HomeMy WebLinkAboutCity Council Committees - Public Facilities District Board - 10/25/2018 (2)Unless otherwise noted, the Public Facilities District meets at 4 p.m. on the last Thursday of each quarter at the
accesso ShoWare Center, 625 West James Street, Kent, WA 98032.
For additional information please contact Kimberley A. Komoto, City Clerk at 253-856-5728 or via email at
Kkomoto@KentWA.gov.
Any person requiring a disability accommodation should contact the City Clerk’s Office at 253-856-5725 in
advance. For TDD relay service call Washington Telecommunications Relay Service at 7-1-1.
Public Facilities District Board
Board Members: Mike Miller - Jeff Piecewicz - Lew Sellers – Randall Smith – Carmen Goers
Officers: Mike Miller, Chair – Jeff Piecewicz, Vice Chair, Lew Sellers, Secretary
Staff Representatives: Aaron BeMiller, Treasurer - Kimberley A. Komoto
October 25, 2018
4 p.m.
Location: accesso ShoWare Center
625 West James Street
Kent, WA 98032
Item Description Action Speaker Time
1. Call to order Mike Miller 1
2. Roll Call Mike Miller 1
3. Changes to the Agenda
MOVE TO APPROVE THE AGENDA Mike Miller 1
4. Approval of Minutes dated July 26, 2018
MOVE TO APPROVE THE MINUTES DATED JULY
26, 2018
Yes Mike Miller 1
5. Financial Reports
A. City of Kent
B. accesso ShoWare Center
No
Aaron BeMiller
Arletta Voter
10
6. Operational Updates:
A. General Manager
B. Marketing Update
C. City of Kent Update
No
Tim Higgins
Erin Buck
Kurt Hanson
15
7. Seattle Thunderbirds Update
A. Sales, Marketing and Attendance
B. Advertising and Suite Sales
No
Bill LaForge
10
8. Other Business Mike Miller 1
9. Adjournment Yes Mike Miller 1
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Public Facilities District Board Regular Meeting July 26, 2018
Minutes Kent, Washington
Approval Pending
Page 1 of 3
Date: July 26, 2018
Time: 4 p.m.
Place: accesso ShoWare Center
Attending
Board: Carmen Goers
Mike Miller
Lew Sellers
Randall Smith
Jeff Piecewicz
Other
Attendees: Erin Buck, SMG Director of Marketing
Arletta Voter, SMG Finance Director
Pat Fitzpatrick, City Attorney
Kimberley A. Komoto, City Clerk
Bill LaForge, Thunderbirds General Manager
Sean Runnels, Thunderbirds Director of Ticketing
Agenda:
1. Call to Order
The meeting was called to order at 4 p.m., with Mike Miller presiding.
2. Roll Call
Carmen Goers – Present (Arrived at 4:10 p.m.)
Mike Miller – Present
Lew Sellers - Present
Randall Smith - Present
Jeff Piecewicz – Present
3. Changes to the Agenda
Item 8, Seattle Thunderbirds Update, was moved to item 6. Lew Sellers moved to
approve the agenda as amended, seconded by Randall Smith.
The motion passed unanimously with a vote of 4-0.
4. Approval of Minutes dated April 26, 2018
Sellers moved to approve the minutes dated April 26, 2018, seconded by Smith.
The Motion passed unanimously with a vote of 4-0.
5. Randall Smith’s Reappointment to the Public Facilities District Board –
Information Only
Public Facilities District Board Regular Meeting July 26, 2018
Minutes Kent, Washington
Approval Pending
Page 2 of 3
Pat Fitzpatrick, City Attorney advised that the City’s Economic and Community
Development Committee recommended reappointing Randall Smith to the Public
Facilities District Board for an additional 4-year term, September 1, 2018 – August
13, 2022. The City Council will confirm the reappointment during the August 7, 2018,
meeting.
6. Seattle Thunderbirds Update
Sean Runnels, Thunderbirds Director of Ticketing, indicated that the season
ticket renewal rate is at 90%, and there is one less suite sold. Runnels provided
details regarding the number of games, including the loss of two Tuesday games.
Runnels indicated he will be relocating to Spokane on August 29th but has enjoyed
working with the Thunderbirds for the past 17 years.
Runnels introduced the Thunderbirds General Manager, Bill LaForge.
LaForge indicated he is from Edmonton, was a teacher, went into scouting and
coaching and has been with the Silvertips for 10 years. LaForge expressed his
excitement for the future and will be hiring an equipment manager and scouts.
7. Finance Reports
A. City of Kent. In Aaron BeMiller’s absence, Chair Miller reviewed the
accesso ShoWare Center operating fund ending June 30, 2018, the Kent Special
Events Center Public Facilities District Fund ending June 30, 2018, and the Kent Public
Facilities District Sales Tax Collections – Inception through June 30, 2018.
B. accesso ShoWare Center. Arletta Voter, SMG Finance Director, provided
details of the accesso ShoWare Center Income Statement for the quarter ending June
30, 2018, including direct event income, ancillary income, other event income, other
operating income, indirect expenses, net income from operations, admission tax, and
net income.
8. Operations Update
a/b. General Manager/Marketing Update.
Erin Buck, Director of Sales and Marketing, provided the Public Facilities
District marketing update, including total attendance, website traffic, social media
activity, and email marketing.
Buck conveyed that Pollster ranked the accesso ShoWare Center 134th in the
2018 Midyear Worldwide Ticket Sales Top 200 Arena Venues, and 90th in North
America.
Public Facilities District Board Regular Meeting July 26, 2018
Minutes Kent, Washington
Approval Pending
Page 3 of 3
Buck reviewed highlights from the second quarter of 2018, including sell outs,
the various private and catering events, and 17 graduations.
Buck provided details on the third and fourth quarter of 2018 ticketed events,
community and catering events, and non-hockey announced events.
Buck indicated that January 4 – January 6, 2018, the accesso ShoWare Center
will host the State of Washington Wrestling competition that will include college and
high school wrestlers. The economic impact is expected to be $300,00 - $400,000.
The Kent Downtown Partnership is a major sponsor and the Lodging Tax fund will
cover the cost of the facility.
B. City of Kent.
None
8. Other Business
Goers suggested communicating to the residents how the Public Facilities District
budget is developed and that the budget may appear to show a loss, but once the
admission taxes are taken into consideration, the budget will show a profit rather
than a loss.
9. Adjournment
Sellers moved to adjourn the meeting and Piecewicz seconded the motion.
The motion passed unanimously with a vote of 4-0.
Meeting adjourned at 4:40 p.m.
