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AGENDA
Council Finance & Audit Committee
November 18, 2019
10:00 am - noon
CIC Room - City Hall
Approval of Minutes from the October 21, 2019 Council Finance Committee meeting.
1. City Long Term Financial Plan Review 30 mins. D. Lenz
2. Water - Horsetooth Shutdown 30 mins. C. Webb
M. Kempton
Council Finance Committee
Agenda Planning Calendar 2019
RVSD 11/13/19 mb
Nov. 18P
th
P
City Long Term Financial Plan Review 30 min D. Lenz
Water – Horsetooth Shutdown 30 min C. Webb
M. Kempton
Dec. 16P
th
P
Utility LTFP & CIP – Electric & Stormwater 45 min L. Smith
Purchasing Policy Update 30 min G. Paul
Sales Tax on Mobile Homes 20 min J. Poznanovic
Utility Off Cycle Budget Items 25 min L. Smith
Jan 27P
th
P
Utility LTFP & CIP – Water and Waste Water 45 min L. Smith
Affordable Housing Support Process (Fees) 20 min S. Beck-Ferkiss
V. Shaw
Feb 24P
th
P
GASB 87 Implementation Update 20 min T. Storin
Mar 16P
th
P
B-Dam Alternatives and Recommendation 30 min T. Connor
Future Council Finance Committee Topics:
• Park/Median Design Standards & Maintenance Costs – TBD
• Metro District Policy Update – TBD early 2020
Finance Administration
215 N. Mason
2nd Floor
PO Box 580
Fort Collins, CO 80522
970.221.6788
970.221.6782 - fax
fcgov.com
Finance Committee Meeting Minutes
10/21/19
10 am - noon
CIC Room - City Hall
Council Attendees: Mayor Wade Troxell, Ross Cunniff, Ken Summers
Staff: Mike Beckstead, Travis Storin, Carol Webb, Theresa Connor, Lance Smith, Shane Boyle,
Dean Klingner, Tom Leeson, Noelle Currell, Jennifer Poznanovic, Kelley Vodden, Jennifer
Selenske, Kerri Ishmeal, Renee Callas, John Duval, Tyler Marr, Dave Lenz, Jo Cech, Katie
Ricketts, Zach Mozer, Josh Birks, Victoria Shaw, Shannon Hein, Clay Frickey, Carolyn
Koontz
Others: Kevin Jones, Chamber of Commerce
Dale Adamy, R1st.org
______________________________________________________________________________
Meeting called to order at 10:05 am
Approval of Minutes from the August 19, 2019 Council Finance Committee Meeting. Ken Summers moved for
approval of the minutes as presented. Ross Cunniff seconded the motion. Minutes were approved unanimously.
A. Development Review Fee Update
Tom Leeson, Director, Community Development & Neighborhood Services
Noelle Currell, Manager, Financial Planning and Analysis
Jennifer Poznanovic, Sr. Manager, Sales Tax / Revenue
SUBJECT FOR DISCUSSION
Development Review and Building Permit Fees Study
EXECUTIVE SUMMARY
As part of the City’s coordinated fee update process, City Staff along with MGT Consulting Group (MGT)
conducted an in-depth analysis of the City’s development review and building permit fees. This study evaluated
whether these fees are set at appropriate levels, inclusive of all costs, consistent with the City’s goals for cost
recovery, and how fees compare to other communities regionally.
Due to the complexities, processes and number of departments involved in development review and the
permitting, the Council Finance Committee requested an advisory committee be created to better understand
potential impacts of fee and methodology changes and collect feedback and advisement regarding proposed
changes.
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Staff has extensively evaluated the methodology for calculating fees and is requesting feedback on the change in
methodology for calculating building permit and plan check fees from using the valuation of a project to using
the square footage of a project (not all project types apply), a flat fee for over-the-counter permits, addition of a
new erosion control and storm water inspection fees, as well as updates to current development review fees
based on a simplified fee schedule. No methodology changes are being requested for development review fees;
however, timing of collection of Utilities development review is being shifted to when services are provided.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Is Council Finance supportive of updated fees and methodology?
Is Council Finance supportive of new Erosion Control & Stormwater Inspection fees?
BACKGROUND/DISCUSSION
Development Review Fee Advisory Committee
A Development Review Fee Advisory Committee was formed based on Council Finance Committee’s directive to
better understand how to simplify the current fee schedule. This included calculation of fees, timing of
collection, validation and acceptance of a new methodology and other recommendations. This balanced group
was comprised of industry professionals, Fort Collins Citizens, and City staff.
Advisory Committee List: A Blend of Citizens, Industry and Staff
Industry: Jennifer Bray: Affordable Housing Board
Adam Eggleston: Ft. Collins Board of Realtors
Doug Braden: Home Builders Association
Citizen: Matt Robenalt: Downtown Development Authority
Cathy Mathis: Local Legislative Affairs Committee, Development Consultant
Braulio Rojas: South Ft. Collins Business Association
Linda Stanley: Economic Advisory Commission
City Staff: Mike Beckstead: Project Sponsor
Russ Hovland: Fee Owner Building Permit Fees
Tim Kemp: Fee Owner Engineering Fees
Noelle Currell: Project Manager
Tom Leeson: Fee Owner Development Review Fees
Overview of Meetings and Topics Covered
The group convened for five (5) two-hour sessions starting in May 2019 with the final meeting September 2019.
Fee History
Currently, there are numerous fees across CDNS (Community Development and Neighborhood Services),
Utilities, and Engineering, spread over three (3) types of fees; development review, infrastructure inspection
(engineering), and building permit. Examples include building permit fee, plan review fee, transportation
development review, over-the-counter permits, and engineering inspection fees. The current percentage for
cost recovery is set at 100%.
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The City Manager is authorized to set fees based on the costs of providing development and building permit
review services, pursuant to City Code Sec. 7.5-2. The Land Use Code (Sec. 2.2.3.D) establishes the cost recovery
model for development and building permit fees:
1. Recovery of Costs. Development review fees are hereby established for the purpose of recovering the costs
incurred by the City in processing, reviewing and recording applications pertaining to development
applications or activity within the municipal boundaries of the City, and issuing permits related thereto. The
development review fees imposed pursuant to this Section shall be paid at the time of submittal of any
development application, or at the time of issuance of the permit, as determined by the City Manager and
established in the development review fee schedule.
2. Development Review Fee Schedule. The amount of the City's various development review fees shall be
established by the City Manager and shall be based on the actual expenses incurred by or on behalf of the
City. The schedule of fees shall be reviewed annually and shall be adjusted, if necessary, by the City Manager
on the basis of actual expenses incurred by the City to reflect the effects of inflation and other changes in
costs. At the discretion of the City Manager, the schedule may be referred to the City Council for adoption
by resolution or ordinance.
Fee Calculation Review
To accurately calculate where fee levels should be set, an inclusive listing of fees was thoroughly reviewed,
every staff member involved in a fee activity was identified, and staff members that complete fee related
activities were interviewed to determine the amount of time spent per fee item. Calculations were carried out
to determine the fully burdened cost of employees. Overhead calculations were also reviewed and included
things like buildings, managers, and IT support. Fees were set based on the time and the overhead allocated.
Validation steps were taken to ensure proper cost recovery, which included:
• ensuring no individual groups were over-allocated (available work hours versus total time of fee activities)
• estimating revenue forecasts based on 2018 volumes (ensuring revenue does not end higher than cost)
• confirmation with management teams to ensure accurate allocation of each person’s time to the fees (e.g.
only allocating 25% of some positions).
Methodology Changes and Impacts
Development Review Fees
No methodology change for the development review fees (pre-building permit activity, such as Project
Development Plan, Minor Amendment, Final Development Plan) is proposed. However, one goal in this area
was to reduce the number of fees, through fee consolidation or deletion (e.g. Affected Property Owner mailing
costs removed).
