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HomeMy WebLinkAboutPackets - Council Packets (1694)2022 Council Retreat February 18, 2022 Westward Look Resort Agenda Mayor’s Welcome Mike Letcher Welcome, Process and Ground Rules Mid-Year Council Strategic Plan Update Mid-Year Financials for FY21/22 Major Issues to Monitor Town Manager Budget Priorities for FY22/23 Preliminary Revenue Projections for FY22/23 Preliminary 2-Year CIP FY22/23 –23/24 Preliminary 10-Year CIP Mayor’s Welcome Mid-Year Council Strategic Plan Update Mid-Year Council Strategic Plan Update Completed: Transition the OVSafeSteps initiative to ongoing business support programs designed to help with post-pandemic recovery. Ensure wellness and benefit programs are valuable, cost effective and desired by employees and families to support wellness and productivity. Mid-Year Council Strategic Plan Update Behind Schedule: Utilize data to enhance deployment strategies for High Visibility Enforcement (HiVE) in high collision areas to address the increasing volume of traffic and associated issues in and around Oro Valley roadways. Allocate and deploy officers to efficiently and effectively manage and reduce crime utilizing current crime trends. Develop strategies to expand broadband services throughout the Town. Conduct an analysis of Town codes and ordinances to ensure the design standards maintain the unique character of Oro Valley while also providing for a variety of architectural concepts that integrate with and enhance the community. Review and modify town policies to incorporate innovative and effective workforce practices that remain viable post-pandemic. On Hold Mid-Year Council Strategic Plan Update Conduct an external retail market assessment by a qualified firm to provide targeted data designed to assist the town in attracting and retaining restaurant and retail establishments.Determine the feasibility of expanding solar shade structures throughout Town facilities and evaluate grant funding opportunities. Conduct an assessment to determine the types of residential opportunities necessary to successfully promote a thriving and diverse economic base. Mid-Year Financials for FY21/22 OVERVIEW Mid-Year Financial Update and Forecast General Fund Highway Fund Community Center Fund Water Fund Stormwater Fund GENERAL FUND REVENUES REVENUE SOURCE Budget Actuals Thru 12/2021 % of Budget Year -End Estimate Notes Local Sales Taxes $ 21,157,707 $12,526,255 59.2%$ 23,880,002 Trending higher than expected; continued growth and strong recovery in categories impacted by COVID State Shared Revenues 13,729,923 7,153,990 52.1%14,187,081 Trending higher than expected; new Smart & Safe funds received this year Charges for Services 2,387,776 1,306,750 54.7%2,553,577 Trending higher than expected; improvement in recreation revenue. Farebox revenue estimate reduced to zero as fees are waived through the end of the year. Licenses & Permits 1,849,000 875,549 47.4%1,976,497 Expecting higher than budgeted revenues due to several upcoming large commercial projects; SFR permits, however, have slowed considerably Grant Revenue 6,065,290 3,432,869 56.6%6,143,448 Year -end estimate includes amount of ARPA funds that will be recognized this year All Other 1,883,500 801,112 42.5%1,933,900 Includes other intergovernmental revenue, interest income and miscellaneous revenue TOTAL GENERAL FUND REVENUES $ 47,073,196 $ 26,096,525 55.4%$ 50,674,505 Budget variance due to outperforming sales tax collections and state shared revenue GENERAL FUND EXPENDITURES EXPENDITURE CATEGORY Budget Actuals Thru 12/2021 % of Budget Year -End Estimate Notes Personnel $ 30,775,632 $ 13,320,401 43.3%$ 30,645,029 Year to date actuals are slightly below budget due to timing of payroll and vacancy savings. Reduced year-end estimate due to personnel vacancies in several departments. Operations & Maintenance 21,981,773 14,985,241 68.2%22,004,173 Includes $10M PSPRS payment from reserves. Added Smart & Safe funds to year-end estimate. Capital 1,095,175 203,658 18.6%1,175,175 Budget includes Westward Look improvements, IT needs and Parks & Recreation improvements. Added Smart & Safe funds to year-end estimate. Transfers Out 