FY 2023/24
Quarter 1 Financial Report
FY 2022/23 Q1 Operating Results
REPORT OVERVIEW
This report outlines the City's financial performance for the initial quarter of Fiscal Year 2023/24, concluding on September 30, 2023. The financial analysis in this report pertains to the General Fund, the Water, Wastewater and CV. Starr Enterprise Fund, utilizing a modified accrual basis. It is important to clarify that this document does not constitute an audited financial statement. The accuracy of revenue and expenditure data remains provisional until the City concludes its annual audit and finalizes the Annual Comprehensive Financial Report (ACFR).
GENERAL FUND
The General Fund is the general operating fund for the City and includes direct programs, activities, and services provided to the residents of Fort Bragg.
GENERAL FUND REVENUES
The original adopted revenue budget for the General Fund was $11.6 million, an increase of 5 percent from the prior fiscal year.
Prior FY Q1
Actuals
Adopted
Budget
FY 23/24
Amended
Budget FY
23/24 Q1 Budget
Q1 Actual
Results
Variance
vs.
Quarterly
Budget
% of
Total
Budget
Transient Occupancy Taxes $ 1,188,729 $ 3,242,118 $ 3,242,118 $ 1,091,083 $ 1,187,461 $ 96,378 37% Sales Taxes 574,984 1,959,500 1,959,500 527,979 579,153 51,174 30% Property Taxes 8,641 1,150,257 1,150,257 - - - 0%
Other Taxes 188,244 903,985 903,985 144,450 180,952 36,502 20% Reimbursements 626,513 3,410,722 3,410,722 852,680 806,837 (45,844) 24% Charges for Services 30,320 81,343 81,343 20,336 32,573 12,237 40% Licenses & Permits 14,492 94,293 94,293 23,573 14,556 (9,017) 15% Use of Money & Property 13,255 90,000 90,000 22,500 53,724 31,224 60% Fines & Forfeitures 7,589 25,100 25,100 6,275 872 (5,403) 3% Other Revenues 35,432 20,200 20,200 5,050 14,555 9,505 72% Intergovernmental/Grant Reimb 118,411 647,262 647,262 161,815 190,743 28,927 29% Total Revenue $ 2,806,610 $11,624,780 $ 11,624,780 $ 2,855,742 $ 3,061,425 $ 205,683 26% Summary of FY 2023/24 Q1 General Fund Operating Results FY 23/24
At the end of quarter one, the General Fund's operating revenues amounted to a little over $3 million, surpassing quarterly budget projections by $206k, which represents 26 percent of the amended Budget. Transient Occupancy Tax (TOT) constitutes a significant portion, accounting for 28 percent of the total General Fund's revenue. In the last quarter of FY 19/20, TOT faced substantial challenges due to COVID restrictions, concluding the fiscal year with a deficit of $660k compared to budget projections, resulting in an overall deficit for the general fund. However, in FY 20/21, TOT rebounded remarkably, achieving its best year to date and concluding the fiscal year at $3.3 million. Contributing factors included eased international and domestic travel restrictions due to the pandemic, leading to an increase in the number of local visitors. Additionally, Visit Fort Bragg's ongoing marketing campaigns played a crucial role in attracting more visitors to Fort Bragg. In FY 22/23, TOT once again demonstrated a robust performance, indicating an 18% or $186k growth compared to pre-pandemic numbers. Despite this positive outcome, receipts experienced a 10% decline compared to the exceptional quarter recorded in FY 21/22, as detailed in the historical revenue figures provided on the next page. In the Adopted Budget FY 23/24, budget projections were rather conservative, projecting just 1 percent growth. At the end of quarter one, FY 2022/23 Q1 Operating Results
revenues for July and September beat the prior year numbers but were down in August by 10 percent compared.
s
Sales Tax The local sales tax rate is 8.875%, of which the State receives 6%, 0.25% to the County,
1.625% Special Tax, and the City receives 1% (known as the Bradley Burns Local Sales and Use Tax).
