Lessons Learned from the City’s Financial Storm

The City of Lauderdale Lakes

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Managing a City Through a Financial Crisis….

Jonathan K. Allen, MPACity Manager Broward League of Cities

April 16, 2015

Presentation Overview

City of Lauderdale Lakes Facts The Perfect Storm

– Declining Taxable Value– $9.0 Million Public Safety Debt– Heighten Public Scrutiny and Lowered Public Trust

Visual Success Rather Than Failure Development & Execution of a Strong Budget and Financial Plan Don't Let a Good Crisis go to Waste Tune Out the Noise and Criticism Performance Over Politics

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City of Lauderdale Lakes Overview

Style of Government Mayor – Commission – City Manager

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Population 32,593City’s Total Area (Sq. Miles) 3.64Housing Stock 14,283

3,000 Multi-Family 21%7,000 Condo 49%4,283 Single Family 30%

CRA Area (500 acres/.8609375 sq. miles) 24%Commercial Base 15%

City of Lauderdale Lakes Facts Trend History – Millage Rate

Style of Government

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City of Lauderdale Lakes Facts Trend History - Taxable Value

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City of Lauderdale Lakes Facts

Repayment Agreement:Broward Sheriff’s Office Police and Fire Services

The City has entered into a repayment agreement with Broward Sheriff’s Office (“BSO”) for the repayment of past due consideration for public safety services. Payment of the balance is due semi-annually with a final lump sum payment due in April 2016. Annual interest is at a rate determined by BSO using the Annual County Pooled Cash Rate percentage of September 30, 2013. The outstanding balance on the obligation as of September 30, 2013 was $ 7,021,129. Future payments are due as follows:

Year Ending September 30

2014 $ 1,300,0002015 1,450,0002016 4,271,129Thereafter NONE

$ 7,021,129

**Renegotiated Balance Request to Reduce BSO Debt by 50%

The Public Safety Factor - $9,021,129 Debt

Police FY 2015

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Fiscal Year Consideration Ad Valorem# of Positions,

incl. grantpercentage

FY 2004 5,656,960 4,896,556 65 116%FY 2005 5,928,821 5,021,921 65 118%FY 2006 6,398,735 5,606,130 69 114%FY 2007 7,570,281 6,784,525 77 112%FY 2008 7,884,143 6,305,387 73 125% Start of Financial Crisis, lost opportunity to restructure contract

FY 2009 8,476,030 5,904,614 73 144%FY 2010 7,771,800 5,984,871 70 130%FY 2011 8,571,800 5,614,744 70 153% Height of financial crisis

FY 2012 6,124,340 6,627,873 47 92%FY 2013 5,936,046 6,214,294 47 96%FY 2014 6,326,095 6,470,930 49 98%FY 2015 6,636,966 6,183,605 50 107%

5,656,960 5,928,8216,398,735

7,570,281

7,884,143

8,476,030

7,771,800

8,571,800

6,124,340 5,936,046 6,326,095 6,636,9664,896,556 5,021,921

5,606,130

6,784,5256,305,387

5,904,6145,984,871

5,614,744

6,627,873

6,214,2946,470,930

6,183,605

116% 118%114% 112%

125%

144%

130%

153%

92%96% 98%

107%

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

BSO As Percentage of Ad Valorem

Consideration Ad Valorem # of Positions, incl. grant percentage

Public Safety - Police

Fire FY 2015

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Fiscal Year Consideration Assessment# of Positions,

incl. grantpercentage

FY 2008 6,226,818 2,841,496 49 219%FY 2009 6,502,425 3,190,279 49 204%FY 2010 6,864,758 3,210,669 49 214%FY 2011 6,416,937 3,222,812 49 199%FY 2012 6,815,189 4,077,295 49 167% Audit of FY 2012 Found $1M overpayment

FY 2013 6,725,780 4,424,031 44 152%FY 2014 6,948,618 5,704,875 45 122%FY 2015 7,612,778 5,910,770 50 129%

6,226,8186,502,425

6,864,7586,416,937

6,815,189 6,725,7806,948,618

7,612,778

2,841,496

3,190,279 3,210,669

3,222,812

4,077,295

4,424,031

5,704,875

5,910,770

219%

204%

214%

199%

167%

152%

122%129%

0%

50%

100%

150%

200%

250%

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

BSO As Percentage of Ad Valorem

Consideration Assessment # of Positions, incl. grant percentage

Public Safety - Fire

Broward County OIG Findings “Gross Mismanagement of Public Funds”

