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Home My WebLink AboutAgenda - Mail Packet - 8/19/2014 - Council Finance Committee & Ura Finance Committee Agenda - August 18, 2014Council Finance Committee & URA Finance Committee Agenda Planning Calendar 2014 RVSD 8/7/14 kw Aug. 18 TOPIC TIME WHO CFC Budget Briefing 45 min L. Pollack Building on Basics (BOB) – Update 30 min J. Voss General/Fund/Capital Improvement Policies 30 min J. Voss URA Sept. 15 TOPIC TIME WHO CFC Economic Health Policy 30 min J. Voss J. Birks Status of Auditor Findings 30 min M. DeKock URA Business Assistance Proposal 30 min S. Kendal Oct. 20 TOPIC TIME WHO CFC Long Term Financial Plan 45 min A. Gavaldon Comprehensive Fee Study 45 min J. Ping-Small URA Nov. 17 TOPIC TIME WHO CFC URA Future Council Finance Committee Topics: • Review Special Improvement Districts Future URA Committee Topics: • No Topics in Queue Finance Administration 215 N. Mason 2nd Floor PO Box 580 Fort Collins, CO 80522 970.221.6788 970.221.6782 - fax fcgov.com AGENDA Council Finance & Audit Committee August 18, 2014 10:00 to 12:00 noon CIC Room – City Hall Approval of the Minutes from the July 21, 2014 meeting 1. Budget Briefing 45 minutes L. Pollack 2. Building on Basics (BOB) – Update 30 minutes J. Voss 3. General/Fund/Capital Improvement Policies 30 minutes J. Voss Finance Administration 215 N. Mason 2nd Floor PO Box 580 Fort Collins, CO 80522 970.221.6788 970.221.6782 - fax fcgov.com Council Audit & Finance Committee Minutes 7/21/14 10:00 a.m. to 12:00 noon CIC Room Council Attendees: Ross Cunniff, Bob Overbeck, Mayor Karen Weitkunat Staff: Darin Atteberry, Mike Beckstead, Kelly DiMartino, Chris Donegon, John Duval, Marty Heffernan, Mark Jackson, Travis Machalek, Jeff Mihelich, Ginny Sawyer, Jessica Ping-Small, John Voss, Katie Wiggett, Wendy Williams Others: Kevin Jones, Chamber; Kevin Smith, McGladrey Approval of the Minutes Bob Overbeck moved to approve the minutes from the May 19 meeting. Ross Cunniff seconded the motion. Minutes approved unanimously. Mike Beckstead noted that the planning calendar has the “Comprehensive Fee Study” listed for the August 18 meeting. Due to the timing of the consultant’s report, Staff may need to push this item back to September or October. Auditor Report by McGladrey, LLP Kevin Smith of McGladrey presented the 2013 Audit findings. He reported that McGladrey was able to give the City an unmodified opinion, the highest level of opinions. Kevin stated McGladrey audited the business-type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information provided by staff and it is McGladrey’s opinion, found on page 13 of the Cities Comprehensive Annual Financial Report, that the City’s financial statement are in accordance with all accounting principles. There were no material or significant findings related to Internal Controls or Compliance over financial reporting. He explained that, because the City receives a large amount of grant money, an audit is done examining several projects that receive grants; the findings from this audit are found in the Compliance Report. The Mason Corridor project was the largest of the projects involving grants that were audited. There were no new findings this year for any of the projects audited. Page 12 of the Compliance Report does list one finding. This is a finding from 2012, an issue of internal control with reporting. City Staff has met with HUD to resolve the issue in the first quarter of 2014 and it will not be repeated in future years. Darin Atteberry noted that he has correspondence from HUD showing the City’s progress if Council is interested in seeing that. 2 Mike Beckstead explained that in previous years the City has been considered a “high risk auditee” for the single audit because there had been findings in the past. After two years without a Material Weakness, an auditee loses the label of “high risk auditee”; after this year, the City is no longer considered a “high risk auditee.” Bob Overbeck asked if being high risk lead to a high cost per audit. Mike answered that it does not affect the cost of audit. Kevin noted that McGladrey only recommended one journal entry. This was for $2.5M from the Fort Collins/Loveland Water deal. The revenue from the deal was recorded in 2013, but actually wasn’t paid until 2014. City Staff has made this correction. Bob Overbeck asked how many hours McGladrey puts into auditing the City. Kevin answered approximately 1,000. John Voss added that City Accounting Staff focus much of their time on the audit and CAFR from January to May 1 each year. The Mayor asked what Council’s next steps are concerning the audit. Darin responded that Council has received the materials, and does not require a formal report; however Council can choose to schedule a 5 minute report. Mike Beckstead noted that a follow up to previous audit findings is scheduled for Council Finance in September 2014. Review of BOB 2.0 Potential Projects Ginny Sawyer will present BOB 2.0 Potential Projects to Council at the July 22 Council meeting at which Council will work to narrow down the list of potential projects. Ginny asked Council Finance for feedback on the presentation, timeline and milestones. Ginny briefly went over the history of the two Quarter Cent Taxes that expire in 2015: the Capital ¼ Cent (i.e. Building on the Basics or BOB) and the Street Maintenance ¼ Cent. BOB is nearing the end of its ten year term and is expected to have generated $58 million in revenue at the end of those 10 years. The Street Maintenance tax also amounts to $58 million in its ten year term; it accounts for more than half of the street maintenance budget. Both taxes have had wide community support in the past. As Staff has worked toward renewing BOB, they have worked closely with council, developed a potential project list and utilized budget teams to rate projects against strategic outcomes. Staff projected the future of ¼ cent taxes at approximately $79M/10 years. Ginny showed Council Finance the following timeline for 2014-2015: 3 She also gave a list of planned BOB 2.0 Milestones: • July 22: Narrow Project List ($400M to ~$250M) • July-September: Public Engagement • September Work Session: Update • October Off-Site Session: Narrow to $80-$100M • December Work Session: Finalize Package • January Regular Meeting: Refer Ballot The Mayor said that the “Potential Capital Improvement Tax Projects by Outcome Area” chart is a very helpful tool for Council as they narrow down potential projects. The Mayor suggested that projects which can be leveraged with grants or partnerships should be asterisked to highlight that potential. Ross asked about the practicality of including the cost of O&M for each project. Council Finance discussed the benefits of knowing O&M and how it would affect project ranking. In the end, they decided not to add the information to the chart, but agreed that it is an important component to consider. Bob asked when citizens could go online and rate the projects. Ginny said that the goal is to have that available by end of July. Kelly DiMartino pointed out that only the projects that come out of the July 22 work session will be included online. The Mayor emphasized the importance of community buy-in for the projects chosen. The residents of Fort Collins will not vote to renew the tax if they do not support the capital improvement projects Council decides on. Darin agreed and said recommended that each Councilmember get feedback from the people in their districts. August 18, 2014 COUNCIL FINANCE COMMITTEE AGENDA ITEM SUMMARY Staff: Lawrence Pollack Date: August 18, 2014 SUBJECT FOR DISCUSSION Update on the financial assumptions included in the City Manager’s 2015-2016 Recommended Budget EXECUTIVE SUMMARY The City Manager’s 2015-2016 Recommended Budget will be delivered to City Council and available to the public on August 29, 2014. This work session will review the economic assumptions that are being incorporated into the City Manager’s 2015-2016 Recommended Budget and provide an overview of the major themes based on the work to date. Staff will outline the remaining key steps and discuss the City Council process regarding adoption of the City of Fort Collins 2015-2016 Biennial Budget. Discussion of the Recommended Budget will take place during three work sessions and two public hearings in September and October. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED Staff will present an update on the Budget process and address any questions or issues that arise from the conversation with City Council. 1. Does City Council have any questions or concerns about the budget assumptions which are being included in the Recommended Budget? 2. Does City Council have any questions regarding the proposed schedule for discussion of the Recommended Budget? BACKGROUND/DISCUSSION Budgeting for Outcomes (BFO) Process Improvements The 2015-2016 Budget process, called Budgeting for Outcomes (BFO) began with the completion of the City Strategic Plan in March. The strategic plan replaced the Request for Results and Outcome maps previously completed by the BFO Teams. Offers needed to align with one or more strategic objectives across Outcomes. This was one of a number of process improvements made to BFO since the last budget process in 2012 for the 2013-2014 Budget. Other improvements included: • Significant outreach to get citizen feedback on the budget requests (Offers) being considered. In addition to on-line feedback through fcgov.com City staff took a mobile roadshow to over 20 different community events and organization. The intent was to reach a broad range of the citizenry across multiple demographics. • Increased citizen participation on BFO Teams to 2 per team. Ideally, citizens would volunteer for two budget cycles so that in their second term, they could be a mentor to new citizen team members. Feedback from the teams indicates the success of having two citizens per team. • BFO Teams used the strategic objectives from the City Strategic Plan and performance August 18, 2014 measures tied to the Offers in their evaluations of the Offers and their recommendations as to which ones should be funded. • Offers for ongoing programs and services were aligned with the City’s financial software system. Although this did make for a slightly smaller number of larger sized Offers, it more importantly allowed for the first time a year-over- year comparison of how Ongoing Offers were changing and the drivers of those changes. This change allowed for more financial rigor in the process than ever before. The City Manager’s Recommended Budget is in the process of being finalized and published. It will reflect a balance of ongoing programs and services with enhancements that directly address the strategic objectives in the City Strategic Plan. The City Manager’s 2015-2016 Recommended Budget will be delivered to City Council and be available to the public on August 29, 2014. Budget Assumptions The City of Fort Collins economy is performing better than many municipalities and the City organization is in a good financial position with healthy fund balances. Most revenue streams are flat to showing only modest growth, but sales and use tax has been up steadily throughout 2014 above our original revenue forecasts. This bodes well for the General Fund, the three dedicated quarter cent programs, as well as the Keep Fort Collins Great fund. Development-related revenue continues to be strong this year, but investment earnings continue to be much less than historical averages due to the national interest rate environment. City staff is