HomeMy WebLinkAboutAgenda - Mail Packet - 8/18/2020 - Council Finance Committee (Cfc) Agenda - August 17, 2020
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AGENDA
Council Finance & Audit Committee
August 17, 2020
10:00 am - noon
Zoom Meeting 27TUhttps://zoom.us/j/8140111859U27T
Approval of Minutes from the July 20, 2020 Council Finance Committee meeting.
1. Parking Fund 30 mins. N. Currell
D. Brooks
2. Audit Review 20 mins. B. Dunn
K. Vodden
Council Finance Committee
Agenda Planning Calendar 2020
RVSD 07/28/20 ck
Aug. 17P
th
P
Parking Fund 30 min N. Currell
D. Brooks
Audit Review 20 min B. Dunn
K. Vodden
Sept. 21P
st
P
Annual Adjustment Ordinance
Parks & Recreation - Master Plan Review 60 min J. Stokes
H. Depew
Code Revisions for Self-Insurance Fund 15 min T. Storin
J. Duval
Oct. 19P
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P
Utility Rebate Consolidation 20 min J. Poznanovic
12020 Fee Updates 20 min J. Poznanovic
Nov. 16P
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P
Future Council Finance Committee Topics:
• Park/Median Design Standards & Maintenance Costs – TBD
• Metro District Policy Update – TBD 2020
Finance Administration
215 N. Mason
2nd Floor
PO Box 580
Fort Collins, CO 80522
970.221.6788
970.221.6782 - fax
fcgov.com
Finance Committee Meeting Minutes
July 20, 2020
10 am - noon
Zoom Meeting
Council Attendees: Mayor Wade Troxell, Ross Cunniff, Emily Gorgol, Susan Gutowsky
Council Members Absent: Ken Summers
Staff: Darin Atteberry, Kelly DiMartino, Carrie Daggett, John Duval, Jenny Lopez
Filkins, Travis Storin, Tyler Marr, Terri Runyan, Erik Martin, Blaine Dunn, Kelley
Vodden, Jennifer Selenske, SeonAh Kendall, Josh Birks, Jim Byrne, John Stokes,
Honore Depew, Mike Calhoon, Dawna Gorkowski, Bob Adams, Janice Saeger,
Dean Klingner, Paul Sizemore, Larry Schneider, Kurt Friesen, Teresa Roche,
Keen Garbiso, Victoria Shaw, Lawrence Pollack, Cody Forst Dave Lenz, Jo Cech,
Zack Mozer, Jennifer Poznanovic, Lucinda Smith, Carolyn Koontz
Others: Kevin Jones, Chamber of Commerce
Gavin Kaszynski, CFO Associates of Family Medicine
Mike Svetz PROS Consulting (Parks & Recreation)
Andrew Dobshinsky, Consultant, Olin Partnership (Parks & Recreation)
____________________________________________________________________________________
Meeting called to order at 10:04 am
Approval of Minutes from the June 15, 2020 Council Finance Committee Meeting. Ross Cunniff moved for approval
of the minutes as presented. Emily Gorgol seconded the motion. Minutes were approved unanimously.
A. 2020-2021 Budget & Financial Update
Travis Storin, Interim Chief Financial Officer
EXECUTIVE SUMMARY
The purpose of this agenda item is to review:
• The projected 2020-2021 financial scenarios
• Progress against the financial scenarios and remaining shortfall
• Next steps and engagement strategies for 2021 Budget
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
• Does the Finance Committee have any questions/input to share regarding staff’s status and timeline?
• Is the Committee supportive of the 2020 budget cuts identified and recommended by staff?
• Are there questions on the approach to 2021 reduction offers and community engagement?
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BACKGROUND/DISCUSSION
UCurrent shortfall projections
As part of the Analysis & Forecasting workstream, staff has developed a revenue forecasting model that allows
for individual risk adjustment of approximately 200 different revenue streams across multiple scenarios. The
below table represents the four scenarios staff has developed:
U2020 Scenario Progress
In the weeks since this work has begun, staff has identified $31M in backfill, relief, and cuts for the 2020
shortfall with minimal use of reserves, minimal community impact, and minimal staff impact.
U2021 Budget Process
City staff projects a $18.6M revenue shortfall in 2021 vs. prior projections. There is $5.2M of identified relief
housed within Transit, which indirectly benefits the General Fund. The remaining shortfall of $13.4M is being
addressed throughout July and early August with the Budget Leadership Team.
The Council process from July forward will be very consistent with past years, albeit within the framework of a 1-
year budget. Key dates are summarized below:
• Sept. 1st - City Manager's Recommended Budget Published
• Sept. 8th - Council Work Session #1
• Sept.15th - Public Hearing #1
• Sept. 22nd - Council Work Session #2
• Oct. 6th - Public Hearing #2
• Oct. 13th - Council Work Session #3
• Nov. 3rd - Council First Reading
• Nov. 17th - Council Second Reading
Discussion / Next Steps;
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Finance Committee have any questions/input to share regarding staff’s status and timeline?
Is the Committee supportive of the 2020 budget cuts identified and recommended by staff?
Are there questions on the approach to 2021 reduction offers and community engagement?
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Mayor Troxell; I think this is structured well and well thought through - currently in play at the Congress level –
as they resume on the Senate side – The HEROES act from the House side $500B to cities. First CARES went to
cities with populations of 500K or greater. First round – we are not through the storm yet
Emily Gorgol; it is amazing that out of $31M we are looking at using only $1M from reserves.
The Fall and winter may be hard and we may be going through this again. Thank you for the work and I look
forward to the conversation
Ross Cunniff; this is a good presentation of our current understanding of where we are. We are not sure what
fall will bring. Maybe we can be in more in a recovery mode soon but in the meantime, we need to prepare for
what we know.
Highlights;
Capital Project Delays - $2.5M - the largest portion is the Linden Street project which has been deferred out to
January at the earliest.
Street Maintenance -$2.7M - 15% cut - 25 lane miles of deferred maintenance deferred out to 2021
Savings associated with closing city pools for the season due to public safety however EPIC is open with reduced
schedule for reservations and team use. Mulberry and Senior Center are closed through Labor Day.
Emily Gorgol; Parks and Natural Areas are experiencing very heavy use – it is great that people are enjoying their
natural areas – but at the new Shields Street parking / tubing drop at the River - trash and cans etc. – concerns
about maintenance costs with current level of use.
John Stokes; the good news in Natural Areas is that we are just about fully staffed this year and our revenues
have been decent. Emily, what you saw at Shields Street – by the way, I have seen the same thing – I could not
believe how many vehicles parked on the road. We built that new parking lot was built to accommodate the
number of vehicles at that time – now it has just blown through that. We try to stay on top of the trash and
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parks does the same thing. Parks is probably more effected than Natural Areas. Parks is down approximately
100 seasonal employees - currently have 150 seasonal employees. It is hard to keep up with the current volume
of use.
Emily Gorgol; I do have a concern about maintenance with the level of use – I have heard several comments
about the city moving forward with flowers downtown and everything looks great there but there is concern
about balance. I also have a concern in the neighborhood services area - community engagement services being
decreased. What kind of things we are doing to try help people with mental health, etc.?
Ross Cunniff; I agree with Emily, we need to be cautious not to let Natural Areas and Parks degrade while we are
going through this. I have a bigger concern on the neighborhood services side – increased complaints regarding
fireworks, smoke from outdoor fires, among others. We may want to consider shifting some things around to
make sure we can cover the neighborhood quality of life issues.
Paul Sizemore; I appreciate the comments and we definitely have some impacts in our ability to do engagement
work especially in the peak of the impacts from Covid – with our current levels of resourcing we have been able
to keep up with some of these demands including the 4P
th
P of July holiday. The comments are very important as
we look forward to 2021 and any future impacts.
ATION ITEM
Ross Cunniff; for the final summary to create a bar chart by outcome area showing the actual cuts by outcome
area and dollar amount as I expect it is not being spread equally. Transfers like the CARES act backfilling Transit
are different.
Travis Storin took the above request as a follow-up.
Mayor Troxell; anticipating 30K CSU students arriving in our community. They have not been here since March.
I am concerned on Covid side but also Impacts to budget side.
Travis Storin; we have to categorize that for now as one of the big macro variables /unknowns - we are working
with CSU’s projections and schedule including the assumption that students will go home after Thanksgiving
through end of semester.
Darin Atteberry; I am grateful for Travis’ work and his leadership. I want to acknowledge Travis and his team’s
work as well as the Budget Lead Team members and so many folks working on this. I know you understand the
detail that goes into this including hours and hours of work. I want to express my appreciation. For the most
part, very pleased by the small amount of reserves we need to use at this point. I remain hopeful for the 2021
budget as there are other priorities that Council had coming in that I think assuming we can stay the course on
Covid- I think there are things that we will still be able to do in 2021 (Vine / Lemay) a lot will depend on Covid.
Council Priories – we are going to be very intentional in the 2021 process – ongoing conversations. We had
some hard conversations. This effort is intended to minimize the impact on our residents.
Emily Gorgol; I have some questions about the Community engagement strategy; I think part of it is
reacting to the City Manager’s Budget (700-page document). Asking Community members to read that size of
document – is there a summary? Community members are confused on when and how they can advocate for
certain programs. If I wanted to see more funding in some area - when would that take place?
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Travis Storin; we do provide several budget summaries for folks so they don’t have to read the entire Budget
document.
Lawrence Pollack; entry point for interested citizens – the challenge is timing this year as traditionally we would
have had outreach efforts kick off in June - what that allows us to do is take a snapshot of that feedback and
get to the BLT and BFO teams as they are working on the budget. We would be posting the information and
offers so they are visible on the web in early August which will dovetail with community outreach – there really
wasn’t an opportunity to get that information back solely due to this year’s timing which is not ideal. We have
really ramped up community engagement in the last 3 budget cycles which has provided excellent information.
Citizen input on offers and alignment to the Strategic Plan is powerful – unfortunately that we will not have the
opportunity that feedback into this cycle simply due to the timing. We will be able to have that conversation as
part of the Council dialog – based on that there may be modifications in the fall.
Travis Storin; the narrative that describes the staff process and the trade-offs is about 20 pages long
and another 30 pages or so of charts. Governance - where do your tax dollars go?
Lawrence Pollack; a number of years ago, Council Member Martinez asked for a summary – a shorter, more
easily digestible format - 50 or so page summary – we could do something similar on the recommended budget.
Lawrence took this action item for follow up.
ACTION ITEM; Emily Gorgol; milestones; can we add information on when Citizens need to submit input by?
Travis Storin took this action item for follow up.
Mayor Troxell; are there any Council engagement opportunities between now and September?
Travis Storin; we have an August 11P
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P work session scheduled where we can describe
Mayor Troxell; It would be good to know the public engagement part of that – generally how we are reaching
out
ACTION ITEM:
Ross Cunniff; Do we have a list of targeted community outreach on the budget? (organizations or groups)
Travis Storin; that has not come through in a Council Packet – the specific groups were not mentioned in that
memo. I will work with CPIO and get that list. Travis will follow up.
Darin Atteberry; we would prefer that Ross so we will let you know the various outreach groups and
opportunities. If council members have additional thoughts, ideas, or suggestions, we are eager to get that or
maybe virtual conversations that are going on - we are at a disadvantage but any insights you may have would
be helpful.
Kelly DiMartino; forums are being held to help provide foundational understanding for people because we have
heard that it is hard for people to know where and how to wrangle this thing. This year we are trying to provide
more opportunities for learning and getting the lay of the land.
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Darin Atteberry; more so this year, we need to stress this – Emily, depending on someone’s level of interest,
there are cascading opportunities. We do not expect people to read a 600-700 -page document. They can dig in
at the level they like whether that is staying up at 50K feet level or if someone wants to get into more detail, we
have the ability for folks to do that as well. Biggest challenge we have as far as communications, how to
participate in the local budget – we want to make really clear that this is where to go, how to engage. The team
is very open to that.
B. Coronavirus Relief Fund (CVRF), CARES Act, Title V Allocation
Blaine Dunn, Interim Accounting Director
SeonAh Kendall, City Recovery Manager
EXECUTIVE SUMMARY
The purpose of this agenda item is to review City’s Coronavirus Relief Fund (CVRF) allocation:
• Intent and eligibility of reimbursable costs/expenditures
• Potential process for distribution
• Reporting schedule
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
• Does the Finance Committee have any questions about the intent and eligibility of CVRF?
• Is the Committee supportive of the distribution allocations?
An emergency ordinance is being sought due to the immediate exigency in addressing COVID-19. On June 23,
2020, Resolution 2020-059 approved by City Council allowed City Manager Atteberry to enter into an
intergovernmental agreement (IGA) with Larimer County for the allocation of the CARES CVRF. The IGA allocated
$9,015,692 to the City of Fort Collins to respond and address COVID-19.
