HomeMy WebLinkAboutAgenda - Full - Finance Committee - 07/06/2023 -Finance Administration
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AGENDA
Council Finance & Audit Committee Zoom Meeting
July 6, 2023
4:00 - 6:00 pm
Zoom Meeting https://zoom.us/j/8140111859
Approval of Minutes from the May 4, 2023, Council Finance Committee meeting.
1.Utility Customer Information System L. Smith
Presentation: 10 mins. G. Stanford
Discussion: 20 mins.
2.Sustainable Timberline Recycling Center M. Saylor
Presentation: 15 mins.
Discussion: 30 mins.
3. 2023 Light & Power / Broadband Financing B. Dunn
Presentation: 10 mins.
Discussion: 15 mins.
4.Opioid Settlement J. Hueser
Presentation: 10 mins.
Discussion: 10 mins.
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Council Finance Committee
2023 Agenda Planning Calendar
RVSD 6/28/23 ts
July 6th 2023
Utility Customer Information System 30 min L. Smith
G. Stanford
Sustainable Timberline Recycling Center 45 min M. Saylor
2023 Light & Power/Broadband Financing 25 min B. Dunn
Opioid Settlement 20 min J. Hueser
Aug. 3rd 2023
2022 Financial Audit Results 30 min B. Dunn
2022 Fund Balances 30 min B. Dunn
2023 Stormwater Debt – Oak Street 30 min B. Dunn
Police Radios 20 min Z. Mozer
J. Allar
Aug. 16th 2023
*Special Meeting*
Auditor Firm Interviews B. Dunn
Sept. 7th 2023
Annual Adjustment Ordinance 20 min L. Pollack
2024 Budget Revisions 40 min L. Polack
Capital Expansion Fee Updates 60 min D.Lenz
Oct. 5th 2023
November 2nd / December 7th 2023 / January 4th 2024
Rate Forecasts for the 2025-26 BFO Cycle, Associated Capital Improvement Plans &
Anticipated Debt Needs (L. Smith)
Rental Registration – Property Remediation Financing (C. Champine, M. Yoder)
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Finance Administration
215 N. Mason
2nd Floor
PO Box 580
Fort Collins, CO 80522
970.221.6788
970.221.6782 - fax
fcgov.com
Council Finance Committee Zoom Meeting
May 4, 2023
Via Zoom
Council Attendees: Julie Pignataro, Emily Francis, Kelly Ohlson
Staff: Kelly DiMartino, Travis Storin, Rupa Venkatesh, John Duval, Ethan Doak,
Meaghan Overton, Marcy Yoder, Brittany Depew, Chief Swoboda, Sgt. Annie
Hill, Mike Calhoon, Victoria Shaw, Aaron Reed, Rebecca Pomering, Javier
Echeverria Diaz, Terri Runyan, Gerry Paul, Blaine Dunn, Adam Halvorson, Jo
Cech, Randy Bailey, Brian Hergott, Kerri Ishmael, Zack Mozer, Erik Martin,
Carolyn Koontz
Others: Kevin Jones, Chamber
Sady Swanson, Coloradoan
______________________________________________________________________________
Meeting called to order at 4:00 pm
Approval of minutes from the April 6, 2023, Council Finance Committee Meeting. Emily Francis moved for approval
of the minutes as presented. Julie Pignataro seconded the motion. The minutes were approved unanimously via roll
call by; Julie Pignataro, Emily Francis.
Kelly Ohlson joined the meeting at 4:11 pm
A.Auditor RFP Process
Blaine Dunn, Accounting Director
Randy Bailey, Controller
EXECUTIVE SUMMARY
The purpose of this item is to solicit consensus from the Committee regarding:
•The process for selecting an independent auditor for an up-to five-year period.
A Request for Proposal (RFP) will be issued this summer for audit services. The process is designed to ensure the
selected firm meets the City’s requirements and has the knowledge, experience, and reputation in auditing
similar entities.
An annual external audit by an independent CPA firm is required by Statute, Charter, debt covenants, and
virtually all grant agreements.
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GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Staff seeks input on:
•Evaluation criteria for selection of the independent auditor
•Desired modification to historical processes for selection, if any
•Preference on number of firms to be interviewed by the committee.
BACKGROUND/DISCUSSION
Auditor Rotation
Multi-year contracts are limited to 5 years by City Code. The City does have a mandatory auditor rotation policy
in City Code. The Code specifies no firm is eligible for more than two consecutive five-year terms. If the
incumbent does respond to the RFP for a second five-year term, they must assign a new lead partner to conduct
the audit. The City’s current audit firm is in their first five-year term and will be allowed to respond should they
meet the above requirements.
GFOA best practice guidance acknowledges that private sector and publicly traded SEC filing entities have
rotation practices mandated by regulatory authorities or their own bylaws. In the public sector, GFOA cautions
that sometimes it is difficult to get enough qualified responses if the incumbent is disallowed.
The below table shows a 30-year history of audit firms the City has engaged.
1993 Bondi 2005 Bondi 2017 RSM (McGladrey)
1994 Bondi 2006 Bondi 2018 BKD
1995 Bondi 2007 Bondi 2019 BKD
1996 Bondi 2008 McGladrey & Pullen 2020 BKD
1997 Bondi 2009 McGladrey & Pullen 2021 Forvis (BKD)
1998 Bondi 2010 McGladrey 2022 Forvis (BKD)
1999 Bondi 2011 McGladrey
2000 Bondi 2012 McGladrey
2001 Bondi 2013 McGladrey
2002 Bondi 2014 McGladrey
2003 Bondi 2015 McGladrey
2004 Bondi 2016 RSM (McGladrey)
Timeline and Process
Staff proposes to release a Request for Proposal (RFP) in July. The proposed evaluation criteria, all to be equally
weighed at 25% and in no particular order, would be:
•Scope of proposal
•Assigned personnel qualifications.
•Cost and work hours
•Firm capability & reputation
A staff committee, including staff members from City, Library and PFA will evaluate written proposals and
recommend the top firms for presentation to the Finance Committee.
Interviews would be conducted at a special Finance Committee meeting in August with the City Purchasing
Director serving as Purchasing Agent and facilitator. The Committee’s recommendation would be presented to
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the full Council for adoption via Resolution, thereby authorizing the Purchasing Agent to enter into an
agreement with the awarded firm for the 2023 fiscal year audit, renewable annually through the 2027 audit.
DISCUSSION / NEXT STEPS
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Staff seeks input on:
• Evaluation criteria for selection of the independent auditor
• Desired modification to historical processes for selection, if any
• Preference on number of firms to be interviewed by the committee.
Julie Pignataro; have there been any issues with the current process?
Blaine Dunn; I don’t think there have been any issues with the process that we have used in the past – I think it
has worked well – After the last selection, we did get feedback from the committee that two finalists wasn’t
enough choice to bring so maybe we bring three if the committee wants to see a 3rd finalist in the pool. If the
committee agrees, we recommend capping it at 3 finalists.
Travis Storin; we anticipate it to be a competitive process as the City is considered to be a prestigious client as
these firms look to build out their portfolio in their government practice., The feedback we got the last time was
that 2 options really didn’t feel like a choice.
Julie Pignataro; how long are the interviews?
Blaine Dunn; the interviews are typically 45-50 minutes with a 5–10-minute buffer between interviews to allow
time for the firms to swap places at the table. We also allow for a debrief at the end for the committee to make
a decision.
Julie Pignataro; how many applicants do we traditionally receive?
Gerry Paul; the last cycle, we received seven proposals and interviewed two applicants. Our standard practice is
to interview three. We don’t typically interview more than three unless there is a compelling reason.
Julie Pignataro; I would be ok with three. I can understand not feeling like you really have a choice with two.
Blaine Dunn; our intention is to do the interviews back-to-back in one session and make the selection decision
following the interviews in the same meeting.
Emily Francis; I agree with what has been said it sounds like a good plan.
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B. Encampment Cleanup Pilot Program
Rupa Venkatesh, Assistant City Manager
Rebecca Pomering, Natural Areas Technician I
Sgt. Annie Hill, Police Services
Mike Calhoon, Parks Director
Mary Yoder, Neighborhood Services Manager
Brittany Depew, Homelessness Response & Solutions Lead Specialist
EXECUTIVE SUMMARY
In Fall 2022, staff identified a backlog of identified encampments throughout the City and determined that
cleanups need to shift from twice a month to once per week. This was implemented towards the end of January
2023 with the realization that the 2023 funded offer would not be sustainable for the entire year. A pilot
program was implemented to assess the effectiveness and need to continue after three months with an
opportunity to share findings with the Council Finance Committee to request an appropriation if the program
was achieving desired results.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. What questions does the Committee have regarding the pilot program?
2. Does the Committee support additional funds in 2023 to continue with the weekly camp cleanup pilot
program?
3. Does the Committee support staff bringing forward a request for additional funds for 2024 during the mid-
cycle revision process in fall 2023?
BACKGROUND/DISCUSSION (details of item – History, current policy, previous Council actions, alternatives or
options, costs or benefits, considerations leading to staff conclusions, data and statistics, next steps, etc.)
Prior to 2019, the City did not have a separate encampment fund. In 2017 and 2018, cleanups were coming from
regular operating budgets for Natural Areas, Parks, Neighborhood Services, and other departments where
cleanups were occurring. In Fall 2018, a mid-cycle adjustment was requested for a dedicated fund to utilize in
2019. The joint offer was submitted by Neighborhood Services, Parks, Stormwater, and Natural Areas who
provide staffing. Since 2019, a dedicated encampment fund has been utilized though funds expended have
varied over the years likely due to the COVID-19 pandemic.
Since Fall 2022, a weekly tactical team of staff from Social Sustainability, Natural Areas, Police Services,
Neighborhood Services, Parks Rangers, Transfort, City Attorney’s Office and partners such as Poudre Fire
Authority and Outreach Fort Collins meet to coordinate encampment cleanup prioritization and identify hot
spots.
The growing number of encampments became an emergent issue with the turnaround time of when a camp is
identified to cleanup of up to 3 months. A pilot program was implemented to move towards weekly cleanups
with a goal to reduce turnaround time to 30 days.
As of April 6, 2023, the turnaround time for cleanups is an average of 12 days. 257 camps have been cleaned
with 169 cubic yards of waste, 363 Sharps, 77 shopping carts and 15 cubic yards of metal collected and diverted
from Natural Areas, Parks, and other locations in the City. If the current pilot program continues, it is on track to
divert 19% more trash, 41% more shopping carts and 24% more metal than 2022.
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In order to continue the current pilot program of weekly cleanups, an additional $175,000 is requested for 2023.
Additional funds will also be utilized for a debris boom pilot project to help mitigate issues occurring at Warren
Lake/Larimer Ditch #2 as well as provide assistance to the Conifer Street area as it relates to inoperable RVs.
During the mid-cycle revision process in Fall 2023, staff will bring forward a request for additional funds for
2024.
DISCUSSION / NEXT STEPS
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1) What questions does the Committee have regarding the pilot program?
2) Does the Committee support additional funds in 2023 to continue with the weekly camp cleanup pilot
program?
3) Does the Committee support staff bringing forward a request for additional funds for 2024 during the mid-
cycle revision process in fall 2023?
Julie Pignataro; how is the city defining ‘camp’?
See slide #8 below.
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Rebecca Pomering; a site that needs to be cleaned up is referred to as a camp –can be a variety of designations -
camps tagged / trash clean up – no valuables present – folks have left.
Thank you for the Warren Lake boom – thank you for making that happen.
Julie Pignataro; are our shelters full in the summer?
Rupa Venkatesh; yes, we do not do overflow in the summer, but we have talked about extreme heat situations –
I will refer to Meaghan for more context.
Meaghan Overton; traditionally the city’s overflow response has been limited to cold weather months only.
Recently we have been working on an emergency heat response – during the summer months, the concern is
mostly for daytime hours when the temperature is highest. Places like the Murphy Center will open as a cooling
center but no overnight shelter option in the summer – work is going on now to pilot what a coordinated and
slightly more robust and data informed heat response might look like (more extreme temps due to climate
change)
Julie Pignataro; are people camping because they don’t want to be in a shelter or because they can’t?
Sgt. Annie Hill; we ask that question every time we come in contact with someone – why they are not utilizing a
shelter – 99% of the time, folks say they do not want to be n shelter - due to theft. I get an email with how many
beds available - there were 3 beds open last night.
Julie Pignataro; when we have overflow shelters – do they offer choice of where folks can sleep?
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Meahgan Overton; I don’t know if there is a direct yes or no answer to that question– because people’s needs
vary so much – when we talk about traditional overnight, we are talking about The Fort Collins Rescue Mission
which serves single men. This can get complicated rather quickly with couples, families, etc. Additional shelter
capacity creates options for some folks but not across the board – a complicated answer.
Julie Pignataro; on the Successes slide (see slide #11 below) The sub-bullet that says ‘a person experiencing
homelessness (PEH) was able to get housed in just 20 days. How do they get housed?
Sgt. Annie Hill; this was an individual who had been frequently staying in the Troutman tunnel and had been
contacted by Police, Transfort among others. We were able to get Outreach Fort Collins on site and they were
able to initiate the housing questionnaire, and because of his level of vulnerability he was housed very quickly
which is not typical. He got permanent supportive housing.
We need to at least get people in a place where they can complete the housing questionnaire if they do want
long term housing. Then they at least have some type of goal they are working towards. If they are not on any
housing list, how do we make homelessness brief?
The goal is to get outreach on site as often as we can to at least figure out how to get them on track. This
individual is a really great success story – he sings our praises.
Meaghan Overton; if I could add a bit of context, one of the pieces of the weekly meeting that has been
mentioned a few times, is the inclusion of the regional continuum of care and the coordinated entry system.
A group of city staff and partners meeting to talk through hot spots and folks that we are interacting with
regularly, so the continuum of care does a lot of work in the background to connect people with housing
resources in particular and case management – so connecting police / code enforcement with the continuum of
care is part of what is really helping everyone have the same information.
If they are on a housing list, the continuum of care might be aware but maybe Police is not
aware that they are on a list at all. Communication has been a big benefit of the weekly coordination meetings.
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Rupa Venkatesh; with Police being on those calls, they hear the continuum of care and who is on these housing
lists – when they are out in the community, they can connect those pieces. The continuum of care is not
necessarily out in the field, but Police Services is – so it is really connecting the dots.
Julie Pignataro; I am a yes to your questions – I am also a further yes – if you could find a need for another $25 -
50K to help get these people housed or find some other options. That would be amazing, and this would be the
time to do it. We know we are working on these long-term solutions. We know that camp clean ups are a
short-term solution. Will this presentation be given to the full Council or if it will be part of a larger package, but
we need to rehumanize this data. As impressive as the data is about the clean ups, it is actually very depressing.
Talk more about what is happening on the other end like what we are trying to do for people.