7,408,264 2,685,314 36.2%6,262,832 Actuals reflect a transfer for debt service. No principal payment due in FY 21/22 for pension obligation bonds. TOTAL GENERAL FUND EXPENDITURES $ 61,260,844 $ 31,194,614 50.9%$ 60,087,209 Budget variance mainly due to debt service transfer for pension obligation bonds Budgeted Deficit/Use of Fund Balance: ($14.2M) Estimated Deficit/Use of Fund Balance = ($9.4M) Estimated Ending Fund Balance: $23.0M 42.7% of budgeted expenditures Exceeds Council 25% Policy by $9.5M GENERAL FUND $26.7M $18.6M $26.1M $31.2M $47.1M $61.3M $M $10M $20M $30M $40M $50M $60M $70M Revenues Expenditures General Fund FY 21/22 Through December PY Actual CY Actual CY Budget HIGHWAY FUND REVENUES REVENUE SOURCE Budget Actuals Thru 12/2021 % of Budget Year -End Estimate Notes Licenses & Permits $ 25,000 $ 13,364 53.5%$ 25,000 Trending slightly above budget at this time State Shared Revenues 3,614,922 1,895,968 52.4%3,870,000 Trending higher than expected All Other 8,000 9,125 114.1%12,069 Additional revenues attributable to insurance recoveries TOTAL HIGHWAY FUND REVENUES $ 3,647,922 $ 1,918,457 52.6%$ 3,907,069 Expected to exceed budget due to additional HURF revenues HIGHWAY FUND EXPENDITURES EXPENDITURE CATEGORY Budget Actuals Thru 12/2021 % of Budget Year -End Estimate Notes Personnel $ 1,208,870 $ 546,998 45.2%$ 1,208,870 Trending as expected; % of budget reflects timing of payrolls Operations & Maintenance 616,655 253,123 41.0%616,655 Trending as expected; larger line-items include striping, field supplies, electricity and traffic signal maintenance Capital 2,265,000 1,606,850 70.9%2,265,000 Trending as expected; timing of pavement preservation program TOTAL HIGHWAY FUND EXPENDITURES $ 4,090,525 $ 2,406,971 58.8%$ 4,090,525 No budget variance projected at this time Budgeted Deficit/Use of Fund Balance: ($0.4M) Estimated Deficit/Use of Fund Balance = ($0.2M) Estimated Ending Fund Balance: $1.1M HIGHWAY FUND $1.8M $2.1M$1.9M $2.4M $3.6M $4.1M $.0M $.5M $1.0M $1.5M $2.0M $2.5M $3.0M $3.5M $4.0M $4.5M $5.0M Revenues Expenditures Highway Fund FY 21/22 Through December PY Actual CY Actual CY Budget COMMUNITY CENTER FUND REVENUES REVENUE SOURCE Budget Actuals Thru 12/2021 % of Budget Year -End Estimate Notes Contracted Operating Revenues $ 3,622,385 $ 1,923,485 53.1%$ 3,940,742 All revenues sources trending higher than expected. Strong performance particularly in member dues and food & beverage. Town Operating Revenues 697,580 556,587 79.8%963,000 Exceeding budget in member dues and recreation program revenue Other Revenues 3,078,300 1,656,059 53.8%3,438,245 Includes 1/2 cent sales tax revenues, HOA contributions, interest income and other miscellaneous revenues. Higher than expected local sales tax. TOTAL COMM. CENTER FUND REVENUES $ 7,398,265 $ 4,136,131 55.9%$ 8,341,987 Total revenues projected to exceed budget by $943,722 or 12.8%, due to sales tax, fitness and recreation program revenue, and golf revenue COMMUNITY CENTER FUND EXPENDITURES EXPENDITURE CATEGORY Budget Actuals Thru 12/2021 % of Budget Year -End Estimate Notes Contracted Operating Expenditures $ 4,701,528 $ 2,265,781 48.2%$ 4,495,975 Trending better than expected. O&M and personnel costs are expected to come in under budget by $205,000 and $50,000 respectively, per contractor. Town Operating Expenditures 1,086,581 516,249 47.5%1,102,666 Trending as expected Capital Outlay 132,500 50,146 37.8%132,500 Projected on budget at this time Transfers Out 1,868,519 168,519 9.0%168,519 Actuals reflect a transfer for debt service. Interest only payment due on Parks & Rec bonds. TOTAL COMM. CENTER FUND EXPENDITURES $ 7,789,128 $ 3,000,695 38.5%$ 5,899,660 Budget savings of $1.7 million in transfers out. Outperformance in contracted operating expenditures. COMMUNITY CENTER FUND Budgeted Deficit/Use of Fund Balance: ($0.4M) Estimated Surplus: $2.4M Estimated Ending Fund Balance: $5.1M $3.2M $2.8M $4.1M $3.0M $7.4M $7.8M $M $1M $2M $3M $4M $5M $6M $7M $8M Revenues Expenditures Community Center Fund FY 21/22 Through December PY Actual CY Actual CY Budget WATER FUND Revenues: Water sales trending slightly above budget at 54.8%, or $7.7 million through December Anticipated to end 2%, or $273,000 over budget Miscellaneous revenues reflect a lien release Expenses: Expenses for the Water Fund are trending as expected through December, totaling $10.2 million, or 49.5% of budget •Anticipated to end on budget STORMWATER FUND Revenues: Stormwater revenues total $765,500, or 44% of budget through the first half of the fiscal year Anticipated to end the fiscal year $233,000, or 13.4% below budget mainly due to Pima County taking over the Gravel Wash capital project as the Town will not receive the $300,000 budgeted reimbursement Expenses: Stormwater Expenses trending slightly below budget at $549,000, or 23.5% of budget •Anticipated to end the fiscal year under budget by $453,000, or 19.4% due to the budgeted Gravel Wash capital project being taken over by Pima County Major Issues to Monitor Major Issues to Monitor State and Regional •Potential further changes to state shared revenue formula or HURF allocation •Legislative policies that remove municipal control (e.g. in land use) •Reauthorization of RTA via RTA Next and disposition of PAG funding •Impacts of expiration of CAP agreement and resulting renegotiation on AZ municipalities far-term •Impact of County Attorney policies on public safety and judicial engagement •Impacts of inflation on operations, and on economic development/investment Major Issues to Monitor, cont. Long-term Sustainability •Community competitiveness in attracting primary employers and businesses generating sales taxes •Annexation interest and buildout projects, and resulting impacts on projected population and revenue growth to support service levels Operations •Continued escalation of construction costs and availability of contractors •Impact of COVID-19 on staffing, services, community, economic development •Projecting and planning for ongoing costs associated with new infrastructure (e.g. former Vistoso golf course, Naranja Park amenities) •Recruitment and retention of high-quality personnel Town Manager FY22/23 Budget Priorities •Implementation of Town Council FY21/22 –FY22/23 Strategic Leadership Plan •Staff/resources needed to complete projects/objectives Town Manager FY22/23 Budget Priorities Long-Term Facility Planning Preparation and planning for long-term municipal facility needs and their ongoing costs Analysis of one-time and on-going revenues needed to support implementation Other Capital Planning Leveraging investments of one-time dollars to reduce costs long-term Pursuit of federal infrastructure dollars for capital needs and other community investments Complete buildout analysis to provide solid information on available and needed resources to meet long-term repair/lifecycle and new capital needs •Continued COVID recovery and adaptability •Ensuring community engagement continues to address changes in resident preference •Engagement of local businesses; assessment of ongoing impacts and flexible responses by Town Town Manager FY22/23 Budget Priorities Staying Ahead of Industry and Workforce Trends Finalize and implement recommendations of Classification and Compensation Study Ensure benefits remain competitive Preparation for planned or likely retirements in near-term Enhanced training for employees, with emphasis on supervisors or aspiring supervisors Policy or workplace changes that attract/retain employees Enhance wellbeing initiatives with focus on needs by department •Technology, Partnerships and Innovation •Strategic investments that build capacity and collect meaningful data while being mindful of on-going costs •Data-driven decisions for operational enhancements/improvements •Expanded use of process improvement to reduce waste, improve efficiencies and mitigate need for new staff •Creatively evaluate potential partnerships, opportunities to expand existing partnerships, and ways in which cost increases can be mitigated Town Manager FY22/23 Budget Priorities Preliminary Revenue Projections for FY22/23​ OVERVIEW Planning for the FY 22/23 Budget Process Economic Assumptions Preliminary Revenue Forecast Budget Timeline Feedback and Discussion FY 22/23 ECONOMIC ASSUMPTIONS Continued mindful spending by departments Strong fund balance reserves Cautious projection of revenue growth in