The Comprehensive Annual Financial Report of the City of Cary, North Carolina (“Cary”) documents the financial position and results of operations of Cary as of and for the fiscal year ended June 30, 2020. The Government Finance Officers Association of the United States and Canada (GFOA) is the City Cary was awarded a Certificate of Achievement for Excellence in Financial Reporting for its comprehensive annual financial report for the fiscal year ended June 30, 2019.
FY 2020 ANNUAL REPORT
THIS MANAGEMENT OVERVIEW INCLUDES THE FOLLOWING
EXECUTIVE SUMMARY
With increased collaboration and self-awareness, staff continue to work with renewed energy to break down silos, envision, innovate and implement new efficiencies, improve decision-making tools and strengthen decision-making skills, and develop staff to create a new model of local government that will ensure that Cary remains successful in the future.
PROFILE OF THE TOWN OF CARY
HISTORY
A prestigious, private boarding school developed here in the late 1800s, and this school later became famous as the first public high school in North Carolina. With the development of a nearby corporate research park in the 1960s, known internationally as Research Triangle Park, Cary began to grow into a bedroom community from a quiet town of a few thousand people.
TOWN OF CARY GOVERNMENT
The school was on the site now occupied by the Cary Arts Center, a vibrant and robust center for arts activities for the people of Cary. In 1963, the state legislature amended Cary's charter to provide for a Council-Manager form of government.
TRANSFORMATION CONTINUES
Cary must stay true to its values while finding ways to change and grow so that Cary can stay ahead, stay on top, and become the local government that doesn't exist. The city must stay true to its values while finding ways to change and grow so that Cary can stay ahead, stay on top, and become the local government that doesn't yet exist.
FINANCIAL FRAMEWORK
Cary decided to stay at the top rather than risk the path of decline that characterizes other once-great communities that have not kept their place at the top. While Cary enjoys a number of positive attributes, the community also faces clear challenges: an aging population, aging infrastructure and limited land for development.
FY 2020 KEY FINANCIAL RESULTS, STATISTICS AND FINANCIAL PLANS
THIS SECTION INCLUDES REPORTING ON
GENERAL FUND
PROPERTY TAXES
SALES TAX
OTHER GENERAL FUND REVENUES
GENERAL FUND OPERATING EXPENDITURES
SOURCES AND USES
NET RESULTS
FY 2020 GENERAL FUND OPERATING RESOURCES
DEBT SERVICE
GENERAL FUND FINANCIAL POLICY BENCHMARKS
TOTAL FUND BALANCE
UTILITY FUND
UTILITY FUND BUDGETARY* REVENUES AND EXPENDITURES
UTILITY DEMAND
UTILITY OPERATIONS FINANCIAL POLICY BENCHMARKS
CAPITAL INVESTMENTS
CAPITAL PROJECT TO DATE SPENDING
CASH AND INVESTMENT MANAGEMENT
TOWN OF CARY POOLED CASH AVERAGE ANNUAL YIELD
LONG TERM BONDED DEBT
2019 REFERENDUM
The refinancing transaction, which included the issuance of Cary's first taxable bonds, will primarily benefit the Utility Fund by reducing future debt service interest requirements. Three rating agencies, Moody's, Standard & Poor's and Fitch, each affirmed their top ratings for both Cary's general obligation and revenue bonds.
OTHER FINANCIAL INSIGHTS
ECONOMIC GROWTH
A LOOK AHEAD – THE FY 2021 BUDGET
ECONOMIC DEVELOPMENT
CGI rendering courtesy of
IN CONCLUSION, CARY’S FINANCIAL POSITION
FINANCIAL MANGEMENT STRATEGIES AND PRACTICES
OUR GUIDING VISION
The staff is looking for opportunities to invest in AAA-rated North Carolina local government debt to diversify the portfolio. At any given time, the portfolio includes approximately 150 different investments that are expected to mature approximately every three to seven days over the next three to four years to match expected payouts for payroll and other expenses.
CASH AND INVESTMENTS BY TYPE
DEBT MANAGEMENT
A component of these long-term liabilities is in the form of bonds issued to finance capital improvements.
