HomeMy WebLinkAboutAgenda - Mail Packet - 11/17/2015 - Council Finance Committee And Ura Finance Committee Agenda - November 18, 2015Council Finance Committee & URA Finance Committee
Agenda Planning Calendar 2015
RVSD 11/09 mnb
Nov 18 TOPIC TIME WHO
CFC
Street Oversizing Impact Fee Update 20 min D. Klinger
Revenue Diversification 20 min T. Smith
Utility – Capital Requirements within Water Enterprise 20 min L. Smith
URA
Dec 21 TOPIC TIME WHO
CFC
Strategic Risk Assessment 30 min A. Gavaldon
Policy Formalizing Use Tax Current Practices 15 min T. Storin
Response Plan to 2014 Audit Findings 20 min T. Storin
URA
Jan 25 TOPIC TIME WHO
CFC
URA
Feb 22 TOPIC TIME WHO
CFC
Utility CIP & LTFP Review 30 min L. Smith
URA
Future Council Finance Committee Topics:
CAP Financing Strategies
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
November 18, 2015
2:00 – 3:00 p.m.
CIC Room – City Hall
Approval of the Minutes from the October 26, 2015 meeting
1. Street Oversizing Impact Fee Update 20 minutes D. Klinger
2. Revenue Diversification 20 minutes T. Smith
3. Michigan Ditch Finance Requirements 20 minutes L. Smith
Other Business
• Fund Balance Update
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
10/26/15
10:15 - Noon
Community Room
Council Attendees: Mayor Wade Troxell, Gerry Horak, Ross Cunniff
Staff: Mike Beckstead, Jeff Mihelich, John Duvall, John Voss, Josh Burks, Patrick Rowe, Andres
Gavaldon, Tiana Smith, Noelle Currell, Nancy James
Others: Kevin Jones – Chamber of Commerce, Stu MacMillan – Everitt Companies
Absent:
APPROVAL OF MINUTES
Gerry Horak made a motion to approve the September 21, 2015 Council Finance Committee minutes. Ross
Cunniff made a second to the motion. The minutes were approved unanimously.
DOWNTOWN PARKING STRUCTURE FINANCING
Josh Birks presented the proposal to bring this item to Council on November 17th. The item proposed is a
public/private partnership which is consistent with strategic goals. The parking plan that was completed in 2013
identified the proposed location as a need for additional parking in Old Town.
The public-private partnership proposes to construct a 3-level mixed-use parking garage with approximately 323
parking spaces and 3,200 square feet of retail space at the corner of Chestnut and Jefferson Streets – 363
Jefferson Street (the “Project”). The project will be a public-private partnership between the City of Fort Collin
and the developers of the Fort Collins Hotel (Bohemian Companies, McWhinney, and Sage Hospitality –
collectively the “Developer”). The garage entry will be on Chestnut Street and the retail spaces will face onto Old
Firehouse Alley. The Project will contain all required vehicle and bicycle parking for the hotel.
Parking Garage Overview – 323 Total parking spaces (216 – Public, 107- Hotel)
The anticipated total cost is $11.5M, which equals $35.6k per space, including land. The City will purchase
specific parking spaces at completion of the project, which is currently scheduled for the first quarter of 2017.
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Downtown Parking Structure Financing:
• City’s cost - $7.1M
• Annual Debt Service
o 10 Years @ 2.5% = $868k
o 20 Years @ 4.0% = $559k
• Annual On-Going Funding Sources
o Current Civic Center Parking Deb Service – beginning in 2019
Last Payment – June 2018
City Portion - $1,115k (includes 215 N. Mason)
o DDA Support
DDA Resolution 2015-05 documents commitment
• Utilize GF reserves 2017-2018
• City approval of the final plans and itemized cost estimate before construction can commence
• City will purchase 216 deeded spaces from the Developer after construction is completed
Mike indicated that with council’s direction in November to move forward with the project would allow
financing to be in place for the first quarter of 2017. Mike also stated that staff did an analysis as to whether the
financing should be acquired now, which would require the funds to remain in the bank for 6-9 months, or
whether financing should be acquired in the 2nd half of 2016. The analysis showed that a 60 basis point rise in
interest rates indicated that we would be better off doing the financing now; however it’s impossible to predict
when rates will actually rise. Mike continued stating that it is staff’s recommendation to move forward with
financing the 1st half of 2016; locking in at a lower rate, thus avoiding any risk that rates may spike in the 2nd half
of 2016. Staff’s further recommendation is to keep the annual debt service under 10 years. There is existing
debt service on 215 N. Mason and the Civic Center Parking garage, which will expire in June 2018. That debt
service is currently using $1.1M of general funds to support the City’s portion, with the DDA contributing
approximately $275k for that debt as well. The DDA has passed a Resolution committing to $275 - $300k in debt
service beginning in 2019; meanwhile the City will be freeing up the debt service on 215 N. Mason and the Civic
Center Parking Garage. During the interim, staff proposes using use tax and general fund reserves, which would
amount to approximately $1.7M, to fund the first two years of debt payment. Staff recommends using a one-
time revenue to support the two years and then using the retired debt to support the project from that point
forward.
