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2015 Comprehensive Annual Financial Report (CAFR)
City of Tukwila, Washington COMPREHENSIVE ANNUAL FINANCIAL REPORT For the fiscal year ended December 31, 2015 The City of Tukwila, Washington COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended December 31, 2015 Prepared by the City of Tukwila, Finance Department Peggy McCarthy, Finance Director Allan Ekberg, MAYOR TUKWILA CITY COUNCIL Joe Duffie, Council President Dennis Robertson Kathy Hougardy Kate Kruller Verna Seal De'Sean Quinn Thomas McLeod CITY OF TUKWILA: 2015 CAFR TABLE OF CONTENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended December 31, 2015 TABLE OF CONTENTS Page I. INTRODUCTORY SECTION Administrative Organizational Structure, Principal Officials, and Council Committees 1 Letter of Transmittal 3 Certificate of Achievement 9 II. FINANCIAL SECTION Auditor's Report 11 Management's Discussion and Analysis 15 Basic Financial Statements Government -wide Financial Statements: Statement of Net Position 33 Statement of Activities 34 Fund Financial Statements: Balance Sheet — Governmental Funds 35 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 36 Statement of Revenues, Expenditures, and Changes in Fund Balance — Governmental Funds 37 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 38 Statement of Net Position — Proprietary Funds 39 Statement of Revenues, Expenses, and Changes in Net Position — Proprietary Funds 40 Statement of Cash Flows — Proprietary Funds 41 Combining Statement of Fiduciary Net Position — Fiduciary Fund 43 Statement of Changes in Fiduciary Net Position — Fiduciary Fund 44 Notes to the Financial Statements 45 Required Supplemental Information: Schedules of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual General Fund 101 Metropolitan Park District 103 Notes to the Required Supplementary Information 104 Firemen's Pension Trust Fund 105 Retiree Medical and Long -Term Care Benefits for LEOFF I Employees 108 Combining and Individual Fund Financial Statements and Schedules: Combining Balance Sheet — Non -Major Governmental Funds 111 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Governmental Funds 112 Combining Balance Sheet — Non -Major Special Revenue Funds 115 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Special Revenue Funds 116 CITY OF TUKWILA: 2014 CAFR TABLE OF CONTENTS TABLE OF CONTENTS - continued Page Combining Balance Sheet — Non -Major Debt Service Funds 117 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Debt Service Funds 118 Combining Balance Sheet — Non -Major Capital Project Funds 119 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Capital Project Funds 120 Schedules of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual: Local Improvement District #33 Debt Service Fund 121 Arterial Street Capital Project Fund 122 Facilities Capital Project Fund 123 Hotel /Motel Special Revenue Fund 124 Drug Seizure Special Revenue Fund 125 Debt Service Funds 126 Residential Street Capital Project Fund 127 Land & Park Acquisition Capital Project Fund 128 General Government Improvements Capital Project Fund 129 Fire Improvements Capital Project Fund 130 Combining Statements of Net Position — Internal Service Funds 132 Combining Statement of Revenues, Expenses, and Changes in Net Position — Internal Service Funds 133 Combining Statement of Cash Flows — Internal Service Funds 134 Statement of Changes in Assets and Liabilities — Agency Fund 136 III. STATISTICAL SECTION Schedule Net Position by Component 1 138 Changes in Net Position 2 140 Fund Balances, Governmental Funds 3 142 Changes in Fund Balances of Governmental Funds 4 144 General Government Tax Revenues by Source 5 146 Property Tax Levies and Collections 6 147 Assessed and Estimated Actual Value of Taxable Property 7 148 Property Tax Rates — Direct and Overlapping Governments 8 149 Principal Property Taxpayers 9 150 Retail Sales Tax Collections by Sector 10 152 Sales Tax Rate Direct and Overlapping Governments 11 154 Ratios of Outstanding Debt by Type 12 156 Ratios of General Bonded Debt Outstanding 13 158 Computation of Direct and Overlapping Debt 14 159 Legal Debt Margin Information 15 160 Demographic Statistics 23 162 Principal Employers 24 163 Full -Time Equivalent City Government Employees by Department 25 164 Operating Indicators by Function 26 165 Capital Assets by Function 27 166 CITY OF TUKWILA: 2015 CAFR ADMINISTRATIVE ORGANIZATIONAL STRUCTURE PRINCIPAL OFFICIALS ADMINISTRATIVE ORGANIZATIONAL STRUCTURE AND PRINCIPAL OFFICIALS CITIZENS OF TUKWILA f COUNCIL MEMBERS MAYOR Allan Ekberg CITY ADMINISTRATOR David Cline MUNICIPAL COURT Kimberly Walden J CITY ATTORNEY Kenyon Disend PLLC (Contracted) ■ HUMAN RESOURCES Stephanie Brown J INFORMATION TECHNOLOGY Joseph Todd J FINANCE Peggy McCarthy COMMUNITY DEVELOPMENT Jack Pace PARKS AND RECREATION Rick Still J F RE Jay Wittwer COUNCIL COMMITTEES COUNCIL PRESIDENT Joe Duffie FINANCE AND SAFETY COMMITTEE Verna Seal, Chairperson Dennis Robertson, Member Kate Kruller, Member COMMUNITY AFFAIRS AND PARKS De'Sean Quinn, Chairperson Kathy Hougardy, Member Thomas McLeod, Member 1 1 PUBLIC WORKS Bob Giberson 1 POLICE Mike Villa TRANSPORTATION Dennis Robertson, Chairperson Verna Seal, Member De'Sean Quinn, Member UTILITIES Kathy Hougardy, Chairperson Kate Kruller, Member Thomas McLeod, Member CITY OF TUKWILA: 2014 CAFR ADMINISTRATIVE ORGANIZATIONAL STRUCTURE, PRINCIPAL OFFICIALS 2 City of Tukwila 6200 Southcenter Blvd, Tukwila, WA 98188 Jim Haggerton, Mayor August 29, 2016 Honorable Allan Ekberg, Mayor Members of the Tukwila City Council Citizens of Tukwila City of Tukwila 6200 Southcenter Boulevard Tukwila, Washington 98188 -2599 Subject: TRANSMITTAL OF 2015 COMPREHENSIVE ANNUAL FINANCIAL REPORT Dear Mayor, Councilmembers, and Citizens: State law requires that cities publish financial statements in conformity with Generally Accepted Accounting Principles (GAAP), which are audited in accordance with generally accepted auditing standards by the State Auditor's Office, under the Revised Code of Washington (RCW) 43.09.230. Therefore, we issue and transmit to you the City of Tukwila's Comprehensive Annual Financial Report (CAFR) for the fiscal year that ended December 31, 2015. This transmittal letter provides an overview of the report and the financial condition of the City. It also provides insight into the history of Tukwila and the economic conditions affecting it, and describes the systems and controls employed by the Finance Department. The CAFR has several significant uses. First, it provides a general overview of the City's finances to the general public and taxpayers. Second, it is referenced by bond buyers and rating agencies to evaluate the City's fiscal stability and creditworthiness. Finally, the CAFR is a series of financial statements that have been audited by the State Auditor's Office and provides assurances that assets are safeguarded and funds are expended as they were legally appropriated in the adopted budget. I. INTRODUCTION A. MANAGEMENT REPRESENTATION The Tukwila Finance Department prepared the report and accepts responsibility for the accuracy, completeness, and fairness of presentation of the information included. The data is believed to be accurate in all material respects, and it is believed that the data is presented in a manner that fairly sets forth the results of operations and financial position of the City, as measured by the financial activity of the City's various funds. All disclosures necessary to enable the reader to gain the maximum understanding of the City's financial activity have been included. The report has been prepared in 3 CITY OF TUKWILA: 2015 CAFR LETTER OF TRANSMITTAL conformance with GAAP and in conformance with financial reporting standards issued by the Governmental Accounting Standards Board (GASB). City management has developed and evaluated a comprehensive internal control structure that is designed to provide reasonable, but not absolute, assurance regarding the safeguarding of assets against loss from unauthorized use or disposition, and the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance is based on the assumption that the cost of internal controls should not exceed the benefits expected to be derived. As management, we attest that, to the best of our knowledge and belief, this financial report is complete and reliable in all material aspects. As a recipient of federal, state and county financial assistance, the City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act amendments of 1996 and U.S. Office of Management and Budget Circular A -133, Audits of States, Local Governments, and Non - profit Organizations. The audit is conducted by the State Auditor's Office in conjunction with the City's annual independent audit. Information related to this single audit includes the Schedule of Expenditures of Federal Awards, findings and recommendations, if applicable, and auditor's reports on internal control and compliance with applicable laws, regulations, contracts and agreements. The results of the City's annual single audit for the fiscal year ended December 31, 2015 provided no instances of material weaknesses in the internal control structure or significant violations of applicable laws. B. REPORTING ENTITY The City of Tukwila is a non - charter optional code City, operating under Section 35A of the Revised Code of Washington. It has a strong Mayor form of government with a seven - member City Council elected by the voters of the City. Councilmembers are elected at large rather than by district, are responsible for establishing the general guidelines and policies for the City, and each serves a four -year term. The Mayor appoints the City Administrator as the City's chief administrative officer responsible for carrying out the policies and direction set by the Mayor and City Council. The City of Tukwila provides a full range of local government services. These services include police and fire protection, emergency medical services, construction and maintenance of streets and traditional municipal infrastructure, planning and zoning, park and recreational activities, and cultural events. In addition, the City operates an equipment maintenance /rental fund. The City operates its own municipal 18 -hole golf course and provides sewer, water, and surface water services. Tukwila has a municipal court for traffic infractions, misdemeanors, and gross misdemeanors. Other jurisdictions provide jail services to the City. Tukwila residents receive library services from the King County Library System. Incorporated in 1908, the City of Tukwila abuts the City of Seattle on the north and is one mile east of Seattle- Tacoma International Airport. Tukwila has a small residential population of 19,920; however, the daytime shopper /visitor and working population can reach over 150,000 during the holiday shopping season. II. ECONOMIC CONDITION A. SUMMARY OF LOCAL ECONOMY A diverse regional economy is led by The Boeing Company and other smaller manufacturing companies. The Puget Sound region is a major international trade gateway to the Far East. Also, high tech industries 4 CITY OF TUKWILA: 2015 CAFR LETTER OF TRANSMITTAL such as Microsoft and Amazon have made their home in this region. This diversity has now become the strength of our economic well being. Tukwila enjoys a strong position in the Puget Sound region as well as the state of Washington. Tukwila's location is at the crossroads of the State's most significant freeway network (the 1 -5 and 1 -405 interchange), and includes all modes of public transportation. Tukwila's transit stations include the commuter Sounder train, Sound Transit's Tight rail, and the just completed Tukwila Transit Center that all reinforce the well - established advantages of Tukwila as an employment and retail hub. These major transportation systems, the strategic access to Seattle, Tacoma, Sea -Tac Airport, and the population base of the south Puget Sound region provide a natural setting for commercial and industrial activity. Tukwila enjoys one of the largest local retail sales tax bases in the state of Washington, with the City collecting $19.3 million in sales tax revenue for 2015. The total retail sales activity amounted to approximately $2.3 billion in 2015, representing a 13.0% increase in sales tax revenue and retail activity within Tukwila, as compared to the previous year. Although the manufacturing sector was down 12.3 %, construction was up 53.3% and wholesale trade was up 26.5 %. The strength of the City's retail sales activity is the Westfield Southcenter Shopping Center and Parkway Plaza retail development, which combine to create one of the largest retail concentrations on the west coast. This strength continues to attract new retail establishments to locate in Tukwila. This diversified revenue base is further supported by an assessed valuation of $5.4 billion as well as the above - mentioned local retail sales tax base, and has allowed the City to pursue a long -term capital investment program. Permit activity continues to remain solid with 1,689 permits issued in 2015 for a total value of $190.0 million. Permit activity related to commercial property accounts for 77% of 2015 permits issued. B. FUTURE ECONOMIC OUTLOOK The City made significant investments of time and financial resources into key public projects in 2015. The City of Tukwila started design of the Early Start Work for the Strander Boulevard Extension Phase 3 Project. This project will extend Strander Boulevard from West Valley Highway to Oaksdale Ave in the City of Renton. Phase 1 and 2 have been completed and extended Strander Boulevard from Renton to the new Sounder Commuter Station. The final connection under the railroad tracks will add capacity for a new east /west corridor between 1 -405 and South 180th Street. This $39 million project is needed to serve Tukwila and Renton access to the Southcenter Mall and Tukwila's Southcenter District. We are currently applying for federal TIGER grants, state grant opportunities and Freight Mobility grants. The City of Tukwila has an ongoing extensive rehabilitation program in the Sewer Fund for the Southcenter District. As the sewer mains are reaching their 50 -year life span, the City has budgeted over $1 million in each of the next 4 years to reline the asbestos concrete pipes in the Southcenter area. The relining of the sewer pipes will reinforce the strength with little impact to the roadway and minimal excavation. The City reached 90% design completion on a pedestrian and bicycle bridge over the Green River near the intersection of West Valley Highway and Longacres Way. The Tukwila Urban Center Pedestrian /Bicycle Bridge is fully funded with park impact fees, federal grants, and a $6.8 million state regional mobility grant. This bridge will link the Southcenter District with the Tukwila commuter rail station and enable the area to grow as a transit - oriented neighborhood, which will attract more multi - family housing and jobs. The bridge design and property acquisition work is almost finished and construction is scheduled to be completed in 2017. 5 CITY OF TUKWILA: 2015 CAFR LETTER OF TRANSMITTAL The City worked on reconstructing a large portion of Interurban Avenue South from Fort Dent Way to South 143rd Street. Interurban Ave S is an arterial street that runs between 1 -405 to 1 -5 and State Route 599. The $11.4 million project includes construction of curbs, gutters, sidewalks, retaining walls, installation of storm drainage structures and pipes, water main, asphalt overlay, illumination, fiber optics, landscaping, irrigation, and roadway medians. Funding for this project is from federal and state grants, mitigation from an adjoining property owner, and a City bond. The majority of the construction was completed in 2015 with final paving, landscaping, and property restoration in spring 2016. Tukwila made significant progress on projects to rehabilitate four different bridges. The Boeing Access Road Bridge over the BNSF Railroad was awarded $9.7 million in federal grants. This bridge is structurally and seismically deficient and serves the Manufacturing /Industrial Center of Tukwila, which includes thousands of Boeing jobs and the Museum of Flight. The City will also perform major maintenance on three City bridges that include seismic retrofit, deck and joint repair, and painting. All of the bridge work will preserve the City -owned infrastructure and extend the service lives of the bridges. The City reached 90% design completion for street and frontage improvements on South 144th Street between Tukwila International Blvd and 42nd Avenue South, adjacent to Tukwila Village. This project will also include a new traffic signal next to Tukwila School District's Foster High School. Construction will start in 2016 and be completed in 2017. The City continued its partnership with Tukwila Village Development Associates to develop six acres of City -owned land on Tukwila International Boulevard at South 144th Street, known as Tukwila Village. Tukwila Village will be home to a new King County Library, 400 apartments (including at least 320 for seniors), a police neighborhood resource center, retail shops, and a community plaza. The developer started site work such as grading and utility infrastructure in 2015 and will start construction on the mixed - use buildings in 2016. The library started construction in 2015 and will be completed in 2016. III. OTHER RELEVANT INFORMATION A. INDEPENDENT AUDIT State law requires an annual audit of all City books of accounts and financial records by the Office of the State Auditor, which is headed by the independently elected State Auditor. The Auditor has broad legal authority to inquire into all financial and legal compliance matters and such audits are considered equal to audits by certified public accounting firms. The 2015 financial audit of the City is complete and was conducted in conformance with Generally Accepted Auditing Standards. The financial statements of all City funds have been included in this audit. The City has been given an unqualified opinion for 2015. Please see the Auditor's Report. The State Auditor's Office also audits the City's administration of its federal grants under the single audit concept. There were no instances of questioned costs as part of the City's single audit for 2015. B. MANAGEMENT DISCUSSION AND ANALYSIS Accounting principles generally accepted in the United States of America require that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD &A). This letter of transmittal is designed to complement the MD &A and should be read in conjunction with it. Tukwila's MD &A can be found immediately following the independent auditor's report. 6 CITY OF TUKWILA: 2015 CAFR LETTER OF TRANSMITTAL C. RELEVANT FINANCIAL POLICIES In 2015, the City Council approved a revised financial reserve policy. The financial reserve policy, for the well -being and sustainability of the community, its residents and businesses, ensures that the City will be prepared to respond to any and all situations that could result in risk and /or crisis to the City's finances. As part of the financial reserve policy, the City `s general fund unassigned balance shall equal or exceed 18% and the contingency (reserve) balance shall 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. Additionally, at the close of each fiscal year, the unrestricted balances of the enterprise funds shall equal or exceed 20% of the previous year revenue, exclusive of significant, non - recurring revenues such as real estate sales, transfers in from other funds, or debt proceeds. D. AWARDS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Tukwila for its comprehensive annual financial report for the fiscal year that ended December 31, 2014. This was the 28th consecutive year that Tukwila has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. E. ACKNOWLEDGEMENTS Preparation of this report could not have been accomplished without the professional, efficient, and dedicated services of the entire staff of the Finance Department and the cooperation of other City departments. Their long hours of assistance with the preparation and review of this report are greatly appreciated. The Mayor, City Administrator and City Council are to be complimented for their encouragement, interest, and support in conducting the financial operations of the City in a sound and progressive manner. The efficient assistance of examiners from the Office of the State Auditor is also appreciated. Staff who had a direct role in preparing Tukwila's 2015 Comprehensive Annual Financial Report take great pride in their work, and the entire team who worked on this project is to be commended. Respectfully submitted, Peggy McCarthy, CPA Finance Director CITY OF TUKWILA: 2015 CAFR LETTER OF TRANSMITTAL 8 CITY OF TUKWILA: 2015 CAFR LETTER OF TRANSMITTAL Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting poesented to City of Tukwila Washington For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31 , 2013 007-4404-- €eeutive Director/CEO 9 CITY OF TUKWILA: 2015 CAFR LETTER OF TRANSMITTAL 10 Washington State Auditor's Office INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS August 30, 2016 Mayor and City Council City of Tukwila Tukwila, Washington REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Tukwila, King County, Washington, as of and for the year ended December 31, 2015, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 11 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Tukwila, King County, Washington, as of December 31, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Matters of Emphasis As described in Note 1, during the year ended December 31, 2015, the City has implemented the Governmental Accounting Standards Board Statement No. 68, Accounting and Financial Reporting for Pensions — an amendment of GASB Statement No. 27 and Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an amendment of GASB Statement No. 68. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 15 through 30, budgetary comparison information on page 101 through 102, and pension plan information on pages 103 through 108, and information on postemployment benefits other than pensions on pages 109 through 110 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying information listed as combining financial statements and supplementary information on pages 111 through 136 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. This information has been subjected to auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including 12 comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The information identified in the table of contents as the Introductory and Statistical Sections is presented for purposes of additional analysis and is not a required part of the basic financial statements of the City. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we will also issue our report dated August 30, 2016, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. That report will be issued under separate cover in the City's Single Audit Report. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Sincerely, gtc/1-)g-, TROY KELLEY STATE AUDITOR OLYMPIA, WA 13 CITY OF TUKWILA: 2015 CAFR AUDITOR'S OPINION LETTER 14 CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended December 31, 2015 The discussion and analysis of the City of Tukwila's financial performance provides an overall review of the City's financial activities for the year ended December 31, 2015. The intent of this discussion and analysis is to look at the City's financial performance as a whole. Readers should also review the transmittal letter, and the basic financial statements to enhance their understanding of the City's financial performance. FINANCIAL HIGHLIGHTS • Total net position, the amount by which total assets plus deferred outflow of resources exceed total liabilities plus deferred inflow of resources, equals $287 million. A total of 87.4 percent or $250.8 million of total net position is invested in capital assets such as streets, land, buildings, equipment, and other improvements. The remaining net position of $36.2 million is available for debt service, capital projects, and to meet the government's ongoing activities and obligations. • The City's net position decreased by $5 million. Governmental activities decreased by $7.2 million, and business -type activities increased by $2.2 million. The primary reason for the governmental decrease is due to a $9.6 million adjustment that was a result of implementing GASB 68. An additional decrease of $1.4 million was because the City's Component Unit was divested. The business -type activities increase is primarily due to fee increases to fund future capital projects offset by a $2.3 million adjustment that was a result of implementing GASB68 and a $757 thousand change in accounting principal related to depreciation. • As of the close of the current fiscal year, the City of Tukwila's governmental funds reported combined ending fund balances of $38.6 million, an increase of $7.1 million in comparison with the prior year. Approximately 29.5% of this amount ($11.4 million) is available for spending at the government's discretion (unassigned fund balance). • At the end of the current fiscal year, unassigned fund balance for the general fund was $10.9 million, or 22 percent of total general fund expenditures. • The City of Tukwila's total outstanding long -term debt increased by $7.1 million during the current fiscal year. This change is a combination of new debt issued for $10 million offset by principal payments on existing debt, increases in compensated absences, and increases in other post - employment benefits USING THIS ANNUAL FINANCIAL REPORT This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the City of Tukwila as an entire operating entity. The statements then proceed to provide an increasingly detailed look at specific financial conditions. The Statement of Net Position and Statement of Activities provide information about the activities of the whole City presenting both an aggregate view of the City's finances and a longer -term view of those assets. Major fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short -term as well as what dollars remain for future spending. The fund financial statements also look at the City's most significant funds with all other non -major funds presented in total in one column. 15 CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Overview of the Financial Statements The City's basic financial statements are presented in three parts: 1) Government -wide financial statements 2) Fund financial statements 3) Notes to the financial statements Other supplementary information, in addition to the basic financial statements, is also contained in this report. This section of the Management's Discussion and Analysis is intended to introduce and explain the basic financial statements. Government -wide Financial Statements The government -wide financial statements are designed to be corporate -like in that all governmental and business - type activities are consolidated into columns which add to a total for the City. The focus of the Statement of Net Position is designed to be similar to bottom -line results for the City and its governmental and business -type activities. This statement combines and consolidates governmental funds' current financial resources (short -term spendable resources) with capital assets and long -term obligations. Over time, increases or decreases in net position may be one indicator of improvement or deterioration in the City's overall financial health. The Statement of Activities is focused on both the gross and net cost of various functions, including both governmental and business -type activities, which are supported by the City's general tax and other revenues. This is intended to summarize and simplify the user's analysis of the cost of various governmental services and /or subsidy to various business -type activities. The revenue generated by the specific functions (charges for services, grants, and contributions) is compared to the expenses for those functions to show how much each function either supports itself or relies on taxes and other general funding sources for support. All activity on this statement is reported on the accrual basis of accounting, requiring that revenues are reported when they are earned and expenses are reported when they are incurred, regardless of when cash is received or disbursed. Governmental activities of the City include general government (executive, finance, legal, human resources, and court), public safety, physical environment, economic environment, transportation, mental and physical health, and culture and recreation. The City's business -type activities include a water and sanitary sewer utility, surface water utility, and a municipal golf course. Governmental activities are primarily supported by taxes, charges for services, and grants, while business -type activities are self - supporting through user fees and charges. Fund Financial Statements The fund financial statements are the traditional reporting format for governments. A fund is a fiscal and accounting entity with a self - balancing set of accounts used to account for specific activities or meet certain objectives. While the government -wide statements present the City's finances based on the type of activity (general government vs. business type), the Fund Financial Statements are presented by fund type, such as the general fund, special revenue funds and proprietary funds, with the focus on major funds. Governmental Funds Governmental funds are used to account for essentially the same functions that are reported as governmental activities in the government -wide financial statements. The governmental major fund presentation is used, utilizing the current financial measurement focus and the modified accrual basis of accounting. This is the manner in which the budget is typically developed. The basis of accounting is different between the governmental fund statements and the government -wide financial statements. The governmental fund statements focus on the near -term revenues /financial resources and expenditures while the government -wide financial statements include both near - term and long -term revenues /financial resources and expenditures. The information in the governmental fund 16 CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS statements can be used to evaluate the City's near -term financing requirements and immediate fiscal health. Comparing the governmental fund statements with the government -wide statements can help the reader better understand the long -term impact of the City's current year financing decisions. Because the basis of accounting is different between the governmental fund statements and the government -wide financial statements, reconciliations are provided. The reconciliation between the governmental fund Balance Sheets and the government -wide Statement of Net Position is found on the page following the governmental funds' Balance Sheet, while the reconciliation between the governmental fund Statement of Revenues, Expenditures and Changes in Fund Balance and the government -wide Statement of Activities is found directly following the governmental funds' Statement of Revenues, Expenditures, and Changes in Fund Balance. The City maintains twenty individual governmental funds. Of these, four are considered major (the general fund, the arterial street fund, the local improvement district #33 fund, and facilities (urban renewal) fund) and are presented separately in the governmental funds' Balance Sheet and the governmental funds' Statement of Revenues, Expenditures and Changes in Fund Balances. The remaining governmental funds are combined into a single column labeled "Other Governmental Funds." Individual fund data for each of the other governmental funds can be found in the combining statements later in this report. The City maintains budgetary control over its operating funds through the adoption of a biennial budget. Budgets are adopted at the fund level according to state law. Budgetary comparison schedules are presented for the general and major special revenue funds in the "Required Supplemental Information" section of the report. Other budgetary comparison schedules are included following the other governmental funds' combining statements in this report. Proprietary Funds Proprietary funds are used by governments to account for their business -type activities and use the same basis of accounting as utilized in private industry. Business -type activities provide specific goods or services to a group of customers that are paid for by fees charged to those customers. There is a direct relationship between the fees paid and the services rendered. The City has two types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to account for goods and services provided to citizens, while internal service funds are used to account for goods and services provided internally to various City departments. Enterprise funds report the same functions presented as business -type activities in the government -wide statements, but in greater detail. The City's enterprise fund statements provide information on the City's three utilities (water, sanitary sewer, surface water) as well as the City -owned golf course. Internal service funds are an essential accounting tool used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for its fleet of vehicles, and its insurance premiums. Fiduciary Funds Fiduciary funds account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governments or other funds. Fiduciary funds are not included in the government -wide financial statements because their assets are not available to support the City's activities. The City has two fiduciary funds: a firemen's pension trust fund and an agency fund, which are accounted for on the accrual basis. As agency funds are custodial in nature, they do not include revenues and expenses. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found at the end of the Basic Financial Statements section. 17 CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information including budget and actual schedules for the City's general fund and, budgeted major /non -major special revenue funds; and a schedule of funding progress for the Firemen's Pension Trust Fund and other post - employment benefits. Additional pension benefit information is found in Note 8. The combining statements referred to earlier in connection with non -major governmental funds and internal service funds are presented in the section titled "Fund Financial Statements and Schedules." Government -wide Financial Analysis The Statement of Net Position can serve as a useful indicator of the City's financial position. The City of Tukwila's net position at December 31, 2014 and 2015 totaled $292 million and $287 million respectively. The City's overall net position decreased $5 million, or 1.7 %, from the prior fiscal year. The reasons for the overall increase are discussed in the following sections for governmental activities and business -type activities. By far, the largest portion of the City's net position of $250.8 million, or 87.4% reflects investment in capital assets (e.g., land, building, machinery, equipment, vehicles, and infrastructure), less any related outstanding debt that was used to acquire those assets. The City uses these capital assets to provide a variety of services to citizens. Accordingly, these assets are not available for future spending. Although investment in capital assets is reported net of related debt, it should be noted that the resources used to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net position, $5.4 million, or 1.9% represents resources that are subject to external restrictions on how they may be used. The remaining balance of $30.8 million, or 10.7% is unrestricted and may be used to meet the City's ongoing obligations to its citizens and creditors. Following is a condensed version of the government -wide Statement of Net Position for 2015 compared to 2014. Current and other assets Capital assets, net of accumulated depreciation Total assets Deferred Outflows of Resources Long -term liabilities Other liabilities Total liabilities Deferred Inflows of Resources CITY OF TUKWILA NET POSITION (in thousands) Governmental Activities Business -type Activities Total As of 12/31/15 As of 12/31/14 As of 12/31/15 As of 12/31/14 As of 12/31/15 As of 12/31/14 $74,640 $63,671 $17,629 $15,562 $92,269 $79,233 205,816 203,975 66,826 66,036 272,642 270,011 280,456 267,646 84,455 81,598 364,912 349,244 2,576 457 288 - 2,864 457 47,172 40,049 7,723 8,665 54,895 48,714 18,770 7,385 2,531 985 21,302 8,371 65,943 47,434 10,254 9,650 76,197 57,085 4,187 604 346 - 4,533 604 Net position Net investment in capital assets 191,331 191,081 59,483 57,678 250,815 248,759 Restricted 5,446 3,974 0 430 5,446 4,404 Unrestricted 16,126 25,009 14,659 13,840 30,785 38,849 Total net position $212,903 $220,064 $74,142 $71,948 $287,045 $292,012 The governmental unrestricted net position comprises $16 million. The general fund unrestricted net position is available for functions such as public safety employee salaries and supplies, park and road maintenance, and other general government services. The unrestricted net position of business -type activities, $14.7 million, may only be spent on activities related to one of the three City utilities (water, sewer, and surface water) or on the golf course 18 CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS activities. Examples of utility activities include: maintenance of water /sewer mains, pump and lift stations, storm drain flushing, and water meter reading. The $4.7 million increase in current and other assets for governmental activities stems primarily from the $2.1 million in unspent bond proceeds and an increase in taxes receivable. A significant property sale occurred within the City resulting in $1.1 million accrual of real estate excise tax revenue. The increase of $2.1 million in current and other assets for business -type activities is comprised of a net increase of $1.9 million in cash and investments. This increase results from a rate structure design in the utility funds that build reserves for major infrastructure replacement and improvement. Changes in Net Position The change in net position represents the increase or decrease in City net position resulting from its various activities. Following is a condensed version of the City's changes in net position. The table shows the revenues, expenses and related changes in net position for both governmental -type and business -type activities: CITY OF TUKWILA CHANGES IN NET POSITION (in thousands) Governmental Activities 2015 2014 Business -type Activities Total 2015 2014 2015 2014 Revenues: Program revenues Charges for services $9,748 $8,554 $22,158 $19,884 $31,906 $28,438 Operating grants and contributions 893 2,563 184 - 1,077 2,563 Capital grants and contributions 6,432 8,053 2,040 1,548 8,471 9,602 General revenues Property taxes 14,320 14,871 14,320 14,871 Sales and use taxes 19,334 17,105 19,334 17,105 Natural gas use tax - - - - - - Hotel /Motel taxes 678 597 678 597 Utility taxes 4,019 3,856 - - 4,019 3,856 Interfund utility taxes 2,061 1,851 2,061 1,851 Business taxes 2,749 2,556 2,749 2,556 Excise taxes 5,321 3,513 - 5,321 3,513 State entitlements 1,844 1,736 1,844 1,736 Investment earnings 475 444 475 444 Miscellaneous 281 179 281 179 Total revenues 68,156 65,878 24,381 21,432 92,537 87,310 Expenses: General government 8,042 10,289 8,042 10,289 Public safety 29,403 29,293 29,403 29,293 Transportation 11,070 11,668 11,070 11,668 Physical environment 2,611 2,480 2,611 2,480 Culture and recreation 5,125 5,716 5,125 5,716 Economic environment 5,783 5,337 5,783 5,337 Interest on long -term debt 1,033 1,205 1,033 1,205 Water /sewer - - 13,186 12,752 13,186 12,752 Foster golf course - - 2,087 1,946 2,087 1,946 Surface water - 4,148 3,311 4,148 3,311 Total expenses 63,068 65,987 19,421 18,009 82,489 83,996 Increase (decrease) in net position before transfer: 5,088 (109) 4,960 3,423 10,048 3,315 Transfers (300) (600) 300 600 0 0 Change in net position before special item 4,788 (709) 5,260 4,023 10,048 3,315 Special Item (957) (1,995) 0 0 (957) (1,995) Change in net position 3,831 (2,704) 5,260 4,023 9,091 1,320 Net position- beginning of period 220,064 238,121 71,948 69,351 292,012 307,472 Change in accounting principle - Retirement Costs (9,551) 0 (2,308) (557) (11,859) (557) Change in accounting principle 0 0 (757) 0 (757) Prior Period Adjustment (1,442) (15,353) 0 (870) (1,442) (16,223) Net position- beginning balance, as restated 209,072 222,768 68,882 67,924 277,954 290,693 Net position -end of period 212,903 220,064 74,142 71,948 287,045 292,012 19 CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Governmental Activities Governmental activities ended the year with a $7.2 million decrease in the City's net position. Revenues to fund capital assets are recorded as program or general revenues in the statement of activities. However, asset purchases are not recorded as expenses in the year purchased and construction costs are not recorded as expenses in the year incurred. Instead, the costs are recorded as long -term assets and are depreciated over their useful life. The primary reason net position decreased was due to implementation of GASB Statement No. 68 and the divestment of the City's component unit. • Implementation of GASB Statement No. 68 $9.6 million. • Divestment of component unit $1.4 million. A special item representing the 2015 urban renewal motel purchase $957 thousand valuation reduction also reduced net position. Revenues from governmental activities increased $2.3 million from 2014 activity. The components and explanation of the increase follows. • Charges for services increased $1.2 million or 14.0% in 2015. Major reasons for the increase include permit fees revenue increase of $325 thousand over 2014 due to an increase in permit activity and the City received $350 thousand in 2015 that was associated with 2014 due to a change in billing methods. Additionally, the City reclassified $406 thousand of EMS levy revenue from general revenue to charges for services. The reclassification is because the City receives the levy revenue based on call volume rather than the tax base within the City limits. • Operating grants decreased by $1.7 million or 65.2 %. Funding for several projects was received in 2014 for projects that were completed in 2014 or early 2015 including a federal grant for $989 thousand overlay and repair to East Marginal Way. Additionally, the City received $334 thousand to purchase radios for first responders. This grant was specific to 2014. • Capital grants and contributions decreased $1.6 million or 20.1%. In 2014 the City received $3.5 million in grant funding for regional mobility projects that was specific to 2014. The reduction of this grant is offset by increases in funding for the Interurban Ave S project. • Sales and use taxes increased $2.2 million or 13.0% primarily due to an overall increase in services activity of $895 thousand, construction activity of $436 thousand, wholesale trade category of $421 thousand, and retail trade activity of $364 thousand. All other sales and use tax categories were up except for manufacturing, which decreased by $39 thousand. • Excise taxes increased $1.8 million or 51.5% primarily due to the accrual of real estate excise tax of $1.7 million. A significant property sale occurred in the latter part of 2015 which resulted in a one -time increase in revenue. Total governmental expenses decreased by $2.9 million. General government expenses decreased from 2014 by $2.2 million, or 21.8% primarily due to lower medical costs in 2015 than 2014. Transportation expenses decreased from 2014 by $726 thousand, or 6.2 %. The City expensed costs related to overlay and repair that had previously been recorded as capital assets. The primary reduction was due to less depreciation due to this prior period adjustment. Culture and recreation costs decreased by $593 thousand, or 10.4% mostly due to the divestment of the City's blended component unit. Additional information on the change in accounting principle and the special item can be found in Note 15 and Note 16, respectively, to the financial statements. 