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HomeMy WebLinkAboutMinutes - Finance Committee - 12/15/2014 -r C.Finance AdministrationI0215N.MasonF.2~Floor •P05ox580 I I Fort Collins,CO 80522970.221.6788 970 221 6782 tax fcgov corn Council Audit &Finance Committee Minutes 12/15/14 10:00 a.m.to 12:00 Noon CIC Room Council Attendees:Ross Cunniff,Bob Overbeck Staff:Darin Atteberry,Mike Beckstead,Josh Birks,Karen Cumbo, Carrie Daggett,Mike DeKock,John Duval,Kevin Gertig, Tauny Gilmore,Marty Heffernan,Bruce Hendee,Jessica Ping Small,John Voss,Katie Wiggett Others:Dale Adamy,Mike Freeman,RMI;Audrey Frajo,Chamber Approval of the Minutes Bob Overbeck moved to approve the minutes from the November17 meeting.Ross Cunniff seconded the motion.Minutes approved unanimously. 201.4 Revenue Update Mike Beckstead provided details on the additional revenue that is anticipated above forecast for 2014. Mike explained that Staff last updated the revenue forecast in September and the additional revenue above budget was used in the 2015/16 budget.October and November revenue growth was exceptionally strong and an additional $6.2M of Sales and Use tax revenue (with approximately $3.7M of this within the General Fund)is anticipated by year end. Bob Overbeck asked for an update on the Police Training Facility.Darin Atteberry said that the topic will be discussed at a Council Work Session in January.Staff is currently in dialogues with potential partners. While Weld County will not be a partner,some towns within Weld County are interested. Mike outlined the following options for CFC in the use of the additional $3.7M of GF revenue: 1.Assign additional revenue to select projects eliminated from Capital Project List 2.Allow Select projects to compete with other priorities in 2015 revision or 2017/18 BFO process Council Finance discussed the merits of the projects eliminated from the Capital Project List.Marty Heffernan explained that the Southridge Irrigation System ($2.2M)project is a top priority while the Fossil Creek Synthetic Turf project ($1.3M)and the Park Conversion to Raw Water ($.8M)are less pressing projects,though important.Darin noted that each of these projects helped with water conservation.Marty added that the Southridge Irrigation System would result in 20%savings on water. Ross Cunniff said that it would be helpful to see the water cost savings in terms of average household water use. 0 0 City ofFortCoLlins Darin asked Marty to calculate the cost of a worst case catastrophic event due to the Fossil Creek turf situation.Ross agreed that such information would be good to know on all projects so Council could set aside only the necessary funds while Staff came up with Plans for completing these projects over time. Ross said that after the April election,the new Council should have a say on how these revenues are spent. Darin explained that the top three priorities from these projects would be Transfort Bus Fleet Replacement Computer Aided Dispatch and the Southridge Irrigation System.Council Finance recommends setting aside $.5M from the $3.7M for each of these three projects.Staff will move forward with this recommendation and make these assignments in the 2014 year end fund balance. Review of Prior Revenue Diversification Discussions Jessica Ping-Small explained that since 2012,Staff has been analyzing and considering various facets of revenue diversification and presenting their findings to Council in phases.This presentation is to recap past discussions and to seek direction on next steps. The City receives 45-50%of its revenue from sales and use tax which can be a volatile source of revenue. The conundrum of how to strike the balance of adequate revenue to fund current service levels without an overreliance on sales and use tax is an ongoing issue in Fort Collins and surrounding municipalities.The City’s dependence on sales and use tax is about average compared to other Colorado cities. Jessica showed a breakdown of Fort Collins tax base,noting that a significant portion of Fort Collins tax is comprised of voter approved taxes that eventually sunset.Jessica went on to address Fort Collins’mill levy rate,pointing out that the City mill rate of 9.797 is currently slightly above the average of 8.828 mills compared to other Colorado cities. Since 2012,Staff has looked at multiple options to both diversify and stabilize revenue,using Colorado Springs comprehensive revenue diversification study as a guide.Staff came up with 7 main alternatives,3 of which were still based on sales tax. One option is a sales tax on services,a tax that is hard to estimate potential revenue for.If adopting a tax on services,the City would have three tiers of services to explore for possibly taxing:1)services that other surrounding cities tax;2)personal care type