HomeMy WebLinkAboutFIN 2020-05-28 COMPLETE AGENDA PACKETCity of Tukwila
Finance Committee
O Verna Seal, Chair
O Kathy Hougardy
O Zak Idan
Distribution:
V. Seal
Mayor Ekberg
K. Hougardy
D. Cline
Z. Idan
R. Bianchi
D. Quinn
C. O'Flaherty
K. Kruller
A. Youn
T. McLeod
L. Humphrey
C. Delostrinos Johnson
SPECIAL MEETING AGENDA
Note special meeting THURSDAY, MAY 28, 2020 — 5:00 PM
day and time. 4 HAZELNUT CeNFERENCE Reem
THIS MEETING WILL NOT BE CONDUCTED AT CITY FACILITIES
BASED ON THE GOVERNOR'S PROCLAMATION 20-28.
THE PHONE NUMBER FOR THE PUBLIC TO LISTEN TO THIS
MEETING IS: 1-253-292-9750, Access Code 575731821#
Item
Recommended Action
Page
1. BUSINESS AGENDA
a. An ordinance authorizing the issuance and sale of a
a. Forward to 6/1 Regular Mtg.
Pg.1
Limited Tax General Obligation Refunding Bond of the
City in the principal amount of not to exceed $2,450,000
to refund the City's outstanding Limited Tax General
Obligation Bonds, 2010b (Taxable Build America Bonds —
Direct Payment) and to pay the cost of issuing the bond.
Vicky Carlsen, Finance Director
b. A contract with McKinstry for assessment and planning
b. Forward to 6/8 C.O.W. and
Pg-67
services for the City of Tukwila 2020 Facility Study.
6/15 Regular Mtg.
Rachel Bianchi, Deputy City Administrator
c. 2020 1st Quarter Fire Department Budget Report.
c. Discussion only.
Pg.89
Jay Wittwer, Fire Chief,
2. MISCELLANEOUS
Next Scheduled Meeting: Monday, June 8, 2020
SThe City of Tukwila strives to accommodate individuals with disabilities.
Please contact the City Clerk's Office at 206-433-1800(TukwilaCityClerk(cbTukwilaWA.gov) for assistance.
City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO:
Finance Committee
FROM:
Vicky Carlsen, Finance Director
CC:
Mayor Ekberg
DATE:
May 20, 2020
SUBJECT: Refund Outstanding 2010B Limited Tax Obligation Bonds
ISSUE
Delegate authority to the Finance Director, through the end of July, to issue limited tax
obligation bonds (LTGO) bonds to refund the City's outstanding 2010B LTGO bonds via a direct
placement process.
BACKGROUND
The City issued $3,970,000 LTGO bonds on July 29, 2010 to pay for improvements to
Southcenter Parkway and purchase emergency response capital equipment. Bonds were
issued with an interest rate ranging from 3.61 % to 5.41 %; interest rates are higher during the
last few years of the repayment schedule. Interest rates for the remaining life of the bonds
range from 4.75% to 5.41 %. Final payment for these bonds is December 2024.
The bonds have a call provision that allows the bonds to be called on any date on or after June
1, 2020. Given that current interest rates are lower than the rate the City is paying on these
bonds, it is the City's best interest to pursue a refunding of these bonds.
Per the City's current debt policy, adopted by Resolution No. 1840, the City will refinance debt
to achieve debt service savings as market opportunities arise.
DISCUSSION
As of May 2020, the outstanding balance of these bonds is $2,330,000 plus total interest of
$383,945.
Refunding these bonds could result in net savings in interest of up to $70 thousand. The debt
could be structured so that most of the savings could be realized in 2020, the fiscal year that is
experiencing the largest deficit due to the pandemic.
The issue would be a direct placement with a bank rather than selling the bonds on the open
market as this would be the most cost effective method of refunding the existing bonds. With a
direct placement, the City would not incur the cost of a bond rating.
An RFP was circulated to banks on May 19, 2020 to determine what banks are interested in
submitting a proposal. Review of the proposals is tentatively scheduled for June 10, 2020 with
an expected closing date of June 24, 2020.
INFORMATIONAL MEMO
Page 2
The draft ordinance delegates authority to the Finance Director, until the end of July, to select
the proposal the is in the best interest of the City (if any) and to approve the interest rate and
terms of the bond within the parameters set forth in the ordinance. Due to the limited time
available before the proposed closing date of June 24, 2020, staff is recommending that this
item go directly to the Regular Council meeting on June 1, 2020.
If a proposal is accepted, the Finance Director will report back to the full Council on the details
of the agreement.
RECOMMENDATION
Council is being asked to approve the ordinance and consider this item at the June 1, 2020
Regular Meeting.
ATTACHMENTS
Draft Ordinance
Request for Proposals, Limited Tax General Obligation Refunding Bond, 2020
2
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, AUTHORIZING THE ISSUANCE
AND SALE OF A LIMITED TAX GENERAL OBLIGATION
REFUNDING BOND OF THE CITY IN THE PRINCIPAL
AMOUNT OF NOT TO EXCEED $2,450,000 TO REFUND THE
CITY'S OUTSTANDING LIMITED TAX GENERAL OBLIGATION
BONDS, 2010B (TAXABLE BUILD AMERICA BONDS —
DIRECT PAYMENT) AND TO PAY THE COST OF ISSUING
THE BOND; PROVIDING THE FORM, TERMS AND
COVENANTS OF THE BOND; DELEGATING THE AUTHORITY
TO APPROVE THE SALE OF THE BOND; PROVIDING FOR
OTHER MATTERS RELATING THERETO; PROVIDING FOR
SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE.
WHEREAS, the City of Tukwila, Washington (the "City"), issued its Limited Tax
General Obligation Bonds, 2010B (Taxable Build America Bonds — Direct Payment) on
July 29, 2010 pursuant to Ordinance No. 2296 passed by the City Council
(the "Council") on July 19, 2020 (the "2010 Ordinance"), in the original principal amount
of $3,970,000 (the "2010 Bonds"); and
WHEREAS, the 2010 Ordinance provides that the City may call the 2010 Bonds
maturing on or after December 1, 2020 (the "Refunded Bonds") for redemption on any
date on or after June 1, 2020, in whole or in part, at the price of par plus accrued
interest, if any, to the date of redemption; and
WHEREAS, after due consideration it appears that it is in the best interest of the
City to authorize the issuance of a Limited Tax General Obligation Refunding Bond to
refund and defease the Refunded Bonds as described herein for debt service savings
and to pay costs of issuance the bond; and
WHEREAS, the City has issued a request for proposals from various financial
institutions to purchase the bond authorized herein; and
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WHEREAS, the Council wishes to delegate authority to the Finance Director
(the "Designated Representative"), for a limited time, to select the proposal that is in the
best interest of the City (if any) and to approve the interest rate and the terms of the
bond within the parameters set by this ordinance; and
WHEREAS, the Council now wishes to authorize the issuance of the bond and sale
of the bond to the successful respondent subject to the terms and conditions set forth in
this ordinance;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
Section 1. Definitions and Interpretation of TermsError! Bookmark not defined..
(a) Definitions. As used in this ordinance, the following words shall have the
following meanings:
Acquired Obligations mean the Government Obligations acquired by the City
under the terms of this ordinance and the Escrow Agreement to effect the defeasance
and refunding of the Refunded Bonds, but only to the extent that the same are acquired
at Fair Market Value.
Bond means the City's Limited Tax General Obligation Refunding Bond, 2020,
authorized to be issued pursuant to the terms of this ordinance.
Bond Counsel means Pacifica Law Group LLP, Seattle, Washington, or an
attorney at law or a firm of attorneys, which is admitted to practice law before the
highest court of any state in the United States of America or the District of Columbia and
nationally recognized and experienced in legal work relating to the issuance of tax-
exempt bonds who is or are selected by the City.
Bond Purchase Contract means a commitment, bond purchase contract, loan
agreement or other contract between the City and the Purchaser, if any, approved by
the Designated Representative pursuant to this ordinance.
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.
Call Date means the date of redemption of the Refunded Bonds as set forth in the
Escrow Agreement.
City means the City of Tukwila, Washington, a municipal corporation duly
organized and existing under the laws of the State of Washington.
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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.
Code means the Internal Revenue Code of 1986 as in effect on the date of
issuance of the Bond or (except as otherwise referenced herein) as it may be amended
to apply to obligations issued on the date of issuance of the Bond, together with
applicable proposed, temporary and final regulations promulgated, and applicable
official public guidance published, under the Code.
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.
Designated Representative means the Finance Director, or his or her designee.
Escrow Agent means U.S. Bank National Association, and its successors and
assigns.
Escrow Agreement means the Escrow Deposit Agreement between the City and
the Escrow Agent to be dated as of the date of closing and delivery of the Bond.
Finance Director means the duly appointed and acting Finance Director of the City
or the successor to such officer.
Fair Market Value means the price at which a willing buyer would purchase the
investment from a willing seller in a bona fide, arm's length transaction, except for
specified investments as described in Treasury Regulation § 1.148-5(d)6), including
United States Treasury obligations, certificates of deposit, guaranteed investment
contracts, and investments for yield restricted defeasance escrows. Fair Market Value
is generally determined on the date on which a contract to purchase or sell an
investment becomes binding, and, to the extent required by the applicable regulations
under the Code, the term "investment" shall include a hedge.
Federal Tax Certificate means the certificate executed by the City setting forth the
requirements of the Code for maintaining the tax exemption of interest on the Bond, and
attachments thereto.
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Government Obligations mean those obligations now or hereafter defined as such
in Chapter 39.53 RCW.
Interest Rate means the fixed rate of interest on the Bond as approved by the
Designated Representative and set forth in the Bond and in the Bond Purchase
Contract.
Maturity Date means the date of final maturity of the Bond, as set forth therein.
Mayor or City Mayor means the elected Mayor of the City, or the successor to the
duties of that office.
Purchaser means the financial institution that is the successful respondent to a
request for proposals to purchase the Bond, selected by the Designated
Representative.
Refunded Bonds mean the outstanding 2010 Bonds.
Registered Owner means the person whose name the Bond is registered to 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.
State means the State of Washington.
2010 Bonds mean the City's Limited Tax General Obligation Bonds, 2010B
(Taxable Build America Bonds — Direct Payment), issued pursuant to the 2010
Ordinance in the original aggregate principal amount of $3,970,000 on July 29, 2010.
2010 Ordinance means Ordinance No. 2296 passed by the Council on July 19,
2010, authorizing the issuance of the 2010 Bonds.
(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 any gender shall mean and include correlative words of all
genders and words importing the singular number shall mean and include the plural
number and vice versa;
(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;
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(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. Findings; Authorization of the Bond.
(a) Findings. The City has established financial policies which provide, as a
general rule, that the City may issue refunding bonds to refund outstanding debt when,
among other reasons, such refunding results in a sufficient net present value savings.
Council approval is necessary prior to the issuance of debt under State law. The
Council hereby finds: (1) it is in the best interest of the City and its taxpayers that it
issue a Limited Tax General Obligation Refunding Bond to refund the outstanding 2010
Bonds for aggregate net present value debt service savings; (2) interest rates are
fluctuating in the current bond market environment, and in order to maximize overall
savings, it is in the best interest of the City to refund the outstanding 2010 Bonds as
soon as possible after the first optional call date (June 1, 2020); (3) the refunding bond
authorized herein will be issued without further Council approval only if the parameters
provided for herein are satisfied; and (4) the adoption of this ordinance and the issuance
of the refunding bond are necessary, routine and consistent with City policy and
Governor Inslee's emergency proclamation issued on March 24, 2020, as extended and
supplemented, suspending portions of the Open Public Meetings Act.
(b) Authorization of Bond. For the purpose of defeasing and refunding the
Refunded Bonds for aggregate net present value savings and paying costs of issuance
of the Bond, the City is hereby authorized to issue and sell a Limited Tax General
Obligation Refunding Bond in the principal amount not to exceed $2,450,000 (the
"Bond").
The Bond shall be a general obligation of the City and shall be designated "City of
Tukwila, Washington, Limited Tax General Obligation Refunding Bond, 2020" or other
such designation as set forth in the Bond and approved by the Designated
Representative. 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. 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 and in the Bond Purchase Contract. Principal of and
interest on the Bond shall be payable at the times and in the amounts as set forth in the
Bond Purchase Contract and in the payment schedule attached to the Bond.
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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.
(c) Transfer or Exchange of Registered Ownership. The Bond shall not be
transferrable without the consent of the City except as provided in the Bond and in the
Bond Purchase Contract.
(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.
(e) Additional Provisions. The Bond will not be registered with The Depository
Trust Company, New York, New York, or any other securities depository. No official
statement, prospectus, offering circular or other offering statement containing material
information with respect to the City or the Bond will be provided in connection with the
issuance of the Bond; the Bond will be unrated, and the Bond will not be assigned a
CUSIP number.
Section 4. Right of Prepayment. The City may prepay the Bond as set forth in
the Bond Purchase Contract. If the Bond is prepaid in full, interest shall cease to accrue
on the date such prepayment occurs.
Section 5. Form of Bond. The Bond shall be in substantially the form set forth in
Exhibit A, which is incorporated herein by this reference.
Section 6. Execution of Bond. 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. Only such Bond as shall bear thereon a Certificate
of Authentication in the form set forth in Exhibit A, 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.
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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 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) Refunding Plan. For the purpose of realizing overall debt service savings, the
City proposes to refund and defease the Refunded Bonds as set forth herein. Proceeds
of the Bond shall be deposited with the Escrow Agent pursuant to the Escrow
Agreement to be used immediately upon receipt thereof to defease the Refunded Bonds
as authorized by the 2010 Ordinance and to pay costs of issuance of the Bond.
The proceeds of the Bond deposited with the Escrow Agent shall be used to
defease the Refunded Bonds and discharge the obligation thereon by either being held
uninvested as cash or by the purchase of Acquired Obligations bearing such interest
and maturing as to principal and interest in such amounts and at such times which,
together with any necessary beginning cash balance, will provide for the payment of
interest on the Refunded Bonds on the Call Date and the redemption price of the
Refunded Bonds on the Call Date. Such Acquired Obligations, if any, shall be
purchased at a yield not greater than the yield permitted by the Code and regulations
relating to acquired obligations in connection with refunding the bond issues.
(b) Escrow Agent; Escrow Agreement. U.S. Bank National Association is hereby
appointed as Escrow Agent. A beginning cash balance, if any, and the Acquired
Obligations shall be deposited irrevocably with the Escrow Agent in an amount sufficient
to defease and redeem the Refunded Bonds. The proceeds of the Bond remaining after
acquisition of the Acquired Obligations, if any, and provision for the necessary
beginning cash balance shall be used to pay expenses of the acquisition and
safekeeping of the Acquired Obligations and costs of issuance of the Bond and the
administrative costs of the refunding. In order to carry out the purposes of this section,
the Designated Representative is authorized and directed to execute and deliver this
Escrow Agreement to the Escrow Agent.
(c) Call for Redemption of the 2010 Bonds. The City hereby sets aside available
funds of the City and sufficient funds out of the purchase of the Acquired Obligations
from proceeds of the Bond to make payments described above. The City further calls
the Refunded Bonds for redemption on the Call Date in accordance with the provisions
of the 2010 Ordinance. Said defeasance and call for redemption of the Refunded Bonds
shall be irrevocable after the issuance of the Bond and delivery of cash and/or Acquired
Obligations to the Escrow Agent. The Escrow Agent is hereby authorized and directed
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to provide for the giving of notice of defeasance and/or redemption of the Refunded
Bonds in accordance with the applicable provisions of the 2010 Ordinance. The Escrow
Agent is hereby authorized and directed to pay to the paying agent for the Refunded
Bonds sums sufficient to pay, when due, the payments specified in this section.
Section 8. Tax Covenants. The City will take all actions necessary to assure the
exclusion of interest on the Bond from the gross income of the owners of the Bond to
the same extent as such interest is permitted to be excluded from gross income under
the Code as in effect on the date of issuance of the Bond, including but not limited to the
following:
(a) Private Activity Bond Limitation. The City will assure that the proceeds of the
Bond are not so used as to cause the Bond to satisfy the private business tests of
Section 141(b) of the Code or the private loan financing test of Section 141(c) of the
Code.
(b) Limitations on Disposition of Projects. The City will not sell or otherwise
transfer or dispose of: (i) any personal property components of the projects refinanced
with proceeds of the Bond other than in the ordinary course of an established
government program under Treasury Regulation § 1.141-2(d)(4); or (ii) any real property
components of the projects, unless it has received an opinion of Bond Counsel to the
effect that such disposition will not adversely affect the treatment of interest on the Bond
as excludable from gross income for federal income tax purposes.
(c) Federal Guarantee Prohibition. The City will not take any action or permit or
suffer any action to be taken if the result of such action would be to cause the Bond to
be "federally guaranteed" within the meaning of Section 149(b) of the Code.
(d) Rebate Requirement. The City will take any and all actions necessary to
assure compliance with Section 148(f) of the Code, relating to the rebate of excess
investment earnings, if any, to the federal government, to the extent that such section is
applicable to the Bond.
(e) No Arbitrage. The City will not take, or permit or suffer to be taken, any action
with respect to the proceeds of the Bond which, if such action had been reasonably
expected to have been taken, or had been deliberately and intentionally taken, on the
date of issuance of the Bond would have caused the Bond to be an "arbitrage bond"
within the meaning of Section 148 of the Code.
(f) Registration Covenant. The City will maintain a system for recording the
ownership of the Bond that complies with the provisions of Section 149 of the Code until
the Bond has been surrendered and canceled.
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(g) Record Retention. The City will retain its records of all accounting and
monitoring it carries out with respect to the Bond for at least three years after the Bond
matures or is redeemed (whichever is earlier); however, if the Bond is redeemed and
refunded, the City will retain its records of accounting and monitoring at least three
years after the earlier of the maturity or redemption of the obligations that refunded the
Bond.
(h) Compliance with Federal Tax Certificate. The City will comply with the
provisions of any Federal Tax Certificate with respect to the Bond. In the event of any
conflict between this section and the Tax Certificate, the provisions of the Tax
Certificate will prevail.
(i) Bank Qualification. The City hereby designates the Bond for purposes of
paragraph (3) of Section 265(b) of the Code and represents that not more than
$10,000,000 aggregate principal amount of obligations the interest on which is
excludable (under Section 103(a) of the Code) from gross income for federal income tax
purposes (excluding (i) private activity bonds, as defined in Section 141 of the Code,
except qualified 501(c)(3) bonds as defined in Section 145 of the Code; and (ii) current
refunding obligations to the extent the amount of the refunding obligation does not
exceed the outstanding amount of the refunded obligation), has been or will be issued
by the City, including all subordinate entities of the City, during the calendar year 2021.
The covenants of this Section 8 will survive payment in full or defeasance of the
Bond.
Section 9. Pledge of Funds and Credit; General Obligation. 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.
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.
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
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and collection of said taxes and for the prompt payment of the principal of and interest
on the Bond when due.
Section 10. Sale of the Bond. The Council has determined it would be in the best
interest of the City to delegate to the Designated Representative for a limited time the
authority to approve the final terms of the Bond subject to the provisions of this
ordinance. The Designated Representative has solicited bond purchaser proposals and
is hereby authorized to select the Purchaser that submits the proposal that is in the best
interest of the City. The Bond shall be sold to the Purchaser pursuant to the terms of
the Bond Purchase Contract.
Subject to the terms and conditions set forth in this Section 10, the Designated
Representative is hereby authorized to select the Purchaser, to approve the dated date
of the Bond, principal payment dates, interest payment dates, redemption/prepayment
provisions, the Maturity Date, and the Interest Rate for the Bond, to approve and
execute the Bond Purchase Contract, to agree to any additional terms and covenants
that are in the best interest of the City and consistent with this ordinance, and to
execute the sale of the Bond to the Purchaser, provided that:
(a) the principal amount of the Bond does not exceed $2,450,000,
(b) the Maturity Date for the Bond is no later than December 1, 2024,
(c) the Bond is sold at a price of not less than 98% of par,
(d) the true interest cost for the Bond does not exceed 2.0%, and
(e) the Bond is sold for a price that results in a minimum aggregate net present
value debt service savings over the Refunded Bonds (calculated by deducting
scheduled federal subsidy payments with respect to the Refunded Bonds from annual
debt service and assuming no future sequestration of such payments) of at least 1.0%.
Following the sale of the Bond, the Designated Representative shall provide a
report to Council describing the sale and final terms of the Bond approved pursuant to
the authority delegated in this section.
The authority granted to the Designated Representative by this Section 10 shall
expire on August 1, 2020. If the Bond has not been sold by August 1, 2020, the
authorization for the issuance of the Bond shall be rescinded, and the Bond shall not be
issued nor its sale approved unless such Bond shall have been re -authorized by
ordinance of the Council. The ordinance re -authorizing the issuance of the sale of such
Bond may be in the form of a new ordinance repealing this ordinance in whole or in part
or may be in the form of an amendatory ordinance.