20 CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS The next chart summarizes the governmental activity revenue by source, while the second one reflects the specific program revenues and related expenses for the various activities of the City. Gaps between specific program revenues and their related expenses are funded through general tax revenues. Revenues by Source — Governmental Activities Other ®axes 13% Utilityt taxes 9% SalesF ndL .iseEtaxes 28% OtherEevenue 4% 21 Chargesffor@ervices 14% OperatingE rantsF e0 contributions 1% CapitalEgrants118e0 contributions 10% Property[itaxes 21% CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Program Revenues and Expenses - Governmental Activities $30,000,000 $27,000,000 $24,000,000 $21,000,000 $18,000,000 $15,000,000 $12,000,000 $9,000,000 $6,000,000 $3,000,000 $0 f �o �m�ewa �� �� em�� oce� met �\o � o eon o Q�� co": \ems e mac Ge� �p a • Qc4' GJ\ cpco c�` Business -Type Activities ❑ Program revenues • Expenses Business -type net position increased by $2.2 million during 2015. Key components of this increase include: • An increase in capital grants and contributions of $492 thousand. • An increase in expenditures of $1.4 million. • A change in accounting principle of $757 thousand to depreciate capital assets using the straight line method. • A change in accounting principle of $2.3 million also resulted in a decrease to net position. The adjustment was due to the implementation of GASB Statement No. 68. • $2.3 million or an 11.4% increase in charges for services primarily due to utility rate increase effective January 2015, and water and sewer hook -up fees on new construction. • Income before non - operating revenue /(expense), capital contributions, and transfers amounted to: • Water fund: $ 787,554 • Sewer fund: 1,657,567 • Foster golf course fund: (604,795) • Surface water fund: 965,559 $ 2,805,885 22 CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS The following chart shows the relative net position balances for each business -type fund: Business -Type Net Position - By Fund The majority of net position in the City's enterprise funds relate to capital asset infrastructure, such as water and sewer mains, and the golf course land. As such, most of the net position is not available to support the ongoing expenses of the funds. The following chart contrasts the total net position to the spendable portion of net position for each enterprise fund: 23 CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 - Comparison of Total Net Position to Spendable Net Position Business -Type Funds • Spendable /Unrst Net Position ■ Total Net Position $0 -� Water Sewer Surface water Foster golf course The following chart depicts the revenues and expenses for business -type funds: $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 Business -type Activity Revenues and Expenses Before Capital Contributions and Transfers Water Sewer 24 Surface Water Foster Gdf Course ❑ Revenues • Expenses CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Financial Analysis of Governmental Funds The purpose of the City's governmental funds is to report on near -term revenues /financial resources and expenditures. This information helps determine the City's financial requirements in the near future. Specifically, the fund balance is a good indicator of the City's financial resources. As of December 31, 2015, the City's governmental funds had combined fund balances of $38.6 million, an increase of $7.1 million or 22.5 %. The increase is primarily due to bond proceeds of $6.1 million in the arterial street fund, $2.25 million draw on a line -of- credit in the facilities replacement fund, an increase in real estate excise tax receivable of $1.7 million split between the arterial street and a capital projects fund and an increase of $2.2 million in sales and use tax revenue offset by an increase in general governmental expenditures. These increases are also offset by the divestiture of the City's blended component unit. The change in prior year fund balances for other major funds are as follows: • General fund $834,256 • Arterial Street fund 3,676,871 • Local Improvement District No. 33 (3,255) • Facilities — Urban Renewal 528,092 • Other governmental funds 690,705 $5,726,669 The Local Improvement District No. 33 fund decreased because debt service payments, including a $605,000 bond principal payment and a $346,784 interest payment associated with the assessments, exceeded revenues by $3,255. Other major governmental funds remained stable, with moderate increases in total fund balance. Of the non -major governmental funds, special revenue funds decreased $7 thousand, debt service funds increased $198 thousand, and capital projects funds increased $500 thousand. Of the governmental fund balances $7.65 million is nonspendable for capital assets held for resale and $1.34 million is nonspendable for outstanding notes receivable owed to the City from the Tukwila Pool Metropolitan Park District. Restricted fund balances constrained for a specific purpose by external parties or enabling legislation consist of $623,120 for tourism, $2,421,047 for arterial street improvements, $7,239 for drug seizure, $135,616 for park and land acquisition or development, $551,434 for fire improvements, and $1,707,618, for debt service. Assigned fund balances intended to be used for specific purposes consist of $2,631,336 for arterial streets, $1,189,545 for facilities -urban renewal, $819,161 for residential street improvements, $1,981,473 for land acquisition, recreation and park development, $397,033 for general government improvements, $141,373 for technology, $350,000 for public safety equipment, $203,323 for debt service, and $5,587,275 for contingencies. The general fund is the primary operating fund of the City. All receipts and payments of ordinary City operations are processed through this fund unless they are required to be accounted for in another. At the end of 2015, the general fund had an unassigned fund balance of $10.9 million. 25 CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS The following chart shows the relative fund balances for governmental funds: Arterialatreeti fund 13% Governmental Funds — Fund Balances Local]mprovementC DistrictG t33 Facilities /Urbanl7 Renewal 23% GeneraIE and 47% 26 CapitalLproject[Ifunds 10% SpecialOevenue®unds 2% DebtE erviceffunds 2% CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS The general fund revenue increase of $2.8 million are from the following sources: General Fund Revenue Increases / (Decreases) - By Source $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 so ($1,000,000) Taxes $4,585,479 Cha rges for servi ces $694,139 Licenses and permits $228,381 Fi nes a nd forfeitures $18,819 I nvestment earnings $55 555 Miscellaneous $10,570 I me rgove rnm enta l ($93,120) Financial Analysis of Proprietary Funds The City's proprietary funds provide the same type of information as found in the government -wide financial statements, but in greater detail. Factors affecting the finances of the City's proprietary funds have already been addressed in the discussion of the City's business -type activities. General Fund Budgetary Highlights The City budgets biennially by adopting a budget at the end of the preceding biennium, and then making adjustments as necessary via budget amendments throughout the next two years. Following is a summary of such budget amendments that occurred in 2015: Net Expenditure increases: New budget for Kelly Day payout $220,000 Additional budget for Police and Fire overtime 510,000 Increase utilities budget 80,000 Increase budget related to grant revenue 111,046 Adjust budget to account for grant funding received for emergency radios 60,000 27 CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Net Revenue Increase: Grant revenue not budgeted during regular budget process 736,046 Increase plan review fees for consulting services 150,000 Increase in sales tax revenue 2,122,000 Reasons for the significant variances in the general fund between the final budget and actual results include: • Revenue from taxes were $776 thousand, or 1.8 %, higher than budget. Property taxes decreased $71 thousand and sales and use taxes increased $245 thousand. In addition, there was a gain of 13 percent, or $331 thousand in gambling taxes and other taxes increased $207 thousand. • Intergovernmental revenue was $346 thousand, or 7% less than budget. The primary reason is the City received grant funds in 2014 that did not carry forward into 2015. • Charges for services was $432 thousand, or 17.5% higher than budget. The primary reason is because of increased permitting activity. • Expenditures were below budget by $550 thousand, or 1.1%. Transportation costs were lower than expected due to the timing of capital outlay on projects that were delayed or where completion timelines extended. All other functions showed reductions in spending. Capital Asset and Debt Administration Capital Assets The City's investment in capital assets for both its governmental and business -type activities as of December 31, 2015 totaled $273 million (net of accumulated depreciation), an increase of $2.6 million, or 1.0 %, from 2014. This investment in capital assets includes land, buildings, improvements, machinery and equipment, construction in progress, utility transmission /distribution systems, roads, bridges, and other infrastructure. SUMMARY OF CAPITAL ASSETS (NET OF DEPRECIATION) Governmental Activities Business -Type Activities Total As of 12/31/15 As of 12/31/14 As of 12/31/15 As of 12/31/14 As of 12/31/15 As of 12/31/14 Land $ 35,312,814 $ 35,312,814 $ 2,346,230 $ 2,346,231 $ 37,659,044 $ 37,659,045 Construction in Progress 26,133,182 16,718,203 7,247,963 4,200,272 33,381,145 20,918,475 Buildings 10,711,996 13,810,448 8,679,027 9,397,907 19,391,023 23,208,355 Other Improvements 5,933,158 6,775,474 48,145,336 49,607,584 54,078,494 56,383,058 Machinery and Equipment 6,811,474 6,841,516 407,530 484,324 7,219,004 7,325,840 Infrastructure 120, 913, 528 124, 516,494 120, 913, 528 124, 516, 494 Total $205,816,152 $203,974,948 $66,826,087 $66,036,318 $272,642,240 $270,011,266 More detailed information on capital assets is provided in Note 7 to the financial statements. General capital outlay purchases added $196,588 in machinery and equipment and included various technology purchases in the amount of $111,521, exercise equipment for $10,779, and a portable HVAC system for $11,578, and thermal imaging cameras totaling $62,710. Many of the projects in the Arterial Street Fund continue to be in the construction phase adding $7.5 million in construction -in- progress for the period. The major arterial street fund activities are comprised of the following: • Interurban Avenue South, $4.5 million • Tukwila Urban Center Pedestrian /Bicycle Bridge $1.3 million • Tukwila Urban Center Transit center $0.7 million 28 CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS • Boeing Access Road Bridge Rehabilitation $0.47 million • Andover Park West $0.4 million • Various other Arterial Street Fund projects total $0.13 million Ongoing Residential Street fund construction projects added $1,408,205 to construction -in- progress and include the following: • Thorndyke Safe Routes to School, $820,669 • 40 — 42nd Ave S, $321,663 • Cascade View Safe Routes to School, $127,961 • 42nd Ave S Roadside Barriers, $75,870 • Various other Residential Street Fund projects total $62,042 Land Acquisition, Recreation & Park Development activities consist of $2,132,523 for the Duwamish Gardens and Duwamish Hill Preserve work in progress improvements and $11,936 for other park related projects. Other governmental funds' activity in the area of facilities improvements provided an additional $122,303 to work in progress costs for the year. Business -type activities consisted of $3.7 million in added construction in progress work for the year. Major projects in the utility funds comprise of the following: • East Marginal Way S Pipe, $1,129,914 • Interurban Ave S, $1,773.744 A total of $756,527 in other ongoing utility construction projects were added to construction -in- progress during the current period. Long -term Debt At the end of the current fiscal year, the City had total bonded debt outstanding of $24,800,241. Of this amount, $23,057,714 is general obligation bonds, and $1,742,527 is revenue bonds for the water /sewer and surface water utilities. The increase in outstanding bonds is due to the principal payments redeemed for the year netted against new debt of $8.1 million issued in 2015. The City currently maintains a rating of AA with Standard and Poor's, AA- with Fitch's Investor Service and Al with Moody's for its general obligation debt. The City also has $6.1 million in special assessment debt. 29 CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS The following schedule summarizes the City's bonded debt: SUMMARY OF BONDED DEBT Governmental Activities Business -type Activities Total As of 12/31/15 As of 12/31/14 As of 12/31/15 As of 12/31/14 As of 12/31/15 As of 12/31/14 General obligation bonds Revenue bonds $ 23,057,714 $ 16,638,221 $ - $ - $ 23,057,714 $ 16,638,221 - 1,742,527 2,580,000 1,742,527 2,580,000 $ 23,057,714 $ 16,638,221 $ 1,742,527 $ 2,580,000 $ 24,800,241 $ 19,218,221 Other Special assessment bonds $ 6,082,500 $ 6,687,500 $ - $ - $ 6,082,500 $ 6,687,500 ADDITIONAL LONG -TERM DEBT Governmental Activities Business -type Activities Total Other long term debt As of 12/31/15 As of 12/31/14 As of 12/31/15 As of 12/31/14 As of 12/31/15 As of 12/31/14 Public Works Trust Fund Loans $ $ - $ 5,646,459 $ 5,742,867 $ 5,646,459 $ 5,742,867 Other Post Employment Benefits 7,144,923 5,341,973 - 7,144,923 5,341,973 Employee leave benefits 3,860,472 3,740,161 334,004 306,441 4,194,476 4,046,602 Due to other governments 6,265,200 6,650,400 6,265,200 6,650,400 $ 17,270,595 $ 15,732,534 $ 5,980,463 $ 6,049,308 $ 23,251,058 $ 21,781,842 More detailed information on long -term debt is provided in Note 11 to the financial statements. Economic Factors The outlook for 2016 is positive. The economy in King County is showing steady signs of recovery and the City is in a good position to take advantage of the strong regional economy. The City of Tukwila has a small residential population, yet the City serves the regional economy and has become an economic powerhouse, providing jobs and revenue for the region and state. Several major pending developments will have significant impacts on the future of Tukwila's economy: • In 2015, developers broke ground on Washington Place, a 19 -story structure comprising 370 residential units and 180 hotel rooms. The building will be the tallest between Seattle and Tacoma and the first multi- family residential housing in Tukwila's Southcenter District. Given its walkability to high capacity bus, commuter rail, retail, dining, and entertainment, the project is projected to be a catalyst for additional transit - oriented development. • In 2014, the City completed construction of a new transit center in the heart of the Southcenter District on Andover Park West. The Transit Center provides a safer, expanded, high - quality bus stop with shelters, larger bus pullouts, improved lighting, sidewalks and landscaping. The transit center serves numerous King County bus routes including the RapidRide F line. Just as this project helped attract Washington Place, it will attract additional future development. • In 2016 the City will start construction on a pedestrian and bicycle bridge over the Green River near the intersection of West Valley Highway and Longacres Way. The bike /ped bridge is fully funded with park impact fees, federal grants, and a $6.8 million state regional mobility grant. This bridge will link the Southcenter District with the Tukwila commuter rail station and enable the area to grow as a transit - oriented neighborhood which will attract more multi - family housing and jobs. The bridge design and property acquisition work is almost finished and construction is scheduled to be completed in 2017. 30 CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS • The City is reconstructing a large portion of Interurban Avenue South from Fort Dent Way to South 143rd Street. Interurban Ave S is an arterial street that runs between 1 -405 to 1 -5 and State Route 599. The $11.4 million project includes construction of curbs, gutters, sidewalks, retaining walls, installation of storm drainage structures and pipes, water main, asphalt overlay, illumination, fiber optics, landscaping, irrigation, and roadway medians. Funding for this project is from federal and state grants, mitigation from an adjoining property owner, and a City bond. The majority of the infrastructure was completed in 2015 with final paving, landscaping, and property restoration in spring 2016. • Tukwila has construction projects underway to rehabilitate four different bridges in 2016. The Boeing Access Road Bridge over the BNSF Railroad was awarded $9.7 million in federal grants. This bridge is structurally and seismically deficient and serves the Manufacturing /Industrial Center of Tukwila which includes thousands of Boeing jobs and the Museum of Flight. The City will also perform major maintenance on three City bridges that include seismic retrofit, deck and joint repair, and painting. All of the bridge work will preserve the City -owned infrastructure and extend the service lives of the bridges. • The Southcenter Parkway Extension project, the five -lane roadway from South 180th Street to South 200th Street that was completed in 2012 has improved traffic flow and provided the infrastructure needed for future development of the Tukwila South area. Tukwila South comprises 512 acres between South 180th Street and the City's southern limits and is expected to ultimately bring 20,000 new jobs, 10 million square feet of office, technology, and retail space into the City. The Tukwila South property owner continues performing site work such as grading, filling, and installing storm water and other utility infrastructure. The City has invested significant resources into improving the health and safety of the Tukwila International Boulevard neighborhood and catalyze new development. • In 2012 the City executed an agreement with Tukwila Village Development Associates to develop six acres of City -owned land on Tukwila International Boulevard at South 144th Street, known as Tukwila Village. Tukwila Village will be home to a new King County Library, 400 apartments (including at least 320 for seniors), a police neighborhood resource center, retail shops, and a community plaza. The developer started site work such as grading and utility infrastructure in 2015 and will start construction on the mixed - use buildings in 2016. The library is under construction and will be completed in 2016. • In 2016 the City will start construction street and frontage improvements adjoining Tukwila Village on South 144th Street between Tukwila International Blvd and 42nd Avenue South. This project will also include a new traffic signal next to Tukwila School District's Foster High School and will be completed in 2017. • In 2013 the City of Tukwila partnered with the US Attorney, US Marshalls, and numerous other Federal, State, and local agencies to seize three motels on Tukwila International Boulevard near 144th Street. The seizure resulted from an extensive undercover investigation that proved the motel owners profited from crime occurring on the properties. In 2014 and 2015 the City purchased the three seized motels, plus another motel and smoke shop. In early 2016 the City has nearly completed demolition of the five buildings. The demolition and site work will be compete in summer 2016. Although the City has not chosen a specific use for the site, the City will certainly sell or use it for a project that continues to improve the neighborhood and attract more development and improve the image for the whole city. Requests for Information This financial report is designed to provide a general overview of the City of Tukwila's finances for readers with an interest in the City's finances. Questions concerning this report, or requests for additional information, may be addressed to the Finance Director, City of Tukwila, 6200 Southcenter Blvd, Tukwila, WA 98188 -2544. 31 CITY OF TUKWILA: 2015 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS 32 CITY OF TUKWILA: 2015 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF NET POSITION DECEMBER 31, 2015 Governmental Business -Type Activities Activities Total ASSETS: Cash and cash equivalents $ 22,681,952 $ 12,293,611 $ 34,975,562 Investments 9,259,008 2,636,502 11,895,510 Taxes receivable 6,906,384 789 6,907,173 Other receivables 1,100,074 1,637,441 2,737,515 Due from other governmental units 2,857,124 659,327 3,516,452 Inventory of materials and supplies 13,837 62,402 76,241 Restricted cash and cash equivalents 2,442,097 82,006 2,524,103 Notes receivable 6,266,537 257,016 6,523,553 Real property held for resale 7,645,000 7,645,000 Investment in joint ventures 9,193,002 9,193,002 Non- depreciable capital assets 61,445,996 9,594,193 71,040,189 Depreciable capital assets (net of accumulated depreciation) 144,370,156 57,231,894 201,602,050 Net Pension asset 6,275,313 6,275,313 Total Assets 280,456,481 84,455,181 364,911,663 DEFERRED OUTFLOWS OF RESOURCES: Deferred loss on refunding Deferred outflow s related to pensions Total Deferred Outflow s Of Resources LIABILITIES: Accounts payable Accrued wages and benefits payable Accrued interest payable Unearned revenue Other liabilities Bonds and other debt payable Due w ithin one year Due in more than one year Net pension liability Total Liabilities 390,874 2,185, 306 46,323 437,196 241,271 2,426, 577 2,576,180 287,594 2,863,773 2,035,021 125,563 2,160,584 1,562,433 118,718 1,681,151 339,069 18,113 357,182 460,282 12,450 472,732 2,742,814 161,245 2,904,060 2,774,337 759,117 3,533,454 44,397,994 6,963,873 51,361,868 11,630,656 2,095,180 13,725,836 65,942,607 10,254,259 76,196,866 DEFERRED INFLOWS OF RESOURCES: Deferred inflow s related to pensions 3,677,005 346,180 4,023,185 Business taxes received in advance 510,226 510,226 Total Deferred Inflows Of Resources 4,187,231 346,180 4,533,411 NET POSITION: Net investment in capital assets 191,331,156 59,483,424 250,814,581 Restricted for: Debt service 1,707,618 1,707,618 Tourism promotion 623,120 623,120 Arterial street improvements 2,421,047 2,421,047 Drug investigation and enforcement 7,239 7,239 Land and park acquisition, development 135,616 135,616 Fire improvements 551,434 551,434 Unrestricted net position 16,125,592 14,658,912 30,784,504 Total Net Position $ 212,902,822 $ 74,142,336 $ 287,045,158 The notes to the financial statements are an integral part of this statement. 33 CITY OF TUKWILA: 2015 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF ACTIVITIES For the Year Ended December 31, 2015 -- Expenses -- Program revenues -Net (Expense) Revenue and Changes in Net Position- Charges Operating Capital Grants Governmental Business -Type Total For Services Grants and and Activities Activities Contributions Contributions FUNCTIONS / PROGRAMS: PRIMARY GOVERNM ENT Governmental activities General Government $ 8,042,254 $ 3,794,134 $ 93,898 $ $ (4,154,221) $ (4,154,220.24) Public safety 29,403,206 1,754,856 358,798 (27,289,552) (27,289,552) Transportation 11,069,605 206,065 272,728 4,658,261 (5,932,552) (5,932,552) Physical environment 2,611,297 - 761,722 (1,849,574) (1,849,574) Culture and recreation 5,125,227 644,283 54,542 1,011,554 (3,414,847) (3,414,847) Economic environment 5,782,907 3,348,802 113,504 (2,320,602) (2,320,602) Interest on long -term debt 1,033,440 - (1,033,440) (1,033,440) Total Governmental Activities 63,067,935 9,748,140 893,470 6,431,537 (45,994,789) (45,994,788) BUSINESS -TYPE ACTIVITIES: Water 5,734,624 6,508,536 1,213,611 1,987,523 1,987,523 Sewer 7,451,612 9,064,173 - 209,180 1,821,741 1,821,741 Surfacewater 4,147,974 5,102,617 183,616 617,100 1,755,359 1,755,359 Foster golf course 2,086,586 1,482,288 - (604,297) (604,297) Total Business -Type Activities 19,420,796 22,157,615 183,616 2,039,890 4,960,326 4,960,326 Total Primary Government $ 82,488,731 $ 31,905,755 $ 1,077,086 $ 8,471,427 $ (45,994,789) $ 4,960,326 $ (41,034,462) General Revenues: Taxes Roperty taxes $ 14,320,085 $ $ 14,320,085 Retail sales and use taxes 19,334,152 19,334,152 Hotel /motel taxes 677,971 677,971 Utility taxes 4,019,288 4,019,288 Interfund utility taxes 2,061,098 2,061,098 Business taxes 2,749,140 2,749,140 Excise Taxes 5,321,281 5,321,281 State entitlements 1,843,634 1,843,634 Unrestricted investment earning 475,345 475,345 Miscellaneous 280,551 280,551 Total General Revenues 51,082,545 51,082,545 Excess of revenues over expenses 5,087,756 4,960,326 10,048,083 before transfer and special item Transfers (300,000) 300,000 - Special item (956,798) (956,798) Change in net position 3,830,958 5,260,326 9,091,285 Net position - beginning 220,064,399 71,947,737 292,012,136 Change in accounting principle - pension costs (9,551,003) (2,308,254) (11,859,257) Change in accounting principle - depreciation - (757,473) (757,473) Divestment of Corrponent Unit (1,441,532) (1,441,532) Net position- beginning restated 209,071,863 68,882,010 277,953,873 Net position- ending $212,902,822 $ 74,142,336 $ 287,045,158 The notes to the financial statements are an integral part of this statement. 34 CITY OF TUKWILA: 2015 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2015 Local Other Total General Arterial Improvement Facilities Governmental Governmental Fund Street District #33 Urban Renew al Funds Funds ASSETS: Cash and cash equivalents $ 8,724,316 $ 2,187,700 $ 1,038,769 $ 1,300,301 $ 3,691,056 $ 16,942,142 Investments 5,240,755 - 5,240,755 Taxes receivable 5,571,294 627,246 - 707,844 6,906,384 Other receivables 441,099 - 410,476 139,206 990,781 Due from other governmental units 216,131 1,147,114 - 1,493,879 2,857,124 Restricted assets: Cash and cash equivalents 8,406 2,421,047 12,644 2,442,097 Special assessment receivable - 4,925,713 4,925,713 Notes receivable 1,340,824 - 1,340,824 Real property held for resale - 7,645,000 7,645,000 Total Assets $ 21,542,825 $ 6,383,107 $ 6,374,958 $ 8,945,301 $ 6,044,629 $ 49,290,820 LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES: Liabilities: Accounts payable 604,183 Accrued w ages & benefits 1,493,744 Unearned revenue 200,700 Other liabilities 153,776 Total Liabilities 2,452,402 Deferred inflow of resources Unavailable revenue - special assessment - Business taxes received in advance 510,226 Unavailable revenue - property tax, other 249,390 Total Deferred Inflow Of Resources 759,617 Fund balance: 1,057,320 14,529 258,876 9,714 1,042 100,000 1,330,724 5,336,189 110,756 302,754 33,634 259,582 61,412 657,383 1,973,971 1,542,948 460,282 574,064 4,551,265 5,336,189 510,226 249,390 Nonspendable 1,340,914 Restricted: HoteVrnotel tax Arterial street capital improvements 2,421,047 Drug investigation and enforcement Park and land acquisition /development Fire improvements Debt service guraranty fund Local Improvement District Assigned: Residential street improvements Arterial street improvements - 2,631,336 Contingencies 5,587,275 Land & park acquisition Facilities & urban renew al General government improvements - Technology 141,373 Riblic safety equipment 350,000 Debt service - Unass igned 10,911,244 5,336,189 6,095,806 1,038,769 7,645,000 8,985,914 1,189,545 623,120 7,239 135,616 551,434 668,849 819,161 1,981,473 397,033 203,323 623,120 2,421,047 7,239 135,616 551,434 668,849 1,038,769 819,161 2,631,336 5,587,275 1,981,473 1,189,545 397,033 141,373 350,000 203,323 10,911,244 Total Fund Balance 18,330,806 5,052,383 1,038,769 8,834,545 5,387,246 38,643,749 Total Liabilities, Deferred Inflows And Fund Balances $ 21,542,825 $ 6,383,107 $ 6,374,958 $ 8,945,301 $ 6,044,629 $ 49,290,820 The notes to the financial statements are an integral part of this statement. 35 CITY OF TUKWILA: 2015 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION DECEMBER 31, 2015 Total Governmental Funds Total governmental fund balances as reported on this statement $ 38,643,749 Capital assets used in governmental activities are not financial resources and therefore not reported in the funds. Non - depreciable assets Depreciable assets (net) Internal service fund assets The net pension asset is not an available resource and, therefore, is not reported in the funds. Deferred outflow of pension costs Deferred inflow of pension contributions The City has an equity interest in two joint ventures. This equity interest for the provision of governmental services is not a current financial resource and therefore is not reported in the funds. Revenue that was not collected witin the recognition period and therefore was not available to pay current liabilities: Unavailable revenue reported for propertytax and other receivables Unavailable revenue reported for special assessment Some liabilities are not due and payable in the current period and therefore are not reported in the funds. Long term liabilities due within one year Long term liabilities due in more than one year Accrued interest payable Deferred outflow on refunding Internal service funds are used by management to charge the cost of certain activities, such as health insurance and fleet maintenance, to individual funds. The assets and liabilities of these internal service funds are included in governmental activities in the statement of net position. 61,445,996 139,629,022 4,741,135 205,816,152 6,275,313 2,147,396 (3,622,610) (1,475,214) 9,193,002 249,390 5,336,189 5,585,579 (2,774,337) (55,699,438) (339,069) 390,874 (58,421,971) 7,286,210 Net Position Of Government Activities As Reported On The Statement Of Net Position $ 212,902,822 The notes to the financial statements are an integral part of this statement. 36 CITY OF TUKWILA: 2015 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 Local Other Total General Arterial Improvement Facilities Governmental Governmental Fund Street District #33 Urban Renewal Funds Funds REVENUES: Taxes $ 45,201,369 $ 1,400,104 Licenses and permits 2,242,256 Intergovernmental 4,626,463 4,788,489 Charges for services 2,896,446 121,485 Fines and forfeitures 261,457 Investment earnings 163,618 9,677 Special assessments Miscellaneous 120,887 53,646 $ $ $ 1,946,643 $ 48,548,116 2,242,256 2,424, 932 11, 839, 883 917,317 3,935,248 - 261,457 296,304 868 4,878 475,345 650,415 - 650,415 1,809 100,000 55,925 332,268 Total Revenues 55,512,496 6,373,402 948,528 100,868 5,349,695 68,284,989 EXPENDITURES: Current: General government Public safety Physical environment Transportation Culture and recreation Economic environment Debt service: Principal Interest Capital outlay Total Expenditures Excess (deficiency) of revenues Over (Under) Expenditures 7,247,117 28,973,651 1,919,306 2,820,022 4,259,532 4,328,177 2,948,053 605,000 346,784 196,589 7,583,236 365,978 95,299 61,514 15,922 24,593 90,520 1,504,207 1,875,507 778,826 3,646,449 7,708,394 29, 035,165 1,935,228 5,792,668 4,350,052 5,832,384 2,480,507 1,125,609 11,426,274 49,744,394 10,531,289 951,784 365,978 8,092,836 69,686,279 5,768,102 (4,157,887) OTHER FINANCING SOURCES (USES): Transfers in 500,000 Transfer out (5,433,846) Issuance of debt - Bond premium 1,700,000 5,825,000 309,758 (3,255) (265,110) (2,743,141) (1,401,291) (500,000) 2,250,000 3,433,846 5,633,846 (5,933,846) 8,075,000 309,758 Total Other Financing Sources And Uses (4,933,846) 7,834,758 - 1,750,000 3,433,846 8,084,758 Net change before Special Item 834,256 3,676,871 (3,255) 1,484,890 690,705 6,683,467 Special Item - asset valuation (956,798) (956,798) Net change in fund balances 834,256 3,676,871 (3,255) 528,092 690,705 5,726,669 Fund balance- beginning 17,496,550 1,375,512 1,042,024 8,306,453 4,696,541 31,476,863 Divestment of Component Unit - 1,440,218 Fund balance- beginning restated 17,496,550 1,375,512 1,042,024 8,306,453 4,696,541 32,917,081 Fund Balance - Ending $ 18,330,806 $ 5,052,383 $ 1,038,769 $ 8,834,545 $ 5,387,246 $ 38,643,749 The notes to the financial statements are an integral part of this statement. 37 CITY OF TUKWILA: 2015 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENT FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2015 Net change in fund balances per the Statement of Revenues, Expenditures, and Changes in Fund Balances Amount reported as change in net position in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. In the current period, these amounts are: Capital Outlay Capital asset disposal Depreciation Expense (excludes internal service fund depreciation which is reflected in intemal service fund change in net position listed below) Excess of Capital Outlay Over Depreciation Expense The net effect of various transactions involving the Citys pension plans are: Reduction in pension liability and expense Increase in pension contribution revenue Reduction in the Fireman's Pension liability and expense 11,426,274 (4,330) (7,260,550) 1,228,219 503,132 14,483 $ 5,726,669 4,161,394 1,745,834 The City has equity interests in two joint ventures. The equity interests for the provision of governmental (143,093) services are not current financial resources and therefore are not reported in the funds. Repayment of long -term debt is reported as an expenditure in governmental funds, but the repayment reduces long -term liabilities in the Statement of Net Position. In the current year, these amounts consist of: Bond principal retirement Amortization expense Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long -term liabilities in the statement of net position. General Obligation Bonds issued General Obligation Bonds issued 2,480,507 110,990 2,591,497 (309,758) (7,909,800) Internal service funds are used by management to charge the costs of certain activities to individual funds. The change in net position of internal service funds is reported with governmental activities. 725,108 Because some revenues will not be collected for several months after the Citys fiscal year ends, they are not considered "available" revenues in the government funds. Decreases this year are for: Miscellaneous receivables (77,783) Propertytaxes (65,101) Special Assessment (650,415) Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. These activities consist of: Increase in accrued interest Amortization of deferred charge on bond refunding Increase in compensated absences Increase in unfunded other post employment benefits Total additional expense (increase) decrease 47,792 (66,613) (141,823) (1,802,950) (793,299) (1,963,594) Change In Net Position On The Statement Of Activities $ 3,830,958 The notes to the financial statements are an integral part of this statement. 38 CITY OF TUKWILA: 2015 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF NET POSITION PROPRIETARY FUNDS DECEMBER 31, 2015 Water Utility Sew er Utility Governmental Foster Surface Total Activities Golf Water Enterprise Internal Course Utility Funds Service Funds Current assets: Cash and cash equivalents $ 3,845,268 $ 5,917,392 $ 762,664 $ 1,768,287 $ 12,293,611 $ 5,739,809 Investments 2,116,492 520,010 - - 2,636,502 4,018,253 Taxes receivable - - 789 - 789 - Other receivables 466,570 891,448 5,077 274,346 1,639,231 109,294 Due from other governmental units 390,795 1,617 - 266,915 659,327 - Inventory of materials and supplies - 62,402 - 62,402 13,836 Current assets restricted Cash and cash equivalents 15,700 66,306 82,006 Total Current Assets 6,834,825 7,330,466 897,239 2,309,548 17,373,868 9,881,193 Noncurrent assets: Notes receivable Capital assets Land Building Other improvements Machinery and equipment Less: accumulated depreciation Construction in progress Total capital assets (net of accumulated depreciation) Total Noncurrent Assets Total Assets Deferred Outflows of Resources Deferred pension Deferred Loss on Refunding Total Deferred Outflow s Of Resources 257,016 257,016 87,347 69,525 1,609,575 579,783 2,346,230 1,416,567 3,364,962 6,627,496 1,875,395 13,284,419 19,851,205 14,586,442 3,559,992 42,643,402 80,641,041 - 802,138 1,242,767 94,786 49,776 2,189,467 14,897,544 (10,514,341) (7,884,494) (5,759,485) (14,724,712) (38,883,033) (10,156,409) 2,551,709 241,921 - 4,454,333 7,247,963 - 14,194,624 14,194,624 11,621,122 6,132,364 11,878,138 6,132,364 34,877,977 66,826,087 4,741,135 34,877,977 67,083,103 4,741,135 21,029,449 54,814 12,044 66,858 19,208,605 7,029,603 31,826 28,720 62,330 37,187,525 84,455,181 14,622,327 60,546 62,330 92,301 241,271 37,910 5,559 46,323 97,860 287,594 37,910 LIABILITIES: Current Liabilities Accounts payable 43,179 34,454 5,164 42,767 125,563 61,051 Accrued wages and benefits 24,732 15,135 29,958 48,894 118,718 19,485 Accrued interest payable 2,778 8,148 - 7,187 18,113 - Unearned revenue 4,771 - - 7,679 12,450 - Other current liabilities 54,952 32,853 61,376 12,065 161,245 867,500 Due to other governments 95,080 233,436 - 270,953 599,468 - Compensated absences - 14,826 - 14,826 Revenue bond payable 37,654 89,790 17,379 144,823 Total Current Liabilities 263,145 428,641 96,497 406,922 1,195,206 948,036 Noncurrent liabilities: Reserve for unreported claims - - - - Revenue bonds payable 415,403 990,576 - 191,724 1,597,704 Net pension liability 476,002 276,365 541,271 801,542 2,095,180 Compensated absences 120,765 10,697 90,749 96,968 319,178 Due to other governments 717,275 2,196,886 - 2,132,830 5,046,991 Int Total Noncurrent Liabilities 1,729,446 3,474,524 632,020 3,223,064 9,059,053 Total Liabilities Deferred Inflow s of Resources Deferred inflow pension earnings Total Deferred Inflow s Of Resources 1,301,250 329,212 1,630,462 1,992,591 3,903,165 728,517 3,629,986 10,254,259 2,578,498 78,648 45,663 89,432 132,437 346,180 54,395 78,648 45,663 89,432 132,437 346,180 54,395 NET POSITION: Net investment in capital assets 12,941,256 8,139,154 6,132,364 32,270,650 59,483,424 4,741,135 Unrestricted 6,083,812 7,181,169 141,620 1,252,312 14,658,912 7,286,210 Total Net Position $ 19,025,069 $ 15,320,322 $ 6,273,984 $ 33,522,961 $ 74,142,336 $ 12,027,345 The notes to the financial statements are an integral part of this statement. 39 CITY OF TUKWILA: 2015 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 Governmental Foster Surface Total Activities Water Sewer Golf Water Enterprise Internal Utility Utility Course Utility Funds Service Funds OPERATING REVENUES: Charges for services $ 6,484,031 $ 9,020,998 $ 1,371,325 $ 5,085,974 $ 21,962,328 $ 8,847,111 Other operating revenue 465 - 110,466 225 111,156 112,715 Total Operating Revenues 6,484,496 9,020,998 1,481,791 5,086,199 22,073,484 8,959,826 OPERATING EXPENSES: Operating & maintenance 3,590,010 5,418,374 1,518,249 1,846,454 12,373,086 7,137,230 Administrative and general 645,770 538,327 173,909 801,518 2,159,525 441,581 Taxes 933,085 1,033,643 67,190 570,177 2,604,094 Depreciation and amortization 528,077 373,087 327,238 902,492 2,130,894 785,736 Total Operating Expenses 5,696,941 7,363,431 2,086,586 4,120,641 19,267,599 8,364,548 Operating Income (Loss) 787,554 1,657,567 (604,795) 965,559 2,805,885 595,279 NON - OPERATING REVENUE (EXPENSE): Investment earnings 24,040 43,175 952 18,905 87,073 96,407 Interest expense (37,683) (88,181) (27,333) (153,197) Gain (loss) on disposal of capital assets - - (455) (2,487) (2,942) 33,422 Other non - operating revenue 183,616 183,616 - Total Non- Operating Revenue (Expense) Income (Loss) Before Contributions & Transfers (13,642) (45,006) 497 172,701 114,550 129,829 773,912 1,612,561 (604,297) 1,138,259 2,920,435 725,108 Capital contributions 1,213,611 209,180 617,100 2,039,890 Transfers in - - 300,000 - 300,000 - Change in Net Position 1,987,523 1,821,741 (304,297) 1,755,359 5,260,326 725,108 Total net position - beginning 17,561,954 13,803,052 7,932,071 32,650,659 71,947,737 11,664,929 Change in accounting principle - pension costs (524,409) (304,471) (596,317) (883,057) (2,308,254) (362,692) Change in accounting principle - depreciation - - (757,473) - (757,473) - Total net position - beginning restated 17,037,545 13,498,581 6,578,281 31,767,602 68,882,010 11,302,237 Total Net Position - ending $ 19,025,068 $ 15,320,322 $ 6,273,984 $ 33,522,961 $ 74,142,335 $ 12,027,345 The notes to the financial statements are an integral part of this statement. 