City of Arvada 2017 Third Quarter Financial Report

Financial Report

Third Quarter 2017

Finance Department • 8101 Ralston Road • Arvada, Colorado 80002 720-898-7120 • www.arvada.org

Contributors: Bryan Archer, Director of Finance Lisa Yagi, Assistant Director of Finance Ryan Adler, Budget Analyst Deanne Gibboney, Budget Analyst Debra Nielson, Controller Vesta Weinhauer, Treasury Analyst Arlene Martinez, Executive Assistant

Table of Contents

Table of Contents Overview............................................................................................................................... 2-3 General Fund........................................................................................................................ 4-7 Streets Fund......................................................................................................................... 8-9 Parks Fund....................................................................................................................... 10-11 Special Revenue Funds Tax Increment Funds..................................................................................................... 12-13 Community Development................................................................................................... 14 Arvada Housing Authority................................................................................................... 15 Capital Improvements Projects Fund................................................................................. 16-17 Enterprise Funds Water Fund........................................................................................................................ 18 Wastewater Fund............................................................................................................... 19 Stormwater Fund............................................................................................................... 20 Golf Fund........................................................................................................................... 21 Food Service Fund (Arvada Events)................................................................................ 22-23 Internal Service Funds Insurance Fund.................................................................................................................. 24 Computer Fund.................................................................................................................. 25 Print Services Fund............................................................................................................ 26 Vehicle Fund...................................................................................................................... 27 Buildings Fund................................................................................................................... 27 Arvada Economic Development Association (AEDA)...........................................................28-29 City of Arvada Investment Report...................................................................................... 30-31

1

OVERVIEW

2017 Third Quarter Report The Financial Report for the City of Arvada provides an unaudited overview of the major funds and how their revenues and expenditures performed in comparison to budget. This is not meant to be a complete accounting, but rather a quick look at the highlights.

The economic recovery is now in its eighth year and showing little signs of slowing down. September marked the 99th month of recovery, the third longest in US history, with experts expecting this to last another 12 to 24 months. Consumer confidence is the highest it has been since 1997 and the probability of a third Federal Reserve rate hike in December sits at 70%. Gross domestic product (GDP) increased at 3% for the third quarter with positive contributions from personal consumption, exports and government spending. All of this occurred despite the two hurricanes, Harvey and Irma, wreaking havoc on the southern part of the United States.

With low unemployment and robust economic growth, Colorado has the strongest economy in the United States. Arvada has contributed to the growth, even though it does not allow retail sales of marijuana, one of the largest contributors to the increase in state-wide tax revenues. The current unemployment rate in Arvada is the lowest in years at 2.2%. Building revenues are up 6.9% due to a substantial jump in roofing permits issued in the wake of the May 8, 2017 hail storm and large number of commercial projects. The graphic below shows total roofing permits issued and highlights the spike in the second and third quarters. There were 5,491 roofing permits issued through September, or four times the five-year average of 1,293.

Total Roofing Permits Issued

by Month thru September Total Roofing Permits Issued

by Month through September 2012-2017 2012 - 2017 1,600

1,400

1,200

Roofing Permits

1,000

2012 2013 2014

800

2015 2016 600

2017

400

200

0 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

Expectations for a slowdown in sales tax for the second half of 2017 were a bit premature. The year-to-date increase now sits at 6.1% over 2016. Growth is widespread, with all sales tax categories showing increases except Health & Specialty Foods and Telephone Equipment. The categories with the largest yearover-year growth continue to be Retail Hardware, General Department Stores and Fast-Casual Restaurants, all supported by the population growth.

Fueled by the repairs caused by the May hail storm, auto use tax is now up 22.9% over 2016. New auto sales slowed for the third quarter but are expected to increase in the fourth quarter due to the hurricanes. Population growth in the City continues to bolster receipts.

Included in this quarterly update is the new Streets Fund, along with a listing of the individual streets that had some type of work performed. The four categories of Asphalt Replacement, Concrete Replacement, Crack Sealing and Other show where the resources are being allocated. For 2017, over $10 million

2

OVERVIEW

dollars is expected to be spent maintaining the City’s most valuable asset. In the next two-year budget cycle, 2019-2020, staff will provide additional funding opportunities for City Council to consider as the City tries to address an approximate $6 million funding gap. It needs to be pointed out that any options will come at a cost to our current 10-year plans.

A short write-up has been included about how Parks staff is attempting to tackle the City Council goal related to trail gaps. A comprehensive plan has been created and presented and funding to implement this plan will be requested.

Work has begun on the Delta police station. The land has been acquired and the design work is well underway. Construction should begin in the spring of 2018 with an opening date scheduled for early 2019. The station will be 100% cash financed and has an estimated cost of just over $4.5 million. This will add a third community station to the northwest part of the City and will provide additional resources to the growing community.

The ability of the Arvada Housing Authority to offer housing subsidies continues to be eroded, with the number now sitting at 444 families out of a possible 508. As was stated in previous financial reports, this number will continue to decline unless changes to the funding levels are approved at the federal level.

For example, the median rate for a one-bedroom apartment is $1,070 per month, with two-bedroom units at $1,350. The nation-wide average for twobedrooms is $1,160. This represents a 3.8% increase over 2016. Additional units are being added to the housing stock in Arvada but many of these units are along the G Line and command higher rates. Attainable housing will need to be a focus of future strategic plans.

Three capital projects are highlighted this month – the Arvada Holistic Health and Fitness Park, West 64th Avenue and Indiana Street intersection improvements and the Fleet Maintenance cold storage building. Please take the opportunity to read about just a few of the exciting projects the City has in the works.

The new estimated date for opening of the RTD’s G Line is now 2018. Continued challenges with the previously unused rail-crossing technology plague the A and B Lines. Until the Public Utilities Commission (PUC) is satisfied, guards will be required at all ground-level crossings and testing will not be able to resume on the G Line. Residents and business owners that expected the line to open in the winter of 2016 are exceedingly frustrated. The City needed to update the 10-year financial plan as it called for increases in sales tax related to expected commuter traffic. You can see the trains in action along the G Line, but they are running for no other reason than to keep the tracks conditioned.

Work continues on the West Woods Golf Course clubhouse expansion and the irrigation replacement project. The structure for the new/remodeled clubhouse is now complete and finishes are being applied. Opening for the expanded kitchen operations, golf simulator, new bar, pro shop and additional office space is expected in the first quarter of 2018, giving staff and players alike the opportunity to “work out the kinks” before golf season is in full swing. The irrigation project is nearing completion, with the majority of the larger lateral pipes in the ground. Weather permitting; the smaller irrigation lines will be completed before the harsh conditions of winter set in.

The City of Arvada will end 2017 in good financial shape. Additional revenue from building activity and increases in sales and use tax greater than the expected budget will offer funds that can be dedicated to one-time projects or rolled back into the fund balance. As Finance staff refines the assumptions for the next 10-year financial plan, opportunities to move additional resources towards growing infrastructure needs will be researched. The current 10-year capital plan will also be revisited to make sure the projects identified in 2015 and 2016 for funding are still valid.

R. Assmus

3

GENERAL FUND

General Fund Overview The General Fund pays for the City’s basic services. This includes police, planning, transportation planning, street light maintenance and costs, building activity and general administration. In addition, the General Fund also provides for the following: • Operational support to the Parks Fund and Arvada Economic Development Association • General Debt Service payments • Transfer to the Capital Improvements Fund for new parks, transportation and other infrastructure projects • Grant support to the Arvada Center The following table provides a comparison of budgeted cash balances, revenues and expenditures to budget, including prior year amounts in the same areas.