monitoring all revenue sources carefully and will utilize the most current information available to set 2015-2016 projected revenues. Additionally, the Utilities Funds proposed rate changes will be discussed during the Council’s budget review process. The City Manager’s Recommended Budget is being developed on these key assumptions: • Focus on City Council and community priorities as reflected in the 2014 City Strategic Plan • Maintain existing operations and seek ways to deliver desired services more efficiently • Moderate Sales and Use tax revenue growth o General revenue economic growth is assumed to be 3.0% and 2.5% in 2015 and 2016, respectively o Use Tax: The forecast includes a base of $14.5M which is flat year-over-year and which is available to fund ongoing programs and services. However, in 2016 this base drops to $12.6M without the renewal of the two ¼ cent sales and use taxes for Street Maintenance and Building on Basics (BOB). o Use Tax is forecasted above the base at $3.0M and $2.5M in 2015 and 2016, respectively. However, due to the volatility of this revenue stream, the additional Use Tax above the base is restricted to one-time expenditures. • Unanticipated 2014 Sales Tax revenue above forecast of $2.7M increases the base for 2015 upon which economic growth is forecasted. Unanticipated 2014 Use Tax revenue above forecast of $6.7M is included in the 2015-2016 budget for one-time expenditures • Unanticipated underspend in the North College Improvement project, as well as impact from the opening of the mall, is also included in the overall revenue forecast • Utility rate increases of 2.0% for Light & Power and 3.0% for Wastewater are included in both 2015 and 2016 • Wage adjustments assume an overall 2.0% increase each year, which is below initial market data for the Front Range. Benefit cost inflation is forecasted at 11.5% and 3.7% in 2015 and 2016, respectively includes the financial impact from national health care reform (the Affordable Care Act). There are no changes planned for pension contributions • There are a number of significant cost increases over 2014. These are listed on slide 9 of attachment #1. August 18, 2014 City Council Budget Meetings The City Council has a series of work sessions scheduled in September and October to discuss the proposed 2015-2016 budget. Each work session will include staff presentations regarding specific Outcomes, followed by an opportunity for questions and discussion. Key dates for City Council discussions and public hearings are as follows: Meeting Date Topic August 26, 2014 Work Session General Budget Overview September 9, 2014 Work Session Presentations, Questions and Discussion: 1. Community & Neighborhood Livability 2. Economic Health 3. Environmental Health 4. Safe Community September 23, 2014 Adjourned Regular Meeting and Work Session Budget Public Hearing #1 Presentation, Questions and Discussion: 1. Culture and Recreation 2. High Performing Government 3. Transportation October 7, 2014 Regular Meeting Budget Public Hearing #2 October 14, 2014 Work Session General Discussion – Final Direction October 21, 2014 City Council Meeting First Reading of Appropriations Ordinance November 18, 2014 City Council Meeting Second Reading of Appropriations Ordinance ATTACHMENTS Attachment #1 – Presentation 1 Council Finance Committee 2015-2016 City Manager’s Recommended Budget Overview August 18, 2014 2 Budget Overview Budget Process Improvements Include: • City Strategic Plan basis for evaluating offers vs. Purchasing Strategies • Improved Citizen Engagement – 2 citizens per team, enhanced outreach • BFO teams used metrics to evaluate offers – empowered to assess & prioritize • Modified Offers to On-Going and Enhancements – Reduced offer total from 550 to 430, created larger offers for On-Going – On-going offers allowed year to year cost comparison by Budget Lead Team • Significant reduction in BFO team staff hours Requested Innovative Ideas Consistent with Strategic Plan Challenging Choices – Significant Cost Issues and Funding Priorities Recommended Budget: • Reflects community priorities • Continues high level of service expected by the community 3 Example: On-Going Budget Comparison Budget 2014 Budget 2015 % ∆ Labor & Benefits $2,816 $2,969 5.4% Non-Labor 498 505 1.4% Subtotal 3,314 3,474 4.8% Rebates 227 265 16.8% Total $3,541 $3,740 5.6% Rebate 2013 Budget 217 Rebate 2013 Actual 253 ∆ $ 36 ∆ % 16.3% * All Amounts in Thousands Financial Services Rebate Detail Budget 2014 % Inc. (Dec.) Budget 2015 % Inc. (Dec.) Budget 2016 % Inc. (Dec.) 3,397,994 -6.3% 3,474,411 2.2% 3,550,215 2.2% 227,300 4.5% 265,404 16.8% 270,296 1.8% Total Original Budget $3,625,294 -5.7% $3,739,815 3.2% $3,820,511 2.2% Sales Tax Software (HPG) KFCG - Green Purchasing (1 FTE) (83,820) Ongoing Budget $3,541,474 2.4% $3,739,815 5.6% $3,820,511 2.2% General Fund - Ongoing $3,541,474 2.4% $3,739,815 5.6% $3,820,511 2.2% 0.0% 0.0% 0.0% Total Funding Sources $3,457,611 $3,541,474 2.4% $3,739,815 5.6% $3,820,511 2.2% $3,457,611 $3,457,611 $3,845,639 Less One-time Enhancements Funding Sources (300,000) (88,028) Community & Neigh. Liveability (Rebates 217,450 Offer 13.1 & 14.1 Finance - Budget Comparison Ongoing Budget Comparison Budget 2013 Original Budget by Outcome High Performing Government (13.1) 3,628,189 Change in Rebate Policy Increased Costs 4 Revenue Assumptions Assumed Moderate Growth in 2015 & 2016…. Additional Mall Revenue Included in 2016 2016 ¼ Cent Revenue Not Included in Budget ($ millions) 2013 Actual 2014 Forecast 2015 Budget 2016 Budget Sales Tax Prior Year $ 92.1 $ 96.6 $ 99.8 3% & 2.5% Economic Growth 2015/2016 4.5 3.0 2.5 Additional Marijana Tax Revenue - 0.2 Mall Base & Dedicate Tax - - 2.0 Total Sales Tax Revenue $ 92.1 $ 96.6 $ 99.8 $ 104.3 Year over Year Change 4.9% 3.3% 4.5% Less: Expiring 1/4 Cents (12.6) Sales Tax Revenue $ 99.8 $ 91.7 Use Tax Use Tax (On-Going) $ 14.5 $ 14.5 $ 14.5 14.5 Use Tax (On-Going w/o 1/4 Cents) $ 12.6 Use Tax (One-Time) 3.6 6.7 3.0 2.5 5 Funding Opportunities Included in Budget Unanticipated Revenue Included in Budget Fund Balances reviewed with Council Finance June 2014 • All healthy at year end 2013 and forecast healthy year end 2014 • General Fund balance increased from $55.2M in 2012 to $60.7M in 2013 ($ millions) On-Going One-Time On-Going One-Time Funding Opportunities Included: 2014 Sales Tax Above Budget 2.7 2014 Use Tax Above Budget 6.7 North College Improvement Underspend 2.9 2016 Mall Sales Tax - Base & Dedicated 2.0 Mall Use Tax Paid in 2014 & 2015 2.5 Total Opportunities Included $ 2.7 $ 12.1 $ 2.0 $ - 2015 2016 6 Revenue Detail Unanticipated Revenue Included in Budget… ¼ Cents Not Included in Budget in 2016 ($ millions) 2013 Actual 2014 Orig Bdgt 2014 Projected 2015 Budget 2016 Budget Sales Tax $ 92.1 $ 93.9 $ 96.6 $ 99.8 $ 91.7 Use Tax Base 14.5 14.5 14.5 14.5 12.6 Use Tax One-Time 3.6 - 6.7 3.0 2.5 Property Tax 16.9 17.2 17.2 18.0 18.7 Intergovt & Shared Revenue 15.4 11.0 11.0 12.2 12.3 Culture, Parks & Rec Fees 12.3 10.9 10.9 12.8 12.9 PILOTs 9.1 9.3 9.3 9.9 10.2 Operating Grants & Contributions 16.4 4.5 7.4 5.6 5.6 Capital Grants & Contributions 31.7 1.8 7.9 2.0 2.0 Licenses, Permits & Dev Fees 5.4 4.3 4.3 4.8 4.8 Court & PD Fines 2.8 2.8 2.8 2.4 2.5 Other 28.1 25.7 19.9 24.8 23.9 Subtotal Governmental Revenue $ 248.3 $ 195.9 $ 208.5 $ 209.8 $ 199.7 Use of Prior Year Unanticipated $ 12.1 $ - Total Governmental Budgeted Revenue $ 221.9 $ 199.7 * ** * Includes $7M of DDA bond revenue ** Includes $26M of MAX grant revenue 7 Utility Rate Assumptions Actual Actual Budget Budget Utility Rates: 2013 2014 2015 2016 L&P * 4.3% 2.0% 2.0% 2.0% Water ** 4.0% 4.0% 0.0% 0.0% Waste Water *** 0.0% 3.0% 3.0% 3.0% Storm Water 0.0% 0.0% 0.0% 0.0% 2013 includes 3.83% PRPA & 0.50% Solar Program, 2014 1.5% PRPA & 0.50% Solar Program, 2015-16 PRPA only 2013 includes 4% Fire Mitigation, 2014 includes 1% Fire Mitigation, 3% Capital Improvements 2014-16 Capital Improvements L&P Driven by PRPA Pass Through Waste Water Driven by Capital Improvements * ** *** 8 Cost Assumptions Budget Budget 2015 2016 General Inflation 2.0% 2.0% Compensation 2.0% 2.0% Benefits Cost 11.5% 3.7% Pension Contributions No Change GERP Supplemental Contribution $1.1M $1.1M Moderate Inflation….Compensation Tied to Market…. Benefit Costs Increased Significantly in 2013 & 2014…. Wellness Clinic Should Reduce Benefit Cost Increase by 2016 9 Significant Cost Increases Over 2014 Total $ Salary Costs $ 2.0 Health Care Reform 0.9 Benefits Cost 1.4 PFA Contribution per IGA 1.5 IT Equipment Replacement & Lease 2.0 Transit Service Annualize (including $.7M CSU funded) 2.4 General Fund Impact from Cons Trust Fund to Trails .7 Total $10.9 Planned & Unplanned Expenditures Create Challenging Environment ($ millions) 10 Budget Overview 2013 2014 2015 2016 Government Budget Utilities Budget Total City Budget General Fund Included Above KFCG Included Above Details in development by budget ($ millions) August 18, 2014 COUNCIL FINANCE COMMITTEE AGENDA ITEM SUMMARY Staff: John Voss, Controller Date: August 18, 2014 SUBJECT FOR DISCUSSION: Building on Basics (BOB) Update EXECUTIVE SUMMARY Council Finance Committee requested an update on the status of BOB. The dedicated 0.25% sales and use tax was approved by voters on November 2, 2005. The effective period is January 1, 2006 through December 31, 2015. Voters approved 13 specific projects with an estimated of value of $56.2M. Revenue is expected to exceed the forecast made in 2005. All project commitments should be completed by 2016. Operating and maintenance commitments will be provided through 2022. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED None, information sharing. BACKGROUND/DISCUSSION During a recent discussion on renewing BOB the Council Finance Committee asked several questions. How is existing BOB progressing? Are operating and maintenance dollars being provided as committed to in the ballot language? The presentation slides focus on answering these questions. ATTACHMENTS • BOB Update, slides • Resolution 2005-092 and the associated AIS materials from August 16, 2005 1 Building On Basics - Update Council Finance Committee August 18, 2014 2 Agenda • What is BOB • Project Commitments • Project details • Revenue and Expense Comparison • Closing Comments 3 BOB Overview • Renewal of 0.25% Sales & Use Tax • Approved 72% to 28% on November 2, 2005 • 10 years: Jan 1, 2006 through Dec. 31, 2015 • Original Forecast $56.2M – Projects $51.8M – Operations & Maintenance $4.4M – Assumed 0% Inflation 4 FINAL COUNCIL PROJECT LIST CAPITAL COST 7 Yrs O&M Total 1 Intersection Improvements & Traffic Signals $ 11,000 $ 35 $ 11,035 2 Timberline Road - Drake to Prospect 4,856 112 4,968 3 Harmony Road - Seneca to College Avenue 3,969 133 4,102 4 Lincoln Center Reno and Cultural Facilities Plan 5,000 168 5,168 5 Park Upgrades and Enhancements 1,525 315 1,840 6 Senior Center Improvements 4,000 315 4,315 7 Museum/Discovery Science Center 6,000 1,400 7,400 8 Bicycle Program Implementation 1,000 - 1,000 9 Pedestrian Plan and Disability Access Improv. 