HomeMy WebLinkAbout1983-165-10/04/1983-ADOPTING THE FINANCIAL AND MANAGEMENT POLICIES RELATING TO THE 1984 FINAL BUDGET RESOLUTION 83- 165
OF THE COUNCIL OF THE CITY OF FORT COLLINS
ADOPTING THE FINANCIAL AND MANAGEMENT
POLICIES RELATING TO THE 1984 FINAL BUDGET
WHEREAS, the City Manager and City Council have reviewed various
financial and management policies in conjunction with the annual budget
process and five year plan, and
WHEREAS, the City of Fort Collins is committed to sound financial
planning and direction, and
WHEREAS, these policies form the basis for various decisions affecting
the 1984 final budget, and
WHEREAS, City Council wishes to formally adopt these financial and
management policies in conjunction with the adoption of the budget ending
fiscal year 1984
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT
COLLINS that the following financial and management policies be, and the
same hereby are, adopted as the basis for the resolution adopting the 1984
Budget for the City of Fort Collins
1 CATEGORIZATION OF CITY SERVICES
In 1983, the City Council reviewed and categorized all City services in
order to set priorities for allocating available money These categories
are
Basic or Core Services - these are services that are best performed at the
local eve anT are most closely linked to protecting the health and safety
of the citizens Legally mandated services or commitments are also included
in this category
Maintenance of Effort Services - these are services which the City has
traditionally prove a or w ich reflect a major capital investment re-
quiring an expenditure of funds to maintain
Quality of Life - these are activities which are provided for more spe-
cializedups and enhance the desirability of Fort Collins as a place to
live
These categories were applied to City services in the following manner
5e
—J
Basic or Core Services
Debt Payments
Fire
Light and Power
Police
Storm Drainage
Streets
Water and Sewer
Maintenance of Effort Services
Cemeteries
Engineering
Facilities
General Administrative
Services
Internal Service
Activities
Library
Park Maintenance
Street Lighting
Transfort
Quality of Life
Airport
Community Services
Golf
Lincoln Center
Museum
Open Space
Recreation
2 SALES AND USE TAX DISTRIBUTION
SALES AND USE TAX DISTRIBUTION
TOTAL
It 10 1/40 DISTRIBUTION
1968 1980 1982 PER 1t
General Fund 100% 25% --- 125%
General City Capital
Improvements --- 6% 25% 31%
Seven Year Capital Program
Operation & Maintenance --- 30% --- 300v
Street Debt Service --- 25% --- 25%
Transfort --- 10% --- 100
Reserves --- 4% --- 4%
TOTAL 100% 100% 25% 225%
-2-
J
The debt service for streets is to pay for the street rehabilitation
and new construction program begun in 1980 As the debt service payments
decrease, the difference between the debt service and the revenue generated
by 1/44 sales and use tax will be allocated as follows
1 Any difference between the debt service and the revenue generated
by 1144 sales and use tax up to $250,000 will be allocated to the
General Fund
2 Any difference between the debt service and the revenue generated
by 1/44 sales and use tax over $250,000 will be allocated to the
Capital Projects Fund for general City capital projects
3 WATER AND SEWER UTILITIES
Formally adopted financial policies are an important factor in plan-
ning the financial operations of the Water and Sewer Utilities Compre-
hensive financial policies should include statements concerning
o Net Income Requirements
e Capital Cost Financing
e Reserve Requirements
o Rate Requirements
Policy statements have been developed for each area listed above and
incorporated into the five-year Water and Sewer financial plan
NET INCOME
The net income of the Water and Sewer Utility shall be at least equal
to the annual cost of the following
- Principal reductions of outstanding bonds
- Loan repayments to Federal or State agencies
- Annual operating reserve increases
RESERVES
The following reserves shall be established and maintained in the appli-
cable utility
- Operating reserve at least equal to 2`6 of the projected annual
operating revenue
- Plant Investment Fee reserve equal to the annual fees less annual
cost allocated to System Expansions
- Capital reserve equal to the amount of bond proceeds available
at the end of one fiscal year to be expended in the next fiscal
year
- Debt reserve equal to the amount required by individual bond
ordinance
-3-
RATE REQUIREMENTS
Utility rates shall be set at a level to provide for the net incone
requirement in each fiscal year Levelized rate increases are preferred
and, when possible, should be achieved through levelized expenditures
CAPITAL COST FINANCING
Annual capital cost shall be identified as one of three types
1 Normal replacement of the existing system
2 System improvements that benefit the existing and future popula-
tion (System Improvements)
3 System expansions that benefit future populations (System
Expansion)
Normal replacements shall be financed on a Pay-As-You-Go basis from a
reserve for depreciation funded from current rates
System improvements shall be debt financed over the life of the improvement
and the annual de t service shall be funded from current rates