Emily Francis; if we tag an active camp, do we clean up after they leave?
Sgt. Annie Hille; the tag is giving them a warning that they can’t be camping there as there is usually a good
amount of rubbish. We don’t enforce this at night – We don’t start clean-up until at least 24 hours after the
camp has been tagged. We at least do two tags prior to clean up.
Rupa Venkatesh; so the $5,500 average weekly clean up cost is the cost of the contractor.
Emily Francis; I understand the budget is going to trash cleanup, but I struggle with tagging active camps and
asking people to move when we don’t have shelter space for folks to utilize or other housing options to offer.
They move to another camp, and we have to do it all over again.
Rebecca Pomering; one thing we have noticed is that if we don’t take immediate action on these clean ups, they
will build upon each other we don’t want people in the tunnel of a ditch system for a variety of reasons including
safety (if the water would turn on) and people aren’t able to move out of the way or the physical debris that is in
the canal which is intensified with the number of people. Som the sooner we can identify a problem and get
them resources whether that is through outreach or Police.
Emly Francis; so, is it every active camp?
Sgt. Annie Hill; we offer resources to every single camp we go to – we want to help get people connected to
resources. We identify areas where if we don’t address them, they get larger and there can be more crime in
the camps. It becomes an unsafe environment if we don’t address them early on as Rebecca mentioned.
The area they cover is usually Old Town and North Fort Collins and the transit lines. They have been really
accommodating in coming on site.
Emily Francis; I understand that there are big safety concerns and concerns around natural areas where we see a
lot of folks camping. The reality is that these are sweeps as we are continually asking people who are
experiencing homelessness to move. I struggle with, we don’t have enough space in our community to house
people or enough overflow shelter space. Asking them to move is another disruptor for their lives.
How much does it cost to run our overflow shelter?
Meaghan Overton; let me see if we can get that number.
Emily Francis; we do need to make progress with the options that we can offer people.
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Kelly Ohlson; on slide #12 (see below) the $50-70K for an abandoned construction site. That seems like a high
number. Why did we let it get that bad before cleaning it up?
Rupa Venkatesh; first, we could not contact the property owner over several months. When we didn’t have any
luck, essentially the options were – Do we keep trying to contact the owner OR do we do something to help
mitigate the problem?
Marcy Yoder; it was also to secure the site, it is not that expensive to just do clean up. It needed to be fenced
and boarded so that folks can’t continue to get into those partially constructed buildings. It ranges from they
dug the hole for the basement and stopped to the house is partially up but doesn’t have windows or doors to
close and secure it.
Rupa Venkatesh; the framing had actually deteriorated so it had become this open space.
Kelly Ohlson; I am yes on the questions. I really like the team effort. It was a long time coming, but I like where
you are at. I have little to no empathy for folks creating messes in natural and sensitive areas.
When you don’t act, it is only getting worse over time -I know we need to work on systemic solutions for the
problem. We are cleaning the camps, but the number of camps continues to increase year over year.
Nothing is actually being done to mitigate the problem, but I appreciate what is being done.
Sgt. Annie Hill; we have more users on the field map app and more people out working together to address this.
–The numbers look big right now as since January we have a coordinated team and effort. The goal is to have a
significant decrease.
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Kelly Ohlson; I also have empathy for residents who don’t want to go there anymore. The perception is that we
are not doing enough. I have talked with residents who will not go to parts of the Poudre River Trail.
Is the funding coming from the General Fund?
Rupa Venkatesh; yes, the funding is coming from the General Fund.
Meaghan Overton; I was able to get an estimate for seasonal overflow 2020 – 2021 which would include
November through April - $280K for that season.
Emily Francis; the longer we push it down the road – we continue to see increased numbers spent on clean ups
but what are we doing to actually address the problem?
Rupa Venkatesh; we are looking at what are the other innovative programs that are already out there that can
help PEH and we are also collaborating with our regional partners to help house individuals. You hit the two
pieces of puzzle – we aren’t just doing clean ups but also working on what we can do to help people so they
don’t have to camp.
Meeting adjourned at 5:00 pm
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COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Lance Smith, Sr. Director of Finance for Utilities
Gretchen Stanford, Utilities Deputy Director of Customer Connections
Date: July 6th 2023
SUBJECT FOR DISCUSSION
Utilities Billing System Appropriation
EXECUTIVE SUMMARY
An appropriation ordinance is being brought for your consideration from the Light & Power,
Water, Wastewater and Stormwater enterprise funds’ available reserves. The use of these
reserves is necessary to implement a modern Utility Customer Information System – Customer
Self Service Portal (CIS-CX) Solution. This appropriation request is the second, and final, such
request related to the new CIS-CX.
The first request for $4.25M was made in March as the City was assessing vendor proposals.
Those funds were appropriated earlier so that the City could begin the process of temporarily
increasing staffing for the implementation while contract review and negotiations were being
finalized. The City has now identified the Vendor of Choice, reviewed the functional
requirements in detail with that vendor and negotiated terms of the contract sufficient to
determine the amount of investment needed to successfully deploy a new CIS-CX. This
appropriation request of $9,700,000, if passed by the full City Council, will provide the
additional funding needed for all costs associated directly with the software deployment,
software testing, training, and the organizational change management associated with moving
onto a modern CIS-CX.
The total amount being requested for appropriation here is:
Software as a Service Implementation $3,250,000
Software Licensing through Implementation $2,400,000
Organizational Change Management $1,500,000
Testing Protocol Development and Testing $900,000
Training Development and Initial Training $900,000
Business Process Analysis and Alignment $750,000
Total $9,700,000
With this appropriation, this CIS-CX implementation will begin in October of this year and be
fully operational by the end of 2025.
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GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. Does the Council Finance Committee support bringing an appropriation ordinance
forward for the consideration of the full City Council to support the licensing and
full implementation of the modernization of the Customer Information System –
Customer Self Service Portal?
BACKGROUND/DISCUSSION
In March the initial request for funds to move ahead with the selection, implementation and
deployment of a modern Utility Customer Information System – Customer Self Service Portal
(CIS-CX) Solution was brought to this Committee for consideration (See Attachment 1).
Following the support of this Committee at that meeting, an appropriation ordinance for
$4,250,000 was adopted by the City Council. Since that time, the following progress has been
made on this effort:
• Following the 5 weeks of product demonstrations, the Vendor of Choice has been
selected;
• Secured funding for anticipated expenses for project management, legal review of
service contract, and to begin the process to temporarily backfill those positions needed
for this implementation;
• Agreed to extensive contract requirements with the Vendor of Choice and refined the full
implementation costs.
At that time it was explained that a second appropriation would be necessary before the capital
investment is fully funded and the service contract could be signed. Costs associated with the
full scope of the solution including data migration, software interfaces, business process
mapping, organizational change management, testing and training, as well as the direct
implementation of the selected CIS-CX, have been defined, discussed and negotiated by the
outside project management consultants, the Vendor of Choice and Fort Collins Utilities. The
funds being requested for the second, and final, appropriation associated with this software
implementation will be utilized as follows:
Software as a Service Implementation $3,250,000
Software Licensing through Implementation $2,400,000
Organizational Change Management (OCM) $1,500,000
Testing Protocol Development and Management $900,000
Training Development and Initial Training $900,000
Business Process Analysis and Alignment $750,000
Total $9,700,000
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Software as a Service Implementation - $3,250,000
All of the Vendor of Choice’s direct costs associated with the implementation itself are included
here. The chosen solution is a hosted solution, meaning that it will reside on software servers
owned and maintained by the Vendor of Choice. A dedicated implementation is expected to
provide over 22,000 hours toward this implementation during the 24-month implementation
schedule.
Software Licensing through Implementation - $2,400,000
Because this is a hosted software solution, the Vendor of Choice will begin realizing most direct
costs associated with having a dedicated server at the beginning of the implementation. As such,
monthly subscription fees will begin with the implementation itself, rather than at the time of
going into production. Subscription fees will increase over time due to customer growth over a
certain number and with modest, annual inflationary adjustments per contractual terms.
Organizational Change Management - $1,500,000
The current utility billing system will have been in place for over 20 years before this 24-month
implementation is completed. Software capabilities have increased tremendously over the past
20 years which is one of the primary reasons for this modernization. This change will require
strategic change management to be a successful transformation of the utility customer
experience. Outside change management consultants will work together with internal change
agents to ensure the success of this implementation while allowing employees to adapt and
embrace this change.
Change management will be approached from both an organizational perspective as well as a
more direct project perspective. From an organizational perspective outside change management
consultants will work with Utility staff and leadership to mature the OCM capability within the
organization. More specifically, focusing on how the new CIS-CX solution will be a major
change itself, change management strategies will be developed and deployed to ensure the
success change to this transformational application.
Testing Protocol Development and Management - $900,000
Testing is critical to any software upgrade, especially those that are intended to be seamless and
consistent with previous software. This implementation will require rigorous functional testing,
system integration testing, operational readiness testing, stress testing, and regression and user
acceptance testing. Testing scripts will have to be developed consistent with current and
anticipated rate structures and business processes.
Software as a Service (SaaS) is becoming more and more common with modern utility billing
systems. There are several advantages to SaaS over traditional utility-hosted billing systems
including having access to the latest releases of the software solution. However, in order to most
efficiently manage all SaaS clients, it is necessary for software vendors to minimize the number
of different release configurations clients are running at any given time. This is done through
required software releases to clients throughout the year. Because of this, testing is done not just
during the initial implementation but also throughout the life of the solution with new releases.
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Training Development and Initial Training - $900,000
Any new application requires some training but a software application that is this critical to
Utilities’ success requires extensive training to ensure that employees understand and are
confident and capable of utilizing the new CIS-CX. A Training Manager will help the City
conduct a training needs assessment before developing training strategies, course curriculums
and end user training materials specific to the job duties of each end user. All employees who
will be utilizing the new CIS-CX will be trained prior to using the solution in their capacity.
Business Process Analysis and Alignment - $750,000
The new CIS-CX will be capable of supporting current rate structures and customer services and
through regular updates will adapt as those change in the future. In order to understand how
changes to any existing business processes may affect customers, it is necessary to understand all
business processes that are part of the Meter to Cash lifecycle of each utility service provided.
All existing business processes with touch points to the Meter to Cash lifecycle will be
documented in an “As Is” state and then refined into a “To Be” state through workshops with
subject matter experts and end users. These documented business processes will then serve as
the basis for developing the necessary testing, training and future business process
improvements.
Financial Considerations
Appropriation by Enterprise Fund
As the customer information and billing system is needed by each utility to generate monthly
operating revenues, each utility requires such a system and therefore should contribute to the
upgrade or replacement of such a system. While some rates are more complicated than others
and some require meter consumption data to assess, billing for each utility requires much of the
same information as any other utility. Because electric monthly charges are more complicated
than flat stormwater rates and unmetered wastewater use, there are additional billing components
for billing electric customers. Hence, it is appropriate to attribute more of the shared costs to
Light & Power. A similar argument applies to Water billing. The annual subscription costs for
this system are divided between the four utilities as follows:
Light & Power 50.0%
Water 25.0%
Wastewater 12.5%
Stormwater 12.5%
This same cost sharing ratio is proposed for the implementation costs:
Light & Power $4,850,000
Water $2,425,000
Wastewater $1,212,500
Stormwater $1,212,500
$9,700,000
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The total expected cost of implementing a modern, SaaS customer billing and portal will not
exceed the combination of this and the previous appropriation requests:
First Appropriation (Ordinance No. 36, 2023) $4,250,000
Second Appropriation $9,700,000
Total Requested Appropriations $13,950,000
Enterprise Fund Reserve Balances
The funds being requested herein will need to come from available reserves of each utility.
These funds are above and beyond funds set aside within the reserves to meet minimum fund
balance requirements and any previous appropriations made but not yet spent. As the table
below shows, each enterprise fund has sufficient available reserves for both anticipated
appropriations related to modernizing the CIS-CX solution.
ATTACHMENTS
Attachment 1 – Agenda Item Summary from Initial Appropriation Request (CFC Meeting on
March 3, 2023)
($ are in millions)Light & Power Water Wastewater Stormwater
Available Reserves EOY 2022 $29.0 $45.1 $19.5 $15.0
LESS 2023-24 BFO Investments ($4.7)($19.1)($7.2)($1.6)
LESS Initial CIS-CX Appropriation ($2.1)($1.1)($0.5)($0.5)
Estimated Available Reserves $22.2 $24.9 $11.8 $12.9
Amount Being Requested ($4.9)($2.4)($1.2)($1.2)
Remaing Available Reserves $17.3 $22.5 $10.6 $11.7
Page 19 of 102
Utilities Billing System
Appropriation
07/06/2023
Lance Smith
Senior Director of Finance for Utilities
Gretchen Stanford
Utilities Deputy Director of Customer
Connections
Page 20 of 102
2Direction Sought
1.Does the Council Finance Committee support bringing an appropriation ordinance
forward for the consideration of the full City Council to support the licensing and
full implementation of the modernization of the Utilities Customer Information
System – Customer Self Service Portal?
Page 21 of 102
3Customer Information System – Customer Self-Service Portal
What: A modern customer portal and billing system on a hosted platform
Why: 1) The current system is outdated (> 20 years old) and uniquely configured over that period
making it difficult to maintain or upgrade;
2) Our customers deserve a modern, platform independent customer portal to access their
account and to change how and when they use their utility services
When: By beginning in October 2023 the 24-month implementation will be completed by the end of
2025.
At what cost:
1st Appropriation $4,250,000
2nd Appropriation $9,700,000
Total Solution Implementation $13,950,000
Ongoing Annual Subscription Fees $1,250,000 / yr
Page 22 of 102
4Use of Funds From the First Appropriation Request
Project Management
•Managing project scope, installation plans, schedule and budget
•Minimizing project risks by proactively addressing issues as they arise
•Addressing staffing challenges for the Solution Provider and City
Quality Assurance
•Product testing and process validation
•Establishing clear service level expectations
•Ensuring project requirements are met within the initial project scope
Contract Review
•Outside Counsel will ensure that the City’s and its ratepayers interests are
front and center in the solutions agreements
Contractual Staffing
•Allow existing staff to focus on ensuring the new solution will meet business
requirements
Page 23 of 102
5Additional Appropriation Requested
Software as a Service Implementation $3,250,000
Software Licensing through Implementation $2,400,000
Organizational Change Management (OCM) $1,500,000
Testing Protocol Development and Management $900,000
Training Development and Initial Training $900,000
Business Process Analysis and Alignment $750,000
Total $9,700,000
Page 24 of 102
6Use of Funds From the Second Appropriation Request
Software as a Service (SaaS)
•Dedicated host platform created and subscribed software modules loaded
•Software interfaces established and customer data transferred
Software Licensing
•Software subscription fees are paid monthly
Organizational Change Management
•Outside certified Change Management Consultants will partner with internal Change Agents to ensure a
successful implementation and engaged end users
•Increased organizational change management capabilities
Testing Protocol Development and Management
•Testing protocols will be developed and executed throughout implementation and future releases
Training Development and Initial Training
•Training strategies and materials will be developed and deployed following a needs assessment
Business Process Analysis and Alignment
•All business processes in the Meter to Cash lifecycle will be documented and optimized
Page 25 of 102
7Available Reserves
($ are in millions)Light & Power Water Wastewater Stormwater
Available Reserves EOY 2022 $29.0 $45.1 $19.5 $15.0
LESS 2023-24 BFO Investments ($4.7)($19.1)($7.2)($1.6)
LESS Initial CIS-CX Appropriation ($2.1)($1.1)($0.5)($0.5)
Estimated Available Reserves $22.2 $24.9 $11.8 $12.9
Amount Being Requested ($4.9)($2.4)($1.2)($1.2)
Remaining Available Reserves $17.3 $22.5 $10.6 $11.7
Page 26 of 102
8Direction Sought
1.Does the Council Finance Committee support bringing an appropriation ordinance
forward for the consideration of the full City Council to support the licensing and
full implementation of the modernization of the Utilities Customer Information
System – Customer Self Service Portal?
