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02.27.24 Town Council Meeting Presentation Work SessionWelcome to the February 27, 2024, Prosper Town Council Work Session Call to Order/Roll Call Agenda Item 1. Discussion regarding the Town's five-year financial projection(s). (RBS) Multi-Year Financial Forecast Council Workshop February 27, 2024 Purpose •Kick Off to the Budget Season •Ensures Council and Staff are in alignment •Council Goals and Priorities •A growing and diversified tax base •Accelerate Capital program to support and promote growth •Excellence in Municipal Services •Commercial corridors are ready for development •Development of downtown as a destination •Revenue forecasts •Committed or requested (per five-year staffing requests)expenditures •Expenditure drivers •Needed Work sessions •Helps establish upcoming workplan for Budget Preparation •Population growth and capital project completions used for five-year staffing •A/V growth used for multi-year capital projects •Confirm Budget Calendar Upcoming Budget Calendar Key Dates •February –5-year budget projection •May 15 –Preliminary Appraisal Rolls Due •June 25 –Council Budget Workshop •July 25 –Certified Appraisal Received by Staff •August 5 –Preliminary Budget to Town Council •August 13 –Submit Preliminary Budget to Town Council •August 30 –Budget Town Hall Meeting •September 10 –PH/Vote on Budget/Vote on Tax Rate July 9 and 23 are regular Council meetings. July 30 is fifth Tuesday. General Fund Assumptions •Projected Revenues for FY 2025 •Property Tax –47% of revenue, 11.5% growth •Sales Tax –24% of revenue, 8.9% growth •License, Permits & Fees –13% of revenue, 17.1% growth •Franchise Fees –6% of revenue, 0.6% growth •Projected Expenditures –(not reviewed or approved by Town Management) •Personnel -62% of expenditures, 2.5% vacancy rate •4% merit for all employees •Compensation Study Funds •3% market for Public Safety pay plan •5% market adjustment for General positions more than 5% behind market •New Positions –includes all positions request by departments Personnel Expenditures –62% of GF Expenditures •Merit Adjustment –4% •General Fund Impact -$859,590 •Water and Sewer Impact -$122,268 •Storm Drainage Utility Fund -$9,612 •Public Safety Market Adjustment –3% •General Fund Impact -$335,362 •Crime SPD -$99,974 •Fire SPD -$62,501 •All Other Market Adjustment –5% where applicable •General Fund Impact -$164,713 •Water and Sewer Impact -$2,790 •Storm Drainage Utility Fund -$0 •Benefits –4% General Fund Assumptions (continued) •Expenditures (continued) •Operations –3% growth •Known Project Completion •Fire Station 4 –2025, staffing in 2025 and 2026 •Raymond Park –2025 •Lakewood Preserve -2025 •Public Works Facility -2026 •Streets –Various street openings in all years •One-time/Capital Expenditures (typically from new positions or programs) •Capital Dedicated –10.8 cents •Town Manager preliminary budget will balance with respect to recurring revenue and expenditures. One-time will balance with respect to available revenues with fund balance drawdowns (if any) complying with minimum fund balance policy. Debt Capacity and Capital Dedicated Goal is to maintain stable I&S rate of 17.7 cent rate but no more than 20.2 cents per policy •With additional DS capacity due to greater than expected A/V growth in FY 2025 to maintain the DS tax rate, we can: •Issue more debt in 2024 since first DS payment is 2025 •Front load DS to pay off debt sooner and keep rate up •Issue same amount but plan on redeeming callable debt in 2025 •Keeping Capital Dedicated at 10.8 cents means at projected growth, we will have about $10.2 million in capital dedicated funds Utility Fund Assumptions •Work in Progress •Solid Waste Fund was new in FY2023 •Rate increases from suppliers •We are a Distribution and Collection Utility •50% of total expenditures service cost from regional provider •Do not have firm increases from providers •Eventual goal to issue revenue bonds Work Sessions Future Work Sessions •June 25 –Budget Workshop •Compensation –Date not set •Other Capital needs not currently on Plan for CIP consideration? •Others Needed? July 9 and 23 are regular Council meetings. July 30 is fifth Tuesday. Property Valuation Year Existing Valuation Reappraisal Growth Reappraisal Growth New Property Total Valuation Total Growth 2020 3,744,683,788 49,749,601 1.3%414,634,110 4,209,067,499 12% 2021 4,209,067,499 31,571,433 0.8%360,557,369 4,601,196,301 