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Home My WebLink AboutFS 2015-07-07 COMPLETE AGENDA PACKETCity of Tukwila Finance and Safety Committee O Kathy Hougardy, Chair o Joe Duffie o De'Sean Quinn AGENDA Distribution: K. Hougardy 3. Duffle D. Quinn K. Kruller D. Robertson Mayor Haggerton D. Cline P. McCarthy C. O'Flaherty R. Turpin L. Humphrey A. Balcom C. Flores B. Giberson TUESDAY, JULY 7, 2015 — 5:30 PM HAZELNUT CONFERENCE Room (formerly known as CR #3) at east entrance of City Hall commen 1. PRESENTATION(S) 2. BUSINESS AGENDA a. An Interlocal Agreement with King County for an Automated Fingerprint Identification System (AFIS) portable mobile ID fingerprint device. Officer Adam Balcom, Police Department b. Fire Department purchase of thermal imaging cameras. Chris Flores, Interim Fire Chief c. A lease extension for the City's records storage facility. Bob Giberson, Public Works Director d. A resolution adopting a financial reserve policy. Peggy McCarthy, Finance Director e. 2015 1st Quarter Revenue Report. Peggy McCarthy, Finance Director 3. ANNOUNCEMENTS 4. MISCELLANEOUS a. Forward to 7/13 C.O.W. and 7/20 Regular Mtg. b. Forward to 7/20 Consent Agenda. c. Forward to 7/20 Consent Agenda. d. Forward to 7/13 C.O.W. and 7/20 Regular Mtg. e. Information only. Pg.1 Pg.15 Pg.19 Pg.25 Pg.41 Next Scheduled Meeting: Tuesday, July 21, 2015 6. The City of Tukwila strives to accommodate individuals with disabilities. Please contact the City Clerk's Office at 206 - 433 -1800 (TukwilaCityClerk0TukwilaWAgov) for assistance. TO: City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM Mayor Haggerton Finance & Safety Committee FROM: Mike Villa, Chief of Police BY: Adam Balcom, Community Police Team Detective DATE: 07/07/2015 SUBJECT: King County Automated Fingerprint Identification System (AFIS) portable MobilelD fingerprint device ISSUE The Tukwila Police Department utilizes the expertise of King County AFIS for multiple criminal investigatory reasons. The portable MobilelD device is a free new tool that street -level officers can use in the field in order to identify a subject more quickly and efficiently. BACKGROUND King County AFIS is a voter - approved regional provider of expert fingerprint identification services that officers, investigators, prosecutors, and corrections staff have all come to rely on. The program aids in solving crimes and is recognized for its high standards in quality, accuracy, and service. The portable MobilelD device is a new tool that street -level officers can use in the field in order to identify a subject more efficiently. The Council is being asked to consider and approve the implementation of this technology. DISCUSSION The Tukwila Police Department has been pilot testing two MobilelD devices since January 2014 and has experienced great success with the program. The MobilelD device is a portable tool that helps alleviate question -of- identity issues and provides almost immediate results directly to the officer. Its use is far more effective, beneficial, and efficient than having to transport a subject to the police station or jail for identification. Its deployment has helped identify multiple suspects of in- progress robberies, assaults, organized retails theft schemes, forgeries, and other crimes that directly affect our community. One success story includes the identification and capture of a jaywalking subject who attempted to lie about his identity, but was positively identified by the MobilelD device, and was subsequently discovered to be a fugitive recently shown on KOMO News as one of "Department of Corrections Most Wanted." The MobilelD device is not physically invasive, does not reveal any sensitive personal information, and as of today I have yet to receive any concerns and /or complaints from citizens that have participated in using the device. FINANCIAL IMPACT Zero; King County AFIS is voter - approved and already paid for. Also, King County AFIS provides the MobilelD devices and training for free. RECOMMENDATION The Council is being asked to approve the Revised Interlocal Agreement and consider this item at the July 13, 2015 Committee of the Whole meeting and subsequent July 20, 2015 Regular Meeting. ATTACHMENTS Revised Interlocal Agreement 1 REVISED INTERLOCAL AGREEMENT BETWEEN KING COUNTY AND TUKWIILA for use of ELECTRONIC FINGERPRINT CAPTURE EQUIPMENT THIS AGREEMENT is entered into between King County ( "County ") and the city of Tukwila ( "Agency "). The County and the Agency may be referred to individually as a "Party" or collectively as "Parties." WHEREAS, the Automated Fingerprint Identification System (AFIS) has proven to be an effective crime - fighting tool in furtherance of the health, welfare, benefit and safety of the residents within King County; and WHEREAS, since January 1, 2013, the County has continued to provide effective AFIS services to public law enforcement agencies within King County, through a voter approved six (6) year levy, as authorized by King County Ordinance No. 17381; and WHEREAS, the Agency wishes to use AFIS services through Electronic Fingerprint Capture Equipment ( "FP Equipment ") including the necessary software and computer equipment, and system maintenance services; NOW, THEREFORE, for and in consideration of the promises and covenants contained in this Agreement, the Parties hereto agree as follows: I. PURPOSE The purpose of this Interlocal Agreement is to establish the terms under which FP Equipment, which the County approves for placement in the Agency, will be used and maintained. This applies to FP Equipment previously approved for placement in the Agency and FP Equipment approved for placement in the Agency during the term of this agreement. The goals of this Agreement are to: • Protect the public by assisting law enforcement in identifying potentially wanted or dangerous subjects before they are released from custody. • Protect law enforcement officers by providing information important to officer safety prior to the release of detained individuals. • Provide efficiency and accuracy in criminal record reporting to the Washington State Patrol ( "WSP ") and the Federal Bureau of Investigation ( "FBI "). • Improve the quantity and quality of fingerprints available for search in the King County Regional AFIS Database. FP Equipment is defined as: • Livescan: stationary electronic fingerprint capture equipment used to obtain full sets of fingerprints for purposes of searching and storing in AFIS; • Mobile ID: mobile electronic fingerprint capture equipment used to obtain prints from two fingers for purposes of searching AFIS to determine an individual's identity. These prints are not stored in AFIS. Page 1 of 10 Revision Date: 02/26/2015 3 II. CONTRACT ADMINISTRATION A. This Agreement shall be administered by the King County Sheriff through the Regional AFIS Manager or other designee and the Agency Chief of Police or its designee. Each Party's governing body shall approve this Agreement. Each Party shall inform the other within thirty (30) days of this Agreement's execution of its respective contract administrator. III. GENERAL TERMS AND CONDITIONS A. The County, in its sole discretion, will decide whether to place FP Equipment in the Agency. B. All FP Equipment purchased by the County and located at the Agency's site shall remain the property of the County. C. The County may require the Agency to return FP Equipment to the County at any time, for any reason. D. All FP Equipment that has been installed by the King County Regional AFIS Program will be available for use by any other law enforcement agency operating within King County, if feasible, and no charge for the use of those devices by other agencies will be levied by the Agency. E. All FP Equipment shall be used exclusively for biometric purposes only. F. Statistics, or any information, which is pertinent to the FP Equipment and AFIS Program and requested by the King County Regional AFIS Manager, will be compiled by the Agency and submitted as needed. G. The Agency shall cooperate with the FBI if contacted through a post - processing review of a Mobile ID match in its database. H. The County may remove any Agency employee's rights to use FP Equipment at any time, for any reason. I. The Agency shall ensure that no Agency employee, officer or agent sells, transfers, publishes, discloses, or otherwise makes available any FP Equipment, software, documentation or copies thereof to any third party without the express written authorization of the County. J. The Agency agrees to notify the County immediately of any FP Equipment access code of any person who leaves Agency employment so that the County may delete that person's access code in order to maintain the integrity of the AFIS. K. The Agency will comply with all FP Equipment requirements as detailed in attached Exhibit A. The Regional AFIS Manager may revise these requirements at any time. Any revised requirements will be provided to the Agency and automatically incorporated as a new Exhibit A to this agreement. No council approval will be required to amend the Exhibit A. L. The Agency will comply with the Regional AFIS Program Biometric Handheld Fingerprint Identification Policy. Copy attached as Exhibit B. The Regional AFIS Manager may revise this policy at any time. Any revised policy will be provided to the Agency and automatically incorporated as a new Exhibit B to this agreement. No council approval will be required to amend the Exhibit B. Page 2 of 10 Revision Date: 02/26/2015 4 IV. AGENCY LIAISONS AND TRAINING A. The Agency shall assign at least one (1) Liaison. The Agency may assign separate Liaisons for each type of