HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/16/2010 - SECOND READING OF ORDINANCE NO. 024, 2010, APPROPR DATE: March 16, 2010 9 A .
STAFF: Darin Atteberry _
Tess Heffernan
Second Reading of Ordinance No.024,2010,Appropriating$350,000 from Prior Year Reserves,Committed to Police,
in the Capital Expansion Fund for Crossroads Safehouse
EXECUTIVE SUMMARY
In the fall of 2009, Crossroads Safehouse requested assistance from the City in funding the renovation of its new,
expanded domestic violence shelter. This Ordinance, unanimously adopted on First Reading on March 2, 2010,
appropriates $350,000 from Police Capital Improvement Expansion Fees for the renovation and construction of
Crossroads'new facility. This contribution of$350,000 will be contingent on Crossroads obtaining commitments from
other funding sources for 90%of the total funding needed for the capital renovation of the Crossroads facility prior to
beginning the construction.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on Second Reading.
ATTACHMENTS
1. Copy of First Reading Agenda Item Summary-March 2, 2010
(w/o attachments)
ATTACHMENT 1
DATE: March 2, 2010
STAFF: Darin Atteberry _
Tess Heffernan
First Reading of Ordinance No. 024, 2010, Appropriating $350,000 from Prior Year Reserves, Committed to Police,
in the Capital Expansion Fund for Crossroads Safehouse
EXECUTIVE SUMMARY
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In the fall of 2009, Crossroads Safehouse requested assistance-from the City in funding the renovation of its new,
expanded domestic violence shelter. o�uncidirected staff tolinvestigate options for funding Crossroads. Following
further scrutiny of HUD regulations, a professioriala`ppr'aisal of the existing shelter(which is owned by the City), a
review of Crossroads' financials and business plan for its new facility, and an evaluation of the City's capital
improvement expansion fees the following is recommended:
1. That the City Council appropriate $350,000 from Police Capital Improvement Expansion Fees for the
renovation and construction of Crossroads' new facility; and
2. That the sale of the existing Safehouse facility be deferred until at least 2014, at which time existing
obligations to HUD will be fulfilled, the City will own the building free and clear, and Council can formally
consider the option of selling the building and using a portion of the revenues to repay the Police Capital
Expansion Fund.
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BACKGROUND/ DISCUSSION %J
In the fall of 2009, Crossroads Safehouse requested $500,000 in City funding to be used for the renovation of
Crossroads' new regional facility. City Council discussed this request at length during the 2010/2011 City budget
hearings and directed the City Manager to investigate funding options and bring forward a recommendation at the
earliest date possible.
Since that time, staff has analyzed information and looked at the feasibility of various funding options. The City owns
the existing Safehouse facility and leases it to Crossroads for $1/year. At the time of Crossroads' initial funding
request, the suggestion was made that the City sell-the facility. and use the proceeds for the new regional facility.
However, the purchase and upgrade of-tIGt building has been-funded`by Community Development Block Grants
(CDBG)and,as a result,the use and sale of the facility fall under a number of i ousing and Urban Development(HUD)
regulations. Much effort has gone into discerning which}THUD-reg I tions would apply, were the City to pursue this
option, and just what, if any, equity the C�ityfmight:ha`ye�, theJexisting facility.
In addition to analysis of the HUD regulations, staff has:
• completed a review of Crossroads'financial status, including past audits, projections for the new expanded
facility, and capital campaign contributions and pledges to date
• toured the new facility and analyzed the renovation plans and budget
• hired a professional real estate appraiser to assess the value of the existing City-owned facility currently
occupied by Crossroads. (�
COPY
March 2, 2010 -2- ITEM 26
The following summarizes the findings from the analysis:
1. Crossroads currently has sufficient funding and has planned for ongoing funding of the expanded facility,
including increased operational expenses.
2. The renovation plans and budget for the expanded facility are well founded, thorough, and based on sound
practices.
3. The real estate appraisal of the existing facility indicates the market value of the property ranges from
$556,000 for a"quick sale"to$1.16 million. This value is based on the market for private group homes and
includes analysis of comparable sales both locally and along the entire Front Range. Most contracts would
probably be contingent upon approval of a-proposed-new-use-through-the City's land use requirements.
4. CDBG monies are expected`to be invested in real ipro pertyfor at least five years, after which time the CDBG
investment is considered to have serve duts use/andthe activity isi closed out." In the case of the current
Crossroads.facility, the closeout:of-the a\dOity will occur in 2014. LT his means that:
a. If the property is sold prior to 2014,the entire value of the property(minus a small amount the City put into
it for rehabilitation) must be returned to the CDBG program.
b. If the property is sold after 2014, the entire proceeds from the sale of the property would go to the City.
