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Home My WebLink AboutCOVID-19 Financial Impact PresentationSTAFF PRESENTATION TO FOLLOW: 1 r I C04;qui h CITY OF lOVVA CITY 410 East Washington Street Iowa City, Iowa S2240-1826 (319) 356-5000 (3I9) 356-5009 FAX www.icgov.org City of Iowa City COVID-19 PANDEMIC FINANCIAL IMPACT MAY 2020 March 8 — First Three Cases of COVID-19 Detected in Johnson County March 17 —State of Iowa Declared State of Public Health Disaster Emergency March 22—Johnson County Mayors Urged Residents to Stay Home and Limit Non - Essential Activities May 4— Iowa Homeland Security Reports Current Number of Confirmed Johnson County Cases is 518 and 6 deaths March 13 — President Trump Declared National Emergency March 17 —City Closed City Hall to the Public March 24— Non- essential Service Personnel Assigned to Work From Home March 15 —City Closed Library, Senior Center and Other Facilities March 18— Mayor Teague Declared Civil Emergency Due to COVID-19 March 27— CARES Act is Signed Into Law COVI D-19 Pandemic Financial Environment ➢Situation has been fluid and unpredictable Duration of pandemic is unknown, and the financial impact could be indefinite Financial situation must be monitored and evaluated continuously ➢Each fund has different revenue and expenditure impacts ➢Each fund has its own challenges, restrictions, and needs COVID-19significai impacted funds City of Iowa City Fund Structure Non -Budgetary Budgetary Funds Funds Special Revenue Debt Service Enterprise Capital Projects Internal Service General Fund Funds Fund Funds Fund Funds General* CDBG Debt Service Parking Capital Projects Equipment HOME Grant Transit Risk Management *includes Emergency Fund Road Use Tax Wastewater Information Technology Services Other Shared Water Central Services Revenues Metro Planning fitly Organization of Refuse Collection Health Insurance Johnson County Employee Benefits Landfill Dental Insurance Emergency Levy Airport Affordable Housing Storm Water Agency Funds Peninsula Apartments Housing Authority Project G reen Tax Increment Financing Self -Supporting Municipal Improvement District All City Revenues All Funds Revenue Sources Charges for Services 24% Intergovernmental 20% Use of Money & Prop 2% Licenses & Permits 2% Other City Taxes 3% Misc. 4% Other Financial Sources ,0/ Budget21 'Percent Property Taxes $ 65,849,136 37.5% Other City Taxes $ 5,551,461 3.2% Licenses & Permits $ 2,735,470 1.6% Use of Money & Property $ 3,143,149 1.8% Intergovernmental $ 35,562,244 20.2% All City Revenues — COVI D-19 Impact . . • .Impact Property Taxes Residential, commercial, multi- Delayed or unpaid taxes residential property taxes Other City Taxes Licenses & Permits Use of Money & Property Hotel/Motel taxes, utility franchise taxes Business permits, construction permits, rental permits Interest income, facility rentals Increased hotel vacancy, reduced consumption due to business & education closures Sidewalk cafe refunds, reduced construction activity, potential impact on student housing market Low/Moderate High Moderate/High Rent reduction or deferrals in City facilities, lower interest Low/Moderate rates on investments, no park shelter/facility rentals Intergovernmental Road Use Taxes, CDBG, HOME, Lower pass thru revenues; more government grants housing rental assistance, CDBG, Police, HUD, FEMA, FAA capital grants Charges for Utility fees (water, sewer, storm Greatly reduced parking and transit fees, no water late Services water), parking fees, transit fees or shut off fees, reduced water consumption, no fees recreation/senior center programming fees Miscellaneous Police, Library, Parking Fines Reduced enforcement Other Financial Sale of bonds No impact Sources High/Mixed Very High Low/Moderate Low All City Expenditures Debt. Capital Outlay, 20% Supplies, 3 All Funds Expenditures Personnel, 38% s,26% FY2021 Budget P!e=cenj Personnel $ 67,869,764 38.7% Services $ 45,256,647 25.8% Supplies $ 5,177,469 3.0% Capital Outlay $ 34,636,380 19.7% Debt Service $ 22,562,154 12.9% Total $ 175,502,414 100.0% All City Expenditures — COVI D-19 Impact Personnel Permanent wages & benefits, temp Furloughs of hourly staff and intern staffing, overtime wages begins May 17, continue to pay permanent idle staff Services Equipment repair & maintenance, Discontinued travel, lower cleaning, utilities, travel & training, equipment usage, lower consulting, software maintenance utilities Supplies Cleaning and safety supplies, plants Purchased more safety & & trees, uniforms, minor equipment cleaning supplies, purchased more software Capital Outlay Equipment, patrol cars, library books, None capital projects Reduce workforce, furlough employees, delay filling open positions, discontinue temps and interns staffing Reduce consulting services, reduce travel & training, lower repair & maintenance, lower utilities, reduce grant programs