FP Equipment. B. All Agency Liaisons are required to attend training in the proper use of and the administrative functions of the FP Equipment. Training shall be provided by the County designated Trainer. C. Agency Liaisons for Livescan are responsible to work with the County to schedule staff training, provide user access, perform queue maintenance, and conduct system troubleshooting and testing. D. Agency Liaisons for Mobile ID are responsible to work with the County to schedule Agency staff to install the Mobile ID software, schedule staff training, and conduct system troubleshooting and testing. E. All Agency FP Equipment Operators are required to attend County provided training in the proper use of the FP Equipment by the County designated Trainer. V. INSTALLATION AND MAINTENANCE OF ELECTRONIC FINGERPRINT CAPTURE EQUIPMENT A. Costs paid by County The County shall pay for the one -time delivery and installation of the FP Equipment approved for placement in the Agency. The County shall be responsible for all maintenance costs on the FP Equipment, unless otherwise specified below. B. Costs paid by Agency The Agency shall pay the following costs related to FP Equipment: 1. Any cost for office space remodeling which may be necessary to accommodate the Agency's Livescan installation; 2. Any internal infrastructure which may be necessary to connect the Agency to the King County Network. This infrastructure may include a Local Area Network, wiring, or other equipment; 3. Services in connection with the relocation of the FP Equipment or the additional removal of items of equipment, attachments, features, or other devices, except as may be mutually agreed by written amendment to this Agreement; 4. Electrical work external to the Agency's FP Equipment; 5. Repair or replacement of damaged or lost FP Equipment from any cause whatsoever, while in the care, custody and /or control of the Agency; 6. Repair or replacement to FP Equipment due to the FP Equipment being modified, damaged, altered, moved or serviced by personnel other than County's Contractor or its authorized representative; 7. Purchase of consumable FP Equipment supplies, such as printer toner cartridges, cleaning supplies, and gloves; Page 3 of 10 Revision Date: 02/26/2015 5 8. Agency employee salary cost and any overtime pay which may be necessary to complete initial or ongoing use or training for FP Equipment; 9. Cost of integrating any Agency system to the FP Equipment. 10. Costs associated with moving FP Equipment. 11. Costs associated with preventative cleaning of FP Equipment. C. The County shall act as the point of contact for any questions or service calls from the Agency that need to be relayed to the FP Equipment Contractor. The County shall have a contact person available twenty -four (24) hours a day, seven (7) days a week. D. The Agency shall provide a means of gaining access to the FP Equipment twenty -four (24) hours a day, seven (7) days a week for the purpose of installation, service calls, regular maintenance and special maintenance, when agreed upon in advance between parties. The Agency shall permit the County and /or the FP Equipment Contractor prompt and free access to the FP Equipment, including the ability to access the Livescan remotely. E. The Agency will not make or permit any person other than the County or the FP Equipment Contractor to make any adjustment or repair to the FP Equipment. The Agency will not relocate, modify, change, or attempt to connect said FP Equipment without the prior written permission of the AFIS Regional Manager. The Agency will not attempt to service the FP Equipment, except for normal cleaning, and will not permit anyone other than the County or the FP Equipment Contractor to perform maintenance services in connection with the FP Equipment. F. The Agency shall promptly notify the County of any error, defect, or nonconformity in the FP Equipment. G. The Agency shall perform preventative cleaning of the FP Equipment in accordance with the written instructions and schedules provided by the County. H. Any local system or network changes that would affect the FP Equipment or King County network must be reviewed by King County prior to implementation. I. The Agency shall provide and maintain the network required to submit electronic fingerprint transmissions, in compliance with the FP Equipment Security Policy as described in Exhibit A. VI. DURATION, TERMINATION AND AMENDMENT A. This Agreement shall become effective when it is signed by both Parties. B. This Agreement shall continue in full force and effect from year to year unless modified or terminated in accordance with the terms of this Agreement. C. This Agreement may be terminated or suspended by either Party without cause, in whole or in part, by providing the other Party's administrator, as described in Article II., thirty (30) days advance written notice of the termination. D. If County or other expected or actual funding is withdrawn, reduced, or limited in any way the County may, upon written notification to the Agency's administrator, as described in II., terminate or suspend this Agreement in whole or in part and such termination or suspension may take place immediately. Page 4 of 10 Revision Date: 02/26/2015 6 E. This Agreement shall terminate without penalty in the event that, in the opinion of the County, AFIS levy proceeds are, for whatever reason, no longer available for purposes of this Agreement. F. Upon termination of this Agreement, the Agency shall cooperate in the return of all King County property to the County. Such a return would be coordinated by the Regional AFIS Manager. G. As described in Article III.K and L, any changes to Exhibit A or B may be made by the Regional AFIS Manager. All other amendments to this Agreement must be agreed to in writing by the parties. VII. INDEMNIFICATION AND LIMITATION OF LIABILITY A. In no event will the County be liable for loss of data, loss of use, interruption of service, incompleteness of data and /or for any direct, special, indirect, incidental or consequential damages arising out of this Agreement or any performance or non - performance under this Agreement. B. Except where prohibited by law, the Agency shall indemnify, defend and hold harmless the County and its officers, agents, and employees, or any of them, from any and all claims, actions, suits, liability, loss, costs, expenses, and damages arising out of or in any way relating to the installation, maintenance or use of the County's FP Equipment including any claimed violation of any person's civil rights, except for injuries and damages caused by the negligence or willful misconduct of the County, its officers, or employees. The foregoing indemnity is specifically and expressly intended to constitute a waiver of the Agency's immunity under Washington's Industrial Insurance act, RCW Title 51, as respects the County only, and only to the extent necessary to provide the County with a full and complete indemnity of claims made by the Agency's employees. The parties acknowledge that these provisions were specifically negotiated and agreed upon by them. In the event that any suit based upon such a claim, action, loss, or damage is brought against the County, the Agency shall defend the same at its sole cost and expense; provided, that, the County retains the right to participate in said suit at its own expense if any principle of governmental or public law is involved; and if final judgment be rendered against the County and its officers, agents, and employees, or any of them, or jointly against the County and the Agency and their respective officers, agents, and employees, or any of them, the Agency shall satisfy the same. C. The County assumes no responsibility for the payment of any compensation, fees, wages, benefits or taxes to or on behalf of the Agency, its employees, contractors or others by reason of this Agreement. D. The Agency shall protect, indemnify and save harmless the County, its officers, agents and employees from any and all claims, costs and losses whatsoever occurring or resulting from (1) the Agency's failure to pay any compensation, wage, fee, benefit or tax, and (2) the supplying to the Agency of work, services, materials or supplies by Agency employees or agents or other contractors or suppliers in connection with or in support of performance of this Agreement. E. The indemnification, protection, defense and save harmless obligations contained herein shall survive the expiration, abandonment or termination of this Agreement. VIII. CHOICE OF LAW AND VENUE This Agreement will be governed by the laws of the State of Washington, both as to interpretation and performance. Any action at law, suit in equity or other judicial proceeding for the enforcement of this Agreement may be instituted only in King County Superior Court. IX. DISPUTES Page 5 of 10 Revision Date: 02/26/2015 7 The Parties shall use their best, good -faith efforts to cooperatively resolve disputes and problems that arise in connection with this Agreement. Both Parties will make a good faith effort to continue without delay to carry out their respective responsibilities under this Agreement while attempting to resolve the dispute under this article. X. NO THIRD PARTY BENEFICIARIES There are no third party beneficiaries to this Agreement, and this Agreement shall not impart any rights enforceable by any person or entity that is not a party hereto. XI. WARRANTY OF RIGHT TO ENTER INTO AGREEMENT The Parties each warrant they have the authority to enter into this Agreement and that the persons signing this Agreement for each Party have the authority to bind that Party. XII. ENTIRE AGREEMENT No change or waiver of any provision of the Agreement shall be valid unless made in writing and executed in the same manner as this Agreement. Except as to modifications to Exhibits A & B, the governing body of each Party shall approve any amendment to this Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all previous agreements, written or oral, between the Parties with respect to the subject matter hereof. KING COUNTY NAME OF PERSON SIGNING TITLE. OF PERSON SIGNING DATE SIGNED AGENCY: NAME OF AGENCY NAME OF PERSON SIGNING TITLE OF PERSON SIGNING DATE SIGNED EXHIBITS: A: FP Equipment Requirements B: Biometric Handheld Fingerprint Identification Policy Page 6 of 10 8 Revision Date: 02/26/2015 EXHIBIT A FINGERPRINT EQUIPMENT REQUIREMENTS I. LIVESCAN SPECIFIC REQUIREMENTS A. Environmental The County shall provide an Uninterruptible Power Supply ( "UPS ") to be used with the Livescan equipment at no cost to the Agency. The Agency shall provide the County with a minimum of two fixed IP addresses to be used only for the Livescan system and fingerprint card printer. Cities must provide the proper environment for the Livescan, to include: 1. Consistent temperature ranging from 60 to 80 degrees Fahrenheit. 