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2016 December Financial Report


Table of Contents Monthly Financial Summary

3

General Fund

5

Revenues

6

Expenditures

6

Revenue Sources

7

Sales Tax

7

Property Tax

9

Franchise Fees

10

Use Taxes

11

Building & Planning Permit Fees

12

Food Tax Fund

13

Quality of Life Fund

14

Keep Greeley Moving Fund

15

Public Art Fund

16

Water Funds

17

Sewer Funds

19

Stormwater Funds

21

Lodging Tax

22

Investments

23

Front Cover: Poudre River Open Space, Greeley Colorado 2


December Financial Summary Governmental accounting can at times be difficult to interpret because most (but not all) revenue is received one month after it is generated, while all expenses are recorded in the month which they were incurred. The following report outlines Greeley's major revenue funds and details how much has been collected in 2016.

General Fund The General Fund is comprised from a variety of sources and has a total revenue budget of $91,595,166. The fund has an expenditure budget of $101,622,465 for 2016, with the $10,027,299 difference coming from an existing fund balance. The monthly financial report focuses on major revenue sources, expenditures, and trends and how they relate to historic, current, and future revenues and expenditures. Below are select summaries of financial information. Additional detailed information is contained in each section.

Sales Tax Sales tax is budgeted at 48% of total General Fund revenues. Through eleven months of sales tax payments, $35,193,498 (80%) of the 2016 budget estimate of $43,582,484 has been collected. Based upon current trends, sales tax revenues are projected to be $3 million below budget.

Use Taxes Use taxes comprise 6% of General Fund revenues. General use tax has increased 33% to date, totaling $1,627,102. This sum is 117% of the $1,387,283 2016 budget through eleven months of collections. Building use tax is levied when a building permit is issued and therefore all 2016 revenue has been collected. The 2016 total of $2.66 million is nearly identical to the $2.65 million collected in 2015. Building use tax revenue exceeded the budget by over $1 million this year. Auto use tax revenue has increased 1.8% from 2015 to 2016. $2,820,884 (119%) of the budget estimate of $2,353,630 has been collected through eleven months of 2016. Given current trends, auto use tax is projected to exceed budget by as much as $700,000.

Building Permits New construction permits serve as an indicator of growth. Total building permit revenue increased 1.7% from 2015 to 2016 and exceeded the budget by $157,386; however, the number of new construction permits issued (and total valuation) in 2016 was 406 ($135 million) as compared to 771 permits ($149 million) in 2015, a 48% decline in the total number of permits and 9.2% decline in total valuation. 244 single-family dwelling permits ($45.3 million) were issued in 2016 as compared to 449 permits ($74 million) in 2015. This is a 46% decline in the number of permits issued and a 39% decline in valuation. 139 multi-family permits were issued in 2016 as compared with 290 in 2015, a decrease of 52%. Multi-family permit valuation decreased 19% in 2016, declining from $53.3 in 2015 to $43.4 million this year. New commercial project valuations increased from $21.6 million in 2015 to $46.6 million in 2016.

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Other General Fund Revenue Sources Franchise fees account for 6% of General Fund revenue. To date, $4.08 million (72%) of a budgeted $5.55 million in fees have been collected. Property taxes contribute 11% of the General Fund’s revenue. To date, $9.82 million (103%) of a budgeted $9.55 million in taxes have been collected. Fines and forfeits make up 3% of the General Fund and $2 million (78%) of the budgeted $2,544,100 have been collected to date. The remaining 2016 budgeted revenues include $6.9 million (8%) from other funds, $7.6 million (8%) in intergovernmental revenue, $5.3 million (6% ) from service charges, $2.5 million (3%) in severance and mineral taxes, and $2.4 million (3%) in other revenues.

Special Fund Revenues & Economic Indicators

Lodging Tax The Convention and Visitors Fund is supported by the City’s 3% lodging tax and is utilized to support convention and visitors activities. For rooms rented in the month of November, revenue was down 18% from 2015; total 2016 revenue is down 12.2%. According to the November Rocky Mountain Lodging Report, Greeley currently has a 66.3% year-to-date occupancy rate as compared to 72.8% in 2015. Greeley’s November occupancy rate was 52.5% as compared to 56.5% for all of Colorado.