BACKGROUND/DISCUSSION On May 18, 2020, Governor Polis signed Executive Order D2020 070, Directing the
Expenditure of Federal Funds Pursuant to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, to
establish the Coronavirus Relief Fund (CVRF). Through the Department of Local Affairs (DOLA) this fund will
reimburse costs to Counties, Municipalities and Special Districts that:
1. Are necessary expenditures incurred due to the COVID-19 public health emergency (COVID-19 emergency).
2. Were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment
of the CARES Act) for the State; and
3. Were incurred during the period that begins on March 1, 2020 and ends on December 30, 2020.
Intent
The City has incurred increased expenditures due to COVID 19 health emergency response. The requirement
expenditures be incurred “due to” the public health emergency means expenditures must be used for actions
taken to respond to the public health emergency. Costs incurred by the City from March 1, 2020 – December 30,
2020 are reimbursable, as long as those items were not budgeted as of March 27, 2020. The CARES CVRF does
not allow for municipality revenue backfill/replacement, including the replacement of unpaid utility fees or tax
obligations.
Eligible Expenditures
• Direct City incurred expenditures to address the public health emergency including such costs as:
o Payroll expenses for public safety, human services and similar employees whose services are
substantially dedicated to mitigating or responding to the COVID-19 public health emergency.
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o Expenses for communication of the public health orders.
o Expenses for medical and protective supplies, including sanitizing products and personal protective
equipment.
o Expenses to improve telework capabilities for public employees to enable compliance with COVID-
19 public health precautions.
o Expenses for providing paid sick and paid family and medical leave to public employees.
• Expenses to facilitate compliance with COVID-19-related public health measures for our residents, such as
expenses to support:
o Rental assistance to prevent homelessness.
o Utility payment assistance to continue to receive essential services
o Food delivery to residents, including, for example, senior citizens and other vulnerable population.
o Facilitation of distance learning and remote working, including technological improvements.
o Emergency sheltering for people experiencing homelessness to mitigate COVID-19 effects and
enable social distancing compliance.
• Expenses associated with the provision of economic support for our business community, such as expenses
to support
o Provision of grants to small businesses to reimburse the costs of business interruption caused by
required closures.
Sector Direct City Response Residents Businesses
Proposed Distribution 28% 42% 30%
Expended $558,000 $233,000 $165,000
Available Funds $2,009,692 $3,510,000 $2,539,000
Total $2,567,692 $3,743,000 $2,705,000
Proposed for Distribution
CARES funding requests for all entities will utilize an application, verification, and tracking process to align with
the CRVF criteria. Once requests are received and prioritized, the proposed slate will go to Council for final
acceptance.
Direct City Response Funds:
• Internal request and tracking process set up and monitored through EOC.
Businesses:
• Distribution to support businesses will be through a financial assistance application process:
o Although economic recovery support is directly to local businesses, this overall benefits the
residents and community – the City’s Economic Health Office (EHO) has proposed a grant process to
support businesses between 5 – 20 employees, has existed for over one year (prior to March 1,
2020), and remained in good standing with the State of Colorado, Larimer County and the City of
Fort Collins. EHO has indicated a desire to allocate a specific portion of this direct support to
disadvantage business enterprises (DBEs) such as women-, minority- and veteran-owned businesses.
Residents:
• Social recovery for our residents is another component of community recovery. The City’s Social
Sustainability Office has identified needs and nonprofit organizations that would meet the required need
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and ability to address COVID-19. Applicants for residents will be private, nonprofit organization that is non-
governmental.
Reporting Schedule
Due to subrecipient relationship nature, and defined time eligibility of the distributions, Staff is recommending
monthly status reports of expenditures and milestones to City Council. An end-of-year impact report will be
provided to City Council by March 31, 2021.
Discussion / Next Steps;
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
• Does the Finance Committee have any questions about the intent and eligibility of CVRF?
• Is the Committee supportive of the distribution allocations?
$9M CARES allocation from state’s allocation for Fort Collins – we were not anticipating this – Governor on a
prelim basis – they were going to retain – Larimer County awarded a $31M piece and based on population and
other factors we will be $9M
Mayor Troxell; with regards to Connexion working with PSD on providing connectivity to some of our trailer park
neighborhoods. Is that in there too?
SeonAh Kendall; yes, $50K for a feasibility study - our partners are talking about a range of $300-500K per
manufactured home community - Fort Collins has 11 manufactured home communities – we are trying to hone
in on what can be done at the county level and the municipal level.
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Mayor Troxell; the schedule looks good - looking forward to the upcoming July 28P
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P adjourned meeting to
further discuss this topic. I am supportive of the work and the allocations.
Emily Gorgol; confirming there is $50K for the study but no money for the actual connectivity.
SeonAh Kendall; we put in known items first and there is a cushion -allocation vs direct dollar - Digital access
would be in the Residential Support for COVID category 42% allocated to that space specifically - we were
aware of the number $300 -500K. Can we have a regional conversation and have multiple partners?
Emily Gorgol; in additional to rental assistance are we able to provide mortgage assistance?
SeonAh Kendall; we are looking at what state is doing. Blaine and I will go back in to understand the changes
around mortgage assistance. The US Treasury is providing frequent updates on what is and is not eligible. We
want to make sure we are following the state guidance.
Blaine Dunn; we are trying to leave some flexibility within those numbers so that as we get more guidance from
the Treasury and the state, we will have the flexibility to make those changes as needed.
Emily Gorgol; I am happy to see the utility payment assistance in there as well.
For the business support, are we able to have money for restaurants who need to redo enclosed patios looking
forward to fall and winter for additional new space?
Josh Birks; we are still working out the exact details of the small business grant program and what it would look
like. Modifications to a business premise in order to operate safely. For retail establishments that could include
putting up plexiglass or making other changes to facilitate one-way traffic through their establishment, etc.
Business grants will be spanning the whole host of types of businesses. For office space, it could include very
similar expenses to what the city incurred to facilitate working remotely. Most of that would probably be on a
reimbursement basis. So, we would be looking to understand what their needs are.
Emily Gorgol; what about Disadvantaged Business Entities; DBEs (women, minority, low income and veteran
owned businesses). Is that a reimbursement process as well?
Josh Birks; nothing has been finalized - plane is mid-flight while we build out the actual details - the best
practices that we have seen around the country are to primarily focus on reimbursement basis – we are also
looking at possibly pairing some technical assistance in allowing funds to be used for that as well. We have not
conceived of a difference between DBEs and other businesses in terms of approach. My office is interested in
having a target or even set aside a portion of the funds to be earmarked for DBEs.
SeonAh Kendall; the rationale around the reimbursements - these must be because of Covid - as sub recipients
of the city they would have to follow same guidelines in terms of not being previously budgeted and having to
do with Covid, etc.
Emily Gorgol; I am guessing that DBEs would not have access to upfront capital to cost those type of costs. I
would be concerned that a reimbursement model could be challenging for them. Are we able to support skill
and education opportunities for folks whose jobs will not be coming back?
SeonAh and Josh are working with the county regarding what would retraining or skills training look like and
could CARES dollars be used for that.
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Ross Cunniff; Emily touched on a couple of questions that I had. I agree with the Mayor, I like our timeline, July
28P
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P allows us to dig in a little more. The more detail you can get to Council in advance of that the better. One of
the concerns we will have will be making sure we are prioritizing how we are doing this relative to the impacts to
our community. If we have a way of quantifying that would be helpful; how many people need rental
assistance, how many need additional utilities assistance. How many businesses need this capital improvement
option for Covid response? If we could get some data on that to help us balance those numbers that would be
helpful.
Susan Gutowsky; are we going to target seniors? They are not as assertive in seeking out resources and yet I am
hearing that they are being stretched to the point where rent is exceeding their monthly funds. Is there some
way we can support them? So many seem to be one paycheck away from homelessness. I talked with Kelly
Evans with Neighbor to Neighbor and she said they were acutely aware that more and more seniors are in dire
need of assistance.
SeonAh Kendall; I would be happy to reach out to a couple of folks obviously within Social Sustainability but also,
we have a robust volunteer program with the city. I would probably reach out to Sue Schafer to have a
conversation regarding how we do that outreach.
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C. Parks & Recreation – Master Plan – Funding
John Stokes, Deputy Director, Community Services
Honore Depew, Sr. Project Manager
EXECUTIVE SUMMARY
The purpose of this item is to provide an overview of findings so far from a funding analysis of parks and
recreation facilities. Presentation by Interim Community Services Director, John Stokes. Consults and
department directors available for discussion/questions.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Is the proposed scope and direction of the financial analysis appropriate?
BACKGROUND/DISCUSSION
The Parks and Recreation Master Plan update process began in November 2019 and has included extensive
system analysis and community engagement. Staff has been working with a consultant team, stakeholders, and
the community to identify parks and recreation desires, assess how Fort Collins compares to other peer and
benchmark communities, and identify key issues and priorities the plan should address – including a long-term
financial framework.
Staff and the consulting team are conducting a thorough and detailed analysis of the entire inventory of parks
and recreational facilities. The assessment includes an appraisal of assets and amenities throughout the system
using benchmark communities, national trends, and survey data as guideposts. From this work current levels of
service can be compared, and future amenities and services anticipated.
Several approaches are being used to develop an understanding of how current facilities compare to benchmark
communities, and how those facilities relate to what Fort Collins’ community members have highlighted in
through surveys, open houses, etc. The analysis also includes an evaluation of the funding structures in place to
support development, maintenance, replacement, and programing.
The Total Cost of Ownership for a Park or Recreation facility includes four buckets:
1) capital needed to build it in the first place,
2) funds to maintain it (operations and maintenance),
3) funds to replace/upgrade parts and equipment (lifecycle replacement), and
4) funds to completely redesign or remodel when necessary (refresh).
Fort Collins has historically managed the first bucket successfully – new recreation facilities have been funded
with tax initiatives and new parks with dedicated impact fees. The other three buckets compete for general
funds as part of the budget process every two years. As a result, the long-term sustainability of maintenance,
lifecycle and refresh are not assured.
Preliminary findings from the funding analysis:
Parks Department
• Large and diverse Parks system (1,190 acres)
o Expansive inventory of assets creates systematic pressures
• Annual funding for lifecycle replacement of Parks amenities (asset management) is approximately $4 million
below the recommended target investment, based on industry standards to invest 3% of total asset value
each year
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• Fort Collins spends less per acre on operations and maintenance than the national median but more than
the national median per capita
• Development of a capital improvement plan by Parks and Park Planning and Development is an important
next step for the sustainability of Parks asset management
Recreation Department
• 60% of community participating in Recreation programs suggests strong value
• Recreation typically recovers more than half of expenditures, even including overhead costs such as
maintenance from Operation Services
• Modest ability to increased cost recovery on longer (5-10 year) time horizon
• Limited resources to maintain and improve facilities
• Staffing is lean and relies heavily on hourly workers
Next Steps
• Complete a level of service analysis
• Complete a forward-looking asset management financial projection for individual parks and recreational
facilities (capital improvement plan)
• Identify strategies for funding alternatives and options
• Conduct additional community outreach
• City Council Work Session: Aug. 25
• Council Finance Committee: Sept. 21
Discussion / Next Steps;
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Is the proposed scope and direction of the financial analysis appropriate?
Mike Calhoon over $12M park - $2M in downtown area
Includes a lot of parks – Mulberry to Cherry
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ACTION ITEM:
Ross Cunniff; regarding the slide above - what percent of the per acre cost/ budget is personnel? Fuel?
Capital? Concrete? What is the breakdown and what are the cost of living implications?
John Stoke - Fort Collins’ cost of living is 9% higher than benchmark communities in the US.
John will follow up with Ross with the requested detail.
Mike Svetz; 2/3 of the overall budget is personnel
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Ross Cunniff; do we have a benchmark on the 3% of asset value?
Mike Svetz; there is not necessarily a benchmark – 3-5% to do life cycle replacement – understanding
that lifecycle management never stops in a parks system – we do ask that they set aside 3-5% annually
for life cycle management
Ross Cunniff; would be interesting to break it down by asset class – for paved trails, facilities, pools etc.
– like we figured out for streets – to hone in on right number and help us make decision on what we be
shifting to accommodate
John Stokes; there is a lot of work going on behind the scenes in terms of that number - clearly this is
an area where we need to do a deeper dive and will address your comments.
Mayor Troxell; doing comparative analysis like we do in other areas – streets, etc. would be helpful by
asset classes – with regards to responsibilities of parks – Old Town and median work- neighborhood
parks / community parks - is there a breakdown there? Shines the light on the real value that impacts
our community – Nature in the City – access – we have that with our parks as well – median work, Old
town.
John Stokes; we do have budgets for those items - it would be interesting to know if other
communities - our cost per acre – how is that influenced by median work being part of that?
Mike Svetz; provided the exact breakdown – we have taken a cost of service approach based on park
classification and area – that is how we derived the general shortfall associated with ongoing park
maintenance – We did a mini cost of service analysis which provided an understand that for every acre
of park - what you would potentially need to be spending for any new development –that speaks to
that total cost of ownership concept.
Mike Calhoon; $12M for the whole parks division with over $2M in the Downtown area which also
includes a lot of parks in the downtown are between Mulberry and Cherry – The people that I have
talked with – it is mixed bag for other communities. Public works to contractors.
Mike Svetz; dependent on the community – there are a lot of value systems that speak to wanting to
contract things out – you always run the risk of cost volatility and quality of work – the park systems is
exceptionally well maintained and consistently maintained – the departments that seem to perform
the best and do the most consistent job seem to be inhouse within the available resources.