Additional changes within the development review fees include adding staff members that are fully engaged in
development review activities that have not historically been included within the fee calculations. This includes
City Attorney’s Office staff, Forestry staff, and Parks Planning staff. Additionally, Utilities development review
fees have historically been collected at time of Building Permit, and those will now be collected at time of
development review application to more accurately reflect the time of service.
The impacts of these changes are an increase in development review fees for all application types
Infrastructure Inspection Fees
No methodology change is proposed for the infrastructure inspection fees. These fees were last updated in
1997, so the impact of these changes is an increase in the infrastructure inspection fees.
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Building Permit Fees
Staff is proposing a methodology shift for new construction building permit fees from being based on valuation
to square footage/building type. The square footage of a project is not subject to disagreements as it is a
definite quantity provided within the application; it is known in the early phases of a project, so it provides a
stronger basis for calculating accurate fee estimate. Additionally, square footage has a strong correlation to the
amount of time it takes to review/process an application and the time it takes to complete inspections.
To help with efficiency and overall fee consistency, over-the-counter permits will go to a flat fee versus valuation
based (examples: residential roof, water heater, furnace). Staff time in this area is driven by type of work, not
the value.
Tenant finishes and remodels will remain valuation based. Valuation cost breakouts were updated based upon
interviews with building inspectors with the result being a decrease in fees for these application types.
It should be noted that sales and use tax is still based on valuation, so applicants will still need to provide the
project valuation for tax purposes.
The impacts of these changes, including shifting the timing of collection of the Utility development review fees,
are a decrease in building permit fees.
New Fees: Erosion Control & Storm Water Construction Inspection
These are proposed new fees that will cover field inspection personnel. Currently, no fees are collected, and this
activity is subsidized by the rate payers and not by established fees. Staff is requesting implementation of an
erosion control fee & storm water infrastructure inspection fee to cover the costs of inspections that are
currently being executed.
The process completed by Utilities is as follows; Field verification by a City Stormwater Inspector is now required
as stated in the project Development Agreement, City Land Use Code Section 3.3.2(E)(1)(e), and Fort Collins
Stormwater Criteria Manual Ch 3, Sec 3.1). Project managers should request inspections prior to installation of
stormwater features, or at a minimum, keep the City inspector up to date on scheduling.
Inspections target the milestones listed in the feature’s corresponding 33TUconstruction checklistU33T, which is
submitted as part of the Site Grading and Drainage Certification (checklists may change as the program evolves).
As part of the certification process, certification checklist documentation 45Tis45T submitted to Utilities’ Water
Engineering Department and requires acknowledgment that verification occurred at the intervals specified
therein.
Utilities Light and Power are not included in this study.
Developer/Builder Cost Impacts
In order to understand/quantify the impact on development, staff did a comparative study on existing
developments. Samples were chosen based upon common application types including: Infill development,
Single Family Homes, Multi-family, Affordable Housing, Commercial Buildings and Industrial Uses. Fees within
this study generally increased ~30%, however as part of the overall fee stack, the updates resulted in minor
changes (from less than 1% to 10% of total City Fees). Additional details are included in attachment 1.
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City Cost/Revenue Impacts
Since the fees charged are intended to cover the costs to provide the service, an analysis was done to evaluate
the costs to the City of development review, infrastructure inspection, and building permits based on the 2018
volume of permit applications. In 2018, the City collected $5.6 million in development related fees, which were
intended to cover the costs of those services. The actual total cost in 2018 was closer to $7.6M.
The greatest impact on collections is seen in the Utilities Funds and the Transportation fund. In Utilities the
changes are driven by the timing of collection, updated cost inputs and addition of Erosion Control and
Stormwater Infrastructure Inspections. Within the Transportation fund changes are driven primarily by the
infrastructure inspections (which as noted had not had fee updates since 1997) and update to number of
Transportation funded Development Staff (e.g. Traffic Engineers and Civil Engineers).
Next Steps and Public Outreach
Advisory Group Summary of Findings
The group acknowledges and agrees with the overall methodology changes, fee structure, calculations and
inputs. The group agrees that though there are increases in some areas, overall the changes make sense and
fees will be less complicated. The group agrees with 100% cost recovery. Fees must reflect the cost it takes to
provide the service and nothing more. The group notes that any fee increases, particularly to housing, are a
concern.
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Discussion / Next Steps;
Separate fee for each permit application type
Consolidated and reduced total number of fees from 150 to 106
Mike Beckstead; they have also created a fee calculator which makes it easier early on in the process to
understand how much and when fees will be payable. This is a benefit and a simplification.
Ken Summers; what are the overhead costs?
Tom Leeson; direct cost, hourly rate plus overhead costs such as vehicles and uniforms and admin costs. More
detail to follow later in the presentation.
Mike Beckstead; we approached this with 100% cost recovery, and we looked at it not just direct costs but
including health benefits, retirement contributions, materials used in process and support costs that go with it.
Ken Summers; Is there double accounting? Are we going to reduce the allocation we need for legal?
Mike Beckstead; for the Development Plan Review and Legal -both come out of the General Fund so the revenue
we collect doesn’t go into a specific fund - all flows into the General Fund. We don’t segregate the funding or the
expenditures that way because they are co-mingled in the General Fund.
Ross Cunniff; what are the pros and cons of creating a dedicated mini fund for obvious transparency?
I like the 100% cost recovery but the responsibility that comes with that is for us to ensure that we are not
double counting as well as that we are working to try to constrain those costs to exactly what they need to be.
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Mike Beckstead; we are having those conversations - we had provided Council some information before trying
to estimate costs - this has always been very challenging as it is diffused across the organization.
There is clear benefit to going to a dedicated fund - I am not ready to recommend one way or the other yet
The more specific the revenue is the more restrictive we are. We currently have 41 reportable funds - our
closest neighbor /peer has 21-25 range. Within Finance, we are discussing – what is the right mix of dedicated /
restricted fund revenue? There is complexity and overhead that goes with each fund - but good to discuss this
during BFO.
We have 1 City Attorney who spends 100% of his time on Development Review Applications.
2.5 FTEs from Forestry as well
Building Permit Fees - we changed the way we calculate – now based on square footage not valuation -
Have a fair amount of over the counter fees – simple flat rate fees.
Valuation is not going away because we charge sales and use tax.
Ross Cunniff; future number - $2M subsidy towards development review - $1.6M from other entities
Stormwater rates were higher because we weren’t capturing these fees
Mike Beckstead; a bigger portion of it is actually transportation and utilities - General Fund subsidy
The Committee reviewed slides illustrating several different kinds of development and the associated fees and
impact of the recent changes;
Infill/ Mixed Use - Uncommon,
Residential Single Family - Timbervine
Residential Multi-Family -The Wyatt
Affordable Housing - Village on Redwood,
Commercial - Harmony Commons
Industrial - South College Storage=
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Tom Leeson; we reviewed this information with Darin Atteberry last week and he administratively approved the
process changes. The intent is to do an Adoption in Q1 2020 to be effective at the beginning of Q2 2020.
Mike Beckstead; we have this scheduled to come back to Council Finance in December if we get controversy out
of outreach, but if the future outreach is similar to what we have had in the past, I am not sure we would need
to come back to Council Finance - I wanted to see if there was Committee concurrence on this approach.
Ross Cunniff; a memo would be sufficient.
Mayor Troxell; I have a question about the fee stack, conversations going around to try to get some alignment -
continue that in support of our residents - meaningful adjustments in the right direction. I appreciate the
amount of work that has gone into this
Mike Beckstead; in 2016 there was a request to take this on because of the sporadic nature of the updates
which would come to you at different times - This was great guidance and I applaud Jennifer and her
predecessors for the work that has gone into the organization of this - it has taken us 3 years to get through the
first round. Starting in 2021, we will be on a 4-year cadence for development fees and 2-year review cadence
for utility fees. We had big increases in impact fees in 2017 - $ value increases here but now that we are on a
prescribed cadence with routine reviews, we will minimize any big pops.
