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HomeMy WebLinkAboutCity of Holland - Public Financial Report),6&$/<($5 3238/$5$118$/),1$1&,$/5(3257 POPULAR ANNUAL FINANCIAL REPORT Welcome We are pleased to present the City of Holland’s first Popular Annual Financial Report (PAFR) for the year ended June 30, 2021. In alignment with the City’s strategic goal to enhance communications with stakeholders, this report is designed to present City finances in a clear and understandable manner. The unaudited PAFR is a streamlined version of the more detailed Annual Comprehensive Financial Report, commonly known as the audit report. All financial information in this report can be found in greater detail in the complete audit report available online at www.cityofholland.com. The purpose of the PAFR is to help citizens have a better understanding of the City’s resources and how we use them. The financial information presented is consistent with Generally Accepted Accounting Principles, but in a condensed format. The primary focus is the Governmental and Proprietary Funds, excluding the discretely presented component units, internal service funds, and fiduciary funds. The report provides additional detail for the General Fund, which is the main operating fund of the City and highlights some of the major initiatives and capital projects for the City. Thank you for taking time to read this year’s report and become more familiar with your City’s finances. We are proud to serve the residents of the community and hope the information presented provides you with an easy to understand overview of the City’s financial outlook. Best Regards, Keith Van Beek City Manager Vision: The City of Holland is located in Allegan and Ottawa County and is the largest city in both counties. City limits span 17.5 square miles and was incorporated in 1867. According to the 2020 census the population was 34,378. The City of Holland is located 30 miles southwest of Grand Rapids, 186 miles northwest of Detroit and 150 miles northeast of Chicago, Illinois. The City of Holland’s Mission Statement is simply “Maximize Livability”. This is felt throughout the City with the charming and lively downtown district, active neighborhoods, community events, celebration of diversity, safe bike infrastructure and walkability, and the well-maintained parks and open spaces. Innovative snowmelt in downtown sidewalks and roads, covering over 5 miles, helps to keep the central business district vibrant and pedestrian friendly during the winter months. The City also hosts the annual Tulip Time Festival, which is a destination for many visitors. Approximately 550,000 tulips are planted throughout the City each year. The City owns and operates Windmill Island Garden and in 2021 welcomed 131,465 visitors, a new record. A City owned airport facility is leased to an airport authority which includes the City of Holland, City of Zeeland and Park Township. A combined fixed route and personalized bus/van transportation service, which leases the City owned transportation center (depot) also servicing the railroad, is operated and taxed by a separate transportation authority including the City and Holland Charter Township. POPULAR ANNUAL FINANCIAL REPORT City Profile City Snapshot Population (2020 estimate) 34,378 Unemployment Rate 4.9% Median Family Income $57,002 Total Housing Units 12,027 Renter Occupied 38% Construction Permits Issued 732 Fiscal Year 2021 General Fund Budget $24,204,495 Total Taxable Assessed Value $1,261,251,898 City Full Time/Part Time Employees 367/92 City Bond Rating (Moody’s/S&P) Aa2/AA The City’s Strategic and Business Planning process provides overall direction for the City of Holland. The most recent plan was adopted in April 2021 (complete plan is available on the City’s website). The following highlight some of the major initiatives that began, continued or were completed during Fiscal Year 2021, including: POPULAR ANNUAL FINANCIAL REPORT Strategic Initiatives Affordable Housing Affordable housing is a priority for the City. The City participated in several economic development tools designed to incentivize affordable housing projects, including the approval of a brownfield with Lakeshore Habitat for Humanity and Jubilee Ministries to construct new homes. Anaerobic Digester Construction began on a new anaerobic digester in FY 2021. This egg shaped facility will improve disposal of biosolids and is expected to be completed in four to five years. Waterfront Holland The City continues to make progress on the “march to the water”. In FY 2021 the City worked with consultants to solicit qualifications through a