HomeMy WebLinkAboutAgenda - Mail Packet - 11/29/2022 - Council Finance Committee Agenda – December 1, 2022
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AGENDA
Council Finance & Audit Committee
December 1, 2022
4:00 - 6:00 pm
Zoom Meeting https://zoom.us/j/8140111859
Approval of Minutes from the November 3, 2022, Council Finance Committee meeting.
1. Financial Policy Updates B. Dunn
Presentation: 15 mins.
Discussion: 15 mins.
2. Northfield Suniga Road TCEF Major Reimbursement M. Virata
Presentation: 10 mins. M. Martinez
Discussion: 10 mins.
3. Municipal Court Renovations J. Hueser
Presentation: 10 mins.
Discussion: 20 mins.
4. Rental Licensing Pilot Programming M. Yoder
Presentation: 15 mins. M. Overton
Discussion: 25 mins.
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Council Finance Committee
2022 Agenda Planning Calendar
RVSD 11/23/22 ck
Dec. 1st 2022
Financial Policy Updates
15 mins. presentation
15 mins. discussion
30 min B. Dunn
Northfield Suniga Road TCEF Major Reimbursement
10 mins. presentation
10 mins. discussion
20 min M. Virata
M. Marinez
Municipal Court Renovations
10 mins. presentation
20 mins. discussion
30 min J. Hueser
Rental Licensing Pilot Programming
15 mins. presentation
25 mins. discussion
40 min M. Yoder
M. Overton
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Finance Administration
215 N. Mason
2nd Floor
PO Box 580
Fort Collins, CO 80522
970.221.6788
970.221.6782 - fax
fcgov.com
Council Finance Committee Meeting
November 3, 2022, 4-6 pm
Via Zoom
Council Attendees: Julie Pignataro, Kelly Ohlson, Emily Francis
Staff: Kelly DiMartino, Travis Storin, John Duval, Ginny Sawyer, Dean Klingner,
Jen Poznanovic, Nina Bodenhamer, Blaine Dunn, Jo Cech, Amanda Newton,
Holly Mason, Randy Bailey, Trevor Nash, Renee Reeves, Caryn Champine,
Drew Brooks, Honore Depew, John Phelan, Javier Echeverria-Diaz,
Megan Valliere, Josh Birks, SeonAh Kendall, Linday Ex, Gerry Paul,
Dave Lenz, Kerri Ishmael, Zack Mozer, Erik Martin, Carolyn Koontz
Others:
Kevin Jones, Chamber
Molly Bohannon, Coloradoan
Patrick Picard, Fehr & Peers (Consultant)
Rachel Shindman, EPS (Consultant)
Emily Gallichotte, CSU
______________________________________________________________________________
Meeting called to order at 4:00 pm
Approval of minutes from the October 20, 2022, Council Finance Committee Meeting. Emily Francis moved for
approval of the minutes as presented. Kelly Ohlson seconded the motion. Minutes were approved unanimously via
roll call by; Julie Pignataro, Kelly Ohlson and Emily Francis.
A. General Employee Retirement Plan (GERP) Review
Blaine Dunn, Accounting Director
Amanda Newton, Sr. Treasury Analyst
EXECUTIVE SUMMARY
The General Employee Retirement Plan “the Plan” was established in 1971 and was closed to new members in
1999. There are currently 352 total members left in the Plan including active employees, terminated vested
employees, and employees receiving a benefit. In 2021 the total pension liability was $59.6M and the fiduciary
net position for the Plan was $54.6M, leaving a net pension liability of $5.1M.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Inform and educate Council Finance Committee on the Plan
Does Council Finance desire any additional information?
BACKGROUND/DISCUSSION
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The Plan is overseen by the General Employees Retirement Committee (GERC). The GERC is comprised of 6
members, 1 from financial services and 5 current or former employees covered by the Plan. The GERC administers
the Plan including setting the investment policy and making any changes to assumptions used in the actuarial
valuations. After studying the actuarial valuation report prepared by Milliman, an independent actuarial and
consulting firm, the GERC decided to make no changes in the assumptions for 2022. The 15-year average return
for the plan is currently 7.7%.
In 2013 Council approved increasing the supplementary contribution to $1.1M annually. This was to help reach
full funding of the plan sooner than previously projected. Based on the present value of future benefits ($60.2M),
the current market value of assets ($54.6M), and the present value of future payroll contribution ($1.0M), the
shortfall of $4.6M is anticipated to be funded through the annual supplemental contribution of $1.1M over the
next 5 years. Therefore, it is currently estimated the plan will meet full funding by 2026. This is when the City
supplemental contributions will end. However, the full funding year might change year over year based on the
actuarial valuation.
The current net pension liability of $5.1M is the lowest amount the Plan has had since 2007. The current funding
ratio of 91% is the highest the Plan has had since 2007 and compares favorably with other public sector plans. The
Plan continues to be able to meet all obligations and overall is in a healthy financial status.
DISCUSSION / NEXT STEPS
GENERAL DIRECTION SOUGHT
Inform and educate Council Finance Committee on the Plan
Does Council Finance desire any additional information?
Julie Pignataro and Emily Francis; no questions – thank you
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Kelly Ohlson; (slide 12) see above
It appears now we will need to continue the supplemental funding out to possible 2037 due to stock market
performance YTD in 2022.
Blaine Dunn; that is correct – that date changes every year based on the actuarial report. In my tenure, I have
seen it out as far as 2042 and as soon as 2026. The 2037 date is a staff estimate not an actuarial estimate.
Kelly Ohlson; I would like to have historical data on the supplemental contribution – when it started and how
much by year. I think they absolutely made the right decision in 1999 to close the plan. I support defined
contribution but not defined benefit.
Investment Policy Category Allocation (slide 9) see above
Kelly Ohlson; Domestic Mutual Funds at top end of scale -
Travis Storin; from an asset allocation standpoint, with a plan that won’t truly sunset until the 2060’s,
it is actually prudent to have a stomach for the ups and downs of the equity markets. Loading up on fixed
income (bonds) in the long haul it is the belief of staff that would cost the city more. It is our belief that over the
40-year horizon, the equity market is the right place to be
Kelly Ohlson; I agree with your answer.
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B. Sustainable Funding - Transit
Drew Brooks, Director, Transit
EXECUTIVE SUMMARY
This session is intended to provide an overview of work performed over the last year in development of the
Transfort Funding & Fare Free Study. The presentation will include an overview of the project, a summary of the
fare free analysis, updates to funding projections for operational and capital needs to buildout the Transit
Master Plan (TMP), and a review of new possible transit revenue development and sources.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
What questions do Councilmembers have regarding the information presented?
What additional information would aid in decision-making regarding sustainable funding for transit?
BACKGROUND/DISCUSSION
In the Fall of 2021, Transfort & FC Moves staff conducted a competitive Request for Proposal (RFP)
process to hire a consultant team to conduct a funding study for Transfort. The funding study was a key
short-term priority of the Transit Master Plan (TMP), adopted in 2019. The TMP identified that significant new
funding sources were needed to build and operate the projected new services adopted in the plan.
In December of 2021, work began with Fehr & Peers and their partners EPS and FHU. The study, which will be
complete by the end of 2022, will include the following key deliverables:
• Public and partner engagement
• Review of current operations and revenue
• Update of expense projections from the 2019 TMP
• Development of future funding options
• Fare structure review including a fare free analysis
• Implementation plan
The following overview of completed and in process work from the study are illustrated in the presentation:
Fare Free Analysis
The analysis found that Transfort’s current farebox recovery is quite low and the costs associated with fare
collection are high. Excluding the contractual contribution towards fares with CSU ($638,000 in 2021), under the
current collection system, Transfort has a negative farebox recovery.
Benefits to remaining a fare free system include:
• Cost savings
• Increased equity and access
• Ridership growth (long-term)
• Ease of operations
• Fulfilling community transit, equity, and climate goals
There are also possible barriers to remaining fare free that require consideration, though mitigation
strategies are possible:
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Updated Revenue Needs
A complete update of the capital and operational expense projections associated with the TMP has
been completed. These estimates are divided into three milestone categories with associated projects
and service expansions:
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It is important to note that many of the most expensive capital projects are slated in the short-term
category, resulting in an uneven distribution of capital funding needs over the 20-year plan:
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Revenue Sources Under Consideration
The team performed a comprehensive analysis of all possible funding sources utilized by transit
agencies nationwide. The current task is a detailed evaluation of all preferred tools using six key
criteria:
The comprehensive list of revenue sources is divided into three broad categories: Federal & State,
Local Recurring, and Districts & Other. The current evaluation process is intended to inform
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development of an overall funding strategy to be complete by the end of the year and to inform and
augment Council’s current sustainable funding discussions.
DISCUSSION / NEXT STEPS
GENERAL DIRECTION SOUGHT
What questions do Councilmembers have regarding the information presented?
What additional information would aid in decision-making regarding sustainable funding for transit?
NOTE: Slide #6 was replaced as the table used in the version distributed wasn’t the correct one. (see above for
updated slide)
Patrick Picard, Fehr & Peers (Consultant)
Rachel Shindman, EPS (Consultant)
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Kelly Ohlson; slide 21 Key Questions (see above) says $5M but slide 14 (see below) which says $13.7M short per
year. Why aren’t we simply saying we have a $14.7M problem?
Drew Brooks; we have heard in the discussion you have been having regarding what a potential sustainable
funding source might be – numbers in the range of $5-8M, potentially $10M. We know we have a gap, the total
being approximately $14M per year if we average it over the entire 18–20-year timeframe. We have been
working with scenarios of - if what you come up with is $5M per year or $8M per year and we are trying to
figure out where do we come up with the gap after that.
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Kelly Ohlson; I am flummoxed – why aren’t we just saying we have a $14-15M transit problem? Let’s not
complicate it.
Drew Brooks; we were talking about the $8-10M number initially which was prior to this study being conducted
to evaluate what was in the Transit Master Plan and update all those numbers. So, now we have the updated
numbers. We were basing numbers off what was in the Transit Master Plan which was dated - 2016 and 2017.
The numbers today have been updated.
Kelly Ohlson; you have refined the numbers which is what we asked for and this is good work – why don’t we
just say we have a $14-15M transit problem? This would be confusing to our residents whose job is not to study
this in depth. I recommend we call it what it is - a $14-15M transit gap.
Travis Storin; we are likely going to have to prioritize under the $14M and struggle to deliver on the whole
transit master plan and we will have to make some difficult decisions on whether BRT versus certain fixed route
expansions versus para transit would take place. I found the $8-10M to be pragmatic and consistent with what
we have talked about here in the past. Difficult decisions regarding what elements of the master plan we really
want to put our energies behind.
Kelly Ohlson; I would say we have a $14.7M transit issue - realistically we won’t do it - the sustainable revenue
holder which is $8M – come up with a number that we think is realistic and work toward that goal that dollar
figure and prioritize what that buys us. That is my take on this whole thing.
Julie Pignataro; what makes you think one number is more realistic that the other?
Travis Storin; the early part was linked to previous master plans - should update our knowledge if the number
has gone higher - some of the mechanisms we have talked about in terms of an additional ¼ cent of sales tax
would generate around $9.5M and is already probably a tall order in and of itself. My own judgment in looking
across all four priorities, each of which are indicating a need of between $6-10M each is that it would be a
struggle to meet all four of those priorities and go all the way to the top of the range – as always, we are open to
a different level of input from committee members
Julie Pignataro; I like what Kelly is saying - it is what it is - if the number is $14M -it is confusing the issue
Emily Francis; I think it would be more grounding to say we have this $14M problem we are talking about and
this is where the other dollars may be coming from - a more holistic picture. If we aren’t going to do $14M, are
we doing $8M? Why would we have a plan of $14M when we can’t pay for it even with other revenue sources?
Why make a plan outside of what we can feasibly do?
Drew Brooks; this was a plan that was adopted by a very different council – there were probably assumptions
made at the time that the funding could or would be found in some way, shape or form. The number has
increased due to project costs and inflationary impacts over time. Many of these plans are very aspirational but
we do have an intent to build - if we don’t find a funding source that reaches the $14.7M, then we would have
to go back to this plan and make an amendment or revision that meets as many of the goals as we possibly can if
council feels that is prudent.
Rachel Shindman; part of our job is to understand how we can do it - there are tools out there that can help us
do this – whether we can implement them and use them may or may not be possible depending on whether an
election is needed or other things – what else is in the hopper for funding? Our role is to help understand what
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tools are out there and what could be done to get us to that level – looking at the overall need of $14M and
then understanding the 2 buckets; one is the ongoing sustainable revenue conversation of which transit is a part
and the second piece is what are we left with in addition to that and how might we address that
and understanding the best tools that meet our needs – there are a lot of grants out there that are only
available for capital improvement – understanding of the need – what is the level of grant funding out there for
capital so can we start to understand what the need looks like under the $14M - How much of the grant revenue
can we get - How much to capital – how much to revenue - Our job is to try to understand the different ways we
can meet it.
Kelly Ohlson; we are putting this through a funnel and making good progress since the last time we discussed
this. In my opinion, start with what the master plan is - we have the $14.7M which is an aspirational plan. So,
staff and consultants go back and say - we can’t do everything (much like the Natural Areas plan) and then put it
through and come up with what we think we absolutely should be doing in transit and what is that number
The goals are great but what we really need to make sure we need to get done – if the number you come up
with is low - Council still has the prerogative to move some things up and other things down. I think the next
iteration needs to be – the $14.7M – good work there but is it realistic –most of our plans are aspirational and
that is ok, but we need get it to a number we can work toward and how we fund it.
An example - Do I want transit to Boulder for people? Yes - Is it as important as more routes for people living in
Fort Collins? No. I would like staff to do the heavy lifting first, both financial and otherwise.
Julie Pignataro; I was thinking along those same lines – if you say the funding commitment based on the plan is
$14.7M and the funding commitment based on your recommendation is $8M or whatever and the minimum
funding commitment would be just to keep the lights on - that would be super helpful in framing what we are
talking about. This presentation is divided into 3 sections; 1) fare free transit 2) revenue needs 3) revenue
funding to meet those needs
Drew Brooks; we have heard from council members asking us about the option of going fare free.
We have been fare free since the beginning of the pandemic. Our costs to collect fares are high but we wanted
to do a fully analysis there. If we can work with CSU and retain their contribution – if we keep that there is a
pretty good argument that collecting fares doesn’t really do much for us and adds additional costs.
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Julie Pignataro: what was the difference with the updated slide #6? (see above) the 4.1%
Patrick Picard; slide #6 that went out with the packet included outdated assumptions and was from a previous
version -we updated the assumptions for life cycle of the equipment, when it needs to be replaced. Made the
assumption that it would be a little bit longer (10 years instead of 7)
Julie Pignataro; Benefit and Barriers Slide #7 (see above)
Did we derive these from other communities who have done something similar?
Where did these all come from?
Patrick Picard; Benefits are from doing research on what has occurred in other communities.
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The report includes some peer studies that we did. The issues are slightly different in each community. The
barriers that we identified are ones that either staff is already experiencing are just seem more likely given the
context of Fort Collins. I think cost is a major issue in other communities but is not the issue in Fort Collins
RTD gets 25-30% of their revenue from fares. If they went fare free, it would be a much bigger barrier.
For Fort Collins, If you can overcome the CSU thing it is not much of a barrier.
Drew Brooks; one thing to add is the increased demand for paratransit and Dial-A-Ride services. The cost per
ride is $42. If we had zero fare, we would have to do that for Dial-A-Ride as that is a federal requirement. We
would probably see an increase in costs to cover this but we don’t know what that percentage would be.
Julie Pignataro; what kind of riders are using that service? Could our buses be equipped to support them?
Drew Brooks; if we had much more frequent and more broad-based system, probably more people who have a
disability would use the system as opposed to Dial-A-Ride. The intent of Dial-A-Ride is to provide a
complementary service to those who can’t access the fixed route system. Users are all members of our
community who have a disability and qualify to use this service.
Julie Pignataro; what percentage of our riders is that?
Drew Brooks; we don’t have that as a percentage of our riders because it is a service that they must qualify for. I
can get back to you with how many actual riders are utilizing the service. We have 30-35K rides per year and
that has started to increase as the pandemic has been dwindling.
Patrick Picard; it is a requirement for federal funding that they provide this service and the most you can charge
is 2x the fare. Any agency that converted to fare free saw an increase in para transit service. We listed some
Of the mitigation strategies and one of the ones that is commonly done is being stricter on eligibility – a lot of
times there is a little more leeway given as this is a very vulnerable population that probably needs it.
Some that have gone fare free just budget more for their para transit services which is a basic need of the
community.
Julie Pignataro; if we stay at fare free which I didn’t realize we were still fare free. The pandemic policies we
started didn’t end at the same time and some didn’t end. My family loves the free bus, and we may have ridden
more in the last year if we had known.
Drew Brooks; we remained fare free for a few reasons – one if that jour services are reduced we can afford to
remain fare free at this time because we don’t have as many expenses. As we are hopefully able to increase our
services that will be a consideration going forward. Another consideration is the equipment we use to collect
fares has been dormant and some has become obsolete so we would have to use some other method.
Ticket Vending Machines (TVM) on the Max – even if we go back to collecting fares, we won’t use them again as
they are past their useful life so we would go to some other method of collecting fares. We were waiting to
finish this study and see where that led us and see where the breakpoint is where we need to collect fares or fill
that gap.
Julie Pignataro; we want more ridership growth (better for the environment and the system as a whole).
Does that lead to a more expensive system?
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Drew Brooks; not necessarily, we have the capacity today if we have the growth - we are still at significantly
lower rider levels – pre-pandemic – we have not returned anywhere near what ridership was in 2019. We
are still down about 50% - which is a typical reduction for a university town.
Julie Pignataro; would higher ridership lead to more potential grants?
Drew Brooks; it does have a relationship, but it hasn’t been the case currently because of the impacts of the
pandemic – the federal dollars have not been tied to ridership over the last few years.
Julie Pignataro; CSU subsidizes for students to ride free
Drew Brooks; We also have a grant from the Bohemian Foundation which is intended for youth (17 and under)
to ride free.
Patrick Picard; CSU likes the data they can get from students tapping a card which seemed like a bigger issue
than funding.
Emily Francis; presumably other communities collect fares and make money - why is our system different where
we are losing money? Why wouldn’t we just get a new fare collection system?
Drew Brooks; the primary reason is that so much of our ridership is based on CSU and they pay a fee so that all
students, faculty, and staff ride free so that brings down the number significantly. What we collect at the fare
box is very small. If we were to go back to collecting fares, we would use a new system that would be less
expensive to operate.
Patrick Picard; smaller cities don’t get much money from fares. (often less than 10% of their operating
expenses). It is usually the urban areas – and many are moving to fare free (Kansas City and Albuquerque have
changed to fare free recently). Ridership varies from place to place.
Travis Storin; rarely do transit / bus agencies recover more than 20% of their costs from fares. Public transit is
generally speaking heavily taxpayer funded (federally / locally). The vast majority of transit agencies are money
losers if you just look at fares.
Patrick Picard; RTD is 25-30%. The best in the country is New York City which is at 55% - so 45% of their funding
is not from fares but from local and federal funding.
Emily Francis; where are we with the PSD study? Is that also being discussed with the funding?
Drew Brooks; that study is just getting underway - we are hoping to have that one bid by the end of the year
and planning to get started right after the first of the year. That is in the pipeline and will be a piece of any
future discussions. Learn more about if there are opportunities to share resources with PSD, The study should be
rather short in duration.
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Revenue Sources (slides 18-20) see above
Kelly Ohlson; #37 on the list above, Regional Transportation Authority (RTA)
I played a role in defeating two RTAs that weren’t for transit but were for road projects.
Assuming this RTA would be a transit RTA – not one masquerading
Rachel Shindman; the tools listed don’t complete on the same field – we wanted to share information on
what it could look like. Understand an RTA can be used for transit and other transportation projects but we
are not at that point in our analysis yet to know – it is still in the hopper and there is no recommendation
Kelly Ohlson; I don’t want to see an RTA that isn’t almost all exclusively transit.
It did get defeated for those other reasons.
Drew Brooks; any items in the Revenue Sources List (see slides above) that you want us to run away from or any
that you want to move forward with?
Kelly Ohlson; I don’t want naming rights that come bring in 3% of the money I despise naming rights - involved in
sponsorships 45 on the list.
Drew Brooks; we are only looking seriously at the options highlighted in green
Travis Storin; we are bringing all four priorities to the December 13th as a status check with the full council
Julie Pignataro; maybe specifically ask that question about the list of revenue sources of the full council.
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Emily Francis; some guidance on funding sources – aligning with our values and priorities
C. Sustainable Funding - Climate Options
Honore Depew, Sr. Manager, Environmental Sustainability
John Phelan, Energy Services, Senior Manager
Javier Echeverria Diaz, Sr. Analyst Finance
Megan Valliere, Coordinator, Project Management
EXECUTIVE SUMMARY
The purpose of this item is to respond to the requests at the September 1, 2022, Council Finance Committee (CFC)
meeting and provide several models for climate revenue generation for consideration. Five options for generating
climate-focused revenue are summarized, along with the current revenue built into Utilities’ electricity rate
structure that supports climate initiatives.
The options presented include:
1) Sustainable Revenue – for parks, transit, housing, and climate (in alignment with the ongoing CFC discussions)
2) OPTION 1: Dedicated Sales Tax – specifically for climate initiatives
3) OPTION 2: Natural Gas – excise tax
4) OPTION 3: Natural Gas – as proxy fee for emissions
5) OPTION 4: Large Emitter Fee
These options are summarized based on initial research and case studies of peer municipalities. If directed,
extensive additional legal and policy analysis will be needed for those options selected to be explored further in
2023. Given the additional time needed to conduct in-depth analysis for further consideration of each option, staff
is requesting to know which approaches CFC members would like to remove from consideration at this time. Staff
recommends exploring Options 1 & 2 further. Greater detail on future revenue use will be part of the December
13 Council Work Session.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Which climate revenue generating approaches would CFC members like to see prioritized for further analysis in
2023 and which should be removed from consideration?
BACKGROUND/DISCUSSION
Over the last year, City staff have identified and presented to Council Finance Committee (CFC) various revenue
generation mechanisms to provide necessary resources for parks, housing, and transit. Since the conversation
began, CFC has indicated a desire to see climate funding included as the “fourth corner” of the dedicated funding
discussion. During the September 1, 2022, CFC meeting, staff presented a brief and general overview of potential
revenue generation mechanisms for ongoing climate funding. After the staff presentation, which included only
brief remarks on fees for large emitters, staff heard a clear request by committee members to present additional
research and data exploring ways to both generate climate revenue and drive changes to systems and behaviors.
The analysis contained in this agenda item summary details the high-level, conceptual research in this area for
CFC review. Should CFC desire more information about any of these options, it will require more in-depth policy
and legal analysis in 2023 to determine how they would be implemented in the context of the City of Fort Collins,
our existing finance and revenue generation tools, and the suite of options being presented to Council for
sustainable revenue for parks, housing, transit, and climate.
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The options detailed below and included in an attached summary table (See Appendix 1) are divided into two
categories - Core, Ongoing Climate Funding and Acceleration Opportunities / Enhancements to Core. Staff
considers Core Funding to include funding from the existing Utilities rate structure and possible new funding from
the outcomes of the broader Sustainable Revenue project. Potential Acceleration Opportunities include options
that would generate dedicated climate revenue while also working toward Our Climate Future goals using financial
incentives and disincentives that encourage systems and behavior change within the community. The options are
summarized below with detailed discussion available in the attached Appendix 2. The summaries include a brief
overview of the funding mechanism (i.e., description, potential uses of funding, revenue potential (when
available), flexibility of funds) and key policy considerations (equity considerations and implementation notes).
Core, Ongoing Climate Funding
Core Funding includes revenue from the existing Utilities electricity rate structure and possible new funding from
the outcomes of the broader Sustainable Revenue project.
Existing Revenue (Utilities)
Overview
The existing electrical rate structure generates funds directly from customers to help manage community
electricity use and carbon emissions. Current electric use would be 21% higher without this funding, which has
been in place since 2005. A portfolio evaluation of Utility programs confirmed that for every $1.00 invested, Utility
efficiency programs recognized $1.80 in local community benefits.
• Uses: Program resources are available for residential, commercial, and industrial customers and are
closely coordinated with Platte River Power Authority. The funds are used to support a range of climate
initiatives, including energy efficiency, increased renewables, and enhanced grid flexibility.
• Revenue: Fort Collins Utilities generates more than $6 million annually from the existing rate structure.
City Council approves the Utility customer electric rate structure by ordinance annually or when needed.
• Flexibility: Funds are allocated through the Fort Collins Budgeting for Outcomes (BFO) process. As a result,
the funds can be used for a wide array of purposes that align with the Fort Collins Utility charter.
Key Policy Considerations
• Equity: The BFO process and staff program design can support equitable distribution of the funds. Past
examples include Epic Homes focus on rental properties, the Larimer County Conservation Corp Energy
and Water Program and targeted small business lighting incentives.
• Other Considerations: These ongoing and evolving programs have a proven track record of positively
impacting environmental, social, and economic conditions in Fort Collins and contributing to the
outcomes of the Our Climate Future plan.
Sustainable Revenue (Climate, Transit, Housing, Parks)
Overview
The New Revenue Core Team has presented and discussed the pursuit of sustainable revenue via a repurposed
sales tax, property tax, excise tax, user fee, or other mechanisms identified and discussed in past CFC meetings.
Splitting this revenue between parks, transit, housing, and climate will provide ongoing funding for all four areas,
enabling targeted spending on climate initiatives that will support the City and community in reaching our climate
mitigation and resilience goals.
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• Uses: A wide range depending on the structure of the revenue funding model which could support residential,
commercial, and industrial structures and users.
• Revenue: Depends on the chosen structure.
• Flexibility: Since any of the revenue generation mechanisms included in past discussion can be written broadly
to allow for a wide variety of investments and last for as many years as the Council and community would like,
this revenue will provide for both flexibility and consistency in our approach.
Key Policy Considerations
• Equity: These mechanisms affect a broad swath of the community and collect revenue from most individuals
in the city. Depending on structure, this approach will likely be regressive (having a proportionally greater
impact on low-income community members). Equity considerations should be built into these revenue
options to reduce the impact on specific community populations.
• Implementation: These mechanisms, aside from user fees, require voter approval.
Acceleration Opportunities / Enhancements to Core
Potential Acceleration Opportunities include options that would generate dedicated climate revenue while also
working toward Our Climate Future goals using financial incentives and disincentives that encourage systems and
behavior change within the community.
OPTION 1: Dedicated Sales Tax for Climate Initiatives
Overview
This option could be considered separately from or as part of the new sustainable revenue package being
developed for parks, housing, transit, and climate funding. One possibility would be to put forth a voter-approved
tax for climate (inclusive of parks, housing, and/or transit) to help accomplish Our Climate Future goals, or it could
be an additional dedicated tax separate from the package of new revenue tools discussed above. Examples include
Denver’s Climate Protection Fund and the Portland Clean Energy Community Benefits Fund (both are described in
detail in the attached Appendix 2).
• Uses: Both Denver and Portland’s funds can be applied to a wide range of allowable uses, including buildings,
renewables, workforce, transportation, environmental & climate justice, regenerative agriculture, green
infrastructure, adaptation & resiliency, future innovations, and administration.
• Revenue: Denver’s fund generates $40 million annually and Portland’s generates $30 to $60 million
depending on the source. Local revenue generation would depend on the rate and applicability of the tax and
should be expected to be significantly lower given the population differential between Fort Collins and
Denver/Portland.
• Flexibility: A dedicated sales tax can be written to have a wide range of allowable uses, as in the Denver and
Portland case studies. Staff views this potential revenue source as highly flexible as well. As in the case of core
new revenue, this funding could last as long as Council and the community would like, and it would impact
the entire community as well as visitors who enter the City and pay sales tax as part of their purchases while
in town.
Key Policy Considerations
• Equity: Sales taxes are inherently regressive, but Denver has found a way to distribute resources generated
from their tax equitably. Denver’s ordinance creating the Climate Protection Fund (CPF) states that it “should,
over the long term, endeavor to invest fifty percent (50%) of the dedicated funds directly in the community
with a strong lens toward equity, race and social justice.” Portland only assesses a surcharge on gross revenues
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from large retailers due to their outsized impact on climate change. Small retailers were excluded to minimize
impacts on small- and medium-sized businesses within the community.