services;and 3)consulting type services.Council Finance asked that Staff prepare a memo further explaining this option. Bob Overbeck asked about the possibility of taxing online sales.Jessica answered that online sales represent an estimated loss in sales tax of $3-4M annually.The possibility of state-level tax rates is being discussed nationally. Darin Atteberry pointed out that Staffs diversity discussion is very much focused on stability rather than finding new revenue.Bob Overbeck asked if Staff has looked at Sales and Use Tax levels in the 2008 downturn to see what a base might look like in another downturn.Jessica answered that Staff has looked at the 2008 base and,while revenue from sales and use tax was down 6-7%,it was not as volatile as might be expected.Mike Beckstead added that property taxes in Fort Collins also remained relatively flat during the recession. Bob had asked Staff to examine the impact of a City Mill Level at 31.162,the mill rate at which a “three- City ofFortCoLLins legged stool”would be achieved.Jessica showed numbers comparing a 2012 bill at the current rate of 9.797 mills with a bill at 31.162 mills,noting an increase of roughly 300%.Ross asked if the sales tax rate would be lowered if the mill levy was raised.Jessica answered that it likely would. Council Finance recommends that Council discuss the possibility of a Transportation Fee before or in conjunction with discussions on renewing the ¾cent Street Maintenance Tax.Council Finance would also like to see more information about a potential tax on services,an admissions tax and other options. Staff will bring a presentation to Council Finance in 03 or 042015 to tie up the loose ends on potential diversification options. Rocky Mountain Innosphere (RMI)Business Update Mike Freeman of Rocky Mountain Innosphere (RMI orthe Innosphere)explained that RMI is Colorado’s leading science and technology incubator.RMI is focused on supporting entrepreneurs who are building high growth potential companies in cleantech,biosciences,hardware and software. Bob Overbeck asked if Council could get a breakdown of RMI’s funding partners with their level of funding.Mike replied that each funding partner contributes $25K or more with the largest donation being $125K;however,RMI cannot release a list of each company and their donations as these are private organizations and often chose to keep their donations private. Mike explained the importance of RMI’s strategic partners,industry partners,and bank partners.Bob Overbeck noted that it would be nice to hear a deeper story on these partners work with RMI.Mike went on to discuss RMI’s economic impact in 2013,noting that the most significant number was the total capital raised:$35.3M in 2013. Mike went over RMI’s proposed major initiatives for 2015: •Further implementing Lean Launchpad (up front training program) •Better defining services delivered by staff vs.advisors,providers •Creating more definition around software program •Defining role with CSU Powerhouse •Advancing our access to capital program (focus on seed funding) •Implementing an Early Exit program. Mike then explained RMI’s Key Initiative for 2015:the Early Exit Program.This program is customized for companies with early exit potential (approximately 5 companies a year).These companies will pay RMI a 2%transaction fee (of the value of a sale)when they exit.This will be an opt-in program solely for companies with good acquisition potential. Establishing a Parking Fund in 2015 Mike DeKock explained that the City has set up a new fund to report parking revenues and expenditures that were previously reported in the Transportation Fund.The CFO has the authority to establish a new fund;however,Council approval is required to transfer the parking reserves currently reported in the Transportation Fund into the Parking Fund. An ordinance will be presented for the February 4,2015 Council Meeting to transfer an estimate of reserves as of December 31,2014 of approximately $1,519,485.Mike explained that this balance is an estimate because year end accruals are still coming in.If there are any additional transactions recorded 3 0 0 City ofFortCoLLins altering the year-end reserve amount,an appropriation will be proposed for the year-end adjustment ordinance. Darin noted that this is not a change to parking practices,only a change in financial reporting to improve transparency.Bob Overbeck noted that it might be useful to add an asterisk stating how much money the City forfeits annually with the issuance of warnings or “oops”tickets.Ross asked that Staff look into the “oops”tickets because he believes the tickets have a statement on them saying that they are granted through the DBA or DDA. Council Finance supports the transfer of funds from the Transportation Fund to the Parking Fund.