Town of Mt. Crested Butte Five Year Financial/Business Plan

Transcription

1 Town of Mt. Crested Butte Five Year Financial/Business Plan

2 TABLE OF CONTENTS INTRODUCTION 3 CHAPTER 1: CURRENT FINANCIAL STATUS 5 CHAPTER 2: GOALS AND OBJECTIVES 8 CHAPTER 3: FINANCING THE PLAN - 10 CHAPTER 4 MAJOR UNCERTAINTIES AFFECTING THE FUTURE 11 CHAPTER 5: TABLES, GRAPHS, & CHARTS - 13

3 INTRODUCTION Mt. Crested Butte s (the Town) five year Business/Financial Plan (The Plan) is a significant and positive step toward achieving a Shared Community Vision. Mt Crested Butte will become a world-class, year-round, sustainable resort community through balancing quality of life, our environment, financial stability, and the lifestyle and diversity of both our residents and guests. The Plan is a comprehensive document that provides the reader with significant information relative to the community s present and projected financial position and the projected services and possible improvements that will be delivered over the next five years. The Plan is comprised of five chapters: Chapter 1 explains the Town s current financial status; Chapter 2 enumerates the proposed goals and objectives to be initiated during the five year period; Chapter 3 identifies the costs and financing of The Plan; Chapter 4 discuses major factors which can affect The Plan; and Chapter 5 provides a variety of financial documentation, graphs and charts that support The Plan. Currently, Town revenue is largely dependent upon the success of Crested Butte Mountain Resort (the Resort). This is because a majority of the Town s operating revenue is sales and use taxes, which are largely tied to tourism and development. Therefore, it is critical that the Town, the Resort and others work together to support and improve the tourism product. In 2009 the Town and the Resort formed a public private partnership to build the Adventure Park in the heart of the base area. Since that beginning the Resort has added a Zip Line and an Air Bag Jump to the Adventure Park. Additionally, the Resort has added and expanded its on mountain bike trails. The improvement in the summer amenities is paying off economically with steady growth in summer business since Additionally, the Town has formed another partnership with the Crested Butte Music Festival and the Resort to build a 500 seat performing arts center in Mountaineer Square North, the Biery-Witt Center at Mt. Crested Butte. Fund raising is underway and the land for the project has been donated by the Resort and the Town. The Mt. Crested Butte Downtown Development Authority has committed $7,800,000 to the project. The goal is to open the doors to the Performing Arts Center in FINANCIAL/ BUSINESS PLAN ASSUMPTIONS The Town Council s Finance Committee worked with the Town Staff making the following assumptions to create this five year Financial/ Business Plan. These assumptions should be kept in mind as this plan is reviewed. General Fund The approved 2015 projections serve as a base.

4 Assessed values and property tax revenues increase 15% in 2016, increase 6% in 2018 and 10% in The mill levies remain the same at 5 mills for the General Fund and mills for the Capital Projects Fund. remains at 5%. Sales tax will increase by 4% per year for 2016 thru Sales tax rate Building revenues increase 3% per year for 2016 thru Sheriff contract revenue included in intergovernmental revenue increases 2% per year thru (Adjusted with CPI). Other revenues are increasing by 2% per year. General Fund expenditures increase 3% per year from 2016 thru Payroll and employee benefits increase 4% annually from 2016 to Cash reserves are kept at 50% of total expenditures and any funds over 50% are transferred to the Capital Fund to cover the loss of property tax revenues. Capital Projects Fund Assessed values and property tax revenues increase 15% in % in 2018 and 10% in The mill Levies remain the same at 5 mills for the General Fund and mills for the Capital Projects Fund. payments. Transfers to the Debt Service Fund equal the required Principal and Interest Public works expenditures of $150,000 per year are for recurring road work. Non-discretionary expenditures are listed in detail based on needs assessments.