System ex ansion shall be funded on a Pay-As-You-Go basis from a combina-
tion o ant nvestment Fees and Contributions In Aid of Construction
Federal and/or State grants may be utilized to fund portions of or all
of capital costs
4 CAPITAL IMPROVEMENT POLICY
The development of the Capital Improvement Program has been significantly
modified in the 1984 Budget by Resolution -483-86, dated May 3, 1983
Council stated its intention "to develop and implement a program for
soliciting citizen involvement and participation in formulating a Capital
Improvements Program and the funding therefor" This was accomplished with
the adoption of Resolution #83-94, dated June 7 , 1983, creating a Citizen's
Advisory Committee on Project RECAP (RE-evaluation of CApital Projects)
Council directed the Citizen' s Advisory Committee on Project RECAP to make
recommendations not only on the capital improvement needs of the community,
but also on potential methods of financing those improvements
Accordingly, the development of the Capital Improvement Program was seg-
regated into two components
1) those staff-recommended projects for which specific funding
sources had already been identified, i e the "Utilities" portion
of the Capital Projects Fund (Sewer Projects, Storm Drainage Basin
Improvements and Water Projects) as well as the Parkland Projects
(Both Utilities and Parkland have specifically dedicated revenue
sources) , and
-4-
2) those staff-recommended projects for which funding sources had not
been identified, i e General City Capital Projects
This latter category was the subject of Project RECAP Utilizing Project
RECAP's recommendations as a base, staff added some projects and deleted
others and developed a program for 1984 General City Capital Projects
With the incorporation of General City Capital Projects into the 1984
Budget, the City of Fort Collins will continue to operate under its
existing Capital Improvement Policy
1 The City will make all capital improvements in accordance with the
adopted Capital Improvement Program and the Capital Project
Management Control System
2 The City will identify estimated costs and funding sources for
each capital project requested before it is submitted to City
Council
3 The City will use intergovernmental assistance to finance only
those capital improvements that are consistent with the Capital
Improvement Plan and City priorities and whose operating and
maintenance costs have been included in the operating budget
forecasts
The 1984 Budget continues to follow the capital financing policy adopted
with the 1983 Budget During the development of the 1983 Budget, an overall
strategy was developed to give direction on how capital projects should be
financed based upon the different types of capital improvements These
projects (excluding Water and Sewer) were categorized as
Replacement - capital expenditures relating to normal replacement
of worn or obsolete capital plant
• Expansion - capital expenditures relating to the construction of
new or expanded facilities necessitated by growth
Unusual - capital expenditures for improvement that enhance the
quality of life in Fort Collins and are consistent with the City' s
goals, but cannot be categorized as essential for the provision of
basic services or maintenance of life
The overall policy developed to finance capital improvements (excluding
Water and Sewer) addresses these three categories
REPLACEMENT
In general , capital expenditures relating to the normal replacement of
morn or obsolete capital plant will be financed by reserving an amount
-5-
of annual working capital provided from depreciation These projects
will be financed on a pay-as-you-go basis with debt financing considered
where appropriate The formula for computing the amount of reserves for
capital replacement will be integrated with the current Capital Reserve
Policy and Debt Financing Policy In those funds in which depreciation is
not accounted for, a method for calculating the annual depreciation of
replaceable assets will be developed in order to reserve an amount of
annual working capital for replacement
EXPANSION
The present policy concerning capital plant expansion relates to new growth
and will continue in effect This policy directs that these capital expend-
itures be financed primarily by new development in the form of development
fees, plant investment fees, and contributions-in-aid-of-construction
These projects will be financed primarily on a pay-as-you-go basis but when
the City' s share of the new improvements can be determined to benefit the
overall population in the future, debt financing may be appropriate This
policy will be integrated with the City' s present Capital Reserves and Debt
Financing Policies
UNUSUAL
The policy relating to unusual capital expenditures directs the City to
look to the ultimate beneficiary of each capital improvement in order to
determine the source of funding As projects are identified, they will be
funneled through a decision process in order to
0 determine whether projects are acceptable from the point of view of
municipal goal achievements or cost benefit analysis
