HomeMy WebLinkAboutAgenda - Mail Packet - 4/4/2023 - Council Finance And Audit Committee Hybrid Meeting Agenda – April 6, 2023Finance Administration
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AGENDA
Council Finance & Audit Committee Hybrid Meeting
April 6, 2023
4:00 - 7:00 pm
222 Laporte, Colorado River Community Room
Zoom Meeting https://zoom.us/j/8140111859
Approval of Minutes from the March 2, 2023, Council Finance Committee meeting.
1. West Elizabeth Appropriation Request S. Smith
M. Martinez
Presentation: 10 mins.
Discussion: 20 mins.
2. Ballot Work re: Potential County Childcare Tax C. Taylor
Presentation: 10 mins.
Discussion: 20 mins.
3.Sustainable Revenue - Climate H. Depew
J. Echeverria Diaz
Presentation: 15 mins.
Discussion: 30 mins.
4. Sustinable Revenue - Approach to Ballot T. Storin
G. Sawyer
Presentation: 15 mins.
Discussion: 60 mins.
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Council Finance Committee
2023 Agenda Planning Calendar
RVSD 3/30/23 ck
April 6th Hybrid Meeting / Zoom / 222 Colorado River Room
West Elizabeth Appropriation Request 30 min M. Martinez
Ballot Work re: Potential County Childcare Tax 30 min C. Taylor
Sustainable Revenue – Climate 45 min H. Depew
Sustainable Revenue – Approach to Ballot 75 min G. Sawyer
T. Storin
May 4th 2023
Encampment Clean-up 20 min R. Venkatesh
M. Yoder
Auditor RFP Process 30 min B. Dunn
Appropriation from Opioid Settlements 30 min J. Hueser
June 1st 2023
Sustainable Timberline Recycling Center TBD M. Saylor
July 6th 2023
August 7th or August 16th (in person - 4-7:30 pm)
Auditor Interviews (B. Dunn)
September 7th
Annual Adjustment Ordinance (20 mins. L. Pollack)
2024 Budget Revisions (45 mins. L. Pollack
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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
March 2, 2023
Via Zoom
Council Attendees: Julie Pignataro, Emily Francis, Kelly Ohlson, Shirley Peel
Staff: Kelly DiMartino, Travis Storin, Rupa Venkatesh, John Duval, Teresa, Roche,
Claudia Menendez, Ginny Sawyer, Chad Crager, Blaine Dunn, Jo Cech,
Randy Bailey, Renee Callas, Jen Poznanovic, Gerry Paul, Lawrence Pollack,
Nina Bodenhamer, Malinda Mascarenas, Kendall Minor, Lance Smith,
Gretchen Stanford, Katie Geiger, Mike Calhoon, Victoria Shaw,
Meaghan Overton, SeonAh Kendall, Monica Martinez, Dave Lenz, Kerri Ishmael,
Sheena Freve, Zack Mozer, Tracy Ochsner, Erik Martin, Brian Hergott,
Jeff Rochford, Carolyn Koontz
Others: Kevin Jones, Chamber
Molly Bohannon, Coloradoan
Mark Houdashelt
______________________________________________________________________________
Meeting called to order at 4:00 pm
Approval of minutes from the February 2, 2023, 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. Utility Billing System Appropriation
Lance Smith, Sr. Director of Finance for Utilities
Gretchen Stanford, Utilities Deputy Director of Customer Connections
EXECUTIVE SUMMARY
An appropriation ordinance is being brought for your consideration from the utility enterprise funds. These
funds are necessary to implement a modern Utility Customer Information System – Customer Self Service Portal
(CIS-CX) Solution. Funds from the enterprise reserves are being requested just as the City completes the
selection of a solution partner and before professional services are contracted. This appropriation request is
necessary to allow the City to secure CIS-CX project management and solution quality assurance services
through go-live, provide legal review of professional services contracts, and provide funding for hiring
contractual staff throughout the implementation.
The total amount being requested for appropriation here is:
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Professional QA and Implementation Management $1,500,000
Contract Review and Counsel $100,000
Contractual Implementation Staffing $2,650,000
Total $4,250,000
Once the full solution scope for the new CIS-CX is determined another appropriation, expected to be the last,
will be requested for the direct solution costs including licensing and hardware.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Council Finance Committee support bringing an appropriation ordinance forward for the consideration
of the full City Council to support the next phase of the modernization of the Customer Information System –
Customer Self Service Portal?
BACKGROUND/DISCUSSION
Fort Collins Utilities is currently conducting 5 weeks of onsite product demonstrations as the final review of
proposals received for a modern Utility Customer Information System – Customer Self Service Portal (CIS-CX)
Solution. The proposals were received after a deliberate 12-month process focused on identifying solution
requirements, scrutinizing and rating every proposal received, performing reference checks of each solution
provider with other utilities that have implemented the proposed solutions, planning the solution
implementation schedule, staffing needs and quality assurance milestones, and having employees involved in
the solution selection throughout the process and asking questions of the solution providers. This due diligence
and deliberation are necessary to ensure that the selected solution partner and their CIS-CX will serve our
community well as our community moves toward Our Climate Future and evolving how we serve our ratepayers
and enhancing their customer experience with their municipal utilities.
Over the next few months, a solution partner will be selected and then a second appropriation will be presented
to this Committee before the 24-month solution implementation can begin. It is anticipated that the City will
successfully implement the new CIS-CX within 24 months, at which point the existing solution will be retired.
The Capital Improvement Plans presented to the Council Finance Committee ahead of the 2023-24 Budgeting
For Outcomes included up to $15M for this capital investment including the licensing and hardware.
This appropriation is being brought forward at this time to maintain the continuity of the implementation
schedule and to ensure that the pricing reflected in the proposals are current and complete. Momentum for
this implementation is building as staff are getting opportunities to see the benefits of modernizing and
enhancing our customer’s experience as well as focusing on simplifying the architecture and processes behind
the customer interface to provide a stable, upgradable platform.
There are three categories of funding in this next phase of the CIS-CX modernization.
Professional Quality Assurance and Project Management Services
While many existing City employees have worked for decades with the current customer information and billing
system, operating such a system requires a different skill set than upgrading or implementing an existing system
into a new system. The new system may be hosted in the cloud or a more traditional in-house physical solution
with different hardware requirements and interfaces. It may include different modules for a customer portal,
social media, bill printing, etc. To effectively implement these new features and ensure that the City is receiving
the functionality it is expecting, professional software implementation project management and quality
assurance is required.
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A scope of work has been developed for these services with a maximum fee through the implementation and
go-live of the new solution. Because most of this work will be done remotely, travel expenses have been
excluded from the not to exceed price for these services. Estimating some travel will be necessary, raises the
amount being requested for these services including travel to $1,500,000.
Contract Review and Counsel
Prior to the City entering into a binding services agreement with the solution provider outside legal counsel may
be sought as needed to ensure the final agreement is in the best interest of the City and ratepayers. It is
requested that an amount of up to $100,000 be appropriated for this purpose.
Contractual Staffing
Many of the City’s employees who work in and with the current customer information system will be involved in
the implementation of the new solution. This is a best practice to ensure that the proposed solution is
consistent with customer expectations and operational requirements. In order to have these employees
available to focus on the implementation, staff will be augmented by contractual staff throughout the
implementation, and post go-live quality assurance and testing. Based on the staffing plan developed for the
solution implementation, the following contractual positions are needed before implementation:
4 Customer Service Providers $288,000 / yr
1 Customer Experience Provider $64,000 / yr
1 Billing & Accounts Receivable Specialist $80,000 / yr
1 Field Service Lead $100,000 / yr
5 Information Technology Solution Providers $575,000 / yr
$1,047,000 / yr
Because having these additional staff will be advantageous throughout the 24-month implementation with
some needed beforehand and some afterward, in total for almost 2.5 years of augmentation it is estimated that
contractual staff may require:
Contractual Staffing Appropriation = $2,650,000
In addition to the contractual staff discussed above who will backfill employees focused on the implementation,
there will be a need for additional staffing for the duration of the project who will focus on leading testing of the
solutions, developing training and training employees, implementing organizational change management,
reviewing existing business processes and developing business analytics for the future solution. As these
additional staff are not needed initially, this staffing need will be a part of the implementation appropriation
once the solution partner is selected.
Appropriation by Enterprise Fund
As the customer information and billing system is needed by each utility to generate monthly operating
revenues, each utility requires such a system and therefore should contribute to the upgrade or replacement of
such a system. While some rates are more complicated than others and some require meter consumption data
to assess, billing for each utility requires much of the same information as any other utility. Because electric
monthly charges are more complicated than flat stormwater rates and unmetered wastewater use, there are
additional billing components for billing electric customers. Hence, it is appropriate to attribute more of the
shared costs to Light & Power. A similar argument applies to Water billing. The annual subscription costs for
this system are divided between the four utilities as follows:
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Light & Power 50.0%
Water 25.0%
Wastewater 12.5%
Stormwater 12.5%
This same cost sharing ratio is proposed for the implementation costs.
Light & Power $2,125,000
Water $1,062,500
Wastewater $531,250
Stormwater $531,250
$4,250,000
Enterprise Fund Reserve Balances
The funds being requested herein would come from available reserves of each utility. These funds are above
and beyond funds set aside within the reserves to meet minimum fund balance requirements and any previous
appropriations made but not yet spent. As the table below shows, each enterprise fund has sufficient available
reserves for both anticipated appropriations related to modernizing the CIS-CX solution.
DISCUSSION / NEXT STEPS
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Council Finance Committee support bringing an appropriation ordinance forward for the consideration
of the full City Council to support the next phase of the modernization of the Customer Information System –
Customer Self Service Portal?
Emily Francis: are we including Connexion in the billing system?
Lance Smith, no, when the previous effort did not work, we needed an immediate solution for Connexion.
A separate billing system was stood up for Connexion about 1 ½ years ago.
Emily Francis; is there no plan to incorporate all into one billing system?
Light & Power Water Wastewater Stormwater
Available Reserves EOY 2021 $41.4 $41.3 $19.1 $14.5
Mid-year 2022 Appropriations ($26.1)$0.0 $0.0 $0.0
2023-24 BFO Use ($1.0)($29.3)($7.7)($2.3)
2022 Revenues Above Budget $11.2 $3.5 $1.2 $0.2
2022 Expenses Below Budget $1.9 $7.4 $1.8 $2.2
Estimated Available Reserves $27.4 $22.9 $14.4 $14.6
Amount Being Requested ($2.1)($1.1)($0.5)($0.5)
Remaining Available Reserves ($M)$25.3 $21.8 $13.9 $14.1
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Lance Smith; the real challenge there is that the vendors who built systems for traditional utilities have not
gotten into the broadband space so there are really not many solutions that would incorporate broadband as
well.
Travis Storin; also, although the backend systems probably don’t exist to support the market in the way we
would hope right now, there are opportunities to have a more streamlined customer facing experience and
there are platforms that can merge bills for presentation purposes and still be processed by staff separately on
the backend so a utilities customer who also has Connexion could be presented with one bill. That is further
down the road and is carries some level of inefficiencies by virtue of operating the two billing systems on the
back end. But if the spirit of your question is around the customer experience, there are some alternative ways
we could be approaching that and examining that in the future.
Julie Pignataro; can you talk a bit about lessons learned from the previous experience that are feeding into this
process?
Lance Smith; the previous experience was not successful and so the first lesson is that we were trying to manage
an implementation of a software system in house and in house we don’t have that expertise – the first thing we
did was procure outside expertise and project management– test things along the way – confirm all works – we
tried to do this w/out adding an contractual staffing – make sure this implementation goes well – we can’t ask
people to do that – we are bringing resources in to backfill so these folks can focus on this – we are asking
outside council to review the contract to make sure it is very clear and tight
Gretchen Stanford; the requirements are such an important piece of that – making sure that we are all on the
same page about what those requirements are and that QA piece will be very important as well.
Julie Pignataro; so, we don’t know who we are going with yet. How much is our IT team involved in this choice
because of their expertise?
Lance Smith; so, this is not for an RFP. We issued that earlier this year. Before we did that, we brought on a
professional management team who helped us write the requirements so we could issue the RFP. We reduced
the number of proposals we received down to five who we are bringing in for this week long demo. Each vendor
is spending a week here on -site to demonstrate how their system works. We have a team who will be scoring
them as they go through this process. The team consists of folks from customer service, billing, metering, rates
as well as a large contingent from IT. Collectively, this team is going to score the proposals then we will have
our chosen vendor and then will be working with them to negotiate the contract as to exactly what is going to
be provided. The first thing will be determining if it will be a hosted system or inhouse and that will determine
some of the cost. IT is intimately involved and half of the staffing we are asking for is IT.
Julie Pignataro; I had heard that everyone thought the previous (failed) project would be ready to go out of the
box.
Travis Storin; it was sold as an off the shelf solution.
Lance Smith; it was and one of the things we are doing with these demos is – one criteria said that we aren’t
going to look at your solution unless it has already been deployed in a market with 100K plus customers.
They are going to show us their product, step us through so we can make sure it does what they say it does.
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Previously we were told it was an off the shelf solution and then we realized no it was not. That was one of the
big lessons learned. So, making sure the product is real is key. We will also be doing reference checks with other
utilities who have implemented their solutions to make sure it did what they were told and the implementation
timing was accurate.
Travis Storin; Julie, if you have more in-depth questions, we may need to have an Executive Session because of
the ongoing litigation we are involved in.
Julie Pignataro; let’s put that on the shelf for now and keep us updated.
Kelly Ohlson; I see $13-18M for a new billing system. Is that number close to what we expected as it seems like
a ‘take your breath away’ number
Lance Smith; it is in the ballpark and there is a pretty wide range $9-14M. That depends on what type of
solution we go with, whether it is In house, running on our computers with our IT doing the trouble shooting or
it could be on a hosted platform, they run it on their servers. The hosted solution option is the solution we are
leaning toward. Our current billing system is about 20 years old, so we haven’t done this in 20 years. The
hosted solution would include regular updates 2-3 times per year so we would constantly be upgraded to the
current version of the software. We don’t want to have a highly customized system. We want something as
close to off the shelf as possible. When I came and talked to you about the debt forecast I was assuming
$12M
Kelly Ohlson; so, to confirm today we are talking about $4.2M.
Lance Smith; yes, that is correct – the total range is $13-18M
Result; The Committee approved this to go forward to the full Council on March 21st.
