HomeMy WebLinkAboutCity Council Committees - Operations - 11/18/2003Operations Committee Minutes
November 18, 2003
Committee Members Present: Chair Rico Yingling, Leona Orr, Judy Woods sitting in for Tim Clark
The meeting was called to order by Rico Yingling, Chair at 4:08 P.M.
APPROVAL OF MINUTES OF NOVEMBER 4, 2003
Leona Orr moved to approve the minutes of the November 4, 2003, Operations Committee
meeting. The motion was seconded by Judy Woods and passed 3-0.
APPROVAL OF VOUCHERS DATED NOVEMBER 14, 2003
Judy Woods moved to approve the vouchers dated November 14, 2003. Leona Orr seconded
the motion, which passed 3-0.
STREAMLINED SALES TAX RESOLUTION
Chief Administrative Officer Mike Martin presented the Streamlined Sales Tax Resolution and
provided a revised Resolution. The resolution creates the opportunity for the Kent City Council to
formally affirm the City’s position on Washington State implementation of the Streamlined Sales Tax
project.
The resolution supports efforts to streamline tax collection definitions and procedures. However, the
resolution requests that sales tax revenue from intrastate sales continue to be distributed at the point
of sale, rather than at the point of delivery. Such an approach protects cities that have used this sales
tax revenue to construct and operate infrastructure to support businesses that generate these
intrastate sales. Yet, catalog and internet sales conducted by out of state companies would generate
sales taxes distributed to the point of delivery - specifically to cities whose residents and businesses
placed the order, ensuring all cities across the state will benefit from the streamlined sales tax
provisions overall.
The resolution also directs that implementation of sales tax streamlining provision should coincide with
federal adoption of similar provisions allowing collection of sales taxes on internet and catalog sales
across state lines. Implementing changes to the state’s sales tax structure before federal action
authorizes sales tax collection on internet and catalog sales is premature. Such action would only
cause intrastate sales tax distribution dislocation with nominal fiscal benefit to the state as a whole.
There will be no budget impact at the time of the adoption of the resolution, however, implementation of
Sales Tax Streamlining provisions that shift sales tax distribution for intrastate sales from point of sale
to point of delivery would cost the City of Kent approximately $4 million annually.
Leona Orr moves to recommend that the Streamlined Sales Tax Resolution, as presented in
its amended form, be placed on the consent calendar for the December 9, 2003, Council
meeting for adoption. The motion was seconded by Judy Woods and passed 3-0.
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ACCOUNTS RECEIVABLE WRITE-OFFS
Finance Director May Miller presented the Accounts Receivable Write-Offs. The Washington State
auditor’s office recommends that the City write-off uncollectible accounts that are over one year old.
This year the write-off request is for $9,252.51 for accounts from 1992 through 2002 of
miscellaneous Accounts Receivable, Utility Billing receivables and customer accounts. There is no
budget impact and it is considered within Bad Debt Accrual Amount. Ms. Miller stated that this is the
lowest write-offs in five (5) years.
Judy Woods moved to recommend authorization of miscellaneous Accounts Receivable, Utility
Billing, and customer write-offs of $9,252.51 for accounts from 1992 through 2002, and to
forward this Account Receivable Write-Offs on to Council on December 9, 2003, for
authorization. The motion was seconded by Leona Orr and passed 3-0.
2003 LTGO COUNCILMANIC BONDS
Finance Director May Miller presented the 2003 LTGO Councilmanic Bonds. The 2003 LTGO
Councilmanic Bond issue totals approximately $7,518,000 and contains three items:
A. Taxable Bonds for $1,874,000
B. Tax Exempt Bonds for $3,529,000
C. Refunding 1992 Bonds for $2,115,000
Debt service on A and B will be included in the 2004 budget. Savings on C will be included in 2004
through 2007 budgets.
A. TAXABLE BONDS
The taxable LTGO bonds total approximately $1,874,000 and include $1,200,000 for loan repayment
to the Water Fund for land purchase for the Kent Station project. The $1,200,000 is the final
payment of the original $3,900,000 Water Fund loan to the Kent Station project and is due
1/14/2004. A second Water Fund loan remains outstanding with a 2006 due date.
Approximately $655,000 of bond proceeds will refinance the capital improvement loan on the
downtown Saturday Market building currently payable to U. S. Bank at 7.125% interest rate. The
refinance rate of estimated 5.45% will provide long-term financing for the project and approximately
$39,000 of net present value savings. The taxable bonds carry a 15 year term at an approximate
5.45% interest rate and can be called at any time without penalty as long as future interest rates are
no higher than today. If rates are lower, there would be a make-whole prepayment fee.
B. TAX EXEMPT BONDS
The $3,529,000 tax exempt bonds will fund the second issuance of bonds for the city’s Tech II plan.
The plan’s intent to bond was approved by Council on 5/21/2002. The technology bonds primarily
fund public safety systems for the jail and records management systems as well as providing officer
reporting, crime analysis, mug shot tools, and other technology projects. The tax exempt bonds also
include some funds for technology servers, security upgrades, and productivity software. The
planned bond amount was reduced from $4,000,000 to $3,500,000 due to cost savings. The tax
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exempt technology bonds will be for ten years at approximately 3.55% interest. Ms. Miller stated
that tax exempt bonds need to go towards public use projects and that is why there is the need for
the Taxable Bonds and Tax Exempt Bonds.
C. REFUNDING 1992 BONDS
The 1992 LTGO Refunding Bonds of approximately $2,115,000 will provide net savings of
approximately $127,000. This will be achieved by refinancing callable bonds maturing in 2004-2007.
The refinancing rate of approximately 2.3% will show significant savings over the current 6.351%-
6.5% interest with approximately $117,000 of the savings in 2004. The bonds were originally issued
to refund portions of 1985, 1986, and 1987 bond issues and were used for Golf Open Space,
Corrections Facility, Senior Center, Library and Street capital projects.
The exact amounts and interest rates will be set after Council Committee approval and stated in the
final Ordinance at the December 9, 2003, regular Council Meeting. Bond closing is expected on
December 18, 2003.
Leona Orr moved to recommend the 2003 (LTGO) Councilmanic Bond Ordinance for
approximately $7,518,000, including issuance costs, be placed on the consent calendar for the
December 9, 2003, City Council meeting for adoption. The motion was seconded by Judy
Woods and passed 3-0.
The meeting was adjourned at 4:32 P.M.
Renee Cameron
Operations Committee Secretary