3,000 350 3,350 10 N. College Rd Improvements - Vine to Conifer 4,000 42 4,042 11 Transit Fleet Vehicle Replacement 923 - 923 12 Library Technology 5,950 - 5,950 13 Police Computer Aided Dispatch & Records Sys. 600 1,533 2,133 TOTAL $ 51,823 $ 4,403 $ 56,226 Resolution 2005-092, Submitting to Electors 000’s 5 After Election – February 2006 • Projects scheduled by year through 2015 • O&M schedule by year through 2022 • Applied estimated inflation 3.5% to construction projects – Resulted in a projected short fall, at that time • Current forecast anticipates $2.7M surplus – No inflation for O&M 6 Revenue Progression 000's Original Current Forecast Over(Under) Year Sales & Use Sales & Use Interest Total Annual Cumulative 2006 $ 5,626 $ 5,004 $ 74 $ 5,078 $ (548) $ (548) 2007 5,626 5,767 192 5,959 333 (215) 2008 5,626 5,529 348 5,877 251 36 2009 5,626 5,146 421 5,568 (58) (22) 2010 5,626 5,554 238 5,792 166 144 2011 5,626 5,767 112 5,879 253 397 2012 5,626 6,262 89 6,350 724 1,121 2013 5,626 6,474 104 6,579 953 2,074 2014 5,626 7,055 50 7,105 1,479 3,553 2015 5,626 7,049 50 7,099 1,473 5,026 TOTAL $ 56,260 $ 59,608 $ 1,679 $ 61,286 $ 5,026 Timing differences between revenue collection and transfer from S&U Fund to BOB funds 7 Commitments and Disbursements Summary 000’s Commitments Disbursed Project Capital O&M Total Capital Infl. Adjmnts O&M Total 1 Intersection Improvements & Traffic Signals 11,000 35 11,035 11,000 35 11,035 2 Timberline Road - Drake to Prospect 4,856 112 4,968 4,856 1,385 (2,342) 112 4,011 3 Harmony Road - Seneca to College Avenue 3,969 133 4,102 3,969 254 (773) 133 3,583 4 Lincoln Center Reno and Cultural Facilities Plan 5,000 168 5,168 5,000 638 168 5,806 5 Park Upgrades and Enhancements 1,525 315 1,840 1,525 484 315 2,324 6 Senior Center Improvements 4,000 315 4,315 4,000 1,148 350 5,498 7 Museum/Discovery Science Center 6,000 1,400 7,400 6,000 184 1,400 7,584 8 Bicycle Program Implementation 1,000 1,000 1,000 1,000 9 Pedestrian Plan and Disability Access Improv. 3,000 350 3,350 3,000 11 350 3,361 10 N. College Rd Improvements - Vine to Conifer 4,000 42 4,042 4,000 704 42 4,746 11 Transit Fleet Vehicle Replacement 923 923 923 93 1,016 12 Library Technology 5,950 5,950 5,950 5,950 13 Police Computer Aided Dispatch & Records Sys. 600 1,533 2,133 600 113 1,533 2,246 Subtotal 51,823 4,403 56,226 51,823 5,012 (3,115) 4,438 58,158 14 Administrative Fees 0 0 0 0 0 0 425 425 Total 51,823 4,403 56,226 51,823 5,012 (3,115) 4,863 58,583 8 BOB – Project Details 1 - Intersection Improv. & Traffic Signals 000's Commitment Disbursments to Voters 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Future TOTAL Capital 11,000 275 2,325 1,900 3,500 780 2,220 11,000 Inflation Capital 0 Adjustments 0 O&M 35 5 5 5 5 5 5 5 35 Total 11,035 275 5 2,330 1,905 5 5 3,505 785 2,220 0 0 11,035 2 - Timberline Road - Drake to Prospect 000's Commitment Disbursments to Voters 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Future TOTAL Capital 4,856 400 600 3,856 4,856 Inflation Capital 163 1,222 1,385 Adjustments (2,342) (2,342) O&M 112 112 112 Total 4,968 400 0 0 0 0 0 0 763 2,736 0 112 4,011 9 Timberline Road – Drake to Prospect • Original estimate of $4,856 would do the following – “This project will expand Timberline Road to 4-lane arterial standards including travel lanes, sidewalks, bike lanes, landscaped medians, and other necessary improvements. The project will include improvement of the Timberline/Prospect intersection and its approaches to add additional through and turn lanes.” • Another project in the same area accomplished a lot of the work in 2006 • In 2010 the Engineering Department revised the estimated budget to reflect the cost of the outstanding features, saving $2,342 10 BOB – Project Details 6 - Senior Center Improvements 000's Commitment Disbursments to Voters 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Future TOTAL Capital 4,000 350 2,000 1,650 4,000 Inflation Capital 80 545 523 1,148 Adjustments 0 O&M 315 50 300 350 Total 4,315 0 0 0 0 0 0 430 2,545 2,173 50 300 5,498 7 - Museum/Discovery Science Center 000's Commitment Disbursments to Voters 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Future TOTAL Capital 6,000 750 5,250 6,000 Inflation Capital 184 184 Adjustments 0 O&M 1,400 200 200 200 200 200 200 200 1,400 Total 7,400 750 5,434 0 200 200 200 200 200 200 200 0 7,584 11 Revenue and Expense Comparison Original Actual / Forecast Change Revenue Sales & Use Tax $ 56,226 $ 59,608 $ 3,382 Interest Earnings - 1,679 1,679 TOTAL BOB REVENUE 56,226 61,286 5,060 Capital and O&M 1 Intersection Improvements & Traffic Signals 11,035 11,035 - 2 Timberline Road - Drake to Prospect 4,968 4,011 (957) 3 Harmony Road - Seneca to College Avenue 4,102 3,583 (519) 4 Lincoln Center Reno., Cultural Facilities Plan 5,168 5,806 638 5 Park Upgrades and Enhancements 1,840 2,324 484 6 Senior Center Improvements 4,315 5,498 1,183 7 Museum/Discovery Science Center 7,400 7,584 184 8 Bicycle Program Implementation 1,000 1,000 - 9 Pedestrian Plan and Disability Access Improv. 3,350 3,361 11 10 N. College Rd Improvements - Vine to Conifer 4,042 4,746 704 11 Transit Fleet Vehicle Replacement 923 1,016 93 12 Library Technology 5,950 5,950 - 13 Police Computer Aided Dispatch, Records Sys. 2,133 2,246 113 TOTAL PROJECT COSTS 56,226 58,158 1,932 General Fund Administrative Fees - 425 425 TOTAL BOB EXPENSES 56,226 58,583 2,357 Projected Surplus(Deficit) $ - $ 2,703 $ 2,703 12 Closing Comments • The 13 approved projects will all be completed as described in 2005 • O&M is being distributed over 7 years • Any remaining surplus will be made available in an upcoming BFO cycle 13 14 BOB – Project Details 3 - Harmony Road - Seneca to College Ave 000's Commitment Disbursments to Voters 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Future TOTAL Capital 3,969 3,000 450 519 3,969 Inflation Capital 66 188 254 Adjustments (66) (707) (773) O&M 133 19 19 19 19 19 19 19 133 Total 4,102 3,000 19 19 19 469 19 19 19 0 0 0 3,583 4 - Lincoln Center Reno. & Cultural Fac. Plan 000's Commitment Disbursments to Voters 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Future TOTAL Capital 5,000 150 2,000 2,850 5,000 Inflation Capital 217 420 637 Adjustments 0 O&M 168 24 24 24 24 24 48 168 Total 5,168 150 0 0 2,217 3,270 24 24 24 24 24 48 5,805 5 - Park Upgrades and Enhancements 000's Commitment Disbursments to Voters 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Future TOTAL Capital 1,525 275 1,250 1,525 Inflation Capital 30 454 484 Adjustments 0 O&M 315 45 45 45 45 135 315 Total 1,840 0 0 0 305 0 0 45 45 45 1,749 135 2,324 15 BOB – Project Details 8 - Bicycle Program Implementation 000's Commitment Disbursments to Voters 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Future TOTAL Capital 1,000 125 125 125 125 125 125 125 125 1,000 Inflation Capital 0 Adjustments 0 O&M 0 0 Total 1,000 0 0 125 125 125 125 125 125 125 125 0 1,000 9 - Pedistrian Plan, Disability Access 000's Commitment Disbursments to Voters 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Future TOTAL Capital 3,000 300 300 300 300 300 300 300 300 300 300 3,000 Inflation Capital 11 11 Adjustments 0 O&M 350 7 14 21 28 35 42 50 42 35 76 350 Total 3,350 300 318 314 321 328 335 342 350 342 335 76 3,361 10 - N. College Rd - Vine to Conifer 000's Commitment Disbursments to Voters 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Future TOTAL Capital 4,000 400 3,600 4,000 Inflation Capital 28 676 704 Adjustments 0 O&M 42 6 6 6 24 42 Total 4,042 0 0 428 0 0 4,276 0 6 6 6 24 4,746 16 BOB – Project Details 11 - Transit Vehicle Replacement 000's Commitment Disbursments to Voters 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Future TOTAL Capital 923 150 150 150 150 323 923 Inflation Capital 5 11 16 61 93 Adjustments 0 O&M 0 0 Total 923 150 155 161 166 0 384 0 0 0 0 0 1,016 12 - Library Technology 000's Commitment Disbursments to Voters 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Future TOTAL Capital 5,950 744 744 744 744 744 744 744 742 5,950 Inflation Capital 0 Adjustments 0 O&M 0 0 Total 5,950 0 0 744 744 744 744 744 744 744 742 0 5,950 13 - Police Computer Aided Dispatch & Records Sys. 000's Commitment Disbursments to Voters 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Future TOTAL Capital 600 600 600 Inflation Capital 113 113 Adjustments 0 O&M 1,533 219 219 219 219 219 219 219 1,533 Total 2,133 0 0 219 219 219 932 219 219 219 0 0 2,246 17 Harmony Road – College to Seneca • Original estimate of $3,969 would do the following – “This project will widen 1.7 miles of West Harmony Road between Seneca and College Avenue to 4-land arterial street standards including bike lanes, sidewalks and reconstruction of the Harmony/Shields intersection.” • Project started before BOB. In 2006 BOB gave $3,000 and General Fund “loaned” $969. In 2009 BOB forecast showed $3M shortfall. In 2010 BOB “repaid” $450 and balance owed was removed from BOB schedule/forecast. • Opportunity to now repay balance on loan August 18, 2014 COUNCIL FINANCE COMMITTEE AGENDA ITEM SUMMARY Staff: John Voss, Controller Date: August 18, 2014 SUBJECT FOR DISCUSSION: Policy Discussion EXECUTIVE SUMMARY Over that last 18 months the Council Finance Committee has been systematically reviewing all Council Finance Policies. The remaining financial policies are a varied mixture of topics. Staff seeks concurrence on the recommended direction: combine the three polices into a single General Financial Policy, incorporate others in administratively approved policies (e.g. HR Administrative Policy) and move some elements to a new CFO Finance Operating Policy. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED: Do you agree with the recommended direction? BACKGROUND/DISCUSSION: If the Council Finance Committee agrees with the recommended direction, staff will bring all impacted financial policies back to CFC with detailed proposed changes, and then ultimately to the full City Council for approval. ATTACHMENTS • Policy Discussion, slides • Policies 3.0, 4.0 and 6.0 with changes 1 Council Finance Committee Policy Discussion General Policy Fund Policy Capital Improvement Fund Policy August 18, 2014 2 Financial Policy Overview Financial Polices evolved as part of Budget Process • Previously adopted and revised by Council every 2 years. Remaining Financial Management Policies to be Reviewed by Council: • General Policies • Fund Policy • Capital Improvement Funds • Economic Development Funds Remaining Policies a Mixture of Things Covered by: • City Code • Council Approved Policies and IGA’s • Policies that should probably by Administrative Policies 3 CFC agenda in September Todays discussion 4 Proposal Overview Proposal to move sections to one of several other policies 3.0 General Policy New Council Finance General Policy 4.0 Fund Policy Incorporate into other Financial or Administrative Policy e.g. HR Administrative Policy 6.0 Capital Improvement Funds New CFO Finance Operating Policy 5 3.0 General Polices Topic/Section Content Recommendation 3.1 Administrative Charges • General Fund Departmental Costs to Allocated • How Costs are Allocated • All funds Receive Allocations but Not All Funds are Charged • Keep as Council Financial General Policy 3.2 Payment in Lieu of Taxes (PILOT) • Re-summarizes Code • Set in Code • Remove from Council Policy • Add to CFO Finance Operating Policy 3.3 Lease Purchase • Discusses when to use, reason to use and criteria for evaluation • Add to Debt Policy 3.4 Human Resource Management and Productivity • Employee Compensation Policy • City Performance Goals and Measures Policies • Move to HR policies 3.5 Medical Insurance and Retirement Plan • Medical Insurance • Retirement Programs • Keep as Council Financial General Policy 3.6 Facility Maintenance and Repairs • Maintenance, Repair & Replacement • Priorities for Maintenance and Repair Funding • Funding Policy/Target • Eliminate non-policy items • Move to Operation Services Policy 6 3.0 General Polices, continued Topic/Section Content Recommendation 3.7 Poudre Fire Authority – Revenue Allocation Formula • Narrative about PFA history and relationship to City • Describes RAF in previous IGA • Covered by IGA • Remove from Council Policy • Add to CFO Finance Operating Policy 3.8 Rebate Programs • Property Tax and Utility Charge Rebate Program • Sales Tax Rebate on Food Program • Set in Code • Remove from Council Policy • Add to CFO Finance Operating Policy 7 4.0 Fund Polices Topic/Section Content Recommendation 4.1 General Fund – Productivity Savings • Service Productivity Incentive Productivity Incentive Policy • Policy Structure • Discontinued in 2007 • Eliminate this section of Policy 4.2 Enterprise Funds • Utility Services • Electric Utility • Water Utility • Wastewater Utility • Storm Drainage Utility • Pledged Revenues • Flow of Funds • Rate Maintenance • Capital Cost Financing • Bond Ordinances address many of these items • Minimum Fund Policy address many of these items • Debt Policy address some of the capital financing • Add to Fund & Debt Policy 4.3 Internal Service Funds • Cost recovery expectations • Rate setting • Competitive rates • Use of fund balances • Use of consultants • Update content • Move to CFO Finance Opearing Policy 4.4 Special Revenue and Debt Service Funds • Cultural Services & Facility Fee Policy • Art In Public Places • Recreation Fund Policy • Many funds not given any guidance: e.g. Transit, Cemeteries • APP covered by Code • Update content • Keep as Council Financial General Policy 8 6.0 Capital Improvement Funds Topic/Section Content Recommendation 6.1 Citizen Participations • Narrative about public involvement on dedicated quarter taxes, no policy elements • Eliminate this section of Policy 6.2 Capital Improvement Policy • Narrative is light on policy content • Develop multi-year plans annually • Emphasize pay-as-you-go financing • Operating and maintenance costs should be identified in multi-year plans and information included with capital appropriation requests • Needs major update • Keep as Council Financial General Policy 9 New CFO approved Finance Operating Policy Create a section that includes a list of various policies, contracts, City Code sections and IGA’s Keep track of periodic reviews and responsibilities Examples: • PFA IGA - Revenue Allocation – Formula and frequency of updates • Grocery, Utility and Property Rebate Programs – annual CPI updates • Timnath IGA • Boxelder IGA • Woodward Agreement • Capital Expansion Fee (Code) • Council Compensation updates (Code) • Administrative Fees (approved by City Manager) Add – capital expansion fees – annual CPI update and 3-5 analytical review 10 Summary Proposal to move sections to one of several other policies 3.0 General Policy New Council Finance General Policy 4.0 Fund Policy Incorporate into other Financial or Administrative Policy e.g. HR Administrative Policy 6.0 Capital Improvement Funds New CFO Finance Operating Policy •Question: Do you agree with the recommend direction? •If yes, staff will bring all impacted financial policies back to CFC with detailed proposed changes, and then ultimately to the full City Council for approval Financial Management Policies GENERAL POLICIES 3.1. ADMINISTRATIVE CHARGES Expenses for departments rendering services to other departments are equitably apportioned. For Enterprise, Internal, and Special Revenue Funds, direct charges are made to the funds receiving services when they are rendered. Certain departments within the General Fund provide services to all funds and do not have a direct billing mechanism. For these General Fund departments, a cost allocation formula has been developed to apportion costs to other funds and provide offsetting revenue to the General Fund. a. General Fund Departmental Costs to be Allocated Departmental costs to be allocated include City Council, City Manager, City Clerk, City Attorney, Human Resources, Finance, and Information Technology (IT). Any services in these departments which are funded by user fees or dedicated revenues are excluded from the allocation. The amount of costs to be allocated is the current adopted budget for each of the departments listed above less user fees and dedicated revenue. With a multi-year budget, the charge to each fund is increased by a determined percentage for the second future year and then adjusted to the actual calculation with the next multi- year budget. b. How Costs Are Allocated 1. The Human Resources costs are allocated to funds based on the total number of budgeted full-time-equivalent positions in each fund. 2. The administrative costs for IT are allocated to funds based on the total number of budgeted full-time-equivalent positions in each fund. 3. All other General Fund administrative costs are allocated to the funds based upon adjusted budgets for the current year. Adjustments are made to recognize the lower amount of administrative services required for Capital, Debt Service, and Purchased Power payments. Capital project budgets are reduced by two-thirds and averaged over three years. Debt Service budgets are reduced by three-fourths and the entire Purchased Power budget is deducted from the Light & Power budget. c. All Funds Receive Allocations but Not All Funds Are Charged While Administrative Charges are allocated among all City funds, only specified funds are charged. Charges are not made to a fund if it is not self-supporting, it is an Internal Service fund, or if the funds role is merely to facilitate proper accounting procedures. For example, the Sales and Use Tax fund and Debt Service fund receive amounts which are then transferred to other funds. Charging these funds would lead to double charging many transactions and would not correspond to the level of service provided by the departments in the General Fund. Comment [JV1]: Keep as Council Financial Policy Comment [JV2]: No longer in General Fund Financial Management Policies d. Review During each budget process, the Administrative Charge calculation will be reviewed. Further refinements in the allocation formulas will be made as needed to assure that the equitable apportionment requirement of the Charter is met. 3.2. PAYMENT IN LIEU OF TAXES (PILOT) In accordance with the City Charter regarding municipality rates and finances, the water, wastewater, and electric utilities "pay into the General Fund in lieu of taxes on account of the city-owned utilities such amount as may be established by the Council by ordinance". The established PILOT rate is based on the amount of taxes that would be levied if the utility were privately owned. The PILOT rate, as established by Council is 6% for the Water and Wastewater Funds and for the Light and Power Fund. This rate is applied to the operating revenues per year for each fund. 3.3. LEASE-PURCHASE The City of Fort Collins uses lease-purchase financing for the provision of new and replacement equipment, vehicles and rolling stock in order to ensure the timely replacement of equipment and vehicles. This method may also be used to acquire real property. Members of management staff have developed an equipment needs schedule for rolling stock which encompasses the demands of operating departments. This schedule is used to project equipment needs for each budget term. The City leases the asset in installments according to a fixed payment schedule. Each installment includes principal and interest and the City builds equity and assumes risk in the asset over the term of the lease. The annual installments are appropriated by the Council each year. Advantages of lease-purchase financing over the traditional cash method of financing are: $ Decreasing the impact of inflation on the purchase of new and replacement equipment. $ Resolving the problem of a capital replacement needs backlog. $ Conserving operating reserves. $ Reducing the initial impact of the cost to user departments by enabling acquisition costs to be spread over the useful life of the equipment. $ Safeguarding the opportunity to use cash assets to earn higher interest than the interest cost of lease-purchasing. Comment [JV3]: Set by Code ordinance. Removed Council Finance Policy and add to new CFO General Policy Comment [JV4]: Incorporate into 5.0 Debt Policy. Financial Management Policies It should be noted that the City is able to discontinue the equipment leases at its discretion so that future City Councils will have the option to continue or discontinue the policy of lease-purchasing City equipment. According to State of Colorado House Bill 90-1164, local governments are required to identify as part of their budgets: 1) the total expenditures during the ensuing fiscal year for all lease purchase agreements involving real and personal property; and 2) the total maximum payment liability under all lease purchase agreements over the entire term of the agreements, including all optional renewal terms. The State does not include lease purchase in the legal definition of debt, however rating agencies include lease purchase financing in calculating the City's long-term financial obligations and overall debt burden. 3.4. HUMAN RESOURCE MANAGEMENT AND PRODUCTIVITY The City of Fort Collins' goal as an employer is to attract and retain quality employees in recognition of their essential contribution in providing services to the citizens of Fort Collins. As a provider of services in the community, the experience, commitment and talent of our employees is critical to the quality and value of City services. The City has two financial policies which address the human resource component of its cost of providing services: a. Employee Compensation Policy In order to attract and retain quality employees and also to recognize and reward quality performance, the City has established a system which guides the compensation of its employees. The objective of the compensation policy is to pay employees fairly, competitively and in a way that is understandable to the community and the organization. 1. For all classified employees and unclassified management of the City, compensation will be established through a total compensation methodology. Total compensation is defined as both salary and benefits. This methodology will use annual surveys of the relevant labor market. The labor market is defined as employers and jurisdictions that closely approximate the size and/or services of the City of Fort Collins. This market will primarily consist of Front Range communities, but may also include the state of Colorado or regional data from both the private and public sectors. Salaries will be calculated at the 70th percentile by taking the pay range maximums of comparable market data and establishing a point wherein 30% of the salaries are higher and 69% of the salaries are lower than the City=s pay range maximum. Benefits will be set at a point that is determined to be competitive, as compared to the relevant labor market, by examining market provisions and plan design for medical and dental insurance. Comment [JV5]: Move to HR Policies Financial Management Policies 2. Hourly, temporary or contractual employee compensation rates will be set according to the prevailing market rate for that type of job within the Northern Colorado market; the existing pay plan may also be considered for similar positions. These employees are a valuable resource in the provision of services for the community, and the City will set those compensation rates in a manner that will attract high quality employees. b. City Performance Goals and Measures Policies The goals of the City of Fort Collins are to provide our citizens with outstanding services. In doing so, the City will commit to attracting and retaining quality employees and to recognizing and rewarding their quality performance. To accomplish these goals, the City will: 1. Maintain staffing at a level that will enable the City to provide the necessary services in a high quality manner; 2. Provide ongoing assessment of customer satisfaction with the level of services provided by the City and continuously improve the quality of those services; 3. Develop and maintain a pay-for-performance review process to establish goals and to evaluate employee work performance; 4. Assess options to streamline operations by continuing to monitor the cost effectiveness of additional staffing vs. the cost of adding capital equipment; and 5. Measure the productivity and effectiveness of the City's work force. 