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AGENDA
Council Finance & Audit Committee
May 20, 2019
10:00 am - noon
CIC Room - City Hall
Approval of Minutes from the April 15, 2019 Council Finance Committee meeting.
1. GERP Review 30 minutes T. Storin
2. EPIC Program Review (energy efficiency loans) 30 minutes J. Phelan
S. Carpenter
3. Fee Updates – Utility & Capital Expansion 30 minutes L. Smith
J. Poznanovic
4. Sidestream Treatment Project 20 minutes C. Webb
J. Graham
Council Finance Committee
Agenda Planning Calendar 2019
RVSD 05/13/19 mnb
May 20P
th
P
GERP Review 30 min T. Storin
EPIC Program Review (energy efficiency loans) 30 min J. Phelan
S. Carpenter
Fee Updates – Utility & Capital Expansion 30 min L. Smith
J. Poznanovic
Sidestream Treatment Project 20 min C. Webb
J. Graham
June 17P
th
P
Development Fee Update & Total Fee Discussion 30 min N. Curell
J. Poznanovic
Mason Place Affordable Housing Fee Waivers 30 min N. Currell
S. Beck-Ferkiss
2020 Utility Rate Adjustments 30 min L. Smith
Northfield Metro District Application 30 min J. Birks
July 15P
th
P
2018 Audit Results 20 min T. Storin
2018 Fund Balance Review 15 min T. Storin
Sports Complex Evaluation 30 min W. Williams
EPIC External Borrowing Terms/Details 30 min J. Phelan
S. Carpenter
Aug 19P
th
P
Comprehensive 2019 Fee Updates 30 min J. Poznanovic
2020 Budget Revision Review 30 min L. Pollack
Future Council Finance Committee Topics:
• New Potential Fees Discussion - TBD
• 2019 Annual Adjustment Ordinance – Sep
• Utility LTFP & CIP - Nov
Finance Administration
215 N. Mason
2nd Floor
PO Box 580
Fort Collins, CO 80522
970.221.6788
970.221.6782 - fax
fcgov.com
Finance Committee Meeting Minutes
04/15/19
10 am - noon
CIC Room - City Hall
Council Attendees: Mayor Wade Troxell, Ross Cunniff, Ken Summers, Gerry Horak
Staff: Darin Atteberry, Kelly DiMartino, Jeff Mihelich, Mike Beckstead, Kevin Gertig, Lance
Smith, Theresa Connor, Shane Boyle, Wendy Williams, Mike Calhoon, Kurt Friesen,
Laurie Kadrich, Noelle Currell, Chad Crager, Kyle Lambrecht, Tim Kemp, Dean Klingner,
Travis Storin, John Duval, Blaine Dunn, Ginny Sawyer, Tom Leeson, John Voss, Katie
Ricketts, Carolyn Koontz
Others: Kevin Jones, Chamber of Commerce
______________________________________________________________________________
Meeting called to order at 10:04 am
Approval of Minutes from the March 18P
th, 2019
P Council Finance Committee Meeting. Ross Cunniff moved for approval
of the minutes. Ken Summers seconded the motion. Minutes were approved unanimously.
A. Stormwater - Northeast College Corridor Outfall Cost Sharing (NECCO)
Theresa Connor, Deputy Director, Utilities
Lance Smith, Utilities FP&A Director
EXECUTIVE SUMMARY
The Stormwater Utility proactively constructed an outfall to serve both existing developed and undeveloped
land near Vine and Lemay. The Northeast College Corridor Outfall (NECCO) stormwater system (or NECCO
system) was designed to provide an adequate outfall for the area north of Vine Drive and east of College Avenue
in order to alleviate existing drainage problems and to facilitate development and redevelopment in the area.
The NECCO system is intended to provide a less expensive means of satisfying storm drainage for this area
through economies of scale than individual landowners could provide separately. The purpose of this item is for
City Council to consider adopting the cost share concept whereby development and redevelopment draining
into the NECCO system be allowed to pay their proportional cost share of the NECCO improvements if they
choose to use the NECCO system in lieu of constructing separate stormwater facilities.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Is the Council Finance Committee supportive of staff bringing forth an Ordinance formalizing the cost sharing
opportunity associated with the NECCO system?
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BACKGROUND/DISCUSSION
UProject History
The Northeast College Corridor Outfall (NECCO) Project was initiated in response to large development potential
north of Vine Drive and east of College Avenue. In 2010 the North College Infrastructure Funding Plan
(Resolution 2010-023) was adopted by the City Council. At that time, there was no adequate stormwater outfall
for this area of the City, which created a significant hinderance to development and redevelopment. There were
also drainage problems in this area from existing development, mainly due to a lack of stormwater regulations
when this area of the City originally developed.
In response to the development interest in the area, design was initiated on a stormwater system that would
help mitigate existing drainage issues in the area, as well as provide an adequate stormwater outfall. The
NECCO design was managed by the City’s Stormwater Engineering group and was completed in 2009.
Appropriations were made through the 2015-16 Budgeting For Outcomes (BFO) process and further
appropriations were made in the 2017-2018 BFO cycle. Construction of the “backbone” storm sewer system
occurred in 2016-2017 and the regional pond was constructed in 2018. Other portions of the NECCO system
have been completed by development, which were funded partially through the Developer Repay program and
partially through the NECCO buy-in paid by the development. Another section of the system is under design and
will be constructed as part of Planning, Development and Transportation’s Suniga Road capital project.
UCost Share Concept
At the time of development, a Developer can choose whether to tie into the NECCO system in order to receive
the benefits of the system. If the Developer chooses to connect to NECCO, they pay a proportionate share of
the NECCO system cost, as described below. If a Developer chooses not to connect to the NECCO system, then
they are required to meet typical stormwater requirements without the benefit of NECCO. Since the NECCO
proportionate cost for a development only covers their share of the NECCO stormwater system which serves as
a gateway to the City’s stormwater infrastructure, all properties still pay the standard Stormwater plant
investment fees (PIFs) in addition to their share of the NECCO cost.
In allocating the costs for the NECCO improvements, the impacted area was analyzed to determine which
portion of the area was developed and which portion of the area was undeveloped. To define proportionate
cost shares, the NECCO system was broken down into individual project components and the cost of each
component was divided among the area benefitting from that component (e.g. only those areas receiving a
benefit from the regional pond pay for the regional pond). Based on the analyses, it was determined that the
City’s share of the NECCO system would be approximately 49% and the appropriate developer share of the
Project would be approximately 51%.
To date, the City has been constructing improvements and is being re-paid for a pro-rata share of costs for the
“developer share” of the Project as development occurs through development and/or repay agreements. The
City will stop collecting allocated costs once development’s appropriate share of NECCO improvements has been
satisfied. Current costs are based on a combination of estimated future and actual construction costs. The cost
for a developer to buy into the NECCO system will be updated to reflect actual construction costs as
improvements are constructed.
Although the NECCO project has a long history and is partially constructed, the purpose of the proposed
ordinance is to formalize the allocation of costs between the City and benefitted development, and the
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allocation of the developer share of improvement costs among benefitted properties as they develop or
redevelop.
UProject Costs
Attachment 1 - NECCO Cost Breakdown Analysis shows the total estimated cost of the NECCO system to be $13.9M
of which development’s share is 51.5% or $7.2M and the City’s share is 48.5% or $6.8M. To date, $7.6M of
improvements have been completed and $875K has been received by development buying into the NECCO
system. As development and redevelopment continues in this area it is expected that the full $7.2M of the
developer share of these improvements will be received into the Stormwater Enterprise.
UPublic Outreach
Significant public outreach has been completed over the course of the NECCO planning and various capital
projects, beginning in 2008 through February of 2019. Outreach has been focused on property owners in the
vicinity of the NECCO infrastructure that can be served by the improvements, the North College Citizen’s
Advisory Group, and the Urban Renewal Authority.
DISCUSSION / NEXT STEPS
Mayor Troxell; Please talk about what you have proposed in the context of URA as there was no
mention of URA.
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Theresa Connor; this was developed before the URA - they did contribute to some land cost for the
pond as part of this project. In context with other projects, this wraps up the cost share portion of
NECCO and formalizes with Council approval how we cost share with the private sector.
For all of the undeveloped properties - it provides at least a portion of the stormwater system –
regional pond will provide detention and water quality treatment. Before NECCO all of the properties
had to build their own stormwater outfall systems.
Darin Atteberry; do property owners need to notify us of an opt in now or can they do that at any
time?
Theresa Connor; they can do that at any time
Darin Atteberry; so, this is just away for us to recapture some of our expense
Is the opt in price equal to the marginal increase in additional capacity?
Lance Smith; the costs are allocated depending on which portions of the system improvements you are
benefitting from and how much of that capacity you are using.
Darin Atteberry; so, we are building the whole system - regardless of opt in
Theresa Connor; if they don’t opt in, they will have to build their own outfall - so it is voluntary but
would be cost prohibitive -we have worked together collaborative to date - it is an attractive offer and
we think they will opt in.
Ken Summers; I am in support but have a few questions.
Do we want to give them an option? Is that really in our best interest?
Does it even make sense to offer an option? Based on that, we are looking at a recommendation to
codify existing practices. I assume those who have participated feel this is fair, cost effective and
adequate. Do we really want parallel systems?
Theresa Connor; NECCO System Schematic; the area in red already constructed - blue laterals - thought
development agreements - we may work with PDT when they do Vine/ Lemay - this area will develop
as developers or other opportunity come to us.
Darin Atteberry; where does the pond drain out?
Shane Boyle; It does drain - off of Redwood - drains due east into Lemay and is pumped into the A4
lateral - working to fix the A4 lateral and that is gravity
Ross Cunniff; with the cost sharing - the public benefits regardless of benefit to developers to pay less
money. Can you go over public benefits?
Darin Atteberry; is the stormwater rate payer paying for the oversizing?
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ACTION ITEM:
Theresa Connor; Majority of benefit are to existing owners - 49% and 51% between existing rate payers
and future development
Ross Cunniff; add that to the Council presentation - front and center
Lance Smith; we do have some exposure if the development decided to do this themselves, the rate
payers would be impacted - to date we have recovered about $1M of the $7M
Theresa Connor; they would have to construct their own outfall – the cost of that directs them
toward NECCO project - for our citizens this is very cost effective per acre. Partnership is good.
Mayor Troxell, Ross Cunniff and Ken Summers support going forward with this topic to the full Council.
B. Vine/Lemay TCEF Funding
Chad Crager, City Engineer
SUBJECT FOR DISCUSSION
Financing alternatives for the Lemay Avenue realignment project from Lincoln Avenue to Conifer Street. The
project also includes a new intersection of Lemay Avenue and Suniga Road, the extension of Buckingham Street,
and a grade separated crossing of the Burlington Northern Santa Fe (BNSF) Railway.
EXECUTIVE SUMMARY
The purpose of this item is to present and discuss potential financing alternatives for this high priority
transportation capital improvement project. Staff has recently completed the plans for the 50% design, a
majority of the right-of-way (ROW) acquisitions, and construction of the Phase One roadway embankment in
collaboration with the Utilities Department. The total current project (design, right-of-way, and construction)
cost is estimated at $23.5M.
