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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 01/02/2019 - SECOND READING OF ORDINANCE NO. 175, 2018, AMENDINAgenda Item 3 Item # 3 Page 1 AGENDA ITEM SUMMARY January 2, 2019 City Council STAFF Ginny Sawyer, Policy and Project Manager Carrie M. Daggett, Legal SUBJECT Second Reading of Ordinance No. 175, 2018, Amending Chapter 23 of the Code of the City of Fort Collins Related to Funding of Art in Public Places Contributions for Connexion and the Expenditure of Utilities Art in Public Places Funds and Rescinding Funds Provisionally Appropriated for Such Contributions. EXECUTIVE SUMMARY This Ordinance, unanimously adopted on First Reading on December 18, 2018, authorizes a delayed payment in early 2023 based on the 2022 operating revenue of Connexion, along with an ongoing Art in Public Places (APP) obligation going forward, consistent with the principles of the APP program (treating Connexion as separate from the Light and Power Fund). This Ordinance also adds back into the APP provisions of the City Code language that was inadvertently omitted in 2012, when the APP Code provisions were rewritten. At the Council’s request, the Ordinance is being amended on Second Reading to make clear that any future changes to the APP Code provisions will also apply to Connexion. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. First Reading Agenda Item Summary, December 18, 2018 (w/o attachments) (PDF) Agenda Item 23 Item # 23 Page 1 AGENDA ITEM SUMMARY December 18, 2018 City Council STAFF Ginny Sawyer, Policy and Project Manager Ingrid Decker, Legal SUBJECT First Reading of Ordinance No. 175, 2018, Amending Chapter 23 of the Code of the City of Fort Collins Related to Funding of Art in Public Places Contributions for Connexion and the Expenditure of Utilities Art in Public Places Funds and Rescinding Funds Provisionally Appropriated for Such Contributions. EXECUTIVE SUMMARY The purpose of this item is to consider Ordinance No. 175, 2018 as a follow-up to Ordinance No. 056, 2018, which stated: That the City Manager is directed to study whether the Art in Public Places (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. This Ordinance would also add back into the APP provisions of the City Code language that was inadvertently omitted in 2012, when the APP Code provisions were rewritten. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION The City of Fort Collins established an Art in Public Places (APP) program by ordinance in 1995. The program requires City capital projects greater than $250,000 to contribute 1% of capital cost to the APP program. In 2012, amendments were made to the City Code to limit the 1% of project cost contributions from Utility funds to 0.5% of annual operating revenue to provide a level of cost protection to rate payers. Other than these changes, the APP program has not seen significant change since its inception. This means that other than the amendments made in 2012 the APP code has not undergone any significant changes. ATTACHMENT 1 Agenda Item 23 Item # 23 Page 2 Staff and Council have been assessing how the new broadband effort fits within the APP program. Based on Council’s action earlier this year, the options are listed in the three bullets that follow:  (A) If Connexion is treated as part of the Light & Power Utility for APP purposes, the APP amount would be approximately $600k.  (B) If Connexion is treated as a separate utility for APP purposes, and it has no operating revenue, the APP amount would be zero.  (C) A third option is an amount and timing of payment agreeable Council based on projected broadband revenue and aligned with the principles of the APP program. The following options were discussed with APP Board, the Energy Board, the Water Board, the Transportation Board, and the Economic Advisory Commission. 2018 2019 2020 2021 2022 Eligible Connexion Capital Appropriations 80,000,000 Connexion Operating Revenue * 387,630 5,403,877 17,039,946 33,374,837 APP if included with L&P (A) 609,526 APP if Connexion is 5th Utility (B) Hybrid (C) 166,874 * Estimated Revenue All Boards expressed a commitment to the value of public art and a desire to ensure the success of Connexion. No Contribution:  There was little support for exempting Connexion from APP entirely, although there was recognition that APP has never applied to a major start-up competitive operation. Full Contribution (as considered under Light and Power):  There was no support for a near-term full payment, however the APP and Cultural resources Boards do support a delayed full payment. Hybrid Option:  There was general support for and recognition that waiting until Connexion is operating and generating regular revenue helps serve both Connexion and APP. When the City Council made updates to the APP Code provisions in 2012, significant revisions were made to the Ordinance amending the Code between First and Second reading. Those revisions inadvertently omitted language clarifying that utilities APP funds can only be spent for purposes that provide a betterment to the utility or are for a specific utility purpose that benefits the utility ratepayers. The City Attorney’s Office is recommending that this language be added back into the APP Code provisions as part of this Ordinance. CITY FINANCIAL IMPACTS As proposed, the hybrid approach would call for a delayed payment in early 2023 based on the 2022 operating revenue of Connexion, along with an ongoing APP obligation going forward, consistent with the principles of the APP program (treating Connexion as separate from the Light and Power Fund). This option places less of a burden on Connexion while still providing some level of funding for APP. BOARD / COMMISSION RECOMMENDATION Agenda Item 23 Item # 23 Page 3 Prior to the August 28, 2018, Council Work Session, staff met with APP Board, the Energy Board, the Water Board, the Transportation Board, and the Economic Advisory Commission. Boards were not asked to make formal recommendations. All Boards expressed a commitment to the value of public art and a desire to ensure the success of Connexion and the majority supported the hybrid option. Following the Council work session on August 28, 2018, staff was asked to revisit the options with the APP Board and the Cultural Resources Board. Both Boards support a delayed payment of the Option A amount and then subsequent compliance with the APP requirements. ATTACHMENTS 1. August 28, 2018 Work Session Follow Up (PDF) 2. September 19, 2018 Art in Public Places Board Minutes (PDF) 3. Cultural Resource Board Minutes September 27, 2018 (Draft) (PDF) 4. Ordinance No. 056, 2018 (PDF) 5. PowerPoint Presentation (PDF) -1- ORDINANCE NO. 175, 2018 OF THE COUNCIL OF THE CITY OF FORT COLLINS AMENDING CHAPTER 23 OF THE CODE OF THE CITY OF FORT COLLINS RELATED TO FUNDING OF ART IN PUBLIC PLACES CONTRIBUTIONS FOR CONNEXION AND THE EXPENDITURE OF UTILITIES’ ART IN PUBLIC PLACES FUNDS AND RESCINDING FUNDS PROVISIONALLY APPROPRIATED FOR SUCH CONTRIBUTIONS WHEREAS, on April 25, 1995, the City Council adopted Ordinance No. 020, 1995, establishing the Art in Public Places (“APP”) Program, adopting the Art in Public Places Guidelines, and setting goals and requirements for the acquisition, maintenance and exhibition of public art by the City; and WHEREAS, on April 7, 1998, the City Council adopted Ordinance No. 047, 1998, which reenacted the APP Provisions of the City Code with certain modifications; and WHEREAS, the APP Program requires capital City projects greater than $250,000 to contribute 1% of capital cost to the APP Program; and WHEREAS, on October 2, 2012, the City Council adopted Ordinance No. 078, 2012, which set the level of Utility contributions to the APP Program to .5% of annual operating revenue instead of 1%; and WHEREAS, on November 7, 2017, the voters approved Ordinance No. 101, 2017, amending the City Charter to permit the City Council to (1) authorize the City’s electric utility to provide telecommunication services and facilities, or (2) create a telecommunications utility; and WHEREAS, on January 16, 2018, the City Council adopted Ordinance No. 011, 2018 authorizing the City’s electric utility to provide telecommunication facilities and services in the City, and to issue securities and other debt obligations to fund the provision of such facilities and services; and WHEREAS, on June 14, 2018, the City’s Electric Utility Enterprise closed on the sale of $142.2 million in bonds to fund the build-out and the initial operating expenses of a new telecommunications system; and WHEREAS, at an event on June 28, 2018, the City announced the name “Connexion” for the telecommunications system; and WHEREAS, on May 1, 2018, the City Council adopted Ordinance No. 056, 2018, which provisionally appropriated $479,430 in bond proceeds for APP and $130,096 in bond proceeds for maintenance thereof; and WHEREAS, at the August 28, 2018, Council Work Session, the City Council reviewed the APP Program and asked staff to develop some options pertaining to whether Connexion -2- contributions to APP should be capped and when Connexion should begin to pay into the APP Program; and WHEREAS, City Council directed staff to conduct public outreach and to provide any recommendations related to APP Program changes before the end of 2018; and WHEREAS, City Staff has discussed options related to APP Program changes with the APP Board, the Energy Board, the Water Board, the Transportation Board, and the Economic Advisory Board; and WHEREAS, all boards expressed a commitment to the value of public art and a desire to ensure the success of Connexion; and WHEREAS, there was general support for and recognition that waiting until Connexion’s buildout has begun to mature before using Connexion funds for APP would be best for the APP Program and for Connexion; and WHEREAS, it is anticipated that 2022 will be the year in which Connexion buildout will see maturity and Connexion will have operating revenue; and WHEREAS, City staff is proposing changes to the APP Program that would defer payment to APP of 1% of the Connexion construction costs until 2023, when a one-time payment would be made up to a cap based on Connexion’s 2022 operating revenue, after which Connexion would contribute to APP as though it were a separate utility; and WHEREAS, in 2012, when significant changes were made to Ordinance No. 078, 2012, amending the APP program Code provisions, between First and Second Reading, Code language about the permitted uses of utility funds, based on requirements in Article XII, Section 6 of the City Charter, was inadvertently omitted; and WHEREAS, the City Attorney’s Office is recommending that the omitted language be put back into the Code; and WHEREAS, the City Council has determined that the proposed amendments are in the best interests of the City and are necessary for the public’s health, safety, and welfare. 