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Memo - Mail Packet - 9/27/2016 - Memorandum From Mike Beckstead Re: Councilmember Questions From Work Sessions On The 2017-2018 City Manager Recommended Budget
3 4 3) Question from Gino Campana: Has the number of unfunded Offers changed in the 2017-18 Budget Cycle? Response from Mike Beckstead: The total number of unfunded offers in 2015 was 105, compared to 130 in 2017. This equates to 28.0% and 31.3% of total offers funded in 2015 and 2017, respectively. This is displayed in the table below, as well as the total dollar value of the Offers based on what was submitted to the City’s seven strategic Outcomes. Adopted Proposed 2015 2017 Total % Total # Offers 375 416 41 10.9% # Funded 270 286 16 5.9% # Unfunded 105 130 25 23.8% # % Unfunded 28.0% 31.3% Total $ Offers $516,735,162 $590,137,039 $73,401,877 14.2% $ Funded $492,215,489 $559,162,182 $66,946,693 13.6% $ Unfunded $24,519,673 $30,974,857 $6,455,184 26.3% $ % Unfunded 4.7% 5.2% Variance 4) Request from Ray Martinez, Gino Campana and Kristin Stephens: Please provide a table of the Utility rate increases from 2009 through 2018 for each utility displaying 1) the average monthly cost increase to rate payers per year and 2) the average increase per utility over that 10 year period. For Light & Power, please break out purchased power from capital related increases. Please also attach the Utility capital improvement plan that was shared with the Council Finance Committee at their June 20 meeting. Response from Lance Smith: Please see Attachment #3 for the Utility rate increases from 2009 through 2018 for each utility displaying 1) the average monthly cost increase to rate payers per year and 2) the average increase per utility over that 10 year period. In addition, Attachment #4 is the AIS for the Utility 2016 Strategic Financial Plan Update that was shared with the Council Finance Committee at their June 20 meeting ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Outcome: Environmental Health 5) Question from Ross Cunniff: What % of our natural areas are open to the public? Response from John Stokes: 96% of owned/managed acres of City owned Natural Areas are open to the public. 5 6) Request from Ross Cunniff: Please provide charts reflecting 1) Acres conserved per capita over time and 2) Total acres conserved over time Response from John Stokes: Please refer to Attachment #5 for the requested charts 7) Question from Ross Cunniff: When will the Timberline Recycling Center allow the opportunity for people to voluntarily recycle plastic bags? Response from Susie Gordon: Staff’s experiences over the past three years of accepting plastic “film” material, including plastic shopping bags, has proved to be unsuccessful. Unresolved problems that were encountered at the former recycling center (Rivendell), included: A. Inadequate collection bins - There are no commercially manufactured bins designed for plastic bag collection that takes place at an unmanned, outdoor recycling drop-off site. Our experience has been that when conventional large collection boxes, referred to as 30-yard roll-off boxes, are used to collect plastic bags, people end up dumping trash in them. This may be attributed to the resemblance that mixed plastic bags/film materials have to household trash. Even when recycling signs are clear and highly visible, they are often not read. Customers see what looks like trash and may assume they are being offered a free way to get rid of their trash. B. Litter and blowing trash from overflowing bins - Plastic film is extremely susceptible to being wind-blown. C. High levels of contamination - It is often difficult to follow the high standards placed on plastic film by the industry, e.g. “must be completely clean and dry”. Low tolerance levels are applied for contamination in plastic “film” materials; the extremely low value of film means we pay to have it hauled to the recycling plant without reimbursement. Worse, it is easy to have loads rejected at the recycling plant that then must go to the landfill for disposal. D. Extra costs for Litter collection - Unsightly, overflowing plastic collection bins lead to other inappropriate dumping activities occurring, which are costly to clean up. At the new Timberline Recycling Center, plastic-shopping-bag recycling is not being offered to the public in the “no fee” area, for the above reasons. However, staff is beginning discussions with the contracted site operator of the new hard-to-recycle materials section. If Waste-Not Recycling is willing to consider adding this service in the fully-staffed area, we may install a 30-yard roll-off for the public to use for plastic film materials. This would mean a dedicated recycler has the option of paying the $5 fee and, under supervision, drop off plastic bags, shrink wrap, etc. along with other materials that are being collected in the staffed area. 6 8) Question from Ross Cunniff: Would it be possible to move some or all of the utility fixed rates into variable rates? Response from Mike Beckstead: This will be covered in the Council Finance Committee meeting scheduled for Friday, September 30. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Outcome: Economic Health 9) Question from Gerry Horak: How does the Economic Health Office stay in touch with local businesses and plan for the future? Response from Josh Birks: The Economic Health Office works to stay in touch with local businesses in a number of different ways; the office collectively refers to these as our businesses retention and expansion (BRE) program. The BRE program seeks to achieve four main objectives: (1) build relationships with existing businesses; (2) gather intelligence on existing business and industry plans and trends; (3) welcome new businesses to our community; and (4) establish systems to alert the office of potential contractions or departures of existing businesses. The office leverages relationships with internal and external partners to achieve these objectives. With over 8,500 businesses within the City, staff focuses BRE efforts on primary employers and target industries. Specific activities that achieve the four objectives include: • Targeted employer visits by EHO staff, the City Manager and Mayor – targets are determined based on information gathered through relationships with partners and, in some cases, industry data; • Visits to headquarter locations outside of Fort Collins that have of local operations in Fort Collins – typically in California and in conjunction with the Colorado Office of Economic Development and International Trade (OEDIT); • Collaborate and share information with Utilities, Planning and Sales Tax on business activity; • Collaborate and share information with Colorado State University (CSU), Front Range Community College (FRCC), Larimer Small Business Development Center (SBDC), Fort Collins Area Chamber of Commerce, Larimer County, Innosphere and other regional partners such as Northern Colorado Economic Alliance (NCEA) and Upstate Colorado on business activity; • Active participation in the Northern Colorado (NoCO) Manufacturing Partnership and Health Sector – great opportunities to meet with businesses that are active members); • Collaboration with Metro Denver Economic Development Corporation (MDEDC) and the Colorado OEDIT on business and industry activity – including new business relocation opportunities; 7 • Signatory to both the Larimer County and MDEDC Code of Ethics that stipulates communities in the County and Front Range will not poach businesses from other communities in the same area and each community will contact the host community of a businesses that is considering relocation within the County or Front Range; • Board participation on the Fort Collins Downtown Business Association, Leadership Fort Collins, and clusters such as Northern Colorado Local Foods, Colorado Clean Energy Cluster, NoCoBio, and Colorado Water Innovation Cluster. 