FEDRAC MINUTES 09-24-19 CITY QF
Federal Way
City Council
Finance/Economic Development/Regional Affairs Committee
Tuesday,September 24,2019 Federal Way City Hall
4:30 p.m. SUMMARY MINUTES Council Chambers
CALL TO ORDER: Committee Chair Dini Duclos called the meeting to order at 4:32 p.m.
COMMITTEE MEMBERS IN ATTENDANCE: Chair Duclos, Councilmember Tran; Councilmember Assefa-
Dawson via conference call.
COUNCILMEMBERS IN ATTENDANCE: Deputy Mayor Susan Honda; Councilmember Moore.
STAFF MEMBERS IN ATTENDANCE: Finance Director, Ade Ariwoola;Accounting Manager, Chase
Donnelly; City Attorney, Ryan Call; Dumas Bay Manager, Rob Ettinger; Community Development
Director, Brian Davis; Chief of Police,Andy Hwang; Administrative Assistant, Dana Almberg.
PUBLIC COMMENT: Dana Hollaway, Federal Way citizen, regarding Federal Way Public Schools 2020
Impact Fees.
A. APPROVAL OF SUMMARY MINUTES—July 23, 2019 MEETING
Motion made by Councilmember Assefa-Dawson to approve the minutes from July 23,2019 as
written;motion seconded by Councilmember Tran and carried 3-0.
B. SECOND QUARTERLY FINANCIAL REPORT: Presented by Finance Director Ade Ariwoola.
• Sales tax increased by 39.2%over a 10-year period which is an average of 3.92% per
year. There was a sales tax slight decrease in 2017 due to end of major construction
reducing sales tax on construction activities. There was a modest increase on services
and retail sales tax, and the PAEC came online at the end of 2017.
* Utility tax had a 13.51%decrease over the same period resulting in annual average
decrease of 1.35%. The major decreases were in regular land phone and cellular
phone. Gas had a similar decrease of 32.8% due to gas prices and climate change.
Prop 1 expenses have grown during this same period.
Property tax had a 14.36% increase over the same period resulting in a 1.44% average
annual growth. The City of Federal Way had high number of nontaxable property
construction during this time period such as schools, affordable housing, and the PAEC.
REET tax had a good run of 196.8%over the period and gave the City about 20% annual
growth from the low of the recession time to the high of the economic boom.
A handout from the Office of the Washington State Auditor was passed out, it was not
included in the packet. It is titled Financial Statements and Federal Single Audit Report
for the City of Federal Way for the period of January 1, 2018—December 31, 2018.
The report is the State Auditors report on the financial report on the single audit. In
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summary it is good news, there are no findings. Both for the Single Audit and the
Financial Report, there were no findings, it is a clean audit.
Future challenges are sustainable revenue and managing expenses. It is not being
suggested to cut the budget in any way, but part of the sustainable cannot be revenue
alone, we need to keep an eye on expenses.
Savings from SCORE, after we amend the budget next year and we have results from
the consultants work for the Salaries Study, we will bring to the Council some ideas of
how some of that money savings will be spent.
Debt and debt capacity, the council has within it's power to levy or have debt up to140
million. Without going to the citizens the council can levy that much. As the end of
2018, we have 31.5 million in debt, we have 110 million excess.
Councilmember Tran likes the graph provided. He would like to see a chart that shows
both revenue and expenditures.
Motion made by Councilmember Assefa-Dawson to forward the Second Quarterly
Financial report to the October 1st..2019 consent agenda for approval;motion seconded
by Councilmember Tran and carried 3-0.
C. FEDERAL WAY PUBLIC SCHOOLS 2020 IMPACT FEES:—Presented by Federal Way Public Schools Chief
Finance & Operations Officer, Sally McLean.
Ms. McLean gave an overview regarding how the School Impact Fees are calculated. It is a one-
time payment by residential developers to help mitigate or off-set the impacts of new
development. For schools, the impact is an increased need for new classrooms to serve
additional scholars. The school impact fees can't be used for hiring new teachers or buying new
busses, etc. It can only be used to create more classroom space. Impact fees are calculated
annually and they are based on a formula that was jointly developed many years ago by Master
Builders and King County, they include concepts called Student Generation Rates. This is the
number of students coming from new development. They include cost, land or construction cost.
The fees also include credits including funding we may be getting from the State for assistance,
for the K3 class size reduction funding and credit for local tax rates. Credits are applied against
the costs and discounted by fifty percent which is considered to be the local share.
Due to a large amount of new students coming into the Federal Way School District from multi-
family complexes, there is a larger demand for more classroom space. We have made some
modifications and remodeling what we can. On behalf of the taxpayers of Federal Way Public
Schools, they respectfully request FEDRAC approval to the full Council of the 2020 School Impact
Fees as submitted.
After discussion between Councilmembers, Staff and Ms. McLean, it was decided that more
discussion is necessary to proceed, so City staff will work with the School District to come up with
new numbers and come with a presentations to the full Council.
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No action was taken. The request is to come back to Council with new information.
D. OSA FIREWORKS PENALTIES: Presented by Police Chief Andy Hwang.
Chief Hwang stated that at the July 8 Council meeting they gave after action report of firework
enforcement. Subsequent from that meeting there was some email communication revisiting
the penalty amount for firework violation.
