Loading...
HomeMy WebLinkAboutAgenda - Mail Packet - 3/17/2015 - Council Finance Committee & Ura Finance Committee Agenda - March 16, 2015Council Finance Committee & URA Finance Committee Agenda Planning Calendar 2015 RVSD 03.09.15 tg Mar. 16 TOPIC TIME WHO CFC Utility Billing Transparency 30 min L. Rosintoski Utility Plant Investment Fee 30 min L. Smith Annual Re-appropriation Ordinance 15 min M. Beckstead 2014 Investment Returns & Investment Policy 15 min H. Hall URA Apr. 20 TOPIC TIME WHO CFC GERP Update 15 min John Voss URA May 18 TOPIC TIME WHO CFC Economic Health Policy 30 min J. Voss J. Birks 2014 Year End Highlights 30 min J. Voss 2014 Year End Fund Balance 20 min J. Voss URA 2014 URA Operational & Financial Update 30 min J. Birks T. Leeson June 15 TOPIC TIME WHO CFC Revenue Diversification - Sales Tax on Services and Admissions Tax 45 min J. Ping-Small Exempt Organization – Potential Code Updates 30 min J. Ping-Small URA Future Council Finance Committee Topics: • Review Special Improvement Districts • Auditors Report – July • Debt Capacity Analysis Future URA Committee Topics: 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 March 16, 2015 10:00 a.m. to Noon CIC Room – City Hall Approval of the Minutes from the February 9, 2015 meeting 1. Utility Billing Transparency 30 minutes L. Rosintoski 2. Utility Plant Investment Fee 30 minutes L. Smith 3. Annual Re-appropriation Ordinance 15 minutes M. Beckstead 4. 2014 Investment Returns & Investment Policy 15 minutes H. Hall Finance Administration 215 N. Mason Street 2nd Floor PO Box 580 Fort Collins, CO 80522 970.221.6788 970.221.6782 - fax fcgov.com Council Audit & Finance Committee Minutes 02/09/15 10:00 am to 12:00 Noon CIC Room Council Attendees: Ross Cunniff, Bob Overbeck, Mayor Karen Weitkunat Staff: Darin Atteberry, Mike Beckstead, Josh Birks, Cory Christensen, John Duvall, Tauny Gilmore, Bruce Hendee, John Hutto, Jeff Mihelich, Lucinda Smith, Peggy Streeter, John Voss Others: Dale Adamy, Kevin Jones, Brad Decker, John Little Approval of Minutes Ross Cunniff made a motion to approve the January 12, 2015 Council Finance Committee minutes. Bob Overbeck made a second to the motion. The minutes were approved unanimously. Police Regional Training Facility John Hutto and Mike Beckstead provided a presentation to review the proposed Regional Training Campus (RTC) facility. The campus would be located near Boyd Lake on Fort Collins/Loveland airport property. Mike stated that the alternative proposal presented today illustrates three modifications that reduce the capital investment from $24.1 million to $20.4 million. Reductions include: 1. Pistol range reduced from 25 lanes to 20 2. Street grid was taken out – can be put in at a later date 3. Maintenance classroom office now turned into a storage facility The primary needs of the partners at the training facility were identified: • Driving Pursuit Speed Track – Fort Collins • Pistol Range and Rifle Range – Loveland Mike explained the capacity level at the facility. The initial facility start-up is anticipated at 65 percent usage with a future expansion consideration over a 20 year growth projection when evaluating capacity issues. It was noted however, that the classroom portion has limited growth expansion. 2 Bob Overbeck inquired about the value of renting classrooms – this is estimated at $350.00 for a four- hour segment. Letters of intent from the eleven agencies within the region have been received. Mike outlined the operational and maintenance expenditures for the first five-years noting that personnel, range maintenance, track maintenance, and consumables are the largest cost estimates. The presentation provided the following information and considerations: • Financing the project is complicated but doable: o Training facility not considered an essential service o Facility on leased land o Facility co-owned by two municipalities • Year-one is track only, year-two includes the range and class rooms • Market and/or demand opportunities assumes additional rental income The Council Finance Committee members provided the following comments/questions: • What type of facility has Colorado Springs invested in? o Denver, Aurora, and CO Springs have either existing facilities or being built • Can a detox facility be included on this campus? o There could be FAA concerns and other restrictions • Suggesting offers to other communities to buy-in as partners • Reservations and concerns for the budget impact to Fort Collins It was noted that the current design of the training facility has the potential to be developed into a police academy serving northern Colorado. Darin Atteberry addressed the committee stating that a joint city council meeting between Fort Collins and Loveland will take place on February 12th. The discussion will encourage a cooperative partnership at a 50/50 ownership. Climate Action Plan Financing - CAP Lucinda Smith provided progress to the economic analysis of the CAP. The framework strategies include the following Greenhouse Gas (GHG) reduction categories: • Buildings – boosting efficiency, comfort, and improved health • Advanced Mobility – transportation improvements, more convenient and cleaner • Energy Supply and Delivery – shifting to renewable energy resources • Waste Reduction – material regeneration The three main components that drive financial outcomes are: 1. Savings in energy fuel costs 2. Costs incurred for up-front investments 3. Future escalating fuel costs 3 The CAP presentation gave preliminary estimates on cumulative costs & savings. Lucinda identified caveats in the analysis that does exclude costs related to: • Distribution - infrastructure enhancements • Generation - electric storage resources The Council Finance Committee provided the following feedback: • A concern that the variables and assumptions and not clearly articulated and understood • The strategy needs to be described as a conceptual/feasible strategy and not a detailed set of actions and investments, the details behind individual investments will come later • Concerns of the continued dependence on other entities involved/invested and unknown future scenarios, i.e., numbers assumed PRPA replaces coal with natural gas by 2029, however this is an unlikely scenario • If Council and other parties procrastinate taking too much time to analyze variables – what happens to the ultimate Climate Action Plan • Detailed analysis and information is needed on each strategy before decisions can be made • The possibility of future decisions may come down to an eventual judgment call • Requested that all economic benefits to the CAP should be included in the caveats, i.e., boosting and improvements to future jobs directly and indirectly, and improvements to public health • The Committee appreciates the information provided Darin Atteberry stated that Platte River Power Authority (PRPA) is a critical partner. He stated that hard decisions are coming however; is hopeful to continue moving forward with the aspirational vision ahead of us. Woodward 2014 Rebates On April 2, 2013 City Council passed an ordinance approving an economic development project agreement between the City of Fort Collins, Downtown Development Authority, and Woodward, Inc. The discussion today is in preparation of the upcoming ordinance to appropriate $2.1M of General Revenue Funds. Mike Beckstead provided information to the committee which included: • Rebates allowed per the agreement • Rebate schedule as agreed upon with Woodward • Estimated current rebate due • Key stipulations The agreement states that Woodward is eligible for rebates in three areas and the schedule includes two applications per year: 1. Use Tax on Construction 2. Development Fees 3. Capital Improvement Fees 4 Key stipulations include: • Woodward reaching 1,400 employees by 12/31/18 • Use tax and capital expansion fees include a backfill requirement by the General Fund • Rebate funds will be appropriated by City Council biannually Executive Session At 11:19 am, a motion was made and seconded for the Council Finance Committee to enter into