Andrew Thompson, CGFO
Chief Financial Officer

Rhea Rivera, CGFM

Asst. Director, Financial Services

Recommended Action:  The City Commission adopt the final millage rates for FY 2024 and adopt the FY 2024 budget.  To ensure compliance with TRIM requirements, it is recommended that the City Commission do the following in the indicated order to ensure proper adoption of the millage rates and budget:  

1. Conduct a public hearing in regard to the FY 24 final millage rates;  

2. After deliberation, adopt the FY 24 final millage resolution.  Prior to adopting the millage levy resolution, staff must formally announce the name of the taxing authority (City of Oakland Park), the rolled-back rate, and percentage increase over the rolled-back rate, and the millage rate to be levied.  The following millage rates are recommended to be adopted:

• Operating Millage: 5.8362 mills (10.74% over the rolled-back millage rate of 5.2701 mills)
• Debt Millage Series 2020: 0.4109 mills
• Debt Millage Series 2022: 0.2229 mills

3. Conduct a public hearing in regard to the FY 24 tentative budget of $141,976,497;  

4. After deliberation, adopt the FY 24 tentative budget, City fiscal policies, citywide compensation, capital improvement program, and fee booklet.

The State “Truth in Millage” (TRIM) legislation requires that a preliminary millage rate be established for inclusion on the TRIM Notice distributed by the County Appraiser in August each year. The TRIM Notice advises property owners as to the maximum millage rate being considered by the City, as well as the time and place for public hearings, in regard to the adoption of a tentative millage rate and annual operating budget.

The City Manager’s Recommended Budget was distributed to the Commission on July 12th and presented during the July 19th meeting. The millage rate and operating budget were discussed during this meeting and the Commission adopted a preliminary operating millage rate of 5.8362 mills, a combined debt service millage rate of 0.6338 mills, and the recommended assessment rates for inclusion on the TRIM Notices distributed by the Broward County Property Appraiser in August.  The Commission also set tentative millage and budget hearings date for September 6th.

On September 6th, the public hearings were conducted and after deliberation, the Commission adopted a tentative operating and voted debt service millage rates (5-0 approval) and a tentative budget (5-0 approval).  It was announced that the public hearings for the adoption of the final millage rate and annual operating budget would be held at 6:30 p.m. on September 20, 2023 at the City Hall Chambers.   

As part of the TRIM legislation, it is necessary to advertise these hearings two to five days before the final hearings. Two advertisements are required. One is notification that the hearings will be held at the above-indicated time and place. Since the tentative operating millage rate of 5.8362 mills adopted by the Commission exceeds the rolled-back millage rate of 5.2701 mills, TRIM legislation requires that the public hearings be advertised as a tax increase. The second advertisement is a schedule providing a summary of the tentative budget. As required, both advertisements have been scheduled for Sunday, September 18th in the Sun-Sentinel. TRIM legislation does not permit advertising solely on the Internet.

Another facet of the budget cycle is the adoption of assessment rates for the fire, residential solid waste, and stormwater services. If the TRIM notice is used for written notification of the time and place of the assessment rate hearings, the hearings cannot be scheduled until 20 days after the County Appraiser has mailed the last of the TRIM Notice, but no later than September 15th. The assessment hearings were held on September 13th and the Commission adopted all assessment rates that were preliminarily approved in July.  The Stormwater Assessment ($114 per equivalent residential unit) remains unchanged from last year; the Fire Assessment ($276 per unit) reflects a $25 increase or about 10% increase from last year; and Residential Solid Waste Assessment ($310 per dwelling unit) reflects an increase of $29.50 from the FY23 rate of $280.50.  The adjustments to the Solid Waste and Fire Assessment rates are both predicated on the results of rate studies that were previously presented to the Commission (June 2022 for the solid waste rate study and April 2021 for the fire assessment rate study); copies of these presentations were attached as part of their respective agenda items.

The City's Fiscal Policies are adopted annually at the time of the City's adoption of the annual budget.  The City's Fiscal Policies remain unchanged from last year which incorporated the changes to Section 218.39, Florida Statutes regarding the selection of external auditors to perform annual financial audits.  A copy of these policies is attached as Exhibit "B".

In accordance with Civil Service Rules, the City Commission is requested to adopt the citywide Compensation Plan in conjunction with the annual budget. The current citywide Compensation Plan, previously approved by Commission, includes all classifications from all employee groups and is consistent with all collective bargaining agreements currently in effect.  These classifications have all been approved by the Civil Service Board as required by the Civil Service Rules.  The amended citywide Compensation Plan is attached as Exhibit “C”.  The proposed changes are described in the attached memorandum from the City's Human Resources Department.

