HomeMy WebLinkAboutMemo - Read Before Packet - 7/17/2018 - Memorandum From Lance Smith And Lisa Rosintoski Re: Council Follow Up On Appropriation Ordinance No. 093, 2018 Appropriating Prior Year Reserves In The Light And Power Fund, The Water Funds, The WasteUtilities
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Fort Collins, CO 80522
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M E M O R A N D U M
DATE: July 12, 2018
TO: Mayor Troxell and Councilmembers
FROM: Lance Smith, Utilities Strategic Finance Director
Lisa Rosintoski, Utilities Deputy Director, Customer Connections
THROUGH: Darin Atteberry, City Manager
Jeff Mihelich, Deputy City Manager
Kevin R. Gertig, Utilities Executive Director
RE: Council Follow-up on Appropriation Ordinance No. 093, 2018, Appropriating
Prior Year Reserves in the Light and Power Fund, the Water Funds, the
Wastewater Fund and the Storm Drainage Fund for the Utilities Customer
Information Billing System Project.
Bottom Line: In the 2017-18 Budget For Outcomes (BFO) process, Utilities submitted Offer
7.24 requesting $8 million for a new billing system for the four utilities - electric, water,
wastewater and stormwater. While final costs had not been determined, costs for the new system
were estimated to be between $6 and 8 million. A revised estimate determined the billing system
could be replaced for $6.8 million, based on a tier two vendor, and $6.8 million was included in
the capital improvement plans (CIPs) for the four utilities. However, $2.3 million was
appropriated in the 2017-18 BFO, leaving a balance of $4.5 million to be appropriated in the
2019-2020 BFO. This appropriation request includes $4.5M that was previously included in the
Capital Improvement Plans (CIPs) and $1.8M that was not previously included in the CIPs. A
significant portion of the increase is based on a better understanding of hardware, data base
licensing and data conversion. At the time the initial CIP was determined, the comprehensive,
integrated solution was not identified. Therefore, based on the preferred vendor solution, with
broadband, the hardware and data conversion cost upgrades have been finalized, resulting in staff
increasing the original $6.8 million CIP amount.
Background:
Once it became necessary to deploy a billing system for broadband services, Utilities decided to
look for a comprehensive, integrated billing system supporting five utilities. This effort resulted
in the selection of a single vendor to provide a comprehensive billing system at a total cost not to
exceed $9,545,663. Given the previous appropriations of $2.3 million and $948,663 for
broadband, the appropriation request on July 10, 2018 for $6,297,001 represents the remaining
funds needed from the four existing utilities to fully fund the new billing system with the
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additional hardware and data conversion costs. This represents an increase from the previous
estimated cost of $6.8 million of $1,797,001 to the four existing utilities. This incremental $1.8
million was not included in previous capital improvement plans. Initial estimates were
preliminary estimates based on discussions with consultants and vendors. These estimates
underestimated the hardware, data conversation and data base licensing costs compared with the
final system selected.
The impact of the higher cost is to further draw down the available reserves in the four utility
Enterprise Funds. The table below shows the remaining available reserves after this
appropriation and the incremental costs to each utility above previous CIP amounts:
Cost estimates used within our 10 year CIP are best estimates based on information available at
that time. As final design and functionality is completed, costs can shift within the CIP. The
CIP is updated every two years to adjust for better cost estimates and to rebalance and prioritize
funding needs based on the revised cost estimates and projects funded.
CC: Mike Beckstead, Chief Financial Officer
Lori Clements, Customer Care & Technology Senior Manager
Utility
Available Fund
Balances
Appropriation
Request
Remaining
Available
Reserves
Incremental
Costs not in
CIPs
Electric $5.5 $2.5 $3.0 $714,482
Water $22.1 $1.6 $20.5 $453,829
Wastewater $20.0 $1.1 $18.9 $313,467
Stormwater $7.5 $1.1 $6.4 $315,224
$1,797,001
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