20190709 Budget Work Session PPTTOWN COUNCIL
BUDGET WORK SESSION
July 9, 2019
Review 2019 Major Initiatives from
Strategic Planning Session
2
Review of FY 2019-2020 Budget Calendar
•July 25, 2019 Appraisal District Certifies Tax Roll
•August 13, 2019 Town Manager presents Proposed Budget
Certified Collection Rate/Certified Appraisal Roll and Proposed Property Tax Rate to Town Council
•August 16, 2019 Finance Subcommittee Reviews Proposed Budget
•August 27, 2019 Town Council Meeting –First Public Hearing
•September 5, 2019 Town Council Meeting –Second Public Hearing (special called meeting)
•September 10, 2019 Adopt Budget and Tax Rate
•October 1, 2019 New Fiscal Year Begins
3
FY 2018-2019 Budget Highlights
No increase in property tax rate
Increased Property Valuations
New Growth to Tax Roll
Increased Sales Tax Receipts
Increased Service Levels to Town
Increased Infrastructure Improvements
4
FY 2018-2019 General Fund Budget Highlights
Funded a Ladder Truck $1.650M
Funded a Street Maintenance program and other various street projects $1.813M
Funded Public Safety Facility FFE and Construction Enhancements $2.281M
Increased approved workforce from 162 to 184 FTE positions
Implemented the Enterprise Fleet program
Provided a Fire Modular Building and Parks & Rec office renovation
Supported a CPI Program, and completed first Kaizen event to improve efficiencies
5
FY 2018-2019 Water -Sewer Fund
Budget Highlights
Funded additional costs for water and sewer management
fees-$1.950M
Funded various water and sewer capital projects -$1.540M
Executed an exclusive franchise agreement with CWD for solid
waste that included more services to the citizens.
Increased approved workforce from 34 to 40 FTE positions
6
Growth Pressures
7
655 669 777
915
322
378
0
100
200
300
400
500
600
700
800
900
1000
2015 2016 2017 2018 YTD 2019
Building Permits
Building Permit Applications Projected
Growth Pressures
8
0
100000
200000
300000
400000
500000
600000
700000
800000
900000
1000000
2014 2015 2016 2017 2018
Public Works
Linear Feet of Water Lines Linear Feet of Sewer Lines
5,189
6,247
6,982
7,955
8,462
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2015 2016 2017 2018 YTD 2019
Utiltiy Billing Customers
Growth Pressures –
Public Safety
9
1,245 1,437
1,962 2,185
1,488
1,236
-
500
1,000
1,500
2,000
2,500
3,000
2015 2016 2017 2018 YTD 2019
Prosper Fire Department -Calls for Service
Prosper Fire Department - Total Calls Projected
28,889 30,754
36,688
14,625
20,475
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2016 2017 2018 YTD 2019
Prosper Police Department -Calls for Service
Police Calls for Service Projected
GENERAL FUND
10
11
General Fund Major
Revenue Sources:
Estimated Property Tax:
$14,602,011 52%
Estimated Sales Tax:
$4,991,187 18%
Building Permits Projected:
$2,06,400 10%
Makes up 80% of the
Revenue Sources within
the General Fund
Property Tax
52%
Sales Tax
18%
Building Permits
10%
Franchise Fees
7%
Other License, Fees, & Permits
4%
Transfers In
3%
Charges for Services
1%
Fines &
Warrants
2%
Other
3%
Property Tax Sales Tax Building Permits
Franchise Fees Other License, Fees, & Permits Transfers In
Charges for Services Fines & Warrants Other
FY 2018-2019 Year End Estimated
General Fund Revenue
Major Revenue Streams
Property values and TAV projected growth
Debt Service –I & S Rate
Sales Tax
Building Permits
Water and Sewer Rates
Miscellaneous Fees
12
2019 Preliminary Property
Valuation and Tax Revenue
13
Appraised Values History
Preliminary appraised value is $4.271 Billion for 2019.
•14.64% increase compared to 2018 value of $3.744 Billion
On average the Town sees a 2-3% reduction from preliminary values to
certified values provided by July 25th due to ARB reviews.