Current project funding includes: The Budgeting for Outcomes (BFO) process, the City’s Transportation Capital
Expansion Fee (TCEF) Reserves, and Developer contributions for Local Street obligations. To date, $3.7 M has
been appropriated to Phase One of the project and all funds have been expended. Phase Two would be a $9.1
M appropriation from TCEF reserves. The Phase Three funding needed for the project is $10.5 M (in 2019
dollars).
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Staff is seeking direction regarding an appropriation of the TCEF reserves. Completion of Phase II will allow staff
to further refine the proposed construction schedule and stay on track for a project opening date in the next
budget cycle.
Questions for the Council Finance Committee:
Does the Council Finance Committee support a Summer 2019 appropriation of the TCEF reserves in the amount
of $9.1M for Phase Two funding?
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BACKGROUND/DISCUSSION
Realigned Lemay Avenue has been on the City’s Master Street Plan since the 1980’s. This project, along with the
grade separation at the BNSF Railway, have been included in numerous Planning efforts over the past few
decades.
Train switching operations continue to increase in the Vine and Lemay area. The total time that the intersection
is blocked to the travelling public has increased 50% from June 2016 to February 2019 (22 hours of blockage per
month v. 33 hours of blockage per month).
The construction of this project will alleviate existing deficiencies and provide a “key” infrastructure asset for
northeast Fort Collins. More specifically, this project will:
• Improve quality of life, access, and neighborhood livability for Andersonville, Buckingham, and Alta Vista
• Reduce accidents and congestion, and improve emergency services coverage by separating travel modes
from BNSF Railway switching operations
• Improve air quality by reducing the emissions from idling vehicles, whereby aligning with the goals of the
Climate Action Plan
• Provide multi-modal connectivity to the new Beet Street Park at the southwest corner of Vine and Lemay
• Reduce traffic volumes on Ninth Street (Lindenmeier Road)
Over the past few years, staff has given many formal presentations and provided project information at City
sponsored events; designed to encourage public participation and collect feedback. Staff is actively addressing
community questions and working with nearby residents, business owners, landowners, and proposed
development projects.
USummary of Public Engagement to Date:
• February 2016 - Public Open House (Streets Facility) 122 people signed in for the event
• February 2016 - Presentation to the Transportation Board
• May 2016 - Presentation to the Futures Committee
• May 2016 - Presentation to the Council Finance Committee
• August 2016 - Lincoln Neighborhood Ice Cream Social
• August 2016 – Council Work Session
• November 2016 - Presentation to Alta Vista residents
• September 2017 – Open House event for Alta Vista, Andersonville, and Buckingham residents at the Legacy
Church (Ninth Street and San Cristo Street)
• October 2017 – Presentation at Council Work Session
• December 2017 and March 2018 – Fort Collins Area Chamber of Commerce
• January 2018 and February 2019 – Transportation Board
• February 2018 – Fort Collins Sertoma Club
• March 2018 and February 2019 – North Fort Collins Business Association
• Project website is available at: 32TUhttp://www.fcgov.com/engineering/vine-lemay.phpU32T
Staff will continue public outreach and engagement efforts with stakeholders in 2019.
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DISCUSSION / NEXT STEPS
TCEF - Transportation Capital Expansion Fees
Phase Two - $9.1M is the ask for now. We would like to allocate TCEF now
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Darin Atteberry; the dirt used to this point is city dirt- we are now out of city dirt so we will need to get it
elsewhere
Chad Crager; a lot of the dirt on site came from NECCO
Mike Beckstead; external financing - we saved $350K versus budget on Prospect I25 and the Police Training
Facility. We had talked during BFO that the next project we might want to fund would be Vine Lemay - if we
added another $400K to the $350K that would give us the additional $750K needed to finance the debt.
The other alternative is we are looking at refinancing a URA loan from the city used for the Summit Project –
once we completed that the URA would reimburse the $5M from their loan to the General Fund. Those funds
could be available if Council chooses. BOB 1 still has $3- 3.5M of funding available but we can’t use that until
the last project is finished which is the City Park refresh. This project would have to completed in order to use
this funding for other capital projects. We anticipate that being started in 2020 and finished in late 2021.
$1.8M in BOB 1 is allocated for the City Park update / upgrade. This timing pushes us out farther to 2022 which
means inflation would kick in for another 2-3 years. If we wanted to wait for the reserves this will happen later
rather than sooner.
Ross Cunniff; CEF - we are applying these funds in that region and not city wide.
Chad Crager; With the Capital Expansion Fees, there are a lot coming in from this area that are not constrained
to this area. This does not deplete the funds for the whole city funds. The current balance is approximately
$22M - this will not deplete our reserves of the TCEF.
Ross Cunniff; in our Master Plans - What other CEF eligible projects are there? opportunity costs
Chad Crager; for our transportation projects - we can apply a certain percentage - anything that is not a local
portion. For example if Montava were to develop - anything they construct that is not a local piece that we
would consider regional - we keep track to make sure we are hitting that regional piece with the funding.
Darin Atteberry; what are the TCEF priorities and how does this stack up relative to other projects?
Chad Crager; this is our #1 project - we are looking ahead to make sure we have adequate funding to do other
projects and are not depleting the reserves.
ACTION ITEM:
Ken Summer; what is the inflow of TCEF revenue from development fees etc.?
Chad Crager; we can give you the information the last 3 years - we also forecast and project what is coming in
based on activity in the building permit review process.
Darin Atteberry; before we agreed to have this come to Council Finance Committee - Chad and Laurie had to
answer a lot of these same questions - this is a big off line appropriation - we need to have some really good
reason to move forward - I think Chad has outlined those well in terms of the staging of the construction, the
availability of the dirt, etc. Vine Lemay is a priority for Council as well - where likely growth will continue to
occur - felt like a good time to bring it forward.
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Ross Cunniff; I think it makes sense to bring it forward - full transparency to Council
Darin Atteberry; I do think that the other priority projects conversation should be front and center for Council
and the public.
Mayor Troxell; what about train horn noise? that is also a Council priority – we need to build this into our
overall train horn noise strategy and reduction - It would be foolish not to leverage it in a bigger way
Chad Crager; it will still be a crossing, but we will work with them to establish a quiet zone at this location.
The neighborhood streets will still be an at grade crossing for pedestrians and bicyclists - this should remove
one of the crossings from blowing the horns.
Mayor Troxell; Windsor has quiet zones all the way through 9 intersections. We have 22 and it blows the whole
way - how do we leverage maybe other intersections too as part of this?
Chad Crager; we are working through a prioritization right now - what quiet zones do we address first? It is not
only the infrastructure we put it - it is the wiring that the trains have to add. Also, adding the Advance Warning
Detection System at the same time.
Mayor Troxell; This plays into our Public Policy agenda as well - in order for our legislatures to go forward we
need to show that we are doing our part - spending millions of dollars and we can’t get it done alone
Darin Atteberry; this is a great example as well as all of the improvements we have been talking about with the
Max Corridor - spending millions to try to minimize that -
Even to notify as we go forward – here is yet another improvement that we are making, and we are serious
about this.
Mayor Troxell; Windsor submitted a TIGER grant - we are investing big time to improve the safety, so we need to
leverage that.
Gerry Horak; this project was first brought forward in late 80’s - over 30 years ago.
Include some equity lens because it has a huge benefit to surrounding neighborhoods.
This is important for Council.
BOB 1 - I don’t think City Park is going to be an issue - I don’t think the $3.5M would be available for this - I think
we should understand that this is not limited to $1.8 M - that is a serious option to look at – there is a nexus to
something the Council will be considering soon.
Darin Atteberry; there are other options that are going to be on the table soon such as I25 to help further.
Ken Summers; current ask relative to $9.1M – the case is very compelling and the priority is high.
We trust your analysis regarding available funds - time frame. We do need to take a serious look at a strategy
for Phase 3 - whether it will be financing / retiring some debt early if funds are available
I think we should fund Phase 2 and begin looking at how and when we would make Phase 3 happen ASAP.
Ross Cunniff; consider putting some of that money away toward this - could reduce the financing costs
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Mike Beckstead; that is something we have talked about – is it appropriate to bring something like this forward
in a mid cycle BFO - historically we would not bring something like this forward mid BFO cycle because it is not
competing with all of the other needs across the city. If Council wanted us to do it, we certainly could.
Ross Cunniff; suggesting that we have that conversation / discussion with the next Council -not suggesting we
appropriate - we think you should keep some of this in reserve for consideration and compare it to all other
priorities - it gives the future Council the option
Mike Beckstead; we could do the same with $350K of operating revenue - set it aside and don’t spend it on
other ongoing efforts - $350 and $5 as a combination strategy could cover the gap – borrow 5 and use 5 – that
could get us there as well
ACTION ITEM:
Gerry Horak; when this comes to Council, can you include a graph showing how much money is coming in from
the Capital Fund and from the different sources - showing money coming in and going out - reserves - and
include project priorities
Mayor Troxell; I like the equity lens point that Gerry brought up - right now those neighborhoods are impacted
by this and it is getting worse and by building big infrastructure like an overpass / the grade separated – we need
to show that is actually improving - show how we are reconnecting through the neighborhood street and the
park -should be part and parcel to the whole story
Darin Atteberry; abutments also need great attention and resource - a barrier can be really bad if not built
properly - it will have negative impact and statement about equity
Mayor Troxell; 392 interchange - natural appearance - less structural in terms of how it is integrated into a
neighborhood - neighborhood equity
ACTION ITEM:
Gerry Horak; would suggest we work with our CPIO folks to get at what is happening on the project as it moves
forward
Mike Beckstead; we will bring that forward
C. Parks / Median / Parks Refresh Design / Maintenance Plan Framework
Chad Crager, City Engineer
Mike Calhoon, Director of Parks
Kurt Friesen, Director of Park Planning and Development
SUBJECT FOR DISCUSSION: Streetscapes Standard Review
EXECUTIVE SUMMARY
It has been over five years since the Streetscapes Standards were updated in 2013. Several projects have been
designed and built to these updated standards. While the streetscapes in these projects have been appreciated
aesthetically, they do cost more to construct and maintain. These additional costs for capital construction and
maintenance do not seem to be sustainable with current funding. Over the last 5 years, it has come to the
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attention of staff This effort will focus on ways to reduce costs without sacrificing the quality of the streetscapes.
This presentation is provided to set the stage for a more robust review in the 4P
th
P quarter of this year.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Committee have any additional questions regarding the need to revisit the Streetscapes Standards?
Does the Committee have additional category recommendations the team should consider during its evaluation
of the Streetscapes Standards?
BACKGROUND/DISCUSSION
The Streetscape Standard was last updated in 2013 to enhance the visual appearance of the intersections,
medians and parkways on the arterial streets throughout town. When roads and/or intersections are improved
by Engineering these new standards are utilized to guide the design. In addition, when monies are available
through the Budgeting for Outcomes process, the streetscape renovation projects managed by the Parks
Department are also upgraded to these standards.
While these streetscape standards have been appreciated aesthetically, they have increased landscaping capital
costs by as much as 300% and maintenance costs by as much as 500%. As a result of these increase costs staff is
focusing on cost drivers and ways to reduce costs while still providing aesthetically pleasing streetscapes. The
results of this staff review are anticipated to be complete by the 4P
th
P quarter of this year.