executive session as permitted under article II, section 11(2) of the City Charter, section 2-31(a)(2) of the City Code and Colorado revised Statutes section 24-6-402(4)(b). The executive session constitutes a privileged attorney-client communication. The Council Finance Committee was reconvened at 11:30 am. Woodward 2014 Rebate Discussion - Continued The Council Finance Committee provided the following questions/comments for staff: • Is there a wage requirement related to the 1,400 jobs, i.e., minimum wage • What constitutes a full-time employee, hours plus length of employment – recommending that City Council is provided with this information Mike Beckstead noted that it is staff recommendation to use dollars from the Capital Expansion Funds for that portion of the rebate rather than General Fund dollars. Motion At this time Ross Cunniff motioned for the City to use General Fund dollars to fulfill the agreement requirement. Bob Overbeck seconded the motion. Vote to approve motion: • Ross Cunniff – yes • Bob Overbeck – yes • Mayor Karen Weitkunat – no Mayor Weitkunat stated that she supports the staff recommendation and she would like both scenarios brought to City Council for discussion. Financial Comparative Data Mike Beckstead provided Front Range financial comparison information to the committee. The 2014 financial ratio study for municipalities was conducted by RubinBrown LLP; Accounting Services in Denver, CO. 5 The information was collected from 32 Front Range communities with an average population of 76,000. Comparisons include: • Liquidity Ratios • Debt to Asset Ratios • Tax Revenue Ratios • Government-Wide Expense Ratios • Debt Service Expenditure Ratios • General Fund Ratios Mike stated that Fort Collins is in the first or second quartile on many of the financial ratios and in the middle to third quartile on revenues and spending per capita. He shared his interpretation of the study that illustrates the citizens of Fort Collins want and expect a higher point of service. With citizen satisfaction deemed high, Fort Collins citizens also share their willingness to fund the desired levels of service as well. The study reflects for Fort Collins a conservative use of debt, a recovering economy in 2013 that also improved its net position, and MAX grants plus capital spending that influenced several ratios. Mike stated that the City will continue its participation in future surveys. It validates good financial practices. Mayor Weitkunat requested a one-page summary of this information to City Council. Darin Atteberry would like to pursue the possibility that RubinBrown will attend and present information to the Regional Manager meetings in Colorado. Meeting Adjourned Finance Department 215 N Mason Street 2nd Floor PO Box 580 Fort Collins, CO 80522 MEMORANDUM Date: March 10, 2015 To: Council Finance Committee City Councilmembers Through: Darin Atteberry, City Manager From: Mike Beckstead, Chief Financial Officer Re: Woodward Rebate – Questions from Council Finance The City’s obligations associated with Woodward rebates earned to date were reviewed with Council Finance Committee on February 9 th . The Woodward Agreement defines the terms for what is eligible for rebates and defines the contingencies and requirements associated with the rebates. In summary, rebates are earned as a percentage of fees paid, the percentage earned varies based on the type of fee paid, 60% of the earned rebate is paid initially and 40% is held back until Woodward achieves employment of “no fewer than 1,400 employees at all Woodward worksites within Fort Collins combined”. The chart below summarizes rebates earned to date. Staff anticipates bringing forward an appropriation in the next few weeks for the 60% rebates eligible for payment. Council Finance asked for clarification on two questions concerning the Woodward rebates. 1. Is there a wage requirement related to the 1,400 jobs? Answer: No. 2. What constitutes a full-time employee? Answer: Section 6.4(c)(i) and (ii) of the Agreement provides the following definition: (i) “Employee” means a full time employee, or the equivalent of one full time employee, for whom Benefits (hereinafter defined) are available and who is working at a Woodward worksite located in Fort Collins. Multiple persons working as permanent or contract employees on less than a full time schedule may be deemed to constitute a full time equivalent “Employee” for the purpose of this provision, calculated as follows: the total number of hours worked by such multiple persons working less than full time, divided by the total hours customarily worked by a single full time worker. In order to be eligible to include a non-full time person in the calculation of equivalent full time Employees, Benefits shall be available to such person. (ii) “Benefits” shall mean benefits that are customarily available to Woodward employees. It is mutually understood that such benefits will be modified by Woodward and/or its contracting agencies over time as required by law or as they otherwise deem appropriate. COUNCIL FINANCE COMMITTEE AGENDA ITEM SUMMARY Staff: Lisa Rosintoski – Utilities Customer Connections Manager Lori Clements – Utilities Customer Support Manager Date: March 16, 2015 SUBJECT FOR DISCUSSION: Resolution 2014-095, Utilities Billing Review for transparency of cost of service allocation presentment to customers EXECUTIVE SUMMARY A. Resolution 2014-095 Directing the City Manager to Review Funding for Utilities Capital Improvements, Including Utilities Plant Investment Fees and Other Related Matters, and Report the Results of that Review for Further Council Consideration. The purpose of this project is to recommend options for increasing the transparency of Fort Collins Utilities cost-of-service expense allocation through the utility bill, website, and other communication tools. Beginning in December 2014, Utilities staff evaluated options to make a variety of utility costs, including capital expenses, payment-in-lieu of taxes (PILOT), and streetlights, more transparent for customers to understand how costs are allocated for utility services through rates. The evaluation included a review of the Customer Information System (CIS) to determine resources and costs related to transparency, as well as a review of potential communication methods and tools. In addition, Utilities conducted residential and commercial customer surveys investigating customer preferences and interest in utility bill transparency. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED Fort Collins Utilities conducts cost-of-service studies to determine the rates to charge customers for utility services. Fort Collins Utilities reviews rates and adjusts them annually or when necessary to reflect these costs, including operations, administration, billing, capital improvements, PILOT’s, streetlights, and others. City Council approves rates by ordinance, and new rates typically go into effect in January. Customers are assigned rate codes depending on their service type (residential or commercial), as well as the utility services provided. During the transparency evaluation, Utilities staff studied how costs are allocated by utility service (electric, water, wastewater and stormwater), as well as by customer class (residential, commercial, large commercial and industrial). Utilities staff concluded that costs embedded within rates may be made more transparent through the website, utility bills, and existing printed materials. Fort Collins Utilities provides monthly utility bills to approximately 79,000 customers for electric, water, wastewater and/or stormwater services. Of the average 79,000, approximately 22,000 are electronically billed. Customers who elect paper bills currently receive a single page, letter-size bill that includes account information; a bill payment and summary section; up to 21 line items for utility services, usage tiers, fees, taxes, totals and usage history; and a bill stub. The bill template is preprinted; customer-specific data is drawn from the Customer Information System to be printed on