• Implementation: A dedicated sales tax requires voter approval.
OPTION 2: Natural Gas Excise Tax
Overview
One policy option that could both raise revenue and disincentivize emissions is an excise tax on natural gas use. A
new tax could be assessed on the delivery of natural gas and charged directly to the entities that deliver natural
gas (e.g., Xcel Energy). The delivery entity would have discretion on how to pass the cost along to customers. A
local example is Boulder’s experience in environmental revenue generation through a similar tax structure (for a
detailed description of the current and proposed Boulder approaches see the attached Appendix 2).
• Uses: In Boulder, the revenue collected from their existing climate taxes has been put toward rebates and
incentives to help residents and businesses reduce energy usage and implement solar solutions, piloting
innovative technologies, implementing local policies, lobbying and advocacy for regulatory changes at other
levels of government, and other initiatives related to reaching the City’s clean energy goals. Their proposed
natural gas excise tax includes allowable uses for revenue such as direct cash assistance for energy efficiency,
microgrid energy storage, building electrification, transportation infrastructure electrification, natural climate
solutions, and wildfire resilience.
• Revenue: Revenue generation locally will vary depending on how it is structured and could be one of the
higher-impact options to consider. Because staff expects the community to slowly phase out its dependence
upon natural gas, revenue generated from an excise tax of this type will likely endure for greater than ten
years and into the foreseeable future. In Boulder, the combined total of average annual revenue for their
existing two taxes is roughly $3.9 million per year and could increase to $6.5 million per year with their tax
consolidation proposal this November.
• Flexibility: The Council can structure allowable uses for the tax as broadly as it would like in the ballot
language, therefore, this revenue generation mechanism could be highly flexible.
Key Policy Considerations
If Council is interested in pursuing this option, staff will need to conduct additional research and analysis to
determine estimates for implementation and administrative costs.
• Equity: Staff would classify this mechanism as regressive since the City maintains little control over how
natural gas providers pass costs onto their customers and because an excise tax on a utility will likely impact
low-income customers to a greater degree than middle- and high-income customers. Boulder is pursuing
options to enhance the equitable application of the tax.
• Implementation: A new excise tax requires voter approval. There may be several legal complexities with
implementing a general tax on natural gas providers that is then passed onto consumers, especially given the
City’s current contract with Xcel Energy. The City currently maintains a franchise fee agreement with Xcel
Energy which grants them the nonexclusive right to use City streets, public utility easements, and other City
property for the purpose of providing natural gas service in exchange for a fee, which they pass down to
consumers. More information about the City’s franchise agreement with Xcel Energy can be found below.
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OPTION 3: Natural Gas as Proxy Fee
Overview
When considering potential revenue from medium-sized emitters (entities not required to report to the EPA
because they are under the 25k MT CO2e/year) natural gas consumption could be used as a proxy for emissions,
and a fee could be charged to medium-sized emitters. This option is the least-well understood due to staff’s
inability to find local, regional, or other peer examples of this type of program.
• Uses: The use of these funds would need to be tied to the actions or behavior of the feepayer limiting the
ability to achieve broader Our Climate Future goals and objectives.
• Revenue: For the same reason as the previous option, staff believes that revenue generated from this
mechanism will endure for greater than ten years and into the foreseeable future.
• Flexibility: Fees must legally have a narrower use that applies these recovered dollars to the cost of programs
that address shortfalls imposed by feepayers. The use of revenue generated via this mechanism would be
restricted to a greater degree than a voter-approved tax. Council and City Staff would need to brainstorm
creative ways to use revenue to target emissions in a way that ties the fee revenue to the costs incurred due
to activities related to GHG emissions by the City’s largest emitters.
Key Policy Considerations
Since the City does not supply natural gas, staff does not currently have access to consumption levels by account
within the community. Should Council be interested in pursuing this type of revenue generation, staff will need
to invest time and resources into understanding the legal and policy-related complications that may arise from
the use of a fee-based mechanism. Researching how staff will collect data on the largest natural gas emitters in
the community will present an additional hurdle for this option.
• Equity: Since the fee would directly target the community’s largest emitters, it would be levied equitably.
Nonetheless, Council and staff would still need to make intentional investments of fee revenue in ways that
are both legal and equitable to enhance the community-wide impact of the revenue.
• Implementation: A fee does not require voter approval. The largest barrier to this type of program is
determining exactly which consumers would be subject to the fee (i.e., the top 50 or 100 consumers,
consumers above a certain threshold, etc.) and how the City would collect that information. At this time,
staff does not have an estimate of the implementation/administrative costs of a natural gas proxy fee, in
part due to a lack of peer examples in this space.
OPTION 4: Large Emitter Fee
Overview
A “large emitter” would be defined as those entities reporting more than 25,000MT CO2e annually, as reported
to the EPA. The recommended fee would be based on the Social Cost of Carbon, which is priced at $51/MT of
carbon emitted. At this level of carbon emissions, there are three facilities within City limits to which the fee would
apply, Broadcom, Colorado State University, and Anheuser Busch (details on emissions available in the attached
Appendix 2).
• Uses: Fees require the organization to use the recovered revenue in pursuit of programs and policies that
connect to the issue caused by the behavior or actions of the feepayer. Consequently, the safest investment
of fee revenue would result in the City providing programs or rebates that earmark funding for these entities
to address large sources of emissions and their impact on climate and environment in our community.
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• Revenue: Assuming a fee of $51/MT of carbon emitted this revenue mechanism could generate as much as
$10.9 million annually (details of the revenue calculation available in the attached Appendix 2). As with many
behavior-based policy interventions, revenue is expected to decrease over time as emitters align their
behavior with the expectations of the policy in an attempt to reduce their overall costs.
• Flexibility: Fees must legally have a narrower use that applies these recovered dollars to the cost of programs
that address shortfalls imposed by feepayers, the use of revenue generated via this mechanism would be
restricted to a greater degree than a voter-approved tax. Council and City Staff would need to brainstorm
creative ways to use revenue to target emissions in a way that ties the fee revenue to the costs incurred due
to activities related to GHG emissions by the City’s three largest emitters.
Key Policy Considerations
Further staff analysis is necessary to understand the resource-intensiveness of this approach in terms of
administrative costs as staff is unaware of other analogous programs for comparison. In terms of equity, staff’s
evaluation is that this mechanism is generally more progressive in nature than other options since it targets the
highest emitters in the community. Nonetheless, it also creates an arbitrary line between emitters that are
required to report to EPA and those just under the threshold of 25MT, potentially creating equity issues between
entities just above and below the line.
• Equity: Since the fee would directly target the community’s largest emitters, it would be levied equitably.
Nonetheless, Council and staff would still need to make intentional investments of fee revenue in ways that
are both legal and equitable to enhance the community-wide impact of the revenue.
• Implementation: Because this revenue generation strategy is not a traditional tax, it does not require voter
approval via ballot initiative. This may ultimately lessen the procedural hurdles toward implementation. CSU
is a separate governmental entity unlike the other two private enterprises, the likelihood of legal complexity
is relatively high according to analysis by the City Attorney’s Office.
Additional Lever – Natural Gas Franchise Fee
The City assesses a tax called an occupational privilege gas service tax paid by Xcel Energy to the City in exchange
for the non-exclusive right of the company to use City streets, public utility easements, and other City property
for the purpose of providing utility service to the City and residents. The franchise agreement specifies that Xcel
must collect the fee via a surcharge upon City residents who are customers of the company. The fee is then
remitted to the City in monthly installments.
Allocation of Existing Franchise Fee Revenue
The revenue generated from this tax averages nearly half a million dollars per year (historical detail available in
the attached Appendix 2), all of which is then funneled directly into the general fund.
The franchise fee was originally instated in 1987, and several updated agreements between the City and Xcel have
been executed in the decades since. The latest agreement was signed in 2018 and stipulates the terms of the
franchise fee, including the maximum surcharge to be collected from customers, which is set at 3%. The current
franchise agreement is set to terminate in 2038.
While franchise fees can provide reliable and sustainable revenue for the general fund which can then be allocated
flexibly based upon the needs of the greater organization (as is currently the case in Fort Collins, Greeley,
Thornton, Lakewood, and Frisco, CO) some municipalities have leveraged these funds creatively in pursuit of
climate and environmental health goals (examples are available in the attached Appendix 2).
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Importantly, redirecting the use of franchise fee revenue at its currently negotiated level of 3% for climate-related
goals, policies, and programs does not constitute new revenue generation in the context of the present
sustainable revenue conversation.
Renegotiation of Franchise Fee
While redirecting the use of current franchise fees solely to climate-related programs does not create new
revenue, Council could endeavor to reopen and renegotiate the terms of the current agreement to raise the
surcharge on customers. If, for example, the surcharge was doubled to 6%, the City could generate an additional
$300k - $500k per year on average. This could raise the annual revenue to a total yearly average of between $600k
- $1M which could be leveraged in pursuit of GHG reduction goals outlined in Our Climate Future plans.
Staff Recommendation and Next Steps
Staff recommends further legal and policy analysis of Options 1 & 2 as part of the broader Sustainable Revenue
conversation. These tax-based options for climate revenue generation are anticipated to have longer timeframes,
higher flexibility for use of funds, and fewer legal complications compared with (fee-based) Options 3 & 4.
Next steps for this process will be:
• Take CFC guidance on which options to investigate further
• Provide a timeline to the full City Council at the December 13 Sustainable Funding Work Session that includes
future analysis of the selected revenue generation strategies
The December Work Session will also be an opportunity to go deeper into what new revenue may be used for. As
shared in the recent OCF Work Session, there will be many investments needed to achieve adopted climate and
waste goals, in alignment with the OCF Pathways and the Council OCF Action Roadmap.
DISCUSSION / NEXT STEPS
GENERAL DIRECTION SOUGHT
Which climate revenue generating approaches would CFC members like to see prioritized for further analysis in
2023 and which should be removed from consideration?
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Julie Pignataro; the reason we know who the top 3 emitters are, is because they must report to the EPA,
correct?
Honore Depew: the EPA defines a large emitter as anyone over 25K metric tons of CO2 equivalent (can be
various greenhouse gas emissions) annually - three such emitters in the city of Fort Collins
Julie Pignataro; is there anything like a medium / medium high classification?
Honore Depew: not so much about the classification but more about the reporting requirement – if you are less
than 25K metric tons per year, you are not required to report to the EPA.
Julie Pignataro: so, we couldn’t define a medium?
John Phelan; the other key distinction for a large emitter is that those units (metric tons) are directly in carbon
dioxide, once you get below that threshold, there is no carbon dioxide metric to report so you have to switch to
some other measurement to determine medium, medium high etc. From our initials research, it looks like
natural gas use would be the next best option that would apply in a broad way across the community.
There simply isn’t anything that measures carbon as an emission.
Julie Pignataro; is the natural gas use information private or available / public?
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John Phelan; we would have to go through some extensive work to get that information - we get aggregate
information currently from Xcel Energy – large blocks of commercial, residential - not detail.
In order to get the specific information, we would have to ask as part of our research. Our attorneys and our
policy staff. The data does exist but is a matter of us getting access to it.
Julie Pignataro; would I have to give permission for someone to get the data for my home? Businesses would
have to give their permission too.
John Phelan; You would have to give permission and the same for a business. Boulder is our best proxy for this
as they have been using a similar approach for many years. They have worked with Xcel to apply the tax through
their billing system. Boulder is not getting the usage information on individual customers, but, they have an
agreement with Xcel. We would have an additional challenge as we want to go beyond Xcel
We want the buyers who buy from any natural gas provider, the City of Fort Collins as an example, only uses
Xcel pipes but does not buy the gas from Xcel. It seems plausible that we could find out through our regulations,
requirements and working with our partners– but we don’t have any specific examples of seeing it done that
way.
Javier Echeveria-Diaz; Boulder is trying to achieve and pass a tax rate on transport natural gas providers, There
are 14 of them. They will do it on revenue versus gas usage because it is easier to track. I don’t know if it was a
legal barrier or just the intricacy of the detail work.
Julie Pignataro; it might be worth finding out why they do it that way. Question for John Duval, if it is a fee,
there must be a connection, right? Could it be a fee that could fund transit (because it is somewhat connected
to air quality) or would it need to be more connected than that?
John Duval; any fee we collect must reasonable benefit the fee payers. The difficulty with transit would be how
do the emitters benefit with the fee going toward transit? There is the example of the Aspen case where they
charged a fee for the plastic bags and used the money for recycling and recycling education, so it is possible to
look into that framework. The Supreme Court upheld that as a valid fee. Might be useful in coming up with a
process or a use of the fees that at least, indirectly benefit the fee payers (the emitters). If you wanted us to
pursue that route, we would have to look more into the detail of how we would set up the program so we could
defend it as in some way benefitting the fee payers.
Julie Pignataro; Option 2 - Natural Gas Excise Tax – was it stated that would just be turned over to the customer
or did I misread that?
John Phelan; so, the large emitter fee with only 3 entities potentially paying that fee would be most restrictive in
terms of potential uses. Whereas, a Natural Tax Excise Tax, because it is a tax, would require voter approval and
uses could be framed in the ballot and would have quite a bit of flexibility. Its kinds of hits a middle spot
between longevity and intending natural gas use to decrease over time over a course of a larger group of
customers would be providing revenue for quite a few years versus the large emitter fee which could drop off a
cliff rather quickly if any of the 3 go below the 25K metric tons per year and they all have intentions of doing so.
Travis Storin; what is passed through to the end user and equitability. The example around Boulder (we
will find out next Tuesday when that goes to the voters) is being levied on the 15 gas transporters. It is a safe
assumption that that increase will get passed on to the user. Presumably, large consumers like a big commercial
entity utilizing higher volumes of natural gas will pay a greater share than an individual resident would.
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Emily Francis; my understand is that option #2 is only for gas providers – the amount they are emitting is just a
tax
Travis Storin; the correlation we were looking to draw is that you would disincentive consumption of natural gas
– the optimal amount of revenue is $0 – maybe someday, over time we reach that point but the less gas you use
the less tax you pay – for the end user – assuming this would be done in a Boulder like type model.
Emily Francis; most homes are still built with gas so what do I do, not turn my stove on?
The reason we were looking at those large emitters is because we want them to reduce their emissions.
To my knowledge, they aren’t doing it that quickly so yes, that funding could run out or decline but say
over 5 years we have revenue that we could choose what to do with, knowing that it is going to end.
The goal is we want it to go down. so we are going to put a fee on it until you do. The end goal of why we are
trying to do the emitter fee is different that the natural gas. That is one way to tax, but I think it is regressive still
and people can’t choose right now as most homes are built to use gas.
Does option #3 incentive people to reduce their emissions?
John Phelan; in all cases, fee, or tax, we are using this to get them to reduce their use whether it be carbon
emission or gas. For either option #2 or #3, you could define thresholds where it doesn’t impact residential or
has a very small impact on residential users and only target the larger users. If approved as a tax, there would be
more flexibility in use than as a fee, so they are very similar, just different approaches. You could draw a line
as to who you are targeting with a variety of levels to shield those who cannot pay.
Honore Depew; to bring it back to Emily’s point earlier about how it feels regressive -asked to turn off their gas
stoves but in the long run, yes as you saw at the work session in the Council Action Roadmap, the performance
standards – we need to electrify our building stock, both new and existing. While providers can decide how to
pass along a fee to their customers / end users. We can also build in equity-based exemptions to the way that is
designed to incentivize or directly fund that type of convergent away from natural gas using devices in the
home.
I am going to turn it over to Lindsay Ex to address the concern Emily also brought up about the declining rate of
fees paid by large emitters over time,
Lindsay Ex; what we do know, there are three entities that were identified as large emitters that do the federal
reporting. CSU and Anheuser-Busch are two of those and they have publicly stated goals to reduce emissions
over time and are actively working on that. While Broadcom doesn’t have public goals yet, we have been
meeting with them quarterly particularly since the inclusion of the industrial process and product emissions
were built into our inventory by council a few years ago to better understand what they are doing as a company
to reduce your emissions. We are able to share that between 2015 and 2021, they have reduced their emissions
by nearly 60% and they are doing so at such a fast rate that as an example when we did the initial numbers as a
result of this inquiry, in 2020 that revenue would have been approximately $7.1M but based on their decreases
in 2021 alone, that revenue would have decreased to $6.4M, so that helps to show at a high level how these large
emitters are already taking action. Because of the nexus requirements of any fee, all the benefits would go right
back to these 3 emitters anyway.
Emily Francis; some organizations make goals and don’t accomplish them. That was helpful
I am not opposed to natural gas but would like to see more of a phased approach as I don’t think as a city we are
ready to implement and move forward with requiring electrification of all home or to converting homes. I would
be hesitant to start that fee or tax now when we don’t have that in place. Like Julie, I am not opposed to any of
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them. For the sustainable funding source, I would like to see that in a stack related to how that would play out
with the others. Maybe a combination
John Phelan; if that natural gas approach was targeting large users rather than residential, does that change
how you think about those options?
Emily Francis; I guess I just don’t see how it wouldn’t be passed on.
Travis Storin; the point in us bringing it up is that it goes to an end user and with a minimum threshold
could exempt certain households or residential entirely. But our high-volume users and high-volume emitters
would be given that incentive because whatever amount they get passed through they will pay less if their gas bill
is lower. This tax will likely manifest itself in a higher per therm rate or some kind of surcharge on their bill.
Kelly Ohlson; for the large emitters, is this self-reporting – how do we know there are not more hitting that number
but just not reporting.
John Phelan; there could be some risk there – it is self-reported based on protocols for how to do greenhouse gas
emissions. I can’t state categorically that there is not someone else who should be reporting. Reporting is related
to the regulatory environment of the air permits that they have – the size of the plants they have.
Kelly Ohlson; cutting to the chase - we are not making any decisions. I am reluctantly willing to perhaps save
some time to take the large emitter fee off the table for a couple reasons; CSU is a tad questionable (legally) and
if PRPA was located within our city limits, they would fall into that category.
John Phelan; yes, they would fall into that category
Kelly Ohlson; I am not willing to eliminate the other options. I think staff wanted to discontinue work on option
#3 I am not willing to let that go yet until we have more data Willing to let option #4 go and keep the others
alive and request more work.
Julie Pignataro; I am willing to let option #4 go for now but it does bring up an interesting question when we talk
about all of the electrification if PRPA isn’t lock step with us – because they will have to use more natural gas
as they bring down the coal use.
Honore Depew;
Continue looking at climate revenue sources as part of the larger sustainable revenue
Conversation to include a potential sales tax
Research further using natural gas as a proxy with options around a fee or a tax – not excluding either at this point
Letting the large emitter fee go as we move into the December work session.
Kelly Ohlson; coming up on this work session – it is Council’s prerogative to not do what we recommend
We are letting the large emitter fee go but are not giving any direction on the first part -we have spent 5 meetings
on these
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Travis Storin; I wanted to reinforce that the previous topic is very much in the conceptual stage, and I don’t want
the committee to have the expectation that the climate topic will be fully flushed out by the December 13th work
session.. The work session is intended to be holistic around all four priorities.
Meeting Adjourned at 6:10 pm
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COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
STAFF: Blaine Dunn, Accounting Director
DATE: December 1, 2022
SUBJECT FOR DISCUSSION: 2022 Financial Policy Review
EXECUTIVE SUMMARY: Once a year a portion of Financial Policies are reviewed and
updated as needed. Staff is committed to reviewing each policy no less than every 3 years.
Policy 7 and Policy 8 were reviewed in January 2022, but additional concerns were brought
forward with some of those changes, so staff has adjusted the recommendations around the Local
Government Investment Pools. Staff is also adding one change under Policy 5, to be reviewed by
the Committee during this meeting. Policies up for review this year are:
Financial Management Policy 5 – Fund Balance
Financial Management Policy 7 – Debt
Financial Management Policy 8 – Investment
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. Does Council Finance Committee support the changes as recommended?
BACKGROUND/DISCUSSION
Financial Management Policy 5 – Fund Balance Minimums: This policy has one change:
• Section 5.3 Minimum Balances
o Change Benefits Fund minimum balance from 30% to 25%
Financial Management Policy 7 – Debt: This policy has four sections with recommended
changes
• Section 7.3 Types of Debt and Financing Agreements
o Clarify when equipment leases can be used
o Clarify parameters for conduit debt
• Section 7.4 Debt Structure and Terms
o Remove language of capitalizing interest per new accounting standards
• Section 7.8 Inter-agency Loan Program
o Section is being moved from Policy 8 – Investment, with no additional changes
• Section 7.9 Other
o Clarify additional items to be included on future Debt Administration Policy
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Financial Management Policy 8 – Investment: Throughout the Policy the Poudre River Library
District is added for who this policy applies to. This policy has four sections with recommended
changes:
• Section 8.1 Policy
o Clean up language
• Section 8.6 Suitable and Authorized Investments
o Clarify there are no split ratings allowed on purchased investments
• Section 8.7 Diversification and Liquidity
o Renaming section to remove duplicate
o Increase amount allowed in Local Government investment pools to be changed
from 20% to 60%
• Section 8.8 Inter-agency Loan Program
o Removed from policy and added to Policy 7 – Debt
ATTACHMENTS
• Presentation Slides
• Policy 5 – Fund Balance, redline version
• Policy 5 – Fund Balance, clean version
• Policy 7 – Debt, redline version
• Policy 7 – Debt, clean version
• Policy 8 – Investment, redline version
• Policy 8 – Investment, clean version
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Financial Management Policies Review
December 1, 2022Blaine Dunn, Accounting DirectorPage 35 of 193
2Direction Sought
•Does Council Finance Committee support the changes as recommended?
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3Financial Management Policies
Policy #Policy Name Last CFC Review Date Next CFC Review Date
1 Budget November 2020 November 2023
2 Revenue November 2020 November 2023
3 General November 2020 November 2023
5 Fund Balance Today November 2023
7 Debt Today / January 2022 November 2024
8 Investments Today / January 2022 November 2024
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4Updates since January 2022
•Change to Fund Balance Policy
• Reduce the Benefits Fund balance minimum policy from 30% down to 25% of annual
medical and dental expenses
•After January discussion at Council Finance –concerns were raised about holding 100% of
funds in Local Government Investment Pool (LGIP)
•Staff believes these are safe a prudent investment options for the City
•Policy was originally changed to allow 100% of funds to be invested in LGIPs
•While in practice this is will never happen, it would still be possible
•After further review, staff is recommending changing LGIP max to 60% of portfolio
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5
Policy 5 –Fund Balance
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6Policy 5 –Fund Balance
Sections:
1.Governmental Funds and Fund Balance
2.Proprietary Fund and Working Capital
3.Minimum Balances (change Benefits Fund minimum from 30% to 25%)
4.Below Minimum
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7Policy 5 –Fund Balance, continued
5.3 Minimum Balances, Section F –Internal Service Funds
•Change benefits minimum from 30% to 25%
Impact and Projections of Fund Balance
Budget Projected P rojected Projected
2022 2023 2024 2025
Medical/Rx 24.3$ 25.4$ 27.3$ 29.3$
Dental 1.6$ 1.5$ 1.6$ 1.7$
Total 25.9$ 26.9$ 28.9$ 31.0$
30% Policy Min.7.8$ 8.1$ 8.7$ 9.3$
25% Policy Min.6.5$ 6.7$ 7.2$ 7.8$
Policy Differential 1.3$ 1.3$ 1.4$ 1.6$
* - in millions
Reduction in minimum Fund Balance will remain within the Benefits Fund
One time reserves savings, not an annual ongoing savingsPage 41 of 193
8
Policy 7 –Debt
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9Policy 7 -Debt
Sections:
1.Authorization for Municipal Borrowing
2.Purpose and Uses of Debt
3.Types of Debt and Financing Agreements (clean up)
4.Debt Structure and Terms (remove section per new accounting standards)
5.Refinancing Debt
6.Debt Limitations and Capacity
7.Debt Issuance Process
8.Inter-agency Loan Program (new section moved from Investment policy)
9. Other (adding additional information)
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10Policy 7 –Debt, continued
7.3 Types of Debt and Financing Agreements
•Clarification on where lease purchases shall be recognized
•Updating which policies additional information can be found
7.8 Inter-agency Loan Program
•This section used to exist within the Investment Policy, but closer aligns with Debt Policy
•No other changes to the policy are recommended
7.9 Other
•Additional clarification on what is included within Debt Administration Policy
•Debt Administration Policy is still under development by staff
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11
Policy 8 –Investment
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12Policy 8 –Investment
Sections:
1.Policy
2. Scope (add Library District to applicability of policy)
3.Investment Objectives
4.Standards of Care
5.Safekeeping and Custody
6.Suitable and Authorized Investments (clarify no split ratings)
7.Suitable and Authorized Investments Diversification and Liquidity (Rename and
change Local Government Investment Pools (LGIP) to 60% max, from 20%)
8.Inter-agency Loan Program (remove and put in Debt policy)
9. Reporting
10.Policy Adoption (clarify cadence of policy updates)
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13Policy 8 –Investment, continued
8.2 Scope
•Add Poudre River Public Library District to scope of policy
8.6 Suitable and Authorized Investments
•Update ratings rules to clarify no split ratings for investments will be allowed
8.7 Diversification and Liquidity
•Update name; previously had two sections named Suitable and Authorized Investments
•Increase amount allowed to be held in LGIP to 60% (from 20%)
8.8 Inter-agency Loan Program
•Remove from Investment Policy and add to the Debt Policy
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14What is a Local Government Investment Pool?
What is an LGIP?
-A short-term investment vehicle available to governmental entities
-Money of participating governments is combined to invest in short term securities
-Operates like a money market mutual fund with stable net asset value
What are the main characteristics?
-Maximum safety
-High liquidity
-Competitive yields
How do we invest in LGIP?
-Invest in two AAAm rated Colorado pools: COLOTRUST and CSAFE
-Account for 12% of the City’s investment portfolio as of November 2022
-Daily access to cash withdrawal and contribution
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15Next Steps
•Bring Policy changes to City Council for consideration as soon as practical
•These specific policies will be reviewed again no later than 2024
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16Direction Sought
•Does Council Finance Committee support the changes as recommended?
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18
Additional Information on LGIP’s
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19The 2008 Financial Crisis and LGIP
How did COLOTRUST do in 2008?
-Navigated through the crisis without limiting redemptions, and maintaining the stable $1 NAV
-Robust credit research and portfolio management teams saw flags before downturn
-Maintained AAAm rating through financial crisis
How did CSAFE do in 2008?
-Owned a small position in Lehman Brothers in the Reserve Fund
-A temporary 5% redemption limitation
-No Participant lost any principal or interest and CSAFE maintained its AAAm rating.
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20Protections Implemented and Adopted
A Money Market Fund Reform implemented by SEC in 2016:
-Enhance the stability of money market funds and to reduce investor risks
-Limit investments to short-term, high-quality debt securities with little value fluctuation
-Maintain a significant amount of liquid assets to meet reasonably foreseeable redemptions
-Diversity portfolios by limiting the funds to investing no more than 5% in any one issuer
COLOTRUST & CSAFE Policy Adoption Highlights:
-Amend investment parameters and maturity limitations in investment policy to comply with MMF
reform by SEC
-Move away from prime MMF to Government Securities and a diversified A1 rated Commercial
Paper of individual names
-Exposure to a single corporate or municipal issuer limited to 5%of total fund portfolio
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21Investment Holdings
COLOTRUST Holdings Overview
-No exposure to oil/gas companies
-Eligible investments include:
•US Treasury Securities
•US Agency Securities
•Collateralized Bank Deposits
•Repurchase Agreements
•Commercial paper not rated below
A-1, P-1, or F-1
CSAFE Holdings Overview
-No exposure to oil/gas companies
-Eligible Investments Include:
•U.S. Treasury & Agency Securities
•U.S. Government Instrumentalities
•Municipal Securities
•Repurchase Agreements
•U.S. dollar denominated senior debt
instruments issued by corporationsPage 54 of 193
Financial Management Policy 5
Fund Balance Minimums Issue Date: 01/12/21 Version: 5 Issued by: City Council
Financial Policy 5 – Fund Balance Minimums
1
5.1 Governmental Funds and Fund Balances To set minimum fund balances so as to mitigate risks, maintain good standing with rating agencies, and ensure cash is available when revenue is unavailable. The policy sets minimum fund balances, not targets or maximum balances. Each fund should be evaluated by staff to determine the appropriateness of maintaining fund balances above the minimums set in this policy. Contingencies for severe weather, prolonged drought, and anticipated capital spending should be considered independently from this policy. The Equity on balance sheet of a governmental fund is called Fund Balance. The current classifications of Fund Balance in governmental funds are primarily based on the origin of the constraints. The following categories are in decreasing order of constraints. Non-Spendable Permanent endowments or assets in a non-liquid form Restricted Involve a third party: State Legislation or Contractual Agreements Committed Set by formal action of the City Council Assigned By staff, and/or residual balances in a Special Revenue Fund Unassigned Remaining balances in governmental funds
Objective:
To set minimum fund balances as to mitigate risk, maintain good standing with rating agencies, and ensure
cash is available when revenue is unavailable. The policy sets minimum fund balances, not targets or
maximum balances. Each fund should be evaluated by staff to determine the appropriateness of
maintaining fund balances above the minimums set in this policy. Contingencies for severe weather,
prolonged drought, and anticipated capital spending should be considered independently from this policy.
