HomeMy WebLinkAbout2025-012-02/18/2025-ADOPTING AMENDMENTS TO THE CITY’S FINANCIAL MANAGEMENT POLICIESRESOLUTION 2025-012
OF THE COUNCIL OF THE CITY OF FORT COLLINS
ADOPTING AMENDMENTS TO THE CITY’S FINANCIAL
MANAGEMENT POLICIES
A.At is October 18,1994,meeting,City Council approved Financial
Management Policies for the City pursuant to Resolution 94-174,which provides that City
Council may adopt and amend such policies.
B.The City is committed to sound and efficient financial planning and fiscal
management consistent with the best practices as established by the Government
Financial Officers Association.
C.The City Manager and the City’s Controller,acting in the role of Interim
Financial Officer,are recommending amendments to five of the current Financial Policies.
D.“Financial Management Policy 1 —Budget Policy,”with its recommended
amendments,is attached and incorporated herein by reference as Exhibit “A”(the
“Budget Policy”).
E.The Budget Policy is being amended to provide minor terminology changes
for clarity and simplification.
F.“Financial Management Policy 2 —Revenue”with its recommended
amendments,is attached and incorporated herein by reference as Exhibit “B”(the
“Revenue Policy”).
3.The Revenue Policy is being amended to change the General Fund liquidity
rule timeline to forty-five (45)days to align with the approved biennial budget for the 2025-
2026 fiscal period,to add the effective or expiration dates of sales and use taxes,and to
remove provisions related to philanthropic contributions that are duplicative of those in
other policies in effect.
H.“Financial Management Policy 3 —General Financial Policies”with its
recommended amendments,is attached and incorporated herein by reference as Exhibit
“C”(the “General Financial Policy”).
The General Financial Policy is being amended by adjusting the Money
Purchase Plan chart by updating the existing employer contribution percentage to reflect
collective bargaining agreements currently in place and updating the category names of
two employee groups in the chart,and amendments in other provisions of the policy to
add new or remove outdated references to voter-approved taxes.
J.“Financial Management Policy 5 —Fund Balance Minimums”with its
recommended amendments,is attached and incorporated herein by reference as Exhibit
“D”(the “Fund Balance Policy”).
—1—
K.The Fund Balance Policy is being amended to update the General Fund
liquidity rule timeline to forty-five (45)days as approved in the biennial budget for the
2025-2026 fiscal period.
L.“Financial Management Policy 7 —Debt,”to which no amendments are
recommended,is included to indicate that the policy was reviewed,is attached and
incorporated herein by reference as Exhibit “E”.
M.“Financial Management Policy 8 —Investments”with its recommended
amendments,is attached and incorporated herein by reference as Exhibit “F”(the
“Investment Policy”).
N.The Investment Policy is being amended to change a reference to “Trust
and Agency Funds”to the “Fiduciary Funds,”which includes trust,agency,and pension
funds.
In light of the foregoing recitals,which the Council hereby makes and adopts as
determinations and findings,BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1.The City Council hereby approves and adopts the Budget Policy,
Revenue Policy,the General Financial Policy,the Fund Balance Policy,the Debt Policy,
and the Investment Policy,as reviewed or reviewed and amended as shown in Exhibits
“A,”“B,”“C,”“D,”“E,”and “F”respectively.
Section 2.Except for the six Financial Management Policies reviewed or
reviewed and amended as provided in this Resolution,all other Financial Management
Policies shall remain unchanged and in full force and effect until the same are reviewed,
amended,or repealed by subsequent action of the City Council
Passed and adopted on February 18,2025.
I
ATTEST:
Sr.Deputy City Clerk
Effective Date:February 18,2025
Approving Attorney:Dianne Criswell
EXHIBIT A TO RESOLUTION 2025-012
Financial Management Policy 1
Issue Date:01/12/21
Reviewed:12/5/24geVersion:5
Issued by:Budget Director
Objective:
Governments allocate limited resources to programs and services through the budget process.
As a result it is one of the most important activities undertaken by governments.The purpose
of this policy is to establish parameters and provide guidance governing the budgetfor the City
of Fort Collins (City).
Applicability:
This budget policy applies to allfunds and Service Areas of the City.
Authorized by:
City Council Resolution 2014-058,2017-101,2021-010
Financial Policy 1 -Budget
EXHIBITATO RESOLUTION 2025-012
1.1 Overview
The Fort Collins City Charter establishes time limits and the essential content of the City
Manager’s proposed budget;however the budget preparation process is not prescribed,but
is developed by the City Manager with input from the City Council.
The fiscal year of the City is the calendar year.The City may adopt budgets for a budget
term of one fiscal year or more.After the Charter amendment in 1997 allowing the City
Council to set by ordinance a budget term to be more than one fiscal year,the Council has
adopted two-year budgets that correspond with the election cycle,with the recent
exception of having a one-year budget for fiscal years 2021 and 2022 due to the COVID
pandemic.
The budget is a 2-year plan by which the City Council sets the financial and operational
priorities for the City.Utilization of the budget process enables current levels of
programs and services to continue and new programs and services to be implemented.
The budget along with the annual appropriation ordinance provides the basis for
the control of expenditures.The State Constitution and the City Charter provide
the basic legal requirements and timelines for the process.Council priorities,
ordinances and resolutions provide additional direction and respond to the needs of the
community.
1.2 Principles for Budget Planning
The City provides a wide variety of services to the community.It is in the power of the City
Council to adopt a budget and manage the available resources to best meet the service
needs for the overall good of the community (Charter Article II,Section 5 (c)J
In 2005 the City Council,on recommendation from the City Manager,endorsed the
Budgeting for Outcomes (BFOJ budget process.At a high level,the budgeting for outcomes
methodology can be summarized as:
1.Determine how much money is available.The budget should be built on expected revenues.
This would include base revenues,any new revenue sources,and the potential use of fund
balance.
2.Prioritize results.The results or outcomes that matter most to the community should be
defined.Elected leaders should determine what programs are most important to their
constituents.
3.Allocate resources among high priority resulty.The allocations should be made in a fair and
objective manner.
4.Conduct analysis to determine what strategies,programs,and activities will best achieve desired
results.
5.Budget available dollars to the most sign f/leant programs and activities.The objective
is to maximize the benefit of the available resources.
6.Set measures of monthly progress,monitor,and close the feedback loop.These measures
should assign monthly budget,spell out the expected results and outcomes and how they will
be measured.
Financial Policy 1 -Budget 2
EXHIBIT A TO RESOLUTION 2025-012
7.Check what actually happened.This involves using performance measures to compare
actual versus budgeted results,and financial measures for budget versus actual results on a
monthly basis.
Communicate performance results.Internal and external stakeholders should be informed
of the results in an understandable format.
At that time,the City Council also identified the key outcomes it believed should be used in
the new budget process.
In 2012,the City Council passed resolution 2012-076 promoting improved results through
performance measures and data-driven decision making.In reference to the budget an
outcome-based performance measurement system helps ensure that available resources
are used to achieve excellent results at low cost to the taxpayers and will enhance the
community’s understanding of the City and the services it provides.
1.3 Scope
A.Comprehensiveness
The proposed budget shall provide a complete financial plan for each fund of the City and
shall include appropriate financial statements for each type of fund showing comparative
figures for the last completed fiscal year,comparative figures for the current year,and the
City Manager’s recommendations for the ensuing budget term (City Charter Article V,Part 1,
Section 2).In addition,the City of Fort Collins Budget Document may include items such as:
1)Statement of organization-wide strategic goals.
2)A description of the budget process,including a timeline.
3)A Glossary of Budget Tenns.
4)A City of Fort Collins organizational chart
5)Letter from the City Manager.
6)Budget Overview which may include:
a)The economic outlook;
b)Revenue assumptions;
c)Summary of use of reserves;
d)Budget priorities and highlights.
7)Copy of signed appropriation ordinance and a schedule of 2nd year proposed
appropriations.
8)Revenue,expense and changes in fund balance summaries.
9)Summary of employee full-time equivalent staffing by service area and department
10)A section for each of the key strategic Outcomes,which may include:
a)Information indicating how the Offers in the Outcome are funded,by fund;
b)Major key purchases;
c)Major enhancements purchased;
d)Detailed listing of all offers funded and unfunded;
e)Strategic objectives of the Outcome.
11)Fund Statements.
Financial Polky 1 -Budget 3
EXHIBIT A TO RESOLUTION 2025-012
12)Overview of debt position.
13)Current Capital Improvement Plan.
14)Summary of changes to user fees
15)Summary of property tax mill levy and assessments.
The annual appropriation ordinance shall also include the levy in mills,as fixed by the
Council,upon each dollar of the assessed valuation of all taxable property within the city,such
levy representing the amount of taxes for City purposes necessary to provide,during the
ensuing fiscal year,for all properly authorized expenditures to be incurred by the City,
including interest and principal of general obligation bonds.If the Council fails in any year to
make said tax levy as above provided,then the rate last fixed shall be the levy fixed for the
ensuing fiscal year and the Financial Officer shall so certi1~(Charter Article V,Section 5).
B.Budget Form
The City of Fort Collins uses the Budgeting For Outcomes model to create the City budget A
new budget is designed from the ground up based on the results desired in each of the
Outcomes defined by the City.The BFO budget-building process includes four steps:
1)Determine how much revenue will be available (the price people pay);
2)Determine the priorities of the City and the Community members and the results to be
achieved;
3)Allocate the revenue needed to achieve the desired results;
4)Determine which budget items will best produce the desired results at the price allocated.
C.Basis of Budgeting
All budgetary procedures conform to the City Charter and Code,state regulations and to
generally accepted accounting principles.The basis or principle used for budgeting is the
same as that used for accounting with a few exceptions,and varies according to the fund type.
Governmental Funds use the modified-accrual basis of accounting.This means that revenues
are recognized when they are earned,measurable and available.Expenditures are recognized
in the period that liabilities are due and payable.The budgetary basis is the same and is used
in the General Fund,Special Revenue and Debt Service Funds,and Capital Project Funds.
Proprietary and Fiduciary Funds use the full accrual basis of accounting.Revenues are
recognized when they are earned and expenses are recognized when liabilities are incurred.
However,the budgetary basis in these funds is primarily based on the modified-accrual
approach.Instead of authorizing budget for depreciation of capital assets,the budget
measures and appropriates cash outflows for capital acquisition and construction,which is a
modified-accrual approach.In full accrual based accounting debt proceeds are recorded as
liabilities rather than a revenue (funding source).For these reasons,a reconciliation and
adjustment is made on these fund statements to show the difference between the budgetary
Financial Policy 1 -Budget 4
EXHIBIT A TO RESOLUTION 2025-012
basis and the accounting basis.
D.Budget Calendar
The fiscal and accounting year shall be the same as the calendar year.“Budget term”shall
mean the fiscal year(s)for which any budget is adopted and in which it is to be administered.
Council shall set by ordinance the term for which it shall adopt budgets (Charter Article V.
Section 1).
On or before the first Monday in September the City Manager shall file with the City Clerk a
proposed budget for the City for the ensuing two-year term (Charter Article V,Section 2).
The Council shall,within ten (10)days after the filing of said proposed budget with the City
Clerk set a time certain for public hearing and cause notice of such public hearing to be
given by publication.At the hearing,all persons may appear and comment on any or all
items and estimates in the proposed budget Upon completion of the public hearing the
Council may revise the budget estimates (Charter Article V,Section 3).
After said public hearing and before the last day of November preceding the budget term,the
Council shall adopt the budget for the ensuing term.The adoption of the budget shall be by
ordinance.Before the last day of November of each fiscal year,the Council shall appropriate
such sums of money as it deems necessary to defray all expenditures of the City during the
ensuing fiscal year.The appropriation of funds shall be accomplished by passage of the
annual appropriation ordinance.Such appropriation of funds shall be based upon the budget
as approved by the Council but need not be itemized further than by fund with the exception
of capital projects and federal or state grants which shall be summarized by individual project
or grant (Charter Article V,Section 4).
Appropriations for each year of the two-year budget will be approved by the City Council
annually.Appropriations for the 2nd year of the biannual budget are adopted during the
budget revision process.That process allows for adjustments to the originally adopted
biennial budget that address new Council priorities or support changing needs based on
economic conditions.The City Manager may present any budget adjustment
recommendations to the City Council in Work Sessions and then Council may amend the
budget and,as required by the City Charter,appropriate or authorize expenditures for the
coming fiscal year.
1.4 Roles and Responsibilities
Ail powers of the City and the determination of all matters of policy are vested in the Council
except as otherwise provided by the Charter.Without limitation of the foregoing,the Council
has the power to adopt the City’s budget
The City Manager is responsible to the Council for the proper administration of all affairs of
the City and to that end has the power and is required to prepare the budget and submit it to
Financial Policy 1 -Budget S
EXHIBITATO RESOLUTION 2025-012
the Council and be responsible for its administration after adoption.
The City Manager and Chief Financial Officer,along with the other executive directors,known
as the Budget Lead Team (BLT),develop the guidelines,consistent with the policies,to be
used for budget preparation.During the development of the budget various department and
division representatives may be called upon to provide their expertise.