The City Charter and State Statute require the City to adopt a five-year capital improvement plan. The attached Capital Improvement Program plan (Exhibit “D”) identifies the capital investment needs of the City for the next five years, including identification of known funding sources to be utilized to pay for these projects. An overview of the plan was previously presented to the Commission in June and again in July.

The City also maintains a comprehensive fee booklet that is adopted by the City Commission as part of the budget adoption process.  The attached fee booklet (Exhibit "E") is unchanged from prior years with the exception of the Fire Rescue Department's medical transport charges.  These service charges have been unchanged since 2011 and the Department has requested their adjustment to rates in line with the charges maintained by other Broward cities.  The proposed changes would increase basic life support transport service from $670 to $750 and advanced life support from $750 to $1,000 per transport.  

During the July 19th Commission meeting, staff presented a summary of the Recommended Budget's key elements, including the proposed FY 24 business plan capital purchases, grant activity, and the financial impact of the proposed recommended operating and voted debt service millage rates and assessment rates on residents. 

The below sections detail the operating and voted debt service millage rates and budget considered for FY 2024:

Millage Rates (Operating & Debt Service)

As required by the TRIM process, the first requirement of the initial public budget hearing is to adopt a tentative millage rate. The Recommended Budget included a preliminary operating millage rate of 5.8362 mills; and two (2) separate voted debt service millage of 0.4109 mills and 0.2229 mills for Series 2020 and Series 2022 of the G.O. Bonds, respectively, or a combined debt service millage of 0.6338 mills, which were adopted by the Commission.

The recommended operating millage is 5.8362 mills, which is unchanged from the preliminary and tentative rate approved by Commission. This will be the ninth reduction to the operating millage in a ten-year period.

The 2023 property tax base, which forms the basis of FY 24's ad valorem revenue, has increased by 12.94% in the past year to $5.07 billion.  As part of the budget process, the City is required to calculate the "rolled-back rate", which is the millage rate that is needed to produce the same level of property tax revenue as the prior year's operating tax levy. With the property tax base increase and the proposed operating millage rate, there would be $2.72 million more in revenue than would be provided by the rolled-back operating millage rate of 5.2701 mills at a 95% rate of collection.

Although the City is reducing the operating millage rate, the total property tax collections will be higher and the City will be required to advertise a 10.74% tax increase over the rolled-back millage rate of 5.2701 mills under the State's Truth-in-Millage (TRIM) Statute.  The rolled-back millage rate only applies to the operating millage rate - it does not apply to debt service millage rates.

In 2018, over two-thirds of Oakland Park's voters approved the issuance of $40 million in General Obligation (G.O.) bonds to rebuild and enhance the City’s Fire-Rescue and community facilities.  In May 2020, the City was assigned an investment grade AA credit rating by Standard and Poor’s and in June 2020, the first tranche of bonds (Series 2020) was sold, securing $26 million of the approved $40 million. In late 2021, it became clear that large increases in the interest rates could be expected - to avoid higher interest costs, the City moved quickly to sell the remaining bonds and secure lower interest rates. In February 2022, the remaining $14 million of the approved $40 million G.O. bonds were subsequently sold (Series 2022).  These proceeds will be utilized to fund Oakland Park’s Building Our Second Century program facility efforts.  These G.O. bond proceeds are financed over a 20-year period.  The City is required to pay the bonds' debt service costs by levying the voter-approved debt service millage. 

The G.O. bond debt service to be paid next fiscal year is approximately $3.05 million, which will require a debt service millage rate of 0.4109 mills for Series 2020 and a debt service millage rate of 0.2229 mills for Series 2022.  The combined debt service rate for Series 2020 and Series 2022 is 0.6338 mills.  The Commission is asked to adopt a specific rate for each specific series.  

Budget

In July, staff presented the City Commission with a Recommended Budget of about $141,976,497. The document represents a financial plan based on the policy direction established by the Commission and the best information the staff has available at this time. As changes occur and new information becomes available that impacts these plans, revisions to the budget will be needed, either as part of the adoption of the final budget or later through the budget amendment process after the fiscal year begins. The Budget is attached as "Exhibit A."  The attached FY 24 Budget Message also provides a detailed narrative and explanation of the proposed budget. Additional details regarding the proposed FY 24 budget is included in the FY 24 Recommended Budget Book.  This document is available upon request thru the City Clerk's Office. 

Since the preparation of the Recommended Budget in July, a number of new elements have emerged that will have an effect on the 2024 fiscal year budget.