Kimberley A. Komoto
City Clerk/Board Secretary
July 26, 2018
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2014 2015 2016 2017 2018 2018
Actual Actual Actual Actual Adj. Budget YTD
Beginning Fund Balance (2,442,087) 33,990 1,610,543 2,161,074 2,448,464 2,448,464
Revenues
Admissions Tax 256,124 375,049 385,546 347,109 350,000 260,263
SMG Income-Loan Proceeds 18,524 181,900 194,990 - 104,587
Other Income 28,000 280,543 13,128 1,691
Transfer In from ShoWare POS 84,430 84,430
Transfer In Capital (Lifecycle)259,310 300,000 300,000 300,000 -
Transfer In from GF 3,200,000 1,000,000 500,000 500,000 500,000 -
Total Revenues 3,456,124 1,680,882 1,647,988 1,355,226 1,234,430 450,970
Expenditures
Services 972,046 518,716 440,005 551,480 777,220 465,562
Capital Outlay (SMG)8,000 240,957 208,808 104,587 A
Other Capital Outlay 68,535 14,788 B
Bank Account Adjustment (414,387) 321,048 (92,221)
Debt Service on SMG Loan 2,058 24,796 24,800
Lifecycle 93,390 306,438 300,000 223,039
Total Expenditures 980,046 104,330 1,097,457 1,067,836 1,102,020 807,976
Change in Fund Balance 2,476,077 1,576,553 550,531 287,390 132,410 (357,005)
Ending Fund Balance 33,990 1,610,543 2,161,074 2,448,464 2,580,874 2,091,459
A. Advanced Broadcast Solutions - AV equipment- video scoreboard
B. Tube Art Group - canopy sign for showare
SHOWARE CENTER OPERATING FUND
September 30, 2018
2013 2014 2015 2016 2017 2018
Actual Actual Actual Actual Actual YTD
Beginning Fund Balance 123,990 130,697 149,099 283,216 290,211 322,422
Revenues
Sales & Use Tax 714,360 784,330 830,283 900,659 916,139 567,013
City of Kent 3,104,475 3,029,824 3,184,222 3,069,514 3,126,031 872,422
Interest - Sales Tax 300 308 665 1,825 4,017 6,284
Total Revenues 3,819,135 3,814,462 4,015,170 3,971,998 4,046,187 1,445,719
Expenditures
Services and Charges
Debt Service 3,812,428 3,796,060 3,881,053 3,965,003 4,013,977 1,180,192
Total Expenditures 3,812,428 3,796,060 3,881,053 3,965,003 4,013,977 1,180,192
Change in Fund Balance 6,707 18,402 134,117 6,995 32,210 265,528
Ending Fund Balance 130,697 149,099 283,216 290,211 322,422 587,949
September 30, 2018
PUBLIC FACILITIES DISTRICT FUND (PFD)
KENT SPECIAL EVENTS CENTER
Rec'd From For the 2017-2018 Percent
State Month of 2012 2013 2014 2015 2016 2017 2018 Variance Change
March January 46,602.21 51,168.67 54,393.18 62,093.69 67,491.02 66,601.62 74,684.13 8,082.51 12%
April February 49,815.46 49,710.74 51,311.25 62,665.01 70,218.75 67,453.42 66,095.59 (1,357.83) -2%
May March 54,277.64 59,046.95 63,646.55 66,367.08 80,978.10 78,264.92 85,380.95 7,116.03 11%
June April 49,261.77 55,538.05 61,993.29 65,371.95 72,265.70 70,108.46 83,574.97 13,466.51 21%
July May 56,321.68 60,088.10 64,218.58 64,346.46 69,656.54 75,701.34 82,830.77 7,129.43 11%
August June 61,884.22 62,538.27 71,784.55 74,724.59 79,863.45 85,649.15 89,006.94 3,357.79 4%
September July 57,393.92 62,625.41 67,029.60 71,400.46 70,492.04 73,399.53 85,439.37 12,039.84 17%
October August 59,303.71 60,085.81 65,322.35 65,419.73 74,139.52 77,179.92 0%
November September 61,748.38 62,922.07 73,134.60 76,450.14 80,821.74 80,018.27 0%
December October 57,441.73 61,637.13 67,503.38 66,926.27 70,811.98 76,630.86 0%
January November 54,623.15 55,475.85 63,529.29 64,428.54 75,435.99 76,535.32 0%
February December 69,263.39 73,523.24 80,463.26 90,088.90 88,484.53 88,596.45 0%
Total 677,937.26 714,360.29 784,329.88 830,282.82 900,659.36 916,139.26 567,012.72 49,834.28 6%
KENT PUBLIC FACILITIES DISTRICT
Sales Tax Collections
Inception to Date thru September 30, 2018
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Financial Statements Audit Report
City of Kent Special Events Center
Public Facilities District
For the period January 1, 2017 through December 31, 2017
Published September 28, 2018
Report No. 1022335
Insurance Building, P.O. Box 40021 Olympia, Washington 98504-0021 (360) 902-0370 Pat.McCarthy@sao.wa.gov
Office of the Washington State Auditor
Pat McCarthy
September 28, 2018
Board of Directors
City of Kent Special Events Center Public Facilities District
Kent, Washington
Report on Financial Statements
Please find attached our report on the City of Kent Special Events Center Public Facilities
District’s financial statements.
We are issuing this report in order to provide information on the District’s financial condition.
Sincerely,
Pat McCarthy
State Auditor
Olympia, WA
TABLE OF CONTENTS
Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards..................................................................................................... 4
Independent Auditor's Report on Financial Statements .................................................................. 6
Financial Section ............................................................................................................................. 9
About the State Auditor's Office ................................................................................................... 27
Washington State Auditor's Office
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INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPOR TING AND ON COMPLIAN CE AND
OTHER MATTERS BASED ON AN AUDIT OF FINAN CIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
City of Kent Special Events Center Public Facilities District
King County
January 1, 2017 through December 31, 2017
Board of Directors
City of Kent Special Events Center Public Facilities District
Kent, Washington
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States, the financial statements of the
governmental activities and each major fund of the City of Kent Special Events Center Public
Facilities District, King County, Washington, as of and for the year ended December 31, 2017, and
the related notes to the financial statements, which collectively comprise the District’s basic
financial statements, and have issued our report thereon dated July 27, 2018.
INTERNAL CONTROL OVER FINANCIAL REPORTING
In planning and performing our audit of the financial statements, we considered the District’s
internal control over financial reporting (internal control) to determine the audit procedures that
are appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s
internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a
material misstatement of the District's financial statements will not be prevented, or detected and
corrected on a timely basis. A significant deficiency is a deficiency, or a combination of
Washington State Auditor's Office
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Page 4
deficiencies, in internal control that is less severe than a material weakness, yet important enough
to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies. Given these limitations, during our audit we did
not identify any deficiencies in internal control that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
COMPLIANCE AND OTHER MATTERS
As part of obtaining reasonable assurance about whether the District’s financial statements are free
from material misstatement, we performed tests of the District’s compliance with certain
provisions of laws, regulations, contracts and grant agreements, noncompliance with which could
have a direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance or other matters that are required
to be reported under Government Auditing Standards.
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
District’s internal control or on compliance. This report is an integral part of an audit performed
in accordance with Government Auditing Standards in considering the District’s internal control
and compliance. Accordingly, this communication is not suitable for any other purpose. However,
this report is a matter of public record and its distribution is not limited. It also serves to
disseminate information to the public as a reporting tool to help citizens assess government
operations.
Pat McCarthy
State Auditor
Olympia, WA
July 27, 2018
Washington State Auditor's Office
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INDEPENDENT AUDITOR’S REPORT ON
FINANCIAL STATEMENTS
City of Kent Special Events Center Public Facilities District
King County
January 1, 2017 through December 31, 2017
Board of Directors
City of Kent Special Events Center Public Facilities District
Kent, Washington
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of the governmental activities and each
major fund of the City of Kent Special Events Center Public Facilities District, King County,
Washington, as of and for the year ended December 31, 2017, and the related notes to the financial
statements, which collectively comprise the District’s basic financial statements as listed on
page 9.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
Washington State Auditor's Office
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including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the District’s preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we
express no such opinion. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of significant accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities and each major fund of the City of
Kent Special Events Center Public Facilities District, as of December 31, 2017, and the respective
changes in financial position thereof for the year then ended in accordance with accounting
principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis be presented to supplement the basic financial statements.
Such information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic or
historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of
America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management’s responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the
basic financial statements. We do not express an opinion or provide any assurance on the
information because the limited procedures do not provide us with sufficient evidence to express
an opinion or provide any assurance.
Washington State Auditor's Office
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OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING
STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated July 27,
2018 on our consideration of the District’s internal control over financial reporting and on our tests
of its compliance with certain provisions of laws, regulations, contracts and grant agreements and
other matters. The purpose of that report is to describe the scope of our testing of internal control
over financial reporting and compliance and the results of that testing, and not to provide an
opinion on internal control over financial reporting or on compliance. That report is an integral
part of an audit performed in accordance with Government Auditing Standards in considering the
District’s internal control over financial reporting and compliance.
Pat McCarthy
State Auditor
Olympia, WA
July 27, 2018
Washington State Auditor's Office
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FINANCIAL SECTION
City of Kent Special Events Center Public Facilities District
King County
January 1, 2017 through December 31, 2017
REQUIRED SUPPLEMENTARY INFORMATION
Management’s Discussion and Analysis – 2017
BASIC FINANCIAL STATEMENTS
Governmental Funds Balance Sheet/Statement of Net Position – 2017
Governmental Funds Revenues, Expenditures and Changes in Fund Balance/Statement of
Activities – 2017
Notes to the Financial Statements – 2017
Washington State Auditor's Office
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City of Kent Special Events Center Management’s Discussion and Analysis
Public Facilities District (PFD) For the Year Ended December 31, 2017
INTRODUCTION:
The City of Kent formed the City of Kent Special Events Center Public Facilities District (PFD) in August
2007. The district was established pursuant to State legislation and codified under RCW 35.57, with
the powers and authority set forth by law. The purpose of the PFD is to provide the financing
necessary to construct an events center in the City of Kent. The PFD provided the financing for the
design and construction of the special events center, known as ShoWare Center. Although the PFD
provided much of the funding for the center, the asset is owned by the City of Kent per the interlocal
agreement between the PFD and the City.
