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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 07/17/2018 - ITEMS RELATING TO THE FIRE PROTECTION CAPITAL EXPAAgenda Item 2 Item # 2 Page 1 AGENDA ITEM SUMMARY July 17, 2018 City Council STAFF Jennifer Poznanovic, Project and Revenue Manager John Duval, Legal SUBJECT Items Relating to the Fire Protection Capital Expansion Fee. EXECUTIVE SUMMARY A. Second Reading of Ordinance No. 086, 2018, Amending Section 7.5-30 of the Code of the City of Fort Collins Relating to the Adjustment of the Fire Protection Capital Expansion Fee. B. Second Reading of Ordinance No. 087, 2018, Appropriating Prior Year Reserves from the Fire Protection Capital Expansion Fee Account Within the Capital Expansion Fee Fund to Reimburse Building Permit Applicants for Overpayment of the Fire Protection Capital Expansion Fee. These Ordinances, unanimously adopted on First Reading on July 3, 2018, adjust the Fire Protection Capital Expansion Fee (Fire CEF) to be consistent with correct calculations and appropriate funds from the Fire CEF Account in the Capital Expansion Fee Fund to reimburse fee payers for overpayments back to October 1, 2017. Consulting firm Duncan Associates discovered there was a cell reference error in their formula used for the City’s 2017 Capital Expansion Fee Study. This error caused the Fire CEF to be overstated by 19%. The City Council approved 75% of the proposed fee increases in the City’s Capital Expansion Fees (CEFs), which went into effect October 1, 2017. Due to the error in the Fire CEF calculation, the Fire CEF was set at 90% instead of 75% of the 2017 proposed fee level. The estimated total refund due to fee payers is approximately $130,000. STAFF RECOMMENDATION Staff recommends adoption of the Ordinances on Second Reading. ATTACHMENTS 1. First Reading Agenda Item Summary, July 3, 2018 (w/o attachments) (PDF) 2. Ordinance No. 086, 2018 (PDF) 3. Ordinance No. 087, 2018 (PDF) Agenda Item 7 Item # 7 Page 1 AGENDA ITEM SUMMARY July 3, 2018 City Council STAFF Jennifer Poznanovic, Project and Revenue Manager John Duval, Legal SUBJECT Items Relating to the Fire Protection Capital Expansion Fee. EXECUTIVE SUMMARY A. First Reading of Ordinance No. 086, 2018, Amending Section 7.5-30 of the Code of the City of Fort Collins Relating to the Adjustment of the Fire Protection Capital Expansion Fee. B. First Reading of Ordinance No. 087, 2018, Appropriating Prior Year Reserves from the Fire Protection Capital Expansion Fee Account Within the Capital Expansion Fee Fund to Reimburse Building Permit Applicants for Overpayment of the Fire Protection Capital Expansion Fee. The purpose of this item is to adjust the Fire Protection Capital Expansion Fee (Fire CEF) consistent with correct calculations and to appropriate funds from the Fire CEF Account in the Capital Expansion Fee Fund to reimburse fee payers for overpayments back to October 1, 2017. Consulting firm Duncan Associates discovered there was a cell reference error in their formula used for the City’s 2017 Capital Expansion Fee Study. This error caused the Fire CEF to be overstated by 19%. The City Council approved 75% of the proposed fee increases in the City’s Capital Expansion Fees (CEFs), which went into effect October 1, 2017. Due to the error in the Fire CEF calculation, the Fire CEF was set at 90% instead of 75% of the 2017 proposed fee level. The estimated total refund due to fee payers is approximately $130,000. STAFF RECOMMENDATION Staff recommends adoption of the Ordinances on First Reading. BACKGROUND / DISCUSSION In 2016, the City of Fort Collins contracted with consulting firm Duncan Associates to analyze the City’s methodology for calculating CEFs and to update the CEFs for Neighborhood Parks, Community Parks, Fire, Police and General Government. CEFs require City Council approval and Council approved the increases in the CEFs at 75% of the amounts determined by Duncan Associates. These fee increases went into effect October 1, 2017. ATTACHMENT 1 Agenda Item 7 Item # 7 Page 2 Earlier this year, the Poudre Fire Authority (PFA) contracted with Duncan Associates to update the Fire CEF. Duncan Associates used data collected from the City’s 2017 Capital Expansion Fee Study as a basis for starting the PFA study. During its analysis, Duncan Associates discovered there was a cell reference error in their formula used for the City. In the tables below, “Net Cost per Functional Population” of $422 was calculated using “Net Replacement Cost” instead of “Net Replacement Cost Attributable to City.” Correcting this error would result in a “Net Cost per Functional Population” of $354. This calculation error caused the Fire CEF to be overstated by 19% in the 2017 CEF Study. In the table below, the “2017 proposed” fees are overstated by 19% compared to the “proposed corrected” or accurately calculated 2017 proposed fees. Staff asked Duncan Associates to confirm that all other CEFs were calculated correctly. Duncan Associates confirmed that all other CEFs were calculated correctly. In the table below, the “current” amounts imposed for the Fire CEF (effective October 1, 2017) are at 90% instead of 75% of the “proposed corrected” 2017 fee level. The “current corrected” column shows Fire CEFs at 75% of the accurately calculated full fee level. The next fee increase is anticipated for 2019 and would be to update all CEFs (Neighborhood Parks, Community Parks, Fire, Police and General Government) from 75% (step I) to 90% (step II) of the 2017 proposed fees. Staff presented two options to Council Finance Committee on June 18, 2018: 1. Adjust the Fire CEF to the 75% level and provide refunds to overpaying feepayers. ‐ Adjust fees consistent with corrected calculations – required Ordinance ‐ Appropriate funds from the Fire CEF Account for reimbursement of building permits paid back to October 1, 2017 2. Continue with current fees ‐ Step I and step II of Fire CEF increases = 90% of the 2017 proposed fee level Guidance from Council Finance Committee was Option 1. CITY FINANCIAL IMPACTS Agenda Item 7 Item # 7 Page 3 The current impact as of June 19, 2018, is approximately $78,000 in refunds for approximately 395 building permits that have been issued. Fees are paid upon issuance of the permit and there are currently approximately 135 building permit applications. Refunds will also be provided to applicants issued new permits before the corrected fee goes into effect, which is anticipated for July 28, 2018. The total refund estimate of approximately $130,000 is on the high end due to high monthly permit variance. The City will only refund what is owed and the balance will go back into the Fire CEF Account. Staff time estimated to issue 500 refunds is approximately 40 minutes per refund across two departments - 30 minutes per refund in Community Development and Neighborhood Services and 10 minutes per refund in Accounting. This is approximately 330 hours or 40 days. Staff plans to process and issue refunds expeditiously. BOARD / COMMISSION RECOMMENDATION On June 18, 2018, Council Finance Committee recommended Option 1 - Adjust the Fire CEF to the 75% level and provide refunds to overpaying feepayers. (Attachment 1) PUBLIC OUTREACH Staff plans to communicate the Fire CEF calculation error with impacted permit holders and applicants prior to issuing refunds and adjusting fees. Until corrected Fire CEFs are effective, staff plans to communicate with new permit applicants that fees will be adjusted once the corrected fees are effective (estimate July 28, 2018). ATTACHMENTS 1. Council Finance Committee Minutes, June 18, 2018 (PDF) -1- ORDINANCE NO. 086, 2018 OF THE COUNCIL OF THE CITY OF FORT COLLINS AMENDING SECTION 7.5-30 OF THE CODE OF THE CITY OF FORT COLLINS RELATING TO THE ADJUSTMENT OF THE FIRE PROTECTION CAPITAL EXPANSION FEE WHEREAS, the City is a home rule municipality having the full right of self-government in local and municipal matters under the provisions of Article XX, Section 6 of the Colorado Constitution and the City’s Charter; and WHEREAS, among the home rule powers of the City is the power to regulate, as a matter of purely local concern, the development of real property within the City and to impose impact fees for such development; and WHEREAS, the City Council has determined that new development should contribute its proportionate share of providing the capital improvements typically funded with impact fees; and WHEREAS, the City Council has broad legislative discretion in determining the appropriate funding mechanisms for financing the construction of public facilities and improvements in the City; and WHEREAS, in early 2016, City staff initiated a comprehensive review of the City’s various impact fees now charged to new development; and WHEREAS, as part of that review, the City commissioned consultant Duncan Associates (“Duncan”) to prepare an impact fee study for the community parkland, neighborhood parkland, police, fire protection and general government capital expansion fees (collectively, “Capital Expansion Fees”) which resulted in the “Capital Expansion Fee Study” dated August 2016, in which Duncan identified the need to increase each of the Capital Expansion Fees by various amounts (the “CEF Study”); and WHEREAS, on June 6, 2017, the City Council adopted Ordinance No. 049, 2017 (“Ordinance No. 049”) in which it amended various sections of City Code Chapter 7.5 to implement the fee increases recommended for the Capital Expansion Fees in the CEF Study to be effective October 1, 2017, but in doing so, the Council decided to only increase the Capital Expansion Fees to 75% of the amounts recommended in the CEF Study; and WHEREAS, Duncan recently discovered that the increased amount for the City’s fire protection capital expansion fee (the “Fire CEF”) was incorrectly calculated in the CEF Study resulting in the Fire CEF being increased in Ordinance No. 049 to a level that is 90% of the Fire CEF recommended in the CEF Study; and WHEREAS, this has resulted in those persons and entities applying to the City for building permits since October 1, 2017, to pay the Fire CEF at the 90% level instead of the 75% level intended in Ordinance No. 049; and -2- WHEREAS, this Ordinance amends Code Section 7.5-30 to fix this error Duncan discovered by reducing the Fire CEF to the 75% level recommended in the CEF Study as intended in Ordinance No. 049; and WHEREAS, contemporaneously with this Ordinance, the City Council will also consider the adoption of Ordinance No. 087, 2018, to appropriate $130,000 from the Fire Protection Capital Expansion Fee Account within the Capital Expansion Fee Fund to reimburse applicants for building permits who have overpaid, and will continue to overpay until this Ordinance goes into effect, the Fire CEF at the 90% level instead of the intended 75% level; and WHEREAS, for the foregoing reasons, the City Council has determined that it is in the best interest of the City and its citizens and necessary for the protection of the public’s health, safety and welfare, that the Fire CEF be decreased in Code Section 7.5-30 as hereafter provided. 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 Section 7.5-30 of the Code of the City of Fort Collins is hereby amended to read as follows: Sec. 7.5-30. - Fire protection capital expansion fee. (a) There is hereby established a fire protection capital expansion fee which shall be imposed pursuant to the provisions of this Article for the purpose of funding capital improvements related to the provision of fire services, as such improvements may be identified in the capital improvements plan for fire protection services. Such fee shall be payable prior to the issuance of any building permit for a residential, commercial or industrial structure. The amount of such fee shall be determined as follows: Current As of October 1, 2017 Resid., up to 700 sq. ft. $281.00 $316.00 Resid., 701 to 1,200 sq. ft. 357.00 428.00 Resid., 1,201 to 1,700 sq. ft. 395.00 465.00 Resid., 1,701 to 2,200 sq. ft. 410.00 473.00 Resid., over 2,200 sq. ft. 440.00 526.00 Commercial buildings (per 1,000 sq. ft.) 339.00 395.00 Industrial buildings (per 1,000 sq. ft.) 80.00 93.00 . . . -3- Introduced, considered favorably on first reading, and ordered published this 3rd day of July, A.D. 2018, and to be presented for final passage on the 17th day of July, A.D. 2018. __________________________________ Mayor ATTEST: _______________________________ City Clerk Passed and adopted on final reading on the 17th day of July, A.D. 2018. __________________________________ Mayor ATTEST: _______________________________ City Clerk -1- ORDINANCE NO. 087, 2018 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROPRIATING PRIOR YEAR RESERVES FROM THE FIRE PROTECTION CAPITAL EXPANSION FEE ACCOUNT WITHIN THE CAPITAL EXPANSION FEE FUND TO REIMBURSE BUILDING PERMIT APPLICANTS FOR OVERPAYMENT OF THE FIRE PROTECTION