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LTC 362-2021 Fiscal Year 2021 Third Quarter AnalysisMIAMI BEACH OFFICE OF THE CITY MANAGER LTC NO. 362-2021 LETTER TO COMMISSION TO: FROM: Honorable Mayor Dan Gelber and Members of the City Commission Alina T. Hudak, City Manag ~ September 1, 2021 DATE: SUBJECT: Fiscal Year 2021 Third Quarter Analysis The purpose of this Letter to Commission (L TC) is to provide the Mayor and members of the City Commission with the status of the Fiscal Year (FY) 2021 operating budget to actual revenues and expenses incurred for the third quarter ending June 30, 2021 with projections through fiscal year- end September 30, 2021, as set forth in the City's Charter which specifies that "the City Manager shall make public a quarterly report showing the actual expenditures during the quarter just ended against one quarter of the proposed annual expenditures set forth in the budget." It is important to note that certain assumptions for both revenues and expenditures have been made in these projections, including the projected ongoing impact of COVID-19 on the City's operations that will continue to be refined and adjusted as additional data and information becomes available. SUMMARY Since the FY 2021 budget was adopted, the planned use of reserves has changed due to the slower than originally anticipated recovery in General Fund revenues and resort taxes from the ongoing impact of COVID-19. The third quarter projections anticipate that an additional $18. 7 million, which is a decrease of $4.0 million from the $22.7 million shortfall projected as of the second quarter of FY 2021, will be needed from General Fund reserves to re-balance the FY 2021 budget and $16.8 million, which is an increase of $6.8 million from the $10.0 million as of the second quarter, is recommended to be added to the Resort Tax reserve due to third quarter revenue projections coming in higher than projected in the second quarter of FY 2021. To help offset this shortfall, the Administration recommends applying funds recently received from the Coronavirus Relief Fund under the CARES Act, through Miami-Dade County. To date, the City has received $41.1 million, of which $37.1 million is reimbursable to the General Fund. The Administration also recommends applying .$3.8 million of funds received to date in FY 2021 from the Federal Emergency Management Agency (FEMA) for costs incurred from Hurricane Irma. Should this be approved as recommended, the General Fund reserve would total approximately $85.1 million, or 24.3%. This amount is projected to decrease to $79. 7 million based on the FY 2022 Proposed Budget. If these projections are realized at year-end, this balance would still exceed the minimum 17.0% General Fund unrestricted budgetary fund balance recommended by the Government Finance Officers Association (GFOA). Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 2 of 20 USE OF RESERVES GENERAL FUND Pre-COVID Reserve as of 0913012019 Actual Use of Reserve in FY 2020 Adopted Use of Reserve in FY 2021 Remaining Reserve New gap in FY 2021 CARES Act funds to date Police initiatives (staffing , cameras, RTCC) No furlough days for FOP & IAFF; 1 less furlough day for all other employees Arts & Cultural programming FEMA reimbursement Elimination of Parking contribution Rent Assistance Program continuation Sabrina Cohen Foundation contribution Revised FY 2021 Reserve Projected Use of Reserve in FY 2022 Projected FY 2022 Reserve Q1 Q2 Q3 Reserve Amount Reserve Amount Reserve Amount $80.6 million ($0 .3 million) ($9 .6 million) $70.7 million ($27.8 million) $36 .9 million $79.8 million $80.6 million ($0.3 million) ($9.6 million) $70.7 million ($22 .7 million) $38.1 million ($7 .5 million) ($1 .2 million) ($1 .0 million) $2 .6 million $79.0 million $80.6 million ($3.3 million) ($9 .6 million) $67.7 million ($18.7 million) $37 .1 million ($3 .9 million) ($1.0 million) $3 .8 million $1 .2 million ($0 .2 million) ($0.9 million) $85.1 million ($5.4 million) $79.7 million The General Fund use of fund balance increased from $9 .6 million as adopted in the FY 2021 budget to a projected use of $28.3 million as of the end of the third quarter of FY 2021 (compared to the projected use of $32.3 million in the second quarter) as a result of the following: 1. An additional $12.2 million reduction in the FY 2021 Resort Tax contribution to the General Fund for tourism -eligible expenditures in the General Fund due to slower than anticipated growth in revenues projected for FY 2021 due to COVID-19 2. Additional reductions in General Fund revenues of $5 .0 million from, among other sources, Intergovernmental and Other Taxes, Licenses and Permits, Charges for Services, and Rents and Leases due to slower than anticipated economic growth from the ongoing impact of COVID-19 and proactive measures taken by the Mayor and City Commission to promote business operations and economic recovery in the City adversely impacted by the COVID-19 pandemic 3. Additional General Fund expenditures of $1.5 million for public safety-related operations attributed to COVID-19, a contractually required pension buyback window for all eligible sworn Police and Fire personnel to purchase up to two years of service in accordance with the City's current collective bargaining agreements, and expenditures related to education initiatives that will need to be transferred from the Education Compact Fund to the General Fund due to a projected loss in garage advertisement revenues that were earmarked for education initiatives in FY 2021 Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 3 of 20 The FY 2021 Resort Tax and Parking Fund projected use of fund balance as of the third quarter remain unchanged from the adopted FY 2021 budgets and do not propose any use of reserves and/or fund balance to ensure compliance with debt service coverage requirements. RESORT TAX FUND Pre-COVID Reserve as of 09130/2019 Actual Use of Reserve in FY 2020 Remaining Reserve Contribution to reserve in FY 2021 Pedestrianization. of Ocean Drive (pending) Revised FY 2021 Reserve Projected Use of Reserve in FY 2022 Projected FY 2022 Reserve Q1 Q2 Q3 Reserve Amount Reserve Amount Reserve Amount $15.2 million ($5.0 million) $10.2 million $10.2 million $15.2 million ($5.0 million) $10.2 million $15.2 million ($3.5 million) $11.7 million $10.0 million $16.8 million $20.2 million Est. ($1.5 million) $27.0 million ($5.4 million) $21.6 million All General Fund, Enterprise Funds, Internal Services Funds, and Special Revenue Funds budgets are projected to be at or below their current FY 2021 amended budgets as of year-end with revenues projected to be equivalent to or in excess of expenditures, except for specific General Fund Departments, the Convention Center Enterprise Fund, and the Red Light Camera, 5th & Alton Garage, Biscayne Point, and Biscayne Beach Special Revenue Funds which have been detailed further in the forthcoming third quarter analysis. CORONA VIRUS RELIEF FUND Miami-Dade County has received an allocation from the Coronavirus Relief Fund (CRF) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. $100 million of that funding is being allocated for an award program for local municipalities. Of the $100 million, $75 million is for operational costs and $25 million for new municipal programs. Funds from this program may only be used to (1) cover costs that are necessary expenditures incurred due to the public health emergency with respect to COVID-19, (2) were not accounted for in the budget most recently approved as of March 27, 2020, and (3) were incurred during the period of March 1, 2020 through December 30, 2020. The County will consider reimbursement for COVID-19 related and incurred operating expenses, as well as certain new programs proposed by municipalities. The following are not eligible under the program: (1) equipment and capital expenses; (2) loss of revenue; (3) utility payment forgiveness. Examples of eligible costs for the $75 million program include: • Costs to enable remote work • FEMA cost share (the 12.5% local cost component of FEMA PA) • Personnel costs for hours dedicated to mitigating or responding to COVID-19 • Contact tracing • Public health • Expenses to facilitate compliance with public health precautions Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 4 of 20 Examples of eligible costs for the $25 million