Budgeting Control System
No appropriation may be made by the Council which exceeds the revenues,reserves or other
funds anticipated or available at the time of the appropriation,except for emergency
expenses incurred by reason of a casualty,accident or unforeseen contingency arising after
the passage of the annual appropriation ordinance (Charter Article V.Section 8 (a)).
Control of expenditures is exercised at the fund level.Fund managers are responsible for all
expenditures made against appropriations within their fund and can allocate available
resources within the fund.
All appropriations unexpended or unencumbered at the end of the fiscal year shall lapse to
the applicable general or special fund,except for:
•appropriations for capital projects do notlapse until the completion of the capital project;
and
•federal or state grants do not lapse until the expiration of the federal or state grant
(Charter Article V,Section 11).
A.Budget Transfers
Between Funds or Capital Projects
During the fiscal year,the Council may,by ordinance,upon the recommendation of the City
Manager,transfer any unexpended and unencumbered appropriated amount or portion
thereof from one fund or capital project account to another fund or capital project account
provided that:
1)the purpose for which the transferred funds are to be expended remains unchanged;
2)the purpose for which the funds were initially appropriated no longer exists;or
3)the proposed transfer is from a fund or capital project account in which the amount
appropriated exceeds the amount needed to accomplish the purpose specified in the
appropriation ordinance (Charter Article V.Section 10 (b)).
Within a Fund
Budget control is maintained at the departmental level.The City Manager may,during the
fiscal year,transfer any unexpended and unencumbered appropriated amount within the
same fund (Charter Article V.Section 10(a)).The Chief Financial Officer also has the authority
to approve departmental expenses greater than the budget for that department so long as the
Financial Policy I -Budget 6
EXHIBIT A TO RESOLUTION 2025-012
overall expenses in the fund serving that department are less than the budgeted amount for
the fund.In no case may the total expenditures of a particular fund exceed that which is
appropriated by the City Council (Charter Article V,Section 8(b)).
B.ApplicableAmendmentsto the Budget
Budget Increases
There generally are four opportunities during the fiscal year for supplemental additions to
the current year annual appropriation approved by Council:
1)The first is through the encumbrance carry-forward process whereby approved purchase
orders that cannot be executed prior to the end of the fiscal year will have available
budget carried forward into the new year.
2)The second is usually adopted in March/April to re-appropriate funds from the previous
year’s ending balance for projects or obligations that were approved but not completed
during that year.
3)The third opportunity in the 2nd half of the year is used to fine-tune (clean-up)the
current fiscal year for previously unforeseen events.In addition,if revenue is received
during the fiscal year from a source that was not anticipated at the time of budget
adoption or appropriation for the fiscal year,such as grants or implementation of a new
fee,Council may appropriate that unanticipated revenue for expenditure when received
anytime during the year.
4)Lastly,the Council,upon recommendation of the City Manager,may make supplemental
appropriations by ordinance at any time during the fiscal year;provided,however,that
the total amount of such supplemental appropriations,in combination with all previous
appropriations for that fiscal year,shall not exceed the then current estimate of actual
and anticipated revenues to be received by the city during the fiscal year.This provision
shall not prevent the Council from appropriating by ordinance at any time during the
fiscal year such funds for expenditure as may be available from reserves accumulated in
prior years,notwithstanding that such reserves were not previously appropriated
(Charter Article V,Section 9).
Budget Decreases/Frozen Appropriations
The budget may be decreased below adopted appropriations during the fiscal year due to
changes in service demand,changes in economic conditions,and/or changes in Council goals.
Each service area is responsible for developing a plan to reduce appropriations,which will
be ready for implementation should the need arise.If the City Manager directs budget
reductions,Council will be informed and the appropriations will be “set aside”through
administrative action.While the appropriation amount is not changed,expenditures shall
not exceed the reduced amount recommended by the City Manager.
Financial Policy I -Budget 7
EXHIBITATO RESOLUTION 2025-012
C.Order ofFunding when Multiple Funding SourcesAvailable
Sometimes a given project or program has multiple sources of funding available.Examples
of such projects include but are not limited to grant funded projects,jointly funded
projects/programs between governmental and proprietary funds,or projects/programs
where both dedicated tax and/or fee revenues and General Fund tax revenues are available.
Unless stated otherwise within the authorizing ordinance,budget offer,or a contractual
agreement funding sources will be applied in the order of most-constrained to least-
constrained in the judgment of City staff.For example,a project jointly funded by the
General Fund and the Natural Areas Fund would first fund project spending using all
available and appropriated Natural Areas revenues prior to spending appropriated General
Fund revenues.This is in an effort to maximize the benefit of available sources in
accordance with the principles described in section 1.2 above.
1.6 Balanced Budget Definition
All funds are required to balance.As such,total anticipated revenues must equal the sum of
budgeted expenditures for each fund.Revenues are derived from two sources:current
revenue charges and unallocated reserves carried forward from prior years.
Contingency Planning for Unanticipated Revenue Shortfrlls
During times when the City experiences signifIcant unanticipated revenue shortfalls,a
contingency plan will be developed that outlines the necessary steps to align expenditures to
meet the actual revenue received.The contingency plan will target the funds being impacted
by the revenue shortfall.In general,the priority order of the steps in our contingency
methodology are:
•Align ongoing expenditures with anticipated ongoing revenue
•Sweep vacancy savings and non-service related savings such as fuel or utilities if under
budget
•If a Contingency Reserve has been established,utilize a portion of that reserve
•Develop a stop doing list utilizing the drilling platform prioritization.
•At a Service Area level,reduce expenditures related to
o discretionary expenditures
o new hires/vacancies (postponement of posting positions)
o travel and training
o reduced levels of support to programs
Financial Policy 1 -Budget 8
EXHIBIT B TO RESOLUTION 2025-012
Financial Management Policy 2
Issue Date:01/12/21
eV Reviewed:12/5/24Version:5
Issued by:Revenue and Project
Manager
Objective:
Monitoring and controlling revenues is important to the City of Fort Collins.Through its revenue policy,the
City primarily aims to maintain a diversified revenue system which will protect itfrom possible short-term
fluctuations in any of its various revenue sources.To accomplish this,revenues are monitored on a
continuous basis.An understanding of the economic and legalfactors which directly and indirectly affect
the level of revenue collections is an important part of the City’s revenue policy.-
Applicability:
This policy applies to all City Revenues.This policy does/does not apply to or govern revenues generated by
City-owned general improvement districts,DDA,UR.4,PFA or Library District
Authorized by:
City Council,Resolutions 1994-174,2013-093,2016-096,2021-010
2.1 Limitations under TABOR (Taxpayer Bill of Rights)
A.Background
The City of Fort Collins’revenue and expenditures are limited by Colorado’s Taxpayer’s Bill
of Rights in Article X,Section 20 of the Colorado Constitution (TABOR).While TABOR limits
both revenue and expenditures,its primary application is in limiting revenue collections.
Growth in revenue is limited to the increase in the Denver-Boulder-Greeley Consumer Price
Index plus local growth (new construction and annexation).This percentage is added to the
preceding year’s revenue base,giving the dollar limit allowed for revenue collection in the
ensuing year.Any revenue collected over the limit must be refunded to the residents unless
the voters approve the retention of the excess revenue.Federal grants or gifts to the City
are not included in the revenue limit City enterprises (electric,water,wastewater and
stormwater utilities)are also exempt from the imposed limits.In 2003,the Golf Fund
revenue sources was considered for enterprise status for purposes of TABOR
Financial Policy 2 -Revenue I
EXHIBIT B TO RESOLUTION 2025-012
B.‘De-Bnwing’
In November 1997,Fort Collins’voters approved a ballot measure that allows the City to
retain revenues that exceed the growth limit imposed by TABOR.The measure specified
that any retained revenues over the growth limit must be used for certain designated
purposes.
•Public Health and Safety (including,but not limited to,environmental monitoring
and mitigation)
•Transportation
•Growth Management
•Maintenance and Repair of Public Facilities
C.TABOR Notice for New Tax or Tax Increase
•Develop revenue forecasts that are reasonable and factor in the implications of over
collection.
•Review these forecasts with the appropriate leadership staff.
D.Monitor New Tax Revenue
•Staff will monitor actual revenue against the forecast revenue disclosed in the TABOR
notice.
•In the second year,confirm first years’actual revenue to forecast and determine if any
action is needed.Provide a report to the City Council with results and any
recommended action.
E.TABOR Legislation and Iudicial Decisions
Staff shall monitor new TABOR legislation,judicial decisions and actions taken by other
governments to see if they affect the City.This will include working with the City’s outside
consultants,such as special bond counsel and CML.When such matters are discovered
affecting the City,staff will confer to determine what actions,if any,the City should take in
response.
F.Documentation of ‘Fiscal Year Spending’under TABOR
Although the City has de-Bruced,current interpretations of TABOR section 20(3)(c)merit
the need for the ongoing calculation of “fiscal year spending”.Staff will maintain and
update records annually to calculate the City’s fiscal year spending under TABOR.These
records shall be kept for at least six years.Also,documentation shall be kept current that
defines which related agencies,funds and types of revenues are required under TABOR to
be included in fiscal year spending and those that can be excluded.
Financial Policy 2 -Revenue 2
EXHIBIT B TO RESOLUTION 2025-012
2.2 Revenue Review,Objectives and Monitoring
A.Review and Projections
The City reviews estimated revenue and fee schedules as part of the budget process.
The major revenue sources in the General Fund are sales and use tax,property tax,
lodging tax,intergovernmental revenues,fines and forfeitures,user fees and charges,
and transfers from other funds.Conservative revenue projections are made for the
budget term.The projections are monitored and updated as necessary.
B.Princinles
The City has established six (6)general principles that will be used to guide decisions on
revenue:
1.Develop and maintain stable revenue sources.
The City will strive to maintain stable revenue sources by:
a.Targeting revenue sources with minimal volatility
b.Monitoring current revenue sources for variability
c.Adjusting forecasts as necessary to accommodate unanticipated
increases and declines
d.Monitoring and adjusting expenditures for unanticipated revenue
gains/losses
2.Develop and maintain a diverse revenue base.
For all general government operations,the City will strive to maintain
diverse revenue sources.The City recognizes that becoming too dependent
upon one revenue source would make revenue yields more vulnerable to
economic cycles.Therefore,the City will strive to maintain diverse revenue
sources by:
a.Targeting revenue from multiple sources
b.Working to expand fee-based revenue where possible
c.Working to minimize overdependence on any single revenue source
d.Staff will monitor dependency on sales and use tax to ensure an over
reliance does not occur
3.Cultivate revenue sources that are equitable among residents of different
economic levels.
The City will strive to preserve a revenue stream that does not overburden
low-income residents by:
a.Providing low-income residents with opportunities to participate in
programs through reduced fee structures and scholarships
b.Providing a Sales Tax on Food and Utility rebate to lessen the burden of
taxes and fees on low-income residents
Financial Policy 2 -Revenue 3
EXHIBIT B TO RESOLUTION 2025-012
c.Ensuring fees do not exceed cost to provide service
4.Generate adequate revenue to maintain service levels inline with resident
expectations.
The City will generate adequate revenue to maintain core service levels by~
a.Ensuring fees for service do not exceed cost to provide service
b.Maintaining a cost recovery model
c.Monitoring service level performance annually through the Community
Scorecard
d.Regularly reviewing services to assess core vs.desired
5.Maintain healthy reserves.
The City will maintain healthy reserves by:
a.Adhering to State mandated reserve and internal reserve policies
b.Maintaining a Tabor (State)reserve for the General Fund of 3%or more
of the City’s fiscal year spending
c.Meeting City policy for the General Fund of an additional contingency of
45 days or 12.5%of next year’s adopted budgeted expenditures
6.Fees for Services are fairly born by those who use those services.
C.Monitoring
In an annual summary financial report;the major sources revenue and the associated
percentages will be reviewed by the Council Finance Committee.
2 3 Fee Policy
As a home rule municipality,the City of Fort Collins has the ability to determine the extent
to which fees should be used to fund City facilities,infrastructure and services.There are
two kinds of fees that the City may establish:Impact Fees and Special Service Fees.Impact
fees are typically one-time charges levied by the City against new development Impact
fees are based on current levels of service and act as a buy-in method for new development
The revenue can only be used for capital infrastructure needs created by the impact of the
new development However,the City may and does employ other methodologies legally
available to calculate its impact fees.Special service fees are charges imposed on persons or
property that are designed to defray the overall cost of the particular municipal service for
which the fee is imposed.This Policy sets forth principles for identifijing:(1)the kinds of
services for which the City could appropriately impose fees;(2)methods for calculating the
percentage of costs to be recovered by such fees;and (3)the manner in which the fees
should be allocated among individual fee payers.