0 evaluate each capital projects' relevant cash flow in order to
determine if a project is financially viable
0 prioritize capital improvements based upon these findings
5 RESERVE POLICY
Formally adopted reserve policies are an important factor in maintaining
the City of Fort Collins in good fiscal health
There are three primary types of reserves
0 Operating Reserves
0 Capital Reserves
0 Debt Reserves
-6-
The degree of need for these reserves differs based upon the type of fund
or operation involved However, one policy statement for each type of
reserve can be uniformly applied to all funds
OPERATING RESERVES
There are two types of operating reserves
1 An appropriated contingency which provides for unexpected or
unanticipated expenditures during the years
This is the amount of contingency budget, normally stated as part
of the operating budget
2 Revenue reserve of working capital is established to provide for
unforeseen revenue losses If something happens to the economy,
there is flexibility without worrying that current expenditures
will exceed the total revenue available
These reserves are not appropriated as part of the annual budget
but are utilized at the end of the fiscal year, if necessary The
amount of reserve is based upon potential revenue loss that would
most probably occur in a given fund
CAPITAL RESERVES (AS APPLIED TO UTILITIES)
Capital reserves are established in order to provide for normal replacement
of existing capital plant and additional capital improvements financed on a
pay-as-you-go basis
The amount of the reserve is determined by averaging the dollar value of
capital needs as shown in the Capital Improvement Program
A second type of capital reserve is an appropriated capital contingency,
which provides for the conceptual study and preliminary design of unan-
ticipated capital improvements
Debt financed capital improvements by definition are financed by the
proceeds of bond issues and do not require capital reserves
NOTE Because of the incorporation of Project RECAP into the 1984 Budget
process, specific guidelines for reserves have not been identified for
General City Capital Projects Such guidelines will be developed and
presented to Council for adoption at a later time
DEBT RESERVES
Debt reserves are established to protect bond holders from payment de-
faults Adequate debt reserves are essential in maintaining good bond
ratings and the marketability of bonds
-7-
Debt reserves are established by bond ordinance and normally provide
for a reserve equal to one-half of the average annual outstanding debt
service requirement
The reserve policy recommended that has been included in the 1984 budget
and five-year plan is as follows
The City will establish and maintain
OPERATING RESERVES
0 Equal to 2% of the annual operating expenditure budget by fund, to
protect against unanticipated expenditures,
• Equal to 2% of projected annual operating revenue by fund, for the
purpose of protecting against unexpected revenue losses,
CAPITAL RESERVES
0 Equal to the annual average of the five year projected additions
for the replacement and additions to the existing capital plant,
financed on a pay-as-you-go basis, for the purpose of providing
for capital improvement needs of the City,
0 Equal to 5% of the amount annually appropriated for capital con-
struction, for the purpose of providing for the costs of prelim-
inary study and design, and
DEBT RESERVES
Debt reserves as required by market conditions in concert with each
debt issued and established by bond ordinance
These policy statements are intended to apply to the various funds of
the City , however, it is recognized that various Federal , State, and
local laws and regulations, and specific financial policies may supercede
this reserve policy
6 DEBT POLICY
In 1981 , the City of Fort Collins adopted the following debt financing
policy
POLICY STATEMENT
The City of Fort Collins will use debt financing when it is appropriate It
will be judged appropriate only when the following conditions exist
1 When non-continuous capital improvements are desired
-8-
2 When it can be determined that future citizens will receive a
benefit from the improvement
When the City of Fort Collins utilizes long-term debt financing it will
ensure that the debt is soundly financed by
1 Conservatively projecting the revenue sources that will be uti-
lized to pay the debt
2 Financing the improvement over a period not greater than the
useful life of the improvement
3 Determining that the cost benefit of the improvement, including
interest cost, is positive
Additionally, the City has the following policies in relation to debt
financing
1 Total general obligation debt will not exceed 10% of assessed
valuation in accordance with the City Charter
2 Where possible, the City uses special assessment, revenue, or
other self supporting bonds instead of general obligation bonds
3 Fort Collins maintains good communications with bond rating
agencies about its financial condition
The 1984 Budget includes debt service payments and reserve requirements for
all debt currently outstanding for all proposed debt issues
7 INVESTMENT POLICY
In conjunction with the report on the Financial Condition of the City