10) Question from Kristin Stephens and Bob Overbeck: What is the long-term plan for the Car Barn? Response from Josh Birks: The Economic Health Office (EHO) worked with the Facilities Department throughout 2015 and 2016 to evaluate the opportunities for reuse of the Car Barn. Throughout public engagement, citizen’s stated a clear preference for a public use (e.g., Winter Farmer’s Market, Community Food Hall, etc.). In order to facilitate a public use, significant investment is needed to restore the property. This investment is not likely to come from the preferred use (neither generates significant revenue to support capital/restoration costs). The current budget Offer requests funding to restore the building to a “usable” state. The rational for this approach being that then the preferred use could cover the costs of operating the building as part of its use. The building and adjacent property represents a strong opportunity for redevelopment; however, the EHO and Facilities departments both have limited resources to pursue the opportunity at this time. Therefore, the following alternatives could be funded to advance the restoration of the property, including (but not limited to): • Hire a consultant team to develop a plan for the building and adjacent property including detail development cost estimates – requires oversight by EHO or Facilities staff and significantly reduces the capacity impacts on those departments; • Hire a contractual employee to develop a plan for the building and adjacent property, identify and pursue grants to fund the plan, develop and manage a Request for Proposals process, and otherwise advance the project – requires minimal oversight by either EHO or Facilities reducing the capacity impacts on those departments significantly; • Continue through a team of EHO and Facilities staff to advance the project as a secondary or tertiary priority – results would likely progress slowly and rely on an opportunistic approach for grants and other funding sources; or • Take no action – let the property remain as is and return to the project when capacity or funding levels change. 8 11) Request from Gerry Horak: Please provide a high-level summary of where we are now and where are we headed to address Historic Preservation issues. Response from Laurie Kadrich: This information summarizes the current survey budget and two additional options for the 2017-18 BFO period. These options would enable the Historic Preservation Division to: • Make progress on Council’s goal of having current property survey data in priority areas throughout the city; • Meet requirements for professional survey to maintain the City’s federal Certified Local Government standing; • Reduce the approval time for building plans by one-third; and • Differentiate significant properties from the merely old, providing predictability to property owners, developers and citizens, and increasing successful outcomes. Fort Collins has approximately 18,000 older (50 year +) properties, of which just 2,500 or 13%, have been documented. CURRENT PRACTICE: Apply for grant funds to survey 200 properties (1%) over next two years, at cost to City of $30,000 ($150/property) BFO Core Offer 78.1 for ongoing Development Review services – currently funded. City of Fort Collins provides $30,000 cash match for a state grant-funded survey project ($60,000 total) to survey 200 properties (approx. 6 blocks) and write historic context, required for State-funded projects; • Would not make headway as each year > 1% of properties turn 50 years old; • Requires staff time of 40 hours for grant writing and 20 hours for grant reporting, not factored into cost; • Grant funding not guaranteed. OPTION 2: Survey 14% (2,500 properties) for $144,000 ($58/property) BFO Enhancement Offer 78.9 funded for a survey consultant for two years of full-time survey work • BFO offer combined with grant-funded survey would provide for 2,500 properties surveyed (for a total of 14% of existing properties constructed between 1870-1969) • Cost to City of Fort Collins: $144,000 for BFO survey offer. OPTION 3: Survey 14% (2,500 properties) for $187,600, and make information readily accessible to public online ($75/property) BFO Enhancement Offers 78.9 and 78.8 funded for both survey consultant and an interactive website that would make available to the public all of the new survey data in an accessible database on the City website. • One-time cost for database and website development; IT would hire consultant to develop interactive website feature that shares survey information, determinations of eligibility, historical material and photos on a GIS-based map • Cost to City of Fort Collins: $217,600 ($177,000 + $43,600 for BFO offers 78.8 and 78.9). 9 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Outcome: High Performing Government 12) Request from Bob Overbeck: Please provide data about how the City fleet is becoming more efficient with each budget cycle. Response from Ken Mannon and Tracy Ochsner: The City Fleet has several strategies to becoming more efficient when replacing vehicles: 1. Replace with a more fuel efficient vehicle such as a hybrid or electric vehicle 2. Replace with an alternative fueled vehicle such as natural gas 3. Downsize the engine and/or vehicle size 4. Reduce idling Since 2001, we have increased our alternative fueled, hybrid and plug in electric fleet by the following: CNG EV Hybrid 2001 2 2002 2 2003 1 2004 1 2005 4 2006 1 2007 1 2008 3 6 2009 7 7 2010 4 2011 6 2 2012 1 5 2013 13 3 2 2014 11 5 2015 4 6 1 2016 5 3 16 TOTAL 49 18 55 In addition, a good example of where we are improving our fuel economy is our police vehicle fleet. Other areas also show improvement, but this is the highest mileage department. The following shows the fuel economy for that segment of the fleet since 2010: Year Miles Gallons MPG Improvement 2010 1,821,180 158,308 11.5 2011 1,835,680 157,260 11.67 1.47% 2012 1,928,306 159,389 12.1 3.64% 2013 2,004,325 156,776 12.78 5.67% 2014 2,055,441 154,698 13.29 3.93% 2015 2,034,273 150,771 13.49 1.55% 2016 YTD 1,283,932 90,194 14.24 5.50% TOTAL 23.74% 10 13) Question from Ross Cunniff: What % of our documents (through statistically valid sampling) might we not be able to access if we stopped renewing the subscription for Office 365? Response from Dan Coldiron: It is difficult to determine an accurate percentage of the documents that would not be accessible in a short period of time due several factors. We do know that the number would likely be significant and would be the major consideration in any decision to move away from Microsoft software offerings, cloud or on-site. There are couple of scenarios that would play out if we discontinued an Office 365 subscription. In both cases, the City would need to acquire an alternative software option in order to continue normal business operations. The associated basic software packages, such as a word processing, spreadsheet, and presentation