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2023 Citizen PAFRVillage of Oak Brook, Illinois Popular Annual Financial Report For the Year Ended December 31, 2023 Table of Contents About Village of Oak Brook 1 Village of Oak Brook Leadership 2 Fund Structure, Measure Focus, and Basis of Accountfng 3 Explanatfon, Analysis, and Discussion of Financial Statements 4-11 Village Sales Tax 12 Key Statfstfcs 13 A Message From the Village President Dear Citfzens of Oak Brook, We are pleased to present the Popular Annual Financial Report (PAFR) for the fiscal year ended December 31, 2023. The PAFR is a high level report for citfzens who wish to gain a general understanding and summary of the Village’s financial actfvitfes and positfon. Informatfon contained in this report is a summarized version of the Village’s official financial statements, the Comprehensive Annual Financial Report (CAFR). The PAFR presents financial data on the same basis of accountfng as the CAFR, just in a simplified manner. While the annual CAFR is over 150 pages, the PAFR is condensed down to just over 10 pages. The Village’s fiscal year 2023 annual audit was completed on June 27, 2023 by Sikich, LLP. The CAFR is compliant with generally accepted accountfng principles (GAAP) and has received an unmodified (“clean”) opinion from our auditors. The full disclosure financial statement, CAFR, be found on the Village’s website. The Village of Oak Brook has received all three of the Government Finance Officer’s Associatfon (GFOA) awards for local government finance: • Distinguished Budget Presentation Award (12 consecutive years) • Certificate of Achievement for Excellence in Financial Reporting (45 consecutive years) • Award for Outstanding Achievement in Citizen’s (Popular) Financial Reporting (8 consecutive years) Our commitment to the GFOA award programs help ensure financial informatfon is presented in a way that is consistent with the highest standards in governmental financial reportfng. The Village Board and I appreciate your input and contfnued commitment in making Oak Brook a great community to live and work. If you have any questfons concerning this report or would like to offer any ideas or suggestfons for improvement, please contact Marilyn Fumero, Finance Director, at (630) 368-5070 or email at mfumero@oak-brook.org. Sincerely, Laurence E. Herman Village President Popular Annual Financial Report Village of Oak Brook, Illinois Fiscal Year 2023 Important Numbers and Addresses Village Hall 630/368-5000 1200 Oak Brook Road Oak Brook, IL 60523 Fire HQ (Non-Emergency) 630/368-5200 Police HQ (Non-Emergency) 630/368-8700 Public Works 630/368-5270 For Police or Fire Emergencies Dial 911 Village of Oak Brook 2023 Quick Facts Populatfon 8,163 (estfmate) Retail Sales Per Capita $215,190 Land Area 7.95 sq. miles Median Income $158,663 Median Home Value $825,600 Unemployment Rate 3.7% Credit Ratfng Aa1 Total Cash and Investments $72.3 million General Fund Cash and Investments $28.4 million General Fund Reserve (cash to 2023 budgeted operatfng expenditures) 18.07months Outstanding Debt* 2023 Annual Budget $57.3 million Employees (FTE’s)** 167.36 About the Village of Oak Brook 1 The Village was incorporated February 21, 1958 by Paul Butler. Oak Brook is a community where impressive corporate and retail centers, beautfful homes, lush parks, and forest combine to make a dynamic and invitfng atmosphere. Oak Brook also offers an exceptfonal variety of actfvitfes that appeal to a broad range of interests, such as; polo matches at the Oak Brook Polo Grounds; an 18-hole championship Golf Club; a Bath and Tennis Club facility that includes a swimming pool, a diving pool, tennis courts, and an events venue; and numerous walking trails and paths. The Village of Oak Brook is located about 15 miles west of the Chicago Loop, near the geographic center of the seven-county Chicago metropolitan area. Excellent transportatfon links are provided to all parts of the greater metropolitan area by a network of tollways and Federal and State highways which pass through or near the Village. The Oak Brook area is neighbors with the communitfes of Lombard, Villa Park, Elmhurst, Oakbrook Terrace, Downers Grove, Westmont, Clarendon Hills, Hinsdale, and Westchester. The Village places a great emphasis on interactfng with local businesses, both existfng and potentfal. A large portfon of the Village’s revenue stream is derived from sales tax, which is crucial to the Village’s General Fund operatfng budget. The strong business community in Oak Brook