HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 10/09/2007 - CONTINUED DISCUSSION REGARDING THE CITY MANAGER'S DATE : October 9 , 2007 WORK SESSION ITEM
STAFF : Darin Atteberry FORT COLLINS CITY COUNCIL
Mike Freeman
SUBJECT FOR DISCUSSION
Continued discussions regarding the City Manager' s Recommended 2008-2009 Budget.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1 . Are there changes which Council wishes to make in the Recommended Budget before it
considers the Appropriation Ordinance?
2 . Review of unfunded budget items listed by Council at September 25 Work Session for
possible inclusion in the Final Budget. Are there additions Council would like to make to
the Appropriation Ordinance to be considered on October 16? How would Council direct
staff to cover these cost changes?
BACKGROUND
On September 25 , City Council and staff met in work session to continue reviewing the 2008 -2009
City Manager' s Recommended Budget. In addition to gathering information regarding the proposed
budget, Council developed a list of unfunded offers (both one-time and on-going) that it may wish
to consider funding during the 2008 -2009 Budget cycle. In order to add these items to the final
budget, Council acknowledged that it would need to either eliminate other offers from the
recommended funding list, or add some additional revenues to the budget.
Attachment 1 includes a list of the offers which Councilmembers mentioned as possible funding
additions . Offers are sorted into three categories, including offers that were made as one-time offers
requiring only one-time funds, offers which were offered as on-going offers, but which could be
funded or partially funded via one-time funds, and offers which would require the commitment of
on-going revenues . On-going offers generally include the addition of staff or other on-going
commitments that are not typical of one-time offers .
The total of offers specifically mentioned by Councilmembers during the September 25 work
session is $2 . 9 million in 2008 and an additional $ 1 . 9 million in 2009 for a total of over $4. 8 million
during the budget term.
In the 2008 -2009 City Manager' s Recommended Budget, several possible additional funding
sources were outlined. The proposed budget does not assume the use of any of these funding
sources, but they were outlined for Council ' s consideration. Additional revenues could include the
use of additional General Fund reserves, additional vendor fee revenues or changes in the
development review charges for Building Permit Fees . These additional funding sources could yield
a variety of levels of new funding, depending on City Council ' s decisions .
October 9 , 2007 Page 2
L Use of Reserves
The Council Finance Committee will be reviewing the City ' s current policies regarding General
Fund reserves at its Monday, October 8 meeting. Recommendations for appropriate reserve levels
based on accounting standards and regional practices will be discussed. Further discussion of
reserves and possible one-time funds for 2008 -2009 budget uses will be discussed at the work
session, depending on the outcome of Finance Committee work. The 2008-2009 Recommended
Budget already includes the planned use of approximately $3 million of General Fund reserves. Staff
does not recommend the further use of General Fund reserves for either one-time or on-going
expenses .
2. Vendor Fee Modifications
A second alternative for increasing available resources for the 2008-2009 Budget is a modification
to the City ' s current Vendor Fee for sales and use tax licensees . The proposed modification could
result in $390,000 of on-going additional revenue being available for General Fund uses . This
change would not increase taxes or fees charged, but rather lower the amount of City sales and use
taxes that vendors would be allowed to retain in exchange for the service they provide in collecting
City taxes .
History
The vendor fee is a service fee that is retained by sales tax licensees in recognition of their work in
collecting the City' s sales and use taxes . The fee was originally established to acknowledge that
merchants incurred a cost for collecting sales taxes including accounting work and the completion
of paper forms for remitting the sales tax collection. With increasingly automated accounting
processes, the cost incurred by vendors has decreased as their "point of sale" software makes these
calculations for the vendor.
In the past, the vendor fee has been paid at different rates . The original vendor fee of 3 % with no
cap was first changed in 1989 . The 1989 change limited vendors to 3 % of the first $3 ,000 in sales
tax they collected, plus I % of all taxes thereafter. The vendor fee was further reduced in April 2004
to the current formula with a cap of $ 90 per reporting period.
The current vendor fee allows licensees to keep 3 % ($90) of the first $3 ,000 of sales tax collected
during each reporting period as a service fee for collecting the tax. The fee may be taken only if the
return is filed and paid on time.
In order to keep the full vendor fee of $90 each reporting period (monthly/ quarterly /annually), a
vendor must reach at least $ 100,000 in net taxable sales . Generally, the top 250 vendors reach the
$90 vendor fee cap each month. There are approximately 9 , 800 active sales tax licenses . Less than
5 % of vendors reach the sales volume needed to keep the full vendor fee each month.
Over time, the changes in the vendor fee have resulted in businesses retaining a smaller amount of
City sales and use tax as a service fee. The following chart illustrates the history of the vendor fee
taken by businesses :
October 9 , 2007 Page 3
Vendor Fees Paid to Licensees 2001-2006
1 ,000,000
8M000 -
N 600,000 -
0
400 . 000
200,000
2001 2002 2003 2004 2005 2006
Year
Recommended Change to the Vendor Fee
Currently, approximately $700,000 is kept each year by businesses as a vendor fee. Staff is
proposing that the vendor fee could be further reduced to 1 %, yielding approximately $390,000 of
additional revenue available to the City General Fund. The proposed vendor fee would allow
vendors to keep 1 % ($45 ) of the first $4, 500 in tax collected. Vendors would keep approximately
$310 ,000 annually, which would result in the City realizing a greater share of the actual sales and
use tax collected. This does not change the sales tax rate that residents pay, but rather recoups a
greater amount of it from the vendors who collect the taxes on the City' s behalf.