A.Fees should be cost related
The amount of a fee should not exceed the overall cost of providing the täcility,
Financial Policy 2 -Revenue 4
EXHIBIT B TO RESOLUTION 2025-012
infrastructure or service for which the fee is imposed.Cost may include direct and
indirect costs.That is:
1.Costs which are directly related to the provision of the service;and,
2.Support costs which are more general in nature but provide support for the
provision of the service.
B.Percentage of cost recovery
The extent to which the total cost of service should be recovered through fees
depends upon the following factors:
1.The nature of the facilities,infrastructure or services.In the case of fees for
facilities,infrastructure as well as governmental and proprietary services,total
cost recovery may be warranted.In the case of governmental services,it may be
appropriate for a substantial portion of the cost of such services to be borne by the
City’s taxpayers,rather than the individual users of such services.
2.The nature and extent of the benefit to the fee payers.When a particular facility
or service results in substantial,immediate and direct benefit to fee payers,a
higher percentage of the cost of providing the facility or service should be
recovered by the fee.When a particular facility or service benefits not only the fee
payer but also a substantial segment of the community,lower cost recovery is
warranted.
3.The level of demand for a particular service.Because the pricing of services can
significantly affect demand,full cost recovery for services is more appropriate
when the market for the services is strong and will support a high level of cost
recovery.
4.Ease of collection.In the case of impact fees,ease of collection is generally not a
factor.In the case of fees for services,however,such fees may prove to be
impractical for the City to utilize if they are too costly to administer.
C.Establishment and Modification of Fees and Charges
The following Impact Fees imposed by the City are established by the City Council by
ordinance and may be modified only by ordinance of the City Council.
1.Six Capital Expansion Fees:Transportation,Neighborhood Park Community Park
Fire,Police and General Government
2.Five Utility Fees:Water Supply Requirement Electric Capacity,Sewer Plant
Investment Stormwater Plant Investment Water Plant Investment
Fee updates occur on a regular two and four-year cadence and fee updates occur
together to provide a more holistic view of the impact of any fee increases.Detailed
Financial Policy 2 -Revenue 5
EXHIBIT B TO RESOLUTION 2025-012
fee study analysis for all six Capital Expansion Fees occurs every four years.This
requires an outside consultant through a request for proposal (RFP)process where
data is provided by City staff.Findings by the consultant are also verified by City staff.
For Utility Fees,a detailed fee study is planned every two years.These are internal
updates by City staff with periodic consultant verification.Fee study analysis will be
targeted in the odd year before Budgeting for Outcomes (BFOJ.In years without an
update,an inflation adjustment occurs.
The amounts of all other service and administrative fees may be determined by the
City Manager as provided in City Code Chapter 7.5,Article I,absent any provision of
the City Charter the contrary.Development Review/Building Fees follow the same
four-year cadence as the Capital Expansion Fees.
All fee revenues will be estimated by the City Manager and submitted to the City
Council as part of the City Manager’s recommended budget
D.Rebate Programs
If the amount of a particular fee is considered to be too high to accommodate the
needs of particular segments of the community and the public interest would be
served by adjusting the amount or manner of payment of such fees in particular
instances,the amount of the fee may be waived,rebated,or deferred as appropriate.
In the case of fees established by ordinance,the criteria for waiving,rebating,or
deferring payment of such fees shall be established by the City Council by ordinance.
2.4 Sales and Use Tax Distribution
Sales and Use Tax shall be used and accounted for as intended by the voters.Details of how
the different segments of sales and use tax are used are outlined in the City Code Chapter
25.The following is a summary for informational purposes only.
The City’s Sales and Use Tax currently totals 4.35 cents on a $1.00 purchase,as follows:
Effective January 1,2024
1968-General City uses 1.00 cent
1980-General City uses 1.00 cent
1982 -General City uses 0.25 cent
2006-Open Space Yes!0.25 cent
2011 -Keeping Fort Collins Great 0.85 cont***
2015 -Street Maintenance 0.25 cent*
2015 -Community Capital Improvement Program 0.25 cent*
2020—General City Uses 0.60 cent**
2020 —General Fund Renewable 0.25 cent**
2024—2050 Tax oso cent**
4.35 cent
*Excludes sales and use tax on grocery food for home consumption
**Excludes sales and use tax on grocery food for home consumption and use tax for
manufacturing equipment
Keep Fort Collins Great tax sunset end of 2020
Financial Policy 2 -Revenue 6
EXHIBIT B TO RESOLUTION 2025-012
2.4.A Management and reporting of 2050 Tax Proceeds
Voters approved the November 2023 City-Initiated Ballot Issue No.1 fora 0.50%sales and use
tax beginning January 1,2024 and ending December 31,2050.Colloquially this renewable tax
is referred to as the “2050 Tax”.The ballot measure read as follows:
SHALL CITY OF FORT COLLINS TAXES BE INCREASED BY $23,800,000 IN THE FIRST FULL
FISCAL YEAR (2024),AND BY SUCH AMOUNTS COLLECTED ANNUALLY THEREAFTER,FROM
A .50%SALES AND USE TAX BEGINNING JANUARY 1,2024,AND ENDING AT MIDNIGHT ON
DECEMBER 31,2050,WITH THE TAX REVENUES SPENT ONLY FOR THE FOLLOWING:
•50%FOR THE REPLACEMENT,UPGRADE,MAINTENANCE,AND ACCESSIBILITY OF
PARKS FACILITIES AND FOR THE REPLACEMENT AND CONSTRUCTION OF INDOOR
AND OUTDOOR RECREATION AND POOL FACILITIES,
•25%FOR PROGRAMS AND PROJECTS ADVANCING GREENHOUSE GAS AND AIR
POLLUTION REDUCTION,THE CITY’S 2030 GOAL OF 100%RENEWABLE
ELECTRICITY,AND THE CITY’S 2050 GOAL OF COMMUNITY-WIDE CARBON
NEUTRALITY,AND
•25%FOR THE CITY’S TRANSIT SYSTEM,INCLUDING,WITHOUT LIMITATION,
INFRASTRUCTURE IMPROVEMENTS,PURCHASE OF EQUIPMENT,AND UPGRADED
AND EXPANDED SERVICES;
•AND WHILE CITY COUNCIL MAY EXERCISE ITS DISCRETION IN DECIDING THE
TIMING OF SPENDING FOR EACH CATEGORY,THAT SPENDING SHALL SUPPLEMENT
AND NOT REPLACE THE CURRENT CITY FUNDING FOR THE SPECIFIED PURPOSES
AND SHALL BE RECONCILED TO THE STATED PERCENTAGES BY THE END OF 2030,
2040,AND WHEN THE LAST REVENUES COLLECTED FROM THE TAX ARE SPENt BUT
THIS TAX SHALL NOT APPLY TO:
•ITEMS EXEMPT UNDER THE CITY CODE FROM CITY SALES AND USE TAX;
•FOOD FOR HOME CONSUMPTION;AND
•MANUFACTURING EQUIPMENT,BUT FOR THE USE TAX ONLY;
•AND WITH ALL THE TAX REVENUES,AND INVESTMENT EARNINGS THEREON,TO BE
COLLECTED,RETAINED,AND SPENT AS A VOTER APPROVED REVENUE CHANGE
NOTWITHSTANDING THE SPENDING AND REVENUE LIMITATIONS OF ARTICLE X,
SECTION 20 OF THE COLORADO CONSTITUTION?
The following policy language is intended to:
1.Further prescribe the City Council’s intended split of the 50%Parks/Recreation share.
The categories of Replacements,Upgrades,Maintenance,and Accessibility are intended
for the majority of ftinding and thus the amounts for construction of “indoor and
outdoor recreation and pool facilities”is limited to 20%of the overall proceeds within
the 50%share,reconciled by gross appropriations at the same 2030,2040,and 2050
frequencies as prescribed by the ballot
2.Further direct staff to report to Finance Committee annually the life-to-date spending
percentages for each of the three ballot categories (Parks/Rec,Transit Climate)to
ensure well-planned proportionality between the categories for management of the
2030,2040,and 2050 legal reconciliation milestones.
Financial Policy 2 -Revenue 7
EXHIBIT B TO RESOLUTION 2025-012
Definitions
Governmental Services:services provided by the City for the public good such as regulating land use,
maintaining streets,and providing police and fire protection.
Imnact Fees:usually one-time charges,levied by the City against new development to offset the impacts of
the new developments
Proprietary Services:services provided for the benefit and enjoyment of the residents of the City,at their
discretion,such as parks and recreation services
Rebate:a return of a portion ofafee within a specifIed time.Unlike a waiver or discount,the rebate is given
after the fee has been paid in full
Special Service Fee:charges imposed on persons or property that are designed to defray the overall cost of
the particular municipal service for which the fee is imposed
Waiver:when a portion ofafee is reduced before being paid by a buyer
Getting Help
Please contact the Revenue and Project Manager with any questions at 970.221.6626.
Related Policies/References
City Code Chapter 25 Taxation,Article Ill Sales &Use Tax
City Code Chapter 26 Utilities
Administrative Fee
Financial Policy 2 -Revenue 8
EXHIBIT C TO RESOLUTION 2025-012
Financial Management Policy 3 Issue Date:01/12/21
Reviewed:12/05/24a
Version:6
Issued by:City Council
Objective:
To outline the method and principles for allocation Administrative Charges;establishing the parameters for
the Medical and Retirement Program;Fund Organization;Cost Recovery and Fee Setting;and Capital
Improvement Program.
Applicability:
This p.licy applies to all City funds.It does not apply to URA,DDA,PFA and Library.
Authorized by:
City Council Resolution 2006-006,2015-055,2017-101,2022-010
3.1 Administrative Charges
Certain General Fund departments render services to departments in other funds and shall
be equitably apportioned to those other funds.General Fund departments that do not have
a direct billing mechanism shall have their costs allocated using the formula outlined in this
section to other funds and provide offsetting revenue in the General Fund.
A.General Fund Deoartmental Costs to be Allocated
Certain General Fund departmental costs to be allocated include City Council,City
Manager,City Clerk City Attorney,Human Resources,and Finance.Any services in
these departments which are funded by user fees or dedicated revenues are excluded
from the allocation.
The amount of costs to be allocated is the current adopted budget for each of the
departments listed above less user fees and dedicated revenue.With a multi-year
budget the charge to each fund is increased by a determined percentage for the second
future year and then adjusted to the actual calculation with the next multi-year budget
B.How Costs Are Allocated
The Human Resources costs are allocated on a prorated basis to funds based on the total
number of budgeted full-time-equivalent positions in each fund.
Financial Policy 3 -General Financial Policies 1
EXHIBIT C TO RESOLUTION 2025-012
All other General Fund administrative costs are allocated on a prorated basis to the
funds based upon adjusted expenditure budgets for the current year.Adjustments are
made to recognize the lower amount of administrative services required for Capital,
Debt Service,and Purchased Power payments.Capital project budgets are reduced by
two-thirds and averaged over three years.Debt Service budgets are reduced by three-
fourths and the entire Purchased Power budget is deducted from the Light &Power
budget
C.All Funds Receive Allocations but Not All Funds Are Charged
While Administrative Charges are allocated among all City funds,only specified funds
are charged.Charges are not made to a fund if it is not self-supporting,it is a
Governmental Internal Service fund,or if the funds role is merely to facilitate proper
accounting procedures.For example,the Sales and Use Tax fund and Debt Service fund
receive amounts which are then transferred to other funds.Charging these funds would
lead to double charging many transactions and would not correspond to the level of
service provided by the departments in the General Fund.
V.Review
During each budget process,the Administrative Charge calculation will be reviewed by
the Budget Office.Minor refinements in the allocation formulas are made as needed.
Significant changes will be brought to the City Council for approval to assure that the
equitable apportionment meets requirements of the Code/Charter.
3.2 Medical Insurance and Retirement Plan
A.Medical Insurance
In 1981,the City of Fort Collins set up a partially self-funded medical insurance program.
The objective of a self-funding program is to reduce the cost of medical insurance by
assuming the risk for certain plan expenses.Assuming a portion of the risk lowers the
amount of charges compared to a conventional full insurance plan Historically,the City has
found this funding method to be a cost-effective means of providing a very desirable
employee benefit
To administer the self-funded and insured portions of the medical insurance plans,the City
conducts a competitive proposal process every five years or more often if required.The
insurance contracts are reviewed annually for both performance and cost.The types of
services contracted for include plan administrative services,stop-loss protection against
larger claims,life and accidental death and dismemberment insurance,and long-term
disability coverage.
Financial Policy 3 -General Financial Policies 2
EXHIBIT C TO RESOLUTION 2025-012
B.Retirement Programs
The City of Fort Collins contributes to two types of retirement plans:a Defined Benefit Plan
and Defined Contribution Plans.
1.Defined Benefit Plan -the General Employees Retirement Plan (Plan).The pension plan
is closed to new participants as of 1/1/1999.
The Plan document approved by the City Council outlines the details of the program.A
Board meets monthly to oversee the program.Board members,in consultation with annual
actuary report and other information,make recommendations to City Council for any plan
changes that may be needed from time to time.The Plan currently calls for the employer
(City)to contribute 10.5%.Because the plan is underfunded,a Supplemental Contribution
is made at a fixed dollar amount each year.The Supplemental amount is reevaluated every
2 years in conjunction with the budget cycle and based on the latest actuarial valuation
report.
