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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 11/05/2013 - RESOLUTION 2013-090 AMENDING THE CITY COUNCIL'S FIAgenda Item 13 Item # 13 Page 1 AGENDA ITEM SUMMARY November 5, 2013 City Council STAFF John Voss, Controller/Assistant Financial Officer Mike Beckstead, Chief Financial Officer SUBJECT Resolution 2013-090 Amending the City Council's Financial Management Policies by the Addition of an Introduction Section. EXECUTIVE SUMMARY The purpose of this item is to approve an Introduction section to the Financial Management Policies. Staff is recommending that language be included within the Financial Management Policies specifically stating that the policies are developed per the Charter to provide guidance to staff, and that the Council has the ability to approve exceptions to the policies under extraordinary circumstances, if it determines that doing so is in the best interests of the City. Financial Services and the City Attorney think the best place for this clarification is in the introduction section of the Financial Management Policies document and not within each individual policy. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BACKGROUND / DISCUSSION Staff has committed to review and update the existing Financial Management Policies of the City with Council Finance during 2013. During this review, staff has implemented a new standard format for all financial policies and is updating existing policies to the new format as part of the review. Staff is recommending that language be included within the Financial Management Policies specifically stating that the policies are developed per the Charter to provide guidance to staff, and that the Council has the ability to approve exceptions to the policies under extraordinary circumstances, if it determines that doing so is in the best interests of the City. Staff believes that the best place for this clarification is in the “Introduction” section of the Financial Management Policies document, rather than within each individual policy. BOARD / COMMISSION RECOMMENDATION On October 21, 2013, the Council Finance Committee reviewed and approved the proposed language, with some minor changes, for the Introduction to the Financial Management Policies. ATTACHMENTS 1. Council Finance Committee minutes, October 21, 2013 (draft) Finance Administration 215 N. Mason 2nd Floor PO Box 580 Fort Collins, CO 80522 970.221.6788 970.221.6782 - fax fcgov.com Council Audit & Finance Committee Minutes 10/21/13 10:00 to 12:30 CIC Room Council Attendees: Mayor Karen Weitkunat, Bob Overbeck, Ross Cunniff Staff: Darin Atteberry, Mike Beckstead, Josh Birks, Marty Heffernan, Mark Jackson, Tom Leeson, Jessica Ping-Small, Peggy Streeter, Steve Roy, John Voss, Katie Wiggett Others: Dale Adamy, Kevin Jones (Chamber of Commerce) Approval of the Minutes Bob Overbeck moved to approve the minutes for the September 16 meeting. Mayor Karen Weitkunat seconded the motion. Minutes approved unanimously. *For timing purposes, the items were not addressed in the order they appeared on the agenda. Revenue Policy Review Jessica Ping-Small noted that the most significant change to the Revenue Policy is the inclusion of 5 revenue principles that give staff and City Council a foundation for making sound financial decisions that will provide the citizens of Fort Collins a diverse, stable and fair revenue stream equipped to provide the services necessary to keep Fort Collins great. She presented the following 5 principles: 1. Maintain a diverse revenue base 2. Maintain a stable revenue base 3. Cultivate revenue sources that are equitable among all economic levels 4. Generate adequate revenue to maintain core service levels 5. Maintain healthy reserves These principles were presented to Council Finance and the Futures Committee in 2012 and again to Council Finance in January 2013 as part of the ongoing revenue diversification study. Staff has incorporated suggested modifications in the policy. Mike Beckstead noted that the reason a “three-legged stool” approach was said to not be practical in Fort Collins is that municipalities that do incorporate such an approach depend on high property tax or a city income/occupational tax. Without those two taxes to depend on, across the Front Range, municipalities commonly depend on sales and use tax. Fort Collin’s revenue from sales & use tax is in ATTACHMENT 1 2 the lower end of the middle compared with other Front Range communities. Staff would like to maintain and continually improve Fort Collins’ diverse revenue base. Ross Cunniff suggested adding a sixth principle: “Fees for Service are fairly born by those who use those services.” While this guideline is addressed in the policy, it could be highlighted. Ross also asked to see the study on the impact taxing services would have in Fort Collins. Jessica will provide the study to Council Finance. Financial Management Policy Format and Introduction Mike Beckstead said that staff is in the process of updating and consolidating all the financial policies and bringing them to Council for approval. Staff has drafted an introduction to the Financial Policies that states Council’s ability to deviate