has allowed the Village to operate without a property tax levy. The Village is able to offer a number of services, such as public safety, public works, library, and recreatfon while maintaining a low tax community. The Village also feeds into a number of outstanding school districts, including: Butler District 53, Downers Grove District 58, Elmhurst District 205, Hinsdale District 181, and Salt Creek District 48. **Based on 2,080 annual hours. The Village of Oak Brook operates under the Village form of government and is governed by our elected Village President and a six member Board of Trustees—each elected at large for a four-year term of office. The Village Clerk is elected for a four-year term, attends meetfngs of the Village Board, keeps its minutes, and is the official custodian of Village records. Electfons are held biennially, during odd- numbered years, on the first Tuesday in April. The Village Board’s primary functfon is policy making. The Village President, with the consent of the Board, appoints a Village Manager to administer daily administratfve operatfons of the Village. The Village President presides over meetfngs of the Board, and selects and removes appointed officers of various boards, commissions and committees with the consent of the Board. The mission of the Village is to provide the community with excellent local government services and the best educatfonal opportunitfes that meet the needs of its 3 Village of Oak Brook Leadership 2 Village of Oak Brook Organizational Chart Management Team Village Manager Greg Summers Police Chief Public Works Brian Strockis Tim O’Malley Fire Chief Library Kevin Fleege Jacob Post Information Technology Golf Course Tom Gilbert Sean Creed Development Services Finance Rebecca Von Drasek Marilyn Fumero Assistant Village Manager Joseph Mitchell From left to right: Trustee Naveen Jain, Trustee James Nagle, Trustee A. Suresh Reddy, Trustee Netasha Scarpinitf, Village Attorney, Michael Castaldo, President Laurance Herman, Village Manager Greg Summers, Trustee Michael Manzo, Trustee Edward Tiesenga. Like other local governments, the Village of Oak Brook utflizes fund accountfng. Fund accountfng segregates related accounts and actfvitfes into separate funds to ensure and demonstrate compliance with legal and regulatory requirements. Village funds are classified into three categories: governmental funds, business-type funds, and fiduciary funds. Governmental funds are used to account for all or most of the Village’s general actfvitfes, including administratfon, public safety, highways and streets, library, and community development. Governmental funds are categorized as: the General Fund, special revenue funds, and capital projects funds. The General Fund is used to account for and report all financial resources not accounted for and reported in another fund. Special revenue funds are used to account for and report specific revenue sources that are restricted or committed for specified purposes other than capital or debt. Capital projects funds are used to account for and report resources that are restricted, committed, or assigned for capital outlay. Business-type funds are used to account for actfvitfes similar to those found in the private sector, where the determinatfon of net income is necessary or useful for sound financial administratfon. Goods or services from these actfvitfes can be provided to either outside partfes (enterprise funds) or to other departments or agencies primarily within the government (internal service funds) with costs being recovered through user-fees and charges. Fiduciary funds are used to account for assets held on behalf of outside partfes, including other governments, or on behalf of other funds within the government. Financial actfvity of fiduciary funds are not included in governmental or business-type actfvitfes. The Village presents two types of financial statements: the Government-Wide Financial Statements and Fund Financial Statements. In the Government-Wide Financial Statements, the aggregate of all Governmental and all Business-Type funds are presented. The Government-Wide Financial Statements and Business- Type Fund financial statements are prepared using the economic resources measurement focus and the accrual basis of accountfng. The Governmental Fund Financial Statements are prepared using the current financial resources measurement focus and modified accrual basis of accountfng. There are a few major differences between these two reportfng basis. Fund Structure, Measure Focus, and Basis of Accounting 3 The Statement of Net Position (commonly known as the “balance sheet”) reports informatfon on all of the Village’s assets, liabilitfes, and deferred inflows and outilows, with the difference reported as its “net positfon.” Net positfon measures the resources (cash, investments, receivables, capital assets, etc.) of the Village and any claims (payables, deposits, debt, etc.) against those resources. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Village is improving or deteriorating. The table below shows that, as of December 31, 2023, the Village’s total net positfon was $158.1 million, which is an increase of $15.1 million from 2022. The largest portfon of the Village’s net positfon, $158.1 million, reflects its investment in capital assets, less any outstanding debt used to acquire those assets. The Village uses these capital assets to provide various services to its residents. Consequently, these assets are not available for future spending and separated. An additfonal portfon of the net positfon, approximately $21.3 million, is subject to external restrictfons on how it may be used. The unrestricted portfon of net positfon represents a $19.2 million deficit. The deficit balance is primarily due to the unfunded pension liabilitfes related to the IMRF (Illinois Municipal Retfrement Fund), Police, and Fire pension plans and the OPEB obligatfon. The deficit unrestricted net positfon will gradually improve as the pension plans become better funded in future years. The total deficit unrestricted net positfon improved $15.2 million in 2023 due to current year results and strong market conditfons for the Village’s pension plans. Explanation, Analysis, and Discussion of Financial Statements 4 Statement of Net Position The Village has seen steady improvements in total net positfon over the past five years. Net positfon has grown from $92.6 million in 2019 to $158.1 million in 2023. The Governmental Actfvitfes portfon has increased from $51.8 million in 2019 to $88.6 million in 2023, a $36.8 million, or 78.6%, improvement. The Business-Type Actfvitfes portfon has increased from $40.8 million in 2019 to $69.5 million in 2023, a $28.7 million, or 83.4%, improvement. Although total net positfon has increased, the Village stfll maintains unrestricted deficits due to unfunded pension liabilitfes. Total 2023 2022 2023 2022 2023 2022 Change Cash and Investments 62.3 51.6 28.1 23.5 90.4 75.1 15.3 Current and Other Assets 12.8 17.9 2.6 3.7 15.4 21.6 (6.2) Capital Assets 80.3 81.1 41.6 41.2 121.9 122.3 (0.4) Total Assets 155.4 150.6 72.3 68.4 227.7 219.0 8.7 Deferred Outflows of Resources 15.8 18.9 1.2 0.6 17.1 19.5 (2.4) Long-Term Liabilities 69.7 72.9 1.7 0.8 71.4 73.7 (2.3) Other Liabilities 6.6 8.2 0.9 0.7 7.5 8.9 (1.4) Total Liabilities 76.3 81.2 2.6 1.5 78.9 82.6 (3.7) Deferred Inflows of Resources 6.4 10.5 1.5 2.5 7.9 13.0 (5.1) Net Investment in Capital Assets 76.5 78.9 41.1 41.2 117.6 120.1 (2.5) Restricted 21.3 17.8 0.0 1.0 21.3 18.8 2.5 Unrestricted (9.2)(18.8)28.4 22.9 19.2 4.1 15.1 Total Net Position 88.6 77.9 69.5 65.1 158.1 143.0 15.1 Governmental Business-Type Total Primary Activities Activities Government The foundatfon of the Village’s financial planning is centered on the Village’s policy of maintaining a General Fund cash and investments reserve that meets or exceeds six months of annual operatfng expenses. The six month policy level was established due to the Village not having the predictability of real estate tax revenue. Approximately 50% of the Village’s General Fund operatfng budget is funded by sales tax revenue, which is susceptfble to economic downturns and consumer spending. This conservatfve policy seeks to ensure the Village will have sufficient funds on hand to operate in an emergency situatfon as well as having sufficient tfme to address any volatflity. Over the past five years, the Village has been able to significantly increase its General Fund reserve balance to $42.6 million at December 31, 2023, or 18.1 months of budgeted 2023 operatfng expenditures. As of December 31, 2023, the Village had $137.6 million in cash and investments on hand, An increase of $16 million from December 31, 2022. Cash and investments by fund is: Explanation, Analysis, and Discussion of Financial Statements 5 The Village’s overall cash and investment balance is made up of various sources. The checking and Illinois Funds portfon are highly liquid and have immediate access. Illinois Funds balances earned interest during 2023 at a rate that ranged from 0.09% to 