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untanglingwebs
El Supremo
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Tonights city council meeting revealed definitively what had been rumored for weeks-Flint's deficit is approximately $19.3 million. According to Kincaid, who has been working with the audit committee, this is more than double the previous deficit.
The audit is expected to be released sometime this week. Kincaid recommended asking auditing firm Plante Moran to a public meeting where the particulars of the audit can be discussed publicly. |
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Mon Jan 14, 2013 9:58 pm |
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untanglingwebs
El Supremo
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| The audit (CAFR) and the latest EFM report is now online at the official site of the City of Flint Michigan. The deficit is $19.2 million. |
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Sat Jan 19, 2013 6:42 pm |
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untanglingwebs
El Supremo
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Proprietary Funds - The City of Flint’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.
Total net assets in the Water Fund are $19.6 million, an increase of $1.2 million from the previous year. Unrestricted net assets are still negative at ($8.8 million), but improved from fiscal year 2011 ($12.4 million). Net operating income is also improved from a negative $5.4 million to a positive $2.4 million.
The positive change is attributable mostly to increases in rates.
The Water Fund has a bond reserve account of $2.6 million and an equipment reserve account of $3.0 million.
Net assets of the Sewer Fund are $61.7 million, a decrease of $3.8 million from 2011.
Net operating income remained negative at ($1.9 million), even though sewer rates were also increased.
Additional rate increases averaging 25 percent were implemented as part of the fiscal year 2013 budget in order to improve the financial solvency of the water and sewer systems |
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Sun Jan 20, 2013 5:33 am |
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untanglingwebs
El Supremo
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General Obligation Bonds - The City issued $10 million in General Obligation Bonds in fiscal year 2008 on behalf of the Flint Downtown Development Authority for construction of the new Rutherford Parking Structure. The City has pledged a portion of state-shared revenue as security for the bond. The DDA has pledged net revenue from the parking operations for the repayment of the bond. However, in the City’s approved Deficit Elimination Plan, it was determined by the City that the DDA’s commitment to funding its portion of the debt service for the parking ramp was unrealistic given the decline in property values and revenues expected
to be received through operations were not realized. The City as the guarantor is making the debt service payments. |
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Sun Jan 20, 2013 5:39 am |
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untanglingwebs
El Supremo
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Analysis of Fund Financial Statements
As noted earlier, the City of Flint uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental Funds - The focus of the City of Flint’s governmental funds is to provide information on near-term inflows, outflows, and balances of expendable resources. Such information is useful in assessing the City of Flint’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.
The City’s governmental funds show an operating deficit of $12.2 million as of June 30, 2012. This is an increase of $12.0 million from the prior year, primarily attributed to deficit spending in the General Fund, as well as the $1.5 million impairment of the Genesee Towers property.
Added to the $7.3 million deficit in the General Fund at the end of fiscal year 2011, this increase results in a total $19.2 million deficit.
The $11.9 million deficit for the General Fund in fiscal year 2012 is the result of inaccurate revenue and expense projections in the adopted budget, unplanned transfers to the Garbage Collection, Building Department, and Parks and Recreation Funds in the amount of $3.4 million, and the impairment of the asset held for sale Genesee Towers property at $1.5 million.
Budgeting and managing the General Fund has been difficult due to significant reductions in property tax revenues, income tax revenues, and state-shared revenues.
These are the three major sources of revenues to the General Fund. Added to this has been expenditure assumptions regarding utilities, fuel, and personnel reductions based on projected savings which did not materialize.
The remaining governmental funds have a fund balance of $7.0 million, of which virtually all is invested in infrastructure and equipment or restricted for specific purposes. The largest fund balances among the governmental funds are the Major and Local Streets, $3.29 million and Capital Improvements, $1.6 million. Other special revenue funds are maintained primarily to demonstrate accountability. Federal and State laws place restrictions on how these funds can be spent.