program include: • Rental and mortgage assistance programs • Job training • Childcare • Small business grants for business interruption To date, approximately $41.1 million in reimbursements have been received from Miami-Dade County for unbudgeted expenditures incurred due to COVID-19 from March 1, 2020 through December 30, 2020 and certain new programs initiated by the City. Of the $41.1 million in reimbursements received, approximately 90.3%, or $37.1 million, is for General Fund expenditures that have been incurred. The funds received from this program are one -time in nature and the Administration's recommendation is to use these funds to cover budget shortfalls from the economic impact of COVID-19. Any funds over and above that amount are recommended to be put towards the General Fund reserve goal of 3 months, or 25.0% of total revenue, and/or the Resort Tax reserve goal of 6 months, or 50.0%. AMERICAN RESCUE PLAN ACT FUNDS The American Rescue Plan Act of 2021 (ARPA) is an emergency legislative package intended to "fund vaccinations, provide direct relief to families bearing the brunt of the COVI D-19 crisis, and support struggling communities." The bill provides a total of $1 .9 trillion to governments and other entities such as hospitals, public schools, and universities to promote recovery from the COVID-19 pandemic . Signed into law by President Biden on March 11, 2021, the bill allocated $350 billion in fiscal recovery funds to State, Local, Tribal, and Territorial (SL TT) Governments, of which $45.6 billion was allocated for metropolitan cities, such as the City of Miami Beach , to: • Respond to the COVID-19 public health emergency or its negative economic impacts including (but not limited to): assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality • Provide premium pay to eligible State workers, or grants to eligible employers with employees that perform essential work during the COVID-19 public health emergency • Provide government services to compensate for the reduction in revenue in the community due to the pandemic (budget shortfalls) • Make necessary investments in water, sewer, or broadband infrastructure The City is projected to receive an allocation of $23 .6 million in one-time federal dollars from the American Rescue Plan Act to address the projected revenue shortfalls attributed to COVID-19, of which $11.8 million has been received to date, that the Administration is recommending be used to balance the shortfall attributed to COVID-19 in the FY 2022 budget. ANALYSIS As a result of the COVID -19 pandemic, the City is continuing to experience impacts to its Resort Tax, Convention Center, and General Fund revenues, and to some extent, Parking, as the City is highly dependent on the tourism and hospitality industries. Similar to the balancing plans that the Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 5 of20 City Administration presented to the Finance and Economic Resiliency Committee (FERC) at the April 17, 2020 and April 24, 2020 meetings to balance the FY 2020 budgets, the FY 2021 budgets included assumptions based on the expectation of low economic activity for the first several months of the fiscal year with gradual growth in economic activity thereafter. The key to balancing the FY 2021 budgets was to (1) reduce costs as much as possible to mitigate the projected ongoing revenue loss, and (2) judiciously use the City's reserves to make up the difference. Among other things, the adopted FY 2021 budgets included the projected savings from the following cost reduction initiatives: • Citywide hiring freeze on vacant positions included in the budget, allowing for the flexibility to fill critical positions on an as-needed basis • Citywide freeze on budgeted non-essential expenditures requiring an additional layer of review by an oversight committee reporting to the City Manager while the uncertainty of revenues persists • Citywide freeze on non-essential tuition reimbursements • Citywide freeze on 80% of budgeted expenditures for training and travel • All employees in all bargaining units taking a specified number of furlough days using a tiered approach based on employees' salaries as follows: 5 days for employees earning greater than $80,000; 4 days for employees earning between $70,001 and $80,000; 3 days for employees earning between $60,001 and $70,000; 2 days for employees earning between $50,001 and $60,000; and 1 day for employees earning $50,000 and less. This initiative was subsequently approved to be amended to exclude the members of the Fraternal Order of Police (FOP) and the International Association of Fire Fighters (IAFF), as well as to reduce the number of furlough days by 1 for all other employees. • Refinancing of outstanding debt • Additional savings identified by departments tasked with reducing expenditures as much as possible GENERAL FUND General Fund Third Quarter Status An analysis of the actual nine-month operating revenues and expenses for the period October 1, 2020 through June 30, 2021 reveals an operating budget surplus of $54.0 million. While the actual surplus as of June 30, 2021 may seem unusual when compared to the projection for the current fiscal year ending September 30, 2021, it should be noted that the City receives a large percentage of its ad valorem property taxes during the first several months of the fiscal year. For FY 2021, ad valorem property tax revenues represent approximately 59.8% of total budgeted revenues adopted and 66.2% of actual revenues collected during the first nine months of the fiscal year. As of June 30, 2021, total revenues collected were approximately 82.7% of the current FY 2021 amended budget, or $283.4 million. Conversely, expenditures were approximately 67.0% of the current FY 2021 amended budget, or $229.5 million. It is important to note that there are often delays in expenditures until the close-out of the fiscal year. Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 6 of20 FY 2021 Budget General Fund Adopt ed Budget Amended Budget 3/4 of Amended Budget Re'-"lnues $ 329,023,000 $ 342,719,000 $ 257,039,250 Expenditures $ 329,023,000 $ 342 ,719 ,000 $ 257 ,039,250 $ $ Excess of Revenues Ove r/(Under) Expenditures $ General Fund Year-End Projections Actuals as of V ariance from 1/2 06/30/21 Amended Budget O'-"lr / (Under) 283,444,814 $ 26,405,564 229,493,689 $ (27,545 ,561) 53,951,124 Year-end operating revenues and expenditures projected through September 30, 2021 provide a more realistic indication of any estimated year-end surpluses or shortfalls as of this point in time. While actual revenues and expenses reflected in this analysis are as of June 30, 2021, these projections have incorporated more current information, including the projected impact of COVID - 19 on the City's, as well as the actions that the City Administration is proactively continuing to take to mitigate the losses in revenues outlined in the Letter to Commission (L TC) dated March 26, 2020 (L TC# 143-2020). A summary of the preliminary General Fund revenues and expenditures as of June 30, 2021 with projections through September 30, 2021 reflects a projected year-end shortfall of $18.7 million, which is a decrease of approximately $4.0 million from the $22. 7 million shortfall projected as of the second quarter of FY 2021. It is important to note that this analysis is a preliminary projection based on not only the experience during the first nine months of the fiscal year, but also the projected impact of COVID-19 on the City's operations for the remainder of the current fiscal year. In addition, these projections do not assume any Coronavirus Relief Funds received under the CARES Act through Miami -Dade County for unbudgeted expenditures related to COVID -19, funds received from the Federal government under the 2021 American Rescue Plan Act (ARPA), or any potential costs from additional vaccination efforts that may be approved by the City Commission during FY 2021. As more information becomes available, these projections will continue to be refined over time. FY 2021 Budget General Fund Adopt ed Budget Amended Budget Projected Difference % O1.