HomeMy WebLinkAboutAgenda - Mail Packet - 11/18/2014 - Council Finance & Ura Finance Committee Agenda - November 17, 2014Council Finance Committee & URA Finance Committee
Agenda Planning Calendar 2014-2015
RVSD 11/12/14 mnb
Nov. 17 TOPIC TIME WHO
CFC
On Bill Financing Interest Rate 20 min J. Phelan
Pilots & Street Lighting 30 min L. Smith
2014 Rebate Update 15 min K. Wiggett
New Financial Operating Policy 20 min J. Voss
URA Multiple URA Budget Items 30 min T. Leeson
Dec. 15 TOPIC TIME WHO
CFC
RMI Business Update 30 min M. Freeman
Review of prior Revenue Diversification Discussions 45 min J. Ping-Small
Establishing Parking Fund in 2015 15 min M. DeKock
Continuing Discloser Compliance (Debt) 15 min J. Voss
URA
Jan. 12 TOPIC TIME WHO
CFC
Economic Health Policy 30 min J. Voss
J. Birks
URA
Feb. 9 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
November 17, 2014
10:00 a.m. to 10:30
CIC Room – City Hall
Approval of the Minutes from the October 20, 2014 meeting
1. On Bill Financing Interest Rate 20 minutes J. Phelan
2. Pilots and Street Lighting 30 minutes L. Smith
3. 2014 Rebate Update 15 minutes K. Wiggett
4. New Financial Operating Policy 20 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
10/20/14
10:00 a.m. to 11:00 p.m.
CIC Room
Council Attendees: Ross Cunniff, Bob Overbeck, Mayor Karen Weitkunat
Staff: Darin Atteberry, Mike Beckstead, Josh Birks, Delynn
Coldiron, Chris Donegon, John Duval, Andres Gavaldon,
Laurie Kadrich, Sandra Lindell, Jessica Ping-Small, Lawrence
Pollack, John Voss, Katie Wiggett
Others: Dale Adamy; Kevin Jones, Chamber
Mike Beckstead requested that the order of agenda be changed to include an update on the
mall bonds and to put Jessica Ping-Small’s items first. The committee approved the change.
Bond Issuance for the Mall
Mike Beckstead said that the bonds for the mall closed on October 9, 2014. The bonds closed with an
interest rate of 5.92% (a weighted average), significantly lower than the original estimate of 7%. A
lower interest rate means a reduction in debt service of $18M from the original estimate and a
reduction in City Sales Tax revenue that will be needed to support bond payments.
Bob Overbeck said that he appreciated the update and would like to hear regular updates at Council
Finance Meetings as the mall progresses.
Approval of the Minutes
Bob Overbeck moved to approve the minutes from the September 15 meeting. Ross Cunniff seconded
the motion. Minutes approved unanimously.
Comprehensive Fee Study
Mike Beckstead noted that Staff has had multiple conversations with Council on Revenue Diversification
in the last few years. Out of these conversations has come a Comprehensive Fee Study and an updated
Revenue Policy which includes Revenue Diversification. The study Jessica will present today is a new
study that includes residential, commercial and industrial fee comparisons. Staff will give Council
Finance an overview of the study today; in December, Staff will provide an overview of Revenue
Diversification efforts and discuss next steps with the Committee.
Jessica Ping-Small explained that the 2010 study focused on methodology and contained a comparison
of residential fees. The scope of the current study focuses primarily on the fees as they exist today. The
study does not analyze the methodology for how the fees are derived, but instead educates on how the
City compares to other jurisdictions on the Front Range and serves as a tool for making informed
decisions regarding fees in the future.
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The scope of the Fee Study includes a comparative analysis of fees associated with the “cost to build” in
Fort Collins and surrounding communities. The fees include Building Permit, Development Review and
Capital Improvement Fees. Thirteen benchmark cities plus Larimer County were selected based on
proximity to Fort Collins and historical benchmark data.
Bob Overbeck asked why Weld County was not included when Larimer County was. Jessica explained
that it was not excluded for a particular reason; Larimer County was included because it is local.
Jessica summarized the study’s results. Below is a high level table of the overall Fort Collins ranking by
scenario.
*Includes Building Fees (Permit, Plan Review, Use Tax), Utility and Non-Utility Capital
Expansion Fees
Based on the fee study, Fort Collins ranked low for residential development. This ranking is driven by
Utility Capital Improvement fees that are significantly lower than most benchmark cities. Fort Collins
Utility Fees ranked 13 out of 15. However, Fort Collins ranked on the higher end of both commercial
scenarios. The Fort Collins fees are in in the top 3 for both Building fees and Non-Utility Capital
Improvement Fees. It is important to note that Use Tax is included in all scenarios.
Ross Cunniff asked if we had historical data on why the fees for Industrial and Commercial had become
higher than those in surrounding areas. Jessica answered that one notable driver was the Capital
Expansion Fee update which updated the basis of the fees to current actuals. An unintended
consequence of the update was to push up Fort Collins’s overall cost to build.
Jessica concluded that that the fee study uncovered several opportunities dependent on the growth
strategy. There are areas where fees could strategically be introduced, increased or decreased. In
December, Staff will seek direction for next steps.
The Mayor noted that the fees with the greatest disparity between the highest City and the lowest City
are the ones that stand out the most. She asked that Staff look at why Larimer County is high on
Commercial Retail in the area of non-utility fees when Larimer County is low on non-utility fees in all
other categories. Staff will follow up on the extremes in the December discussion.
Bob Overbeck said that a five-year history of these fees would be helpful to identify drivers. Mike
Beckstead noted that residential has been well tracked in the last five years and has remained relatively
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the same. Jessica and Laurie Kadrich will work to pull together as much historical data for the non-
residential scenarios as they can for the December meeting.
Woodward Rebate Appropriation Review
Jessica explained that the City’s agreement with Woodward specifies that Woodward is eligible for a rebate
in the following areas:
• Use Tax on Construction Materials and Eligible Equipment (up to 80%)
• Development Fees (100%)
• Capital Improvement Fees (up to 50%)
Staff worked with Woodward to develop a schedule for these rebates. Woodward agreed to submit two
applications a year. The first application covers January-June and includes Development Review and Capital
Improvement Fes. The second application covers Development Review and Capital Improvement Fees from
June-December as well as Use Tax for the entire year.
Key stipulations for receiving the rebates include:
• Of the rebate amounts eligible, 40% will be withheld in escrow dependent on Woodward
reaching the 1,400 employee mark by 12/31/18.
• Use tax and Capital Expansion fees include a backfill requirement by the General Fund which will
be accounted for at the time of appropriation.
• 100% of the Capital Improvement Fee rebate will be backfilled by the General Fund
• 100% of the dedicated taxes will be backfilled by the General Fund
• .25% Natural Areas
• .25% Streets and Transportation
• .25% Building on Basics Projects
• .85% Keep Fort Collins Great
• Rebate funds will be appropriated by City Council biannually as part of the rebate process.
Bob Overbeck asked if the required 1,400 employees included current employees. Mike answered that
Woodward had approximately 700 local employees at the time of the agreement. The 1,400 required by
12/31/18 includes 700 employees new to Fort Collins. Bob Overbeck asked that Staff be aware of whether
these employees are coming from the local population or if they are moving into the area as this may affect
affordable housing, crowding issues, etc.
Jessica explained that the Woodward Rebate appropriation for the period Jan – Jun of 2014 was for
$88,343.19. This amount is included in the appropriation ordinance going to Council on November 4.
Jessica explained that the funds for the rebate were put aside as the money came in. In early 2015, Staff
intends to bring another appropriation request to Council Finance before taking it to Council. The amount
of rebate depends on the amount of progress Woodward makes in coming months.
Council Finance supports the appropriation.
Long Term Financial Plan (LTFP)
Mike explained that the purpose of presenting the Long Term Financial Plan (LTFP) is to get Council
Finance’s response on its structure and assumptions before a draft is brought to Council in February
2015. Andres Gavaldon noted that the purpose of the LTFP is to provide a directional tool to highlight
potential issues. It will provide a base case 10 year view of revenue and expenditures based on key
assumptions and provide directional understanding of the gaps between various revenue and
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expenditure assumptions. The LTFP will also provide the ability to evaluate the impact of various
scenarios from the base case.
Bob noted that this tool could be helpful in evaluating the impact of financing things such as
sustainability initiatives. Mike noted that this tool could be helpful in running such scenarios as the
impact of the City deciding to take on maximum debt capacity.
Andres reviewed the scope of the LTFP, noting that nine funds have been discretely modeled and
included in the total City view. The Mayor asked why KFCG is broken out as a fund, but the other ¼ cent
taxes are not. John Voss explained that all sales taxes are included in the model; however the dedicated
taxes, such as the ¼ cent street maintenance tax, are not broken out of the funds they are dedicated to.
Mike Beckstead said that Staff would consider a way to make this clearer; perhaps a footnote could be
added to the information on funds.
Ross Cunniff suggested adding a column to the Correlation Matrix that spoke to the unpredictability
/ predictability of each forecast.
Andres noted that Staff aims for a February 2015 completion target date for council work session. The
results will be incorporated into the Strategic Planning Cycle. Throughout 2015, there will likely be a lot
of polishing and adjusting as Staff works with Council to cement the structure of this new tool. Once
finalized, the LTFP will be updated every two years.
Council Finance sees the LTFP as a useful tool and suggested that the LTFP be an ongoing process in
2015.
Annual Budget Adjustment Ordinance
Mike Beckstead explained that the Annual Budget Adjustment Ordinance is going to Council October 22.
Ross asked if expenses related to the Mountain Avenue weekend closures were included in this
ordinance. Darin said that it is not included in the current ordinance; Budget Staff will need to get police
input to see if the closures will require extra budget.
Other Business
Bob Overbeck asked whether Council Finance could have an update on the City’s low-income rebate
programs in November. Staff will bring an update in November or December of 2014.
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: John Phelan, Energy Services Manager
Mike Beckstead, Chief Financial Officer
Date: November 17, 2014
SUBJECT FOR DISCUSSION: On-Bill Financing Program Interest Rates
EXECUTIVE SUMMARY
The purpose of the On-Bill Financing pilot program (also known as the Home Efficiency Loan Program)
is to provide residential utility customers with low-cost financing for energy efficiency, solar
photovoltaic, and water conservation improvements to support the outcomes adopted in City of Fort
Collins policies and plans, such as the Climate Action Plan, Energy Policy and Water Conservation
Plan.
Staff presented a set of recommendations for revisions to Utilities On-Bill Financing (aka Home
Efficiency Loan Program) at the October 28, 2014 work session. Council directed staff to present
Program interest rates at the November 17 City Council Finance Committee meeting for further
clarification.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Staff is seeking agreement and direction for:
• The allowable range of interest rates which will be included in the rate ordinance updates for the
affected customer classes and service types.
• Guidelines for the selection of an annual interest rate, to be documented in the program rules and
regulations.
BACKGROUND/DISCUSSION
Staff presented a set of recommendations for revisions to Utilities On-Bill Financing (aka Home
Efficiency Loan Program) at the October 28, 2014 work session. Council expressed support for the
recommended modifications to the Program, including the costs, resources and timeline, and directed
staff to ensure the following are managed as part of the revised Program implementation.
• Setting interest rates which are attractive for customers, relevant with the market and limit Utilities
financial risk. Council directed staff to present Program interest rates at the November 17 City
Council Finance Committee meeting for further clarification.
Related to interest rates, the program is administered as follows:
• The allowable range of interest rates is set within each utility service type rate ordinance
• The program rules call for an interest rate to be set for the following calendar year by the financial
officer.
• Rates are intended to be fixed for the calendar year.
• Individual loan rates are fixed for the term of the loan.
When the program was launched in 2013, the interest rates were:
• The rate ordinance range was “prime plus 2% to 5%”
• Interest rates were set for two tiers based on credit score at prime plus 2% (5.25%) and prime
plus 3% (6.25%)
Interest rate changes made to the program as a result of the August 2013 Council Work Session:
• The rate ordinance range was a simplified “5% to 10%”
• Interest rates were set for two tiers based on credit score at 5% and 6%
On-Bill Financing Program Results
The following table lists a number of leading OBF programs with the intent of comparing program
performance and interest rates. While the data is limited, there are programs with good performance
with both low and moderate interest rates. Utilities staff has received on-going anecdotal feedback that
the 2013/2014 interest rates of 5 – 6% were dissuading customers from moving forward (feedback from
customers, contractors and energy advisors).
Program Inception Interest Rate Number of
Loans
Funding
Provided
FC HELP 2013 5% – 6% 20 $145k
MWE How$mart 2007 3% 1,000 $5M
South Carolina 2010 2.5% 125 $1M
Clean Energy
Works Oregon
2006 5.99% 3,000 $35M
NYSERDA
(New York)
2012 3.49% 1,096 $11.5M
Key Considerations for Setting of Interest Rates
Considerations for setting interest rates include:
• The Utilities anticipated “cost of capital”
• Market rates for alternative investments of reserves
• Possible use of third party capital in the future
• Other City programs which offer loans (e.g. historic preservation, radon)
• Participation targets related to Climate Action Plan and Energy Policy
• Simple and predictable for clarity of outreach and administration
Recommendations
For establishing the allowable range of interest rates in the rate ordinance, staff recommends a range
from 2.5% to 10%. This range is broad enough to allow for setting of annual interest rates at values
which should be valid for anticipated economic conditions.
For the establishment of annual interest rates, staff recommends that the OBF Rules and Regulations
reference the key considerations noted above which will allow the financial officer to establish rates on
an annual basis which balance the key considerations and market conditions.