A Deficit Elimination Plan was approved by the State on Michigan in May 2012 to eliminate the deficits for 2011 in the General Fund, the Water Supply Division, and the Downtown Development Authority. This plan was for the next five years starting with fiscal year 2013, and forecast that there would be an added deficit for fiscal year 2012. The actual accumulated deficit of $19.2 million is slightly less than the $18.2 million projected, when the impact of the Genesee Towers impairment is not taken into effect. Elimination of the accumulated deficit is based on
the issuance of bonds as approved by the State in its approval of the Deficit Elimination Plan. The State of Michigan has not yet approved such a borrowing. |
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Sun Jan 20, 2013 5:47 am |
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untanglingwebs
El Supremo
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Bond Ratings - There are no current ratings for Flint. Prior ratings were withdrawn as theCity’s financial position led to consideration of the City being placed into receivership. Moody's Investors Service last rated the City of Flint’s general obligation unlimited bonds at Ba1, with a stable outlook, in February 2006.
Economic Factors and Next Year’s Budget and Rates
Economic Factors - Like most cities throughout the state of Michigan, the City of Flint in the year 2012 continued to take its share of hits in this struggling economy. However, like a true champion, Flint took those hits in 2012, is still standing, and has landed a few hits itself.
Flint and Genesee County are moving aggressively to position our region as a recognized center of innovation and entrepreneurship in the public and private sectors. Our new leadership is collaboratively utilizing our strong anchor assets in higher education, life sciences/health care, and advanced manufacturing to make our region a superior place for business investment, policy experimentation, and multi-sector partnerships. We were once branded as “one of the fastest
dying cities in America” by Forbes magazine; however, we are now rapidly advancing through the process of reinvention.
Our overall objective is to create a sustainable region with new jobs, strong neighborhoods, and great schools achieved through private and public partnership, innovation, and entrepreneurship.
Flint and Genesee County aim to be one of Michigan’s major success stories by advancing out of prolonged recession to rapid recovery and growth. Our region intends to lead the way with these measurable achievements over the next three to five years:
Doubling export activity and generating new jobs
Increasing enrollments across our higher education institutions
Attracting and retaining mobile talent and young families
Stabilizing property values and local tax revenues
Reducing unemployment and poverty
Improving health outcomes, quality of life, and environmental sustainability
A major component of the region’s reinvention is the necessary diversification of the economy. Dynamic growth in services sector is replacing many lost manufacturing jobs. Conservative job creation forecasts for the next decade were prepared during our Comprehensive Economic Development Strategy formulation.
They estimated more than 12,000 net new private sector jobs including 6,000 healthcare jobs, 2,000 new hospitality jobs, and 1,000 new education jobs among others. For 2011, we seek to create 2,000 net new jobs.
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Sun Jan 20, 2013 5:59 am |
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untanglingwebs
El Supremo
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City of Flint, Michigan
15
Management’s Discussion and Analysis (Continued)
[b]We are already succeeding in creating jobs and opportunities today because of the continued collaboration among our key economic sectors, governments, and non-profits. Despite the ongoing recession, last year the region created 1,700 jobs and retained 1,000 more through coordinated efforts led by the Genesee Regional Chamber of Commerce, our lead economic development agency. In fact, over the last two years, public and private joint efforts have brought more than $230 million in new manufacturing infrastructure investment, more than $200 million in private investment to downtown Flint, and over $100 million in new higher education assets. Further, Flint suppliers have increased their federal contracting wins over
1,300 percent in the last five years. Finally, federal investment is also growing; recent awards include $33 million from the EPA to clean up the Buick City Brownfield, a HUD Challenge Planning Grant, a SAFER Grant, and several research and development grants.[b]
At the core of our region, the City of Flint has shifted from a factory town to a community anchored by its institutions of higher education. This year, a milestone was reached by the area’s colleges and universities: total enrollment is now nearly 34,000 students inundergraduate through doctoral programs. Many new businesses, housing options, and restaurants have been created as part of the downtown Flint investments. The formerly all-commuter Downtown has been transformed into a vibrant scene where 3,600 college students are living in newly
developed multi-institution residence halls and lofts. Notably, two landmark hotels that had been closed for business (the Hyatt Regency and Durant) are fully renovated and now house college students from all four of our higher education institutions.