the front of the bill. Included with the bill are the citywide newsletter, CityNews, and other bill inserts provided by Utilities and other City departments. “Real estate” on the front of the bill is limited, due to the utility services customers are billed for, the programs they participate in, the amount of electricity and water they use, the rates they are billed on, and special bill messages. If the number of line items exceeds 21, the customer’s electricity and water use history is truncated or deleted. Historically, customers have appreciated this usage history as beneficial and useful data for budgeting and comparison on conservation measures. Fort Collins Utilities prints one-line messages on the front of the bill in special circumstances. For example, customers are notified about the availability of the annual federally required Water Quality Report in this manner. This one-line message is limited to 80 characters, so it is primarily used to direct customers to additional information elsewhere. Utilities staff believes that using this message may be appropriate for an annual message about utility service cost allocation. The back of the bill is pre-printed with useful customer information, such as highlights about rates, terms, payment options, contact information, customer assistance programs, utility bill delinquency, and other important details. Cost-allocation data could be printed on the back of the bill, if some of the existing information is removed, or customers could be directed to additional information elsewhere, such as the web site or the annual printed rates brochure. Existing functionality of the Customer Information System does not allow Utilities to print cost- allocation data specific to the customer or to the customer’s rate class, nor does it allow any type of graphic functionality on the front of the bill. The current functionality allows a table to be printed which lists the energy and water use by month for the cumulative twelve month period; for instance March of the current year to March of the previous year. Further functionality is being investigated as part of a future upgrade or replacement of the CIS. Utilities staff considered other bill formats, including multiple-page bills, legal-size bills, and multiple-color bills, but staff dismissed these options due to significant cost increases associated with them. For example, a two-page bill doubles the cost of bill printing, as well as increases the cost of postage by 21 cents per bill. This does not include potential costs for printers or other items. It is also a less sustainable alternative, by requiring the use of more paper, printing and waste. Utilities staff will continue to evaluate bill format options as part of the CIS evaluation. In addition, Utilities encourages customers to view and pay their bill online, where they can also connect to the “Monitor My Use” web portal, which provides individualized usage data, tips, and more. Utilities continues to encourage customers to take advantage of self-service, online options to conduct business, including e-Bill, web portal, and mobile. Since Utilities launched e-Bill in 2009, an increasing number of customers are electing to receive and pay their bills electronically. When customers adopt the “enrolled” e-Bill option, Utilities (and thus all customers) not only saves in credit card fees per transaction, but the amount of paper used (and ultimately discarded) is reduced dramatically. According to the City’s Environmental Services Department, this results in “upstream and downstream reductions” of greenhouse gases (GHG), such as less energy and non-energy-related emissions from extraction and transportation of raw materials, manufacturing, and transportation of products and results in less paper ultimately sent to the landfill. With even 1,000 enrolled customers, annual savings include: • 12,000 bills • 24,000 envelopes • 12,000 copies of City News • up to 36,000 copies of other bill inserts Currently, more than 22,000 Utilities customers choose electronic bills. According to payitgreen.org, 35 billion paper statements, bills, and payments are mailed in the United States annually; resources saved when customers switch to electronic billing include six pounds of paper and 23 pounds of wood, as well as preventing the production of 29 pounds of greenhouse gases, which is the equivalent of: • The emissions avoided by not driving 30 miles • The emissions avoided by not consuming 2 gallons of gasoline • Planting 0.4 tree seedlings and allowing them to grow for 10 years As part of a customer segmentation study, Fort Collins Utilities solicited customer feedback about utility bill transparency. The study was conducted in January and February 2015. Utilities’ expects the results of the survey by March 13 and will share this data with the City Council Finance Committee. In addition, Utilities plans to manage additional feedback with both residential and commercial customers regarding customer preferences on bill transparency, which will include samples of methods to communicate how and where cost allocation would be best presented. STAFF RECOMMENDATION Based on the evaluation to date, staff recommends using a comprehensive set of tools and methods to educate customers about Utilities’ capital expenses, PILOTs and streetlights, as well as other operating costs. Based on staff evaluation, this data is best conveyed via these tools: • Web: Detailed information in graphic and text format on the City’s web site explaining how costs are allocated per utility service, including definitions. This information would reside under the rates section and detail the expenses for each utility service. • Utility Bill: o Message: A message on the front of utility bills and e-Bill emails directing customers to the web site to “learn more how Utilities allocates costs.” o Back: A section on the back of the bill that describes how each utility service’s costs are allocated, including a level of detail about allocation of utility costs, as well as directing customers to the web site. • Bill Insert: The annual printed rates bill insert that is provided in January each year would include details about cost allocation, as well as information directing customers to the web site. • Newsletter: Annually, Customer Accounts would provide as part of the business newsletter a section describing cost of service allocation for rates for each utility service. ATTACHMENTS 1. Presentation City Council Finance Committee March 10, 2015 Utility Bill Transparency Project Purpose Resolution 2014-095, Utilities Billing Review for: Transparency of Utilities cost of service allocation Council Feedback • Do the presented options meet the expectations of the Resolution? • Does Council Finance Committee support Utilities staff recommendation? • Can staff provide memo to City Council on implementation schedule and tactics? Focus Focus of Review: • Customer transparency - allocation of costs by utility service - Examples • Customer preferences • Recommendations - Examples • Implementation schedule Customer Transparency Utility Services Consistent Topics: • Capital Improvements • PILOTs • Operations • Customer Service and Administration • Debt Service • Other Customer Transparency Utility Functional Topics: • Light and Power: o Purchase Power o Energy Efficiency/Renewables o Streetlights • Water o Resources and Treatment o Water Conservation Customer Transparency Utility Functional Topics: • Wastewater o Reclamation • Stormwater o Drainage/Detention o Engineering/Floodplain Management Customer Transparency Light & Power Customer Transparency Water Customer Transparency Wastewater Customer Transparency Stormwater Customer Preferences Survey Results: To be presented at March 16 City Council Finance Committee Recommendations Website • Most comprehensive and detailed Utility Bill • Front – Message • Back – Overall cost allocation pie chart Bill Insert • Annual with rate updates Newsletters Presentation – Website Presentation – Website Presentation – Utility Bill (Front) Presentation – Utility Bill (Back) Presentation – Pie Chart on Bill Presentation – Rate Bill Insert Implementation Schedule Step 1 • Website • June 2015 Step 2 • Utility Bill • July 2015 Step 3 • Newsletters • Beginning third quarter 2015 Step 4 • Bill Insert • January 2016 Council Feedback • Do the presented options meet the expectations of the Resolution? • Does Council Finance Committee support Utilities staff recommendation? • Can staff provide memo to City Council on implementation schedule and tactics? COUNCIL FINANCE COMMITTEE AGENDA ITEM SUMMARY Staff: Lance Smith, Utilities Strategic Financial Planning Manager Date: March 16, 2015 SUBJECT FOR DISCUSSION Inclusion of General Plant Improvements in Utility Development Fees EXECUTIVE SUMMARY Resolution 2014-095 directed the City Manager to investigate options for modifying the Utilities development fees to fund additional types of capital needs for the operation of Utilities, including administrative facilities and other facilities not currently included, and to report the results of this investigation to the City Council no later than March 24, 2015. Staff is recommending that changes be made to City Code to allow for general plant additions to be included in Utility development fees. The current language in City Code is focused on recovering capital expenses related to the specific utility’s direct operations for providing service. Historically this has been interpreted to not include administrative facilities. Staff is proposing to submit the language changes to City Council later this year and to include the Utilities Administrative Building and Service Center remodeling costs in the fee schedules to be presented to City Council for 2016. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. Should staff develop suggested changes to Chapter 26 of the City Code for consideration by City Council that would allow for general plant additions to be included in development fees? 2. Does the Council Finance Committee support including the general plant investments associated with the Utilities Administrative Building and Service Center remodel beginning with the 2016 development fee schedules? BACKGROUND/DISCUSSION As part of the discussion with City Council on the requested appropriation for a new Utility Administrative Building in 2014, a question was raised on why this expense had not been included in the development fees for each of the utility services. Staff responded that the language currently in City Code has not allowed for general capital expenses, such as for an administrative building, to be included in the development fees. (Development fees are also referred to as plant investment fees, or PIFs.) The City Council passed Resolution 2014-095 directing the City Manager to investigate options for modifying the Utilities development fees to fund additional types of capital needs for the operation of Utilities, including administrative facilities and other facilities not currently included, and to report the results of this investigation to the City Council no later than March 24, 2015. PIFs PIFs are the mechanism by which new customers pay for excess capacity of existing infrastructure and their share of additional infrastructure required to provide service to the growth. It is how growth pays its own way. PIFs are evaluated annually and approved by the City Council. City Code The relevant sections of City Code are: Sec. 26-120 (b) The [Water Plant Investment Fee] shall be based on and used for growth-related capital expansion costs of water supply, storage, transmission, treatment, and distribution facilities and related factors. Sec. 26-283 (b) The [Sewer Plant Investment Fee] shall be based on and used for growth-related capital expansion costs of wastewater collection, transmission and treatment facilities. Sec. 26-473 (b) The [Electric Capacity Fee] shall be based upon and used to defray growth-related capital expansion costs of substations and distribution infrastructure and related facilities, and actual costs that have been or will be incurred by the utility to plan and provide service loads to new development, as more specifically described in the Division. These costs shall include the cost of labor and materials to install substation transformers, distribution transformers, primary cable, vaults, conduit, connections, switches, fuses, circuit breakers, and other infrastructure. Sec. 26-512 There is hereby imposed on each and every lot or parcel of land within the City with respect to which any improvement creates an impervious surface covering more than three hundred fifty (350) square feet of the lot or parcel, and the owners thereof, a stormwater plant investment fee. The fee is deemed reasonable and necessary to pay for a new development’s share of the existing equity in the capital stormwater facilities that have been installed for the protection of the health, safety, and welfare of the inhabitants of the City. Legal Basis The City Attorney’s Office has researched the legal basis for including such general capital expenses in these fees and determined that it would be permissible to change City Code to include such investments. As such, staff is recommending that such modifications be drafted and presented to the City Council for their consideration. The development fee schedules for 2015 have been established and published already. While such fees can be adjusted at City Council’s discretion, staff is recommending that the 2015 fee schedules not be adjusted mid-year and that the costs associated with the Utilities Administrative Building and Service Center remodeling be included in the 2016 fee schedules. Impact to PIFs The impact of including the full cost of the new Utilities Administration Building and the remodel of the existing Service Center into the 2015 PIFs would be: • Electric Capacity Fees would increase less than 2% • Water PIFs would increase from $4.43 to $4.47 per gallon per day • Sewer PIFs would increase from $12.35 to $12.45 per gallon per day • Stormwater PIFs would increase from $6,390 to $6,466 per developable acre ATTACHMENTS Attachment 1 – Presentation for Council Finance Committee City Council Finance Committee March 16, 2015 Utility Development Fees Purpose Resolution 2014-095 directed the City Manager to investigate modifying utility development fees to include administrative facilities. PIF Overview 3 IN OUT Improvements to serve new development Installed excess infrastructure capacity Operations and maintenance Infrastructure renewal • Plant Investment Fees (PIFs), also known as development fees, are how growth pays its own way • PIFs allow new customers to buy into the existing infrastructure PIF Overview PIFs in 5 steps: 4 Value of current infrastructure Value of new infrastructure Capacity of existing infrastructure Capacity of new infrastructure Background & Recommendation • Historically, Utility plant investment fees (alternatively referred to as development fees) have not included general plant investments such as the new Utility Administrative Building • As such facilities are necessary for the administrative operations associated with providing utility services to the community, it is recommended that the City Code is modified to allow such costs to be recovered through these fees 5 PIF Impact • Water PIFs would increase from $4.43 per gpd to $4.47 per gpd • Wastewater PIFs would increase from $12.35 per gpd to $12.45 per gpd • Stormwater PIFs would increase from $6,390 per developable acre to $6,466 per developable acre • Electric Capacity Fee increase is expected to be less than 2% 6 Council Feedback • Does the Council Finance Committee support Utilities staff recommendation to draft such changes to City Code for the consideration of the full City Council? • Does the Council Finance Committee support including these costs beginning with the 2016 fee schedules? 