General Fund Beginning Fund Balance

2017 Budget

As of 09/30/17

As of 09/30/16

$41,397,000

$41,397,000

$83,433,798

$69,884,717

$62,174,517

$85,449,164

$50,103,589

$52,389,800

10,019,156

5,337,000

630,000

684,254

400,000

200,000

$96,152,574

$55,840,589

$53,219,800

14,044,128

8,954,717

REVENUES Total Revenues EXPENDITURES Ongoing Capital JPPHA (Jefferson Parkway Public Highway Authority) Total Expenditures Income/(Loss)

(12,718,776)

Ending Fund Balance

$28,678,224

$55,441,128

• 2017 beginning fund balance was $41,397,000 • $12,254,902 of the budget is dedicated to projects not completed in 2016 and one-time items • $3,000,000 of the one-time allocations is added to the Streets Maintenance program • The 2017 budget requires $12,718,776 to balance

General Fund Ending Fund Balance by Quarter Compared to Fund Balance Goal of 17% of Budgeted Expenditures 60% 50% 40% 30% 20% 10% 0%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017

4

GENERAL FUND Sales Tax 55.3%

Revenue Highlights

• Overall revenues are up $7.7 million or 12.4% over 2016 • Building use tax and building permits have exceeded

2017 BUDGET GENERAL FUND REVENUES

Property Tax 6.4%

2017 budget by $4.8 million

• Major revenue categories of sales tax, use tax, property tax, building and intergovernmental revenues are discussed in more detail in the “Revenue Highlights” section • Court fines and fees have increased by $1.3 million or 11.6% over 2016 • A loan payback of $2 million was received in 2017 • All other revenues are in line with 2016 revenues for the first nine months

Use Tax 1.9%

Other 16.4% Auto Use Tax 7.4%

Interest .7% Franchise Fees 4.6%

Sales Tax

Court Fines & Fees 2.3%

Building Use Tax & Permits 5.0%

Sales Tax Collections

• Sales tax collections lag one month; therefore, collections for the third quarter only represent eight months

• Sales tax is up 6.1% from third quarter 2016 reflecting third quarter sales tax collection increases for nine straight years (2009-2017) • All sales tax categories are up from third quarter 2016 except health/specialty foods and telephone equipment/service

$50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0

09/30/2013 Sales Tax $25,953,189

Use Tax Building Use Tax • Reflects continued growth in the west part of Arvada and approximately 5,120 roofing permits issued since the May 2017 hail storm • Actual collections exceed the 2017 budget • Budget is based on an historical average number of permits; excess revenues over budget will be reserved to fund one-time projects or added to the fund balance Auto Use Tax • Auto use tax increased 22.9% from third quarter 2016 • Increases in auto use tax also driven by the May 2017 hail storm General Use Tax • General use tax is up 54.2% from third quarter 2016, primarily due to one-time use taxes from a large retailer • This category will be close to meeting budget in 2017

09/30/2014 $27,844,593

09/30/2015 $29,688,649

09/30/2016 $30,943,735

09/30/2017 2017 Budget $32,835,108 $48,316,915

Use Tax Collections $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 General

09/30/2013 $873,197

09/30/2014 $890,495

09/30/2015 $858,212

09/30/2016 $706,837

09/30/2017 $1,090,202

2017 Budget $1,632,986

Auto

$3,516,156

$3,914,175

$4,536,196

$4,556,231

$5,600,569

$6,435,000

Building

$2,348,796

$3,429,533

$4,142,569

$5,129,017

$5,310,008

$2,184,840

Building

5

Auto

General

GENERAL FUND

Property Tax

Property Tax Collections

• The City’s property tax rate is 4.31 mills per $1,000 of valuation • The mill is placed on the assessed valuation • Up 1.0% from the third quarter 2016 due to new growth as 2017 collections are based on valuations from 2016, which did not change • Actual collections exceed the 2017 budget with very little additional revenue expected

$6,000,000 $5,500,000 $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 Property Tax

09/30/2013 $4,532,720

09/30/2014 $4,565,024

Intergovernmental Revenues

09/30/2015 $4,638,645

09/30/2016 $5,562,456

09/30/2017 $5,623,110

2017 Budget $5,611,710

Intergovernmental Revenues

• Highway Users Tax Fund (HUTF), the City’s share of statecollected gas tax revenue, is up 3.2% for the third quarter • Road and Bridge funds, the City’s share of property tax collected by Jefferson and Adams Counties, and dedicated to the maintenance of roads and bridges, is up 8.6% for the third quarter

$6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 HUTF Jefferson County

09/30/2013 $2,539,390

09/30/2014 $2,600,435

09/30/2015 $2,695,921

09/30/2016 $2,684,664

09/30/2017 $2,769,195

2017 Budget $4,180,145

$701,103

$715,791

$720,750

$788,189

$855,555

$826,925

Jefferson County

HUTF

85% of businesses are voluntarily compliant with City tax codes

6

GENERAL FUND

Miscellaneous 0.7% Transfers 25.9%

Expenditure Highlights

Personnel, 43.6%

• Overall expenditures are up $2.6 million, or 4.9%, when compared to 2016 • An additional cash transfer of $404,000 to the Arvada Center was made in June 2017 • Transfers increased $6.6 million, or 48.7% over 2016 due to an increased transfer to the Capital Improvement Projects fund

Debt Service 3.9%

2017 BUDGET GENERAL FUND EXPENDITURES

Contracts 6.3%

Supplies and Expenses, 5.7%

Services and Charges, 13.9%

Salary and Benefit Salary and Benefits

2017 Budget

Salaries and Wages

$32,534,711

Vacancy Savings

As of 09/30/16

$21,509,717

$21,341,242

-

-

977,404

654,291

718,146

Group Insurance

6,513,929

3,959,873

3,833,655

Retirement

3,570,709

2,403,720

2,402,645

Medicare

427,311

286,067

279,668

Temporary Wages & Social Security

497,855

370,982

396,117

Other

434,899

316,209

248,474

$43,625,107

$29,500,859

$29,219,945

Overtime

Total

(1,331,711)

As of 09/30/17

• Retirements and vacancies continued to hold down Salary and Wage Expenditures through the first nine months of the year • Modest year-over-year drops in Overtime and Temp Wage expenditures helped to keep the increase in General Fund Personnel expenditures through the first three quarters of 2017 at .8%.

8% or less annual healthcare premium increases over the previous year

7

STREETS FUND Streets Fund Overview The Streets Fund accounts for costs associated with street repair and replacement including crack sealing, chip sealing, seal coating, milling and overlay and reconstruction.

Revenues are derived from the City’s General Fund and the Highway Users Tax Fund which is the City’s share of state-collected gas tax revenue.