Food Tax Greeley's food tax funds a capital maintenance program for the repair of streets, buildings, parks, and other capital assets. Through eleven months, the City has collected $6,230,614 (98%) of the 2016 budget estimate of $6,357,052. Revenues are currently 9.8% higher than last year. Total food tax revenue is expected to exceed the budget.

Economic Indicators Oil prices at the end of December increased 35% from 2015. The price of Colorado/Nebraska DJ Basin Oil was $47.50 as compared to $30.75 a year ago. Despite the recent price increase, sales and use taxes collected from the oil and gas industry continue to be less than last year. Through eleven months of collections in 2016, oil and gas sales tax revenue declined by $92,857 (42%) from 2015. In April of 2016, the Colorado Supreme Court issued a ruling in favor of BP America Production, allowing it and other petroleum producers to deduct capital costs from severance taxes. This ruling did not impact the City’s $2.09 million severance and mineral tax revenue in September. The severance tax budget for 2016 was $2.5 million.

Summary The following sections outline Greeley's major operating funds. Despite continued low gas and oil prices, local economic conditions are slowly improving, as evidenced by the recent growth in sales tax revenue. The mixed state of the economy means some funds will experience revenue shortfalls; however, the defects will mostly be offset by gains in other areas this year. The city is on track to stay on budget with no significant changes to services.

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General Fund Overview: Major sources of revenue in the General Fund include sales, property, and use tax; county, state, and federal intergovernmental funds; franchise fees; transfers from other funds; fines, forfeits, and service charges; licenses and permits; and miscellaneous sources. The following graph compares 2015 expenditures and revenues with the same data from 2016. April expenditures are higher due to carryover monies from previous years being appropriated and transferred to other funds. The increase in August revenues and expenditures are due to the purchase of two compressed natural gas buses using grant funding. The decline in September revenue is due to a $2.1 million reduction in severance tax. The timing of 26 payroll periods causes expenditures to increase by $2.3 million in September 2016 and to decrease by $2.3 million in October 2016 as compared to the same months in 2015.

The table below provides data for the 2016 revised budget as of December 31st, 2016.

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Revenues: The following revenue sources have received eleven months of payments in 2016: franchise fees; sales, general use, lodging, and property tax. Twelve months of payments have been received for the following: building and planning permit fees; building use tax; and utility charges. Total revenues are currently 88.8% of the 2016 budget.

Expenditures: The General Fund is used to provide 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 the approved budget for 2016. Below is a summary of expenditures through December 2016. The majority of the quarterly increases are tied to one-time budgeted transfers between funds, distribution of 26 payroll periods, purchase of compressed natural gas buses, the appropriation of end-of-year fund balance, increases in operating costs, fire equipment, and moving costs.

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Revenue Sources The City collects sales tax on the retail sale of various goods and commodities at a rate of 4.11%; the state's sales tax rate is 2.9%. City sales tax revenue is distributed to the Public Safety Fund (0.16%), Quality of Life Fund (0.30%) and General Fund (3.0%). In 2016 the City of Greeley imposed an additional 3.46% tax on food for home consumption – the “Food Tax” Fund. The graph below illustrates the sales tax revenue distribution to five different funds: General, Public Safety, Quality of Life, Food, and “Keep Greeley Moving”.

Sales tax revenues have been collected for eleven months in 2016. 2016 general sales tax revenue is budgeted at 6.5% above 2015 revenue. Sales tax revenue has decreased 2% as compared to 2015. The decline in growth rate is primarily due to continued low natural gas prices, a decline in motor vehicle sales, gas stations sales, clothing and accessories sales, and home furnishing sales.

5,000,000

12%

4,500,000

10%

4,000,000

8%

3,500,000

6%

3,000,000

4%

2,500,000

2%

2,000,000

0%

1,500,000

-2%

1,000,000

-4%

500,000

-6%

0

-8%

Monthly % Change

Sales Tax Only: General Fund Share (After Debt, Expense, & Adjustments)

Revenue $

General Fund sales tax revenues are anticipated to be lower than the 2016 budget by $3 million based on current trends and economic information. The graph to the right is a summary of the General Fund share of sales tax by month and includes eleven months of 2016 actuals and a one-month forecast for 2016.

2014 2015 2016 Forecast 2016 Budget

2016 Actual 15 vs 16 % Change

Month Sales Tax Reported

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The North American Industry Classification System (NAICS) is used to categorize sales tax revenue by industry. The graph below compares sales tax revenue by industry for 2015 and 2016. Some adjustments have been made to account for late payments. Electronics and appliance stores experienced the largest increase (30.9%) over 2015, while motor vehicle and parts dealers have experienced the largest decline (11%).