7 COUNCIL FINANCE COMMITTEE AGENDA ITEM SUMMARY Staff: Mike Beckstead Date: March 16, 2015 SUBJECT FOR DISCUSSION (a short title) Review of the 2015 Reappropriation Ordinance which appropriates prior year reserves. EXECUTIVE SUMMARY (a brief paragraph or two that succinctly summarizes important points that are covered in more detail in the body of the AIS.) City Council authorized expenditures in 2014 for various purposes. The authorized expenditures were not spent or could not be encumbered in 2014 because: • there was not sufficient time to complete bidding in 2014 and therefore, there was no known vendor or binding contract as required to expend or encumber the monies • the project for which the dollars were originally appropriated by Council could not be completed during 2014 and reappropriation of those dollars is necessary for completion of the project in 2015 • to carry on programs, services, and facility improvements in 2015 with unspent dollars previously appropriated in 2014 In the above circumstances, the unexpended and/or unencumbered monies lapsed into individual fund balances at the end of 2014 and reflect no change in Council policies. Monies reappropriated for each City fund by this Ordinance are as follows: General Fund $ 1,197,690 Golf Fund 40,000 Keep Fort Collins Great Fund 772,000 Light & Power Fund 18,000 Transportation Fund 28,000 $ 2,055,690 GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED (Work session questions should be designed to gather direction from Council without requiring Councilmembers to make a decision.) Does Council Finance Committee support moving forward with the 2015 Reappropriation Ordinance on April 21, 2015? BACKGROUND/DISCUSSION (details of item – History, current policy, previous Council actions, alternatives or options, costs or benefits, considerations leading to staff conclusions, data and statistics, next steps, etc.) GENERAL FUND City Attorney Office 1. Attorney Search Services - $55,000 The City Attorney’s Office requests this reappropriation to cover fees and costs associated with search-related expenses and outside recruitment services for multiple attorney positions. It is anticipated that two search processes will be needed, although it is possible that further search and recruitment efforts would be necessary to fill all three of the positions. Efforts to competitively procure attorney recruitment and search services were initiated in fall 2014. However, the vendor pool contacted regarding the initial Request for Proposals was not appropriately targeted and the process was restarted with additional potential vendor outreach in order to ensure that adequate efforts had been made to reach suitable vendor proposers. City Manager Office 2. Downtown Development Authority Ramps Project - $868 The City and the Downtown Development Authority (DDA) have been asked by a number of Fort Collins residents to help find a solution to afford disabled access to businesses in the Old Town Historic District. Business owners will voluntarily pay $75 for a ramp, remote doorbell and accessibility sticker. In a collaborative effort, the City and DDA will split the remaining costs and delivery fee. A field survey of thresholds in historic buildings indicated 20 qualified locations – four purchased ramps in 2014. Since limited requests for ramp installations were made in 2014 we expect the project to continue with more outreach and interest in 2015. 3. Performance Excellence Consulting - $12,438 The Performance Excellence Consulting funds will be used in Q1 and Q2- 2015 for PDCA (Plan, Do, Check, Act) Process Improvement training for City staff. The City will use outside consulting to deliver coursework and to assist in a complex process. Intentions are to finish the work in 2015. Community Development & Neighborhood Services 4. Historic Preservation - $7,642 These funds are used for mailings, printing and similar outreach services in support of Historic Preservation programs, and will be used to fulfill grant-related requirements to provide a historic context, architectural survey, and survey report to each owner of property in the 15-block Loomis Addition. Nearing completion, the grant requires that a copy of this context be provided to each property owner. A copy of each survey form and the accompanying survey report must also be provided to each property owner. These funds will cover the costs of producing and disseminating these documents. 5. Nature in the City - $34,964 Nature in the City was approved as a 2-year project, initiated in 2014 and expected to run through 2015. Throughout 2014, extensive public outreach and visioning processes were employed to develop the project’s strategic plan, which will be completed in 2015. In addition to the completion of the Strategic Plan, the remaining funds will be used to complete additional project deliverables, such as the Nature in the City design guidelines, connectivity analyses for people and wildlife, and associated Land Use Code changes and other demonstration projects, e.g., the living wall. Communications and Public Involvement Office 6. Comcast Negotiations – $44,249 These funds are for continued cable franchise consultation and legal fees during negotiations between the City and Comcast. Consultants with expertise on telecommunications law and franchise negotiation were hired in July of 2013. Their work and related legal work continues until the new franchise agreement is in place. The current agreement has been extended until June, 16, 2015 as work and related legal work continues until the new franchise agreement is in place. The negotiations are going well and, barring unforeseen complications, a new agreement is anticipated to be finalized prior to that date. Economic Health 7. Foothills Metropolitan District - $13,750 These funds will be used to form a Metropolitan District at the Foothills Mall redevelopment. Alberta Development submitted these funds, per the 2008 adopted policy regarding Metro District formation, in 2012 and no payments were required in 2014. Funding carried forward are for any payments due in 2015. These funds will be carried until after bond issuance by the metro district. Bonds were issued in late 2014. It is anticipated that these funds will be returned to the application in 2015. Environmental Services 8. Clean Air Quality Programs - $13,374 The reappropriated funds will be used to provide continued support of the air quality programs including: working with state agencies to attain the ozone health standard and protect air quality, increasing outreach and education on ozone issues to empower citizens to reduce ozone precursor emissions, addressing impacts to air quality from fugitive dust, enhancing the zero- interest loan program to encourage citizens to change out old wood stoves & install radon mitigation systems. This work will be accomplished using additional resources including backfilling the vacated 0.5FTE position, funding an hourly program assistant or intern, purchasing safety equipment and air monitoring equipment. Funds were not fully expended for developing air quality programs due to the unanticipated amount of staff work on asphalt and oil and gas issues in 2014. 9. Database Consulting - $5,510 This request is for the second half of payment for development of a database to store and manage Community Diversion Rate data. ITX Project is still moving forward. Purchase Order in place needs to be renewed for completion in 2015. 10. FortZED Engagement and Administration - $28,576 The remaining 2014 funds will be used to support the FortZED community engagement project, Lose-a- Watt Energy Prize (aka Georgetown University Energy Prize competition). This two year project will engage the Fort Collins community to help reduce energy use through energy efficiency as part of a national competition for a $5M prize purse. This project is well aligned as a strategy to assist the community meet goals set forth by the Climate Action Plan and the Energy Policy. This project did not fully develop until mid-December 2014; hence it was not funded as part of the budgeting process. The 2014 funds lapsed due to the unsuccessful agreement of a scope of work with a third party. These negotiations occurred at the end of the budget cycle and resulted in the project and funds lapsing. The funds are intended to be used for a technology platform to provide a data and benchmarking information as part of the re-developed FortZED website. 