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HomeMy WebLinkAboutTown of Cornelius - Public Financial Report - 2 - Table of Contents Manager’s Message to Cornelius’ citizens 3 Purpose of this report 4 Awards and Quick Facts 4 City Profile 5 History of Cornelius 5 Budget Process 6 FY2021 Significant Events 7 Principal Taxpayers and Principal Employers 7 General Fund- Revenue and Expenditures 8 Enterprise Fund- Revenue and Expenditures 10 Variances in General and Enterprise Funds 12 Changes in Fund Balance 12 Long-term Debt 13 Award for Outstanding Achievement 14 - 3 - Manager’s Message to the Cornelius’ citizens Dear Cornelius Citizens and Property Owners, Cornelius is a uniquely wonderful community, with a history of progress and passion. Town Staff and I are proud and thankful to serve you. The Town of Cornelius is pleased to present the 2021 Popular Annual Financial Report (PAFR) for the fiscal year ending June 30, 2021. The Town was awarded its fourth Certificate of Achievement for Excellence in Financial Reporting for the 2020 Popular Annual Financial Report (PAFR) by the Government Finance Officers Association (GFOA). Provided in this report are the financial highlights from the fiscal year ending June 30, 2021. The PAFR is designed to provide a summary of the Town’s financial position in a user-friendly format. This report represents an ongoing commitment to keep citizens informed about the Town’s finances. The information in this report comes from the financial statements in the Town’s Annual Comprehensive Financial Report (ACFR), which is prepared in accordance with generally accepted accounting principles (GAAP) and is audited by an independent certified public accounting firm. The PAFR is intended to be a supplement to the ACFR, not a replacement. The ACFR contains more detailed and extensive information. The ACFR is available online at www.cornelius.org/255/Accounting. I hope that you find the PAFR to be informative and understandable. As you review the PAFR, please share any questions, concerns, or recommendations that you may have with Town Staff and I. Citizens like you are what makes Cornelius such a great place to live and work. Respectfully submitted, Andrew Grant Town Manager - 4 - PURPOSE OF THIS REPORT This Popular Annual Financial Report (PAFR) is a summary of the financial activities of the Town’s funds as reported in the 2021 Annual Comprehensive Financial Report (ACFR). The PAFR is a summarized version and highlights the overall financial condition of the Town in the General Fund and Enterprise Fund. This report is a reflection of our effort to keep citizens informed about how your tax dollars are being utilized in a user-friendly manner. Portions of the information in this report are taken from financial statements that are contained in the ACFR, specifically the General Fund and the Enterprise Fund. We hope you find the PAFR to be concise, informative, and user-friendly. This report focuses on the General Fund and the Enterprise Fund. All reports may be viewed on the Town’s website at www.cornelius.org/255/Accounting or copies of these reports may be picked up in the Finance Department. AWARDS • The Town of Cornelius’ Annual Comprehensive Financial Report (ACFR) for the year ended 2020, from which the information on pages 18-116 has been drawn, was awarded the Certificate of Achievement for Excellence in Financial Reporting by Government Finance Officers Association of the United States and Canada (GFOA). The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized ACFR, whose contents conform to program standards. Such an ACFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current ACFR continues to conform to the Certificate of Achievement Program’s requirements, and we are submitting it to GFOA to determine its eligibility for another Certificate. The Town was awarded the Certificate of Achievement for the 11th consecutive year. • Award for Certificate of Achievement for Excellence in Financial Reporting for the 2020 Popular Annual Financial Report (PAFR) for the 4th time. • The Cornelius Police Department is a six-time recipient of the Commission on Accreditation for Law Enforcement Agencies, Incorporated (CALEA). In 2020, Cornelius PD was awarded Accreditation with Excellence. QUICK FACTS Population 31,489 Median Household Income $88,366 Median Household Value $417,175 Sales Tax Rate 7.25% Average High Temperature 70.73˚F Average Low Temperature 47.15˚F Average Precipitation 45.5 inches Land Area 13.07 sq. miles Shoreline ~73.5 miles - 5 - CITY PROFILE The Town of Cornelius has a Council-Manager form of government with a Mayor and five-member Board of Commissioners. The Mayor and Board of Commissioners are elected for two-year terms in November of odd-numbered years, and the election is non- partisan. The Board of Commissioners meet the first and third Mondays of the month beginning at 6:00pm. The administrative operations of the Town are handled by the Town Manager who serves as the Chief Administrative Officer. The Town Manager directs the implementation of policy directives by the Board of Commissioners and oversees all other departments and