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Home My WebLink About2017 City of South Bend Popular Annual Financial ReportSouth Bendcity of Indiana Popular Annual Financial Report (PAFR) Prepared by the Department of Administration and Finance Letter From the Mayor June 29, 2018 Dear residents and visitors of the City of South Bend, As with any large organization, management has a duty to provide meaningful reports that summarize the organization’s condition within its current environment to its executive board. In that spirit, I am pleased to present the City of South Bend’s third Popular Annual Financial Report (PAFR) to you, the City’s ultimate executive board. The PAFR contains information about the City DQGLWV¿QDQFHVLQDXVHUIULHQGO\IRUPDWWKDWLVHDVLHUWRGLJHVWDQG XQGHUVWDQGWKDQWKH&LW\¶VSDJH&RPSUHKHQVLYH$QQXDO)LQDQFLDO 5HSRUW&$)57KH¿QDQFLDOLQIRUPDWLRQSUHVHQWHGKHUHLQLV excerpted from the CAFR and I encourage readers interested in more detail to refer to that document for further information. The City is delighted to announce that its 2016 PAFR received an award for outstanding achievement in Popular Annual Financial 5HSRUWLQJIURPWKH*RYHUQPHQW)LQDQFH2I¿FHUV$VVRFLDWLRQ7KLV was our second year in a row to receive the award, and we were the only city in Indiana to do so. South Bend continued its upward climb in 2017. Our population JUHZIRUWKH¿IWKFRQVHFXWLYH\HDUDVRXUFRPPLWPHQWWRTXDOLW\ of life attracts more visitors and residents to our community. Part of that commitment was the completion of the downtown ³6PDUW6WUHHWV´FRQYHUVLRQWRDPRUHLQYLWLQJSHGHVWULDQIULHQGO\ streetscape. Businesses have already taken notice, and we’ve seen RYHUPLOOLRQLQSULYDWHLQYHVWPHQWÀRRGGRZQWRZQZLWKQHZ hotels, apartments, and restaurants. We’re paying attention to our neighborhoods, too. In late summer we unveiled the My SB Parks & Trails plan, which will enhance community spaces and green spaces across town. Over $40 million will touch over 30 parks and trails, making it the largest investment in parks in South Bend’s history. This report will also showcase our commitment to strong public safety, smooth roads, and inclusive economic development, among many other priorities. We’ve also maintained our AA bond rating, one the best for Indiana cities of our size. The City of South Bend is interested in your feedback so we may improve the PAFR in future years. I welcome your comments and suggestions on behalf of the Administration & Finance Department and encourage you to contact City Controller Jennifer Hockenhull at With Highest Regards, Pete Buttigieg MMMMMMMMMMMMMaaaayyyyyyoooooooorrrrrrrrrr PPPPPPPPPeeeeete Buttigiegg 2 www.southbendin.gov 201177 The Popular Annual Financial Report City Government Finances: Overview ....4 Our Organizational Chart ........................5 We Are South Bend ................................6 South Bend Education and Business .....7 South Bend Culture and Recreation........8 South Bend Events .................................9 The City’s Revenue ...............................10 The Cost of City Services ......................11 The City’s Net Position ...........................12 Government Wide Revenue/Expenses ...13 The City’s Debt Burden ..........................14 )XOO7LPH(PSOR\HHV)7(¶V Contact Information ................................16 3 for more information visit www.southbendin.gov WWiWiWiWWiWW kikikk memememedidddiaaaa CoCoCooCoCoCoCoCoooCooooCoCooooCoCoooooCommmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmonoo ssss City Government Finances Overview The goal of a business venture is to provide income for its stakeholders. In contrast, the goal of government is to provide services to its citizens. The measurement of success in business is a positive “bottom line”: revenue exceeds expenses. But the measurement of VXFFHVVIRUDJRYHUQPHQWLVWKHDELOLW\WRVHUYHLWVSRSXODWLRQZLWKLQLWV¿QDQFLDOFRQVWUDLQWV