The URL can be used to link to this page

Home My WebLink AboutEconomic Advisory Board - Minutes - 04/19/2023Page | 1 04/19/23 – Minutes Economic Advisory Board REGULAR MEETING Wednesday, April 19, 2023 – 4:00 PM 300 LaPorte Avenue, Council Information Center 1. CALL TO ORDER: 4:04 PM 2. ROLL CALL a. Board Members Present – • John Parks (Vice Chair) • Mike Colwell • Thierry Dossou • Erin Gray • Mistene Nugent • Braulio Rojas • Richard Waal b. Board Members Absent – • Denny Coleman • Renee Walkup (Chair) c. Staff Members Present – • Ashley Kailburn, Senior Specialist, Economic Health • Katie Geiger, Senior Specialist, Economic Health • Wendy Serour, Executive Assistant, Economic Health • Ginny Sawyer, Senior Project Manager, City Manager’s Office d. Guest(s) – • NA 3. AGENDA REVIEW 4. APPROVAL OF MINUTES a. Board approved February Minutes (no meeting in March) 5. UNFINISHED BUSINESS a. No unfinished business to discuss. Note the last memo the team submitted to Council was the Land Redevelopment Code – does anyone know when that happened? Council pulled down in January or February. 6. NEW BUSINESS a. Sustainable Funding Update – Ginny Sawyer • Recently we went to the Council Finance Committee for recommendations and updates so this presentation has been updated accordingly . • Started this conversation back in 2021 knowing there as asset deficits as well as some gaps in order to achieve the funding plan . Page | 2 04/19/23 – Minutes • One thing that happened during that time was that voters voted to update the voting time period so the City no longer has 3 major areas that need to be addressed . • Parks – this is an area where there’s a deficit and is an area where we need to maintain and update. Our parks are built through Capital Expansion Fees – this is dedicated funding to build parks in the city however we don’t have dedicated funding for ongoing care of the parks and so the Parks Dept. must compete in the Budget for Outcomes (BFO) process every 2 years. • Other major areas that compete – Sustainability Services, Police and as mentioned, Parks and Recreation, • They reviewed Transit, Climate and Housing (part of City’s “Big Moves”) • Trying to scale the entire conversation in regards to funding – looking first at capital for the larger projects and then over time, funding (grants) for ongoing maintenance projects of those transit projects. • Accelerated Housing Strategic Plan Implementation – expand the City’s competitive funding process to better support projects seeking to 1) acquire land 2) develop new affordable housing 3) preserve existing affordable housing and 4) support residents . • Big Move 13 – electric cars and fleets. - scale and accelerate building performance, infrastructure. • Bug Move 6 – Efficient and emission free buildings = $2.65 million • Q (John) – Question about the last slide – explain the energy rating for residents – is that a kW score for your home? • A (Ginny) – yes, taking into account the SF of a home and the amount of energy is used, there would be something used similar to what you find with Energy Score appliances. • Q (Mike) – May not be a fair comparison depending on who lives in the home. • A (Ginny) – yes, honestly we would need to rely on our Energy Services team to provide more details re. how this future scoring would work . • Big Move 4 – Active Transportation (getting people out of vehicles) = $1.5 M annually • Big Move 2 & 10 Zero Waste = $2M annually • Overall revenue of the City (not including Utilities) – more than 50% of our revenue is from sales and use tax - Property taxes is 11.30% and Poudre Fire Authority is funded under this tax • Q (Mistene) – how does our revenue chart (pie) compare to other cities? A (Ginny) – regarding the pie I don’t know but I do have a slide coming with some additional information • Typically in Colorado you will see city’s operating on sales tax and county running on property taxes however these lines are starting to blur as costs increase - Our sales tax is 3.85%; base rate is 2.85% and grocery sales is 2.25% (groceries is a fixed rate) - We have 3 dedicated ¼ cent taxes including 1) street maintenance 2) capital improvement (10 year renewal) and 3) open space (20-25 year renewal) • Keep Fort Collins Great fund (KFCG) – general renewable tax ¼ cent • Q (Mistene) – who oversees the KFCG fund? City Council? • A (Ginny) – that money goes into our general fund and so that is part of our budgeting process. KFCG dollars still go into the general fund it’s just not specified what the funds are going to (not as prescriptive) • Total tax rates – comparison alongside other communities the main difference in the amount of taxes collected is bus transit funds – ours comes out of our general fund while other cities collect an additional tax to support public transit. • Sales and Use Tax Rates (1968 -2035) – highlighting how we’ve been collecting taxes since 1968 and the changes that have been made . Most likely we’ll be backing up the tax renewals more often than in the past moving forward . • Colorado City Mill Levy Comparison demonstrates how the Mill Levy’s work including Poudre Fire Authority, library and Poudre School District – currently Larimer County is Page | 3 04/19/23 – Minutes talking about the possibility of including a childcare tax but nothing is decided at this point. • When we started the conversation of funding – here is the big list that staff first reviewed. - Large emitter fees - Excise tax - Business occupation tax - User fees - Carbon tax, etc. • After the end of the day – city staff narrowed down: - Franchise fee – right now Xcel pays a franchise fee - Substance fee – alcohol, marijuana and nicotine - Utility occupation tax – another way to attempt to decrease natural gas use – if we go to this fee, this will impact households about $32/annually - Property tax – estimated impact by household or commercial - Sales tax - Large emitter tax • Q (Mike) – does residential include apartments? Or are in apartment in commercial? The reason I ask is this tax could impact renters. • Q (Ginny) – does anyone own an apartment or a duplex? • A (Wendy) – yes, I believe that a multifamily is commercial (as well as residential tax) • Q (Mike) – I know this will drive rent increases. This is an area that needs to be cleaned up because if this goes to an election, I think a lot of people who rent properties are going to be telling their tenants that this tax increase will impact their rent. • Comment (Mistene) – I don’t think we can overlook commercial property tax because commercial property taxes can impact small businesses. • Comment (Wendy) – I could be wrong but HOAs however they are the commercial umbrella of a multifamily complex and each unit pays residential taxes. May need clarification if there’s commercial taxes applied to multifamily complexes. • Comment (Mike) – To Mistene’s point commercial tax rates are already high, we need to make sure this is addressed. • Comment (Ginny) – I’m curious to know where the rates are less? • Comment (Mike) – To your point, somebody needs to look at if we’re going to look at commercial taxes, we need to understand who will be impacted and make sure we know the complexities. • Q (Erin) – I’m also curious, how these rose to the top? Like what is the equity and climate lens these are looked through? So if you are taxing natural gas, are you also incentivizing or providing like renewable – how are you taking advantage of federal tax credits – how are you compensating? • A (Ginny) – Right now the compensation has been only in the realm of rebating low- income qualifiers. And then if we go back to looking at some of those efforts on the climate slides – like we need the money to pay for some of these pieces. Most of these rose to the top base on feedback from Council Finance and some other work not wanting to tax other services and not wanting to charge a business occupation tax. Council Finance is driving the large emitter tax – they’re taking an approach to look for additional ways to reduce carbon emissions through additional tax. And another thing to consider is if we’re successful, the revenue declines – it’s a declining revenue source. • Comment (Erin) – I do think businesses are starting to line up with net zero impacts. Businesses are starting to recognize the value of this – if we don’t start incentivizing good behaviors, what’s the long-term impact? We should be recognizing businesses for positive behaviors vs. penalizing them. • Comment (Mike) – Where’s the incentive to switch to electric from gas? I think that’s what you’re asking – if you’re going to take this out there, I think there has to be Page | 4 04/19/23 – Minutes incentives that match up – to the apartment buildings, mostly to the commercial businesses have to use a lot of the energy. • Comment (Ginny) – Actually the bulk of the natural gas use in town is residential. • Comment (Mike) – either way, so why such a high impact on commercial properties. • Comment (Ginny) – You’re probably looking at property tax. I will share from a staff’s perspective in 2021 – we looked at what are ways we can add revenue to meet these needs vs. how can we reduce carbon emission s. • Comment (Braulio) – I caution there are many elements for this topic to consider that we don’t have and in general how elastic are things – if you put more money on the gas bill for residential, you are probably taking away money from the grocery bill. But I also am wondering when we tax gas… • Comment (Ginny) – Gas is only at a state level and again the use of gas has been declining. • Comment (Braulio) – Okay in my experience gas is more elastic but then again there are many countries that use the gas to build revenue… • Comment (Ginny) – Let me keep going but I really appreciate this discussion. The large emitter tax, Council Finance wants us to bring this, it only applies to 2 businesses in town. • Comment (Erin) – What are the 2 businesses? • Comment (Ginny) – Broadcom and AB (Anheuser Busch) • (Ginny) – Here’s what we’re looking for when it comes to alcohol, the tax only applies to off premise like a liquor story, not a glass of wine, etc. For Marijuana, we’re really the only community that doesn’t have an additional tax on marijuana right now although marijuana is still taxed at about 19% when you add everything up. For Tobacco, which