In addition, subject to Council’s direction in regard to the Policy Training Facility project, if the timing of these
two projects coincide, staff has discussed with Bond Council about doing a single debt issuance.
Council and Staff discussed the overall project further. Ross indicated that to be comfortable with this project,
Staff will have to do extensive public outreach and community engagement plan, and be very transparent about
the funding for the project. Ross further stated that he was concerned about security after dark. Josh
confirmed that the current parking structures use a lot of security cameras, which optimizes the number of
personnel that is needed. On heavier use days there is physical security.
Darin also stated that the Bohemians have also asked for several encroachments. Darin will bring light to those
at Council on Tuesday evening.
3
SALES TAX RECAPTURE – REVIEW OPPORTUNITIES
The City Council identified a Sales Tax Recapture Initiative in their Priorities for 2015. The Council Finance
Committee had an initial conversation regarding the scope in June. The Committee clarified the desire to
evaluate and understand the opportunity for Intergovernmental Agreements (“IGA”) with adjacent communities
in order to share sales tax revenue from commercial development that occurs along the borders between each
City. As a precursor to those discussions staff has prepared an analysis of commercial sites along the edge of the
community that represent the opportunity for retail development that could generate sales tax revenue to share
through an IGA.
General Direction Sought from CFC:
1. Does the Council Finance Committee agree with the identified opportunity sites? And the identified
communities to approach?
2. Does the Council Finance Committee need additional information to inform the next steps of this
initiative?
Considerations of Analysis:
1. Property types to include – Revenues to share, sales tax, property tax, or both?
2. Level of existing development – Should agreements be retroactive?
3. Extend of revenue sharing area – How far into each community should a revenue sharing area extend?
Questions from Council:
Gerry - asked about the existing IGA with Loveland and what assurances do we have that the boundaries will
stay the same between the communities. Gerry also asked about the property between Wellington and Ft.
Collins and better assurances with an agreement (IGA).
Wade - asked if the property at Prospect and I-25 is currently zoned for best use and practice? Josh indicated
that previously they had requested that this area be re-zoned to extend the commercial further into the
property, which was denied. Darin indicated that currently the property owners, which is owned by the White
Brothers, are talking to Planning staff about other options for that location, which would include employment,
industrial and affordable housing.
Darin also indicated that there have been conversations going on every few months with Timnath and Laurie
Kadrich’s office. Also, there have been very good conversations with Loveland in regard to renewing the IGA
between Ft. Collins and Loveland. However, he feels it’s important to further engage the elected officials in
Timnath.
Josh stated that the obvious has been identified, and that a conversation with Timnath on the three
interchanges: Harmony Road & 1-25, Prospect Road & I-25, and Mulberry Road & I-25, should take place. Josh
will do a follow-up memo on the questions from CFC.
POLICY UPDATES – METRO DISTRICT & PENSION FUNDING
At the July meeting the Council Finance Committee reviewed the funding status of the pension plan. The plan to
fully fund the General Employees Retirement Plan (GERP) by contributing an additional $1.12 million until the
100% funded. The Committee request the plan is formalized in a policy with additional parameters on when
further actions should be taken regarding funding. The attached Pension Funding policy captures the requested
parameters.
4
The other policy to consider is an existing policy that was first developed and approved in 2008 - the Metro
District Policy. At that time no Metro Districts existed and a proposal to create one was in the works. The
Council Finance Committee wanted a policy to guide them before considering any proposals. Staff recommends
no changes to the existing Metro District Policy.
General Direction Sought:
1. Is the Pension Funding policy ready to bring to City Council for adoption?
2. Is the Metro District policy satisfactory as is and no changes are needed? Mike’s expectation is that we
will take this policy to Council for approval. Josh stated that these types of policies are a guide… After
further discussion, it was determined that some guides should be provided. Mike will make this
adjustment, and will place the item on consent at a future Council meeting.
Mike informed CFC that the approved policies are now available on FCGOV.com with current revision dates.
The Council Finance Committee adjourned their meeting and reconvened into URA Committee at 11:13 a.m.
URA COMMITTEE
TIF ASSISTANCE PROPOSAL
Hickory Commons, a proposed development located within the North College Tax Increment Financing (TIF)
district of the Fort Collins Urban Renewal Authority (URA), has submitted an application for TIF financing
assistance in the amount of $136,072. If approved, the TIF would be provided as a reimbursement for
stormwater facility costs, including a neighborhood drainage outfall which may benefit several properties within
the vicinity of the proposed development. The TIF assistance would be paid out over time based on actual
increment collected from the project, in keeping with current URA practices.
Total Project Cost - $4,909,886
The TIF request is for a maximum of $136,072 for the reimbursement of costs related to the construction of the
development’s stormwater system. This system includes the construction and oversizing of proposed drainage
outfall, which may be a benefit to neighboring properties. Additionally, the stormwater system will pick-up
historic flows from Hickory Street and a neighboring property to the west. The repay eligible portion of this
request is estimated to be $40,000 and would be assigned to the URA fi the application is approved.
General Direction Sought from CFC:
1. Does the URA Finance Committee concur with staff’s recommended reimbursement approach (terms
and timeline)?
2. Does the URA Finance Committee have questions, comments, or concerns that should be addressed
before this item is presented to the URA Board?