RFQ process which will be followed by an RFP process in FY 2022. Sustainability and Energy Conservation The City commissioned a task force to update the Community Energy Plan. The City has made considerable progress towards the initial goal of reducing gas emissions per capita from the baseline 24 metric tons down to no more than 10 by 2050. The task force completed and Council adopted their recommendations in FY 2022. (See complete report on the City’s website) 16th Street —The two mile segment from Lane Avenue to Kollen Park Drive was resurfaced and a large storm sewer culvert that carries the Maplewood Inter-County Drain under 16th Street replaced. Other improvements include a new storm sewer between Central and River Avenue, as well as installation of snowmelt transmission infrastructure within this block. Total project cost was $2,534,908. 20th and 21st Street — Sections of 20th Street and 21st Street were reconstructed by the Holland Board of Public Works and the City of Holland. The project included replacement of utilities, new asphalt pavement, concrete curbs, gutters and sidewalk. The total project cost was $1,280,100. Dog Park—A new dog park was added to the list of City parks in the fall of 2020. The 3 acre park, located on the 24th Street side of Van Raalte Farm, is fenced in for safety. Amenities include drinking fountains for both pets and owners, obstacle courses for the pets, log benches for resting and walking paths. There is also a year round restroom facility and dog washing station on site. Total cost for the park was $537,908. Lakeview Park—The playground equipment was replaced and a poured in place (PIP) safety surface was installed. Donations from the neighborhood families paid for PIP to be installed in place of the commonly used engineered wood fiber. The total project cost was $247,054. City Projects Several infrastructure and municipal capital projects were completed during the fiscal year, including: City functions are divided between two groups of activities: Governmental Activities and Busi- ness-Type Activities. This is required for financial reporting purposes. POPULAR ANNUAL FINANCIAL REPORT City Functions Grant Funds Mayor, Council, Committees City Administration Community & Neighborhood Services Finance/ Treasurer Streets & Engineering Assessing Recreation Planning & Zoning Facilities Snowmelt System Fund Police Permits & Inspections Cemeteries Holland Energy Fund Fire Parks Farmers Market Special Revenue Funds Debt Service Capital Projects Electric Utility Water Utility Wastewater Utility Refuse & Recycling Windmill Island Gardens Fiber Optics Utility Civic Center Place Governmental Activities The City’s basic services are considered to be governmental activities and are primarily funded by taxes. The City Charter requires a Holland Board of Public Works (HBPW) to manage and operate municipally owned utilities, including electric, fiber-optics, water and wastewater. Other business-type activities include the City’s refuse & recycling fund, Windmill Island Gardens and the Civic Center Business-Type The following tables represent condensed forms of the financial statements presented in the complete audit report. The Statement of Net Position (the City’s Balance Sheet) and Statement of Activities (the City’s Income Statement) are divided between governmental and business- type activities to distinguish functions of the City which are principally supported by taxes and intergovernmental revenues (governmental activities) from those functions which are intended to recover all or part of their costs through user fees (business-type). POPULAR ANNUAL FINANCIAL REPORT Financial Highlights Statement of Net Position Government Activities Business-Type Activities Total 2021 2020 2021 2020 2021 2020 Total Assets $191,811,538 $179,196,999 $579,026,234 $654,695,483 $770,837,772 $833,892,482 Total Deferred Outflows 2,613,457 3,672,122 1,192,789 1,557,336 3,806,246 5,229,458 Total Liabilities 67,979,290 71,107,713 77,885,358 193,533,554 145,864,648 264,641,267 Total Deferred Inflows 5,254,592 1,129,376 3,366,980 556,732 8,621,572 1,686,108 Total Net Position $121,191,113 $110,632,032 $498,966,685 $462,162,533 $620,157,798 $572,794,565 Net Position represents the difference between the City’s total assets and total liabilities. Change in the net position serves as a useful indicator of the City’s financial position. The City’s net position at June 30, 2021 totaled $620,157,798, representing an increase of 8.3%. During FY 2021, the electric utility was able to pay off almost $96 million of debt on the energy park. This contributed to the reduction of