ATTACHMENTS
1) On-Bill Financing Presentation, Council Finance Committee, November 17, 2014
1
On-Bill Utility Financing
Interest Rate Review
and Recommendations
City Council Finance Committee
November 17, 2014
2
Staff is seeking agreement and direction for:
• The allowable range of interest rates which will be
included in the rate ordinance updates for the
affected customer classes and service types
• Guidelines for the selection of an annual interest
rate, to be documented in the program rules and
regulations
• Direction for the setting of interest rates for 2015
GENERAL DIRECTION SOUGHT AND
SPECIFIC QUESTIONS TO BE ANSWERED
3
Related to interest rates, the program is administered as
follows:
• The allowable range of interest rates is set within each
utility service type rate ordinance
• The program rules call for an interest rate to be set for
the following calendar year by the financial officer.
• Rates are intended to be fixed for the calendar year.
• Individual loan rates are fixed for the term of the loan.
Current Program - Structure
4
2013
• The rate ordinance range was “prime plus 2% to 5%”
• Interest rates were set for two tiers based on credit score at
prime plus 2% (5.25%) or prime plus 3% (6.25%)
2014
• The rate ordinance range was a simplified “5% to 10%”
• Interest rates were set for two tiers based on credit score at
5% or 6%
Current Program – Interest Rates
5
Program Comparison
Program Inception Interest Rate Number of
Loans
Funding
Provided
FC HELP 2013 5% – 6% 20 $145k
MWE
How$mart
2007 3% 1,000 $5M
South
Carolina
2010 2.5% 125 $1M
Clean
Energy
Works
Oregon
2006 5.99% 3,000 $35M
NYSERDA
(New York)
2012 3.49% 1,096 $11.5M
6
Interest Rate Considerations
Considerations for setting interest rates include:
• The Utilities anticipated “cost of capital”
• Market rates for alternative investments of reserves
• Possible use of third party capital in the future
• Other City programs which offer loans (e.g. historic
preservation, radon)
• Participation targets related to Climate Action Plan and
Energy Policy
• Simple and predictable for clarity of outreach and
administration
7
• For establishing the allowable range of interest
rates in the rate ordinance, staff recommends
a range from 2.5% to 10%
• For the establishment of annual interest rates,
staff recommends that the OBF Rules and
Regulations reference the key considerations
noted above
Recommendations
8
Discussion
9
Backup Slides
10
Borrowing Cost
At 10 years, for every 1% delta
between borrowing and loan rates,
cost to City is ~$600k
$ (200)
$ 0
$ 200
$ 400
$ 600
$ 800
$ 1,000
$ 1,200
$ 1,400
$ 1,600
$ 1,800
$ 2,000
0.00% 1.00% 2.00% 3.00% 4.00% 5.00%
10 Year Cost ($ in 000's)
Customer Interest Rate
Borrowing Cost of $10M in Loans (10 yr)
Capital borrowed
at 4.5%
$ 0
$ 500
$ 1,000
$ 1,500
$ 2,000
$ 2,500
$ 3,000
$ 3,500
$ 4,000
0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00%
15 Year Cost ($ in 000's)
Customer Interest Rate
Borrowing Cost of $10M in Loans (15 yr)
Capital borrowed
at 5.25%
At 15 years, for every 1% delta
between borrowing and loan rates,
cost to City is ~$900k
11
Energy & Capital Calculator
10%
15%
20%
25%
30%
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
$5,500
$6,000
$6,500
$7,000
$7,500
$8,000
$8,500
$9,000
$1,000 $1,200 $1,400 $1,600 $1,800 $2,000
Typical tier 1 furnace project
Typical tier 2 furnace project
Loan Term
15
(years)
Rate
3%
Annual
Utility Cost
$1,750
Percent
Savings
20%
Available
Capital
$5,093
Typical insulation & air sealing project
Annual Utility Bill
Available Capital
12
Interest Rate:
• Revise allowable range of interest rates to 2.5% - 10%
• Revise qualifications to single tier and interest rate
• Rate intended to be “low but not zero” to attract customers
and allow for adjustments
• Considerations for setting rate include: Other City loan
programs, market rates for alternative investments,
potential future use of 3rd party capital
Actions required:
• Council adoption of revised rate ordinance language for
interest rate range
• Revise administrative rules and regulations for single tier
Recommendation: Interest Rate
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Lance Smith
Ellen Switzer
Date: November 17, 2014
SUBJECT FOR DISCUSSION: Options for Funding Street Lighting
EXECUTIVE SUMMARY:
Ordinance 146, 2014 was proposed to revise City Code to specify that the operation and
maintenance of the street lighting system was an in kind payment by the Light and Power Fund
in lieu of franchise fees. The ordinance did not change the existing practice or policy.
Ordinance 146, 2014 was approved on first reading after the original 3-3 vote against the
ordinance was reconsidered on October 28, 2014. The second vote was 4-2 with Council
Members Cunniff and Overbeck voting against the Ordinance. As part of the discussion on
October 28, Council asked for a further discussion of options for funding the City’s street
lighting system prior to second reading. Second reading is scheduled for November 18, 2014
although staff is recommending postponement of the item until December 16, 2014.
Questions asked by Council included:
Why should street lighting be considered an “in kind” payment?
Why should City Council introduce a new franchise fee?
Why shouldn’t City Council increase Light and Power’s Payment in Lieu of Taxes and Franchise
Fees (PILOTs) and have the General Fund assume responsibility for the cost of street lighting?
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Council Finance Committee support Staff’s recommendation to approve the 2
nd
reading
of Ordinance 146, 2014 codifying the responsibility for the cost of street lighting as a L&P
payment to the General Fund in lieu of taxes and/or franchise fees?
Would the Council Finance Committee like a City Council work session in early 2015 to discuss
Enterprise Funds payment in lieu of taxes and franchise fees with the full Council?
BACK GROUND
Light and Power has been assigned the responsibility for the cost of operations and maintenance
of the City’s street lighting system since 1986. Prior to 1986, the City’s General Fund was
responsible for the operation and maintenance costs of street lighting. The City Code contained
a municipal street lighting electric rate to recover the cost from the General Fund. In 1986, City
Council approved Ordinance 98, 1986 deleting the street lighting rate schedule thereby making
the Light and Power Fund responsible for the cost of street lighting operations and maintenance.
This was based on a City Charter clause delineating the responsibilities of the Light and Power
Utility. In 1987, the citizens approved changes to the Charter that removed specific
responsibilities of City departments. Since 1987 both the Charter and Code have remained silent
on the responsibility for street lighting. The City Attorney’s Office has recommended that the
City Code be modified to specify that this on-going non-cash street lighting contribution by the
Light and Power Fund to the General Fund be codified to clarify that the street lighting services
provided by Light and Power are an in kind payment in lieu of franchise fees.
RESPONSE TO QUESTIONS POSED ON FIRST READING
Q. Why should street lighting be considered an “in kind” payment?
A. If Ordinance 146, 2014 is passed on second reading, street lighting would be considered an in
kind payment instead of increasing the current 6% in lieu of taxes and franchise payment. A
franchise fee is paid to the city to allow utilities permission to use a municipality’s rights of way.
Typical Colorado franchise fees are 3% of operating revenues. The Light and Power Enterprise
Fund is providing street lighting services without charge to the General Fund in lieu of a portion
of the cash payment for franchise fees for use of the City’s right of way that would be assessed to
a private utility. This in kind payment has been the practice for 28 years and is consistent with
how many other Colorado municipal utilities are operating. This in kind payment is already built
into the 2015 electric rates being considered for Second Reading on November 18, 2014.
Q. Why should City Council introduce a new franchise fee?
A. If Ordinance 146, 2014 is passed on second reading the provision of street lighting by Light
and Power would be considered a in kind payment in lieu of franchise fee and the 6% PILOT
would remain the same. A payment in lieu of franchise fees is not a new concept or fee. City
Charter Part III, Section 23 states: “If the utility is subject to a payment to the general fund in
lieu of taxes and franchise fees, an estimate shall be made of the amount of taxes and franchise
fees that would be chargeable against such utility if privately owned, and the amount of such
payment, as determined by the Council under Article XII, Section 6 of this Charter, shall be
charged against the utility fund.”
Per City Code, the Light and Power Fund pays 6% of operating revenue to the General Fund in
lieu of taxes and franchise fees. The Light and Power Utility also currently reports the cost of
street lighting as a non-cash payment to the General Fund in lieu of taxes and franchise fees
however the transaction is not recorded in City financial statements. The BFO Offer Summary
20.1 Utilities Light and Power Payments and Transfers states:
“PILOTs are mandated by Charter and set by City Council by ordinance at an amount equal to
6% of the Utilities’ operating revenues from the sale of electricity. The payment compensates the
General Fund for the revenue it would receive in taxes and franchise fees if the Utility were
privately owned. In addition to this cash payment, the Utility operates and maintains the City's
street lighting system at no cost to the City General Fund. This is a non-cash contribution
equating to approximately $1.2 million per year.”
Based on advice from the City Attorney’s Office, Ordinance 146, 2014 specifies that the
contribution for street lighting should be identified as a portion of the payment in lieu of
franchise fees.
If a decision is made to no longer consider this as an in kind payment to the General Fund it will
be necessary to develop and adopt a new Street lighting rate schedule and modify all other rate
schedules. The General Fund would then be responsible for all costs of street lighting.
Q. Why shouldn’t City Council increase Light and Power’s Payment in Lieu of Taxes
(PILOTs) and Franchise Fees and have the General Fund assume responsibility for the cost
of street lighting?
A. This is certainly an option for Council to consider. Based on staff surveys of some Colorado
municipal electric utilities, payments to the municipal general funds vary from 5% to 12% of
operating revenues. The provision of in kind services provided to the general fund also varies
between Utilities. The following table below summarizes the survey results.
City
Payments in Lieu of
Taxes and Franchise Fees
In Kind Services Provided
to General Fund
Date of
Data
Fort Collins 6% Street lights 2014
Colorado Springs 6.173 mills/kWh or ~5.4% None 2014
Longmont 8% Street lights, Traffic signals,
flashers subsidized rates for
municipal buildings, additional
cash payments for trees and
economic development
2014
Loveland 7% Street lights, Traffic signals, school
flashers, other misc. services
2014
Fort Morgan 12% None 2012
Fountain 5% Minor such as hanging
holiday lights
2012
Glenwood Springs 3% in lieu of taxes, 3% in
lieu of franchise
None 2012
Per the most recent American Public Power survey, in 2010 investor-owned distribution utilities
paid a median of 3.9 percent of electric operating revenues in taxes and fees to state and local
governments. The 50 percent of investor owned utilities in the middle range made payments
ranging from 2.5 to 5.8 percent.
There are two viable options for paying for the cost of street lighting. Pros and cons of each are
shown below.
Option 1 – Increase the Light and Power’s Fund Payment in Lieu of Taxes and Franchise
Fees from 6% to 7.2% and make the General Fund responsible for the cost of operation
and maintenance of the street lighting system.
Pros:
• Cost neutral to electric rate payers
• Cost neutral to the General Fund
• 7.2% PILOTs is reasonable in comparison to neighboring public utilities
Cons:
• Would require an ordinance to revise all 2015 electric rate schedules and establish new
streetlight rate
o Increase PILOT to 7.2%
o Reduce electric rates distribution facilities charges
• Would require an appropriation ordinance to increase the General Fund’s 2015 budget
• Street lighting costs as percentage of L&P operating revenues vary year to year
• General Fund could be deemed responsible for upgrades to street lighting system (LEDs)
• 7.2% PILOTs is high in comparison to private investor owned utilities
Option 2 – Change City Code to make the operation and maintenance of the City’s street
lighting system an additional payment in lieu of franchise fee.
Pros:
• Code clarification only – no change in policy or practice and the intent of Ord. 95, 1986
• No changes needed to 2015 electric rate schedules or 2015 General Fund budget
• Cost neutral to electric rate payers
• Practice is utilized by several other neighboring municipal utilities
Cons:
• PILOTs transaction recorded in City’s financial statements understates the value of
L&P’s contributions to the General Fund
STAFF RECOMMENDATION:
Staff recommends Option 2 which could be accomplished if Council approves Ordinance 146,
2014 on second reading.
.
BACKGROUND/DISCUSSION:
ATTACHMENTS:
1: AIS from October 28, 2014
Agenda Item 2
Item # 2 Page 1
AGENDA ITEM SUMMARY October 28, 2014
City Council
STAFF
Ellen Switzer, Utilities Financial Operations Manager
Lance Smith, Strategic Financial Planning Manager
Kevin Gertig, Utilities Executive Director
SUBJECT
First Reading of Ordinance No. 146, 2014, Revising Chapter 26 of the City Code Regarding Payments in Lieu
of Taxes and Franchise Fees, and Specifying that the Operation and Maintenance of the Street Lighting
System is an In Kind Payment by the Light & Power Fund in Lieu of Taxes and Franchise Fees.
EXECUTIVE SUMMARY
The purpose of this item is to codify the longstanding City policy and practice whereby the Light & Power Fund
has been responsible for providing municipal street lighting as an in-kind payment to the General Fund as part
of the Electric Utility’s payment in lieu of taxes and franchise fees. The Ordinance also revises the language
related to the Water and Wastewater Funds’ required 6% payment to the General Fund to clarify that this is a
payment in lieu of taxes and franchise fees (as opposed to just a payment in lieu of taxes). This change is
consistent with Article V, Section 23 of the City Charter and with the wording used in City Code to reference
the same fee paid by the Light & Power Fund.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
BACKGROUND / DISCUSSION
Prior to 1986 the operation and maintenance costs related to street lighting were paid by the City’s General
Fund. In 1986, City Council determined that the Electric Utility should assume fiscal responsibility for operating
and maintaining the street lighting system. Ordinance No. 095, 1986 deleted the municipal street lighting rate
schedule from the City Code and street lighting costs were no longer billed to the General Fund. The City
Council in 1986 deemed this change to be consistent with the then-current Charter, which stated that the utility
was responsible for the “designing, construction, reconstruction, addition, repair, replacement, maintenance,
supervision, and operation of the water and light plants, and the street lighting system and equipment.” The
Agenda Item Summary presented with Ordinance No. 095, 1986 referenced this expense as an additional
payment in lieu of taxes.