B. Connexion – Capital Management
Blaine Dunn, Director, Accounting
Chad Crager, Broadband Executive Director
EXECUTIVE SUMMARY
The purpose of this item is to provide Council Finance Committee an update on Connexion’s financial
projections, highlight the timing of liquidity needs, and discuss a proposed resolution that will enable flexibility
in the usage of funds to be raised in the fall of 2023 from a planned bond offering in combination with Light &
Power.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does Council Finance Committee support the recommendation to bring forward a resolution to Council to
reimburse Connexion for expenditures through a future bond offering?
BACKGROUND/DISCUSSION
Both Light and Power and Connexion anticipate needing to borrow money through bond offerings in 2023. The
projects for Light and Power and Connexion each have different timelines, so it is expected expenditures for
Connexion will occur before the issuance of additional bonds, and exhaust currently available funds.
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Reimbursement of expenditures with bond proceeds is allowed for soft costs. However, in order to reimburse
expenditures incurred for capital costs, an official declaration by Council must be made.
Therefore, in order for the City to be able to use the proceeds from the issuance to reimburse Connexion for any
expenditures, and at the same time maintain the tax-exempt status of the bonds, the Internal Revenue Service
(Treasury Regulation 26 C.F.R. §1.150-2) requires the City Council adopt a Resolution. The Resolution represents
the City’s declared official intent to reimburse the applicable City funds for such expenditures with the proceeds
from the issuance of the bonds.
The declaration of official intent through the Resolution complies with federal regulations. It also provides more
flexibility to the City so it can better manage the capital expenditures related to the Projects. With a Resolution,
the City can make the capital expenditure prior to issuing the bonds and later reimburse the applicable City fund
with the proceeds from the issuance of the bonds.
FINANCIAL IMPACTS
Staff presented updated financial projections for Connexion at the January 10, 2023, Work Session. In that
meeting, the capital project estimate was updated, reflecting a need to access approximately $16 million
additional capital to complete the network build-out and customer ramp-up by the end of 2024. An additional
$3 – $5 million for excess operating expenses was also estimated to be needed.
These estimates remain unchanged. The table below highlights the original Business Plan capital assumptions,
approved spending updates, project spending to date and the current project estimate.
Connexion’s maximum funding need is expected by December 2024, with 2025 expected to be breakeven before
the generation of excess cashflows that will be able to service the L&P reserve usage payback plus new bonding
commitments. To date, Connexion has issued $129.6 million of the $150 million voter approved amount to
support Connexion’s build. This leaves over $20 million available for additional funding needs.
Connexion is contemplating the issuance of new bonds totaling approximately $20 million (in a combined
offering with Light & Power’s approximately $40 million requirement). Highlighted below is the current
estimate of the projected inflows and outflows for Connexion for the balance of 2023 and full year 2024 (with
the assumption of completion of new bonding in the September / October timeframe.)
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DISCUSSION / NEXT STEPS
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does Council Finance Committee support the recommendation to bring forward a resolution to Council to
reimburse Connexion for expenditures through a future bond offering?
Kelly Ohlson; it says Connexion knows there will be a need for future capital of $20M
$16M capital and $4M for operations
(see slide below)
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Blaine Dunn; capital can be used in two different senses; capital can mean cash. The $16M for capital covers
expenditures for fixed assets being put into the ground. Fixed assets – the $4M is the soft costs which include
personnel, marketing, etc.
Julie Pignataro; this is hard because this comes back to us a lot - but my answer is yes.
I know we have a new team and more information, but it is very difficult. I just have to acknowledge this is hard
to read. I do know you are being very transparent and that is super helpful. Constant updates are helpful.
Emily Francis; did we already discuss the $40M in Light & Power that we are bonding?
Blaine Dunn; we have not, that is scheduled to come back to this committee in the June timeframe. Lance is still
solidifying some of the final numbers.
Travis Storin; we have not talked directly about the financing, however, it is part and parcel to the long term
capital plan that Utilities updates every 2 years. I believe we talked about Light & Power in December. It is
implicit in the cost numbers that we would go for approximately $40M.
Blaine Dunn; when Light & Power came to Council Finance the last time, that was the number that was in their
presentation.
Emily Francis; yes, a hard yes but yes
Result; The Council Finance Committee approves this to go forward with a resolution to Council to reimburse
Connexion for expenditures through a future bond offering.
C. Annual Reappropriation Ordinance
Lawrence Pollack, Budget Director
EXECUTIVE SUMMARY
The purpose of this item is to reappropriate monies in 2023 that were previously authorized by City Council for
expenditures in 2022 for various purposes. The authorized expenditures were not spent or could not be
encumbered in 2022 because:
• There was not sufficient time to complete bidding in 2022 and therefore, there was no known vendor or
binding contract as required to expend or encumber the monies; or
• The project for which the dollars were originally appropriated by Council could not be completed during
2022 and reappropriation of those dollars is necessary for completion of the project in 2023.
Additionally, there may have been sufficient unspent dollars previously appropriated in 2022 to carry on
programs, services, and facility improvements in 2023 for those specific purposes.
In the above circumstances, the unexpended and/or unencumbered monies lapsed into individual fund balances
at the end of 2022 and reflect no change in Council policies.
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Monies reappropriated for each City fund by this Ordinance are as follows:
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Council Finance Committee support moving forward with the 2023 Reappropriation Ordinance on the
Consent Agenda at the March 21, 2023, Council meeting?
BACKGROUND/DISCUSSION
The Executive Team has reviewed the Reappropriation requests to ensure alignment with organization
priorities and the Budget staff reviewed the requests to verify that all met qualification requirements. The
2023 Reappropriation requests are as follows, by fund:
GENERAL FUND
Police Services
1) K9 Vests - $3,520
Purpose for funds: $3,520 was donated by a resident for the purpose of buying a protective vest for a K9.
This has not yet been purchased and should be reappropriated according to the intent of the gift.
Reason funds not expensed in 2022: The reason that the gift was not expended in 2022 was because the
dog that it was intended for needed to be returned to the breeder because of behavioral issues. Another K9
has been purchased and the vest will be purchased later in the year when the dog is full grown.
2) Northern Colorado Regional Communication Network (NCRCN) - $300,000
Purpose for funds: The funds are being drawn from NCRCN (Northern Colorado Regional Communication
Network) reserves, a restricted portion of the General Fund. These funds were designated for the
maintenance and replacement of the radio towers and equipment on top of the hospital and on Tower Road
by Horsetooth Rock.
Reason funds not expensed in 2022: Because of the complexity of the scope of the project, and conflicting
priorities with other projects, the Information Services Division in Police Services is still in the process of
developing the RFP to bid out the work. This project will commence in 2023.
City Manager’s Office
3) Council High Performing Board - $18,295
Purpose for funds: The previous City Council approved an offer for $30,000 to support Council group and
individual development. Strategies such as individual mentors/coaches and conferences are available with
General Fund $602,754
Transit Fund 55,750
Transportation Fund 100,000
Water Fund 52,500
Broadband Fund 4,361,774
Data & Communications Fund 86,000
UT Customer Service & Administration Fund 170,848
Total $5,429,626
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this funding. It can also be used for other training purposes, as well as participation with associations such
as the Colorado Municipal League, National League of Cities, and Water Literate Leaders.
Reason funds not expensed in 2022: A portion of this funding was used in 2022; however, City Council did
not fully utilize the available budget. A Council workshop in January of this year outlined further training
and development needs for Council in 2023. These funds will be used towards those additional
opportunities.
4) DEI Principles of Community - $8,000
Purpose for funds: A key deliverable identified by Council to advance the Equity and Inclusion priority was
to develop Principles of Community for the organization to foster and enhance a sense of belonging for
coworkers and the community we serve. This funding will create the principles of community which
developed as a mission, vision, values refresh project. Work was partially completed in Q4 of 2022 after
extensive staff engagement. The Communications Department is working on creating a new poster and
communications to be shared city-wide in 2023.
Reason funds not expensed in 2022: Not all funds were expenses in 2022 as the city-wide roll out of the
new Mission, Vision and Values (MVV) was planned for Q2 2023. Messaging and development of the
outreach materials is still in progress and expected to be completed and ready for outreach by the end of
Q2. These funds will be used to pay for the final printing of materials and promoting the new MVV across all
departments in 2023.
5) Land Acknowledgement Funding - $16,065
Purpose for funds: Land Acknowledgement funds have been used to build trust with the Fort Collins Native
American community in a land-focused way. Having a strong relationship with a foundation of trust is a
crucial first step before we can begin the process of creating a written land acknowledgement. For example,
funds have been used to provide space for the Northern Colorado Intertribal Powwow Association (NCIPA)
Powwow, space and supplies for NCIPA culture classes, and space and supplies for the NCIPA winter drive
celebration.
Reason funds not expensed in 2022: It was crucial to establish a strong relationship of trust and reciprocity
before beginning the process of creating a land acknowledgment. There was some hesitancy in the Native
American community about creating a land acknowledgment without understanding the City’s commitment
to the Native community, to ensure that the land acknowledgment was not merely a performative action.
Over the last year, we have established that relationship and we now have a solid basis to create a written
land acknowledgement in 2023. Quarterly meetings have been set up with the Native American community
for 2023, and we are also establishing a Native American Advisory Circle this year. These spaces will be the
mechanism through which the land acknowledgment is created.
Parks
6) Park Planning & Development Special Project Support - $5,600
Purpose for funds: Special project support funding was appropriated in 2020 for Park Planning &
Development staff to conduct site planning and prepare cost estimates for potential donor funded projects,
enabling donors to move forward with fundraising efforts. To date, multiple projects have been completed
utilizing this funding source, including Veteran's Plaza improvements, Eastside Park improvements, Sugar
Beet Park art "The Hand that Feeds", a cyclo-cross training course in Rossborough Park, site planning for a
pickleball complex, and a pledge from the mountain bike community to fund a feasibility study for a bike
park as part of a GOCO grant.
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Reason funds not expensed in 2022: Funding partnerships with potential donors are unpredictable. This
funding enables the City to be responsive to potential donors when fundraising opportunities arise. The
remaining funds will be used to complete projects currently underway.
Community Development & Neighborhood Services
7) Mediation and Restorative Justice Services - $4,526
Purpose for funds: These funds were all donations made to support the Mediation and Restorative Justice
programs. The programs were founded 22 years ago and provide community-based services to support
residents in constructively facing conflict. Community Mediation is used to address all types of conflicts and
supports citizens in resolving conflicts collaboratively. Youth (10-22) in our community can be referred to the
Restorative Justice programs to take responsibility for, and help repair the harm of, crimes they have
committed. Our team of over 50 trained volunteers makes these services free or low-cost and available for
our community.
Planned uses for these donated funds include additional training and conferences for staff and volunteers;
diversifying the Mediation and RJ volunteer pool; funding the RePay program where youth in the RJ
programs who owe victim restitution can do community service to help pay the restitution.
Reason funds not expensed in 2022: In January 2022, two of the 4-person MRJ team left the organization so
efforts were focused on maintaining core services, rather than pursuing special projects. New staff were
hired in May 2022 and training, onboarding continued throughout much of the rest of the year. It is
expected that these funds will be expended in 2023.
Social Sustainability
8) EV Credits - $238,000
Purpose for funds: These funds address the cost differential between current Colorado Housing and Finance
Authority requirements and the updated Building Code requirements for Electric Vehicle (EV) infrastructure
for affordable developments. The program provides cost-sharing of these additional infrastructure
requirements by providing credits of flat fees calculated per project based on eligible parking spaces.
Reason funds not expensed in 2022: The City did not receive any requests for EV infrastructure credits from
qualifying projects in 2022. The parking standards in the Building Code that will be in place starting 2023 will
allow all affordable housing projects to qualify for this credit. Staff expects the first request for a credit to be
submitted Q1 2023.
Natural Areas
9) West Nile Virus - $8,748
Purpose for funds: The West Nile Virus Program provides proactive mosquito management and seeks to
reduce the risk of human contraction of West Nile Virus. The majority of the monies fund two contracts; a
contract with Vector Disease Control International provides mosquito larvae control and mosquito trapping,
while a second contract with Colorado State University provides for testing West Nile Virus presence. The
remaining funds provide for community education through various forms of advertisement and outreach.
Reason funds not expensed in 2022: During the budget process of 2023-2024 full funding for the WNV
Program was not restored, yet looking ahead, it became clear that the inflation-related contract costs for
the fundamental, contracted elements of the program would significantly exceed the budgeted increase for
2023 and 2024. To plan for this short-fall, remaining outreach funds (approximately $5000) were coupled
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with unanticipated reimbursement money from the Town of Berthoud (approximately $3000) not spent
with the intention to carry them over to address the 8% increase in contractor costs. Without carrying these
funds forward, the contracted elements of the program are likely to exceed the total program budget by
roughly $2000.
TRANSIT FUND
Transfort/Dial-A-Ride
10) Poudre School District (PSD) & Transfort Collaboration Study - $55,750
Purpose for funds: This funding allows for a study to determine areas of better collaboration for student
transportation between Transfort and Poudre School District (PSD).
Reason funds not expensed in 2022: Staffing issues, contractor availability, as well as purchasing
department capacity led to delays for this project until late November 2022. Staff currently has all of the
work in place to sign a contract and begin work as soon as 2023 funding is confirmed. Multiple staff will be
actively monitoring and guiding this work in 2023.
TRANSPORTATION FUND
Traffic
11) Neighborhood Traffic Mitigation Program Project Construction - $100,000
Purpose for funds: Traffic in neighborhoods can affect the quality of life for residents, bicycles, pedestrians
and drivers. The Neighborhood Traffic Mitigation Program is a collaborative effort between neighborhoods
and City staff to implement traffic calming options. In 2022, Traffic received $130,000 additional funding for
medians and/or pedestrian refuge islands, sidewalk curb extensions and traffic diverters in order to achieve
a more "complete streets" approach to traffic calming. The offer included funding for professional
(consulting) services and funding for the construction of traffic mitigation devices on neighborhood streets.
Traffic is requesting $100,000 to be re-appropriated from the 2022 budget to construct these mitigation
improvements.
Reason funds not expensed in 2022: In 2022, evaluation of locations and public outreach was completed.
Due to staffing changes and consultant availability, design of the mitigation improvements for Whedbee and
Oak was not started until fall. Survey and design will be completed in the Spring of 2023 and the
construction will start in the summer/fall.
WATER FUND
Utility Water Resources Division
12) Northern Integrated Supply Project (NISP) Response & Engagement - $52,500
Purpose for funds: Since 2008, the City has developed and contributed science-based input to the various
planning stages of the Northern Integrated Supply Project (NISP) project with the goal of minimizing adverse
impacts on the Poudre River and the Fort Collins community. The City’s efforts have resulted in positive
changes to this project which are reflected in the NISP operations and mitigation plan. Funding from this
2022 offer is intended to provide technical consulting and engineering support to inform the City’s
engagement in future NISP planning efforts. Specifically, City staff will engage in NISP adaptive management
and master planning stakeholder processes; however, additional technical and consulting support will be
needed to achieve the desired outcomes. Funds from this offer would support: 1) water resources
engineering and analysis to advise the NISP flow operations and ensure the proposed flow mitigation
program is realized; 2) advisement for the development of NISP’s proposed Master Plan and Adaptive
Management Program; and 3) additional discipline-specific representation on technical advisory groups and
input for project infrastructure proposed within the City limits.
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Reason funds not expensed in 2022: The NISP project Record of Decision (ROD) was not issued until late
2022, which was later than NISP project participants anticipated. Because of this permitting delay and
because staff at Northern Water were heavily involved in post-fire recovery from the 2020 East
Troublesome Fire, Northern Water elected to postpone the Adaptive Management and River Master
Planning discussions with stakeholders until after the ROD was released. Northern Water initiated
conversations with potential project stakeholders, including City of Fort Collins, about the intended start of
these planning efforts in early 2023. Funds from this budget offer will be used for the original intended
purpose of developing science-based input with the assistance from technical and engineering consultants,
on how the NISP project impacts should be managed, mitigated and monitored.
BROADBAND FUND
Broadband
13) Re-Deploy of Broadband Working Capital - $4,361,774
Purpose for funds: Offer 63.1 encompassed the ramp up of Connexion core operations as the network build
out was expected to be essentially complete by year-end 2022, and customer acquisition, servicing and
network maintenance approached full targeted operating levels. This offer was for all 2022 ongoing
expenditures which include personnel, operating costs, cost of goods sold (primarily internet and video
content) and debt servicing requirements. This request seeks to reappropriate $4.4 million in unspent 2022
funds into 2023 for completion of the primary network buildout, access to customer premises and
continued customer installations.
Reason funds not expensed in 2022: Construction of the network, accessing commercial and residential
multiple dwelling unit (MDU) accounts, and ramp-up of customer base has taken longer than expected due
to supply chain cost increases, build-out complexity and installation labor shortage issues. These conditions
have required appropriation of additional capital expenditures for the project by City Council in September
2021 and April 2022 totaling $28 million. An additional $5.4 million in unanticipated working capital savings
(primarily from operating cost containment and interest income from the original bond proceeds) was
reserved and targeted for re-deployment as part of the updated financing efforts. $1.0 million of this
amount was spent in 2022 on network buildout. This request seeks to reappropriate the remaining $4.4
million from the $5.4 million re-deployed amount to meet the increased capital requirements. This does not
represent an increase in the capital budget estimate, just the formal transfer of reserved funds.
DATA AND COMMUNICATIONS FUND
Information Technology
14) Staff Augmentation for Network and Voice Operational Support - $86,000
Purpose for funds: This request will fund additional hardware support and staff augmentation for Network
and Voice support that will assist with the Webex rollout, voice enterprise support, Police Wi-Fi upgrades,
and other enterprise network tasks and demands. These funds will allow the Information Technology (IT)
department to contract with an experienced vendor to help manage operational and project workload. This
will also allow time for IT to hire new Network/Voice personnel and get them up to speed, while not losing
traction on enterprise support needs, project rollouts, and maintaining a proper work-life balance with an
already overextended Network staff.
Reason funds not expensed in 2022: These funds were not expensed due to workload capacity, vacant
positions, and expertise issues in the midst of the transition of Network and Voice operations between
Connexion and the IT department that occurred in mid-2022. Upon transferring ownership of the Network
and Voice operations, IT began evaluation of the current status of the operation and prioritized what
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needed most attention, which was delayed lifecycle switch replacement, ARPA-funded initiatives, and voice
strategy which pushed the aforementioned initiatives and operational tasks to late 2022 and into 2023. IT
has evaluated, rescoped, and is currently posting the vacant Network positions to better address the needs
of the City's Network and Voice systems to keep up with service needs, project demands, upgrades, and
expansion.
UTILITY CUSTOMER SERVICE AND ADMINSTRATION FUND
Utility Technology and Customer Service
15) Utilities Information Technology Minor Capital - $170,848
Purpose for funds: The funds are requested for replacement of departmental firewalls for 1) the Customer
Information System (CIS) Utility billing system hosted onsite at Platte River Power Authority (PRPA) and 2)
the Utilities Advanced Meter Fort Collins (AMFC) system. The firewalls are currently end-of-life, and thus
end-of-support, and need to be replaced.
Reason funds not expensed in 2022: The downside to the departmental firewalls is that they are discrete
stand-alone installations built as a pair for redundancy. The number of these types of discrete firewall
installs across the City creates a large management burden, as well as a large and potentially inefficient use
of funds. IT was exploring a new concept in which these disparate firewalls could be combined into a single
on-premise redundant virtual environment with the expectation that the new environment would be easier
to manage, provide better redundancy, and ultimately be a more cost-effective solution. However, due to
other work priorities, the research and analysis into this proposal was not able to be completed in 2022.
The research into this new firewall architecture should be completed in 2023, and the funds for these
firewalls could be applied towards this new firewall architecture. If the new firewall architecture proves to
be unfeasible, the funds would still need to be applied to the purchase of discrete firewalls.
FINANCIAL/ECONOMIC IMPACT This Ordinance increases 2023 appropriations by $5,429,626. A total of
$602,754 is requested for reappropriation from the General Fund, $4,361,774 is requested from the Broadband
Fund, and $465,098 from other funds. Reappropriation requests represent amounts budgeted in 2022 that could
not be encumbered at year-end. The appropriations are from prior year reserves.
DISCUSSION / NEXT STEPS
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Council Finance Committee support moving forward with the 2023 Reappropriation Ordinance on the
Consent Agenda at the March 21, 2023 Council meeting?
Kelly Ohlson; a pervious Council decided that West Nile Virus was a community issue and not a Natural Areas
issue and the funding was taken from Natural Areas and put into the General Fund. Now I see it back under
Natural Areas.
Lawrence Pollack; you are correct that the funding is coming from the General Fund not Natural Areas.
But it is managed and the budget is run through Natural Areas.
Emily Francis; no questions
Julie Pignataro; no questions – Thank you for the great explanations in the packet.
Page 18 of 131
RESULT; The Council Finance Committee supports moving forward with the 2023 Reappropriation Ordinance on
the Consent Agenda at the March 21, 2023 Council meeting.
OTHER BUSINESS;
Julie Pignataro; because of the number and nature of the agenda items, does it make sense to do the April 6th
meeting in person? We do good work this way – this is a robust agenda and this will be the 5th or 6th time we are
talking about how we plan to package our funding shortfalls.
Travis Storin; one of the agenda items for the April 6th meeting is Sustainable Revenue Climate and a separate
topic regarding our approach to the ballot. Large emitter will be incorporated into that dialog. We will be
brining the results of our analysis around the large emitter tax as opposed to a fee. We are at an actionable
time as it relates to November ballots. We added more time to allow for that dialog.
It was agreed to have the April 6th Council Finance Committee meeting be a hybrid meeting.
Meeting Adjourned at 5:10 pm
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COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Spencer M. Smith, P.E., Engineering - Special Projects Engineer
Monica Martinez, Planning Development & Transportation Finance Manager
Date: April 6, 2023
SUBJECT FOR DISCUSSION
West Elizabeth Corridor final design - Multi-Modal Options Funding Grant Appropriation
EXECUTIVE SUMMARY
The West Elizabeth travel corridor is currently the highest priority pedestrian/alternative mode
area for improvement in the City and was highlighted in City Plan and the Transit Master Plan.
The City was awarded a $1,232,248 Multi-Modal Options Funding (MMOF) grant from the
North Front Range Metropolitan Planning Organization (NFRMPO) for final design of the
project. The grant award requires a 50% local match of $1,232,248. Colorado State University
(CSU) has committed to funding 50% of the local match requirement and has appropriated
$616,124 for that purpose. The City will be required to contribute 50% of the local match funds
as well as the local overmatch funds. The City’s financial commitment to the final design will be
$616,124 in local funds and $35,504 in local overmatch funds for a total of $651,628 to complete
the $2.5M final design.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Is Council Finance supportive of an out of cycle supplemental appropriation for the Multi-Modal
Options Fund (MMOF) and required local match to complete Final design for West Elizabeth
Corridor?
BACKGROUND/DISCUSSION
MMOF Background
In August 2022, the NFRMPO awarded the City with a MMOF grant for the final design
of the West Elizabeth Corridor project.
The approved funding breakdown is as follows:
• MMOF grant $1,232,248
• Local Match (City/CSU) $1,232,248
• Local Overmatch (City) $35,504
• Total $2,500,000
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The total local match requested from the City is $651,628. Funds from the Transportation
Capital Expansion Fee (TCEF) and unanticipated revenue from Transfort will be used in
equal amounts to support this supplemental appropriation request ($325,814 each).
West Elizabeth Corridor Background
The West Elizabeth Corridor is currently the most productive transit area and one of the
highest pedestrian use areas within the City.
• It has more passengers per revenue hour than Max and there are often times where
“trailer” buses are required in order to accommodate all the passengers.
• Most passengers are going to/from CSU. This includes CSU’s foothills campus
which is harder for Transit to access due to the limited ability to turn buses around
at Overland Trail.
• Bike/ped count data show extremely high usage and potential for modal conflict
at the major intersection of W. Elizabeth and City Park Ave.
Design along this corridor is expected to allow for safer travel for all modes and a more
direct route for buses which will include a turnaround at the end of Elizabeth which could
help lead to some route consolidation.
Due to the many factors and current condition of this corridor, it is one of the top priority
areas for improvement within the City and has specifically been highlighted in the Transit
Master Plan as the highest priority project.
West Elizabeth Corridor Project Status
• 30% Design - Completed (Summer 2022)
• Final Design – Summer 2023 to Summer 2024 (pending this appropriation of
local match funds)
• RAISE grant – Submitted (February 2023)
o Foothills Transit Center and Roundabout at Overland/Elizabeth
o $10.7M requested
• Small Starts grant
o Project Rating submittal (tentative) – Fall 2023
Staff is recommending appropriation of the City’s final design local match and overmatch for
several reasons:
• The project funds are highly leveraged in that CSU is contributing $616,124 to the
project.
• Having a completed final design and this project at a “shovel ready” status could help
secure construction funding.
• In line with guiding themes and principles of the City Strategic Plan:
o Multimodal Transportation & Public Transit
o Equity, Inclusion and Diversity
o Environmental Sustainability
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ATTACHMENTS
1. Council Finance PowerPoint Presentation
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West Elizabeth 100% Design –Council Finance Committee
Spencer Smith, Monica Martinez - April 6, 2023
Page 24 of 131
2Council Direction Sought
Is Council Finance supportive of an out of cycle supplemental
appropriation for the Multi-Modal Option Fund (MMOF) and required local
match to complete 100% design for the West Elizabeth Enhanced Travel
Corridor?
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3Where We Are
Design
•30% Design Complete (Q3 2022)
•Final Design –FHU
-Begin Q2 2023
-Finish Q2 2024
•Project Rating System
-Greenroads
-Envision
•MMOF Grant (Q2 2022)
-CSU committed 50% of Local Match
($616k)
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4Where We Are (cont.)
Grants
•RAISE (Rebuilding American Infrastructure
with Sustainability and Equity)
-Foothills Transit Center & Roundabout
-Requested $10.7M
-Submitted Q1 2023
•Small Starts
-Application mostly complete. Working to
finalize local match funding sources
-Tentative project rating submittal
Summer 2023
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5Next Steps
•IGAs (CDOT & CSU)
-Currently finalizing
•CFC/City Council –April/May 2023
-Local match appropriation -final design
-IGA approvals
•Final Design Contract -FHU
-Currently finalizing
•Construction Funding
-Ongoing effort to identify local match
funding sources ($20M minimum)
-Small Starts grant application
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6West Elizabeth Corridor Design Project
•Funding will complete 100% Design
•Keeps project on track to be eligible for FTA Small Starts Grant Funding
(same grant that was utilized for MAX)
•Leveraged funds/partnership -CSU contributing $616k for 100% Design
Funding Source 30%
Amount
100%
Amount
Total
MMOF $ 750,000 $ 1,232,248 $1,982,248
CSU $ 375,000 $ 616,124 $ 991,124
Transfort Reserves
$ 375,000 $ -$ 375,000
TCEF $ -$ 325,814 $ 325,814
Transfort Unanticipated Revenue $ -$ 325,814 $ 325,814
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7Council Direction Sought
Is Council Finance supportive of an out of cycle supplemental
appropriation for the Multi-Modal Option Fund (MMOF) and required local
match to complete 100% design for West Elizabeth Enhanced Travel
Corridor?
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Key Metrics 8
•Reduce or eliminate passenger “leave behinds”
•More convenient travel between Main and Foothills campuses and MAX
•Future compatibility with bike/scooter share, microtransit, increased transit services in west Fort Collins
•Buses every 7.5-10 minutes during peak hours
•Connections to CSU Transit Center, MAX on Mason at Laurel Station
•Increase transit capacity
•Improve transit system connectivity
•Improve connecting walkways, bikeways
•Improve multimodal safety
•Support interconnectivity between modes
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Route Plan and Stop Locations 9
Roundabout
Roundabout
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10Schedule
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Page 34 of 131
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Christina Taylor
Date: April 6th, 2023
SUBJECT FOR DISCUSSION: Ballot Work Re: Potential County-wide Childcare Tax
EXECUTIVE SUMMARY (
Larimer County families currently spend between 20-50% of their annual household income on
childcare costs. The cost of care for one child, between $7,000-$20,000 a year, exceeds that of
tuition costs of many colleges and universities. Childcare cost and availability negatively impacts
younger families who are not prepared to handle this enormous financial burden so early in their
lives. This restricts many families' ability to afford other basic needs, including stable housing
and food. It also impacts our economy in a big way. Lack of childcare access is estimated to cost
Larimer County nearly $100m in lost earnings, productivity and revenue. Quality childcare is
essential to ensuring we have thriving, productive generations in the years to come, yet
inadequate public investment coupled with a dire lack of qualified workforce means that quality
care is out of reach for many families.
