2021
FISCAL YEAR ENDING JUNE 30, 2021
Citizens Financial Report TOW N OF WA K E FORE ST ~ NORTH CA ROLIN A
1
Providing transparency about the Town’s financial operations The 2021 Citizens’ Financial Report provides citizens and other interested parties with an overview of the Town’s financial results. This report is prepared to increase awareness and provide transparency about the Town’s financial operations. The financial information provided here is obtained from the audited financial statements in the Town’s 2021 Annual Comprehensive Financial Report (ACFR) which is audited by Cherry Bekaert LLP and has received an unmodified or “clean” opinion. The Citizen’s Annual Financial Report is not required to present the same level of detail as the ACFR and, therefore may not fully conform to generally accepted accounting principles (GAAP). This report is designed to provide a summary of the Town’s overall financial condition of the Town in a user-friendly format as well as serve as a supplement to the ACFR, not a replacement. To see the report, visit the town’s website at wakeforestnc.gov and search for “comprehensive annual financial report.”
CONTENTS Town Leaders....................................................... 3 Strategic Plan........................................................ 4 Financial Results................................................... 5 Major Initiatives..................................................... 8 Debt Management............................................... 11 Budget................................................................ 13 Wake Forest by the Numbers.............................. 14
Finance & Budget Awards The Town of Wake Forest’s Annual Comprehensive Financial Report (ACFR) has won the Government Finance Officers Association of the United States and Canada (GFOA) award for 31 consecutive years. For the last eight consecutive years, the Town has received the GFOA award for the Distinguished Budget Presentation. To earn these awards, the Town must produce easily readable and efficiently organized budget and financial reports, whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and accepted legal requirements. In addition, the Town’s Citizens’ Financial Report has received the award for Outstanding Achievement in Popular Annual Financial Reporting for the last four years. The award is valid for a period of one year. To view all Town of Wake Forest financial reports, including the budget, visit the town’s website at wakeforestnc.gov and search for “finance.”
Government Finance Officers Association
Award for Outstanding Achievement in Popular Annual Financial Reporting Presented to the
Town of Wake Forest North Carolina
For its Annual Financial Report for the Fiscal Year Ended 2020
Executive Director/CEO
Town Leaders A Message from the Town Manager We strive to make sure we retain that sense of character that continues to make Wake Forest the ultimate location to live, work and play.
The Town of Wake Forest is proud to present its Popular Annual Financial Report (PAFR) for the Fiscal Year ending 2021. After a year of canceling many of our traditional events, we began to gradually phase in our events. Events such as Friday Night on White and Six Sundays in Spring concert series are important to the quality of life for our residents and they have experienced great attendance since reopening. Our Parks, Recreation & Cultural Resources Department continues to see many of its programs outpaced in attendance when compared to preCOVID numbers. As an example, our annual Boo Bash attracted more than 4,000 attendees this year when typical numbers are around 1,000. The Renaissance Centre continues to have a positive impact on citizens and has established itself as the cultural arts center for Wake Forest and beyond. Since reopening, performances sell out well in advance of the show dates. The Centre continues to be a destination for our downtown and plays a key role in its success. Our Fire Department was awarded an ISO Class 1 designation. This has the potential to lower insurance premiums for some of our commercial businesses in town. Wake Forest is now one of only eighteen communities out of 1,220 in North Carolina to receive this classification.