2017 Budget

Streets Fund Beginning Fund Balance

$

As of 09/30/17* -

$

-

Crack Sealing 2.83%

REVENUES General Fund Transfer

$11,458,030

$11,458,030

-

-

$11,458,030

$11,458,030

Other Total Revenues

Other 0.26%

Concrete Replacement 32.12% Asphalt Replacement 64.79%

EXPENDITURES Asphalt Replacement

$6,600,000

$5,194,776

3,200,000

2,575,129

300,000

227,168

Concrete Replacement Crack Sealing

1,358,030

21,173

$11,458,030

$8,018,246

-

3,439,784

-

$3,439,784

Other Total Expenditures Income/(Loss) Ending Fund Balance

$

* This fund was established effective 2017

Mill and Overlay Projects Status

Street

From

To

Complete

86th Pkwy (EB only)

Simms St

88th Ave

Complete

86th Pkwy

Alkire St

Simms St

• Over one quarter of the Streets Fund’s

Complete

Kipling St

72nd Ave

80th Ave

Complete

Vance Dr

80th Ave

Pomona Dr

Complete

Everett Wy

84th Ave

Garrison St

Patching Complete On Hold until 2018

Oak St

80th Ave

76th Dr

financial resources for 2017 came from one-time dollars appropriated in the City’s carry-over ordinance adopted in April of this year

Complete

Quail St

76 Dr

80th Ave

Complete

81st Pl

Club Crest Dr

Pomona Dr

Complete

68th Ave

SH 121 (Wadsworth)

Lamar St

Complete

Garrison St

Ridge Rd

51st Ave

Complete

64th Ave

Independence St

Oberon Rd

Complete

Holland Cir

64th Ave

End of Cul-de-sac

Complete

84th Ave

Sheridan Blvd

Gray Ct

Complete

Beech St

72nd Ave

74th Dr

Complete

Alkire St

82nd Ave

86th Pkwy

Complete

58th Ave

Kipling

Simms St

Milling/Overlay in Progress

Independence St

58th Ave

Ridge Rd

8

Revenue Highlights

Expenditure Highlights

• Total

expenditures on street maintenance through the first nine months of the year were just more than double those in 2016 over the same period. This was due, in part, to good construction weather in the spring and the timing of payments to vendors

STREETS FUND

Concrete Replacement Projects Status Street

From

To

Complete

68th Ave

Salsbury St

Lamar St

Complete

84th Ave

Sheridan Blvd

Gray Ct

Complete

Independence St

58th Ave

Ridge Rd

Complete

57th Ave

Independence

Old Wadsworth

Complete

Balsam St

58th Ave

Grandview Ave

Complete

Carr St

57th Ave

Grandview Ave

Complete

84th Ave

Simms St

Newcombe St

Complete

Newcombe St

84th Ave

86th Pkwy

Complete

72nd Dr

Beech St

Devinney Ct

Complete

Devinney Ct

72nd Dr

74th Dr

Complete

74th Dr

Devinney Ct

Alkire St

Complete

62nd Ave

Independence St

Garrison St

Complete

Independence St

Brooks Dr

66th Ave

Complete

Rensselaer Dr

64th Ave

Independence St

Complete

81st Dr

Pomona Dr

Everett St

Complete

81st Ln

Everett St

Club Crest Dr

Complete

Pomona Dr

SH 121 (Wadsworth)

Harlan Ct

Complete

Otis

Lamar Dr

Chase Dr

Complete

85th Ave

Otis Dr

Lamar Dr

Complete

66th Ave

Oak St

Kipling St

Complete

Miller St

64th Ave

66th Ave

Complete

52nd Ave

Wadsworth Blvd

Marshall St

In Progress

Sheridan Blvd (west)

67th Ave

69th Ave

Coming Up

Cody Ct

Grandview

Clarabelle Dr.

Crack Seal Projects Status

Street

From

To

Complete

Spring Mesa Subdivision

Complete

Village of Five Parks

Complete

Sunrise Ridge Subdivision

Complete

W. 64th Pkwy

SH 93 (Sheridan Blvd.)

Quaker St.

Complete

W. 72nd Ave.

Kipling St.

Pierce St.

Complete

W. 80th Ave

SH 121 (Wadsworth Blvd.)

SH 93 (Sheridan Blvd.)

Complete

W. 58th Ave (Ralston Rd.)

Independence St.

Wadsworth Blvd.

Complete

64th Ave

Ward

Allendale Dr

9

PARKS FUND Parks Fund Overview The Parks Fund accounts for costs associated with the acquisition, design, development, maintenance and beautification of parks, open space and trails within the City. Revenues are derived from the City’s General Fund, Grants Fund, Apex and Jefferson County Open Space funds.

Revenue Highlights

• Overall revenue is up 4.2% or $209,717 over third quarter 2016 • APEX Park and Recreation District reimbursement is received during the fourth quarter, while the majority of expenditures occur during both the second and third quarter

2017 Budget

As of 09/30/17

$5,286,000

$5,286,000

$4,322,796

$2,448,972

$2,347,526

City Cash Transfer

3,258,403

2,471,778

2,397,629

APEX Reimbursement

1,043,347

5,687

-

218,835

282,995

253,396

$8,843,381

$5,209,432

$4,998,551

$9,113,396

$6,191,066

$5,904,630

-

-

-

$9,113,396

$6,191,066

$5,904,630

Parks Fund Beginning Fund Balance

As of 09/30/16

REVENUES Open Space

Other Total Revenues EXPENDITURES

Expenditure Highlights

• Total

Expenditures increased $286,436 over third quarter 2016 • Personnel costs related to one new position (Parks Program Manager) and adjustments to an existing Parks Worker II increased salaries and benefits $116,048 or 4.1% • Water/Sewer/Stormwater fees increased 8.5% or $33,632 over the same time period in 2016

Ongoing Capital Total Expenditures Income/(Loss) Ending Fund Balance

Lake Ranger volunteer hours provided

10

(270,015) $5,015,985

(981,634) $4,304,366

(906,079)

PARKS FUND

Bib

ber

Cre

ek

Ralston Creek

In October 2016, the trail gap plan was reviewed with the City Council at a workshop and the priorities, as set forth in the 2016 Parks, Trails and Open Space Masterplan, were affirmed. This document is now used to inform budget priorities for the future and in determining which trail project might be eligible for grant funding.

M

oon

k ree

Big

C Dry

Heritage Canal

lch

Gu

Little Dry Creek

The 2016 Parks, Trails and Open Space Plan identifies the City’s eight major trail corridors (Barbara Gulch, Big Dry Creek, Heritage Canal, Leyden Creek, Little Dry Creek, Moon Gulch, Ralston Creek and Van Bibber Creek, and prioritizes - in high, medium and low - where trail gaps exist as of mid-2016.

Van

Barbara Gulch

By 2019, 100% of all identified trail gaps and connection points recognized in the City’s Parks, Trails and Open Space Master Plan and Bicycle Master Plan as identified by the Arvada Park Advisory Committee and as approved by City Council are built/completed.

Ley den

Cre

ek

With the priorities now set, the focus turns to the budget process as it concerns which of the prioritized trail gap projects will be included in the capital projects budget. At this time, the majority of all new trail projects are being completed by the developers of Candelas and Leyden Rock, as they are included in the development agreements as requirements to be completed by the developers of the projects. Completing gaps along other corridors will largely depend on grants received for specific trail segments.

52% In determining the percent completed for this strategic result, equal weight was given to preparing the plan and funding the identified improvements. Based on this, the strategic result is considered 52% because the plan has been developed and approved but, as of 2017, sufficient funds to complete the identified improvements have not yet been budgeted.