functions. The Town has 128 authorized full-time positions. The Town averages 30 part-time employees on any given payroll period. MAYOR, BOARD OF COMMISSIONERS, AND TOWN MANAGER IN FY 2021 Woody Washam Mayor Denis Bilodeau Mayor Pro-Tem Jim Duke Commissioner Michael Miltich Commissioner Thurman Ross Commissioner Tricia Sisson Commissioner Andrew Grant Town Manager HISTORY OF CORNELIUS The Town of Cornelius, the second youngest of Mecklenburg County’s six incorporated towns, was founded in 1893 but not incorporated until March 4, 1905. The Town’s origin has been traced by many historians to a dispute over cotton weighing. In the late 1800s, two thriving cotton farms located in Davidson disagreed on whether an official town cotton weigher should be appointed. After a heated election was held and legislation enacted, a town cotton weigher was hired and the firm which opposed the appointment decided to relocate much of its operations just south of the Davidson town limits. Frequently after heavy rains, the road connecting Davidson and Cornelius would become impassable. The hill leading into Davidson would become so muddy that many cotton farmers found it safer and more convenient to conduct their business just south of Davidson in a small frame building. The success of the cotton purchasing business later inspired the owners to construct a cotton mill where raw cotton could be converted into cloth. The owners of the cotton firm lacked the needed money to make the idea of a cotton mill a reality but knew who could provide the financial backing. Joseph Benjamin Cornelius (1833- 1914) supplied the needed investment, and the mill was opened. Although the town was originally incorporated as “Liverpool”, the Town’s name was soon changed to Cornelius to honor J.B. Cornelius who was the principal stockholder in the cotton mill. Perhaps even more influential as the cotton industry was to the Town’s development and growth early in the century, was the damming of the Catawba River to create Lake Norman. In 1963, Duke Power created the largest man-made lake in North Carolina and provided the area with both hydroelectric power and recreational opportunities. The formation of the lake also provided Cornelius with over 73 miles of developable shoreline within the Town’s planning jurisdiction. 6 BUDGET PROCESS The budget is the single most important annual document presented to the Board of Commissioners. The annual budget ordinance sets the tax rate to be levied upon property for the year and describes how those taxes and other revenue will be spent. The budget is primarily intended to establish policy direction, but it also serves the citizens by providing an understanding of the Town’s operating fiscal programs. It reflects the Town’s commitment to maintain necessary services, improving quality of life, and maintaining the tax rate at an appropriate level. The Town of Cornelius, like all local governments throughout North Carolina, prepares, adopts, and administers its budget in accordance with the Local Government Budget and Fiscal Control Act (LGBFCA). This Act establishes responsibilities in the adoption of the budget and, most importantly, requires that the budget be balanced. In other words, the estimated revenues and financing sources must equal the proposed spending. North Carolina local governments operate under a July 1 - June 30 fiscal year. A budget must be adopted by June 30th of each year, or interim provisions must occur. The spending for the upcoming fiscal year is authorized through the Board of Commissioner’s adoption of a budget ordinance. This action authorizes the spending, assures that the budget is balanced, and levies the property tax for that budget year. Additionally, related resolutions or ordinances formally authorize changes to the Town’s Board adopted fee schedule. Amendments to the budget ordinance may occur throughout the year with Town Board approval that could impact planned spending levels. Under North Carolina law, local property taxes may not be changed at any point in the year once adopted without input from the State government or extraordinary circumstances. By law, each year, a public hearing is held by the Board of Commissioners to receive comments from citizens and taxpayers on the recommended budget. That hearing is held after the Town Manager formally presents his recommended budget to the governing body. Throughout the budget review period, copies of the recommended budget are kept on file for public review in the Town Finance Director’s office, with the Town Clerk, and available on the Town’s website. - 7 - SIGNIFICANT EVENTS FOR FY 2021 • The Town of Cornelius Public Works department began the Willow Pond Stream restoration project in the McDowell Creek watershed. The project consists of removing the Willow Pond dam and restoring the stream underneath the pond, restores portions of the reaches upstream and downstream of the current pond. Total restoration of approximately 6,000’. • The Town of Cornelius Parks and Recreation Department began to replace the athletic facility lighting at Bailey Road Park. This project includes replacing all