• Broward Sheriff's Office: Immediately prior to the distribution of the FY 2024 Recommended Budget, the City received notice from the Broward Sheriff's Office including a BSO budget for FY 24 that incorporates the cost of benefit changes to the Florida Retirement System that had not been contemplated in BSO's original submission to the City in May.  The revised budget is $19.25 million, an increase of $300 thousand over the budget submitted in May.  This increase was not contemplated as part of the Recommended Budget.
• Property Insurance: In August, the City received the renewal notice from the Florida Municipal Insurance Trust (FMIT), which provides liability, property and workers' compensation insurance to Oakland Park.  Insurance costs for 2024 are $500 thousand more than anticipated.  The majority of this increase is due to a significant change in the property insurance market; Oakland Park's property tax premium has doubled because of these changes. The range of property insurance premium increases with FMIT clients in this area is 75% to 220%.  Staff is working with FMIT to identify options to reduce the extent of the $500 thousand increase.
• Water & Sewer Rates: Oakland Park purchases water from Fort Lauderdale and utilizes a combination of Fort Lauderdale and Broward County for wastewater processing.  In accordance with City Code, Oakland Park's water and sewer rates automatically adjust on October 1 based on changes in the consumer price index and supplier pricing to Oakland Park.  Fort Lauderdale has advised us that there will be a 22.5% rate increase on October 1, coupled with a smaller 9% increase in wastewater charges.  Broward County has also increased its sewer processing rate by 12%.  The net result is an approximately 6% increase in sewer rates and an 11% in water rates for Oakland Park customers.  A full water and sewer rate study is underway for Oakland Park and the results will be presented along with a water and sewer master plan during FY 2024.

The above items are not reflected in the FY 24 budget, but will be addressed as part of a budget amendment in the coming months.

The proposed budget maintains the millage and assessment rates recommended in July.  A copy of the budget summary is attached as "Exhibit A" to this agenda item.  Additional detail regarding the proposed FY 2024 budget is included in the FY 24 Recommended Budget Book.  This document is available on file at the Oakland Park City Library and at City Hall with the City Clerk's Office; copies are also available electronically by request.  All account-level information has also been uploaded onto the City's OpenGov transparency portal. 

The recommended operating millage rate is 5.8362 mills and the combined debt millage rate  is 0.6338 mills (0.4109 mills for Series 2020 and 0.2229 mills for Series 2022).  The operating millage will generate about $2.7 million over the rolled-back rate for a total property tax revenue of $28.1 million while the debt millage will generate about $3.05 million for the debt service of the G.O Bonds due in FY 24.  This presumes approximately a 95% collection rate.

As provided in Section 193.155(1), F.S., beginning in 1995, or the year after the property receives homestead exemption, an annual increase in assessment shall not exceed the lower of the following:

For 2026, the CPI change reported by the Florida Department of Revenue is 6.5%.  As such, the maximum growth in taxable value a homestead residence can experience is 3%.    About 60% of all Oakland Park residential properties are homesteaded.  With the maximum taxable value increase of 3% and the proposed operating millage rate of 5.8362, the median, homesteaded single-family home from last year would experience a $33.22 increase in City property tax for operations, or equivalent to $2.77 a month. With the combined debt service millage of 0.6338 mills, the estimated cost for the median, homesteaded single-family home is $103.14, which is a $10.32 decrease from the prior year.  The net increase in property tax (operating and debt service) is $22.90 for this median home.  With the proposed increases to the fire assessment ($25.00) and residential solid waste ($29.50), the total increase for all taxes and special assessment fees is $77.40 for FY 2024, the equivalent of $6.45 a month. 

The proposed budget for adoption incorporates only information that is available now.  Budget amendments during fiscal year 2024 can be expected as new situations arise and reassessment of our budget is required. 

Taxing authorities must hold two public hearings to adopt the millage rate and budget.  The procedures required for each public hearing are governed by  s.200.065, F.S. 

To ensure compliance with TRIM requirements, it is recommended that the City Commission do the following in the indicated order to ensure proper adoption of the proposed millage and budget:  

1. Conduct a public hearing in regard to the FY 24 final millage rates;  

2. After deliberation, adopt the FY 24 final millage resolution.  Prior to adopting the millage levy resolution, staff must formally announce the name of the taxing authority (City of Oakland Park), the rolled-back rate, and percentage increase over the rolled-back rate, and the millage rate to be levied.  The following millage rates are recommended to be adopted:

• Operating Millage: 5.8362 mills (10.74% over the rolled-back millage rate of 5.2701 mills)
• Debt Millage Series 2020: 0.4109 mills
• Debt Millage Series 2022: 0.2229 mills

3. Conduct a public hearing in regard to the FY 24 tentative budget of $141,976,497;  

4. After deliberation, adopt the FY 24 tentative budget, City fiscal policies, citywide compensation, and CIP.