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HomeMy WebLinkAboutTown of Wake Forest - Public Financial Report1 Citizens Financial Report TOWN OF WAKE FOREST ~ NORTH CAROLINA FISCAL YEAR ENDING JUNE 30, 2021 20 2 1 Finance & Budget Awards The Town of Wake Forest’s Annual Comprehensive Financial Report (ACFR) has won the Government Finance Officers Association of the United States and Canada (GFOA) award for 31 consecutive years. For the last eight consecutive years, the Town has received the GFOA award for the Distinguished Budget Presentation. To earn these awards, the Town must produce easily readable and efficiently organized budget and financial reports, whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and accepted legal requirements. In addition, the Town’s Citizens’ Financial Report has received the award for Outstanding Achievement in Popular Annual Financial Reporting for the last four years. The award is valid for a period of one year. To view all Town of Wake Forest financial reports, including the budget, visit the town’s website at wakeforestnc.gov and search for “finance.” CONTENTS Town Leaders ......................................................3 Strategic Plan .......................................................4 Financial Results ..................................................5 Major Initiatives ....................................................8 Debt Management ..............................................11 Budget ...............................................................13 Wake Forest by the Numbers .............................14 Providing transparency about the Town’s financial operations The 2021 Citizens’ Financial Report provides citizens and other interested parties with an overview of the Town’s financial results. This report is prepared to increase awareness and provide transparency about the Town’s financial operations. The financial information provided here is obtained from the audited financial statements in the Town’s 2021 Annual Comprehensive Financial Report (ACFR) which is audited by Cherry Bekaert LLP and has received an unmodified or “clean” opinion. The Citizen’s Annual Financial Report is not required to present the same level of detail as the ACFR and, therefore may not fully conform to generally accepted accounting principles (GAAP). This report is designed to provide a summary of the Town’s overall financial condition of the Town in a user-friendly format as well as serve as a supplement to the ACFR, not a replacement. To see the report, visit the town’s website at wakeforestnc.gov and search for “comprehensive annual financial report.” Government Finance Officers Association Award for Outstanding Achievement in Popular Annual Financial Reporting Presented to the Town of Wake Forest North Carolina For its Annual Financial Report for the Fiscal Year Ended 2020 Executive Director/CEO 3 A Message from the Town Manager The Town of Wake Forest is proud to present its Popular Annual Financial Report (PAFR) for the Fiscal Year ending 2021. After a year of canceling many of our traditional events, we began to gradually phase in our events. Events such as Friday Night on White and Six Sundays in Spring concert series are important to the quality of life for our residents and they have experienced great attendance since reopening. Our Parks, Recreation & Cultural Resources Department continues to see many of its programs outpaced in attendance when compared to pre- COVID numbers. As an example, our annual Boo Bash attracted more than 4,000 attendees this year when typical numbers are around 1,000. The Renaissance Centre continues to have a positive impact on citizens and has established itself as the cultural arts center for Wake Forest and beyond. Since reopening, performances sell out well in advance of the show dates. The Centre continues to be a destination for our downtown and plays a key role in its success. Our Fire Department was awarded an ISO Class 1 designation. This has the potential to lower insurance premiums for some of our commercial businesses in town. Wake Forest is now one of only eighteen communities out of 1,220 in North Carolina to receive this classification. As we move into Fiscal Year 2022, the Town’s Community Plan Update and Northeast Community Plan are being finalized. We are moving toward an implementation phase to address the tasks identified in the Northeast Community Plan, as well as begin the process of updating our Unified Development Ordinance to implement the policies identified in the Community Plan Update. Additionally, we will begin to finalize a list of projects for a potential bond referendum in November of 2022. Our financial position