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HomeMy WebLinkAboutFS 2014-09-16 COMPLETE AGENDA PACKETCity of Tukwila Finance and Safety Committee O Verna Seal, Chair O Joe Duffie O Kathy Hougardy AGENDA Distribution: V. Seal J. Duffie K. Hougardy D. Quinn D. Robertson Mayor Haggerton D. Cline P. McCarthy C. O'Flaherty R. Turpin L. Humphrey K. Kertzman TUESDAY, SEPTEMBER 16, 2014 — 5:30 PM HAZELNUT CONFERENCE ROOM (formerly known as CR #3) at east entrance of City Hall Item Recommended Action Page 1. PRESENTATION(S) 2. BUSINESS AGENDA a. A lease agreement with Westfield Southcenter for the a. Forward to 9/22 C.O.W. Pg.1 Visitor Information Center. and Special Meeting Katherine Kertzman, Tourism Program Manager Consent Agenda. b. An agreement for shuttle services for Seattle Southside b. Forward to 10/6 Consent Pg.15 Visitor Services (SSVS). Agenda. Katherine Kertzman, Tourism Program Manager c. 2014 2nd Quarter investment report. c. Information only. Pg.23 Peggy McCarthy, Finance Director d. 2014 2nd Quarter miscellaneous revenue report. d. Information only. Pg.31 Peggy McCarthy, Finance Director 3. ANNOUNCEMENTS 4. MISCELLANEOUS Next Scheduled Meeting: Tuesday, October 7, 2014 16. The City of Tukwila strives to accommodate individuals with disabilities. Please contact the City Clerk's Office at 206 - 433 -1800 ( TukwilaCitvClerk (aTukwilaWA.gov) for assistance. T{]: City of Tukwila Jim Haggerton, Mayor INFORMATIONAL U��U�n�������U� nn�n ��n��n�n��n n��n���u~ n�n�~n�n*~�n���n�����n�n Mayor Haggerton Finance and Safety Committee FROM: Katherine Kertzman, Tourism & Marketing Program Manager Brandon J. Miles, Economic Development Planner DATE: August 28, 2014 SUBJECT: Satellite Visitor Center ISSUE Seattle Southside Visitor Services (SSVS) requests approval to extend the lease space at Westfield Southcenter to operate the satellite visitor center (VC). BACKGROUND In October of 2013, the City Council authorized SSVS to begin operating a satellite VC in a kiosk at Westfield Southcenter Mall. The lease term for the kiosk was one year and the project was intended to be a pilot p ject. The lease is scheduled to terminate at the end of September 2014. Staff is requesting to continue the pilot project and to extend the lease until June 50. 2015. On July 1, 2015 it is anticipated that the new Seattle Southside Regional Tourism Authority will take over all operations of the Visitor Center. It costs the City nearly $10,000 a month to operate the VC. The lease from Westfield is a nominal $1 per year. The funding comes from lodging tax, not the City's general fund. Council authorization is needed to allow the Mayor to enter into a new lease agreement that would extend the lease until June 30, 2015. SSVS has adequate unused funds to cover the $30,000 cost in operating the VC through 2014. The Mayor's proposed 2015/16 budget recommends providing lodging tax funding to fund the VC until June 30, 2015. It is anticipated that by July 1, 2O15thatthe8eatt|e3outhsideRegiona|TnuhsnnAuthohh//88RTA>vviUbeinapnsitionto assume operations of the VC. The Mayor's proposed budget does not provide any funding to operate the VC beyond June 30. 2015. If SSRTA is not in a position to assume operations of the VC on July 1, 2015 the City will either need to cease operations of the VC or request that the City Council provide additional lodging tax funding. On August 27, 2014, the City of Tukwila's Lodging Tax Advisory Committee (LTAC) recommended that the City continue operating and funding the VC until June 30, 2015. DISCUSSION This location has proven to be very beneficial to our traveling guests while increasing SSVS's ability to market its local tourism businesses directly to the traveling public. The VC connects hotel guests' shuttle riders with an onsite concierge service that provide assistance for their travel related needs. It also serves airport layover travelers, tour groups, independent leisure travelers as well as area residents looking for assistance for visiting family and friends. 2 INFORMATIONAL MEMO Page 2 Since this was a pilot project, SSVS staff has been tracking several performance measures to evaluate the performance of the VC. The following are some key data collected by staff: 1. Staffing the satellite VC requires 2.75 FTEs. Because this is a pilot project all VC staff members are temporary employees hired through a staffing agency. All SSVS VC staff members are crossed trained to work both VC locations (SeaTac and Westfield) and have regularly scheduled shifts at both locations. Staffing hours were increased to provide for more crossovers between shifts permitting staff to take breaks without leaving the desk unstaffed. 2. Year to date the VC consistently fields over 4,000 questions monthly of which 1,500 or more are defined as visitor inquiries and 2,500 are mall related questions. The average cost per visitor inquiry is $7 per inquiry. SSVS focuses on increasing customer satisfaction while continually working to reduce cost. Staff emphasizes learning and adaptation as important to achieving this success. In March, all VC staff went through a four week customer service and sales training program. Since then the number of admission tickets sold and reservations booked have increased significantly. For example, City Pass sales are up 104% second quarter amounting to $1,280 in commission. In general, commission on ticket sales average 10% of the ticket cost. Over time the commission on ticket sales will help to offset some of the staffing cost and reduce the costs per visitor inquiry while providing enhanced guest services. 3. With Metro's Rapid Ride line now connecting Westfield Southcenter to Sound Transit Link Light Rail, Sea -Tac International Airport and other connecting points, the VC will begin selling Orca cards and providing a reloading station for current Orca card holders. SSVS will receive a $1 processing fee for each Orca card sold. This will help reduce operating costs. 4. Staff is working with mall management to improve signage to more clearly explain the services offered at the VC. Reducing mall related questions overtime will improve the VC's ROI, free up VC staff time to work on social media and other special projects and improve job satisfaction. The Seattle Southside Tourism Promotion Area Steering Committee is a self - selected group of hoteliers in SeaTac and Tukwila who represent hotels with 90 or more rooms and who have organized to support formation of a tourism promotion area (TPA). On April, 11, 2013 the six member committee voted unanimously to support the satellite VC and is willing to assume all costs and operations of the satellite VC once the TPA and a public development authority (SSRTA) are operating and organizationally ready. SSRTA should be ready to assume operations no later than July 1, 2015. The draft lease allows the City to terminate the lease with 30 -day's notice, thus providing flexibility in the event that SSRTA is able to assume operations earlier than July 1, 2015. FINANCIAL IMPACT The total cost to operate the VC until June 30, 2015 is $90,000. SSVS has $30,000 dollars in unspent funds within its 2014 Council approved budget that will be used to operate the VC through the end of the year. Therefore, there is no additional budget request for this item W:12014 Info Memos - Council ) Westfield VC Memo Aug 2014.doc INFORMATIONAL MEMO Page 3 needed in 2014. The Mayor's proposed 2015/16 budget will include $60,000 in lodging tax funds to operate the VC until July 1, 2015. No general funds are proposed to be used to operate the VC. If the SSRTA is unable to assume operations on July 1, 2015 the City will either have to cease operations of the VC or request that additional lodging tax funds are allocated to support its operations. RECOMMENDATION Council is being asked to authorize the Mayor to sign the lease. The Finance and Safety Committee is being asked to forward this item to the Committee of the Whole meeting for discussion on September 22, 2014 and then forward it to the Consent Agenda of the Special Meeting that same evening to ensure approval prior to the termination date of the current lease (9/30/14). ATTACHMENTS • Proposed Lease with Westfield Southcenter W:12014 Info Memos- CouncillWestfield VC Memo Aug 2014.doc 3 4 Contract No.: SPECIALTY RETAILING PROGRAM Short Term Lease Agreement This Short Term Lease Agreement (this "Lease "), is dated as of October 1, 2014 (the "Effective Date "), and entered into by and between the undersigned entity or entities, in its (or their) capacity as agent(s) for the owner(s) of the Shopping Center(s) listed on Exhibit A, with offices at 2049 Century Park East, 41st Floor, Los Angeles, CA 90067 ( "Lessor ") and City of Tuwikla, doing business as Seattle Southside ( "Trade Name "), with an address at 6200 Southcenter Boulevard, Tukwila, WA 98188 ( "Lessee "). Lessor hereby grants Lessee the right to use that certain space more particularly described on Exhibit A attached hereto (the "Premises ") in the Westfield shopping center(s) listed on Exhibit A attached hereto (each, a "Shopping Center ", and collectively, the "Shopping Centers "). NOW, THEREFORE, in consideration of the mutual promises hereinafter contained, and for other good and valuable consideration, the parties hereto, intending to be legally bound hereby, agree as follows: 1. Premises and Permitted Use. Westfield hereby leases to Lessee the Premises for the sole purpose of operating a tourism desk (provided all materials distributed or displayed shall be subject to Lessor's prior approval, not to be unreasonably withheld) ( "Permitted Use ") under the Trade Name and for no other purpose, expressly conditioned upon all terms and conditions set forth in this Lease. There may be no change in the Permitted Use of the Premises or the Trade Name without Lessor's prior written approval, which may be withheld in Lessor's sole and absolute discretion. 2. Hours of Operation. Lessee shall be continuously open for business at each of the Premises in accordance with the Rules and Regs (as defined below). Lesson and Lessee may agree to alter operating hours based on business demands. 3. Term. The term for this Lease for each of the Shopping Centers shall commence on October 1, 2014 and shall expire on June 30, 2015 (the "Term "), unless earlier terminated as set forth in this Lease. 4. Intentionally Deleted. 5. Installation; Maintenance and Repair. Lessee shall install within the Premises, at its sole cost and expense, all equipment, personal property, improvements and facilities necessary for the Permitted Use. Prior to such installation, Lessee shall submit design plans and specifications to Lessor for approval. All work undertaken by Lessee or its contractors, subcontractors and other agents in connection with the installation, operation and maintenance of its equipment, improvements and facilities shall be undertaken and completed in a good and workmanlike manner by professional, licensed and qualified personnel and contractors. Lessee, at its sole cost and expense, shall repair, replace and maintain in good condition all portions of the Premises. Lessee may not make any structural alterations to the Premises without the prior written consent of Lessor. Lessor shall not be responsible for any installation, alteration or maintenance of the Premises, nor shall it be liable for any installation, alteration or maintenance costs and expenses whatsoever. Lessee shall ensure that the Premises maintain the same standards of appearance and cleanliness as the remainder of the Shopping Center(s). 