HomeMy WebLinkAboutCity of Bentonville - Public Financial Report1
Popular Annual
Financial Report
for the fiscal year ended December 31, 2020
CITY OF BENTONVILLE,
ARKANSAS
2
Table of Contents
Message from the Finance Director and List of Elected Officials……………………………………………..………….. 3
Awards and Recognition……………………………………………………………………………………………………………………… 4
About Bentonville……………………………………………………………………………………………………………………………….. 5
City of Bentonville – Organizational Chart and FTEs.…………………………………………………………………………… 6
Financial Governance………………………………………………………………………………………………………………………….. 7
Financial Highlights – Governmental Funds…………………………………………………………………………………………. 8‐9
Revenues – Where Does the Money Come From?................................................................................... 10
Expenditures – Where Does the Money Go?............................................................................................ 11
Financial Highlights – Enterprise Funds………………………………………………………………………………………………… 12
City of Bentonville’s Outstanding Debt………………………………………………………………………………………………… 13
Bentonville Community Center
3
A MESSAGE FROM THE FINANCE DIRECTOR
To the Citizens of Bentonville:
We are pleased to present the Popular Annual Financial Report
(PAFR) for the City of Bentonville. This report is designed to
provide a better financial understanding of our city government,
local economic conditions, and where our financial position
stands. This report is presented in accordance with guidelines
from the Government Finance Officers Association (GFOA) and
was prepared based using information for the fiscal year ended
on December 31, 2020. According to the GFOA:
“The GFOA established the Popular Annual Financial
Reporting Awards Program (PAFR Program) in 1991 to
encourage and assist state and local governments to extract
information from their annual comprehensive financial report to
produce high quality popular annual financial reports specifically
designed to be readily accessible and easily understandable to
the general public and other interested parties without a
background in public finance and then to recognize individual
governments that are successful in achieving that goal.”
The PAFR contains highlights from the City’s 2020 Annual
Comprehensive Financial Report (ACFR), which is a more
detailed, audited document. The PAFR and ACFR are prepared
in accordance with Generally Accepted Accounting Principles
(GAAP). Copies of both reports are available by visiting the City’s
website at bentonvillear.com.
The City of Bentonville continues our commitment of providing
financial information to the public. In addition to the PAFR, this
commitment includes:
Online publication of our Annual Budget and
participation in the GFOA Distinguished Budget
Presentation Award Program
Online publication of our Financial Annual Report and
participation in the GFOA Certificate of Achievement for
Excellence in Financial Reporting Program.
Online publication of our Monthly Budgetary
Comparison reports
Multiple presentations to City Council and the Public
regarding financial information and results throughout
the year
Sincerely,
Jake Harper, CPA
Finance Director
City of Bentonville
Elected Officials
Stephanie Orman
Mayor
Email: sorman@bentonvillear.com
Tim Robinson
Council Member
Ward 1, Position 1
Email: trobinson@bentonvillear.com
Gayatri Agnew
Council Member
Ward 1, Position 2
Email: gagnew@bentonvillear.com
Cindy Acree
Council Member
Ward 2, Position 1
Email: cacree@bentonvillear.com
Chris Sooter
Council Member
Ward 2, Position 2
Email: csooter@bentonvillear.com
Aubrey Patterson
Council Member
Ward 3, Position 1
Email: apatterson@bentonvillear.com
Bill Burckart
Council Member
Ward 3, Position 2
Email: bburckart@bentonvillear.com
Octavio Sanchez
Council Member
Ward 4, Position 1
Email: osanchez@bentonvillear.com
Holly Hook
Council Member
Ward 4, Position 2
Email: hhook@bentonvillear.com
4
jharper@bentonvillear.co
m
Awards and Recognition
Popular Annual Financial Reporting Award
The City of Bentonville’s Popular Annual Financial Report (PAFR) has
won the Government Finance Officers Association of the United
States and Canada (GFOA) Award for Outstanding Achievement in
Popular Annual Financial Reporting for the first time last year. This
award is a prestigious national award recognizing conformance with
the highest standards for preparation of state and local government
popular reports.
In order to receive an Award for Outstanding 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 one year only. 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
eligibility for another award.
GFOA Triple Crown
In addition to the PAFR award, the City of
Bentonville has received a Triple Crown
medallion from the Government Finance
Officers Association of the United States of
America and Canada (GFOA). This signifies that
the City has received all three GFOA awards
(the Certificate of Achievement for Excellence
in Financial Reporting Award, Distinguished
Budget Presentation Award, and Popular
Annual Financial Reporting Award) for fiscal
year ending 2019.
