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Home My WebLink AboutFY20Budget Review ppt� r 1 ®�IP - CITY OF IOWA CITY UNESCO CITY OF LITERATURE City of Iowa City FY2020 Budget Proposal January 5, 2019 Budget Document Areas to Focus: • Transmittal Letter (Executive Summary) • Economic Trends* • Fund Structure and Description • Financial and Fiscal Policies • Long Range Financial Planning • General Fund Summary *2018 numbers will be added in the final budget Pages 11-28 Pages 42-45 Pages 73-78 Pages 87-93 Pages 94-99 Pages 1 17-131 General Fund General (10"") Major funds Special Revenue Funds COBG (2109) HOME Grant (2110) Road Use Tax (2200) Other Shared Revenues(2300) Metro Planning Organization of Johnson County (2350) Employee Benefits (2400) Affordable Housing (2500) Peninsula Apartments (2510) Tax Increment Financing (26") SelfSupporting Municipal Improvement District (2820) Budgetary Funds loon -Budgetary Funds Debt Service Fund Debt Service (50") Enterprise Funds Parking (710") Transit (715') Wastewater (720') Water (730') Refuse Collection (7409) Landfill (750') Airport (7600) Storm Water (7700) Housing Authority (79") Capital Prc Fund Capital Projects Internal Service Funds Equipment (810') Risk Management (8200) Information Technology Services (830') Central Services (8400) Heath Insurance (8500) Dental Insurance (8600) Agency Funds Project Green (9102) Iowa City: A Robust Era of Growth • 4th largest population growth in the State of Iowa (top Metro) 3 in DSM • 523 more residents than Coralville and North Liberty, combined Budget Goals *Provide resources to make significant progress implementing City Council's Strategic Plan priorities and adopted Master Plans • 2018-2019 Council Strategic Plan • Parks Master Plan • Bicycle Master Plan • Climate Action and Adaptation Plan • Affordable Housing Action Plan • Natural Areas Management Plan in Budget Goals *Balance expanding service needs and community priorities with declining taxable value of apartment buildings Budget Goals *Consider the overall effect of changes on household budgets including taxes, fees, and School District/County needs �7 County Bike and Park Master Plan Implementation • Destination playgrounds and other enhancements at Lower City Park and Willow Creek Park • Completion of the Riverfront Crossings Park improvements • Accessibility improvements at Brookland and College Green Parks R4366 Glendale Park Shelter&Playground R4367 Napoleon Playground R4132 Harlocke Hill R4132 Reno Street Park R4132 Ryerson Park R4132 Black Spring Park R4132 Oak Grove Park R4349 Wetherby Shelter& Playground R4364 Scott Park Shelter&Playground R4348 Fair Meadows Playground R4132 Hunter's Run Park • Completion of bicycle lanes on Clinton, Mormon Trek, Foster, Governor, and Dodge • Construction of the Highway 1 Trail extension to Mormon Trek • Construction of McCollister from Gilbert to Sycamore • Greenwood & Myrtle and Prentiss bicycle boulevards IL & / Bike lane * Buffered bike lane 6, — 4t3 4 laneto 3 lane conversion aLvm Bicycle boulevard ... _ S Sidepath Affordable Housing Since FY2015 the City has con le housing initiatives • Funds have contributed to construction of 397 affordable units (excludes public housing and workforce housing tax credits) • 87% of subsidized units have aided families at 80% or below of the area median income • 63% of units assisted have been rentals while 37% have been owner occupied The FY2020 budget is the first City budget to embed discretionary funds ($650,000 in FY2020) for Affordable Housing and not rely on one-time funds • Council direction needed on use of one-time funds to increase the FY2020 contribution to the Affordable Housing Fund • Recent Council