2. Consistent humidity ranging from 20% to 80% non - condensing. 3. Network connections no more than 3 -4 feet from equipment. 4. Total of 4 power outlets within 3 -4 feet of the Livescan system. Note: It is recommended that Cities have a dedicated 120V, 15Amp, 60Hz power line for the Livescan to avoid circuit overload. B. Local Interfaces Livescans may be integrated with local records management systems provided that: 1. All development and installation costs are paid by the Agency 2. The integration specifications are provided for review and approval by the County prior to implementation 3. The integration is tested by the County prior to implementation C. Fingerprint, Palmprint and Arrest Record Transmission 1. All Agency criminal misdemeanor, gross misdemeanor, and felony fingerprints and palmprints, on both adults and juveniles, will be electronically transmitted to the King County Regional AFIS database for search and registration. 2. The King County Regional AFIS will transmit the Agency's fingerprint images, charge and demographic data, electronically to the Washington State Patrol for processing. 3. The Agency will be solely responsible for the accuracy of all demographic and charge information on its fingerprint and palmprint submissions. The County will not edit any suburban Agency demographic or charge information prior to submitting to Washington State Patrol. Page 7 of 10 Revision Date: 02/26/2015 9 II. MOBILE IDENTIFICATION SPECIFIC REQUIREMENTS The Agency must provide the proper environment for the Mobile ID software, to include: A. The Mobile Data Terminal or patrol vehicle mounted laptop running Windows 7 (32 or 64 bit) operating system. B. The patrol vehicle must be a physically secure location according to current Criminal Justice Information Services Security Policy. III. QUALITY CONTROL Maintaining the quality of the Regional AFIS database is important in order to continue our region's ability to identify criminals and solve crimes. The Agency shall submit electronically captured fingerprints and palmprints (where applicable) to the Regional AFIS database that are of the best possible quality. The County will provide training to Agency staff, either through the FP Equipment Contractor or the County. The Agency and County will work together to ensure that all users are trained to competency. The County will review the quality of electronically captured prints and inform Agency of operators not meeting standards. These operators may be required to repeat training, and must improve their overall quality, in order to maintain access to the FP Equipment. IV. NETWORKING The Agency will provide coordination of Agency IT staff, when needed, to ensure secure networking is in place. The Agency shall report, in advance when possible, all network changes and /or outages which have the potential to disrupt FP Equipment connectivity. Reporting can be made via the King County Service Request Line (206- 263 -2777) or the AFIS IT mailbox (AFISITHeIp @kingcountv.gov). V. SECURITY A. Roles and Responsibilities Each participating Agency is responsible for establishing appropriate security control. All member Cities shall provide security awareness briefing to all personnel who have access to King County FP Equipment. B. Monitoring All access attempts are logged and /or recorded and are subject to routine audit or review for detection of inappropriate or illegal activity. Security - related incidents that impact County FP Equipment data or communications circuits shall be reported immediately upon discovery by the Agency to the King County Regional AFIS Program. C. Physical Security Cities must assume responsibility for and enforce the system's security standards with regard to all Cities and users it services. The Agency must have adequate physical security to protect against any unauthorized access to FP Equipment, or stored /printed data at all times. Page 8 of 10 Revision Date: 02/26/2015 10 D. Network Environment Security Cities hosting the connection of FP Equipment shall ensure adequate security measures are taken to provide protection from all forms of unauthorized and unsolicited access to FP Equipment. These security measures will be in compliance with Federal Information Processing Standard (FIPS) 140 -2. Cities are required to provide, manage, and maintain a firewall that segments the FP Equipment from any foreign non - public safety networks. Any exceptions to this or any other network security requirement must be approved by the Regional AFIS Manager under the guidance of King County by and through its Sheriffs Office Information Services Section and King County Information Technology. If a security breach occurs and personal identifiable information or confidential data is released or compromised, the host Agency shall bear the responsibility and costs to notify affected individuals whose information was released or compromised. This will be completed in accordance with any applicable state or federal laws. Page 9 of 10 Revision Date: 02/26/2015 11 12 PURPOSE EXHIBIT B BIOMETRIC HANDHELD FINGERPRINT IDENTIFICATION POLICY King County Regional Automated Fingerprint Identification System (AFIS) To provide direction for the use of the biometric handheld fingerprint identification devices, more commonly known as a mobile identification device or Mobile ID. If an agency wishes to adopt its own or deviate from this policy, the agency must present its request to the Regional AFIS Manager. II. PROGRAM King County's regional AFIS program has initiated a Mobile ID project, involving the use of wireless remote fingerprint identification throughout the county. The project is designed to assist in identifying persons whose identities are in question. While the fingerprint verification process already exists in King County, Mobile ID moves this function to law enforcement first responders, resulting in a more timely identification process. The system scans the fingerprints at the Mobile ID device and transmits wirelessly to the King County AFIS. If the fingerprints are in the AFIS database, a positive match returns the person's specific identifiers to the Mobile ID device or officer's mobile computer. In the future, a simultaneous search may also be conducted to search Washington State Patrol's AFIS database and an FBI database known as the Repository for Individuals of Special Concern (RISC). A. Only officers trained by AFIS program staff and operating under the guidelines of the Mobile ID project may use the device. B. In the event that lack of usage by the assigned officer is a concern, the AFIS program will communicate with the agency and provide retraining and /or direct a reassignment of the device. C. Any use of the device not consistent with this policy and /or law enforcement purposes may result in reassignment or forfeiture of the device, and /or a deactivation of access to the AFIS database. Additionally, any violation of the Mobile ID policy /procedure, or of federal or state law, may subject the officer to internal discipline by his /her agency. III. PROCEDURE The use or retention of any Mobile ID- collected data shall conform to federal and state laws. It must also conform to individual agency policy as well as the AFIS program procedure as follows: A. An officer may use Mobile ID when there is probable cause to arrest a suspect. B. An officer may also use Mobile ID during a Terry Stop based upon reasonable suspicion. If a person provides a driver's license or other valid means of identification, or gives the officer a name that can be confirmed through a driver's license check, that form of identification should suffice without the use of Mobile ID. However, if there are articulable facts that give rise to reasonable suspicion regarding the accuracy of a person's identity, the officer may use Mobile ID to verify identity. C. Absent probable cause or reasonable suspicion of criminal activity, a person may consent to an officer's request to use Mobile ID. However, the consent must be voluntary as defined by current Washington case law; i.e., the person must be informed that he /she has a right to refuse the officer's request. D. Use of the device shall be documented in any report generated as a result of the contact. The officer must articulate the specific facts that support the basis for the use of Mobile ID and must state the voluntary compliance of the Mobile ID if used without