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July 1,
2004
Honorable
Mayor and Members of the City Commission
City of Lauderhill, Florida
In accordance with Article VI, Section 6.06 (e) and Article IX,
Section 9.01 of the Charter of the City of Lauderhill, I am pleased to submit a
balanced city manager’s proposed budget for fiscal year 2005. This proposed
budget includes recommended revenues and expenditures for the period covering
October 1, 2004 through September 30, 2005, and is submitted for your review and
consideration.
The goal of this message is to provide information on past and
current trends that contribute to the implementation of all major programs and
services provided by the city. The goal of the budget is to provide sound
fiscal management by allocating resources to those programs and services that
achieve the city’s mission. This document will review the city’s major programs
and services, and the funding sources necessary to provide them.
Budget Highlights
I am excited to be a part of the renaissance of Lauderhill. The
efforts of the city and county staff on the redevelopment of State Road 7 and
the regional park will generate more than $100 million in development in the
near future. Improvements such as the Carishoca Market Place, a 150-room hotel
and approximately 100 single family homes are scheduled for phase one of the
State Road 7 redevelopment project. These improvements, coupled with
landscaping and entranceway features, will greatly improve the appearance of our
State Road 7 corridor; which translates to increased economic development,
increased property values and ultimately additional tax revenues. Another
example of our transformation is the construction of our new police station,
county library, and Publix shopping plaza located on Oakland Park Boulevard.
These projects are examples of the city's new development standard and
philosophy.
As we move into fiscal year 2005, we will continue our efforts to
bring Cricket World Cup 2007 to the City of Lauderhill and work to develop micro
businesses. Other initiatives include the continued investment in our
infrastructure to ensure a clean, safe, and aesthetically pleasing community.
The city is continuing to move forward with its renaissance; however, as
mentioned in previous budget messages, we are at a financial and policy
crossroad. Outlined are the major factors that contributed to the development of
this budget.
General Government Services
I am proposing the addition of four (4) new police officers.
This will bring our total complement of certified police officers to 104. These
are the only new positions proposed in this budget. As you know, last year the
commission approved five (5) new police positions contingent upon receiving
grant funding. Unfortunately, we were not awarded the grant. Consequently,
during fiscal year 2004, we only filled two positions, which were funded by the
city’s budgeted salary match. These additions resulted in our current
complement of 100 officers.
To further the economic growth of the city, I am supporting the
establishment of the Lauderhill Chamber of Commerce, which will oversee business
development and retention. As a result, I am proposing the dissolution of the
Economic Development Department. Two new divisions were created in its place.
The first is the Office of Neighborhood and Business Enrichment, which will
operate under the direction of the Finance Department. Its primary
responsibilities will include grants procurement and management, neighborhood
and business enrichment and housing. The second is the Office of Project and
Program Development, which will operate under the direction of Administration.
Its primary responsibilities include coordinating and enhancing the city’s image
through special projects and events and tourism development, as well as public
relations.
The city continues to receive double digit increases to its
insurance costs. Our projected increase for fiscal year 2005 is twenty percent
(20%). This equates to an overall increase of approximately $400,000 for the
fourth consecutive year. Historically, the city has budgeted insurance costs to
a separate Insurance Service Fund, which was previously allocated to the
General, Water and Sewer, and Stormwater funds. During the six month budget
review of fiscal year 2004, the Insurance Service Fund was dissolved and the
cost of insurance policies were charged to the Human Resources Department while
actual insurance claims are charged directly to the originating department.
This practice will continue during fiscal year 2005.
Salary and benefit costs continue to rise at a pace greater than
projected revenues. Pension costs for the city’s four pension funds average
16.5 percent of payroll or $2,326,929. This is up from 13 percent or $
1,833,338, from last year. The additional costs are attributed to salary and
benefit increases based on collective bargaining agreements.
Debt Management
During fiscal year 2005 the city is required to make $3.8 million
in principal and interest payments for its outstanding debt. This represents an
increase of $2.2 million over fiscal year 2004. The specifics relating to the
increased payments are outlined in the debt management section of this message.
Capital Improvements
Planned redevelopment of our major thoroughfares is a priority
that is addressed. The commission approved an inter-local agreement with
Broward County on June 14, 2004, to contribute $4.2 million to the State Road 7
Beautification Initiative. Also, the proposed capital improvement plan includes
an additional $8 million for citywide beautification.
This budget includes a $2 million capital investment toward the
development of an arts and cultural center that will accommodate between 1,000
and 1,500 permanent seats. We will continue to work with the County in the
development of a state-of-the art, main event field. Both the cultural center
and event field are scheduled for construction in the planned county regional
park.
In summary, I am proposing the following to pay for the
aforementioned new positions, enhanced programs and services, increased debt
service payments, and capital projects. I am proposing that we increase the ad
valorem rate from $5.82 to $6.32 per $1,000 of assessed valuation; fire rescue
fee from $98 to $142 per year for all residential properties; the fixed water
and sewer fee from $6.65 to $10.00; the monthly stormwater fee from $6 to $8;
the delinquent utility payment assessment fee from 2 percent of outstanding
utility charges to 4 percent of outstanding utility charges. In addition, I am
proposing that we issue a $5 million Water and Sewer Revenue Bond and a General
Obligation Bond in the range of $20 million to $30 million.
Revenues and Expense Summary
The city will collect $36,545,019 in General Fund revenue for the
upcoming fiscal year, up from $32,600,413 in fiscal year 2004.