Mayor Troxell; Parks -it is a public function that is enabling a benefit - not just cutting grass – our Parks
folks do an outstanding job – recognizing is important to our community to understand – one of the
special features of our community that people appreciate. Funding is an important one we need to
address as a Council and a community – sustainable framework.
Ross Cunniff; this is a really good start - good work. On the revenue sources it would be interesting to
know how other communities are doing this – is it out of their general fund or do they have dedicated
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tax revenue for it? Interested in exploring more diverse ways of providing funding for parks - for
example; tax for service, on-bill impact fee type - exploring those options - what are the possibilities for
Fort Collins - If we always put this in the General Fund it will always be first on the chopping block in
tough times.
John Stokes; Thank you Ross for those comments; we will be taking a look at a variety of potential
funding mechanisms; park investment fees, trail expansion fee, maybe a way we can work this into our
Capital Expansion fee program beyond investment and new parks only. There are several concepts we
will be exploring throughout this process. This is an iterative process - we have a lot of homework yet
to do – although we didn’t share this today - we have done some very interesting deep dive analysis on
cost recovery in recreation- which programs are super cost effective and which ones are not.
Darin Atteberry; we are in good shape on this - Ross had some questions around industry standards
and metrics around the 3-5%. 3-5%is pretty normal as an operating fund for public facilities. Ken
Mannon 3-5% line item - some years we do a pretty good job and some years we have had other
priorities. The number that is being proposed is reasonable. We went into this to understand what
our needs and gaps are - Fort Collins has an amazing portfolio and plan - we are in a good position but
as every single city service we have, costs are increasing and when we get into the conversation about
the design of future facilities and as we update existing facilities and probably over the last 10 years we
have been more mindful about total operating expense and cost of ownership. We have better insight
- it is a huge asset portfolio that we need to be very cognizant of. Thanks to everyone – this has been a
great discussion.
D. Recordkeeping Change – Nationwide Transition Update
Joaquin ‘Keen’ Garbiso
EXECUTIVE SUMMARY
As a part of the City’s municipal code, we must take our benefit programs out to a competitive procurement
process. This allowed us the opportunity to view what is happening nationally, what organizations are doing to
stay competitive both for their talent and financially and to ensure we are offering the best benefit programs for
our employees. After a thorough and competitive process, Nationwide was selected.
• The City has been with ICMA-RC for 45 years, accumulating over $500M in assets
We are currently working through all aspects of this transition.
In working with outside counsel Dan Lacomis, it was determined City Council must approve the documents
transitioning the City-sponsored retirement plans for City employees from ICMA-RC to Nationwide because the
City Council is the governing body of the municipal corporation.
Documents to be approved are:
• Adoption Agreement (along with attachments)
• Trust Agreement
• Merger of plan agreement (plan consolidation approval
• An Affiliation Agreement with each affiliated entity (PFA, DDA and Library)
16
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
We would like to provide a high-level overview of the transition and future Council action required on August 18
and respond to any questions or comments.
BACKGROUND/DISCUSSION
With ICMA-RC, the City and its affiliates (PFA, Library and DDA) had over 29 plans (20 of which are active via
payroll deductions) consisting of 401(a), 457(b) Deferred Compensation and Retirement Health Savings (RHS)
Plan, which in the future will be known as a Post-Employment Health Plan (PEHP) offered through a Voluntary
Employee Beneficiary Associate (VEBA) trust.
In partnership with Nationwide, Jenny Lopez Filkins, outside counsel (Dan Lacomis), our affiliates and their legal
counsel, we have consolidated our plans to 15.
• 401(a): 6 Plans
• 457(b): 4 Plans
• PEHP: 5 Plans
Discussion / Next Steps;
Mayor Troxell; of cost and benefits to those that are impacted with this change. Is this a cost / benefit neutral
thing – or just good administering / keep your house in order thing or is there more to be aware of?
Teresa Roche; we did an RFP after doing a competitive landscape view with Innovest (our financial partner).
When we went out to bid which is a good business practice and is required by charter – we looked at who we
are serving today – demographics, organization - we did see that we were going to be able to lower costs while
providing more engagement and education. They have some very powerful metrics on client satisfaction.
Measures that will let us know if we are truly taking care of the needs of our employees. We feel that this will
be a far better partner for us going forward.
Ross Cunniff; this looks straightforward – Consent Resolution makes a lot of sense. Thank you for getting this
done.
Darin Atteberry; I do stand behind this - this was a good practice to going out to bid. Improved accessibility for
our changing workforce, better access. HR, CAO and Financial Services have spent a great amount of time on
this and it has been a very long transition. Think this is the right path forward for our employees and for the city.
Meeting adjourned at noon.
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Drew Brooks, Transfort/Parking Services Director
Noelle Currell, Planning, Development & Transportation Finance Manager
Date: August 17, 2020
SUBJECT FOR DISCUSSION
Parking Fund COVID Financial Impacts
EXECUTIVE SUMMARY
The Parking Fund is currently consuming reserves at the rate of $88k/month because of COVID.
These impacts are due to both the overall economic environment as well as Emergency Orders
issued to help support both businesses and residents.
The Parking Fund is expected to lose approximately $845k of fund balance over the course of
2020.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Inform Council Finance of the current financial status of the Parking Fund.
BACKGROUND/DISCUSSION
The Parking Fund is an administrative (non-codified) governmental fund. It was created in 2015
to ensure that Parking Revenue that is generated through a variety of sources will only be used to
further the Parking Mission (not provide a supplemental funding source for General Fund
activities). As a non-enterprise fund, Parking is not intended to be self-regulating.
Leading into COVID; revenues and expenses were nearly balanced (with expenses being slightly
higher than revenue in recent years and in the 2020 budget):
Actual Actual Actual Actual Actual Budget
2015 2016 2017 2018 2019 2020
Beginning Balance 0 1,510,396 1,516,953 1,796,033 1,546,205 1,487,872
Revenue 3,661,192 2,368,112 2,755,408 3,278,679 2,698,547 2,857,432
Expenses 2,150,796 2,361,555 2,476,328 3,528,507 2,756,881 2,900,003
Surplus / (Deficit) 1,510,396 6,557 279,080 (249,828) (58,334) (42,571)
UEnding Balance U1,510,396 U1,516,953 U1,796,033 U1,546,205 U1,487,872 U1,445,301
The impacts of both City decisions to support the economy and residents have had large negative
impacts on Parking revenues. Parking has not been able to lower its expenses proportionally due
to nature of the expenses; for example, software/hardware for garages/pay stations and existing
security contracts with the garages. Due to the impact on revenue and nature of the expenses in
the fund, reserves are being consumed at the rate of about $88k/month on average.
Though it is expected that the Parking Fund will have a positive fund balance at the end of 2020,
there is currently no path to rebuild that fund balance, nor pay for additional critical needs (e.g.
Civic Center Parking Structure Elevator repairs). Budgeted ending fund balance for 2020 was
$1,455,301. Forecasted fund balance is $708,501. Note that this decrease in fund balance will
cause the use of specific Civic Center Reserves.
Staff is closely monitoring the situation and will make adjustments as nimbly as possible to
continue to serve and support the community. Additional strains on the fund will be
communicated to City Leadership and Council as soon as they are brought to light.
ATTACHMENTS
Attachment 1 – Parking Fund Council Finance August 2020 PowerPoint Presentation
1
Parking Fund Financial Update August 2020
Drew Brooks & Noelle Currell
Thursday, March 26, 2020 –12:17pm
Council Direction Sought
Inform Council Finance Committee on the
current status of the Parking Fund
2
Parking Services Mission
Support, and be ambassadors for, all who
work, shop, and live in Fort Collins through
efficient parking supply/demand management.
3
•Help businesses thrive
•Good stewardship of parking revenue and general revenue funds
•Maintain resources for safe and efficient operations
•Keeping parking operations viable
Agenda
•How Parking is Funded & How Revenues are Spent
•COVID Impacts
•Fund Forecast
•What’s Next
4
How is Parking Funded?
5High dependence on violations; General Fund in support of Capital
How are Parking Revenues Spent?
6
Majority of costs are tied to asset management and personnel
COVID Pandemic Impacts
7706 of 863 regular spaces available March 30, 2020 –3:20pm
•March 16th –Phased down and then suspended
non-safety related parking enforcement
•Continue patrols of downtown in support
of public safety
•April 1st –Emergency Order officially suspending
enforcement
•Patrols of parks and other City facilities
for observation
COVID Pandemic Impacts
Decrease in Transactions: Citations ↓65%; Hourly ↓55%; Permits ↓54%
Decrease in Revenue: Citations ↓45%; Hourly ↓61%; Permits ↓20%
8
Parking Fund Forecast
9
Projected loss of fund balance in 2020: $845k
Fund balance expected to go to $0 by end of 2021
What’s Next for Parking?
•Enforcement resumed August 3, 2020
•Close monitoring of RP3 neighborhoods
•Completion of on-street sensor project
•Continuous weekly analysis of revenue/expense/fund balance
•Parking structure major maintenance
•Civic Center Parking Structure Elevator -$250k
•Old Town Parking Structure is beyond design life -$TBD
10
Key Takeaways
1.Parking revenues normally only cover ongoing Operations
2.COVID has greatly impacted revenue/fund balance
3.Policy discussions will occur after data collection and economic
recovery
11
Questions?
12
Backup
13
History & Plan Recommendations
14
•1973 Parking meters removed to remove
competition with free parking at the new
Foothills Fashion Mall
•1989 Downtown Plan identified:
•Parking perceived as full
•Employees park in close proximity to
businesses where patrons should be
parking, and
•A need for parking fund to invest in
infrastructure
Strategic Planning History
•2004 Downtown Strategic Plan recommended
on-street paid parking as the primary strategy to
promote parking turnover
•2013 Parking Plan suggests that “parking is a
giant unfunded liability"
•2014, the Transit-Oriented Development
Parking Study recommended the implementation
of on-street paid parking as a solution to manage
parking and create a revenue source to invest in
new parking infrastructure.
•2017 Downtown Plan adopted policy
to "Implement a system to collect
parking utilization data on occupancy and
turnover, and communicate parking availability to
the public.
15
In-ground Sensor
Inground Parking Sensor sample area
(highlighted in orange):
•Initial re-installations occurred mid-
March –contractor called away due to
COVID-19
•Installation completed June 9th to 11th.
•Verification of accuracy and reliability
to occur once final install of equipment
complete.
16
Emergency Order 2020-07
17
Suspended enforcement:
•Time -limited enforcement
•Expired Registration
•Immobilizing (Booting)
•RP3 permitted areas
Administrative:
•Pause-escalation cycle for citations
•Permit holder-hold/waive lapsed permits
•Pause-permit waitlist
April 1st
Business as Unusual-Informational Flyer
18
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Blaine Dunn, Interim Accounting Director
Kelley Vodden, Controller
Chris Telli, BKD LLP
Anna Thigpen, BKD LLP
Date: August 17, 2020
SUBJECT FOR DISCUSSION
Independent Auditors’ Report on 2019 Financial Statements
Independent Auditors’ Report on Compliance for Major Federal Programs
EXECUTIVE SUMMARY
BKD will be presenting an overview of the Report to Council. This report covers the audit of the
basic financial statements and compliance of the City of Fort Collins for year-end December 31,
2019.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Staff seeks input on areas of priority or concern, other than those established in this Report to the
City Council, for matters of recordkeeping and/or the City’s internal control environment.
Otherwise there are no specific questions to be answered as this is a 2019 year-end report.
BACKGROUND/DISCUSSION
In compliance with Government Auditing Standards, the City undergoes an independent external
audit on an annual basis. BKD finalized its financial statement audit and compliance report on
July 31, 2020 and the firm is required to report the results of the audit to those charged with
governance.
Attachment 1 to this agenda item contains the full report, and findings of note are summarized
below:
Significant Issues Discussed with Management (Attachment 1, page 4):
City management and the audit team discussed the accounting treatment of Fiduciary Activities
and how they relate to the adoption of GASB 84. The audit team agreed with how the City
presented the Fiduciary Activities.
Other Findings (Attachment 1, pages 6-8):
Other findings/deficiencies identified by the auditors but not rising to the level of a significant
deficiency can be found in the Report to the City Council. Staff will provide a written response
to the audit findings at a fourth quarter Council Finance Committee meeting.
ATTACHMENTS
1. PowerPoint Presentation
2. Report to the City Council
3. Single Audit Compliance Report
4. Comprehensive Annual Financial Report
CITY OF FORT COLLINS
Presentation to the Council Finance and Audit
Committee
Christopher J. Telli, CPA
Anna Thigpen, CPA
BKD Participants & Scope
Christopher J. Telli, CPA
Partner
3
Anna Thigpen, CPA
Senior Manager
3
Purpose
Express opinions on the December 31, 2019 financial statements and supplementary information of the City
Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards
Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance and Report on Schedule of Expenditures of Federal Awards required by Uniform Guidance
•Issue communications required under auditing standards generally accepted in the United States of America to assist the board in overseeing management’s financial reporting and disclosure process. This report also presents an overview of areas of audit emphasis, as well as future accounting standards and industry developments for governments.
•This report also provides an overview of areas of audit emphasis, as well as future accounting standards.
4
Audit Scope and Results
Management Judgement and Accounting Estimates
•Self-insurance reserves (IBNR)
•Net pension liability
•Other postemployment benefits liability
•Fair value of investments
•Allowances for accounts, grants and notes receivable
•Depreciable lives of capital assets
5 5
Audit Scope and Results
Financial Statement Disclosures
•Revenue recognition
•Investments
•Long-term debt
•Adoption of new accounting pronouncement
6 6
Audit Scope and Results
Audit Adjustments
•Adjustment to reclassify transfer to City from the Fire Authority of
approximately $90,000 to income rather than a transfer in
•Adjustment to record grants receivable of approximately $120,000
•Adjustment of approximately $5,800,000 to remove the recognition
of capitalized interest related to the Broadband Fund, as GASB
89, Accounting for Interest Cost Incurred before the End of a
Construction Period was early implemented as of 12/31/2018,
thus removing the requirement to record capitalized interest
7 7
Audit Scope and Results
Proposed Adjustments Not Recorded
•See attached summary of uncorrected misstatements we
aggregated during the current engagement and pertaining to the
latest period presented that were determined by management to
be immaterial, both individually and in the aggregate, but more
than trivial to the financial statements as a whole
•Turn around effect of prior year passed adjustments not recorded
•Net investment in capital assets –retainage payable
8 8
Audit Scope and Results
Accounting Principles
•Adoption of GASB 84, Fiduciary Activities
•Pension and Other Employee Benefit Trust Funds
•Investment Pool Funds
•Custodial Funds
9 9
Audit Scope and Results
Difficulties Encountered in Performing the Audit
•As a result of the spread of the SARS-CoV-2 virus and the
resulting state and citywide stay-at-home orders, it was necessary
for all parties to work remotely to perform and complete the audit.
This caused management to experience certain reporting
difficulties relating to the CAFR preparation process and resulted
in delays and inefficiencies in our review of the financial report.
This caused the opinion date to be later than it has been
historically.
10 10
Internal Control Over Financial
Reporting
•A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis.
•A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented or detected and corrected on a timely basis.
•A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
•We observed the following matters that we consider to be deficiencies.
11
Internal Control Over Financial
Reporting
•Deficiencies: Capitalized Interest
•The City early implemented GASB 89, Accounting for Interest
Cost Incurred before the End of a Construction Period in 2018
which removed the requirement to record capitalized interest.
•BKD proposed a journal entry to remove capitalized interest
recognized in 2019 in the amount of $5.8M.
12
Internal Control Over Financial
Reporting
•Deficiencies: Pooled Cash
•The Light & Power Fund reported a negative balance in
pooled cash of approximately $1.9M. The City ultimately
reclassified this negative cash in the Broadband Fund for
financial reporting purposes.
•BKD recommends the City closely evaluate pooled cash at
year end and if a negative pooled cash account is present, to
appropriately allocate negative pooled cash amongst the
funds/entities participating in the pooled cash balance.
13
Internal Control Over Financial
Reporting
•Deficiencies: Grants Receivable:
•During testing of grants receivable, BKD identified an error
and proposed an audit adjustment of $120,000 for an
additional grant accrual
•BKD recommends that the City consider refining the grants
receivable reporting process which may include an identifying
account number on the SEFA rollfoward which could be used
for financial statement preparation to ensure that items are
appropriately reported as receivables, deferred inflows of
resources, and/or revenue.
14
Internal Control Over Financial
Reporting
•Deficiencies: Net Investment in Capital Assets (NICA)
•BKD proposed an audit adjustment for the inclusion of
retainage payable related to capital assets in the (NICA)
calculation for all related funds.
•Management chose not to record this adjustment based on
materiality.
•BKD recommends that management include retainage in the
NICA calculation on a go forward basis.
15
Internal Control Over Financial
Reporting
•Deficiencies: Cash Inflows -Permits
•There is no formal documentation of review of the monthly
reconciliation between Accela and JD Edwards.
•BKD recommends that this reconciliation be reviewed
monthly, and that the review be documented.
16
Internal Control Over Financial
Reporting
•Deficiencies: Information Technology
•The primary data center door is in the same security group as other doors in the LaPorte Building.
•The secondary data center is located within five miles of the primary data center. Given their proximity, both data centers could be affected by the same regional events resulting in an extended service outage.
•The City’s secondary/backup co-location data center is managed by a third party. A Service and Organization Controls (SOC) or similar report has not been received and evaluated by the City to verify the effectiveness of physical and environmental controls at the third party.
•There is not a formal change management policy for in-house application development
•A formal periodic user access and permission review is not evidenced for the applications listed below. A periodic review provides management with the opportunity to verify ongoing needs, limit potential segregation of duties conflicts, and to remove access for terminated users that were not otherwise caught in the normal termination process. The systems included are as follows: JD Edwards, CIS, Tungsten, MS Govern, Accela, Active Directory (AD)
•Although, the CIS application appears to have a shared Incident Response Program with other application shareholders, the City does not have an enterprise-wide Incident Response Program to provide uniform guidance on classifying and handling incidents.
17
Future Pronouncements
•GASB Statement No. 83, Certain Asset Retirement Obligations
•Effective for December 31, 2020
•GASB Statement No. 87, Leases
•Effective for December 31, 2022
•GASB Statement No. 88, Certain Disclosures Relating to Debt, including Direct
Borrowings and Direct Placements
•Effective for December 31, 2020
•The effective dates of the pronouncements above, and certain others, have been
extended with the approval of GASB Statement No. 95 Postponement of the
Effective Dates of Certain Authoritative Guidance
18
Questions?
Thank you!
Christopher J. Telli, CPA // Partner // ctelli@bkd.com // 303.861.4545
Anna Thigpen, CPA // Senior Manager // athigpen@bkd.com // 303.861.4545
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Fort Collins, Colorado
As part of our audits of the financial statements and compliance of the City of Fort Collins,
Colorado (the City) as of and for the year ended December 31, 2019, we wish to communicate
the following to you.
AUDIT SCOPE AND RESULTS
Auditor’s Responsibility Under Auditing Standards Generally Accepted in the United
States of America and the Standards Applicable to Financial Audits Contained in
Government Auditing Standards Issued by the Comptroller General of the United States
and U.S. Office of Management and Budget (OMB) Title 2 U.S. Code of Federal
Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (Uniform Guidance)
An audit performed in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards issued by the Comptroller General of the United States and U.S. Office of
Management and Budget (OMB) Uniform Guidance is designed to obtain reasonable, rather than
absolute, assurance about the financial statements and about whether noncompliance with the
types of compliance requirements described in the OMB Compliance Supplement that could have
a direct and material effect on a major federal program occurred. In performing auditing
procedures, we establish scopes of audit tests in relation to the financial statements taken as a
whole. Our engagement does not include a detailed audit of every transaction. Our engagement
letter more specifically describes our responsibilities.
These standards require communication of significant matters related to the financial statement
and compliance audits that are relevant to the responsibilities of those charged with governance
in overseeing the financial reporting process. Such matters are communicated in the remainder
of this letter or have previously been communicated during other phases of the audit. The
standards do not require the auditor to design procedures for the purpose of identifying other
matters to be communicated with those charged with governance.
Audits of the financial statements and compliance do not relieve management or those charged
with governance of their responsibilities. The professional services agreement more specifically
describes your responsibilities.
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 2
Qualitative Aspects of Significant Accounting Policies and Practices
Significant Accounting Policies
The City’s significant accounting policies are described in Note 1 of the audited financial
statements.
Alternative Accounting Treatments
We had discussions with management regarding alternative accounting treatments within
accounting principles generally accepted in the United States of America for policies and
practices for material items, including recognition, measurement and disclosure considerations
related to the accounting for specific transactions as well as general accounting policies, as
follows:
Modified approach for infrastructure-City streets
Management Judgments and Accounting Estimates
Accounting estimates are an integral part of financial statement preparation by management,
based on its judgments. The following areas involve significant areas of such estimates for
which we are prepared to discuss management’s estimation process and our procedures for
testing the reasonableness of those estimates:
Self-insurance reserves (IBNR)
Net pension liability
Other postemployment benefits liability
Fair value of investments
Allowances for accounts, grants and notes receivable
Depreciable lives of capital assets
Financial Statement Disclosures
The following areas involve particularly sensitive financial statement disclosures for which we
are prepared to discuss the issues involved and related judgments made in formulating those
disclosures:
Revenue recognition
Investments
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 3
Long-term debt
Adoption of new accounting pronouncement
Audit Adjustments
During the course of any audit, an auditor may propose adjustments to financial statement
amounts. Management evaluates our proposals and records those adjustments which, in its
judgment, are required to prevent the financial statements from being materially misstated. A
misstatement is a difference between the amount, classification, presentation or disclosure of a
reported financial statement item and that which is required for the item to be presented fairly in
accordance with the applicable financial reporting framework. Some adjustments proposed were
not recorded because their aggregate effect is not currently material; however, they involve areas
in which adjustments in the future could be material, individually or in the aggregate.
Areas in which adjustments were proposed include:
Proposed Audit Adjustments Recorded
Adjustment to reclassify transfer to City from the Fire Authority of approximately
$90,000 to income rather than a transfer in
Adjustment to record grants receivable of approximately $120,000
Adjustment of approximately $5,800,000 to remove the recognition of capitalized interest
related to the Broadband Fund, as GASB 89, Accounting for Interest Cost Incurred
Before the End of a Construction Period was early implemented as of December 31,
2018, thus removing the requirement to record capitalized interest
Proposed Audit Adjustments Not Recorded
Attached is a summary of uncorrected misstatements we aggregated during the current
engagement and pertaining to the latest period presented that were determined by
management to be immaterial, both individually and in the aggregate, but more than
trivial to the financial statements as a whole
Auditor’s Judgments About the Quality of the City’s Accounting Principles
During the course of the audit, we made the following observations regarding the City’s
application of accounting principles:
Adoption of GASB 84, Fiduciary Activities
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 4
Disagreements with Management
The following matters involved disagreements which if not satisfactorily resolved would have
caused a modified auditor’s opinion on the financial statements:
No matters are reportable
Consultation with Other Accountants
During our audit we became aware that management had consulted with other accountants about
the following auditing or accounting matters:
No matters are reportable
Significant Issues Discussed with Management
Prior to Retention
During our discussion with management prior to our engagement, the following issues regarding
application of accounting principles or auditing standards were discussed:
No matters are reportable
During the Audit Process
During the audit process, the following issues were discussed or were the subject of
correspondence with management:
Adoption of GASB 84, Fiduciary Activities
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 5
Difficulties Encountered in Performing the Audit
Our audit requires cooperative effort between management and the audit team. During our audit,
we found significant difficulties in working effectively on the following matters:
As a result of the spread of the SARS-CoV-2 virus and the resulting state and citywide
stay-at-home orders, it was necessary for all parties to work remotely to perform and
complete the audit. This caused management to experience certain reporting difficulties
relating to the CAFR preparation process and resulted in delays and inefficiencies in our
review of the financial report. This caused the opinion date to be later than it has been
historically.
Other Material Communications
Listed below are other material communications between management and us related to the
audit:
Management representation letter (attached)
We orally communicated to management other deficiencies in internal control identified
during our audit that are not considered material weaknesses or significant deficiencies
INTERNAL CONTROL OVER FINANCIAL REPORTING
In planning and performing our audit of the financial statements of the City of Fort Collins,
Colorado (the City) as of and for the year ended December 31, 2019, in accordance with auditing
standards generally accepted in the United States of America and the standards applicable to
financial audits contained in Government Auditing Standards issued by the Comptroller General
of the United States, we considered the City’s internal control over financial reporting (internal
control) as a basis for designing audit procedures that are appropriate in the circumstances for the
purpose of expressing our opinion on the financial statements, but not for the purpose of
expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not
express an opinion on the effectiveness of the City’s internal control.
Our consideration of internal control was for the limited purpose described in the preceding
paragraph and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies and, therefore, material weaknesses or significant
deficiencies may exist that were not identified.
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 6
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent or detect and correct misstatements on a timely basis.
A material weakness is a deficiency, or a combination of deficiencies, in internal control, such
that there is a reasonable possibility that a material misstatement of the City’s financial
statements will not be prevented or detected and corrected on a timely basis.
A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is
less severe than a material weakness, yet important enough to merit attention by those charged
with governance.
We observed the following matters that we consider to be deficiencies.
Capitalized Interest
The City early implemented GASB 89, Accounting for Interest Cost Incurred before the End of a
Construction Period in 2018, thus removing the need to record capitalized interest. During
testing of capital assets, BKD identified capitalized interest in the Broadband Fund which was
included as an addition to capital assets in 2019. BKD proposed a journal entry to remove
capitalized interest in the amount of $5.8M. Due to delays in the year-end close, audit
workpapers were provided prior to all closing journal entries being recorded, which likely
contributed to this error not being identified internally.
Pooled Cash
The Broadband Fund ended the year with a negative balance in pooled cash of approximately
$5.1M. For financial reporting purposes, this fund is reported with the Light & Power Fund,
which resulted in a combined negative balance in pooled cash of approximately $1.9M. The
City ultimately reclassified this negative cash in the Broadband Fund for financial reporting
purposes. BKD recommends the City closely evaluate pooled cash at year-end and if a negative
pooled cash account is present, to appropriately allocate negative pooled cash amongst the
funds/entities participating in the pooled cash balance.
