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2015 Financial Report

December Finance Department


TABLE OF CONELEVENTS DECEMBER FINANCIAL SUMMARY ...................................................................... 2 GENERAL FUND ................................................................................................... 4 REVENUES .............................................................................................................. 4 EXPENDITURES ........................................................................................................ 5 REVENUE SOURCES ............................................................................................. 6 SALES TAX .............................................................................................................. 6 PROPERTY TAX ........................................................................................................ 8 FRANCHISE FEES ...................................................................................................... 8 USE TAXES ............................................................................................................. 9 BUILDING & PLANNING PERMIT FEES ......................................................................... 10 LODGING TAX ....................................................................................................... 10 WATER FUNDS .................................................................................................. 11 SEWER FUNDS................................................................................................... 13 STORMWATER FUNDS ...................................................................................... 14

Front Cover: Lisa J. Cameron Russell is an International Award-Winning artist producing work in Public Places collections. Lisa’s paintings are displayed on the fence surrounding Centennial Village, in Greeley, CO.

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December Financial Summary The December Financial Report provides a brief summary for the twelve months of 2015. The largest source of revenue for the City of Greeley General Fund is Sales Tax. The General Sales Tax receipts are received a month in arrears. Thus, we have only 11 months of actual collections. Sales tax receipts between January and November show a 3.7%* increase above 2014. Year to date Food Tax revenues are also higher with 7.6%* increase over 2014. In the eleven months of collections of the general sales tax, we have receipted 91% of the 2015 estimate of $46,736,514 or a total of $42,451,401. In food tax collections in the eleven months of 2015, a total of $6,559,439 has been collected on a budget of $7,122,379. Again, approximately 92% of the estimated budget has been collected. We will definitely meet our budget expectations. If we continue to collect as we have during the eleven months of the year, we will exceed our estimates in both areas. One area being monitored is Lodging Tax revenues. Year to date Lodging Tax revenue declined 9.9% from January to November of 2015. For rooms rented in November, revenues decreased by 8.5% from 2014. Total collections are $517,527. This is 115% of the budget estimate for 2015. According to the November Rocky Mountain Lodging Report, occupancy rates averaged 57.7% as compared to a 55.7% occupancy rate for all of Colorado. Year to date occupancy rates for Greeley are reported at 72.8% as compared to 76.9% in 2014. These figures align with the slowdown of oil and gas production in the Weld County region. New construction permits is tracked as an indicator of growth. Building Permit revenues have decreased by 7% in the twelve months of the year due to fewer new commercial projects in 2015. Year to date valuations of new commercial projects and remodels in 2015 are at $39.5 million from 428 permits as compared to $70.5 million from 529 permits in 2014. Year to date growth continues to come from new single and multi-family units. Permits for single family increased from 361, at a value of $58.9 million in 2014 to 449, at a value of $74 million, in 2015. New multi-family units increased from 2014 with 428 as compared to 492 in 2015 with the valuation increasing from $38.4 million in 2014 to $53.3 million in 2015. Building permits also translate into building use tax revenue. Building use tax is collected at the time of the building permit, thus the reported receipts represent 12 months of collections. We have collected $1,247,855 above our 2015 estimate. Auto sales continue to trend above last year’s vales. We are seeing growth rates of over 7% in Auto Use Tax for the eleven months of 2015. We have collected 33% or $793,230 over our total 2015 budget estimate through December. Thus, again, this particular revenue source will exceed expectations. *Entities previously reporting food tax as sales tax in 2014 have started reporting food tax in 2015. This results in overstating growth from Food Tax and reduces Sales Tax.

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The “gain� in auto use tax will be somewhat offset by a lower than estimate for general use tax. Year to date comparisons of the General Use Tax shows declines of 18%. The decrease again is coming, primarily, from the oil and gas industry. To date, total collections in general use tax are at 88% of our estimate of $1,600,000. Auto Use tax revenue will more than offset this decrease. Oil prices continue to stay significantly lower than last year. At the end of December, the price of Colorado/Nebraska DJ Basin Oil was averaging $37 per barrel as compared to over $54 a year ago. We are closely monitoring the impact of the oil and gas industry on the revenue streams for the City of Greeley. Sales and Use Taxes collected from oil and gas industries continue to be lower than last year. For the first eleven months of 2015, Use Tax has declined by 88% or $238,004 and Sales Tax has declined by 47% or $168,995 for oil and gas industries. We continue to experience overall positive year to date growth for 2015. The current revenue figures are above budget in many instances. In each section actuals and budget will be compared. A conservative budget approach has been taken in 2015 due to the many different possible outcomes. The following report will provide a brief summary of the major areas by comparing to 2014 and 2015 revenues and expenditures.