Page 27 of 102
Attachment to July 6th CFC Agenda Item
Utility Customer Information System
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Lance Smith, Sr. Director of Finance for Utilities
Gretchen Stanford, Utilities Deputy Director of Customer Connections
Date: March 2nd 2023
SUBJECT FOR DISCUSSION
Utilities Billing System Appropriation
EXECUTIVE SUMMARY
An appropriation ordinance is being brought for your consideration from the utility enterprise
funds. These funds are necessary to implement a modern Utility Customer Information System –
Customer Self Service Portal (CIS-CX) Solution. Funds from the enterprise reserves are being
requested just as the City completes the selection of a solution partner and before professional
services are contracted. This appropriation request is necessary to allow the City to secure CIS-
CX project management and solution quality assurance services through go-live, provide legal
review of professional services contracts, and provide funding for hiring contractual staff
throughout the implementation.
The total amount being requested for appropriation here is:
Professional QA and Implementation Management $1,500,000
Contract Review and Counsel $100,000
Contractual Implementation Staffing $2,650,000
Total $4,250,000
Once the full solution scope for the new CIS-CX is determined another appropriation, expected
to be the last, will be requested for the direct solution costs including licensing and hardware.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. Does the Council Finance Committee support bringing an appropriation ordinance
forward for the consideration of the full City Council to support the next phase of
the modernization of the Customer Information System – Customer Self Service
Portal?
BACKGROUND/DISCUSSION
Page 28 of 102
Fort Collins Utilities is currently conducting 5 weeks of onsite product demonstrations as the
final review of proposals received for a modern Utility Customer Information System –
Customer Self Service Portal (CIS-CX) Solution. The proposals were received after a deliberate
12-month process focused on identifying solution requirements, scrutinizing and rating every
proposal received, performing reference checks of each solution provider with other utilities that
have implemented the proposed solutions, planning the solution implementation schedule,
staffing needs and quality assurance milestones, and having employees involved in the solution
selection throughout the process and asking questions of the solution providers. This due
diligence and deliberation is necessary to ensure that the selected solution partner and their CIS-
CX will serve our community well as our community moves toward Our Climate Future and
evolving how we serve our ratepayers and enhancing their customer experience with their
municipal utilities.
Over the next few months, a solution partner will be selected and then a second appropriation
will be presented to this Committee before the 24-month solution implementation can begin. It
is anticipated that the City will successfully implement the new CIS-CX within 24 months, at
which point the existing solution will be retired. The Capital Improvement Plans presented to
the Council Finance Committee ahead of the 2023-24 Budgeting For Outcomes included up to
$15M for this capital investment including the licensing and hardware.
This appropriation is being brought forward at this time to maintain the continuity of the
implementation schedule and to ensure that the pricing reflected in the proposals are current and
complete. Momentum for this implementation is building as staff are getting opportunities to see
the benefits of modernizing and enhancing our customer’s experience as well as focusing on
simplifying the architecture and processes behind the customer interface to provide a stable,
upgradable platform.
There are three categories of funding in this next phase of the CIS-CX modernization.
Professional Quality Assurance and Project Management Services
While many existing City employees have worked for decades with the current customer
information and billing system, operating such a system requires a different skill set than
upgrading or implementing an existing system into a new system. The new system may be
hosted in the cloud or a more traditional in-house physical solution with different hardware
requirements and interfaces. It may include different modules for a customer portal, social
media, bill printing, etc. To effectively implement these new features and ensure that the City is
receiving the functionality it is expecting, professional software implementation project
management and quality assurance is required.
A scope of work has been developed for these services with a maximum fee through the
implementation and go-live of the new solution. Because most of this work will be done
remotely, travel expenses have been excluded from the not to exceed price for these services.
Estimating some travel will be necessary, raises the amount being requested for these services
including travel to $1,500,000.
Contract Review and Counsel
Page 29 of 102
Prior to the City entering into a binding services agreement with the solution provider outside
legal counsel may be sought as needed to ensure the final agreement is in the best interest of the
City and ratepayers. It is requested that an amount of up to $100,000 be appropriated for this
purpose.
Contractual Staffing
Many of the City’s employees who work in and with the current customer information system
will be involved in the implementation of the new solution. This is a best practice to ensure that
the proposed solution is consistent with customer expectations and operational requirements. In
order to have these employees available to focus on the implementation, staff will be augmented
by contractual staff throughout the implementation, and post go-live quality assurance and
testing. Based on the staffing plan developed for the solution implementation, the following
contractual positions are needed before implementation:
4 Customer Service Providers $288,000 / yr
1 Customer Experience Provider $64,000 / yr
1 Billing & Accounts Receivable Specialist $80,000 / yr
1 Field Service Lead $100,000 / yr
5 Information Technology Solution Providers $575,000 / yr
$1,047,000 / yr
Because having these additional staff will be advantageous throughout the 24-month
implementation with some needed beforehand and some afterward, in total for almost 2.5 years
of augmentation it is estimated that contractual staff may require:
Contractual Staffing Appropriation = $2,650,000
In addition to the contractual staff discussed above who will backfill employees focused on the
implementation, there will be a need for additional staffing for the duration of the project who
will focus on leading testing of the solutions, developing training and training employees,
implementing organizational change management, reviewing existing business processes and
developing business analytics for the future solution. As these additional staff are not needed
initially, this staffing need will be a part of the implementation appropriation once the solution
partner is selected.
Appropriation by Enterprise Fund
As the customer information and billing system is needed by each utility to generate monthly
operating revenues, each utility requires such a system and therefore should contribute to the
upgrade or replacement of such a system. While some rates are more complicated than others
and some require meter consumption data to assess, billing for each utility requires much of the
same information as any other utility. Because electric monthly charges are more complicated
than flat stormwater rates and unmetered wastewater use, there are additional billing components
for billing electric customers. Hence, it is appropriate to attribute more of the shared costs to
Light & Power. A similar argument applies to Water billing. The annual subscription costs for
this system are divided between the four utilities as follows:
Page 30 of 102
Light & Power 50.0%
Water 25.0%
Wastewater 12.5%
Stormwater 12.5%
This same cost sharing ratio is proposed for the implementation costs.
Light & Power $2,125,000
Water $1,062,500
Wastewater $531,250
Stormwater $531,250
$4,250,000
Enterprise Fund Reserve Balances
The funds being requested herein would come from available reserves of each utility. These
funds are above and beyond funds set aside within the reserves to meet minimum fund balance
requirements and any previous appropriations made but not yet spent. As the table below shows,
each enterprise fund has sufficient available reserves for both anticipated appropriations related
to modernizing the CIS-CX solution.
ATTACHMENTS (numbered Attachment 1, 2, 3,…)
Light & Power Water Wastewater Stormwater
Available Reserves EOY 2021 $41.4 $41.3 $19.1 $14.5
Mid-year 2022 Appropriations ($26.1)$0.0 $0.0 $0.0
2023-24 BFO Use ($1.0)($29.3)($7.7)($2.3)
2022 Revenues Above Budget $11.2 $3.5 $1.2 $0.2
2022 Expenses Below Budget $1.9 $7.4 $1.8 $2.2
Estimated Available Reserves $27.4 $22.9 $14.4 $14.6
Amount Being Requested ($2.1)($1.1)($0.5)($0.5)
Remaining Available Reserves ($M)$25.3 $21.8 $13.9 $14.1
Page 31 of 102
Page 32 of 102
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Molly Saylor and Jacob Castillo
Date: July 6, 2023
SUBJECT FOR DISCUSSION Sustainable Timberline Recycling Center (TRC) planning update
EXECUTIVE SUMMARY
Staff will provide an update on the “Sustainable TRC” planning project, including the results of an
operator scenario analysis. The analysis compares continuing to leverage a contracted vendor for hauling
and “Hard-to-Recycle” yard operations with bringing hauling and operations fully in-house. Impacts are
compared across six goals for the site, including a quantitative financial analysis. Findings from the
financial analysis demonstrate for between $33,000 and $149,000 in projected additional cost, the
community could see significant benefits across several goal areas. Based on these findings, staff plans to
submit an offer to bring the TRC fully in-house as part of the budget revision process.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. What questions do you have about the findings of the operator scenario analyses?
2. What questions do you have about a revision offer to bring the TRC in-house?
BACKGROUND/DISCUSSION
Past Council Finance Committee (CFC) guidance: CFC meeting on 07.07.21 requested staff conduct
further analysis on bringing TRC operations fully in-house and to come back for further discussion.
Sustainable TRC project history. The Timberline Recycling Center opened at its current location in
2017. Leveraging the first five-years of experience at the site, staff initiated a process to create a new five-
year plan for the site, including:
• Operational aspects (including operator scenarios)
• A review of accepted materials and new circular economy and recycling opportunities
• Equipment replacement planning
• Accessibility and equity aspects of the site
• A long-term vision for the TRC expressed as site-specific goals
Planning timeline. The Sustainable Timberline Recycling Center (S-TRC) project began in 2021 and
included an initial conversation with the Council Finance Committee. After a pause to focus staff efforts
on the Contracted Waste Hauler project, staff reinitiated the project in early 2023 focusing initially on
operator scenarios. The project phases are:
• Phase I: Deeper dive into and decision-making on whether to bring TRC operations in-house
o Consider impact to TRC goals
o Consider impact to City finances
• Phase II: Focus on 5-year site plan and operational decisions toward long-term vision
Page 33 of 102
TRC goals and operator scenarios. The current operator scenario is one in which all the hauling for the
site (free Everyday-Recyclables Yard and paid Hard-to-Recycle Yard) is contracted out to a vendor. The
same vendor also operates the Hard-to-Recycle Yard.
An alternative operator scenario is to bring hauling and operations of the entire site “in-house” to be
operated by City staff. There are trade-offs with each scenario. To compare options on a consistent basis,
staff have identified six high-level goals for the TRC and have compared operator scenarios across each
goal (qualitatively and, when possible, quantitatively). The goals for the site include:
• Diversion. Recycle as many materials as possible by expanding hard-to-recycle materials and
providing convenient drop-off for everyday recyclables.
• Safety. Operations are safe for employees and customers.
• Financial responsibility. The site manages its financial resources in a responsible way,
minimizing City costs while maintaining performance on other goals.
• Service. Maintain excellent customer service, in keeping with community and City standards.
• Accessibility and inclusion. Ensure site is inclusive for all parts of the Fort Collins community,
especially BIPOC and disabled community members.
• Flexibility. Recognizing how fast the Colorado recycling landscape is evolving, ensure the site
can quickly evolve.
Approach and key assumptions.
• Staff has approached these analyses qualitatively and, for financial responsibility, also
quantitatively.
• Key assumptions about City’s role in each scenario
o Contracted scenario (status quo):
Manage contract and vendor (note: all ongoing costs are pass-through)
Provide site supervision for the Everyday-Recyclables Yard
Own and operate equipment for Everyday-Recyclables Yard
o In-house scenario (alternative):
Manage and supervise the entire site (i.e., both yards), including staffing (3.0
FTE)
• Gatehouse staff (2.0 FTE)
• Driver (1.0 FTE)
Haul materials for the entire site
• Purchase truck
Purchase equipment for Hard-to-Recycle Yard (capital costs) thus owning all
equipment for the entire site.
Provide safety and customer service training for operations and hauling staff.
Results of operator scenario analyses
Financial responsibility (quantitative)
The below table summarizes financial analysis comparing the cost of bringing these services in-house
versus contracting it out, using assumptions reflecting current conditions.
Page 34 of 102
Note: Not all data for the contracted scenario is possible to parse into the same categories as the in-house
scenario. The context column indicates how data is aggregated between categories (see context marked
“data”) and highlights factors that drive true differences between scenarios (see context marked “delta”).
Key takeaways:
• Projected $182,000 additional cost to bring TRC in house.
• Primary element of cost difference is increased wages for City employees.
• Results represent historical and current conditions - Influencing factors could increase costs
toward the high end of the range in either scenario.
The below table summarizes a second financial analysis comparing possible future costs of bringing
services in-house versus contracting it out. The key difference is increased hauling rates, which is a likely
change when the contract is renewed in 2026.
Key takeaways:
• Hauling rates may increase by $149k over today’s rates.
• Considering this, the additional cost of bringing the TRC in-house ranges from $33k to $182k
depending on how contracted hauling rates increase.
• Continued use of outside contractors may expose the City to cost increases higher than internal
operations.
Orange = W-N is lower; green = City is lower; grey = no difference
Note: red cells indicate a flip to greater cost and green highlights in-house as lower cost
Page 35 of 102
Other goals (qualitative). The qualitative information gathered by the project team is presented as
potential clear or possible trade-offs, depending on staff’s level of certainty and experience with the topic.
These trade-offs are outlined in the tables below.
Key takeaway: For an estimated $33k-$182k annual increase in costs, the community could see
substantial benefits across all goal areas and there are possible risks associated with bringing the TRC
operations and hauling fully in-house to consider.
Next steps. Based on the results of the operator scenario analysis, staff believes the best course of action
is to transition operations of the TRC in-house. If the Committee supports staff’s recommended course of
action, a Budgeting for Outcomes (BFO) offer will be prepared and presented for Council consideration
as part of this year’s revision process.
To facilitate the transition, staff will:
• Give notice to the vendor (contingent upon Council’s approval of the budget as part of the mid-
cycle budget revision) of the City’s intent to transition the site’s operations and hauling in-house.
• Create a plan and timeline for the transition in site operations and hauling.
o Staff anticipates the transition would be complete between mid-2025 and mid-2026 and
variability due to outside factors (e.g. supply chains) is possible.
o The transition timeline is largely driven by lead-times of 14-18 months to secure a truck
for hauling.