remains strong. The Town has received triple A ratings from the three national credit rating agencies. This translates into lower borrowing costs for the Town. Out of 552 municipalities in the State, Wake Forest is only one of nine to achieve this rating. Additionally, our auditors have finished their year-end review and reported no issues or irregularities and therefore issued a clean opinion of our finances. On behalf of our elected officials and staff, I want to thank you for your support of our continued efforts in Wake Forest. We strive to make sure we retain that sense of character that continues to make “our Wake Forest” the ultimate location to live, work, and play. — Kip Padgett, Town Manager 2021 Wake Forest Mayor & Board of Commissioners Commissioner Jim Dyer Commissioner Bridget Wall-Lennon Commissioner Liz Simpers Commissioner Adam Wright Commissioner Chad Sary Mayor Vivian Jones Town Leaders We strive to make sure we retain that sense of character that continues to make Wake Forest the ultimate location to live, work and play. 4 Key Goals of the Strategic Plan As we look to the future, Wake Forest must plan for how it will continue providing services in a manner that efficiently meets the needs of our growing and ever-changing community. The strategic plan charts our course for the next five years towards providing excellent and sustainable quality of life for our citizens. The Town’s strategic plan has four goals as listed at right: Mission Statement The Town of Wake Forest is committed to improving the quality of life in our community by preserving our character, fostering economic opportunities, strengthening our neighborhoods, delivering superior services and embracing the diversity of our citizens. Goal 1 Economic Development Goal 2 Safe & Connected Community Goal 3 Values-Based Organizational Culture Goal 4 Fiscal Strength Strategic Plan A vibrant and diverse community that provides superior public services and an exceptional quality of life Public works employees build and maintain sidewalks. The Wake Forest community came together to refresh areas in the Northeast Community for “Make a Difference Day.” 5 FISCAL YEAR 2020–21 Financial Results Governmental Results The Governmental activities section in the Town’s financial statements include programs generally supported by taxes, capital contributions along with grants from federal/ state governments. Governmental revenue sources cover various services including: public safety, public infrastructure, general government administration and parks, recreation and cultural resources. Governmental activities also include special revenue activities, such as grants, and capital project activities, such as greenway and transportation projects funded by bond proceeds. 2021 2020 Change Total Assets & Deferred Outflows $333,404,245 $301,785,989 $31,618,256 Total Liabilities & Deferred Inflows 81,224,241 69,395,731 (11,828,510) Total Net Position $252,180,004 $232,390,258 $19,789,746 Balance Sheet A balance sheet provides a snapshot of what the Town owns (assets) and owes (liabilities). Net position represents the Town’s investment in the assets it uses in providing services to its citizens. Over time increases or decreases in net position may serve as a useful indicator of whether the Town’s financial position is improving or weakening. During FY 2020-2021, the Town’s net position increased $19,789,746. A vibrant and diverse community that provides superior public services and an exceptional quality of life 2021 2020 Change Revenues $78,744,732 $58,368,969 $20,375,763 (Expenses)(58,954,986) (44,709,532) (14,245,454) Change in Net Position $19,789,746 $13,659,437 $6,130,309 Total governmental activity revenue increased 34.99% from prior year while expenses increased 31.96%. Increases from previous fiscal year were recognized as follows: n Ad valorem taxes – 14.8% over previous year due to revaluation of assessed property and strong continued growth n Local option sales tax – 16% increase over prior year Income Statement An income statement provides a summary of amounts received (revenues) and amounts spent (expenditures). The difference between revenue and expenditures shows the Town’s change in net position. A positive change indicates the Town had enough revenues to cover its obligations and has the ability to save for the future. Management acknowledges that 2021 was a successful year. After experiencing the challenges presented by the widespread Coronavirus (COVID-19), our strong financial position, management practices, the willingness of all staff to operate as a united team along with growth in Wake County, the town has been able to successfully navigate these