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2019 PAFR2019 Popular Annual Financial Report Village Trustees Andrew Stein Lester Ottenheimer David Weidenfeld Joanne Johnson Eric Smith Gregory Pike A Message from the Village President It is with great pleasure that the Village of Buffalo Grove present s the annual “A Citizen’s Guide to Local Financial Activities” for the fiscal year ended December 31, 2019. It is my desire to deliver to the residents of Buffalo Grove an overview of the Village’s progress and financial performance that is transparent and easily understood. This report summarizes the financial activities of the Village and is not intended to replace the Comprehensive Annual Financial Report (CAFR). The full disclosure financial statements, or CAFR, can be found on the Village’s website at www.vbg.org. The analysis conducted within this report outlines growth drivers, capital projects, and summarized financial and trend data. The presentation of financial information in the report has been derived from the audited financial statements and conforms to generally accepted accounting principles (GAAP) and related reporting standards. The Village continues to make financial transparency a priority and providing open communication with its residents and businesses. It is my hope that the information and data contained in the 2019 guide to local financial activities will provide the reader a snapshot of the challenges and opportunities the Village of Buffalo Grove is managing today and into the future. Sincerely, The Village Clerk's office maintains all of the Village’s official records, meeting minutes, documents as well as a range of services including business and liquor licensing, voter registration and municipal code updates are provided daily. Budget Overview The Buffalo Grove 2020 Budget is designed to provide residents and other interested parties with an easy to navigate format that clearly explains how the Village allocates its resources. Each program strives to make BG more responsible, resilient, or safe. Every program consists of major services the Village provides for its residents and the business community. The budget document is therefore organized by areas, programs, and major services. The gray boxes on the following pages provide an overview of each area . Each program provides oversight over the services that are provided either directly to the community or indirectly as an internal support function. How resources are allocated within the annual budget provides the reader insight as to what the strategic priorities are and what services are valued by Village stakeholders. The FY 2020 Budget supports 17 programs that deliver 47 services. Each year, the Village determines its level of service, strategic goals and expectations and staffing levels based upon the demand for services, anticipated revenues, and progress toward long-term operational and capital development goals. Responsible Resilient Safe BG is... BG is... Households in Buffalo Grove 15,650 is the median household income in BG $106,564 Single family homes in Buffalo Grove 11,326 is the median year a home in BG was built 1982 A Closer Look at BG Responsible BG is committed to being prudent stewards of the public dollar.   To achieve this commitment the village takes the following actions:   Innovating the administrative, personnel, and legislative functions Managing the village's finances, pensions funds and debt service Overseeing the strategic use of information technology resources The Village’s net position increased by $2.8 million (or 4.8 percent) during the fiscal year ending December 31, 2019. The governmental net position increased by $2.4 million (24.2 percent) and the business-type activities net position increased by $0.4 million (less than one percent). Equalized assessed valuation increased by $28 million or 1.7 percent to $1.69 billion for the 2018 levy year. The increase is due primarily to the triennial and quadrennial assessments in Cook and Lake Counties as well as new property and development experienced during the year. Did you know? Open BG provides a landing page with direct access to the village’s financial, historical, and contractual data. Anyone can use this data to participate in and improve government . Check it out at vbg.org/openbg! BG Fast Facts Where Your Property Tax Dollars Go BG has a distinctive local economy with an employment base of 20,000 daily workers. BG has over 10 million square feet of commercial, office, and industrial space. BG is home to several advanced manufacturing centers as well as many high profile firms such as Flex, Siemens and Yaskawa. 2020 Top Employers and Tax Payers BG is... Resilient BG strives to provide and maintain the highest quality infrastructure. To achieve this commitment the village takes the following actions:   Maintaining the village's streets, grounds, water, drainage, and sewer systems Improving the quality of municipal buildings, parking lots, and vehicles Directing the long term structural needs through engineering  The property tax levy for 2019, to be collected in 2020, funds police and fire protection. Revenues for the Village’s governmental activities for 2019 were $48.9 million ,an increase of 6.1 percent. Property taxes continue to be the Village’s largest source of revenue (33.3 percent) at $16.3 million. Other taxes and intergovernmental revenue including sales tax, state income tax, utility tax, prepared food and beverage tax, hotel tax, and real estate transfer tax total $20.9 million, or 42.7 percent of total governmental activities revenue. Revenue Overview Did you know? BG has been recognized as one of the top places to live US by Money magazine and is consistently noted as being one of the safest communities.  Local Economy External economic factors at the national and state level continue to impact the Village’s revenue profile and, subsequently its ability to manage operating and capital resources. Property tax collections totaled $16,321,876 which is an increase from the previous year’s total of $15,980,771, an increase of 2.1 percent. Water and sewer collections decreased from $11,074,840 in 2018 to $10,938,035 in 2019. A total decrease of 1.2 percent. Sales taxes [net of rebates], both state shared and home rule, generated $9,945,743 in 2019 versus $10,159,866 in 2018, a decrease of 2.1 percent. The Village’s unemployment statistics have consistently been lower than the national and state averages, with an unemployment rate at the end of the year at 2.8 percent, besting the state rate by 0.9 percent Buffalo Grove 2019 Revenue by Governmental Activities Source When a TIF district is created, the property values of the parcels within the district are set at a base equalized assessed value (EAV). Taxing bodies (Village, county, township, school districts, etc) continue to collect property taxes based upon the  base EAV. Any increase in the EAV generates the TIF increment, which is then available for projects within the TIF district.   