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FIN 2017-10-17 COMPLETE AGENDA PACKET
City of Tukwila Finance Committee O Verna Seal, Chair O Kathy Hougardy O Thomas McLeod AGENDA TUESDAY, OCTOBER 17, 2017 — 5:30 PM HAZELNUT CONFERENCE ROOM (At east entrance of City Hall) Distribution: V. Seal K. Hougardy T. McLeod D. Robertson Mayor Ekberg D. Cline C. O'Flaherty L. Humphrey Item Recommended Action Page 1. PRESENTATION(S) 2. BUSINESS AGENDA a. National Criminal History Improvement (NCHIP) grant a. Forward to 10/23 Consent Pg.1 for the Police Department. Agenda. Leon Richardson, Support Operations Senior Manager b. An ordinance for short-term debt refinancing for the b. Forward to 10/23 C.O.W. Pg.3 Urban Renewal Project. and 11/6 Regular Mtg. Peggy McCarthy, Finance Director c. An amendment to the contract with PFM Financial c. Forward to 11/6 Consent Pg.35 Advisors, LLC (PFMFA) for financial adviser services. Agenda. Peggy McCarthy, Finance Director d. August 2017 monthly departmental budgets -to -actuals report. d. Information only. Pg.49 Vicky Carlsen, Deputy Finance Director e. An update on the Fire Department budget. e. Information only. Pg.53 [Continued from 9/19/17 Finance Committee meeting.] Vicky Carlsen, Deputy Finance Director, and Jay Wittwer, Fire Chief 3. ANNOUNCEMENTS 4. MISCELLANEOUS Next Scheduled Meeting: Tuesday, November 7, 2017 SThe City of Tukwila strives to accommodate individuals with disabilities. Please contact the City Clerk's Office at 206-433-1800 (TukwilaCityClerk©TukwilaWA.gov) for assistance. City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance Committee FROM: Mike Villa, Chief of Police BY: Leon Richardson, Senior Manager CC: Mayor Ekberg DATE: 16 August 2017 SUBJECT: Disposition Research Specialist (Grant funded position) ISSUE There are multiple records that need to be updated due to processing errors which are resulting in Criminal History not reflecting accurately for some people. BACKGROUND Tukwila began using a new correctional facility, SCORE in 2011. The SCORE facility is having issues placing the Tukwila case number in their system when booking people. This causes criminal history checks to not always show complete information. We have identified a significant amount of records that need to be researched and corrected. In 2016, we were awarded this grant and to date the Specialist was able to correct over 2,780 dispositions. Our 2015 compliance rate for dispositions has increased from 37.39% to 83.47%. As of 28 September 2017, we have received verbal confirmation that we have been awarded the National Criminal History Improvement Grant (NCHIP) from DOJ via WSP and anticipate we will receive official notification mid-October. We are asking for approval for the Mayor to sign the grant once it arrives. The reason for this is due to the grant cycle aligning with the federal fiscal year running October to October and us wanting to maximize the grant. ANALYSIS To stay current with incoming workload and maintain current level of service the Tukwila Police Records Unit needs to add one temporary FTE who will be assigned to research and correct SCORE booking information. FINANCIAL IMPACT The Tukwila Police Department is being considered for the awarding of a grant in the amount of $86,029 with a 10% match of $8,602.90. Federal Reimbursement (90%) $77,426.10. This reimbursement is at the discretion of the agency in that it can be Monthly, Quarterly or one lump sum at the end of the FY. RECOMMENDATION The Council is being asked to authorize the Mayor to accept the grant, approving 1 temporary FTE (full-time employee) for 2018, at the October 23, 2017 Special Meeting Consent Agenda. 2 City of Tukwila INFORMATIONAL MEMORANDUM TO: Finance Committee FROM: Peggy McCarthy, Finance Director CC: Mayor Ekberg DATE: October 11, 2017 SUBJECT: Refinancing Urban Renewal Short Term Debt Allan Ekberg, Mayor ISSUE Approve the issuance of a $2.35 million taxable bond to refinance the urban renewal 3 -year note that matures December 1, 2017. BACKGROUND For the purpose of urban renewal, the City purchased three crime ridden motels in 2014 for $3.6 million and an additional motel and structure in 2015 for $1.6 million for a total of $5.2 million. To finance these purchases, in December 2014 a taxable 20 -year $3.85 million bond was issued to Zions First National Bank and a taxable 3 -year $2.25 million note was issued to Bank of the West. It was anticipated that the 3 -year $2.25 million note would be paid from proceeds of the sale of property. The motel property has not yet been sold and the 3 -year note comes due on December 1, 2017. DISCUSSION Based on feedback from the Finance Committee on June 6, 2017, City staff and PFM moved forward with the solicitation of replacement financing. A replacement financing Request For Proposal was published on September 7, 2017 and seven banks responded. Cashmere Valley Bank offered the lowest borrowing costs and most favorable terms. The proposal was accepted and includes these key terms: Amount Interest rates Prepayment Option Year 1-3 Year 4 Year 5 $2,350,000 2.6% 2.8% 3.0% The bond may be prepaid in whole or in part at any time prior to the maturity date with no prepayment penalty. FINANCIAL IMPACT The 2017-2018 biennial budget models the note as being paid in 2018. The effect of refinancing the note instead of paying it off is additional annual interest expense of approximately $20,000 in 2018, $61,100 in 2019 and 2020, $65,800 in 2021 and $70,500 in 2022, should the bond not be paid early. RECOMMENDATION The Council is being asked to approve the bond ordinance and consider this item at the October 23, 2017 Committee of the Whole meeting and subsequent November 6, 2017 Regular Meeting. ATTACHMENTS Draft bond ordinance PFM Presentation 3 4 LiA/HV AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AUTHORIZING THE ISSUANCE AND SALE OF A LIMITED TAX GENERAL OBLIGATION BOND OF THE CITY IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $2,350,000 TO REFUND THE CITY'S OUTSTANDING LIMITED TAX GENERAL OBLIGATION BOND ANTICIPATION NOTE, 2014 (TAXABLE NON -REVOLVING LINE OF CREDIT) AND TO PAY THE COST OF ISSUING THE BOND; PROVIDING THE FORM OF THE BOND; AUTHORIZING THE SALE OF THE BOND TO CASHMERE VALLEY BANK; AND PROVIDING FOR OTHER MATTERS RELATING THERETO; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the City of Tukwila, Washington (the "City"), has outstanding its Limited Tax General Obligation Bond Anticipation Note, 2014 (Taxable Non -Revolving Line of Credit), issued on December 9, 2014 pursuant to Ordinance No. 2464 passed by the City Council (the "Council") on December 1, 2014, as amended by Ordinance No. 2472 passed by the Council on March 16, 2015 (as amended, the "Note Ordinance"), in the original principal amount of $2,250,000 (the "Note"); and WHEREAS, the Note is scheduled to mature on December 1, 2017; and WHEREAS, the Note Ordinance authorizes the City to prepay all or a portion of the outstanding principal on the Note in advance of its maturity date at any time; and WHEREAS, after due consideration it appears that it is in the best interest of the City to pay at maturity or prepay the Note from proceeds of a limited tax general obligation bond issued in the principal amount of not to exceed $2,350,000 (the "Bond"); and WHEREAS, the City has received the offer of Cashmere Valley Bank (the "Purchaser") set forth in Exhibit A attached hereto (the "Proposal"), to purchase the Bond; and W: Word Processing\Ordinances\LTGO Bond -2017 Cashmere Valley Bank 10-10-17 PM:bjs Page 1 of 8 5 WHEREAS, it is deemed necessary and advisable that the City accept the Purchaser's offer and issue the Bond as set forth herein; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. Definitions and Interpretation of Terms. (a) Definitions. As used in this ordinance, the following words shall have the following meanings, unless the context or use indicates otherwise, words importing the singular number shall include the plural number and vice versa. Adjustment Date means the First Interest Rate Adjustment Date and the Second Interest Rate Adjustment Date. Bond means the City's Limited Tax General Obligation Bond, 2017 (Taxable), authorized to be issued pursuant to the terms of this ordinance. Bond Counsel means Pacifica Law Group LLP, or an attorney at law or a firm of attorneys, selected by the City. Bond Register means the registration records for the Bond maintained by the Bond Registrar. Bond Registrar means the City Finance Director, whose duties include registering and authenticating the Bond, maintaining the Bond Register, transferring ownership of the Bond, and paying the principal of and interest on the Bond. City means the City of Tukwila, Washington, a municipal corporation duly organized and existing under the laws of the State of Washington. City Administrator means the duly appointed and acting City Administrator, including anyone acting in such capacity for the position, or the successor to the duties of that office. City Attorney means the duly appointed and acting City Attorney, including anyone acting in such capacity for the position, or the successor to the duties of that office. City Clerk means the duly appointed and acting City Clerk of the City or the successor to the duties of that office. Commission means the United States Securities and Exchange Commission. Council or City Council means the Tukwila City Council, as the general legislative body of the City as the same is duly and regularly constituted from time to time. Debt Service Fund means the fund or account created pursuant to this ordinance for the purpose of paying debt service on the Bond. Finance Director means the duly appointed and acting Finance Director of the City or the successor to such officer. W: Word Processing\Ordinances\LTGO Bond -2017 Cashmere Valley Bank 10-10-17 PM:bjs 6 Page 2 of 8 First Interest Rate Adjustment Date means December 1, 2020. Interest Rate means: (a) from the date of issuance to (but not including) the First Interest Rate Adjustment Date, a fixed rate of interest of 2.6% per annum; (b) from the First Interest Rate Adjustment Date to (but not including) the Second Interest Rate Adjustment Date, a fixed rate of interest of 2.8% per annum; and (c) from the Second Interest Rate Adjustment Date to the Maturity Date, a fixed rate of interest of 3.0% per annum. Maturity Date means the final date of maturity stated in the Bond, which shall be approximately five years from the date of issuance of the Bond. Mayor or City Mayor means the elected Mayor of the City, or the successor to the duties of that office. Note means the City's Limited Tax General Obligation Bond Anticipation Note, 2014 (Taxable Non -Revolving Line of