unprecedented times. General Fund Results The General Fund is the Town’s primary operating fund. Property taxes and sales taxes are the two largest sources of revenue making up over 75% ($43,628,163) of the total received for the fiscal year. These revenues provide services to citizens and businesses within Town limits. Public safety, which includes police and fire protection account for 41% ($21,463,379) of the total expended. This is followed by General government at 26% ($13,844,684) which includes the governing body, administration, communications, human resources, finance, downtown development, information technology, planning, inspections, engineering, public works administration and fleet maintenance. The charts on this page show the breakdown by percentage of General Fund revenues and expenditures. General Fund Expenditures Year Ended June 30, 2021 $52,329,432 Public Safety $21,463,379 41.0% General Government 13,844,684 26.4% Debt Service 6,619,209 12.7% Environmental Protection 4,379,114 8.4% Cultural & Recreational 3,397,524 6.5% Transportation 2,625,522 5.1% General Fund Revenues Year Ended June 30, 2021 $58,316,871 Property Taxes 33,655,281 57.7% Sales Taxes 9,972,882 17.1% Grants & Other Taxes 6,353,591 10.9% Permits & Fees 4,099,595 7.0% Sales & Services 2,068,143 3.5% Other Sources 2,167,379 3.7% 6 Three Year Trends 2021 Actual 2020 Actual 2019 Actual Property Taxes $33,655,281 $29,340,018 $27,713,298 Sales Taxes 9,972,882 8,594,400 8,245,963 Grants & Other Taxes 6,353,591 3,877,446 3,855,450 Permits & Fees 4,099,595 3,027,188 2,751,352 Sales & Services 2,068,143 625,102 930,868 Other Sources 2,167,379 2,768,762 1,751,684 Total GF Revenues $58,316,871 $48,232,916 $45,248,615 2021 Actual 2020 Actual 2019 Actual Public Safety $21,463,379 $19,818,764 $16,674,495 General Government 13,844,684 13,209,979 12,362,906 Debt Service 6,619,209 6,319,300 6,703,678 Environmental Protection 4,379,114 3,853,434 3,674,634 Cultural & Recreational 3,397,524 3,681,193 3,276,171 Transportation 2,625,522 2,371,653 2,487,546 Total GF Expenditures $52,329,432 $49,254,323 $45,179,430 General Fund Revenues General Fund Expenditures FISCAL YEAR 2020–21 Financial Results Proprietary Results Proprietary or business type activities rely on fees charged to customers for services rendered. The Town operates Wake Forest Power and reports as the Electric Fund. It is operated in a manner similar to private business where the costs of providing the service are financed or recovered through user charges. 2021 2020 Change Total Assets & Deferred Outflows $30,943,593 $30,861,745 $81,848 Total Liabilities & Deferred Inflows 9,799,782 9,663,095 (136,687) Total Net Position $21,143,811 $21,198,650 $(54,839) 2021 2020 Change Revenues $21,350,603 $20,614,193 $736,410 (Expenses)(21,405,442) (20,317,296) (1,088,146) Change in Net Position $(54,839) $296,897 $(351,736) Charges for services from the sale of power increased 2.5% in the current year compared to a 2.5% decrease in the previous year. Change in net position for business-type activities decreased $54,839 for the fiscal year. Balance Sheet A balance sheet provides a snapshot of what the Town owns (assets) and owes (liabilities). Net position represents the Town’s investment in the assets it uses in providing services to its citizens. Income Statement An income statement provides a summary of amounts received (revenues) and amounts spent (expenses). The difference between revenue and expenses shows the Town’s change in net position. A positive change indicates the Town had enough revenues to cover its obligations and has the ability to save for the future. Wake Forest Power serves over 6,500 customers. 7 Major Initiatives Wake Forest Community Plan Update & Future Land Use Map The Town of Wake Forest currently relies on the 2009 Wake Forest Community Plan and Growth Strategies Map as a policy-based comprehensive plan. The current plan contains the vision statements, policies, and actions that have guided growth in Wake Forest for the last 10 years. The Town hired Houseal Lavinge in the summer of 2020 to update the 2009 Community Plan. Planning staff have been managing the project through the two-year process. When adopted, the Wake Forest Community Plan Update and Future Land Use Map will guide development and investment in Wake Forest for the next 10 to 20 years. The updated plan will help effectively guide Town leaders in making substantive and thoughtful decisions for the community. Northeast Community Plan The Town of Wake Forest is developing a plan for the future of the Northeast Community. The North- east Community Neighborhood is in the northeast quadrant of the Town of Wake Forest. The area is comprised