6. Lessee's Employees. Lessee shall ensure that all of its contractors, vendors, employees and personnel, if any, at the Premises maintain a clean appearance and are at all times properly behaved and qualified and trained to carry out their duties and responsibilities in accordance with all laws, ordinances and the rules and regulations for the Shopping Center(s) that are attached hereto as Exhibit C and incorporated herein by reference (the "Rules and Regs "). Any violations by Lessee or its employees, agents, vendors, contractors or subcontractor of the Rules and Regs shall be deemed to be breach of this Lease. 7. Lessee's Surrender of Possession and Restoration of the Premises. Upon the expiration of the Term or earlier termination of this Lease, Lessee shall surrender possession of the Premises to Lessor and (i) restore the Premises to the condition in which the Premises existed prior to installation of the Personal Property (as defined below), subject to ordinary wear and tear, (ii) repair all damage caused by or in connection with Lessee's compliance with the obligations contained in this Section, (iii) Intentionally Deleted; and (iv) surrender to Lessor the Premises, broom -clean and in good condition. Any of Lessee's obligations under this Section which have not been performed by Lessee prior to the expiration of the Term or earlier termination of this Lease shall survive such expiration of the Term or earlier termination of this Lease. If Lessee fails to meet its obligations under this Section, Lessor shall restore the Premises to the condition in which the Premises existed prior to installation of the Personal Property, and Lessee shall reimburse Lessor for its costs and expenses related thereto within five (5) days after Lessor gives written notice to Lessee as provided in Section 19 of this Lease of the amount due. 8. Disposition of Personal Property. Upon the expiration of the Term or earlier termination of this Lease, 1 5 Contract No.: Lessee shall remove all of its merchandise, personal property, signs, sets, displays, equipment, telephone and data cabling (collectively, and without limitation, "Personal Property") from the Premises and the Shopping Center(s). If Lessee fails to remove all or any part of the Personal Property from the Premises prior to expiration of the Term or earlier termination of this Lease, then Lessor, in its sole and absolute discretion may (a) declare that all or any part of the Personal Property shall become property of Lessor, (b) sell or dispose all or any part of the Personal Property, and/or (c) require that Lessee remove all or any part of the Personal Property immediately. To the extent necessary, Lessee hereby absolutely and unconditionally gives, grants, bargains, sells, transfers, sets over, assigns, conveys, releases, and delivers to Lessor all of Lessee's rights, title and interest in the Personal Property remaining in the Premises at the expiration of the Term or earlier termination of this Lease. Further, if Lessor incurs any attorney's fees and /or costs for the sale /disposal /removal of the Personal Property, Lessee shall reimburse Lessor for such attorney's fees and costs within five (5) days after Lessor gives written notice to Lessee as provided in Section 19 of this Lease of the amount due. To extent applicable, Lessee hereby waives and releases Lessor from any notice obligations under applicable law relating to the Personal Property, including but not limited to notice of any sale /disposal /removal of the Personal Property. Any of Lessee's obligations under this Section which have not been performed by Lessee prior to the expiration of the Term or earlier termination of this Lease shall survive such expiration of the Term or earlier termination of this Lease. 9. Indemnity. Lessee shall defend (with counsel reasonably satisfactory to Lessor), indemnify and hold harmless Lessor, its agents, affiliates, partners, members and employees from and against any and all liabilities, claims, demands, damages, expenses, fees, fines, penalties, suits, proceedings, actions and causes of action of any and every kind and nature (i) arising from or in any way connected with the Permitted Use, or (ii) arising from or in any way connected with Lessee's use of the Premises, or (iii) caused by Lessee or any of its affiliates, members, employees, subcontractors, contractors, agents and representatives, excepting any liability or claim caused by the gross negligence or willful misconduct of Lessor or its employees. The obligations of this Section shall survive the expiration of the Term or earlier termination of this Lease. 10. Compliance with Laws; Permits. Lessee agrees that it has read and understands the Rules and Regs and shall abide by and shall cause its employees, agents, vendors, contractors or subcontractor to abide by the same, as such Rules and Regs may be amended from time to time by Lessor. Any conflict between the terms of this Lease and the terms of any Rules and Regs, the terms of this Lease shall control. Lessee further agrees, at its sole cost and expense, to comply with all present and future laws, ordinances, orders, rules, regulations and requirements of all governmental authorities having jurisdiction over, affecting, or applicable to the Premises. Lessee represents and warrants that Lessee has obtained, or will obtain prior to the commencement of its business operations, at its sole cost and expense, any required permits, authorizations, consents and approvals of any type or nature from the appropriate governmental authorities for use of the Premises for the Permitted Use, to the extent necessary (the "Permits "), and all of such Permits are, or will be, and will remain in full force and effect during the Term. Lessee shall provide copies of such required Permits to Lessor upon request. 11. "As -Is "; Release. Lessee acknowledges that it has inspected the Premises (or will inspect the Premises prior to commencement of its business operations), observed no dangerous conditions, accepts the Premises "as is ", and assumes all risk of injury or damage to Lessee's person or property, in connection with Lessee's use of the Premises regardless of the condition thereof. Lessee expressly waives all rights, if any, to assert any claims against Lessor, Westfield U.S. Holdings, LLC, Westfield America, Inc., Westfield America Limited partnership and any and all of their parents, subsidiaries, affiliates, members, predecessors, successors, employees, representatives, any marketing fund, tenants and lessees for damage, destruction or loss of any equipment, personal property, supplies, cash (or other evidence of customer debt such as checks or credit card receipts) upon the Shopping Center or, by any reason of fire, theft, robbery or burglary, bodily injury, personal injury or death or other loss, provided, however, such loss or damage is not due to the gross negligence or willful misconduct of Lessor or any of its parents, subsidiaries, affiliates, members or employees. Lessee accepts all responsibility for any injury or public liability incurred as a direct result of its display or personal property or fixtures or business operations. 12. Security. Lessor shall have no responsibility to provide security, supervision or protection against any loss that may be sustained by Lessee. Any Lessee requiring security must provide security at Lessee's expense, and prior to utilizing a security company, obtain the written approval of Lessor. 13. Insurance. a. Lessee shall, at its sole cost and expense, carry and maintain coverage as follows: i. Commercial General Liability on an "occurrence basis" with a limit of $1,000,000 per occurrence and $2,000,000 in the aggregate, for bodily injury, death and property damage, which Commercial General Liability policy shall include products /completed operations liability coverage with a separate 2 6 Contract No.: aggregate limit of not less than $1,000,000 and personal and advertising injury coverage with a separate limit of not less than $1,000,000, and contractual liability coverage; ii. Property insurance covering Lessee's personal property in an amount equal to full replacement value; iii. Statutory Worker's Compensation and Employer's Liability insurance as required by the laws of the State in which the Shopping Centers are located; and iv. Commercial Automobile Liability insurance with a combined single limit of not less than $1,000,000 providing coverage for the use of any owned, non -owned or hired vehicles. b. The required insurance policies must apply on a primary basis, and any other insurance policies of Lessor or any other additional insured entities are excess and non - contributing. c. Lessee's is a member of the Washington Cities Insurance Authority, a municipal self-insurance risk pool for property and casualty coverage, as authorized under RCW 48.62 and regulated by the Washington State Risk Manager. The Parties hereby agree that Lessee's continued participation in the Washington Cities Insurance Authority self - insurance risk pool shall satisfy the coverage requirements set forth in Section 13(a). Upon request by Lessor, Lessee will provide an Evidence of Coverage letter as proof of coverage limits required in Section 13(a). d. If Lessee contracts with or hires independent contractors, subcontractors or vendors to participate in the Permitted Use or the installation of any equipment or improvements, Lessee shall require such independent contractors, subcontractors and/or vendors to satisfy the insurance requirements set forth in this Section and to the extent requested by Lessor, Lessee shall cause such third parties to furnish evidence of such insurance coverage to Lessor, and to execute a hold harmless agreement as requested by Lessor. 14. Lessor's Right to Relocate Premises. At any time during the Term, Lessor shall have the right to relocate the Premises to another part of the Shopping Center by notifying Lessee in writing. Lessee shall relocate its Premises to such other location within seven (7) days after Lessor provides written of notice, at Lessee's sole cost and expense. 15. Termination Right. Lessor or Lessee may terminate this Lease at any time during the Term, in its sole and absolute discretion, upon thirty (30) days advance written notice sent to the other party in the manner required by this Lease. Lessee: 16. Events of Default; Termination. a. The occurrence of any of the following shall constitute a default and material breach of this Lease by i. Any failure by Lessee to observe or perform any other provision, covenant or condition of this Lease to be observed or performed by Lessee where such failure continues for twenty-four (24) hours after written notice from Lessor to Lessee; provided that if the nature of such default is such that the same cannot reasonably be cured within twenty-four (24) hours, Lessee shall not be deemed to be in default if it shall commence such cure within such period and thereafter rectify and cure such default with due diligence in no event to exceed ten (10) days after written notice thereof from Lessor to Lessee identifying the default. b. In the event of a default by Lessee, Lessor in addition to any other remedies available to it at law or equity, including injunction, at its option, without further notice or demand of any kind to Lessee or any other person may: (1) declare the Term hereof ended and re -enter the Premises and take possession thereof and remove all persons therefrom, and Lessee shall have no further claim thereon or hereunder; and (2) even though it may have re- entered the Premises, thereafter, at its sole discretion, immediately terminate this Lease and Lessee's right to possession of the Premises by giving Lessee written notice that this Lease is terminated. 