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 23-303 of the Code of the City of Fort Collins is hereby amended as follows: Sec. 23-303. Accounting methods. -3- . . . (c) Contributions to APP for each Utility will be kept and spent in such Utility's own fund, with the exception of maintenance, administration, repair and display costs. Each Utility fund will pay its share of maintenance, administration, repair and display costs annually to the APP program cost center in the Cultural Services and Facilities Fund. Monies credited to such Utility funds for APP shall be expended only for the acquisition or lease of works of art that provide a betterment to such utility or that are otherwise determined by the City Council to be for a specific utility purpose that is beneficial to the rate payers of such Utility. Section 3. That Section 23-304 of the Code of the City of Fort Collins is hereby amended as follows: Sec. 23-304. Construction projects greater than $250,000. (a) All requests submitted to the City Council for appropriations for construction projects estimated to cost over two hundred fifty thousand dollars ($250,000.) shall include an amount equal to one (1) percent of the estimated cost of such project for works of art. This requirement shall also apply to appropriations partially funding a project that will have a total estimated cost of over two hundred fifty thousand dollars ($250,000.) even if such individual appropriations are equal to or less than said amount. When the City Council approves the appropriations for any such project, one (1) percent of the appropriated amount shall be deposited into the appropriate cost center. If any construction project is partially funded from any source which precludes a work of art as an object of expenditure of such funds, the appropriation for works of art shall be equal to one (1) percent of the portion of the estimated project cost that will be funded from project funding sources that are not so restricted. Money collected in the APP cost centers shall be expended by the City for projects as prescribed by the APP Guidelines. (b) The amount of annual contributions to the APP program for each Utility fund shall be limited to one-half (.5) percent of the budgeted operating revenue in such Utility fund for that year, except that the Light and Power Fund will be calculated based on budgeted operating revenues excluding revenues from telecommunication facilities and services, as such facilities and services are defined in § 26-1. (c) In 2023, the Light and Power Fund will make a one-time payment for APP of one (1) percent of the bond proceeds expended on the construction of telecommunication facilities from 2018 through 2022, but limited to one-half (.5) percent of the 2022 operating revenue attributed to telecommunication facilities and services. This amount shall be in addition to any contributions credited to APP from appropriations for new construction projects in 2023. (d) Except as set forth in Subsection (c), above, until January 1, 2023, the requirements of this Article shall not apply to activities and revenues attributed to telecommunication facilities and services. Beginning January 1, 2023, the requirements of this Article, as amended from time to time, will apply to telecommunications facilities and services as though they are a separate utility. -4- Section 4. That the amounts of ONE HUNDRED THIRTY THOUSAND NINETY- SIX DOLLARS ($130,096) and FOUR HUNDRED SEVENTY-NINE THOUSAND FOUR HUNDRED THIRTY DOLLARS ($479,430) for Art in Public Places provisionally appropriated and authorized for transfer in Sections 2 and 3 of Ordinance No. 056, 2018, are hereby frozen, unappropriated, rescinded or otherwise no longer authorized for expenditure. Any amounts due for Art in Public Places related to telecommunications facilities and services revenues or appropriations shall be budgeted, appropriated and made when and only as required by the Code provisions adopted as part of this Ordinance. Introduced, considered favorably on first reading, and ordered published this 18th day of December, A.D. 2018, and to be presented for final passage on the 2nd day of January, A.D. 2019. __________________________________ Mayor ATTEST: _______________________________ City Clerk Passed and adopted on final reading on the 2nd day of January, A.D. 2019. __________________________________ Mayor ATTEST: _______________________________ City Clerk