5.46%. The Village’s Corporate Bonds, Municipal Bonds, Certfficates of Deposits, and Government & Agency Obligatfons generally mature within five year. The investment portiolio is managed to have individual securitfes maturing nearly every month to keep the portiolio relatfvely liquid. The overall investment portiolio earned interest during 2023 at an average weighted yield of Summary on Village Cash and Investments Fund 2023 Balance 2022 Balance Change General $42,584,194 $38,507,903 $4,076,291 Hotel Tax 3,771,197 2,690,346 1,080,851 Motor Fuel Tax 2,022,102 1,697,234 324,868 Foreign Fire Insurance 177,548 219,138 (41,590) Infrastructure 15,495,611 8,880,969 6,614,642 Promenade TIF 0 309,920 (309,920) Water 52,597,437 49,666,119 3,304,318 Sports Core 16,363,549 15,308,692 1,054,857 Golf Surcharge 0 278,773 (278,773) Self Insurance 569,442 (25,381) 590,823 Garage 346,474 305,150 41,324 Equipment Replacement 3,324,883 3,036,753 288,130 Total $137,621,437 $120,875,616 $16,745,821 (in millions) Explanation, Analysis, and Discussion of Financial Statements The Village contributes to three defined benefit pension plans, the Illinois Municipal Retfrement Fund (IMRF), an agent multfple-employer public employee retfrement system; the Police Pension Plan, which is a single-employer pension plan; and the Firefighter’s Pension Plan, which is also a single-employer pension plan. The benefits, benefit levels, employee contributfons, and employer contributfons for all three plans are governed by Illinois Compiled Statutes and can only be amended by the Illinois General Assembly. For further informatfon on these pension plans, refer to the Village’s 2023 ACFR. Related to these pension plans, the Village reports, under long-term liabilitfes on the Statement of Net Positfon, an unfunded pension liability of $61.1 million for governmental actfvitfes and $1.0 million for business-type actfvitfes, for a total of $62.1 million as of December 31, 2023. Actual cash contributfons to the pension funds for 2023 totaled $6 million. This consisted of: $0.5 million for the IMRF pension plan, $2.8 million for the Police pension plan, and $2.7 million for the Fire pension plan. Current State statutes require the Village’s contributfons must accumulate to the point where the past service cost for the Police and Fire pension plans is 90% funded by the year 2040. The Village strives to have it’s pension funds 100% funded. The Village’s total net pension liability at 12/31/23 is: IMRF Police Pension Fire Pension Total Total Pension Liability $46,982,817 $75,469,095 $61,046,910 $183,498,822 Plan Fiduciary Net Positfon (41,716,168) (44,689,405) (34,941,614) (121,347,187) Unfunded Pension Liability $5,266,649 $30,779,690 $26,105,296 $62,151,635 Plan Funded Rate 88.79% 59.22% 57.24% 66.13% Combined annual Public Safety (Police and Fire) recommended pension contributfons are expected to increase from $4.3 million in 2021 to $5.6 million in 2040 assuming a 100% funding target. Increasing pension costs could have an impact on future services provided by the Village. Actual contributfons and unfunded liability for these years could also vary from projectfons depending on key actuarial assumptfons, including salary increases, mortality tables, investment returns, and Village funding levels. Projectfons are updated each year through an actuarial valuatfon to determine the actual funding status of the plans. In additfon, current efforts to consolidate downstate pension plans could have a significant impact on these projectfons and the health of the pension plans. The Village will contfnue to monitor consolidatfon and its impact on the Village’s financial future. Summary on Village Pension Plans 6 The Statement of Activities (commonly known as the “income statement”) reports all financial actfvity for the fiscal year ended December 31, 2023. This statement presents high-level summary informatfon about how the Village’s net positfon changed during the fiscal year. Overall, the Village’s total net positfon has decreased $5.9 million, or 8.5%, during fiscal year 2023. Governmental actfvitfes net positfon increased $5.2 million, or 12.5%, from 2022 and business-type actfvitfes net positfon decreased $11.1 million, or 40.4%, from 2022. Total revenues decreased $7.56 million, or 11%, compared to prior year. The decrease in 2023 revenues is due to a one-tfme revenue source generated by the sale of the non-corporate water main lines in 2022. Total expenses increased $5.4 million, or 12.7%, compared to the prior year, which is due primarily