HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/01/2018 - ITEMS RELATING TO THE APPROPRIATION FROM LIGHT ANDAgenda Item 4
Item # 4 Page 1
AGENDA ITEM SUMMARY May 1, 2018
City Council
STAFF
Travis Storin, Accounting Director
Mike Beckstead, Chief Financial Officer
John Duval, Legal
SUBJECT
Items Relating to the Appropriation from Light and Power/Broadband Fund Debt Proceeds and Other Funds
Related to the Broadband Project.
EXECUTIVE SUMMARY
A. Second Reading of Ordinance No. 056, 2018, Appropriating Proceeds from the Issuance of 2018 Electric
Utility Enterprise Revenue Bonds for Capital, Operating, Debt Service and Art in Public Places
Expenditures Associated with the Construction of a Broadband System to Provide Telecommunication
Facilities and Services to Customers Within Fort Collins in the Light and Power Fund and Transferring
Appropriations from the Light and power Fund to the Cultural Services and Facilities Fund for the Art in
Public Places Program.
B. Second Reading of Ordinance No. 057, 2018, Appropriating Funds from the Light and Power Fund to
Defease the City of Fort Collins, Colorado, Electric Utility Enterprise Taxable Revenue Bonds Series
2010B.
These Ordinances, unanimously adopted on First Reading on April 24, 2018, appropriate (1) bond proceeds
for the construction of a municipal broadband system and (2) Light & Power reserves for the defeasance of
outstanding debt. The issuance and defeasance were authorized by the Electric Utility Enterprise Board
Ordinances No. 003 and No. 004, respectively. This agenda item is consistent with Strategic Objective 3.9
from the 2016 Strategic Plan: Encourage the development of reliable, high speed internet services throughout
the community.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinances on Second Reading.
ATTACHMENTS
1. First Reading Agenda Item Summary, April 24, 2018 (w/o attachments) (PDF)
2. Ordinance No. 056, 2018 (PDF)
3. Ordinance No. 057, 2018 (PDF)
Agenda Item 1
Item # 1 Page 1
AGENDA ITEM SUMMARY April 24, 2018
City Council
STAFF
Travis Storin, Accounting Director
Mike Beckstead, Chief Financial Officer
John Duval, Legal
SUBJECT
Items Relating to the Appropriation From Light and Power/Broadband Fund Debt Proceeds and Other Funds
Related to the Broadband Project.
EXECUTIVE SUMMARY
This item was originally scheduled for April 17 and was moved to April 24 to allow the Mayor and City Manager
an opportunity to discuss funding for Art in Public Places (APP), timing, and process concerns with impacted
stakeholders. Funding for APP is included in the ordinance below and will be finalized upon a review of the APP
guidelines and process to occur by the end of 2018. Both the amount borrowed and amount appropriated have
been increased to cover the additional funding requirement.
A. First Reading of Ordinance No. 056, 2018, Appropriating Proceeds from the Issuance of 2018 Electric Utility
Enterprise Revenue Bonds for Capital, Operating, Debt Service and Art in Public Places Expenditures
Associated with the Construction of a Broadband System to Provide Telecommunication Facilities and
Services to Customers Within Fort Collins in the Light and Power Fund and Transferring Appropriations from
the Light and power Fund to the Cultural Services and Facilities Fund for the Art in Public Places Program.
B. First Reading of Ordinance No. 057, 2018, Appropriating Funds from the Light and Power Fund to Defease
the City of Fort Collins, Colorado, Electric Utility Enterprise Taxable Revenue Bonds Series 2010B.
The purpose of this item is to appropriate (1) bond proceeds for the construction of a municipal broadband
system and (2) Light & Power reserves for the defeasance of outstanding debt. The issuance and defeasance
were authorized by the Electric Utility Enterprise Board Ordinances No. 003 and No. 004, respectively. This
agenda item is consistent with Strategic Objective 3.9 from the 2016 Strategic Plan: Encourage the development
of reliable, high speed internet services throughout the community.
STAFF RECOMMENDATION
The City Manager recommends adoption of the Ordinances on First Reading. The City Manager has also
determined that these appropriations are available and previously unappropriated from the Light and Power
Fund and will not cause the total amount appropriated in the Light and Power Fund to exceed the current estimate
of actual and anticipated revenues to be received in this Fund during the fiscal year.
