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HomeMy WebLinkAboutCity of Virginia Beach - Public Financial ReportCITY OF VIRGINIA BEACH, VIRGINIA POPULAR ANNUALFinancial Report For Fiscal Year ending June 30, 2021 PATRICK A. DUHANEY CITY MANAGER FROM THE CITY MANAGER This Popular Annual Financial Report (PAFR) for the fiscal year ended June 30, 2021 outlines how the City of Virginia Beach has maintained its standard of quality service delivery as we continue to reimagine how we do business throughout a global pandemic. The report illustrates how we made fiscally sound economic decisions to both protect city resources, and to provide assistance to families and businesses in need. It offers a breakdown of City revenues and expenses as well as an annual snapshot of our local economy. City Council’s goals and priorities will continue to guide the investments and funding decisions we make as we work through these unprecedented times. As with every year, we strive to provide complete transparency into City spending and operations for citizens to access in an easy-to- absorb format. Virginia Beach’s standing among the best- managed cities is well deserved, primarily for its commitment to fiscal responsibility and the excellent stewardship of City finances. I am proud to serve as the city manager of such a distinguished public organization. May we all look forward to good health and continued success throughout this year. The Department of Finance ........................4 Virginia Beach by the Numbers ...............6 Citywide Revenues ..............................................8 Citywide Revenues and Expenses ..........9 Citywide Net Position .....................................10 Citywide Long-Term Liabilities ................12 General Fund .........................................................14 Priorities and Goals ...........................................16 Year in Review .......................................................17 CONTENTS DEPARTMENT OF FINANCE The City of Virginia Beach Department of Finance serves as a strategic business partner to provide excellent service to internal and external customers, deliver a clear and concise picture of the City’s current and future financial position and promote actions to achieve the City’s goals and priorities. FY 2021 Popular Annual Financial Report The award-winning Department of Finance is proud to present the Popular Annual Financial Report (PAFR) for the fiscal year ended June 30, 2021 — a short form report that provides summarized information about the City’s financial activities. It is intended to give readers an overview of the City and its finances. The PAFR provides a picture of the City’s general financial condition, including a brief analysis of where the City’s revenues come from and where those dollars are spent. Every year the City of Virginia Beach is required to produce an Annual Comprehensive Financial Report (ACFR) that provides detailed information about the City’s financial position. It is prepared in conformance with Generally Accepted Accounting Principles (GAAP). The ACFR provides detailed information and includes an audit from an independent firm of licensed certified public accountants. The information in this report is derived from the FY2021 ACFR; however, while this report provides a summary of financial information for the City and School Board, it does not provide detailed information on all the City’s funds, the Community Development component unit, or all the necessary financial statements and note disclosures as required by GAAP. For purposes of this report, the term “Citywide” refers to activities of both the City and the School Board. To view the ACFR in its entirety, visit www.VBgov.com/Finance. 4 PAFR FY2021 Outstanding Achievement in PAFR Reporting The Award for Outstanding Achievement in Popular Annual Financial Reporting is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government popluar reports. In order to receive an Award for Oustanding Achievement in Popular Annual Financial Reporting, a government unit must publish a Popular Annual Financial Report, whose contents conform to program standards of creativity, presentation, understandability, and reader appeal. An Award for Outstanding Achievement in Popular Annual Financial Reporting is valid for a period of one year only. The City has submitted its PAFR for FY2020 and expects to be receiving an Award for Outstanding Achievement in Popular Annual Financial Reporting as we have for the previous two fiscal years. We believe our current report continues to conform to the Popular Annual Financial Reporting requirements, and we are submitting it to GFOA to determine its eligilibilty for another award. DEPARTMENT OF FINANCE The Annual Comprehensive Financial Report (ACFR), one of the supporting