Applicability:
Funds—This policy applies to all City funds. It does not apply to URA, DDA, PFA and Library.
Authorized by:
City Council Resolutions 1994-174, 2008-038, 2014-058,2017-101, 2021-010
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Financial Policy 5 – Fund Balance Minimums
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Minimums outlined in section 5.3 relate only to Assigned and Unassigned balances.
5.2 Proprietary Fund and Working Capital Internal Service Funds and Enterprise Funds are accounted for nearly identical to the private sector. The balance sheets include long term assets and long term liabilities. The resulting Equity section on their balance sheet, called Net Position, is not always a good measure of spendable financial resources. To get to spendable financial resources, a common calculation is to take Current Assets and subtract Current Liabilities, with the net result called Working Capital. To further refine, for purposes of this policy, certain required restrictions are further subtracted and result in Available Working Capital. Some examples of required restrictions are unspent monies for Art in Public Places, Water Rights, and existing appropriations for capital projects. The minimums outlined in section 5.3 relate to Available Working Capital.
5.3 Minimum Balances The following Minimum Balances refers to Assigned and Unassigned Fund Balances in governmental funds and Available Working Capital in the Internal Service Funds and Enterprise Funds. A. General Fund
60 Day Liquidity Goal - The Commitment for Contingency should be at least 60 days (17%) of the subsequent year’s originally adopted budgeted expenditures and transfers out. The calculation for the minimum level shall exclude expenditures and transfers out for large and unusual one-time items. Important note – the 60 Day Liquidity Goal is in addition to the Emergency Reserves required by Article X, Section 20(5) of the State Constitution. This reserve must equal 3% of non-exempt revenue and can only be used for declared emergencies. Fiscal emergencies are specifically excluded by the State Constitution as qualifying use of this reserve. B. Special Revenue Funds No minimum balance is required.
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Financial Policy 5 – Fund Balance Minimums
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C. Debt Service Funds No minimum balance is required. D. Capital Project Funds No minimum balance is required. E. Enterprise Funds Enterprise funds focus on working capital rather than fund balance. Enterprise Funds shall maintain a minimum Available Working Capital equal to 25% of Operating Expenses, less Depreciation. Exception1: In the case of L&P, operating expenses will include purchased renewable energy for resale but will not include regular purchased power for resale (i.e. Platte River Power Authority). Exception 2: In the case of Golf, the minimum fund balance will be 12.5%. Important note – The Water Fund holds a balance for Restricted Water Rights. The balance equals the amount of cash in-lieu-of water rights payments and raw water surcharges less any expenses for acquiring water rights and water storage; The enterprises funds should also be accumulating available working capital above these minimums for the purposes of funding future capital projects. F. Internal Service Funds Each fund is a unique operation and will maintain a minimum Available Working Capital as follows: 601 Equipment Fund 8.3% Of annual operating expenses, excluding depreciation 602 Self-Insurance Fund * 25.0% Of annual operating expenses 603 Data & Communications Fund 0.0% N/A 604 Benefits Fund 25.030.0% Of annual medical and dental expenses 605 Utility Customer Service Fund 0.0% N/A
* Self Insurance Fund will be measured against Available Unrestricted Net Position instead of Available Working Capital.
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Financial Policy 5 – Fund Balance Minimums
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5.4 Below Minimum
When circumstances result in balances below the minimum, staff should develop a plan to restore minimums fund balances and present it to Council Finance Committee.
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Financial Policy 5 – Fund Balance Minimums
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Definitions
Non Spendable Fund Balances: Applicable to governmental funds. Permanent endowments or assets in a
non-liquid form such as long term inter-agency loans.
Restricted Fund Balances: Applicable to governmental funds. Involve a third party such as State
Legislative requirements, voter ballot language, or the Contractual Agreements with parties
external to the City.
Committed Fund Balances: Applicable to governmental funds. Involve a of formal action by the City
Council. An example is traffic calming revenues are required to be spent on traffic calming
activities. Any unspent monies at end of year are classified as Committed to traffic calming in the
General Fund.
Assigned Fund Balances: Are applicable to governmental funds. Assignments can be made by senior
management. They represent the intent to use the monies for a specific purpose. An example of this
it this the one time Harmony Road monies transferred by the State to the City. Although required to
be used on Harmony Road, staff intends to use the monies only on Harmony Road improvements.
These monies are considered when measuring compliance with minimum fund balances.
Unassigned Fund Balances: Are applicable only to the governmental funds. These monies are considered
when measuring compliance with minimum fund balances.
Working Capital: Is a term applicable to Internal Service and Enterprise Funds. It is the difference
between Current Assets and Current Liabilities. Not all Working Capital is available. Available
Working Capital does not include Restrictions for debt, Art in Public Places, approved capital
appropriations, and other restrictions.
Unrestricted Net Position: Is a term applicable to Internal Service and Enterprise Funds. Not all
Unrestricted Net Position is available. Available Unrestricted Net Position does not include unused
Art in Public Places monies, approved capital appropriations, and other commitments.
Liquidity: Assets range from cash to land. The more easily and quickly an asset can be converted to cash
determines its relative liquidity.
Reserves: A legacy term that previously referred to fund balances, or fund balances set aside for a specific
purpose. It is no longer used on financial statements.
Fund Balance: Is a term applicable to governmental funds. Fund balance or Equity is the difference
between assets ,liabilities, deferred outflows of resources and deferred inflows of resources. Since
governmental funds do not have long term assets and long term debt on their balance sheet, fund
balance is similar and approximates working capital in the private sector and enterprise funds.
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Financial Policy 5 – Fund Balance Minimums
6
Getting Help
Please contact the Controller with any questions at 970.221.6772.
Page 60 of 193
Financial Management Policy 5
Fund Balance Minimums Issue Date: 01/12/21 Version: 5 Issued by: City Council
Financial Policy 5 – Fund Balance Minimums
1
5.1 Governmental Funds and Fund Balances To set minimum fund balances so as to mitigate risks, maintain good standing with rating agencies, and ensure cash is available when revenue is unavailable. The policy sets minimum fund balances, not targets or maximum balances. Each fund should be evaluated by staff to determine the appropriateness of maintaining fund balances above the minimums set in this policy. Contingencies for severe weather, prolonged drought, and anticipated capital spending should be considered independently from this policy. The Equity on balance sheet of a governmental fund is called Fund Balance. The current classifications of Fund Balance in governmental funds are primarily based on the origin of the constraints. The following categories are in decreasing order of constraints. Non-Spendable Permanent endowments or assets in a non-liquid form Restricted Involve a third party: State Legislation or Contractual Agreements Committed Set by formal action of the City Council Assigned By staff, and/or residual balances in a Special Revenue Fund Unassigned Remaining balances in governmental funds
Objective:
To set minimum fund balances as to mitigate risk, maintain good standing with rating agencies, and ensure
cash is available when revenue is unavailable. The policy sets minimum fund balances, not targets or
maximum balances. Each fund should be evaluated by staff to determine the appropriateness of
maintaining fund balances above the minimums set in this policy. Contingencies for severe weather,
prolonged drought, and anticipated capital spending should be considered independently from this policy.
Applicability:
Funds—This policy applies to all City funds. It does not apply to URA, DDA, PFA and Library.
Authorized by:
City Council Resolutions 1994-174, 2008-038, 2014-058,2017-101, 2021-010
Page 61 of 193
Financial Policy 5 – Fund Balance Minimums
2
Minimums outlined in section 5.3 relate only to Assigned and Unassigned balances.
5.2 Proprietary Fund and Working Capital Internal Service Funds and Enterprise Funds are accounted for nearly identical to the private sector. The balance sheets include long term assets and long term liabilities. The resulting Equity section on their balance sheet, called Net Position, is not always a good measure of spendable financial resources. To get to spendable financial resources, a common calculation is to take Current Assets and subtract Current Liabilities, with the net result called Working Capital. To further refine, for purposes of this policy, certain required restrictions are further subtracted and result in Available Working Capital. Some examples of required restrictions are unspent monies for Art in Public Places, Water Rights, and existing appropriations for capital projects. The minimums outlined in section 5.3 relate to Available Working Capital.
5.3 Minimum Balances The following Minimum Balances refers to Assigned and Unassigned Fund Balances in governmental funds and Available Working Capital in the Internal Service Funds and Enterprise Funds. A. General Fund
60 Day Liquidity Goal - The Commitment for Contingency should be at least 60 days (17%) of the subsequent year’s originally adopted budgeted expenditures and transfers out. The calculation for the minimum level shall exclude expenditures and transfers out for large and unusual one-time items. Important note – the 60 Day Liquidity Goal is in addition to the Emergency Reserves required by Article X, Section 20(5) of the State Constitution. This reserve must equal 3% of non-exempt revenue and can only be used for declared emergencies. Fiscal emergencies are specifically excluded by the State Constitution as qualifying use of this reserve. B. Special Revenue Funds No minimum balance is required.
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Financial Policy 5 – Fund Balance Minimums
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C. Debt Service Funds No minimum balance is required. D. Capital Project Funds No minimum balance is required. E. Enterprise Funds Enterprise funds focus on working capital rather than fund balance. Enterprise Funds shall maintain a minimum Available Working Capital equal to 25% of Operating Expenses, less Depreciation. Exception1: In the case of L&P, operating expenses will include purchased renewable energy for resale but will not include regular purchased power for resale (i.e. Platte River Power Authority). Exception 2: In the case of Golf, the minimum fund balance will be 12.5%. Important note – The Water Fund holds a balance for Restricted Water Rights. The balance equals the amount of cash in-lieu-of water rights payments and raw water surcharges less any expenses for acquiring water rights and water storage; The enterprises funds should also be accumulating available working capital above these minimums for the purposes of funding future capital projects. F. Internal Service Funds Each fund is a unique operation and will maintain a minimum Available Working Capital as follows: 601 Equipment Fund 8.3% Of annual operating expenses, excluding depreciation 602 Self-Insurance Fund * 25.0% Of annual operating expenses 603 Data & Communications Fund 0.0% N/A 604 Benefits Fund 25.0% Of annual medical and dental expenses 605 Utility Customer Service Fund 0.0% N/A
* Self Insurance Fund will be measured against Available Unrestricted Net Position instead of Available Working Capital.
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Financial Policy 5 – Fund Balance Minimums
4
5.4 Below Minimum
When circumstances result in balances below the minimum, staff should develop a plan to restore minimums fund balances and present it to Council Finance Committee.
Page 64 of 193
Financial Policy 5 – Fund Balance Minimums
5
Definitions
Non Spendable Fund Balances: Applicable to governmental funds. Permanent endowments or assets in a
non-liquid form such as long term inter-agency loans.
Restricted Fund Balances: Applicable to governmental funds. Involve a third party such as State
Legislative requirements, voter ballot language, or the Contractual Agreements with parties
external to the City.
Committed Fund Balances: Applicable to governmental funds. Involve a of formal action by the City
Council. An example is traffic calming revenues are required to be spent on traffic calming
activities. Any unspent monies at end of year are classified as Committed to traffic calming in the
General Fund.
Assigned Fund Balances: Are applicable to governmental funds. Assignments can be made by senior
management. They represent the intent to use the monies for a specific purpose. An example of this
it this the one time Harmony Road monies transferred by the State to the City. Although required to
be used on Harmony Road, staff intends to use the monies only on Harmony Road improvements.
These monies are considered when measuring compliance with minimum fund balances.
Unassigned Fund Balances: Are applicable only to the governmental funds. These monies are considered
when measuring compliance with minimum fund balances.
Working Capital: Is a term applicable to Internal Service and Enterprise Funds. It is the difference
between Current Assets and Current Liabilities. Not all Working Capital is available. Available
Working Capital does not include Restrictions for debt, Art in Public Places, approved capital
appropriations, and other restrictions.
Unrestricted Net Position: Is a term applicable to Internal Service and Enterprise Funds. Not all
Unrestricted Net Position is available. Available Unrestricted Net Position does not include unused
Art in Public Places monies, approved capital appropriations, and other commitments.
Liquidity: Assets range from cash to land. The more easily and quickly an asset can be converted to cash
determines its relative liquidity.
Reserves: A legacy term that previously referred to fund balances, or fund balances set aside for a specific
purpose. It is no longer used on financial statements.
Fund Balance: Is a term applicable to governmental funds. Fund balance or Equity is the difference
between assets ,liabilities, deferred outflows of resources and deferred inflows of resources. Since
governmental funds do not have long term assets and long term debt on their balance sheet, fund
balance is similar and approximates working capital in the private sector and enterprise funds.
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Financial Policy 5 – Fund Balance Minimums
6
Getting Help
Please contact the Controller with any questions at 970.221.6772.
Page 66 of 193
Financial Management Policy 7
Debt Issue Date: 11-19-13XXXX Version: 2 Issued by: City Council ontroller/ Assistant Financial Officer
Financial Policy 7 – Debt
1
7.1 Authorization for Municipal Borrowing
The City Charter (Article V. Part II) authorizes the borrowing of money and the issuance of long term debt. The Charter and State Constitution determine which securities may be issued and when a vote of the electors of the City and approved by a majority of those voting on the issue.
7.2 Purpose and Uses of Debt
Long term obligations should only be used to finance larger capital acquisitions and/or construction costs that are for high priority projects. Debt will not be used for operating purposes. Debt financing of capital improvements and equipment will be done only when the following conditions exist: a) When non-continuous projects (those not requiring continuous annual appropriations) are desired; b) When it can be determined that future users will receive a significant benefit from the improvement; c) When it is necessary to provide critical basic services to residents and taxpayers (for example, purchase of water rights);
Objective:
The purpose of this policy is to establish parameters and provide guidance governing the issuance
of all debt obligations issued by the City of Fort Collins (City).
Applicability:
This debt policy applies to all funds and Service Areas of the City and closely related agencies such
as the Downtown Development Authority (DDA), Fort Collins Leasing Corporation and the Fort
Collins Urban Renewal Authority (URA).
Authorized by:
City Council Resolutions, 1994-174, 2013-093, 2022-xxx
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Financial Policy 7 – Debt
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d) When total debt, including that issued by overlapping governmental entities, does not constitute an unreasonable burden to the residents and taxpayers.
7.3 Types of Debt and Financing Agreements
The types of debt permitted are outlined in State statute. The City will avoid derivative type instruments. In general the following debt types are used by the City: a) General obligation bonds—backed by the credit and taxing power of the City and not from revenues of any specific project. Colorado law limits general obligation debt to 10% of the City’s assessed valuation. Under TABOR this type of debt must be approved by voters. b) Revenue Bonds—issued and backed by the revenues of a specific project, tax increment district (TIF), enterprise fund, etc. The holders of these bonds can only consider this revenue source for repayment. TABOR does not require that voters approve these types of debt. c) Lease Purchase – issued whereby the asset acquired is used as collateral. Examples include Certificates of Participation (COP), Assignment of Lease Payments (ALP) and equipment leases. Equipment leases shall be limited to financing within Internal Service Funds. TABOR does not require that voters approve these types of agreements. d) Moral Obligation Pledge—a pledge to consider replenishing a debt reserve fund of another government agency if the reserve was used to make debt payments. This type of commitment will only be used to support the highest priority projects, or when the financial risk to the City does not increase significantly, or when the City’s overall credit rating is not expected to be negatively impacted. Because it is a pledge to consider replenishing, it is not a pledge of the City’s credit, and as such is not a violation of State statutes and City Charter. However, decision makers should keep in mind that not honoring a Moral Obligation Pledge will almost certainly negatively impact the City’s overall credit rating. TABOR does not require that voters approve these types of agreements. e) Interagency Borrowing—issued when the credit of an agency (DDA, URA) of the City does not permit financing at affordable terms. Usually used to facilitate a project until the revenue stream is established and investors can offer better terms to the agency. Program parameters are outlined in City’s Investment Policy 8.8section 7.8 of this policy. TABOR does not require that voters approve these types of agreements. f) Conduit Debt—Typically limited to Qualified Private Activity Bonds (PAB) defined by the IRS and limited to the annual allocation received from the State. Low income housing is one example of a qualified use of PAB. Program parameters are outlined the General Financial Policy 3.6. There is no pledge or guarantee to pay by the City. g) Any other securities not in contravention with City Charter or State statute.
7.4 Debt Structure and Terms
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Financial Policy 7 – Debt
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The following are guidelines, and may be modified by the City to meet the particulars of the financial markets at the time of the issuance of a debt obligation: a) Term of the Debt: The length of the financing will not exceed the useful life of the asset or average life of a group of assets, or 30 years, whichever is less. Terms longer than 20 years should be limited to the highest priority projects. b) Structure of Debt: Level debt service will be used unless otherwise dictated by the useful life of the asset(s) and/or upon the advice of the City's financial advisor. c) Credit Enhancements: The City will not use credit enhancements unless the cost of the enhancement is less than the differential between the net present value of the debt service without enhancement and the net present value of the debt service with the enhancement. d) Variable Rate Debt: The City will normally not issue variable rate debt, meaning debt at rates that may adjust depending upon changed market conditions. However, it is recognized that certain circumstances may warrant the issuance of variable rate debt, but the City will attempt to stabilize the debt service payments through the use of an appropriate stabilization arrangement. e) Derivative type instruments and terms will be avoided. f) Interest during construction will be capitalized when the debt is in an enterprise fund.
7.5 Refinancing Debt
Refunding of outstanding debt will only be done if there is a resultant economic gain regardless of whether there is an accounting gain or loss, or a subsequent reduction or increase in cash flows. The net present value savings shall be at least 3%, preferably 5% or more. In an advanced refunding (before the call date), the ratio of present value savings to the negative arbitrage costs should be at least 2.
7.6 Debt Limitations and Capacity Debt capacity will be evaluated by the annual dollar amount paid and the total amount outstanding with the goal to maintain the City’s overall issuer rating at the very highest rating, AAA. Parameters are different for Governmental Funds, Enterprise Funds, and Related Agencies. a. Governmental Funds—Annual debt service (principal and interest) will not exceed 5% of annual revenues. For calculation, revenues will not include internal charges, transfers and large one-time grants. Outstanding debt in relation to population and assessed value will be monitored. b. Enterprise Funds—Each fund is unique and will be evaluated independently. Each fund’s debt will be managed to maintain a credit score of at least an A rating. These funds typically issue revenue bonds and investors closely watch revenue coverage ratio. Coverage ratios are usually published in the Statistical Section of the City’s Comprehensive Annual Financial Statement.
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Financial Policy 7 – Debt
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c. Related Agencies—Each agency will be evaluated independently, taking into account City Charter, State statutes, market conditions and financial feasibility.
7.7 Debt Issuance Process When the City utilizes debt financing, it will ensure that the debt is soundly financed by: a) Selecting an independent financial advisor to assist with determining the method of sale and the selection of other financing team members b) Conservatively projecting the revenue sources that will be used to pay the debt; c) Maintaining a debt service coverage ratio which ensures that combined debt service requirements will not exceed revenues pledged for the payment of debt. d) Evaluating proposed debt against the target debt indicators.
7.8 Inter-agency Loan Program
1. Purpose: The purpose of the Inter-agency loan program is to support City services, missions, and values by making loans to outside entities such as the Urban Renewal Authority and the Downtown Development Authority while maintaining an adequate rate of return for the City.
2. Eligible Applicants: The following are examples of situations in which City loans to outside agencies may be appropriate: A. An entity that was created wholly or in part by the City and is in a fledgling stage and does not yet have an established credit history to access the capital markets. Examples include the Urban Renewal Authority, etc. B. An entity related to the City desires to issue debt that will be repaid over a timeframe that would be unrealistic for a private lender. Examples include bonds issued by the Downtown Development Authority for less than 10 years. C. Any other situation in which the Council deems it appropriate to meet the financing needs of an entity that is engaged in services that support the mission and values of the City.
3. Program Guidelines: A. The borrowing entity must have approval from its governing body. B. The loan must be evidenced by a promissory note.
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Financial Policy 7 – Debt
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C. There must be a reasonable probability of repayment of the loan from an identifiable source such as TIF revenues. D. The interest rate assigned to the loan must be the higher of the Treasury Note or Municipal Bond of similar duration (3 year, 5 year, etc.), plus 0.5%, subject to the following minimum (floor). FLOOR - Minimum Loan Rates Term Rate 0 – 5 years 2.75% 6 – 10 years 3.25% 11 – 15 years 3.75% 16 – 25 years 4.00% E. The loans must be limited to 25 years. F. City Council must review the request and approve the amount and terms and conditions of the loan. G. Loans of Utility reserves must be reviewed by either the Energy Board or Water Board in advance of City Council, or other board consideration, and must meet the following additional criteria: a. the City Council must make a formal finding that the funds will not be needed for utility purposes during the term of the loan, and that the terms and conditions of the loan represent a reasonable rate of return to the Utility; and b. utility rates must not be increased for the purposes of funding the loan.
4. Limit on Funds available for Loan Program A. Governmental Funds: Total loans shall not exceed 25% of the aggregate cash and investments balance of the governmental funds (i.e., General Fund and Special Revenue Funds).
B. Enterprise Funds: Total loans shall not exceed 5% of the aggregate cash and investments balance in the enterprise funds (i.e. Utility Funds and Golf Fund).
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Financial Policy 7 – Debt
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C. Operating and capital needs of the loaning funds shall not be significantly impaired by these loans.
D. Loans should not impact the loaning funds compliance with minimum fund balance policies, timing of intended uses, etc
7.87.9 Other Debt Management - The City will also have an aAdministratively approved Debt Administration Policy and Procedure 53 that includes guidance on: a) Investment of bond proceeds b) Market disclosure practices to primary and secondary markets, including annual certifications, continuing disclosures agreements and material event disclosures c) Arbitrage rebate monitoring and filing d) Federal and State law compliance practices e) Ongoing Market and investor relations efforts f) Identify a Chief Compliance Officer g) System of actions and deadlines f)h) Records to be maintained
Getting Help
Please contact the Controller/Assistant Financial OfficerDirector of Accounting with any questions
at 970.221.6784.
Related Policies/References
- The City of Fort Collins Charter (Article V., Part II)
- Investment Policy
- Debt Administration Policy and Procedures 53
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Financial Policy 7 – Debt
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Definitions
Conduit Debt: 1- An organization, usually a government agency, that issues municipal securities to raise
capital for revenue-generating projects where the funds generated are used by a third party
(known as the "conduit borrower") to make payments to investors. The conduit financing is
typically backed by either the conduit borrower's credit or funds pledged toward the project by
outside investors. If a project fails and the security goes into default, it falls to the conduit
borrower's financial obligation, not the conduit issuer (City). 2- Common types of conduit financing
include industrial development revenue bonds (IDRBs), private activity bonds and housing revenue
bonds (both for single-family and multifamily projects). Most conduit-issued securities are for
projects to benefit the public at large (i.e. airports, docks, sewage facilities) or specific population
segments (i.e. students, low-income home buyers, veterans). 3- In some cases, a governmental entity
issues municipal bonds for the purpose of making proceeds available to a private entity in
furtherance of a public purpose, such as in connection with not-for-profit hospitals, affordable
housing, and many other cases. These types of municipal bonds are sometimes referred to as
"conduit bonds." One common structure is for the governmental issuer to enter into an
arrangement with the private conduit borrower in which the bond proceeds are loaned to the
conduit borrower and the conduit borrower repays the loan to the issuer. For most conduit bonds,
although the governmental issuer of the bonds is legally obligated for repayment, that obligation
usually is limited to the amounts of the loan repayments from the conduit borrower. If the conduit
borrower fails to make loan repayments, the governmental issuer typically is not required to make
up such shortfalls. Thus, unless the bond documents explicitly state otherwise, investors in conduit
bonds should not view the governmental issuer as a guarantor on conduit bonds.
Credit Enhancements: the requirement that a certain percentage or amount of non-federal dollars or in-
kind services be provided in addition to the grant funds.
Interagency: the individual responsible for fiscally managing the grant award and the person who
maintains the records in the City’s financial system.
Debt Service Coverage Ratio: is a common measure of the ability to make debt service payments. The
formula is net operating income (operating revenue – operating expense) divided by debt service
(annual principal and interest)
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Financial Management Policy 7
Debt Issue Date: XXXX Version: 2 Issued by: City Council
Financial Policy 7 – Debt
1
7.1 Authorization for Municipal Borrowing
The City Charter (Article V. Part II) authorizes the borrowing of money and the issuance of long term debt. The Charter and State Constitution determine which securities may be issued and when a vote of the electors of the City and approved by a majority of those voting on the issue.
7.2 Purpose and Uses of Debt
Long term obligations should only be used to finance larger capital acquisitions and/or construction costs that are for high priority projects. Debt will not be used for operating purposes. Debt financing of capital improvements and equipment will be done only when the following conditions exist: a) When non-continuous projects (those not requiring continuous annual appropriations) are desired; b) When it can be determined that future users will receive a significant benefit from the improvement; c) When it is necessary to provide critical basic services to residents and taxpayers (for example, purchase of water rights);
d) When total debt, including that issued by overlapping governmental entities, does not constitute an unreasonable burden to the residents and taxpayers.
Objective:
The purpose of this policy is to establish parameters and provide guidance governing the issuance
of all debt obligations issued by the City of Fort Collins (City).
Applicability:
This debt policy applies to all funds and Service Areas of the City and closely related agencies such
as the Downtown Development Authority (DDA), Fort Collins Leasing Corporation and the Fort
Collins Urban Renewal Authority (URA).
Authorized by:
City Council Resolutions, 1994-174, 2013-093, 2022-xxx
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Financial Policy 7 – Debt
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7.3 Types of Debt and Financing Agreements
The types of debt permitted are outlined in State statute. The City will avoid derivative type instruments. In general the following debt types are used by the City: a) General obligation bonds—backed by the credit and taxing power of the City and not from revenues of any specific project. Colorado law limits general obligation debt to 10% of the City’s assessed valuation. Under TABOR this type of debt must be approved by voters. b) Revenue Bonds—issued and backed by the revenues of a specific project, tax increment district (TIF), enterprise fund, etc. The holders of these bonds can only consider this revenue source for repayment. TABOR does not require that voters approve these types of debt. c) Lease Purchase – issued whereby the asset acquired is used as collateral. Examples include Certificates of Participation (COP), Assignment of Lease Payments (ALP) and equipment leases. Equipment leases shall be limited to financing within Internal Service Funds. TABOR does not require that voters approve these types of agreements. d) Moral Obligation Pledge—a pledge to consider replenishing a debt reserve fund of another government agency if the reserve was used to make debt payments. This type of commitment will only be used to support the highest priority projects, or when the financial risk to the City does not increase significantly, or when the City’s overall credit rating is not expected to be negatively impacted. Because it is a pledge to consider replenishing, it is not a pledge of the City’s credit, and as such is not a violation of State statutes and City Charter. However, decision makers should keep in mind that not honoring a Moral Obligation Pledge will almost certainly negatively impact the City’s overall credit rating. TABOR does not require that voters approve these types of agreements. e) Interagency Borrowing—issued when the credit of an agency (DDA, URA) of the City does not permit financing at affordable terms. Usually used to facilitate a project until the revenue stream is established and investors can offer better terms to the agency. Program parameters are outlined in section 7.8 of this policy. TABOR does not require that voters approve these types of agreements. f) Conduit Debt—Typically limited to Qualified Private Activity Bonds (PAB) defined by the IRS and limited to the annual allocation received from the State. Low income housing is one example of a qualified use of PAB. Program parameters are outlined the General Financial Policy 3.6. There is no pledge or guarantee to pay by the City. g) Any other securities not in contravention with City Charter or State statute.