Decision: Increase affordable housing funding $140k for South District Home Ownership Program • Pending Request 1: HCDC recommendation for NEX LI HTC Project (Sand Companies— Herbert Hoover Hwy) ($200k) • Pending Request 2: Housing Fellowship request for the Del Ray Project ($150k) Climate Action •Solar at C -Transit Study N -Added staff • Increased N •Climate Public O ) at Landfill O Natural Areas > Action Works O -Installation of D and Refuse Maintenance v Grants Facility and new bicycle • Hickory Hill mTTRA O facilities and •Expansion of O •Terry Trueblood -Local Foods (pending N parking organics • Ryerson Woods (D Initiatives funding C collection Q -Sand Prairie allocation) O � •Support for O •Continue ~ Bike to Work •Methane •Added Green Iowa -Added week study at the Stormwater O Americorps Assistant Wastewater Technician v Partnership Facilitiesposition Advertising Treatment D o7 Manager position transit/mobility Plant to • Expanded • Promotion of options accompany language sustainable Landfill translation lifestyle •Lighting, study resources to elements of HVAC and assist with the plan energy emergency efficiency communications upgrades Social Justice $2.5 million in funding for the Behavioral Access Center partnership with Johnson County $75k for the Social Justice and Racial Equity Grant program • Funding to eliminate fines for children's materials at the Iowa City Public Library - A Racial Equity Toolkit Initiative • Funding for accessibility improvements (parks, sidewalks and public facilities) • Step 1 of the hourly wage rate increase for temporary employees ($11.50/hr) • Temporary wages increased by $261,662 in FY 2020 over FY 2019 (+9%). Approximately 63% of the increase is due to higher wages as opposed to increased hours. • Step 2 to $13.25/hr estimated to cost $400k (FY 2021) • Step 3 to $15.00/hr estimated to cost $350k (FY 2022) E Investments in Roads Budget continues to increase funding for pavement rehabilitation Provides for new equipment to help the Streets Division improve efficiency and effectiveness of in-house pavement management efforts Necessarily increasing our reliance on General Obligation bonds for road projects in the CIP $2,000,000 $1,500,000 $1,000,000 $500,000 E12 Annual Pavement Rehabilitation Capital Expenditures 2013 2014 2015 2016 2017 2018 2019 2020 Road Improvements Major Upcoming 2019: McCollister Blvd extension CIP-Funded Road Projects 2020: American Legion Rd reconstruction 2021: Rochester Ave reconstruction Benton Street reconstruction 2022: Court Street reconstruction Dubuque Street reconstruction 2023: Dodge Street reconstruction Kirkwood/Capitol connection in RFC Additional Core Service Support • Resource Management (2 positions) • Refuse • Landfill • Utility upgrades • Water (First Ave, Dill, Spruce) • Sewer (Nevada, Scott Trunk) • Storm (Lower Muscatine) • Facilities (1.5 positions) • Stormwater (1 position) • Public Safety • Fire station land • Training tower • Public safety storage • Downtown cameras • New technology Tax Rate and Surplus Dollars • Budget meets Strategic Plan objective for 8t" straight tax rate decrease with modest increases in water and storm water rates General Fund operational reserve funds are strong, with reserves slightly above the upper end of the City's 25-35% of revenues and transfers in policy target. • Recent surplus funds beyond the policy target have been used to create and fund the Emergency Reserve, reduce and retire debt, bolster the capital improvement program and fund critical projects: • Public Works Facility & Fire Training Tower- Phase 1 • County Behavioral Access Center • Affordable Housing Fund • The FY2018 surplus of $2.95 million is unallocated. Staff