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HomeMy WebLinkAboutPackets - Council Packets (294)Council Meeting Regular Session February 15, 2017 1 Town Council Meeting Announcements 2 Upcoming Meetings 3 Upcoming Meetings 4 5 6 Fiscal Year 2016/17 Financial Update Through Dec. 2016 February 15, 2017 7 FY 16/17 BUDGET BY FUND AS % OF TOTAL BUDGET This annual mid-year update covers the major funds in the Town’s budget, including the General Fund, the Highway Fund, Bed Tax Fund, newly added this year is the Community Center Fund, and the Water and Stormwater Utility funds. This year’s update no different from past year’s updates through mid-year in that there are some areas that are trending to come in over budget and some areas trending to come in under budget, so I will cover those and discuss the reasons why these areas are trending as they are, and identify what actions have been taken in other areas of the budget and operations to accommodate for these trends. 8 GENERAL FUND REVENUES Starting with General fund revenues, the next two slides highlight the major revenue sources, how they are trending compared to budget, what the estimated variance is to budget and the reason for the variance. This slide focuses on the Local Sales Tax revenue category in the General fund. Local sales taxes make up nearly 50%, or $15M, of the General Fund’s $32M budget, so this slide highlights several of the main categories of sales tax that we collect in the General Fund. At the top, construction sales taxes (collect a 4% construction sales tax) - budgeted just over $3.4M and estimate that actual collections will be approximately $640,000 underbudget due to slower residential construction than originally anticipated with year ending single family permits estimated at 165 compared to the 200 that were budgeted. In addition, there was a delay in a memory care facility construction project that was anticipated to be constructed during this FY, but will now likely occur next FY. And finally, we are seeing some revenue reduction from recent legislation that was enacted last year which eliminated smaller construction contractors from having to remit construction sales tax on smaller construction, remodeling and renovation jobs. Since we primarily categorize construction taxes as one-time revenues dedicated to one-time capital project spending in our General Government CIP Fund, we’ve adjusted to this revenue shortfall by placing a hold on our capital projects without impacting the day-to-day operations of the Town. As we move through the remainder of this FY, we will be looking at rolling over those projects that don’t get completed this year into next year’s budget. Retail sales – collect a 2.5% retail sales tax and the 2% portion is collected in the General Fund, while the 0.5% portion is dedicated to the Comm Ctr Fund We budgeted $6M for the 2% portion in the GF, and we are trending to this amount for year-end. As we’ve discussed in prior meetings, due to seasonality, we typically collect about 43 – 45% of these revenues in the first half of the year, and the remainder in the second half. So we are right on target with our collections in this category. Restaurant – similar to retail, collect a 2.5% tax on rest/bar sales, with 2% portion in the General fund. We budgeted $1.1M in this category in the GF, and expect to exceed that amount by about $100,000 at year-end due to healthy growth in this area and the opening of some new restaurants this past year. Utility – collect a 4% utility sales tax and budgeted $2.8M. This category is trending slightly above budget, expect to go exceed budget by about $45,000. Overall in the Local Sales Tax category, it is estimated that we will come in under budget by about $583,000, due to the lagging construction sales tax collections. 9 GENERAL FUND REVENUES (continued) For Licenses & Permits – budgeted $1.8M and estimate that we will come in about $294,000 under that amount at YE, again due to the residential permit numbers trending below the 200 we budgeted and the delay in the construction of the memory care facility. It’s important to point out that we still anticipate these building projects to occur with the home permits and the commercial projects coming out of the ground next fiscal year, rather than this FY, so this revenue will shift into next year’s budget. Federal Grants – budgeted just over $500,000 and estimate coming in about $84,000 under that amount due to funding changes at the Counter Narcotics Alliance. This reduction in grant funds will be offset by vacancy savings in the Police Department. State Shared Revenues – budgeted $10.4M and estimate coming in about $145,000 over that amount based on projections from AZ Dept. of Revenue and the League of Cities and Towns. Charges for Services – budgeted $1.9M, which was a conservative figure, and estimate exceeding that amount by about $100,000 at YE due to revenue generation at the Aquatic Center. Overall, for GF Revenues, we budgeted $32M, and estimate coming in under that amount by about $684,000 due to those one-time revenues from const tax and building permits. 10 GENERAL FUND EXPENDITURES Total expenditures estimated under budget at year-end by 0.7%, or $232,000 Personnel savings = $90,000 Department O&M and capital savings = $142,000 Council-approved use of contingency = $30,000 for Town Manager recruitment Estimated year-end fund balance = $11.3 million 34% of adopted expenditures 11 Revenues HIGHWAY FUND Total revenues estimated under budget at year-end by 0.9%, or $34,000 Rollover of Safeway (1st Ave) safety CIP project Revenues for services provided to the Stormwater Utility Fund State shared highway user revenues estimated over budget by 4.5%, or $135,000 Expenditures Estimated under budget at year-end by 5.8%, or $272,000 due primarily to rollover of Safeway (1st Ave) safety CIP project Maintaining pavement preservation at budgeted $1.15 million Estimated year-end fund balance = $1.1 million 12 COMMUNITY CENTER FUND Revenues Contracted revenues estimated under budget by 17.7%, or $663,000 based on updated Troon forecast Town operating revenues estimated over budget by 7.5%, or $56,000 due to member dues and recreation program revenues Half-cent sales tax revenues estimated over budget by 3.2%, or $68,000 due to growth in retail and restaurant/bar sales tax collections Expenditures Contracted expenditures estimated under budget by 4.1%, or $217,000 based on updated Troon forecast Town operating expenditures estimated on budget at $961,000 Estimated year-end fund balance = $11,574 13 Bed Tax Fund BED TAX FUND and STORMWATER UTILITY FUND Bed tax revenues estimated under budget by 3.8%, or $42,000, based on current trends Expenditures estimated on budget at year-end Estimated year-end fund balance = $347,000 Stormwater Utility Fund Revenues estimated on budget at year-end Expenditures estimated under budget by 5.3%, or $61,000 14 WATER UTILITY FUND Total revenues estimated over budget at year-end by 1.3%, or $190,000 due primarily to increased water sales Total expenses estimated under budget by 0.4%, or $83,000 due to personnel savings 15 Questions? 