And unlike a business, the government is prohibited by law from allowing expenditures to exceed budgeted limitations. /LNHDQ\FLW\LQWKH8QLWHG6WDWHV6RXWK%HQGXVHV³IXQGEDVHG´DFFRXQWLQJ$³IXQG´LV DVHJUHJDWHGJURXSRIUHVRXUFHVWKDWKDYHEHHQLGHQWL¿HGWRPHHWDVSHFL¿FSXUSRVH$ fund is just like a checkbook: cash receipts and disbursements are recorded in it and, like a checkbook, the City strives to maintain a positive balance. %URDGO\VSHDNLQJWKHUHDUHWZRPDLQW\SHVRIIXQGVJRYHUQPHQWDOIXQGVDQGEXVLQHVV W\SHIXQGV*RYHUQPHQWDOIXQGVDUHXVHGWRDFFRXQWIRUEDVLFVHUYLFHVSROLFHDQG¿UH protection, street maintenance as examples. We all pay for these services through our tax dollars so that they’ll be available to any of us who need them, whenever we need them. %XVLQHVVW\SHIXQGVDUHUXQOLNHDEXVLQHVV7KH\FKDUJHRQO\WKHSHRSOHZKRXVHWKHVHUYLFHDQGDUHH[SHFWHGWRKDYH revenues cover their operating expenses as well as any loan payments. In South Bend, these funds include Water Works, Wastewater, Solid Waste, Century Center and the EMS system. $FURVVDOOIXQGVWKHUHDUHLQÀRZVDQGRXWÀRZVUHYHQXHDQGH[SHQVHVRUH[SHQGLWXUHV Revenue is the sum of money coming in to the City. The main sources, as noted above, are tax dollars and charges for VHUYLFHV5HYHQXHDOVRLQFOXGHVSURFHHGVIURPQHZGHEWVXFKDVDERQGWR¿QDQFHDFRQVWUXFWLRQSURMHFW(DFKRIWKHVH sources can be further broken down, as you’ll see in later pages. Expenditures are the costs of the City and are divided into three main types: operating, debt service and capital outlay. Operating expenditures are the costs for salaries and supplies needed to provide the services. These expenditures are ongoing, in that they will be incurred year after year as the City performs its services, but the amounts may change VLJQL¿FDQWO\EDVHGXSRQWKHOHYHORIVHUYLFHVWKH&LW\DGPLQLVWUDWLRQFKRRVHVWRSURYLGH Debt Service comprises the principal and interest payments made to repay the City’s debt obligations. Before the City can apply for any new debt, it must be able to prove that it will be able to repay that debt along with any prior debt still outstanding. These expenditures are ongoing as well, but the amounts are stable, based on the repayment schedules negotiated at the time the debt was incurred. &DSLWDORXWOD\H[SHQGLWXUHVFDQEHHLWKHUODUJHRQHWLPHH[SHQGLWXUHVVXFKDVDQHZ EXLOGLQJRUVPDOOHUDQQXDOH[SHQGLWXUHVVXFKDVQHZYHKLFOHSXUFKDVHVZLWKLQDÀHHW maintenance program. These expenditures can vary widely year to year, based on current UHTXLUHPHQWV :LWKWKHVHEURDGGH¿QLWLRQVLQPLQGZHKRSHWKDW\RX¶OO¿QGWKHIRUHJRLQJUHSRUWVPHDQLQJIXODQGLQWHUHVWLQJ 4 www.southbendin.gov South Bend Our Organization The Residents of South Bend Common Council Mayor City Clerk Police Department Fire Department Public Works Legal Department Code Enforcement Administration and Finance Innovation and Technology Building Department Community Investment Venues, Parks and Arts Common Council Legislative Authority, 4 years each Mayor Pete Buttigeig &KLHI([HFXWLYH2I¿FHU 4 year term City Clerk Kareemah Fowler Maintain Council records, ordinance violation collections, 4 year term 5www.southbendin.gov 6 We Are South Bend Population Statistics The City Administration’s Mission The City Administration’s Values Population (2017 estimate)102,245 % Female 52.3% % Male 47.7% Average Persons Per Household 2.45 Median Household Income$38,463 Median Housing Value$80,500 Persons Below Poverty Level 26.7% Educational Attainment High school graduate or higher 58.6% Bachelor’s degree or higher 24.4% Population Demographics White 63.3% Black or African American 24.6% Hispanic or Latino 8.5% Asian 1.2% American Indian/Alaska Native 0.4% Native American and Other 3DFL¿F,VODQGHU0.1% Other Race 1.9% Two or more races 4.4% Veterans (2015 Estimate) 4,809 6RXUFH86&HQVXV%XUHDXKWWSVIDFW¿QGHUFHQVXVJRY $PHULFDQ&RPPXQLW\6XUYH\<HDU(VWLPDWHV “We deliver services that empower everyone to