Wade asked what the expected use was going to be. Patrick indicated that the warehouse is being built on a
speculative basis. They are working on marketing aspects at this time; no user currently slated for the space.
Patrick stated that the owner has owned the site for an extended period of time. Ross stated that in general,
the proposal makes sense; however, he wants to be careful about the justifications that we are using going
forward. Although not required, he also felt it would be helpful to write a letter to the other taxing districts,
Josh stated that they are having a lot more interaction with the county. Patrick further indicated that he has
5
gone through KAG and they have voiced their approval. Gerry was concerned about the number of warehouse
properties in north Ft. Collins, which is not what we would like to see in north Ft. Collins. Ross did say that one
advantage would be the stormwater improvements as a public benefit. However, he does agree with Gerry in
that we do not want to keep doing more of the same.
Darin indicated that he and Mike has been serving on a Steering Committee (County-wide URA) and how it’s
relating to the Districts; they are not real concerned about the one- off projects, but more concerned about the
accumulative impact with the larger projects. Ross suggested a letter be submitted to them for public
awareness. Gerry stated that this should be standard practice.
Wade stated that he does not want the URA to be part of investing in financial deals. Josh will look into the
zoning, and if there is any way to restrict the benefit being tied to excluding certain uses.
URA 2016 BUDGET
This item pertains to the 2016 budget for the Fort Collins Urban Renewal Authority (URA). The budget is
comprised of revenues and expenses from the three tax increment financing districts within the URA, as well as
general URA operating costs.
The 2016 annual operating appropriation for 2016 is $2,889,600.
General Direction Sought:
No discussion planned - this item is provided as information only; staff is available for questions.
Wade adjourned the URA Committee and reconvened Council Finance Committee at 11:32 a.m.
OTHER BUSINESS
Revenue Diversification Opportunities
Mike stated that he had a meeting two weeks ago with David Roy and they talked about reviewing this item at
CFC. Mike’s recollection was that Council asked staff to come back at a future meeting with a list of all of the
opportunities and actions we have explored in the past and to get direction from CFC about which 2 or 3 that
should be pursued over the course of the next 3-6 months. Mike sought direction about when this should be
scheduled, given the limited time available at the November and December meetings. After further discussion,
it was determined that Mike will place the item on the November 18th CFC meeting agenda.
Reschedule January and February 2016 CFC Meetings
Mike sought direction on rescheduling the January and February 2016 Council Finance Meetings due to
following on Holidays. It was determined that staff will work with Sarah Kane in City Manager’s Office to
reschedule.
Meeting Adjourned at 11:36 a.m.
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Rick Richter, Director of Infrastructure Services
Dean Klingner, Capital Projects Manager
Matt Baker, Street Oversizing Program Manager
Date: November 18, 2015
SUBJECT FOR DISCUSSION
Transportation Capital Expansion Fee (Street Oversizing) Assessment
EXECUTIVE SUMMARY
The purpose of this item is to update the status of the assessment and update of the Street
Oversizing Program. The Street Oversizing Program has been a successful funding source for
roadway capital improvements with development. Emerging trends of redevelopment and the
approaching build out of the City’s GMA make an update desirable. Other changes over the last
few years which indicate an update are:
• Updates to Transportation Modelling, such as the NFRMPO 2045 have just been
completed and adjustments to the methodology are needed.
• New Street Standards, including Bike and Pedestrian Plan elements
• New MAX bus rapid transit and transit oriented development may allow alternative
compliance, reducing the need for traditional street infrastructure.
• Redevelopment and infill projects place different impacts on public facilities than
greenfield development.
The City of Fort Collins has retained TischlerBise, Inc. as a consultant to assist the City with the
assessment of its existing Transportation Capital Expansion Fee Program (Street Oversizing
Capital Expansion Fee Program).
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
• Is there support for the continued use of a Transportation Impact Fee program to access
development its proportional cost for impacts to the transportation system?
Are there any questions or concerns about the adjustments being considered to the
Transportation Capital Expansion fees?
Any comments regarding the idea of establishing two different benefit zones in the
Transportation Capital Expansion Fee to mitigate redevelopment impacts?
BACKGROUND The City of Fort Collins charges new developments Capital Expansion Fees
for their proportionate share of the cost of new capital facilities required to serve them. The
Street Oversizing Capital Expansion Fee is a one-time impact fee on development, and is used to
mitigate the impacts of new development on the transportation network. The Street Oversizing
Capital Expansion Fee Program has been a stable long term funding source for the construction
of capital transportation infrastructure in newly-developing areas. The Street Oversizing impact
fee program was originally adopted in 1979, with revisions in 1986, 1993, 1997, 2000, 2003, and
2006. Periodic recalculations and inflation adjustments of the Street Oversizing fee schedule
ensure that fee revenues will be sufficient to pay for the cost of eligible improvements. However,
as the City of Fort Collins begins to approach build out if its Growth Management Area, it is
prudent to assess and update the program to continue the long term success of the program to
fund development impacts to the City’s transportation network. City Council has directed staff to
review the Street Oversizing Capital Expansion Fee Program as the appropriate basis for
assessing the cost of transportation improvements to developments based on their proportional
impacts.