arrest, probable cause, or reasonable suspicion. Page 10 of 10 Revision Date: 02/26/2015 13 14 City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM TO: Mayor Haggerton Finance and Safety Committee FROM: Chris Flores, Interim Fire Chief DATE: June 24, 2015 SUBJECT: FD Purchase of Thermal Imaging Cameras ISSUE The department administration is asking City Council to approve the purchase of replacement thermal imaging cameras (TIC's). BACKGROUND All department thermal imaging cameras are scheduled to be replaced in 2015. The expenditure was included in the 2015 -2016 departmental biennial budget request, and approved by Tukwila City Council. Funding can be found in Account Number 000.11.522.200.35.00, on page 195 of the City 2015 -2016 Biennial Budget. These units replace existing inventory, whose service lives span technological changes over three plus decades. A team was assigned to research and make a recommendation regarding the unit to be purchased. The chosen unit not only tied for the highest assessment score, but is available at the most competitive pricing. DISCUSSION The City /Department can take advantage of discounted pricing and equipment bonuses by ordering and purchasing this equipment prior to the expiration of the attached existing current quote. FINANCIAL IMPACT The financial impact is $62,578.10. The amount budgeted for this expenditure is $72,000.00. The funding source is City /Department General Fund. RECOMMENDATION The Council is being asked to approve the proposal and consider this item at the July 20, 2015 Regular Meeting Consent Agenda. ATTACHMENTS Current Quote for equipment 15 16 Unifire, Inc. 3924 E. Trent Ave. Spokane, WA 99202 Quote To: Joel Perry Tukwila Fire Dist. #54 4237 S. 144 St. Tukwila, WA 98168 206- 849 -1298 oeip00 @yahoo.com Toll -Free: 1- 800 - 745 -3282 Phone: 971 - 269 -4226 Fax: 509 - 535 -9064 www.unifireusa.com Quote Date Quote # 6/17/2015 10065D2JS Quote By: Jerry Springer Item Description Qty MSP Your Cost Ea. Ext. Cost Your Cost Without Trade,-in ;_ .,, $ - < -55 K-55 320X240 Thermal Camera Kit* 11 $5,495.00 $ 4,595.00 $ 50,545.00 X198322 Truck Charger 11 $795.00 $ 595.00 $ 6,545.00 $ - *Kit Includes: Hard Case, Thermal Imaging Camera (TIC), (2) Li -Ion Batteries, Tabletop Charger w /Power Supply, USB Cable, Retractable Lanyard, Neck Strap, Tripod Adapter (UNC 1/4 " -20), FLIR Tools Software (scratch card), Documents Comments Subtotal $ 57,090.00 ALL PRICES F.O.B. SPOKANE, WA 99202, CUSTOMER RESPONSIBLE FOR ALL SHIPPING AND HANDLING ,HARGES. "`ALL PRICES IN UNITED STATES DOLLARS. '* *PRICES QUOTED, GOOD FOR 45 DAYS FROM 3/17/2015. Shipping $ 350.00 Sales Tax % 9% $ 5,138.10 Total $62,578.10 1- 800 - 745 -3282 www.unifireusa.com Fax: 509 - 535 -9064 Page 1 of 1 17 18 TO: City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM Mayor Haggerton/ " \.� Finance and Safety Committee FROM: Bob Giberson, Public Works Director DATE: July 3, 2015 SUBJECT: Record Storage Lease Extension Amendment No. 3 to Agreement No. 09 -083 ISSUE The Record Storage Facility lease agreement with the Sabey Corporation (Sabey) needs to be extended. BACKGROUND In May 2009, the City of Tukwila entered into a 5 -year lease agreement with Sabey for 6,392 rentable square feet of safe, secure and humidity controlled indoor storage of City Clerk and Police Department records storage. In December 2011, the City of Tukwila entered into Amendment No. 1 to Agreement 09 -083, amending the base lease to revise the square footage based on a separate renovation of the building common space and a relocate restroom facility. On April 25, 2014, the City of Tukwila entered into Amendment No. 2 for a 1 -year lease extension through May 31, 2015. Sabey has offered a 1 -year lease extension through May 31, 2016 with optional extensions after that date. ANALYSIS The increased rent from $5,708.78 to $5,880.04 is reasonable based on similar increases for market rate rents in the region. The budget for this lease is in facilities. We hope to accommodate permanent document storage needs in our future facility projects, such as the combined Public Works maintenance facility. RECOMMENDATION The Council is being asked to formally approve this 1 -year lease extension and authorize the Mayor to sign the 1 -year lease amendment and to consider this item on the Consent agenda at the July 20, 2015 regular meeting. Attachment: Proposed Lease Extension (Amendment No. 3) w: \pw eng \other \bob giberson \correspondence \info memo - record storage lease renewal 7.31.15.docx 19 20 THIRD AMENDMENT TO THE WAREHOUSE LEASE AGREEMENT This Third Amendment to the Warehouse Lease Agreement ( "Amendment ") is entered into by and between International Gateway East LLC ( "Landlord "), as Landlord, and City of Tukwila, ( "Tenant ") as Tenant, under that certain Warehouse Lease Agreement ( "Lease "), dated May 4, 2009, as amended by that certain First Amendment to the Warehouse Lease Agreement dated December 12, 2011, as amended by that certain Second Amendment to the Warehouse Lease Agreement dated April 25th, 2014, between the parties hereto. RECITALS A. Landlord and Tenant desire to extend the Term of the Lease and revise Tenant's Option to extend the Term of the Lease in accordance with the terms herein. B. Except as may be expressly provided otherwise in this Amendment, capitalized terms in this Amendment shall have the meaning given such terms in the Lease. NOW, THEREFORE, in consideration of the mutual promises contained herein, Landlord and Tenant agree as follows: 1. Amendments. 1.1 Section 1.8 Expiration Date is amended and restated in its entirety as follows: "Expiration Date" means May 31, 2016, which is the date that is seven (7) years after the Commencement Date, unless sooner terminated or extended in accordance with this Lease. 1.2 Section 1.9 Term is amended and restated in its entirety as follows: "Term" means a period of seven (7) years, commencing on the Commencement Date and terminating on the Expiration Date, unless sooner terminated or extended in accordance with this Lease. 1.3 Section 1.10 Base Rent is amended and restated in its entirety as follows: Base Rent for Suite 110 shall be payable by the following schedule: Term Base Rent/Month 06/01/09 — 05/31/10 $4,600.28 06/01/10 — 05/31/11 $4,988.25 06/01/11 — 05/31/12 $5,265.38 06/01/12 — 05/31/14 $5,542.50 1 G: \Legal \Lease Materials \Lease Documents \IGE Bldg 1 \Tukwila Amend 3 061715.doc 6/17/15 4:23PM 21 06/01/14 — 05/31/15 $5,708.78 06/01/15 — 05/31/16 $5,880.04 Base Rent shall be payable as provided in Section 4. 1.4 Section 3.6 Extension Option is amended and restated in its entirety as follows: i) Upon expiration of the seven (7) years of the initial Term, the Term of the Lease will automatically extend for successive twelve (12) month periods (each, an "Option Term ") on the same terms and conditions as contained in this Lease as are provided for in the initial Term, except as provided below in Section 3.7. ii) Either party may prevent the Term from extending to additional Option Terms by providing the other party with written notice of intent not to renew ("Non Renewal Notice ") more than ninety (90) days prior to the expiration of the initial Term, or the current Option Term, as the case may be. iii) The first Option Term commences upon the date of expiration of the initial Term. iv) Neither party has the right to revoke its Non - Renewal Notice once the notice is delivered to the other party. v) For the purposes of this Lease, "Term" means the initial Term and any Option Term. 1.5 Section 3.7 Base Rent During Option Term is amended and restated in its entirety as follows: i) The Base Rent in respect to each Option Term increases two percent (2 %) from the Base Rent payable under the immediately prior period under this Lease. ii) The adjusted Base Rent commences on and is payable on the first day of each Option Term. 2. Entire Amendment. This Amendment sets forth the entire agreement of the parties with respect to the subject matter set forth herein and may not be modified other than by an agreement in writing signed by the parties hereto or their respective successors and interests. 3. Acknowledgement. The parties hereto each acknowledge that as expressly modified by this Amendment, all the terms and conditions of the Lease remain unchanged and are in full force and effect and enforceable in accordance with their terms. In the event of a conflict between the Lease and this Amendment, the terms and provisions of this Amendment shall control. 4. Execution. This Amendment may be executed in several counterparts and all so executed 2 G: \Legal \Lease Materials \Lease Documents \IGE Bldg 1 \Tukwila Amend 3 061715.doc 6/17/15 4:23PM 22 shall constitute one Amendment, binding on all the parties hereto even though all the parties are not signatories to the original or the same counterpart. Delivery of a facsimile or other copy of this Amendment has the same effect as delivery of an original. 