NEW BUFFALO — The audit report for the fiscal year ending June 30, 2021, was presented to the New Buffalo City Council on Dec. 20 by Joe Verlin of Gabridge & Company.

“It was a very smooth audit process. We do appreciate all the extra effort that went into this year’s audit given that it was entirely remote again due to COVID,” he said.

Verlin said the report’s opinion on the financial statements reads: “In our opinion the financial statements present fairly in all material respects the financial position of the city as of June 30, 2021.”

Verlin said this is “a clean opinion according to the American Institute of Certified Public Accountants.”

“Financial Highlights” and other information contained in the audit report include the following:

The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of this fiscal year by $20,956,398 (shown as net position), representing an increase of $736,822 over the previous fiscal year.

At the close of the current fiscal year, the City’s governmental funds reported combined fund balances of $5,063,315, an increase of $856,961 in comparison with the prior year. Approximately 44.8 percent of this amount, or $2,270,800, is available for spending at the City’s discretion (unassigned fund balance). However, that amount is across various funds and subject to individual fund requirements.

At the end of the current fiscal year, unassigned fund balance for the general fund was $2,270,800, or 72.8 percent of the general fund’s total expenditures and transfers out. The Government Finance Officers Association, in its best practices for Fund Balance Guidelines for the General Fund document, recommends that, at a minimum, unrestricted budgetary fund balance in their general fund shall be no less than two months of regular general fund operating revenues (or regular general fund operating expenditures). The City’s unassigned fund balance level is above this best practice benchmark as of year-end. The City’s fund balance policy maintains that minimum unrestricted fund balance be the sum of the top two taxpayer’s total annual city tax or 25 percent of general fund revenue, whichever is higher. The sum of the top two taxpayer’s total annual tax for 2021 is $175,094, while 25 percent of General Fund revenue is $907,993. Therefore, the minimum fund balance is $907,993.

Total fund balance of the general fund increased by $513,976 during the year for an ending total balance of $2,500,339. This balance is expected to decrease significantly during the next fiscal year as the City moves forward with large capital projects that were delayed due to COVID-19 in calendar year 2020.

Capital Assets

The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2021 amounted to $15,673,092 (net of accumulated depreciation).

Of this amount, $10,491,483 was for its governmental activities and $5,181,609 was for its business-type activities. This investment in capital assets includes land, buildings, equipment and vehicles, and infrastructure. Additional information on the City’s capital assets can be found in Note 5 to these financial statements.

Long-term Debt

At the end of the current fiscal year, the City had total long-term debt outstanding of $5,912,858. The City reduced its long-term debt by a net $479,553 during the year. Of the total outstanding debt, $3,319,613 was for governmental activities while $2,593,245 was for business-type activities. Additional information on the City’s long-term debt can be found in Note 6 to these financial statements.

Next Year’s Budgets and Rates

Management estimates that approximately $3.46 million of revenues will be available for appropriation in the general fund in the upcoming budget. Expenditures are expected to change significantly compared to 2021 as the City moves forward with large capital projects that have been delayed over the past two years. A large portion of the general fund’s fund balance is expected to be used for the projects, resulting in a planned and budgeted general fund deficit. The City continues to review all budget line items for opportunities to reduce expenditures when possible. The budget will be monitored during the year to identify any necessary amendments. In 2022, the City plans again to use current revenues to provide essential services and to maintain the City’s financial reserves at similar levels. The ongoing costs of providing essential services for the citizens of the City will again need to be monitored in order to maintain the financial condition of the City. Additionally, management and the City Council continue to monitor the impact of the COVID-19 Pandemic on City revenues.

In her monthly Parks Report, Director Kristen D’Amico noted that the old Dune Walk has been removed at the public beach, adding that bids for the new dune walk are expected to go out this month.

“We are looking at getting started this spring, so if all goes well we will have a brand new dune walk for summer and beyond,” she wrote.

The new Dune Walk will include an ADA walkway in the lower dune, and a walkway that will be installed in the same area as the previous one.

In the Code Enforcement update in the meeting packet, Gail Grosse wrote that citations were issued for several unregistered rentals.

“At this time, three of the parties found to be illegally advertising an unregistered rental are applying for a permit.”

She also reported that the department has actively been preparing for the transition to “in-house” processing of STR rental applications.

“We have created more detailed applications to verify all permit holders are aware of the policies of the program.”

Also on Dec. 20, the City Council approved (within the meeting’s consent agenda) a special events permit application from the New Buffalo Area Schools to hold the 2022 graduation ceremony from 6:30 to 10 p.m. Saturday, June 4, at 112 East Clay St. (including a road closure, fireworks display, assistance from the police and fire departments).

In another Dec. 20 matter, the council agreed (by a 3-1 vote) to enter into a Fire Service Agreement with New Buffalo Township.

City Manager Darwin Watson said in June 2020, the City Council approved entering into an agreement with New Buffalo Township to provide supplemental fire services to the city. The approved agreement was to expire on December 31, 2020. On December 21, 2020, the City Council approved an extension of the agreement to expire on December 31, 2021. Both times, it was identified that the city lacked the ability to reciprocate mutual aid to the township. The city wishes to continue the arrangement until a long-term solution can be adopted.

The proposed contract is almost identical to the previous ones, except: 1. The cost of the contracted fire services w ill increase from $24,000 to $60,000, annually; and 2. Either party may terminate the agreement with a 30-day notice, instead of 60 days.

The Township Board scheduled a special Dec. 29 meeting where the Fire Service Agreement was expected to be approved.

In other Dec. 20 business, the New Buffalo City Council:

• Authorized the purchase of a boat launch parking kiosk from Total Parking Solutions, Inc., for $7,945. Currently, the majority of the city’s fee collections are managed through an automated means, with the exception of the boat launch.

• OK’d a suspension of rezoning requests until the completion of an ongoing Zoning Ordinance Review and Update. During this process the city will look at how to promote and manage growth, along with how to assist residents and businesses manage expectations about what they and their neighbors can do with their property.

• Authorized repair work to a Public Works dump truck by Duneland Custom Repair Center in the amount of $6,704.49.

• Approved amendments to the 2022 fiscal year budget affecting the city’s General Fund, Harbor Operations Fund, Water and Sewer Funds that have differed from the adopted fiscal year’s budget, due to a number of activities.

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