of Fort Collins, 1981 , a number of financial management policies were
considered, including Investment Policies
With the 1983 Budget, City Council adopted the following Investment Poli-
cies, which remain in effect
1 The City will continue to analyze the cash flow of all funds on a
regular basis to ensure maximum cash availability
2 In order to obtain the best possible return on all cash invest-
ments, the City will continue to pool cash from several different
funds for investment purposes
3 Market conditions and investment securities will continue to be
analyzed on a daily basis to determine the maximum yield to be
obtained
-9-
4 The City will continue to invest at least 99% of its idle cash on
a continuous basis
5 The City will invest in quality issues and will comply with City
Charter and State Statutes regarding investment requirements
8 REVENUE POLICY
Generally, the City reviews estimated revenue and fee schedules as part of
the budget process Estimated revenue is conservatively projected for five
years and updated annually Proposed rate increases are based upon
0 Fee policies applicable to each fund or activity
0 The related cost of the service provided
0 The impact of infla-ion in the provision of services
0 Equitability of comparable fees
A Revenue Policy for the City of Fort Collins would include the existing
informal policies with the addition of
0 The establishment of a diversified and stable revenue system
to shelter the City from short run fluctuations in any one revenue
source over the next two years
The effect of developing an overall City Revenue Policy has been
0 Adoption of financial policies for the Water and Sewer Funds
regarding net income requirements, capital cost financing, reserve
requirements, and rate requirements
0 Rate increases for various fees and services provided by the City
9 PARKS AND RECREATION FEES
In 1981 , the City Council adopted the following fee policy for Parks and
Recreation
I The Recreation Division shall recover a minimum of 50% of its
total cost in revenue generated through fees and charges
2 Total direct revenue from all Recreation programs shall not fall
below a 1000M recovery of total direct costs
3 Categories have been created for the Recreation programs in
order to evaluate which programs must cover total or partial
expenditures These categories are
-10-
A Total Support
1 Sports
2 Dance and Fitness
B Partial Support
1 Aquatics
2 Outdoor Recreation
3 Arts and Crafts
4 Special Interests
C Minimal Support
1 Senior Citizens
2 Special Events
3 Therapeutics
4 Youth Centers
5 Northside Recreation
Total revenue from fees and charges shall cover a minimum of 80%
of "Total " and "Partial" support program costs The difference
between 8000 and 100% will be supported by the General Fund as well
as for those programs requiring minimum support
4 Revenue generated from rentals, concessions, and other miscella-
neous sources shall be considered an equal priority with class
registrations when establishing fees and charges
5 The Recreation Division shall provide designated programs for
senior citizens and developmentally disabled persons at 1/2 the
established fee and to low-income citizens at 1/3 the established
fee
6 The Recreation Division shall charge rental for rooms, pool time,
gym, ball field, and special equipment, as specified in written
policies
7 An admission fee shall be charged at the Northside Community
Center for use of the weight room, locker room, and gym, during
drop-in hours
8 Solicitation of funds through donations, fund raising events,
non-traditional sources, and various other needs shall be encour-
aged by the Parks and Recreation Advisory Board and City Council
Funding collected for any special purpose shall be earmarked for
that purpose, and the utilization of foundations for the further-
ance of this goal shall likewise be encouraged
The 1984 Recreation Budget and fees have been developed utilizing the
policy as adopted for 1981
-11-
10 PAYMENT-TN-LIEU-OF-TAXES
In accordance with the City Charter regarding utility accounts, the
City charges an estimate of the amount of property taxes and franchise
fees that would be charged to each utility if owned privately Currently,
the City levies a payment-in-lieu of taxes (P I L 0 T ) against the
Water, Sewer, and Light and Power utilities
In 1981 , City Council approved a policy to reduce the rates of contri-
bution to the General Fund by each of the utilities in an effort to
0 establish a rate more comparable to the rate that would be charged
if privately owned, and
0 provide a more consistent rate for all utilities
A five year program to achieve this objective was adopted for 1981
The City Council set the PILOT rates for 1982 to achieve the objec-
tives established in 1981 As a result, the PILOT rates for the Water,
Sewer, and Light and Power utilities will be 5% of operating revenues
per year for each utility This policy reduces the amount of income
the General Fund will receive from the 'Rater and Sewer Funds each year
This reduction has been incorporated in the General Fund 1984 Budget
In conjunction with the 1984 Budget, payments-in-lieu of taxes from the