2.401(a)and 457 Money Purchase Plans.Also known as Defined Contribution Plans,the
contribution rates are as follows:
401a 457
Employee Group Employer Employee Waiting Employer Employee Waiting
classified Employees 6.5%3.0%6 months 0.0%optional no wait
classified Employees hired 7.5%3.0%6 months 0.0%optional no wait
on orbefore 3/31/07
Unclassified Management 6.5%6.0%no wait 0.0%optional no wait
Unclassified Management 7.5%6.0%no wait 0.0%optional no wait
hired on or before 3/31/07
Council Appointed Employees 10.0%0.0%no wait match up to optional no wait
3%
Executive and Senior Leaders 10.0%0.0%no wait match up to optional no wait
3%
Police &Dispatch (per union 11%8.5%no wait match up to optional 6
agreement)*3%months
for
match
Community Service Officer 8.0%3.0%6 months 0.0%optional no wait
*All employee groups vest immediately,except Police and Dispatch who follow schedule in
union agreement
Employee contributions to the 457 plan are limited to the amounts published by the IRS.
Financial Policy 3 -General Financial Policies 3
EXHIBIT C TO RESOLUTION 2025-012
The City will contract with a third party administrator to provide the Defined Contribution Plans.
City Staff comprised of both Finance and HRwill oversee the program and performance of the third
party administrator.
3.3 Fund Organization
Funds for accounting and financial reporting purposes have their own balance sheet and income
statement
The organization of the City’s Funds is designed to enhance accountability and transparency,
comply with Generally Accepted Accounting Principles,meet grant requirements,comply with City
Code/Charter and comply with Colorado statutes.In City Article V,Section 25 the Financial Officer
is empowered to create funds as appropriate.However,City Code Chapter 8,Article Ill also
establishes additional parameters for City funds.
The number of funds established should be the minimum needed for legal and operating
requirements.Unnecessary funds can result in inflexibility,undue complexity and inefficient
financial administration.
The City’s funds are organized at two levels of groupings;Fund Groups and Fund Types.
Fund Groups
Governmental Funds Used to account for activities primarily supported by taxes,grants and similar
revenue sources.
Proprietary Funds Used to account for activities that receive significant support from fees and
charges.
Fiduciary Funds Used to account for resources that a City holds as a trustee or agent on behalf of an
outside party that cannot be used to support the City’s own programs.
Within each Fund Group are Fund Types.
Governmental Fund Types
General Fund Main operating fund used to account for and report all financial resources not
accounted for andre orted in another fund.
Special Revenue Used to account for and report the proceeds of specific revenue sources that are
Funds restricted,committed or assigned to expenditure for specific purposes,other than
debt service or ca ital ro ects.
Debt Service Funds Used to account for and report resources that are restricted,committed or
assi ed to e enditure for rinci al and interest
Capital Project Funds Used to account for and report resources that are restricted,committed or
assigned to expenditure for capital outlays,including the acquisition or
construction of ca ital facilities or other ca ital assets.
Financial Policy 3 -General Financial Policies 4
EXHIBIT C TO RESOLUTION 2025-012
Proprietary Fund Types
Enterprise Funds Used to account and report any activity for which a fee is charged to external users
of goods and setvices
Internal Service Used to account and report any activity for which a fee is charged to other funds,
Funds department or agencies of the City and its component units on a cost
reimbursement basis.
Fiduciary Fund Types
Pension (and Other Used to account and report resources that are required to be held in trust for the
Employee Benefit)members and beneficiaries of defined benefit plans.
Trust Funds
Custodial Funds Used to report resources held by the City in a purely custodial capacity.
The following is a list of all funds of the City,including legally separate entities but from a financial
reporting perspective are treated as a component unit of the City.
Special Revenue Fund
Special Revenue Fund
Special Revenue Fund Separate
Special Revenue Fund
Special Revenue Fund
Special Revenue Fund
Special Revenue Fund
Special Revenue Fund
Special Revenue Fund
Special Revenue Fund
Special Revenue Fund
Special Revenue Fund
Special Revenue Fund
Special Revenue Fund
Special Revenue Fund
Special Revenue Fund
Special Revenue Fund
Special Revenue Fund Separate
Special Revenue Fund
Capital Expansion Fund
Sales &Use Tax Fund
General Improvement District #1
Keep Fort Collins Great Fund
Community Capital Improvement
Program
2050 Tax
Natural Areas Fund
Cultural Services &Facilities
Recreation Fund
Cemeteries Fund
Perpetual Care Fund
Museum Fund
Community Development Block
Home Investment Partnership
Transit Services Fund
Transportation Capital Expansion Fee
Transportation Services Fund
GID #15 -Skyview
Parking Fund
Group and Type
Governmental
General Fund
I
I
I General Fund
Debt Service
Capital Projects Fund
Capital Projects Fund
Capital Projects Fund
Capital Leasing Corporation
Capital Projects Fund
Neighborhood Parkland Fund
Conservation Trust Fund
Financial Policy 3 -General Financial Policies S
EXHIBIT C TO RESOLUTION 2025-012
Proprietary
Enterprise Fund City 500 Golf Fund
Enterprise Fund City 501 Electric and Telecommunications
Fund
Enterprise Fund City 502 Water Fund
Enterprise Fund City 503 Wastewater Fund
Enterprise Fund City 504 Storm Drainage Fund
Enterprise Fund City 505 Broadband Fund
Internal Service Fund City 601 Equipment Fund
Internal Service Fund City 602 Self-Insurance Fund
Internal Service Fund City 603 Data and Communications Fund
Internal Service Fund City 604 Benefits Fund
Internal Service Fund City 605 Utility Customer Service &Admin
Fiduciary
Pension Trust Fund City 700 Employees Retirement Fund
Governmental
Special Revenue Fund Separate 800 URA -N.College District
Special Revenue Fund Separate 801 URA -Prospect South TIF District
Special Revenue Fund Separate 803 URA -Mall Fund
Special Revenue Fund Separate 820 DDA Operating Fund
Special Revenue Fund Separate 821 tWA Fixed Asset and Long Term Debt
Special Revenue Fund Separate 822 DDA Debt Service Fund
3.4 Cost Recovery and Fee Setting
A.Enterprise Funds shall rely on charges and user fees to recover their costs,rather than
taxes.Utility rates will be based upon the cost of service approach to reflect full distribution
of costs to appropriate rate classes in order to effect equitable sharing of costs.Rates shall
be established and maintained at a level sufficient to maintain positive net income in each of
the utility funds after paying the full cost of operating and maintaining the utilities and
keeping them in good repair and working order.Such rates shall also be sufficient to enable
each utility,where applicable,to meet rate requirements of City or utility enterprise bond
ordinances.
B.The Internal Service Funds shall operate under the following guidelines.
1.Internal service fund charges are limited to the recovery of the cost of the service,including
depreciation,rather than making a profit Each funds prior year financial statements and
estimates of future costs form the basis for the calculation of charges.
Financial Policy 3 -General Financial Policies 6
EXHIBIT C TO RESOLUTION 2025-012
2.Charges should be set at a level to avoid significant adverse financial impacts on their
customers.Fund customers and independent experts should be allowed to review and
make recommendations about the level of charges.The Finance Department should
approve the analysis and conclusions used to set rates.
3.Internal service funds should compete with similar services offered by the private sector.
The City staff will compare rates every five years.If not competitive with the private sector,
the Finance Department will analyze whether the private sector should provide the service.
4.Internal service funds may build up reserves.Customer-approved master plans and
independent third-party actuarial reviews (for the Benefit and Self-Insurance funds)guide
the level of reserves.Fund managers may spend reserves only for their approved purpose.
5.The City may buy equipment and facilities for the internal service funds through lease-
purchase financing.Management’s decision to recommend lease-purchase financing depends
on:(1)cash flow needs;(2)budget constraints;(3)benefit to cost analysis;and (4)level of
reserves.
6.Except for the Utilities Customer Service and Administration Fund,Internal service funds
operate under the same guidelines and constraints as the General Fund and other
governmental funds of the City.The Utilities Customer Service and Administration Fund shall
operate under the guidelines of the Utilities Services Funds.
C.Cultural Services &Facilities Fund Fee Policy
1.Total revenue from fees and charges shall cover a minimum of 55%of Lincoln Center
Operation and Maintenance and Performing and Visual Arts Programming Budgets.This
includes revenues generated at the Lincoln Center from rentals,equipment,concessions and
other miscellaneous sources and all total direct revenues from the Performing and Visual
Arts Programming.A transfer from the General Fund will make up the difference between
total revenue and expenditures.
2.The Cultural Services and Facilities Administration and Museum budgets provide minimal
financial support.These programs are funded primarily by a transfer from the General
Fund.
3.Major capital improvements and renovations will be financed through sources other than
Cultural Services and Facilities Fund.
4.Charitable gifts and donations—raised from the philanthropic sector of foundations,
corporations,and individuals to support public initiatives of the City of Fort Collins—will
be
Financial Policy 3 -General Financial Policies 7
EXHIBIT C TO RESOLUTION 2025-012
made directly to the City of Fort Collins.Acceptance,stewardship,tracking,and
expenditures of all charitable gifts are governed by Philanthropic Administrative and City
Give Finance Governance Policy with great attention to transparency and accountability.
D.Recreation Fund Rates and Charges Policy
Recreation Rates and Charges shall cover between 68%to 75%of all operating costs,with the
difference to be covered by the City’s General Fund and/or voter approved tax revenues
dedicated to Parks &Recreation.Equipment and rolling stock shall be considered operating
costs in the application of this policy.Recreation Rates and Charges shall not be expected to
cover major capital items such as facility and land acquisitions,major renovations to facilities
or other costs such as utilities,custodial or grounds maintenance.
3.5 Capital Improvement Program
1.Each Service Area or Department shall develop multi-year Master Plans for capital
improvements.On a city-wide basis,staff shall compile a 10-year Capital Improvement
Plan and update it every two years.Estimates of operating and maintenance costs
should be included;
2.Appropriation requests must include not only the cost of construction or acquisition
and the funding sources,but an estimate of operating and maintenance costs;
3.Capital improvements projects will be administered in accordance with the Capital
Projects Procedures Manual;
4.Appropriations for capital improvements will be constructed and expenditures incurred
only for the purpose as approved by City Council;
5.Staff should seek out grants and partnerships whenever appropriate.
3.6 Using State Allocation of Private Activity Bonds
A.Background:Conduit debt is issued in a local government’s name,but the resources for
repayment come from individuals or entities that are not part of government Entities seek
Financial Policy 3 -General Financial Policies B
EXHIBIT C TO RESOLUTION 2025-012
conduit debt because of the government’s ability to issue debt at favorable tax-exempt
rates.Private Activity Bonds (PAB)are a form of conduit debt
Colorado’s Private Activity Bond allocation program is established by the Colorado Private
Activity Bond Ceiling Allocation Act,Section 24-32-1701,et seq.,C.R.S.Pursuant to Section
24-32-1706,annually the City of Fort Collins is offered a portion of the State ceiling as a
local government If the City does not issue bonds or assign bond capacity to an entity for a
local project by September 15th annually,the cap automatically reverts back to the state’s
pool.
Historically,the City has provided this capacity on a first come first serve basis.It has not
been uncommon for the City to receive no requests.Because more partners are using
programs that can benefit from the lower interest rate that PAB’s offer,the City is
establishing this process.
B.Purpose:PAB’s allow certain private sector activities to receive lower interest rates.PAB’s
may be used for affordable housing development and rehabilitation,specific economic
development programs and for industrial development purposes,among other permitted
uses.The City will attempt to find local uses for this development tool.
C.Communication:Information about the program should be placed on the City’s website
(fcgov.com).Consideration for other advertising and communication methods may be
appropriate.
D.Awarding and Assigning:Awarding PAB and Assigning PAB allocations are different
processes.Assigning PAB to another qualified issuer is strongly preferred.This is to reduce
the administrative investments and leverage the efficiency of qualified issuers who award
PAB’s regularly.If an entity applies for a direct award under the City’s name,staff will
attempt to find a qualified issuer that agrees to accept an assignment from the City and
issue the PAB under their own authority.
B.Application due date:Written applications to use of Fort Collin’s annual PAB allocation are
due to the City’s Chief Sustainability Officer by March 15th.
F.Application Elements:
a.The following items are required when applying for both assignments and direct
awards.
i.A request letter signed by applicant describing the project the PAB would be
used for and including:the applicant’s name,address,phone,email address,
and principal contact.
ii.Amount of allocation being requested.