Credit), issued on December 9, 2014 pursuant to the Note Ordinance. Note Ordinance means Ordinance No. 2464 passed by the Council (on December 1, 2014, as amended by Ordinance No. 2472 passed by the Council on March 16, 2015. Proposal means the proposal letter submitted by the Purchaser substantially in the form attached hereto as Exhibit A. Purchaser means Cashmere Valley Bank, Cashmere, Washington, and its successors and assigns. Registered Owner means the person named whose name the Bond is registered on the Bond Register. Rule means the Securities and Exchange Commission's Rule 15c2-12 under the Securities Exchange Act of 1934, as the same may be amended from time to time. Second Interest Rate Adjustment Date means December 1, 2021. State means the State of Washington. (b) Interpretation. In this ordinance, unless the context otherwise requires: (1) The terms "hereby," "hereof," "hereto," "herein," "hereunder" and any similar terms, as used in this ordinance, refer to this ordinance as a whole and not to any particular article, section, subdivision or clause hereof, and the term "hereafter" shall mean after, and the term "heretofore" shall mean before, the date of this ordinance; (2) Words of the masculine or feminine gender shall mean and include correlative words of any gender and words importing the singular number shall mean and include the plural number and vice versa; W: Word Processing\Ordinances\LTGO Bond -2017 Cashmere Valley Bank 10-10-17 PM:bjs Page 3 of 8 7 (3) Words importing persons shall include firms, associations, partnerships (including limited partnerships), trusts, corporations and other legal entities, including public bodies, as well as natural persons; (4) Any headings preceding the text of the several articles and sections of this ordinance, and any table of contents or marginal notes appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this ordinance, nor shall they affect its meaning, construction or effect; and (5) All references herein to "articles," "sections" and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof. Section 2. Authorization of the Bond. (a) For the purpose of paying at maturity or prepaying the Note and paying costs of issuance of the Bond, the City is hereby authorized to issue and sell a limited tax general obligation bond in the principal amount not to exceed $2,350,000 (the "Bond"). (b) The Bond shall be a general obligation of the City and shall be designated "City of Tukwila, Washington, Limited Tax General Obligation Bond, 2017 (Taxable)" or other such designation as set forth in the Bond and approved by the Finance Director. The Bond shall be dated as of its date of delivery to the Purchaser, shall be fully registered as to both principal and interest, shall be in one denomination, and shall mature on the Maturity Date. The Bond shall bear interest from its dated date or the most recent date to which interest has been paid at the Interest Rate then in effect, as the same may be adjusted pursuant to the Proposal and set forth herein. The Interest Rate shall reset on each Adjustment Date, and shall remain in effect until but not including the next Adjustment Date. Interest on the principal amount of the Bond shall be calculated per annum on a 30/360 basis, or as otherwise provided in the Bond. Principal of the Bond shall be payable on the Maturity Date and interest on the Bond shall be paid semi- annually on June 1 and December 1, beginning June 1, 2018, to the Maturity Date or prior prepayment. Section 3. Registration, Exchange and Payments. (a) Registrar/Bond Registrar. The Finance Director shall act as Bond Registrar. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver the Bond if transferred or exchanged in accordance with the provisions of the Bond and this ordinance and to carry out all of the Bond Registrar's powers and duties under this ordinance. (b) Registered Ownership. The City and the Bond Registrar may deem and treat the Registered Owner of the Bond as the absolute owner for all purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. Payment of the Bond shall be made only as described in subsection (d) below. All such payments made as described in subsection (d) below shall be valid and shall satisfy the liability of the City upon the Bond to the extent of the amount so paid. W: Word Processing\Ordinances\LTGO Bond -2017 Cashmere Valley Bank 10-10-17 PM:bjs 8 Page 4 of 8 (c) Transfer or Exchange of Registered Ownership. The Purchaser shall have the right at any time to assign, transfer or convey the Bond in whole but no such assignment, transfer or conveyance shall be effective as against the City unless and until the Purchaser has delivered to the City prior written notice thereof that discloses the name and address of the assignee and such assignment, transfer or conveyance shall be made only to (i) an affiliate of the Purchaser or (ii) banks, wholly-owned direct or indirect subsidiaries of banks or bank holding companies, insurance companies or other financial institutions or their affiliates that signs a qualified purchaser letter in substantially the same form as provided by the Purchaser in connection with the issuance of the Bond and otherwise satisfactory to Bond Counsel. Nothing herein shall limit the right of the Purchaser or its assignees to sell or assign participation interests in the Bond to one or more entities listed in (i) or (ii). (d) Place and Medium of Payment. Both principal of and interest on the Bond shall be payable in lawful money of the United States of America. Principal and interest on the Bond shall be payable by check, warrant, ACH transfer or by other means mutually acceptable to the Purchaser and the City. Upon final payment of principal and interest of the Bond, the Registered Owner shall surrender the Bond for cancellation at the office of the Bond Registrar in accordance with this ordinance. Section 4. Prepayment. The outstanding principal amount of the Bond may be prepaid in whole or in part at any time prior to the Maturity Date at a price of par plus accrued interest to the date of prepayment. The City shall provide at least 15 calendar days prior written notice of any intended prepayment. If the Bond is prepaid in full in accordance with this Section 4, interest shall cease to accrue on the date the Bank receives such prepayment. Section 5. Form of Bond. The Bond shall be in substantially the form set forth in Exhibit B, which is incorporated herein by this reference. Section 6. Execution of Bond. (a) The Bond shall be executed on behalf of the City with the manual or facsimile signature of the Mayor, and shall be attested by the manual or facsimile signature of the Clerk. (b) Only such Bond as shall bear thereon a Certificate of Authentication in the form set forth in Exhibit B, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated and delivered hereunder and is entitled to the benefits of this ordinance. (c) In case either of the officers who shall have executed the Bond shall cease to be an officer or officers of the City before the Bond so signed shall have been authenticated or delivered by the Bond Registrar, or issued by the City, such Bond may nevertheless be authenticated, delivered and issued and upon such authentication, delivery and issuance, shall be as binding upon the City as though those who signed W: Word Processing\Ordinances\LTGO Bond -2017 Cashmere Valley Bank 10-10-17 PM:bjs Page 5 of 8 9 the same had continued to be such officers of the City. The Bond may also be signed and attested on behalf of the City by such persons who at the date of the actual execution of the Bond, are the proper officers of the City, although at the original date of such Bond any such person shall not have been such officer of the City. Section 7. Application of Bond Proceeds. Proceeds of the Bond shall be distributed as follows: (a) The amount necessary to pay or prepay the outstanding principal of and interest on the Note on the date of maturity or prepayment, respectively, plus any prepayment penalties or related fees, shall be deposited into the Note Account (as defined in the Note Ordinance) and shall be used within 30 days of the issuance of the Bond to redeem the Note in accordance with its terms. After the Note is paid in full, the Note shall be cancelled and delivered to the City. (b) The remaining proceeds of the Bond shall be used by the City to pay costs of issuance of the Bond or shall be deposited into the Debt Service Fund. (c) The Finance Director is hereby authorized to select the date of prepayment (if any) and to call the Note for prepayment prior to maturity on such date in accordance with the terms of the Note Ordinance. The Finance Director and the appropriate City officials are further authorized to execute such documents and to take such actions as necessary to pay or prepay the Note in accordance with its terms and this ordinance. Section 8. Pledge of Funds and Credit; General Obligation. (a) The City hereby authorizes the creation of a fund or account to be used for the payment of debt service on the Bond (the "Debt Service Fund"). No later than the date each payment of principal of or interest on the Bond becomes due, the City shall transmit sufficient funds, from the Debt Service Fund or from other legally available sources, to the Registered Owner for the payment of such principal or interest. Money in the Debt Service Fund may be invested in legal investments for City funds. (b) The City hereby irrevocably covenants and agrees for as long as the Bond is outstanding and unpaid that each year it will include in its budget and levy an ad valorem tax upon all the property within the City subject to taxation in an amount that will be sufficient, together with other revenues and money of the City legally available for such purposes, to pay the principal of and interest on the Bond when due. (c) The City hereby irrevocably pledges that the annual tax provided for herein to be levied for the payment of such principal and interest shall be within and as a part of the tax levy permitted to cities without a vote of the people, and that a sufficient portion of each annual levy to be levied and collected by the City prior to the full payment of the principal of and interest on the Bond will be and is hereby irrevocably set aside, pledged and appropriated for the payment of the principal of and interest on the Bond. The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of said taxes and for the prompt payment of the principal of and interest on the Bond when due. W: Word Processing\Ordinances\LTGO Bond -2017 Cashmere Valley Bank 10-10-17 PM:bjs 10 Page 6 of 8 Section 9. Sale of the Bond. (a) The Bond shall be sold to the Purchaser pursuant to the terms of this