HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 06/06/2017 - FIRST READING OF ORDINANCE NO. 070, 2017, APPROPRIAgenda Item 6
Item # 6 Page 1
AGENDA ITEM SUMMARY June 6, 2017
City Council
STAFF
Kirsten Howard, PFA Senior Budget & Board Coordinator
Tom DeMint, PFA Fire Chief
Ann Turnquist, PFA Director of Administrative Services
SUBJECT
First Reading of Ordinance No. 070, 2017, Appropriating Prior Year Reserves in the Capital Improvement
Expansion Fund and in the Keep Fort Collins Great Tax Fund For Disbursement to the Poudre Fire Authority.
EXECUTIVE SUMMARY
The purpose of this item is to appropriate funds from the Fire Capital Expansion Account to Poudre Fire
Authority (PFA) for payment of debt on Fire Station 4. Station 4, located at 1945 West Drake Road, was built
through a Lease/Purchase funding source at a rate of 4%, with 20 installments. The Fire Capital Improvement
Expansion Fund has been used to make the annual Lease/Purchase payments. The Lease/Purchase
agreement allows for prepayment after December 18, 2017. Paying off the Station 4 Lease/Purchase will save
Poudre Fire Authority $451,000 in interest payments over the next ten years, and will allow Capital Expansion
Fees to build for the future construction of PFA’s next fire station. During the 2017 PFA Budget process, the
Board of Directors directed staff to pay off the outstanding debt on Station 4, utilizing Capital Expansion Fees
that have been collected for the benefit of PFA and held in an earmarked account.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
BACKGROUND / DISCUSSION
A. Lease/Purchase Pay Off
In 2008, PFA procured a Lease/Purchase to build a replacement station for old Station 4. Since the lease
purchase rate was 4%, it made sense to borrow $3.16 million to build the new facility. The annual installments
(20 installments) are $234,354 per year, which have been paid back using the City’s Capital Improvement
Expansion Fee revenue for Fire.
PFA’s remaining principle amount as of December 2017 is $1.9 million. Per the terms of the Station 4 debt
agreement, in 2017 PFA will be able to consider pre-paying all or a portion of the balance of the Lease-
Purchase payments. The PFA Board directed staff to begin the process needed to pay the outstanding
principal balance when it is possible after December 19, 2017. The lender, JP Morgan, has agreed to such a
repayment. Prepaying the balance of the debt will result in a long-term savings of $451,000 in interest
payments.
In 2011, PFA staff implemented a Station 4 Lease/Purchase Capital Project to save two-years’ worth of
payments in the event the Capital Expansion Fee did not generate enough in any given year to pay the annual
payment. This account has a balance of $501,000, which will be used in addition to the requested amount
from the City’s Capital Expansion Fee revenue for Fire.
Agenda Item 6
Item # 6 Page 2
PFA staff is requesting $1,392,000 be transferred to PFA from the City-held Fire Capital Improvement
Expansion Fee, to be combined with funds held at PFA, in order to pay off the Station 4 Lease/Purchase,
leaving a balance in the Fire Capital Expansion fee account of $328,596.
B. KFCG Reserve
PFA staff is requesting the balance within the City-held KFCG Reserve for Fire ($557,607) to be transferred by
City Council to PFA to be appropriated by the PFA Board within PFA’s capital budget for a new station alerting
system, replacement of Mobile Data Terminals, and a new Records Management System.
Each year, PFA receives a portion of KFCG revenue though the revenue allocation formula as a part of the
City’s monthly contributions to PFA. In addition, when KFCG revenues exceed the amount projected in the
revenue allocation formula (11% of the total KFCG collections), PFA’s share of the excess revenue is held by
the City in a KFCG reserve. PFA then requests transfer of the reserve revenue as part of an annual clean-up
process. This action will disburse a majority of the City’s current balance in the PFA KFCG reserve.
PFA’s 2017 Budget includes the use of KFCG reserves for specific capital needs. PFA’s Mobile Data
Terminals are due for replacement, PFA’s electronic Records Management System requires an upgrade, and
PFA’s Station Alerting technology is very dated and is limited in functionality causing a negative impact on
response times. PFA staff requests the transfer of KFCG Reserves held by the City in order to replace and
upgrade these PFA systems. The PFA Board of Directors will appropriate these funds within their capital
budget once sufficient funds are available to purchase the equipment/upgrades.