Tax Year 2013 2014 2015 2016 2017 2018
Final Value
($Billions)$1.447 $1.753 $2.139 $2.546 $3.114 $3.744
Value Changes
($Millions)$194.1 $305.8 $385.7 $407.2 $567.8 $630.6
Percentage
Change 15.49%21.13%22.00%19.04%22.30%20.25%
14
Average Single-Family Home Value History
$344,458 $333,084 $324,387 $321,662
$351,317 $378,651
$423,062
$460,766 $495,762
$523,567
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
15
2019 Preliminary Property Valuations
•Preliminary Total Taxable (after freeze loss) Increased 14.64%
Collin County Value $3,524,029,965
Denton County Value $ 747,106,298
Total Valuation $4,271,136,263
•Preliminary Existing Taxable Values Increased $125,547,276 or 3.39%
•Preliminary New Construction Totaled $419,022,643 or 11.25%
16
Property Tax Reform –SB 2
KEY TAKEAWAYS
New legislation limits Texas governments’ ability to raise maintenance and operations (M&O) property tax revenues above 3.5% without voter approval.
Cities and Counties likely will explore various strategies to manage the new revenue restrictions
This constraint, coupled with expanding infrastructure and service needs, could reduce financial flexibility and stress Texas municipalities’ creditworthiness according to the rating agencies.
17
FY 2012-13 thru FY 2018-2019
18
$0.000000
$0.100000
$0.200000
$0.300000
$0.400000
$0.500000
$0.600000
$0.700000
TY 2013 TY 2014 TY 2015 TY 2016 TY 2017 TY 2018
Town of Prosper Tax Rate History
Rollback Rate (after sales tax adj) @ 8%Rollback Rate (after sales tax adj) @ 3.5%Adopted Tax Rate Linear (Rollback Rate (after sales tax adj) @ 3.5%)
Tax Rate Analysis
•This analysis over the past 6 years, Town of Prosper levied property
taxes 4 out of 6 years higher than 8% rollback tax rate
•Only once in the last 6 years, has the Town levied property taxes
lower than 3.5% rollback rate (one year anomaly)
19
TAX YEAR TY 2013 TY 2014 TY 2015 TY 2016 TY 2017 TY 2018 Total
Revenue Loss-Rollback Rate 3.5%1,019,058$ 1,821,037$ 264,626$ 903,871$ 874,476$ -$ 4,883,068$
SB 2 Strategies/Impacts
•One-time capital expenditures to slow down due to limitations on futureyearfinancialflexibility
•Evaluate current programs and long-term viability
•More reliance on user fees
•Evaluate the sustainability of operating and personnel costs of new facilitypriortoconstruction
•RATING AGENCIES POTENTIAL IMPACTS:
•Defer maintenance on capital infrastructure
•Higher than normal transfers into general operating funds from water and sewerfunds,which could be supported by rate increases
•Slow growth with moderately sized property tax base will rely more heavily onalternativeformsofrevenuelikesalestaxandservicescharges/fees,which can bemorevolatile
20
DEBT SERVICE FUND
I&S RATE
21
Town’s Debt Capacity
•Town’s Debt Policy:
•Total principal of GO Bonds and all other outstanding tax
indebtedness will be targeted not to exceed 6% of TAV tax rolls.
•Town has maintained a level below the maximum debt capacity
•Town’s target of 35% or less of the total tax rate -$0.52 per Town’s
debt policy
•Town’s I&S rate has been stabilized at 29.30% of tax rate or $0.1525
22
Bond Ratings
Current Rating
AA+
Aa1
AA+
Aa1
Aa1
Aa1
Moody's Aa3 June 2012
Moody's Aa3 October 2011
Standard & Poor's AA February 2014
Moody's Aa2 February 2014
Standard & Poor's AA June 2016
Moody's Aa2 June 2016
Rating Entity Prior Rating Prior Rating Period
23
Moody’s recently rating on the 2019 GO Bonds and COs outlook as stable at Aa1
S&P recent rating on the 2019 GO Bonds and COs at AA+
Aa1 and AA+ ratings are the second highest ratings of each agency
Town’s very strong economy and rapidly expanding moderately sized tax base
Significant ongoing development
Conservative budgeting and formal policies
2020 Proposed
Sales and Use Tax
24
Sales Tax
Town levies a total of 2% sales tax on all taxable items sold within its borders.
Prosper Economic Development Corporation-Type B levies 0.5%.
May, 2018, voters approved to abolish the 0.50% sales tax revenue for property tax relief and replaced it with the creation of two Public Safety Special Purpose Districts.