recommends that $450k be transferred to the Emergency Reserve Fund. The remaining $2.5 million could be used to meet unfunded Council initiatives and create a new Facility Reserve Fund. Outstanding City Council Initiatives Affordable Housing Fund Contribution & additional LIHTC requests Future Concerns Sustaining our Strong Fiscal Position Commercial backfill from State of Iowa continues to be vulnerable Multi -residential taxability continues to erode Economic uncertainty in key industries Multi -Residential Property Taxability Multi -residential property class has been separated from Commercial and is taxed at a declining rate - the taxable percentage decreases annually until it equals the residential tax rate in 2024 In FY20, multi -residential property will be taxed at 75.00%, which equates to a loss of over $125 million in taxable value The loss of taxable value equates to approximately $2 million in lost property tax revenue Projected cumulative loss over ten years (beginning in FY 17) would be over $15 million without a state backfill Residential Rollback Trend 90% 80% 78% V64% 70% V4 60% 50% 40% 30% 20% 10% 0% "Ib" _111 Rollback by Assessment Year 81% Mm 55% EBW 44% 53% 56% bb _,Ib q �0 1q qO 1q q`l' 1q qR 1q qb 1q �O �O 90 00 O`L ryO OQ Ob 1q O'b �O �O �O �O ryO ryO �O The rollback returned to 57% in FY2O2O after a slight dip (to 56%) in FY2O19. A 1 % change in the rollback figure represents approximately $7OOk in tax revenue State of Iowa Backfill Future of Backfill Remains Uncertain State lawmakers have routinely called for the elimination or phase out of the backfill. In 2018 negotiations on a phase out bill stalled on the last day of the legislative session Iowa City Budget Equivalents $.41 added to our property tax levy 15 police officer or fire firefighter positions All three pools, animal shelter and forestry divisions Other Variable Costs Fuel Just five years ago, the City's aggregate fuel cost was nearly $1 million more than anticipated fuel costs today. Healthcare Health insurance costs vary year to year. As a self-insured organization, healthcare claims add up to real dollars. In the last five years, costs have increased by 18%. Sustaining Strong Growth 1. Growth is returning to average levels, and 2. Residential rollback may decrease Both would cause more operational stress in future years State commercial backfill is not expected to continue at 100% going forward Therefore .. . Sustaining Strong Growth This erosion directly impacts: • our ability to expand staffing • make long-term financial commitments to operations Looking ahead it is possible, if not likely, we will experience: • loss of commercial backfill (10% of commercial tax base), • continued loss in multi -residential (4% of multi -residential tax base per year), and • a decline in the residential rollback. Revenue Pro ert Taxes $ 59,173,825 $ 60,299,657 1.9% Other Cit Taxes $ 5,554,453 $ 6,198,537 11.6% Licenses &Permits $ 2,553,460 $ 2,585,810 1.3% Use of Mone &Pro $ 2,575,752 $ 3,598,811 39.7 In $ 41,944,691 $ 35,813,586 -14.6% Char es for Services $ 42,719,637 $ 41,622,105 -2.6% Misc. $ 7,281,035 $ 6,798,972 -6.6� Other Financial Sources $ 18,551,642 $ 12,998,538 -29.9% otal $180,354,495 $169,916,016 -5.8% All Funds Revenue Sources In Li Charges for Services Uther City Taxes 4% Financial )urces S% Property Tax Rate Trend $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 Taxable Value and Levy Rate W., 17.5 17 �V FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 mTax Value (millions) $2,758 $2,848 $2,960 $3,036 $3,137 $3,183 $3,421 $3,543 $3,745 $3,923 Val % Change 2.95% 3.27% 3.93% 2.56% 3.32% 1.46% 7.50% 3.55% 5.72% 4.74% �Ptax Rate 17.757 17.842 17.269 