major areas Inflation rate ~7% (December 2021) PRELIMINARY FY 22/23 GENERAL FUND –LOCAL SALES TAXES •16.5% growth in General Fund sales tax revenues (budget-to-budget) •Compared to current year forecasts: 3.2% growth •Recovery of accommodation related tax revenues and continued strong gains in retail and restaurant •Growth in contracting due to known commercial projects •Projected slower homebuilding - 1 2 3 4 5 6 7 8 9 10 Utilities Restaurant & Bars Construction Retail Remote Collections Hotel (Incl. Bed Tax)MillionsGeneral Fund Collections by Major Tax Category FY2020 Actual FY2021 Actual FY2022 Projected FY2023 Prelim PRELIMINARY FY 22/23 GENERAL FUND –STATE SHARED REVENUE •8.8% increase in state-shared revenues (budget-to-budget) •State shared income taxes expected to grow from FY22 actual •State enacted rate reduction goes into effect for FY23 •Continued modest growth in state shared sales taxes and county auto-lieu •New Smart & Safe funding in FY22 expected to grow significantly over next three years •To be revised based on estimates received in March from the League 6.3% -5.7% 0.4% 9.4% 18.1%20.1% 6.9% -4.6% -18.2% -10.3% 10.6% 6.7%6.4% 3.1% 8.6% 3.5%3.3% 6.9% 10.2% -1.6% 21.4% 5.0%4.1%4.9%4.9% -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 STATE REVENUE GROWTH ACTUALS & FORECASTED PRELIMINARY FY 22/23 GENERAL FUND –OTHER MAJOR REVENUE •Single Family Residential (SFR) Permit Revenue •Future lack of inventory limits revenues •Considerable commercial development in near-term •Assumes no major rezoning or annexations 0 100 200 300 400 500 600 2017 Actual 2018 Actual 2019 Actual 2020 Actual 2021 Actual 2022 Budget 2022 Projected 2023 Prelim 2024 Forecast 2025 Forecast 2026 Forecast 2027 Forecast 2028 Forecast SFR Permits by Fiscal Year Remaining available residential permits PRELIMINARY FY 22/23 GENERAL FUND ASSUMPTIONS Preliminary ongoing General Fund revenue: Up $2.5M from FY 21/22 budget figures Retirement Benefit Costs:-$25K (ASRS 12.22% ->12.03%, PSPRS assumed flat) Merit & Step Increases:+ $500K Class & Comp Estimate:+ $1.0-$1.5M Remaining Before Other Costs: $1.0-$1.5 million Other cost considerations at the forefront include new personnel, impact of inflation FY 22/23 BUDGET TIMELINE DATE DESCRIPTION February 18th Council Retreat: Strategic Plan review, preliminary revenue projections & budget discussion March 2nd Water Rates Notice of Intent April 15th Manager’s Recommended Budget distributed to Council and Budget & Finance Commission April 19th Budget & Finance Commission discuss Manager’s Recommended Budget April 18th –22nd Individual Council budget briefings May 11th–12th Council Budget Study Sessions; CIP also presented June 1st Adoption of Proposed Water Rates; Adoption of Tentative Budget; Adoption of Comprehensive Fee Schedule; Presentation of five-year forecast June 15th Final Budget Adoption DISCUSSION Preliminary FY 22/23 and Future Year Capital Improvement Program (CIP) Preliminary Capital Improvement Program (CIP) 10-year plan Year one is budgeted in the FY 22/23 Recommended Budget Years two through 10 are placeholders Fluid document subject to shifts, changes, deletions and additions Projects reflect goals and strategies of the Council-adopted Strategic Leadership Plan (SLP) and other department/community needs Process timeline modified to obtain early Council feedback prior to budget development Preliminary requests total $51.7 million for FY 22/23 ($17.5 million is bond funded) and $37.3 million for FY 23/24 (all funds) Preliminary Capital Improvement Program (CIP) Capital Improvement Program Funding Sources General Fund Capital Fund (General-Funded) Water Utility (Operating and Impact Fee Fund) Highway Fund Community Center Fund PAG/RTA Fund Grants Fund Parks Bond ARPA Stormwater Utility Preliminary Capital Improvement Program (CIP) Preliminary Project Requests: Long-term Capital Plan and Exercise Preliminary 10-Year CIP (3-10 years) Departments updated/modified CIP 10-year plans Projects categorized within 3 main "buckets" Near-term (3-5 years) Mid-term (6 -8 years) Far -term (9-10 years) Seek input from Council (Near-term is main focus) Interactive exercise and discussion to set some priority projects