11. Innovation Fund Program - $45,866 The Municipal Innovation Fund creates a source of funding to develop efficient, innovative improvements to the City’s physical plant and operational procedures. These improvements focus on reducing costs, reducing energy and water use, and reducing the City’s environmental and carbon footprint. Projects will be evaluated by an interdepartmental team using a triple bottom line approach; however, projects that optimize the three areas will be given priority. Some projects funded in 2013/2014 are pending final invoices/payments but have been committed in full. Final requests for payment for these approved projects are expected in 2015. Human Resources 12. Compensation and Career Path Implementation - $30,000 In 2014, the City embarked on an assessment of the current state of Pay-for-Performance, Compensation, and Career Progression. The Study identified a number of opportunities for improving key strategies and processes related to Compensation, Performance Management, and Career Progression. The funds requested will be used for consulting fees associated with the Implementation phase of this Project. Due to the vacancy of the Compensation Manager position, the Implementation phase of the project was delayed. Municipal Court 13. Court-Appointed Defense Counsel - $9,000 In 2014, the budgeted amount for court-appointed defense counsel expenses exceeded the original amount authorized due to changes in the state law which resulted in increased appointments. The Municipal Court Judge ordered court-appointed attorneys assigned to represent several different defendants whose cases began in 2014 and have yet to be concluded or were concluded in 2015. The fee paid for such representation is billed at the rate of $75.00/hour up to a maximum of $1,675.00 if the case does not go to trial or $2,480.00 if the case goes to trial. Due to the complexity of circumstances related to the defense cases involved with these appointments, and the fact that dispositions have not yet been reached or were reached in late December of 2014, the defense attorneys have either not yet presented the Court with bills or presented the Court with bills that were paid using 2015 funds instead of 2014 funds. 14. Court Security Officer - $4,815 In April 2014, City Council approved funding for a new Court Security Officer position for the Municipal Court. Due to the lengthy hiring process required for hiring a limited commission officer, the Court was unable to finish the hiring process until mid-December of 2014. Personnel and equipment costs were anticipated being used by the Court in 2014. The Court has not been billed for all of the equipment or costs associated with the hiring of this officer to date, but anticipate receiving these bills in early 2015. Natural Areas 15. Northern Integrated Supply Project (NISP) - $85,045 The purpose of these funds is to support the City’s analysis of the Supplemental Draft Environmental Impact Statement (SDEIS) for the Northern Integrated Supply Project (NISP). Publication of the SDEIS has been repeatedly delayed by the Army Corps. Staff expects the publication of the SDEIS to be in June or July of 2015. Operation Services 16. Relocation of the Historic Butterfly Building - $250,000 At present, the Creamery Laboratory building is located on the site for the new Utilities Administration Building. It will need to be moved and special requirements of the Landmark Preservation Commission (LPC) will need to be fulfilled. Moving costs and the associated cost to re-purpose this building were not included in the new Utility Building project budget. These costs are to be funded from Operation Services major maintenance budget. The Landmark Preservation Commission has made substantial requests for the relocated Creamery Laboratory building that needs to be completed with the new construction and have it ready to be occupied along with the new Utilities Administration building. This process began in mid-2014; however, the complexity of designing the new administration building to compliment the laboratory building delayed the project. Approval from the LPC to relocate the building was received on February 11, 2015 and this gives the City a better understanding of the overall costs involved in the relocation effort. Parks 17. Median Renovation - $13,423 Median renovation funds are one-time funding for major renovations of medians beyond the amount the Parks Division receives on an on-going basis for small median renovations. These funds are the remaining budget for median renovations in 2014. These funds will be added to the 2015 budget for the design work on the East Horsetooth/South Lemay median renovation project. 18. Lifecycle Funding - $89,610 Lifecycle funds are used for replacement of park infrastructure, and renovating and re-mulching medians. These specific median lifecycle funds were not spent as anticipated in 2014 due to the high volume of construction activity in the area making it difficult to obtain bids, contractors and traffic control permits. Social Sustainability 19. Human Services Program - $4,496 The Human Services Program is requesting a total of $4,496 in reappropriation funding of which $1,722 is to be allocated to the non-profit agency, Education & Life Training Center (ELTC). The agency was awarded these funds through a competitive process and the agency was unable to spend all funds by close of 2014. The remaining $2,774 is for printing and the reception to introduce the “Human Service Partners: A Community Snapshot” report. Due to unforeseen delays in CPIO, the final report was not completed until January of 2015. 20. Affordable Housing Fund - $449,064 The Affordable Housing Funds are allocated annually to support critical affordable housing needs in the City of Fort Collins. They were awarded in the fall cycle of the Competitive Process to housing service providers to further the goals identified in the City’s Affordable Housing Strategic Plan. The second reading of the ordinance approving the allocation of the funds occurred on December 10, 2014. Any un-allocated funds are intended to accumulate in the fund to meet future affordable housing needs. Although the funds were committed, it wasn’t possible to negotiate and complete project contracts prior to the year end, which meant that purchase orders could not be established. Some funds are allocated as match funding for projects receiving federal HOME/Community Development Block Grant (CDBG) dollars. These projects cannot be contracted until all federal requirements have been met. The Home Buyer Assistance program is a City managed program to which funds are not contracted or encumbered but wired to closing as individual loans are approved. GOLF FUND 21. Golf Driving Range Supplies - $40,000 This request will fund the purchase of range balls at the three City-owned golf courses. These funds were not expended in 2014 due to delays in finding sponsorships for the range balls. Logos of sponsors are stamped onto the balls as part of the sponsorship agreements. As of December 2014 sponsorships had not been finalized. KEEP FORT COLLINS GREAT FUND Community Development & Neighborhood Services 22. Design Assistance Program - $1,224 The Design Assistance Program (DAP) was established by Council to address compatibility issues in the Eastside and Westside Neighborhoods. By incentivizing the use of pre-qualified professionals with success in context-sensitive historic design, the DAP helps to enhance the compatibility of size, massing, and character of new construction within the historic core neighborhoods, lessening neighborhood concerns. DAP funds are limited to $2,000 per project and, in 2014, requests were insufficient to fully utilize the total amount budgeted. However, with the steady increase in requests being received (5 to date in 2015); it appears that the budgeted amount will soon be depleted. This reappropriation would supplement the amount available and provide additional assistance, helping to promote Council’s objective. 