5. Lender's Consent. The effectiveness of this Amendment is conditioned upon Landlord receiving the consent of its lender. DATED this day of , 2015. TENANT: CITY OF TUKWILA By: Its: LANDLORD: INTERNATIONAL GATEWAY EAST LLC, by Sabey Corporation, Manager By: Its: Senior VP, Finance 3 G: \Legal \Lease Materials \Lease Documents \IGE Bldg 1 \Tukwila Amend 3 061715.doc 6/17/15 4:23PM 23 STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) On this day of , 2015, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn as such, personally appeared , to me known to be the of CITY OF TUKWILA, a municipality that executed the within and foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said corporation for the uses and purposes therein mentioned, and on oath stated that he /she was authorized to execute said instrument. WITNESS my hand and official seal the day and year in this certificate first above written. Printed Name: NOTARY PUBLIC in and for the State of Washington, residing at My commission expires: STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) On this day of , 2015, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn as such, personally appeared Patricia A. Sewell, to me known to be the Senior VP, Finance, of Sabey Corporation, Manager of INTERNATIONAL GATEWAY EAST LLC, the corporation that executed the within and foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said corporation for the uses and purposes therein mentioned, and on oath stated that she was authorized to execute said. instrument. WITNESS my hand and official seal the day and year in this certificate first above written. Printed Name: NOTARY PUBLIC in and for the State of Washington, residing at My commission expires: 4 G: \Legal \Lease Materials \Lease Documents \IGE Bldg 1 \Tukwila Amend 3 061715.doc 6/17/15 4:23PM 24 TO: City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM Mayor Haggerton City Council FROM: Peggy McCarthy, Finance Director DATE: July 1, 2015 SUBJECT: Revision to Financial Reserve Policy ISSUE Consider for approval the proposed revisions to the Financial Reserve Policy, as currently set forth in Resolution 1774. BACKGROUND A Reserve policy was established in 2009 as a safeguard to protect the community, its residents, and businesses from unforeseen or emergent situations that could negatively impact the City's finances including revenue shortfalls and unanticipated expenditures. The policy was revised in October 2012 to augment, simplify and clarify the policy criteria and guidance. The revision now proposed would increase the General Fund reserve level, add a Special Project Reserve and conform the healthcare fund reserve policy to current practices. DISCUSSION Revisions to the current policy is now being considered for the following reasons: 1. To ensure sufficient General Fund balance is maintained. The current policy requires a 10% General Fund minimum fund balance, the Government Finance Officer Association (GFOA) Best Practices recommends a 16.67% minimum balance and the proposed policy revision increases the minimum balance to 18 %. Together, the proposed revised 18% General Fund reserve requirement and the existing 10% Contingency Fund reserve requirement would commit 28 %, or approximately $15.4 million, to reserves. This level is realistic and attainable since the 2014 unassigned General Fund balance was $10 million and the 2014 Contingency Fund balance totaled $5.7 million -- for a combined total of $15.7 million exceeding the estimated $15.4 million required should the policy revision be adopted. The increased level of reserves is considered prudent based on the City's experience with previous revenue shortfalls. When the City experienced a revenue shortfall as a result of the combined effect of the Great Recession and the adoption by the state of Washington of the destination based sales tax, sales tax revenue declined by more than $4 million from a high of $20 million in 2007 to a low of Tess than $16 million in 2009, 2010 and 2012. Additionally, the governmental fund balances, as presented in Attachment A of the Financial Planning Model, have declined by over $8 million from a high in 2007 of $29 million to the current $21 million level. 2. To establish a Special Project Reserve based on 10% of one -time revenues. To ensure a portion of one -time revenue windfalls is saved for special one -time expenditures, a Special Project reserve is proposed. The reserve would be funded by allocating 10% of one -time revenues to the reserve each year. Through the first quarter of 2015, 10% of one -time revenues 25 INFORMATIONAL MEMO Page 2 approximate $62 thousand comprised of $12 thousand from construction sales tax and $50 thousand from the Tukwila Village land sale. 3. To conform the self - insured healthcare reserve minimums to those used by the actuary in the annual IBNR (incurred but not reported) liability and IBNR reserve calculations. The Policy now states that the IBNR reserve should equal 2.5 times the IBNR. In practice, and as conservatively recommended by the actuary and healthcare broker, the IBNR reserve should equal 1.5% of the IBNR. This reserve is in addition to the IBNR liability. RECOMMENDATION The Council is being asked to approve the resolution revising the Financial Reserve Policy at the July 13, 2015 Committee of the Whole meeting and the subsequent July 20, 2015 Regular Meeting. ATTACHMENTS Revised Financial Reserve Policy — clean copy Revised Financial Reserve Policy — red Tined Resolution 1774 Financial Reserve Policy GFOA Best Practice W: \FIN Projects \Council Agenda Items12015 \Reserve Policy \InfoMemo Reserve Policy 6- 30- 15.doc DRAFT A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, REVISING THE PREVIOUSLY ADOPTED FINANCIAL RESERVE POLICY TO INCREASE THE GENERAL FUND RESERVE LEVEL, ADD A SPECIAL PROJECT RESERVE, AND CONFORM THE HEALTH CARE FUND RESERVE POLICY TO CURRENT PRACTICES; AND REPEALING RESOLUTION NO. 1774. WHEREAS, for the well -being and sustainability of the community, its residents, and businesses, it is important that the City of Tukwila be prepared to respond to any and all situations that could result in a risk and /or crisis to the City's finances including, but not limited to, revenue shortfalls and unanticipated expenditures; and WHEREAS, it is the responsibility of the City Council of the City of Tukwila to provide policy direction for the City's biennial budget through the passage of motions and ordinances, adoption of resolutions, and final approval of said budget; and WHEREAS, a financial reserve policy establishes, attains, and restores minimum fund balances, including self- insured health care reserve funds, and specifies review and reporting of such; and WHEREAS, the Best Practices promulgated by the Government Finance Officers Association recommends that the unrestricted fund balance in the General Fund equal no less than two months of regular General Fund operating revenues, or 16.67 %; and WHEREAS, credit rating agencies consider combined General Fund and Contingency Reserve Fund balances of at least 30% of operating revenues to be a good indication of credit worthiness; and WHEREAS, with the Great Recession and the imposition by Washington State of the destination -based sales tax, the City's annual sales and use tax revenue declined from a high of over $20 million in 2007 to a low of less than 16 million in 2009, 2010 and 2012; and W: \Word Processing \Reserve Policy revised 7 -1 -15 PM:bjs Page 1 of 3 27 28 WHEREAS, the governmental fund balances included in the Financial Planning Model Attachment A declined from a high of over $29 million in 2007 to a current level of $21 million; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Section 1. Minimum Fund Balances. A. At the close of each fiscal year, the General Fund unassigned balance shall equal or exceed 18 %, and the Resee- Contingency Fund reserve balance shall each equal or exceed 10 %., of the previous year General Fund revenue, exclusive of significant non - operating, non - recurring revenues such as real estate sales or transfers in from other funds. B. In regard to the Enterprise Funds, aAt the close of each fiscal year the unrestricted fund balances of the Enterprise Funds shall equal or exceed 20% of the previous year revenue, exclusive of significant non - operating, non - recurring revenues such as real estate sales, transfers in from other funds or debt proceeds. Section 2. Special Project Reserve. - - - - - - - - - shall be authorized by the City Council. A Special Project Reserve shall be established and maintained in the General Fund. The Special Project Reserve shall be credited annually with 10% of the year's one -time revenues, including significant real property sales and sales tax received on construction activity. Section 3. Use and Restoration. • Use of reserves or draw down of minimum balances shall occur only upon recommendation of City Administration and approval by City Council through a resolution. Should use or draw down occur, a fund balance decline below the prescribed minimum balance after 2014City Administration shall establish a plan, no later than the end of the fiscal year following the year of decline, to restore the fund balance to the prescribed minimum level. The plan shall be presented to and approved by the City Council. Section 4. Self- insured Health Care Funds. care funds, tThe City shall maintain a reserve balance in each of its self- insured health care funds in an amount equal to 21.5 times, or 2- 58150 %, of the actuarially determined IBNR (incurred but not reported) ceseFvebalance. Use of the reserve will occur only upon recommendation by City Administration and approval by City Council through a resolution. plan funds. W: \Word Processing \Reserve Policy revised 7 -1 -15 PM:bjs Page 2 of 3 Section 5. A report showing compliance with the Financial Reserve Policy shall be provided to the City Council on an annual basis, no later than July 1 of each year. Section 6. Repealer. Resolution No. 1774 is hereby repealed. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of , 2015. ATTEST /AUTHENTICATED: Christy O'Flaherty, MMC, City Clerk Kate Kruller, Council President APPROVED AS TO FORM BY: Rachel B. Turpin, City Attorney W: \Word Processing \Reserve Policy revised 7 -1 -15 PM:bjs Filed with the City Clerk: Passed by the City Council: Resolution Number: Page 3 of 3 29 30 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, REVISING THE PREVIOUSLY ADOPTED ADOPTING -A FINANCIAL RESERVE POLICY TO WHEREAS, for the well -being and sustainability of the community, its residents, and businesses, it is important that the City of Tukwila be prepared to respond to any and all situations that could result in a risk and /or crisis to the City's finances, including but not limited to revenue shortfalls and unanticipated expenditures; and WHEREAS, it is the responsibility of the City Council of the City of Tukwila to provide policy direction for the City's biennial budget through the passage of motions and ordinances, adoption of resolutions, and final approval of said budget; and WHEREAS, a financial reserve policy establishes, attains, and restores minimum fund balances, including self- insured health care reserve funds, and specifies review and reporting of such; WHEREAS, the Best Practices promulgated by the Government Finance Officer's Association recommends that unrestricted fund balance in the general fund equalbe no less than two months of regular general udnfund operating revenues, or 16.67%;. - WHEREAS, credit rating agencies consider a combined general fund and contingency reserve fund balances of at least 30% of operating revenues to be a good indication of credit worthiness; WHEREAS, with the Great Recession and the imposition by Washington State of the destination based sales tax, the City's annual sales and use tax revenue declined from a high of over $20 million in 2007 to a low of less than 16 million in 2009, 2010 and 2012; and WHEREAS, the governmental fund balances included in the Financial Planning Model Attachment A declined from a high of over $29 million in 2007 to a current level of $21 million; 31 NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Section 1. Minimum Fund Balances. At the close of each fiscal year, —Lthe General Fund unassigned balance shall equal or exceed 18 %, and the Contingency Fund reserve- balance shall each equal or exceed 10 %,. of the previous year General Fund revenue, exclusive of significant non - operating, non - recurring revenues such as real estate sales or transfers in from other funds. At the close of each fiscal year, the unrestricted balances of the In rcgard to the Enterprise Funds; - - - - - - - - - - - - - - - - - - - - - - - - shall equal or exceed 20% of the previous year revenue, exclusive of significant non - operating, non - recurring revenues such as real estate sales, transfers in from other funds or debt proceeds. Section 2. Special Project Reserve. A Special Project Reserve shall be established and maintained in the General Fund. It will be credited annually with 10% of the year's one -time revenues- including significant real property sales and sales tax received on construction activity. Council. 32 Section 3. Use and Restoratation. Use of reserves or draw down of minimum balances shall occur only upon recommendation of the City Administration and approval by City Council through resolution. - - - - - - - - Section 1 shall be attained no later than the end of the 2011 fiscal year. Should use or draw down occur, - - - - - - - - - - - - - - - - - - - - 2011, City Administration shall establish a plan, no later than the end of the fiscal year following the year of decline, to restore the fund balance to the prescribed minimum level. The plan shall be presented to and approved by the City Council. Section 4. Self - insured Healthcare Funds. care funds, Tthe City shall maintain a reserve balance -in each of its self- insured health care funds in an amount equal to 12.5 times, or 250150 %, of the actuarially determined IBNR (incurred but not reported) r,esefvebalance. -Use of the reserve will occur only upon recommendation by the City Administration and approval by Council through resolution. pis. Section 5. A report showing compliance with the Financial Reserve Policy shall be provided to the City Council on an annual basis, no later than July 1 of each year. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of 20122015. ATTEST /AUTHENTICATED: Christy O'Flaherty, MMC, City Clerk Verna SealKate Kruller, Council President APPROVED AS TO FORM BY: Filed with the City Clerk: Passed by the City Council: Resolution Number: Shelley M KerclakeRachel Turpin, City Attorney 33 34 City of Tukwila Washington Resolution No. ) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, ADOPTING A FINANCIAL RESERVE POLICY TO MAINTAIN AN ADEQUATE FUND BALANCE, ALLOWING MITIGATION OF RISKS TO REVENUES. WHEREAS, for the well -being and sustainability of the community, its residents, and businesses, it is important that the City of Tukwila be prepared to respond to any and all situations that could result in a risk and /or crisis to the City's finances, including but not limited to revenue shortfalls and unanticipated expenditures; and WHEREAS, it is the responsibility of the City Council of the City of Tukwila to provide policy direction for the City's biennial budget through the passage of motions and ordinances, adoption of resolutions, and final approval of said budget; and WHEREAS, a financial reserve policy establishes, attains, and restores minimum fund balances, including self - insured health care reserve funds, and specifies review and reporting of such; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Section 1. At the close of each fiscal year, the General Fund balance and the Reserve Fund balance shall each equal or exceed 10% of the previous year General Fund revenue, exclusive of significant non - operating, non - recurring revenues such as real estate sales or transfers in from other funds. In regard to the Enterprise Funds, at the close of each fiscal year the unrestricted fund balance shall equal or exceed 20% of the previous year revenue, exclusive of significant non - operating, non - recurring revenues such as real estate sales, transfers in from other funds or debt proceeds. Section 2. All expenditures from the Reserve Fund shall be authorized by the City Council. W: \Word Processing- City \Resolutions \Reserve policy adopted by resolution 9 -18 -12 KM:bjs Page 1 of 2 35 Section 3. The prescribed minimum fund balances outlined in Section 1 shall be attained no later than the end of the 2014 fiscal year. Should a fund balance decline below the prescribed minimum balance after 2014, City Administration shall establish a plan, no later than the end of the fiscal year following the year of decline, to restore the fund balance to the prescribed minimum level. The plan shall be presented to and approved by the City Council. Section 4. In regard to the self - insured health care funds, the City shall maintain a reserve balance in each of its self - insured health care funds in an amount equal to 2.5 times, or 250 %, of the actuarially determined IBNR (incurred but not reported) reserve. The contingency reserve balance will be combined with the IBNR reserve balance and recorded as one liability in each of the self- insured health care plan funds. Section 5. A report showing compliance with the Financial Reserve Policy shall be provided to the City Council on an annual basis, no later than July 1 of each year. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this % Sr day of Q Crab Q.r- , 2012. ATTEST /AUTHENTICATED: Christy O'Flah rty, MMC, City Clerk Verna Seal, ouncil President APPROVED AS TO FORM BY: Shelley M. Kerslake, City Attorney Filed with the City Clerk: q Passed by the City Council: Resolution Number: W:\Word Processing- City \Resolutions \Reserve policy adopted by resolution 9 -18 -12 KM:bjs 36 Page 2 of 2 Government Finance Officers Association GFOA Best Practice Replenishing General Fund Balance Background. It is essential that governments maintain adequate levels of fund balance to mitigate risks and provide a back -up for revenue shortfalls. The adequacy of unrestricted fund balance' in the general fund should be assessed based upon a government's specific circumstances. Nevertheless, GFOA recommends,,,, at a minim t hat general- purpose governments, regardless of size, incorporate in its financial policies that unrestricted fund balance in their general funde no'less than Cwo "morifis of �'regu ar general fund operating revenues or ~regu ar genera n . operating a c> n i ures. r 7 % If fund balance falls below a government's policy level, then it is important to have a solid plan to replenish fund balance Levels. Rating agencies consider the government's fund balance policy, history of use of fund balance, and policy and practice of replenishment of fund balance when assigning ratings. Thus, a well developed and transparent strategy to replenish fund balance may reduce the cost of borrowing. However, it can be challenging to build fund balances back up to the recommended levels because of other financial needs and various political considerations. Recommendation. GFOA recommends that governments adopt a formal fund balance policy that defines the appropriate level of fund balance target levels. Also, management should consider specifying the purposes for which various portions of the fund balances are intended. For example, one portion of the fund balance may be for working capital, one for budgetary stabilization, and one for responding to extreme events. This additional transparency helps decision makers understand the reason for maintaining the target levels described in the fund balance policy. Governments should also consider providing broad guidance in their financial policies for how resources will be directed to fund balance replenishment. For example, a policy