5. The question was raised as to whether equity in the existing facility can be transferred to the new facility. The
short answer is that this is not possible without first selling the existing facility. If the building is sold prior to
2014, the proceeds from the sale would be returned to the CDBG program and then distributed through the
CDBG open competitive process for eligible=activities='Crossroads could apply for funds through the CDBG
competitive process.
Staff also explored whether the City�ould,le�Cross'roads money for the renovation of the new facility and
then use proceeds from the sale-of the existing building to pay the City back. However, CDBG funds are
prohibited from being used to pay off existing loans; this is not an option if the building is sold before 2014.
6. In the case of Crossroads Safehouse, there is a clear nexus between the Council's goals for a safe
community, the services provided by Crossroads, the need fora larger facility for those services, and the
mission of Police Services.
Based on the above findings, staff is recommends the following:
First,that$350,000 be appropriated for the construction and renovation of the new Crossroads facility using funds from
the Police Capital Expansion Fee balance1C�ossroatls,`nitially'requested$500,000 from the City; however, the new
facility will draw clients from across the state. This recommendatiowtakesjnito consideration the percentage of Fort
Collins residents that will be served.lThis contribution of,$350000 would'be contingent on Crossroads raising 90%
of the total needed for the capital campa`ig�p/rio%r.to,.beginnirig constructiohl
Secondly, staff recommends that the marketing and sale of the existing Safehouse facility be deferred until 2014 and
reevaluated at that time. There are several reasons for this:
• By late 2014 the community will have received its benefit from CDBG program funds and thus the entire equity
of the building will be available to the City.
• The economic climate and real estate market is expected to improve in the coming years; the City will likely
be able to sell%the building at a higher price than possible in today's market.
• It will be very difficult to market theiproperty.whine Crossroads,occupies it due to security concerns. The
address g the Safehouse is'�co tial and nd cannot be-atl'vertis /to potential buyers using conventional
marketing techniques.
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March 2, 2010 -3- ITEM 26
• If the building is marketed now, there is the risk of having a contract on the building and nowhere for
Crossroads to move in the event its capital campaign does not progress on the planned timeline. Crossroads
does not have funds to pay rent to a new owner.
• The community's needs will continue to evolve in the coming four years and so will the Council's policies
around meeting those needs. As the fall of 2014 nears, Council can assess options and decide what course
of action to take. It may make sense to sell the building at that time and use a portion of the revenue to repay
the Police Capital Expansion Fund. Another option might be to utilize the building for some other City or
community need. In the meantime, staff will explore alternatives for interim use of the building once
Crossroads has vacated it.
Staff believes this is a good solution forth vty and-the community.
411,
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FINANCIAL IMPACT
The December 31,2009 balance in the Capital Expansion Fund reserve for Police is estimated at$1,803,000. These
funds are collected when new development occurs and are used to help pay debt service on the new Police building.
Should Council wish to appropriate $350,000 in one-time funds for Crossroads' new facility, staff recommends it be
taken from this funding source.
SUSTAINABILITY: ECONOMIC, ENVIRONMENTAL AND SOCIAL IMPACTS
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From an economic standpoint, these recommendations strengthen the partnership that the City and Crossroads
Safehouse have had for over 30 years. t, . o the ne�acility will also open up a number of options for use or
sale of the existing facility.
The plans for the new Safehouse have received national recognition for innovative environmental design; it will be the
first"green"domestic violence shelter in United States.
The public purpose served by this expenditure is clear. In 2009, 436 women and children were sheltered at the
Crossroads Safehouse for a total of 8,553 nights of housing. An additional 138 individuals were turned away because
the shelter was full. The expanded facility will enable Crossroads to serve all those in need. It will serve not only Fort
Collins residents but others from the region and across the state.
STAFF RECOMMENDATION
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Staff recommends adoption of the O�rdin�J on.Fir`st�)ll adiLr
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BOARD / COMMISSION RECOMMENDATION
At the Council Finance Committee on Monday, February 22nd, the City Manager updated the Committee on the
Crossroads Safehouse appropriation item.
COPY
ORDINANCE NO. 024, 2010
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING PRIOR YEAR RESERVES IN THE CAPITAL EXPANSION FUND
FOR THE RENOVATION OF THE NEW REGIONAL CROSSROADS SAFEHOUSE
WHEREAS, Crossroads Safehouse ("Crossroads") is a private, non-profit corporation in
the City that provides services which promote a safer community, thereby serving a valuable
public purpose; and
WHEREAS, in the fall of 2009, Crossroads requested assistance from the City in funding
the renovation of its new, expanded domestic violence shelter; and
WHEREAS, City Council discussed this request during the 2010-2011 City budget
process and directed the City Manager to investigate funding options and make a
recommendation; and
WHEREAS, the present Crossroads facility was purchased by the City in 1979 for a
purchase price of$90,000, which purchase was wholly funded with CDBG funds; and
WHEREAS, additional CDBG funds in the approximate amount of $6,300 were
expended in 1979 for repairs to the building and, from the years 1984 through 2007, CDBG
funds in the approximate amount of $570,000 were expended toward the making of
improvements to the building; and
WHEREAS, the Department of Housing and Urban Development ("HUD") regulations
provide that any real property under the City's control that was acquired with CDBG funds in
excess of $25,000 must either be used to meet national objectives until five years after the
expiration of the most recent grant agreement, or if not used to meet national objectives, then the
City must pay the City's CDBG fund as program income the amount equal to the current value
of the property; and
WHEREAS, under the HUD regulations, there is no payment required to be made from
the City into the City's CDBG fund after the five year period following expiration of the most
recent grant agreement; and
WHEREAS, the City has conducted an appraisal of the Crossroads property which
appraisal has determined that the property presently would only generate a purchase price of
approximately $556,000; and
WHEREAS, the appraiser anticipates that, by 2014, the property may be valued at as
much as $1,160,000; and
WHEREAS, the most recent CDBG grant agreement was closed out in 2009 and, by
September 2014, five years will have elapsed since the most recent grant agreement so that, in
2014, the City would likely be able to realize a significant beneficial gain in value; and
WHEREAS, for the foregoing reasons, it wold not be in the best interests of the City to
immediately offer the Crossroads facility for sale; and
WHEREAS, staff therefore recommends that $350,000 be appropriated from other
sources for the renovation of the new regional Crossroads facility, pending the eventual sale of
the present Crossroads facility; and
WHEREAS, $350,000 could be made available in the Capital Improvement Expansion
Fee fund prior year reserve that are presently committed to Police Services, and the expenditure
of such funds for the proposed Crossroads facility would be consistent with the mission of Police
Services; and
WHEREAS, the Colorado Supreme Court in the case of Barber v. State, has determined
that funds raised for special purposes by governmental entities in Colorado may be used for
purposes other than those originally intended if such use of the funds is determined to be
necessary by the legislative body by reason of a revenue shortfall; and
WHEREAS, in recent years, the City has, in fact, experienced severe revenue shortfalls
that have necessitated reductions in the City work force and required the elimination or paring
back of various City services; and
WHEREAS, accordingly, under this ruling of the Colorado Supreme Court, the City's
Capital Improvement Expansion Fee funds can be used to support the valid public purpose
served by Crossroads as a component of the City's interest in promoting a safe community; and
WHEREAS, the City's contribution of $350,000 would be contingent on Crossroads
obtaining commitments from other funding sources for 90% of the total funding needed for the
capital renovation of the Crossroads facility prior to beginning the construction; and
WHEREAS, Article V, Section 9 of the City Charter permits the City Council to
appropriate by ordinance at any time during the fiscal year such funds for expenditure as may be
available from reserves accumulated in prior years, notwithstanding that such reserves were not
previously appropriated; and
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That the City Council hereby finds that the appropriation of funds as
authorized by this Ordinance serves an important public purpose and is in the best interests of
the health, safety and welfare of the residents of the City.
Section 2. That there is hereby appropriated for expenditure from prior year reserves
in the Capital Expansion Fund the sum of THREE HUNDRED FIFTY THOUSAND DOLLARS
($350,000) for the renovation of the new regional Crossroads facility, provided, however, that
the provision of such funding to Crossroads shall be contingent upon the City's receipt of
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evidence in a form satisfactory to the City Manager, that Crossroads has obtained commitments
from other funding sources for 90% of the total funding needed for the capital renovation of the
Crossroads facility prior to beginning construction of the facility.
Section 3. That this appropriation from prior year reserves in the Capital
Improvement Expansion Fund is hereby determined by the City Council to promote a valid
public purpose in that it helps to establish a safer community by providing facilities for those
persons who are victims of relationship abuse, all of which serves the mission of Fort Collins
Police Services and protects the public health, safety and welfare.
Introduced, considered favorably on first reading, and ordered published this 2nd day of
March, A.D. 2010, and to be presented for final passage on the 16th day of March, A.D. 2010.
i
Mayor
ATTEST:
City Clerk
Passed and adopted on final reading on the 16th day of March, A.D. 2010.
Mayor
ATTEST:
City Clerk
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