HomeMy WebLinkAboutEconomic Advisory Commission - Minutes - 09/21/2016MINUTES
CITY OF FORT COLLINS
ECONOMIC ADVISORY COMMISSION
Date: Wednesday, September 21, 2016
Location: CIC Room, City Hall, 300 Laporte Ave.
Time: 11:00am–1:00pm
For Reference
Wade Troxell, Mayor & Council Liaison
Josh Birks, Staff Liaison 221-6324
Dianne Tjalkens, Minutes 221-6734
Commission Members Present Commission Members Absent
Sam Solt, Chair Ann Hutchison
Glen Colton Ted Settle
Kristin Owens
Linda Stanley
Denny Otsuga
Alan Curtis
Craig Mueller
Staff Present Staff Absent
Dianne Tjalkens, Admin/Board Support
Josh Birks, Economic Health Director
Sue Beck-Ferkiss, Social Sustainability Specialist
Tiana Smith, Revenue & Project Manager
Noelle Currell, Senior Financial Analyst
Matt Baker, Street Oversizing Program Manager
Dean Klinger, Manager of Capital Projects/City Engineering
Guests
Corey Preston, attorney
Meeting called to order at 11:09am
Public Comment—None
Review and Approval of Minutes:
August minutes approved as presented.
Agenda Review—No changes.
Commission Member/Staff Updates—
1. Linda: 1. Visited a number of reservations and other areas in north west. Contrast with Fort Collins:
cheap housing, no jobs, community, tranquility. 2. Saw a “Hire Locally” campaign. Should start this
in Fort Collins.
2. Alan: 1. Fort Collins Innovate Challenge update—have selected pilot (EV). Process went well.
Innovate Challenge is to solve problems in technology. 2. Innosphere won grant with SBA and
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National Institute of Health to support small business innovation grants. 3. Launched first venture
capital fund. Will allow Innosphere to fund own start-up companies.
3. Sam: Recently drove back from Mexico—many things in Mexico that are calm and peaceful. Other
observations: State of Sonora is doing infrastructure work right now (roads, deep water port, natural
gas power, new Ford plant). Thinking ahead on how building out. Contrast to I-25, which is choked
from Longmont to Wyoming. NoCo is developing beyond ability to update infrastructure.
4. Glen: Two economies throughout the country—some hot/expensive economies, some no- to
negative-growth. Why do we have economic policies for the rich to get richer? Other communities
are struggling. Why do we want to give incentives to come here? Do we want to attract more
companies? How crowded, big and expensive do we want to be?
5. Denny: Credit investor event had 30 people who came to learn how to be angel investors. Having
follow-up pitch event featuring Fort Collins companies October 5 at Galvanize. Event is open to the
public. Colorado Capital Conference November 15-16, regional event.
AGENDA ITEM 1—Land Bank Program Updates, Sue Beck-Ferkiss
Affordable Housing is defined as subsidized housing for people at 80% or lower AMI. Want people to
spend 1/3 or less of income on housing. City has role of policy setting, funding, and convening, but don’t
build. Land Bank is only long term affordable housing incentive Fort Collins has. Housing affordability is
important to future workforce, stabilizing housing for children, for financial gain/wealth building,
increasing disposable income, etc. Housing costs have increased more than income. Last year poverty rate
decreased, but had rate gain in rent of 9%, while income increased only 2%. Rents accelerating at twice
rate of income. Direct and indirect job creation: family, senior and market rate housing have similar
impacts on ongoing job creation. At 60% AMI, can afford $1190 in rent, but cannot find anything to buy
in Fort Collins. Land Bank has 50 acres in 5 parcels (4-17 acres per property). When put parcels in
program, program restrictions bring value down; never intend to sell for full market value. Program
started in 2001; 2002-2006 purchased properties; in 2015 decided to activate. Currently developing
Horsetooth property with Fort Collins Housing Authority. Original program analysis thought program
would cost money, but has cash flowed due to rentals. Thought would acquire more acreage annually, but
have not since 2006. Also assumed would use credit to buy land, but have only used general fund dollars.