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General Fund Revenues Major sources of revenue in the General Fund include: Sales Tax, Use Taxes, Property Taxes, county, state, and federal intergovernmental funds, Franchise Fees, charges for services, transfers from other funds, fines and forfeits, licenses and permits, and miscellaneous sources. It is important to note most revenues are received a month later, while expenditures are recorded in the month they are incurred. The timing difference between revenues and expenditures creates an unequal comparison until the end of the year when revenues and expenditures have each been collected for 12 periods. Below is a summary of the General Fund revenue sources as compared to 2015 budget:

2015 General Fund Overview 2015 Budget Use of Fund Balance Revenue Expenditures

2015 Actual

$12,247,106 $85,401,194 $97,648,300

Variance

$4,657,330 $7,589,776 $81,115,585 $4,285,609 $85,772,915 $11,875,385

% of Budget 38.0% 95.0% 87.8%

Revenues have been collected for eleven months of Sales Tax, General Use Tax, Auto Use Tax, Lodging Tax, Franchise Fees, and Property Tax. Revenues have been collected for twelve months for Building & Planning Permit Fees, Building Use Tax, and Utility Charges. The General Fund Revenues have increased by 3.1% for the first twelve months of 2015. Year to date revenues are 95% of the current 2015 budget.

1st Quarter 2nd Quarter 3rd Quarter October November December YTD Total

General Fund Revenue Comparisons % 2015 Change Actual to 2014 2015 Variance 2015 Budget 2014 2015 2015 Budget $14,234,680 $15,115,115 $880,435 6.2% $22,325,201 $23,202,209 $877,008 3.9% $23,567,283 $24,977,195 $1,409,912 6.0% $6,926,206 $6,755,383 ($170,823) -2.5% $5,673,306 $5,380,825 ($292,481) -5.2% $5,936,988 $5,684,859 ($252,129) -4.2% $78,663,664 $81,115,585 $2,451,921 3.1% $85,401,194 94.98%

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Expenditures The General Fund is used to pay for the City’s basic municipal services such as police, fire, parks, culture, recreation, public works, community development, and general administration. Expenditures from the General Fund are consistent with expectations and the approved budget for 2015. Below is a summary of expenditures for the first twelve months of 2015.

General Fund Expenditure Comparisons % 2015 Change Actual to 2014 2015 Variance 2015 Budget 2014 2015 2015 Budget 1st Quarter $15,487,056 $19,061,783 $3,574,727 23.1% 2nd Quarter $24,467,375 $28,309,616 $3,842,241 15.7% 3rd Quarter $21,652,359 $17,889,561 ($3,762,798) -17.4% October $8,252,390 $8,877,427 $625,037 7.6% November $6,022,501 $6,083,209 $60,709 1.0% December $6,639,327 $5,551,318 ($1,088,008) -16.4% YTD Total $82,521,007 $85,772,915 $3,251,907 3.9% $97,648,300 87.84% We monitor the changes in revenue and expenditures over time and compare them to historical trends. As shown by the graph below, the first twelve months of revenues and expenses are following the trends of last year.

General Fund: Revenue & Expenditure Overview Analysis

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Revenue Sources Sales Tax The City collects Sales Tax on the retail sale of various goods and commodities. The state's tax rate is 2.9% and the City’s is 3.46%. Sales Tax is distributed to the Public Safety Fund (0.16%), Quality of Life Fund (0.30%) and General Fund (3.00%). The City of Greeley also imposes the same rate of 3.46% on food for home consumption – the “Food Tax” Fund. Sales Tax revenues have been collected in the eleven months of 2015. General Sales Tax revenue increased by 3.7%* in the first eleven months of 2015 as compared to 2014. Food Tax revenue is reported separately from General Sales Tax and increased by 7.6%* for the first eleven months of 2015. The declines in December Sales Tax revenues are related to year over year declines in oil and gas related industries, accommodations, utilities, telecommunications, equipment rental and leasing services, and one time payments in 2014. 2015 General Sales Tax revenue is budgeted at 1.7% above 2014 revenue and Food Tax revenue is budgeted at 3.5% over 2014 revenues. We review Sales Tax revenue in three areas as shown below. The first way is how the Sales Tax revenues are distributed to the four different funds, Public Safety, Quality of Life, Food, and General.