€r / (Und e r) Re\€nues $ 329 ,023 ,000 $ 342,719,000 $ 325,495,000 $ (17 ,224,000) -5 .0% Expenditures $ 329 ,023 ,000 $ 342,719,000 $ 344,219 ,000 $ 1,500,000 0.4% Excess of Revenues Over/(Under) Expenditures $ (18,724,000) -5.5% General Fund Operating Revenues For FY 2021, property tax collections are being projected at 95 .0% of total property taxes assessed, wh ich is consistent with the original adopted budget thus allowing for discounts and a level of adjustment for appeals that is consistent with historical levels . The impact of these appeals and adjustments realized for the FY 2021 budget were provided by the Miami-Dade County Property Appraiser on July 1, 2021 when the City 's certified property values were received. As of June 30, 2021, actual operating revenues collected were approximately 82.7% of the current amended budget, or $283.4 million, with operating revenues through fiscal year-end September 30, 2021 projected at $325.5 million, which is approximately 5.0%, or $17.2 million, below the current amended budget, primarily due to the ongoing impact of COVID-19 on the City's revenues. Revenue categories projected to exceed budget or with significant variances to budget in excess of 10.0%, or $300,000, are further explained below: Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 7 of 20 Ad Valorem Taxes -Collections are projected at 0.8%, or $1.6 million, below the current amended budget, which was originally budgeted at 95.0% of total property taxes assessed, based on the realized impact of property tax appeals and adjustments provided by the Miami- Dade County Property Appraiser on July 1, 2021 for the FY 2021 budget. Overall, the final values citywide decreased by approximately $1.1 billion to $40.6 billion compared to the certified preliminary values of $41. 7 billion received last year on July 1, 2020 from the Property Appraiser that were used to develop the FY 2021 budget. Other Taxes -This category of revenues includes franchise and utility taxes on electricity, gas, fuel, cable-television, and telephones. Collections are projected to be 2.5%, or $595,000, below the current amended budget due to franchise and utility taxes on electricity, cable, and gas trending lower than budget due to a slower than originally anticipated recovery in the City's economic activity from COVID -19. Licenses and Permits -This category includes business tax receipts, licenses/special use permits, and sidewalk cafe fee revenues and is projected to be below the current amended budget by 10.4%, or $1.5 million, primarily due to a decrease in revenues for business tax receipts and sidewalk cafe fee revenues resulting from the City's overall response to the COVID-19 pandemic. On January 13, 2021, the Mayor and City Commission adopted Resolution No. 2021-31559 prorating portions of the FY 2021 business tax receipts fees relating to fee categories involving the sale and service of alcoholic beverages after midnight to provide that fees for the after midnight business tax receipt categories would not apply for FY 2021. In addition, on March 17, 2021, the Mayor and City Commission adopted Resolution No. 2021-31631 extending the suspension and/or proration of annual sidewalk cafe permit fees through September 30, 2021 to continue to promote business operations and economic recovery in the City. Intergovernmental -This category of revenues includes local option gas tax, motor fuel tax, sales proceeds, local option sales tax proceeds, and alcoholic beverage license proceeds and is projected to be 2.6%, or $291,000, above the current amended budget primarily due to local option sales tax, gas tax, and motor fuel tax collections trending higher than budget based on current economic activity. Charges for Services -This category includes revenues from activities and programs offered by the Parks and Recreation Department such as after school and summer classes, as well as the operations of the Miami Beach and Normandy Shores golf courses, public safety, passport, and lot clearing services, and is projected to be above the current amended budget by 3.8%, or $493,000, primarily due to revenues from the City's two golf courses trending higher than budget based on current year trends. Fines and Forfeits -This category, among other things, includes traffic fines, parking fines, and code enforcement violations, and is projected to be above the current amended budget by 26.9%, or $288,000, primarily due to police recoveries and code enforcement, fire, and public works fines and violations trending higher than budget. Interest -This category is comprised of various sources of interest income derived from the City's current investments and is projected to be 2.0%, or $55,000, above the amended budget due to realized gains in interest revenues on current investments. Rents and Leases -This category includes revenues from various rentals and leases of City owned properties. Projected FY 2021 collections are 8.5%, or $505,000, below the Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 8 of 20 current amended budget primarily due to a credit in the amount of $900,000 provided to Live Nation, the operator of the Jackie Gleason Theater, to account for significant adverse operational impacts associated with COVID -19, which was approved by the City Commission through Resolution No. 2021-31546, as well as additional rent relief provided to qualified tenants in FY 2021 as approved by the Mayor and City Commission on January 13, 2021 to continue to promote business operations and economic recovery in the City. These decreases are, however, projected to be partially offset by additional revenues from specific leases such as the Miami Beach Marina and Penrod's that are trending higher than budget. Miscellaneous -This category includes revenues from various categories such as concessions, reimbursements, and miscellaneous revenue categories including beach access fees, advertising, and sale of city property. Projected FY 2021 collections are 5.1 %, or $769,000, below the current amended budget primarily due to a projected decrease of $752,000 in beachfront concession revenues that are trending lower than budgeted and attributed to the slower than originally anticipated recovery in the City's economic activity from COVID -19. Resort Tax Contribution -This category is based on the annual contribution from the Resort Tax Fund to the General Fund for tourism-eligible expenditures that are funded in the General Fund that include, among other things, expenditures associated with police officers serving entertainment areas; a portion of fire rescue services from Fire Stations 1 & 2; and ocean rescue services. Due to the projected impact of COVID-19 on the City's Resort Tax revenues for FY 2021, the total Resort Tax Fund transfer to the General Fund budgeted for FY 2021 was $18.6 million; however, as a result of the slower than originally anticipated recovery in the City's revenues, the contribution is projected to be 65 .6%, or $12.2 million , below the current amended budget at $6.4 million. Fund Balance/Retained Earnings -This category is comprised of prior year General Fund reserves and fund balance appropriated for one-time purposes specified in the current year budget. As part of the funding appropriated for FY 2021, $1.2 million was to be transferred to the Parking Enterprise Fund to enable the Parking Department to phase -in the "right- sizing" reductions originally recommended by the City Administration, and approved by the City Commission, as part of the FY 2021 budget process to minimize the impact to a number of employees in the Parking Department, especially Parking enforcement. Due to FY 2021 Parking revenues trending above budget, as well as a delay in the reinstatement of some service levels that were reduced due to COVID-19 (landscaping, security, janitorial, etc.) and continued vacancy of budgeted positions due to COVID-19, new vacancies, and hiring challenges, it is projected that the $1.2 million will no longer need to be transferred to the Parking Enterprise Fund as presented at the Commission Budget Retreat on June 4, 2021. For a detail of General Fund revenues by category, refer to the attached Exhibit A. General Fund Operating Expenditures As of June 30, 2021, actual expenses were approximately 67.0% of the current FY 2021 amended budget, or $229.5 million, with operating expenditures through fiscal year-end September 30, 2021 projected at $344.2 million, which is approximately 0.4%, or $1.5 million, above the current FY 2021 amended budget. As previously mentioned, these projections are not only based on experience during the first nine months of the fiscal year, but also more current information available. Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 9 of20 General Fund expenditures by department projected to exceed budget or with significant variances to budget in excess of 10 .0%, or $300,000, are further explained below: Org a nizational Deve lopment Performance Initiatives (ODPI) -The department is projected to be 13.6%, or $152,000, above the current amended budget primarily due to costs related to existing education initiatives that were originally budgeted in the Education Compact Fund in FY 2021 that may need to be transferred to and funded by the General Fund in FY 2021. Education initiatives in the Education Compact Fund are primarily funded by revenues collected for advertising in the City's garages. The City has not collected any advertisement revenues during FY 2021 and the timing of collections, if any, remains uncertain . As a result, in order to ensure that these education initiatives are funded, these expenditures may need to be transferred to and funded by the General Fund in FY 2021. Organizational Development Performance Initiatives FY 2021 FY 2021 Projected vS Amended Budget Projected Amended % O\€r I (Under) Budget Variance Expenditures $ 1,119,000 $ 1,271,000 $ 152,000 13 .6% Ho us ing a nd Community Se rvi ces -The department is projected to be below the current amended budget by 9.4%, or $367,000, primarily due to projected savings in personnel services expenditures resulting from full -time and part-time budgeted positions that have been and/or remain vacant in the current fiscal year. A significant portion of the department's vacancies are in the Homeless division and have been difficult to fill due to the nature of the work involved. Housing and Community Services FY 2021 FY 2021 Projected vS Amended Budget Projected Amended % O\€r I (Under) Budget Variance Expenditures $ 3 ,887,000 $ 3,520,000 $ (367 ,000) -9.4% Pa rk s a nd Rec reat ion -The department is projected to be 1.9%, or $645,000, below the current amended budget primarily due to projected savings in personnel services expenditures resulting from numerous full-time and part-time budgeted positions that have been and/or remain vacant in the current fiscal year. These vacancies are primarily attributed to the department's proactive efforts in reducing its costs for operations as much as possible to mitigate the projected revenue loss from COVID -19 . Parks and Recreation FY 2021 FY 2021 Projected vS Amended Budget Projected Amended % O\€r I (Under) Budget Variance Expend itures $ 34,283 ,000 $ 33 ,638 ,000 $ (645,000) -1.9% Publi c Works -The department is projected to be below the current amended budget by 3.8%, or $519,000, resulting from projected savings in personnel services expenditures due to numerous budgeted full -time vacancies within the department's Engineering, Streets and Street Lighting, and Greenspace Management divisions. The department has been attempting to fill these budgeted positions; however, the volume of candidates who are interested and qualified for some of these positions has been very limited. Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 10 of 20 Public Works FY 202 1 FY 2021 Amended Bud get Projec ted Expenditures $ 13,577,000 $ 13,058,000 Projec ted vs Amended % O-.er / (Under) Budget Variance $ (519,000) -3 .8 % Capital Improvement Projects (CIP) -The department is projected to be 8.6%, or $480,000, below the current amended budget primarily due to projected savings in personnel services expenditures resulting from several budgeted full-time position vacancies that the department has been unable to fill or is in the process of filling based on the current needs of the department. Capital Improvement Projects FY 202 ·1 FY 202 ·1 Proje cted vs Amended Budget Projected Amended % O-.er I (Under) Budget Variance Ex penditures $ 5 ,551 ,000 $ 5 ,071 ,000 $ (480 ,000) -8.6% Police -The department is projected to be 0.2%, or $283,000, below the current amended budget primarily due to projected savings in personnel services expenditures budgeted for the additional temporary sworn Police Officer positions (15) and sworn Sergeant positions (2) that were approved to be added as part of the Second Amendment to the FY 2021 Operating Budget on March 17, 2021, through Resolution No. 2021-31646. The recruitment and training of sworn positions in the City is an extensive process that can take several months . As a result, savings are being projected for these additional positions that were added in the current fiscal year to account for the time that potential recruits will have to go through the recruitment and training process before being deployed . A portion of these projected savings will be used to fund $180,000 of projected costs of the additional measures being taken by the Department in the Art Deco Cultural District (ADCD) to enhance visibility and deter criminal activity detailed further in the Letter to Commission dated June 21, 2021 (L TC# 254-2021 ). Had this new initiative not been implemented, the department would have a projected saving of $463,000 at year-end that, if realized at year-end, would be requested to be carried forward into FY 2022 to extend these additional measures. Finally , the projection includes $400,000 for the implementation of a one-time signing bonus program in FY 2021 to stimulate recruitment of police officers, as recommended by the FERG at its July 16, 2021 meeting. Police FY 2021 FY 2021 Projected vs Amended Budget Projected Amended % O-.er I (Under) Budget Varianc e Ex penditures $ 118,014,000 $ 117,731 ,000 $ (283,000) -0.2 % Fire -The department is projected to be 2.4%, or $2.2 million , above the current amended budget primarily due to increased usage of unbudgeted overtime, which is attributed to several factors. First, during the nine months of FY 2021, there have been numerous firefighters out for extended periods of time due to testing positive for COVID-19 which, as a result, required · the usage of unbudgeted overtime to fill these slots to maintain minimum shift staffing requirements. Second, the department has utilized additional unbudgeted overtime for COVID -19 related functions such as the Miami Beach Convention Center COVID -19 drive thru testing and homebound testing programs. Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 11 of 20 Fire FY 2021 FY 2021 Amended Budget Proje cted Ex penditures $ 91 ,890,000 $ 94,078,000 Projected -,s Am e nded % O-.er I (Under) Budg et Varian ce $ 2 ,188,000 2.4% C itywide Accounts -Citywide Accounts are a category of budgeted expenditures related to the City's overall operations that are not readily identifiable to any specific department. These accounts are projected to be 15.5%, or approximately $3.6 million, above the current amended budget primarily due to the projected impact of the pension buyback window provided for all eligible sworn Police and Fire personnel, regardless of pension service time, to purchase up to two years of service from July 1, 2021 through September 30, 2021 in accordance with the City's current collective bargaining agreements. Since the final confirmed volume of participation in the program still remains unknown at this time, the impact of the pension buyback window is a conservative projection that assumes that all eligible sworn Police and Fire personnel will use their accumulated vacation and sick leave and elect to participate in the program. As additional information becomes available, these projections will continue to be further refined. Citywide Accounts FY 202 1 FY 2021 Projected -,s Amended Budget Projected Am e nded % O-.er I (Under) Budg et Variance E xpenditures $ 23 ,057 ,000 $ 26,640,000 $ 3,583,000 15 .5% While the above-listed General Fund departments comprise those projected to exceed their current amended budgets or with significant variances to budget in excess of 10.0%, or $300,000, all other General Fund departments are projected to have savings at year-end that may be realigned within the General Fund to address any department overages should these projections be realized at year-end . For a detail of General Fund expenditures by department, refer to the attached Exhibit A. ENT E RPRI SE F UND S The City accounts for those goods and services provided by a particular department to external users for which a fee is charged as Enterprise Funds. The City's Sanitation, Water, Storm Water, Sewer, Parking, Convention Center, and Building operations comprise this category of proprietary funds . An analysis of the actual nine-month operating expenses for the period October 1, 2020 through June 30, 2021, reveals that all Enterprise Funds have expenses less than three quarters of their current FY 2021 amended budgets. It is important to note that this is not representative of typical trends for a full fiscal year, as there is often a lag in processing of expenditures, particularly those billed by outside entities for services provided. Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 12 of 20 NTERPRISE FUNDS Sanitation Sewer Storm Water FY 2021 Adopted Budget 22,124,000 49,226,000 31,159,000 Budget Amendment -11/18/20 456,000 1,171 ,000 1,671,000 Budget Amendment -03/17/21 0 0 0 Budget Amendment -04/21/21 0 0 0 Budget Amendment -06/23/21 0 0 0 Bud et Amendment -07/28/21 0 0 0 FY 2021 Amended Bud et 22,580,000 50,397 ,000 32 ,830,000 3/4 Adopted Budget 16,593,000 36,919,500 23,369,250 3/4 Amended Bud et 16,935,000 37,797,750 24,622 ,500 Revenues as of 06/30/21 19,310,987 37 ,755,144 23,330,775 Ex enditures as of 06/30/21 14,366,128 32,439,320 18,531 ,596 Expenditures Above/(Below) 3/4 Amended Budget (2 ,568,872) (5,358,430) (6,090,904) % Variance -1 1.4% -10.6% -18.6% Water Parking Building Convention Genter 35,497 ,000 37 ,558,000 16,596,000 26,318,000 2,561,000 88,000 160,000 4,389,000 0 0 0 0 0 ~ 0 0 2,000,000 0 0 0 2,000,000 0 0 0 0 38,058 ,000 37 ,646,000 16,756,000 34,707,000 26,622,750 28,168,500 12,447,000 19,738,500 28,543 ,500 28,234,500 12,567,000 26,030,250 24,678,289 26,877 ,352 9,424,500 16,274,289 20,392 ,963 22,237 ,159 11,677,585 15,187,866 (8,150,537) (5,997 ,341) (889,415) (10,842 ,384) -21.4% -15.9% -5.3% -31 .2% Year-end operating revenue and expenditure projections through September 30, 2021 provide a more realistic indication of any anticipated year-end surpluses or shortfalls as of this point in time. While the actual revenues and expenses presented above are as of June 30, 2021, the year-end projections incorporate more current information, including the ongoing projected impact of COVID -19 on the City's operations, as well as the actions that continue to be taken by the City Administration to reduce costs as much as possible to mitigate the ongoing revenue impact. Revenues for all Enterprise Funds are projected to be equivalent to or in excess of expenditures as of year-end, except for the Convention Center Fund. In addition, all Enterprise Fund budgets are projected to be under budget in excess of 10.0%, or $300,000, except for Sewer operations . The only significant variances in the Enterprise Fund budgets to note are the following: Parking -Based on the Parking Enterprise Fund's FY 2021 third quarter projections, revenues are projected to exceed expenditures resulting in a projected surplus of approximately $4 .3 million that would be available to be set aside in FY 2021 for renewal and replacement of existing Parking assets or future operating expenditures, after eliminating the budgeted $1 .2 million contribution from the General Fund, should these projections be realized at year-end . The surplus projected as of the third quarter is attributed to a combination of factors which include FY 2021 Parking revenues trending above budget, a delay in the reinstatement of some service levels that were reduced due to COVID-19 (landscaping, security, janitorial, etc.) and the continued vacancy of budgeted positions due to COVID-19, new vacancies, and hiring challenges as presented at the Commission Budget Workshop on June 4, 2021. It is important to note, however, that due to the uncertainty of Parking's revenues, the surplus projected as of the third quarter may be less as of year-end. Therefore, trends will continue to be monitored over the coming months. Convention Center -Due to the ongoing impact of COVID -19 on Convention Center operations, it is projected that the Convention Center Fund will require the use of approximately $4.5 million of prior year fund balance. This is a decrease of approximately $738,000 from the budgeted use of fund balance in FY 2021 of $5 .2 million and is primarily attributed to changes in the event calendar from what was originally anticipated for FY 2021, which was 51 events (compromised of definite, firm, and tentative), and the events that are currently being anticipated for FY 2021, which is 17. If realized at year-end , the projected use of $4.5 million of fund balance will be funded from the Convention Center fund balance, which totals approximately $8.3 million, resulting in a projected remaining fund balance of approximately $3.8 million. Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 13 of20 The Convention Center Fund currently has a 17.0% reserve of approximately $4.9 million. If necessary, the Administration would recommend using 6.0% of this reserve, or $1.7 million, to further support operations and maintaining the minimum 11.0% reserve requirement of $3.2 million. Any further shortfall beyond this point may need to be supported by the General Fund or Resort Tax Fund. Due to the variability of event cancellations as a result of COVID-19, Convention Center operations will continue to be monitored over the coming months. Sanitation -Based on the Sanitation Enterprise Fund's FY 2021 third quarter projections, revenues are projected to exceed expenditures resulting in a projected surplus of approximately $1.9 million. This projected surplus is primarily attributed to a reimbursement of approximately $1.5 million received from the Federal Emergency Management Agency (FEMA) for costs incurred by the City in the Sanitation Fund related to Hurricane Irma. Since the costs incurred by the Sanitation Fund related to Hurricane Irma were funded from the Sanitation Fund's reserves, it is recommended that the projected surplus be used to replenish Sanitation's reserves should these projections be realized at year-end. The remaining projected surplus of approximately $418,000 is primarily attributed to savings in personnel costs resulting from numerous budgeted full-time position vacancies that have been difficult to fill due to the nature of the work involved. ENTERPRISE FUNDS Sanitation Sewe, Storm Water Water Parlting Buililing Convention eente, FY 2021 Adopted Budget 22 ,124,000 49,226,000 31 ,159,000 35,497 ,000 37 ,558,000 16,596,000 26,318,000 Budget Amendment -11118120 456,000 1,171 ,000 1,671 ,000 2,561,000 88 ,000 160,000 4 ,389,000 Budget Amendment -03/17/21 0 0 0 0 0 0 0 Budget Amendment -04/21/21 0 0 0 0 0 0 2,000,000 Budget Amendment -06/23121 0 0 0 0 0 0 2,000,000 Budget Amendment -07/28/21 0 0 0 0 0 0 0 FY 2021 Amended Budget 22,580,000 50,397 ,000 32,830,000 38,058,000 37,646,000 16,756,000 34,707,000 FY 2021 Projections: Charges for Services 21,449,000 45,406,000 32,042,000 32,231,000 30,984,800 15,280,000 4,431,000 Other 2 ,363,000 4 ,912,000 184,000 3,293,000 4,687,200 832,000 16,240,000 FY 2021 Revenue Pro·ections 23,812,000 50,318,000 32 ,226,000 35,524,000 35,672,000 16,112,000 20,671,000 $ Overl(Under) Amended Budget 1,232,000 (79,000) (604,000) (2,534,000) (1,974,000) (644,000) (14,036,000) % Overl(Under) Am ended Budget 5.5% -0.2% -1.8% -6.7% -5.2% -3.8% -40.4% FY 2021 Ex enditure Pro·ections 21,920,000 50,318,000 32 ,226,000 35,524,000 31 ,421,000 16,112,000 25,156,000 $ Over/(U nder) Amended Budget (660,000) (79,000) (604,000) (2,534,000) (6,225,000) (644,000) (9,551,000) % Over/ Under Amended Bud et -2 .9% -0.2% -1 .8% -6.7% -16.5% -3.8% -27.5% Revenues Over/ Under Ex enditures 1,892,000 0 0 0 4,251,000 0 4,485,000 As additional information becomes available these projections will continue to be further refined. INTERNAL SERVICE FUNDS The City accounts for goods and services provided by one department to other departments citywide on a cost reimbursement basis as Internal Service Funds. Central Services, Fleet Management, Information Technology, Property Management, Risk Management (Self Insurance), Medical and Dental, and the Office of the Inspector General comprise this category of proprietary funds. An analysis of the actual nine -month operating revenues and expenses for the period October 1, 2020 through June 30, 2021, reveals that all Internal Service Funds have expenses less than three quarters of their current FY 2021 amended budgets. It is important to note that this is not representative of typical trends for a full fiscal year, as there is often a lag in processing of expenditures, particularly those billed by outside entities for services provided. Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 14 of 20 NTERNAL SERVICE FUNDS Central Fleet lnfonnatlon Services Management Technology FY 202 1 Adopted Budget 1,042,000 13,216,000 17,652,000 Bud get A mendm ent -11 /18/20 10,000 1,872,000 634,000 Budget A mendm ent -03/17/21 0 0 0 Bud et Amendmen t -04/2 1/21 0 0 0 FY 2021 Amended Bud et 1,052,000 15,088,000 18,286 ,000 1 /2 Adopted Budget 52 1,000 6,608 ,000 8,826 ,000 1/2 Amended Bud et 526,000 7,544,000 9,143,000 Revenues as o f 03/31/21 505,148 7,134,886 7,831,073 Ex enditures as of 03/3 1/21 427,652 4,571,229 7,624,615 Expenditures Above/(Below) 1/2 Amended Budge (98,348) (2,972,771) (1,518,385) % Varia nce -9.3% -19.7% -8.3% Office of Property Risk Medical & Dental Inspector General Management Management Insurance 1,459,000 10,956,000 22,455,000 40,258,000 568,000 759,00 0 80,000 0 0 0 0 0 0 0 0 0 2,027,000 11,715,000 22,535,000 40,258,000 729 ,500 5,478,000 1 1,227,500 20,129,000 1,0 13,500 5,857,500 1 1,267,500 20,129,000 1,023 5,193,306 10,880 ,237 19,3 10,385 698,657 4 ,576,836 6,958,955 16,957,159 (314,843) (1,280,664) (4,308,545) (3 ,171,84 1) -15.5% -10.9% -19.1% -7 .9% Year-end operating revenue and expenditure projections through September 30, 2021 provide a more realistic indication of any anticipated year-end surpluses or shortfalls as of this point in time. While the actual revenues and expenses presented above are as of June 30, 2021, the year-end projections incorporate more current information, including the ongoing projected impact of COVID -19 on the City 's operations, as well as the actions that continue to be taken by the City Administration to reduce costs as much as possible to mitigate the ongoing revenue impact. Revenues for all Internal Service Funds are projected to be equivalent to or in excess of expenditures as of year-end. Internal Service Fund budgets projected to exceed budget or with significant variances to budget in excess of 10.0%, or $300,000, are further detailed below. Information Technology -This fund is projected to be 3.3%, or $599,000, below the current amended budget primarily due to projected savings of $541,800 in contract maintenance and information technology supplies identified by the department as a result of difficulties in sourcing inventory of computers, as well as some delays in the recruitment process for several position vacancies. Property Management -This fund is projected to be 3.4%, or $404,000, below the current amended budget primarily due to projected savings in personnel services expenditures of $306 ,000 resulting from several full -time budgeted positions that have been and/or remain vacant in the current fiscal year as a result of delays in the recruitment process, as well as additional projected savings in maintenance, repairs, and utilities expenditures of $98,000 . Risk Management -This fund is projected to be 4.4%, or $984,000, below the current amended budget, primarily due to lower than originally projected increases in policy renewals across most lines of insurance, including, but not limited to property, workers' compensation, and cyber liability, as well as projected savings in general, police , workers compensation, and public official liability claims and case reserves based on actuarial forecasts as of the end of the third quarter of FY 2021. Since claims can fluctuate, these trends will continue to be monitored over the coming months and future projections adjusted accordingly. Medical and Dental -This fund is projected to be 5.2%, or $2.1 million, below the current amended budget due to medical claims trending lower than originally budgeted for FY 2021 based on current claims experience and adjusted actuaria l forecasts as of the end of the third quarter of FY 2021. It is important to note that despite the better than anticipated claims experience realized during the first nine months of the fiscal year, claims can fluctuate significantly throughout the year; therefore, these trends will continue to be monitored in the coming months and future projections adjusted accordingly. Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 15 of 20 INTERNAL SERVICE FUNDS Central Fleet Information Services Management Technology FY 202 1 Adopted Budget 1,042 ,000 13,2 16,000 17 ,652,000 Bud get Ame ndment -11 /1 8/20 10,000 1,872,000 634,000 Bud get Am endment-03/17/21 0 0 0 Budget Amendment -04/2 1/21 0 0 0 Bu dget Am endment -06/23/2 1 0 0 0 Budget Amend m en t -07/28/21 0 0 0 FY 2021 Amended Budget 1,052,000 15,088,000 18,286,000 FY 202 1 Projectio ns: Charg es for Services 1,0 12,000 12,707,000 15,675,000 Other 16,000 2,1 09,000 2,012,000 FY 202 1 Reve nue Proiection s 1,028,000 14,8 16,000 17,687,000 $ Over/(U!lder) Amended Budget (24,000) (272 ,000) (599,000) % Over/(Under) Amended Budget -2 .3% -1.8% -3.3% FY 202 1 Expenditure Projecti ons 1,02 8,000 14,8 16,000 17,687,000 $ Over/(Under) Amende d Budget (24,000) (272,000) (599,000) % Over/(Under) Am ende d Bud ae t -2.3% -1.8% -3.3% Revenues Overl(Under) Exoenditures 0 0 0 Office of Property Risk Medical & Inspector 0ental General Management Management Insurance 1,459,000 10,956,000 22,455,000 40,258,000 568,000 759,000 80,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2,027,000 11,715,000 22,535,000 40,258,000 1,994,000 10,162,000 20,475,000 0 1,000 1,149,000 1,076,000 38,165,000 1,995,000 11 ,3 11 ,000 21,551,000 38,165,000 (32,000) (404,000) (984,000) {2,093,000) -1.6% -3.4% -4.4% -5.2% 1,995,000 11 ,3 11 ,000 21,551,000 38,165,000 (32,000) (404,000) (984,000) {2,093,000) -1.6% -3.4 % -4.4% -5.2% 0 0 0 0 These projections will continue to be refined as additional information becomes available. SPECIAL REVE NU E FUNDS Special Revenue Funds consist of revenues and expenditures which are legally restricted or committed for specific purposes, other than debt service and/or capital projects. Special Revenue Funds include Resort Tax, as well as Transportation and People's Transportation Plan (PTP) Fund operations, 7th Street Garage operations, 5th & Alton Garage operations, the Tourism and Hospitality Scholarship Program, Information and Communications Technology Fund, Education Compact Fund, Franchise Waste Haulers and Sustainability Contributions , the Residential Housing Program, Red Light Camera Program operations, Emergency 911 Fund, Miami Beach Cultural Arts Council, Normandy Shores and the City's three Security Guard Special Taxing Districts (Biscayne Point, Biscayne Beach, and Allison Island), Miami City Ballet, Art in Public Places (AIPP) operations, Tree Preservation and Commemorative Tree Trust Fund, Beachfront Concession Initiatives Program, the Beach Renourishment Fund, Police Unclaimed Property and Crash Report Sales Funds, Police Confiscation Trust Funds (Federal and State), Police Training and School Resources Fund, the Adopt-a-Bench Program, and the Off-Duty Services Fund. An analysis of the actual nine-month operating revenues and expenses for the period October 1, 2020 through June 30, 2021, reveals that all Special Revenue Funds have expenses less than three quarters of their current FY 2021 amended budgets primarily due to expenditures that are typically incurred in the latter part of the fiscal year with the exception of the 5th & Alton Garage, Art in Public Places, and Convention Center Renewal and Replacement Funds which incurred some one-time expenses earlier in the fiscal year. It is, however, important to note that the actuals incurred for these funds through June 30, 2021 are not representative of typical trends for a full fiscal year. Year-end operating revenue and expenditure projections through September 30, 2021 provide a more realistic indication of any anticipated year-end surpluses or shortfalls as of this point in time. While the actual revenues and expenses presented are as of June 30, 2021, the year-end projections incorporate more current information available. Revenues for all Special Revenue Funds are projected to be equivalent to or in excess of expenditures as of year-end unless subsequently detailed below . In addition, while many