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HomeMy WebLinkAboutMinutes - Finance Committee - 11/18/2013 -_____C .Finance Administration____I 0 —I I 2~FIoorI—Ort LOLL Fort Collins CC 80522 970.221.6788 /__v~_4~~iIIIII_IIlIlI•••IIIIImbbb____~970.221.6782 Council Audit &Finance Committee Minutes 11/18/13 10:00 to 12:00 CIC Room Council Attendees:Mayor Karen Weitkunat,Bob Overbeck,Ross Cunniff Staff:Darin Atteberry,Mike Beckstead,Josh Birks,Karl Gannon, Bruce Hendee,Mark Jackson,Diane Jones,Tom Leeson,Ken Mannon,Lawrence Pollack,Kurt Ravenschlag,Jessica Ping- Small,Peggy Streeter,Steve Roy,John Voss,Katie Wiggett, Timothy Wilder Others: Approval of the Minutes Bob Overbeck said that the October21 minutes did not include all of the discussion items from the meeting and asked that the minutes be revised to include all pertinent discussion items.The amended minutes will be brought for approval at the December16 meeting. Transfort Business Review Kurt Ravenschlag explained that Transfort plays a critical role in the achievement of the community’s vision for a compact growth pattern with viable travel options.Fort Collins is seeing a growing demand for transit and Transfort receives frequent requests for extended hours,Sunday service and service to areas that are currently not serviced.Recent investments in MAX and supporting east west transit routes have moved our transit system forward,but significant progress is needed to achieve a baseline level of transit service. The 2009 Transfort Strategic Operating Plan (TSOP)concluded that Fort Collins is near the bottom of service hours and investment per capita compared to peer communities: Summary of Peer Comparison Operating Cost Per Capita Service Hours Per Capita Peer Average $90.66 .93 Transfort $48.56 .54 Lowest Peer $30.92 .54 Highest Peer $178.63 1.74 0 Otyof ~n5~ins Timothy Wilder explained that peer communities were selected based of demographic and geographic characteristics as well as qualitative factors.Based on a methodology developed by the Transportation Research Board,these communities were assigned “likeness”scores for key attributes,providing a quantitative measure of how alike these communities are to Fort Collins. Transfort’s effort toward implementing the TSOP and reaching a baseline level of service brings into focus our critical need for alternative sources of funding for operations.lfTransfort were to achieve full implementation of the TSOP by 2016 without increased funding,the funding gap would total approximately $6.7M at current rates. In 2009,the Citizen Financial Advisory Committee (FAC)found that a combination of funding sources would be needed to support the transit improvements envisioned by the TSOP.In evaluating possible revenue streams for the strategic plan,the advisory committee used several criteria to evaluate each: •Reliable and dedicated source •Fair:Places burden on users,but not undue burden on those least able to pay •Ease of administration and implementation •Revenue grows with the community •Ability for differentiation by community •Likely success with voters,public acceptance The funding mechanisms would be targeted to place the burden of transit funding on the community at large and individual populations that benefit from Transfort services.The committee recommended the following options: 1.Dedicated Sales tax 2.Transit Utility Fee 3.New Negotiated Agreements with ASCSU and other partners 4.Special Assessment Kurt explained that this conversation was intended to bring awareness to the financial challenges that Transfort will soon be facing and to revisit the 2009 TSOP recommendations.Staff feels that the time is nearing when the community will need to decide:do we develop a strategy to implement the existing vision for transit in Fort Collins,develop a new vision for transit or simply maintain the status quo. Darin Atteberry said that,with several key funding decisions such as theY.cent street maintenance fee and BOB currently before Council,discussions must be prioritized.The Community does need to have a conversation about transit,to help decide what level of service the community wants and to give the community a feel for what is possible.However,it may be 2015 before we want to ask the community how we can double transit funding.Ross Cunniff noted that the community has voted on transit issues throughout the years and the voting results have showed an ever increasing desire for better transit. Darin asked what the national trend is on fair box recovery.Kurt said that the national average is 15%. Fort Collins is at 13%and,with MAX,should go up to 14%.Our long-term goal is 20%. r ins Ross Cunniff asked if Transfort had considered partnership with the school district.Kurt said that,in 2009,staff had discussions with PSD and Loveland.The schools are currently focused on increasing their walking area and reduce busing. Street Maintenance Fee Review Jessica Ping Small explained that street maintenance is currently funded primarily from 3 sources: •General fund contributions •KFCG sales tax •A Designated %cent sales tax that will sunset December 31,2015 The %cent sales tax initiatives have been supported multiple times by citizens since 1990;however, relying on an expiring sales tax has risks such as revenue variability and potential expiration.The street system is the City’s largest asset investment and failure to maintain the investment will cost many millions extra in repair and rebuild expenses,as well as affect travel,commerce and access for the community.Staff has explored the feasibility of a Street Maintenance Fee (SMF)to replace the ~/4 cent designated sales tax to promote revenue diversification and provide more certainty in the revenue used to support a basic service. The City’s Street Maintenance Program (SMP)provides management of the overall street network and maintains safe and accessible street pavement sidewalks,curbs and gutters.Proactive street maintenance saves millions of dollars over time.The City aims to maintain the average condition as Good or LOS B.Our current budget is sufficient to maintain this goal which ensures the following: •Overall pavement conditions will be maintained at a LOS B •Potholes,crack sealing and other ongoing street maintenance will be maintained at current levels •Ongoing systematic street maintenance A SMF would be an alternative to asking voters to renew the ¾cent sales tax that expires at the end of 2015.The SMF would be charged on City utility bills for maintaining City streets,bike lanes,medians and City maintained sidewalks.The fee would be assessed based on a trip generation model for both residential and non-residential properties.The evaluated fee was based on replacing the current ¾cent tax revenue The “Trip Generation Methodology,”which estimates the average number of trips each type of user generates in a day,results in a fee structure in which users pay in rough proportion to the extent they use the system.For example,users who add 10 trips per day to the transportation system pay a fee much lower than those user types (i.e.high traffic businesses)that average 300 trips per day. Residential users are also assessed a fee based on trip generation which equates to an estimated $2.99 per month per unit.This trip generation theory is similar to the method used to calculate street oversizing fees and has been recognized by courts as a fair and legally appropriate way of apportioning costs. Jess noted that both the tax and fee have strengths and weaknesses.The primary weakness of the current ¾cent tax is that it expires,making it unstable.The fee has the strength of stability but it could be very impactful to the business community,especially small businesses. 0 0 Otyof ~rtc~LLins If Council chooses to pursue the SMF fee discussion,the following items will need consideration: •Significant public outreach/education •Exemption for Institutional (churches,schools,government) •Utility billing fee and actual retail space on bill •Rebate Program (A rebate program would need to be considered for low income residents) •Delinquency Issues (Because the SMF would be placed on the monthly utility bill,additional discussions will need to occur regarding collections) Darin Atteberry suggested that staff look at a sampling of fast food restaurants (i.e.4 McDonalds)and compare the current revenue coming in from the ¾cent sales tax to projected SMF income. Understanding how the cost of the fee compares for an individual business would be helpful for determining equity. Steve Roy asked what model Staff had used in determining the fee.Jessica answered that Staff used the Loveland model which considers businesses’acreage and square footage as well as truck vs.car trip generation.Bob Overbeck asked why the residential fee was flat rather than based on acreage.Mark Jackson answered that residential was based on average trip generation,primarily for ease of administration.Steve Roy noted that the fee needs to be proportional and that it seemed that nonresidential would take a larger burden than the residential.He suggested that Staff consider subsidizing the fee with a tax to make it more equitable. Darin explained that staff is currently leaning toward a renewal of the ¾sales tax over the fee,and asked that Council seriously consider continuing the tax into perpetuity.Steve Roy noted that,while a fee may seem more reliable because it would not expire and would not require a vote,fees are subject to repeal by Council,so a voter approved tax into perpetuity may actually be a more reliable funding source. Mayor Weitkunat stated that she is not a proponent of a fee because she feels that a sales tax more effectively accounts for the impact of nonresidents.Her initial reaction is to work toward establishing a ¾cent tax in perpetuity. Ross Cunniff said that businesses will build the cost of the fee into their cost structure and,in that way, the fee will be borne by external customers.Bob Overbeck asked if Staff had figured in economic collapse or downturn in their estimates.Jessica replied that,while we cannot exactly plan for economic collapse or downturn,Staff has been conservative in their projections.Bob asked if stress tests had been made to see how much downturn the City can cope with.Darin responded that,because Street Maintenance is flexible,in the case of a significant downturn,the City would simply reduce service. Mike added that the City can bare a downturn for a short period of time,as we did in 2008;however, the longer one postpones maintenance,the greater the cost in the end. Darin asked Jessica if the business community,which values street maintenance,was in favor of the SMF.Jessica replied that the Chamber of Commerce would favor a tax over a fee. Budget Policy Review Lawrence Pollack explained that the draft budget policy provided to Council is a significant departure from the previous policy.The previous budget policy evolved as part of the Budget document.In that context it focused on explaining budget concepts rather than setting policy.The new policy was created r Fort CoLlins from scratch based on policy guidelines from the Government Finance Officers Association (GFOA) presented as best practices.As such,a red line version of the previous policy was not deemed valuable or useful.Still a copy of the previous policy was provided with some notes on changes. Ross asked that the committee discuss the new policy in the meeting today and delay acceptance to a later date.Darin noted that the nature of the policy seemed to be administrative and asked if it was really necessary to bring this to Council for approval.Mike Beckstead replied that,in the past all policies had been brought to Council;however,some were more administrative and some required Council’s approval.Darin proposed that we determine which policies were administrative and no longer bring those to Council.Ross suggested that the attorneys could look through the policies and determine which necessitated Council approval. Mayor Weitkunat asked to be shown the index again with something showing which policies had been reviewed and which were waiting for approval.Staff will prepare that index and will bring the Budget Policy back to Council Finance at a later meeting. Scheduling January’s Meeting Mike Beckstead asked the Committee when they would like to reschedule the January20 meeting that falls on a holiday.The Committee believed that either the 13th or the 27~would work,so staff could double check schedules and send out a final date later.(Note:The January meeting will be held on Monday,January 13 at 10 a.m.)