17. Holding Over. If, following the expiration of the Term or earlier termination of the Lease, possession of the Premises is not immediately surrendered to Lessor, then Lessee shall pay to Lessor on account of use and occupancy of the Premises, for each month (or any portion thereof) during which Lessee (or a person claiming by, through or under Lessee) holds over in possession of the Premises, an amount equal to two (2) times the then current market rate rent for the Premises, as reasonably determined by Lessor. Lessor's right to collect such amount from Lessee for such use and occupancy shall be in addition to any other rights or remedies that Lessor may have under this Lease, or at law or in equity. Nothing contained in this Section shall permit Lessee to retain possession of the 3 7 Contract No.: Premises following the expiration of the Term or earlier termination of the Lease, or limit in any manner Lessor's right to regain possession of the Premises, through summary proceedings or otherwise. Lessor's acceptance of any payments from Lessee after expiration of the Term or earlier termination of the Lease shall be deemed to be on account of the amount to be paid by Lessee in accordance with the provisions of this Section. Lessee expressly waives, for itself and for any person claiming through or under Lessee, any rights that Lessee or any such person may have under the provisions of legal requirements, in connection with any holdover summary proceedings that Lessee may institute to enforce the provisions of this Section. Lessee shall indemnify, defend and hold Lessor harmless from and against any and all loss, claims, demands, liabilities, damages (including, without limitation, consequential damages), costs and/or expenses (including, without limitation, attorney's fees and expenses) resulting from any failure by Lessee to surrender the Premises in the manner and condition required by this Lease upon the expiration of the Term or earlier termination of the Lease, including, without limitation, any claims made by any proposed new tenant founded upon such failure by the Lessee. 18. Restrictions on Transfer. Lessee shall not transfer, assign, sublet, enter into franchise, license or concession agreements, change ownership or voting control of, all or any part of this Lease without Lessor's prior written consent, which will not be unreasonably withheld. 19. Notices. Wherever in this Lease it shall be required or permitted that notice be given or served by either party to this Lease to or on the other, such notice, shall be given or served, and shall not be deemed to have been duly given or served unless in writing and forwarded by overnight courier, certified or registered mail, addressed to the parties at the addresses set forth above. Either party may change such address by written notice sent by certified or registered mail. 20. Governing Law. This Lease shall be construed in accordance with the laws of the State of Washington pertaining to contracts made and performed entirely therein. 21. Attorney's Fees and Costs. If either Lessor or Lessee institutes any action or proceeding against the other party relating to the provisions of this Lease or any default hereunder, the non - prevailing party in such action or proceeding shall reimburse the prevailing party for the reasonable expenses of attorney's fees and all costs and disbursements incurred therein by the prevailing party, including, without limitation, any such attorney's fees, costs or disbursements incurred on any appeal from such action or proceeding. The prevailing party shall recover all such attorney's fees, costs or disbursements as costs taxable by the court in the action or proceeding itself without the necessity for a cross - action by the prevailing party. In addition to the foregoing award of attorney's fees, costs and disbursements to the prevailing party, the prevailing party shall be entitled to its attorney's fees, costs and disbursements in any post judgment proceedings to collect or enforce the judgment. This provision is separate and several and shall survive the termination of this Lease, and shall survive the entry of any judgment, and shall not merge, or be deemed to have merged, into any judgment. Further, if Lessor employs an attorney or seeks legal advice in connection with any breach of this Lease by Lessee, or any insolvency proceeding commenced by or against Lessee, all such legal costs incurred shall be payable by Lessee. Such legal costs shall include, without limitation, review of any and all notices, schedules, or petitions concerning the Lessee, attendance at creditors' meetings, negotiations with debtor or debtor's counsel, preparation and filing of any and all notices, motions, proofs of claim, objections, or any other pleadings on behalf of Lessor in any hearing regarding any matters of any nature in which the Lessor believes its rights may be affected. For purposes of this Lease, the term "attorneys' fees" or "attorneys' fees and costs" shall mean the fees and expenses of counsel to the parties hereto, which may include printing, photostating, duplicating and other expenses, air freight charges, and fees billed for law clerks, paralegals and other persons not admitted to the bar but performing services under the supervision of an attorney. 22. No Waiver by Lessor. The waiver by Lessor of any breach of any term, covenant or condition contained in this Lease shall not be deemed a waiver of such term, covenant, or condition of any subsequent breach thereof, or of any other term, covenant, or condition contained in this Lease. Lessor's consent to or approval of any act by Lessee requiring Lessor's consent or approval shall not be deemed to waive or render unnecessary Lessor's consent to or approval of any subsequent similar act by Lessee. Lessor's subsequent acceptance of partial or full rent or performance by Lessee shall not be deemed to be an accord and satisfaction or a waiver of any preceding breach by Lessee of any term, covenant or condition of this Lease, or of any right of Lessor to a forfeiture of this Lease by reason of such breach, regardless of Lessor's knowledge of such preceding breach at the time of Lessor's acceptance. No term, covenant or condition of this Lease shall be deemed to have been waived by Lessor unless such waiver is in writing and executed by Lessor. 4 8 Contract No.: 23. Miscellaneous. The invalidity or unenforceability of any particular provision(s) of this Lease shall not affect the other provisions hereof, and this Lease shall be construed in all respects as if such invalid or unenforceable provisions were omitted. This Lease contains all of the agreements of the parties hereto with respect to any matter covered or mentioned in this Lease, and no prior agreement, negotiations, representations, brochures, arrangements, or understanding pertaining to any such matter shall be effective for any purpose unless expressed herein. Except to the extent required by law, including, without limitation, reporting and disclosure requirements under applicable securities laws, and except as reasonably necessary in the normal course of dealing with a party's employees, officers, directors, investors and prospective investors, attorneys, accountants, banks, lenders, advisors, and other representatives (all of whom will be required to honor the confidentiality of such information), Lessee shall not disclose the economic terms of this Lease or any material information regarding the Premises to any person without the prior written consent of Lessor. This Lease may be signed in counterparts, each of which shall be deemed an original, and all of which together shall be deemed a single instrument. The parties agree that signatures by facsimile or other electronic transmission methods shall be accepted as originals. Lessee agrees that it will not issue a press release or publish, disseminate or otherwise make public any statement, advertisement or other public communication concerning this Lease or its operations at the Shopping Center(s) without the prior approval of Lessor, which written approval shall not be unreasonably withheld or delayed. IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed by their duly authorized representatives as of the date first above written. LESSOR: LESSEE: Westfield Property Management LLC, City of Tulikwa a Delaware limited liability company a Washington Mutual Corporation In its capacity as agent for the owner(s) of the Shopping Center(s) BY: NAME: TITLE: 5 9 Contract No.: EXHIBIT A SHOPPING CENTER INFORMATION, ADDITIONAL INSURED LANGUAGE Westfield WEA Southcenter C Westfield Property Southcenter Management LLC Space to be utilized: Three exterior posters cases on the east facade of Sears. Current Seattle Southside location on the northeast corner of Sears. L2 c1 LJ (-3 0 H- 0 6 10 Contract No.: EXHIBIT B Intentionally Deleted 7 11 Contract No.: EXHIBIT C Rules and Regs To ensure the quality, consistency and presentation of the Partnership Marketing program, the following rules of operation must be adhered to without exception: Prior to Installation Display: • A scale drawing of the exhibit set -up must be submitted and approved by Partnership Marketing and/or the Mall Management Office at least 14 days prior to implementation. Provision must be shown for aisles, widths between exhibits, etc. No planters, ash trays, benches, directories or center equipment may be moved at any time. Once an exhibit is positioned and approved, it may not be rearranged or moved by exhibitor. A fine will result in non - compliance. Mall Management will have final say on placement of all displays, and displays shall be placed only within areas approved by the Fire Marshall. • Displays can not exceed 6 feet in height without approval from Lessor and display must not block any retail sight lines. • A phone jack and an electrical plug may be available at many locations. It is the responsibility of the Lessee to contact the local phone company to activate the jack. If electrical plugs are unavailable, Lessor has the right to move the location of the display. Fire Regulations and Permitting: • The Shopping Center strictly enforces fire codes. The placement of the activation location or premises must have at least ten feet aisles between planters, furniture and display. Twenty feet aisles between RMU's and twelve feet from storefronts must be maintained at all times. • Electric cords may not be exposed on any part of the activation location or premises. All electrical cords coming from the floor outlet must be properly hidden at all times. • Cotton batting, straw, dry vines or other highly flammable materials shall not be used in the booth unless such materials have been flame proofed. • There shall be no open flame of any type; this will include torches, candles, soldering devices, etc. • There shall be no flammable liquids of any type; this will include paint thinners, kerosene, gasoline or other like materials. • Electrical wiring provided for the booths shall conform to the requirements of the Building and Safety Department. Only Heavy Duty cords (type S or S3) which are U.L. approved are allowed. Multiple plugs must be accompanied by a plug strip with a circuit breaker. All electrical cords shall be adequately protected against tampering. Cords crossing the pedestrian aisles shall be covered with an appropriate threshold plate to prevent pedestrians from tripping on loose cords. • Lessee must obtain all necessary permits and licenses required by local, state and federal law prior to activating their program and commencing business within their premises. Lessee must adhere to all fire codes and regulations. Contact the Fire Department for further information. The sampling of food for immediate consumption is not permitted without approval from the County Health Department. Marketing and Signage: • When advertising or publicizing your event/display, the Shopping Center name must be used as shown in Exhibit A, • Any advertisements or signage must be submitted to Lessor for approval, including, but not limited to the content, dimensions and location of all signage. • All display signs are to be professional. Handwritten signs are impermissible. • No surveys may be conducted or petitions signed unless approved by center management prior to the activity taking place. Once on property Set -up: • Set -up /Installation must take place outside of regular center hours. • All carts and dollies for moving material are required to have pneumatic tires. Rubber tires are permitted in service corridors only. Metal wheels are not allowed. Any damage to property will be charged to Lessee. 