Genesee County has attracted strong new businesses such as: Magna Electronics, creating 525 new jobs to produce electric vehicle motors; Swedish Biogas, working in partnership with Kettering University and the City of Flint to create cutting edge, state of the art technology for alternative fuel development; IINN (Insight Institute of Neurosurgery and Neuroscience), a medical device firm specializing in R&D and production; Diplomat Specialty Please delete me!, the fastest growing firm of its type in the United States, is exporting pharmaceutical products throughout the world. Diplomat and IINN will employ more than 4,000 men and women in New Economy jobs and jointly occupy 750,000 square feet in a former GM Brownfield site.
In healthcare, Genesys Health System continues to be a significant medical asset in Grand Blanc and plans to establish a new presence in downtown Flint. Hurley Hospital is investing to expand its emergency and trauma care capacity. McLaren Health System is expanding its presence throughout mid-Michigan with plans to invest over $60M in a new Proton Beam cancer treatment facility. All three hospitals are actively engaged in growing medical research activities at their facilities.
We are building upon these local and regional successes. We have over 100 economic development projects targeting the fundamental challenges that complicate and frustrate our efforts to turn opportunity into renewed prosperity. Our theory of change is that achieving prosperity involves simultaneous and often interdependent progress on people, place, and policy initiatives. |
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Sun Jan 20, 2013 6:04 am |
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untanglingwebs
El Supremo
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City of Flint, Michigan
16
Management’s Discussion and Analysis (Continued)
People-focused approaches benefit from strong educational and workforce development programs already in place. Attraction of new participants continues to accelerate as our workforce increasingly pursues personal talent development and career advancement preparations.
Place-based approaches will provide a highly conducive business climate for firms of target industries, while enriching the quality of life for current and potential residents. Several excellent examples include Bishop International Airport, the Buick City Brownfield, and the Genesee County-led Karegnondi Water Authority project.
Policy approaches must be focused on driving prosperity. We have been successfully cultivating federal, state, and local government support that is engaged, innovation-driven, and invested in our economic development priorities. Across the region, our governmental partners are increasingly well-organized to help respond to new opportunities quickly. Further policyimprovements - in which we will need your help - will remove barriers or provide new incentives. These changes are necessary for both new initiatives and to boost current efforts. A
summary of our key policy interests is provided on page 17.
We have multiple projects underway building an environment that accelerates entrepreneurial and innovation successes - whether for general businesses or emphasizing the commercialization of advanced technology-based new products and services. We are working to creatively expand ways that favor capital intensive investments in existing and newly emerging industries. For
example, we now regularly pursue foreign direct investment with teams comprised of business, university, governmental, and philanthropic representatives.
Our existing projects will help us maintain timely progress toward prosperity because they enjoy strong consensus and committed partners. Our partners are actively engaged in growing capital investment, technology transfer, and human capital development. Appropriate new, marketdriven projects will be fostered by incentives supporting and rewarding projects that address remaining gaps in how we are meeting our core challenges.
Budgets - The placement of the City of Flint into state receivership emphasizes the City’s precarious financial position. Flint is an urban center which has been faced with a very significant loss in employment base in addition to the well-known problems of all mature urban centers.