of over 300 acres of land that is home to approximately 2,300 people. When adopted, the Northeast Community Plan will guide policies and actions responding to current and future needs of the community. The goal is to help preserve the history, diversity, and affordability of the area while addressing issues of growth, economic health, public infrastructure, and preservation. Residents were invited to share their input on the plan through public meetings, survey and an open house. Affordable Housing Plan In light of the increasingly difficult housing situation many in the Triangle are experiencing, the Town of Wake Forest is developing an Affordable Housing Plan to help better analyze and mitigate housing conditions within the community. The Wake Forest Affordable Housing Plan will examine existing local housing conditions, determine housing needs, establish a vision and associated goals for housing in the community, and recommend policies to help achieve this vision. Underground Fiber Infrastructure Underground fiber infrastructure construction started in February 2020. Project includes installing 25 route miles of fiber interconnecting 14 town facilities. Cost is approximately $2.5 million is expected to be complete by March 2022. 8 Ligon Mill Operational Improvements Improvements consist of widening the existing narrow corridor from two-lanes to a four-lane median divided highway with left-turn lanes, bike lanes, curb and gutter and extra wide sidewalks. Construction started in May 2020 and is expected to be completed by the end of 2021. This logo indicates a project financed through general obligation bonds that were approved by Wake Forest voters in November 2014. 20 9 Wake Forest Fire Department After operating as a private, non-profit organization for 37 years, the Wake Forest Fire Department (WFFD) officially joined the Town of Wake Forest on July 1, 2020. Established in 1921, the WFFD currently operates with five fire stations throughout Wake Forest. Comprised of over 80 paid personnel, 20 part-time employees and 28 volunteers, the department pro- vides fire protection, emergency medical and rescue services, as well as a public education program for the community. The Wake Forest Fire Department officially joined the Town of Wake Forest adding approximately 100 employees to serve and protect the community. Looking to the Future The Town continues to make strategic public investments that will spur private development. Several developments that are in progress are direct results of that investment. n 353 South White Street The former SunTrust building, located at the corner of White Street and Elm Avenue spans one acre in the heart of downtown Wake Forest. Slated for redevelopment into a mixed-use, pedestrian-oriented property located at a key corner, the Town plans to use the site to serve as the major gateway into downtown. While a developer has not yet been selected for the redevelopment project (an RFP process is slated for early 2021), conceptual plans and in-depth studies on the marketability of the site have been completed, priming the property for the next stages of development. n Phase 2 PowerHouse Row Plans for Phase 2 of PowerHouse Row are now underway. This structure will be larger than Phase 1, with approximately 12,000 square feet of commercial and retail space at street level. In total, Phase 2 of PowerHouse Row will include 47 apartment units with early investment projections hovering around $14 million. n 535 South White Street Warehouse 535 South White Street warehouse is a project that will convert/update the 16,000 square foot building into a mix of uses including food and beverage along with private offices. Located adjacent and sharing open space with Loading Dock Wake Forest, the former warehouse was acquired earlier this year and plans are in the review phase. Work continued on two major plan updates that will determine the future of our community. The Northeast Community Plan and the Community Plan Update overlap fiscal years and continue into 2022. Approximately 100 employees were onboarded as a result of the Fire Department’s transition to the Town on July 1, 2020. The Affordable Housing Plan kicked off in 2021. The Town will examine local housing conditions, determine housing needs, establish a vision and associated goals for housing in the community and recommend policies to help achieve this vision. Seventeen positions were added to meet the demands of our growing community. Fiscal Year Highlights 10 Two Assistant Town Managers were added and Town departments were re-organized and streamlined. A cost of service and rate study was completed for Wake Forest Power. The results were presented in December. Electric rate increases were delayed until September 1, 2021. The Town issues debt to fund General Governmental and business-type capital needs. Total outstanding debt as of June 30, 2021 totals $47,942,277. This includes general obligation bonds (voter approved debt), revenue bonds (electric) and installment purchase agreements. The chart below provides the breakdown of debt type at the end of the fiscal year. Town’s Credit Ratings The Town benefits from its outstanding credit ratings. A priority of the Town is to maintain public trust in the sustainability of the Town’s financial system. This commitment has resulted in the Town receiving the following credit ratings: n Standard & Poor’s AAA n Fitch Ratings AAA n Moody’s Aaa Another priority of the Town is to maximize return on town funds. By maintaining or improving bond ratings result in lower interest rates on debt. Debt Issuance The Town’s total debt increased by $5,742,587 (13.6%) during the fiscal year. Along with retiring debt during the year, the Town issued the following debt: Installment Purchase Agreements: n $2,500,000 – Fiber Construction, July 2020, 7-year term, 2.17% n $738,170 – Vehicles and Equipment, September 2020 – 4-year term – 1.04% n $1,309,512 – Aerial Ladder Fire Truck, February 2021, 5-year term, 0.99% n $642,435 – Vehicles and Equipment, June 2021, 4-year term, 0.97% General Obligation Bonds: n $1,290,000 – Street, Sidewalk and Greenway Improvements (various projects) June 2021, five-year term, .54% n $4,920,000 – Street, Sidewalk and Greenway Improvements (various projects) June 2021, twenty-year term, 1.62% In addition, the Town had a rate modification of the 2018 Street Improvements installment note which had an outstanding balance of $1,800,000. The new interest rate for the refinanced debt is 2.13%, which resulted in savings of $65,000 over remaining life of loan. Also, as result of the Fire Department’s merger with the Town, two outstanding Fire Department installment notes were assumed by the Town. During the year the Town retired one of the notes totaling $106,231. The remaining Fire Department note had an outstanding principal balance of $350,411 and a 2.99% interest rate. Debt Management Breakdown of Debt Year Ended June 30, 2021 $47,942,277 General Obligation Bonds $29,400,000 61.3% Installment Purchase Agreements $17,739,013 37% Revenue Bonds $803,264 1.7% 11 During 2021-2022, the Town plans to issue installment debt to purchase replacement vehicles and equipment for the Police department. Debt Policy Compliance The Town actively monitors and manages its debt capacity and affordability. In keeping with the goal of enhancing fiscal strength identified in the strategic plan, the Town has a formal policy which provides guidance and direction when considering the impact of future debt. Future Debt Issuance The Town utilizes a debt model to plan the issuance of future debt. The model was last updated during FY 2017-2018 in conjunction with issuing general obligation bonds in June 2018. The updated debt model includes planned issuances through 2021. A debt service fund with specific revenues including a portion of the tax rate, vehicle fees and downtown municipal service district tax funds are earmarked to repay general fund debt. During FY 2021-2022, the Town plans to issue $1,304,500 in installment debt to purchase replacement vehicles and equipment for the Police, Public Works, and Inspections departments. Another bond referendum is planned for November 2022. The amount along with proposed projects will be finalized in the coming months and incorporated into the debt model update in Spring 2022. Debt Management How the Town’s Debt Compares to Policy 0.6494%* 2%* Town’s Current Debt Town’s Policy for Debt North Carolina State Statute *of assessed valuation 12 Holding Park Aquatic Center offers a lap pool, water slides, children’s pool and sprayground. (top image) During 2021-2022, the Town plans to issue installment debt to purchase replacement vehicles and equipment for the Police, Public Works, and Inspections departments. (bottom image) 8%* Budget & Planning Property Tax Rate The Town’s tax rate will remain unchanged at $0.495 for the coming fiscal year. 13 The budget represents the fundamental philosophy of being conservative with revenue projections and maintaining fiscal constraint on the expenditure side. Fiscal Year 2021–22 Budget Highlights Much like an average household, the Town uses a balanced budget to ensure that it maintains a healthy financial position. North Carolina law requires local governments to approve a balanced budget each year. The Town plans for its financial needs of the future by utilizing a five-year capital