9.3% 2022 4,601,196,301 366,487,773 8.0%469,526,490 5,437,210,564 18.2% 2023 5,437,210,564 582,365,527 10.7%596,431,779 6,616,007,870 21.7% 2024 6,616,007,870 842,814,805 12.7%876,474,004 8,335,296,679 25.99% 2025 8,335,296,679 333,411,867 4.0%791,505,566 9,460,214,112 13.5% 2026 9,460,214,112 189,204,282 2.0%811,904,109 10,461,322,503 10.58% 2027 10,461,322,503 209,226,450 2.0%739,486,333 11,410,035,286 9.1% 2028 11,410,035,286 228,200,706 2.0%674,277,196 12,312,513,188 7.9% 2029 12,312,513,188 246,250,264 2.0%613,329,972 13,172,093,424 6.98% New Property Valuation Year New Commercial New Single Family Single Family Permits New Multi- family Total New Property Valuation 2020 142,506,404 272,127,706 786 414,634,110 2021 79,258,829 281,298,540 1244 360,557,369 2022 146,247,781 323,278,709 700 469,526,490 2023 134,460,200 461,971,579 1225 596,431,779 2024 188,002,668 654,248,828 904 34,222,508 876,474,004 2025 150,000,000 572,465,566 900 69,040,000 791,505,566 2026 150,000,000 559,744,109 900 102,160,000 811,904,109 2027 150,000,000 519,086,333 800 70,400,000 739,486,333 2028 150,000,000 524,277,196 800 0 674,277,196 2029 150,000,000 463,329,972 700 0 613,329,972 Tax Rate Year I&S (Debt Service) O&M (General Fund) Capital Dedicated TIRZ Total Tax Rate Unused Increment Balance 2020 0.1525 0.3675 0 0.006 0.52 N/A 2021 0.1525 0.3675 0 0.008 0.52 0.013725 2022 0.182 0.328 0 0.008 0.51 0.043161 2023 0.18017 0.32983 0.112 0.013 0.51 0.017336 2024 0.177258 0.332742 0.108 0.011 0.51 0.002523 2025 0.177258 0.327742 0.108 0.012 0.505 0 2026 0.177258 0.322742 0.108 0.013 0.50 0 2027 0.177258 0.322742 0.108 0.014 0.50 0 2028 0.177258 0.322742 0.108 0.015 0.50 0 2029 0.177258 0.322742 0.108 0.015 0.50 0 Sales Tax Budget History Year Original Budget Amended Budget Actual Original Budget Variance Amended Budget Variance 2020 5,011,936 5,011,936 6,096,355 21.64%21.64% 2021 5,733,141 7,517,110 8,212,116 43.24%9.25% 2022 7,972,237 9,119,683 9,464,641 18.72%3.78% 2023 10,105,208 10,032,434 10,160,615 0.55%1.28% 2024 10,893,442 -- Sales Tax Projections –22% Year Sales Tax (TIRZ Adj.)Sales Tax Growth Mixed Beverage Mixed Beverage Growth 2020 6,096,355 N/A 74,941 N/A 2021 8,212,231 34.71%101,327 35.21% 2022 9,464,641 15.25%122,298 20.70% 2023 10,160,615 7.35%172,884 41.36% 2024 11,069,169 8.94%187,784 8.62% 2025 11,874,521 7.28%200,929 7.00% 2026 12,666,220 6.67%214,994 7.00% 2027 13,368,233 5.54%230,044 7.00% 2028 14,106,571 5.52%246,147 7.00% 2029 14,882,834 5.50%263,377 7.00% Sales Tax Projections Building Fees –14% of GF Revenue Franchise Fees –5% of GF Revenue New Personnel Requests FTE Count Current 2025 2026 2027 2028 2029 Total Ending Fire 80 10 4 6 0 12 33 113 Police 85 14.5 13 10 11 11 59.5 144.5 All Other 222.75 32.5 25 24 18 33 132.5 355.25 Total FTE 387.75 57 42 40 30 56 225 612.75 Amount 2025 2026 2027 2028 2029 Fire 1,226,849 536,315 630,650 105,108 1,437,066 Police 1,565,766 1,412,957 948,771 1,177,104 1,152,328 All Other 2,855,491 2,010,552 1,958,770 1,667,932 1,942,050 Total FTE 5,648,106 3,959,824 3,538,190 2,950,144 4,531,443 Debt Capacity at 0.17728 I&S Tax Rate See Debt Service Long Range Plan handout Year I&S Property Tax Revenue Revenue from Frozen I&S Taxes GO CO Additional Capacity Debt Service 2024 14,774,980 927,900 31,950,000 --15,727,864 2025 16,768,986 955,737 17,950,000 -5,763,460 17,749,724 2026 18,543,531 984,409 26,700,000 -5,409,525 19,552,941 2027 20,225,200 1,013,941 12,550,000 10,500,000 4,893,154 21,264,142 2028 21,824,915 1,044,360 10,242,000 -4,004,452 22,894,274 2029 23,348,589 1,075,690 --13,836,114 24,449,280 Executive Session Section 551.087 –To discuss and consider economic development incentives and all matters incident and related thereto. Section 551.072 –To discuss and consider purchase,exchange,lease or value of real property for municipal purposes and all matters incident and related thereto. Section 551.074 –To discuss and consider personnel matters and all matters incident and related thereto. Section 551.071 –Consultation with the Town Attorney to discuss legal issues associated with any agenda item. Section 551.071 -To consult with the Town Attorney regarding legal issues associated with Article 1.09 and Article 8.03 of the Town's Code of Ordinances, and Chapter 214 of the Texas Local Government Code,and all matters incident and related thereto. The Town Council will reconvene after Executive Session. Reconvene into Work Session Adjourn