Many changes in development landscape since program started including unanticipated stressors. Current
ordinance says land must be used for 100% residential affordable, but best practices now are mixed use,
mixed income. Current ordinance also does not align with tax credit program that funds affordable
housing developments. Other ordinance criteria: affordable in perpetuity, sale price not to exceed 90% of
market value, solely residential, rental at 50% AMI and below, ownership at 60% AMI and below. 60%
ownership is challenging for owner without supports. Currently cannot sell land for any other reason than
provision of affordable housing. Ex: Have large parcel near other affordable housing. Is 100% residential
affordable appropriate for that whole property? Have charrette later this week to discuss this property.
Sale considerations include verifiable need for land, value of property, remediation of impediments due to
surrounding development. Some felt we should hold land until no more parcels were available, but also
intended to be evergreen program. With Horsetooth property learned the need to tweak for AMI and that
RFP competitive method is the best way to go. Convening focus groups with industry professionals and
consumers of affordable housing to discuss potential changes to the ordinance, such as allowing more
flexibility, tying to Affordable Housing Strategic Plan, using RFP to deploy, and looking for ways to add
density. All parcels today are in low density mixed use zones. With density bonus, getting 96 units on
Horsetooth parcel. Partner feels that is underutilizing the land, but neighbors felt the project too dense.
Could add more density and still have a lot of green features. Low Income Housing Tax Credit program
(funding mechanism) has many sustainable features built into it, so housing will be efficient/sustainable.
Next steps: Work Session October 25, draft ordinance changes, conduct public outreach, consider
acquiring redevelop properties.
Discussion/Q & A:
• Economic benefits of affordable housing? Tax revenue is compared to what? If we do something else
on that land, might get more tax revenue. Some poor people get more benefits than they pay in taxes.
o Affordable housing is great TBL example. Without affordable housing for low wage earners
to live on our community, we will have gaps in workforce and won’t be able to accommodate
all needs of community.
o Agree. More benefits in social and environmental.
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o Any time build have some immediate economic impacts.
• How do you do mixed income without losing units?
o May not be maximizing number of units, but many other factors to consider. RFP driven—
site specific to maximize use of the land.
• Helpful to Council and boards to have basic slide at beginning that describes the program: what it is,
money, what happens when buy and sell property, etc.
o Recommending modifications to constraints, but not understanding constraints soon enough
in presentation.
o Council that passed land bank ordinance was very forward thinking. Could have been
deployed sooner. Won’t get affordable housing unless have programs like this. Supply and
demand. Perpetuity is key. 50% piece—don’t totally understand what changes would be—
should go both lower and higher at the same time, but not higher for all units. 50% is pretty
good number, but need many lower than this too. Be careful about what changing. Mixed use
is good, but what are we giving up?
o Agree. Want to see quantifiable in why want certain changes. What will be the outcomes of
the changes? Include scenarios.
• Quantify how many people in Fort Collins meet the income levels. From RFP perspective, wanting to
be more developer friendly is great. Responding to the market.
o Market can’t drive who will be living there.
• Intervening recession impacted values of the properties.
o Was land bought during that time?
No. Missed opportunity, but didn’t have funds available.
• Tech team has been discussing mixed income and mixed use, would increase land value and allow
program to acquire more property. Giving up some units today, but buying opportunity for more units
down the road. Current distribution of parcels—have gaps where could use parcels such as Mtn. Vista
and along Max.
o Ordinance says money goes back into program.
o But many pieces need to be in place to buy more land. Better to have units now?
o Also discussed idea of land swap, but don’t have purview to do that now. Want to allow best
use for affordable housing or the parcels.
• Keeping up with population growth?
o No. AHSP has goal to incrementally get to 10% of inventory as affordable, which would still
be below percentage of population that qualifies. Losing de-facto affordable housing in
market, but right now there is some. Not trying to house everyone in affordable housing.
• Where did money come from to buy properties?
o General fund dollars.
o Willing to put in more? Or only getting funds from sales?
Put BFO offers in for acquisition and water rights, but both are currently under the
line.
• Impact fees? Charge developers for other things.
o Intriguing idea. Would have to do a nexus study. Did one in 1992 and did not move forward.
