HomeMy WebLinkAboutEconomic Advisory Commission - Minutes - 06/15/2016MINUTES
CITY OF FORT COLLINS
ECONOMIC ADVISORY COMMISSION
Date: Wednesday, June 15, 2016
Location: CIC Room, City Hall, 300 Laporte Ave.
Time: 11:00am–1:30pm
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 Ted Settle
Kristin Owens
Denny Otsuga
Glen Colton
Linda Stanley
Alan Curtis
Ann Hutchison
Craig Mueller
Staff Present Staff Absent
Dianne Tjalkens, Admin/Board Support
Josh Birks, Economic Health Director
Mike Beckstead, Chief Financial Officer
Wade Troxell, Mayor
Ginny Sawyer, Policy and Project Manager
Guests
Dale Adamy
Meeting called to order at 11:04am
Review and Approval of Minutes:
May minutes approved as amended.
Changes: Note that last speaker did not show up, hence early adjournment.
Agenda Review—Revenue Diversification to precede Brownfield presentation.
Public Comment—Dale Adamy: Emphasized importance of municipal discussion on carbon tax.
Commission Member/Staff Updates—
1. Denny: BizGirls is happening. Friday is demo day. Eight girls attending. Pitching ideas at
Galvanize on Friday. If interested, email Denny for invitation. Will repeat program in Denver
next month. Attended Smart City event in Japan recently. Discussed Fort Collins with other
participants. Event was about sustainability and how communities can grow with
entrepreneurial view of smart growth.
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2. Alan: Innosphere is in final discussion with Estes Park EDC to begin business incubator in
Estes. Committee meeting Thursday for final approval.
3. Glen: Ted made a motion at the last meeting regarding state grants to Comcast. Wondering if
we will continue this motion.
a. Ted is not in attendance at today’s meeting. Will follow up at next meeting.
4. Mayor Troxell: Recently returned from Smart Cities summit in China.
5. Ann: Small business of the year event end of May—112 nominees for awards. High Country
Beverage, Egan CPA, Frameworks Timber, and others received overall awards. Also, Tips
Strategies in Fort Collins next month to create workforce plan for Larimer County—
supported by EHO, Larimer County, United Way, Chamber in Loveland and Fort Collins,
and others. Will release report in October.
AGENDA ITEM 1— Continued Discussion Regarding Growth Dialogue—Board
Leadership team asked Mayor Troxell to discover more information about what EAC is
investigating/discussing around growth. Council does not have a position on growth versus no growth. He
would like to create better alignment between Council priorities and EAC role as advisory board to
Council.
Discussion/Q & A:
• Are we in a controlled growth mode? Many discussions with other residents about TBL and growth.
Little understanding of TBL and growth is large part of that. Is TBL in or out of balance?
o Have growth management area. Not sure what controlled growth means—want to continue to
have Fort Collins be a desirable place to live. Some things we can’t do—can’t keep people
out of Fort Collins. When tried to control water taps, ended up creating water districts with
own consequences. Is growth the right metric? What is the intended outcome?
• The proposed outcome could be a white paper with EACs collective thoughts directed to Council.
Since started discussion, have changed perspective based on information from presenters. How do
you make sure the TBL is being recognized and is in balance with growth?
o How does that relate to growth? Everything that comes to Council has a TBL evaluation.
• Group looks at things like TIF issues and other incentives. What are indirect effects of those on the
city in terms of quality of life, who is getting the jobs, increased population, and increased costs to the
city? Ex: Woodward—never got good TBL assessment. Done in terms of where Woodward sits, but
indirect costs to city were not evaluated. Cost-benefit at larger scale.
• Economic capacity within the city. At a higher capacity than ever before. Educated people are staying
here. Have issues with underemployment. Want to have a vibrant community.
o All want a vibrant community. For underemployment, what can you really do? When bring
good jobs here, brings people from outside, brings spouses, etc. Not the underemployed who
are getting the new good jobs. Have little control over things other than quality of life,
education, etc. What causes people to move in and out? How can issues be solved? Is it the
City’s role to solve them?