may define the revenue sources that would typically be looked to for replenishment of fund balance. This might include non - recurring revenues, budget surpluses, and excess resources in other funds (if legally permissible and if there is defensible rationale). Year -end surpluses are an especially appropriate source for replenishing fund balance. Finally, a government should consider including in its financial policy a statement that establishes the broad strategic intent of replenishing fund balances as soon as .gtoo.org 37 38 Government Finance Officers Association Best Practice economic conditions allow. This emphasizes fund balance replenishment as a financial management priority. Governments are subject to a number of factors that could require the use of fund balances. It is therefore incumbent on jurisdictions to minimize the use of fund balance, except in very specific circumstances. Replenishment should take place in a prompt fashion with amounts that have been used to ensure that the jurisdiction is properly prepared for contingencies. With the foundation of a financial policy in place, governments should use their long -term financial planning and budget processes to develop a more detailed strategy for using and replenishing fund balance. With these criteria in mind, the government should develop a replenishment strategy and timeline for replenishing fund balances as soon as possible, and that is still appropriate to prevailing budgetary and economic conditions and that considers the following: 1. The policy should define the time period within which and contingencies for which fund balances will be used. This gives the public a sense for how fund balance is being used as a "bridge" to ensure stable cash flow and provide service continuity. 2. The policy should describe how the government's expenditure levels will be adjusted to match any new economic realities that are behind the use of fund balance as a financing bridge. 3. The policy should describe the time period over which the components of fund balance will be replenished and the means by which they will be replenished. Frequently, a key part of the replenishment plan will be to control operating expenditures and use budget surpluses to replenish fund balance. The replenishment plan might also specify any particular revenue source that will aid in the replenishment of fund balances. For example, if the government has a volatile sales tax yield, it might specify that yields that are significantly above average would be used to replenish fund balances. Generally, governments should seek to replenish their fund balances within one to three years of use. However. when developing the specifics of the replenishment plan, governments should consider a number of factors that influence the rate and time period over which fund balances will be replenished. Factors influencing the replenishment time horizon include: 1. The budgetary reasons behind the fund balance targets. The government should consider special conditions that may have caused it to set its fund balance target levels higher than the GFOA - recommended minimum level. For example, if targets are higher because the community has very volatile cash flows, then the government would want to build the fund balances back up more quickly compared to governments with more stable cash flows. 2. Recovering from an extreme event. An extreme event, such as a natural disaster, that has required the government to use a portion of its fund balance, may make Government Finance Officers Association Best Practice it infeasible to replenish the fund balance as quickly as normal, depending upon the severity of the event. 3. Political continuity. Replenishing fund balance takes political will, and that will is often strengthened by the memory of the financial challenge that caused the use of fund balances in the first place. If the governing board and /or management are already committed to a particular financial policy, the replenishment strategy should be as consistent as possible with that policy in order to maximize political support. 4. Financial planning time horizons. Fund balances should typically be replenished within the time horizon covered by the organization's long -term financial plan. This puts the entire replenishment plan in context and shows the public and decision makers the expected positive outcome of the replenishment strategy. 5. Long -term forecasts and economic conditions. Expectations for poor economic conditions may delay the point at which fund balances can be replenished. However, in its replenishment plan the government should be sure to set a benchmark (e.g., after fund balances have dropped to a certain point below desired target levels) for when use of fund balance is no longer acceptable as a source of funds. 6. Milestones for gradual replenishment. A replenishment plan will likely be more successful if it establishes replenishment milestones at various time intervals. This is especially important if replenishment is expected to take place over multiple years (e.g., if you are starting from 75% of your target, set a goal to reach 80 percent of target in one year, 90 percent in two years, and 100 percent in three years). 7. External financing expectations. A replenishment plan that is not consistent with credit rating agency expectations may increase the government's cost of borrowing. It is important that the logic used by the government to develop the replenishment plan be communicated in an effective fashion to external lenders. Notes: I Unrestricted fund balance comprises the committed. assigned, and unassigned fund balance categories. References. GFOA Best Practice, "Appropriate Level of Unrestricted Fund Balance in the General Fund," 2009. For a fuller explanation of the concept of "bridging" in financial distress, please visit GFOA's financial recovery website at www.gfoa.org/financialrecovery. Approved by the GFOA's Executive Boatri February, 2011. 39 40 TO: City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM Mayor Haggerton Finance and Safety Committee FROM: Peggy McCarthy, Finance Director BY: Lily Jue, Fiscal Coordinator DATE: July 7, 2015 SUBJECT: Sales Tax and Miscellaneous Revenue Report - 1st Quarter 2015 le I - Sales Tax in $1,000's f,.. -..e �: .: '�.•. }; ?�... qy A 1 4 _ j { y -•U ni 1�. .:. >•: .1. 9� t JJ ��te�5ln�..ti.4 kl�r!5 c)f`il Tlkt!u %.4.f.V sf' -: "I, ,.: •.. '.G ! 2014 Actual 2015 Actual YOY Change ' Other ' -- Month -- : Other : Total :1 Other , Total Construction : Industries ! Total Collect - Construc-1 1 Construc.1 1 1 i ed Redd tion j Industries ; 1 tion I I Industries Amount % Amount I % Amount I % Jan Mar $ 57 j $ 1,049 j $ 1,106 $ 85 j $ 1,195 j $ 1,280 $ 28 49 %1 $ 146 14 %1 $ 174 16% Feb Apr 34 j 1,047 j 1,081 86 j 1,227 j 1,313 52 153 %1 180 17 %1 232 21% Mar May 56 j 1,265 j 1,321 99 j 1,362 I 1,461 43 78 %j 97 8% 140 11% Q -1 Totals $ 147 i 3,361 i $ 3,508 $ 270 : '• 3,784 : $ 4,054 $ 123 84 %f 423 :. 13%i '$ 546 16% Apr Jun 57 i 1,135 � 1,192 May Jul 53 : 1,201 : 1,254 - ' - ' - - - - - j - Jun Aug 75 1,303 ! 1,378 - ! - ! - - -i - - - - Q-2 Totals $ 185 ! 3,639 ! $ 3,824 $ ! - ! $ -. $ 1 - ! $ - Jul Sep 80 1 1,315 j 1,395 - i - j - - -i - - i - - Aug Oct 87 j 1,301 j 1,388 - j - I - - -j - - I - - Sep Nov 91 I 1,340 I 1,431 - i - i - - -i - - i - - Q -3 Totals $ 258 1 3,956 1 $ 4,214 $ - i - . $ - $ - - . $ - Oct Dec 64 i 1,319 � 1,383 Nov Jan 87 ; 1,396 : 1,483 - - - - - - - - Dec Feb 78 ! 1,857 ! 1,935 i I - - -I - - - - Q -4 Totals $ 229 ! 4,572 ! $ 4,801 $ - ! - ! $ - $ - -! - - ! $ - - Totals $ 819 j 15,528 j $ 16,347 $ 270 1 3,784 1 $ 4,054 _ $ 123 - I 423 - i $ 546 - First quarter sales tax collections through March were $546K more than the same quarter in the previous year, resulting in a 16% increase. There was an increase in construction sales tax of $123K over the same quarter last year, or up by 84% as well as an increase in sales tax from other industries of $423K which resulted in a rise of 13 %. As of March 31st, revenue that the City has received from sales tax mitigation totals $284,506, which is 25% of the annual mitigation budget. 41 42 INFORMATIONAL MEMO Page 2 Budget to Actual - Sales Tax in $1,000's Schedule I - Sales Tax Actual revenue from sales tax collections received during the first quarter experienced an increase of $336K or 9% above the current original budget. W: \FIN Projects \Sales Tax Information \2015 \Info Memo Sales Tax - 2015 -Q1 2015MEMO (July 2015).docx 43 E. 2014 2015 "c er s ). -r er -- Month -- Collect- Original ed Rec'd Actual Budget Actual Amt °/0 Jan Mar $ 1,106 $ 1,171 $ 1,280. $ 109 9% Feb Apr 1,081 1,161 1,313 152 13% Mar May 1,321 1,386 1,461 75 5% Q -1. Totals $. 