40 CITY OF TUKWILA: 2015 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2015 Page 1 of 2 Governmental Foster Surface Total Activities Water Sewer Golf Water Enterprise Internal Utility Utility Course Utility Funds Service Funds CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $ 6,448,402 $ 9,016,512 $ 1,479,914 $ 5,084,443 $ 22,029,271 $ 8,896,289 Cash paid to supplier (3,431,816) (5,855,061) (768,072) (1,694,907) (11,749,856) (1,609,027) Cash paid for taxes (933,085) (1,033,643) (67,190) (570,177) (2,604,094) - Cash paid to or on behalf of employees (776,060) (446,969) (943,805) (1,188,432) (3,355,266) (6,331,851) Other cash received (paid) 465 6,365 225 7,055 - Net Cash Provided (Used) By Operating Activities 1,307,906 1,680,839 (292,787) 1,631,153 4,327,111 955,410 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Operating grant received Transfers in 183,616 183,616 300,000 300,000 Net Cash Provided (Used) By Non- Capital Financing Activities 300,000 183,616 483,616 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of capital assets Contributed capital Debt proceeds Capital grants Principal payment on debt Interest payment on debt Proceeds from sale of equipment (1,338,852) (53,360) 108,387 206,109 453,057 1,581,851 716,283 1,454 (1,043,380) (1,598,960) (84,263) (124,518) (2,288,866) (3,681,079) 11,576 326,073 209,103 2,244,011 899,725 1,617,462 (535,553) (3,177,892) (40,419) (249,200) (1,288,808) 33,418 Net Cash Provided (used) for Capital And Related Financing Acivities (1,188,768) 12,576 (1,744,433) (2,920,624) (1,255,390) CASH FLOW FROM INVESTING ACTIVITIES: - Proceeds from sale of investments - 865,729 Purchase of investments (500,000) (500,000) - Interest received 6,449 24,751 952 18,905 51,057 176,192 Net Cash Provided (Used) In Investing Activities 6,449 (475,249) 952 18,905 (448,943) 1,041,921 Net increase (decrease) in cash and Cash equivalents Restated cash equivalents Cash and cash equivalents- beginning of year Cash And Cash Equivalents -end of year 125,588 3,735,380 1,218,166 8,165 4,699,225 820,805 89,241 1,441,160 1,679,046 10,934,457 741,941 741,941 4,997,868 $ 3,860,968 $ 5,917,392 $ 828,971 $ 1,768,287 $ 12,375,617 $ 5,739,809 Cash at end of year consists of: Cash and cash equivalents 3,845,268 5,917,392 762,664 1,768,287 12,293,611 $ 5,739,809 Restricted cash - customer deposits 15,700 - 66,306 82,006 - Total Cash and cash equivalents $ 3,860,968 $ 5,917,392 $ 828,971 $ 1,768,287 $ 12,375,617 $ 5,739,809 The notes to the financial statements are an integral part of this statement. 41 Net Cash Provided (Used) By Operating Activities $ 1,307,906 $ 1,680,839 $ (292,787) $ 1,631,153 $ 4,327,111 $ 955,410 CITY OF TUKWILA: 2015 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2015 Page 2 of 2 Governmental Foster Surface Total Activities Water Sewer Golf Water Enterprise Internal Utility Utility Course Utility Funds Service Funds RECONCILIATION OF NET OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating Income (Loss) $ 787,554 $ 1,657,567 $ (604,795) $ 965,559 $ 2,805,885 $ 595,279 Adjustments to reconcile operating income to net cash Provided (used) by operating activities: Depreciation 528,077 373,087 327,238 902,492 2,130,894 785,736 Asset (increase) decrease: Accounts receivable (28,629) (4,487) (1,387) (1,531) (36,033) (63,538) Inventory and other (4,581) (4,581) 1,132 Deferred outflow of resources increase (decrease) 54,814 31,826 62,330 92,301 241,271 37,910 Liability increases (decreases): Accounts payable 33,773 (335,680) (3,489) (227,092) (532,488) (346,941) Other liabilities (4,140) 20,086 5,033 10,722 31,701 - Wages & benefits payable 15,106 (15,898) 16,296 21,139 36,643 225 Deferred inflow of resources (increase) decrease (78,648) (45,663) (89,432) (132,437) (346,180) (54,395) Total Adjustments 520,352 23,272 312,008 665,594 1,521,226 360,130 SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Capital assets acquired by contributed capital Increase (decrease) in fair value of investment Amortization of bond premium Total Non Cash investing, Capital and Financing Activities $ 388,940 $ 1,617 $ 1,335 1,749 $ 390,275 $ $ $ 390,557 $ 339 3,423 23,889 3,366 $ - $ 339 $ 393,980 $ 23,889 The notes to the financial statements are an integral part of this statement. 42 CITY OF TUKWILA: 2015 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF FIDUCIARY NET POSITON FIDUCIARY FUND DECEMBER 31, 2015 Firemen's Pension Agency Trust Fund Fund ASSETS: Cash and cash equivalents Total Assets $ 1,416,506 $ 124,624 1,416,506 137,092 LIABILITIES: Accounts and other payables 137,092 Total Liabilities 137,092 NET POSITION: 1,416,506 Held In Trust For Pension Benefits And Other Purposes $ 1,416,506 $ The notes to the financial statements are an integral part of this statement. 43 CITY OF TUKWILA: 2015 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUND FOR THE YEAR ENDED DECEMBER 31, 2015 Firemen's Pension Trust Fund ADDITIONS: Other contributions: Fire Insurance Premiums $ 63,590 Investment earnings 2,667 Total Additions 66,258 DEDUCTIONS: Benefit payments $ 62,777 Total Deductions 62,777 Change In Net Position 3,481 Net position - beginning Net Position - ending 1,413,026 $ 1,416,506 The notes to the financial statements are an integral part of this statement. 44 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS For the Year Ended December 31, 2015 NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Tukwila was incorporated on June 23, 1908, and operates under the laws of the State of Washington applicable to a non - charter optional code city with a Mayor /Council form of government. Tukwila is served by a Mayor and seven councilmembers, all elected at large to four -year terms. The City provides what are considered general government services including public safety, streets, parks, planning and zoning, permits and inspection, general administrative, water services, sanitary sewer collection, and storm drainage. The accounting and reporting policies of the City of Tukwila conform to generally accepted accounting principles as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The City's significant accounting policies are described in this note. A. The Reporting Entity In accordance with the criteria set forth in Statement No. 14 of the Governmental Accounting Standards Board, (GASB) the City's Comprehensive Annual Financial Report (CAFR) includes all funds controlled by the City. See Note 7, Joint Ventures, for a discussion of Valley Communications Center, which is a joint public safety dispatching authority for five member cities, and South Correctional Entity (SCORE), which is a governmental administrative agency. Also, see Note 13, Risk Management, for a discussion of the Washington Cities Insurance Authority. The City of Tukwila is a party to the following interlocal agreements (not all inclusive): • Cascade Water Alliance • Valley Cities — SCORE Jail • Valley Communications Center • Valley Narcotics Enforcement Team • Valley Special Weapons and Tactics Team • Valley Civil Disturbance Unit • Tukwila Metropolitan Park District • Regional Animal Services of King County • King County Water Resource Inventory Area 9 • City of SeaTac Probation Services • King County Reclaimed Water • Community Connectivity Consortium The organizations above are separate entities in the State of Washington, whereby the City may enter into these agreements pursuant to, and as authorized by, the Interlocal Cooperation Act under RCW 39.34. The City of Tukwila is not financially accountable to these organizations, none of the organizations have an ongoing financial interest in the City, and the City is not financially dependent upon these organizations. Divestment of Component Unit In 2014, the Tukwila Metropolitan Park District (District), which operates pool programs within the City, was reported as a blended component unit in the City's financial statements because the City's councilmembers served in an ex 45 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS officio capacity as the District's commissioners. In the November 3, 2015 general election, voters approved a measure changing the governing Board of Commissioners from the Tukwila City Council serving in the ex officio capacity to a five member board with directly elected commissioners. The effective date of the proposition was November 24, 2015. As of December 31, 2015, the District was no longer a component unit of the City and the financial data associated with it was removed from the City's financial statements. B. Basis of Presentation The City's basic financial statements consist of government -wide statements, including a statement of net position and a statement of activities, and fund financial statements which provide a more detailed level of financial information. Government -wide Financial Statements The statement of net position and the statement of activities display information about the City. These statements include the financial activities of the government, except for fiduciary funds. The activity of the internal service funds is eliminated to avoid "doubling up" revenues and expenses. The statements distinguish between governmental activities and business -type activities. The statement of net position presents the financial condition of the governmental and business -type activities of the City at year -end. The statement of activities presents a comparison between direct expenses and program activity of the City. Direct expenses are those specifically associated with a service, program or department and therefore clearly identifiable to a particular function. Indirect costs are included in the program expense reported for individual functions and activities. The statement of activities reports the expenses of a given function offset by program revenues directly connected with the functional program. A function is an assembly of similar activities and may include portions of a fund or summarize more than one fund to capture the expenses and program revenues associated with a distinct functional activity. Program revenues include charges paid by the recipient of the goods or services offered by the program, grants and contributions that are restricted to meeting the operational or capital requirements of a particular program and interest earned on grants that is required to be used to support a particular program. For identifying to which function program revenue pertains, the determining factor for charges for services is which function generates the revenue. For grants and contributions, the determining factor is to which functions the revenues are restricted. Revenues which are not classified as program revenues are presented as general revenues of the City, and certain limited exceptions. The comparison of direct expenses with program revenues identifies the extent to which each business segment or governmental function is self- financing or draws from the general revenues of the City. Fund Financial Statements During the year, the City segregates transactions related to certain City functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Fund financial statements are designed to present financial information of the City at this more detailed level. The focus of governmental and enterprise fund financial statements is on major funds. Each major fund is presented in a separate column. Non -major funds are aggregated and presented in a single column. Internal service funds are combined and the totals are presented in a single column on the face of the proprietary fund statements. Fiduciary funds are reported by type. While fiduciary funds are excluded from the government -wide statements, they are included in the fund financial statements. 46 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS C. Fund Accounting The accounts of the City are organized on the basis of funds; each of which is considered a separate accounting entity. Each fund is accounted for with a separate set of self - balancing accounts that are comprised of assets, deferred outflow of resources, liabilities, deferred inflow of resources, fund equity, revenues and expenditures or expenses, as appropriate. The City's resources are allocated to - and accounted for - in individual funds according to the purpose for which they are spent and how they are controlled. There are three categories of funds: governmental, proprietary and fiduciary. Governmental Funds All governmental funds are accounted for on a "flow of current financial resources" measurement focus. This means only current assets and current liabilities are generally included on their balance sheets. Their reported fund balance (net current assets) is considered a measure of "available spendable resources." Governmental fund operating statements focus on measuring changes in current financial position, rather than net income; they present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. The following are the City's major governmental funds: • The general fund accounts for all of the City's financial resources except those required by statute or generally accepted accounting principles to be accounted for in another fund. As is the case with most municipalities, the general fund is the largest and most important accounting entity of the City. As noted in the statements that follow, the general fund receives the bulk of its revenues from local taxes, followed by State shared revenues, service charges, and other income. • The Arterial Street Fund was established in accordance with RCW 82.36.020 for the administration of the State - levied motor vehicle half -cent gasoline tax distributed to Tukwila and is used primarily to account for capital arterial street projects. In addition to the State - levied motor vehicle gasoline tax, other revenue includes state and federal grants, impact fees, and transfers in from the general fund. • The Local Improvement District (LID) #33 accounts for assessments related to the LID and provides payment to the Fiscal Agent for principal and interest on bonds issued in November 2013. • The Facilities Fund was established in 1988 for the replacement of existing general government facilities, including property owned by the City that will be utilized for redevelopment or renewal purposes. The other governmental funds of the City, account for the proceeds of specific revenue sources that are segregated to ensure that expenditures are made exclusively for qualified purposes. Proprietary and Internal Service Funds Proprietary and internal service funds are accounted for on a "flow of economic resources" measurement focus. This means all assets and all liabilities (whether current or noncurrent) associated with their activity are included on their balance sheets. Proprietary fund operating statements present increases (revenues and gains) and decreases (expenses and losses) in net total assets. Proprietary funds measurement focus is based upon determination of net income, financial position, and cash flows. Proprietary and internal service funds distinguish operating revenues and expenses from non - operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise and internal service funds are charges to the City's customers for sales and services. Operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non - operating revenues and expenses. As described further below, there are two fund types in this category - enterprise and internal service. 47 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Restricted assets shown in the government -wide financial statements and the proprietary funds balance sheet include monies reserved for payment of revenue bond debt, and deposits held for utility and golf course customer accounts. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. The City's enterprise funds account for utility and golf course operations, which are self - supported through user charges. The utilities are financed and operated like a private business enterprise, which requires periodic determination of revenues earned, expenses incurred, and net income for capital maintenance, public policy, management control and accountability. The City's major enterprise funds are as follows: • Water Utility Fund accounts for operations and capital improvements to provide water services to the City. • Sewer Utility Fund accounts for operations and capital improvements to provide sanitary sewer services to the City. • Foster Golf Course Fund is used to account for the operation, maintenance, and improvements of the municipal golf course facility. • Surface Water Utility Fund accounts for the operations and capital improvements for the City's storm drainage and surface water management function. The City has three internal service funds. The Equipment Rental Fund is used to account for the costs of maintaining and replacing all City vehicles and auxiliary equipment. All equipment costs, including depreciation, are factors in calculating the rates charged to each user department. The Insurance and Insurance — LEOFF I Funds are used to account for the costs of the City's self- insured medical plan for active employees and retired LEOFF 1 employees respectively. Medical and dental costs for covered employees are charged to the respective user departments. All premiums, medical and dental costs and ancillary charges are included. Fiduciary Funds Fiduciary funds account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governments, and other funds. The City has two fiduciary funds, Firemen's Pension Trust Fund and Agency Fund. The Firemen's Pension Trust Fund is accounted for in essentially the same manner as proprietary funds. The agency fund is custodial in nature (assets equal liabilities) and does not involve a measurement of results of operations. Fiduciary funds are excluded from the government -wide financial statements. D. Measurement Focus Government -wide Financial Statements The government -wide financial statements are prepared using the economic resources measurement focus. All assets, deferred outflow of resources, liabilities, and deferred inflow of resources associated with the operation of the City are included on the Statement of Net Position. Fund Financial Statements All governmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets, current liabilities, and deferred inflow of resources generally are included on the balance sheet. The statement of revenues, expenditures and changes in fund balances reports on the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. This approach differs from the manner in which the government activities of the government -wide financial statements are prepared. Governmental fund financial statements therefore include a 48 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS reconciliation with brief explanations to better identify the relationship between the government -wide statements and statements for governmental funds. Like the government -wide statements, all proprietary and internal service fund types are accounted for on a flow of economic resources measurement focus. All assets and all liabilities associated with the operation of these funds are included on the statement of net position. The statement of changes in activities presents increases (i.e., revenues) and decreases (i.e., expenses) in net total position. The statement of cash flows provides information about how the City finances and meets the cash flow needs of its proprietary activities. Fiduciary funds are reported using the economic resources measurement focus. E. Basis of Accounting Basis of accounting refers to the recognition of revenues and expenditures or expenses in the accounts and reporting them in the financial statements. Government -wide financial statements are prepared using the accrual basis of accounting. Governmental funds use the modified accrual basis of accounting. Proprietary and fiduciary funds use the accrual basis of accounting. Revenues — Exchange and Non - exchange Transactions Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. The modified accrual basis of accounting is followed in all governmental funds of the City. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available. "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay current liabilities. For the City, available means expected to be received within sixty (60) days of year -end. The primary accrued revenues that meet these criteria are sales and utility taxes. Non - exchange transactions, in which the City receives value without directly giving equal value in return, include property taxes, sales and use taxes, admission taxes, gambling taxes, utility taxes, hotel /motel taxes, grants, entitlements, and donations. These revenues are on an accrual basis. On the accrual basis, the revenue is recognized in the period in which the income is earned. Revenue from property taxes is recognized in the fiscal year for which the taxes are levied. (See Note 4 on receivables). Other Revenue Sources Revenue sources which are not considered to meet the measurable and available criteria for revenue recognition include licenses and permits, fines and forfeitures, and other miscellaneous revenues since they are generally not measurable until received. Under the modified accrual basis, expenditures are recorded when the fund liability is incurred, except for principal and interest on general long -term debt and vacation and sick pay which are recorded when paid. As a general rule the effect of interfund activity has been eliminated from the government -wide financial statements via the process of consolidation. Internal service fund and similar internal activity has been eliminated from the government -wide statement of activities so expenses are not reported twice. Exceptions to this general rule are payments for interfund services provided and used, such as between the City's water, sewer, and surface water functions and various other functions of the City, which are not eliminated in the process of consolidation. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported on the government -wide statements as program revenues include, charges to customers or applicants for goods, operating grants and contributions, and capital grants and contributions. General revenues include all taxes. The accrual basis of accounting is followed in all proprietary funds. Under the accrual 49 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS basis of accounting, revenues are recognized when earned and expenses are recorded when incurred. All assets and liabilities are recorded in the fund. F. Budgets and Budgetary Accounting The City of Tukwila budgets its funds in accordance with the Revised Code of Washington 35A.33. In compliance with the code, biennial budgets are adopted for the general fund and special revenue funds. For governmental funds, there are no substantial differences between the budgetary basis and generally accepted accounting principles. Budgetary accounts are integrated in fund ledgers for all budgeted funds, but the financial statements include budgetary comparisons for biennially budgeted governmental funds only. Budgets established for proprietary and fiduciary funds are "management budgets" and are not legally required to be reported and, as such, are not reported in the CAFR. The biennial appropriated budgets are adopted at the fund level and the budgets constitute the legal authority for expenditures at that level. Subsidiary revenue and expenditure records are used to compare the budgeted amounts with actual revenues and expenditures. As a management control device, the subsidiary ledgers monitor expenditures for individual functions and activities by object class. Any unexpended appropriation balances lapse at the end of the biennium. The City of Tukwila's budget procedures are mandated by RCW 35A.33. The steps in the budget process are as follows: 1) Prior to November 1 on even numbered years, the Mayor submits a proposed budget to the City Council. This budget is based on priorities established by the Council and estimates provided by the City departments during the preceding months, and balanced with revenue estimates made by the Mayor. 2) The City Council conducts public hearings on the proposed budget in November. Public hearings are also held in December, if necessary. 3) The Council makes its adjustments to the proposed budget and adopts by ordinance a final balanced budget no later than December 31. 4) The final operating budget as adopted is published and distributed within the first month of the following year. Copies of the budget are made available to the public. The City Council must approve, by ordinance, any amendments that increase the total for the fund. Budget amounts presented in the financial statements include both the original amounts and the final amended budget as approved by the City Council. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental appropriations, and other legally authorized changes applicable to the fiscal year. Expenditure Categories General Government Includes administration, finance, municipal court, attorney, and city clerk activities. Public Safety Includes all police and fire activities. Physical Environment Includes expenditures for the public works activities not chargeable to the enterprise funds. Transportation Includes all street and arterial street maintenance and construction. Economic Development Reflects the planning and building inspection activities. Culture and Recreation Includes the parks and recreation activities. 50 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS G. Assets, Liabilities, and Fund Equity Cash and Cash Equivalents All cash and cash equivalents, restricted and unrestricted, consists of cash balances in the checking account, money market account, imprest funds, and the State Treasurer's Local Government Investment Pool. All funds in the care of other institutions are considered investments. Cash equivalents are short -term, highly liquid investments that are readily convertible to known amounts of cash. Investments Investments are held separately by each fund with interest earned directly for the benefit of each fund. Investments are reported in the financial statements at fair value, cost or amortized cost, depending on the type and maturity length of each investment as required by GASB Statement 31. Washington State statutes provide for the City to hold investments consisting of obligations of the Federal Government, repurchase agreements, prime banker's acceptances, and time certificates of deposit. Additional deposit and investment information is presented in Note 3. Notes Receivable Notes receivable in the enterprise funds consists of sewer connection fees due from customers to the utility. In the governmental funds, it consists of the current portion of the special assessment receivable. Amounts Due to and From Other Funds and Governments, Interfund Loans and Advances Receivable Activity between funds that is representative of lending /borrowing arrangements outstanding at the end of the fiscal year are referred to as either "interfund loans receivable /payable" or "advances to /from other funds." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." As of December 31, 2015, there are no residual balances outstanding between the governmental activities and business -type activities. The non - current portion of interfund loans and advances between funds, as reported in the fund financial statements, are offset by a fund balance nonspendable account in applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources. See Note 5 on interfund transactions. Special Assessments Special assessments are amounts levied against benefited properties to recover costs associated with the construction of Local Improvement District (LID) projects. A lien is recorded against benefited properties until the assessment has been paid. Special assessments receivable represent all outstanding assessment amounts including current assessments billed but not collected, delinquent assessments unpaid at year -end, and special assessment amounts due in future years, which are recorded in a deferred inflow of resources account in the fund financial statements. Since special assessments are secured by liens against related properties, no allowance for uncollectible amounts is made. Inventories Inventory is defined as items purchased for resale to external customers or other City departments, or supplies and small tools used in normal operations that are considered material in amount. The inventory amount on this year's financial statements reflect only those items that will be resold. The inventory is valued at average cost using the consumption method and there is a physical inventory count taken annually at year -end. Governmental funds use the purchase method whereby inventory items are considered expenditures when purchased. 51 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Real Property Held for Resale Governmental funds do not report property, plant, and equipment because such assets normally are used in operations, and therefore will never be available for spending (they are not financial assets). However, specific items of property occasionally are acquired with the intent of sale. Examples include foreclosure properties, redevelopment properties, and donated assets held for resale rather than retained for use in operations. Governments often acquire redevelopment properties to attract private- sector investment in an economically depressed area and are willing to sell the property at a price that may be far less than the government's cost to acquire and improve the property. Since assets held for sale can never be reported at an amount higher than their net realizable value, any cost in excess of net realizable value must be excluded from the property value reported in the financial statements. The City acquired redevelopment properties in its urban renewal area along Tukwila International Boulevard. Acquisition of the Tukwila Village property began in 1999 and an agreement to develop the property was secured in 2012. Three crime - ridden motels were acquired in 2014, and two additional properties were acquired in 2015, with the intent to demolish the structures and sell the vacant land for redevelopment. All redevelopment properties are reported at net realizable value in the financial statements. Deferred Outflows /Inflows of Resources Deferred outflow of resources is a consumption of net position by the government that is applicable to a future reporting period. Deferred inflow of resources is acquisition of net position by the government that is applicable to a future reporting period. Capital Assets and Depreciation The accounting and reporting treatment applied to the capital assets associated with a fund are determined by its measurement focus. Capital assets acquired in governmental funds are accounted for as expenditures in the fund when the asset is purchased. These assets are reported in the governmental activities column of the government - wide statement of net position but are not reported in the fund financial statements. Capital assets utilized by the proprietary funds are reported both in the business -type activities column of the government -wide statement of net position and in the respective funds. All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the year. Donated assets are valued at estimated fair market value at time of acquisition. Where historical cost is not known, assets are recorded at estimated historical costs. The City maintains a capitalization threshold of five thousand ($5,000) dollars. The City's infrastructure consists of roads, bridges, storm sewers, water and sewer distribution and collection systems. Improvements are capitalized while the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Depreciation is computed using the straight line method over estimated service lives, as follows: Asset Estimated Service Life Buildings 25 to 50 years Non - Building Improvements 25 to 50 years Machinery and Equipment 2 to 50 years Intangibles 2 to 50 years Infrastructure 25 to 50 years 52 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS See Note 6 for additional information on capital assets. Other Liabilities Other liabilities include retainage, deposits and the incurred - but - not - reported (IBNR) claims and claim reserve for the self- insured healthcare funds. The Self Insurance fund includes an IBNR liability of $867,500 determined using actuarial methods. This liability is multiplied by a factor of 2.5 to meet the City's financial goal of maintaining reserves at 1 x IBNR for claim fluctuations plus 1.5 x IBNR for a claims reserve yielding a total liability of $2,168,750. Compensated Absences City policy and labor contracts with City of Tukwila employees call for the accumulation of vacation and sick leave. At termination of employment, employees with the required length of service may receive cash payments for all accumulated vacation leave to a maximum of 384 hours. Sick leave termination benefits are based on a percentage of accumulated sick leave up to a maximum of 180 hours. The payment is based on current wages at termination. The entire compensated absence liability, which includes salary and wages as well as related taxes, is reported on the government -wide financial statements. In the enterprise funds, the entire amount of compensated absences is reported as a fund liability. This reporting format is in compliance with GASB Statement No. 16. The current portion reported on the schedule of long -term liabilities is calculated using the last -in- first -out (LIFO) approach. Anticipated subsequent yearly usage is used to determine the current portion of the liability. There is no current portion to report when the anticipated leave usage is less than the anticipated leave to be accrued during the next year. Long -Term Obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, long -term debt and other long -term obligations are reported as liabilities in the applicable governmental activities, business - type activities, or proprietary fund type statement of net position. Bond premiums and discounts are amortized over the life of the bonds using the straight line method. Bonds payable are reported net of the applicable bond premium or discount. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenses. In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Long -term debt outstanding at year -end is outlined in Note 10. Fund Balance /Net Position A fund balance represents the difference between the current assets and current liabilities plus deferred inflows. The City restricts those portions of fund balance which are legally segregated for a specific future use or which do not represent available, spendable resources and therefore are not available for general appropriation or expenditure. Net position represents the difference between assets plus deferred outflow of resources and liabilities plus deferred inflow of resources. Net position invested in capital assets, net of related debt, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used (i.e., the amount that the City has spent) for the acquisition, construction or improvement of those assets. Net position is reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. The remaining balance is reported as unrestricted. 53 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS In 2012 and again in 2015, the City revised the Reserve Policy which addresses the various types of the City's operating and restricted use funds. The objectives of this Policy are to establish, attain, and restore minimum fund balances, including self- insurance health care reserve funds, and specified review and reporting of fund balances. At the close of each fiscal year, the General Fund balance shall equal or exceed 18 %, and the Contingency 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. Additionally, 10% of the previous year one -time revenues shall be set aside in a one -time revenue reserve within the Contingency Reserve fund. 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 non - operating, non - recurring revenues such as real estate sales, transfers in from other funds or debt proceeds. The City shall maintain a reserve balance in each of its self- insured health care funds an amount equal to 2.5 times or 250 %, of the actuarially determined IBNR reserve. Fund Balance Components The fund balance amounts for governmental funds have been classified in accordance with GASB Statement No. 54 and are reported as nonspendable, restricted, committed, assigned or unassigned. Nonspendable fund balance includes items that cannot be spent. This includes activity that is not in a spendable form (inventories, prepaid amounts, long -term portion of loans /notes receivable, or property held for resale unless the proceeds are restricted, committed or assigned) and activity that is legally or contractually required to remain intact, such as a principal balance in a permanent fund. The general fund's nonspendable fund balance of $1.3 million is the outstanding balance of a loan from the general fund to the Tukwila Metropolitan Park District. The facilities fund has a nonspendable fund balance of $7.65 million representing real property held as an investment. • Restricted fund balances have constraints placed upon the use of the resources either by an external party or imposed by law through a constitutional provision or enabling legislation. • Committed fund balances can be used only for specific purposes pursuant to constraints imposed by a formal action in the form of ordinances and resolutions of Tukwila Councilmembers, the City's highest level of decision - making authority. This formal action is the passage of an ordinance by City Council creating, modifying, or rescinding an appropriation. These committed amounts cannot be used for any other purpose unless Council removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. • Assigned fund balance includes amounts that are constrained by the City's intent to be used for a specific purpose, but are neither restricted nor committed. Intent of use is determined through the budgetary process and is expressed by the Finance Director. • Unassigned fund balance is the residual amount not included in the four categories described above. Also, any deficit fund balances within the other governmental fund types are reported as unassigned. Each fund has been analyzed to classify the fund balance in accordance with GASB Statement No. 54. Funds are created by the City Council and money is authorized to be transferred to the fund for a particular purpose. At this point, balances in these funds are at least committed, and may be further restricted depending on whether there is an external party, constitutional provision, or enabling legislation constraint involved. The City applies restricted resources first when an expense is incurred for purposes of which both restricted and unrestricted net position is available in the governmental funds. When expenditures are incurred for purposes, for which unrestricted (committed, assigned, and unassigned) resources are available, and amounts in any of these unrestricted 54 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS classifications can be used, it is the City's policy to spend committed resources first, the assigned second, followed by unassigned. Operating Revenues and Expenses Operating revenues are generated directly from the primary activity of the proprietary funds. For the City, these revenues are service fees for utilities, charges for services for the use of the golf course and the internal use of vehicles, computers and facilities. Operating expenses are necessary costs incurred to provide the good or service that are the primary activity of each fund. All other revenues and expenses are classified as non - operating including investment earnings, interest expense and the gain or loss on the disposition of capital assets. Contributions of Capital Contributions of capital in proprietary fund financial statement arise from outside contributions of capital assets, for example, developers, and grants or outside contributions of resources restricted to capital acquisition and construction. It also includes water and sewer connection charges. Indirect Cost Allocation Indirect costs, also referred to as overhead costs, consist of the cost of central services or support functions shared across departments. They include accounting, human resources, payroll, information technology, janitorial services and others. These services are paid through the general fund and charged back to the proprietary funds that directly benefit from them. In prior years, the indirect costs allocated to the proprietary funds were recorded as a transfer out of the proprietary funds and a transfer in to the general fund. Pursuant to guidance by the Washington State Auditor's Office, Budgeting, Accounting, and Reporting System (BARS), the indirect costs allocated to the proprietary and other funds of $2,255,320 for 2015 are reported as a reduction of general government expenditures on the Statement of Activities rather than as transfers in and transfers out. Interfund Activity Exchange transactions between funds are reported as revenues in the seller funds and as expenditures /expenses in the purchaser funds. On the government -wide statement of activities, the exchange transactions between the internal service funds and the user funds are eliminated. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources /uses in governmental funds and after non - operating revenues /expenses section in proprietary funds. Transfers between governmental and business -type activities on the government -wide statement of activities are reported separately after general revenues. Transfers between funds reported in the governmental activities column are eliminated. Transfers between funds reported in the business type activities column are eliminated. Special Item Special items are transactions that are either unusual in nature or infrequent in occurrence. They must also be within the control of management. They are reported as a separate line item entitled Special Item. The City has one special item reported in 2015. The City purchased motels in the Tukwila International Boulevard urban renewal area for redevelopment. The assets were written down to the net realizable value because the structures on the land will be demolished and the property sold as raw land. The reduction in value is reported as a special item. Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. 55 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Risk Management It is the City of Tukwila's policy to self- insure for unemployment benefits because of the insignificant liability. Medical and dental self- insurance coverage is also provided for employees. All buildings, City equipment, and City vehicles are insured by carriers for property coverage at replacement value. The City of Tukwila is a member of the Washington Cities Insurance Authority (WCIA) as of January 1, 1984. WCIA is an organization of Washington entities numbering 179 as of December 31, 2015. WCIA provides pooled self - insurance coverage for general liability, vehicle liability, false arrest, and errors and omissions. See Note 12 for additional information on risk management. H. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of all state sponsored pension plans and additions to /deductions from those plans' fiduciary net position have been determined on the same basis as they are reported by the Washington State Department of Retirement Systems. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. I. Changes in Reporting In 2015 the City implemented GASB Statement No. 68 Accounting and Financial Reporting for Pensions which amends GASB Statement No. 27. This statement replaces the requirements of Statements No. 27 and No. 50 related to pension plans that are administered through trust or equivalent arrangements. The City also implemented GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to The Measurement Date — An Amendment of GASB Statement No. 68. This Statement addresses an issue regarding application of the transition provisions of Statement No. 68. The issue relates to amounts associated with contributions, if any, made by a state or local government employer or nonemployer contributing entity to a defined benefit pension plan after the measurement date of the government's beginning net pension liability. NOTE 2 — DEPOSITS AND INVESTMENTS The City maintains a cash and investment pool available for use by all funds. Interest earned on pooled investments is recorded in the participating funds. Investments are also held separately by several of the funds, with interest earned directly for the benefit of each fund. Cash and Cash Equivalents Custodial credit risk is the risk associated with the failure of a depository financial institution. In the event of a depository financial institution's failure, it is the risk that the City would not be able to recover its deposits or collateralized securities that are in the possession of the outside parties. The City minimizes custodial credit risk by following the restrictions set forth in state law. At year -end, the carrying amount of the City's cash balance held in banks was $14,479,680. Of the bank balance, $250,000 was covered by Federal depository insurance and the Washington Public Deposit Protection Commission (WPDPC) insured the remainder. The City also maintains imprest funds totaling $14,450. The City participates in the State Treasurer's Investment Pool, which is a 2a7 -like unrated pool, overseen by the State Treasurer's Office. The fair value of the City's position in the pool is the same as the value of the pool shares. Because of its highly liquid nature, the Pool funds are considered cash equivalents. Investments 56 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS The City's investment portfolio includes certificate of deposits insured by the Washington State Public Depository Commission, U.S. Government Agency Notes, and municipal bonds issued by state and local agencies. These investments are reported at fair value based on quoted market prices. Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Also, the Firemen's Pension Fund is authorized to invest in stocks, bonds, and mutual funds. At December 31, 2015, the City had the following deposits and investments: SCHEDULE OF INVESTMENTS BY MATURITY Maturity Credit Market Date Rating Value Certificates of Deposit: Sound Community Bank Bank of Washington Total Certificate of Deposits U.S. Government Agency Notes: Federal Home Loan Mtg Corp Federal Natl Mortgage Assn Federal Home Loan Bank Federal Home Loan Mtg Corp Total U.S. Agency Notes 3/4/2017 5/1/2016 $ 3,174, 738 250,000 3,424,738 5/13/2016 AAA / AA+ 2,000,398 8/23/2017 Aaa / AA+ 993,328 9/21 /2018 Aaa / AA+ 1,000,013 5/25/2018 AAA / AA+ 997,016 4,990,755 Municipal Bonds: Washington State Convention Center: Lodging Tax 7/1/2016 Aa3 / A+ 505,050 Washington State Biomedical Research: Revenue - Facilities 7/1/2017 Aaa / AA+ 520,010 Marysville Washington: Limited General Obligation 12/1/2017 Aa3 / Al 304,477 Washington State Biomedical Research:Re enue - Facilities 7/1/2019 Aaa / AA+ 547,445 Port of Anacortes, Washington: Limited General Obligation 9/1/2020 Al 362,719 Douglas County School District, Washington: Unlimited General Obligation 12/1/2020 Aal / Aa3 1,240,317 Total Municipal Bonds 3,480,017 TOTAL INVESTMENTS $ 11,895,510 * No credit rating with certificate of deposit accounts; accounts are insured by the Public Depository Protection Commission. 57 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS RECONCILIATION OF ALL CASH, DEPOSITS AND INVESTMENTS AS REPORTED ON STATEMENT OF NET POSITION: Cash and Cash Equivalents: $ 34,975,562 Investments 11,895,510 Current Assets Restricted: Cash and cash equivalents 2,524,103 Total Cash, Cash Equivalents and Investments $ 49,395,175 SUMMARY BY TYPE: Cash and Cash Equivalents: Local Government Investment Pool Money market account Cash on hand Cash in bank -book balance Total cash and cash equivalents Investments: Certificates of deposit U.S. Government Agency Notes Municipal bonds Total investments $ 10,708,902 13,152, 028 14,450 13, 624, 285 37,499,665 3,424,738 4,990,755 3,480,017 11, 895, 510 Total Cash, Cash Equivalents, and Investments $ 49,395,175 Restricted Assets - Governmental Deposits $ 8,406 Drug Seizure funds - federal portion 12,644 Debt Service 2,280,652 Impact Fees 140,395 Restricted Assets- Govemmental $ 2,442,097 Restricted Assets - Business -Type Customer Deposits -Water Utility Customer Deposits -Golf Course Lease Deposits -Golf Course Revenue Bond Reserve Account -Water /Sewer /Surface Water $ 15,700 51,306 15,000 Restricted Assets - Business -Type $ 82,006 Total Restricted Assets $ 2,524,103 58 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. As a means of limiting its exposure to fair value losses arising from rising interest rates, the City's investment policy limits at least half of the City's cash and investment portfolio to maturities of less than one year. Investment maturities are limited as follows: 1) At the time of investment, a minimum of thirty percent (30 %) of the cash and investment portfolio will be comprised of investments maturing or available within one year. 2) At the time of investment, eighty percent (80 %) of the portfolio will be comprised of investments maturing or available within five (5) years and no instruments shall have a maturity exceeding ten (10) years, except when compatible with a specific fund's investment needs. 3) The average maturity of the portfolio shall not exceed three and one half (3 1/2) years or forty -two (42) months. The City uses the weighted average maturity method to manage interest rate risk. Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State statutes and the City's investment policy limit the types of securities authorized for investment by the City. The principal governing statutes are RCW 39.59 and RCW 39.60. The Finance Director may further restrict eligible investments by this policy at his /her discretion. Authorized investments include (but are not limited to): 1) U.S. Treasury Securities. 2) U.S. Agency Securities (i.e., obligations of any government- sponsored corporation eligible for collateral purposes at the Federal Reserve). 3) Certificates of Deposit, Money Market Deposit Accounts and savings deposits with qualified depositories within statutory limits as promulgated by the WPDPC at the time of investment. 4) Bankers Acceptances (BA's) purchased on the secondary market with a rating of A -1, P -1, its equivalent or better. 5) General Obligation Bonds of a state or local government which have at the time of the investment one of the three highest credit ratings of a nationally- recognized rating agency. 6) The Washington State Local Government Investment Pool (LGIP). As of December 31, 2015, the City's investments in municipal bonds were rated Aaa to Al by Moody's Investor Service. Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of an investment in a single issuer. The City of Tukwila diversifies its investments by security type and institution as described below: 1) No more than fifty percent (50 %) of the City's cash and investment portfolio, at the time of purchase, shall be in any single financial institution. 59 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS 2) Except, that no more than seventy -five percent (75 %) of the City's portfolio, at the time of purchase, shall be invested in the Washington State Local Government Investment Pool, and 3) No more than seventy -five percent (75 %) of the City's portfolio, at the time of purchase, shall be invested in U.S. Treasury or Agency securities. NOTE 3 — RECEIVABLES Taxes Receivable Taxes receivable consists of property, sales and use, gambling, leasehold, and hotel /motel taxes. Customer accounts receivable consists of amounts owed by private individuals or organizations for goods and services provided. Uncollectible amounts are considered immaterial and the direct write -off method is used. Customer accounts receivable also includes the current portion of special assessments due from property owners within Local Improvement District No. 33. Other types of accounts receivable include utility taxes due from private organizations and customer accounts receivable for amounts owed which billings have not been prepared. Governmental Business -Type Activities Activities Total Taxes Receivable Property $ 197,626 $ $ 197,626 Sales & Use 3,736,033 3,736,033 Real Estate Excise Tax 1,097,739 1,097,739 Utility Tax 828,247 828,247 Admission /Gambling /Parking /Other 1,046,739 789 1,047,528 Total Taxes Receivable 6,906,384 789 6,907,173 Customer Receivable Miscellaneous Utility Accounts Total Customer Receivable Interest Notes due within one year Total Receivables 432,016 5,077 1,630,573 437,093 1,630,573 432,016 55,087 1,635,651 2,067,667 1,790 56,877 612,971 612,971 $ 8,006,458 $ 1,638,230 $ 9,644,688 Property Taxes Receivable The County Treasurer acts as an agent to collect property taxes levied in the County for all taxing authorities. Collections are distributed daily via wire transfer. January 1st February 14th April 30th May 31st October 31st Property Tax Calendar Taxes are levied and become an enforceable lien against properties. Tax bills are mailed. First of two equal installment payments is due. If taxes are less than $50, full payment is due. (RCW 84.56.020) Assessed value of property established for next year's levy at 100 percent of market value. Second installment is due. (RCW84.56.020) 60 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Assessed values are established by the County Assessor at 100% of fair market value. A revaluation of all property is required every two years. On May 31 of each year the assessed value of property is established for the next year's property tax levy. Property taxes levied by the County Assessor and collected by the County treasurer become a lien on the first day of the levy year and may be paid in two equal installments if the total amount exceeds $50. The first half of real property taxes is due on April 30 and the balance is due October 31. Delinquent taxes bear interest at the rate of 12% and are subject to additional penalties if not paid as scheduled. During the year, property tax revenues are recognized when cash is received. At year -end, unpaid property taxes are recorded as a receivable. Property tax receivables at year -end not expected to be collected within 60 days after the current period are reported as other unavailable revenue in the deferred inflow of resources section of the governmental funds financial statements. The tax rate for general City operations is limited to $3.60 per $1,000 of assessed value. An additional levy rate of $0.225 is available to the City because the City funds a Firemen's Pension Fund. The payment of principal and interest on limited tax (non- voted) bonds issued by the City is made from the general levy. Accordingly, the issuance of limited tax general obligation bonds has the effect of reducing property taxes available for the general operations of City government. State law also provides that the City's operating levy may not exceed 101 % of the largest single levy of the past three years. The State Constitution provides that the total of all taxes upon real and personal property by the State and all taxing entities, including the City, shall not in any year exceed 1°/0 ($10 per $1,000) of the true and fair monetary value of such property. This limitation may be exceeded upon the approval of 60% of the City voters at an election in which the total vote exceeds 40% of the votes cast at the last general election. Washington State Constitution and Washington State law, RCW 84.55.010, limit the rate. The City's regular levy in 2015 was $2.84188 per $1,000 of assessed valuation of $5,054,078,747 for a total regular levy of $14,327,468. Due from Other Governments All receivables from other governments are recorded at year -end as amounts Due from Other Governmental Units. These amounts represent federal, state, and local reimbursement -type grants, and are reported as receivables and intergovernmental revenues in the year when the related expenditures are incurred. As of December 31, 2015, the majority represents grants. Notes Receivable Notes receivable for governmental activities consists of the long -term portion of the special assessments related to Local Improvement District (LID) No. 33. Special assessments are levied against certain property owners benefited by the improvement. The current portion of outstanding assessments is reported in the receivables category on the Statement of Net Position and consists of assessments which are due within one year and delinquent assessments from the prior year. Assessments are charged to property owners within the LID annually with payments due in October of each year. The repayment period for the assessments is 15 years with the first installment due in 2014 and the final installment due in 2028. Notes receivable for business —type activities consists of outstanding payment plans for sewer connection fees. The City designed and constructed sewer infrastructure in both the Allentown and Foster Point neighborhoods, which was previously on septic. The project was completed and accepted by City Council in 2007. The connection fees to be paid by property owners were established by ordinance, effective in August, 2007. One option given to property owners was an installment payment plan. This option allowed owners to sign an agreement to have the connection charge added to their monthly water bill and repaid over 5, 10, or 15 years with a 4% annual interest rate. The balance reflects all principal outstanding at year -end. 61 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Governmental Business -Type Activities Activities Total Notes Receivable Special Assessments - Non - Current Portion $ 6,266,537 $ Sewer Payment Plan Total Receivables - $ 6,266,537 257,016 257,016 $ 6,266,537 $ 257,016 $ 6,523,553 NOTE 4 — INTERFUND TRANSACTIONS Interfund activity is the term used to describe similar financial transactions between funds of the primary government. Reciprocal interfund activity involves the exchange of equal or almost equal value between funds. Services Provided /Used — Transactions that would be treated as revenues, expenditures or expenses if they involve external organizations, such as buying goods and services in return for equal or almost equal value, are similarly treated when they involve other funds of the City of Tukwila. Interfund Loans /Advances — Loans between funds are classified as interfund loans receivable and payable or as advances to and from other funds in the fund statements. Interfund loans are offset by a reservation of fund equity. Interfund loans are subject to elimination upon consolidation. Nonreciprocal interfund activity does not involve the exchange of equal or almost equal value between funds. Transfers — Transactions to support the operations of other funds are recorded as "Transfers" and classified with "Other Financing Sources or Uses" in the fund statements. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government -wide financial statements. Contributions — Contributions to the capital of enterprise or internal service funds, transfers of capital assets between proprietary and governmental funds, transfers to establish or reduce working capital in other funds, and transfers of remaining balances when funds are closed are classified non - operating revenue. Reimbursements — Repayments from funds responsible for expenditures or expenses to the funds that initially paid for them. These transactions are expenditures /expense in the fund responsible and as a reduction of expenditure /expensed in the fund being reimbursed. Interfund transfers for the year were as follows: SUMMARY OF INTERFUND TRANSFERS Governmental Proprietary Funds Funds General Arterial Other GoVt Total Golf Fund Street Facilities Funds Governmental Course TOTAL Transfers In $ 500,000 $ 1,700,000 $ - $ 3,433,846 $ 5,633,846 $ 300,000 $ 5,933,846 Transfers Out (5,433,846) - (500,000) - (5,933,846) - (5,933,846) Net Transfers In (Out) $ (4,933,846) $ 1,700,000 $ (500,000) $ 3,433,846 $ (300,000) $ 300,000 $ 62 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS The principal purposes for interfund transfers include interfund subsidies and transfers into debt service and capital projects funds. NOTE 5 — OPERATING LEASES During 2015 the City maintained operating lease agreements for the purpose of leasing City operated machinery and equipment. Tukwila leases office/ storage space for the purposes of the Records Center, Seattle Southside Visitor Center and the Neighborhood Resource Center. In addition the City leased a postage machine and copiers during 2015. Costs associated with these activities are as follows. SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS 2015 2016 2017 2018 2019 Records Center 1 Neighborhood Resource Center 2 Seattle Southside Visitor Center Police Archives /Vehicle Storage Police Department Gym Postage Machines Office Equipment 69,704 21,000 20,141 4,600 8,400 9,096 52,096 29,400 10,500 55,752 14,652 9,096 45,995 57,424 59,144 15,091 15,542 9,096 9,096 36,103 17,924 60,916 16,012 9,096 3,300 Total Lease Payments 185,037 165,396 117,714 101,706 89,324 1 Leasing of the Records Center expires on 5/31/2016. The tenant is responsible for the cost of utilities and maintenance of building, w hich is estimated, based on square footage and reconciled annually by the lessor. 2 Leasing of the Neighborhood Resource Center expires on 6/30/2016. 63 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTE 6 — CAPITAL ASSETS Capital asset activity for the year ended December 31, 2015, was as follows: GOVERNMENTAL ACTIVITIES BEGINNING BEGINNING Divestment of BALANCE ENDING BALANCE Component 1/1/2015 BALANCE 1/1/2015 Unit RESTATED INCREASES DECREASES 12/31/2015 Governmental Activities Capital assets, not being depreciated: Land $ 35,312,814 - $ 35,312,814 $ - $ - $ 35,312,814 Construction in Progress 16,718,203 - 16,718,203 11,355,209 (1,940,230) 26,133,182 Total capital assets, not being depreciated 52,031,017 0 52,031,017 11,355,209 (1,940,230) 61,445,996 Capital assets, being depreciated: Buildings 25,424,641 (2,845,260) 22,579,382 92,027 Other Improvements 18,130,493 (76,492) 18,054,002 10,030 Machinery and Equipment 19,600,119 (216,988) 19,383,131 1,501,411 Infrastructure 172,163,132 - 172,163,132 1,701,622 Total capital assets being depreciated (243,210) 22,671,409 18,064,032 20,641,332 173,864,754 235,318,386 (3,138,739) 232,179, 646 3,305,090 Less accumulated depreciation for: Buildings (11,614,193) 292,289 (11,321,904) (637,509) Other Improvements (11,355,020) 2,550 (11,352,470) (778,403) Machinery and Equipment (12,758,603) 20,639 (12,737,964) (1,402,051) Infrastructure (47,646,638) - (47,646,638) (5,304,588) (243,210) 235,241,526 310,158 (11,959,413) (12,130, 873) (13, 829, 858) (52,951,226) Total accumulated depreciation (83,374,454) 315,477 (83,058,977) (8,122,551) 310,158 (90,871,370) Total capital assets, being depreciated, net 151,943,932 (2,823,262) 149,120,670 (4,817,461) 66,948 144,370,156 Governmental activity capital assets, net $ 203,974,949 $ (2,823,262) 201,151,687 $ 6,537,748 $ (1,873,282) $ 205,816,152 Effective with the 2015 financial reporting year, the Tukwila Pool Metropolitan Park District (TPMPD) is no longer a component unit of the City of Tukwila. Because the TPMPD is no longer a component unit, the beginning balances are being restated. On the November 3, 2015 general election, voters approved a measure changing the governing Board of Commissioners from the Tukwila City Council serving in an ex officio capacity to a five member board with directly elected commissioners. The effective date of the proposition was November 24, 2015. 64 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS BUSINESS -TYPE ACTIVITIES BEGINNING CHANGE IN ENDING BALANCE ACCOUNTING BALANCE 1/1/2015 PRINCIPLE INCREASES DECREASES 12/31/2015 Business -Type Activities Capital assets, not being depreciated: Land $ 2,346,230 $ $ - $ - $ 2,346,230 Construction in Progress 4,200,272 3,660,185 (612,494) 7,247,963 Total capital assets, not being depreciated 6,546,502 0 3,660,185 (612,494) 9,594,194 Capital assets, being depreciated: Buildings 13,284,419 - - - 13,284,419 Other Improvements 80,053,417 - 612,494 (24,870) 80,641,041 Machinery and Equipment 2,322,594 20,894 (154,020) 2,189,467 Total capital assets being depreciated 95,660,430 633,388 (178,890) 96,114,928 Less accumulated depreciation for: Buildings (4,233,598) - (371,794) - (4,605,392) Other Improvements (30,098,748) (708,834) (1,710,507) 22,383 (32,495,705) Machinery and Equipment (1,838,270) (48,640) (48,593) 153,566 (1,781,937) Total accumulated depreciation (36,170,616) (757,473) (2,130,894) 175,949 (38,883,034) Total capital assets, being depreciated, net 59,489,816 (757,473) (1,497,506) (2,942) 57,231,894 Business -Type activity capital assets, net $ 66,036,318 $ (757,473) $ 2,162,679 $ (615,436) $ 66,826,087 The City changed the depreciation method for machinery and equipment as well as other improvements categories. Previously, the depreciation method utilized was the composite method. Beginning with fiscal year 2015, the straight -line method of depreciation is utilized for all categories of capital assets. 65 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS DEPRECIATION Depreciation expense for 2015 was charged to functions /programs as follows: Governmental Activities General Government $ 272,680 Public Safety 165,840 Physical Environment 687,741 Transportation 5,339,544 Economic Environment 4,301 Culture and Recreation 790,444 Intangible Assets 76,265 Capital assets held by the government's internal service funds are charged to the various functions based on their usage of the assets 785,736 Total 2015 depreciation expense - governmental activities $ 8,122,551 Business -type activities: Water Utility Sewer Utility Foster Golf Course Surface Water Utility $ 528,077 373,087 327,238 902,492 Total 2015 depreciation expense - business -type activities $ 2,130,894 NOTE 7 — JOINT VENTURES A joint venture is a legal entity or other organization that results from a contractual agreement and that is owned, operated, or governed by two or more participants as a separate and specific activity subject to joint control in which the participants retain (a) an on -going financial interest or (b) an on -going financial responsibility. The City participates in two joint ventures. A summary of the City's investment in joint ventures follows. SUMMARY OF INVESTMENT IN JOINT VENTURES Equity in Equity in Capital Assets TOTAL Operations financed by Outstanding Investment in Debt Joint Ventures Valley Com $ 2,139,261 $ $ 2,139,261 SCORE 788,541 6,265,200 7,053,741 TOTAL $ 2,927,802 $ 6,265,200 $ 9,193, 002 66 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Valley Communications Center The "Valley Communications Center" was established August 20, 1976, when an Interlocal Agreement was entered into by the four original participating municipal corporations, including the cities of Renton, Kent, Auburn, and Tukwila. Federal Way was formally admitted during 2000. The agreement is sanctioned by the provisions and terms of the Interlocal Cooperation Act pursuant to RCW 39.34. The initial duration of the agreement was five years, and thereafter is automatically extended for consecutive five -year periods. The purpose of the joint operation, hereafter referred to as Valley Com, is to provide improved consolidated emergency communications (dispatch) services for police, fire, and medical aid, to the five participating cities and to several subscribing agencies. Separate agreements between Valley Com and the subscribing agencies have been executed, which set forth conditions of services and rates charged. The allocation of prorated financial participation among the five participating cities is the percentage of estimated dispatched calls attributed to each jurisdiction compared to the total estimated dispatched calls for the current 12 -month period ending December 31. The 2015 cost distribution for the five (5) participating cities is as follows: City Dispatchable Calls Percent of Total Renton 78,046 19.69% Kent 107,575 27.15% Auburn 92,008 23.22% Tukwila 34,477 8.70% Federal Way 84,170 21.24% Total 396,276 100.00% Valley Com is governed by an Administration Board composed of the Mayors from the five participating cities of Renton, Kent, Auburn, Tukwila, and Federal Way. The Board is responsible for the following functions: (1) Adopting an annual budget after review by participating legislative bodies; (2) Appointment and /or discharge of the Director; (3) Approves personnel policy and makes final decisions on all major policy changes; (4) Reviews and approves all contracts. In addition, an Operating Board was established and consists of two members of each participating City's Public Safety Departments, including the heads of such departments or their designees. The Operating Board performs the following functions: (1) Oversees the operation of Valley Com and advises and makes recommendations to the Administration Board; (2) Makes recommendation on Director selection; (3) Presents proposed policies and budgets to the Administration Board; (4) Approves disbursement of funds by the Director. The Director presents a proposed budget to the Operating Board on or before August 15 of each year. The proposed budget is then presented to the Administration Board by September 1 of each year. The Administration Board can make changes to the proposed Valley Com budget as it finds necessary, but final approval falls to the legislative body of each participating city, in accordance with the provisions of the Interlocal Agreement. The share of equity belonging to the five (5) participating cities is as follows: 67 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS FEDERAL ITEM RENTON KENT AUBURN TUKWILA WAY TOTAL 2014 Equity Balance $ 5,350,252 $7,530,786 $5,079,377 $2,974,283 $3,619,944 $24,554,642 2014 Percent of Equity 21.79% 30.67% 20.69% 12.11% 14.74% 100.00% GASB 68 Adjusted Equity (a) (1,876,235) (2,640,908) (1,781,244) (1,043,026) (1,269,448) (8,610,861) 2014 Equity Balance - Restated $ 3,474,017 $4,889,878 $3,298,133 $1,931,257 $2,350,496 $ 15,943,781 Equity January 1, 2015 Current Year Increase /(Decrease) Equity December 31, 2015 Percent of Equity $ 3,474, 017 $4,889,878 $ 3, 298,133 $1,931,257 $2,350,496 $ 15, 943, 781 470,862 649,015 555,097 208,004 507,809 2,390,787 $ 3,944,879 $5,538,893 $ 3, 853, 230 $2,139,261 $2, 858, 305 $18,334,568 21.52% 30.21% 21.02% 11.67% 15.59% 100.00% (a) 2015 Owner Cities Equity Allocation was restated for GASB Statement No. 68 adjustment using percent of equity. Liabilities are the responsibility of the five participating cities in direct proportion to their equity position. In August 1993, Valley Com entered into an interlocal cooperation agreement, pursuant to RCW 39.34 RCW, with the sub- regions of King County, Seattle, and the Eastside Public Safety Communications Agency. This agreement governs the development, acquisition and installation of the 800 MHz emergency radio communications system funded by a $57 million King County levy approved in November 1992. This agreement provides that upon voluntary termination of any sub - region's participation in the system, it surrenders its radio frequencies, relinquishes its equipment and transfers any unexpended levy proceeds and associated equipment replacement reserves to another sub - region or consortium of sub - regions. Thus, in accordance with this agreement, the participating cities of Valley Com have no equity interest in Valley Com's 800 -MHz communications system. During 2000, the Valley Communications Center Development Authority was created to issue $12,758,000 in General Obligation Bonds to finance construction, equipment, and land for a new facility completed in 2002. Each of the five participating cities was responsible for one -fifth of the debt obligation, which originally was $2,551,600 per City. The basic agreement shall not be terminated until all bonds issued by Valley Communications Center Development Authority have been paid and retired. The final payment on the bonds was made in 2015. A complete set of financial statements are available from Valley Communications Center, 27519 108th Ave SE, Kent, WA 98030, or by telephone 253 - 372 -1300. South Correctional Entity (SCORE) The South Correctional Entity (SCORE) consolidated correctional facility was established February 25, 2009, when an Interlocal Agreement (the "Original Interlocal Agreement ") was entered into by seven participating municipal governments, the "Member Cities" of Auburn, Burien, Des Moines, Federal Way, Renton, SeaTac and Tukwila, under the authority of the "Interlocal Cooperation Act" (RCW 39.34). This "Original Interlocal Agreement" was amended and restated October 1, 2009 and named the City of Des Moines as the "Host City" and the remaining Member Cities as "Owner Cities ". This interlocal agreement is known as the "Formation Interlocal Agreement ". Pursuant to a separate "Host City Agreement" dated October 1, 2009, the Host City will not enjoy the same equity position as the Owner Cities until all debts issued are paid and the Host City fulfills all of its obligations as outlined in the Host City Agreement. Pursuant to SCORE financial policies, all unexpected funds or reserve funds shall be distributed based on the percentage of the Member City's average daily population at the SCORE Facility for the last three (3) years regardless of its Owner City or Host City status. SCORE, a governmental administrative agency pursuant to RCW 39.34.030(3), has the power to acquire, construct, own, operate, maintain, equip, and improve a correctional facility known as the "SCORE Facility" and to provide correctional services and functions incidental thereto, for the purpose of detaining arrestees and sentenced 68 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS offenders in the furtherance of public safety and emergencies within the jurisdiction of the Member Cities. The SCORE Facility may serve the Member Cities and Subscribing Agencies which are in need of correctional facilities. Any agreement with a Subscribing Agency shall be in writing and approved by SCORE as provided within the SCORE Formation Interlocal Agreement. Financing for the acquisition, construction, equipping, and improvement of the SCORE Facility was provided by bonds issued by the South Correctional Entity Facility Public Development Authority (the "SCORE PDA "), a public development authority chartered by the City of Renton pursuant to RCW 35.21.730 through 35.21.755. The SCORE PDA issued $86 million in special obligation bonds in 2009 (the "Bonds ") to construct, develop, acquire and equip the SCORE Facility. Pursuant to the Formation Interlocal Agreement and the ordinances of each city, each Owner City (which includes the Cities of Auburn, Burien Federal Way, Renton, SeaTac, and Tukwila) is obligated to budget for and pay its share, and only its share, of the principal and interest on the Bonds as the same become due and payable. Each Owner City's obligation to pay its portion is an irrevocable, unconditional full faith and credit obligation of such Owner City, payable from property taxes levied within the constitutional and statutory authority provided without a vote of the electors of the Owner City on all of the taxable property within the Owner City and other sources of revenues available therefor. The following is a summary of the debt service requirements for the Bonds: SUMMARY OF DEBT SERVICE REQUIREMENTS The City of Tukwila reports its share of equity interest in the Governmental Activities column within the Government - wide financial statements under assets. The following is condensed (unaudited) financial information as of December 31, 2015 related to SCORE: ITEM FEDERAL AUBURN BURIEN DES MOINES WAY RENTON SEATAC TUKWILA TOTAL 2014 Equity Balance 2014 Percent of Equity GASB 68 Adjusted Equity la) $ 4,243,234 $ 515,410 $ 292,160 $3,676,724 $ 4,220,405 $ 712,666 $1,080,470 $14,741,069 28.79% 3.50% 1.98% 24.94% 28.63% 4.83% 7.33% 100.00% (1,048,625) (155,837) (113,182) (1,204,461) (1,134,356) (240,723) (326,032) (4,223,216) 2014 Equity Balance - Restated $ 3,194,609 $ 359,573 $ 178,978 $2,472,263 $ 3,086,049 $ 471,943 $ 754,438 $10,517,853 Equity January 1, 2015 Current Year Increase /(Decrease) Equity December 31, 2015 $ 3,194,609 $ 359,573 $ 178,978 $2,472,263 $ 3,086,049 $ 471,943 $ 754,438 $10,517,853 137,167 17,268 18,288 148,312 136,621 26,524 34,103 518,283 $ 3,331,776 $ 376,841 $ 197,266 $2,620,575 $ 3,222,670 $ 498,467 $ 788,541 $11,036,136 Percent of Equity 30.19% 3.41% 1.79% 23.75% 29.20% 4.52% 7.15% 100.00% The investment in joint venture for SCORE on the Statement of Net Position includes Tukwila's share of debt issued in 2009. The City's share of SCORE debt is $6,265,200. See Note 11 for additional information on long -term debt. Completed financial statements for SCORE and SCORE PDA can be obtained from the SCORE, Attn: Finance Manager, 20817 17th Avenue South, Des Moines, WA 98198. 69 Debt Service Schedule Debt Service Allocation to Owner Cities BABs Aubum Bunen Federal Way Renton SeaTac Tukwila Year Principal Interest Subsidy Total 31% 4% 18% 36% 3% 8% 2016 $ 2,065,000 $ 4,911,886 $ (1,517,676) $ 5,459,210 $ 1,692,355 $ 218,368 $ 982,658 $ 1,965,316 $ 163,776 $ 436,737 2017 2,145,000 4,820,241 (1,511,685) 5,453,556 1,690,602 218,142 981,640 1,963,280 163,607 436,285 2018 2,240,000 4,715,979 (1,511,685) 5,444,294 1,687,731 217,772 979,973 1,959,946 163,329 435,544 2019 2,310,000 4,602,229 (1,475,151) 5,437,078 1,685,494 217,483 978,674 1,957,348 163,112 434,966 2020 2,385,000 4,484,854 (1,437,475) 5,432,379 1,684,037 217,295 977,828 1,955,656 162,971 434,590 2021 -2025 13,405,000 20,377,998 (7,109,462) 26,673,536 8,268,796 1,066,941 4,801,236 9,602,473 800,206 2,133,883 2026 -2030 16,325,000 15,803,611 (5,715,798) 26,412,813 8,187,972 1,056,513 4,754,306 9,508,613 792,384 2,113,025 2031 -2035 20,095,000 9,856,351 (3,682,383) 26,268,968 8,143,380 1,050,759 4,728,414 9,456,828 788,069 2,101,517 2036 -2039 19,410,000 2,636,145 (1,147,380) 20,898,765 6,478,617 835,951 3,761,778 7,523,555 626,963 1,671,901 Totals $80,380,000 $72,209,294 $(25,108,695) $127,480,599 $ 39,518,984 $5,099,224 $22,946,507 $45,893,016 $3,824,418 $10,198,448 The City of Tukwila reports its share of equity interest in the Governmental Activities column within the Government - wide financial statements under assets. The following is condensed (unaudited) financial information as of December 31, 2015 related to SCORE: ITEM FEDERAL AUBURN BURIEN DES MOINES WAY RENTON SEATAC TUKWILA TOTAL 2014 Equity Balance 2014 Percent of Equity GASB 68 Adjusted Equity la) $ 4,243,234 $ 515,410 $ 292,160 $3,676,724 $ 4,220,405 $ 712,666 $1,080,470 $14,741,069 28.79% 3.50% 1.98% 24.94% 28.63% 4.83% 7.33% 100.00% (1,048,625) (155,837) (113,182) (1,204,461) (1,134,356) (240,723) (326,032) (4,223,216) 2014 Equity Balance - Restated $ 3,194,609 $ 359,573 $ 178,978 $2,472,263 $ 3,086,049 $ 471,943 $ 754,438 $10,517,853 Equity January 1, 2015 Current Year Increase /(Decrease) Equity December 31, 2015 $ 3,194,609 $ 359,573 $ 178,978 $2,472,263 $ 3,086,049 $ 471,943 $ 754,438 $10,517,853 137,167 17,268 18,288 148,312 136,621 26,524 34,103 518,283 $ 3,331,776 $ 376,841 $ 197,266 $2,620,575 $ 3,222,670 $ 498,467 $ 788,541 $11,036,136 Percent of Equity 30.19% 3.41% 1.79% 23.75% 29.20% 4.52% 7.15% 100.00% The investment in joint venture for SCORE on the Statement of Net Position includes Tukwila's share of debt issued in 2009. The City's share of SCORE debt is $6,265,200. See Note 11 for additional information on long -term debt. Completed financial statements for SCORE and SCORE PDA can be obtained from the SCORE, Attn: Finance Manager, 20817 17th Avenue South, Des Moines, WA 98198. 69 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTE 8 — PENSION PLANS The following table represents the aggregate pension amounts for all plans subject to the requirements of the GASB Statement 68, Accounting and Financial Reporting for Pensions for the year 2015: Aggregate Pension Amounts — All Plans Pension liabilities $ 13,725,838 Pension assets 6,275,313 Deferred outflows of resources 2,426,578 Deferred inflows of resources 4,023,184 Pension expense /expenditures 1,003,624 Washington State Department of Retirement Systems Substantially all City of Tukwila full -time and qualifying part-time employees participate in one of the following statewide retirement systems administered by the Washington State Department of Retirement Systems, under cost - sharing, multiple - employer public employee defined benefit and defined contribution retirement plans. The state Legislature establishes, and amends, laws pertaining to the creation and administration of all public retirement systems. The Department of Retirement Systems (DRS), a department within the primary government of the State of Washington, issues a publicly available comprehensive annual financial report (CAFR) that includes financial statements and required supplementary information for each plan. The DRS CAFR may be obtained by writing to: Department of Retirement Systems Communications Unit P.O. Box 48380, Olympia, WA 98504 -8380 Or it may be downloaded from the DRS website at www.drs.wa.qov. A. Public Employees Retirement System (PERS) Plans 1, 2, and 3 PERS members include elected officials; state employees; employees of the Supreme, Appeals and Superior Courts; employees of the legislature; employees of district and municipal courts; employees of local governments; and higher education employees not participating in higher education retirement programs. PERS is comprised of three separate pension plans for membership purposes. PERS plans 1 and 2 are defined benefit plans, and PERS plan 3 is a defined benefit plan with a defined contribution component. PERS Plan 1 - provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the member's average final compensation (AFC) times the member's years of service. The AFC is the average of the member's 24 highest consecutive service months. Members are eligible for retirement from active status at any age with at least 30 years of service, at age 55 with at least 25 years of service, or at age 60 with at least five years of service. Members retiring from active status prior to the age of 65 may receive actuarially reduced benefits. Retirement benefits are actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, an optional cost -of- living adjustment (COLA), and a one -time duty - related death benefit, if found eligible by the Department of Labor and Industries. PERS 1 members were vested after the completion of five years of eligible service. The plan was closed to new entrants on September 30, 1977. 70 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Contributions The PERS Plan 1 member contribution rate is established by State statute at 6 percent. The employer contribution rate is developed by the Office of the State Actuary and includes an administrative expense component that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates. The PERS Plan 1 required contribution rates (expressed as a percentage of covered payroll) for 2015 were as follows: PERS Plan 1 Actual Contribution Rates: Employer 9.21 % Employee* 6.00% January through June 2015 July through December 2015 11.18% 6.00% The City of Tukwila actual contributions to the plan were zero dollars for the year ended December 31, 2015 PERS Plan 2/3 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the member's average final compensation (AFC) times the member's years of service for Plan 2 and 1 percent of AFC for Plan 3. The AFC is the average of the member's 60 highest -paid consecutive service months. There is no cap on years of service credit. Members are eligible for retirement with a full benefit at 65 with at least five years of service credit. Retirement before age 65 is considered an early retirement. PERS Plan 2/3 members who have at least 20 years of service credit and are 55 years of age or older, are eligible for early retirement with a benefit that is reduced by a factor that varies according to age for each year before age 65. PERS Plan 2/3 members who have 30 or more years of service credit and are at least 55 years old can retire under one of two provisions: • With a benefit that is reduced by three percent for each year before age 65; or • With a benefit that has a smaller (or no) reduction (depending on age) that imposes stricter return -to -work rules. PERS Plan 2/3 members hired on or after May 1, 2013 have the option to retire early by accepting a reduction of five percent for each year of retirement before age 65. This option is available only to those who are age 55 or older and have at least 30 years of service credit. PERS Plan 2/3 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other PERS Plan 2/3 benefits include duty and non -duty disability payments, a cost -of- living allowance (based on the CPI), capped at three percent annually and a one -time duty related death benefit, if found eligible by the Department of Labor and Industries. PERS 2 members are vested after completing five years of eligible service. Plan 3 members are vested in the defined benefit portion of their plan after ten years of service; or after five years of service if 12 months of that service are earned after age 44. PERS Plan 3 defined contribution benefits are totally dependent on employee contributions and investment earnings on those contributions. PERS Plan 3 members choose their contribution rate upon joining membership and have a chance to change rates upon changing employers. As established by statute, Plan 3 required defined contribution rates are set at a minimum of 5 percent and escalate to 15 percent with a choice of six options. Employers do not contribute to the defined contribution benefits. PERS Plan 3 members are immediately vested in the defined contribution portion of their plan. Contributions The PERS Plan 2/3 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. The Plan 2/3 employer rates include a component to address the PERS Plan 1 UAAL and an administrative expense that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee contribution rates and Plan 3 contribution rates. The PERS Plan 2/3 required contribution rates (expressed as a percentage of covered payroll) for 2015 were as follows: 71 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS PERS Plan 2/3 Actual Contribution Rates: Employer 2/3 Employee 2 January through June 2015 9.21% 4.92% July through December 2015 11.18% 6.12% Employee PERS Plan 3 varies The City of Tukwila actual contributions to the plan were $1,581,183 for the year ended December 31, 2015 Public Safety Employees' Retirement System (PSERS) PSERS Plan 2 was created by the 2004 Legislature and became effective July 1, 2006. To be eligible for membership, an employee must work on a full time basis and: • Have completed a certified criminal justice training course with authority to arrest, conduct criminal investigations, enforce the criminal laws of Washington, and carry a firearm as part of the job; or • Have primary responsibility to ensure the custody and security of incarcerated or probationary individuals; or • Function as a limited authority Washington peace officer, as defined in RCW 10.93.020; or • Have primary responsibility to supervise eligible members who meet the above criteria. PSERS membership includes: • PERS 2 or 3 employees hired by a covered employer before July 1, 2006, who met at least one of the PSERS eligibility criteria and elected membership during the period of July 1, 2006 to September 30 2006; and • Employees hired on or after July 1, 2006 by a covered employer, that meet at least one of the PSERS eligibility criteria. PSERS covered employers include: • Certain State of Washington agencies (Department of Corrections, Department of Natural Resources, Gambling commission, Liquor Control Board, Parks and Recreation Commission, and Washington State Patrol), • Washington State Counties, • Washington State Cities (except for Seattle, Spokane, and Tacoma), • Correctional entities formed by PSERS employers under the Interlocal Cooperation Act. PSERS Plan 2 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the average final compensation (AFC) for each year of service. The AFC is based on the member's 60 consecutive highest creditable months of service. Benefits are actuarially reduced for each year that the member's age is less than 60 (with ten or more service credit years in PSERS), or less than 65 (with fewer than ten service credit years). There is no cap on years of service credit. Members are eligible for retirement at the age of 65 with five years of service; or at the age of 60 with at least ten years of PSERS service credit; or at age 53 with 20 years of service. Retirement before age 60 is considered an early retirement. PSERS members who retire prior to the age of 60 receive reduced benefits. If retirement is at age 53 or older with at least 20 years of service, a three percent per year reduction for each year between the age at retirement and age 60 applies. PSERS Plan 2 retirement benefits are actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, an optional cost -of living adjustment (COLA), and a one -time duty - related death benefit, if found eligible by the Department of Labor and Industries. PSERS Plan 2 members are vested after completing five years of eligible service. 