ATTACHMENTS – No attachments other than the presentation
Page 36 of 102
Presented by:
Sustainable TRC -
Council Finance
Committee
07/06/2023
Molly Saylor
Interim Waste Reduction and
Recycling Manager
Compiled by:
The S-TRC project team
Caroline Mitchell, Javier Echeverría,
Sheela Backen, Molly Saylor
Jacob Castillo
Chief Sustainability Officer
Page 37 of 102
2Questions for Council Finance Committee
1.What questions do you have about the findings of the operator scenario
analyses?
2.What questions do you have about a revision offer to bring the TRC in-
house?
Page 38 of 102
3Context of Sustainable TRC project
Sustainable TRC project:
•Next 5-year plan for site
Goals of project:
•Phase I: Deeper dive into and decision-making on whether to bring TRC operations in-house
•Consider impact to TRC goals
•Consider impact to City finances
•Phase II: Create a 5-year vision for the site, including accepting additional materials and
expanding community opportunities at the site to make progress toward TRC goals
Past CFC guidance:CFC meeting on 07.07.21 requested staff conduct further analysis on
bringing TRC operations in-house and to come back for further discussion.
Page 39 of 102
4TRC Goals
Goal Framing
Diversion Recycle as many materials as possible by expanding hard-to-recycle
materials and providing convenient drop-off for everyday recyclables
Safety Ensure the site is safe for employees and customers
Financially responsible The site manages its financial resources in a responsible way, minimizing
City costs while maintaining performance on other goals
Service Maintain excellent customer service, in keeping with community and City
standards
Accessible & inclusion Ensure site is inclusive for all parts of the Fort Collins community, especially
BIPOC and disabled community members
Flexibility Recognizing how fast the Colorado recycling landscape is evolving, ensure
the site can quickly evolve
Ability to impact goals:
•Current: influence
•If operations were in-house: direct Page 40 of 102
5What would bringing in-house mean?
City’s current role:
•Manage contract and contractor (all ongoing costs are pass-through)
•Provide site supervision for the Everyday-Recyclables Yard
•Own and operate equipment for Everyday-Recyclables Yard
Bringing TRC in-house adds:
Providing staffing (3 FTE) for
•Gatehouse staff
•Driver
•Hauling for the entire site
•Purchasing truck and equipment for Hard-to-Recycle Yard (capital costs)
•Providing safety and customer service training for operations and hauling
Key takeaway: After equipment has been purchased, the primary change would be managing
staffing and hauling
Page 41 of 102
6Scenario Results – Current Conditions
Contract In-House Diff btw contract and
in-house Context
Up-front capital N/A $298k $298k
Annual operational
costs $380k $562k $182k
Staffing $195k $351k $156k •Data - Driver embedded in hauling
•Delta - City pays more competitive wages
Equipment
Replacement $29k $81k $52k •Data - Depreciation of operator equipment
embedded elsewhere
Hauling &
Maintenance $150k $124k $(26k)•Data - Also includes driver
Site expenses $58k $58k -•Not operator dependent
Commodities $(1k)$(1k)-•Not operator dependent
Gate fees $(50k)$(50k)-•Not operator dependent
Key takeaways:
•Projected $182,000 additional cost to bring TRC in house
•Primary element of cost difference is increased wages for City employees
•Results represent historical and current conditions - Influencing factors could increase costs toward the high end of the
range in either scenario
Orange = W-N is lower; green = City is lower; grey = no difference
Page 42 of 102
7Scenario Results – Potential Future
Contract In-House Diff btw contract and
in-house Context
Up-front capital N/A $298k $298k
Annual operational
costs $529k $562k $33k
Staffing $195k $351k $156k
Equipment
Replacement $29k $81k $52k
Hauling &
Maintenance $299k $124k $(175k)•Increased hauling costs of $149k
Site expenses $58k $58k -
Commodities $(1k)$(1k)-
Gate fees $(50k)$(50k)-
Key takeaways:
•Hauling rates may increase by $149k over today’s rates
•Considering this, the additional cost of bringing the TRC in-house ranges from $33k to $182k
• Continued use of outside contractors may expose the City to cost increases higher than internal operations
Orange = W-N is lower; green = City is lower; grey = no difference
Page 43 of 102
8Trade-offs of bringing in-house
Goal Possible risks Clear benefits
Diversion N/A
(costs are pass-through in contract)
Reduced barriers & increased flexibility to
implement new services
Safety City sole entity liable if safety issue Control frequency & content of safety training
Financially
responsible
Increase in cost generally and up to $140k
additional cost if equipment fails, costs of
diesel rise significantly, or additional staffing
is needed
Can more closely track financials and quickly
pivot as recycling markets fluctuate.
Protected from vendor price increases.
Service Potential shortage of qualified applicants Control frequency & content of customer
service training
Key takeaway: For an estimated $33k-$182k annual increase in costs, many benefits could be gained
Goal Possible risks Possible benefits
Accessible &
inclusion
Flexibility in implementing equity and
inclusion focused strategies on-site
Flexibility Increase in ability to respond to changing
conditions and needs across all goals
Page 44 of 102
9Timeline for bringing operations in-house
2023/24
AUG NOV JAN
2025
Q2
2026
JUN
12-14 Month from delivery to contract renewal14-18 Month from truck order to delivery
City begins operations
Page 45 of 102
10Questions for Council Finance Committee
1.What questions do you have about the findings of the operator scenario
analyses?
2.What questions do you have about a revision offer to bring the TRC in-
house?
Page 46 of 102
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Blaine Dunn, Accounting Director
Date: July 6, 2023
SUBJECT FOR DISCUSSION
Bond Issuance: Light and Power & Connexion
EXECUTIVE SUMMARY
City staff is seeking $60M in financing through a bond offering for a October 2023 closing. These
funds will be used for work need in the light and power utility ($40M) and additional capital needs
in Connexion ($20M).
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Committee support bringing a bond issuance Ordinance to Council on August 15th?
Does the Committee support bringing an appropriation Ordinance to Council on August 15th?
BACKGROUND/DISCUSSION
Light and Power
Projects for the Light and Power utility are identified through the strategic financial plan, attached
to this AIS. Through the continued capital improvement plan, the Light and Power team have
identified several areas needing investment. The primary use of the funds will be to build a new
substation in the northeast part of town, help with additional costs due to supply chain issues with
transformers, additional system additions, and additional annexation costs being faced by the
utility.
Connexion
In March 2023, Council authorized the reimbursement of capital expenditures through the
issuance of bonds. Connexion has now exhausted all currently available funds. Staff presented
updated financial projections for Connexion at the January 10, 2023, Work Session. In that
meeting, the capital project estimate was updated, reflecting a need to access approximately $16
million additional capital to complete the network build-out and customer ramp-up by the end of
2024. An additional $3 – $5 million for excess operating expenses was also estimated to be
needed.
Page 47 of 102
These estimates remain unchanged. The table below highlights the original Business Plan capital
assumptions, approved spending updates, project spending to date and the current project
estimate.
Connexion’s maximum funding need is expected by December 2024, with 2025 expected to be
breakeven before the generation of excess cashflows that will be able to service the L&P reserve
usage payback plus new bonding commitments. To date, Connexion has issued $129.6 million
of the $150 million voter approved amount to support Connexion’s build. This leaves over $20
million available for additional funding needs.
Debt Structure
The City is seeking to borrow a total of $66.1M, $66.5M ($60M of principal) for the projects and
$550k in closing costs, with the bonds. The bonds will have a fixed interest rate and a mixed
repayment term of 21 years. Light and Power will make level debt service payments throughout
the term, while Connexion will pay interest only until the previous 2018 bonds are paid off.
Connexion will then pay off the remaining principal balance in two years. The City will make
semiannual payments starting in 2024 with the last payment occurring in December 2044. The
average annual debt service for Light and Power will be $3.1M. Connexion will pay $1M each
year, until paying off principal with debt service of $10.7M.
ATTACHMENTS
Attachment 1 – PowerPoint
Attachment 2 – Strategic Financial Plan Light & Power
Page 48 of 102
Headline Copy Goes Here
Accounting Director
Blaine Dunn
2023 Light & Power
/ Connexion
Financing
07-06-23
Page 49 of 102
Headline Copy Goes Here
2
Agenda
•Project information
•Debt Issuance Process
•Debt structure
Page 50 of 102
Headline Copy Goes Here
3
Council Finance Question
Does the Committee support bringing forward a bond
issuance Ordinance to Council on August 15th?
Does the Committee support bringing forward an
appropriation Ordinance to Council on August 15th?
Page 51 of 102
Headline Copy Goes Here
•At the January 10, 2023, Council Work
Session, the need was identified for
additional funding to complete the
network buildout and customer ramp-
up.
•This outlook remains the same
•Approximately $20 million additional
funding is needed:
•$16 million for capital
•$4 million for operations
4
Connexion
•December 2024 is timeframe for
maximum need with 2025 projected as
breakeven (revenues covering capital,
operating expenses and debt
payments).
•Connexion has exhausted the existing
L&P reserve usage appropriation of
$20 million
•In March 2023, Council authorized
Connexion to use bond proceeds to
reimburse expenditures related to the
construction
Estimate borrowing $20MPage 52 of 102
Headline Copy Goes Here
5
Light and Power
•Projects are based on most recent Capital Improvement Plan
•Projects include:
•New substation in northeast
•Continued system additions
•Supply chain issues with transformers
•Updated annexation costs
Estimate borrowing ~$40M
Page 53 of 102
Headline Copy Goes Here
6
Debt Issuance Process
•Issuance Options
•Negotiated Sale
•Private Placement
•Competitive Bid
•Currently planning Competitive Bid
•Leverage market conditions for municipal utilities
•Market appears to favor competitive bid
•Strong credit for Electric and Telecom utility in the market
•Will take competitive bids from underwriters in September
•Ordinance will leave option open for Negotiated Sale
•If market conditions change, management will work with Bond Advisor if issuance change is needed
Page 54 of 102
Headline Copy Goes Here
7
Cost Share
•Total Principal $60M
•Light and Power $40M
•Connexion $20M
•Light and Power Payments
•$3.1M each year
•Connexion Payments
•$1M years 1-19
•$10.75M year 20-21
Total Light & Power Connexion
60$ 40$ 20$ Debt Obligation
% Share 66%33%
Borrow-Principal $ 60,000,000
Term 21
Interest*4.37%*
Payments $3.1 M $1 M
Debt Share Allocation ($ in millions)
$10.75 M
*Market rates as of 06/23/23; subject to change
Years 1 -19:
Years 20-21:
Years 1 -21:
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Headline Copy Goes Here
8
Debt Structure
•21 year term
•Fixed interest rate
•Semiannual payments starting in 2024
•Last payment 2044
•Light and Power will make even debt payments until 2044
•Connexion will pay interest only for 18 years and pay off balance in 2044
•Proceeds:Issuance Costs*$0.55M
Project Amounts (Principal)$60M
Premium*$6.1M
Total Proceeds $66.1M
*estimate subject to changePage 56 of 102
Headline Copy Goes Here
9
Key Upcoming Dates
•August 14 Determination of Method of Sale
•August 15 City Council First Reading of Authorizing Ordinance and Appropriation Ordinance
•August 24-28 Conference calls with rating agencies
•September 5 City Council Second Readings
•September 8 Rating results received
•September 15 Notice of sale posted
•September 26 Marketing of bonds on Parity
•October 11 Closing and delivery of proceeds
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Headline Copy Goes Here
10
Council Finance Question
Does the Committee support bringing forward a bond
issuance Ordinance to Council on August 15th?
Does the Committee support bringing forward an
appropriation Ordinance to Council on August 15th?
Page 58 of 102
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2022 10-Year Strategic Financial Plan
City of Fort Collins Utilities
Light & Power
UTILITIESPage 60 of 102
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Table of Contents
Purpose of the Strategic Financial Plans ..................................................................................................... 3
2021 Financial Overview ............................................................................................................................ 3
2021 Revenues ........................................................................................................................................ 4
2021 Expenses ........................................................................................................................................ 6
Long-Term Financial Analysis ................................................................................................................... 9
Revenue Analysis.................................................................................................................................... 9
Expenditure Analysis – Light & Power ................................................................................................ 12
Operating Income Analysis – Light & Power....................................................................................... 17
Capital Planning and Expenditure Analysis ......................................................................................... 18
Debt Analysis ........................................................................................................................................ 20
Reserves Analysis ................................................................................................................................. 23
Rate Analysis ........................................................................................................................................ 24
Financial Risk Assessment ....................................................................................................................... 27
Appendix A: Capital Improvement Plan .................................................................................................. 28
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Purpose of the Strategic Financial Plans
The strategic financial plans are intended to provide a 10-year plan for the efficient and effective
financial management of each utility in a manner that is consistent with the City’s values and mission
and aligned with the City’s biennial Budget Process and Strategic Planning Process. Much of the long-
term strategic direction for each utility requires significant capital investment spanning more than one
budget cycle and while the magnitude of the required investment may be included in the capital
improvement plans, the financial capacity and strategies to meet these challenges is beyond the scope of
such plans. Capital improvement projects should be prioritized through an asset management program
to ensure alignment with the City’s strategic objectives and proper planning to achieve the targeted
levels of service for each utility to our community.
Whereas strategic planning sets the operational direction of where the utilities are going in the future,
strategic financial planning provides a financial context for this movement. The strategic financial plans
ensure the long-term operational and fiscal objectives and level of service targets for each of the utilities
are met in a financially sustainable and resilient manner. The strategic financial plans outline the
projected financial health, long-term revenues and expenditures, debt position and recommended
financial strategies necessary to achieve the operational objectives and targeted levels of service for each
of the four utilities over the next 10 years.
2021 Financial Overview
Note: This enterprise fund consists of both an electric utility and an internet utility. This report only speaks to
the electric utility.
As the table below shows, the three main financial metrics from a long-term financial planning
perspective were met in 2021. The operating margin, the excess in operating revenues after covering all
operating expenses including depreciation, continued to improve in 2021 driven by significant recent
rate increases at the upper limit of the targeted range as well as limited growth in operating expenses.
More modest rate adjustments in the next 10 years between 2 and 4% will be necessary to maintain this
positive operating margin.
The debt coverage ratio is shown as if there is no outstanding debt. This enterprise fund does have
outstanding debt of $129.6M at the end of 2021 related to Connexion, however, because it is not directly
Strategic Financial
Plan Target 2017 2018 2019 2020 2021 2022
Target
Operating Margin > 2.0%-3.6% -5.6% -1.1% 2.5% 5.6% 3.0%
Debt Coverage Ratio > 2.0 6.9 - - - --
Rate Adjustment < 5.0%3.45% 1.8% 5.0% 5.0% 3.0% 2.0%
Operating Margin = (Operating Revenues from Monthly Charges) - (Operating Expenses including depreciation)
(Operating Revenues from Monthly Charges)
Debt Coverage Ratio = (Net Pledged Revenues consisting of Operating Margin + Development Fees + Earned Interest)
(Annual Debt Service Expense)
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associated with electric infrastructure, it is not driving any rate adjustments for electric services and
therefore not included in this table. The combined electric and internet net pledged revenues are
sufficient to maintain the targeted debt coverage ratio of 2.0 for this debt.