CAPITAL EXPANSION FEE WHEREAS, in early 2016, City staff initiated a comprehensive review of the City’s various impact fees now charged to new development; and WHEREAS, as part of that review, the City commissioned consultant Duncan Associates (“Duncan”) to prepare an impact fee study for the community parkland, neighborhood parkland, police, fire protection and general government capital expansion fees (collectively, “Capital Expansion Fees”) which resulted in the “Capital Expansion Fee Study” dated August 2016, in which Duncan identified the need to increase each of the Capital Expansion Fees by various amounts (the “CEF Study”); and WHEREAS, on June 6, 2017, the City Council adopted Ordinance No. 049, 2017 (“Ordinance No. 049”) in which it amended various sections of City Code Chapter 7.5 to implement the fee increases recommended for the Capital Expansion Fees in the CEF Study to be effective October 1, 2017, but in doing so, the Council decided to only increase the Capital Expansion Fees to 75% of the amounts recommended in the CEF Study; and WHEREAS, Duncan recently discovered that the increased amount for the City’s fire protection capital expansion fee (the “Fire CEF”) was incorrectly calculated in the CEF Study resulting in the Fire CEF being increased in Ordinance No. 049 to a level that is 90% of the Fire CEF recommended in the CEF Study; and WHEREAS, this has resulted in those persons and entities applying to the City for building permits since October 1, 2017, to pay the Fire CEF at the 90% level instead of the 75% level intended in Ordinance No. 049; and WHEREAS, contemporaneously with its consideration of this appropriation Ordinance, the City Council will also consider the adoption of Ordinance No. 086, 2018, to amend Code Section 7.5-30 to fix this error Duncan discovered by reducing the Fire CEF to the 75% level as intended in Ordinance No. 049; and WHEREAS, this Ordinance appropriates $130,000 from the Fire Protection Capital Expansion Fee Account within the Capital Expansion Fee Fund to reimburse those building permit applicants who have or will overpay the Fire CEF at the 90% level instead of the 75% level intended in Ordinance 049; and WHEREAS, Article V, Section 9 of the City Charter permits the City Council, upon recommendation of the City Manager, 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 -2- WHEREAS, the City Manager has recommended the appropriation described herein and determined that this appropriation is available and previously unappropriated from the Fire Protection Capital Expansion Fee Account within the Capital Expansion Fee Fund and will not cause the total amount appropriated in the Fire Protection Capital Expansion Fee Account within the Capital Expansion Fee Fund to exceed the current estimate of actual and anticipated revenues to be received in that Account during any fiscal year; and WHEREAS, for the foregoing reasons, the City Council has determined that it is in the best interest of the City and its citizens and necessary for the protection of the public’s health, safety and welfare, that these funds be appropriated to reimburse those building permit applicants who have or will overpay the Fire CEF because of the error in the CEF Study. 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 prior year reserves in the Fire Protection Capital Expansion Fee Account within the Capital Expansion Fee Account the sum of ONE HUNDRED THIRTY THOUSAND DOLLARS ($130,000) for the reimbursement of those building permit applicants who have or will overpay the Fire CEF at the 90% level set in the CEF Study instead of at the 75% level as intended in Ordinance No. 049. Section 3. This appropriation shall not be effective unless and until Ordinance No. 086, 2018, becomes law to amend Code Section 7.5-30 to reduce the Fire CEF to the 75% level intended by Ordinance No. 049. Introduced, considered favorably on first reading, and ordered published this 3rd day of July, A.D. 2018, and to be presented for final passage on the 17th day of July, A.D. 2018. __________________________________ Mayor ATTEST: _______________________________ City Clerk -3- Passed and adopted on final reading on the 17th day of July, A.D. 2018. __________________________________ Mayor ATTEST: _______________________________ City Clerk