are all required tools that contribute to the daily operations and functions of the City. In the first scenario, if the City chose to continue to use Microsoft software, the City would purchase on-site, individual software licenses and make them available to the necessary users. Documents developed in Office 365 would be readily accessible to the end user with their original formatting, formulas and content intact. In the second scenario, the City could choose a Microsoft competitor’s software or services as an alternative and acquire licensing for staff. The extent of the accessibility to the content of the documents, including formatting and formulas would be dependent upon the quality of the competitor’s document conversion tools. Unfortunately, document conversions generally provide a limited ability to fully and neatly convert other vendor’s documents. In this case, the City would expect to spend significant resources to return a large percentage of current City documents to their desired state of functionality. The proposal for the migration of the City’s email and office productivity suite to a hosted Office 365 implementation is based upon a number of factors and potential benefits. The most significant are listed below: • Preserves the City’s current document and staff training investment based upon more than 20 years of the use of Microsoft productivity software within the organization. • Reduces the investment in on-site technology infrastructure to support and recover email, elements of personal and shared storage, and desired communications technologies. • “Flattens” the related costs and resourcing demands associated with cyclical, large software and hardware upgrade projects costs. • Avoids the needed investment in a suitable disaster resiliency option for enterprise, mission-critical, communication systems, as well as upgrades to the current email systems and office productivity suite. 6.6 6.6 5.9 5.12 6.41 5.27 5.11 6.41 8.21 6.29 5.8 5.8 5.9 5.8 5.9 5.8 5.8 5.8 5.8 5.8 8.9 5.8 8.15 8.9 5.11 8.9 8.19 5.8 5.8 8.9 5.8 8.6 8.16 6.7 6.6.7 7 6.3 6.7 6.7 5.8 6.7 6.42 8.9 6.7 6.7 6.7 6.42 6.42 6.42 8.9 8.2 6.7 6.42 6.42 6.7 6.42 8.18 6.42 6.7 6.42 6.42 6.7 6.42 Attachment #1 part B Offer # Responsible Department 2017 2018 CULTURE & RECREATION 20.3 Parks Grandview Cemetery Mausoleum $ 50,000 $ 450,000 56.14 Cultural Services Gardens on Spring Creek Visitor Center - CCIP 0 2,185,000 70.3 Park Planning & Dev. East Community Park 200,000 0 70.3 Park Planning & Dev. Northeast Community Park 1,360,000 0 71.1 Park Planning & Dev. Poudre River Downtown Project - CCIP 4,744,000 0 Recreational Trail Development 70.1 Park Planning & Dev. Administration 224,293 231,149 70.1 Park Planning & Dev. Trail Acquisition/Development 1,336,000 1,069,000 Total Recreational Trail Development 1,560,293 1,300,149 Neighborhood Park Development 70.2 Park Planning & Dev. Administration 484,478 496,813 70.2 Park Planning & Dev. Side Hill Neighborhood Park 1,835,000 443,000 70.2 Park Planning & Dev. Trailhead Park 779,000 0 Total Neighborhood Park Development 3,098,478 939,813 TOTAL CULTURE & RECREATION $ 11,012,771 $ 4,874,962 ECONOMIC HEALTH 5.8 Light & Power Utilities: Light & Power - New Feeder Capacity $ 4,615,492 $ 1,287,440 5.9 Light & Power Utilities: Light & Power - System Purchases 140,000 15,000 5.11 Light & Power Utilities: Light & Power - Distribution System Conversions 0 800,000 5.12 Light & Power Utilities: Light & Power - System Improvements & Replacements 2,062,000 2,225,000 5.23 Light & Power Utilities: Light & Power - Operational Technology - 1.0 FTE 2,579,927 182,457 5.27 Light & Power Utilities: Light & Power - Electric Distribution System Corrosion Mitigation 150,000 175,000 TOTAL ECONOMIC HEALTH $ 9,547,419 $ 4,684,897 ENVIRONMENTAL HEALTH 6.5 Water Utilities: Water - Treatment and Source of Supply $ 1,000,000 $ 1,000,000 6.6 Water Utilities: Water - Distribution Master Plan Priority Projects 1,900,000 1,350,000 6.7 Water Utilities: Water - Distribution Small Projects 1,000,000 1,110,000 6.8 Water Utilities: Water - Meter Replacement 800,000 800,000 6.11 Water Utilities: Water - Water Quality Instrumentation 50,000 50,000 6.16 Water Utilities: Water - Water Quality Lab Infrastructure Replacement 1,300,000 1,300,000 6.17 Water Utilities: Water - Water Quality/Pollution Control Master Plan 210,000 0 6.26 Water Utilities: Water - Underground Electrical Power Supply 650,000 650,000 6.29 Water Utilities: Water - Cathodic Protection 0 2,280,000 6.30 Water Utilities: Water - Azalea Waterline Replacement 450,000 0 6.31 Water Utilities: Water - Poudre Canyon Raw Water Line Improvements 800,000 0 6.41 Wastewater Utilities: Wastewater - Collection System Master Plan Priority Projects 450,000 350,000 6.42 Wastewater Utilities: Wastewater - Collection System Small Projects 706,000 743,000 6.43 Wastewater Utilities: Wastewater - Cured in Place Pipe Lining 450,000 450,000 6.44 Wastewater Utilities: Wastewater - Water Reclamation and Biosolids 1,000,000 1,000,000 6.45 Wastewater Utilities: Wastewater - Pollution Control Lab Instrumentation 50,000 30,000 6.50 Wastewater Utilities: Wastewater - Inflow-Infiltration Study 200,000 0 6.51 Wastewater Utilities: Wastewater - Anaerobic Digester Lid Replacement 0 2,100,000 6.52 Wastewater Utilities: Wastewater - Dewatering Improvements 2,135,000 2,135,000 6.53 Wastewater Utilities: Wastewater - Facility Sludge Strain Press Redundancy 720,000 800,000 6.54 Wastewater Utilities: Wastewater - Water Reclamation and Biosolids Master Plan 500,000 0 6.56 Wastewater Utilities: Wastewater - Sidestream Treatment 0 4,300,000 84.4 Natural Areas Nature in the City - CCIP 190,111 189,865 86.6 Natural Areas Natural Areas Shop Expansion 125,000 1,250,000 TOTAL ENVIRONMENTAL HEALTH $ 14,686,111 $ 21,887,865 CAPITAL PROJECTS 2017-2018 By Outcome Offer # Responsible Department 2017 2018 CAPITAL PROJECTS 2017-2018 By Outcome SAFE COMMUNITY 8.6 Stormwater Utilities: Stormwater - Stream Rehabilitation Program $ 350,000 $ 1,400,000 8.9 Stormwater Utilities: Stormwater - Collection System Replacement - Small Capital Projects 1,400,000 1,500,000 8.15 Stormwater Utilities: Stormwater - Buckingham and Lincoln Outfall 200,000 0 8.16 Stormwater Utilities: Stormwater - Poudre River at Oxbow Levee 850,000 0 8.17 Stormwater Utilities: Stormwater - Prospect and College Storm Sewer 750,000 0 8.18 Stormwater Utilities: Stormwater - Remington Street Storm Sewer 100,000 800,000 8.19 Stormwater Utilities: Stormwater - Magnolia Street Outfall Phase 1 300,000 1,200,000 8.20 Stormwater Utilities: Stormwater - Mulberry & Riverside Storm Sewer 800,000 0 8.21 Stormwater Utilities: Stormwater - NECCO Phase 3: Lemay to Redwood 1,600,000 1,700,000 29.36 Office of the Chief Proposed Police Training Facility 1,080,000 0 29.37 Office of the Chief Existing Range Safety Repairs 232,700 0 29.39 Police Info Services Police CAD and RMS Replacement CRISP 2,980,000 0 TOTAL SAFE COMMUNITY $ 10,642,700 $ 6,600,000 TRANSPORTATION 1.4 Engineering Riverside Bridge at Spring Creek Replacement $ 1,300,223 $ - 1.5 Engineering Arterial Intersections Improvements - CCIP 350,000 400,000 1.6 Engineering Lemay Realignment and Railroad Crossing Improvements Project 1,000,000 0 1.7 Engineering Pedestrian Sidewalk / ADA Compliance - CCIP 1,000,000 1,100,000 1.8 Engineering Willow Street River District Construction – Final Design - CCIP 0 765,000 1.9 Engineering Lincoln Avenue Improvements - Poudre River Bridge to 1st Street Construction - CCIP 2,811,000 0 1.10 Engineering Horsetooth Road and College Avenue Intersection Improvements 500,000 500,000 1.12 Engineering Suniga Road Improvements – College Ave to Blondel Street 300,000 1,500,000 1.15 Engineering Sharp Point Drive Connection and Railroad Crossing 150,000 0 1.19 Engineering Lincoln Avenue Improvements - 1st Street to Lemay Pedestrian and Landscape Enhancements 750,000 0 3.4 FC Moves Bicycle Infrastructure Improvements - CCIP 350,000 350,000 3.7 FC Moves Low Stress Bike Route Design and Construction 0 209,740 3.9 FC Moves Protected Bike Lane Pilot Project 50,000 250,000 TOTAL TRANSPORTATION $ 8,561,223 $ 5,074,740 HIGH PERFORMING GOVERNMENT 7.24 Utilities Customer Svc Utilities: Customer Information Billing System $ - $ 2,300,000 7.29 Water Utilities: Asset Register and Work Order Management System 825,000 480,000 TOTAL HIGH PERFORMING GOVERNMENT $ 825,000 $ 2,780,000 TOTAL CAPITAL PROJECTS $ 55,275,224 $ 45,902,464 Note: Excludes capital leases. 