Ross Cunniff; community measured approach - In answer to questions for Council Finance, I am a yes and a yes
This presentation answered a lot of questions I had and makes it very clear what we are doing and looking for is
to specifically support the operations and funding of the development review process. We will want to ratchet
up to look at how we could reduce costs – this is not intended to be punitive – it is making sure that we are
diligently working to make those costs as low as practical.
Mayor Troxell; I appreciated the specific examples of different types of development - very helpful
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Ken Summers; I have a question regarding slide 4 (see above) under Development Construction Permit you have
Erosion Control and Stormwater – is the proposal to pull these out and put them somewhere else?
Tom Leeson; we are not currently charging for the Erosion Control or stormwater efforts we do as part of the
Development Construction Permit. Erosion Control - we have 2 full time dedicated employees who go out to
inspect multiple times during the construction phase. The Stormwater -more of the final stormwater measures
that put in that also require inspection prior to occupancy - we are proposing to add those into the
Infrastructure Inspection Fees.
Mike Beckstead; the costs have always been there, but they were being paid for by the rate payers of those
utilities - we didn’t have a unique fee to charge the developer for those activities -
Tom Leeson; the development review center will be reimbursing utilities for that time - that will go into the
waste / storm water fund - in essence that fund has been subsidizing the Development Review effort -this has
been happening for many years.
Mike Beckstead; the next time Lance does his cost of service / rate analysis he will take all of those into
consideration – we have a new revenue source for those kinds of costs which will have an impact on future rate
requests - to the degree that it is incremental and isolated I am not sure - I would have to go back and talk with
Lance. That is where the other side of this transaction will occur.
Ken Summer; thinking about erosion control measures - seems that these are already tightly regulated at the
state level -so, with all the current state regulations in place in terms of keeping dirt on the site and fencing, etc.
- Have there been problems with erosion in the past?
Theresa Connor; The city has an S4 Permit that allows our storm water to drain directly into the river and does
not need to go through our sanitary sewer system. Because of having that permit we have to do erosion control
inspection; we need to have this in place in order to stay in compliance this is a requirement to do construction
inspection. Driven by development taking place in the community.
Ken Summers; I see a couple things happening – for example the $5M we lent to the URA, etc. – feels a bit like
we are shaking the couch cushions looking for more money - wondering what are the best ways for us to
increase our revenue instead of nickel and diming, fees etc. I think we need to be looking at some efficiencies in
this area as well - I want to be comfortable that we have some safeguards in place and are looking at efficiencies
- be conscientious in terms of how many visits, how much time it takes. If there is an inspector who is
consistently finding lots of problems - the problem may be with the inspector. These are legitimate concerns
from the city standpoint.
Theresa Connor; we do have stormwater and the municipal separate stormwater permit through the state and
the EPA. We are finding the better part of prescriptive requirements from the state recently on erosion control,
visiting every few weeks based on the conditions on the site - so there are some very prescriptive requirements
for us from federal and status regulators that we are doing and have been doing for some time. We are
constantly looking for efficiency measures out of that and are open to new ideas but we have had these 2
positions on erosion control compliance for some time and tt protects our water ways - an ounce of prevention
is worth a pound of cure – especially in erosion control keeping that dirt on site will protect our streams - we do
comply with prescriptive requirements.
Ross Cunniff; can you speak to what efforts you take to oversee and audit.
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Tom Leeson; this question has come up a couple of times in our outreach and is a fair question because we are
charging based on time – one of the complaints was if you were more efficient you could charge us less – we
took that very seriously and in parallel to this effort, we have spent last 2 years implementing the Lean
Methodology on every development application type - trying to get as efficient as we can in terms of
development review and our permit processing. We have seen an appropriation recently for our Accela program
(the software program that administers all of the permits) was not functioning at a level that could make us as
efficient as we want to be – so we are spending a lot of time going through the bidding process to identify the
business process and get that fully integrated into Accela - and we are developing a set of metrics around
development review so we can understand how long each step should take – how long the review of each stage
takes.
Ken Summers; thank you - I appreciate the reassurance that we have systems in place to monitor and that you
are on top of it and it shows efficiencies. Sometimes that motivation isn’t as great for a government entity.
Mayor Troxell; Baldrige looks at constant improvements - looking at best practices - by mentioning the Lean
Methodology - government can run with efficiency and high performance and be very intentional – we have
processed - recognize and make them better and that is built into the entire organization - talk about high
performing government and set those expectations - this is one reason we get to a high level of trust with the
community because you see activities happen for the purpose they are intended and frankly, I am proud
Tom Leeson; getting into this new regular cadence for reviews will be a good cross check and will ensure that
those fees are aligned with the processes we have.
Mike Beckstead; to me the drivers of this fee increase are;
1) we have not updated some of these fees in a long time - some of the methodologies and the cost drivers are
different now
2) some of the allocations of cost only assumed a 50% absorption which has now gone to 100%
3) there are the 2 new utility fees that used to be paid by utility rate payers and are now paid by the
development fees.
There is a series of methodology and process drivers that are really behind this - we saw the same thing in our
Capital Expansion Fees in 2016-17 when we did a deep dive on those because they had not been updated in a
while – I truly anticipate a much smoother trajectory going forward with the routine updates and we will avoid
these price spikes from infrequent updates.
Mayor Troxell; I appreciate Ken’s concern and this discussion - show me - what is your process and that is the
evidence - we are obligated to do things that other governments have been mandated and that adds costs.
Mayor Troxell; we are good
Mike Beckstead; we will come back in December if need be or we will provide a memo at the minimum.
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B. Revolving Loan Program Review
Josh Birks, Director Economic Health Office
Shannon Hein, Sr. Specialist, Economic Sustainability
SUBJECT FOR DISCUSSION
Economic Health Revolving Loan Fund – Good News
EXECUTIVE SUMMARY
The purpose of this item is to share the good news that the City of Fort Collins Revolving Loan Fund has officially
launched and provide an overview of the program. The Revolving Loan Fund is intended to support small
businesses and startup companies operating in Fort Collins. The City has pledged funds to support access to
capital for small businesses in Fort Collins, which have historically not had access to traditional financial capital
markets (“under banked” or “non-bankable”) The demographic focus of this program will be low-income,
minority, veteran, and women-owned small businesses.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. Does the Committee have any questions about the program?
BACKGROUND/DISCUSSION
A revolving loan fund (RLF) is a gap financing tool used for the development and expansion of small businesses
and startup companies. This Ordinance will support the first step in the development of the City’s RLF that over
time will become an “evergreen” source of capital for underserved and disadvantaged borrowers in the
community. “Evergreen” is the term used to refer to a self-replenishing pool of money through interest and
principal payments from previous loans to be used for new loans as budgeted and appropriated in future years.
Businesses with 1-100 employees make up 98% of all firms in Fort Collins. These businesses employ 47% of the
workforce and provide 40% of the total wages in our community.
Demonstrated need:
Data from the small business needs assessment deployed in 2018 demonstrated the need and interest for
capital resources from women-owned businesses, specifically women-owned businesses in the revenue
band of $100,000 - $499,000.
A report by Minority Business Development Agency
<http://www.mbda.gov/sites/default/files/DisparitiesinCapitalAccessReport.pdf>, found that, “Among firms
with gross receipts under $500,000, loan denial rates for minority firms were about three times higher, at 42
percent, compared to those of non-minority-owned firms, 16 percent.”