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 7
Grants Receivable
During testing of grants receivable and the related Schedule of Expenditures of Federal Awards
(SEFA) rollforward, BKD noted that the process to agree ending balances to the trial balance
requires staff to identify the account and fund where each line item is recorded and this process
appears to be done manually. In addition, BKD identified an error and proposed an audit
adjustment of $120,000 for an additional grant accrual. BKD recommends that the City consider
refining the grants receivable reporting process which may include an identifying account
number on the SEFA rollfoward which could be used for financial statement preparation to
ensure that items are appropriately reported as receivables, deferred inflows of resources, and/or
revenue.
Net Investment in Capital Assets
Retainage payable as it relates to capital assets should be included in the net investment in capital
assets (NICA) calculation for all related funds. As in the prior year, an audit adjustment was
proposed to correct the NICA calculation. Management chose not to record this adjustment
based on materiality.
Cash Inflows – Permits
A monthly reconciliation between Accela, the permit software and JD Edwards, the accounting
software, is prepared. However there is no formal documentation of review of this
reconciliation. BKD recommends that this reconciliation be reviewed monthly, and that the
review be documented.
Information Technology
The primary data center door is in the same security group as other doors in the LaPorte
Building. The data center door should be segregated into its own security group to limit
access to the primary data center to only necessary IT personnel.
The secondary data center is located within five miles of the primary data center. Given
their proximity, both data centers could be affected by the same regional events resulting
in an extended service outage.
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 8
The City’s secondary/backup co-location data center is managed by a third party. A
Service and Organization Controls (SOC) or similar report has not been received and
evaluated by the City to verify the effectiveness of physical and environmental controls at
the third party.
There is not a formal change management policy for in-house application development.
A formal change management policy provides a uniform process that aides in preventing
unauthorized or untested changes, updates, or patches being applied to production
systems. These changes could result in the damage or loss of data, inaccurate reports,
and/or malfunctioning systems.
A formal periodic user access and permission review is not evidenced for the applications
listed below. A periodic review provides management with the opportunity to verify
ongoing needs, limit potential segregation of duties conflicts, and to remove access for
terminated users that were not otherwise caught in the normal termination process. The
systems included are as follows:
o JD Edwards
o CIS
o Tungsten
o MS Govern
o Accela
o Active Directory (AD)
Although, the CIS application appears to have a shared Incident Response Program with
other application shareholders, the City does not have an enterprise-wide Incident
Response Program to provide uniform guidance on classifying and handling incidents.
OTHER MATTERS
Although not considered material weaknesses, significant deficiencies or deficiencies in internal
control over financial reporting, we observed the following matters and offer these comments
and suggestions with respect to matters which came to our attention during the course of the
audit of the financial statements. Our audit procedures are designed primarily to enable us to
form an opinion on the financial statements and, therefore, may not bring to light all weaknesses
in policies and procedures that may exist. However, these matters are offered as constructive
suggestions for the consideration of management as part of the ongoing process of modifying
and improving financial and administrative practices and procedures. We can discuss these
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 9
matters further at your convenience and may provide implementation assistance for changes or
improvements.
COVID-19 Resource Center
BKD has created a new resource center to help disseminate important tax and accounting
information for our clients and friends as we evaluate ways to mitigate the inevitable financial
effects of the SARS- CoV-2 virus and the incidence of COVID-19 (COVID-19). Some of the
information included in the COVID-19 Resource Center is as follows:
Small Business Administration loans, payroll tax credits and
general business planning considerations
Business continuity
Cash flow projections and business planning
Security and agility for a remote work environment
CARES Act relief for state and local governments
Tax considerations surrounding COVID-19
Protect your organization with cyber hygiene tips
We encourage you to review these resources, which are available at
https://www.bkd.com/covid-19-resource-center?industry[3856]=3856
Other Funding Considerations
The City may be awarded additional funding such as additional grants and/or contributions
which may require additional requirements and considerations. We recommend management
analyze each funding award both separately for its unique terms and conditions as well as in the
aggregate to manage cash flow and overall compliance. Further, the City may wish to
communicate to insurance providers and others (e.g., FEMA) that the spread of the SARS-CoV-2
virus and the incidence of COVID-19 has had significant impacts on the City for which it may at
a future date pursue certain claims.
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 10
Reference Rate Reform
The London Interbank Offered Rate (LIBOR), which began its daily publication in 1986,
represents the average of the estimated interest rates that a high-quality London bank would be
charged to borrow from other leading banks. It quickly evolved into the world’s primary
benchmark for short-term interest rates. In 2012, the rate submission process was corrupted by
member banks manipulating rates for their own profit, and post-financial crisis regulation has
significantly reduced the transaction volume upon which banks base their LIBOR submissions.
In fact, it is expected that a number of banks currently reporting information used to set LIBOR
will stop doing so after 2021.
In 2014, the Federal Reserve established the Alternative Reference Rates Committee (ARRC),
which is tasked, among other matters, with identifying a risk-free alternative reference rate
(ARR) for USD LIBOR, and in 2017, ARRC identified the Secured Overnight Financing Rate
(SOFR), which is a measure of the cost of borrowing cash overnight, collateralized by U.S.
Treasury securities, as its preferred alternative rate for USD LIBOR.
Management should begin the process of identifying existing contracts that extend past 2021 to
determine their LIBOR exposure. Many legacy contracts have interest rate provisions
referencing LIBOR that, when drafted, did not contemplate the permanent discontinuation of
LIBOR and, as a result, there may be uncertainty or disagreement over how the contracts should
be interpreted.
Future Accounting Pronouncements
GASB Statement No. 95, Postponement of Effective Dates of Certain Authoritative Guidance
In response to the challenges arising from COVID-19, on May 7, 2020 GASB approved
Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance.
GASB approved an 18 month postponement for Statement 87, Leases. All statements and
implementation guides with a current effective date of reporting periods beginning after June 15,
2018, and later have a one-year postponement. This change is effective immediately. Early
application is still encouraged.
GASB Statement No. 83 – 2020 Effective Date
GASB Statement No. 83, Certain Asset Retirement Obligations (GASB 83): GASB 83
establishes uniform criteria for governments to recognize and measure certain asset retirement
obligations (AROs). An ARO is defined as a legally enforceable liability associated with the
retirement of a tangible capital asset. Examples could be costs associated with decommissioning
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 11
a nuclear power plant or disposal of x-ray machine. An ARO is recognized when the liability is
incurred, which is manifested by the occurrence of both an external obligating event (such as a
legally binding contract or a court judgment) and an internal obligating event (such as placing a
tangible capital asset into service). A government also recognizes a deferred outflow of
resources when it recognizes an ARO liability. The ARO is measured at the best estimate of the
current value of outlays expected to be incurred. Additional note disclosures are required.
GASB 83 is effective for financial statements for fiscal years beginning after June 15, 2019.
Earlier application is encouraged.
GASB Statement No. 87 – 2022 Effective Date
GASB Statement No. 87, Leases (GASB 87): GASB 87 provides a new framework for
accounting for leases under the principle that leases are financings. No longer will leases be
classified between capital and operating. Lessees will recognize an intangible asset and a
corresponding liability. The liability will be based on the payments expected to be paid over the
lease term, which includes an evaluation of the likelihood of exercising renewal or termination
options in the lease. Lessors will recognize a lease receivable and related deferred inflow of
resources. Lessors will not derecognize the underlying asset. An exception to the general model
is provided for short-term leases that cannot last more than 12 months. Contracts that contain
lease and nonlease components will need to be separated so each component is accounted for
accordingly.
GASB 87 is effective for financial statements for fiscal years beginning after June 15, 2021
Earlier application is encouraged. Governments will be allowed to transition using the facts and
circumstances in place at the time of adoption, rather than retroactive to the time each lease was
begun.
GASB Statement No. 88 – 2020 Effective Date
GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and
Direct Placements (GASB 88). This Statement defines debt for purposes of disclosure in notes
to financial statements as a liability that arises from a contractual obligation to pay cash (or other
assets that may be used in lieu of cash) in one or more payments to settle an amount that is fixed
at the date the contractual obligation is established. This Statement requires that additional
essential information related to debt be disclosed in notes to financial statements, including
unused lines of credit; assets pledged as collateral for the debt; and terms specified in debt
agreements related to significant events of default with finance-related consequences, significant
termination events with finance-related consequences, and significant subjective acceleration
clauses. This Statement also requires that existing and additional information be provided for
direct borrowings and direct placements of debt separately from other debt.
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 12
GASB 88 is effective for financial statements for fiscal years beginning after June 15, 2019, with
earlier application encouraged.
GASB Statement No. 90 – 2022 Effective Date
GASB Statement No. 90, Majority Equity Interests – an Amendment of GASB Statements No. 14
and No. 61 (GASB 90). An equity interest is a financial interest in a legally separate
organization evidenced by ownership of shares of the organizations stock or by otherwise having
an explicit, measurable right to the net resources of the organization that is usually based on an
investment of financial or capital resources by a government. An equity interest is explicit and
measurable if the government has a present or future claim to the net resources of the entity and
the method for measuring the government’s share of the entity’s net resources is determinable.
This statement modifies guidance for reporting a government’s majority equity interest in a
legally separate organization and will require organizations to re-evaluate any arrangements
presently reported as a joint venture.
GASB 90 is effective for financial statements for fiscal years beginning after December 15,
2019.
GASB Statement No. 91 – 2021 Effective Date
GASB Statement No. 91, Conduit Debt Obligations. This statement clarifies the existing
definition of a conduit debt obligation, establishes a single method of reporting for issuers, and
enhances note disclosures. This Statement is effective for financial statements for fiscal years
beginning after December 15, 2020.
GASB Statement No. 92 – 2020 Effective Date
GASB Statement No. 92, Omnibus. GASB periodically updates its authoritative guidance for
practice issues and technical inconsistencies identified during application and implementation of
GASB statements. This release includes updates on leases and fiduciary activities. This
Statement is effective for financial statements for fiscal years beginning after December 15,
2019.
GASB Statement No. 97 – 2022 Effective Date
GASB Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial
Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. Section 457
plans should be classified as either a pension plan or other employee benefit plan, depending on
whether the plan meets the definition of a pension plan. Accounting and financial reporting
requirements for 457 plans that meet the definition of a pension plan are defined and investment
valuation requirements for all 457 plans are modified. Statement 97 limits the application of the
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 13
financial burden criterion regarding contributions to postemployment benefit plans to only
defined benefit pension plans and defined benefit OPEB plans that are administered through
trusts. This will reduce costs of reporting of certain defined contribution pension plans as
fiduciary component units. This supersedes previous guidance in Statement 84 and
Implementation Guide 2019-2. The accounting and reporting changes are effective for fiscal
years beginning after June 15, 2021. Changes to the component unit assessment are effective for
reporting periods beginning after June 15, 2021.
* * * * *
This communication is intended solely for the information and use of management, City Council,
and others within the City and is not intended to be and should not be used by anyone other than
these specified parties.
July 31, 2020
Before Subsequent to
Misstatements Misstatements Misstatements % Change
Total Assets & Deferred Outflows 1,274,383,229 1,274,383,229
Total Liabilities & Deferred Inflows (145,575,509) (145,575,509)
Total Net Position (1,128,807,720) (1,128,807,720)
General Revenues & Transfers (221,443,893) (221,443,893)
Net Program Revenues/ Expenses 192,104,575 192,104,575
Change in Net Position (29,339,318) (29,339,318)
Verify Debits and Credits have been entered correctly on the Menu-GA Tab
City of Fort Collins
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflect the effects on the financial
statements if the uncorrected misstatements identified were corrected.
Governmental Activities (Government-Wide Statements)
QUANTITATIVE ANALYSIS
Governmental Activities (Government-Wide Statements)SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)Assets LiabilitiesGeneral Revenues & TransfersNet Program Revenues/ Expenses Net PositionChange in Net PositionNet PositionDescription Financial Statement Line ItemDR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)To adjust the net investment in capital assets component of net position for the inclusion of retainageF00 000 0 0 Net investment in capital assets1,764,366Unrestricted net position(1,764,366)Total passed adjustments00 000 00Impact on Change in Net Position0Impact on Net Position0Client: City of Fort CollinsPeriod Ending: December 31, 2019Net Effect on Following YearFactual (F), Judgmental (J) or Projected (P)
Before Subsequent to
Misstatements Misstatements Misstatements % Change
Total Assets & Deferred Outflows 19,314,410 19,314,410
Total Liabilities & Deferred Inflows (13,701,600) (13,701,600)
Total Net Position (5,612,810) (5,612,810)
General Revenues & Transfers (6,899,708) (6,899,708)
Net Program Revenues/ Expenses 2,902,363 2,902,363
Change in Net Position (3,997,345) (3,997,345)
Verify Debits and Credits have been entered correctly on the Menu-GA Tab
City of Fort Collins
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflect the effects on the financial
statements if the uncorrected misstatements identified were corrected.