The City will be challenged for several more years to determine how it can restore its financial solvency and provide at least a basic level of city services while at the same time participating in the activities which will result in Flint being an attractive place for residents, students, businesses, and visitors. |
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Sun Jan 20, 2013 6:10 am |
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untanglingwebs
El Supremo
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The challenges are many, including:
Continuing decline in property values,
made more dire by the phase-out of personal property tax
Minimal increases in income tax revenues as unemployment and poverty remain high
An aging and reduced workforce, resulting in an increase in the ratio of retirees to active employees, affecting pension and health care costs
Aging sewer, water, street, and sidewalk infrastructure
Continuing high levels of crime
Reduced population
There are, however, many positive steps being taken which give strong hope that the City will regain its financial solvency and be a key part of restoring the community of Flint, including:
Strong partnership with entities such as the Greater Regional Flint Chamber of Commerce, Prima Civitas, and the State of Michigan to promote economic development
Strong support - financial and otherwise - from the Mott Foundation to support many activities helping to restore Flint
Diversification of Flint’s economic base, especially in higher education and healthcare
Support of city residents to financially support city initiatives, as evidenced by recent passage of a 6 mill Public Safety Stabilization Millage
Support from the State of Michigan to assist the City, including increases in state trooper presence and assisting financially in re-opening the City’s lock-up
Willingness by those managing the City to make the necessary decisions to restore financial solvency, as evidenced by the implementation of a fiscal year 2013 budget which raised revenues and cut expenses sufficiently to assure that expenses will not exceed revenues
Taking steps to improve and maintain long-term financial solvency, including reducing the workforce by nearly 20 percent; restructuring health benefits in a manner which reduced OPEB liabilities by nearly 2/3; reduced pension benefits, significantly raised water and sewer rates while implementing new fees for trash pick-up and street lights, and restructuring the way in which city services are provided
Working collaboratively with other municipalities to consider sharing of services, as evidenced by five recent applications to the State for financial support in implementingshared services
Commitment to develop a five-year strategic plan and budget in conjunction with the City’s fiscal year 2014 budget.
Requests for Information - This financial report is designed to provide a general overview of the City of Flint’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Finance Director, City of Flint, 1101 South Saginaw Street, Room #203, Flint, Michigan 48502. |
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Sun Jan 20, 2013 6:17 am |
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untanglingwebs
El Supremo
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At June 30, 2012, some funds have overdrawn their share of the pooled cash and
investments. Fund overdrafts of pooled cash and investments are reported as an
interfund liability of that fund. Management has selected the Water Supply Division
Fund, Sewage Disposal Division, Fringe Benefit Fund, Data Processing Fund, Central
Maintenance Garage Fund, Self-Insurance Fund, Garbage Collection Fund, and Parks andRecreation Fund to report the interfund receivable.
Accordingly, the above-mentioned funds' pooled cash and investment balances, as reported on the financial statement, have been decreased by the amounts receivable from the other City funds with an overdraft.
Interest income earned as a result of pooling cash and investments is distributed to the participating funds monthly utilizing a formula based on the average daily balance of each fund's share of the total pooled cash and investments. Funds that have overdrawn their share of pooled cash and investments are charged interest costs.
For purposes of the statement of cash flows, pooled cash and investments have been considered as cash and cash equivalents. |
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Sun Jan 20, 2013 6:31 am |
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Dave Starr
F L I N T O I D
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Jobs - how many went to Flint residents?
Challenges - I must have missed the crime rate being cited as a challenge. |
_________________
I used to care, but I take a pill for that now.
Pushing buttons sure can be fun.
When a lion wants to go somewhere, he doesn’t worry about how many hyenas are in the way.
Paddle faster, I hear banjos. |
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Sun Jan 20, 2013 8:57 am |
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untanglingwebs
El Supremo
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I don't know where the jobs are? They appear to be on the higher end of the salary scale and not service jobs, but Flint still lost income tax revenue.
Did you notice that they appeared to borrow from the water and sewer funds for funds tht over spent? Can't wait for council to gril the auditors.
The auditing letter was the biggest piece of "bubble gum fluff" I have ever seen! They priased the entities that are creating the conflicts of interest. |
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Sun Jan 20, 2013 12:56 pm |
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untanglingwebs
El Supremo
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This audit reminds me of a audit years ago for Flint West Village. Flint west Village wanted to continue land banking and they were fighting the changes in the law that made nonprofits pay taxes on certain properties. The auditor remarked on how favorable their legal action was. Auditors are not lawyers and should never give legal opinions. Flint West Village lost their suit and plunged further towards bankruptcy.
The same auditor made it difficult to tell that Greater Eastside Community Association was inflating the value of their properties (Flint West village too) to make the nonprofit seem more solvent and that Greater Eastside had also lost properties for tax foreclosure, including their office.