Discussion took place regarding options for future firework enforcement. Such items were
possible rate increases and more signs throughout the City. Chief Hwang said they will make
the request for more display boards throughout the City.
This item was for information/discussion purposes only. No action was taken.
E. PAEC CONSTRUCTION INTERFUND LOAN BONDING ORDINANCE: Presented by Finance Director
Ade Ariwoola. Director Ariwoola introduced Kaitlyn Caldwell with Key Bank Capital Market. Ms.
Caldwell is here to support the Finance team and is looking to get support for an ordinance to
issue up to 7 million dollars of limited tax to an obligations bond to provide permanent
financing for the Performing Arts and Event Center project. She is here to give a preliminary
overview and will be back to present the first reading on October 15t
Motion made by Councilmember Tran to forward the proposed ordinance to First Reading on
October 1,2019 Council meeting;motion seconded by Councilmember Assefa-Dawson and
carried 3-0.
F. VOUCHERS 07/16/2019- -08/15/2019: Presented by Finance Director, Ade Ariwoola.
Finance Director Ariwoola summarized the 7/16/2019—8/15/19 vouchers in the amount of
$3,717,342.59.
Deputy Mayor Honda had sent Mr. Ariwoola some questions she had, and he will address some of
them tonight. On page 106, in regards to CR Floors & Interiors, the payment for$9,144.61 was
for a settlement regarding some unavoidable damage done while doing construction on the
Pacific Hwy. phase 5 project. On page 116,the payment for$27,420.36 is for the interest on the
HUD Section 108 loan.
Motion made by Councilmember Tran to forward the July Vouchers to the October 1, 2019
consent agenda for approval;motion seconded by Councilmember Assefa-Dawson and carried
3-0.
G. VOUCHERS 08/16/2019--09/15/2019: Presented by Finance Director,Ade Ariwoola.
Finance Director Ariwoola summarized the 8/16/2019—9/15/19 vouchers in the amount of
$3,279,546.86 and there were no questions from the Committee.
Motion made by Councilmember Tran to forward the August Vouchers to the October 1,2019
consent agenda for approval;motion seconded by Councilmember Assefa-Dawson and carried 3-0.
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H. MONTHLY FINANCIAL REPORT—JULY 2019: Presented by Finance Director,Ade Ariwoola.
Director Ariwoola summarized the May 2019 Monthly Financial Report. Notable areas include:
• Property Tax
• Community Development permits and fees
• Business License Fees
Motion made by Councilmember Tran to forward the July 2019 Monthly Financial Report to the
October 1, 2019 consent agenda for approval;motion seconded by Councilmember Assefa-Dawson
and carried 3-0.
I. MONTHLY FINANCIAL REPORT—AUGUST 2019: Presented by Finance Director, Ade Ariwoola.
Director Ariwoola summarized the May 2019 Monthly Financial Report. Notable areas include:
• Property Tax
• Sales Tax
• Community Development permits and fees
• Court Revenue
• Probation Revenue
• Admission Tax
• Business License Fees
• Park& General Recreation Fees
• Real Estate Excise Tax
• Lakehaven Utility District
Motion made by Councilmember Tran to forward the August 2019 Monthly Financial Report to the
October 1,2019 consent agenda for approval;motion seconded by Councilmember Assefa-Dawson
and carried 3-0.
J. FINANCIAL POLICY: Presented by Finance Director,Ade Ariwoola
Recently the City of Ellensburg was defrauded by$185,897 to electronic fraud. We need to be
one step ahead of potential issues. We are making changes that we won't do any requests via
email. We instituted a process that we will not be rushed to pay bills, that is where the problem
happened. We are taking our time and not taking electronic information. We have received
several emails from fraudulent people claiming to be City employees and requesting a change of
direct deposit. We will not take these electronically.
This item was for information/discussion purposes only. No action was taken.
K. BUDGET AMENDMENT UPDATE: Presented by Finance Director,Ade Ariwoola.
• The Mayor and FEDRAC will review budget amendment proposal in October. It needs to
be done by December, we are trying to get it done early.
• Budget amendment will go to Council in November
• Budget amendment to 2019 & 2020 budget
This item was for information/discussion purposes only. No action was taken.
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L. BUSINESS REGISTRATION UPDATE: Presented by Finance Director,Ade Ariwoola.
The City of Federal Way will be partnering with the Washington State Department of Revenue to
issue business licenses effective October 3, 2019. This will save Federal Way businesses time and be
more efficient. It will also be a good way to determine businesses who are operating in Federal Way
without a license.
This item was for information/discussion purposes only. No action was taken.
M. Score update: Presented by Finance Director, Ade Ariwoola.
The ADP for the City of Federal Way is at the lowest it's been. If we are able to sustain the ADP like
this, we will do really well. The Police Department and the Courts are to be commended for
managing the ADP. Federal Way leaving SCORE is not hurting us, we are doing very well.
This item was for information/discussion purposes only. No action was taken.
OTHER:
NEXT MEETING: Tuesday, October 22, 2019 @ 4:30 p.m.
ADJOURNED: The meeting was adjourned at 6:06 p.m.
Attest: Approved by Committee:
rn be
Dana Almberg,Administrativ ssistant II Date
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