Financial Policy 3 —General Financial Policies 9
EXHIBIT C TO RESOLUTION 2025-012
iii.Bond counsel firm name,address,phone,email address and principal
contact
iv.Description of Applicant’s local projects and years of operation
v.Number of years’entity has been doing business in State of Colorado
vi.Provide a Certificate of Good Standing from the Secretary of State’s office.
vii.Description of assets to be purchased or constructed and expenses
incidental to the project,including the sale of bonds.
viii.Explanation of how the project aligns with City objectives.
ix.Number of housing units and target demographics
x.Statement from competent bond counsel that the project is eligible for
qualified private activity bonds.
b.The following additional items are required in applications for direct awards of PATh
Debt Information
xi.Name,address,phone of principal contact of the proposed underwriter or
lender.
xii.Anticipated timetable for bond transaction.
xiii.Estimated bond redemption and interest payment schedule
xiv.Indicate the type of letter of credit or similar instrument,which will back the
debt
xv.Disclose if the applicant is involved in any litigation which may affect the
validity or repayment of the bonds.
Financial Information
xvi.Audited financial statements for the applicant for the last three years and
interim statements for the current year.If not available,please explain why.
xvii.Projection of future revenues,expenditures and debt service coverage for
the next five years supported by a feasibility study.
Other
xviii.Describe the arrangements that will ensure compliance with arbitrage
reporting and payment requirements.
xix.Name,address and principal contact person for applicant’s local bank.
xx.Briefly describe any potential conflicts of interest of personal/professional/
political relationships between the applicant’s officers and/or directors or
applicant’s operations and the City of Fort Collins.
xxi.Any other information which provides evidence of the applicant’s ability to
repay the bonds and complete the project
Debt Security
xxii.All arbitrage calculations and payments must be performed by the trustee
under the terms of the trust agreement or by any such other arrangement
that will ensure compliance.The City must be provided with copies of 8088-
T’s filed with the IRS.
xxiii.The private entity must provide the City with information on the status of
the debt annually and upon any material event
Financial Policy 3 -General Financial Policies 10
EXHIBIT C TO RESOLUTION 2025-012
xxiv.The bond documents must indemnify the City against IRS assessments and
legal fees arising from the financing.
xxv.The issuer’s agent will be responsible for all continuing disclosure
requirements.
C.Items missing from application may result in disqualification from consideration.
C.Fees:There are no fees for applications that request assignments to another qualifying
issuer.However,the following fees apply to applications requesting a direct award of PAB
from the City of Fort Collins.
a.Issuance fee equal to the greater of:A.0.2 5%of the par amount of the debt,or B.
$5,000.The fee is capped at $25,000.
b.The cost of a review of the financing by an independent fiscal agent (to be selected
by the City)
c.Any other direct cost incurred by the City related to the financing.
d.There will not be additional issuance fees for any amendment or modification of the
original transaction even if it requires official action by City Council,except for
actual direct costs of the City.
H.Review Process
a.PAB Committee:Applications will be reviewed by a committee of at least 3 people.
Members will include at least one representative each from Social Sustainability,
Economic Health and Finance.Representatives from other departments,such as the
City Manager’s Office will be added as needed.Service Area Directors will make the
necessary appointments to the PAB Committee.
b.At a minimum,the following factors should be considered by the PAB Committee
when making a recommendation:
i.How well the project applied for meets the land use,economic development
and/or affordable housing goals of the City of Fort Collins.
ii.Project feasibility and timing.
iii.Leverage of other investment into the project
iv.Maintenance of or increase in local tax base.
v.Competing uses for the City’s allocation.
vi.Whether the City’s allocation should be used in multiple projects.
vii.Whether the application should be considered by any City Board or
commission.
c.The PAB Committee will decide on a recommendation no later than July 1.
d.City Council shall approve all PAB assignments or direct awards.The PAB
Committee shall submit their recommendations to the City Council no later than
August 15.
Financial Policy 3 -General Financial Policies 11
EXHIBIT C TO RESOLUTION 2025-012
Getting Help
Please contact the Accounting Manager with any questions at 970.416.2436.
Financial Policy 3 -General Financial Policies 12
EXHIBIT D TO RESOLUTION 2025-012
Financial Management Policy 5 Issue Date:01/12/2 1
Version:6
*••Reviewed:12/5/24
•~a .C S Issued by:City Council
Objective:
To set minimum fund balances as to mitigate risk maintain good standing with rating agencies,and ensure
cash is available when revenue is unavailable The policy sets minimum fund balances,not targets or
maximum balances.Each fund should be evaluated by staff to determine the appropriateness of
maintaining fund balances above the minimums set in this policy.Contingencies for severe weather,
prolonged drought,and anticipated capital spending should be considered independently from this policy
Applicability:
Funds—This policy applies to all City funds.It does not apply to URA,DDA,PFA and Library
Authorized by:
City Council Resolutions 1994-174,2008-038,2014-058,2017-101,2021-010
5.1 Governmental Funds and Fund Balances
To set minimum fund balances so as to mitigate risks,maintain good standing with
rating agencies,and ensure cash is available when revenue is unavailable.The policy
sets minimum fund balances,not targets or maximum balances.Each fund should be
evaluated by staff to determine the appropriateness of maintaining fund balances above
the minimums set in this policy.Contingencies for severe weather,prolonged drought,
and anticipated capital spending should be considered independently from this policy.
The Equity on balance sheet of a governmental fund is called Fund Balance.The current
classifications of Fund Balance in governmental funds are primarily based on the origin
of the constraints.The following categories are in decreasing order of constraints.
Non-Spendable Pennanent endowments or assets in a non-liquid form
Restricted Involve a third party:State Legislation or contractual agreements
Committed Set by formal action of the City Council
Assigned By staff,and/or residual balances in a Special Revenue Fund
Unassigned Remaining balances in governmental funds
Minimums outlined in section 5.3 relate only to Assigned and Unassigned balances.
Financial Policy S -Fund Balance Minimums
EXHIBIT D TO RESOLUTION 2025-012
5.2 Proprietary Funds and Working Capital
Internal Service Funds and Enterprise Funds are accounted for nearly identical to the
private sector.The balance sheets include long term assets and long-term liabilities.
The resulting Equity section on their balance sheet called Net Position,is not always a
good measure of spendable financial resources.To get to spendable financial resources,
a common calculation is to take Current Assets and subtract Current Liabilities,with the
net result called Working Capital.
To further refine,for purposes of this policy,certain required restrictions are further
subtracted and result in Available Working Capital.Some examples of required
restrictions are unspent monies for Art in Public Places,Water Rights,and existing
appropriations for capital projects.The minimums outlined in section 5.3 relate to
Available Working Capital.
5.3 Minimum Balances
The following Minimum Balances refers to Assigned and Unassigned Fund Balances in
governmental funds and Available Working Capital in the Internal Service Funds and
Enterprise Funds.
A.General Fund
45 Day Llauiditv Goal -The Commitment for Contingency should be at least 45 days
(12.5%)of the subsequent year’s originally adopted budgeted expenditures and
transfers out The calculation for the minimum level shall exclude expenditures and
transfers out for large and unusual one-time items.
Important note —the 45 Day Liquidity Goal is in addition to the Emergency Reserves
required by Article X,Section 20(5)of the State Constitution.This reserve must equal
3%of non-exempt revenue and can only be used for declared emergenc es.Fiscal
emergencies are specifically excluded by the State Constitution as qualiI~4ng use of this
reserve.
B.Special Revenue Funds
No minimum balance is required.
Financial Policy S -Fund Balance Minimums 2
EXHIBIT D TO RESOLUTION 2025-012
C.Debt Service Funds
No minimum balance is required.
D.Capital Project Funds
No minimum balance is required.
E.Enterprise Funds
Enterprise funds focus on working capital rather than fund balance.
Enterprise Funds shall maintain a minimum Available Working Capital equal to 25%of
Operating Expenses,less Depreciation.Exceptioni:In the case of L&P,operating
expenses will include purchased renewable energy for resale but will not include
regular purchased power for resale (i.e.Platte River Power Authority).Exception 2:In
the case of Golf,the minimum fund balance will be 12.5%.
Important note —The Water Fund holds a balance for Restricted Water Rights.The
balance equals the amount of cash in-lieu-of water rights payments and raw water
surcharges less any expenses for acquiring water rights and water storage.
The enterprises funds should also be accumulating available working capital above
these minimums for the purposes of funding future capital projects.
F.Internal Service Funds
Each fund is a unique operation and will maintain a minimum Available Working Capital
as follows:
0
ci
Equipment Fund
Self-Insurance Fund *
Data &Communications
Fund
Benefits Fund
Utility Customer Service
Fund
Of annual operating expenses,excluding
depredation
Of annual operating expenses
Of annual medical and dental expenses
Self Insurance Fund will be measured against Available Unrestricted Net Position
instead of Available Working Capital.
Financial Policy S -Fund Balance Minimums 3
EXHIBIT D TO RESOLUTION 2025-012
54 Below Minimum
When circumstances result in balances below the minimum,staff should develop a plan
to restore minimums ftind balances and present it to Council Finance Committee.
Financial Policy S -Fund Balance Minimums 4
EXHIBIT D TO RESOLUTION 2025-012
Definitions
Non-Snendable Fund Balances:Applicable to governmentalfunds.Permanent endowments or assets in a
non-liquid form such as long-term inter-agency loans.
Restácted Fund Balances:Applicable to governmentalfunds.Involve a third party such as State
Legislative requirements,voter ballot language,or the Contra ctualAgreements with parties
external to the City.
Committed Fu.d lalances:Applicable to governmental funds.Involve a off.rmol action by the City
C.uncil.An example is traffic calming revenues are required to be spent on traffic calming
activities.Any unspent m.nies at end ofyear are classified as Committed to traffic calming in the
General Fund.
Assigned Fund Balances:Are applicable to governmentalfunds.Assignments can be made by senior
management.They represent the intent to use the manies for a specific purpose.An example of this
it this the one-time Harmony Road monies transferred by the State to the City.Although required to
be used on Harmony Road,staff intends to use the monies only on Harmony Read impr.vements.
These monies are considered when measuring compliance with minimum fund balances.
Unassigned Fund Balances:Are applicable only to the governmental funds.These monies are considered
when measuring c.mphance with minimum fund balances.
Werking Capital:isa term applicable to internal Sen’ice and Enterprise Funds.it is the difference
between Current Assets and Current Liabilities.Not all Working Capital is available.Available
Werking Capital does n•t include Restrictions for debt,Art in Public Places,approved capital
appropriations,and other restrictions.
Uprestricted Net Position:Isa term applicable to internal Service and Enterprise Funds.N.t all
Unrestricted Net Position is available.Available Unrestricted Net Position does not include unused
Art in Public Places monies,approved capital appropriations,and other commitments.
Liquidity:Assets range from cash to land.The more easily and quickly an asset can be c.nverted to cash
determines its relative liquidity.
Reserves:A legacy term that previously referred to fund balances,arfund balances set aside for a specific
purpose.it is no longer used on financial statements.
Fund Balance:isa term applicable to governmental funds.Fund balance or Equity is the difference
between assets,liabilities,deferred outJl.ws of resources and deferred inflows of resources.Since
g.vernmental funds do not have long term assets and long-term debt on their balance she et,fund
balance is similar and approximates working capital in the private sector and enterprise funds.
Financial Policy 5—Fund Balance Minimums 5
EXHIBIT D TO RESOLUTION 2025-012
Getting Help
Please contact the Accounting Manager with any questions at 970.416.2436.
Financial Policy 5 -Fund Balance Minimums 6
EXHIBIT E TO RESOLUTION 2025-012
Financial Management Policy 7
Issue Date:02/07/2023
I e i t Reviewed:12/05/2024Version:3
Issued by:City Council
Objective:
The purpose of this policy is to establish parameters and provideguidancegoverning the issuance
of all debt obligations issued by the City of Fort Collins (City).
Applicability:
This debt policy applies to allfunds and Service Areas of the City and closely related agencies such
as the Downtown Development Authority (DDA),Fort Collins Leasing Corporation and the Fort
Collins Urban Renewal Authority ((IRA).
Authorized by:
City Council Resolutions,1994-174,2013-093,2023-017
7.1 Authorization for Municipal Borrowing
The City Charter (Article V.Part 11)authorizes the borrowing of money and the issuance of long-term
debt The Charter and State Constitution determine which securities may be issued and when a vote
of the electors of the City and approved by a majority of those voting on the issue.
7.2 Purpose and Uses of Debt
Long term obligations should only be used to finance larger capital acquisitions and/or construction
costs that are for high priority projects.Debt will not be used for operating purposes.Debt financing
of capital improvements and equipment will be done only when the following conditions exist:
a)When non-continuous projects (those not requiring continuous annual appropriations)
are desired;
b)When it can be determined that future users will receive a significant benefit from the
improvement;
c)When it is necessary to provide critical basic services to residents and taxpayers (for
example,purchase of water rights);
d)When total debt,including that issued by overlapping governmental entities,does not
constitute an unreasonable burden to the residents and taxpayers.
