2022 Public Annual Financial Report (PAFR)

A Message from the Village President

I'mverypleasedfortheVillage ofBuffaloGrovetopresentits annual“CitizenʼsGuidetoLocal FinancialActivities”(Public AnnualFinancialReport)forthe fiscalyearendedDecember31,2022.

I'm proud of our ability to deliver the Buffalo Grove community with an overview of the Villageʼs progress and financial performance in a manner that is both transparent and easy to understand. This report does not replace the Annual Comprehensive Financial Report (ACFR), but rather provides a summary of financial activities. The full disclosure financial statements, or ACFR, are available online at www.vbg.org/financialreports.

Analysis conducted within this report outlines growth drivers, capital projects and summarized financial and trend data. The presentation of financial information in the report has been derived from audited financial statements and conforms to generally accepted accounting principles (GAAP) and related reporting standards.

The Village continues to prioritize financial transparency and open communication with its residents and businesses. I hope the information and data provided in this guide to local financial activities in 2022 gives you a snapshot of the challenges and opportunities the Village of Buffalo Grove is managing todayandintothefuture.

Sincerely,

ResponsibleResilientSafe

Budget Overview

BuffaloGrove's2022budgetisdesignedtoprovideresidentsandother interestedpartieswithaneasy-to-navigateformatthatclearlyexplainshow theVillageallocatesitsresources.EachprogramstrivestomakeBGmore responsible,resilientand/orsafe.Everyprogramconsistsofmajorservices theVillageprovidesforitsresidentsandthebusinesscommunity.Therefore, thebudgetdocumentisorganizedbyareas,programsandmajorservices. Thegrayboxesonthefollowingpagesprovideanoverviewofeacharea.

Each program provides oversight over the services that are provided either directly to the community or indirectly as an internal support function. How resourcesareallocatedwithintheannualbudgetprovidesthereaderinsight as to what the strategic priorities are and what services are valued by Village stakeholders. The 2022 budget supports 18 programs that deliver 47 services.

Each year, the Village determines its level of service, strategic goals and expectations and staffing levels based upon the demand for services, anticipatedrevenuesandprogresstowardlong-termoperationalandcapital developmentgoals.

The Village Clerk's office maintains all of the Villageʼs official records, meeting minutes and documents as well as a range of services including businessandliquorlicensing,voterregistrationand municipalcodeupdates.

Andrew Stein

Lester Ottenheimer

David Weidenfeld

Joanne Johnson

Frank Cesario

Gregory Pike

Janet Sirabian

Eric Smith

A Closer Look at BG

The Villageʼs net position increasedby $5.9 million (or 35.7percent) during the fiscal yearendingDecember 31, 2021. The governmental net positiondecreased by $6.2 million (16.9 percent) and the business-type activities net position increasedby$12.1million(18.8percent).

Equalized assessed valuation decreased by $36.6 million or 2.1 percent to $1.75billionforthe2021levyyear(collectedin2022).

BG Quick Facts

Did you know?

Open BG provides a hub of direct access to the Villageʼs financial, historical and contractual data. Anyone can use this data to participate in and improve government. Checkitoutatvbg.org/openbg!

87%

$117,921

43,212

BG is...

Responsible BGiscommittedto beingprudent stewardsofthepublic dollar.

Toachievethis commitmentthe villagetakesthe followingactions:

Innovating the administrative, personnel, and legislative functions

Where Your Property Tax Dollars Go

Managing the Village's finances, pension funds and debt service

Overseeing the strategic use of information technology resources

Median household income in BG

BG is... Resilient

BGstrivestoprovide andmaintainthe highestquality infrastructure.

Toachievethis commitmentthe villagetakesthe followingactions:

2022 Top Employers and Tax Payers

BG has a distinctive local economy with an employment baseof20,000dailyworkers.

BG has over 10 million square feet of commercial, office, and industrial space. BG is home to several advanced manufacturing centers as well as many high profile firms suchasSiemens,PlexusandYaskawa.

Local Economy

External economic factors at the national and state level continue to impact the Villageʼs revenue profile and, subsequently its ability to manageoperatingandcapitalresources.