1 Status of Fund Balances Council Finance Committee June 1, 2016 Attachment #2 2 Objectives • Types of constraints • Restricted balances can be available • Review fund balances • Using fund balances in the budget process 3 Fund Balance Definitions • Non-spendable – Not spendable in form (inventory, long-term receivables) – Legally or contractually required to be maintained intact (permanent endowments) • Restricted – Externally enforceable legal restrictions (TABOR emergency reserve, debt covenants, re-development agreements, IGA’s) • Committed – Constraint formally imposed at the highest level of decision making authority through Ordinance (Capital Expansion fees, Neighborhood Parkland fees) • Assigned – Intended to be used for specific purposes (Affordable Housing, Camera Radar, Encumbrances) • Unassigned – Available for any City purpose – Reported only in the General Fund except in cases of negative fund balance most constrained least constrained 4 Restricted balances can be available • Available but with some constraints, examples – BCC-CE residuals are restricted but available only for capital as defined in the ballot language – Udall Endowment interest is restricted but available to be appropriated for maintenance and improvements of Udall Natural Area • Available for nearly any purpose, examples – Funds available at the discretion of the City Council for any municipal purpose 5 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose General Fund $ 74.0 $ 72.4 $ 63.4 $ 1.3 $ 7.7 Capital Expansion Fund 21.8 22.9 13.9 9.0 - Sales & Use Tax Fund 4.3 3.7 3.7 - - GID #1 Fund 1.2 0.4 - 0.4 - Keep Fort Collins Great Fund 14.9 16.8 7.8 9.0 - Neighborhood Parkland Fund 7.1 8.4 7.4 1.0 - Conservation Trust Fund 1.7 2.0 1.5 0.5 - Naturals Areas Fund 12.1 13.5 1.3 12.2 - Cultural Services Fund 1.7 1.9 0.8 - 1.1 Recreation Fund 2.6 3.0 0.9 0.3 1.8 Cemeteries Fund 0.5 0.6 0.1 0.5 - Perpetual Care Fund 1.7 1.8 - 1.8 - Museum Fund 0.8 1.0 - 1.0 - Transit 1.4 (0.3) - (0.3) - Street Oversizing 15.3 16.8 1.8 15.0 - Transportation 18.8 17.1 2.7 - 14.4 Parking Fund - 1.5 0.7 0.6 0.2 Capital Projects Fund 23.6 25.8 24.0 1.8 - Light & Power Fund 56.6 51.4 35.0 16.4 - Water Fund 61.3 61.5 57.1 4.4 - Wastewater Fund 39.1 35.5 17.0 18.5 - Storm Drainage Fund 19.6 22.0 17.9 4.1 - Equipment Fund 3.0 2.2 1.1 1.1 - Self Insurance Fund 1.8 1.7 1.5 0.2 - Data & Communications Fund 1.3 1.8 0.3 - 1.5 Benefits Fund 7.8 5.4 6.0 (0.6) - Utility Customer Service Fund 2.6 0.3 0.9 (0.6) - TOTAL $ 396.6 $ 391.1 $ 266.7 $ 97.7 $ 26.7 All City Funds 6 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Assigned - Minimum 60 day Policy $ 21.5 $ 22.7 $ 22.7 $ - $ - Non-spendable Advances 5.3 5.2 5.2 - - Landbank inventory 3.0 1.8 1.8 - - Restricted TABOR Emergency 6.3 6.4 6.4 - - Police Programs 1.5 1.0 0.6 0.4 - Donations & Misc 1.1 0.7 - 0.7 - Economic Rebates 5.2 3.3 3.3 - - DDA/Woodward Debt 2.3 2.3 2.3 - - Committed - Traffic Calming 0.3 0.3 0.2 0.1 - Culture & Recreation 0.2 0.2 0.2 - Assigned - - Prior Year Purchase Orders 4.9 3.3 3.3 - - Manufacturing Use Tax Rebate 0.5 2.3 2.3 - - 2016 Budgeted use of reserves 9.3 5.2 5.2 - - Council Priorities set aside 6.9 7.7 7.7 - - DPS/Comm System 0.1 - - - - Camera Radar 0.8 0.8 0.1 0.1 0.6 Affordable Housing Land Bank 0.2 0.2 - - 0.2 Waste Innovation 0.1 0.2 - - 0.2 Reappropriation 1.2 1.1 1.1 - - Unassigned 3.3 7.7 1.0 - 6.7 Year End Total $ 74.0 $ 72.4 $ 63.4 $ 1.3 $ 7.7 General Fund - Year End 2015 - $72.4 1.0 Police Training Facility 0.7 Parking Meters 0.5 Transit Buses 0.5 Police CAD 0.5 Golf Irrigation System 4.4 Recession Contingency 7 General Fund Balances • $5.2 loaned to URA (Advances) • $1.8 Land-bank program, lowered to market value • $6.3 is an emergency reserve required by TABOR, equal to 3% of qualified governmental revenue • $1.0 restricted to Police Programs; for Drug Task Force $927k, dispatch system replacement $0.1 • $0.7 restricted by donor for various purposes (Horticulture, Udall Endowment, etc) • $3.3 is restricted to Economic Incentive Rebates • $2.3 is for debt contingency on DDA debt obligation to Woodward • Traditionally fund balances are Assigned for camera radar and photo red-light, public safety dispatch system, Affordable Housing and Waste Innovation • $1.1 is set aside for the re-appropriation process 8 • Monies collected on building permits, revenue varies greatly with development activity • Must be used for new and /or expanding facilities • $2.7 in loans to the URA (RMI2) in General Government • Police monies used for debt on new police headquarters • Fire monies used to pay debt on Station #4 • $3.2 is planned for remaining 2 planned Community Parks (East and Northeast) 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Committed General Government 7.6 8.5 2.7 5.8 Police 0.9 0.8 0.8 - Fire 0.8 1.1 1.1 - Community Parkland 12.5 12.5 9.3 3.2 Year End Total $ 21.8 $ 22.9 $ 13.9 $ 9.0 $ - Capital Expansion Fund - Year End 2015 - $22.9 9 • Sales Tax for BOB and Natural Areas deposited here – Voter language requires deposit in Sale & Use Tax Fund – Residual balance owed to Natural Areas and BOB. 2015 revenue exceeded appropriations needed to make transfers. Will be addressed in annual year end adjustment ordinance in September 2016. 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Restricted - BOB 2.1 1.8 1.8 - Natural Areas 2.2 1.9 1.9 - Year End Total $ 4.3 $ 3.7 $ 3.7 $ - $ - Sales & Use Tax Fund - Year End 2015 - $3.7 10 • Property tax based - 4.924 mill levy generates about $240 K annually 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Committed Capital Improvements 1.2 0.4 - 0.4 Year End Total $ 1.2 $ 0.4 $ - $ 0.4 $ - General Improvement District #1 Fund - Year End 2015 - $0.4 11 • The $9.0 will be made available in the next BFO process 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Restricted Street Maintenance 3.1 4.7 1.6 3.1 Other Transportation 4.4 3.1 2.6 0.5 Police Services 3.1 3.5 0.5 3.0 Fire & Emergency Services 0.5 0.8 0.5 0.3 Parks & Recreation 1.2 1.6 0.8 0.8 Other 2.6 3.1 1.7 1.4 Year End Total $ 14.9 $ 16.8 $ 7.8 $ 9.0 $ - Keep Fort Collins Great Fund - Year End 2015 - $16.8 12 • Monies collected on building permits, revenue varies greatly with development activity • $1.0 is for new Neighborhood Parklands 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Committed - Neighborhood Parks 7.0 8.4 7.4 1.0 Assigned Prior Year Purchase Orders 0.1 - - - Year End Total $ 7.1 $ 8.4 $ 7.4 $ 1.0 $ - Neighborhood Parkland Fund - Year End 2015 - $8.4 13 • Shared Lottery Proceeds – an average of $1.3 collected annually • Can be spent on a variety of specified Recreation purposes as defined by the State • City has primarily used these monies for trails 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Restricted Parks, Rec & Open Space Capital Improvement1s.7 2.0 1.5 0.5 Year End Total $ 1.7 $ 2.0 $ 1.5 $ 0.5 $ - Conservation Trust Fund - Year End 2015 - $2.0 14 • Major funding sources – About 60% comes from City quarter cent sales tax, expires at end of 2030 – About 30% comes from County Open Space tax, expires at end of 2043 • Revenue sharing to municipalities will drop from 58% to 50% beginning in 2019 • $12.2 to be appropriated in 2016 for potential land purchases. 