to market changes for Fire and Police Pension investments. For the year ended December 31, 2023, the Village recognized a pension expense of $4.3 million. In 2023 the Village Board approved a supplemental Police and Fire Pension contributfon of $2.0 million. Explanation, Analysis, and Discussion of Financial Statements 7 Statement of Activities See page 10 of this report for further analysis and explanatfon of major changes among revenue and expense line items. Explanation, Analysis, and Discussion of Financial Statements 2023 Actual 2022 Actual Change Sales Tax $25,223,362 $25,455,831 $(232,470) Sales tax covers all the various taxes imposed under the Retailers Occupatfon tax, the service Occupatfon tax, and the Use Tax Act. The Village currently receives 1.50% of eligible sales. Utility/Telecom Tax 4,286,590 5,214,840 (928,250) The Village taxes telecommunicatfons, natural gas, and electricity. The Village receives 5% tax from NICOR and a 10-tfered formula based on kilowatts used from Commonwealth Edison. Taxes are also imposed on interstate or intrastate telecommunicatfons originatfng or received in the Village by a person at a rate of 6% of gross charges. Hotel/Motel Tax 1,391,083 1,366,301 24,782 3% tax imposed upon the use and privilege of rentfng rooms in a hotel or motel within the Village. Intergovernmental 2,173,689 2,382,743 (209,054) Amounts received from other governments for support of partfcular functfons or for general financial support. Includes State income tax and personal property replacement tax. Charges for Services 22,401,272 21,355,013 1,046,259 Charges imposed for providing services. Total charges for services is comprised of: Water $9,717,533, Sports Core $3,190,657, and Governmental (licenses, permits, fees) $3,843,934. Grants 909,622 862,669 46,953 Funds received from federal and state agencies to assist in offsetting expenditures related to various programs. All Other Revenue Sources 1,700,104 1,035.,688 664,416 Consists of property tax, other tax, gain on disposal of capital assets, investment income, and other revenue. $58,085,722 $57,673,085 $412,637 Revenue Overview 8 See page 10 for explanatfons on the major changes from 2022. Explanation, Analysis, and Discussion of Financial Statements Note - The increase in total expenses in 2015 relates to the recording of $10.4 million in pension expense related to the implementatfon of GASB Statements No. 68 and 71. Fiscal year 2015 was the first year the expense was recorded on the Village ’s financial statements. The increase in total expenses in 2023 relates to the implementatfon of GASB Statement No. 87. See page 10 for explanatfons on the major changes from 2022. Expense Overview 9 Key financial highlights of fiscal year 2023 include: • For the year ending December 31, 2023, the Village’s total (combined governmental and business-type) assets and deferred outilows of resources exceeded liabilitfes and deferred inflows of resources by $158.1 million (referred to as net positfon). • The Village’s total net positfon increased by $15.2 million, or 10.6%, compared to the prior year. • The governmental actfvitfes reported a total net positfon of $88.6 million, which is an increase of $10.7 million, or 13.7%, in comparison to the prior year’s balance. The change is due to the reductfon of Police, Fire & IMRF Pension and OPEB liabilitfes based on actuarial estfmates. • The business-type actfvitfes reported a total net positfon of $69.5 million, which is an increase of $4.5 million, or 6.9%, in comparison to the prior year’s balance. The change is attributed to profits from the 2022 sale of the non-corporate water main lines. The Village contfnues to be the water supplier for Aqua’s newly acquired customer base. • The Village had a total (governmental and business-type actfvitfes combined) unrestricted net positfon of $19.1 million on December 31, 2023, which is an improvement of $15.2 million from last year. The increase in unrestricted net positfon is due to management implemented changes in both “business type” and “governmental” type actfvitfes. • Total revenues decreased $7.0 million, or 10.1%, in comparison to the prior year. The reductfon is due to the one-tfme revenue source generated in 2022 from the sale of non-corporate water main lines. • Total expenses increased $5.4 million, or 12.8%, in comparison to the prior year. The increase in expenditures is attributed to supplemental pension contributfons and personnel costs related to the ratffied collectfve bargaining agreement that expired in 