• Boulder used to be bigger than Fort Collins. Boulder’s growth management plans have driven growth
to Lafayette, Niwot, Louisville, etc. VMT, housing affordability are exacerbated in Boulder.
o Boulders effort to control growth had unintended effects.
o Needs to be looked at in a balance. Not a spigot we can control, but there are impacts we can
affect. Fort Collins has become more desirable. Dynamic.
o The City never looks at unintended effects of incentives.
o Many discussions in community of whether we will become like Boulder, but this group is
not considering implementing the types of policies Boulder has.
• At Council meeting, Councilman Campana commented regarding building permits that the City could
increase the size of the Planning Department. Wonder if that is really what we want to do?
o Lot of pressure on staff to stay on the lean side. In the recession has to let go of staff.
Tendency to squeeze and expect more.
• Rate at which the city can grow effectively. How can that be measured?
• The board is charged with giving advice to Council on economic vitality. Can have vitality without
adding more people and more jobs until full and undesirable. We talk about doing things differently
in Fort Collins. 3% growth rate is not sustainable. How can we maintain vitality without so much
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growth? Need broader definition of sustainability. Attended water discussions and think we are
moving toward subsidizing water tap fees. Have school bond issue coming up. More we grow, we’ll
have $25K/new home subsidy for schools, subsidy for water, overpass, roads, I-25 will get more
congested. Right now costs are being passed on to people who are here. New growth doesn’t pay for
itself. Will probably have taxes for these costs. More water we use, the more pressure there is on the
Poudre and to have NISP. Environmental costs. More subsidies to companies bringing in jobs puts
more pressure on the housing market. We want to bring these issues before Council. What we are
doing is not sustainable. Keep land in Mountain Vista as prime agricultural land, put CSAs on it and
become truly sustainable.
o Latest on urban agriculture in Mountain Vista plan gets to a lot of those ideas. Plan includes
natural corridor of Box Elder and maintaining agriculture. Planning foresight of Fort Collins.
Plans have been enacted and reflect the values of the time. Mountain Vista subarea
development would be different from historic land use. Economic health strategy is to
incubate, grow, retain, attain and attract. The model is designed to be sustaining. There have
been incentive packages. For Woodward there was a lot about public investment into
infrastructure. That investment into community is important. Also primary employment
provides economic basis for amenities we enjoy. It is dynamic. Losing jobs too. Businesses
become less competitive. Not a zero-sum game. Plays to underemployment and other things
that need to get addressed. Have improved our process for capturing all elements, but can
always do more to get 360˚ perspective.
• Growth conversation and white paper are beyond our purview. Should be applying these perspectives
to items going before Council. Use the lens to look at issues going before Council. Bring in Mountain
Vista subarea plan and provide that perspective to the project. Role is to give feedback to Council on
items coming to Fort Collins.
• Cameron talked about build out plan. Fort Collins has always been plan oriented; we have order.
There have been big risked by previous Councils that have paid off in great ways—examples: trails,
open space, etc.
o Citizens initiated these projects.
Have always had an active citizenry. Checks and balances. Beats the alternative of
apathy. Boards and commissions are vibrant and critical. Climate Action Plan is a
stretch item. Undergrounding of our utilities in the 1960s was as well. Growth paid
its own way for undergrounding in new developments and backfilled existing areas.
Thoughtful approach from varying perspectives has always been a benefit to our
community. Citizen initiatives are embraced.
o In 2002 Council opposed a citizen initiative. Councils have not always been supportive.
Councils ebb and flow.
• Charge for this commission?
o General mission of the commission.
o Commission created around 2005/2006. Came out of economic vitality and action group—a
grassroots citizen group with City participation. Charge of this group is similar to others—
review things going to Council and give economic advice, and survey the horizon for new
advice. This group has discussed growth a lot. Intent to document the perspectives, then apply
them to the work coming before Council. Ted proposed interesting framework in the last
meeting—an issue book, which documents perspectives in non-judgmental way. Becomes a
discussion starter to have deeper conversations in items like City Plan.
o Most important to Council is perspective on items coming before Council. Instead of
codifying in a document, test it with an item coming before Council such as the Mountain
Vista Subarea Plan. Have community separators, which are now well embraced and pursued.