At the end of the TIF district's 23-year life, all real estate tax revenues are again shared proportionately by the taxing bodies based on their individual tax rates. Tax Increment Financing  BG is... SafeBG knows that the community expects to be safe in their homes, at work, and around town. To achieve this commitment, the village takes the following actions: Insuring the public's safety through emergency medical , fire, and police services Inspecting the environmental and heath impacts of businesses Developing standards for the permitting and zoning of the village's built environment  Town Center Kensington Development Partners seeks to redevelop the 20-acre Town Center property into a new, mixed- use development, to be anchored by retail, restaurants, and multi-family residential. Kensington was attracted to the redevelopment project due to the Corridor Plan’s bold vision and the Village’s willingness to consider a Tax Increment Financing (TIF) district. Kensington's investment will exceed over $100M.   Northwest Community Hospital The existing Northwest Community Healthcare (NCH) medical offices at 15 S McHenry Road and 125 E Lake Cook Road will be redeveloped into a new 4-story 70,000 sqft medical office building to accommodate NCH. The project would also include a 4,900 square foot retail component at the northwest part of the site. The Village Board has authorized the establishment of a TIF district which includes the Town Center project and encompasses most Lake Cook Road properties. Preliminary projections show that the taxable EAV, which is currently $18 million, will grow to over $80 million. The preliminary TIF budget is projected at $100 million. Lake -Cook Road TIF District A TIF is a commonly used tool, which helps municipalities make needed improvements (such as roads and sewers) or helps attract private development.  TIF generates a pool of revenue used for reinvestment within the district. Property owners within the district continue to pay their normal property taxes. Did you know? The Buffalo Grove Community foundation was founded in early 2020 and is a 501c3 dedicated to raising funds for projects that improve the quality of life of the Buffalo Grove community. BGPD Quick Facts Expense Overview The cost of all governmental activities this year was $47.7 million, an increase of 0.6 percent from 2018 ($47.4 million). The largest increase was made in Public Works expense or $1.0 million in 2019. Public Safety and General Government expenses decreased by $0.1 million (0.3 percent) and $0.6 million (7.9 percent). Expenses from all business-type activities decreased by $0.4 million or 2.9 percent. The Water Fund expenses decreased by $0.4 million due to less Lake County tap on fee expenses. Golf expenses were reduced in 2019 to $1.9 million in total.  Affirmative Action Recruiting Plan has been in place since 1986 and updated every 3 years. Biased Based Policing Annual review revealed the 17th consecutive year without any complaints of biased based profiling. Officers complete an 8 hour Mental Health First Aid and a 40 hour Crisis Intervention training. Village Pensions Obligations The Fire Pension Fund was 73% funded as of the 12/31/18 actuarial valuation. The annual interest rate assumption is 7% with projected 2019 returns of 17.6%. The Police Pension Fund was 65% funded as of the 12/31/18 actuarial valuation. The annual interest rate assumption is 7% with projected 2019 returns of 18.7% For 2019, the Village funded an additional $290,000 above the 2018 contributions. Pension fund contributions total $5.4 million for the year. BG by the numbers 27% of residents were born outside of the United States of residents have some level of post- secondary education of residents have access to 4+ acres per 1,000 residents According to 2014-2018 American Community Survey five-year estimates. 87% 79%96% of residents in the labor force are currently employed Buffalo Grove 2019 Expenditures by Function Saxon & Downing Improvement Melinda & Hiawatha Improvement Green Knolls & Gail Improvement Apple Hill & Tenerife Improvement Thompson & Brandywyn Contract 1 Maintenance Projects Learn More About Key IMP Projects Stay Connected The Infrastructure Modernization Program encompasses the largest initiative in the Village’s history to replace and rehabilitate core infrastructure assets. Due to the development patterns of the Village since 1958, much of the water and sewer infrastructure as well as road deficiencies exist in the Cook County portions of the Village. However, given the desire to balance the needs of the entire village with this initiative, several projects are planned village-wide over the next five years and beyond. Key IMP Project Impacts and Results 2020 Project Street Miles Water Miles Total Cost Apple Hill/Tenerife 1.75 0.0 $1,425,374 Gail/Green Knolls 1.06 0.0 $2,090,587 Saxon/Downing 0.70 0.70 $2,812,500 Hidden Lake/Checker 0.42 0.0 $201,608 Thompson/Brandywyn 4.87 0.0 $7,630,069 2021 Project Street Miles Water Miles Total Cost Melinda/Hiawatha 0.79 0.79 $2,889,400 Vintage 0.77 0.0 $918,935 Cambridge 0.75 0.70 $5,426,744 Thompson/Brandywyn 4.48 0.0 $12,235,079 Factors Regarding the Infrastructure Modernization Program Buffalo Grove will... 5 Make significant Investments into infrastructure upgrades and replacements. Embark on the largest infrastructure project in the Village's history. 2. 1. Complete planned Capital Improvements over time.3. Minimize resident disruption.4. Secure sustainable funding into the future.5. November 4 2019, the Village Board approved two significant revenue streams for this purpose, the implementation of a fixed facility fee and water/sewer rate increase for water and sewer main replacement and a local motor fuel tax to fund road improvements. In 2020, the Board approved a bond issue totaling $24 million - $14 million for water/sewer and $10 million for streets, to begin our infrastructure modernization project, with minimal impact on the property tax levy. Over the next five years, the Village projects investing over $50 million into water, sewer and streets. To the extent possible, project sequencing will be arranged such that entire neighborhoods will be completed within one to three years based on outside funding in an effort to reduce service interruptions and overall disruption. The Village Board and staff have devoted a great deal of time to developing sustainable practices to improve and maintain our core infrastructure.