Light and Power Fund will be adjusted by the cost of streetlighting within
the City This accounting adjustment will not impact the projected ending
fund balance in the General Fund or Light and Power Fund
11 ADMINISTRATIVE CHARGES
The General Fund provides services to all funds requiring a formula
for the allocation of Administrative Charges The formula approved in
1981 is
• Allocation of 50% of the cost based upon the ratio of each fund' s
budget (operation, maintenance, and capital ) to the total City
budget, and
0 Allocation of 50% of the cost based upon the number of City employ-
ees in each fund to the total number of City employees
This policy was applied to all funds in 1984 with the exception of those
funds which are subsidized by the General Fund
12 ENTERPRISE FUNDS
The City currently has six Enterprise Funds They include Cemeteries,
Golf, Light and Power, Sewer, Storm Drainage, and Water The Enterprise
-12-
Fund classification has been used to account for various services for which
there exists a significant potential for financing through user charges In
many of these funds a subsidy from the General Fund has been necessary to
cover operating expenses Historically, services were accounted for in an
enterprise fund only if they were financed more than 50% by user charges
In the 1984 Budget, all Enterprise Funds, except for Cemeteries, are
recovering 100% of their costs in 1984-88 Cemeteries Fund anticipates
recovery rates of 53 to 560V in the upcoming five year period
There has been a nationwide trend towards the regulation of the demand
for governmental services through user fee mechanisms The Fort Collins
City Council supports this concept The long term goal of all enterprise
accounts is self sufficiency Towards this end, those funds which are not
presently self sustaining shall incrementally adjust their rate structures
to achieve a positive income position
Those operations Nhich cannot achieve a positive income position within a
five year timeframe, may be accounted for as subsidized operations and
not as Enterprise Funds In the case of the Cemeteries Fund, efforts will
be undertaken to improve recovery rates in 1984 and beyond Possible
reclassification will be considered during 1984, if needed
13 ENERGY
The City recognizes a responsibility in energy management and conservation
As a consumer, the City strongly encourages building retrofits, alternate
fuels, and changes in operating practices which will save the City money or
enable it to benefit from new technologies
As the operator of an electric utility and a member of a power generation
cooperative, the City is an energy provider City Council is therefore
interested in helping its consumer public reduce the energy it uses
City Council , recognizing certain responsibilities for leadership and
regulation which are inherent in local governments, is willing to shoulder
some of the risks which innovation and being first in the field entail
Towards these ends, the City Council will look for implementation of the
following programs and policies
1 The in-house Energy Aanagement Program will continue to hold a
high priority The decentralized approach has worked well and
because this strategy promotes more innovation and greater depart-
mental involvement, it remains the preferred approach
2 The principal goal of the program is cost savings To this end,
$115,000 has been included in the 1984 Budget for energy conser-
vation retrofit work in City facilities
-13-
3 Whenever possible, and to the extent practical , life cycle costing
will be used in developing bid specifications and awarding con-
tracts
4 The greatest long-term benefits from energy conservation will
result from broad participation by the community To encourage
this participation, a commum ty education program will be devel-
oped It will address consumer awareness, the impacts of conserva-
tion, and other information the community will need to deal with
energy issues Like all elements of the Energy Management Program,
this segment will be addressed by departments and coordinated
through the City Manager' s Office
5 To further encourage energy conservation , City Council will
look for ways to utilize community resources for community prob-
lems The zero interest loan program is one example
6 City Council recognizes the important role of the private sector
in long-term energy conservation and will take steps to be in-
volved with the community in a way which encourages energy conser-
vation in building design and community layout
7 The alternate fuels program will be contrived and expanded,
insuring operating cost savings and a reduction of vulnerability
to foreign oil reliance
14 TRANSFORT
BACKGROUND
The current Transfort System is financed by
A contract with CSU
• User fees (non-CSU)
0 A General Fund operating subsidy
The 1984 Budget includes a continuation of this City' s commitment to the
Transfort and Care-A-Van services A General Fund subsidy of $684 thousand
is expected to be partially offset by incoming Federal revenues of $348
thousand, resulting in reduced City subsidies of $295 thousand for Trans-
fort and $41 thousand for Care-A-Van Since the federal mass transit