baseball, tennis, soccer, and football lighting with LED lighting and adding basketball court LED lighting. LED lighting saves energy consumption and has a longer life cycle than the typical metal halide. • The Town of Cornelius Parks and Recreation Department began Phase II of the Plum Creek/South Bailey Road Greenway project and Phase III of the McDowell Creek Greenway project. Plum Creek/South Bailey Road Greenway Phase II consists of nearly a 0.4 mile-long, ten-foot-wide paved trail for pedestrians and bicycles. McDowell Creek Greenway Phase III consists of developing a tunnel beneath Westmoreland Road linking Birkdale in Huntersville, NC to Magnolia Plaza. • The Town of Cornelius Fire Department entered into a contract to replace its aging engines with a new engine. The new fire engine will be a Seagrave Pumper Engine, and it is expected to be delivered within 440 days of the signed engineering drawings. PRINCIPAL PROPERTY TAXPAYERS AND PRINCIPAL EMPLOYERS Principal Property Taxpayers Principal Employers In FY 2021 (in order of ranking) In FY 2021 (in order of ranking) WMCI Charlotte III LLC Charlotte Mecklenburg Schools Kings Park LLC Town of Cornelius BBR/ Marina Waterfront LLC The Peninsula Club The Peninsula Club Inc Financial Independence Group Inc. Cornelius Development LLC Lake Norman Chrysler Jeep Dodge Ram Inland Southeast Southlake LLC Modern Nissan of Lake Norman One Norman Square LLC McDonald’s Foamex Innovations Lake Norman Infiniti MW Ark LLC Asset Management Technologies Inc. Gre Jeton LLC VectorVest Inc. - 8 - GENERAL FUND The General Fund is the largest fund for the Town of Cornelius. This fund accounts for all revenue and expenditures associated with local governmental services such as public safety, general government, transportation, cultural and recreational, and environmental protection. For FY2021, the General Fund revenue was $29.5 million, an increase of $1.8 million from FY2020. Property tax revenue was $16.9 million or approximately 57 percent of the total General Fund revenue. The General Fund expenditures were $23 million, an increase of $800,000 from FY2020. Public safety accounted for $10.2 million or 44 percent of the total General Fund expenditures. Public safety includes the Police Department, Animal Control, Fire Department, and Communications. Debt Service accounted for the second highest expenditures in FY2021 with $3.2 million or 14 percent of the total General Fund expenditures Revenues FY2019 FY2020 FY2021 Ad valorem taxes 14,426,414 16,513,048 16,943,009 Other taxes 574,464 430,401 379,149 Interest earnings 375,765 345,864 97,162 Miscellaneous revenues 347,546 681,402 745,730 Shared restricted revenues 2,118,393 1,883,092 1,625,586 Shared unrestricted revenues 7,140,691 7,167,255 7,799,041 Charges for svcs and fees 912,113 717,106 628,877 Debt Issued 1,807,332 - 1,338,000 Total Revenues 27,702,718 27,738,168 29,556,554 Expenditures FY2019 FY2020 FY2021 Governing Board 70,553 69,012 66,077 General Government 1,511,713 1,919,093 1,725,231 General Services 320,989 333,470 322,297 Public Safety 9,354,477 9,276,881 10,154,605 Transportation 2,187,281 1,932,856 1,359,987 Environmental Protection 2,217,711 2,433,882 2,312,798 Economic & Physical Dev. 1,012,389 946,032 984,463 Cultural & Recreational 4,389,785 2,583,545 2,889,085 Debt Service 2,396,778 2,732,374 3,212,360 Total Expenditures 23,461,676 22,227,145 23,026,903 - 9 - Where the money comes from: Property taxes are the largest funding source of general fund revenues at 57% of total Town revenues. Shared unrestricted revenues are the second highest funding source of revenues at 26%. This includes local sales tax, utility franchise tax, food and beverage tax, beer and wine tax, ABC profit distribution, and stormwater fees. Where the money goes: Public Safety accounts for the majority of General Fund expenditures at 44% and consists of police, animal control, communications, and fire. Debt Service accounts for the second highest amount of General Fund expenditures totaling 14%. Economic and Physical Development is made up of Community Planning, Tourism, and Economic Development. 10,154,605 3,212,360 2,889,085 2,312,798 1,725,231 1,359,987 984,463 322,297 66,077 0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 Public Safety Debt Service Cultural & Recreational Environmental Protection General Government Transportation Economic & Physical Dev. General Services Governing Board 2021 EXPENDITURES-GENERAL FUND 16,943,009 7,799,041 1,625,586 1,338,000 745,730 628,877 379,149 97,162 0 5,000,000 10,000,000 15,000,000 20,000,000 Ad valorem taxes Shared unrestricted revenues Shared restricted revenues Debt Issued Miscellaneous revenues Charges for svcs and fees Other taxes Interest earnings 2021 REVENUES-GENERAL FUND - 10 - ENTERPRISE FUND All electric distribution system operations, maintenance, and capital improvements are funded through the Enterprise Fund. The Fund has been managed since FY1998 under a contract with ElectriCities including updated amendments to the original contract and in cooperation with the Town of Huntersville. In FY2021, the Enterprise Fund revenue was approximately $7.6 million which