11

SPECIAL REVENUE FUNDS Special Revenue Funds Overview Special Revenue Funds account for revenues that are to be used for specific purposes. The following funds are considered special revenue funds: • Tax Increment Funds • Community Development • Housing

Tax Increment Funds Overview There are two tax increment funds which account for the voter-approved sales tax increases to fund expanded police services. The first accounts for the .21 cent sales and use tax and the second accounts for the .25 cent sales and use tax. Sources include sales tax, general use tax, auto use tax, building use and interest income. Since the tax increment is in addition to the City’s 3% sales tax, revenue trends in the tax increment fund will closely follow those in the general fund. .21 and .25

2017 Budget

As of 09/30/17

$11,060,000

$11,060,000

$ 7,743,576

$ 5,156,892

$ 4,870,971

1,573,940

1,841,759

1,596,407

468,000

391,674

322,375

$ 9,785,516

$ 7,390,325

$ 6,789,754

Ongoing

$ 9,755,369

$ 6,472,014

$ 5,553,666

Capital

1,500,000

-

104,111

$ 6,472,014

$ 5,657,777

918,311

1,131,976

Tax Increment Funds Beginning Fund Balance

As of 09/30/16

Use Tax Other Total Revenues EXPENDITURES

Total Expenditures Income/(Loss) Ending Fund Balance

$11,255,369 (1,469,853) $ 9,590,147

• Sales Tax/Audit Revenue increased 5.8% or $285,921 over 2016 • Use tax increased 15.3% • Other Revenue tied to agency reimbursements for personnel and overtime increased 21.5% or $69,298

Expenditure Highlights

REVENUES Sales Tax/Audit Revenue

Revenue Highlights

$11,978,311

•

Personnel costs up 18.7% or $778,234 over the same time period in 2016; the number of vacant positions has been reduced from 9 to 3 • Due to an increase in State grant-funded overtime enforcement checkpoints and DUI grants, overtime is up 2.1% • Shift Pay has also increased 44.6% with fewer vacancies and more Police Officers choosing the 1% swing shift and 2% graveyard shift • Additional expenditures include outfitting new Police Officers, replacement schedules on gear such as vests, tasers, etc., and sending 20 recruits to the academy in 2017, compared to 14 in 2016

By 2017, Arvada will be in the top 80% or better of metro area cities Uniformed Crime Reports (UCR)

with lowest crime rates as benchmarked by

12

SPECIAL REVENUE FUNDS

The Arvada Police Department embraces sector-based policing, where officers are an integral part of the community they serve. This makes the department more fluid, collaborative, networked and responsive to the community.

Benefits to the Arvada Community: • • • •

Increased community engagement Building public trust Ability to address other quality of life issues Reduction of crime

Benefits for the City of Arvada Police Department: • • • •

Building of employee trust, confidence and satisfaction Increased morale Improved internal communication and coordination between the sectors Credibility and confidence of elected officials

Number of Emergency Call responses provided

350 300 250 200 150 100 50 0

Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Adam

Baker

13

Charlie

Delta

SPECIAL REVENUE FUNDS

Community Development Overview The Community Development Fund accounts for all entitlements, revenues and expenditures of the Community Development Block Grants (CDBG) program and the Home Rehabilitation program and Essential Home Repairs program.

Community Development Fund

2017 Budget

As of 09/30/17

As of 09/30/16

Beginning Fund Balance

$5,818,000

$5,818,000

$ 114,737

$ 386,331

$ 182,246

668,003

178,942

219,708

City Cash Transfer

45,000

33,750

33,750

Interest/Other

14,000

36,816

52,994

Total Revenues

$ 841,740

$635,839

$ 488,698

$ 632,623

$ 419,879

$ 242,977

415,919

205,008

172,359

$1,048,543

$ 624,887

$ 415,336

10,952

73,362

REVENUES Recovered Grants

Revenue Highlights

• Revenues increased $147,000 or 30.1% over 2016 • Recovered costs increased $204,000 or 111.9% over 2016 due to three large repayments • Grant Revenue decreased $41,000 or 18.5% due to timing of CDGB grant approval by the Federal Government

EXPENDITURES Ongoing Essential Home Repairs Total Expenditures Income/(Loss) Ending Fund Balance

(206,803) $5,611,197

$5,828,952

Expenditure Highlights

• Essential home repairs increased approximately $177,000 over 2016 • Ten essential home repair projects have been completed during the first nine months of 2017, while five projects were completed during the first nine months of 2016 • Approximately $70,000 was transferred to CIP for the Carr Street sidewalk project

Number of Single-family rehab affordable housing grants loans and loan subsidies provided

14

SPECIAL REVENUE FUNDS

Arvada Housing Authority Overview The Authority administers funds received for rent subsidy to low/moderate income households under Section 8 of the U.S. Housing Assistance Payment Program.

Revenue Highlights

2017 Budget

Arvada Housing Authority

• Overall revenues increased approximately $276,000

Beginning Fund Balance

or 9.3% over 2016 • Grant funding is based upon actual expenditures incurred for the program; 2017 expenditures have increased over 2016 expenditures, which has increased the grant reimbursements

REVENUES Recovered Grants

As of 09/30/17

$

31,000

$

31,000

$

19,178

$

20,721

As of 09/30/16

$

16,598

3,910,147

3,237,962

2,956,180

87,418

-

10,000

Interest/Other

1,000

990

622

Total Revenues

$4,017,743

$3,259,673

$2,983,400

$ 402,198

$ 248,271

$ 268,784

3,585,147

2,908,029

2,775,852

33,241

22,971

26,868

$4,020,586

$3,179,271

$3,071,504

80,402

(88,104)

Transfers

EXPENDITURES

Expenditure Highlights

Ongoing

expenditures increased $107,700 or 3.5% over 2016 • Rents in the Denver market continue to increase, causing the growth in Rents expenditures • The Arvada Housing Authority served 444 families during the third quarter 2017 while 480 families were served during third quarter 2016 (508 families are allowed)

Transfers

• Overall

Rents Total Expenditures Income/(Loss) Ending Fund Balance

(2,843) $

28,157

$ 111,402

Number of Families receiving section 8 housing assistance payments on a monthly average

15

CAPITAL IMPROVEMENTS PROJECTS FUND

Capital Improvement Projects (CIP) Fund Overview The Capital Improvement Projects Fund is where the City keeps track of capital projects for streets, traffic, and parks.

2017 Budget

As of 09/31/17

$13,480,000

$13,480,000

$12,160,529

$ 7,155,745

$ 1,830,707

Grants and Recovered Costs

2,500,000

2,638,914

1,522,111

Contributions

2,000,000

1,229,903

236,593

-

183,061

18,205

$16,660,529

$11,207,623

$ 3,607,616

CIP Administration

$ 9,003,045

$ 1,892,798

$16,533,762

CIP Street Projects

2,036,558

816,020

1,604,051

CIP Traffic Projects

15,028,510

1,736,170

2,942,884

1,653,722

1,912,175

1,514,445

-

-

49,267

Total Expenditures

$27,721,835

$ 6,357,163

$22,644,409

Income/(Loss)

(11,061,306)

Ending Fund Balance

$ 2,418,694

Capital Improvement Fund Beginning Fund Balance

As of 09/31/16

REVENUES Transfers

Interest Total Revenues EXPENDITURES

CIP Park Projects CIP Arvada Center Projects

Revenue Highlights

4,850,460

(19,036,793)

$18,330,460

Expenditure Highlights

• Transfers consist of a final transfer from the Lands Dedicated

• Administration

expenditures are due to the intergovernmental agreement with APEX for the Fitzmorris Recreation Center and the Olde Town Lighting projects • Street expenditures are related to the final payments for W. 56th Avenue, design of Ralston Road reconstruction and the intersections of 64th and 72nd Avenue and Indiana • Traffic expenditures are related to the final payments for the traffic signal reconstruction project and quiet zones • Parks expenditures are primarily due to the Stenger irrigation replacement, Meadowglen Lake projects and Van Bibber Creek Trail and design services for the Holistic Health and Fitness Park

Fund for future park projects and a transfer from the General Fund for the Police Delta Station, the Olde Town Hub and several smaller capital projects approved by City Council in April 2017 • Contributions reflect Lands Dedicated payments that are now accounted for in the Capital Improvement Fund • Recovered Costs are reimbursements from other agencies or companies that have shared in the cost of a project

By 2019, 20% of all sidewalk gaps selected from the Transportation Committee inventory and approved by City Council will be built according to the then-current code requirements.

