City of Mountlake Terrace. Fourth Quarter 2014 Financial Report April 2, 2015

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Nathaniel Phillips
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1 City of Mountlake Terrace Fourth Quarter 2014 Financial Report April 2,

2 Overview Reviewing the City s finances on a regular basis, and posting the review on the City s website, highlights the City Council s goals of: Protect and Enhance the City s Financial Health and Stability; Develop and Implement more effective Communication and Outreach with the Community Maintain appropriate and essential Public Services in a cost effective manner The City remains on target with the Six-Year Financial Forecast to continue providing cost-effective services, programs and projects for the community; This has been accomplished through the City Council s adherence to a practice of living within our financial means. 2

3 Overview (continued) Tonight s review looks at several of the City s funds in terms of their performance during the year and the fourth quarter. General Fund Street Operating Fund Recreation Fund Fleet Management Fund Hotel/Motel Tax Fund Solid Waste Service Fund Enterprise Funds Water Utility Fund Wastewater Utility Fund Storm Water Utility Fund Capital Funds Real Estate Excise Tax Fund Street Construction Fund Capital Improvement Fund 3

4 General Fund General Fund revenues are used to pay for the following programs: City Council City Manager Administrative Services Community & Economic Development Fire (contracted through Fire District 1) Municipal Court (contracted through Snohomish County) Parks & Property Management Police 4

5 General Fund (continued) Revenues in the General Fund: Property Tax-General Property Tax-EMS Sales Tax Legislative Backfill Utility Tax-Gas Utility Tax-Garbage Utility Tax/ Franchise-Cable Utility Tax-Telephone Utility Tax-Electric Utility Tax-Water/Sewer/Storm Admission Tax-Theatre Gambling Tax-Bingo/Pulltabs Gambling Tax-Mini Casino Business Licenses Building Permits Engineering Fees Planning, Zoning, Subdivision Permits Animal License Liquor Excise Tax Liquor Board Profits Criminal Justice Funds Grants Payments from Other Governments PUD Privilege Tax Golf Course Contract Emergency Medical Service Transport Solid Waste Admin Fee Off duty Officers Reimbursement Home Detention Records Charge Passports Other Charges for Service Fines and Forfeitures 5

6 General Fund (continued) Sales Tax Collections for the year came in at $156,000 over the budget, and close to the $2.2 million forecasted. Total sales tax collected in 2014 was $2,155,592. Sales tax from construction activities accounted for 17% of the total sales tax and sales tax from retail trade accounted for 29%. The highest sales tax payer for the year was a construction company. Gambling Tax Revenues were under budget for the year due to the closing of the Palace Casino in 2013 and lower revenues from the other 2 casinos. Gambling tax revenues totaled $908,734 for the year, or 73% of the $1,239,000 annual budget. The forecasted amount was $1.1 million. Development Services Fees totaled $616,659 or 75% of the Revised Budget of $820,000. Engineering fee revenues were below projections. Cable and Solid Waste Franchise fees totaled $695,560, or 120% of budget. This was because of the one time increase in fees from the City s Solid Waste Service provider. 6

7 New Developments Have Increased Jobs, Sales Tax, and Development Fee Revenues in Mountlake Terrace 7

8 General Fund (continued) $15,000,000 $14,800,000 $14,600,000 Fourth Quarter General Fund Operating Revenues $14,400,000 Fourth Quarter $14,200,000 $14,000,000 $13,800,

9 General Fund Operating Expenditures $15,500,000 Fourth Quarter $15,000,000 $14,500,000 $14,000,000 Fourth Quarter $13,500,000 $13,000,000 $12,500,

10 General Fund (continued) The Ending Fund Balance at the end of the Fourth Quarter of 2014 totaled $699,884. This is $543,268 below the Revised Budgeted Ending Fund Balance The decrease is a direct result of accounting for the 2013/2014 retroactive invoice from Fire District One for $511,014. The Fund Balance will be replenished over the next two years as there will be a budget savings of $255,507 in 2015 and in 2016 as the invoice was already expensed in The invoice will be paid in quarterly installments through the end of

11 Street Operations Fund The Street Fund covers the maintenance of the City s public right-of-ways: More than 60 miles of City streets 400 City-owned street lights 15 traffic signals 3,000 signs 50 miles of sidewalk Numerous crosswalks and other pavement markings Vegetation maintenance for more than 19 miles of planting strips and brush control along unimproved right-of-ways. 11

12 Street Operations At Work 12

13 Street Operations Fund (continued) Street Fund Operating revenues are at 98% of the 2014 budget as of the end of the Fourth Quarter. Street Operating Fund expenditures were 83% of the total 2014 budget at the end of the Fourth Quarter. The General Fund transferred $174,727 or just 58% of the 2014 Operating Transfers Budget to the Street Fund for the year. 13