The graph below outlines retail sales by location, omitting grocery stores and auto dealers. St. Michaels, Northgate Village, & Centerplace have increased sales from 2015 to 2016 by 5.4%, 1.43%, and 2.18%, respectively. The graph has been modified to adjust for late payments and adjustments to prior periods.

Retail Sales Tax by Location

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Property Tax The City levies property taxes based on Weld County's biennial property value appraisal. The mill levy is currently set at 11.274 mils. Property tax revenues have increased 13% from 2015 through eleven months of collection. Due to concerns with other General Fund revenues, $500,000 of property tax revenues were reserved and not spent in 2016.

Given that property tax is a function of the assessed value of land, it is important to note the drastic increase in Colorado property values. The graph below illustrates the upward trend of housing values in Greeley (as reported by the St. Louis Federal Reserve) from October 1987 to July of 2016. Rising property values will lead to increasing property tax revenues.

Greeley House Price Index 250.00 200.00 150.00 100.00

Housing Price (thousands)

50.00 1984-10-01 1986-10-01 1988-10-01 1990-10-01 1992-10-01 1994-10-01 1996-10-01 1998-10-01 2000-10-01 2002-10-01 2004-10-01 2006-10-01 2008-10-01 2010-10-01 2012-10-01 2014-10-01 2016-10-01

0.00

https://fred.stlouisfed.org/series/ATNHPIUS24540Q: Data is updated quarterly Q3 on 11.28.16.

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Franchise Fees Electric and natural gas utilities, telephone companies, and cable television providers pay franchise fees to the City for the use of public right-of-way property . The following graph illustrates the year-to-date trend in natural gas franchise fee revenue. Due to an oversupply of natural gas, prices to residential customers has fallen significantly. This downward trend in actual receipts is illustrated below.

Franchise fees have decreased significantly this year due to sustained low natural gas prices. Current revenue projections show a yearly total finishing $750,000 below the budget. The decrease in franchise fee revenues has been partially offset by operating savings in fuel, electricity, and natural gas purchases.

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Use Tax Use taxes are levied upon individuals using, storing, or consuming tangible personal property that has not been subject to sales tax. Three types of use taxes (general, automobile, and building) provide revenue to the Safety Fund, Quality of Life Fund, and General Fund.

General use tax revenue has increased 33.8% from 2015 to 2016. The General Fund share of use taxes has exceeded budget projections.

Auto Use Tax Automobile use tax revenue has increased 1.8% from 2015 to 2016. General Fund auto use revenue (excluding Keep Greeley Moving) currently totals $2,820,884, 120% of the $2,353,630 budget. It is anticipated that the General Fund share of auto use tax will exceed budget by as much as $700,000.

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Building Use Tax Building use tax revenue increased 10% from 2015 to 2016. A slower projected pace of building activity led to a budget of only $1.6 million for 2016. As a result, 2016 revenue has exceeded the budget by over $1.1 million (72%).

Building & Planning Permit Fees Building and planning permit fees are collected on new commercial, industrial, and residential renovation and construction. Plan filing and check fee revenues increased 32.6% ($125,137) from 2015 to 2016 and building permit fees increased 1.6% ($24,808). The 2016 budget anticipated a decline of 33.2% in plan filing and check fees and a 15.2% decrease in building permit revenue. Both finished the year greatly exceeding projections, totaling 94% and 19% above budget, respectively.

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Food Tax Fund Greeley's food tax funds a capital maintenance program for the repair of streets, buildings, parks, and other capital assets. The revenue cannot be used for other governmental purposes. The tax rate is currently 3.46% and 3% of the tax is applied to capital maintenance. The remaining balance is distributed to the Quality of Life and Public Safety Funds (0.30% and 0.16%) as approved by voters in 2002 and 2004. Eleven months of 2016 food tax collection totaled $6,230,614 (85.6%) of the budgeted $7,282,052. Food tax revenue is outpacing regular sales tax due to improved reporting. In the second half of 2015, the City began working with businesses that were not reporting food tax separately from other sales tax. As a direct result, food tax revenue has increased by approximately $315,000, with a corresponding decrease in sales tax revenue. Accounting for improved reporting, the food tax growth rate through eleven months of 2016 is 5.3%. Other revenue includes $1.9 million in general fund onetime carryover monies allocated to street maintenance. Total food tax revenue is expected to exceed the 2016 budget.