8 12 Contract No.: • Standard Shopping Center hours are 10:00 a.m. to 9:00 p.m. Mondays through Saturday; 11:00 a.m. to 7:00 p.m. Sundays (may vary slightly per Shopping Center). Hours will vary to accommodate seasonal and holiday demands. Any Lessee who does not maintain these hours unless revised hours have been agreed upon and included in the contract will be in violation of the Lease and will be subject to immediate termination of the Lease. In case of any emergency, the mall management office must be notified immediately. • Lessee is responsible for supplying tables, chairs and other materials unless agreement states otherwise. All tables or counters must be skirted to the floor on all four sides. If event equipment is rented from Mall Management, it must be returned in the same condition that it was provided to Lessee. If it is not, damage will be assessed and charged to Lessee. • No decorations or signs are to be hung from the ceiling, soffits, pole lights, or columns or attached to walls, trees, or any other mall fixtures. • Exhibitors are responsible for providing or arranging all necessary labor in uncrating, erecting, or dismantling of displays. Maintenance personnel are not available to help with set up /take down. • Exhibitors may park at loading areas only to unload materials. Loading zones will be kept open for deliveries whenever possible. Parking in driveways, fire lanes, and loading zones is strictly prohibited. Delivery vehicles must be completely unloaded in appropriate dock and then moved out. Unattended parked vehicles in Loading Zones will be ticketed or towed at the expense of the Lessee serviced by the vehicle. • Access and deliveries through the common area of the Shopping Center or the main public entrances will only be permitted when it is physically impossible to make deliveries through the service corridor routes. Permission for deliveries through the Shopping Center must be obtained from the Management Office. No deliveries can be made during Shopping Center operating hours. Staffing: • Lessee shall at all times use the Premises for the purpose of performing the Activities in a proper manner satisfactory to Licensor and in an honest, conscientious and business -like way. • Lessee is responsible for the safety, security, and cleanliness of its own displays. Any damage to mall floors, walls, furniture or plants will be billed to the Lessee. Lessor assumes no responsibility for any loss or damage to property displayed by Lessee in the Shopping Center or parking lot. • The Premises must be staffed at all times with competent personnel, who are neat in appearance and dressed in a professional manner. The Management Office maintains the right to immediately cause the removal of such employees from the Shopping Center if such employees are not properly dressed or do not otherwise comply with these rules and regulations. • Activations and/or Premises should not be left unattended for more than 10 minutes, if applicable. • It is recommended that breaks not be taken during the peak shopping hours between 11:30 a.m. and 2:00 p.m. for staffed activations and premises. • Employees may not bring their children or pets to the Shopping Center. • Lessee is not permitted to have food, beverages or reading material at the activation location or premises, unless otherwise permitted in their Agreement. Smoking is also prohibited. Radios, heaters, fans, televisions, etc. are not allowed. • All personnel must park in employee parking areas as designated by Lessor. Parking abuse will result in ticketing and, if necessary, towing the vehicle. • Activation locations and premises must be secured at your own risk. Please make sure to contact the Management Office, if you need assistance. • Coats, pocketbooks, and other personal belongings must be stored out of sight. • Lessee shall not at anytime solicit shoppers. Soliciting is to try to obtain, to ask earnestly, to beg, or to entice shoppers persistently beyond four feet of the activation location or premises. You may, however, greet customers within four feet of your activation location or premises. • If the event/display includes street teams throughout the Shopping Center, these employees must remain in the designated areas set forth in the Lease. • The playing of any musical instrument, radio, television, or the use of a microphone, loudspeaker, or flashing/rotating lights is not permitted without Center Management approval. If allowed, the sound level should be set to a level that will not affect the businesses in the shopping center. • Cardboard boxes and trash are to be properly disposed of. The Management Office shall provide locations. • No trash will be placed in or around mall trash receptacles. Violation of the common area trash receptacle policy will result in a fine. Vehicle Display 9 13 Contract No.: Any vehicle or other apparatus which has a fuel tank and which will be used for display purposes inside the Shopping center shall meet the following requirements: a. Comply with all local fire regulations. b. Provide locked fuel caps and/or prevent caps from allowing possible leakage of flammable vapors. c. Disconnect all battery cables. d. Provide drip pans, carpet squares or other material under each tire and/or leg of heavy items. e. The fuel tank of each vehicle shall have a maximum of one gallon of gas. f. Keys to each vehicle must be left with the Mall Management. g. Dealership employee must clean the car daily before 10 a.m. h. Mall Management has the right to remove or relocate any and all vehicles at any time. i. To obtain a fire permit please contact your local fire inspector. Failure to adhere to the above and /or rectify within 2 -5 days (depending on the violation) could result in the suspension and /or terminations of the Lease until said violation is cured. Please keep a copy of these rules and regulations at your activation and/or Premises. Please review these rules often with your employees and newly hired personnel. If you would like additional copies please let the Management Office know. AGREEMENT TO ACCEPT RULES AND REGULATIONS I have read and understand the criteria for operation and agree to abide by them. I further agree to have all employees read and understand these rules and regulations. I understand that failure to do so will result in termination of activity in the Shopping Center. Lessee Name Name (Please print) Signature Date 14 10 wVV m��^ T{}: City of Tukwila Jim Haggerton, Mayor INFORMATIONAL U��U���������U� nu�n ��n��n�n��n n��x����~ n�n�~o�x��n����n�����n�n Mayor Haggerton Finance and Safety Committee FROM; Katherine Kertzman, Tourism Program Manager Brandon Miles, Economic Development Planner DATE: September 3, 2014 SUBJECT: Seattle Express Shuttle Services Contract ISSUE The Council is being asked to reauthorize the Mayor to sign a shuttle services contract with Miller Schmer Inc. doing business as "Seattle Express" on behalf of Seattle Southside Visitor Services (SSVS). BACKGROUND For over 13 years SSVS has hired Seattle Express to provide regularly scheduled shuttle services from hotels in the City of SeaTac to Westfield Southcenter, seven days a week (excluding some major hV|iddys). Currently, the City of SeaTac contributes 10096 of the shuttle costs as a part of the annually approved tourism marketing initiatives SSVS provides to the City of SeaTac. The City of SeaTac's Hotel Motel Advisory Committee members support funding the complimentary shuttle service for their guests because it conveys added value to selling their properties to potential overnight guests and groups; the City of Tukwila incurs no direct costs but receives the sales tax from shoppers. Seattle Express delivered more than 28.000 riders/shoppers to Westfield Southcenter in 2013 resulting in $4,311,900 in estimated visitor spending at Westfield'. The shuttle is wrapped in Seattle Southside branded advertising. As administrator of Seattle Southside. Tukwila contracts with the shuttle, pays Ulnrn, and is reimbursed 100Y6 for expenses from the SeaTac lodging tax fund. Currently, the cost is $10,000 per month. Seattle Express has an Auto Transportation Certificate 01052 issued by the Washington Utilities and Transportation Commission (WUTC) that gives Seattle Express the sole right to provide a scheduled shuttle service, at a set rate, on a set route for hotel guests (in our cities) and no other company can provide this shuttle service in our area which is defined as SeaTac and Tukwila. Thenafone, a competitive bid process is not feasible for this contract. ANALYSIS Both the SeaTac Hotel Motel Advisory Committee and Tukwila Lodging Tax Advisory Committee reviewed and approved the 2015 Seattle Express shuttle service marketing initiatives at their respective August meetings. FINANCIAL IMPACT As the Council is aware, the operation of SSVS is a joint effort between the cities of SeaTac and Tukwila. Tukwila is solely responsible for the administration of SSVS. Both cities provide funding to SSVS to fund joint / The estimated spending per shuttle rider is ee'imated from a survey completed. by Westfield. in 20I1. INFORMATIONAL MEMO Page 2 efforts, such as marketing. Additionally, each city also provides funding for specific initiatives. The Seattle Express Shuttle Service is an example of one such initiative. The City of SeaTac provides 100Y6 of the funding to pay the direct costs associated with operation of the shuttle. Neither the City of Tukwila's lodging fund nor the City's general fund pays the costs associated with the shuttle operations. SSVS Transition In the s ing of 2013 the City Council authorized the Mayor to sign an interlocal agreement (ILA) with the cities of SeaTac and Des Moines to create a tourism promotion area (TPA) that encompasses the geographical areas of Tukwila, SeaTac and Des Moines. The City of SeaTac is currently working to form a public development authority (PDA) that will oversee the day to day operations of the TPA. Once the PDA is operating, it is assumed that most of the operations of SSVS will shift to the PDA. Once the PDA is formed and SSVS ceases to exist as a City Department, the City will not be able to administer some of the contracts that SSVS currently oversees. The proposed Shuttle services contract includes a provision that Tukwila can terminate the contract with 30-dey'S notice. This provides the City of Tukwila flexibility once the PDA is up and running. RECOMMENDATION The Council is being asked to authorize the Mayor to sign a service contract in an amount not to exceed $120,000 on behalf of Seattle Southside Visitor Service with Miller Schmer Inc. doing business as Seattle Express. The Finance and Safety Committee is being asked to place the contract on the October 6, 2014 consent agenda. ATTACHMENTS • Proposed Contract 16 City of Tukwila 6200 Southcenter Boulevard, Tukwila WA 98188 Contract Number: CONTRACT FOR SERVICES This Agreement is entered into by and between the City of Tukwila, Washington, a non-charter optional municipal code city hereinafter referred to as "the City," and Seattle Express, hereinafter referred to as "the Contractor," whose principal office is located at 8028 180th St. SE, Snohomish, WA 98296. WHEREAS, the City has determined the need to have certain services performed for its citizens but does not have the manpower or expertise to perform such services; and WHEREAS, the City desires to have the Contractor perform such services pursuant to certain terms and conditions; now, therefore, IN CONSIDERATION OF the mutual benefits and conditions hereinafter contained, the parties hereto agree as follows: Scope and Schedule of Services to be Performed by Contractor. The Contractor shall perform those services described on Exhibit A attached hereto and incorporated herein by this reference as if fully set forth. In performing such services, the Contractor shall at all times comply with all Federal, State, and local statutes, rules and ordinances applicable to the performance of such services and the handling of any funds used in connection therewith. The Contractor shall request and obtain prior written approval from the City if the scope or schedule is to be modified in any way. 2. Compensation and Method of Payment. The City shall pay the Contractor for services rendered according to the rate and method set forth on Exhibit B attached hereto and incorporated herein by this reference. The total amount to be paid shall not exceed $120,000 at a rate of $10,000 per month. 