Stories indexed with the term ‘FY 2013’

In action taken at its Dec. 4, 2013 meeting, the Ann Arbor Downtown Development Authority board voted to accept the authority’s FY 2013 audited statements. The overall opinion was that the DDA’s records are a fair and accurate statement of the authority’s finances – an “unmodified” or clean opinion.

The DDA’s audit firm is the same one used by the city of Ann Arbor – Rehmann. [.pdf of DDA FY 2013 audit]

This brief was filed from the DDA offices at 150 S. Fifth Ave., Suite 301. A more detailed report will follow: [link]

An Oct. 24, 2013 meeting of the Ann Arbor city council’s audit committee featured just one item – a review of the draft audit report prepared by auditor Mark Kettner of Rehmann Robson, working with city staff. And overall the report on the fiscal year concluding on June 30, 2013 provided $2.4 million of good news for the city’s general fund.

Highlights from that draft FY 2013 report, which has now been issued in final form to the city, include an increase to the general fund balance from about $15.4 million to about $16.2 million. The $800,000 increase contrasts to the planned use of roughly $1.6 million from the general fund balance in the FY 2013 budget. About $200,000 of the increase was in the “unassigned” fund balance. The rest of it fell into restricted categories, CFO Tom Crawford explained at the meeting.

The result of the audit, in the new GASB terminology, was an “unmodified” opinion – which corresponds to the older “unqualified” opinion. In sum, that means it was a “clean” audit. The concerns identified last year had been addressed to the auditor’s satisfaction.

Members of the audit committee were enthusiastic about the $2.4 million better-than-budget performance for the city’s general fund, which had expenditures budgeted for $74,548,522 in FY 2013.

However, Crawford cautioned that he is “not crazy about the versus-budget comparison” because actual expenses will generally be less than budget anyway. He also pointed out during the meeting that just $1.3 million of the $2.4 million better performance are recurring items – things that he would expect to continue going forward.

While the year-end audit provided some good news, Crawford said he recommended that the city try to have about $1 million to $1.5 million of “good news” each year, because the city needs fund balance to pay for non-recurring items.

Crawford and Rehmann auditor Mark Kettner walked the committee through some of the highlights that still, on balance, had led to the good news. Revenue for services was almost $400,000 less than budgeted, due in part to lower-than-budgeted fire inspection fee revenue. Fines and forfeitures – including parking tickets – were $300,000 less than budgeted. And investment income was off by $400,000. But state shared revenue came in at $500,000 better than budgeted. [These figures come from page 36 of the final audit report.]

“The general fund had pretty much a year like you’d hope it would,” Crawford said. The year ended with an unassigned fund balance of roughly $14 million, or about 18% of expenditures – and 18-20% of expenditures is where the fund balance should be, he said. “So we’re really in a good spot.”

Challenges facing the city this coming year include the implementation of the new GASB 68 accounting standard starting in FY 2015, which begins July 1, 2014. That standard requires that most changes to the net pension liability will be included immediately on the balance sheet – instead of being amortized over a long time period. The GASB 68 standard must be implemented for an organization’s financial statements for fiscal years beginning after June 15, 2014.

Crawford prepped the committee to see a probable drop in the pension plans funded ratio – from about 82% to 80% – because of the five-year window used to book losses. The last of the losses in 2008-09 will be on the books this year, but after that the city would expect to see improvement every year, Crawford said. This most recent year, the pension fund had an 11% return, which is four points better than the 7% return the fund assumes for planning purposes.

Two of the city’s funds were highlighted by Crawford at the Oct. 24 meeting as having potential difficulties associated with the GASB 68 standard – solid waste and the public market (farmers market). For the public market fund, Crawford floated the idea to the audit committee that it could be folded back into the city’s general fund, on analogy with the golf fund. Starting this year (FY 2014) the golf fund has been returned to general fund accounting.

The consensus on the audit committee was that the full city council should receive a brief presentation on the audit report – either at an upcoming working session or a regular meeting. [.pdf of final audit report released on Nov. 15, 2013]

Prior to new committee assignments to be made by the post-election composition of the city council, the audit committee consists of: Margie Teall (Ward 4), Sumi Kailasapathy (Ward 1), Sally Petersen (Ward 2), Stephen Kunselman (Ward 3), and Chuck Warpehoski (Ward 5).