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Restricted Natural Areas 9.9 12.2 - 12.2 Assigned Prior Year Purchase Orders 1.5 0.6 0.6 - Capital Projects 0.7 0.7 0.7 - Year End Total $ 12.1 $ 13.5 $ 1.3 $ 12.2 $ - Natural Areas Fund - Year End 2015 - $13.5 15 • Accounts for Lincoln Center and other Cultural Service activities. 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Committed Art in Public Places 0.3 0.4 0.4 - Assigned Prior Year Purchase Orders 0.1 0.1 0.1 - Capital Projects 0.4 - - - Cultural Services Surplus 0.9 1.4 0.3 - 1.1 Year End Total $ 1.7 $ 1.9 $ 0.8 $ - $ 1.1 Cultural Services & Facilities Fund - Year End 2015 - $1.9 16 • Fees and charges cover about 85% of operating costs. 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Assigned Prior Year Purchase Orders 0.1 0.1 0.1 - Recreation Programs 0.1 0.3 - 0.3 Recreation Surplus 2.4 2.6 0.8 - 1.8 Year End Total $ 2.6 $ 3.0 $ 0.9 $ 0.3 $ 1.8 Recreation Fund - Year End 2015 - $3.0 17 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Assigned Cemeteries Surplus 0.5 0.6 0.1 0.5 Year End Total $ 0.5 $ 0.6 $ 0.1 $ 0.5 $ - Cemeteries Fund - Year End 2015 - $0.6 18 • To be used to maintain the cemeteries once on-going operations cease. 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Restricted Perpetual Care 1.7 1.8 - 1.8 Year End Total $ 1.7 $ 1.8 $ - $ 1.8 $ - Perpetual Care Fund - Year End 2015 - $1.8 19 • Balances and activity moved out of Cultural Services Fund. Desired better transparency because of partnership agreement with Museum non-profit. 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Assigned Capital Projects 0.1 - - - Cultural Services Surplus 0.7 1.0 - 1.0 Year End Total $ 0.8 $ 1.0 $ - $ 1.0 $ - Museum Fund - Year End 2017 - $1.0 20 • Deficit is result of purchases made in 2015 in anticipation of grant that was not fully finalized until early 2016. • Recommend revisiting the budgeting and accounting methods used in Transit. Current practices are complex, require high maintenance by staff and difficult to report. 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Assigned Prior Year Purchase Orders 1.1 - - - Transit Surplus(Deficit) 0.3 (0.3) - (0.3) Year End Total $ 1.4 $ (0.3) $ - $ (0.3) $ - Transit Fund - Year End 2015 - ($0.3) 21 • Monies are collected from developers, revenue varies greatly with development activity 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Restricted Street Oversizing Surplus 14.6 14.8 1.1 13.7 Assigned Capital Projects 0.7 2.0 0.7 1.3 Year End Total $ 15.3 $ 16.8 $ 1.8 $ 15.0 $ - Street Oversizing Fund - Year End 2015 - $16.8 22 • $5.7 may be reassigned but is intended to be used for Harmony Road improvements. – Residual of the $13 million from State when ownership transferred to City • Parking balances moved to their own fund in 2015 • $8.7 will be made available in BFO 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Restricted - Fiscal Agent 0.8 0.1 0.1 - CC Parking Garage IGA 0.9 - - - Assigned - Prior Year Purchase Orders 0.6 0.6 0.6 - Capital Projects 0.3 1.1 1.1 - DT Parking 0.6 - - - Harmony Road 5.8 5.7 - - 5.7 Transportation Surplus 9.8 9.6 0.9 - 8.7 Year End Total $ 18.8 $ 17.1 $ 2.7 $ - $ 14.4 Transportation Fund - Year End 2015 - $17.1 23 • New Fund in 2015, previously included in Transportation Fund 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Restricted - Fiscal Agent - - - - CC Parking Garage IGA - 0.9 0.3 0.6 Assigned - Prior Year Purchase Orders - 0.2 0.2 - DT Parking - 0.4 0.2 - 0.2 Available for capital and operations - - - - Year End Total $ - $ 1.5 $ 0.7 $ 0.6 $ 0.2 Parking Fund - Year End 2015 - $1.5 24 • BCC-Community Enhancements has $0.8 available for capital projects • Building on Basics (BOB) is expected to have $1.0 available for capital projects, after the projects are completed 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Restricted - BCC-Community Enhancements 2.9 2.4 1.6 0.8 Building on Basics (BOB) 16.2 9.7 8.7 1.0 Misc. projects (11) - 1.1 1.1 - Assigned - General City Projects 4.5 12.6 12.6 - Year End Total $ 23.6 $ 25.8 $ 24.0 $ 1.8 $ - Capital Project Fund - Year End 2015 - $25.8 25 • New Policy Minimum is equal to 25% of operating expenses, excluding depreciation and non- renewable energy purchases • Approved but unencumbered capital projects include new Utility Administrative Building, Wood Street Renovations, Smart Grid, Substation Improvements, SW Enclave System, Underground Conversion Program and Art in Public Places. 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Minimum Policy - 25% Operations $ 7.2 $ 8.1 $ 8.1 $ - Assigned Prior Year Purchase Orders 1.9 1.5 1.5 - Approved Capital Projects 20.1 17.2 17.2 - Available for capital and operations 27.4 24.6 8.2 16.4 Year End Total $ 56.6 $ 51.4 $ 35.0 $ 16.4 $ - Light & Power Fund - Year End 2015 - $51.4 26 • New Policy Minimum is equal to 25% of operating expenses, excluding depreciation 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Minimum Policy - 25% Operations $ 4.7 $ 5.2 $ 5.2 $ - Restricted - Debt 0.3 0.3 0.3 - Assigned Prior Year Purchase Orders 0.5 0.5 0.5 - Approved Capital Projects 43.7 37.4 37.4 - Available for capital and operations 12.1 18.1 13.7 4.4 Year End Total $ 61.3 $ 61.5 $ 57.1 $ 4.4 $ - Water Fund - Year End 2015 - $61.5 27 • New Policy Minimum is equal to 25% of operating expenses, excluding depreciation 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Minimum Policy - 25% Operations $ 2.9 $ 3.2 $ 3.2 $ - Restricted - Debt 0.2 0.2 0.2 - Assigned - Prior Year Purchase Orders 0.4 0.4 0.4 - Approved Capital Projects 15.1 9.6 9.6 - Available for capital and operations 20.5 22.1 3.6 18.5 Year End Total $ 39.1 $ 35.5 $ 17.0 $ 18.5 $ - Wastewater Fund - Year End 2015 - $35.5 28 • New Policy Minimum is equal to 25% of operating expenses, excluding depreciation 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Minimum Policy - 25% Operations $ 1.5 $ 1.4 $ 1.4 $ - Restricted Debt 0.3 0.3 0.3 - Assigned Prior Year Purchase Orders 0.2 0.1 0.1 - Approved Capital Projects 14.3 16.1 16.1 - Available for capital and operations 3.3 4.1 - 4.1 Year End Total $ 19.6 $ 22.0 $ 17.9 $ 4.1 $ - Storm Drainage Fund - Year End 2015 - $22.0 29 • Equipment Replacement – $1.1 is for replacement of vehicles and equipment for Police, Forestry and Parks 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Minimum Policy - 8.3% Operations $ 0.8 $ 0.7 $ 0.7 $ - Capital Leasing - - - - Assigned - Prior Year Purchase Orders 0.3 0.3 0.3 - Approved & unencumbered capital proj - - - - Equipment surplus 1.9 1.2 0.1 1.1 - Year End Total $ 3.0 $ 2.2 $ 1.1 $ 1.1 $ - Equipment Fund - Year End 2015 - $2.2 30 • New Policy Minimum is equal to 25% of operating expenses • Loss fund reserves have declined significantly over the last 7 years due to a major settlement and planned use of reserves 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Minimum Policy - 25% Operations $ 1.0 $ 1.0 $ 1.0 $ - Committed - Self Insurance surplus 0.6 0.5 0.3 0.2 Assigned - Prior Year Purchase Orders 0.2 0.2 0.2 - Year End Total $ 1.8 $ 1.7 $ 1.5 $ 0.2 $ - Self Insurance Fund - Year End 2015 - $1.7 31 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Assigned Prior Year Purchase Orders 0.3 0.3 0.3 - Data & Communication Surplus 1.0 1.5 - - 1.5 Year End Total $ 1.3 $ 1.8 $ 0.3 $ - $ 1.5 Data and Communications Fund - Year End 2015 - $1.8 32 • The charges to departments have been reduced slightly to use up some of the fund balance. This continues through 2016. • New Policy Minimum is equal to 30% of medical and dental expenses • This fund does not meet policy minimums. 