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LTC 075-2022 Fiscal Year 2022 First Quarter Analysis075-2022 MIAMI BEACH OFFICE OF THE CITY MANAGER LTC NO. LETTER TO COMMISSION TO: FROM: DATE: Honorable Mayor Dan Gelber and Members of the City Commission Alina T. Hudak, City Mana~ February 25, 2022 SUBJECT: Fiscal Year 2022 First Quarter Analysis The purpose of this Letter to Commission (L TC) is to provide the Mayor and City Commission with the status of the Fiscal Year (FY) 2022 operating budget to actual revenues and expenses incurred for the first quarter ending December 31, 2021 with projections through fiscal year-end September 30, 2022, 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 The FY 2022 budget was adopted to assume a cautiously optimistic rebound in revenues due to the impact of COVID-19 on the City's operations. Based on revenues in the General Fund and Resort Tax trending higher than originally anticipated for the first quarter of the current fiscal year, revenues and expenditures as of December 31, 2021 with projections through September 30, 2022 reflect a projected year-end surplus of $5.1 million in the General Fund and $6 .5 million in Resort Tax. Based on the preliminary General Fund revenues and expenditures as of December 31, 2021 with projections through September 30, 2022, the Administration is recommending that the projected year-end surplus of $5.1 million be allocated as follows: (1) $900,000 for the 500 Alton Road ($600,000) and Ocean Terrace ($300,000) Projects to pay the Parking Department for monthly park ing passes to provide the required parking accommodations stipulated in the Development Agreements for each project (2) $234,000 to create two new positions in the Police Department (1 Assistant Chief and 1 Sergeant) and convert one existing position (Officer to Executive Officer to the Chief) (3) $223,000 to implement the staffing recommendations made by Matrix Consulting for the Police Department (Add 2 Crime Analyst positions and 1 Detention Officer) (4) $104,000 as a match for a Resilient Florida Funding Grant (5) $3 . 7 million remaining balance set aside as a reserve for collective bargaining and consideration for repayment of furloughs Letter to Commission -Fiscal Year 2022 First Quarter Analysis Page 2 of 15 Similarly, based on preliminary Resort Tax revenues and expenditures as of December 31, 2021 with projections through September 30, 2022, the Administration recommends that the projected year-end surplus of $6.5 million be allocated as follows: (1) $1.6 million for milling and pavement resurfacing on Washington Avenue (2) $700,000 for additional Police staffing and services during Spring Break (3) $603,000 for the reconfiguration of Ocean Drive (4) $264,000 for the expansion of holiday lighting in North Beach (5) $216,000 for the South Beach Wine and Food Festival cash sponsorship for City services (6) $127,000 for the restriping of Washington Avenue (7) $100,000 for Miami Beach Live -Spring Break (8) $2.9 million remaining balance set aside to achieve the City's additional Resort Tax reserve targets USE OF RESERVES Should the General Fund items summarized above be approved through a budget amendment, as recommended, the projected General Fund reserve would total approximately $78.8 million, or 22.3%, which equals approximately 2. 7 months of reserves. The reserve policy for the General Fund is a required 2 months and a goal of 3 months. GENERAL FUND Q 1 Reserve Amount Estimated Reserve as of 913012021** FY 2022 Budget Amendments 72nd Street Project Contribution Additional FEMA Reimbursement for Hurricane Irma Additional General Fund Revenues Projected as of Q1 Parking Contribution for 500 Alton Road Project Parking Contribution for Ocean Terrace Project Matrix Staffing Report Recommendations (3 Positions in Police) Additional Police Positions (2 New Positions + 1 Reclassification) Resilient Florida Funding Grant Match Projected FY 2022 Reserve $87.5 million ($9.9 million) ($3 .5 million) $1.0 million $5 .1 million ($0.6 million) ($0.3 million) ($0.2 million) ($0.2 million) ($0 .1 million) $78.8 million **Estimated Reserve updated based on preliminary balances provided by Finance Department as of 09/30/2021 For Resort Tax, if the items previously summarized are approved through a budget amendment, as recommended, the projected reserve would total approximately $26.0 million, or 45.5%, which equals approximately 5.5 months of reserves. The reserve policy for the 2% Resort Tax Fund is a minimum of 3 months, with a goal of 6 months. Letter to Commission -Fiscal Year 2022 First Quarter Analysis Page 3 of 15 Q1 RESORT TAX FUND Estimated Reserve as of 9/30/2021 ** FY 2022 Budget Amendments 72nd Street Project Contribution Additional Resort Tax Revenues Projected as of 01 Washington Avenue Milling and Resurfacing Additional Police High Impact -Spring Break Ocean Drive Reconfiguration Holiday Lighting Expansion in North Beach SOBE WFF Cash Sponsorship for City Services Washington Avenue Restriping Miami Beach Live -Spring Break Projected FY 2022 Reserve Reserve Amount $29.9 million ($0 .9 million) ($5.9 million) $6.5 million ($1.6 million) ($0.7 million) ($0 .6 million) ($0.3 million) ($0 .2 million) ($0 .1 million) ($0 .1 million) $26.0 million **Estimated Reserve updated based on preliminary balances provided by Finance Department as of 09/30/2021 All General Fund, Enterprise Funds, Internal Services Funds, and Special Revenue Funds budgets are projected to be at or below their current FY 2022 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 Sewer Enterprise Fund, the Red Light Camera and 5th & Alton Garage Special Revenue Funds which have been detailed further in the forthcoming first quarter analysis. 