Acquisition of properties can help maintain identity of community. Mountain Vista plan has
separators, workspaces, with higher density housing between. It will be a different look and
feel.
• City has done well and we want it to continue to do well.
o Have a good track record of positive outcomes due to broader discussions.
o Have to be opportunistic when capital is coming, and let it flow, but in the right direction.
o Maintain community values. What makes Fort Collins special—people are friendly,
neighborhoods are welcoming—those are things we should be intentional about preserving.
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• Should the commission compile all the learning it has been doing intentionally over the last few
months and document it in any way?
o Capture the summary. Categorize the yin and yang of it.
ACTION ITEMS: Mayor Troxell will take notes back to leadership team to discuss, then will provide
more clear direction.
AGENDA ITEM 2—Revenue Diversification Study—Mike Beckstead
Working on revenue diversification for a long time. Have narrowed down to three alternatives talking to
Council Finance about. Seeking feedback.
Three-legged stool—ideally three consistent and similarly sized sources of revenue. Reduce dependence
on sales tax revenue. In 2013 developed policy including guidelines for what is important: diverse,
equitable, adequate to maintain service levels, healthy reserves, stable, fees born by those who use
service. Revenue comes from sales and use tax, intergovernmental, charges for services, property tax,
licenses and permits, investments, etc. Reviewed other cities for comparison to see what they are doing to
get the three-legged stool. Other Colorado municipalities also have high reliance on sales tax. Fort Collins
mills in property tax bill are close to average for Colorado. Unless structural change in state’s use of
property tax, likely to stay the same. Property tax in other states can be much higher. Have list of 22 peer
cities (similar size, university, separation from large metro)—most do not have diversified revenue. Some
cities have municipal or local income tax. Tourist destinations have taxes on hotels and restaurants.
Income tax is not allowed in current state constitution. Goal: Not looking for new revenue, looking for
how to shift the balances to reduce dependence on sales tax.
Three alternatives:
1. Tax on Services—Not currently reported as sales. New Mexico has model. Looking at services
that would be less impactful to lower income citizens. Extensive dialogue needed to determine
which services to tax. Categories could include: animal care, laundry/dry cleaning, hair care,
personal care, sports facilities, and exercise memberships. Pros: increasing use of services, less
regressive. Cons: difficult to estimate revenue.
2. Transportation Utility Fee—Could generate ~$10M annual revenue. Based on trip generation of
a business. Manufacturing plants and large grocery stores would pay ~$45K/year, other
businesses higher or lower based on trip generation. Ex: Old Town restaurant: ~$600/year. There
would be a mechanism for appeal. Equivalent to 0.32% tax. If exempt churches, schools, and
government, the net revenue is reduced. Scalable, but significant to certain types of businesses.
Pros: low impact to individual residents. Cons: big impact to high traffic business and impact on
low income residents.
3. Occupation Tax or Fee—If a tax, requires a vote, but gives greater flexibility on how the tax is
used. If a fee there must be a particular purpose the fees are used to cover. Requires more
specificity. Aurora and Denver have implemented. To generate ~$10M (without exemptions),
would be ~$3.80/month/employee. Equivalent to 0.32% tax rate. Discussing whether this would
impact business attraction.
Voter approval may be needed on any of these. Make sure citizens are comfortable. Intent to reduce sales
tax rate if can find other sources.
Discussion/Q & A:
• Could taxes be reduced?
o If increased revenue from other sources, that could be a possibility.
• Tax on services could be volatile based on business cycles.
o Less cyclical items could be selected.
o Less cyclical is more needs-based, and more likely to be used by low income people.
o Landscaping services are not included in this list.