Operating revenues had grown through modest rate adjustments at a steady rate of 2-3% before
increasing 5% in 2021. Total energy sales continue to be flat with modest customer growth offset by
conservation efforts. This has allowed for the operating income to turn positive as operating expenses
have grown at a slower rate – still not exceeding the peak seen in 2018. However, inflationary pressures
are being seen across the utilities for materials and labor as we begin the 2023-24 budget cycle.
2021 Revenues
Total revenues associated with electric services grew by 7.0% in 2021 over 2020. Revenues for
residential services remain the largest contributor.
$120,000,000
$125,000,000
$130,000,000
$135,000,000
$140,000,000
$145,000,000
$150,000,000
2017 2018 2019 2020 2021
Light & Power Operations
Operating Revenue
Operating Expense
Residential Elec
Services,
$60,523,864
Commercial Elec
Services,
$44,604,468
Industrial Charges
for Services,
$32,596,311
PILOTs,
$8,275,824
Development
Fees/PIFs/Contributions,
$6,014,739
Other Misc,
$2,311,992
Electric Revenues -2021
$154.3M
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Operating revenues exceeded the budget by $8.3M in 2021 primarily driven by continued growth in
residential sales. This was consistent with what was seen in 2020, particularly after the COVID
pandemic began in March of 2020. Commercial and industrial revenues were closer to the budgeted
amounts in 2021 than in 2020 with commercial revenues slightly exceeding the budget. Non-operating
revenues from development fees were twice what was realized in 2020 and were adequate to cover the
system additions and replacements completed in 2021. Revenues are budgeted conservatively to account
for weather variability and other uncertainties.
The three-year trend below shows stable revenues throughout the pandemic and reflects the associated
shift from the workplace to remote work.
$ 6,015
$ 151
$ 32,596
$ 44,604
$ 60,524
$ 2,964
$ 340
$ 33,230
$ 43,450
$ 53,070
$ 0 $ 10,000 $ 20,000 $ 30,000 $ 40,000 $ 50,000 $ 60,000 $ 70,000
Development Fees
Green Energy Program Sales
Industrial Sales
Commercial Sales
Residential Sales
2021 Actual vs Budget Revenues ($K)
Budget
Actual
$ 6,015
$ 151
$ 32,596
$ 44,604
$ 60,524
$ 3,346
$ 242
$ 31,746
$ 41,396
$ 57,980
$ 3,493
$ 364
$ 32,701
$ 42,833
$ 51,586
$ 0 $ 10,000 $ 20,000 $ 30,000 $ 40,000 $ 50,000 $ 60,000 $ 70,000
Development Fees
Green Energy Program Sales
Industrial Sales
Commercial Sales
Residential Sales
Year Over Year Revenues ($K)
2019
2020
2021
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2021 Expenses
Total expenses for electric services and capital investment grew 3.8% in 2021 over 2020. With
depreciation, PRPA purchased power costs comprised 62% of total expenses. Without depreciation and
system additions, replacements and asset renewal expenses, none of which are included in rate
considerations, these purchased power costs represent 72% of expenses.
Operating expenses were below budget in 2021 by $6.4M primarily due to lower than anticipated energy
purchases. The purchased power expense from Platte River Power Authority (PRPA) was $4.7M below
budget before any weather normalization. Aside from the PRPA generation and transmission expense
which is not included in the graph below, Light & Power operations and administrative expenses were
very close to budget. Administrative expenses are expected to be below budget before the financials are
fully settled for 2021 over the next few months. PILOTs refer to the 6% transfer to the General Fund for
payment in lieu of taxes (PILOTs) and exceeded budget based on realized operating revenues which
themselves were higher than budgeted. Energy Services were $2.5M, or 32%, below budget and
essentially flat to the previous two years. Just as revenues are budgeted conservatively, expenses are
budgeted adequately to ensure that the annual appropriations made by City Council are not exceeded per
Municipal Code.
PRPA Purchased
Power, $91,717,204 System Additions /
Replacement /
Asset Renewal,
$11,009,549
L&P Operations,
$10,205,297
Administrative
Services, $9,666,806
PILOTs, $8,254,729
Community
Renewables,
$1,964,444
Energy Services,
$4,773,569
Depreciation,
$11,500,000
Electric Expenses -2021
$149.1M
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The three-year trend below shows growth by major expense categories. The growth in administrative
expenses reflects increased costs associated with higher executive consulting expenses within Utilities,
updating the administrative charges model from general municipal services as well as higher than
anticipated bad debt expense related to the pandemic.
$ 6,139
$ 1,964
$ 4,774
$ 8,255
$ 9,667
$ 10,205
$ 6,515
$ 2,015
$ 6,999
$ 7,810
$ 9,388
$ 10,038
$ 0 $ 2,000 $ 4,000 $ 6,000 $ 8,000 $ 10,000 $ 12,000
System Addition/
Replacement
Community Renewables
Energy Services
PILOTs
Administrative Services
L&P Operations
2021 Actual vs. Budget Expenses ($K)
(Not including Purchased Power Expense)
Budget
Actual
$ 6,139
$ 1,964
$ 4,774
$ 8,255
$ 9,667
$ 10,205
$ 3,788
$ 1,684
$ 4,845
$ 7,879
$ 8,938
$ 9,726
$ 4,564
$ 1,316
$ 4,748
$ 7,649
$ 7,877
$ 9,857
$ 0 $ 2,000 $ 4,000 $ 6,000 $ 8,000 $ 10,000 $ 12,000
System Addition/
Replacement
Community Renewables
Energy Services
PILOTs
Administrative Services
L&P Operations
Year Over Year Expenses ($K)
2019
2020
2021
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Community renewables consist of energy purchased from “customer-generators” producing energy
through solar generation. The five-year trend shown below reflects the growth of such generation on the
distribution system. Most of the renewable energy provided to our customers is still purchased through
Platte River Power Authority (PRPA). These purchases are now part of the base Tariff 1 purchase
power agreement with PRPA as the previous Tariff 7 was eliminated in 2020. In 2021, 38% of PRPA’s
generation was non-carbon emitting energy.
The following graph shows the recent trend in purchased power expense through PRPA. The 2018 peak
in operating revenues was driven by the peak annual demand in energy which resulted in the highest
annual purchased power expense being realized as shown by this graph.
$ 0 $ 500 $ 1,000 $ 1,500 $ 2,000 $ 2,500 $ 3,000
2021
2020
2019
2018
2017
Renewable Energy Purchased from Customers ($K)
$ 89,500 $ 90,000 $ 90,500 $ 91,000 $ 91,500 $ 92,000 $ 92,500 $ 93,000 $ 93,500 $ 94,000 $ 94,500
2021
2020
2019
2018
2017
Year Over Year Purchased Power Expenses ($K)
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Long-Term Financial Analysis
Revenue Analysis
Light & Power revenues consist of operating revenues from monthly charges for services which includes a 6%
payment in lieu of taxes (PILOTs) that is transferred to the General Fund of the City and non-operating revenues
which consist of development fees, other minor fees (dark fiber leases, warehouse fees, etc.) and miscellaneous
revenues (interest, asset auctions, etc.). Approximately 59% of these revenues are passed directly through to
Platte River for generation and transmission charges and the 6% PILOTs revenue is transferred to the General
Fund. The remaining 35% of revenues consists of operating revenues and non-operating revenues which are
available to the Light & Power Enterprise Fund for operational and capital expenses although, as a standing
practice, non-operating revenue should not be relied upon for operational expenses. Energy conservation and
renewable energy programs also need to be covered in the remaining 35%.
With widespread adoption of air conditioning, Light & Power shifted from a winter peaking utility to a summer
peaking utility a few decades ago. The wholesale purchased power charges from Platte River Power Authority
have a seasonal component to the demand charge which is reflected below in the monthly revenue stream along
with the increased energy consumption in the summer months.
Operating revenues for this fund have grown substantially over the previous decade from $100M in 2011 to
$146M in 2021 while the amount of energy consumed by the community has remained flat over the same period.
Overall growth has just outpaced energy conservation efforts resulting in reduced energy use per customer but an
overall 0.2% annual increase in total energy consumed. Thus, the significant growth in operating revenues is
attributable entirely to rate increases that have occurred since 2011 and not growth in consumption.
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
Electric Monthly Operating Revenues (2011 -2021)
2021
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
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The table below shows the annual revenues by major categories for the past 5 years. Residential revenues have
been growing more steadily than commercial and industrial revenues over the last 5 years. (The data here is not
adjusted for weather so as to accurately represent the revenues received.)
The table also shows that the non-lapsing revenues over this same period have come mostly from development
fees. Electric development fees peaked in 2016 although strong growth returned in 2021. The volatility of
development fees is much greater than that of operating revenues requiring caution before relying on development
fee revenues for necessary capital improvements or forecasting revenues.
0
500,000,000
1,000,000,000
1,500,000,000
$0
$20,000,000
$40,000,000
$60,000,000
$80,000,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Energy Sales (kWh)Operating RevenuesElectric Operating Revenues and Energy Sales (2011-2021)
Annual Demand (KWH)Residential Sales Commercial Sales Industrial Sales
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Looking at revenues on an annual percent change basis shows a longer-term trend of 3-4% annual growth since
2011 with 2021 showing 6.76% growth in revenues (see table below). Development fees accounted for $2.6M of
the $9.8M increase in revenues in 2021 while the 3.0% retail rate increase accounted for most of the rest. Again,
revenue growth is being driven by rate increases and those rates for monthly charges have increased well above
the rate of inflation (0-2%) over each time horizon.
Budget
Year 2017 2018 2019 2020 2021 2021
Customers 72,523 74,585 75,656 76,821 77,741 77,741
Annual Rate Adjustment 3.45% 1.80% 5.00% 5.00% 3.00% 3.00%
Residential Elec Services 48,155,049$ 50,193,559$ 51,585,680$ 57,979,597$ 60,523,864$ 53,070,000$
Commercial Elec Services 40,883,514$ 41,366,478$ 42,832,683$ 41,396,010$ 44,604,468$ 43,450,000$
Industrial Charges for Services 32,004,494$ 32,305,145$ 32,700,560$ 31,746,182$ 32,596,311$ 33,230,000$
Green Energy Program 399,322$ 380,138$ 363,727$ 241,815$ 151,080$ 340,000$
PILOTs 7,287,813$ 7,453,720$ 7,648,671$ 7,879,394$ 8,275,824$ 7,810,000$
Operating Revenue 128,730,192$ 131,699,040$ 135,131,321$ 139,242,998$ 146,151,547$ 137,900,000$
Development Fees/PIFs/Contributions 5,490,709$ 4,302,440$ 3,492,813$ 3,345,800$ 6,014,739$ 2,895,000$
Interest Revenue 457,811$ 429,785$ 478,827$ 422,134$ 318,381$ 247,660$
Transfers In -$ -$ -$ -$ -$ -$
Other Misc 2,362,133$ 1,758,453$ 2,114,025$ 1,258,384$ 1,839,131$ 1,155,000$
Non-Operating Revenue 8,375,563$ 6,576,363$ 6,395,988$ 5,252,125$ 8,172,251$ 4,297,660$
Revenue Bonds -$ -$ -$ -$ -$ -$
Operating/Capital Grants & Contributions -$ -$ -$ 59,366$ -$ -$
External Revenue -$ -$ -$ 59,366$ -$ -$
Total Revenues 137,105,754$ 138,275,403$ 141,527,308$ 144,554,489$ 154,323,798$ 142,197,660$
Budget
Year 2020 2021 2021
10 Yr
Annualized
Trend
5 Yr
Annualized
Trend
3 Yr
Annualized
Trend
1 Yr
Annualized
Trend
Customers 76,821 77,741 77,741 1.62%1.74% 1.39% 1.20%
Annual Rate Adjustment 5.00% 3.00% 3.00% 3.80%3.65% 4.33% 3.00%
Residential Elec Services 57,979,597$ 60,523,864$ 53,070,000$ 4.29%5.10% 6.44% 4.39%
Commercial Elec Services 41,396,010$ 44,604,468$ 43,450,000$ 3.30%2.14% 2.54% 7.75%
Industrial Charges for Services 31,746,182$ 32,596,311$ 33,230,000$ 4.24%1.49% 0.30% 2.68%
Green Energy Program 241,815$ 151,080$ 340,000$ -10.89%-17.45% -26.48% -37.52%
PILOTs 7,879,394$ 8,275,824$ 7,810,000$ 3.90%3.17% 3.55% 5.03%
Operating Revenue 139,242,998$ 146,151,547$ 137,900,000$ 3.90%3.16% 3.53% 4.96%
Development Fees/PIFs/Contributions 3,345,800$ 6,014,739$ 2,895,000$ 11.31%-1.12% 11.82% 79.77%
Interest Revenue 422,134$ 318,381$ 247,660$ -7.76%-9.15% -9.52% -24.58%
Transfers In -$ -$ -$
Other Misc 1,258,384$ 1,839,131$ 1,155,000$ 0.32%-4.12% 1.51% 46.15%
Non-Operating Revenue 5,252,125$ 8,172,251$ 4,297,660$ 5.71%-1.65% 7.51% 55.60%
Total Revenues 144,554,489$ 154,323,798$ 142,197,660$ 3.53%2.86% 3.73% 6.76%
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Looking out over the next ten years through the long-term financial model, revenues are expected to continue
trending upward as residential development continues and modest rate adjustments are necessary for Platte River
Power Authority to meet the 2030 climate goals and the distribution system is renewed. Beneficial Electrification
will be a focus in the coming decade which may increase energy sales and in turn revenues. The graph below
shows a forecasted annual growth of 3.8% in future operating revenue (solid green line) which is consistent with
the growth over the past decade. The green area shows the range of revenues considered in the stochastic analysis
for the long term financial model.
Non-operating revenues are expected to remain within the range seen over the past decade with modest inflation
offsetting the impacts of redevelopment becoming more common requiring less development fees than “green
field” development and investment policies remain conservative. The uncertainty over the next decade appears
large due to the volatility of the development fees. Any unanticipated grant revenue would positively impact the
financial health of the utility and as such is not modelled here.
Expenditure Analysis – Light & Power
Light & Power operating expenses are shown below in the categories consistent with the monthly financial
operating report. The two expense categories on that monthly report made to Platte River Power Authority
(PRPA) are not included to provide some relative scale for the expenses that remain within the municipality. The
direct operational costs are shown in purple, community renewable and energy efficiency program expenses in
shades of green and the administrative expenses in shades of yellow. The payment in lieu of taxes is shown
second from the bottom. Depreciation is a non-budgetary expense so it is shown on top. Total operating
expenses have grown at an annual rate of 3.6% over the past decade.