Sidewalk gaps have been identified No funding has been identified

16

CAPITAL IMPROVEMENTS PROJECTS FUND Project Highlights Arvada Holistic Health and Fitness Park The City of Arvada and Red Rocks Community College are working together to design a unique destination park in the Arvada Ridge area – Arvada Holistic Health and Fitness Park. The primary goal of the Park is to provide a unique and meaningful park space within a transit-oriented neighborhood.

This Park will help residents become active participants in their health and wellness, providing a place to exercise and practice physical, mental, emotional, and spiritual aspects of wellness that promote whole-body health. It will also act as an outdoor classroom and research laboratory for students at Red Rocks Community College, enhancing practical educational opportunities for the students enrolled in the Holistic Health program. The master plan was finalized in October 2017 and the design development/construction documents will be completed early 2018.

West 64th Avenue and Indiana Street Intersection Improvements This project did not arise from the Citizens Capital Improvement Plan Committee or a City Council goal. Many times, there are smaller projects that are completed because of efficiencies with another project or because the project is needed.

This project is a capacity improvement at 64th and Indiana that involved the installation of an additional left-turn lane on eastbound 64th at Indiana and a 700-foot acceleration lane on northbound Indiana, handicap (ADA) ramps, curb and gutter, asphalt installation and signing and striping.

Work was completed on this project in late summer.

Fleet Maintenance Storage Building This project will replace a temporary vehicle storage building. The 8,400 square feet building will be pre-manufactured steel construction with a concrete floor. The building has excellent exposure to solar power and will be designed to maximize the number of solar panels. The building will house cold storage of Arvada Police Department (APD) vehicles and will support a future 4-lane armorer’s range for APD. This project was originally a 2015 project. The bid came in at 160% of budget, so the project was re-bid with just the base building and components to support a future armorer’s range.

17

ENTERPRISE FUNDS Water Fund Overview The Water Fund accounts for all activities within the scope of the water utility operations including administration, operations, capital water projects, financing and related debt service and billing and collection.

2017 Budget

Water Fund Beginning Fund Balance

• Revenues

from Water Charges were up 6.7% through the three quarters of 2017, with consumption up 6.2% • Total Tap Fee sales through nine months were nearly even with last year • Other revenues dropped versus 2016 due to last year’s sale of the Ward Ponds property

$95,242,000

$20,070,273

$14,844,062

$13,912,299

Tap Fees

10,290,493

8,632,127

8,594,138

Interest

476,000

534,345

370,050

REVENUES

Other Total Revenues

Ongoing

1,787,078 $24,663,564

$18,307,886

$12,922,244

$12,648,382

2,261,750

115,266

134,554

Major Capital Maintenance

5,643,763

1,512,162

1,384,102

Capital

8,092,188

57,126

190,977

$34,305,586

$14,606,798

$14,358,015

10,833,435

10,305,550

(2,101,519)

Ending Fund Balance

versus the same period of 2016 • The uptick in Major Capital Maintenance expenditures was due to the timing of payments on water main replacement contracts

1,429,698 $25,440,232

Debt Service

Income/(Loss)

• Personnel expenditures were up a modest 1.5%

1,367,301 $32,204,067

EXPENDITURES

Total Expenditures

Expenditure Highlights

As of 09/30/16

$95,242,000

Water Charges

Revenue Highlights

As of 09/30/17

$93,140,481

$106,075,435

*$37,939,702 of the Fund Balance is a cash escrow reserved in Denver Water’s name and related to the Gross Reservoir expansion. The Water Fund’s overall obligation is expected to total $110 million through 2025.

90% of water, sewer and stormwater customers pay their utility bill on time

18

ENTERPRISE FUNDS

Wastewater Fund Overview The Wastewater Fund accounts for all activities necessary in the collection, transmission and disposal of sewage and wastewater.

Wastewater Fund Beginning Fund Balance

2017 Budget $ 9,386,000

As of 09/30/17

As of 09/30/16

Revenue Highlights

$ 9,386,000

• Sewer

REVENUES Sewer Charges

$11,825,960

$8,229,226

$7,838,493

Tap Fees

918,992

999,781

1,017,951

Interest

309,256

233,065

89,748

Other

866,693

404,863

354,535

$13,920,901

$9,866,936

$9,300,727

$8,897,606

$6,673,205

$5,664,513

Ongoing

5,184,500

2,160,296

7,048,426

Major Capital Maintenance

2,951,538

193,743

927,046

Capital

1,319,500

27,838

-

$18,353,144

$9,055,082

$13,639,985

Total Revenues EXPENDITURES Metro District

Total Expenditures Income/(Loss)

(4,432,243)

Ending Fund Balance

$4,953,757

811,854 $10,197,854

(4,339,258)

Tap Fee revenue was down a modest 1.8% through September • The jump in Interest revenues reflects a loan payment from AURA made in June of this year

Expenditure Highlights

• Treatment

charges from the Metro Wastewater Reclamation District represented nearly three-fourths of total Expenditures through the first nine months of the year • The substantial drop in Ongoing Expenditures versus 2016 reflects last year’s $5 million loan to AURA • Timing on sewer main replacement contracts caused the decrease in Major Capital

By 2023, all wastewater collection pipelines installed prior to 1980 will be rehabilitated or replaced

19

ENTERPRISE FUNDS

Stormwater Fund Overview The Stormwater Fund accounts for all activities necessary to maintain a stormwater management plan.

Revenue Highlights

• The

City’s Stormwater Utility Fee was left unchanged for 2017

Stormwater Fund

2017 Budget

Beginning Fund Balance

$7,030,000

$7,030,000

$3,352,511

$2,480,098

$2,442,763

63,609

104,920

78,924

$3,416,120

$2,585,017

$2,521,687

$2,737,829

$1,376,799

$ 984,096

860,612

645,138

649,260

Stormwater Fee

Total Revenues

• The City completed a public meeting with The US Army Corps of Engineers regarding future drainage improvements to a large section of Ralston Creek that are currently in the planning phase • The increase in Ongoing expenditures was due to timing of payments on miscellaneous drainage projects throughout The City • Expenditures on Capital were related to pond dredging and improvements at Davis Lane Park

As of 09/30/16

REVENUES

Other

Expenditure Highlights

As of 09/30/17

EXPENDITURES Ongoing Debt Service Capital Total Expenditures

1,210,254

182,637

-

$4,808,695

$2,204,574

$1,633,356

380,443

888,331

Income/(Loss)

(1,392,575)

Ending Fund Balance

$5,637,425

$7,410,443

Annually at least 25% of all City-owned stormwater system assets will be inspected, and cleaned as needed.

20

ENTERPRISE FUNDS

Golf Fund Overview The Golf Course Fund accounts for all revenues and expenses of the Lake Arbor and West Woods Golf Courses, including food service operations.