we’re now calling nicotine, is also a hard one to guess just to get estimates on it because recently, since last June, we opted out of the share back so we’re only just now taxing it with our local tax, that used to be done differently. • So we’ve done just a couple of scenarios, I’m going to run through these quickly. If we looked at a ¼ cent, 3 Mill Property Tax, and 3% on those substances, we’re estimating $25M in revenue, increasing our tax to 4.1% and impacting residents with a $156 increase. • Here we’ve got 5 Mills Property Tax, 5% Tax on alcohol, 5% Tax on retail marijuana, 5% tax on tobacco → sales tax of 3.85% and $29M . About $107 impact on residents. • And then this next slide we’ve added in the franchise fee, the tax on substances, property tax and 5 Mills – it’s interesting when we do these , so the franchise fee would not have to go to the voters, so if we did this that would 2 tax measures on the ballot this year. Property tax we wouldn’t see until 2025 because that’s collected in a rears so we wouldn’t see the $29M+ because that wouldn’t be collected in 2024. • So here’s where we are – we’re very pushed, normally when the City runs a tax measure we are out talking to the public for at least a year. Obviously that’s not going to happen if we do these. The ballot language has to be set by August so once that’s complete we cannot be out talking about it (City staff). We can respond to questions and that’s it. • What we’re thinking and trying to propose is that we make Parks and Recreation a priority since those are existing assets so whether that’s property tax or the substance taxes this is something we run in 2023. In 2024 we run our renewals, we don’t really want to run something else at the same time, and then in 2025-2026 potentially looking at the climate portfolio, I don’t know how Council is going to go with this topic as it’s a priority but I don’t know how much more we will put on for this year. • For the long-term look at possible tax renewals – for 2025 we’ll have the renewal of KFCG and Open Space – these will be funded in 2026. And really we’re on a timeframe, every 5 years we’re going to the voters asking these questions. Hence, we really want to be transparent and good stewards in bringing information forward. • So that’s the basics of it – I have some backup slides in here if needed. Page | 5 04/19/23 – Minutes • Comment (Mistene) – Has Council looked at what they’re actually spending money on? • Comment (Ginny) – Yeah, I wish I had those slides. At the last Council Finance meeting we did try to go through and we looked at how much the budget has increased how much the total budget has increased over 20 years and it’s a lot. But we also did that in comparison to population size, to inflation and everything else so we are pretty in line but let me see if I can find that slide and I can bring it up. • Comment (Mistene) – I still would be interested in seeing that and from the view of the taxpayers, what are we spending money on. • Comment (Mike) – Yes it’s quite a figure and then regarding feedback, the first question is not the renewals as the emphasis, the first question i s that businesses would ask is where did you gain in sales? Which part of this is coming from efficiencies, savings, whatever. I think it’s a question that if the City Council wants to take to the voters, they better be ready to say we at least went and found this much, instead of saying we need this much, it’s really critical to show what monies we found . It’s a lot of money. • Comment (Richard) – And something that’s tangential about this is [no additional info, recording did not capture what Richard shared]. Are there any ROIs that help? [no additional info, recording did not capture what Richard shared]. • Comment (Ginny) – Not specific to your feedback, which I appreciate , but as an idea of if we do a climate umbrella tax, that it just goes until 2050 which is when we’re supposed to meet the goal. Ya know and if we start that in 2025 it would take us 25 years to get there but that doesn’t answer your question of ROI and how much do we need to get there. • Comment (Richard) – I just like to see if we’re investing in these technologies, why do you do it? [no additional info, recording didn’t capture what Richard shared]. • Comment (Mike) – Yes I think that’s a good point how do you motivate them to say yes to your question. Right? It’s not yeah voters are going to take the time to understand it to the level you understand it, right? They’re not going to do it but I think if we say we’re going to make a $10M investment as a City, right now, let’s take a fleet, and today the average cost to maintain is, I’m doing a simple right, it’s $0.31/mile, with electrification over 25 years, that will go down to $0.06. And there is some evidence that in some areas, not all areas but in some areas they do get less expensive to maintain , now it’s not true with the heavy vehicles, but that’s not the majority though. I just think you’re going to want to say things like this – yeah, it’s a big investment but the good news is in the long term we won’t be facing the same ongoing costs and we can switch to a