In 1987, voters approved changes to the City Charter which eliminated the specific duties of many
departments. At that time, all references to which department or fund bore the responsibility for street lighting
were removed from the Charter. The Charter change was not intended to change the Electric Utility’s
responsibility for the street lighting system, but rather to remove the specific codified list of duties and
responsibilities for various funds and departments from the Charter to allow more administrative flexibility. The
Charter has been silent on street lighting since 1987.
The Light & Power Fund has maintained fiscal responsibility for the street lighting system since 1986. In
addition, City Council has set the Light & Power Fund’s cash payment in lieu of taxes and franchise fees at 6%
of the Fund’s operating revenues. (The cash payment was increased from 5% in 1989.) The proposed
Agenda Item 2
Item # 2 Page 2
Ordinance codifies the current practice of requiring the Electric Utility to maintain fiscal responsibility for the
operation and maintenance of the street lighting system in addition to payment of taxes and franchise fees. No
changes are proposed for the cash payment of 6% of operating revenues. The Ordinance is consistent with
the direction given by City Council when adopting Ordinance No. 095, 1986 and does not change any current
practice or policy. Since the costs of street lighting have been built into the electric rates since 1986 there will
be no rate impact to rate payers related to the Ordinance.
The Light & Power Fund, Water Fund, and Wastewater Fund each pay 6% of operating revenues to the
General Fund. In the City Code this payment is referred to as a “payment in lieu of taxes and franchise” in the
Light and Power Fund, but as a “payment in lieu of taxes” in the Water and Wastewater Funds. The City
Charter at Article V, Section 23 characterizes the payments as “payment to the general fund in lieu of taxes
and franchise fees”. The omission of the reference to franchise fees appears to have been inadvertent. This
Ordinance also changes the wording in the Water and Wastewater Funds to be consistent with the Charter and
with similar references to the same payments by the Light & Power Fund in the City Code. The Stormwater
Fund is not subject to a payment in lieu of taxes and franchise fees, so no corresponding update is required to
that portion of the City Code.
FINANCIAL / ECONOMIC IMPACTS
In 2013, the cost of operating and maintaining the street light system totaled $1.3 million. The costs of street
lighting have been built into the electric cost of service and electric rates since 1986, and the current request to
amend the City Code under this Ordinance will have no rate impact.
Payments in lieu of taxes and franchise fees vary among Colorado cities and throughout the country as do in
kind services. The amounts paid to the General Fund by the Light & Power, Water, and Wastewater Funds
are within normal ranges. A 2012 survey of the fees and free services is attached for reference.
ENVIRONMENTAL IMPACTS
None identified.
BOARD / COMMISSION RECOMMENDATION
Since there are no policy changes proposed, and this Ordinance substantially addresses issues of clarification
of existing practices, this item was not reviewed by the Energy or Water Boards.
PUBLIC OUTREACH
Out-of-city customers were notified of the proposed ordinance and a public notice was issued in the
Coloradoan.
ATTACHMENTS
1. Survey of Municipalities (PDF)
2. Ordinance No. 095, 1986 (PDF)
3. Powerpoint presentation (PDF)
ATTACHMENT 1
ATTACHMENT 2
1
Street Lighting
Ordinance No. 146, 2014
City Council
October 28, 2014
1st
Reading
2
Background – PILOTs
• The electric, water and wastewater utilities
are required by City Charter to pay the
General Fund an amount equivalent to the
taxes and franchise fees such utilities would
pay if they were privately owned.
• The fee is called a payment in-lieu of taxes
and franchise fees (PILOTs)
• The 6% PILOTs is set by City Council by
ordinance
3
Background - Streetlights
• Prior to 1986 street lighting was paid for by the General Fund through
a monthly streetlight rate
• In 1986, it was determined that the City Charter would permit L&P to
assume these costs
• Ordinance 98, 1986 deleted the Streetlight Rate Schedule from City
Code
• City Charter was simplified in 1987 and became silent on the
responsibility for street lighting
• Since 1986 L&P has paid for the energy and O&M of the street
lighting system and has been considered a non-cash PILOT
4
What the Ordinance does?
1. Revises City Code to align with long term
practice/policy assigning fiscal responsibility
of the municipal streetlight system to the
Light and Power Fund
– Clarifies that the in kind service is a franchise fee in
addition to the 6% PILOT
– No financial impact to Light and Power or rates
5
What the Ordinance does?
2. Clarifies that the PILOT for the Water and
Wastewater utilities is for payment in-lieu of
taxes and franchise fees
- 1 -
ORDINANCE NO. 146, 2014
OF THE COUNCIL OF THE CITY OF FORT COLLINS
REVISING CHAPTER 26 OF THE CODE OF THE CITY OF FORT COLLINS
REGARDING PAYMENTS IN LIEU OF TAXES AND FRANCHISE FEES, AND
SPECIFYING THAT THE OPERATION AND MAINTENANCE OF THE STREET
LIGHTING SYSTEM IS AN IN KIND PAYMENT BY THE LIGHT & POWER FUND IN
LIEU OF TAXES AND FRANCHISE FEES
WHEREAS, prior to July 1, 1986, the operation and maintenance costs related to the
City’s street lighting system were paid by the City’s General Fund; and
WHEREAS, on July 1, 1986, City Council adopted Ordinance No. 095, 1986, which
removed the municipal street lighting rate schedule from City Code and stopped internal billing
of street lighting costs to the General Fund; and
WHEREAS, City Council at the time determined it was consistent with Article IX,
Section 2 (B) of City Charter, as it existed in 1986, for the Electric Utility to assume fiscal
responsibility for operating and maintaining the street lighting system; and
WHEREAS, the agenda materials accompanying Ordinance No. 095, 1986, characterized
the shift in fiscal obligation as an additional payment by the Electric Utility in lieu of taxes; and
WHEREAS, voters in the City approved City Charter revisions in 1987 that eliminated
the specific duties of many City departments and created broader administrative flexibility in
fund and department management; and
WHEREAS, in streamlining the statements of department’s duties, the 1987 Charter
revisions also removed any reference to which department(s) or fund(s) bore responsibility for
street lighting costs; and
WHEREAS, since 1987, the Light & Power Fund has maintained fiscal responsibility for
the street lighting system, and the costs of street lighting have been incorporated into the electric
rates paid by customers of the Electric Utility; and
WHEREAS, City Council has established, pursuant to Article V, Section 23 and Article
XII, Section 6 of the City Charter, that an annual cash payment in lieu of taxes and franchise fees
is owed by the Light & Power Fund, Water Fund, and Wastewater Fund in the amount of 6% of
the operating revenues in each fund; and
WHEREAS, staff recommends clarifying descriptions of the annual operating revenues
payment made by the Water Fund in Article III, Chapter 26 of the City Code, and by the
Wastewater Fund in Article IV, Chapter 26 to be consistent with how the annual Light & Power
Fund payment is described in Article VI, Chapter 26, to reflect that such funds are collected in
lieu of taxes and franchise fees; and
WHEREAS, staff also recommends updating the City Code to codify the longstanding
custom and practice of the Electric Utility bearing fiscal responsibility for the operation and
- 2 -
maintenance of the street lighting system in addition its annual payment in lieu of taxes and
franchise fees; and
WHEREAS, this revision to the City Code will not affect the rates paid by customers of
the Electric Utility nor increase the amount of operating revenues paid by the Light & Power
Fund in lieu of taxes and franchise fees.
NOW, THEREFORE BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That updating descriptions in the City Code to reflect the consistent
purposes for which the Light & Power Fund, Water Fund, and Wastewater Fund designate a
portion of operating revenues for payments in lieu of taxes and franchise fees is in the best
interest of the customers of the respective utility services and of the City.
Section 2. That amending the City Code to reflect the custom and practice of
providing street lighting system operation and maintenance as an additional in-kind component
of the franchise fee paid by the Electric Utility in its annual payments in lieu of taxes and
franchise fees is in the best interest of the customers of the Electric Utility and of the City.
Section 3. That Section 26-118(c) of the Code of the City of Fort Collins is hereby
amended to read as follows:
Sec. 26-118. Determination of user rates.
. . .
(c) In addition to the monthly service charges set forth in §§ 26-126 and 26-127,
there shall be a charge for payments in lieu of taxes and franchise. The charge shall
be six and zero-tenths (6.0) percent of said monthly service charges billed pursuant
to said §§ 26-126 and 26-127.
. . .
Section 4. That Section 26-277(c) of the Code of the City of Fort Collins is hereby
amended to read as follows:
Sec. 26-277. Determination of user rates; annual adjustment.
. . .
(c) In addition to the monthly service charges set forth in §§ 26-279, 26-280 and 26-
282, there shall be a charge for payments in lieu of taxes and franchise. The charge
shall be six and zero-tenths (6.0) percent of said monthly service charges billed
pursuant to said §§ 26-279, 26-280 and 26-282.
- 3 -
Section 5. That Section 26-392 of the Code of the City of Fort Collins is hereby
amended by the addition of a new Subsection (e) to read as follows:
Sec. 26-392. Utility considered a City-owned enterprise.
(e) The enterprise shall annually operate and maintain the City street lighting system
as an additional payment in lieu of franchise fees otherwise paid by the enterprise
pursuant to Article V, Section 23 of the City Charter.
Introduced, considered favorably on first reading, and ordered published this 28th day of
October, A.D. 2014, and to be presented for final passage on the 18th day of November, A.D.
2014.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 18th day of November, A.D. 2014.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
1
Options for Street Lighting
and
Payment in Lieu of Taxes &
Franchise Fees
City Council Finance Committee
November 17, 2014
2
Two Options to
Pay For Street Lighting Costs
• Option 1
– Increase L&P’s PILOT to 7.2%
– Adjust rates down to be cost neutral
to rate payers
• Option 2
– Ordinance 146, 2014 – Codifies the
intent of the 1986 ordinance and the
practice of the past 28 years
3
Option 1 – Increase PILOTs
Pros:
• Cost neutral to the GF
• Common utility practice
• 7.2% PILOTs
– Reasonable compared with other
Municipalities
– High compared with an investor owned
utility
4
Option 1 – Increase PILOTs
Cons:
• New ordinances needed
– revise ‘15 rates & new st lt rate
– appropriation to increase GF ‘15 budget
• St lt/ oper revenue % varies year to year
• GF responsible for st lt upgrades? (LED)
5
Option 2 – L&P Funds Streetlights
Pros:
• Code clarification only
• Practice & policy same since 1986
• No changes to ‘15 rates or budget
• Common utility practice
Cons:
• Non recorded financial contribution to the
General Fund
6
DIRECTION SOUGHT
Does the Council Finance Committee
support Staff’s recommendation to
approve the 2nd
reading of Ordinance
146, 2014 codifying the responsibility
for the cost of street lighting as a L&P
payment to the General Fund in lieu of
taxes and/or franchise fees?
7
PILOTs and Free Services Vary
City
Electric Utility
Payments in
Lieu of Taxes &
Franchise Fees
In Kind Services
Provided to
General Fund
Fort Collins 6% Streetlights
Colorado Sp 6.173 mills/kWh or
~5.4%
None
Longmont 8% Streetlights & more
Loveland 7% Streetlights & more
Fort Morgan 12% None
Fountain 5% Minor-holiday lights
Glenwood Sp
3% in lieu of taxes,
3% in lieu of franchise
None
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Katie Wiggett, Finance Administrative Assistant
Jessica Ping-Small, Revenue and Project Manager
Date: November 17, 2014
SUBJECT FOR DISCUSSION
Sales Tax on Food, Property Tax/Rental and Utility Rebate Program Update
EXECUTIVE SUMMARY
The Finance Department currently administers three rebate programs for low income, senior and
disabled residents. The rebates are for Property Tax, Utilities and Sales Tax on Food, rebates that
were created in 1972, 1975 and 1985 respectively.
In May of 2012, City Council approved changes to the ordinances which improved consistency
among the rebates, allowed an increased number of residents to qualify for the Property Tax and
Utility Rebate and simplified the process for applicants. The Sales Tax on Food Rebate was also
updated from $40 to $54 and has since been updated annually according to the Denver-Boulder-
Greeley Consumer Price Index for Urban Consumers. In 2014, the rebate amount was $56 per
person.
The number or rebates issued in 2014 increased 13% over 2013 largely due to continued
outreach efforts.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
None, update to the Council Finance Committee.
BACKGROUND/DISCUSSION
History
Property Tax Rebate
• Established in 1972 for low income senior (65 and over) residents
• Expanded in 1980 to include low income disabled residents
• Eligible property owners entitled to a refund of all City property taxes paid in the
preceding year
• Eligible renters entitled to a rebate of 1.44% of rental payments for property on which
City property taxes were paid
• The 1.44% rebate for renters was the percentage of total rent at the time that resulted in a
rebate amount equal to that of property owners which was calculated at $33.33 in 1972.
• Income eligibility level updated in 2012 to 50% of the area median income (AMI) as
reported by HUD on an annual basis
Utility Rebate
• Established in 1975 for low income senior residents
• Program applies to applicants who hold an account with the City of Fort Collins utilities
• Amount of refund is based on average monthly residential consumption of water,
wastewater, stormwater and electric service updated annually
• Income eligibility level updated in 2012 to 50% of the area median income (AMI) as
reported by HUD on an annual basis
Sales Tax on Food Rebate
• Established in 1984 and rebate amount set at $25 per person in eligible household
• Income eligibility level updated in 2005 to 50% of the area median income (AMI) as
reported by HUD on an annual basis
• In 2005 per Council direction, staff researched and recommended changes to the income
level for the Sales Tax on Food Rebate only. The goal was to increase the number of
households that qualified.