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 COVID-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 Letter to Commission -Fiscal Year 2022 First Quarter Analysis Page 4 of 15 The City of Miami Beach received an allocation of approximately $23.6 million in one-time federal dollars to address the revenue shortfalls attributed to COVID-19, which the City Commission approved to be used to balance the projected shortfall attributed to COVID-19 in the FY 2022 budget approved on September 30, 2021, through Resolution 2021-31872. To date, approximately $11.8 million of the total allocation has been received and the balance of $11.8 million is anticipated to be received during FY 2022. ANALYSIS Although diminishing, the City is continuing to experience impacts of the pandemic on some of its revenues. Similar to the balancing plans that the City Administration implemented for FY 2020 and FY 2021, the FY 2022 budgets included assumptions based on the expectation of conservative economic activity with gradual growth thereafter. The keys to balancing the FY 2022 budgets were to (1) reducing non-essential costs as much as possible, (2) allocating ARPA funds received by the City totaling $23.6 million from the federal government to mitigate the projected ongoing revenue loss attributed to COVID-19 and (3) judiciously using the City's reserves to make up the difference. GENERAL FUND First Quarter Status An analysis of the actual three-month operating revenues and expenses for the period October 1, 2021 through December 31, 2021 reveals an operating budget surplus of $126.8 million. While the actual surplus as of December 31, 2021 may seem unusual when compared to the projection for the current fiscal year ending September 30, 2022, it should be noted that the City receives a large percentage of its annual ad valorem property tax revenues during the first three months of the fiscal year. For FY 2022, ad valorem property tax revenues represent approximately 56.4% of total budgeted revenues adopted and 75.8% of actual revenues collected during the first three months of the current fiscal year. As of December 31, 2021, total revenues collected were approximately 55.2% of the current FY 2022 amended budget, or $201.0 million. Conversely, expenditures were approximately 20.4% of the current FY 2022 amended budget, or $74.2 million. It is important to note that there are often delays in expenditures until the close-out of the fiscal year. FY 2022 Budget 1/4 of Amended Actuals as of Variance from 1/4 General Fund Adopted Budget Amended Budget Budget 12/31 /21 Amended Budget O-.er I (Under) Re-.enues $ 354 ,106,000 $ 363,997 ,000 $ 90 ,999 ,250 $ 200 ,995 ,347 $ 109,996 ,097 Ex penditures $ 354,106,000 $ 363 ,997 ,000 $ 90 ,999 ,250 $ 74 ,229 ,026 $ (16 ,770 ,224) Excess of Revenues Over/(Under) Expenditures $ 126,766,321 Year-End Projections Year-end operating revenues and expenditures projected through September 30, 2022 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 December 31, 2021, these projections have incorporated more current information, including the ongoing projected impact of COVID-19 on the City 's revenues, as well as any actions that the City Administration has taken to mitigate the impact. Letter to Commission -Fiscal Year 2022 First Quarter Analysis Page 5 of 15 A summary of the preliminary General Fund revenues and expenditures as of December 31, 2021 with projections through September 30, 2022 reflects a projected year-end surplus of $5.1 million, which the City Administration is recommending be allocated for the items detailed below with the remaining $3. 7 million surplus to be set aside as a reserve for collective bargaining and consideration for repayment of furloughs. It should be noted that this analysis is a preliminary projection based on not only the experience during the first three months of the fiscal year, but also the projected impact of COVID-19 on the City's operations . Further, these projections assume the use of $23.6 million in American Rescue Plan Act (ARPA) funds allocated to the City by the federal government. FY 2022 Budget General Fund Adopted Budget Amended Budget Proj ected Difference % O1.er / (Under) Re1.enues $ 354 ,106,000 $ 363 ,997 ,000 $ 369 ,103 ,000 $ 5 ,106 ,000 1.4% E x penditures $ 354 ,106,000 $ 363 ,997,000 $ 363,987,000 $ (10 ,000) 0.0% Excess of Revenues Over/(Under) Expenditures $ 5,116,000 1.4% Contribution to Parking for 500 Alton Road Project 600,000 