Inflation accelerated last year as the U.S. economy recovered from the COVID-19 Pandemic. Prices rose as strong consumer demand—stoked by lower interest rates and government stimulus—collided with constrained supply chains and pandemic-related shortages. Russia's invasion of Ukraine in 2022 further spurred inflation worldwide, hitting food, energy, and other commodity prices.
The ongoing impact of the Federal Reserve's interest rate hikes on the economy remains a topic of concern among many analysts. These rate increases primarily aim to mitigate inflationary pressures by rendering borrowing more costly. The intended consequence is reduced spending by households and businesses, potentially resulting in slower wage growth as employers exercise caution in hiring. $-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
FY 2023/24 FY 2022/23 FY 2021/22 FY 2020/21 FY 2019/20 FY 2018/19 Q1 TOT REVENUES
July August Sept
FY 2022/23 Q1 Operating Results
Despite a notable surge in the third quarter, the overall pace of economic expansion has been more subdued since the Federal Reserve initiated its series of rate hikes compared to the period preceding the Pandemic. The expectation was that these measures would counter inflation, but the effects on economic growth seem to have been more nuanced. As we move into the next quarter, there are indications that growth is once again moderating. This suggests that the full impact of the interest-rate hikes may still be unfolding and influencing economic dynamics. Observers will likely continue to closely monitor these developments to gauge the effectiveness of the Federal Reserve's monetary policy in steering the economy in a balanced direction.
The overall Consumer Price Index (CPI) increased by 3.7% in September 2023 from the same month a year ago, pulled down by a drop in gasoline prices that was partially offset by higher food costs. The reading was down from 8.3% in August to 9.1% in June, the highest inflation rate in four decades. The CPI measures what consumers pay for goods and services.
The current economic landscape is witnessing a shift in factors that have bolstered consumer spending over the past two years, and signs of strain are emerging. A notable concern is the decline in the personal saving rate, a metric indicating the funds individuals have left after accounting for expenditures and taxes.
This rate has dipped to 3.9% in the latest measurement, signaling that many Americans are tapping into their savings. The expectation is that the summer robust pace may not be sustainable and might need to moderate.
Several challenges on the horizon could contribute to a slowdown in spending. The resumption of student loan repayments and rising gas prices are identified as potential hurdles, impacting Americans' discretionary budgets for activities like dining out and travel. While there has been growth in Americans' paychecks, a nuanced perspective emerges when adjusting for inflation and removing taxes. In August, incomes experienced a decline for the second consecutive month. The looming concern is that widespread company layoffs could further impact incomes if the labor market cools. Locally, as the economy moves into the slower winter months, the City will continue to monitor consumer spending trends and navigate the evolving financial landscape in the coming months.
FY 2022/23 Q1 Operating Results
In FY 22/23, Quarter-one results were 30 percent of the total Budget. Sales Tax was only down 2 percent compared to the same period last year but still up 22 percent compared to Pre-Pandemic, which is optimistic news for the City as this revenue category continues to record gains. All sales tax categories have experienced year-over-year growth, the largest of which includes Food Products, Construction, and transportation. In addition, the County Pool, where most online transactions are captured, has continued to grow. This growth is attributable to the Pandemic's sustained impact of redirecting significant activity to online sales. The recent growth in County Pool receipts has been fueled by online purchases during the Pandemic and is facilitated by the South Dakota vs. Wayfair, Inc. Supreme Court decision in 2018, which provided states with the authority to require online retailers to collect sales tax even without a local presence in that State. The County Pool revenue is distributed to all cities within Mendocino County based on a distribution formula administered by the CDTFA.
The City's Sales Tax conservative projections are that revenues will end the fiscal year at $1.9 million, down 2% from the FY 22/23 year-end result of $2.2 million, as the Fed has aggressively raised interest mentioned above.