DEBT POLICY
BONDED DEBT AMORTIZATION
PENSIONS AND OTHER POST EMPLOYMENT BENEFITS
Cary has specifically earmarked a total of $3.9 million for its OPEB obligation in the Internal Health Insurance Service Fund. Additional resources of at least $9 million exist in the $15.3 million net position of the Internal Health Insurance Service Fund being studied as a possible commitment to OPEB.
PROCUREMENT
The pension plan is considered one of the best plans in the country as it is well funded and prepared to meet future obligations to retirees. More information about these benefits is included in Note 12 and in the Additional Information Required subsection of the financial portion of the CAFR.
FINANCIAL SYSTEMS
RISK MANAGEMENT
CAPITAL PROGRAM
Cary is focused on strengthening asset management planning for maintenance as infrastructure built during Cary's booming growth in the 1980s and 1990s is due for major maintenance or replacement. As an example, in the past few years Cary has built two new fire stations to replace Fire Station 2 and establish a new Fire Department Area 9.
BUDGET PROCESS
LONG TERM FINANCIAL PLANNING
Reports from the model include a sophisticated dashboard of strategic indicators used by staff to recommend rates that meet or exceed Cary's policies for today's cash on hand and debt service coverage ratios. Over the past three years, the model has been adjusted to reflect falling demand per per capita based on Cary's experience and national trends.
CITIZEN FEEDBACK
Projections for spending, other income and expenses, and debt service create rate requirements to meet financial goals. Other improvements to the capital plan include work to align the budget with the Imagine Cary Community Plan and priorities outlined in Cary's Landed Infrastructure Asset Management Plan and Transportation, Parks, Water, Sewer and Stormwater Master Plans.
FINANCIAL REPORTING
At Cary, price elasticity can also be a factor, as can increased awareness due to customer availability.
IN CONCLUSION,
FULFILLING THE IMAGINE CARY COMMUNITY PLAN
LIVE: FOSTERING STRONG NEIGHBORHOODS
WORK: ASSURING CONTINUING PROSPERITY
SHOP: CREATING VIBRANT DESTINATIONS Cary Values: Managing Future Land Use
ENGAGE: EXPERIENCING THE CARY COMMUNITY
SHAPE: GUIDING COMMUNITY GROWTH Cary Values: Managing Future Land Use
MOVE: PROVIDING TRANSPORTATION CHOICES Cary Values: An Efficient System for All Users
SERVE: MEETING COMMUNITY NEEDS
ACT: MOVING FROM VISION TO REALITY 1. Apply the Cary Community Plan Policies
CONCLUSION
MERIT BADGE COLLEGE
HOUSING REHABILITATION PROGRAM
STUDY: WOMEN MOST SUCCESSFUL IN CARY
SINGLE-FAMILY AND RESIDENTIAL ALTERATION AND ADDITION PERMITS During FY 2020, Cary issued permits for 748 new single-family dwellings,
WORK: ASSURING CONTINUED PROSPERITY
AMAZON AND XEROX COMING TO CARY
EPIC GAMES
SHOP CREATING VIBRANT DESTINATIONS New Life for “The Center”
ENGAGE: EXERIENCING THE CARY COMMUNITY
LAUNCHING MYCARY
ESPORTS EVENT IN CARY
CHINESE LANTERN FESTIVAL
INDOOR COMMUNITY SPORTS COMPLEX
DOWNTOWN PARK PROJECT NEARS END OF DESIGN
SHAPE: GUIDING COMMUNITY GROWTH
FENTON MARCHES ONWARD
ONE WALKER, ONE WALNUT
NEW DOWNTOWN PARKING DECK AND LIBRARY
STANDARD SPECS MANUAL UPDATE
NON-RESIDENTIAL PERMITS
REZONING AND DEVELOPMENT PLANS
POPULATION
MOVE: PROVIDING TRANSPORTATION CHOICES
CROSSING CARY VIA GREENWAY
DYNAMIC LEFT TURN INTERSECTION
WALKER STREET IMPROVEMENTS PROJECT
CARY COLLECTS APP
GOOD HOPE WATER TANK
TEXT TO 911 UPGRADE
CARY DRONE OPERATIONS
NEW FIRE STATION 9
The new Station 9 is a 17,500-square-foot, two-story, three-bay facility built in accordance with Cary's Strategic Energy Action Plan. The 1,400-square-foot, multi-purpose room can be used for town training, events and Cary's emergency operations center.