• Rebate amount updated to $56 per person in 2013 (updated annually)
2014 Rebate Summary
Total Applications Received 1556
Total Qualified Applications Processed 1474
Average Rebate Amount $188
Total Food Tax Rebate $170,352
Total Property Tax/Rental Rebate 63,294
Total Utility Rebate 43,055
Total Rebate for 2013 $276,701
Year # of Rebates Issued Total Rebate Amount Average Rebate Amount
2014 1474 $276,701 $188
2013 1304 $203,2723 $156
2012 1273 $223,621 $176
2011 1126 $138,654 $123
2010 1101 $142,510 $129
Participation in the program increased 13% in 2012 over 2011, an increase attributed to outreach
efforts and program improvements. In 2013, a continued expansion in outreach efforts grew the
program by an additional 2%. In 2014, Staff partnered with the Fort Collins Low Income
Assistance Project Team to find new ways to better reach low income residents. Staff also
worked with CPIO to create dynamic outreach materials including posters, e-mailable flyers, and
an improved application. As a result of these efforts, the number of rebates issued in 2014
increased 13% over 2013’s totals.
2014 Outreach
• Distributed over 2,500 flyers to 6 PSD schools with highest low-income populations;
also provided PSD with an electronic copy to be e-mailed to all parents
• Made information available through 2-1-1 and mailed out in United Way’s Newsletter to
partnering organizations
• Worked with the Fort Collins Low Income Assistance Project Team to find more contacts
within the community and to improve program promotion by partnering organizations
• Partnered with local agencies such as Homelessness Prevention, Volunteers of America
and Larimer Health and Human Services
• Provided on-site help at the DMA and at Skyline Retirement Homes’ Town Hall Meeting
• Provided program education to staff at Matthews House
• Application forms and posters distributed to City offices and recreation centers, Poudre
River Libraries, the Workforce Center and Larimer County Social Service offices as well
as to several senior living apartment clubhouses
• Advertised program in City News, Senior Voice and on Cable 14
• Advertised on fcgov.com and City’s Facebook page
• Provided applications and posters to the Villages low-income apartments
• Applications mailed out to all applicants from the prior year
• City webpage with downloadable application in English and Spanish
Goals for 2015
• Continue with proven outreach strategies
• Develop strategy for better reaching Spanish-speaking community
• Increase on-site application assistance at low-income, senior housing
• Continue to increased and improve partnership with non-profits to advertise the program
ATTACHMENTS
Power Point Presentation
1
2014 Rebate Program Update
Sales Tax on Food
Property Tax / Rental
Utilities
Council Finance Committee
November 17, 2014
2
Program Overview
Sales Tax on Food Rebate:
• Established in 1984 – Rebate to lower income citizens
• $56 per eligible household member – updated annually
Property Tax/Rental Rebate:
• Established in 1972 – Rebate to senior and disabled low-income
citizens
• City portion of applicants property tax levy
OR
• 1.44% of rental payment for year
Utility Rebate:
• Established in 1975 - Rebate to senior and disabled lower
income citizens
• Based on billing data for average monthly consumption for water,
wastewater, stormwater and electric service
3
Program Qualifications
All Programs:
• Income – 50% of the Local Area Median Income per household size
• Fort Collins Residency – prior year up to application date
• US Citizenship or Lawful Residence
• Photo ID required for all household members 18 years old or older
Property Tax / Rental Rebate:
• 65 or over or Disabled
• Tax-paying owner of physical residence OR pay rent for taxable housing
Utility Rebate:
• 65 or over or Disabled
• Customer of Fort Collins Utilities (name on account)
4
2012 Major Program Improvements
• Raised the income level for Property Tax Rebate and Utility
Rebate from 30% of AMI to 50% of AMI – consistent with the
Sales Tax on Food Rebate
• Increased Sales Tax on Food Rebate amount from $40 to $54
per person in qualified household.
• Indexed future Sales Tax on Food Rebate amount to the local
Consumer Price Index (CPI).
• Revamped application to be more streamlined and dynamic
Improvements simplified and
streamlined application process.
Rebates issued increased 12% in 2012.
5
2014 Rebate Program Improvements
• Worked extensively with CPIO to produce streamlined
application and dynamic advertising materials, including an
HTML friendly poster
• Partnered with Low Income Assistance Project Team
• Sent home customized flyer in PSD take home packets
• Presented program for Matthews House workers and at senior
housing town hall meeting
Improvements Focused on Increasing
Awareness and Participation
6
2014 Advertising and Promotion
• Distributed over 2,500 flyers to 6 PSD schools and
provided electronic flyer to go out in e-mail packets
• Made information available through 2-1-1 and information
mailed out in United Way’s newsletter to local partners
• Application forms and posters distributed City offices and
recreation centers as well as Larimer County offices and
the library
• Information sent out with Utility Bill and published in the
Aspen Club, Senior Voice and in the Office on Aging’s
resource guide
• Information published on fcgov.com and on City’s
Facebook page and on Cable 14
7
2014 Advertising and Promotion
• Webpage with downloadable application on City Website in
English and Spanish
• Partnership with local agencies to assist in distributing
information:
• Homelessness Prevention
• Matthews House
• Volunteers of America
• Larimer Health and Human Services Department and Workforce Center
• Provided on site help at the DMA Plaza and at Skyline
Retirement Home
• Worked with Fort Collins Low Income Assistance Project Team
to make contacts and improve program promotion
Electronic Advertising Materials Helped Partners Get Word Out
8
2014 Rebate Summary
Total Applications Received 1556
Total Qualified Applications Processed 1471
Average Rebate Per Application $188
Total Food Tax Rebate $170,352
Total Property Tax/Rent $63,294
Total Utility Rebate $43,055
Total Rebate For 2014 $276,701
Year # Qualified Applicants Total Rebate Amt Average Rebate Amt
2013 1304 $203,272 $156
2012 1273 $223,621 $176
2011 1126 $138,654 $123
2010 1101 $142,510 $129
Rebates issued in 2014 increased 13% over 2013
9
2014 Recap and Goals for 2015
• Outcome of 2014 Program Improvements:
• Outreach increased due to addition of html friendly advertising
• Increased awareness and participation by partnering agencies
and the public
• 13% increase in rebates issued
• Goals for 2015:
• Continue with proven outreach strategies
• Develop strategy for better reaching Spanish-speaking
community
• Increase on-site application assistance or education at low
income housing
• Increased partnership with non-profits to advertise the program
November 17, 2014
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: John Voss, Controller
Date: November 19, 2014
SUBJECT FOR DISCUSSION: Overhaul of Financial Policies 3, 4 and 6
EXECUTIVE SUMMARY: Policies 3, 4 and 6 address a quite varied range of topics. In
August the Council Finance Committee (CFC) approved combining these policies into one
general financial policy. Many sections of these policies are redundant with other financial
policies, City Code and Intergovernmental Agreements (IGAs). There are also many sections
with no policy elements. Lastly some sections are not financial in nature or should be moved to
another financial policy.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED:
Does the CFC agree to the recommended changes?
Does the CFC recommend presenting the proposed policy revisions to the City Council?
BACKGROUND/DISCUSSION: With the exception of the investment policy and minimum
fund balance policy the financial policies have not received a thorough update in many years.
Beginning in 2013, staff has been working with the Council Finance Committee to
systematically go through every policy. We are nearing the end of that process. After this round
of policies all that will remain is the Economic Health Policy.
Before proceeding with the systematic review, staff and CFC reaffirmed the values of financial
policies as follows:
• Provide quality control in decision making
• Strengthen City during times of financial difficulty
• Promote strategic thinking
• Higher bond ratings and lower interest costs
• Provide for contingencies
• Help curtail spending
• Help avoid tax increases
CFC also agreed that staff should adhere to the following principals for effective policies:
• Explicit – in writing
• Current – reviewed on regular basis
• Literal – plain language, quantify measures
• Centrally Available – on City intranet
• Brevity – include only policy components that are relevant to high level decision making
• Comprehensive – balance concise with all relevant topics
November 17, 2014
This round of policy review is looking at 3 policies at one time. Staff recommends combining
them into one General Financial Policy. This was tentatively agreed to by the CFC in August
2014.
Current Proposed
3.0 General Policies
4.0 Fund Policies 3.0 General Financial Policies
6.0 Capital Improvement Funds
Summary of Changes.
3.1 Administrative Charges. This section is relatively current with todays practice. Removed
Information Technology costs from the formula because they became an Internal Service Fund in
2008. Clarified language where appropriate.
3.2 Payment in Lieu of Taxes (PILOT). Deleted this section because this is covered in City
Code.
3.3 Lease-Purchase. Deleted this section because the topic is covered in Debt Policy 7.0. No
real policy elements.
3.4 Human Resource Management and Productivity. Deleted this section. The compensation
portion is not current and the topic really belongs in HR Policies. The performance goals and
measures section is weak on policy and topic really belongs in HR policies.
3.5 Medical Insurance and Retirement Plan. Changed reference number to 3.2.
The medical insurance section a. basically states the program will be partially self-funded
with stop-loss insurance for high valued claims. A lot of non-policy language. Staff
recommends that Finance and HR work together in 2015 to analysis whether the self-
insurance program is the most cost effective.
In the retirement program section b. the social security items were removed because they
are mandated by federal government. Reduced the language in the defined benefit plans
(pension). Updated tables and contribution rates.
3.6 Facility Maintenance and Repairs. This section is deleted because it is primarily
informational and not really financial in nature.
3.7 Poudre Fire Authority – Revenue Allocation Formula. This section is deleted because it is
redundant with Intergovernmental Agreement that is approved City Council.
3.8 Rebate Programs. This section is deleted because it is redundant with City Code, outdated
and mostly informational.
November 17, 2014
(3.3) Fund Organization. The reference number was changed to 3.3. Updated definitions of
fund Groups and fund Types. Updated the list of City Funds.
3.9 General Fund. Deleted this section. These policies were discontinued in 2007. Created new
section 3.4 Fund Organization.
Enterprise Funds. Deleted nearly all of the sections. Rate and fee portions were moved to
section 3.4. Deleted pledged revenue because these standards are outlined in bond documents.
Deleted the Art in Public Places (APP) sections because the program is controlled by the City
Code. The sections on Flow of Funds because they primarily addressed reserves and fund
balance that are covered under Council Finance Policy 5.0.
3.9 Internal Service Funds. Renamed this section to 3.4 Cost Recovery and Fee Setting.
Refocused this section that was partly about fund structure. Moved the Cultural Services fee
discussion to this section from section 3.10. Relocated Recreation Fee policy discussion from
3.10 to this section.
3.11 Capital Improvement Funds. Renamed this section to 3.5 Capital Improvement Program.
Deleted section on Citizen Participation as it included no policy elements. Combined old 3.12
with the new section 3.5. Added language that all Service and Departments shall develop Master
Plans for capital replacement and expansion. Added language that every 2 years City staff will
compile a 10 year Capital Improvement Plan. Clarified and updated certain language.
3.13 Capital Improvement Program. This section was deleted because it had no policy elements
and was purely informational.
ATTACHMENTS
• PowerPoint slides
• Policies in clean version
• Policies with changes highlighted
1
Council Finance Committee
General Policy 3.0 Proposed
Updating and Merging:
3.0 General Policy
4.0 Fund Policy
6.0 Capital Improvement Fund Policy
November 19, 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 January
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 Changes
3.1 Administrative Charges • General Fund Departmental Costs to
Allocated
• How Costs are Allocated
• All funds Receive Allocations but Not
All Funds are Charged
• Updated and clarified
3.2 Payment in Lieu of Taxes
(PILOT)
• Re-summarizes Code • Deleted because redundant
with IGA.
3.3 Lease Purchase • Discusses when to use, reason to use
and criteria for evaluation
• Deleted because topic is
covered by Debt Policy 7.0
3.4 Human Resource
Management and Productivity
• Employee Compensation Policy
• City Performance Goals and Measures
Policies
• Deleted because not current
and belongs in HR policies.
3.5 Medical Insurance and
Retirement Plan
• Medical Insurance
• Retirement Programs
• Reorganized and updated
3.6 Facility Maintenance and
Repairs
• Maintenance, Repair & Replacement
• Priorities for Maintenance and Repair
Funding
• Deleted because it was
primarily informational
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
• Deleted section because redundant
with IGA
• Add to CFO Finance Operating
Policy
3.8 Rebate Programs • Property Tax and Utility Charge
Rebate Program
• Sales Tax Rebate on Food
Program
• Deleted section because it is
redundant with City Code
• Add to CFO Finance Operating
Policy
7
(Formerly 4.0) Fund Polices
Topic/Section Content Recommendation
3.3 Fund Orgaization • Service Productivity Incentive
Productivity Incentive Policy
• Policy Structure
• Delete this section because
practice was discontinued in 2007
Enterprise Funds
• Utility Services
• Electric Utility
• Water Utility
• Wastewater Utility
• Storm Drainage Utility
• Pledged Revenues
• Flow of Funds
• Rate Maintenance
• Capital Cost Financing
• Delete these sections because:
• Bond Ordinances address many of
these items
• Minimum Fund Policy address many
of these items
• Debt Policy address some of the
capital financing
3.4 Cost Recovery and Fee
Setting
• Cost recovery expectations
• Rate setting
• Competitive rates
• Use of fund balances
• Use of consultants
• Cultural Services & Facility Fee
Policy
• Art In Public Places
• Recreation Fund Policy
• Clarified, repurposed, and removed
redundant language about fund
organization
8
(Formerly 6.0) Capital Improvement Funds
Topic/Section Content Recommendation
3.11 Citizen Participations • Narrative about public involvement on
dedicated quarter taxes, no policy
elements
• Delete this section because it is
only informational.
3.12 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
• Added language that a 10 year
CIP will be compiled every 2
years and be based on
department Master Plans
3.13 Capital Improvement
Program
• Describes some capital project funds • Delete this section because
there are no policy elements, it
is simply informational and not
necessarily complete
9
Summary
• Is more information needed?
• What changes are requested?
• Is package ready to go to full City Council for
approval?
Financial Management Policy 3 PROPOSED CLEAN VERSION
General Financial Policies
Issue Date: January 17,
2006
Version: 2
Issued by: City Council
Financial Policy 3 – General Financial Policies PROPOSED CLEAN VERSION
1
3.1 Administrative Charges
Certain General Fund departments render services to departments in other funds and shall
be equitably apportioned to those other funds. General Fund departments that do not have
a direct billing mechanism shall have their costs allocated using the formula outlined in this
section to other funds, and provide offsetting revenue in the General Fund.
A. General Fund Departmental Costs to be Allocated
Certain General Fund departmental costs to be allocated include City Council, City
Manager, City Clerk, City Attorney, Human Resources, and Finance. 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
Objective:
To outline the method and principles for allocation Administrative Charges; establishing the parameters for
the Medical and Retirement Program;, Fund Organization; Cost Recovery and Fee Setting; and Capital
Improvement Program.
Applicability:
This policy applies to all City funds. It does not apply to URA, DDA, PFA and Library.
Authorized by:
City Council Resolution 2006-006.
Financial Policy 3 – General Financial Policies PROPOSED CLEAN VERSION
2
The Human Resources costs are allocated on a prorated basis to funds based on the total
number of budgeted full-time-equivalent positions in each fund.
All other General Fund administrative costs are allocated on a prorated basis to the
funds based upon adjusted expenditure 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
Governmental 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.
D. Review
During each budget process, the Administrative Charge calculation will be reviewed the
Budget Office. Minor refinements in the allocation formulas are made as needed.
Significant changes will be brought to the City Council for approval to assure that the
equitable apportionment meets requirements of the Code/Charter.
3.2 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 33
years, the City has found this funding method to be a cost-effective means of providing a
very desirable employee benefit.
Financial Policy 3 – General Financial Policies PROPOSED CLEAN VERSION
3
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. The types of
services contracted for include plan administrative services, stop-loss protection against
larger claims, life and accidental death and dismemberment insurance, and long-term
disability coverage.
B. Retirement Programs
The City of Fort Collins contributes to two types of retirement plans: a Defined Benefit Plan
and Defined Contribution Plans.
1. Defined Benefit Plan - the General Employees Retirement Plan (Plan). The pension
plan is closed to new participants as of 1/1/1999.
The Plan document approved by the City Council outlines the details of the program. A
Board meets monthly to oversee the program. Board members, in consultation with annual
actuary report and other information, make recommendations to City Council for any plan
changes that may be needed from time to time. The Plan currently calls for the employer
(City or PFA) to contribute 10.5%. Because the plan is underfunded, a Supplemental
Contribution is made at a fixed dollar amount each year. The Supplemental amount is
reevaluated every 2 years in conjunction with the budget cycle and based on the latest
actuarial valuation report.
2. 401(a) and 457 Money Purchase Plans. Also known as Defined Contribution Plans,
the contribution rates are as follows:
401 a 457
Employee Group Employer Employee Waiting Employer Employee Waiting
Classified Employees 6.5% 3.0% 6 months 0.0% optional no wait
Classified Employees hired on
or before 3/31/07
7.5% 3.0% 6 months 0.0% optional no wait
Unclassified Management 6.5% 6.0% 6 months 0.0% optional no wait
Unclassified Management
hired on or before 3/31/07
7.5% 6.0% 6 months 0.0% optional no wait
Direct Reports of City Council 10.0% 0.0% no wait match up to
3%
optional no wait
Service Area Directors 10.0% 0.0% no wait match up to
3%
optional no wait
Police & Dispatch (per union
agreement) *
8.0% 8.0% no wait match up to
3%
optional 6
months
Community Service Officer 7.5% 3.0% 6 months 0.0% optional no wait
Financial Policy 3 – General Financial Policies PROPOSED CLEAN VERSION
4
* All employee groups vest immediately, except Police and Dispatch who follow schedule in
union agreement.
Employee contributions to the 457 plan are limited to the amounts published by the IRS.
The City will contract with a third party administrator to provide the Defined Contribution Plans.
City Staff comprised of both Finance and HR will oversee the program and performance of the third
party administrator.
3.3 Fund Organization
Funds for accounting and financial reporting purposes have their own balance sheet and income
statement.
The organization of the City’s Funds is designed to enhance accountability and transparency,
comply with Generally Accepted Accounting Principles, meet grant requirements, comply with City
Code/Charter and comply with Colorado statutes. In City Article V, Part III, Section 25 the Financial
Officer is empowered to create funds as appropriate.
The number of funds established should be the minimum needed for legal and operating
requirements. Unnecessary funds can result in inflexibility, undue complexity and inefficient
financial administration.
The City’s funds are organized at two levels of groupings; Fund Groups and Fund Types.
Fund Groups
Governmental Funds Used to account for activities primarily supported by taxes, grants and similar
revenue sources.
Proprietary Funds Used to account for activities that receive significant support from fees and charges.
Fiduciary Funds Used to account for resources that a City holds as a trustee or agent on behalf of an
outside party that cannot be used to support the City’s own programs.
Within each Fund Group are Fund Types.
Governmental Fund Types
General Fund Main operating fund used to account for and report all financial resources not
accounted for and reported in another fund.
Special Revenue
Funds
Used to account for and report the proceeds of specific revenue sources that are
restricted, committed or assigned to expenditure for specific purposes, other than
debt service or capital projects.
Debt Service Funds Used to account for and report resources that are restricted, committed or assigned
to expenditure for principal and interest.
Financial Policy 3 – General Financial Policies PROPOSED CLEAN VERSION
5
Capital Project Funds Used to account for and report resources that are restricted, committed or assigned
to expenditure for capital outlays, including the acquisition or construction of capital
facilities or other capital assets.
Proprietary Fund Types
Enterprise Funds Used to account and report any activity for which a fee is charged to external users of
goods and services
Internal Service
Funds
Used to account and report any activity for which a fee is charged to other funds,
departments, or agencies of the City and its component units on a cost
reimbursement basis.
Fiduciary Fund Types
Pension Trust Fund Used to account and report resources that are required to be held in trust for the
members and beneficiaries of defined benefit plans.
Agency Funds Used to report resources held by the City in a purely custodial capacity.
The following is a list of all funds of the City, including legally separate entities but from a financial
reporting perspective are treated as a component unit of the City.
Group and Type Legal Ref. Name
Governmental
General Fund City 100 General Fund
Special Revenue Fund City 250 Capital Expansion Fund
Special Revenue Fund City 251 Sales & Use Tax Fund
Special Revenue Fund Separate 252 General Improvement District #1
Special Revenue Fund City 254 Keep Fort Collins Great Fund
Special Revenue Fund City 272 Natural Areas Fund
Special Revenue Fund City 273 Cultural Services & Facilities
Special Revenue Fund City 274 Recreation Fund
Special Revenue Fund City 275 Cemeteries Fund
Special Revenue Fund City 276 Perpetual Care Fund
Special Revenue Fund City 277 Museum Fund
Special Revenue Fund City 280 Community Development Block
Special Revenue Fund City 281 Home Investment Partnership
Special Revenue Fund City 290 Transit Services Fund
Special Revenue Fund City 291 Street Oversizing Fund
Special Revenue Fund City 292 Transportation Services Fund
Special Revenue Fund Separate 293 GID #15 - Skyview
Special Revenue Fund City 294 Parking Fund
Special Revenue Fund City 300 Timberline/Prospect SID #94
Debt Service City 303 Debt Service Fund
Debt Service City 304 Capital Leasing Corporation
Capital Projects Fund City 400 Capital Projects Fund
Capital Projects Fund City 270 Neighborhood Parkland Fund
Capital Projects Fund City 271 Conservation Trust Fund
Proprietary
Financial Policy 3 – General Financial Policies PROPOSED CLEAN VERSION
6
Enterprise Fund City 500 Golf Fund
Enterprise Fund City 501 Light & Power Fund
Enterprise Fund City 502 Water Fund
Enterprise Fund City 503 Wastewater Fund
Enterprise Fund City 504 Storm Drainage Fund
Internal Service Fund City 601 Equipment Fund
Internal Service Fund City 602 Self-Insurance Fund
Internal Service Fund City 603 Data And Communications Fund
Internal Service Fund City 604 Benefits Fund
Internal Service Fund City 605 Utility Customer Service & Admin
Fiduciary
Pension Trust Fund City 700 Employees' Retirement Fund
Governmental
Special Revenue Fund Separate 800 URA - N. College District
Special Revenue Fund Separate 801 URA - Prospect South TIF District
Special Revenue Fund Separate 803 URA - Mall Fund
Special Revenue Fund Separate 820 DDA Operating Fund
Special Revenue Fund Separate 822 DDA Debt Service Fund
3.4 Cost Recovery and Fee Setting
A. Enterprise Funds shall rely on charges and user fees to recover their costs, rather than
taxes. 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. The Internal Service Funds shall operate under the following guidelines.
1. Internal service fund charges are limited 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. Charges should be set at a level to avoid significant adverse financial impacts on their
customers. Fund customers and independent experts should be allowed to review and make
recommendations about the level of charges. The Finance Department should approve the
Financial Policy 3 – General Financial Policies PROPOSED CLEAN VERSION
7
analysis and conclusions used to set rates.
3. Internal service funds should compete with similar services offered by the private sector.
The City staff will compare rates every five years. 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 shall operate under
the guidelines of the Utilities Services Funds.
C. Cultural Services & Facilities Fund Fee Policy
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.
Financial Policy 3 – General Financial Policies PROPOSED CLEAN VERSION
8
D. 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:
(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
Financial Policy 3 – General Financial Policies PROPOSED CLEAN VERSION
9
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.
3.5 Capital Improvement Program
1. Each Service Area or Department shall develop multi-year Master Plans for capital
improvements. On a city-wide basis, staff shall compile a 10 year Capital Improvement
Plan and update it every two years. Estimates of operating and maintenance costs
should be included;
2. Appropriation requests must include not only the cost of construction or acquisition
and the funding sources, but an estimate of operating and maintenance costs;
3. Capital improvements projects will be administered in accordance with the Capital
Projects Procedures Manual;
4. Appropriations for capital improvements will be constructed and expenditures incurred
only for the purpose as approved by City Council;
5. Staff should seek out grants and partnerships whenever appropriate. ;
Financial Policy 3 – General Financial Policies PROPOSED CLEAN VERSION
10
Definitions
Example:
Financial Policy 3 – General Financial Policies PROPOSED CLEAN VERSION
11
Getting Help
Please contact the Controller with any questions at 970.221.6772.
Financial Management Policy 3 PROPOSED WITH CHANGES
General Financial Policies
Issue Date: January 17,
2006
Version: 2
Issued by: City Council
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
1
3.1 Administrative Charges
Certain General Fund Expenses for departments rendering services to other departments in
other funds and shall be are equitably apportioned to those other funds. 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
departments that provide services to all funds and do not have a direct billing mechanism.
For these General Fund departments shall have their, a costs allocatedion using the formula
outlined in this section has been developed to apportion costs to other funds, and provide
offsetting revenue in to the General Fund.
A. General Fund Departmental Costs to be Allocated
Certain General Fund Ddepartmental costs to be allocated include City Council, City
Manager, City Clerk, City Attorney, Human Resources, and 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
Objective:
To outline the method and principles for allocation Administrative Charges; establishing the parameters for
the Medical and Retirement Program;, Fund Organization; Cost Recovery and Fee Setting; and Capital
Improvement Program.
Applicability:
Funds—This policy applies to all City funds. It does not apply to URA, DDA, PFA and Library.
Authorized by:
City Council Resolution 2006-006.
Comment [JV1]: No longer in General Fund.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
2
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
The Human Resources costs are allocated on a prorated basis to funds based on the total
number of budgeted full-time-equivalent positions in each fund.
The administrative costs for IT are allocated to funds based on the total number of
budgeted full-time-equivalent positions in each fund.
All other General Fund administrative costs are allocated on a prorated basis to the
funds based upon adjusted expenditure 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
Governmental 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.
D. Review
During each budget process, the Administrative Charge calculation will be reviewed the
Budget Office. Minor Further refinements in the allocation formulas will beare made as
needed. Significant changes will be brought to the City Council for approval to assure
that the equitable apportionment meets requirements of the Code/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
Comment [JV2]: IT is now an Internal Service
Fund that and is no longer in the General Fund
Comment [JV3]: Set by Code Ordinance.
Redundant to also have in policy and extra work to
keep them in sync
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
3
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.
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
Comment [JV4]: Incorporate policy elements
into Debt Policy 7.0. There are few policy elements,
mostly definitions and explanations.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
4
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:
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.
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
Comment [JV5]: Duplicate, covered under HR
Policies.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
5
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.
3.53.2 Medical Insurance and Retirement Plan
Aa. 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
33 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
Comment [JV6]: Staff recommends HR and
Finance commit in 2015 to review and analyze the
self-insurance model to reaffirm its continued cost
effectiveness.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
6
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 expenseslarger claims, life and accidental death and
dismemberment insurance, and long-term disability coverage.
Bb. Retirement Programs
The City of Fort Collins contributes to three two types of retirement pension plans:, a
Defined Benefit Plan and Defined Contribution Plans. including:
1. Social Security;
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.
12. 401(a) Defined Benefit Plan - the General Employees Retirement Plan (Plan). Theis
pension plan is closed is no longer open to new participants as of 1/1/1999.
The Plan document approved by the City Council outlines the details of the program. A
Board meets monthly to oversee the program. Board members, in consultation with annual
actuary report and other information, make recommendations to City Council for any plan
changes that may be needed from time to time. The Plan currently calls for the employer
(City or PFA) to contribute 10.5%. Because the plan is underfunded, a Supplemental
Contribution is made at a fixed dollar amount each year. The Supplemental amount is
reevaluated every 2 years in conjunction with the budget cycle and based on the latest
actuarial valuation report.