thrive.” •Excellence Goal: best in state and/or top 25% nationally •Accountability Goal: offer services with the greatest value to the taxpayer •Innovation *RDOGHOLYHUVHUYLFHVPRUHHI¿FLHQWO\ through creativity •Inclusion *RDOLQFOXGHGLYHUVHYRLFHVLQGHFLVLRQPDNLQJ •Empowerment Goal: establish a work environment that allows employees to contribute richly www.southbendin.gov WiWWiWiWiWiWWWWWWWWiWiWWWiWWiWWWiWWW ikikkikkkkikkkkkkkk memememememem eedidddiddidiiia a a aaa CCCCCoCoCoCoCCCCoCCCoCooooooo mmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm ononononononooononnnnnnn sssssssss 7 Education and Business Colleges and Universities University of Notre Dame Indiana University South Bend Holy Cross College Saint Mary’s College Ivy Tech Community College Local Business Headquarters 1st Source Bank (Financial Institution) Tire Rack (Automotive Parts Supplier) Fulton Industries (Custom Component Manufacturing) ABRO Industries (Automotive & Household Chemical Products) Data Realty (Digital Information Management) Crowe LLP (CPA Firm) Press Ganey (Health Care Management) Largest Employers University of Notre Dame (Higher Education) Beacon Health System (Health Care) 6RXWK%HQG&RPPXQLW\6FKRROV.3XEOLF6FKRROV Saint Joseph Health System (Health Care) Indiana University South Bend (Higher Education) City of South Bend (Government) AM General (Automotive Manufacturing & Assembly) South Bendss uring)uring) mical Products) FKRROVFKRROV n)n) mbly)mbly) www.southbendin.gov South Bend 675 private jobs created WiWiWiWiWiWWiWWWiWWWWiWiWWiWiWWWiWiWWWWWWiWWWWWiWWiWWWWiWWWiWWWWWWWWWWWWWWWWWiWiWWW iii kikkkkkikikkkkikikikikikikkikkkkikikikikikkikkkikkkkikkkkikkikiii memememememememememememememmemememmemememememememememememememmemememmememememmemmememmmmeeeeeeeeeeee didididididididdiddididdiddddddddddddddiii aaaaaaaaaaaaaaaa CoCoCoCoCoCoCoCoCoCoCoCoCoCCoCoCCCoCoCCoCoCoCoCoCoCoCoCoCoCoCoCooooooooooooooooooooooo mmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm onooononononoonononononoononononoononononoooonooononoooooonononoooonooonononononononnnnnnnnnnnnnnnnnn ssssssssssssssssssssssssssssssssssss 8 South Bend Culture and Recreation Byers Softball Complex at St. Clair Park South Bend Symphony Orchestra at the Morris Performing Arts Center Potowatomi Zoo Park Tippecanoe Place Studebaker National Museum WiWiWWWiWWiWiWiWiWiWiiWiWWWW kkiikikikikkikikikkikikkikikk memememememememmememeemememeemeeemememememeemeemmeeeeeeemememeemememememeeeemmememeeeememeeeememememememmmmemeeemeememeeemeeemmmmemmeemeemmmemmmemmememmmmmmmememememmeeddddidididididddiidididdidddddididdidididdiddididiiiididdiiididddidiidddddiiidddiididididididiiiididiiiiddddididdiddddddaaaaaaaaaaaaaaaaa aaa aaaaaaaaaaaa aaaaa CoCCoCoCoCCCoCCoCoCoCoCoCoCoCoCoCCCCCCCCoCoCCCCCCCoCoCCCCCCCCCCCCCCCCCommmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmonononononnnonoonnoononononoononoo sssssssssssssssssssss WiWiWiWiWiWiWiWiWiWiWiWiWWiWiWiWWWiWiWWiWWWWWWWWWWiWWWiWiWiiikikkikikikikikikikikikikkiiiiimememememme didddddid a a CoCoCoCC ooooommmmmmmmmmmmmmmmm ooonooonoon ssssssss 9 Sou t h Ben d Events Year Round • First Fridays, Downtown Spring • St. Patrick’s Day parade and “Greening of the East Race” • Egg Stravaganza • River Lights Music Festival • Mayors’ Ride • Bike to Work Week • Best. Week. Ever. • Sunburst Race Summer • South Bend Cubs Baseball • Summer Concert Series (various parks) • West Side Memorial Day Parade • Leeper Park Art Fair • Art Beat • Outdoor Film Series • Red Table Plaza Concert Series • Fridays by the Fountain • Restaurant Week • East Race Waterway Rafting Fall/Winter • Notre Dame Football Games • Downtown for the Holidays • Restaurant Week River Lights South Bend Cubs East Race Rafting Downtown for the Holidays for more information visit www.visitsouthbend.com/ 50,000 Attendees to the First Annual Best. Week. Ever. 10 The City’s Revenue Revenue