16.805 16.705 16.651 16.583 16.333 16.183 15.833 Rate % change -0.54% 0.48% -3.21% -2.69% -0.60% -0.32% -0.41% -1.51% -0.92% -2.16% 16 15.5 15 *FY2020 Proposed Overlapping Tax Rate — FY2019 Levy Rates • The City of Iowa City tax levy rate is one component of the total property tax rate residents and businesses pay. • The three largest components of the overlapping property tax rate are the City, the School District, and the County. The City's Levy rate has dropped over the last 7 years but other taxing bodies make up the balance of the tax bill. State of Iowa* 0% Kirkwood 3% Percent of Overlapping Tax Rate 'The State of Iowa has a special levy of $0.0031/$1,000 of taxable value Overlapping Tax Rate Trend $45.00 $40.00 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 FY09 FY10 FYI] FY12 FY13 FY14 FY15 FY16 FY17 FY18 �ICCSD Johnson County Kirkwood State of Iowa m City of Iowa City o Iowa City Percentage of Total 44.50% 44.00% 43.50% 43.00% 42.50% 42.00% 41.50% 41.00% Property Tax Levy Comparison Council Bluffs ..- $17.91 ._ $17.85 .._ 0.34% Waterloo $17.60 $18.53 (5.02%) Des Moines $17.04 $16.58 2.77% Davenport Iowa City* Sioux City $16.78 $16.18 $15.77 $15.53 :4 $16.66 8.05% 4.' 5.34% Cedar Rapids $15.22 $15.22 0.00% Coralville $13.53 $13.53 0.00% West Des Moines $12.00 $12.05 0.41% North Liberty $11.03 $11.03 0.00% Dubuque $10.89 $10.45 4.21% Ames $10.38 $10.84 4.24% * Proposed Iowa City tax rate for FY2020 is $15.83. Major Revenue Sources — Hotel Motel $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 Hotel Motel Tax Hotel Motel Tax FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 $776,501 $813,896 $871,706 $967,049 $1,057,386 $1,078,762 $1,136,712 $1,045,686 Major Revenue Sources - Utility $1,050,000 $1,000,000 $950,000 $900,000 $850,000 Utility Franchise Tax is currently 1% $750,000 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Utility Franchise Tax$1,031,187I $901,690 I $874,235 I $939,387 I $976,060 1 Nor"Fees Liberty Franchise Rate 0% Davenport 0% West Des Moines 0% Ames 0% Coralville Iowa City Council Bluffs 1% 14141 2% Cedar Rapids 3% Waterloo 3% Dubuque 5% Sioux City 5% Des Moines 5% $815,503 Cable Franchise Fee Revenue $773,018 $750,167 e., $733,644 $685,659 $662,448 Cable TV Franchise • Revenue declining as alternate forms of media increase in popularity • City franchise agreement expired August 1, 2018 • State franchise agreement may result in an additional 10% decline in revenue • Pass through funding for PATV (-$242k) and PEG funding (-89k) have ceased • Future of franchise fee revenue is uncertain at best Major Revenue Sources — Road Use Tax $10,000,000 $9,000,000 Road Use Tax Receipts $7,000,000 $6,000,000 $5,000,000 FY2018 is the first year $4,000,000 to see a decline in Road Use Tax revenue $3,000,000 $2,000,000 ......_ $1,000,000 — ....... ��;r��•n> nv�w»>ov»» w�a �ov»vti� ��rr �iT , $0 FY2010 1 FY2011 Use Tax Receipts 1 $5,593,8401$5,881,0 3 1 FY2014 I FY2015 I FY2016 I FY2017 I FY2018 1111$6,744,6631$7,230,6631$8,320,1171$8,672,2791$8,426,5( PUP Total Revenues vs. Expenditures Fund:Road UseTzr Fund $11 $10.5 $10 $9.5 $9 e $8.5 2020 Projected 2021 Projected 2022 Projected 2023 Projected 2024 Projected 2025 Projected -*-Total Expenses +Total Revenue ar Rapids 2009 avenport 1989 )UX City 1987 aterloo 1991 I Bluffs 1990 ubuque 1988 mes 1987 'est Des Moines 2018 2024 $18,188,066 None $15,708,839 None $12,674,087 2025 $9,719,545 None $9,051,867 None $8,494,969 None $7,626,760 None 100% Street Repair 60% Property Tax Relief, 40% Capital Improvements and Equipment 60% Property Tax Relief, 20% Infrastructure Projects, 10% City Facilities, 10% EDX 100% Street Repair 100% Streets and Sewers 50% Property Tax Relief, 