The City’s Economic Health Office (EHO) has identified access to capital as a barrier to the small business
community within the Economic Health Strategic Goal, B.4, Increase Capital to Support Startup Companies
and Entrepreneurs. As such, EHO believes a revolving loan fund can support in meeting Strategic Objective
B.4.
Goals - The goals of the RLF include:
A. Encouraging business starts, strengthening and/or expansion of businesses through self-employment. This in
turn facilitates job creation as a means of economic self-sufficiency for low-and moderate-income
individuals.
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B. Helping bridge the financial gap for small businesses which might eventually qualify for bank financing and
preparing the small business owner for traditional bank relationships.
C. Foster diversity in the business community by encouraging business ownership among traditionally
underserved minorities, women, and the disabled.
D. Promote entrepreneurship and business innovation as a means of harnessing the creative potential of small
businesses and investing in the economic success of the community.
Contributions to this RLF comes from two sources:
Platte River Power Authority (PRPA) support of economic development efforts (2017, 2018, 2019 and
beyond)
2019 City of Fort Collins Cluster Funding (one-time contribution)
Since 1982, Platte River has granted funds annually to support economic development efforts. Prior to 2017,
these contributions received by the City of Fort Collins were directed toward Rocky Mountain Innosphere
(Innosphere). In August 2017, the City requested PRPA to remit the funds directly to our organization in order to
support the development of a small business lending program. These funds were received in 2017 and 2018 and
are in the City’s General Fund reserve available for appropriation.
Funds to be appropriated are as follows:
Source Fund Amount
2017 PRPA Contribution General Fund $21,878
2018 PRPA Contribution General Fund 21,916
2019 PRPA Contribution General Fund 36,436
City of Fort Collins Cluster Contribution KFCG (transfer to General Fund) 98,500
Total RLF Appropriation and Transfer $178,730
Summer 2019, the City issued Request for Proposal (RFP) #8963 seeking a qualified, licensed and accredited
capital vendor to manage and administer the revolving loan fund on the City’s behalf. The City selected Colorado
Lending Source (“CLS”) as the vendor. CLS will lend its own funds and use the City’s contribution only in the case
of default on a loan. The total loan pool will be $1.0 million.
Term loans would be available to eligible small businesses for up to $50,000 for the following purposes:
Working capital
Equipment
Inventory
Business purchase
Oversight
A representative from the selected vendor will meet with City of Fort Collins staff at least semi-annually to
review the program, lending data, and to provide updates. Staff will provide updates to City Council annually.
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Discussion / Next Steps:
Current default rate is less than 4% - they are comfortable with a certain default rate as they
are trying to reach those lenders who might have constraints with traditional commercial banks
Shannon Hein and Josh Birks; character based loans - have a committee they work with - mentor or circle
surrounding them - we get referrals from banks - they work with banks on the front side of the opportunity and
on the back side - after 2 years of credit history they encourage the borrowers to change to a conventional bank
- They know the criteria the banks are looking for - they run a number of different programs as well - so if a
candidate is better for a different program they will slot them there – these are $50K max loans- typical term of
8 years – give it some length to manage cash flow and then move them through the program and get them into
the private sector – that way you get the money back and can start over with another borrower.
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Ross Cunniff; great
Mayor Troxell; this is great, thank you
Ken Summers; great
C. Stormwater – Land Acquisition
Theresa Connor, Deputy Director, Utilities
Shane Boyle, P.E. Stormwater
Lance Smith, Director, FP&A Utilities
SUBJECT FOR DISCUSSION Off-Cycle Budget Amendment for Strategic Land Acquisition in the West
Vine Stormwater Basin
EXECUTIVE SUMMARY
The West Vine Stormwater Master Plan envisions an open channel connection between the City-owned Forney
Property and City-owned land located adjacent to this parcel to the east. The parcel at 1337 West Vine came in
for conceptual development review. Staff has negotiated a price for purchasing the rear portion of the property
while the West Vine road frontage portion is being subdivided into residential lots. The purpose of this item to
appropriate prior year reserves in the Storm Drainage Fund to purchase the parcel.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does Council Finance Committee have any questions or suggestions regarding the off-cycle budget amendment
to fund strategic land acquisition in support of the West Vine Stormwater Master Plan?
BACKGROUND/DISCUSSION
38TMuch of the West Vine Basin, located in western Fort Collins generally along Vine Drive and Laporte Avenue,
was developed in the County prior to stormwater and floodplain regulations being adopted. For this reason,
there is significant potential for flooding in the basin during a large rainstorm event. The City’s Stormwater
Master Drainage Plan for the West Vine Basin identifies improvements that would help to mitigate and convey
flood flows through the basin to the Poudre River.
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38TA portion of the property at 1337 West Vine lies within the proposed alignment for the West Vine Outfall
Stormwater Project and is currently for sale (see attached presentation). The purpose of this appropriation is
to authorize the purchase of the portion of the property that is needed in order to construct the West Vine
Outfall project. If the City does not purchase the property, it may be sold to a third party and developed, which
would hinder the City’s ability to construct this important Stormwater project. 18T38T
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38TRecent projects and property acquisition in the area that are part of the West Vine Outfall include construction
of a portion of the West Vine Outfall from Vine Drive to the Poudre River in 2013-2014 and acquisition of the
Forney Property for a future regional detention pond in 2012.18T38T
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Discussion / Next Steps:
1337 W. Vine Drive - sub dividing into 3 lots – we are interested in southern parcel
Budget of $255K in case there are some unknowns
Reason this land is strategic for us - if you look at the West Vine Master Plan
West Vine outfall constructed a few years ago – Stormwater currently owns two parcels of land here - one next
door – been renamed to Pucntc Verde – do an open channel – with potential for trails, etc - future plan –
Because this parcel was in for review and available now we thought it would be prudent to bring forward an off
cycle offer to purchase the – gives us flexibility if we were to do an open channel in this area and construct large
diameter culverts - we don’t get multi use
Mayor Troxell; what is the time frame
Theresa Connor; the parcel is in for development - West Vine Master Plan will take a decade or so to do – our
attention would shift to West Vine after the Downtown plan is completed.
Ross Cunniff; I am supportive - Intent is through acquisition of undeveloped parcels, easements - overflow
channel
Theresa Connor; it would be an open channel which gives us more flexibility - it has multi-function
Ross Cunniff; - I think we should move forward – benefits the community as it protects several neighborhoods -
real estate happens when it happens
Theresa Connor; improvements needed especially as area developments - manage the stormwater flow and
bring it through to the Poudre River
16
Mayor Troxell; this is necessary – Ross, any concerns about the mid cycle?
Ross Cunniff; If this was General Fund I would say yes, but since this is restricted funding focused on a specific
utility purpose, benefits stormwater rate payers and is protecting several neighborhoods, I am good with it.
Ken Summers; you do what you need to do when the opportunity arises, and the money is there
D. URA Bond Refinancing
Travis Storin, Director, Accounting
Josh Birks, Director, Economic Health Office
SUBJECT FOR DISCUSSION
Prospect South Loan Refinance Moral Obligation
EXECUTIVE SUMMARY
In 2013, the City loaned the Fort Collins Urban Renewal Authority (“Authority”) $5 million from the General Fund
to reimburse a developer for eligible expenses as part of the Summit development in the Prospect South Tax
Increment Financing District. The City has requested the Authority consider refinancing this loan to free up the
$5 million for investing in other community priorities. The Authority may also benefit from refinancing by being
able to issue bonds with lower interest rates than the existing loan. As part of this refinance, the Authority is
seeking a moral obligation from the City. The moral obligation would result in improved bond ratings and
reduced debt service costs to the Authority.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Council Finance Committee agree with moving forward with the proposed loan refinance and the
associated moral obligation?
What additional information would be useful prior to presenting this item to City Council?