That is one that should be up here. That is kind of conversations we will have if we
pursue this option.
o Cons: Does this drive leap-frogging service providers. Do you drive services outside your
boundaries?
Part of decision on selecting services. Look at how far people will drive to access
services.
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TBL: If people are driving farther for services, less environmentally friendly.
But lower sales tax might stimulate shopping.
o What about internet sales?
Recently signed agreement with Amazon to receive sales tax on items delivered to
Fort Collins. Started May 1. Where add distribution centers, gives them activity in
the state. They came to the City. Interested to see what revenue will be.
Unless have physical presence in municipality, internet sales services are not required
to collect sales tax. Issue will be solved at federal level.
• National League of Cities Mainstreet Fairness Act.
• Transportation Utility Fees—some of the numbers look really high, but if compared to their revenue
stream, it might help put it into perspective.
• Reason CSU is not included as an institution?
o Excluded by definition. Tax-exempt.
o They charge separately to park in their lots. Non-state operational fund they generate on their
own.
o If CSU has nonprofit status, so do schools and churches.
• Valuing who gets taxed and who doesn’t, who gets exempt from fees and who doesn’t. Need to be
careful around equity and standards. Potential red flag issues for the public. We see our values being
put in place over decisions. Ex: People thinking that schools aren’t making money so we exempt
them; churches are doing good work so we exempt them. The rich people will pay for dry cleaning
and these other things. Some people aren’t going to want to do that because they get “stuck paying for
someone else.” Must be cognizant of preconceived notions and how they are changing the dynamics.
o Will completely vet these ideas.
o Especially on services, which ones are used by more affluent or not? More affluent people
might get a $100 haircut, while lower income might get $10 haircut, so already levels.
o “Luxury goods” is more palatable term.
o If come across supporting data, please forward.
• Transportation fee—It’s not the businesses who should be paying. It should be the people making the
trips. One of the goals of the City is to lower VMT. Not sure how it would be done, other than
measuring mileage per year. In Oregon it is done through insurance. People who are driving more
should be paying more.
o How do you capture those people who aren’t in Fort Collins? Trip generation is based on
economic activity that includes a broader area than city boundaries.
o Per resident is a flat fee, which is not trip generation.
There are inequities in all these aggregations.
Already have inequities in existing taxes, but will become focal points of any new tax
discussion.
o Lower tax rate if implement TUF, so businesses can charge consumer for additional expense
in price of merchandise.
Suggesting shift in who generates the cost, and who pays for the cost.
If charging business more, they will increase prices. Logic across the board that
needs review.
• How bad is the three-legged stool issue now?
o It is built into how municipalities are funded in Colorado. Fort Collins has dips in sales tax
about a year after a recession starts, but it is not severe.
• Are communities with equal distribution actually doing better than Fort Collins?
o Question is whether they are less impacted by national market cycles than we are. Hard to
answer that because there aren’t many case studies.
o CSU looked at sales tax across many Front Range communities, but none of these have a
really balanced sheet.
• County is dependent on property tax. How stable during recession?
o In City stayed fairly flat during recession. Mesa saw 40% reduction in property tax revenue
during recession. Have some insulation in Fort Collins on property values. Property tax and
sales tax are fairly stable.
Then discussion should be on how to get people to work on City-related services—
other mechanisms to weather downturns. Working on City’s structure to buy things,
hire people, etc., might have more impact.
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Theoretical and philosophical elements of preferred revenue model. Theoretically
having multiple revenue streams minimizes risk.
• How important is it to decrease sales tax, compared to revenue safety?
o Have not looked at this yet. Sales tax rate change may not have an impact on spending. At
local level would not be enough of a stimulus to affect change in spending habits. KFCG
implementation created large change to tax rate, and did not significantly impact spending.
Ex: Front Range Village has higher tax rate than downtown. People have been
indifferent to the public improvement fee.
• If point of diversification is to weather disruptions, should look at which one most likely to be stable,
not which one is preferred.