Today, Larimer County is poised to pave the way for future generations by radically shifting how
the childcare sector is funded. By creating a dedicated local public funding stream, we have the
opportunity to increase access to quality, affordable childcare for thousands of families in
Larimer County. At the same time, we will be able to improve provider compensation and
preparation, making childcare an attractive profession that is valued for its positive impact on the
lives of families and the children upon whom our future relies. With a question posed to Larimer
voters in November of 2023, we propose to raise the Larimer County sales and use tax by .25%
(just 25 cents on every $100 purchase). The revenue generated from a successful ballot measure,
an estimated $19-$21M annually, will work toward ensuring that no family in Larimer County is
paying more than 10% of their annual income on childcare costs. Further, it will support Larimer
County early care and education professionals with wage supplements, professional
development, increased access to healthcare benefits, and more.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
(Work session questions should be designed to gather direction from Council without requiring
Councilmembers to make a decision.)
This presentation is meant to inform the CFC and provide an opportunity for questions and
discussion on how this effort can coexist with Council taxation efforts this year.
BACKGROUND/DISCUSSION (details of item – History, current policy, previous Council
actions, alternatives or options, costs or benefits, considerations leading to staff conclusions, data
and statistics, next steps, etc.)
Please see the attachment.
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ATTACHMENTS (numbered Attachment 1, 2, 3,…)
1. ECE Ballot Report-
https://drive.google.com/file/d/1WczzamFnK1ZqKIt8rAG9s_RBn-_rXz_0/view
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PUBLIC FUNDING
FOR EARLY
CHILDHOODINCREASING ACCESSJanuary 2023
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EARLY CHILDHOOD COUNCIL OF
LARIMER COUNTY
For more than 20 years, the Early Childhood Council of Larimer County (ECCLC)
has been working to improve services to children and families. Our mission is to
bring the community together to share knowledge and resources, build
expertise, and work collaboratively to ensure that all young children in Larimer
County have the care, support, and opportunities necessary to grow, learn, and
succeed. We work strategically together with everyone important in a young
child’s life—parents, teachers, physicians, and psychologists―to equitably
modernize and prioritize quality early childhood experiences. We provide expert
coaching and consultation, build leadership capacity, incubate innovative ideas,
spearhead community collaboration, advocate for policies and funding, and
design and pilot innovative programs.
ECCLC is one of Colorado's 34 Early Childhood Councils working to improve
services to children and families. The work of Councils is guided by the Early
Childhood Colorado Framework. ECCLC is one of the strongest Early Childhood
Councils in the state and widely recognized as a center of excellence and a hub
for innovative solutions that support long-term, positive, and sustainable change
for families in our community. ECCLC is also designated by the State as the Local
Coordinating Organization for Universal Preschool.
01
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02
Larimer County families currently spend between 20-50% of their annual
household income on childcare costs. The cost of care for one child, between
$7,000-$20,000 a year, exceeds that of tuition costs of many colleges and
universities. Childcare cost and availability negatively impacts younger families
who are not prepared to handle this enormous financial burden so early in their
lives. This restricts many families' ability to afford other basic needs, including
stable housing and food. It also impacts our economy in a big way. Lack of
childcare access is estimated to cost Larimer County nearly $100m in lost
earnings, productivity and revenue. Quality childcare is essential to ensuring we
have thriving, productive generations in the years to come, yet inadequate public
investment coupled with a dire lack of qualified workforce means that quality
care is out of reach for many families.
Today, Larimer County is poised to pave the way for future generations by
radically shifting how the childcare sector is funded. By creating a dedicated local
public funding stream, we have the opportunity to increase access to quality,
affordable childcare for thousands of families in Larimer County. At the same
time, we will be able to improve provider compensation and preparation, making
childcare an attractive profession that is valued for its positive impact on the lives
of families and the children upon whom our future relies. With a question posed
to Larimer voters in November of 2023, we propose to raise the Larimer County
sales and use tax by .25% (just 25 cents on every $100 purchase).
The revenue generated from a successful ballot measure, an estimated $19-$21M
annually, will work toward ensuring that no family in Larimer County is paying
more than 10% of their annual income on childcare costs. Further, it will support
Larimer County early care and education professionals with wage supplements,
professional development, increased access to healthcare benefits, and more.
Jump to page 14 to see how this will work!
EXECUTIVE SUMMARY
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03
Why is Early Childhood Important? ........................................................
Access to Childcare in Larimer County..................................................
Childcare is a Market Failure.........................................................................
Impacts on Our Community.........................................................................
Benefits of Increased Investment in Childcare................................
Proposed Policy Solution.................................................................................
Funding Breakdown...........................................................................................
How Did We Get Here?....................................................................................
Conclusion.................................................................................................................
Appendices................................................................................................................
Research and Citations.....................................................................................
TABLE OF CONTENTS
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Pages 19-20
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04
The science of brain development shows that children form more than a
million new neural connections every second within the first five years of
life. Children’s earliest experiences with their caregivers directly impact how
these neural connections are made, laying the foundation for all future
learning, behavior, and health. The caregivers that interact with our children
in their first five years, from parents, grandparents and babysitters, to early
educators such as child care providers, are the stewards for early growth
and development. Numerous studies have shown just how critical it is for
our children to have high quality early experiences to ensure they are able
to be successful and thrive from day one.
WHY ARE THE FIRST FIVE YEARS SO IMPORTANT?
THE IMPORTANCE OF
THE EARLY YEARS
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ACCESS TO CARE 05
Larimer County is facing a crisis in early childhood care and education. Based on
2019 estimates, licensed capacity for child care is only 25% of projected demand
for infants and toddlers, and only 64% for preschool age children. This challenge
is not new and recognition of it as a major barrier to the economic and social
success of our community is widely held. The Talent 2.0 Regional Workforce
Strategy report released in 2017, identified lack of access to child care as one of
three key barriers to workforce recruitment and retention in Larimer County. As
such, the Larimer County Board of County Commissioners made expanding
access to quality child care a key priority of the County’s 2019 – 2023 strategic
plan -- Goal 2, objective 3: “By 2023 Larimer County, with public and private
partners, "will increase quality child care capacity by 50% by identifying and
implementing investment strategies in the areas of workforce, infrastructure and
funding that result in long-term systems change.”
The Children’s Equity Project notes that systemic inequities begin before birth
and follow children into the early care and education (ECE) system, one of the
first systems with which they interact. In fact, families’ access to childcare, their
children’s experiences while in care, and the outcomes they take with them as
they transition into school and beyond, can vary drastically based on their race,
ethnicity, and language. Outcomes for children of color and those living in
poverty continue to fall short of those of their peers. Larimer County School
District data continually demonstrates that historically marginalized populations
are not graduating on time. Child health data at the state level demonstrates
that health and mental health outcomes for children of color, and other
marginalized identities, continue to be worse than for their peers.
Lack of Access
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06CHILDCARE IS A
MARKET FAILURE
The average cost of child care in Larimer Count is $199-$324 weekly,
depending on the age of the child. This equals roughly $9,500-15,500
a year, per child. That means the average Larimer County family
(median household income of $75,332 per the Colorado Department
of Labor and Unemployment) spends between 12-20% of their annual
income on child care for one child. The US Department of Human
Services recommends that child care costs should not exceed more
than 7% of a family's budget.
Impact on Families
Early educators (often called child care providers) make an average
of $13-$15 an hour. The poverty rate for early educators in Colorado is
15.1 percent. According to the Massachusetts Institute of Technology
(MIT), a single parent of two children needs to make $42/hr to afford
to live in Larimer County. A two-parent household with BOTH
parents working (and 2 children in the home) each need a
minimum of $23/hour to afford to live in Larimer County.
The only way to raise revenue in a child care program is to increase
family tuition rates. If programs were to raise tuition rates in order to
raise the rates of pay for their educators, families would suffer. The
Center for American Progress, a bipartisan policy institute, estimates
that if child care centers were to raise the tuition rate to afford to
pay a living wage for their educators, they would need to raise the
rates by a whopping 42%, which is far from sustainable for the
average American family. Child care continues to be a classic market
failure, and early childhood educators are paying the price with
unsustainably low wages.
Impact on Childcare Providers
Nationally in 2019, 98% of all occupations in the US earned
more than child care teachers, who experience a poverty
rate that is eight times higher than that of K-8 teachers.
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07IMPACTS ON OUR
COMMUNITY
Nearly $100M in lost earnings, productivity, & revenue
$680 million lost by employers in CO; $31 million in Larimer County
Opportunity cost of over 900 jobs each year
According to the Council for a Strong America, care shortages in
Larimer County have resulted in:
Impact on Larimer's Economy
11% of working parents have turned down a position due to lack of
childcare
16% of employers have seen employees leave for childcare reasons
16% of the US workforce—26.8 million people—are dependent on
childcare in order to work (CO is closer to 20%)
Only 39% of respondents with household incomes below $50,000
and children at home said that they could afford childcare
45,981 CO parents are making career sacrifices due to issues with
child care
Nationally, according to McKinsey and Company, Pew Research and
the US Chamber of Commerce Foundation:
Impact on Our Workforce
More than 20 million women left the workforce across the
US over the past three years due to childcare
access issues.
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08
Colorado's population of children under the age of four is expected
to increase 22% by 2026.
Demand Continues to Grow
Lack of a qualified workforce, insufficient compensation, front-line
working conditions and ever-increasing demand has led to a
childcare crisis across the country. Indeed, 70% of local child care
program directors have reported difficulty finding qualified staff.
Supply is Inadequate
Without additional public investment, childcare will continue to
operate as a market failure and remain inaccessible and
unaffordable.
The Model is Broken
According to several state and national surveys on the early childhood workforce,
the primary systemic barriers to recruiting and retaining qualified early
childhood educators are low wages, limited benefits, and challenging work
environments. There are an estimated 2,500-4,000 individuals employed in the
ECE system in Larimer County at any given time. The majority (45%) are young
professionals, ages 25-35 who are likely parents of young children themselves
(Colorado Early Care and Education Workforce Data Dashboard). They have
specialized education and training in early childhood development, early literacy,
and social emotional wellbeing. Yet while quality, licensed child care is expensive,
it is also undervalued as menial labor, paying only $12 to $15 per hour. At this rate,
many providers are actually eligible for public assistance. According to the
Economic Policy Institute, it is estimated that up to 15% of ECE providers in
Colorado live below the poverty line.
70%
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BENEFITS OF
INCREASED
INVESTMENT
Economic Returns
Providing children and families with early health and
learning opportunities from the prenatal period
produces a 13% return on investment per child per
year, significantly higher than just investing in
preschool alone, which begins at age three.
The National Forum on Early Childhood Policy and
Programs has found that high quality early childhood
programs can yield a $4 – $9 dollar return per $1
invested.
For more information on how child care access
impacts our state economy, click here.
09
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10
Gaps in knowledge, ability and wellness open up
long before kindergarten. These gaps tend to
persist throughout life, and are difficult and
costly to close. Taking a proactive approach to
cognitive and social skill development through
investments in quality early childhood programs
is more effective and economically efficient than
trying to close the gap later on.
Family Stability
Health and Wellbeing
Over the past several years, families have faced unprecedented challenges
related to the COVID-19 pandemic. Caregivers have struggled to maintain their
own mental health in the face of economic and social uncertainty. We know that
access to quality, affordable childcare is a key contributor to adult mental health
and economic stability. This is important because safe and stable families are
more likely to produce healthy, thriving children. Moreover, quality child care
pays off by helping primary caregivers to establish careers and grow their
income potential.
Recent research has also shown dramatic long-term physical health impacts of
early interventions that incorporate a focus on early education, nutrition and
health. More than 30 years later, treatment group individuals were at
significantly lower risk for serious cardiovascular and metabolic diseases, such as
stroke and diabetes.
These findings demonstrate the incredible potential of coordinated birth-to-five
early childhood programs to prevent chronic disease, improve mental health,
reduce healthcare costs and produce a flourishing society.
Page 47 of 131
11
PROPOSED
SOLUTION
To increase the county-wide sales and use tax by 0.25%
(25 cents on a $100 purchase), which will generate an
estimated $19M-$21M per year in revenue
The measure should specify that revenue generated by
this tax may be used to subsidize the cost of child care
and preschool programs for families with children from
birth to age 5, as well as to increase quality and supply of
care
The measure should include a 15 year sunset provision
Larimer County Board of County Commissioners should refer
a county-wide sales & use tax increase question to voters at
the November 2023 election for the purpose of supporting
early care and education programs in Larimer County.
Specifically:
Page 48 of 131
12ANNUAL FUNDING
BREAKDOWN
Up to $10M distributed
directly to Larimer
County families to
offset the cost of child
care tuition
*See Appendix A
*See Appendix B
Up to $7M invested into the early
childhood workforce through
recruitment and retention
strategies, and salary
supplementation
Up to $2M invested into capital
projects to increase the
number of programs in
Larimer County through new
builds and renovation of
existing spaces.
*See Appendix B
Administrative costs will be capped at 5% of overall tax revenue annually
*Based on year 1 estimates
Page 49 of 131
13POSITIVE IMPACTS
ON LARIMER COUNTY
7000
CHILDREN UNDER 5 WILL SEE
CHILDCARE TUITION OFFSETS
*MEETS APPROX 60% OF TOTAL NEED
UP TO
Approx. 1000 early childhood
educators will see their annual
income increase
Up to 85% of ECE programs in
Larimer County will receive quality
improvement and workforce support
Larimer County can expect to see
positive economic gains as a result of
increased access to childcare
Page 50 of 131
Demographic information of families with young children in Larimer County
Child poverty rate and distribution in Larimer County
Number and distribution of licensed child care and preschool providers in
Larimer County
Estimated need vs licensed capacity for child care and preschool in Larimer
County based on the number of children with all parents in the workforce
Cost of child care and preschool in Larimer County and percent of family
income spent on child care based on Larimer County median income
Current subsidized funding for early care and education in Larimer County –
federal, state, and local sources; public and private
Community Steering Committee Process
In 2021, ECCLC convened a community steering committee to study this issue
and develop recommendations for action. 14 of 17 members of that Committee
agreed to recommend Larimer County Commissioners pursue a 0.25% sales tax
increase to create a local dedicated funding source for early care and education
in Larimer County. The Commissioners received that recommendation in the
summer of 2021 and deferred action, endorsing the concept but saying they
needed more time to work on the specifics of a proposal (Article). We'd like to
revisit the conversation in partnership with County leadership to advance a
proposal to the ballot in 2023.
