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HomeMy WebLinkAboutMinutes - Finance Committee - 10/20/2014 -r C .Finance AdministrationI02~FloorF•r••[tin 970.221.6788 970 221 6782 fax fcgov corn Council Audit &Finance Committee Minutes 10/20/14 10:00 a.m.to 11:00p.m. CIC Room Council Attendees:Ross Cunniff,Bob Overbeck,Mayor Karen Weitkunat Staff:Darin Atteberry,Mike Beckstead,Josh Birks,Delynn Coldiron,Chris Donegon,John Duval,Andres Gavaldon, Laurie Kadrich,Sandra Lindell,Jessica Ping-Small,Lawrence Pollack,John Voss,Katie Wiggett Others:Dale Adamy;Kevin Jones,Chamber Mike Beckstead requested that the order of agenda be changed to include an update on the mall bonds and to put Jessica Ping Small’s items first.The committee approved the change. Bond Issuance for the Mall Mike Beckstead said that the bonds for the mall closed on October 9,2014.The bonds closed with an interest rate of 5.92%(a weighted average),significantly lower than the original estimate of 7%.A lower interest rate means a reduction in debt service of $1SM from the original estimate and a reduction in City Sales Tax revenue that will be needed to support bond payments. Bob Overbeck said that he appreciated the update and would like to hear regular updates at Council Finance Meetings as the mall progresses. Approval of the Minutes Bob Overbeck moved to approve the minutes from the September15 meeting.Ross Cunniff seconded the motion.Minutes approved unanimously. Comprehensive Fee Study Mike Beckstead noted that Staff has had multiple conversations with Council on Revenue Diversification in the last few years.Out of these conversations has come a Comprehensive Fee Study and an updated Revenue Policy which includes Revenue Diversification.The study Jessica will present today is a new study that includes residential,commercial and industrial fee comparisons.Staff will give Council Finance an overview of the study today;in December,Staff will provide an overview of Revenue Diversification efforts and discuss next steps with the Committee. Jessica Ping-Small explained that the 2010 study focused on methodology and contained a comparison of residential fees.The scope of the current study focuses primarily on the fees as they exist today.The study does not analyze the methodology for how the fees are derived,but instead educates on how the City compares to other jurisdictions on the Front Range and serves as a tool for making informed decisions regarding fees in the future r City ofFortCoLLins The scope of the Fee Study includes a comparative analysis of fees associated with the “cost to build”in Fort Collins and surrounding communities.The fees include Building Permit Development Review and Capital Improvement Fees.Thirteen benchmark cities plus Larimer County were selected based on proximity to Fort Collins and historical benchmark data. Bob Overbeck asked why Weld County was not included when Larimer County was.Jessica explained that it was not excluded for a particular reason;Larimer County was included because it is local. Jessica summarized the study’s results.Below is a high level table of the overall Fort Collins ranking by scenario. Development Type*Overall Ranking 1st =Highest Fees 15th =Lowest Fees Single Family Residential Detached 12th Commercial office 2nd Commercial retail 1st Multi4amilylCommercial mixed use 8th Industrial Warehouse tlncludes Building Fees (Permit,Plan Review,Use Tax),Utility and Non-Utility Capital Expansion Fees Based on the fee study,Fort Collins ranked low for residential development.This ranking is driven by Utility Capital Improvement fees that are significantly lower than most benchmark cities.Fort Collins Utility Fees ranked 13 out of 15.However,Fort Collins ranked on the higher end of both commercial scenarios.The Fort Collins fees are in in the top 3 for both Building fees and Non-Utility Capital Improvement Fees.It is important to note that Use Tax is included in all scenarios. Ross Cunniff asked if we had historical data on why the fees for Industrial and Commercial had become higher than those in surrounding areas.Jessica answered that one notable driver was the Capital Expansion Fee update which updated the basis of the fees to current actuals.An unintended consequence of the update was to push up Fort Collins’s overall cost to build. Jessica concluded that that the fee study uncovered several opportunities dependent on the growth strategy.There are areas where fees could strategically be introduced,increased or decreased.In December,Staff will seek direction for next steps. The Mayor noted that the fees with the greatest disparity between the highest City and the lowest City are the ones that stand out the most.She asked that Staff look at why Larimer County is high on Commercial Retail in the area of non-utility fees when Larimer County is low on non-utility fees in all other categories.Staff will follow up on the extremes in the December discussion. Bob Overbeck said that a five-year history of these fees would be helpful to identify drivers.Mike Beckstead noted that residential has been well tracked in the last five years and has remained