different platform, whatever you want to call it. • Comment (Erin) – Yeah, I agree and I think that’s what’s frequently missing and that’s why I raise the question as a voter I want to know why did you select the large emitter tax, which has been shown to have mild impacts over our carbon tax which can be very controversial but I think people don’t know enough information about how it would be implemented and would there be a graduated tax rate , you know with people with higher emitting vehicles or people of a higher income would be taxed more vs. the lower income people. I also think that a lot needs to be brought up with discussing these is how well people of different demographics be impacted, what would be the distribution and cost benefits of from these taxes among the population and then make the case. And to the point of the ROI, that’s a great point, that can also be described qualitatively so what are the risks and opportunities of doing these taxes now for the population. So, people really want to stay in Fort Collins, and so I think they do have that long-term view, right? When they think about it, that makes those costs and benefits and risks and opportunities over 10-20 years to 2050 so I think that would be really helpful to get people on board. • Comment (Ginny) – I will say that this Council has, they have definitely had an equity Page | 6 04/19/23 – Minutes lens and when you ask why the majority of the list got eliminated, it’s because Council felt they were regressive, and any tax is going to be regressive because it’s going to be a higher percentage of a lower income paying. • Comment (Braulio) – On the same line, I think the benefit or the direction is that financially, financial benefit and environmental, and I think a lot of the benefit from those investments are more environmental like the people not feel them in their pockets necessarily but definitely a marketing strategy should be strong enough to convince people that it makes sense to pay more taxes because we are going to create a better Fort Collins for one… • Comment (Ginny) – This Council feels strongly that it is a climate emergency, and they are approaching it that way. • Comment (Braulio) – Yes but my point of remarking people think about the climate and people think about their pocket. So it’s reaching the correct lever because if sometimes people feel like their pocket is being invaded , they react and the last 2 years Americans are paying probably over 10 or 15% on cost of living so I don’t know if this is the sunshine to knock on the door for many people but in general, overall I agree with we are doing and I think this presentation was good and we’re going in the right direction I just want to make sure we don’t have any bumps. • Comment (Richard) – I would agree I would say something very similar , I would say this is the right stuff to do, there’s no argument there, I would just make sure they would say yes and that’s the question. There are pieces and parts and certain things in there that I don’t agree with and that people can argue with, but how do you get a yes overall? I don’t think it’s that we think the Council cares or we get that Council cares, we want to make sure it translates with people. We saw that with the land use code, it just didn’t translate and a lot of people didn’t bother to read what was going on and got all worked up and said no to it, but they didn’t understand what they said no to. That’s what my fear is that you’re going to have exactly that again. • Comment (Mistene) – so with all due respect I’m not sure we do know it’s the right thing to do is to ask for more funding… • Comment (Richard) – I was thinking the climate issues, not how you fund it, I was speaking of the goal. I disagree with you with the funding, as a businessperson my whole life there’s a lot of stuff that will cause are real problem. • Comment (Mistene) – yeah, I think if we can’t show that we’ve made an effort to balance the budgets, we’d get passed up so if we could actually see that information that would be fabulous if we can see it and I’m sure it’s public information. • Comment (Ginny) – Well budget, yes, it’s all out there for sure. • Comment (Richard) – to see it would be helpful… • Comment (Ginny) – That would be a great presentation our CFO or Budget Director are well versed on this topic and the timing is good with the midyear appropriation cycle. • Comment (Richard and Mistene) – agreed this would be a good approach for this group as well as a presentation for Council . That’s my question, has Council really looked at this and are there areas that aren’t understood. • Comment (Ginny) – I’d like to think that Council understands the budgets that they approve. There are multiple hearings to help them understand and our budgeting for outcomes addresses if we’re going to add something, we also need to look at what’s being taken away. So I think they do know and they may not be convinced. • Comment (John) – I was just thinking I recognize the interest in the budget, to Braulio’s point, the interest in return on investment, the literature might want to focus on highlighting this to breakdown the metrics something