7.4 Debt Structure and Terms
The following are guidelines, and may be modified by the City to meet the particulars of the financial markets at the time of the issuance of a debt obligation:
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a) Term of the Debt: The length of the financing will not exceed the useful life of the asset or average life of a group of assets, or 30 years, whichever is less. Terms longer than 20 years should be limited to the highest priority projects. b) Structure of Debt: Level debt service will be used unless otherwise dictated by the useful life of the asset(s) and/or upon the advice of the City's financial advisor. c) Credit Enhancements: The City will not use credit enhancements unless the cost of the enhancement is less than the differential between the net present value of the debt service without enhancement and the net present value of the debt service with the enhancement. d) Variable Rate Debt: The City will normally not issue variable rate debt, meaning debt at rates that may adjust depending upon changed market conditions. However, it is recognized that certain circumstances may warrant the issuance of variable rate debt, but the City will attempt to stabilize the debt service payments through the use of an appropriate stabilization arrangement. e) Derivative type instruments and terms will be avoided.
7.5 Refinancing Debt
Refunding of outstanding debt will only be done if there is a resultant economic gain regardless of whether there is an accounting gain or loss, or a subsequent reduction or increase in cash flows. The net present value savings shall be at least 3%, preferably 5% or more. In an advanced refunding (before the call date), the ratio of present value savings to the negative arbitrage costs should be at least 2.
7.6 Debt Limitations and Capacity Debt capacity will be evaluated by the annual dollar amount paid and the total amount outstanding with the goal to maintain the City’s overall issuer rating at the very highest rating, AAA. Parameters are different for Governmental Funds, Enterprise Funds, and Related Agencies. a. Governmental Funds—Annual debt service (principal and interest) will not exceed 5% of annual revenues. For calculation, revenues will not include internal charges, transfers and large one-time grants. Outstanding debt in relation to population and assessed value will be monitored. b. Enterprise Funds—Each fund is unique and will be evaluated independently. Each fund’s debt will be managed to maintain a credit score of at least an A rating. These funds typically issue revenue bonds and investors closely watch revenue coverage ratio. Coverage ratios are usually published in the Statistical Section of the City’s Comprehensive Annual Financial Statement. c. Related Agencies—Each agency will be evaluated independently, taking into account City Charter, State statutes, market conditions and financial feasibility.
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7.7 Debt Issuance Process When the City utilizes debt financing, it will ensure that the debt is soundly financed by: a) Selecting an independent financial advisor to assist with determining the method of sale and the selection of other financing team members b) Conservatively projecting the revenue sources that will be used to pay the debt; c) Maintaining a debt service coverage ratio which ensures that combined debt service requirements will not exceed revenues pledged for the payment of debt. d) Evaluating proposed debt against the target debt indicators.
7.8 Inter-agency Loan Program
1. Purpose: The purpose of the Inter-agency loan program is to support City services, missions, and values by making loans to outside entities such as the Urban Renewal Authority and the Downtown Development Authority while maintaining an adequate rate of return for the City.
2. Eligible Applicants: The following are examples of situations in which City loans to outside agencies may be appropriate: A. An entity that was created wholly or in part by the City and is in a fledgling stage and does not yet have an established credit history to access the capital markets. Examples include the Urban Renewal Authority, etc. B. An entity related to the City desires to issue debt that will be repaid over a timeframe that would be unrealistic for a private lender. Examples include bonds issued by the Downtown Development Authority for less than 10 years. C. Any other situation in which the Council deems it appropriate to meet the financing needs of an entity that is engaged in services that support the mission and values of the City.
3. Program Guidelines: A. The borrowing entity must have approval from its governing body. B. The loan must be evidenced by a promissory note. C. There must be a reasonable probability of repayment of the loan from an identifiable source such as TIF revenues.
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D. The interest rate assigned to the loan must be the higher of the Treasury Note or Municipal Bond of similar duration (3 year, 5 year, etc.), plus 0.5%, subject to the following minimum (floor). FLOOR - Minimum Loan Rates Term Rate 0 – 5 years 2.75% 6 – 10 years 3.25% 11 – 15 years 3.75% 16 – 25 years 4.00% E. The loans must be limited to 25 years. F. City Council must review the request and approve the amount and terms and conditions of the loan. G. Loans of Utility reserves must be reviewed by either the Energy Board or Water Board in advance of City Council, or other board consideration, and must meet the following additional criteria: a. the City Council must make a formal finding that the funds will not be needed for utility purposes during the term of the loan, and that the terms and conditions of the loan represent a reasonable rate of return to the Utility; and b. utility rates must not be increased for the purposes of funding the loan.
4. Limit on Funds available for Loan Program A. Governmental Funds: Total loans shall not exceed 25% of the aggregate cash and investments balance of the governmental funds (i.e., General Fund and Special Revenue Funds).
B. Enterprise Funds: Total loans shall not exceed 5% of the aggregate cash and investments balance in the enterprise funds (i.e. Utility Funds and Golf Fund).
C. Operating and capital needs of the loaning funds shall not be significantly impaired by these loans.
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D. Loans should not impact the loaning funds compliance with minimum fund balance policies, timing of intended uses, etc
7.9 Other Debt Management - The City will also have an administratively approved Debt Administration Policy and Procedure 53 that includes guidance on: a) Investment of bond proceeds b) Market disclosure practices to primary and secondary markets, including annual certifications, continuing disclosures agreements and material event disclosures c) Arbitrage rebate monitoring and filing d) Federal and State law compliance practices e) Ongoing Market and investor relations efforts f) Identify a Chief Compliance Officer g) System of actions and deadlines h) Records to be maintained
Getting Help
Please contact the Director of Accounting with any questions at 970.221.6784.
Related Policies/References
- The City of Fort Collins Charter (Article V., Part II)
- Investment Policy
- Debt Administration Policy and Procedures 53
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Definitions
Conduit Debt: 1- An organization, usually a government agency, that issues municipal securities to raise
capital for revenue-generating projects where the funds generated are used by a third party
(known as the "conduit borrower") to make payments to investors. The conduit financing is
typically backed by either the conduit borrower's credit or funds pledged toward the project by
outside investors. If a project fails and the security goes into default, it falls to the conduit
borrower's financial obligation, not the conduit issuer (City). 2- Common types of conduit financing
include industrial development revenue bonds (IDRBs), private activity bonds and housing revenue
bonds (both for single-family and multifamily projects). Most conduit-issued securities are for
projects to benefit the public at large (i.e. airports, docks, sewage facilities) or specific population
segments (i.e. students, low-income home buyers, veterans). 3- In some cases, a governmental entity
issues municipal bonds for the purpose of making proceeds available to a private entity in
furtherance of a public purpose, such as in connection with not-for-profit hospitals, affordable
housing, and many other cases. These types of municipal bonds are sometimes referred to as
"conduit bonds." One common structure is for the governmental issuer to enter into an
arrangement with the private conduit borrower in which the bond proceeds are loaned to the
conduit borrower and the conduit borrower repays the loan to the issuer. For most conduit bonds,
although the governmental issuer of the bonds is legally obligated for repayment, that obligation
usually is limited to the amounts of the loan repayments from the conduit borrower. If the conduit
borrower fails to make loan repayments, the governmental issuer typically is not required to make
up such shortfalls. Thus, unless the bond documents explicitly state otherwise, investors in conduit
bonds should not view the governmental issuer as a guarantor on conduit bonds.
Credit Enhancements: the requirement that a certain percentage or amount of non-federal dollars or in-
kind services be provided in addition to the grant funds.
Interagency: the individual responsible for fiscally managing the grant award and the person who
maintains the records in the City’s financial system.
Debt Service Coverage Ratio: is a common measure of the ability to make debt service payments. The
formula is net operating income (operating revenue – operating expense) divided by debt service
(annual principal and interest)
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Financial Management Policy 8
Investment Policy Issue Date: 12/18/2012XXXX Version: 5 Issued by: Investment AdministratorCity Council
Financial Policy 8 – Investments
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8.1 Policy The City of Fort Collins, Colorado (the “City”) is a home rule municipality operating under the City Charter. Article V, Part III of the City Charter assigns to the Financial Officer the responsibility of investing City funds. Funds must be placed in investments authorized by the City Council (“Council”). The Financial Officer will administer the investment program to ensure effective and sound fiscal management. It is the policy of the City to invest public funds in a manner which will protect capital and meet liquidity needs while providing the highest investment return provide the highest investment return while protecting capital and meeting liquidity needs.
8.2 Scope
Objective:
This policy is to establish guidelines for the efficient management of City funds and for the purchase and sale
of investments. The City’s principal investment objectives, in priority order are: legal conformance, safety,
liquidity and return on investment. All investments shall be undertaken in a manner that seeks to ensure the
preservation of capital in the overall portfolio.
Applicability:
This investment policy applies to the investment of all general and specific funds over which the City
exercises financial control, including operating funds, Poudre Fire Authority, the Downtown Development
Authority, Poudre River Public Library District, Fort Collins Leasing Corporation and the Fort Collins Urban
Renewal Authority.
Authorized by:
City Council, Resolutions 90-44, 2008-121, 2009-109, 2010-065, & 2012-119. 2022-xxx.
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This policy is to establish guidelines for the efficient management of City funds and for the purchase and sale of investments. This investment policy applies to the investment of all general and special funds over which the City exercises financial control, including operating funds, Poudre Fire Authority, the Downtown Development Authority, Poudre River Public Library District, Fort Collins Leasing Corporation and the Fort Collins Urban Renewal Authority. For purposes of this policy, operating funds include: General Fund; Special Revenue Funds; Debt Services Funds (unless prohibited by bond ordinance); Capital Projects Funds; Enterprise Funds; Internal Service Funds; Trust and Agency Funds; and Any newly created Fund, unless exempted by Council. Unless specifically provided for in the bond ordinance, all bond proceeds, bond reserve funds and pledged revenues must be invested in accordance with the operating funds guidelines set forth in this Investment Policy. Guidelines for investing the funds of the City’s defined benefit plan shall be included in the Investment Policy for the General Employees’ Retirement Plan, which is monitored and approved by the General Employees’ Retirement Committee.
8.3 Investment Objectives The City’s principal investment objectives, in priority order, are: legal conformance, safety, liquidity, and return on investment. All investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio.
1. Legal conformance: The investment portfolio will conform to all legal and contractual requirements.
2. Safety: Safety of investment principal and the preservation of capital are primary objectives of the investment program. When making investment decisions, the Financial Officer will seek to ensure the preservation of capital in the overall portfolio by mitigating credit risk and interest rate risk. A. Credit Risk: The Financial Officer will minimize the risk of loss of principal and/or interest due to the failure of the security issuer or backer by: a. Limiting investments to the safest types of securities. b. Pre-qualifying financial institutions, securities brokers and dealers, and advisors.
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c. Diversifying the investment portfolio to reduce exposure to any one security type or issuer.
Interest Rate Risk: The Financial Officer will minimize the risk that the market value of securities in the portfolio will fall due to changes in market interest rates by: a. Whenever possible, holding investments to their stated maturity dates. b. Investing a portion of the operating funds in shorter-term securities, money market mutual funds, or local government investment pools.
3. Liquidity: The investment portfolio must be sufficiently liquid so as to meet all reasonably anticipated operating cash flow needs. This is accomplished by structuring the portfolio so that securities mature to meet cash requirements for ongoing operations. Investments shall be managed to avoid, but not prohibit, sale of securities before their maturities to meet foreseeable cash flow requirements. Since all possible cash needs cannot be anticipated, the portfolio must consist largely of securities with active secondary or resale markets.
4. Return on Investment: The investment portfolio will be designed with the objective of maximizing the rate of return on investment while maintaining acceptable risk levels and ensuring adequate liquidity. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. Investment pooling may be used to maximize the City’s investment income. Interest income, from pooling, will be distributed to the participating funds in proportion to each fund’s level of contribution. The Financial Officer will determine whether a security will be sold prior to maturity. The following are examples of when a security might be sold: a. A security with a declining credit rating may be sold early to minimize loss of principal; b. A security swap would improve the quality, yield, return, or maturity distribution of the portfolio; c. Liquidity needs of the portfolio require that the security be sold; or d. The Financial Officer will obtain the best rate of return on investments by taking advantage of market volatility and recognizing gains on a portion of the portfolio.
8.4 Standards of Care
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1. Prudence: The City has a fiduciary responsibility to protect the assets of the City and to invest funds appropriately. The standard of care to be used by City officials is the “prudent person” rule as specified by CRS 15-1-304, which reads:
“Standard for investments: In acquiring, investing, reinvesting,
exchanging, retaining, selling, and managing property for the benefit of
others, fiduciaries shall be required to have in mind the responsibilities
which are attached to such offices and the size, nature, and needs of the
estates entrusted to their care and shall exercise the judgment and care,
under the circumstances then prevailing, which men of prudence,
discretion, and intelligence exercise in the management of the property of
another, not in regard to speculation but in regard to the permanent
disposition of funds, considering the probable income as well as the
probable safety of capital. Within the limitations of the foregoing
standard, fiduciaries are authorized to acquire and retain every kind of
property, real, personal, and mixed, and every kind of investment,
specifically including, but not by way of limitation, bonds, debentures,
other corporate obligations, stocks, preferred or common, securities of any
open-end or closed-end management type investment company or
investment trust, and participations in common trust funds, which men of
prudence, discretion, and intelligence would acquire or retain for the
account of another.” The Financial Officer and designees, acting within the guidelines of this investment policy and written procedures, the City Charter and Code, all applicable state and federal laws and after exercising due diligence, will not be held personally liable and will be relieved or personal responsibility for an individual security’s credit risk or market price changes, or for losses incurred as a result of specific investment transactions or strategies. (CRS 24-75-601.4, et seq.)
2. Ethics and Conflicts of Interest: City officers and employees involved in the investment process will refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions. Employees and investment officials must disclose any material interests in financial institutions with which they conduct business. They must further disclose any personal financial and investment positions that could be related to the performance of the City’s investment portfolio. In addition they must adhere to the rules of conflicts of interest as stated in Art. IV, Section 9(b) of the Charter of the City of Fort Collins, Colorado.
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3. Delegation of Authority: The City Charter assigns the responsibility for the collection and investment of all city funds to the Financial Officer, subject to direction from Council by ordinance or resolution. The Financial Officer, subject to City Manager approval, may appoint other members of the Finance Department to assist in the investment function.
Administrative Procedures a. The Financial Officer is responsible for all investment decisions and activities, and must regulate the activities of subordinate employees for the operation of the City’s investment program consistent with this investment policy. b. No person may engage in an investment transaction except as provided under the terms of this Investment Policy and the procedures established by the Financial Officer. A. Authorized Designees a. The Financial Officer will maintain a list of individuals and institutions that are authorized to transfer, purchase, sell and wire securities or funds on behalf of the City. b. This list will be provided to the securities broker or dealer or financial institution prior to the City conducting any investment transactions with the institution. B. Investment Advisors a. The Financial Officer has the discretion to appoint one or more investment advisors, registered with the Securities and Exchange Commission under the Investment Advisors Act of 1940, to assist in the management of all or a portion of the City’s investment portfolio. b. All investments made through such investment advisors shall be within the guidelines of this Investment Policy.
4. Investment Committee: The Investment Committee consists of the Financial Officer and at least 2 other employees of the City that are knowledgeable in the area of governmental investments. The Investment Committee, at the discretion of the Financial Officer, may also include up to 2 private sector investment or banking professionals. The purpose of the Investment Committee shall be to provide advice to the Financial Officer regarding the operation of the investment program.
8.5 Safekeeping and Custody
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1. Authorized Securities Brokers and Dealers and Financial institutions A. The Financial Officer will maintain a list of financial institutions authorized to provide investment services. The Financial Officer will also maintain a list of approved securities brokers and dealers. This list may include “primary” dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15C3-1. B. All financial institutions and securities brokers and dealers who wish to provide investment services to the City must supply the following (as appropriate): a. Current audited financial statements; b. Completed securities broker and dealer questionnaire; c. Proof of National Association of Securities Dealers certification and registration in the State of Colorado; and d. Certification of their review, understanding and agreement to comply with the City’s Investment Policy. C. If a financial institution or securities broker or dealer wishes to enter into a repurchase agreement with the city, the institution must sign a Master Repurchase Agreement approved as to form and content by the City Attorney’s Office. D. The Financial Officer must conduct an annual review of the financial condition of authorized financial institutions and securities brokers and dealers. E. Investment transactions must be executed with an authorized financial institution or securities broker or dealer except in the following circumstances: a. Commercial paper, banker acceptances and guaranteed investment contracts may be purchased and sold directly from the issuer; b. Mutual funds and money market funds may be purchased, sold and held directly with the funds; c. Investments in local government investment pools may be transacted directly with the pool; and d. Bond refunding and lease escrow agreements will be executed as provided in the bond and lease documents. F. The Financial Officer will establish a safekeeping agreement with an approved financial institution to act as a third party custodian. Investment securities will be held for the City by the custodian. When applicable, the Financial Officer shall establish a separate securities lending agreement with the custodian bank. The selection of the City’s primary depository
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and primary custodian will be made through the City’s competitive Request for Proposals process. 2. Delivery versus Payment: All trades will be executed by delivery versus payment to ensure that securities are deposited in an eligible financial institution prior to the release of funds. Securities will be held by the City’s third-party custodian as evidenced by safekeeping receipts. 3. Internal Controls: The Financial Officer is responsible for establishing and maintaining an internal control structure designed to provide reasonable assurance that the assets of the city are protected from loss, theft or misuse.
8.6 Suitable and Authorized Investments
As a home rule city, the City may adopt a list of acceptable investment instruments differing from those outlined in CRS 24-75-601.1. Pursuant to Article V of the City’s Charter the Council has adopted the following Ordinances and Resolutions establishing the framework under which the Financial Officer must conduct his duties: Ordinance 90, 1993; Ordinance 108, 1988, Resolution 85-134; and Resolution 82-70. Council may adopt additional Ordinances or Resolutions that require modification of these investment tools.
1. Eligible Investments: City funds may be invested in the following: A. Any securities now or hereafter designed as legal investment for municipalities in any applicable statute of the State of Colorado; B. Interest-bearing accounts or time certificates of deposit, including collateralized certificates of deposit and certificates of deposit through the Account Registry Service, of financial institutions designated as depositories for public moneys by the State of Colorado; C. United States Treasury obligations for which the full faith and credit of the United States are pledged for payment of principal and interest. Such securities will include but not be limited to: Treasury bills, Treasury notes, Treasury bond and Treasury strips with maturities not exceeding five years from the date of purchase; D. Obligations issued by any United States government-sponsored agency or instrumentality. Maturities may not exceed five years from the date of purchase; E. Obligations issued by or on behalf of the City; F. Obligations issued by or on behalf of any state of the United States, political subdivision, agency, or instrumentality thereof. At the time of
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purchase the obligation shall have an investment grade rating of not less than AA- from Standard & Poor’s, Aa3 from Moody’s Investors Service or AA- from Fitch Ratings Service. The ratings must be not less than above for all agencies rating the debt, no split ratings are allowed;; G. Prime-rated bankers acceptances with a maturity not exceeding six months from the date of purchase, issued by a state or national bank which has a combined capital and surplus of at least 250 million dollars, whose deposits are insured by the FDIC and whose senior long-term debt is rated at the time of purchase at least AA- by Standard and Poor’s, Aa3 by Moody’s Investors Service, or AA- by Fitch Ratings Service. The ratings must be not less than above for all agencies rating the debt, no split ratings are allowed; H. U.S. dollar denominated corporate notes or bank debentures. Authorized corporate bonds shall be U.S. dollar denominated, and limited to corporations organized and operated within the United States with a net worth in excess of 250 million dollars. At the time of purchase the debenture or corporate note shall have an investment grade rating of not less than AA- from Standard & Poor’s, Aa3 from Moody’s Investors Service or AA- from Fitch Ratings Service. The ratings must be not less than above for all agencies rating the debt, no split ratings are allowed; I. Prime-rated commercial paper with a maturity not exceeding six months issued by U.S. corporations. At the time of purchase the paper shall be rated A1 by Standard and Poor’s and P1 by Moody’s Investors Service. If the commercial paper issuer has senior debt outstanding, the senior debt must be rated at the time of purchase at least AA- by Standard and Poor’s or Aa3 by Moody’s Investors Service; J. Guaranteed investment contracts of domestically-regulated insurance companies having a claims-paying ability rating of AA- or better from Standard & Poor’s at the time of purchase; K. Repurchase and reverse repurchase agreements. The structure of the agreements (including margin ratios and collateralization) shall be contained in the Master Repurchase Agreements. Repurchase agreements shall include but are not limited to delivery-versus-payment, tri-party and flexible repurchase agreements; L. Local government investment pools authorized under the laws of the State of Colorado with a rating of AAAm; and M. Money market mutual funds regulated by the Securities and Exchange Commission and whose portfolios consist only of dollar denominated securities.
2. Repurchase Agreements
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A. Before any repurchase agreements shall be executed with an authorized securities broker or dealer or financial institution, a Master Repurchase Agreement approved as to form and content by the City Attorney’s Office must be signed between the City and the securities broker or dealer or financial institution. B. The Financial Officer will maintain a file of all Master Repurchase Agreements. C. In addition to the straight forward repurchase agreement, wherein the financial institution or securities broker or dealer delivers the collateral versus payment to the City’s custodian for a fixed term at a fixed rate, the City may enter into other types of repurchase agreements which may include but not be limited to flexible repurchase agreements, tri-party agreements and reverse repurchase agreements. D. Repurchase agreements must be collateralized as provided in individually executed Master Repurchase Agreements at a minimum of 102 percent. E. Zero coupon instruments will not be accepted as collateral. F. The collateralized securities of the repurchase agreement can include but are not limited to: U.S Treasuries, Collateralized Mortgage Obligations or Agency securities.
8.7 Suitable and Authorized InvestmentsDiversification and Liquidity
1. Diversification and Asset Allocation: It is the intent of the City to diversify its investment portfolio. Investments shall be diversified to eliminate the risk of loss resulting from over-concentration of assets in a specific maturity, issuer or class of securities. Diversification strategies and guidelines shall be determined and revised periodically by the Financial Officer. The investments may be diversified by: A. Limiting investments to avoid over-concentration in securities from a specific issuer or business sector (excluding U.S. Treasury securities); B. Limiting investment in securities that have higher credit risks; C. Investing in securities with varying maturities; and D. Maintaining a portion of the portfolio in readily available funds such as local government investment pools, money market funds or short term repurchase agreements to ensure that City liquidity needs are met.
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The maximum investment allowable for each investment category as a percentage of the entire portfolio is as follows (excluding collateral for repurchase agreements):
CASH AND CASH EQUIVALENTS............................................................... 100%
TREASURY SECURITIES ................................................................................. 90%
GOVERNMENT-SPONSORED AGENCY SECURITIES .............................. 90%
REPURCHASE AGREEMENTS ....................................................................... 70%
LOCAL GOVERNMENT INVESTMENT POOLS………………………………..60%
CORPORATE NOTES OR BONDS* ............................................................... 40%
BANK DEBENTURES*...................................................................................... 25%
COMMERCIAL PAPER* ................................................................................... 25%
BANKER’S ACCEPTANCES* ........................................................................... 25%
LOCAL GOVERNMENT INVESTMENT POOLS .......................................... 20%
MONEY MARKET FUNDS
AND MUTUAL FUNDS ............................................................................. 15%
CD ACCOUNT REGISTRY SERVICE
(MAXIMUM 50 MILLION). ..................................................................... 15%
CERTIFICATES OF DEPOSIT ......................................................................... 15%
GUARANTEED INVESTMENT CONTRACTS ................................................ 5%
* A maximum of 10 percent of the portfolio may be invested in any one provider or issuer.
2. Investment Maturity and Liquidity
A. A portion of the portfolio should be continuously invested in readily available funds such as local government investment pools, money market funds, or short-term repurchase agreements to ensure that appropriate liquidity is maintained to meet ongoing obligations. The City must at all times maintain 5 percent of its operating investment portfolio in instruments maturing in 120 days or less. B. Reserved funds may be invested in securities exceeding 5 years if the maturities of such investments are made to coincide as closely as possible with the expected use of funds. C. The weighted average final maturity limitation of the total portfolio, excluding pension funds and long-term reserve funds, will not exceed 3
years. D. The City may collateralize repurchase agreements with longer-dated investments, final maturity not to exceed 30 years.
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8.8 Inter-agency Loan Program
1. Purpose: The purpose of the Inter-agency loan program is to support City services, missions, and values by making loans to outside entities such as the Urban Renewal Authority and the Downtown Development Authority while maintaining an adequate rate of return for the City.
2. Eligible Applicants: The following are examples of situations in which City loans to outside agencies may be appropriate: A. An entity that was created wholly or in part by the City and is in a fledgling stage and does not yet have an established credit history to access the capital markets. Examples include the Urban Renewal Authority, etc. B. An entity related to the City desires to issue debt that will be repaid over a timeframe that would be unrealistic for a private lender. Examples include bonds issued by the Downtown Development Authority for less than 10 years. C. Any other situation in which the Council deems it appropriate to meet the financing needs of an entity that is engaged in services that support the mission and values of the City.
3. Program Guidelines: A. The borrowing entity must have approval from its governing body. B. The loan must be evidenced by a promissory note. C. There must be a reasonable probability of repayment of the loan from an identifiable source such as TIF revenues. D. The interest rate assigned to the loan must be the higher of the Treasury Note or Municipal Bond of similar duration (3 year, 5 year, etc.), plus 0.5%, subject to the following minimum (floor). FLOOR - Minimum Loan Rates Term Rate 0 – 5 years 2.75% 6 – 10 years 3.25% 11 – 15 years 3.75%
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16 – 25 years 4.00% E. The loans must be limited to 25 years. F. City Council must review the request and approve the amount and terms and conditions of the loan. G. Loans of Utility reserves must be reviewed by either the Energy Board or Water Board in advance of City Council consideration, and must meet the following additional criteria: a. the City Council must make a formal finding that the funds will not be needed for utility purposes during the term of the loan, and that the terms and conditions of the loan represent a reasonable rate of return to the Utility; and b. utility rates must not be increased for the purposes of funding the loan.
4. Limit on Funds available for Loan Program A. Governmental Funds: Total loans shall not exceed 25% of the aggregate cash and investments balance of the governmental funds (i.e., General Fund and Special Revenue Funds).
B. Enterprise Funds: Total loans shall not exceed 5% of the aggregate cash and investments balance in the enterprise funds (i.e. Utility Funds and Golf Fund).
C. Operating and capital needs of the loaning funds shall not be significantly impaired by these loans.
D. Loans should not impact the loaning funds compliance with minimum fund balance policies, timing of intended uses, etc.
8.98.8 Reporting
1. Methods: The Financial Officer will prepare an investment report on a quarterly basis. In addition, a comprehensive investment report may be published on the City’s website on an annual basis. All investment reports will be submitted in a timely manner to the City Manager.
2. Performance Standards: The investment portfolio will be managed in accordance with the parameters specified within this Investment Policy. The
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Financial Officer will establish a benchmark yield for the City’s investments equal to the average yield on the U.S. Treasury security which most closely corresponds to the portfolio’s actual weighted average maturity. In order to determine the actual rate of return on any portion of the portfolio managed by an investment advisor, the Financial Officer must include all of the advisor’s expenses and fees in the computation of the rate of return.
3. Marking to Market: The market value of the portfolio will be calculated at least quarterly and a statement of the market value will be included in the quarterly investment report.
8.108.9 Policy Adoption This Investment Policy will be reviewed at least every threetwo years by the Investment Committee, City Manager and the Financial Officer and may be amended by Council as conditions warrant. The Investment Policy may be adopted by Resolution of the Council.
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Definitions
Agency: A bond, issued by a U.S. government-sponsored agency. The offerings of these agencies are backed
by the U.S. government, but not guaranteed by the government since the agencies are private
entities. Such agencies have been set up in order to allow certain groups of people to access low cost
financing, especially students and first-time home buyers. Some prominent issuers of agency bonds
are Student Loan Marketing Association (Sallie Mae), Federal National Mortgage Association (Fannie
Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). Agency bonds are usually exempt
from state and local taxes, but not federal tax.
Average Life: The length of time that will pass before one-half of a debt obligation has been retired.