Financial Policy 7-Debt 1
EXHIBIT E TO RESOLUTION 2025-012
7.3 Types of Debt and Financing Agreements
The types of debt permitted are outlined in State statute.The City will avoid derivative type
instruments.In general the following debt types are used by the City:
a)General obligation bonds—backed by the credit and taxing power of the City and not
from revenues of any specific project Colorado law limits general obligation debt to
10%of the City’s assessed valuation.Under TABOR this type of debt must be approved
by voters.
b)Revenue Bonds—issued and backed by the revenues of a specific project,tax
increment district (TIF),enterprise fund,etc.The holders of these bonds can only
consider this revenue source for repayment TABOR does not require that voters
approve these types of debt
c)Lease Purchase —issued whereby the asset acquired is used as collateral.Examples
include Certificates of Participation (COP),Assignment of Lease Payments (ALP)and
equipment leases.Equipment leases shall be limited to financing within Internal
Service Funds.TABOR does not require that voters approve these types of
agreements.
d)Moral Obligation Pledge—a pledge to consider replenishing a debt reserve fund of
another government agency if the reserve was used to make debt payments.This type
of commitment will only be used to support the highest priority projects,or when the
financial risk to the City does not increase significantly,or when the City’s overall
credit rating is not expected to be negatively impacted.Because it is a pledge to
consider replenishing it is not a pledge of the City’s credit and as such is not a
violation of State statutes and City Charter.However,decision makers should keep in
mind that not honoring a Moral Obligation Pledge will almost certainly negatively
impact the City’s overall credit rating.TABOR does not require that voters approve
these types of agreements.
e)Interagency Borrowing—issued when the credit of an agency (DDA,URA)of the City
does not permit financing at affordable terms.Usually used to facilitate a project until
the revenue stream is established and investors can offer better terms to the agency.
Program parameters are outlined in section 7.8 of this policy.TABOR does not
require that voters approve these types of agreements.
fl Conduit Debt—Typically limited to Qualified Private Activity Bonds (PAB)defined by
the IRS and limited to the annual allocation received from the State.Low income
housing is one example of a qualified use of PAB.Program parameters are outlined
the General Financial Policy 3.6.There is no pledge or guarantee to pay by the City.
g)Any other securities not in contravention with City Charter or State statute.
7.4 Debt Structure and Terms
The following are guidelines,and may be modified by the City to meet the particulars of the
financial markets atthe time of the issuance of a debt obligation:
Financial Policy 7-Debt 2
EXHIBIT E TO RESOLUTION 2025-012
a)Term of the Debt:The length of the financing will not exceed the useful life of the asset
or average life of a group of assets,or 30 years,whichever is less.Terms longer than
20 years should be limited to the highest priority projects.
b)Structure of Debt:Level debt service will be used unless otherwise dictated by the
useful life of the asset(s)and/or upon the advice of the City’s financial advisor.
c)Credit Enhancements:The City will not use credit enhancements unless the cost of the
enhancement is less than the differential between the net present value of the debt
service without enhancement and the net present value of the debt service with the
enhancement
d)Variable Rate Debt:The City will normally not issue variable rate debt meaning debt
at rates that may adjust depending upon changed market conditions.However,it is
recognized that certain circumstances may warrant the issuance of variable rate debt
but the City will attempt to stabilize the debt service payments through the use of an
appropriate stabilization arrangement.
e)Derivative type instruments and terms will be avoided.
7.5 Refinancing Debt
Refunding of outstanding debt will only be done if there is a resultant economic gain regardless of
whether there is an accounting gain or loss,or a subsequent reduction or increase in cash flows.
The net present value savings shall be at least 3%,preferably 5%or more.In an advanced
refunding (before the call date),the ratio of present value savings to the negative arbitrage costs
should be at least 2.
7.6 Debt Limitations and Capacity
Debt capacity will be evaluated by the annual dollar amount paid and the total amount outstanding
with the goal to maintain the City’s overall issuer rating at the very highest rating,MA.Parameters
are different for Governmental Funds,Enterprise Funds,and Related Agencies.
a.Governmental Funds—Annual debt service (principal and interest)will not exceed
5%of annual revenues.For calculation,revenues will not include internal charges,
transfers and large one-time grants.Outstanding debt in relation to population and
assessed value will be monitored.
b.Enterprise Funds—Each fund is unique and will be evaluated independently.Each
fund’s debt will be managed to maintain a credit score of at least an A rating.These
funds typically issue revenue bonds and investors closely watch revenue coverage
ratio.Coverage ratios are usually published in the Statistical Section of the City’s
Comprehensive Annual Financial Statement
c.Related Agencies—Each agency will be evaluated independently,taking into account
City Charter,State statutes,market conditions and financial feasibility.
Financial Policy 7-Debt
EXHIBIT E TO RESOLUTION 2025-012
7.7 Debt Issuance Process
When the City utilizes debt financing~it will ensure that the debt is soundly financed by:
a)Selecting an independent financial advisor to assist with determining the method of
sale and the selection of other financing team members
b)Conservatively projecting the revenue sources that will be used to pay the debt;
c)Maintaining a debt service coverage ratio which ensures that combined debt service
requirements will not exceed revenues pledged for the payment of debt
d)Evaluating proposed debt against the target debt indicators.
7.8 Inter-agency Loan Program
1.Purpose:The purpose of the Inter-agency loan program is to support City
services,missions,and values by making loans to outside entities such as the
Urban Renewal Authority and the Downtown Development Authority while
maintaining an adequate rate of return for the City.
2.EligibleApplicants:The following are examples of situations in which City
loans to outside agencies may be appropriate:
A.An entity that was created wholly or in part by the City and is in a fledgling
stage and does not yet have an established credit history to access the
capital markets.Examples include the Urban Renewal Authority,etc.
B.An entity related to the City desires to issue debt that will be repaid over a
timeframe that would be unrealistic for a private lender.Examples include
bonds issued by the Downtown Development Authority for less than 10
years.
C.Any other situation in which the Council deems it appropriate to meet the
financing needs of an entity that is engaged in services that support the
mission and values of the City.
3.Program Guidelines:
A.The borrowing entity must have approval from its governing body.
B.The loan must be evidenced by a promissory note.
C.There must be a reasonable probability of repayment of the loan from an
identifiable source such as TIF revenues.
Financial Policy 7-Debt 4
EXHIBIT E TO RESOLUTION 2025-012
D.The interest rate assigned to the loan must be the higher of the Treasury
Note or Municipal Bond of similar duration (3 year,5 year,etc.),plus 0.5%,
subject to the following minimum (floor).
FLOOR -Minimum Loan Rates
Term Rate
0 —5 years 2.75%
6—10 years 3.25%
11—15 years 3.75%
16—25 years 4.00%
E.The loans must be limited to 25 years.
F.City Council must review the request and approve the amount and terms
and conditions of the loan.
G.Loans of Utility reserves must be reviewed by either the Energy Board or
Water Board,as applicable,in advance of City Council or Council
committee consideration,and must meet the following additional criteria:
a.the City Council must make a formal finding that the funds will not
be needed for utility purposes during the term of the loan,and that
the terms and conditions of the loan represent a reasonable rate of
return to the Utility;and
b.utility rates must not be increased for the purposes of funding the
loan.
4.Limit on Funds available for Loan Program
A.Governmental Funds:Total loans shall not exceed 25%of the aggregate
cash and investments balance of the governmental funds (i.e.,General
Fund and Special Revenue Funds).
B.Enterprise Funds:Total loans shall not exceed 5%of the aggregate cash
and investments balance in the enterprise funds (i.e.Utility Funds and
Golf Fund).
C.Operating and capital needs of the loaning funds shall not be significantly
impaired by these loans.
Financial Policy 7-Debt
EXHIBIT E TO RESOLUTION 2025-012
D.Loans should not impact the loaning funds compliance with minimum fund
balance polides,timing of intended uses,etc
7.9 Other
Debt Management -The City will also have an administratively approved Debt
Administration Policy and Procedure 53 that includes guidance on:
a)Investment of bond proceeds
b)Market disclosure practices to primary and secondary markets,including annual
certifications,continuing disclosures agreements and material event disclosures
c)Arbitrage rebate monitoring and filing
dJ Federal and State law compliance practices
e)Ongoing Market and investor relations efforts
f)ldentiêa Chief Compliance Officer
g)System of actions and deadlines
h)Records to be maintained
Getting Help
Please contact the Accounting Manager with any questions at 970.416.2436.
Related Policies/References
-The City ofFort Collins Charter (Article V.,Part II)
-Investment Policy
-DebtAdniinistra don Policy and Procedures 53
Financial Policy 7-Debt 6
EXHIBIT E TO RESOLUTION 2025-012
Deflniti.ns
Conduit Debt 1-An organization,usually a government agency,that issues municipal securities to raise
capital for revenue-generating prejects where the funds generated are used by a third party
(known as the “canduit borrower)ta make payments to investors.The conduitfinancing is
typically backed by either the conduit borr.wer’s credit orjisnds pledged toward the project by
eutside investars.If a project fails and the security goes into default,itfalls to the conduit
barrower’s financial obligation,not the conduit issuer (City).2-Common types of cenduit financing
include industrial development revenue bonds (lDTh9s),private activity bends and housing revenue
bonds (both for single-family and multifamily projects).Mast conduit-issued securities are for
prejects to benefit the public at large (i.e.airports,decks,sewage facilities)or specific population
segments (i.e.students,low-income heme buyers,veterans).3-In some cases,a governmental entity
issues municipal bonds for the purpose of making proceeds available to a private entity in
furtherance af a public purpose,such as in c.nnection with not-for-profit hospitals,affordable
hausing,and many other cases.These types of municipal bonds are sometimes referred to as
“canduit bonds.’One common structure is for the governmental issuer to enter into an
arrangement with the private conduit borrower in which the bond proceeds are leaned to the
conduit borrower and the c.nduit borrower repays the loan to the issuer.For mast conduit bonds,
although the governmental issuer of the bonds is legally obligated for repayment,that abligation
usually is limited is the amaunts of the loan repayments from the conduit borrower.If the conduit
barrower fails to make lean repayments,the governmental issuer typically is not required to make
up such shartfalls.Thus,unless the bond documents explicitly state otherwise,investors in conduit
bends shauld not view the governmental issuer as a guarantor on conduit bonds.
Credit E.hp.cements:the requirement that a certain percentage or amaunt of non-federal dallars or in-
kind services be provided in addition to the grantfunds.
Interagency:the individual responsibleforfiscally managing the grant award and the person who
maintains the records in the City’s financial system.
Debt Service C.verage Rail.:is a cammon measure af the ability ta make debt service payments.The
farmula is net operating income (operating revenue —operating expense)divided by debt service
(annual principal and interest)
Financial Policy 7-Debt
EXHIBIT F TO RESOLUTION 2025-012
Financial Management Policy 8 Issue Date:02-07-2023
Reviewed:12-05-2024aaVersion:5
Issued by:City Council
Objective:
This policy is to establish guidelines for the efficient management of City funds and for the purchase and sale
of investments.The City’s principal investment objectives,in priority order are:legal conformance,safety,
liquidity and return on investment All investments shall be undertaken in a manner that seeks to ensure the
preserv.tion .f capital in the overall portfolio.
Applicability:
This investment policy applies to the investment of all general and specific funds over which the City
exercises fln.ncial control,including operating funds,Poudre Fire Authority,the Downtown Development
Auth.rity,Poudre River Public Library District,Fort Collins Leasing Corporation and the Fort Collins Urban
Renewal Authority.
Auth•rized by:
City Council,Resolutions 90-44,2008-121,2009-109,2010-065,2012-119.2023-017
8.1 Policy
The City of Fort Collins,Colorado (the “City”)is a home rule municipality operating under
the City Charter.Article V,Part Ill of the City Charter assigns to the Financial Officer the
responsibility of investing City funds.Funds must be placed in investments authorized by
the City Council (“Council”).The Financial Officer will administer the investment program
to ensure effective and sound fiscal management
It is the policy of the City to invest public funds in a manner which will protect capital and
meet liquidity needs while providing the highest investment return.
82 Scope
This policy is to establish guidelines for the efficient management of City funds and for the
purchase and sale of investments.This investment policy applies to the investment of all
general and special funds over which the City exercises financial control,including
operating funds,Poudre Fire Authority,the Downtown Development Authority,Poudre
Financial Policy 8—Investments 1
EXHIBIT F TO RESOLUTION 2025-012
River Public Library Disthct Fort Collins Leasing Corporation and the Fort Collins Urban
Renewal Authority.For purposes of this policy,operating hinds include:
General Fund;
Special Revenue Funds;
Debt Services Funds (unless prohibited by bond ordinance);
Capital Projects Funds;
Enterprise Funds;
Internal Service Funds;
Fiduciary Funds;and
Any newly created Fund,unless exempted by Council.
Unless specifically provided for in the bond ordinance,all bond proceeds,bond reserve
funds and pledged revenues must be invested in accordance with the operating funds
guidelines set forth in this Investment Policy.Guidelines for investing the funds of the City’s
defined benefit plan shall be included in the Investment Policy for the General Employees’
Retirement Plan,which is monitored and approved by the General Employees’Retirement
Committee.