total liabilities and corresponding increase in total net position. Governmental deferred inflows increased by $4 million which reflects the receipt of the American Rescue Plan Act (ARPA) grant. The City is still awaiting final grant restrictions before designating the use of these funds. Therefore, government accounting rules require this to be recorded as a deferred inflow until the funds are spent. Statement of Activities (Changes in Net Position) Government Activities Business-Type Activities Total 2021 2020 2021 2020 2021 2020 Revenues $40,118,892 $37,299,860 $144,690,781 $134,810,447 $184,809,673 $172,110,307 Expenses 36,930,571 38,994,102 100,515,869 100,096,736 137,446,440 139,090,838 Transfers 7,370,760 7,105,692 (7,370,760) (7,105,692) - - Change in Net Position 10,559,081 5,411,450 36,804,152 27,608,019 47,363,233 33,019,469 Net Position-Beginning 110,632,032 105,220,582 462,162,533 434,554,514 572,794,565 539,775,096 Net Position-Ending $121,191,113 $110,632,032 $498,966,685 $462,162,533 $620,157,798 $572,794,565 Total net position increased by $47,363,233, of which $10,559,081 represents the increase in governmental activities and $36,804,152 represents the business-type activities (primarily utilities). Contributing to the governmental activities was the receipt of over $900,000 of CARES Act grants. POPULAR ANNUAL FINANCIAL REPORT Where the City government money comes from? Total revenue for Governmental Fund equaled $39,814,871. Property taxes account for 34% of revenues and federal/ state contributions (grants, sales tax, personal property tax replacement) account for another 31%. The City received over $900,000 in CARES Act grants which were recorded in FY 2021. Transfers from other funds represents 20% of revenues and is mostly comprised of the dividend from HBPW. Property Tax Your property tax dollars are split between many different local government bodies to provide services you use every day, including schools, libraries, county services and more. The City keeps 33 cents of every dollar to support operations, the remaining 67 cents is paid to the other taxing jurisdictions (Macatawa Area Express Transportation Authority, West Michigan Airport Authority, Herrick District Library, and Holland Area Community Swimming Pool Authority, schools, OAISD). City Millage Rate Taxable value increased 5.3% during FY 2021, reflecting an upward trend in property values. However, Michigan law limits increases in taxable value, primarily to the rate of inflation, or 1.9% for 2021, and therefore, most property owners saw an increase in this range. In addition, the City has maintained the overall millage rate (combined City and Airport) of 13.8682 for the last ten years. 0.0000 2.0000 4.0000 6.0000 8.0000 10.0000 12.0000 14.0000 16.0000 Debt Airport Operating & Capital City of Holland Millage Rate Where are your City government dollars spent? The City of Holland provides a full range of local government services, including police and fire protection, environmental health, housing and building inspections, street construction and maintenance, planning and zoning, recreation programs, several municipal parks, cemetery facilities, an open-air canopied farmers market and various other cultural activities. The Governmental expenses totaled $48,829,310 in FY 2021. Miles of Street: 149 Miles of Streets Resurfaced: 7.2 Streetlights: 2,496 Miles of Watermain: 252 Miles of Storm Sewer: 152 Number of Parks: 23 Recreation Program Participants: 19,622 Police—Arrests: 706 Police—Traffic Violations: 2,279 Fire—Emergency Responses: 3,913 Fire—Medical Emergencies: 2,537 Public Safety Parks & Recreation Public Works POPULAR ANNUAL FINANCIAL REPORT Property Taxes, 38% Licenses & Permits, 5%Charges for Services, 6% Federal/State Contributions, 24% Fines & Fees, 1% Interest & Rents, 2% Transfers from Other Funds, 24% Revenue General Government, 18% Public Safety, 53% Public Works, 6%Welfare & Social Services, 3% Parks & Recreation, 14% Transfers to Other Funds, 6% Expenditures The General Fund is the primary operating fund of the City and accounts for resources used to support core municipal services including police and fire protection, public works, community & neighborhood services, parks and recreation, cemeteries and City administration. The majority of the revenue comes from: property taxes, state shared revenues and an annual transfer from the Electric Utility Fund as authorized by City Charter provisions. Public Safety accounts for 53% of the expenditures, followed by General Government, which includes City Council, the City Manager’s Office, Fiscal Services, Human Resources, the