Fiscal 2017 Third Quarter Financial Results Havre de GraceFiscal 2017 Third Quarter Financial Results INTER – CITY MEMORANDUM To: Havre de Grace City Council and Citizens From: Mayor William T. Martin Date: April 17, 2017 RE: Fiscal 2017 Third Quarter Financial Results Download PDF Download Graphs I am, once again, pleased to present the financial performance of our City for the third quarter of fiscal 2017. As we move into spring, I will be focusing my efforts on making Havre de Grace a premier tourist destination. I also plan to continue stimulating residential and commercial growth. As we complete this fiscal year, I will be stressing targeted, meaningful investment in our City infrastructure, especially in our parks and playgrounds. With the planned completion of the Opera House renovation, the resumption of First Fridays, and the continued beautification of our City parks, I intend build on our past success for the past 2 years and once again make Havre de Grace a destination of choice in Maryland. General Fund The General Fund increased in value by $1.09 million through March. The budget anticipated that the fund would increase by $1.30 million, which is $210,000 more than the actual increase. As a comparison, the fund increased $1.39 million over the same period last year. Overall, revenues collected were $120,000 more than anticipated in the budget and $480,000 more than the amount collected over the same period for last year. • The City collected $130,000 less property and income taxes than anticipated by the budget, but $340,000 more than the amount collected last year. • The City received substantial private contributions and debt proceeds for the Opera House construction, which resulted in miscellaneous revenues being $270,000 more than budgeted and $450,000 more than those reported for the same period last year. • In Fiscal 2016, the City performed extensive rehabilitation on the Promenade and the Police purchased a vehicle using proceeds from their reserve funds. As a result, fund transfers decreased $260,000 in the current fiscal year but were in-line with budget expectations. As noted in my previous quarterly report, the City has received most of its general fund revenues. Consequently, expenditures should exceed revenues for the remainder of the year and the Fund Balance will steadily decline. This is customary and anticipated and I expect the remainder of the year to progress as planned. The City spent $330,000 more than expected and $790,000 more than it spent last year for the same period. • Personnel costs were $90,000 under budget expectations but $640,000 more than spent last year for the same period. The increase can be attributed to the quarterly performance bonus awarded during the budget process and to increased contributions to the Sworn Officer Pension Fund. • Operational spending was $190,000 more than budget expectations and $80,000 more than that spent in the prior year. The primary cause of the increase over both the budget and prior year was the decision by myself and Council to help the Susquehanna Hose Company recoup an additional $100,000 spending for the new fire boat. The Susquehanna Hose Company is a vital resource to our citizens and we are very fortunate to have the best volunteer fire company in the State located here in Havre de Grace. • Capital spending was $230,000 over budget expectations but $70,000 less than spending through the same quarter of last year. The decline in spending from last year can be attributed to the Opera House renovations and the rehabilitation of the Promenade occurring last year, and reduced paving. The excess over budget can be attributed primarily to the City identifying additional State Highway Administration funds that we were granted permission to use on paving. You may recall that, due to funding limitations, the City had to defer several paving projects. The unexpected funding allowed the City to proceed with much needed repairs to Ontario and Erie streets. General Fund spending continues to be consistent month to month, with fluctuations being attributed to the timing of payroll, capital project spending and debt service payments. Water and Sewer Fund To date, the Water & Sewer Fund earned a profit of $660,000 for the year. The fund was expected to earn an estimated profit of $920,000 in the budget and a $160,000 loss was earned by the fund last year. Revenues were $160,000 less than anticipated by the budget but $1.06 million more than those earned for the same period last year. • Metered revenues were $20,000 above expected levels and $540,000 more than the same period for last year. Overall demand for Water & Sewer services increased 13.5% compared to last year. Increased metered revenues over last year can be attributed to this increase in demand. • Grant and debt revenues were $20,000 more than anticipated by the budget and $260,000 more than what was received last year for the same period. Progress on the rehabilitation of the Water Treatment Plant accounts for both increases. • New development has resulted in connection fees being $190,000 below budget expectations but $280,000 more than the same period for last year. The City increased its expected development fees this quarter to help fund much needed repairs to our distribution system. Based on the activity volumes, I expect to reach the revised connection fees by year end. Water revenues continue to increase. These increases have been sustained for over 6 months and I believe them to be the direct result of my revitalization efforts. Water & Sewer Fund spending was $100,000 above budgeted levels, and $240,000 above the spending for the same period of last year. • Personnel costs are $60,000 below budget and $100,000 below those incurred last year. We continue to operate with fewer personnel than last year which is generating these savings. • Operating costs were $180,000 above budget and $50,000 above the same period for last year. The increase in costs appear to be due to increase in usage by our residents. • Capital spending is below budget expectations by $280,000, but is $90,000 more than spending over the same period last year. The City adjusted the budget this past quarter to add very important maintenance to our water distribution and waste water collection systems. These new projects should be completed by year-end. Water & Sewer Fund spending is impacted by the same factors as those affecting spending in the General Fund. There are no individually significant spending plans and the Wastewater Treatment Plant debt obligations have been met for this year. Marina Fund The Marina Fund incurred a $100,000 operating profit through the end of the quarter. The profit was projected to be $80,000 by the budget and the Marina had a $160,000 operating profit last year for the same period. Revenues were $25,000 below budget expectations through the end of the quarter and $15,000 lower than last year. • Slip contract renewals were $15,000 below budget expectations and $10,000 behind last year’s sales. Indications are that slips are being rented for smaller vessels this year. I expect this shortfall to be corrected through increased transient rentals and we are expecting a vibrant boating season. Marina revenues decline over the winter months due to decreased boating activity. Revenues should return to “In Season” levels by June. Marina spending was $45,000 less than budget expectations, but $45,000 more than for the same period last year. • Personnel costs were essentially at the same levels as anticipated by the budget and those incurred for the prior year. • Operating costs were $40,000 below budget expectations and $5,000 lower than those incurred last year. Operating expenses have declined in virtually all areas. • Fuel purchases were $20,000 below budget expectations and $15,000 more than last year. Fuel is purchased in bulk and the fluctuations are expected to correct themselves over the course of the year. • Capital spending was $20,000 more than budget expectations through the end of the quarter and $25,000 above levels achieved last year. The Marina extended its re-decking program to pier 4 which caused the overage. Marina spending declines through the 2nd and 3rd quarters as boating activity is negligible during the winter months. As with revenues, the Marina will be moving to “In Season” activity levels. Other Funds The City Emergency Reserve fund is at its $1.38 million legislative target with no activity since the 1st quarter. The RAD loan program earned $7,000 in interest and collected $33,200 in loan payments through the end of the period. As a result it has $430,000 available for additional lending. The Promenade Fund has $26,500 available to maintain the Promenade. Permit fees generated $5,000 year to date. Critical Area Tax receipts were $41,300 through the end of the quarter and almost $260,000 is available for future qualified Chesapeake Bay restoration projects. Slip User Fees were $53,800 for the year and $175,000 was transferred in accordance with the budget. As a result, $54,600 is available for waterfront improvement projects. The Community Center Fund earned $25,000 through the end of the quarter, and a balance of $66,000 is available for operations and future repairs. The Abandoned Property Restricted Fund had $700 in forfeitures for the period and $69,300 is available for Police special projects. The Forest Conservation Fund has had no activity during the quarter and $700 resides in the Fund for “green” projects.