Special Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 16 of 20 Revenue Funds are projected to have significant variances to budget in excess of 10 .0%, or $300,000, due to the projected impact of COVID-19 on the City's operations, as well as the actions that continue to be taken by the City Administration to reduce costs as much as possible to mitigate the projected revenue loss, the 5th & Alton Garage Fund, Biscayne Beach and Biscayne Point Security Guard Special Taxing Districts are projected to exceed budget as further detailed below . The only significant variances in the Special Revenue Funds to note are the following: Education Compact Fund -This fund is projected to be 23.7%, or $152,000, below the current amended budget due to costs related to existing education initiatives that were originally budgeted in the Education Compact Fund in FY 2021 that are anticipated to be transferred to and funded by the General Fund instead in FY 2021 should these projections be realized at year-end. Education initiatives in the Education Compact Fund are primarily funded by revenues collected for advertising in the City's garages. The City has not collected any advertisement revenues during FY 2021 and the timing of collections, if any, remains uncertain. As a result, in order to fund certain education initiatives, these expenditures may need to be funded by the General Fund in FY 2021. Education Compact FY 2021 FY 2021 Projected vs Amended Budget Projected Amended % Over/ (Under) Budqet Variance Expenditures $ 641,000 $ 489 ,000 $ (152,000) -23.7 % Red Light Camera Fund -This fund is projected to be 46.5%, or $654,000, below the current amended budget due to delays in the installation of an additional five red light cameras, as well as revenues generated from the existing cameras trending lower than budgeted resulting from existing cameras that are or anticipated to be temporary offline for repairs and/or replacement. Overall, expenditures are projected to exceed revenues by $378,000. Therefore, should this projected shortfall be realized at year-end ; it will be offset using available fund balance in the Red Light Camera Fund which is approximately $791,000. Red Light Camera FY 2021 FY 2021 Projected vs Amended Budget Projected Amended % Over/ (Under) Budget Variance Expenditures $ 1,407 ,000 $ 753 ,000 $ (654 ,000) -46 .5% Other Special Revenue Funds -The 5th & Alton Garage, as well as the Biscayne Point and Biscayne Security Guard Special Taxing District Special Revenue Funds, are projected to exceed their current amended budgets by $176,000, $8,000, and $18,000, respectively. This is primarily attributed to a projected increase in operations in the 5th & Alton Garage, as well as changes in the security service levels requested by these two Special Taxing Districts and implemented mid-year of FY 2021 . Should these projected overages be realized at year-end, they will be offset using available fund balance RESORT TAX FUND The City's Resort Tax Fund is primarily supported by taxes collected pursuant to Chapter 67-930 (Section 6) of the Laws of Florida, as amended, and Section 5 .03 of the City of Miami Beach Charter, as amended . This legislation authorizes the use of Resort Taxes for the promotion of the tourism industry, which includes , but is not restricted to the following : Publicity, advertising, news Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 17 of 20 bureau, promotional events, convention bureau activities, capital improvements and the maintenance of all physical assets in connection therewith; and for the payment of the reasonable and necessary expenses of collecting, handling and processing of said tax. Typically, the City has considered the following services as "Services Related to the Promotion of Tourism:" • Police Officers serving entertainment areas • A portion of Fire Rescue services from Fire Stations 1 & 2 • Ocean Rescue services • Sidewalk pressure cleaning in South, Middle and North Beach visitor areas • South Beach sanitation • Enhanced Code Compliance/Enforcement provided to respond to evening entertainment area violations and staffing of special events • Other Code Compliance/Enforcement activities in tourism and visitor related facilities/areas • Tourism and Cultural Development Department and the Cultural Arts Council • Museums and Theatres (Garden Center, Bass Museum, Colony and Byron Carlyle Theatres) • Golf courses (net of revenues) • Memorial Day and other special event costs • Homeless services • July 4th , Visitor Center funding, Holiday Lights, MDPL, Orange Bowl, etc. These allowable uses have led to increased tourism-related activities, such as special events including Art Basel and the Air and Sea Show. The City is highly dependent on the tourism and hospitality industry. As a result, due to COVID- 19, the City is continuing to experience adverse impacts to its Resort Tax revenues. Total two percent Resort Tax revenues for FY 2021 are projected to be 7.2%, or $3.4 million, above the current amended budget as of year-end, which was adopted assuming a gradual recovery in Resort Tax revenues impacted by COVID-19 during FY 2021. Total FY 2021 two percent Resort Tax expenditures are projected to be 28.9%, or $13.5 million, below the current amended budget as of year-end, primarily due to a $12 .2 million decrease in the FY 2021 Resort Tax contribution to the General Fund for tourism-eligible expenditures in the General Fund and savings in other two percent Resort Tax operating expenditures totaling approximately $1 .9 million. These decreases were, however, partially offset by a $604,000 increase in the combined contributions to the Miami Beach Visitor and Convention Authority (VCA) and Greater Miami Convention & Visitors Bureau (GMCVB) that are based on a percentage of two percent Resort Tax collections projected above budget. The proceeds of the one percent bed tax, as adopted through Resolution No. 2018-30512, and continuing in FY 2021, unless amended by the City Commission, are to be utilized as follows: 60% allocated for Transportation initiatives in tourist-related areas; 10% allocated equally among North Beach, Middle Beach and South Beach for capital projects that enhance Miami Beach 's tourist related areas; and 10% allocated to various arts and cultural programs. One percent bed tax revenues for FY 2021 are projected to be 6.4%, or $685,000, above the Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 18 of 20 current amended budget as of year-end. Concurrently, since transfers for Transportation initiatives in tourism-related areas, North, Middle, and South Beach quality of life projects, and various arts and cultural programs that are funded by the Cultural Arts Council are directly based on the proceeds of the one percent bed tax, one percent Resort Tax expenditures are equally projected to be 6.4%, or $685,000, above the current amended budget as of year-end, of which $409,000 impacts Transportation initiatives in tourism -related areas, $207,000 impacts North, Middle, and South Beach quality of life projects equally, and $69,000 impacts various arts and cultural programs that are funded by the Cultural Arts Council. Lastly, the proceeds of the additional one percent bed tax levied solely for the purposes of expanding, enlarging, renovating, and/or improving the Miami Beach Convention Center, including debt service related thereto , as well as providing Capital Renewal and Replacement funding for the Miami Beach Convention Center, are projected to be 6.4%, or $685,000, above the current amended budget as of year-end . Since the proceeds of the additional one percent bed tax must first provide for the payment of debt service and any excess, based on proceeds , be set- aside for Capital Renewal and Replacement funding for the Miami Beach Convention Center, addit ional one percent bed tax expenditures are also projected to be 6.4%, or $685,000, above the current amended budget as of year-end. It is important to note that due to the impact of COVID -19 on the City 's FY 2021 Resort Tax revenues and third quarter projections , approximately $1 .0 million will need to be transferred from the total two percent Resort Tax revenues for FY 2021 to provide debt service coverage should these projections be realized at fiscal year-end. Overall, due to the ongoing impact of COVID-19 on the City Resort Tax revenues, combined Resort Tax revenues are