Bankers’ Acceptance: A short-term credit investment which is created by a non-financial firm and whose
payment is guaranteed by a bank. Often used in importing and exporting, and as a money market
fund investment.
Benchmark: A comparative base for measuring the performance or risk tolerance of the investment
portfolio. A benchmark should represent a close correlation to the level of risk and the average
duration of the portfolio’s investments.
Book Value: The value at which a security is carried on the inventory lists or other financial records of an
investor. The book value may differ significantly from the security’s current value in the market.
Broker: An individual who brings buyers and sellers together for a commission.
Cash Sale/Purchase: A transaction which calls for delivery and payment of securities on the same day that
the transaction is initiated.
Certificate of Deposit (CD): A time deposit with a specific maturity evidenced by a certificate.
Collateralization: Process by which a borrower pledges securities, property, or other deposits for the
purpose of securing the repayment of a loan and/or security.
Commercial Paper: An unsecured short-term promissory note issued by corporations, with maturities
ranging from 2 to 270 days.
Coupon Rate: The annual rate of interest received by an investor from the issuer of certain types of fixed-
income securities. Also know as the “interest rate”.
Credit Quality: The measurement of the financial strength of a bond issuer. This measurement helps an
investor to understand an issuer’s ability to make timely interest payments and repay the loan
principal upon maturity. Generally, the higher the credit quality of a bond issuer, the lower the
interest rate paid by the issuer because the risk of default is lower. Credit quality ratings are
provided by nationally recognized rating agencies.
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Credit Risk: The risk to an investor that an issuer will default on the payment of interest and/or principal
on a security.
Current Yield (Current Return): A yield calculation determined by dividing the annual interest received
on a security by the current market price of that security.
Debenture: A bond secured only by the general credit of the issuer.
Delivery versus Payment (DVP): A type of securities transaction in which the purchaser pays for the
securities when they are delivered either to the purchaser or to their custodian.
Diversification: A process of investing assets among a range of security types by sector, maturity, and
quality rating.
Duration: A measure of the timing of the cash flows, such as the interest payments and the principal
repayment, to be received from a given fixed-income security. This calculation is based on three
variables: term to maturity, coupon rate and yield to maturity. The duration of a security is a useful
indicator of its price volatility for given changes in interest rates.
Federal Deposit Insurance Corporation (FDIC): A federal agency that insures deposits in member banks
and thrifts up to $100,000 ($250,000 through 12/31/2013).
Federal Funds: Funds placed in Federal Reserve banks by depository institutions in excess of current
reserve requirements. These depository institutions may lend fed funds to each other overnight or
on a longer basis. They may also transfer funds among each other on a same-day basis through the
Federal Reserve banking system. Fed funds are considered to be immediately available funds.
Federal Funds Rate: The interest rate that banks charge each other for the use of Federal funds.
Government Securities: An obligation of the U.S. government, backed by the full faith and credit of the
government. These securities are regarded as the highest quality of investment securities available
in the U.S. securities market.
Green Investments: Mutual funds that are considered “ethical investments.” These funds screen
companies to ensure that they have sound environmental practices such as: maintaining or
improving the environment, industrial relations, racial equality, community involvement, education,
training, healthcare and various other environmental criteria. Negative screens include but are not
limited to: alcohol, gambling, tobacco, irresponsible marketing, armaments, pornography, and
animal rights.
Interest Rate Risk: The risk associated with declines or rises in interest rates which cause an investment in
a fixed-income security to increase or decrease in value.
Investment-grade Obligations: An investment instrument suitable for purchase by institutional investors
under the prudent person rule. Investment-grade is restricted to those obligations rated BBB or
higher by a rating agency.
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Liquidity: An asset that can be converted easily and quickly into cash without a substantial loss of value.
Local Government Investment Pool (LGIP): An investment by local governments in which their money is
pooled as a method for managing local funds.
Mark-to-Market: The process whereby the book value or collateral value of a security is adjusted to reflect
its current market value.
Market Value: Current market price of a security.
Master Repurchase Agreement: A written contract covering all future transactions between the parties
to repurchase and reverse repurchase. Establishes each party’s rights in the transaction.
Maturity: The date on which payment of a financial obligation is due. The final state maturity is the date
on which the issuer must retire a bond and pay the face value to the bondholder.
Money Market Mutual Fund: Mutual funds that invest solely in money market instruments (short-term
debt instruments, such as Treasury bills, commercial paper, bankers’ acceptances, repurchase
agreements, and federal funds).
Mutual Fund: An investment company that pools money and can invest in a variety of securities, including
fixed-income securities and money market instruments. Mutual funds are regulated by the
investment company Act of 1940 and must abide by the Securities and Exchange Commission (SEC)
disclosure guidelines.
National Association of Securities Dealers (NASD): A self-regulatory organization of brokers and
dealers in the over-the-counter securities business. Its regulatory mandate includes authority over
firms that distribute mutual fund shares as well as other securities.
Net Asset Value: The market value of one share of an investment company, such as a mutual fund. This
figure is calculated by totaling a fund’s assets which includes securities, cash, and any accrued
earnings, subtracting this from the fund’s liabilities and dividing this total by the number of shares
outstanding. This is calculated once a day based on the closing price for each security in the fund’s
portfolio.
No Load Fund: A mutual fund which does not levy a sales charge on the purchase of its shares.
Portfolio: Collection of securities held by an investor.
Primary Dealer: A group of government securities dealers who submit daily reports of market activity and
positions and monthly financial statements to the Federal Reserve Bank of New York and are
subject to its informal oversight.
Real Estate Investment Trust (REIT): A company that buys, develops, manages and sells real estate
assets. Allows participants to invest in a professionally managed portfolio of real-estate properties.
The main function is to pass profits on to investors; business activities are generally restricted to
generation of property rental income.
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Repurchase Agreement (Repo): An agreement of one party to sell securities at a specified price to a
second party and a simultaneous agreement of the first party to repurchase the securities at a
specified price or at a specified later date.
Reverse Repurchase Agreement: An agreement of one party to purchase securities at a specified price
from a second party and a simultaneous agreement of the first party to resell the securities at a
specified price to the second party on demand or at a specified date.
Rule 2a-7 of the Investment Company Act: Applies to all money market mutual funds and mandates
such funds to maintain certain standards, including a 13-month maturity limit and a 90-day
average maturity on investments, to help maintain a constant net asset value of one dollar ($1.00).
Securities and Exchange Commission (SEC): Agency created by Congress to protect investors in
securities transactions by administering securities legislation.
Total Return: The sum of all investment income plus changes in the capital value of the portfolio. For
mutual funds, return on an investment is composed of share price appreciation plus any realized
dividends or capital gains. This is calculated by taking the following components during a certain
time period. (Price Appreciation) + (Dividends Paid) + (Capital Gains) = Total Return
Treasury Bills: Short-term U.S. government non-interest bearing debt securities with maturities of
no longer than one year.
Treasury Bonds: Long-term U.S. government debt securities with maturities of more than ten years.
Currently, the longest outstanding maturity is 30 years.
Treasury Notes: Intermediate U.S. government debt securities with maturities of two to ten years.
Tri-party Repurchase Agreement: In a “normal repurchase” transaction there are two parties, the buyer
and the seller. A tri-party repurchase agreement adds a custodian as the third party to act as an
impartial entity to the repurchase transaction to administer the agreement and to relieve the buyer
and seller of many administrative details.
Weighted Average Maturity (WAM): The average maturity of all the securities that comprise a portfolio.
Yield: The current rate of return on an investment security. Generally expressed as a percentage of the
security’s current price.
Yield Curve: A graphical representation that depicts the relationship at a given point in time between
yields and maturity for bonds that are identical in every way except maturity. A normal yield curve
may be alternatively referred to as a positive yield curve.
Yield-to-Maturity: The rate of return yielded by a debt security held to maturity when both interest
payments and the investor’s potential capital gain or loss are included in the calculation of return.
Zero-Coupon Securities: A security that is issued at a discount and makes no periodic interest payments.
The rate of return consists of a gradual accretion of the principal of the security and is payable at
par upon maturity.
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Financial Management Policy 8
Investment Policy Issue Date: XXXX Version: 5 Issued by: City Council
Financial Policy 8 – Investments
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8.1 Policy The City of Fort Collins, Colorado (the “City”) is a home rule municipality operating under the City Charter. Article V, Part III of the City Charter assigns to the Financial Officer the responsibility of investing City funds. Funds must be placed in investments authorized by the City Council (“Council”). The Financial Officer will administer the investment program to ensure effective and sound fiscal management. It is the policy of the City to invest public funds in a manner which will protect capital and meet liquidity needs while providing the highest investment return.
8.2 Scope This policy is to establish guidelines for the efficient management of City funds and for the purchase and sale of investments. This investment policy applies to the investment of all general and special funds over which the City exercises financial control, including operating funds, Poudre Fire Authority, the Downtown Development Authority, Poudre
Objective:
This policy is to establish guidelines for the efficient management of City funds and for the purchase and sale
of investments. The City’s principal investment objectives, in priority order are: legal conformance, safety,
liquidity and return on investment. All investments shall be undertaken in a manner that seeks to ensure the
preservation of capital in the overall portfolio.
Applicability:
This investment policy applies to the investment of all general and specific funds over which the City
exercises financial control, including operating funds, Poudre Fire Authority, the Downtown Development
Authority, Poudre River Public Library District, Fort Collins Leasing Corporation and the Fort Collins Urban
Renewal Authority.
Authorized by:
City Council, Resolutions 90-44, 2008-121, 2009-109, 2010-065, 2012-119. 2022-xxx.
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River Public Library District, Fort Collins Leasing Corporation and the Fort Collins Urban Renewal Authority. For purposes of this policy, operating funds include: General Fund; Special Revenue Funds; Debt Services Funds (unless prohibited by bond ordinance); Capital Projects Funds; Enterprise Funds; Internal Service Funds; Trust and Agency Funds; and Any newly created Fund, unless exempted by Council. Unless specifically provided for in the bond ordinance, all bond proceeds, bond reserve funds and pledged revenues must be invested in accordance with the operating funds guidelines set forth in this Investment Policy. Guidelines for investing the funds of the City’s defined benefit plan shall be included in the Investment Policy for the General Employees’ Retirement Plan, which is monitored and approved by the General Employees’ Retirement Committee.
8.3 Investment Objectives The City’s principal investment objectives, in priority order, are: legal conformance, safety, liquidity, and return on investment. All investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio.
1. Legal conformance: The investment portfolio will conform to all legal and contractual requirements.
2. Safety: Safety of investment principal and the preservation of capital are primary objectives of the investment program. When making investment decisions, the Financial Officer will seek to ensure the preservation of capital in the overall portfolio by mitigating credit risk and interest rate risk. A. Credit Risk: The Financial Officer will minimize the risk of loss of principal and/or interest due to the failure of the security issuer or backer by: a. Limiting investments to the safest types of securities. b. Pre-qualifying financial institutions, securities brokers and dealers, and advisors. c. Diversifying the investment portfolio to reduce exposure to any one security type or issuer.
Interest Rate Risk: The Financial Officer will minimize the risk that the market value of securities in the portfolio will fall due to changes in market interest rates by:
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a. Whenever possible, holding investments to their stated maturity dates. b. Investing a portion of the operating funds in shorter-term securities, money market mutual funds, or local government investment pools.
3. Liquidity: The investment portfolio must be sufficiently liquid so as to meet all reasonably anticipated operating cash flow needs. This is accomplished by structuring the portfolio so that securities mature to meet cash requirements for ongoing operations. Investments shall be managed to avoid, but not prohibit, sale of securities before their maturities to meet foreseeable cash flow requirements. Since all possible cash needs cannot be anticipated, the portfolio must consist largely of securities with active secondary or resale markets.
4. Return on Investment: The investment portfolio will be designed with the objective of maximizing the rate of return on investment while maintaining acceptable risk levels and ensuring adequate liquidity. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. Investment pooling may be used to maximize the City’s investment income. Interest income, from pooling, will be distributed to the participating funds in proportion to each fund’s level of contribution. The Financial Officer will determine whether a security will be sold prior to maturity. The following are examples of when a security might be sold: a. A security with a declining credit rating may be sold early to minimize loss of principal; b. A security swap would improve the quality, yield, return, or maturity distribution of the portfolio; c. Liquidity needs of the portfolio require that the security be sold; or d. The Financial Officer will obtain the best rate of return on investments by taking advantage of market volatility and recognizing gains on a portion of the portfolio.
8.4 Standards of Care
1. Prudence: The City has a fiduciary responsibility to protect the assets of the City and to invest funds appropriately. The standard of care to be used by City officials is the “prudent person” rule as specified by CRS 15-1-304, which reads:
“Standard for investments: In acquiring, investing, reinvesting,
exchanging, retaining, selling, and managing property for the benefit of
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others, fiduciaries shall be required to have in mind the responsibilities
which are attached to such offices and the size, nature, and needs of the
estates entrusted to their care and shall exercise the judgment and care,
under the circumstances then prevailing, which men of prudence,
discretion, and intelligence exercise in the management of the property of
another, not in regard to speculation but in regard to the permanent
disposition of funds, considering the probable income as well as the
probable safety of capital. Within the limitations of the foregoing
standard, fiduciaries are authorized to acquire and retain every kind of
property, real, personal, and mixed, and every kind of investment,
specifically including, but not by way of limitation, bonds, debentures,
other corporate obligations, stocks, preferred or common, securities of any
open-end or closed-end management type investment company or
investment trust, and participations in common trust funds, which men of
prudence, discretion, and intelligence would acquire or retain for the
account of another.” The Financial Officer and designees, acting within the guidelines of this investment policy and written procedures, the City Charter and Code, all applicable state and federal laws and after exercising due diligence, will not be held personally liable and will be relieved or personal responsibility for an individual security’s credit risk or market price changes, or for losses incurred as a result of specific investment transactions or strategies. (CRS 24-75-601.4, et seq.)
2. Ethics and Conflicts of Interest: City officers and employees involved in the investment process will refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions. Employees and investment officials must disclose any material interests in financial institutions with which they conduct business. They must further disclose any personal financial and investment positions that could be related to the performance of the City’s investment portfolio. In addition they must adhere to the rules of conflicts of interest as stated in Art. IV, Section 9(b) of the Charter of the City of Fort Collins, Colorado.
3. Delegation of Authority: The City Charter assigns the responsibility for the collection and investment of all city funds to the Financial Officer, subject to direction from Council by ordinance or resolution. The Financial Officer, subject to City Manager approval, may appoint other members of the Finance Department to assist in the investment function.
Administrative Procedures
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a. The Financial Officer is responsible for all investment decisions and activities, and must regulate the activities of subordinate employees for the operation of the City’s investment program consistent with this investment policy. b. No person may engage in an investment transaction except as provided under the terms of this Investment Policy and the procedures established by the Financial Officer. A. Authorized Designees a. The Financial Officer will maintain a list of individuals and institutions that are authorized to transfer, purchase, sell and wire securities or funds on behalf of the City. b. This list will be provided to the securities broker or dealer or financial institution prior to the City conducting any investment transactions with the institution. B. Investment Advisors a. The Financial Officer has the discretion to appoint one or more investment advisors, registered with the Securities and Exchange Commission under the Investment Advisors Act of 1940, to assist in the management of all or a portion of the City’s investment portfolio. b. All investments made through such investment advisors shall be within the guidelines of this Investment Policy.
4. Investment Committee: The Investment Committee consists of the Financial Officer and at least 2 other employees of the City that are knowledgeable in the area of governmental investments. The Investment Committee, at the discretion of the Financial Officer, may also include up to 2 private sector investment or banking professionals. The purpose of the Investment Committee shall be to provide advice to the Financial Officer regarding the operation of the investment program.
8.5 Safekeeping and Custody
1. Authorized Securities Brokers and Dealers and Financial institutions A. The Financial Officer will maintain a list of financial institutions authorized to provide investment services. The Financial Officer will also maintain a list of approved securities brokers and dealers. This list may include “primary” dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15C3-1.
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B. All financial institutions and securities brokers and dealers who wish to provide investment services to the City must supply the following (as appropriate): a. Current audited financial statements; b. Completed securities broker and dealer questionnaire; c. Proof of National Association of Securities Dealers certification and registration in the State of Colorado; and d. Certification of their review, understanding and agreement to comply with the City’s Investment Policy. C. If a financial institution or securities broker or dealer wishes to enter into a repurchase agreement with the city, the institution must sign a Master Repurchase Agreement approved as to form and content by the City Attorney’s Office. D. The Financial Officer must conduct an annual review of the financial condition of authorized financial institutions and securities brokers and dealers. E. Investment transactions must be executed with an authorized financial institution or securities broker or dealer except in the following circumstances: a. Commercial paper, banker acceptances and guaranteed investment contracts may be purchased and sold directly from the issuer; b. Mutual funds and money market funds may be purchased, sold and held directly with the funds; c. Investments in local government investment pools may be transacted directly with the pool; and d. Bond refunding and lease escrow agreements will be executed as provided in the bond and lease documents. F. The Financial Officer will establish a safekeeping agreement with an approved financial institution to act as a third party custodian. Investment securities will be held for the City by the custodian. When applicable, the Financial Officer shall establish a separate securities lending agreement with the custodian bank. The selection of the City’s primary depository and primary custodian will be made through the City’s competitive Request for Proposals process. 2. Delivery versus Payment: All trades will be executed by delivery versus payment to ensure that securities are deposited in an eligible financial institution prior to the release of funds. Securities will be held by the City’s third-party custodian as evidenced by safekeeping receipts.
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3. Internal Controls: The Financial Officer is responsible for establishing and maintaining an internal control structure designed to provide reasonable assurance that the assets of the city are protected from loss, theft or misuse.
8.6 Suitable and Authorized Investments
As a home rule city, the City may adopt a list of acceptable investment instruments differing from those outlined in CRS 24-75-601.1. Pursuant to Article V of the City’s Charter the Council has adopted the following Ordinances and Resolutions establishing the framework under which the Financial Officer must conduct his duties: Ordinance 90, 1993; Ordinance 108, 1988, Resolution 85-134; and Resolution 82-70. Council may adopt additional Ordinances or Resolutions that require modification of these investment tools.
1. Eligible Investments: City funds may be invested in the following: A. Any securities now or hereafter designed as legal investment for municipalities in any applicable statute of the State of Colorado; B. Interest-bearing accounts or time certificates of deposit, including collateralized certificates of deposit and certificates of deposit through the Account Registry Service, of financial institutions designated as depositories for public moneys by the State of Colorado; C. United States Treasury obligations for which the full faith and credit of the United States are pledged for payment of principal and interest. Such securities will include but not be limited to: Treasury bills, Treasury notes, Treasury bond and Treasury strips with maturities not exceeding five years from the date of purchase; D. Obligations issued by any United States government-sponsored agency or instrumentality. Maturities may not exceed five years from the date of purchase; E. Obligations issued by or on behalf of the City; F. Obligations issued by or on behalf of any state of the United States, political subdivision, agency, or instrumentality thereof. At the time of purchase the obligation shall have an investment grade rating of not less than AA- from Standard & Poor’s, Aa3 from Moody’s Investors Service or AA- from Fitch Ratings Service. The ratings must be not less than above for all agencies rating the debt, no split ratings are allowed; G. Prime-rated bankers acceptances with a maturity not exceeding six months from the date of purchase, issued by a state or national bank which has a combined capital and surplus of at least 250 million dollars, whose deposits are insured by the FDIC and whose senior long-term debt
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is rated at the time of purchase at least AA- by Standard and Poor’s, Aa3 by Moody’s Investors Service, or AA- by Fitch Ratings Service. The ratings must be not less than above for all agencies rating the debt, no split ratings are allowed; H. U.S. dollar denominated corporate notes or bank debentures. Authorized corporate bonds shall be U.S. dollar denominated, and limited to corporations organized and operated within the United States with a net worth in excess of 250 million dollars. At the time of purchase the debenture or corporate note shall have an investment grade rating of not less than AA- from Standard & Poor’s, Aa3 from Moody’s Investors Service or AA- from Fitch Ratings Service. The ratings must be not less than above for all agencies rating the debt, no split ratings are allowed; I. Prime-rated commercial paper with a maturity not exceeding six months issued by U.S. corporations. At the time of purchase the paper shall be rated A1 by Standard and Poor’s and P1 by Moody’s Investors Service. If the commercial paper issuer has senior debt outstanding, the senior debt must be rated at the time of purchase at least AA- by Standard and Poor’s or Aa3 by Moody’s Investors Service; J. Guaranteed investment contracts of domestically-regulated insurance companies having a claims-paying ability rating of AA- or better from Standard & Poor’s at the time of purchase; K. Repurchase and reverse repurchase agreements. The structure of the agreements (including margin ratios and collateralization) shall be contained in the Master Repurchase Agreements. Repurchase agreements shall include but are not limited to delivery-versus-payment, tri-party and flexible repurchase agreements; L. Local government investment pools authorized under the laws of the State of Colorado with a rating of AAAm; and M. Money market mutual funds regulated by the Securities and Exchange Commission and whose portfolios consist only of dollar denominated securities.
2. Repurchase Agreements A. Before any repurchase agreements shall be executed with an authorized securities broker or dealer or financial institution, a Master Repurchase Agreement approved as to form and content by the City Attorney’s Office must be signed between the City and the securities broker or dealer or financial institution. B. The Financial Officer will maintain a file of all Master Repurchase Agreements.
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C. In addition to the straight forward repurchase agreement, wherein the financial institution or securities broker or dealer delivers the collateral versus payment to the City’s custodian for a fixed term at a fixed rate, the City may enter into other types of repurchase agreements which may include but not be limited to flexible repurchase agreements, tri-party agreements and reverse repurchase agreements. D. Repurchase agreements must be collateralized as provided in individually executed Master Repurchase Agreements at a minimum of 102 percent. E. Zero coupon instruments will not be accepted as collateral. F. The collateralized securities of the repurchase agreement can include but are not limited to: U.S Treasuries, Collateralized Mortgage Obligations or Agency securities.
8.7 Diversification and Liquidity
1. Diversification and Asset Allocation: It is the intent of the City to diversify its investment portfolio. Investments shall be diversified to eliminate the risk of loss resulting from over-concentration of assets in a specific maturity, issuer or class of securities. Diversification strategies and guidelines shall be determined and revised periodically by the Financial Officer. The investments may be diversified by: A. Limiting investments to avoid over-concentration in securities from a specific issuer or business sector (excluding U.S. Treasury securities); B. Limiting investment in securities that have higher credit risks; C. Investing in securities with varying maturities; and D. Maintaining a portion of the portfolio in readily available funds such as local government investment pools, money market funds or short term repurchase agreements to ensure that City liquidity needs are met. The maximum investment allowable for each investment category as a percentage of the entire portfolio is as follows (excluding collateral for repurchase agreements):
CASH AND CASH EQUIVALENTS .............................................................. 100%
TREASURY SECURITIES ................................................................................. 90%
GOVERNMENT-SPONSORED AGENCY SECURITIES .............................. 90%
REPURCHASE AGREEMENTS ....................................................................... 70%
LOCAL GOVERNMENT INVESTMENT POOLS ……………………………….60%
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CORPORATE NOTES OR BONDS* ............................................................... 40%
BANK DEBENTURES*...................................................................................... 25%
COMMERCIAL PAPER* ................................................................................... 25%
BANKER’S ACCEPTANCES* ........................................................................... 25%
MONEY MARKET FUNDS
AND MUTUAL FUNDS ............................................................................. 15%
CD ACCOUNT REGISTRY SERVICE
(MAXIMUM 50 MILLION). ..................................................................... 15%
CERTIFICATES OF DEPOSIT ......................................................................... 15%
GUARANTEED INVESTMENT CONTRACTS ................................................ 5%
* A maximum of 10 percent of the portfolio may be invested in any one provider or issuer.
2. Investment Maturity and Liquidity
A. A portion of the portfolio should be continuously invested in readily available funds such as local government investment pools, money market funds, or short-term repurchase agreements to ensure that appropriate liquidity is maintained to meet ongoing obligations. The City must at all times maintain 5 percent of its operating investment portfolio in instruments maturing in 120 days or less. B. Reserved funds may be invested in securities exceeding 5 years if the maturities of such investments are made to coincide as closely as possible with the expected use of funds. C. The weighted average final maturity limitation of the total portfolio, excluding pension funds and long-term reserve funds, will not exceed 3
years. D. The City may collateralize repurchase agreements with longer-dated investments, final maturity not to exceed 30 years.
8.8 Reporting
1. Methods: The Financial Officer will prepare an investment report on a quarterly basis. In addition, a comprehensive investment report may be published on the City’s website on an annual basis. All investment reports will be submitted in a timely manner to the City Manager.
2. Performance Standards: The investment portfolio will be managed in accordance with the parameters specified within this Investment Policy. The Financial Officer will establish a benchmark yield for the City’s investments
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equal to the average yield on the U.S. Treasury security which most closely corresponds to the portfolio’s actual weighted average maturity. In order to determine the actual rate of return on any portion of the portfolio managed by an investment advisor, the Financial Officer must include all of the advisor’s expenses and fees in the computation of the rate of return.
3. Marking to Market: The market value of the portfolio will be calculated at least quarterly and a statement of the market value will be included in the quarterly investment report.
8.9 Policy Adoption This Investment Policy will be reviewed at least every three years by the Investment Committee, City Manager and the Financial Officer and may be amended by Council as conditions warrant. The Investment Policy may be adopted by Resolution of the Council.
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Definitions
Agency: A bond, issued by a U.S. government-sponsored agency. The offerings of these agencies are backed
by the U.S. government, but not guaranteed by the government since the agencies are private
entities. Such agencies have been set up in order to allow certain groups of people to access low cost
financing, especially students and first-time home buyers. Some prominent issuers of agency bonds
are Student Loan Marketing Association (Sallie Mae), Federal National Mortgage Association (Fannie
Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). Agency bonds are usually exempt
from state and local taxes, but not federal tax.
Average Life: The length of time that will pass before one-half of a debt obligation has been retired.
Bankers’ Acceptance: A short-term credit investment which is created by a non-financial firm and whose
payment is guaranteed by a bank. Often used in importing and exporting, and as a money market
fund investment.
Benchmark: A comparative base for measuring the performance or risk tolerance of the investment
portfolio. A benchmark should represent a close correlation to the level of risk and the average
duration of the portfolio’s investments.
Book Value: The value at which a security is carried on the inventory lists or other financial records of an
investor. The book value may differ significantly from the security’s current value in the market.
Broker: An individual who brings buyers and sellers together for a commission.
Cash Sale/Purchase: A transaction which calls for delivery and payment of securities on the same day that
the transaction is initiated.
Certificate of Deposit (CD): A time deposit with a specific maturity evidenced by a certificate.
Collateralization: Process by which a borrower pledges securities, property, or other deposits for the
purpose of securing the repayment of a loan and/or security.
Commercial Paper: An unsecured short-term promissory note issued by corporations, with maturities
ranging from 2 to 270 days.
Coupon Rate: The annual rate of interest received by an investor from the issuer of certain types of fixed-
income securities. Also know as the “interest rate”.
Credit Quality: The measurement of the financial strength of a bond issuer. This measurement helps an
investor to understand an issuer’s ability to make timely interest payments and repay the loan
principal upon maturity. Generally, the higher the credit quality of a bond issuer, the lower the
interest rate paid by the issuer because the risk of default is lower. Credit quality ratings are
provided by nationally recognized rating agencies.
Page 109 of 193
Financial Policy 8 – Investments
13
Credit Risk: The risk to an investor that an issuer will default on the payment of interest and/or principal
on a security.
Current Yield (Current Return): A yield calculation determined by dividing the annual interest received
on a security by the current market price of that security.
Debenture: A bond secured only by the general credit of the issuer.
Delivery versus Payment (DVP): A type of securities transaction in which the purchaser pays for the
securities when they are delivered either to the purchaser or to their custodian.
Diversification: A process of investing assets among a range of security types by sector, maturity, and
quality rating.
Duration: A measure of the timing of the cash flows, such as the interest payments and the principal
repayment, to be received from a given fixed-income security. This calculation is based on three
variables: term to maturity, coupon rate and yield to maturity. The duration of a security is a useful
indicator of its price volatility for given changes in interest rates.
Federal Deposit Insurance Corporation (FDIC): A federal agency that insures deposits in member banks
and thrifts up to $100,000 ($250,000 through 12/31/2013).