Property Taxes: Property Taxes are received in lump sums in December, April, and July, deviating from an even distribution throughout the year. This unique receipt pattern contrasts with the traditional evenly spread revenue streams. The rise in housing costs is particularly noteworthy, representing the most significant increase since the early 1980s. This surge can be attributed to a robust labor market, which has consistently propelled rental rates upward. Within the 95437 zip code, median home prices have maintained a year-over-year increase. According to data from Zillow as of September 2023, median home prices stood at $554k, marking a substantial growth from $480k—a decline of 8.2% over the past year. These trends emphasize the dynamic nature of property values and the broader economic landscape in the specified region.
The rapid half-point mortgage rate drop began when bond markets rallied after the Fed's rate hike pause on November 1 and continued when October inflation dropped. Mortgage rates have an inverse relationship with bonds, meaning that when interest in bonds—and subsequently bond prices—rises, mortgage rates tend to fall. The decline in rates has prompted a modest resurgence of interest in mortgages. According to the Mortgage Bankers Association (MBA), applications for home purchases increased by 5% between the last two weeks of November. However, this activity still remains below levels observed a year ago. The reason for this is that while rates have decreased in recent weeks, they are not exactly low. Approximately 83% of FY 2022/23 Q1 Operating Results
mortgage homeowners currently have a rate of 5% or less, according to Redfin.
Nevertheless, today's rates are significantly lower than the highest rates U.S. borrowers faced in 1981 when rates reached nearly 19% on 30-year mortgages. The historical context underscores that despite the recent drop, current mortgage rates are comparatively favorable for borrowers in today's market. Other taxes include Franchise Fees and Business License taxes. Actuals totaled $180k, which is $36k over the quarterly Budget estimates. The revenues from solid waste removal were up $33k from quarterly budget projections due to the new solid waste franchise agreement with Redwood Waste Solutions. Conversely, revenues from Cable television franchise fees have slowly declined as more customers move to satellite and internet-based services. Business License Tax is collected during the business license renewal season in February to March of each year. Reimbursements include the annual Citizens' Option for Public Safety (COPS) reimbursements for the City's Community Service Officers (CSO), admin cost reimbursement from grants, Highway user tax, special sales tax allocation, developer deposit reimbursements, and cost allocations transfers, which are considered a cost to the Enterprise funds but revenue to the General Fund. This revenue ended the quarter at $45k below the quarterly Budget due to the timing of some of the reimbursements, which is expected to pick up in the remaining quarters.
Intergovernmental are reimbursements for staff time work on grants, including the School Resource Officer reimbursement, Social Services Liason Grant, Economic Development Agency (EDA), Community Development Block Grants (CDBG) for code enforcement, business assistance loan, Utility Bill assistance, and general administration. The Quarter ended result was 29% of the total Budget.
FY 2022/23 Q1 Operating Results
GENERAL FUND EXPENDITURES
The General Fund's adopted Budget for FY 2023/24 was $11.5 million. The amended Budget is $11.7 million, with Budget amendments of $207,561, excluding Purchase order rollovers from the prior fiscal year.
EXPENDITURES
Prior FY Q1
Actuals
Adopted
Budget
FY 23/24
Amended
Budget FY
23/24 Q1 Budget
Q1 Actual
Results
Variance
vs.