Contribution to Parking for Ocean Terrace Project 300 ,000 Additional Police Positions (2 Positions + 1 Reclass) 234 ,000 Matri x Staffing Report Recommendations (3 Positions) 223 ,000 Resilient Florida Funding Grant Match 104,000 Excess of Revenues Over/(Under) Expenditures $ 3,655,000 1.0% Operating Revenues For FY 2022, property tax collections are being projected at 95 .0% of total property taxes assessed, which is consistent with the original adopted budget 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 2022 budget will be provided by the Miami-Dade County Property Appraiser in July 2022 when the City's certified property values are received. As of December 31, 2021, actual operating revenues collected were approximately 55.2% of the current amended budget, or $201.0 million, with operating revenues through fiscal year-end September 30, 2022 projected at $369 .1 million, which is approximately 1 .4%, or $5.1 million, above the current amended budget. As previously mentioned, these projections are not only based on experience during the first three months of the fiscal year, but also other information available including, among other things, the use of $23.6 million of ARPA funds allocated to the City by the federal government. Revenue categories projected to exceed budget or with significant variances to budget in excess of 10 .0%, or $300,000, are further explained below: Licenses and Permits -This category includes business tax receipts, licenses/special use permits, and sidewalk cafe fee revenues and is projected to be above the current amended budget by 13.0%, or $2.0 million, primarily due to increased fire, planning, and public works plans review services and permit revenues resulting from increased real estate and economic development activity. It is important to note that of the additional $2 .0 million projected, $875,000 is attributed to Public Works permit revenues collected earlier in the fiscal year for the 500 Alton Road Project. Letter to Commission -Fiscal Year 2022 First Quarter Analysis Page 6 of 15 Intergovernmental -This category includes local option gas tax, motor fuel tax, sales tax proceeds, and half-cent sales tax proceeds received from Miami-Dade County and the State of Florida and is projected to be 9.5%, or $1.1 million, above the current amended budget primarily due to sales tax and half-cent sales tax collections trending higher than originally anticipated based on current economic and tourism-related activity. Interest -This category is comprised of various sources of interest income derived from the City's current investments and is projected to be 31.9%, or $850,000, above the current amended budget due to realized gains in interest revenues on current investments and anticipated increase in interest rates . Rents and Leases -This category includes revenues from various rentals and leases of City owned properties . FY 2022 collections are projected to be 7 .6%, or $463,000, above the current amended budget primarily due to the revenues from several of the City's leases, including the Miami Beach Marina, trending higher than originally budgeted since the revenues that are collected by the City are based on a percentage of the tenants' sales . Miscellaneous -This category includes revenues from various categories such as concessions, reimbursements, and other revenue categories including beach access fees and advertising. Projected FY 2022 revenues are 6.9%, or $981,000 , above the current amended budget primarily due to revenues from lien statement services and planning design review fees trending higher than originally anticipated as a result of increased real estate and development activity. For a detail of General Fund revenues by category , refer to the attached Exhibit A. Operating Expenditures As of December 31, 2021, actual expenses were approximately 20.4% of the current FY 2022 amended budget, or $74.2 million, with operating expenditures through fiscal year-end September 30, 2022 projected at $364 .0 million, which is approximately $30,000 below the current FY 2022 amended budget. As previously mentioned , these projections are not only based on experience during the first three months of the fiscal year, but also more current information available including, among other things, the ongoing impact of COVID-19 on the City 's operations. General Fund expenditures by department projected to exceed budget or with variances to budget in excess of 10 .0%, or $300,000, are further explained below : Police -The department is projected to be 0.8%, or $959,000, above the current amended budget primarily due to numerous unforeseen retirements and substantial impact of COVID- 19 infections experienced in the current fiscal year (up to 56 officers out of work at various times for various lengths of time) resulting in the usage of additional unbudgeted overtime to backfill positions and maintain minimum staffing requirements . Police FY 2022 FY 2022 Projected vs Amended Budget Projected Amended % O'v€r / (Und er) Budget Variance Expenditures $ 124,379,000 $ 125 ,338 ,000 $ 959 ,000 0.8% Letter to Commission -Fiscal Year 2022 First Quarter Analysis Page 7 of 15 C ity Attorney -Due to the cost of the expanded Mun ic ipal Prosecution Program recently approved by the City Commission mid-year of FY 2022, which is projected to cost $318,000 (pro-rated) and includes the addition of three full-time positions, contractual services, and build-out of office space for these additional positions, the department is projected to be slightly above the current amended budget by 0.5%, or $34,000 , until the budget amendment for the Municipal Prosecutor Program is approved . The pro-rated cost in FY 2022 of $318,000 is projected to be offset in part by one-time savings in other personnel-related expenditures in the current budget, due to vacancies that the City Attorney 's Office is in the process of filling. The projected cost of the recently approved Municipal Prosecutor Program will be included in an upcoming operating budget amendment. City Attorney FY 2022 FY 2022 Projected vs Amended Budget Projected Amended % O.er I (Under) Budget Variance Ex penditures $ 6 ,285,000 $ 6 ,319 ,000 $ 34 ,000 0.5 % 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 the department overages projected above should these projections be realized at year-end . For a detail of General Fund expenditures by department, refer to the attached Exhibit A. ENTERPRISE FUNDS 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 operat ions comprise this category of Proprietary Funds. An analysis of the actual three-month operating expenses for the period October 1, 2021 through December 31, 2021, reveals that all Enterprise Funds have actual expenses that are less than one quarter of their current FY 2022 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 . NTERPRISE FUNDS Sanitation Se-r Stormwater water Parking Building Convention Center FY 2022 Adopted Budget 22,170,000 52,916,000 31 ,911 ,000 35,032,000 43,477,000 17,449,000 27 ,332,000 Budget Amendment -10/13/21 0 0 0 0 0 0 0 Bud el Amendment -11/22/21 1 130,000 2,321 ,000 1,952 ,000 3,494,000 681 ,000 7,000 1228000 FY 2022 Am ended B ud et 23,300,000 55,237 ,000 33 863,000 38 ,526,000 44,158,000 17 456,000 28,560 ,000 1 /4 Adopted Budget 5,542,500 13,229,000 7,977 ,750 8,758,000 10,869,250 4,362,250 6 ,833 ,000 1/4 Amended Bud et 5,825,000 13809,250 8,465,750 9,631 ,500 11 ,039,500 4,364,000 7,140,000 Revenues as of 12/31/21 5,337 ,885 11 ,699,311 7 049826 7,144,163 11 ,168,839 4,376,615 19.405 Ex enditures as of 12/31/21 4,377,346 12,760,512 2 415 044 8,023 777 5,221 ,720 3,546,470 1,626,008 Expenditures Above/(Below) 1/4 Amended Budget (1,447 ,654) (1,048,738) (6 ,050.706) (1,607,723) (5,817,780) (81 7,530) (5,513,992) % Variance -6 .2% -1.9% -17.9% -4.2% -13.2% -4 .7% -19.3% Letter to Commission -Fiscal Year 2022 First Quarter Analysis Page 8 of 15 Year-end operating revenue and expenditure projections through September 30, 2022 provide a more realistic ind ication 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 December 31 , 2021 , the year-end projections inco rporate more current information , including the ongoing projected impact of COVID-19 on the City 's operations. Revenues for all Enterprise Funds are projected to be equivalent to or in excess of expenditures as of year-end. In addition, all Enterprise Fund budgets are projected to be under budget, except for Sewer operations, which is further detailed below: Sewer Operations -Both revenues and expenditures are projected to exceed the current amended budget by approximately 1. 7%, or approximately $922 ,000. Th is is primar ily attributed to an increase in retail users' usage , which, in turn , is projected to result in an increase in t he projected costs incurred for sewer treatment services received by the City from Miami-Dade County. The additional revenues and expenditures will be appropriated in the year-end budget amendment to be within the revised budget. ENTERPRISE FUNDS Sanitation Sewe r Storm wate r wate r P.-klng Building Convention Center FY 2022 Adopted Budget 22,170,000 52 ,916 ,000 31 ,911 ,000 35 ,032,000 43,477,000 17 ,449 ,000 27 ,332 ,000 Budget Amendment -10/13/21 0 0 0 0 0 0 0 Budget Amendment -11/22/21 1,130,000 2,321 ,000 1,952,000 3 ,494,000 681 ,000 7 ,000 1,228,000 FY 2022 Amended Budget 23,300,000 55 ,237,000 33,863,000 38,526,000 44 ,158,000 17 ,456,000 28,560,000 FY 2022 Projections : Charges for Services 19,250,500 51 ,674 ,000 32 .616,000 33.463,000 43,188,000 12 ,221 ,000 18,448,000 Other 3,883.500 4.485,000 1,133000 4 ,986,000 767 ,000 5,013,000 9,839,000 23,134,000 56 ,159,000 33,749,000 38,449,000 43,955,000 17 ,234 ,000 28,287,000 166,000 922,000 114,000 77,000 203,000 222,000 273,000 -0.7% 1.7% -0 .3% -0.2% -0.5% -1 .3% -1.0% 23,134,000 56 ,159,000 33,749,000 38 ,449,000 43 ,955,000 17,234.000 28,287,000 166,000 922,000 114,000 77 ,000 203,000 222,000 273,000 -0 .7% 1.7% -0 .3% -0.2% -0 .5% -1 .3% -1 .0% Revenues Over/ Under Ex nditures 0 0 0 0 0 0 0 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 three -month operating revenues and expenses for the period October 1, 2021 through December 31, 2021, reveals that