CITY FINANCIAL IMPACTS
The funds being requested are held by the City of Fort Collins and are earmarked for use by the Poudre Fire
Authority.
BOARD / COMMISSION RECOMMENDATION
The PFA Board recommends approval of the Ordinance.
ATTACHMENTS
1. PFA Board minutes, September 22, 2015 (PDF)
2. 2017 PFA Budget, recommending payoff (PDF)
PFA Board minutes
September 22, 2015
EXCERPT RE: Payoff of Station 4
2016 Preliminary Budget
Ann Turnquist and Kirsten Howard asked for the Board’s direction in preparation of the
Final 2016 Budget.
Ann Turnquist stated revenues are up from the City and the District and she reviewed
the increases. Because of the capital contribution from Timnath to the District for
Station 8, the funding ratio is different than in years past. Gerry Horak suggested a
footnote on this percentage increase because it is capital. Gerry suggested an
adjustment of the percentage rates. Kristin Stephens asked if an adjustment would
adequately reflect what happened. Ann said the percentages can be shown both ways.
Dave Pusey asked if the District increase takes into account the Mulberry Annexation
and do we want to project when that will happen. Dave suggested making a footnote
for the Mulberry Annexation. Ann Turnquist advised it will be a different formula. The
Board discussed impacts of the annexation.
Ann Turnquist stated the budget building blocks are basically three components: current
services, service enhancements, and other recommendations. Ann briefly highlighted
non-discretionary increases such as current labor market adjustment projecting 3%,
health insurance premiums, and Workers’ Compensation insurance increases. Ann
noted that the Workers’ Compensation Experience Modifier used to determine PFA’s
rate is projected to decrease to 0.75. Tom DeMint noted that the Safety Officer is
having an impact and the position has had enough time to show causal link for the
Safety Officer function.
Ann Turnquist reviewed the service enhancements. Gerry Horak asked about the
Administrative support to CSS. Ann stated two current employees are working part-time
and those positions would become full-time with benefits. Gerry asked about hiring
three part-time positions instead of two full-time. Darin Atteberry stated the City is
facing similar issues with healthcare reform in regard to hourly vs classified positions.
Gerry asked for better justification for the $66,000. Ann said these positions would be
paid for with fee revenue from Community Safety Services. Darin stated costs for
turnover rates should be considered also.
Mike DiTullio asked about healthcare cost increases for employees. Darin Atteberry
stated some employees may see a 30% increase in costs as the City is going from two
plans to one.
Ann Turnquist stated the Public Educator position started as a contractual employee
and PFA would like to convert it to a classified position as it has become a key addition
to the Public Education Program. Gerry Horak stated if it was advertised as contractual
position originally, PFA should advertise the position as different folks may apply. Darin
Atteberry agreed in some cases such as for an executive position, Darin likes to perform
a national search even for an incumbent position. However, there are times in some
ATTACHMENT 1
PFA Board minutes
September 22, 2015
EXCERPT RE: Payoff of Station 4
cases when you have someone performing well in that position and you know that going
to fill the position, to do a search is disingenuous.
Ann Turnquist reviewed Other Recommended Changes and the highest priority
expenditures such as the Apparatus Replacement of $600,000. Tom DeMint stated
some PFA apparatus is in the red category and at the end of the apparatus’ useful life.
The Planning and Analysis position will shift from a captain to battalion chief position.
Tom DeMint stated this position will be a competitive process.
Additions to equip replacement reserves include $250,000 for radios and $250,000 for
SCBA. Mike Gress stated to replace SCBA the cost would be $1.5 million. Tom DeMint
added that we are looking at a grant.
Ann Turnquist reviewed the High Priority Needs: Deputy Fire Marshal, Station Alerting
System (tones in stations), Facility Electronic entry system (key fobs), and program
manager budget requests.
Mike DiTullio said he would like to pay off the Station 4 loan and asked if that will be a
discussion a year from now? Tom DeMint stated staff and the Board can have that
discussion beginning in 2017.
Ann Turnquist stated staff hopes to have salary information available by the November
work session. Ann stated PFA currently has healthy reserves and in 2016, does the
Board want to use some of those reserves to fund capital projects? Darin stated City
Council has asked departments to spend KFCG reserves. Ann Turnquist asked if staff
came back with a recommendation to spend some reserves would the Board be
comfortable with that. Gerry Horak agreed he would like to see debt gone for Station 4.