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031
Operating Revenues (2011 -2031)
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The table below shows operating and non-operating expenses by the major categories shown on the Monthly
Financial Operating Report (MOR).
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
$50,000,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Electric Operating Expenses (2011 -2021)
less PRPA Expense
L&P Operations
PILOTs
Admin Services - CS&A
Admin Services - General Fund
Other Payments & Transfers
Energy Services
Purchase Pwr - Community Renewables
Depreciation
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Purchased Power – Tariff 1 - Increased purchase power costs are offset directly by increased operating revenues
through rate increases each year. The upward trend is driven mainly by year over year wholesale rate increases by
Platte River. As PRPA moves toward its 2030 goal of 100% renewable energy, it is expected that annual retail
rate adjustments of 1.5-2.5% will be needed until 2030. These rate increases are included in the rate projections
modeled here.
Renewables PRPA - A set amount of renewable energy (76,000 MWh / yr) has been purchased each year from
Platte River toward internal renewable energy goals until 2021. These costs were rolled into the Tariff 1
purchased power costs beginning in 2021.
Community Renewables – The growth seen here over the past decade was driven primarily by the Solar
Purchased Power Program (SP3) which took advantage of a State program allowing for any renewable energy
purchased under certain conditions to count triple toward the Renewable Energy Standard. This was
accomplished through 20 year purchased power agreements at a fixed rate. Ongoing adoption of distributed
generation will continue to increase this expense through similar purchased power agreements as well as rooftop
solar excess energy purchases.
L&P Operations – This line item represents the largest and most direct expenses associated with providing
electric services to the community. These expenses have been managed tightly in recent years although there was
Budget
Year 2017 2018 2019 2020 2021 2021
Annual Demand (KWH)1,499,034,911 1,516,929,428 1,483,954,714 1,457,336,159 1,476,408,624 1,495,938,741
Purchase Power -Tariff 1 PRPA 89,413,232$ 92,104,424$ 91,707,977$ 89,411,750$ 91,717,204$ 94,493,000$
Purchase Power - Renewables PRPA 1,900,007$ 1,899,993$ 1,900,000$ 1,900,000$ -$ 1,900,000$
Purchase Pwr - Community Renewables 754,063$ 770,017$ 1,315,861$ 1,683,711$ 1,964,444$ 2,014,700$
L&P Operations 10,034,802$ 10,836,548$ 9,857,112$ 9,726,245$ 10,205,297$ 10,037,738$
Energy Services 5,952,237$ 6,495,792$ 4,747,851$ 4,844,966$ 4,773,569$ 6,999,124$
PILOTs 7,287,813$ 7,453,711$ 7,648,671$ 7,879,376$ 8,254,729$ 7,810,000$
Admin Services - CS&A 5,832,953$ 5,883,633$ 6,318,644$ 7,335,602$ 7,394,617$ 7,394,617$
Admin Services - General Fund 1,163,489$ 1,192,576$ 1,107,453$ 1,135,139$ 1,090,628$ 1,090,628$
Other Payments & Transfers 701,670$ 1,236,452$ 450,755$ 466,839$ 1,181,561$ 1,181,561$
Depreciation 10,325,278$ 11,209,564$ 11,518,342$ 11,420,843$ 11,500,000$ 12,000,000$
Total Operating Expenses 133,365,544$ 139,082,709$ 136,572,666$ 135,804,472$ 138,082,049$ 144,921,368$
Debt Service 1,992,263$ 142,254$ 25,223$ 25,228$ 12,656$ 12,660$
System Addition/Replacement 6,209,847$ 4,490,883$ 4,564,438$ 3,788,421$ 6,139,007$ 5,559,120$
Capital (other than Sys Add)8,950,979$ 5,517,340$ 5,758,112$ 4,053,113$ 4,870,542$ 7,647,504$
Total Non-operating Expenses 17,153,090$ 10,150,476$ 10,347,772$ 7,866,762$ 11,022,205$ 13,219,284$
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an increase of 4.9% in these costs in 2021. Managing this growth to a more moderate level in the future will be
very important to the financial success of this utility.
Energy Services – This expense category includes energy efficiency and conservation programs as well as
customer rebates and incentives. As the table below shows, these expenses have been decreasing in recent years
while the budget has remained closer to previous levels.
Payments in Lieu of Taxes (PILOTs) – This is a transfer to the General Fund set at 6% of operating revenues.
As such, any increase in this expense is directly offset by higher operating revenues.
Administrative Services – Administrative Service expenses from the Utilities internal Customer Service and
Administration areas increased significantly over the past few years. This is in part due to staffing issues related
to upgrading the billing system and to higher consulting costs associated with having an interim Executive
Director for almost two years. It will be important to limit growth in these expenses going forward.
Administrative Services from the General Fund has seen more modest increases over this same period. In 2021,
bad debt was also significantly higher than in previous years due to the “no shut-offs” policy implemented during
the Covid-19 pandemic. This is expected to return to a more manageable level beginning in 2022.
System Additions and Capital – The intermediate term downward trend reflects the extraordinary capital
investments made 3-7 years ago which included deployment of the advanced metering infrastructure ($36M
investment) and the construction of the new Customer Service building at 222 LaPorte (~$15M investment). The
one-year change reflects the level of development seen in 2021 consistent with the significant increase in
development fees seen in the revenues over 2020.
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This will be particularly challenging as most of the operating revenue goes to purchased power expenses which
are expected to grow above the long-term rate of inflation – purchased power costs are assumed to increase at
2.25% annually. The dotted black line in the chart shows the current trend on operating expenses. The
uncertainty in operating expenses is large and highlights the importance of stochastic modeling rather than
showing a single forecasted value a decade into the future.
Budget
Year 2020 2021 2021
10 Yr
Annualized
Trend
5 Yr
Annualized
Trend
3 Yr
Annualized
Trend
1 Yr
Annualized
Trend
Annual Demand (KWH)1,457,336,159 1,476,408,624 1,495,938,741 0.2% -0.4% -0.9% 1.3%
Purchase Power -Tariff 1 PRPA 89,411,750$ 91,717,204$ 94,493,000$ 2.8% 1.0% -0.1% 2.6%
Purchase Power - Renewables PRPA 1,900,000$ -$ 1,900,000$ -100.0% -100.0% -100.0% -100.0%
Purchase Pwr - Community Renewables 1,683,711$ 1,964,444$ 2,014,700$ 21.6% 36.6% 16.7%
L&P Operations 9,726,245$ 10,205,297$ 10,037,738$ 3.2% -0.3% -2.0% 4.9%
Energy Services 4,844,966$ 4,773,569$ 6,999,124$ 4.6% -6.7% -9.8% -1.5%
PILOTs 7,879,376$ 8,254,729$ 7,810,000$ 3.9% 3.1% 3.5% 4.8%
Admin Services - CS&A 7,335,602$ 7,394,617$ 7,394,617$ 5.4% 2.6% 7.9% 0.8%
Admin Services - General Fund 1,135,139$ 1,090,628$ 1,090,628$ 0.6% -6.2% -2.9% -3.9%
Other Payments & Transfers 466,839$ 1,181,561$ 1,181,561$ 10.2% 15.8% -1.5% 153.1%
Depreciation 11,420,843$ 11,500,000$ 12,000,000$ 4.4% 4.5% 0.9% 0.7%
Total Operating Expenses 135,804,472$ 138,082,049$ 144,921,368$ 3.2% 0.9% -0.2% 1.7%
Debt Service 25,228$ 12,656$ 12,660$ -38.5% -63.6% -55.4% -49.8%
System Addition/Replacement 3,788,421$ 6,139,007$ 5,559,120$ 0.1% -12.8% 11.0% 62.0%
Capital (other than Sys Add)4,053,113$ 4,870,542$ 7,647,504$ -7.7% -14.8% -4.1% 20.2%
Total Non-operating Expenses 7,866,762$ 11,022,205$ 13,219,284$ -5.1% -15.1% 2.8% 40.1%
Total Expenses 143,671,234$ 149,104,254$ 158,140,652$ 2.3% -1.0% 0.0% 3.8%
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Operating Income Analysis – Light & Power
The operating income for this Fund has been negative for 6 of the last 10 years. This was initially an intentional
effort to draw down Reserves but because of continued negative operating income rate increases were necessary
beginning in 2017 as part of the solution to address this ongoing shortfall. Operating income turned positive
beginning in 2019 with the proposed rate increases before the pandemic and has increased through 2021. This
trend is expected to continue provided operating expenses are controlled.
($50,000,000)
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
201120122013201420152016201720182019202020212022202320242025202620272028202920302031Operating Income 2011 -2031
Operating Income
Operating Revenue
Operating Expense
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Capital Planning and Expenditure Analysis
Note: Appendix A shows the anticipated capital investments and expected year of investment.
Ahead of the biennial budget cycle, the long-term financial models are updated to determine if any rate
adjustments are needed as well as if there is a need to issue debt for upcoming capital investments. The financial
models require a review of the 10-year capital investment plans and a need to re-prioritize the anticipated projects
along with any new investments. An updated CIP was developed in October 2021 ahead of discussions with the
Council Finance Committee.
The development of prioritized CIPs is necessary to ensure efficient use of capital to optimize the levels of service
being provided to our community. This prioritization has been an elusive goal since the first CIP was developed
in 2016. Progress has been made on identifying the service level metrics for this utility but setting service level
targets and the relative weights of those service levels remains to be done. Additionally, the 10-year CIPs have
fluctuated significantly from one budget cycle to the next (every 2 years) which makes financial planning more
challenging than more stable and refined CIPs would require for each utility including this one. After the 2021
CIP deadline of October 1st an additional $65M was added to it over the next two weeks which increased the 10-
year capital needs by 40%. This type of volatility in long-term planning efforts is very unsettling.
The current 10 Year capital improvement plan (CIP) anticipates almost 50% more capital investment over the
coming decade than was realized in the previous decade. The investments over the past decade involved
significant work by outside labor including the Utility Customer Service Building and the deployment of smart
meter infrastructure suggesting the amount of capital work intended to be done in house over the coming decade
is much more than a 50% increase. This increase is largely driven by new capacity needs, anticipated annexations
which require significant capital investment with no associated development fee revenue, a new substation, and
asset replacement of aging infrastructure.
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
2016 CIP 2017 CIP 2019 CIP 2021 CIP 10/01 2021 CIP 10/15
Light & Power 10 Year Capital Improvement Plan Totals (NOT inflated)
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The current 10 Year CIP consists of $221M of identified capital investments which consists of $57M of new
capital needs for the anticipated growth in system demands over the decade as well as $52M for system renewal
investments, $43M for anticipated annexations, $40M for new technology, $18M for substation investments and
$10M for facilities and vehicles. (All projects are identified in 2021 dollars so that a consistent inflation can be
applied to all future projects.)
The following chart shows the annual capital investment made each year with the amount of approved capital
investment remaining at the end of the year. In addition to the annual lapsing appropriation for System Additions
/ Replacements which is intended to provide adequate funding to meet all new infrastructure associated with new
development, each year new capital appropriations are made for asset renewal programs and specific projects
which add the capital investment remaining from previous years. The amount of capital appropriations remaining
at the end of each year exceeds the realized annual capital investment made each year. At the end of 2021, the
amount of capital appropriated from previous budget cycles was $13,045,076. This $13M shown in green will
require more than two years to invest at the recent rate of investment shown in light red without any additional
capital appropriations being requested.
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031Annual Capital InvestmentCapital Investments 2022 -2031
(in 2021 dollars)
Technology and Other Annexations Transformers, Cables & Duct Banks
System Additions Substations Last 10 Yr Ave Annual Capital $
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While there is some lead time related to capital investments because of the policy of fully funding each capital
investment up front, this build-up of capital work reduces the agility to adapt capital investments as priorities may
change. The capital improvement plan discussed below and included in Appendix A is recommending that an
additional 46.7M be appropriated in the 2023-24 budget cycle for capital work
The electric system is almost entirely an underground distribution system that has been built over the last 30-50
years. These underground assets have performed well over their useful life, allowing the community to benefit
from a very reliable electric system, but based on the current CIP it is expected that significant capital investment
will need to be made in the coming decades to renew this aging infrastructure. The need for asset lifecycle
management strategies (from installation to replacement) for all major electric assets needs to be an area of focus
for Asset Management and L&P Operations in the next few years so that the necessary investments are prioritized
and adequate funding is available as needed in the future.
Annexations into the City limits typically result in this utility taking over service from a neighboring utility. This
requires compensating the neighboring utility for stranded assets and sometimes for lost future revenue.
Additionally, it involves reconfiguring and rebuilding the existing infrastructure without any development fee to
offset the capital investment. Thus, annexations can be a significant expense for this utility. The Mulberry
Annexation is the most significant contributor to the Annexations category as this annexation is estimated to cost
electric ratepayers at least $50M to acquire and rebuild the infrastructure to meet standards as well as requiring
the addition of a new substation to adequately serve these customers and other growth in the northeast corner of
the growth management area. A deferment of this annexation by a few years would relieve some of the potential
constraints on this fund.
Debt Analysis
Last Bond Rating: AA- (in 2021)
While operating revenues are intended to cover all operating expenses, debt issuances are an important source of
funding for capital investments for any utility. Debt issuances also establish generational equity by having the
generation of customers benefiting from the investment funding the investment through the debt repayment rather
than having current customers pay for investments that are necessary to serve future generations. Given the
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
2015 2016 2017 2018 2019 2020 2021
Light & Power Capital Spend and Year End Appropriations
Spent w/ System Additions
Spent w/o System Additions
YE Appropriations w/o System Additions
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significant increase in capital investment that is expected over the next decade, significant levels of debt will be
necessary even after the use of all available reserves and anticipated development fees.
The long-term financial modeling relies on objective criteria to drive financial decisions such as when to issue
debt. The use of objective criteria allows for future debt issuances to be modeled and to provide clear reasoning
as to why an issuance is needed in any given year based on the current CIP. Debt issuances are based on the
following criteria.
1. If capital investments are anticipated to exceed available reserves over the next 3 years a debt issuance is
assumed to be sufficient to cover the next 2 years capital investments and leave 125% of the minimum
required reserve. This recommendation is presented to the Council Finance Committee ahead of the
biennial budget cycle.
2. Because there are costs associated with debt issuances a balance is struck between frequently issuing debt
and making efficient use of the generated capital by limiting the frequency of debt issuances to no more
than once every 3 years.
The electric utility had historically operated without any debt prior to 2010. While this was a very strong
financial position, it was one that resulted in cross generational subsidies as assets were bought by one generation
of ratepayers and then effectively used by subsequent generations of the community. This should be revisited
particularly when interest rates are extremely low which may not last much longer based on recent inflationary
pressures.