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Policy minimum - 30% Operations $ 5.3 $ 5.8 $ 5.8 $ - Assigned - Benefit Surplus 2.5 (0.4) 0.2 (0.6) - Year End Total $ 7.8 $ 5.4 $ 6.0 $ (0.6) $ - Benefits Fund - Year End 2015 - $5.4 33 • The last couple of years USC has reduced fees to the four utility funds with intent of using some of this fund balance. 2014 Total 2015 Total Appropriated, Min. Policy, or Scheduled Available but with some Constraints Available for Nearly Any Purpose Assigned - Prior Year Purchase Orders 0.4 0.5 0.5 - Unrestricted 2.2 (0.2) 0.4 (0.6) Year End Total $ 2.6 $ 0.3 $ 0.9 $ (0.6) $ - Utility Customer Service Fund - Year End 2015 - $0.3 Attachment #3 Electric Utility Service PRPA Portion Distribution Component Rate Increase Amount Paid Relative to 2008 Average Residential Monthly Charge Average Residential Increase Notes on Distribution Component 2009 2.80% 2.80% 102.8% $49.20 $1.38 2010 4.79% 2.63% 7.42% 110.4% $52.85 $3.65 Renewables 0.82%, Energy Srvcs 1.81% 2011 4.70% 1.80% 6.50% 117.6% $56.28 $3.43 Energy Services 1.8% 2012 4.80% 3.50% 8.30% 127.4% $60.95 $4.67 3.5% capital 2013 3.83% 0.50% 4.33% 132.9% $63.59 $2.64 0.5% Ft Collins Solar Program 2014 1.50% 0.50% 2.00% 135.5% $64.86 $1.27 0.5% Ft Collins Solar Program 2015 1.90% 1.90% 138.1% $66.09 $1.23 2016 3.20% 3.20% 142.5% $68.21 $2.12 2017 2.20% 1.25% 3.45% 147.5% $70.56 $2.35 2018 1.80% 1.80% 150.1% $71.83 $1.27 Water Utility Service Rate Increase Amount Paid Relative to 2008 Average Residential Monthly Charge Average Residential Increase 2009 0.00% 100.0% $35.82 $0.00 2010 3.00% 103.0% $36.90 $1.07 2011 3.00% 106.1% $38.00 $1.11 2012 6.00% 112.5% $40.28 $2.28 2013 4.00% 117.0% $41.89 $1.61 2014 4.00% 121.6% $43.57 $1.68 2015 0.00% 121.6% $43.57 $0.00 2016 0.00% 121.6% $43.57 $0.00 2017 5.00% 127.7% $45.75 $2.18 2018 5.00% 134.1% $48.04 $2.29 Wastewater Utility Service Rate Increase Amount Paid Relative to 2008 Average Residential Monthly Charge Average Residential Attachment #4 COUNCIL FINANCE COMMITTEE AGENDA ITEM SUMMARY Staff: Lance Smith, Utilities Strategic Financial Director Date: June 20, 2016 SUBJECT FOR DISCUSSION Utilities 2016 Strategic Financial Plan Update EXECUTIVE SUMMARY The purpose of this agenda item is to provide the Council Finance Committee with an update on the 2016 Utilities Strategic Financial Plan as a follow up to the discussion on April 18, 2016 on each utility’s Capital Improvement Plan (CIP). As stated in that Agenda Item Summary: “Each of these plans [CIPs] is projecting substantial capital investment being needed for each utility over the next decade. Because the projected levels of investment are not achievable through current operating revenues alone it will be necessary to further analyze the best means of achieving these operational needs without negatively impacting the financial integrity of the utilities while maintaining affordable utilities to the community. This analysis and the long term Utilities Strategic Financial Plan will be the focus of the follow up discussion in a few months.” Recommendations for achieving the capital investments proposed in the CIPs while maintaining the financial health of each utility, along with the bond rating, through modest rate adjustments are discussed below and in the presentation. With the exception of the Stormwater Fund, the recommendation achieves these objectives within the next decade. The Stormwater CIP will require 15 years to complete the work targeted within the next decade in order to achieve these objectives. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. Does the Council Finance Committee support the Utilities Strategic Financial Planning recommendations? BACKGROUND/DISCUSSION At the April 18, 2016 Council Finance Committee the “Utilities Capital Improvement Plan and Strategic Financial Plan Update” outlined the full planning process for capital projects beginning with the Master Planning efforts, including the prioritized CIPs and how the process continues with the Strategic Financial Plan being developed. That discussion showed why none of the utility funds have adequate Available Reserves 1 to achieve the proposed capital projects over the 1 Available Reserves are the portion of the Fund Balance that is not necessary to meet Bond covenants or the City’s Minimum Reserve Financial Policy, and is not currently appropriated for another purpose. coming decade. Thus it will be necessary to adjust rates and consider issuing debt before considering also delaying some of the capital projects beyond 10 years. Several Next Steps were identified then which are being discussed herein. The Next Steps were to: 1. Incorporate the 10 year capital projections into the long term financial model for each utility 2. Perform scenario analyses to understand cash vs. debt funding impacts on rates, reserves, debt capacity and the financial position of each Enterprise Fund 3. Develop recommendations on rate increases and debt issuances to meet the expected needs of the Fund Incorporate the 10 Year CIP into Financial Models Since the meeting in April, the capital investment projections for 2017-2026 have been entered into a long term financial planning model for each utility. This model considers a 21 year horizon (2006 – 2026) beginning 10 years ago and projecting forward 10 years from today. The 10 years of historical analysis provides the basis for the 10 year forward projection for each revenue and expense. Perform Scenario Analyses There are several financial mechanisms available to cover the incremental capital investments. Any Available Reserves can be appropriated to the specific capital projects ensuring their adequate funding. Any operating income will increase the Available Reserves. Rate adjustments provide a direct way to increase operating income. Available Reserves can also be increased by issuing debt through revenue bonds. The balance between these mechanisms is the objective of the stochastic model. The financial model has several financial objectives: • Maintaining adequate Operating Income and Reserve Minimums are necessary. • It is preferred that the City maintain, if not improve, its bond rating wherever possible including the Utility Enterprise Funds. • Rate spikes are undesirable because of the impact such adjustments can have on residential and commercial customers. An order of preference is necessary when considering rates, Available Reserves and Debt in the model. Because rate adjustments provide the most direct communication with ratepayers that costs are increasing, rate adjustments were considered first by themselves. This is consistent with the assumption that rate adjustments will always be a consideration. Then because the CIP was prioritized to respect that prioritization it is necessary to also consider debt in the sources available to increase the Available Reserves. Lastly, adjustments to the capital investment over the next decade were considered if it just is not financially feasible to respect the prioritization of the CIP. 1. Scenario 1 – This scenario first considers if it is possible to complete the proposed capital projects within the next 10 years (2017 – 26) by only adjusting rates and not issuing any new debt. If this is achievable with modest rate adjustments then this is the recommended path for that specific utility. 