Reflected in the budget as Special Revenue Funds:
Crime Control and Prevention District –0.25% sales and use tax
Fire Control, Prevention, and Emergency Medical Services District –0.25% sales and use tax
25
Sales Tax 8.25% Collected in the Town
State, 6.25%
Local: Support General
Fund, 1%
Local: EDC Type B,
0.50%
Local: Fire District,
0.25%
Local: Crime District,
0.25%
26
GF 1% Sales Tax Historical Net of TIRZ & Projected Collections
27
Fiscal Year Sales Tax Collections % Change
FY 2014-2015 $2,171,204 11.78%
FY 2015-2016 $2,796,393 28.79%
FY 2016-2017 $3,509,444 25.50%
FY 2017-2018 $4,424,976 26.09%
FY 2018-2019 Estimate $4,931,554 11.45%
FY 2019-2020 Budget $5,178,132 5.00%
Public Safety Historical and Current Funding
28
$- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000
FY 2016-2017 Actual
FY 2017-2018 Actual
FY 2018-2019 Budget
General Fund SPDs
*FY 2018-2019 General Fund funded one-time Public Safety capital
infrastructure:Ladder Fire Truck and Police Station/Dispatch Facility in the
amount of $4,281,293.This is not represented in the graph above.
Building Permits
Fee Rate Structure
29
Building Permit Rate Structure
•Approved by Council 6/25/2019 due to HB 852 effective date 5/21/19
•Prohibits municipalities to develop permit fees around value of
dwelling or cost of construction
•Law prohibits disclosure of valuations as a condition of obtaining a
permit
•New residential building permit fee schedule based on square footage
•Approved Permit Fee schedule is provided on the Town’s webpage
30
Building Permit Fee Revenue
31
$2,441,631
$2,855,876
$2,776,784
$4,116,287
$2,806,400
$3,215,472
300
400
500
600
700
800
900
1000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
2015 2016 2017 2018 Estimated 2019 Projected 2020
Building Permits
Building Permit Revenue Permits Issued
WATER AND WASTEWATER
FUND
32
Water & Sewer Fund Revenue
FY 2018-2019 Year End Estimated
33
Water Charges,
$12,041,488 , 58%
Sewer Charges,
$6,539,283 , 32%
Sanitation Charges,
$1,279,576 , 6%
Other, $577,521 , 3%Investment Income,
$140,619 , 1%
Water-Sewer Rate Plan Rate Model
•Town adopted a multi-year water and sewer rates during 2018 budget
process.
•Every budget cycle,staff reviews the adopted rate to see if parameter
of financial stability are met.
•Must maintain minimum of 25%of annual operating expense
•Must target minimum 1.25 debt coverage per debt management policy
•The Water/Sewer Fund has out performed due to
•Accelerated customer account growth
•Prudent budgeting
•Capital Plan Management
34
Proposed FY 2020 Rate Plan
35
•No adjustment to sewer rates in FY 2020
•No adjustment to residential water rates in FY 2020
•Only adjustment for FY 2020 will bring Commercial water base
charges into alignment with the Residential water base charges
Proposed FY 2020 Water-Sewer Rate Plan
36
1" meter Residential Rates
Current
Rates
FY 2020
Adopted
Rates
FY 2020
Proposed
Rates
Proposed
% Change
Water, 10K gallons & 5K Sewer 116.95$ 130.65$ 116.95$ 0.00%
1" meter Commercial Rates
Current
Rates
FY 2020
Adopted
Rates
FY 2020
Proposed
Rates
Proposed
% Change
Water, 20K gallons & 20K Sewer 271.10$ 307.10$ 276.05$ 1.83%
Historical & Forecast Annual Water Accounts
FY 2014 –FY 2023
37
FY 2020 Water Usage by Customer Class
38
Annual billable
consumption estimate =
Over 1.7 Billion Gallons
Average Monthly
Residential Bill Comparison
39
$81.21
$90.92
$91.21
$91.54
$104.20
$105.45
$108.19
$112.05
$116.95
$117.93
$128.18
$132.73
$132.96
$146.96
$149.99
$54.88
$49.40
$59.85
$57.94
$61.70
$63.42
$61.77
$65.50
$64.05
$75.13
$80.20
$88.74
$92.13
$104.00
$100.08
$26.33
$41.52
$31.36
$33.60
$42.50
$42.03
$46.42
$46.55
$52.90
$42.80
$47.98
$43.99
$40.83
$42.96
$49.91
Colleyville
Frisco
Coppell
University Park
McKinney
Fairview
Rockwall
Sachse
Prosper
Keller
Southlake
Little Elm
Murphy
Princeton
Rowlett
Regional Bill Comparison (Residential)
Water (10,000 gallons)Wastewater (5,000 gallons)
Average Monthly
Commercial Bill Comparison
40
Miscellaneous Fees
•Plan Review Fees
•Third Party Fees/ Geotechnical
•Inflow and Infiltration Fees
•Usage Fees –407 Recreation Center
41
Plan Review Fees
•Fee to offset costs for electronic review software
•Software Licensing $7,000.