moving toward an implementation phase to address the tasks identified in the Northeast Community Plan, as well as begin the process of updating our Unified Development Ordinance to implement the policies identified in the Community Plan Update. Additionally, we will begin to finalize a list of projects for a potential bond referendum in November of 2022. Our financial position remains strong. The Town has received triple A ratings from the three national credit rating agencies. This translates into lower borrowing costs for the Town. Out of 552 municipalities in the State, Wake Forest is only one of nine to achieve this rating. Additionally, our auditors have finished their year-end review and reported no issues or irregularities and therefore issued a clean opinion of our finances. On behalf of our elected officials and staff, I want to thank you for your support of our continued efforts in Wake Forest. We strive to make sure we retain that sense of character that continues to make “our Wake Forest” the ultimate location to live, work, and play. — Kip Padgett, Town Manager
As we move into Fiscal Year 2022, the Town’s Community Plan Update and Northeast Community Plan are being finalized. We are
2021 Wake Forest Mayor & Board of Commissioners
Mayor Vivian Jones
Commissioner Jim Dyer
Commissioner Chad Sary
Commissioner Liz Simpers
Commissioner Bridget Wall-Lennon
Commissioner Adam Wright 3
Strategic Plan
Key Goals of the Strategic Plan As we look to the future, Wake Forest must plan for how it will continue providing services in a manner that efficiently meets the needs of our growing and ever-changing community. The strategic plan charts our course for the next five years towards providing excellent and sustainable quality of life for our citizens. The Town’s strategic plan has four goals as listed at right:
Mission Statement The Town of Wake Forest is committed to improving the quality of life in our community by preserving our character, fostering economic opportunities, strengthening our neighborhoods, delivering superior services and embracing the diversity of our citizens.
Goal 1 Economic Development Goal 2 Safe & Connected Community Goal 3 Values-Based Organizational Culture Goal 4 Fiscal Strength
A vibrant and diverse community that provides superior public services and an exceptional quality of life
Public works employees build and maintain sidewalks. The Wake Forest community came together to refresh areas in the Northeast Community for “Make a Difference Day.”
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FISCAL YEAR 2020–21
Financial Results
Governmental Results The Governmental activities section in the Town’s financial statements include programs generally supported by taxes, capital contributions along with grants from federal/ state governments. Governmental revenue sources cover various services including: public safety, public infrastructure, general government administration and parks, recreation and cultural resources. Governmental activities also include special revenue activities, such as grants, and capital project activities, such as greenway and transportation projects funded by bond proceeds.
2021
2020
Change
$333,404,245
$301,785,989
$31,618,256
Total Liabilities & Deferred Inflows
81,224,241
69,395,731
(11,828,510)
Total Net Position
$252,180,004
$232,390,258
$19,789,746
Total Assets & Deferred Outflows
Management acknowledges that 2021 was a successful year. After experiencing the challenges presented by the widespread Coronavirus (COVID-19), our strong financial position, management practices, the willingness of all staff to operate as a united team along with growth in Wake County, the town has been able to successfully navigate these unprecedented times.
Balance Sheet A balance sheet provides a snapshot of what the Town owns (assets) and owes (liabilities). Net position represents the Town’s investment in the assets it uses in providing services to its citizens.
Over time increases or decreases in net position may serve as a useful indicator of whether the Town’s financial position is improving or weakening. During FY 2020-2021, the Town’s net position increased $19,789,746.
2021
2020
Change
Revenues
$78,744,732
$58,368,969
$20,375,763
(Expenses)
(58,954,986)
(44,709,532)
(14,245,454)
Change in Net Position
$19,789,746
$13,659,437
$6,130,309
Total governmental activity revenue increased 34.99% from prior year while expenses increased 31.96%. Increases from previous fiscal year were recognized as follows: n
n
Income Statement An income statement provides a summary of amounts received (revenues) and amounts spent (expenditures). The difference between revenue and expenditures shows the Town’s change in net position. A positive change indicates the Town had enough revenues to cover its obligations and has the ability to save for the future.
Ad valorem taxes – 14.8% over previous year due to revaluation of assessed property and strong continued growth Local option sales tax – 16% increase over prior year
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General Fund Revenues Year Ended June 30, 2021 $58,316,871
General Fund Results The General Fund is the Town’s primary operating fund. Property taxes and sales taxes are the two largest sources of revenue making up over 75% ($43,628,163) of the total received for the fiscal year. These revenues provide services to citizens and businesses within Town limits.
Property Taxes
Public safety, which includes police and fire protection account for 41% ($21,463,379) of the total expended. This is followed by General government at 26% ($13,844,684) which includes the governing body, administration, communications, human resources, finance, downtown development, information technology, planning, inspections, engineering, public works administration and fleet maintenance. The charts on this page show the breakdown by percentage of General Fund revenues and expenditures.