improvements plan that is updated annually, financial forecasting, debt models, various other studies and plans. Governmental Activities: The 2021-2022 Adopted Budget increased (4%) from the 2020-2021 Amended Budget, this also increased 6.5% over the 2020-2021 Adopted Budget. The foundation of this budget is the strategic plan which sets the roadmap for all decisions over the next few years. The budget endeavors to achieve the four key goals in the strategic plan by maintaining current service levels, enhancing infrastructure and providing for employees. Ten (10) new positions were included in the approved budget. Of these positions, one is attributed to the creation of a new Legal Services department. The Town’s tax rate will remain unchanged at $.495 for the coming fiscal year. The rate is inclusive of $.015 for transportation initiatives and $.005 for affordable and workforce housing. The final budget for the General Fund totaled $56.05 million. In addition, the Downtown Municipal Service District tax rate remains unchanged at $.14. Despite the appearance of renewed fiscal growth and other positive changes in economic conditions, the Town will continue to focus on financial sustainability. The budget represents the fundamental philosophy of being conservative with revenue projections and maintaining fiscal constraint on the expenditure side. Decision making will still require much care and prudence as we continue to focus on providing the core services our citizens expect. Prioritizing how our resources are utilized is critical as we make long term plans for capital investments, as well as addressing future debt service and additional upcoming legislative mandates. Business–type Activities: Utility rates were increased in the Electric Fund with the Adopted 2021-2022 Budget per an electric rate study that was presented in December 2020. The study began during the FY 2019-2020, however, due to the pandemic the study, as well as any potential changes to the rates were delayed. The total budget is $23.3 million for the Electric Fund. General Government Public Safety Fire Services Transportation Environmental Protection Cultural & Recreation Debt Service 29.5% 26.4% 15.4% 7.2% 1.7% 8.5% 11.3% How Your Town Property Tax Dollars Are Spent Total Budget FY 2021–2022 $91,434,535 Personnel Costs $38,269,340 42% Operating Costs $28,372,760 31% Purchase for Power $12,298,935 14% Debt Service $7,887,700 86% Capital Outlay $4,605,800 5% 14 Wake Forest by the Numbers 50,244 town population 4th largest municipality in wake county 12,794 acres within town limits 19.99 land area in square miles 141.58 miles of town-owned streets 36 yrs median age 1,003 building permits issued during fiscal year 398 town employees $40,982 per capita personal income $92,210 median household income 78 full-time sworn police officers 6 police stations 6,567 number of wake forest power customers 3.9% wake forest unemployment rate 25 fire department volunteers 108 full-time and part-time firefighters 5 fire stations 15 Rank Principal Employers Approximate # of Employees 1 Wake County Public School System 1300 2 CenturyLink 452 3 Southeastern Baptist Theological Seminary, Inc.448 4 Walmart 412 5 Wegman’s 410 6 Town of Wake Forest 391 7 Chick Fil A 318 8 Lowes Foods 211 9 Target Corporation 200 10 Sams Club 185 11 Lowe’s Home Improvement 176 12 Rex Healthcare (Wake Forest & Wakefield) 171 13 Pack-Rat 170 14 Home Depot 164 15 Hillside Nursing Center of Wake Forest, Inc.160 16 Franklin Academy 152 17 Texas Roadhouse 123 18 Publix 120 19 Kohl’s 114 20 Moffat Pipe 88 21 Norse 70 Source: Wake Forest Economic Development projected employment estimates Rank Taxpayer Taxable Assessed Valuation 1 Legacy Wake Forest LLC $54,216,034 2 Wake Forest Apartments LLC 41,361,099 3 Heritage Gardens LLC 38,751,899 4 Caveness Partners LLC 36,903,241 5 Wake Forest Crossing Owner LLC 34,961,948 6 WMCI Raleigh IV LLC 33,949,300 7 Waypoint CapCreek MF Owner LLC 33,540,923 8 Crossroads Holdings LLC 30,573,582 9 Wake EMC 28,189,207 10 Walmart Real Estate Business Trust 23,649,363 Total $356,096,596 Total Assessed Valuation $6,799,785,581 Source: Wake County Revenue Department MAJOR TAXPAYERS MAJOR EMPLOYERS The 2021 Citizens Financial Report is a publication of: Town of Wake Forest FINANCE DEPARTMENT 301 S. Brooks St. Wake Forest, NC 27587 For more information about the Town of Wake Forest visit wakeforestnc.gov Wilmington Richmond Washington, D.C. Baltimore Norfolk Charleston CharlotteAsheville Raleigh Atlanta Columbia Charleston Louisville Nashville Birmingham north carolina virginia south carolina west virginia kentucky tennessee georgia alabama ohio Lexington Montgomery Annapolis Dover Cincinnati