In 1997, the City adopted Section 3.7.3 of the Land Use Code - Adequate Public Facilities
Ordinance (APF) in order to establish an ongoing mechanism that ensured that public facilities
and services needed to support development are available concurrently with the impacts of such
development. The Adequate Public Facilities Ordinance is supported, in part, by the Street
Oversizing Program. However, the Street Oversizing Program cannot fund improvements that
are not directly related to mitigating development impacts such as existing deficiencies, regional
growth need, etc. Solutions to transportation APF problems often require funding from multiple
sources including the General Fund and Street Oversizing.
Objectives of this review and assessment are:
• Review and update the Street Oversizing Program methodology, including base land use
assumptions, traffic projections and modelling, construction cost data, credit for taxes,
and trip generation.
• Review Colorado Impact Fee law to ensure compliance with regulatory guidelines.
• Explore how redevelopment and infill projects might generate different impacts and
needs for transportation facilities.
• Provide some flexibility for alternative compliance through demand management or other
strategies to reduce the need for traditional infrastructure.
• Explore elements of a funding strategy for long term and larger projects, such as
combining impact fee revenue with other revenue for ineligible projects, exemptions for
affordable housing and economic development, and service area boundaries.
In addition to updating the base assumptions and methodology of the Street Oversizing
Capital Expansion Fee Program, several other modifications are being considered. Staff is
seeking direction on the following proposed changes:
• Changing the name from “Street Oversizing” to “Transportation Capital Expansion Fee”
• Using Vehicle Miles Travelled (VMT) as the basis for determining impact, instead of
trips generated.
• Transportation impact fees be assessed by dwelling size instead of unit type, similar to
how all other Capital Expansion fees are assessed. Capital Expansion Fees in general are
perceived to affect the affordability of homes, and staff recognizes the sensitivity of fee
increases.
• Simplify the transportation impact fee schedule from 43 categories of use to only a
handful; Residential (by size of unit) and two broad categories for commercial and
industrial.
• Creating two benefit districts to recognize the differing transportation improvements
needed in the redeveloping downtown area. The Urban district would include the areas
of the Downtown Plan, North College URA, and the Midtown URA. The suburban
benefit district would include the remaining developable land in Fort Collins.
ATTACHMENTS
Memo re: Adequate Public Facilities, September 11, 2014 (PDF
Work Session Summary, Adequate Public Facilities Ordinance, January 28, 2015 (PDF)
DATE:
STAFF:
January 27, 2015
Karen Cumbo, Director of PDT
Rick Richter, Director of Infrastructure Services
WORK SESSION ITEM
City Council
SUBJECT FOR DISCUSSION
Status of the Adequate Public Facilities Ordinance.
EXECUTIVE SUMMARY
The purpose of this item is to discuss the status of Land Use Code (LUC) Section 3.7.3 - Adequate Public
Facilities Ordinance (APF) in order to review the APF requirements and identify the next steps in exploring
revisions to the ordinance.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Discussion of next steps.
BACKGROUND / DISCUSSION
In 1997, the City adopted Section 3.7.3 of the Land Use Code in order to establish an ongoing mechanism that
ensured that public facilities and services needed to support development are available concurrently with the
impacts of such development. Ordinances governing “concurrency” of public facilities such as transportation,
utilities, and others generally operate in conjunction with specific land use requirements related to development.
In Fort Collins, APF provisions are in addition to other requirements for infrastructure that are needed to serve a
particular development. For transportation, the adoption of the APF Ordinance was intended to strengthen an
already existing Street Oversizing Program (SOP) that was established in 1979. The SOP continues today and is
a capital expansion fee program that collects revenue from new developments specifically to mitigate
communitywide traffic impacts. The SOP collects revenues intended to be used for the design and construction
of arterial and collector streets citywide, and is in addition to obligations for local street improvements needed for
development. The system improvements necessary to build the Master Street Plan are intended to be funded by
a combination of funding sources including City of Fort Collins Capital Funding (to address existing deficiencies
and broader, system-wide improvements not directly related to development) and developer contributions (to
address new impacts as identified in Traffic Impact Studies). Developer contributions are addressed by collecting
Street Oversizing fees at the time of development and by requiring certain road improvements to be built by the
developer at their cost. The collection of Street Oversizing fees cannot be used to address existing deficiencies
that are not related to development.
There have been questions raised about the implications of the APF ever since it was adopted. Staff files include
memos and notes from 2000, 2003, 2007, 2013, and 2014. A memo was sent to Council in September 2014 that
recommends consideration of these issues:
Updating of the Street Oversizing Program to verify the basis for assessing the proportional cost of
transportation improvements (including new standards for sidewalks, landscaping, etc.);
Evaluation of how redevelopment and infill impacts on public facilities differ from “greenfield” development
and incorporate the differences into new requirements;
Evaluation and drafting of alternative compliance methods like demand management strategies or other
methods that would reduce the need for traditional infrastructure improvements;
January 27, 2015 Page 2
Identification of a funding/financing strategy for the construction of existing deficiencies and costly projects
such as the above-grade crossing at Vine and Lemay or Timberline and Lemay improvements. A strategy is
needed since a portion of these improvements were needed at the time the APF Ordinance was enacted;
however a current funding source has not been identified. Because the need for these long-standing projects
is not entirely tied to development impacts, financial responsibility cannot be assigned solely to development.