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
Comment [JV7]: Mandated by federal
government. Not necessarily
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
7
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:
23. 401(a) and 457 Money Purchase Plans. Also known as Defined Contribution Plans,
the c for Service Directors, Classified and Unclassified Management, Police and Fire;
andontribution rates are as follows:
401 a 457
Employee Group Employer Employee Waiting Employer Employee Waiting
Classified Employees 6.5% 3.0% 6 months 0.0% optional no wait
Classified Employees hired on
or before 3/31/07
7.5% 3.0% 6 months 0.0% optional no wait
Unclassified Management 6.5% 6.0% 6 months 0.0% optional no wait
Unclassified Management
hired on or before 3/31/07
7.5% 6.0% 6 months 0.0% optional no wait
Direct Reports of City Council 10.0% 0.0% no wait match up to
3%
optional no wait
Service Area Directors 10.0% 0.0% no wait match up to
3%
optional no wait
Police & Dispatch (per union
agreement) *
8.0% 8.0% no wait match up to
3%
optional 6
months
Community Service Officer 7.5% 3.0% 6 months 0.0% optional no wait
* All employee groups vest immediately, except Police and Dispatch who follow schedule in
union agreement.
Employee contributions to the 457 plan are limited to the amounts published by the IRS.
The City will contract with a third party administrator to provide the Defined Contribution Plans.
City Staff comprised of both Finance and HR will oversee the program and performance of the third
party administrator.
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.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
8
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 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)
Comment [JV8]: Informational mostly. Not
really financial in nature.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
9
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 target for M&R of General Government
facilities is 4% of Current Replacement Value (CRV) for occupied facilities.
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
Comment [JV9]: Redundant with the IGA
between City and Poudre Fire Authority. Will add to
Administrative Policy as item to monitor.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
10
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.
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
Comment [JV10]: Redundant with City Code.
Will add to Administrative Policy as item to monitor.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
11
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.
3.3 Fund OrganizationGeneral Fund
Funds for accounting and financial reporting purposes have their own balance sheet and income
statement.
The organization of the City’s Funds is designed to enhance accountability and transparency,
comply with Generally Accepted Accounting Principles, meet grant requirements, comply with City
Code/Charter and comply with Colorado statutes. In City Article V, Part III, Section 25 the Financial
Officer is empowered to create funds as appropriate.
The number of funds established should be the minimum needed for legal and operating
requirements. Unnecessary funds can result in inflexibility, undue complexity and inefficient
financial administration.
The City’s funds are organized at two levels of groupings; Fund Groups and Fund Types.
Fund Groups
Governmental Funds Used to account for activities primarily supported by taxes, grants and similar
revenue sources.
Proprietary Funds Used to account for activities that receive significant support from fees and charges.
Fiduciary Funds Used to account for resources that a City holds as a trustee or agent on behalf of an
outside party that cannot be used to support the City’s own programs.
Within each Fund Group are Fund Types.
Governmental Fund Types
General Fund Main operating fund used to account for and report all financial resources not
accounted for and reported in another fund.
Special Revenue
Funds
Used to account for and report the proceeds of specific revenue sources that are
restricted, committed or assigned to expenditure for specific purposes, other than
debt service or capital projects.
Debt Service Funds Used to account for and report resources that are restricted, committed or assigned
to expenditure for principal and interest.
Capital Project Funds Used to account for and report resources that are restricted, committed or assigned
to expenditure for capital outlays, including the acquisition or construction of capital
facilities or other capital assets.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
12
Proprietary Fund Types
Enterprise Funds Used to account and report any activity for which a fee is charged to external users of
goods and services
Internal Service
Funds
Used to account and report any activity for which a fee is charged to other funds,
departments, or agencies of the City and its component units on a cost
reimbursement basis.
Fiduciary Fund Types
Pension Trust Fund Used to account and report resources that are required to be held in trust for the
members and beneficiaries of defined benefit plans.
Agency Funds Used to report resources held by the City in a purely custodial capacity.
The following is a list of all funds of the City, including legally separate entities but from a financial
reporting perspective are treated as a component unit of the City.
Group and Type Legal Ref. Name
Governmental
General Fund City 100 General Fund
Special Revenue Fund City 250 Capital Expansion Fund
Special Revenue Fund City 251 Sales & Use Tax Fund
Special Revenue Fund Separate 252 General Improvement District #1
Special Revenue Fund City 254 Keep Fort Collins Great Fund
Special Revenue Fund City 272 Natural Areas Fund
Special Revenue Fund City 273 Cultural Services & Facilities
Special Revenue Fund City 274 Recreation Fund
Special Revenue Fund City 275 Cemeteries Fund
Special Revenue Fund City 276 Perpetual Care Fund
Special Revenue Fund City 277 Museum Fund
Special Revenue Fund City 280 Community Development Block
Special Revenue Fund City 281 Home Investment Partnership
Special Revenue Fund City 290 Transit Services Fund
Special Revenue Fund City 291 Street Oversizing Fund
Special Revenue Fund City 292 Transportation Services Fund
Special Revenue Fund Separate 293 GID #15 - Skyview
Special Revenue Fund City 294 Parking Fund
Special Revenue Fund City 300 Timberline/Prospect SID #94
Debt Service City 303 Debt Service Fund
Debt Service City 304 Capital Leasing Corporation
Capital Projects Fund City 400 Capital Projects Fund
Capital Projects Fund City 270 Neighborhood Parkland Fund
Capital Projects Fund City 271 Conservation Trust Fund
Proprietary
Enterprise Fund City 500 Golf Fund
Enterprise Fund City 501 Light & Power Fund
Enterprise Fund City 502 Water Fund
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
13
Enterprise Fund City 503 Wastewater Fund
Enterprise Fund City 504 Storm Drainage Fund
Internal Service Fund City 601 Equipment Fund
Internal Service Fund City 602 Self-Insurance Fund
Internal Service Fund City 603 Data And Communications Fund
Internal Service Fund City 604 Benefits Fund
Internal Service Fund City 605 Utility Customer Service & Admin
Fiduciary
Pension Trust Fund City 700 Employees' Retirement Fund
Governmental
Special Revenue Fund Separate 800 URA - N. College District
Special Revenue Fund Separate 801 URA - Prospect South TIF District
Special Revenue Fund Separate 803 URA - Mall Fund
Special Revenue Fund Separate 820 DDA Operating Fund
Special Revenue Fund Separate 822 DDA Debt Service 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.
Comment [JV11]: No policy elements
Comment [JV12]: Discontinued practice in
2007.
Comment [JV13]: Discontinued practice in
2007.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
14
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.
(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.
Enterprise Funds
a. 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 75% 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.
Comment [JV14]: Move to Cost Recovery and
Rate Setting section 3.4
Comment [JV15]: Move to Cost Recovery and
Rate Setting section 3.4
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
15
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.
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.
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
Comment [JV16]: Redundant with code and
adds no additional policy elements.
Comment [JV17]: Redundant with City Code
and adds not additional policy elements.
Comment [JV18]: Move to Cost Recovery and
Rate Setting section 3.4
Comment [JV19]: Outdated and covered by
Minimum Fund Balance Policy 5.0.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
16
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 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:
Comment [JV20]: Covered by bond docments
Comment [JV21]: Outdated and covered by
Minimum Fund Balance Policy 5.0.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
17
(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 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.
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
Comment [JV22]: Covered in City Code.
Comment [JV23]: Coverage ratios and related
formulas are dictated by bond documents.
Comment [JV24]: No significant policy
elements. Maybe make a blanket statement for all
enterprise funds??????
Comment [JV25]: Coverage ratios and related
formulas are dictated by bond documents.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
18
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:
(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
Comment [JV26]: Outdated and covered by
Minimum Fund Balance Policy 5.0.
Comment [JV27]: Covered in City Code
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
19
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 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
Comment [JV28]: Outdated and covered by
Minimum Fund Balance Policy 5.0.
Comment [JV29]: Covered by City Code.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
20
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.
3.93.4 Internal Service FundsCost Recovery and Fee Setting
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 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, Communications Fund, Equipment Fund, Utilities
Customer Service and Administration Fund, and the Self-Insurance Fund.
A. Enterprise Funds shall rely on charges and user fees to recover their costs, rather than
taxes. 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.
A.B. The Internal Service Funds shall operate under the following guidelines.
Comment [JV30]: Coverage ratios and related
formulas are dictated by bond documents.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
21
1. Accounting guidelines limit Iinternal service fund charges are limited 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 Ccharges should be set at a level to avoid significant adverse
financial impacts on their customers. Fund customers and independent experts should be
allowed to review and make recommendations about the level of charges. The Finance
Department should approve coordinates theis analysis and conclusions used to set rates.
3. Internal service funds should compete with similar services offered by the private sector.
The City staff will compare rates each yearevery five years. 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 shall operates under
the guidelines of the Utilities Services Funds.
3.10 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.
B.C. a. Cultural Services & Facilities Fund 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 [JV31]: This was more applicable
when the museum was a part of the Cultural
Services Fund
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
22
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
Comment [JV32]: Outdated and covered in City
Code.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
23
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 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.
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
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
24
funds are required to set up their own restricted reserve accounts for Art in Public Places.
C.D.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:
(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
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
25
(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.
(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.
(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.
Comment [JV33]: Outdated and now covered
by Minimum Fund Balance Policy 5.0.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
26
CAPITAL IMPROVEMENT FUNDS
3.113.5 Capital Improvement Program 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.
3.12 Capital Improvement Policy
The City will continue to operate under its existing Capital Improvement Policy:
Comment [JV34]: First two paragraphs are
informational only with no policy elements.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
27
1. 1. The Each Service Area or Department shallCity will develop a multi-year Master
Pplans for capital improvements and update it annually. On a city-wide basis, staff shall
compile a 10 year Capital Improvement Plan and update it every two years. Estimates
of operating and maintenance costs should be included;
2. 2. Appropriation requests must include The City will identify not only the cost of
construction or acquisition and the estimated costs and funding sources, for each capital
project requested before it is submitted to City Councilbut an estimate of operating and
maintenance costs;
3. 3. All City Ccapital improvements projects will be administered in accordance with the
Capital Projects Procedures Manual;
4. 4. All CityAppropriations for capital improvements will be constructed and
expenditures incurred only for the purpose as approved by City Council;
5. 5. Staff should seek out grants and partnerships whenever appropriate. The City will
use a variety of different sources to fund capital projects, with an emphasis on the a pay-
as-you-go philosophy;
6. 6. Funding for operating and maintenance costs for approved capital projects must be
identified at the time projects are approved.
3.13 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,
Comment [JV35]: Covered in item 2
Comment [JV36]: Informational only. No policy
elements.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
28
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.
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.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
29
Definitions
ExampleNon Spendable Fund Balances: Applicable to governmental funds. Permanent endowments or
assets in a non-liquid form such as long term inter-agency loans.
Financial Policy 3 – General Financial Policies PROPOSED WITH CHANGES
30
Getting Help
Please contact the Controller with any questions at 970.221.6772.
Finance Administration
215 N. Mason
2nd Floor
PO Box 580
Fort Collins, CO 80522
970.221.6788
970.221.6782 - fax
fcgov.com
AGENDA
Urban Renewal Authority Board Finance Committee
November 17, 2014
11:30 a.m. to 12:00 noon
CIC Room – City Hall
Approval of the Minutes from the September 15, 2014 Meeting
1. Multiple URA Budget Items 30 minutes T. Leeson
Finance Administration
215 N. Mason
2nd Floor
PO Box 580
Fort Collins, CO 80522
970.221.6788
970.221.6782 - fax
fcgov.com
URA Finance Committee Meeting
Draft Minutes
9/15/14
11:00 to Noon
CIC Room
Council Attendees: Karen Weitkunat, Bob Overbeck, Ross Cunniff
Staff: Mike Beckstead, Megan Bolin, Karen Cumbo, Mike DeKock,
Kelly DiMartino, Chris Donegon, Andres Gavaldon, Amy
Sharkey, Larry Schneider, John Voss, Katie Wiggett
Others: Danielle Nater, Feeders Supply; Kevin Jones, Chamber
Approval of the Minutes of April 21, 2014
Bob Overbeck moved to approve the minutes for the April 21, 2014 meeting. Ross Cunniff seconded the
motion. Minutes approved unanimously.
TIF Assistance Proposal
Megan Bolin presented a TIF Assistance Proposal for the Northern Colorado Feeders Supply, a local
business. Megan explained that Feeders Supply’s new site is located at 300 Hickory Street. Before
Feeders Supply bought the property, 300 Hickory Street had sat vacant for about a year. Now the site
and buildings are deteriorated; there are asbestos problems; and the lot does not meet City code
requirements.
Feeders Supply’s projected project includes the following:
• Business relocation from 359 Linden Street
• New 2,100 sq. ft. office/retail building
• Public Sidewalk and landscaping improvements
• New fencing and striping of the parking area
• Façade improvements to the two existing warehouses (already completed)
With the sidewalk and landscaping improvements, Feeders Supply will be bringing the property up to
code. They plan to upgrade the fence from a chain link fence to a metal one matching the neighboring
business. Replacing the fence is required per City code and the North College Citizen Advisory Group
Board (CAG) has recommended that the cost of the new fence be funded through TIF.
Megan walked through the public benefits of the project:
• Blight Remediation
o Removal of unsafe site and building conditions
o Occupation of vacant site
o Improved public sidewalk and landscaping
2
• Business Retention
o Local company since 1972
o 4 full time staff, 2 part time staff, 2 owners
o Additional 1-2 employees once project is complete
Megan explained that the total increment for the project was projected at $158,352 and the project cost
gap was projected at $79,300. This is with an assumption of 15 years of increment with zero growth.
The total eligible costs for the project come to $61,550. If Council approves the cost of the fence along
Hickory Street, the total eligible costs will come to $72,450.
