Loading...
HomeMy WebLinkAboutAgenda - 10-08-20; 1 - Alcohol Beverage and Control Board Voting Membership and Financial Allocation 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: October 8, 2020 1 SUBJECT: Alcohol Beverage and Control Board Voting Membership and Financial Statement Analysis DEPARTMENT: County Attorney and Finance ATTACHMENT(S): INFORMATION CONTACT: John Roberts, (919) 245-2318 Attachment 1: ABC Listing of Gary Donaldson, (919) 245-2453 Distributions Attachment 2: 2016 ABC Benchmarking Petition Attachment 3: 2017 ABC Funding Increase Petition Attachment 4: ABC Memorandum Response to updated Benchmarking Analyses PURPOSE: To provide: 1) An update on the BOCC commissioner being an ABC voting member 2) A financial analysis of the ABC Board revenue, profitability and funding capacity BACKGROUND: LEGAL —Voting Member Information The BOCC has expressed interest in having the commissioner appointee to the ABC Board be a voting member rather than a non-voting liaison. There are multiple options available to the BOCC if the BOCC is dissatisfied with some aspect of ABC operations or governance or if the BOCC simply believes changes should be made for other reasons. 1) Change the Chair. The BOCC has full authority to appoint the Chair. 2) Change or reduce salaries. Again full authority to do so rests with the BOCC. 3) Adopt standards of conduct for ABC board members. 4) Appoint commissioners or senior county employees to the ABC board. Both have been done by counties in North Carolina. This fourth option is further explored below. As authorized by statute the BOCC appoints both the members and the Chair of the ABC Board and members serve three-year terms. Due to the fact that terms are for three years it may be administratively best to appoint a commissioner who has at least three years left in office. However, this is not absolutely necessary because vacancies are filled by the BOCC to complete the term of the member who created the vacancy and should a commissioner leave 2 office another could be appointed to fill the ABC role for the duration of the original appointee's term. There may be some concern about the prohibition of dual office holding if a commissioner is appointed to the ABC board, however, so long as the appointment is ex officio the dual office holding prohibition is not a concern. Under North Carolina law ex officio appointees have the same rights and authority as any other appointee. Regarding the dual office non-issue North Carolina General Statute §128-1.2 reads: Ex officio service by county and city representatives and officials. Except when the resolution of appointment provides otherwise, whenever the governing body of a county or city appoints one of its own members or officials to another board or commission, the individual so appointed is considered to be serving on the other board or commission as a part of the individual's duties of office and shall not be considered to be serving in a separate office. As used in this section, the term "official" means (i) in the case of a county, the county manager, acting county manager, interim county manager, county attorney, finance officer, or clerk to the board and (ii) in the case of a city, the city manager, acting city manager, interim city manager, city attorney, finance officer, city clerk, or deputy clerk. As used in this section, the term "city"has the meaning provided in G.S. 160A-1. One important consideration in appointing a commissioner to the ABC board is the appointment would create occasional conflicts of interest for the appointed commissioner. That commissioner could not vote, and would have to be excused from voting, on ABC board members' salaries, the ABC board travel policy, or other items that could have a financial impact on the commissioner. There are two current ABC board members whose terms expire 6/30/21. According to the Orange County advisory board webpage Patrick Burns is serving the first of two potential terms and Jane Cousins is serving the second of two terms. Should the BOCC determine to appoint one, or more, of its own members to an ABC board position one of these two positions is most realistic for the appointment because outright removal of ABC members may only be for cause. Of the remaining members' terms one expires in 2022 and two expire in 2023. FINANCIAL- Revenue, Profitability and Funding Capacity Chair requested a financial statement analysis of the ABC Board to determine additional funding capacity in view of the ABC Board not approving the County's FY 2020-21 funding request for the Drug Treatment Court program. The Drug Treatment program was funded at $25,000 and not the requested $32,500. The Vice-Chair requested a listing of distributions to sub-recipients for FY 2019-20 (Attachment 1). The following are key financial and revenue metrics from the ABC FY 2019-20 Financial Audit. ABC Key Financial metrics include: • Net position increased by 9.27% • Total Sales increased 12.47% • Retail liquor sales increased 22.48% • Working capital increased 28.8% 3 Table 1 below indicates the historical year trend in ABC profits before distribution and distribution to sub-recipients. As noted on Table 1 below, the ABC distribution as a percent of profits has increased from 39% in FY 2014-15 to 65% in FY 2019-20. These increases resulted from BOCC Petitions and Benchmarking Analyses (Attachments 2 and 3). Table 1 Orange Alcoholic Beverage Control Board Historical Year Financial Trend FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Profit Before Distributions $1,780,957 $ 1,564,997 $ 1,303,231 $ 1,074,918 $ 1,458,916 $ 1,249,749 Profit as Percent of Income 9.91% 8.37% 9.77% 5.35% 6.83% 5.20% Statutory Distributions Law Enforcement $ 130,000 $ 135,000 $ 149,000 $ 149,300 $ 160,000 $ 147,000 Alcohol Education 156,550 144,094 209,150 212,500 244,000 165,233 Local 400,000 400,000 500,000 500,000 535,000 500,000 Total Distributions $ 686,550 679,094 858,150 861,800 939,000 812,233 Total Distribution as% of Profit 39% 43% 66% 80% 64% 65% Table 2 below is an updated Benchmarking Analysis as of June 30, 2019 comparing the Orange County ABC Board distribution to sub-recipients as a percent of profit which was 64%. The five counties of Alamance, Chatham, Durham, Wake and Mecklenburg have an average distribution as percent of profit of 70%. Based on the ABC financial and sales performance and the Table 2 comparison of other County ABC Board distributions, the County's Drug Treatment funding request of $32,500 for the Criminal Justice Resource Department does appear reasonable. A copy of this financial analysis has been provided to the ABC General Manager and Finance Director in order to allow ABC management to respond. Attachment 4 represents the ABC response. Table 2 Alcoholic Beverage Control Board-Benchmarking Analysis As of June 30,2019 Alamance Chatham Durham Wake Mecklenberg Orange Profit Before Distributions $1,490,023 $ 224,751 $5,094,539 $23,520,812 $27,934,328 $ 1,458,916 Profit as Percent of Income 9.7% 5.07% 12.64% 15.57% 15.65% 6.83% Statutory Distributions Law Enforcement $ 84,629 $ 5,028 $ 484,250 $ 1,147,161 $ 2,588,961 $ 160,000 Alcohol Education $ 74,050 $ 7,040 $ 267,123 $ 4,284,450 $ 4,903,700 $ 244,000 Local $ 955,176 $ 124,181 $2,555,555 $11,884,086 $13,291,176 $ 535,000 Total Distributions $1,113,855 $ 136,249 $3,306,928 $17,315,697 $20,783,837 $ 939,000 Total Distribution as % of Profit 75% 61% 65% 74% 74% 64% AVERAGE 70% FINANCIAL IMPACT: There is no financial impact associated with this abstract. SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goals are applicable to this agenda item: • GOAL: FOSTER A COMMUNITY CULTURE THAT REJECTS OPPRESSION AND INEQUITY 4 The fair treatment and meaningful involvement of all people regardless of race or color; religious or philosophical beliefs; sex, gender or sexual orientation; national origin or ethnic background; age; military service; disability; and familial, residential or economic status • GOAL: ENSURE ECONOMIC SELF-SUFFICIENCY The creation and preservation of infrastructure, policies, programs and funding necessary for residents to provide shelter, food, clothing and medical care for themselves and their dependents. ENVIRONMENTAL IMPACT: There is no environmental impact associated with this item. RECOMMENDATION(S): The Manager recommends the Board accept this as an information item for further discussion. 5 Schedule 10(a) ORANGE COUNTY ALCOHOLIC BEVERAGE CONTROL BOARD (a component unit of Orange County Government) SCHEDULE OF DISTRIBUTIONS OF PROFITS Year Ended June 30,2020 Date of Restrictions Distribution Recipient Amount Distribution on Use Law Enforcement Town of Hillsborough Police $ 2,500 7/25/2019 Enforcement Town of Hillsborough Police 2,500 10/21/2019 Enforcement Town of Hillsborough Police 2,500 1/23/2020 Enforcement Town of Hillsborough Police 2,500 5/11/2020 Enforcement Town of Carrboro Police 4,750 7/25/2019 Enforcement Town of Carrboro Police 4,750 10/21/2019 Enforcement Town of Carrboro Police 4,750 1/23/2020 Enforcement Town of Carrboro Police 4,750 5/11/2020 Enforcement Town of Chapel Hill Police 4,500 7/25/2019 Enforcement Town of Chapel Hill Police 4,500 10/21/2019 Enforcement Town of Chapel Hill Police 4,500 1/23/2020 Enforcement Town of Chapel Hill Police 4,500 5/11/2020 Enforcement Orange County Sheriff 