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HomeMy WebLinkAboutMinutes - Finance Committee - 11/17/2008 -C.Finance AdministrationI0For4CoLLins!!i~80522 _________________9702216782-fax Council Finance Committee Minutes 11/17/08 10:30 a.m 12:00 p.m. Council Attendees:Mayor Doug Hutchinson,CounciLmember Ben ManveL,CounciLmember KeLLy Ohison City Staff Attendees:Darin Atteberry,Kraig Ecton,Mike Freeman, Chuck Seest,Jeremy Reese,Heather Shepherd Others:Ann Hutchison from the Chamber of Commerce; Kevin Gertig from Utilities;Matt Robenalt,DDA and Kathy Cardona,DDA Approval of the Minutes from the October 27th meeting. Darin Atteberry wouLd Like a more detaiLed description on the section of the minutes that discussed HR benefits from this meeting. Purchase Power Reserve Policy Tern Bryant reviewed proposed changes to the Purchase Power Reserve PoLicy Current Policy: Current Reserve PoLicy: Revenue Reserve 8%of ensuing year’s operating budget less purchase power CapitaL Reserve 20%of 5-yr capital pLan CapitaL OutLay equipment repLacement Art in PubLic PLaces per code Encumbrance Reserve carry over purchase orders Purchase Power after aLL other reserves are met Background: •Purchase Power Reserve authorized in 1985 Offset future rate increases Mitigate potentiaL changes in cost of FederaL hydropower •StabLe rates from PRPA have resuLted in Low eLectric rate increases •Purchase Power Reserve has not been needed for intended purpose •Purchase Power Reserve has accumuLated to $31.6 miLLion ØJ~n~LLins Staff Proposal •Eliminate Purchase Power Reserve Policy •Spend down for Capital required to implement Energy Policy/Climate Policy initiatives —Benefits rate payers —Reduces rate impacts otherwise needed to implement Policy initiatives •Future Purchase Power increases will be passed through to retail customers to reflect full cost of power Terri Bryant said staff is proposing to eliminate the Purchase Power Reserve policy which will reduce rate impacts otherwise needed to implement policy initiatives. Darin Atteberry stated that he doesn’t support using one-time reserves to buffer consumers from rate increases for on year since It would just make the increase more extreme when it did happen in the following year(s). Mayor Hutchinson asked what the next steps would be if the Committee accepts these recommendations.Terd Bryant stated that first,it would have to be approved by the Electric Board,and eventually it would come to the City Council for approval.This would occur sometime in the first quarter of next year. Mulberry Wastewater Bond Discussion Chuck Seest told Committee that he and Terri Bryant had a recent meeting with City’s bond counsel and financial advisor to recommend to the Finance Department the best way to structure these bonds.The City is scheduled to take these bonds to the market during the first full week of January,2009.The City’s intent is to sell approximately $30 million of bonds. Terd Bryant pointed out that during budget development for this it was important to develop a stable rate for the coming years,so rates were set at 12%for this year,11%for next year 10%,for the following year,etc.(This would be done to avoid a 25%rate increase right at the outset to cover the cost of the plant improvements.) DDA Bonds Bond Structure •Will utilize Updated City Investment Policy Borrowing meets the criteria of “Stub Period”,not typical period for the market (4 years) Borrowing total of $10.5 million plus costs Source of funds will be City Portfolio Bonds will mature in 2012,tied to 5 year Treasury Note (approx.2.50% 11/13/08) •Bond will make payments in June &December C DDA Projects Funded by Bond •Downtown ALLey Improvements $4.OM •Purchase of the ELks Building 2.8M •Beet Street CuLtural Program 1 .OM •Year Round Community Market 0.7M •River District Improvement 0.5M •Green Building Program in Downtown 0.5M •Other Items-Fort ZED,RaiLroad Study,Etc 1 .OM TOTAL PROJECTS $1 0.5M CounciLmember OhLson stated that he wants to ensure that anyone the City worked with wouLd get simiLar treatment and the City is not favoring DDA over others in future,similar projects. Mayor Hutchinson asked if the pLans for the ELks BuiLding wiLL remain the same and Matt Robenalt responded that the pLan wiLL probabLy have to be reviewed now. RMI2 Financing Mike Freeman supplied the Committee with information on the Rocky Mountain Innovation Initiative.This used to be caLLed the