Discretely Presented Component Units (Government-Wide Statements)
QUANTITATIVE ANALYSIS
Governmental Activities (Government-Wide Statements)SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)Assets LiabilitiesGeneral Revenues & TransfersNet Program Revenues/ Expenses Net PositionChange in Net PositionNet PositionDescription Financial Statement Line ItemDR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)To adjust the net investment in capital assets component of net position for the inclusion of retainageF00 000 0 0 Net investment in capital assets17,523Unrestricted net position(17,523)Total passed adjustments00 000 00Impact on Change in Net Position0Impact on Net Position0Factual (F), Judgmental (J) or Projected (P)Client: City of Fort CollinsPeriod Ending: December 31, 2019Net Effect on Following Year
Before Subsequent to
Misstatements Misstatements Misstatements % Change
Total Assets & Deferred Outflows 1,079,136,125 1,079,136,125
Total Liabilities & Deferred Inflows (210,000,912) (210,000,912)
Total Net Position (869,135,213) (869,135,213)
General Revenues & Transfers (8,851,993) (8,851,993)
Net Program Revenues/ Expenses (8,937,713) (8,937,713)
Change in Net Position (17,789,706) (17,789,706)
Verify Debits and Credits have been entered correctly on the Menu-GA Tab
City of Fort Collins
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflect the effects on the financial
statements if the uncorrected misstatements identified were corrected.
Business Type Activities (Government-Wide Statements)
QUANTITATIVE ANALYSIS
Governmental Activities (Government-Wide Statements)SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)Assets LiabilitiesGeneral Revenues & TransfersNet Program Revenues/ Expenses Net PositionChange in Net PositionNet PositionDescription Financial Statement Line ItemDR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)Line not used00 000 0 0 To adjust the net investment in capital assets component of net position for the inclusion of retainageF00 000 0 0 Net investment in capital assets2,151,279Unrestricted net position(2,151,279)Total passed adjustments00 000 00Impact on Change in Net Position0Impact on Net Position0Factual (F), Judgmental (J) or Projected (P)Client: City of Fort CollinsPeriod Ending: December 31, 2019Net Effect on Following Year
Before Subsequent to
Misstatements Misstatements Misstatements % Change
Total Assets & Deferred Outflows 283,607,470 283,607,470
Total Liabilities & Deferred Inflows (34,556,722) (34,556,722)
Total Fund Balance (249,050,748) (249,050,748)
Revenues (20,652,711) (20,652,711)
Expenditures 170,398,766 (206,994) 170,191,772 -0.12%
Change in Fund Balance (18,231,586) (206,994) (18,438,580) 1.14%
City of Fort Collins
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflect the effects on the
financial statements if the uncorrected misstatements identified were corrected.
Aggregate Remaining Fund
QUANTITATIVE ANALYSIS
Aggregate Remaining FundSCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)Assets & Deferred OutflowsLiabilities & Deferred InflowsChange in Fund BalanceFundBalanceDescription Financial Statement Line ItemDR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)PY Turnaround effect - To write off unreconciled amount in the credit card clearing accountF0 0 0 (81,500) 81,500 0 0 Fund Balance81,500Expense(81,500)PY Turnaround effect - To write off the unreconciled amount in the Customer AR AccountF0 0 0 (125,494) 125,494 0 0 Fund Balance125,494Expense(125,494)Total passed adjustments0 0 0 (206,994) 206,994 0 0Impact on Change in Fund Balance(206,994)Impact on Fund Balance 0Client: City of Fort CollinsPeriod Ending: December 31, 2019RevenuesExpendituresFund BalanceNet Effect on Following YearFactual (F), Judgmental (J) or Projected (P)
Before Subsequent to
Misstatements Misstatements Misstatements % Change
Total Assets & Deferred Outflows 107,395,769 107,395,769
Total Liabilities & Deferred Inflows (34,919,804) (34,919,804)
Total Fund Balance (72,475,965) (72,475,965)
Revenues (152,256,979) (152,256,979)
Expenditures 133,777,182 (666,312) 133,110,870 -0.50%
Change in Fund Balance (5,420,433) (666,312) (6,086,745) 12.29%
City of Fort Collins
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflect the effects on the
financial statements if the uncorrected misstatements identified were corrected.
General Fund
QUANTITATIVE ANALYSIS
General FundSCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)Assets & Deferred OutflowsLiabilities & Deferred InflowsChange in Fund BalanceFundBalanceDescription Financial Statement Line ItemDR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)PY PAJE turnaround effect of adjustment to developer escrows to the more conservative tracking spreadsheet amountF0 0 0 (666,312) 666,312 0 0 Fund Balance 666,312Expense(666,312)Total passed adjustments0 0 0 (666,312) 666,312 0 0Impact on Change in Fund Balance(666,312)Impact on Fund Balance 0Client: City of Fort CollinsPeriod Ending: December 31, 2019RevenuesExpendituresFund BalanceNet Effect on Following YearFactual (F), Judgmental (J) or Projected (P)
Before Subsequent toMisstatements Misstatements Misstatements % ChangeCurrent Assets 49,411,145 49,411,145Non-Current Assets & Deferred Outflows 316,845,191 316,845,191Current Liabilities (16,786,257) (16,786,257)Non-Current Liabilities & Deferred Inflows (143,623,459) (143,623,459)Current Ratio 2.944 2.944Total Assets & Deferred Outflows 366,256,336 366,256,336Total Liabilities & Deferred Inflows (160,409,716) (160,409,716)Total Net Position (205,846,620) (205,846,620)Operating Revenues (136,967,822) (136,967,822)Operating Expenses 139,410,672 139,410,672Nonoperating (Revenues) Exp 573,397 573,397Change in Net Position 18,587 18,587City of Fort CollinsATTACHMENTThis analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflect the effects on the financial statements if the uncorrected misstatements identified were corrected.Light and Power (Broadband)QUANTITATIVE ANALYSIS
Light and Power (Broadband)SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)CurrentNoncurrentCurrentNoncurrentOperating RevenuesOperating ExpensesNonoperating (Revenues) ExpNet PositionChange in Net PositionNet PositionDescription Financial Statement Line ItemDR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)To adjust the net investment in capital assets component of net position for the inclusion of retainageF0000 0000 0 0 Net investment in capital assets1,354,201Unrestricted net position(1,354,201)Total passed adjustments0000 0000 00Impact on Change in Net Position 0Impact on Net Position 0Client: City of Fort CollinsPeriod Ending: December 31, 2019Assets & Deferred OutflowsLiabilities & Deferred InflowsNet Effect on Following YearFactual (F), Judgmental (J) or Projected (P)
Before Subsequent toMisstatements Misstatements Misstatements % ChangeCurrent Assets 26,424,727 26,424,727Non-Current Assets & Deferred Outflows 133,153,888 133,153,888Current Liabilities (4,803,013) (4,803,013)Non-Current Liabilities & Deferred Inflows (2,643,384) (2,643,384)Current Ratio 5.502 5.502Total Assets & Deferred Outflows 159,578,615 159,578,615Total Liabilities & Deferred Inflows (7,446,397) (7,446,397)Total Net Position (152,132,218) (152,132,218)Operating Revenues (17,489,736) (17,489,736)Operating Expenses 9,965,204 9,965,204Nonoperating (Revenues) Exp (479,499) (479,499)Change in Net Position (8,302,886) (8,302,886)City of Fort CollinsATTACHMENTThis analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflect the effects on the financial statements if the uncorrected misstatements identified were corrected.Storm DrainageQUANTITATIVE ANALYSIS
Storm DrainageSCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)CurrentNoncurrentCurrentNoncurrentOperating RevenuesOperating ExpensesNonoperating (Revenues) ExpNet PositionChange in Net PositionNet PositionDescription Financial Statement Line ItemDR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)To adjust the net investment in capital assets component of net position for the inclusion of retainageF0000 0000 0 0 Net investment in capital assets222,640Unrestricted net position(222,640)Total passed adjustments0000 0000 00Impact on Change in Net Position 0Impact on Net Position 0Factual (F), Judgmental (J) or Projected (P)Client: City of Fort CollinsPeriod Ending: December 31, 2019Assets & Deferred OutflowsLiabilities & Deferred InflowsNet Effect on Following Year
Before Subsequent toMisstatements Misstatements Misstatements % ChangeCurrent Assets 86,347,038 86,347,038Non-Current Assets & Deferred Outflows 259,923,781 259,923,781Current Liabilities (10,418,047) (10,418,047)Non-Current Liabilities & Deferred Inflows (2,920,693) (2,920,693)Current Ratio 8.288 8.288Total Assets & Deferred Outflows 346,270,819 346,270,819Total Liabilities & Deferred Inflows (13,338,740) (13,338,740)Total Net Position (332,932,079) (332,932,079)Operating Revenues (31,969,152) (31,969,152)Operating Expenses 30,702,070 30,702,070Nonoperating (Revenues) Exp 2,455,037 2,455,037Change in Net Position (5,781,495) (5,781,495)City of Fort CollinsATTACHMENTThis analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflect the effects on the financial statements if the uncorrected misstatements identified were corrected.WaterQUANTITATIVE ANALYSIS
WaterSCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)CurrentNoncurrentCurrentNoncurrentOperating RevenuesOperating ExpensesNonoperating (Revenues) ExpNet PositionChange in Net PositionNet PositionDescription Financial Statement Line ItemDR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)To adjust the net investment in capital assets component of net position for the inclusion of retainageF0000 0000 0 0 Net investment in capital assets319,579Unrestricted net position(319,579)Total passed adjustments0000 0000 00Impact on Change in Net Position 0Impact on Net Position 0Factual (F), Judgmental (J) or Projected (P)Client: City of Fort CollinsPeriod Ending: December 31, 2019Assets & Deferred OutflowsLiabilities & Deferred InflowsNet Effect on Following Year
Before Subsequent toMisstatements Misstatements Misstatements % ChangeCurrent Assets 49,534,729 49,534,729Non-Current Assets & Deferred Outflows 164,852,247 164,852,247Current Liabilities (4,202,094) (4,202,094)Non-Current Liabilities & Deferred Inflows (20,086,687) (20,086,687)Current Ratio 11.788 11.788Total Assets & Deferred Outflows 214,386,976 214,386,976Total Liabilities & Deferred Inflows (24,288,781) (24,288,781)Total Net Position (190,098,195) (190,098,195)Operating Revenues (24,056,457) (24,056,457)Operating Expenses 19,516,869 19,516,869Nonoperating (Revenues) Exp 817,119 817,119Change in Net Position (5,597,727) (5,597,727)City of Fort CollinsATTACHMENTThis analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflect the effects on the financial statements if the uncorrected misstatements identified were corrected.WastewaterQUANTITATIVE ANALYSIS
WastewaterSCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)CurrentNoncurrentCurrentNoncurrentOperating RevenuesOperating ExpensesNonoperating (Revenues) ExpNet PositionChange in Net PositionNet PositionDescription Financial Statement Line ItemDR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)To adjust the net investment in capital assets component of net position for the inclusion of retainageF0000 0000 0 0 Net investment in capital assets254,859Unrestricted net position(254,859)Total passed adjustments0000 0000 00Impact on Change in Net Position 0Impact on Net Position 0Factual (F), Judgmental (J) or Projected (P)Client: City of Fort CollinsPeriod Ending: December 31, 2019Assets & Deferred OutflowsLiabilities & Deferred InflowsNet Effect on Following Year
Travis Storin
Interim Chief Financial Officer
City of Fort Collins
215 N. Mason St.
Fort Collins, CO 80522
970.416.2367
fcgov.com
July 31, 2020
BKD, LLP
Certified Public Accountants
1801 California Street, Suite 2900
Denver, Colorado 80202
We are providing this letter in connection with your audits of our financial statements as of and
for the years ended December 31, 2019 and your audit of our compliance with requirements
applicable to each of our major federal awards programs as of and for the year ended December
31, 2019. We confirm that we are responsible for the fair presentation of the financial statements
in conformity with accounting principles generally accepted in the United States of America. We
are also responsible for adopting sound accounting policies, establishing and maintaining effective
internal control over financial reporting, operations and compliance, and preventing and detecting
fraud.
Certain representations in this letter are described as being limited to matters that are material.
Items are considered material, regardless of size, if they involve an omission or misstatement of
accounting information that, in light of surrounding circumstances, makes it probable that the
judgment of a reasonable person relying on the information would be changed or influenced by
the omission or misstatement.
We confirm, to the best of our knowledge and belief, the following:
1. We have fulfilled our responsibilities, as set out in the terms of our engagement
letter dated January 17, 2020, for the preparation and fair presentation of the
financial statements in accordance with accounting principles generally accepted in
the United States of America.
2. We acknowledge our responsibility for the design, implementation and
maintenance of internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud
or error.
3. We acknowledge our responsibility for the design, implementation and
maintenance of internal control to prevent and detect fraud.
2
4. We have reviewed and approved a draft of the financial statements and related notes
referred to above, which you prepared in connection with your audit of our financial
statements. We acknowledge that we are responsible for the fair presentation of
the financial statements and related notes.
5. We have provided you with:
(a) Access to all information of which we are aware that is relevant to the
preparation and fair presentation of the financial statements such as records,
documentation and other matters.
(b) Additional information that you have requested from us for the purpose of
the audit.
(c) Unrestricted access to persons within the entity from whom you determined
it necessary to obtain audit evidence.
(d) All minutes of meetings of the governing body held through the date of this
letter.