ordinance and the Proposal. The City hereby accepts the Proposal, which is attached as Exhibit A and incorporated herein by this reference. The Finance Director is hereby authorized: (a) to approve the principal amount of the Bond; (b) to execute a bond purchase agreement with the Purchaser; and (c) to agree to any other terms, conditions and covenants that are in the best interest of the City and in accordance with the Proposal, so long as the principal amount of the Bond does not exceed $2,350,000 and the terms of the Bond are otherwise consistent with the terms of this ordinance. (b) The appropriate City officials, including but not limited to the City Mayor, City Administrator and the Finance Director, are hereby authorized and directed to do everything necessary for the prompt issuance, execution and delivery of the Bond and for the proper application and use of the proceeds thereof. Section 10. Ongoing Disclosure; Covenants. (a) Ongoing Disclosure. The Bond is exempt from ongoing disclosure requirements of the Rule. (b) Covenants. So long as the Bond is outstanding, the City hereby covenants and agrees to provide the Registered Owner: (1) Copies of the City's audited financial statements within a reasonable time after such statements become available; and (2) Financial or other information as may be reasonably requested from time to time. Section 11. Lost, Stolen or Destroyed Bond. In case the Bond shall be lost, stolen or destroyed while in the Registered Owner's possession, the Bond Registrar may at the request of the Registered Owner execute and deliver a new Bond of like date, number and tenor to the Registered Owner thereof upon the Registered Owner's paying the expenses and charges of the City and the Bond Registrar in connection therewith and upon its filing with the City written certification that such Bond was actually lost, stolen or destroyed and of its ownership thereof. In the case the Bond shall be lost, stolen, or destroyed while in the Registered Owner's possession, the Registered Owner may elect upon final payment of principal and interest of the Bond to surrender a photocopy of the Bond for cancellation at the office of the Bond Registrar together with written certification that such Bond was actually lost, stolen or destroyed and of its ownership thereof. W: Word Processing\Ordinances\LTGO Bond -2017 Cashmere Valley Bank 10-10-17 PM:bjs Page 7 of 8 11 Section 12. Severability; Ratification. If any one or more of the covenants or agreements provided in this ordinance to be performed on the part of the City shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or agreements, shall be null and void and shall be deemed separable from the remaining covenants and agreements of this ordinance and shall in no way affect the validity of the other provisions of this ordinance or of the Bond. All acts taken pursuant to the authority granted in this ordinance but prior to its effective date are hereby ratified and confirmed. Section 13. Payments Due on Holidays. If an interest and/or principal payment date for the Bond is not a business day, then payment shall be made on the next business day and no interest shall accrue for the intervening period. Section 14. Corrections by City Clerk. Upon approval of the City Attorney and Bond Counsel, the City Clerk is hereby authorized to make necessary corrections to this ordinance, including but not limited to the correction of clerical errors; references to other local, state or federal laws, codes, rules, or regulations; ordinance numbering and section/subsection numbering; and other similar necessary corrections. Section 15. Effective Date. This ordinance or a summary thereof shall be published in the official newspaper of the City, and shall take effect and be in full force five days after passage and publication as provided by law. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of , 2017. ATTEST/AUTHENTICATED: Christy O'Flaherty, MMC, City Clerk APPROVED AS TO FORM BY: Pacifica Law Group LLP, Bond Counsel Allan Ekberg, Mayor Filed with the City Clerk: Passed by the City Council: Published: Effective Date: Ordinance Number: Attachments: Exhibit A — Proposal — Cashmere Valley Bank Exhibit B — Form of Bond / Certificate of Authentication and Registration W: Word Processing\Ordinances\LTGO Bond -2017 Cashmere Valley Bank 10-10-17 PM:bjs 12 Page 8 of 8 Exhibit A Copy of Purchaser's Proposal [attached] A-1 13 (ZrairmereValleil Bank City of Tukwila Limited Tax General Obligation Bond, 2017 (Taxable) Term Sheet (Subject to Bank underwriting and credit approval) September 25, 2017 1 Issuer: City of Tukwila, King County Washington (the "City") 2. Amount: $2,350,000 3. Form: Registered Limited Tax General Obligation Bond, 2017 (Taxable) (the "Bond") issued by the City and purchased by Cashmere Valley Bank at private sale. 4. Purpose: Proceeds would be used to refund the City's LTGO Bond Anticipation Note, 2014 (Taxable) which was used to acquire certain improved property on Tukwila International Boulevard for the purpose of redevelopment, and to pay certain costs of Bond issuance. 5. Bond Terms: a) Interest Rate and Terms: The Bond would be structured as a taxable non -amortizing bond with a final maturity of either 3, 4 or 5 years. The rate of interest for the first 3 years would be 2.6%. The rate of interest for year 4 would be 2.8%, and for year 5, 3.0%. Interest would be computed on the basis of a 360 - day year consisting of twelve 30 -day months. The Bond would be dated the Date of Delivery and would bear interest from its date. The City may choose if interest is paid monthly, quarterly or semi-annually. b) Transferability Cashmere Valley Bank would hold the Bond with no intent to sell or transfer. The Bond may be transferred only in whole to a qualified investor. 14 City of Tukwila Limited Tax General Obligation Bond 2017 (Taxable) Page 2 c) Security The Bond would be a limited tax general obligation supported by the full faith and credit of the City. 6. Prepayment: The outstanding principal amount of the Bond may be prepaid in whole or in part at any time prior to the Maturity Date at par plus accrued interest to the date of prepayment. The City would provide the Bank with written notice of any intended prepayment at least 15 days prior to such prepayment date. 7. Fees: The Bank would not charge any fees for the Bond, and does not expect any legal costs. 8. Additional Terms: The Bond documents would be in the standard forms customarily required by the Bank for municipal funding and would include additional terms and conditions not discussed above. The City would provide its annual financial report to the Bank during the period the Bond is outstanding and held by the Bank. At the date of closing the Bond, the financial condition and credit of the City and all other features of this transaction would be as represented to the Bank without material adverse change. Please note that this term sheet is for discussion purposes only and does not represent a commitment on the part of the Bank to lend funds. The Bank agrees to the proposed schedule of events presented in the Request for Proposals. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW. 15 16 Exhibit B Form of Bond UNITED STATES OF AMERICA NO. R-1 $ STATE OF WASHINGTON CITY OF TUKWILA LIMITED TAX GENERAL OBLIGATION BOND, 2017 (TAXABLE) DATE OF ISSUANCE: [ , 2017] MATURITY DATE: [ , 2022] REGISTERED OWNER: CASHMERE VALLEY BANK, CASHMERE WASHINGTON PRINCIPAL AMOUNT: MILLION AND DOLLARS The City of Tukwila, Washington, a municipal corporation organized and existing under and by virtue of the laws of the State of Washington (the "City"), hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, on or before the Maturity Date identified above, the Principal Amount identified above. This bond shall bear interest on the outstanding principal balance at the interest rate then in effect (the "Interest Rate"), as follows: (a) from the Date of Issuance identified above to (but not including) the First Interest Rate Adjustment Date (December 1, 2020), a fixed rate of interest of 2.6% per annum, (b) from the First Interest Rate Adjustment Date to (but not including) the Second Interest Rate Adjustment Date (December 1, 2021), a fixed rate of interest of 2.8% per annum, and (c) from the Second Interest Rate Adjustment Date to the Maturity Date, a fixed rate of interest of 3.0% per annum. Interest on this bond shall accrue from the Date of Issuance until paid and shall be computed per annum on the principal amount outstanding on a 30/360 basis. The Interest Rate shall reset on each Adjustment Date as described above, and shall remain in effect until but not including the next Adjustment Date. Principal of this bond shall be payable on the Maturity Date and interest on this bond shall be paid semi-annually on June 1 and December 1, beginning June 1, 2018, to the Maturity Date or prior prepayment. B-1 17 Both principal of and interest on this bond shall be payable in lawful money of the United States of America. Principal and interest on this bond shall be payable by check or warrant or by other means mutually acceptable to the Registered Owner and the City. Upon final payment of principal and interest of this bond, the Registered Owner shall surrender this bond for cancellation at the office of the Bond Registrar in accordance with Ordinance No. of the City (the "Bond Ordinance"). This bond is issued pursuant to the Bond Ordinance to redeem the City's Limited Tax General Obligation Bond Anticipation Note, 2014 (Taxable Non -Revolving Line of Credit) and to pay costs of issuance for this bond. Capitalized terms used in this bond have the meanings given such terms in the Bond Ordinance. The City may prepay this bond on any date upon providing at least 15 calendar days prior written notice to the Registered Owner, as further provided in the Bond Ordinance. The City has in the Bond Ordinance authorized the creation of a fund to be used for the payment of debt service on this bond, designated as the Debt Service Fund. The Debt Service Fund shall be drawn upon for the sole purpose of paying the principal of and interest on this bond. The City hereby irrevocably covenants and agrees with the owner of this bond that it will include in its annual budget and levy taxes annually, within and as a part of the tax levy permitted to the City without a vote of the electorate, upon all the property subject to taxation in amounts sufficient, together with other money legally available therefor, to pay the principal of and interest on this bond as the same shall become due. The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of such taxes and the prompt payment of such principal and interest. Owners of this bond do not have a security interest in particular revenues or assets of the City. This bond is not a debt or indebtedness of the State of Washington, or any political subdivision thereof other than the City. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall have been manually signed by or on behalf of the Bond Registrar or its duly designated agent. This bond is issued pursuant to the Constitution and laws of the State of Washington, and duly adopted ordinances of the City. This bond is transferable upon compliance with the conditions set forth in the Bond Ordinance. It is hereby certified that all acts, conditions and things required by the Constitution and statutes of the State of Washington to exist, to have happened, been done and performed precedent to and in the issuance of this bond exist, have happened, been done and performed and that the issuance of this bond does not violate any constitutional, statutory or other limitation upon the amount of bonded indebtedness that the City may incur. B-2 18 IN WITNESS WHEREOF, the City of Tukwila, Washington, has caused this bond to be executed by the manual or facsimile signature of the Mayor of the City Council and attested by the manual or facsimile signature of the Clerk, as of this day of , 2017. [SEAL] CITY OF TUKWILA, WASHINGTON By Allan Ekberg, Mayor ATTEST: Christy O'Flaherty, MMC, City Clerk CERTIFICATE OF AUTHENTICATION AND REGISTRATION This bond is the City of Tukwila, Limited Tax General Obligation Bond, 2017 (Taxable) described in the within mentioned Bond Ordinance and is registered in the name of the Registered Owner on the books of the City, in the office of the City Finance Director (the "Bond Registrar"), as to both principal and interest, as noted in the registration blank below. All payments of principal of and interest on this bond shall be made by the City to the Registered Owner from the Debt Service Fund. Date of Name and Address of Signature of Registration Registered Owner Bond Registrar , 2017 B-3 Finance Director 19 CERTIFICATE I, the undersigned, the Clerk of the City of Tukwila, Washington (the "City"), DO HEREBY CERTIFY: 1. That the attached Ordinance No. (the "Ordinance") is a full, true and correct copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the regular meeting place thereof on November 6, 2017 as that ordinance appears in the minute book of the City; and the Ordinance will be in full force and effect five (5) days after its passage and publication as provided by law; and 2. That the meeting was duly convened and held in all respects in accordance with law, and to the extent required by law, due and proper notice of such meeting was given; that a legal quorum was present throughout the meeting and a legally sufficient number of members of the Council voted in the proper manner for the passage of said Ordinance; that all other requirements and proceedings incident to the proper passage of said Ordinance have been fully fulfilled, carried out and otherwise observed; and that I am authorized to execute this certificate. 3. That Ordinance No. has not been amended, supplemented or rescinded since its passage and is in full force and effect and that I am authorized to execute this certificate. IN WITNESS WHEREOF, I have hereunto set my hand this day of , 2017. 20 CITY OF TUKWILA, WASHINGTON Christy O'Flaherty, MMC, City Clerk City of Tukwila Finance Committee Meeting 2014 Bond Anticipation Note October 17, 2017 N PFM Financial Advisors LLC 1200 Fifth Avenue Suite 1220 Seattle, WA, 98101 Susan Musselman (360) 445-0238 Duncan Brown (206) 858-5367 pfm Overview 1) Background 2) Lender RFP and Results 3) Proposed LTGO Bond, 2017 4) Next Steps Appendix: Debt Capacity and Market Update Review of 2014 LTGO Bonds and Note • In December 2014, the City issued its $2.25 million Limited Tax General Obligation Bond Anticipation Note, 2014 (the "2014 Note") and $3.85 million Limited Tax General Obligation Bonds, 2014 (the "2014 Bonds") • Both were used to acquire properties along Tukwila International Boulevard (TIB) • The 2014 Note has a final maturity of December 1, 2017 • The 2014 Bond has a final maturity of December 1, 2034, and is subject to optional redemption on December 1, 2019 • At the time of issuance, the City anticipated using proceeds from the sale of the TIB properties to repay the 2014 Note • Properties are anticipated to be sold to a private party for new development • However, the properties have not yet been sold 2 2014 Note - Considerations The City has several options to address the upcoming maturity of the 2017 Note: 1) Refinance with cash • City could use proceeds from other sources (i.e. Tukwila Village), if available 2) Refinance with long-term Limited Tax GO (non -voted) debt • If property will be used for some other governmental purpose of the City 3) Extension or replacement • Most flexible option (could be refinanced on a longer-term basis with other options - cash, LTGO, or UTGO - at a later date) Based on feedback from the Finance Committee on June 6, 2017, City staff and PFM moved forward with the solicitation of replacement interim financing 3 Limited Tax General Obligation Bond, 2017 (Taxable) • The holder of the existing 2014 Note (Bank of the West) is not interested in extending the existing facility • On September 7th, PFM distributed an Request for Proposals for replacement financing on behalf of the City The RFP was distributed to 18 banks, of which 7 responded Cashmere Valley Bank provided the most advantageous financing terms for the proposed Limited Tax General Obligation Bond, 2017 (Taxable) (the "2017 TIB Bond") Five year final maturity (December 1, 2022) • Initial rate of 2.60%, increasing to 2.80% in year 4 and 3.00% in year 5 Estimated "True Interest Cost" of 2.71% through maturity • Prepayable at any time — as TIB properties are sold, the 2017 TIB Bond may be paid down IV 01 4 2017 TIB Bond = Next Steps Activity Date Finance Committee Meeting - Consideration of Bond Ordinance (5:30 p.m.) 10/17 Committee of the Whole - Consideration of Bond Ordinance (7:00 p.m.) 10/23 City Council Meeting - Consideration of Bond Ordinance (7:00 p.m.) 11/6 Bond Ordinance Published 11/9 Bond Closing - funds delivered and 2014 Note redeemed 11/14 5 Appendix: Debt Capacity and Market Update Outstanding Limited Tax General Obligation Debt • As of October 2017, the City has $35,398,577 of non -voted general obligation debt and $32,990,000 of voted general obligation debt outstanding $6 C 02 $5 — CC) $4 Annual Non -Voted General Obligation Debt Service ii • LTGO Bonds, 2017 LTGO Note, 2014 (Taxable) LTGO Bonds, 2015 m SCORE 2009B (BABs) SCORE 2009A LTGO Bond, 2014 (Taxable) m LTGO Bond, 2013 LTGO Refunding Bonds, 2011 LTGO Bonds, 2010B (BABs) E LTGO Ref Bonds, 2008 1 I 1 1 1 1 I I N N N 0 N N N N Ct• co (11 cv) N N N N N 8 Outstanding Long -Term General Obligation Debt LTGO Refunding Bonds, 2008 LTGO Bonds, 2010B (Taxable BABs Direct Payment) LTGO Refunding Bonds, 2011 LTGO Bond, 2013 LTGO Bond, 2014 (Taxable) LTGO Note, 2014 (Taxable) LTGO Bonds, 2015 LTGO Bonds, 2017 Subtotal SCORE Bonds, 2009A SCORE Bonds, 2009B (Taxable BABs- Direct Payment) Subtotal Total - LTGO UTGO Bonds, 2016 Subtotal Total - General Obligations $2,165,000 3,575,000 3,360,000 609,977 3,560,000 2,250,000 5,605,000 8,180,000 $29,304,977 220,400 5,873,200 $6,093,600 $35,398,577 32,990,000 $32,990,000 $68,388,577 n/a 6/1/2020 12/1/2021 n/a 12/1/2019 anytime 6/1/2025 6/1/2027 1/1/2020 1/1/2020 dvance refund LTGO Bonds, 1999 cquisition & construction of Southcenter Parkway improvements; emergency preparedness facilities, fixtures, tech. Advance refund LTGO Bonds, 2003A Park district facility improvements (pool) Tukwila International Boulevard — propert acquisition Pay and reimburse the City for the cost of ertain road construction and related im • rovements Pay or reimburse the City for the cost of ertain road construction and related im • rovements SCORE Facility 6.00% 3.96 — 5.41%* 3.00 — 4.00% 3.00-4.00% 0.85 — 4.86%** LIBOR + 1.00% 2.25 — 3.00% 3.00% — 3.50% 4.50 — 5.00% 5.00 — 6.616%* 12/1/2019 12/1/2024 12/1/2023 12/1/2022 12/1/1934 12/1/2017 12/1/2035 12/1/2037 1/1/2022 1/1/2039 risu— Assured Guaranty n/a n/a n/a n/a n/a n/a n/a n/a n/a 12/1/2026 Pay and reimburse the City for the cost of onstructing fire stations and acquiring related firefighting apparatus/equipment, onstructing a justice center 4.50 — 5.00% 12/1/2036 n/a As of October 10, 2017. * Build America Bonds coupons are shown as gross rates, not reflecting Federal subsidy (35% prior to sequestration). ** A portion of the 2014 Bonds will have interest rates reset every five years, based on the Five Year Advance Fixed Bullet Rate, as published9 by the Seattle Federal Home Loan Bank. Calculation of Debt Capacity •The table below summarizes the City's non -voted and total general obligation debt capacity, as limited by statute Non -Voted General Obligation Debt Capacity 2016 Assessed Value for 2017 Tax Year Non -Voted Debt Capacity (1.5% of AV) Less: Outstanding Non -Voted Debt $5,751,820,403 $86,277,306 (35,398,577) Remaining Non -Voted Debt Capacity Total General Obligation Debt Capacity for General Municipal Purposes 2016 Assessed Value for 2017 Tax Year Total Debt Capacity (2.5% of AV) Less: Outstanding Voted Debt Less: Outstanding Non -Voted Debt $50,878,729 $5,751,820,403 $143,795,510 (32,990,000) (35,398,577) Remaining Total Debt Capacity for General Municipal Purposes(1) -1 $75,406,933 10 Market Update 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% �0�� �0\� <<e„o �0\tt �0�� � �aJ PJB , Municipal Market Data (MMD) "AA" GO Yield Curve 2016 Bonds (11/30/2016) 3 Years Ago (10/6/2014) Current (10/6/2017) 2015 Bonds (4/28/2015) 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Current (10/6/2017) ®®2016 Bonds (11/30/2016) 2015 Bonds (4/28/2015) 3 Years Ago Bond Buyer 20 -Bond GO Index vs. 30 -Year Treasury Last Three Years ti�1�4' PJB o�, < e`o •?C) o�, <(e5) 4aJ PJB 20 -Bond GO Index 30 -Year Treasury 11 Market Update = Interest Rate Forecasts -Most market participants expect interest rates to rise modestly through the end of 2017 and 2018 'The chart below shows consensus forecasts from numerous financial institutions Quarterly Historical and Forecasted Interest Rates 3.50% 3.00% -0 2.50% 7 >- 2.00% 0 1.50% 1.00% 0.50% 0.00% w w Historical Q1 16 Q2 16 Q3 16 Q4 16 Q117 Q2 17 Q3 17 End of Quarter Federal Funds Rate (Upper Bound) 2 -Year US Treasury Note Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 3 -Month Libor 10 -Year US Treasury Bond Source: Bloomberg, Composite UST forecast represents at least 50 banks. 