DISCUSSION / NEXT STEPS:
Ross Cunniff; when these were put in place - did we have maintenance included
Mike Calhoon in 2013 we provided an estimate for maintenance -we said it would be 3 -5x the estimate –
we are at the high end. We have to have specified staff – in the middle of the median to take care of plants
Hostile work environment for plants
Capital projects 2-year warranty then release it to Parks Dept
Gerry Horak; since we had the issues on North College with initial planting that blocked / obstructed views).
Assume you are making changes so that doesn’t happen again
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Chad Crager; we are working with them to ensure sight distance is addressed
Mike Beckstead; that will also be include in the proposed design standards that will be coming forward
Mayor Troxell; West Drake - basically it is kind of whatever it is
Mike Calhoon; west Drake was a revision offer that we asked for in the last cycle – was built using the previous
standard with no irrigation - we were hoping that mother nature would help us with the water but that didn’t
happen so we put in sub surface irrigation in and re sodded
Mayor Troxell; why wouldn’t we do more of a xeriscape which would require less irrigation?
3x – 5x – when it is supposed to be more natural – would need to be tidied every so often but not to the degree
-some of the annual / biannual event. Are we at best practice for what gives us the highest value?
I really liked what Bruce Hendee did - bringing some design and beautification efforts to the medians -
Growth issues – maintenance cost issues - I really like trying to enhance it - What is the sweet spot for best
practices and for our climate? To lift the level of what that means – and then apply that – couple standards ago
– lift that up over time
Mike Calhoon; we use all perennials in the medians - no annuals with the exception of the Mulberry Street
bridge. Medians on East Prospect were intentionally designed to enhance the environment on both sides of the
street. The context of each location is important; sweet spot - color / texture / balance of rocks and plants /
using water as efficiently as possible but keeping to a clean and kept look too
Mayor Troxell; like the big rocks
There was some- artwork done at the Harmon and College intersection – the finish didn’t stay - was that
covered by warranty is that being redone?
Chad Crager: the warranty is over, but we are going to get it repaired – there are a few cracked panes – we are
working with Helen in APP as the panes are applicable to the art
ACTION ITEM:
Mayor Troxell; metal work - didn’t adhere and was peeling off within a year
Mike Calhoon; we will follow up
Ross Cunniff; previously filed a SAR
Ken Summers; we need a change in standards and a streetscape plan
I like the big rocks – create the esthetics we want but drastically reduce the maintenance costs -
Plantings in a very hostile environment - we need to rethink that - in a median with people driving by
Not sure people would notice if it was nicer in a lower maintenance cost mode. I support a thorough rethink of
our median standards moving towards accomplishing goals with aesthetics with far less costs
Ross Cunniff; grass is counter intuitive in our climate - adjusting it more toward attractive but durable makes
sense - make it more cost effect with maintenance but look just as good - more it resource effective for water
particularly
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Gerry Horak; it is important to come back to Council Finance Committee with the different levels
Looking at the life cycle process -what are some options to achieving the goal?
We can always start with a lower – reducing operations and maintenance costs. Ken’s impression is good
To consider doing some kind of scientific – 2 user groups; folks driving and folks shopping / living / businesses by
it - two different views - walking / biking – what seems to fit and what folks are ok with.
Not an online survey - design a pretty interesting study
Darin Atteberry; this is an intentional conversation - water conservation was a big and important part of that
discussion - how do we go from overgrown Junipers, etc. to really important urban space - I like the evolution of
the conversation - we now have 5 years of data - I am hearing a very intentional about costs but don’t give up
the aesthetics - we could overreact and do away with aesthetics
As we have this conversation – we need to include urban landscape architects – why not leverage the talent in
the community and get feedback from professionals
Mayor Troxell; Urban Lab in the last year has the pocket park competition / exhibit – they added these around
town - great concept - bring those folks into play as well
Ken Summers; intersection of Horsetooth and Timberline - rock contours- rocks in a frame - that is pleasing but
not maintenance intensive
Darin Atteberry; that intersection is a great example – it was in need of additional capacity and turn lanes
landscaping standards / Arts in Public Places
SUBJECT FOR DISCUSSION have
EXECUTIVE SUMMARY
The design and level of service expectations for parks is evolving. The community expects a higher level of
service for typical features (i.e. playgrounds, ballfields, water features) along with new design features that help
to tell the story of the site. These expectations come with additional financial impacts associated with
construction and maintenance of these sites. The intent of this review is to assure high quality designs for parks
while minimizing the long-term maintenance costs of these sites.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Committee have any additional questions regarding the need to revisit park design and maintenance?
Does the Committee have additional category recommendations the team should consider during its evaluation
of park design and maintenance?
BACKGROUND/DISCUSSION
Maintenance costs have been increasing about 4% per year over the last several years. The days of minimal
maintenance (i.e. mowing, trash collection, weed whipping) and then heading home no longer exist. The
technical aspects of maintaining a variety of sites throughout the community require a specialty skill set that
ranges from turf management to public health and safety. Design elements have been introduced that have
shifted the requirements of the maintenance operations to assure safe and accessible sites for the community.
The best example of this has been the addition of interactive water features that require water testing 3X per
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day. The employees now must be trained and licensed to perform tests, recognize non-compliance of standards
and perform corrective actions so the system can be returned to service.
The additional design features and level of service evolution are not unexpected. The requirements have
changed over the years for park design (i.e. American with Disabilities Act, Playground Safety Standards). In
addition, tying the history of a site through the design requires creativity and imagination that at times adds
additional elements in a park setting that creates interesting maintenance challenges.
The goal of this review is to identify cost drivers to the ongoing maintenance costs and attempt to limit these for
the long-term financial health of the organization. This should be done without sacrificing the creative design
aspects that separate the City of Fort Collins’ park system from the region.
DISCUSSION / NEXT STEPS;
Fort Collins park system includes 50 parks; seven Community Parks and 43 Neighborhood Parks
Maintenance Tracking System; RAMS - Resource Allocation Measurement System
Issues with life cycle in our system – Lee Martinez Park example – we had a unique opportunity to bundle
money from 3 different sources; our ADA offer for surface improvement, part of the BOB 1 money
$550K total – people are very happy with the design
Now we have life cycle compared to new design - one issue or concern is equity across town
We keep our eyes on the higher level – new design / older parks but we have a gap in life cycle for our older
parks
15
Mike Beckstead; for clarity $550K is our annual life cycle budget for all parks - it has been that way for 10-12
years
Ross Cunniff; unique elements - Shouldn’t Lee Martinez list the farm?
Mike Calhoon; Maintenance savings realized will be in 21-22 savings realized - We take over maint as soon as
parks are built –
16
Mayor Troxell; why isn’t donative giving a strategy for capital? And -related to that is through partnerships – like
the Whitewater – with a $550K limit on maintenance this could be a giving opportunity – Urban Lab – Hearth
Fire Park – they wanted a tree – we can’t take water up there yet - more rifle shot opportunities instead of
cannon balls. Big park build out - how can we provide recreational opportunities and neighborhood amenities
sooner? Do partnerships - the design elements, etc. - might be an Interim step on some of these things
Mike Calhoon; Spring Canyon - we had some of that with the playground
Gerry Horak; City Give - sort of a discrete build - Your example of Martinez - such a positive thing – and ADA
compliant - It would be a good exercise to use the health equity index in your map - because the question is
beside asserting it - how does it match up? That would help with prioritization for Council and the community -
How we incorporate this in our decision making and analysis?
Mayor Troxell; I know there is a group of citizens looking at doing a citizen initiative – what is some sizzle?
You could make a compelling opportunity on that front
Ken Summers; Operational maintenance - this is a scary proposition for the city moving forward
1 community park every 4 square miles - 1 neighborhood park every square mile
Do any other cities have this many parks? When you start looking at community needs - not just costs
But construction - developers - provide fees to build these parks - this is huge - very much in favor
Our City Plan – we are projecting 10-20 years in the future – talking about a changing world – renewable
energy replacing fossil fuels – driverless vehicles - changes in terms of cities and how we live and work
and our priorities - Has anyone ever done a study? This seems like this is a park system based on the 1950’s -
not the future - What are those cultural / projections moving forward as far as community parks, neighborhood
parks, Nature in the City of Fort Collins - Pocket parks - Are we really being underserved?
Gerry Horak; that would be a major change in direction - Neighborhood and Community Parks are the future -
They are accessible -you can walk or ride your bike to them. Within 10 minutes of your home -
Nature in the City - the thinking needs to be more a combination of recreation / nature in the park
We are looking to the future - most folks can walk to a park in their neighborhood - that is part of the DNA of
Fort Collins.
Darin Atteberry; that is in our DNA as a City of Fort Collins
Ken Summers; I may live in one of those spots - surrounded by parks
Gerry Horak; I agree with taking a look at how we have less life cycle costs for parks but having parks provided is
who we are
Ken Summers; I don’t think our current sales tax revenue is enough to support maintenance costs for 65
neighborhood parks
Gerry Horak; that depends on what level of service – more about what we have in those parks - softball fields -
and more multi-use fields – the Skate park is always used - Looking at levels of service - What we provide and
what would maximize the benefit for a minimum cost
17
Ken Summers; what are those parks going to look like? what is the level of service?
If that’s our commitment, then how can we structure those in a way that allows for ongoing improvements and
developments - Can we do something less?
Gerry Horak; we let the public process drive what went in at Twin Silo Parks instead of having guidelines and
standards - Not as much about operational maintenance – costs - that is what Council staff time and Park staff
time should be spent is to start to figure those things out - focus
Ross Cunniff; I strongly support our strategy as far as the number of parks and distance – there may be areas
that may be underserved - My intuition is that the maintenance costs for Lee Martinez is less than Twin Silos
….we have some fantastic / award winning parks or do we just need more places for children to run around
Darin Atteberry; 2 good news items; the Nature in the City conversation over the last few years has made the
integration much clearer and starting this summer we will be working on the Parks Master Plan – the course we
are on is that adoptive plan. Fees being collected from developers are tied to that Master Plan that was
developed and adopted a long time ago. If Council is to make a conscious decision
Think where you do that is over the next 1-2 years as we do the Parks Master Plan. The Nature in the City
conversation has led to how the pieces integrate together and has us thinking very differently about this
dynamic. The Open Space network and the trail network. Bear with us as we get through City Plan and the
Master Transportation Plan and move into the Parks & Recreation Master Plan. This will happen in the next
Council term.
Mayor Troxell; the convergence of Nature in the City of Fort Collins - I think we are still kind of segmented in
Darin Atteberry; true test will be the Innovation Center - funded through capital tax – I remember being in a
Work Session and Council said we don’t’ want to build a traditional recreation center – we want to look at an
Innovation Center – If Council desires we can change these things - we can’t do it at a staff level.