5 CHAPTER 1: CURRENT FINANCIAL STATUS A. ANNUAL BUDGET PROCESS The annual budget process begins in August with each of the Town Departments submitting their budget requests to the Finance Officer. The Town Manager and Finance Officer project revenues for the ensuing year. Meetings are then held with each Department Head to review their proposed budgets. A preliminary budget is prepared for the Town Council s Audit Committee and after review it is then reviewed and discussed by the Town Council during a series of work sessions. As a result of these work sessions, budget revisions are made. By late November a budget is prepared for presentation at a public hearing. After the public hearing further revisions may be made and a final budget ordinance is prepared for approval by the Town Council. B. GENERAL FUND SOURCES OF REVENUE There are three major sources of revenue for the general fund: sales tax, use tax, and property tax. Two of the three sources, sales and use tax, constituting 60% of total revenues, have fluctuated greatly during the last ten years making it extremely difficult to budget and resulting in large decreases in revenue during down years. (See chart in Chapter 5.) 1. SALES TAX Historically, sales tax has been the single largest revenue contributor to the general fund. Sales tax revenue is largely dependent on winter tourism which is, for the most part, associated with the success of the Resort. During the last five years, taxable sales have grown 39%. Sales tax revenues in 2009 were about $1,266,627 and the 2015 actual is $2,214,392. The Town increased its Sales Tax rate from 4% in 2009 to 5% in 2010 and currently remains at a rate of 5%. 2. USE TAX Use tax is a tax charged on materials used for construction. Use tax fluctuates greatly depending upon the amount of construction occurring. For example, in 2005, use tax was about $930,000 as a result of new construction after the sale of the Resort in March of 2004, as compared to $56,000 in The Town s Building revenues which include use tax have recovered in 2013 and 2014 to equal our ten year average and we expect them to grow 3% per year from 2016 to PROPERTY TAX Mt. Crested Butte currently has a five mill property tax levy for the general fund. During the past five years, property tax revenue has declined progressively. With the 2013 property assessed valuations the overall assessed value of our community decreased 61% since The

6 2015 assessed valuations increased 15%. Property tax collections were $755,000 in 2009 and projected to be $403,000 in C. RESTRICTED REVENUE Restricted Revenue is specifically restricted to a designated use. Mt Crested Butte has five major sources of Restricted Revenue: Affordable Housing; Downtown Development Authority (DDA); Impact Fees; Admissions Tax and Transportation. 1. AFFORDABLE HOUSING Whenever new development occurs, the developer must either provide affordable housing or contribute cash to the Affordable Housing Fund. Cash received in lieu of providing affordable housing is deposited in the Affordable Housing Fund. Such cash must be used for affordable housing projects. Prior to 2003, the affordable housing fund had accumulated a balance of $1,100,000. The Town has constructed two duplexes and one triplex in the Prospect Homestead Community Housing Subdivision spending approximately $1,461,000. All seven units have been sold and are occupied. 2. DOWNTOWN DEVELOPMENT AUTHORITY (DDA) The DDA was established in 1997 to aid in the redevelopment of the base area. The DDA is a tax increment financing district which will expire in Since its creation, the DDA has undertaken various projects such as the purchase of Inn Site II (now the free parking lot just north of Treasury Road), built the Transit Center in the base area, and paid for improvements to Gothic Road. Additionally in 2009 investing $450,000, the DDA established a public private partnership with Crested Butte Mountain Resort to develop an Adventure Park next door to the Treasury Building in the heart of the base area. The Adventure Park includes a climbing wall, a bungee trampoline, and an eighteen hole miniature golf course. The miniature golf course is covered allowing the space to be used for convention and event activities. A percentage of the revenues from the Adventure Park are paid to the DDA. This DDA revenue stream expires in June of The DDA Board of Directors has prioritized its activities to construct two