5
About Bentonville History
In November 1837, a site was designated as the
county seat for Benton County. This site was named
in honor of Senator Thomas Hart Benton of
Missouri, who worked to have Arkansas admitted as
a state. Bentonville was named after the county and
became the county seat. Bentonville was
incorporated as a town in January 1873. By 1900,
Bentonville had a city‐owned light and water plant
and was working on a sewer program. There was
also a telephone company and school system.
Bentonville, once primarily an agricultural
community, has grown into a thriving business and
tourist community. In May of 1950, Sam Walton
opened Walton’s 5 and 10 store on the Bentonville
Square. Now Walmart is the number one retailer in
the country with significant positioning
internationally.
The U.S. Census Bureau has recognized the City of
Bentonville as the 5th fastest growing large city in
the United States in May 2020. With ongoing
announcements of a variety of new housing options
and businesses along with an inspiring
entrepreneurial spirit, a focus on expansive trail
systems, and beautiful trees and natural open
spaces for all to enjoy, the City continues to receive
awards and recognition as one of the best places in
the United States to live, work, and play.
Location ‐ Northwest corner of Arkansas. The
City is part of the Northwest Arkansas Metro
Area, made up of 4 cities (Fayetteville, Springdale,
Rogers, and Bentonville). The City is the county
seat for Benton County and is located
approximately 180 miles from Little Rock.
Form of City Government – Mayor‐Council
Size/Population – 31.5 square miles; 54,164
residents (2020 – U.S. Census Bureau)
Demographics – Median age 32.5; Median
household income $80,392; Median housing value
$232,600; Average household size 2.67%
Unemployment Rate – 3.50% for the
metropolitan area of Northwest Arkansas. This
compares favorably to the state’s average
unemployment rate of 4.9% and the national
average of 6.7%.
Top Five Employers – Walmart/Sam’s Club;
Mercy Health System of Northwest Arkansas;
Bentonville School District; Northwest Arkansas
Community College; Benton County
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City of Bentonville – Organizational Chart and FTEs
Citizens
City Clerk
Water Utilities
Information Technology Human Resources Fire
Department
Transportation
& Streets Electric Water
Community Relations
and Economic Dev Finance Fire Transportation
District Court
Mayor's
Office
Public Works
Maintenance
Parks and Recreation Accounting &
Purchasing
Building
Inspection Airport Inventory Wastewater
Electric Utilities
Staff Attorney
Police
MayorCity AttorneyCity Council
Boards and Commisions
Public Library
Community
Development Utility Billing Engineering
Organizational Chart
Full‐Time Equivalent City Employees by
Function
General Government 75.5
Public Safety 229
Recreation 100.5
Street Department 25
Library 24
Total 454
Business‐Type Activities
Electric 49
Water 45
Wastewater 22
Suuport 22
Total 138
Total Primary Governments 592
Governmental Activities
As of December 31, 2020
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Financial Governance
•Budget
•Internal Review
•External Review
(Audit)
•Receipt of Money
•Disbursement of
Money
•Financial Reports to
Show Completion or
Progress
•
•YOU! ‐
Citizens/Taxpayers of
Bentonville
•Employees of the City
of Bentonville
•State Government
•Federal Government
•City Ordinances and
Resolutions
•Arkansas State Code
•Federal Requirements
•Generally Accepted
Accounting Principles
(GAAP)
•Governmental Accounting
Standards Board (GASB)What guides
our
accounting
practices?
Who are we
accountable
to?
How do we
stay
accountable?
What are we
accountable
for?
Budget
Prepared Annually
Approved by City Council
Reviewed periodically for
progress
Internal
Review
Reconciliations
*Example ‐Compare bank
statements to computer
records
Records Review
* Consistenly review
payroll records and cash
payment records
Review of Processes
* Make sure processes are
working correctly
*Ensure proper internal
controls
*Drive processes
improvement
External
Review
(Audit)
Audits are required by
both State and Federal
Law
Performed annually by
outside CPA firm
8
Over time, increases or decreases in the City’s net
position may be an indicator of whether the
financial situation of the City is improving or
deteriorating.
The City of Bentonville’s overall net position
increased 8.4% or $26 million from the prior
fiscal year. The three components of net position
are:
NET INVESTMENT IN CAPITAL ASSETS
The most significant portion of net position (83%
or $279 million) is invested in capital assets.
Bentonville uses these capital assets to provide a
variety of public goods and services to its citizens
(i.e. ‐ street construction, park improvements,
etc.). For that reason, these assets are not
available for future spending. Bentonville’s
investment in capital assets is reported net of
related debt.