33,655,281
57.7%
Sales Taxes
9,972,882
17.1%
Grants & Other Taxes
6,353,591
10.9%
Permits & Fees
4,099,595
7.0%
Sales & Services
2,068,143
3.5%
Three Year Trends
Other Sources
2,167,379
3.7%
General Fund Revenues 2021 Actual
2020 Actual
2019 Actual
$33,655,281
$29,340,018
$27,713,298
Sales Taxes
9,972,882
8,594,400
8,245,963
Grants & Other Taxes
6,353,591
3,877,446
3,855,450
Permits & Fees
4,099,595
3,027,188
2,751,352
Sales & Services
2,068,143
625,102
930,868
Other Sources
2,167,379
2,768,762
1,751,684
$58,316,871
$48,232,916
$45,248,615
2021 Actual
2020 Actual
2019 Actual
$21,463,379
$19,818,764
$16,674,495
13,844,684
13,209,979
12,362,906
Property Taxes
General Fund Expenditures Year Ended June 30, 2021 $52,329,432
Total GF Revenues
General Fund Expenditures
Public Safety
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$21,463,379
41.0%
Public Safety General Government
General Government
13,844,684
26.4%
Debt Service
6,619,209
6,319,300
6,703,678
Debt Service
6,619,209
12.7%
Environmental Protection
4,379,114
3,853,434
3,674,634
Environmental Protection
4,379,114
8.4%
Cultural & Recreational
3,397,524
3,681,193
3,276,171
Transportation
2,625,522
2,371,653
2,487,546
Cultural & Recreational
3,397,524
6.5%
$52,329,432
$49,254,323
$45,179,430
Transportation
2,625,522
5.1%
Total GF Expenditures
FISCAL YEAR 2020–21
Financial Results
Proprietary Results Proprietary or business type activities rely on fees charged to customers for services rendered. The Town operates Wake Forest Power and reports as the Electric Fund. It is operated in a manner
2021
2020
Change
$30,943,593
$30,861,745
$81,848
Total Liabilities & Deferred Inflows
9,799,782
9,663,095
(136,687)
Total Net Position
$21,143,811
$21,198,650
$(54,839)
Total Assets & Deferred Outflows
similar to private business where the costs of providing the service are financed or recovered through user charges.
Balance Sheet A balance sheet provides a snapshot of what the Town owns (assets) and owes (liabilities). Net position represents the Town’s investment in the assets it uses in providing services to its citizens.
Change in net position for business-type activities decreased $54,839 for the fiscal year.
2021
2020
Change
Revenues
$21,350,603
$20,614,193
$736,410
(Expenses)
(21,405,442)
(20,317,296)
(1,088,146)
$(54,839)
$296,897
$(351,736)
Change in Net Position
Charges for services from the sale of power increased 2.5% in the current year compared to a 2.5% decrease in the previous year.
Income Statement An income statement provides a summary of amounts received (revenues) and amounts spent (expenses). The difference between revenue and expenses shows the Town’s change in net position. A positive change indicates the Town had enough revenues to cover its obligations and has the ability to save for the future.
Wake Forest Power serves over 6,500 customers.
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Major Initiatives 20
Wake Forest Community Plan Update & Future Land Use Map The Town of Wake Forest currently relies on the 2009 Wake Forest Community Plan and Growth Strategies Map as a policy-based comprehensive plan. The current plan contains the vision statements, policies, and actions that have guided growth in Wake Forest for the last 10 years. The Town hired Houseal Lavinge in the summer of 2020 to update the 2009 Community Plan. Planning staff have been managing the project through the two-year process. When adopted, the Wake Forest Community Plan Update and Future Land Use Map will guide development and investment in Wake Forest for the next 10 to 20 years. The updated plan will help effectively guide Town leaders in making substantive and thoughtful decisions for the community.
Northeast Community Plan The Town of Wake Forest is developing a plan for the future of the Northeast Community. The Northeast Community Neighborhood is in the northeast
quadrant of the Town of Wake Forest. The area is comprised of over 300 acres of land that is home to approximately 2,300 people. When adopted, the Northeast Community Plan will guide policies and actions responding to current and future needs of the community. The goal is to help preserve the history, diversity, and affordability of the area while addressing issues of growth, economic health, public infrastructure, and preservation. Residents were invited to share their input on the plan through public meetings, survey and an open house.
