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Home My WebLink About1209RESOLUTION NO. A RESOLUTION of the City Council of the City of Kent, Washington, relating to the investment of city property tax receipts in custody of King County finance manager. WHEREAS, as required by state law, the King County Finance Manager collects property taxes for and on behalf of the City of Kent; and WHEREAS, RCW 36.29.020 provides that the City Council may authorize and direct the King County Finance Manager to invest property tax receipts which are collected prior to the disbursement of such receipts to the City; and WHEREAS, the City of Kent has directed such investment and the State Court of Appeals has upheld the City's right to earn interest on money invested; and WHEREAS, the King County Finance Manager has proposed the automatic investment of city tax receipts in a manner set forth in a letter dated April 21, 1989, a copy of which is attached as Exhibit A and to make a lump sum payment retroactive to october 24, 1988; and WHEREAS, it is in the best interest of the citizens of the City of Kent that city tax receipts in the custody of the King County Finance Manager be invested in the manner proposed; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF KENT, WASHINGTON DOES HEREBY RESOLVE AS FOLLOWS: Section 1. The King County Finance Manger is authorized and directed to invest tax receipts in the manner proposed in the letter attached as Exhibit A. Section 2. The City shall accept a lump sum payment calculated according to the system proposed by the King County Finance Manager, retroactive to October 24, 1988, in complete satisfaction for all past claims for earnings on City tax receipts. section 3. The City agrees to hold King County, its Finance Manger, and other officers and employees harmless from claims for damages or loss of funds resulting from investments made in accordance with the system proposed by the King County Finance Manager pursuant to the standard set out in RCW 39.58.140. RESOLVED this Ao day of F--71"-'-' -<----=------' 1989. Passed at a regular City of Kent, washington this meeting of~ ~ day of Council of the 1989. Mayor of the City of Kent, this .,U_ ELLEHER, MAYOR ATTEST: I hereby certify that this is a true and correct copy of Resolution No. po J , passed by the city Council of the City of Kent, washington, the OlD day o?---; , 1989. ~~ (SEAL) MARIE JE S , CIT CLERK 7350-260 - 2 - King County Finance Division Office of Financial Management 600 King County Administration Building 500 Fourth Avenue Seattle, Washington 98104 April 21, 1989 FINANCE MANAGER City of Kent 220 South 4th Kent, WA 98032 Dear City Finance Officer: Ex hi bit A r-c7YPY fiECE!VED I l Jll1c 1 )' :~:~ney As you may know, the State Court of Appeals issued a decision last fall regarding interest earnings on property tax receipts. That case, Seattle, et al vs. King County, et al, has now become final. The general effect of this decision is that cities now have the right to earn interest on taxes collected for them by the County up to the date the taxes are disbursed. The purpose of this letter is to explain the way in which we intend to implement this decision. 1. Automatic Investment Earnings -In order to realize the greatest overall return and to minimize administrative burdens for all of us, we will combine all city tax receipts for investment with other residual County cash. We will then provide an automatic prorata distribution of the earnings to each fund at month end. In addition to increasing our mutual investment power, this will eliminate the need for you to give, and for us to receive, individualized investment directions. The formula by which earnings will be prorated is complex, but fair. It duplicates the formula agreed to between Seattle and the County for purposes of the litigation (see enclosure). You should contact Garry Holmes of this office at 296-7333 if you would like a detailed explanation of the formula. 2. Investment Service Fee -The County will charge and deduct an investment service fee for all investments made pursuant to this letter as provided in RCW 36.29.020. This fee is 5 percent of the earnings up to a maximum fee of $50 per year for each transaction for each city. For purposes of computing the fee, all collections, deposits and investments for each city on a given day will be considered a single transaction. 3. · Retroactive Earnings -Subject to and upon receipt of appropriation authority from the County Council, we will make a lump sum retroactive payment to all cities which have elected to participate in this system. The payment will represent the earnings which would have accrued under the formula between October 24, 1988 (the date of the court decision), and the date the new automatic system is fully implemented. Retroactive payments will be made only to those cities from which a resolution as described below has been received. City Finance Officer April 21, 1989 Page 2 4. Resolutions -Each city wishing to participate in the system described above must adopt a resolution which: 1. References and adopts the terms of this letter, 2. Directs investment according to the terms of the letter, 3. Accepts the lump sum payment in satisfaction of all claims for earnings on tax receipts. 4. Expressly holds the County harmless from any damage or loss of funds resulting from investments made pursuant to this letter. I have enclosed a draft resolution for your consideration which contains the ~ elements required. Cities which have previously adopted resolutions which do not contain the above elements must submit either a new or an amended resolution containing the required elements. The effective date for beginning the interest earnings calculation will be October 24, 1988 for those cities from which we have received a resolution by June 30, 1989. Resolutions received after June 30, 1989 will be effective on the date received. I believe the system described above will work smoothly and fairly, although I anticipate there will be some period of adjustment necessary. If you have any questions on how the system will operate, please contact Scott Matheson, Cash Management Supervisor, at 296-7310 or me at 296-7326. D. Lee Dedrick Finance Manager DLD:ja Enclosures • • • • • • • • • • • • • • • • • • • • • • CALCULATING INTEREST EARNED ON PROPERTY TAX RECEIPTS Date Paid Daily Daily Tax Receipts Interest (I) Daily Net Charge Interest (2) (3) Interest float Rate Days 01/01/89 11,000,000.00 m. 93 $1.90 $36.03 0.09230 0.85 01/02/89 tl,OOO,OOO.OO $290.81 U4.54 1276.27 0.09230 0.85 01/03/89 11,000,000.00 $543.68 S27.18 1516.50 0.09230 0.85 NET INTEREST EARNED THROUGH 1/3/89 »>»>»»>»»»»»>» 1828.80 (I) The Daily Charge is the investaent service fee authorized by RCII: 36.29.020 which is 5' of the interest earned not to exceed S50 a day. (2) The intarest rate is a aonthly average of the federal funds Overnight Rate. (3) float Days is the period of tile required by the bank to collect and aake available for investaent checks used in paying taxes to King County . The net interest earned on 1/1/89 for 1/1/89 receipts is $1,000,000 X .15 X .09230 X 1/365 m.93 less Investunt Service fee : -tl. 90 Net Interest $36.03 NOTE: On the date of receipt interest is earned on only 1St of the ti,OOO,OOO because of the .85 Float factor . The net interest urned on 1/2/89 for 1/1 and 1/2/89 receipts: 1/1/89 Receipts 11,000,000 x .09230 x 1/3t5 : 1252.88 1/2/89 Receipts S1 ,000,000 X .15 X .09230 X 1/365 : $l7. 93 less Investaent Service fee : ·U4.54 Net Interest 1276.27 The net interest earned on 1/3/89 for 1/1, 1/2, & 1/3/89 receipts: 1/1/89 Receipts 11,000,000 x .09230 x 1/365 : 1252.88 1/2/89 Receipts 11,000,000 x .09230 x 1/365 : 1252.88 1/3/89 Receipts 11,000,000 x .15 x .09230 x 1/365: 137.93 less Investaent Service fee : -S27.18 Net Interest : S516.50 ..