12 34 City of Tukwila INFORMATIONAL MEMORANDUM Allan Ekberg, Mayor TO: Finance Committee FROM: Peggy McCarthy, Finance Director CC: Mayor Ekberg DATE: October 11, 2017 SUBJECT: Approve Contract Amendment with PFMFA, the City's Financial Advisor ISSUE Approve a contract amendment with PFM Financial Advisors LLC (PFMFA) increasing the not to exceed amount and the term. BACKGROUND A contract for municipal advisor services was signed with Public Finance Management Inc. (PFM), on June 30. 2014. The contract amount was $40,000 and the term was two years, with an expiration date of June 1, 2016. Under this contract, the following fees were paid through proceeds of the bond issues: Invoice Date Bond Issue Description of Services / Fees Amount 1/13/2015 Urban renewal bonds, two issues, 2014 Taxable Financial advisory fee plus mileage $15,209.12 4/28/2015 Arterial Street bonds, 2015 LTGO Financial advisory and Official Statement preparation fees $23,500.00 Cumulative Contract Total TOTAL $38,709.12 In December 2015, the contract was amended to increase the contract amount to $130,000 and the contract term to December 31, 2017. Under this contract amendment, the following fees were paid through the bond proceeds. 12/22/2016 Public Safety Plan, 2016 UTGO Financial Advisory Fee, Disclosure Fee, Financial Advisory expenses $48,402.55 7/26/2017 Residential Streets, 2017 LTGO Financial Advisory Fee, Disclosure Fee, Financial Advisory expenses 23,629.03 TOTAL $72,031.58 Cumulative Contract Total $110,740.70 In June 2017, the City assigned the PFM contract to PFM's newly formed financial advisory arm PFM Financial Advisors LLC. DISCUSSION The City's future financing plans include refinancing the 2014 urban renewal short term debt in November 2017 and issuing bonds for the Public Safety Plan in 2018 or 2019. PFMFA services have benefited the City by providing general professional guidance, assisting with financing strategies, optimizing debt structures, and obtaining favorable interest rates on the bond issues. 35 INFORMATIONAL MEMO Page 2 It is in the best interest of the City to continue to use their services. Accordingly, revised contract terms are recommended to extend the contract amount and service term, as follows: Contract Terms Original Amendment 1 Amendment 2 Expiration date June 1, 2016 December 31, 2017 December 31, 2020 Amount $40,000 $130,000 $300,000 FINANCIAL IMPACT The financial advisory fees will be paid for from bond proceeds. RECOMMENDATION The Council is being asked to approve the contract amendment and consider this item at the November 6, 2017 Regular Meeting Consent Agenda. ATTACHMENTS Contract amendment 14-086(b) Original contract 14-08 36 City of Tukwila Contract Number: 14-086(b) Council Approval 6200 Southcenter Boulevard, Tukwila WA 98188 CONTRACT FOR SERVICES Amendment # 2 Between the City of Tukwila and PFM Financial Advisors LLC (PFMFA) That portion of Contract No. 14-086 between the City of Tukwila and PFM Financial Advisors LLC (PFMFA) is amended as follows: Section 2. Compensation and Method of Payment. The City shall pay the Contractor for services rendered according to the rate set forth on Exhibit B attached hereto and incorporated herein by this reference. The total amount to be paid shall not exceed $300,000. Section 4. Duration of Agreement: This agreement shall be in full force and effect for a period commencing June 1, 2014 and ending December 31, 2020, unless sooner terminated under the provisions hereinafter specified. All other provisions of the contract shall remain in full force and effect. Dated this day of , 20 CITY OF TUKWILA CONTRACTOR Allan Ekberg, Mayor Susan Musselman, Director ATTEST/AUTHENTICATED APPROVED AS TO FORM City Clerk City Attorney Page 1 of 1 37 38 City of Tukwila 6200 Southcenter Boulevard, Tukwila WA 98188 Contract Number14-086 Council Approval N/A CONTRACT FOR SERVICES This Agreement is entered into by and between the City of Tukwila, Washington, a non -charter optional municipal code city hereinafter referred to as "the City," and Public Financial Management, Inc. , hereinafter referred to as "the Contractor" or "PFM" whose principal office is located at 1200 Fifth Ave. Seattle, WA 98101. WHEREAS, the City has determined the need to have certain services performed for its citizens but does not have the manpower or expertise to perform such services; and WHEREAS, the City desires to have the Contractor perform such services pursuant to certain terms and conditions; now, therefore, IN CONSIDERATION OF the mutual benefits and conditions hereinafter contained, the parties hereto agree as follows: 1. Scope and Schedule of Services to be Performed by Contractor. The Contractor shall perform those services described on Exhibit A attached hereto and incorporated herein by this reference as if fully set forth. In performing such services, the Contractor shall at all times comply with all Federal, State, and local statutes, rules and ordinances applicable to the performance of such services and the handling of any funds used in connection therewith. The Contractor shall request and obtain prior written approval from the City if the scope or schedule is to be modified in any way. 2. Compensation and Method of Payment. The City shall pay the Contractor for services rendered according to the rate and method set forth on Exhibit B attached hereto and incorporated herein by this reference. The total amount to be paid shall not exceed $40,000 at a rate of $295. 3. Contractor Budget. The Contractor shall apply the funds received under this Agreement within the maximum limits set forth in this Agreement. The Contractor shall request prior approval from the City whenever the Contractor desires to amend its budget in any way. 4. Duration of Agreement. This Agreement shall be in full force and effect for a period commencing June 1, 2014 , and ending June 1, 2016 , unless sooner terminated under the provisions hereinafter specified. 5. Independent Contractor. Contractor and City agree that Contractor is an independent contractor with respect to the services provided pursuant to this Agreement. Nothing in this Agreement shall be considered to create the relationship of employer and employee between the parties hereto. Neither Contractor nor any employee of Contractor shall be entitled to any benefits accorded City employees by virtue of the services provided under this Agreement. The City shall not be responsible for withholding or otherwise deducting federal income tax or social security or contributing to the State Industrial Insurance Program, or otherwise assuming the duties of an employer with respect to the Contractor, or any employee of the Contractor. CA Revised 2012 Page 1 of 9 39 6. Indemnification. The Contractor shall defend, indemnify and hold the City, its officers, agents, officials, employees and volunteers harmless from any and all claims, injuries, damages, losses or suits including attorney fees, arising out of or in connection with the performance of this Agreement, except for injuries and damages caused by the sole negligence of the City. Should a court of competent jurisdiction determine that this Agreement is subject to RCW 4.24.115, then, in the event of liability for damages arising out of bodily injury to persons or damages to property caused by or resulting from the concurrent negligence of the Contractor and the City, its officers, officials, employees, and volunteers, the Contractor's liability hereunder shall be only to the extent of the Contractor's negligence. It is further specifically and expressly understood that the indemnification provided herein constitutes the Contractor's waiver of immunity under Industrial Insurance, Title 51 RCW, solely for the purposes of this indemnification. This waiver has been mutually negotiated by the parties. The provisions of this section shall survive the expiration or termination of this Agreement. 7. Insurance. The Contractor shall procure and maintain for the duration of the Agreement, insurance against claims for injuries to persons or damage to property which may arise from or in connection with the performance of the work hereunder by the Contractor, their agents, representatives, employees or subcontractors. Contractor's maintenance of insurance, its scope of coverage and limits as required herein shall not be construed to limit the liability of the Contractor to the coverage provided by such insurance, or otherwise limit the City's recourse to any remedy available at law or in equity. A. Minimum Scope of Insurance. Contractor shall obtain insurance of the types and with the limits described below: 1. Automobile Liability insurance with a minimum combined single limit for bodily injury and property damage of $1,000,000 per accident. Automobile liability insurance shall cover all owned, non -owned, hired and leased vehicles. Coverage shall be written on Insurance Services Office (ISO) form CA 00 01 or a substitute form providing equivalent liability coverage. If necessary, the policy shall be endorsed to provide contractual liability coverage. 2. Commercial General Liability insurance with limits no less than $1,000,000 each occurrence, $2,000,000 general aggregate and $2,000,000 products -completed operations aggregate limit. Commercial General Liability insurance shall be written on ISO occurrence form CG 00 01 and shall cover liability arising from premises, operations, independent contractors, products - completed operations, stop gap liability, personal injury and advertising injury, and liability assumed under an insured contract. The Commercial General Liability insurance shall be endorsed to provide the Aggregate Per Project Endorsement ISO form CG 25 03 11 85 or an equivalent endorsement. There shall be no endorsement or modification of the Commercial General Liability Insurance for liability arising from explosion, collapse or underground property damage. The City shall be named as an insured under the Contractor's Commercial General Liability insurance policy with respect to the work performed for the City using ISO Additional Insured endorsement CG 20 10 10 01 and Additional Insured -Completed Operations endorsement CG 20 37 10 01 or substitute endorsements providing equivalent coverage. 3. Workers' Compensation coverage as required by the Industrial Insurance laws of the State of Washington. CA Revised 1-2013 Page 2 of 9 40 B. Other Insurance Provision. The Contractor's Automobile Liability and Commercial General Liability insurance policies are to contain, or be endorsed to contain that they shall be primary insurance with respect to the City. Any insurance, self-insurance, or insurance pool coverage maintained by the City shall be excess of the Contractor's insurance and shall not contribute with it. C. Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best rating of not less than A: VII. D. Verification of Coverage. Contractor shall furnish the City with original certificates and a copy of the amendatory endorsements, including but not necessarily limited to the additional insured endorsement, evidencing the insurance requirements of the Contractor before commencement of the work. E. Subcontractors. The Contractor shall have sole responsibility for determining the insurance coverage and limits required, if any, to be obtained by subcontractors, which determination shall be made in accordance with reasonable and prudent business practices. F. Notice of Cancellation. The Contractor shall provide the City and all Additional Insureds for this work with written notice of any policy cancellation, within two business days of their receipt of such notice. G. Failure to Maintain Insurance. Failure on the part of the Contractor to maintain the insurance as required shall constitute a material breach of contract, upon which the City may, after giving five business days notice to the Contractor to correct the breach, immediately terminate the contract or, at its discretion, procure or renew such insurance and pay any and all premiums in connection therewith, with any sums so expended to be repaid to the City on demand, or at the sole discretion of the City, offset against funds due the Contractor from the City. 8. Record Keeping and Reporting. A. The Contractor shall maintain accounts and records, including personnel, property, financial and programmatic records which sufficiently and properly reflect all direct and indirect costs of any nature expended and services performed in the performance of this Agreement and other such records as may be deemed necessary by the City to ensure the performance of this Agreement. B. These records shall be maintained for a period of seven (7) years after termination hereof unless permission to destroy them is granted by the office of the archivist in accordance with RCW Chapter 40.14 and by the City. 9. Audits and Inspections. The records and documents with respect to all matters covered by this Agreement shall be subject at all times to inspection, review or audit by law during the performance of this Agreement. 10. Termination. This Agreement may at any time be terminated by the City giving to the Contractor thirty (30) days written notice of the City's intention to terminate the same. Failure to provide products on schedule may result in contract termination. If the Contractor's insurance coverage is canceled for any reason, the City shall have the right to terminate this Agreement immediately. 11. Discrimination Prohibited. The Consultant, with regard to the work performed by it under this Agreement, will not discriminate on the grounds of race, religion, creed, color, national origin, age, veteran status, sex, sexual orientation, gender identity, marital status, political affiliation or the presence of any disability in the selection and retention of employees or procurement of materials or supplies. CA Revised 1-2013 Page 3 of 9 41 12. Assignment and Subcontract. The Contractor shall not assign or subcontract any portion of the services contemplated by this Agreement without the written consent of the City. 13. Entire Agreement; Modification. This Agreement, together with attachments or addenda, represents the entire and integrated Agreement between the City and the Contractor and supersedes all prior negotiations, representations, or agreements written or oral. No amendment or modification of this Agreement shall be of any force or effect unless it is in writing and signed by the parties. 14. Severability and Survival. If any term, condition or provision of this Agreement is declared void or unenforceable or limited in its application or effect, such event shall not affect any other provisions hereof and all other provisions shall remain fully enforceable. The provisions of this Agreement, which by their sense and context are reasonably intended to survive the completion, expiration or cancellation of this Agreement, shall survive termination of this Agreement. 15. Notices. Notices to the City of Tukwila shall be sent to the following address: City Clerk, City of Tukwila 6200 Southcenter Blvd. Tukwila, Washington 98188 Notices to the Contractor shall be sent to the address provided by the Contractor upon the signature line below. 16. Applicable Law; Venue; Attorney's Fees. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington. In the event any suit, arbitration, or other proceeding is instituted to enforce any term of this Agreement, the parties specifically understand and agree that venue shall be properly laid in King County, Washington. The prevailing party in any such action shall be entitled to its attorney's fees and costs of suit. DA'ThD this 304- day of C , 20 /4. CITY OF TUKWILA r, Jim H/ire TTEST/AUTHENTICATED: ef}t (4,4113 City Clerk, Christy O'Flaherty APPROVED AS TO FORM: t/127 -"C\ Office of the Cit At CA Revised 1-2013 42 to y CO TRACTOR B: Y Susan Musselman, Director Address: 1200 Fifth Avenue. Suite 1220 Seattle. WA 98101-3132 Page 4 of 9 Fxh4-194 -A- Services related to the Financial Planning and Policy Development : • Assist the City in the formulation of Financial and Debt Policies and Administrative Procedures. • Review current debt structure, identifying strengths and weaknesses of structure so that future debt issues can be designed to maximize ability to finance future capital needs. This will include, reviewing existing debt for the possibility of refunding that debt to provide the City with savings. • Analyze future debt capacity to determine the City's ability to raise future debt capital. • Assist the City with the development of the City's financial planning efforts and process by assessing capital needs, identifying potential revenue sources, analyze financing alternatives such as pay-as-you-go, lease/purchasing, short-term vs. long-term financings, assessments and provide analysis of each alternative as required as to the budgetary and financial impact. • Develop, manage and maintain computer models for long-term capital planning which provide for inputs regarding levels of ad valorem and non -ad valorem taxation (if relevant), growth rates by operating revenue and expenditure item, timing, magnitude and cost of debt issuance, and project operating and capital balances, selected operating and debt ratios and other financial performance measures as may be determined by the City. • Attend meetings with City's staff, consultants and other professionals and the City. • Review underwriter's proposals and provide analysis of same to the City. • financial planning and policy development assignments made by the City regarding bond and other financings, and financial policy including budget, tax, enterprise rates, cash management issues and related fiscal policy and programs. • Assist the City in preparing financial presentations for public hearings and/ or referendums. • Provide special financial services as requested by the City. • Services Related to Debt Transactions (Includes short term financings, notes, loans, letters of credit, line of credit and bonds). Upon the request of the City: • • Analyze financial and economic factors to determine if the issuance of debt is appropriate. • Advise as to the various financing alternatives available to the City. • Develop a financing plan in concert with City's staff which would include recommendations as to the approach to and timing series of borrowing. • Assist the City by recommending the best method of sale, either as a negotiated sale, private placement or a public sale. In a public sale, make recommendation as to the determination of the best bid. In the event of a negotiated sale, assist in the solicitation, review and evaluation of any investment banking proposals, and provide advice and information necessary to aid in such selection. • Develop alternatives related to debt transaction including evaluation of revenues available, maturity schedule and cash flow requirements. • Evaluate benefits of bond insurance and/or security insurance for debt reserve fund, if applicable. • Develop credit rating presentation and coordinate with the City the overall presentation to rating agencies, which applicable. • Assist the City in the procurement of other services relating to debt issuance such as printing, paying agent, registrar, etc. CA Revised 1-2013 Page 5 of 9 43 • Identify key bond covenant features and advise as to the financial consequences of provisions to be included in bond resolutions regarding security, creation of reserve funds, flow of funds, redemption provisions, additional parity debt tests, etc.; review and comment on drafts of documents relating to authorization of financing. • Review the requirements and submit analysis to bond insurers, rating agencies and other professionals as they pertain to the City's obligation. • Review the terms, conditions and structure of any proposed debt offering undertaken by the City and provide suggestions, modifications and enhancements where appropriate and necessary to reflect the constraints or current financial policy and fiscal capability. • Coordinate with City's staff and other advisors as respects the furnishing of data for offering documents, it being specifically understood that Financial Advisor is not responsible for the inclusion or omission of any material in published offering documents. • Provide regular updates of tax-exempt bond market conditions and advise the City as to the most advantageous timing for issuing its debt. • Advise the City on the condition of the bond market at the time of sale, including volume, timing considerations, competing offerings, and general economic considerations. • Assist and advise the City in negotiations with underwriters regarding fees, pricing of the bonds and final terms of any security offering, and make in writing definitive recommendations regarding a proposed offering to obtain the most favorable financial terms based on existing market conditions. • Assist the City in selecting an underwriter for a negotiated sale of bonds. Review and oversee the Underwriter's bond marketing plan, review the interest rates, reoffering yields, Underwriter's compensation and other terms and conditions of the sale, and advise the City on the reasonableness of the Underwriter's purchase proposal. • For any competitive sale of bonds, prepare official notice of sale, recommend sale parameters, take steps necessary to ensure broad market exposure of the issue, through the use of newswire services and official statement distribution, and perform additional steps necessary and customary for competitive bond sales. • Coordinate parties to the closing, and ensure wire instructions and transfer amounts