7 facilities: 1) Performing Arts Center in cooperation with the Crested Butte Music Festival and Crested Butte Mountain Resort; and 2) Parking in the Town Center. The DDA has voter authorization to issue bonds up to $25,000,000 in order to finance these projects. The DDA created a defined geographical area (generally the base area extending south to Westwall Lodge) from which Mt. Crested Butte receives a large percentage of the property tax assessed on new construction plus a percentage of the additional tax revenue from valuation increases to existing property. 3. IMPACT FEES New development within Mt. Crested Butte requires the developer to pay impact fees. These fees, computed by an established formula, are to be used for increased expenses to the town which arise as a result of new development. For example, development and its attendant increase in population results in road maintenance, public safety, staff and equipment expenditure increases. These fees have been used for such things as acquiring new road maintenance equipment and new police cars, upgrading the computer system, and improving our web site. 4. ADMISSIONS TAX This tax applies to lift tickets and events held in Mt. Crested Butte. The revenue from this tax is used to support the public transportation system, marketing purposes, and events. The portion of the revenue for marketing helps to support local private business s marketing programs through a summer and winter grant application process, including support for Gunnison County Airport s subsidized airline service promotion programs. The portion for transportation supports Mountain Express. 5. TRANSPORTATION The Town directs twenty percent (20%) of the sales tax revenue to the Transportation Fund. Ninety five percent (95%) of the funds generated are paid to Mountain Express. Mountain Express is the intra-city and inter-city bus transportation system jointly funded by the Towns of Mt. Crested Butte and Crested Butte. Mountain Express is directed by a five (5) person board of directors. Two directors are appointed by each respective town council and one (1) member is appointed by the Mountain Express Board.

8 CHAPTER 2: GOALS AND OBJECTIVES Meeting the Community Plan vision of being a world-class resort community requires providing certain amenities and level of services. Both residents and guests have expectations as to these amenities and services. The following describes the amenities and level of services the Town is able to provide under the Plan over the next 5 years. A. MAINTAIN ROADS An important consideration for this section on Town roads is some historical information. The years 2000 to 2004 were very difficult financially for Mt. Crested Butte. Town revenue was down significantly largely due to the continuing decline of the Resort. Skier days declined from approximately 550,000 in to 416,000 in with a low of 330,000 in Sales and use taxes (the major sources of revenue) decreased approximately 33%. The town compensated for this revenue shortfall by greatly reducing annual expenses for road repair and maintenance, limiting increases in staff and salaries, and not investing in capital improvements. The Town issued $2,450,000 in bonds in 2010 for major road improvement and to start work on the extension of the Recreation Path which currently terminates at Marcellina Lane. The design and construction drawings for the extension of the Recreation Path from Marcellina Lane to Winterset have been completed. In 2011 the work on the Recreation Path began at Town Hall. Phase I work is complete. With the help of a Transportation Alternative Program Grant phase 2 of the Recreation Path Extension is scheduled to be completed in the summer of Additionally, the Town has completed the design and engineering for a Recreation Path Bridge which will cross Gothic Road at the South Entrance of the Town of Mt. Crested Butte. The Town hired SGM to assess the condition of all town roads and came up with a plan to repair and maintain all town roads over the next six years with cash from the capital fund. B. PROVIDE FOR ANTICIPATED OPERATING COST INCREASES Mt. Crested Butte employs 22 full time employees and 1 seasonal employee. The Plan has budgeted for an annual overall increase in salaries of 4% going forward and an annual increase of 4% in the cost of fringe benefits. Additionally, other operating costs have been increased at the rate of 3 % per year. The Plan has not provided for any increases in personnel, because the Town believes it is staffed to provide the high level of services required. Some major replacement of equipment will be necessary, including police vehicles, computer hardware, and maintenance equipment.

9 C. BUILD OPERATING RESERVES Operating reserves at December 31, 2015 are projected to be $1,289,000, representing 50% of 2016 General Fund expenditures. The Plan projects keeping operating reserves at 50% of General Fund expenditures thru December 31, 2020 and transferring any funds over 50% to the Capital Projects Fund expenditures which include road repairs, recreation path extension and the purchase of capital equipment.