RESPONDING TO COVID-19
Cary's first service test wells were also built on site and consist of two 10,000-unit underground tanks, allowing personnel to remain local rather than travel to neighboring jurisdictions to conduct annual mandatory testing of fire engine pumps. The completion of the Fire Station 2 and Fire Station 9 relocation projects will ensure the fire department meets current and future requirements related to response time goals in the Downtown and Crossroads/USA.
ACT: MOVING FROM VISION TO REALITY
311 LAUNCH
CARY TOWN COUNCIL HOSTS FIRST-EVER VIRTUAL TOWN HALL
NANCY JONES HOUSE
MEMBERS OF TOWN COUNCIL
TOWN OF CARY MISSION STATEMENT AND STATEMENT OF VALUES
MISSION STATEMENT
STATEMENT OF VALUES
APPOINTED AND ADMINISTRATIVE STAFF
RUSS OVERTON
SEAN STEGALL
DANIEL AULT
RENEE POOLE
CHRISTINE SIMPSON
VIRGINIA JOHNSON
KAREN MILLS
SUSAN MORAN
ALLAN CAIN
MIKE COOPER
TONI DEZOMITS
JAMIE REVELS
NICOLE RAIMUNDO
SCOTT BERRY
DOUG MCRAINEY
TED BOYD
SCOTT HECHT
DANNA WIDMAR
JERRY JENSEN
WES EVERETT
KERRY HARVILLE
ALLISON HUTCHINS
TOWN OF CARY ORGANIZATION CHART
CARY CITIZENS
TOWN MANAGER’S OFFICE
TOWN CLERK’S OFFICE
TOWN ATTORNEY’S OFFICE
FIRE
DEVELOPMENT SUPPORT SERVICES
UTILITIES
POLICE
PERMITS
PUBLIC WORKS
PLANNING
FACILITIES
PARKS, RECREATION, AND CULTURAL
RESOURCES
HUMAN RESOURCES
TECHNOLOGY SERVICES
FINANCE
TOWN BOARDS AND COMMISSIONS
RESPONSIBILITIES OF TOWN GOVERNMENT BY DEPARTMENT
LEGISLATIVE DEPARTMENT
TOWN MANAGER’S DEPARTMENT
Organizational development at the Town of Cary is a human endeavor to help people thrive in our culture and meet the demands of the future. GoCary Door to Door also serves the city of Cary and surrounding communities with premium demand response service for city residents age 60 and older.
POLICE DEPARTMENT
The 311 Center is a citizen-centric communications and information center that blends modern software with staff knowledge of city operations to provide citizens with excellent customer service. With a strong foundation of powerful and connected technologies, the 311 Center uses a OneCary approach to citizen services – breaking down silos to better understand and meet citizen needs.
FIRE DEPARTMENT
FINANCE DEPARTMENT
Special Projects focuses on emerging issues or challenges facing the organization and/or our community, using analytical and adaptive approaches to improve the way we serve our citizens. The division provides customer service, manages the water meter reading system and bills and collects for utilities.
HUMAN RESOURCES DEPARTMENT
Procurement also manages contracts, manages city warehouse inventory, manages internal couriers and disposes of surplus property. The Financial Strategy (Budget) Department is responsible for the planning, development, implementation and evaluation of the operating and capital improvement budget and capital improvement plan.
MARKETING AND INFORMATION TECHNOLOGY DEPARTMENT
PARKS, RECREATION AND CULTURAL RESOURCES DEPARTMENT
The division organizes the Cary Road Race as well as softball tournaments at the local and state level. The city's public art program is administered through the Department and Coordination of City Exhibitions.
PUBLIC WORKS DEPARTMENT (GENERAL AND FLEET FUNDS)
TRANSPORTATION AND FACILITIES DEPARTMENT
PLANNING, INSPECTIONS AND PERMITS, AND DEVELOPMENT SERVICES DEPARTMENT
Development Services coordinates Cary's development review process, with an emphasis on providing accurate, timely, friendly, clear and consistent service. Development Technicians serve as a resource for citizens and the development community by providing assistance with city applications, policies and procedures.
UTILITIES DEPARTMENT – (UTILITY FUND)
This division participates in engineering studies and provides education and training to reclaimed water customers, cooling tower customers and landscape contractors who use reclaimed water. Operations also include performing preventive, predictive and corrective maintenance for the main plant site, removal and disposal of biosolids, and recycling water production.