Fiscal year 2005 revenue
projections continue to be flat. Even though we have enjoyed a 12 to 15 percent
increase in our taxable property tax base, all other revenues are projected to
increase only 3 to 5 percent during fiscal year 2005. Communication Service
Tax revenue has leveled off during fiscal year 2004. Previously, we experienced
a decline in revenue based on the increase usage of residential and commercial
cable modems and DSL services. In addition, building structure permits are
projected to be $35,000, down from $150,000 during fiscal year 2004. This is a
direct result of the lack of available land for new construction.
This
will be the first year that we implement a Utility Water Service Tax. Based on
current water usage, this will generate approximately $1,000,000 in General Fund
Revenue. In an effort to grow our revenue base, staff will continue to seek new
funding sources by applying for federal, state, and local grants.
Taxes and fees
I am proposing a $.50 cent increase from $5.82 to $6.32 per
$1,000 in assessed valuation in the property tax rate for fiscal year 2005. As
a result, the new rate and property appreciation will generate $ 1,050,497 in
additional revenue.
Based on an equity rate study performed by Government Services
Group, Inc., which analyzed the cost of providing fire service, I am proposing
an increase to the fire rescue rates for commercial, industrial and residential
services. More specifically, the proposed fire rescue assessment fee will
increase from $98 to $142 per residential household. In total, the increased
Fire fees will generate $1,325,000 in additional revenue. This will fully fund
our fire rescue service.
User rates and charges
I am proposing to increase the monthly stormwater fee from $6 to
$8. This will produce $650,000 in additional revenue. The proposed increase is
based on an independent consultant study performed in fiscal year 2000. Based
on that study, the recommendation was to increase our monthly rate to $8 so that
we would have sufficient funds to support future infrastructure improvements and
debt service payments. This additional revenue is needed to pay for upcoming
principal and interest payments relating to our outstanding State Revolving
Loans and 2004 Stormwater Capital Project Bond.
Additionally, I am proposing to increase water and sewer rates
from $6.65 to $10.00. This will produce an additional $1,000,000 in revenue.
The additional revenue will fund much needed infrastructure improvements, such
as lift station rehabilitations and the required Turnpike crossing project.
Also, delinquent fee for past due utility payments will increase from 2 percent
of the total outstanding balance to 4 percent of the total outstanding balance.
The new rate will generate an additional $27,000 revenue.
Capital Projects Summary
Fiscal year 2005 budget includes a total of $17,024,333 in
capital improvement projects and expenditures. Of the total, $10,132,833 is in
the Capital Project Fund (305) and $6,891,500 in the Enterprise Funds (Fund 401
and 450). Projects in Fund 450 will be funded with current revenues. However,
projects in Fund 305 and 401 are not currently funded and will require the city
to issue debt to complete the recommended projects.
As previously discussed at commission workshops and retreats, our
policy has been to issue bonds in $5 million increments to fund current year
projects. Based on our current revenue streams, we only have the ability to
continue to fund our capital projects in this manner for three to four more
years. Hence, I am proposing that we continue to work to have a referendum
proposal for a General Obligation Bond in the range of $15 - $30 million
prepared for the November 2, 2004, General Election. With interest rates at a
50-year low, now is an excellent time to continue investing in our city by
seeking the approval of our residents for a General Obligation bond. This will
not only fund our current capital projects, but also give us the ability to
complete projects that are currently included in years four and five of our Five
Year Capital Improvement Plan to be completed in a timely manner.
A complete list of all capital projects is included in the
Capital Improvement Section of the budget document.
Debt
Management Summary
We currently have approximately
$35 million in revenue bonds and $8.1 million in State Revolving Fund Loans
outstanding. During fiscal year 2005 our total debt service equals $3.8
million, up from $1.225 million in fiscal year 2004. The sharp increase
represents principal payments that are required on our outstanding issues. The
increased payments are a result of the debt repayment structure. Upon the
issuance of our existing debt, the city pays interest only in the early years of
the repayment period with the understanding that future years would require
higher yearly payments. This methodology allows a larger portion of current
funds to be utilized at the beginning of the construction cycle while deferring
principal payments until the completion of the project. However, going forward
we will seek to refinance existing debt to ensure level payments over the entire
repayment period of the bond.
Summary
The city is well positioned to deal with this period of slow
revenue growth and increased expenses. We have adequate reserves to address any
unexpected revenue shortfalls or extraordinary expenditures. We will continue
to work diligently to ensure sound fiscal management of taxpayer’s dollars.
As stated in my fiscal year 2004 budget message, our goal is to
become the beacon of revitalization and economic growth in central Broward
County. As we continue to move forward with the renaissance of our city, we
must continue to work diligently to ensure sound fiscal management of our
taxpayer’s dollars. Being that we are at a financial and policy crossroads we
must continue to get the maximum return on all of our capital investments, both
human and fiscal.
In conclusion, I would like to thank our staff for their
contributions to the development of this proposed fiscal year 2005 budget for
your review. Through information gathered at our pre-budget workshops and from
the Commission, department directors and their staff had the tremendous task of
developing estimates and documentation necessary to support the proposed budget
requests. Assistant City Manager Desorae Giles-Smith, Finance Director Kennie
Hobbs, Jr., and Accountant II Herbert Gumbs assisted me in reviewing the
departmental budget requests and formulating the final version of the proposed
fiscal year 2005 budget. Lastly, I applaud the Finance Department staff for
compiling and producing the final version of the budget for your review and
consideration.
Sincerely,
Charles “Chuck” Faranda
City Manager
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