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2022 PAFR2022 Popular Financial Annual Report 2022 Popular Financial Annual Report Village Trustees Andrew Stein Lester Ottenheimer David Weidenfeld Joanne Johnson Frank Cesario Gregory Pike A Message from the Village President I'm very pleased for the Village of Buffalo Grove to present its annual “Citizenʼs Guide to Local Financial Activities” (Public Annual Financial Report) for the fiscal year ended December 31, 2022. I'm proud of our ability to deliver the Buffalo Grove community with an overview of the Villageʼs progress and financial performance in a manner that is both transparent and easy to understand. This report does not replace the Annual Comprehensive Financial Report (ACFR), but rather provides a summary of financial activities. The full disclosure financial statements, or ACFR, are available online at www.vbg.org/financialreports. 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 audited financial statements and conforms to generally accepted accounting principles (GAAP) and related reporting standards. The Village continues to prioritize financial transparency and open communication with its residents and businesses. I hope the information and data provided in this guide to local financial activities in 2022 gives you 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 Villageʼs official records, meeting minutes and documents as well as a range of services including business and liquor licensing, voter registration and municipal code updates. Budget Overview Buffalo Grove's 2022 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 and/or safe. Every program consists of major services the Village provides for its residents and the business community. Therefore, the budget document is 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 2022 budget supports 18 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... Janet Sirabian Eric Smith BG is... of residents have some level of post-secondary education 87% Median household income in BG $117,921 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, pension funds and debt service Overseeing the strategic use of information technology resources The Villageʼs net position increased by $5.9 million (or 35.7 percent) during the fiscal year ending December 31, 2021. The governmental net position decreased by $6.2 million (16.9 percent) and the business-type activities net position increased by $12.1 million (18.8 percent). Equalized assessed valuation decreased by $36.6 million or 2.1 percent to $1.75 billion for the 2021 levy year (collected in 2022). Did you know? Open BG provides a hub of direct access to the Villageʼs financial, historical and contractual data. Anyone can use this data to participate in and improve government. Check it out at vbg.org/openbg! BG Quick Facts Where Your Property Tax Dollars Go of residents in the labor force are currently employed 97% is the median age of a BG resident 41.2 of residents have access to 4+ acres per 1,000 residents 79% Single-family homes in Buffalo Grove 11,434 of residents were born outside of the United States 35% Total population in BG 43,212 74.3% 16.4% 9.3% 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 Siemens, Plexus and Yaskawa. 2022 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. Revenues for the Villageʼs governmental activities for the year ended December 31, 2022 were $66.3 million, an increase of $7.0 million or 11.8 percent. Property taxes continue to be the Villageʼs largest source of revenue (25.7 percent) at $17.0 million. Included within the property tax revenues are the pension levies for the Police and Firefighter Pension Funds and IMRF/Social Security. The pension levies account for 33.2 percent of the property tax levy. 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 $34.4 million or 52.0 percent of total governmental activities revenue. Revenue Overview Did you know? MoneyGeek.com recently evaluated small cities and towns across the United States - those with 30,000 to 100,000 residents - and ranked them according to the per capita cost of crime. They ranked Buffalo Grove the #1 safest town in the U.S., with a $22 crime cost per capita. Local Economy External economic factors at the national and state level continue to impact the Villageʼs revenue profile and, subsequently its ability to manage operating and capital resources. Property tax collections totaled $17,037,557 which is a slight increase from the previous yearʼs total of $16,970,657, an increase of 0.4 percent. Water and Sewer collections decreased from $16,326,679 in 2021 to $16,119,322 in 2022, a total decrease of 1.3 percent. Sales taxes, both state shared and home rule, generated $17,037,557 in 2022 versus $16,013,176 in 2021, an increase of .4 percent. MoneyGeek.com recently evaluated small cities and towns across the United States - those with 30,000 to 100,000 residents - and ranked them according to the per capita cost of crime. They ranked Buffalo Grove the #1 safest town in the U.S., with a $22 crime cost per capita. Did you know? 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 health impacts of businesses. Developing standards for the permitting and zoning of the village's built environment. The Clove Village leadership, along with developers Kensington Development Partners and Urban Street Group broke ground on the 22- acre Town Center property redevelopment. Construction of The Clove is underway to transform the area into a new, modern entertainment, commercial and residential district. This compact central district will feature contemporary building design, as well as upscale tenants and be a unique destination for residents and visitors alike. Following the groundbreaking, several buildings were demolished. Construction is underway on the 43,000 square foot grocery store, as well as the 7-story, 297-unit high- end apartment building with 16,000 square feet of commercial space on the ground floor. Distinctive of this building, the NCH and retail outlot Northwest Community Healthcare (NCH) redeveloped into a new 4-story medical office building that was awarded the 2022 Best Medical Property in the state. NCH's site plans also include a 4,900 square foot retail outlot at the northwest corner, and construction is underway for Wild Fork and Veterinary Emergency Group. New Public Works Facility focus is creating an amenity-rich, convenience-filled environment. The plan also provides nearly 20,000 square feet of new retail and restaurants scattered throughout the site. So far Chick-fil-A and Guzman y Gomez have made commitments and construction for their new restaurants is in the works. A nearly one-acre Village-owned “Central Park” will sit in the middle of the site and can be programmed for concerts and other events. The 34,000 square feet located on the northern portion of the site, creating new opportunities for existing and future tenants. The Village purchased the building at 1650 Leider Lane and began planning for construction. The new 173,000 square foot facility provides enough space to accommodate public works operations now and well into the future. Repurposing an existing building will save the Village approximately 40% of costs compared to that of a new building. While construction costs are at a premium, staff has planned for value engineering to keep costs in line. The project will be financed with combination of AAA-rated bonds and capital fund reserves. The remainder of the project cost will come from the sale of the existing public works property and other sources, with no additional cost to BG taxpayers. Occupancy is anticipated sometime in 2024. BGPD Quick Facts Expense Overview The cost of all governmental activities this year was $67.1 million, an increase of 65.3 percent from 2021 ($40.6 million). The largest decrease was made in General Government expenses $19.4 million in 2022. Public Safety expenses increased by $6.9 million (28.9 percent) and Public Works expenses remained stable at $8.0 million. Expenses from all business-type activities increased by $5.3 million or 37.3 percent. The Water Fund expenses increased by $5.1 million, which compares favorably to a budgeted increase in expenses. Golf expenses were decreased in 2022 to $2.0 million in total or 4.8 percent. Affirmative Action Recruiting Plan has been in place since 1986 and updated every 3 years. Biased Based Policing Annual review revealed the 21st 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 Pension Obligations The Fire Pension Fund had a funded ratio of 82% as of December 31, 2022. The annual interest rate assumption is 7% with a the five-year average return is 6.36% as of December 31, 2022. The Police Pension Fund had a funded ratio of 78% as of December 31, 2022. The annual interest rate assumption is 7% with a five-year average return of 5.68% as of December 31, 2022. 75% of total retirement expenses are related to pension costs. In 2022, the Village contributed $5.8 million in employer obligations for current and future annuitants and $9.4 million was distributed to retired pensioners. Finance and Liabilities 2022 Adequate Reserves The Village had $17,701,070 in unassigned fund balance available in the General Fund on December 31, 2022. Debt Reduction The Village retired a total of $2,570,990 in general obligation debt in fiscal year 2022. Public Safety Pension Funding The Fire Pension Fund is funded at 81.9%, and the Police Pension Fund is funded at 77.5%. State statute mandates that pensions be funded at 100% by 2040. Financial Stability The Village holds a AAA⏤the highest possible⏤bond rating from Standard & Poor's on all current bonded general obligation debt. The Village's financial policy requires a 25% fund balance for general operations. Learn more at www.vbg.org/financialreports. Cambridge on the Lake Lift Station Relocation Forest/Glendale Street + Utility Thompson + Brandywyn Road Contract 3 Maintenance Projects Learn more about key IMP Projects Connect with the Village and stay informed The Infrastructure Modernization Program encompasses the largest initiative in the Villageʼs 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 now through 2027. Key IMP Project Impacts and Results 2021 Projects Street Miles Water Miles Total Cost Melinda/Hiawatha 0.79 0.78 $2,350,800 Vintage 0.77 0.0 $456,000 Cambridge 0.75 0.70 $3,787,000 Thompson/Brandywyn 1.14 0.0 $4,324,000 TOTAL 6.79 1.49 $10,917,800 2022 Projects Street Miles Water Miles Total Cost COTL Li Station 0 0.1 $3,289,000 Forest/Glendale 1.21 2.7 $6,890,000 Thompson/Brandywyn 1.82 0 $2,842,000 TOTAL 3.03 2.8 $13,021,000 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. 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. The Village projects investing over $50 million into water, sewer and streets between 2020 and 2023. 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. Infrastructure Modernization Program Buffalo Grove will...