23. Historic Preservation Grants - $12,401 These funds are used for mailings, printing and similar outreach services in support of Historic Preservation programs, and will be used to fulfill grant-related requirements to provide a historic context, architectural survey, and survey report to each owner of property in the 15-block Loomis Addition. Nearing completion, the grant requires that a copy of this context be provided to each property owner. A copy of each survey form and the accompanying survey report must also be provided to each property owner. These funds will cover the costs of producing and disseminating these documents. 24. Landmark Rehabilitation Program - $14,432 This program provides promised funds for owners who have been given landmark rehabilitation loan awards, but have not yet completed their work, as well as to fund additional loan awards. Recipients of Landmark Rehabilitation Loans have two years in which to complete the work and request reimbursement. In 2014, $18,000 in fund requests were received, resulting in the program having unanticipated extra funds. In 2015, the Commission has received requests for $35,626 in loan funds matched by $78,500 of owner funds, which will result in $114,000 worth of new sustainable rehabilitation work on older housing stock. One-third of these requests cannot be funded in 2015 without this reappropriation. 25. Oil and Gas - $46,379 Staff spent the majority of 2013 and 2014 developing policy on the Oil and Gas issue, securing an operator agreement, legal activities, and conducting interim air quality monitoring. A contract was signed at the end of 2014 with Geosyntec to conduct the groundwater quality monitoring, but the funds were not able to be encumbered. In addition, the funds will be used for follow up on the baseline inspections conducted at the existing operations within City limits and to further investigate results, as needed, from the baseline air quality monitoring in 2014 and groundwater sampling data to be collected. 26. Old Town Neighborhoods Plan - $9,032 This request will utilize the remaining funds from the Lincoln Corridor Plan and to support the Old Town Neighborhoods Plan. The remaining funds for the Lincoln Corridor Plan were identified for the final phase of public outreach. This balance will be used for the same purpose in supporting the Old Town Neighborhoods Plan public outreach process. During this past year, an exhaustive public process led to a Preliminary street design for the Lincoln Corridor. The public process was extended for several months to provide additional information in preparation for the final Council hearing in May 2014. 27. West Central Area Plan - $2,260 The West Central Area Plan update process began in January 2014 and was intended to be completed within a 15-month schedule. Significant work was completed on the plan in 2014, which included extensive public outreach, consultant services, staff planning tasks, and production costs. Staff is requesting reappropriation of the remaining funding to complete the project within the first quarter of 2015, in accordance with the original budget and schedule. Communications and Public Involvement Office 28. Public Engagement - $22,184 Funding supports implementation of key objectives of the City’s Public Engagement Strategic Plan: to better equip City staff to successfully manage public engagement projects, foster an engaged citizenry, and ensure accountability through improved reporting. Funding allocated to support socio-demographic research and implementation of staff public engagement training was not fully expended due to unanticipated medical leave of Civic Engagement Specialist in Q4 2014 and Q1 2015. Work is resuming through the City’s Public Engagement Team and with Civic Engagement Liaison support during remainder of 2015. Cultural Services/Museum 29. Museum of Discovery Display Cases - $19,250 KFCG funds were designated for the Museum to purchase and install additional museum casework to be added to the galleries to enhance the visitor experience. Staff focus in 2014 was on the design and installation of the “FC150 A Sesquicentennial Celebration” exhibit. The KFCG funded cases were designed and bid out in the third quarter of 2014, but the contract was not signed until the fourth quarter of 2014 with delivery of the cases scheduled for early 2015. Environmental Services 30. Road to Zero Waste - $41,107 Part of these funds will be used to pay for development and construction of a trash and recycling enclosure in Montezuma Fuller Alley at the Oak Street parking lot. It will allow businesses in the area to abide by the cardboard ordinance, which they currently cannot do due to lack of space for a recycling bin. The project will also beautify this high-visibility area. Additional projects will also be implemented based on recommendations from the Road to Zero Waste plan. The projects were delayed due to many factors, but are moving forward now and are expected to be completed in 2015. Natural Areas 31. Ecosystem Response Model - $56,196 The purpose of these funds is to develop the Poudre River Ecosystem Response Model and to further utilize the model to help analyze the Northern Integrated Supply Project’s Supplemental Draft Environmental Impact Statement (SDEIS). Publication of the SDEIS was delayed, but staff expects it to be published in June or July of 2015. 32. Poudre River Ecological Restoration and Rehabilitation - $256,998 These funds were appropriated for stream restoration and rehabilitation and supported extensive restoration of the Poudre River channel and bank at several locations, including Sterling Natural Area and McMurry Natural Area. These KFCG funds were matched by Natural Area’s baseline restoration funds and external funds raised by our non-profit partner, the Colorado Water Trust. A combination of efficiencies that kept the project under budget and additional funds brought to the table by The Colorado Water Trust who partnered with us on the Ames diversion removal represents the savings and carryover. These funds from 2014 will be used for additional Poudre River restoration as part of the Kingfisher Point/Poudre River Ecological Restoration project underway in 2015 and 2016. Parking Services 33. Neighborhood Permit Parking Program - $7,176 This program was created in order to provide close and convenient on-street parking for residents by reducing the volume and impact of non-resident vehicles parking in the neighborhoods. A purchase order had been issued for signage for the neighborhoods but was closed at the end of the year. Signage is still being added or amended in the neighborhoods and this requests the balance of unencumbered funds to be used for signage needed in the neighborhoods. 