RESTRICTED NET POSITION
This portion of net position (8% or $26 million) is
restricted, representing funds that are limited to
construction activities, payment of debt or
specific programs by law (i.e. – street projects
paid with bond funds, grant monies received to
fund special City projects, etc.).
UNRESTRICTED NET POSITION
The remaining portion of net position (9% or $30
million) is unrestricted, representing resources
which are available for services.
Statement of Net Position
The statement of net position presents all the City of Bentonville’s assets,
deferred outflows of resources, liabilities and deferred inflow of resources,
with the difference reported as the net position.
Bentonville’s fiscal year runs January 1 to December 31. The City’s
statement of net position and statement of activities for fiscal years ending
December 31, 2018‐2020 are shown in the charts below.
2018 2019 2020
Revenues 76,572,832 87,327,266 95,097,514
Less: Expenses 56,648,619 63,720,079 68,055,683
Transfers (121,350) ‐ (951,000)
INCREASE (DECREASE) IN NET
POSITION 19,802,863$ 23,607,187$ 26,090,831$
Net Position, Beginning of Year 268,841,989 285,824,236 309,431,423
Prior Period Restatement (2,820,616) *‐ ‐
Net Position After Restatement
Year Restated 266,021,373 285,824,236 309,431,423
NET POSITION, END OF YEAR 285,824,236$ 309,431,423$ 335,522,254$
Activities/Changes in Net Position
ASSETS 2018 2019 2020
Current and Other Assets 114,854,657 121,175,808 124,769,213
Capital Assets 259,746,630 270,754,848 289,101,845
TOTAL ASSETS 374,601,287$ 391,930,656$ 413,871,058$
Deferred Outflows of
Resources 11,673,374 15,034,020 12,867,143
LIABILITIES
Long‐Term Liabilities 81,838,291 78,537,719 65,179,636
Other Liabilities 16,574,849 17,879,195 21,580,492
TOTAL LIABILITIES 98,413,140$ 96,416,914$ 86,760,128$
Deferred Inflows of
Resources 2,037,285 1,116,339 4,455,822
Net Investment in
Capital Assets 232,185,202 252,689,293 279,366,430
Restricted 20,794,051 21,881,884 26,232,902
Unrestricted 32,844,983 34,860,246 29,922,922
TOTAL NET POSITION 285,824,236$ 309,431,423$ 335,522,254$
NET POSITION
*Restatement due to implementation of GASB Statement No. 75, Accounting
and Financial Reporting for Postemployment Benefits other than pensions.
FY 2020
Net Position $335,522,254
Financial Highlights –
Governmental Funds
9
Financial Highlights –
Governmental Funds
REVENUES 2018 2019 2020
Property tax 8,277,403 8,973,078 9,530,177
Sales tax 35,758,719 39,654,947 43,279,794
State turnback 3,843,744 4,007,424 4,155,203
Impact fees 2,391,272 4,119,459 2,858,636
Franchise taxes 5,653,246 5,368,133 5,506,867
Charges for services 6,099,014 6,459,222 3,916,496
Fines and forfeitures 495,928 488,999 388,542
Licenses and permits 1,752,257 1,819,605 1,960,842
Grants 4,214,651 2,662,127 7,352,436
Contributions 1,126,912 280,763 462,068
Interest 820,608 1,178,951 539,721
Investment income ‐ ‐ 195,681
Miscellaneous 816,284 1,282,201 1,903,661
TOTAL REVENUES $71,250,038 $76,294,909 $82,050,124
EXPENDITURES
General government 6,833,349 7,515,045 8,682,730
Public safety 20,392,788 21,730,128 24,418,096
Recreation 8,507,693 9,582,308 9,077,193
Street Department 2,665,820 2,520,796 3,970,303
Library 1,449,844 1,609,734 1,777,953
CDBG 184 ‐ ‐
Capital outlay 19,995,607 18,172,104 18,989,724
Debt service
Principal 9,121,951 11,505,000 11,535,000
Interest 2,285,210 1,929,130 1,464,550
TOTAL EXPENDITURES $71,252,446 $74,564,245 $79,915,549
Sale of capital assets 39,540 3,769,638 20,025
Transfers in 1,186,184 5,521,936 791,518
Transfers out (1,307,534) (5,521,936) (1,742,518)
NET CHANGE IN FUND BALANCES ($84,218) $5,500,302 $1,203,600
Fund Balances, Beginning of Year 95,469,699 95,385,481 100,885,783
FUND BALANCES, END OF YEAR $95,385,481 $100,885,783 $102,089,383
OTHER FINANCING SOURCES (USES)
Financial Activity Statement for Years Ended December 31
Governmental funds are used to account
for tax‐supported activities. Bentonville’s
governmental funds include the General
Fund, Street Fund, Capital Project Fund,
Debt Service Fund, and other Nonmajor
Governmental Funds.