Quarterly
Budget
% of
Total
Budget
General Government
City Council $ 47,827 $ 185,314 $ 112,360 $ 28,090 $ 21,940 $ 6,150 20% Administrative Services 200,791 737,505 761,621 190,405 178,361 12,045 23% City Attorney/Legal 110,807 300,000 314,193 78,548 43,549 34,999 14% Finance 130,325 635,770 637,770 159,442 159,477 (35) 25% Non-departmental (overhead) 439,162 1,138,196 1,141,534 285,383 616,731 (331,347) 54% General Government Subtotal 928,912 2,996,784 2,967,476 741,869 1,020,058 (278,189) 34% Public Safety
Fire 118,281 453,708 453,708 113,427 122,402 (8,975) 27% Police (Inc. Code Enforcement & Crew) 960,764 4,483,371 4,486,748 1,121,687 1,006,555 115,132 22% Public Safety Subtotal 1,079,045 4,937,079 4,940,456 1,235,114 1,128,957 106,157 23% Community Services
Public Works 373,348 1,561,495 1,742,846 435,712 345,540 90,171 20% Fort Bragg Marketing (Measure AA/AB) 43,385 240,650 252,458 63,114 29,360 33,755 12% Community Development 73,894 443,898 450,795 112,699 102,861 9,838 23% Community Contributions 17,558 147,588 174,957 43,739 117,158 (73,418) 67% Debt 239,375 556,303 556,303 122,757 122,757 - 22%
Community Services Subtotal 747,560 2,949,933 3,177,358 778,020 717,675 60,345 23% Allocation to Internal Service Funds 171,531 656,999 656,999 164,250 161,024 3,226 25% Total Expenditure $ 2,927,048 $11,540,795 $ 11,742,289 $ 2,919,253 $ 3,027,714 $ (108,461) 26% Net Revenue /(Expenditure) $ (120,438) $ 83,985 $ (117,509) $ (63,511) $ 33,711 $ 97,222 FY 23/24
Operating expenditures from the General Fund concluded the quarter at $3.03 million, representing 26 percent of the amended Budget. Listed below are the more significant variances. City Attorney/Legal Costs were just 14% of the total Budget and $35k under the quarterly Budget due to a September outstanding invoice that have not been paid. Legal costs are expected to be within Budget towards the end of the fiscal year.
Non-departmental is at 54% of the total Budget attributed to the nature of California Intergovernmental Risk Authority (CIRA) liability and property premium payments, which are paid in the first quarter.
Overall, property insurance has increased by 83%, and worker's compensation and general liability also recorded a cost increase of 19% year-over-year. Additionally, $150k was budgeted to contribute to Section 115 Trust to diversify the City's Investments to address the likelihood of increases to the California Public Employees' Retirement System (CALPERS) unfunded liability.
FY 2022/23 Q1 Operating Results
The Police Department budget is at 22% of the total budget and is on track with quarterly projections.
Dispatch costs will increase by 5 percent per the operating agreement with the City of Ukiah.
Additionally, the department currently has an open positions, which are expected to be filled in the third quarter. The budget line item also includes Code Enforcement and Social Service liaison. Community Contributions include the Budget for Noyo Center, Special projects from Measure AB, Sister City Program, and Economic Development & Financing Corporation (EDFC). In quarter one, payment of $17,558 was made to the Noyo center and $97,600 to the Fort Bragg Unified School District to repair and resurface tennis courts from Measure AB Special projects fund. Fort Bragg's Marketing budget includes expenditures such as professional marketing, events, and Public relations services. The quarterly Budget is $12k under Budget due to the timing of payments to Consultants and partner agencies, including Creative Thinking- Marketing. Debt Payments A significant accomplishment for the City in FY 2020/21 was developing and adopting a Pension funding policy. These included issuing Lease Revenue Bonds to reduce the City's Unfunded pension Liability by $7.5 million in November 2021 to achieve a 90-100 percent funding status with CALPERS. FY 2023/24 Budget includes the City's second annual debt payment for these bonds, in which interest is paid in quarter one, and the principal is to be paid in the fourth quarter.
Overall, most of the general fund expenditures are in line with or below quarterly budget projections.
GENERAL FUND NET RESULTS
The City's primary operating fund is the General Fund, which heavily depends on revenues generated from Transient Occupancy Tax (TOT) and Sales Tax. Both of these revenue streams achieved their best performance in FY 20/21 and maintained strong results throughout FY 21/22, experiencing a slight decline in FY 22/23. As of Q1 in FY 23/24, both TOT and Sales Tax revenues have remained stable.