Case Studies
To inform this process, research was conducted on five other communities that
successfully passed early childhood tax initiatives to learn about both the nature
and structure of their tax-funded program and the strategy that lead to their
success. Specifically, the focus was on developed and examined case studies
regarding voter-approved, publicly-funded early childhood programs in Denver,
CO; Kent County, MI; Multnomah County, OR, San Miguel County, CO, Summit
County, CO.
Additionally, this research analyzed the results of eight tax initiatives, considered
by Larimer County voters between 2014 and 2020. The purpose of this exercise
was to learn more about voter responses to tax questions in Larimer County.
Determining Demand & Need
To inform this work, a comprehensive set of data was compiled, and analyzed,
including:
14HOW DID WE
GET HERE?
Page 51 of 131
There is a significant gap between demand for and availability of licensed
child care and preschool in Larimer County: It is estimated that Larimer
County needs at least another 3,572 spaces for children from birth to 24
months and another 4,069 spaces for those ages 2 to 5 to close the gap
between the number of children with all parents working and the number of
licensed slots.
Child care is a significant cost burden to working families in Larimer County.
Current funding sources – public and private – are insufficient to help the
community address both availability and affordability of child care and
preschool.
A sustainable, high-quality system requires a new, dedicated public funding
stream.
Staffing data
Participants and Needs
Cost Per Child
Quality Level
Care type (i.e. home-based, center based, etc)
Current funding
Revenue Allocation Scenarios
To estimate an annual budget for the tax revenue, ECCLC used a comprehensive
cost-modeling tool developed by Brodsky Research on behalf of the Bell Policy
Center, as well as previous cost modeling completed by Brodsky research in 2021
on behalf of this project. Scenarios include a variety of factors to get as accurate
an estimate as possible.
The tool uses existing data sets from a several local, state and national resources
to consider the following factors, which is not an exhaustive list:
15
Research Conclusions
Page 52 of 131
CONCLUSION
The system of care for our youngest population is
fundamentally broken. Without public investment, our
community's future is at risk. We have an opportunity to
substantially improve the early care and education system in
Larimer County, and to be a positive example to our peers
throughout the state and the country. The model proposed
here is workable, replicable, and we can lead the way together.
424 Pine Street, Ste 201, Fort Collins, CO 80524
(970) 377-3388
www.ecclc.org || info@ecclc.org
www.larimerthrivebyfive.org
16
Page 53 of 131
APPENDIX A 17
Cost of Care and Estimated Need
*Cost of Care modeling factors in the differences in quality ratings and corresponding rates.
Need modeling includes the following data and assumptions:
-Cost of care based on distribution of Colorado Shines quality level and age
-Percentage of children served in home settings vs center-based settings
-Assumes 50% of children served will access full-day care (50h/wk), 25% will access school-day
care (30h/wk) and 25% will access part time care (12.5h/wk)
-Assumes the following participating rates: Ages 0-12mo (50%); 12-24mo, 24-36mo, 3 and 4y0
(65%);
-Assumes approximately 10,246 children served
-Estimated population of children by household income level (based on ACS data from 2020)
used to model a max of 10% of annual income spent on child care
-Current funding factors in the following funding streams: CCAP, Head Start, Early Head Start, CPP
and other school district pre-k funding
*Cost modeling was completed by Brodsky Research and Consulting in 2021, as well as with the
use of a cost-modeling tool created by Brodsky Research and Consulting on behalf of Bell Policy
Center in 2022. Data used in cost modeling, as well as the rest of this report can be found in
Appendix D.
Page 54 of 131
APPENDIX B 18
Workforce Investments
Capital Investments
*Workforce investment estimates are based off actual data on current number of educators in the
workforce, number of educators needed to meet demand, cost of current higher education for
ECE careers, and cost of professional development needed to achieve and maintain credentialing
as an early childhood educator.
*Salary supplementation would increase educator wages by approximately $2/hr per year
*Capital Investments modeled after current support being offered through ECCLC via state ARPA
funding, which will expire in 2024.
Page 55 of 131
CITATIONS 19
The Heckman Equation. (2020, April 20). Retrieved January 6, 2023, from
https://heckmanequation.org/
McKinsey & Company Report (2021). https://www.mckinsey.com/featured-insights/2021-year-in-
review
Council for a Strong America. (2022) https://www.strongnation.org/locations/colorado
Colorado Department of Labor and Unemployment;
https://www.colmigateway.com/vosnet/analyzer/resultsNew.aspx?session=occproj&pu=1&plang=E
2017 Composite COLI calculated in the 17-18 CO Childcare MRS
Child and Adult Care Food Program: National Average Payment Rates, Day Care Home Food
Service Payment Rates, and Administrative Reimbursement Rates for Sponsoring Organizations
of Day Care Homes for the Period July 1, 2019 Through June 30,
2020https://www.federalregister.gov/documents/2019/08/07/2019-16907/child-and-adult-care-
food-program-national-average-payment-rates-day-care-home-food-service-payment
Colorado Shines Licensing Data 2022
Bell Policy Colorado ECE Cost Model 2022 (Not public)
Page 56 of 131
Public Funding for Early Childhood
Christina N. Taylor, MPH
Chief Executive Officer
Page 57 of 131
Childcare Access in Larimer County
The State of the Sector
$12,000
A Year
The average cost Larimer
County
families pay a year per
child for childcare,
often $16-20k for
an infant.
40% Shortage
in childcare access for
families with
preschoolers unable
to find care.
75% with infants who
cannot find care.
37% of INCOME
based on an average
median HHI of $64,919
Spent on childcare for a
family of four
with two kids under
the age of 5
Page 58 of 131
Why Does Early Childhood Matter?
The Base for Lifelong Health and Success
•A child that is an affordable and quality early education program will be
better prepared for kindergarten, read earlier, be more likely to graduate high
school and attend college, earn a higher wage, live a healthier life and have
better developed life skills.
Page 59 of 131
Why Does Early Childhood Matter?
The Base for Lifelong Health and Success
Decreased
Healthcare Costs
Decreased Crime
Rates
Decreased
Unemployment
Costs
Increased lifetime
earnings
Page 60 of 131
Childcare Access and the Economy
•10% of Colorado residents quit or don’t take a jobs because of childcare
challenges. During the pandemic, this challenge was heightened and
families in Larimer County reduced their work by 42% due to lack of
childcare.
Page 61 of 131
Childcare Access and the Economy
•Lack of access to child care and early education leads to increased work
absences and can remove talented employees from the workforce
•In the last year alone, more than 20 million women with children in the
US have left the workforce due to lack of childcare access
Page 62 of 131
Childcare Access and the Economy
•In 2008, United Way and the Coloradoan conducted a community-wide
assessment of poverty in Larimer County and determined the absence of
affordable childcare was the single greatest deterrent to a family’s self
sufficiency
Page 63 of 131
Why is there such a shortage?
Childcare as a Market Failure
“The market failure is that we count on parents to pay for the bulk of the cost of child care, yet to provide
good-quality care costs far more than many parents can afford” Gina Adams, Urban Institute
“It’s past time that we treat childcare as what it is –an element whose contribution to economic growth
is as essential as infrastructure or energy.” Treasury Secretary Janet Yellen
Federal Health and Human Services-7% of a family’s income is reasonable to spend on child care
Most families are paying between 13-30% of their annual income on child care, depending on number of
children, cost of care and other factors.
Page 64 of 131
Why is there such a shortage?
WORKFORCE IS KEY!
Early educators make an average of $13-$15 an hour
Not enough to afford housing in Larimer County
Early educators require extensive education and credentials to work in an early childhood classroom
Education in early childhood is a demanding field!
Long hours
Emotionally and Physically Taxing
Early childhood educators are leaving the field faster than we can hire them!
Page 65 of 131
What Options are There for Families?
Affordability
Colorado Child Care Assistance Plan (CCAP)
United Way Larimer Child Care Fund
Sliding Scales and Scholarships
Colorado Preschool Program
Head Start
Universal Pre-K
Page 66 of 131
What Options are There for Families?
IT’S NOT ENOUGH
Page 67 of 131
What is the solution?
HOW DO WE SOLVE THE ACCESS CRISIS?
Page 68 of 131
What is the solution?
HOW DO WE SOLVE THE ACCESS CRISIS?
Page 69 of 131
How will this help?
HOW DO WE SOLVE THE ACCESS CRISIS?
Page 70 of 131
How will this help?
HOW DO WE SOLVE THE ACCESS CRISIS?
Page 71 of 131
How did we get here?
WHY IS THIS THE PROPOSED SOLUTION?
Partnership with United Way to explore public funding options in 2021
17 member steering committee
Public polling
Research on other options
Lessons learned
Page 72 of 131
Questions?
For more info, or to get involved:
info@ecclc.org
www.ecclc.org
www.larimerthrivebyfive.org
Page 73 of 131
Page 74 of 131
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Honore Depew, Javier Echeverría Díaz, John Duval, Ryan Malarky, Megan Valliere
Date: April 6, 2023
SUBJECT FOR DISCUSSION Sustainable Funding – Climate Options
EXECUTIVE SUMMARY
The purpose of this item is to provide analysis of several funding mechanisms that would generate
revenue to advance climate initiatives, based on previous direction from the Council Finance
Committee (CFC) at the September and November 2022, and January 2023 meetings. The
information provided offers detail about three potential revenue sources as CFC considers a
number of possible mechanisms to support the broader New Revenue conversation (which is the
final agenda item at the April 6, 2023 CFC meeting). Staff is requesting direction about which
options, if any, to include for further discussion at the April 25 City Council Work Session. The
analysis provided is based on considerable research, including examples from peer municipalities,
legal and policy analysis, and financial analysis. To the extent there are legal issues with any of
these three revenue sources, the City Attorney’s Office will address those issues in a separate
confidential memorandum to Council.
The options presented include:
1. OPTION 1: Large Emitter Tax
2. OPTION 2: Natural Gas Franchise Fee Increase from 1.07% to 3.00%
3. OPTION 3: Natural Gas Utility Occupation Tax
Staff recommends pursuing Option 2 because City Council could make the fee adjustment in short
order without a ballot referral to begin delivering new, sustained revenue for climate priorities.
Other options for generating new revenue to fund climate priorities could then be considered over
the course of the next two election cycles. Staff will be seeking guidance at the April 25 City
Council Work Session about what specific climate priorities should be funded by any new revenue
generated.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. What questions do committee members have about these potential revenue generating
mechanisms?
2. Which options, if any, should staff include for further discussion at the April 25 City
Council Work Session? (To be addressed as part of final CFC item)
Page 75 of 131
OPTION 1: Large Emitter Tax
Bottom Line
A large emitter tax has the potential to accelerate de-carbonizing two entities currently producing
more GHG emissions than the EPA reporting threshold. It would generate several million dollars
a year in new revenue in the short term, but its financial returns diminish steadily, with the last
year of projected revenue generation before 2030 after the two entities drop below the EPA’s
reporting threshold.
Background
CFC members expressed interest in a large emitter fee or tax in response to community input for
ways to raise revenue for climate-related projects while also providing disincentives for the
emission of greenhouse gas (GHG). Because the uses for revenue from a fee would be more limited
than tax revenue, staff were directed to focus on a large emitter tax.
In this scenario, a “large emitter tax” would be imposed on those entities within the City’s
boundaries emitting more than 25,000 metric tons of carbon dioxide equivalent (MT CO2e)
annually, as reported to the U.S. Environmental Protection Agency (EPA). The tax would be $51
per MT CO2e emitted per year.
Social Cost of Carbon Definition
To date, all revenue projections for this potential source have been calculated based on the Social
Cost of Carbon (SC-CO2). The SC-CO2 is defined by the EPA as “a measure, in dollars, of the
long-term damage done by a ton of carbon dioxide (CO2) emissions in a given year,” and it “also
represents the value of damages avoided for a small emission reduction (i.e., the benefit of a CO2
reduction).”0F
1 Estimates of the SC-CO2 depend in large part on the anticipated monetary value of
today’s decisions on the conditions of the future. The current SC-CO2 is $51/MT CO2e, though
the EPA is currently considering dramatically increasing this number to $190/MT CO2e.
New Revenue Potential
At the current reporting requirement of 25,000 MT CO2e annually, only three entities within city
limits would be subject to a large emitter tax. These include Broadcom, Anheuser-Busch, and
Colorado State University (CSU). The City Attorney’s Office review and analysis of case law
regarding a municipality’s ability to tax a university in its jurisdiction concluded it was unlikely
the City had the legal authority to do so.1F
2 As a result, CSU has been excluded from this analysis,
leaving only two taxable entities in the “large emitter” category now operating within city limits.
1 United States Environmental Protection Agency. (n.d.). The Social Cost of Carbon: Estimating the Benefits of
Reducing Greenhouse Gas Emissions. https://19january2017snapshot.epa.gov/climatechange/social-cost-
carbon_.html
2 See Colorado Supreme Court decision, City of Boulder v. The Regents of the University of Colorado, in which the
Court concluded Boulder could not compel the University of Colorado to remit to Boulder an admissions tax for
public events on campus.
Page 76 of 131
Using forecasted levels of CO2e emitted from Anheuser-Busch and Broadcom, the following table
shows the annual revenue the City would expect to generate in 2024 utilizing the SC-CO2 as a
baseline per metric ton.
Figure 1
Facility Total Reported Emissions (MT
CO2e) 2024 Forecast
Revenue ($51/MT)
Broadcom 57,400 $2.9M
Anheuser-Busch 37,474 $1.9M
Total 94,874 $4.8M
To understand the ability of a large emitter tax on these two entities to generate sustainable
revenue, staff analyzed GHG emissions trends from each of the two entities to project the date at
which they would bring their emissions below the 25,000 MT CO2e threshold for EPA reporting
and thus no longer be subject to the local tax. Anheuser Bush has publicly committed to bring their
annual emissions below 25,000 MT CO2e before 2023, as well as Broadcom has also publicly
committed to bring their annual emissions under the reporting threshold within the next five years.
The following graphs show each businesses’ progress toward lower emissions:
Figure 2
60 57 54 53 50 51 49 48 48 47
42 44 42 40 37 35 33 31 29 27 25
-
10
20
30
40
50
60
70
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Anheuser Bush Annual CO2e Emissions (Thousands)
Metric Tons CO2e Target Projected reductions by 2030
25K MTons CO2e
Page 77 of 131
Figure 3
The resulting revenue generation estimates for future years are tabulated below in Figure 4.