2. Scenario 2 – This scenario acknowledges that it may not be possible to achieve the objectives through Scenario 1 and considers also issuing debt to raise of the necessary capital. If this is achievable through manageable debt service costs and modest rate adjustments then it is the recommendation. 3. Scenario 3 – This scenario is considered when there is no combination of modest rate adjustments and serviceable debt issuances to achieve the capital projects and maintain the financial health of the utility. In this scenario adjustments to the 10 year capital spend are considered – either smoothing out the capital spend evenly across those 10 years or extending the time horizon out beyond 10 years. Develop Recommendations Light & Power The projected 10 Year CIP includes $90M of new capital needs for the anticipated system demands over the decade. This represents a 10-15% increase over the previous decade’s capital investment. $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Annual Capital Investment 501 - Light & Power Fund Operational Technology & Fiber Annexations New Capacity Substation Improvements Distribution System Improvements Ave. Capital Investment 2017-26 Historical Ave Capital 2006-15 Such a change from recent history should be manageable through modest rate increases alone. The dashboard below shows how this is viable. The upper left corner is a chart showing potential annual rate increases as being less than 5%. The upper right corner is a chart showing the annual operating income for the fund. Each Enterprise is expected to have adequate operating income. The bottom right corner shows a chart of the total outstanding principal debt. In this analysis no additional debt was issued and the outstanding debt is fully retired in 2020. The bottom left corner shows the Available Reserves. Here the capital investment drops off significantly in the last few years resulting in an increased operating income which results in the Available Reserves building up quickly. This analysis will be updated every two years to monitor if any adjustments are necessary. Recommendation: Scenario 1 will allow for the additional capital needs through modest rate adjustments without the anticipated need of issuing debt over the coming decade. Water The Water Enterprise Fund has a CIP with $160M which represents twice the historical average annual spend has been. 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% Rate Increase ($5,000,000) ($2,500,000) $0 $2,500,000 $5,000,000 $7,500,000 $10,000,000 Operating Income $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Available Reserves 0 5000000 10000000 15000000 20000000 25000000 30000000 35000000 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Outstanding Debt This utility also has low Available Reserves which limits short term financial agility. The CIP also ramps up quickly which together make it infeasible to have modest rate adjustments alone (Scenario 1) and achieve the operational needs for the CIP. The dashboard below shows the negative Available Reserves and large rate increases. The build-up of Available Reserves may make it necessary to adjust rates downward as well in the last few years. Next, issuing debt along with modest rate increases was considered. This Scenario (Scenario 2) does result in a feasible path. However, as the dashboard below shows, operating income remains negative. $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Annual Capital Investment 502 - Water Fund Environmental Services Water Resources Water Distribution Water Production Ave. Capital Investment 2017-26 Historical Ave Capital 2006-15 ($5,000,000) $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 Operating Income $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Outstanding Debt ($10,000,000) $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 $90,000,000 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Available Reserves 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Rate Increase Next it was assumed that the annual capital spend over the coming decade can be smoothed to near the average annual spend each year (Scenario 3). This change respects the prioritization in the CIP and accomplishes the same infrastructure in 2026 as the CIP. The dashboard below shows how this change reduces the amount of debt needing to be issued from $55-70M to $50- 60M and results in positive operating income. Recommendation: Scenario 3 (immediately above) which will accomplish the financial objectives while completing the CIP over the coming decade. Wastewater The slight reduction in the estimated capital investment over the coming decade compared to the previous decade is the result of the Mulberry rebuild. ($5,000,000) ($3,000,000) ($1,000,000) $1,000,000 $3,000,000 $5,000,000 $7,000,000 Operating Income $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Outstanding Debt $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Available Reserves 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% Rate Increase ($5,000,000) ($3,000,000) ($1,000,000) $1,000,000 $3,000,000 $5,000,000 $7,000,000 Operating Income $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 The minor change in the average annual capital investment should be manageable through rate adjustments alone. This Fund also has healthy Available Reserves allowing for more financial agility if needed in an emergency. The dashboard below shows how Scenario 1 is sufficient to meet the operational needs and maintain the current levels of service. The bottom left corner shows a sizable build-up of Available Reserves over the next decade. This is intentional to address new nutrient removal and temperature regulations driven capital projects in 2027-30 estimated to cost $60-80M in addition to ongoing system renewal. Recommendation: Modest rate adjustments should be sufficient to cover capital investment in the next decade without the need to issue additional debt for this fund. Stormwater $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Annual Capital Investment 503 - Wastewater Fund Environmental Services Wastewater Collection Water Reclamation Ave. Capital Investment 2017-26 Historical Ave Capital 2006-15 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 Operating Income $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Outstanding Debt $0 $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Available Reserves 0.0% 2.0% 4.0% 6.0% The Stormwater Enterprise Fund has spent just over $5M per year on capital investments in the previous decade. The 2017-26 CIP requires just over $15M per year or 3 times the current rate