Renewal of Voter-Approved Millage

City of Ferndale, MichiganFebruary 9, 2015

The $2.6 million dollar question:Property values have begun to rise, so why are we here?

Headlee Amendment (1978)—Limits revenue from property assessment

increases for City

Requires City to roll back millage rates to offset property assessment increases

City’s current authorized operating millage under Headlee limitation: 14.5528

Charter-approved operating limit: 20 mills

Headlee mill rate rollback amount: 5.4452

Proposal A caps potential for revenue growth from increased property

assessments at 5% or the rate of inflation, whichever is less

Inflation rate average 2%

Proposal A: (1994) Constrains the City’s abilityto grow revenues as property values rise

2000 2003 2006 2009 2011 2014 2017 2020

Assessed Value 75,000 82,500 90,750 95287.5 $61,936.88 $68,130.56 $74,943.62 $82,437.98

Taxable Value 75,000 76,500 78,030 78,810 $61,936.88 $63,175.61 $64,439.12 $65,727.91

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$ R

eal Pro

pert

y T

ax

Axis Title

Proposal A Hypothetical Case Sample

Assessed Value Taxable Value

Taxable value down 23% from FYE 2007

$0 $100,000,000$200,000,000$300,000,000$400,000,000$500,000,000$600,000,000$700,000,000$800,000,000$900,000,000

2014

2013

2012

2011

2010

2009

2008

2007

$493,417,269.76

$492,370,019.75

$519,680,219.80

$555,831,669.86

$598,997,909.93

$649,225,850.02

$650,729,480.02

$641,649,210.00

$ Value

Fis

cal Y

ear

Endin

g (

FY

E)

Community-wide value history: FYE 2007-2014State equalized value vs. taxable value

Total TV: SEV

Property tax revenues are below 2007 levels

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

$10,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Re

ven

ue

s

Fiscal Year Ending (FYE)

Property Taxes: 2007-2016

Source: City of Ferndale Financial Statements: FYE 2007-2014

*FYE 2015-2016 projected 1.5% inflation increase

Two different stories: FYE 2011-2014

With voter-

approved millage

Without voter-

approved millage

$15,000,000.00

$16,000,000.00

$17,000,000.00

$18,000,000.00

$19,000,000.00

$20,000,000.00

$21,000,000.00

FYE 2011 FYE 2012 FYE 2013 FYE 2014

GF

REV

ENU

ES/E

XP

ENSE

S

FYE 2011-2014

GF WITH VOTER MILLAGE

General Fund Expenses General Fund Revenues

$15,000,000.00

$16,000,000.00

$17,000,000.00

$18,000,000.00

$19,000,000.00

$20,000,000.00

$21,000,000.00

FYE 2011 FYE 2012 FYE 2013 FYE 2014

GF

REV

ENU

ES/E

XP

ENSE

S

FYE 2011-2014

GF WITHOUT VOTER MILLAGE

General Fund Expenses General Fund Revenues

Without voter-approved millage: Fund balance depleted by FYE 2019

$(20,000,000)

$(15,000,000)

$(10,000,000)

$(5,000,000)

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

FY15 FY16 FY17 FY18 FY19

Re

ven

ue

s/Ex

pe

nse

s

FYE 2015-2019

Projecting Without Voter-Approved Millage

Beginning Fund Balance + Revenues -Expenditures

Fund balance in FYE 2015: $5,591,698

Tax impact on typical Ferndale household: $75,000 taxable value

Mill Amount 2015

Tax Payment

2016 Expected

Tax Payment

Voter-Approved

Headlee

5.4552 $409.14 $409.14

What does the General Fund pay for?

Which services aren’t paid for by the General Fund?

Parking

Water/sewer

Major & local street maintenance

Sanitation services

2011-2014: What have we been up to?

Kinetic energy

Energy & momentum gained

through momentum begets a

growth in energy

Body maintains momentum unless

energy disrupted

Let’s get metaphorical

Resident re-investment sparks new

movement

Movement results in restructure,

investment with an eye on the

future

The City maintains energy and

momentum unless the speed

changes

DPW finds more than $600,000 in annual savings

Training

• Bringing annual tree work in house saves more than $168k in contract costs.

Strategic Hiring

• Hiring for skills: Masonry, concrete/pavement work, and electrical saves more than $350k in contract costs.

Technology

• Sign Shop software upgrades and sewer televising equipment/software save more than $100k in contract costs and efficiencies.

City viewed as business friendly—A smart place to invest

$ Value of construction up 93%

Work permits up 40%

Mayor’s Business Council (2012)—Business friendly | B2B networks | streamline business process

Restructure Department | Invest in building mgmt. software | mobile technology—increase time in field,

reduce time in office

Becoming a leader in municipal IT and communications

Reconstructing the City’s network

•Protecting your data through information security

•Mobile offices—pushing work into the field and out of the office

•Connectivity and hardware reductions—reducing server replacement through virtualization and NAS

Saving more than $60,000 in purchasing through scale of economy

•Computer/equipment replacement programs

•Scale purchasing and volume licensing

•Organizing Citywide technology through budget process—developing strategic investments through coordination and desiloing

Establishing online City services and communications

•Launched www.ferndalemi.gov—eliminated www.ferndale-mi.com

•Launched the beginning of City online payments: water, property taxes

•Established City social media presence, City text notification service

City opts for long-term wellness: Strategic human resource management

Cut

$165k in labor

att

orn

ey c

ost

s

Use savings to hire first human resources director

Establish wellness programs—immediate health savings!

MiLife Wellness Center Collaborative: Long-term investment in health savings

Positive relationship with collective bargaining units; legal fees decrease

Ferndale PD Does More with Less

Overall Part 1 Crime Rates down 50% since

2009

0

200

400

600

800

1000

1200

1400

1600

1800

2009 2010 2011 2012 2013 2014 2015

# O

F P

AR

T O

NE

CR

IMES

FISCAL YEAR ENDING (FYE)

Crime Reduction: 2011-2014

Murder Sexual Assault Robbery Assault Burglary Larceny Arson Vehichle Theft Weapons Narcotics

Source: Oakland County CLEMIS Report: 2009-YTD

Ferndale Fire –

A Lean Mean Fire Fighting Machine

Successfully Renews Contracts

with Pleasant Ridge and Royal

Oak Township

New Network provides Fire

Marshal with Mobile Office –

more time in the field, less

time in the office.

Have reduced staffing

minimums to help manage costs

43rd District Court: Improved the Face of

Ferndale’s Justice System without GF Dollars

City financial health improves

• Lower bond interest rates

• Attractive business environment

• City has stable fund balance (cash reserves) for rainy day

(2014) S&P upgrades City credit rating

from A+ to AA-

• City Hall adds terminals; reduces lines

• Online payments

• Staffing efficiencies through cross training

Finance department restructures

Recreation continues to do more with less since FYE 2011

Expenses down $141K

Revenues up

between $10k-$20k

Staff remains dedicated through cost saving measures Reduction in Friday operating hours = -104 hours/year for all AFSCME 998

members

Administrative employees work with minimal increases

20% healthcare premium cost sharing put in place for all employees except

police and fire

Strategic restructuring

As employees leave, we hire to realign talents

Minimal staff increases

Strategic about new hires—makes service delivery more robust with less

Loss of $2.6 million annually = apx 15% revenue loss

The City would have to reconsider how to maintain service quality

Reduced service levels through personnel cuts

Delayed or eliminated capital improvement/replacement projects

Delayed or eliminated technology investments/advancements