The City’s basic services, including police
and fire protection, parks and recreation,
streets, community and economic
development services, maintenance and
capital improvements are accounted for in
these funds.
In 2020, revenues related to property taxes,
sales tax, state turnback, charges for
services increased due to growth in the City
as people are moving to Northwest
Arkansas (see page 10 for more revenue
details).
Public safety expenditures included the
purchase of a new fire truck and two
ambulances. In addition, the increase in the
Street Department expenditures is mainly
due to the replacement of two dump trucks
(see page 11 for more expenditure details).
Nonspendable
Prepaid expenditures 299,560
Restricted
Debt service 7,956,798
General capital improvements 21,005,117
New growth 7,142,595
Street improvements 6,111,298
Other 86,016
Unassigned 59,487,999
TOTAL FUND BALANCE 102,089,383
FUND BALANCE BREAKDOWN
AS OF DECEMBER 31, 2020
10
Revenues – Where Does the Money Come From?
Sales Taxes
$43.3M
52.7%
Property Taxes
$9.5M
11.6%
Intergovernmental
Revenues
$7.4M
9.0%
Franchise Taxes
$5.5M
6.7%
State Turnback
$4.2M
5.1%
Charges for Services
$3.9M
4.8%
Special Assessments
and Fines
$3.2M
4.0%
Other Income
$3.1M
4.3%
Licenses and Permits
$2.0M
2.4%
Funding for the services provided to
residents comes from many sources. In
2020, the City’s general governmental
revenues totaled $82,050,124. The largest
category of revenue is sales taxes (52.7% or
$43.3 million) has increased primarily due
to the growth in the City as more people
move to this area. The most significant
decrease was in charges for services (4.8%
or $3.9 million) due to activities within
different departments being canceled
because of the COVID‐19 pandemic.
Below are brief descriptions of The City’s
revenue sources:
Property Taxes are levied on the assessed value of all real property
and certain personal property located within the City.
Sales Taxes are taxes paid to a governing body for the sales of certain
goods and services. The City charges a local sales tax of 2% on most of
the goods/services purchased within the City. This tax is in addition to
the State of Arkansas rate of 6.5% and the Benton County rate of 1%,
for a total sales tax rate of 9.5%.
State Turnback funds are a portion of revenues the City receives from
the State of Arkansas highway funds.
Special Assessments and Fines includes impact and capacity fees,
court fines, warrant fines, etc.
Franchise Taxes includes revenue received from utility
(telecommunications) companies for the right to operate within the
City. The City owned utilities also pay the franchise fees and each
utility (Electric, Water, and Wastewater) has their rate set at 5%.
Charges for Services includes revenues received from services and/or
programs provided by the City such as recreation programs.
Licenses and Permits includes revenues from building permits,
business licenses, and liquor licenses. This revenue category has
increased over the last three years due to growth in new home and
residential construction.
Intergovernmental Revenues includes payments and grants from
Federal, State, and county governments.
Other Income includes interest and investment income, contributions,
and various other miscellaneous income.
Retail Trade $3,369,875
Wholesale Trade $2,810,524
Accommodation and Food Services
$1,574,228
Real Estate/Rental/Leasing $1,567,712
Manufacturing $838,260
TOP 5 SALES TAX CATEGORIES
(per $.01 of City Sales Tax)
11
Expenditures – Where Does the Money Go?
The City is organized into various departments and functions to
provide services to its businesses, citizens, and visitors.
General government includes expenditures for administrative
departments of the City, such as Mayor and City Council, Human
Resources, Accounting and Finance, Legal, and Information
Technology.
Public safety expenditures are related to providing Police and Fire
services and protection.
Recreation includes program administration and facility
maintenance for the community center and parks.
Street Department expenditures are associated with the
maintenance of streets, keeping the streets passable in inclement
weather and keeping them clean.
Library expenditures help to engage our community, encourage
discovery and promote literacy by offering lifelong learning
opportunities.
Capital outlay expenditures are related to construction of capital
projects within the City, such as streets, building and parks
improvements.
Debt service expenditures include principal and interest payments
on general and special obligation debts (see page 13 for more
information).