are confirmed. • Review (or upon request, prepare) Preliminary Official Statements and final Official Statements prepared on behalf of the City for use in marketing any bonds and meeting regulatory requirements. Other PFM Services. Upon request of the City and subject to separate, mutually acceptable fee structures PFM or its affiliates may provide other services which may include the following: a. Impact fee financial analysis b. Grantsmanship c. Rate analysis d. Management analysis e. Referendum assistance f. Legislative initiatives g. Project assessment analysis h. Implementation of revenue enhancement programs i. Arbitrage and rebate services j. Financial analysis of projects being developed by engineer/ architect / specialized consultant studies k. Negotiate on behalf of the City for proposed projects 1. Services for acquisition of Private Utility m. Public -Private Partnership advisory services n. Investment of bond proceeds, including escrow structuring and procurement o. Arbitrage rebate and post -issuance compliance CA Revised 1-2013 Page 6 of 9 44 Interest rate swap advisory services Management and Budget Consulting services, including: • Multi-year Plan — Provide general analytical support as needed for annual budgetary development, multi-year financial planning, and other various policy initiatives as requested by the City; • Collective Bargaining Support — Provide quantitative and analytical support for the City in collective bargaining through such services as the development of costing models for compensation scenarios, development of workforce cost containment strategies, and delivery of expert testimony in employee interest arbitration proceedings; • Revenue Enhancement — Assist the City in evaluating the fiscal and policy impacts of revenue enhancement options such as tax policy reforms and non -tax revenue adjustments; • Economic Development — Assist the City in evaluating transportation, infrastructure, and general economic development financing options in support of the City's goals; • Cash Flows — Review cash flow projections produced by the City, and, as necessary, suggest and support improvements to the City's cash flow model; and • Performance Enhancement — Deliver additional strategic management consulting services as may be requested by the City in areas related to fiscal improvement, management/productivity reforms, and governmental performance. Such services may include, 'without limitation, assisting the City with the development of analyses and narrative with regard to overall strategy and assumptions, revenue forecasts, and/or expenditure reduction initiatives. Such support may include quantitative analysis, identification of best practices, and/or technical review and quality assurance. CA Revised 1-2013 Page 7 of 9 45 EXHIBIT B - FINANCIAL ADVISORY COMPENSATION For the services described, PFM's professional fees and expenses shall be paid as follows: 1. For services related to financial planning, policy development and financial analysis, PFM shall receive hourly rates as listed below. Fees for support staff are included in the hourly rates for professionals. Services will be billed monthly. Experience Level Hourly Rate Director/Managing Director $295 Senior Managing Consultant $275 Senior Analyst $225 Analyst $195 Associate $175 2. For services related to the issuance of Bonds, PFM will be paid a fee in accordance with the following schedule, based on a rate per $1,000 of financing, for each separate bond issue: For financing up to $20 million: $1.50 per $1,000, with a $15,000 minimum For financing up to $75 million: $30,000 plus $0.75 per $1,000 over $20 million Reimbursable Expenses In addition to fees for services, PFM will be reimbursed for necessary, reasonable, and documented out- of-pocket expenses incurred, including travel, telephone conferencing service, overnight mail, and other ordinary cost and any actual extraordinary cost for graphics, and printing which are incurred by PFM. Appropriate documentation will be provided. Other PFM Services Other PFM Services described in Exhibit A will be subject to separate, mutually acceptable fee structures and may require a separate contract with PFM or its affiliates. Official Statements. The Advisor will coordinate and prepare bond official statements, with compensation based on an additional fee which will depend on the estimated time involved in preparation of the official statement. This cost is estimated at approximately $7,500 to $8,500, depending on complexity of the transaction. Although the Advisor may prepare official statements, the City is primarily responsible for the providing accurate and complete information for inclusion in the official statement, and will be responsible for reviewing the official statement. CA Revised 1.2013 Page 8 of 9 46 EXHIBIT C — INSURANCE STATEMENT Public Financial Management, Inc. ("PFM") has a complete insurance program, including property, casualty, comprehensive general liability, automobile liability and workers compensation. PFM maintains professional liability and fidelity bond coverages which total $15 million and $10 million, respectively. Our Professional Liability policy is a "claims made" policy and our General Liability policy claims would be made by occurrence. Deductibles/SIR: General Liability $0 Automobile $250 comprehensive $500 collision Professional Liability (E&O) $500,000 Financial Institution Bond $75,000 Insurance Company & AM Best Rating Professional Liability (E&O): Financial Institution Bond: General Liability: Automobile Liability: Excess /Umbrella Liability: Workers Compensation & Employers Liability Indian Harbor Insurance Company; (A) Federal Insurance Company; (A++) Great Northern Ins. Company; (A++) Federal Insurance Company Federal Insurance Company Pacific Indemnity Company; (A++) CA Revised 1-2013 Page 9 of 9 47 48 City of Tukwila INFORMATIONAL MEMORANDUM TO: Councilmembers CC: Mayor Ekberg FROM: Peggy McCarthy, Finance Director BY: Craig Zellerhoff, Fiscal Coordinator DATE: October 11 28, 2017 SUBJECT: 2017 August Year to Date Financial Update Summary Allan Ekberg, Mayor The purpose of the 2017 Financial report is to summarize for the City Council the general state of Departmental expenditures and to highlight significant items or trends. The following provides a high-level summary of the Departmental financial performance. The 2017 August YTD report is based on financial data available as of September 28th, 2017, for the reporting period ending August 31st, 2017. Additional details can be found within the attached financial report. Allocated budgets through the reporting period are calculated by analyzing spend patterns in the previous year and allocating the current year budget using the same spend pattern. If a line item had no expenditures in the prior year but a budget in the current year, the allocated budget for the current year would be zero. Departmental Expenditures General fund expenditures totaled $37.7 million as compared to the allocated budget of $41.2 million, which is $3.5 million below budget. Notable variances are as follows: • While the fire department is below the allocated budget by $66 thousand, salaries and benefits exceed budget by $166 thousand. This is attributed to the staffing of the unbudgeted pipeline positions (5 vs 3 in 2016) to maintain minimum staffing levels and backfill for retirements. Overtime is now below allocated budget by $96 thousand, however, spending is $8 thousand greater than 2016 through the same period. Additionally, labor contracts have not yet been settled. While the budget includes a cost - of -living adjustment of 2%, actuals do not reflect contract settlement terms. • TIS department has exceeded budget by $52 thousand. The primary reason is a timing difference in the way the allocated budget is calculated for Professional Services. Year to date spend is 56% compared to 66.67% of the year expired. It is anticipated that by the end of the year, the TIS budget will be within budget. • Park department exceeded budget by $23 thousand. This is a result of the department being fully staffed in 2017 compared to 2016. The department also incurred a higher level of spending on supplies during the first half of the year as they are being more proactive and intentional in the planning and preparation for busier summer months. Expenditures are expected to be lower in the second half of the year. • Transfers from the general fund into capital projects funds through August have not been recorded. Rather than transferring funds automatically, we will be transferring funds into the capital projects funds as needed. 49 INFORMATIONAL MEMO Page 2 • Salaries and benefits are $1.1 million lower than budget through August due to ongoing negotiations with the bargaining units. The following table estimates the additional general fund expenditure through July that could be recorded once contract agreements are approved. It should be noted that the budget reflects 2% COLA as a place -holder when the budget was drafted. Percent Increase Estimated Cost through July 2017 1.5% $332,000 2.0% $442,000 2.5% $553,000 • Rents and leases are below budget by $398 thousand. The primary reason is a timing difference in the way the allocated budget is calculated. A credit was applied in December of 2016 to true -up O&M as well as capital costs at the end of the year. It is anticipated that by the end of the year, rents and leases will be very close to budget rather than under budget. Year to Date Department Expenditures Compared to Allocated Budget (Through August 2017) City Council $225 is $253 Mayor $2,370 Human Resources $448 Finance $516 $2,584 $1,675 $1,918 Attorney I$324 $421 Recreation Community Dev. Municipal Court Police Fire Tech. & Innovation Public Works Park Maintenance Street Maint & Ops Dept 20 50 $2,129 $2,201 $2,136 $2,414 $808 $850 $7,752 $7,819 $1,138 $973 $950 $2,354 $2,520 $2,213 $2,383 $1,543 $11,622 $12,429 $2,875 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000$10,000$11,00G$12,000$13,000314,000 Thousands Year to Date Allocated Budget INFORMATIONAL MEMO Page 3 GENERAL FUND CITY OF TUKWILA GENERAL FUND EXPENDITURES YTD AS OF AUGUST 31, 2017 9/28/2017 13:35 SUMMARY OF EXPENDITURES BY DEPARTMENT BUDGET ACTUAL COMPARISON OF RESULTS 2017 ANNUAL 2017 ALLOCATED 2016 `- 2016 2017 ACTUAL OVEW(UNDER) %CH4NGE ALLOCATED }OGT %SPENT 201612016 2016/2017 01 City Council 366,016 253,070 209,725 221,668 224,757 (28,312) 61% 6% 1% 03 Mayor 4,079,582 2,584,137 2,246,013 2,501,302 2,370,065 (214,072) 58% 11% (5)% 04 Human Resources 706,208 515,804 410,205 468,812 448,382 (67,422) 63% 14% (4)% 05 Finance 2,638,813 1,918,335 1,790,595 1,585,948 1,674,720 (243,615) 63% (11)% 6% 06 Attorney 716,955 420,837 