3. Contractor Budget. The Contractor shall apply the funds received under this Agreement within the maximum limits set forth in this Agreement. The Contractor shall request prior approval from the City whenever the Contractor desires to amend its budget in any way. 4. Duration of Agreement. This Agreement shall be in full force and effect for a period commencing January 1, 2015, and ending December 31, 2015, unless sooner terminated under the provisions hereinafter specified. 5. Independent Contractor. Contractor and City agree that Contractor is an independent contractor with respect to the services provided pursuant to this Agreement. Nothing in this Agreement shall be considered to create the relationship of employer and employee between the parties hereto. Neither Contractor nor any employee of Contractor shall be entitled to any benefits accorded City employees by virtue of the services provided under this Agreement. The City shall not be responsible for withholding or otherwise deducting federal income tax or social security or contributing to the State Industrial Insurance Program, or otherwise assuming the duties of an employer with respect to the Contractor, or any employee of the Contractor. CA Revised 1-2013 Page 1 of 6 17 6. Indemnification. The Contractor shall defend, indemnify and hold the City, its officers, agents, officials, employees and volunteers harmless from any and all claims, injuries, damages, losses or suits including attorney fees, arising out of or in connection with the performance of this Agreement, except for injuries and damages caused by the sole negligence of the City. Should a court of competent jurisdiction determine that this Agreement is subject to RCW 4.24.115, then, in the event of liability for damages arising out of bodily injury to persons or damages to property caused by or resulting from the concurrent negligence of the Contractor and the City, its officers, officials, employees, and volunteers, the Contractor's liability hereunder shall be only to the extent of the Contractor's negligence. It is further specifically and expressly understood that the indemnification provided herein constitutes the Contractor's waiver of immunity under Industrial Insurance, Title 51 RCW, solely for the purposes of this indemnification. This waiver has been mutually negotiated by the parties. The provisions of this section shall survive the expiration or termination of this Agreement. 7. Insurance. The Contractor shall procure and maintain for the duration of the Agreement, insurance against claims for injuries to persons or damage to property which may arise from or in connection with the performance of the work hereunder by the Contractor, their agents, representatives, employees or subcontractors. Contractor's maintenance of insurance, its scope of coverage and limits as required herein shall not be construed to limit the liability of the Contractor to the coverage provided by such insurance, or otherwise limit the City's recourse to any remedy available at law or in equity. A. Minimum Scope of Insurance. Contractor shall obtain insurance of the types and with the limits described below: 1. Automobile Liability insurance with a minimum combined single limit for bodily injury and property damage of $5,000,000 per accident. Automobile liability insurance shall cover all owned, non-owned, hired and leased vehicles. Coverage shall be written on Insurance Services Office (ISO) form CA 00 01 or a substitute form providing equivalent liability coverage. If necessary, the policy shall be endorsed to provide contractual liability coverage. 2. Commercial General Liability insurance with limits no less than $5,000,000 each occurrence, $5,000,000 general aggregate and $5,000,000 products-completed operations aggregate limit. Commercial General Liability insurance shall be written on ISO occurrence form CG 00 01 and shall cover liability arising from premises, operations, independent contractors, products- completed operations, stop gap liability, personal injury and advertising injury, and liability assumed under an insured contract. The Commercial General Liability insurance shall be endorsed to provide the Aggregate Per Project Endorsement ISO form CG 25 03 11 85 or an equivalent endorsement. There shall be no endorsement or modification of the Commercial General Liability Insurance for liability arising from explosion, collapse or underground property damage. The City shall be named as an insured under the Contractor's Commercial General Liability insurance policy with respect to the work performed for the City using ISO Additional Insured endorsement CG 20 10 10 01 and Additional Insured-Completed Operations endorsement CG 20 37 10 01 or substitute endorsements providing equivalent coverage. 3. Workers' Compensation coverage as required by the Industrial Insurance laws of the State of Washington. CA Revised 1-2013 Page 2 of 6 18 B. Other Insurance Provision. The Contractor's Automobile Liability and Commercial General Liability insurance policies are to contain, or be endorsed to contain that they shall be primary insurance with respect to the City. Any insurance, self-insurance, or insurance pool coverage maintained by the City shall be excess of the Contractor's insurance and shall not contribute with it. C. Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best rating of not less than A: VII. D. Verification of Coverage. Contractor shall furnish the City with original certificates and a copy of the amendatory endorsements, including but not necessarily limited to the additional insured endorsement, evidencing the insurance requirements of the Contractor before commencement of the work. E. Subcontractors. The Contractor shall have sole responsibility for determining the insurance coverage and limits required, if any, to be obtained by subcontractors, which determination shall be made in accordance with reasonable and prudent business practices. F. Notice of Cancellation. The Contractor shall provide the City and all Additional Insureds for this work with written notice of any policy cancellation, within two business days of their receipt of such notice. G. Failure to Maintain Insurance. Failure on the part of the Contractor to maintain the insurance as required shall constitute a material breach of contract, upon which the City may, after giving five business days notice to the Contractor to correct the breach, immediately terminate the contract or, at its discretion, procure or renew such insurance and pay any and all premiums in connection therewith, with any sums so expended to be repaid to the City on demand, or at the sole discretion of the City, offset against funds due the Contractor from the City. 8. Record Keeping and Reporting. A. The Contractor shall maintain accounts and records, including personnel, property, financial and programmatic records which sufficiently and properly reflect all direct and indirect costs of any nature expended and services performed in the performance of this Agreement and other such records as may be deemed necessary by the City to ensure the performance of this Agreement. B. These records shall be maintained for a period of seven (7) years after termination hereof unless permission to destroy them is granted by the office of the archivist in accordance with RCW Chapter 40.14 and by the City. 9. Audits and Inspections. The records and documents with respect to all matters covered by this Agreement shall be subject at all times to inspection, review or audit by law during the performance of this Agreement. 10. Termination. This Agreement may be terminated by the City at any time and for any reason by the City giving to the Contractor thirty (30) days written notice of the City's intention to terminate the same. If the Contractor's insurance coverage is canceled for any reason, the City shall have the right to terminate this Agreement immediately. 11. Discrimination Prohibited. The Contractor shall not discriminate against any employee, applicant for employment, or any person seeking the services of the Contractor to be provided under this Agreement on the basis of race, color, religion, creed, sex, age, national origin, marital status or presence of any sensory, mental or physical handicap. CA Revised 1-2013 Page 3 of 6 19 12. Assignment and Subcontract. The Contractor shall not assign or subcontract any portion of the services contemplated by this Agreement without the written consent of the City. If Seattle Southside becomes a part of a newly formed Public Development Authority (PDA), the City may assign this Agreement to the PDA. 13. Entire Agreement; Modification. This Agreement, together with attachments or addenda, represents the entire and integrated Agreement between the City and the Contractor and supersedes all prior negotiations, representations, or agreements written or oral. No amendment or modification of this Agreement shall be of any force or effect unless it is in writing and signed by the parties. 14. Severability and Survival. If any term, condition or provision of this Agreement is declared void or unenforceable or limited in its application or effect, such event shall not affect any other provisions hereof and all other provisions shall remain fully enforceable. The provisions of this Agreement, which by their sense and context are reasonably intended to survive the completion, expiration or cancellation of this Agreement, shall survive termination of this Agreement. 15. Notices. Notices to the City of Tukwila shall be sent to the following address: City Clerk, City of Tukwila 6200 Southcenter Blvd. Tukwila, Washington 98188 Notices to the Contractor shall be sent to the signature line below. Seattle Southside Visitor Services 3100 South 176t1 St. Seattle, WA 98188 address provided by the Contractor upon the 16. Applicable Law; Venue; Attorney's Fees. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington. In the event any suit, arbitration, or other proceeding is instituted to enforce any term of this Agreement, the parties specifically understand and agree that venue shall be properly laid in King County, Washington. The prevailing party in any such action shall be entitled to its attorney's fees and costs of suit. DATED this day of , 20 . CITY OF TUKWILA CONTRACTOR By: Mayor, Jim Haggerton ATTEST/AUTHENTICATED: City Clerk, Christy O'Flaherty APPROVE) AS TO FORM: Office of the City Attorney Printed Name and Title: Address: CA Revised 1-2013 Page 4 of 6 20 Exhibit A Scope of Services 1. Provide a complimentary regularly scheduled round trip shuttle service for SeaTac hotel guests to the Westfield Southcenter. 