all Internal Service Funds have actual expenses that are less than one quarter of their current FY 2022 amended budgets. Similar to Enterprise Funds, 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 2022 First Quarter Analysis Page 9 of 15 NTERNAL SERVICE FUNDS Central Fleet lnlonnatlon Services Management Technology FY 2022 Adopted Budget 1,021 ,000 16,772 ,000 19,121 ,000 Budget Amendment -10/13/21 0 0 0 Bud et Amendment -11/22/21 20,000 3,799,000 1,636,000 FY 2022 Amended Bud et 1,041,000 20,57 1,000 20,757 ,000 1/4 Mopted Budget 255,250 4,193,000 4 ,780,250 1/4 Amended Bud et 260,250 5,142,750 5 ,189,250 Revenues as of 12/31/21 253,639 2,714,796 4 ,032 ,000 Ex enditures as of 12/31/21 241 ,522 1,547,378 4 ,190,956 Expen d itures Above/(Below ) 1/4 Amended Budget (18,728) (3,595,372) (998,294) % Variance -1.8% -17 .5% -4 .8% Office of Property Risk Medical & Inspector Dental General Management Management Insurance 1,532 ,000 11 ,709,000 23,325,000 41 ,543,000 0 0 0 0 534 ,000 536,000 495,000 0 2,066,000 12,245,000 23,820,000 41 ,543,000 383,000 2,927,250 5,831 .250 10,385,750 516,500 3,061 ,250 5,955,000 10,385,750 383,000 2,564,617 6 ,225,030 10,543,407 377,439 1,743,283 2,991 ,171 9,356 ,285 (139 ,061) (1 ,317,967) (2,963,829) (1 ,029,465) -6.7% -1 0.8% -12.4% -2 .5% Year-end operating revenue and expenditure projections through September 30 , 2022 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 December 31, 2021, the year-end projections incorporate more current information , includ ing the ongoing projected impact of COVID-19 on the City's operations. Revenues for all Internal Service Funds are projected to be equivalent to or in excess of expenditures as of year-end and all Internal Service Funds are projected to be below their current amended budgets. INTERNAL SERVICE FUNDS Central Fleet Information Office of Property Risk Medical& Inspector Dental Services Management Technology General Management Management Insurance FY 2022 Adopted Budget 1.021 ,000 16,772,000 19,121.000 1,532 ,000 11,709,000 23,325,000 41 ,543 ,000 Budget Amendment -10/13/21 0 0 0 0 0 0 0 Budget Amendment -11/22121 20,000 3,799,000 1,636,000 534 ,000 536,000 495,000 0 FY 2022 Amended Budget 1,041 ,000 20,571 ,000 20,757,000 2,066,000 12,245,000 23,820,000 41 ,543 ,000 FY 2022 Projections : Charges for Services 1,007 ,000 16,265,000 16,372 .000 1,532,000 10,263,600 21,816,000 0 Other 28,000 4,227 ,000 4 ,295 ,000 505,000 1,694,400 1,736,000 41 ,295 ,000 FY 2022 Revenue Proiections 1,035,000 20,492 ,000 20,667.000 2,037 ,000 11 ,958,000 23,552,000 41 ,295 ,000 $ Over/lUnder) Amended Budget (6,000) (79,000) (90,000) (29,000) (287,000) (268,000) (248,000) % Over//Underl Amended BudQet -0.6% -0.4% -0.4% -1 .4% -2 .3% -1 .1% -0 .6% FY 2022 Exoendi ture Proiections 1,035,000 20,492,000 20,667 ,000 2,037 ,000 11,958,000 23,552,000 41 ,295,000 $ Over/lUnder) Amended Budget (6,000) (79,000) (90,000) (29,000) (287,000) (268,000) (248,000) % Over//Under) Amended BudQet -0.6% -0.4% -0.4% -1.4% -2 .3% -1.1% -0 .6% Revenues Over/(Under) Expenditures 0 0 0 0 0 0 0 These projections will continue to be refined as additional information becomes available. SPECIAL REVENUE 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, Beach Renourishment, Resiliency, Sustainability and Resiliency, and Biscayne Bay Protection Trust Funds , Police Unclaimed Property and Crash Report Sales Letter to Commission -Fiscal Year 2022 First Quarter Analysis Page 10 of 15 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 three-month operating revenues and expenses for the period October 1, 2021 through December 31, 2021, reveals that all Special Revenue Funds have actual expenses that are less than one quarter of their current FY 2022 amended budgets primarily due to expenditures that are typically incurred in the latter part of the fiscal year, except for the 5th & Alton Garage, Art in Public Places, and Waste Haulers Funds that incurred one-time expenditures during the first quarter of the fiscal year. It is important to note that actuals incurred through December 31, 2021 are not always typically representative of trends for a full fiscal year. Year-end operating revenue and expenditure projections through September 30, 2022 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 December 31, 2021, the year-end projections incorporate more current information, including the ongoing projected impact of COVID-19 on the City's operations. Revenues for all Special Revenue Funds are projected to be equivalent to or in excess of expenditures as of year-end, except for the Red Light Camera Fund, which is subsequently explained below. Further, all Special Revenue Funds are projected to have savings at year-end including some with significant variances to budget in excess of 10.0%, or $300,000, except for the 5th & Alton Garage Fund, which is also further detailed below. Red Light Camera Fund -This fund is projected to be 43 .8%, or $623,000, below the current amended budget and expenditures are projected to be in excess of revenues by $357,000 due to delays in the deployment and installation