2017 Budget

Golf Fund Beginning Fund Balance

$

122,000

As of 09/30/17 $

• West Woods Clubhouse Remodel and Expansion Project

122,000

REVENUES Golf Courses

$ 3,608,054

$ 2,199,576

$ 2,607,441

Restaurants

910,744

643,119

1,208,889

10,381,767

2,399,911

-

236,311

177,233

181,693

$15,136,876

$ 5,419,839

$ 3,998,023

Golf Courses

$ 2,262,234

$ 1,666,043

$ 1,594,446

Restaurants

961,087

753,639

1,265,370

1,376,238

699,407

810,078

Construction Revenue City Cash Transfer Total Revenues EXPENDITURES

Administration Capital Total Expenditures

10,737,805

3,800,956

252,203

$15,337,364

$ 6,920,045

$ 3,922,098

Income/(Loss) Ending Fund Balance

$

(200,488)

(1,500,206)

(78,488)

$(1,378,206)

Revenue Highlights

As of 09/30/16

75,925

and West Woods Irrigation System Replacement Project continued during the third quarter 2017 • Total rounds played at West Woods were down 23.7% due to the irrigation project closing 9 holes at a time, customer inconvenience of construction and loss of amenities • Due to the Membership Extension Program, West Woods annual members were only down 5.4% • West Woods Golf Course hosted 3,500 corporate league and tournament guests without the benefit of an on-site restaurant • Lake Arbor Golf Course rounds were up 5.1% in comparison to 2016 • Acquisition of new events led to an increase in tournament rounds by 58.6% at Lake Arbor Golf Course

Expenditure Highlights

• Third quarter expenditures are in line with projections and are greatly influenced by construction of the two major capital projects at West Woods Golf Course

By 2019, West Woods club house and related facilities are replaced.

Master Plan/Financial Feasibility Study Master Plan/Financial Feasibility Study Initiated Design Development Initiated

Golf Rounds by Type - January - September Westwoods Player Support

2017

2016

21,356

28,281

(6,925)

Variance (24%)

Secure Project Funding

Super Users Annuals

4,818

5,092

(274)

(5%)

Final Project Plans Completed, Construction Manager and General Contractor Selected, Construction Contract Awarded by City Council and Temporary Clubhouse Facilities Opened

Super Users Clubs

2,039

2,414

(375)

(16%)

Tournament

3,530

5,226

(1,696)

(32%)

140

715

(575)

(80%)

31,883

41,728

(9,845)

(24%)

Lake Arbor

2017

2016

Construction of Expanded Clubhouse

Player Support

19,947

19,519

Super Users Annuals

Grow the Game Total

Variance 428

2%

11,590

10,756

834

8%

Super Users Clubs

1,332

1,449

(117)

(8%)

Tournament

1,087

685

402

59%

550

437

113

26%

34,506

32,846

1,660

Grow the Game Total

21

5%

ENTERPRISE FUNDS

Food Services Fund (Arvada Events) Overview The Hospitality Fund accounts for all revenue and expenses associated with food service activities including the operation of banquet facilities at the Arvada Center for the Arts and Humanities and off-site catering.

2017 Budget

Food Service Fund Beginning Fund Balance

$

As of 09/30/17

As of 09/30/16

676,000

$

676,000

$26,663

$

22,947

REVENUES Concession Services Banquet and Guest Services Total Revenues

$

40,626

1,553,675

947,903

945,303

$1,580,338

$970,850

$

985,930

$ 394,624

$277,045

$

296,724

1,156,132

748,064

EXPENDITURES Administration Operations Capital

-

Total Expenditures

-

$1,550,756

Income/(Loss)

$1,025,109

29,582

Ending Fund Balance

(54,259)

$ 705,582

742,116 $1,038,839 (52,910)

$ 621,741

Revenue Highlights

• Arvada Hospitality Sales Revenues per Market Segment Wedding/ Anniversary 2.36% In-House City 3.17%

Religious 10.90%

Wholesale 0.06% Social 9.50%

Association 31.69%

Government 9.25% Corporate 22.09% Fraternal 3.41%

Events at the Arvada Center has maintained revenue within $1,000 of 2016 actuals • Corporate, Government, Religious and Social Markets have increased over 2016, replacing the decrease in revenue of over $40,000 from the Arvada Center and In-house market segments • Results are attributed to a fully staffed sales force, economic recovery and brand identity • Third quarter number of events, guests served and total revenue is now ahead of the previous five-year average

Education 7.56%

Expenditure Highlights

• Third quarter expenses are in line with projections and are approximately $13,700 less in third quarter 2017 compared to third quarter 2016

22

ENTERPRISE FUNDS

Events by Market Segment January - September ARVADA CENTER

2017

Arvada Center

2016

Variance

-

9

(9)

(100%)

Association

43

58

(15)

(26%)

Corporate

54

64

(10)

(16%)

Education

15

14

1

7%

Fraternal

70

68

2

3%

Government

12

12

-

0%

In-house

18

39

(21)

(54%)

Religious

45

45

-

0%

Social

20

18

2

11%

(2)

(40%)

(52)

(16%)

Wedding/Anniversary Total WEST WOODS

3

5

280

332

2017

2016

Variance

Association

1

1

-

0%

Corporate

-

7

(7)

(100%)

Education

-

1

(1)

(100%)

Fraternal

-

1

(1)

(100%)

In-house City

3

9

(6)

(67%)

Religious

-

1

(1)

(100%)

Social

2

10

(8)

(80%)

14

27

(13)

(48%)

-

2

(2)

(100%)

20

59

(39)

(66%)

Golf Tournaments Wedding/Anniversary Total LAKE ARBOR

2017

2016

Variance

Association

1

1

-

0%

Corporate

-

7

(7)

(100%)

Education

-

1

(1)

(100%)

Fraternal

-

1

(1)

(100%)

In-house City

3

9

(6)

(67%)

Religious

-

1

(1)

(100%)

Social

3

10

(7)

(70%)

22

36

(14)

(39%)

-

2

(2)

0%

29

68

(39)

(57%)

Golf Tournaments Wedding/Anniversary Total

23

INTERNAL SERVICE FUNDS

Internal Service Funds Overview There are five Internal Service Funds – Insurance Fund (Risk Management), Computer Fund, Print Services Fund, Vehicles Fund and Building Fund. Internal Service Funds charge internal programs and departments for use of goods and services. The Funds then pay for all associated costs of things such as purchasing insurance, vehicle purchases and maintenance, computer purchases and maintenance, and buildings maintenance.

Insurance Fund Overview The Insurance Fund, administered by the Risk Management Program of Finance, accounts for the City’s self-insurance against loss. It is funded with contributions by all City departments and programs based on their levels and types of exposure. The Fund is also used for loss prevention programs, the protection of City personnel and the preservation of City property and assets.

Insurance Fund Beginning Fund Balance

• Contribution

revenue increased approximately $252,500 or 19.1% over 2016 • Recovered costs increased $32,000 over 2016 due to reimbursements for vehicle and property damage

As of 09/30/17

As of 09/30/16

$2,705,000

$2,705,000

$2,085,006

$1,581,279

$1,328,749

60,000

62,664

38,170

-

68,318

35,850

$2,145,006

$1,712,261

$1,402,768

$1,827,685

$2,334,947

$1,843,322

482,941

309,633

309,368

$2,310,626

$2,644,579

$2,152,690

REVENUES Contributions Interest Other Total Revenues EXPENDITURES Risk Management Administration Risk Management Operations

Revenue Highlights

2017 Budget

Total Expenditures Income/(Loss)

(165,620)

Ending Fund Balance *

$2,539,380

(932,319)

(749,922)

$1,772,681

*Per GASB Statement 10, an additional $1,416,074 in cash is currently held in the Risk Management fund to cover potentially incurred liabilities as of the beginning of the year. This figure was reached by the Risk Management’s actuary for 2016.