In 2010 this utility issued two revenue bonds totally $16M to receive a matching grant from the Department of
Energy for the deployment of advanced metering infrastructure. This debt was retired early in 2018 from reserves
to allow for the issuance of $142M in electric revenue bonds to support the ballet approved initiative to build
Connexion.
The existing debt was reviewed by Standard and Poor’s again in 2021 which reaffirmed the debt’s (AA-) bond
rating based on the realized electric revenues and financial outlook. The output from the long-term financial
model that is the basis of this plan was provided to the analysts for their revised bond rating. This modeling
indicates that based on the most recent CIP it will be necessary to issue debt likely in the 2023-24 budget cycle to
fund the anticipated $50M in capital investments over these two years. Given capital investment was $11M in
2021 with an additional $13M of work identified and funded at the end of 2021 before adding another $13M in
2022, it is recommended that resources are identified to complete this work before any debt is issued.
The chart below shows the historical and future debt related with electric capital investments including a potential
$41M issuance in the 2023-24 budget cycle. (This chart does not include the $130M outstanding debt related to
Connexion which is tied through the bond covenants to electric revenues.)
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The debt coverage ratio for this Fund has been well above the bond covenant minimum requirements of 1.15-1.2
as well as above the internally recommended ratio of 2.0 necessary to be viewed as favorably as possible by the
rating agencies. This is true even when recognizing the debt associated with Connexion (although the chart below
does not include that debt).
The actual debt capacity for this utility Enterprise Fund is very large due to the large amount of revenues collected
from development fees as well as the utility’s operating income before depreciation. As such, any necessary debt
issuance is not expected to degrade the bond rating below the current (AA-) rating. The stochastic modeling
assumes that future interest rates would fluctuate within a range between 2.0 and 4.0%.
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
201120122013201420152016201720182019202020212022202320242025202620272028202920302031Outstanding Debt 2011 -2031
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
201120122013201420152016201720182019202020212022202320242025202620272028202920302031Debt Coverage Ratio
Debt Coverage Ratio
Recommended Minimum
Bond Covenant Minimum
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Reserves Analysis
Financial Management Policy 5 specifies Fund Balance Minimums for Enterprise Reserves. It also states that
additional reserves should be set aside for anticipated capital investments. The graph below reflects the total Fund
Balance as well as the portion of that balance that is available for capital appropriations above and beyond the
minimum required reserve balance and any existing capital appropriations. The long-term financial modeling
objectively determines when additional capital investment should come from Available Reserves and when it
should come through rates or more immediately through debt issuances.
Based on the strong revenues realized in 2021 that exceeded the budget by $12.0M along with operating expenses
being $6.4M below budget, it is estimated that over $18M was added to Available Reserves in 2021.
The available fund balance is expected to continue to increase due to positive operating income through the
necessary rate adjustments and operating expenses are limited in their year over year growth. This increased
Available Reserve balance will allow for more system renewal investments to be made without significant rate
increases in the future. The actual increase in Available Reserves reflected below is larger than recommended but
it is being driven by the timing of capital investments in the unprioritized CIP.
Debt Capacity Estimation
Interest Rate:3.00%
Net Pledged Revenue (5yr ave):$15,296,600
Debt Coverage
Ratio
Debt Capacity
(10 yr Debt)
Debt Capacity
(15 yr Debt)
Debt Capacity
(20 yr Debt)
1.0 $131 $183 $228
1.2 $109 $152 $190
1.4 $93 $130 $163
1.6 $82 $114 $142
1.8 $73 $101 $127
2.0 $65 $91 $114
2.2 $59 $83 $104
2.4 $54 $76 $95
2.6 $50 $70 $88
2.8 $47 $65 $81
3.0 $44 $61 $76
Outstanding Debt in 2021:$129.6 M
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Estimated$ Millions501 -Light & Power Fund
Fund Balances
AVAILABLE Fund Balances
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In early 2022 it was determined that an additional $20M in funding was needed for Connexion to complete the
initial build-out of the fiber infrastructure. After consideration of several potential financing approaches including
issuing new debt, it was determined that use of Available Reserves within the shared enterprise fund was the best
approach. If a debt issuance is needed in this enterprise fund before this drawdown is covered by Connexion
revenues, Connexion will adhere to the terms of that issuance. If no such issuance is necessary, then Connexion
will compensate the electric utility for the lost interest it would have earned on the Available Reserves. This
intra-enterprise agreement will be presented for formal consideration by the City Council in March 2022. The
chart below reflects this anticipated arrangement being formally adopted at that time and reflects the anticipated
drawdown based on the most current financial modeling for Connexion and assumes all capital appropriations are
made as presented currently in the CIP.
Rate Analysis
Prior to the 2015-16 budget cycle rate adjustments were subjectively determined. Beginning with the 2015-16
budget cycle objective financial metrics were established to determine necessary rate adjustments. This change
allowed for future rate adjustments to be modeled and to provide clear reasoning as to why a rate adjustment is
needed in any given year. There are three financial metrics which drive a need for a rate adjustment.
1. Operating Income – If the combined operating income for the previous two years was negative, a rate
increase is made in the next year sufficient to generate enough operating income in the coming two years
to offset those losses. The two-year period allows for some weather or economic variability and is
consistent with the City’s biennial budget cycle.
2. Debt Coverage Ratio – A debt coverage ratio is recommended by the bond rating agencies to support the
current enterprise fund bond ratings. This debt coverage ratio is well above the minimum specified in the
bond covenants which could trigger bondholders to request a rate increase on their behalf. If the debt
coverage ratio is forecasted to drop below 2.0 in the coming year, a rate increase sufficient to raise the
debt coverage ratio to 2.1 is assumed in the financial modeling and is recommended to the Council
Finance Committee ahead of the biennial budget cycle.
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
201120122013201420152016201720182019202020212022202320242025202620272028202920302031Available Reserves 2011 -2031
Connexion Use of Reserves
Available Funds less Connexion
Available Funds less Connexion
AND No Debt Issuance
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3. Available Reserves – If an enterprise’s reserve balance is anticipated to drop below the minimum required
reserve level in the next year, a rate increase sufficient to maintain the minimum required reserve is made
at the beginning of that year in the financial modeling and is recommended to the Council Finance
Committee ahead of the biennial budget cycle.
The sum of these three rate adjustments is the needed rate adjustment for the following year. In addition to these
three objective criteria for rate adjustments, a 5.0% ceiling is imposed in any given year, consistent with the stated
objective of “gradual, modest rate adjustments”, which may require smoothing such an increase over the two
years of a budget cycle to not have a large rate increase one year and then no rate adjustment the next. These
same objective criteria are applied to the other 3 utility’s financial models.
For this enterprise fund there is also a need to adjust rates to offset any wholesale purchased power rate increases
from PRPA. As purchased power expenses are approximately 70% of annual operating expenses, 70% of any
wholesale rate increase is needed to be made to retail rates to offset this cost increase. This is included within the
5.0% rate ceiling.
The results of the financial modeling which applies the same objective strategies for raising rates and issuing debt
as the other utilities are presented below along with the forecasted debt issuance in 2023.
Modest rate adjustments will be necessary each year in the coming decade of approximately 2% to offset
anticipated PRPA wholesale rate increases toward their 100% renewable by 2030 goal. Additional rate increases
will be necessary for distribution investments as well.
The rate structure for residential customers has changed twice in the past decade. In 2012, a three-tiered, seasonal
increasing block rate structure was adopted with the intent of encouraging energy conservation. This change from
a flat, non-seasonal rate structure was implemented along with an 8.3% rate increase which resulted in significant
Light & Power 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Rate Increase 2.0% 3.0% 4.1% 3-4% 3-4% 3-4% 2-3% 2-3% 2-4% 2-4%
Debt Issued ($M)$41.0
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%201120122013201420152016201720182019202020212022202320242025202620272028202920302031Rate Increases 2011 -2031
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community pushback that first year. The intent of the three-tiered residential rate structure was to promote energy
conservation. Based on analysis done in 2013 comparing weather normalized residential use in 2011 and 2012
there was no measurable change in energy consumption.
Then in 2015, after the deployment of the advanced metering infrastructure, a twelve-month rate pilot study was
done considering a seasonal, time-of-use residential rate as well as a seasonal, tiered, time-of-use residential rate.
The result of this pilot was the adoption of the seasonal, tiered, time-of-use residential rate for all customers
beginning in October of 2018. The result of this implementation was reviewed in 2019 and showed a statistically
significant reduction of 1.9% in total energy consumption as well as a statistically significant reduction in the
residential contribution to the coincident peak of 7.5
The chart below shows the weekday residential TOU rate schedule. Weekends and holidays are considered off-
peak.
In 2019 a pilot rate was implemented for low-income customers called the Income Qualified Assistance Program
(IQAP). This program is intended to reduce the utility burden for these customers to the same portion of
household income as a customer with the median area household income by providing a discount of almost 25%
on their electric, water and wastewater monthly charges. In 2021, IQAP customers average monthly electric bill
was $57.02 compared to other residential customers who paid $76.26 on average. It is expected that this pilot rate
will be formally adopted in the coming years.
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Financial Risk Assessment Below is a list of identified financial risks for this utility. Further assessment of these financial risks, particularly
with operational input, may change the likelihood and consequence of each and may identify other significant
financial risks. This additional assessment should be done as part of the biennial budget cycle. These financial
risks are associated with operational management and anticipated capital needs and highlight the need for close
collaboration between the financial and operational departments within Utilities as well as the importance of
having a refined, prioritized 10-year capital improvement plan rather than an a more exhaustive list of potential
capital needs that may or may not be necessary.
Risk RealizationRisk ID Risk Likelihood Consequence Mitigation Needed?Risk Description
LPFR1 CIP Volatility High High Yes
Long-term financial planning requires planning for uncertainties with more uncertainty requiring more conservative planning to achieve expected financial metrics; significant volatility on long-term capital plans increases uncertainty in the actual capital investment needs leading to inefficient use of capital, higher rate increases and less financial agility to meet operational needs
LPFR2 Undefined Service Level Metrics / Targets / Weights Medium High Yes
The impact of high CIP volatility can be lessened by optimizing such investments to meet expected levels of service through an objective, quantitative prioritization methodology based on predefined service level metrics with established targets and relative weights; not having these tools to optimize capital investment poses a significant financial risk to the utilityLPFR3Operating Expense Increases Medium High Yes OpEx assumed to not exceed 3.0%; exceedance would limit funds for capital needs and drive further rate increases
LPFR4 PRPA 100 % by 2030 costs Medium Medium Beyond Control Wholesale increases are expected annually of 2-3% through 2030; higher increases will limit room for increases to meet distribution needs and contribute to rate fatigue
LPFR5 Retail Rate Fatigue Medium Medium Beyond Control Annual rate adjustments will be necessary to meet both wholesale and distribution needs; rate fatigue would require a financial reassessment of ability to meet operational targets
LPFR6 Mulberry Annexation Medium Medium Beyond Control The timing and how this annexation is implemented could result in costs being shared by all ratepayers and require investment on a schedule that may impact other planned capital investments
LPFR7 Unidentified Capital Projects Medium Low No As service level targets are established and asset management plans developed and Beneficial Electrification is implemented unanticipated capital needs may require more capital investment than currently plannedLPFR8Municipal Broadband Financial Support Low Medium No Any additional financial support from electric ratepayers will limit capital for L&P needsLPFR9System Reliability Low Low No A real or perceived decline in service reliability could accelerate system renewal investments and lead to less efficient use of capital
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Appendix A: Capital Improvement Plan
Below is a list of identified capital projects expected to be completed over the next decade. These projects are
grouped into the following categories:
System Additions – infrastructure that will be necessary to serve new growth areas
Substation Improvements – system renewal costs for substation infrastructure as well as an additional substation
to serve the northeast portion of the community
Transformers, Cables and Duct Banks – system renewal costs for existing distribution transformers, cables and
duct banks
Annexations – anticipated annexation areas will require acquisition of existing infrastructure from neighboring
utility providers as well as upgrading that infrastructure to the City’s standards
Technology and Other Improvements – improvements to existing buildings used to house staff and warehouse
stock as well as capital projects associated with updating / adopting new technologies
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501 - Light & Power Utility 10-Year CIP Funding Recommendation
Project Name 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
1680 Subdivision Construction
16800000 System Addition/Replacement $5,725,243 $5,700,000 $5,700,000 $5,700,000 $5,700,000 $5,700,000 $5,700,000 $5,700,000 $5,700,000 $5,700,000 $5,700,000
501001 Substations
501001A001 Battery Banks $20,000 $59,000 $20,000 $20,000
501001A002 Battery Chargers $40,000 $20,000 $40,000
501001A003 LTC (Load Tap Changer) Inspection and Repair $105,000 $105,000 $105,000 $105,000 $105,000
501001A004 Oil Containment Walls $70,000 $70,000 $70,000
501001A005 Replace HVAC Units $44,000 $44,000 $44,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000
501001A006 Transformer Radiator Replacements $78,000 $103,000 $103,000 $78,000 $78,000 $78,000 $78,000
