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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 06/09/2009 - ECONOMIC HEALTH/FINANCIAL ISSUES UPDATE DATE: June 9, 2009 STAFF: Darin Afteberry Mike Freeman WORK SESSION ITEM Josh Birks FORT COLLINS CITY COUNCIL Pre-taped staff presentation: available at fcgov.com/clerk/agendas.php SUBJECT FOR DISCUSSION Economic Health/Financial Issues Update. EXECUTIVE SUMMARY The overall economic goal for the City is to balance high quality economic development with quality community and environmental goals. The City has strong partnerships with diverse organizations, strategic marketing and promotion of the area to new and expanding businesses, and the City continues to focus on retaining and growing quality primary jobs while also focusing on retaining and building the retail sector. In 2009, the City has faced challenges such as broad economic slowdown, decrease in sales tax collections, decrease in use tax collections, and potential financing difficulties for developers. Recently,the City has reduced the General Fund by$5.6 million and Transportation Fund by another $4.5 million. Fort Collins is not immune to the global economic climate,yet we have economic strengths unique to our community.Fort Collins has a highly educated workforce,an innovative and globally-focused university, a supportive culture for entrepreneurs, and diverse industries. 2009 will also bring economic opportunities to Fort Collins. Colorado State University's focus on research and development and commercialization of research will nurture and expand start-ups that most likely will stay in Fort Collins. The City's collaboration with the Downtown Development Authority will result in new projects that benefit the whole community and differentiate us from other regional communities. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED The presentation will focus on providing City Council an economic and financial update. The discussion will focus on highlighting revenue collection through May of this year and strategies for achieving economic health in 2009. In addition, staff will present an idea for the City to take a more proactive role in the early planning steps to facilitate the redevelopment of midtown commercial properties. The idea includes using approximately $200,000 from the existing budget to fund the hiring of an interdisciplinary consulting team to assist staff in developing a vision and implementation plan for the redevelopment Foothills Mall and support the Mason Corridor BRT project. Staff will address suggestions and questions from City Council. June 9, 2009 Page 2 BACKGROUND In 2004, Council appointed a group of community representatives to develop a set of recommendations intended to address the economic vitality and sustainability of Fort Collins. Members of the"Economic Vitality and Sustainability Action Group"(EVSAG)met for two years and created an economic strategy map for the City to follow in order to achieve economic success and longevity. A major outcome of EV SAG was the Economic Action Plan. The Action Plan consists of four key strategies for economic health: • Diversify the economy • Build partnerships • Support business expansion and attraction • Be proactive on economic issues. City Council is updated periodically on implementation of the Economic Action Plan. Financial updates are also provided to give an overall picture of economic health, in the community and the City's organization. ATTACHMENTS 1. Power Point Presentation. ATTACHMENT I C 2009 Economic Health Update Number Two June 9, 2009 "�IColllns bwmsc,-A Background • City Council asked for regular updates on economic and finance issues — 15' update: December 2008 — 2nd update: February 10, 2009 — 3'd update: June 9, 2009 Fo`„' y of r li`S L i ECONOMIC ACTION PLAN STRATEGIES • Four key strategies: — Business incubation, retention, expansion and attraction — Be proactive on economic issues — Build partnerships — Diversify the economy For, �tJ`s BUSINESS INCUBATION, RETENTION, EXPANSION & ATTRACTION • Focus is on incubation, retention, and expansion • RM12 Building, Fundraising, Program Expansion • Participation in the NCEDC Business Retention & Expansion program • UniverCity Connections • Brokers meetings and property owners support • Support for North College URA projects FOB c rt� �C�inS 1 2 C BE PROACTIVE ON ECONOMIC ISSUES • New URA at Prospect and College (fall 2009) • Infrastructure investments that support economic health — 392 Partnership — Fort Collins-Loveland Airport • International Council of Shopping Centers Conference • Business communications strategy — eNewsletter, fcgov.com/business and fortcollinsinnovation.com City of Fort Collins f� C BUILD PARTNERSHIPS • Colorado State University — Research Foundation z — Ventures — Superclusters • Rocky Mountain Innovation Initiative • NCEDC site selection inquiries • UniverCity Connections �Yw10 • City/DDA priority projects 110 L�(llVeTSin' FOB rt� 5 BUILD PARTNERSHIPS • FortZED Implementation — Department of Energy grant — Department of Local Affairs grant — Green Dining Week promotion — FortZED 50 FORT — Fortzed.com web site �--, _ Ri r C��S DIVERSIFY THE ECONOMY • Further develop industry clusters — Clean Energy • SWOT analysis • Energy and Engines Lab lease/expansion — Biotechnology • RM12 space, Research Innovation Center — Software • GIS — Uniquely Fort Collins • Be Local, Shop Fort Collins First of Fps rt�!`s � w �i C DIVERSIFY THE ECONOMY • Further develop industry clusters — Update cluster profiles — DEN-ZED — Develop business incubation model/process of Fort `s bowls F-1, Fon Collins Tom]Employmem Trwd else eteaa 75 %ROOD 650W Sake:Boreal d labrr S i9 cs 6OiC0 C2CCJ XCa 2� _1W 2MB ZC J Unemployment Trend - - - -- 80 0 6.0 60 - 40 3,0 20 LO - —US —co Sa w:9iwuMLabw Sbeagw —FTC OA � I ill I I 2003 2W4 210i 2106 w 2= A 9 9.000 Technology poster Emplrynnrlt Trend 1.615 Source:OLEW.CBJ Regional6canmdet 8000 - ■SrtMeie ■F@rdvae 7,000 1.831 6.000 5.000 4,000 3,000 — 2,000 - - - - - 0 - 2002 2003 2004 2005 2006 2007 2008 6 C Clean Energy Cluster Employment Trend 25w Sousa:OCEN;CSU Re2larol Fiwnmi� 2000 1,500 1, 5m 0 2002 2003 2004 M0 2006 2007 2008 Biosaence Cluster E*ployment Trend 2.000 Saar QCEW,CSII Raglan E.nist 1.800 1.600 1,400 1,200 1,000 800 600 400 200 0 2002 2003 2004 200E 2106 2W7 2008 7 J Financial Update = Forte "tom°``l1s - 1 Sales Tax Revenue • 2009 sales tax collections year-to-date (YTD) thru April are 3.4% lower than 2008. • Major factors contributing to the decline in 2009: — Auto Dealers & Service Stations are down 19.1% YTD thru April — Home Furnishings & Consumer Electronics are down 11.8% YTD thru April • Retail categories that have offset the decline in 2009: — Food Stores YTD thru April (+4.3%) — General Merchandise YTD thru April (+2.9%) of Fo�'r� t�r`s s C. Use Tax Revenue • 2009 use tax collections year-to-date (YTD) thru April decreased 26.7% from 2008. • Use tax from building permits and auto registrations continue to decline sharply during the first 4 months of 2009: — Building permit use tax have fallen 67.1% YTD thru April. — Automobile use tax decreased 15.1% YTD thru April. • Auto sales and construction activity are expected to remain slow, impacting use tax collections during all of 2009. Fort C. Other Major General Fund Revenues Property Taxes: • Collected $5.91VI YTD thru April 2009. — 4.5% increase over 2008 