documents for this report, also represents award-winning work, having received the GFOA’s Certificate of Achievement for Excellence in Financial Reporting for the 42nd time. 42 years PAFR FY2021 5 VIRGINIA BEACH Formed January 1, 1963 Largest city in Virginia 44th largest city in the country (by population) Comprised of roughly 260 sq. miles of land and 51 sq. miles of water Demographics: Population 459,470 Median Age 36.6 Income Per Capita $60,397 Education: High School Degree 18.7% Some College 25.0% Associates Degree 12.2% Bachelors Degree 22.9% Graduate Degree + 15.3% Top 10 Employers 1. City of Virginia Beach/ Schools 2. Naval Air Station Oceana 3. Joint Expeditionary Base Little Creek/ Ft. Story 4. Sentara Healthcare 5. GEICO General Insurance Company 6. Lynnhaven Mall 7. Gold Key/PHR Hotels and Resorts 8. STIHL Inc. 9. Amerigroup (Anthem) 10. Navy Exchange Service Command VIRGINIA BEACH 6 PAFR FY2021 BY THE NUMBERS POLICE 150,674 calls for service 4 stations 228 marked police vehicles 2 helicopters 9 boats FIRE 403 structure fire incidents 447 non-structure fire incidents 26,614 medical assisted incidents 15,475 other incidents 20 stations 60 fire trucks EMERGENCY MEDICAL SERVICES 49,254 calls for service 17 stations 37 ambulances 56 career captains and paramedics 965 volunteers 370,589 volunteers HUMAN SERVICES 3,245 individuals served by behavioral health emergency services* 21,095 households participating in SNAP 613 cases opened in the temporary assistance for needy families program CULTURE AND RECREATION 10 public libraries 5 golf courses (City owned) 7 recreation centers 563,638 visits to recreation centers PUBLIC WORKS 49,301 street lights 4,959 miles of streets 90 collection trucks 148,000 tons of garbage collected EDUCATION 55 elementary schools 25 secondary schools 7 specialty schools 63,452 students enrolled PAFR FY2021 7 *FY2021 data not yet available CITYWIDE REVENUE Citywide revenues were $2.2B, which is $141M above the revenues from the prior year. There were increases in: Real estate and personal property taxes; hotel, meal, and sales taxes; and taxes on deeds and wills. $43MOther$54MBusiness Licenses $46MUtility $112MHotel and Meal $80MGeneral Sales $140M Personal Property $639MReal Estate57% 17%Other General Revenue Charges for Services 14% Capital and Operating Grants 19% 50% Taxes $2.2BillionREVENUE 8 PAFR FY2021 CITYWIDE REVENUE AND EXPENSES The City’s total financial activities are made up of two broad classifications: Governmental and Business-type activities. Additionally, there are two main sources of revenues: Program Revenues and General Revenues. Program Revenues include charges for services and program specific grants and contributions. General Revenues include property and other taxes, and other non-program specific revenue. Revenue for the City in FY2021 totaled $1.7B, an increase of $105M compared to FY2020. Total expenses for the City were $1.6B in FY2021, an increase of $69M compared to FY2020. CITY Governmental Business-Type School Total Total Total REVENUES Activities Activities Board FY2021 FY2020 FY2019 Program Revenues $ 319 $ 225 $ 205 $ 749 $ 741 $ 732 General Revenues 1,185 7 289 1,481 1,348 1,363 Total Revenues 1,504 232 494 2,230 2,089 2,095 EXPENSES General Government 777 - - 777 708 697 Education 394 - 882 1,276 1,379 1,229 Public Safety 203 - - 203 162 178 Water & Sewer - 128 - 128 123 140 Stormwater - 28 - 28 33 38 Waste Management - 40 - 40 35 35 Other 27 18 - 45 40 41 Total Expenses 1,401 214 882 2,497 2,480 2,358 Transfers in (out) (25) 25 417 417 528 402 Increase (decrease) 78 43 29 150 137 139 Net Position – Beginning 2,648 1,232 (81) 3,799 3,657 3,518 Net Position – Restatement Adjustment* 5 Net Position – Ending $ 2,726 $ 1,275 $ (52) $ 3,949 $ 3,799 $ 3,657 PAFR FY2021 9 STATEMENT OF CHANGES IN NET POSITION AS OF JUNE 30, 2021 (IN MILLIONS) * Due to the implementation of GASB 84 CITYWIDE NET POSITION The City issues government-wide financial statements in its ACFR. These statements are designed to provide readers with a broad overview of the City. Included in this report is a “Statement of Net Position.” This statement defines net position as the difference between all assets and all liabilities. FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 NET POSITION IN BILLIONS CITYWIDE NET POSITION 4.0 3.8 3.7 3.5 3.6 3.5 3.3 3.1 • Net Position is the difference between what the City owns and what it owes. • Positive net position balances are one indicator of financial stability. • The City implemented GASB 68 in FY2014, which required the net pension liability to be recorded. In FY2018 the City implemented GASB 75, which required the net Other Postemployment Benefit liability to be recorded. • The key consideration in analyzing net position is not the amount itself, but rather the direction