ATTACHMENTS
1. Memo re: Adequate Public Facilities, September 11, 2014 (PDF)
ATTACHMENT 1
Transportation Capital Expansion Fee Assessment
City of Fort Collins Engineering
5-24-15
Program Overview
What is Street Oversizing?
• Capital expansion to serve more
than local traffic
• Covers growth share of
system improvements
Street Oversizing Program
• Collects an impact fee for each
new building permit based on
traffic generated.
• Reimburses developers for
constructing arterial and collector
streets within and adjacent to
their developments.
2
Cost of Improvements
3
• Construction cost
estimate of Oversizing
improvements needed
adjacent to
development land
• Based on the City’s
Master Street Plan
• Includes oversized
portion of roadways,
structures, sidewalks,
engineering, traffic
signals, and bike lanes
Fee Calculation Formula
4
Total cost of improvements necessary
to serve new development
Total Trip increase
from new development
= Cost to Add One Trip to
Transportation Network
Trip Generation of Building or
Project (from TIS or ITE Manual)
Cost to Add One Trip
to Transportation Network
Trip Adjustment Factor to Account
for Pass-by and Diverted Link Trips
X
X
= Street Oversizing Fee
Unit Cost
Impact Fee Requirements
Senate Bill 15
• Comprehensive Transportation Plan and Joint
Transportation Funding Program Adopted
• Credit for Taxes and Improvements
• Rough Proportionality to Benefit
• Plan to Correct Existing Deficiencies
• Trigger in Development Process
• Building Permit
• Time Limit and Refund Provisions
5
Eligible Projects
How are street oversizing fees used?
• Arterial lane miles in developing area
• Improving traffic flow at intersections
(turn lanes, roundabouts, traffic signals)
• Complete streets and
multi-modal facilities
6
Roadway CIP Plan
Transportation Capital Improvements Plan
Unfunded Capital
Street Oversizing Fees
GF Contribution
7
Completed Improvements
Between 1998 and 2014, the Street Oversizing Program
participated in the construction of:
• 69.2 lane miles of roadway, including 71 auxiliary turn lanes
• 10.7 miles of landscaped medians
• 48.7 miles of bike lanes
• 36.9 miles of sidewalks
• 85 enhanced crosswalks
• 29 bus pads (4 with shelters)
• 82 traffic signals or signal upgrades
• $77 million in transportation improvements
8
Street Oversizing
Revenue vs. Expenditure
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
Millions
Revenue
Expenditures
9
Purpose of Update
• Updates to Transportation Modelling, such as the NFRMPO 2045
have just been completed and adjustments to the methodology are
needed.
• New Street Standards, including Bike and Pedestrian Plan elements.
• New MAX bus rapid transit and transit oriented development may
allow alternative compliance, reducing the need for traditional street
infrastructure.
• Redevelopment and infill projects place different impacts on public
facilities than greenfield development.
10
Timeframe and Next Steps
August 2015 through February 2016
• Land Use Assumptions and Development Projections
• Determine Transportation Capital Needs
• Evaluate Allocation Methods
• Determine Need for Credits
• Conduct Cash Flow Analysis
• Prepare Updated Street Oversizing Capital
Expansion Fee Report
• Prepare Expansion Fee Ordinance and
Implementation Assistance
11
12
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Mike Beckstead, CFO
Tiana Smith, Revenue and Project Manager
Date: November 18, 2015
SUBJECT FOR DISCUSSION Revenue Diversification History and Next Steps
EXECUTIVE SUMMARY
The purpose of this item is to provide a recap to the Council Finance Committee of the ongoing
Revenue Diversification project. Since 2012, staff has continued to analyze and consider various
facets of diversification which have been presented to City Council in phases. This item
summarizes the efforts to date and asks for Council Finance to recommend 2-4 options for staff
to pursue.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Based on the 6 Revenue Principles, which 2-4 options for revenue diversification should we
pursue from the 8 options presented?
BACKGROUND/DISCUSSION
The City receives 45%-51% of its revenue from sales and use tax. Sales and use tax can be a volatile
source or revenue during times of economic downturn. The issue of how to strike a balance of
adequate revenue to fund current levels of service without an overreliance on sales and use tax is an
ongoing issue.
In 2012, staff embarked on an ongoing project to assess the City’s revenue. Phases of the project
have included the following initiatives:
• Analyze City’s revenue base and compare it to benchmark jurisdictions
• Evaluate diversification options
• Update Revenue Policy to include revenue principles for decision making
• Analyze a Street Maintenance and Park Maintenance Fee
• Complete comprehensive fee comparison study
The presentation will recap the following:
1) Revenue Comparisons
2) Revenue Principles
3) Options to Diversify
The information presented has been updated to current revenue figures. The presentation is intended
to recap for the Council Finance Committee the information that has been gathered at each phase and
ask for direction on which options to pursue.