is up 5.2% from FY2020. Total Enterprise Fund expenses were approximately $6.43 million which is up 2.2% from FY2020. Revenues FY2019 FY2020 FY2021 Charges for services 6,747,065 6,466,617 6,493,803 Other Operating 42,558 742,202 1,131,093 Miscellaneous 40,096 15,995 9,728 Interest Earnings 14,626 9,320 435 Totals 6,844,345 7,234,134 7,635,059 Expenses FY2019 FY2020 FY2021 Administration 98,331 155,827 124,105 Operating 1,237,998 1,330,045 1,366,802 Power Purchases 4,524,182 4,610,398 4,675,915 Capital Outlay 469,143 215,663 287,572 Debt Service 26,829 26,428 26,028 Totals 6,356,483 6,338,361 6,480,422 - 11 - Where the money comes from: Charges for service account for the vast majority of the Enterprise Fund revenues at 85%. The remaining revenues are comprised of interest earnings, other operating revenues, and miscellaneous revenues. Other operating revenue is made up of a working capital NCMPA rebate. Where the money goes: Power purchases account for the majority of the Enterprise Fund expenses at 72%. Operating expenses are the second highest at 21%. 6,493,803 1,131,093 9,728 435 - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 Charges for services Other Operating Miscellaneous Interest Earnings 2021 REVENUES-ENTERPRISE FUND 4,675,915 1,366,802 287,572 124,105 26,028 - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 5,000,000 Power Purchases Operating Capital Outlay Administration Debt Service 2021 EXPENSES-ENTERPRISE FUND - 12 - GENERAL FUND VARIANCES: Cultural and Recreational expenditures increased 10.5% in FY2021 over the prior fiscal year due to the reinstatement of programs affected by COVID-19. Public Safety increased 8.6% in FY2021 over the prior fiscal year due to the addition of 6 full-time firefighter positions within Cornelius-Lemley Fire and Rescue. Debt Service expenditures increased 15% in FY2021 over the prior fiscal year due to the purchase of several Police vehicles in FY2020. Sales Tax and Ad Valorem Tax revenues increased in FY2021. Interest earnings, Occupancy Tax, Utility Franchise Tax, and Food and Beverage Tax revenues decreased in FY2021 over the prior fiscal year due to COVID-19. ENTERPRISE FUND VARIANCES: Charges for Services increased slightly in FY2021 by 0.4%. Other Operating revenues increased in FY2021 over the prior fiscal year due to a NCMPA working capital rebate. Administration expenses decreased 25% in FY2021 due to linemen vacancies. Capital outlay increased in FY2021 by 25%. FUND BALANCE The Town will maintain adequate, but not excessive, operating reserves categorized as fund balance. The fund balance is established to provide for any unforeseen revenue losses and to take advantage of unanticipated opportunities. While the fund balance is infrequently appropriated as part of the annual budget, it is utilized to fund capital improvement projects or meet grant matching requirements. The Town will preserve cash reserves to shield against times of economic distress. The Town will utilize both the use of fund balance and pay-as-you-go capital financing as a mechanism to provide for capital projects. The Town will adhere to the Board adopted Fund Balance Policy. The Town shall ensure that the General Fund fund balance is maintained at adequate levels as a percentage of the General Fund budgeted expenditures, which is 40%. Additionally, we will compare favorably to other municipalities within our state population group both in unrestricted fund balance and total fund balance. The Town will seek to preserve, when possible, General Fund fund balance. The Town made a $5 million contribution to the General Fund fund balance and $973,000 contribution to the Electric Fund fund balance in FY2021. General Fund- Total fund balance FY2019 FY2020 FY2021 Beginning General Fund Balance $15,507,182 $16,990,662 $20,801,734 Adjustments to Beginning Fund Balance 0 0 0 Revenues $25,895,386 $27,738,168 $28,218,554 Expenditures ($23,461,676) ($22,227,145) ($23,026,903) Issuance of Debt $1,807,332 0 $1,338,000 Transfers In 0 0 0 Transfers Out ($2,757,562) ($1,699,951) ($1,402,526) Net Change of Fund Balance $1,483,480 $3,811,072 $5,127,125 Ending General Fund Balance $16,990,662 $20,801,734 $25,928,859 - 13 - Enterprise Fund- Total fund balance FY2019 FY2020 FY2021 Beginning Enterprise Fund Balance $8,016,155 $8,452,516 $9,101,990 Adjustments to Beginning Fund Balance 0 0 0 Revenues $6,843,243 $7,233,433 $7,634,759 Expenses ($6,406,882) ($6,583,959) ($6,661,858) Net Change of Fund Balance $436,361 $649,474 $972,901 Ending Enterprise Fund Balance $8,452,516 $9,101,990 $10,074,891 LONG-TERM DEBT As of June 30, 2021, the Town of Cornelius had an outstanding bonded debt of $13,117,984. The remaining debt for the Town is $4,328,545 and consists of installment purchase agreements. Total outstanding debt for the Town is $17,446,529. North Carolina General Statues limit the amount of general obligation debt that a unit of government can issue to 8% of the total assessed value of taxable property within that government’s boundaries. The Town of Cornelius’ assessed value is $7,464,168,311. The debt margin (capacity) for the Town of Cornelius is $597,133,465. - 14 -