Affordable Housing Plan In light of the increasingly difficult housing situation many in the Triangle are experiencing, the Town of Wake Forest is developing an Affordable Housing Plan to help better analyze and mitigate housing conditions within the community. The Wake Forest Affordable Housing Plan will examine existing local housing conditions, determine housing needs, establish a vision and associated goals for housing in the community, and recommend policies to help achieve this vision.
This logo indicates a project financed through general obligation bonds that were approved by Wake Forest voters in November 2014.
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Underground Fiber Infrastructure
Ligon Mill Operational Improvements
Underground fiber infrastructure construction started in February 2020. Project includes installing 25 route miles of fiber interconnecting 14 town facilities. Cost is approximately $2.5 million is expected to be complete by March 2022.
Improvements consist of widening the existing narrow corridor from two-lanes to a four-lane median divided highway with left-turn lanes, bike lanes, curb and gutter and extra wide sidewalks. Construction started in May 2020 and is expected to be completed by the end of 2021.
Looking to the Future
Wake Forest Fire Department After operating as a private, non-profit organization for 37 years, the Wake Forest Fire Department (WFFD) officially joined the Town of Wake Forest on July 1, 2020. Established in 1921, the WFFD currently operates with five fire stations throughout Wake Forest. Comprised of over 80 paid personnel, 20 part-time employees and 28 volunteers, the department provides fire protection, emergency medical and rescue services, as well as a public education program for the community.
The Town continues to make strategic public investments that will spur private development. Several developments that are in progress are direct results of that investment. n 353 South White Street The former SunTrust building, located at the corner of White Street and Elm Avenue spans one acre in the heart of downtown Wake Forest. Slated for redevelopment into a mixed-use, pedestrian-oriented property located at a key corner, the Town plans to use the site to serve as the major gateway into downtown. While a developer has not yet been selected for the redevelopment project (an RFP process is slated for early 2021), conceptual plans and in-depth studies on the marketability of the site have been completed, priming the property for the next stages of development.
Phase 2 PowerHouse Row Plans for Phase 2 of PowerHouse Row are now underway. This structure will be larger than Phase 1, with approximately 12,000 square feet of commercial and retail space at street level. In total, Phase 2 of PowerHouse Row will include 47 apartment units with early investment projections hovering around $14 million. n
The Wake Forest Fire Department officially joined the Town of Wake Forest adding approximately 100 employees to serve and protect the community.
n 535 South White Street Warehouse 535 South White Street warehouse is a project that will convert/update the 16,000 square foot building into a mix of uses including food and beverage along with private offices. Located adjacent and sharing open space with Loading Dock Wake Forest, the former warehouse was acquired earlier this year and plans are in the review phase.
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Fiscal Year Highlights
Seventeen positions were added to meet the demands of our growing community.
Two Assistant Town Managers were added and Town departments were re-organized and streamlined.
Approximately 100 employees were onboarded as a result of the Fire Department’s transition to the Town on July 1, 2020.
A cost of service and rate study was completed for Wake Forest Power. The results were presented in December. Electric rate increases were delayed until September 1, 2021.
Work continued on two major plan updates that will determine the future of our community. The Northeast Community Plan and the Community Plan Update overlap fiscal years and continue into 2022.
The Affordable Housing Plan kicked off in 2021. The Town will examine local housing conditions, determine housing needs, establish a vision and associated goals for housing in the community and recommend policies to help achieve this vision.
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Debt Management
T
he Town issues debt to fund General Governmental and business-type capital needs. Total outstanding debt as of June 30, 2021 totals $47,942,277. This includes general obligation bonds (voter approved debt), revenue bonds (electric) and installment purchase agreements. The chart below provides the breakdown of debt type at the end of the fiscal year.