365,162 311,755 323,746 (97,091) 45% (15)% 4% 07 Recreation 3,384,688 2,200,529 1,956,690 2,033,408 2,128,910 (71,619) 63% 4% 5% 08 Community Development 3,693,338 2,413,543 1,887,065 2,119,171 2,135,795 (277,748) 58% 12% 1% 09 Municipal Court 1,307,808 850,073 733,854 763,976 807,536 (42,537) 62% 4% 6% 10 Police 18,288,092 12,429,095 11,195,973 12,030,017 11,621,606 (807,489) 64% 7% (3)% 11 Fire 11,862,568 7,818,848 7,682,578 7,518,990 7,752,013 (66,835) 65% (2)% 3% 12 Technology& Innovation Svcs 2,026,820 1,085,655 686,561 795,950 1,138,152 52,497 56% 16% 43% 13 Public Works 3,802,639 2,519,789 2,230,738 2,454,889 2,354,161 (165,629) 62% 10% (4)% 15 Park Maintenance 1,418,760 950,329 904,169 904,228 972,953 22,624 69% 0% 8% 16 Street Maintenance & Operations 3,109,592 2,383,195 1,896,478 2,256,832 2,212,884 (170,312) 71% 19% (2)% 20 Dept20 5,237,691 2,875,429 2,529,923 2,612,916 1,543,002 (1,332,427) 29% 3% (41)% Total Expenditures 62,639,570 41,218,669 36,725,730 38,579,863 37,708,682 (3,509,987) 60% 5% (2)% Percent o year completed 66.67% 51 INFORMATIONAL MEMO Page 4 GENERAL FUND CITY OF TUKWILA GENERAL FUND EXPENDITURES YTD AS OF AUGUST 31, 2017 912812017 13:35 SUMMARY OF SALARIES AND BENEFITS BUDGET ACTUAL COMPARISON OF RESULTS 2017 ANNUAL 2017 ALLOCATED 2016 2016 2017 ACTUAL OVER/(UNDER) % CHANGE ALLOCATED BDGT %SPENT 2016/2016 2016/2017 11 Salaries 27,560,991 18,366,078 16,947,917 17,540,736 17,805,782 (560,296) 65% 3% 2% 12 Extra Labor 777,897 514,405 437,694 476,772 492,992 (21,412) 63% 9% 3% 13 Overtime 1,632,035 1,111,152 1,198,796 983,105 1,048,035 (63,117) 64% (18)% 7% 15 Holiday Pay 525,583 78,159 4,767 80,154 77,807 (352) 15% 1581% (3)% 21 FICA 1,809,260 1,225,440 1,106,350 1,146,708 1,174,243 (51,197) 65% 4% 2% 22 Pension-LEOFF2 849,253 542,388 522,593 529,913 539,840 (2,549) 64% 1% 2% 23 Pension-PERS/PSERS 1,580,986 1,057,230 772,826 922,962 985,462 (71,767) 62% 19% 7% 24 Industrial Insurance 864,098 538,461 381,754 431,430 411,834 (126,627) 48% 13% (5)% 25 Medical & Dental 5,903,094 3,949,295 3,490,801 3,742,239 3,741,523 (207,772) 63% 7% (0)% 26 Unemployment 13,000 - 1,285 28,991 3,956 3,956 30% 2155% (86)% 28 Uniform/Clothing 10,460 3,176 3,526 1,819 1,788 (1,388) 17% (48)% (2)% Total Salaries and Benefits 41,526,657 27,385,784 24,868,311 25,884,829 26,283,263 (1,102,521) 63% 4% 2% Percent o year corrpleted 66.67% SUMMARY OF SUPPLIES, SERVICES, AND CAPITAL BUDGET ACTUAL COMPARISON OF RESULTS 2017 ANNUAL 2017 ALLOCATE) 2016 2016 2017 ACTUAL OVER/(UNDER%CHANGE ALLOCATED BDGT %SPENT 2016/2016 2016/2017 Transfers 5,237,691 2,875,429 2,529,923 2,612,916 1,543,002 (1,332,427) 29% 3% (41)% 31 Supplies 1,164,823 817,817 746,516 769,325 770,899 (46,918) 66% 3% 0% 34 Items Purchased for resale 22,000 15,841 21,701 15,899 15,307 (534) 70% (27)% (4)% 35 Small Tools 99,818 57,436 191,099 49,382 67,989 10,554 68% (74)% 38% 41 Professional Services 3,266,711 1,840,115 1,574,149 1,637,022 1,624,850 (215,265) 50% 4% (1)% 42 Communication 449,970 244,822 223,594 223,174 246,144 1,322 55% (0)% 10% 43 Travel 192,380 142,834 87,722 99,366 124,996 (17,839) 65% 13% 26% 44 Advertising 51,500 28,972 19,982 15,965 12,539 (16,433) 24% (20)% (21)% 45 Rentals and Leases 2,314,372 1,973,724 1,759,533 1,746,476 1,575,478 (398,246) 68% (1)% (10) % 46 Insurance 886,895 886,895 785,581 810,799 887,617 722 100% 3% 9% 47 Public Utilities 1,893,570 1,494,237 1,258,765 1,441,526 1,543,208 48,971 81% 15% 7% 48 Repairs and Maintenance 732,613 439,926 409,219 421,903 334,815 (105,111) 46% 3% (21)% 49 Miscellaneous 1,562,773 998,454 754,321 668,499 703,550 (294,904) 45% (11)% 5% 51 Inter -Governmental 3,003,792 1,951,716 1,475,146 1,746,381 1,921,395 (30,321) 64% 18% 10% 53 Ext Taxes, Oper. Assess 5 - 48 549 195 195 3908% 1053% (64)% 64 Machinery & Equipment 234,000 64,667 20,120 435,853 53,435 (11,231) 23% 2066% (88)% Total Supplies, Services, and Capital 21,112,913 13,832,885 11,857,419 12,695,034 11,425,419 (2,407,466) 54% 7% (10) % Percent o year completed 66.67% 52 City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance Council Committee FROM: Peggy McCarthy, Finance Director and Jay C Wittwer, Fire Chief BY: Vicky Carisen, Deputy Finance Director CC: Mayor Ekberg DATE: October 11, 2017 SUBJECT: Fire Department Budget Update and Preliminary Year -End Budget Amendment Information ISSUE The discussion below encompasses the Fire Department budget. It also includes a brief discussion of other proposed budget amendments in order to provide context for the Fire Department budget. The Fire Department is currently projected to exceed the 2017 adopted budget largely due to additional pipeline positions authorized by the Council in late 2016 and fewer than anticipated retirements in 2017. BACKGROUND Pipeline Positions Pipeline positions were introduced to the Fire Department in February of 2014. City Council approved up to three pipeline positions in 2014 and an additional two pipeline positions in June of 2016 in anticipation of future retirements. Pipeline positions are unbudgeted and were created to save overtime costs associated with retirements. When a Firefighter retires, it takes six to nine months to hire a Firefighter and have them complete the training academy. The intent of the pipeline positions is to have staff ready to move into the vacated position, thereby eliminating the need to fill the position with overtime. The City has experienced overtime savings due to the pipeline positions; however, the savings were not as much as expected. Pipeline positions that are not filling vacated positions provide an additional cushion between total staffing per shift and minimum staffing of 13. Fire Department Retirements The Fire department's staff enjoys a significant amount of longevity. There are currently 24 Fire personnel, or 34%, that are eligible to retire in three years or less. Retirements have been averaging three a year since 2012. However, through the end of August, there has only been one retirement. When the authorized pipeline positions increased from three to five, it was anticipated that there would be at least three retirements in 2017 and pipeline positions would transfer into the vacated position. 53 54 INFORMATIONAL MEMO Page 2 At the September 19, 2017 Finance Committee meeting, staff briefed the Committee that the Fire Department is expected to be over budget due to the additional pipeline positions approved in 2016 and the lack of retirements that were anticipated to occur in 2017. Additionally, expenditures associated with deployments are unpredictable and in September, fire personnel were deployed to assist with recovery efforts associated with two hurricanes. Staff committed to returning to the Finance Committee with greater detail on a budget amendment for the Fire Department. Additionally, staff committed to providing information on other possible budget amendments. DISCUSSION Projected Year -End — Fire Department At this time, staff is estimating that the Fire Department will exceed their adopted budget by approximately $400 thousand, of which $160 thousand is revenue backed. To address the current over budget situation, staff will be recommending a budget amendment; details on which is provided below. In addition to the budget amendment, staff is taking additional steps to better manage the Fire Department's budget. There has been, and will continue to be, ongoing discussions regarding minimum staffing needs and better management of overtime to stay within budget. After review of the impacts of the two additional pipeline positions on salaries, benefits, and overtime, staff has determined that it would be appropriate to reduce the number of pipeline positions to three. When the next two retirements occur, the pipeline positions will not be filled. The budget amendment for 2018 will help cover costs associated with the pipeline positions until they can be absorbed into the budget. Proposed Budget Amendment — Fire Department Staff is recommending a budget amendment of $400 thousand for the Fire Department consisting of three elements. 1. Costs associated with the two additional pipeline positions authorized in June 2016. Costs for each pipeline position is approximately $120 thousand including wages, benefits, equipment, and training for a proposed amendment of $240 thousand. This element of the amendment will be requested for both 2017 and 2018. 2. Expenditures associated with the deployments related to the hurricanes. Approximately $125 thousand in costs were incurred to deploy fire personnel. These costs are revenue backed so the budget amendment would include not only an adjustment to overtime and related benefits but to revenue as well. Due to the lateness in the year that the deployments occurred, the City will most likely not receive reimbursement until 2018. 3. Additional EMS levy funds to account for costs for providing emergency medical services. The City has requested, and will receive, an additional $35 thousand in EMS levy funds that is expected to be received this year. Both revenue and expenditure lines will be adjusted $35 thousand. Other Proposed Budget Amendments Staff is reviewing budgets and identifying other possible budget amendment requests in addition to the budget amendment for the Fire Department. Staff has currently identified the following possible amendment requests, most of which are housekeeping in nature rather than required: Z:\Council Agenda Items\Finance\10.17.17\Info Memo - Fire Budget 10.17.17.docx INFORMATIONAL MEMO Page 3 1. An amendment to the Council budget to include costs incurred in 2017 related to the contract with Steven M. Golblatt Public Safety Plan Program Management Quality Assurance. 2. An amendment to the Recreation budget for four grants received after the budget was adopted. The amendment is revenue backed. 3. An amendment removing the revenue associated with the sale of the Gregor House. Rather than selling the property, the property will be leased to the Way Back Inn. 4. Add funds to the City Facilities fund (306). This fund is used to account for costs associated with the Public Works Shops facility. When the budget was written, it was anticipated that the City would sell bonds in 2017, however, the earliest bonds will be sold for the Public Works Shops facility will be in 2018. 5. Potential amendment to the Interurban project. 6. True up of Public Works capital projects to actuals as needed in capital project funds. 7. Potential amendment in the Public Safety Plan fund (305) to change the year of purchase for certain apparatus and equipment. 8. Adjust beginning fund balances to actual in various funds. RECOMMENDATION For information only. Z:\Council Agenda Items\Finance\10.17.17\Info Memo - Fire Budget 10.17.17.docx 55 56