from Governmental Activities totaled $155.7 million in 2017. The largest revenue sources were property taxes and local income taxes. Property taxes are capped at approximately 1% of property values for homeowners. Revenue from Business-Type Activities totaled $77.1 million in 2017. The Wastewater and Water 8WLOLWLHVZHUHWKHODUJHVW%XVLQHVV7\SHIXQGVDQG provide essential services to residents. Solid Waste provides trash collection services on a weekly basis and EMS provides emergency ambulance services to residents in need. www.southbendin.gov 76 shows booked at the Morris Performing Arts Center in 2017 11 The Cost of City Services Total Expenses for Governmental Activities was $160.3 million in 2017. The largest category was Public Safety (police and ¿UHIROORZHGE\(FRQRPLF'HYHORSPHQW6WUHHWV and Culture & Recreation. Total Expenses for Business-Type Activities was $71.2 million in 2017. 7KHODUJHVW%XVLQHVV7\SHDFWLYLWLHVDUHWKH Wastewater and Water Works operations, which charge fees for services rendered. Solid Waste provides trash collection services that are essential to City residents. The City also manages three downtown parking garages and owns the Century Center convention venue located on the Saint Joseph River. www.southbendin.gov 35 parks and 20 miles of trails touched by the My SB Parks & Trails plan 12 The City’s Net Position For 2017, the City’s Net Position was $366.6 million. “Net Position” is the difference between the City’s assets and its liabilities. It represents resources currently available to the City for future services and economic safety buffers. The majority of Net Position consists of investment in capital assets and is, therefore, not able to be spent on governmental programs and services. *RYHUQPHQWZLGHQHWSRVLWLRQLQFUHDVHGE\RU GXULQJ¿VFDO2YHUDOOWKH&LW\LVEHWWHURII¿QDQFLDOO\DW December 31, 2017 than it was at December 31, 2016 on a JRYHUQPHQWZLGH¿QDQFLDOEDVLV7KHSULPDU\UHDVRQLVWKDWWKH&LW\ received slightly higher than expected property taxes in 2017 and the Wastewater activities accumulated reserves to fund capital projects in the future. Net Position declined from 2013 to 2014 due to new accounting rules for recording pensions. www.southbendin.gov $207,663,000 in private investment in the City 13 Government-Wide Revenue and Expenses Changes 2016 to 2017 *RYHUQPHQWZLGHUHYHQXH increased by 2.0% from 2016 to 2017. Governmental activity revenue increases were due mainly to increases in overall property taxes and the increase LQWKHEXVLQHVVW\SHDFWLYLW\ revenue was due mainly to a 5% surcharge for wastewater customers who live outside City limits as well as increases in solid waste fees during 2017. Changes 2016 to 2017 *RYHUQPHQWZLGHH[SHQVHV increased by 16.6% from 2016 to 2017. The increase in the governmental activity expenses was due mainly to the increased costs in the public safety area including negotiated wage increases for sworn police RI¿FHUV7KHLQFUHDVHLQWKH EXVLQHVVW\SHDFWLYLWLHVZDV due mainly to increased costs in the Wastewater area due to increased costs of operations and ongoing maintenance needs. www.southbendin.gov àSFGBUBMJUJFT 55,287 hours of training by the Fire Department 14 The City’s Debt Burden The City’s total debt obligation at the end of 2017 was $452 million. The City’s use of debt allows it to leverage current resources to buy or construct assets to be used in the future, such as the lease of police cars or the construction of infrastructure. These arrangements allow the City to pay for the vehicles or LQIUDVWUXFWXUHGXULQJWKHSHULRGVLQZKLFKWKHUHVLGHQWVUHFHLYHWKHEHQH¿WVRIWKHVHUYLFHV The largest segment of the City’s debt is its pension and other employment liability. At the end of 2017, the City’s Net 3HQVLRQ/LDELOLW\ZDVPLOOLRQ7KH&LW\LVUHTXLUHGWRFRQWULEXWHRIDQQXDOSD\UROOIRUQRQEDUJDLQLQJDQG 7HDPVWHUHPSOR\HHVDQGIRU3ROLFHDQG)LUHGHSDUWPHQWHPSOR\HHV3HQVLRQOLDELOLWLHVDUHIXQGHGRYHUDORQJ term time period. 