Figure 4
Year Total AB +
Broadcom New
Revenue
Anheuser-Busch (AB) Broadcom
Metric Tons
CO2e
(projected)
Annual Tax
Revenue at
$51/MT CO2e
Metric Tons
CO2e (projected)
Annual Tax Revenue at
$51/MT CO2e
2022 N/A 41,632 N/A *79,000 N/A
2023 N/A 39,553 N/A 68,200 N/A
2024 $4,838,564 37,474 $1,911,164 57,400 $2,927,400
2025 $4,181,737 35,395 $1,805,137 46,600 $2,376,600
2026 $3,524,909 33,316
$1,699,109 35,800 $1,825,800
2027 $2,868,082 31,237
$1,593,082 25,000 $1,275,000
2028 $1,487,055 29,158
$1,487,055
2029 $1,381,027 27,079
$1,381,027
2030
$1,275,000 25,000
$1,275,000 *2022 Metric Tons of CO2e for Broadcom is an actual figure.
306
202
172 183
140 125
79 68 57 47 36 25
-
50
100
150
200
250
300
350
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Broadcom Annual CO2e emissions (Thousands)
Metric Tons CO2e Target Projected reductions in the next 5 years
25K MTons CO2e
Page 78 of 131
Should both organizations follow through with their public statements about their reductions, then
Broadcom would not be subject to the tax after 2027, and Anheuser-Busch would not be subject
after 2030. If the tax were to be passed in the fall of 2023, revenue collection would begin in 2024.
Figure 5
Impact to Consumers
The effects of this tax would be directly borne by those two impacted entities. It is unknown
precisely how they would absorb the added costs or how the additional taxation would affect
business investments in GHG-reduction measures. The tax would discourage large emitters from
locating to the Fort Collins community but significantly impacts those already operating in City
limits.
OPTION 2: Natural Gas Franchise Fee Increase from 1.07% to 3.00%
Bottom Line
In general, though the data may fluctuate year to year as indicated above, staff predicts that
increasing the natural gas franchise fee to its maximum 3% would likely result in new revenue
generation between $930,000 and $1.3M per year, with average annual impacts to end consumers
between $11-$16 for residential customers and $56-$85 for businesses. Any revenue generated by
this approach is likely to be volatile from year to year given the unpredictability of wholesale
natural gas prices.
Background
Since 1987 and until 2018, Xcel operated its natural gas system within the City using and
occupying City streets, alleys and public rights-of-way without a franchise agreement from the
City. In place of a franchise agreement, the City has imposed in Article VI of City Code Chapter
4.84
4.18
3.52
2.87
1.49 1.38 1.28
0
1
2
3
4
5
6
2024 2025 2026 2027 2028 2029 2030
Total Annual Revenue AB + Broadcom (MM)
Total Revenue AB+Broadcom (MM)
Page 79 of 131
25 a “Gas Company Occupation Tax” (Occupation Tax) levied on Xcel. The Occupation Tax is a
flat amount of $445,000 per year payable quarterly by Xcel. The Occupation Tax is described in
the Code Section 25-343(5) as being imposed, in part, as consideration to the City for Xcel’s use
of the City’s streets, alleys and public rights-of-way.
Effective February 1, 2018, the City and Xcel agreed to enter into a franchise agreement, which
agreement City Council approved in Ordinance No. 006, 2018 (Franchise Agreement). The
Franchise Agreement is for a term 20 years. Under it, Xcel has agreed to pay the City franchise
fee of 1.07% of Xcel’s annual gross revenues, but the City has also agreed that this franchise fee
is to be applied as a credit against the $445,000 Occupation Tax. In fact, the percentage of 1.07%
was originally chosen to generate an amount of franchise fee revenues that would approximate the
$445,000 Occupation Tax. However, the parties also agreed in the Franchise Agreement that the
City could, upon giving 60-days prior written notice to Xcel, increase the rate of the franchise fee
up to no more than 3%, with Xcel still being entitled to use the franchise fee it pays as a credit
against the $445,000 Occupation Tax.
Fee Increase and Use of Funds
Therefore, with City Council direction in a Resolution, the City could give Xcel the 60-day notice
to increase the franchise fee from 1.07% to 3.0% of Xcel’s annual gross revenues. Currently, the
franchise fee revenue is funneled directly to the general fund and allocated as part of the bi-annual
budget process. Council could choose to designate any or all the franchise fee revenues specifically
to climate investments. Staff recommends allocating the new portion of revenue generated from
an increased franchise fee (~two thirds of total funds remitted) for climate work, and the tables
below reflect that assumption in revenue projections.
Important note: although this revenue source is designated as a “fee” it is not the type of fee that
is required to be used in manner that is reasonably likely to benefit the fee payer.
New Revenue Potential
The revenue generated by increasing Xcel’s franchise fee from 1.07% to 3% would vary annually
based on Xcel’s revenue year to year, though data from previous years informs future estimates.
The table below (Figure 6) displays Xcel’s annual remittances of the franchise fee for each of the
years 2018 – 2022 as well as an average for the most recent four years:
Figure 6
2018 2019 2020 2021 2022 2019-2022 Average
$361,583 $461,431 $391,306 $483,249 $727,633 $515,905
City staff believe that 2020 revenues were unusually low due to the COVID-19 pandemic, and
2022 revenues were higher due to the increasing price of natural gas as a result of several factors:
the Ukraine-Russia war, inflation, colder winter temperatures, cost increases for coal, and a hike
in the base rate (which has tripled since 2020).
Page 80 of 131
Using actual Xcel franchise fee payments from previous years, staff calculated several estimates
for revenue generation from an increased franchise fee of 3%. The following table (Figure 7)
displays two different revenue estimates: one using the average of actuals from the past four years
and one using 2022 actuals. Modeled scenarios result in estimated new revenue exceeding
$900,000 per year, though the rising price of natural gas indicates a likely scenario close to or
exceeding $1 million per year.
Figure 7
Franchise Fee % 2019-2022 AVG Revenue
Baseline 2022 Revenue Baseline
1.07% (actual) $ 515,905 $ 727,633
3.00% (estimate) $ 1,446,462 $ 2,040,093
New revenue
for climate investments $ 930,557 $ 1,312,460
Impact to Consumers
As a result of the unpredictability of revenue estimates for natural gas, the impact per resident of
an increase to the franchise fee is more volatile than a four-year average can perfectly predict.
Nonetheless, these numbers represent the best available estimates based on analysis of data from
previous years. The table below (Figure 8) shows average monthly and annual estimated increases
in costs by customer type using data from Xcel’s 2021 Community Report because the 2022 report
has not yet been released. As a result of increasing Xcel and corresponding franchise fee revenues
in 2022, the use of 2021 data may be slightly underestimating actual average cost increases for
Xcel customers at a 3% franchise fee.
Figure 8
Monthly On-Bill Franchise Fee Cost Net Annual
Franchise
Fee
Increase**
Customer
Type
2021
Average
Monthly
Bill
Current Avg.
Monthly
Franchise Fee
1.07%
Total Avg.
Monthly
Franchise Fee
3.00%
Net Avg. Monthly
Franchise Fee
Increase
3.00%
Residential $ 47.42 $ 0.51 $ 1.42 $ 0.92 $ 10.98
Business* $ 242.26 $ 2.59 $ 7.27 $ 4.68 $ 56.11
*Business: blend of commercial, industrial, & contract accounts
**These totals represent the net average monthly franchise fee increase times 12 months.
Importantly, because Xcel’s report consolidates commercial, industrial, and contract accounts into
the category of “business,” the average annual increase estimate in this category likely obscures
significant nuance in the data between small businesses, large facilities, transport companies, and
the like. As a result, this category includes a wide range of potentially very different types of
consumer accounts. City staff will need to obtain more detailed data on the distribution of customer
Page 81 of 131
types within the “business” category to understand and characterize the impacts of the rate increase
to different types of non-residential customers more clearly.
Using 2021 data as a baseline, increasing the franchise fee to 3% would result in an estimated
average annual cost increase of $10.98 for residential accounts and $56.11 for business accounts.
By contrast, if total costs for future years resemble those from 2022, both revenue generation
potential and average annual cost increases would be higher. In the highest scenario (using 2022
baseline data) the estimated average annual increase would be approximately $16.50 for residential
accounts and $84.50 for business accounts. Staff anticipates that the City could adopt a rebate
program to provide relief to low-income customers.
OPTION 3: Natural Gas Utility Occupation Tax
Bottom Line
While this mechanism taxes natural gas as a proxy for greenhouse gas emissions and can generate
a steady revenue stream, annual cost increases are relatively high for natural gas consumers (e.g.,
5x higher than increasing the natural gas franchise fee). In terms of the community’s appetite for
this type of revenue mechanism, Fort Collins staff is encouraged that Boulder’s version of this tax
passed with over 70% approval. There is potential that a utility occupation tax would be popular
in our community as well given both municipalities’ aggressive climate commitments and prior
statistically valid surveys that found over 80% of Fort Collins’ residents support acting on the
climate emergency. However, this new tax would compound with an increase to Xcel’s franchise
fee, leading to a considerable uptick in the cost of natural gas for consumers if both mechanisms
were enacted. Additionally, there is currently no clear way for City Council to ensure the tax would
not be regressive.
Background
City staff began investigating the utility occupation tax (UOT) model when voters in the City of
Boulder approved a Climate Tax in November 2022 which uses a similar mechanism. A UOT
essentially taxes a natural gas provider (or other utility provider) for the taxable privilege of
delivering natural gas to consumers within City limits.
Boulder’s Climate Tax sets an annual amount of revenue to be collected (passed at $6.5 million)
and adjusts rates each year to achieve that amount. Boulder imposes this tax on both electricity
and natural gas provided by Xcel since Boulder does not have a municipal electric utility. (The
$6.5 million annual revenue amount was proposed and adopted as a $2.5 million annual increase
from their previous approximate annual Climate Tax revenue with $1 million set aside for wildfire
recovery and resiliency efforts.) Their rates are variable by account type, with residential accounts
seeing a substantially lower increase and overall cost burden than commercial and industrial.
City Councilmembers have clearly stated that equity and minimizing the regressive nature of
taxation must be prioritized for any new revenue mechanism alongside GHG emissions reduction
and climate-related behavior change. In the case of a UOT, the tax would be levied on the provider
and presumably passed on to consumers. While the taxing jurisdiction may set the rate at which
Page 82 of 131
the tax is to be collected, it does not have direct control over how the provider passes the cost on
to customers through the utility billing process.
Although public materials produced by Boulder indicate variable rate impacts by account type,
Fort Collins City staff have not identified a legal mechanism by which these variable increases are
being enforced. As a result, the proposal below explores cost scenarios that do not
differentiate cost increases by account type. Nonetheless, Fort Collins staff are still exploring
this possibility to limit the regressivity of the UOT mechanism and further Council’s goals of
keeping residential rate increases as low as possible for the end consumer.
New Revenue Potential
Given staff’s current understanding of this tax mechanism, Council may select an amount of
revenue it would like to generate per year and require the provider to adjust annual rates
accordingly to meet this revenue requirement. The following scenario (Figure 9) uses a target
revenue of $3,585,313 per year, which was chosen to illustrate an amount at which bills for both
residential and business accounts increased by a round 8%, which reflects the 8.73% percentage
increase to residential accounts resulting from the ballot measure that Boulder voters approved in
2022. Importantly, the target annual amount can be adjusted by City Council depending on its
preferences.
Figure 9
Customer
Type
Example
Rate
Increase
2021
Avg.
Monthly
Bill
Increase
in
Monthly
Bill
Total
Annual
Cost
Increase
Active
Accounts Annual Revenue
Residential 8.00% $47.42 $ $3.79 $45.52 55,098 $2,508,279
Business* 8.00% $242.26 $19.38 $232.57 4,631 $1,077,033
Total annual new revenue: $3,585,313
*Business: blend of commercial, industrial, & contract
Note: because Xcel’s report consolidates commercial, industrial, and contract accounts into the
category of “business,” the average annual increase estimate in this category likely obscures
significant nuance in the data between small businesses, large facilities, transport companies, and
the like. As a result, this category includes a wide range of potentially very different types of
consumer accounts.
Impact to Consumers
As mentioned above, Boulder has publicly stated that their UOT model for the Climate Tax
differentiates average bill impacts by account type, with commercial and industrial accounts
experiencing greater cost impacts than residential accounts. Fort Collins City staff have
investigated Boulder’s municipal code and spoken with their sustainability manager and attorneys
to clarify the exact legal mechanism which enforces this public commitment. At this time, staff
is unable to clearly articulate the way that Boulder is enforcing this cost differentiation
commitment in partnership with Xcel, so there is no way to guarantee that residential accounts
Page 83 of 131
would see a proportionally lower increase and overall lower cost burden than commercial and
industrial. This would be a high-priority area for further staff research in the coming weeks if CFC
members would like to advance the UOT for consideration at the April 25 Work Session.
Staff is interested in learning more about Boulder’s rate increase differentiation mechanism
because ensuring lower impacts to residential accounts may be a way to avoid additional
regressivity for this tax mechanism. Commercial and industrial accounts may be more easily able
to address cost increases, so a legal mechanism to enforce higher rate impacts to these types of
customers may provide a more equitable context for this type of revenue generation. Theoretically,
if the City were able to enact a scenario with variable rate impacts to different types of customers,
City Council would still select a target revenue amount. The cost of that target revenue would be
passed down to residential accounts at a lower proportion or percentage increase than for
commercial and industrial accounts, as Boulder has stated their mechanism will operate. Staff will
continue to learn from Boulder’s experience and commits to analyzing the feasibility of instituting
this type of scenario in Fort Collins as more information becomes available.
Based on the Boulder example, a UOT could be structured to provide relief to low-income
customers.
Next Steps
The options presented in this CFC item should be considered within the larger context of the
Sustainable Funding conversation during the final item at the April 6 CFC meeting.
Options/mechanisms of interest to the CFC will be advanced to the full City Council for Work
Session discussion on April 25, including discussion of what specific climate priorities should be
funded by any new revenue generated.
Page 84 of 131
Sustainable Revenue Options for Climate Priorities
Council Finance Committee –April 6, 2023
Honore Depew,Climate Program Manager
Javier Echeverria, Sustainability Finacial AnalystPage 85 of 131
2Sustainable Revenue –Climate: Questions for CFC
1.What questions do committee members have about these
potential revenue generating mechanisms?