20% City Facilities Maintenance, 30% Special Assessment Relief 60% Property Tax Relief, 40% Community Betterment 50% Property Tax Relief; 50% Quality of Life Proiects Expenditures All Expenditures by Category $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 FY2020 Expenditures by State Budget Category 1.2 0.8 0.6 0.4 0.2 0 Public Safety Public Works Culture& Community& General Debt Service Capital Business Type Recreation Economic Government Projects Activities Development *excludes transfers General Fund Expenditures Personne 74% Excludes transfers Uses 0% aI �JM (Revised) • • • - • - - • • - • 'ersonnel $42,219,519 $43,226,993 2.33% ervices $11,366,562 $10,958,352 -3.73% :ontingency $565,000 $580,000 2.59% upplies $1,678,323 $1,720,876 2.47% :apitalOutlay $3,223,443 $2,013,398 -60.10% Aher Financial Uses $1,262,500 $200,000 -531.25% otal Expenditures* $60,315,347 $58,699,619 -2.75% Public Safety Pension Contributions 3,500,000 3,000,000 2500,000 2000,000 1,500,000 1,000,000 500,000 City of Iowa City MFPRSI Contributions V FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019* FY2020** ■Fire 961,815 1,052,753 1,226,921 1,289,744 1,208,773 1,158,015 1,178,514 1,236,739 1,258,262 iPolice 1,251,111 1,344,954 1,688,246 1,668,273 1,585,142 1,532,865 1,591,762 1,792,063 1,778,122 Total 2212,926 2397,707 2915,167 2958,016 2793,915 2690,880 2770,276 3,028,802 3,036,384 %Change 31.27% 8.357o 21.58% 1.477o -5.557o -3.6917o 2.957o 9.337o 0.257o *Amended ** Proposed 45 IPERS Pension Contributions 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 Cityof Iowa City WEIRS Contributions V FY14 FY15 FY16 FY17 FY18 FY19* FY20* ■ IPERS 2,567,223 2,550,271 2,555,490 2,655,816 2,710,906 3,159,951 3,265,081 ■ % Change 4.71% -0.66% 0.20% 3.93% 2.07% 16.56% 3.33% *Budgeted Government Add two positions - one full time 4.00 5.50 Buildings Assistant Facility Manager/Energy Efficiency Project Manager and one 0.5 Custodian Refuse Add one Maintenance Worker 1 17.88 18.88 Position Landfill Add one Landfill Operator Position 14.88 15.88 Stormwater Add one Stormwater Technician 1.50 2.50 Position Parking Eliminate 1.75 Cashier Positions (long- 21.38 19.63 standing vacancies) TOTAL ALL Department FTE 605.55 608.18 Debt Service Debt Service Debt restructuring and elimination continues to be a critical component of the strategy to respond to property tax reform State of Iowa limits debt service to no more than 5% of total assessed property value Iowa City is projected to beat 1.11% of total valuations City goal is to meet Moody's Aaa benchmark of net direct debt outstanding of .75% of city's total assessed value. Iowa City policy specifies that debt service levy shall not exceed 30% of the total City levy in any fiscal year The projected debt service levy is approximately 19.9% of the total levy Distribution of Moody's General Obligation Ratings for All US Cities 800 700 600 500 U a 400 Q E D Z 300 200 100 Iowa City 0 Aaa Aal Aa2 Aaa Al A2 A3 Baal Baalf07.99%j ■National 229 290 739 547 418 208 96 44 28 % of Total 8.72% 11.05% 28.15% 20.84% 15.92% 7.92% 3.66% 1.68% 1.07% Moody's Aaa Rating Distribution of Moody's General Obligation Bond Ratings for Cities in Iowa 18 16 14 12 U 10 0 Q 8 E Z V Aaa Aal Aa2 Aa3 Al A2 A3 Baal Baa2 Baa3 ■State 3 6 13 12 16 13 4 1 0 0 %of Total 4.41% 8.8297. 19.127. 17.65% 23.53% 19.127. 4.41% 1.477. 0.0097. 