BACKGROUND
The City and Authority have entered into two loan agreements for development projects in the
Prospect South TIF District. What follows is a summary of each loan agreement.
The Summit
On September 6, 2011, City Council established the Prospect South Tax Increment Financing
(TIF) District within the Midtown Urban Renewal Plan Area. After the establishment of Prospect
South as a TIF district, Capstone Development Corporation sought TIF assistance for The
Summit, a 220-unit student housing development. On September 13, 2011, the Authority Board
approved a financial agreement where the Authority would reimburse $5 million of eligible
expenses to Capstone. Per the agreement, the $5 million reimbursement was due upon
completion of the project. At the time, staff estimated The Summit would generate $8 million of
tax increment over the life of the project.
When Capstone completed The Summit in 2013 and received a Certificate of Occupancy,
Capstone requested reimbursement. The Authority was unable to reimburse Capstone for two
reasons:
17
1. The original estimate of tax increment generation for the Summit was inaccurate. Staff’s updated tax
increment generation estimate in 2013 showed the Summit should generate $7 million, not $8 million as
predicted in 2011.
2. Interest rates rose from 4% to 4.96%.
As such, the City and Authority negotiated a loan agreement at that time to reimburse Capstone.
The City agreed to loan the Authority $5 million with a 2.68% interest rate. This interest rate was
based on the known revenue stream of the Prospect South TIF District at the time. This left a $1.78 million
interest rate gap. To fill that gap, the Authority agreed to pledge 50% of future
unencumbered revenue from the Prospect South TIF District to the City. Both City Council and
the Authority Board approved this loan agreement on November 5, 2013.
Prospect Station
In October 2013, the Authority executed a Redevelopment Agreement with Prospect Station
LLC. The Redevelopment Agreement obligated the Authority to reimburse the developer up to
$494,000 for eligible expenses. The Agreement required 50% of the reimbursement obligation
($274,000) to be paid in a single payment upon completion of the project with the remaining
50% paid by the Authority over a 21-year period. Knowing the Authority would not have
sufficient funds to make a single payment upon completion of Prospect Station, the City
approved Resolution 2013-079 declaring City Council’s intent to provide a loan to the Authority
for half of the Authority’s reimbursement obligation.
Prospect Station received a Certificate of Occupancy in September 2014 and subsequently
requested reimbursement. In response, the City and Authority entered into a loan agreement for
$247,000 to fulfill the Authority’s Redevelopment Agreement with Prospect Station. The loan
has a 23-year term and 4.5% interest rate. The Authority Board approved the loan agreement on
November 18, 2014 with City Council approval following on December 16, 2014.
DISCUSSION
Finance staff approached Authority staff in the summer of 2019 with the idea of refinancing the Prospect South
loan. Refinancing the loan could allow the City to allocate the $5 million to other priorities. A refinance could
also allow the Authority to get a lower interest rate than the effective interest rate of 4.96% on the Prospect
South loan.
To assess the viability of a refinance, the City and Authority contracted with their own bond and finance counsel.
The Authority has contracted with Ehlers for their finance counsel and GreenbergTraurig for their bond counsel.
Based on the current tax increment projections, the Authority anticipates receiving between a BBB+ and AA-
rating for their bond issuance. The attached proforma outlines the differences between BBB+, A, and AA- rated
bonds. The URA expects the following terms for this bond issuance:
Amount Borrowed Outstanding balance and cost of issuance
(Approx. $5 million)
Term 18 years
Interest Rate 2.587% - 2.929%
Coverage Ratio 1.94 - 2.01
Total Cost $6,150,782 - $6,343,395
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The Authority is seeking a moral obligation from the City to receive a more favorable bond rating and interest
rate. A moral obligation allows the City to meet any debt service costs from the bond issuance in the case of a
default. Council is not obligated to meet these debt service costs in the event of a default by the URA. Council
may elect to appropriate funds to service this debt or Council can elect to not service this debt. A moral
obligation would likely result in a rating increase from BBB+ to A or higher. The savings between these two
ratings is $165,192 over the life of the loan. The moral obligation will also make it easier for investors to trade
the bonds in the secondary market, reducing the interest cost upon issuance by the Authority.
In summary, this refinance will allow the City to allocate $5 million to other community priorities during the
upcoming Budgeting for Outcomes process while potentially saving the URA $794,000 - $986,000 over the life of
the loan. This loan refinance would also honor the strong partnership between the City and the URA.
NEXT STEPS
The Authority Board will consider the proposed loan refinance at their regular meetings on October 24 and
November 7. City Council will consider the moral obligation on November 19. Staff aim to complete the
refinance by the end of 2019.
Discussion / Next Steps:
Staff Recommendation is Option #2 - refinance with the city’s moral obligation pledge. You do pay a higher rate
without the moral obligation component.
Mike Beckstead; I just received notification that Moody’s reaffirmed us as stable at AAA rating
If we go back to the Mall discussion, we spent a good amount of time around evaluating our moral obligation
around the $53M - we talked with the rating agencies in pretty good detail at that time – no adverse effect to
our credit rating as it is not considered or counted as debt. If we were called upon to exercise that moral
obligation and we elected not to honor that moral obligation pledge - our credit rating could drop several levels
19
Josh Birks; 2 times debt coverage ratio is really solid - borrowing capacity being left on the table at this time
intentionally because how URA wants to use those future funds is unknown.
Ross Cunniff; from the city’s perspective, we are getting $5M that we are obligated - we can then choose to help
the property taxpayers or the URA (depending on how you want to look at it) by reducing their interest rate with
the moral obligation- that is the choice - first choice is do we want that $5M back or not
Mike Beckstead; we could get the $5M back either way - there is still savings to the URA
Ross Cunniff; do we want that $5M back or not? If we do want it back, we go with the moral obligation
You can look at it two ways; more dollars available for projects or more dollars being refunded to tax entities
or both. Cosign or walk away and suffer a lower credit rating as a result.
Mike Beckstead; that was a great summary - I like the moral obligation - refinancing is a good thing for the URA
either way - there are benefits to both - we have access to the $5M for city’s future needs - Lower expense over
the next 18 years - the moral obligation just increases the amount due by about $200K due to the lower interest
rates.
Ken Summers; support the moral obligation or keep the $5M and make 4.5% interest on our investment - I am
comfortable with either of them – because if we are letting the URA finance, let’s help them and do the whole
thing. I think they are pretty solid businesses.
Mike Beckstead; with the 2 times deb coverage ratio this is not even in the gray zone for me in terms of future
risk - property tax is pretty stable right now - we don’t see a downside
Ross Cunniff; let’s go with the moral obligation - I don’t see much downside - seems unlikely that a future
Council would be called upon to act on it.
Mayor Troxell; I support the moral obligation consistent with our discussion in Council.
This is really following through on what was discussed then.
Meeting Adjourned at 11:35 am
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: David Lenz, Director, Financial Planning & Analysis
Zack Moser, Analyst, Financial Planning & Analysis
Date: November 18, 2019
SUBJECT FOR DISCUSSION
2020 Long Term Financial Plan Outlook (excluding Utilities)
EXECUTIVE SUMMARY
The City updates the Long-Term Financial Plan (LTFP) outlook every two years as part of the
Strategic Planning Process. The objective is to highlight potential challenges and aid in
philosophical decision-making on strategies that span the longer term (5 – 10 plus years). The
City has enjoyed a strong economic base and has done an excellent job in managing its
expenditures and maintains a Aaa Moody’s credit rating.
However, due to a general slowdown in actual and projected revenue growth, escalating cost
pressures in serving a growing population base and a prior modeling error, the projected
financial position (city reserves) come under more pressure in the mid-term than highlighted in
the 2018 LTFP. This updated outlook fully accounts for the addition of approximately 100 FTE
positions added over the last two BFO cycles and the requirement to continue to add more FTE
positions to serve the increasing population base.