Upon passage and approval of this ordinance, the proper officials of the City
including the Designated Representative, the Mayor, the City Administrator and the City
Clerk are authorized and directed to undertake all action necessary for the prompt
execution and delivery of the Bond to the Purchaser thereof and further to execute all
closing certificates, agreements, and documents required to effect the closing and
delivery of the Bond in accordance with the terms of the Bond Purchase Contract.
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Section 11. Ongoing Disclosure; Covenants. The Bond is exempt from ongoing
disclosure requirements of the Rule.
The City may agree to provide the Purchaser certain financial or other information
and agree to such covenants as determined to be necessary by the Designated
Representative and as set forth in the Bond Purchase Contract and approved by the
Designated Representative.
Section 12. 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.
Section 13. 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 14. Corrections by 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.
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PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at
a Regular Meeting thereof this this day of )2020.
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:
Attachment: Exhibit A — Form of Bond; Certificate of Authentication and Registration
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Page 12 of 12
NO. R-1
Exhibit A
Form of Bond
[TRANSFER RESTRICTIONS]
UNITED STATES OF AMERICA
§1
STATE OF WASHINGTON
CITY OF TUKWILA
LIMITED TAX GENERAL OBLIGATION REFUNDING BOND, 2020
INTEREST RATE:
MATURITY DATE:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
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 and to pay interest thereon from the date of delivery, or the
most recent date to which interest has been paid or duly provided for, at the Interest
Rate set forth above (the "Interest Rate"). Interest on this bond shall accrue from its
dated date until paid and shall be computed per annum on the principal amount
outstanding on a 30/360 basis. Principal of and accrued interest on this bond shall be
payable on the dates set forth in the payment schedule attached hereto.
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 provide funds to refund
certain outstanding general obligations bonds of the City and to pay costs of issuance.
Capitalized terms used in this bond have the meanings given such terms in the Bond
Ordinance.
[Prepayment provisions]
This bond has/has not been designated by the City as a "qualified tax-exempt
obligation" within the meaning of Section 265(b) of the Internal Revenue Code of 1986,
as amended.
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15
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.
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 City Clerk, as of this day of
)2020.
[SEAL]
ATTEST:
Christy O'Flaherty, MMC, City Clerk
A-2
CITY OF TUKWILA, WASHINGTON
Z
Allan Ekberg, Mayor
16
CERTIFICATE OF AUTHENTICATION AND REGISTRATION
This bond is the City of Tukwila, Limited Tax General Obligation Refunding Bond,
2020, 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
2020
A-3
Finance Director
I
in
N
Request for Proposals
City of Tukwila, Washington
Limited Tax General Obligation Refunding Bond, 2020
May 19, 2020
Introduction
The City of Tukwila, Washington (the "City") is requesting proposals for a Limited Tax General Obligation
Refunding Bond, 2020 (the "Bond") in accordance with the Proposed Financing Terms set forth below. If
issued, proceeds of the Bond will be used to refund, on a current basis, the City's outsanding Limited Tax
General Obligation Bonds, 2010B (Taxable Build America Bonds — Direct Payment), which are callable on
June 1, 2020 (callable par amount of $2,330,000).
The purchaser will be provided with an opinion from the City's bond counsel, Pacifica Law Group LLP,
relating to the City's authority to issue the Bond, enforceability of Bond, and its tax-exempt status. The
Bond will not be rated; however, the City's outstanding limited tax general obligation bonds carry a rating
of "AA+" (stable outlook) from S&P Global Ratings (rating report dated October 1, 2019).
By providing a proposal, each proposer is agreeing to the Proposed Financing Terms herein, and is
acknowledging the Schedule of Events set forth below. Each proposal must state an interest rate to be
offered, and, if subject to adjustment prior to Bond closing, the methodology for such adjustment. Terms
of each proposal should be firm for closing through July 15, 2020.
Schedule of Events
The following sets forth the expected time schedule for events relating to the proposed financing
Request for Financing Proposals Distributed...................................................................................... May 19
City Council Meeting to consider Bond Ordinance........................................................................ June 1
Purchaser Proposals Due (3:00 p.m. Pacific Time)........................................................................ June 5
Review of and acceptance of winning proposal by the City.......................................................... By June 10
ClosingDate....................................................................................................................................... June 24
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Proposed Financing Terms
Closing Date:
Principal Amount:
Tax Status:
Final Maturity:
Interest:
June 24, 2020 (estimate)
$1,995,000 (estimate); not -to -exceed $2,450,000
Tax-exempt; bank qualified
December 1, 2024 (4 years). Principal payments are estimated as shown in the
following table; however, principal payment amounts are subject to adjustment
based on the final interest rate of the Bond.
Payment Date
Principal
12/1/2021
$490,000
12/1/2022
495,000
12/1 /2023
500,000
12/1 /2024
510,000
Total:
$1,995,000
Note: Preliminary; subject to change
Interest will be payable semi-annually with interest due on June 1 and December
1, commencing December 1, 2020. The City will only consider fixed rates of
interest.
Purpose: To refund, on a current basis, the City's outstanding Limited Tax General
Obligation Bonds, 2010B (Taxable Build America Bonds — Direct Payment), which
were originally issued to finance the acquisition and construction of Southcenter
Parkway improvements, the acquisition and installation of emergency
preparedness facilities, fixtures, equipment, and information technology and
software.
Security: The Bond is a limited tax general obligation of the City. For as long as the Bond
is outstanding, the City has irrevocably pledged to include in its budget and levy
taxes annually, within the constitutional and statutory limitations provided by law
without a vote of the electors of the City, on all of the taxable property within the
City in an amount sufficient, together with other money legally available and to be
used therefor at the discretion of the City Council, to pay when due the principal
of and interest on the Bond. The City irrevocably pledges its full faith, credit and
resources to the annual levy and collection of such taxes and for the prompt
payment of such principal and interest. The Bond does not constitute a debt or
indebtedness of King County, the State of Washington, or any other political
subdivision thereof other than the City.
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Financial and Other Information
To assist in the preparation of proposals, links to the City's most recent official statement (2019), and the
City's audited financial statements for the years 2014 through 2018 may be found below. These documents
are dated as of their respective dates and do not reflect subsequent events.
1. Audited Financial Statements 2018:
https://www.tukwilawa.gov/wp-content/uploads/Fin-Current-CAFR.Pdf
2. Audited Financial Statements 2017:
https://www.tukwilawa.gov/wp-content/uploads/Fin-CAFR 2017.pdf
3. Audited Financial Statements 2016:
https://www.tukwilawa.gov/wp-content/uploads/Fin-CAFR 2016.pdf
4. Audited Financial Statements 2015:
https://www.tukwilawa.gov/wp-content/uploads/Fin-CAFR 2015.pdf
5. Audited Financial Statements 2014:
https://www.tukwilawa.gov/wp-content/uploads/Fin-CAFR 2014.pdf
Limited Tax General Obligation Bonds, 2019 (Official Statement): https://emma.msrb.org/ES1428030.pdf
Informational Memoranda. The 2019 novel coronavirus ("COVID-19") pandemic currently is affecting many
parts of the world, including the State and the local region, including the City. City staff has prepared two
memoranda to brief its Mayor and City Council on the financial impacts of COVID-19 and the City's
response. These memoranda are public documents, are available to the public on the City's website, and
are attached to this RFP for the convenience of the reader. The memoranda include:
1. Memo: Budget Impacts due to COVID-19 Pandemic (Exhibit A)
2. Memo: Decision Tree for Financial Impacts of COVID-19 (Exhibit B)
The information contained in these exhibits speak only of their dates, has been compiled from sources
considered to be reliable, and is subject to change without notice. The City cannot predict the duration and
extent of the COVID-19 public health emergency, or quantify the magnitude of the impact on the State and
regional economy or on the other revenues and expenses of the City.
Cautionary Note. In the preparation of the projections contained in the attached exhibits, the City has made
certain assumptions with respect to conditions that may occur in the future. Although the City believes these
assumptions are reasonable for the purpose of the projections, they are dependent upon future events, and
actual conditions may differ from those assumed. To the extent actual future events or conditions differ from
those assumed by the City or provided to the City by others, the actual results will vary from those projected.
Certain statements contained in this RFP do not reflect historical facts, but rather are forecasts and
"forward -looking statements." No assurance can be given that the future results discussed herein will be
achieved, and actual results may differ materially from the forecasts shown. In this respect, the words
"estimate," "project," "anticipate," "expect," "intend," "believe" and similar expressions are intended to
identify forward -looking statements. The achievement of certain results or other expectations contained in
forward -looking statements involves known and unknown risks, uncertainties and other factors that may
cause actual results, performance or achievements described to be materially different from any future
results, performance or achievements expressed or implied by such forward -looking statements. Such
risks and uncertainties include, among others, changes in regional, domestic and international political,
social and economic conditions, federal, state and local statutory and regulatory initiatives, litigation,
technological change, seismic events, and various other events, conditions and circumstances, many of
which are beyond the control of the City. All estimates, projections, forecasts, assumptions and other
21
forward -looking statements are expressly qualified in their entirety by the cautionary statements set forth in
this RFP. These forward -looking statements speak only as of the date they were prepared. The City does
not plan to issue any updates or revisions to those forward -looking statements if or when their expectations
or events, conditions or circumstances on which such statements are based occur and specifically disclaims
any such obligation.
Nothing contained in this RFP is, or should be construed as, a representation by the City that this RFP,
including the documents attached hereto or referenced herein, comprises all of the information that may be
material to a decision to invest in, hold, or dispose of any City debt. The information and expressions of
opinions herein are subject to change without notice, and the delivery of this RFP does not, under any
circumstances, create any implication that there has been no change in the affairs of the City or in the other
matters described herein since the dates as of which such information is provided.
If your firm is interested in providing a proposal to the City, please include the requested information to be
submitted by the date shown in the Schedule of Events.
Proposals should clearly state: the proposed interest rate of the Bond (and methodology for such
adjustment, if subject to change before closing); other fees and costs charged by purchaser (if any);
prepayment terms; conditions (if any); and concurrence with the Schedule of Events set forth above.
The City reserves the right to seek clarification or negotiate modifications with one or more proposing firms,
if needed to meet the City's needs.
Proposals will be evaluated based on responses to the information requested herein. The City will consider
all information provided in response to this request in making its selection. The City further reserves the
right, in its sole discretion, to select the proposal that is in the best interest of the City or to reject all
proposals.
All proposals will be considered firm proposals, and may not be changed from the date and time of
submission through the dates of closing and settlement as set forth in the schedule above.
The Purchaser will be expected to sign a purchaser letter and issue price certificate in substantially the
forms attached. The Bond will not be registered with the Securities and Exchange Commission or any other
regulatory body. Accordingly, the Bond will not be transferable unless a subsequent transfer is exempt from
the registration requirements under the Act and as provided in the form of purchaser letter, a copy of which
is attached. Investors should consult with their counsel as to the applicable requirements for an investor to
avail itself of any exemption under the Act. No CUSIP number will be assigned to the Bond unless
requested or unless a CUSIP is required by Rule G-34 of the Municipal Securities Rulemaking Board, as
amended.
This is not a commitment.
Representation of Present Intent to Hold:
By submitting a bid, the purchaser represents that it has a present intent to hold the Bond subject to this
transaction to maturity, earlier redemption, or for its loan portfolio, and has no present intention of reselling
or otherwise disposing of all or a part of such Bond. Purchaser acknowledges that PFM Financial Advisors
LLC ("Municipal Advisor" to the City) is relying on the foregoing representation and based on this
representation this transaction meets the requirements for being a qualifying exception for purposes of
MSRB Rule G-34, and the Municipal Advisor is excepted and released from the requirement to request a
CUSIP assignment on behalf of the City pursuant to MSRB Rule G-34 for the Bond.
Proposals are to be submitted by e-mail to the City's financial advisor, PFM, at sea-advisors(o)pfm.com.
Please contact Duncan Brown (brownd@pfm.com or 206-858-5367) or Steven Amano (amanos@pfm.com
or 206-858-5366) with any questions or if you require additional information.
22
(1)
Proposed Form of Purchaser Letter
[Purchaser's Letterhead]
12020
City of Tukwila
Tukwila, Washington
RE: City of Tukwila, Washington, Limited Tax General Obligation Refunding Bond, 2020
(the "Bond")
Ladies and Gentlemen:
The undersigned hereby represents , a
(the "Purchaser"), hereby acknowledges receipt of the above -referenced Bond dated , 2020,
issued in the principal amount of $ . The undersigned acknowledges that the Bond was issued
pursuant to Ordinance _ of the City of Tukwila, Washington (the "Bond Ordinance"). Capitalized terms
used in this letter have the meanings given such terms in the Bond Ordinance.
In connection with the acquisition of the Bond by the Purchaser, the Purchaser hereby makes the
following representations upon which you may rely:
1. The Purchaser is an institutional investor who is an accredited investor (as defined under
paragraph 1, 2, 3, or 7 of Rule 501(a) of the Securities Act of 1933 (the "Act").
2. The Purchaser has sufficient knowledge and experience in financial and business matters,
including purchase and ownership of governmental obligations, to be able to evaluate the risks and merits
of the loan represented by its purchase of the Bond, and its net worth and available assets are such that it is
able to bear the economic risk of its purchase of the Bond. The Purchaser is able to bear the economic risk
of the investment represented by its purchase of the Bond.
3. The Purchaser understands that the Bond is a general obligation of the City payable as set
forth in the Bond Ordinance. The Purchaser acknowledges that no property, credit enhancement, or other
security has been pledged to the payment of principal of and interest on the Bond.
4. The Purchaser understands that no official statement, prospectus, offering circular or other
offering statement containing material information with respect to the City or the Bond is being issued, that
the Bond is unrated, and that, with due diligence, it has made its own inquiry and analysis with respect to
the City, the Bond and the security therefor, and other material factors affecting the security for and payment
of the Bond, and is relying solely on such inquiry and analysis in its purchase of the Bond.
5. The Purchaser acknowledges that it has either been supplied with or been given access to
information, including financial statements and other financial information, to which a reasonable investor
would attach significance in making investment decisions, and the Purchaser has had the opportunity to ask
questions and receive answers from knowledgeable individuals and organizations concerning the City, the
use of proceeds of the Bond and the Bond and the security therefor so that, as a reasonable investor, the
Purchaser has been able to make its decision to purchase the Bond.
23
6. The Purchaser acknowledges that it is purchasing the Bond for investment for its own
account and not with a present view toward resale or the distribution thereof, in that it does not now intend
to resell or otherwise dispose of all or any part of its interests in the Bond. The Purchaser acknowledges
that the Bond shall not be transferable without the consent of the City unless (a) the Purchaser's corporate
name is changed and the transfer is necessary to reflect such change; (b) the transferee is a successor in
interest of the Purchaser by means of a corporate merger, an exchange of stock, or a sale of assets; or (c)
the transferee is an institutional investor who is an accredited investor (as defined under paragraph 1, 2, 3,
or 7 of Rule 501(a) of the Act, and such transferee executes a purchaser's letter substantially similar to this
letter. The Purchaser also acknowledges that any transfer of the Bond that fails to comply with this
provision and the transfer limitations on the Bond contained in the Bond Ordinance shall be null and void.
7. The Purchaser understands that the Bond is an exempted security under the Act and that
registration is not legally required as of the date hereof, and further understands that the Bond (a) is not
being registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state,
(b) will not be listed in any stock or other securities exchange, (c) will not carry a rating from any rating
agency, and (d) will be issued in a single denomination of $[ �, which may not be readily
marketable.
8. The Purchaser has had the opportunity to consult with and be advised by legal counsel as
to the significance of this letter and it has satisfied itself that the Bond is a lawful investment for it under
all applicable laws.
Very truly yours,
24
Certificate of Purchaser
The undersigned duly authorized representative of
certifies in good faith as of the issue date for the
Required for all private placements:
(the "Bond") that:
(the "Purchaser") hereby
1. The Purchaser is paying the purchase price of $ (the "Issue Price") for the Bond,
equal to the par amount of the Bond. The Bond is not being issued in exchange for property.
Or The Purchaser is paying the purchase price of $ (the "Issue Price") for the Bond,
equal to the par amount of the Bond less original issue discount in the form of an origination fee of
$ paid by the Issuer. The Bond is not being issued in exchange for property.
2. The Purchaser is not acting as an Underwriter with respect to the Bond. The Purchaser has
no present intention to sell, reoffer, or otherwise dispose of the Bond (or any portion of the Bond or any
interest in the Bond). The Purchaser has not contracted with any person pursuant to a written agreement to
have such person participate in the initial sale of the Bond, and the Purchaser has not agreed with the Issuer
pursuant to a written agreement to sell the Bond to persons other than the Purchaser or a related party to the
Purchaser.
Public means any person (including an individual, trust, estate, partnership, association, company,
or corporation) other than an Underwriter or a related party to an Underwriter. The term "related party" for
purposes of this certificate generally means any two or more persons who have greater than 50% common
ownership, directly or indirectly.
Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with
the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bond to the
Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person
described in clause (i) of this paragraph to participate in the initial sale of the Bond to the Public (including
a member of a selling group or a party to a retail distribution agreement participating in the initial sale of
the Bond to the Public).
Loan fee that is not OID:
The Purchaser is being paid a fee (the "Loan Fee") of $ with respect to the Bond. The
Loan Fee is a fee for the payment of services or property provided by the Purchaser and does not represent
a payment in the nature of points.
If Bank is providing 8038 calculations:
The computation of the yield of the Bond for purposes of Section 148 of the Internal Revenue Code
of 1986, as amended (the "Code"), the weighted average maturity of the Bond for federal tax Form 8038-
G, are all set forth in the attached Schedules. We have computed yield as the discount rate that, when used
in computing the present value of all principal and interest payments to be made under the Bond from the
date of issuance, to maturity, produces an amount equal to the aggregate Issue Price; provided that, the
Issuer is assumed to exercise or not exercise an option or combination of options (including an optional
redemption provision) in a manner that minimizes yield on the Bond and a holder is assumed to exercise or
not exercise an option or combination of options in a manner that maximizes yield on the Bond. The
weighted average maturity of the Bond is the sum of the products of the Issue Price of the Bond and the
25
number of years to maturity (taking into account mandatory redemptions), divided by the Issue Price of the
Bond.
To the extent that we provided certain computations that show a yield, issue price, weighted averae
maturity and certain other information with respect to the Bond, as shown in the attached Schedules, these
computations are based on our understanding of directions that we have received from Bond Counsel
regarding interpretation of the applicable law. We express no view regarding the legal sufficiency of any
such computations or the correctness of any legal interpretation made by Bond Counsel. Nothing herein
represents our interpretation of any laws or regulations under the Code.
The Issuer may rely on the statements made herein in connection with making the representations
set forth in the Federal Tax Certificate and in its efforts to comply with the conditions imposed by the Code
on the exclusion of interest on the Bond from the gross income of their owners. Bond Counsel also may
rely on this certificate for purposes of its opinion regarding the treatment of interest on the Bond as
excludable from gross income for federal income tax purposes. We acknowledge that Bond Counsel's
opinion applies to amounts properly treated as interest on the Bond and does not apply to fees, charges or
contingent payments that may be paid with respect to the Bond. In addition, we acknowledge that if the
terms of the Bond are modified after the Issue Date, such modification may result in a reissuance which
could have an adverse effect on the tax-exempt status of the Bond. Capitalized terms used but not defined
herein have the meanings given those terms in the Federal Tax Certificate.
Dated:
[Purchaser]
26
Page 8 of 8
Memo to the City of Tukwila Finance Committee
Budget Impacts due to COVID-19 Pandemic
27
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TO: Finance Committee
FROM: Vicky Carlsen, Finance Director
CC: Mayor Ekberg
DATE: March 31, 2020
SUBJECT: Budget Impacts due to COVID-19 Pandemic
Updated for May 4, 2020 Regular Meeting
ISSUE
Financial impacts of the COVID-19 pandemic.
DISCUSSION
Staff has been working on a daily basis to evaluate and analyze the financial impacts to
the City of Tukwila's budget as a result of the ongoing coronavirus pandemic. This memo
is to share with the Council current thinking and potential next steps associated with this
global issue.
I want to start with a shared recognition that there are difficult choices ahead as we deal
with lost and delayed revenues. The organization is here to serve the Tukwila residents,
businesses and broader communities and we committed to moving forward through
process with our City values of Caring, Professional and Responsive at the forefront of
our work. We also understand that there may be additional impacts to employees. As we
approach what we hope is a new, but relatively short-term, fiscal reality we remain
committed to being transparent, creative, and empathetic as we identify solutions that
preserve City services and, as much as possible, as many positions that are feasible.
Further, we are committed to working with our employees and labor partners in this effort.
Because there is so much uncertainty with regard to the duration of this pandemic, as
well as how long businesses will be closed, a number of assumptions have been made
regarding impacts to general fund revenue. As new information is received and when
there is a better idea of when the pandemic will end, we will be able to better predict the
full impact of this emergency.
We can partially identify revenue impacts through June. However, estimating financial
impacts for the second half of the year will depend greatly on when the pandemic is over
and how quickly the economy can recover. At this time, there is not enough information
to predict what the second half of 2020 could look like.