Sales Tax Only Comparisons 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0

2014 2015 2014 2015 YTD YTD Actual Budget Public Safety Bonds 1,892,338 1,963,071 $2,443,314 $2,488,281 Quality of Life 4,076,826 3,802,328 $4,581,214 $4,669,566 Food 5,286,932 5,687,374 $5,964,863 $6,175,815 General Fund 35,481,336 36,807,574 $39,847,27 $40,525,23 *Entities previously reporting food tax as sales tax in 2014 have started reporting food tax in 2015. This results in overstating growth from Food Tax and reduces Sales Tax.

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Secondly retail sales are reviewed using the North American Industry Classification System (NAICS) codes for the City of Greeley. The codes are then simplified into major categories as shown below. Not all the categories are included below, but they give a good representation of how 2015 revenues compare to 2014.

Sales Tax by Major Categories $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000

2014

$0

2015

Lastly, retail sales are tracked by geographic locations, omitting businesses selling groceries and auto dealers. Below is a summary of the Sales Tax revenue collected by identified retail locations. In 2015 the St. Michaels area continues to see the largest growth rate of 11.5% as compared to 2014, while the Downtown Development area declined by 6.1%.

Retail Sales Tax by Location $12,000,000 $11,000,000 $10,000,000 $9,000,000 $8,000,000

$7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000

$1,000,000 $0 St. Michaels

Downtown Development

University District

Greeley Mall Area

10th Street/23rd-47th Av

Centerplace Area

2014

$203,773

$1,741,685

$1,861,171

$2,883,426

$2,863,143

$10,108,941

2015

$227,103

$1,634,672

$1,901,877

$2,851,765

$2,938,210

$10,568,083

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Property Tax Property Tax is levied upon the values of land, buildings, and business personal property. Assessments are determined by Weld County every two years using market values of recent sales of similar property in the area. The mill levy is currently set at 11.274 mils. Property Tax revenues are expected to remain near the same levels in 2015 as was received in 2014. Property Taxes have been received for eleven months in 2015. 2015 property tax revenues are 1.5% above 2014. The total Property Taxes collected in 2015 are short of the budget by $355,224.

Property Tax 2014 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter YTD Total

2015

$2,731,675 $4,013,233 $1,734,593 $84,701 $8,564,202

Variance

$2,315,222 $4,581,194 $1,719,761 $78,599 $8,694,776

($416,453) $567,961 ($14,832) ($6,102) $130,574

% % Of Change 2015 Budget 2015 2014 Budget 2015 -15.2% 14.2% -0.9% -7.2% 1.5% $9,050,000 96.07%

Franchise Fees Franchise Fees & Telephone Tax 2014 YTD Cable Electric Natural Gas Telephone YTD Total

% Change 2015 YTD 2014 2015

$618,885 $644,541 $2,137,549 $2,096,352 $1,586,714 $1,504,433 $124,346 $122,011 $4,467,494 $4,367,337

2015 Budget

4.1% $850,000 -1.9% $2,660,000 -5.2% $1,700,000 -1.9% $131,000 -2.2% $5,341,000

% Of 2015 Budget 75.8% 78.8% 88.5% 93.1% 81.8%

Franchise Fees are fees levied on companies in exchange for the right to use public right of way and otherwise operate as a franchise. Franchise Fees are collected for electric, natural gas and cable TV. Cable fees are currently up 4.1% in 2015 as compared to 2014. Electric and Natural Gas fees are down by 1.9% and 5.2% from 2014. Telephone revenues are down 1.9% in 2015 from 2014. Total Franchise Fees for 2015 are down 2.3% from 2014 being budgeted at a 1% increase from 2014 revenues. Franchise Fees had been expected to be below budget due to declines in natural gas and electric prices. 8


Use Taxes Use Taxes are taxes levied upon individuals using, storing, or consuming tangible personal property on property within the city limits. Three types of Use Taxes are collected: automobile, building, and general. All three Use Taxes are distributed to the Public Safety Fund, Quality of Life Fund, and General Fund. General Use Tax revenues are down for the first eleven months of 2015 by 18%. In 2015 the City has not had the same level of new businesses that generated use tax on major equipment purchases that the City experienced in 2014. Also, this is the area where oil and gas companies reported equipment purchases, and as noted, we are seeing a direct decline in use taxes from this industry.

General Use Tax

Auto Use Tax $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $Public Safety

2014 YTD

2015 YTD

2014 Actual

2015 Budget

$137,925

147,664

$150,121

$110,983

Quality of Life $258,610 276,870 $281,477 $208,092 General Fund $2,586,10 $2,768,69 $2,814,76 $2,080,92

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Year to date Auto Use Tax revenues continue to come in higher than last year with an increase of 7.1%. The total 2015 Auto Use Tax budget is $2.4 million with $3.2 million in revenue being collected in the first eleven months of 2015.


Building Use Tax $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $Public Safety

2014 YTD

2015 YTD

2014 Actual

2015 Budget

142,064

141,408

$141,956

$83,704

Building Use Tax has been collected for twelve months of 2015. Year to date Building Use Tax revenues are 0.5% below 2014 year to date figures. The 2015 budget is projected to be 41% lower than actual revenues in 2014.

Quality of Life

266,370 265,140 $266,168 $156,944 General Fund 2,663,699 2,651,397 $2,661,682 $1,569,441

Building & Planning Permit Fees Building & Planning Permit Fees are collected on commercial, industrial and residential construction and improvements. Plan Filing and Check Fees increased by 10.6% or $36,790 while Building Permit Fees decreased by 7% or $112,428 from 2014 for the twelve months of 2015. The 2015 budget planned for a decline of 19% in Plan Filing and Check Fees and a 5.7% decrease in Building Permit revenue from 2014 revenues.

Building & Planning Permit Fees

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Lodging Tax The Convention and Visitor’s Tax is a three percent lodging tax that is utilized to support convention and visitor activities. The City takes an active role in promoting the community by providing funding for Greeley Unexpected, the Greeley Convention and Visitor’s Center, and marketing other community events. Year to date the Lodging Tax revenue for the eleven months of 2015 has decreased by 9.9%. However in comparing just November lodging, revenues were down 8.5% from 2014. The annual decline in lodging tax revenue had been anticipated; however year to date occupancy rates remain above the state average according to the November Rocky Mountain Lodging Report showing Greeley occupancy rates at 72.8% as compared to the 70.4% state total. As shown in the graph below, the 2015 budget is lower than 2014 actuals by 27%. The 2015 budget projection removes most of the growth seen in the last 2 years.

Lodging Tax

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Water Funds The Water Department provides water to the citizens and industries of Greeley. This is water of a quality and quantity that meets all health and aesthetic criteria. The department is responsible for 467 miles of distribution lines and 69 million gallons of treated water storage reservoirs. Several projects are expected to be completed in 2015. Expenditures are expected to exceed revenues as fund balance is used to fund capital projects. Listed below is a summary of the budgeted capital expenditures for 2015:     

$43.2 million for the construction of the northern segment of the Bellvue 60" transmission pipeline. $6.5 million for the Water Acquisition Phase II. $5.5 million for the Five Million Gallon Treated Water Reservoir near the Gold Hill Reservoir. $20.4 million for 45 Water capital improvement projects. $3.5 million for 15 Water treatment and supply capital projects.

An overview of water revenues and expenditures is displayed below. Total water revenues for 2015 are currently 80.7% of budget for the twelve months of collections. 2015 year to date revenues as compared to 2014 for Residential, Commercial, and Industrial rates increased by 4.9%, 7.5%, and 0.8% respectively. In 2015 total rate revenue is currently up 5.9% from 2014 and is budgeted to be up 6.9% at the end of 2015 as compared to 2014. Year to date expenditures are 55.2% of budget for the twelve months of 2015.

Water Overview YTD 2014 Actual

YTD 2015 Actual

Residential Rates Commercial Rates Industrial Rates Other Rates Raw Water Sales Impact Fees Other* Total Revenue

$17,200,810 $4,511,754 $4,010,477 $4,915,961 $647,001 $6,399,906 $9,460,094 $47,146,003

$18,042,831 $4,849,997 $4,041,850 $5,519,853 $860,166 $7,979,901 $10,600,310 $51,894,909

Operating Capital Total Expenditures Difference (R-E)

$40,699,178 $12,227,037 $52,926,215 ($5,780,212)

$33,825,898 $29,694,398 $63,520,297 ($11,625,388)

% Change 4.9% 7.5% 0.8% 12.3% 32.9% 24.7% 12.1% 10.1%

2015 Budget $19,529,401 $4,186,299 $4,166,741 $5,562,856 $125,000 $5,671,888 $25,035,225 $64,277,410

-16.9% $36,051,654 142.9% $79,119,506 20.0% $115,171,160 101.1% ($50,893,750)

* Other includes year-end accounting adjustments that can continue through the audit process.

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% of 2015 Budget 92.4% 115.9% 97.0% 99.2% 688.1% 140.7% 42.3% 80.7% 93.8% 37.5% 55.2%


Sewer Funds The Sewer Department collects water-borne waste from residences and businesses. This in turn provides treatment and an environmentally safe release of waste collected. The Sewer Department also continues to rehabilitate dated sewer collection segments throughout the City in need of repair. At the end of 2014, the system had a total of 356 miles of line and 10 sewage pumping stations. Sewer projects in 2015 include $6.3 million for the North Greeley Sewer Phase II, $3.2 million in projects at the Water Pollution Control Facility, and $1 million in Lift Station upgrades, expansions, and rehabilitations. Sewer debt of $6 million was issued in June 2015 to fund Sewer capital projects. Below is a summary of Sewer revenues and expenditures. Residential, Commercial, and Industrial revenues are higher by 2.6%, .2%, and 3.1% for 2015 as compared to 2014. Total rate revenue is budgeted to grow by 0.3% and currently has grown 2.1%. Total sewer revenue in 2015 is down by 6.4% from 2014 and is budgeted to be 13.7% lower than 2014 at the end of 2015. The 2015 budgeted year end reduction from 2014 actuals is driven by a budget reduction in impact fee revenues, onetime state grants, and onetime contributions.

Sewer Overview YTD 2014 Actual

YTD 2015 Actual

Residential Rates Commercial Rates Industrial Rates Impact Fees Other* Total Revenue

$6,417,521 $2,123,905 $472,966 $3,333,565 $1,538,412 $13,886,370

$6,584,295 $2,128,919 $487,532 $3,810,853 ($20,031) $12,991,567

Operating Capital Total Expenditures Difference (R-E)

$8,464,111 $6,630,163 $15,094,273 ($1,207,903)

$8,503,200 $5,088,032 $13,591,232 ($599,665)

% Change 2015 Budget 2.6% 0.2% 3.1% 14.3% -101.3% -6.4%

$6,663,663 $2,141,905 $543,601 $2,729,300 $198,493 $12,276,962

0.5% $8,963,921 -23.3% $14,199,751 -10.0% $23,163,672 -50.4% ($10,886,710)

% of 2015 Budget 98.8% 99.4% 89.7% 139.6% -10.1% 105.8% 94.9% 35.8% 58.7%

* Other includes year-end accounting adjustments that can continue through the audit process. Bond Revenues are not included.

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Stormwater Funds The Stormwater division is responsible for:      

developing a Capital Improvement Program for Stormwater facilities monitoring and creating maintenance plans for the existing system developing City drainage standards reviewing flood impact issues regulating illicit discharges managing the City’s Stormwater National Pollution Discharge Elimination System (NPDES) permit

Capital projects in 2015 include:    

$2,655,806 for 27th Avenue Storm Drain Improvements $200,000 Poudre River Flood Reduction Feasibility Study $300,000 for the Downtown Master Plan Update $220,000 for Sunrise Neighborhood Drainage Improvements

A brief summary of Stormwater revenue and expenditures are shown below. Year to date 2015 revenue is 10.9% above 2014. Total Stormwater revenue for 2015 is budgeted at 4.3% over 2014 actual revenues. 2015 expenditures are budgeted to exceed revenues by $3.5 million as Stormwater fund balance is used. For 2015, 70.6% of the expenditure budget has been spent. Stormwater debt of $8 million was issued in July to fund Stormwater capital projects.

Stormwater Overview YTD 2014 Actual

YTD 2015 Actual

% 2015 Budget Change

Rates Impact Fees Other* Total Revenue

$4,139,319 $267,593 ($73,503) $4,333,409

$4,447,933 7.5% $355,938 33.0% $2,547 -103.5% $4,806,418 10.9%

$4,380,900 $173,400 $219,300 $4,773,600

Operating Capital Total Expenditures Difference (R-E)

$2,977,757 $3,630,717 21.9% $3,397,791 $1,731,332 $2,252,269 30.1% $4,939,377 $4,709,089 $5,882,986 24.9% $8,337,168 ($375,680) ($1,076,568) 186.6% ($3,563,568)

* Other includes year-end accounting adjustments that can continue through the audit process.

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% of 2015 Budget 101.5% 205.3% 1.2% 100.7% 106.9% 45.6% 70.6%


CITY OF GREELEY FINANCE DEPARTMENT | 1000 10TH STREET | GREELEY CO 80631

970-350-9731 | WWW.greeleygov.com PREPARED BY: ROBERT MILLER, BUDGET MANAGER CATHY KIRIAKOS, FINANCIAL ANALYST

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December monthly report