72 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Contributions The PSERS Plan 2 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2. The Plan 2 employer rates include components to address the PERS Plan 1 unfunded actuarial accrued liability and administrative expense currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee contribution rates. The PSERS Plan 2 required contribution rates (expressed as a percentage of current -year covered payroll) for 2015 were as follows: PSERS Plan 2 Actual Contribution Rates: Employer Employee January through June 2015 10.54% 6.36% July through December 2015 11.54% 6.59% The City of Tukwila actual contributions to the plan were $17,224 for the year ended December 31, 2015 B. Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Plan 1 and 2 LEOFF membership includes all full -time, fully compensated, local law enforcement commissioned officers, firefighters, and as of July 24, 2005, emergency medical technicians. LEOFF is comprised of two separate defined benefit plans. LEOFF Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined per year of service calculated as a percent of final average salary (FAS) as follows: • 20+ years of service — 2.0% of FAS • 10 -19 years of service — 1.5% of FAS • 5 -9 years of service — 1% of FAS The FAS is the basic monthly salary received at the time of retirement, provided a member has held the same position or rank for 12 months preceding the date of retirement. Otherwise, it is the average of the highest consecutive 24 months' salary within the last ten years of service. Members are eligible for retirement with five years of service at the age of 50. Other benefits include duty and non -duty disability payments, a cost -of living adjustment (COLA), and a one -time duty - related death benefit, if found eligible by the Department of Labor and Industries. LEOFF 1 members were vested after the completion of five years of eligible service. The plan was closed to new entrants on September 30, 1977. Contributions Starting on July 1, 2000, LEOFF Plan 1 employers and employees contribute zero percent, as long as the plan remains fully funded. The LEOFF Plan I had no required employer or employee contributions for fiscal year 2015. Employers paid only the administrative expense of 0.18 percent of covered payroll. LEOFF Plan 2 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the final average salary (FAS) per year of service (the FAS is based on the highest consecutive 60 months). Members are eligible for retirement with a full benefit at 53 with at least five years of service credit. Members who retire prior to the age of 53 receive reduced benefits. If the member has at least 20 years of service and is age 50, the reduction is three percent for each year prior to age 53. Otherwise, the benefits are actuarially reduced for each year prior to age 53. LEOFF 2 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, a cost -of- living allowance (based on the CPI), capped at three percent annually and a one -time duty - related death benefit, if found eligible by the Department of Labor and Industries. LEOFF 2 members are vested after the completion of five years of eligible service. 73 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Contributions The LEOFF Plan 2 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2. The employer rate included an administrative expense component set at 0.18 percent. Plan 2 employers and employees are required to pay at the level adopted by the LEOFF Plan 2 Retirement Board. The LEOFF Plan 2 required contribution rates (expressed as a percentage of covered payroll) for 2015 were as follows: LEOFF Plan 2 Actual Contribution Rates: Employer 5.23% Employee 8.41% State and local governments Ports and Universities 8.59% 8.41% The City of Tukwila actual contributions to the plan were $804,404 for the year ended December 31, 2015 The Legislature, by means of a special funding arrangement, appropriates money from the state General Fund to supplement the current service liability and fund the prior service costs of Plan 2 in accordance with the recommendations of the Pension Funding Council and the LEOFF Plan 2 Retirement Board. This special funding situation is not mandated by the state constitution and could be changed by statute. For the state fiscal year ending June 30, 2015, the state contributed $58,339,032 to LEOFF Plan 2. Actuarial Assumptions The total pension liability (TPL) for each of the DRS plans was determined using the most recent actuarial valuation completed in 2015 with a valuation date of June 30, 2014. The actuarial assumptions used in the valuation were based on the results of the Office of the State Actuary's (OSA) 2007 -2012 Experience Study. Additional assumptions for subsequent events and law changes are current as of the 2014 actuarial valuation report. The TPL was calculated as of the valuation date and rolled forward to the measurement date of June 30, 2015. Plan liabilities were rolled forward from June 30, 2014, to June 30, 2015, reflecting each plan's normal cost (using the entry -age cost method), assumed interest and actual benefit payments. • Inflation: 3% total economic inflation; 3.75% salary inflation • Salary increases: In addition to the base 3.75% salary inflation assumption, salaries are also expected to grow by promotions and longevity. • Investment rate of return: 7.5% Mortality rates were based on the RP -2000 report's Combined Healthy Table and Combined Disabled Table, published by the Society of Actuaries. The OSA applied offsets to the base table and recognized future improvements in mortality by projecting the mortality rates using 100 percent Scale BB. Mortality rates are applied on a generational basis; meaning, each member is assumed to receive additional mortality improvements in each future year throughout his or her lifetime. There were minor changes in methods and assumptions since the last valuation. • The OSA updated demographic assumptions, consistent with the changes from the 2007 -2012 Experience Study Report, used when valuing the PERS 1 and TERS 1 Basic Minimum COLA. • The OSA corrected how valuation software calculates a member's entry age under the entry age normal actuarial cost method. Previously, the funding age was rounded, resulting in an entry age one year higher in some cases. • For purposes of calculating the Plan 2/3 Entry Age Normal Cost contribution rates, the OSA now uses the current blend of Plan 2 and Plan 3 salaries rather than using a long -term membership assumption of two - thirds Plan 2 members and one -third Plan 3 members. 74 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS • The OSA changed the way it applies salary limits, as described in the 2007 -2012 Experience Study Report. Discount Rate The discount rate used to measure the total pension liability for all DRS plans was 7.5 percent. To determine that rate, an asset sufficiency test included an assumed 7.7 percent long -term discount rate to determine funding liabilities for calculating future contribution rate requirements. (All plans use 7.7 percent except LEOFF 2, which has assumed 7.5 percent). Consistent with the long -term expected rate of return, a 7.5 percent future investment rate of return on invested assets was assumed for the test. Contributions from plan members and employers are assumed to continue being made at contractually required rates (including PERS 2/3, PSERS 2, SERS 2/3, and TRS 2/3 employers, whose rates include a component for the PERS 1, and TRS 1 plan liabilities). Based on these assumptions, the pension plans' fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long -term expected rate of return of 7.5 percent was used to determine the total liability. Long -Term Expected Rate of Return The long -term expected rate of return on the DRS pension plan investments of 7.5 percent was determined using a building - block- method. The Washington State Investment Board (WSIB) used a best estimate of expected future rates of return (expected returns, net of pension plan investment expense, including inflation) to develop each major asset class. Those expected returns make up one component of WSIB's capital market assumptions. The WSIB uses the capital market assumptions and their target asset allocation to simulate future investment returns at various future times. The long -term expected rate of return of 7.5 percent approximately equals the median of the simulated investment returns over a 50 -year time horizon. Estimated Rates of Return by Asset Class Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2015, are summarized in the table below. The inflation component used to create the table is 2.2 percent and represents the WSIB's most recent long -term estimate of broad economic inflation. Asset Class Target Allocation % Long -Term Expected Real Rate of Return Arithmetic Fixed Income 20% 1.70% Tangible Assets 5% 4.40% Real Estate 15% 5.80% Global Equity 37% 6.60% Private Equity 23% 9.60% 100% Sensitivity of NPL The table below presents the City of Tukwila proportionate share of the net pension liability calculated using the discount rate of 7.5 percent, as well as what the City of Tukwila proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1- percentage point lower (6.5 percent) or 1- percentage point higher (8.5 percent) than the current rate. 75 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Pension Plan Fiduciary Net Position Detailed information about the State's pension plans' fiduciary net position is available in the separately issued DRS financial report. Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2015, the City of Tukwila reported a total pension liability of $7,037,111 for its proportionate share of the net pension liabilities as follows: 1% Decrease Current Discount Rate 1% Increase - 6.50% - 7.50% -8.50% PERS 1 8,644,579 7,100,255 5,772,278 PERS 2/3 18,136,552 6,202,541 (2,934,883) PSERS 2 73,156 9,628 (35, 563) LEOFF 1 (600,983) (939,397) (1,227,833) LEOFF 2 5,343,574 (5,335,916) (13,372,638) Pension Plan Fiduciary Net Position Detailed information about the State's pension plans' fiduciary net position is available in the separately issued DRS financial report. Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2015, the City of Tukwila reported a total pension liability of $7,037,111 for its proportionate share of the net pension liabilities as follows: The amount of the liability /(asset) reported above for LEOFF Plan 2 reflects a reduction for State pension support provided to the City of Tukwila. The amount recognized by the City of Tukwila as its proportionate share of the net pension liability /(asset), the related State support, and the total portion of the net pension liability /(asset) that was associated with the City of Tukwila were as follows: Liability (or Asset) PERS 1 7,100,255 PERS 2/3 6,202,533 PSERS 2 9,628 LEOFF 1 (939,397) LEOFF 2 (5,335,916) The amount of the liability /(asset) reported above for LEOFF Plan 2 reflects a reduction for State pension support provided to the City of Tukwila. The amount recognized by the City of Tukwila as its proportionate share of the net pension liability /(asset), the related State support, and the total portion of the net pension liability /(asset) that was associated with the City of Tukwila were as follows: At June 30, the City of Tukwila proportionate share of the collective net pension liabilities was as follows: 76 Liability (or Asset) LEOFF 2 - employer's proportionate share (5,335,916) LEOFF 2 - State's proportionate share of the net pension liability /(asset) associated with the employer (3,528,118) TOTAL (8,864,034) At June 30, the City of Tukwila proportionate share of the collective net pension liabilities was as follows: 76 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Employer contribution transmittals received and processed by the DRS for the fiscal year ended June 30 are used as the basis for determining each employer's proportionate share of the collective pension amounts reported by the DRS in the Schedules of Employer and Nonemployer Allocations for all plans except LEOFF 1. LEOFF Plan 1 allocation percentages are based on the total historical employer contributions to LEOFF 1 from 1971 through 2000 and the retirement benefit payments in fiscal year 2015. Historical data was obtained from a 2011 study by the Office of the State Actuary (OSA). In fiscal year 2015, the state of Washington contributed 87.12 percent of LEOFF 1 employer contributions and all other employers contributed the remaining 12.88 percent of employer contributions. LEOFF 1 is fully funded and no further employer contributions have been required since June 2000. If the plan becomes underfunded, funding of the remaining liability will require new legislation. The allocation method the plan chose reflects the projected long -term contribution effort based on historical data. In fiscal year 2015, the state of Washington contributed 39.80 percent of LEOFF 2 employer contributions pursuant to RCW 41.27.726 and all other employers contributed the remaining 60.20 percent of employer contributions. The collective net pension liability (asset) was measured as of June 30, 2015, and the actuarial valuation date on which the total pension liability (asset) is based was as of June 30, 2014, with update procedures used to roll forward the total pension liability to the measurement date. Pension Expense For the year ended December 31, 2015, the city of Tukwila recognized pension expense as follows: Proportionate Share 6/30/14 Proportionate Share 6/30/15 Change in Proportion PERS 1 0.139888% 0.135736% - 0.004152% PERS 2/3 0.178370% 0.173592% - 0.004778% PSERS 2 0.055208% 0.052748% - 0.002460% LEOFF 1 0.077048% 0.077944% 0.000896% LEOFF 2 0.510586% 0.519159% 0.008573% Employer contribution transmittals received and processed by the DRS for the fiscal year ended June 30 are used as the basis for determining each employer's proportionate share of the collective pension amounts reported by the DRS in the Schedules of Employer and Nonemployer Allocations for all plans except LEOFF 1. LEOFF Plan 1 allocation percentages are based on the total historical employer contributions to LEOFF 1 from 1971 through 2000 and the retirement benefit payments in fiscal year 2015. Historical data was obtained from a 2011 study by the Office of the State Actuary (OSA). In fiscal year 2015, the state of Washington contributed 87.12 percent of LEOFF 1 employer contributions and all other employers contributed the remaining 12.88 percent of employer contributions. LEOFF 1 is fully funded and no further employer contributions have been required since June 2000. If the plan becomes underfunded, funding of the remaining liability will require new legislation. The allocation method the plan chose reflects the projected long -term contribution effort based on historical data. In fiscal year 2015, the state of Washington contributed 39.80 percent of LEOFF 2 employer contributions pursuant to RCW 41.27.726 and all other employers contributed the remaining 60.20 percent of employer contributions. The collective net pension liability (asset) was measured as of June 30, 2015, and the actuarial valuation date on which the total pension liability (asset) is based was as of June 30, 2014, with update procedures used to roll forward the total pension liability to the measurement date. Pension Expense For the year ended December 31, 2015, the city of Tukwila recognized pension expense as follows: Deferred Outflows of Resources and Deferred Inflows of Resources At December 31, 2015, the City of Tukwila reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: 77 Pension Expense PERS 1 186,773 PERS 2/3 688,648 PSERS 2 11,155 LEOFF 1 (192,609) LEOFF 2 309,657 TOTAL 1,003,624 Deferred Outflows of Resources and Deferred Inflows of Resources At December 31, 2015, the City of Tukwila reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: 77 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS PERS 1 Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience - - Net difference between projected and actual investment earnings on pension plan investments - 388,462 Changes of assumptions - - Changes in proportion and differences between contributions and proportionate share of contributions - - Contributions subsequent to the measurement date 376,122 - TOTAL 376,122 388,462 PERS 2/3 Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience 659,332 Net difference between projected and actual investment earnings on pension plan investments - 1,655,785 Changes of assumptions 9,994 - Changes in proportion and differences between contributions and proportionate share of contributions 153,740 Contributions subsequent to the measurement date 486,432 TOTAL 1,155, 758 1,809,525 78 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS PSERS Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience 9,020 - Net difference between projected and actual investment earnings on pension plan investments - 4,775 Changes of assumptions 60 - Changes in proportion and differences between contributions and proportionate share of contributions - 149 Contributions subsequent to the measurement date 5,090 TOTAL 14,170 4,924 LEOFF 1 Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience _ _ Net difference between projected and actual investment earnings on pension plan investments - 158,586 Changes of assumptions - - Changes in proportion and differences between contributions and proportionate share of contributions - 44,932 Contributions subsequent to the measurement date _ TOTAL - 158,586 LEOFF 2 Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience 467,248 Net difference between projected and actual investment earnings on pension plan investments - 1,616,755 Changes of assumptions 14,074 - Changes in proportion and differences between contributions and proportionate share of contributions - 44,932 Contributions subsequent to the measurement date 399,206 TOTAL 880,529 1,661,687 79 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Deferred outflows of resources related to pensions resulting from the City of Tukwila contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2016. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended December 31: PERS 1 2016 $ (150,554) 2017 (150, 554) 2018 (150, 554) 2019 63,201 2020 - Thereafter - Year ended December 31: PERS 2/3 2016 $ (494, 770) 2017 (494,770) 2018 (494,772) 2019 344,112 2020 - Thereafter - Year ended December 31: PSERS 2016 $ (417) 2017 (417) 2018 (418) 2019 2,431 2020 1,488 Thereafter 1,489 Year ended December 31: LEOFF 1 2016 $ (61,538) 2017 (61,538) 2018 (61,538) 2019 26,026 2020 - Thereafter - Year ended December 31: LEOFF 2 2016 $ (548,094) 2017 (548,094) 2018 (548,094) 2019 363,212 2020 83,925 Thereafter 16,786 80 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Firemen's Pension System Summary of Significant Accounting Policies Investments are valued and reported at fair value. Plan Description Plan Administration: The Firefighters" Pension Fund is administered by the City of Tukwila. The plan is a single - employer defined benefit pension plan that provides pensions for firefighters that were hired prior to 1970. The firefighters' pension board consists of the following five members: the chairperson of the fire commissioners for said district who shall be chairperson of the board, the county auditor, county treasurer, and in addition, two regularly employed or retired firefighters elected by secret ballot of the employed and retired firefighters. Retired members who are subject to the jurisdiction of the pension board have both the right to elect and the right to be elected under this section. The first members to be elected by the firefighters shall be elected annually for a two -year term. The two firefighter - elected members shall, in turn, select a third eligible member who shall serve in the event of an absence of one of the regularly elected members. Plan membership is limited to active members of the Firefighters' Pension Fund (FPF) as of March 1, 1970. On that date, the Washington Law Enforcement Officers' and Firefighters' System (LEOFF) was established. FPF is responsible for paying the pensions of those members retired prior to March 1, 1970 and for providing the "excess benefit ", the excess of FPF formula benefits over the LEOFF benefits. Therefore, the plan is closed to new members. At December 31, 2015, FPF membership consisted of the following: Type of Membership Total Inactive plan members retired prior to March 1, 1970 0 Inactive plan members retired March 1, 1970 or after 10 Active Plan Members 0 Total 10 Benefits Provided All benefit terms are in statutes RCW 41.16, 41.18, and 41.26. FPF provides retirement, disability, and death benefits. Each firefighter in service on March 1, 1970 receives the greater of the benefit payable under the Washington Law Enforcement Officers' and Firefighters' Retirement System and the benefits available under the provisions of prior law. Where benefits under the old law exceed those under the new law for any firefighter, the excess benefits are paid from the FPF of the city employing the member on March 1, 1970. All members are retired and drawing benefits. Benefit terms provide for cost -of- living adjustments to each member's retirement benefit. There are two types of increases: escalation by salary in proportion to the current salary of the rank from which the firefighter retired, or an increase proportionate to the increase in the Seattle -area CPI, with the change computed annually. Regardless of the increase (or decrease) in the CPI, the benefits are increased at least 2% each year. The former applies to firefighters who retired from service after 1969, their survivors, and to firefighters who retired for duty disability (but not their survivors) after 1961. The latter applies to all other types of monthly benefits. Contributions As long as the FPF provides for benefits to covered members, the City will be eligible to receive a share of the State's distribution of the fire insurance premium taxes. The amount the City receives is 25% of all monies received by the State from taxes on fire insurance premiums. Contributions can also come from taxes paid pursuant to the 81 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS provisions of RCW 41.16.060. This statute require that each municipality levy up to $0.45 (only $0.225 of which can be in excess of the property tax limit pursuant to RCW 84.52.043) per $1,000 of assessed valuation, based on reports by a qualified actuary, to maintain the fund. The actuarial assumptions were provided by an independent actuary. Investments It is the policy of the City of Tukwila to invest public funds in a manner that will provide maximum security with the highest investment return while meeting the daily cash flow demands of the City, while conforming to all state and local statutes governing the investment of public funds. The money- weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amount actually invested. Concentrations. Approximately 70% of investments held are with Columbia Bank City's Net Pension Liability The components of the City's net pension liability at December 31, 2015 are as follows: Total pension liability Less: Plan fiduciary net position City's net pension liability Plan fiduciary net position as a percentage of the total pension liability $ 1,829,926 1,416,506 $ 413,420 77.41% Schedule of Changes in the City's Net Pension Liability and Related Ratios Total Pension Liability 2014 2015 Service Cost Interest 50,098 49,716 Changes of benefit terms Differences between expected and actual experience Changes in assumptions Benefit payments, included refunds of employee contributions (2,442) (61,863) (58,277) Net change in total pension liability Total pension liability — beginning Total pension liability — ending (a) (11,765) 1,852,693 1,840,929 $ (11,003) 1,840,929 1,829,926 82 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Plan Fiduciary Net Position Contributions — employer .............................................................................. ............................... Contributions — employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense ........................................................... ............................... [Other $ 64,114 1,805 (6863) Net change in plan fiduciary net position 4,056 3,481 Plan fiduciary net position — beginning 1,408,970 1,413,026 Plan fiduciary net position — ending (b) 1,413,026 1,416,506 City's net pension liability — ending (a) — (b) $ 427,903 $ 413,420 Plan fiduciary net position as a percentage of the total pension liability Covered- employee payroll City's net pension liability as a percentage of covered- employee payroll 76.76% 77.41% n/a Deferred Outflows of Resources and Deferred Inflows of Resources n/a At December 31, 2015, the City of Tukwila reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred outflows of resources related to pensions resulting from the City of Tukwila contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2016. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: 83 Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience 2,442 Net difference between projected and actual investment earnings on pension plan investments 70,339 Totals 70,339 2,442 Deferred outflows of resources related to pensions resulting from the City of Tukwila contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2016. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: 83 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Year ended December 31: 2016 $ 13,105 2017 15,547 2018 15,547 2019 15,547 2020 8,152 Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of December 31, 2014, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return 2.75% 3.75% 2.75% Healthy life mortality rates were based on the RP -2014 mortality table, total dataset, fully generational projected with Scale MP -2014, set back one year for males and set forward one year for females. Disabled life mortality rates were based on the RP -2014 mortality table, total dataset, fully generational projected with Scale MP -2014, set back two years for males and females. The long -term expected rate of return on pension plan investments assumption was based on the nature and mix of current and expected pension plan assets over a period of time representative of the expected length of time between the first day of service and date of the last benefit payment. The discount rate used to measure the total pension liability was 2.75 %. The projection of cash flows used to determine the discount rate assumed City contributions were equal to revenue received from Fire Insurance premiums and the amount received would increase at the inflation rate of 2.75 %. Based on this assumption, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payment of current plan members. Therefore, the long -term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the net pension liability to changes in the discount rate. The following presents the net pension liability of the City, calculated using the discount rate of 2.75 %, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1- percentage -point lower, 2.75 %, or 1- percentage point higher, 3.75 %, than the current rate: City's net pension liability 1% Decrease Basis of Valuation Current Discount 1% Increase Rate $ 2,070,457 $ 1,829,926 $ 1,628,370 A general summary of the substantive plan used as the basis of the valuation follows. Applicable Statutes Benefits RCW 41.16, 41.18, 41.26 Each firefighter in service on March 1, 1970 receives the greater of the benefit payable under LEOFF or FPF. Where benefits under the old law exceed those under the new for any firefighter, the excess benefits are paid from the FPF of the city employing the member on March 1, 1970. Service Retirement Benefit 84 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Member Survivor Eligibility: age 50 and 25 years of service (RCW 41.18.040) or Age 50 and five years of service (RCW 41.26.090). Amount of benefit: 50% of salary plus an additional 2% for each year of service in excess of 25 years. Maximum benefit of 60% of salary (does not apply for those retiring after July 1, 2006). Eligibility: spouse or child Amount of benefit: continuation of the firefighter's benefit. (If spouse — same, plus additional 5% of salary per child. If no spouse — 30% of salary for first child, 10% for each additional child. Maximum of 60% of salary). Duty Disability Retirement Benefit Member Survivor Eligibility: disabled after six -month waiting period. Amount of benefit: determined the same as Service Retirement Benefit. Recovery: restoration to service. See Survivor's Benefit section under Service Retirement. Non Duty Disability Retirement Benefit Member Survivor Duty Death Benefit Non Duty Death Benefit Special Provisions Vesting Deferred Benefit Eligibility: disabled after 90 -day waiting period. Amount of benefit: 50% of salary, or service retirement benefit, if greater. Recovery: see Duty Disability Retirement. Limitations: no benefits payable if firefighter employed elsewhere when disabled. Eligibility: spouse or child Amount of benefit: 33.3% to widow or children only. 45.8% to widow and one child. 47.6% to widow and two children. 50.0% to widow and three children. Eligibility: spouse or child Amount of benefit: If spouse — 50% of salary plus an additional 5% of salary per child; maximum benefit of 60% of salary. If no spouse — 50% of salary to children. Eligibility: spouse or child Amount of benefit: provisions the same as Survivor's Benefit under Non -Duty Disability Retirement. Under disability or death benefits, a surviving spouse may elect a lump -sum payment of $5,000 in lieu of future monthly benefits. Termination after 20 years of service (RCW 41.18.130) or five years of service (RCW 41.26.090). Commences: when a firefighter would have had 25 years of service (RCW 41.18.130) or age 50 (RCW 41.26.090). Amount of benefit: 2% of salary for each year of service. Other provisions apply, see statutes. Death while vested prior to commencement of benefits: payment of firefighters deferred benefit to spouse or child. 85 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Postretirement Increase Benefits Payable Under LEOFF Type 1 Type 2 Applicability Minimum Benefit Funeral Benefit Participant Summary January 1, 2015 Age and service determined as of the census date. Annual increase proportionate to the increase in the Seattle -area CPI. Minimum increase at least 2% each year. Escalation by salary in proportion to current salary or rank from which the firefighter retired. Annual increase proportionate to the increase in the Seattle -area CPI. Minimum increase at least 2% each year. Type 1 applies to firefighters who retired from service after 1969, their survivors, and to firefighters who retired for duty disability (but not their survivors) after 1961. Type 2 applies to all other types of monthly benefits After April 25, 1973, a minimum benefit of $300 per month to all retired firefighters and their survivors. This minimum is increased by the CPI. $500 RCW 41.18.140, no provision under RCW 41.26. LEOFF Plan 1 (Firemen's Pension) Inactive Participants Age Service Retirees Disabled Retirees Surviving Spouses Total < 65 0 0 0 0 65 -69 0 1 0 1 70 -74 1 1 1 3 75 -79 2 3 0 5 80 -84 0 1 0 1 85 - 89 1 0 0 1 90 + 0 0 0 0 Total 4 6 1 11 Annual pension amounts through December 31, 2015: Paid by City Paid by LEOFF $58,277 $443,360 The information presented in the preceding required schedules were determined as part of the actuarial valuations at the dates indicated. The key actuarial assumptions used for the January 1, 2015 valuation were: Assumption Rates Actuarial Cost Method Asset Valuation Method Measurement Date Inflation Rate Entry Age Fair Market Value January 1, 2015 2.75% 86 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Discount Rate (or Investment Return) Cost of Living Salary Increases (for calculated benefit increases based on rank) Healthy Mortality Disabled Mortality Spouse Age We based the long -term expected rate of return on pension plan investments assumption on the nature and mix of current and expected pension plan assets over a period of time representative of the expected length of time between the first day of service and date of the last benefit payment. The rate of 2.75% was selected. 2.75 %, based on SSA OASDI 2014 report. 3.75 %, based on SSA OASDI 2014 report. RP -2014 mortality table, total dataset, fully generational with mortality improvement scale MP -2014 setback one year for males and set forward one year for females. RP -2014 mortality table, total dataset, fully generational with mortality improvement scale MP -2014 set forward two years for males and females. We assumed that wives are three years younger than husbands. NOTE 9 — OTHER POSTEMPLOYMENT BENEFIT (OPEB) PLAN During the year ended December 31, 2008, the City elected to adopt the provisions of GASB Statement No. 45, "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions" (GASB No. 45), which requires the City to accrue other postemployment benefits (OPEB) expense related to its postretirement healthcare plan based on a computed annual required contribution (ARC) that includes the current period's service cost and an amount to amortize unfunded actuarial accrued liabilities. Instead of recording expense on a "pay -as- you-go" basis, the City, under GASB No. 45, has recorded a liability of $7,144,923 for the difference between the actuarially calculated ARC and the estimated contributions made since the adoption of GASB No. 45. This liability is included in other noncurrent liabilities in the accompanying December 31, 2015 statement of net position. The effect of GASB No. 45 for the current fiscal year was to decrease the City's excess of revenue over expenses before capital contributions and the City's increase in net position for the year ended December 31, 2015 by $1,802,950. Plan Description The City of Tukwila's LEOFF Plan 1 (the Health Plan) is a single - employer defined - benefit healthcare plan administered by the City. The Health Plan provides medical, prescription drug, dental, Medicare Part B premiums, long -term care, and vision expenses for LEOFF Plan 1 retirees. Dependent spouses and children are not covered. The Health Plan's actuary is Healthcare Actuaries. The Health Plan does not issue a separate standalone financial report. Membership As of December 31, 2015, there were 38 retirees meeting the eligibility requirements of a LEOFF 1 member. The actuarial valuation is based on the 40 retirees in the plan as of December 31, 2014. This is considered a closed group with no new members. Funding Policy 87 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS Funding for LEOFF 1 retiree healthcare costs is provided entirely by the City as required by RCW. The City's funding policy is based upon pay -as- you -go financing requirements. For the fiscal year ended December 31, 2015, the City contributed $477,292 to the Health Plan through use of existing fund balance. The City's contribution was entirely to fund 'pay -as- you -go' costs under the Health Plan and not to prefund benefits. There were no retiree contributions. Annual OPEB Cost and Net OPEB Obligation The City's annual other postemployment benefit (OPEB) cost is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize unfunded actuarial liabilities over a period 21 years as of January 1, 2008. The following tables show the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City's net OPEB obligation. ANNUAL OPEB COST AND NET OPEB OBLIGATION 2013 2014 2015 Annual required contribution (ARC) Interest on Net OPEB Obligation Adjustment to ARC Annual OPEB cost (expense) Employer contributions Change in Net OPEB Obligation Net OPEB Obligation at Beginning of year Net OPEB Obligation at End of year 1,264,522 174,458 (359,904) 1,903,679 171,067 (388,580) 1,079,076 (878,755) 1,686,166 (905,974) 200,321 4,361,460 780,192 4,561,781 2,585,779 146,904 (452,441) 2,280,242 (477, 292) 1,802,950 5,341,973 $ 4,561,781 $ 5,341,973 $ 7,144, 923 * (i) is the assumed interest rate that year, 4% in 2013, 2.75% in 2014 and 2.75% in 2015. The net OPEB obligation of $7,144,923 is included as a non - current liability on the Statement of Net Position. ANNUAL DEVELOPMENT OF OPEB COST Total Fiscal Annual Interest on Employer Change in Net OPEB Year Required Net OPEB ARC Annual Contri- Net OPEB Obligation (Gain)/ Ended Contribution Obligation Adjustment OPEB Cost butions Obligation Balance Loss 2008 $ 1,366,284 $ - $ - $1,366,284 $ 557,103 $ 809,181 $ 809,181 $ 809,181 2009 1,366,284 40,459 61,839 1,344,904 335,265 1,009,639 1,818,820 1,031,019 2010 1,366,284 90,941 143,332 1,313,893 317,771 996,122 2,814,942 1,048,513 2011 1,264,522 112,598 213,809 1,163, 311 335,090 828,221 3,643,163 929,432 2012 1,264,522 145,727 287,945 1,122, 304 404,007 718,297 4,361,460 860,515 2013 1,264,522 174,458 359,904 1,079,076 878,755 200,321 4,561,781 385,767 2014 1,903,679 171,067 388,580 1,686,166 905,974 780,192 5,341,973 997,705 2015 2,585,779 146,904 452,441 2,280,242 477,292 1,802,950 7,144, 923 2,108, 487 * Based on a 21 -year closed amortization as of January 1, 2008 88 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation were as follows: PERCENTAGE OF ANNUAL OPEB COST CONTRIBUTED Fiscal Year Ending Percentage of Annual OPEB Employer Annual OPEB Net OPEB Cost Contribution Cost Contributed Obligation December 31, 2013 1,079,076 878,755 81 4,561,781 December 31, 2014 1,686,166 905,974 54 5,341,973 December 31, 2015 2,280,242 477,292 21 7,144,923 Funded Status and Funding Progress As of January 1, 2016, the most recent actuarial accounting update, the plan was 0% funded. The actuarial accrued liability for benefits was $30.2 million, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $30.2 million and a funded ratio of 0 %. The funded ratio is 0 %, because the City funds benefits on a pay -as- you -go basis. SCHEDULE OF FUNDING PROGRESS (rounded to thousands) Actuarial Unfunded Actuarial UAAL as a Actuarial Value Accrued Accrued Liabilities Funded Covered Percentage of Valuation Date of Assets Liabilities (UAAL)* Ratio Payroll Covered Payroll January 1, 2008 $0 $16,103 $16,103 0% $581 4% January 1, 2011 0 14,805 14,805 0 371 3 January 1, 2014 0 21,264 21,264 0 195 1 January 1, 2015 0 29,538 29,538 0 132 0 Only four valuations completed to date Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and healthcare cost trend. Actuarially determined amounts are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. GASB 45 requires that the schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi -year trend information that shows whether the actuarial value of Health Plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions The basis of projections of benefits for financial reporting purposes is the substantive plan (the Health Plan as understood by the City and members of the Health Plan) and includes the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the City and Members of the Health Plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short -term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long -term perspective of the calculations. The January 1, 2015 valuation used the entry age normal actuarial cost method. The actuarial assumptions included a 2.75% investment rate of return (net of administrative expenses) and an initial annual healthcare cost trend rate 89 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS of 9.0% for pre- Medicare expenses, to an ultimate rate of 3.8% after 61 years. The Medicare trend assumption is 6.5 %, to an ultimate rate of 3.8% after 61 years. The dental trend assumption is 5.5 %, to an ultimate rate of 3.5% after 4 years. The Medicare premium trend rate is 5.4% for all years. The long -term care trend rate is 5.0% for all years. The trend for the Excise Tax threshold is 0% until 2018, when a trend rate of 4.24% is used. The trend for all future years after that year is 3.24 %. All trend rates include a 3.0% inflation assumption. The UAAL is amortized as a level dollar amount on a closed basis over 21 years beginning January 1, 2008. The remaining amortization period at December 31, 2015 was 13.0 years. Assumption Rates Actuarial Cost Method Entry Age Normal method. Measurement Date January 1, 2015 Inflation Rate 3.00% Discount Rate (or Investment Return) Selected the assumed discount rate of 2.75% based on the five - year average investment yield on the investments expected to finance the payment of benefits. Healthy Mortality RPH -2014 mortality table (headcount weighted), total dataset, fully generational with mortality improvement scale MP -2014 setback one year for males and set forward one year for females. Disabled Mortality RPH -2014 mortality table (headcount weighted), total dataset, fully generational with mortality improvement scale MP -2014 set forward two years for males and females. Turnover None assumed. All LEOFF 1 actives are fully eligible for retirement. Per Capita Claims Cost Assumed annual per capita claims costs are as follows: Age Medical /Rx Dental Vision LTC 55 $ 21,875 $ 966 $ 181 $ 133 60 28,071 966 181 220 65 15,406 966 181 448 70 16,924 966 181 1,183 75 17,984 966 181 3,028 80 18,348 966 181 6,499 Aging or Morbidity Factors Aging /morbidity factors are included in the per capita claims costs shown above (except dental and vision). Medicare Part B Premium Reimbursements The City reimburses Medicare retirees for Part B premiums. The 2015 annual premium is $1,258.80. Affordable Care Act (ACA) Excise Tax Threshold Ages 55 -64 All Other Single $ 11,850 $ 10,200 90 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS ACA Base Premium Assumed annual plan costs upon which the ACA tax calculation is based: Medicare ineligible $ 28,071 Medicare eligible $ 16,557 ACA Tax • We assumed a 40% excise tax rate on premiums above the ACA threshold. • We assumed the City of Tukwila pays no federal taxes. • We assumed the excise tax will apply to medical /Rx and Medicare premium reimbursements. Trend Rates Medical Long -Term Trends* from Getzen SOA Model version 2014_b using baseline assumptions. Excise Pre- Part B Long -Term Tax Year Medicare Medicare Dental Vision Premiums Care Threshold 2015 9.00% 6.50% 5.5 % 4.0% 5.4% 5.0% 0. c % 2016 7.50% 6.50% 5.0% 4.0% 5.4% 5.0% 0.00% 2017 6.50% 6.O0% 4.5% 4.0% 5.4% 5.0% 0.00% 2018 5.50% 5.501 4.0% 4.0% 5.4% 5.09 4.24% 2019 5.50% 5.50% 3.5% 3.5% 5.4% 5.0% 3.24% 202[) 5.46% 5.46% 3.5% 3.5% 5.4% 5.0% 3.24% 2021 -2074 - -- - -- 3.5% 3.5% 5.4% 5.0% 3.24% 2075+ 3.80% 3.80•% 3.5% 3.5% 5.4% 5.0% 3.24% *The trend rates include assumed inflation of 31 for all future years. The Schedule of Funding Progress, presented as required supplementary information following the notes to the financial statements, provides the multi -year trend information showing whether the actuarial value of plan assets is increasing or decreasing over time relative to the actual. NOTE 10 - LONG -TERM DEBT Governmental Activities Long -Term Debt General Obligation Bonds are direct obligations of the City for which its full faith and credit are pledged. Debt service for voter - approved issues, of which the City has none, would be funded by special property tax levies. Debt service for City Council authorized bonds, also called councilmanic bonds, is funded from regular property taxes, sales taxes, or other general revenues, and is generally paid from debt service funds. The City currently maintains a rating of Al from Moody's Investor Service, AA from Standard & Poor's, and a rating of AA- from Fitch's Rating Service for its General Obligation Bonds. General Obligation Bonds outstanding at year -end are as follows: • 2008 LTGO bonds were issued to refund the remaining debt of the 1999 LTGO bonds. The 1999 LTGO bonds were issued to purchase an additional City Hall Annex (6300 building) and economic revitalization projects. 