Source: Grosse Pointe News Online

Farms enjoys a strong fiscal year in 2012

by Brad Lindberg Staff Writer

December 13, 2012

GROSSE POINTE FARMS — It was a good year for city finances.

Municipal revenue totaled $95,000 beyond expectations. Expenditures ended $77,209 under budget.

“We collected a little more money than we anticipated,” said Councilman Louis Theros, chairman of the Grosse Pointe Farms budget and audit committee. “A lot of it had to do with the rebound in housing starts and improvements, which we saw for the first time in quite a long time.”

Increased construction had a trickle-down effect on sales of building licenses and construction permits.

“That was up $104,000 over last year,” said John Lamerato, Farms finance director.

The news came in a routine audit for the fiscal year ending June 30, conducted by Plante Moran accounting firm.

Revenues of $12.7 million exceeded expenses of $12.6 million.

“Our budget is about the same as it was in 2001,” Theros said.

“All departments operated within their budgets,” Lamerato said. “Only 31 cents of every $1 in property taxes revenues goes to city services. That’s a good figure.”

Public safety accounted for about 37 percent of general fund expenditures.

“That number is closer to 50 percent in most cities around the state,” Lamerato said.

Rainy day fund

Some $172,000 was added during the year to the general fund balance, which is comparable to the city’s savings account. Fund balance now stands at $4.9 million.

Of that amount, undesignated funds, often called the rainy day fund, is $3.2 million.

“That is just under 26 percent of our general fund budget, which is very good when you compare it peer-to-peer throughout Michigan,” Theros said.

Auditors recommend municipal rainy day funds equal at least 20 percent of general funds.

The capital projects fund totals $2.1 million.

“We’re going to spend $900,000 in the 2012-13 year on capital projects, with another $800,000 committed to roads,” Theros said.

A mild winter last year helped reduce costs in the road fund.

“Last winter, we spent $82,000 less for snow and ice removal compared to the prior year,” Lamerato said.

The savings is plowed back into the road fund.

“That will help us for future maintenance,” Lamerato said. “But, you never know. We could have a bad winter this year.”

Water fund

Lamerato characterized the water and sewer fund as the “only not-so-bright spot.”

Low water consumption last year drained revenue.

Expenditures and related costs, such as buying new equipment, rose in the wake of two cases of sewage backups involving about 300 households in the inland sewer district.

“That fund worsened by about $700,000 over last year,” Lamerato said. “Liabilities are more than their assets for that fund.”

Total net assets are positive. When including capital assets, the fund has a $1,193,929 deficit in unrestricted net assets, according to Lamerato.

The fund owes the general fund and capital fund money borrowed for operations, he said.

“This year, we had a dry summer, so water consumption was up quite a bit,” Lamerato said. “Those funds will help repay the general fund and capital fund for those advances.”

The deficit elimination plan includes higher water rates, effective last July, and “the utilization of bond proceeds that will lower operating costs associated with the flooding,” according to Lamerato.

A state grant is paying some costs of upgrading the Kerby Road Pump Station to ward off more backups.

“We’ve been assured of at least a $90,000 grant, and close to $300,000, if we get a second one,” Lamerato said. “That money will help refund the water fund.”


Property taxes comprise more than 70 percent of the city’s revenue.

“The housing market has picked up quite a bit this past year,” Lamerato said.

“We estimate we’ll have, for the first time in years, no reduction in taxable values for the next year. We’re hoping for at least a stable — and maybe even a positive return.”


The Farms received two awards this year from the Government Finance Officers Association of the United States and Canada.

“For the 19th consecutive year, we received the Certificate of Achievement for Excellence in Financial Reporting for our audit report,” Lamerato said.

The city also won an award for Outstanding Achievement in Popular Annual Financial Reporting for its citizen Financial Summary.

“We’re one of only six cities in Michigan to receive both awards,” Theros said.

This year’s citizen’s summary is due for distribution to households with the January newsletter.