of an additional five red light cameras that were planned as part of the new proposed agreement, as well as revenues from the currently existing cameras trending lower than budgeted since some cameras are or are anticipated to be offline for various reasons. As a result, if this projection is realized at year-end, the $357,000 shortfall will need to be transferred to and funded by the General Fund for the current fiscal year. Red Light Camera FY 2022 FY 2022 $ % Amended Budget Projected Variance Variance Revenues $ 1,423,000 $ 443,000 $ (980,000) -68.9% Expenditures $ 1,423,000 $ 800,000 $ (623 ,000) -43 .8% Surplus/(Shortfall} $ 0 $ (357,000) $ (357 ,000) 5th & Alton Garage Fund -The fund is projected to be 9.0%, or $61,000, above its current amended budget. This is primarily attributed to an increased level of operations taking place at this garage from what was originally anticipated for the current fiscal year due to COVID- 19 . Although projected to exceed the current amended budget, the additional expenditures are projected to be offset by additional revenues collected and available fund balance, if necessary. Letter to Commission -Fiscal Year 2022 First Quarter Analysis Page 11 of 15 5th & Alton Garage FY 2022 · FY 2022 Amended Budget Projected Revenues $ 676,000 $ 737 ,000 Expenditures $ 676 ,000 $ 737 ,000 Surplus/(Shortfall) $ 0 $ 0 Projected vS Amended % 01A':lr / (Under) Budget Variance $ 61,000 9.0% $ 61 ,000 9 .0% $ 0 Other significant variances in the Special Revenue Funds to note are explained below. Transportation -While the projections for the Transportation Fund do not meet the previously mentioned criteria above requiring a variance explanation, it is important to note that revenues are projected to exceed expenditures by $972,000 since the operations of this fund are primarily supported by 60% of 1 % Resort Tax Quality of Life (QOL) collections that have exceeded budget for the first four months of the current fiscal year, which may be utilized to enhance transportation-related services in an upcoming budget amendment. Transportation FY 2022 FY 2022 Projected vS Amended Budget Projected Amended % 01A':lr I (Under) Budget Variance Revenues $ 9 ,023 ,000 $ 9 ,952,000 $ 929 ,000 10 .3% Expenditures $ 9,023,000 $ 8,980,000 $ (43 ,000) -0.5% Surplus/(Shortfall) $ 0 $ 972 ,000 $ 972,000 E-911 and PTP -While the E-911 Fund and People's Transportation Plan (PTP) Fund projections do not also meet the previously mentioned criteria requiring a variance explanation, it is important to note that the expenditures incurred in these funds are based mostly on fees that are collected by voice communications service providers (wireless, wireless prepaid, and non-wireless) and half-cent surtax revenues collected by Miami-Dade County that are subsequently allocated and remitted to the City annually. Revenues in both of these funds are projected to be in excess of expenditures as of year-end by $176,000 and $327,000 in the E-911 Fund and PTP Fund, respectively . Should these additional projected revenues be realized at year-end, it will be recommended that the budgets for these funds be amended at year-end to permit for additional allowable expenditures incurred in these Departments' Other Funds (General Fund and Transportation) to be charged back accordingly. E-911 FY 2022 FY 2022 Projected vS Amended Budget Projected Amended % 01A':lr / (Under) Budget Variance Revenues $ 591,000 $ 767 ,000 $ 176 ,000 29 .8% Expenditures $ 591,000 $ 591 ,000 $ 0 0 .0% Surplus/(Shortfall) $ 0 $ 176 ,000 $ 176 ,000 People's Transportation Plan (PTP) FY 2022 FY 2022 Projected vS Amended Budget Projected Amended % 01A':lr / (Under) Budget Variance Revenues $ 3 ,560 ,000 $ 3 ,887 ,000 $ 327,000 9.2% Expenditures $ 3 ,560,000 $ 3 ,560 ,000 $ 0 0 .0% S urplus/(Shortfall) $ 0 $ 327,000 $ 327,000 Letter to Commission -Fiscal Year 2022 First Quarter Analysis Page 12 of 15 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 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. Therefore, due to the impact of COVID-19 on the City's resort taxes, the FY 2022 budget was adopted to assume a cautiously optimistic rebound in revenues. 2% Resort Tax Based on the first four months of actual collections, total two percent Resort Tax revenues for FY 2022 are projected to be 11.0%, or $6.4 million, above the current amended budget as of year- end, with the remaining months in the current fiscal year conservatively projected at 85.0% of FY 2019 collections (pre COVID-19). Total FY 2022 two percent Resort Tax expenditures are projected to be 0.2%, or $126,000, below the current amended budget as of year-end, primarily due to savings of $593,000 in special events costs and contributions, $272,000 in the budgeted two percent subsidy to the 1 % Resort Tax (Convention Center) which is no longer projected to be needed since projected 1 % Resort Tax revenues (Convention Center) are projected to exceed the required debt service coverage for FY 2022, and $147,000 in personnel-related savings attributed to various vacancies that departments Letter to Commission -Fiscal Year 2022 First Quarter Analysis Page 13 of 15 are in the process of trying to fill, which were largely offset by a $886,000 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. 