The City provides a full range of
services, including police and fire
protection, and recreational
activities and facilities. The City is
also responsible for the
maintenance of streets, parks,
cemetery, and other amenities.
General Governmental
Expenditures do not include
expenditures for the City’s electric,
water, wastewater, and sanitation
funds.
Summary of the Governmental Fund Expenditures
12
Enterprise funds are used to report the same
functions presented as business‐type activities in the
government‐wide financial statements. These funds,
in general, charge customers for services provided.
The business‐type activities of the City include
Electric, Water, Wastewater, Sanitation, and related
support departments which comprise the Utility Fund.
Utility Fund Revenues
In FY 2020, revenue for the business‐type activities
totaled $102.8 million. Charges for services were the
largest revenue source for these operations, representing
94.7% of business‐type activity revenues. Capital grants
and contributions accounted for 4.1% of revenues with
other general revenues representing 1.2%.
Financial Highlights –
Enterprise Funds
Electric
$68.9M
67.0%
Sanitation
$5.8M
5.7%
Water
$12.7M
12.3%
Utility Billing
& Meter
$0.7M
0.7%Wastewater
$14.7M
14.3%
$59.7M
$15.0M
$10.1M
$5.4M
$3.5M
$0.0M $10.0M $20.0M $30.0M $40.0M $50.0M $60.0M
Electric
Water
Wastewater
Sanitation
Utility Billing & Meter
Utility Fund
FY 2020 Departmental Expenditures
City of Bentonville’s Utility Meter Count
Wastewater
18,081
Water
18,011
Water ‐Irrigation
Meters 3,571
Electric
23,448
13
City of Bentonville’s Outstanding Debt
How Much Does the City Owe?
The City had $33,310,301 in revenue bonds
outstanding as of December 31, 2020, which is
a decrease of $12,683,310 from the previous
year. The decrease was due to the regularly
scheduled principal reductions on the
outstanding debt. In June 2021, pursuant to the
issuance of the City’s 2021 Sales and Use Tax
bonds, the City received a bond rating of AA‐ by
Standard & Poor’s. This level of bond rating
shows that the City has a very strong capacity
to meet financial commitments which helps to
allow borrowing at favorable interest rates,
therefore reducing costs for the City and its
taxpayers.
The table above shows the General Obligation bonds which were issued for the Governmental Activities funds. These bonds
are backed by the credit and taxing power of the City and has the lowest interest rates and requires a public vote to issue.
They were issued for the purposes of street construction, parks and recreation capital, police and fire capital, and the
municipal airport. These bonds are secured by a pledge of, and are payable from, the capital tax.
The table above shows the Revenue bonds which were issued for the Business Type Activities funds. These bonds are secured
by future income streams, such as utility revenues. They were issued for the purpose of acquiring, constructing, equipping,
renovating, expanding, and refurbishing additions and improvements to the City’s electric, water, and sewer system.
$5.4M
$27.2M
$0.0M
$5.0M
$10.0M
$15.0M
$20.0M
$25.0M
$30.0M
$35.0M
City of Bentonville's Long‐term Debt
Business Type Activities Governmental Activities
Governmental Activities – Long‐term Debt Obligations
Interest Rates Final Maturity Date
Principal at
December 31, 2020
Sales and Use Tax bonds, Series 2009 4.00%–5.00% 2027 7,265,000$
Sales and Use Tax bonds, Series 2010 2.00%–4.00% 2027 6,830,000$
Sales and Use Tax bonds, Series 2017 2.00%–5.00% 2027 13,105,000$
Governmental Activities Total Bonds 27,200,000$
Business Type Activities – Long‐term Debt Obligations
Interest Rates Final Maturity Date
Principal at
December 31, 2020
Revenue bonds, Series 2006A 2.50% 2028 3,515,224$
Revenue bonds, Series 2006B 5.20%‐5.90% 2025 923,331$
Revenue bonds, Series 2000 2.75% 2023 870,678$
Revenue bonds, Series 1998 2.75% 2021 50,320$
Business Type Activities Total Bonds 5,359,553$
As of December 31, 2020
14
The City’s website (bentonvillear.com) provides information about City services, community events,
employment opportunities, public safety tips, and much, much more. Residents may also take
advantage of many online services on the website including:
If you have any questions, comments, or suggestions regarding the 2020 Popular Annual Financial
Report, please contact the City of Bentonville Finance Department at (479) 271‐3110.
City of Bentonville, Arkansas
Finance Department
1000 SW 14th Street
Bentonville, AR 72712
Utility Bill Payments
Meeting Agendas and Minutes
Elections Information
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City Budgets and Annual Audit
And Much More…