like “this tax will have these impacts and will save this many metric tons of CO2 which helps us meet our goals”. Having the financial ROI and as well as the carbon goals will help people make sense of it. • Comment (Richard) – The voters will want to know how was this approached and it’s Page | 7 04/19/23 – Minutes important to let them know about the steps. • Comment (Mike) – Is that saying more if the taxes are sunsetting… • Comment (Richard) – The voters aren’t going to say “well I want those taxes to end after 10 years”. A lot of voters don’t have room in their current budgets and we shouldn’t assume most voters do . Either way they will be impacted similarly to the current cost of eggs, they used to be $2.00 and now they’re $8.00 – it can cause a lot of emotion with the voters and gets people worked up. This is where I feel we’re in danger of saying we want all of this money to do these great things and people are going to say no. I really think it’s a problem and if you don’t market this right, • Comment (Richard) – When you do your budget cycles, do you look at your budgets to say well, we overspent here and we underspent here. • A (Ginny) – So we always have to do a budget every 2 years. Every program and service has to write their program offer that says here’s how much we need, here’s how we’re going to get there and here’s our performance metrics . If the budget increases there also has to be a rationale to say this budget has increased by this much, whether it’s inflation, whether we added a program coordinator…and this budget is tracked every year. So say something isn’t working, staff needs to justify how they will shift the funding and how the new approach will be a success. You can also move an offer entirely which rarely happens but sometimes does. We also look at and track more frequently any underspent. If they haven’t spent their budget we want to know why and what is their plan. • Comment (Richard) – Sure if you don’t need to spend, you shouldn’t spend it. I understand I was just wondering how that works. • A (Ginny) – It’s a very heavy process and sometimes not a favorite. We did it annually through Covid which was really hard, and now we’re back to a 2-year process which is great. But it is true, I work in the City Manager’s office and we have 13 people with 3 budget offers – 1 that addresses all of Council’s needs and what they need, we have 1 that addresses the administrative piece and we have 1 that is to support performance metrics, engagement and one other thing. So throughout those as we review them it can be like hey look, we’re not going to do employee engagement this year , scratch your contract for an example. We can always reevaluate t hings. • Comment (Erin) – I’m curious, this budget gap seems small to me considering infrastructure – I recently got a notice from my kid’s school, there’s lead in the pipes – I think a lot of infrastructure, we’re seeing across the nation, and couple that with climate change and things for adaptation, how do we communicate that we need more financing. Of course we’ll need additional funding to support these needs – from a communications perspective, I’m curious what the conversation is with Council or how the City is thinking about these longer term issues. Or I imagine even if we address part of this gap and it looks like it went up to $29 and not the full $46, what’s next? • Comment (Braulio) – To your point, without realizing it, these hard times that we are focused to, we are going to see so many citizens react in different ways but general good/bad, it’s always good before asking to say, I need more money because…to be clear on what we’re asking for. I’ve been studying the City for a long time, and I know they are really responsible and efficient in terms of the budget but the general public doesn’t necessarily know this. • Comment (Ginny) – To show the efficiencies and then our main goal is maintaining community trust. The main thing is the level of service we provide. How do we provide these services in the most efficient ways. • Comment (Braulio) – Something good and bad at the same time is that this community has become very big and really diverse . • Comment (Mike) – So to follow up this information will go to Council in 2 weeks? • Comment (Ginny) – Yes, we’ll go to Council in 2 weeks (May 25) and hopefully one of our questions will be do we want to defer anything in November. Then we need to go back in July and then we have only until August to talk about it in the community due to Page | 8 04/19/23 – Minutes rules around the election. So this is where we ask you to spread the word! From this group, if there are things that stand out to you, as recommendations or there were a lot of questions here – a memo from this board with a summary of items would be beneficial. • Comment (Braulio) – I think moving forward I think it good to go this November and that would be our main recommendation and in addition to that we can probably summarize, having the right balance, revenue . Would we be able to see the details? • Comment (Ginny) – I will share the entire Council packet with this group so you can see the details being