Ken Summers; Twin Silos -community involvement - gold and platinum standard
We need equity - we want all of our parks to be…. We don’t want to get ourselves backed in a corner
On some of these issues where we are not serving the needs and the function
Mike Beckstead; good discussion - we will be back later in the fall with additional details and discussion
Adjourned at 11:41 am
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Travis Storin, Accounting Director and Blaine Dunn, Sr. Treasury Analyst
Date: May 20, 2019
SUBJECT FOR DISCUSSION
General Employee Retirement Plan Review
EXECUTIVE SUMMARY
The General Employee Retirement Plan “the Plan” was established in 1971 and was closed to
new members in 1999. There are currently 392 total members left in the Plan including active
employees, terminated vested employees, and employees receiving a benefit. In 2018 the total
pension liability was $66.2M and the fiduciary net position (FNP) for the Plan was $43.1,
leaving a net pension liability (NPL) of $23.2M. This was an increase of $12M from the 2017
valuation. Staff evaluated increasing the supplemental contribution to help lower the NPL.
Through April 30, 2019, with strong investment returns driving a $9.1M recovery, the NPL is
down to $14.1M. Currently staff recommends making no changes to the supplemental
contribution.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does Finance support staff recommendation to hold 2019/2020 supplemental contribution at
current level of $1.12M?
Does Council Finance desire any additional information?
BACKGROUND/DISCUSSION
The Plan is overseen by the General Employees Retirement Committee (GERC). The GERC is
comprised of 6 members, 1 from financial services, 4 current or former employees covered by
the Plan, and 1 at large member. The GERC administers the Plan including setting the
investment policy and making any changes to assumptions used in the actuarial valuations.
In 2018 the NPL increased by $12M from 2017, there were three major factors driving this
increase:
• In 2018 the GERC adopted a new mortality table to better reflect how long people are
currently living. With the new mortality table there was an increase of $2.9M to the NPL.
• In 2018 the Plan had losses of -4.97% which reduced the FNP and increased NPL by
$5.4M.
• With the above two changes the plan was projected to run out of money, creating a
Depletion Date. When a Depletion Date occurs, the Plan must use a different discount
rate than adopted by the GERC. The new discount rate is determined by Government
Accounting Standards Board (GASB) standards and must be used for all years after the
Depletion Date occurs creating a new hybrid discount rate for the Plan valuation. The use
of this new discount rate increased the NPL by an additional $4.0M.
Two factors will have the greatest impact on the Plan NPL moving forward: Supplemental
contribution and investment returns. With so few employees left in the Plan, participant
contributions make up a fraction of future obligations. In 2013 Council approved increasing the
supplemental contribution to $1.12M annually. This was to help reach full funding of the plan
sooner than previously projected.
Based on the valuation ending December 31, 2018 the supplemental contribution would be
needed into perpetuity because of the depletion of assets in the plan. However, through April 30,
2019 the Plan has experienced gains of 12.67%. The strong recovery leaves the NPL at an
estimated $14.1M, a decrease of $9.1M vs. the valuation date. With this decrease in NPL it is
estimated the last supplemental contribution will be made in 2041.
With strong investment returns to start the year staff recommends leaving the supplemental
contribution at the current level. Staff will continue to monitor the plan and make a
recommendation on future contributions following the next actuarial valuation.
ATTACHMENTS
Attachment 1 - PowerPoint
05-20-2019
General Employee Retirement Plan Review
Travis Storin, Accounting Director & Blaine Dunn, Sr. Treasury Analyst
Retirement Plan
•Established January 1, 1971
•Closed to new members January 1, 1999
•Defined Benefit
•Years of service
•1.5% per year
•Average of highest 5 consecutive years
•Example: 20 years x 1.5% x $55,000 = $16,500 benefit per year
•No COLA in retirement
•General Employees Retirement Committee (GERC)
•Administers the Plan
•Composed of 6 members (1 from Financial Services, 4 current or former
employees in GERP, 1 tax paying elector of the city)
2
3
$38
$40
$42
$44
$46
$48
$50
$52
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
2017 2018 2019
Mi
l
l
i
o
n
s
Snapshot date of Actuarial
Report is 12/31
Market Value of Plan Assets
2018 Results
4
Combination of factors drove large increase in unfunded liability; much of this increase has been recovered
•Drivers of increase to NPL
include:
1)Mortality table update
2)Decrease in investment value
3)1) and 2) requires use of a GASB
discount rate vs. City discount rate
•Investment losses specific to
December 2018. As of April
30th, fund returns have
rebounded and GASB
discount would not be used
2018 Results
5As of April 30, NPL has decreased $9.1M
*2019 is staff pro forma calculation; 2011 -2018 are actuarial results
$13.8
$15.7
$14.7
$12.1
$14.9 $14.5
$11.2
$23.2
$14.1
65%69%
80%79%
74%75%
81%
65%
77%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
$0
$5
$10
$15
$20
$25
2011 2012 2013 2014 2015 2016 2017 2018 2019*
Mi
l
l
i
o
n
s
Net Pension Liability Funded Ratio
Data Summary
6
1 1
1 –2018 refers to Year Ending 12/31/2017; 2019 refers to Year Ending 12/31/2018
Review of Key Assumptions
7
Overview of Results –GASB 67/68 Disclosure
8
Next Steps
9
•Staff Recommendation
•Hold the supplemental contribution at $1.12M for 2019-2020
•Wait for next BFO cycle and revaluate for 2021-2022 budget based on 2019
Plan results
Questions
•Does Finance Committee support staff recommendation to hold
2019/2020 supplemental contribution at current level of $1.12M?
•Does Finance Committee desire any additional information?
10
Appendix
11
Recent Major Assumption Changes
12
•Investment Return
•7.5% through 2010
•6.8% 2011-2012 ($3.7 M increase to Net Pension Liability(NPL))
•6.5% beginning 2013 ($1.6M increase to NPL)
•6.25% beginning 2018 ($1.3M increase to NPL)
•Mortality Tables
•In 2010 updated to most recent actuarial industry standard ($1.3M increase to NPL)
•In 2014 applied generational scaling ($830k increase in NPL)
•In 2018 updated to most recent actuarial industry standard ($2.9M increase to NPL)
•Increased Supplemental Contribution from City to $1.12M annually in 2013
Return on Investments
13
25yr Average Annual Rate of Return –6.0%
6.80%6.80%6.50%6.50%6.50%6.50%6.25%6.25%
-3.1%
11.6%
18.7%
6.0%
-0.6%
5.9%
16.4%
-5.2%
-10%
-5%
0%
5%
10%
15%
20%
2011 2012 2013 2014 2015 2016 2017 2018
Assumed Return on Investments Actual Return on Investments
Total Pension Liability
14
* 2011-2013 restated based on new GASB disclosures
$31.2 $29.3 $26.1 $24.2 $20.2 $18.0 $17.2 $16.1
$9.6 $9.2
$8.5 $8.5
$8.3 $7.4 $7.8 $7.1
$16.1 $18.9 $21.6 $25.1 $29.4 $33.0 $35.0 $40.3
$56.8 $57.3 $56.2 $57.8 $57.9 $58.4 $60.0
$63.4
$0
$10
$20
$30
$40
$50
$60
$70
2011 2012 2013 2014 2015 2016 2017 2018
Mi
l
l
i
o
n
s
Active Term Vested Retired
Fiduciary Net Position
15
* 2011-2013 restated based on new GASB disclosures
$37.0
$39.5
$44.7 $45.7
$43.1 $43.9
$48.8
$43.1
$0
$10
$20
$30
$40
$50
2011 2012 2013 2014 2015 2016 2017 2018
Mi
l
l
i
o
n
s
Investment Policy
Category Allocation
16
Minimum Target Maximum
Equities/Stocks
Domestic 35%45%55%
International 5%15%25%
Fixed Income/Bonds 30% 40%50%
_____
TOTAL 100%
Current portfolio distribution in red (approximate)
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: John Phelan, Sean Carpenter, and Travis Storin
Date: May 20, 2019
SUBJECT FOR DISCUSSION: Epic Program Capital Strategy - Update and Next Steps
EXECUTIVE SUMMARY
This item will provide an update since the November 2018 presentation to Council Finance
regarding the Epic Program and its capital strategy, including:
• Brief history of on-bill financing in Fort Collins;
• Program vision and objectives;
• Current status of the capital stack and;
o Ongoing conversations with potential external lenders;
o Next steps regarding securing and appropriation of third-party capital into a
revolving loan fund.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
• Does the Council Finance Committee desire additional information prior to proceeding
with consideration of financial agreements?
BACKGROUND/DISCUSSION
Fort Collins’ innovative On-Bill Finance program supports a number of community and City
Council priorities, including ambitious goals around energy efficiency and renewables, reduced
greenhouse gas emissions and increased equity and wellbeing of all residents (see 31TUEnergy
PolicyU31T and 31TClimate Action Plan31T). Meeting these objectives will require, among other activities,
that greater numbers of property owners undertake comprehensive efficiency improvements in
the coming years, particularly for older, less-efficient rental properties which make up a large
percentage of the City’s housing stock. An ongoing and attractive financing structure to support
energy efficiency retrofits will be a critical element for success moving forward.
On-Bill Financing 1.0
The Home Efficiency Loan Program (HELP, aka OBF 1.0) operated from January 2013 through
early 2017 when the maximum outstanding loan balance of $1.6M was reached. During this
period 160 loans were made with a median term of ten years, an average loan amount of $8,900
and a zero default rate. Program processes and interest rates varied over this time period, with a
significant ramp up in 2016 with the Council directed interest rate of 2.5% over all loan terms
(Figure 1).
Figure 1. OBF 1.0 Loan Count and Loan Amount
Elevations Credit Union
Elevations Credit Union was selected through an RFP process for energy loan financing in 2017.
Elevations offers energy efficiency loans for credit union members with a range of interest rates,
terms and qualifications, but their product offerings are not “on-bill financing”. The Elevations
loan continues to have Utilities staff qualify the efficiency project based on the rebate measures
in the Efficiency Works Home program. However, the loan origination and servicing are
independent of Utilities programs. Uptake of the program has been minimal, with an average of
three to five loans issued per month. With the implementation of Epic Loans, Elevations loans
will continue to be an option for interested customers.
Mayors Challenge / Epic Program
The Mayors Challenge was a yearlong competition that challenged leaders across the United
States to uncover and test bold, innovative ideas to confront the toughest problems faced by
cities today (31Twww.mayorschallenge.bloomberg.org31T). Three-hundred and twenty-four cities
joined the competition, and nine were selected as winners of the 2018 Mayors Challenge. In
January 2018 Fort Collins was selected as one of thirty-five “Champion Cities” in the first phase
of the competition, winning $100,000. In October 2018 Fort Collins won the final phase of the
competition and the associated $1M prize to implement the Epic Program.
The Epic Program was developed to improve energy efficiency of housing stock and the health,
wellbeing and equity of all residents, including Low and Moderate Income (LMI) families who
rent. In addition to energy efficiency upgrading, the Epic team is collaborating with Colorado
State University to track and measure improvements in indoor air quality and qualitative health
data from residents living in upgraded properties. In short, the Epic Program is trying to change
how people think about the benefits of energy efficiency improvements. It’s not about the
houses, it’s about the people living in the houses.