(e) All significant contracts and grants.
6. All transactions have been recorded in the accounting records and are reflected in
the financial statements.
7. We have informed you of all current risks of a material amount that are not
adequately prevented or detected by entity procedures with respect to:
(a) Misappropriation of assets.
(b) Misrepresented or misstated assets, liabilities or net position.
8. We believe the effects of the uncorrected financial statement misstatements
summarized in the attached schedule are immaterial, both individually and in the
aggregate, to the financial statements taken as a whole. There are no other known
matters that require correction in the financial statements.
9. We have no knowledge of any known or suspected:
(a) Fraudulent financial reporting or misappropriation of assets involving
management or employees who have significant roles in internal control.
(b) Fraudulent financial reporting or misappropriation of assets involving others
that could have a material effect on the financial statements.
3
10. We have no knowledge of any allegations of fraud or suspected fraud affecting the
City received in communications from employees, customers, regulators, suppliers
or others.
11. We have disclosed to you the results of our assessment of the risk that the financial
statements may be materially misstated as a result of fraud.
12. -
governmental entities (i.e., Fort Collins Urban Renewal Authority, Fort Collins
Downtown Development Authority, the Poudre Fire Authority, the Poudre River
Public Library District, and Fort Collins Capital Leasing Corporation) and
transactions between the City and them of which we are aware. These
relationships and transactions have been appropriately accounted for and
disclosed in accordance with accounting principles generally accepted in the
United States of America. We understand that the term
and non-governmental entiti can
significantly influence, directly or indirectly control.
13. Except as reflected in the financial statements, there are no:
(a) Plans or intentions that may materially affect carrying values or
classifications of assets and liabilities.
(b) Material transactions omitted or improperly recorded in the financial
statements.
(c) Material gain/loss contingencies requiring accrual or disclosure, including
those arising from environmental remediation obligations.
(d) Events occurring subsequent to the balance sheet date through the date of this
letter requiring adjustment or disclosure in the financial statements.
(e) Agreements to purchase assets previously sold.
(f) Restrictions on cash balances or compensating balance agreements.
(g) Guarantees, whether written or oral, under which the City is contingently
liable.
14. We have disclosed to you all known instances of noncompliance or suspected
noncompliance with laws and regulations whose effects should be considered when
preparing financial statements.
15. We have no reason to believe the City owes any penalties or payments under the
Employer Shared Responsibility Provisions of the Patient Protection and
4
Affordable Care Act nor have we received any correspondence from the IRS or
other agencies indicating such payments may be due.
16. We have disclosed to you all known actual or possible litigation and claims whose
effects should be considered when preparing the financial statements. The effects
of all known actual or possible litigation and claims have been accounted for and
disclosed in accordance with accounting principles generally accepted in the United
States of America.
17. Adequate provisions and allowances have been accrued for any material losses
from:
(a) Uncollectible receivables.
(b) Purchase commitments in excess of normal requirements or above prevailing
market prices.
18. Except as disclosed in the financial statements, we have:
(a) Satisfactory title to all recorded assets, and they are not subject to any liens,
pledges or other encumbrances.
(b) Complied with all aspects of contractual and grant agreements, for which
noncompliance would materially affect the financial statements.
19. Except as has been previously disclosed to BKD, LLP, by the City involving an
environmental issue concerning a solid-waste facility the City co-owns with other
local governments, The City has not been designated as a potentially responsible
party (PRP or equivalent status) by the Environmental Protection Agency (EPA)
or other cognizant regulatory agency with authority to enforce environmental laws
and regulations.
20. We have notified you of any instances of noncompliance with applicable disclosure
requirements of the SEC Rule 15c2-12 and applicable state laws.
21. With regard to deposit and investment activities:
(a) All deposits and investment transactions have been made in accordance with
legal and contractual requirements.
(b) Disclosures of deposit and investment balances and risks in the financial
statements are consistent with our understanding of the applicable laws
regarding enforceability of any pledges of collateral.
5
(c) We understand that your audit does not represent an opinion regarding the
enforceability of any collateral pledges.
22. With respect to any nonattest services you have provided us during the year,
including the drafting of the schedule of expenditures of federal awards:
(a) We have designated a qualified management-level individual to be
responsible and accountable for overseeing the nonattest services.
(b) We have established and monitored the performance of the nonattest services
to ensure that they meet our objectives.
(c) We have made any and all decisions involving management functions with
respect to the nonattest services and accept full responsibility for such
decisions.
(d) We have evaluated the adequacy of the services performed and any findings
that resulted.
23. We acknowledge that we are responsible for compliance with applicable laws,
regulations and provisions of contracts and grant agreements.
24. We have identified and disclosed to you all laws, regulations and provisions of
contracts and grant agreements that have a direct and material effect on the
determination of amounts in our financial statements or other financial data
significant to the audit objectives.
25. We have identified and disclosed to you any violations or possible violations of
laws, regulations and provisions of contracts and grant agreements whose effects
should be considered for recognition and/or disclosure in the financial statements
or for your reporting on noncompliance.
26. We have taken or will take timely and appropriate steps to remedy any fraud, abuse,
illegal acts or violations of provisions of contracts or grant agreements that you or
other auditors report.
27. We have a process to track the status of audit findings and recommendations.
28. We have identified to you any previous financial audits, attestation engagements,
performance audits or other studies related to the objectives of your audit and the
corrective actions taken to address any significant findings and recommendations
made in such audits, attestation engagements or other studies.
29. We have provided our views on any findings, conclusions and recommendations,
as well as our planned corrective actions with respect thereto, to you for inclusion
6
in the findings and recommendations referred to in your report on internal control
over financial reporting and on compliance and other matters based on your audit
of the financial statements performed in accordance with Government Auditing
Standards.
30. With regard to federal awards programs:
(a) We have identified in the schedule of expenditures of federal awards all
assistance provided (either directly or passed through other entities) by
federal agencies in the form of grants, contracts, loans, loan guarantees,
property, cooperative agreements, interest subsidies, commodities, insurance,
direct appropriations or in any other form.
(b) We have identified the types of compliance requirements described in the
U.S. Office of Management and Budget (OMB) Compliance Supplement
regarding activities allowed or unallowed; allowable costs/cost principles;
cash management; eligibility; equipment and real property management;
matching, level of effort, earmarking; period of performance of federal funds;
procurement and suspension and debarment; program income; reporting;
subrecipient monitoring; and special tests and provisions that are applicable
to each of our federal awards programs. We have identified to you our
interpretation of any applicable compliance requirements subject to varying
interpretations.
(c) We are responsible for complying, and have complied, with the requirements
of Uniform Guidance.
(d) We are responsible to understand and comply with the requirements of
federal statutes, regulations and the terms and conditions of federal awards
related to each of our federal awards programs and have disclosed to you any
and all instances of noncompliance with those requirements occurring during
the period of your audit or subsequent thereto to the date of this letter of which
we are aware. Except for any instances of noncompliance we have disclosed
to you, we believe the City has complied with all applicable compliance
requirements.
(e) We are responsible for establishing and maintaining effective internal control
over compliance to provide reasonable assurance we have administered each
of our federal awards programs in compliance with federal statutes,
regulations and the terms and conditions of the federal awards.
(f) We have made available to you all federal awards (including amendments, if
any) and any other correspondence or documentation relevant to each of our
federal awards programs and to our compliance with applicable requirements
of those programs.
7
(g) The information presented in federal awards program financial reports and
claims for advances and reimbursements is supported by the books and
records from which our financial statements have been prepared.
(h) The costs charged to federal awards are in accordance with applicable cost
principles.
(i) The reports provided to you related to federal awards programs are true
copies of reports submitted or electronically transmitted to the federal
awarding agency, the applicable payment system or pass-through entity in the
case of a subrecipient.
(j) Amounts claimed or used for matching were determined in accordance with
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for
Federal Awards (Uniform Guidance) regarding cost principles.
(k) We have monitored any subrecipients to determine that they have expended
federal awards in accordance with federal statutes, regulations and the terms
and conditions of the subaward and have met the audit and other requirements
of the Uniform Guidance.
(l) We have taken appropriate corrective action on a timely basis after receipt of
costs pertaining to federal awards programs passed through to the
subrecipient by us.
(m) We have considered the
made any necessary adjustments to our books and records.
(n) We have disclosed to you any communications from federal awarding
agencies and pass-through entities concerning possible noncompliance with
the applicable compliance requirements for each of our federal awards
programs, including any communications received from the end of the period
of your audit through the date of this letter.
(o) We have identified to you any previous compliance audits, attestation
engagements and internal or external monitoring related to the objectives of
your compliance audit, including findings received and corrective actions
taken to address any significant findings and recommendations made in such
audits, attestation engagements or other monitoring.
(p) Except as described in the schedule of findings and questioned costs, we are
in agreement with the findings contained therein and our views regarding any
8
disagreements with such findings are consistent, as of the date of this letter,
with the description thereof in that schedule.
(q) We are responsible for taking corrective action on any audit findings and have
developed a corrective action plan that meets the requirements of Uniform
Guidance.
(r) The summary schedule of prior audit findings correctly states the status of all
schedule of prior audit findings as of the date of this letter.
(s) The reporting package does not contain any protected personally identifiable
information.
31. The financial statements disclose all significant estimates and material
concentrations known to us. Significant estimates are estimates at the balance sheet
date which could change materially within the next year. Concentrations refer to
volumes of business, revenues, available sources of supply, or markets for which
events could occur which would significantly disrupt normal finances within the
next year. Significant assumptions used by us in making accounting estimates,
including those measured at fair value, are reasonable.
32. The fair values of financial and nonfinancial assets and liabilities, if any, recognized
in the financial statements or disclosed in the notes thereto are reasonable estimates
based on the methods and assumptions used. The methods and significant
assumptions used result in measurements of fair value appropriate for financial
statement recognition and disclosure purposes and have been applied consistently
from period to period, taking into account any changes in circumstances. The
significant assumptions appropriately reflect market participant assumptions.
33. The supplementary information required by the Governmental Accounting
approach to infrastructure, and pension and other postemployment benefit
information, has been prepared and is measured and presented in conformity with
the applicable GASB pronouncements, and we acknowledge our responsibility for
the information. The information contained therein is based on all facts, decisions
and conditions currently known to us and is measured using the same methods and
assumptions as were used in the preparation of the financial statements. We believe
the significant assumptions underlying the measurement and/or presentation of the
information are reasonable and appropriate. There has been no change from the
preceding period in the methods of measurement and presentation.
9
34. With regard to supplementary information:
(a) We acknowledge our responsibility for the presentation of the supplementary
information in accordance with the applicable criteria.
(b) We believe the supplementary information is fairly presented, both in form
and content, in accordance with the applicable criteria.
(c) The methods of measurement and presentation of the supplementary
information are unchanged from those used in the prior period.
(d) We believe the significant assumptions or interpretations underlying the
measurement and/or presentation of the supplementary information are
reasonable and appropriate.
(e) If the supplementary information is not presented with the audited financial
statements, we acknowledge we will make the audited financial statements
readily available to intended users of the supplementary information no later
35. We acknowledge the current economic volatility presents difficult circumstances
and challenges for Government entities. Governmental Entities are facing declines
in the fair values of investments and other assets, declines in the volume of
business, constraints on liquidity and difficulty obtaining financing. We understand
the values of the assets and liabilities recorded in the financial statements could
change rapidly, resulting in material future adjustments to asset values, allowances
for accounts and notes receivable, net realizable value of inventory, etc. that could
negatively impact the City ability to meet debt covenants or maintain sufficient
liquidity. We acknowledge that you have no responsibility for future changes
caused by the current economic environment and the resulting impact on the City
financial statements. Further, management and the Board are solely responsible for
all aspects of managing the City, including questioning the quality and valuation of
investments, inventory and other assets, reviewing allowances for uncollectible
amounts and evaluating capital needs and liquidity plans.
36. As a local government, the City, and its officials, are often the target of criticism
by citizens and others and these criticisms sometimes include accusations of fraud
and other wrongdoing by the City and its officials. So, while it is likely there may
be such accusations in the recent past, we are not aware of any that have been or
are likely to be substantiated.