and speed at which it is increasing or decreasing. Net Investment in Capital Assets Amount invested in capital assets less accumulated depreciation and outstanding balance of any debt used for construction or acquisition of the assets. Unrestricted Net Position Remaining amounts that can be used to meet the City’s ongoing obligation to various different creditors. Restricted Net Position Amounts that have legal restrictions on how these resources may be used. Net Position is broken down into three major categories 10 PAFR FY2021 CITYWIDE NET POSITION CITY Governmental Business-Type School Total Total Total Activities Activities Board FY2021 FY2020 FY2019 Current Assets $ 993 $ 466 $ 301 $ 1,760 $ 1,530 $ 1,322 Capital Assets 3,427 1,314 598 5,339 5,263 5,150 Deferred Outflows 178 16 214 408 311 189 Total Assets and Deferred Outflows 4,598 1,796 1,113 7,507 7,104 6,661 Other Liabilities 131 25 119 275 200 232 Long-Term Liabilities 1,703 492 958 3,153 2,957 2,656 Deferred Inflows 38 4 88 130 148 115 Total Liabilities and Deferred Inflows 1,872 521 1,165 3,558 3,305 3,003 Net Investment in Capital Assets 2,394 874 598 3,866 3,822 3,896 Restricted 78 28 25 131 150 114 Unrestricted 254 373 (675) (48) (173) (353) Total Net Position $ 2,726 $ 1,275 $ (52) $ 3,949 $ 3,799 $ 3,657 STATEMENT OF NET POSITION AS OF JUNE 30, 2021 (IN MILLIONS) PAFR FY2021 11 CITYWIDE LONG-TERM LIABILITIES CITY LONG-TERM LIABILITIES Governmental Business-Type School Total Total Total (IN MILLIONS) Activities Activities Board FY2021 FY2020 FY2019 General Obligation Bonds $ 523 $ - $ - $ 523 $ 580 $ 542 State Literary Fund Loans - - - - 1 1 Public Facility Revenue Bonds 341 43 - 384 417 297 Revenue Bonds - 349 - 349 250 263 Agriculture Reserve Program 51 - - 51 48 48 Landfill Closure and Post-closure Care 22 - - 22 21 21 Premium/Discount on Bonds Sold 106 45 - 151 136 100 Net Pension Liability 479 46 749 1,274 1,097 957 Net OPEB Liability 89 5 148 242 257 285 Accrued Compensated Leave 46 4 43 93 89 83 Estimated Claims and Judgments 46 - 18 64 61 59 Total $ 1,703 $ 492 $ 958 $ 3,153 $ 2,957 $ 2,656 At the end of FY2021, the City had $1.3B in bonds and notes outstanding and $886.7M in other liabilities, for a total of $2.2B, a net increase of $123.6M due primarily from the issuance of Storm Water and Water & Sewer Revenue Bonds of $188.3M. For the 12th consecutive year, all three major rating agencies — Standard & Poor’s, Moody’s Investors Service and Fitch Ratings — affirmed the City’s Triple-A Ratings on its general obligation bonds. 12 PAFR FY2021 CITYWIDE LONG-TERM LIABILITIES Debt Management Policies The City has conservative fiscal policies, especially in terms of debt. The State Constitution limits the amount of general obligation debt a governmental entity may issue to 10% of the total assessed value of taxable real property. At the end of the fiscal year, the City’s assessed value of real property was $62.5B, which makes the City’s debt less than the current debt limitation of $6.3B. Below are the debt management policies adopted by City Council: Established As of Ratio Description Guidelines June 30, 2021 Annual debt service to No greater 7.4% general government expenditures than 10% Overall net debts to estimated No greater 1.4% full value of taxable property than 3.5% Overall net debt per capita No greater $1,975 than $3,000 Overall net debt per capita No greater 3.2% to per capita income than 6.5% PAFR FY2021 13 GENERAL FUND The General Fund is the largest of the City’s 32 funds and provides funding for the daily operations and services of the City. It supports day-to-day operations for many of the core services of the City, including public safety, human services, education, and general government. 21% Sales, Utility, Business License & Other Taxes 3%Permits, Fees, Fines & Other From Commonwealth 13% From Federal Government2% Charges for Services 4% WHERE THE MONEY COMES FROM Property Taxes 57% General Fund revenues of $1.243B were 4.6% ($54.8M) over budget and increased 4.1% ($48.9M) from the prior year. WHERE THE MONEY GOES Expenditures of $1.2B were 9.3% ($154.7M) under budget, an increase of 7.2% (80.4M) from the prior year. A significant part of the General Funds revenues is used to finance the operations of the Virginia Beach School Board. Education35% 7% Public Works 10% Human Services Debt Service 5% Transfers to Other Funds12%General Government 19% 8%Police 4%Fire 14 PAFR FY2021 • Nonspendable • Not in spendable form • Legally or contractually required to stay intact • Restricted • Externally imposed by creditors, grantors, or City Ordinances • Committed • Must be used for specific purposes imposed by formal action of City Council • May be redeployed for other purposes with appropriate due process • Assigned • To be used for specific purposes and do not meet criteria