The baseline scenario assumes current operating conditions and service level delivery, as well as
no outlier impacts (severe recession, natural disaster, etc.). Given our requirement to balance our
expenses against revenues, the Strategic Plan will need to address a combination of options to
contain costs, improve productivities and look for revenue enhancement opportunities.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does Council Finance have any questions related to the 2020 Long-Term Financial Plan
Outlook?
BACKGROUND/DISCUSSION
During the last two Strategic Plan updates, a key component of uncertainty was the potential for
the KFCG tax to sunset in 2020. The potential loss of that revenue source would have put severe
pressure on the City’s finances. However, even with an extension of the tax (which ultimately
was approved by voters), the projections were for City expenditures to exceed revenues over the
long term (reaching approximately $10 million per year in the 2016 Plan and $15 million per
year in the adjusted 2018 Plan by the year 2025).
These pressures on longer term fund reserves continue in the 2020 Plan - the actual and expected
increases to costs continue to accelerate and the estimates of revenue growth from existing
sources have softened somewhat. Our projected deficit by year 2025 could reach $35 to $40
million per year.
Below are the major drivers of changes to the 2020 LTFP outlook compared to the prior 2018
LTFP:
• Lower Tax Revenues:
o Slowing Sales Tax revenue growth – projected at 2.5% annual increase vs 2.8%
prior.
o Lower Use tax revenue – still increasing but driven off a lower base due to
declines in 2015 – 2018 timeframe.
o Offset by slightly higher property taxes from higher valuations.
• Higher Personnel costs:
o Increased salary and benefits costs – reflecting higher current actual FTE levels
and increased future FTE levels to support services for the growing population
base.
• Modeling issues corrected from the 2018 plan:
o Adjustments to fully account for all fund groups and correct for erroneous data
inputs in year 2016 that carried thru the projections.
The graph below highlights our estimated revenue and expense profile, as well as the year ending
fund balances. As noted above, the City has some work to do during the upcoming Strategic
Planning and BFO process to address the tail-off and increasing funding gap, especially as it
relates to specific fund balances.
ATTACHMENTS
Attachment 1: PowerPoint Presentation: 2020 LTFP
David Lenz / Zack Mozer
2020 Long-Term Financial Plan
November 2019
What is the Long-Term Financial Plan?
Objective:
Highlight potential challenges and aid in philosophical decision-making on strategies that
span the longer term (5 to 10+ years)
What it is:
Methodology to identify macro issues to be addressed in the strategic plan
Process of aligning financial capacity with long-term service level objectives
Framework to stimulate discussion around a long-range thought perspective
Attempt to provide a balanced, base case scenario with 50/50 probability of occurring
under current operating conditions
What it’s not:
Detailed 10 year budget
Project Specific Initiatives Analysis
Operational Next Steps
2
Scope and Process
Total City View = All Fund Groups
Includes: Primary Funds, Secondary Funds and Internal Service Funds
Excludes: Utilities
Model Data:
18 years of history at the individual account level
30+ years of Sales and Use tax revenue
Service Area Capital Estimates / Debt Service Projections
Revenue / Expense Forecast Inputs:
290 revenue accounts summarized into 36 revenue line items
593 expense accounts summarized into 39 expense line items
Correlation analysis
Historical Trend Perspective
Unique drivers at the organizational line item level
Service area and analyst knowledge/input regarding future projects
3
$138M
$207M
$161M
$242M
$301M $359M
$225M
$269M
$369M
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025$ MILLIONSREVENUES & EXPENDITURES -ALL FUNDGROUPS -WITH TRANSFERS
Year End Balance Revenue Scenario Revenue Expenditures Scenario Expenditures
4
•Healthy financials through 2020 at existing service levels
•$32M of funding eliminated in 2021 without KFCG
2016 LTFP –All Governmental Funds
2018 LTFP –All Governmental Funds
5
•Healthy financials through 2020 at existing service levels
•$32M of funding eliminated in 2021 without KFCG
What Happened –2018 vs. 2016 LTFP
2016 LTFP –by 2025
Expenses exceeding Revenues by approximately $10M/yr
Ending Fund Balance declines to $161 million
2018 LTFP –by 2025
Revenues exceeding Expenses by approximately $5M/yr
Ending Fund Balance increases to $273 million
Errors and Omissions in 2018 LTFP:
Historical data from 2016 for a number of inputs entered incorrectly
(reversed signage) and escalated throughout the plan period
CCIP Fund and Internal Service Funds not explicitly included in model
Adjusted 2018 LTFP –by 2025
Expenses exceeding Revenues by approximately $15M/yr
Ending Fund Balance decreases to $100 million
6
This
difference
accounts
for the vast
majority of
the ending
balance
variance
between the
plans.
Adjusted 2018 LTFP
7
Ending Fund Balance in 2025 drops to $100 million
(vs. $161 million from the 2016 LTFP)
2020 LTFP
Primary Assumptions and Impacts vs. prior plan
8
Item Growth Rate Impact Rationale
Population + 1.9% > + 1.3%Per Economic Development figures –slowing rate of growth over
forecast period.
Sales Tax + 2.5% Slowing growth over historical prior estimate of 2.8%
Use Tax + 3.6%Similar % increase expected from prior estimates but from lower base
due to actual results in 2015 –2018.
Property Tax + 5.0%Increased projection on 5 year rolling average. Accounts for run up in
2016-2018 property valuations.
Salaries + 3.7%In line with recent historical cost increases. Forecast at CPI plus FTE
increases due to service level needs from population increase. Police
increases are slightly higher.
Benefits + 4.7%Increase at 1.0% over CPI plus FTE increases due to service level
needs from population increase. Police increases are slightly higher.
Net negative impact from prior LTFP driven by:
•Lower Sales and Use tax offset by higher Property taxes
•Higher salary and benefits costs driven by higher actual FTE levels and increased
projections of future FTE levels needed.
Where are we now? 2020 LTFP -Baseline
9
The Baseline 2020 LTFP shows the same general profile as the adjusted 2018 LTFP, resulting in a lower Ending
Fund Balance in 2025 of $74 million vs. $100 million.
2020 LTFP -Implications
10
Expenses and Capital
Expense acceleration in excess of revenue growth
Containment of salary and benefit costs
FTE levels in conjunction with service level objectives
Productivity improvements
Capital refresh timing / capability
Revenue
Increased monitoring and understanding of macro-economic drivers and trends
Renewed focus on evaluating alternative sources / structures
Timing
Strategic Plan considerations
2021/22 BFO cycle impacts
2020 LTFP –Scenario
2.5 % Increase in Rev & Reduction in Expense
11
A combination of revenue enhancements and/or expense controls will be required to stabilize long term fund balances
2020 LTFP
12
Back-Up
Fort Collins Enhanced Leadership Model
13
Long-Term Financial Plan is
a key component informing
the Strategic Planning
Process
2020 LTFP
14
The continuation of spending above projected revenue inflows would put the
city in a deficit position by the year 2028, and …
2020 LTFP -General Fund
15
Specific funds
come under
pressure much
earlier. The
General Fund
could drop
below
minimum
Fund
Requirements
by 2023
2020 LTFP –Scenarios
2.5 % Annual Increase in Revenues
16
2020 LTFP –Scenarios
2.5 % Annual Reduction in Expenses
17
1
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Mark Kempton, Director of Plant Operations
Lance Smith, Director Utilities Finance
Liesel Hans, Water Conservation Manager
Date: November 19, 2019
SUBJECT FOR DISCUSSION
Appropriation of $3.2 million of reserve funds from the Water Fund for the construction of a
temporary emergency backup drinking water supply system associated with the Horsetooth
Outlet Project.