from policy when it is in the City’s best interest. An example of the need for such a provision is seen in the current matter before the Council concerning the interest rate proposed on a loan between the City and the URA. A deviation from the current investment policy is proposed to Council because of short fall in estimated revenue and an increase in interest costs from the September 2011 estimates. Steve Roy added that Council has always had the ability to make an exception to policy per City Charter; however, it is advisable to incorporate and institutionalize language that allows Council to make those exceptions. Bob Overbeck said that he is concerned about there being too many exceptions or amendments made to City policy. The best practice would be to address any mistake made and insure that that mistake not be made again. Mike replied that Staff has learned many lessons through the Capstone Project. Evidence of what staff learned can be seen in the new policy that Josh Birks drafted for TIF’s that establishes clear boundaries for using that financing method. Also, staff now bases rates off of the County’s estimate of value which factors in revenue generation rather than the project cost. Council Finance appreciates staff’s transparency and willingness to continuously improve. Bob Overbeck requested that, in the future, Staff present stress tests for financing projects presented to the Council Finance Committee. New Fees Review Jessica Ping-Small noted that street maintenance is currently funded primarily through sales tax including the designated ¼ cent sales tax that has a sunset date of December 31, 2015 and the Keep Fort Collins Great sales tax. Although sales tax initiatives have been supported multiple times by citizens, relying on an expiring sales tax has risks such as revenue variability and potential expiration. Staff has explored the feasibility of a Street Maintenance Fee (SMF) to replace the ¼ cent designated sales tax. Jessica also noted that Park and Trail Maintenance is currently funded though the General Fund and $735K of Conservation Trust Funds that were diverted from trail construction in due to funding shortfalls. Staff has drafted a Park Maintenance Fee (PMF) to generate $735K annually which would allow the Conservation Trust Funding to go back to trail construction. Ross Cunniff noted that he certainly wants to fund Parks without using the Conservation Trust. However, discussing the two possible fees together may be confusing, so Ross suggested that Council Finance focus first on the more urgent matter of the sun setting street maintenance tax. Council Finance agreed that they want to discuss Park Maintenance separately at a later date and that they would like to be brought a broader discussion with all potential funding options. 3 Mike Beckstead called attention to the example fee breakdown for the Street Maintenance Fees. A triple bottom line analysis showed that this fee would be very hard on small businesses such as fast food businesses which would be required to pay $10,334 annually. Ross Cunniff noted that the cost of the fee would be pushed off to the customer, in that way non-residents would still pay the fee just like they currently pay the tax. Council Finance discussed various alternatives to the fee. Darin concluded that when the ¼ cent tax expires in December 31, 2015, the City has 3 options: 1. Continue the tax another term 2. Vote to continue the tax in perpetuity 3. Move to some other funding mechanism such as the proposed fee. Council will discuss the options at a work session in November. Staff will incorporate Council Finance’s suggestions into the presentation for November. Updates Mike Beckstead noted that the Long Range Financial Plan has been moved out to 2014 given other priorities in 2013. Completing this task will remain on Financial Services work plan but will be delayed. A matrix the details council priorities identified and discussed at the May Council retreat is being developed by Diane Jones and will be presented to the council at the November retreat. This matrix will illustrate how each of the priorities identified are addressed within the current budget, through the budget revision process or through staff goals. Staff will bring an appropriation for the Flood on November 19. The appropriation is still in development, staff anticipates the total appropriation will be around $2.7M with funding provided by FEMA and the state covering all but approximately $350K. Foothills Mall Financial Review Mike announced that there will be an Open House at the Mall on October 30 from 4-7 p.m. All are welcome to attend. He then explained that the planned development at Foothills Mall associated with the Redevelopment Agreement and incentive package approved by Council on May 7, 2013 has several modifications and revisions that will be going back to the Planning & Zoning Board in November 2013 and January 2014. These changes will have a minor impact on the financial incentive package. In summary, the deal is intact, there is no change to the incentive package, and the financial return to the City is substantially unchanged. Details from the discussion are highlighted below: 1. The Foothills Mall has reduced in size by approximately 10%. 2. The opening of the Mall is delayed approximately 1 year. 3. The Foothills Activity Center is planned at 18K square feet and to be located in between Macy’s and the planned parking structure. 4. Estimated sales per square foot have increased from $350 to $378 based on known tenants that will occupy the Mall. 5. The incentive value of $53M to support the public improvements is unchanged. 4 6. The par value of the bonds has declined slightly from $73M to $71M. 7. The maximum bond payment amount is unchanged at $180M 8. Sales tax remitted as part of the Sales Tax Revenue Pledge is unchanged at $9M. 9. Net new sales tax revenue has increased from $108M to $117M. This information will be brought to Council at the December 3 meeting. Next Steps Staff will add the tentative dates for all future policy updates to the long-term planning calendar. Staff will bring funding options for Park and Trail Maintenance to Council Finance as a separate discussion in the near future. Staff will also incorporate Council Finance suggestions to the Street Maintenance Fee presentation before bringing it to Council in November. - 1 - RESOLUTION 2013-090 OF THE COUNCIL OF THE CITY OF FORT COLLINS AMENDING THE CITY COUNCIL’S FINANCIAL MANAGEMENT POLICIES BY THE ADDITION OF AN INTRODUCTION SECTION WHEREAS, in 1994, the City Council adopted Resolution 94-174 approving certain Financial Management Policies (the “Policies”) which established guidelines for the preparation of the annual budgets of the City and its long-range financial plans; and WHEREAS, the City Council has periodically amended the Policies; and WHEREAS, the City Manager, Financial Officer and City Attorney have recommended that the City Council further amend the Policies to include an Introduction section and an Index to the Policies; and WHEREAS, the purpose of the Introduction is to explain how the Policies have been formulated and the ways in which they are to be used, and to also specifically authorize the City Council to approve exceptions to the Policies by ordinance or resolution when the City Council determines that extraordinary circumstances or changing objections warrant such exceptions. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the Financial Management Policies, as previously amended, are hereby further amended by the addition of the Introduction section and Index shown on Exhibit “A”, attached hereto and incorporated herein by this reference. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 5th day of November, A.D. 2013. _________________________________ Mayor ATTEST: _____________________________ City Clerk Financial Management Policies EXHIBIT A Introduction These Financial Management Policies have been adopted by the Council of the City of Fort Collins, pursuant to the provisions of Article V, Section 12 of the City Charter, to guide the administration, management, deposit and investment of City funds. They reflect the current requirements and laws that apply to the City’s financial activities and, in the judgment of the City Council, they represent the best financial practices for the City. The formulation of these policies has been guided by input and standards derived from nationally recognized organizations such as the Government Finance Officers Association (GFOA), National Advisory Council on State and Local Budgeting (NACSLB), and International City and County Managers Association (ICMA). A key objective of these Financial Management Policies is to provide a central location for all Council‐approved financial policies. Nothing herein is intended to supersede the provisions of the City Charter or City Code. Rather, these policies are intended to provide more detailed rules and guidelines to be used by decision makers, management staff, and other City employees in administering the financial affairs of the City. To supplement and implement these Financial Management Policies, and to further preserve and strengthen the financial health of the City, the City Manager and City Financial Officer may, in carrying out their respective duties and responsibilities under the City Charter and City Code, adopt any such additional administration policies as they deem necessary for that purpose. Such policies will generally be more detailed and operationally focused. If, from time to time, the City Council determines that extraordinary circumstances or changing objectives warrant revisions or exceptions to these Financial Management Policies, the City Council may approve by resolution or ordinance such amendments or exceptions to the same as the City Council considers to be in the best interest of the City. INDEX REF. # POLICY TITLE/SECTION Last Update Approver Page Section I – City Financial Management Policies 1 Budget 11/15/2005 City Council 2 Revenue 11/15/2005 City Council 3 General 11/15/2005 City Council 4 Fund 04/15/2008 City Council 5 Reserves (Fund Balance) 04/15/2008 City Council 6 Capital Improvement Funds 11/15/2005 City Council 7 Debt 11/15/2005 City Council 8 Investments 12/18/2012 City Council Section II – City Council Decisions related to URA Financial Management Policies URA TIF Financing Incentives (in process) TBD City Council