This discussion and analysis of the PFD’s financial performance provides an overview of the PFD’s
financial activities for the fiscal year ended December 31, 2017. The intent of this discussion and
analysis is to look at the PFD’s financial performance as a whole. Readers should also review the
basic financial statements and notes to enhance their understanding of the PFD’s financial
performance.
FINANCIAL HIGHLIGHTS:
• Net position ($79,821,961) decreased by $1,799,827 or 2.3 percent from 2016 levels.
• Net bonded debt of $3,330,000 decreased by $1,100,000 or 24.8 percent from 2016 levels.
• Notes payable-debt refinancing (district bond) of $48,295,000 decreased $485,000 or 1.0
percent from 2016.
• Notes payable-debt advances of $28,533,536 increased $3,411,982 (principal and interest) or
13.6 percent with the 2017 payment and accrued interest from the City under the Contingent
Loan and Support Agreement.
• Sales tax revenues of $916,139 increased by $15,480 or 1.7 percent compared to amounts
collected in 2016.
OVERVIEW OF THE FINANCIAL STATEMENTS:
This discussion and analysis is intended to serve as an introduction to the City of Kent Special Events
Center Public Facilities District (PFD) basic financial statements. The PFD’s basic financial statements
are comprised of governmental funds: (1) Balance Sheet/Statement of Net Position, (2) Revenues,
Expenditures and Changes in Fund Balance/Statement of Activities and (3) notes to the financial
statements.
The government-wide financial statements and fund financial statements have been combined in the
basic financial statements segregated in separate columns and are accompanied by a reconciliation
between the statements (see the “Adjustments” column for details).
• Government-wide financial statements. The government-wide financial statements are
designed to provide readers with a broad overview of the PFD’s finances in a manner similar to
a private-sector business. The government-wide financial statements include 1) Statement of
Net Position and 2) Statement of Activities.
Washington State Auditor's Office
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City of Kent Special Events Center Management’s Discussion and Analysis
Public Facilities District (PFD) For the Year Ended December 31, 2017
• Fund financial statements. A fund is a grouping of related accounts that is used to maintain
control over resources that have been segregated for specific activities or objectives. The PFD
uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. All of the funds of the PFD are major governmental funds for the purposes of this
financial report. The focus of these funds is on near-term inflows and outflows of spendable
resources, as well as balances of spendable resources available at the end of the fiscal year.
Such information may be useful in evaluating the PFD’s near-term financing requirements. The
fund financial statements include 1) Balance Sheet and 2) Revenues, Expenditures and
Changes in Fund Balance.
Balance Sheet/Statement of Net Position - This statement presents a snap-shot view of the assets of
the PFD, the liabilities it owes and the net difference or net position. It focuses on the resources
available for future operations.
Revenues, Expenditures and Changes in Fund Balance/Statement of Activities - This statement
presents all revenues and expenditure of the PFD during the fiscal year, including other sources and
uses.
Notes to the financial statements - The notes to the financial statements provide additional
information that is essential to a full understanding of the data provided in the financial statements and
should be read in conjunction with the financial statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS:
The PFD’s overall financial position decreased in 2017 by $1,799,827 or 2.3 percent from 2016 levels to
a deficit of $79,821,961. This decrease in fund balance primarily reflects the increase in notes payable-
debt advances of $3,411,982 (principal and interest) offset by the reduction in outstanding net bonded
debt of $1,100,000.
City of Kent’s Special Events Center
Public Facilities District
Statement of Net Position
2017 2016
Assets
Current and other assets $ 351,993 $ 329,922
Total Assets 351,993 329,922
Liabilities
Other liabilities 15,418 20,502
Long-term debt 80,158,536 78,331,554
Total Liabilities 80,173,954 78,352,056
Net Position
Unrestricted (79,821,961) (78,022,134)
Total Net Position $ (79,821,961) $ (78,022,134)
Highlights from the Statement of Net Position:
• Taxes receivables ($165,287) increased by $1,285 or 0.8%. The increase in the receivable is due
to increased sales tax revenues in 2017 (1.7 percent increase for the year).
• Outstanding long-term bonded debt was reduced by $1,100,000 as the result of the principal
payment made during 2017.
Washington State Auditor's Office
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City of Kent Special Events Center Management’s Discussion and Analysis
Public Facilities District (PFD) For the Year Ended December 31, 2017
• Notes payable-debt advances increased by $3,411,982 (principal and interest) or 13.6 percent in
2017 with the City’s 2017 support under the contingent loan and support agreement and accrued
interest on the note.
• The PFD’s deficit net position is the result of the agreement established between the PFD and the
City of Kent. The PFD was established to provide the financing necessary to construct an
events center in the City of Kent. The PFD issued bonds to fund the design and
construction of the special events center, known as ShoWare Center. Although the PFD
provided much of the funding for the construction of the center, the asset is owned by the
City of Kent. Since the asset resides within the financials of the City of Kent, but the long-
term debt belongs to the PFD, the PDF will likely show a deficit net position throughout
the life of the bonds. The last of the bonds will mature in December 2020, but the PFD
will continue to have notes payable to the City for payments the City has made under the
contingent loan agreement as well as the PFD note payable for the refinancing of the
sales tax bonds.
The following table details the changes in net position.
City of Kent’s Special Events Center
Public Facilities District
Statement of Activities
2017 2016
Revenues
Sales tax $ 916,139 $ 900,659
Investment earnings 4,017 1,826
Total Revenues 920,156 902,485
Expenses
Other Services and Charges 2,183,000 1,009,603
Interest expense 536,983 1,427,143
Total Expenses 2,719,983 2,436,746
Other Financing Sources (Uses)
Special item – debt forgiveness - 4,045,000
Total Other Financing Sources (Uses) - 4,045,000
Decrease in net position (1,799,827) 2,510,739
Net Position – January 1 (78,022,134) (80,532,873)
Net Position – December 31 $ (79,821,961) $ (78,022,134)
Overall, the PFD saw a decrease in net position of $1,799,827. Key highlights:
• Sales tax revenue ($916,139) increased by $15,480 or 1.7 percent compared to the previous
year as the result of the improving economy.
• Interest expense ($536,983) decreased by $890,160 or 62.4 percent as compared to 2016 due to
the defeasance of the sales tax bonds in 2016.
• Other services and charges expense increased by $1,173,397 or 116.2 percent from 2016 as the
PFD made payments to the City for the 2016 LTGO Series B bond debt service under the
Interlocal Agreement.
FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS:
The focus of the governmental funds is to provide information on near-term inflows and outflows of
spendable resources, as well as on balances of spendable resources available at the end of the fiscal
year. Such information may be useful in assessing the PFD's near-term financing requirements.
Washington State Auditor's Office
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City of Kent Special Events Center Management’s Discussion and Analysis
Public Facilities District (PFD) For the Year Ended December 31, 2017
At the end of the current fiscal year, the PFD's governmental funds reported combined ending fund
balances of $322,421, an increase of $32,210 from the previous year. Any fund balance available in the
funds is restricted for future payments on the PFD’s debt.
The General Fund is the chief operating fund of the PFD. At the end of the current fiscal year, fund
balance of the General Fund was $322,421 representing a $32,210 or 11.1 percent increase from the
2016 balance. The primary revenue sources for the general fund are sales tax revenues and interest
income. Sales taxes for 2017 were $916,139, an increase of $15,480 or 1.7 percent from 2016. Interest
income for 2017 was $4,017, up 119.9 percent from 2016 with higher cash balances, slowly rising
interest rates and participation in the City’s pooled investments which earned higher interest than bank
deposits. With the refinancing of the District’s 2008 Sales Tax Bonds with City LTGO Bonds, the District
is now responsible for paying the City the amount of the debt service on the City’s 2016 Series B LTGO
Refunding Bonds. In 2017, these payments were $2,668,000.
The Debt Service Fund is used to account for payment of principal and interest of long-term debt.
Transfers from the PFD’s General Fund along with loans from the City provide the financing source to
cover such debt. During 2017, the PFD paid $1,100,000 toward principal and $245,977 for interest
expense for debt service. The debt service fund also records the other financing source for the
revenues advanced from the City under the contingent loan and support agreement to cover the District
debt payments. In 2017, the City advanced $3,126,031 to the District, up 1.8 percent from 2016.