relatively 2 City ofFortCoLLins the same.Jessica and Laurie Kadrich will work to pull together as much historical data for the non residential scenarios as they can for the December meeting. Woodward Rebate Appropriation Review Jessica explained that the City’s agreement with Woodward specifies that Woodward is eligible for a rebate in the following areas: •Use Tax on Construction Materials and Eligible Equipment (up to 80%) •Development Fees (100%) •Capital Improvement Fees (up to 50%) Staff worked with Woodward to develop a schedule for these rebates.Woodward agreed to submit two applications a year.The first application covers January June and includes Development Review and Capital Improvement Fes.The second application covers Development Review and Capital Improvement Fees from June-December as well as Use Tax for the entire year. Key stipulations for receiving the rebates include: •Of the rebate amounts eligible,40%will be withheld in escrow dependent on Woodward reaching the 1,400 employee mark by 12/31/18. •Use tax and Capital Expansion fees include a backfill requirement by the General Fund which will be accounted for at the time of appropriation. •100%of the Capital Improvement Fee rebate will be backfilled by the General Fund •100%of the dedicated taxes will be backfilled by the General Fund -.25%NaturalAreas -.25%Streets and Transportation -.25%Building on Basics Projects •.85%Keep Fort Collins Great •Rebate funds will be appropriated by City Council biannually as part of the rebate process. Bob Overbeck asked if the required 1,400 employees included current employees.Mike answered that Woodward had approximately 700 local employees at the time of the agreement.The 1,400 required by 12/31/18 includes 700 employees new to Fort Collins.Bob Overbeck asked that Staff be aware of whether these employees are coming from the local population or if they are moving into the area as this may affect affordable housing,crowding issues,etc. Jessica explained that the Woodward Rebate appropriation for the period Jan —Jun of 2014 was for $88,343.19.This amount is included in the appropriation ordinance going to Council on November 4. Jessica explained that the funds for the rebate were put aside as the money came in.In early 2015,Staff intends to bring another appropriation request to Council Finance before taking it to Council.The amount of rebate depends on the amount of progress Woodward makes in coming months. Council Finance supports the appropriation. Long Term Financial Plan (LTFP) Mike explained that the purpose of presenting the Long Term Financial Plan (LTFP)is to get Council Finance’s response on its structure and assumptions before a draft is brought to Council in February 2015.Andres Gavaldon noted that the purpose of the LTFP is to provide a directional tool to highlight potential issues.It will provide a base case 10 year view of revenue and expenditures based on key assumptions and provide directional understanding of the gaps between various revenue and 3 City ofFortCoLLins expenditure assumptions.The LTFP will also provide the ability to evaluate the impact of various scenarios from the base case. Bob noted that this tool could be helpful in evaluating the impact of financing things such as sustainability initiatives.Mike noted that this tool could be helpful in running such scenarios as the impact of the City deciding to take on maximum debt capacity. Andres reviewed the scope of the LTFP,noting that nine funds have been discretely modeled and included in the total City view.The Mayor asked why KFCG is broken out as a fund,but the other ‘/4 cent taxes are not.John Voss explained that all sales taxes are included in the model;however the dedicated taxes,such as the 1/4 cent street maintenance tax,are not broken out of the funds they are dedicated to. Mike Beckstead said that Staff would consider a way to make this clearer;perhaps a footnote could be added to the information on funds. Ross Cunniff suggested adding a column to the Correlation Matrix that spoke to the unpredictability I predictability of each forecast. Andres noted that Staff aims for a February 2015 completion target date for council work session.The results will be incorporated into the Strategic Planning Cycle.Throughout 2015,there will likely be a lot of polishing and adjusting as Staff works with Council to cement the structure of this new tool.Once finalized,the LTFP will be updated every two years. Council Finance sees the LTFP as a useful tool and suggested that the LTFP be an ongoing process in 2015. Annual Budget Adjustment Ordinance Mike Beckstead explained that the Annual Budget Adjustment Ordinance is going to Council October 22. Ross asked if expenses related to the Mountain Avenue weekend closures were included in this ordinance.Darin said that it is not included in the current ordinance;Budget Staff will need to get police input to see if the closures will require extra budget. Other Business Bob Overbeck asked whether Council Finance could have an update on the City’s low-income rebate programs in November.Staff will bring an update in November or December of 2014.