-$150 engineering plan review fee proposed would generate approx. $6,000 for 40 projects. (over 50 projects last year)
-Additional savings on CIP engineering plan submittals.
•Various Comparison Cities collect similar fee in some manner or method
42
Third Party Fees/ Geotechnical
•Follow up item from Windsong Ranch Road Repairs
•Provides more consistent and reliable testing
•With exception of Colleyville*, no other Comparison City provides Material Testing services.
•Melissa, Grand Prairie, Fort Worth* and Burleson* provide Material Testing services, and fund with either increased inspection fees* or transferring hard costs to Developer
•Recommend transferring hard cost to Developer initially and re-evaluating as increase to inspection fees in the future
43
Inflow and Infiltration Fees
44
•Inflow -Storm water that enters into wastewater
system at points of direct connection to the systems.
Various sources contribute to the inflow including
open wastewater pipes, unprotected manholes, and
openings in wastewater lines.
•Infiltration -Groundwater that enters wastewater
system through cracks and/or leaks in wastewater
pipes and manholes.
Large Flow Events Amount in MGD / Cost to Treatment Rain Fall in Inches
October 10, 2018 3.4 $ 6,900 2.7
October 14, 2018 6.4 $ 13,600 2.7
October 20,2018 10.9 $ 23,700 1.7
December 26, 2018 1.9 $ 3,500 3.5
April 23, 2019 1.3 $ 2,100 1.5
May 18, 2019 0.44 $ 200 2.7
June 1, 2019 0.347 $ 0 1.7
*Typical flow is 0.375 –0.400 MGD
Actual Inflow Occurrences
Actual Inflow Occurrences
Items Reviewed
•Prohibit contractors from connecting to exiting lines until final acceptance
has been granted.
•Not considered at this time.
•Install in-line valves to prevent flow until acceptance.
•Not considered due to future maintenance.
•Fining contractors that cause inflow to existing wastewater lines.
•Fining builders/developers that cause inflow to existing wastewater lines.
•No other municipalities are currently fining for inflow violations.
In the summer of 2016, inspections of 33,402 linear feet of wastewater mains and 75
manholes/cleanouts were completed within the area bound by Coleman Street, Preston Road,
Gorgeous Road, and south of East First Street.
Phase I
Located Repairs Amount
Structural Repairs $188,080
I&I Repairs $190,470
Total Repairs $378,550
Completed Repairs Amount
Completed Repairs $6,920
Remaining Repairs (1-3 Years)$62,650
Future Repairs (5-10 Years)$308,980
In the summer of 2017, inspections of 32,998 linear feet of wastewater mains and 85
manholes/cleanouts were completed in the area bound by Coleman Street, E. Prosper Trail,
Preston Road and Hickory Creek Drive.
Located Repairs Amount
Structural Repairs $52,725
I&I Repairs $160,475
Total Repairs $213,200
Completed Repairs Amount
Completed Repairs $12,575
Remaining Repairs (1-3 Years)$116,500
Future Repairs (5-10 Years)$84,125
Phase II
In the summer of 2018, inspections of 16,866 linear feet of wastewater mains and 58
manholes/cleanouts were completed in the area bound by Coleman Street, W. Prosper Trail,
BNSF Railroad and W. First Street.
Located Repairs Amount
Structural Repairs $28,535
I&I Repairs $56,990
Total Repairs $85,525
Completed Repairs Amount
Completed Repairs $25,585
Remaining Repairs (1-3 Years)$59,940
Future Repairs (5-10 Years)$0
Phase III
Proposed Fee Schedule
Description Fee
Non-Plugged Wastewater Lines & Manholes to System
First Offence
Second Offence
Third and Subsequent Offence
$500 Connection/Day
$750 Connection/Day
$1,000 Connection/Day
Wastewater Services Open/Broken
First Offence
Second and Subsequent Offence
$100 Lot/Day
$200 Lot/Day
Service Inflow from Plumbing Installation
First Offence
Second Offence
Third and Subsequent Offence
$250 Lot/Day
$400 Lot/Day
$500 Lot/Day
•Continue to repair the items that provide the highest return.