8.3 Investment Objectives
The City’s principal investment objectives,in priority order,are:legal confonnance,safety,
liquidity,and return on investment All investments shall be undertaken in a manner that
seeks to ensure the preservation of capital in the overall portfolio.
1.Legal conformance:The investment portfolio will conform to all legal and
contractual requirements.
2.Safety:Safety of investment principal and the preservation of capital are
primary objectives of the investment program.When making investment
decisions,the Financial Officer will seek to ensure the preservation of capital
in the overall portfolio by mitigating credit risk and interest rate risk
A.Credit Risk:The Financial Officer will minimize the risk of loss of principal
and/or interest due to the failure of the security issuer or backer by:
a.Limiting investments to the safest types of securities.
b.Pre-quali~ng financial institutions,securities brokers and dealers,
and advisors.
c.Diversi~ng the investment portfolio to reduce exposure to any
one security type or issuer.
Inte rest Rate Risk The Financial Officer will minimize the risk that the market value of
securities in the portfolio will fall due to changes in market interest rates by:
Financial Policy 8-investments 2
EXHIBIT F TO RESOLUTION 2025-012
a.Whenever possible,holding investments to their stated maturity
dates.
b.Investing a portion of the operating funds in shorter-term
securities,money market mutual funds,or local government
investment pools.
3.Liquidity:The investment portfolio must be sufficiently liquid so as to meet all
reasonably anticipated operating cash flow needs.This is accomplished by
structuring the portfolio so that securities mature to meet cash requirements
for ongoing operations.Investments shall be managed to avoid,but not
prohibit sale of securities before their maturities to meet foreseeable cash
flow requirements.Since all possible cash needs cannot be anticipated,the
portfolio must consist largely of securities with active secondary or resale
markets.
4.Return on Investment’The investment portfolio will be designed with the
objective of maximizing the rate of return on investment while maintaining
acceptable risk levels and ensuring adequate liquidity.Return on investment
is of secondary importance compared to the safety and liquidity objectives
described above.Investment pooling may be used to maximize the City’s
investment income.Interest income,from pooling,will be distributed to the
participating funds in proportion to each fund’s level of contribution.
The Financial Officer will determine whether a security will be sold prior to
maturity.The following are examples of when a security might be sold:
a.A security with a declining credit rating may be sold early to minimize loss
of principal;
b.A security swap would improve the quality,yield,return,or maturity
distribution of the portfolio;
c.Liquidity needs of the portfolio require that the security be sold;or
d.The Financial Officer will obtain the best rate of return on investments by
taking advantage of market volatility and recognizing gains on a portion of
the portfolio.
84 Standards of Care
1.Prudence:The City has a fiduciary responsibility to protect the assets of the
City and to invest funds appropriately.The standard of care to be used by City
officials is the “prudent person”rule as specified by CR5 15-1-304,which
reads:
“Standard for investments:In acquiring,investing,reinvesting,
exchanging,retaining,selling,and managing property for the benefit of
Financial Policy 8—Investments 3
EXHIBIT F TO RESOLUTION 2025-012
others,jIduciaries shall be required to have in mind the responsibilities
which are attached to such offices and the size,nature,and needs of the
estates entrusted to their care and shall exercise the judgment and care,
under the circumstances then prevailing,which men ofprudence,
discretion,and intelligence exercise in the management of the property of
another,not in regard to speculation but in regard to the permanent
disposition offunds,considering the probable income as well as the
probable safety of capitaL Within the limitations of the foregoing
standard,fiduciaries are authorized to acquire and retain every kind of
property,real,personal,and mixed,and every kind of investmenc
specifically including,but not by way of limitation,bonds,debentures,
other corporate obligations,stocks,preferred or common,securities of any
open-end or closed-end management type investment company or
investment trus4 and participations in common trustfunds,which men of
prudence,discretion,and intelligence would acquire or retain for the
account ofanother.”
The Financial Officer and designees,acting within the guidelines of this
investment policy and written procedures,the City Charter and Code,all
applicable state and federal laws and after exercising due diligence,will not be
held personally liable and will be relieved or personal responsibility for an
individual security’s credit risk or market price changes,or for losses incurred
as a result of specific investment transactions or strategies.(CR5 24-75-601.4,
et seq.)
2.Ethics and Conflicts of Interest:City officers and employees involved in the
investment process will refrain from personal business activity that could
conflict with the proper execution and management of the investment
program,or that could impair their ability to make impartial decisions.
Employees and investment officials must disclose any material interests in
financial institutions with which they conduct business.They must further
disclose any personal financial and investment positions that could be related
to the performance of the City’s investment portfolio.In addition they must
adhere to the rules of conflicts of interest as stated in Art IV,Section 9(b)of
the Charter of the City of Fort Collins,Colorado.
3.Delegation ofAuthority:The City Charter assigns the responsibility for the
collection and investment of all city funds to the Financial Officer,subject to
direction from Council by ordinance or resolution.The Financial Officer,
subject to City Manager approval,may appoint other members of the Finance
Department to assist in the investment function.
Administrative Procedures
Financial Policy 8-Investments 4
EXHIBIT F TO RESOLUTION 2025-012
a.The Financial Officer is responsible for all investment decisions
and activities,and must regulate the activities of subordinate
employees for the operation of the City’s investment program
consistent with this investment policy.
b.No person may engage in an investment transaction except as
provided under the terms of this Investment Policy and the
procedures established by the Financial Officer.
A.Authorized Designees
a.The Financial Officer will maintain a list of individuals and
institutions that are authorized to transfer,purchase,sell and wire
securities or funds on behalf of the City.
b.This list will be provided to the securities broker or dealer or
financial institution prior to the City conducting any investment
transactions with the institution.
B.Investment Advisors
a.The Financial Officer has the discretion to appoint one or more
investment advisors,registered with the Securities and Exchange
Commission under the Investment Advisors Act of 1940,to assist
in the management of all or a portion of the City’s investment
portfolio.
b.All investments made through such investment advisors shall be
within the guidelines of this Investment Policy.
4.Investment Committee:The Investment Committee consists of the Financial
Officer and at least 2 other employees of the City that are knowledgeable in
the area of governmental investments.The Investment Committee,at the
discretion of the Financial Officer,may also include up to 2 private sector
investment or banking professionals.The purpose of the Investment
Committee shall be to provide advice to the Financial Officer regarding the
operation of the investment program.
8.5 Safekeeping and Custody
1.Authorized Securities Brokers and Dealers and Financial institutions
A.The Financial Officer will maintainalist of financial institutions authorized
to provide investment services.The Financial Officer will also maintain a
list of approved securities brokers and dealers.This list may include
“primary”dealers or regional dealers that qualify under Securities and
Exchange Commission (SEC)Rule 15C3-1.
Financial Policy 8-Investments
EXHIBIT F TO RESOLUTION 2025-012
B.All financial institutions and securities brokers and dealers who wish to
provide investment services to the City must supply the following (as
appropriate):
a.Current audited financial statements;
b.Completed securities broker and dealer questionnaire;
c.Proof of National Association of Securities Dealers certification and
registration in the State of Colorado;and
d.Certification of their review,understanding and agreement to
comply with the City’s Investment Policy.
C.If a financial institution or securities broker or dealer wishes to enter into
a repurchase agreement with the city,the institution must sign a Master
Repurchase Agreement approved as to form and content by the City
Attorney’s Office.
D.The Financial Officer must conduct an annual review of the financial
condition of authorized financial institutions and securities brokers and
dealers.
E.Investment transactions must be executed with an authorized financial
institution or securities broker or dealer except in the following
drcum stances:
a.Commercial paper,banker acceptances and guaranteed investment
contracts may be purchased and sold directly from the issuer;
b.Mutual funds and money market funds may be purchased,sold and
held directly with the funds;
c.Investments in local government investment pools maybe
transacted directly with the pool;and
d.Bond refunding and lease escrow agreements will be executed as
provided in the bond and lease documents.
F.The Financial Officer will establish a safekeeping agreement with an
approved financial institution to act as a third party custodian.Investment
securities will be held for the City by the custodian.When applicable,the
Financial Officer shall establish a separate securities lending agreement
with the custodian bank The selection of the City’s primary depository
and primary custodian will be made through the City’s competitive
Request for Proposals process.
2.Delivety versus Payment All trades will be executed by delivery versus
payment to ensure that securities are deposited in an eligible financial
institution prior to the release of funds.Securities will be held by the City’s
third-party custodian as evidenced by safekeeping receipts.
Financial Policy 8—Investments 6
EXHIBIT F TO RESOLUTION 2025-012
3.Internal Controls:The Financial Officer is responsible for establishing and
maintaining an internal control structure designed to provide reasonable
assurance that the assets of the city are protected from loss,theft or misuse.
8 6 Suitable and Authorized Investments
Ma home rule city,the City may adopt a list of acceptable investment instruments differing
from those outlined in CR5 24-75-601.1.Pursuant to Article V of the City’s Charter the
Council has adopted the following Ordinances and Resolutions establishing the framework
under which the Financial Officer must conduct his duties:Ordinance 90,1993;Ordinance
108,1988,Resolution 85-134;and Resolution 82-70.Council may adopt additional
Ordinances or Resolutions that require modification of these investment tools.
I.Eligible Investments:City funds may be invested in the following:
A.Any securities now or hereafter designed as legal investment for
municipalities in any applicable statute of the State of Colorado;
B.Interest-bearing accounts or time certificates of deposit including
collateralized certificates of deposit and certificates of deposit through the
Account Registry Service,of financial institutions designated as
depositories for public moneys by the State of Colorado;
C.United States Treasury obligations for which the full t~ith and credit of the
United States are pledged for payment of principal and interest Such
securities will include but not be limited to:Treasury bills,Treasury notes,
Treasury bond and Treasury strips with maturities not exceeding five
years from the date of purchase;
V.Obligations issued by any United States government-sponsored agency or
instrumentality.Maturities may not exceed five years from the date of
purchase;
E.Obligations issued by or on behalf of the City;
F.Obligations issued by or on behalf of any state of the United States,
political subdivision,agency,or instrumentality thereof.At the time of
purchase the obligation shall have an investment grade rating of not less
than A.A-from Standard &Poor’s,Aa3 from Moody’s Investors Service or
AA-from Fitch Ratings Service.The ratings must be not less than above for
all agencies rating the debt,no split ratings are allowed;
G.Prime-rated bankers acceptances with a maturity not exceeding six
months from the date of purchase,issued by a state or national bank
which has a combined capital and surplus of at least 250 million dollars,
whose deposits are insured by the FDIC and whose senior long-term debt
Financial Policy B -Investments
EXHIBIT F TO RESOLUTION 2025-012
is rated at the time of purchase at least AA-by Standard and Poor’s,Aa3 by
Moody’s Investors Service,or AA-by Fitch Ratings Service.The ratings
must be not less than above for all agencies rating the debt no split ratings
are allowed;
H.U.S.dollar denominated corporate notes or bank debentures.Authorized
corporate bonds shall be U.S.dollar denominated,and limited to
corporations organized and operated within the United States with a net
worth in excess of 250 million dollars.At the time of purchase the
debenture or corporate note shall have an investment grade rating of not
less than AA-from Standard &Poor’s,Aa3 from Moody’s Investors Service
or AA-from Fitch Ratings Service.The ratings must be not less than above
for all agencies rating the debt no split ratings are allowed;
Prime-rated commercial paper with a maturity not exceeding six months
issued by U.S.corporations.At the time of purchase the paper shall be
rated Al by Standard and Poor’s and P1 by Moody’s Investors Service.If
the commercial paper issuer has senior debt outstanding,the senior debt
must be rated at the time of purchase at least AA-by Standard and Poor’s
or Aa3 by Moody’s Investors Service;
J.Guaranteed investment contracts of domestically-regulated insurance
companies having a claims-paying ability rating of AA-or better from
Standard &Poor’s at the time of purchase;
K Repurchase and reverse repurchase agreements.The structure of the
agreements (including margin ratios and collateralization)shall be
contained in the Master Repurchase Agreements.Repurchase agreements
shall include but are not limited to delivery-versus-payment,fri-party and
flexible repurchase agreements;
L.Local government investment pools authorized under the laws of the State
of Colorado with a rating of AAAm;and
M.Money market mutual funds regulated by the Securities and Exchange
Commission and whose portfolios consist only of dollar denominated
securities.
2.Repurchase Agreements
A.Before any repurchase agreements shall be executed with an authorized
securities broker or dealer or financial institution,a Master Repurchase
Agreement approved as to form and content by the City Attorney’s Office
must be signed between the City and the securities broker or dealer or
financial institution.
B.The Financial Officer will maintain a file of all Master Repurchase
Agreements.
Financial Policy 8-Investments 8
EXHIBIT F TO RESOLUTION 2025-012
C.In addition to the straight forward repurchase agreement wherein the
financial institution or securities broker or dealer delivers the collateral
versus payment to the City’s custodian for a fixed term at a fixed rate,the
City may enter into other types of repurchase agreements which may
include but not be limited to flexible repurchase agreements,ui-party
agreements and reverse repurchase agreements.