projected to be 5.8%, or $4.0 million , above the current amended budget as of year-end, while expenditures are projected to be 18.3%, or $12.8 million, below the current amended budget due to the necessary expenditure adjustments made that were previously mentioned to ensure compliance with debt service coverage and reserve requirements resulting in $16 .8 million available to be set aside to the reserves, which is an increase of $6 .8 million from the $10.0 million available to be set aside as of the second quarter. Should these projections be realized at year-end, the Administration recommends that the year- end Resort Tax surplus be utilized to address and enhance public safety, enforcement, and programming in the tourism areas throughout the City, including the Art Deco Cultural District (ADCD), as discussed at the Commission Budget Retreat on June 4, 2021 and set aside funds to achieve the City's additional Resort Tax reserve targets as amended by the City Commission through Resolution 2019-30664 on January 16 , 2019 . FY 2021 FY 2021 Actuals as o f %Actua l of ©v er/(Under-) % Ove r/(Under) Adopted Ame nded 06/30/21 Ame nded Amended Amended Budget Budget Budget Budget Budget Rev enues 2% Reso rt Tax 45,045,000 45,045,000 36,547,094 8 1.1% 49,713,000 4,668,000 10.4% M scellaneo us Revenues 1,057,000 1,057,000 158,857 15.0% 251,000 (806,000) -76.3% Reso rt Tax Fun d Ba lance 0 503,000 0 0.0% 0 (503,000) -1 00 .0% 1% Reso rt Tax (QO L) 10,771,000 10,771,000 8,443,960 78.4% 11 ,456,000 685,000 6.4% Addi tiona l 1% for Conven tion Center 12,457,000 12 ,457,000 8,443,960 67.8% 12,457,000 0 0.0% Tot al Revenues 69,330,000 69,8 33,000 53,593,871 76.7% 73,8 77,000 4 ,044,000 5.8% Expe nditures General Fund Contribution 18,639,000 18,639,000 13,979,250 75.0% 6,415,000 (12,224 ,000) -65.6% Sanitation Fund Contri bution 5,780,000 5,780,000 4 ,335,000 75.0% 5,780,000 0 0 .0% Contribution to GM:VB 4,527,000 4,527,000 3,750,000 82 .8% 5,012 ,000 485,000 10.7% Contribution to VGA 1,075,000 1,075,000 712,870 66.3% 1,194,000 119,000 11.1% Contribu tion to M . Sinai 1,000,000 1,000,000 0 0 .0% 1,000 ,000 0 0 .0% O ther Operating/Other Uses 14 ,881,000 15,384,000 7 ,7 85,797 50.6% 13,572,000 (1 ,812,000) -11.8% Wa rketing 200,000 200,000 85,790 42.9% 150,000 (50,000) -25.0% Transfer to NB, tla, SB Capital. Transp, and Arts (QOL) 10 ,771 ,000 10 ,771,000 8,443,960 78.4% 11,456,000 685,000 6 .4% Addt'l 1% Conv. Center Debt Service & Ca . Ren & Re I. 12,457,000 12,457,000 0 0 .0% 12,457,000 0 0.0% Total Ex end itures 69,330,000 69,833,000 39,092,667 56 .0% 57,036,000 12,797,000 -18.3% Exce ss o f Re venues Ove r/ Unde r Ex n d itures 0 0 14,501 ,204 16,841 ,000 Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 19 of 20 CONCLUSION All General Fund, Enterprise Funds, Internal Services Funds, and Special Revenue Funds budgets are projected to be at or below their current FY 2021 amended budgets as of year-end with revenues projected to be equivalent to or in excess of expenditures, except for specific General Fund Departments, the Convention Center Enterprise Fund, and the Red Light Camera, 5th & Alton Garage, Biscayne Point, and Biscayne Beach .Special Revenue Funds. These projected overages and shortfalls, if realized at year-end, will be closed using a mix of sweeping savings from other funds and the use of available fund balance. The third quarter projections anticipate that an additional $18. 7 million, which is a decrease of $4.0 million from the $22.7 million shortfall projected as of the second quarter of FY 2021, will be needed from General Fund reserves to re-balance the FY 2021 budget and $16.8 million, which is an increase of $6.8 million from the $10.0 million as of the second quarter, is recommended . to be added to the Resort Tax reserve due to third quarter revenue projections coming in higher than projected in the second quarter of FY 2021. The assumptions in the third quarter projections will continue to be refined as additional data and information becomes available between now and the development of the year-end projections, as well as during the finalization of the FY 2022 budgets. Any material variances will be disclosed and discussed at upcoming Finance and Economic Resiliency Committee meetings. ATH/JW/TOS Letter to Commission -Fiscal Year 2021 Third Quarter Analysis Page 20 of 20 CITY OF MIAMI BEACH FY 2021 GENERAL FUND 3RD QUARTER REVENUES Ad Valorem Taxes Ad Valorem Taxes -Pay-As-You-Go Capital Ad Valorem Taxes -Capital Renewal & Replacement Ad Valorem Taxes -Normandy Shores Other Taxes Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Interest Rents and Leases Miccollanoouc Other-Resort Tax Contribution Other-Non-Operating Revenues Fund Balance/Retained Earnin s TOTAL REVENUES EXPENDITURES Mayor & Commission City Manager Marketing and Communications Office of Management and Budget (prev. OBPI) Org. Dev Peformance Initiatives Finance Procurement Human Resources/Labor Relations City Clerk City Attorney Housing & Community Servic es Property Management General Fund Planning Environment & Sustainability Tourism & Culture Economic Development Code Compliance Parks & Recreation (including Golf courses) Public Works Capital Improvement Projects Police Fire Citywide (Net of Individual Items Below): Normandy Shores Pay-As -You-Go Capital Info & Comm . Tech Fund Capital Renewal and Replacement Fund Parkin Contribution TOTAL EXPENDITURES EXCESS OF REVENUES OVER/ UNDER EXPENDITURES FY 2021 Adopted Budget 193,218,000 2,592,000 807,000 18,000 24,083,000 13,925,000 11,254,000 13,061,000 1,069,000 2,769,000 5,954,000 16,1~6,000 18,639,000 16,910,000 9,599,000 329,023,000 2 ,517,000 4 ,798,000 2 ,180,000 1,466,000 1,018,000 6,294,000 2 ,699,000 2 ,794,000 1,829,000 5,743,000 3,489,000 2 ,001,000 5,192,000 1,152,000 3,162,000 1,108,000 6,456,000 34 ,016,000 13,587,000 5,544,000 115,167,000 91 ,171,000 13,743,000 111,000 252 ,000 300,000 43,000 1,211 ,000 329,023,000 0 EXHIBIT A FY 2021 Amended Budget 193,218,000 2,592,000 807,000 18,000 24,083,000 13,925,000 11,254,000 13,061,000 1,069,000 2,769,000 5,954,000 16,1~6,000 18,639,000 16,910,000 23,295,000 342,719,000 2,517,000 4,798,000 2,221 ,000 1,466,000 1,119,000 6,358,000 2,705,000 2,794,000 1,844,000 6,150,000 3,887,000 2,054,000 6,095,000 1,248,000 3,242 ,000 1,372,000 6,477,000 34,283,000 13,577,000 5,551,000 118,014,000 91,890,000 17,140,000 111,000 4,252,000 300,000 43,000 1,211 ,000 342,719,000 0 Actuals as of 06/30/21 184,264,283 2,592,0QQ. 807,000 18,000 15,157,766 9,842,619 7,841,911 10,994,112 1,101,538 8,578,148 4,389,343 11, 11ltl,3ll 13,979,250 12,662,500 0 283,444,814 1,751 ,728 3,361 ,814 1,501 ,929 1,021,949 454,779 4,545,639 1,850,526 1,847,840 1,241 ,812 4,198,298 2,045,810 1,399,984 3,385,050 795,289 2,029,326 848,102 4,527,437 21 ,198,556 7,944,248 3,551 ,661 84,184,015 69,295,046 6,518,483 0 0 0 0 0 229,493,689 53,951,124 %Actual of Amended Budget 95.4% 100.0% 100.0% 1(Xl0% 62.9% 70.7% 69.7% 84.2% 103.0% 309.8% 1.0% 7~.0% 75.0% 75.0% 0.0% 82 .7% 69.6% 70.1% 67.6% 69.7% 40.6% 71.5% 68.4% 66.1% 67.3% 68.3% 52.6% 68.2% 55.5% 63.7% 62.6% 61.8% 69.9% 61 .8% 58.5% 64.0% 71 .3% 75.4% 38.0% 0.0% 0.0% 0 .0% 0.0% 0 .0% 67.0% FY 2021 Year End Projections 191,623,000 2,592,000 807,000 18,000 23,488,000 12,473,000 11 ,545,000 13,554,000 1,357,000 2,824,000 5,449,000 1l,366,000 6,415,000 16,910,000 22,084,000 325,495,000 2 ,399,000 4 ,538,000 2,112,000 1,342,000 1,271,000 6 ,244,000 2,553,000 2 ,579,000 1,725,000 6 ,018,000 3,520,000 1,947,000 5,822,000 1,235,000 3,237,000 1,237,000 6 ,224,000 33,638,000 13,058,000 5,07 1,000 117,731,000 94,078,000 21,934,000 111,000 4 ,252,000 300,000 43,000 0 344,219,000 18,724,000 l(Uade ,) ~oded odget (1,595,000) 0 0 0 (595,000) (1,452,000) 291,000 493,000 288,000 55,000 (505,000) (760,000) (12,224,000) 0 1,211,000 17,224,000 (118,000) (260,000) (109,000) (124,000) 152,000 (114,000) (152,000) (215,000) (119,000) (132,000) (367,000) (107,000) (273,000) (13,000) (5,000) (135,000) (253,000) (645,000) (519,000) (480,000) (283,000) 2,188,000 4 ,794,000 0 0 0 0 1,211,000 1,500,000 18,724,000 % Over/(l!Jnde,) ~nded Budget , -0.8% 0.0% 0.0% 0.0% -2.5% -10.4% 2 .6% 3.8% 26.9% 2.0% -8.5% 6.1% -65.6% 0.0% -5.2% -4.7% -5.4% -4.9% -8.5% 13.6% -1.8% -5.6% -7.7% -6.5% -2.1% -9.4% -5.2% -4.5% -1 .0% -0.2% -9.8% -3.9% -1 .9% -3.8% -8.6% -0.2% 2.4% 28.0% 0.0% 0.0% 0.0% 0.0% -100.0% 0.4%