34. Parking Garage Major Maintenance/Handicap Parking Spaces - $45,480 These funds provide critically needed maintenance and repairs for the Old Town Parking Structure and for the installation/upgrades of handicap accessible parking spaces in the downtown area. Although work was planned for the Old Town Parking Structure in 2014, funds could not be encumbered prior to year-end. In addition, some funds had been encumbered for the installation/upgrades of handicap parking spaces, however, the concrete company was sold and the purchase order was closed prior to year-end. A new Purchase Order will be issued for this work in 2015 once the funds are reappropriated for work to be completed in 2015. Parks 35. Lifecycle Funding - $217,881 Lifecycle funds are used for replacement of park infrastructure, and renovating and re-mulching medians. Funding of $217,881 will be used to replace lighting at Edora ball fields. There was not sufficient funding available in 2014 for the project, so these funds will be added to the 2015 budget to fully fund the project. Traffic 36. Traffic Signal Network Firewall - $20,000 Funds are intended for the installation of a firewall for the Traffic Signal Network. Currently, the signal network is protected from unauthorized access via an “access control list”. This is a cumbersome method as we continue to enhance the traffic signal network. More importantly, IT does not believe that the current set up provides the necessary level of security. They have determined that a hardware firewall is needed to properly secure the traffic network. This is an IT project that will be funded by Traffic Operations. IT was not able to schedule and complete the work in 2014 due to other priorities. LIGHT & POWER FUND 37. Solar Rebate Incentives - $18,000 Solar garden funding was budgeted for $250,000 in both 2013 and 2014. Due to construction delay of four residential solar electric installations we are requesting reappropriation of 2014 funds so that the awarded rebate incentives can be paid in 2015. TRANSPORTATION FUND FC Moves 38. Transportation Planning and Engineering Consultation - $28,000 The City of Fort Collins, Colorado has contracted with Atkins to perform on-call Transportation Planning Studies and related analyses to evaluate long range and short term multi-modal transportation needs. Assignments or tasks will be assigned on an as needed basis. The purpose of this request is to extend this on-call through the end of 2015, including but not limited to the Larimer County Urban Street Standards and Master Streets Plan updates, and the Land use code amendments. The funds were not fully expended in 2014 as the need to utilize this on-call contract did not occur. The expected tasks for 2015 were initiated internally by staff in 2014 however; the items to be assigned to the on-call consultants were not scheduled to begin until 2015. FINANCIAL/ECONOMIC IMPACTS This Ordinance increases 2015 appropriations by $2,055,690. A total of $1,197,690 is requested for reappropriation in the General Fund and $858,000 is requested from various other City funds. Reappropriation requests represent amounts budgeted in 2014 that could not be encumbered at year-end. The appropriations are from 2014 prior year reserves. COUNCIL FINANCE COMMITTEE AGENDA ITEM SUMMARY Staff: Mike Beckstead, Chief Financial Officer Harold Hall, Investment Administrator Date: March 16, 2015 SUBJECT FOR DISCUSSION The City Investment Policy and 2014 Investment Return Review includes a review of investment objectives, legal investments, City investment policy summary, interest rate environment, and 2014 investment returns. EXECUTIVE SUMMARY The City investment policy did not change in year 2014. City investment objectives, types of investments, and policy parameters were unchanged. The 2014 City investment return of 1.10% exceeded by .35% the budgeted return assumption of .75% for year 2014. Total interest income earned is approximately $5.1 million dollars with $635 thousand dollars going to the general fund. The City’s year over year return increased 22 percent in 2014. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED This is an annual review and information presentation only and does not require direction from the committee. BACKGROUND/DISCUSSION The current City investment policy has been in place since December 2012. ATTACHMENTS 1. Copy of current investment policy 2. PowerPoint presentation 1 Council Finance Committee Investment Policy Review 16 March 2015 2 Topics • Investment Objectives • Legal Investments • City of Fort Collins Investment Policy • Summary of Investments • Federal Reserve Policy & Interest Rates • Investment Returns • Investment Earnings History 3 City of Fort Collins Investment Policy Review Investment Objectives (in order of importance): 1. Legal conformance: conform to all legal and contractual requirements. 2. Safety: Safety of investment principal and the preservation of capital. 3. Liquidity: sufficiently liquid to meet all operating cash flow needs. 4. Return on Investment: maximizing the rate of return on investment while maintaining acceptable risk levels. Legal, Safety & Liquidity are More Important than Investment Return 4 City of Fort Collins Investment Policy Review Legal Investments under Colorado State Statute 24-75-601.1 1. Treasuries 2. Government Agency Securities 3. General Obligation / Revenue Bonds 4. Bankers Acceptance 5. Commercial Paper 6. Local Government investment Pools 7. Repurchase / Reverse Repurchase Agreements 8. Securities Lending 9. Money Market Funds 10. Guaranteed Investment Contracts 11. Corporate Bonds Equities are not Legal Investments 5 City of Fort Collins Investment Policy Policy Investment Parameters Maximum • CASH AND CASH EQUIVALENTS 100% • TREASURY SECURITIES & AGENCY SECURITIES 90% • REPURCHASE AGREEMENTS 70% • DOMESTIC CORPORATE BONDS* 40% • BANK DEBENTURES*, COMMERCIAL PAPER*, BANKER’S ACCEPTANCES* 25% • LOCAL GOVERNMENT INVESTMENT POOLS 20% • MONEY MARKET FUNDS, CD’S, & CDARS 15% • GUARANTEED INVESTMENT CONTRACTS 5% *Maximum 10% of the portfolio invested in any one issuer . 6 City of Fort Collins Investment Policy Review Current Policy Investment Rules: – Maximum maturity of individual investments is 5 years. (exceptions may exceed 5 years; maturity length to coincide with expected use of funds) – Weighted Average Maturity of City portfolio not to exceed 3 years. – Must maintain 5 percent of the operating portfolio in instruments maturing in 120 days or less. Balance Capital Preservation and Liquidity Objectives While Maximizing Investment Returns 7 Market Value 1 0.460 488 1 0.956 540 37 1.497 1,293 13 1.453 1,147 13 1.052 988 22 1.341 1,241 3 0.750 281 3 0.862 344 6 9.966 872 1 0.250 79 4 0.773 106 1 1.750 305 3 0.515 466 Total and Average 108 Issuer Apple Inc 2,500,000.00 2014 year End CIty of Fort Collins Summary by Issuer December 31, 2014 Number of Investments Par Value % of Portfolio Average YTM 365 Average Days 2,497,300.00 0.65 Federal Farm Credit Bank 142,195,000.00 142,028,983.30 36.73 Chevron Corp 2,500,000.00 2,505,300.00 0.65 Federal Home Loan Bank 52,550,000.00 52,501,267.50 13.58 Federal Home Loan Mortgage Co. 54,500,000.00 54,258,140.00 14.03 Federal Nat'l Mtg. Assoc. 90,670,000.00 90,284,651.30 23.35 General Electric Co 9,000,000.00 9,023,040.00 2.33 General Electric Cap Corp 11,000,000.00 11,047,520.00 2.86 GNMA 14,767.27 15,062.69 0.00 Great Western Bank 1,250,000.00 1,250,000.00 0.32 Met Life Global Funding 11,780,000.00 11,816,666.20 3.06 Morgan Stanley Smith Barney 2,000,000.00 2,039,020.00 0.53 Wal-Mart Stores Inc 7,450,000.00 7,446,498.50 1.93 387,409,767.27 386,713,449.49 100 1.303 1,095 8 Quarterly Investment Returns • Investment Returns: __Percent_ Weighted Average Maturity • 2013: • 1st quarter = .92 2.4 years • 2nd quarter = .88 2.4 years • 3rd quarter = .89 2.4 years • 4th quarter = .91 2.4 years • 2014: • 1st quarter = .96 2.8 years • 2nd quarter = 1.09 2.9 years • 3rd quarter = 1.17 2.9 years • 4th quarter = 1.20 2.8 years Average Historical WAM since 2006 = 2.1 years 9 Investment Earnings Received • Investment Earnings: Total $ (in Millions) Average Interest rate • 2006 actual = 13.7 4.34% • 2007 actual = 15.6 4.91% • 2008 actual = 14.5 3.91% • 2009 actual = 9.5 2.55% • 2010 actual = 6.3 1.88% • 2011 actual = 5.2 1.38% • 2012 actual = 4.1 1.10% • 2013 actual = 3.6 0.90% • 2014 actual = 5.1 1.10% Investment returns bottomed in 2013. Rates should increase as the Fed normalizes monetary policy. 10 Federal Reserve Policy & Interest Rates Interest Rate Environment: • The Fed left the Fed Funds rate unchanged during 2014 at a range of 0% to .25%. This rate has been effective since December 2008. • Interest rates will likely remain at these levels as long as the committee determines its objectives of maximum employment and 2 percent inflation are unrealized. • The Fed announced an end to its purchases of mortgage-backed and Treasury securities in October 2014. • The Fed is widely expected to increase the feds funds rate in the second half of 2015 but it has hedged its language to allow for delays in rate increases depending on the strength of the economy and other economic indicators. • The pace and size of rate increases is the big unknown despite much speculation by wall street economists.