Expenditure Highlights

• Overall expenditures increased $491,889 or

1:10 Ratio of workers comp claims to employee

22.8% over 2016 • Workers Compensation claims are the bulk of the increase due to several large claims and the settlement of a multi-year claim

24

INTERNAL SERVICE FUNDS

Computer Fund Overview The Computer Fund provides resources for both ongoing maintenance and replacement of the City’s computers, network hardware, and other electronic infrastructure. It is funded with contributions by all City departments based on their levels of use of this technology.

Computer Fund

2016 Budget

As of 09/30/17

As of 09/30/16

Beginning Fund Balance

$7,242,000

$7,242,000

$1,194,934

$ 897,100

REVENUES Maintenance Replacement

$ 705,218

1,081,507

899,905

768,107

$2,276,441

$1,797,005

$1,473,325

$

1,513

$ 472,122

$ 644,671

Replacement

1,440,361

288,649

336,632

Other

1,238,017

274,609

428,554

$2,679,891

$1,035,379

$1,409,857

761,626

63,468

Total Revenues EXPENDITURES Maintenance

Total Expenditures Income/(Loss) Ending Fund Balance

(403,450) $6,838,550

$8,003,626

50 Technology projects completed

Revenue Highlights

• Revenue is appropriately aligned with the existing identified replacement and maintenance schedules

• Maintenance is up 27.2% and replacement is up 17.16% over 2016

50 49 48 47 46

Expenditure Highlights

• Expenditures

are down 26.5% from 2016 as staff was geared towards completing projects such as: Police Regional Records Management System, security project 2 Factor authentications, replacement of Wireless Access Points throughout city buildings, and assistance with the Lake Arbor construction project

45 44 43 42 41

2014

25

2015

2016

2017 thru Sept

INTERNAL SERVICE FUNDS

Print Services Fund Overview The Print Services Fund provides ongoing operational support for the City’s printing needs.

Print Services Fund Beginning Fund Balance

2017 Budget

As of 09/30/17

As of 09/30/16

$208,000

$208,000

$482,625

$264,179

$291,361

-

4,862

6,898

$482,625

$269,041

$298,259

$282,761

$181,151

$174,701

REVENUES Print Services Revenue Other Total Revenues EXPENDITURES Ongoing Leases/Equipment

166,558

78,895

44,068

Total Expenditures

$449,319

$260,046

$218,769

33,306

8,995

79,490

$241,306

$216,995

Income/(Loss) Ending Fund Balance

Revenue Highlights

Number of media designs provided

• Print Services revenue is down about 9.7% compared to the same time period in 2016

800 700 600 500 400

Expenditure Highlights

300 200

• Ongoing expenditures are slightly higher in 2017 due to an

100 0

increase in salaries, benefits and supplies • Leases and Equipment expenditures are higher in 2017 due to the purchase of a large banner printer in 2017 and the timing of lease payments (September 2016 lease payment was not paid until October 2016)

July-Dec 2014

2015

* Measure implemented as of July 2014

26

2016

2017 thru Sept

INTERNAL SERVICE FUNDS

Vehicles

2017 Budget

As of 09/30/17

$3,875,000

$3,875,000

Maintenance Contributions

$2,322,230

$1,740,263

$1,830,599

Replacement Contributions

1,531,460

1,147,017

938,893

200,000

299,588

353,484

$4,053,690

$3,186,868

$3,122,976

Maintenance

$2,413,677

$1,848,333

$2,003,460

Replacement

1,775,123

734,251

3,498,128

$4,188,800

$2,582,584

$5,501,588

Overview

Vehicles Fund

The Vehicles Fund provides resources for the maintenance and replacement of City vehicles and heavy equipment.

Beginning Fund Balance

It is funded with contributions by all City departments based on their vehicle inventory and use.

As of 09/30/16

REVENUES

Other Total Revenues

Revenue Highlights

EXPENDITURES

• A realignment of Fund contributions saw more budgeted for Replacement charges and less for Maintenance charges, hence the different year-over-year changes between the two • Other Revenues include recovered costs from auctioning retired vehicles and equipment

Total Expenditures Income/(Loss)

(135,110)

Ending Fund Balance

$3,739,890

604,285

(2,378,612)

$4,479,285

Expenditure Highlights

• The drop in Maintenance Expenditures reflects the lack of

By 2019, 60% of the City’s fleet will

payments for construction of the new cold storage building & PD weapons testing range, completed last year • The drop in Replacement Expenditures is due to the timing of when new vehicles and equipment are received

be capable of using alternative fuel sources

Buildings Fund Overview The Buildings Fund provides resources for maintaining major portions of facility infrastructure as replacement becomes necessary. The primary types of infrastructure are HVAC equipment, parking lots, roofs, and carpet.

It is funded with contributions by all City departments based on their facility occupancy.

Buildings Fund Beginning Fund Balance

2017 Budget

As of 09/30/17

As of 09/30/16

$3,200,000

$3,200,000

$ 514,025

$ 311,494

$ 315,391

33,000

28,959

126,813

$ 547,025

$ 340,453

$ 442,205

REVENUES Replacement Transfers Other Total Revenues

Replacement

$1,515,464

$ 239,000

Capital Lease

-

-

87,676

$1,515,464

$ 239,000

$ 111,788

101,453

330,417

Income/(Loss) Ending Fund Balance

• The

drop in Replacement Transfers reflects the loss of contributions from the Arvada Center • The substantial drop in Other Revenues reflects the discontinuation of transfers to the Fund to cover debt service on a now-completed capital lease

Expenditure Highlights

• The Capital Lease Expenditures represent payments per an

EXPENDITURES

Total Expenditures

Revenue Highlights

(968,439) $2,231,562

$

24,112

$3,301,453

27

agreement with Siemens Building Technologies in 2004 for energy-efficiency improvements at various City facilities.

Final payments on this lease were made in 2016.

• A majority of the Replacement Expenditures represent transfers to the Golf Fund for parking lot and HVAC replacements integrated into the WW Clubhouse replacement

ARVADA ECONOMIC DEVELOPMENT ASSOCIATION (AEDA) Overview AEDA was established to encourage and stimulate all forms of economic development – commercial and industrial. The services provided by AEDA benefit both the City and citizens by providing information and services to existing and prospective businesses and industries. AEDA is funded by a transfer from the General Fund for services it renders to the City and its citizens. The City also provides administrative support for AEDA. A Board of Directors appointed by City Council governs AEDA.

Operations

2017 Budget

Beginning Fund Balance

$267,000

$267,000

Revenues

865,703

616,816

585,633

Expenditures

787,763

513,653

701,834

$344,940

$370,163

Ending Fund Balance

As of 09/30/17

As of 09/30/16

Revenue Highlights

• Revenue consists of a transfer from the general fund equal to the operating expenditures, including personnel

Expenditure Highlights

• Expenditures in 2017 are comparable to 2016, removing a one-time incentive of $200,000 granted in 2016

By 2019, 1,000 new jobs from businesses will be created and located in urban centers and corridors.