2. The route schedule will be published online and in printed format to be distributed to all SeaTac hotels, SSVS and Westfield Southcenter. 3. Seattle Express will not make changes to the published schedule without prior written approval from SSVS staff. 4. Seattle Express will be responsible for all maintenance and upkeep of shuttle fleet and any associated fees. 5. Permit SSVS to wrap the shuttle van(s) used for Westfield Shuttle service in Seattle Southside branded advertising at SSVS's expense. 6. Shuttle service will operate seven days a week, excluding certain holidays. 7. Include Seattle Southside webpage link on Seattle Express website. 8. Promote the Seattle Southside visitor center by providing shuttle riders with SSVS Visitor Guide and Map and encouraging them to utilize other visitor center services. 9. Shuttle drivers will act as tourism ambassador for the Seattle Southside area. 10. With each monthly invoice, provide a ridership total report for the month being billed. CA Revised 1 -2013 Page 5 of 6 21 Exhibit B Compensation Contractor shall submit invoices to the City within fourteen days of the end of each month. Invoices shall be mailed to: Seattle Southside Visitor Services 3100 South 176 Street Seattle, WA 98188 The total amount to be paid under this contract shall not exceed $120,000 and will be paid at a fixed rate of $10,000 per month. CA Revised 1 -2013 Page 6 of 6 22 City of Tukwila Jim Haggerton, Mayor INFORMATIONAL U��U�n�������K� nn�n ��n�nmn��n n�*n����~ n�n�~n�n�*n�a��n�����n�n TO: Mayor Haggerton Finance and Safety Committee FROM: Peggy McCarthy, Finance Director BY: Vicky Carlsen, Deputy Finance Director DATE: September 10, 2014 SUBJECT: Second Quarter 2014 Cash & Investment Report ISSUE The second quarter Investment Report is included with this memorandum and is discussed below. BACKGROUND City funds are invested to earn a reasonable return while preserving principal and allowing sufficient liquidity to meet the City's operating needs. To achieve these objectives investments are diversified by type, by financial institudon, and by maturities in compliance with the City Investment Policy. DISCUSSION Portfolio Components At June 50. 2014. the portfolio totaled $47.1 million comprised of $37.2 million in cash and cash equivalents and $10.0 in longer term investments. The portfolio balance increased by $2.4 million from March 31, 2014 balance of $44.7 million. Ann jor reason for the increase in funds is because property tax collections for the first half of the year were received in 2nd quarter while general fund expenditures are spread fairly evenly throughout the year. In April, the City purchased a Federal Home Loan Mortgage Corp agency investment in the amount of $2 million. It was purchased on April 10, 2014 and will mature on March 4, 2017. This investment has a .85% yield to maturity. In June, the City purchased a second agency investment of $1 million from Fannie Mae with a maturity date of December 20, 2014 and a yield to maturity of 1.30%. Both investments increase the percentage of the City's longer-term investments and increase portfolio yield because of the higher interest rates on both agencies. Since these are both longer- terminvestnnento.theyxverep|acedinthecondngencyfundvvherethe|ike|ihondofaccesainOthe available cash in the next few years is remote. The purchase of agencies also increases the diversity of the portfolio. Portfolio Performance The portfolio weighted average yield at year end was .46%. Considering the portfolio's weighted average maturity was 1.1 years, and the yield on the cash & cash equivalent accounts was .08%, the portfolio yield of 0.46% is still quite favorable. The yield has been sustained by the 4.22% average yield on the municipal bond investments, the .59% yield on the certificate of deposits, the .67% yield on the agencies, and the .45% earnings credit on the US Bank depository account. INFORMATIONAL MEMO Page 2 Investment income through 2nd quarter 2014 for cash equivalents and certificates of deposits is $4O.G8O plus $75.2ODof accrued municipal bond interest for o total of$115.88Oagainst a prorated budget of $131.078. Not included in the portfolio is interest earned from the operating ondcaoite loans to the MPD. The operating loan is being repaid on a monthly basis and will be paid in full by May 2023. Interest earned on the loan through the second quarter of 2014 is $10.207. The capital loan is being repaid semi-annually and will be paid in full by December 2022. Accrued interest for the first quarter of 2014 is $7,884. Attached to the investment report are amortization schedules for both loans to the MPD. Policy Compliance and Liquidity Analysis As of the end of the 2'm quarter, the portfolio profile is well within the range of all the investment policy parameters. There is currently a healthy mix of investments with a range of maturity dates. Current investments allow for adequate cash flow requirements. Fund Cash & Investment Balances The general fund balance shows an increase of $300 thousand from March 31, 2014 revenue on budget and expenditures under budget for the first half of the year. Both the general fund and contingency funds show significant increases from March 2013 to March 2014. This is due to the sale of LID bonds that occurred in November 2013 then transferring a portion of the bond proceeds into the contingency fund. Changes in other governmental funds is due primarily due to the timing of when capital pr ject expenditures are occurring. Both the insurance and LEOFF I insurance funds show a reduction in cash and investments. Claims have been higher than anticipated in the insurance fund and the LEOFF I insurance fund is not currently funded in order to intentionally reduce fund balance. Investment Environment Short term interest rates continue to remain low and are expected to remain low through 2015. Unemployment rates continue to fall but the labor market remains slack. The Federal intends to maintain a zero-interest-rate policy until the economy strengthens. The portfolio will be managed to take advantage of investment opportunities as they arise. RECOMMENDATION Presentation is for information only. ATTACHMENTS Cash and Investment Report Policy Compliance & Liquidity Analysis Cash and Investment Balances by Fund Treasury Rates and Yield Curves Amortization Schedule — MPD Operating Loan Amortization Schedule — MPD Capital Loan 24 CITY OF TUKWILA CASH & INVESTMENT REPORT June 30, 2014 (a) (c) (d) Rating Purchase Maturity Term Par Book Yield to Annualized Agency / Issuer Moodys Investment Type Date Date Yrs Value Balance Maturity Return CASH & CASH EQUIVALENTS US Bank Depository Various (b) $17,134,544 $17,134,544 (e) 12,888 0.45% Washington State Treasurer LGIP Investment Pool Various (b) 5,930,789 5,930,789 (f) 0.08% 2,990 Columbia Bank Money market Various (b) 14,100,596 14,100,596 (f) 13,286 0.18% Total Cash & Cash Equivalents 37,165,929 37,165,929 0.08% 29,163 INVESTMENTS Certificates of Deposit Sound Community Bank Certificate of Deposit 3/4/2011 3/4/2017 6.0 3,000,000 3,134,494 0.85% 17,402 Regal Bank Certificate of Deposit 6/20/2012 12/20/2014 2.5 250,000 250,000 1.30% 1,621 CERTIFICATES OF DEPOSIT -- TOTAL 5.7 3,250,000 3,384,494 0.59% 19,022 Agencies Federal Home Loan Mtg Corp US agency 4/10/2014 5/13/2016 2.1 2,000,000 2,002,911 0.50% (e) 10,000 (FHLMC) FNMA US agency 6/6/2014 8/23/2017 3.2 1,000,000 998,400 1.00% 10,008 TOTAL AGENCIES 2.5 3,000,000 3,001,311 0.67% 20,008 Taxable Municipal Bonds City of Marysville, sinking Al LTGO Refunding 11/23/2010 12/1/2017 5.5 535,000 573,252 3.37% 19,319 2014 -2017, ave 5.5 years Washington State Convention Aa3 Lodging Tax Bonds 11/30/2010 7/1/2016 5.6 500,000 503,625 3.60% 18,130 Center Facility UW Biomedical Center Aal Revenue Bonds 12/14/2010 7/1/2017 6.6 500,000 503,724 4.05% 20,401 UW Biomedical Center Aal Revenue Bonds 12/14/2010 7/1/2019 8.6 500,000 504,038 4.70% 23,690 Douglas County, ESD, sinking Aal UTGO 12/23/2010 12/1/2020 8.9 1,135,000 1,149,825 4.55% 52,317 2018 -2020, ave 9 yrs Port of Anacortes Al LTGO 12/17/2010 9/1/2020 9.7 340,000 330,855 5.00% 16,543 TOTAL MUNICIPAL BONDS 7.6 3,510,000 3,565,320 4.22% 150,400 Total Investments 5.4 9,760,000 9,951,125 1.90% 189,430 TOTAL CASH, CASH EQUIVALENTS & INVESTMENTS 1.1 $ 46,925,929 $ 47,117,054 I 0.46% I $ 218,593 (a) On calleable bonds, term is calculated to final maturity even though call date may occur first; term of liquid investments is one day; on sinking fund bonds, average maturity is used to calculate term. (b) No fixed maturity, funds are available within one day. (c) Yield to Maturity represents average rate for the year for various investment vehicles. (d) Annualized Return represents actual earnings for the fiscal year for bonds. (e) Represents earning credit from US Bank. City earns interest up to the amount of fees. (f) Represents rate in effect for period ending this report. (g) Annualized Return represents actual earnings through current reporting period Current Portfolio Yield Percent of Cash & Investment Portfolio Municipal Bonds 8% Money Market 32% 1111111 ,,,e0000000000000000000000000000000000000000000000000 CDs 8% LGIP 13% Cash 39% 25 CITY OF TUKWILA Policy Compliance & Liquidity Analysis CASH & INVESTMENT REPORT June 30, 2014 Liquidity Analysis & Maturity Diversification Funds immediately available Fixed Maturity Investments, maturing in: 0 -90 days after Report Date 91 -180 days after Report Date Investments maturing in 1 year or less Investments maturing in 1 -3 years Investments maturing in 3 -5 years Investments maturing in 5 -7 years Investments maturing in 7 -10 years Investments maturing in more than 1 year and less than 10 years. TOTALS Portfolio Amount $ 37,165, 929 250,000 250,000 5,641, 030 2,075,376 1,984,719 9,701,125 $ 47,117, 054 Available Within 1 Year As of Report Date Available Within 5 Years $ 37,165, 929 $ 37,165, 929 250,000 $ 37,415,929 79% 250,000 5,641, 030 2,075,376 Available in 5 - 10 Years 1,984,719 $ 45,132, 336 $ 1,984,719 96% 5% I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I Liquidity Requirements and Funds Available for Investing: Funds immediately available Restrictions & designations: Operating liquidity Liquidity threshold Funds available for longer term investing (a) $ 37,165, 929 14, 000, 000 14, 000, 000 $ 23,165,929 (a) Represents largest one month decline in portfolio balance over the most recent 36 month period doubled; or the equivalent of a 100% cushion. I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I Financial Institution Diversification US Bank Washington State Treasurer Columbia Bank Sound Community Bank Other financial institutions Total Investment Mix Depository State Investment Pool Money market Certificate of Deposit US Agency Municipal Bonds Total Portfolio Amount $ 17,134,544 5,930,789 14,100, 596 3,134,494 6,816,631 $ 47,117, 054 % of Total 36.4% 12.6% 29.9% 6.7% 14.5% 100.0% Portfolio Amount % of Total 17,134,544 36.4% 5,930,789 12.6% 14,100, 596 29.9% 3,384,494 7.2% 3,001,311 6.4% 3,565,320 7.6% 47,117, 054 100.0% POLICY MAXI MUM 50.0% 75.0% 50.0% 50.0% 50.0% POLICY MAXI MUM insured by PDPC 75.0% insured by PDPC insured by PDPC 75.0% no limit specified in policy Policy Met? Yes Yes Yes Yes Yes Policy Met? Yes Yes Yes Yes Yes Yes IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII Weighted Average Maturites: Certificates of deposit Municipal bonds Total Investments Total Portfolio Years 5.7 7.6 5.4 1.1 POLICY MAXIMUM 3.5 Policy Met? Yes Note: Cash and cash equivalents are available within one day and are factored into the Total Portfolio weighted average maturity. 