14 Recreation Fund The Recreation Fund covers the revenues and expenditures of the City s award-winning recreation services, including Aquatics, Athletics/Fitness, Youth and General Recreation Programs. The Fund has a target of recovering 85 percent of its overall cost through user fees; the remaining 15 percent of the cost for recreation programs is funded by the General Fund The Recreation Fund ended the year with an 80% Cost Recovery. Due to lower revenues than forecasted, the General Fund transfer to the Recreation Fund was $72,878 over the budgeted transfer of $508,340, totaling $581,

15 Recreation Fund, continued Youth Program Revenues at 103% of Revised Budget Aquatics Revenues Totaled $1,157,720 or 72% of the Revised Budget 15

16 Fleet Management Fund The Fleet Management Fund charges other City funds for the cost of maintaining, repairing and replacing vehicles and equipment. Because this fund receives its revenue from other funds within the organization (e.g., the Storm Water Fund pays the Fleet Management Fund to repair the street sweeper), Fleet Management is referred to as an Internal Service Fund. The Fleet Management Fund also receives revenue for maintaining vehicles for the City of Shoreline. 16

17 Fleet Management Fund 17

18 Fleet Management Fund (continued) Revenues in the Fleet Management Fund through the Fourth Quarter were at 93% of the 2014 Revised Budget. Revenues include $55,396 from the City of Shoreline for the maintenance of their vehicles. Operating Expenditures totaled 88% of the 2014 Revised Budget at the end of the Quarter., with significant savings for fuel costs. These savings were used to fund vehicle and equipment purchases. 18

19 Hotel/Motel Tax Fund Hotel/Motel Tax Revenues exceeded the Revised 2014 Budget by $6,442. A positive sign that the local economy is improving 19

20 Solid Waste Service Fund This Fund is funded by solid waste utility taxes and pays for lower income resident s garbage bills. Expenditures decreased from previous years and were $9,400 below the 2014 Revised Budget, as few residents qualified for the program. A positive sign that the local economy is improving 20

21 Enterprise (Utility) Funds These are funds with revenues from user rates and fees. Like a business enterprise, these funds cover their own costs, without help from outside funds. By and large, under Washington law these revenues cannot be used to subsidize programs other than those related to the utility. The City operates three utilities: Storm Water Sewer Water Rates in each utility are made up of three components: The first portion covers maintaining and operations; A second portion pays debt on funds previously borrowed to make repairs and upgrades; and The last portion of rates goes towards replacing and upgrading the system. 21

22 Storm Water Utility Fund The Storm Water Utility Fund covers the cost of maintaining the natural and developed storm and surface water conveyance system. These actions come about under regulatory requirements through the National Pollution Discharge Elimination System (NPDES) Phase II permit issued by the Washington State Department of Ecology. Work includes: Public education and outreach Inspection of commercial and multifamily housing sites for proper operation and maintenance of storm water treatment and control facilities Identification of illicit discharges to the storm water system Spill cleanup response for accidental discharges Water quality monitoring for Lake Ballinger 22

Storm Water Utility Fund (continued) Storm Water Operating Revenues totaled $1,798,154 or 99% of the Revised 2014 Budget through the end of the Fourth Quarter.

23 Storm Water Utility Fund (continued) Storm Water Operating Revenues totaled $1,798,154 or 99% of the Revised 2014 Budget through the end of the Fourth Quarter. Revenues include a $74,994 regional storm water utilization fee from Vineyard Park. This represents a pro-rated share of the Town Center Regional Storm Water Facility. Storm Water Operating Expenses totaled 91% of the Revised 2014 Budget at the end of the Fourth Quarter. Operating Revenues exceeded Operating Expenses by $101,308. These funds will be used to fund future Storm Water Capital Projects and Debt Service. The Ending Fund Balance of $3,194,297 includes $2,307,419 of unspent bond proceeds to be used for capital projects. 23

24 Storm Water Utility Fund Operating Revenues $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $- Fourth Quarter Fourth Quarter 24

25 Sewer Utility Fund The Sewer Utility Fund covers the expense of providing sanitary sewer service to the community. 70 miles of mains 30 miles of laterals Four lift stations 1,400 manholes The majority of sewer treatment services are provided by the Wastewater Treatment Plant in Edmonds, of which Mountlake Terrace is part-owner. Smaller amounts of wastewater flows to King County METRO via Brier and Shoreline. The Sewer Utility Fund is also the funding source for capital improvements to the City s wastewater collection system, and for the City s share of the cost of capital improvements to the Wastewater Treatment Plant. 25