3.5. MEDICAL INSURANCE AND RETIREMENT PLAN a. Medical Insurance In 1981, the City of Fort Collins set up a partially self-funded medical insurance program. The objective of a self-funding program is to reduce the cost of medical insurance by assuming the risk for certain plan expenses. Assuming a portion of the risk lowers the amount of charges compared to a conventional full insurance plan. For most of the last 22 years, the City has found this funding method to be a cost-effective means of providing a very desirable employee benefit. To administer the self-funded and insured portions of the medical insurance plans, the City conducts a competitive proposal process every five years or more often if required. The insurance contracts are reviewed annually for both performance and cost. During the annual renewal process, the City negotiates to attain more favorable rates from insurance providers. The types of services contracted for include plan administrative services, stop-loss protection against unexpected expenses, life and accidental death and dismemberment insurance, and long-term disability coverage. Comment [JV6]: Update needed, remove all the non-policy elements. Keep as Council Finance Policy Financial Management Policies b. Retirement Programs The City of Fort Collins contributes to three types of pension plans, including: Financial Management Policies 1. Social Security; 2. 401(a) Money Purchase Plans for Service Directors, Classified and Unclassified Management, Police and Fire; and 3. 401(a) Defined Benefit Plan - the General Employees Retirement Plan. This plan is no longer open to new participants. For the Social Security program, the City follows the program guidelines of the Social Security Administration. The Finance Department makes the appropriate employer and employee contributions with the bi-weekly payroll checks. The City uses private companies to operate the money purchase plans. For City employees, the ICMA Retirement Corporation administers the money purchase plans. For employees of the Poudre Fire Authority, Prudential Management Investment Services administers the money purchase plan. The City, through the Finance and Human Resource Departments, administers the defined benefit plan. In 1998, the General Employees Retirement Plan offered its members the opportunity to transfer their assets to a money purchase plan. Of over 800 members, 368 members decided to move to the money purchase plan. As of December 31, 1998, $9 million of plan assets were transferred to the plan. The rate of contribution for the City administered plan is based upon an actuarial valuation to determine the plan=s normal cost and unfunded liability for benefits. The City will maintain contribution rates at a level sufficient to meet all current normal costs of the pension plan. Should an unfunded liability be determined for the defined benefit plan, such liability will be amortized over a period not to exceed twenty years. In addition to the pension programs, the City offers deferred compensation plans to City and Poudre Fire Authority employees as an adjunct to the general retirement plan. This helps the City maintain comparability with benefits provided by other Front Range communities. Employee participation in the deferred compensation plan is optional. The Budget incorporates the following rate requirements to provide funding support for this retirement program policy: Normal Costs Social Security Contribution General Employee Retirement Money Purchase Police/Fire Money Purchase Management & Classified 1,2,3,4 City Contribution 7.65% 4.5% 8%/8% 3%-10% Employee Contribution 7.65% none 8%/10% 0%-6% (1) For the City Manager, City Attorney, Municipal Judge, and Services Directors, the City contributes at a rate of 10% of base salary. There is no employee match required. (2) For Unclassified Management and Department Heads, the City contributes either 3% if the employee is in GERP or if the employee has the City contribute to the deferred compensation plan or 7.5% if the Financial Management Policies employee has opted out of the GERP and does not have the City contribute to the deferred compensation plan. Employees in this category contribute 6%. (3) For classified employees who transferred from the General Employee Retirement Plan in 1998, the City contributes 7.5%. If the classified employee remains in the GERP, the contribution rate is 3%, and if the employee has the City contribute to the deferred compensation plan, the contribution rate is 4.5%. Employees contribute either 0% or 3% of their salary. (4) The maximum contribution to a 401 money purchase plan is the lesser of 25% of salary or $40,000. This maximum is indexed for inflation. The table below shows the contribution rates to the 457 deferred compensation program: Deferred Compensation City Contribution 3% to 7.5% Employee Contribution up to 25% of salary, not to exceed a total of $15,000 3.6. FACILITY MAINTENANCE AND REPAIRS a. Maintenance, Repair & Replacement (MM&R) 1. MAINTENANCE B The upkeep of building systems to realize their anticipated useful life. Includes periodic actions to assure continued service, operational efficiency, or to prevent breakdowns (for example, changing filters and belts on HVAC equipment.). 2. REPAIR/REPLACEMENT B Actions needed to restore building systems/ components to a functional condition. Performed when systems/components have reached their useful life; become obsolete; pre-maturely worn out; or have failed (i.e., roof replacement). b. Priorities for Maintenance and Repair Funding 1. Life, health, and safety (for example, heating system repair) 2. Protect Capital Investment (preventative maintenance) 3. Repair and Restoration These priorities are used as the basis for funding recommendations in the budget process. c. Funding Policy/Target The City of Fort Collins recognizes the need to maintain City buildings to adequately support provision of services to its residents. The ongoing funding Comment [JV7]: Move to Operation Services Policies Financial Management Policies target for M&R of General Government facilities is 4% of Current Replacement Value (CRV) for occupied facilities. Financial Management Policies 3.7. POUDRE FIRE AUTHORITY - REVENUE ALLOCATION FORMULA In December of 1981, the City and the Poudre Valley Fire Protection District created the Poudre Fire Authority (PFA) through an intergovernmental agreement. The PFA provides fire protection services to Fort Collins and the surrounding area. The agreement specifies a Revenue Allocation Formula (RAF) for defining the City's contribution to the PFA for operations and maintenance. Originally, for PFA's operating costs, the City shared property tax and sales and use tax collections. In addition to operating costs, the agreement further provides authorization for the PFA to request funds for capital costs pursuant to the procedures set by the City and District. PFA's capital needs include land acquisition, construction of additional stations, and acquisition of major fire fighting apparatus. The RAF has served as the Poudre Fire Authority's funding mechanism from 1981 through the 1993 budget. After the State Constitution was amended in 1992, the RAF was revised. In its original form, the Revenue Allocation Formula allowed the PFA to realize the full extent of growth in sales and use tax and property tax collections. Article X, Section 20 of the State Constitution now limits the rate of growth to a combination of the Denver-Boulder-Greeley Consumer Price Index and additions to the local property tax base primarily due to construction and annexation. Accordingly, the Revenue Allocation Formula for the City's contribution to the PFA has been restructured to fit within the constraints of Article X, Section 20. The City will continue its current policy of funding PFA capital needs by dedicating one mill of the City's total mill levy. The revenue from the dedicated mill will be managed according to the property tax mill levy and revenue limitation provisions of Article X, Section 20. The City's contribution to PFA for operation and maintenance will be calculated by the Revenue Allocation Formula. The Revenue Allocation Formula allocates to PFA 67.09% of the property tax mills available for operations and 0.303 of one cent of the City's 2.25 cent sales and use tax applicable to all taxable sales and uses. The resulting contribution for operations and maintenance will then be compared to the constitutional growth limits. The City's operation and maintenance contribution to PFA will be the lesser of the contribution as determined by the Revenue Allocation Formula or the allowable contribution in accordance with the limits imposed by Article X, Section 20 of the State Constitution. 3.8. REBATE PROGRAMS The City recognizes that certain segments of its population, specifically the disabled and senior citizens on fixed incomes, may be unable to keep pace with increasing taxes and utility costs. In an effort to partially offset the cost of property taxes, utility billings and sales taxes on these segments of its population, the City has established several rebate programs, as follows: a. Property Tax and Utility Charge Rebate Program These programs provide financial assistance to disabled residents and senior citizens, in the form of an annual rebate on property tax and utility charges, who qualify under residency and income guidelines. Comment [JV8]: Redundant with old IGA. Remove from Council Financial Policy. Add to new CFO General Policy Comment [JV9]: Not current. Redundant with Code Ordinances. Add to new CFO General Policy Financial Management Policies b. Sales Tax Rebate on Food Program The Council recognizes that sales tax on grocery food is a higher proportion of low- income individuals and families than higher income individuals and families. For this reason, the City specifically excluded tax on the sale of grocery food when enacting three 0.25 cent sales and use tax extensions that went into effect in January 2006. In November 2002 voters approved the renewal of the ANatural Areas and Parks: one-quarter cent sales and use tax to continue the City=s existing open space program. The tax was renewed for a period of 25 years, ending December 31, 2030. In April 2005, voters approved a City-initiated ballot measure which extends the Street Maintenance and Transportation@ one-quarter cent sales and use tax to continue the City=s Street Maintenance Program. The one-quarter cent tax for Street maintenance was renewed for a period of 10 years, ending December 31, 2015. In November 2005, voters approved a City-initiated ballot measure which extends the ACommunity Enhancements Projects@ one- quarter cent sales and use tax to continue the City=s capital improvement program. The tax was renewed for a period of 10 years, ending December 31, 2015. In addition to these measures, the City has a Sales Tax Rebate on Food Program. This