2.Which options, if any, should staff include for further discussion at
the April 25 City Council Work Session?
•To be addressed as part of final CFC item
Page 86 of 131
3Summary of Climate Funding Mechanisms for Consideration
Mechanism Voter
Approval
Estimated Annual
Revenue Generation
Estimated Increase to Monthly
Residential Bills
OPTION
1 Large Emitter Tax Yes $4.8M (2024)
$0 by 2030 $0
OPTION
2
Natural Gas Franchise
Fee Increase No
$930k -$1.3M
Dependent on price
of natural gas
~$1
OPTION
3
Natural Gas Utility
Occupation Tax Yes Up to $3.6M
Up to 8% tax rate ~$4
Page 87 of 131
4Sustainable Revenue –Climate: Background
•October 2021 –January 2023:
•Multiple Council Finance Committee meetings and a Council Work Session
•Continued interest from Councilmembers to both:
1.Primarily generate sustainable revenue and
2. Secondarily creating a potential disincentive for producing Greenhouse
House Gas emissions
•April 6, 2023 CFC Meeting:
•Analysis of three options for funding mechanisms that would generate
revenue to advance climate initiatives and drive down emissions from
behavior change
Page 88 of 131
5Sustainable Revenue –Climate: Funding Context
•Many existing City investments; more needed to reach adopted goals
•“Climate Core” investments
•Energy Services (Utilities), Climate Team (Environmental Services)
•Direct investments in GHG reduction initiatives; equity and resilience focus
•Could be scaled and accelerated with new revenue from these mechanisms
•“Climate Umbrella” investments
•Our Climate Future Big Moves & Council Road Map
•Housing, Transit, Waste Reduction & Recycling, FC Moves, etc.
•Investments needed are order of magnitude larger
•April 25 Work Session
• How various scenarios could address funding gaps for climate priorities
Page 89 of 131
6Option 1: Large Emitter Tax
Entity Total Reported Emissions (MT CO2e)
2024 Forecast
Potential Revenue
($51/MT)
Broadcom 57,400 MT $2.9M
Anheuser Busch 37,474 MT $1.9M
Total 94,874 MT $4.8M
Considerations:
•Requires voter approval
•Potential to accelerate de-carbonizing of two entities currently emitting
more than the EPA reporting threshold (25k MT CO2e/year)
•Using a “Social Cost of Carbon” of $51/MT CO2e would generate several
million dollars a year
•Diminishing returns
•Funds go away when entities drop below reporting threshold (as soon
as 2030)Page 90 of 131
7Projected Emissions
60 57 54 53 50 51 49 48 48 47
42 44 42 40 37 35 33 31 29 27 25
-
10
20
30
40
50
60
70
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Anheuser Bush Annual CO2e Emissions (Thousands)
Metric Tons CO2e Target Projected reductions by 2030
25K MTons CO2e
Page 91 of 131
8Projected Emissions
306
202
172 183
140 125
79 68 57 47 36 25
-
50
100
150
200
250
300
350
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Broadcom Annual CO2e emissions (Thousands)
Metric Tons CO2e Target Projected reductions in the next 5 years
25K MTons CO2e
Page 92 of 131
9Projected Revenue
4.84
4.18
3.52
2.87
1.49 1.38 1.28
0
1
2
3
4
5
6
2024 2025 2026 2027 2028 2029 2030
Total Annual Revenue AB + Broadcom (MM)
Total Revenue AB+Broadcom (MM)
Revenue anticipated to
decline under reporting
threshold after 2030
Page 93 of 131
10Option 2: Natural Gas Franchise Fee Increase
2019-2022 AVG
Revenue Baseline
2022 Revenue
Baseline
Current Fee Rate –1.07%$ 515,905 $ 727,633
Proposed Rate –3.00%$ 1,446,462 $ 2,040,093
Potential New Revenue for Climate Initiatives
(estimated)$ 930,557 $ 1,312,460
Considerations:
•Does not require voter approval
•Current franchise fee of 1.07% generates ~$445k/yr to General Fund
•New portion of revenue could be allocated for a variety of climate uses
•Peer communities charge a 3% Franchise Fee
•City’s legal agreement allows up to a 3% fee
Page 94 of 131
11Option 2: Natural Gas Franchise Fee Increase
*Business: blend of commercial, industrial, & contract accounts
Monthly On-Bill Franchise Fee Cost
Net Annual
Franchise Fee
Cost Increase
Customer
Type
2021 Average
Monthly Bill
Current Avg.
Monthly
Franchise Fee
1.07%
Total Avg.
Monthly
Franchise Fee
3.00%
Net Avg.Monthly
Franchise Fee
Increase
3.00%
Residential $ 47.42 $ 0.51 $ 1.42 $ 0.92 $ 10.98
Business*$ 242.26 $ 2.59 $ 7.27 $ 4.68 $ 56.11
Considerations:
•Already appears as line item on customer bills
•Use of 2021 data may underestimating actual cost increases for Xcel
customers
•City could adopt a rebate program to provide relief to low-income customers
Page 95 of 131
12Option 3: Utility Occupation Tax
Customer
Type
Example
Rate
Increase
2021 AVG
monthly Bill
Increase in
monthly bill
Active
Accounts
Annual
Revenue
Residential 8.00%$47.42 $3.79 55,098 $2,508,279
Business* 8.00%$242.26 $19.38 4,631 $1,077,033
Total annual new revenue:$3,585,313
*Business: blend of commercial, industrial, & contract accounts
Considerations:
•Requires voter approval
•Scalable rate increase based on Council/voter preference
•Levied on a natural gas provider for the taxable privilege of delivering natural
gas to consumers within City limits
•Boulder voters passed similar with 70% approval
•Would compound with a franchise fee for consumers
•Billing structure can provide relief to low-income customers Page 96 of 131
13Summary of Climate Funding Mechanisms for Consideration
Mechanism Voter
Approval
Estimated Annual
Revenue Generation
Estimated Increase to Monthly
Residential Bills
OPTION
1 Large Emitter Tax Yes $4.8M (2024)
$0 by 2030 $0
OPTION
2
Natural Gas Franchise
Fee Increase No
$930k -$1.3M
Dependent on price
of natural gas
~$1
OPTION
3
Natural Gas Utility
Occupation Tax Yes Up to $3.6M
Up to 8% tax rate ~$4
Page 97 of 131
14Sustainable Revenue –Climate: Questions for CFC
1.What questions do committee members have about these
potential revenue generating mechanisms?
2.Which options, if any, should staff include for further discussion at
the April 25 City Council Work Session?
•To be addressed as part of final CFC item
Page 98 of 131
Page 99 of 131
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Ginny Sawyer, Sr. Project Manager
Travis Storin, Chief Financial Officer
Jennifer Poznanovic, Sr. Revenue Manager
Date: April 6, 2023
SUBJECT FOR DISCUSSION Sustainable Funding Update
EXECUTIVE SUMMARY
The purpose of this item is to seek Council Finance Committee (CFC) direction on timing and
revenue options to consider for referral to the November 2023 ballot.
Staff is also providing additional budget information as background.
Also of note, staff is currently focusing on a November 2024 election to bring forward the Street
Maintenance renewal and the Community Capital Renewal.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. What is Council Finance feedback on revenue options and timelines presented?
2. What additional information would Council Finance like to see?
BACKGROUND/DISCUSSION
Over the past year, staff has been working with CFC and the full Council to seek ways to
address identified funding needs in the areas of parks and recreation, transit, and housing.
Along with these needs the criticality of advancing City climate action goals has also been
identified as an area of need. Estimated annual shortfalls range from six to twelve million per
area.
• Parks & Recreation - $8 to $12M annual shortfall (Parks & Recreation Master Plan)
• Transit - $8M to $14.7M annual shortfall (Transit Master Plan)
• Housing - $8M to $9.5M annual shortfall (Housing Strategic Plan)
• Climate - $6M to $9.5M annual shortfall (Our Climate Future Plan)
Transit, Housing, and Climate are the initiatives targeted as “Climate Umbrella.”
CFC discussions to date have highlighted a desire to:
• Clearly define and articulate revenue needs.
• Thoroughly research funding options including impacts to residents.
• Work to keep overall resident impact and tax burden as low as possible.
• Consider existing dedicated tax renewals and associated election timelines in a strategic
manner.
These considerations have also been supported by the full Council.
Funding Options and Analysis
Through discussion and analysis at CFC and Council work sessions, sales tax, property tax and
excise/additional sales taxes have emerged as the most feasible mechanisms. Staff has also
Page 100 of 131
researched and added an increase to the Xcel franchise fee and a Utility Occupation Tax,
commonly referred to as a “climate tax.” The table below demonstrates the potential revenue
gain of these mechanisms along with estimated annual impact to residents.
Category Funding
Mechanism Use
Annual
Revenue
Estimate
Stakeholder Impact
Franchise
Fee to 3% Natural Gas Bills “Core”
Climate $1M
• Council action only – does
not require voter approval
• 2% increase. ~
$11/household annually
Substance
tax
1 to 5% on
Alcohol/MJ/Tobacco Parks & Rec $6 to
11M+
• $1 to 5 per $100 purchase
in Fort Collins
• Visitors also impacted
Utility
Occupation
Tax
8 to 9% on Natural
Gas Bills
Climate
Umbrella $3 to 4M
• 8% residential increase per
household. ~$50 per
residential household
annually
Property
Tax 1 to 5 Mills Climate
Umbrella
$4 to
18M+
• Residential annual increase
of $21 to 107
• Commercial annual increase
of $87 to 435
Total $15 to
40M+
• $81 to $168 net annual
increase per household +
impact of excise tax
Franchise Fee:
The maximum allowable Xcel franchise fee surcharge is 3%. The City currently assesses the
fee at 1.07% and could increase the fee to its maximum through an Ordinance approved by City
Council and with 60 days’ notice to Xcel. Although this revenue source is designated as a “fee”
it is not subject to the restrictions of other types of fees that require any use of those funds
directly benefit the fee payer.
Additional Sales Tax:
An additional sales tax is a sales tax on the purchase price to the end customer. For
consideration in these discussions, staff has estimated additional tax revenue using an
additional 3% and 5% tax on marijuana, alcohol and tobacco.
Numerous other municipalities across Colorado have an additional tax on marijuana.
Tax Type Additional 3% Additional 5%
Alcohol* $2M+ $4M+
Marijuana $3M $5M
Page 101 of 131
Tobacco $1M $2M
An additional sales tax would require voter approval.
Property Tax:
Since 1992, the City has collected 9.797 mils of property tax which equates to 10.5% of a Fort
Collins property owners total annual property tax. Below is the breakdown of what a Fort Collins
property owner pays in property tax.
Poudre Fire Authority gets 67% of the City’s portion (approx. 6 of the City’s 9 mills) of property
tax amount through an intergovernmental agreement. Requires voter approval.
Utility Occupation Tax:
This mechanism taxes natural gas as a proxy for greenhouse gas emissions. Council may
select an amount of revenue they would like to generate per year and require the provider to
adjust annual rates accordingly to meet this revenue requirement.
Funding Scenarios
Achieving additional funding will likely be a phased effort that lessens the funding gaps
incrementally over time. Knowing this, and through CFC conversations, two demonstration
scenarios have been created.
The scenarios presented are not intended to be final or recommended options. They are
intended to demonstrate the flexibility and variable means and ways to add additional revenue
to cover the identified gaps.
Scenario A:
$29M in 2024 with two ballot measures in November 2023
Category Funding Mechanism Timing Use Annual Revenue
Estimate Resident Impact
Franchise
Fee to 3% Natural Gas Bills 2023 “Core”
Climate $1M
2% increase. ~
$11/household
annually
Substance
tax
(?)% on
Alcohol/MJ/Tobacco 2023 Parks &
Rec $10M $1 to 5 per $100
purchase
Property
Tax 5 mills 2023 Climate
Umbrella $18M+
Residential annual
increase of $107
Commercial annual
increase of $87 to
435
Total $29M
$118 net annual
increase per
household + impact
of excise tax
Page 102 of 131
Scenario B:
$15-20M in 2024 and the addition of $18M in property tax starting in 2026. Option to sunset the
Utility Occupation tax upon approval of the property tax.
** A ¼ -cent tax increase is estimated to generate $9+M/annually and to cost a resident $31
per/year.
Election Timeline Considerations
Per the recent ballot initiative, City elections will now be in November. Ballot referral would
need to happen in August.
TABOR initiatives cannot be considered during special elections.
Street Maintenance and Community Capital Taxes expire December 31, 2025. November 2024
and November 2025 are two opportunities for renewal.
Community Messaging: City Budget and Revenue Context
Prior to putting tax measures on the ballot, the City typically works to provide residents with
information regarding financial stewardship practices and implementation. This goes beyond the
cyclical process of creating a transparent and balanced budget every 2 years and looks to
include revenue, staffing, inflation, and efficiencies over time.
Category Funding
Mechanism Timing Use
Annual
Revenue
Estimate
Stakeholder Impact
Franchise
Fee to 3% Natural Gas Bills 2023 “Core”
Climate $1M 2% increase. ~ $11/household
annually
Substance
tax
(?)% on
Alcohol/MJ/Tobacco 2023 Parks &
Rec $10M $1 to 5 per $100 purchase
Utility
Occupation
Tax
Natural Gas bills 2023 Climate
Umbrella $3-4M
8-9% residential increase per
household. ~$50 per
residential household
annually
Property
Tax 5 mills 2025 Climate
Umbrella $18M+
Residential annual increase of
$107
Commercial annual increase of
$87 to 435
Total $32M+
$168 net annual increase per
household + impact of excise
tax
Page 103 of 131
Staff has begun its outreach efforts with Boards and Commissions, with sessions completed or
to-be-completed with the Parks & Recreation Board, Natural Resources Board, Transportation
Board, Economic Advisory Board, Affordable Housing Board, and Super Issues Meeting.
Below are some high level points from recent analysis:
• The City’s annual operating budget grew from $307M in 2003 to $597M in 2023.
• The compound annual rate of increase for this 20-year period is 3.6%.
o High of 10% in 2008
o Low of -3% in 2007
• From 2006 through 2024 (projected), population has grown by an average of 1.6% per
year and inflation has averaged 2.4% per year
• Composite inflation and population amounting to 4% has outpaced growth in the City
budget of 3.6%
• For the same span of time, compensation dollars per capita has increased an average of
2.1% per year, which compares well with inflation.