of investment. This utility has low Available Reserves which limits the financial agility of the utility in the short term. The CIP is also heavily focused on the first 5 years ($71M invested in 2017-21 and $29M in 2022-26). Together these challenges make it infeasible to address the CIP goals through rates alone. The dashboard below for this Scenario (Scenario 1) shows that Available Reserves immediately turn negative and operating income jumps with the large rate adjustments. Rate adjustments are not effective in the situation this utility is in with high operating income, low Available Reserves, and annual operating revenues of just $15M, or the same amount of capital investment requested per year although it is tightly focused on 4 years in the middle. $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Annual Capital Investment 504 - Stormwater Fund Boxelder Basin Stormwater Authority Stream Rehabilitation Minor Capital Major Capital Ave. Capital Investment 2017-26 Historical Ave Capital 2006-15 $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 Operating Income $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Outstanding Debt ($30,000,000) ($25,000,000) ($20,000,000) ($15,000,000) ($10,000,000) ($5,000,000) $0 $5,000,000 $10,000,000 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Available Reserves 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% Rates and debt (Scenario 2) are shown in the dashboard below. Available Reserves are not sufficient even with the very large debt issuance ($80-90M within the first 5 years) and 10% rate increases. Next it was considered how the CIP could be modified while respecting the prioritization of the investments. Because the increase in the average annual capital investment is increasing so much from $5M to $15M per year smoothing the investment evenly over the 10 years is not going to be adequate. Instead stretching the timeline from 10 years out to 15 years was considered (Scenario 3). The dashboard below shows how effective this approach is at achieving the financial objectives albeit over a longer time period. Recommendation: Scenario 3 which reduces the near term debt issuance down from $80-90M to $40-50M by extending the time horizon out 5 years to 2031. Where Are We In the Planning Process? As the CIPs are incorporated into developing the 2016 Utilities Strategic Financial Plan there is a need for some back and forth discussions between the Utility Executive Director, Operations $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 Operating Income $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 $90,000,000 $100,000,000 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Outstanding Debt ($10,000,000) ($5,000,000) $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Available Reserves 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Rate Increase $0 $1,000,000 Managers and Finance around what may be a manageable adjustment to the annual capital investment while maintaining the current levels of service being provided to the community. This is where we are at now in the whole planning process. The Scenario Analyses suggested the preferred financial strategy to the CIP. Now the Operations Managers need to consider what this approach would mean in terms of impacts to the current levels of service and what may be adjustable or not. Subsequent modeling efforts may be needed if the preferred financial strategy is not operationally feasible. On the version of the process map presented in April shown below the red loop represents where we are currently at in the planning process: Conclusion The 2016 CIPs included significant increases in anticipated capital investments for two of the utilities over the previous decade’s investment level. These two utilities also are the same two utilities with low Available Reserves. Managing the financial health of these two utilities, Water and Stormwater, while maintaining the current levels of service will require rate adjustments, debt issuances and some adjustments to the CIPs. The other two utilities, Light & Power and Wastewater, are expecting modest rate adjustments may be necessary over the next 10 years, but there is not expected to be a need to issue debt in these two utilities over the next decade. Utility Available Reserves (in $M) 2015 Operating Expenses (in $M) Days Cash on Hand in Available Reserves Capital Spend 2006-15 (in $M) Capital Spend 2017-26 (in $M) % Increase / (Decrease) Light & Power 16.4 38.8 154 80.5 85 5.6% Water 4.4 23.3 69 73.9 152.1 105.8% Wastewater 18.5 15.8 427 87.7 84.8 -3.3% Stormwater 4.1 9.9 151 56.3 156.5 178.0% Staff will continue to keep the Council Finance Committee and the entire City Council informed of the biannual updates and other changes to the Utilities Strategic Financial Plan. The 2016 Utilities Strategic Financial Plan will be published once the current iterative step between Finance and Operations is agreed upon within the next few months. - 0.05 0.10 0.15 0.20 0.25 0.30 0.35 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Acres Conserved Per Capita Over Time Acres Conserved Per Capita Over Time Attachment 5 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Acres Conserved Over Time Acres Conserved Over Time 0.0000 0.0200 0.0400 0.0600 0.0800 0.1000 0.1200 0.1400 0.1600 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Average Acres per capita per year Average Acres per capita $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 Operating Income $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Outstanding Debt $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Available Reserves 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Rate Increase 120.0% Rate Increase 8.0% 10.0% 12.0% 14.0% Rate Increase $50,000,000 $60,000,000 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Outstanding Debt $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Available Reserves 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% Rate Increase Increase 2009 11.00% 111.0% $24.78 $2.73 2010 10.00% 122.1% $27.26 $2.48 2011 9.00% 133.1% $29.72 $2.45 2012 8.00% 143.7% $32.09 $2.38 2013 0.00% 143.7% $32.09 $0.00 2014 3.00% 148.0% $33.06 $0.96 2015 3.00% 152.5% $34.05 $0.99 2016 3.00% 157.1% $35.07 $1.02 2017 3.00% 161.8% $36.12 $1.05 2018 3.00% 166.6% $37.21 $1.08 Stormwater Utility Service Rate Increase Amount Paid Relative to 2008 Average Residential Monthly Charge Average Residential Increase 2009 0.00% 100.0% $14.26 $0.00 2010 0.00% 100.0% $14.26 $0.00 2011 0.00% 100.0% $14.26 $0.00 2012 0.00% 100.0% $14.26 $0.00 2013 0.00% 100.0% $14.26 $0.00 2014 0.00% 100.0% $14.26 $0.00 2015 0.00% 100.0% $14.26 $0.00 2016 0.00% 100.0% $14.26 $0.00 2017 5.00% 105.0% $14.97 $0.71 2018 0.00% 105.0% $14.97 $0.00 6.42 8.9 8.6 8.9 6.5 6.7 29.39 6.45 29.37 70.3 70.3 70.1 70.1 70.2 70.2 86.6 20.3 56.14 1.6 1.19 1.15 1.8 1.4 1.12 1.9 1.1 Sources: GeoBase, Esri, IGN, HERE, Kadaster DeLorme, NL, Ordnance Intermap, Survey, increment Esri Japan, P Corp.METI, , GEBCO, Esri China USGS, (Hong FAO, Kong)NPS, , NRCAN, swisstopo, MapmyIndia, © OpenStreetMap contributors, and the GIS User Community In City Managers Capital Recommended Projects Budget CITY GEOGRAPHIC These and were map OF not products FORT designed and INFORMATION COLLINS or all intended underlying for general data SYSTEM are use developed by members MAP for use PRODUCTS of the by the public. 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