BACKGROUND / DISCUSSION
Overview
At its April 3, 2018, meeting the Electric Utility Enterprise Board adopted Ordinances No. 003 and No. 004 on
Second Reading, authorizing the issuance of debt for construction of the broadband system. The ensuing step
is to appropriate bond proceeds for operating costs of 2018, the capital project itself, debt issuance costs,
ATTACHMENT 1
Agenda Item 1
Item # 1 Page 2
repayment of the General Fund bridge loan, capitalized interest, and defeasance of the 2010 Light & Power
bonds.
For reference, below is the schedule previously published for the broadband project:
Table 1: Broadband Project Schedule
CITY FINANCIAL IMPACTS
Appropriations and Budget
Appropriations of the above proceeds are brought forward to City Council under Ordinance No. 056, 2018. Of
the $142,815,541 project funding, $115,356,991 will be appropriated upon issuance while $27,458,550 will be
set aside for future appropriations.
Of the $27,458,550 for future appropriations, staff recommends a balance sheet assignment of $8,200,000
million of unappropriated proceeds for the exclusive use of expanding the system in response to market share
and/or future annexations. This step will require staff to return to Council to authorize the use of these funds.
The remaining $8,200,000 of unappropriated proceeds are for operating costs to be appropriated in the 2019
and 2020 biennial budget as part of Budgeting for Outcomes (BFO). The remaining $11,058,550 of
unappropriated bond proceeds will be placed into escrow as the capitalized interest fund.
The ordinance includes a contribution of $609,526 to Art in Public Places (APP). These APP funds are
transferred to APP on a provisional basis and depend on the outcome of a broader conversation and review of
APP and future Council policy discussions. Of the $609,526, $479,430 remains in the Light & Power Fund for
acquisition of art while $130,096 is transferred to the Cultural Services Fund for maintenance and operations.
City Code states that contributions from City utilities to the APP program are capped at 0.5% of their budgeted
operating revenue. As Broadband is being created as a sub-fund within the Light & Power Fund, it shares this
cap with the electric utility. The 2018 cap for Light & Power is $652,650, of which $43,124 has already been
committed as part of existing capital projects within Light & Power. The $609,526 contribution to APP is based
on the remaining cap, as 1% of the Broadband project amount would otherwise exceed that cap.
Ordinance No. 056, 2018, directs staff to review and consider whether the APP Code provisions need to be
amended to address future new Broadband System construction projects and to present recommendations by
the end of 2018.
Staff will leverage current Art and Culture Master Plan findings, as well as conduct additional meetings with the
Cultural Resources Board, the APP Board, other relevant boards, capital planning staff, and budget staff. A
review of the current APP workplan and recommendations will be presented.
Agenda Item 1
Item # 1 Page 3
Appropriated and unappropriated proceeds for the Broadband project totaling $142.8M are summarized below:
Table 2: Broadband Appropriations
Table 3: Unappropriated Proceeds
Appropriations for the Light and Power Defeasance are summarized below:
Table 4: Light and Power Appropriations
Impact to Other Projects
The Utility Customer Information System (CIS) replacement project planned for a $7M+ implementation cost,
with $2.3M appropriated in 2018 and the remainder to be brought forward for the 2019-2020 budget. Broadband
was to be put on a separate billing system funded by the project.
Throughout February and March, staff has learned that it can implement a single system to serve all five utilities.
Doing so necessitates a faster implementation so that Broadband can activate customers in late 2019. Long-
term this is expected to decrease cost, and in fact the bids for the new system are coming in lower than the
original project plan for the four utilities.
2018 Operating Appropriations
Cost of Issuance (legal, advisor, underwriter) 822,100
Interest on $1.8 M loan from General Fund 15,000
2010 L&P defeasance, backfill QECB subsidy 373,000
Operating expenses 2018, repay GF loan 1,800,000
Capitalized Interest 2018 3,129,117
Operating Budget 2018 6,139,217
Multiyear Non‐lapsing Capital Appropriations
Capital Projects 108,608,249
Art in Public Places 609,526
Capital Budget 109,217,775
Appropriated by Ordinance in 2018 115,356,991
Set aside for future appropriations
Working capital future years (2019‐20 BFO) 8,200,000
Success capital (higher take rate or annexation) 8,200,000
Capitalized Interest 11,058,550
Total set aside for future appropriations 27,458,550
Budgeting for Defeasance of 2010 Light and Power Bonds
2018 Budget (already appropriated) 1,992,324
New Appropriation from L&P Reserves 3,791,004
Total escrow amount for 2018‐2020 payments 5,783,328
Agenda Item 1
Item # 1 Page 4
The immediate impact is for the four existing utilities to bring forward the full project cost for appropriation sooner
than initially planned.