0.00% Moody's Aaa Rating Analysis and Summary Enterprise Fund Balances Fund Projections - Water • As the largest rate payer, P&G currently accounts for approximately 8% of all water revenues ($787k). The next highest user only accounts for 1.2% ($120k) . • With a substantial reduction in operations scheduled for 2019, staff is recommending a 5% increase in FY2020 and FY2021. • The rate increase, combined with approximately a $300k reduction in annual system improvements should be enough to stabilize the fund for the foreseeable future Fund Projections - Wastewater As the second largest rate payer, P&G currently accounts for approximately 1 1% of all sewer revenues ($1.35 million). The third highest user only accounts for 1.3% ($160k). Despite their reduction in operations, staff is not recommending a sewer rate increase Existing sewer revenues combined with planned debt retirement should keep the fund stable and allow for needed system improvements and future borrowing Annual Financial Household Impact $2,500 $2,000 Based on a residential $1.500 customer with $100,000 property valuation. $1.000 $500 $0 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 ■ Property Taxes $909 $928 $922 $930 $900 $901 • Stormwater $42 $42 $54 $54 $54 $60 ■ Refuse $191 $191 $191 $205 $229 $229 ■ Sewer - 800 cubic feet $433 $433 $433 $433 $433 $433 ■ Water-- 800 cubic feet $344 $362 $362 $362 $380 $399 •Total $1,919 $1,955 $1,962 $1,984 $1,996 $2,022 Percent Change 2.3% 1.9% 0.3% 1.1% 0.6% 1.3% Key Decisions Use of one-time FY 2018 surplus funds ($2.95 million) to fund Council initiatives and reserves 1. Affordable Housing • Increase the embedded $650k contribution • Add $140k for the South District Homeownership Program* • Consider HCDC recommendation for additional LIHTC support ($200k) Could use unallocated • Consider Housing Fellowship request for additional LIHTC support ($150k) I land banking funds 2. Add solar at Terry Trueblood Recreation Center ($100k)* 3. Add funding to reflect cost estimates for the Sanxay-Gilmore House relocation ($200k - $860k in additional funding needed) 4. Replenish the Emergency Reserve to $5 million ($450k) 5. Create a Municipal Facility Reserve to seed future construction and rehabilitation needs for city operations * Council direction already received We anticipate strong valuation growth to counter continued phasing of property tax reform However, slower growth and continued reform measures may strain FY 2022-2024 Next Year's Budget Flan for... Close monitoring of water, sewer, landfill and refuse utility rates Steady resources available for continued strategic and master plan initiatives Continued operational support for core services • Identification of funding needed for Transit service level enhancements and facility relocation • Deeper cost analysis for continued temporary employee wage increases • More detailed financial planning for future municipal facility needs • More detailed long-term financial planning for roadway maintenance Considerably expanded funding for affordable housing and now embedded a sustainable local funding source into the budget Committed to funding the Johnson County Behavioral Access Center without new debt Created new grant funds to further efforts with social justice / racial equity, historic preservation and climate action Increased funding for roadway maintenance Began execution of projects resulting from publicly supported master plans for Parks, Natural Areas, Bicycles, Climate Action, Riverfront Crossings, and the downtown streetscape Gradually expanded staffing in key core service areas (e.g. Police, Streets) Expanded service levels (e.g. curbside composting, ICPL Bookmobile) Invested significantly to improve public facilities and working conditions for staff And much more! The FY2020 budget aims to build on this success and further the goals the City Council has set for the community while recognizing the operating pressures of a rapidly growing community and acknowledging the reality of continued property tax reform. Thank You