program provides for an annual rebate to members of qualifying households on the basis of residency and income guidelines. Financial Management Policies FUND POLICIES 4.1. GENERAL FUND The General Fund is the largest and most diverse of the City's operating funds. It includes all resources not legally restricted to specific uses. The major source of revenue to the General Fund is sales and use tax, which accounts for approximately 60% of the revenue. Local property tax and Lodging Tax are also included, as are revenues derived from fees for services and materials, licenses, permits, and fines. a. Service Productivity Incentive Policy This Policy provides incentives for General Fund managers to improve planning and delivery of services. General Fund managers need a means by which to save unspent annual appropriations that result from increases in productivity. Without an incentive policy, managers tend to spend savings on short term needs rather than long-range service improvement. This policy creates incentives to more closely examine spending decisions and to consider program related savings before requesting additional General Fund resources. Prudent cost-effective service delivery requires long range planning of both costs and resources necessary to provide the service. This Policy provides a framework within which managers can develop strategic plans rather than short term, line item cost approaches. Allowing managers to save and use resources from increased productivity emphasizes responsibility and accountability for efficient service delivery. It further allows more flexibility for General Fund managers, similar to the management conditions of enterprise funds. b. Policy Structure This Policy defines savings as unspent department or division level appropriations which managers have not committed for future years. Committed appropriations include encumbrances, unspent lease purchase, and any planned re- appropriations. The Policy further requires that the savings result from increased productivity in service delivery. 1. Budget Office staff will adjust department or division savings within a service area for any over spending by another department or division within the service area. 2. Budget Office staff will determine the department and division annual savings after the annual financial report is completed. 3. The following criteria guide the use of carry-over savings and appropriations. (a) The City Manager must review and approve requests for use of savings. Comment [JV10]: Discontinued in 2007. Practice had become mostly underspending, not necessarily as a result of productivity savings. Repeal this section of policy Financial Management Policies (b) Increased productivity should generate the savings, rather than decreases in services. (c) Departments and divisions should use savings for the improvement of future service delivery. (d) City Council must approve, through an appropriation ordinance, the request for use of savings. (e) Annual General Fund revenue collections must be equal to or greater than the projected budget revenue. The eligible productivity savings shall be separately accounted for in a General Fund designated reserve account. Requests for the use of accumulated savings from prior year(s) held in this reserve can be made by the department or divisions at any time during the year. 4.2. ENTERPRISE FUNDS The City has five Enterprise Funds. These are Golf, Light & Power, Wastewater, Storm Drainage, and Water. The Enterprise Fund classification has been used to account for various services for which there exists a significant potential for financing through user charges. Historically, services were accounted for in an Enterprise Fund if financed more than 50% by user charges (of the five Enterprise Funds, all but the Golf Fund are also treated as "enterprises" within the meaning of Article X, Section 20 of the State Constitution). All Enterprise Funds will recover 100% of their costs. The goal of all enterprise accounts is self-sufficiency. Toward this end, funds that are not recovering at least 7595% of costs shall incrementally adjust their rate structures to achieve a positive income position. Those operations which cannot achieve a positive income position within a five year time frame may be accounted for as subsidized operations and not as Enterprise Funds. a. Utility Services The financial policies of the Utilities are administered in accordance with the City Charter. Each of the four utilities has been established, and is operated as an Aenterprise@ as permitted by the City Charter in accordance with Article X, Section 20 of the Colorado Constitution. 1. Fiscal Responsibility Per the Charter, the Financial Officer will maintain a standard system of accounting which shall, at all times, correctly reflect all financial operations of each utility. The Utilities may keep other supplemental records and data as are generally used by various segments of the utility industry. Comment [JV11]: Delete most sections that are both not current and/or covered by another Council Finance Policy Comment [JV12]: No policy elements Comment [JV13]: Redundant with charter Financial Management Policies The Financial Officer shall keep accounts of each Utility Fund separate and distinct from all other accounts of the City. Accounts for the Utilities shall contain proportionate charges for all services performed by other departments as well as proportionate credits for all services rendered to other departments. Financial Management Policies 2. Utility Rates Utility rates will be based upon the cost of service approach to reflect full distribution of costs to appropriate rate classes in order to effect equitable sharing of costs. Rates shall be established and maintained at a level sufficient to maintain positive net income in each of the utility funds after paying the full cost of operating and maintaining the utilities and keeping them in good repair and working order. Such rates shall also be sufficient to enable each utility, where applicable, to meet rate requirements of City or utility enterprise bond ordinances. b. Electric Utility The following policies pertain to the electric utility-Light and Power Fund. Since the utility is debt-free, these policies pertain primarily to maintenance of reserves. The utility shall be operated: 1. To provide an operating reserve equal to 8% of budgeted operating expenditures, excluding the cost of purchased power; 2. To provide a future capital improvements reserve in an amount equal to the average annual cost (excluding debt financing) of the approved five-year capital improvement plan, considering any changes which, from time to time, may be made in such plan; 3. To provide a purchase power reserve up to approximately 25% of the annual revenue from the sale of electrical energy. This reserve shall be used to partially off-set, defer, or mitigate the impact of purchase power cost increases due to factors such as federal power issues. Significant changes to the 25% level shall be reported to the Council during the budget process. 4. Priority for the accumulation of reserves shall be as follows: reserves shall first be accumulated in the operating reserve, second in future capital improvements reserve, third in the purchase power reserve. In addition, 1% of specified capital project appropriations shall be reserved and restricted for the City's Art in Public Places program. After reserves are funded, any remaining working capital shall be added to the purchase power reserve. c. Water Utility The following policies pertain to the water utility-Water Fund. 1. Pledge of Revenues The City=s general obligation water bonds are general obligations of the City secured by a covenant to levy taxes to make all bond payments. Thus, they are backed by the full faith and credit of the City. In addition, the City has pledged revenues from monthly water charges, plant investment fees, supplemental user fees (collected pursuant to the Anheuser-Busch Master Comment [JV14]: Relocate to another Council Financial Policy Comment [JV15]: Outdated, replaced by 5.0 Minimum Fund Balance Policy. Delete section. Comment [JV16]: Delete Section. Covered by other Policies. Comment [JV17]: Redundant with Bond Ordinances. Financial Management Policies Agreement--hence AA-B supplemental user fees@), investment earnings, and all other income derived from the operation of the Water Fund toward payment of the bonds. The City=s practice is to pay general obligation water bonds from revenues of the water system rather than through property taxation. The City has pledged the Water Fund revenues indicated above toward the payment of its water enterprise revenue bonds. 2. Flow of Funds The City has committed to maintain rates and charges sufficient to generate sufficient Anet revenues@ of the water system to pay principal and interest on its water revenue bonds and general obligation water bonds. Net revenues include all revenues referred to above, less operation and maintenance (O&M) expenses. O&M expenses are those expenses necessary to operate, maintain, and repair the water system, but do not include any allowance for depreciation or capital replacements and improvements. After all O&M expenses are paid, the remaining net revenue is pledged to pay the revenue bonds principal, interest, and related costs. After all O&M and debt services expenses are paid, the City is required to maintain the following revenue bond accounts: (a) Principal and Interest Reserve - at an amount equal to the accrued principal and interest on the water revenue bonds; (b) Debt Service Reserve - at an amount specified in the bond ordinances. Any remaining net revenues of the Water Fund may be used for any lawful purpose. These are used, in part, to fund major and minor capital improvements and the following reserves: (a) Operating Reserve--at an amount equal to 5% of the projected operating revenue for the ensuing year; (b) Water Rights Reserve--at an amount equal to the amount of cash in- lieu-of water rights payments and raw water surcharges less any expenditures for acquiring water rights; (c) Art in Public Places Reserve--at an amount equal to 1% of eligible capital projects whose appropriations exceed $250,000; (d) Capital Reserve--at an amount equal to remaining working capital after all other reserves are satisfied. 3. Rate Maintenance The Water Revenue Bond Ordinances require the City to charge and earn sufficient revenue to produce Anet pledged revenues@ that are equal to 110% of the actual annual debt service requirements for all outstanding water Comment [JV18]: Covered in Minimum Fund Balance Policy Comment [JV19]: Covered in first statement of Utilities Comment [JV20]: Redundant with bond ordinances, and each bond ordinance may have unique requirements. Financial Management Policies revenue bonds plus 100% of all costs payable to issuers of reserve fund sureties. Net pledged revenues are defined as all revenues of the Water Fund, less O&M expenses. Financial Management Policies 4. Water Capital Cost Financing Capital cost will be identified as either: (a) Minor Capital--relatively small capital acquisitions such as vehicles, lab equipment, or minor improvements; or (b) Capital Projects--major additions, improvements, or expansions to utility plant. Financing for minor capital is through water utility revenues. Financing for capital projects is principally through long-term debt financing. d. Wastewater Utility The following policies pertain to the wastewater utility-Wastewater Fund. 1. Pledge of Revenues In accordance with the City and Wastewater Enterprise Bond Ordinances (together the ABond Ordinances@), the City has pledged revenue from monthly sewer charges, plant investment fees, A-B supplemental user fees, investment earnings, and all other income derived from the operation of its wastewater utility toward the payment of its sewer revenue bonds. 