This report includes additional description of the Oct. 24, 2013 city council audit committee meeting. [Full Story]

Ann Arbor Downtown Development Authority board meeting (June 5, 2013): An oblique quip from a DDA board member during the June meeting signaled likely ongoing friction between the DDA and the Ann Arbor city council: “Too many people’ve been staying up too late on Mondays …” The comment came in the context of two different board votes – one on adopting the DDA’s upcoming fiscal year 2014 budget, and another on adjustments to its current year’s budget as the year comes to a close on June 30.

The DDA had actually already adopted its FY 2014 budget – back on Feb. 6, 2013. And although it’s been customary in the past years for the DDA to adopt its budget in advance of the city council’s approval, the state enabling statute for downtown development authorities provides a different sequence: “Before the budget may be adopted by the board, it shall be approved by the governing body of the municipality.”

Considerable debate on the DDA’s budget had unfolded among city councilmembers at their May 20, 2013 meeting. And the council had ultimately decided on a 10-1 vote to approve a FY 2014 budget for the DDA that differed from the one the DDA had adopted in February. In addition to recognizing an additional $568,000 in tax increment finance revenue (TIF), the council’s action transferred an additional $300,000 from the DDA’s TIF fund to the DDA’s housing fund.

At their June 5 meeting, some DDA board members balked at the council’s action, citing the replacement of rusting-out light poles on Main Street as a more pressing need than reserving funds for undetermined future housing projects. But ultimately the board adopted the council’s approved budget on an 8-2 vote – with dissent from Sandi Smith and John Mouat. Absent from the meeting were Russ Collins and Nader Nassif.

At the June 5 meeting, the board concluded that a portion of the more than $516,000 cost for the Main Street light poles would need to come from the city’s general fund. Mayor John Hieftje indicated at the meeting that in the next month he expected the city council would be presented with a budget resolution authorizing the difference between the $516,000 total cost and the $268,000 that the DDA considers available in its council-approved budget.

Also approved by the DDA board were annual routine adjustments to its current year’s budget, which are undertaken to ensure that actual expenses and revenues are reflected accurately. The adjustments are made so that expenses do not exceed revenues in any of the funds. During those deliberations, back-and-forth between board treasurer Roger Hewitt and Newcombe Clark indicated a realization that the kind of budget amendment they were undertaking for FY 2013, at the end of the fiscal year, might be used to work around the budget levels authorized by the city council. It’s not completely clear if that strategy is possible.

But in response to Hewitt’s assurance that budget amendments could be enacted for any reason – as long as expenditures didn’t exceed revenues – Clark made his comment about people staying up too late on Monday nights. [The city council meets on Monday nights, and the council's deliberations on the DDA budget have gone long into the evening. If the DDA board can change its budget after adopting the council-approved version, then the council's deliberations would seem to be moot.]

The June meeting was Clark’s penultimate one, as his term expires at the end of July and he’s moving to Chicago to take a job there. The board’s July 3 meeting will also be board chair Leah Gunn’s last meeting, which will mark the end of over two decades of service on the DDA board, beginning in 1991.

The parking revenue and patrons report from the public parking system was one of the regular highlights of the meeting. The DDA manages Ann Arbor’s public parking system under a contract with the city. The parking report was complemented by a board resolution that awarded five additional monthly parking permits to The Varsity residential project, bringing its total to seven. The DDA can assign monthly permits to residential projects under the city’s contribution in lieu (CIL) program – which provides a mechanism for building housing without providing parking spaces onsite.

Local developer Peter Allen addressed the board during public commentary, reporting that his company had been one of three to submit bids in response to the city’s RFP (request for proposals) for brokerage services to sell the former Y lot at Fifth and William streets. He told the board he thinks the parcel is worth $5-7 million or more. [Full Story]

Roughly $2.6 million in changes to the current year’s budget (FY 2013) have been approved by the Ann Arbor Downtown Development Authority board. They stem primarily from costs that had been budgeted for the previous year for construction of the Library Lane underground parking garage, but not paid for. The vote on the amended budget came at the board’s Jan. 9, 2013 meeting.

The result of those changes leaves a budget with $22,237,924 in revenues against $26,339,555 in expenses for the year – which translates to a planned use of the DDA’s fund balance reserve of $4,101,632. That’s about half of the existing fund balance. The FY 2013 budget projects a fund balance at the end of FY 2013, on June … [Full Story]

Ann Arbor Transportation Authority board meeting (Oct. 18, 2012): The recent AATA board meeting had a good-news, bad-news flavor.

