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HomeMy WebLinkAboutMinutes - Finance Committee - 08/19/2013 -r _____C .Finance Administration_____I 0 215N Mason——II 2’~FIoorI-Ort CoLLins Fort Collins,CO 80522 970.221.6788~~o~2~782-fax Council Audit &Finance Committee Minutes 8/19/13 10:00 to 12:00 CIC Room Council Attendees:Mayor Karen Weitkunat,Ross Cunniff,Bob Overbeck Staff:Darin Atteberry,Mike Beckstead,Megan Bolin,Steve Catanach,Kevin Gertig;Brian Janonis,Diane Jones, Mindy Pfleiger,Lawrence Pollack,Lance Smith,Jon Haukaas,Kurt Ravenschlag;Steve Roy,John Voss, Katie Wiggett Others:Dale Adamy Approval of the Minutes Bob Overbeck moved to approve the minutes for the July 15,2013 and the August 8,2013 meetings. Mayor Karen Weitkunat seconded the motion.Minutes were approved unanimously. 2014 Budget Revisions —in Advance of the September 10 Work Session Lawrence Pollack presented the recommended revisions to the 2014 Budget;an Appropriations Ordinance is scheduled to go to first reading October15 and a second reading November 5. Lawrence went through the individual recommended changes.City-wide,supplemental appropriations recommended total $8.1 million.The following are key objectives which the recommendations line up with: .Address stated Council priorities •Cover increased costs for power •Complete funding for North College Improvements •Maintain fund balances and start rebuilding reserves in the General Fund to support future needs and economic uncertainty The recommended 2014 budget supplemental appropriations meet these goals. City Manager Darin Atteberry noted that the City’s two year budget process encourages a conservative approach,keeping a strong fund balance.The two year process is also an important part of Budgeting for Outcomes (BFO),a very transparent process in which staff recommends and council decides. C ins Review Utility Rates Lance Smith noted that the 2013-14 City Budget included rate increases for the Water and Wastewater utilities.The proposed rate increases for 2014 are necessary to fund the capital improvements and ongoing operating expenses as outlined in the 2013 14 City Budget.Below are the 2014 Proposed Rate Increases: •Electric—2.0% •Wastewater—3.0% •Water—4.0% A new development fee is being proposed for the Water Fund to provide sufficient funding to fully utilize accepted water rights throughout the year.This fee,called the Water Right Utilization Fee (WRUF),is necessary to ensure that new development not only provides water rights necessary to serve the development but also the capital associated with developing the water storage required to fully utilize those water rights.Currently the City of Fort Collins accepts water rights from several different irrigation companies to meet the raw water requirements for development purposes.Some of these water rights come with short-term storage,but most do not have any storage associated with them.In order to fully utilize those rights to meet the demand for water throughout the year it is necessary to have sufficient storage capacity.Because the duration and magnitude of the flows from each of the irrigation ditch company is unique,the amount of such storage depends on the specific water rights. Thus,the new fee will vary by the water right source. For the Electric utility,the increase is composed of a 1.5%increase from Platte River Power Authority and $500,000 for the second phase of the Fort Collins Solar Purchased Power Program.Electric Development Fees are being reviewed for 2014 and will be included in the Electric Rate Ordinance on October 15. Staff has presented the proposed changes in rates and fees to the Energy Board on August 8 and the Water Board on August 15 for their preliminary review.No action was requested of the Boards at these meetings.Staff will meet with these Boards again before the First Reading of the Rate Ordinances in October and provide the Board recommendations with the Ordinances.Staff will present the rate class specific increases and the proposed changes to the development fees to City Council at the September 24 Work Session. The First Reading of the 2014 Utility Rate Ordinances is scheduled for October 15. Bob II Update Mike Beckstead opened a discussion on the potential renewal of the current community capital improvement tax,Building on Basics (BOB).He noted that,historically,Fort Collins has a long history of voter approved sales tax initiatives targeted for major capital projects.The current initiative,BOB,was approved in 2005 and is a quarter cent tax which has helped finance such projects as the Lincoln Center renovation,the Museum of Discovery and the Senior Center expansion.BOB expires December 31, 2015.Mike presented a graph showing the other taxes that are also due to expire in 2015,noting that the transportation/street maintenance 34 cent tax will expire at the same time as BOB While staff is currently working on renewing BOB,they are also conducting a revenue diversification study that would enable the Council to possibly replace the transportation 34 cent