During the first quarter of the fiscal year, revenues amounted to $3 million, equivalent to 26 percent of the annual Budget. Simultaneously, expenditures reached $3.02 million, constituting 26 percent of the annual Budget. This resulted in a net revenue of $33,711. Moving forward, our team will actively monitor revenues throughout the fiscal year to ensure they align with expenditure levels.
The upcoming Mid-Term Budget workshop, scheduled for March 2023, presents an opportune moment to assess the impacts of the economic slowdown observed in other sectors of the economy. This workshop will be instrumental in gaining insights into the evolving fiscal landscape and making informed decisions to maintain a balanced budget.
Prior FY Q1
Actuals
Adopted
Budget
FY 23/24
Amended
Budget FY
23/24 Q1 Budget
Q1 Actual
Results
Variance
vs.
Quarterly
Budget
% of
Total
Budget
Total Revenue $ 2,806,610 $11,624,780 $ 11,624,780 $ 2,855,742 $ 3,061,425 $ 205,683 26% Total Expenditure $ 2,927,048 $11,540,795 $ 11,742,289 $ 2,919,253 $ 3,027,714 $ (108,461) 26% Net Revenue /(Expenditure) $ (120,438) $ 83,985 $ (117,509) $ (63,511) $ 33,711 $ 97,222 Summary of FY 2023/24 Q1 General Fund Operating Results FY 23/24
FY 2022/23 Q1 Operating Results
MEASUE AA/AB UPDATE
1. Special Projects Allocation – 0.25%
C/F Balance 6/30/21: $ 67,000
FY 21/22
FY 21/22 Allocation 60,000
Dana Grey Water System Upgrade (28,097)
Bainbridge Park Soccer (51,228)
Purchase Groomer/Renovator (9,300)
Balance 6/30/22 $ 38,375
FY 22/23
Allocation FY 22/23 $ 70,231
Repair & Resurface of 4 Tennis & Pickle Ball Courts
FY 23/24
Allocation FY 23/24 $ 70,231
Repair & Resurface of 4 Tennis & Pickle Ball Courts (97,600) Est.Balance 6/30/24 $ 81,237
2. Noyo Center Allocation – 0.25%
C/F Balance 6/30/22: $ -
FY 22/23
FY 22/23 Allocation 70,231
Quarter 1 (17,558)
Quarter 2 (17,558)
Quarter 3 (17,558)
Quarter 4 (17,558)
Balance 6/30/23 $ -
FY 23/24
Allocation FY 23/24 $ 70,231
Noyo Center Q1 Allocation (17,558)
Est.Balance 9/30/23 $ 52,673.25
FY 2022/23 Q1 Operating Results
WATER ENTERPRISE FUND
The Water Enterprise concluded the quarter with revenues totaling $805k, equivalent to 26 percent of the overall Budget. Concurrently, expenditures for the same period amounted to $722k, representing 27 percent of the total Budget. This financial snapshot underscores a revenue surplus of $83k for the quarter, highlighting a favorable fiscal position for the Water Enterprise at this juncture. Ongoing monitoring of revenues and expenditures will continue to ensure prudent financial management in alignment with budgetary goals.
Prior FY Q1
Actuals
Adopted
Budget
FY 23/24
Amended
Budget FY
23/24 Q1 Budget
Q1 Actual
Results
Variance
vs.
Quarterly
Budget
% of
Total
Budget
Charges for Services $ 773,645 $ 3,050,060 $ 3,050,060 $ 843,232 $ 798,887 $ (44,345) 26% Other Revenue 17,828 49,000 $ 49,000 12,250 6,137 (6,113) 13% Total Revenue $ 791,473 $ 3,099,060 $ 3,099,060 $ 855,482 $ 805,024 $ (50,458) 26% Expenditure by Category
Debt Service $ 329,976 340,080 $ 340,080 $ 326,749 $ 284,191 $ 42,558 84% Personnel services 198,426 1,192,854 1,192,854 298,214 188,295 109,918 16% Administration 127,438 473,565 473,565 118,391 112,174 6,217 24% Contractual services 34,579 93,000 122,258 30,565 8,535 22,030 7% Materials & supplies 41,244 280,948 280,948 70,237 18,796 51,441 7% Utilities 49,568 175,000 175,000 43,750 48,071 (4,321) 27% Repairs & maintenance 4,687 44,500 45,878 11,470 8,299 3,170 18% Insurance 63,962 62,689 62,689 15,672 53,392 (37,720) 85% Other operating 3,806 10,500 10,500 2,625 330 2,295 3%
Total Expenditure $ 853,686 $ 2,673,136 $ 2,703,772 $ 917,672 $ 722,083 $ 195,589 27% Net Revenue /(Expenditure) $ (62,213) $ 425,924 $ 395,288 $ (62,190) $ 82,941 $ 145,131 Summary of FY 2023/24 Q1 Water Enterprise Operating Results FY 23/24
Net Revenue /(Expenditure) $ 111,377 $ 206,190 $ 149,006 $ 6,897 $ (62,213) $ (69,110) Charges for Services the revenue structure of the Water Enterprise Fund is significantly supported by Charges for Services. The first quarter demonstrated consistent performance compared to the previous fiscal year, with revenues typically higher in this period due to seasonal factors. During FY 22/23, quarter one, the City of Fort Bragg declared a Stage 2 water warning, leading to the implementation of mandatory stage two water conservation measures. These measures aimed at reducing water consumption by 10-20%. The proactive steps taken by ratepayers in the prior fiscal year, particularly during the summer, contributed to water conservation efforts. In response to these challenges, the city has undertaken initiatives to identify and address leaks. The installation of new Water Meters funded by the CDBG Grant in Quarters two and three will enhance real-time leak detection capabilities. Moreover, improvements to the customer portal through Water Smart will provide customers with analytics on their water usage, offering valuable information to address leaks and manage high water usage more effectively. These advancements reflect the City's commitment to efficient water management and customer engagement. The City received significant rainfall at the end of the winter months and is forecasted to have more rainwater replenishing our three raw water sources in the coming winter months.
Debt Service The adopted Budget for Debt Service stands at $330k within the Water Enterprise Fund.
Presently, the fund carries only one outstanding debt: the state of California Department of Water Resources Loan, which amounted to $476k and was successfully paid off in the preceding fiscal year. Additionally, the 2014 Water Revenue Refunding Bond, with a principal of $337,080, is set to mature in the current fiscal year.
As of now, Debt Services are at 84% of the Budget. This percentage reflects the timing of the payments, as FY 2022/23 Q1 Operating Results
WASTEWATER ENTERPRISE FUND
per the Debt Schedule, with payments typically made in Quarter one. The fiscal responsibility demonstrated by the successful repayment of the prior loan underscores the prudent financial management within the Water Enterprise Fund. The upcoming maturation of the Water Revenue Refunding Bond is a key consideration in managing the Debt Service budget for the remainder of the fiscal year. Contractual Services budget covers Utility Billing costs for printing, mailing, and compliance with Senate Bill 998. These costs have come in below Budget in the first quarter. Utilities are up 27% of the total Budget. Energy costs for Electric have risen by 35% per month compared to last year due to rate increases with a slight increase in consumption. Insurance costs, including Property & ADP Contributions, DIC Earthquake, and flood deductible buydown, are paid in the first quarter annually. As mentioned earlier, CIRA insurance costs have recorded year-over-year increases. Property Insurance increased by 83% and DIC by 43% overall. Currently, the Insurance costs are over 85% of the Budget. Staff is working with CIRA to confirm the allocation of property insurance before the mid-term Budget.
Overall, most expenditures are in line with quarterly budget projections, and staff anticipates that revenues will outpace expenditure estimates come year-end.
Wastewater Enterprise's revenue ended the quarter at $950k, which is 28 percent of the total Budget, and expenditures ended the first quarter at $756k, in line with overall quarter one budget projections.
Prior FY Q1
Actuals
Adopted
Budget
FY 23/24
Amended
Budget FY
23/24 Q1 Budget
Q1 Actual
Results
Variance
vs.
Quarterly
Budget
% of
Total
Budget
Charges for Services $ 873,566 $ 3,391,756 $ 3,391,756 $ 847,939 $ 915,238 $ 67,299 27% Other Revenue 52,218.00 140,000 140,000 35,000 35,248 248 25% Total Revenue $ 925,784 $ 3,531,756 $ 3,531,756 $ 882,939 $ 950,485 $ 67,546 27% Expenditure by Category
Personnel services 148,287 714,353 714,353 178,588 199,423 (20,835) 28% Administration 171,905 713,395 713,395 178,349 171,647 6,702 24% Contractual services 27,122 411,701 715,476 178,869 57,399 121,471 8% Materials & supplies 77,648 298,894 418,715 104,679 77,309 27,370 18% Utilities 96,367 300,000 300,000 75,000 116,542 (41,542) 39% Repairs & maintenance 19,583 89,750 90,832 22,708 21,774 934 24% Insurance 81,174 70,633 70,633 17,658 112,645 (94,987) 159% Total Expenditure $ 622,086 $ 2,598,726 $ 3,023,404 $ 755,851 $ 756,738 $ (887) 25% Net Revenue /(Expenditure) $ 303,698 $ 933,031 $ 508,352 $ 127,088 $ 193,747 $ 66,659 Summary of FY 2023/24 Q1 Wastewater Enterprise Operating Results FY 23/24
Similar to the Water Enterprise Fund, revenues for the relevant fiscal year rebounded to pre-COVID levels in FY 20/21, totaling $950k or 27 percent of the total Budget. Encouragingly, in the current fiscal year, FY 23/24, revenues are continuing this positive trend and currently stand at 27% of the total Budget. This upward trajectory reflects a resilient financial performance and suggests sustained recovery from the impacts of the COVID-19 pandemic. Monitoring these revenue trends will be crucial in ensuring continued fiscal health and effective budgetary management.
FY 2022/23 Q1 Operating Results
Utilities are up 39% of the total Budget. Energy costs for Electric have risen by 60% or $12k/month compared to the last year due to rate increases. Insurance costs, Including Property & ADP Contributions, DIC Earthquake, and flood deductible buydown, are paid annually in the first quarter. As mentioned earlier, there have been year-over-year increases in CIRA insurance costs, particularly due to the impact of the new Wastewater Treatment Plant on Property Insurance for the fund in recent years. Property Insurance has increased by 83%, and DIC by 43% overall.
At present, insurance costs are exceeding the Budget by $53k. Our staff is actively collaborating with CIRA to confirm the allocation of property insurance costs. This clarification is essential before the mid-term Budget, as it will help determine whether a Budget Amendment is necessary to address the current overage in insurance expenditures.
Most expenditures align with quarterly budget projections, and staff anticipates that revenues will outpace expenditure estimates come year-end.
CV STARR ENTERPRISE
The C.V. Starr Community Center and Sigrid & Harry Spath Aquatic Facility (C.V. Starr Center) represent a comprehensive 43,000-square-foot establishment. This multifaceted facility features an indoor water park, fitness and exercise rooms, weight rooms, and meeting spaces available for community use. The surrounding grounds complement the Center's offerings with amenities such as a dog park, Skateboard Park, and petanque courts.
Ownership of the C.V. Starr Center lies with the City, and its operational, maintenance, and capital improvement costs are partially mitigated through restricted sales tax and property tax revenues. These dedicated funds are specifically allocated to the C.V. Starr Enterprise Fund, ensuring a financial framework to support the ongoing success of the facility.