PUBLIC ART ADVISORY BOARD
ENVIRONMENTAL ADVISORY BOARD
PLANNING AND ZONING BOARD
ZONING BOARD OF ADJUSTMENT
HISTORIC PRESERVATION COMMISSION
PARKS, RECREATION AND CULTURAL RESOURCES
ADVISORY BOARD
INFORMATION SERVICES ADVISORY BOARD
Town of Cary North Carolina
FINA NCIAL SECTION
Cary, North Carolina City Council members report on financial statements. We performed the audit with the aim of forming an opinion on the financial statements, which together make up the basic financial statements of the City Municipality.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Sales tax revenue increased $1.4 million (3.8%) due in part to a strong economy in the first eight months of the fiscal year. At the end of the current fiscal year, the total balance of funds in the general fund was $98.1 million.
BASIC FINANCIAL STATEMENTS
ENTITY-WIDE FINANCIAL STATEMENTS
STATEMENT OF NET POSITION
GOVERNMENT AL FUNDS
GOVERNMENTAL FUNDS FINANCIAL STATEMENTS
BALANCE SHEET - GOVERNMENTAL FUNDS
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION
In the statement of activities, the costs of these assets are allocated over their estimated useful lives (with depreciation, see below) and must be added back. Some other adjustments to operating expenses are unrelated to expenditures in state funds, but should be included in the activity report.
GENERAL FUND BUDGETARY COMPARISON SCHEDULE
TRANSIT SPECIAL REVENUE FUND BUDGETARY COMPARISON STATEMENT
EMERGENCY TELEPHONE SYSTEM SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE
PROPRIET ARY FUNDS
PROPRIETARY FUNDS FINANCIAL STATEMENTS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION - PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
NOTES
NOTES TO BASIC FINANCIAL STATEMENTS
RREEPPOORRTTIIN NG G EEN NTTIITTYY
EEN NTTIITTYY--W WIID DEE AAN ND D FFUUN ND D FFIIN NAAN NCCIIAALL SSTTAATTEEM MEEN NTTSS
93, Replacement of Interbank Offered Rates – This statement is intended to address the accounting and financial reporting implications resulting from the replacement of an Interbank Offered Rate (IBOR). 96, Subscription-Based Information Technology Agreements - This statement is intended to provide guidance on accounting and financial reporting for subscription-based information technology agreements (SBITAs) to governments.
RREEPPOORRTTIIN NG G EEN NTTIITTYY
94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements – This statement aims to improve financial reporting by addressing issues related to public-private and public-public partnership agreements (PPPs). This statement is intended to increase consistency and comparability regarding the reporting of fiduciary components.
EEN NTTIITTYY--W WIID DEE AAN ND D FFUUN ND D FFIIN NAAN NCCIIAALL SSTTAATTEEM MEEN NTTSS
The effective date for this standard was extended due to the issuance of GASB Statement no. 97, Designated Entity Criteria, and Accounting and Financial Reporting for the Internal Revenue Code, Section 457, Deferred Compensation Plans - an amendment to GASB Statements No.
M MEEAASSUURREEM MEEN NTT FFOOCCUUSS,, BBAASSIISS OOFF AACCCCOOUUN NTTIIN NG G AAN ND D FFIIN NAAN NCCIIAALL SSTTAATTEEM MEEN NTT PPRREESSEEN NTTAATTIIOON N
FFlleeett – This fund is used to account for the fleet services activity provided by the Public Works Department and is charged to other Cary departments on a cost reimbursement basis. Heeaalltthh IInnsuurraannccee – This fund is used to account for employee and retiree health and dental expenses incurred by Cary in connection with the decision to self-insure these.
BBUUD DG GEETTAARRYY
Dedicated for Fire Projects – entire non-restricted fund balance in the Fire Project Fund (subfund of Capital Project Fund), allocated for specific fire projects. Dedicated for General Government Projects – includes (1) entire unrestricted fund balance in the General Government Project Fund (subfund of the Capital Projects Fund), which is allocated to specific general government projects or (2) a portion of unrestricted fund balance in the General Fund specifically committed to a general government activity by Council Action.
STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY There were no incidents of non-compliance for fiscal year 2020
- SSTTAATTEE RREEVVOOLLVVIIN NG G LLOOAAN N
- CCH HAAN NG GEESS IIN N LLOON NG G--TTEERRM M LLIIAABBIILLIITTIIEESS
- D DEEAATTH H BBEEN NEEFFIITT PPLLAAN N
The redemption price for these redeemed bonds exceeded the book value of the old debt in the amount of. The redemption price for the redeemed bonds exceeded the carrying amount of the old debt by $1.4 million, resulting in a chargeback loss with an unamortized balance at June 30, 2020 of $860,930 for business-type activities.
REQUIRED SUPPLEMENTARY INFORMATION
Cary refinanced $41.8 million of the 2014 series of general obligation notes through a competitive sale on October 20, 2020 and closed on the transaction on November 5, 2020. On October 22, 2020, Cary held a negotiated sale of the tax-exempt notes. that refinanced all of the State Revolving Loan Funds of over $29.4 million, saving over $2.2 million in service fund debt service budget payments over 13 years.
THIS SECTION CONTAINS ADDITIONAL INFORMATION REQUIRED BY ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA
On October 8, 2020, Cary took out a private bank loan to finance part of the purchase of a replacement lift truck. More than $3.9 million in projected debt service savings will be realized over nineteen years, with the majority of savings benefiting the utility fund.
LAW ENFORCEMENT OFFICERS’ SPECIAL SEPARATION ALLOWANCE
Although the outcome of these lawsuits cannot be determined at this time, it is the opinion of the City Attorney and management that the resolution of these cases will not have a material adverse effect on Cary's financial condition. As a result of the spread of COVID-19, financial uncertainty has arisen which may adversely affect Cary's revenue and operations for an indefinite period of time.
LOCAL GOVERNMENT EMPLOYEE RETIREMENT SYSTEM
In addition, Cary advanced refinanced a $31.8 million portion of the Series 2013, Series 2015 and Series 2017 revenue bonds, saving more than $2.2 million in projected utility fund debt service payments over 21 years. Cary expects that the amount, if any, of expenditures that may be denied by awarding agencies as a result of these audits will be insignificant.
LAW ENFORCEMENT SEPARATION ALLOWANCE REQUIRED SUPPLEMENTAL INFORMATION (A)
LOCAL GOVERNMENT EMPLOYEE RETIREMENT SYSTEM (LGERS) REQUIRED SUPPLEMENTAL INFORMATION
LAW ENFORCEMENT SEPARATION ALLOWANCE ADDITIONAL INFORMATION REQUIRED(A) ADDITIONAL INFORMATION REQUIRED(A) CITY OF CARY, NORTH CAROLINA. The information in the required supplementary schedules was determined as part of the actuarial valuations on the dates indicated.
OTHER POST-EMPLOYMENT BENEFITS REQUIRED SUPPLEMENTAL INFORMATION
SUPPLEMENT ARYINFORMATION
CA PIT AL PROJECT FUND
CAPITAL PROJECT FUND
CAPITAL PROJECT FUND - SUB-FUND COMBINATION OF SCHEDULE OF INCOME, EXPENDITURE AND CHANGES IN FUND BALANCE.
STREETS PROJECT SUB-FUND - SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
DOWNTOWN PROJECT SUB-FUND - SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
STREETS PROJECT SUBFUND - SCHEDULE OF INCOME, EXPENDITURES AND CHANGES IN THE FUND BALANCE - BUDGET AND ACTUAL. DOWNTOWN PROJECT SUBFUND - SCHEDULE OF INCOME, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL.
FIRE PROJECT SUB-FUND - SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FIRE PROJECT SUBFUND - SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND CURRENT. GENERAL GOVERNMENT PROJECT SUBFUND - PLAN OF REVENUES, EXPENDITURES AND CHANGES IN BALANCE OF FUNDS - BUDGET AND CURRENT.
UTILITY SYSTEMENTERPRISE FUND
UTILITY SYSTEM ENTERPRISE FUND
UTILITY SYSTEMS ENTERPRISE FUND - DEPARTMENT WHICH COMBINES PLAN FOR INCOME, EXPENSES AND CHANGES IN THE FUND'S NET POSITION. EXPENDITURE SYSTEM OPERATIONS SUBFUND - STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN THE FUND'S NET POSITION BUDGET AND ACTUAL (NON-GAAP) CITY OF CARY, NORTH CAROLINA.