2021. Explanation, Analysis, and Discussion of Financial Statements Overview of Financial Position and Results of Activities 10 Explanation, Analysis, and Discussion of Financial Statements 11 General Fund The General Fund accounts for the Village’s primary operatfng actfvitfes. Services funded by the General Fund include police, fire, library, public works, economic development, and general administratfon. The General Fund accounts for all financial resources except those accounted for in another fund. General Fund balance increased $4.1 million in 2023 to a total of $42.6 million. Revenues increased $3.1 million from 2022 while expenditures increased $6.13 million over 2022. Revenues were $6.1 million over the original budget, while expenditures were $1.75 million over the original budget in 2023. The increase in expenditures is primarily attributed to Public Works operatfons previously expensed to Infrastructure Fund and reallocated to the General Fund in 2023. Village Sales Tax 12 Sales Tax revenue is largest revenue source in the Village’s General Fund and Infrastructure Fund. The amount of sales tax generated by Village businesses allows the Village to operate without a real estate tax levy. The Village does receive a small amount of real estate tax revenue for the Promenade TIF district, but this money is used exclusively to repay TIF bondholders. The sales tax rate charged within the Village is 7.50%. Of this rate, the Village directly receives 1.50%. The 1.50% is further broken down into two portfons: 1.00% is the local portfon that goes into the General Fund to fund general operatfons (public safety, public works, library, development services, and administratfon) and 0.50% is the non-home rule portfon that goes into the Infrastructure Fund to fund roadway improvements. Also, the Promenade TIF Fund receives a portfon of sales tax revenue to be used to repay bondholders in accordance with the redevelopment agreement. Of all the sales tax and non-home rule sales tax collected from stores within the Promenade shopping center, 20% of this amount is recorded in the Promenade TIF Fund. The Promenade TIF Fund decreased $309,920 from 202 to 2023, to a fund total of $0.00. On December 12, 2023, the Village passed Ordinance S-1678 providing fro the terminatfon of the Promenade TIF Fund. The General Fund’s portfon of sales tax revenue in fiscal year 2023 was $17,704,486, which is a , or 1.6%, over 2022. The Infrastructure Fund’s portfon of non-home rule sales tax in fiscal year 2023 was $7,518,876, which is an increase of $155,661, or 2.1%, over 2022. Of the Village’s total sales tax revenue, nearly 50% comes from businesses located within the Oakbrook Center mall. These taxpayers accounted for approximately 42,06% of the Village’s total sales tax revenue in 2023. The Village contfnues to work on attractfng new businesses to strengthen its sales tax base and contfnue operatfons without a real estate tax levy. The Village maintains a diverse tax base with four industries generatfng over $2.0 million to the Village annually. • Louis Vuitton • Macy’s • Nordstrom Inc • Room & Board • The Neiman Marcus Llc • Ahead • Apple • Carvana Llc • CD Peacock 1837 • Costco Key Statistics 13 *Individual property tax rates may vary depending on school district boundaries. 2019 2020 2021 2022 2023 General Debt per capita $423 $395 $343 $515 $322 DuPage County unemployment rate 2.20% 6.70% 4.50% 3.70% 3.70% Property tax rate* 3.5125 3.6668 3.6621 3.6608 3.7436 Estfmated retail sales $1,258,194,000 $1,156,254,300 $1,597,908,800 $1,676,957,100 $1,756,592,420 Total sales tax receipts—cash basis $18,268,091 $16,840,473 $20,428,732 $25,455,831 $25,223,362 Police Physical arrests 178 125 164 664 686 Parking violatfons 317 99 29 160 188 Traffic violatfons 1596 1345 1212 1056 1,135 Fire EMS incidents 1,468 1,162 1,493 1,707 2,017 Fire incidents 693 598 671 1,181 1,214 Communications Center (DUCOMM) Police calls dispatched 23,200 18,460 20,561 18,173 17,492 Fire/EMS calls dispatched 2,711 2.253 2,665 2,888 3,231 Library Total circulatfon 140,20 78,614 92,718 155,677 177,293 Total holdings 88,520 88,994 91,065 93,982 90,088 Community Development Building permits issued 920 830 865 894 924 Estfmated constructfon value $167,423,370 $179,143,947 $121,039,599 $133,244,295 $215,308,136 Inspectfons 2,510 2,203 2,556 2,686 3,496 Sports Core B&T recreatfon memberships 265 - - 382 333 Social memberships - - - - - Total events 88 8 45 59 25 Golf memberships 150 152 245 277 279 Total golf rounds 36,253 41,396 48,656 46,098 47,660