Debt Issuance The Town’s total debt increased by $5,742,587 (13.6%) during the fiscal year. Along with retiring debt during the year, the Town issued the following debt: Installment Purchase Agreements: n
Town’s Credit Ratings The Town benefits from its outstanding credit ratings. A priority of the Town is to maintain public trust in the sustainability of the Town’s financial system. This commitment has resulted in the Town receiving the following credit ratings: n n n
Standard & Poor’s AAA Fitch Ratings AAA Moody’s Aaa
Another priority of the Town is to maximize return on town funds. By maintaining or improving bond ratings result in lower interest rates on debt.
$2,500,000 – Fiber Construction, July 2020, 7-year term, 2.17% n $738,170 – Vehicles and Equipment, September 2020 – 4-year term – 1.04% n $1,309,512 – Aerial Ladder Fire Truck, February 2021, 5-year term, 0.99% n $642,435 – Vehicles and Equipment, June 2021, 4-year term, 0.97% General Obligation Bonds: n
$1,290,000 – Street, Sidewalk and Greenway Improvements (various projects) June 2021, five-year term, .54% n $4,920,000 – Street, Sidewalk and Greenway Improvements (various projects) June 2021, twenty-year term, 1.62% In addition, the Town had a rate modification of the 2018 Street Improvements installment note which had an outstanding balance of $1,800,000. The new interest rate for the refinanced debt is 2.13%, which resulted in savings of $65,000 over remaining life of loan. Also, as result of the Fire Department’s merger with the Town, two outstanding Fire Department installment notes were assumed by the Town. During the year the Town retired one of the notes totaling $106,231. The remaining Fire Department note had an outstanding principal balance of $350,411 and a 2.99% interest rate.
Breakdown of Debt During 2021-2022, the Town plans to issue installment debt to purchase replacement vehicles and equipment for the Police department.
Year Ended June 30, 2021 $47,942,277
General Obligation Bonds Installment Purchase Agreements Revenue Bonds
$29,400,000
61.3%
$17,739,013
37%
$803,264
1.7% 11
Debt Management Debt Policy Compliance
Future Debt Issuance
The Town actively monitors and manages its debt capacity and affordability. In keeping with the goal of enhancing fiscal strength identified in the strategic plan, the Town has a formal policy which provides guidance and direction when considering the impact of future debt.
The Town utilizes a debt model to plan the issuance of future debt. The model was last updated during FY 2017-2018 in conjunction with issuing general obligation bonds in June 2018. The updated debt model includes planned issuances through 2021. A debt service fund with specific revenues including a portion of the tax rate, vehicle fees and downtown municipal service district tax funds are earmarked to repay general fund debt.
How the Town’s Debt Compares to Policy
During FY 2021-2022, the Town plans to issue $1,304,500 in installment debt to purchase replacement vehicles and equipment for the Police, Public Works, and Inspections departments. Another bond referendum is planned for November 2022. The amount along with proposed projects will be finalized in the coming months and incorporated into the debt model update in Spring 2022.
Town’s Current Debt
0.6494%*
Town’s Policy for Debt
2%*
North Carolina State Statute
8%* *of assessed valuation
Holding Park Aquatic Center offers a lap pool, water slides, children’s pool and sprayground. (top image) During 2021-2022, the Town plans to issue installment debt to purchase replacement vehicles and equipment for the Police, Public Works, and Inspections departments. (bottom image) 12
Budget & Planning Fiscal Year 2021–22 Budget Highlights The budget represents the fundamental philosophy of being conservative with revenue projections and maintaining fiscal constraint on the expenditure side.
Property Tax Rate The Town’s tax rate will remain unchanged at $0.495 for the coming fiscal year.
Much like an average household, the Town uses a balanced budget to ensure that it maintains a healthy financial position. North Carolina law requires local governments to approve a balanced budget each year. The Town plans for its financial needs of the future by utilizing a five-year capital improvements plan that is updated annually, financial forecasting, debt models, various other studies and plans. Governmental Activities: The 2021-2022 Adopted Budget increased (4%) from the 2020-2021 Amended Budget, this also increased 6.5% over the 2020-2021 Adopted Budget. The foundation of this budget is the strategic plan which sets the roadmap for all decisions over the next few years. The budget endeavors to achieve the four key goals in the strategic plan by maintaining current service levels, enhancing infrastructure and providing for employees. Ten (10) new positions were included in the approved budget. Of these positions, one is attributed to the creation of a new Legal Services department.