2. Flow of Funds The first charge against Wastewater Fund revenue is operation and maintenance (O&M) expenses--those expenses necessary to operate, maintain, and repair the sewer system. After all O&M expenses have been paid, the remaining net revenue is pledged to pay the sewer revenue bonds principal, interest, and related costs. After all O&M and debt services expenses are paid, the City is required to maintain the following reserve accounts (listed in pledge order): (a) Principal and Interest Reserve--at an amount equal to the accrued principal and interest on the sewer revenue bonds; (b) Debt Service Reserve--at an amount specified in the bond ordinances; (c) Wastewater Bond Capital Reserve--at an amount equal to 25% of the O&M expenses budgeted for the fiscal year. Any remaining net pledged revenues of the Wastewater Fund may be used for any lawful purpose. These are used, in part, to fund major and minor capital improvements and the following reserves: Comment [JV21]: No real policy elements Comment [JV22]: Not current, Topics covered by other policies. Delete section Comment [JV23]: Redundant with Bond Ordinances, of which each may be unique. Financial Management Policies (a) Operating Reserve--at an amount equal to 5% of the projected operating revenue for the ensuing year; (b) Art in Public Places Reserve--at an amount equal to 1% of eligible capital projects whose appropriations exceed $250,000; (c) Capital Reserve--at an amount equal to remaining working capital after all other reserves are satisfied. 3. Rate Maintenance The Bond Ordinances require the City to charge and earn sufficient revenue to produce Anet pledged revenues@ that are equal to 115% of the actual annual debt service requirements for all outstanding bonds plus 100% of all costs payable to issuers of reserve fund sureties. Net pledged revenues are defined as all revenues of the Wastewater Fund indicated above, less O&M expenses. 4. Wastewater Capital Cost Financing Capital cost will be identified as either: (a) Minor Capital--relatively small capital acquisitions such as vehicles, lab equipment, or minor improvements; or (b) Capital Projects--major additions, improvements, or expansions to utility plant. Financing for minor capital is through utility revenues. Financing for capital projects is principally through long-term debt financing. e. Stormwater Utility The following policies pertain to the stormwater utility - Storm Drainage Fund. 1. Pledge of Revenues In accordance with the City and Storm Drainage Enterprise Bond Ordinances (together the ABond Ordinances@), the City has pledged revenue from monthly charges, stormwater development fees, investment earnings, and all other income derived from the operation of its stormwater utility toward the payment of its storm drainage revenue bonds. 2. Flow of Funds The first charge against Storm Drainage Fund revenue is operation and maintenance (O&M) expenses-those expenses necessary to operate, maintain, and repair the storm drainage system. After all O&M expenses Comment [JV24]: Covered in first paragraph on enterprise funds. Comment [JV25]: No real policy elements. Comment [JV26]: Not current, Topics covered by other policies. Delete section Comment [JV27]: Redundant with Bond Ordinances. Comment [JV28]: No real policy elmenets. Those are policy like are covered in the Minimum Fund Balance Policy. Financial Management Policies have been paid, the remaining net revenue is pledged to pay the storm drainage revenue bonds principal, interest, and related costs. After all O&M and debt service expenses are paid, the City is required to maintain the following reserve accounts (listed in pledge order): (a) Principal and interest reserve-at an amount equal to the accrued principal and interest on the storm drainage revenue bonds; (b) Debt service reserve-at an amount specified in the bond ordinances. Any remaining net pledged revenues of the Storm Drainage Fund may be used for any lawful purpose. These are used, in part, to fund major and minor capital improvements and the following reserves: (a) Operating Reserve--at an amount equal to 5% of the projected operating revenue for the ensuing year; (b) Art in Public Places Reserve--at an amount equal to 1% of eligible capital projects whose appropriations exceed $250,000; and (c) Capital Reserve--at an amount equal to remaining working capital after all other reserves are satisfied. 3. Rate Maintenance The Bond Ordinances require the City to charge and earn sufficient revenue to produce Anet pledged revenues@ that are equal to 125% of the actual annual debt service requirements for all outstanding bonds. Net pledged revenues are defined as all revenues of the Storm Drainage Fund indicated above, less O&M expenses. 4. Storm Drainage Capital Cost Financing Capital cost will be identified as either: (a) Minor Capital--relatively small capital acquisitions such as vehicles, equipment, or minor improvements; or (b) Capital Projects--major additions, improvements, or expansions to the storm drainage system. Financing for minor capital is through utility revenues. Financing for capital projects is principally through long-term debt financing. 4.3. INTERNAL SERVICE FUNDS Internal Service Funds account for certain support services provided to other funds and external agencies. By imposing charges to the users of the services, they recover their costs. The Finance Department may recommend the creation, continuation, or ending Comment [JV29]: Covered in first paragraph on Enterprise Funds. Comment [JV30]: No real policy elements. Comment [JV31]: Update Content. Move to new CFO General Policy Financial Management Policies use of an internal service fund based on documented customer needs and financial benefits. The City now operates five internal service funds. These include the Benefits Fund, Data & Communications Fund, Equipment Fund, Utilities Customer Service and Administration Fund, and the Self-Insurance Fund. The Internal Service Funds operate under the following guidelines. 1. Accounting guidelines limit internal service fund charges to the recovery of the cost of the service, including depreciation, rather than making a profit. Each fund's prior year financial statements and estimates of future costs form the basis for the calculation of charges. 2. Fund managers should set charges at a level to avoid adverse financial impacts on their customers. Fund customers and independent experts review and make recommendations about the level of charges. The Finance Department coordinates this analysis. 3. Internal service funds should compete with similar services offered by the private sector. The City staff will compare rates each year. If not competitive with the private sector, the Finance Department will analyze whether the private sector should provide the service. 4. Internal service funds may build up reserves. Customer-approved master plans and independent third-party actuarial reviews (for the Benefit and Self-Insurance funds) guide the level of reserves. Fund managers may spend reserves only for their approved purpose. 5. The City may buy equipment and facilities for the internal service funds through lease-purchase financing. Management's decision to recommend lease-purchase financing depends on: (1) cash flow needs; (2) budget constraints; (3) benefit to cost analysis; and (4) level of reserves. 6. Except for the Utilities Customer Service and Administration Fund, Internal service funds operate under the same guidelines and constraints as the General Fund and other governmental funds of the City. The Utilities Customer Service and Administration Fund operates under the guidelines of the Utilities Services Funds. 4.4. SPECIAL REVENUE AND DEBT SERVICE FUNDS Special Revenue Funds are used to account for the proceeds of revenue sources which are restricted by law or administrative action to expenditures for specified purposes. The Debt Service Fund is used for the payment of principal and interest on long-term debts. The major source of revenue in the Debt Service Fund is the Sales & Use Tax. a. Cultural Services & Facilities Fee Policy The Cultural Services & Facilities Fund shall budget to recover at least 40% of its total cost in revenue generated through implementing the following policy: Comment [JV32]: Not sure if this is being done Comment [JV33]: Need to update content. Many special revenue funds not listed and provided guidance or parameter. Comment [JV34]: Update and move to new CFO General Policy Financial Management Policies 1. Total revenue from fees and charges shall cover a minimum of 55% of Lincoln Center Operation and Maintenance and Performing and Visual Arts Programming Budgets. This includes revenues generated at the Lincoln Center from rentals, equipment, concessions and other miscellaneous sources and all total direct revenues from the Performing and Visual Arts Programming. A transfer from the General Fund will make up the difference between total revenue and expenditures. 2. The Cultural Services and Facilities Administration and Museum budgets provide minimal financial support. These programs are funded primarily by a transfer from the General Fund. 3. Major capital improvements and renovations will be financed through sources other than Cultural Services and Facilities Fund. 4. Solicitation of funds through donations, fund-raising events, and non- traditional sources shall be encouraged by the City staff, Lincoln Center League, the Cultural Resources Board and the City Council. Funding collected for any special purpose shall be earmarked for that purpose and those funds will be processed through the Fort Collins Foundation. b. Art in Public Places The purpose of this program is to encourage and enhance artistic expression and appreciation and to add value to the community through acquiring, exhibiting and maintaining public art. The program provides a funding mechanism and contains guidelines pertaining to the selection and acquisition of works of art, restrictions on the usage of certain funds available for the acquisition of art, upkeep and maintenance of public art, and other areas pertaining to the general administration of the program. Following is a summary of the guidelines which provide a framework for the implementation and administration of the City's Art in Public Places program. 