ATTACHMENTS
1. Council Finance Committee: Revenue Diversification History and Next Actions
Revenue Diversification
10/18/15
Council Finance Committee
1
Revenue Diversification
“Not putting all your eggs in one basket”
Revenue – the total income produced by a given source
Diversity – the condition of having or being composed of differing
elements
There is merit in the notion that states and local
governments should balance their tax systems through
reliance on the "three-legged stool“**
** Source – National Conference of State Legislatures (NCLS)
Goal – Reduce Dependency on Sales Tax Revenue by
Creating Alternate Sources of Revenue
2
Sales & Use Tax
$ 111.8M
45%
Intergovt’al
$ 68.7M
28%
Charges for
Services
$ 33.4M
13%
Property Tax
$18.5M
7%
Other Misc.
$ 6.3M
3%
Other Taxes
$ 3.8M
2%
Fines &
Forfeitures
2,803,037
1%
Investment
585,365
0%
Licenses/Permits
3,040,048
1%
Fort Collins Governmental Revenue
2013 2014
Sales & Use
Tax
$129M
51%
Intergovt’al
$49.7M
19%
Charges for
Services
$37.6M
15%
Property
Tax
$19.2M
7%
Other Misc.
$5.2M
2%
Licenses/Perm
its
$4.6
2%
Other Taxes
$3.98M
2%
Investment
$2.9M
1%
Fines &
2014 Revenue Comparison
Colorado Cities
Fort Collins Reliance on Sales Tax Increased with KFCG
4
2010 Revenue Comparison
National Cities
Diversity in Other Cities is Often Achieved With an
Income Tax and/or Higher Property Tax.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Other Revenue
Other Taxes
Sales & Use Tax
Property Tax
Other Taxes
• Springfield, OH – Income
Tax & State levied shared
taxes
• State College, PA –
Income Tax
• Williamsburg, VA –
Restaurant Tax, Hotel-
Motel Tax
5
Fort Collins Combined Sales Tax Rate is on the Low End
2014 Sales Tax Rate Comparison
Colorado Cities
**Jurisdictions with multiple tax rates due to special districts and/or located in multiple counties
6
Mill Levy Rate Comparison
Fort Collins is Slightly Above the Average of 8.828 mills
Compared to Other Colorado Cities
0
5
10
15
20
25
30
35
8.828
mills
7
Revenue Principles
Adopted in 2013
Revenue Policy Adopted in 2013
1. Maintain a diverse revenue base
2. Maintain a stable revenue base
3. Cultivate revenue sources equitable at all economic levels
4. Adequate revenue to maintain service levels
5. Maintain healthy reserves
6. Fees for services are born by those who use those service
Principles are Intended to Serve as
the Foundation for Revenue Decisions.
8
Options to Diversify Revenue
1. Tax on services
2. Differential sales tax rate
3. Transportation utility fee
4. Increase property tax
5. Make ¼ cent taxes permanent
6. Occupational privilege tax
7. Park/Trail Maintenance Fee
8. Xcel Franchise Fee
Staff Assumes Majority Would go to Voter Approval &
Would Require a Reduction in Current Sales Tax Rate
Alternatives Considered
Voter
Approval?
Replace Existing
Revenue Source?
Potentially
Potentially
Potentially
Potentially
Potentially
Potentially
Potentially
9
Sales Tax on Services**
• Household spending has shifted from goods to services
• Taxing services reduces volatility of sales tax collections as big-
ticket durable goods purchases are the first to decline during
downturn
• May make sales tax more fair as there is less distinction between
consumption of goods and consumption of services
• Could make sales tax less regressive by taxing service
purchases made primarily by the affluent
• Difficult to estimate revenue and tax rate reduction to be neutral
**As Reported by the Center on Budget and Policy Priorities (CBPP)
Assumes the Sales Tax Rate Would be Reduced to
Accommodate the Revenue Generated From Taxing Services
10
Differential Sales Tax Rate
• Differential tax rate for restaurants and liquor stores
• Applies to food and liquor sales
• 1% Tax Estimated Annual Revenue - $3.5M to $4.0M
11
Transportation Utility Fee
• A fee based on the # of trips a particular land use generates –
Users share the cost of maintaining street system
• Designated for use in the maintenance and repair of the City’s
transportation system
• Fee to both residential and commercial properties added to utility
bill.