YTD thru April. — consistent with the amount budgeted • 2009 is a reappraisal year — the assessed valuation increased by 9% in 2007. — expect slight increase in 2009; will be collected in 2010. Payments in Lieu of Taxes Pilot: • Collected $2.41VI YTD thru April 2009. of Four' �t lins C 9 General Fund 2009 — Revenue Estimate • Revenue Original Budget $106,000,000 • Revenue Updated Proiection $100.400,000 • Revenue Shortfall $ 5,600,000 • Shortfall Result of Following: — Drop in Use Tax Collections by 26.7% YTD — Drop in Sales Tax Collections of 3.4% YTD — Drop in Building Permits and Investment.E arnin gsna(fins af General Fund 2009 — Reduction Plan • Revenue Shortfall $ 5,600,000 • Vacancy Savings —Hiring Freeze $ 2,000,000 • Benefit Savings 500,000 • Reduce Support to Other Funds 848,000 • Reduce Department Spending 2,252.000 Total $ 5,600,000 Fortins 10 C Reduce General Fund Support to Other Funds • Reduce support to Cultural Services $ 100,000 • Reduce support to Recreation $ 165,000 • Reduce support to Cemeteries $ 18,000 • Reduce support to Transit $ 347,000 • Reduce support to Street Oversizing $ 24,000 • Reduce support to MIS fund $ 194,000 • Savings from reduced support $ 848,000 aty of For' terns .3 Context for the Remaining $2.2M Revision • $2.2 M = approximately 2% of General Fund Budget. — Certain items are not subject to reduction: • Debt, Insurance, Transportation & PFA funding — Translates to larger reductions elsewhere (6 to 8%) Fort� ins C- ii Midtown Commercial Redevelopment Vision dry Of ort Collins Identify the Problem • Retail sales have been in decline since 2001 • Large- and medium-format retail spaces vacant • Supporting retail space remains vacant • General Growth Properties declared bankruptcy • Significant financial impact to the City Foothills Mall Net Taxable Retail Sales $180 - - - - - -. $100 . TFe mallwoJd�9b¢rordleq$25 mlgnineCltlKKW C saleslacr ed it w wpt mewth C"de gm — $160 $160 2 $140 $fro $120 a2 Wim lea $120 $100 $100 Sso $BO so $60 $40 $40 $20 $20 $0 m 2A1 2002 A(D 2A4 2005 2706 2OI 2DOB �AroCe at♦Nl 0lhar �rmd$BewMe �a4wda Cvoah ftgmw College Vacant Retail Space Retail Space Square Feet Est. Sales Tax 18,2 Mall (including Anchors) 235,000 $2,500,000 Other College Retail Space Toys'R Us 50,000 Linei Things 35,000 Circuit City 35.000 Wild Oats 52,000 Wal-Mart 82,000 Additional Ancillary(Estimate) 100,000 to 200,000 Subtotal 354,000 to 454,000 $3,000,000 Total 589,000 to 689,000 $5,500,000 nsv.r,w City of ��_ For, t�s L ) Objective Develop a vision and implementation plan for the redevelopment of midtown commercial properties — including the redevelopment of the Foothills Mall and in support of the Mason Corridor BRT project. The vision would be consistent with existing land use plans and goals and include mixed use development. uv,r Fo, rt li`s di �J Goals • Create an overall vision and implementation plan • Understand the economic and market conditions • Evaluate the demand for retail and mixed-use development • Foothills Mall is the major catalyst project • Investigate the public financing tools needed Fo, t� ns .ram htJ.4�' 1 ; •f`y � - r fifr m ,_I r �� '� 'v.Tl�=•mot �L• `y J ' IIIfN a 4 1 1 5� yl v 2-4 if ✓.'i 'c4 ' �r N i 29 Other Publicly Led Projects • Villa Italia — Lakewood (Bel Mar) • Cinderella City— Englewood (Englewood Town Ctr) • Northglenn Mall — Northglenn • Southglenn Mall — Centennial — (Streets at Southglenn) City of Forte gins r�F C Estimated Budget Low High Scope Item $ % $ % Existing Conditions $25,000 17% $30,000 15% Market Analysis $35,000 23% $50,000 25% Vision/Master Plan $45,000 30% $60,000 30% Implementation Strategy $45.000 30% $60,000 30% Total $150,000 100% $200,000 100% crty Fort Collins