26 Sewer Utility Fund (continued) Revenues Sewer service revenues are at 102% of the Revised 2014 Budget as of the end of the Fourth Quarter. Other sewer revenues, which include connection fees for new developments, have exceeded the annual budget by $133,064 at the end of the year, due to new developments in the City. Expenditures Sewer operating expenses, total 89% of the Revised 2014 Budget at the end of the Fourth Quarter. Operating Revenues exceed Operating Expenses by $903,473. These funds will be used to fund future Sewer Capital Projects and Debt Service payments. 26

27 Sewer Utility Fund Operating Revenues $3,800,000 $3,700,000 $3,600,000 $3,500,000 $3,400,000 $3,300,000 $3,200,000 $3,100,000 $3,000,000 $2,900,000 $2,800,000 Fourth Quarter Fourth Quarter 27

28 Water Utility Fund The Water Utility Fund covers the expense of providing potable water to the community. 79 miles of water mains Three water reservoirs 850 hydrants 2,700 system valves 5,900 service connections. Cross-connection and backflow prevention program Sampling of the water to insure all standards are met Capital improvements and replacements 28

29 Water Utility Fund (continued) Total water operating revenues are 89% of the Revised 2014 Budget for the year. Total water operating expenses, are at 92% of the Revised 2014 Budget at the end of the year. Operating revenues in the exceed Operating Expenses by $59,057. These funds will be used to fund future Water Capital Projects and Debt Service payments. The Ending Fund Balance of $5,442,527 includes $3,912,518 of unspent bond proceeds to be used to fund future Water Capital Projects. 29

30 Water Utility Fund Operating Revenues $3,300,000 Fourth Quarter $3,200,000 $3,100,000 $3,000,000 $2,900,000 Fourth Quarter $2,800,000 $2,700,000 $2,600,

31 Real Estate Excise Tax (REET) Revenues $800,000 Fourth Quarter $700,000 $600,000 $500,000 $400,000 $300,000 Fourth Quarter $200,000 $100,000 $

32 Street Construction Fund The Street Construction Fund covers projects to provide, preserve, and improve street, pedestrian, bicycle, and traffic control facilities. A portion of the City s allocation of the Motor Vehicle Fuel Tax Traffic impact fees Interest that accrues on funds in the account. State and federal grants and appropriations Loan proceeds Interagency financial participation Real Estate Excise Tax (REET). Because so much of these funds are restricted by law to be used only for street construction, and not street maintenance, they are kept in a fund that is separate from the Street Operations (Maintenance) Fund. 32

33 Street Construction Projects Are Funded by Grants, Motor Vehicle Fuel Tax, REET and TBD 33

34 Street Construction Fund (continued) The capital projects supported by the fund are those identified in the Transportation Capital Facilities and Improvement Program (TCFIP) and the Transportation Improvement Program (TIP). Street pavement overlays Seal coats Sidewalk and sidewalk ramp construction Bicycle route signing and striping Street reconstruction Traffic control system upgrades 34

35 Capital Improvement Project (CIP) Fund The City defines a capital project to be any project or purchase that has a cost of more than $5,000, and has an estimated useful life of three years or more. The Capital Improvement Project (CIP) Fund covers capital projects or purchases that aren t covered elsewhere (such as those in a utility fund). Examples of projects covered in the CIP Fund include Public safety equipment Recreation and park improvements Information technology purchases The CIP Fund receives transfers from the General Fund based on the long-term capital budget needs of the various City departments and the Recreation programs. 35

36 Capital Improvement Project (CIP) Fund (continued) With the exception of grant-funded projects or purchases, activity in the CIP Fund has declined over the course of the recession as the City s limited funds are used for maintaining programs and services rather than replacing capital. The City continues to receive grant dollars for park improvements and expansion, leveraging relatively small amounts of the community s dollars into larger improvements funded from other sources. One example of this is the Emergency Operations Center (EOC), which was mostly funded by a $237,500 Federal grant. Another Example is the $85,000 Grant the City Received from the County for Playground Equipment at Evergreen Playfield. The Therapy Pool at the Recreation Pavilion was funded by a $75,000 Grant from Verdant. 36

37 Playground Equipment Purchased with Snohomish County Grant Funds 37

38 CONCLUSION The City s Fourth Quarter finances highlight three things: The City remains on target financially in providing cost-effective services, programs and projects identified by the Mountlake Terrace community; and The City Council has adhered to a policy of ensuring these programs and projects will be able to be maintained for years to come by living with our financial means; and While General Fund Revenues and Expenditures are very tight and close to the budget, there are indicators that the economy is improving in the City of Mountlake Terrace 38

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