Clerk’s Office and Planning & Zoning. General Fund General Fund Reserves & Future Planning The City has a history of conservative management of finances. The combined General Fund and Budget Stabilization ending unassigned fund balance totaled $7,039,356, or 28.2% of total expenditures and transfers out at June 30, 2021. The reserves along with the City’s commitment to long-term planning enabled the City to carefully respond to the COVID-19 crisis without impacting services to citizens. Looking to the future, the City will continue to focus on the annual adoption of a Strategic and Business Plan and update the annual long-term financial plan. This will especially be instrumental as the City evaluates the potential uses of the American Rescue Plan Act grant funds. Revenue Trends Development interest continues to be strong, contributing to the total property taxable value in the City. However, Michigan law limits the increase in taxable value, generally to the rate of inflation. Federal/state contributions increased in FY 2021 as the City received more than $900,000 in CARES act grants. Also included in this category is state revenue sharing (sales tax, personal property tax replacement) which increased as consumer spending was boosted by the stimulus packages. Finally, permit revenue increased, also driven by the strong interest in development, both commercial and residential. Expenditure Trends Public safety represents 53% of the General Fund budget. The City carefully managed expenditures during FY 2021, given the ongoing pandemic. Total General Fund expenditures were $23,397,403 which was $807,092 less than the final budget as filling certain staffing vacancies were delayed and contractual expenditures came in less than anticipated. POPULAR ANNUAL FINANCIAL REPORT HBPW Utilities The Holland Board of Public Works manages the utility funds for the City. The three main funds are electric, water and wastewater, and account for the revenues and expenses related to providing reliable and safe electric supply, water and wastewater services. The Holland Energy Park efficiencies have reduced electric utility expenses leading to a $23.7 million increase in net position. The savings is being passed along to customers through a rate decrease for FY 2022 of almost 10%. - 20.0 40.0 60.0 80.0 100.0 120.0 Electric Utility Water Utility Wastewater Utility Mi l l i o n s o f D o l l a r s Enterprise Funds -HBPW Utilities Revenue Expense $ Proprietary (business-type) Funds Recap Other Enterprise Funds The City’s other Enterprise Funds include the Solid Waste Fund (Recycling & Refuse), Windmill Island Gardens, and Facilities Management. The City is committed to sustainability and energy conservation and in FY 2021, after rethinking its approach to recycling, implemented a recycling cart program. This has had a positive impact on recycling participation. The City owns and operates Windmill Island Gardens, which features a working Dutch windmill and is a popular tourist attraction during the annual Tulip Time festival. COVID-19 negatively impacted this fund during the prior year given the cancellation of the festival. However, the festival was able to be held in a limited format for 2021 and attendance at Windmill Island Gardens reached record levels. - 0.5 1.0 1.5 2.0 2.5 3.0 Refuse & Recycling Windmill IslandGardens FacilitiesManagement Mil l i o n s o f D o l l a r s Enterprise Funds -Other Revenues Expenses$ City Council City operations are directed and managed by a Council-City Manager form of government. City Council is made up of a mayor and eight members. Six represent specific wards, and two represent the entire city at-large. The City Manager is the chief executive officer of the City. POPULAR ANNUAL FINANCIAL REPORT Sign up online to receive #MiHolland City News in your inbox Online City Website cityofholland.com Downtown Information downtownholland.com Recreation Programs hollandrecreation.com Holland Events Holland.org Holland Farmers Market www.hollandfarmersmarket.com Social Media City of Holland on Facebook: Facebook.com/hollandmichigan City of Holland YouTube Videos Youtube.com/cityofholland City of Holland on Instagram Instagram.com/cityofholland City of Holland on Twitter twitter.com/CityofHolland City of Holland Videos vinmeo.com/cityofholland STAY CONNECTED Budget, Strategic Plan and more… The City presents information designed to help residents understand the City’s strategic goals and City finances throughout the year. Find documents like the Annual Budget, Budget in Brief Strategic Plan & Business Plan, and links to the latest City E-News online at cityofholland.com.