BOARD / COMMISSION RECOMMENDATION
At its February 27, 2018 meeting, the Council Finance Committee supported proceeding to First Reading with
the full Council.
PUBLIC OUTREACH
Two separate ballot measures brought to voters were successful in authorizing the establishment of a municipal
fiber retail broadband network.
ATTACHMENTS
1. Broadband and Art in Public Places Memo (PDF)
2. Council Finance Committee minutes, February 27, 2018 (PDF)
3. Powerpoint presentation (PDF)
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ORDINANCE NO. 056, 2018
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING PROCEEDS FROM THE ISSUANCE OF 2018 ELECTRIC UTILITY
ENTERPRISE REVENUE BONDS FOR CAPITAL, OPERATING, DEBT SERVICE AND
ART IN PUBLIC PLACES EXPENDITURES ASSOCIATED WITH THE CONSTRUCTION
OF A BROADBAND SYSTEM TO PROVIDE TELECOMMUNICATION FACILITIES AND
SERVICES TO CUSTOMERS WITHIN FORT COLLINS IN THE LIGHT AND POWER
FUND AND TRANSFERRING APPROPRIATIONS FROM THE LIGHT AND POWER
FUND TO THE CULTURAL SERVICES AND FACILITIES FUND FOR THE ART IN
PUBLIC PLACES PROGRAM
WHEREAS, after final passage of Ordinance No. 003 of the Board of the City of Fort
Collins, Colorado, Electric Utility Enterprise (the “Enterprise Ordinance”), the Electric Utility
Enterprise (the “Enterprise”) intends to issue its “City of Fort Collins, Colorado, Electric Utility
Enterprise, Tax-Exempt Revenue Bonds, Series 2018A” (the “2018A Bonds”) and its “City of Fort
Collins, Colorado, Electric Utility Enterprise, Taxable Revenue Bonds, Series 2018B” (the “2018B
Bonds” and, together with the 2018A Bonds, the “Bonds”)
WHEREAS, as described in the Enterprise Ordinance, the Bonds are being issued and sold
to fund the construction of a municipal broadband system by the City’s Electric Utility (the
“Electric Utility”) to provide telecommunication facilities and services, including the transmission
of voice, data, graphics and video, to customers within the City, which facilities and services the
Electric Utility has not previously provided but is now authorized to provide pursuant to City
Charter Article XII, Section 7 and City Code Section 26-398 (the “Broadband System”); and
WHEREAS, the net proceeds from the sale of the Bonds are anticipated to be
$142,815,541, and of this amount, City staff is requesting that only $115,356,991 be appropriated
now from the Light and Power Fund to be used to fund the construction of the Broadband System,
including for all related capital, operating and debt service expenditures, leaving an unappropriated
balance of $27,458,550 to be appropriated for future operation and expansion costs relating to the
Broadband System and capitalized interest to bondholders; and
WHEREAS, in 1995, the City Council adopted Article XII of City Code Chapter 23 to
establish a program to acquire, exhibit and maintain art in public places to be funded by including
in the Council’s appropriations for certain capital projects, including those of its utilities, an
amount equal to 1% of the construction costs for those projects, but this contribution amount for
the City’s utilities is limited to a total annual contribution amount of .5% of each utility’s
“budgeted operating revenue” (the “APP Ordinance”); and
WHEREAS, contributions to art in public places for each utility will be kept and spent in
such Utility’s own fund, with the exception of maintenance, administration, repair and display
costs pursuant to City Code Section 23-303; and
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WHEREAS, the Electric Utility’s budgeted operating revenue for 2018 is $130.53 million,
but this amount does not include any budgeted revenues generated from the Broadband System
since the System will not be in operation in 2018, so this amount only includes revenues to be
generated from electric services provided in 2018 by the Electric Utility; and
WHEREAS, as currently written, the APP Ordinance therefore requires that this
appropriation include a 1% contribution for art in public places capped at the Electric Utility’s
Light and Power Fund’s annual limit of .5% of the $130.53 million budgeted operating revenues,
which is $652,650, and the Light and Power Fund has so far contributed $43,124 of this cap in
2018, so this leaves $609,526 available to be contributed for the Broadband System project under
the APP Ordinance; and
WHEREAS, Article V, Section 9 of the City Charter permits the City Council, upon
recommendation of the City Manager, to make supplemental appropriations by ordinance at any
time during the fiscal year, provided that the total amount of such supplemental appropriations, in
combination with all previous appropriations for that fiscal year, do not exceed the current estimate
of actual and anticipated revenues to be received during the fiscal year; and
WHEREAS, the City Manager has recommended the appropriation described herein and
determined that this appropriation is available and previously unappropriated from the Light and
Power Fund and will not cause the total amount appropriated in the Light and Power Fund to
exceed the current estimate of actual and anticipated revenues to be received in this Fund during
the fiscal year; and
WHEREAS, the City Council finds and determines that the adoption of this Ordinance is
necessary for the public’s health, safety and welfare and that it is in the best interests of the City,
the Electric Utility and the Electric Utility’s ratepayers.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That the City Council hereby makes and adopts the determinations and
findings contained in the recitals set forth above.
