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HomeMy WebLinkAboutMinutes - Finance Committee - 01/14/2013 -Ce Finance AdministrationI0FtcLL.2 FloorOroIflSP0Box580 Fort Collins,CO 80522 970.221.6788 fax Council Audit &Finance Committee Minutes 1/14/13 10:00 to 12:00 CIC Room Council Attendees:Mayor Karen Weitkunat,Mayor Pro Tern Kelly Ohlson, Ben Manvel Staff:Darin Atteberry,John Voss,Mike Beckstead, Mindy Pfleiger,Karen Tracy,Marty Heffernan, Steve Roy,Wendy Williams,Diane Jones,Katie Wiggett Others: Approval of the Minutes of December 17,2012 Ben Manvel moved to approve the minutes from the December 17,2012 meeting.Kelly Ohlson seconded the motion.Minutes were approved unanimously. Capital Improvement Expansion Fee Update Mike Beckstead outlined that he plans to present the updated Capital Expansion Fees in a work session on February 12.He will present the update to City Council on March 5,and again for a second hearing on March 19. Jessica Ping-Small presented a comprehensive review of the Capital Improvement Expansion Fees.Staff have worked with Duncan Associates to review the methodology and update the fees established in 1996.The outcome of the study retains the basic methodology of incremental expansion but recommends minor changes to some of the inputs.The fees have all been updated based on current level of service which factors in current capital assets for all fees.Also,trails have been added to the park calculations. In the uptiated review the inputs to fee calculations have changed,resulting in a variation in updated fees. •Neighborhood and community park fees are increasing for smaller units and decreasing for larger units. •Fire,police,and general government fees are increasing. •Net residential fees are increasing except for largest units,and commercial/industrial fees are increasing. 0 0 Cityof rEcfl5~Lins Director of CPRE Marty Heffernan explained that the new Trails Fee would be added to the updated Parks Fees.Trail Fees were already allowed for in the City’s Plan;they had simply not been calculated in until now.City Attorney Steve Roy asked the Finance Department to double check that there was no “double dipping”with the updated fees. Darin asked if the cost of a new City Hall could be included in the general government costs that are used to build up the fees.Also,he asked if,once collected,the general government revenue could be used to fund a new City Hall.Staff indicated the cost basis for the new fees could only be based on the existing level of service and the associated asset base that supports this service;hence,the added costs of a future City Hall cannot be included in the revised fees.The fees collected are to be used for developments outlined in the city’s plan;therefore,future revenue collected from the revised fees can be used to fund a portion of the new City Hall.While the fees are used for development,the fee amounts are always based on the current level of service provided never on the projected value of future developments. Mayor Weitkunat asked that the report add a general summary of how Capital Expansion Fees are used. Ben Manvel asked if the city could raise the fees based on over capacity,just as they lower the fees due to under capacity.Jessica said that she will ask Clancy Mullen of Duncan Associates if this would be an option. Jessica concluded that inputs to formula and asset information had been updated for all fees and that a reduction of household size based on a national survey drove partial fee change.Staff recommends codifying a comprehensive review every 3-5 years. Revenue Policy and Diversification Options Jessica presented the proposed city’s revenue principles that will become the foundation for a revised revenue policy and possible options for diversification and stabilization of the City’s revenue sources. Jessica offered the following five revenue principles for discussion: 1.Maintain a diverse revenue base 2.Maintain a stable revenue base 3.Cultivate revenue sources that are equitable among all economic levels 4.Generate adequate revenue to maintain core service levels 5.Maintain healthy reserves Jessica stated that,in 2011,sales and use tax was 51%of the general government revenue.Though this rate is not uncommon for cities in Colorado,greater diversification is desirable to create greater stability.Many cities diversify by adopting the “three-legged stool”approach,an approach that uses income tax,occupation privilege tax,or significantly higher property taxes.This approach is currently not feasible in Fort Collins,so we must find ways to diversify within our framework. On Principle 1,Mayor Weitkunat asked that the categories “Intergovernmental”and “Charges for Services”be broken down into smaller subcategories to make the chart “2011 General Government Revenue”more clear. r CityofFortCoLLins On Principle 2,Ben noted that the chart “Sales and Use Tax Growth”needs another column stating the running total so the chart will better represent the change.He also stated that,without such information as inflation and population figured in,the chart is misleadingly positive.Staff agreed. On Principle 4,Kelley Ohlson objected to the use of the word core describing services because it is too subjective.The council agreed that the word core should be dropped. Council Direction /Next Steps The Council Finance supports the 5 revenue principles with the suggested revisions.The Council does want staff to initiate the ¾cent renewal process,but does not want to make the ‘/4 cent sales tax permanent. The Council Finance wants staff to further research the Transportation Utility Fee and the Sales Tax on Services as the most feasible diversification options.They would also like staff to research Differential Sales Tax Rates and the Occupational Privilege Tax. Near Term Actions: Jess stated that staff will mobilize efforts to replace or extend the two ¾cents expiring in December 2015 or assess and make recommendation on replacing the Transportation ¾Cent with a Transportation Utility Fee. Kelley noted that the dates for the projected Citizen Campaign were not accurate.Darin agreed and said that they should be changed to May 2014-Nov.2014. 1.onger Term Actions: Jessica stated that,for a long term option,the city could evaluate options to diversify and/or promote stability within its revenue stream.Staff decided on the following six options as the most feasible: 1.Expand sales tax to cover services 2.Implement a differential sales tax rate 3.Assess a transportation utility fee 4.Increase property tax 5.Make ¾cent taxes permanent 6.Implement an occupational privilege tax Kelley suggested that,if the city does add a service tax,it could drop the 2.25%tax on take home foods. The council agreed that this is a valid option.In light of this conversation,Mike noted that the lack of hard data on Service Tax would make adopting such a tax both challenging and risky. Darin suggested that a parks maintenance fee be added to the potential transportation utility fee.Staff will evaluate this alternative in conjunction with assessing a Transportation Utility Fee. KelIey believes that a two hour work session or a special work session should be scheduled to discuss this topic further.Darin agrees that this would be a good topic for the Futures Committee.