TechnoLogy Incubator and now incorporates aLl of Northern CoLorado. CurrentLy existing companies are in 10,000 sq ft.of office space but they wiLL need 16,000 sq ft.within the next year.They aLso need a below market Lease rate to be successfuL.It is growing and the City definiteLy wants to keep supporting the initiative,however: The new DDA amphitheater wiLL displace aLL RMI2 companies,except Sprig Toys,when it is buiLt. As a resuLt of this,a new faciLity is being proposed at Inverness Innovation Park which would incLude a 29,000 sq ft.4 story buiLding with 3,000 sq ft.for wet Lab space (not competing with CSU),and the 4th fLoor rented out at market rate.The buiLding wouLd also be LEED certified. Mike Freeman said that this project can’t happen without City and URA Board support.The process for the new RIM buiLding would be as foLlows: RMI wiLl create a nonprofit LLC.The City wouLd Loan the URA board the full construction vaLue of the project,which is $4.4milLion,and then the URA board wouLd Loan that amount to the RMI2 nonprofit. Mike Freeman stated that it’s a low risk deal for the City.Once construction is done, a URA bond wouLd be issued for $3.2 million and a permanent loan wouLd then be put in pLace to make up the difference. City of~rtCcWn~Lins Mike Freeman also recommended attempting to keep this building in the downtown area if possible.It would assist with employment in the downtown which is critical for the long term viability of the downtown. Mike asked the Council Finance Committee if they agree with the logic of the funding for this project. Councilmember Ohlson asked how the City could be sure there isn’t a ‘better deal’if the project was located in mid-town,for exampLe.The Mayor suggested that more information be prepared for Council Members that would contain some of those scenarios. Darin Atteberry told the Committee that he strongly supports this approach. However,there is still some work to be done on the details.Darin said that if the Committee members agree to move forward with the project,Mike will prepare more information and time will be spent individually with each of the three Council Committee members to ensure that everyone has the opportunity to consider the project and ask questions.The Committee agreed to this approach. Quarterly Financial Update Jeremy Reese summarized the Sales Tax Revenue year-to-date.Collections are up almost 1%for the last quarter and this is mainly due to restaurant sales. -Sales tax collections have increased 0.9%year-to-date -Factors contributing to the growth in 2008: •Restaurant Sales (+5.9%) •Food Stores (+7.0%) -Retail categories challenging growth in 2008: •General Merchandise Stores (-8.8%) •Home Furnishings ft Consumer ELectronics (-1.6%vs.+16.0%in 2007) Revenue Projections General fund projected sales tax revenue without redevelopment at the mall in 2010 and 2011: 2008 -$50.3 M (2.1%increase) 2009 -$52.3 M (4.0%increase) 2010 -$53.5 M (2.4%increase) 2011 -$54.8 M (2.3%increase) Use Tax Revenue -General use tax collections have decreased 16.9%through September 2008 when compared to the same period in 2007.(The decrease is the result of one-time audit revenue in 2007). -General use tax revenue is on track to meet the 2008 budgeted amount of $8.2M. r ~Ec9ll~s Jeremy Reese stated that Use Tax is down,but still in line to meet budget projections. Other Business Foothills Mall URA -CounciLmember Ohlson mentioned that he had recently been interview by the media on the topic of the Foothills Mall URA and the fact that the plan is to shut the URA down until a new developer would be able to offer a new plan. Darin Atteberry asked Mike Freeman if that is a feasible option,and Mike responded that it is definitely the best way to proceed. Councilmember Ohlson asked if getting a whole new project would entail spending more money doing new studies.Mike Freeman said the City will use the same study that was completed last year unless a significant amount of time were to pass between now and when new development occurred on the site.The Committee agreed that this URA should be dissolved formally at the next City Council Meeting and it can be resumed at such time that the City has viable development plans for the Mall.Darin Atteberry told the Committee he plans to make sure the public knows that the City is still working on various strategies for the Mall and has not abandoned the site. Meeting adjourned at 12:30.