to be classified as restricted or committed • Unassigned • Residual, spendable amounts not contained in other classifications GENERAL FUND The total fund balance for FY2021 was $349M, the highest in the City’s history, which includes $334M in unrestricted and unassigned and $15M in restricted fund balance. Unassigned fund balance for the General Fund was 10.25% ($111M) of next year’s budgeted revenues. This was well within City Council’s policy of 8-12%. FY2014 UNASSIGNED FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FUND BALANCE IN MILLIONS GENERAL FUND — FUND BALANCE 349 306 231230218 186164172 UNRESTRICTED RESTRICTED PAFR FY2021 15 PRIORITIES AND GOALS To ensure Virginia Beach remains a preferred coastal city to attract residents, businesses and visitors, the City tries to balance its efforts and use of resources to sustain the important components that make the City livable and successful. The City’s Strategic Plan provides a solid foundation on which the City will continue to build an intentional and prosperous future in these areas: • 21st Century Infrastructure • Safe and Healthy Communities • Growing Economic Opportunity • Thriving Neighborhoods • Innovative and Sustainable Government CITY OF VIRGINIA BEACHSTRATEGIC PLAN TWO-YEAR PLAN: FY22–23 16 PAFR FY2021 YEAR IN REVIEW PAFR FY2021 17 Culture of Service More than 9,000 City volunteers served 777,784 hours, which equates to $22,197,973, or 3.69¢ saved on the real estate tax rate. More Heads in Beds According to Smith Travel Research (a tourism data company), the Virginia Beach market was one of only two of the nation’s top tourism markets that saw increased profit margins from revenue per available room. A Complete 360 After two years of construction, the new 30,000 sq. ft. Woodstock Skate Park, built over a 5.2M-gallon wet weather offline storage tank, opened to the public in June 2021. Shots in Arms More than 1,130 employee volunteers from 22 departments across the City worked together to help deliver COVID-19 vaccines to 60,285 people at the Virginia Beach Convention Center Mass Vaccination Clinic held January – April 2021. Biomedical and Life Sciences Hub The City opened the Virginia Beach Bio Accelerator, a 5,700- sq.-ft. facility space for shared labs, conference rooms and offices, available to international and domestic start-ups and growing companies. Helping Marine Animals The Virginia Aquarium Darden Marine Animal Conservation Center opened in May 2021, allowing the Stranding Response Team to conduct aquatic animal collection and quarantine, marine mammal and sea turtle stranding response, and marine animal research. Since its opening, the Center aided 40 stranded sea turtles. 18 PAFR FY2021 YEAR IN REVIEW Safest Large City AdvisorSmith, a resource for business advice and original research, updated its study on “Safest Cities in America.” Their research (using FBI data) identified Virginia Beach as the nation’s safest large city. Best Run City Considering factors such as a City’s credit rating, long- term debt, the quality of schools and graduation rates, health factors, crime rates, the economy, household income, infrastructure and pollution, WalletHub also determined the best run cities in America and Virginia Beach is among the top 10. Watt-Ever Works During FY2021, the City reduced overall energy consumption by 6% and utilization per square foot dropped by 9.9% on buildings with more than 5,000 sq. ft., saving more than $340K. We’re Ready Virginia Beach was recertified as a StormReady®️ community committed to better preparing citizens with education and essential information before, during and after major storms. Surfers Rejoice The City completed construction of public facilities near Rudee Inlet featuring an exterior rinse station, shower stalls with changing stations and surfboard storage. All the Buzz Virginia Beach dedicated a new pollinator garden at Red Wing Park and became an official Bee City USA affiliate, solidifying the City’s commitment to improve the landscape for pollinators. PAFR FY2021 19 YEAR IN REVIEW Virginia Beach Sports Center Crossed the Finish Line On budget and ahead of schedule, the Virginia Beach Sports Center opened Oct. 1, 2020. Construction of the $68M sports center began in August 2018. The 285,000-sq.-ft. facility is the only venue of its kind on the east coast not on a college or university campus. It houses a 200-meter indoor hydraulically banked track, 12 basketball courts that can be converted into 24 volleyball courts, multiple concession areas, digitally enhanced meeting rooms, contemporary event space and seating for up to 5,000. The Virginia Beach Sports Center is located at 1045 19th Street, across from the Virginia Beach Convention Center and less than a mile from the oceanfront. Visit vbsportscenter.com for more information.