29
INFORMATIONAL MEMO
Page 2
That said, our assumptions are as follows:
• Non -essential Businesses will be shut down into May
• When businesses reopen, it will take some time to return to normal
• We expect very little sales tax to be remitted during March and April given the "Stay
Home, Stay Healthy" order
• Property tax deadlines have been extended to June 1 for residential and commercial
properties who pay property taxes themselves (property taxes paid through
mortgage companies will still be required to be remitted on time). It is unknown how
many taxpayers pay property taxes themselves in the City, but payment delays will
affect the City's cash flows
• Uncertainty regarding utility customer payments which would impact interfund utility
tax
• Sales tax revenue is received two months after it is earned. We will not know the
true impacts on sales tax until May and June
• Impacts of lost and deferred revenue will create cash flow issues
Financial impacts affecting the City are broken down into two categories: Lost Revenue
and Delayed Revenue.
Lost Revenue
This category includes revenue that will forever be lost due to businesses and
programming closed down. Each month that businesses are closed will result in well over
$1 million in lost revenue. With the information we have today, the following chart
estimates lost revenue each month through June. March has been calculated as a partial
month because systematic closures did not occur until mid -month. Other miscellaneous
revenue in the last row include a myriad of other small revenue sources including interest
earnings, donations, court fines, permits, licenses, etc. Again, the full impacts to March
revenue will not be known until the latter part of May.
Potential Lost Revenue
Admissions Tax
Gambling Tax
TCC Programming
TCC Rentals
Sales Tax
Mall
Retail (excluding Mall)
Accomodation & Food Service (excluding Mall)
Entertainment, Recreation (excluding Mall)
Other sales tax categories and other misc. rev
Total
March
April
May
June
66,000
85,000
97,000
75,000
-
500,000
350,000
350,000
23,000
57,000
40,000
37,000
44,000
26,000
21,000
46,000
167,500
300,000
335,000
350,000
253,500
442,000
348,000
390,000
39,500
70,000
75,000
82,000
11,500
20,000
26,000
28,000
500,000
500,000
258,000
292,000
1,105, 000
2,000,000
1,550,000
1,650,000
30
INFORMATIONAL MEMO
Page 3
Cumulative impact of Lost Revenue is as follows:
March only
$1,105,000
March - April
$3,105,000
March - May
$4,655,000
March - June
$6,305,000
Delayed Revenue
The second category includes revenue that the City will most likely receive, but at a later
time, once economic activity has returned to normal. It is unknown when the delayed
revenue would be received by the City.
With a high rate of unemployment caused by businesses closing, many utilities are
waiving late fees and not shutting off utilities to customers until the emergency is over.
We have also made the determination to not undertake either commercial or residential
shut off as this time, and have suspended late fees associated with utility nonpayment.
This could result in utility customers, including businesses, paying their bills late, which
would result in a delay in receiving utility tax revenue.
As noted above, an extension for property tax payments has been extended to June 1st
for residential and commercial property owners that pay the tax themselves.
Other reasons for revenue receipts delayed include:
• City permit counter currently closed to new permits, though still processing existing
projects' permits
• Potential new businesses are not opening during this pandemic
• Businesses that are granted permission to defer tax payments without penalty
At this time, with so little information available, it is next to impossible to predict when
delayed revenue could be received by the City. For now, an assumption that 30% of total
monthly revenues in the delayed category will be received either later this year or next
year. The assumption of 30% is only an estimate and the actual impact could be much
higher, or lower.
Potential Delayed Revenue
March
April
May
June
Utility Taxes
385,000
340,000
300,000
294,000
Interfund Utility Taxes
130,000
650,000
130,000
150,000
Property Taxes
-
250,000
200,000
-
Permit Activity
220,000
460,000
280,000
247,000
Business Licenses, State Entitlements
75,000
33,000
21,000
68,000
Other misc. revenue categories
500,000
500,000
500,000
500,000
1,310,000
2,233,000
1,431,000
1,259,000
March
April
May
June
Totals
10% delayed
131,000
223,300
143,100
125,900
623,300
20% delayed
262,000
446,600
286,200
251,800
1,246,600
30% delayed
393,000
669,900
429,300
377,700
1,869,900
Totals
786,000
1,339,800
858,600
755,400
3,739,800
31
INFORMATIONAL MEMO
Page 4
Cumulative impact of Delayed Revenue is as follows:
March only
$393,000
March — April
$1,062,900
March — May
$1,492,200
March — June
$1,839,900
To summarize, the financial impacts due to COVID-19 is as follows. Please recognize,
information changes on a daily basis. As new information becomes available, the
assumptions and projections will be updated.
_o st
Delaved
Totals
Cumulative
I'd arc h April Mav J une Totals
1.105. DOD 2. DD 0. DDO 1. 550. D DD 1 650 DOD 6.305. 0 DO
393.DDD 669.%0 429.3DO 377.700 1 869 9DO
1498.000 2.669.900 1979.300 2.027.7DO 8.174.900
March
1,498.DO0
March - ApH 1
4,167.900
March - Pdav
6,147.200
PJarch - J une
8.174.900
Based on businesses closed into the first part of May and the assumption that it will take
time for the economy to return to normal, the funding gap to close would be $6.1 million
using the March through May assumptions. It should be noted that this gap is roughly
equal to 10% of the City's annual general fund.
Adjust General Fund Expenditures Based on Revenue Assumptions
An effective way to reduce general fund expenditures would be to implement changes in
three phases: immediate changes, near -term changes, and changes that can be
implemented as better information becomes available and/or the longer the pandemic
lasts.
Immediate: Immediate changes that have already been implemented include the
following:
Hiring freeze for all currently vacant positions annual savings
$1,600,000
All travel cancelled, no non -essential training unspent balance
$140,000
Furlough all part-time, temporary extra labor (excluding unemployment)
$150,000
No overtime unless authorized by Mayor
$910,000
No transfers to capital project funds
$1,200,000
Total immediate savings
$4,000,000
32
INFORMATIONAL MEMO
Page 5
After implementing the measures above, it is anticipated that two-thirds of the gap will be
closed, leaving a remaining gap of $2.1 million. All departments are being required to
immediately scrub their budgets and identify all other cost savings from programs that
could be delayed until 2021 or eliminated altogether. Department reductions must be in
excess of the reductions already listed above and may not include expenditures that are
revenue backed. We expect to have that information back next week.
In addition, staff is investigating a number of other opportunities to identify $2.1 M in
savings, knowing that there may be additional savings needed should the duration of this
emergency go longer, therefore requiring making up for additional lost revenues above
$6.1 M. While not all of these may come to fruition for a variety of reasons, we are also
currently:
• Identifying potential additional transfers from the general fund that could be delayed
or eliminated
• Reviewing the Fleet Fund to determine if there is additional capacity there that could
be used as a partial one-time, short term stop -gap measure, and what the
implications of such a decision would be
• Fully scrubbing our contingency and reserve funds to determine if there are
additional funds over the mandated policy amounts that could be used
• Initiating the discussion with our labor partners to identify if any of the following can
help close the budget gap: voluntary retirements, voluntary leave without pay for
staff that choose this option, additional potential furloughs, reduction in hours,
reduction in pay or potential layoffs, and seeking labor's own ideas to fill in the gap
We have been soliciting ideas from staff on other areas for reductions and, as usual, are
impressed by the many varied ideas that have come from our employees that serve our
City. It is clear that they understand the serious nature of the financial issues we are facing
and want to be a part of the solution. In addition, there is a clear ethic of teamwork
permeating through the different ideas. As you know, no impacts to wages, benefits or
working conditions can be implemented without bargaining such impacts in advance with
our labor partners.
Our commitment is to continue to keep you informed of any changes as we progress
through these difficult times. Once we have a better idea of a final recommendation to
close the current $2.1 M we will work with you, as well as the staff, to implement any
additional changes. In the meantime, please do not hesitate to reach out to me directly.
New Information for April 13, 2020 Finance Committee
The intent of this memo is to prepare the City Council to make informed policy and budget
decisions regarding the financial impacts of the COVID-19 pandemic.. Decisions will need
to be made this year for the 2020 budget. As this is a budget year, decisions for the next
biennium can be made through the normal budget process this summer.
33
INFORMATIONAL MEMO
Page 6
The COVID-19 pandemic is causing unprecedented financial impacts world-wide and the
full extent of these impacts will not be known for months. However, we do know several
key factors:
- Initial U.S. unemployment claims are significantly higher than during the Great
Recession. The graph below is from the April 4, 2020 CV-19 Track No. 4, published
by the King County Office of Economic and Financial Analysis. The line at the far
right side of the graph is not the border, but the number of claims between March
22, 2020 and March 28, 2020;
6,mlwo
Spp "o
0.WQA0
3p00AW
Z.QKQW
�,000noa
s?o 137& :B3 947 20+0 L5i5 92C
King County unemployment claims totaled 47,333 for the week of March 29, 2020
through April 4, 2020;
Statewide, businesses have the option to file, and pay, excise tax returns later than
the normal due date. This will impact the City's ability to forecast revenue as well
as cash flow for the next several months;
The City has received requests from businesses for an extension to file tax returns
later than the current due date. City Council will be asked to approve temporary
emergency policies that will formally grant businesses an extension.
In order to understand, and develop a plan to address the financial impacts due to the
COVID-19 pandemic, three models have been developed. The models have been
developed using information available the week of April 6, 2020 and are subject to change
as new information becomes available. All models consider revenue losses and include
immediate expenditure reductions listed in the chart at the bottom of page 4 above as
well as additional reductions identified by department totaling $1.8 million for a grand total
expenditure reduction of $6.2 million.
The City has already taken several steps to address the financial impacts of the
pandemic. The city immediately implemented several cost savings measures.
- Hiring freeze on all existing vacant positions. Positions will be filled only by approval
of the Mayor, as deemed necessary. If all positions listed below are frozen for the
remainder of 2020, total savings would be roughly $1.6 million in salaries plus
benefits. Total projected savings will change as other positions become vacant due
to retirements and/or if some of the positions listed below are filled. Currently
vacant positions by department are as follows on the next page:
34
INFORMATIONAL MEMO
Page 7
o Community Development: senior planner, building inspector III, associate
planner, plans examiner
o Fire: emergency management specialist, admin support technician — Note:
Firefighter personnel positions currently in the hiring process will continue.
o Police: community policing coordinator, evidence technician, police officer
(3), master police officer (3) — Note: Police are authorized to continually
actively recruit and hire new police officers to fill these vacant positions. Due
to the time involved in this process and further retirements, it is assumed
that not all of these positions will be able to be filled in 2020.
o Public Works: engineer, facilities maintenance technician
o Street: maintenance & operations specialist
o TIS: information technology specialist
- All travel and non -essential training canceled for the remainder of the year. Total
savings is estimated to be $140 thousand.
- Furlough all extra labor and part-time staff. Net savings, after considering
unemployment costs, could be as much as $150 thousand but only if all extra labor
and part-time positions remain vacant for the remainder of 2020.
- Remove transfers of $1.2 million from the general fund to capital project funds. This
will impact capital projects in residential street, arterial street, and the general
government improvement funds. Further discussion on what capital projects would
be impacted will be held at a later Finance Committee meeting.
- No overtime unless authorized by the Mayor could result in a savings of up to $910
thousand. This affects all departments including Police and Fire.
All departments have been asked to identify additional expenditure reductions. To date,
departments have identified an additional $1.8 million in savings.
In addition to the steps highlighted above, the City also established a budget ideas email
address for employees to submit budget reduction suggestions. A cross -departmental
group is being put together to review all suggestions and provide Administration with
recommendations on which suggestions should be implemented. These suggestion will
be vetted with the unions, and unions are being asked to come with budget ideas, as
well.
Fire department overtime: During 2019, the Finance Committee spent considerable time
reviewing several aspects of fire department operations in order to understand why the
fire department is consistently over budget. Per the informational memo dated May 22,
2019 and most recently reviewed by the Finance Committee on October 28, 2019, one
option to keep the fire department within budget was to significantly decrease use of
overtime to fill staffing when additional firefighters call in sick leave. Station 52 had the
least amount of fire calls the last 5 years and would be the station affected with this
change. The temporary impact would be to staff an aid car instead of an engine at this
station, as warranted based on available staffing.
35
INFORMATIONAL MEMO
Page 8
At the April 13, 2020 Finance Committee meeting, the following question was asked: Are
firefighters moved among stations when faced with minimum staffing so that it is always
Fire Station 52 that affected by placing the aid car in service in place of an engine? Per
Chief Wittwer, personnel shift between stations as needed. Fire Station 52 would be the
station where the aid car will be placed in service.
Effective April 1, 2020, this option was implemented and is estimated to save $250
thousand in overtime over the course of the year. It should be noted that Fire Station 54's
response time to the neighborhood around Fire Station 52 is very quick and within our
adopted goals for response times for the Tukwila community. Fire Station 54 responds
to the Old Hill neighborhood often, particularly when Fire Station 52 personnel are at
trainings or covering a different area of the City for a variety of reasons.
Fire Calls 6y Station By Year
with Average Response Times
24J
195
0:07:I2
186
1G,
0:C5 29
160
0:45:45
140
126
120
114
103
0- 04:19
1�
101
100
65 66
0:05:36
80
62 G2 G1 72
76
0:02:53
W
53 $�
42 44
57
0:02:10
38
IIIIG-Woz
AD
II
0:01:26
2q
lI..............
1 I
0-00:43
{1
O 90.00
S1 51 51 51 51 52 57
52 52 52
53 53 53 53
53 54 54 54 54 54
2014 2015 2016 2017 2018 7014 2015
2016 2017 2018
2014 2A15 201E 2017
2018 2014 2015 2%6 �017 2019
�Fire Call 5
-RPsporiseTime
The current prediction is that the economic recovery from the pandemic would not be
complete until 3rd or 4th quarter of 2021, a full 18 months to return to a pre -pandemic
economy. Unemployment levels, sustainability of businesses, and how the State and
County plan to ease social distancing restrictions are considered in the models.
Timeline through April 15, 2020
The timeline at the top of the next page highlights select significant events that have
occurred in the State as well as King County. The time period covered is 38 days and
begins on February 29, 2020 with the first known COVID-19 related death in the State
through April 6, 2020 when schools across the State were ordered closed for the
remainder of the academic year.
36
INFORMATIONAL MEMO
Page 9
Timeline of Select COVID-19 Related Events
February 29
March 2
March 11
March 13 March 16 March 17 March 23 April 2
April 6
First known
Companies begin
Governor bans
Governor extends Closure of all Governor bans Governor issues Stay at home
Schools ordered
COVID-19 death
encouraging
gatherings of 250
ban of gatherings restaurants, bars, gatherings of 'stay at home' order extended
closed for
in WA State
employees to work
or more in King,
of 250 or more entertainment, and groups larger than order for 2 weeks through May 4
remainder of
from home
Pierce, and
across State recreational 50 people
academic year
Governor issues
Snohomish
facilities
state of
Some schools
counties
Schools closed for
emergency
across state close
6 weeks Limits large group
for a few days
gatherings
through March 31
** 38 days in the timeline **
Scenario 1 — Stay At Home Ends May 4:
- Stay at home order does not extend beyond May 4, 2020 and allows for gatherings
of up to 100 individuals through the summer months and all restrictions lifted by
September.
- Sales tax, along with admissions, and gambling taxes will be significantly impacted
through May but will begin to grow in June.
- Due to increases in unemployment benefits, consumer demand could fuel sales
growth back to 80% of pre -pandemic sales by the end of the year.
- We expect minimal defaults on property tax payments but there would be a cash
flow issue.
- Casinos could experience half the demand through summer and back to 80% by the
end of the year.
- Admission tax could remain low through summer and return to 80% of prior year by
the end of the year.
- During the closure order, utility tax revenue could be 20% below normal and
returning to normal levels in the fall.
- Programming revenue from the Tukwila Community Center will begin to provide
some programming during the summer and fully open by September.
Under Scenario 1, the City would need to identify ways to close an additional gap of $2.4
million.
Scenario 1 - The "Stay at Home" order not extended past May 4th and
allows gatherings of up to 100 individuals through the summer months
and all restrictions lifted by September.
GENERAL FUND SUM
PROJECTED
BUDGET
2020 COVID
REDUCTIONS
COVID REDUCED
BUDGET
REVENUES
SALARIES AND BENEFITS
SUPPLIES AND PROF SERVICES
67,475,493
44,958,702
22,762,577
(8,602,709)
(3,081,520)
(3,136,432)
58,872,784
41,877,182
19,626,145
TOTAL EXPENSES
67,721,279
(6,217,952)
61,503,327
OVER/(UNDER) FUNDED
(245,786)
(2,384,758)
(2,630,544)
37
INFORMATIONAL MEMO
Page 10
SCENARIO 1 - GENERAL FUND REVENUES AND EXPENSES
12
a
10
8
6
4
2
6
4
2
Jar Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
S1-Revenues - S1-Expenses ...... Bud Revenues ...... Bud Expenses
On the next page is a graph for Scenario 1 that shows the 2020 budget for revenue along
with the revised revenue projections based on lost as well as delayed revenue. The yellow
line indicates the 2020 revenue budget, by month. The blue section in each bar indicates
the adjusted revenue budget after taking into consideration both lost and delayed
revenue. The orange section of each bar indicates lost revenue, while the gray and green
sections indicate delayed revenue; gray is revenue delayed but projected to be received
later in 2020 while green is projected to be received in 2021.
a
INFORMATIONAL MEMO
Page 11
$8
$7
54
S1 REVENUES - BUDGET VS. COVID
� Ft.mwd H—nue � COVID Red -lium a K—nuns in Z(VD � I)eiayNd HevenueL to AV —HildRele.d K—.. e
$l7
�d
$8
F
� $f
$A
Sz
= P � AM -SEP- -Sr DEC
5..
Scenario 2 - Stay at Home Extended into June:
- Stay at home order extends by an additional month, through June 4, 2020 and allows
for gatherings of up to 100 individuals through the summer months and all
restrictions lifted by September.
- Any extension on the stay at home order will most likely result in more businesses
going out of business.
- Sales tax, along with admissions, and gambling taxes will be significantly impacted
through June but will begin to grow in June.
- Due to increases in unemployment benefits, consumer demand could fuel sales
growth back to 70% of pre -pandemic sales by the end of the year.
- We would still expect minimal defaults on property tax payments but there would be
a cash flow issue.
- Casinos could experience half the demand through summer and into fall and back
to 60% by the end of the year.
- Admission tax will remain low through summer and return to 70% of prior year by
the end of the year.
- During the closure order, utility tax revenue could be 20% below normal and
returning to normal levels in the fall.
- Programming revenue from the Tukwila Community Center will begin to provide
some programming during the summer and fully open by October.
With Scenario 2, the City would need to close an additional gap of $4.3 million.
39
INFORMATIONAL MEMO
Page 12
Scenario 2 - The "Stay at Home" order is extended until May 31st and
allows for gatherings of up to 100 individuals through the summer
months and all restrictions lifted by September
2020 COVID COVID REDUCED
GENERAL FUND SUMMARY
BUDGET REDUCTIONS BUDGET
REVENUES
67,475,493 (10,473,648) 57,001,845
SALARIES AND BENEFITS
44,958,702 (3,081,520) 41,877,182
SUPPLIES AND PROF SERVICES
22,762,577 (3,136,432) 19,626,145
TOTAL EXPENSES
67,721,279 (6,217,952) 61,503,327
OVER/(UNDER) FUNDED
(245,786) (4,255,696) (4,501,482)
SCENARIO 2 - GENERAL FUND REVENUES AND EXPENSES
12
12
n
8
6
4
2
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
-52-Revenues -52-Expenses •••••• Bud Revenues •••••• Bud Expenses
8
6
4
2
INFORMATIONAL MEMO
Page 13
S2 REVENUES - BUDGET VS. COVID
Revised He venue CCNI❑ Hedudiuns Belayed Revenues in 2020 rl[ delayed Rewn ues lu 2021—fludgeted Revenue
$lU $10
f
58 58
ti
$4 54
5a — $a
� ._
sv ]AN FEB MAR APR MWE i ..S vDEC
sv
.o
S8
S.4
Scenario 3 — Stay at Home Order Extended into July:
- Stay at home order extends by an additional month, through July 4, 2020 and allows
for gatherings of up to 50 individuals through the summer months and additional
restrictions lifted by Fall with full restrictions lifted by end of the year.
- The assumption is restrictions would last longer in order to stave off a second wave
of infection.
- Any extension on the stay at home order will most likely result in even more
businesses going out of business.
- Sales tax, along with admissions, and gambling taxes will be significantly impacted
through the end of August but will begin to grow in September.
- Due to increases in unemployment benefits, consumer demand might fuel sales
growth back to 60% of pre -pandemic sales by the end of the year.
- We would still expect minimal defaults on property tax payments but there would be
a cash flow issue.
- Due to the length of restrictions with this scenario, casinos would not open in 2020.
- Admission tax will remain low through summer and return to 60% of prior year by
the end of the year.
