Audit reveals record value increase in Rochester
Financial accounting practices and policies were spot on in 2018, according to Rochester City Auditor Rana Emmons, who presented city council members with the city's annual financial audit at their meeting on Monday, November 26.
Highlights of the unmodified audit, which received the highest rating the city can receive, included a 3.83 increase in property values. Emmons said a national study of home value increases since 2009 found Rochester to have the 16th highest increase in residential values in the United States, and ranked first in Michigan, with growth-in-value of 40.43 percent since 2009.
Most of the value increases are related to reconstructions and renovations in single-family homes, with more than 1,200 building permits and improvements in the past year, totaling over $50 million worth of renovations.
Emmons also congratulated the city on its financial accounting, noting seven consecutive certificates of achievement for excellence in financial reporting from the Government Finance Officers Association.
Among the points of discussion in the audit presentation was the city's efforts to spend down some of its general fund balance, as called for by a recent update to the city's fund balance policy. Rochester used about $925,000 in existing general fund balance, with about $865,000 spent for infrastructure projects related to the city's street fund. At the same time, the city paid down about $930,000 in principal debt and funded about 70 percent of its pension liabilities. The latter payments were helped by an increase of about $400,000 in net investment income in 2018 over the prior year.
Councilman Ben Giovanelli questioned what Emmons felt was a responsible general fund balance amount.
"There's two parts, and it really depends. You put a lot of thought into your multi-year budget. But it depends on what capital plans you might be deciding and what you're planning. You can't do (a major project) with fund balance in one year, so it's a savings in a way.
"Also, what are the city's operating expenditures? How long could you go if the revenue streams dried up? The city took a hit on taxable values during the economic downturn, and there's really nothing you can do about that. There's really nothing you can do about state shared revenues, either... how long could you provide city services if that happened, and it can happen. That's the measure... so it depends on what projects you have coming up, and what your comfort level is. Operating expenditures are pretty stable."
By keeping expenditures stable, planning projects over several years and maintaining enough funds for less stable revenue streams, Emmons said the city is showing "marks of being good stewards of money."
"It's all combined," she said. "It's not one thing."