16 17 Zoning Code Amendment Taglines for Wall Signs Town Council February 15, 2017 18 Wall Signs Purpose Amend Zoning Code Establish standards Definition No size increase The purpose for this next case is to provide clarification in the zoning code regarding the use of taglines. Taglines are an accessory component of wall signs as shown (push) on this slide, circled in yellow. This is not a new sign type but is simply part of a wall sign that, overtime, has been allowed or not allowed depending on the interpretation of the code at the time, which means several of these signs already exist in our community today. In fact, the photos in tonight’s presentation are all pictures of Oro Valley businesses. It’s also important to understand that this code amendment will not add more signage to a building but allows a business to utilize a small part of their allowed sign size for a Tagline. Tonight we propose to provide clarity about the use of Taglines which is basically a housekeeping item to the zoning code. 19 Proportionality With this code amendment, we wanted to be sure that Taglines were not to used as a main component of a sign but also reflected how these signs are being used in the community today. For an example, the size standards proposed in the code would allow Sports Clips as the primary sign with individual letters and the word Haircuts as a small, subordinate Tagline. 20 Your Voice Our Future General Plan Goals Policies Actions As with any code amendment we look to the General Plan which provides goals, polices and actions to maintain the unique character of Oro Valley by studying and updating: Signage regulations to emphasize identification and direction over advertising goods or services to maintain compatibility and minimal intrusiveness. This code amendment meets this goal by:   Allowing businesses to use Taglines as a small component of the main identification sign allows a store to provide direction and further identify their business.   Regulating the Tagline size maintains the character of the Town, compatibility and minimizes intrusiveness. 21 Summary and Recommendation Clarity and standards General Plan conformance Planning and Zoning Commission recommended approval to Council Again, this code amendment is basically a housekeeping item for the zoning code, so that we can provide clarity that taglines will be an allowed sign type. As I mentioned earlier, the use of Taglines will not add more signage to a building but will allow a business to utilize a small part of their allowed sign size for a Tagline. The proposed amendment is found to meet the standards of the general plan and the Planning and Zoning Commission has recommended approval of the proposed code amendment. Thank you. 22 23 Town Council Meeting February 15, 2017 Public Hearing Proposed Increase in Water Rates for Oro Valley Water Utility 24 Mayor & Council Water Policies Water Utility is self supporting with rate-based revenues Water rates and charges reviewed annually Debt service coverage of 1.30 Cash reserve of at least 20% of operating budget Avoid sudden or large scale shifts in rates – minimize rate shock Rate structure to encourage water conservation Rate structure to encourage use of reclaimed water All costs of water facilities shall be paid by the applicant. - Growth pays for itself Cost of service approach (AWWA methodology) 25 Preferred Financial Scenario Water Rates Analysis Analysis of the three funds within the Utility Five-year revenue and expenditure projections - Begin with the budget for current fiscal year Propose new debt to finance capital in future years Propose small rate increases each year - Only approve rate increase for the first year Meets all revenue requirements Debt service coverage requirements Cash reserve requirements 26 What we have done . . . Water Supply & Conservation Preserve and protect our groundwater - Developed reclaimed water supply for golf course irrigation - Developed CAP water supply for potable uses - 44% of demand met with renewable water supplies Water conservation - Education and public outreach - Water audits - Advanced Metering Infrastructure and meter replacement - Provided early leak detection - Water demands declined over last 12 years 27 Potable Water Use Trends & Growth Rates 28 Golf Course Water Use Trends 29 Preferred Financial Scenario Proposed changes in water rates: Increase in potable and reclaimed water base rates Increase in the potable water commodity rates Increase in potable construction water rates The following rates will not be changed: No increase in the reclaimed water commodity rate No increase in groundwater preservation fees for potable or reclaimed Revenue from rates do not fund growth related projects Growth pays for itself through impact fees 30 Base Rate Increases 31 Commodity Rate Increases 32 Customer Impacts – Monthly Bill 33 Schedule 12/07/16 Town Council adopted Notice of Intent 12/08/16 Published Rate Report on website 01/18/17 Published Notice of Intent in newspaper 02/15/17 Public Hearing to adopt new rates 03/17/17 New rates become effective 04/05/17 Begin billing at new rates 34 Recommendations Water Utility Commission recommends approval of the proposed water rate increase Water Utility staff recommends approval of the resolution increasing the water rates for the Oro Valley Water Utility 35 36