Section 2. That there is hereby appropriated from the Light and Power Fund
proceeds from the Bonds in the total amount of ONE HUNDRED FIFTEEN
MILLION THREE HUNDRED FIFTY-SIX THOUSAND NINE HUNDRED
NINETY-ONE DOLLARS ($115,356,991) to be used to fund the construction of
the Broadband System, including for all related capital, operating, debt service and art-in-public-
places expenditures as follows:
Cost of Issuance $822,100
Interest on loan from General Fund 15,000
Backfill of forfeited subsidy to Light & Power 373,000
2018 Operating Expenses 1,800,000
2018 Capitalized Interest 3,129,117
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Capital Projects 108,608,249
Art in Public Places (Artwork) 479,430
Art in Public Places (transfer to Cultural Services for Maintenance &
Operations)
130,096
$115,356,991
Section 3. That the unexpended appropriated amount of ONE HUNDRED THIRTY
THOUSAND NINETY-SIX DOLLARS ($130,096) in the Light and Power Fund is authorized
for transfer to the Cultural Services and Facilities Fund. Appropriation of said funds in the
Cultural Services and Facilities Fund shall be contingent upon the completion of the review
process described in Section 4. Such funds shall be appropriated in the Cultural Services and
Facilities Fund for the Art in Public Places Program Maintenance and Operations.
Section 4. That the City Manager is directed to study whether the APP Ordinance
needs to be amended to address future Broadband System projects and to present any
recommended amendments to Council before the end of 2018. This should include
consideration of a contribution amount capped at .5% of the Broadband System’s anticipated
annual operating revenues once the system is in full operation, which capped amount is
estimated to be from $125,000 to $150,000. The City Manager should also evaluate and
recommend to Council how to fund art-in-public places contributions for Broadband System
appropriations. It is Council’s intent that some or all of the funds transferred by this Ordinance
to the Cultural Services and Facilities Fund shall be transferred to the Light and Power Fund as
appropriate and in accordance with the program amendments adopted by Council in follow up
to this review process.