The Town’s tax rate will remain unchanged at $.495 for the coming fiscal year. The rate is inclusive of $.015 for transportation initiatives and $.005 for affordable and workforce housing. The final budget
How Your Town Property Tax Dollars Are Spent
for the General Fund totaled $56.05 million. In addition, the Downtown Municipal Service District tax rate remains unchanged at $.14. Despite the appearance of renewed fiscal growth and other positive changes in economic conditions, the Town will continue to focus on financial sustainability. The budget represents the fundamental philosophy of being conservative with revenue projections and maintaining fiscal constraint on the expenditure side. Decision making will still require much care and prudence as we continue to focus on providing the core services our citizens expect. Prioritizing how our resources are utilized is critical as we make long term plans for capital investments, as well as addressing future debt service and additional upcoming legislative mandates. Business–type Activities: Utility rates were increased
in the Electric Fund with the Adopted 2021-2022 Budget per an electric rate study that was presented in December 2020. The study began during the FY 2019-2020, however, due to the pandemic the study, as well as any potential changes to the rates were delayed. The total budget is $23.3 million for the Electric Fund.
Total Budget FY 2021–2022 $91,434,535
General Government
29.5%
Public Safety
26.4%
Fire Services
15.4%
Transportation Environmental Protection Cultural & Recreation Debt Service
7.2% 1.7%
Personnel Costs
$38,269,340
42%
Operating Costs
$28,372,760
31%
Purchase for Power
$12,298,935
14%
Debt Service
$7,887,700
86%
Capital Outlay
$4,605,800
5%
8.5% 11.3%
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Wake Forest by the Numbers
50,244
$40,982
4 th
$92,210
town population
per capita personal income
largest municipality in wake county
36 yrs
median household income
median age
141.58 19.99 miles of town - owned streets
1,003
land area in square miles
building permits issued during fiscal year
12,794 acres within town limits
3.9%
108
full-time and part-time firefighters
wake forest unemployment rate
25
fire department volunteers
5
fire stations
78
full-time sworn police officers
6
police stations
14
398
town employees
6,567
number of wake forest power customers
MAJOR TAXPAYERS
Rank Taxpayer
MAJOR EMPLOYERS
Taxable Assessed Valuation $54,216,034
Rank
Principal Employers
Approximate # of Employees
1
Wake County Public School System
1300
2
CenturyLink
452
3
Southeastern Baptist Theological Seminary, Inc.
448
4
Walmart
412
5
Wegman’s
410
6
Town of Wake Forest
391
7
Chick Fil A
318
1
Legacy Wake Forest LLC
2
Wake Forest Apartments LLC
41,361,099
3
Heritage Gardens LLC
38,751,899
4
Caveness Partners LLC
36,903,241
5
Wake Forest Crossing Owner LLC
34,961,948
6
WMCI Raleigh IV LLC
33,949,300
7
Waypoint CapCreek MF Owner LLC
33,540,923
8
Crossroads Holdings LLC
30,573,582
8
Lowes Foods
211
Target Corporation
200
9
Wake EMC
28,189,207
9
10
Walmart Real Estate Business Trust
23,649,363
10
Sams Club
185
11
Lowe’s Home Improvement
176
12
Rex Healthcare (Wake Forest & Wakefield)
171
13
Pack-Rat
170
14
Home Depot
164
15
Hillside Nursing Center of Wake Forest, Inc.
160
16
Franklin Academy
152
17
Texas Roadhouse
123
18
Publix
120
19
Kohl’s
114
20
Moffat Pipe
88
21
Norse
70
Total Total Assessed Valuation Source: Wake County Revenue Department
$356,096,596 $6,799,785,581
Source: Wake Forest Economic Development projected employment estimates
15
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The 2021 Citizens Financial Report is a publication of: Town of Wake Forest FINANCE DEPARTMENT 301 S. Brooks St. Wake Forest, NC 27587 For more information about the Town of Wake Forest visit wakeforestnc.gov
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