EXECUTIVE SUMMARY
The purpose of this item is to request an appropriation of $3.2 million from Water Fund Reserves
to design and construct a project to provide a temporary backup drinking water supply pumping
system during a planned October-November 2020 closure of the Soldier Canyon Dam Outlet
pipeline from Horsetooth Reservoir. The pipeline provides drinking water to the two drinking
water treatment plants serving the City of Fort Collins and surrounding areas, serving about
250,000 people. The pumping system is intended as an emergency backup supply system to the
primary Cache la Poudre River water supply during the 60-day long planned outage of the
Horsetooth Reservoir water supply line. The City will be reimbursed approximately 40 to 50% of
the project costs by our project partners at the conclusion of construction.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Committee support the appropriation of Water Fund reserves to construct an emergency
backup water supply system for the City and our partners, the Tri-Districts and Platte River
Power Authority (PRPA)?
Does the Committee support implementation of water use reduction measures to lower water
demands to typical winter levels of 15 million gallons per day for the duration of the project?
BACKGROUND
Northern Water, which operates the 54-inch Soldier Canyon Dam Outlet pipeline from
Horsetooth Reservoir to the City's Fort Collins Water Treatment Facility and the Tri-District's
(Fort-Collins Loveland, East Larimer County, and North Weld County water districts) Soldier
Canyon Water Treatment Plant, is planning to perform necessary maintenance on the water line
in October and November of 2020. This maintenance will require a full closure of the line for up
to 60 days, which will result in both treatment plants relying on the Cache la Poudre River
("Poudre River") as the sole water source for the City's and the Tri-District's respective water
2
service areas. Platte River Power Authority’s (PRPA) Rawhide Plant also receives process water
from the Horstetooth line and could be affected by a long-term loss of water.
Historically, the Poudre River has been a reliable source of high-quality water; however, it can
be susceptible to water quality impairing incidents such as forest fires, vehicle crashes, chemical
spills, and other incidents that may cause the treatment plants to shut off the water intakes from
the River. If one or more of these such incidents were to occur and cause a prolonged shutdown
of the Poudre River intakes during the planned outlet project, the City and the Tri-Districts could
be at risk of a drinking water shortage. PRPA’s Rawhide Plant could also be affected by a
longer-term water outage shortage and is a working partner in this project. The City has
sufficient treated water storage to withstand short term outages (up to 8 hours); however, the Tri-
Districts do not have similar storage and may be susceptible to water shortages during a short
loss of the Poudre supply.
To mitigate the potential water supply risk, the City, the Tri-Districts, and PRPA are proposing
to construct a temporary emergency water supply project. Low cost, operational mitigation
measures will also be implemented to help mitigate risks associated with the Poudre supply.
Examples include stockpiling additional water treatment chemicals, installing containment
booms in the river etc.
The Hansen Supply Canal project includes a temporary backup emergency pump station on the
Hansen Canal that both the City and the Tri-Districts have agreed to design and construct as an
alternative supply of Horsetooth Reservoir water to both treatment plants in the case of a loss of
water supply from the Poudre River. The anticipated total cost of the project of $3.2 million is to
be shared between the City, the Tri-Districts, and PRPA as outlined in separate Inter
Governmental Agreements (IGAs).
In the case of a sustained loss of the Poudre River supply (in excess of 8 hours), water will be
pumped from the Hansen Supply Canal (the canal that flow out the north end of Horsetooth
Reservoir) via a new temporary pump station to be constructed by summer 2020. Water will then
be pumped into the existing Pleasant Valley Pipeline (PVP) or to the City’s two existing Poudre
River pipelines through a newly constructed pipeline connection that will transport water to both
treatment plants to serve the City’s and the Tri-District’s customers, as well as PRPA.
COST SHARING & PARTNERING STATUS
The anticipated cost share percentages, based on million gallons per day (MGD) of flow to each
partner for the project are approximately as follows;
• NWCWD - 12 MGD (34%) - $1.1 million • ELCO - 3 MGD (8.5%) - $0.25 million • FCLWD – 5 MGD (14.2%) - $0.45 million • Fort Collins – 15 MGD (winter use; 42.4%) - $1.4 million • PRPA - 0.3 MGD (0.9%) - $0.03 million • UTotal needed = 35.3 MGD (100%)
3
Based on the percentages above, the net cost to the City upon completion of the project is
estimated to be $1.4 million to $1.6 million. There are some items in the project cost that do not
pertain to all parties e.g. water conservation measures within the City will not apply to
NWCWD.
To date both ELCO, NWCWD, and PRPA have verbally committed to paying for their portions
of the project. FCLWD has also indicated interest in the project but has not formally approved
their participation in the project. An Intergovernmental Agreement (IGA) has been developed
between the City and the Tri-Districts which outlines the general ownership, operation, and
payment terms for the project. The final details of percentages will be added to the IGA closer to
selection of a final design alternative for the project.
DEMAND MANAGEMENT
The Horsetooth Outlet Project is an opportunity to share information about:
• the importance of proactive maintenance to sustain high quality, reliable water supplies;
• the source of our water supply;
• the collective responsibility to use our water resources wisely;
• and, the value of a community-owned water utility.
The proposed back-up supply project will provide 15 to 20 million gallons per day (MGD) of
water to Fort Collins. Typical demands in early October are approximately 20 to 22 MGD and
typically drop to 15 MGD toward the middle-to-end of October as irrigation and other seasonal
uses end. Staff suggests the following water demand management approach to mitigate risk:
• Goal: Reduce water demand to typical winter levels (15 MGD) by October 1st and
sustain this winter level throughout the Horsetooth Outlet Project.
1. Perform extensive public outreach and education in the months leading up to and
throughout the project.
o Tactics may include, but is not limited to, utility bill inserts, direct mailers,
local articles/ads, emails, newsletters, staff presence/activities at a variety of
events throughout the year, community presentations (targeted and upon
request), posters, promotion of programs/services and rebates, collaboration
with City, commercial, and key accounts, etc.
2. Mandatory or voluntary requirement for all customers to end all irrigation by October
1st, with limited exceptions.
With proactive outreach, communication and engagement, we believe the community will do
their part to minimize some of the necessary risk of the project. Many communities across the
nation only have one water supply and we are fortunate to have two reliable, high-quality
sources. It is our responsibility to protect our community by protecting and proactively managing
our water resources. Water is an essential ingredient to the many activities and businesses that
make Fort Collins special. Investments we make today in our water resources, infrastructure, and
community education help maintain clean, reliable water resources and protect the very thing our
community was built upon – and continues to thrive upon.
While the goal is to achieve temporary water reductions, this effort stands to drive lasting
4
efficiency and conservation impacts, benefiting our utility and residents alike. Additionally, the
Water Supply Shortage Response Plan (WSSRP) update project identified the need to develop an
approach for water shortages outside of the typical summer irrigation season. The Horsetooth
Outlet Project provides an opportunity to collect information that will inform that approach for
the next WSSRP update, currently slated for after the recently kicked-off Water Supply and
Demand Management Policy update. Outreach will be performed in cooperation with the Tri-
Districts where feasible, and these conversations have already started. Additional risk reduction
measures such as restricting truck traffic in the Poudre Canyon during the shutdown are being
discussed with the Colorado Department of Transportation (CDOT).
A location map for the Hansen Canal pumping system is shown in Attachment 1.
A preliminary schematic of the Hansen Canal Pump System is shown in Attachment 2.
The City will initially fund and manage the construction of the project. The Tri-Districts and PRPA
will reimburse the City at appropriate milestones for their portion of the project costs. The pipelines
and appurtenances will be permanent connections, though, at this time, the pumps associated with
the pump station will be temporary and will be removed from the site at the completion of the
Horsetooth Outlet Repair Project.