Introduced, considered favorably on first reading, and ordered published this 24th day
of April, A.D. 2018, and to be presented for final passage on the 1st day of May, A.D. 2018.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 1st day of May, A.D. 2018.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
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ORDINANCE NO. 057, 2018
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING FUNDS FROM THE LIGHT AND POWER FUND TO
DEFEASE THE CITY OF FORT COLLINS, COLORADO, ELECTRIC
UTILITY ENTERPRISE TAXABLE REVENUE BONDS SERIES 2010B
WHEREAS, the City Council has heretofore established, pursuant to Section 19.3(b) of
Charter Article V and Ordinance No. 060, 1993 adopted by the Council on July 20, 1993, and
Ordinance No. 038, 2010 adopted by the Council on April 20, 2010, the City’s Electric Utility as
an enterprise of the City (the “Enterprise”); and
WHEREAS, after final passage of Ordinance No. 003 by the Board of the City of Fort
Collins, Colorado, Electric Utility Enterprise (the “Board ”), the Enterprise intends to issue its
“City of Fort Collins, Colorado, Electric Utility Enterprise, Tax-Exempt Revenue Bonds, Series
2018A” (the “2018A Bonds”) and its “City of Fort Collins, Colorado, Electric Utility Enterprise,
Taxable Revenue Bonds, Series 2018B” (the “2018B Bonds”) to fund the construction of a
municipal broadband system to provide certain telecommunication facilities and services to
customers within the City (jointly, the “Broadband Bonds”); and
WHEREAS, pursuant to Ordinance No. 001 adopted by the Board in 2010, the Board
authorized the issuance of the “City of Fort Collins, Colorado, Electric Utility Enterprise, Tax-
Exempt Revenue Bonds, Series 2010A” in the aggregate principal amount of $9,675,000 (the
“2010A Bonds”), and its “City of Fort Collins, Colorado, Electric Utility Enterprise, Taxable
Revenue Bonds (Direct Pay Qualified Energy Conservation Bonds), Series 2010B” in the
aggregate principal amount of $6,410,000 (the “2010B Bonds”) to finance various improvements
to the City electric utility system; and
WHEREAS, the 2010A Bonds have been fully paid in accordance with their terms and are
no longer outstanding; and
WHEREAS, the 2010B Bonds are currently outstanding in the principal amount of
$5,270,000 and $513,328 in interest; and
WHEREAS, relating to the issuance of the Broadband Bonds, the Board has determined in
Ordinance No. 004 that it is in the best interest of the Enterprise to defease the outstanding 2010B
Bonds in full prior to the issuance of the 2018 Bonds in order to eliminate certain restrictive
contractual provisions contained in the 2010B Bond Ordinance; and
WHEREAS, upon such defeasance, the 2010B Bonds will no longer be deemed to be
outstanding within the meaning of the 2010B Bond Ordinance; and
WHEREAS, the Board has determined that the Enterprise will utilize available funds in
the Light and Power Fund to defease the 2010B Bonds; and
WHEREAS, in connection with this defeasance, the Enterprise will enter into an escrow
agreement (the “Escrow Agreement”) with U.S. Bank National Association, as escrow agent, (the
“Escrow Agent”), into which escrow the funds appropriated herein will be deposited; and
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WHEREAS, in order to fully defease the 2010B bonds, the total amount of $5,783,328 will
need to be deposited with the Escrow Agent under the Escrow Agreement; and
WHEREAS, there has already been appropriated in the City’s 2018 annual budget
$1,992,324 for the principal and interest payment owed under the 2010B Bonds in 2018 and,
therefore, only an additional $3,791,004 needs to be appropriated in this Ordinance to fully defease
these Bonds; and
WHEREAS, Article V, Section 9 of the City Charter permits the City Council, upon
recommendation of the City Manager, to make supplemental appropriations by ordinance at any
time during the fiscal year, provided that the total amount of such supplemental appropriations, in
combination with all previous appropriations for that fiscal year, does not exceed the current
estimate of actual and anticipated revenues to be received during the fiscal year; and
WHEREAS, the City Manager has recommended the appropriation described herein and
determined that this appropriation is available and previously unappropriated from the Light and
Power Fund and will not cause the total amount appropriated in the Light and Power Fund to
exceed the current estimate of actual and anticipated revenues to be received in this Fund during
the fiscal year; and
WHEREAS, the City Council finds and determines that the adoption of this Ordinance is
necessary for the public’s health, safety and welfare and that it is in the best interests of the City
and its Electric Utility.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That the City Council hereby makes and adopts the determinations and
findings contained in the recitals set forth above.
Section 2. That there is hereby appropriated from the Light and Power Fund THREE
MILLION SEVEN HUNDRED NINETY-ONE THOUSAND FOUR DOLLARS
($3,791,004) to be deposited with the Escrow Agent pursuant to the terms and
conditions of the Escrow Agreement in partial defeasance of the 2010B Bonds.
The remaining amount of $1,992,324 to be paid from the Light and Power Fund to the Escrow
Agent under the Escrow Agreement in order to fully defease the 2010B Bonds shall come from
the funds already appropriated in the City’s 2018 budget to pay the 2018 principal and interest
payment due under the 2010B Bonds.
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Introduced, considered favorably on first reading, and ordered published this 24th day of
April, A.D. 2018, and to be presented for final passage on the 1st day of May, A.D. 2018.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 1st day of May, A.D. 2018.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk