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Home My WebLink AboutMinutes - Finance Committee - 06/23/2015 -r c.Finance AdministrationI0215N.Mason~••I—Ort LOLL.Fort Collins,CO 80522 970.221.6788~9702782-lax Counci Audit &Finance Committee Minutes 06/23/15 2:30 4:30 p.m. Community Room Council Attendees:Mayor Wade Troxell,Gerry Horack,Ross Cunniff Staff:Mike Beckstead,Jeff Mihelich,John Duvall,John Voss,Josh Birks,Jessica Ping-Sma Travis Storm,Peggy Streeter,Nancy James Others:Kevin Jones Chamber of Commerce APPROVAL OF MINUTES Ross Cunniff made a motion to approve the May18,2015 Counci Finance Committee minutes.Gerry Horack made a second to the motion.The minutes were approved unanimously. Mike indicated that he will be deferring the July 201h calendar item Long Term Revenue Diversification due to Jessica leaving her position on July 3”’;she has accepted a job with Advanced Energy.The posting for her position will be going out later this week or early the week of June 2?. EXEMPT ORGANIZATION —POTENTIAL CODE UPDATES Chapter 25 of the Municipal Code allows organizations that meet the definition of charitable,per city code,to purchase tangible personal property for use in the organizations’activities free from city of Fort Collins sales and use tax.Recently,Colorado case law was discovered that may have a substantial impact on staffs interpretation of the charitable organization definition.Staff is recommending City Council consider amending the code to mitigate the impact of the case law to a substantial number of the city’s 300 exempt organizations. The general direction sought and specific questions were proposed to CFC: •Does CFC support potential code changes to amend the definition of charitable organization? •Does the CFC support one of the options presented by staff? The current Code allows the entities exemption from paying sales and use tax on purchases but does not exempt them from collecting sales tax if selling tangible goods. 0 0 $Wtcwr~ottins Issue to Address: •In fall of 2014 staff denied an application for exemption based on definition. •During appeal process,City Attorney’s Office discovered a ruling from the CO Supreme Court: o Definition of charitable organization the same as Fort Collins o CO Supreme Court interpreted definition differently than staff has historically Impact of Ruling:23%(70)of City Exempt Organizations would no longer qualify under existing definition. Staff feels that this would have a big impact locally,thus is requesting that a review be made to the current code and consider the following options: Option 1)No code change Option 2)Redefine “charitable organization”to align with the past application of the definition Option 3)Amend code to exempt any religious or charitable organization that has been granted tax exempt status by the state or eligible for tax exemption under state law. Secular charities and religious organizations have to be treated equally by definition.Moving forward,there are pros and cons in regard to each option. Staff’s recommendation is to take the 3’d option,which would amend code to exempt any entity granted tax exemption from the State: •Allows existing organizations to retain exemption •Supports local charitable organizations •Reduce staff time and subjectivity of definition •Simplified process for charitable organizations •Diminishes confusion for retailers After discussion,it was determined that CFC would take staffs recommendation to take Option #3.John Duvall stated that by amending the code to include the state’s definition,any entity that meets the City’s definition of the code will also meet the state’s definition.When the state amends their code,the City will then have to amend its code as well. 2014 YEAR END FINANCIAL HIGHLIGHTS A recap of revenue,expenditures and debt was reviewed by CFC.The financial condition of the City continues to be healthy,as reported by John Voss.Revenues increased as did expenditures.The population continues to grow,and with it,a demand for more services.Outstanding debt continues to decline. There are two broad categories in accounting Governmental Activities and Enterprise Activities Governmental activities are described as those activities that do not lend themselves to be fully funded by User Fees and are wholly or partially tax supported (Transportation,Police,Fire,Parks,Natural Areas,etc.)Enterprise activities are 2 those activities that are 100%funded by User Fees (Light &Power,Water,Wastewater,Storm Drainage,and Golf). REVENUE City Funds •Sales and Use tax and Capital Impact fees lead Revenue increase Governmental Revenue •Capital grants down,primarily MAX Capital grants are onetime.Operating grants are ongoing —which is where we’d like to see the most growth in because it supports operations. •2014 Sales &Use tax up 15.4% •Impact fees driving increase in Charges for Services 2014 Governmental Revenue •Sales &Use tax is the primary source of revenue at 51%,(Sales tax is 60%of the General Fund) Interest Earnings •Interest rates continue historic low,except slight rise in 2015 •Unrealized gains and losses washout when held to maturity Enterprise Fund Revenue •Light &Power revenue declines,while the other Enterprise Funds see increased revenue EXPENDITURES Expenditures by Service Area —(including capital).Spending overall has not changed a whole lot over the years. •Utilities $222.7 •PDT $79.0 •Comm.&Operations $54.3 •Police $37.2 •PFA (City Portion)$20.8 Energy Purchased •Efficiency programs appear to be working. •Megawatt-hours per capita declines an average of -1.8% •The city tracks what has been paid for purchased power (for resale),which went down this year from $80.3 to $80.1. •Demand charges from PRPA will be included in next year’s report. Personnel Costs -2014 Full Time Equivalent •Personnel costs have risen in all service areas,attributed by growth in full time employees and compensation. I •0 •Total employees for all Service Areas =1,294.9 Classified &Unclassified;362.3 Hourly for a total of 1,657.1 •Gross Pay -$99,823,79% •Benefits -$27,258,21% •2014 Employee Benefits $27,258 (in thousands) DEBT Outstanding Debt •Debt per person $1,784 (1986—with a population of 87,740) •Debt per person -$814 (2014—with a population of 155,400) •Per capita debt in 20141546%less than 1986 Comnliance with Debt Policy •Annual debt service cannot exceed 5%of governmental revenue. Revenue (does not include one-time large capftal grants,as per policy)$229.5 M Debt Service $5.4 M DS/Revenue $2.20% D5 Policy Limit $5.00% Fund Balance in General Fund •2013 Ending $60.7 •2014 net $13.2 •2014 EndIng $73.9 2014 YEAR END FUND BALANCE REVIEW An overview of the past year was presented by John Voss.Fund balances are primarily considered for funding one-time offers during the Budgeting for Outcomes process.To a lesser extent available monies are also used to fund supplemental appropriations between BFO cycles. Fund Balance definitions were reviewed to include:Non-spendable,restricted,committed,assigned,and unassigned —which are listed in order from most constrained to least constrained.Restricted balances can be available with some constraints or available for nearly any purpose. A high level overview of all City Funds with total balances available,were reviewed by staff and Council Finance members. Mike stated that our General Fund balances went up by 35M from 2013,which is a positive for the City r _A32ll~All City Funds •2014 Total $397.5 •Appropriated,Mm.Policy,or Scheduled $266.7 •Available but with some Constraints $108.4 •Available for Nearly any Purpose $22.4 General Fund —Year End 2014 •2014 Total $74.0 •Appropriated,Mm.Policy,or Scheduled $64.6 •Available but with some Constraints $1.9 •Available for Nearly any Purpose $7.5 Sales Tax Recapture DIscussion An initiative that came out of the Council retreat concerning “Sales Tax Recapture”was discussed.It was suggested that the City look at the property adjoining our neighboring communities and assess what tools could be put into place to incentivize and partner with our neighboring communities to share possible sales tax revenue that will be generated when this property is developed. Other Business Ross requested a financial update on staffs assessment on what is being considered as new additions,and not new additions,for the Mall Committee.Staff will include this material at the next Mall Committee meeting. Meeting Adjourned at 4:16 p.m.