501001A009 Feeder Relay Replacements $189,000 $95,000
501001A011 Transformer Re-furbishing $120,000 $120,000 $120,000 $120,000 $120,000 $120,000 $120,000 $120,000 $120,000 $120,000
501001A012 Install Capacitor Banks $80,000 $80,000 $80,000 $80,000 $80,000
501001A013 Transformer Oil Filtration $170,000 $170,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000
501001A014 Substation Security $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000
501001A016 Install New 735 Power Quality Meters $13,000 $13,000 $13,000 $13,000 $13,000
501001A017 Substation Misc Capital $100,000 $100,000 $100,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000
501001A018 Substation Basalite Walls $305,000 $594,000
501001A020 Equipment For CVR (Conservation Voltage Reduction)$75,000 $75,000
501001A021 PRPA Circuit Switcher Installations $40,000
501001A022 New Northeast Substation $6,649,200 $3,761,000 $0
501001A023 New Northeast Substation Land Acquisition $1,085,000
501005 Feeders
501005D004 Install circuit 936 to unload circuits 804, 834, and 906 $514,000
501005D011 Install circuit 324 to unload circuit 308 $1,040,000
501005D012 Install circuit 302 to serve Mulberry Annexation $2,160,000
501005D055 Circuit 602 to serve NE Developments - Ph3 Mt Vista $1,300,000
501005D060 Install circuit 624 to serve Developments in NE Ft. Collins $1,080,000
501005D076 Install circuit 706 to unload circuits 704 and 738 (see also 501005D079)$500,000
501005D077 Install circuit 322 to serve Mulberry Annexation $720,000
501005D078 Circuit 628 to serve NE developments - Ph1 Mt Vista $1,300,000
501005D079 Upgrade and Extend 722 to unload circuits 704 and 738 (See 501005D076)$1,050,000
501005D080 Extend East Vine Circuit 622 - Railroad to I25 $395,000
501005D081 Circuit 324 Carriage pky ph1 - Prospect to fox grove $220,000
501005D082 New Circuit 338 to serve Mulberry road developments $1,080,000
501005D083 Circuit - NE Sub Ckt 1 $528,000
501005D084 Circuit - NE Sub Ckt 2 $648,000
501005D085 Circuit - NE Sub Ckt 3 $628,800
501005D086 Circuit - NE Sub Ckt 4 $744,000
501005D087 Circuit - NE Sub Ckt 5 $744,000
501005D088 Circuit - NE Sub Ckt 6 $1,044,000
501005D089 Circuit - NE Sub Ckt 7 $888,000
501005D090 Circuit - NE Sub Ckt 8 $1,044,000
501005D091 Circuit - Timberline 338 extension $612,000
501008 Duct BanksSubstationsSystem AdditionsTransformers, Cables & Duct BanksPage 88 of 102
City of Fort Collins Utilities 2022 10-Year Light & Power Strategic Financial Plan 30 of 31
501008D081 Duct Bank to serve NE FC Devel Ph 1 $1,102,200
501008D090 Duct Bank on Carriage Pkwy Phase 2 - Fox Grove to Forelock Dr (1X2 w/ 20% Contingency)$693,000
501008D091 Duct Bank on Carriage Pkwy Ph 3- Forelock Dr to Mulberry (1X2 w/ 20% Contingency)$140,000
501008D093 Duct Bank on Mulberry -Timberline to Carriage Pkwy (2X4 w/ 20% Contingency)$2,239,200
501008D094 Overland Trail Duct Bank Drake to Prospect (1X2 w/ 20% Contingency)$570,000
501008D095 Duct Bank Extend East Vine Circuit 622 - Railroad to I25 $825,000
501008D096 Duct Bank on Carriage Pkwy Phase 1 - Prospect to Fox Grove $693,000
501008D097 Duct Bank - NE circuit 1 & 2 $352,800
501008D098 Duct Bank - NE circuit 3 $2,376,000
501008D099 Duct - Timberline 338 Extension $1,368,000
501012 System Cable Replacements
501012C009 CAPITAL - Replacement Area 9 - Valley Hi $149,000
501012C012 CAPITAL - Replacement Area 12 - Woodlands PUD $86,000
501012C013 CAPITAL - Replacement Area 13 - Village West 9th $207,000
501012C016 CAPITAL - Replacement Area 16 - Parkwood East $130,000
501012C017 CAPITAL - Replacement Area 17 - Trail West PUD $182,000
501012C018 CAPITAL - Replacement Area 18 - Edora Acres $101,000
501012C019 CAPITAL - Replacement Area 19 - Evergreen Park $69,000
501012C020 CAPITAL - Replacement Area 20 - The Ridge PUD $117,000
501012C021 CAPITAL - Replacement Area 21 - West Azalea $32,000
501012C022 CAPITAL - Replacement Area 22 - Larkborough $131,000
501012C023 CAPITAL - Replacement Area 23 - Village West 3rd $84,000
501012C024 CAPITAL - Replacement Area 24 - Wagon Wheel $66,000
501012C025 CAPITAL - Replacement Area 25 - Brown Farm 4th $58,000
501012F020 Cable Replacements - Ongoing $690,000 $690,000 $690,000 $690,000 $690,000 $690,000 $690,000 $690,000 $690,000
501012F021 Feeder Cable Replacements - Ongoing $230,000 $230,000 $230,000 $230,000 $230,000 $230,000 $230,000 $230,000 $230,000 $230,000 $230,000
501014 Transformers
501014F022 Distribution Transformer Purchases & Replacements $792,811 $1,041,257 $795,000 $795,000 $795,000 $795,000 $795,000 $795,000 $795,000 $795,000 $795,000
501004 Annexations
501004C005 Clydesdale Park First & Second Annexations $1,011,000
501004D001 Miller Enclave $277,000
501004D002 Mulberry Enclave $324,000 $6,529,000 $4,322,500 $4,322,500 $4,322,500 $7,551,700 $7,551,700 $7,551,700 $10,572,000
501004D003 East Horsetooth (PVREA) Enclave
501004D003 East Horsetooth (Xcel) Enclave
501004D004 Taft Hill & Harmony Enclave
501004E001 PVREA GMA Area
501004E002 Xcel GMA Area
501002 Service Center
501002B003 Cable Handling Facility for Cut-To-Length Program $1,575,000
501002B004 700 Wood Street Backup Power and Dual Feed ATO $519,000
501002B005 Overland Disaster Recovery Site for SCO $450,000
501002B006 Warehouse Storage Yard Covered Structure $199,000
1940 Minor Capital - Vehicles & Equipment
19400000 Minor Capital - Vehicles & Equipment $929,000 $625,000 $625,000 $625,000 $625,000 $625,000 $625,000 $625,000 $625,000 $625,000 $625,000
501009 CMMS–Maintenance ManagementAnnexationsTransformers, Cables & Duct BanksTechnology and OtherPage 89 of 102
City of Fort Collins Utilities 2022 10-Year Light & Power Strategic Financial Plan 31 of 31
501009G002 Operational Technology - Maximo $300,000
501015 Streetlights
501015F023 Streetlight System Replacement $986,866 $986,866 $986,866 $986,866 $986,866 $986,866 $100,000 $100,000 $100,000 $100,000 $100,000
501015G009 LED Streetlight Control and Automation $120,000 $120,000 $120,000 $120,000 $120,000 $120,000 $120,000 $120,000 $120,000 $120,000 $120,000
501016 Distribution Automation
501016G010 Distribution Automation/FLISR $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000
501017 System Relocations
501017J001 System Relocations - Road & Intersection Projects $230,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000
501025 Advanced Metering Infrastructure
501025G004 AMI Equipment and Tech Upgrade $650,300 $664,000 $10,700 $10,700 $10,700 $10,700 $10,700 $10,700 $10,700 $10,700 $10,700
501025G005 AMI Wide Area Network (WAN)$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
501025G006 AMI Backhaul Network Hardware Tech Refresh $0 $234,600 $42,650 $112,000
501025G007 AMI Test Network Expansion $191,900
501025G008 AMI New Technology Testing and Miscellaneous Capital $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
501026 Demand Respond Technology Upgrade
501026G013 Energy Services Peak Partners - DCU3 Refresh $435,500
501026G014 Energy Services Peak Partners - GIWH $0 $1,402,500 $1,402,500 $1,402,500 $1,402,500 $1,402,500 $1,402,500 $1,402,500 $1,402,500 $1,402,500 $1,402,500
501026G015 Energy Services Peak Partners - EVSE $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000
501026G016 Energy Services Peak Partners - PRO1 Thermostat Sunset $200,000
501026G017 Energy Services Peak Partners - Inverter Supervision & Control $250,000
501013 Operational Technology
501013G001 ADMS Strategic Upgrades - Business Releases 3-6 $450,000 $580,000 $970,106 $660,951 $714,254 $351,797
501013G003 eSCADA Hardware/Software $74,624 $74,624 $74,624
501013G011 Radio System Upgrades $0 $628,970 $42,642 $42,642 $42,642 $42,642 $42,642 $42,642 $42,642 $42,642 $42,642
501013G012 GPS & Underground Facilities Visualization $127,926
501013G014 L&P/Energy Services Systems Alignment $106,605 $106,605 $106,605
501013G015 Utility Scale Energy Storage $150,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000
Utility Billing System Upgrade $4,000,000
Total $17,326,344 $28,838,521 $21,903,168 $25,160,114 $21,266,262 $19,469,208 $21,128,142 $23,690,339 $21,200,542 $21,185,542 $22,486,842Technology and OtherPage 90 of 102
Page 91 of 102
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Jill Hueser
Date: 7/6/23
SUBJECT FOR DISCUSSION
Appropriation of Opioid Settlement Funds to Municipal Court Drug Court Program
EXECUTIVE SUMMARY
I am asking Council Finance to support the appropriation of funding already paid and scheduled
for future payments to the Court to be utilized in creating a municipal court drug program to
address high needs individuals with substance abuse disorders in our local community.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does Council Finance support an appropriation of current and future opioid settlement funds to
the court for a substance use disorder probation program/drug court?
BACKGROUND/DISCUSSION
Council has consistently expressed support for a drug court program in municipal court. The
court has worked over the last two years to plan for a drug court. This would be the first of its
kind in the state but other municipal courts have already expressed interest in creating a similar
program.
Drug courts are proven to reduce recidivism, provide savings in criminal justice and resource
costs, and help individuals struggling with substance use disorders achieve sobriety and become
positively contributing members of the community.
The opioid settlement money has to be used for certain types of programs, and drug court fits
those parameters. While it is not a huge amount of money, it is a starting point for our program
and can hopefully be leveraged through grant-writing. In the past, we have not been able to apply
for many federal grants that could fund this type of program because we did not have dedicated
matching funds.
The group working on the opioid settlement funding agreed unanimously that the impact of this
funding would be maximized by the court in developing its drug court program.
ATTACHMENTS
Attachment 1: PowerPoint Presentation
Page 92 of 102
July 9, 2021
Municipal Court BLT Presentation
Chief Judge Jill HueserPage 93 of 102
Drug Courts Generally
•The first drug court opened in 1989 in Miami, Florida, to address how
often individuals would cycle in and out of prison due to drug
addiction.
•Today there are around 4,000 treatment courts nationwide.
•Adult drug courts are the most prevalent treatment court, making up
about half of all treatment courts in the United States.
•Drug courts, which combine treatment with incentives and sanctions,
mandatory and random drug testing, and aftercare, are a proven tool
for improving public health and public safety. They provide an
innovative mechanism for promoting collaboration among the judiciary,
prosecutors, community corrections agencies, drug treatment
providers, and other community support groups.
•Every $1 spent on drug courts yields more than $2 in savings in the
criminal justice system alone. This does not include healthcare savings,
emergency resource savings, and other areas of savings.
2Page 94 of 102
Our Goals
Drug courts vary somewhat in terms of their structure, scope,
and target populations, but they all share three primary goals:
1.Reduced Recidivism Rates
2.Reduced Substance Use Among Participants
3.Rehabilitation of Participants
3Page 95 of 102
What does drug court look like?
The core organizational structure and attributes of the drug court model, which has
successfully been replicated in thousands of courtrooms nationwide, includes the following key
components:
•Integration of alcohol and other drug treatment services within justice system case processing;
•A non‐adversarial approach, through which prosecution and defense counsel promote public
safety while protecting participants’ due process rights;
•Early identification of eligible participants and prompt placement in the drug court;
•Access to a continuum of alcohol, drug and other treatment, and rehabilitation services;
•Frequent alcohol and other drug testing to monitor abstinence;
•A coordinated strategy governing drug court responses to participants’ compliance or
noncompliance;
•Ongoing judicial interaction with each participant;
•Monitoring and evaluation to measure achievement of program goals and gauge effectiveness;
•Continuing interdisciplinary education to promote effective drug court planning,
implementation and operations; and
•Forging of partnerships among drug courts, public agencies, and community‐based
organizations to generate local support and enhance drug court program effectiveness.
4Page 96 of 102
Drug Court Statistics
•Drug courts operate on the local level to divert non‐violent offenders with substance use
problems from incarceration into supervised programs with treatment and rigorous
standards of accountability.
•Drug courts help participants recover from addiction and prevent future criminal activity
while also reducing the burden and costs of repeatedly processing low‐level, non‐violent
offenders through the courts, jails, and prisons.
•Drug court programs have a tangible effect on criminal recidivism. A study funded by the
Department of Justice examined re‐arrest rates for drug court graduates and found that
nationally, 84 percent of drug court graduates have not been re‐arrested and charged
with a serious crime in the first year after
graduation, and 72.5 percent have no arrests at the two‐year mark.
•Additionally, an analysis of drug court cost‐effectiveness conducted by The Urban Institute
found that drug courts provided $2.21 in benefits to the criminal justice system for every
$1 invested.
•When expanding the program to all at‐risk arrestees, the average return on investment
increased even more, resulting in a benefit of $3.36 for every $1 spent.
5Page 97 of 102
Drug Court Impacts
6
•A review of five independent meta‐analyses concluded that drug courts
significantly reduce crime by an average of 8 to 26 percentage points;
well‐administered drug courts were found to reduce crime rates by as much as
35 percent, compared to traditional case dispositions.
•The success of drug courts has led to development of Tribal Wellness,
Veterans Treatment, Mentally Ill Offender, Community, and Family Treatment
courts.
OUR GOAL IS TO REPLICATE THESE SUCCESSES ON THE LOCAL LEVEL BY EARLY
IDENTIFICATION OF AT‐RISK INDIVIDUALS AND INTERVENTION!
Our municipal drug court would be the first of its kind in Colorado.
https://obamawhitehouse.archives.gov/ondcp/ondcp-fact-sheets/drug-courts-smart-approach-to-criminal-
justice#:~:text=A%20review%20of%20five%20independent,compared%20to%20traditional%20case%20dispositions.
Page 98 of 102
How will the Opioid Funding help?
•Initial funding will be used to hire a dedicated probation officer to
build the drug court team.
•Many federal grants are available for this type of program. However,
they require the City have dedicated matching funding. We are
hoping to leverage this funding through grant-writing.
•The team working on the opioid settlement funding, which included
members of the City Manager’s Office, Social Sustainability, the City
Attorney’s Office, and Police Services agreed that, given the funding
available, this request represents the best usage of that money.
7Page 99 of 102
Opioid Settlement Funds
Over the next 18 years, the City will receive $948,562.96 in annual
allotments.
In 2023, the City received it first payment of $106,672.20.
Department of Justice (DOJ) grants are only available for established
drug court programs. These grants can help offset specialized training
costs, counseling services, and add additional resources/probation
officers as the program grows.
8Page 100 of 102
Program Cost Breakdown
•New 1.0 FTE Probation Officer:
•$90,000 annually
•Computer Equipment/ Case Management Licensing Fees:
•$18,000 first year
•$2,000 on-going
•Contract Drug Court Therapist/Counseling services:
•$25,000 annually
The total annual program costs is approx. $118,000.
9Page 101 of 102
Request
The Court requests an appropriation of $75,000 of the 2023 Opioid
Settlement funds into the Court’s budget to start a Municipal Drug Court
program.
•This amount includes approx. 4 months of salary for the new
Probation Officer, licensing and computer equipment costs, and the
costs for therapist/counseling services for 2023.
The Court will, through the 2025/2026 BFO process, request funds
(approx. $65,000) in addition to the annual settlement appropriation to
support the on-going program.
The Court will seek DOJ grants to help offset the costs of this program.
10Page 102 of 102