91 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS • 2010 LTGO bonds were issued for the construction and realignment of Southcenter Parkway in the Tukwila South Annexation area and for the cost of emergency preparedness capital and other equipment. • 2011 LTGO refunding bonds were issued to refund a portion of the bonds issued in 2003 for the City's Arterial Street program. • 2013 LTGO bonds were issued and the proceeds loaned to the Tukwila Metropolitan Park District to pay for improvements to the pool. • 2014 LTGO bonds were issued to fund the purchase of land acquisition and capital costs of redevelopment activities within the City's Tukwila International Boulevard (TIB) urban renewal area. • 2014 LTGO general obligation bond in the form of a line of credit to purchase property and pay for capital costs of redevelopment activities within the City's Urban Renewal area. • 2015 LTGO bonds were issued to pay for improvements to Interurban Avenue South and reconstruct or retrofit Boeing Access Road Bridge. Special assessment bonds are issued to finance construction of local improvement district (LID) projects and are repaid through assessments collected from property owners benefiting from related improvements. Although the bonds are secured by liens against assessed properties, the City is required under state law to establish a guaranty fund to provide a means of paying LID bond debt service obligations in the event there are insufficient resources in the LID debt service fund. The special assessment bonds are not general obligation debt but the City is obligated in some manner to cover the interest on the bonds. Therefore, the bonds are reported as Special Assessment Debt with Governmental Commitment. Special assessments outstanding at year -end are as follows: • 2013 special assessment bonds LID No. 33 were issued to reimburse the City for a portion of the costs of a major reconstruction of Klickitat and Southcenter Parkway to improve access to the urban center. Business -Type Activities Long -Term Debt Revenue bond indebtedness issued to fund proprietary activities is recorded in proprietary funds. Debt service payments are made from operating revenues generated by the proprietary funds. In proprietary funds, bonds are displayed net of unamortized premium or discount; annual interest expense is decreased by amortization of debt premium and increased by the amortization of debt discount. The City currently maintains a rating of Aaa from Moody's Investor Service for debt in this category. State of Washington Public Works Trust Fund Loans are a low interest rate loans available from the State of Washington Department of Commerce, Local Government & Infrastructure Division for qualifying projects and are a direct responsibility of the City. This debt is repaid by proprietary fund revenues. The City is in compliance with all Washington State debt limitation statutes and bond indenture agreements. The schedules that follow summarize the long -term debt transactions of the City for the year ended December 31, 2015. 92 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG -TERM LIABILITIES SUMMARY REVENUE PUBLIC WORKS DUE TO OTHER GENERAL SPECIAL BONDS TRUST FUND COMPENSATED OTHER POST EMPLOY - OBLIGATION ASSESSMENT UTILTIES LOANS ABSENCES GOVERNMENTS tub BENEFITS TOTAL Outstanding 01/01/2015 $16,638,221 $6,687,500 $2,580,000 $ 5,742,866 $ 4,046,602 $ 6,650,400 $ 5,341,973 $47,687,562 Added 8,075,000 1,742,527 501,484 3,464,525 1,802,950 15,586,486 Retired / redeemed (1,655,507) (605,000) (2,580,000) (597,892) (3,316,650) (385,200) (9,140,249) Outstanding 12/31/2015 $23,057,714 $6,082,500 $1,742,527 $ 5,646,458 $ 4,194,477 $ 6,265,200 $ 7,144,923 $54,133,799 Add Premiums, Subtract Discounts Total Long -Term Liabilities Debt Service to Maturity 761,523 $54,895,322 Following are schedules showing the debt service requirements to maturity for the City's long -term debt, excluding compensated absences. 2016 2017 2018 2019 2020 2021 -2025 2026 -2030 2031 -2035 2036 -2040 $ 1,932,737 4,241,428 2,062,196 2,143, 521 1,416,461 5,895,371 2,610,000 2,756,000 $ 779,111 716,242 634,436 549,296 450,566 1,382,838 638,288 234,239 $ 171,600 179,200 184,800 190,800 197,200 1,115, 600 1,360,800 963,200 1,902,000 $ 255,861 249,088 243,173 237,069 229,039 1,018,682 765,620 308,683 211,365 $ 670,000 450,000 445,000 445,000 445,000 2,225,000 1,402,500 $ 286,005 271,830 257,655 243,638 223,613 813,794 239,188 $ 4,095,314 6,107, 788 3,827,260 3,809,324 2,961,878 12, 451, 284 7,016,395 4,262,121 2,113, 365 Totals $ 23,057,714 $ 5,385,013 $ 6,265,200 $ 3,518,579 $ 6,082,500 $ 2,335,721 $ 46,644,728 Governmental Activities Year Ended December 31 General Obligation Bonds Principal Interest Due to Other Governments Principal Interest Special Assessments Principal Interest Total 2016 2017 2018 2019 2020 2021 -2025 2026 -2030 2031 -2035 2036 -2040 $ 1,932,737 4,241,428 2,062,196 2,143, 521 1,416,461 5,895,371 2,610,000 2,756,000 $ 779,111 716,242 634,436 549,296 450,566 1,382,838 638,288 234,239 $ 171,600 179,200 184,800 190,800 197,200 1,115, 600 1,360,800 963,200 1,902,000 $ 255,861 249,088 243,173 237,069 229,039 1,018,682 765,620 308,683 211,365 $ 670,000 450,000 445,000 445,000 445,000 2,225,000 1,402,500 $ 286,005 271,830 257,655 243,638 223,613 813,794 239,188 $ 4,095,314 6,107, 788 3,827,260 3,809,324 2,961,878 12, 451, 284 7,016,395 4,262,121 2,113, 365 Totals $ 23,057,714 $ 5,385,013 $ 6,265,200 $ 3,518,579 $ 6,082,500 $ 2,335,721 $ 46,644,728 2016 2017 2018 2019 2020 2021 -2025 2026 -2030 2031 -2032 $ 144,823 $ 39,189 143,282 37,386 149,659 34,033 150,736 30,531 156,614 27,004 821,462 79,052 175,951 4,117 $ 599,468 $ 599,468 599,468 599,468 599,468 2,360,873 205,875 82,370 28,232 25,235 22,238 19,240 16,243 37,036 5,147 618 $ 811,712 805,371 805,398 799,976 799,329 3,298,423 391,090 82,988 Totals $ 1,742,527 $ 251,314 $ 5,646,458 $ 153,989 $ 7,794,288 93 Business -Type Activities Year Ended December 31 Revenue Bonds Principal Interest Public Works Trust Fund Loans Principal Interest Total 2016 2017 2018 2019 2020 2021 -2025 2026 -2030 2031 -2032 $ 144,823 $ 39,189 143,282 37,386 149,659 34,033 150,736 30,531 156,614 27,004 821,462 79,052 175,951 4,117 $ 599,468 $ 599,468 599,468 599,468 599,468 2,360,873 205,875 82,370 28,232 25,235 22,238 19,240 16,243 37,036 5,147 618 $ 811,712 805,371 805,398 799,976 799,329 3,298,423 391,090 82,988 Totals $ 1,742,527 $ 251,314 $ 5,646,458 $ 153,989 $ 7,794,288 93 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG -TERM LIABILITIES — GOVERNMENTAL FUNDS ITEM Interest Rates OUTSTANDING OUTSTANDING Due Within Maturity Authorized 12/31/2014 ISSUED REDEEMED 12/31/15 One Year GOVERNMENTAL ACTIVITIES: Limited General Obligation (GO) Bonds Payable: 2008 Refunding- Streets /Facilities 4.00 -6.00 12/01/19 6,180,000 3,450,000 630,000 2,820,000 655,000 2010 Streets / Equipment 2.00 -5.41 12/01/24 5,870,000 4,350,000 380,000 3,970,000 395,000 2011 Refunding Streets (2003 GO) 1.25 -4.00 12/01/23 4,620,000 4,185,000 405,000 3,780,000 420,000 2013 LTGO -MPD Pool Improve 2.00 -4.00 12/01/22 1,000,000 803,221 99,507 703,714 93,737 2014 LTGO -Urban Renewal 0.85 -4.86 12/01/34 3,850,000 3,850,000 141,000 3,709,000 149,000 2014 LTGO -Line of Credit 1 Mo. LIBOR+ 1.0% 12/01/17 2,250,000 2,250,000 - 2,250,000 2015 LTGO- Interurban, BAR 2.25 -3.00 12/01/35 5,825,000 5,825,000 5,825,000 220,000 Total Bonds Payable 29,595,000 16,638,221 8,075,000 1,655,507 23,057,714 1,932,737 Issuance premiums 562,755 309,758 110,990 761,523 Net Bonds Payable Due to Other Governments 29,595,000 17,200,976 8,384,758 1,766,497 23,819,237 1,932,737 2009 Facility SCORE 2010 ValleyCom Refunding 3.00 -6.62 01/01/39 6,898,800 6,430,400 165,200 4.30 -5.75 12/01/15 1,065,000 220,000 220,000 6,265,200 171,600 Total Due Other Governments Special Assessment Debt 7,963,800 6,650,400 385,200 Klickitat Urban Access Project 3.150 -5.375 01/15/29 6,687,500 6,687,500 - 605,000 6,265,200 171,600 6,082,500 670,000 Total Special Assessment Debt 6,687,500 6,687,500 605,000 6,082,500 670,000 Other Post- Employement Benefits Payable 5,341,973 1,802,950 - Compensated Absences: 3,740,162 3,193,766 3,073,455 7,144,923 3,860,473 Total Governmental Funds $44,246,300 $ 39,621,012 $ 13,381,474 $5,830,152 $ 47,172,333 $ 2,774,337 Due to Other Governments Valley Communication Center Public Development Authority issued General Obligation dispatch facility and refunded the debt in April 2010. The City is contracted to pay 20% of 15 -year bonds that matured in 2015. This debt was paid from the General fund. bonds in 2000 for a new the debt service of these SCORE Public Development Authority issued General Obligation bonds in 2009 to acquire equip a consolidated correctional facility to be located in Des Moines, Washington. The 8% of the debt service of these 30 year bonds that mature in 2039. This debt is paid from 94 , construct, improve, and City is contracted to pay the General fund. CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG -TERM LIABILITIES - BUSINESS -TYPE ACTIVITIES ITEM Interest OUTSTANDING Rates Maturity Authorized 12/31/2014 ISSUED OUTSTANDING Due Within REDEEMED 12/31/15 One Year BUSINESS -TYPE ACTIVITIES: Bonds Payable: 1995 Water /Sewer Revenue 2006 Water /Sewer /SWM Revenue 2015 Water /Sewer /SWM Refunding 4.15 -6.63 4.00 -4.50 2.34 02/01/15 $ 4,500,000 $ 12/01/26 $ 3,180,000 $ 12/01/26 1,742,527 375,000 $ - 2,205,000 $ - 1,742,527 $ 375,000 $ 2,205,000 - $ 1,742,527 144,823 Total Bonds Payable Unamortized Deferred Credits (Charges): Issuance Premiums Issuance Discounts 9,422,527 2,580,000 1,742,527 2,580,000 1,742,527 144,823 35,770 (82) 35,770 (82) Net Bonds Payable Public Works Trust Fund Loans: 2003 Loan - Water /Sewer 2003 Loan - Surface Water 2004 Loan - Water /Sewer 2004 Loan - Surface Water 2004 Loan - Surface Water 2014 Loan -Sewer 0.50 06/01/21 0.50 06/01/21 0.50 -2.00 06/01/24 0.50 -2.00 06/01/24 1.00 06/01/24 0.5 06/01/32 9,422,527 2,615,687 1,742,527 273,870 219,725 5,016,000 684,000 4,196,056 101,180 81,175 2,728,862 372,118 2,221,441 238,090 501,484 2,615,688 Total Public Works Trust Fund Loans 10,389,651 5,742,866 501,484 1,742,527 144,823 14,454 86,725 14,454 11,597 69,578 11,597 272,886 2,455,976 272,886 37,212 334,906 37,212 222,144 1,999,297 222,144 39,599 699,975 41,175 597,892 5,646,458 599,468 Compensated Absences 306,440 270,759 243,195 334,004 14,826 Total Business -Type Activities $19,812,178 $ 8,664,993 $ 2,514,770 $3,456,775 $ 7,722,989 $ 759,117 TOTAL ALL FUNDS $ 64,058,478 $ 48,286,005 $ 15,896,244 $ 9,286,927 $ 54,895,322 $ 3,533,454 LONG -TERM LIABILITIES RECONCILIATION Government Funds Enterprise Funds Balance 12 -31 -15 General obligation bonds Special assessment bonds Revenue bonds Public Works Trust Fund loans Due to Other Governments Employee leave benefits Net Premiums /Discounts Other Post - Employment Benefits $23,057,714 $ $ 6,082,500 6,265,200 3,860,473 761,523 7,144,923 1,742,527 5,646,458 334,004 $23,057,714 6,082,500 1,742,527 5,646,458 6,265,200 4,194,477 761,523 7,144, 923 Total long -term debt $47,172,333 $ 7,722,989 $54,895,322 Debt Limit Capacities State law provides that debt cannot be incurred in excess of the following percentages of the value of the taxable property of the City: 1.5% without a vote of the people; 2.5% with a vote of the people; 5.0% with a vote of the 95 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS people, provided the indebtedness in excess of 2.5% is for utilities; 7.5% with a vote of the people, provided the indebtedness in excess of 5.0% is for parks or open space development. At December 31, 2015, the debt limits for the City were as follows: SUMMARY OF DEBT LIMIT CAPACITIES Item Without a Vote 1.5% With a Vote of the People 2.5% 5.0% 7.5% Legal Limit $ 80,929,877 $ 134,883,128 $ 269,766,256 $ 404,649,384 Outstanding Net Indebtedness 29,322,914 29,322,914 Margin Available $ 51,606,963 $ 134,883,128 $ 269,766,256 $ 375,326,470 Refunding and Defeasance of 2006 Water and Sewer Bonds On December 15, 2015, the City issued $1,742,527 in water and sewer revenue refunding bonds, 2015, with an effective interest cost of 2.340087 percent to advance refund $2,060,000 of outstanding water and sewer revenue bonds, 2006, with an effective interest rate of 4.494518 percent. The net proceeds were used to purchase U.S. government securities that were deposited with an escrow agent to provide for all future debt service payments on the refunded bonds. As a result, the refunded bonds are considered defeased and the liability for those bonds has been removed from the business -type activities column of the statement of next position. The reacquisition price exceeded the net carrying amount of the old debt by $80,707. This transaction resulted in an economic gain (difference between the present values of the old and new debt service payments) of $147,882. Long -term Liabilities other than debt Claims are paid from one or more funds based on the nature of the transaction. Employees' compensable leave is the City's liability for all unused vacation and sick leave and unpaid overtime accrued by employees and, payable under specified conditions. This obligation is paid only at the time of termination, usually from the same funding source(s) from which the employee's salary or wage compensation was paid. The City does not report a liability for termination benefits because it is not reasonably estimable. Local Improvement District No. 33 Tukwila Urban Access Improvement Project Local Improvement District (LID) No. 33 was formed on November 16, 2009 by Ordinance No. 2260. The project was designed to improve congestion within the City's Urban Center. The project included a partial lid over Southcenter Parkway, removal of conflicting turning movements, and the widening of Southcenter Parkway. Construction for the project began in March 2011 and was completed in October 2011. The project was closed out and accepted as complete by City Council on February 19, 2013. A variety of funding sources were used to pay for the project including federal and state grants, impact fees, City funds, a right -of -way donation, and special assessments. The City chose to fund the project internally, rather than obtain external, short-term financing then apply special assessments to property owners after the project was completed. Fund 104 Arterial Streets, where the project was accounted for, loaned the project funds as needed using a draw method at an interest rate of 1.80 %. This loan was repaid in 2013 when special assessment bonds were issued. 96 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS The City confirmed the assessment roll with a final assessment of $9,475,894. The prepayment period for the special assessments was open in the fall of 2013 and during that time the City received $2,788,350 in prepayments. Once the prepayment window closed, the City issued bonds for the remaining outstanding assessments in the amount of $6,687,500. From these proceeds, the City deposited $668,750 to the guaranty fund. The second of 15 annual installments for the assessments was due by October 16, 2015. As of December 31, 2015, all LID Special Assessments were current, nothing was delinquent. During 2015, several property owners chose to pay the assessment in full. Because of the additional principal payments received, the City has enough funds in the LID No. 33 funds to meet debt service requirements in 2016 and pay $157,500 additional principal. Estimated Arbitrage Rebate The Federal Tax Reform Act of 1986 requires issuers of tax - exempt debt of over $5 million to make payments to the United States Treasury of investment interest received at yields that exceed the issuers tax - exempt borrowing rates. Payments of arbitrage rebate amounts due under these regulations must be made to the U.S. Treasury every five years. The City's estimated rebatable arbitrage amount as of December 31, 2015 is $0 for its tax - exempt bond issues subject to the Tax Reform Act. NOTE 11 — COMMITMENTS Property Sale Commitment. In December 2014, the City agree to a sell the land parcel commonly known as the Longacre Property for $1.6 million. The sale is contingent upon the suitability of the property as determined by the purchaser. The examination period to determine suitability expires July 1, 2017. Construction Commitments. As of December 31, 2015, the City share of contractual obligations on construction projects total $5,101,710. Governmental Activities Remaining Commitment 42nd Ave S Phase III /Gilliam Creek SSWM 53rd Ave S Street Improvements 42nd Ave S Roadside Barriers Interurban Ave S Tukwila Urban Center - Pedestrian /Bicyle Bridge TUC Transit Center Andover Park W Street /Water Duwamish Gardens Other governmental projects $ 222,326 498,991 107,383 1,525,419 90,306 282,937 381,931 1,449,884 75,426 Total Governmental Activities $ 4,634,603 Business -Type Activties Projects Remaining Commitment Macadam Water Upgrade Andover Park East Water /Sewer East Marginal Way South Storm Pipe Replacement Other Utility related projects Total Business -Type Activities $ 114,664 101,144 204,380 46,920 $ 467,108 Total CIP /Commitments $ 5,101,710 97 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTE 12 — POTENTIAL POLLUTION REMEDIATION AND OTHER LIABILITIES There are several lawsuits in which the City is involved. The City Attorney estimates that the potential claims against the City to have no material financial impact. The City of Tukwila may share in potential liability under the Comprehensive Environmental Response, Compensation and Liability Act ( "CERCLA ") for sediment contamination within the Lower Duwamish Waterway Superfund site. The Environmental Protection Agency has estimated the total costs to be $342 million with 120 parties sharing in the liability. While it is impossible to accurately estimate the City's potential CERCLA liability at this time, the relatively small size of the City's storm water system within the Lower Duwamish Waterway Superfund site area, as well as the system's recent establishment in 1989, gives reason to the City to believe that its share of the potential liability is not significant and not estimable. NOTE 13 — RISK MANAGEMENT The City of Tukwila is a member of the Washington Cities Insurance Authority (WCIA). Utilizing Chapter 48.62 RCW (self- insurance regulation) and Chapter 39.34 RCW (Interlocal Cooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self- insuring, and / or jointly contracting for risk management services. WCIA has a total of 179 Members. New members initially contract for a three -year term, and thereafter automatically renew on an annual basis. A one - year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police, public officials' errors or omissions, stop gap, and employee benefits liability. Limits are $4 million per occurrence self- insured layer, and $16 million per occurrence in the re- insured excess layer. The excess layer is insured by the purchase of reinsurance and insurance and is subject to aggregate limits. Total limits are $20 million per occurrence subject to aggregate sublimits in the excess layers. The Board of Directors determines the limits and terms of coverage annually. Insurance coverage for property, automobile physical damage, fidelity, inland marine, and boiler and machinery are purchased on a group basis. Various deductibles apply by type of coverage. Property insurance and auto physical damage are self- funded from the members' deductible to $750,000, for all perils other than flood and earthquake, and insured above that amount by the purchase of insurance. In -house services include risk management consultation, loss control field services, claims and litigation administration, and loss analyses. WCIA contracts for the claims investigation consultants for personnel issues and land use problems, insurance brokerage, and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. As outlined in the interlocal, WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in financial instruments which comply with all State guidelines. A Board of Directors governs WCIA, which is comprised of one designated representative from each member. The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the organization. The WCIA Executive Director reports to the Executive Committee and is responsible for conducting the day to day operations of WCIA. 98 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS The City insures its buildings, equipment, and vehicle property insurance with WCIA. They self -fund up to $250,000 with standard property insurance purchased above that amount. Traveler's insures boiler machinery and provides for employee dishonesty coverage. The City of Tukwila has a Risk Management and a Safety Committee to oversee risk management. In addition, the WCIA provides support for a proactive risk analysis program and a loss control manual. There were no significant reductions in insurance coverage in the past year. During the year under audit and in the past three years, no settlement has exceeded insurance coverage. The City self- insures for unemployment benefits. This is budgeted each year and has not exceeded $60,000 per year. This expense is budgeted in the Finance Department within the general fund and no reserves are allocated because of the limited liability and historical cost. The City also self- insures for medical, dental and other health care benefits. A third -party administrator, Healthcare Management Administrators, Inc., provides claims administration. The City has a stop -loss policy with Sun Life Insurance Company, which provides individual limits of $175,000 and a plan limit of $8,273,754 in 2015. Each fund contributes an appropriate amount each year to pay premiums and claims. Liabilities include an actuarially determined amount for claims that have been incurred but not reported (IBNR's) and a contingency reserve equal to 2.5 times the IBNR reserve. The IBNR liability is estimated using actuarial methods. Based on results as well as a review of actual run -out, average lag days of 66.6 days for medical, 19.3 days for pharmacy, 32.1 days for dental, and 39.2 days for vision were selected. Using average lag days and net adjusted paid claims, the IBNR liability was estimated as of June 30, 2015. Next, the estimated IBNR liability as of December 31, 2015 was developed by trending the June 30, 2015 estimates to year -end. No explicit margin for claims fluctuations was added because the amount of the reserve in the fund balance is sufficient to cover expected claims fluctuations. Administrative costs were then added. The following table reflects changes in the balances of claims liabilities for 2015 and 2014. SUMMARY OF HEALTH CARE CLAIM LIABILITIES ITE M Active Employees Retired Employees LEOFF I 2015 2014 2015 2014 Claim Liabilities at Beginning of Year Claim expenses: Current year and changes in estimates Claim payments and expenses Claim Liabilities at End of Year $ 2,260,000 $ 1,669,250 $ 285,750 $ 214,250 5,561,504 6,633,199 (5,874,004) (6,042,449) 134,050 (198,550) 959,835 (888, 335) $ 1,947,500 $ 2,260,000 $ 221,250 $ 285,750 NOTE 14 — CHANGE IN ACCOUNTING PRINCIPLE The City of Tukwila recorded a Change in Accounting Principle concerning calculating depreciation in the Golf Course fund. Previously, depreciation was calculated using the composite depreciation method. In 2015, the City changed to the straight line depreciation method, which is the method utilized by the City's other enterprise funds. The change in depreciation method resulted in recording $757,473 in additional depreciation for prior years. 99 CITY OF TUKWILA: 2015 CAFR NOTES TO THE FINANCIAL STATEMENTS The City also implemented Governmental Accounting Standards Board Statement 68, Accounting and Financial Reporting for Pensions (see Note 9, Pension Plans). On a government -wide basis, this change in accounting principle resulted in a reduction of beginning fund balance for governmental activities of $9,551,003 and of $2,308,254 for the business -type activities. NOTE 15 — SPECIAL ITEM The City purchased 3 motels in the Tukwila International Boulevard urban renewal area in 2014 and two additional properties in 2015. The properties were purchased for a total of $5,201,798. The City plans to demolish the structures and hold the property as an investment until sale to a developer. Because assets held for resale cannot be reported at more than the anticipated net realizable value, the City reduced the asset cost of the 2015 purchases by $956,798 as a valuation adjustment. This valuation adjustment is reported as a special item on the Statement of Activities and the Statement of Revenues, Expenditures, and Changes in Fund Balances. NOTE 16 — SUBSEQUENT EVENT In 2014, the cities of Tukwila, SeaTac, and Des Moines signed an interlocal agreement (ILA) creating a Tourism Promotion Area (TPA) to encompass the geographical boundaries of the three cities. The TPA was set up so that the City of SeaTac would serve as the legislative body for the TPA. The City of Tukwila began operating Seattle Southside Visitor Services (SSVS) in 2002. SSVS was responsible for marketing the cities of Tukwila, SeaTac, and Des Moines under the "Seattle Southside" to brand to potential overnight guests. As part of the TPA process, the City of SeaTac formed a public development authority (SSRTA). Effective January 1, 2016 most of the operations of SSVS transitioned to SSRTA. As part of this transition, all of the City of Tukwila employees who worked for SSVS assumed positions with SSRTA. The City also transitioned or terminated most on the contracts executed for the benefit of SSVS. The City of Tukwila has no obligations or liabilities associated with the operations of SSRTA. In the past the City's lodging tax funds were used to support four full time employees with SSVS, as well as some part time and temporary help. Currently, the lodging tax funds are not being used to support staff. As part of the ILA with the cities of Des Moines and SeaTac, Tukwila intends to provide some lodging tax funds to SSRTA. The transition of SSVS to SSRTA will have no impact on the collection of lodging tax funds. The City still retains authority in the collection of the funds and how they are dispersed (subject to the limitations in State law). The transition of SSVS to SSRTA relieves the City of significant financial obligations. The transition of SSVS to SSRTA will cause a small impact to the general fund. The cities of Des Moines and SeaTac contributed over $800,000 a year to the operation of SSVS. The intergovernmental funds resulted in the City's lodging tax being charged approximately $97,925 in indirect cost allocations. Now that these intergovernmental funds are no longer going to come to the City, the indirect charge for 2016 is estimated to be approximately $35,000. It should be noted that the termination of operating SSVS will also result in a significant reduction in costs to the City to support overnight tourism. 100 CITY OF TUKWILA: 2015 CAFR REQUIRED SUPPLEMENTAL INFORMATION CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED DECEMBER 31,2015 Original Final Budget Budget (Gaap Basis) (Gaap Bais) Actual Results Variance With Final Budget Positive (Negative) REVENUES: Taxes $ 42,301,943 $ 44,424,639 $ 45,201,369 $ 776,730 Licenses and permits 2,105,089 2,255,089 2,242,256 (12,833) Intergovernmental 4,648,899 4,972,499 4,626,463 (346,036) Charges for services 2,392,787 2,464,537 2,896,446 431,909 Fines and Foreitures 242,829 242,829 261,457 18,628 Investment earnings 86,052 126,052 163,618 37,566 Miscellaneous 97,788 97,788 120,887 23,099 Total Revenues 51,875,387 54,583,433 55,512,496 929,063 EXPENDITURES: Current: General Government 7,971,301 7,421,301 7,247,117 174,184 Public Safety 27,696,295 29,092,569 28,973,651 118,918 Physical environment 2,002,906 1,952,906 1,919,306 33,600 Transportation 3,066,264 2,866,264 2,820,022 46,242 Economic environment 4,445,449 4,470,221 4,328,177 142,044 Culture and recreation 4,092,425 4,265,425 4,259,532 5,893 Capital outlay 39,040 226,040 196,589 29,451 Total Expenditures 49,313,680 50,294,726 49,744,394 550,332 Excess Of Revenues And Expenditures 2,561,707 4,288,707 5,768,102 1,479, 395 OTHER FINANCING SOURCES (USES): Bond proceeds - - - Transfers in 2,200,000 1,300,000 500,000 Transfers out (4,959,846) (6,083,846) (5,433,846) (800,000) 650,000 Total Other Financing Sources And Uses (2,559,846) (4,783,846) (4,933,846) (150,000) Net change in fund balances Fund balances - beginning 1,861 15,200,000 (495,139) 15,881,000 834,256 17,496,550 1,329,395 1,615,550 Fund Balances - Ending $ 15,201,861 $ 15,385,861 $ 18,330,806 $ 2,944,945 101 CITY OF TUKWILA: 2015 CAFR REQUIRED SUPPLEMENTAL INFORMATION NOTES TO REQUIRED SUPPLEMENTARY INFORMATION The City of Tukwila budgets its funds in accordance with the Revised Code of Washington 35A.33. In compliance with the code, biennial budgets are adopted for the general fund and special revenue funds. For governmental funds, there are no substantial differences between the budgetary basis and generally accepted accounting principles. Budgetary accounts are integrated in fund ledgers for all budgeted funds, but the financial statements include budgetary comparisons for biennially budgeted governmental funds only. Budgets established for proprietary and fiduciary funds are "management budgets" and are not legally required to be reported and, as such, are not reported in the CAFR. The biennial appropriated budgets are adopted at the fund level and the budgets constitute the legal authority for expenditures at that level. Subsidiary revenue and expenditure records are used to compare the budgeted amounts with actual revenues and expenditures. As a management control device, the subsidiary ledgers monitor expenditures for individual functions and activities by object class. Any unexpended appropriation balances lapse at the end of the biennium. The City of Tukwila's budget procedures are mandated by RCW 35A.33. The steps in the budget process are as follows: 1) Prior to November 1 on even numbered years, the Mayor submits a proposed budget to the City Council. This budget is based on priorities established by the Council and estimates provided by the City departments during the preceding months, and balanced with revenue estimates made by the Mayor. 2) The City Council conducts public hearings on the proposed budget in November and December. 3) The Council makes its adjustments to the proposed budget and adopts by ordinance a final balanced budget no later than December 31. 4) The final operating budget as adopted is published and distributed within the first month of the following year. Copies of the budget are made available to the public. The City Council must approve by ordinance any amendments that increase the total for the fund. Budget amounts presented in the basic financial statements include both the original amounts and the final amended budget as approved by the City Council. Expenditure Categories General Government Public Safety Physical Environment Transportation Economic Environment Culture and Recreation Includes administration, finance, municipal court, attorney, and city clerk activities. Includes all police and fire activities. Includes expenditures for the public works activities not chargeable to the enterprise funds. Includes all street and arterial street maintenance and construction. Reflects the planning and building inspection activities. Includes expenditures related to parks and recreational activities. The information presented in the following required schedules was determined as part of the actuarial valuations at the dates indicated. 102 Plan fiduciary net position as a percentage of the total pension liability Plan fiduciary net position as a percentage of the total pension liability Plan fiduciary net position as a percentage of the total pension liability Plan fiduciary net position as a percentage of the total pension liability CITY OF TUKWILA: 2015 CAFR REQUIRED SUPPLEMENTAL INFORMATION COST SHARING MULTIPLE EMPLOYER DEFINED BENEFIT PENSION NET PENSION LIABILITY PERS] Fiscal Year Ending Employer's proportion of the net pension liability (asset) Employer's proportionate share of the net pension liability State's proportionate share of the net pension liability (asset) associated with the employer Total: Proportionate share of the net pension liability Employer's covered (asset) employee payroll Employer's proportionate share of the net pension liability as a percentage of covered employee payroll December31, 2015 0.135736% PERS[? /3 $ 7,100,255 $ 7,100,255 $ 15,561,016 45.63% 59.10% Fiscal Year Ending Employer's proportion of the net pension liability (asset) Employer's proportionate share of the net pension liability State's proportionate share of the net pension liability (asset) associated with the employer Total: Proportionate share of the net pension liability Employer's covered (asset) employee payroll Employer's proportionate share of the net pension liability as a percentage of covered employee payroll December 31, 2015 0.173592% PSERS $ 6,202,541 $ $ 6,202,541.00 $ 15,406,589.00 40.26% 89.20% Fiscal Year Ending Employer's proportion of the net pension liability (asset) Employer's proportionate share of the net pension liability State's proportionate share of the net pension liability (asset) associated with the employer Total: Proportionate share of the net pension liability (asset) Employer's covered employee payroll Employer's proportionate share of the net pension liability as a percentage of covered employee payroll December 31, 2015 0.052748% LEOFF1. $ 9,628 $ $ 9,628 $ 154,426 6.23% 95.08% Fiscal Year Ending Employer's Employer's proportion of the net proportionate share pension liability of the net pension (asset) liability State's proportionate share of the net pension Total: Proportionate liability (asset) share of the net associated with the pension liability employer (asset) Employer's proportionate share of the net pension Plan fiduciary net liability as a position as a Employer's covered percentage of covered percentage of the employee payroll employee payroll total pension liability December 31, 2015 0.077944% LEOFFI3 $ (939,397) $ $ (939,397) $ 76,144 -1233.71% 127.36% Fiscal Year Ending Employer's proportion of the net pension liability (asset) Employer's proportionate share of the net pension liability State's proportionate share of the net pension Total: Proportionate liability (asset) share of the net associated with the pension liability employer (asset) Employer's covered employee payroll Employer's proportionate share of the net pension liability as a percentage of covered employee payroll December 31, 2015 0.519159% $ (5,335,916) $ (2,123,832)r $ (7,459,748) $ 15,113,237 * Until a full 10 -year trend is compiled, govemments should present information only for those years for vMich information is available. 103 - 49.36% 111.67% CITY OF TUKWILA: 2015 CAFR REQUIRED SUPPLEMENTAL INFORMATION CONTRIBUTIONS PERS© Less: Contributions in Relation to the Copntribution as a Statutorily Statutorily Percentage of Fiscal Determined Determined Contribution Covered Employee Covered Employee Year Ending Contribution Contribution Deficiency (Excess) Payroll Payroll December 31, 2015 $ P E RSE2 /3 686,881 $ (686, 881) $ $ 15, 654, 255 4.39% Less: Contributions in Relation to the Copntribution as a Statutorily Statutorily Percentage of Fiscal Determined Determined Contribution Covered Employee Covered Employee Year Ending Contribution Contribution Deficiency (Excess) Payroll Payroll December 31, 2015 $ PSERS 873,248 $ (873,248) $ $ 15,498,171 5.63% Less: Contributions in Relation to the Copntribution as a Statutorily Statutorily Percentage of Fiscal Determined Determined Contribution Covered Employee Covered Employee Year Ending Contribution Contribution Deficiency (Excess) Payroll Payroll December 31, 2015 $ LEOFF . 10,105 $ (10,105) $ - $ 156,084.0 6.47% Less: Contributions in Relation to the Copntribution as a Statutorily Statutorily Percentage of Fiscal Determined Determined Contribution Covered Employee Covered Employee Year Ending Contribution Contribution Deficiency (Excess) Payroll Payroll December 31, 2015 $ $ $ $ 25,679 0.00% LEOFFE2 Less: Contributions in Relation to the Copntribution as a Statutorily Statutorily Percentage of Fiscal Determined Determined Contribution Covered Employee Covered Employee Year Ending Contribution Contribution Deficiency (Excess) Payroll Payroll December 31, 2015 $ 776,719 $ (776,719) $ $ 15, 380, 541 5.05% * Until a full 10 -year trend is compiled, govemments should present information only for those years for which information is available. 104 CITY OF TUKWILA: 2015 CAFR REQUIRED SUPPLEMENTAL INFORMATION FIREMEN'S PENSION TRUST FUND SCHEDULE OF FUNDING PROGRESS (Rounded to thousands) Actuarial Unfunded Actuarial UAAL as a Actuarial Actuarial Value Accrued Accrued Liabilities Funded Covered Percentage of Valuation Date of Assets Liabilities (UAAL) Ratio Payroll Covered Payroll January 1, 2005 $1,265 $1,182 ($83) 107% $608 N/A January 1, 2007 1,336 1,310 (26) 102 463 N/A January 1, 2009 1,445 1,610 165 90 442 37 January 1, 2011 1,430 1,582 152 90 0 N/A January 1, 2013 1,416 1,296 (120) 109 0 N/A January 1,2014* 1,409 1,853 444 76 0 N/A January 1, 2015 1,413 1,841 428 77 0 N/A * January 1, 2014 change in actuary and adoption of GASB 67 Schedule of Changes in the City's Net Pension Liability and Related Ratios Total Pension Liability 2014 2015 Service Cost Interest Changes of benefit terms Differences between expected and actual experience Changes in assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefit payments, included refunds of employee contributions Net change in total pension liability 50,098 (61,863) Y 49,716 (58,277) (8,561) 1,840,929 1,829,926 Total pension liability — beginning Total pension liability — ending (a) (11,765) 1,852,693 1,840,929 Plan Fiduciary Net Position Contributions — employer Contributions — employee Net investment income Benefit payments, including refunds of employee contributions 64,114 63,590 1,805 2,667 (61,863) (58,277) 105 CITY OF TUKWILA: 2015 CAFR REQUIRED SUPPLEMENTAL INFORMATION . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Administrative expense Other Net change in plan fiduciary net position Plan fiduciary net position — beginning Plan fiduciary net position — ending (b) (4,500)- 1 City's net pension liability — ending (a) — (b) Plan fiduciary net position as a percentage of thetotal .... pension .... liability ......................................................................... ............................... Covered - employee payroll City's net pension liability as a percentage of =...._ covered-employee...payroll ................................................................... ............................... Notes to schedule: 4,056 3,481 1,408,970 1,413,026 1,413,026 1,416,506 427,903 ! $ 413,420 76.76% 77.41% n/a n/a The following assumptions were changed as of 1/1/2014: discount rate changed to 2.75 %, salary increases changed to 3.75 %, CPI changed to 2.75 %, mortality tables updated to RP -2014 with Scale MP -2014 projections. These changes to assumptions and experience differences increased liabilities approximately $567,000. GASB 67, Financial Reporting for Pension Plans, was adopted as of January 1, 2014, therefore liabilities were fresh - started at this date. SCHEDULE OF EMPLOYER CONTRIBUTIONS - PENSION 1 Less: Contributions in Relation to the Copntribution as a Statutorily Statutorily Contribution Percentage of Fiscal Determined Determined Deficiency Covered Employee Covered Employee Year Ending Contribution Contribution (Excess) Payroll Payroll December 31, 2006 $ 45,951 $ 45,951 $ - $ n/a December 31, 2007 50,555 50,555 - n/a December 31, 2008 52,571 52,571 n/a December 31, 2009 48,537 48,537 - n/a December 31, 2010 49,989 49,989 n/a December 31, 2011 54,865 54,865 n/a December 31, 2012 52,249 52,249 - n/a December 31, 2013 56,962 56,962 n/a December 31, 2014 64,114 64,114 n/a December 31, 2015 63,590 63,590 n/a 106 CITY OF TUKWILA: 2015 CAFR REQUIRED SUPPLEMENTAL INFORMATION Notes to Schedule: Contributions are a portion of State Fire Insurance Premiums. Schedule of Investment Returns Annual money- weighted rate of return, net of investment expense 2011 0.12% 2012 0.20% 2013 0.17% 2014 0.13% 2015 0.19% Notes to Schedule: Ten -year schedule required. However, until a full 10 -year trend is compiled, information is presented for those years where information is available. The key actuarial assumptions used for the January 1, 2015 valuation were: Assumption Rates Actuarial Valuation Date January 1, 2015 Actuarial Cost Method Asset Valuation Method I Entry Age Fair Market Value Measurement Date January 1, 2015 Discount Rate (or Investment Return We based the long -term expected rate of return on pension plan investments assumption on the nature and mix of current and expected pension plan assets over a period of time representative of the expected length of time between the first day of service and date of the last benefit payment. The rate of 2.75% was selected. Cost of Living I 2.75 %, based on SSA OASDI 2014 report. Salary Increases (for calculated benefit increases based on rank) 3.75 %, based on SSA OASDI 2014 report. Healthy Mortality RP -2014 mortality table, total dataset, fully generational with mortality improvement scale MP -2014 setback one year for males and set forward one year for females. 107 CITY OF TUKWILA: 2015 CAFR REQUIRED SUPPLEMENTAL INFORMATION Disabled Mortality RP -2014 mortality table, total dataset, fully generational with mortality improvement scale MP -2014 set forward two years for males and females. Spouse Age We assumed that wives are three years younger than husbands. Under the Firemen's Pension Trust fund, most adjustments are based on the change in salary for the rank of members held at retirement or based on the Consumer Price Index. Adjustments are determined in accordance with RCW 41.18.150, RCW 41.20 and RCW 41.26 108 CITY OF TUKWILA: 2015 CAFR REQUIRED SUPPLEMENTAL INFORMATION RETIREE MEDICAL AND LONG -TERM CARE BENEFITS FOR LEOFF 1 EMPLOYEES SCHEDULE OF FUNDING PROGRESS (Rounded to thousands) Actuarial Actuarial Value Accrued Valuation Date of Assets Liabilities Unfunded Actuarial Accrued Liabilities Funded Covered (UAAL)* Ratio Payroll UAAL as a Percentage of Covered Payroll January 1, 2008 January 1, 2011 January 1, 2014 January 1, 2015 $0 0 0 0 $16,103 14,805 21,264 29,538 $16,103 14,805 21,264 29,538 0% 0 0 0 SCHEDULE OF EMPLOYER CONTRIBUTIONS $581 371 195 132 Fiscal Year Ending Employer Contributions Annual Required Contributions Percentage of (ARC) ARC Contributed December 31, 2008 December 31, 2009 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 December 31, 2014 December 31, 2015 $557,103 $335,265 317,771 335,090 404,007 878,755 905,974 477,292 $1,366,284 $1,366,284 1,366,284 1,264,522 1,264,522 1,264,522 1,903,679 2,585,779 41% 25 23 26 32 69 48 18 RETIREE MEDICAL AND LONG -TERM CARE BENEFITS FOR LEOFF 1 EMPLOYEES 4% 3 1 0 Assumption Rates Actuarial Cost Method Entry Age Normal method. Measurement Date January 1, 2015 Discount Rate (or Investment Return) Selected the assumed discount rate of 2.75% based on the five - year average investment yield on the investments expected to finance the payment of benefits. Healthy Mortality RPH -2014 mortality table (headcount weighted), total dataset, fully generational with mortality improvement scale MP -2014 setback one year for males and set forward one year for females. 109 CITY OF TUKWILA: 2015 CAFR REQUIRED SUPPLEMENTAL INFORMATION Disabled Mortality RPH -2014 mortality table (headcount weighted), total dataset, fully generational with mortality improvement scale MP -2014 set forward two years for males and females. Turnover None assumed. All LEOFF 1 actives are fully eligible for retirement. Per Capita Claims Cost Assumed annual per capita claims costs are as follows: Age Medical /Rx Dental Vision LTC 55 $ 21,875 $ 966 $ 181 $ 133 60 28,071 966 181 220 65 15,406 966 181 448 70 16,924 966 181 1,183 75 17,984 966 181 3,028 80 18,348 966 181 6,499 Aging or Morbidity Factors Aging /morbidity factors are included in the per capita claims costs shown above (except dental and vision). Medicare Part B Premium Reimbursements The City reimburses Medicare retirees for Part B premiums. The 2015 annual premium is $1,258.80. Affordable Care Act (ACA) Excise Tax Threshold Ages 55 -64 All Other Single $ 11,850 $ 10,200 ACA Base Premium Assumed annual plan costs upon which the ACA tax calculation is based: Medicare ineligible $ 28,071 Medicare eligible $ 16,557 ACA Tax • We assumed a 40% excise tax rate on premiums above the ACA threshold. • We assumed the City of Tukwila pays no federal taxes. • We assumed the excise tax will apply to medical /Rx and Medicare premium reimbursements. Trend Rates Medical Long -Term Trends* from Getzen SOA Model version 2014_b using baseline assumptions. Excise Pre- Part B Long -Term Tax Year Medicare Medicare Dental Vision Premiums Care Threshold 2015 9.00% 6.50% 5.5% 4.0% 5.4% 5,0% thou', 2016 7.50% 6.509 5.0% 4.0% 5.4% 5.o% 0,00=; 2017 6.5095 6.00% 4.5% 4.0% 5.4% 5.0% 0.00% 2018 5.50% 5.50% 4.D% 4.0% 5.4% 5. {7% 4.24% 2019 5.50% 5.50 3.5% 3.5% 5.4% 5,0 3.24% 202o 5.46% 5.46% 3.5% 15% 5.4% 5, 0% 3.24% 2021 -2074 _.. ... 3.5% 3.5% 5,4% 5.0% 3.24% 20751- 3.80° 3.80% 3.5% 3.5% 5.4% 5. { }% 3.24% *The trend rates include assumed inflation of 3% for all future years. 110 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES NON -MAJOR GOVERNMENTAL FUNDS Special Revenue Funds Special Revenue Funds are established to account for proceeds of specific taxes or other specific revenue sources that are legally restricted to or committed for expenditures for particular purposes. • Hotel /Motel Tax Fund — Established to account for the proceeds of a 1% special excise tax on overnight lodging in Tukwila. This tax provides resources to support tourism development and promotion activities in Tukwila. • Drug Seizure Fund — Accounts for monies and proceeds from the sale of property seized during drug and felony investigations. These funds are legally required to be expended on drug and felony related police activities. Debt Service Funds Debt Service Funds are account for the accumulation of resources for and the payment of principal and interest on general obligation and special assessment bonds. • Local Improvement Guaranty Fund — Holds reserve funds required under state law to provide a means of paying local improvement district (LID) bond debt service obligations in the event there are insufficient resources in the LID debt service fund. • Limited Tax G.O. Refunding 2003 — Accounts for the principal and interest payments for the refunded Limited Tax G.O. 1994 Bonds for the construction of a new Community Center and the replacement of Fire Station #53. This bond has been paid off. • Limited Tax G.O. Refunding 2008 — Accounts for the principal and interest payments for the refunded Limited Tax G.O. 1999 Bonds which were issued for the purchase of a City Hall annex, known as the 6300 Building, and the purchase of land and payment of other economic revitalization costs for the future Tukwila Village project. • Limited Tax G.O. SCORE — Accounts for the principal and interest payments required per the debt service schedule for the City's portion of the construction of a correctional facility along with six other cities. • Limited Tax G.O. 2010 — Accounts for the principal and interest payments for the bonds issued for the construction and realignment of a major arterial street, Southcenter Parkway, in the Tukwila South Annexation area and for the cost of emergency preparedness capital and other equipment. • Limited Tax G.O. Refunding 2010 — This fund provides payment to Valley Communications Center for principal and interest on bonds issued in April 2010 to refund bonds that were originally issued in 2000 to pay for the new Valley Communications Center. This debt reflects Tukwila's share with four other cities. Each of the five cities is responsible for one -fifth of the annual debt service. 111 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES • Limited Tax G.O. Refunding 2011 — Accounts for the principal and interest payments for the portion of the Limited Tax G.O. 2003 Bonds refunded and pertaining to arterial street projects. • Limited Tax G.O. 2013 — Accounts for principal and interest on bonds issued for the renovation of the Tukwila Metropolitan Park District swimming pool. The proceeds were loaned to the District; the District reimburses the City for the debt service based on an interlocal agreement between the two entities. • Limited Tax G.O Fund — Accounts for principal and interest payments on bonds issued in 2014 for the Tukwila International Boulevard Revitalization project and for bonds issued in 2015 for the Interurban Avenue South improvement and Boeing Access Road Bridge retrofit projects. Capital Project Funds Capital Project Funds account for the acquisition or development of major capital facilities, except those projects financed by proprietary funds. Sources of revenue to these funds include general obligation bond proceeds, federal and state grants, real estate excise taxes, and transfers from the General Fund. • Residential Street — Established in accordance with RCW 35A.37.010 to account for maintenance and improvement of the City's residential streets. Major sources of support are the State - levied tax on motor vehicle fuels distributed to Tukwila, to be used for City street purposes, state and federal grants, and transfers in from the General Fund. • Land Acquisition, Recreation, and Park Development — Accounts for the acquisition of land, development of land, and construction of park facilities. • General Government Improvements — This fund was established in 1992 to provide funding for minor capital improvements not related to parks, land acquisition, or major building replacements. • Fire Improvements — This fund is to be used for the acquisition of land, development of land and construction of fire facilities. Revenue for this fund comes primarily from fire impact fees. 112 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING BALANCE SHEET NON -MAJOR GOVERNMENT FUNDS DECEMBER 31, 2015 Total Total Total Total Special Revenue Debt Service Capital Projects Governmental Funds Funds Funds Funds ASSETS: Cash and cash equivalents $ 471,784 $ 872,171 $ 2,347,101 $ 3,691,056 Taxes receivable 80,982 626,862 707,844 Customer accounts 139,206 139,206 Due from other governmental units 1,493,879 1,493,879 Current assets restricted: Cash and cash equivalents 12,644 12,644 Total Assets 704,615 872,171 4,467,842 6,044,629 LIABILITIES AND FUND BALANCES: Current liabilities Acoounts payable Accrued w ages and benefits Customer deposit Revenue received in advance 46,088 28,168 256,666 302,754 5,466 33,634 61,412 61,412 259,582 259,582 Total Liabilities 74,257 583,126 657,383 Fund balances: Restricted 630,359 668,849 687,050 1,986,258 Assigned 203,323 3,197,666 3,400,988 Total Fund balances 630,359 872,171 3,884,716 5,387,246 Total Liabilities and Fund Balances $ 704,615 $ 872,171 $ 4,467,842 $ 6,044,629 113 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR GOVERNMENT FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 Total Total Total Total Special Revenue Debt Service Capital Projects Governmental Funds Funds Funds Funds REVENUES: TAXES: Taxes $ 677,971 $ $ 1,268,671 $ 1,946,643 Intergovernmental - 92,854 2,332,078 2,424,932 Charges for services 862,011 55,306 917,317 Investment earnings 782 1 4,096 4,878 Miscellaneous 17,683 38,242 55,925 92,854 Total Revenues 1,558,447 3,698,393 5,349,695 EXPENDITURES: Current: General government 95,299 95,299 Economic environment 1,504,207 - 1,504,207 Physical environment 15,922 15,922 Public safety 61,514 - 61,514 Cultural and Recreation 90,520 90,520 Transportation 24,593 24,593 Debt service Principal 1,875,507 1,875,507 Interest 778,826 - 778,826 Capital Outlay 3,646,449 3,646,449 Total Expenditures 1,565,720 2,654,333 3,872,783 8,092,836 Exces (deficiency) of revenues Over (Under) Expenditures (7,273) (2,561,478) (174,390) (2,743,141) OTHER FINANCING SOURCES (USES): Transfers in Total Other Financing Sources And Uses Net change in fund balances Fund balances - beginning Fund Balances - Ending 2,759,846 674,000 3,433,846 (7,273) 637,632 2,759,846 198,368 673,804 674,000 499,610 3,385,106 3,433,846 690,705 4,696,541 630,359 $ 872,171 $ 3,884,716 $ 5,387,246 114 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING BALANCE SHEET NON -MAJOR SPECIAL REVENUE FUNDS DECEMBER 31, 2015 Hotel /Motel Tax Drug Seizure Total Special Revenue Funds ASSETS: Cash and cash equivalents $ 449,165 $ 22,619 $ 471,784 Taxes receivables 80,982 - 80,982 Other receivables 139,206 - 139,206 Current Assets Restricted: Cash and cash equivalents 12,644 12,644 Total Assets 669,353 35,263 704,615 LIABILITIES AND FUND BALANCES: Accounts payable Accrued wages and benefits Total Liabilities 18,065 28,168 46,233 28,024 46,088 28,168 28,024 74,257 Fund balances: Restricted 623,120 7,239 630,359 Total Fund Balances 623,120 7,239 630,359 Total Liabilities and Fund Balances $ 669,353 $ 35,263 $ 704,615 115 F CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR SPECIAL REVENUE FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 Total Special Revenue Hotel /Motel Tax Drug Seizure Funds REVENUES: Taxes $ 677,971 $ - $ 677,971 Charges for services 862,011 - 862,011 Investment earnings 711 70 782 Miscellaneous 10,788 6,895 17,683 Total Revenue 1,551,482 6,966 1,558,447 EXPENDITURES: Current: Public safety Economic environment 1,504,207 61,514 61,514 1,504,207 Total Expenditures 1,504,207 61,514 1,565,720 Excess (deficiency) of revenues Over (Under) Expenditures 47,275 (54,548) (7,273) Net change in fund balances 47,275 Fund balances - beginning 575,844 (54,548) (7,273) 61,787 637,632 Fund Balances - ending $ 623,120 $ 7,239 $ 630,359 116 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING BALANCE SHEET NON -MAJOR DEBT SERVICE FUNDS DECEMBER 31, 2015 Special LTGO LTGO Score LTGO Valley LTGO LTGO LTGO Bond Total Assesment Refunding Refunding LTGO Bonds Com Refunding Bonds Fund Bonds Bonds Bonds Bonds 2010 ** LTGO Bonds 2013 Nonmajor Guaranty 2003 (Ref 2008 (Ref 2009* Refunding 2011 (Ref Debt Service Fund 2013 1994) 1999) Bonds 2003) Funds 2010 (Ref 2000) ASSETS: Cash and cash equivalents $ 669,148 $ 195 $ 416 $ 2 $ 33,705 $ 794 $ 539 $ - $ 167,372 $ 872,171 TOTAL ASSETS 669,148 195 416 2 33,705 794 539 167,372 872,171 LIABILITIES AND FUND BALANCES: Total Liabilities Fund balances: Restricted 668,849 - 668,849 Assigned 299 195 416 2 33,705 794 539 - 167,372 203,323 ' Total Fund Balances 669,148 195 416 2 33,705 794 539 167,372 872,171 InTotal Liabilities and Fund Balances $ 669,148 $ 195 $ 416 $ 2 $ 33,705 $ 794 $ 539 $ $ 167,372 $ 872,171 Limited Tax GO Bonds 2009A also includes Limited Tax GO Bonds 2009B ** Limited Tax GO Bonds 2010A also includes Taxable Build America Bonds 2010B 117 Special LTGO LTGO Score LTGO Valley LTGO LTGO LTGO Bond Total Assessment Refunding Refunding LTGO Bonds Com Refunding Bonds Fund Nonmajor Bonds Bonds Bonds Bonds 2010 ** LTGO Bonds 2013 Debt Service Guaranty 2003 (Ref 2008 (ref 2009* Refunding 2011 (Ref Funds Fund 2013 1994) 1999) Bonds 2003) 2010 (Ref 2000) CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR DEBT SERVICE FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 REVENUES: Intergovernmental $ - $ - $ - $ - $ 92,854 $ - $ - $ $ - $ 92,854 Investment earnings 1 - 1 Total revenues 1 92,854 92,854 EXPENDITURES: Debt service Principal 630,000 380,000 220,000 405,000 99,507 141,000 1,875,507 Interest 181,300 205,650 8,800 140,825 13,623 228,628 778,827 Total Expenditures 811,300 585,650 228,800 545,825 113,130 369,628 2,654,334 Excess (deficiency) of revenues Over (Under) Expenditures 1 - (811,300) - (492,796) (228,800) (545,825) (113,130) (369,628) (2,561,479) OTHER FINANCING SOURCES (USES): Transfers in - - 811,300 523,791 228,800 545,825 113,130 537,000 2,759,846 Total Other Financing Source And Uses - - 811,300 523,791 228,800 545,825 113,130 537,000 2,759,846 Net change in fund balances 1 30,995 167,372 198,367 Fund balances - beginning 669,147 195 416 2 2,710 794 539 673,804 Fund Balances - Ending $ 669,148 $ 195 $ 416 $ 2 $ 33,705 $ 794 $ 539 $ $ 167,372 $ 872,171 * Limited Tax GO Bonds 2009A also includes Limited Tax GO Bonds 2009B ** Limited Tax GO Bonds 2010A also includes Taxable Build America Bonds 2010B 118 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING BALANCE SHEET NON -MAJOR CAPITAL PROJECTS FUNDS DECEMBER 31, 2015 Land ACQ. General Total Nonmajor Residential Rec & Park Government Fire Capital Project Street Development Improvements Improvements Funds ASSETS: Cash and cash equivalents Taxes receivable Due from other governmental units $ 926,387 $ 436,607 $ 432,673 $ 551,434 $ 2,347,101 44,624 582,238 626,862 34,865 1,459,014 1,493,879 Total Assets 1,005,876 2,477,859 432,673 551,434 4,467,842 LIABILITIES AND FUND BALANCES: Current payables: Accounts payables 169,022 56,231 31,413 256,666 Accrued wages and benefits 2,540 326 2,600 5,466 Customer deposit 15,154 44,631 1,627 61,412 Unearned revenue - 259,582 259,582 Total Liabilities 186,715 360,770 35,641 583,126 Fund balances: Restricted - 135,616 551,434 687,050 Assigned 819,161 1,981,473 397,033 - 3,197,666 Total Fund Balace 819,161 2,117,089 397,033 551,434 3,884,716 Total Liabilities and Fund Balances $ 1,005,876 $ 2,477,859 $ 432,673 $ 551,434 $ 4,467,842 119 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR CAPITAL PROJECTS FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 Land ACQ. General Total Nonmajor Residential Rec & Park Government Fire Capital Projects Street Development Improvements Improvements Funds REVENUES: Taxes Charges for services Intergovernmental Investment earnings Miscellaneous Total Revenues $ $ 1,268,671 $ - $ - $ 1,268,671 8,900 46,406 55,306 545,429 1,786,649 - 2,332,078 1,477 1,588 502 528 4,096 38,242 - 38,242 585,148 3,065,809 502 46,934 3,698,393 EXPENDITURES: Current: General government 95,299 - 95,299 Physical environment 15,922 15,922 Culture and recreation 90,520 - 90,520 Transportation 24,593 - - 24,593 Capital Outlay 1,379,687 2,144,458 122,303 3,646,449 Total Expenditures 1,404,280 2,250,900 217,603 3,872,783 Exces (deficiency) of revenues Over (Under) Expenditures (819,132) 814,909 (217,101) 46,934 (174,390) OTHER FINANCING SOURCES (USES): Transfers in 474,000 200,000 - 674,000 Total Other Financing Sources And Uses 474,000 200,000 - 674,000 Net change in fund balances (345,132) 814,909 (17,101) 46,934 499,610 Fund balances - beginning 1,164,293 1,302,180 414,133 504,500 3,385,106 Fund Balances - ending $ 819,161 $ 2,117,089 $ 397,033 $ 551,434 $ 3,884,716 120 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL LOCAL IMPROVEMENT DISTRICT #33 DEBT SERVICE FUND FOR THE YEAR ENDED DECEMBER 31,2015 Original Final Budget Budget (Gaap Basis) (Gaap Bais) Actual Results Variance With Final Budget Pos itive (Negative) REVENUES: Special assessment $ 443,147 $ 604,724 $ 650,415 $ 45,691 Investment earnings 366,993 366,993 296,304 (70,689) Miscellaneous 1,809 1,809 Total Revenues 810,140 971,717 948,528 (23,189) EXPENDITURES: Debt service: Principal 447,500 605,000 605,000 Interest 346,784 346,784 346,784 0 Total Expenditures 794,284 951,784 951,784 0 Excess Of Revenues And Expenditures 15,856 19,933 (3,255) (23,188) Net change in fund balances 15,856 19,933 (3,255) (23,188) Fund balances - beginning 805,000 1,042,000 1,042,024 24 Fund Balances - Ending $ 820,856 $ 1,061,933 $ 1,038,769 $ (23,164) 121 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL ARTERIAL STREET CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31, 2015 Original Final Budget Budget (Gaap Basis) (Gaap Basis) Actual Results Variance With Final Budget Positive (Negative) REVENUES: Taxes $ 358,000 $ 358,000 $ 1,400,104 $ 1,042,104 Intergovernmental 12,443,000 13,223,000 4,788,489 (8,434,511) Charges for services 381,000 381,000 121,485 (259,515) Investment earnings 5,000 5,000 9,677 4,677 Miscellaneous 815,000 815,000 53,646 (761,354) Total Revenues 14,002,000 14,782,000 6,373,402 (8,408,598) EXPENDITURES: Current: Transportation 424,509 424,509 2,948,053 (2,523,544) Capital outlay 21,133,002 21,999,002 7,583,236 14,415,766 Total Expenditures 21,557,511 22,423,511 10,531,289 11,892,222 Excees (deficiency) of revenues Over (Under) Expenditures (7,555,511) (7,641,511) (4,157,887) 3,483,624 OTHER FINANCING SOURCES (USES): Transfers in 1,700,000 1,700,000 1,700,000 - Premium on bonds 309,758 309,758 General obligation bonds proceeds 5,600,000 5,600,000 5,825,000 225,000 Total Other Financing Sources And Uses 7,300,000 7,300,000 7,834,758 534,758 Net change in fund balances (255,511) (341,511) 3,676,871 4,018,382 Fund balance - beginning 600,000 1,375,000 1,375,512 512 Fund Balances - Ending $ 344,489 $ 1,033,489 $ 5,052,383 $ 4,018,894 122 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FACILITIES CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2015 Original Final Budget Budget (Gaap Basis) (Gaap Bais) Actual Results Variance With Final Budget Positive (Negative) REVENUES: Investment earnings $ 3,602 $ 3,602 $ 868 $ (2,734) Miscellaneous Total Revenues 3,602 3,602 868 (2,734) EXPENDITURES: Current: General Government Capital outlay 2,180,000 2,180,000 365,978 (365,978) 2,180, 000 Total Expenditures 2,180,000 2,180,000 365,978 1,814,022 Excess Of Revenues And Expenditures (2,176,398) (2,176,398) (365,110) 1,811,288 OTHER FINANCING SOURCES (USES): Sales of capital assets Bond proceeds Transfers out 2,200,000 2,250,000 (2,200,000) 1,200,000 2,250,000 (1,200,000) 100,000 (1,100,000) 2,250,000 (500,000) 700,000 Total Other Financing Sources And Uses 2,250,000 2,250,000 1,850,000 (400,000) Net change in fund balances before special item 73,602 73,602 1,484,890 1,411,288 Special item (956,798) (956,798) Net change in fund balances after special item 73,602 73,602 528,092 454,490 Fund balances - beginning 1,800,000 937,000 8,306,453 7,369,453 Prior period adjustment - Fund balances - beginning as restated 1,800,000 937,000 8,306,453 7,369,453 Fund Balances - Ending $ 1,873,602 $ 1,010,602 $ 8,834,545 $ 7,823,943 123 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL HOTEL /MOTEL TAX SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31, 2015 Variance With Original Final Final Budget Budget Bduget Actual Positive (Gaap Basis) (Gaap Basis) Results (Negative) REVENUES: Taxes $ 600,000 $ 600,000 $ 677,971 $ 77,971 Charges for services 853,550 853,550 862,011 8,461 Investment earnings 1,766 1,766 711 (1,055) Miscellaneous 12,000 12,000 10,788 (1,212) Total Revenues 1,467,316 1,467,316 1,551,482 84,166 EXPENDITURES: Current: Economic environment 1,567,643 1,567,643 1,504,207 63,436 Capital outlay: Economic environment 10,000 10,000 10,000 Total Expenditures 1,577,643 1,577,643 1,504,207 73,436 Excess (deficiency) of revenues Over (Under) Expenditures (110,327) (110,327) 47,275 157,602 Net change in fund balances Fund balances - beginning (110,327) (110,327) 47,275 157,602 $ 500,000 $ 500,000 575,844 75,844 Fund Balances - Ending $ 389,673 $ 389,673 $ 623,120 $ 233,447 124 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL DRUG SEIZURE SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31, 2015 Variance With Original Final Final Budget Budget Budget Actual positive (Gaap Basis) (Gaap Basis) Results (Negative) REVENUES: Investment earnings $ $ - $ 70 $ 70 Intergovernmental Fines and forfeitures 60,000 60,000 6,895 (53,105) Total Revenues 60,000 60,000 6,966 (53,034) EXPENDITURES: Current: Public safety 55,000 55,000 61,514 (6,514) Capital outlay: Public safety Total Expenditures 55,000 55,000 61,514 (6,514) Excess (deficiency) of revenues Over (Under) Expenditures 5,000 5,000 (54,548) (59,548) OTHER FINANCING SOURCES (USES): Transfers in Total Other Financing Sources And Uses - - Net change in fund balances 5,000 5,000 (54,548) (59,548) Fund Balances - beginning 60,000 60,000 61,787 1,787 Fund Balances - Ending $ 65,000 $ 65,000 $ 7,239 $ (57,761) 125 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL DEBT SERVICE FUNDS FOR THE YEAR ENDED DECEMBER 31,2015 Original Final Budget Budget (Gaap Basis) (Gaap Bais) Actual Results Variance With Final Budget Positive (Negative) REVENUES: Intergovernmental $ 61,858 $ 61,858 $ 92,854 $ 30,996 Investment earnings 500 500 1 (499) Miscellaneous 437,355 437,355 - (437,355) Total Revenues 499,713 499,713 92,854 (406,859) EXPENDITURES: Debt service: - - - Principal 2,430,707 2,430,707 1,875,507 Interest 828,352 828,352 778,826 555,200 49,526 Total Expenditures 3,259,059 3,259,059 2,654,333 (604,726) Excess Of Revenues And Expenditures (2,759,346) (2,759,346) (2,561,478) 197,868 OTHER FINANCING SOURCES (USES): Transfers in 2,759,846 2,759,846 2,759,846 Total Other Financing Sources And Uses 2,759,846 2,759,846 2,759,846 Net change in fund balances 500 500 198,368 197,868 Fund balances - beginning 673,000 673,000 673,804 804 Fund Balances - Ending $ 673,500 $ 673,500 $ 872,171 $ 198,671 126 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL RESIDENTIAL STREET CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2015 Original Final Budget Budget (Gaap Basis) (Gaap Bais) Actual Results Variance With Final Budget Positive (Negative) REVENUES: Intergovernmental $ 523,042 $ 549,042 $ 545,429 $ (3,613) Investment earnings 1,800 1,800 1,477 (323) Miscellaneous - - 38,242 38,242 Total Revenues 524,842 550,842 585,148 34,306 EXPENDITURES: Current: Trans portation Capital outlay 1,868,000 2,177,000 24,593 1,379,687 (24,593) 797,313 Total Expenditures 1,868,000 2,177,000 1,404,280 772,720 Excess Of Revenues And Expenditures (1,343,158) (1,626,158) (819,132) 807,026 OTHER FINANCING SOURCES (USES): Transfers in - 674,000 474,000 (200,000) Total Other Financing Sources And Uses 674,000 474,000 (200,000) Net change in fund balances (1,343,158) (952,158) (345,132) 607,026 Fund balances - beginning 1,400,000 1,165,000 1,164,293 (707) Fund Balances - Ending $ 56,842 $ 212,842 $ 819,161 $ 606,319 127 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL LAND & PARK ACQUISITION CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2015 Original Final Budget Budget (Gaap Basis) (Gaap Bais) Actual Results Variance With Final Budget Positive (Negative) REVENUES: Taxes $ 306,000 $ 306,000 $ 1,268,671 $ 962,671 Intergovernmental 2,124,000 2,124,000 1,786,649 (337,351) Charges for services 60,000 60,000 8,900 (51,100) Fines and Foreitures Investment earnings 1,000 1,000 1,588 588 Miscellaneous Total Revenues 2,491,000 2,491,000 3,065,809 574,809 EXPENDITURES: Current: Physical environment Culture and recreation Capital outlay Total Expenditures 3,273,000 3,273,000 3,273,000 15,922 90,520 2,144,458 (15,922) (90,520) 1,128, 542 3,273,000 2,250,900 1,022,100 Excess Of Revenues And Expenditures (782,000) (782,000) 814,909 1,596,909 OTHER FINANCING SOURCES (USES): Transfers in 100,000 - (100,000) Total Other Financing Sources And Uses 100,000 (100,000) Net change in fund balances (782,000) (682,000) 814,909 1,496,909 Fund balances - beginning 1,100,000 1,100,000 1,302,180 202,180 Fund Balances - Ending $ 318,000 $ 418,000 $ 2,117,089 $ 1,699,089 128 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL GENERAL GOVERNMENT IMPROVEMENTS CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2015 Original Final Budget Budget (Gaap Basis) (Gaap Bais) Actual Results Variance With Final Budget Positive (Negative) REVENUES: Investment earnings $ 500 $ 500 $ 502 $ Total Revenues 500 500 502 2 EXPENDITURES: Current: General Government - 95,299 (95,299) General Government Improvements 120,550 120,550 - 120,550 Public Safety - Physical environment - Capital outlay 200,000 200,000 122,303 77,697 Total Expenditures 320,550 320,550 217,603 102,947 Excess Of Revenues And Expenditures (320,050) (320,050) (217,101) 102,949 OTHER FINANCING SOURCES (USES): Transfers in 200,000 200,000 200,000 Total Other Financing Sources And Uses 200,000 200,000 200,000 Net change in fund balances Fund balances - beginning Fund Balances - Ending (120,050) (120,050) (17,101) 102,949 500,000 500,000 414,133 (85,867) $ 379,950 $ 379,950 $ 397,033 $ 17,083 129 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FIRE IMPROVEMENTS CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2015 Original Final Budget Budget (Gaap Basis) (Gaap Bais) Actual Results Variance With Final Budget Positive (Negative) REVENUES: Fire impact fees $ 50,000 $ 50,000 $ 46,406 $ (3,594) Investment earnings 100 100 528 428 Total Revenues 50,100 50,100 46,934 (3,166) EXPENDITURES: Current: Public Safety Capital outlay Total Expenditures Excess Of Revenues And Expenditures 50,100 50,100 46,934 (3,166) Net change in fund balances 50,100 50,100 46,934 (3,166) Fund balances - beginning 450,000 450,000 504,500 54,500 Fund Balances - Ending $ 500,100 $ 500,100 $ 551,434 $ 51,334 130 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES NON -MAJOR INTERNAL SERVICE FUNDS Internal Service Funds The City's Internal Service Funds are used to account for the financing of special services performed by designated departments within the City of Tukwila for the benefit of other departments within the City. The funds provide services then generate revenue by billing the department for which the service was provided. • Equipment Rental Fund — Accounts for the costs of maintaining and replacing all City vehicles and auxiliary equipment. All equipment costs, including depreciation, are factors in calculating the rates which are charged to each user department. • Insurance Fund Active Employees — Accounts for the costs of the City's self- insured medical plan. Medical and dental costs for covered employees are charged to the respective user departments. All premiums, medical and dental costs and ancillary charges are included. • Insurance Fund LEOFF 1 Retirees — Accounts for the costs of the City's self- insured medical plan for LEOFF 1 retirees. Medical and dental costs for covered employees are charged to the respective user departments, either the Police Department or the Fire Department. All premiums, medical and dental costs and ancillary charges are included. 131 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS DECEMBER 31, 2015 Total Insurance - Internal Equipment Insurance Leoff I Service Rental Active Employees Retirees Funds ASSETS: Current assets Cash and cash equivalents $ 4,632,430 $ 175,077 $ 932,303 5,739,809 Investments 304,477 3,713,777 - 4,018,253 Receivables 1,313 40,585 67,395 109,294 Inventory of materials and supplies 13,836 - 13,836 Total Current Assets 4,952,056 3,929,439 999,698 9,881,193 NONCURRENT ASSETS: Capital Assets: Machinery and equipment 14,897,544 - 14,897,544 Less: accumulated depreciation (10,156,409) - (10,156,409) Total Capital Assets (Net Of A /D) 4,741,135 - 4,741,135 Total Noncurrent Assets 4,741,135 4,741,135 Total Assets 9,693,191 3,929,439 999,698 14,622,327 Deferred Outflow s of Resources Deferred inflow pension earnings 37,910 - 37,910 Total Deferred Inflows Of Resources 37,910 37,910 LIABILITIES: Current liabilities: Accounts payable 58,337 2,714 61,051 Accrued wages and benefits 19,485 - 19,485 Claims incurred but not reported 779,000 88,500 867,500 Total Current Liabilities 77,822 - 779,000 - 91,214 - 948,036 Noncurrent liabilities: Reserve for unreported claims 1,168,500 132,750 1,301,250 Pension obligation 329,212 - 329,212 Total Noncurrent Liabilities 329,212 - 1,168,500 - 132,750 - 1,630,462 Total Liabilities 407,034 - 1,947,500 - 223,964 - 2,578,498 Deferred Inflow s of Resources Deferred inflow pension earnings Total Deferred Inflow s Of Resources 54,395 - 54,395 54,395 - - - - 54,395 NET POSITION: Net investment in capital assets 4,741,135 - 4,741,135 Unrestricted 4,528,537 1,981,939 775,734 7,286,210 Total Net Position $ 9,269,672 $ 1,981,939 $ 775,734 $ 12,027,345 132 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 Total Insurance- Internal Equipment Insurance Leoff I Service Rental Active Employees Retirees Funds OPERATING REVENUES: Charges for services $ 2,994,409 $ 4,902,046 $ 950,656 $ 8,847,111 Other operating revenue 892 111,823 112,715 Total Operating Revenue 2,995,301 - 5,013,869 - 950,656 8,959,826 OPERATING EXPENSES: Operations & maintenance 1,294,084 Administrative & general 310,431 Depreciation 785,736 Total Operating Expenses 2,390,251 Operating Income (Loss) 5,441,541 401,606 119,964 11,186 - 5,561,505 - 7,137,230 441,581 785,736 412,792 8,364,548 605,050 - (547,635) - 537,864 595,279 NON - OPERATING REVENUE (EXPENSE): Investment earnings 59,745 36,436 226 96,407 Sale of capital assets 33,422 - 33,422 Total Non- Operating Revenue (Expense) 93,167 36,436 226 129,829 Income (Loss) Before Contributions & Transfers 698,217 (511,199) 538,090 725,108 Change In Net Position 698,217 (511,199) 538,090 725,108 Net position beginning of year 8,934,147 2,493,138 237,644 11,664,929 Change in accounting principle - pension costs (362,692) - (362,692) Total net position - beginning restated 8,571,455 2,493,138 237,644 11,302,237 Net Position end of year $ 9,269,672 $ 1,981,939 $ 775,734 $ 12,027,345 133 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2015 Page 1 of 2 Equipment Rental Insurance Total Internal Insurance - Service Leoffl Funds CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from users Cash paid to suppliers Cash paid to, or on behalf of, employees $ 2,999,159 $ 5,013,869 $ 883,261 $ 8,896,289 (1,038,863) (487,596) (82,568) (1,609,027) (550,176) (5,386,409) (395,266) (6,331,851) Net Cash Provided (Used) By Operating Activities 1,410,119 (860,135) 405,426 955,410 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceed from sale of equipment Purchase of capital asset 33,418 (1,288,808) 33,418 (1,288,808) Net Cash Provided (Used) For Capital And Related Financing Activities (1,255,390) - (1,255,390) CASH FLOW FROM INVESTING ACTIVITIES: Proceeds from sale of investments 375,000 490,729 865,729 Interest received 62,361 113,605 226 176,192 Net Cash Provided (Used) In Investing Activities 437,361 604,335 226 1,041,921 Net Increase (Decrease) In Cash And Cash Equivalents 592,089 (255,801) 405,652 741,941 Cash and cash equivalents- beginning of year Cash And Cash Equivalents -End Of Year Cash at end of year consists of: Cash and cash equivalents 4,040,340 430,878 526,650 4,997,868 $ 4,632,430 $ 175,077 $ 932,303 $ 5,739,809 Total Cash $ 4,632,430 $ 175,077 $ 932,303 5,739,809 $ 4,632,430 $ 175,077 $ 932,303 $ 5,739,809 134 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2015 Page 2 of 2 Equipment Rental Insurance Total Internal Insurance- Service Leoffl Funds RECONCILIATION OF NET OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating Income (Loss) $ 605,050 $ (547,635) $ 537,864 $ 595,279 Adjustments to reconcile operating income to net cash Provided (used) by operating activities: Depreciation 785,736 785,736 Asset (increases) decreases: Accounts receivable 3,858 (67,395) (63,538) Inventory 1,132 1,132 Deferred outflow of resources increase (decrease) 37,910 37,910 Liability increases (decreases): Accounts payable 30,601 (312,500) (65,042) (346,941) Wages and benefits payable 225 225 Deferred inflow of resources (increase) decrease (54,395) (54,395) Total Adjustments 805,068 (312,500) (132,438) 360,130 Net Cash Provided (Used) By Operating Activities $ 1,410,118 $ (860,135) $ 405,426 $ 955,410 SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Increase in fair value of investment $ 23,889 $ - $ - $ 23,889 Total Non Cash Investing, Capital And Financing Acitivties $ 23,889 $ - $ 23,889 135 CITY OF TUKWILA: 2015 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND FOR THE YEAR ENDED DECEMBER 31, 2015 Balance Balance January 1, 2015 Additions Deductions December 31,2015 ASSETS Cash and cash equivalents $ 161,249 $ 735,239 $ (165,537) $ 124,624 Receivables 5,184 172,820 (165,537) 12,467 Total Assets 166,433 908,059 (331,074) 137,092 LIABILITIES Accounts and other payables 166,433 1,485,726 (1,515,067) 137,092 Total Liabilities $ 166,433 $ 1,485,726 $ (1,515,067) $ 137,092 The notes to the financial statements are an integral part of this statement. 136 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION City of Tukwila STATISTICAL SECTION December 31, 2015 Financial Trends Information Financial trends schedules are intended to provide users with information to assist them in understanding and assessing how the City's financial position has changed over time. Schedule 1 Net Position by Component 138 Schedule 2 Changes in Net Position 140 Schedule 3 Fund Balances, Governmental Funds 142 Schedule 4 Changes in Fund Balances, Governmental Funds 144 Schedule 5 General Governmental Tax Revenues by Source 146 Revenue Capacity Information The objective of providing revenue capacity information is to help users understand and assess the factors affecting the City's ability to generate its most significant local source revenues. Schedule 6 Property Tax Levies and Collections 147 Schedule 7 Assessed and Estimated Actual Value of Taxable Property 148 Schedule 8 Property Tax Rates - Direct and Overlapping Governments 149 Schedule 9 Principal Property Taxpayers 150 Schedule 10 Retail Sales Tax Collections by Sector 152 Schedule 11 Sales Tax Rate Direct and Overlapping Governments 154 Debt Capacity Information Debt capacity information is intended to assist users to understand and assess the City's current levels of outstanding debt and ability to issue additional debt in the future. Schedule 12 Ratios of Outstanding Debt by Type 156 Schedule 13 Ratios of General Bonded Debt Outstanding 158 Schedule 14 Computation of Direct and Overlapping Debt 159 Schedule 15 Legal Debt Margin Information 160 Demographic and Economic Information These Schedules offer demographic and economic information to assist users in understanding certain aspects of the environment within which the City operates and to provide information that facilitates comparisons of financial statement information over time and across governmental units. Schedule 16 Demographic Statistics 162 Schedule 17 Principal Employers 163 Operating Information These Schedules contain service and infrastructure data to help users understand how the information in the City's financial report relates to the services the City provides and the activities it performs. Schedule 18 Full -time Equivalent Employee by Department 164 Schedule 19 Operating Indicators by Function 165 Schedule 20 Capital Assets by Function 166 137 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA SCHEDULE 1 NET POSITION BY COMPONENT(a) LAST TEN FISCAL YEARS Page 1 of 2 2006 2007 2008 2009 2010 Governmental activities: Invested in capital assets, net of related debt $ 133,129,382 $ 136,053,013 $ 136,742,368 $ 155,847,012 $ 177,078,793 Restricted 1,305,239 1,233,234 19,720,546 16,360,097 23,005,792 Unrestricted 29,506,541 35,520,681 18,476,837 16,031,473 12,119,923 Total governmental activities net position $ 163,941,162 $ 172,806,928 $ 174,939,751 $ 188,238,582 $ 212,204,508 Business -type activites: Invested in capital assets, net of related debt $ 34,017,190 $ 36,083,972 $ 36,071,402 $ 38,052,488 $ 44,759,489 Restricted 435,995 441,073 439,100 438,619 430,444 Unrestricted 12,070,451 11,267,171 13,335,836 10,987,162 11,158,081 Total business -type activities net position $ 46,523,636 $ 47,792,216 $ 49,846,338 $ 49,478,269 $ 56,348,014 Primary government: Invested in capital assets, net of related debt $ 167,146,572 $ 172,136,985 $ 172,813,770 $ 193,899,500 $ 221,838,282 Restricted 1,741,234 1,674,307 20,159,646 16,798,716 23,436,236 Unrestricted 41,576,992 46,787,852 31,812,673 27,018,635 23,278,004 Total primary government net position $ 210,464,798 $ 220,599,144 $ 224,786,089 $ 237,716,851 $ 268,552,522 Notes: (a) All amounts are reported on the accrual basis Source: Tukw ila Finance Department Note: The decrease in unrestricted fund balance is due primarily to implementaton of GASB 68 and the associated charge to fund balance for pension expense. 