V.Repurchase agreements must be collateralized as provided in individually
executed Master Repurchase Agreements at a minimum of 102 percent
E.Zero coupon instruments will not be accepted as collateral.
F.The collateralized securities of the repurchase agreement can include but
are not limited to:U.S Treasuries,Collateralized Mortgage Obligations or
Agency securities.
8.7 Diversification and Liquidity
1.Diversification and AssetAllocation:It is the intent of the City to diversify its
investment portfolio.Investments shall be diversified to eliminate the risk of
loss resulting from over-concentration of assets in a specific maturity,issuer
or class of securities.Diversification strategies and guidelines shall be
determined and revised periodically by the Financial Officer.The investments
may be diversified by:
A.Limiting investments to avoid over-concentration in securities from a
specific issuer or business sector (excluding U.S.Treasury securities);
B.Limiting investment in securities that have higher credit risks;
C.Investing in securities with varying maturities;and
V.Maintaining a portion of the portfolio in readily available funds such as
local government investment pools,money market funds or short term
repurchase agreements to ensure that City liquidity needs are met
The maximum investment allowable for each investment category as a
percentage of the entire portfolio is as follows (excluding collateral for
repurchase agreements):
CASH AND CASH EQUIVALENTS 100%
TREASURY SECURITIES 90%
GOVERNMENT-SPONSORED AGENCY SECURITIES 90%
REPURCHASE AGREEMENTS 70%
LOCAL GOVERNMENT INVESTMENT POOLS 60%
Financial Policy 8—Investments 9
EXHIBIT F TO RESOLUTION 2025-012
CORPORATE NOTES OR BONDr 40%
BANK DEBENTUREr 25%
COMMERCIAL PAPER*25%
BANKER’S ACCEPTANCE~25%
MONEY MARKET FUNDS
AND MUTUAL FUNDS 15%
CD ACCOUNT REGISTRY SERVICE
(MAXIMUM 50 MILUON)15%
CERTIFICATES OF DEPOSIT 15%
GUARANTEED INVESTMENT CONTRACTS 5%
*A maximum of 10 percent of the portfolio may be invested in any one
provider or issuer.
2.Investment Maturity and Liquidity
A.A portion of the portfoiio should be continuously invested in readily
available funds such as local government investment pools,money market
funds,or short-term repurchase agreements to ensure that appropriate
liquidity is maintained to meet ongoing obligations.The City must at all
times maintain 5 percent of its operating investment portfolio in
instruments maturing in 120 days or less.
B.Reserved funds may be invested in securities exceeding 5 years if the
maturities of such investments are made to coincide as closely as possible
with the expected use of funds.
C.The weighted average final maturity limitation of the total portfolio,
excluding pension funds and long-term reserve funds,will not exceed 3
years.
D.The City may collateralize repurchase agreements with longer-dated
investments,final maturity not to exceed 30 years.
8.8 Reporting
1.Methods:The Financial Officer will prepare an investment report on a
quarterly basis.In addition,a comprehensive investment report may be
published on the City’s website on an annual basis.All investment reports will
be submitted in a timely manner to the City Manager.
Z Performance Standards:The investment portfolio will be managed in
accordance with the parameters specified within this Investment Policy.The
Financial Officer will establish a benchmark yield for the City’s investments
Financial Policy 8-Investments io
EXHIBIT F TO RESOLUTION 2025-012
equal to the average yield on the U.S.Treasury security which most closely
corresponds to the portfolio’s actual weighted average maturity.In order to
determine the actual rate of return on any portion of the portfolio managed by
an investment advisor,the Financial Officer must include all of the advisor’s
expenses and fees in the computation of the rate of return.
3.Marking to Market’The market value of the portfolio will be calculated at
least quarterly and a statement of the market value will be included in the
quarterly investment report
8.9 Policy Adoption
This Investment Policy will be reviewed at least every three years by the Investment
Committee,City Manager and the Financial Officer and may be amended by Council as
conditions warrant The Investment Policy may be adopted by Resolution of the Council.
Financial Policy 8—Investments 11
EXHIBIT F TO RESOLUTION 2025-012
Definitions
Agency:A bond,issued by a U.S.government-sponsored agency.The offerings of these agencies are backed
by the U.S.government but not guaranteed by the government since the agencies are private
entities.Such agencies have been set up in order to allow certain groups of people to access low cost
financing,especially students and first-time home buyers.Some prominent issuers of agency bonds
are Student Loan Marketing Association (Sallie Mae),Federal National Mortgage Association (Fannie
Mae)and Federal Home Loan Mortgage Corporation (Freddie Mac).Agency bonds are usually exemp
from state and local taxes,but not federal tax.
Average Life:The length of time that will pass before one-half of a debt obligation has been retired.
Bankers’Accentance:A short-term credit investment which is created by a non-financial firm and whose
payment is guaranteed by a bank.Often used in importing and exporting,and as a money market
fund investment.
Benchmark:A comparative base for measuring the performance or risk tolerance of the investment
portfolio.A benchmark should represent a close correlation to the level of risk and the average
duration of the portfolio’s investments.
Book Value:The value at which a security is carried on the inventory lists or otherfinancial records ofan
investor.The book value may differ significantly from the security’s current value in the market
Broker:An individual who brings buyers and sellers together for a commission.
Cash Sale/Purchase:A transaction which calls for delivery and payment ofsecurities on the same day that
the transaction is initiated.
Certificate of DeDosit (CD):A time deposit with a specific maturity evidenced by a certificate.
Collateralization:Process by which a borrower pledges securities,property,or other deposits far the
purpose of securing the repayment of a loan and/or security.
Commercial Paner:An unsecured short-term promissory note issued by corparations,with maturities
ranging from 2 to 270 days.
Coupon Rate:The annual rate of interest received by an investor from the issuer of certain types affixed
income securities.Also known as the “interest rate’~
Credit Ouality:The measurement of the financial strength of a band issuer.This measurement helps an
investor to understand an issuer’s ability to make timely inte rest payments and repay the loan
principal upon maturity.Generally,the higher the credit quality of a bond issuer,the lower the
interest rate paid by the issuer because the risk of default is lower.Credit quality ratings are
provided by nationally recognized rating agencies.
Financial Policy 8-Investments 12
EXHIBIT F TO RESOLUTION 2025-012
Credit Risk:The risk to an investor that an issuer will default on the payment of interest and/or princi pal
on a security.
Current Yield (Current Return);A yield calculation determined by dividing the annual interest received
on a security by the current market price of that security.
Debenture:A bond secured only by the general credit of the issuer.
Delivery versus Payment (DVP):A type ofsecurities transaction in which the purchaser pays for the
securities when they are delivered either to the purchaser or to their custodian.
Diversification:A process of investing assets among a range ofsecurity types by sector,maturity,and
quality rating.
Duration:A measure of the timing of the cash flows,such as the interest payments and the principal
repayment,to be received from a given fixed-income security.This calculation is based on three
variables:term to maturity,coupon rate and yield to maturity.The duration of a security is a useful
indicator of its price volatility for given changes in interest rates.
Federal Denosit Insurance Corporation (FDICb Afederal agency that insures deposits in member banks
and thrifts up to $100,000 ($250,000 through 12/31/2013).
Federal Funds:Funds placed in Federal Reserve banks by depository institutions in excess of current
reserve requirements.These depository institutions may lend fed funds to each other overnight or
on a longer basis.They may also transfer funds among each other on a same-day basis through the
Federal Reserve banking system.Fed funds are considered to be immediately available funds.
Federal Funds Rate:The interest rate that banks charge each other for the use of Federal funds.
Government Securities:An obligation of the U.S.government,backed by the fullfaith and credit of the
government These securities are regarded as the highest quality of investment securities available
in the U.S.securities market
Green Investments:Mutual funds that are considered “ethical investments.”These funds screen
companies to ensure that they have sound environmental practices such as:maintaining or
improving the environmenc industrial relations,racial equality,community involvement,education,
training,healthcare and various other environmental criteria.Negative screens include but are not
limited to:alcohol,gambling,tobacco,irresponsible marketing,armaments,pornography,and
animal rights.
lnte est Rate Risk:The risk associated with declines or rises in interest rates which cause an investment in
a fixed-income security to increase or decrease in value.
Investment-grade Obligations:An investment instrumentsuitable for purchase by institutional investors
under the prudent person rule.Investment-grade is restricted to those obligations rated BBB or
higher by a rating agency.
Financial Policy 8-Investments 13
EXHIBIT F TO RESOLUTION 2025-012
Liquidity:An asset that can be convened easily and quickly into cash without a substantial loss of value.
Local Government Investment Pool ILGIP):An investment by local governments in which their money is
pooled as a method for managing local funds.
Mark-to-Market The process whereby the book value or collateral value of a security is adjusted to reflect
its current market value.
Market Value:Current market price of a security.
Master Renurchase Am-eement A written contract covering allfuture transactions between the parties
to repurchase and reverse repurchase.Establishes each party’s rights in the transaction.
Maturity:The date on which payment of a financial obligation is due.The final state maturity is the date
on which the issuer must retire a bond and pay the face value to the bondholder.
Money Market Mutual Fund:Mutualfunds that invest solely in money market instruments (sho fl-term
debt instruments,such as Treasury bills,commercial paper,bankers’acceptances,repurchase
agreements,and federalfunds).
Mutual Fund:An investment company that pools money and can invest in a variety of securities,including
fixed-income securities and money market instruments.Mutual funds are regulated by the
investment company Act of1940 and must abide by the Securities and Exchange Commission (SEC)
disclosure guidelines.
National Association of Securities Dealers INASD1:A self-regulatory organization of brokers and
dealers in the over-the-countersecurities business.Its regulatory mandate includes authority over
firms that distribute mutual fund shares as well as other securities.
Net Asset Value.The market value of one share ofan investment company,such as a mutualfund.This
figure is calculated by totaling a fund’s assets which includes securities,cash,and any accrued
earnings,subtracting this from the fund’s liabilities and dividing this total by the number ofshares
outstanding.This is calculated once a day based on the closing price for each security in the fund’s
portfolio.
No Load Fund:A mutualfund which does not levy a sales charge on the purchase of its shares.
Portfolio:Collection ofsecurities held by an investor.
Primary Dealer:A group ofgovernment securities dealers who submit daily reports of market activity and
positions and monthly financial statements to the Federal Reserve Bank of New York and are
subject to its informal oversight
Real Estate Investment Trust (REIn:A company that buys,develops,manages and sells real estate
assets.Allows participants to invest in a professionally managed portfolio of real-estate properties.
The main function is to pass profits on to investors;business activities are generally restricted to
generation ofproperty rental income.
Financial Policy 8-Investments 14
EXHIBIT F TO RESOLUTION 2025-012
Renurchase Asreement 1Reno~:An agreement of one party to sell securities at a specified price to a
second party and a simultaneous agreement of the first party to repurchase the securities at a
specified price or at a specified later date.
Reverse Renurchase Agreement An agreement of one party to purchase securities at a specified price
from a second party and a simultaneous agreement of the first party to resell the securities at a
specified price to the second party on demand or at a specified data
Rule 2a-7 of the Investment Comnany Act:Applies to all money market mutual funds and mandates
such funds to maintain certain standards,including a 13-month maturity limit and a 90-day
average maturity on investments,to help maintain a constant net asset value of one dollar ($1.00).
Securities and Exchange Commission (SEC):Agency created by Congress to protect investors in
securities transactions by administering securities legislation.
Total Return:The sum of all investment income plus changes in the capital value of the portfolio.For
mutual funds,return on an investment is composed ofshare price appreciation plus any realized
dividends or capital gains.This is calculated by taking the following components during a certain
time period.(Price Appreciation)+(Dividends Paid)+(Capital Gains)=Totol Return
Treasury Bills:Short-term U.S.government non-interest-bearing debt securities with maturities o
no longer than one year.
Treasury Bonds:Long-term US.government debt securities with maturities of more than ten years~
Currently,the longest outstanding maturity is 30 years.
Treasury Notes:Intermediate U.S.government debt securities with maturities of two to ten years.
Tri-narty Repurchase AEreement:In a “normal repurchase”transaction there are two parties,the buyer
and the seller.A tn-party repurchase agreement adds a custodian as the third party to act as an
impartial entity to the repurchase transaction to administer the agreement and to relieve the buyer
and seller of many administrative details.
Wei2hted Averaee Maturity 1WAM~:The average maturity of all the securities that comprise a portfolio.
-The current rate of return on an investment security.Generally expressed as a percentage of the
security’s current price.
Yield Curve:A graphical representation that depicts the relationship at a given point in time between
yields and maW rity for bonds that are identical in every way except maturity.A normal yield curve
may be alternatively referred to as a positive yield curve.
Yield-to-Maturity:The rate of return yielded by a debt security held to maturity when both interest
payments and the investor’s potential capital gain or loss are included in the calculation of return.
Zero-Counon Securities:A security that is issued at a discount and makes no periodic interest payments.
The rate of return consists of a gradual accretion of the principal of the security and is payable at
par upon maturity.
Financial Policy 8-Investments 15