0
2
4
6
8
10
12
14
16
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
Apr Jul Sep Jan Jun Aug Oct Dec Mar Jul Sep Nov Jan Mar May Jul Sep Nov
2013 2014 2015 2016
Lo
a
n
C
o
u
n
t
Lo
a
n
A
m
o
u
n
t
Sum of LoanAmount Count of ProjectIdentifier
Fort Collins has an unusually large proportion of rental properties; approximately 50% of the
City’s total housing stock are rentals, including approximately 25% of single-family homes.
Much of our housing stock, particularly rentals, are older and could benefit from energy
efficiency upgrades. The Epic Program leverages the existing Efficiency Works Homes program
(administered in collaboration with Platte River Power Authority) and the revitalized on-bill
financing, with the Bloomberg project focus on low-to-moderate income renters and indoor air
quality and health / wellbeing improvements (Figure 2). The Epic Program team was inspired by
new research and studies around “social determinants of health” and the impacts of housing on
health and wellbeing. This project will address the “Climate Economy” via energy efficiency,
and in so doing also address other important “human centered” issues in our Community. The
program seeks to simultaneously develop solutions for indoor air quality and health / wellbeing,
energy efficiency, the rental split incentive, on-bill financing, leveraging third party capital,
developing important partnerships, and spreading innovation.
Figure 2. Epic Program Structure
The Mayors Challenge award has a three-year performance period for implementing the winning
idea. The 2021 goals for the Epic Program are:
1. Epic will upgrade 360 rental properties and 2,000 total homes
a. 16% of projects will be financed with an Epic Loan
2. Epic will demonstrate improved health and wellbeing, related to indoor air quality and
living environment
3. Savings from reduced energy use and lower utility bills will be available for other family
priorities
4. Rental property owners will report financing is not a barrier to energy efficiency
upgrades
On-bill financing, a critical piece of the Epic Program, was revitalized in August 2018 using the
$100,000 award from the champions phase of the Mayors Challenge to further develop the Epic
Program idea. The Colorado Energy Office also provided a $200,000 grant at that time to kick
off the loan program. The grant agreement with Bloomberg Philanthropies was completed in
February 2019 and the initial $100,00 tranche of the $1M was awarded. Another key milestone
for setting up the Epic Loans are the revised financial officer’s rules and regulations to allow
simplified underwriting. Interest rates will be reassessed regularly and approved by the City
CFO, including adjustments based on external capital rates and adding a modest administrative
premium in the future. The loan interest rates, effective January 2019, are as follows:
Loan Term Interest Rate
3 or 5 years 3.49%
7 or 10 years 3.99%
15 or 20 years 4.49%
Financial services for the Epic Loan are delivered by Impact Development Fund, which was
selected through a competitive selection process in 2018. At a high level, the process relating to
the efficiency and loan programs is:
• An efficiency assessment is conducted on the home by the EW-Home advisor/auditor.
• Opportunities for improved health, safety, comfort, and energy efficiency are identified
and prioritized. Standardized pricing with estimated energy savings can be provided for
recommended insulation/ air sealing improvements.
• If desired, the property owner can choose to pursue an Epic Loan, as follows:
o Customer completes application for a loan to financial services provider
o Epic Loan program manager reviews the project & provides initial loan approval
o Upon approval, the homeowner and contractor(s) coordinate the timing and
completion of the project
o After final loan approval by the Epic loan program manager, and receipt of the
project completion certificate, final inspections, and waiting the 72 hour right of
rescission, loan funds are disbursed to contractor(s) by financial services provider
o A UCC lien filing is recorded with Larimer County for the loan (by financial
services provider)
o Closing documents are provided from financial services provider to the Utilities
Billing Department staff to set up the loan in the billing software
o Loan payments are added to the customer’s monthly utility services bill
Third Party Capital
Leveraging external capital is critical to achieving the long-term vision of the Epic Loans. The
program team seeks to design an “evergreen” revolving loan fund which:
• Supports residential energy efficiency upgrades for years to come;
• Scales to meet long-term efficiency objectives;
• Removes financial barriers to efficiency upgrades with attractive rates and terms;
• Aligns capital commitments with customer loan terms; and
• Minimizes the City and Utilities risk and administrative effort.
The Epic Loan is designed to balance the programmatic objectives and financial requirements of
the City of Fort Collins, while also meeting the needs and expectations of capital providers and
Utilities customers.
The City of Fort Collins completed an RFP for qualified firms to provide capital in support of the
Epic Loan. The program team is currently in conversations with potential firms and hopes to
finalize contracts in the near future. Third party capital offers a continuing source of funds to
meet increasing customer demand for energy efficiency financing. Fort Collins Utilities will be
the borrower and guarantor of the funds from capital providers, and Fort Collins Utilities will in
turn service the repayments to its capital lenders using repayment obligations from customers to
Utilities. In this on-bill financing model, capital providers will not be originating loans to, or
otherwise engaging directly with, Utilities customers. Instead, capital providers will lend or grant
funds to the City, and the City will undertake and / or oversee loan underwriting, origination and
collections. Capital providers will therefore have recourse to the Epic fund and repayments for
funds borrowed, but not to individual Utilities customers (Figure 3).
Figure 3. Capital and Repayment Structure
Capital sources for the Epic Loan need to align with the following high-level objectives:
• Attractive: The loan program must be able to provide attractive loan terms to customers,
specifically attractive interest rates.
• Scalable: The program must be scalable in support of Fort Collins ambitious energy
goals. It is anticipated that Fort Collins will upgrade thousands of homes in the coming
years.
• Simple: The implementation and administration of the program must be as simple as
possible for all parties, including customers, Utilities, and the capital partners.
Potential Size of Loan Portfolio
During OBF 1.0 from July 2015 to February 2017, the rate of loan activity was equivalent to
approximately 120 loans and $1M annually. To provide sufficient financing for the expected
number of projects, the short-term (3-4 year) capital goal is $7M to $8M. This assumes $1.5M to
$2M annually in energy efficiency project financing. The longer-term capital goal is up to $16M
in order to establish a self-sustaining revolving loan.
With a range of loan terms from 3 to 15 years, the expectation for a breakdown of necessary
third-party capital amounts and terms would be:
Loan Term Percentage of Portfolio
3 & 5 years 30%
7 & 10 years 40%
15 years 30%
Potential Financial Solution
Utilities intends to create a sustainable cycle of loans and repayments similar in concept to a
revolving loan fund. Currently, the Epic Program team is engaged with the following capital
sources and amounts, which will be blended to create attractive interest rates that are below
market rates for customers:
Capital
source Utilities Customers
Capital Type Provider Term Rate Amount Status
Low or No
Cost
Bloomberg Philanthropies
– Champions Phase
Award
N/A 0% $100,000 In hand or
recently
deployed
Bloomberg Philanthropies
- Award
N/A 0% $600,000 Committed
Colorado Energy Office –
Initial Grant
N/A 0% $200,000 In hand or
recently
deployed
Colorado Energy Office –
Grant or Loan
TBD TBD TBD Under
discussion
External
Market
National Commercial
Bank
5 & 10
year
3.95% -
4.25%
$2,500,000 Under
discussion
National Commercial
Bank
5 & 10
year
TBD TBD Under
discussion
National Green Bank 10 &
15 year
5.75% $2,500,000 Under
discussion
National impact investor 7 year 5-7% $2,500,000 Under
discussion
Internal
Repayments of previously
paid loans
N/A 0% $400,000 Committed
The City will blend capital sources and interest rates into loan offerings that recover the cost of
capital, and include a modest administrative premium to cover administrative costs in the future.
The example in Figure 4 shows how capital sources and interest rates can be calculated to
understand total funds and average interest rate, as well as broken down into short, medium and
long-term rates and amounts. Figure 4 is an example of how capital sources will determine the
rate offered to customers based on loan term.
Figure 4. Example Capital Stack and Loan Terms
Flexible structures which minimize the need for the City to carry non-deployed debt capital, such
as lines of credit versus term loans, are being proposed. Other key considerations include the
Light & Power plans for a 2023 debt offering and the need to protect the AA- electric credit
rating and Broadband’s coverage covenants.
In all cases, Fort Collins Utilities would be the borrower, with the third-party funds being loaned
to customers by Utilities. Fort Collins Utilities would be responsible for the repayment to the
capital provider. In turn, Utilities customers carry the obligation for repayment of loans to the
City via their utility bill. Utilities has various code-specified tools for recourse of delinquent
utility bills that makes the risk profile for the Epic Loan portfolio extremely low. Third-party
capital providers will have a senior pledge on customer loan repayments and second position on
Electric Utility revenues, after the more senior pledge held by revenue bondholders.
Fort Collins Utilities recognizes that this proposed financing model is unique for a municipal-
owned utility, and as such we are committed to working with capital providers to “co-create” a
viable and scalable financing model that is workable and beneficial for all parties. We also intend
to continually search for new capital sources to add to the capital stack that provide the most
desirable terms and conditions for customers and the City.
Capital Sources Principal Rate
Equity
Bloomberg (grant)10%700,000$ 0.00%
Colorado Energy Office Grant 3%200,000$ 0.00%
L&P available cap 6%400,000$ 0.00%
Mission-driven Capital 0%-$ 0.00%
Debt
State of CO Loan 15%1,000,000$ 1.75%
Nat'l Commercial Bank - 5 yr (Loan)18%1,250,000$ 3.95%
Nat'l Commercial Bank - 10 yr (Loan)18%1,250,000$ 4.25%
Nat'l Green Bank - 15 yr (Loan)29%2,000,000$ 5.75%
Total 100%$6,800,000 3.46%
Loans Offered Tranche 1 Tranche 2 Tranche 3 Total
Cost of Capital 2.71%2.85%4.60%3.46%
Amount available $1,820,000 $2,480,000 $2,500,000 $6,800,000
Term offered 3-5 yr term 7-10 yr term 15 yr term -
Rate offered 3.75%4.25%4.75%4.30%
Next Steps
The Epic Program team is currently in discussions with third-party capital providers to develop
lending agreements. The Epic Program team proposes the following review and approval process
for lending agreements:
• Staff will continue to move forward with developing finalized scopes and terms.
• Leadership stakeholders, such as City CFO and Utilities FP&A Director, will review
agreements.
• CAO, particularly internal legal counsel, will review agreements. Bond counsel is not
engaged.
• City Purchasing will review agreements.
• The Finance Committee has an additional review of lending agreements.
• Staff proceeds with City Council consideration via ordinance with a target approval of
August 2019. There will be a separate ordinance prepared for each lender.
The Epic Program team seeks guidance on the Finance Committee’s desire for additional
information before proceeding with City Council consideration of financial agreements.
ATTACHMENTS
Attachment 1: Epic Program Capital Strategy Presentation, May 20, 2019
1
May 20, 2019
Epic Program Capital Strategy
John Phelan, Energy Services Senior Manager
Sean Carpenter, Climate Economy Advisor
Travis Storin, Accounting Director
Agenda
•Review November 2018 Council Finance discussion
•Brief history of on-bill financing efforts
•3 to 5 year capital objectives and long-term vision
•Core tenets and guardrails for capital strategy
•Current “capital stack” and status with potential lending sources
•Next steps for Epic Team and Council Finance
2Objective: Support from Council Finance Committee for next steps
Questions
Does the Council Finance Committee desire
additional information prior to proceeding
with consideration of financial agreements?