Federal Funds: Funds placed in Federal Reserve banks by depository institutions in excess of current
reserve requirements. These depository institutions may lend fed funds to each other overnight or
on a longer basis. They may also transfer funds among each other on a same-day basis through the
Federal Reserve banking system. Fed funds are considered to be immediately available funds.
Federal Funds Rate: The interest rate that banks charge each other for the use of Federal funds.
Government Securities: An obligation of the U.S. government, backed by the full faith and credit of the
government. These securities are regarded as the highest quality of investment securities available
in the U.S. securities market.
Green Investments: Mutual funds that are considered “ethical investments.” These funds screen
companies to ensure that they have sound environmental practices such as: maintaining or
improving the environment, industrial relations, racial equality, community involvement, education,
training, healthcare and various other environmental criteria. Negative screens include but are not
limited to: alcohol, gambling, tobacco, irresponsible marketing, armaments, pornography, and
animal rights.
Interest Rate Risk: The risk associated with declines or rises in interest rates which cause an investment in
a fixed-income security to increase or decrease in value.
Investment-grade Obligations: An investment instrument suitable for purchase by institutional investors
under the prudent person rule. Investment-grade is restricted to those obligations rated BBB or
higher by a rating agency.
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Financial Policy 8 – Investments
14
Liquidity: An asset that can be converted easily and quickly into cash without a substantial loss of value.
Local Government Investment Pool (LGIP): An investment by local governments in which their money is
pooled as a method for managing local funds.
Mark-to-Market: The process whereby the book value or collateral value of a security is adjusted to reflect
its current market value.
Market Value: Current market price of a security.
Master Repurchase Agreement: A written contract covering all future transactions between the parties
to repurchase and reverse repurchase. Establishes each party’s rights in the transaction.
Maturity: The date on which payment of a financial obligation is due. The final state maturity is the date
on which the issuer must retire a bond and pay the face value to the bondholder.
Money Market Mutual Fund: Mutual funds that invest solely in money market instruments (short-term
debt instruments, such as Treasury bills, commercial paper, bankers’ acceptances, repurchase
agreements, and federal funds).
Mutual Fund: An investment company that pools money and can invest in a variety of securities, including
fixed-income securities and money market instruments. Mutual funds are regulated by the
investment company Act of 1940 and must abide by the Securities and Exchange Commission (SEC)
disclosure guidelines.
National Association of Securities Dealers (NASD): A self-regulatory organization of brokers and
dealers in the over-the-counter securities business. Its regulatory mandate includes authority over
firms that distribute mutual fund shares as well as other securities.
Net Asset Value: The market value of one share of an investment company, such as a mutual fund. This
figure is calculated by totaling a fund’s assets which includes securities, cash, and any accrued
earnings, subtracting this from the fund’s liabilities and dividing this total by the number of shares
outstanding. This is calculated once a day based on the closing price for each security in the fund’s
portfolio.
No Load Fund: A mutual fund which does not levy a sales charge on the purchase of its shares.
Portfolio: Collection of securities held by an investor.
Primary Dealer: A group of government securities dealers who submit daily reports of market activity and
positions and monthly financial statements to the Federal Reserve Bank of New York and are
subject to its informal oversight.
Real Estate Investment Trust (REIT): A company that buys, develops, manages and sells real estate
assets. Allows participants to invest in a professionally managed portfolio of real-estate properties.
The main function is to pass profits on to investors; business activities are generally restricted to
generation of property rental income.
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Financial Policy 8 – Investments
15
Repurchase Agreement (Repo): An agreement of one party to sell securities at a specified price to a
second party and a simultaneous agreement of the first party to repurchase the securities at a
specified price or at a specified later date.
Reverse Repurchase Agreement: An agreement of one party to purchase securities at a specified price
from a second party and a simultaneous agreement of the first party to resell the securities at a
specified price to the second party on demand or at a specified date.
Rule 2a-7 of the Investment Company Act: Applies to all money market mutual funds and mandates
such funds to maintain certain standards, including a 13-month maturity limit and a 90-day
average maturity on investments, to help maintain a constant net asset value of one dollar ($1.00).
Securities and Exchange Commission (SEC): Agency created by Congress to protect investors in
securities transactions by administering securities legislation.
Total Return: The sum of all investment income plus changes in the capital value of the portfolio. For
mutual funds, return on an investment is composed of share price appreciation plus any realized
dividends or capital gains. This is calculated by taking the following components during a certain
time period. (Price Appreciation) + (Dividends Paid) + (Capital Gains) = Total Return
Treasury Bills: Short-term U.S. government non-interest bearing debt securities with maturities of
no longer than one year.
Treasury Bonds: Long-term U.S. government debt securities with maturities of more than ten years.
Currently, the longest outstanding maturity is 30 years.
Treasury Notes: Intermediate U.S. government debt securities with maturities of two to ten years.
Tri-party Repurchase Agreement: In a “normal repurchase” transaction there are two parties, the buyer
and the seller. A tri-party repurchase agreement adds a custodian as the third party to act as an
impartial entity to the repurchase transaction to administer the agreement and to relieve the buyer
and seller of many administrative details.
Weighted Average Maturity (WAM): The average maturity of all the securities that comprise a portfolio.
Yield: The current rate of return on an investment security. Generally expressed as a percentage of the
security’s current price.
Yield Curve: A graphical representation that depicts the relationship at a given point in time between
yields and maturity for bonds that are identical in every way except maturity. A normal yield curve
may be alternatively referred to as a positive yield curve.
Yield-to-Maturity: The rate of return yielded by a debt security held to maturity when both interest
payments and the investor’s potential capital gain or loss are included in the calculation of return.
Zero-Coupon Securities: A security that is issued at a discount and makes no periodic interest payments.
The rate of return consists of a gradual accretion of the principal of the security and is payable at
par upon maturity.
Page 112 of 193
Page 113 of 193
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Marc Virata, Monica Martinez, Dana Hornkohl, Clay Frickey
Date: December 1, 2022
SUBJECT FOR DISCUSSION
Northfield Development Suniga Road Major Reimbursement
EXECUTIVE SUMMARY
The Northfield developer has constructed Suniga Road as a four-lane arterial to City standards as
part of its development requirements. Per Section 24 -112 of the City Code, the developer is
eligible for reimbursement from Transportation Capital Expansion Fee (TCEF) funds for the
oversized, non-local portion of Suniga Road not attributed to the local portion obligation. Staff is
recommending appropriations totaling $2,081,548 from TCEF funds.
While this reimbursement is considered routine as part of the code obligations under the TCEF
Program, this request is coming before Council Finance Committee now because of the large
dollar amount outside of the typical 2-year budgeting process. Previously, and since the
inception of the TCEF Program, TCEF reimbursements to development were anticipated and
appropriated through the 2-year budgeting process. As part of the process improvements
identified first in the 2021 budget, the TCEF Program is now categorizing developer
reimbursements as “Major” and “Minor” reimbursements, with “Major” developer
reimbursements brought to Council individually rather than predicting what reimbursements are
needed on a 2-year basis. This proposed reimbursement is the first request under this new
process.
Staff has identified on the review of this reimbursement request that, as part of the metro district
service plan for Northfield, the developer also is eligible to seek reimbursement from their metro
districts for these same Suniga Road improvements that the developer is requesting from TCEF
funds. The district manager of their metro districts has provided an affidavit, however, affirming
that the metro districts will not reimburse the developer for these same costs that are proposed
for reimbursement through TCEF funds.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
• Does Council Finance Committee support an off-cycle appropriation of Transportation
Capital Expansion Fee fund reserves to reimburse the Northfield developer for its
construction of Suniga Road?
• As the first Major reimbursement through the identified process improvements, does
Council Finance Committee desire that all Major reimbursements appear before Council
Finance Committee?
• Does Council Finance Committee support TCEF funds being utilized as proposed by
Staff, in light of the documentation provided from Northfield’s metro district manager
that the metro district will not also reimburse for these same improvements if TCEF
funds are used to reimburse the developer?
BACKGROUND/DISCUSSION
Page 114 of 193
TCEF Program
The TCEF Program (formerly Street Oversizing), instituted by ordinance in 1979, was
established to manage the construction of new arterial and collector streets, and is an “Impact
Fee” funded program. The TCEF Program determines and collects impact fees from
development and redevelopment projects. The collection of these impact fees contributes funding
to growth-related City Capital Projects and reimburses development for constructing roadway
improvements above the local street access standards. Section 24-112 of the City Code allows
for reimbursement to developers for the construction of collector and arterial streets.
TCEF funds for reimbursement to developers previously were appropriated through the 2-year
budgeting process. The TCEF Manager would forecast when development projects would build
improvements within the budget cycle for appropriation from City Council. Identifying when
development will be entitled and construction of public infrastructure will be completed,
however, is not always predictable. The appropriation for TCEF under the 2019-2020 Budget
anticipated the Northfield developer’s completion of Suniga improvements during that budget
cycle. When that did not occur, there appeared to be a large underspend in the TCEF fund and
concerns were raised by City Council. The TCEF Program updated its approach in the 2021
Budget to begin characterizing developer reimbursements as “Major” and “Minor.” Staff has
identified $500K as the threshold between a Minor and Major reimbursement.
This reimbursement is for the Northfield developer’s construction above the local street access
standards of half a mile of Suniga Road between Redwood Street and Lindenmeier Road (former
Lemay alignment) . Suniga Road was built by the developer as a four-lane arterial street
including the completion of construction of the median landscape and irrigation installation for
the center median. TCEF funds for this reimbursement previously were appropriated under the
2019-2020 Budget and, when not utilized, were returned into TCEF reserves.
Under the 2021 process improvement to have Major reimbursements brought to City Council
individually, the dollar amount as a Major reimbursement classification is being brought for
consideration. TCEF funds previously have reimbursed the developer as minor reimbursements
for both Suniga right-of-way ($477,456 in 2020) and a bridge structure in Suniga Road over the
Lake Canal ($361,354 in 2021). This remaining reimbursement request would complete the
reimbursement eligibility for Suniga Road to the Northfield developer.
Staff has reviewed the documentation provided by the Northfield developer and agrees that the
requested reimbursement meets the requirements under City Code Section 24-112 for
appropriation from TCEF funds. There are additional development projects nearing
infrastructure completion (Water’s Edge and Waterfield, and Country Club Reserve) that also
would qualify as Major reimbursements and likely would appear before City Council for
appropriation. One of staff’s question is, does the Council Finance Committee desire that each of
these Major reimbursements also appear before the Committee ahead of City Council?
Metro District Manager Affidavit and Resolutions of the Metro Districts
The Northfield developer’s request for reimbursement from TCEF funds prompted review of the
metro district service plan for Northfield. There are three metro districts serving the Northfield
development. Staff’s review determined that the developer is eligible to seek reimbursement
from the developer’s metro districts for the same improvements being requested for
reimbursement from TCEF funds (but could not legally be reimbursed from both). Council
Page 115 of 193
Finance Committee may have a preference on whether reimbursement to the developer should
occur from TCEF funds or the developer’s metro districts; however, with the developer meeting
the requirements for reimbursement from TCEF funds under Section 24-112 of the City Code,
staff does not have a reason to object to the developer’s reimbursement request from TCEF
funds.
An affidavit from the manager of Northfield’s metro districts has been provided to the City
affirming that the metro districts will not reimburse the developer for this same reimbursement
request from TCEF funds and are prohibited from reimbursing the developer for any costs which
the City would have reimbursed as this would be a violation of the service plan. Additionally, the
affidavit asserts that the previous reimbursements for Suniga right-of-way and the bridge
structure have not and will not be reimbursed by the metro districts. Resolutions adopted by the
three metro districts also have been provided adopting that each district will not reimburse the
developer for any costs for which they have been reimbursed from the City.
ATTACHMENTS
1. Northfield – TCEF Cost Allocation
2. Affidavit from Metro District Manager
3. Resolution from Metro District 1
4. Resolution from Metro District 2
5. Resolution from Metro District 3
Page 116 of 193
Presented by:
Northfield Developer
Suniga Road Major
Reimbursement
12-01-2022
Marc Virata
Civil Engineer
Clay Frickey
Redevelopment Manager
Dana Hornkohl
Capital Projects Manager
Page 117 of 193
2Questions for the Council Finance Committee
1.Does Council Finance Committee support an off-cycle
appropriation of Transportation Capital Expansion Fee fund
reserves to reimburse the Northfield developer for its construction
of Suniga Road?
2.As the first Major reimbursement through the identified process
improvements, does Council Finance Committee desire that all
Major reimbursements appear before Council Finance
Committee?
3.Does Council Finance Committee support TCEF funds being
utilized as proposed by Staff, in light of the documentation
provided from Northfield’s metro district manager that the metro
district will not also reimburse for these same improvements if
TCEF funds are used to reimburse the developer?Page 118 of 193
3TCEF Program
•One time impact fee collected from development and redevelopment to
mitigate impacts to the existing transportation network
•Fee is proportional to anticipated impact
•Used to support growth related infrastructure improvements which add
capacity to the system
•Reimbursement to Developers
•Contributions to transportation capital improvement projects
•Fees cannot be used for improvements which solely benefit an adjacent
development, existing deficiencies, and for maintenance
Page 119 of 193
How are TCEF Fees used?4
Site 1
Site 2
Site 3 Site 4
•Reimbursement to Developers
for constructing improvements
beyond “local street”
•Contributions to Capital Projects
•Complete Streets
•Multimodal Improvements
•Transit
•Intersections/Signals
Arterial St.
Local St.
Collector St.
Page 120 of 193
TCEF Process Change
TCEF Reimbursement Appropriation Process
Since Program Inception through 2020
•Appropriation for reimbursement through standard budgeting process
•Forecast when development projects are entitled and constructed
Northfield development Suniga Road appropriation
•Appropriated under the 2019-2020 Budget
•Road only now completed
•Appearance of large underspend
2021 Budget TCEF Program Update
•“Minor” reimbursements appropriated through 2-year budget process
•“Major” reimbursements instead individually appropriated
5
Page 121 of 193
6Northfield’s Suniga Road Improvements
6
Northfield’s Construction
Suniga Road Improvements Project (2019)
Constructed 2014
Future Construction
Vine & Lemay Improvements (Includes
segment of Suniga Road)
Limits: Redwood Street to Lindenmeier Road
(former Lemay alignment)
Previous reimbursements: road right-of-way
($477K, 2020); box culvert ($361K, 2021)
TCEF Appropriation Request: $2.1M
Page 122 of 193
Northfield’s Suniga Road Improvements 7
Page 123 of 193
Northfield’s Suniga Road Improvements 8
Page 124 of 193
Major Reimbursement Process 9
TCEF Major Reimbursement
Appropriation Process
•Northfield’s Suniga Road first
major reimbursement
appropriation request
•Previously appropriations
embedded through budgeting
process and routinely
reimbursed through TCEF
operating account
•Does Council Finance
Committee desire all future
major reimbursements appear
before Council Finance
Committee?
Future Major Reimbursements
•Waters Edge
•Waterfield
•Country Club Reserve
•Bloom
•Montava
Page 125 of 193
Northfield’s Metro Districts and Reimbursement 10
Northfield Has Three Metro District Areas
•Developer eligible to seek
reimbursements from the metro districts
for these same improvements requesting
TCEF reimbursement
•Could be reimbursed from either TCEF
or the metro districts but not both
District 1 District 2
District 3
Page 126 of 193
Northfield’s Metro Districts and Reimbursement 11
Affidavit from Manager and Resolutions adopted by the
Metro Districts are provided indicating:
•Proposed TCEF reimbursement will not also be
reimbursed by the Metro Districts
•Previous right-of-way and bridge improvements have
not and will not be reimbursed by the Metro Districts
Does Council Finance Committee support TCEF
funds being utilized as proposed by Staff,
considering the documentation provided from
Northfield’s Metro Districts?
Page 127 of 193
Attachment 1 – Engagement Summary
Community Engagement Overview
Fort Collins has had a long-standing community dialogue about the best way(s) to ensure safe,
healthy housing for renters, efficiently use existing housing stock, and address nuisance issues.
During development of the HSP in 2020, extensive community engagement continued to
highlight a need to explore rental registration/licensing and occupancy ordinance revisions. Over
the last year, staff has built on the HSP community dialogue by engaging with a range of
community members to ensure that multiple perspectives are included in the current exploration
of rental housing strategies.
Groups Engaged:
Group Engagement Activities Conducted
Renters, neighborhood groups,
HOAs Housing Strategic Plan engagement, 2020-2021
Community Questionnaire, Aug. 2022
Pop-up Engagement, Aug. 2022
Rental Housing Taskforce
Landlords, realtors, property
managers Presentation to Northern CO Rental Housing Association,
Feb. 2022
Presentation to Board of Realtors, Feb. 2022
Rental Industry Questionnaire, Feb./March 2022
Rental Housing Taskforce
City Departments Convening of Rental Housing and Occupancy Core Team
Conversations with IT, Building Services, Communications
and Public Involvement Office, City Attorney’s Office
Council Ad Hoc Housing Committee discussion, Dec. 2020
Rental Strategies Work Session, Oct. 2021
Summary of Key Engagement Activities
Rental Industry Questionnaire, February/March 2022
This online questionnaire was primarily focused on soliciting feedback from rental owners,
property managers, and landlords to better understand how potential rental programs (e.g.,
registry and occupancy regulations) might impact the industry, and to explore specific elements
of program design. Assessor’s data was used to identify and mail flyers to nearly 9,000 likely
owners of rental property within Fort Collins to ensure wide awareness of the questionnaire. A
total of 1,912 people responded to the questionnaire, 68% of whom identified themselves as
rental owners, managers, or landlords. 20% of respondents were residents who live or work in
Fort Collins but do not own or manage rental property.
Rental Housing Task Force, March-August 2022
In early 2022, the City convened a Task Force to support deeper exploration of the three HSP
strategies to work collaboratively to propose modifications to current rental housing policy for
consideration by City staff, the broader public, and City Council. A total of 76 people applied for
Page 130 of 193
20 spots, and applications were reviewed by a committee of City staff. The top scoring
applications for landlord/property managers, renters, and others were invited to participate. Staff
consulted with the City Attorney’s Office on the criteria utilized for selection and the
information shared with the selection team. Demographic information was collected from
applicants but was not used in the selection process; it was considered in aggregate for the entire
application pool to evaluate the task force’s representativeness.
A panel of applicants was selected to represent a diversity of perspectives, including rental
housing tenants, property owners/landlords and property managers, and people who fit neither
category. Fort Collins residents Jack Armstrong, Jade Beaty, Julia Berger, Lisa Cunningham,
Brannan Davis, Adam Eggleston, Emily Gallichotte, Carrie Gillis, Cecilia Granby, Sean Haines,
Nicole Hanson, Mike Herder, Torey Lenoch, Robert Long, Lindsay Mason, Amy Pezzani, Jose
Luis Ramos, Carolyn J. Rasley, and Isabella Zapata served as Task Force members for the
duration of ten meetings. One task force member withdrew from participation due to other
commitments. The total composition of the group was 19 members, and all meetings were
facilitated by a professional third-party facilitator.
The task force members shared multiple perspectives and affiliations. They are listed below:
Renter Industry Representative Other
Currently renting Realtor Non-profit executive
Single parent Large landlord Immigrant to U.S.
Experienced homelessness Small landlord HOA Board representative
Affordable housing tenant Real estate appraiser Fifth generation Fort Collins
resident
Seeking home ownership Contractor CSU Off-Campus Life
Parent of renters Property Manager
Former CSU student Former Housing Authority
employee
The Task Force met a total of ten times between March 30 and August 3, 2022. The 19 Task
Force members attended an average of 8.5 meetings each. Each meeting had an average of 16
Task Force members present. Task Force members completed homework assignments between
meetings to ensure they were well informed. Early meetings were primarily informational as the
Task Force members received presentations from staff as well as a panel including Paul
Anderson, Lloyd Walker, David Roy, and Benton Roesler to explore opinions about the City’s
U+2 Policy.
Community Questionnaire, August 2022
This questionnaire sought opinions about how much the City’s approach to rental housing
regulation and occupancy should change, if at all. The questionnaire also asked respondents their
opinions about a range of potential next steps for rental registration/licensing and occupancy
ordinance revisions. Additional “pop-up” engagement utilizing the Neighborhood Services
lemonade stand was conducted to increase awareness of the community questionnaire and
encourage participation; particularly in areas where changes to occupancy and extra occupancy
Page 131 of 193
have been raised as a concern. A total of 1,739 responded to the questionnaire: 64% indicated
that they owned their home, 31% of respondents indicated that they rented their home, 19% of
respondents were landlords. The charts below show respondents by Council District and housing
tenure (rent/own):
Council District Total Owners %Owners Renters %Renters
District 1 226 138 61% 82 36%
District 2 223 150 67% 62 27%
District 3 143 94 65% 46 32%
District 4 227 154 68% 63 28%
District 5 373 249 67% 113 30%
District 6 264 144 55% 111 42%
Page 132 of 193
City of Fort Collins - Irrigation Tap Invoice - Permit # 643873 & Permit # 643875
Landscape Concepts - Landscape & Irrigation Installation, Dated 6/2/22
2167 LF
455 LF
Total 2622 LF
Local
Residential
Suniga
(4-lane
Arterial)
Right-of-Way (ft) 51 115
Pavement Width (FL-FL, ft) 30 65
Median Width (excluding turn lane, ft) N/A 19
Protected Bike Lane Width (ft) N/A 6
Bike Lane Buffer Width (ft) N/A 3.5
Parkway Width (ft) 6 9.5
Sidewalk Width (ft) 4.5 6
Fly Ash Depth (in) 12 12
Road Base (in) 6 15
Asphalt (in) 4 8
GLH No.Description Quantity Units Unit Cost Total Quantity Cost Quantity Cost Notes
001 1 LS 408,122.53$ 408,122.53$ 0.65 265,279.64$ 0.35 142,842.89$ Assumed that majority of this is directly related to arterial section status and associated utility uses
225 1 LS 32,583.28$ 32,583.28$ 1.00 32,583.28$ 0.00 -$ This line is for offsite purposes only and installed w/ offsite Suniga
243 1 LS 54,327.57$ 54,327.57$ 0.40 21,731.03$ 0.60 32,596.54$ This line is sized for arterial, applied estimated ratio of local vs arterial flows, estimate accounts for Pond D outlet
266 1 LS 72,099.62$ 72,099.62$ 0.40 28,839.85$ 0.60 43,259.77$ This line is sized for arterial, applied estimated ratio of local vs arterial flows
273 1 LS 62,809.82$ 62,809.82$ 0.40 25,123.93$ 0.60 37,685.89$ This line is sized for arterial, applied estimated ratio of local vs arterial flows
295 1 LS 33,981.70$ 33,981.70$ 1.00 33,981.70$ 0.00 -$ All Suniga related, median not required for local street
298 1 LS 28,885.52$ 28,885.52$ 1.00 28,885.52$ 0.00 -$ All Suniga related, median not required for local street
301 1 LS 28,136.52$ 28,136.52$ 1.00 28,136.52$ 0.00 -$ All Suniga related, median not required for local street
349 8,975 LF 3.00$ 26,925.00$ 4,876 14,628.00$ 4,099 12,297.00$ Local responsible for outside C&G prep, assumed remaining is median C&G prep, referenced GLH quantity
350 4,093 LF 2.93$ 11,992.49$ 0.25 2,998.12$ 0.75 8,994.37$ TCEF/Developer Unit Cost Based on walk widths (1.5/6=25%)
351 24 EA 328.13$ 7,875.12$ 16.00 5,250.08$ 8.00 2,625.04$ Local require intersection curb returns, remaining assumed related to median & bike lane
352 3,947 LF 3.54$ 13,972.38$ 1.00 13,972.38$ 0.00 -$ All Suniga related, protected bike lane not required for local street
354 3,875 LF 22.12$ 85,715.00$ 1.00 85,715.00$ 0.00 -$ All Suniga related, median not required for local street
355 1,164 LF 45.36$ 52,799.04$ 1.00 52,799.04$ 0.00 -$ All Suniga related, median not required for local street
356 4,099 LF 24.14$ 98,949.86$ 0.00 -$ 1.00 98,949.86$ Local Requirement
357 5 EA 560.00$ 2,800.00$ 1.00 2,800.00$ 0.00 -$ All Suniga related, median not required for local street
358 284 SF 12.32$ 3,498.88$ 1.00 3,498.88$ 0.00 -$ All Suniga related, median not required for local street
359 3,861 LF 35.84$ 138,378.24$ 0.25 34,594.56$ 0.75 103,783.68$ TCEF/Developer Unit Cost Based on walk widths (1.5/6=25%)
Northfield
Suniga Roadway Lengths
Concrete Prep - Suniga
Design Engineer:
Design Firm:
Project Number:
Date:
REFERENCES:
Northfield - TCEF Suniga - Estimated Street Runoff Comparisons, prepared by HDS, Dated 5/11/22
TRANSPORTATION CAPITAL EXPANSION FEE (TCEF) - SUNIGA REIMBURSEMENT
Median Nose
Median Cover @ Box Culvert
6' Detached Sidewalk
TCEF
GLH Construction - Request for Payment, Invoice # 201122707, Dated 11/24/2021
GLH Construction - Northfield - Phase 1, Suniga Reimbursements, Dated 1/7/22
Highland Development Services - Invoice # 1296, Dated 9/27/21
Landmark Construction Solutions - Invoice # 90-02929, Dated 12/31/21
Developer
Constructed
Pavement
Sections
COST DETERMINATION/ALLOCATION:
18" Vertical Curb & Gutter
SD-19 (NECCO A8 Lateral)
SD-20 (NECCO A7 Lateral)
SD-21 (NECCO A5 Lateral)
Western Median Underdrain
Central Median Underdrain
Eastern Median Underdrain
Curb & Gutter Prep
Detached Sidewalk Prep
Radius Prep
3' Buffer Lane & 6' Bike Lane
Concrete Placement - Suniga
SD-24 (NECCO A3 Lateral)
General Site Work
General Site Work
Storm Sewer
J.Claeys
Highland Development Services
18-1000-03
October 10, 2022
Onsite Length (east to Lemay)
Offsite Length (west to Redwood)
Street Section References
18" Double Vertical
30" Vertical Curb & Gutter
1 of 2Page 133 of 193
GLH No.Description Quantity Units Unit Cost Total Quantity Cost Quantity Cost Notes
TCEF Developer
COST DETERMINATION/ALLOCATION:
General Site Work360 102 LF 47.77$ 4,872.54$ 0.44 2,143.92$ 0.56 2,728.62$ TCEF/Developer Unit Cost Based on walk widths (3.5/8=44%)
361 130 LF 59.64$ 7,753.20$ 0.55 4,264.26$ 0.45 3,488.94$ TCEF/Developer Unit Cost Based on walk widths (5.5/10=55%)
362 24 EA 2,856.00$ 68,544.00$ 16.00 45,696.00$ 8.00 22,848.00$ Local require intersection curb returns, remaining assumed related to median & bike lane
363 4 EA 1,344.00$ 5,376.00$ 0.00 -$ 1.00 5,376.00$ Local Requirement
364 10 EA 1,120.00$ 11,200.00$ 1.00 11,200.00$ 0.00 -$ All Suniga related, protected bike lane not required for local street
365 11,841 SF 5.77$ 68,322.57$ 1.00 68,322.57$ 0.00 -$ All Suniga related, protected bike lane not required for local street
366 3,956 LF 35.84$ 141,783.04$ 1.00 141,783.04$ 0.00 -$ All Suniga related, protected bike lane not required for local street
379 12,260 SY 2.89$ 35,431.40$ 6,000 17,339.36$ 6,260 18,092.04$ Local SY based on pavement width (EOA-EOA)
381 1 EA 1,680.00$ 1,680.00$ 0.49 822.16$ 0.51 857.84$ TCEF/Developer Unit Cost based on pavement ratio [(12,260-6,260)/12,260=49%, reference GLH No. 379]
382 15,277 SY 10.08$ 153,992.16$ 7,331 73,899.84$ 7,946 80,092.32$ Local SY based on pavement width (FL-FL+3)
383 13,458 SY 12.87$ 173,204.46$ 5,512 70,943.73$ 7,946 102,260.73$ Local SY based on pavement width (FL-FL+3), Assuming fly ash extended beyond C&G
384 12,260 SY 45.98$ 563,714.80$ 6,000 275,869.78$ 6,260 287,845.02$ Local SY based on pavement width (EOA-EOA)
385 48 LF 20.22$ 970.56$ 0.00 -$ 1.00 970.56$ Local Requirement
389 1,939 LF 3.00$ 5,817.00$ 954 2,862.00$ 985 2,955.00$ Local responsible for outside C&G prep, assumed remaining is median C&G prep, referenced GLH quantity
390 650 CY 3.97$ 2,580.50$ 0.56 1,436.10$ 0.44 1,144.40$ TCEF/Developer Unit Cost based on right-of-way ratio (51/115=44%)
391 975 CY 5.03$ 4,904.25$ 0.56 2,729.32$ 0.44 2,174.93$ TCEF/Developer Unit Cost based on right-of-way ratio (51/115=44%)
392 530 CY 10.03$ 5,315.90$ 0.56 2,958.41$ 0.44 2,357.49$ TCEF/Developer Unit Cost based on right-of-way ratio (51/115=44%)
393 914 LF 2.93$ 2,678.02$ 0.25 669.51$ 0.75 2,008.52$ TCEF/Developer Unit Cost Based on walk widths (1.5/6=25%)
394 2 EA 328.13$ 656.26$ 0.00 -$ 2.00 656.26$ Local require intersection curb returns
395 859 LF 3.54$ 3,040.86$ 1.00 3,040.86$ 0.00 -$ All Suniga related, protected bike lane not required for local street
396 852 LF 22.12$ 18,846.24$ 1.00 18,846.24$ 0.00 -$ All Suniga related, median not required for local street
397 102 LF 45.36$ 4,626.72$ 1.00 4,626.72$ 0.00 -$ All Suniga related, median not required for local street
398 953 LF 24.14$ 23,005.42$ 0.00 -$ 1.00 23,005.42$ Local Requirement
399 32 LF 31.36$ 1,003.52$ 0.00 -$ 1.00 1,003.52$ Local Requirement
400 344 SF 12.32$ 4,238.08$ 1.00 4,238.08$ 0.00 -$ All Suniga related, median not required for local street
401 795 LF 35.84$ 28,492.80$ 0.25 7,123.20$ 0.75 21,369.60$ TCEF/Developer Unit Cost Based on walk widths (1.5/6=25%)
402 119 LF 47.77$ 5,684.63$ 0.44 2,501.24$ 0.56 3,183.39$ TCEF/Developer Unit Cost Based on walk widths (3.5/8=44%)
403 2 EA 2,856.00$ 5,712.00$ 0.00 -$ 2.00 5,712.00$ Local require intersection curb returns
404 4 EA 1,344.00$ 5,376.00$ 0.00 -$ 1.00 5,376.00$ Local Requirement
405 2 EA 1,120.00$ 2,240.00$ 0.00 -$ 1.00 2,240.00$ All Suniga related, protected bike lane not required for local street
406 2,577 SF 5.77$ 14,869.29$ 1.00 14,869.29$ 0.00 -$ All Suniga related, protected bike lane not required for local street
407 859 LF 35.84$ 30,786.56$ 1.00 30,786.56$ 0.00 -$ All Suniga related, protected bike lane not required for local street
408 2,735 SY 2.89$ 7,904.15$ 1,421 4,105.41$ 1,314 3,798.74$ Local SY based on pavement width (EOA-EOA)
409 3,584 SY 10.08$ 36,126.72$ 1,916 19,309.92$ 1,668 16,816.80$ Local SY based on pavement width (FL-FL+3)
410 6,630 SY 12.87$ 85,328.10$ 4,962 63,856.65$ 1,668 21,471.45$ Local SY based on pavement width (FL-FL+3), Assuming fly ash extended beyond C&G
411 2,735 SY 45.98$ 125,755.30$ 1,421 65,317.14$ 1,314 60,438.16$ Local SY based on pavement width (EOA-EOA)
412 48 LF 20.22$ 970.56$ 0.00 -$ 1.00 970.56$ Local Requirement
436 -15,074 SY 9.18$ (138,379.32)$ -7,499 (68,843.88)$ -7,575 (69,535.44)$ Local SY based on pavement width (EOA-EOA)
437 15,074 SY 12.92$ 194,756.08$ 7,499 96,891.39$ 7,575 97,864.69$ Local SY based on pavement width (EOA-EOA)
Total 2,883,032.94$ TCEF 1,670,426.34$ Developer 1,212,606.60$
1 LS 42,800.00$ 42,800.00$ 0.58 24,798.28$ 0.42 18,001.72$ Ratio based on total construction costs
1 LS 128,878.88$ 128,878.88$ 0.58 74,672.29$ 0.42 54,206.59$ Ratio based on total construction costs
Irrigation Tap - POC D 1 LS 29,593.51$ 29,593.51$ 1.00 29,593.51$ 0.00 -$ All Suniga related, median not required for local street
Irrigation Tap - POC E 1 LS 33,857.33$ 33,857.33$ 1.00 33,857.33$ 0.00 -$ All Suniga related, median not required for local street
Medain Landscape & Irrigation Installation 1 LS 248,200.00$ 248,200.00$ 1.00 248,200.00$ 0.00 -$ All Suniga related, median not required for local street, Final Invoice from Landscape Concepts
Grand Total 3,054,711.82$ TCEF 2,081,547.75$ Developer 1,284,814.91$
Deduct 2" Asphalt
Roadway Design
Construction Management
3.5' Conc Buffer Lane 6" Thick
6' Concrete Bike Lane 6" Thick
Subgrade Prep - Streets
Change Orders
Asphalt Wedges
6' Detached Sidewalk
8' Detached Sidewalk
Square Radii
Handi-Cap Ramps w/ Trunc Domes
Bike Lane Ramps-No Domes
18" Vertical Curb & Gutter
18" Double Vertical
30" Vertical Curb & Gutter
31" Rollover Curb & Gutter
Median Cover @ Box Culvert
Cut to Fill West Side of Box Culvert
Export Excess Dirt Stock Pile
Detached Sidewalk Prep
Radius Prep
3.5' Buffer Lane & 6' Bike Lane Prep
Strip West Side of Box Culvert
Fly Ash Subgrade Prep
10" Asphalt on Suniga
Asphalt Wedges
Curb & Gutter Prep
Asphalt Mobilization
6" Road Base - 1' Behind TBC
West of Box Culvert
Asphal Placement
8' Detached Sidewalk
10' Detached Sidewalk
Square Radii
Handi-Cap Ramps w/ Trunc Domes
Bike Lane Ramps-No Domes
3.5' Conc Buffer Lane 6" Thick
6' Concrete Bike Lane 6" Thick
Subgrade Prep - Streets
Asphalt Prep
Suniga Median Landscaping
Add 9" Road Base
HDS (Invoice# 1296)
LCS (Invoice# 90-02929)
6" Road Base - 1' Behind TBC
Fly Ash Subgrade Prep
10" Asphalt on Suniga
Page 2 of 2Page 134 of 193
May be used for residential local streets providing access to single family detached dwellings
with driveways.