3,508 $ 3,718 $ 4,054 $, :: 336 9% Apr Jun 1,192 1,252 - - - May Jul 1,254 1,287 - - - Jun Aug 1,378 1,431 - - - Q-2 Totals $ 3,824 $ 3,970 Jul Sep 1,395 1,408 - - - Aug Oct 1,388 1,359 - - - Sep Nov 1,431 1,399 - - - Q -3 Totals $ 4,214 $ 4,166 Oct Dec 1,383 1,286 - - - Nov Jan 1,483 1,354 - - - Dec Feb 1,935 1,871 - - - Q-4 Totals $ 4,801 $ 4,511 $ - 1 $ - - Totals $ _ 16,347 $ 16,365 $ 4,054. $ 336 . - Actual revenue from sales tax collections received during the first quarter experienced an increase of $336K or 9% above the current original budget. W: \FIN Projects \Sales Tax Information \2015 \Info Memo Sales Tax - 2015 -Q1 2015MEMO (July 2015).docx 43 44 INFORMATIONAL MEMO Page 3 Below is a graph of sales tax collections by type of industry showing overall change for 1st quarter 2015 revenue receipts from January through March. $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 s- $(50,000) $(100,000) Change YTD by Category* The increase in the "Construction" category, specifically in the NAICS group under 236 - Construction of Buildings was due primarily to several construction companies reporting sales tax revenue during the current quarter that previously did not have any such activity reported in the previous year. The overall increase in the 'Wholesale Trade" category is attributable to the NAICS category 423, 'Wholesale Trade in durable Goods" of about $138K. Similarly, the "Retail Trade" category experienced increases totaling $50K in the areas of Building /Material /Garden and Clothing /Accessories. Of the $245K rise in the "Services" category, there were combined increases totaling $222K in the areas of: Information, Real Estate /Rental /Leasing, Professional /Scientific/Technology, Health Care /Social Assistance, and Accommodation /Food Services. The miscellaneous category includes activities from agriculture, forestry, fishing, mining and utilities with unclassifiable establishments having the largest change decrease of ($24K). W: \FIN Projects \Sales Tax Information \2015 \Info Memo Sales Tax - 2015 -Q1 2015MEMO (July 2015).docx 45 Servi ces, 245,4] Construction WholesaleTrade, $123,366, — _$142,767 Retail Trade, $80,950 Automotive, $34,433 III Transportation/ Warehousing, ($380) Manufacturing (.14334) Miscellaneous, ($66,284) The increase in the "Construction" category, specifically in the NAICS group under 236 - Construction of Buildings was due primarily to several construction companies reporting sales tax revenue during the current quarter that previously did not have any such activity reported in the previous year. The overall increase in the 'Wholesale Trade" category is attributable to the NAICS category 423, 'Wholesale Trade in durable Goods" of about $138K. Similarly, the "Retail Trade" category experienced increases totaling $50K in the areas of Building /Material /Garden and Clothing /Accessories. Of the $245K rise in the "Services" category, there were combined increases totaling $222K in the areas of: Information, Real Estate /Rental /Leasing, Professional /Scientific/Technology, Health Care /Social Assistance, and Accommodation /Food Services. The miscellaneous category includes activities from agriculture, forestry, fishing, mining and utilities with unclassifiable establishments having the largest change decrease of ($24K). W: \FIN Projects \Sales Tax Information \2015 \Info Memo Sales Tax - 2015 -Q1 2015MEMO (July 2015).docx 45 46 INFORMATIONAL MEMO Page 4 Schedule II shows the year -to -date sales tax from the top ten industry classifications. Wholesale Trade, Durable Goods in the NAICS 423 category continues to have the highest year over year increase at $138,426, primarily due to an increase in reported sales by a leading manufacturer of heavy duty commercial vehicles. This is followed by an increase of $112,472 in the category of Construction of Buildings. This increase is partially attributable to several construction companies reporting sales tax revenue during the current quarter that previously did not have any activity reported in the same period from the previous year as well as an increase in sales activity. Schedule II YTD YTD Dollar % Group Name Current Prior Diff. Diff. * 452 General Merchandise Stores $ 470,784.24 $ 457,216.05 $ 13,568 2.97% * 448 Clothing and Accessories $ 437,854.64 $ 408,312.42 $ 29,542 7.24% * 722 Food Services, Drinking Places $ 403,293.24 $ 368,046.80 $ 35,246 9.58% * 423 Wholesale Trade, Durable Goods $ 359,980.31 $ 221,554.05 $ 138,426 62.48% * 443 Electronics and Appliances $ 227,882.28 $ 231,481.44 $ (3,599) - 1.55% 236 Construction of Buildings $ 187,219.24 $ 74,747.30 $ 112,472 150.47% * 441 Motor Vehicle and Parts Dealer $ 180,562.05 $ 150,336.43 $ 30,226 20.11% * 453 Miscellaneous Store Retailers $ 175,006.35 $ 180,060.33 $ (5,054) - 2.81% 517 Telecommunications $ 160,543.77 $ 119,501.04 $ 41,043 34.35% * 444 Building Material and Garden $ 143,622.72 $ 121,708.61 $ 21,914 18.01% * 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 NAICS 336 Transportation Equipment Manufacturing category experienced a 39% decrease from the prior year due to significant decrease in sales activity during this first quarter. Schedule III YTD YTD Dollar % Group Name Current Prior Diff. Diff. 999 Nonclassifiable Establishments $ 19,982.43 $ 44,223.34 $ (24,241) - 54.81% 336 Transportation Equipment Man $ 19,967.88 $ 33,164.24 $ (13,196) - 39.79% * 453 Miscellaneous Store Retailers $ 175,006.35 $ 180,060.33 $ (5,054) -2.81% * 443 Electronics and Appliances $ 227,882.28 $ 231,481.44 $ (3,599) -1.55% * 442 Fumiture and Home Fumishings $ 104,458.27 $ 106,807.66 $ (2,349) -2.20% 531 Real Estate $ 10,671.39 $ 12,551.04 $ (1,880) - 14.98% 561 Administrative and Support Svc $ 32,998.79 $ 34,092.10 $ (1,093) - 3.21% 488 Transportation Support $ 11,218.64 $ 11,943.31 $ (725) - 6.07% 238 Specialty Trade Contractors $ 63,698.09 $ 63,849.49 $ (151) -0.24% 721 Accommodation $ 117,716.68 $ 116,967.62 $ 749 0.64% * Mitigated NAICS Code W: \FIN Projects \Sales Tax Information\2015 \Info Memo Sales Tax - 2015 -01 2015MEMO (July 2015).docx 47 48 INFORMATIONAL MEMO Page 5 The following charts show 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. 52,500,000 $2,400,000 52,300,000 52,200,000 52,100,000 52,000,000 51,900,000 $1,800,000 51,700,000 $1,600,000 51,500,000 5700,000 $600,000 $500,000 5400,000 5300,000 5200,000 5100,000 $- Retail Q1 02 Q3 Q4 Wholesale 01 Q2 Q3 5450,000 5400,000 5350,000 5300,000 5250,000 5200,000 5150,000 5100,000 550,000 5- Q4 • 2010 • 2011 t 2012 • 2013 • 2014 • 2015 • 2010 • 2011 • 2012 ! 2013 ! 2014 • 2015 $1,400,000 51,200,000 51,000,000 -'- -- 5800,000 5600,000 5400,000 5200,000 Services 5- $450,000 5400,000 $350,000 $300,000 $250,000 5200,000 $150,000 5100,000 550,000 $- 01 Q2 Q3 Q4 Construction Other -Mfg. Trnsp /Wrhsng, Automotive, & Misc. Q1 01 Q2 Q3 Q4 W: \FIN Projects \Sales Tax Information\2015 \Info Memo Sales Tax - 2015 -Q1 2015MEMO (July 2015).docx • 2010 • 2011 • 2012 • 2013 • 2014 • 2015 Q2 Q3 Q4 • 2010 • 2011 • 2012 t 2013 • 2014 • 2015 • 2010 • 2011 • 2012 • 2013 • 2014 • 2015 49 50 INFORMATIONAL MEMO Page 6 Below is Schedule IV which shows quarterly gambling tax earned for the prior year compared to the current year. Schedule IV - Gambling Tax (e) (c) 2015 Quarter 2014 2015 Prorated Eamed Actual Actual Budget INCREASE (DECREASE) YEAR OVER YEAR BUDGET VARIANCE Amount % Amount Q1 $ 678,358 $ 698,773 $ 615,337 Q2 666,716 - 604,777 Q3 678,302 - 615,286 04 698,517 - 633,623 $ 20,415 3% $ 83,436 14% Totals $ 2,721,893 $ 698,773 $ 2,469,024 $ 20,415 $ 83,436 Gambling taxes for the 1st quarter ended March 31st, are $20K or 3% higher than 2014 and $81K or 13% over 2015 budget. Casinos within the City continue to do well. Schedule V shows monthly admissions tax receipts for the 1st quarter prior year compared to the same quarter current year. Schedule V - Admissions Tax (b) (c) 2015 Quarter 2014 2015 Prorated Eamed Actual Actual Budget INCREASE (DECREASE) 2015 to 2014 Actuals 2015 Actuals to 2015 Budget Amount % Amount Jan $ 47,314 $ 46,586 $ 56,057 Feb 39,544 42,492 46,851 Mar 48,187 40,167 57,091 01 Totals $ 135,045 $ 129,245 $ 160,000 $ (728) -2% $ (9,472) -17% 2,948 7% (4,360) -9% (8,020) -17% (16,924) -30% $ (5,800) -4% $ (30,755) -19% Admissions tax receipts are at ($5.8K) or 4% below 2014 collections and ($30.7K) or 19% under budget. Receipts from movie theater sales continue to be a primary component of revenue for the admissions tax. (a) Gambling tax currently includes card games, punch boards, pull tabs, and amusement games. (b) Excludes golf course admissions tax. (c) Actuals reflected in Schedules IV and V are amounts earned through first quarter 2015. W: \FIN Projects \Sales Tax Information\2015 \Info Memo Sales Tax - 2015 -Q1 2015MEMO (July 2015).docx 51 52 c e n N CO oo ra fCO. N: I j j j'j j j j NIA ol�l vI • . mlv N • • �a'a')I °I�INImINIao • 1 1 1 1 1 1 ao'I N to 1 1: Iru0I m II� 10 �jNIvI�Ia�iN��nln 1 1 xI I `lid1 .iktj�C ae • O 0 of e r-1 e of I\e N N 1� t4) o )00 tD a01 I N a? ^I r` [h �t va�e�o�m 310 oilmge`�i :�) Na? /?rFlk� �INIYmOH� OL H O 0 fQy T o rO n 40 0 C014-- COICOICOICVIR).10 co • •- co to. ,o co O (7 N'a 10 O N 10 m m • IN �I I Ivl�lvl� I 1 1 CO • -4 0 e co cri 4 5-, CO"' 1°n , r- C N Ca N co_ Q Q S M is m CO �I 40 CV 0 03 tg en _o R s a •o) m m W O 0 2 G C3 a. 3 O 012 y e 0 as Os as V C7 AUTOMOTIVE -J 1a•• 0 J 0 O RIK Soles Tax Rpt91 -2015 0 2 Wc' f -T -1 -1 r -1 f -1 1 1 1 1 1 1 11 1 1 1 m 0 rn `n 4I- I j°�nj� n!O Im m!vlc m oro N- N m N N oIq °LN��a�i v�Nlc) gllrn c°'? Ni� .1 1 1 1' I'I Y1''''1 1' 1 1 1 1 1 1 1 1 1' N""T'nti,07cN N orF ImInJ ,�t,mvotio y.INI{o �, IA- �.I. `. IC' n�c�l „ati�yw+�I,$Ii�l ^•IN,'•1I% N °'IE`>• - ,at.r�? 0 �k E1Y;4` •- ele • N "-. Op O 2 r O t0 O.t+jlf7 , I o"u -7lm r•o rm O 01 m •»4r.- m'SO' �'k- ml 10 a7 N.yN1 N I pp•O rO e R 1 N N CO NO N N m�njiY'f:� +gym 1 yv CZ as o)I mIN sn �1�1i6 ° Tr.. NIaV ^I I I 2 co i 1- 0 e at F 0 ymO m 10 N 03 EEO- CO IA a0-) r N N CV N N CA 01 r 0) I I I I I I I I I O • In co ri 4 0 4- - co coo N 1- 0 CO v CO CO 414 1.0 m a O m� N N O 0 e R N- N n 0 411. CO n CO m< V or N O CO 10 n O 40 a0 N r vm . CONSTRUCTION N 0 N • H CA o L • 011 o ' c $ ' U c U C S' o —• g C L I c U �° ° = o d `° °'6 -` Q d m .c O1an C—`` a d C o d ro d d n N m r m y�U m m ace W o. co Q •m e�e, E �¢ � m Zlm.o�,� an d C I m — t0 U C .1 r y •= o0 o c E a o p E E H ¢° Z 3 a a a f.1 a z° d ai M v w 1- ai 17 CO CO CO CO CO th `i $ 7 7 7 7 M CO m 01 02 el O an m a 0 w m c U •moo o 2 C f0 m „0 2 N Z 0 6 0 4- 0 O A v v v o m m fe m o 0 W v m m 1- 1- m ;so ta !n O v v e• WHOLESALE TRADE TOTAL 53 I 1