shared with Council. • Comment (John) – Yes we can draft a memo together. • Comment (Braulio) – I want to move to have this group create a memo for City Council… • Comment (Richard) – My first reaction is not to make a motion to create a memo at this point – I’m not ready to make a decision tonight. I agree though to move to adopt a memo via email, because we aren’t going to be able to do it tonight. Then we can pull together our recommendations for Council – when do we need those by? • Comment (Ginny) – The 25th is when we go and that’s just a work session – even if you went over the materials, watch the meeting on the 25 th and then put something together. Thank you all for your time! • Comment (Braulio) – Okay. • Comment (John) – Suggested to break for dinner and then come back to discuss the memo. ◼ [recording has feedback from meeting in Council Chambers, can’t interpret what’s being said ]. • Comment (John) – The idea of having a memo about the tax proposal – I’m curious when this would happen. The decision isn’t until July wondering how this group would like to approach → timing and the message. • Comment (Mike) – There are a number of ways to approach it, the question is do we want to say this is something we want to commit to? • Comment (Braulio) – I’m okay waiting for next week or next month to provide a follow up memo [recording has feedback from meeting in Council Chambers, very hard to interpret what’s being said]. • Comment (Erin) – I think what seems really tangible is to say, this is going to be a funding gap and here’s our recommendations however I’m curious to understand our role and what we can and can’t recommend? Communications, selection of taxes, design of taxes, etc.? What • Comment (Mistene) – I think we need an understanding, are we past the answer no? We’re unsure if they’ve said yes or no. • Comment (Mike) – Are we 6-months too late? Has the decision already been made? • Comment (Mike) – That’s the hard part is oh by the way we’re presenting this on Tuesday. • Comment (Erin) – Do we ever get “we’re thinking about this” vs. the intervention part, too late to get input. • Comment (Mistene) – if we understood our charter more, that would be helpful. • Comment (Mike) – I trying to understand my role • Comment (John) – It’s to give feedback and timely feedback but do you know when that happens? This is something we should put on a coming agenda. • Comment (Mistene) – [recording has feedback from meeting in Council Chambers, very hard to interpret what’s being said]. Talking about reimaging about the boards – maybe have SeonAh come in and share this summary. My understanding is that as a board, we are…. Page | 9 04/19/23 – Minutes • Comment (John) – Part of it has to do with the level of… • [recording has feedback from meeting in Council Chambers, can’t interpret what’s being said ]. • Group asked to get more information about the history of this board and how they serve. Ashley will be following up with Jillian and arrange that discussion for May’s meeting. • Do we provide generic feedback? • Group discussed being more proactive – themselves and then as a group. If we can communicate with Rene that would be helpful. • Everyone on the board is happy to serve but wanting to be sure their time is an actual contribution that’s effective. • Comment (John) – (Group reviewing previous meeting notes) This conversation will continue next month. Second piece – the group would like to learn how to be more effective as a board. And 3rd in general we will have some board elections coming up to determine the Chair and Co-Chair and this is something to think about. Would be great to have new voices on the board and figure out how we can determine how to be more strategic. • Comment (Mike) – local minimum wage we don’t have any input on. • Comment (Erin/Mike) – What’s relevant City Council notes? When is the right time to engage with Council so we can be effective? If they can’t make a decision until July, that only leaves one more of engagement for City staff. Do they have to make a decision by July? Can they push it back further? Would probably push it out until the following year. • Comment (John) – sounds like the main issue we’d like to focus on is the City budget . Economic Strategic Plan – would like to review at the May meeting. Is there a decision point coming up? Yes, they will discuss how we align with state regulations and the triple bottom line. • Comment (Richard) – Can we make a recommendation for the next meeting? Can we not have a presentation and more of a discussion? • Follow-up: Ashley will work with Rene for a planning meeting – include John. • [recording has feedback from meeting in Council Chambers, can’t interpret what’s being said]. 7. STAFF REPORTS a. Ashley Kailburn, Senior Specialist in Economic Sustainability introduced herself. She started with the Economic Health department about a month ago and will be covering for Jillian as staff liaison in March. • John asked who all will be missing March to see if they need to cancel but it sounds like they will have quorum. 8. OTHER BUSINESS 9. ADJOURNMENT a. (5:59 pm) - minutes approved by a vote of the Board on XX/XX/XX