City went from $6 Million in General Fund reserves to being unable to pay for BSO public safety services

CRA funds were improperly used for City operating expenses. Former Finance Director inflated revenue estimates of over $18

Million City revenue streams were over-estimated in disregard for

economic data that showed revenue decreasing City revenues were declining and expenses were not being

reduced

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February 2012

Broward County OIG Findings “Gross Mismanagement of Public Funds”

The City Manager was responsible for proposing the Budget but delegated the task to the former Finance Director

In FY2008, the City’s total fund balance declined from $6.3M to $4.4M or by 29.6%

In FY2009, the City’s fund balance declined from $4.4M to $921,853 or by 79.4%

In FY2011, the City owed BSO $9M for public safety services and the CRA $2.5M

City Management & City Commission didn’t monitor and manage it’s budget effectively

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February 2012

New City Management Team ResponseFirst 100 Days Into Recovery – Sept 2011

Imposed a hiring freeze Implemented a 10% across the board salary reduction

and 3% retirement reduction Negotiated/Executed a new debt repayment plan for $9M

owed to BSO for public safety services Negotiated/Executed a Forbearance agreement for $2.5M

owed to the CRA Consolidated City Departments to realize cost savings

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New City Management TeamFirst 100 Days Into Recovery – Sept 2011

Held Training Session on Understanding Municipal Financial Management for City Officials

Established & Maintained Open Communication with External Stakeholders

Cooperated with State’s Joint Legislative Auditing Committee and Broward County Auditor to complete external assessments of the City’s financial condition

Established New Monthly Financial Reporting Format and Regular Budget Reports

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Visual Success Rather Than Failure

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FY 2010 FY 2011 FY 2012 FY 2013

Government Wide

Total Net Assets: 20,814,900.00 20,205,763.00 24,051,959.00 30,859,631.00

Total Cash and Cash Equivalents: 18,147.00 1,725,412.00 5,303,554.00 6,930,087.00

Governmental Funds

Total Fund Balance (All Funds) 11,339,121.00 10,306,950.00 10,493,401.00 13,831,552.00

General Fund -1,415,269.00 -4,853,499.00 1,045,437.00 4,418,132.00

CRA Trust Fund 3,442,513.00 3,550,387.00 3,863,443.00 3,344,620.00

Fire Rescue Fund -1,396,103.00 -1,735,562.00 384,410.00 243,410.00

Total Cash & Cash Equivalents 18,147 33,336.00 2,361,890.00 2,140,436.00

Proprietary Funds

Total Net Assets 3,775,416.00 1,888,287.00 3,775,416.00 6,015,475.00

Stormwater Fund 2,754,715.00 1,390,683.00 2,754,715.00 4,146,140.00

Solid Waste and Recycling Fund 1,080,174.00 907,831.00 1,080,174.00 1,691,666.00

Financial Indicators Overall Rating Favorable as compared to the Benchmark Group.

4 Year Performance Measures

Development & Execution of a Strong Budget & Financial Plan

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Developed a Balanced and Conservative Budget Developed 5-Year City Financial Plan Adopted City Financial Integrity Principals and

Financial Procedures Produced Monthly Financial Reports by the 15th day of

each month Completed Budget Transition to GASB Requirements Coordinated Comprehensive Budget & Purchasing

Management Workshops with Facilitators

Action Items in Dealing with Financial Crisis….

Dr. Lee facilitating City’s Financial Training Session on Understanding Municipal Financial Management

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Don't Let a Good Crisis Go to Waste

Dollar Tree Stores Auto Zone Store Two Race Trac Developments Florida Medical Center & Infastructure

Investments American Land Ventures

– $50 million Multi-Family Development

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Performance Over Politics

Adopted budget with a City property tax rate of 9.50 mills Budget continued the City sound budgeting practices in accordance with generally

accepted accounting principles (GAAP) including conservative revenue streams Budget Trend: Reduction in overall property tax millage rate of -3.11% from the roll

back of 9.8046 Provided funds for law enforcement, emergency medical services and fire rescue

services through BSO Adopted fire assessment fee to pay for operating and outstanding debt costs Budget provided for the replenishment of Fund Balance of $211,489 Budget included a slight increase in the tax rate for the voter approved 2005

General Obligation Bond due to increase in the debt service Funded CRA Forbearance payment in the amount of $150,000 Funded BSO repayment in the amount of $1,184,500, including interest