26 Performance Analysis Current portfolio yield Benchmarks: 6 month treasury 2 year treasury Local Govt Invst Pool 0.46% 0.07% 0.47% (f) 0.08% CITY OF TUKWILA Cash & Investment Balances By Fund and Fund Group CASH & INVESTMENT REPORT June 30, 2014 Fund Groue' Balances 06/30/14 General 000 GENERAL 6,987,822 General Tota 6,987,822 Special Revenue 101 HOTEL /MOTEL TAX 495,322 103 STREET 104 ARTERIAL STREET 105 CONTINGENCY 107 FIRE EQUIP. CUM. RESERVE 109 DRUG SEIZURE FUND 68,308 Special Revenue Total 9,359,877 Debt Service 206 L.I. GUARANTEE 669,147 207 LIMITED TAX G.O. BONDS 1999 208 LIMITED TAX G.O. BONDS 2000 209 LIMITED TAX G.O. BONDS 2003 210 LIMITED TAX G.O. REFUNDING 2003 211 LIMITED TAX G.O. REFUNDING 2008 212 LTGO SCORE BONDS 213 LTGO SCORE BLD AMER BONDS 214 LTGO 2010 Series A 215 LTGO 2010 Series B 216 VALLEY COM Refunding bonds 2010 106,434 217 LIMITED TAX GO BONDS REFUNDING 274,214 218 LTGO 2013 - 233 LID #33 81,316 Debt Service Total 2,369,574 Capital Project 301 LAND ACQ, REC & PARK DEVLPMNT 1,236,430 302 FACILITY REPLACEMENT 1,904,720 303 GENERAL GOVERNMNT IMPROVEMENTS 570,592 304 FIRE IMPACT FEES 454,321 Capital Project Total 4,166,063 Enterprise 400 UTILITY ON ACCT (overpayments) 22,106 401 WATER 5,376,215 402 SEWER 3,335,265 404 WATER /SEWER REVENUE BONDS 405 BOND RESERVE 411 FOSTER GOLF COURSE 622,681 412 SURFACE WATER 2,361,899 Enterprise Total 11,718,166 Internal Service 501 EQUIPMENT RENTAL 4,650,880 502 INSURANCE 5,238,745 503 INSURANCE - LEOFFI 735,138 Internal Service Total 10,624,763 Grand Total 45,226,266 Balances 6/30/13 $ 4,149,258 4,149,258 660,126 1,450,893 1,051,963 1,582,095 911,325 5,763,258 1,461,857 945,694 146,312 5,177,278 Balances 6/30/12 $ 4,903,893 4,903,893 440,145 938,114 2,055,132 1,458,686 943,850 222,196 6,058,123 1 3,020,451 3,828,526 244,320 247 469,496 406,416 218 705,717 291,688 1,390 30,891 - - 115,995 296,039 108,557 369,525 4,612 66,508 12,954 14 1 101,738 3,148,430 5,688,409 1,099,701 1,633,257 2,088,543 2,018,535 637,101 433,693 402,514 317,677 4,227,860 4,403,163 27,857 17,122 5,655,077 3,982,420 2,316,037 1,238,090 458,643 114,058 2,985,279 2,683,138 11,442,893 8,034,828 4,474,197 3,804,498 6,239,565 6,198,009 1,666,674 1,904,047 12,380,436 11,906,554 40,526,154 40,994,970 Balances 6/30/11 $ 7,197,080 7,197,080 497,927 733,893 8,906,680 1,457,270 884,605 (20,100) 12,460,275 13,248 70 814 Balances 6/30/10 $ 5,314,837 5,314,837 927,777 464,298 4,978,370 887,293 802,518 258,103 8,318,359 118,267 133,945 (3,914) 71,715 (74,699) 14,132 245,314 4,845,418 4,216,052 2,044,018 2,073,625 751,794 363,610 168,919 145,423 7,810,149 6,798,708 13,664 13,184 4,377,038 5,046,356 1,209, 792 1,622,088 135,566 393,547 (169,408) 142,065 2,575,702 1,966,145 8,006,789 9,318,951 3,803,723 3,604,004 6,048,103 5,424,728 1,725,536 1,528,676 11,577,363 10,557,408 47,065,787 40,553,577 Funds not included in the Grand Total are the fiduciary funds and the MPD. However, these balances ($2,121,880) are included in the investment balances. 27 Rates at June 30, 2014 u CITY OF TUKWILA Treasury Rates and Yield Curves CASH & INVESTMENT REPORT June 30, 2014 3mo 6mo 1Yr 2Yr 3Yr 5Yr 10Yr 30Yr 1 II 11111111 1111 II 111111 II 111111 VII II IIII111111 VII 0.04% 0.07% 0.11% 0.47% 0.88% 1.62% 2.53% 3.34% Source: US Department of the Treasury Rate % Change Change 0.00% 0% - 0.03% -43% - 0.04% -36% 0.11% 23% 0.22% 25% 0.21% 13% 0.01% 0% - 0.18% -5% Rates at June 28, 2013 3mo 6mo 1Yr 2Yr 3Yr 5Yr 10Yr 30Yr 11111 111111111111111 IIIIIIII 0.04% 0.10% 0.15% 0.36% 0.66% 1.41% 2.52% 3.52% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Comparison of Treasury Rates 1111111111110 11111111111111110100m011101100 muuuuuuuuumuuuumuuuuuuuuu 3mo 6mo 1 yr 2 yr 3 yr 5 yr 10 yr 30 yr 6/30/2014 -6/28/2013 28 MPD Operating Loan - through end of 2014 only Period Accumulated Principal Interest (Date) Beg Bal Funding Payments Interest End Bal Interest Pmt Pmt 10/1/2011 $ - $ 191,294 $ - $ 319 $ 191,613 $ 319 11/1/2011 191,612.82 - 319.35 191,932.18 638.18 12/1/2011 191,932.18 - 319.89 192,252.07 958.07 1/1/2012 192,252.07 - 320.42 192,572.49 1,278.49 2/1/2012 192,572.49 - 320.95 192,893.44 1,599.44 3/1/2012 192,893.44 - 321.49 193,214.93 1,920.93 4/1/2012 193,214.93 225,000.00 - 697.02 418,911.95 2,617.95 5/1/2012 418,911.95 - 698.19 419,610.14 3,316.14 6/1/2012 419,610.14 - 699.35 420,309.49 4,015.49 7/1/2012 420,309.49 - 700.52 421,010.01 4,716.01 8/1/2012 421,010.01 - 701.68 421,711.69 5,417.69 9/1/2012 421,711.69 - 702.85 422,414.54 6,120.54 10/1/2012 422,414.54 433,706.00 - 1,426.87 857,547.41 7,547.41 11/1/2012 857,547.41 - 1,429.25 858,976.66 8,976.66 12/1/2012 858,976.66 - 1,431.63 860,408.28 10,408.28 1/1/2013 860,408.28 250,000.00 - 1,850.68 1,112,258.96 12,258.96 2/1/2013 1,112,258.96 - 1,853.76 1,114,112.73 14,112.73 3/1/2013 1,114,112.73 - 1,856.85 1,115,969.58 15,969.58 4/1/2013 1,115,969.58 - 1,859.95 1,117,829.53 17,829.53 5/1/2013 1,117,829.53 19,692.58 1,863.05 1,100,000.00 19,692.58 19,692.58 6/1/2013 1,100,000.00 10,121.48 1,833.33 1,091,711.85 21,525.91 8,288.15 1,833.33 7/1/2013 1,091,711.85 10,121.48 1,819.52 1,083,409.89 23,345.43 8,301.96 1,819.52 8/1/2013 1,083,409.89 - 10,121.48 1,805.68 1,075,094.10 25,151.12 8,315.80 1,805.68 9/1/2013 1,075,094.10 - 10,121.48 1,791.82 1,066,764.44 26,942.94 8,329.66 1,791.82 10/1/2013 1,066,764.44 - 10,121.48 1,777.94 1,058,420.90 28,720.88 8,343.54 1,777.94 11/1/2013 1,058,420.90 - 10,121.48 1,764.03 1,050,063.46 30,484.92 8,357.45 1,764.03 12/1/ 2013_1 ,050,063.46__- __10,121.48 _ 1,750.11_ 1,041,692.08__32,235.02 _ 8,371.371,750.11 1/1/2014 1,041 - ,692.08 10,121.48 1,736.15 1,033,306.76 33,971.18 8,385.33 1,736.15 2/1/2014 1,033,306.76 10,121.48 1,722.18 1,024,907.45 35,693.35 8,399.30 1,722.18 3/1/2014 1,024,907.45 10,121.48 1,708.18 1,016,494.15 37,401.53 8,413.30 1,708.18 4/1/2014 1,016,494.15 10,121.48 1,694.16 1,008,066.83 39,095.69 8,427.32 1,694.16 5/1/2014 1,008,066.83 10,121.48 1,680.11 999,625.46 40,775.80 8,441.37 1,680.11 6/1/2014 999,625.46 10,121.48 1,666.04 991,170.02 42,441.84 8,455.44 1,666.04 7/1/2014 991,170.02 10,121.48 1,651.95 982,700.49 44,093.79 8,469.53 1,651.95 8/1/2014 982,700.49 10,121.48 1,637.83 974,216.85 45,731.63 8,483.65 1,637.83 9/1/2014 974,216.85 10,121.48 1,623.69 965,719.06 47,355.32 8,497.79 1,623.69 10/1/2014 965,719.06 10,121.48 1,609.53 957,207.11 48,964.85 8,511.95 1,609.53 11/1/2014 957,207.11 10,121.48 1,595.35 948,680.98 50,560.20 8,526.13 1,595.35 12/1/2014 948,680.98 10,121.48 1,581.13 940,140.63 52,141.33 8,540.34 1,581.14 Prior urrent 29 PAYMENT BEGINNING DUE DATE BALANCE Capital Loan to MPD Repayment Schedule PRINCIPAL INTEREST PAYMENT RATE INTEREST PAYMENT ENDING 2/1/2013 6/1/2013 1,000,000.00 12/1/2013 949,268.33 6/1/2014 901,009.43 12/1/2014 852,328.26 6/1/2015 803,221.13 12/1/2015 753,684.31 6/1/2016 703,714.05 12/1/2016 657,176.98 6/1/2017 609,976.75 12/1/2017 562,103.92 6/1/2018 513,548.90 12/1/2018 464,301.97 6/1/2019 414,353.27 12/1/2019 366,075.34 6/1/2020 316,831.85 12/1/2020 266,603.49 6/1/2021 215,370.56 12/1/2021 163,112.97 6/1/2022 109,810.23 12/1/2022 55,441.43 30 Amount loaned to the MPD (50,731.67) 0.02 (48,258_ _____ (48,258.90) 0.02_ __ (48,681.17) 0.02 (49,107.13) 0.02 (49,536.82) (49,970.26) (46,537.07) (47,200.23) (47,872.83) (48,555.02) (49,246.93) (49,948.70) (48,277.93) (49,243.49) (50,228.36) (51,232.93) (52,257.59) (53,302.74) (54,368.80) (55,441.43) 0.02 0.02 0.03 0.03 0.03 0.03 0.03 0.03 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 1,000,000.00 (5,833.33) 949,268.33 (8,306.10)_ 901,009.43 (7,883.83) 852,328.26 (7,457.87) (7,028.18) (6,594.74) (10,027.93) (9,364.77) (8,692.17) (8,009.98) (7,318.07) (6,616.30) (8,287.07) (7,321.51) (6,336.64) (5,332.07) (4,307.41) (3,262.26) (2,196.20) (1,108.83) (131,285.26) 803,221.13 753,684.31 703,714.05 657,176.98 609,976.75 562,103.92 513,548.90 464,301.97 414,353.27 366,075.34 316,831.85 266,603.49 215,370.56 163,112.97 109,810.23 55,441.43 0.00 Prior Current f TO: City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM Mayor Haggerton Finance and Safety Committee FROM: Peggy McCarthy, Finance Director BY: Jennifer Ferrer -Santa Ines, Senior Fiscal Coordinator DATE: September 9, 2014 SUBJECT: Sales Tax and Miscellaneous Revenue Report - 2nd Quarter 2014 Schedule I -Sales Tax in $1,000's Total sales tax collections for the second quarter were $54K below the same quarter in the previous year. New construction sales tax collection for second quarter was $155K lower compared to the same quarter in the previous year resulting in a 46% decrease. As of June 30th, the City has collected $568,606 in sales tax mitigation, which is 47% of the annual mitigation budget. Sales tax collections through the month of August are nearly 50% of the annual budget. Projections for the remainder of the year assumes an increase of 4.0% over monthly budget. 31 2013 Actual 2014 Actual YOY Change -- Month -- Collected Reed New j Other j Total Construc- I Industries I tion New j Other j Construc -I Industries I tion Total New Construction j Amount % I Other Industries j Total Amount % I Amount Jan Mar $ 76 $ 1,038 � $ 1,114 $ 57 � $ 1,049 ' $ 1,106 $ (19) -25 %; $ 11 1 %; $ (8) -1% Feb Apr 77 1,127 1,204 34 1,047 1,081 (43) -56 %I (80) 7 %I (123) -10% Mar May 86 ; 1,191 ; 1,277 56 ; 1,265 ; 1,321 (30) -35 %; 74 6 %; 44 3% Q -1 Totals $ 239 , 3,356 ! $ 3,595 $ 147 ! 3,361 , $ 3,508 $ (92) -38%! 5 0%! $ (87) -2% Apr Jun 1171 1,1091 1,226 571 1,1351 1,192 (60) -51 %! 26 2%! (34) -3% May Jul 1191 1,1651 1,284 531 1,201 1 1,254 (66) -55 %I 36 3 %I (30) -2% Jun Aug 104 j 1,264 j 1,368 75 j 1,303 j 1,378 (29) -28 %j 39 3 %j 10 1% Q -2 Totals $ 340 j 3,538 j $ 3,878 $ 185 j 3,639 j $ 3,824 $ (155) -46 %j 101 3 %j $ (54) -1% YTD thru 2nd Qtr $ 579 I 6,894 I $ 7,473 $ 332 I 7,000 I $ 7,332 $ (247) -43 %1 106 2%: $ (141) -2% Jul Sep 101 ; 1,300 ; 1,401 Aug Oct 105 . 1,240 ! 1,345 - I I I Sep Nov 108 ! 1,227 I 1,335 - _ _ _ _I Q -3 Totals $ 314 ! 3,767 ! $ 4,081 $ - ! - 1 $ - $ - -1 - -1 $ - $ - Oct Dec 921 1,1571 1,249 I I -I - -I - Nov Jan 102 j 1,248 j 1,350 - 1 - 1 - - -1 - -1 - Dec Feb 75 j 1,660 j 1,735 I I -1 - -1 - Q-4 Totals $ 269 � 4,065 � $ 4,334 $ - $ $ $ $ Totals $ 1,162 ; 14,726 ; $ 15,888 I $ 332 ; I 7,000 ; $ 7,332 $ (247) I - 106 I -; $ (141) - Total sales tax collections for the second quarter were $54K below the same quarter in the previous year. New construction sales tax collection for second quarter was $155K lower compared to the same quarter in the previous year resulting in a 46% decrease. As of June 30th, the City has collected $568,606 in sales tax mitigation, which is 47% of the annual mitigation budget. Sales tax collections through the month of August are nearly 50% of the annual budget. Projections for the remainder of the year assumes an increase of 4.0% over monthly budget. 