- During the closure order, utility tax revenue could be 20% below normal and
returning to normal levels in the fall.
- Programming revenue from the Tukwila Community Center will begin to provide
some programming during the summer but not return to normal in 2020.
41
INFORMATIONAL MEMO
Page 14
With Scenario 3, the City would need to close an additional gap of $7.1 million.
Scenario 3 - The "Stay at Home" order is extended until July 4th and
allows for gatherings of up to 50 individuals through the summer
months and additional restrictions lifted by Fall will full restrictions
2020 COVID COVID REDUCED
GENERAL FUND SUMMARY
BUDGET REDUCTIONS BUDGET
REVENUES
67,475,493 (13,305,252) S4,170,241
SALARIES AND BENEFITS
44,958,702 (3,081,520) 41,877,182
SUPPLIES AND PROF SERVICES
22,762,577 (3,136,432) 19,626,145
TOTAL EXPENSES
67,721,279 (6,217,952) 61,503,327
OVER/(UNDER) FUNDED
(245,786) (7,087,300) (7,333,086)
SCENARIO 3 - GENERAL FUND REVENUES AND EXPENSES
12
C
O
12
C
O
10
10
S
S
6
.
6
f
4
4
2
2
Jan
Feb Mar Apr
May Jun Jul Aug Sep Oct
Nov Dec
S3-Revenues
- S3-Expenses ...... Bud Revenues ...... Bud Expenses
42
INFORMATIONAL MEMO
Page 15
53 REVENUES - BUDGET VS. COVID
Revised Revenue � COVID Reductions a Delayed Revenues fn 2020 � Delayed Revenues to 2021 •Budgeted Revenue
$8
A summary of the 3 scenarios are as follows:
Initial assumption
$6.1 million in lost revenues in 2020
Scenario 1
Additional $2.4 million for a total of $8.5 million
Scenario 2
Additional $4.3 million for a total of $10.5 million
Scenario 3
Additional $7.1 million for a total of $13.3 million
43
INFORMATIONAL MEMO
Page 16
Also included is a summary of the assumptions for each scenario (revised for 4/27/20):
Assumption
Scenario 1
Scenario 2
Scenario 3
Basis
Stay at home order does not extend beyond
Stay at home order extends by an additional
Stay at home order extends by an additional
May 4, 2020 and allows for gatherings of up
month, through June 4, 2020 and allows for
month, through July 4, 2020 and allows for
to 100 individuals through the summer
gatherings of up to 100 individuals through
gatherings of up to 50 individuals through the
months and all restrictions lifted by
the summer months and all restrictions lifted
summer months and additional restrictions
September.
by September.
lifted by Fall with full restrictions lifted by end
of the year.
Any extension on the stay at home order will
most likely result in more businesses going
The assumption is restrictions would last
out of business.
longer in order to stave off a second wave of
infection.
Any extension on the stay at home order will
most likely result in even more businesses
qoinci out of business.
Sales and Other
Sales tax, along with admissions, and
Sales tax, along with admissions, and
Sales tax, along with admissions, and
Taxes
gambling taxes will be significantly impacted
gambling taxes will be significantly impacted
gambling taxes will be significantly impacted
through May but will begin to grow in June.
through June but will begin to grow in June.
through the end of August but will begin to
grow in September.
Adopted Budget.,
Revised Budget:$14,541,497
Revised Budget.,$13,689,699
Revised Budget$11,660,178
$20,600,686
Reduction of $6,059,179
Reduction of $6,910,977
Reduction of $8,940,498
Unemployment
Due to increases in unemployment benefits,
Due to increases in unemployment benefits,
Due to increases in unemployment benefits,
consumer demand could fuel sales growth
consumer demand could fuel sales growth
consumer demand might fuel sales growth
back to 80% of pre -pandemic sales by the
back to 70% of pre -pandemic sales by the
back to 60% of pre -pandemic sales by the
end of the year
end of the year.
end of the year
Property Taxes
We expect minimal defaults on property tax
We would still expect minimal defaults on
We would still expect minimal defaults on
payments but there would be a cash flow
property tax payments but there would be a
property tax payments but there would be a
issue.
cash flow issue.
cash flow issue
Adopted Budget:
No projected reduction in budget
No projected reduction in budget
No projected reduction in budget
$16,416,911
Casinos
Casinos could experience half the demand
Casinos could experience half the demand
Due to the length of restrictions with this
through summer and back to 80% by the end
through summer and into fall and back to
scenario, casinos would not open in 2020.
of the year.
60% by the end of the year.
Adopted Budget:
Revised Budget: $2,927,106
Revised Budget., $2,530,205
Revised Budget: $1,755,057
$4, 274,000
Reduction of $1346 894
Reduction of $1 743 795
Reduction of $2 518 943
Admission Tax
Admission tax could remain low through
Admission tax will remain low through
Admission tax will remain low through
summer and return to 80% of prior year by
summer and return to 70% of prior year by
summer and return to 60% of prior year by
the end of the year.
the end of the year.
the end of the year.
Adopted Budget.,
Revised Budget $589,548
Revised Budget., $518,274
Revised Budget $495,910
$870,000
Reduction of $280 452
Reduction of $351 726
Reduction of $374 090
Utility Tax
During the closure order, utility tax revenue
During the closure order, utility tax revenue
During the closure order, utility tax revenue
could be 20% below normal and returning to
could be 20% below normal and returning to
could be 20% below normal and returning to
normal levels in the fall.
normal levels in the fall.
normal levels in the fall.
Adopted Budget:
Revised Budget: $5,990,250
Revised Budget: $5,894,713
Revised Budget: $5,788,825
$6, 818,610
Reduction of $828 360
Reduction of $923 897
Reduction of $1 029 785
Culture and
Programming revenue from the Tukwila
Programming revenue from the Tukwila
Programming revenue from the Tukwila
Recreation
Community Center will begin to provide some
Community Center will begin to provide some
Community Center will begin to provide some
programming during the summer and fully
programming during the summer and fully
programming during the summer but not
open by September.
open by October.
return to normal in 2020.
Adopted Budget:
Revised Budget: $380,138
Revised Budget: $357,569
Revised Budget: $318,243
$601, 000
Reduction of $220 862
Reduction of $243 431
1 Reduction of $282 757
Because it is currently expected that a COVID related recession will last through 2021,
there will be impacts to the next biennial budget. The City should expect a reduced base
of at least $4 million in revenue in 2021 which means that ongoing savings will be needed
to maintain the budget for the next biennium.
Cash Flow
Loss of revenue without an equal offset in expenditure reduction will result in an impact
to cash flows. The chart below demonstrates the impacts to cash flow for each of the 3
MA
INFORMATIONAL MEMO
Page 17
scenarios modeled as well as cash flow for the current budget; revenue received by the
City each month less payment of expenditures each month.
As indicated in the chart below, if the general fund began the year at zero (no cash in the
bank), the general fund would end the year at very close to zero. However, during the
year, the general fund would have a cash deficit of $3.4 million in April and a cash deficit
of $2.3 million in October. Approximately $3.4 million in reserves are currently used for
cash flow purposes in April and October, shortly before the City receives property tax
revenue.
As each of the 3 scenarios indicate, without reducing expenditures above what has
already been identified, the need for cash on hand throughout the year increases.
Scenario 1 would require maintaining a minimum contingency fund reserve of $5.2 million
in order to cover expenditures, while Scenario 3, the worst case, would require a minimum
contingency fund reserve of at least $7.8 million at year-end to maintain a positive cash
balance. Minimum contingency fund reserves are summarized as follows:
Current budget
$3.4 million required to maintain positive cash flow
Scenario 1
$5.2 million required to maintain positive cash flow
Scenario 2
$7.1 million required to maintain positive cash flow
Scenario 3
$7.8 million required to maintain positive cash flow
CASH FLOW
56
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Financial Reserve Policy — General Fund and Contingency Fund
The City adopted a reserve policy that was most recently amended by Resolution 1919,
adopted by Council on November 20, 2017. The policy states that the general fund
unassigned fund balance shall equal or exceed 18% and the contingency fund reserve
45
INFORMATIONAL MEMO
Page 18
balance shall equal or exceed 10% of previous year general fund revenue, exclusive of
significant non -operating, non -recurring revenues such as real estate sales or transfers
from other funds. The policy also requires a one-time revenue reserve that will be
maintained in the contingency fund. The one-time revenue reserve shall be credited
annually with 10% of the prior year one-time revenues to the extent general fund surplus
for the year is sufficient to cover the reserve funding. A copy of the resolution is included
as an attachment to this memo.
The policy also states that any draw down of minimum balances shall occur only upon
recommendation of City Administration and approval by City Council through a resolution.
Should a draw down occur, the City Administration shall establish a plan, no later than
the end of the fiscal year following the decline, to restore the fund balance to the
prescribed minimum level. The plan shall be presented to and approved by the City
Council.
Per Government Finance Officers Association (GFOA), a national organization
representing public finance professionals throughout the United States and Canada and,
among other functions, provides best practice guidance on all aspects of government
finance functions. For minimum unassigned general fund balances, GFOA recommends,
"at a minimum, that general-purpose governments, regardless of size, maintain
unrestricted budgetary fund balance in their general fund of no less than two months of
regular general fund operating revenues or regular general fund operating expenditures."
Other considerations include:
- Vulnerability to natural disasters;
- Dependency on volatile revenue sources, in our case, sales tax;
- The predictability of its revenues and the volatility of its expenditures (i.e., higher
levels of unrestricted fund balance may be needed if significant revenue sources
are subject to unpredictable fluctuations or if operating expenditures are highly
volatile);
- Perceived exposure to significant one-time outlays (e.g., disasters, immediate
capital needs, state budget cuts);
- The potential drain upon general fund resources from other funds, as well as the
availability of resources in other funds;
- The potential impact on the entity's bond ratings and the corresponding increased
cost of borrowed funds
Additional best practices include the following:
- Define the time period within which and contingencies for which fund balances will
be used;
- Describe how the government's expenditure and/or revenue levels will be adjusted
to match any new economic realities that are behind the use of fund balance as a
financing bridge;
- Describe the time period over which the components of fund balance will be
replenished and the means by which they will be replenished;
- Governments should seek to replenish reserves within one to three years of use.
.N
INFORMATIONAL MEMO
Page 19
Parameters for using unassigned general fund balance and contingency fund reserves
should include the following:
- Are one time in nature. Once they are used, they are gone unless replenished via a
repayment plan.
- Some reserves must be maintained for cash flow purposes. The amount maintained
is determined by the lowest balance during the fiscal year. (As noted above in the
cash flow section, with each worsening scenario, the amount of reserves required
to maintain a positive cash flow increase.
- Funds can be used for short-term downturns/losses but any use of the funds must
be repaid within a reasonable timeframe.
- Funds used for longer -term downturns should be a stop -gap only and a long-term,
sustainable solution must be identified and implemented.
- It should be noted that the draft general fund unassigned fund balance as of
December 31, 2019 meets best practice guidelines of maintaining a minimum two
months of general fund expenditures.
Current reserves are as follows (draft until 2019 is officially closed):
"General fund unassigned fund balance
$12,476,158
Contingency fund
$6,402,392
One-time revenue reserve
$699,586
Total reserves
$19,578,136
** Exceeds required unassigned fund balance by $951,851
New Information for April 27, 2020 Finance Committee
Financial Reserve Policy — Enterprise Funds
The Reserve Policy also includes requirements for enterprise funds. Per the policy, the
unrestricted balances of the enterprise funds shall equal or exceed 20% of the previous
year revenue, exclusive of the effects of GASB Statement 68, as well as significant non -
operating, non -recurring revenues such as real estate sales, transfers in from other funds,
or debt proceeds.
Parameters for unrestricted balances in excess of required reserves include the following:
- Enterprise funds cannot subsidize the general fund. Any enterprise funds utilized for
general fund purposes would need to be via an interfund loan that would be
required to be repaid, with interest, within a reasonable timeframe.
- Reserves above the required 20% should be retained for planned and/or required
capital projects adopted in the Capital Improvement Plan.
The chart below details the draft ending unrestricted fund balance as of December 31,
2019 and includes the required reserve as well as a high-level calculation of the impact
to ending fund balance after taking into consideration capital projects that are included in
the Capital Improvement Program through 2024, adopted by City Council via Resolution
No. 1953 on December 3, 2018.
CA
INFORMATIONAL MEMO
Page 20
The net effect on unrestricted (ending) fund balance includes the total cost of capital
projects through 2024 less any dedicated revenue (grants, King County Flood Control,
etc.) and operating revenue utilized to complete the projects. The figures below are high-
level only and do not take into consideration loss of revenue in 2020 because businesses
are currently closed or possible rate increases in future years. As information becomes
available regarding lost revenue during the shutdown, the chart can be updated.
12/31/2019
20% of
Policy
Net Effect of
Estimated Net
Unrestricted
2018 Revenue
Compliance
Capital Projects
Unrestricted
Fund Balance *
on Fund
Fund Balance
Balance
12/31/2024
401 - Water
7,484,856
1,425,806
Y
(5,900,000)
159,050
402 - Sewer
13,606,550
2,174,173
Y
2,020,000
1 13,452,377
412 - Surface Water
5,423,776
1,423,961
1 Y
(126,000)1
3,873,814
*Adjusted for removal of the effects of GASB Statement 68
Unemployment
The City of Tukwila is a `reimbursable employer' as are many government agencies in
Washington State. This means that the City does not pay a monthly unemployment
premium like we do with Industrial Insurance. Rather, when a former employee is receives
unemployment, Employment Security Department (ESD) will pay the unemployment
claim to the former employee then bill the City for those costs.
Given the current COVID-19 pandemic and changes in unemployment regulations at both
the Federal and State levels, unemployment rules have changed quite a bit and could
continue to evolve. The Federal stimulus in the recently enacted CARES Act created
Pandemic Unemployment Assistance (PUA) for businesses and workers affected by
COVID-19.
Key changes in unemployment due to the pandemic include the following:
- Eligibility for unemployment benefits is expanded to include many Washington
employees who would normally not qualify for unemployment including many self-
employed individuals and those that do not have the typically required 680 hours
to claim unemployment.
- An additional $600 per week is available to nearly everyone on unemployment from
March 29, 2020 through the week ending July 25, 2020.
- Benefits extended by 13 weeks, for a maximum of 39 (which is about 9 months).
This includes individuals who were already on unemployment as well as those who
are newly eligible.
Benefits to employees that are laid off or furloughed: Employees eligible to file for
unemployment due to COVID-19 staffing reductions would receive a weekly benefit
amount of between $188 and $790 from Washington State Unemployment. All employees
receiving unemployment could receive an additional $600 per week from the CARES Act.
Given the additional $600 provided under the CARES Act, some employees, mostly part-
INFORMATIONAL MEMO
Page 21
time staff, could receive more money through unemployment benefits than if they
continued to receive a regular paycheck.
Costs incurred by the City: As previously stated, reimbursable employers are required to
pay 100% of unemployment costs. However, during this national emergency, the federal
government is offering some relief to reimbursable employers:
- If an employee's hours were reduced or eliminated to follow public health
recommendations, the federal government should pay 50% of the unemployment
charges.
- Workers at these government agencies are eligible for the Federal Pandemic
Unemployment Compensation supplement of $600 per week.
It is probable that unemployment costs associated with any employee that was furloughed
or laid off because reduced/eliminated work hours to follow public health
recommendations would be reimbursed at 50%. This would most likely include part-time
staff hired in the Parks and Recreation departments. Programs were shut down because
social distancing could not be adequately maintained.
However, reductions in full-time staff would be because of a loss of revenue, not because
of the need to follow public health recommendations. While still unclear, it is highly unlikely
that these unemployment costs would be reimbursed and the full unemployment cost
would be borne by the City.
Financial Impacts to Residential Street, Arterial Street, and General Government
Improvement Capital Projects Funds
The financial impact of the pandemic will not only reduce revenues in the general fund,
but will also effect dedicated and restricted revenues in our capital projects funds.
Revenues that are expected to be negatively impacted include parking tax, gas tax
(MVFT), real estate excise tax (REET), solid waste utility tax, and impact fees. At this
time, we do not expect that grants already approved will be negatively affected by the
pandemic.
The chart that follows on the next page summarizes the financial situation for each of the
3 funds and is followed by a narrative explanation for each fund.
i•
INFORMATIONAL MEMO
Page 22
Residential Streets
Bridges and Arterial
General Government
(103)
Streets (104)
Improvements (303)
Beginning Balance
-
2,090,386
656,306
Forecasted Revenues
Taxes
243,000
1,027,250
Fees
470,056
Grants
359,609
2,889,000
Interest
20,000
414
Transfers -In
100,000
-
Total Available Funds 702,609 6,496,692 656,720
Forecasted Spending
Wages and Benefits
Forecasted Spending by Project
Fund Project Name
485,383 50,000
103
42nd Ave S Phase 111
378,000
103
53rd Ave S
399,000
103
Traffic Calming/Residential Safety Improve.
2,000
103
Interfund Loan Repayment
336,932
104
Strander Blvd Extension Grant Reimb.
622,000
* 104
West Valley Hwy (1-405 - Strander Blvd)
350,000
* 104
Boeing Access Rd/Airport Wy Seismic Retrofit
2,614,000
104
42nd Ave Bridge Replacement
320,000
104
Annual Overlay
1,400,000
104
Annual Bridge Inspection & Repairs
335,000
104
ADA Improvements
50,000
104
Annual Traffic Signal Program
125,000
104
Wetland & Environmental Mitigation
40,000
104
Transportation Element of Comp. Plan
400,000
104
Walk & Roll Program
75,000
303
6300 Dry Fire Sprinkler System
30,000
303
Facilities Study
190,000
104
Park Impact Fees
1,009,400
Total Spending
1,115,932
7,825,783 270,000
Ending Balance (413,323) (1,329,091) 386,720
* Indicates projects funded by grant revenue
Residential Street
Revenues currently forecasted for this fund include gas tax (MVFT) and grant revenue
that was invoiced in 2019 and expected to be received in 2020. At this time, the City and
Seattle City Light are still disputing revenue of approximately $500 thousand the City
expected to receive from the utility as part of the 42nd Ave S and 53rd Ave S roadway
projects. Because this revenue is still disputed, it is not included in the summary table
that follows this discussion. This matter is currently being handled by our attorney. It
should be noted that a budgeted transfer in of $100 thousand is still included in the
revenue budget.
Expenditures include final costs associated with the 42nd Ave S and 53rd Ave S projects
as well as an interfund loan repayment that was necessary at the end of 2019 to keep the
fund from reflecting a negative cash balance at the end of 2019. Total amount of the loan
was $337 thousand and was necessary because Seattle City Light did not reimburse the
City, as expected.
50
INFORMATIONAL MEMO
Page 23
Based on the current forecast for revenue and cost estimates for the projects listed above,
it is projected that this fund will have a negative fund balance of $514 thousand at the end
of 2020. Unless Seattle City Light reimburses the City for costs incurred on the 2 roadway
projects, a transfer in of over $400 thousand will be needed to keep this fund positive at
year-end. Staff is recommending that the transfer come from the General Government
Improvement fund. The transfer amount, based on current information, could be roughly
$386 thousand, leaving a deficit of only $28 thousand to be covered by the general fund.
If Seattle City Light reimburses the City, the funds could be transferred back to the general
government fund and the general fund.
Arterial Street
Revenues currently forecasted in this fund include parking and gas taxes, real estate
excise tax, impact fees, and grant revenue. It also includes the additional solid waste
utility tax approved by Council in 2019. At the March 2, 2020 regular council meeting,
Council authorized the use of this tax for 30% design for the 42nd Ave South Bridge
Replacement project. It should be noted that a budgeted transfer of $1 million was
eliminated during the first phase of budget reductions.
Expenditures in this fund include wages and benefits for three FTE as well as a number
of projects; many of which are funded solely by dedicated/restricted revenues and
transfers in from the general fund. Also included are 2 projects that are almost entirely
funded by grants.
Without reducing and/or eliminating projects that are not funded by grant revenue, the
fund will end the year with a deficit of over $1.3 million.
In order to keep this fund solvent, staff is recommending the following changes:
- Delay the Transportation Element of the Comprehensive Plan and the Walk & Roll
program until 2021.
- Reduce funding for the following projects: overlay, bridge inspections, ADA
improvements, traffic signal program, and wetland mitigation by a total of $865
thousand.
General Government Improvements
As part of the first phase of budget reductions, a transfer in of $200 thousand was
eliminated. No other revenues are dedicated to this fund.
Planned expenditures in this fund include $190thousand for phases I and II of a facilities
study that includes updated seismic assessments of several facilities, $30 thousand for
the dry fire sprinkler system, as well as $100 thousand for other minor repair projects that
could be needed this year.
Because of the healthy beginning fund balance of $657 thousand, eliminating the transfer
in does not create deficit fund balance at year-end. This fund is currently projected to end
the year with a fund balance of over $386 thousand. Due to the current deficit in the
residential street fund of $413 thousand, staff recommends transferring any excess funds
51
INFORMATIONAL MEMO
Page 24
from this fund into the residential street fund, lessening the impact to the general fund. As
mentioned in the discussion on the residential street fund, if Seattle City Light reimburses
the City, the funds can be transferred back into this fund.