The City has engaged in a contractual arrangement with the Mendocino Coast Recreation and Parks District (MCRPD) for the day-to-day operation and maintenance of the C.V. Starr Center. However, a significant development occurred in August 2023 when the MCRPD Board issued notice to terminate the operating agreement. The MCRPD allowed for a 6-month transition to facilitate a smooth transition.
In response to this change, the CV Starr Ad-Hoc Committee, in collaboration with City Staff, has diligently formulated a comprehensive plan. The objective is to seamlessly integrate the C.V. Starr Center into the City's operational framework, and this transition is anticipated to be completed by February 2024. This strategic plan ensures the continued provision of services and facilities to the community, aligning with the City's commitment to its residents' well-being and recreational needs.
FY 2022/23 Q1 Operating Results
Adopted
Budget
FY 23/24
Amended
Budget FY
23/24 Q1 Budget
Q1 Actual
Results
Variance
vs.
Quarterly
Budget
% of
Total
Budget
Operating Revenues 596,248 596,248 $ 149,062 200,956 $ 51,894 34% Sales Tax 1,199,769 1,199,769 299,942 326,867 26,925 27% Property Taxes 283,127 283,127 - - - 0%
Other Revenue 50,000 50,000 12,500 777 (11,723) 2%
Total Revenue $ 2,129,144 $ 2,129,144 $ 461,504 $ 528,600 $ 67,096 25% Expenditure by Category
Personnel services 1,439,777 1,439,777 359,944 395,663 (35,719) 27% Administration 32,300 32,300 8,075 622 7,453 2%
Contractual services 35,419 50,419 12,605 14,210 (1,605) 28% Utilities 350,000 350,000 87,500 88,732 (1,232) 25%
Repairs & maintenance 60,000 67,247 16,812 15,932 879 24% Insurance 30,208 30,208 7,552 - 7,552 0%
Other operating 173,011 173,011 43,253 27,957 15,295 16% Total Expenditure $ 2,120,714 $ 2,142,961 $ 535,740 $ 543,117 $ (7,376) 25% Net Revenue /(Expenditure) $ 8,430 $ (13,817) $ (74,236) $ (14,516) $ 59,719 Summary of FY 2023/24 Q1 CV Starr Enterprise Operating Results FY 23/24
The revenue generated from general admissions encompasses user fees obtained from drop-in visits, membership sales, and other admissions. The Center was closed during COVID-19, impacting membership sign-ups and dropin visits. The facility experienced a delayed opening post-COVID due to safety precautions, such as the continued use of masks (except in the pool area), the closure of showers to minimize unmasked time, and capacity restrictions during Open Swim and Swim Slide Splash sessions, contributed to this shortfall.
Despite the challenges, since re-opening, membership revenue and general admissions have rebounded at the end of quarter one at $200,956, 34 percent of the overall Budget. At the time of this report, the City Council approved rate increases in the second quarter, which take effect in January 2024, generating an estimated $90k in additional revenue.
FY 2022/23 Q1 Operating Results
It's encouraging to report that our sales tax figures align with our quarterly budget projections, and we are on track to meet our overall budget expectations of $1.2 million. This positive trajectory reflects our effective strategies and market responsiveness.
On the property tax front, funds are received in the third quarter of the fiscal year. This timing aligns with our budget planning, contributing to the overall financial health of the Center.
Regarding personnel costs, we are currently at 27% of the Budget, effectively meeting our quarterly expectations.
However, recognizing the dynamic nature of our operations, we are actively evaluating and planning to restructure staffing to ensure optimal efficiency and resource utilization.
Shifting our focus to administration costs, which encompass legal, travel, and training expenses, it's noteworthy that a substantial portion of these expenditures is expected to be incurred in the second and third quarters. As we progress through the fiscal year, we remain committed to prudent financial management, ensuring that our budget allocations align with our operational needs and strategic goals.