funding has not been formally approved at this time, the possibility exists
that the City' s subsidy may be higher than currently projected An in-
creased marketing effort is planned during 1984, with a goal of improving
Transfort ridership by 351. and decreasing the needed City subsidy accor-
dingly
-14-
ACTION
The City will work towards establishing a Quality Transfort System as
soon as is practicable, to be phased in as funds become available Such a
system could provide for the following
0 Nine buses serving 85% of the community and all major service
areas at reasonable intervals
Operation of the system 14 hours per day, 6 days a week
Operation of a downtown shuttle
Partial funding by fares
Working towards the Quality Transfort System, the City designates Transfort
to be an essential service to all the community, and will pursue coordina-
tion efforts with Care-A-Van and the School District, grant awards, and
increased fees through adve-tising and contracts
15 STORM DRAINAGE
In accordance with the City' s continuing commitment to provide storm
drainage lines and facilities within subdivided and developing areas
of the City, the Storm Drainage Utility was established in 1980 for
the purpose of paying for the cost of capital construction and for the
associated operation and maintenance costs of the Storm Drainage Program
A monthly storm drainage utility fee was implemented in 1981 to provide
financing for operation and maintenance costs
In past years, funding for capital construction and development of basin
master plans was provided by the Seven Year Capital Fund With Seven Year
Capital monies expended, alternative financing for capital improvements had
not been identified
In order to address the storm drainage capital needs, the City has devel-
oped master plans of storm drainage capital requirements for each basin In
an effort to balance storm drainage risk and liability, the Storm Drainage
Board has recommended a twenty (20) year storm drainage capital program
that relates to the system requirements of each basin This twenty (20)
year program provides for the installation of storm drainage improvements
in existing and developing areas of the City where a positive cost/benefit
ratio exists for each project
A basin fee for capital construction has been included to finance these
improvements Future and existing developments would contribute to the cost
of these facilities based upon the benefits to be derived from the capital
construction
The basin fee for new and existing developments would depend upon the
improvements required in each basin, the intensity of existing and proposed
development, and the size of each basin
-15-
A minimum fee will allow critical storm drainage improvements to begin in
undeveloped areas while improvements to existing areas are further reviewed
in terms of risk and consensus
16 ART IN PUBLIC PLACES
The City of Fort Collins is encouraging the development of the arts as a
highly satisfying end in itself, but also to improve the quality of life
via creative surroundings in the community Visually a community is
sterile until the quality of the environment is enhanced by the addition
of visual arts to public buildings, parks, and plazas To this end, City
Council and staff have developed a program to provide art in public places
for the City of Fort Collins
1 Art in Public Buildings
An art acquisitior program for the City' s major public buildings
housing employees and for public gathering places was developed
in 1982 As appropriate works of art are identified, staff will
make the necessary recommendations to Council
2 Art in the Parks
The budget for each new park will include $1,000 to $5,000 for
active sculptures and passive art as a part of the unique park
experience This is to be designed into the new park construction
schedule
3 Jury Policy
A policy for a Jury of at least three persons with diversified
professional arts background will be established to determine
commissions and selections of artworks for public places
Jurying will assure that the selections will have a universal
appeal and relieve any single person of the responsibility of
selection for a cross-section of tastes
4 Center for the Study of Contemporary Art
The City staff and community will be encouraged to become involved
with CSU in the development of the Center for Contemporary Art
This should expand the community' s awareness and appreciation of
contemporary art
17 PENSIONS
The City of Fort Collins contributes to five (5) pension plans, including
-16-
e Police
• Fire
• General Employee Retirement
• State Pension - Police
State Pension - Fire
The Police, Fire, and General Employee Retirement Plans are administered by
the City of Fort Collins The rate of contribution for the City admini-
stered plans is based upon an annual actuarial analysis for the normal cost
and unfunded liability of the number of employees participating in each
pension plan
In 1981 , an actuarial study of the costs and benefits of each plan was
completed which recommended
• The reduction of the City' s normal contribution rate due to changes
made in the actuarial assumptions
The amortization of the unfunded liability over a twenty (20)