31 32 INFORMATIONAL MEMO Page 2 Schedule I - Sales Tax in $1,000's W: \FIN Projects \Sales Tax Information\2014 \Info Memo Sales Tax - 2014 -Q2 2014MEMO.docx -- Month -- Collected Recd 2013 2014 Actual Budget Actual Variance [Act Over(Under) Bdgt] Amt ok Jan Mar $ 1,114 $ 1,077 $ 1,106 $ 29 3% Feb Apr 1,204 1,069 1,081 12 1% Mar May 1,277 1,274 1,321 47 4% Q -1 Totals $ 3,595 $ 3,420 3,508 $ 88 3% Apr Jun 1,226 1,150 1,192 42 4% May Jul 1,284 1,181 1,254 73 6% Jun Aug 1,368 1,321 1,378 57 4% Q -2 Totals $ 3,878 $ 3,652 $ 3,824 $ 172 5% YTD thru 2nd Qtr $ 7,473 $ 7,072 $ 7,332 $ 260 4% Jul Sep 1,401 1,304 - - - Aug Oct 1,345 1,246 - - - Sep Nov 1,335 1,281 - - - Q -3 Totals $ 4,081 $ 3,831 $ - $ - - Oct Dec 1,249 1,172 - - - Nov Jan 1,350 1,230 - - - Dec Feb 1,735 1,705 - - - Q -4 Totals $ 4,334 $ 4,107 $ - $ - - Totals $ 15,888 $ 15,010 $ 7,332 $ 260 - W: \FIN Projects \Sales Tax Information\2014 \Info Memo Sales Tax - 2014 -Q2 2014MEMO.docx INFORMATIONAL MEMO Page 3 Below is a graph of sales tax collections by type of industry showing overall change in the first and second quarters in 2013 revenue receipts throught the second quarter in 2014. Change YTD by Category* $100,000 WholesaleTrade, $65,682 Services,, $80,779 $50,000 Automotive, 1 $34,611 Reta i I Trade, $38,131 $(50,000) IUi sportation /Wa rehousing $(2,574) $(100,000) $(150,000) $(200,000) $(250,000) Manufacturing, $(64,004) ($44 636) ($248 016) Construction $(300,000) The overall construction decrease shown above is primarily due to the Construction of Buildings category. Decrease in manufacturing is partialy due to Transportation Equipment Manufacturing category, which show a decline in gross sales activity. The miscellaneous category includes activities from unclassifiable establishments. Variance from this category is primarily due to 2013 activity from trust type organizations, which are not reported under a specific NAICS code. This same type of transaction did not reoccur in first quarter 2014 resulting in the negative variance. W: \FIN Projects \Sales Tax Information\2014 \Info Memo Sales Tax - 2014 -Q2 2014MEMO.docx 33 34 INFORMATIONAL MEMO Page 4 Schedule II shows the year -to -date sales tax from the top ten industry classifications. Wholesale Trade, Durable Goods category had the highest year over year increase at $47,946, where at least three establishment's gross sales doubled or better this year as compared to 2013. This is followed by an increase of $39,033 in Miscellaneous Store Retailers category. This increase is attributable to a significant rise in sales from one particular retailer who delivers payment solutions to its customers. Schedule II YTD YTD Dollar Group Name Current Prior Diff. Diff. * 452 General Merchandise Stores $ 457,216.05 $ 466,670.02 $ (9,454) -2.03% * 448 Clothing and Accessories $ 408,312.42 $ 447,896.05 $ (39,584) -8.84% * 722 Food Services, Drinking Places $ 368,046.80 $ 358,380.15 $ 9,667 2.70% * 443 Electronics and Appliances $ 231,481.44 $ 219,582.46 $ 11,899 5.42% * 423 Wholesale Trade, Durable Goods $ 221,554.05 $ 211,485.79 $ 10,068 4.76% * 453 Miscellaneous Store Retailers $ 180,060.33 $ 165,322.25 $ 14,738 8.91% * 441 Motor Vehicle and Parts Dealer $ 150,336.43 $ 140,120.17 $ 10,216 7.29% * 444 Building Material and Garden $ 121,708.61 $ 118,007.71 $ 3,701 3.14% * 451 Sporting Goods, Hobby, Books $ 121,533.13 $ 128,974.84 $ (7,442) -5.77% 517 Telecommunications $ 119,501.04 $ 109,581.23 $ 9,920 9.05% * Mitigated NAICS Code Schedule III shows the ten largest declines in sales tax revenue for industries with over $10,000 collected year -to -date. The Construction of Buildings category resulted in a 61 % decrease from the prior year due to significant decrease in construction activity from at least four major contractors. Permiting activity to date reported a slight decline of 5% in the # of permits issued. Schedule Ill YTD YTD Dollar Group Name Current Prior Diff. Diff. 999 Nonclassifiable Establishments $ 44,223.34 $ 144,238.43 $ (100,015) - 69.34% 236 Construction of Buildings $ 74,747.30 $ 162,909.50 $ (88,162) - 54.12% * 448 Clothing and Accessories $ 408,312.42 $ 447,896.05 $ (39,584) -8.84% 336 Transportation Equipment Man $ 33,164.24 $ 55,116.29 $ (21,952) - 39.83% 621 Ambulatory Health Care Service $ 10,750.14 $ 21,194.86 $ (10,445) - 49.28% * 452 General Merchandise Stores $ 457,216.05 $ 466,670.02 $ (9,454) -2.03% 522 Credit Intermediation $ 12,921.88 $ 21,843.91 $ (8,922) - 40.84% * 451 Sporting Goods, Hobby, Books $ 121,533.13 $ 128,974.84 $ (7,442) -5.77% 511 Publishing Industries $ 23,769.02 $ 29,489.64 $ (5,721) - 19.40% 611 Educational Services $ 11,819.55 $ 16,351.98 $ (4,532) - 27.72% * Mitigated NAICS Code W: \FIN Projects \Sales Tax Information\2014 \Info Memo Sales Tax - 2014 -Q2 2014MEMO.docx INFORMATIONAL MEMO Page 5 The next two pages show graphs of sales tax receipts the City collected from major industries between 2010 through the current year. These categories include retail, services, wholesale, construction, and other consisting of manufacturing, transportation & warehousing, automotive, and miscellaneous. $2,400,000 $2,300,000 $2,200,000 $2,100,000 $2,000,000 $1,900,000 $1,800,000 $1,700,000 $1,600,000 $1,500,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $- Retail Q1 Q2 Services Q3 Q4 Q1 Q2 Q3 W: \FIN Projects \Sales Tax Information\2014 \Info Memo Sales Tax - 2014 -Q2 2014MEMO.docx Q4 35 36 INFORMATIONAL MEMO Page 6 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $- $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $- Wholesale Q1 Q2 Q3 Construction Q4 I Q1 Q2 Q3 W: \FIN Projects \Sales Tax Information\2014 \Info Memo Sales Tax - 2014 -Q2 2014MEMO.docx Q4 111111111111 2010 111111111111 2011 Illll 2012 111111111111 2013 IN 2014 INFORMATIONAL MEMO Page 7 Other -Mfg. Trnsp /Wrhsng, Automotive, & Misc. $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $- Q1 Q2 Q3 Q4 Revenue received from mitigation has been consistent. The City received $7.9 million in sales tax and mitigation throught the second quarter. W: \FIN Projects \Sales Tax Information\2014 \Info Memo Sales Tax - 2014 -Q2 2014MEMO.docx 37 38 INFORMATIONAL MEMO Page 8 Below is Schedule IV which shows quarterly gambling tax earned for the prior year, and the current year to date. Schedule IV - Gambling Tax tat Quarter Earned 2013 Actual (c) 2014 Actual 2014 Prorated Budget INCREASE (DECREASE) YEAR OVER YEAR BUDGET VARIANCE Amount % Amount Q1 $ 557,272 $ 678,358 $ 537,068 $ 121,086 21.73% $ 141,290 26.31% Q2 630,650 666,716 537,068 36,066 5.72% 129,648 24.14% YTD 1,187,922 1,345,074 1,074,136 157,152 13.23% 270,938 25.22% Q3 522,196 - 537,069 - - - - Q4 583,347 - 537,069 - - - - Totals $ 2,293,465 $ 1,345,074 $ 2,148,274 $ 157,152 - $ 270,938 - Compared to 2013 first and second quarter combined totals, the City has collected approximately 13% more in gambling revenue due to higher receipts. Schedule V shows monthly admissions tax receipts for the prior year and current year to date. Schedule V - Admissions Tax t°) Quarter Earned 2013 Actual (c) 2014 Actual 2014 Prorated Budget INCREASE (DECREASE) YEAR OVER YEAR BUDGET VARIANCE Amount % Amount % Q1 $ 111,254 $ 135,045 $ 137,500 $ 23,791 21.38% $ (2,455) -1.79% Q2 158,396 149,487 137,500 (8,909) -5.62% 11,987 8.72% YTD 269,650 284,532 275,000 14,882 5.52% 9,532 3.47% Q3 154,463 - 137,500 - - - - Q4 203,324 - 137,500 - - - - Totals $ 627,437 $ 284,532 $ 550,000 $ 14,882 - $ 9,532 - Admissions tax receipts are 3.5% above budget as indicated for first and second quarter combined totals, and about 5.5% above prior year actual receipts. Attachments • Sales Tax Summary (a) (b) (c) Gambling tax currently includes card games, punch boards, pull tabs, and amusement games. Excludes golf course admissions tax. Actuals reflected in Schedules IV and V are amounts earned through second quarter 2014. W: \FIN Projects \Sales Tax Information\2014 \Info Memo Sales Tax - 2014 -Q2 2014MEMO.docx SALES TAX SUMMARY 2nd Quarter 2014 (Received in March 2014 - Aug 2014) NAICS CONSTRUCTION 13 TOTAL 236 Construction of Buildings 716,944 237 Heavy 8 Civil Construction 111,237 238 Specialty Trade Contractors 334,704 TOTAL CONSTRUCTION S 1,162,885 S Overall Construction Change from Previous Year MANUFACTURING 311 Food Manufacturing 312 Beverage & Tobacco Products 313 Textile Mills 314 Textile Product Mills 315 Apparel Manufactunng 316 Leather & Allied Products 321' Wood Product Manufacturing 322' Paper Manufactunng 323' Printing & Related Support 324 Petroleum & Coal Products 325 Chemical Manufacturing 326 Plastic 8 Rubber Products 327' Nonmetallic Mineral Products 331 Primary Metal Manufacturing 332 Fabricated Metal Mfg Products 333 Machinery Manufacturing 334' Computer 8 Electronic Products 335 Electric Equipment, Appliances 336 Transportation Equipment Mfg 337' Furniture & Related Products r339' Miscellaneous Manufacturing TOTAL MANUFACTURING S 13 TOTAL 13 YTD 408.390 22,628 148,494 519,512 S 9:926 5.267 670 11,042 685 3 1:611 24:030 28:377 23 6.273 4 565 4.655 1,150 21,801 5 062 6.719 4,944 251,447 11.025 13,014 412,288 S 13 YTD 5,188 2.761 290 4,974 334 2 YTD 14YTD %Dill 160,922 - 60.6% 23,096 2.1% 147.478 -0.7% 331,496 ($248,016) -42.8% 974 12,277 14,759 10 3,068 2,584 1913 252 11,663 2,664 4 806 409 118335 4.459 6,346 Overall Manufacturing Change from Previous Year TRANSPORTATION & WAREHOUSING 481 Air Transportation 482 Rail Transportation 484 Truck Transportation 485 Transit and Ground Passengers 487 Scenic and Sightseeing Tran 488 Transportation Support 491 Postal Services 492 Couriers & Messengers I 493' Warehousing & Storage TOTAL TRANSP & WHSING Overall Transpo WHOLESALE TRADE 423' Whls Trade - Durable Goods 424' Whls Trade - Nondurable Goods 425' Wholesale Electronic Markets 13 TOTAL 153 1.597 5,820 395 876 39,511 529 787 746 S 50,413 S n Change from Previous Year 13 TOTAL 975.482 132,473 2,819 198,069 S 13 YTD 0 1,581 2.167 218 425 18,787 229 155 YTD 14 YTD % Diff 2,978 -42.6% 2,509 -9.1% 266 -8.3% 5,345 7.5% 200 -40.2% i - 72.6% 1.253 28.6% 12,254 -0.2% 11,776 -20.2% 12 17.9% 3,624 18.1% 1,968 -23.8% 2,322 21.4% 2,333 824.9% 3,339 - 71.4% 4,468 67.7% 2,395 - 50.2% 1,529 273.6% 61.157 -48.3% 5.182 16.2% 9,155 44.3% 134,065 664.004) -32.3% 451 24,013 S 13 YTD 446,388 60.733 1,667 WHOLESALE TRADE TOTAL S 1,110,174 S Overall Wholesale Change from Previous Year ales Tax Mitigation NAICS Codes 508,787 S NAICS AUTOMOTIVE 13 TOTAL 441' Motor Vehicle 8 Parts Dealer 615,272 447' Gasoline Stations 75,449 TOTAL AUTOMOTIVE S 690,721 S Overall Automotive Change from Previous Year NAICS 442' YTD 14 YTD % Diff 0 0.0% 27 - 98.3% 1,188 -45.2% 448 105.4% 637 0.0% 18,426 -1.9% 230 0.0% 138 - 10.6% 345 - 23.5% 21,439 ($2,574) -10.7% YTD 14YTD %Diff 494,333 10.7% 78.680 29.6% 1,456 -12.6% 574,469 $65,682 12.9% RETAIL TRADE Fumiture & Home Furnishings Electronics & Appliances Building Material & Garden 5' Food 8 Beverage Stores 13 YTD 287,852 34,330 322,182 S 13 TOTAL 13 YTD 408:005 190,305 997.182 444,683 565,653 278,423 206.924 98,106 101.536 446' Health & Personal Care 219,169 448' Clothing & Accessories 2,071.810 934,443 ' 451' Sporting Goods. Hobby: Books 568.945 259.161 452' General Merchandise Stores 2.154 523 963.686 453' Miscellaneous Store Retailers 692.525 322.763 454' Nonstore Retailers 174.653 77.097 TOTAL RETAIL TRADE $ 8,059,390 S 3,670,204 $ Overall General Retail Change from Previous Year YTD 14YTD %Dili 316,889 10.1% 39,903 16.2% 356,192 $34,611 10.7% 14 YTD %Diff 219,245 15.2% 443,995 -0.2% 289,122 3.8% 99,105 1.0% 18.0% 893,974 -4.3% 255,095 -1.6% 945,793 -1.9% 361,796 12.1% 80,372 4.2% 3,708,335 $38,131 7.0% SERVICES 13 TOTAL 13 YTD 51X Information 587,449 292,940 52X Finance & Insurance 97,434 47.172 53X Real Estate, Rental. Leasing 464,703 190,720 541 Professional, Scientific. Tech 286,461 126,916 551 Company Management 29 29 56X Admin, Supp, Remed Svcs 181,408 110,829 611 Educational Services 58,682 32,269 620 Health Care Social Assistance 91,502 47,236 71X Arts & Entertainment 133,647 64.811 72X' Accommodation & Food Svcs 2.031,720 974,242 81X Other Services 216,087 105,418 92X Public Administration 61.978 33.508 TOTAL SERVICES S 4,211,101 $ 2,026,089 S Overall Services Change from Previous Year MISCELLANEOUS 13 TOTAL 000 Unknown 0 111 -115 Agriculture, Forestry, Fishing 668 211 -221 Mining & Utilities 2,071 999 Unclassifiable Establishments 187,778 MISCELLANEOUS TOTAL S 190,517 S Overall Miscellaneous Change from Previous Year 13 TOTAL 13 YTD YTD 14 YTD % Diff 330,622 12.9% 37,469 -20.6% 203,148 6.5% 167,047 31.6% 0 - 100.0% 61,770 -44.3% 25,135 - 22.1% 38,420 - 18.7% 69,653 7,5% 1,030,951 5.8% 109,856 4.2% 32,797 -2.1% 2,106,869 $80,779 4.0% 90 278 143.526 143,893 S 13 YTD GRAND TOTALS 515,888,089 57,472,749 Grand Total Change from Previous Year Grand Total Change from Previous Year - Without New Construction YTD 14YTD %Diff 49,474 0.0% 244 171.7% 364 31,2% 49,175 -65.7% 99,257 ($44,636) -31.0% YTD 14 YTD % Diff 57,332,723 ($140,027) -1.87% $107,989 1.57%