• $6.2M of ongoing budgets were cut since 2020, net of any Restore offers.
• The City’s Charter ensures that deficit spending is never permitted, and that service
levels will always be matched to revenue
• The BFO process incorporates requirements to document and measure efficiencies and
cost savings, these can be viewed at:
• fcgov.com/budget (ongoing offer narratives)
• fcgov.com/kfcg (annual KFCG reporting)
• From 2000 to 2022, the City Net Taxable sales dropped from 80% to 50% of total
County sales (i.e. When Fort Collins was the “only” place to shop our sales tax revenues
were more heavily subsidized by non-residents. Today residents are taking more of the
burden to create revenue for the City.)
Climate Progress:
• Ongoing initiatives
• Energy Efficiency, Customer Renewable and Grid Flexibility programs
• $6.6M annually
• EPIC Loan program, up to $2.5M annually in available financing
• Streetlight LED conversion, $1Mk annually
• Efficiency Works programs (via Platte River budgeting)
• ~$5M annually
• 23/24 Enhancement Offers
• $1.7M over two years for grid flexibility software, hardware and programs
• $150k for mobile home efficiency demonstration
• Planned investments
• New tools for distribution system planning and operations
• Federal and State Grant Funding: active research and application processes
Staff estimates that community electricity utilization would be 20% higher without the Utilities
energy programs since 2005.
ATTACHMENTS (numbered Attachment 1, 2, 3,…)
1. Sustainable Funding Update PPT
Page 104 of 131
SUSTAINABLE FUNDING UPDATE
04-06-2023Page 105 of 131
2Council Finance Direction
QUESTIONS:
What is CFC’s feedback on revenue options and
timelines presented?
What additional information would Council Finance
like to see?
Page 106 of 131
3February CFC
FEBRUARY CFC
•Staff presented an option of additional sales tax dedicated to Parks &
Recreation in 2023, tax renewals in 2024 and potential housing, climate,
transit tax in 2025
•Council Finance requested exploring more than one tax measure in 2023
and more clarity in how funds would be dedicated
Page 107 of 131
4Agenda
•Refresher on timing and 4 priority areas
•Ballot Package Strategies
•Pros/cons on each ballot package:
•Community viability/landscape
•Equity impacts and mitigation techniques
•Risks
•Nexus: Mission/action/ask
•Community Messaging: City Budget Review
•Budget and service footprint
•Staffing levels
•Efficiencies gained
•Existing Climate Backdrop Page 108 of 131
52023 Core Team Timeline
SUSTAINABLE FUNDING TIMELINE
April CFC April Council Work
Session
• Natural gas excise,
larger emitter tax,
franchise fees
•ECCLC Childcare
Ballot Measure
• Overall ballot referral
strategy
November
Elections
July CFC &
August Council
•Potential draft ballot
specifics
•Overall ballot referral
strategy
Page 109 of 131
Identified Funding Needs 6
Masterplan to Build Out
Projects
To Achieve 10%
Affordable Housing Stock
To Accelerate Community
Transition From Fossil
Fuels
$9.5M+ Annual Gap$14.7M Annual Gap $8-9.5+ Annual Gap$8-12M Annual Gap
ANNUAL REVENUE GAP = $40M TO $46M+
Masterplan Projects
Page 110 of 131
7Agenda
•Refresher on timing and 4 priority areas
•Ballot Package Strategies
•Community Messaging: City Budget Review
•Budget and service footprint
•Staffing levels
•Efficiencies gained
•Existing Climate Backdrop
Page 111 of 131
8Options
Category Funding
Mechanism Timing Use Annual Revenue
Estimate Resident Impact
Franchise Fee
to 3%Natural Gas Bills “Core”
Climate $1M
•Council action only –does not require voter
approval
•2% increase. ~ $11/household annually
Substance tax 1 to 5% on
Alcohol/MJ/Tobacco Parks & Rec $6 to 11M+•$1 to 5 per $100 purchase in Fort Collins
•Visitors also impacted
Utility
Occupation Tax
8 to 9% on Natural
Gas Bills
Climate
Umbrella $3 to 4M • 8-9% residential increase per household. ~$50
per residential household annually
Property Tax 1 to 5 Mills Climate
Umbrella $4 to 18M+•Residential annual increase of $21 to 107
•Commercial annual increase of $87 to 435
Total $15 to 40M+•$81 to $168 net annual increase per
household + impact of excise tax
Page 112 of 131
9Scenario A
Category Funding
Mechanism Timing Use Annual Revenue
Estimate Stakeholder Impact
Franchise Fee
to 3%Natural Gas Bills 2023 “Core”
Climate $1M
•Council action only –does not require
voter approval
•2% increase. ~ $11/household annually
Substance tax (?)% on
Alcohol/MJ/Tobacco 2023 Parks & Rec $10M •$1 to 5 per $100 purchase in Fort Collins
•Visitors also impacted
Property Tax 5 mills 2023 Climate
Umbrella $18M+•Residential annual increase of $107
•Commercial annual increase of $435
Total $29M+•$118 net annual increase per household
+ impact of excise tax
Page 113 of 131
10Scenario B
Category Funding Mechanism Timing Use Annual Revenue
Estimate Stakeholder Impact
Franchise Fee
to 3%Natural Gas Bills 2023 “Core”
Climate $1M
•Council action only –does not require
voter approval
•2% increase. ~ $20/household annually
Substance tax (?)% on
Alcohol/MJ/Tobacco 2023 Parks &
Rec $10M •$1 to 5 per $100 purchase in Fort Collins
•Visitors also impacted
Utility
Occupation Tax
8 to 9% on Natural
Gas Bills 2023 Climate
Umbrella $3 to 4M • 8-9% residential increase per household.
~$50 per residential household annually
Property Tax 5 Mills 2025 Climate
Umbrella $18M+•Residential annual increase of $107
•Commercial annual increase of $435
Total $32M+•$177 net annual increase per household
+ impact of excise tax
•If successful, Utility Occupation Tax would naturally decline over time.
•Also an option to sunset this tax upon approval of Property Tax.
•For reference, a ¼-cent sales tax increase generates $9M+ annually with a
resident impact of $31/yr.Page 114 of 131
11Agenda
•Refresher on timing and 4 priority areas
•Ballot Package Strategies
•Community Messaging: City Budget Review
•Budget and service footprint
•Staffing levels
•Efficiencies gained
•Existing Climate Backdrop
Page 115 of 131
122023 Engagement Team Timeline
SUSTAINABLE FUNDING ENGAGEMENT TIMELINE
March April
• Parks & Recreation
(3/22)
•Natural Resources
(3/22)
May
•Affordable Housing (5/4)
• Super Issues (5/22)
•Natural Resources
•Transportation (4/19)
•Economic Advisory
(4/19)
Page 116 of 131
13Budget size over time
•The City’s annual budget grew from
$307M in 2003 to $597M in 2022
•The compound annual growth rate of City
Spend for this 20-year period is 3.6%
•The compound annual growth rate for
population + CPI is 4.0%
Four priority areas 2003-2023:
Environmental Svcs. (non-utility)* 8.9%
Parks and Recreation 3.1%
Social Sustainability 4.5%
Transit 3.9%
* Excludes disposable bag ordinance and landfill
remediation budgets0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
2006 2008 2010 2012 2014 2016 2018 2020 2022
City Budget Growth vs.
Population + CPI Growth
3-yr Budget Avg 3-yr Population + CPI Avg Page 117 of 131
14Staffing Over Time
•City strives to parallel staffing growth with
population growth for existing services
•From 2006 through 2024 (projected), population
has grown by an average of 1.6% per year
•For the same span of time, compensation per
capita has increased an average of 2.1% per
year
•2006:
•Population: 135,034
• FTE:1,154.3
•FTE per 1,000: 8.5
•2024:
•Population: 180,191
• FTE:1,794.6
•FTE per 1,000: 10.0
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 City PopulationCompensation SpendMillionsCity Staffing Spend and Population
Total Comp Population Page 118 of 131
15Budget efficiencies over time
The City’s Charter holds two key requirements pertaining to budget:
•The City is not permitted to deficit spend –every appropriation must be matched to
a specific revenue or reserve source
•City Council adopts all appropriations via Ordinance
This budgetary environment of forced trade-offs and our Charter ensures that:
•Despite revenue challenges, service levels will always be right-sized to available
revenues.
•Staff are compelled to implement efficiencies and process improvements as a
matter of service continuity, and to document and measure these in their BFO
offers, KFCG annual reports, etc. (see backup slides)
•$6.2M of ongoing budget cuts have been made since 2020, net of restoration offers
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16Fort Collins Utilities Climate Funding
•Ongoing initiatives
•Energy Efficiency, Customer Renewable and Grid Flexibility programs
•$6.6M annually
•EPIC Loan program, up to $2.5M annually in available financing
•Streetlight LED conversion, $1Mk annually
•Efficiency Works programs (via Platte River budgeting)
•~$5M annually
•23/24 Enhancement Offers
•$1.7M over two years for grid flexibility software, hardware and programs
•$150k for mobile home efficiency demonstration
•Planned investments
•New tools for distribution system planning and operations
•Federal and State Grant Funding: active research and application processes
OUR IMPACT
Community-wide
total electricity use
would be over 20%
higher without
Utilities energy
programs since 2005
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17Council Finance Direction
QUESTIONS:
What is CFC’s feedback on revenue options and
timelines presented?
What additional information would Council Finance
like to see?
Page 121 of 131
19
Backup
Page 122 of 131
20Fort Collins Net Taxable Sales
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Millions
City Net Taxble City % of County Sales City Pop % of County
(revenue trends and comparisons)
FORT COLLINS NET TAXABLE SALES
Page 123 of 131
21Property Tax
Category Funding Mechanism Annual Revenue
Estimate Household Impact
Property Tax 1 Mill Property Tax $3.5M •Residential annual increase of $21.45
•Commercial annual increase of $87.00
2 Mill Property Tax $7M+•Residential annual increase of $42.90
•Commercial annual increase of $174.00
3 Mill Property Tax $11M+•Residential annual increase of $64.35
•Commercial annual increase of $261.00
4 Mill Property Tax $14.5M+•Residential annual increase of $85.80
•Commercial annual increase of $348.00
5 Mill Property Tax $18M+•Residential annual increase of $107.25
•Commercial annual increase of $435.00
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22Substance Tax
Category Substance Funding Mechanism Annual Revenue
Estimate Household Impact
Additional (Excise)
Sales Tax Alcohol*1% Additional Tax $780K+•$1 per $100 purchase in Fort Collins
•Visitors also impacted
Alcohol*3% Additional Tax $2M+•$3 per $100 purchase in Fort Collins
•Visitors also impacted
Alcohol*5% Additional Tax $4M+•$5 per $100 purchase in Fort Collins
•Visitors also impacted
Marijuana 1% Additional Tax $900K+•$1 per $100 purchase in Fort Collins
•Visitors also impacted
Marijuana 3% Additional Tax $3M+•$3 per $100 purchase in Fort Collins
•Visitors also impacted
Marijuana 5% Additional Tax $5M+•$5 per $100 purchase in Fort Collins
•Visitors also impacted
Tobacco**1% Additional Tax $340K+•$1 per $100 purchase in Fort Collins
•Visitors also impacted
Tobacco**3% Additional Tax $1M+•$3 per $100 purchase in Fort Collins
•Visitors also impacted
Tobacco**5% Additional Tax $2M+•$5 per $100 purchase in Fort Collins
•Visitors also impacted
*Liquor store estimate only
**Cigarette estimate only
Page 125 of 131
Election Timeline Options:
23Election Timeline Options
2023 2024 2025 2026
November November NovemberNovember
•Street Maintenance and Community Capital Taxes expire Dec. 31, 2025
Parks & Rec.Renewals Climate Portfolio –
Climate, Housing, Transit
Page 126 of 131
24Budget efficiencies over time
Staff completed a review of adopted budgets, KFCG annual reports, FC Lean
Program Results, and department-provided “stop-doing” lists.
Sources Cited:
•Ongoing offer narratives –responses to “Improvements and Efficiencies” section
(fcgov.com/budget)
•KFCG Annual Reporting (fcgov.com/kfcg)
•Reduction Offers during current and previous BFO cycles (fcgov.com/budget)
In addition to these narrative examples, staff confirmed that $6.2M of ongoing budgets
were cut since 2020, net of any Restore offers.
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25
Budget efficiencies over time
Source: Ongoing Offer Narratives
2023-2024 BFO Cycle –Ongoing Offers
•Digital processing of dozens of city services and functions
•Reduction in total cost of ownership of City computer hardware
•Decrease in injuries leading to decreased cost of Workers’ Comp
•Fleet management improvements
•City budget application was brought in-house, saving $50,000+ per year
•Pricing discounts on telephony for circuit access and long-distance costs
•FCTV updated closed captioning cost lowered from $20/hr to $0.16/hr
•Re-assignment of certain police functions to non-sworn positions
•Reduction in 911 call times and costs through Colorado Regional Information Sharing Project
•Construction of Law Enforcement Training Center saves up to $90,000 per year
•East-side Park Maintenance Shop provides more efficient service with fewer cross-town tripsPage 128 of 131
26Budget efficiencies over time
Source: 2020 KFCG Annual Report
2020 KFCG Annual Report:
•Lower cost on building rentals and travel time by moving community meetings to virtual forums
•Lower costs for Parks and Utilities and leading to an early project completion of Horsetooth Outlet
•Elimination of superintendent position at City Park Nine golf course
•Reduced printing and mailing of the Recreator, saving nearly $100,000
•Cross-department collaboration on capital projects leading to significant cost savings
•CDNS electronic conversion for final approval and recording process, eliminating paper and mylar
•Online roofing permit processing saves staff from ~500 permits/month
•Smart Irrigation Controllers for 48 city sites plus 57 medians/streetscapes
•GIS mapping of Parks snow removal routes and irrigation systems drove fuel and labor savings
•GIS mapping of street sweeping operations improves air quality and saves cost
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272022 Long-term Financial Plan -Baseline
Page 130 of 131
28
2022 Long-term Financial Plan
Scenario: New Revenue Sources -Gap Closure
•Additional 0.25% Sales Tax
(~ $9M per year) starting in
2023.
•New Property Tax Mill
assessed (~ $4M per year)
starting in 2023.
•Implement New
Maintenance and
Improvement use fee to
support Lifecycle projects
(builds up to ~ $7M per year)
in 2026 to offset gap in
ongoing maintenance
needs.
Page 131 of 131