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Quality of Life Fund Grant funds, park development impact fees, and the 0.3% sales tax are used to finance projects throughout Greeley. 2016 projects included: $1.6 million for 8th Avenue (1000, 1100, and 1200 blocks) improvements; $370,000 for the construction of the Sheepdraw trail, including a pedestrian bridge; and $3 million for improvement of the Youth Sports Complex.

Monfort Park Soccer Fields, 4800 24th Street, Greeley CO 80634 14


Keep Greeley Moving Fund A new sales tax of 0.65% was approved by voters in the last quarter of 2015 to help fund street maintenance and improvements. The City is responsible for public concrete sidewalk and gutter repairs through the seven-year life of the program. It will additionally make major improvements to ten arterial and collector roads, repave eight neighborhoods, and complete three street capacity projects. 2016 projects included: 

$7.1 million for pavement overlay, seal coat, patching, and striping

$5.8 million to fund 20th Street Phase II: 71st to 86th Avenue

$1.0 million to fund the construction of up to 70 handicap ramps and sidewalk access points at various locations throughout the city

Keep Greeley Moving revenue is 99.6% of the budget and will exceed projections. Capital project expenditure is currently 93.6% of the 2016 budget.

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Public Art Fund The Public Art Fund is part of the City’s capital improvement plan. Existing Public Art Fund balance was used to fund 2016 projects, resulting in expenditures being higher than revenues. 2016 projects included: 

$56,100 to fund public art acquisitions, one to three sculptures purchased and installed at outdoor sites.

$21,000 for “Paint the Town Murals” dedicated to the Downtown Alleyway art mural project in collaboration with the DDA.

$26,000 to fund the Art on Loan Program.

Project Updates Uptown Trees: Three Uptown Tree Sculptures were installed on April 14th including “Eternal Leaves” by Ken McCall and Lezlie Dixon at 1310 8th Ave, “Flying Animals” by Mary Ann Baker at 1320 8th Ave, and “Moire’ Tree” by David Farquharson at 1330 8th Ave. Eight new sculptures were selected for Spring 2017 installations.

Whitaker Kinetics: Two 25 foot tall Lyman Whitaker Kinetic works of art have been installed at the new CDOT location on W 10th across from Promontory and the other at 83rd Ave and Hwy 34 bypass.

Lyman Whitaker Twister Star

Island Grove Entryway Art: The Art Commission selected a larger than life playful puppy sculpture titled “Play Bow” by artist Don Kennell. The sculpture was installed at the 14th Avenue entrance of Island Grove.

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Water Funds The Water Department provides clean water to the citizens and industries of Greeley. The department is responsible for 476 miles of distribution lines and 69.75 million gallons of treated water storage reservoirs. Below is a summary table of water revenues and expenditures.

Total water revenues for 2016 are currently 98% of the budget. 2016 revenues for residential, commercial, and industrial rates moved 5.1%, -4.1%, and 18.3%, respectively, from 2015. Total rate revenue increased 5.5% from 2015.

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Water Funds Several projects are expected to be completed in 2016. As previously indicated, water 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 2016: $20.8 million for over 38 water capital replacement & construction projects. $13.1 million for water rights acquisition. $27.9 million to construct the northern segment of the Bellvue Transmission 60� Transmission Line. $5.4 million to construct the 5 million gallon treated water reservoir at Gold Hill (pictured below) Update: Design activities were completed during 2015 and the project was awarded to Garney Construction Inc. The concrete tank roof was poured on September 24, 2016 and the tank structure is complete. Construction is on schedule.

$4 million to complete the Boyd Water Treatment Plant Winterization. Update: This project is part of the second phase of water treatment plant improvements. Design commenced in 2016 and will be completed during 2017 utilizing a CMAR process.

$829,000 for the Distribution Line Extension and Oversizing Project, providing improved flow pressure, and system reliability for future and existing distribution systems. Update: Design for Spanish Colony extension was completed during 2016 to be followed by easement acquisition during Winter 2016 and 2017. Construction to begin July 2017 after easement acquisition completed.

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Sewer Funds The Sewer Department collects and treats wastewater from Greeley's residences and businesses. 359 miles of line and 10 sewage pumping stations are operated and maintained by the department in order to perform these critical services. Residential, commercial, and industrial sewer revenues have moved –1.16%, 0.4%, and 11.4%, respectively, from 2015 to 2016. Total sewer revenue in 2016 is down by 12.1% as compared to 2015. The 2016 decline continues to be driven by lower plant investment fees. Total rate revenue was budgeted to increase 2.8% this year.

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Sewer Funds 2016 sewer projects includes: 

$7.2 million for Water Pollution Control Facility improvements Update: This project was identified in the 2012 Biosolids Master Plan and includes replacement of: 1) covers for two primary digesters; 2) mixing system for the primary digesters; 3) boiler heating system for the plant; 4) sludge thickening equipment; 5) conversion of sludge storage tank to a third primary digester; 6) south plant standby generator. The project was bid out in August 2016 with PCL Construction, Inc. being awarded the bid for $6,235,834.

$2.8 million for the North Greeley Sewer Phase II Update: A crossing agreement for Union Pacific has been executed for this project. The project scope was reduced to fund the Ashcroft Draw Sanitary Sewer Project. The reduced scope project was sent out for contractor Statement of Qualifications. From this, two contractors were prequalified to bid on the project. Results of the bid were received on 11/17/16. The project will likely be awarded in December, with construction commencing early in 2017.

$480,000 to rehabilitate the sewer collection system Update: With the construction savings of utilizing city staff, the sewer line located within 8th Ave was repaired while Public Works was conducting improvements in 8th Ave from 10th Street to 13th Street. The remaining funds will be utilized to relocate the existing sewer line to the alley adjacent to the existing Greeley annex. The line will serve the new City of Greeley facilities.

Caustic Metering Pumps at the Water Pollution Control Facility

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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 2016 included:  $3.8 million for 27th Avenue storm drain improvements 17th to the Poudre River Update: All construction in and around 28th Ave/27th Ave Court and 16th ST/17th ST/17th ST Road is complete. Design of the Woodbriar Park detention pond and park upgrades (in coordination with CPRD) will be completed in the summer of 2017, with construction running from October 2017-May 2018. Design and construction of a crossing at the #3 canal/Clarkson diversion structure will soon commence. Lastly, design improvements to the channel downstream of the Clarkson structure will begin in 2017 and is due to be constructed in 2018.

 $1.2 million for Sunrise Neighborhood drainage improvements. Update: 11th Street outfall construction is complete. Design of the 9th Street outfall and the 6th Ave collector will be completed in early 2017. In conjunction with the paving program, both will be completely constructed in 2017.

 $700,000 for drainage system repairs to system mains, inlets and culverts. Update: Bids for design and repairs needed to support the 2016 Keep Greeley Moving were received in late July.

 $300,000 to fund annual neighborhood improvements.

A brief summary of Stormwater revenue and expenditures is shown below. Revenues are up 7.4% from 2015 to 2016. Stormwater revenue for 2016 was budgeted at 2.5% over 2015 actual revenues. 2016 expenditures were budgeted to exceed revenues by $8.8 million as Stormwater fund balance is used. To date, 53.7% of the expenditure budget has been spent.

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Lodging Tax The Convention and Visitors Fund is supported by a 3% lodging tax and is utilized to support convention and visitor activities. For rooms rented in November, revenues decreased 18% from 2015 and total revenue is down 12.2% as compared to 2015. Total collections for 2016 are $454,263, 98.9% of the budget estimate for 2016. According to the November Rocky Mountain Lodging Report, Greeley year to date occupancy rates are currently at 66.3% as compared to 72.8% in 2015.

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Investments The City of Greeley's investment objectives include: • The preservation of capital and protection of investment principal • Maintaining sufficient liquidity to meet immediate and short-term obligations • Achieving a market value rate of return • Minimizing risk through asset diversification

The City's portfolio performance benchmark is the one-year U.S. Treasury rate. As of December 31, 2016 the weighted average maturity was 1.16 years, book yield was 0.94% and the one-year treasury rate was 0.85%.

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City Council Members Mayor Tom Norton Ward I: Rochelle Galindo Ward II: Randy Sleight Ward III: John Gates Ward IV: Michael Finn At Large: Sandi Elder At Large: Robb Casseday

Finance Department | 1000 10th Street | Greeley CO 80631 970-350-9731 | www.greeleygov.com

Prepared By:

Robert Miller, Budget Manager Jose Gutierrez, Financial Analyst

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