3
OBF Background
•Epic Program & Bloomberg Mayors
Challenge
•Code update to remove interest
rate specificity (Dec 2018)
•Effective January 2019 rates*
3 or 5 years -3.49%
7 or 10 years -3.99%
15 or 20 years -4.49%
•Third party capital RFP (Dec 2018)
•Update financial officer’s rules and
regulations (Feb 2019)
•Began in 2013 with $1.6M revolving
loan fund from Light & Power
reserves
•Low interest rate and long loan
terms led to rapid uptake
•~25% of $1.6M repaid to date with
0% default rate
•Revitalized August 2018 as part of
Bloomberg Mayors Challenge
4
November 2018 meeting OBF history
* Staff plans to adjust interest rates in response to outside/market rate capital once secured
Mayors Challenge & Epic Program
Epic Program
Comprehensive, streamlined energy efficiency upgrade program with attractive financing
Efficiency Works Homes
Existing energy efficiency assessment and upgrade program for residential homes
Epic Loan
No money down, low interest loan through the revitalized on-bill financing option
Bloomberg Mayors Challenge
Focus on renters and LMI residents with indoor air quality and health/wellbeing monitoring
5
Renters
&
LMI Residents
All
Residents
Three Year Project Goals
Epic will upgrade 360 rental properties and 2,000 total homes
16% of projects will be financed with an Epic Loan
Epic will demonstrate improved health and wellbeing, related to
indoor air quality and living environment
Savings from reduced energy use and lower utility bills will be
available for other family priorities
Rental property owners will report financing is not a barrier to
energy efficiency upgrades
6
Core Tenets and Guardrails
Loan portfolio management
•Total principal available across all sources for next 3-4 years target: $7M -$8M
•Interest rate target: blended cost of capital, plus modest admin premium
•Annual loans issued / originated: $1.5M -$2.0M
•Parity in length of term borrowed vs. length of term loaned
Other critical considerations
•No negative impact on Light & Power planned 2023 debt offering
•Protect Utilities credit rating &broadband’s coverage covenants
7
Long Term Vision: Capital
8
3rd Party Capital
•Design an “Evergreen” revolving loan fund which:
•Supports residential energy efficiency upgrades for years to come
•Scales to meet long-term efficiency objectives
•Removes financial barriers to efficiency upgrades with attractive rates and
terms
•Aligns capital commitments with retail loan terms (e.g. term & rate parity)
•Minimizes the City and Utilities risk and administrative effort
•Short-term (3-4 years): $7M -$8M across all capital sources combined
•If successful short-term, longer-term: potentially up to $16M
Example:
Capital Stack and Loan Terms
9
Loans Offered Tranche 1 Tranche 2 Tranche 3 Total
Cost of Capital 2.71%2.85%4.60%3.46%
Amount available $1,820,000 $2,480,000 $2,500,000 $6,800,000
Term offered 3-5 yr term 7-10 yr term 15 yr term -
Rate offered 3.75%4.25%4.75%4.30%
•City will blend its various capital sources
and interest rates into loan offerings that
recover cost of capital plus administrative
costs
•Reviewed no less than semi-annually
Capital Sources Principal Rate
Equity
Bloomberg (grant)10%700,000$ 0.00%
Colorado Energy Office Grant 3%200,000$ 0.00%
L&P available cap 6%400,000$ 0.00%
Mission-driven Capital 0%-$ 0.00%
Debt
State of CO Loan 15%1,000,000$ 1.75%
Nat'l Commercial Bank - 5 yr (Loan)18%1,250,000$ 3.95%
Nat'l Commercial Bank - 10 yr (Loan)18%1,250,000$ 4.25%
Nat'l Green Bank - 15 yr (Loan)29%2,000,000$ 5.75%
Total 100%$6,800,000 3.46%
Proposed Review & Approval Process
•Agreements with capital providers
•Scope and terms: Travis, Sean, John
•Leadership stakeholders: CFO and Utilities FP&A Director
•Legal: City Attorney (CAO) engaged (CAO opinion -bond counsel not
required at this time)
•Purchasing review
•Finance Committee additional review
•Approval by City Council via ordinance, separate Ordinances for each lender
•Target August 2019
10
Questions
Does the Council Finance Committee desire
additional information prior to proceeding
with consideration of financial agreements?
11
12
3rd Party Capital
12
Backup
Capital Sources
13
Capital Type Provider Term Rate Amount Status
Low or no cost
Bloomberg Philanthropies –Champions
Phase Award
N/A 0%$100,000 In hand or recently
deployed
Bloomberg Philanthropies -Award N/A 0%$600,000 Committed
Colorado Energy Office –Initial Grant N/A 0%$200,000 In hand or recently
deployed
Colorado Energy Office –Grant or Loan TBD TBD TBD Under discussion
External Market
National Commercial Bank 5 & 10 year 3.95% -
4.25%
$2,500,000 Under discussion
National Commercial Bank 5 & 10 year TBD TBD Under discussion
National Green Bank 10 & 15 year 5.75%$2,500,000 Under discussion
National impact investor 7 year 5-7%$2,500,000 Under discussion
Internal Available lending from previously repaid
loans
N/A 0%$400,000 Committed
Total $8,800,000
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff:
Jennifer Poznanovic
Lance Smith
Date: May 20, 2019
SUBJECT FOR DISCUSSION
CEF & Utility Fee Update
EXECUTIVE SUMMARY
Coordination of Council approved fees began in 2016 to provide a more holistic view of the total
cost impact. Previously, fee updates were presented to Council on an individual basis. After the
2019 fee update, fee phasing will be complete with regular two and four-year cadence updates
beginning in 2021.
2019 fee updates include: Development Review fees, Electric Capacity fees, Water Supply
Requirement fees, Wet Utility Plan Investment Fees and Step III of the 2017 Capital Expansion
Fees.
Staff proposes the following fee changes:
• Wet Utility PIFs as proposed
• Electric Capacity Fees as proposed
• Water Supply Requirement Fee as proposed
• 100% of proposed 2017 Capital Expansion Fees (Step III)
• Transportation Capital Expansion Fees (inflation only)
Development Review Fees will be reviewed at the June Council Finance Committee meeting.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. Does Council Finance Committee support the proposed fee updates and outreach plan?
BACKGROUND/DISCUSSION
Since the fall of October 2016, staff has worked to coordinate the process for updating all new
development related fees that require Council approval. Development related fees that are
approved by Council are six Capital Expansion Fees, five Utility Fees and Building
Development Fees.
Previously, fee updates were presented to Council on an individual basis. However, it was
determined that updates should occur on a regular two and four-year cadence and fees updates
should occur together each year to provide a more holistic view of the impact of any fee
increases.
Impact fee coordination includes a detailed fee study analysis for Capital Expansion Fees
(CEFs), Transportation Capital Expansion Fees (TCEFs) and Development Review Fees every
four years. This requires an outside consultant through a request for proposal (RFP) process
where data is provided by City staff. Findings by the consultant are also verified by City staff.
For Utility Fees, a detailed fee study is planned every two years. These are internal updates by
City staff with periodic consultant verification. In the future, impact fee study analysis will be
targeted in the odd year before Budgeting for Outcomes (BFO). In years without an update, an
inflation adjustment occurs.
Below is the current fee timeline:
Phase I of the fee updates included CEFs, TCEFs, Electric Capacity Fees, and Raw Water/CIL
and were adopted in 2017. Phase II included Wet Utility PIFs and step II of CEFs and TCEFs,
Type of Fee Fee Name
Capital Expansion Neighborhood Park
Capital Expansion Community Park
Capital Expansion Fire
Capital Expansion Police
Capital Expansion General Government
Capital Expansion Transportation
Utility Water Supply Requirement
Utility Electric Capacity
Utility Sewer Plant Investment
Utility Stormwater Plant Investment
Utility Water Plant Investment
Building
Development
Development Review & Building
Permit Fees
which were approved in 2018. Development review and building permit fees were originally
included in Phase II but were de-coupled from the 2018 update.
Due to the concern in the development and building community around fee changes, Council
asked for a fee working group to be created to foster a better understanding of fees prior to
discussing further fee updates. In August of 2017, the Fee Working Group commenced
comprised of a balanced group of stakeholders – citizens, business-oriented individuals, City
staff and a Council liaison. The Fee Working Group met 14 times and was overall supportive of
the fee coordination process and proposed fee updates.
The 2019 phase III update includes Development Review fees, Electric Capacity fees, Water
Supply Requirement fees, Wet Utility Plan Investment Fees and Step III of the 2017 Capital
Expansion Fees. After the 2019 fee update, fee phasing will be complete with regular two and
four-year cadence updates beginning in 2021.
2019 Utility Fee Updates
The proposed changes to Utility Fees for a single-family, residential home include a 1.7%
increase to the Electric Capacity Fee (ECF) and increases to the three Wet Utility Fees ranging
between 1.5% and 6.7%. The Water Plant Investment Fee (PIF) is proposed to increase 6.7%, the
Wastewater PIF is proposed to increase 1.5% and the Stormwater PIF is proposed to increase
3.3% from current fee levels.
The two main drivers for the increases include:
• New capital project spending, which increases the overall value of the system
• Annual increases in construction costs, which also increases the replacement value of
existing system
The proposed change to the Water Supply Requirement increases the cost of 1 acre-foot of
required raw water from $17,300 to $21,500, or 24%.
The primary drivers for this increase are:
• Updated construction cost estimates associated with the Halligan Water Supply Project
• Increasing costs of future water rights that will need to be acquired to optimize the water
rights portfolio
The chart below summarizes the proposed Utility Fees for a single-family home, assuming an
8,600 square feet lot and 4 bedrooms:
2019 Capital Expansion Fee Updates
The chart below shows the current and proposed fee updates for CEFs:
Step III fees are an 11% increase from current fee levels (Step II). CEF fee increases are 100% of
full fee levels recommended in 2017. The CPI-U index for Denver-Aurora-Lakewood is used for
CEF inflation. An inflation estimate of 3.2% has been used, but an update will be available in
August 2019.
Step III - Full fees proposed in 2017
Land Use Type Unit
N'hood
Park
Comm.
Park Fire Police Gen. Gov't
Current
Total
Step III
Total w
Inflation
%
Increase
w
Inflation
Residential, up to 700 sq. ft.Dwelling $1,721 $2,430 $421 $236 $574 $5,152 $5,724 11%
Residential, 701-1,200 sq. ft.Dwelling $2,304 $3,253 $570 $319 $774 $6,911 $7,679 11%
Residential, 1,201-1,700 sq. ft.Dwelling $2,516 $3,552 $620 $347 $845 $7,543 $8,381 11%
Residential, 1,701-2,200 sq. ft.Dwelling $2,542 $3,589 $630 $352 $858 $7,630 $8,478 11%
Residential, over 2,200 sq. ft.Dwelling $2,833 $4,001 $701 $392 $955 $8,502 $9,447 11%
Commercial 1,000 sq. ft.0 0 $531 $297 $1,451 $2,182 $2,424 11%
Office and Other Services 0 0 $531 $297 $1,451 $2,182 $2,424 11%
Industrial/Warehouse 1,000 sq. ft.0 0 $124 $69 $342 $512 $569 11%
Outreach Plan
In an effort towards better communication, outreach and notification of impact fee changes, staff
plans to meet with 15 organizations across the City in the summer of 2019.