• To replace current Street Maintenance ¼ Cent - Would require a
fee of approximately $34.50 annually per household in addition to
tiered rates for commercial to replace current ¼ cent
• A family of 4 in Fort Collins pays an estimated $89 per ¼ cent
• Fee is Scalable and/or Could Replace Current ¼ Cent
12
Transportation Utility Fee
Sales Tax is Perceived to be Fairer as it
Applies to Visitors & Residents
13
Use
Monthly
Fee
Yearly
Fee
Lot Size
in Acres
Industrial
Manufacturing $211 $2,528 5.4
Manufacturing $2,731 $32,769 70
Retail
Drug Store $401 $4,813 2.1
Old Town Restaurant $38 $458 0.2
Old Town Shop $23 $275 0.12
Large Retail $1,891 $22,691 9.9
Institutional
Church (large lot) $227 $2,718 5
Church (small lot) $23 $272 0.5
Elementary School $245 $2,936 5.4
High School $544 $6,523 12
High Traffic Retail
Fast Food $861 $10,334 1.8
Bank $574 $6,890 1.2
Convenience Store $383 $4,593 0.8
Grocery Store $2,823 $33,874 5.9
Commercial
Law Office $11 $136 0.25
Motel $63 $761 1.4
Sample Street Maintenance Fees
Increase the Property Tax Rate
• Revenue estimate:
• 2 Mill increase - $3.6M annually
• 20 Mill increase - $36M annually
• Less volatile then sales tax
• Contributes to the goal of a three-legged stool revenue
base – but would require greater than a 2 mill increase
• Impact on the Average property Tax Bill:
• 2 Mill Increase - $58 & 2% increase
• 20 Mill increase - $625 & 23% increase
The Current Mill Levy is Average Amongst our Peers and
Hasn’t Changed Since 1992
14
Make ¼ Cent Taxes Permanent
• Revenue is $7.5M annually for each ¼ cent
• Both the BOB and the Pavement Management taxes passed with
voter approval of over 80% in 2015
• Both residents and visitors bear the burden of maintaining the
streets and for the capital improvements
• Permanent does not equal less volatile
No Impact on Diversity….
Supports Stability & Eliminate Uncertainty
15
Occupational Privilege Tax
• Considered a Payroll or Head Tax
• Can be a fix $ or % of wages
• Can be employer pay only or employer & employee pay
• Examples:
• Aurora - $2 per month for both employer & employee
• Denver - $5.75 month employee, $4.00 month for employer
• Revenue Estimates - $3.5M - $6.0M annually
Create a New Revenue Source….
Fairly Stable & Predictable
16
Park/Trail Maintenance Fee
• Fee assessed monthly on utility bills to residents within the City
to fund a portion of park & trail maintenance
• Create stable revenue source
• Fee based on revenue needs
• Example:
• Fee of $1.06 per month, $12.75 annual
• Revenue generated - $735K
Scalable…. Stable & Predictable Revenue Source
17
Xcel Franchise Fee Increase
• Current Xcel Agreement - $450K annual revenue
• Franchise Fee Agreement
• Franchise fee of 3% would increase revenue to $1.2M
• Revenue would grow with inflation and volume
• CFC previously provided direction for staff to explore the
creating a Franchise Agreement with Xcel
Small…..Stable & Predictable Revenue Source
18
Recap
1. Tax services
2. Differential sales tax rate
3. Transportation utility fee
4. Increase property tax
5. Make ¼ cent taxes permanent
6. Occupational privilege tax
7. Park/Trail Maintenance Fee
8. Xcel Franchise Fee
Alternatives Considered
19
Council Finance Committee Direction
Which 2-3 Alternatives should staff explore?
20
WORK SESSION
AGENDA ITEM SUMMARY TEMPLATE
Staff: Lance Smith, Strategic Financial Planning Manager
Carol Webb, Water Resources & Treatment Operations Manager
SUBJECT FOR DISCUSSION - Financing Options for Reconstruction of the Michigan Ditch
EXECUTIVE SUMMARY
The purpose of this agenda item is to begin discussing financing options for the repair of the Michigan
Ditch near Cameron Pass in eastern Jackson County. The Michigan Ditch experienced an unexpected
catastrophic failure in June, 2015, when the mountainside on which the ditch is constructed slid downhill
several feet. This landslide rendered the ditch unusable until such time that it can be repaired.
Engineering assessments have been done with the recommended mitigation being a tunnel. The
estimated cost of the repair and all associated activities is approximately $7,050,000.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. Support for the project to be brought forward to the full City Council through an appropriation
ordinance.
BACKGROUND/DISCUSSION
The capital project being considered here is the repair of the Michigan Ditch near Cameron Pass in
eastern Jackson County. The Michigan Ditch brings water from the North Platte River basin in Jackson
County, Colorado, across Cameron Pass into the Cache La Poudre River basin in Larimer County. The
ditch is a critical component of Fort Collins Utilities’ raw water supply delivery system, as well as the reuse
plan that supplies water to Platter River Power Authority. The Michigan Ditch experienced a catastrophic
failure in June, 2015, when the mountainside on which the ditch is constructed slid downhill several feet.
This landslide rendered the ditch unusable until such time that it can be repaired. The pictures below
show the extent of the damage caused by the slide.
Damage to the Michigan Ditch from a landslide in spring of 2015
Several alternatives for the repair of the ditch were considered. Possible mitigations included a retaining
wall, a bridge over the landslide area and a tunnel beneath the landslide. The chosen alternative is to
construct a tunnel through the mountainside, in effect anchoring the ditch in place to effectively minimize
the risk from future landslides. The estimated cost of this tunnel and all associated activities is
approximately $7,050,000. The 2015-16 City Budget included $500,000 toward anticipated capital work
on the ditch (see Offer 37.1 in Safe Community). These funds were utilized to do the geotechnical
investigations and preliminary design of the tunnel.
Two options exist to finance the project. The first option is to fund the project through revenue bonds
being issued by the Water Enterprise Fund. The second option is to participate in a program funded by
the State of Colorado Water Conservation Board (CWCB) revolving funds. Either financing mechanism
will increase annual debt service expense. The Water Fund reserves do not currently have sufficient
unappropriated funds available for this project.