25,000 9/19/2020 Enforcement Orange County Sheriff 25,000 12/19/2020 Enforcement Orange County Sheriff 25,000 3/19/2020 Enforcement Orange County Sheriff 25,000 6/5/2020 Enforcement Total Law Enforcement 147,000 Alcohol Education Carpe Diem 3,897 2/13/2020 Education Carpe Diem 4,236 5/11/2020 Education Carpe Diem 4,850 6/23/2020 Education Chapel Hill Downtown Partnership 1,667 7/25/2019 Education Chapel Hill Downtown Partnership 1,667 8/22/2019 Education Chapel Hill Downtown Partnership 1,667 10/4/2019 Education Chapel Hill Downtown Partnership 1,667 10/4/2019 Education Chapel Hill Downtown Partnership 1,667 11/7/2019 Education Chapel Hill Downtown Partnership 1,667 12/19/2019 Education Chapel Hill Downtown Partnership 1,667 1/6/2020 Education Chapel Hill Downtown Partnership 1,667 2/13/2020 Education Chapel Hill Downtown Partnership 1,667 4/16/2020 Education Chapel Hill Downtown Partnership 1,667 5/11/2020 Education Chapel Hill Downtown Partnership 1,667 6/3/2020 Education Chapel Hill Downtown Partnership 1,667 6/4/2020 Education Chapel Hill/Carrboro Schools 9,250 9/19/2019 Education Chapel Hill/Carrboro Schools 9,250 12/19/2019 Education Chapel Hill/Carrboro Schools 9,250 3/19/2020 Education El Centro Hispano 10,066 6/4/2020 Education El Centro Hispano 2,934 6/26/2020 Education El Futuro 1,750 8/2/2019 Education See auditor's report. -46- 6 Schedule 10(b) ORANGE COUNTY ALCOHOLIC BEVERAGE CONTROL BOARD (a component unit of Orange County Government) SCHEDULE OF DISTRIBUTIONS OF PROFITS Year Ended June 30,2020 Date of Restrictions Distribution Recipient Amount Distribution on Use Alcohol Education(cont'd) El Futuro $ 1,750 9/5/2019 Education El Futuro 1,750 10/4/2019 Education El Futuro 1,750 11/7/2019 Education El Futuro 1,750 12/9/2019 Education El Futuro 1,750 1/6/2020 Education El Futuro 1,750 2/13/2020 Education El Futuro 1,750 3/19/2020 Education El Futuro 1,750 5/11/2020 Education El Futuro 1,750 5/21/2020 Education El Futuro 3,500 6/23/2020 Education Pathways to Change 4,613 4/16/2020 Education Pathways to Change 4,388 6/23/2020 Education North Orange Partnership 2,119 12/19/2019 Education North Orange Partnership 2,393 2/21/2020 Education North Orange Partnership 3,418 5/11/2020 Education North Orange Partnership 6,065 6/23/2020 Education Orange County Drug Court 6,250 9/19/2019 Education Orange County Drug Court 6,250 12/19/2019 Education Orange County Drug Court 6,250 3/19/2020 Education Orange County Drug Court 6,250 6/5/2020 Education Orange County Schools 7,500 9/19/2019 Education Orange County Schools 7,500 12/19/2019 Education Orange County Schools 7,500 3/19/2020 Education Total Alcohol Education 165,233 Orange County Government Units Orange County General Fund 125,000 9/19/2019 None Orange County General Fund 125,000 12/19/2019 None Orange County General Fund 125,000 3/19/2020 None Orange County General Fund 125,000 6/5/2020 None Total Orange County Government Units 500,000 Total Distributions $ 812,233 See auditor's report. -47- 7 ORANGE COUNTY NORTH CAROLINA FINANCE and ADMINISTRATIVE SERVICES Gary Donaldson,CTP,Chief Financial Officer I gdonaldson@orangecountync.gov 1 200 S.Cameron Street,Hillsborough,NC 27278 1919.245.2453 Memorandum TO: Commissioner Mark Dorosin FROM: Gary Donaldson, Chief Financial Officer DATE: October 14,2016 RE: Petition Response on ABC Board Funding to the County At the September 6,2016 Board of County Commissioner meeting your petition request was for financial information pertaining to the Alcoholic Beverage Control(ABC)Board funding to the County's General Fund. This petition response is supported by two exhibits which illustrate a five year financial summary of the ABC Boards financial performance and ABC benchmarking with 15 other ABC Boards. Exhibit 1: Orange County ABC Board Five Year Statement of Revenues,Expenses and Changes in Net Position The last column on Exhibit 1 provides a five year average of revenues, expenses, and operating income performance; as noted Net Sales(Revenues)experienced an average annual growth rate of 5.9%while Operating Expenses experienced an average annual growth rate of 3.8%from fiscal years 2012 through 2016. Net income has experienced an average annual growth rate of 11.4%between fiscal years 2012 through 2016. The ABC strong financial performance has resulted in the net position increasing to$7,805,267 as of June 30,2016. The ABC Board has utilized 64%of their net position to cash finance the majority of their capital projects including construction of a new store#3 this past fiscal year. The cash on hand remaining after these capital investments is $2,450,028 as of June 30,2016. The ABC capital funding strategy indicated