Below is the 2019 fee roadmap:
ATTACHMENTS (numbered Attachment 1, 2, 3,…)
1. PowerPoint Presentation – CEF & Utility Fee Update
Organization Staff
Affordable Housing Board All
Building Review Board All
Economic Advisory Commission All
Fort Collins Board of Relators All
Local Legislative Affairs Committee All
Northern Colorado Homebuilder's Association All
Super Issues Forum All
Development Review Advisory Board Dev. Review
Downtown Development Authority Dev. Review
Housing Catalyst Dev. Review
North Fort Collins Business Association Dev. Review
Planning & Zoning Board Dev. Review
South Fort Collins Business Association Dev. Review
Energy Board Utilities
Water Board Utilities
March May June June/July August October 1/1/2020
Capital Expansion Fees CFC Outreach CFC Council Effective
Transportation CEFs
Electric Capacity Fees CFC Outreach CFC Council Effective
Water Supply Requirement CFC Outreach CFC Council Effective
Wet Utility Fees CFC Outreach CFC Council Effective
Development Review Fees CFC CFC CFC Outreach CFC Council Effective
1
Council Impact Fee Update
May 20, 2019
Council Finance Committee
Agenda
•Impact Fee Scope & Timeline
•2019 Fee Updates
•Development Review Fees (June CFC)
•Utility Fees
•Capital Expansion Fees -Step III
•Next Steps
2
Fee Coordination
3
Objective:
•Review fee updates together to
provide a holistic view of the total
cost impact
•Bring impact fees forward per a
defined cadence….. 2 -4 years
Type of Fee Fee Name
Capital Expansion Neighborhood Park
Capital Expansion Community Park
Capital Expansion Fire
Capital Expansion Police
Capital Expansion General Government
Capital Expansion Transportation
Utility Water Supply Requirement
Utility Electric Capacity
Utility Sewer Plant Investment
Utility Stormwater Plant Investment
Utility Water Plant Investment
Building
Development
Development Review & Building
Permit Fees
Fee Timeline
4
•Detailed fee study analysis every 4 years for CEF, TCEFs & Development fees
•Detailed fee study analysis every 2 years for Utility fees
•Conduct fee study analysis in the odd year before BFO
•In years without updates, an annual inflation adjustment occurs
•2019 Fee Group –Development Review fees only
Phase 1 Phase 2 Phase 3
2016 2017 2018 2019 2020 2021
Capital Expansion Fees Update Step II Step III Update
Transportation CEFs Update Step II Update
Electric Capacity Fees Update Update Update
Water Supply Requirement Update Update Update
Wet Utility Fees Update Update Update
Development Review Fees Update Update
Fee Working Group Active Active Active
5
Utility Fees
Utility Fee Current
Charge
2020
Charge $ Change % Change
Electric Capacity Fee $1,537 $1,563 $ 26 1.7%
Water PIF $ 3,826 $ 4,084 $ 258 6.7%
Wastewater PIF $ 3,537 $ 3,590 $ 53 1.5%
Stormwater PIF $ 1,548 $ 1,600 $ 52 3.3%
Water Supply Requirement $11,160 $13,838 $ 2,678 24.0%
•Assumes residential, single-family home with an 8,600 square feet lot and 4 bedrooms
6
Water PIFs
Customer Class Criteria Current Charge 2020 Charge $ Change % Change
Single Family 8,600 sq ft 3,826 4,084 258$ 6.7%
Duplex & Multi-family 3,435 sq ft 1,423 1,546 123$ 8.6%
Commercial
Meter Size
3/4"by tap size 7,930 8,790 860$ 10.8%
1"by tap size 20,960 23,060 2,100$ 10.0%
1 1/2"by tap size 43,510 45,610 2,100$ 4.8%
2"by tap size 72,450 78,820 6,370$ 8.8%
WATER Plant Investment Fees
7
Wastewater PIFs
2018 2020 Change in Proposed %
Customer Class Volume Volume Volume PIF Change
GPD GPD GPD $
Single family residential 230 229 -0.4%3,590 1.5%
Duplex and Multi-family 170 165 -2.9%2,590 0.1%
Commercial
Meter Size - inches
3/4 490 492 0.4%7,710 2.6%
1 1,080 1,096 1.5%17,190 3.8%
1.5 2,070 2,063 -0.3%32,350 2.0%
2 4,300 4,281 -0.4%67,120 2.0%
Wastewater Plant Investment Fees
8
Stormwater PIFs
Rate Class 2019 2020 $ Change % Change
Gross Area Developed (sq ft)8,600 8,600
Common Area Allocation (sq ft)6,156 6,156
Base Rate (per acre*)$9,142 $9,447
Runoff Coefficient 0.5 0.5
Total Fee $1,548 $1,600 $52 3.3%
Gross Area Developed (sq ft)43,560 43,560
Base Rate (per acre*)$9,142 $9,447
Runoff Coefficient 0.8 0.8
Total Fee $7,314 $7,558 $244 3.3%
Commercial
Stormwater Plant Investment Fee
Residential
Capital Expansion Fees
Step III
9
•Step III fees are an 11% increase from current fee levels (Step II)
•CEF fee increases are 100% of full fee levels recommended in 2017
•3.2% Inflation Estimate: CPI-U index for Denver-Aurora-Lakewood update available in August 2019
Step III - Full fees proposed in 2017
Land Use Type Unit
N'hood
Park
Comm.
Park Fire Police Gen. Gov't
Current
Total
Step III
Total w
Inflation
%
Increase
w
Inflation
Residential, up to 700 sq. ft.Dwelling $1,721 $2,430 $421 $236 $574 $5,152 $5,724 11%
Residential, 701-1,200 sq. ft.Dwelling $2,304 $3,253 $570 $319 $774 $6,911 $7,679 11%
Residential, 1,201-1,700 sq. ft.Dwelling $2,516 $3,552 $620 $347 $845 $7,543 $8,381 11%
Residential, 1,701-2,200 sq. ft.Dwelling $2,542 $3,589 $630 $352 $858 $7,630 $8,478 11%
Residential, over 2,200 sq. ft.Dwelling $2,833 $4,001 $701 $392 $955 $8,502 $9,447 11%
Commercial 1,000 sq. ft.0 0 $531 $297 $1,451 $2,182 $2,424 11%
Office and Other Services 0 0 $531 $297 $1,451 $2,182 $2,424 11%
Industrial/Warehouse 1,000 sq. ft.0 0 $124 $69 $342 $512 $569 11%
10
Total Fee Impact
Comparison charts available for June CFC Meeting
Summer 2019 Outreach Plan
11
Organization Staff
Affordable Housing Board All
Building Review Board All
Economic Advisory Commission All
Fort Collins Board of Relators All
Local Legislative Affairs Committee All
Northern Colorado Homebuilder's Association All
Super Issues Forum All
Development Review Advisory Board Dev. Review
Downtown Development Authority Dev. Review
Housing Catalyst Dev. Review
North Fort Collins Business Association Dev. Review
Planning & Zoning Board Dev. Review
South Fort Collins Business Association Dev. Review
Energy Board Utilities
Water Board Utilities
2019 Roadmap
12
•All fee categories update in 2019 except for Transportation CEFs
•Phasing complete after 2019 with regular two and four-year cadence beginning in 2021
March May June June/July August October 1/1/2020
Capital Expansion Fees CFC Outreach CFC Council Effective
Transportation CEFs
Electric Capacity Fees CFC Outreach CFC Council Effective
Water Supply Requirement CFC Outreach CFC Council Effective
Wet Utility Fees CFC Outreach CFC Council Effective
Development Review Fees CFC CFC CFC Outreach CFC Council Effective
Next Steps
13
Does Council Finance Committee support the proposed 2019 fee
updates and outreach plan?
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Jason Graham and Carol Webb
Date: May 20, 2019
SUBJECT FOR DISCUSSION (a short title)
Additional appropriation for the Sidestream Treatment Project
EXECUTIVE SUMMARY (a brief paragraph or two that succinctly summarizes important
points that are covered in more detail in the body of the AIS.)
The purpose of this agenda item is to request an appropriation for additional funding for the
Drake Water Reclamation Facility (DWRF) Sidestream Treatment Project. This request is
necessary to complete the permit-required project within the required timeframe to meet
DWRF’s National Pollution Discharge Elimination System (NPDES) Phosphorus (P)
Compliance Schedule deadline of December 31, 2020. Successful operation of this infrastructure
also will earn regulatory credits to delay future capital project expenses by upwards of 10 years.
This request is an off-cycle request vs. a mid-cycle request due to the regulatory nature and
schedule deadlines required by CDPHE.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
(Work session questions should be designed to gather direction from Council without requiring
Councilmembers to make a decision.)
1. Should staff move forward with this off-cycle appropriation request for the Sidestream
Project?
BACKGROUND/DISCUSSION (details of item – History, current policy, previous Council
actions, alternatives or options, costs or benefits, considerations leading to staff conclusions, data
and statistics, next steps, etc.)
The cost estimate at 60% project design, completed in January 2019, for the Sidestream
Treatment project is greater than the approved budget. The purpose of this agenda item is to
request Council’s approval increase the project budget from $4.3 million to $5.4 million for an
additional appropriation of $1.1 million.
UKey Project Drivers
The Sidestream Treatment project is necessary for DWRF to meet future nutrient water quality
regulations by Colorado Department of Public Health and Environment (CDPHE). The DWRF
National Pollutant Discharge Elimination System (NPDES) permit includes a phosphorus
Compliance Schedule to ensure the City is successful in meeting the required phosphorus limits
by January 01, 2021. The Sidestream Treatment project is a necessary addition required for
DWRF to meet these proposed phosphorus standards.
Nutrient Removal Projects have been identified as part of the Utility’s Capital Improvement
Planning (CIP) and Master Planning efforts for the last ten years. The current CIP identified
Nutrient Removal projects required to meet future nutrient limits by the Environmental
Protection Agency (EPA) and CDPHE and have future potential costs of approximately $70
million by 2028. The Wastewater Utility has been actively planning to minimize this cost as
much as possible through participation in the CDPHE Nutrient Incentive Program and the
AWWA Clean Water Partnership. Participation in these programs could provide the City both
schedule and financial relief of up to 10 years.
A conceptual class 5 cost estimate of $4.3 million was developed for the 2017-2018 BFO cycle
based upon capacity, modeling, analogous projects and the available Sidestream Treatment
technologies. As stated in the BFO offer, the design was based on a conceptual design and a
complete design could result in an increase or decrease of the cost to meet the design
deliverables. As designed progressed, additional detail, including equipment selection, and other
specifications resulted in increased project costs. A contingency in the additional budget request
has been included, appropriate for the current level of design. The following three major factors
impacted the budget requiring this appropriation request:
1. A new sludge feed pump station was required in addition to other improvements
increasing construction costs approximately $625,000. It had been anticipated, but not
feasible, that the existing sludge pumps could be used
2. Completion of the 60% design cost estimate (class 2) revealed an error in the original
BFO class 5 estimate allowing the original BFO request to be approximately $325,000
under-funded. In the future BFO offer estimates, including backup documentation will be
provide to management staff for review
3. The retirement of the Utilities’ lead programming engineer impacted the ability to self-
perform all the process programming, integration, and operator interface requirements of
the plants. Additional support from the equipment manufacturers and consulting
engineers is required for process programming and integration costing approximately
$150,000
For the 2019-2020 BFO budget cycle, steps were taken to address the budgeting issues that
occurred for this project. Larger projects will start with a “design only” phase so that better
construction estimates can be obtained prior to appropriation.