The addition of approximately $805,000 of annual debt service for a 10-year loan term to the Water Fund
will increase the annual debt service to a level not seen since 2009. The addition of this debt service will
result in a debt coverage ratio of 4.24 in 2017. This is still well above the targeted minimum ratio of 2.0
necessary to maintain a “Aaa” credit rating. The debt issued in 2008 will retire in 2018, bringing debt
service levels well below current levels in 2019. This retirement will allow debt for other capital projects to
be issued in the future.
Rate adjustments within the next 5 years will be necessary to fully fund the asset management program
and to accomplish other necessary major capital improvements in the Water Fund. Based on the
financial modeling these increases will not exceed 5% in a given year with or without this additional debt
expense. The increased debt expense may require that future debt issuances be undertaken a year or
two earlier than forecasted if this project was not needed at this time.
Attachments:
1. Vicinity map showing the approximate location of the ditch
1
Michigan Ditch Tunnel Project
Council Finance Committee
11-18-15
2
Pipeline Before and After Latest Landslide
• September 2015
- Request/Receive Temporary Access Permit from State Land Board
• October 2015
- Geotechnical Analysis
- Confirm selected repair alternative
• January 2016
- Tunnel Boring Machine and materials ordered
• June 2016
- Commence construction of selected alternative
• Spring 2017
- Resume ditch operations
3
Project Timeline
4
Project Costs
Geotechnical Assessment & Project Design $790,520
Tunnel Construction $7,050,000
Total Project Cost $7,840,520
5
Water Fund Reserves
6
Annual Debt Service Expense
7
Annual Debt Service Expense
8
Impact of Additional Debt
Additional
$7M of Debt
for MI Ditch
Actuals Budget Forecast
Year 2010 2011 2012 2013 2014 2015 2016 2017 2017
NET PLEDGED REVENUE
Operating Income $2.79 $2.70 $4.35 $2.82 $3.07 $1.52 $0.76 $2.12
Depreciation $4.90 $5.09 $5.37 $5.51 $5.82 $6.00 $6.61 $7.27
Other Non-operating Revenue $1.34 $1.50 $1.27 $1.29 $1.35 $0.29 $1.46 $0.66
Development Fees/PIFs/Contributions $1.72 $3.61 $3.11 $5.10 $9.32 $5.90 $5.93 $5.93
NET PLEDGED REVENUE $10.75 $12.90 $14.10 $14.72 $19.56 $13.71 $14.76 $15.98 $15.98
Debt Ratios
Debt Service Expense $3.70 $3.70 $3.69 $3.25 $3.34 $3.34 $3.33 $2.97 $3.77
Net Pledged Revenue $10.75 $12.91 $14.11 $14.72 $19.56 $14.23 $14.18 $15.99 $15.99
Debt Coverage Ratio 2.91 3.49 3.82 4.53 5.86 4.26 4.26 5.38 4.24
Debt Service Expense $3.70 $3.70 $3.69 $3.25 $3.34 $3.34 $3.33 $2.97 $3.77
Operating Revenue $24.23 $24.10 $28.33 $25.95 $26.77 $28.20 $28.21 $29.52 $29.52
Debt Service Ratio 15% 15% 13% 13% 12% 12% 12% 10% 13%
Thank you
Council direction sought:
• Are we ready to bring this forward to the full City Council for
consideration?
9
General Fund Available Balance Projection: 11/2015 Update
11/18/2015 Council Finance Committee
2014 Year-end Unassigned GF Balance 3.3
Assigned but Available as of 12/31/2014
Police Training Facility 1.0
On Street Paid Parking 0.7
Transit Buses 0.5
Police CAD 0.5
Golf Irrigation Systems 0.5
3.2
Subtotal: 6.5
2015 Revenue Variance over Budget - YTD October
Sales Tax @ 60% allocation to GF 1.5
Use Tax @ 60% allocation to GF 4.5
6.0
Subtotal: 12.5
2015 Supplemental Appropriations from GF Reserves not Previously Committed or Restricted
Police Training Facility (2015-138) (0.8)
Self Insurance fund (2015-123) (0.7)
Land Bank (2015-123) (0.1)
Lincoln Corridor (2015-070) (2.0)
(3.6)
Subtotal: 8.9
2016 Revision Offers Appropriated from GF Reserves
Benefits Adjustments (1.0)
Neighborhood Services Strategic Plan (0.1)
Aircraft Rescue and Firefighting for Airport -
CAP: Planning for Strategic Initiatives and Public-Private Partnership (0.1)
Self Insurance Fund (0.6)
Career Architecture and Pay Structure (0.3)
Prospect and College Intersection (1.1)
(3.2)
Estimated Available and Unassigned Fund Balance as of 11/10/2015: 5.7
Approach and Disclaimers:
12/31/2014 figures account for commitments/appropriations/assignments adopted during original 2015/2016 budgets.
Display of funds available for nearly any purpose. This display ignores any constraint/restriction balance category
Has not undergone full year-end Accounting close process or year-end audit.
Subject to volatility due to budget/actual variances within revenue or expenditures
Forfeitures
$2.5M
1%
Sales & Use Tax Percent of Total Generally Around 50%...
2013 Includes MAX Federal Grant
3