above was confirmed at a meeting with the ABC General Manager, ABC Finance Director,ABC Board Chair,myself, and Deputy County Manager Myren. Exhibit 2: Alcoholic Beverage Control Board Benchmarking among 16 Jurisdictions Exhibit 2 provides a comparison of the Orange County ABC distribution of income after accounting for net profits with 15 other jurisdictions. This benchmarking comparison is sourced to the fiscal year 2015 audited financial reports of the 16 benchmarked jurisdictions. As noted in Exhibit 2,the Orange County ABC Board distribution after profit to the County is 39%as compared to the benchmark average of 82%for the other 15 jurisdictions for fiscal year 2015. The Orange County ABC Distribution is as follows: Law Enforcement $130,000 Alcohol Education $156,550 Local $400,000 Total $686,550 Orange County Governments www.orangecountync.gov 1919.732.8181 8 In conclusion,the figure entitled Orange County Benchmark Average in Exhibit 2 is a normalized figure which represents the fiscal year 2015 profit before distribution multiplied by the other 15 jurisdictions average total distribution to their respective governments. All of the financial information in this petition is sourced to ABC audited financial reports. Please let me know if you need any additional information. Thank you cc: Orange County Board of County Commissioners Orange County Government I www.orangecountync.gov 1919.732.8181 9 ORANGE COUNTY NORTH CAROLINA FINANCE and ADMINISTRATIVE SERVICES Gary Donaldson,CTP,Chief Financial Officer I gdonaldson@orangecountync.gov 1 200 S.Cameron Street,Hillsborough,NC 27278 1919.245.2453 Memorandum TO: Chairman Mark Dorosin FROM: Gary Donaldson, Chief Financial Officer DATE: January 31, 2017 RE: Petition Response for Increased Alcohol Beverage Control Board Funding to the County Please find enclosed my response to the petition you made on November 15, 2016 regarding a process to obtain increased ABC funding. Your petition was precipitated by a benchmarking analysis that indicated that the County is receiving ABC funding well below 15 other peer counties(see attachment). The benchmark analysis indicated that the County receives only 39% of ABC after profit distribution as compared to the peer North Carolina county average of 82%. On December 7,2016, a follow-up meeting was held with the ABC General Manager and ABC Finance Director to determine a funding plan which would increase the County's share to the benchmark average of 82%. The County has requested additional funding of$150,000 for FY2017-18, and phased-in after profit distribution over the next four fiscal years of 50%, 60%, 70%,and 80%,respectively. The ABC General Manager will inform the ABC Board of this County funding request, and follow-up with the County on a decision no later than March-April 2017 to coincide with the FY 2017-18 Budget Development process. Below is a five year history of ABC distributions: 2012 2013 2014 2015 2016 Fiscal Year ABC Distributions Law Enforcement Expenses $120,000 $125,000 $155,000 $130,000 $135,000 Alcohol Education Expenses 105,000 130,000 145,000 156,550 144,094 Local 400,000 400,000 1 400,000 1 400,000 1 400,000 Total $ 625,000 $ 655,000 $700,000 $ 686,550 $ 679,094 Please let me know if you need any additional information. Thank you cc: Orange County Board of County Commissioners Orange County Governments www.orangecountync.gov 919.732.8181 10 COUNTY OF ORANGE ALCOHOLIC BEVERAGE CONTROL BOARD 601 VALLEY]FORGE RD HIILLSBOROUGH,NORTH CAROLINA 27278 919-732-3432 ]FAX: 919-732-5829 ocabc(c�r�,mindsprin PAT BURNS, Board Chair Board Members JANE COUSINS,Vice-Chair LIZ CARTER TONY DUBOIS, General Manager ALICE MAHOOD MIKE ZITO Gary Donaldson, CTP, Chief Financial Officer PO Box 8181 405 Meadowlands Drive Hillsborough, NC 27278 gdonaldson@orangecountync.gov Thank you for reaching out about the boards grant funding decision for the 2020/2021 fiscal year specifically regarding the drug court. The board of directors has the decision-making authority to fund grant agencies. All the grant decisions were made early in the COVID crisis when the board was faced with potential store closures and an uncertain revenue future. I believe you are inquiring about the possibility to revisit this gap of$7500 not previously granted by the board due to the greater than expected ABC revenues for 2020. A written request by the drug court to fund the remaining $7500 would be needed for the board to consider this at the next meeting. I have forwarded this information to our Board to prepare them for a discussion at our next scheduled meeting on October 20. Thank you, Tony DuBois Orange County ABC General Manager www.orangeabc.com