The current DWRF discharge permit requires the City to be in compliance with nutrient
regulations by January 1, 2021. The permit’s compliance schedule also indicates the construction
must be started by December 31, 2019. It is critical to begin construction as soon as possible in
2019 in order to give facility staff adequate time to optimize the system to comply with required
nutrient limits by the January 1, 2021 deadline.
UENVIRONMENTAL IMPACTS
In March 2013, the State of Colorado passed Regulation #85, requiring Publicly Owned
Treatment Works (POTWs) with greater than 2 million gallons per day capacity to meet more
stringent effluent water quality. The regulation mandates that existing POTWs limit their effluent
discharge on a monthly median value of Total Phosphorus to 1.0 mg/L and Total Inorganic
Nitrogen (TIN) of 15 mg/L. DWRF currently meets the TIN limit but the improvements installed
with the Side Stream project are necessary to help meet the Total Phosphorus limit.
While phosphorus and nitrogen are building blocks of organic life, high concentrations in lakes,
reservoirs and receiving waters can lead to lower dissolved oxygen levels, poison aquatic life,
and eutrophication. POTWs are only one of three major sources of nutrient contamination of
receiving waters (urban and agricultural non-point source run-off being the other two) but are the
easiest to regulate being a point source contributor.
UALTERNATIVE ANALYSIS
As project design evolved and the need for additional funding became apparent, the project team
evaluate the following project alternatives:
1. UValue EngineeringU – The project team, including City staff, general contractor, and
design engineer evaluated construction and design variables that could be eliminated and
/ or reduced and still deliver an effective project. While numerous items were removed or
revised, this evaluation was not successful in bringing the overall project costs down to
within the available budget.
2. UNot complete the projectU – This alternative would jeopardize not only immediate
regulatory compliance performance but future nutrient compliance issues as well.
3. URequest $1.1 M as a mid – cycle appropriation requestU – This alternative would
jeopardize the City’s ability to comply with NPDES P Standard Compliance Schedule
deadlines.
4. URequest $1.1 M as an off – cycle appropriation requestU – This is the preferred and
recommended alternative by City Staff. This alternative is also recommended by the
City’s Water Board.
UCITY FINANCIAL IMPACTS
This O appropriate $1,111,000 of Wastewater Fund Reserves for the DWRF Sidestream
Treatment Project. Adequate funds exist in the Wastewater Fund reserves to cover this request
for additional appropriations. In the latest 10-year Wastewater Capital Improvement Program
(CIP), $89M of capital improvements were identified and this is a relatively small increase. A
rate increase beyond what is already planned will not be needed as a result of this request.
ATTACHMENTS
1. Original BFO offer
2. Water Board Meeting Excerpt
3. Power Point Presentation
ENVIRONMENTAL HEALTH
Budget Years: 2017 - 2018Packages and Offers
24
7
Excerpt from Unapproved DRAFT MINUTES - WATER BOARD
REGULAR MEETING
April 18, 2019, 5:30 p.m.
222 Laporte Avenue, Colorado River Community Room
04/18/2019 – Excerpt from Unapproved DRAFT MINUTES Page 1
Budgeting for Outcomes (BFO) Offer 6.56 Drake Water Reclamation
Facility (DWRF) Sidestream Treatment Additional Appropriation
Request
Link Mueller, Special Projects Manager
Jason Graham, Plant Operations Director
(Attachments available upon request)
UPresentation Summary
• Special Projects Manager, Link Mueller explained the need for an
additional appropriation of $1.1 million dollars for the DWRF Sidestream
Project. The Sidestream Treatment Project will remove soluble
phosphorus with an Airprex System that chemically precipitates
phosphorus out of the liquid stream. DWRF doesn’t currently meet
Regulation 85 phosphorus limit (< 1mg/L). The Airprex System will
remove 90% of soluble phosphorus from the sludge. The sludge centrate
loading accounts for 25% of total plant phosphorus load. By treating the
sludge, prior to dewatering, it removes the phosphorus and some of the
ammonia while also improving the dewatering capabilities. The newly
proposed construction start date is July 19, 2019. The System must be
on-line and operational by December 31, 2020. The reason for an off-
cycle appropriation is because with a mid-cycle appropriation, DWRF
could obtain funding but it couldn’t be spent until January 1, 2020.
UDiscussion SummaryU
Board members commented on and inquired about various related topics
including if the struvite is harmful to the system (although some facilities
have struvite issues, DWRF doesn’t; The struvite will be formed in the
reactor and initially sequestered in the biosolids. A future project could
modify the process to allow struvite harvesting from the reactor); why
Airprex was chosen for the phosphorus removal process (Airprex has
already gone through Colorado state process and it fit best with DWRF’s
system); whether there is an “Option B” (DWRF needs to meet
compliance. There is not necessarily an “Option B” at this point, but there
is another project that involves carbon addition and will help ensure
DWRF meets the phosphorus limit); if there is a way to avoid
appropriation requests in the future (Budgeting for Outcomes process
provides more transparency and accountability, so appropriations will at
WATER BOARD
REGULAR MEETING
0 /15 /2018 – Excerpt from Unapproved DRAFT MINUTES Page 2
times need to occur); and a suggestion to include information about the
Colorado incentive fund to Council (If DWRF meets compliance of Reg.
85 in 2020 and then meets Reg. 31 by 2028, incentive credits could be
earned. Funding to meet these future requirements has been set aside in
the Wastewater Fund reserves).
Board Member Bovee moved that the Water Board recommends to City
Council the approval of the additional appropriation request of $1.1 million
dollars from Wastewater Fund reserves for the DWRF Sidestream Project as
recommended by City staff.
Board Member Ortman seconded the motion.
Vote on the motion: It passed unanimously, 7-0.
May 20, 2019
Additional Appropriation Request –Sidestream Treatment
Jason Graham and Carol Webb
Direction Sought
•Should staff move forward with this off-cycle
appropriation request for the Sidestream Project?
2
Strategic Alignment
3
Environmental Health
•4.7 Continually improve Environmental regulatory performance
•4.9 Sustain and improve the health of the Cache la Poudre River and its watershed
High Performing Government
•7.1 world class services
•7.8 maintain/renew assets, collaborate with regional partners
Economic Health
•3.5 Maintain utility systems, services, infrastructure and predicable rates
Background
•Project Summary
•Upcoming nutrient regulations for Nitrogen (N) and Phosphorus (P) removal
•Sidestream project brings complex technology to remove P in order to meet EPA and State regulatory requirements
•Project Drivers
•Required compliance schedule in current facility permit to implement phosphorus removal system by Jan 1, 2021.
•Project funding
•Project initially funded in 2017/2018 budget at $4.3M
•Cost estimate and funding request was based on conceptual design
4
Total Phosphorus
5
0.0
0.5
1.0
1.5
2.0
2.5
A-18 M-18 J-18 J-18 A-18 S-18 O-18 N-18 D-18 J-19 F-19 M-19
Total Phosphorus: Effluent Concentration vs.
Effluent TP (mg/L)Future TP Limit (mg/L)
Current Performance
J-21 F-21 M-21 A-21 M-21 J-21 J-21 A-21 S-21 O-21 N-21 D-21
Chart Title
Projected Effluent TP (mg/L)
TP Limit as of Jan 2021 (mg/L)
Anticipated Performance
Basis for Additional Request
•Cost estimate was based on a conceptual design.
•Estimate determined to be deficient as the design evolved.
•Technological solution is both complex and innovative
•Current estimate based 60% design
•Requesting additional $1.1 million
•High level of confidence based on level of design and contingency
6
Corrective Action
•Corrective Actions to minimize future cost estimating errors:
•Determine when separate BFO Offers for design and
construction are practical.
•Explore Quality Control process for review of budget detail.
7
Financial Overview
•Capital Improvement Plan (CIP) includes Sidestream Treatment
Project as part of identified 80M to 100M in future improvement
costs between 2017 and 2027 for Nutrient Regulations.
•Current Fund balance and prior appropriations allow for funding
of this project including this additional appropriation request.
•Wastewater Fund has approximately $24M of available
reserves.
8
Rate Impacts
•Project already included in the current CIP
•The rate impact of this additional appropriation is relatively
small (1% of anticipated 10 year capital investment) and will not
change the rate forecasts.
•Wastewater Fund
9
Water Board Recommendation
At its April 18, 2019 meeting, the Water Board voted unanimously
to recommend approval of the appropriation.
10
Feedback
Questions or Comments?
11
Blank Slide
Before Backup Slides
12
Regulatory –Permit Compliance Tiers
15
Treatment Limits Summary
New Regulation Strategy
17
New Regulation Strategy
18
Biological Phosphorus Removal
19
Phosphorus Accumulating Organisms (Photo Credit: Cindy Wright-Jones)
20
Cost Estimate Classification from AACE
Airprex Process
21
Additional Costs
•3 months increased GC’s due to increased scope -$97,000
•Increased building size and re-routing of sludge lines -$44,000
•Additional stairs and hand rail on reactor -$37,000
•5 doors and overhead garage door -$20,000
•Increased HVAC due to air exchange requirements -$125,000
•Additional valves, process pipe and insulation -$150,000
•Additional scope to digester building and pump station -$176,000
22
Value Engineering Effort
•Decreased building size and sludge pipe rerouting
•Deleted tank enclosure and re-designed insulation
•Utilizing existing wireways for Sludge Feed Pump Station
•Postponed Access Control
•Eliminated future instrumentation
23
Budget Comparison
Item Original BFO 60% Estimate Revised Budget
Engineering $750,000 $817,000 $707,000
Construction $2,553,000 $3,954,000 $3,907,000
Contingency $985,000 $810,000 $787,000
Total $4,288,000 $5,581,000 $5,400,000
Diff from BFO + $1,281,000 + $1,100,000
24
Note:
Engineering includes Contractor Design Services, City Design PM, and ICE
Construction includes Engineering Construction Services, City Const PM
Total Phosphorus
25
0
0.5
1
1.5
2
2.5
NPDES (1 mg/L)TP (mg/L)
Current Performance Anticipated Performance
DWRF Total Phosphorus Performance
Effluent Values vs. Limit Requirement
60% Site Plan
26
Project Summary
27
What
•Sidestream Treatment Project to remove soluble phosphorus
•Airprex System chemically precipitates phosphorus out of solids stream
Where •Drake Water Reclamation Facility (DWRF)
Why
•DWRF currently can not meet Reg. 85 phosphorus limit (< 1 mg/L)
•Airprex system will remove 90% of soluble phosphorus from sludge
•Sludge centrate loading accounts for 25% of total plant phosphorus load
When
•Construction scheduled to start in May ‘19. Currently proposing July ’19
•System must be on-line and operational by December 31, 2020