Denver just implemented an impact fee, and Boulder has one in the works. Controversial, not
popular with developers, adds cost to housing, but an idea that needs more looking at.
o Real estate transfer tax, etc.
Looked at these in Housing Affordability Policy Study.
Got dedicated sales tax with BOB2 revenue: $4M over 10 years. Looked at various
revenue sources in HAPS. If identified a parcel might better compete for funds.
• Look at transfer of development units—trade densities. If sell to a developer that does mixed use,
then have to buy affordable housing in another development somewhere else. Ensure that getting
same number of units.
o Some programs allow cash in lieu or offsite units. City Plan update can look at density of
parcels.
• Overall, generally good to have flexibility to act more like a business. If tasked to be evergreen must
be able to do this. Use numbers to prove the point. City entities are prohibited from speculating.
Things like not selling for more than 90% of market value seems crazy from business perspective.
Why are we artificially lowering the price?
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o Differential in price is part of the housing subsidy.
o RFP process—they will know what restrictions are.
o Program needs to work for developers and development.
AGENDA ITEM 3—Capital Expansion Fee Study, Mike Beckstead
Requires new development to pay a proportionate share of infrastructure costs. Fees include
neighborhood parks, community parks, fire, police, general government facilities. Use consumer price
index and construction cost index to update fees. But not capturing what is going on in the market—
hearing 30% increase in construction costs. Fees are lagging behind true cost of current assets—won’t
have revenue to build what we want to build. Incremental expansion is methodology using—a buy-in
approach—fees maintain existing level of service. In peer cities standard methodology is incremental
expansion. Have updated for land value. Also evaluating two options for asset values: estimated
construction costs or insured building values. If assets don’t change and population goes up, fees go
down. If investing in assets greater than population growth, then fees go up. Using insured values, fees
would go down in some areas and up in others. Ex: Community parks fee would go up with new Twin
Silos park asset. Using cost of construction values, get different changes—this method uses replacement
cost. There is some judgment and flexibility that is in play as well. Proposing a blended approach.
Sensitive to community’s appetite for fee increases. Compared to peer cities, we are lowest on fees for
residential, in ballpark for office-retail and multifamily, and light industrial. Total fees have been going
up (based on price), but as percentage of median home price staying the same.
Discussion/Q & A:
• CCI (construction cost index) and DBG CPI (Denver-Boulder-Greeley consumer pricing index) are
very different. How do you calculate?
o Use an average.
• How often are fees adjusted?
o Annual changes, based on prior year.
o Lagging. Could use 3-year rolling or other method to anticipate future changes. Will always
lose money this way.
o Don’t want fees to yo-yo up and down—predictability is important, but looking for more
ways to index.
• Police equipment included?
o Yes, in asset value. Increase in rolling stock assets.
o People demanding higher level of service as well, like community parks. Must impact how
much they cost.
Twin Silo park cost per acre is twice that of Fossil Creek Park. Loveland’s park fees
are higher than Fort Collins.
• People who push back on fees are builders, not people who live here. If not collecting as much
money, won’t have parks and other things built at current level of service. General public doesn’t care
about these fees. Go to highest can justify to protect tax payers and be able to do what we said we’d
do.
• Use data based numbers that allow for an increase. Go for highest amount that will sustain the way
that Fort Collins is today. Estimate future plans for all of these things.
o Can’t change methodology. But hearing if can support higher fee, then charge it.
o Ex: If house burns down, need money to replace it. If using replacement cost to move
forward that is a consistent metric.
o Consider that one of highest citizen priorities is affordable housing. If put all fees together,
there is an impact to housing affordability.
• When assess value, include land value?
o Yes. In this analysis the land values have not been updated—getting from engineering.
• Small homes are paying 20%.
o Revenue hat vs. community hat.
o Who has data that shows that when fees increase housing price goes up? It depends on supply
and demand. Need to look at the price elasticity of demand and supply. Need real data. Can
also put policies in place so that there are fee waivers for affordable housing. Ultimately have
to raise sales taxes if need to increase revenue.