New Information for April 28, 2020 Finance Committee
Recap of Current Projected Revenue Gap
As discussed in the first five pages of this memo, the City identified an initial revenue gap
(March through May) of $6.1 million that has been filled with phase I reductions of $4
million and are working with departments to identify an additional $2.1 million to close the
remaining gap. Departments are scrubbing their budgets and have already identified $2
million, leaving a gap of just $100 thousand.
There will be an additional revenue gap that needs to be closed. Three scenarios were
developed resulting in additional revenue losses ranging from $2.4 million up to $7.1
million. Details of each of the scenarios can be found on pages 9 — 16 of this memo.
Additional revenue gap for each scenario is as follows. The amounts below are in addition
to the initial $6.1 million revenue gap discussed above.
Scenario 1 - $2.4 million + initial revenue gap $6.1 = total revenue gap $8.5
Scenario 2 - $4.3 million + initial revenue gap $6.1 = total revenue gap $10.5
Scenario 3 - $7.1 million + initial revenue gap $6.1 = total revenue gap $13.3
Given what we know today, Scenario 1 is most likely too optimistic. Based on economic
indicators today, it is now believed, and is in line with what other area cities are projecting,
that the actual revenue gap would be somewhere between Scenario 2 and Scenario 3,
which would result in an additional revenue gap of around $6 million, for a total revenue
gap in 2020 of $12 million.
Additionally, economic indicators point to a continuing loss of revenue in 2021 as well. At
this time, we are projecting a revenue loss of $6 million in 2021. Thus, the City will need
to fill an additional gap of $6 million in 2020, for a total gap of $12 million with an ongoing
budget shortfall of $6 million in 2021; meaning ongoing budget reductions.
Decision Tree
On one extreme, the City could utilize only contingency funds to fill the gap in 2020.
Given the current contingency fund balance of $7.1 million (see page 19 for specifics on
the contingency fund), this would leave $1.1 million to fill a small portion of the revenue
gap in 2021. This is not a recommended option as it leaves no contingency available for
a second or third wave of infections that could hit later in 2020 or in 2021 nor would it
leave funds for any other emergency that could arise.
The other extreme would be to reduce labor costs by $6 million to fill the remaining
revenue gap and not utilize contingency funds. While this would result in ongoing savings,
this would result in significant loss of staff and significantly reduce the ability to provide
services to our communities.
52
INFORMATIONAL MEMO
Page 25
Rather, staff is recommending a balanced approach of matching contingency funds to
labor reductions using a 3 to 1 ratio. This approach ensures that we stay true to our
values of Caring, Professional, and Responsive. We are in this together and all
departments need to share in the responsibility of reducing costs.
Decision Tree Tools
A more refined decision tree will be presented at the next Finance Committee meeting
with the intent of identifying tools such as the following to close the gap:
- Voluntary retirements and separations
- Involuntary furloughs
- Voluntary furloughs
- Layoffs
- Voluntary pay reductions
Required Services and Current Service Levels
The City of Tukwila is a code city and operates under RCW 35A Optional Municipal Code.
The Optional Municipal Code provides flexibility in the administration of municipal
government and permits code cities to adjust procedures and programs to meet individual
needs. The Code (RCW 35A) establishes the powers and responsibilities of
councilmembers, the mayor, and city administrator. Other city officials have only such
powers as the city council vest in them. This results in an increase in administrative
choices available to code cities.
There are legal requirements regarding planning in the Growth Management Act and
minimum staffing is necessary for development activities. There are relatively few
mandates for code cities in the RCWs regarding minimum staffing and service levels
except for police. Code cities are required to appoint a chief law enforcement officer
pursuant to RCW 35A.12.020 and a city police department must be under the control and
direction of the chief of police. However, neither the state constitution nor state law
mandates a specific number of law enforcement officers or level of law enforcement
services. Thus, staffing and service levels are policy decisions in the discretion of the
City Council. If the City does not maintain their own police department, the County would
be required to provide coverage.
There are no specific statutes that require cities to provide fire protection services or parks
and recreation services. However, as a practical matter, cities provide some measure of
these services.
Through long-standing Council policy, the City Council has set current service levels
through policy decisions during the budget and budget amendment process. The current
budget reflects priorities set by City Council and many of the programs included in the
budget closely align with the City's adopted Strategic Goals.
Attached to this memo is the list of all programs in the general fund. Each program went
through an extensive scoring process that benchmarked every program against the City's
53
INFORMATIONAL MEMO
Page 26
Strategic Goals and basic program attributes. Tier 1 and Tier 2 programs most closely
align with the Strategic Goals. All programs that are legally mandated either at the federal
or state level are identified with an *. Many of the programs that have been identified as
legally required are because of services the City provides. For example, because we
provide fire services and employ firefighters, there are required trainings that all
firefighters must complete on a regular basis.
Professional Services
Details on professional services for each department are detailed in the 2019 — 2020
Biennial Budget Document. During Phase II when departments were required to scrub
their budgets, many budget categories were reduced, including professional services. It
should be noted that some contracts in the professional services category cannot be
reduced as they are legally required. For example, audit costs are captured in
professional services and an annual audit is required per RCW. Details on professional
services for each department in the general fund can be found on the following pages:
Department
Page Number(s)
City Council
89
Mayor's Office
103 -
113
Municipal Court
124
— 125
Parks & Recreation
138 —
160
Community
Development
171 —
182
Police
194
— 210
Fire
222
— 235
Public Works
248
— 260
Administrative Services
271 —
273
Finance
284
TIS
296
In addition to details on professional services, the chart on the following page summarizes
all expenditures by major category in the general fund.
54
INFORMATIONAL MEMO
Page 27
2019 - 21L20 Biennial Budget City of Tukwila. Washington
General Fund Expenditure by Type
General F-und Expendi€ures by Type
Actual
Budgel
Pa rae nt oharga
Prajec-bELd
2101G
2017
2019
2D1B
2D19
2020
201a-19 2a19-2D
Salaries
S 26,737,1578
S 27.618.116
# 27,373s BOB
S 28,f102,303
S 29,395,986 S
3D,296,d21
2.9%
3.1%
Extra Labor
627,M4
653,302
7A473
7a4.60
762,1333
764.697
1.1%
ores
Mime
1,511),1W
1.513.455
1,A54,443
1,B72,D35
1,35D,DN
1,354,OD0
-19.3%
0315
Total Wages
28,OB3,B54
29,785,074
30,1f34T 2
31,D29.CO1
31,508,923
3Z415,317
1.6%
ts%
FICA
1,698,26D
1,750,040
1,791,576
1,843,684
2,107,152
2,Dfl9,OB2
14.3%
-GIs%
LEOFF 2
8131,656
930,131
870,516
M,316
W-Z207
896,125
-2.s%
PERS
1,3135,B67
1,512,991
1,66ZW4
1,610013
1.751,659
1,032,555
e.ez
�.9%
IndusirialInsurrance
978,200
634,001
699z71
N1,170
861,416
934,A77
-e.s%
es%
Med,Drel,Disabiity,Lr7e
5,563,572
5,597,627
5,7315 BN9
6.N7. 64
5065M
5,285,OO7
-s-z%
t,8%
Unemploymenl
40,3AD
13,d39
21,354
13,000
-
on%
on%
Clothing Allowance
5,002
511)9
10,T80
10,774
13,525
0.5 5
-2G.9%
on%
Total B�nefi#
10,27D,937
iD-,w,m
10,79341)21
11,765.321
11,9&%519
14019,052
AAM
*z%
Office Supplies
47DAG
4115,174
494,459
481,442
427,525
427,525
a1.2%
OD%
Small Taols&Minor Equip
1D9J$22
149,013O
9Z-D20
97,318
163,569
133,5ff0
SBA %
-1433:%
Reereafion Prng Supplies
112235
19.782
20-42
31,13D0
37,090
37,000
IGA%
anal
Fire Supplies
1B1,56B
114,465
14"3
186,977
151,37E
161,3T7
-
an%
StreE. Ma 1t Supplies
167,099
1B6,077
15k524
24D,3D0
152,760
165,725
-3&774
.2n%
OL9E-
342,502
32 ,2I}4
305,864
2291,2115
325,485
308,41ki
-s--%
loal Supplies
1AS3.445
1.2111.702
1�22`},d02
1,308,122
U57,656
1,213,GB1
ter%
-1ph
ProiessionA Senkes
2.776,406
3,3D4,744
3,57a406
3,1102,177
3,M2,4H
1. 144,0M
-i s%
Commtnicaticn
407,476
4DD.a2a
471,M9
4W.370
434,6M
434,13M
-0 z
ou%
Tra-,el
143,012
1136,239
16D,103
1ali,8B0
169,630
159,630
-1=-.-
ou%
Ad*nising
24,222
26,052
3Dz51
51,500
47,550
A7,WA
--?-
CD%
Operating Rents & Leases
294,737
478,425
508�4W
4A5 670
466, 130
466,230
-A,oz
13 D%
Equipment Replacerneni
4I32,893
1W.014
567AB
IM014
067,012
166,014
301,e%
-?5.1%
Equip Operations & Maint
1.13D,405
1,411,723
1,641,916
1,055,686
1,763,643
1,784,020
6-9x
1r%
Insurance
810,799
131113,097
07D,416
W-13.962
1.0135.775
1,047,762
zS%
i
Utililies
1,828,751
1,015.730
1,99Z419
1,928,305
109,424
ZD99,1O1
3.7%
33%
Repairs and Maintenance
850.278
OM.275
5B4,152
BOT,4118
623.150
587.912
-zzax
-s.r%
Miscellaneous
832,BSO
030,305
1,031[1,083
1.114.473
886,637
890,637
-2a.3%
02%
Clams &Judgements
160,514
89,100
334,702
3A2,D00
320,090
320,000
is-z%
CD%
Credit Card Fees
38,645
58.078
4D,456
71),081
43,081
43,OB1
-3e.9%
QD%
Other
E.014
6,398
0
5,5O0
4.250
4,250
-34.6%
one
Total ServicLLs
9,71D.B99
11),07,7%
11193d MO
11,873.136
11,M.377
11.165.751
,Z1%
4n%
SCORE Jain
1.310,736
1,4116,963
1,37D, 506
1,533,4(15
1,1526,355
1,675.146
-DA%
3D%
Valley Communications
1,034,820
1,111,663
1,137,420
1,184,617
1,184,253
1,219,01
o.oz
3n%
Animal Conaal
109,136
111,A92
55064
119.852
125,DD0
131,250
s-2%
5a%
Other
244,1565
251,070
240.217
254,D50
2A6,758
293,117
129%
.2a%
TamllntergovemmenmJ
2,GM347
2.941,5SA
3A2D,T07
3,191.124
3,222.36E
3631904
1xc
pox
Machinery and Equipment
79E.fill
117,67
7E..E.89
313,0D0
24D,000
270,000
7oo.0%
1�
Total Capital
798,601
117,679
76�50
30,OD0
244,OD6
270,OD0
ruc.0%
126%
Total NpL Ex pe ndFhrrrLs
53,773.922
54,977,431
57,217, 642
59,19VU
59,503,8A6
0,402,8D5
o-6x
1.9%
Transfers - Deft S-k Furds
2,874,831
2,773,452
3,37B&04
5, 1140.58O
4.D33,851
3,587,180
-31.11%
-11.1%
Transfers- Capital, Daher
1,451,OrJD
2,5134,044
1,5a190
3,1322,I)91)
2119=
1,621,950
-37.3%
-.2es%
Transfer- Contingency
a32,?3^_
180,715
92,572
-
565189
210,ODO
on%
.258 s%
Total FxpendFhuP!i
S 58,533,435
S 611.495,692
$ 62,277,417
t 68,667.314
$ 65.065.875 $
65.821,9d5
65
55
INFORMATIONAL MEMO
Page 28
Possible Next Steps for Council
- May 4, 2020: confirmation from Council that, based on what we know today, the
revenue gap for 2020 is $12 million and a continuing revenue gap of $6 million in
2021; meaning ongoing budget reductions.
- May 11, 2020: Decision on tools to be used in the decision tree to close the revenue
gap.
Suggested schedule for the next several Finance Committee meetings
• April 13, 2020: review 2020 projections, review cash flow, review contingency fund
reserve policy and best practices
• April 27, 2020: review impacts to capital projects in residential and arterial street
funds, impacts of unemployment costs to the City
• May 11, 2020: Review decision tree and triggers for each scenario
• June 8, 2020: review updated projections and sales tax data
RECOMMENDATION
Updated Recommendation: Council consensus on 2020 revenue gap scenario of $12
million with a continuing revenue gap of $6 million in 2021 and discussion of tools that
may be used to close the gap.
ATTACHMENTS
Resolution #1919 — Reserve Fund Policy
2019 — 2020 Biennial Budget Document Programs by Department (pages 452 — 457)
56
= .'7i OT1111=3
Memo to the City of Tukwila Finance Committee
Decision Tree for Financial Impacts of COVID-19
57
w
TO: Finance Committee
FROM: Vicky Carlsen, Finance Director
CC: Mayor Ekberg
DATE: May 6, 2020
SUBJECT: Decision Tree for Financial Impacts of COVID-19
Updated for May 18, 2020 Regular Meeting
ISSUE
Decision tree for use in responding to the financial impacts of the COVID-19 pandemic.
Affirm estimated revenue gap of $12 million in 2020 and $6 million in 2021 via resolution,
approve resolution for temporary wage reduction for non -represented staff.
DISCUSSION
Recap of Current Projected Revenue Gap
As discussed in the first five pages of the attached memo, the City identified an initial
revenue gap (March through May) of $6 million that has been filled with phase I reductions
of $4 million, with departments currently working to close the remaining gap.
Departments have been scrubbing their budgets and have closed the remaining gap as
of May 6, 2020.
There is an additional revenue gap of $6 million for the remainder of the year that needs
to be addressed, bringing the total 2020 revenue gap to $12 million.
Additionally, economic indicators point to a continuing loss of revenue in 2021 as well. At
this time, we are projecting a revenue loss of $6 million in 2021. Thus, the City will need
to fill a total revenue gap of $12 million in 2020 and a revenue gap of $6 million in 2021;
meaning ongoing budget reductions. The 2021 revenue gap can be addressed via the
biennial budget process, with some of the strategies identified for 2020 to be carried
forward as appropriate.
Affirmation of Revenue Gap, Tools for Decision Tree
Included as an attachment is a draft Resolution affirming the estimated revenue gap of
$12 million in 2020 and $6 million in 2021, and authorizing the Mayor, city Administrator,
or Designee, to implement various cost -saving measures to address revenue shortfalls
due to the COVID-19 pandemic. The draft Resolution identifies voluntary retirements and
separations, reductions in workforce through attrition, furloughs, layoffs, pay reductions,
and/or reductions in operating and office hours, closure of offices or departments or
reductions in levels of operations or services, as needed. The Mayor, City Administrator,
59
INFORMATIONAL MEMO
Page 2
and Staff will continue to collaborate and communicate with the City Council as to what
actions will be taken based on collective bargaining negotiations currently underway with
the City's labor partners.
Decision Tree
For purposes of discussing tools that can be utilized in the decision tree to close the
revenue gap, the tools are grouped into two buckets: labor and non -labor. As a reminder,
any changes to wages, hours, and working conditions must be bargained with labor
partners. Based on discussion at the May 4, 2020 Committee of the Whole, the following
tools were identified that can be utilized to close the gap in both 2020 and 2021.
Tools for Decision Tree
Comments
Labor
Voluntary pay reduction
Department Directors have volunteered to the end of 2020.
Considered to be long-term and could be budgeted in 2021-
Layoffs
2022. Layoffs would typically be used for service level
reductions or to follow collective bargaining agreement (CBA)
language. Would result in unemployment costs to the City
Voluntary and involuntary
Considered to be short-term, and impacted employees could
furloughs
be reinstated by the end of 2020 or when workloads return to
normal. Would result in unemployment costs to the City
Voluntary retirements
Would result in long-term savings only if vacated position
and separations
remains unfilled/frozen
Early retirement incentive
Would result in long-term savings only if vacated position
remains unfilled/frozen
Hiring freeze
Results in savings only as long as the position remains
vacant
Reduced work hours per
Should not result in unemployment costs to the City
week/pay reduction
Reduce overtime
Some CBAs contain provisions for overtime in certain
instances and some overtime is reimbursable.
Voluntary leave without
Depending on length of leave, could result in unemployment
pay
costs to the City
Attrition
Freezing positions that have been vacated through attrition.
Savings only realized if positions remains vacant
Non -Labor
Eliminate travel and non-
No additional comments
essential training
Reduce/eliminate
transfers to capital
Would affect capital projects that do not have a dedicated
project funds
revenue source
Reduce department
budgets by program or
No additional comments
type of expenditure
INFORMATIONAL MEMO
Page 3
There is currently an adequate fund balance in the Fleet fund.
Any reductions in transfers would be one-time in nature.
Reduce transfers to Fleet
Schedule for replacing certain vehicles would need to be
fund
reviewed and updated as needed in order to maintain a
positive fund balance. Fleet purchases scheduled for this
year are being reviewed and will be moved to next year when
possible
Contingency fund use is one-time in nature and, per
Contingency fund
Resolution No. 1919, must be repaid within a reasonable time
frame
Would need to be repaid and include a reasonable interest
Interfund loan
rate. An example would be the sewer utility loan to the
general fund
Changes in service levels are policy decision that are set by
Service level adjustments
Council, typically through the budget or budget amendment
process
Also included as an attachment is a document published by Government Finance Officers
Association. The document identifies short-term strategies that can be implemented in
order to maintain a balanced budget. Most of the tools listed in the document are included
in the chart above.
Parameters for Decision Tree
In order to close the revenue gap in both 2020 as well as 2021, the following parameters
are offered:
- Reductions should be proportional and equitable across departments and labor
groups as applied to programs identified through the priority -based budgeting
process
- Revenue gap in 2021 can be closed by continuing the use of some tools into next
year as determined by City Council via setting the 2021-2022 biennial budget
- Changes in service levels are policy decisions that are best made through the
upcoming budget process
- Appropriate mix of reductions in labor costs with contingency funds
- Contingency fund use is one-time and, per adopted policy, must be repaid within a
reasonable time
- Early retirement incentives could be a tool utilized to close the revenue gap in 2021
Non -Represented Staff
To achieve budget savings towards the projected $12 million revenue shortfall, one tool
available to the City is to implement a temporary wage reduction of non -represented staff
effective June 1, 2020 through December 31, 2020. Staff is recommending a 10% base
wage reduction for Administrative Team Members (listed below) and the use of 14-
furlough days for the rest of the non -represented positions which is roughly equal to a
10% wage reduction and work hours. Savings is estimated to be approximately $337
thousand.
61
INFORMATIONAL MEMO
Page 4
• City Administrator
• Deputy City Administrator
• Public Works Director
• Police Chief
• Fire Chief
• Parks & Recreation Director
• Technology Services Director
• Finance Director
• DCD Director
• Human Resources Director
• Economic Development Administrator
• Municipal Court Administrator
The difference in the 10% wage reduction for Administrative Team members and other
non -represented positions taking furlough days is to ensure continued compliance with
Fair Labor Standards Act rules regarding overtime. To maintain FLSA Exempt status (not
be required to pay overtime) the temporary percentage wage reduction for the next seven
months for the Administrative Team members allows them to continue to receive a set
salary regardless of the number of hours worked. The other FLSA Exempt non -
represented positions will be temporality changed to a FLSA non-exempt hourly pay
status and take the 14 furlough days to reduce their pay by 10% and work the
commensurate hours associated with the pay reduction. Details of how the furlough time
would be implemented is being worked out by a small group to ensure City services and
continuity during this time.
A second draft resolution, which implements these cost -saving measures for non -
represented staff, is attached to this memo.
Department Budget Scrub
Departments were asked to scrub their budgets to offer a list of additional reductions for
2020. The chart on the next two pages lists reductions by department that were identified
through the budget scrub exercise and has been updated with reductions identified as of
May 6, 2020. The table below indicates budget reductions, by program for each
department. It does not include reductions in overtime, travel and non -essential training,
or furloughing of part-time positions as those reductions were captured in Phase 1,
immediate reductions.
In addition to the chart on the next two pages, the 2019-2020 Biennial Budget Program
by Department attachment has been updated to reflect those programs that are reduced
through the department budget scrub. Each affected program is highlighted in yellow.