City Staff is recommending the following TIF Reimbursement Structure:
• Reimbursed for $72,450 of eligible costs
• Developer receives 46% of annual increment collected until paid in full or 2030
• If Energy Star rating of 75 or higher is verified within two years after project completion,
Developer receives additional $1,583.52 (1% total increment)
• Maximum URA Obligation = $74,033.52
The Maximum URA Obligation is 35.8% of the total increment, making it well within the URA TIF
parameters.
Ross Cunniff said that he liked this project because Feeders Supply is a local business that serves local
people and the percent of TIF obligation is very good. The Mayor asked what the purpose of the fence
was. Danielle Nater of Feeders Supply answered that it is primarily for security. The Mayor commended
Feeders Supply for choosing to upgrade the fence.
The URA Finance Committee supports including the fence in the eligible costs for the project and
believes this project is ready to go before the URA Board.
URA FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Tom Leeson, Redevelopment Program Manager
Date: November 17, 2014
SUBJECT FOR DISCUSSION
Resolution Adopting the 2015 Budget for the Fort Collins Urban Renewal Authority
EXECUTIVE SUMMARY
The purpose of this item is to consider adoption of the 2015 budget for the North College Tax
Increment Financing District, the Prospect South Tax Increment Financing District, and the
Foothills tax Increment Financing District. Budget revenues include property and sales tax
increment, and interest earned on investments, totaling $2,404,372. Budget expenses include
general operations, and debt service payments totaling $3,248,513.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Finance Committee have any questions or concerns with the proposed 2015 URA
budget?
BACKGROUND/DISCUSSION
The proposed Resolution would adopt the 2015 budget for the Fort Collins Urban Renewal
Authority (URA).
Revenue for the URA is generated from property and sales tax increment collections as well as
interest earned on investments. Property tax increment is determined by the County Assessor’s
Office; although the URA will not receive the final 2014 tax warrant until January 2015, the
2014 August Certification is used to inform budget preparations. Property tax increment sources
include the North College Plan Area and the Prospect South tax increment financing (TIF)
District (no property tax increment is estimated in the Foothills District in 2015). Sales tax
increment is calculated by the City Finance Department is only applies to the Foothills District.
North College TIF District
The total tax increment revenue for the North College Plan Area in 2015 is projected to be
$1,128,353. Additional revenue is collected from interest earned on investments, which totals
$86,406. Combined, the 2015 total estimated revenue for the North College URA is $1,214,759.
This is slightly below the approved budget in the 2014 budget for the URA due to a decrease in
the total assessed value of the North College district.
URA expenses are a combination of operating costs and debt service payments. The operations
line item includes cost for personnel, on-call consulting services, and the County fee for
collection of TIF. Operating expenses for the North College TIF District for 2015 include the
following:
• Operations $ 273,023
• North College Storefront Improvement Program $ 0
Total $ 273,023
The North College TIF District’s annual debt service payments (principal and interest) are from
the following outstanding loans:
North College URA
• 2014 Bond Payment $946,863
• Rocky Mountain Innosphere $132,598
Total $1,079,461
This is below the approved budget in 2014 for the URA due to decrease in the interest payment
on the Rocky Mountain Innosphere loan.
It should be noted that the expenses exceed the revenues by $137,724. The difference between
expenses and revenues is being covered by the approximately $400,000 in the 2015 North
College fund balance.
The Resolution would appropriate the operating and debt service budget for the North College
District, which totals $1,352,484 for 2015.
Prospect South District
The total tax increment revenue for the Prospect South Plan Area in 2015 is projected to be
$339,443. Additional revenue is collected from interest earned on investments, which totals
$270. Combined, the 2015 total estimated revenue for the Prospect South District is $339,713.
URA expenses are a combination of operating costs and debt service payments. The operations
line item includes cost for personnel and a County fee for collection of property taxes. Operating
expenses for the Prospect South TIF District for 2015 include the following:
• Operation $ 6,789
Total $ 6,789
2014 Budget 2015 Budget Difference
Revenues $ 1,289,505 $ 1,214,759 $ (74,746)
Operating Expenses $ 263,312 $ 273,023 $ 9,711
Debt Service $ 1,610,655 $ 1,079,461 $ (531,194)
$ 1,873,967 $ 1,352,484 $ (521,483)
North College District
Comparison of 2014 Budget with Current 2015 Budget
The Prospect South District’s project costs include remaining reimbursement obligations for The
Summit student housing project:
• Project Costs $726,281
Total $726,281
The Prospect South District’s annual debt service payments (principal and interest) are from the
following outstanding loans:
• Capstone $268,946
• Prospect Station $17,459
• Revenue Sharing with City (Capstone) $26,654
Total $313,848
The Resolution would appropriate the operating and debt service budget for the Prospect South
District, which totals $1,046,129 for 2015.
Foothills District
The total tax increment revenue for the Foothills District in 2015 is projected to be $849,900.
This represents this estimated sales tax increment if the mall opens in time for the holiday
season. There is no estimated property tax increment for 2015.
URA expenses are a combination of operating costs and debt service payments. There is no
operations line item in 2015.
The Foothills District annual debt service payments are from the following outstanding loans:
• Metro District Bond $849,900
Total $849,900
The Resolution would appropriate the operating and debt service budget for the Foothills District,
which totals $849,900 for 2015.
Next Steps: The URA Board is scheduled to consider a Resolution adopting the 2015 budget on
November 18, 2014.
ATTACHMENTS
• Attachment 1: 2015 Budget Worksheet
2014 Budget 2015 Budget Difference
Revenues $ - $ 849,900 $ $ 849,900
Operating Expenses $ - $ - $ -
Debt Service $ - $ 849,000 $ 849,000
$ - $ 849,000 $ 849,000
Comparison of 2014 Budget with Current 2015 Budget
Foothills District
Exhibit A
North College Urban Renewal Plan Area
Estimated Revenue:
Tax Increment Collections 1,128,353
Interest on Investments 5,742
Interest from Rocky Mountain Innosphere Loan $ 80,664
Total estimated Revenue for the URA $ 1,214,759
Expenses:
Operations $ 273,023
Project Storefront $ -
Total Operational Costs $ 273,023
Annual Debt Service Payments
2013 Bond Payment $ 946,863
Rocky Mountain Innosphere Interest $ 132,598
Total Debt Service Payments $ 1,079,461
Fund 800 2014 Budget $ 1,352,484
URBAN RENEWAL AUTHORITY
2015 BUDGET
NORTH COLLEGE DISTRICT
Midtown Urban Renewal Plan Area (Prospect South TIF District)
Estimated Revenue:
Tax Increment Collections $ 339,443
Interest on Investments $ 270
Total estimated Revenue for the URA $ 339,713
Expenses:
Operations $ 6,789
Project Storefront $ -
Total Operational Costs $ 6,789
Project Costs
Capstone Reimbursement $ 726,281
Total Project Costs $ 726,281
Annual Debt Service Payments
Capstone $ 268,946
Prospect Station $ 17,459
Revenue Sharing with City (Capstone) $ 26,654
Total Debt Service Payments $ 313,059
Fund 801 2014 Budget $ 1,046,129
URBAN RENEWAL AUTHORITY
PROSPECT SOUTH DISTRICT
2015 BUDGET
Midtown Urban Renewal Plan Area (Foothills TIF District)
Estimated Revenue:
Tax Increment Collections $ 849,900
Interest on Investments $ -
Total estimated Revenue for the URA $ 849,900
Expenses:
Operations $ -
Project Storefront $ -
Total Operational Costs $ - $ -
Annual Debt Service Payments
Foothills Metro District Bond $ 849,900
Total Debt Service Payments $ 849,900
Fund 803 2014 Budget $ 849,900
URBAN RENEWAL AUTHORITY
FOOTHILLS DISTRICT
2015 BUDGET
2014 Budget 2015 Budget Difference
Revenues $ 1,289,505 $ 1,214,759 $ (74,746)
Operating Expenses $ 263,312 $ 273,023 $ 9,711
Debt Service $ 1,610,655 $ 1,079,461 $ (531,194)
$ 1,873,967 $ 1,352,484 $ (521,483)
2014 Budget 2015 Budget Difference
Revenues $ 330,289 $ 339,713 $ $ 9,424
Operating Expenses $ - $ 6,789 $ 6,789
Project Costs $ 726,281 $ 726,281
Debt Service $ 317,779 $ 313,059 $ (4,720)
$ 317,779 $ 1,046,129 $ 728,350
2014 Budget 2015 Budget Difference
Revenues $ - $ 849,900 $ $ 849,900
Operating Expenses $ - $ - $ -
Debt Service $ - $ 849,000 $ 849,000
$ - $ 849,000 $ 849,000
Comparison of 2014 Budget with Current 2015 Budget
North College District
Comparison of 2014 Budget with Current 2015 Budget
Prospect South District
Comparison of 2014 Budget with Current 2015 Budget
Foothills District
URA FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Tom Leeson, Redevelopment Program Manager
Date: November 17, 2014
SUBJECT FOR DISCUSSION
Resolution Appropriating Unanticipated Revenue in the URA Foothills District Fund for the
Foothills Mall Redevelopment Project to be used for Project Expenditures Incurred
EXECUTIVE SUMMARY
The purpose of this item is to consider a resolution to appropriate unanticipated revenue in the
URA Foothills District Fund from reimbursements from Alberta Development Partners for the
Foothills Mall Redevelopment Project to be used for Urban Renewal Authority expenditures
incurred.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Finance Committee have any questions or concerns with the proposed Resolution?
BACKGROUND/DISCUSSION
Section 4.13 of the Redevelopment and Reimbursement Agreement between the Fort Collins
Urban Renewal Authority (URA) and Walton Foothills Holdings VI, LLC (Developer) requires
the Developer to pay or reimburse the City and Authority for all fees, costs and out-of-pocket
third-party expenses incurred by them in connection with developing, negotiating and preparing
the Redevelopment Agreement and related documents and issuing the District Bonds.
Year-to-date, the URA has incurred $289,556 in costs associated negotiating and preparing the
Redevelopment Agreement and related documents and issuing the District Bonds, and has
received payment from Alberta Development Partners. There is an outstanding invoice for
expenses incurred for $30,632.16, and it is anticipated there will be an additional $20,000 in
legal fees associated with the bond issuance.
Next Steps: The URA Board is scheduled to consider the on November 18, 2014.
Foothills Reimbursement Appropriation - 2014
Expenses - Payment Received $ 289,556.00
Expenses - Payment Not yet Received $ 30,632.16
Estimated Expenses - Bond Issuance $ 20,000.00
Unanticpated Revenue Total $ 340,188.16
ATTACHMENTS
No Attachments
URA FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Tom Leeson, Redevelopment Program Manager
Date: November 17, 2014
SUBJECT FOR DISCUSSION
Resolution Approving a Loan From the City of Fort Collins to the Fort Collins Urban Renewal
Authority for the Prospect Station Redevelopment Project, and Approving a Loan Agreement for
that Purpose.
EXECUTIVE SUMMARY
The purpose of this item is to consider a Resolution approving a loan agreement between the Fort
Collins Urban Renewal Authority and the City of Fort Collins for the Prospect Station project in
the Prospect South tax increment financing district.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Finance Committee have any questions or concerns with the proposed Loan
Agreement?
BACKGROUND/DISCUSSION
In October 2013, the Fort Collins Urban Renewal Authority (URA) executed a Redevelopment
Agreement with Prospect Station LLC (Developer) for Prospect Station, a mixed-use project in the
Prospect South Tax Increment Financing (TIF) District (See Attachment 1). The Redevelopment
Agreement obligated the URA to reimburse the Developer up to $494,000 utilizing two payment
methodologies. Fifty percent (50%) of the reimbursement obligation ($274,000) is to be paid in a
single payment upon completion of the project and verification of Eligible Costs, and the remaining
fifty percent (50%) is to be paid by the Authority over a 21-year period. Knowing that the URA
would not have sufficient fund balance to make the single payment outright, it has been anticipated
that the URA would seek a loan from the City of Fort Collins, repaid using tax increment revenue
generated by the project over the life of the Prospect South TIF District. Acknowledging this intent
the City Council approved Resolution No. 2013-79 declaring City Council's intent to provide a loan
to the URA for one half of the URA’s reimbursement obligation to Prospect Station, LLC (See
Attachment #2).
Per the Redevelopment Agreement, the $274,000 reimbursement obligation is due to the Developer
upon completion of the project, subject to verification of eligible costs by URA staff. The
Developer obtained a Certificate of Occupancy for the project in September 2014, and subsequently
submitted their reimbursement request to the URA. The City and URA have negotiated a Loan
Agreement, which requires adoption of an Ordinance by City Council and a Resolution by the URA
Board. The approval of the Resolution by the URA is contingent upon approval of an Ordinance by
City Council, which is scheduled for first and second reading on December 2 and 16th respectively.
Loan Agreement Terms
The Loan Agreement between the URA and the City of Fort Collins for the Prospect Station project
has been structured in way that is consistent with the City's Interagency Loan Policy. The
Interagency Loan Policy states the interest rate assigned to the loan must be the higher of the
Treasury Note or Municipal Bond of similar duration, plus 0.5%.
In order to lock an interest rate, the City Finance Department calculated the average of the 20-year
and 25-year municipal bond interest rate as of October 14, 2014 at 4%, so the interest rate charged
to the URA is 4.5%. Payments will begin in 2015 and the principal and interest payments have been
set at $17,458.58 (See Attachment 2 for Loan Payment Schedule). Principal and interest payments
over the 23 year period will equal $401,547.15
Next Steps: The URA Board is scheduled to consider the on November 18, 2014.