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• Larger dynamic in housing market is supply and demand, GMA constraints, etc. But logical that if
cost elements go up, it will change the cost of a house.
o Someone ultimately has to pay, or we don’t have the services.
o Target money to lower fees for affordable housing, not million dollar condos.
ACTION ITEMS: None
AGENDA ITEM 3—Transportation Capital Expansion Fee, Matt Baker & Mike Beckstead
Integrating into other capital expansion fees. Contracted with consultant to do that. Recommendation:
change name from street oversizing to transportation, Use VMT (vehicle miles travelled) instead of trips
generated, and reduce fee categories. With changes to VMT residential fees increase and commercial-
industrial fees decrease. Expect significant increases.
Cost of Code shows $6K added cost of a home in Fort Collins as compared to standard home. Fee
changes are in line with expected updates. Cadence should be deliberate—want predictability and
stability—update fees every 3-5 years. Changes in development and/or population can impact timeline.
Discussion/Q & A:
• When calculate VMT, differentiate cars from semis?
o Our roads are designed for trucks. Expanding for increased traffic. Usually have 10% or less
mix of large trucks.
o Building roads to accommodate industrial.
• Transportation—just roads?
o All transportation elements including roads, bike lanes, pedestrian, replacing buses, etc.
o Capturing development impact on existing structures to make upgrades to those structures.
• Why making this shift? Just VMT?
o More accurately reflects impacts to expansion of transportation system. Ex: grocery store
only draws from a limited area, even with high trip count their impact is a lot less. VMT more
accurately reflects that.
• What is high level impact? What is the impact on cars, bikes, etc.?
o Will be mostly getting same amount of revenue unless increase fees to redevelop certain parts
of town. Won’t be huge increase in road building.
• Personal behavior change?
o As put facilities on the ground, will see that. Street oversizing didn’t envision Max. Transit
oriented development changes this too.
o Transportation Master Plan builds vision—this is methodology is to accurately assign costs to
development. Doesn’t shift vision, helps implementation.
o Doesn’t impact behavior—single point fee. What will change is what gets built. As more
infrastructure becomes available people will use it.
o Anything City can do to drive down trips is great. How do we get rid of trucks that come
through middle of town?
• Including costs that weren’t in there before, like more funds for transit, and impact on intersections
from development in other parts of town. Including a broader range of cost. And changing
methodology. VMT changes who pays for it.
o Correct.
• Residential home sizes on the chart seem a little outdated. There are many more larger homes.
o Median size is probably closer to 2000sf.
o More granularities.
• Sounds like we have a deficit in transportation?
o In 2013 fee increase was big enough to have to be phased in.
• 3-5 years seems too long. Businesses can’t stop on a dime.
o What changes fee is investment in asset and/or population change.
• According to bar chart, our fees are too low.
o Nominal dollars, not reflected over median values.
o Our fees need to be based on current level of service. Updating fees more often will not
change asset value. Can’t drive fees up just because we think they are too low.
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• If Fort Collins is going to grow over 10 years, the cost may go down, but if maintaining level of
service of today cost must be higher—everything will cost more next year. Catch up rate/gap will get
bigger and bigger. Adjustment should be more often.
o There is no revenue adjustment in these calculations. It is not targeting a revenue amount to
meet a plan. We can’t do that.
o If every two years do replacement cost analysis of assets that would keep you more abreast of
fee changes.
o And if have recession and values go down, fees decrease as well. If use longer term, dampen
those peaks and valleys.
o Always behind when lock in for 5 years.
All doable, but involved engineering estimates, consultants, etc.
• Underlying assumption is that will continue to have new development. What happens when
development slows down?
o Natural curve—as get closer to build-out, the need to build new assets moves closer to zero.
• Fees do get updated annually based on index, so keep up with inflation.
o Must be strategic with cadence, especially if make big investment or when census gives better
population data. Removing whiplash effect.
• What we decide today affects how the city builds out.
o Yes, and hearing that we shouldn’t dilute fees.
o And don’t let it lag.
ACTION ITEMS: Board will formulate recommendation in October or November meeting.\
AGENDA ITEM 2—Public Comment Follow-Up Process, Sam Solt
Not discussed.
Meeting Adjourned: 1:15pm
Next Meeting: October 19
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