LONG-TERM DEBT:
At the end of the current fiscal year, the PFD had total net bonded debt outstanding of $3,330,000 and
$76,828,536 notes payable to the City. Under a Contingent Loan and Support Agreement, the City has
irrevocably pledged its full faith, credit and resources for making the City contingent loan payments to the
PFD as required in order for the PFD to meet their debt service requirements on the bonds, to the extent
that PFD sales tax revenues are not sufficient for that purpose.
City of Kent’s Special Events Center
Public Facilities District
Outstanding Debt
December 31
2017 2016
Revenue bonds 3,330,000 4,430,000
Notes payable-debt advances 28,533,536 25,121,554
Notes payable-debt refinancing 48,295,000 48,780,000
Total debt $ 80,158,536 $ 78,331,554
The District’s total bonded debt decreased by $1,100,000 or 24.8 percent during the current fiscal year.
The required debt service payments were made during 2017. The notes payable to the City increased by
$2,926,982 due to the City advances under the Contingent Loan Agreement less the payment on the
2016 LTGO bonds. Net debt of the PFD increased $1,826,982 in 2017.
The PFD carries an “AA+” rating from Standard and Poor’s as of April 21, 2016 and an “A2” rating from
Moody’s as of April 17, 2015.
Additional information on the PFD’s long-term debt can be found in Note 5 of this report.
Washington State Auditor's Office
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City of Kent Special Events Center Management’s Discussion and Analysis
Public Facilities District (PFD) For the Year Ended December 31, 2017
ECONOMIC OUTLOOK:
The PFD continues to be faced with many of the challenges of the slow recovery to the recent
recession. Its primary revenue source is sales tax revenue which, although slowly recovering,
continues to lag from the pre-recession levels. Per the PFD's intergovernmental agreement with the
City, it receives loans from the City to help cover its debt service should it not receive enough in sales
tax revenue during the year. Any net proceeds of the ShoWare Center operations are pledged towards
the PFD revenue bond debt service, but with the slow economic recovery, the ShoWare Center
continues to not meet expectations as far as the number of events and the number of attendees at such
events and has not yet had net proceeds from operations. Because of this, the PFD turns to the
general operations of the City of Kent to help cover the annual debt service costs. During 2017, the
PFD received $3,126,031 from the City. For 2018, the City has budgeted accordingly to reflect the
needs of the PFD to cover such costs.
REQUESTS FOR INFORMATION:
This financial report is designed to provide a general overview of the City of Kent Special Events Center
Public Facilities District (PFD) finances. Questions concerning the information provided in this report
may be addressed to:
City of Kent Special Events Center, Public Facilities District
c/o Finance Department
220 Fourth Avenue South
Kent, WA 98032
Washington State Auditor's Office
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Page 14
CITY OF KENT SPECIAL EVENTS CENTER PFD
GOVERNMENTAL FUNDS BALANCE SHEET/STATEMENT OF NET POSITION
December 31, 2017
General Fund
Debt Service
Fund Totals
Adjustments
(note 2)
Statement of
Net Position
ASSETS
Restricted assets:
Cash & equity in pooled investments (Note 3)109,913$ -$ 109,913$ -$ 109,913$
Investments, at fair value 47,221$ 47,221 47,221
Other taxes receivable 165,287 - 165,287 - 165,287
Prepaid Insurance - - -
Current 10,138 10,138
Long-term 19,434 19,434
TOTAL ASSETS 322,421 - 322,421 29,572 351,993
LIABILITIES
Accrued interest payable - - - 15,418 15,418
Due within one year:
- - - 1,250,000 1,250,000
- - - 495,000 495,000
Due in more than one year:
- - - 2,080,000 2,080,000
28,533,536 28,533,536
- - - 47,800,000 47,800,000
TOTAL LIABILITIES - - - 80,173,954 80,173,954
FUND BALANCE
Restricted 322,421 - 322,421 (322,421) -
TOTAL LIABILITIES AND FUND BALANCE 322,421 - 322,421 79,851,533
NET POSITION
Unrestricted (79,821,961)
TOTAL NET POSITION (79,821,961)
See accompanying notes to the financial statements
Receivables (net of allowance for estimated
uncollectables (Note 4)
Revenue bonds payable, current portion (Note 5)
Revenue bonds payable, noncurrent portion (Note
5)
Notes payable-debt refinancing (District bond)
(Note 5)
Notes payable-debt advances (Note 5)
Notes payable - debt refinancing, current portion
(Note 5)
Washington State Auditor's Office
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CITY OF KENT SPECIAL EVENTS CENTER PFD
GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES/STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2017
General Fund
Debt Service
Fund Totals
Adjustments
(note 2)
Statement of
Activities
REVENUES
Taxes:
Sales and use tax 916,139 - 916,139 916,139
Miscellaneous revenue:
Interest income 4,017 - 4,017 4,017
TOTAL REVENUES 920,156 - 920,156 - 920,156
EXPENDITURES/EXPENSES
Other Services and Charges 2,668,000 2,668,000 (485,000) 2,183,000
Debt service
Principal - 1,100,000 1,100,000 (1,100,000) -
Interest - 245,977 245,977 291,006 536,983
TOTAL EXPENDITURES/EXPENSES 2,668,000 1,345,977 4,013,977 (1,293,994) 2,719,983
(1,747,844) (1,345,977) (3,093,821) 1,293,994 (1,799,827)
OTHER FINANCING SOURCES (USES)
Issuance of notes payable - 3,126,031 3,126,031 (3,126,031) -
Payment to escrow agent - - - - -
Special item-debt forgiveness - - - - -
Transfers in 1,780,054 - 1,780,054 (1,780,054) -
Transfers out - (1,780,054) (1,780,054) 1,780,054 -
TOTAL OTHER FINANCINGS SOURCES (USES)1,780,054 1,345,977 3,126,031 (3,126,031) -
NET CHANGE IN FUND BALANCE 32,210 (0) 32,210 (32,210)
NET CHANGE IN NET POSITION (1,832,037) (1,799,827)
FUND BALANCES/NET POSITION
Beginning of year 290,211 - 290,211 (78,022,134)
End of year 322,421 (0) 322,421 (79,821,961)
See accompanying notes to the financial statements
EXCESS (DEFICIENCY) OF REVENUES OVER
EXPENDITURES/EXPENSES
Washington State Auditor's Office
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Notes to the Financial Statements
Special Events Center Public Facilities District December 31, 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Reporting Entity
The City of Kent established the Kent Special Events Center Public Facilities District (PFD) in August
2007. The district was established pursuant to State legislation and codified under RCW 35.57, with
the powers and authority set forth by law. The PFD is established for the sole purpose of pursuing the
design, construction, and/or financing of a regional center comprised of a Special Events Center,
individually or in cooperation with any other governmental and/or private entities as allowed by law.
Based on the criteria of Statement No. 14, as amended by Statement No. 61, of the Government
Accounting Standards Board (GASB), “The Financial Reporting Entity”, the City of Kent, WA (City) has
included the PFD in the City’s financial statements utilizing the discrete presentation method. The City
appoints a voting majority of the PFD board, and the organization presents a potential financial benefit
or burden to the City. A copy of the City of Kent’s Comprehensive Annual Financial Report is available
at the City of Kent located at 220 – 4th Avenue South, Kent, WA 98032.
A copy of the City of Kent Special Events Center Public Facilities District’s financial statements is
available at the City of Kent located at 220 – 4th Avenue South, Kent, WA 98032.
As a component unit of the City, the PFD follows the accounting practices of the City. The following
provides a summary of the City's more significant accounting policies. They are presented to assist
the reader in interpreting the financial statements and other data in this report.
b. Basic financial statements
The basic financial statements include both entity-wide and fund financial statements. The district
uses an alternate presentation allowable under accounting principles generally accepted in the United
States of America that combines the fund statements and entity wide statements (the Governmental
Funds Balance Sheet / Statement of Net Position and the Governmental Funds Statement of
Revenues, Expenditures and Changes in Fund Balance / Statement of Activities).
c. Measurement focus, basis of accounting, and financial statement presentation
The accounting and financial reporting treatment applied to a fund is determined by its measurement
focus. The government-wide financial statements use the economic resources measurement focus,
and the accrual basis of accounting. Revenues are recorded when earned and expenses are
recorded when a liability is incurred, regardless of the timing of cash flows
The modified accrual basis of accounting is used by the PFD for the fund statements. Revenues and
other financial resources are recognized when they become susceptible to accrual, i.e., when the
related funds become both measurable and available to finance expenditures of the current period. To
be considered "available", revenue must be collected during the current period or soon enough
thereafter to pay current liabilities. For this purpose, revenue is considered to be available when
collected within sixty days after year-end. However, debt service expenditures, and payments for
claims and judgments are recorded when due.
Sales taxes and intergovernmental revenues are susceptible for accrual. Investment earnings are
accrued when earned. Charges for services, fines and forfeitures, licenses and permits, and other
miscellaneous revenues are recorded upon receipt and are not susceptible for accrual. Expenditures
are recognized when the related fund liability is incurred. Since the recognition of depreciation does
not reduce net financial resources, it is not considered an expenditure. Other exceptions include (1)
inventories of materials and prepaid items are reported as expenditures when purchased, (2) interest
Washington State Auditor's Office
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Notes to the Financial Statements
Special Events Center Public Facilities District December 31, 2017
on long-term debt is not accrued, but is recorded as an expenditure when due.
The PFD reports the following major governmental funds:
General Fund - The PFD’s General Fund is maintained in the office of the Treasurer separate and
distinct from all other funds and accounts for the financial resources of the PFD which are not
accounted for in any other fund. Principal sources of revenue are comprised of sales and use tax and
interest income. Primary uses are transfers to the PFD’s Debt Service Fund to cover its annual debt
payment.
Debt Service Fund – The Debt Service Fund is maintained in the office of the Treasurer separate and
distinct from all other funds. This fund is used to account for payment of principal and interest of long-
term debt. Transfers from the PFD’s General Fund along with intergovernmental funds revenue
provide the financing sources to cover such debt.
d. Budgetary Information
The PFD is not legally required to adopt an annual budget, and therefore does not adopt a budget or
provide budgetary statements in this report.
e. Assets, deferred outflows, liabilities, deferred inflows, and net position
(1) Cash and cash equivalents
The PFD has defined cash and cash equivalents as cash on hand, demand deposits, and any
short-term investments, including restricted assets, with original maturities of three months or less
from the date of purchase. Included in this category are all funds invested in the Local
Government Investment Pool (LGIP).
(2) Restricted assets
Since the PFD is established for the sole purpose of pursuing the design, construction, and/or
financing of a regional center comprised of a Special Events Center, all assets of the PFD are
restricted for the repayment of the outstanding debt of the PFD.
f. Interfund Transfers
Transfers are required where revenue is generated in one fund and expenditures are paid for in other
funds. In the case of the PFD, the interfund transfers which occur are transferred to the debt service
fund to cover the annual debt service payments.
A summary of transfers by fund type is as follows:
Transfers In Transfers Out
Major Funds
General Fund $ 1,780,054 $ -
Debt Service Fund - 1,780,054
Total $ 1,780,054 $ 1,780,054
Washington State Auditor's Office
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Notes to the Financial Statements
Special Events Center Public Facilities District December 31, 2017
2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL
STATEMENTS
EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE
SHEET AND THE GOVERNMENT-WIDE STATEMENT OF NET POSITION
Included in the Balance Sheet/Statement of Net Position is the reconciliation between fund
balance – total governmental funds and net position – governmental activities as reported in
compliance with GASB Statement No. 34. Those adjusting items can be found in the “Adjustment”
column of the Governmental Funds Balance Sheet/Statement of Net Position. Details relating to
those adjustments are shown below.
Fund Balance – Total Governmental Funds $ 322,421
Accrue interest on long-term debt (15,418)
Unamortized prepaid bond insurance on long-term debt 29,572
Long-term liabilities, including bonds payable, are not due and
payable in the current period and therefore are not reported in the
governmental funds:
Revenue bonds (3,330,000)
Note payable-Debt Subsidy (28,533,536)
Note payable-Debt Refinancing (48,295,000)
Net Position – ending of Governmental Activities $ (79,821,961)
EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND STATEMENT
OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES AND THE GOVERNMENT-
WIDE STATEMENT OF ACTIVITIES
Included in the governmental fund statement of revenues, expenditures, and changes in fund
balances/statement of activities is the reconciliation between net changes in fund balances – total
governmental funds and changes in net position of governmental activities in compliance with
GASB Statement No. 34. Those adjusting items can be found in the “Adjustment” column of the
Governmental Fund Revenues Expenditures and Changes in Fund Balances/Statement of
Activities. Details relating to those adjustments are shown below.
Net change in Fund Balance – Total Governmental Funds $ 32,210
Issuance of Note Payable (3,126,031)
Other Services and Charges 485,000
Debt principal payments 1,100,000
Accrued interest on bonds (285,951)
Book interest on notes to the City of Kent 5,083
Current year amortization of prepaid bond insurance (10,138)
Change in Net Position of Governmental Activities $ (1,799,827)
3. DEPOSITS AND INVESTMENTS
The deposits and investment practices of the PFD are accounted for with a modified pooled cash
arrangement. All investment activity of the City must be in compliance with Chapters 35.39 and 39.59 of
the Revised Code of Washington (RCW) and any other statutes or regulatory requirements which may
apply. The City’s investment policy presented in the Kent City Code Chapter 3.02, allows investments
consisting of the State Treasurer’s Investment Pool, U.S. Treasury Obligations, Government Sponsored
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Notes to the Financial Statements
Special Events Center Public Facilities District December 31, 2017
Enterprises Agency Securities (including, but not limited to, Federal Home Loan Bank notes and bonds,
Federal National Mortgage Association notes, Federal Home Loan Mortgage Corporation and Federal
Farm credit Bank bonds), Repurchase Agreements, Bankers’ Acceptances, Commercial Paper,
Certificates of Deposit, Bonds of the State of Washington and local governments within the State of
Washington, General Obligation Bonds of other state and local governments outside Washington,
Corporate Notes, and Supranational Bonds.
Reconciliation of cash, cash equivalents, deposits and investments to Statement of Net Position:
COMPONENT UNIT
Special Events Center PFD:
Cash on hand and in bank $ 109,913
Investments 47,221
Total Cash & Investments $ 157,134
DEPOSITS
The PFD’s deposits are entirely covered by federal depository insurance (FDIC) up to $100,000 and by
collateral held in a multiple financial institution collateral pool administered by the Washington Public
Deposit Protection Commission (PDPC) for amounts over $100,000 as per State Law (RCW 39.58).
INVESTMENTS
The PFD participates in the City of Kent’s pooled cash and investments whereby investments are allocated
to all participating funds based on the equity position in the City’s pooled investments. The PFD follows
the City’s investment policy.
Investments Measured at Amortized Costs:
Investments in the State Treasurer’s Local Government Investment Pool (LGIP), a qualified
external investment pool, are valued at amortized cost, which approximates fair value. The LGIP
is an unrated external investment pool. The LGIP portfolio is invested in a manner that meets the
maturity, quality, diversification and liquidity requirements set forth by the Governmental
Accounting Standards Board in Statement No. 79 for external investment pools that elect to
measure, for financial reporting purposes, investments at amortized costs. The LGIP does not
have any legally binding guarantees of share values. The LGIP does not impose liquidity fees or
redemption gates on participant withdrawals. Participants in the LGIP are offered 100 percent
liquidity on a daily basis, provided notification is made within specified times. Each month,
earnings from the LGIP are deposited to the City’s bank account.
The State Investment Pool was authorized by State statute Chapter 294, Laws of 1986, and is
managed and operated by the State Treasurer. The State Finance Committee is the administrator
of the statute that created the pool and adopts rules. The State Treasurer is responsible for
establishing the investment policy for the pool and reviews the policy annually and proposed
changes are reviewed by the LGIP advisory Committee.
The Office of the State Treasurer prepares a stand-alone LGIP financial report. A copy of the
report is available from the Office of the State Treasurer, PO Box 40200, Olympia, Washington
98504-0200, online at http://www.tre.wa.gov.
Washington State Auditor's Office
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Notes to the Financial Statements
Special Events Center Public Facilities District December 31, 2017
Investments Measured at Fair Value:
The City measures and reports investments other than the LGIP at fair value.
Interest Rate Risk: Interest rate risk is the risk that changes in interest rates of debt instruments
will adversely affect the fair value of an investment. As a means of limiting its exposure to fair
value losses arising from rising interest rates, the City’s investment policy: (1) sets maximum
maturities for the various allowable investment types (generally none exceed five years); (2)
directs structuring the investment portfolio so that maturities mature to meet cash requirements,
when known, for ongoing operations, thereby avoiding need to sell securities on the open market
prior to maturity; and (3) requires investing liquidity funds primarily in short-term instruments (i.e.
investments maturing in less than one year). As of December 31, 2017, the weighted average
maturity for the portfolio was 811 days. Participants’ balances in the LGIP are not subject to
interest rate risk, as the weighted average maturity of the portfolio will not exceed 90 days. As of
December 31, 2017, the LGIP had a weighted average maturity of 35 days.
As of December 31, 2017, the following reflects the PFD’s share of the City’s pooled investments:
Fair Value Investment Maturities
Investment Type Book Value Fair Market <1 1-2 3-5 % of
Value Year Years Years Portfolio
U.S. Treasuries $ 10,440 $ 10,350 $ 1,128 $ 1,891 $ 7,332 21.9%
U.S. Agency Securities 31,620 31,515 9,275 18,608 3,630 66.8%
Commercial Paper 902 909 909 - - 1.9%
Corporate Notes 4,477 4,447 - 2,972 1,476 9.4%
Total investments 47,439 47,221 11,312 23,471 12,438 100.0%
Credit Risk: Credit risk is the risk that an issuer or other counterparty to an investment may not
fulfill its obligations. State statute, as well as City policy, set requirements for the minimum credit
ratings from a nationally recognized rating agency for the various types of investments. City policy
further set guidelines for the maximum portfolio allocation by investment type and issuer. The
credit risk of the LGIP is limited as most investments are either obligations of the US government,
government sponsored enterprises, or insured demand accounts and certificates of deposit. The
credit ratings of the City’s pooled investments are as follows:
Ratings
Investment Type Moody’s S&P % of Investments
U.S. Treasuries 1 Total 21.8%
U.S. Treasury Notes Aaa AA+ 21.8%
U.S. Agency Securities Total 66.4%
Financing Corporation Aaa AA+ 25.4%
Federal Home Loan Bank Aaa AA+ 15.9%
Federal Home Loan Mortgage Corporation Aaa AA+ 13.3%
Federal National Mortgage Association Aaa AA+ 7.9%
Resolution Funding Aaa AA+ 3.9%
Commercial Paper Total 1.9%
Mitsubishi UFJ Financial P-1 A-1+ 1.4%
Toyota Motor Corporation P-1 A-1 0.5%
Corporate Notes Total 9.4%
Apple Inc Aa1 AA+ 1.4%
Washington State Auditor's Office
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Notes to the Financial Statements
Special Events Center Public Facilities District December 31, 2017
Ratings
Investment Type Moody’s S&P % of Investments
BB&T Corporation A2 A- 0.9%
Boeing Company A2 A 1.0%
Cisco Systems Inc A1 AA- 0.9%
Comcast Corporation A3 A- 0.5%
Home Depot Inc A2 A 0.5%
Johnson & Johnson Aaa AAA 0.2%
JP Morgan Chase & Co A3 A- 0.9%
Paccar Financial Corporation A1 A+ 0.1%
PNC Financial Services Group A2 A 1.0%
Procter & Gamble Co Aa3 AA- 0.3%
Texas Instruments Inc A1 A+ 0.3%
The Bank of New York Mellon A1 A 0.5%
Toyota Motor Corporation Aa3 AA- 0.9%
1 U.S. Treasury issues are explicitly guaranteed by the United States government and are not
subject to credit risk
Concentration of Credit Risk: According to the City’s investment policy, with the exception of U.S.
Treasuries, U.S. Agencies, and the LGIP, no more than 25% of the City’s total investment portfolio
will be invested in securities offered by a single issuer. In accordance with GASB Statement No.
40, the City will report any investment in any one issuer that is 5% or more of the total City
portfolio. As of December 31, 2017, the City did not have any investments meeting that criterion.
Custodial Credit Risk: Custodial credit risk for investments is the risk that, in the event of the
failure of the counter party to a transaction, the City will not be able to recover the value of
investment or collateral securities that are in the possession of an outside party. The City’s
investment policy requires that all security transactions entered into by the City are conducted on
delivery-versus-payment (DVP) and that securities are to be held in safekeeping at the trust
department of the City’s primary bank. The custodian provides the City with monthly market
values along with safekeeping receipts. All bank deposits are covered 100% by federal depository
insurance and pledged collateral on deposit with the Washington State Public Deposit Protection
Commission (WSPDPC). Per GASB Statement No. 40 guidelines, the LGIP balances are not
subject to custodial credit risk.
1. Fair value hierarchy:
The PFD as part of the City’s pooled investments measures and records it’s investments within the
fair value hierarchy established by accounting principles generally accepted in the United States of
America. The hierarchy is based on the valuation inputs used to measure the fair value of the
asset.
The guidelines in GASB Statement 72 recognize a three-tied fair value hierarchy as follows:
• Level 1: Quoted prices in active markets for identical assets or liabilities that the
government can access at the measurement date. Observable markets include exchange
markets, dealer markets, brokered markets and principal-to-principal markets.
• Level 2: These are inputs other than quoted prices included in Level 1 that are observable
for the asset or liability (such as interest rates, yield curves, volatilities, credit spreads).
Inputs are derived from or corroborated by observable market data through correlation
including quoted prices for similar assets or liabilities in active markets or inactive markets.
• Level 3: Unobservable inputs for an asset or liability. Only should be used when relevant
Level 1 and Level 2 inputs are unavailable.
Washington State Auditor's Office
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Notes to the Financial Statements
Special Events Center Public Facilities District December 31, 2017
Fair Value Measurements Using
Quoted Prices Significant
In Active Other Significant
Markets for Observable Unobservable
Identical Assets Inputs Inputs
Amount (Level 1) (Level 2) (Level 3)
Investments by fair value level
Debt Securities:
U.S. Treasury Securities $ 10,350 $ 10,350 $ - $ -
U.S. Agency Securities 31,515 - 31,515 -
Commercial Paper 909 - 909 -
Corporate Notes 4,447 - 4,447 -
Sub-totals $ 47,221 $ 10,350 $ 36,871 $ -
Investments measured at amortized costs
State LGIP (cash equivalents) $ 46,205 $ 46,205 $ - $ -
Sub-totals $ 46,205 $ 46,205 $ - $ -
Total investments (incl LGIP) $ 93,426 $ 56,555 $ 36,871 $ -
4. RECEIVABLES
The PFD uses the modified accrual basis of accounting. In adopting this basis of accounting, the PFD
recognizes revenue by recording various receivables and accrued revenue in its financial statements. The
revenue recognition criteria by source is as follows:
a. TAXES RECEIVABLE
Sales and use taxes are collected by the state and remitted to the PFD on the last day of each
month. Sales tax revenue is accrued at year end per GASB Statement No. 33, "Accounting and
Financial Reporting for Nonexchange transactions." As of December 31, 2017, receivables
totaled $165,287.
5. LONG-TERM INDEBTEDNESS
Bonded Debt
In February 2008, the Public Facilities District (PFD) issued Special Events Center Sales Tax Bonds of
$53,150,000 and Special Events Center Revenue Bonds (Taxable), of $10,130,000 to finance a portion of
the costs of developing the Events Center, capitalizing interest on the Bonds, and paying costs of
issuance for the Bonds.
On June 15, 2016, the City of Kent issued $49,105,000 in general obligation bonds (2016 LTGO
Refinancing Bonds, Series B) for the purpose of refunding $53,150,000 of Public Facilities District Sales
Tax Bonds. Although the bonds are now a formal debt of the City of Kent, the City and the PFD have
entered into an Interlocal Financing Agreement whereby the City agrees to lend the District the proceeds
of the 2016 Refunding bonds, and the District hereby borrows said sum from the City for the purpose of
refunding the PFD’s 2008 Sales Tax Bonds. The PFD has recorded a note payable (District Bond) to
the City for the amount of the bond proceeds. The District agrees, in satisfaction of the District Bond, to
remit all sales tax revenue and other Special Events Center revenues which are received by and
available to the District to the City for the purpose of enabling the City to pay the principal of and interest
on the 2016 Refunding Bonds, Series B on their scheduled maturity dates or earlier mandatory
Washington State Auditor's Office
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Notes to the Financial Statements
Special Events Center Public Facilities District December 31, 2017
installment redemption dates.
If at any time the sales tax revenue and other Special Events Center revenues are insufficient to provide
for the payment of principal of and interest on the 2016 Refunding Bonds, the City shall provide for that
deficiency from other available City revenues (city advance), and the amount of the city advance shall be
deemed an additional loan by the City to the District. The District shall repay any city advances from
future available sales tax revenue and other Special Events Center revenues. The outstanding principal
amount of any city advance shall bear interest at a rate set by the City’s Finance Director on the date a
loan is made, based on the then-current yield of the City’s pooled investments.
As of December 31, 2017, the PFD had total net bonded debt outstanding of $3,330,000,
payable from PFD revenue remaining, if any, after the PFD transfers sufficient revenues to the City to pay
the 2016 General Obligation Bonds. The debt is further secured by a pledge of PFD Revenues received
from the City under the terms of the Contingent Loan and Support Agreement. Under the Contingent
Loan and Support Agreement, the City has irrevocably pledged its full faith, credit and resources for the
making of City Contingent Loan Payments to the PFD as required in order for the PFD to meet their debt
service requirements on the bonds, if and to the extent that Sales Tax Revenue and/or Special Events
Center revenues are not sufficient for that purpose. During 2017, the City advanced to the PFD,
$3,126,031, for a total to date of $28,533,536, including $660,317 in accrued interest from 2009 through
2017.
The following is a summary of long-term bonded debt transactions of the Special Events Center Public
Facilities District for the year ended December 31, 2017:
Outstanding Debt Retired, Outstanding
Debt Extinguished Debt
1/1/17 & Amortized 12/31/17
Revenue Bonds 4,430,000 (1,100,000) 3,330,000
Total Long-term Debt Payable $ 4,430,000 $ (1,100,000) $ 3,330,000
The following is a summary of bonded debt issuance and redemption information as of December 31, 2017:
Issuance Maturity Interest Original Redemption Outstanding Due Within
Date Date Rate Amount to Date 12/31/17 One Year
Revenue Bonds 2008 2020 3.16-5.75% 10,130,000 (6,800,000) 3,330,000 1,250,000
Total Bonded Debt $ 10,130,000 $ (6,800,000) $ 3,330,000 $ 1,250,000
The Special Events Center Public Facilities District’s annual debt service requirements to maturity for
their revenue bonds are as follows:
Special Events Center Public Facilities District
Year Principal Interest Total
2018 1,250,000 187,083 1,437,083
2019 1,400,000 118,283 1,518,283
2020 680,000 39,127 719,127
Total $ 3,330,000 $ 344,493 $ 3,674,493
Advance Refundings
As of December 31, 2017 the following bonds have been defeased by placing funds with an escrow agent
in an irrevocable trust, but are not yet callable:
Washington State Auditor's Office
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Page 24
Notes to the Financial Statements
Special Events Center Public Facilities District December 31, 2017
Description Amount Call Date
2008 Public Facilities District Sales Tax Bonds 53,150,000 6/1/2018
Notes Payable
The City of Kent (City) and the Kent Special Events Center Public Facilities District (District) entered into
a contingent loan and support agreement (the agreement) effective February 20, 2008. The contingent
loan agreement remains in effect as long as the 2008 bonded debt of the District, or the City’s 2016
LTGO Refinancing Bonds, Series B bonds are outstanding (2037). Under the agreement, in the event
that the District is unable to timely provide for the payment of principal or interest on any bonds, the City
shall provide the District the amount necessary to make such timely payment. The City’s obligation under
the agreement is absolute and unconditional. The full faith, credit and resources of the City are pledged
irrevocably for the payments of any District shortfalls on the debt payments. The City paid the District
$3,126,031 under the agreement in 2017. Cumulatively, the City has paid the District $27,873,219 under
the agreement. The agreement terms these payments as loans between the City and the District, payable
by the District as District revenues become available for that purpose as defined with Section 4 of the
agreement. Additionally, $660,317 interest has been accrued on the note for a total of $28,533,536 due
to the City. To date, no repayments have been made on these loans and it is deemed unlikely that future
District revenues will be available for this purposes. Therefore, no schedule has been set for the
repayment of these loans and the entire balance is classified as long-term on the District’s Statement of
Net Position.
As noted in the bonded debt discussion above, in 2016, the City loaned the PFD the proceeds of the
City’s 2016 LTGO Refinancing Bonds, Series B for the PFD to defease the 2008 Sales Tax Bonds and
the PFD created a notes payable (District Bond) for the amount of the loan ($49,105,000). This loan
(bond) reduces as payments are made on the 2016 LTGO Refinancing Bonds, Series B. In 2017, a
payment of $485,000 was made leaving a balance of $48,295,000 outstanding at December 31.
Arbitrage Compliance
All arbitrage compliance regulations as per Section 148(f) of the Internal Revenue Service regulations, as
amended, of the Internal Revenue Code for the PFD’s tax-exempt bonds are current.
6. FUND BALANCE/NET POSITION
Fund Balance
Fund balance presented in the governmental fund financial statements represent the difference between
assets and liabilities reported within the governmental fund. Fund balance is classified into the following
categories:
Nonspendable – items that cannot be spent due to form; inventories, prepaid amounts, long-term loan
receivables, or amounts that must be maintained intact legally.
Restricted – amounts constrained for specific purposes imposed by external parties. The PFD has
$322,421 restricted for debt service as of December 31, 2017.
Committed – amounts that may only be used for specific purposes pursuant to constraints imposed by
formal action (resolution) of the PFD Board.
Assigned – all amounts remaining in governmental funds, other than the general fund, not classified as
nonspendable, restricted or committed. Amounts reported as assigned also include year-end
Washington State Auditor's Office
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Page 25
Notes to the Financial Statements
Special Events Center Public Facilities District December 31, 2017
encumbrances that have received approval from the city council and re-appropriated in the following
year’s carry forward budget.
Unassigned – any remaining fund balance in the general fund not classified as nonspendable, restricted,
committed or assigned.
The PFD considers restricted amounts to have been spent first when expenditures are incurred for
purposes for which both restricted and unrestricted fund balances are available. When expenditures of
unrestricted fund balance are incurred, the PFD considers committed amounts spent first, then assigned
amounts and lastly, unassigned amounts.
Net Position
Although the PFD's governmental funds reflected a positive fund balance of $322,421 at December 31,
2017 (restricted for debt service), when adjusted to the district-wide financials presented in accordance
with GASB Statement No. 34, the total liabilities exceed the total assets of the PFD resulting in a deficit
net position. Per the interlocal agreement with the City of Kent, the PFD was created to finance the
construction of the event center and make the debt service payments on the bonds sold to finance that
construction. The capital assets, once constructed by the PFD, were turned over to the City, but the PFD
retains the long-term debt. Because of this, the PFD's financials will reflect a deficit net position through
the life of the bonds, including the 2016 refinancing (December 2037).
Washington State Auditor's Office
___________________________________________________________________________________________________________________
Page 26
ABOUT THE STATE A UDITOR’S OFFICE
The State Auditor's Office is established in the state's Constitution and is part of the executive
branch of state government. The State Auditor is elected by the citizens of Washington and serves
four-year terms.
We work with our audit clients and citizens to achieve our vision of government that works for
citizens, by helping governments work better, cost less, deliver higher value, and earn greater
public trust.
In fulfilling our mission to hold state and local governments accountable for the use of publ ic
resources, we also hold ourselves accountable by continually improving our audit quality and
operational efficiency and developing highly engaged and committed employees.
As an elected agency, the State Auditor's Office has the independence necessary to objectively
perform audits and investigations. Our audits are designed to comply with professional standards
as well as to satisfy the requirements of federal, state, and local laws.
Our audits look at financial information and compliance with state, federal and local laws on the
part of all local governments, including schools, and all state agencies, including institutions of
higher education. In addition, we conduct performance audits of state agencies and local
governments as well as fraud, state whistleblower and citizen hotline investigations.
The results of our work are widely distributed through a variety of reports, which are available on
our website and through our free, electronic subscription service.
We take our role as partners in accountability seriously, and provide training and technical
assistance to governments, and have an extensive quality assurance program.
Contact information for the State Auditor’s Office
Public Records requests PublicRecords@sao.wa.gov
Main telephone (360) 902-0370
Toll-free Citizen Hotline (866) 902-3900
Website www.sao.wa.gov
Washington State Auditor's Office
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Page 27
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PFD Marketing Update – October 2018
accesso ShoWare Center - 625 W James St - Kent, WA 98032 - Ph 253.856.6999 -
accessoShoWareCenter.com
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
2011 2012 2013 2014 2015 2016 2017 2018
Total Attendance
2011 –331,355
2012 –314,853
2013 –356,702
2014 –340,238
2015 –380,116
2016 –395,368
2017 – 410,241
2018 – 279,912
o Still have 17 Thunderbird games, 10 Disney on Ice shows, 3 Tacoma Stars games & 7 other
events for Q4
accessoShoWareCenter.com Statistics
Homepage for 2018
Users on Website in 2018 – 132,467 (new users this quarter – 32,217)
Page views for Q3 in 2018 – 80,753
45,592 sessions have been started on our website this quarter
o Our mobile presence is growing with over 25% of our users surfing and exploring our
site on their cellphones
o Users used to come to our page for hockey related events and we are finding our 2nd
most viewed page is our “events – Concerts” page which means users are seeing us as
more than just a hockey venue
o Our organic search is expanding with 57% of our users coming to our page via a search
engine and almost 30% of our users coming to our page with a direct link
accesso ShoWare Center - 625 W James St - Kent, WA 98032 - Ph 253.856.6999 -
accessoShoWareCenter.com
AS OF TODAY – Social Media statistics: @accessoShoWareCenter
Facebook: 15,034 Likes (up 200 Patrons) / Organic reach up with a larger number of
interactions per post / Q3 interacted on average with 16,000 people while in Q2 only
reached on average of 12,000
o We had a number of shows announce during this quarter, from Seattle U Basketball to
larger concerts coming in Q1 & Q2 of 2019. This has allowed us to gain more
interaction on our posts and see a better organic reach.
Twitter: 2,110 Followers / Averaging 41,800 monthly impressions / Profile visits have gone
up almost 70% in Q3
o A majority of our traffic on this channel to in support of the Seattle thunderbirds. We
have seen a rise in our mentions though from Fans and others posting, this has risen
almost 35% this quarter. We believe this is due to all of the show announces we have
done this past quarter
Instagram: 1,204 followers / Growing our Seattle based following with 18% of followers
from that area
o Instagram continues to grow with our younger followers with a majority of our
followers between the ages of 25-34 but our 18-24 year old followers continues to
grow with the hip-hop shows & Seattle U Basketball we have coming to the venue
AS OF TODAY – Email Marketing information:
123,156 124,412 active email subscribers in database (up 1,256)
o Our email database is the most important data we can work with. This data allows us to
leverage 1st party social media campaign data and allows us to really target on-sales to
the correct customers. We continue to grow this database allowing us to really reach the
correct patrons and bring new “look-a-like” audiences to the building
accesso ShoWare Center - 625 W James St - Kent, WA 98032 - Ph 253.856.6999 -
accessoShoWareCenter.com
accesso ShoWare Center News / Highlights for Q2 2018:
Artist G-Eazy returned to accesso ShoWare Center for a weeklong private & closed tour
rehearsal to prepare for his upcoming outside amphitheater tour
The 9th Annual ShoWare Shootout 3-On-3 Basketball Tournament played with 102 teams and
14 brackets, continuously growing the brand
Seattle based radio station HOT 103.7 brought in the “All-Star Throwback Jam” on July 21st
featuring hip-hop legends Bone Thugs-N-Harmony, Ja Rule & E-40
The Seattle Mist finished out their 10th home season at the venue on July 28th against the
Atlanta Steam
New regional Mexican groups La Arrolladora & Alfredo Olivas brought their Banda style
music to the venue for a night of dancing, bringing in a younger Hispanic generation to the
venue
The Seattle Thunderbirds starting up their pre-season and 18-19 Season games this past
quarter. Here are some highlights:
o TBirds host their annual Hockey Skills Camps for 2 weeks in August, cultivating the
surrounding communities love for hockey and bringing in a new generation of players
o TBirds Annual Training Camp kicked off on August 21st, previewing and training new and
old players
o TBirds win their Home Opener game against Portland 5-3 with over 6,100 fans in the
arena to cheer on the team. The game started with a Party on the Plaza and a red carpet
welcome
Ms. Lauryn Hill brought her 20th Anniversary tour of “The Miseducation of Lauryn Hill” to the
venue on September 15th. The renowned 5-time Grammy Award Winning artist performed
the iconic album start to finish while supported by opening acts Shabazz Palaces and De La
Soul
Over 2,000 attendees participated in the Diversity Career Fair in July 18th, featuring 80+
vendors set-up from local business to large corporations, all willing to hire on the spot for the
right candidate
accesso ShoWare Center - 625 W James St - Kent, WA 98032 - Ph 253.856.6999 -
accessoShoWareCenter.com
For the first time the All Ford Car Show & Mustang Round-Up was held in the parking lot of
the venue with over 2,000 people walking through the event that day
The venue was the beginning of the state wide “Chief for a Day” event. This event takes
children with life-threatening or chronic illnesses and allows them to become chiefs or
sheriffs for the day. The City of Kent Police Department honored Syelis “Sye” Wakeman, age
4, for this year’s event
The venue installed all new acrylic glass panes for the Seattle Thunderbirds, replacing the
outdated glass panes that were used in the past. The update will allow the venue and the
team to be up to date with NHL standards
The venue was part of a 3D imaging project with a group of students from University of
Washington looking to improve the mobility of those patrons with ADA accessibility issues
The memorial to hold tribute to fallen Kent Police Office, Diego Moreno, took place at the
venue on July 31st. The emotional and heart-breaking day was commemorated with friends,
family, 30+ public service agencies and an outpouring amount of support from the
community
Shows announced during Q3
Newsboys United Tour – November 16th
RUSS – November 15th
MercyMe Imagine Nation Tour – April 14th, 2019
2Cellos: Let There Be Cello Tour – February 5th , 2019
Hometown Holiday – December 6th – SOLD OUT
Soon to be announced:
Sesame Street Live – Announced next week
A$AP Rocky - Announced next week
Paw Patrol Live – Announced in two weeks
Couple of other concerts and sporting events to be announced in Q4 for next year
accesso ShoWare Center - 625 W James St - Kent, WA 98032 - Ph 253.856.6999 -
accessoShoWareCenter.com
Q4 Ticketed Events
October 6th – Seattle Thunderbirds vs. Kelowna
October 13th - Seattle Thunderbirds vs. Edmonton
October 14th – Los Inquentos Del Norte
October 16th - Seattle Thunderbirds vs Tri-Cities
October 20th - Seattle Thunderbirds vs Tri-Cities
October 26th - Seattle Thunderbirds vs Kamloops
October 27th – 88rising: 88 Degrees & Rising Tour
November 1st – 5th – Disney on Ice presents Dare to Dream (10 shows)
November 9th - Seattle Thunderbirds vs Kelowna
November 10th - Seattle Thunderbirds vs Everett
November 11th – Seattle U vs Bryant
November 13th - Seattle Thunderbirds vs Spokane
November 14th – Seattle U vs WSU
November 15th – RUSS: I See You Tour Part 2
November 16th – Newsboys United Tour 2018
November 17th - Seattle Thunderbirds vs Portland
November 21st - Seattle Thunderbirds vs Vancouver
November 23rd - Seattle Thunderbirds vs Calgary
November 30th - Seattle Thunderbirds vs Kootenay
December 1st – Tacoma Stars Opening Night vs Turlock
December 6th – 100.7 The Wolf’s Hometown Holiday – SOLD OUT
December 7th – Tacoma Stars vs Dallas
December 8th - Seattle Thunderbirds vs Everett
December 11th - Seattle Thunderbirds vs Prince George
December 14th - Seattle Thunderbirds vs Spokane
December 15th – Tacoma Stars vs Ontario
accesso ShoWare Center - 625 W James St - Kent, WA 98032 - Ph 253.856.6999 -
accessoShoWareCenter.com
December 28th - Seattle Thunderbirds vs Prince George
December 29th - Seattle Thunderbirds vs Portland
Upcoming Community & Catering Events
Q13 Fox “Live & Local in Kent” story aired the week of October 15th – 19th
October 26th – City of Kent Elected Official Luncheon
TBD Seattle U Men’s Basketball Practices
November 8th – 7-Eleven Workshop
December 4th – Tbirds Holiday Skate
December 10th – Kent School PTA Luncheon
2 potential basketball tournaments end of December
Always have a couple of Holiday parties booked at the venue, looking to firm some of those up
now
Just Announced Non-Hockey & Non-Soccer Events for 2019
January 4th – 6th – Gut Check: HS Wrestling Tournament (on sale soon)
February 5th – 2Cellos: Let There Be Cello
March 7th – Chris Tomlin Holy Roar Tour
April 14th – MeryMe