ATTACHMENTS
Attachment 1: Redevelopment Agreement
Attachment 2: Loan Agreement Intent Resolution
Attachment 3: Loan Payment Schedule
Attachment 1
Attachment 2
Midtown URA
Prospect Station
Reimbursement Agreement to City from the URA (General Fund)
Reimbursement Amount 247,000.00 Start Date 31-Dec-15
Interest Rate 4.500% Matures 31-Dec-37
$17,458.58 Payment Years 23
Time in
Years Date Payment Interest Principal Balance
1.000 31-Dec-15 $ (17,458.58) $ (11,115.00) $ (6,343.58) (240,656.42)
2.000 31-Dec-16 (17,458.58) (10,829.54) (6,629.04) (234,027.38)
3.000 31-Dec-17 (17,458.58) (10,531.23) (6,927.35) (227,100.03)
4.000 31-Dec-18 (17,458.58) (10,219.50) (7,239.08) (219,860.95)
5.000 31-Dec-19 (17,458.58) (9,893.74) (7,564.84) (212,296.11)
6.000 31-Dec-20 (17,458.58) (9,553.32) (7,905.26) (204,390.85)
7.000 31-Dec-21 (17,458.58) (9,197.59) (8,260.99) (196,129.86)
8.000 31-Dec-22 (17,458.58) (8,825.84) (8,632.74) (187,497.12)
9.000 31-Dec-23 (17,458.58) (8,437.37) (9,021.21) (178,475.91)
10.000 31-Dec-24 (17,458.58) (8,031.42) (9,427.16) (169,048.75)
11.000 31-Dec-25 (17,458.58) (7,607.19) (9,851.39) (159,197.36)
12.000 31-Dec-26 (17,458.58) (7,163.88) (10,294.70) (148,902.66)
13.000 31-Dec-27 (17,458.58) (6,700.62) (10,757.96) (138,144.70)
14.000 31-Dec-28 (17,458.58) (6,216.51) (11,242.07) (126,902.63)
15.000 31-Dec-29 (17,458.58) (5,710.62) (11,747.96) (115,154.67)
16.000 31-Dec-30 (17,458.58) (5,181.96) (12,276.62) (102,878.05)
17.000 31-Dec-31 (17,458.58) (4,629.51) (12,829.07) (90,048.98)
18.000 31-Dec-32 (17,458.58) (4,052.20) (13,406.38) (76,642.60)
19.000 31-Dec-33 (17,458.58) (3,448.92) (14,009.66) (62,632.94)
20.000 31-Dec-34 (17,458.58) (2,818.48) (14,640.10) (47,992.84)
21.000 31-Dec-35 (17,458.58) (2,159.68) (15,298.90) (32,693.94)
22.000 31-Dec-36 (17,458.58) (1,471.23) (15,987.35) (16,706.59)
23.000 31-Dec-37 (17,458.39) (751.80) (16,706.59) 0.00
$ (401,547.15) $ (154,547.15) $ (247,000.00)
Payment
Attachment 3
URA FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Tom Leeson, Redevelopment Program Manager
Date: November 17, 2014
SUBJECT FOR DISCUSSION
Resolution appropriating prior year reserves in the URA North College Fund to reimburse
remaining North College Marketplace project obligations.
EXECUTIVE SUMMARY
The purpose of this item is to consider the appropriation of prior year reserves in the North
College URA fund to reimburse the North College Marketplace project for completed eligible
improvements identified within the North College Marketplace Redevelopment Agreement.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Finance Committee have any questions or concerns with the proposed North College
Marketplace reimbursement?
BACKGROUND/DISCUSSION
North College Marketplace, Inc. has submitted for its remaining reimbursement for improvements
associated with the “Gateway” category of eligible improvements identified within the
Redevelopment Agreement dated March 18, 2009 (amended June 28, 2012), as well as the Mutual
Settlement Agreement and Full Release of all Claims dated February 27, 2012. Additionally, the
URA has an obligation to transfer $125,000 to the City of Fort Collins to cover the costs associated
with the design and construction of a pedestrian bridge across the canal to the north.
Settlement Agreement Payment
The original Redevelopment Agreement (RA) between North College Marketplace, Inc. and the
URA was executed on March 18, 2009 (See Attachment 1). Section 3.12 of the RA granted the
developer the right to adjust the identified Eligible Costs among the line items to cover cost
overruns in one line item with cost savings in another line. During the course of construction, the
developer requested that $1.26 million of cost savings in the Off-Site Streets line item be re-
allocated to cover cost overruns in the On-Site Utilities line item. At the time the URA disputed the
developer's claim for the re-allocation. During the negotiations, both parties recognized the
uncertainty of litigation and the associated costs, and agreed to settle, which led to the attached
Mutual Settlement Agreement and Full Release of Claims dated February 27, 2012 (See
Attachment 2).
Through the Settlement Agreement, the parties agreed the developer would be reimbursed $610,262
for costs incurred in the On-Site Utilities line item, and the remaining balance ($424,773) would be
split equally. The developers share of the remaining balance would be distributed if the developer
obtained a building permit for development of a principal commercial retail use on any of Lots
2,3,5,6,or 7 of the North College Marketplace project by June 30, 2013.
The developer, North College Marketplace, Inc. met its obligation on June 14, 2013 to obtain a
building permit prior to June 30, 2013 with the Discount Tire building permit pulled for Lot 7, 1830
N. College Avenue (See Attachment 3). Therefore, the developer is entitled to their share of the
remaining balance in the Off-Site Streets of $212,386.57.
Gateway Improvements Reimbursement
The Redevelopment Agreement between North College Marketplace, Inc. and the URA was
amended on June 28, 2012 in order to amend the required timing of certain gateway and
landscaping improvements (See Attachment 4). Exhibit C of the original Redevelopment
Agreement listed a category of improvements (Gateway/Landscaping/Pedestrian
Connection/Grading/North-South Circulation and College Avenue Public Access Easement/Paving
of Grape Street) which had a required completion date of June 30, 2012. At the time the URA and
the developer negotiated the Settlement Agreement, there was still a remaining balance of $283,520
in the "gateway' category. Since the remaining "gateway" improvements were directly associated
with the pad sites that were tied to the Settlement Agreement, the completion date of those
improvements were extended to coincide with the dates established in the Settlement Agreement.
The amendment to the original RA stated that if the developer obtained a building permit by June
30, 2013, then the completion date for the "gateway" improvements would be extended to June 30,
2014. As part of the construction of the Discount Tire Store, as well as an additional pad site
immediately to the north, the developer has timely completed the required "gateway"
improvements. URA Staff has reviewed the reimbursement request and the accompanying receipted
invoices and check vouchers and confirmed the costs are for the agreed upon Eligible Costs.
Therefore, per the Redevelopment Agreement dated February 27, 2009, and amended on June 28,
2012, the developer is entitled to the remaining balance of $283,520 for the "gateway" category of
Eligible Costs.
Pedestrian Connection Payment
The North College Marketplace Development Agreement (Sec.II.K) required the developer to make
a payment to the City in lieu of acquiring street right-of-way and/or easements for designing and
constructing a pedestrain/bicycle bridge or other necessary improvements to achieve a pedestrian
level of service required by the Land use Code (LUC) for the development, up to a maximum
payment of $125,000 (See Attachment 5). The Development Agreement required the developer to
submit a letter to the City committing to pay the City $125,000 to be placed in escrow for the sole
purpose of right-of-way/easement acquisition, design and construction of the pedestrian bridge
improvements. Pursuant to the Redevelopment Agreement, the costs for the pedestrian bridge
improvements were considered a reimbursable expense by the URA. Therefore, the submittal of the
aforementioned letter by the developer, and the subsequent funding of the escrow payment by the
URA would fully satisfy the pedestrian bridge obligations by the developer.
On September 1, 2011, the developer submitted a letter committing to pay the $125,000 (See
Attachment 6) required in the Development Agreement, and the URA responded by indicating the
$125,000 would be transferred into the escrow account (See Attachment 7). However, the $125,000
transfer into escrow never occurred.
Per the North College Marketplace Development Agreement, the URA is obligated to transfer
$125,000 to the City to be used for pedestrian bridge improvements within 15 years of the date of
the Development Agreement (April 5, 2010). The URA desires to transfer the $125,000 to the City
in 2014 so that it can be leveraged to construct a pedestrian/bicycle bridge over the Larimer and
Weld Irrigation ditch to the north of North College Marketplace as part of the City's North College
Avenue road improvements scheduled for 2015.
Next Steps: The URA Board is scheduled to consider the on November 18, 2014.
ATTACHMENTS
Attachment 1: Original Redevelopment Agreement
Attachment 2: Settlement Agreement
Attachment 3: Building Permit
Attachment 4: Amended Redevelopment Agreement
Attachment 5: Development Agreement Language
Attachment 6: Loveland Commercial Letter
Attachment: URA Letter
Attachment 1
Exhibit C
*$900,000 is potential reimbursement to the URA from adjacent properties as they develop/redevelop.
Note: All cost numbers contained herein are based on preliminary cost estimates and are subject to change
based upon final design and cost fluctuations.
This Public Improvements budget is supported by the Public Improvements Summary dated
September 4, 2008, as amended.
Public Improvement Total Cost
Off Site Street Infrastructure (Local Street Portion) $2,812,620*
Demolition, Property Cleanup and Site Preparation Cost $366,650
Wetlands Mitigation, Landscaping, Unsuitable Materials and
Payment to Wetlands’ Reserve Fund
$1,763,206
On-Site Utilities (Sanitary, Storm, Water, Dry) $1,022,861
Gateway / Landscaping / Pedestrian Connection / Grading /
North/South Circulation and College Avenue Public Access
Easement /
Paving of Grape Street
$1,702,128
Relocation Assistance (Up to $1,000 per residence) $10,000
Contingency $322,535
Total Cost for Improvements $8,000,000
Attachment 2
Attachment 3
Attachment 4
Attachment 5
Attachment 6
urban renewal authority
300 LaPorte Ave PO Box 580 Fort Collins, CO 80522-0580
970-221-6505 TDD 970-224-6002 renewfortcollins.com
November 4, 2011
Nathan Klein, Vice President
North College Marketplace, Inc.
1043 Eagle Drive
Loveland, CO 80537
RE: URA / North College Marketplace Application for Reimbursement Request #4 balance
Dear Nathan,
Thank you for presenting the additional information requested from the letter dated September
20, 2011.
Staff has reviewed in the information presented and will process the balance of the funding
request in the amount of $168,199.13 next week for payment on November 10, 2011.
Additionally, staff will accept your request to transfer funds in the amount of $125,000 from the
Urban Renewal Authority (URA) to the City of Fort Collins to satisfy the level of service
requirement for the Pedestrian Bridge within the Gateway, Landscaping, Pedestrian Connection
Line Item.
Lastly, the attached table reconciles the payments to date and applies a mispayment from billing
#3 to the interest. Please refer to the table to reveal the line items that have received interest
payments.
In summary, the documentation provided in revised payment application billing #4, dated
November 1, 2011, supports a reimbursement total of $328,271.28. A check will be issued in
the amount of $203,271.28 and a transfer of $125,000 will complete the payment. This
reimbursement is only for qualified expenses within the Gateway, Landscaping, Pedestrian
Connection Line Item (Section 4).
The remaining balance of this line item after this payment is $283,520.00
Please contact me with any questions or concerns.
Regards,
Christina Vincent
Redevelopment Program Administrator
Attachment 7
2014
Urban Renewal Authority
Budget Items
URA Finance Committee
November 17, 2014
2
URA 2015 Budget
2014 Budget 2015 Budget Difference
Revenues $ 1,289,505 $ 1,214,759 $ (74,746)
Operating Expenses $ 263,312 $ 273,023 $ 9,711
Debt Service $ 1,610,655 $ 1,079,461 $ (531,194)
$ 1,873,967 $ 1,352,484 $ (521,483)
2014 Budget 2015 Budget Difference
Revenues $ 330,289 $ 339,713 $ $ 9,424
Operating Expenses $ - $ 6,789 $ 6,789
Project Costs $ 726,281 $ 726,281
Debt Service $ 317,779 $ 313,059 $ (4,720)
$ 317,779 $ 1,046,129 $ 728,350
2014 Budget 2015 Budget Difference
Revenues $ - $ 849,900 $ $ 849,900
Operating Expenses $ - $ - $ -
Debt Service $ - $ 849,000 $ 849,000
$ - $ 849,000 $ 849,000
Comparison of 2014 Budget with Current 2015 Budget
North College District
Comparison of 2014 Budget with Current 2015 Budget
Prospect South District
Comparison of 2014 Budget with Current 2015 Budget
Foothills District
3
Foothills Reimbursement
Appropriation
4
Foothills Reimbursement Appropriation
5
Prospect Station Loan Agreement
6
Prospect Prospect Station South Loan TIF Agreement District
Redevelopment Agreement:
Reimburse the Developer up to $494,000
• 50% of the reimbursement obligation ($274,000) single payment upon
completion of the project
• 50% to be paid over a 21-year period
7
Prospect Prospect Station South Loan TIF Agreement District
Loan Agreement Terms:
Interagency Loan Policy: higher of the Treasury Note or Municipal Bond
of similar duration, plus 0.5%.
Interest rate as of October 14, 2014 at 4%, so the interest rate charged to
the URA is 4.5%.
P& I set at $17,458.58
P & I over the 23 year period will equal $401,547.15
8
North College Marketplace
Reimbursement
9
North College Marketplace Reimbursement
Settlement Agreement Payment
• Dispute regarding line items adjustment ($1.2M)
• Developer reimbursed $610K
• $424K split equally
• Developer paid $212K if BP pulled on remaining outlot by June 30,
2013
• Discount Tire BP pulled June 14, 2014
10
North College Marketplace Reimbursement
Gateway Improvements Reimbursement
• $283,520 Remaining in Gateway Improvements Line Item
• Completion Deadline extended to June 30, 2014
• Completed required "gateway" improvements as part of pad site
construction
• Eligible Improvements verified by URA Staff
11
North College Marketplace Reimbursement
Pedestrian Connection Payment
• $125,000
• DA required a payment to the City in lieu of acquiring street right-of-way
• Payment for pedestrian/bicycle bridge
• Reimbursable expense by the URA
• URA to make payment to City to be place in escrow
• City's North College Avenue road improvements scheduled for 2015