2012 Comprehensive Annual Financial Report - the City of Tukwila

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CITY OF TUKWILA: 2012 CAFRNOTES TO THE FINANCIAL STATEMENTSLong-term Liabilities other than debtClaims are paid from one or more fund based on the nature of the transaction. Employees’ compensableleave is the City’s liability for all unused vacation and sick leave and unpaid overtime accrued byemployees and, payable under specified conditions. This obligation is paid only at the time oftermination, usually from the same funding source(s) from which the employee’s salary or wagecompensation was paid.The City does not report a liability for termination benefits because it is not reasonable estimable.LID No. 33Tukwila Urban Access Improvement Project Local Improvement District (LID) No. 33 was formed onNovember 16, 2009 by Ordinance No. 2260. The project was designed to improve congestion within theCity’s Urban Center. The project included a partial lid over Southcenter Parkway, removal of conflictingturning movements, and the widening of Southcenter Parkway.Construction for the project began in March 2011 and was completed in October 2011. The project wasclosed out and accepted as complete by City Council on February 19, 2013.A variety of funding sources were used to pay for the project including federal and state grants, impactfees, city funds, a right-of-way donation, and special assessments. The City chose to fund the projectinternally, rather than obtain external, short-term financing then apply special assessments to propertyowners after the project was completed. Fund 104 Arterial Streets, where the project was accounted for,loaned the project funds as needed using a draw method at an interest rate of 1.80%. As of December31, 2012, the total amount of the loan is $8,137,082 plus accrued interest of $193,032. The loan will berepaid when the special assessment bonds are issued in 2013.Since the loan payable by the LID project and the loan receivable by the arterial street fund are containedwithin the same fund, the transactions have been eliminated in the consolidation and reporting process.100
CITY OF TUKWILA: 2012 CAFRNOTES TO THE FINANCIAL STATEMENTSNOTE 12 – CONSTRUCTION COMMITMENTUpon completion, the projects will be capitalized in their appropriate categories in the Government WideStatements and in the proprietary fund financials, if applicable. As of December 31, 2012 the City had$5.1 million contractual obligations on construction projects.NOTE 13 – LITIGATIONThere are several lawsuits in which the City is involved. The City Attorney estimates that the potentialclaims against the will have no material financial impact.NOTE 14 – RISK MANAGEMENTThe City of Tukwila is a member of the Washington Cities Insurance Authority (WCIA).Utilizing Chapter 48.62 RCW (self-insurance regulation) and Chapter 39.34 RCW (InterlocalCooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for thepurpose of providing a pooling mechanism for jointly purchasing insurance, jointly self-insuring, and / orjointly contracting for risk management services. WCIA has a total of 153 Members.New members initially contract for a three-year term, and thereafter automatically renew on an annualbasis. A one-year withdrawal notice is required before membership can be terminated. Terminationdoes not relieve a former member from its unresolved loss history incurred during membership.Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general,automobile, police, public officials’ errors or omissions, stop gap, and employee benefits liability. Limitsare $4 million per occurrence self-insured layer, and $20 million per occurrence in the re-insuredexcess layer. The excess layer is insured by the purchase of reinsurance and insurance and is subjectto aggregate limits. Total limits are $16 million per occurrence subject to aggregate sublimits in theexcess layers. The Board of Directors determines the limits and terms of coverage annually.Insurance coverage for property, automobile physical damage, fidelity, inland marine, and boiler andmachinery are purchased on a group basis. Various deductibles apply by type of coverage. Propertyinsurance and auto physical damage are self-funded from the members’ deductible to $750,000, for allperils other than flood and earthquake, and insured above that amount by the purchase of insurance.In-house services include risk management consultation, loss control field services, claims and litigationadministration, and loss analyses. WCIA contracts for the claims investigation consultants for personnelissues and land use problems, insurance brokerage, and lobbyist services.WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, asdetermined by an outside, independent actuary. The assessment covers loss, loss adjustment, andadministrative expenses. As outlined in the interlocal, WCIA retains the right to additionally assess themembership for any funding shortfall.An investment committee, using investment brokers, produces additional revenue by investment ofWCIA's assets in financial instruments which comply with all State guidelines. These revenues directlyoffset portions of the membership's annual assessment.A Board of Directors governs WCIA, which is comprised of one designated representative from eachmember. The Board elects an Executive Committee and appoints a Treasurer to provide general policy101
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2012 Comprehensive Annual Financial Report - the City of Tukwila

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