ATTACHMENTS
Attachment 1 – Location map for the Hansen Supply Canal Temporary Pump Station
Attachment 2 – Preliminary schematic of the Hansen Canal Temporary Pumping System
Hansen Canal‐ Project Location MapTeds PlaceNoosa DairyPoudre River/HWY 14Project Site
Horsetooth
Outlet Project
October 2020
Agenda
Problem overview
Risks to our water supply
Proposed Solutions
Recommendations
Request to Council Finance
Committee
Direction sought from
the Council Finance
Committee
•Does the Committee support an appropriation of Water Fund reserves to construct an emergency backup water supply system for the City and our partners, the Tri-Districts and Platte River Power Authority?
•Does the Committee support implementation of water use reduction measures to lower water demands to typical winter levels of 15 million gallons per day by October 1, 2020?
Strategic Alignment
4.6 Provide a reliable, high-quality water
supply.
Horsetooth Outlet Project
•Project Owner: Northern Water and U.S. Bureau
of Reclamation
•Activity: Close the Horsetooth (HT) Reservoir
outlet at the Soldier Canyon Dam to conduct
maintenance and repairs
•Duration: Work starts approx. October 15, 2020
and lasts up to 60 days
•No flow via outlet from HT Reservoir to two water
treatment plants
The City’s Interest
•The HT Reservoir outlet: Typically
provides 50% of the annual water supply
to the City and 80% for surrounding areas
•During the outlet project: the City and Tri-
Districts Water Treatment Plants (WTPs)
will rely solely on the Poudre River supply
•Fort Collins WTP has approx. 30 to 40
hours of water in storage (based on 15
MGD demand; 8-hour decision window)
Threats to the Poudre River
Risks to
Poudre
water supply
Magnitude of Risk
(larger bar =greater risk)Risks
Risk
Mitigations
•Partner with Northern on project risks/mitigations
•E.g. Reduce time to water the pipeline
•Through IGA, set max outage length and require Northern
suspend operations in event of fire or catastrophic event
•Increase Poudre River monitoring
•No major maintenance or construction activities at WTF
•Treated water reservoirs at max capacity
•Restrict large truck traffic in Poudre Canyon
•Training and readiness for spill response
•Readiness for water quality changes
Low Cost -$50k to $150k
•Construct temporary pumping station at the Hansen Canal to
the PVP
•Implement water conservation measures
High Cost -$3.2 Million (Approx. 50% City costs)
Risk mitigation for worst case scenario* –Low Cost
0 200 400 600 800 1000 1200
Complete loss of Poudre Water Supply - Long Term -…
6. Develop emergency water conservation …
9. Increase sampling and visual monitoring of the …
15. All major Water Treatment Facility operational,…
17. On-site reservoirs will be maintained at over 21…
19. A complete spill boom inventory will be…
21. Staff will receive boomer deployment training…
23. Increase on site alum storage through the project;
35. Closing Gateway Park/access to our intake during…
38. Ask large water users to cease or lower water…
Risk ScoreMitigationsLow Cost Options -Long Term
* Worst case = complete loss of Poudre water supply
Risk Mitigation for worst case scenario* –High Cost
0 200 400 600 800 1000 1200
Complete loss of Poudre Water Supply - Long Term - more
than 2 days
1. Construct temporary pumping station at the Hansen Canal
to the PVP
3. Request that Northern Water stop work and water up the
Horsetooth line –3-day completion time
12. Investigate $80 k cost associated with new trash racks
vs. coating existing racks thus reducing time to water up…
13. Continue to work with Northern to see if we can shorten
watering up time from 3 to 2 days
Risk ScoreMitigation OptionsHigh Cost Options -Long Term
* Worst case = complete loss of Poudre water supply
Hansen Canal Pump System-Project Location Map
Teds Place/US 287
Noosa Dairy
Poudre River/HWY 14
Project Site
Hansen Canal
Temporary
Pumps
•Temporary backup emergency pumping
station
•Pump Horsetooth water from Hansen
Supply Canal to City pipelines to
treatment facilities
•City/Tri-Districts/PRPA partnership
•Cost estimate: $3.2 M total
•Shared based on flow allocations (approx.
50% City)
•Estimated flow capacity: 30 to 40 MGD
to City, Tri-Districts, and PRPA
Map: Northern Water
https://www.northernwater.org/docs/Water_Projects/PDFmapsWater
Projs/PleasantValley_map.pdf
19
Horsetooth
Outlet
Project –
Emergency
Supply
(Temporary
Pumps)
Hansen
Temporary
Pumps
Demand
Management
•Water required by each entity;
•NWCWD -12 MGD (34% of total flow)
•ELCO -3 MGD (8.5%)
•FCLWD –5 MGD (14.2%)
•City –15 MGD (42.4%)
•PRPA -0.3 MGD (0.9%)
•Total needed = 35.3 MGD (100%)
•Hansen pump station will supply
approx. 40 MGD
Total Daily Water Use Goal: reduce water demand to typical
winter levels (15 MGD) by October 1, 2020
0
10
20
30
40
1-Sep 8-Sep 15-Sep 22-Sep 29-Sep 6-Oct 13-Oct 20-Oct 27-Oct 3-Nov 10-Nov 17-Nov 24-Nov 1-Dec 8-Dec 15-Dec 22-Dec 29-DecWater Use (MGD)15 MGD Goal
Maximum
Average
Minimum
Project Period
Demand Management Strategy
Goal: reduce water demand to typical
winter levels (15 MGD) by October 1, 2020
1.Extensive outreach & education before
and during project
2.Irrigation restrictions starting October 1,
with limited exceptions
•Est. over 4x greater impact with mandatory
Opportunity: Lasting education and impacts.
Other Key
Points
•City would initially fund and manage the
construction of the project
•Tri -Districts and PRPA would reimburse
City at appropriate milestones for their
portion of the project costs
•Permanent components of Hansen
project would be owned and operated by
City and Tri -Districts
•Enables a future permanent pump station
Financials
•PRPA: $0.03 million (0.9%)
•ELCO:$0.25 million (8.5%)
•FCLWD: $0.45 million (14.2%)
•NWCWD: $1.1 million (34%)
•Fort Collins: $1.4 million (42.2%)
•End of 2018:Water Fund Reserve =$70.2M
•$41.7M needed for minimum reserves
and prior appropriations
•$28.6M available for new appropriations
Schedule/Next Steps
City Council approve IGAs: Oct. 1
Council Finance Committee: Nov. 19
Water Board: Nov. 21
City Council: Dec. 3 and 17
Construction Contracting
Oct.–Dec. 2019
Complete design work
Start procurement –long
lead times
Acquire easements
Electrical power
Nov. 2019 –Mar.
2020
Construct and test new
pump station
Train staff on operations
and maintenance
Water demand
management
Mar.–Oct. 2020
Estimated start of outlet
construction
Oct. 15, 2020
Pump system in standby
Continuous monitoring of
the River
Water demand
management
Oct.–Nov. 2020
Under Review
•Very tight construction schedule
•Risk tolerance/management
•Demand management strategies
•Easements and access
•FCLWD participation
Preliminary
Recommendations
•Implement all Low-Cost Options, examples:
•Spill response readiness
•Increased Poudre River monitoring
•Restrict large truck traffic
•Implement demand management measures:
•Extensive outreach & education
•Mandatory irrigation restrictions starting
October 1
•Fund and build the Hansen Canal Temporary
Pumps
•$3.2 M total; City’s portion approx. 40% to
50%
Direction sought from
the Council Finance
Committee
•Does the Committee support an appropriation of Water Fund reserves to construct an emergency backup water supply system for the City and our partners, the Tri-Districts and Platte River Power Authority?
•Does the Committee support implementation of water use reduction measures to lower water demands to typical winter levels of 15 million gallons per day by October 1, 2020?