, plus 18’ (min.) utility easement.
September, 2016
Page 135 of 193
9.5’6’bike lane 6’travel lane travel lanelandscaped median turn lane11’ 12’12’travel lane travel lane12’11’7’proposed improvements 115’79.57777777777777777777777777777777777777777777’99999555’1’ pan6” curb6” curb1’ panLooking Westlandscaped buffer/snow storagelandscaped buffer/snow storage6” curb2’ pan6” curb2’ pan9.5’3.5’sidewalkbike lane buffer3.5’buffer6’sidewalk6’N.T.S.Suniga RoadSuniga RoadOption #5 - curbside raised protected bike lane Option #5 - curbside raised protected bike lane SidewalkDeveloper - 4.5'TCEF - 1.5'ParkwayDeveloper - 5.5'TCEF - 4'Bike Lane and BufferDeveloper - 9'TCEF - 0'(Applying 9' as localstreet pavementsection)Curb and Gutter isresponsibility ofDeveloperAdditional 4' ofpavementresponsibility ofDeveloper. Satisfieslocal street pavementsection of 13')Middle section ofroadway shown inblue is responsibilityof TCEF.Reimbursement Cross Section for Sunigaconstructed by Northfield DevelopmentCONCRETE BIKELANE & BUFFERBY TCEF15' HALF RES LOCAL(13' ASPHALT)DEVELOPERCONCRETE BIKELANE & BUFFERBY TCEF15' HALF RES LOCAL(13' ASPHALT)DEVELOPERPage 136 of 193
AFFIDAVIT RE: REIMBURSEMENT FOR SUNIGA ROAD IMPROVEMENTS
I, Guy Johnson, as a principal of District Resource, LLC, a Colorado limited
liability company, which serves as District Manager and Accountant for
Northfield Metropolitan District Nos. 1-3 (the "Districts"), being first duly
sworn upon oath under penalty of perjury, state and aver as follows:
1. I have personal knowledge of and can testify in a court of
competent jurisdiction regarding the facts set forth herein.
2. I have reviewed the Consolidated Service Plan for the Districts,
approved by the City of Fort Collins (the "City") on October 1, 2019 (the
"Service Plan"), and I am familiar with the provisions of the Service Plan.
3. Section VIII of the Service Plan states "the design, phasing of
construction, location and completion of Public Improvements will be
determined by the Districts to coincide with the phasing and development of
the Planned Development and the availability of funding sources; (ii) the
Districts may, in their discretion, phase the construction, completion,
operation, and maintenance of Public Improvements or defer, delay,
reschedule, rephase, relocate or determine not to proceed with the
construction, completion, operation, and maintenance of Public Improvements,
and such actions or determinations shall not constitute a Service Plan Amendment;
(iii) the Districts shall also be permitted to allocate costs between such
categories of the Public Improvements as deemed necessary in their discretion;
and (iv) to the extent that the City reimburses a developer for Public
Improvements that would otherwise be reimbursable under the Special District
Act, the District shall not reimburse the developer for such Public
Improvements."
4. I am aware that DFC Northfield, LLC (the "Developer") has
constructed improvements to Suniga Road. These include, without limitation,
roadway improvements and box culvert improvements for which culvert
improvements the City paid the Developer $361,354 in 2021, (the "Suniga
Improvements"). The Suniga Improvements benefit the Districts and the City,
and the Developer has applied to the City for reimbursement of the remaining
roadway improvement costs associated with the Suniga Improvements. I am
also aware that the City paid the Developer in 2020 $477,456 for its dedication
to the City of the oversized portion of Suniga Road (the “ROW Dedication”).
5. I have reviewed the records and reports related to the
acceptance by the Districts for eligible costs associated with the Public
Improvements to this date and have determined that the Districts have not to this
date accepted costs for reimbursement, and have not reimbursed costs, related
to the Suniga Improvements or the ROW Dedication.
Page 137 of 193
Page 138 of 193
2165.0007; 1268404
RESOLUTION
OF THE BOARD OF DIRECTORS OF
NORTHFIELD METROPOLITAN DISTRICT NO. 1
PROHIBITING DISTRICT REIMBURSEMENT
OF DEVELOPER FOR SUNIGA ROAD IMPROVEMENTS
WHEREAS, Northfield Metropolitan District No.1 (the “District”) is a quasi-municipal
corporation and political subdivision of the State of Colorado, duly organized pursuant to §§ 32-
1-101, et seq., C.R.S.; and
WHEREAS, pursuant to § 32-1-1001(1)(d), C.R.S., the Board of Directors of the District (the
“Board”) is authorized to enter into contracts and agreements affecting the affairs of the District; and
WHEREAS, pursuant to § 32-1-1001(1)(h) C.R.S., the Board has the management, control,
and supervision of all the business and affairs of the District; and
WHEREAS, DFC Northfield, LLC (the “Developer”) constructed certain oversized
improvements to Suniga Road, an arterial roadway within District boundaries (the “Suniga
Oversized Improvements”), and the Developer dedicated to the City of Fort Collins (the “City”) the
Suniga Oversized Improvements together with a corresponding right-of-way dedication (the “ROW
Dedication”); and
WHEREAS, the Developer seeks reimbursement from, and/or has been reimbursed by the
City for, the costs associated with the construction of the Suniga Oversized Improvements and the
ROW Dedication; and
WHEREAS, pursuant to Section VIII of the Service Plan for the District, approved by the
City on October 1, 2019 (the “Service Plan”), to the extent that the City reimburses a developer for
Public Improvements that would otherwise be reimbursable under the Special District Act, the District
shall not reimburse the developer for such Public Improvements; and
WHEREAS, the District’s accountant has furnished an affidavit stating that the District has
neither accepted costs for reimbursement nor reimbursed costs related to the Suniga Oversized
Improvements or the ROW Dedication.
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE
DISTRICT AS FOLLOWS:
Page 139 of 193
Page 140 of 193
2165.0007; 1268424
RESOLUTION
OF THE BOARD OF DIRECTORS OF
NORTHFIELD METROPOLITAN DISTRICT NO. 2
PROHIBITING DISTRICT REIMBURSEMENT
OF DEVELOPER FOR SUNIGA ROAD IMPROVEMENTS
WHEREAS, Northfield Metropolitan District No. 2 (the “District”) is a quasi-municipal
corporation and political subdivision of the State of Colorado, duly organized pursuant to §§ 32-
1-101, et seq., C.R.S.; and
WHEREAS, pursuant to § 32-1-1001(1)(d), C.R.S., the Board of Directors of the District (the
“Board”) is authorized to enter into contracts and agreements affecting the affairs of the District; and
WHEREAS, pursuant to § 32-1-1001(1)(h) C.R.S., the Board has the management, control,
and supervision of all the business and affairs of the District; and
WHEREAS, DFC Northfield, LLC (the “Developer”) constructed certain oversized
improvements to Suniga Road, an arterial roadway within District boundaries (the “Suniga
Oversized Improvements”), and the Developer dedicated to the City of Fort Collins (the “City”) the
Suniga Oversized Improvements together with a corresponding right-of-way dedication (the “ROW
Dedication”); and
WHEREAS, the Developer seeks reimbursement from, and/or has been reimbursed by the
City for, the costs associated with the construction of the Suniga Oversized Improvements and the
ROW Dedication; and
WHEREAS, pursuant to Section VIII of the Service Plan for the District, approved by the
City on October 1, 2019 (the “Service Plan”), to the extent that the City reimburses a developer for
Public Improvements that would otherwise be reimbursable under the Special District Act, the District
shall not reimburse the developer for such Public Improvements; and
WHEREAS, the District’s accountant has furnished an affidavit stating that the District has
neither accepted costs for reimbursement nor reimbursed costs related to the Suniga Oversized
Improvements or the ROW Dedication.
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE
DISTRICT AS FOLLOWS:
Page 141 of 193
Page 142 of 193
2165.0007; 1268426
RESOLUTION
OF THE BOARD OF DIRECTORS OF
NORTHFIELD METROPOLITAN DISTRICT NO. 3
PROHIBITING DISTRICT REIMBURSEMENT
OF DEVELOPER FOR SUNIGA ROAD IMPROVEMENTS
WHEREAS, Northfield Metropolitan District No. 3 (the “District”) is a quasi-municipal
corporation and political subdivision of the State of Colorado, duly organized pursuant to §§ 32-
1-101, et seq., C.R.S.; and
WHEREAS, pursuant to § 32-1-1001(1)(d), C.R.S., the Board of Directors of the District (the
“Board”) is authorized to enter into contracts and agreements affecting the affairs of the District; and
WHEREAS, pursuant to § 32-1-1001(1)(h) C.R.S., the Board has the management, control,
and supervision of all the business and affairs of the District; and
WHEREAS, DFC Northfield, LLC (the “Developer”) constructed certain oversized
improvements to Suniga Road, an arterial roadway within District boundaries (the “Suniga
Oversized Improvements”), and the Developer dedicated to the City of Fort Collins (the “City”) the
Suniga Oversized Improvements together with a corresponding right-of-way dedication (the “ROW
Dedication”); and
WHEREAS, the Developer seeks reimbursement from, and/or has been reimbursed by the
City for, the costs associated with the construction of the Suniga Oversized Improvements and the
ROW Dedication; and
WHEREAS, pursuant to Section VIII of the Service Plan for the District, approved by the
City on October 1, 2019 (the “Service Plan”), to the extent that the City reimburses a developer for
Public Improvements that would otherwise be reimbursable under the Special District Act, the District
shall not reimburse the developer for such Public Improvements; and
WHEREAS, the District’s accountant has furnished an affidavit stating that the District has
neither accepted costs for reimbursement nor reimbursed costs related to the Suniga Oversized
Improvements or the ROW Dedication.
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE
DISTRICT AS FOLLOWS:
Page 143 of 193
Page 144 of 193
Page 145 of 193
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff:
Date: December 1, 2022
SUBJECT FOR DISCUSSION: Municipal Court’s 15- & 30-Year Design
EXECUTIVE SUMMARY:
Municipal Court is requesting appropriations from General Fund Reserves to complete the
design work for either the 15 or 30 Year design to address future needs at 215 N Mason.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does Council Finance support the appropriations of reserves to complete the design work for
either the 15-Year or 30-Year build-out for Municipal Court
15-Year Design & Cost Estimate: $1,507,500.00
30-Year Design & Cost Estimate: $2,218,000.00
BACKGROUND/DISCUSSION
Municipal Court was moved into its current location at 215 N Mason in 2007 with minimal space
changes taking place since that time. We are currently in the middle of the Urgent needs
renovation funded by reserves in June 2022 which addresses some staff-client interaction issues
but does nothing to address any real courtroom issues.
Municipal Court has put in BFO offers over the past 3-4 budget cycles to address these issues,
but no funding has been awarded.
In 2021 Clark Enersen completed a thorough study of the Court’s current space and future space
needs. They identified the current space size and its limitations and developed both 15 year and
30-year plans addressing standard space requirements for courts. Staff again put in two new
offers this year requesting funding for a plan that would address projected needs for a 15- or 30-
year time horizon. Both options require more than doubling the current space and were
multimillion dollar projects. Neither of these options were funded in the recent BFO process.
Staff is requesting appropriations from General Fund Reserves for the design work necessary to
determine the full scope of what the future for Fort Collins Municipal Courts will look like along
with getting up to date construction cost estimates so we can bring back a future budget request
in the 2025-2026 BFO budget cycle.
Page 146 of 193
ATTACHMENTS:
1. Council Finance Presentation
2. 15-Year Floor Plan
3. 30-Year Floor Plan
4. PMPD Budget Spreadsheet
Page 147 of 193
Presented by:
Municipal Courts Phase II
1st Floor Renovation
12-01-22
Jill Hueser
Chief Judge -Municipal Court
Brian Hergott
Lead Sr. Facilities Project Manager
Page 148 of 193
2Council Finance Meeting
Does Council Finance support an appropriation for design of
the 15-or 30 -year 215 Municipal Court renovation using
Capitol Expansion fees?
*An offer for Construction would be submitted for the 2025/2026 budget cycle.
Page 149 of 193
3Council Finance Meeting
•Municipal Court moved into its current location at 215 N Mason in 2007.
•Minimal renovations done since 2007, primarily for safety and security needs.
•The City spent $637,350 over the last 15 years (including initial move-in costs),
but court caseloads have continued to grow and expand.
•Municipal Court is in the process of a $700,000 Urgent Needs Renovation to
address some critical staff needs on the north half of 1st floor.
•Staff submitted two new BFO offers this year requesting funding for a plan that
would address projected needs for a 15-or 30-year time horizon. Both of these
options require more than doubling the current space and will be multimillion
dollar projects.
Page 150 of 193
4Council Finance Meeting
•In 2021 Clark & Enersen completed a thorough study of the Court’s current space and
future space needs. They identified the current space size and its limitations and
developed both a 15-year and 30-year plan addressing standard space requirements for
courts.
•The two plans we bring before you today will address Municipal Courts for years to
come. The planned renovations we are proposing will require the courts to take over the
entire first floor at 215 N Mason. The 30-year plan will also require an addition be
added to the north side of the building.
Page 151 of 193
5Fort Collins courtroom space is well below standards.
Page 152 of 193
6Council Finance Meeting
Current Conditions –This looks like the Public main Entrance –Currently not for
Courts. This would be the new Courts Entrance for 15 and 30 year plans.
Page 153 of 193
7Council Finance Meeting
Current Conditions –This is the current entrance for Municipal Courts
Page 154 of 193
8Council Finance Meeting
Current Conditions -Courtroom with Very Limited Space and No Jury Box
Page 155 of 193
9Courtroom examples from other jurisdictions
Greeley Loveland
Longmont
Page 156 of 193
10Courtroom examples from other jurisdictions
Northglenn
Aurora
Boulder
Page 157 of 193
11Council Finance Meeting
Current Conditions –Public Intake -Security Processing (Reuse of Community room)
Page 158 of 193
12Council Finance Meeting
Current Conditions –Clerk Processing Windows with Traffic Arrows for Public
Page 159 of 193
13Council Finance Meeting
Current Conditions –Court Admin Area which is at full Capacity
Page 160 of 193
14Council Finance Meeting
Page 161 of 193
15Council Finance Meeting
Page 162 of 193
16Council Finance Meeting
15-year & 30-year considerations:
Page 163 of 193
17Council Finance Meeting
Municipal Court renovations Design Cost
•15-Year $1.5M
•30-Year $2.2M
*Estimated Construction Cost (Includes 8% Escalation to 2025)
15-Year $16.5 M
30 Year $22.0 M
Page 164 of 193
19Council Finance Meeting
Other considerations:
215 –Building Wide HVAC Renovation
•Municipal Court renovation is entire 1st Floor,1/3 of the building.
•215 has aging HVAC and Controls (Installed in 2000)
•15-year & 30-year design estimates would be retrofitting existing system
•Ordinance No. 005,202 for Building Energy & Water scoring calls for 7% reduction
by 2026. In order to meet this goal, we would need a new HVAC system.
•Replacing the current HVAC and Controls Systems with a new systems which
meets City goals and ordinances would exceed $15M (On top of the Municipal
Courts renovation)
Page 165 of 193
18Council Finance Meeting
Does Council Finance support moving forward
with appropriations for design of either a 15 -year
or 30-year Municipal Court renovation at 215 N
Mason using Capital Expansion Fees?
Page 166 of 193
ELECTRICAL
STAIR
JURY ROOM
HEARING
ROOM
WATER
SEC.
OFFICE
CELL
RR
JUDGE
PRE-TRIAL
JURY
ROOM
TELE
PUBLIC
RR
MAIL
ELEV
WAITING
PUBLIC
RR
PUBLIC
RR
PUBLIC
RR
RR
STAFF
CONF.
ROOM
CLERKPROSECUTION
PROBATION
WINDOWS
COURTROOM
ASSOC.
JUDGE
COURT
ADMIN
ASSOC.
JUDGE
STAIR
ASSOC.
JUDGE
ASSOC.
JUDGE
RR
ELEC
CONF.
ROOM
CONF.
ROOM
CONF.
ROOM
CONF.
ROOM
RRRR
WAITING
ENTRY &
SECURITYCONF.
ROOM
CONF.
ROOM
CONF.
ROOM
HEARING
ROOM
RECEPTION
215 MASON - 1ST FLOOR
OPTIONCOLOR LEGEND
AUX - Existing Building Support
AUX - Shared Support
DEPT - Municipal Court
ABBREVATION LEGEND:
CL - Collaboration Room
COF. - Coffee
ELEC - Electrical Room
KIT - Kitchenette
MECH - Mechanical Room
M RR - Mens Restroom
PH - Phone Room
QR - Quiet/Mother's Room
RR - Restroom
STOR - Storage
TELE. - Telecom
W RR - Womens Restroom
STAFF LEGEND:
PO-1 - Service Director
PO-2 - Director/Department Head
WS-1 - Division Head
WS-2 - Supervisor/Manager
WS-3 - Staff - Typ.
WS-4 - PTE/Inter/Temp/Volunteer
WS-5 Field/Crew
1B
Page 167 of 193
ELECTRICALSTAIRJURY ROOMHEARING ROOMWATERCONF. ROOMCOURTROOMSEC. OFFICECELLRRJUDGEPRE-TRIALJURY ROOMTELEPUBLIC RRMAILELEVWAITINGPUBLIC RRPUBLICRRPUBLICRRRRSTAFF CONF. ROOMCLERKPROSECUTIONPROBATIONWINDOWSSMALLCOURTROOMASSOC. JUDGECOURT ADMINASSOC. JUDGESTAIRASSOC. JUDGEASSOC. JUDGERRELECCONF. ROOMCONF. ROOMCONF. ROOMCONF. ROOMRRRRWAITINGENTRY &SECURITYCONF. ROOMCONF. ROOMCONF. ROOMOPTIONALSALLY PORTHEARING ROOMOPTION - 30 Year FullMunicipal Court StudyPage 168 of 193
Project Budget Overview
11/21/22 11/21/22 11/21/22 11/21/22 11/18/2022 11/18/2022
215 Municipal Court Major Renovation
15-Year
Design Budget
15-Year
Construction
30-Year Design
Budget
30-Year
Construction
Entire Bldg.
Mechical Energy
Goals
Entire Bldg.
Mechanical
Like-Like
Development & Permit Fees $5,000.00 $75,000.00 $10,000.00 $115,000.00 $100,000.00 $100,000.00
Real Estate Services $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Engineering & Survey Services $7,500.00 $0.00 $23,000.00 $0.00 $0.00 $0.00
Environmental (Lead-Asbestos)$3,500.00 $0.00 $3,500.00 $0.00 $3,500.00 $3,500.00
Construction Spotter Services N/A $0.00 N/A $0.00 N/A N/A
Environmental Cleanup N/A $0.00 N/A $0.00 N/A N/A
Geo-Tech Soils Report $10,000.00 $0.00 $10,000.00 $0.00 $0.00 $0.00
Materials Testing Services $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Architectural Design Services $1,000,000.00 $100,000.00 $1,540,000.00 $125,000.00 $970,000.00 $665,000.00
PMPD Project Management $30,000.00 $262,138.00 $45,000.00 $334,779.40 $145,000.00 $145,000.00
Energy Modeling $25,000.00 $25,000.00 $35,000.00 $30,000.00 $12,000.00 $12,000.00
Building Commissioning $10,000.00 $45,000.00 $15,000.00 $55,000.00 $90,000.00 $90,000.00
LEED/Sustainability $0.00 $0.00 $5,000.00 $20,000.00 $0.00 $0.00
Partnering Consultant $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Scheduling Consultant $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
IT/Communications $0.00 $225,000.00 $0.00 $375,000.00 $25,000.00 $25,000.00
IT Fiber to site $0.00 $95,000.00 $0.00 $95,000.00 $0.00 $0.00
Utilities - Electrical Service (Bigger Transformer)$0.00 $15,000.00 $0.00 $30,000.00 $200,000.00 $0.00
Utilities - Gas Service $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Utilities - Water Service $0.00 $40,000.00 $0.00 $200,000.00 $0.00 $0.00
Utilities - Sanitary Sewer Service $0.00 $25,000.00 $0.00 $25,000.00 $0.00 $0.00
Capital Tools & Equipment - Pool $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
General Contractor. Design, & Construction $30,000.00 $9,116,631.00 $45,000.00 $11,136,665.00 $13,790,247.00 $6,895,123.50
HVAC - Modify existing systems $0.00 In GC Budget $0.00 In GC Budget $0.00 $0.00
HVAC Controls $0.00 $250,000.00 $0.00 $300,000.00 $500,000.00 $500,000.00
Solar PV Design & Installation $10,000.00 $200,000.00 $10,000.00 $350,000.00 $0.00 $0.00
Bonds & Insurance $0.00 By CM/GC $0.00 By CM/GC By CM/GC By CM/GC
Builders Risk Insurance $0.00 By CM/GC $0.00 By CM/GC By CM/GC By CM/GC
Other Insurance $0.00 N/A $0.00 N/A N/A N/A
FF&E - Furniture, Fixtures & Equipment $0.00 $600,000.00 $0.00 $1,000,000.00 $0.00 $0.00
Safety & Other Supplies $0.00 $15,000.00 $0.00 $20,000.00 $3,000.00 $3,000.00
Art in Public Places (1%)$6,500.00 $163,500.00 $6,500.00 $220,000.00 $0.00 $0.00
Expendable Tools/Equip.(Barricades/Signs, etc.)$0.00 $10,000.00 $0.00 $25,000.00 $2,500.00 $2,500.00
Relocate Staff (EOC)$30,000.00 $959,285.00 $30,000.00 $959,285.00 $0.00 $0.00
Relocate Staff (Parking Services)$40,000.00 $1,333,723.00 $40,000.00 $1,333,723.00 $0.00 $0.00
Weather Protection $0.00 $10,000.00 $0.00 $80,000.00 $0.00 $0.00
Misc. Expenses (Relocate Office, Etc)$0.00 $35,000.00 $0.00 $45,000.00 $50,000.00 $50,000.00
Misc. Landscaping Repairs N/A N/A $0.00 $10,000.00 $0.00 $0.00
Project Contingency $300,000.00 $1,300,000.00 $400,000.00 $3,100,000.00 $900,000.00 $900,000.00
Project Cost Subtotal $1,507,500.00 $14,900,277.00 $2,218,000.00 $19,984,452.40 $16,791,247.00 $9,391,123.50
Escalation 8%$16,492,299.16 $21,983,208.59
GRAND TOTAL $17,999,799.16 $24,201,208.59
Page 169 of 193
Page 170 of 193
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Meaghan Overton, Marcy Yoder
Date: December 1, 2022
SUBJECT FOR DISCUSSION
Request for Appropriation in the amount of $1,600,000 from General Fund for Rental
Registration and Inspection Program Start-Up Phase
EXECUTIVE SUMMARY
In August 2022, Council directed staff to develop a rental housing program that included
mandatory registration of rental properties and proactive inspections to ensure that rental housing
is healthy and safe. Staff has conducted a detailed fee analysis with the intent of making the
rental housing program self-sustaining if approved by City Council. However, setting up the
program will require an initial outlay of funds to hire additional staff, purchase software, and
conduct program activities. To that end, staff is seeking feedback from Council Finance on an
initial appropriation in the amount of $1,600,000 (2023: $776,388 and 2024: $823,612).
