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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 07/05/2017 - SECOND READING OF ORDINANCE NO. 070, 2017, APPROPRAgenda Item 2 Item # 2 Page 1 AGENDA ITEM SUMMARY July 5, 2017 City Council STAFF Kirsten Howard, PFA Senior Budget & Board Coordinator Tom DeMint, PFA Fire Chief Ann Turnquist, PFA Director of Administrative Services SUBJECT Second 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 This Ordinance, unanimously adopted on First Reading on June 6, 2017, appropriates 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 Second Reading. ATTACHMENTS 1. First Reading Agenda Item Summary, June 6, 2017 (w/o attachments) (PDF) 2. Ordinance No. 070, 2017 (PDF) Agenda 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. ATTACHMENT 1 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) -1- 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 -2- 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 -3- Passed and adopted on final reading on the 5th day of July, A.D. 2017. __________________________________ Mayor ATTEST: _______________________________ City Clerk