62
INFORMATIONAL MEMO
Page 5
Reductions by
Reduction
Effects of Reductions
Department/Program
Mayor
Employee Recognition
10,750
Cancellation of all remaining employee recognition events for 2020
Organizational Dev. & Training
14,519
Cancellation of misc. staff development training
Professional Services
5,500
Reduction of non -essential services
Economic Development
City Policy Development
3,300
Delaying economic development plan
City Clerk
Records Management
15,000
Reduce document digitization efforts
Total Reductions from Mayor's
49,069
Department
Administrative Services
Human Resources
Labor Relations
12,500
Reduce prof svos for labor relations and investigations and advertising
Community Svcs & Engagement
Community Engagement
17,500
Reduced funding for Community Connectors program, advertising, and communications
Total Reductions from
30,000
Administrative Services
Finance
Insurance &Risk Management
90,000
Reduced liability insurance in 2020 and claims &judgements
Budget Preparation
25,000
Remove budgeted cost of budget software
Total Reductions from Finance
115,000
Recreation
Organizational Support
57,408
Reduce maintenance project work,
Planning & Development
7,000
Discontinue Rec guide for 2020, discontinue professional development training
Wellness & Enrichment
16,960
Prof svcs contracts, supplies for programs
Front Desk
9,950
Supplies, credit card charges, armored car svos
Events
41,299
Supplies and services contracts
Preschool
2,600
Reduced costs due to program closures
Senior Services & Programs
4,503
Reduced costs due to program closures
Teen
17,980
Removed all trips with admissions costs, reduced costs due to program closures, cancelled
winter open gym
Youth
44,602
Removed all outings and pool trips, reduced costs due to program closures
Volunteer Services
500
Cancelled volunteer appreciation event
Facility Rentals
10,950
Reduced supplies due to closure
Administration
6,000
Supplies reduced
Total Reductions from Recreation
219,752
Parks
Parks
32,902
Utilities, supplies, small tools & equipment
DCD
Permit Intake and Coordination
3,500
Reduced operation supplies and training
Current Planning
12,369
Reduced extra labor - student intern fuloughed
Const. Permit Review & Inspection
400
Reduced operational a)penses
Comp. Plan Implementation
34,486
Professional Services contracts suspended
Code Enforcement
400
Reduced training
Administration
9,875
Reduced operation supplies and training
Total Reductions for DCD
61,030
Court
Multiple programs
51,602
Court is legally required to manage a variety of cases within strict time limits and process
standards. Current budget reductions are, in general, negatively impacting the court and further
cuts could prove critical - especially since demand for court services will absolutely increase.
63
INFORMATIONAL MEMO
Page 6
Reductions by
Reduction
Effects of Reductions
Department/Program
Police
Department Training Program
38,000
While all legally mandated training and certifications will still occur, professional advancement
and train -the -trainer type training will be reduced. Will impact nearly all PD teams: Patrol,
Investigations, etc.
Evidence & Property Mgmt.
14,318
Will require PD to move all items being stored in the off -site Evidence facility to another location,
most likely the new PD facility or back to 6200 if the new construction isn't ready yet.
Community Policing Team &
135,428
Police Patrol Services
Quartermaster
20,000
Will reduce supplies and tools for PD teams, including: Patrol, CPT, Investigations, etc.
Police K9 Program
30,000
The PD will forgo the acquisition of a tracking K9 in 2020
Narcotics & Street Crimes Team
5,000
Our covert employees will reduce their number of rental vehicles, which will impact their ability to
JAC)
swap out "burned" cars.
PD Fitness Initiative
2,600
Will eliminate employee health and fitness initiatives as well as any Department training
scheduled for the space.
Total Reductions for Police
245,346
Fire
Administration
6,000
Subscriptions, dues
Logistics
28,000
Supplies in fire stations, SCBA, chain saws
Special Projects/Tasks
8,000
No S/H meetings, hearing tests
Training Received
5,500
Remove rescue team training
Fire Prevention Administrative
2,000
Reduce training
Emergency Mgmt. Assist Team
30,000
EM office reduce purchases
Total Reductions for Fire
79,500
TIS
End User Infrastructure Service
75,000
Delay refresh of laptops. Cost would be pushed into 2021. This is potential cost savings in the
interim. Still in negotiations
Vendor Management
12,500
Remove Vendor Info. Tech
Network Infrastructure Services
36,000
Delayed Voice PBX by 1 year
GIS Services
36,500
ESRI Budget reduction
Total Reductions for TIS
160,000
Public Works
Facility Cleaning/Custodians
50,000
Defer maintenance repairs of City -owned facilities
Street (Public Works)
Video & Fiber
15,000
Defer maintenance of City -owned cameras
Transportation
35,000
Defer maintenance of roadway/sidewalk repairs
Total Reductions for Street
50,000
Department
Fleet Transfers
O&M
892,010
Reduction of fleet transfers affects all departments in the general fund that have fleet vehicles.
Capital
83,007 Transfers draw down the Fleet fund, which currently has a healthy fund balance
Total Fleet Reductions
975,017
Grand Total Reductions Achieved
2,119,218
through Budget Scrubs
Suggested Approach to Closing the Revenue Gap
The chart on the following page provides one option to close the gap for 2020 and are
estimates until departments complete budget scrubs and negotiations with labor groups
are completed. This is a high-level summary that includes many of the tools listed above.
It should be noted that this model shows the use of contingency funds in two places. First,
as a 3:1 match for reduction in labor costs. Second, as additional funds needed to
balance 2020. Any additional reductions by labor groups or department scrubs would
result in less contingency funds needed to balance 2020. Each labor group may choose
to participate in a different way. For example, one labor group will achieve their
z
INFORMATIONAL MEMO
Page 7
proportional share of reductions by holding positions vacant, while another may opt for
reduced work week rather than layoffs.
Estimated FY 2020 Gap to Fill
12,000,000
Phase I
Hiring freeze for current vacant positions
(1,600,000)
All travel, non -essential training cancelled
(140,000)
Furlough part-time staff
(150,000)
No overtime unless authorized by Mayor
(910,000)
Transfers to capital project funds elimated
(1,200,000)
Total Phase I Reductions
(4,000,000)
Phase II
Department Budget Scrub (2,100,000)
Phase III
Furlough days/pay reduction (non -represented) (382,000)
Potential Furlough Days (labor group) (700,000)
Contingency Match for Labor (3,246,000)
Total Phase III Reductions (4,328,000)
Total Reductions: Phases I, II, and III (10,428,000)
Additional Contingency Funds to Balance (1,572,000)
Remaining Gap to Fill
Total Contingency Funds Available 7,099,000
Used in 2020 (4,818,000)
Balance Available for 2021 2,281,000
In order to close the estimated revenue gap of $6 million in 2021, policy decisions on
service levels would occur through the 2021-2022 budget process during the summer
and fall months of 2020.
Interfund Loan
At the May 11, 2020 Committee of the Whole meeting, information was requested
regarding the use of an interfund loan in lieu of utilizing, or reducing the use of,
contingency funds to close the revenue gap.
Interfund loans are permissible and can utilize funds which are clearly inactive or are in
excess of anticipated cash needs throughout the duration of the loan and are legally
available for investment. Any borrowings from one fund to another fund should be
stipulated in a resolution or ordinance that specifies the terms of the loan including
65
INFORMATIONAL MEMO
Page 8
repayment schedule and a reasonable interest rate (based on the external rate available
to the City). Repayment terms of the loan may continue over a period of more than one
year, however, a loan that continues longer than three years will be scrutinized by auditors
for possible permanent diversion of funds. Because an interfund loan is strictly an
internal funding mechanism, there are no costs to initiate the borrowing. The loan can be
repaid earlier if funds are available. Any early repayment would reduce the total interest
cost.
The last posted investment rate in the Local Government Investment Pool (LGIP) is for
April 2020, and reflects a net earnings rate of 0.55%. The current prime lending rate is
currently 3.25%.
Repayment terms would need to be identified in order to accurately determine the amount
of interest paid over the life of the loan. However, in order to provide some idea of interest
cost for an interfund loan, the following examples are provided using the following criteria:
- Amount of loan = $4.818.000 (utilizina interfund loan rather than continaencv funds)
- Annual installments
- Simple interest calculation on outstanding principal
Total interest over the life of the loan (rounded):
Length of Loan
0.55%
LGIP
3.25%
Prime Lending
3 year repayment schedule
$53,000
$313,000
5 year repayment schedule
$79,000
$470,000
10 year repayment schedule
$146,000
$861,000
RECOMMENDATION
Council is being asked to approve the two Resolutions and consider them at the May 11,
2020 Committee of the Whole meeting and subsequent May 18, 2020 Regular meeting.
ATTACHMENTS
- Informational Memorandum — Budget Impacts due to COVID-19 Pandemic dated
March 31, 2020 and most recently updated May 11, 2020
- Resolution #1919 — Reserve Fund Policy
- 2019 — 2020 Biennial Budget Document Programs by Department (pages 452 — 457)
- Cash is King: Short -Term Strategies to Slow the Flow of Money out the Door and
Keep the Budget Balanced
- Draft Resolution — Non -Represented Staff
- Draft Resolution — Affirming Revenue Gap, Tools for Decision Tree
City of Tukwila a Allan Ekberg, Mayor
Administrative Services Department- Rachel Bianchi, Deputy CityAdministrator
INFORMATIONAL MEMORANDUM
TO: Finance Committee
FROM: Rachel Bianchi, Deputy City Administrator
CC: Mayor Allan Ekberg
DATE: May 19, 2020
SUBJECT: City of Tukwila 2020 Facility Study (City Hall Campus, Tukwila Community Center,
Fire Station 53 and Fire Station 54 — Assessment and Planning Services)
McKinstry
ISSUE
Execute contract to provide Assessment and Planning Services for the City of Tukwila 2020 Facility Study
(City Hall Campus, Tukwila Community Center, Fire Station 53 and Fire Station 54).
BACKGROUND
With the imminent opening of the Tukwila Justice Center, many staff members currently inhabiting City
Hall and the 6300 building will move out of these facilities, leaving significant unused space. The 2015
Facilities Study adopted by the Council contemplated a future with a renovated City Hall, housing all
City Hall Campus staff, and the ultimate demolition of the 6300 building. Since the Justice Center will
open in September of this year, it is time to start the next phase of City Hall Campus planning. In
addition, the City lacks up to date seismic information on its facilities, making it difficult to determine
the best next steps for facilities planning.
A6*6111*11i[Q►1
The City engaged in a public procurement process that included advertising a request for proposals
from interested firms in the Daily Journal of Commerce, reviewing and scoring proposals received and
selecting a firm. McKinstry is being recommended as the selected firm. The City has confirmed that
McKinstry is well qualified to conduct the work requested. McKinstry initially set forth a four -phase
program that would provide seismic and facility condition assessment, space planning at City Hall,
develop a concept and provide a final report to the City Council. Due to the revenue shortfall
associated with the coronavirus pandemic, staff is proposing doing phases one and two now and
deferring the final concept to a later date.
Phases one and two will allow the City to better understand the seismic condition of City Hall, 6300
Building, Tukwila Community Center, Fire Station 53 and Fire Station 54. Moving forward with these
phases will allow the City fully understand the condition of City Hall, the space needs for the
organization with the departure of the Court and Police Department to the Justice Center, and develop
a preferred option (with initial cost estimates) to address facilities needs at the City Hall Campus. This
information will assist the City in determining next steps for the City Hall Campus, which is expected to
be discussed as a part of the development of the 2021/2022 budget.
FISCAL IMPACT
The following table shows the cost estimates for phase 1 and phase 2 with the combined not to
exceed total of $188,200. There is currently $190 thousand in the Facilities 303 fund to cover this
expenditure.
Phase 1 - (Seismic and Facility Condition Assessment)
143,400.00
Phase 2 - (Space Planning to City Hall)
44,800.00
Total
$188,200.00
67
RECOMMENDATION
Council is being asked to approve the Assessment and Planning services contract for scope of work,
associated fees, and schedule described above and in Exhibit A. In addition, staff is requesting authority
for the mayor to sign a no -cost contract amendment with both SOJ and the Council's Program
Management Quality Assurance consultant to provide oversight and quality assurance monitoring of
McKinstry during the two phases of this project. Both SOJ and the PMQA have indicated there is room in
the existing contracts to perform such services.
ATTACHMENTS
Proposal for McKinstry's Assessment and Planning services with Scope of Work and Fee
Proposed contract
Comprehensive capital improvement program spreadsheet developed for May 18, 2020 meeting
Phone: 206-433-I800 • Email: Mayor@TukwilaWA.gov + Website: TukwilaWA.gov
For
Phase 1 & 2 Planning
Proposal
City of Tukwila
City Hall Needs Assessment and Planning Services
APRIIL 28, 2020
•
•
•
ME
instry
ife Of Your Building
J
4/28/20
Rachel Bianchi
5005 3rd AVE. S. • SEATTLE, WA 98134 • 206.762.3311 •mckinstry.com
Deputy City Administrator
City of Tukwila
6300 Southcenter Boulevard, Suite 115
Tukwila, WA 98188
Justine Kim
Partner
Shiels I Obletz I Johnsen
101 Yesler Way, Suite 606
Seattle, WA 98104
Re: City Hall Needs Assessment and Planning Services — Phase 1 & 2
Dear Rachel,
I'm pleased to provide McKinstry's proposal for the City Hall campus needs assessment master plan project. The
enclosed pricing is based on the program scope and goals communicated by your team and McKinstry's
understanding of the City of Tukwila's need for support in assessing the current condition and helping city
stakeholders plan the next evolution of the City Hall campus.
McKinstry and our subcontract partners Signal, tklsc, and RC Cost Group are excited to begin the discovery
process for at City Hall and to provide your team with valuable capital planning and risk management
information. Please contact me if you have any additional questions about this pricing proposal. I look forward
to hearing from you.
Sincerely,
Grant Granger Account Executive, Technical Services
206-552-3020 grants@mckinstry.com
70
City of Tukwila: City Hall Campus Needs Assessment
and Planning Services — Phase 1 &2
Proposal Overview
PHASE
OUTCOME
COST
DESIGN TEAM TASKS
ANTICIPATED
ENGAGEMENT
ANTICIPATED
DURATION
instry
ife Of Your Building
1 DEFINE THE PROJECT
Risk identification and high level
programming information
$143,400
Seismic Assessment of
City Hall 3 6360
Identification of critics! seismic Issues and
retrofit costs to remediate.
Facility Condition Assessment
of City Hall
Full visibility into the deferred maintenance,
life aspactanq, and short•tarm/long•tarm
capital replacement roses for all building
assets. Includes NPV comparison.
Vat/Research Previous Study
An In depth assessment of the previous
information collected and a collection of
new data to provide appropriate context
for the grew project.
Create Program/Inventory
A detailed assessment of the remaining
departments and the necessary space and
activities that should be accommodated in
the program.
Determine Planning Priorities
Create a strategic set of priorities with the
advisory committee input.
Test Fit$
Build a pros and con's list from the in'iteI
FCA flndirgs, establish adjacencies of
departments.
Seismic Assessment
Tukwila Community Center, Fire Station 53
and Fire Station 54, Identify seismic issues
and retrofit costs to remediate.
Additional Option Service
Abbreviated 63CO FCA Summary/overview
and streamlined data applied to capital
planning tools
• weekly Check -ins with SAJ
• Two meetings/interviews of key
stakeholders
One meeting to review and report on
findings up to this point
June 1 - July 15
2 EVALUATE THE PROJECT
Focused Information
$44,800
Interview Departments and
Users
Through a series of Interviews the team
will document and assess the needs from
staff.
Develop Space Planning
Optians
Develop a series of space plans
that illustrate the possibilities for
accommodating the program within the
space.
Vat Preferred Option and
Build Team Recommendations
With guidance from the Cry Advisory
Committee, the team will vet and
hone the preferred option. Identify
recommended programming locations
far specific structures based on analysts
of FCA and the technical performance
crlteria.
Technical. Review of Building
Parfo anon ca ifor preferred option)
Understanding of critical systems -haled
implications for expansion or retrofit
decisions,
Progress Report(s) to Council
Up to two presentations to council
on findings to date and preliminary
recommendation Recommendation
will include preliminary, rough -order -of -
magnitude cost ranges of the preferred
space plan recommendation.
• Weekly Check -Ins with SOJ
• One workshop with key department
stakeholders
• One meeting to review and report on
findings up to this point
• Council presentations)
July 15 - August 15
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CONFIDENTIAL & PROPRIETARY
CITY OF TUKWILA CITY HALL CAMPUS
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City of Tukwila: City Hall Campus Needs Assessment
and Planning Services — Phase 1 &2
Phase 1 Deliverables
McKinstry team will provide City of Tukwila with a consolidated Phase 1 report that includes:
Seismic Assessment
• Written assessment of key seismic findings based on review of the reasonably accessible portions of the
existing facilities and review of prior documentation.
• Coordination with RC Group independent cost estimators for pricing of any recommended/necessary
seismic retrofits at all five facilities, if required
Facility Condition Assessment
• Facility condition assessment including a summary description of each site and facility with necessary and
recommended improvements, Analysis of critical (immediate) repairs, and repairs anticipated over the term
of the analysis, schedule for recommended replacement or repairs (schedule of priorities), and 5-year
annual cost breakdown with recommendations for project prioritizations. Also includes full facility asset
inventory in Excel database format and FCAViz capital planning and scenario visualization tool.
Programming and Architectural Analysis
Analysis of prior recommendations/documentation, anticipated departmental space needs, and City
established planning priorities. Preliminary recommendations which may include written descriptions,
photographs, diagrams, and drawings. Preliminary recommendation will also include initial rough -order -of -
magnitude cost ranges of the preferred programming direction.
Phase 2 Deliverables
• Progress report out to Key Stakeholders and/or Council on key findings, preferred option, and preliminary
recommendations including high-level cost guidance.
Timeline & Staffing
The McKinstry project team will be led by Keith Bass, Project Director for McKinstry's Technical Services
consulting team. Keith will be the City's day-to-day point of contact and will be responsible for coordinating key
meetings and milestone check -ins, and ensuring that every deliverable meets the City's expectations for the
project. Keith will work closely with Kristin Kelsey and Mark Johnson from Signal Architecture + Research. Jason
Tornquist of tklsc will lead the delivery of the seismic assessments; and Andy Cluness from RC Cost Group will
provide independent cost estimation for the preferred option developed by the combined team. Keith will also
be supported by additional McKinstry subject matter experts including Mark Hood, Senior Facility Assessment
Consultant; Mark Nieman, Building Energy Program Manager; and Scott Henderson, Commissioning Lead.
We have assumed a June 1 start date for Phase 1 of the project following notice to proceed from the City. The
McKinstry team will establish appropriate project progress meetings in collaboration with the City of Tukwila
team. Our preliminary recommendation of key stakeholder meetings and phasing in order to meet the City's
objectives can be found on the proposed schedule on the following page.
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CITY OF TUKWILA CITY HALL CAMPUS
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NEEDS ASSESSMENT& PLANNING SERVICES 11
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City of Tukwila: City Hall Campus Needs Assessment
and Planning Services
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City of Tukwila: City Hall Campus Needs Assessment
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Pricing
BASE SCOPE: BY -PHASE LUMP SUM PRICE
The Phase 1 & 2 fees listed below detail the McKinstry project team's costs to complete each phase of the core
Needs Assessment and Planning services program.
Phase 1: Define the Project
$143,400
Phase 2: Evaluate the Project
$44,800
Total Phase 1 and 2 Scope
$188,200
OPTIONAL ADDITIONAL SCOPE: ITEMIZED LUMP SUM PRICE
The City of Tukwila may authorize the below scope addition via formal change order during Phase 1 if desired.
Abbreviated Facility Condition Assessment of 6300 Building (Phase 1) 1 $9,600
ASSUMPTIONS
• Work will be executed during normal business hours (6AM — 4PM, M-F)
• The City shall make key department Stakeholders and maintenance/operations personnel available for
interviews as reasonably requested by the project team. McKinstry team will make every effort to minimize
disruption to the daily work activities of participating City personnel
• Proposal assumes that key project meetings and stakeholder interviews can be held virtually or via phone
while social distancing guidelines or stay-at-home orders remain in effect.
• Proposed schedule is contingent upon available site access to perform necessary assessments of facility
assets, systems performance, and space considerations.
• City shall recognize the site seismic and condition assessments as essential services supporting the
continuity of core City operations in compliance with the Governor's Stay Home --Stay Healthy Order.
• McKinstry site assessment team including subcontractors shall comply with McKinstry's Social Distancing
Protocol and COVID-19 Safety & Security Response Plan, or applicable City standards where more stringent.
• For effective execution of this letter of intent we ask that City of Tukwila provide access to the following for
each facility, if it has not already been granted:
• Good Faith Survey for existing facilities
• Historical utility bills for the last 24 months.
• All mechanical, electrical, architectural, and structural drawings.
• All operational and maintenance manuals, balancing records, & specifications.
• Access to individuals that have relevant information pertaining to the day-to-day operation of
energy using systems on site.
Existing sustainability and energy efficiency goals for City operations
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CONFIDENTIAL &PROPRIETARY \
CITY OF TUKWILA CITY HALL CAMPUS 1} tk1sc
ifeOfYour Building NEEDS ASSESSMENT& PLANNING SERVICES 11
75
City of Tukwila: City Hall Campus Needs Assessment
and Planning Services
• Access, reports or information to City CMMS workorder system
• Information on recent major project history (last 10 years) for each facility
ACCEPTED BY:
City of Tukwila
Rep Name & Title
Signature
McKinstry Essention, LLC.
Geremy Wolff
Regional Director, Technical Services
Signature
Date Date
CONFIDENTIAL &PROPRIETARY \
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CITY OF TUKWILA CITY HALL CAMPUS
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NEEDS ASSESSMENT& PLANNING SERVICES 12
tk1sc
76
City of Tukwila: City Hall Campus Needs Assessment
and Planning Services
Terms and Conditions
PERFORMANCE OF WORK
McKinstry shall perform the scope of work ("Work") specified herein. McKinstry shall furnish all services
necessary to perform the Work and perform the Work to completion diligently, expeditiously and with adequate
forces. Customer shall use its best efforts to provide all information, materials, documents, and assistance that is
reasonably required for McKinstry to perform any and all aspects of the Work.
PAYMENTS
Customer shall pay McKinstry the compensation specified herein ("Price") for the value of Work that McKinstry
has completed, as the Work is completed. Customer shall pay McKinstry within fifteen (15) days of receiving an
invoice. McKinstry will be entitled to interest at the rate of 1.5 percent per month on all sums overdue and
unpaid from the date due.
WARRANTIES
Customer shall receive a one (1) year warranty that covers labor and materials provided by McKinstry as part of
the Work. This warranty commences on the date that the portion of the Work warranted is substantially
complete. However, McKinstry makes no warranty whatsoever regarding components of the Work provided by
third parties, and in such case the terms of the third party's warranty, including manufacturers' warranties, if
any, shall apply between Customer and the third party. The warranties in this section are exclusive and in lieu of
all other warranties, whether express or implied.
TERMINATION
Either Party may terminate this agreement upon fifteen (15) days written notice to the other Party. In such case,
the rights and obligations of each Party that arose prior to the termination date shall survive such termination.
DISPUTES
In case of dispute between the Parties, the Parties will attempt to negotiate a resolution. If a dispute remains
unresolved more than thirty (30) calendar days after the commencement of negotiation, and the Parties have
not agreed to extend such date, then the Parties shall pursue mediation. If any dispute remains unresolved more
than sixty (60) calendar days after the commencement of mediation, then either Party may pursue arbitration.
No litigation will be commenced by either Party unless all of the foregoing steps have been pursued to
completion.
CHOICE OF LAW, VENUE
The validity, interpretation, and performance of this agreement shall be governed by the laws of the state in
which the Work is performed. The venue for resolving any dispute shall be the county in which the Work is
performed.
FORCE MAJEURE
Neither McKinstry nor Customer shall be considered in breach of this agreement to the extent that the Party's
performance is prevented by an event or events that are beyond the control of such party, including but not
limited to acts of God, fire, earthquake, flood, storm, war, rebellion, revolution, insurrection, riot, strike, nuclear
contamination, and/or acts or threats of terrorism.
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CONFIDENTIAL &PROPRIETARY \
CITY OF TUKWILA CITY HALL CAMPUS 1} tk1sc
ifeOfYour Building NEEDS ASSESSMENT& PLANNING SERVICES 13
77
City of Tukwila: City Hall Campus Needs Assessment
and Planning Services
Notwithstanding any other provision(s) of this or any related agreement(s), if McKinstry's work is delayed,
disrupted, suspended, or otherwise impacted as a direct or indirect result of COVID-19 (coronavirus), including,
but not limited to, by (1) disruptions to material and/or equipment supply; (2) illness of McKinstry's workforce
and/or unavailability of labor; (3) government quarantines, closures, or other mandates, restrictions, and/or
directives; (4) owner or contractor restrictions and/or directives; and/or (5) fulfillment of McKinstry's
contractual or legal health and safety obligations associated with COVID-19; then, McKinstry shall be entitled to
a reasonable equitable adjustment to its scope, schedule, duration, and price to account for such delays,
disruptions, suspensions, and impacts.
NO WAIVER
No waiver of any breach, failure, right, or remedy shall be deemed a waiver of any other breach, failure, right, or
remedy, whether or not similar, nor shall any waiver constitute a continuing waiver.
INTELLECTUAL PROPERTY
Intellectual property provided by McKinstry to Customer as part of the Work are instruments of service owned
by McKinstry and are not "work made for hire" as such term is defined under U.S. copyright law. When the Work
is performed to completion, McKinstry grants to Customer a limited license to use the Intellectual Property to
operate, maintain, renovate, and manage the subject matter of the Work.
DAMAGES LIMITATION
Neither party shall be liable to the other party for any consequential, indirect, special, incidental, exemplary, or
similar, damages or losses, including loss of profits, arising out of or relating to this agreement, whether based in
contract or tort or any other theory, even if a party has been advised of the possibility of such damages.
Furthermore, the total aggregate liability of either party, under any theory, is limited to the agreement price.
INDEMNIFICATION
McKinstry shall indemnify and hold harmless Customer from and against all third party claims, damages, losses
and expenses for bodily injury, sickness, disease, or death or destruction of tangible property, directly arising
from McKinstry's performance of the Work, but only to the extent caused by the negligent acts or omissions of
McKinstry.
SEVERABILITY, SURVIVAL
If any portion of this agreement shall be held invalid in whole or in part under any law, rule, regulation, or order,
then such portion shall remain in effect only to the extent permitted, and the remaining portions of the
agreement shall remain in full force and effect. Any invalid portions shall be substituted with an interpretation
that most accurately reflects the Parties' intentions.
AMENDMENT
This agreement may not be amended except pursuant to a written amendment signed by an authorized signer
of each Party.
COMPLETE AGREEMENT
This agreement, including the exhibits attached hereto, is a fully integrated agreement. Any legal terms and
conditions appearing elsewhere in this agreement shall be ignored to the extent they contradict or are
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CONFIDENTIAL &PROPRIETARY \
CITY OF TUKWILA CITY HALL CAMPUS
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City of Tukwila: City Hall Campus Needs Assessment
and Planning Services
inconsistent with the terms and conditions contained in the foregoing numbered list. All previous agreements
between McKinstry and Customer as to the Work are superseded by this agreement.
instry
1/e Of Your Building
CONFIDENTIAL & PROPRIETARY
CITY OF TUKWILA CITY HALL CAMPUS
NEEDS ASSESSMENT & PLANNING SERVICES 15
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79
City of Tukwila Contract Number:
6200 Southcenter Boulevard, Tukwila WA 98188
CONSULTANT AGREEMENT FOR
FACILITIES ASSESSMENT AND PLANNING SERVICES
FOR TUKWILA CITY HALL CAMPUS
THIS AGREEMENT is entered into between the City of Tukwila, Washington, hereinafter
referred to as "the City", and McKinstry, hereinafter referred to as "the Consultant", in consideration
of the mutual benefits, terms, and conditions hereinafter specified.
1. Project Designation. The Consultant is retained by the City to perform assessment and
planning services in connection with the project titled City of Tukwila 2020 Facility Study (City
Hall Campus, Tukwila Community Center, Fire Station 53 and Fire Station 54).
2. Scope of Services. The Consultant agrees to perform the services, identified on Exhibit "A"
attached hereto, including the provision of all labor, materials, equipment and supplies.
3. Duration of Agreement; Time for Performance. This Agreement shall be in full force and
effect for a period commencing upon execution and ending at the end December 2020.
unless sooner terminated under the provisions hereinafter specified. Work under this
Agreement shall commence upon written notice by the City to the Consultant to proceed.
The Consultant shall perform all services and provide all work product required pursuant to
this Agreement no later than December 31, 2020, unless an extension of such time is
granted in writing by the City.
4. Payment. The Consultant shall be paid by the City for completed work and for services
rendered under this Agreement as follows:
A. Payment for the work provided by the Consultant shall be made as provided on Exhibit
"A" attached hereto, provided that the total amount of payment to the Consultant shall
not exceed $188,200 without express written modification of the Agreement signed by
the City.
B. The Consultant may submit vouchers to the City once per month during the progress of
the work for partial payment for that portion of the project completed to date. Such
vouchers will be checked by the City and, upon approval thereof, payment shall be
made to the Consultant in the amount approved.
C. Final payment of any balance due the Consultant of the total contract price earned will
be made promptly upon its ascertainment and verification by the City after the
completion of the work under this Agreement and its acceptance by the City.
D. Payment as provided in this section shall be full compensation for work performed,
services rendered, and for all materials, supplies, equipment and incidentals necessary
to complete the work.
E. The Consultant's records and accounts pertaining to this Agreement are to be kept
available for inspection by representatives of the City and the state of Washington for a
period of three (3) years after final payments. Copies shall be made available upon
request.
5. Ownership and Use of Documents. All documents, drawings, specifications and other
materials produced by the Consultant in connection with the services rendered under this
Agreement shall be the property of the City whether the project for which they are made is
executed or not. The Consultant shall be permitted to retain copies, including reproducible
copies, of drawings and specifications for information, reference and use in connection with
the Consultant's endeavors. The Consultant shall not be responsible for any use of the said
documents, drawings, specifications or other materials by the City on any project other than
the project specified in this Agreement.
6. Compliance with Laws. The Consultant shall, in performing the services contemplated by
this Agreement, faithfully observe and comply with all federal, state, and local laws,
ordinances and regulations, applicable to the services rendered under this Agreement.
7. Indemnification. The Consultant shall defend, indemnify and hold the City, its officers,
officials, employees and volunteers harmless from any and all claims, injuries, damages,
losses or suits including attorney fees, arising out of or resulting from the acts, errors or
omissions of the Consultant in 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
Consultant and the City, its officers, officials, employees, and volunteers, the Consultant's
liability hereunder shall be only to the extent of the Consultant's negligence. It is further
specifically and expressly understood that the indemnification provided herein constitutes the
Consultant'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.
8. Insurance. The Consultant 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 Consultant, its agents,
representatives, or employees. Consultant's maintenance of insurance as required by the
agreement shall not be construed to limit the liability of the Consultant 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 Amounts and Scope of Insurance. Consultant shall obtain insurance of the
types and with the limits described below:
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. Commercial General Liability
insurance shall be written on ISO occurrence form CG 00 01 and shall cover
liability arising from premises, operations, independent contractors and personal
injury and advertising injury. The City shall be named as an insured under the
Consultant's Commercial General Liability insurance policy with respect to the
work performed for the City.
3. Workers' Compensation coverage as required by the Industrial Insurance laws of
the State of Washington.
CA revised : 1-2020
0
Page 2
4. Professional Liability with limits no less than $1,000,000 per claim and
$1,000,000 policy aggregate limit. Professional Liability insurance shall be
appropriate to the Consultant's profession.
B. Other Insurance Provision. The Consultant'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 Consultant's
insurance and shall not be contributed or combined 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. Consultant 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
Consultant before commencement of the work. Certificates of coverage and
endorsements as required by this section shall be delivered to the City within fifteen (15)
days of execution of this Agreement.
E. Notice of Cancellation. The Consultant shall provide the City with written notice of any
policy cancellation, within two business days of their receipt of such notice.
F. Failure to Maintain Insurance. Failure on the part of the Consultant 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 Consultant 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 Consultant from the City.
9. Independent Contractor. The Consultant and the City agree that the Consultant 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 the Consultant nor any employee of the
Consultant 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 for contributing to the state
industrial insurance program, otherwise assuming the duties of an employer with respect to
the Consultant, or any employee of the Consultant.
10. Covenant Against Contingent Fees. The Consultant warrants that he has not employed or
retained any company or person, other than a bonafide employee working solely for the
Consultant, to solicit or secure this contract, and that he has not paid or agreed to pay any
company or person, other than a bonafide employee working solely for the Consultant, any
fee, commission, percentage, brokerage fee, gifts, or any other consideration contingent
upon or resulting from the award or making of this contract. For breach or violation of this
warrant, the City shall have the right to annul this contract without liability, or in its discretion
to deduct from the contract price or consideration, or otherwise recover, the full amount of
such fee, commission, percentage, brokerage fee, gift, or contingent fee.
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 : 1-2020
Page 3
12. Assignment. The Consultant shall not sublet or assign any of the services covered by this
Agreement without the express written consent of the City.
13. Non -Waiver. Waiver by the City of any provision of this Agreement or any time limitation
provided for in this Agreement shall not constitute a waiver of any other provision.
14. Termination.
A. The City reserves the right to terminate this Agreement at any time by giving ten (10)
days written notice to the Consultant.
B. In the event of the death of a member, partner or officer of the Consultant, or any of its
supervisory personnel assigned to the project, the surviving members of the Consultant
hereby agree to complete the work under the terms of this Agreement, if requested to
do so by the City. This section shall not be a bar to renegotiations of this Agreement
between surviving members of the Consultant and the City, if the City so chooses.
15. Applicable Law; Venue; Attorney's Fees. This Agreement shall be subject to, and the
Consultant shall at all times comply with, all applicable federal, state and local laws,
regulations, and rules, including the provisions of the City of Tukwila Municipal Code and
ordinances of the City of Tukwila. 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. Venue for any action
arising from or related to this Agreement shall be exclusively in King County Superior Court.
16. 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.
17. Notices. Notices to the City of Tukwila shall be sent to the following address:
City Clerk
City of Tukwila
6200 Southcenter Boulevard
Tukwila, WA 98188
Notices to Consultant shall be sent to the following address:
McKinstry
5005 3rd Ave. S.
Seattle, WA 98134
18. Entire Agreement; Modification. This Agreement, together with attachments or addenda,
represents the entire and integrated Agreement between the City and the Consultant 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.
CA revised : 1-2020
ME
Page 4
DATED this day of 2020.
CITY OF TUKWILA CONSULTANT
Allan Ekberg, Mayor
Attest/Authenticated:
City Clerk, Christy O'Flaherty
Printed Name:
Title:
Approved as to Form:
Office of the City Attorney
CA revised : 1-2020
Page 5
Project
Fund No.
Project
Status
2020 CIP Projects
103, 104, & 303 Funds
A B
City Funding
Funding 2020 Budget
C
D E
F
G H I
Grant/
2020
Phase 1 & II
103 Fund
Dedicated Rev
Expenditures Committed
Reductions
Balance Policy Decision Council
Funding
to Date for 2020
5/11/2020
Reduction Go / No Go? Decision
103 Fund - Residential Streets
1
103
99410303
42nd Ave S Phase III
Physically completed, final payments
City
$ 378,000
$ 24,102
$ 353,898
2
103
99110301
53rd Ave S
Utility undergrounding, Comcast next
Grant Funded
399,000
120,140
278,860
3
103
Various
(3) Safe Routes to School Projects
Not started, seeking grants, no $ to date
Grant Funded
$ 5,301,000
4
103
81910301
Traffic Calming
On hold due to negative fund balance
City
400,000
9,564
53,504
$ 350,000
5
103
Interfund Loan Repayment
Covers SCL expenditures for 42 & 53
City
336,932
Total 103 Fund $ 1,177,000
104 Fund - Arterial Streets
$ 153,806
$ 1,023,194
$ 350,000
6 104 104 Wages & Benefits Ongoing staff expenses City $ 485,383
$ 93,471 $ 391,912
7
104
98610403
Strander Blvd Extension
Closed, final 2020 grant reimbursement
City
147,362
$ 475,000
622,362
8
104
99310410
West Valley Hwy
Design funds only, underway
Grant Funded
600,000
60,237
539,763
9
104
91310407
BAR Bridge over Airport Way
Construction awarded 5/4/20
Grant Funded
-
2,614,000
17,861
2,596,139
10
104
91810404
42nd Ave S Bridge Replacement
In-depth bridge inspection
City
39,884
39,884
11
104
91810404
42nd Ave S Bridge Replacement
30% Design proposals due 5/19/20
City/WM tax
320,000
680,000
$ 1,000,000
12
104
9030404
S 144th St Bridge - Sidewalks
Not started, seeking grants, no $ to date
Grant Funded
-
227,000
13
104
92010401
Overlay & Repair 2020
Design underway, ready to bid, on hold
City
1,400,000
128,453
71,547
$ 1,200,000
14
104
82010403
Traffic Counts 2020
Ongoing, contract began 1/1/20
City
18,750
3,300
15,450
15
104
92010402
Bridge Inspections 2020
4 legally required bridge inspections
City
196,000
93,000
2,252
49,444
20,000
16
104
91710406
S 196th St/200th St Br Repair
Completed, retainage to be paid
City
1,304
16,000
17
104
91610407
S 119th St Pedestrian Bridge
Painting of pedestrian bridge on hold
City
200,000
18
104
91510405
ADA Improvements
ADA ramps at 53, 58, on hold w/ Overlay
City
50,000
50,000
19
104
82010404
Annual Traffic Signal
Ongoing, reduced by 50%, deferred maint.
City
125,000
2,549
59,951
62,500
20
104
11301302
Wetland & Envir Mitigation
Ongoing, required by permit
City
40,000
16,219
23,781
21
104
82010405
Transp Element of the Comp Plan
Not started, required by GMA, due by 2021
City
400,000
400,000
22
104
82010406
Walk & Roll
Update not started, on hold
City
75,000
75,000
23
104
81710404
TIB Channelization Study
Study completed, $25k balance remaining
City
25,000
25,000
24
104
Park Impact Fees Transfer to 301
Housekeeping transfer from 104 to 301
City
1,009,000
1,009,000
Total 104 Fund $ 4,331,379 $ 4,462,000
303 Fund - Facilities
$ 325,646
$ 5,835,232
$ 1,200,000
$ 1,432,500
25 Beginning Fund Balance Drawdown of fund balance $ 656,000
27
303
91930304
6300 Dry Fire Sprinkler System
Completed
City
30,000
$ 30,000
28
303
91630305
TCC Siding Repairs
Not started, 2 quotes received in 2019
City
200,000
$ 120,000
303
91630305
TCC Siding Repairs -Savings
Savings from bids
City
80,000
303
91630304
City Hall Siding Repairs
No started
City
100,000
$ 100,000
29
303
82030301
2020 Facilities Study/Seismic
RFPs in, not started
City
300,000
110,000
190,000
Total 303 Fund
$ 630,000
$ 30,000
$ -
$ 210,000
$ 390,000
Total 1 $ 1,822,500
Lines 3 & 12, not added in totals as completely grant funded and no grants to date.
Dedicated revenues include REET, Parking tax, & MVFT
Grant funded
Line 11, Solid Waste Utility tax revenue may be reduced due to COVID-19
00
v
hops://tukwilawa.sharepoint.com/sites/publicworks/engineering/Shared Documents/Actlw 2020 Project-lu
City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Tukwila City Council
FROM: Jay C. Wittwer, Fire Chief
BY: Jay C. Wittwer, Fire Chief
CC: Allan Ekberg, Mayor and David Cline, City Administrator
DATE: 05/20/2020
SUBJECT: Fire Department 15t Quarter Budget Report
CURRENT STATUS
The Fire Department has made changes to expenditures for the 2020 budget year. The Fire
Department has met the total adopted budget for Jan 1 to March 31, reflected at 25% and now through
April 2020, it is on target at 33% of budget. Overtime use is tracking ($77,802) under projected budget
as of April 30, 2020. The Fire Department is projected to be at or below budget when the final April
2020 budget report is provided by the Finance Department.
BACKGROUND
The Fire Department Administrative Team has committed to remain within the adopted budget for 2020.
In the past ten years the Fire Department has required a budget amendment that increases that
adopted budget each year. There have been reasons for these increases, however most years have
been centered on Salaries/Benefits and Overtime.
DISCUSSION
1st Quarter Financial Update through April 2020
As the attached report shows, the Fire Department is projected to be within the Adopted 2020 Budget if
current expenditure patterns continue. From January to April 2020, the Fire Department had spent
approximately 33% of its allocated budget. This has been accomplished through a collaborative
process of the full Fire Department Administrative Team as described below and in coordination with
support from other departments, specifically the Finance Department and our shared Public Safety
Analyst.
Overtime Usage
A key change in the Fire Department was the reduction in overtime usage from January to March 2020
as compared to 2019. As the charts show below, the Fire Department had already instituted changes
to its overtime usage in 2020, which caused significant savings.
Due to the impacts of COVID-19 and the "Stay Home, Stay Healthy" order, there was an expectation
of reduced revenues as well as reduced calls for service. The first phase of citywide operational
reductions included a directive of no overtime without prior authorization of the Mayor. For the Fire
Department, this meant not using overtime when there is an unscheduled leave and to staff an aid car
at Fire Station 52 rather than an engine. This change has resulted in additional savings. It should be
noted that if staffing falls below 12, then overtime is incurred to maintain minimum staffing of 12.
Page 1 of 3
Throughout 2019, the average overtime usage per month was $59,629. On
average, of this $59,629 monthly overtime cost, $36,342 was for minimum staffing.
In 2020, the average monthly overtime usage in Jan -March had decreased to $32,053, of
which $16,636 was for minimum staffing.
In April 2020, the actual overtime usage declined to $4,098, with minimum staffing
making up only $417 of the total month's overtime costs.