10
Darin Atteberry, City Manager Travis Storin, Interim Chief Financial
Officer
Blaine Dunn, Interim Accounting Director Kelley Vodden, Controller
City of Fort Collins
Single Audit Report
Year Ended December 31, 2019
City of Fort Collins
December 31, 2019
Contents
Schedule of Expenditures of Federal Awards .................................................................... 1
Notes to Schedule of Expenditures of Federal Awards ..................................................... 4
Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit
of Financial Statements Performed in Accordance with
Government Auditing Standards –
Independent Auditor’s Report .......................................................................................... 5
Report on Compliance for Each Major Federal
Program; Report on Internal Control Over Compliance;
and Report on Schedule of Expenditures of Federal
Awards Required by the Uniform Guidance –
Independent Auditor’s Report .......................................................................................... 7
Schedule of Findings and Questioned Costs ................................................................... 10
Status of Prior Audit Findings ........................................................................................... 14
City of Fort Collins
Schedule of Expenditures of Federal Awards
Year Ended December 31, 2019
1
Department of Housing and Urban Development
CDBG Entitlements Grants Cluster
Community Development Block Grants/Entitlement Grants
Grant Year 2018 / 2019 Direct N/A B-18-MC-08-0008 14.218 $ 255,272 $ 373,796
Grant Year 2019 / 2020 Direct N/A B-19-MC-08-0008 14.218 - 35,888
Total CDBG Entitlement Grants Cluster 255,272 409,684
Home Investment Partnerships Program
Grant Year 2017 / 2018 Direct N/A M-17-MC-08-0209 14.239 15,000 15,000
Grant Year 2018 / 2019 Direct N/A M-18-MC-08-0209 14.239 525,344 585,695
Grant Year 2019 / 2020 Direct N/A M-19-MC-08-0209 14.239 - 25,348
Subtotal 540,344 626,043
Total Department of Housing and Urban Development 795,616 1,035,727
Department of Justice
Equitable Sharing Program Direct N/A 15-5042-0-2-752 16.922 - 6,268
Total Department of Justice - 6,268
Department of Transportation
Highway Planning and Construction (Federal-Aid Highway Program) Cluster
Highway Planning and Construction Pass-Through
Colorado Department of
Transportation ACQ M455-088 (16525) 20.205
- 168,605
Highway Planning and Construction Pass-Through
Colorado Department of
Transportation AQC M455-111 (19561) 20.205 - 691,793
Highway Planning and Construction Pass-Through
Colorado Department of
Transportation PO 411016330 20.205 - 613
Highway Planning and Construction Pass-Through
Colorado Department of
Transportation 14-HTD-72849 20.205
- 167,760
Total Highway Planning and Construction Cluster - 1,028,771
Federal Grantor/
Pass-Through Grantor/Program Title
Federal CFDA
Number
Project/Grant (FAIN) No.
Pass-Through Entity Federal Expenditures
Pass-Through to
Subrecipients Direct/Pass-Through Pass-Through Entity
City of Fort Collins
Schedule of Expenditures of Federal Awards (continued)
Year Ended December 31, 2019
2
Federal Transit Cluster
Federal Transit_Capital Investment Grants Direct N/A CO-03-0206-01 20.500 - 27,508
Federal Transit_Formula Grants Direct N/A CO-2018-001-00 20.507 - 4,775
Federal Transit_Formula Grants Direct N/A CO-2018-017-00 20.507 - 491,498
Federal Transit_Formula Grants Direct N/A CO-2019-027-00 20.507 - 4,305,765
Federal Transit_Formula Grants Direct N/A 1138-2020-4 20.507 - 1,439,714
Federal Transit_Formula Grants Direct N/A CO-2019-003-00 20.507 - 229,611
Federal Transit_Formula Grants Direct N/A CO-2019-001-00 20.507 - 3,189,000
Bus and Bus Facilities Formula, Competitive, and Low or No Emissions Programs Direct N/A CO-2018-002-00 20.526 - 287,530
Bus and Bus Facilities Formula, Competitive, and Low or No Emissions Programs Direct N/A CO-2019-009-00 20.526 - 62,092
Bus and Bus Facilities Formula, Competitive, and Low or No Emissions Programs Direct N/A CO-2019-020-00 20.526 - 3,536
Bus and Bus Facilities Formula, Competitive, and Low or No Emissions Programs Direct N/A CO-2020-013-00 20.526 - 159,387
Total Federal Transit Cluster - 10,200,416
Transit Services Programs Cluster
Enhanced Mobility of Seniors and Individuals With Disabilities Direct N/A CO-2017-025-00 20.513 - 16,805
Enhanced Mobility of Seniors and Individuals With Disabilities Direct N/A CO-2018-016-00 20.513 - 7,245
Enhanced Mobility of Seniors and Individuals With Disabilities Direct N/A CO-2019-005-00 20.513 - 178,923
Total Transit Services Programs Cluster - 202,973
Highway Safety Cluster
National Priority Safety Programs Pass-Through
Colorado Department of
Transportation
19-NHTSA405B.6102
PO 411019717 20.616 - 5,207
Total Highway Safety Cluster - 5,207
Total Department of Transportation - 11,437,367
Federal CFDA
Number
Project/Grant (FAIN) No.
Pass-Through Entity
Pass-Through to
Subrecipients Federal Expenditures Direct/Pass-Through Pass-Through Entity
Federal Grantor/
Pass-Through Grantor/Program Title
City of Fort Collins
Schedule of Expenditures of Federal Awards (continued)
Year Ended December 31, 2019
3
Environmental Protection Agency
Performance Partnership Grants Pass-Through
CO Dept. of Public Health
and Environment PO FAAA 201800005049 66.605 - 14,185
Brownfields Assessment and Cleanup Cooperative Agreements Direct N/A 96806101 66.818 - 144,535
Total Environmental Protection Agency - 158,720
Department of Energy
State Energy Program Pass-Through Colorado Energy Office CTGG119-2009 81.041 - 193,858
Total Department of Energy - 193,858
Federal Emergency Management Agency (FEMA)
Emergency Management Performance Grants Pass-Through
CO Dept. of Public Safety
Division of Homeland
Security and Emergency
Management 19EM-20-66 97.042 - 65,000
Emergency Management Performance Grants Pass-Through
CO Dept. of Public Safety
Division of Homeland
Security and Emergency
Management 18EM-19-82 97.042 - 10,000
Total FEMA - 75,000
Total Expenditures of Federal Awards 795,616$ 12,906,940$
Project/Grant (FAIN) No.
Pass-Through Entity
Federal CFDA
Number Federal Expenditures
Pass-Through to
Subrecipients
Federal Grantor/
Pass-Through Grantor/Program Title Direct/Pass-Through Pass-Through Entity
City of Fort Collins
Notes to Schedule of Expenditures of Federal Awards
Year Ended December 31, 2019
4
Notes to Schedule
1. The accompanying schedule of expenditures of federal awards (the Schedule) includes the
federal award activity of the City of Fort Collins (the City) under programs of the federal
government for the year ended December 31, 2019. The information in this Schedule is
presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations
Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for
Federal Awards (Uniform Guidance). Because this Schedule presents only a selected portion
of the operations of the City, it is not intended to and does not present the financial position,
changes in net position or cash flows of the City.
2. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such
expenditures are recognized following the cost principles contained in Uniform Guidance,
wherein certain types of expenditures are not allowable or are limited as to reimbursement.
Pass-through identifying numbers are presented where available. The City has elected not to
use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit
of Financial Statements Performed in Accordance with
Government Auditing Standards
Independent Auditor’s Report
Honorable Mayor and Members of City Council
City of Fort Collins
Fort Collins, Colorado
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the basic financial statements of the governmental
activities, the business-type activities, the aggregate discretely presented component unit, each major fund
and the aggregate remaining fund information of the City of Fort Collins (the City), as of and for the year
ended December 31, 2019, and the related notes to the financial statements, which collectively comprise
the City’s basic financial statements, and have issued our report thereon dated July 31, 2020 which
contained an emphasis of matter paragraph regarding a change in accounting principle.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control
over financial reporting (internal control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinion on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do
not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control, such that there is a reasonable possibility that a material
misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a
timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control
that is less severe than a material weakness, yet important enough to merit attention by those charged with
governance.
Honorable Mayor and Members of City Council
City of Fort Collins
6
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the City’s internal control and compliance. Accordingly,
this communication is not suitable for any other purpose.
Denver, Colorado
July 31, 2020
Report on Compliance for Each Major Federal
Program; Report on Internal Control Over Compliance;
and Report on Schedule of Expenditures of Federal
Awards Required by the Uniform Guidance
Independent Auditor’s Report
Honorable Mayor and Members of City Council
City of Fort Collins
Fort Collins, Colorado
Report on Compliance for Each Major Federal Program
We have audited the City of Fort Collins’s (the City) compliance with the types of compliance
requirements described in the OMB Compliance Supplement that could have a direct and material effect
on each of the City’s major federal programs for the year ended December 31, 2019. The City’s major
federal programs are identified in the summary of auditor’s results section of the accompanying schedule
of findings and questioned costs.
Management’s Responsibility
Management is responsible for compliance with federal statutes, regulations and the terms and conditions
of its federal awards applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of the City’s major federal programs
based on our audit of the types of compliance requirements referred to above. We conducted our audit of
compliance in accordance with auditing standards generally accepted in the United States of America; the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal
Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for
Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan
and perform the audit to obtain reasonable assurance about whether noncompliance with the types of
compliance requirements referred to above that could have a direct and material effect on a major federal
program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance
with those requirements and performing such other procedures as we considered necessary in the
circumstances.
Honorable Mayor and Members of City Council
City of Fort Collins
8
We believe that our audit provides a reasonable basis for our opinion on compliance for each major
federal program. However, our audit does not provide a legal determination of the City’s compliance.
Opinion on Each Major Federal Programs
In our opinion, the City complied, in all material respects, with the types of compliance requirements
referred to above that could have a direct and material effect on each of its major federal programs for the
year ended December 31, 2019.
Report on Internal Control Over Compliance
Management of the City is responsible for establishing and maintaining effective internal control over
compliance with the types of compliance requirements referred to above. In planning and performing our
audit of compliance, we considered the City’s internal control over compliance with the types of
requirements that could have a direct and material effect on each major federal program to determine the
auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on
compliance for each major federal program and to test and report on internal control over compliance in
accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the
effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the
effectiveness of the City’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a
federal program on a timely basis. A material weakness in internal control over compliance is a
deficiency, or combination of deficiencies, in internal control over compliance such that there is a
reasonable possibility that material noncompliance with a type of compliance requirement of a federal
program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in
internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over
compliance with a type of compliance requirement of a federal program that is less severe than a material
weakness in internal control over compliance, yet important enough to merit attention by those charged
with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be material weaknesses or significant deficiencies. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses. However,
material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements of the
Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Honorable Mayor and Members of City Council
City of Fort Collins
9
Report on Schedule of Expenditures of Federal Awards Required by the Uniform
Guidance
We have audited the financial statements of the governmental activities, the business-type activities, the
aggregate discretely presented component unit, each major fund and the aggregate remaining fund
information of the City, as of and for the year ended December 31, 2019 and the related notes to the
financial statements, which collectively comprise City’s basic financial statements. We issued our report
thereon dated July 31, 2020 which contained unmodified opinions on those financial statements and an
emphasis-of-matter paragraph regarding a change in accounting principle. Our audit was conducted for
the purpose of forming opinions on the financial statements that collectively comprise the basic financial
statements. The accompanying schedule of expenditures of federal awards is presented for purposes of
additional analysis as required by the Uniform Guidance and is not a required part of the basic financial
statements. Such information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the basic financial statements.
The information has been subjected to the auditing procedures applied in the audit of the financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements or to
the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the schedule of
expenditures of federal awards is fairly stated in all material respects in relation to the basic financial
statements as a whole.
Denver, Colorado
August 6, 2020
City of Fort Collins
Schedule of Findings and Questioned Costs
Year Ended December 31, 2019
10
Summary of Auditor’s Results
Financial Statements
1. The type of report the auditor issued on whether the financial statements audited were prepared in
accordance with accounting principles generally accepted in the United States of America (GAAP)
was (were):
Unmodified Qualified Adverse Disclaimer
2. The independent auditor’s report on internal control over financial reporting disclosed:
Significant deficiency(ies)? Yes None reported
Material weakness(es)? Yes No
3. Noncompliance considered material to the financial statements
was disclosed by the audit?
Yes No
Federal Awards
4. The independent auditor’s report on internal control over compliance for major federal awards programs
disclosed:
Significant deficiency(ies)? Yes None reported
Material weakness(es)? Yes No
5. The opinions expressed in the independent auditor’s report on compliance for major federal awards
were:
Unmodified Qualified Adverse Disclaimed
6. The audit disclosed findings required to be reported by
2 CFR 200.516(a)?
Yes No
7. Identification of major programs:
CFDA Number Name of Federal Program or Cluster
20.205 Highway Planning and Construction Cluster
20.500, 20.526, 20.507 Federal Transit Administration Cluster
City of Fort Collins
Schedule of Findings and Questioned Costs (continued)
Year Ended December 31, 2019
11
8. The threshold to distinguish between Type A and Type B programs was $750,000.
9. Auditee qualified as low-risk auditee?
Yes No
City of Fort Collins
Schedule of Findings and Questioned Costs (continued)
Year Ended December 31, 2019
12
Findings Required to be Reported by Government Auditing Standards
Reference
Number Finding
No matters are reportable.
City of Fort Collins
Schedule of Findings and Questioned Costs (continued)
Year Ended December 31, 2019
13
Findings Required to be Reported by the Uniform Guidance
Reference
Number Finding
No matters are reportable.
City of Fort Collins
Status of Prior Audit Findings
Year Ended December 31, 2019
14
Reference
Number Summary of Finding Status
2018-001 Finding: Accounting for Capital Assets
During the year end financial reporting process, when the City identified capital asset-related
expenditures for capitalization, it inadvertently capitalized the same cost twice; once when the
expenditure was initially recorded and a second time when those same costs were transferred to
the capital projects fund.
Implemented
We recommend that internal controls be strengthened and systems be revised to properly identify
these costs in the future and avoid double counting these costs. Adequate training should be
provided to all employees as necessary to eliminate this error.