Optimism was based on ridership data for the fiscal year that ended on Sept. 30 – which includes a record-setting 6,325,785 rides on the regular bus service, up 6.6% over the previous year, and 3.4% more than the previous record year of 2009.

Damping enthusiasm were the year-end budget numbers, which showed the AATA posting a deficit around $260,000 greater than the one it had budgeted for, leaving an excess of expenditures over revenues of $1,255,312. [.pdf of unaudited FY 2012 financials] That comes in the context of an approved budget for the just-begun current fiscal year, which includes an anticipated deficit of about $300,000. The board’s Oct. 18 deliberations revealed the fact that only by recalculating the amount in the AATA’s cash reserves did the organization currently have the required three-month operating reserve on hand.

In that financial context, board members were not inclined to add back in some elements that had recently been cut out of the new Blake Transit Center project, which would have brought the project budget to nearly $8.5 million. The construction contracts approved by the board at its meeting totaled a bit over $8 million, which was still dramatically larger than the smaller $3.5 million project the AATA had started with over three years ago. Instead of taking the less ambitious strategy, the AATA opted to locate the new, larger center on the opposite side of the same parcel where it currently stands. Construction on the two-story Fifth Avenue-facing center is now expected to start in late November or early December.

The board’s deliberations on the new transit center focused on whether to add back into the project some items that had been removed to bring the cost down from $8.5 to $8 million. Of the three items on the table – automatic ticketing kiosks, real-time bus arrival information displays, and LEED certification of the building – only the LEED certification was added back in, at a cost of $80,000.

At the Oct. 18 meeting, the board also got an update on the situation surrounding the incorporation of the new Act 196 board for The Washtenaw Ride. Michael Ford, AATA’s CEO, indicated that the AATA would be reimbursing Washtenaw County for the cost of renotifying jurisdictions in the county regarding their option not to participate in the new authority. He confirmed that AATA board members would not serve simultaneously on the current board and the board of the new authority, as previously expected. Ford indicated that AATA legal counsel believes that what the AATA has done to date already complies with the law, but the AATA is exercising extreme caution.

Several members of the future Act 196 board attended the meeting and had a voice at the table, but not a vote.

The board’s meeting concluded with a closed session lasting nearly two hours on pending litigation. [Full Story]

A small $22,692 surplus is projected in the draft budget of the Ann Arbor Transportation Authority for its upcoming fiscal year, which begins on Oct. 1, 2012. The budget is attached to the Ann Arbor city council online agenda for its Sept. 17 meeting. It shows that the AATA is expecting the 2013 fiscal year essentially to balance expenses against revenues in an overall operating budget of $33,344,048.

That’s an increase of around $3 million over the current year’s budget, which called for the AATA to spend $30,410,622 against only $29,418,998 in revenues. The nearly $1 million planned deficit for that fiscal year – which ends on Sept. 30, 2012 – was previously characterized by the board as a way to “catapult” the organization forward by offering some increased levels of service, in advance of AATA’s possible transition to a new, broader transit authority. Despite budgeting for that $1 million deficit, current projections included in the FY 2013 budget show that the AATA now expects to finish FY 2012 with a much smaller deficit of $296,378 – about one-third of what was projected.

For the new FY 2013 budget, an increase in revenues is accounted for in part by increased passenger revenues. Increased ridership is expected to generate about $750,000 more in fares in the coming year, compared to the fares collected in the fiscal year that’s nearing its end on Sept. 30. The AATA is also budgeting for about $300,000 more in state operating assistance for FY 2013. And the AATA anticipates about $3 million more in federal operating assistance, compared to what it actually received in the current fiscal year. A chunk of that is for a connector study from the northeastern part of the city to its southern edge.

Ann Arbor’s local transit tax, levied at a rate of just over 2 mills, is expected to show stable revenue levels compared to FY 2012, generating about $9.3 million. For the coming year, the AATA does not expect to use any of the local tax levy to help fund commuter express services from Canton and Chelsea, as it has since launching the service. Instead, the AATA will be using $105,217 of federal funds to cover that cost. Responding to an emailed query from The Chronicle, AATA controller Phil Webb explained that the AATA is taking advantage of newly expanded regulations that allows up to $1.47 million of AATA’s programmed federal funds to be used to pay for early investments in the AATA’s 5-year transit program. The AATA released the final draft of that plan on Sept. 5, 2012. [Full Story]