1. Program Funding The APP program's link to funding is the City's Capital Improvements. (a) The program encourages City departments to include artistic and aesthetic values in all construction projects, including those costing less than $50,000, and all purchases of personal property that may be located or used in places open to the public. (b) For eligible projects costing between $50,000 and $250,000, a city selected artist must be utilized and participate in the design of the project for the purpose of incorporating works of art into all aspects of the project to the fullest extent possible within the project budget. Costs Comment [JV35]: Redundant with Code Ordinances. Delete sections. Financial Management Policies incurred by the artist in providing these services to the City are to be paid from the project budget. (c) Requests for appropriations in excess of $250,000 for eligible projects must include an amount equal to one percent (1%) of the amount appropriated at the time of the request. One percent of the amount appropriated will be earmarked for works of art and subsequently reserved, if not spent, in the Cultural Services and Facilities Fund, with the exception of eligible appropriations in the Utility Funds (Light & Power, Water, Wastewater, and Storm Drainage). Each of the Utility Funds is required to establish their own accounts and reserves for the APP program to account for the 1% earmarked for works of art for eligible utility projects. Financial Management Policies 2. Program Administration The APP Board, with the assistance of the APP Coordinator, will have the responsibility of coordinating and making recommendations regarding: (a) acquisition of works of art, (b) process to be used to select works of art and artists, (c) works of art selection criteria, (d) acquisition of donated artwork, (e) certain restrictions on the use of restricted program funds, and (f) encouraging donations for public art. Program guidelines also include definitions of art in public places, work of art, construction project, and APP Coordinator as well as provisions for the installation of art and contractual agreements between the City and artists or donors of works of art. 3. Reserves Art in Public Places Reserve - This reserve is restricted to Art in Public Places program use. Appropriations from this reserve and subsequent expenditures are restricted to the acquisition or lease of works of art, the maintenance, repair or display of works of art, and the expenses of administering the Art in Public Places program. The reserve is funded by amounts equal to 1% of eligible requested capital project appropriations in excess of $250,000, excluding Light & Power, Water, Wastewater, and Stormwater funds. These funds are required to set up their own restricted reserve accounts for Art in Public Places. c. Recreation Fund Fee Policy The following fee policy for the Recreation Fund was adopted by Resolution 1990- 132 on September 4, 1990. The goal of the policy is to provide for a more equitable distribution of the costs of recreational programs between program users and General Fund tax dollars. Costs associated with the Recreation Fund shall be defined as either Program Costs or Community Good Costs. 1. Program costs are directly associated with the activities and facilities used by the citizens, and include the following: Comment [JV36]: Update and move to CFO General Policy Financial Management Policies (a) Activity Costs (1) part time staff (2) materials (3) equipment (4) participant transportation (5) other costs directly associated with conducting activities (b) Facility Operation and Maintenance Costs (1) minor repairs (2) custodial equipment and supplies (3) building utilities (4) specialized items (5) other operations and maintenance costs directly associated with operating facilities Fees should cover the cost of the direct program experience and facilities used. However, fees may be established in accordance with the market value of the recreational services provided. The fees charged will not exceed the cost of providing direct services to program users. 2. Community Good costs are those costs that are necessary to provide a program but are not directly experienced by the user. Such costs include the following: (a) full time recreation staff (b) office operation costs such as telephone and computer charges (c) training costs (d) dues and subscriptions (e) insurance (f) office supplies and equipment (g) other costs not directly experienced by the users The General Fund shall cover "Community Good" costs. General Fund will also cover deficits in programs that cannot recover all their costs through fees. Generally, these include programs designed for special populations where it is not feasible to cover the total cost of participation, or programs, like youth sports where Council policy requires a fee discount. Because costs that are defined as "Community Good" costs are supported by the General Fund, they are subject to the same operational guidelines as established for other General Fund budgets. 3. Designated Reserves Revenues collected by the Recreation Division that exceed expenditures in any given fiscal year are used to fund designated reserves. Comment [JV37]: Covered in 5.0 Minimum Fund Balance Policy. Delete section. Financial Management Policies (a) Designated for Operations - to be maintained at 7% of the program costs portion of the fund, excluding one-time capital items and lease purchase payments. This reserve will only be used to cover revenue shortfalls. Financial Management Policies (b) Designated for Scholarships - established to pay fees for participants who are unable to afford full fees for programs; targeted at 3% of the program cost portion of the fund, but the level of funding is determined by the Recreation Manager, based on tentative plans for future needs and the availability of net resources. (c) Designated for Buildings and Improvements - to be used for one-time improvements and upkeep of recreation facility infrastructure. The reserve level is determined by the Recreation Manager, based on tentative plans for future needs and the availability of net resources. ` (d) Designated for Life Cycle/Capital Needs - to be used for one-time improvements and upkeep of equipment or for one-time purchases over what was budgeted to maintain safety and improve service delivery. The reserve level is determined by the Recreation Manager, based on tentative plans for future needs and the availability of net resources. (e) Designated for Programs - to be used for the start-up of new or the expansion of existing recreation activities and services which require additional revenue. Financial Management Policies CAPITAL IMPROVEMENT FUNDS 6.1. CITIZEN PARTICIPATION The City has a significant investment in its streets, public facilities, parks, natural areas and other capital improvements. In past years, the City Council and the residents of Fort Collins, through their actions, have demonstrated a firm commitment to, and investment in, the City capital projects. The importance of community involvement in the process of evaluating capital projects dates back to the 1970's. Over the years, citizen committees have been involved in planning for capital projects, such as the Designing Tomorrow Today (DT2) capital plan, Re-Evaluation of Capital Projects (RECAP) plan, Choices 95 capital improvements, and most recently the Building Community Choices capital improvement plan. This tradition has continued with the Building on Basics (ABOB@) capital improvement plan which went into effect on January 1, 2006. The residents of Fort Collins on November 1, 2005, approved the extension of a 0.25 cent sales and use tax (excluding grocery food), packaged as the Building on Basics capital plan, to finance streets/transportation projects and other community capital projects. This 0.25 cent sales and use tax extension became effective January 1, 2006 and will expire on December 31, 2015. 6.2. CAPITAL IMPROVEMENT POLICY The City will continue to operate under its existing Capital Improvement Policy: 1. The City will develop a multi-year plan for capital improvements and update it annually; 2. The City will identify estimated costs and funding sources for each capital project requested before it is submitted to City Council; 3. All City capital improvements projects will be administered in accordance with the Capital Projects Procedures Manual; 4. All City capital improvements will be constructed and expenditures incurred for the purpose as approved by City Council; 5. The City will use a variety of different sources to fund capital projects, with an emphasis on the Apay-as-you-go@ philosophy; 6. Funding for operating and maintenance costs for approved capital projects must be identified at the time projects are approved. Comment [JV38]: No policy elements. Delete this section of policy Comment [JV39]: Needs major update. Keep as Council Financial Policy Financial Management Policies 6.3. CAPITAL IMPROVEMENT PROGRAM The City=s Capital Improvement Program includes General City Capital, 1/4 Cent Building on Basics, Capital Expansion, Conservation Trust, Neighborhood Parkland, and Utility Capital. a. General City Capital General City Capital includes minor street repair projects, concrete sidewalk repair projects, construction and improvements to pedestrian access ramps, repair and maintenance of public facilities, funding for land acquisition and implementation of the City=s Civic Activity Center Plan and the General Government Services Strategic Facility Plan, and other miscellaneous projects. b. 1/4 Cent Building on Basics 1/4 Cent Building on Basics projects were approved by the voters of Fort Collins, at a municipal election on November 1, 2005. The voters approved the extension of a 1/4 cent sales and use tax, from which the proceeds would be dedicated to finance a variety of streets/transportation and community projects. Projects include improvements to Harmony Road, Timberline Road, from Drake Road to Prospect Road, North College Avenue improvements, intersection improvements and traffic signals at various locations, Senior Center Improvements, Lincoln Center renovation and cultural facilities plan, park upgrades and enhancements, Museum/Discovery Science Center joint facility, bicycle program implementation, pedestrian plan and disability access improvements, transit fleet vehicle replacement, library technology improvements, police services computer aided dispatch, records and jail management system replacement. c. Capital Expansion The Capital Expansion Fund provides for growth related capital improvements for Library, Community Parkland, Police Services, Fire Services, and General Governmental Facilities Services. Revenues from the capital expansion fees are a form of development fee imposed on new development. The purpose of the fees is to ensure that future growth and new development contribute its proportionate share of providing capital improvements associated with such growth. d. Utility Capital Improvements Utility Capital Projects, specifically Light & Power, Stormwater, Wastewater and Water are budgeted within the appropriate enterprise fund. Sources of funding for utility capital projects are bond proceeds and specific fees and charges. Examples of projects include undergrounding of overhead electrical lines, improvements to water and wastewater systems, and basin improvements associated with the City=s storm drainage system. Comment [JV40]: Informational Only, no policy elements. Delete these sections of Policy Financial Management Policies e. Conservation Trust Projects The Conservation Trust Fund provides for the receipt and expenditure of revenue received from the Colorado State Lottery. The Lottery revenue finances capital projects which relate to the acquisition and development of open space and trails including associated administrative costs and charges. Consistent with Colorado statutes, the operation and maintenance of existing open space and trails may also be financed by these funds. f. Neighborhood Parkland Projects The Neighborhood Parkland Fund provides for the development of neighborhood parks, as financed by a Parkland Fee. The Parkland Fee is collected from developers for each new dwelling unit established within the City limits. The Neighborhood Parkland Fund includes funds for the acquisition, development and administration of neighborhood parks. The associated operation and maintenance costs are included in the General Fund operating budget.