tax with a transportation fee.Staff will r look for direction from Council at the November26 meeting.If Council decides to continue with a transportation tax,this effort will be combined with the BOB renewal effort. Diane Jones continued the discussion,noting that staff hoped to find out if Council Finance supports pursuing a renewal of BOB,and if so at which election time.Staff also hoped to learn more about the types or categories of City capital improvements that should be considered and highlighted as staff begins to create a potential list of community capital improvements.Staff has begun reaching out to all departments to identify potential projects based on existing master plans and BFO initiatives. Should the City move forward with another community capital program and tax initiative to fund the program,we can consider the following election dates: •November 2014—staff recommendation •April 2015 •November2015 Historically,council has put these on the ballot at the earliest possible election.Staff is currently scheduling the work program and outreach activities in conjunction with a November 2014 election. Staff anticipates the following: •Meet with Council on Sep.io (work Session)to review this information and the outcome of the discussion with the Finance Committee. •Work with Boards and Commissions and community groups between now and the next work session (Dec.10)to review and add to the preliminary list. •Utilize the December work session to agree on a project list to take to the public for feedback and preferences in early 2014. Darin noted that staff has worked with the assumption that Council will go through with renewing BOB, but they are aware that Council may decide not to,erasing a large funding source.Mike Beckstead noted that the BOB ¼-cent sales and use tax revenue brought in approximately 6.8 million dollars last year.Bob Overbeck said that Council would want to look at the different options for projects before making this big decision.Diane noted that staff is continuing to compile the list of potentials and will bring it to Council in September. Mayor Weitkunat said that the success of renewal would depend 1)on public outreach and 2)on the universality of the improvement projects.The City must ensure that it is meeting the needs of a wide- span of the residents,considering all the different districts.Staff should look at whether we are currently meeting the residents’needs with our current infrastructure.Darin agreed that this would be a big discussion for Council.Diane noted that many of the projects already on the list came from the City’s Master Plan.Diane said that North College is a good example of a successful improvement funded by BOB;the program has a solid history,and because the City has consistently delivered on the voter approved improvements,the people of Fort Collins generally trust this approach taken by the City. Debt Policy Update John Voss brought an updated Debt Policy to Council Finance for consideration.He noted that the Debt Policy has not been modified in many years,and Staff has developed a new framework for updating, 0 City of,EortccWn~Lins controlling,formatting and publishing financial policies.The Debt Policy is one of first policies to use this new format. The major changes to the policy are as follows: A.Changed method of limiting governmental debt from percent of General Fund revenue to percent of governmental fund revenue. B.Added capacity guidelines for enterprise funds,i.e.the utility funds. C.Added information about Moral Obligation Pledge and when it may be used. D.Added language about goal to keep the City’s overall credit rating at MA. E.Added guidance on refinancing. Under the new policy the governmental funds are limited to $70M more debt compared to $150M under the existing policy.Mike Beckstead noted that adding the objective of keeping the City’s MA rating helped Staff to better know how to set a debt limit. Staff will make all recommended changes to wording and bring the updated policy to Council. DDA IGA to Support Woodward Project Mike Beckstead noted that Staff had put together a document outlining how the DDA IGA would support the Woodward Project.The document is an administrative document not a policy.Ross Cunniff said that he had questions about how Natural Area funds would be used to fund the project noting that in the current document it sounded like underspend in the Natural Area funds could be used to supplement projects such as power lines that are not Natural Area related.Mike Beckstead said that Staff would work on rewording the document to be clear that supplemental Natural Area funds would only be used for Natural Area purposes. Next Steps Staff will bring the Appropriations Ordinance to Council for first reading on October15 and for a second reading November 5. Staff will bring the 2014 Utility Rate Ordinance to Council for first reading on October 15. Staff will continue to compile a list of possible projects for a renewed BOB and will bring the issue to the Council Work Session on September 10.