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Is Council Finance Committee supportive of the request for a $1,600,000 appropriation from the
General Fund to support starting the rental registration and inspection program?
BACKGROUND/DISCUSSION
Previous Council Direction
At a work session on October 26, 2021, staff shared information with Council about the history
of rental housing strategies, findings from recent demographic and market analysis, a summary
of peer cities research, and an outline of a proposed roadmap to implement rental housing
strategies. Several Councilmembers supported additional community engagement in early
2022 to further explore potential design of a rental registration/licensing program.
Upon receiving this Council direction at the October 26, 2021, work session, staff began an
extensive community engagement process to assess feedback from rental owners, property
managers, landlords, and renters. These efforts included an informational mailing to over 9,000
likely landlords identified through City Utilities and County Assessor’s data; a rental industry
questionnaire in February/March 2022 (1,912 responses); a formal Rental Housing Task Force
that met ten times between March and August 2022; and a community questionnaire in August
2022 (1,739 responses). A comprehensive explanation of each of these engagement efforts is
provided in Attachment 1.
On August 23, 2022, staff presented Council with findings from public engagement and best
practice/peer cities research along with several options for potential next steps to implement
Housing Strategic Plan (HSP) strategies related to rental licensing/registration (Strategy 20) and
occupancy ordinance revisions (Strategy 21). Key topics for each strategy included a brief
overview of existing conditions, an examination of outcomes and themes from community
Page 171 of 193
engagement, a summary of recommendations and best practices, and potential next steps toward
implementation.
During the August 23 work session, several Councilmembers supported rental registration, while
several others supported rental licensing. There was general support for a rental housing program
that includes proactive inspections. Based on this Councilmember feedback, a cross-
departmental group of staff has designed a rental housing program that requires registration of all
rental properties and proactive inspections. Council consideration of this rental housing program
is currently scheduled for the January 17, 2023, Council Hearing.
Program Cost
One of the key components of the rental program is a thorough understanding of expected initial
and ongoing costs to the City and a careful calibration of fees. Root Policy Research conducted a
fee analysis based on staff’s proposed program structure to provide a baseline cost estimate and
the corresponding fees necessary to ensure full cost recovery over the first five years of
implementation (Attachment 2).
The figure below shows program expenses for the City of Fort Collins over the first five years of
implementation. Expenses include employee compensation, one-time upfront costs, and ongoing
program costs. Employee salary and benefits (with 4.25 FTE inspectors) would cost $723,438.
One-time costs for the City are estimated at $223,380. Ongoing annual program costs are
estimated at $73,775. Overall, the estimated program cost over the first five years is $4,089,443
in administrative costs to the City ($2.5 million is inspection-related and $1.6 million is non-
inspection related costs).
Though the ongoing rental housing program is designed to be self-sustaining if approved by City
Council, the start-up phase will require an initial appropriation in the amount of $1,600,000 to
hire staff, purchase software, and fund program activities and engagement for the first two years
of the program. This appropriation (including approximately 3% additional funding to account
for inflation) has been included in the analysis of full cost recovery, which means that the initial
outlay of funds will be recovered in full over the first five years of program implementation.
Program costs for 2023 and 2024 are estimated as follows:
Page 172 of 193
Fee Structure
The program fee options are all designed to cover all administrative costs for the first five years
of implementation. This includes the initial appropriation for the “start-up” phase of the program.
Fees can be assessed per unit, per property, or using a hybrid approach. The fee analysis from
Root Policy Research notes that a per unit structure is more expensive for larger multifamily
properties whereas the per property fee is more expensive for single unit owners. The hybrid fee
provides the most equitable distribution of fee costs among different property types and unit
counts compared to the other two fee structures. Staff concurs with Root Policy Research’s
recommendation to pursue a hybrid fee structure. The figure below outlines all of the potential
fee options and the costs to a range of property owners on an annual basis:
FTE Per FTE Cost 2023 Estimate 2024 Estimate
Compensation
Program Manager 1 $90,000 $67,500 $90,000
Engagement Specialist 1 $65,000 $48,750 $65,000
Admin/Tech 1 $50,000 $37,500 $50,000
.25 Deputy CBO 0.25 $25,000 $4,688 $6,250
Lead Bldg Inspector 1 $80,000 $60,000 $80,000
Bldg Inspector 3.25 $70,000 $113,750 $227,500
Bulding and Dev. Review Tech 1 $60,000 $30,000 $60,000
Total Salaries 8.5 $362,188 $578,750
Benefits 0.25 $90,547 $144,688
One-Time Costs
Software 1 $75,000 $75,000 $0
Translation 1 $10,000 $10,000 $0
Vehicle 4.25 $30,000 $127,500 $0
Clothing 4.25 $500 $2,125 $0
Boots 4.25 $160 $680 $0
Tools 4.25 $100 $425 $0
iPad 4.25 $1,300 $5,525 $0
Destop Computer 4.25 $500 $2,125 $0
Total One-Time Costs $223,380 $0
Ongoing Annual
Marketing 1 $20,000 $20,000 $20,000
Postage 1 $10,000 $10,000 $10,000
Phone 4.25 $50 $213 $213
Clothing 4.25 $250 $1,063 $1,063
Vehicle Maintenance and Fuel 4.25 $10,000 $42,500 $42,500
Total Ongoing Annual Costs $73,775 $73,775
Total Compensation/One-Time/Ongoing Costs $749,889 $797,213
Total 2023-2024 $1,547,102
Page 173 of 193
ATTACHMENTS (numbered Attachment 1, 2, 3,…)
1. Engagement Summary
2. Draft Rental Fee Structure Memo
3. PowerPoint
Approach 1:
Fee Options if first inspection included with registration
Fee Structure Options (includes registration and first inspection)
Option 1. Per Unit Fee Structure $0 $30
Option 2. Per Property Fee Structure $65 $0
Option 3. Hybrid Fee Structure (75% property; 25% unit)$49 $21
Reinspection Costs
Single inspector annual costs $80,300
Cost of Reinspection (per unit inspected)$68
Approach 2:
Fee Options if registration separate from inspection fee
Fee Structure Options (registration and inspection fees assessed separately)
Option 1. Per Unit Fee Structure
Registration fee (paid by all properties)$0 $11
Inspection fee (paid only by non-exempt properties)$0 $23
Total Annual Fee (for non-exempt properties)$0 $35
Option 2. Per Property Fee Structure
Registration fee (paid by all properties)$25 $0
Inspection fee (paid only by non-exempt properties)$43 $0
Total Annual Fee (for non-exempt properties)$68 $0
Option 3. Hybrid Fee Structure (75% property; 25% unit)
Registration fee (paid by all properties)$19 $5
Inspection fee (paid only by non-exempt properties)$32 $13
Total Annual Fee (for non-exempt properties)$51 $18
Reinspection Costs
Single inspector annual costs $80,300
Cost of Reinspection (per unit inspected)$68
Per Property Per Unit
Per Property Per Unit
Annual Fees
Annual Fees
Page 174 of 193
MEMORANDUM
To: Marcy Yoder
From: Mollie Fitzpatrick, Julia Jones, and Lucy McGehee
Re: Rental Registry Fee Structure
Date : November 15, 2022
Fort Collins Proposed Program Structure
This memo provides fee structure options for the proposed City of Fort Collins rental
licensing/registry program for the City’s consideration. The fee proposed for Fort Collins
is designed to recover program administration costs and distribute such costs across
the full inventory of rental units in the City. Fee structure alternatives are crafted to
balance the total impact on program costs, number of units in a development, and
number of properties owned/managed by payors.
Registration. The proposed rental licensing/registry program includes an annual
enrollment /renewal with an accompanying fee. Enrollment inclu des basic information
about property ownership and a local contact for the rental property. The City of Fort
Collins will collect rental unit information for the licensing/registry program through an
online application. All rental units will be required to register including:
Single family detached units
Attached units (duplex, row, townhouses)
Multifamily units (apartments or condos)
Mobile homes
Inspections . All rental properties in the City will be inspected unless the property
falls under one of the exemptions below. Inspection of licensed/registered rentals will
occur o n a five -year schedule. The City will use in -house inspectors—separate from
existing building inspectors—to complete inspections of rental units. Units will be
inspected as follows:
All individually owned rental units regardless of type (detached, mobile h ome,
condo, attached housing)
Multifamily rental properties with less than 100 units will be inspected using a
random sample of 10% of total units.
Page 175 of 193
Page 2
Multifamily rental properties with more than 100 units will be inspected using a
random sample of 5% of tot al units.
The following properties will be exempted from an inspection but are still required to
renew their license/registration annually.
Properties that were constructed (or substantially remodeled and inspected by the
City’s inspectors) within the pas t 10 years.
Affordable housing units inspected under the U.S. Department of Housing and
Urban Development (must provide a copy of the inspection report to the City).
Fee Structure Options
Rental registration programs are often designed to be full cost recovery programs,
though some programs are “subsidized” through General Fund allocations for program
administration . Registration and inspection fees can be structured by unit, by building,
or by property; some programs separate registration and inspectio n fees, whereas
others assess a single all-encompassing fee. Details on peer community fees are
included at the end of this memo for context in evaluating the fee options proposed for
Fort Collins.
This section provides a rationale for potential fee structure options in Fort Collins and
fee costs for payors. It considers both per unit and per property fee options and focuses
on a full -cost recovery fee.
Anticipated inspections. Overall, the City of Fort Collins has about 12,500 rental
properties (with 27,500 total units). Of those, 678 properties (5,954 units) would likely be
exempt from inspections (due to age or HUD inspections) leaving 11,818 rental
properties (with 21,526 total units) that are likely to require inspections.
Figure 1 shows the number of rental units and properties in the City of Fort Collins that
would be subject to inspections every five years (exclud ing properties that are less than
10 years old and affordable units inspected by HUD). A reinspection rate of 60% is used
to account for units that need more than one inspection. This count of units and
properties are used to calculate the number of inspections that will need to be
completed annually.
With a random sample method for multifamily units, the number of inspections nee ded
every five years is 11,965 unit inspections. A reinspection rate of 60% results in 7,179
additional inspections. Annually, the City of Fort Collins would have an estimated 3,829
inspections.
Page 176 of 193
Page 3
Figure 1. Rental Units and Properties in Fort Collins and Estimated Annual Inspections
Source: 5-year 2020 ACS, Larimer County Assessor, Housing Catalyst, and Root Policy Research .
Program costs. Figure 2 shows the number of in -house inspectors needed to
administer the program in the City of Fort Collins. The City would need to hire one lead
inspector and 3.25 FTE inspectors. The following assumptions were used to calculate the
number of inspectors needed:
Each inspector can perform five inspections daily on average.
Inspectors work 47 weeks (235 days) per year accounting for holiday and vacation.
Each inspector can complete 1,175 inspections per year.
The lead inspector can complete half the number of inspections as a regular inspector.
Complaint based rental inspections will increase as the City educates tenants on
their rights (0.25 FTE was added to cover this increase).
Figure 2. Estimated Inspector FTE’s to Administer Program
Source:
City of Fort Collins and Root
Policy Research.
Units and Properties
Inspection Exempt 0%678 5,954 0
Inspection Required 11,818 21,526 11,965
Single Family Detached 100%7,377 7,377 7,377
Single Family Attached 100%2,471 2,471 2,471
Duplex 100%1,134 1,134 1,134
Multi Unit (less than 100 units)10%564 4,518 452
Multi Unit (more than 100 units)5%30 5,784 289
Mobile Homes 100%242 242 242
Reinspection Estimate 60%7,179
Total Annual Inspections 20%3,829
Pct. Inspected Properties Units
Estimated
Inspections
Inspections
Units per day per inspector 5
Days per year per inspector 235
Inspector Capacity (units/year)1,175 3.00
Lead Inspector Capacity (units/year)588 1.00
Plus uptick in reporting 0.25
Estimated Inspectors Needed 4.25
Assumptions FTE
Inspectors
Page 177 of 193
Page 4
Figure 3 shows program expenses for the City of Fort Collins. Expenses include employee
compensation, one -time upfront costs, and ongoing program costs. Employee salary and
benefits (with 4.25 FTE inspectors) would cost $723,438 . One-time costs for the City are
estimated at $253,380. Ongoing annual program costs are estimated at $43,775.
Overall, the estimated program cost over the first five years is $4,089,443 in
administrative costs to the City ($2.5 million is inspection -related and $1.6 is non -
inspection related costs) . The program fee options , discussed in the subsequent section,
are all designed to cover all administrative costs for the first five years of implementation.
Figure 3. Program Expenses
Source:
City of Fort Collins and Root
Policy Research.
Category
Compensation
Program Manager (M1)1.00 $90,000 $90,000
Engagement Specialist (P1)1.00 $65,000 $65,000
Admin/Tech 1.00 $50,000 $50,000
.25 Deputy CBO (M1)0.25 $25,000 $6,250
Lead Bldg Inspector 1.00 $80,000 $80,000
Bldg Inspector (each)3.25 $70,000 $227,500
Building and Dev. Review Tech.1.00 $60,000 $60,000
Total Salaries 8.50 $578,750
Benefits 0.25 $578,750 $144,688
One Time Costs
Software 1.00 75,000 $75,000
Marketing 1.00 20,000 $20,000
Postage 1.00 10,000 $10,000
Translation 1.00 10,000 $10,000
Vehicle 4.25 30,000 $127,500
Clothing 4.25 500 $2,125
Boots 4.25 160 $680
Tools 4.25 100 $425
IPAD 4.25 1,300 $5,525
Desktop computer 4.25 500 $2,125
Total One Time Costs $253,380
Ongoing Annual Costs
Per Inspector 4.25
Phone 4.25 $50 $213
Clothing (after year 1)4.25 $250 $1,063
Vehicle maintenance and gas 4.25 $10,000 $42,500
Total Ongoing Annual Costs $43,775
Total
Upfront Costs Total $253,380
Annual Costs Total $767,213
First Five Years Cost 5.00 $4,089,443
Expenses
FTE Per FTE Cost Estimate
Page 178 of 193
Page 5
Full cost recovery fee options for Fort Collins. Figure 4 shows fee
structure options for complete cost recover y in the first five years of program
implementation. Two different approaches are shown for fee calculation:
One approach is to imbed the cost of inspections into the overall registrat ion
fee . This approach effectively requires all registered properties to “share” the
inspection cost, even though some properties will be exempt from the actual
inspections.
The second approach is to separate the cost of registration from the cost of
insp ection such that inspection-exempt properties pay a lower registration fee
while properties that require inspection pay both a registration fee and an
inspection fee. The inspection fee is modeled as an annual fee (even though
inspections would only occur every 5 years) but could be assessed every five years
instead (which would simply require multiplying the fee shown in the figure by five).
Within each approach, three annual fee assessment options are presented: a per
property fee; a per-unit fee; and a hybrid fee (which assumes a base fee per property an
a marginal per-unit fee for each additional unit in the property). The hybrid fee assumes
75% of the cost recovery occurs through the per-property assessment and the
remaining 25% of costs are recovered through the marginal per-unit fee.
There is an additional cost calculated for reinspection per unit. The cost of reinspection
is calculated by estimating the ongoing annual expenses for one inspector ($80,300)
divided by the number of inspections an inspector can complete annually on average
(1,175 inspections). The cost of a reinspection would be $68 per unit per reinspection
required.
Under the first approach, which reflects an all-in -one registration + inspection fee,
assessed on all rental properties in the City:
Option one requires a per unit fee for all licensed/registered units of $30 per unit.
Option two requires a per property fee for all licensed/registered properties
(regardless of unit count) of $65 per property.
Option three requires a combination of a fee per property (75% of cost recovery)
and per unit (25%). This hybrid fee results in a $49 fee per property (includes the
first unit) and $21 per additional unit.
Under the second approach, which reflects a registration fee for all rental units and an
inspection fee for all rental properties that do not qualify for an inspection exemption:
Option one requires a registration fee for all licensed/registered units of $11 per
unit and an additional $23 per unit annually for properties requiring an inspection.
Page 179 of 193
Page 6
Option two requires a per property fee for all licensed/registered properties
(regardless of unit count) of $25 per property plus an additional $43 per property
annually for properties that do qualify for an inspection exemption.
Option thr ee requires a registration fee per of $19 per property (75% of cost
recovery) and $5 per additional unit (25%). Properties that do not qualify for an
inspection exemption would pay another $ 32 per property and $13 per additional
unit annually.
Figure 4. Fee Structure Options for Complete 5 -Year Cost Recovery
Notes: Per unit reflects cost per total unit (not per inspected unit) . In the hybrid fee structure, the first unit is included with
property fee; per unit fee is assessed on each additional unit .
Source: Root Policy Research.
Approach 1:
Fee Options if first inspection included with registration
Fee Structure Options (includes registration and first inspection)
Option 1. Per Unit Fee Structure $0 $30
Option 2. Per Property Fee Structure $65 $0
Option 3. Hybrid Fee Structure (75% property; 25% unit)$49 $21
Reinspection Costs
Single inspector annual costs $80,300
Cost of Reinspection (per unit inspected)$68
Approach 2:
Fee Options if registration separate from inspection fee
Fee Structure Options (registration and inspection fees assessed separately)
Option 1. Per Unit Fee Structure
Registration fee (paid by all properties)$0 $11
Inspection fee (paid only by non-exempt properties)$0 $23
Total Annual Fee (for non-exempt properties)$0 $35
Option 2. Per Property Fee Structure
Registration fee (paid by all properties)$25 $0
Inspection fee (paid only by non-exempt properties)$43 $0
Total Annual Fee (for non-exempt properties)$68 $0
Option 3. Hybrid Fee Structure (75% property; 25% unit)
Registration fee (paid by all properties)$19 $5
Inspection fee (paid only by non-exempt properties)$32 $13
Total Annual Fee (for non-exempt properties)$51 $18
Reinspection Costs
Single inspector annual costs $80,300
Cost of Reinspection (per unit inspected)$68
Per Property Per Unit
Per Property Per Unit
Annual Fees
Annual Fees
Page 180 of 193
Page 7
Figure 5 illustrates how the fee options described above would impact property owners
of a variety of property type s and sizes. A per unit structure is more expensive for larger
multifamily properties whereas the per property fee is more expensive for single unit
owners. The hybrid fee provides the most equitable distribution of fee costs among
different property types and unit cou nts compared to the other two fee structures. Root
recommends the City of Fort Collins adopt hybrid fee structure .
Figure 5. Sample Fees by Property Type Using Fee Structure Options
Source: Root Policy Research.
Figure 6 shows fee structures and costs f or peer communities interviewed by Root
(additional details on peer community programs is included in the appendix to this
memo) . Overall, the recommended hybrid fee for the City of Fort Collins falls in the
middle of the group in terms of costs to rental property owners.
Approach 1: Fee Structure Options (includes registration and first inspection)
Option 1. Per Unit Fee Structure $30 $1,488 $7,441
Option 2. Per Property Fee Structure $65 $65 $65
Option 3. Hybrid Fee Structure (75% property; 25% unit)$49 $1,081 $5,294
Approach 2: Fee Structure Options (with registration and inspection separate)
Option 1. Per Unit Fee Structure
Exempt from inspection $11 $573 $2,863
Option 2. Per Property Fee Structure
Exempt from inspection $25 $25 $25
Inspection required $68 $68 $68
Option 3. Hybrid Fee Structure (75% property; 25% unit)
Exempt from inspection $19 $276 $1,326
Inspection required $51 $943 $3,277
Reinspection Costs
Number of Units Inspected 1 5 13
Cost of Reinspection $68 $342 $854
Total Fee by Property Typeg y
Mobile Home
Building
Building
Page 181 of 193
Page 8
Figure 6 . Peer Community Fee Structures
Source: Root Policy Research.
Ames, Iowa Annual
$50 single family
$100 duplex
$23-$30 per unit
multifamily
1 to 4 years $50 for 3+
reinspections
Austin, Texas Annual $372 per property Annual Utility billing
Boulder, Colorado 4 years $190 per single family or
per building 4 years 3rd party
Lawrence, Kansas Annual $14-$17 per unit 3-6 years $50 per unit
Seattle, Washington 2 years $70 per property
$15 per unit 5-10 years $175 property
$35 per unit
Westminster, Colorado 2 years $50 per unit 2-4 years $40 per unit
Frequency
Inspection
Frequency Fee
Registration/License
Fee
Page 182 of 193
Page 9
Appendix: Peer Community Fee Detail
Root interviewed six peer communities with rental registration and inspection programs
about their rental regulations and fees. These communities were selected because they
are 1) university anchored (with a few exceptions); 2) have unique program
requirements or methods of enforcement ; and 3) have proactive inspections .
Am es, Iowa
Austin, Texas
Boulder, Colorado
Lawrence, Kansas
Seattle, Washington
Westminster, Colorado
Peer community program details related to fee structure are shown in Figure A-1 on the
following page.
The communities interviewed either directly fund their program through fees, allocate
fees to the general fund to fund the program through the general fund, or collect fees
and other department specific funding to run the program. Most communities are cost
neutral, while some communities are working toward that goal or using a unique
funding structure. Cost recovery depends on the frequency of registration/licensing
renewals (ranges from 1 to 4 years in communities), the fee structure and frequency of
inspections (varies). The fee structure for the program determines the staffing capacity.
Communities where fees collected fully fund the program include Ames, Boulder, and
Seattle. Programs funded through the general fund include Lawrence and Westminster.
Programs funded through the general fund can be cost neutral if fee revenue
contributed to the general fund is adequate. Finally, the City of Aus tin charges a small
fee that covers the cost of registration paperwork and funds the remainder of the
program’s administration (staff, inspectors, etc.) through a clean community fee—$4.25
collected monthly as part of utility billing.
Communities interview ed indicated the fee calculation itself can be a challenge. Fees
that are calculated per property have a larger impact on small properties whereas fees
calculated per unit have a larger impact on large properties. Interviewees suggested the
fee calculation be tailored to the amount of staff time and resources properties require.
A tiered fee based on the size of the property was preferred.
Page 183 of 193
Page 10
Figure A -1. Peer Community Program Details
Registration/
Licensing Fee
Inspection
Fee
Cost
Recovery
Inspections
Complaint or
Proactive
Inspection
Frequency Staffing
Ames, Iowa Single family
$50; duplex
$100;
multifamily $23 -
$30 per unit
Included in
registration fee; 3+
inspections $50
each
100% Proactive 1 to 4 year
rotation;
frequency based
on performance
3 full time
inspectors
Austin, Texas $372 per
property
No fee for
inspection; clean
community fee
$4.25/month utility
charge funds code
enforcement
Covers
registration,
not staff
Registered
repeat offender
properties
Annual 8 full time
inspectors, 1
supervisor
Boulder,
Colorado
$190 per SF unit
or per building
Third party
inspectors
100%; pre -
2021 60% fee
recovery, 40%
general fund
Proactive 4 years 3 full time licensing
team, inspections
conducted by 3rd
party
Lawrence,
Kansas
$14-$17 per unit $50 per unit General fund Proactive 3 years typical; 5
or less violations,
6 years
3 inspectors
Seattle,
Washington
$70 for property
and 1st unit; $15
per additional
unit
$175 for property
and 1st unit; $35 per
additional units
Working
toward self -
sufficiency
Proactive;
random
selection of 10%
of all rental units
in city per year
At least once every
5-10 years
1 call center, 3
administrative, 1
cashier, 3
inspectors, 1 senior
inspector, 1
manager
Westminster,
Colorado
$50 per unit $40 per unit 100% Proactive 2 and 4 year
schedule of
inspections based
on property age
3 inspectors, 1 part
time admin
Page 184 of 193
Council Finance: Housing Strategic Plan Implementation
12-01-21
Rental Registration and Inspection Program
Marcy Yoder, Neighborhood Services Manager
Meaghan Overton, Housing ManagerPage 185 of 193
2Direction Sought
Is Council Finance Committee supportive of the request for a
$1,600,000 appropriation from the General Fund to support
the start-up phase of a rental registration and inspection
program?
Page 186 of 193
Strategic Alignment 3
Big Move 7: Healthy, Affordable Housing
•HAH6: Explore mandated rental license/rental
registry
•Strategy 20 -Explore the option of a mandated rental
license/registry program and pair with best practice
rental regulations.
Page 187 of 193
•Greatest Challenge #7: Housing
policies have not consistently
addressed housing stability and
healthy housing, especially for
people who rent
•Community engagement: a desire
to proactively ensure healthy,
safe units and maintain
neighborhood quality of life
4Housing Strategic Plan
Why are we looking at a rental registration and inspection program?
Key Outcomes
Increase Housing Supply & Affordability (12)
Increase Housing Diversity / Choice (12)
Increase Stability / Renter Protections (11)
Improve housing equity (11)
Preserve Existing Affordable Housing (9)
Increase Accessibility (2)
Page 188 of 193
Estimated # of
homes*
Estimated %of all
housing
Total (citywide)87,863 100%
Owned Units 49,775 57%
Rental Units 38,088 43%
Single-household, duplex, and
townhome rentals 14,419 16%
(38% of all rentals)
Multi-household, mixed-use or
manufactured housing rentals 23,669 27%
(62% of all rentals)
5Demographic and Market Analysis
*Note: This data is the best available information at present but should be interpreted as an estimate
because of potential data gaps or lags in reporting property information.
•Over 40% of all housing in Fort Collins is renter-occupied
Page 189 of 193
6Estimated Inspection Volume
Units and Properties
Inspection Exempt 0%678 5,954 0
Inspection Required 11,818 21,526 11,965
Single Family Detached 100%7,377 7,377 7,377
Single Family Attached 100%2,471 2,471 2,471
Duplex 100%1,134 1,134 1,134
Multi Unit (less than 100 units)10%564 4,518 452
Multi Unit (more than 100 units)5%30 5,784 289
Mobile Homes 100%242 242 242
Reinspection Estimate 60%7,179
Total Annual Inspections 20%3,829
Pct. Inspected Properties Units
Estimated
Inspections
Inspections
Page 190 of 193
•Design for full cost recovery
•Separate registration and inspection costs; properties
requiring inspection bear the cost
•Inspection exemptions:
•Properties that are already HUD inspected
•Properties under 10 years old
•Hybrid fee structure (75% per property, 25% per unit)
•Registration: $19/property and $5/additional unit annually
•Inspection: $32/property and $13/additional unit annually
7Program Design
Page 191 of 193
8Funding Request
What: $1,600,000 appropriation from the general fund
Why: Initial outlay for a rental registration and inspection
program to hire staff, purchase software, and fund program
activities and engagement
Program is designed to recover the full cost of the initial
outlay of funds over the first five years of implementation
Page 192 of 193
9Direction Sought
Is Council Finance Committee supportive of the request for a
$1,600,000 appropriation from the General Fund to support
the start-up phase of a rental registration and inspection
program?
Page 193 of 193