10 CHAPTER 3: FINANCING THE PLAN In 2007, town staff began to gather information and make preliminary projections necessary to develop The Plan. Once this information was obtained, the Council began working with the Town Manager and Finance Officer to refine all expense and revenue assumptions. The Council held numerous work sessions to analyze various budget alternatives both in terms of anticipated expenses as well as anticipated revenue. The first plan completed in 2008 was the result of those months of work. The Town Council updated the plan in October A. DE-BRUCING OF PROPERTY TAX The Town Council established a 5.37 mill property tax in 1992 used for debt service and capital expenditures. Because of limitations imposed by TABOR only 3.01 mills was levied prior to (TABOR is the taxpayers bill of rights which limits tax increases). Removing those limitations is called de-brucing and requires approval of the voters. In November of 2009 voters approved the de-brucing of the 5.37 mill property tax and the town has levied 5.37 mills for 2015 which is projected to provide $432,000 of revenue for bond payment and capital expenditures in B. SALES TAXES The Plan then assumes a modest sales tax growth of 4% 2016 thru C. OTHER REVENUES In general, The Plan assumes other revenues, increase 3% per year.

11 CHAPTER 4 MAJOR UNCERTAINTIES AFFECTING THE FUTURE Any long-term plan requires assumptions and predictions. There are several significant uncertainties which impact the Town s attempt to plan for the next five years in that they are significant contributors to both future revenue and required expenditures. These factors relate to tourism. They are also factors over which the Town government does not have complete control. Therefore, The Plan makes certain assumptions stated below relative to these outside factors. A. GUNNISON RIVER VALLEY REGIONAL LOCAL MARKETING DISTRICT Created and funded by a 4% county-wide lodging tax and an intergovernmental agreement including the governing entities of Gunnison County, a primary purpose of the Local Marketing District was to fund a Tourism Association (TA). The TA s function is to increase tourism within Gunnison County. The success of the TA s efforts therefore impact significantly upon The Plan. B. GUNNISON VALLEY TRANSPORTATION AUTHORITY Another important element in future tourism is the availability of air service to the Gunnison- Crested Butte Regional Airport. At the same time the TA was created and funded, Gunnison County electors also created and funded the Gunnison Valley Regional Transit Authority (RTA). Its purpose is to promote and provide County public ground transportation services and air service at Gunnison-Crested Butte Regional Airport. Currently, a significant portion of the flights in and out of Gunnison Airport are dependent upon subsidies, Minimum Revenue Guarantees (MRG s) paid to airlines by the RTA plus additional Minimum Revenue Guarantees provided by the Resort. Such subsidies, (MRG s) are common in most mountain resort communities today, and are an important factor in meeting the Plan s revenue assumptions. C. CRESTED BUTTE MOUNTAIN RESORT At the present time, the operation of Mt. Crested Butte is heavily dependent on sales tax revenue. The majority of such revenue comes from expenditures by tourists, primarily those who come to ski. Therefore, the town s financial future is directly dependent upon the success of the Resort. The Resort s overall goal is to increase winter and summer tourism. In addition the Resort controls a significant amount of real estate available for development. This includes the base area, Prospect, and the North Village. In drafting a five year plan, the Town must consider the success of the Resort s plans and the rate at which such an increase in tourism will occur during the next five years. These factors directly impact the increase in revenue and expenses which will occur. Although the Town is committed to working with the Resort in the development of a first class mountain community, the Town does not control the business operations of the Resort just as the Resort does not control operations of the Town.

12 The addition of the Adventure Park, exposure of the Resort due to Mt. Crested Butte hosting of the stage 2 finish of the USA Pro Cycling Challenge in 2011, 2012 and 2014 and the exposure the resort received from the Whatever U.S.A event in September of 2014 have all contributed to the record setting summer sales tax collections annually since In summary, the continued success of the Resort, TA s successful promotion of Gunnison County and the Resort, and RTA s improvement of air service are substantial factors affecting The Plan. The Plan assumes that the Resort will continue with its development plans and upgrades to the resort.

13 CHAPTER 5: TABLES, GRAPHS, & CHARTS General Fund Revenues and Expenses pg. 14 Capital Expenditures pg to 2015 Actual Revenues Pie Chart pg to 2020 Projected Revenues Pie Chart pg General Fund Revenues vs. Expenses pg. 18 Assessed Valuation History pg. 20