1% Resort Tax (Quality of Life) The proceeds of the one percent bed tax, as adopted through Resolution No. 2018 -30512, and continuing in FY 2022, 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 2022 are projected to be 12.8%, or $1 .6 million, above the 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 12.8%, or $1.6 million, above the current amended budget as of year-end , of which $934,000 is allocated to Transportation initiatives in tourism-related areas, $466,500 allocated to North, Middle, and South Beach quality of life projects equally, and $155,500 allocated for various arts and cultural programs that are funded by the Cultural Arts Council. 1 % Resort Tax (Convention Center) 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 10 .3%, or $1 .3 million, 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, and the remainder is to be set-aside for Capital Renewal and Replacement funding for the Miami Beach Convention Center, additional one percent bed tax expenditures are also projected to be 10.3%, or $1.3 million, above the current amended budget as of year-end. It is important to note that the 1 % Resort Tax (Quality of Life) budget is different from the 1 % Resort Tax (Convention Center) budget due to the impact of COVID-19 on Resort Tax revenues and the City 's cautiously optimistic rebound in revenues, which required the FY 2022 1 % Resort Tax (Convention Center) budget to include a $272,000 contribution from the two percent Resort Tax to fund the required annual debt service for FY 2022. As noted above, since the FY 2022 revenues are projected to exceed the budget, it is anticipated that the transfer from the 2% Resort Tax Fund will not be necessary. Letter to Commission -Fiscal Year 2022 First Quarter Analysis Page 14 of 15 Total Resort Tax Overall , due to actual Resort Tax collections exceeding budget for the first four months of the fiscal year and collections for the remaining months of the current fiscal year projected at 85.0% of FY 2019 collections (pre COVID-19), combined Resort Tax revenues are projected to be 11.2%, or $9.2 million , above the current amended budget as of year-end, while expenditures are projected to be 3 .3%, or $2. 7 million, above the current amended budget resulting in a projected surplus of $6.5 million, which the City Administration is recommending be allocated for the items detailed below and remaining $2.9 million surplus recommended to be set aside to achieve the City's additional Resort Tax reserve targets. ESORT TAX FUND FY 2022 FY 2022 Actuals as of % Act ual of Over/(Under) % Over/(Underl Adopted Amended 12/31/21 Amended -nded Jlmended Budget Budget Budget Budget Budget Revenue s 2% Resort Tax 50.920 .000 50.920.000 10.780 .900 21 .2% 57,419.000 6,499.000 12.8% Mscellaneous Revenues 368.000 368.000 4.672 1.3% 266.000 (102.000) -27.7% Fun d Balance/Retained Earnings 5.9 10.000 6.766.000 0 0.0% 6,766,000 0 0.0% 1% Resort Tax (QOL) 12,184,000 12,184,000 1,845,390 15.1% 13,740,000 1,556,000 12.8% M ditional 1% Resort Tax fo r Convention Center 12,456,000 12,456,000 1,845,390 14.8% 13,740,000 1,284,000 10.3% Tot al Revenues 81,838 ,000 82,694,000 14,476,352 17.5% 91 ,931 ,000 9,237,000 11 .2% Expenditures General Fu nd Contribution 24,866,000 24,866,000 6,216,500 25.0% 24,866,000 0 0.0% Sanitation Fund Contribution 3,040,000 3,040,000 760 ,000 25.0% 3,040,000 0 0.0% Contribution to GM::VB 6,889,000 6,889,000 1,310,620 19.0% 7,463,000 574,000 8.3% Contribution to VGA 2,445,000 2,445,000 477,335 19.5% 2,757,000 312,000 12.8% Contribution to M. S inai 1,000,000 1,000,000 0 0 .0% 1,000,0 00 0 0.0% O ther Operating/O ther Uses 18,758,000 19,574,000 3,304,596 16.9% 18,562,000 (1,012,000) -5.2% Ma rke ting 200,000 240,000 10,034 4.2% 240 ,000 0 0.0% Tran sfer to NB , Ml, SB Capital, Transp, and Arts (QOL) 12,184,000 12,184,000 1,845,390 15.1% 13,740,000 1,556,000 12.8% Addt'l 1% Conv. Center Debt Seniice & Ca . Ren & Re I. 12,456,000 12,456,000 0 0.0% 13,740,000 1,284,000 10.3% Total Ex e nditures 81 ,838,000 82,694,000 13,924,474 16.8% 85 ,408 ,000 2,714,000 3.3% Excess of Revenues Over/ Under Ex nd it ures 0 0 551 ,878 6,523,000 6,523,000 W as hington Ave M lling and Resurfa cing 1,604,000 1,604,000 Additional Police High Im pact -Spri ng Break 700,000 700,000 Ocean Drive Reconfiguration 603,000 603,000 Ho liday Lighting Ex pans ion in North Beach 264,000 264,000 SOBE W FF Cash Sponsorship for City Seniices 216,000 216,000 Washington Avenue Restr iping 127,000 127,000 M arni Beach Li ve -S rin Break 100,000 100,000 Excess of Revenues Over/(Under Ex enditures 0 0 551 ,878 2,909,000 2,909,000 CONCLUSION All General Fund , Enterprise Funds, Internal Service Funds, and Special Revenue Funds budgets are projected to be at or below their current FY 2022 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 Sewer Enterprise Fund, and the Red Light Camera and 5th & Alton Garage Special Revenue Funds. These projected shortfalls, if