Vendor Fee Distribution
$900,000
$7007000
$800,000
$280,000
$5007000
$400,000 hk
Ir"q
$300,000
$93,000
$200,000 $M000
-7
0
$1007000 SL17,OOD
Current Vendor Fee Proposed Vendor Fee
❑ All other Vendors 0 Tap 25D Vendors
October 9 , 2007 Page 4
The top 250 vendors currently keep 40% of the total vendor fee. The proposed vendor fee would
allow these vendors to keep 30% of the total. Thus, more than 9,000 vendors with active sales tax
licenses will keep a greater share of the vendor fee under the proposed changes .
Comparison of Proposal to Other Municipalities
In reviewing the proposed vendor fees of other regional municipalities, the City of Fort Collins
revised fee would be approximately average . Others have higher fees, while several neighboring
communities pay no fee to vendors. The chart shows the vendor fees of comparable cities compared
to the recommended vendor fee for Fort Collins.
Vendor Fee
1 Boulder . 00%
2 Greeley . 00%
3 Lakewood . 00%
4 Pueblo . 00%
5 Aurora D . 50%
6 Denver . 50%
7 Fort Collins . 00%
8 Colorado Springs 2 . 00%
9 Westminster . 50%
10 Arvada . 00%
11 Centennial . 00%
12 Longmont . 00%
13 Thornton . 00%
14 Grand Junction 0. 33%
15 Loveland 0. 33%
3. Development Review Fee Changes
The City is currently in the process of reviewing all of its development fees, including building
permit fees, plan checking fees, general development review fees, and transportation development
review fees (TDPF) . A consultant is currently reviewing both the structure and amount of various
fees and is expected to make a number of recommendations on changes to fee structure and policies .
The City' s general policy has been to recover approximately 80% of the cost of development review
via fees . Changes to the current fee structure are likely to be proposed for implementation in the
coming months . At this time, no proposals have been developed or reviewed with interested parties
such as the development community.
Though the comprehensive review of fees is not yet complete, staff can foresee that some of these
fees are likely to increase . For example, the City ' s building permit fees have not been updated since
1982 because they had been in line with the goal of recovering 80% of costs . Over recent years, the
City ' s entire cost recovery performance has fallen below the 80% target, suggesting a needed update
in permit fees . Also, in comparing Fort Collins ' building permit fees to those of a limited number
of neighboring communities, Fort Collins ' fees are consistently lower. Staff proposes that an
interim adjustment to this specific fee could be made, pending the completion of the complete fee
study. The adjustment would increase the City' s cost recovery for the permitting service.
October 9 , 2007 Page 5
Staff proposes a small increase in fees that would result in fees still remaining lower than Larimer
County and the City of Loveland, yet still yielding approximately $200,000 in additional revenue
which would off-set the current General Fund subsidy of this service.
ATTACHMENTS
1 . City Council Offers for Funding Consideration, September 25 Work Session.
Attachment I
City Council Offers for Funding Consideration
September 25, 2007 Work Session
Request
Ongoing or
Offer Number Result Area Offer Name 2008 Cost 2009 Cost One-time
One Time Only
166.1 Environmental West Nile--fully fund $ 14,156 ongoing partially funded in 2008 only;2009 funded
127.3 Transportation Enhanced Travel Corridor--North College $ 200,000 one time
126.2 Transportation Transfort Strategic Operating Plan Update $ 100,000 one time Either year,prior to'rransportation Master Plan
138.1 Transportation eCommerce Implementation--Parking Service $ 44,000 one time
221.1 Neighborhood Eastside/Westside Neigh.Plan updates $ 171,000 one time
n/a Environmental Hazardous Waste Disposal Facility (Estimate ONLY) $ 200,000 ?? Staffdoes not have an estimate ofeither the one-time or ongoing cost
30.4 High Pert.Govt. Network Services--Network Equipment(Voiee overlP) $ 88,850 $ 83,000 one time 2 one-time offers,Possibly thru telecomm fund for pomnO
$ 918,006 $ 83,000
One Time Possible
2033 Neighborhood Enhancement of Human Services Grant Prog. $ 100,000 S 100,000 ongoing partial,total request=S210,000 year
186.1 Safe Community Traffic Calming(fund pilot?) $ 550,000 $ 550,000 ongoing Fund a pilot project!
184.2 Transportation Sign Replacement Program $ 39,000 ongoing Ongoing protect,first year funding included in 20091dec.Hudget
88.16 Transportation Street Design&Const. Stds Suppt.&Maint. $ 5,000 $ 5,000 ongoing
88.6 Transportation Pedestrian Access--Enhancement $ 275,000 $ 325,000 ongoing
203.2 Neighborhood Partial Restoration of Affordable Housing Fund $ 250,000 $ 200,000 ongoing
211.2 Neighborhood Neighborhohood Sevices--Grant Enhancement $ 5,000 $ 5,000 ongoing
$ 1,223,000 $1,185,000
Ongoing
139.8 Safe Community PFA South Battalion $ 664,616 $ 506,424 ongoing 1801,one time capital,balance ongoing,3-6 coon lead lime
167.1 High Perf Govt. Sustainable City Government $ 67,151 $ 69,048 ongoing
213.1 High Perf Govt. Development Review Center--Innovative Tech $ 121,600 $ 12,600 ongoing
211.3 Neighborhood Neighborhood Services--Code Enforcement $ 17,500 $ 17,500 ongoing
93.1 Neighborhood Neighborhood Parking Pilot program $ 28,735 $ 21,205 ongoing
222.1 Environmental Development Review Center--Green Building $ 22,000 $ 12,000 ongoing onetime start-up;balance ongoing
$ 921,602 $ 638,777
Grand Total $ 2,962,608 $1,906,777