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FY2013 Budget Summary

Performance Over Politics

Adopted budget with a City property tax rate of 9.50 mills Budget continued the City sound budgeting practices in accordance with generally

accepted accounting principles (GAAP) including conservative revenue streams Budget maintained a reduced City workforce and implemented cost effective

service delivery models Provided funds for law enforcement, emergency medical services and fire rescue

services through BSO Adopted fire assessment fee with increased revenue to cover operating and

outstanding debt costs Budget included a slight increase in the tax rate for the voter approved 2005

General Obligation Bond due to increase in the debt service Funded CRA Forbearance payment in the amount of $150,000 Funded BSO repayment in the amount of $1,410,475, including interest

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FY2014 Budget Summary

Performance Over Politics

Adopted budget reduced the City property tax rate from 9.50 mills to 8.95 mills Continued the City sound budgeting practices in accordance with generally

accepted accounting principles (GAAP) including conservative revenue streams Received $125,000 Federal COPS Grant to fund a School Resource Deputy positon Funded general government services including parks and human services,

development services, public works, and other municipal services at current levels Funded law enforcement, emergency medical services and fire rescue services

through BSO and related BSO debt obligations Modified fire assessment fee to include a multi-family category Continued effective use of City resources Funded infrastructure and capital improvement projects within the City Funded the continuation of economic and community development initiatives Continued improvements to the City’s overall financial condition

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FY2015 Budget Summary

Performance Over Politics

$750,000 FEMA Grant for Emergency Operations Center $400,000 County Recycling Grant $1.5 million SAFER Grant to restore Fire Services

Positions $521,000 CDBG Grant for Comprehensive Park

Improvement 2013 COPS Grant for $250,000 to fund two School

Resource Officer Positions 2014 COPS Grant for $125,000 to fund a School

Resource Officer Position

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Grant Awards

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MillageFire

Assessment Stormwater Assessment

Solid Waste/Recycling

Assessment

City of Lauderdale Lakes 8.9500

$ 302.60 (res)/$378.25 (multi) $ 132.00 $ 280.80

City of Lauderhill 7.3698 $ 388.00 $ 162.36 $ 237.84

City of Oakland Park 6.4315 $ 196.00 $ 72.00 $ 255.00

City of Tamarac 7.2899 $ 265.00 $ 121.87 $ 273.75

**Information available as of July 2014

Proposed FY 2015Assessment Rate Comparison

FY 2015 Rate & Per Capita Comparison

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  Millage Population Taxable *Per Capita

    Levied

    (2011 Population Estimates) Value Total Taxes

Lauderhill 7.3698 66,709 $1,940,295,798 $214

Lauderdale Lakes 8.9500 32,766 $829,495,272 $227

West Park 8.9200 14,078 $371,744,173 $236

Weston 2.3900 65,237 $7,082,007,793 $259

Margate 6.5261 53,714 $2,242,395,006 $272

Tamarac 7.2899 60,619 $2,741,474,787 $330

Oakland Park 6.3995 41,459 $2,379,597,572 $367

Lighthouse Point 3.5893 10,377 $1,884,891,938 $652

Southwest Ranches 4.6607 7,345 $1,191,355,934 $756

Pembroke Park 8.5000 6,099 $575,451,918 $802

Lauderdale-By-The-Sea 3.8000 6,074 $1,933,633,651 $1,210

Hillsboro Beach 3.8000 1,875 $1,057,227,189 $2,143

*Per Capita – per unit of population; by or for each person

**Information available as of July 2014

Positive Outcomes from having a Strong Budget & Financial Plan

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Fiscal Year FY 2014/2015 Financial Trends

Factors Trend in 2014/2015

Financial Condition Improving

Business Development Improving

Outstanding BSO Debt Decreasing

Cash Balance Increasing

Capital Investment Increasing

Property Values Improving

CRA Debt Decreasing

Increasing property taxes Reduced Taxes from 9.5 to 8.95

Reducing salaries and benefits Restored salaries and benefits

to pre-crisis levels

Closing City Facilities Re-opened facilities to limited

programming

Eliminating or Changing Services Implemented the hybrid model

for service delivery

Selling Assets Re-evaluated and no longer

needed

Reducing the Workforce The City is maintaining current

staffing level

State Intervention – AVOIDED! The City continues to provide

monthly financial information but it is no longer required

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Lessons LearnedManaging a City Through a Financial Crisis

Closing Remarks

The City will continue to monitor the Taxable Value Trends

Monitor and Manage Public Safety Costs

Participate in Financial/Budget Training Workshops

Active City Manager involvement in the Budget and Audit Process

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Managing a City Through a Financial Crisis

Questions

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