0RVW&DSLWDO/HDVHVUHTXLUHD\HDUUHSD\PHQWVFKHGXOH7KHJRDOLVWRSD\RIIWKHOHDVHLQOHVVWLPHWKDQWKHH[SHFWHG XVHIXOOLIHRIWKHDVVHWEHLQJOHDVHG%RQGVDQGRWKHUORDQVKDYHDORQJHUUHSD\PHQWSHULRGW\SLFDOO\\HDUVWKLVLV DSSURSULDWHVLQFHWKH\DUHXVHGWRSD\IRUORQJHUODVWLQJDVVHWVVXFKDVEXLOGLQJVURDGVDQGRWKHULQIUDVWUXFWXUH In 2017, the City’s expenditures toward debt repayment were PLOOLRQRIJRYHUQPHQWZLGHH[SHQVHV During 2017, the City initiated the following debt transactions: •Entered into capital lease agreements in the amount of $4.68 million to purchase certain vehicles, copiers, and HTXLSPHQW •Issued Taxable Economic Development Revenue Bonds LQWKHDPRXQWRIPLOOLRQWR¿QDQFHDSRUWLRQRI3KDVH II of the Eddy Street Commons development project. •,VVXHG3DUN'LVWULFW%RQGV6HULHV$.LQWKH amount of $14.075 million for various park improvements. The City of South Bend has a strong AA bond rating. 7KHERQGRUFUHGLWUDWLQJLVDPHDVXUHRIWKH&LW\¶V¿QDQFLDOUHSXWDWLRQ$JRRGFUHGLWUDWLQJHQDEOHVWKH&LW\WRERUURZ money for construction projects and other needs at the most competitive interest rates available. This saves thousands of taxpayer dollars in interest payments. S&P Global ratings assigned a AA bond rating to the City of South Bend due to several factors: Strong management, DGHTXDWHEXGJHWDU\SHUIRUPDQFHYHU\VWURQJEXGJHWDU\ÀH[LELOLW\YHU\VWURQJOLTXLGLW\VWURQJLQVWLWXWLRQDOIUDPHZRUNZHDN but growing economy. Great Bond Rating WiWiWiWWW kikkk memme diiaa CCCoCommmm onononn ssssssssssssssss 15 Full-Time Employees (FTE’s) General Government 0D\RU¶V2I¿FH &LW\&OHUN¶V2I¿FH Common Council HOHFWHGRI¿FLDOVSDUWWLPH Administration & Finance / Information Technology ................21 Legal Department .........................10 Engineering .................................. 18 Safety and Risk ............................ 2 Human Rights ................................5 Public Safety Police Department .........................285 Fire Department .............................272 Culture & Recreation Parks & Recreation ....................... 94 Morris Performing Arts Center / Palais Royale ................................ 9 Community Investment Dept of Community Investment .....................................22 Highways & Streets Street Department ..........................55 Enterprise Funds Water Works .................................. 66 Wastewater .....................................45 Organic Resources .........................6 Sewer ..............................................38 Solid Waste .....................................23 Building Department .......................14 Code Enforcement / Animal Care & Control ....................29 Internal Services Central Services ..............................41 311 Call Center ................................6 Innovation and Technology .............17 South Bends) 2 In 2014, 33 Parks & Recreation employees working at the Zoo began working for the Potawatomi Zoological Society and were no longer City employees. In 2015, 34 central dispatch employees began working for Saint Joseph County due to consolidation of 911 operations.www.southbendin.gov 6 weeks of fully paid parental leave 125,057 calls taken by 311 We hope that you found this report useful. We also hope to continually improve this report and look forward to your participation in doing so. Please feel free to CONTACT US: Jennifer Hockenhull, Controller City of South Bend 227 W. Jefferson Blvd., Suite 1200 South Bend, IN 46601 (574) 235-9822 jhockenh@southbendin.gov www.southbendin.gov )RUPRUHGHWDLOUHJDUGLQJÀQDQFLDOGDWD please refer to the 2017 Comprehensive Annual Financial Report (CAFR), found at www.southbendin.gov/2017_CAFR AlAlA ll l l immimmagagaga ererry yy sosoururururrrrcececececedddd frfrom respeectctivii e CiCityty wwebebssisis tetessss anaana d orgag nizaazatitit ononnss.s. 16 Report Desesigned by Marie Hostetler