Reduce office supplies, reduce minor equipment Delay/reduce capital purchases and projects Debt Service General obligation and revenue None Decrease in borrowing rates bonds principal & interest payments, Parking lease -purchase payments Operations include City Council, City Clerk, City Attorney, City Manager, Finance, Police, Animal Services, Fire, Parks & Recreation, Library, Senior Center, Neighborhood & Development Services, CBD, and Public Works Administration General Fund REVENUES EXPENDITURES FY2021 Budget - $59,264,838 FY2021 Budget - $63,133,164 4% 0%1% 3% 4% s% 18% ■ Property Taxes • Personnel x% ■Other City Taxes ■ Licenses & Permits • Services ■ Use of Money & Property • Supplies ■ hdergov't ■ Capital Outlay ■ Charges For Fees & Services 2g5 ■ Misc. • Other Financial Uses ■ Other Financial Sources • Contingency x% • Loss of hotel/motel taxes • Reduced parks & recreation, senior center, and other program fees • Reduction in fine, permit, and rental revenue • Reduce travel and training expenditures • Delay filling open positions • Reduce consulting expenditures • Reduce CVB, Hilton Garden Inn, grant program payments • Reduce recreation program expenditures • Reduce capital outlay expenditures • Use of General Fund contingency $ 478,000 FY2020 $ 800,000 FY2021 $1,278,000 Total r $ 430,000 in FY2020 $ 600,000 in FY2021 $1,030,000 Total FY2020 Total: $1,293,000 FY2021 Total: $2,270,000 $ 385,000 in FY2020 $ 870,000 in FY2021 $1,255,000 Total Fiscal Year 2020 -=1 lr� • Budgeted unassigned fund balance: • Revenue impact: • Expenditure mitigation: • New ending unassigned fund balance: $26,346,337 or 37% of revenues and transfers in -$1,293,000 +$1,293,000 $26,346,337 or 37% of revenues and transfers in • Budgeted unassigned fund balance: $26,301,231 or 36% of revenues and transfers in • FY2020 Net impact: • Revenue impact: • Expenditure mitigation: • New ending unassigned fund balance: $0 -$2,270,000 $2.270.000 $26,301,231 or 36% of revenues and transfers in I -Operations include street and storm sewer maintenance, repair, and construction including engineering, streetlights, traffic signs and signals, snow removal, street cleaning, right- of-way maintenance, etc. Spending restricted to street right-of-way expenditures State estimates a 25% reduction in collections due to fewer vehicle sales and reduced travel Road Use Tax Fund REVENUES FY2021 0% 1% ■ Road Use Tax ■ Building & Devlpmt ■ Misc EXPENDITURES & TRANSFERS OUT ■ Personnel 32% ■ Services ■ Supplies ■Capital Outlay 39/o 890 Transfers Out Reduced tions by 25% Reduce transfers out to capital improvement program (an emphasis on preserving the pavement repair program) Reduced Road Use Tax collections by 25% Road Use Tax Fund — COVID-19 Revenue I m pact Fiscal Year 2020 • Budgeted unassigned fund balance: $2,171,685 or 24% of revenues and transfers in • Revenue impact: -$550,000 • Expenditure mitigation: +$500,000 (Salt/Sand Bunkers & PTZ Cameras CIP) • New ending unassigned fund balance: $2.121.685 or 23% of revenues and transfers in CC= • Budgeted unassigned fund balance: $1,612,192 or 17% of revenues and transfers in • FY2020 Net impact: • Revenue impact: • Expenditure mitigation: • New ending unassigned fund balance: -$50,000 -$1,250,000 $ 0 (Likely be reductions in Annual Pavement Management program) $ 312,192 or 3% of revenues and transfers in operations include on -street parking, parking ramps, parking lots, and parking enforcement Revenues are primarily derived from parking meter revenue, parking ramp revenue, and parking fines This is an enterprise fund and is a fully self-sustaining business -like activity Parking lease -purchase covenants require net revenues to exceed 1.25 times the annual lease payment Parking Fund REVENUES 2021 Budget - $5,935,900 4% 1%1% l% Service Charges ■ Fines Other ■ Interest Income EXPENDITURES &FY2021 Budget - $6,937,252M 1% ■ Personnel ■ Services ■ Supplies ■ Capital Outlay ■ Debt Service • Parking revenues reduced by nearly 90% • Reduce transfers out to capital improvement program • Postpone/eliminate spending of all types; delay filling open positions • Evaluate early call of remaining lease - purchase balance Parking revenues reduced by nearly 90% Parking Fund — COVID-19 Revenue Impact • Budgeted unassigned fund balance: • Revenue impact: • Expenditure mitigation: • New ending unassigned fund balance • Debt coverage: Fiscal Year 2021 • Budgeted unassigned fund balance: • FY2020 Net impact: • Revenue impact: • Expenditure mitigation: • New ending unassigned fund balance • Debt coverage: $4,230,939 or 68% of revenues -$1,860,000 +$400,000 2.770.939 or 44% of revenues 0.25x annual debt payment $3,908,144 or 66% of revenues -$1,460,000 -$2,400,000 +$1,330,000 1.378.144 or 23% of revenues -0.10x annual debt payment r -Operations include a fixed bus routes, SEATS paratransit service, Court Street Transportation Center, and bus maintenance Revenues are primarily derived from transit user fees, Court Street parking ramp operations, property taxes, and State and Federal funding This is an enterprise fund; however, it is not a fully self- sustaining business -like activity; system is subsidized by property taxes and State and Federal funding r -Currently operating a service model SCARES Act could provide up to $5.1 million of additional funding Transit Fund REVENUES & TRANSFERS IN . Charges for Services ■ Intergovernmental Use of Money & Property ■ Miscellaneous ■Transfers In 1% 2% EXPENDITURES $7,98 ■ Personnel ■ Services ■ Supplies ■ Capdal Outlay - v - • - I I • • Bus fares and passes reduced substantially • Court Street Transportation Center parking charges discontinued I EVA • - • 1145 1 KW -M• • Lower equipment and maintenance costs • Delay filling open positions $351,000 FY2020 $222,000 in FY2020 $608,000 FY2021 $385,000 in FY2021 $959,000 Total $607,000 Total FY2020 Total: $573,000 FY2021 Total: $993,000 • Budgeted unassigned fund balance: • Revenue impact: • Expenditure mitigation: • New ending unassigned fund balance • CARES Act funding: 2021 • Budgeted unassigned fund balance: • FY2020 Net impact: • Revenue impact: • Expenditure mitigation: • New ending unassigned fund balance • CARES Act funding: $1,512,646 or 18% of revenues and transfers in -$573,000 +$300,000 1.239.646 or 15% of revenues and transfers in Potentially up to $5.1 million $1,751,221 or 21% of revenues and transfers in -$273,000 -$993,000 +$200,000 685.221 or 8% of revenues and transfers in Potentially up to $5.1 million Operations include a water production plant, water storage facilities, water distribution system, water meter reading, and water quality monitoring This is an enterprise fund and is a fully self-sustaining business -like activity Water debt covenants require net revenues to exceed 1.10 times the annual bond payment i5% rate increase set for July 1 due to relocation of Procter & Gamble personal care product lines Water Fu REVENUES kY2021 Budget - $9,985,860 2% 1" ■ Charges for Fees & Services ■ Use of Money & Property ■ Miscellaneous EXPENDITURES ■ Personnel ■ Services ■ Supplies 17%o ■ Capital Outlay ■ Debt Service • No revenue from late fees and shut-off notices • Reduced water consumption • Potential delay of July 1 rate increase for 3 months None at this time $140,000 FY2020 240,000 FY2021 $380,000 Total $210,000 in FY2020 360,000 in FY2021 $570,000 Total FY2020 Total: $350,000 FY2021 Total: $710,000 $ 0 in FY2020 $110,000 in FY2021 $110,000 Total • Budgeted unassigned fund balance: • Revenue impact: • Expenditure mitigation: • New ending unassigned fund balance • Debt coverage: 1 • Budgeted unassigned fund balance: • FY2020 Net impact: • Revenue impact: • Expenditure mitigation: • New ending unassigned fund balance • Debt coverage: $5,696,986 or 59% of revenues -$350,000 None 5.346.986 or 56% or revenues 1.21x annual debt payment $5,698,978 or 57% of revenues -$350,000 -$710,000 4.638.978 or 46% of revenues 1.11x annual debt payment Emergency Fund Policy U Provide natural or other disaster Mitigate pension, Mitigate fluctuations or response or mitigation sudden elimination of insurance, or health care funding/interim loans State of Iowa property funding anomalies, emergencies, or spikes Avoid any defaults from the payment -6 I...........« _. Assist in the rehabilitation or replacement of fully depreciated or outdated municipal buildings and facilities to avoid the issuance of long-term debt Any other financial emergencies Purchase and clear homes and property in flood plains - $909,197 from FY2018 thru FY2020 General Fund Will experience broad based revenue declines ➢ Expenditure cuts and spending freezes should mitigate lost revenues ➢Road Use Tax Fund ➢ Significant revenue reduction of 25% or more Will require significant capital improvement project reductions to mitigate Parking Fund ➢ Experiencing near total revenue loss ➢ Will require all available measures to meet debt covenants and curb cash loss Transit Fund Sharp drop in operating revenues ➢ CARES Act funding should mitigate lost revenues ➢Water Fund ➢ Water consumption and late & shut-off fee revenues have declined ➢ Possibly postpone July 1 rate increase for 3 months ➢ Will only use available fund balance to mitigate ➢Emergency Fund ➢Available for use for disaster response, mitigation funding, and interim loans ➢Bottom Line: Situation is fluid and changes have been frequent Impact across various funds is uneven and the required mitigations are different Financials will require continuous monitoring and evaluation ➢Duration of the event is unknown, and the financial impact could be indefinite STAFF PRESENTATION CONCLUDED � r rrM as � h CITY OF IOWA CITY 410 East Washington Strect Iowa City, Iowa 52240-1826 (3 19) 356-5000 (3 19) 356-5009 FAX www. icgov. o rg