• Need to work through what is means to be employed. If self-employed or working from home, how
are you taxed?
o Occupation that you perform—“head tax.” Tax on being employed.
o Flip side of income tax because not allowed by state constitution.
o For people who make minimum wage a flat rate could have a significant impact. Why should
it be equal? Is it really an income tax?
• Have we maxed out our impact fees? Parks, roads, etc.?
o Updating capital expansion and street oversizing fees right now.
o Not collecting near enough compared to cost.
• Countercyclical—should be thinking about tremendous amount of growth expected. Needs to scale to
infrastructure needs of people moving into the city. Fort Collins may be immune to national level
issues.
o Seems to make sense on surface that diversified portfolio is better, but not sure if that is true.
Have worked under current model for a long time. Municipality structure has evolved to
counteract state and federal issues. Have lived in places where property tax pays for schools
and there is a clear correlation with performance. In Colorado does it really make sense to
diversify?
o Will spend time looking for more data.
• Which option is most countercyclical?
o People who can afford top tier luxury goods will not change their spending. However, small
businesses may fail due to TUFs in times of recession. Could tier based on growth.
Occupational tax would lose both employee and employer share as employees are laid off in
recession. Opening the door and setting precedent for innovation in revenue. If can get this in
the door, more likely to be able to be nimble when need to make changes.
o Adaptive in process. Won’t be static system.
• What are expense costs associated with collecting these taxes? If need to set up a whole new
departments to implement a tax, it could get complicated and won’t have the net gain seeking.
• Occupational tax—have tiered so people making minimum wage aren’t paying the same as those
making $100K. Employers require services the same way people do in town. If some businesses go
elsewhere that might be beneficial in providing jobs to people in Wellington and other locations,
reducing in-commuting.
o Unsure if can set up a fee based on income. Can mix the split, but to change the fee based on
annual wage would be a question for legal.
• Can you do two or more?
o Like the first two as tax on economic activity. Employment tax is likely to dip at exactly the
time you will need more taxes. Advocate putting both in place.
o Taxing different types of activities. If diversification is important, do all three.
• Implement a fee structure to people moving into Fort Collins from now until build out; should be
different fee structure to deal with infrastructure needs. Impact fees to ensure street lights, additional
lanes, etc. Should maximize that as much as possible.
o In 2012 had fairly significant capital expansion fees. Have fire, police, general government,
and parks fees. Will adjust every 3-5 years. In process of updating now. Council Finance will
be discussing street oversizing fees and capital expansion fees in the next few months. Staff
compares ours to other communities. During building boom want to capture appropriate
funds. Based on level of service and what it would cost to build it today.
• Never an incentive to reduce taxes.
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o If didn’t need to build new schools for increased growth, wouldn’t have to increase property
taxes. When we bring in jobs we bring in people who live in the house and the kids who go to
the schools.
o Have something tremendous going on in Fort Collins and growth is part of it.
A lot of people don’t like where we are going and don’t want to pay for the growth
we are having.
New growth is ruining other aspects of the community, so if they are coming here,
make them pay for it.
• Appreciate that diversification is important for sustainability, but need to question whether really
need $10M more per year.
o What is level of service citizens want? Preparing to have that conversation.
ACTION ITEMS: Josh to follow up with state demographer on questions about Pitkin County.
AGENDA ITEM 3—Update on Brown Field Assessment—Josh Birks
Josh provided handout on brownfield. Received $0.5M from EPA to do environmental assessments on
private property. Perception often stands in the way of investments and redevelopment. Have evaluated
which properties show up in potentially contaminated data bases. About 120 properties that might have
had asbestos, dry cleaning chemicals, fueling station, etc. Narrowed down to 30 properties to contact to
see if want to participate. Biggest criteria for eligibility is that owner is not responsible for contamination.
Frequently find that properties do not have contamination. Owner is under no obligation to do cleanup
until change property use. However, can apply for additional grant for cleanup. Local EPA has many
resources to help get grants.
Meeting Adjourned: 1:33pm
Next Meeting: July 20
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