Property tax collections totaled $17,037,557 which is a slight increase from the previous yearʼs total of $16,970,657, an increase of 0.4 percent.

Water and Sewer collections decreased from $16,326,679 in 2021 to $16,119,322in2022,atotaldecreaseof1.3percent.

Salestaxes, both state shared and home rule, generated $17,037,557 in 2022versus$16,013,176in2021,anincreaseof.4percent.

Revenue Overview

Maintainingthe village'sstreets, grounds,water, drainage,and sewersystems.

Improvingthe qualityofmunicipal buildings,parking lots,andvehicles.

Did you know?

Did you know?

Directingthelong termstructural needsthrough engineering.

MoneyGeek.com recently evaluated small cities and towns across the United States - those with 30,000 to 100,000 residents - and ranked them according to the per capita cost of crime. They ranked Buffalo Grove the #1 safest town in the U.S., with a $22 crime cost per capita.

MoneyGeek.com recently evaluated small cities and towns across the United States - those with 30,000 to 100,000 residents - and ranked them according to the per capita cost of crime. They ranked Buffalo Grove the #1 safest town in the U.S.,witha$22crimecostpercapita.

Revenues for the Villageʼs governmental activities for the year ended December 31, 2022 were $66.3 million, an increase of $7.0 million or 11.8 percent. Propertytaxes continue to be the Villageʼs largest source of revenue (25.7 percent) at $17.0 million. Included within the property taxrevenuesarethepensionleviesforthePoliceandFirefighterPension Funds and IMRF/Social Security. The pension levies account for 33.2 percent of the property tax levy. Other taxes and intergovernmental revenue including sales tax, state income tax, utility tax, prepared food and beverage tax, hotel tax and real estate transfer tax total $34.4 millionor52.0percentoftotalgovernmentalactivitiesrevenue.

The Clove

Village leadership, along with developers Kensington Development Partners and Urban Street Group broke ground on the 22acre Town Center property redevelopment. Construction of The Clove is underway to transform the area into a new, modern entertainment, commercial and residential district. This compact central district will feature contemporary building design, as well as upscale tenants and be a unique destinationforresidentsandvisitorsalike.

Following the groundbreaking, several buildings were demolished. Construction is underway on the 43,000 square foot grocery store, as well as the 7-story, 297-unit highend apartment building with 16,000 square feet of commercial space on the groundfloor.Distinctiveofthisbuilding,the

focusiscreatinganamenity-rich, convenience-filledenvironment. Theplan alsoprovidesnearly20,000squarefeetof newretailandrestaurantsscattered throughoutthesite.SofarChick-fil-Aand GuzmanyGomezhavemade commitmentsandconstructionfortheir newrestaurantsisintheworks.Anearly

one-acreVillage-owned“CentralPark” willsitinthemiddleofthesiteandcan beprogrammedforconcertsandother events.The 34,000squarefeetlocated onthenorthernportionofthesite, creatingnewopportunitiesforexisting andfuturetenants.

BG is... Safe

BG knows that the community expects to be safe in their homes, at work, and around town.

To achieve this commitment, the village takes the following actions:

Insuring the public's safety through emergency medical , fire, and police services.

New Public Works Facility

TheVillagepurchasedthebuildingat1650LeiderLaneandbeganplanning forconstruction.Thenew173,000squarefootfacilityprovidesenough spacetoaccommodatepublicworksoperationsnowandwellintothe future.RepurposinganexistingbuildingwillsavetheVillageapproximately 40%ofcostscomparedtothatofanewbuilding.Whileconstructioncosts areatapremium,staffhasplannedforvalueengineeringtokeepcostsin line.TheprojectwillbefinancedwithcombinationofAAA-ratedbondsand capitalfundreserves.Theremainderoftheprojectcostwillcomefromthe saleoftheexistingpublicworkspropertyandothersources,withno additionalcosttoBGtaxpayers.Occupancyisanticipatedsometimein2024.

NCH and retail outlot

Northwest Community Healthcare (NCH) redeveloped into a new 4-story medical office building that was awarded the 2022 Best Medical Property in the state. NCH's site plans also include a 4,900 square foot retail outlot at the northwest corner, and construction is underwayforWildForkandVeterinaryEmergencyGroup.