Fire Department Overtime (Salaries Only)
YTD as of December 31, 2019
Details
Division # Division
January February
March
April
May
June
July
August September
October November December YTD
TOTAL
200 Suppression
36,377
55,006
47,764
66,909
40,308
52,923
51,977
31,774
39,200
43,423
16,943 17,503
500,107
300 Prevention & Investigation
13,506
11,180
16,937
11,648
12,202
12,329
10,882
17,668
15,729
14,155
8,265 9,475
153,973
410 Training
3,764
2,624
3,846
2,895
1,902
2,624
3,581
3,957
323
4,569
- 1,122
31,206
600 Emergency Management
2,118
6,913
1,190
7,737
2,751
4,965
4,592
30,266
Total
55,764
75,724
69,737
81,452
54,411
75,612
69,191
53,399
55,251
67,112
25,207 32,692
715,552
The Fire Department has worked diligently in 2020 to stay within the Council's adopted budget. After 4
months in 2020, the Fire Department has only used 19% of its allocated budget for overtime. If this rate
is sustained, overtime usage for 2020 will be on budget.
Fire Department Overtime
Year -To -Daze as of April 30, 2020
RemaWng
Allocated
DNilslon #
Division
January
February
March
Apr6
Y MTarAL
Annual Budget %Spent
Budget
Budget
Vadance
200
Suppression
26,531
20,565
23,779
1,187
72,062
440,822
16.396
368,760
146,941
(74,8791
300
Prevendon &Investigation
5,985
5,931
4.626
857
17.399
65,143
26.7%
47,744
21,714
(4,315J
410
Training
1,607
890
2,537
2,055
7,089
18,813
37.7%
11,724
6,271
818
600
Ememncv Management
303
-
3.407
.
3.710
9.406
39.4%
5.696
3.135
574
The Fire Department has adopted the following additional administrative and training changes to better
manage within the 2020 Council Adopted Budget:
Educating the Command Staff and all Officers: The Fire Department Administrative Staff has
traditionally managed the budget for the Fire Department. Efforts have been made to include the
Command Staff every month to discuss, educate and empower the Battalion Chiefs to manage
budgets.
Shift Budgets: in December of 2019 schedules were developed and shared with each of the shift
Battalion Chiefs. Each shift is expected to remain within the budget set for 2020. The Battalion Chiefs
are to review budgets with the captains and all crews. On January 10, 2020 an all officers meeting
was held to educate the officers on the budget and to provide clear expectations concerning
accountability of the budget. The Mayor and City Administrator attended this meeting. A video was
recorded and shared with all Fire Department personnel shortly after the meeting.
Fire Prevention: is expected to remain within the budget set for 2020. Efforts have been made in the
past year to bring efficiencies within that office and to address services that have not met the needs of
the community.
Vacant positions: Two support staff positions have not been filled, one in each of the following
divisions: Emergency Management and Fire Prevention. These two positions became vacant during
2019. The savings from these un-filled positions are cost saving measures, however service levels
have been affected within the Emergency Management Division and Fire Prevention Division.
Consulting Services: Habile Consulting and Prothman Compay are two consulting services brought
into this process. Habile Consulting was the vendor selected to meet one of the provisos of the City
Council. Prothman provided a fire service professional (former Fire Chief Marcus Kragness) to review
and advise the Fire Chief regarding best practices within the fire service.
Page 2 of 3
Former Fire Chief Marcus Kragness did review and provide advice to the Fire Department Management
Team. He spent twelve weeks with the department that included attending Command Staff meetings,
an all Officers meeting, met face to face with most of the response crews, the Fire Marshal's office and
reviewed department documents. Mr Kragness also provided a detailed assessment of Fire Station 52
response area including all other fire response units that responded into that area. He also made
recommendations that will be incorporated into the Department's Strategic Plan.
Habile Consulting has withdrawn from the process and will not provide a report as is mentioned in the
attached Fire Department Proviso Response memo.
Trainina expenditures:
Boat Program Training: For the past ten years the Fire Department has provided training to a
select group of boat operators within the department. Most of this training was done on duty with
no overtime costs incurred however, there has been a small amount of overtime from time to time
during the past ten years. For the budget year 2020 no boat training will be conducted and no
associated overtime costs will be incurred. As committed to earlier, the overall Boat Program
funding policies will be brought to a future Council Committee later this year for review.
Rescue Team Training: All rescue type overtime incurred training has been suspended. There is
rescue training that is provided through the training consortium. This training is conducted to on
duty personnel only and no overtime is incurred. In the past up to $50,000.00 has been spent on
rescue team training, and most of this was off duty overtime expenditures. The goal is to have
zero dollars spent on rescue training during 2020.
The Zone 3 Operations Committee has developed a plan to have all of the Truck/Ladder
Companies respond to assist with Rescue type calls when additional assistance is required. L354
has started to prepare to fill this role in the future. This effort will insure that our rescue capabilities
will meet the demand within our community and for the region.
Mandatory Training: All mandatory training is being identified and cataloged. This includes the
following; WAC 296-305, JATC, Blue -card, Peer Support, vehicle operators and health/safety.
These types of training are required either by National, State or Local Standards. Much of this
training is conducted on duty, however there are cases where overtime costs are needed to provide
this training. All other training has been suspended as noted above.
Staffing Software tracking: The Fire Department has placed a new staffing management software
program into service during 2019. Starting January 1, 2020 all regular and overtime entries are
coded in a manner that provides the ability to track all staffing costs in detail.
FINANCIAL IMPACT
With these changes to the Fire Department budget tracking and adjustment efforts, the overall goal is to
better track costs and to bring the ending fund balance for the Fire Department 2020 budget within the
adopted budget as approved by the City Council. If a budget amendment is requested before the end
of this year, these tracking efforts will bring clarity to the City Council concerning the status of service
levels and the Fire Department Budget.
RECOMMENDATION
This is for discussion only and submitted in response to the 2019 Budget Proviso.
ATTACHMENTS
• December 2019 Overtime report
• April 2020 Overtime report
• May 6, 2020 Memo on Proviso Response presented to Community Services & Safety Committee
Page 3 of 3
91
92
Fire Department Overtime (Salaries Only)
As of December 31, 2019
OL
of Total Annual
i
Auaust
September
October
November
December YTD
TOTAL
Overtime Budget % Spent
1-Min Staffing
37,055
22,229
44,298
53,206
31,457
45,713
56,785
34,606
37,511
45,136
10,993
17,124
436,114
60.9%
2-Training
5,115
4,074
6,505
10,854
13,413
9,289
1,170
3,360
4,296
9,275
2,091
789
70,232
9.8%
3.0-Other
1,235
33,984
4,931
6,374
847
11,251
3,042
953
337
812
176
2,995
66,938
9.4%
3.2-Equip Test/Maint
1,418
1,021
2,058
1,569
490
1,787
-
1,838
730
2,051
126
482
13,570
1.9%
3.3-Meetings
1,701
3,820
246
990
634
425
317
563
-
422
1,051
1,327
11,497
1.6%
4-Prevention
4,117
4,984
2,913
3,924
3,379
2,312
6,004
4,088
6,489
5,469
5,059
5,930
54,668
7.6%
5-Emergency Response
249
-
-
405
1,397
716
-
62
1,191
187
2,504
167
6,879
1.0%
6-Billable
4,873
5,612
8,786
4,130
2,794
4,118
1,874
7,928
4,698
3,759
3,206
3,877
55,655
7.8%
Total
55,764
75,724
69,737
81,452
54,411
7d�,9,191
53,399 W 55,251
67,112
25,207
32,692
715,552 9�6 789,838 90.6%
Details
Annual
May
June
July
August
September
October
November
December
YTD TOTAL
Budget
% Spent
200 Suppression
36,377
55,006
47,764
66,909
40,308
52,923
51,977
31,774
39,200
43,423
16,943
17,503
500,107
600,646
83.3%
1-Min Staffing
27,653
22,229
39,061
50,946
25,034
33,218
48,930
26,451
33,615
36,324
10,993
12,533
366,985
2-Training
4,426
3,127
2,230
8,284
11,785
9,203
1,170
1,907
3,327
3,626
Z091
-
51,176
3.0-Other
670
25,111
1,502
4,445
561
6,635
1,560
953
337
812
176
Z995
45,759
3.2-Equip Test/Maint
1,418
1,021
2,058
1,569
490
1,787
-
1,838
730
2,051
126
482
13,570
3.3-Meetings
1,110
2,637
246
646
634
425
317
563
-
422
1,051
1,327
9,379
4-Prevention
-
-
34
282
212
-
-
-
-
-
-
-
527
5-Emergency Response
249
-
-
405
1,397
716
62
1,191
187
2,504
167
6,879
6-Billable
851
881
2,633
332
195
939
-
-
-
-
5,832
300 Prevention & Investigation
13,506
11,180
16,937
11,648
12,202
12,329
10,882
17,668
15,729
14,155
8,265
9,475
153,973
145,504
105.8
1-Min Staffing
5,798
-
3,326
2,261
6,423
6,346
3,737
6,218
3,896
4,347
-
-
42,352
2-Training
-
-
2,738
589
723
-
-
-
646
579
5,276
3.0-Other
565
1,960
1,923
1,762
286
1,364
910
8,771
3.3-Meetings
-
170
-
344
-
-
-
514
4-Prevention
4,117
4,984
2,796
3,559
Z835
1,771
5,339
3,523
6,489
5,469
5,059
5,930
51,872
6-Billable
3,026
4,066
6,153
3,133
1,934
Z847
895
7,928
4,698
3,759
3,206
3,544
45,188
410 Training
3,764
2,624
3,846
2,895
1,902
2,624
3,581
3,957
323
4,569
1,122
31,206
30,545
102.2%
1-Min Staffing
2,078
-
1,911
-
-
1,579
1,938
1,938
-
-
-
9,444
2-Training
689
947
775
1,981
904
86
-
1,454
323
4,569
789
12,518
3.0-Other
-
-
1,077
166
-
86
1,329
3.3-Meetings
1,012
-
-
-
-
1,012
4-Prevention
-
83
83
332
540
665
565
-
Z269
6-Billable
997
665
-
665
665
332
978
-
-
332
4,635
600 Emergency Management
2,118
6,913
1,190
-
-
7,737
2,751
-
-
4,965
-
4,592
30,266
13,143
230.3%
1-Min Staffing
1,526
-
-
-
-
4,571
2,180
-
-
4,465
-
4,592
17,334
2-Training
-
-
762
-
-
500
-
1,262
3.0-Other
-
6,913
428
3,166
571
-
11,079
3.3-Meetings,
592
592
789,838
90.6%
W
m
Fire Department Overtime
Year -to -Date as of April 15, 2020
Division #
Division
200
Suppression
300
Prevention & Investigation
410
Training
600
Emergency Management
Division Total
Fire Department Overtime Detail by Division
200 - Suppression
Year -to -Date as of April 15, 2020
Overtime Type
Project #
Project
1-Min Staffing
429
Shift Extension (Call)
1-Min Staffing
297
Staffing - Minimum
Subtotal
2-Training
[268.271,421,449]
Instructor
2-Training
422
JATC
Subtotal
3.0-Other
430
Shift Extension (Report)
3.0-Other
427
Public Safety Bond
3.0-Other
530
COVID-19
Subtotal
3.2-Equip Test/Maint
401
Airpak Maintenance/SCBA
Subtotal
3.3-Meetings
405
City Meeting
3.3-Meetings
410
Department Meeting
3.3-Meetings
441
Special Committee Meeting
Subtotal
5-Emergency Response
412
Explorers
Subtotal
6-Billable
434
Starfire Events/Standby
Subtotal
Total
CD
Cn
January
February
March
April
YTD TOTAL
26,531
20,565
23,779
1,187
72,062
5,985
5,931
4,626
857
17,399
1,607
890
2,537
2,055
7,089
303
-
3,407
-
3,710
34,426
27,386
34,349
4,098
100,260
January
February
March
April
YTD TOTAL
361
295
139
333
1,128
15,560
16,144
17,411
84
49,199
15,921
16,439
17,550
417
50,327
2,660
176
-
-
2,836
230
-
230
5,012
436
-
-
5,448
-
165
129
167
461
399
2,162
889
34
3,484
-
-
4,609
-
4,609
399
2,599
5,842
201
9,041
408
833
-
-
1,242
408
833
1,242
945
79
-
3,022
178
-
396
3,596
277
-
158
172
607
4,244
258
158
568
5,228
248
-
-
-
248
248
-
248
299
230
528
299
-
230
-
528
26,531
20,565
23,779
1,187
72,062
Remaining
Allocated
nnualBudget
% Spent
Budget
Budget
Variance
440,822
16.3%
368,760
146,941
(74,879)
65,143
26.7%
47,744
21,714
(4,315)
18,813
37.7%
11,724
6,271
818
9,406
39.4%
5,696
3,135
574
534,184
18.8%
433,925
178,061
(77,802)
0
TO: Community Services and Safety Committee
FROM: Vicky Carlsen, Finance Director
Jay Wittwer, Fire Chief
David Cline, City Administrator
CC: Mayor Ekberg
DATE: May 6, 2020
SUBJECT: Update on 2020 Fire Department Budget Proviso
ISSUE
Update City Council on status of the 2020 Budget Proviso for the Fire Department that
was included in the 2019-2020 mid -biennium budget amendment as well as an update
on the Habile Consulting contract, the company that was hired in response to Budget
Proviso 1 d of the Tukwila City Council regarding the general fund appropriation to the Fire
Department
DISCUSSION
In 2019, the Finance Committee, as well as the full Council, spent several months
reviewing a number of operational aspects of the Fire Department. The review was
conducted because the fire department has exceeded their authorized budget every year
for the last several years. One of the outcomes of the review was to authorize a budget
amendment for 2019 to true up overtime costs, fund recruits in the academy, and provide
resources for leave balance payouts incurred when firefighters retired.
The City Council approved the budget amendment but included a Budget Proviso which
listed conditions to be met in 2020. The Proviso is attached to this memo.
Status Update on Proviso Conditions
Condition 1 a requires the "Fire Chief to deliver a 2019 annual report to the City Council
by the end of the first quarter." While delayed due to the city's COVID-19 response, the
e report was transmitted to the City Council on April 27, 2020 and will be presented to the
Community Services & Safety Committee on May 11, 2020.
The second condition (1 b) requires the "Fire Chief to deliver quarterly reports to the City
Council discussing new revenue implementation and budget status updates." Through
the end of March, the Fire Department is meeting budget, with 25% of budget spend. A
summary report is attached to this memo and a full 1st quarter report will be presented to
the Finance Committee in May.
INFORMATIONAL MEMO
Page 2
The third condition (1 c) requires "the Mayor and/or City Administrator to deliver a mid-
year report to the City Council regarding budget status to date and projection for year
end." This report is planned to be delivered in July or August after the 2nd Quarter closes.
The fourth condition (1d) states, "The City will hire a third -party consultant to review the
Fire Department budgetary and management practices."
In response to Item 1d, the City contracted with Habile Consulting to perform the review.
The contract was signed on December 23, 2019. Habile Consulting began work by
interviewing Councilmembers and various City staff. Interviews were completed in mid -
January. A meeting was scheduled for March 11, 2020, when the City expected to receive
an update on the progress of the review. However, the meeting was canceled by the
contractor and the City was notified that, due to a serious medical issue with a family
member, the meeting would need to be rescheduled. Since that date, the City has had no
response from the consultant even though multiple attempts to contact the consultant
have been made. Attempts included emails as well as phone calls. At this time, the City
has not paid Habile Consulting.
Options moving forward include the following:
1. Hire another consultant to perform the independent study as required by the
Budget Proviso.
2. Defer this item until the next biennium.
3. Other options Council may wish to consider.
The fifth condition (1e) requires the Fire Department to "implement revenue sources and
operational efficiencies while considering cost savings wherever appropriate."
The following chart shows revenue collected through the end of the March for Fire related
activities. Of note, is that False Alarm charges are being charged, the monthly Ambulance
Service fees are being received, and the department has collected funds from Haz Mat
Response Recovery (accidents).
GENERAL
Fire Tech Fee
EMS Participation Grant
Haz Mat Response Recovery
Emergency Services (EMS Levy)
Fire Inspections
Planning Review Fees - FMO
False Alarm Charges
Ambulance Services
Totals
JAN
FEB
MAR
YTD TOTAL
698
$ 802
$ 773
$ 2,273
-
-
1,260
1,260
4,485
3,064
2,800
10,349
2,000
2,000
2,000
6,000
15,595
7,207
7,095
29,897
14,747
12,780
12,157
39,684
400
150
200
750
2,000 2,000 2,000 6,000
$ 39,925 $ 28,002 $ 28,284 $ 96,212
In addition, the Fire Department has continually looked at operational savings throughout
its department and has implemented these where possible.
INFORMATIONAL MEMO
Page 3
RECOMMENDATION
Staff is seeking direction on the preferred option to meet the Proviso condition of Item 1d
regarding hiring a third -party consultant to review the Fire Department budgetary and
management practices.
ATTACHMENTS
Attachment 1: Budget Proviso of the Tukwila City Council 2019 — 2020 Mid -Biennium
Budget Amendment
Attachment 2: Fire Department Budget to Actual Report as of March 31, 2020
M
INFORMATIONAL MEMO
Page 4
Attachment 1
Budget Proviso of the Tukwila City Council
2019-2020 Mid -Biennium Budget Amendment
The following is hereby declared to be the legislative intent of the City Council regarding
the General Fund appropriation to the Fire Department:
1. The City Council approves the $522,900 amendment to the Fire Department's
2019 budget with the expectation that the following conditions be met in 2020:
a. The Fire Chief will deliver a 2019 Annual Report, per RCW 35A.92.030, to the
City Council by the end of the 1 st Quarter.
b. The Fire Chief will deliver quarterly reports to the City Council discussing new
revenue implementation and budget status updates including overtime and
training.
c. The Mayor and/or City Administrator will deliver a mid -year report to the City
Council regarding budget status to date and projection for year-end.
d. The City will hire a third -party consultant to review the Fire Department
budgetary and management practices.
e. The Fire Department will implement additional revenue sources and
operational efficiencies while considering cost savings wherever appropriate.
2. It is expected that the Fire Department will operate within the adopted budget for
2020. If the above proviso conditions are met, the City Councii may reconsider a
budget amendment following the mid -year report.
INFORMATIONAL MEMO
Page 5
Attachment 2
FIRE
CITY OF TUKW I LA
GENERAL FUND EXPENDITURES
YTD AS OF MARCH 31, 2020
BUDGET
ACTUAL
VARIANCES
ACTUAL
EXPENDITURE TYPE
OVER/(UNDER)
% CHANGE
2020
ALLOCATED
%
2020 ANNUAL
ALLOCATED
2018
2019
2020
BDGT
B(PBNDED
2018/2019
2019/2020
11 Salaries
7,666,823
1,916,706
1,814,823
1,910,209
2,002,445
85,740
26%
5%
5%
12 Extra Labor
-
-
825
-
-
-
-
-
-
13 Overtime
534,648
170 822
121,036
207,665
106,435
(64,387)
20 %
72 %
(49) %
15 Holiday Pay
295,454
-
2,443
-
-
-
-
-
-
21 FICA
208,956
52,239
33,511
38,196
35,719
(16,520)
17%
14%
(6)%
22 Pension-LEOFF2
446,274
111,569
96,434
106,396
105,306
(6,262)
24%
10%
(1)%
23 Pens ion-PER SIPSERS
51,129
12,782
12,517
13,551
8,650
(4,132)
17%
8%
(36)%
24 Industrial Insurance
422,619
105,655
66,953
102,081
96,946
(8,709)
23 %
52 %
(5)%
25 Medical & Dental
1,548,497
387,124
364,164
376,823
420,224
33,100
27 %
3 %
12 %
Total Salaries & Benefits
11,174,400
2,756,897
2,512,706
2,764,921
2,776,726
18,830
25%
10%
1 %
31 Supplies
206,877
84,753
38,063
56,102
29,641
(55,112)
14 %
47 %
(47) %
35 Small Tools
87,268
2,132
3,307
276
26,898
24,766
31 %
(92) %
9643 %
41 Professional Services
302,945
18,442
74,446
54,160
70,932
52,490
23 %
(27) %
31 %
42 Communication
32,170
6,321
8,318
7,169
8,620
2,298
27%
(14)%
20%
43 Trawl
7,000
757
1,788
2,355
468
(290)
7 %
32 %
(80) %
45 Rentals and Leases
654,151
162,974
151,209
168,731
164,060
1,086
25 %
12 %
(3) %
46 Insurance
199,922
172,182
191,453
164,888
173,213
1,031
87%
(14)%
5%
47 Public Utilities
73,360
15,575
23,270
23,846
35,354
19,780
48 %
2 %
48 %
48 Repairs and Maintenance
36,921
8,218
11,418
11,876
16,121
7,903
44%
4%
36%
49 Miscellaneous
143,874
18,750
82,056
22,512
22,517
3,767
16 %
(73) %
0 %
64 Machinery & Equipment
200.000
-
-
-
-
-
-
-
-
Total Operating Expenses
1 1,944,488
490,1041
585,328
511,914
547,824
1 57,720
28%
(13)%
7%
Total Expense,
1 13,118,888
3,247,001
1 3,098,033
3,266,836
3,323,550
1 76,549
25%
5%
2 %
Percent of year completed 25 %
189
102