138 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION Page 2 of 2 2011 2012 2013 2014 2015 $ 199,511,779 5,019,817 21,479, 064 $ 203,206,940 2,749,680 20,194, 333 $207,660,389 3,480,002 26,981,105 $ 191,081,461 3,973,726 25,009,212 $ 191,331,156 5,446,074 16,125, 592 $ 226,010,660 $ 226,150,953 238,121,496 $ 220,064,399 $ 212,902,822 $ 52,134,799 $ 52,911,741 55,955,595 $ 57,677,764 $ 59,483,424 430,444 430,444 430,444 430,444 - 10,225,558 11,011, 319 12,964, 539 13,839,529 14,658, 912 $ 62,790,801 $ 64,353,504 69,350,577 $ 71,947,736 $ 74,142,335 $ 248,636,920 5,450,261 34,714,280 $ 253,253,170 3,180,123 34,071,164 $263,615,984 3,910,445 39,945,644 $ 248,759,225 4,404,170 38,848,741 $ 250,814,581 5,446,074 30,784,504 $ 288,801,461 $ 290,504,457 307,472,073 $ 292,012,136 $ 287,045,158 139 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 2 CHANGES IN NET POSITION (a) Page 1 of 2 2006 2007 ' 2008 IMF Mitan. ,1, Expenses Governmental Activities General Government $ 7,402,398 $ 7,456,335 $ 4,723,103 $ 6,689,659 Public Safety 21,839,070 21,726,932 24,147,992 26,959,352 Transportation 5,335,214 5,310,247 5,864,297 5,541,367 Physical Environment 2,734,592 2,764,373 2,862,487 2,575,405 Culture and Recreation 4,234,889 4,506,223 4,797,856 4,914,256 Economic Environment 3,600,158 3,890,845 5,017,935 4,637,531 Health and Hunan Services 3,683 4,204 4,173 4,332 Interest on Long Term Debt 981,573 896,215 1,844,224 753,904 Total Governmental Activities 46,131,577 46,555,374 49,262,067 52,075,806 Business Type Activities Water /Sewer Utility 7,354,876 7,046,603 7,293,362 9,293,434 Foster Golf Course 1,832,303 1,849,542 1,968,595 2,050,172 Surface Water Utility 1,642,204 1,920,194 1,762,417 2,299,394 Total Business Type Activities 10,829,383 10,816,339 11,024,374 13,643,000 Total Primary Government Expenses 56,960,960 57,371,713 60,286,441 65,718,806 Program Revenues Governmental Activities Charges for Services General Government 1,243,936 1,590,553 895,966 1,136,642 Public Safety 538,576 425,241 1,184,530 572,094 Physical Environment 10,000 25,341 1,200 Transportation 247,026 133,500 130,637 103,311 Cultural and Recreation 758,385 777,484 711,542 647,354 Economic Environment 1,756,240 2,319,634 2,476,501 1,001,511 Operating Grants and Contributions 1,897,543 1,692,766 1,325,163 3,386,269 Capital Grants and Contributions 5,675,493 3,746,743 2,282,592 14,784,074 Total Governmental Activities Program Revenues 12,127,199 10,711,262 9,008,131 21,631,255 Business Type Activities Charges for Services Water /Sewer Utility 7,354,876 8,272,647 8,621,909 10,124,653 Foster Golf Course 1,832,303 1,272,425 1,563,681 1,424,595 Surface Water Utility 1,642,204 2,208,549 2,642,325 2,641,313 Capital Grants and Contributions 1,255,360 347,416 756,400 515,633 Total Business Type Activities Program Revenues 12,084,743 12,101,037 13,584,315 14,706,194 Total Primary Government Program Revenues 24,211,942 22,812,299 22,592,446 36,33/,449 Net (Expense) /Revenue Governmental Activities (34,004,378) (35,844,111) (40,253,937) (30,444,551) Business Type Activities 2,031,638 1,284,700 2,559,941 1,063,194 Total Primary Government Net Expense fi (31,972,740) (34,559,411) (37,693,996) (29,381,357) General Revenues and Other Changes in Net Position Governmental Activities Taxes Property Tax 10,973,030 11,302,099 11,656,979 11,901,072 Retail Sales and Use Tax 18,236,733 19,355,867 18,009,297 14,588,297 Natural Gas Use Tax 415,652 344,748 643,037 748,772 Hotel /Motel Tax 501,478 583,232 587,216 489,806 Utility Tax 2,930,332 3,666,079 5,136,444 7,390,860 Interfund Utility Taxes - - - Business Tax 2,097,082 2,236,675 2,497,705 3,196,178 Excise Tax 4,941,461 4,127,360 983,078 367,198 State Entitlements 185,475 217,600 874,046 2,233,445 Unrestricted Investment Earnings 1,923,171 1,727,879 801,847 246,287 Gain /Loss on Sale of Capital Assets 467,510 13,652 (186,663) 980,267 Miscellaneous - - - - Transfers 1,372,652 1,134,683 1,383,774 1,601,200 Total Governmental Activities 44,044,576 44,709,874 42,386,760 43,743,382 Business Type Activities Retail Sales and Use Taxes 645,473 500,000 500,000 327,999 Unrestricted Investment Interest 539,463 618,563 377,955 106,032 Gain /Loss on Sale of Capital Assets - (264,093) Miscellaneous - - - - Transfers 1,250,000 (1,134,683) (1,383,774) (1,601,200) Total Business Type Activities 2,434,936 (16,120) (505,819) (1,431,262) Total Primary Government 46,479,512 44,693,754 41,880,941 42,312,120 Change in Net Position Before Special Item 14,506,772 10,134,343 4,186,945 12,930,763 Special item Change in Net Position 14,506,772 10,134,343 4,186,945 12,930,763 Governmental Activities $ 7,491,102 $ 8,865,765 $ 2,132,823 $ 13,298,831 Business Type Activities 4,580,734 1,268,580 2,054,122 (368,068) Total Binary Government $ 12,071,836 $ 10,134,345 $ 4,186,945 $ 12,930,763 Notes: (a) All amounts are reported on the accrual basis Source: Tulxw ila Finance Department 140 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION 2011 2012 2013 Page 2 of 2 2014 T 2015 1 $ 7,052,717 26,088,644 2,533,394 6,015,197 4,579,338 4,539 4,756,676 1,061,419 52,091,924 9,343,368 1,935,014 2,476,170 $ 9,150,573 $ 8,343,107 25,348,318 26,598,432 2,885,175 3,625,696 6,872,708 7,314,707 4,712,832 4,801,342 4,591 4,203,824 4,242,725 472,438 1,152,063 53,650,459 56,078,072 13,754,552 10,092,903 10,149,557 1,986,747 1,701,131 2,588,098 2,699,767 14,667,748 14, 550,455 $ 10,195,049 25,938,946 2,610,591 7,658,280 5,209,954 5,635,347 1,038,851 58,287,017 10,421,064 1,707,993 2,563,132 $ 10,289,399 $ 8,042,254 29,292,587 29,403,206 11,668,098 2,611,297 2,479,533 11,069,605 5,716,091 5,782,907 5,336,659 5,125,227 1,204,771 1,033,440 65,987,138 63,067,935 14,692,189 12,752,125 13,186,236 1,945,789 2,086,586 3,310,716 4,147,974 18,008,631 19,420, 796 $ 65,846,476 $ 68,318,207 $ 70,628,527 $ 72,979,205 $ 83,995,769 $ 82,488,731 $ 1,080,801 819,043 6,200 571,110 1,787,274 811,679 2,139,029 23,992,563 $ 2,462,671 $ 1,332,418 $ 1,495,438 $ 3,858,862 $ 3,794,134 809,806 684,744 871,919 970,594 1,754,856 7,572 4,939 27,407 196,506 - 345,373 1,004,911 287,956 8,425 206,065 1,722,285 2,323,528 2,786,178 726,869 3,348,802 1,001,117 481,404 744,014 2,793,185 644,283 2,250,601 4,411,618 3,289,818 2,563,002 893,470 18,495,127 1,581,882 16,947,529 8,053,435 6,431,537 31,207,699 27,094,552 11,825,444 26,450,258 19,170,879 17,073,146 9,665,095 1,425,327 3,029,630 7,390,545 21,510,597 52,718,296 11,711,242 11, 758,658 13,146,131 14,308,945 15,572, 709 1,304,016 1,448,729 1,404,264 1,406,440 1,482,288 3,355,956 3,827,010 3,913,184 4,168,313 5,286,233 1,993,537 135,603 338,943 1,548,280 2,039,890 18,364,751 17,170,000 18,802,521 21,431,978 24,381,122 45,459,303 28,995,444 45,252,779 40,602,857 41,454,268 (20,884,225) 7,756,045 (26,555,907) (44,252,628) (31,836,759) 3,697,003 2,619,546 4,110, 332 (46,816,260) (45,994,789) 3,423,348 4,960,326 $ (13,128,180) $ (22,858,904) $ (41,633,082) $ (27,726,426) $ (43,392,912) $ (41,034,463) $ 13,363,096 14,669,328 533,811 458,092 5,600,683 4,205,574 507,798 1,951,936 108,929 1,399,310 $ 13,443,137 15,796,054 317,531 555,682 7,534,260 667,679 2,170,293 2,085,740 275,477 42,798,557 329,527 85,942 97,541 (1,399,310) (886,300) $ 41,912,25/ $ 525,864 43,371,717 61,119 200,871 (525,864) (263,874) 43,107,843 $ 14,131,605 15,441,683 232,208 522,033 5,535,966 2,497,606 2,860,948 1,895,647 116,694 101,688 1,056,843 44,392,921 $ 14,510,241 16,316,398 204,457 526,832 3,879,992 1,686,859 2,570,111 2,745,475 1,861,511 102,486 (1,056,843) (1,056,843) $ 43,336,078 $ 14,870,621 $ 14,320,085 17,105,322 19,334,152 596,781 677,971 3,855,544 4,019,288 1,851,013 2,061,098 2,555,999 2,749,140 3,512,894 5,321,281 1,735,637 1,843,634 444,282 475,345 304,704 179,394 280,551 1,060,650 (600,000) 45,769,716 46,107,488 51,082,545 (1,060,650) 600,000 (1,060,650) 600,000 $ 44,709,066 $ 46,707,488 $ 51,082,545 28,784,077 20,248,939 1,702,996 16,982,640 3,314,576 10,048,082 (1,995,000) (956,798) 1,702,996 16,982,640 1,319,576 9,091,285 $ 140,293 $ 13,932,957 $ (2,703,772) $ 3,830,958 1,562,703 3,049,682 4,023,348 5,260,326 $ 1,702.996 $ 16,982,640 $ 1319,576 $ 9,091,285 28,784,077 $ 21,914,332 6,869,745 $ 28,784,077 20,248,939 $ 16,815,810 3,433,129 $ 20,248,939 141 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 3 FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Page 1 of 2 2006 2007 2008 2009 General Fund (GASB 54) Nonspendable Restricted Committed Assigned Unassigned General Fund (Prior to GASB 54) Reserved Unreserved Total general fund 13,250 8,693,215 $ - $ 12,650 10,504,748 17,800 17,900 7,687,515 7,371,530 $ 8,706,465 $ 10,517,398 $ 7,705,315 $ 7,389,430 All other governmental funds (GASB 54) Nonspendable Restricted Committed Assigned Unassigned All other governmental funds (Prior to GASB 54) Reserved Unreserved, reported in: Special revenue funds 8,500,342 10,834,781 12,943,487 9,123,401 Debt service funds 1,075,347 1,233,234 1,248,901 135,438 Capital Projects funds 7,245,827 8,113,739 6,831,634 7,101,258 Total all other governmental funds $ 16,821,516 $20,181,754 $21,024,022 $ 16,360,097 Note: In 2011 the City of Tukw ila implemented GASB Statement No. 54, w hich changed the categories for fund balances. Balances prior to 2011 w ere not restated to the new standards. Source: Tukw ila Finance Department $45 c $40 $35 $30 $25 $20 $15 $10 $5 $- Fund Balances 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ■I■AII Other Governmental General Fund 142 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION Page 2 of 2 2010 2011 2012 2013 2014 2015 $ $ 5,000 $ - $ 1,743,362 $ 1,544,022 $ 1,340,914 - 18,000 17,900 5,739,140 8,237,141 8,378,557 225,000 15,317,624 5,771,471 10,181,057 6,078,648 10,911,244 $ 5,757,040 $ 8,260,141 $ 8,378,557 $ 17,285,986 $ 17,496,550 $ 18,330,806 $ 14,461,546 3,051 8,541,195 $ - $ - $ - $ 7,370,000 $ 7,645,000 5,014,817 2,749,681 3,480,001 3,973,726 5,446,074 402,306 - - - 11,127,221 7,021,183 4,510,623 4,076,803 7,221,870 - - (1,566,175) (1,360,218) - $ 23,005,792 $16,544,344 $ 9,770,864 $ 6,424,449 $14,060,311 $ 20,312,943 143 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 4 CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS (a) LAST TEN FISCAL YEARS page 1 of2 2006 2007 2008 2009 Revenues Taxes $ 37,801,814 $ 39,660,792 $ 37,412,569 $ 37,167,281 Licenses and Permits 1,273,228 1,827,709 2,022,851 1,283,463 Intergovernmental 7,083,032 6,403,217 5,697,598 17,596,486 Charges for Services 2,345,931 2,024,892 2,569,381 1,443,680 Fines and Forfeitures 221,097 266,188 259,991 301,761 Investment Income 1,159,971 1,425,423 926,913 282,604 Special Assessments - - - Miscellaneous 1,397,585 1,751,145 816,054 701,957 Total Revenues 51,282,658 53,359,366 49,705,357 58,777,232 Expenditures General Government 6,882,594 7,034,602 7,992,286 8,574,563 Public Safety 20,953,226 21,038,810 22,878,689 25,576,932 Physical Environment 2,139,959 2,196,422 2,255,880 2,058,913 Transportation 2,447,096 2,413,390 2,783,077 2,334,298 Economic Environment 3,539,657 3,878,658 4,995,514 4,601,391 Mental & Physical Health 3,683 4,204 4,173 4,332 Culture and Recreation 3,687,580 3,938,779 4,293,658 4,365,023 Debt Service Principal 888,000 930,000 972,000 1,316,297 Interest 1,006,161 914,584 872,224 778,018 Capital Outlay 6,540,452 7,243,879 6,089,703 16,860,362 Total Expenditures 48,088,408 49,593,328 53,137,204 66,470,129 Excess (Deficiency) of Revenues 3,194,250 4,036,039 (3,431,846) (7,692,894) Over (Under) Expenditures Other Financing Sources (Uses) Transfers In 2,143,581 2,266,349 2,515,982 3,865,744 Transfers In - Assessment Transfers Out (2,430,769) (1,131,666) (1,107,543) (2,234,444) Capital Leases - - - Sale of Capital Assets 296,451 100 53,592 1,014,608 General Obligation Bonds Issued - - - - General Obligation Refunding Bonds Issued - - 6,180,000 6,947,574 LID Bonds Assessment - Operating Loan -Tukw ila MPD - - Remium on General Obligation Debt - - Remium on General Obligation Refunding Debt 483,599 Issuance Costs on General Obligation Refunding Debt (108,326) Payment to Refunded Bond Escrow Agent - - (6,555,273) (6,880,397) Total Other Financing Sources (Uses) 9,263 1,134,783 1,462,031 2,713,085 Change in Fund Balance Before Special Item 3,203,513 5,170,822 (1,969,815) (4,979,809) Special Item Net Change in Fund Balances $ 3,203,513 $ 5,170,822 $ (1,969,815) $ (4,979,809) Ratio of Debt Service Expenditures To Total Non - Capital Expenditures Note: (a) All amounts are reported on the modified - accrual basis Source: Tukwila Finance Department 4.8% 4.6% 4.1% 4.4% 144 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION page 2 of 2 2010 2011 2012 2013 2014 2015 $ 37,267,918 $ 38,035,681 $ 41,502,608 $ 42,402,070 $ 44,441,783 $ 48,548,116 1,618,830 3,473,910 1,604,594 2,013,875 2,114,638 2,242,256 14,525,872 24,059,907 7,626,487 7,190,325 14,298,126 11,839,883 2,366,174 2,359,600 3,974,356 3,747,646 3,838,531 3,935,248 390,079 308,027 220,752 242,638 264,934 261,457 144,258 275,479 106,286 151,911 479,219 475,345 2,788,350 701,723 650,415 891,307 356,409 131,979 427,368 354,395 332,268 57,204,438 68,869,013 55,167,062 58,964,183 66,493,348 68,284,989 8,387,317 8,253,440 8,504,511 9,303,742 7,505,173 7,708,394 24,676,370 24,327,498 24,918,306 25,720,884 27,254,312 29,035,165 1,724,147 2,060,482 3,022,516 1,935,895 1,807,993 1,935,228 2,332,178 2,676,511 2,769,182 3,111,493 5,820,601 5,792,668 4,541,845 4,682,646 4,767,944 5,224,964 5,226,832 5,832,384 4,539 4,591 - - - - 4,163,503 3,507,150 3,373,000 4,386,392 4,680,651 4,350,052 1,555,028 1,766,774 1,991,540 5,024,991 2,288,988 2,480,507 849,148 881,850 1,178,464 1,162,649 961,457 1,125,609 11,513,976 25,643,704 12,099,293 5,854,962 10,150,912 11,313,670 59,748,051 73,804,646 62,624,756 61,725,970 65,696,921 69,573,675 (2,543,613) (4,935,633) (7,457,694) (2,761,786) 796,428 (1,288,687) 2,461,806 11,001,619 7,625,792 20,918,983 7,300,080 5,633,846 2,788,350 - - (1,020,857) (10,061,205) (6,174,358) (23,301,516) (7,900,080) (5,933,846) 110,509 15,468 - - - - 27,308 21,406 9,903 5,493 - - 6,935,000 5,055,688 - 1,000,000 3,850,000 8,075,000 - - 6,687,500 - - - (658,706) - - - 112,151 - - - 309,758 (1,069,000) (5,055,688) 7,556,917 977,288 802,631 8,098,809 3,250,000 8,084,758 5,013,304 (3,958,345) (6,655,063) 5,337,023 4,046,428 6,796,071 (1,995,000) (956,798) $ 5,013,304 $ (3,958,345) $ (6,655,064) $ 5,337,023 $ 2,051,428 $ 5,839,273 5.2% 5.8% 6.7% 11.07% 145 6.49% 6.19% CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 5 GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS Fiscal Year Property Sales & Use Utility(a) Excise Business Other(b) Total Taxes 2006 11,018,846 17,591,260 2,930,332 4,938,515 402,784 920,077 37,801,814 2007 11,177,532 19,355,867 3,666,079 4,124,168 405,973 931,173 39,660,792 2008 11,245,973 17,709,319 3,934,210 3,003,438 475,500 1,089,344 37,457,785 2009 12,190,219 14,585,015 6,172,569 2,824,407 738,341 656,730 37,167,281 2010 13,188,942 14,251,312 6,134,494 2,488,357 727,151 301,867 37,092,122 2011 13,427,139 16,113,584 5,424,643 1,780,294 667,064 622,955 38,035,681 2012 14,072,015 15,441,683 4,001,385 3,201,098 2,497,606 2,288,822 41,502,608 2013 14,510,241 16,316,398 3,879,992 2,745,475 2,570,111 2,418,148 42,440,365 2014 14,870,621 17,105,322 3,855,544 3,512,894 2,555,999 2,447,794 44,348,175 2015 14,320,085 19,334,152 4,019,288 5,321,280 2,749,140 2,739,070 48,483,015 Change 2006 -2015 30.0% 9.9% 37.2% 7.8% 582.5% 197.7% 28.3% Notes: (a) Utility taxes enacted beginning in 2003 for electric, natural gas, cable and telephone utilities are assessed at rates of 6.0 %. A utility tax was added in 2009 for solid waste and recycling assessed at a 6.0% rate. A utility tax rate of 10.0% was added in 2010 on the City's water, sewer, and stormwater utilities. (b ) "Other Taxes" include a hotel /motel tax, natural gas use tax and interfund utility taxes. Source: Tukw ila Finance Department $50,000,000 $45, 000,000 $40, 000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- Tax Revenue by Source ■� ■ _■ r ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ IN ■ ■ ■ IN ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ IN ■ 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ❑ Other • Business Tax • Excise Tax • Utility Tax • Sales & Use Tax • Property Tax 146 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 6 PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Collected Within the Fiscal Year of the Levy Total Collections to Date Collections in Fiscal Taxes Levied for Subsequent Year Fiscal Year Amount % of Levy Years Amount % of Levy Levy Balance 2006 10,973,030 10,844,728 98.83% 128,104 10,972,832 100.00% 198 2007 11,176,155 10,994,127 98.37% 182,028 11,176,155 100.00% 0 2008 11,410,664 11,194,247 98.10% 216,077 11,410,323 100.00% 341 2009 12,286,929 12,017,213 97.80% 264,905 12,282,118 99.96% 4,811 2010 13,233,797 13,152,012 99.38% 80,312 13,232,324 99.99% 1,473 2011 13,383,153 13,225,338 98.82% 156,088 13,381,426 99.99% 1,726 2012 13,697,474 13,521,621 98.72% 173,716 13,695,337 99.98% 2,136 2013 13,740,075 13,549,525 98.61% 175,699 13,725,224 99.89% 14,851 2014 14,047,315 13,916,718 99.07% 95,467 14,012,185 99.75% 35,131 2015 14,245,846 14,113,739 99.07% - 14,113,739 99.07% 132,108 Source: King County Office of Finance 15,000,000 12,000,000 - 9,000,000 - 6,000,000 - 3,000,000 - PropertyEFaxmeviesC nd Collections hhuuull. 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 • Taxes Levied for Fiscal Year • Amount Collected Within Fiscal Year of Levy 147 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 7 ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Fiscal Year Total Assessed Total Direct Real Property Personal Property Public Utilities Value Tax Rate 2006 3,399,709,737 482,100,071 66,123,704 3,947,933,512 2.84033 2007 3,853,680,774 509,151,926 87,410,974 4,450,243,674 2.56911 2008 4,470,042,539 595,268,205 110,399,231 5,175,709,975 2.37324 2009 4,122,961,628 746,710,751 112,779,972 4,982,452,351 2.66345 2010 3,950,829,851 717,795,417 119,827,058 4,788,452,326 2.82566 2011 3,833,295,985 712,607,656 129,726,102 4,675,629,743 2.95408 2012 3,778,571,709 736,480,616 134,138,983 4,649,191,308 2.98778 2013 3,824,448,044 779,103,146 152,822,498 4,756,373,688 2.97799 2014 4,146,952,417 744,616,273 162,510,057 5,054,078,747 2.84188 2015 4,409,931,075 810,422,092 174,971,951 5,395,325,118 2.71073 Note: *Real, personal, and state public service property have been assessed at 100% of the estimated value. Source: King County Department of Assessments $6,000,000,000 $5,000,000,000 $4,000,000,000 $3,000,000,000 $2,000,000,000 $1,000,000,000 $- Assessed Value By Type 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 I I I I I I I I I 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 148 Public Utilities iPersonal Property • Real Property i CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 8 PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS (PER $1,000 OF ASSESSED VALUATION) LAST TEN FISCAL YEARS CITY OF TUKWILA Emergency Tukw ila Tukw ila Pool General Special King Port of Medical School Dist Flood Metropolitan Hospital Fiscal Year Levy Levy Total WA State County(a) Seattle Service #406 Control Park District District #1 Total 2006 2.84033 2.84033 2.32535 1.75139 0.23158 0.20621 4.78874 0.04212 - 0.55652 12.74224 2007 2.56911 2.56911 2.13233 1.66106 0.22359 0.30000 4.73164 0.10000 0.50854 12.22627 2008 2.37324 2.37324 1.96268 1.51508 0.19700 0.27404 4.12360 0.09123 0.47141 11.00828 2009 2.66345 2.66345 2.22253 1.74587 0.21597 0.30000 3.89183 0.10514 0.53290 11.67769 2010 2.82566 2.82566 2.27990 1.90797 0.22366 0.30000 5.03380 0.10976 0.55753 13.23828 2011 2.95408 2.95408 2.42266 1.98580 0.22982 0.30000 5.44659 0.11616 0.50372 13.95883 2012 2.98778 2.98778 2.56720 2.11172 0.23324 0.30000 5.69832 0.13210 0.15000 0.50000 14.68036 2013 2.97799 2.97799 2.47044 2.08129 0.21533 0.33500 5.89098 0.15369 0.14944 0.50000 14.77416 2014 2.84188 2.84188 2.28514 1.84798 0.18885 0.30217 5.50160 0.13860 0.14962 0.50000 13.75584 2015 2.71073 2.71073 2.16898 1.95741 0.16954 0.28235 5.22858 0.12980 0.14853 0.50000 13.29592 Note: (a) Includes King County Library District tax and Ferry Source: King County Department of Assessments Direct Property Tax Rates 3.50000 - 3.00000 - 2.50000 - 2.00000 - 1.50000 - 1.00000 0.50000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 149 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 9 PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO Percent of 2015 Total 2015 Assessed Assessed Type of Business 1 Valuation Value(a) 2006 Assessed Valuation Percent of 2006 Total Assessed Value) Boeing Company Westfield (WEA) Southcenter LLC La Ranta LP/Segale Properties KIR Tukw ila 050 LLC/KIMCO Qwest Corporation (US West Communications) E Property Tax Dept Icon Tukw ila Pool 1 (CWVVA Tukw ila 1 LLC) Anne Arundel Apartments LLC (Group Health) Boeing Employees Credit Union COSTCO Wholesale 3301 South Norfolk LLC (Sea -Tuk Warehouse LLC) Wig Properties LLC (JC Penney) Puget Sound Energy /Gas - Bectric Seatac Hotel (Koar - Seatac Partners LP) Jorgensen Forge Corporation Southcenter Corporate Square BRCP Riverview Plaza LLC Federated Department Stores (Macys) Centerpoint 8801 Marginal (Merrill Creek Holdings LLC) CHA Southcenter LLC (Doubletree Inn) Harnish Group Incorporated Horne Depot Sterling Realty Organization Lowe's HIW Incorporated Hill Investment Company Rreef America Reit II Corporation AMB Institutional Alliance Heitman Airplane company Department Stores Commercial Properties Commercial Properties Telephone Utility Commercial Properties Investment Property Apartments Credit Union Cash & Carry Warehouse Food Distribution Department Stores Bectric /Gas Utility Lodging Steel Manufacturer Hair Loss Center Commercial Properties Department Stores Truck Manufacturer Lodging Truck Equipment Home Improvement Commercial Properties Home Improvement Commercial Properties Commercial Properties Commercial Properties Commercial Properties $ 552,951,680 296,255,581 127,261,693 87,805,800 80,519,779 79,841,600 63,807,600 50,996,857 48,178,411 44,420,188 38,621,700 38,355,255 38,018,669 33,752,900 30,478,729 25,815,700 24,586,200 23,589,500 23,288,200 22,651,106 18,366,205 16,269,883 14,530,100 12,883,865 10.25% 5.49% 2.36% 1.63% 1.49% 1.48% 1.18% 0.95% 0.89% 0.82% 0.72% 0.71% 0.70% 0.63% 0.56% 0.48% 0.46% 0.44% 0.43% 0.42% 0.34% 0.30% 0.27% 0.24% $ 402,254,516 134,015,100 75,755,469 34,973,400 11,277,424 33,385,600 10.19% 3.39% 1.92% 0.89% 0.29% 0.85% 23,970,000 0.61% 55,335,014 1.40% 22,350,900 13,384,588 19,239,779 19,167,758 13,232,395 19,990,000 29,500,500 15,241,200 17,585,418 10,520,610 35,704,555 15,171,639 6,934,400 57,937,100 18,412,600 50,809,800 0.57% 0.34% 0.49% 0.49% 0.34% 0.51% 0.75% 0.39% 0.45% 0.27% 0.90% 0.38% 0.18% 1.47% 0.47% 1.29% $ 1,793,247,201 33.24% $ 1,136,149,765 28.78% Notes: (a) In 2015 the total assessed property value in the City of Tukwila was $5,395,325,118 rot In 2006 the total assessed property value in the City of Tukwila was $3,947, 933,512. Source: King County Department of Assessments 150 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION 151 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 10 RETAIL SALES TAX COLLECTIONS BY SECTOR LAST TEN FISCAL YEARS page 1 of 2 Major Industry Sector 2006 2007 2008 2009 Construction and Contracting $ 1,166,088 $ 2,018,058 $ 1,967,785 $ 869,640 Finance, Insurance & Real Estate 93,747 121,879 118,780 119,121 Manufacturing 450,138 590,455 375,263 246,429 Transportation, Communications & Utilities 436,260 483,419 492,960 440,206 Wholesale - Durable /Non - durable Goods 2,048,517 2,457,437 1,760,449 1,436,045 Retail Trade - General Merchandise 2,667,481 2,571,601 2,231,745 2,072,356 Retail Trade - Furniture /Home Furnishings 2,531,049 2,399,347 1,830,576 1,304,234 Retail Trade - Miscellaneous 1,642,722 1,766,853 1,718,898 1,473,496 Retail Trade - Clothing & Accessories 1,704,213 1,838,646 2,103,630 2,017,904 Retail Trade - Restaurants 1,119,859 1,158,424 1,312,603 1,292,252 Retail Trade - Automotive /Gas 1,053,184 1,026,778 1,066,183 748,482 Retail Trade - Building Materials 855,243 777,870 619,657 589,341 Service Industries - Business 1,141,632 1,198,690 1,129,380 868,260 Service Industries - Hotels 453,376 531,836 548,962 453,657 Service Industries - Other 278,777 294,869 318,696 283,319 All Other Categories 205,644 179,421 185,312 208,467 Total Retail Sales Tax Collections $ 17,847,930 $ 19,415,583 $ 17,780,879 $ 14,423,209 Notes: By State law, the City of Tukwila is prohibited from reporting individual sales tax payers. Sources: Tukw ila Finance Department and Washington State Department of Revenue. 152 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION page 2 of 2 2010 2011 2012 2013 2014 2015 $ 917,250 $ 1,390,952 $ 961,125 $ 1,212,594 $ 829,073 $ 1,255,650 99,975 115,123 143,792 174,705 141,010 163,161 387,234 232,737 390,252 386,964 322,189 281,501 441,822 405,197 432,608 475,688 549,126 743,746 1,346,750 1,119,527 1,077,613 1,108,771 1,592,613 2,016,722 2,068,263 2,003,947 2,000,865 2,154,523 2,137,256 2,205,778 1,380,407 1,771,083 1,537,143 1,405,274 1,431,965 1,527,377 1,521,741 1,626,452 1,703,741 1,870,200 1,973,478 1,954,150 2,018,304 2,037,554 2,082,930 2,070,198 2,013,796 2,159,647 1,342,964 1,337,067 1,472,343 1,529,101 1,611,860 1,703,187 664,310 670,806 690,076 690,691 765,765 825,143 499,383 487,620 516,861 565,734 600,610 683,485 882,012 932,422 928,610 968,996 1,073,511 1,265,789 428,450 459,606 487,977 502,721 562,130 626,822 215,045 202,217 234,870 246,802 274,497 273,514 366,925 553,493 381,693 525,133 468,547 978,142 $ 14,580,835 $ 15,345,801 $ 15,042,499 $ 15,888,089 $ 16,347,426 $ 18,663,814 153 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 11 SALES TAX RATE DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS 2006 2007( 0 2008 (0) 2009 (a) 2010 2011 2012 2013 2014 2015 BASIC SALES TAX RATES City of Tukw ila 0.84% 0.84% 0.84% 0.84% 0.84% 0.84% 0.84% 0.84% 0.84% 0.84% Washington State 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% King County 0.15% 0.15% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% Regional Transit Authority 0.40% 0.40% 0.40% 0.90% 0.90% 0.90% 0.90% 0.90% 0.90% 0.90% Metro 0.80% 0.90% 0.90% 0.90% 0.90% 0.90% 0.90% 0.90% 0.90% 0.90% Criminal Justice 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% Department of Revenue 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% Administration Fee Total Basic Combined Sales Tax Rate 8.80% 8.90% 9.00% 9.50% 9.50% 9.50% 9.50% 9.50% 9.50% 9.50% SPECIAL SALES TAX RATES Restaurants (a) 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% - Motor Vehicles ml 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% Notes: (0 King County Food & Beverage tax is in addition to the combined sales tax rate for restaurants, taverns and bars. The funds are used to finance the professional baseball stadium in Seattle. NOTE: This tax expired on October 1, 2011 as taxes imposed to pay the construction bonds for the Seattle baseball stadium expired. ml Effective July 1, 2003, all retail sales, leases and transfers of motor vehicles are subject to the additional sales tax of three - tenths of one percent (.003). The funds are used to finance transportation improvements. (0 Effective April 1, 2007, King County increased the local sales & use tax rate one -tenth of one percent (.001). The tax will be used for transportation purposes. (d) Effective April 1, 2008, King County increased the local sales & use tax rate one -tenth of one percent (.001). The tax will be used for chemical dependency or mental health treatment services. (0 Effective April 1, 2009, the Regional Transit Authority Tax increased five- tenths of one percent (.005). The tax will be used to expand and coordinate light -rail, commuter -rail, and express bus service, and improve access to transit facilities in King, Pierce, and Snohomish Counties. Source: Washington State Department of Revenue Local Sales and Use Tax Rates. 154 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION 155 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 12 RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Page 1 of 2 2006 2007 2008 2009 2010 GOVERNMENTAL ACTIVITIES General Obligation Bonds (e) $ 18,881,798 $ 17,946,335 $17,261,348 $ 22,453,003 $ 26,763,975 Special Assessment (e) - - - - Leas es - - - 40,184 Total Governmental Activities 18,881,798 17,946,335 17,261,348 22,453,003 26,804,159 BUSINESS -TYPE ACTIVITIES General Obligation Bonds 4,547,500 4,102,500 3,642,500 3,423,797 3,238,825 Revenue Bonds 5,824,452 5,470,162 5,112,231 4,790,000 4,395,000 Public Works Trust Fund Loans 9,781,151 9,378,506 9,021,951 8,405,397 7,788,843 Leases 77,947 45,587 11,666 - Total Business -Type Activities 20,231,050 18,996,755 17,788,348 16,619,194 15,422,668 TOTAL PRIMARY GOVERNMENT) $ 39,112,848 $ 36,943,090 $35,049,696 $ 39,072,197 $ 42,226,827 Population (b) 17,930 18,000 18,080 18,170 19,107 Per Capita Personal Income (b) $ 52,655 $ 57,409 $ 58,141 $ 56,904 $ 44,271 Percentage of Personal Income 4.16% 3.58% 3.33% 3.78% 4.99% Debt Per Capita $ 2,193 $ 2,052 $ 1,939 $ 2,150 $ 2,210 Notes: (a) Details regarding the City's outstanding debt can be found in the Notes to the Financial Statements section. (b) Reference SCHEDULE 19, Demographic Statistics, for population and personal income data. " *" Data not available at time of publication. (c) Includes amounts Due to Other Governments. «di Prior year estimated population used due to unavailability of current year estimate. (e) Special assessment debt was issued in 2013 for the Klickitat Urban Access Project. Sources: U.S. Census Bureau, City of Tukwila Finance Department. 50,000,000 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 Total ®ebt 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 156 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION Page 2 of 2 2011 2012 2013 2014 2015 $ 28,006,800 $ 25,752,600 $ 21,727,609 $ 23,851,376 $ 30,084,437 - - 6,687,500 6,687,500 6,082,500 35,891 - - - 28,042,691 25,752,600 28,415,109 30,538,876 36,166,937 3,980,000 3,540,000 3,075,000 2,580,000 1,742,527 7,179,635 6,621,342 6,063,071 5,742,866 5,646,458 11,159,635 10,161,342 9,138,071 8,322,866 7,388,985 $ 39,202,326 $ 35,913,942 $ 37,553,180 $ 38,861,742 $ 43,555,922 19,486 19,611 19,765 19,920 $ 43,887 $ 43,333 $ 43,331 $ 44,820 4.58% 4.23% 4.38% 4.35% $ 2,012 $ 1,831 $ 1,900 $ 1,951 $ 2,187 19,920 (d) 157 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 13 RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS Fiscal Year Population Assessed Value Net Debt Payable Ratio of Net Bonded Special Less Debt from Bonded Debt Debt Gross Bonded Assessment Service Enterprise Net Bonded to Assessed per Debt Debt (a) Funds') Revenuesm Debt Value Capita 2006 17,930 3,947,933,512 25,648,290 1,075,347 4,547,500 20,025,443 0.51% 1,117 2007 18,000 4,450,243,674 24,421,474 - 1,233,234 4,102,500 19,085,740 0.43% 1,060 2008 18,080 5,175,709,975 23,125,007 1,250,275 3,642,500 18,232,231 0.35% 1,008 2009 18,170 4,973,984,133 25,876,800 135,438 3,423,797 22,317,565 0.45% 1,228 2010 19,107 4,809,486,786 29,950,150 3,050 3,238,825 26,708,275 0.56% 1,398 2011 19,107 4,752,606,030 28,006,800 3,330,312 - 24,676,488 0.52% 1,291 2012 19,486 4,649,191,308 25,752,600 3,012,381 22,740,219 0.49% 1,167 2013 19,611 4,756,373,688 21,727,609 6,687,500 696,346 27,718,763 0.58% 1,413 2014 19,765 5,054,078,747 23,851,376 6,687,500 1,687,497 28,851,379 0.57% 1,460 2015 19,920 5,395,325,118 30,084,437 6,082,500 1,910,940 34,255,997 0.63% 1,720 Note: (a) Special assessment debt was issued in 2013 for the Klickitat Urban Access Project. (b) Includes both restricted and assigned fund balance available for debt service payment. (c) These amounts are the general obligation bonds that are being repaid by the Foster Golf Course Fund. Sources: State of Washington Office of Financial Management King County Department of Assessments Tukw ila Finance Department 158 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 14 COMPUTATION OF DIRECT AND OVERLAPPING DEBT AS OF DECEMBER 31, 2015 Jurisdiction Net General Percentage Estimated Obligation Debt Applicable to Applicable to Outstanding Tukw ilaO> Tukwila Direct: City of Tukwila $ 30,084,437 100.00% $ 30,084,437 Overlapping: King County 816,188,684 1.30% 10,610,453 King County Library 108,262,805 2.20% 2,381,782 Port of Seattle 305,535,000 1.30% 3,971,955 Tukwila School District #406 8,028,609 89.33% 7,171,956 Hospital District #1 - 5.23% Total Overlapping Debt: 1,238,015,098 24,136,146 Total Direct and Overlapping Debt: $ 1,268,099,535 $ 54,220,583 Sources: King County Office of Finance King County Office of Assessments c1) The percentage of overlapping debt applicable is estimated using taxable county assessed property values. $35 0 $30 $25 $20 $15 $10 $5 $- DirectCnd®verlapping®ebt • City of Tukwila • King County • King County Library • Port of Seattle • Tukwila School District • Hospital District 159 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 15 LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS Page 1 of 2 2006 2007 2008 2009 2010 Debt Limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit Assessed Value as of December 31, 2015 Debt Limit (7.5% of assessed value) Debt applicable to limit: General obligation bonds Other long -term debt Less: Amount set aside for repayment of general obligation debt and contracts payable Total net debt applicable to limit $ 296, 095, 014 $ 333, 768, 277 $ 388,178, 248 $ 373, 048, 810 $ 360, 711, 509 24,494,996 23,188,240 21,881,765 28,291,920 32,919,123 $ 271,600,018 $ 310,580,037 $ 366,296,483 $ 344,756,890 $ 327,792,386 8.27% $5,395,325,118 404,649,384 29,322,914 375,326,470 29,322,914 Legal debt margin $ 17S 42 4711 Source: Tukw ila Finance Department 160 6.95% 5.64% 7.58% 9.13% CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION Page 2 of 2 2011 2012 2013 2014 2015 $ 356,445,452 $ 348,689,348 $ 356,728,027 $ 379,055,906 $ 404,649,384 29,703,995 25,884,632 21,727,609 23,288,621 29,322,914 $ 326,741,457 $ 322,804,716 $ 335,000,418 $ 355,767,285 $ 375,326,470 8.33% 7.42% 6.10% 6.14% 7.25% 161 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 16 DEMOGRAPHIC STATISTICS LAST TEN FISCAL YEARS Per Capita Personal Number of Number of Tukw ila School Fiscal Personal Income (b) Single- Family Multi - Family District Unemployment Year Population Income (a) (in thousands) Homes Units Enrollment Rate (c) 2006 17,930 52,655 944,104 3,838 4,107 2,698 5.7% 2007 18,000 57,409 1,033,362 3,864 4,107 2,862 5.0% 2008 18,080 58,141 1,051,189 3,884 4,107 2,769 5.9% 2009 18,170 56,904 1,033,946 3,885 4,107 2,795 10.9% 2010 19,107 44,271 845,886 3,892 4,107 2,907 11.7% 2011 19,107 43,887 838,549 3,894 4,094 2,870 7.6% 2012 19,486 43,333 844,387 3,896 4,094 2,902 7.4% 2013 19,611 43,331 849,764 3,915 4,094 2,882 5.2% 2014 19,765 44,820 885,867 3,920 4,103 2,978 4.1% 2015 19,920 * ** *" 3,940 4,103 2,910 4.5% Notes: (a) Per Capita Personal Income data shown is for King County. Specific data for City of Tukwila is not available. (b) Personal Income estimates are calculated by multiplying Tukwila population by the Per Capita Personal Income estimates for Tukwila and are based on a revised methodology that provides for more accuracy. See also Footnote (a). (c) Unemployment rates are listed and estimated using the census -share method. " "" Data not available at time of publication. Sources: Tukw ila Planning Division, Department of Community Development State of Washington Office of Financial Management Work Force Development Council of Seattle - King County (Unemployment Data) Tukw ila School District #406 US Bureau of Economic Analysis 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% - Unemployment Rate 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 162 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 17 PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO Name of Company /Employer Product or Business 2015 Full & Percentage of Part -Time Total City Employment Employees 2006 Full & Part -Time Employment Percentage of Total City Employees Boeing Company Group Health Cooperative Costco Wholesale King County Metro Boeing Employees Credit Union Nordstrom Real Time Staffing Services Inc Red Dot Corporation City of Tukw ila Macy's West Stores Inc Airplane company Data Ctr /Lab /Pharmacy /Mfg. Cash /carry Warehouse Transit operating base Banking /Credit Union Department Store Employment Placement Agency Heater /air conditioning equipment Municipal Government Department Store 7,144 1,550 807 500 499 483 363 352 334 280 20.90% 4.53% 2.36% 1.46% 1.46% 1.41% 1.06% 1.03% 0.98% 0.82% 10,280 705 559 339 354 449 420 409 405 400 Sub -total - Major Employers 12,312 14,320 All Other Employment TOTAL EMPLOYMENT Source: 21,867 29,767 34,179 44,087 Tukw ila Finance Department - Business Licenses 163 23.32% 1.60% 1.27% 0.77% 0.80% 1.02% 0.95% 0.93% 0.92% 0.91% CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 18 FULL TIME EQUIVALENT EMPLOYEE BY DEPARTMENT LAST TEN FISCAL YEARS 2006 2007 2008 2009 2010 2011 2012 2013 DEPARTM ENT Administrative Services (e) Council Mayor ro> Human Resources (a) Finance Recreation Community Development Court (a) Police (c) Fire Information Technology (a) Public Works Parks Street Water Sewer Golf Surface Water Equipment Rental Metropolitan Park District Pool (d) 23.75 26.75 19.75 - - - - 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 11.00 12.00 11.00 16.00 17.00 15.75 16.75 17.75 21.00 20.00 - 4.00 4.00 4.00 4.00 4.00 4.00 4.00 11.00 11.00 12.00 12.00 13.00 11.00 12.00 12.00 12.00 12.00 22.50 23.50 23.50 22.50 20.75 16.25 16.25 16.25 16.00 16.75 20.88 20.25 24.25 24.25 23.00 22.63 23.38 22.13 21.63 21.00 9.75 8.75 8.75 9.00 9.00 9.10 8.10 83.00 80.00 83.00 82.00 80.00 83.00 88.00 87.50 89.00 93.00 65.00 66.00 64.00 63.00 65.00 66.00 67.00 67.00 67.00 70.00 8.00 8.00 8.00 8.00 7.00 6.00 6.00 34.00 32.00 33.00 32.00 30.00 30.00 30.00 31.00 31.00 32.00 10.25 7.50 7.50 7.50 7.50 7.50 7.50 6.00 7.00 7.00 10.00 11.00 12.00 12.00 11.00 12.00 12.00 12.50 11.50 10.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 6.00 3.00 3.00 2.00 2.00 1.00 2.00 2.00 2.00 2.00 2.00 9.25 9.25 9.75 9.75 10.00 9.25 8.25 9.25 8.25 8.25 7.00 7.00 8.00 8.00 7.00 8.00 8.00 8.00 8.00 9.00 5.00 4.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 2.00 2.00 2.00 2.00 329.63 327.25 328.75 331.75 325.00 325.13 333.13 332.38 334.48 337.101 Notes: Based on filled positions not budgeted positions. () The departments for Human Resources, Court, City Clerk and Information Technology were previously reported under Administrative Services. (b) The department of City Clerk began reporting to the Mayor's department in 2009. icl The department of City Clerk began reporting to the Mayor's department in 2009. (d) On September 12, 2011, the Board of Commissioners approved the formation of the Tukwila Metropolitan Park District (MPD) Pool. For the comprehensive annual financial report years of 2011 and 2012, the MPD Pool was treated as a discretely presented component unit. Effective with the report year 2013, statistical information is now included for the MPD and presented as a blended component unit. Sources: Tukwila Finance Department 164 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 19 OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 FUNCTION Police Number of Calls for Service Fire Number of Responses Total Fire Loss Total Inspections 33,686 33,985 35,816 33,095 32,889 30,272 31,916 31,355 29,840 32,946 4,921 4,673 4,824 4,654 4,574 4,649 4,844 4,604 5,156 5,549 $2,982,265 $3,065,005 $2,300,685 $1,934,596 $1,655,571 $1,601,596 $675,847 $343,495 $2,738,080 $1,926,944 4,705 4,845 6,787 6,787 (b) 1,550 (b) 1,360 0) 4,541 3,389 3,850 2,331 Parks and Recreation Class Participants 64,000 98,087 109,273 103,603 85,693 64,049 58,260 52,319 45,514 68,970 Community Ctr Admissions 34,850 90,141 117,533 134,183 134,275 115,728 116,136 114,748 132,397 136,984 Rounds of Golf Played 55,195 55,446 53,565 53,800 50,445 45,947 47,392 47,757 47,267 51,017 Pool Attendance ** 72,963 57,624 59,077 80,727 101,128 66,213 69,332 71,233 79,537 - Street Miles 79 79 79 79 79 79 79 79 79 79 Streets /Sidewalks 16,970 17,540 19,840 22,140 20,360 20,360 22,920 16,767 8,627 4,716 Signalized Intersections 61 63 63 59 59 59 62 62 62 62 Signals /Lights 7,642 7,540 7,540 6,700 6,925 6,925 7,000 8,815 3,012 2,408 Water Utility Services Total Customers 2,117 2,113 2,109 2,112 2,100 2,109 2,117 2,118 2,126 2,145 Total Gallons/Water(in thousands) 789,981 680,649 660,915 731,469 630,755 625,976 650,659 645,982 668,740 697,147 Sanitary Sewer Total Customers 1,720 1,718 1,684 1,694 1,699 1,710 1,727 1,742 1,752 1,775 Surface Water Total Customers Licenses Business Licenses Outside Contractors 5,107 5,156 5,164 5,204 5,207 5,207 5,212 5,226 5,239 5,242 2,354 2,350 2,523 2,422 2,454 2,611 2,030 1,877 2,208 2,220 M 1,066 1,132 1,216 1,215 Permits Building Permits 422 425 423 265 290 389 354 374 347 277 Mechanical Permits 239 238 256 159 160 180 191 221 216 154 Electrical Permits N/A 758 1,533 821 955 1,158 1,175 1,337 1,223 1,119 Plumbing Permits 192 306 264 145 163 187 210 167 184 140 Public Works Permits 144 136 154 131 138 106 126 155 152 163 Libraries Number of Libraries 3 3 3 3 2 2 2 2 2 2 Total Circulation 320,794 306,001 303,665 318,991 327,004 333,451 332,509 313,571 284,667 214,520 Notes: lal Construction of new clubhouse completed and opened in 2003. (b) Due to information system and data program transitioning, this total does not include fire prevention staff inspections at this time as reported in prior years. i°I During 2012, Outside Contractors began their own business licensing category. Prior to this, outside contractors were consolidated with current year issued licenses. * Information not available. ** Pool facilities acquired from King County in 2003. Sources: Tukwila Departments, King County Library System 165 CITY OF TUKWILA: 2015 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 20 CAPITAL ASSETS BY FUNCTION LAST TEN FISCAL YEARS 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 FUNCTION General Government Total City Area (Square Miles) Public Safety Police: Number of Vehicle Units 8.6 8.6 8.6 9.7 9.7 9.7 9.63 9.63 9.63 9.63 64 64 67 70 76 84 88 81 89 89 Fire: Number of Fire Stations 4 4 4 4 4 4 4 4 4 4 Number of Engines /Rescue Trucks /Ladders 9 9 9 9 8 7 7 7 9 9 Number of Medical Aid Vehicles 2 2 2 2 2 1 1 1 1 1 Number of Hazardous Materials Trailer Units 1 2 2 2 2 2 2 2 2 2 Transportation Paved Streets (lane miles) 163 163 163 178 178 178 188.2 188.2 188.2 188.2 Sidewalks (miles) 54 54 54 56 56 56 64.8 64.8 64.8 64.8 Number of Traffic Signals 55 57 57 59 59 59 64 63 63 63 Number of Streetlights Owned by Seattle City Light 1,180 1,180 1,180 1,180 1,335 1,335 (c) 901 901 902 902 Number of Streetlights Owned by Puget Sound Energy 670 670 670 696 696 623 (c 187 187 187 187 Number of Streetlights Owned by City of Tukwila - - - - (°) 1,210 1,216 1224 1224 Culture and Recreation Parks Acreage 0) 161 160 162 162 162 162 175.6 175.6 175.6 190 Number of Parks 16 18 18 18 18 18 19 19 19 19 Golf Course Acreage 67 67 67 67 67 67 77.26 77.26 77.26 77.26 Maintained Trails (miles) 11 11 11 15 15 15 15 15 15 15 Number of Flaygrounds 13 13 13 11 11 11 11 11 11 11 Swimming Pool 1 1 1 1 1 - - - Visitor Center 1 1 1 1 1 1 1 1 1 1 Community Center /Recreation Facilities 1 1 1 1 1 1 1 1 1 1 Number of Libraries 3 3 3 3 2 2 2 2 2 2 Wate r Water Distribution Mains (miles) 45 47 47 41 41 41 41 41 49 49 Maximum Daily Capacity (millions of gallons) 10 10 10 10 10 10 10 10 10 10 Number of Fire Hydrants (Ow ned by City of Tukw ila) 537 555 572 541 542 554 576 576 576 577 Vehicles 7 8 8 8 8 8 8 8 9 9 Sewer Sanitary Sewers (miles) 33 37 37 37 37 37 37 37 37 37 Maximum Daily Treatment Capacity (millions of gallons) 6.33 6.33 6.33 6.33 6.33 6.33 6.33 6.33 6.33 6.33 Vehicles 5 5 6 6 6 6 6 5 4 4 Surface Water Storm Drains (miles) (b) 62 67 67 69 69 70 70 70 70 70.5 Vehicles 4 4 4 4 4 4 4 4 8 8 Notes: (a) Reflects the correct reporting of data for Culture and Recreation - Parks Acreage for the years 2001 through 2006. Parks acreage previously reported included golf course acreage. (a) Reflects the correct reporting of data for Surface Water - Storm Drains (miles) for the years 2001 through 2006. Miles previously reported were incorrect data estimates. meters. Also, additional street lights were added due to new construction for Southcenter Parkway Extension and Klickitat Projects. Sources: Various Departments-Tukw ila 166