01-26-2019 Moody's I
GOVERNMENT FINANCE OFFICERS ASSOCIATION
NEWS RELEASE
FOR IMMEDIATE RELEASE
01/14/2019 For more information contact:
Michele Mark Levine, Director/TSC
Phone: (312) 977-9700
Fax: (312) 977-4806
E-mail: mlevine@gfoa.org
(Chicago, Illinois)--The Certificate of Achievement for Excellence in Financial Reporting has been awarded
to City of Federal Way by Government Finance Officers Association of the United States and Canada
(GFOA) for its comprehensive annual financial report (CAFR). The Certificate of Achievement is the
highest form of recognition in the area of governmental accounting and financial reporting, and its
attainment represents a significant accomplishment by a government and its management.
An Award of Financial Reporting Achievement has been awarded to the individual(s) or department
designated by the government as primarily responsible for preparing the award-winning CAFR.
The CAFR has been judged by an impartial panel to meet the high standards of the program, which includes
demonstrating a constructive "spirit of full disclosure" to clearly communicate its financial story and
motivate potential users and user groups to read the CAFR.
Government Finance Officers Association is a major professional association servicing the needs of nearly
19,000 appointed and elected local, state, and provincial-level government officials and other finance
practitioners. It provides top quality publications, training programs, services, and products designed to u
o:
enhance the skills and performance of those responsible for government finance policy and management.
The association is headquartered in Chicago, Illinois, with offices in Washington, D.C.
203 NORTH LASALLE STREET, SUITE 2700, CHICAGO, ILLINOIS 60601-1210
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U.S.PUBLIC FINANCE
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INVESTORS
ISSUER COMMENT City of Federal Way, WA
18 January 2019
Annual Comment on Federal Way
RATING
General Obligation(or GORelated)? Issuer Profile
No Outlook The City of Federal Way is located in King County in northwestern Washington,bounded on
the north by Puget Sound,just northeast of the Tacoma metro area and 20 miles south of
Seattle.The county has a population of 2,079,550 and a moderate population density of 978
Contacts people per square mile.The county's median family income is$100,658(1st quartile)and the
Nathan Carley +1.312.706.9958 September 2018 unemployment rate was 3.4%(2nd quartile)Z.The largest industry sectors
Associate Lead Analyst that drive the local economy are professional/scientific/technical services,health services,
nathan carley@moodys,com and retail trade.
Eva Bogaty +1.415.274.1765 Credit Overview
VP-Sr Credit Officer/Manager
eva.bogaty@moodys com The credit position for Federal Way is very high quality,and its Aa2 rating is slightly stronger
than the median rating of Aa3 for cities nationwide.The notable credit factors include a
CLIENT SERVICES healthy financial position,a small debt burden,a moderate pension liability,a considerable
Americas 1-212-553-1653 tax base and a healthy wealth and income profile.
Asia Pacific 852-3551-3077 Finances:The city has a healthy financial position but it is slightly weak compared with
Japan 81-3-5408-4100 the assigned rating of Aa2. Federal Way's cash balance as a percent of operating revenues
EMEA 44-20-7772-5454 (34,2%) is roughly equivalent to the US median,but fell materially from 2013 to 2017
Moreover,the fund balance as a percent of operating revenues(29.6%)approximates other
Moody's-rated cities nationwide.
Debt and Pensions:The debt burden of Federal Way is light and is favorable with respect
to its Aa2 rating.The net direct debt to full value(0.3%)is materially below the US median,
and remained stable between 2013 and 2017.The pension liability of the city is mid-ranged
and aligned with the assigned rating of Aa2.The Moody's-adjusted net pension liability to
operating revenues(1.6x)approximates the US median.
Economy and Tax Base:The economy and tax base of Federal Way are healthy overall
and are in line with its Aa2 rating.The total full value($10.3 billion) is much lager than
the US median,and increased dramatically from 2013 to 2017.Moreover,the full value per
capita($106,890)is slightly above other Moody's-rated cities nationwide.The median family
income is 99.1%of the US level.
Management and Governance:Washington cities have an Institutional Framework score
3 of Aa,which is high compared to the nation.Institutional Framework scores measure a
sector's legal ability to increase revenues and decrease expenditures.The sector's major
revenue sources are economically-sensitive sales taxes and property taxes.cities can increase
property tax collections 1%over the prioryear,subject to state statutory limits on property
tax rates.Unpredictable revenue fluctuations tend to be minor,or under 5%annually.
... INVESTORS
Across the sector,fixed and mandated costs are generally greater than 25%of expenditures.Washington has public sector unions,
which can limit the ability to cut expenditures.Unpredictable expenditure fluctuations tend to be minor,under 5%annually.
Sector Trends-Washington Cities
Washington cities are likely to experience steady economic growth over the near-term.Sales tax and other economically sensitive
revenues should improve as unemployment levels remain low,particularly in the Puget Sound region.Strong improvement in the
housing market will continue to boost assessed valuation growth and property tax collections. Pension costs are not a significant source
of credit weakness,but remain a longer-term challenge.
EXHIBIT 1
Key Indicators Ali Federal Way
2013 2014 2015 2016 2017 US Median Credit Trend
Economy/Tax Base
Total Full Value $7,087M $8,375M $8,319M $9,489M $10,298M $1,867M Improved
Full Value Per Capita $78,126 $91,362 $89,588 $100,967 $106,890 $89,200 Improved
Median Family Income(%of US
100% 98% 99% 99% 99% 113% Stable
Median)
Finances
Available Fund Balance as%of
50.8% 41.2% 42.3% 40.1% 29.6% 33.9% Weakened
Operating Revenues
Net Cash Balance as%of Operating o 0 0 0 0 0
47.5/° 38.8/° 42.1/° 40.5/° 34.2/0 36.9/o Weakened
Revenues
Debt/Pensions
Net Direct Debt/Full Value 0.4% 0.4% 0.4% 0.4% 0.3% 1.1% Stable
Net Direct Debt/Operating Revenues 0.55x 0.71x 0.67x 0.69x 0.57x 0.88x Stable
Moody's-adjusted Net Pension Liability ° o ° o ° °
0.5/0 0.6/0 0.8/0 0.9/0 0.9/0 1.8/o Stable
(3-yr average)to Full Value
i
Moody's-adjusted Net Pension Liability
0.77x 1.02x 1.37x 1.64x 1.55x 1.51x Weakened �•
(3-yr average)to Operating Revenues
2013 2014 2015 2016 2017 US Median
Debt and Financial Data
Population 90,720 91,676 92,859 93,986 96,350 N/A
Available Fund Balance($000s) $25,041 $20,105 $21,208 $20,777 $16,972 $7,419
Net Cash Balance($000s) $23,373 $18,927 $21,097 $20,971 $19,613 $8,404
Operating Revenues($0005) $49,246 $48,753 $50,106 $51,816 $57,321 $21,930
Net Direct Debt($000s) $27,016 $34,703 $33,657 $35,726 $32,573 $18,580
Moody's Adjusted Net Pension
$37,768 $49,686 $68,872 $85,026 $88,869 $32,507
Liability(3-yr average)($000s)
Source:Moody's Investors Service
This publication does not announce a credit rating action For any credit ratings referenced in this publication,please see the ratings tab on the issuer/entity page on
www moodys com for the most updated credit rating action information and rating history.
2 18 January 2019 City of Federal Way,WA:Annual Comment on Federal Way