Here we have the auditor making these absurd statements praising the Brown and
Kurtz debacle as those the increase in the deficit is nothing. Brown is a leader of Prima Civitas (although on leave) and his ties to the Greater Regional Chamber of Commerce is well known. Brown even brought in the Chamber VP Duane Miller to help him run the city.In my way of thinking, a proper accounting firm would have addressed the issue of conflicts of interest.
The firm did not address in their notes which departments went over budget, although they have in the past. The notes were fluff and lacked the detail they normally contain. |
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Sun Jan 20, 2013 7:09 pm |
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untanglingwebs
El Supremo
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Flint emergency financial manager talks city progress on water, public safety administrator, other issues
By Kristin Longley | klongley1@mlive.com
on January 21, 2013 at 8:30 AM, updated January 21, 2013 at 8:31 AM
FLINT, MI -- After submitting his quarterly financial report to the state, Flint emergency financial manager Ed Kurtz said the state of the city's finances has begun to improve.
Here's what Kurtz had to say on various other topics related to the state of the city:
Income tax increase
Kurtz is still lobbying legislators for an income tax increase, which would require a change in state law and a vote of Flint citizens.
Changing the income tax from 0.5 percent to 0.75 percent for non-residents and from 1 percent to 1.5 percent for residents would generate close to $7 million in additional revenue a year, Kurtz said.
He noted that even some of the elected officials and community groups who were opposed to the higher property tax for public safety were in favor of raising the income tax rate.
"We're looking very seriously at it," he said.
Water
Kurtz said the city hopes by the end of January to make a final recommendation to the state on where the city's drinking water should come from -- either a new pipeline being built from Lake Huron or a new contract with the city of Detroit.
The Flint River has been ruled out as a long-term drinking water source because of concerns about drought conditions and the higher cost of treating river water versus lake water. The decision will ultimately be made by the state treasury department, he said. "We have hundreds of hours invested in this decision," Kurtz said. "This is a huge investment for the people of the city of Flint."
End in sight?
Kurtz said he expects the state takeover to last at least one more fiscal year, based on the state of the city's finances.
"Toward the end of June 2014," he said, adding: "I don't think the mayor and council in this environment -- they can't make the decisions necessary to keep from going into deficit."
Public safety administrator
After Barnett Jones resigned as public safety administrator when city officials learned he also had another full-time, six-figure job in the Detroit water and sewer department, City Administrator Michael Brown said they're evaluating whether to fill the job. He said the fire department needs leadership.
"The reality is we have no fire chief," Kurtz said. "It's probably going to be interim, whatever we do."
Budgeting
The emergency financial manager's team is going to craft a five-year budget plan that takes projections such as declining property tax revenue and the new public safety millage into consideration, Kurtz said.
The hope is to make the budgeting process easier in the future, Finance Director Jerry Ambrose said. "Financing local governments on the back of property values is a broke model," Ambrose said. "Until someone addresses that model, this is a broke system."
Waste collection
The city is outsourcing waste collection and has selected a vendor, Kurtz said.
More details will be forthcoming once a contract is in place, he said. The decision will affect about 24 city employees. |
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Mon Jan 21, 2013 11:06 am |
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untanglingwebs
El Supremo
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I hear that former Flint residents living in other communities are telling their Flint families how surprised they are that those of us living in Flint don't know the master plan is done. Many of us suspected that when we attended these "planning advisory meetings".
Will Flint become a Metropolitan area and just where are the lines to be drawn?
Of course the Governor's hench men can't rely on property taxes. In every part of the city seniors and retirees are telling me they are leaving and are just abandoning their paid for homes. Property values are so low, why try to sell? Gang violence is out of control and many residents don't feel safe. The bigget complaint I hear is the high cost of water . Suburban water users can't believe Flint residents are sometimes paying as much monthly as they pay quarterly.
Landlords are abandoning their rental properties, especially the smaller ones. Theft and vandalism are among the top reasons. The costs don't offset the benefits.
I wonder who pushed the Flint Journal to write the article on how Flint Finances are improving? The residents don't believe Kurtz or the Journal. |
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Mon Jan 21, 2013 11:18 am |
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