Inspecting the environmental and health impacts of businesses.

Developing standards for the permitting and zoning of the village's built environment.

Quick Facts

AffirmativeAction

RecruitingPlanhas beeninplacesince 1986andupdated every3years.

Village Pension Obligations

TheFire Pension Fund had a funded ratio of82% as of December 31, 2022. The annual interest rate assumption is 7% with a the five-year average returnis6.36%asofDecember31,2022.

The Police Pension Fund had a funded ratio of 78%as of December 31, 2022. The annual interest rate assumption is 7% with a five-year average returnof5.68%asofDecember31,2022.

75% of total retirement expenses are related to pension costs. In 2022, the Village contributed $5.8 million in employer obligations for current and future annuitants and $9.4 million was distributedtoretiredpensioners.

Expense Overview

BiasedBased

PolicingAnnual reviewrevealedthe 21stconsecutiveyear withoutany complaintsofbiased basedprofiling.

The cost of all governmental activities this year was $67.1 million,anincreaseof65.3percentfrom 2021 ($40.6 million). The largest decrease was made in General Government expenses $19.4 million in 2022. Public Safety expenses increased by $6.9 million (28.9 percent) and Public Works expenses remained stable at $8.0 million.

Finance and Liabilities 2022

Adequate Reserves

TheVillagehad$17,701,070 inunassignedfundbalance availableintheGeneralFund onDecember31,2022.

Debt Reduction

TheVillageretiredatotalof $2,570,990ingeneralobligation debtinfiscalyear2022.

Financial Stability

TheVillageholdsaAAA the highestpossible bondrating fromStandard&Poor'sonall currentbondedgeneral obligationdebt.

Public Safety Pension Funding

Officerscompletean 8-hourmentalhealth firstaidanda 40-hourcrisis interventiontraining.

Expenses from all business-type activities increased by $5.3 million or 37.3 percent. The Water Fund expenses increased by $5.1million,whichcomparesfavorablytoabudgetedincreasein expenses.Golf expenses were decreased in 2022 to $2.0 million intotalor4.8percent.

TheFirePensionFundisfunded at81.9%,andthePolicePension Fundisfundedat77.5%. State statutemandatesthatpensions befundedat100%by2040.

The Village's financial policy requires a 25% fund balance for general operations. Learn more at www.vbg.org/financialreports

Infrastructure Modernization Program

Buffalo Grove will...

TheVillageBoardapprovedtwosignificant revenuestreamsforthispurpose,the implementationofafixedfacilityfeeand water/sewerrateincreaseforwaterandsewer mainreplacementandalocalmotorfueltax tofundroadimprovements.

The Infrastructure Modernization Program encompasses the largest initiative in the Villageʼs history to replace and rehabilitate core infrastructure assets. Due to the developmentpatternsoftheVillagesince1958,muchofthe water and sewer infrastructure as well as road deficiencies exist in the Cook County portions of the Village. However, given the desire to balance the needs of the entire village withthisinitiative,severalprojectsareplannedvillage-wide nowthrough2027.

Learn more about key IMP Projects

CambridgeontheLakeLiftStationRelocation

Forest/GlendaleStreet+Utility

Thompson+BrandywynRoadContract3

Connect with the Village and stay

In2020,theBoardapprovedabondissue totaling$24million-$14millionfor water/sewerand$10millionforstreets,to beginourinfrastructuremodernization project,withminimalimpactonthe propertytaxlevy.

MaintenanceProjects

Key IMP Project Impacts and Results

TheVillageprojectsinvestingover$50 millionintowater,sewerandstreets between2020and2023.

Totheextentpossible,projectsequencing willbearrangedsuchthatentire neighborhoodswillbecompletedwithinone tothreeyearsbasedonoutsidefundinginan efforttoreduceserviceinterruptionsand overalldisruption.

TheVillageBoardandstaffhavedevoteda greatdealoftimetodevelopingsustainable practicestoimproveandmaintainourcore infrastructure.