The Board agreed that they would like to spend KFCG and would like to see a plan for
other reserves.
Ann Turnquist summarized, staff should not plan to spend down reserves for
contingency in the 2016 budget but should spend KFCG funds and bring a plan to the
November work session.
ATTACHMENT 2
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ORDINANCE NO. 070, 2017
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING PRIOR YEAR RESERVES IN THE CAPITAL
EXPANSION FEE FUND AND IN THE KEEP FORT COLLINS GREAT
TAX FUND FOR DISBURSEMENT TO THE POUDRE FIRE AUTHORITY
WHEREAS, City Code § 7.5-30 imposes on new development within the City a fire
protection capital expansion fee to be used to fund capital improvements related to the provision
of fire protection services (the “Fire CEF”); and
WHEREAS, all revenues collected from the Fire CEF are deposited into the fire
protection capital expansion fee account established in Code § 8-97 (the “Fire CEF Account”);
and
WHEREAS, the Fire CEF Account is a separate account in the City’s capital expansion
fee fund established in Code § 8-92 (the “CEF Fund”); and
WHEREAS, in 2008, the Poudre Fire Authority (“PFA”) entered into a lease/purchase
transaction to fund the construction of a replacement fire station for PFA’s Station 4, which has
been built at 1945 West Drake Road, Fort Collins (the “Lease-Purchase”); and
WHEREAS, the Lease-Purchase requires PFA to make twenty (20) annual payments of
$234,354 each to be paid with funds from the Fire CEF Account; and
WHEREAS, PFA’s remaining principal amount as of December 19, 2017, under the
Lease-Purchase will be $1.9 million and under the Lease-Purchase, PFA may prepay any or all
of this remaining principal at any time after December 19, 2017; and
WHEREAS, PFA’s Board has directed staff to begin the process needed to pay in full
the remaining principal balance owed under the Lease-Purchase when it is possible to do so after
December 19, 2017, which prepayment will result in a long-term savings of $451,000 in interest
payments; and
WHEREAS, PFA is therefore requesting that the City Council appropriate $1,392,000
from the Fire CEF Account in the CEF Fund to be disbursed to PFA for it to use in paying the
remaining principal balance owed under the Lease-Purchase; and
WHEREAS, at the end of 2016, the fund reserve in the Fire CEF Account was
$1,720,596, and a payment from it of $1,392,000 to PFA would leave a remaining balance of
$328,596; and
WHEREAS, in 2010 the City’s voters approved the 0.85% Keep Fort Collins Great Sales
and Use Tax (“KFCG Tax”); and
WHEREAS, pursuant to Ordinance No. 126, 2010, 11% of the KFCG Tax collected is to
be used for fire protection and other emergency services; and
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WHEREAS, at the end of 2016, the City’s KFCG Tax reserve fund available for fire
protection and other emergency services in the KFCG fund (“KFCG Fund”) was $557,607; and
WHEREAS, PFA has that requested $557,607 be disbursed from the KFCG Fund to the
PFA to be appropriated by the PFA Board within PFA’s capital budget for a new station alerting
system, replacement of mobile data terminals, and a new records management system; 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
WHEREAS, City staff has determined that sufficient, unappropriated funds are available
in the Fire CEF Account of the CEF Fund and in the KFCG Fund for the appropriations
requested by PFA as described above.
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 CEF
Account of the CEF Fund the sum of ONE MILLION THREE HUNDRED NINETY-
TWO THOUSAND DOLLARS ($1,392,000) for disbursement to the PFA for PFA to use to
pay the remaining principal balance it owes under the Lease-Purchase.
Section 3. That there is hereby appropriated from prior year reserves in the KFCG
Fund the sum of FIVE HUNDRED FIFTY-SEVEN THOUSAND SIX HUNDRED
SEVEN DOLLARS ($557,607) to be disbursed to PFA for it to use for a new station
alerting system, the replacement of mobile data terminals, and a new records management
system.
Introduced, considered favorably on first reading, and ordered published this 6th day of
June, A.D. 2017, and to be presented for final passage on the 5th day of July, A.D. 2017.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
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Passed and adopted on final reading on the 5th day of July, A.D. 2017.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk