HomeMy WebLinkAboutCity Council Committees - Operations Committee - 09/06/2016
OPERATIONS COMMITTEE MINUTES
September 6, 2016
Committee Members Present: Les Thomas; Bill Boyce; and Dana Ralph, Chair
The meeting was called to order by Dana Ralph at 4:00 p.m.
1. ROLL CALL.
2. CHANGES TO THE AGENDA.
There were no changes to the agenda.
3. APPROVAL OF THE CHECK SUMMARY REPORT DATED 8/01/2016 THRU
8/15/2016.
L. Thomas moved to approve the check summary report dated 8/01/2016 thru
8/15/2016. B. Boyce seconded the motion, which passed 3-0.
4. APPROVAL OF MINUTES DATED AUGUST 16, 2016.
B. Boyce moved to approve the Operations Committee minutes dated August 16, 2016.
L. Thomas seconded the motion, which passed 3-0.
5. WATER DISTRICT #111 FRANCHISE NEGOTIATIONS – INFORMATION ONLY.
City Attorney Tom Brubaker informed members regarding current franchise negotiations
with Water District #111; a special purpose district which operates in a portion of Kent
on the eastern edge, in and around the old Meridian annexation. Reasons for these
negotiations are: historically, special purpose districts haven’t paid utility tax although
they are a utility (utility taxes are general purpose taxes known as revenues that pay
for police, streets, parks and general government services); and by not paying utility
taxes, an argument can be made that special purpose district customers do not
contribute the same amount to the city general purpose tax revenue as those who do
pay city utility tax.
As a result of a court of appeals case involving the City of Wenatchee, a city can impose
a utility tax but only on the portion of the utility that is run like a business, or
proprietary, to the extent that a utility run government service could not be taxed. For
example, if it is metered like water that’s the business, proprietary end (taxable), but if
it is for fire flow or fire control that’s a general government service (nontaxable). Since
this was a court of appeals ruling and not a supreme court ruling it is possible the ruling
can be reversed.
Basic franchise terms include: defines revenue broadly to include all operating services
but does not include capital investment services; the franchise fee on the gross revenue
is six percent; term is ten years with an option to extend another five years; franchise
includes relocation requirements, if the district installs a new system and the City
requires them to move it within the first ten years the cost will be split equally, if it is
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September 6, 2016
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after the first ten years the district is responsible for the full amount; and other
language and terminology. In return for paying the fee, the City has agreed not to
assume, or take over, the district as well as not allowing the City to impose other taxes.
6. RECONSIDERATION OF PROHIBITION ON HOUSE-BANKED SOCIAL CARD
GAMES – INFORMATION ONLY.
Deputy City Attorney Pat Fitzpatrick provided members with details to reconsider the
prohibition of social card rooms, otherwise known as house-banked card rooms under
state law. At the request of Councilmember Thomas the law department has done some
initial research on law surrounding the card rooms as well as the process the City will
have to follow upon ending the prohibition.
Currently, card rooms are not allowed within the City unless it has been grandfathered
in by an annexation, which, at this time there are no card rooms in Kent. There are two
ways to approach this decision if the City decides to move forward, they are: approving
a zoning ordinance to allow card rooms in certain areas of the city; or, allowing them in
all areas of the city.
Comments made by committee members were regarding the public safety aspect of
allowing card rooms as well as preserving the downtown area. Next steps will be to add
this to the Land Use work plan for 2017.
It is estimated the City of Tukwila gets $300,000 in tax revenue from each of their four
card rooms.
7. CITY INVESTMENT REPORT – INFORMATION ONLY.
Finance Director Aaron BeMiller and Senior Financial Advisor Joe Bartlemay provided
current information regarding the investment report as well as updated members about
a contract that Finance is interested in pursuing.
Mr. Bartlemay informed members on the current state of the city investment report. As
of June 30, 2016, the end of the second quarter, the City has a little over $118 million in
investments, just under $20 million of that is long-term investments and a little over
$98 million of that is the state local government investment pool (the very liquid and
accessible investment fund). The average rate of return is 1.343 percent and the
average years to mature are 2.52 years. A few activity highlights to report are: a new
FICO Strip was purchased for under $4 million with a yield of .84 percent that will
mature in 2018; an older investment purchased in 1990 has fully matured; a CD has
matured and was renewed for another 12 month term; an investment that was
purchased last year has been refinanced; and three investment brokers were
interviewed.
Mr. BeMiller updated members on one of the investment brokers that were interviewed,
PFM Asset Management. This firm of investment professionals would take over the City’s
portfolio with the caveat that the money still belongs to the City, and the City would
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September 6, 2016
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sign-off on any investments being made. The investment would be $25 million and the
cost would be about $25,000 annually.
8. DIRECTOR’S REPORT – INFORMATION ONLY.
Mr. BeMiller updated members on the 2016 Financial Status report for the quarter ended
June 30. From a cash perspective, the City is in a good place. The general fund cash flow
started 2016 a bit lower because an investment was made at the end of 2015 but the
cash flow has moved past where the City was at this time last year. Revenues are right
where they should be with a revised budget of $86,730,470 and actuals through second
quarter of $44,781,438.
Finance Deputy Director Barbara Lopez was invited to speak about the Business and
Occupation revenue collections. With strong collections coming in, it looks like the year
will end with approximately $7.5 million. There are three categories to collection
statistics, they are: taxpayer accounts added (a new business to the city or a business
that has been open and has recently acquired a city business license); delinquent
account collections (businesses that have filed that may have fallen off track); and audit
and compliance (there may be numbers that need to be looked into further). So far,
there has been about $2 million in past due amounts collected from 320 tax payers with
an expected average $530,000 revenue collected annually. Program costs are expected
to end the year very close to budget, which is $713,070.
The meeting was adjourned at 4:55 p.m. by D. Ralph.
J. Hays
Jennifer Hays
Operations Committee Secretary