•Arrange contracts to repair the existing deficiencies with outside contractors. (2019)
•Continue to follow and update the CMOM Program, which includes three additional years of
smoke testing. (Summer 2020)
•Install bollards or pipes to protect manholes located in off-site areas and install gates for easier
egress. (Summer 2020)
•Complete the three wastewater meter stations, SCADA instrumentation, and related towers.
•This will allow staff to see real time flows to UTRWD. (Summer 2019)
•Staff is anticipating to bring an ordinance to Town Council for adoption at the July 23, 2019
meeting.
Staff Involvement
Usage Fees –407 Recreation Center
54
Town Hall Improvements
Public Safety/Military Wall of Honor
Office for the Mayor of the Town
3rd floor shell space, arch window area
3rd floor shell space, balcony area
Renovate an existing conference room
55
56
57
58
59
60
61
62
63
CAPITAL IMPROVEMENT
PROJECTS
64
Recently Completed & Under Design
65
Recently Completed
Under Design
$221,500,000
Completion in Next 5 Years
66
Recently Completed CIP
Under Design
$221,500,000
Completed
Next 5 Years
$464,998,881
Completion Beyond 5 Years
67
Recently Completed CIP
Under Design
$221,500,000
Completed
Next 5 Years
$464,998,881
Completion
Beyond 5 Years
$546,941,000*
STREET
Gates of Prosper, TIRZ 1 (Richland, Lovers Lane Detention)$ 3,125,025
Coleman Street (Gorgeous –Prosper Trail) –4 lanes –(Study Section)$ 250,000
FM 2478 (US 380 –FM 1461) –(ROW Payment)$ 69,000
Fishtrap (Segments 1,4) design; (Elem to DNT) Schematic –(Construction Segment 1)$ 1,190,000
Craig Street (Preston –Fifth)$ 1,250,000
Prosper Trail / DNT Intersection Improvements $ 1,600,000
Cook Lane (First –End) $ 2,100,000
Fishtrap (Teel –Gee Road) –(Design)$ 400,000
Gee Road (Fishtrap –Windsong Retail) –(Design)$ 250,000
Fishtrap (Elem –DNT) –2 then 4 lanes –(Design)$ 500,000
Coit Road (First to Frontier) –4 lanes –(ROW Acquisition)$ 800,000
Teel (US 380 Intersection Improvements) –(Design)$ 100,000
$11,634,025
68
TRAFFIC
Traffic Signal –Fishtrap & Teel Parkway –(Construction)$ 300,000
Traffic Signal –Fishtrap & Gee Road –(Design and Construction)$ 350,000
Traffic Signal –SH 289 & Lovers Lane –(Design and Construction) $ 350,000
Traffic Signal –Coit Rd & Richland Boulevard –(Design) $ 50,000
Traffic Signal –Fishtrap & Windsong Parkway –(Design) $ 50,000
$1,100,000
69
PARK
Lakewood Preserve $2,092,500
Hays Park $ 35,000
Pecan Grove Irrigation $ 85,000
Star Trail Park #2 $ 535,000
Pecan Grove Phase 2 $ 67,500
Windsong H&B Trail Phases 3C,5,6A,6B,7,8, and 9 $ 450,524
Pecan Grove H&B Trail $ 30,000
Star Trail H&B Trail Phases 1,2,3 and 4 $ 100,000
Whitley Place H&B Trail (Powerline Easement)$ 280,000
Frontier Park Storage $ 285,000
$3,960,524
70
FACILITY
Westside Radio Tower for Public Safety $ 500,000
$ 500,000
71
WATER
Custer Road Meter Station and Water Line Relocations $ 2,501,275
Cook Lane (First -End)$ 400,000
Broadway (Parvin –Craig)$ 150,000
$ 3,051,275
WASTEWATER
$0.00
72
DRAINAGE
Frontier Park / Preston Lakes Drainage Improvements –(Design)$ 100,000
$ 100,000
73
Future Council Discussion Items
Field Utilization
Police Staffing Plan
Future Fire Station and Staffing Plan
Downtown Open Space
74
Key Dates in Budget Process
August 27 1st Public Hearing on Tax Rate and Budget
September 5 2nd Public Hearing on Tax Rate and Budget
September 10 Council Adopts the FY 2019-2020 Budget
Council Sets the 2019 Tax Rate
October 1 Fiscal Year 2019-2020 Begins
75
Thank you!
Questions?
76