realized at year-end, will be closed using a mix of sweeping savings from other funds and use of available fund balance. The assumptions in the first quarter projections will continue to be proactively monitored between now and the development of the second quarter projections, as well as during the development of the FY 2023 budget, and any material variances will be disclosed and discussed at upcoming Finance and Economic Resiliency Committee (FERC) and/or City Commission meetings. ATH/JW/TOS Letter to Commission -Fiscal Year 2022 Fir st Quarter Analysis Page 15 of 15 EXH I BIT A CI T Y OF MIAM I BEACH FY 2022 GENERAL FUND 1ST QUARTE R FY 2022 FY 2022 Actuals as of Ad opted Ame nd ed 12131121 Bud get Budget REVENUES Ad Valorem Taxes 196,20 1,000 196,201,000 148,650,805 Ad Valorem Taxes -Pay-As-You-Go Capital 2,616,000 2,616,000 2,616,000 Ad Valorem Taxes -Capital Renewal & Replacement 815,000 815,000 815,000 Ad Valorem Taxes -Normandy Shores 252 ,000 252,000 252,000 Other Taxes 23,986,000 23,986,000 4,407,958 Licenses and Permits 15,054,000 15,054,000 10,553,504 lntergovernm ental 11,598,000 11,598,000 2,315,211 Charges for Services 13,192,000 13,192,000 4,194,304 Fin es and Forfeitures 966,000 966,000 350,172 Interest 2 ,662,000 2,662,000 1,679,564 Rents and Leases 6,091 ,000 6,091 ,000 1,561,919 Mscellaneous 14,196,000 14,284,000 13,960,656 Other-Resort Tax Contribution 24,866,000 24,866,000 6,216,500 Other-Non-Operating Revenues 14,214,000 14,214,000 3,421,756 Fund Balance/Retained Earnings 3,797,000 13,600,000 0 Am erican Rescue Plan Act (ARPA) Funds 23,600,000 23,600,000 0 T OT AL REVENUES 364,1 06,000 363,957,000 200,95 6,347 EXPEN DITUR ES tv'ayor & Commission 2,644,000 2,644,000 563,683 City Manager 4 ,858,000 5,078,000 1,011 ,060 f\J1arketing and Communications 2 ,356,000 2,356,000 492,669 Office of Management and Budget (prev. OBPI) 1,507,000 1,528,000 318,720 Org. Dev Peformance Initiatives 1,701,000 2,118,000 240,892 Finance 6,526,000 6,537,000 1,410,796 Procurement 2,800,000 2,857,000 594 ,978 Human Resources/Labor Relations 2 ,926,000 2,954,000 639,078 City Clerk 1,802,000 1,860,000 366,704 City Attorney 6 ,160,000 6,285,000 1,190,020 Housing & Community Services 3,538,000 4,075,000 523,884 Planning 5,0 14,000 6,085,000 1,151,243 Envi ronment & Sustainability 1,300 ,000 1,349,000 215,098 Tourism and Culture 3 ,445,000 3,467.000 446 ,504 Economic Development 1,578,000 1,652,000 195,563 Code Compliance 6,550,000 6,585,000 1,465,458 Parks & Recreation (including Golf courses ) 38,632,000 39,057,000 6,764,563 Property tv1anagement 2 ,502,000 2,518,000 531,132 Public Works 15,001 ,000 15,22 2,000 2,456,583 Capital Improvement Projects 5,752,000 5,840,000 1,222 ,426 Police 121 ,229,000 124,379,000 28,029,990 Fire 95,995,000 97,557,000 22,024,034 Citywide (incl. Operating Contingency) 15,182,000 16,886,000 2,373,947 Normandy Shores 252,000 252,000 0 Capital Renewal & Replacement 815,000 815,000 0 Info & Comm Technology Fund 300,000 300,000 0 Pav-As-You-Go Caoital Fund 3,741,000 3,741,000 0 TOTAL EXPENDITURES 364,1 06,000 36 3,997,000 74,2 25,026 EXCESS OF R EVENUES OVER/CUN DER) EXPENDITURES 0 0 126,766 321 EXCESS OF REVEN UES OVERl(UNDER) EXPEN DITURES 0 0 126,766,321 Contribution to Parking for 500 Alton Road Project Contribution to Parking for Ocean Terrace Project Additional Polic e Positions (2 Positions + 1 Reclass ) tv1atrix Staffing Report Recommendations (3 Positions) Resilient Florida Funding Grant Match EXCESS O F REVE N UES OVE RICU N DERl EXPE NDIT U RES 0 0 126,766,321 %Actual of ' Overl(Uncler) % Overl(Unclerl Ame nded Alrancled Mllncled Budget Budget Budget 75.8% 196,201,000 0 0.0% 100.0% 2,616,000 0 0.0% 100.0% 815,000 0 0.0% 100.0% 252 ,000 0 0.0% 18.4% 23,798,000 (188,000) -0.8% 70.1% 17,010,000 1,956,000 13.0% 20.0% 12 ,695,000 1,097,000 9.5% 31.8% 13,142,000 (50,000) -0.4% 36.2% 960,000 (6,000) -0.6% 63.1% 3,512,000 850,000 31.9% 1.0% 6,554,000 463,000 7.6% 97.7% 15,265,000 981,000 6.9% 25.0% 24,866,000 0 0.0% 24.1% 14,2 17,000 3,000 0.0% 0.0% 13,600,000 0 0.0% 0.0% 23,600,000 0 0.0% 66 .2% 369 ,1 03,000 6,106 ,000 1.4% 21.3% 2,584,000 (60,000) -2.3% 19.9% 4,985,000 (93,000) -1 .8% 20.9% 2,343,000 (13,000) -0.6% 20.9% 1,511 ,000 (17,000) -1 .1% 11.4% 2,113,000 (5,000) -0.2% 21.6% 6,522,000 (15,000) -0.2% 20.8% 2,836,000 (21 ,000) -0.7% 21.6% 2,922,000 (32,000) -1 .1% 19.7% 1,835,000 (25,000) -1.3% 18.9% 6 ,319,000 34,000 0.5'/o 12.9% 3,937,000 (138,000) -3.4% 18.9% 6,025,000 (60,000) -1.0% 15.9% 1,347,000 (2,000) -0.1% 12.9% 3,463,000 (4,000) -0.1% 11 .8% 1,646,000 (6,000) -0.4% 22.3% 6,575,000 (10,000 ) -0.2% 17.3% 39,003,000 (54,000) -0.1% 21.1% 2,482,000 (36,000) -1.4% 16.1% 15,091,000 (131 ,000) -0.9% 20.9% 5,779,000 (61,000 ) -1 .0% 22.5% 125,338,000 959,000 0.8% 22.6% 97,502,000 (55,000) -0.1% 14.1% 16,72 1,000 (165,000) -1.0% 0.0% 252,000 0 0.0% 0.0% 815,000 0 0.0% 0.0% 300,000 0 0.0% 0.0% 3,741 ,000 0 0.0% 20.4% 363 ,587,000 (10 ,000) 0.0% 34.8% 6,1 16,000 6,116,000 34.8% 6,116,000 6,11 6,000 600,000 600 ,000 300.000 300,000 234,000 234,000 223,000 223,000 104,000 104,000 34.8% 3,666,000 3666,000