28

ARVADA ECONOMIC DEVELOPMENT ASSOCIATION (AEDA)

Program

09/30/2017

Beginning Cash Balance Revenues

5,152

Revenue Highlights

• Revenues consist of interest revenue • No City contribution is budgeted in 2017

217,644

Expenditures Ending Cash Balance

$669,295

Reserved for Economic Impact Fund

$(300,000)

Reserved for Arvada Manufacturing Initiative

(20,300)

Reserved for Targeted and Professional Services

(5,902)

Commitments

(170,659)

Available Unallocated Cash Balance

$172,434

Available Unallocated Cash Balance

$147,531

Expenditure Highlights

• 20 small business grants were paid in the third quarter • Grants help businesses improve signage, landscaping, facades and site improvements • Commitments represent 15 small business grants

Number of new business prospects

29

CITY OF ARVADA INVESTMENT REPORT

Investment Portfolio Objectives Pursuant to the City’s investment policy, the primary objectives of the City’s investment activities, in priority order are safety, liquidity and yield. Consistent with this policy, the portfolio of securities is invested in U.S. Treasuries, U.S. Agencies, local government investment pools (LGIPs), commercial paper, and corporate debt subject to rating and concentration limits. The City-managed investment portfolio is administered to provide sufficient liquidity to meet all reasonably anticipated operating cash needs without selling securities prior to maturity. The portfolio controlled by PFM is actively managed which means that investments may be sold prior to maturity and reinvested in order to achieve the desired duration, yield or diversification of the portfolio.

PORTFOLIO CHANGES Par Value as of 09/30/17

NA

NA

41,080,366

NA

NA

4,899,978

NA

NA

Corporate

23,992,000

NA

NA

US Agency

92,750,000

NA

NA

US Treasury

6,000,000

NA

NA

$172,552,515

NA

NA

$ 2,000,000

NA

NA

Corporate

7,680,000

NA

NA

US Agency

5,500,000

NA

NA

US Treasury

34,115,000

NA

NA

$ 49,295,000

NA

NA

$ 3,830,170

$ 5,703,654

$ (1,873,484)

41,080,366

72,804,665

(31,724,299)

Time CD

4,899,978

14,964,900

(10,064,922)

Negotiable CD

2,000,000

-

2,000,000

Corporate

31,672,000

16,492,000

15,180,000

US Agency

98,250,000

78,750,000

19,500,000

US Treasury

40,115,000

-

40,115,000

$221,847,515

$188,715,219

$ 33,132,296

LGIP Time CD

Subtotal - City

PFM-MANAGED PORTFOLIO Negotiable CD

Subtotal - PFM

CONSOLIDATED PORTFOLIO MM/Savings/Cash LGIP

Total - Combined

CONSOLIDATED PORTFOLIO ALLOCATION

CONSOLIDATED MATURITY DISTRIBUTION 24.8% 21.9% 20.9% 25.0% 17.1% 20.0%

LGIP 18.5% Time CD 2.2%

15.0%

10.8%

10.0%

Negotiable CD 0.9% US Agency 44.3%

$ 3,830,170

MM/Savings/Cash

The City’s portfolio is positioned on the shorter end of the curve to be able to take advantage of the rising interest rates. About 20% of the portfolio is placed in highly liquid assets, such as money market accounts and LGIPs, which currently yield 1.22%. When compared to the third quarter of 2016, the consolidated portfolio has increased by more than $33 million. The current portfolio allocation presents a better diversification between Agencies, Treasuries and the corporate sector. The callable feature available on Agencies offers opportunity for a higher yield, whereas Treasuries offer the most safety and liquidity and are better suited for a “rolling down the yield curve” investment strategy.

US Treasury 18.1%

Difference

CITY-MANAGED PORTFOLIO

The Federal Open Market committee (FOMC) has not raised the interest rates since their June meeting. The current federal target range remains at 1 - 1.25%. Market probabilities show an over 90% chance of another hike in December. At the September meeting, the FOMC announced the beginning of balance sheet tapering. The announcement was widely expected, and had little impact on the yields. The recent hurricanes led to some volatility in the U. S. economic data, particularly in the job market with the first negative reading in September since 2010. However, the final estimate of the second quarter GDP shows that U.S. economy expanded at a healthy pace of 3.1%. As a response to continued economic growth, an anticipated rate hike in December, and potential tax reform, interest rates rose across all maturities.

MM/Savings/Cash 1.7%

Par Value as of 09/30/16

4.5%

5.0% 0.0%

Corporate 14.3%

0-.25

.25-1

1-2

2-3

Maturity (years) 30

3-4

4-5

CITY OF ARVADA INVESTMENT REPORT The average yield on the City-managed portfolio through the third quarter of 2017 was 1.23%, which is an increase of 31 basis points (bps) from the same period last year. The total year-to-date interest earnings in 2017 were $1,854,440, an increase of $500,472 in comparison with same time period in 2016. In 2017, the City switched to a new benchmark, Standard & Poor’s U.S. Agency 0-5 Year Index, which is a better comparison for the City’s portfolio composition, duration, and investment strategy. In the third quarter, the City’s investments underperformed the benchmark by 11 bps. The City’s investment strategy is to buy and hold to maturity, which at times may cause the performance of the City’s portfolio to fall behind the benchmark, particularly in a rapidly rising interest rates environment.

PFM Asset Management (PFM) is the City’s investment advisor who has managed a portion of the City’s investments since October of 2016. The average year-todate yield on the PFM-managed portfolio was 1.26%. When interest rates go up, the value of the current bonds goes down. This translates into unrealized loss in the consolidated portfolio, which is to be expected. The safety of the City’s investments is our first priority. Over 90% of the investments in the portfolio are rated AAA or AA+ by the Standard & Poor’s credit rating agency.

PORTFOLIO PERFORMANCE

PORTFOLIO CHARACTERISTICS

09/30/2017

09/30/2016

Difference

City Interest Earnings

$1,427,016

NA

NA

Duration to Maturity (yrs)

PFM Interest Earnings

427,424

NA

NA

Yield to Maturity at Cost

1.471%

1.350%

Total Interest Earned

$1,854,440

$1,353,968

$500,472

Yield to Maturity at Market

1.611%

1.630%

YTD City Portfolio Yield

1.23%

0.92%

+31 bps

YTD PFM Portfolio Yield

1.26%

NA

NA

YTD Benchmark

1.34%

0.92%

+42 bps

City 1.86

Par Value

$172,552,515

PFM

AA+ 68.92% Total

$49,295,000

$221,847,515

Book Value

172,786,986

49,726,452

222,513,438

Market Value

172,380,200

49,353,757

221,733,956

Unrealized Gain /(Loss)

$

$ (372,696)

$ (779,482)

(406,786)

2.57

CREDIT QUALITY (S&P RATING)

ACCOUNT SUMMARY City

PFM

AAA 22.56% A-1 0.93%

A+ 0.47%

AA6.41%

AA 0.70%

Investment Management Focus - 2017 In June the Federal Reserve raised short-term interest rates by 25 basis points (bps) to a range of 1.0%-1.25%. The FOMC forecast for three hikes in 2017 is still on the table, with a high probability of one more interest rate hike by the end of the year.

The City will continue to focus on diversification of maturities. A portion of the portfolio is kept in LGIP, money markets, and cash balances at levels to meet operating needs and capture attractive interest rates. The City will continue to use a blended strategy, which calls for emphasis in short-term positions as well as some long-term positions (five years in the City’s case), but also staggering maturities in between to smooth the revenue stream. This will allow ample cash should the City experience unexpected needs and allow us to take advantage of better coupons in longer maturity buckets.

The Federal Agencies’ spreads are still tight. Callable securities normally return better yield. (Call provisions are a tool used by issuers to refinance debt at a more attractive rate.) The focus will be to purchase callable securities with a call “lockout” period of one year. A combination of callable and non-callable securities will allow us to enhance investment income over the LGIP funds and not to subject the City’s portfolio to excessive turnover if interest rates fall.

31

Rick Assmus