year period in order to provide for soundly financed pension
plans
• An adjustment to the benefits provided by the General Employee
Retirement Plan in order to maintain comparability with benefits
provided by other front range communities
Based upon City Council action, beginning in 1982, the pension policy
is
1 The City will maintain contribution rates at a level sufficient to
meet all current normal costs of each pension plan
2 Any unfunded liability incurred by the individual pension funds
will be amortized over a period not to exceed twenty (20) years
3 A thrift plan will be added to the general employees retire-
ment plan to maintain comparability with benefits provided by
other Front Range communities
The 1984 rate requirements to continue this policy are
GENERAL
NORMAL COSTS POLICE FIRE EMPLOYEE THRIFTEPLAN
estimate
City Contribution 8% 8% 4 385% 3 %
Employee Contribution 8% 8% -- 3 %
TOTAL 160 16% 4 385% 6 %
-17-
UNFUNDED LIABILITY POLICE FIRE EMPLOYEE TOTAL
City Contribution E 46,000 $125,000 $227,000 $398,000
18 MEDICAL INSURANCE
The City of Fort Collins entered into a partially self-funded medical
insurance program in October, 1981 This program allowed the City to cut
out profit paid to a private carrier, invest available money (at higher
rates) , and maintain a better cash flow The initial savings were as high
as expected and the program continues to provide a cost effective and very
desirable employee fringe benefit
The partially self funded insurance program is enhanced by a consortium of
cities to collectively bid administrative services, stop-loss insurance for
unexpected emergencies, and life and accidental death and dismemberment
insurance resulting in lower rates
The 1984 Budget continues the partially self-funded medical insurance
program for City employees
19 LEASE/PURCHASE
The City of Fort Collins has used lease/purchase financing for the provi-
sion of new and replacement equipment In 1981 , this policy was extended to
the purchase of new and replacement vehicles and rolling stock in order
to
ensure the timely replacement of vehicles and equipment,
ensure that annual vehicle replacement requirements are included in
the annual budget
Other advantages that lease/purchase financing can offer over the tradi-
tional cash method of financing are
1 Decreasing the impact of inflation on the purchase of new and
replacement equipment
2 Reducing the initial impact of the cost to user departments by
enabling acquisition costs to be spread over the useful life of
the equipment
3 Safeguarding the opportunity to use cash assets to earn higher
interest than the interest cost of lease/purchasing
Finally , it should be noted that the City is able to discontinue the
equipment leases at its discretion so that future City Councils will
have the option to continue or discontinue the policy of lease/pur-
chasing City equipment
-18-
20 PRIVATE CONTRIBUTIONS
In reviewing the Quality of Life Services, such as Recreation, Lincoln
Center, and the Library, it was determined that the City should make a
greater effort in securing private contributions for these ongoing programs
and services
Quality of life programs represent an "extra" that we have been able
to provide in Fort Collins in the past and may not be able to provide
at the same level without additional support in the future
During 1981 , the Friends of the Library implemented a fund drive to
purchase an electronic sensing device to protect against the loss of
library materials and the Lincoln Center has actively solicited contribu-
tions for the purchase of equipment to increase the utilization of the
facility Contributions such as these reflect the community's willingness
to support the quality of life services provided by the City without
Jeopardizing other basic and maintenance of effort activities
(In the 1984 Budget, the Library has been reclassified from Quality of Life
to Maintenance of Effort Service, but funding sources other than City
contributions will continue to be sought )
21 REVENUE SHARING
In order to avoid dependency upon federal funds that may not continue for
basic or core service areas, the City currently utilizes Revenue Sharing
monies only for one-time and/or capital costs The exception to this
policy is the use of Revenue Sharing funds for social service programs on
an on-going basis h e , private, non-profit agency contributions, Property
Tax and Utility Rebate Programs, and the Volunteer Program)
The 1984 Revenue Sharing Program provides for the following expenditures
GENERAL CITY CAPITAL PROJECTS S 570,000
Library Books $ 115,749
Energy Program 115,700
Computer/Capital Equipment 208,551
Development of Air Quality Monitoring Program 100 000
GENERAL FUND S 540,000
Contribution to Community Service Agencies $ 143,825
Volunteer Program 18,718
Utility Charge and Property Tax Rebate for 137,457
Senior Citizens
Public Housing Local Financing 100,000
COMMUNITY SERVICES 8 PUBLIC HOUSING S 400,000
CITY EQUIPMENT BUILDING DEBT PAYMENT $ 45,000
TOTAL $1 ,555,000
-19-
22 REBATE PROGRAMS
The City recognizes that certain segments of the population, specifically
handicapped and senior citizens on fixed incomes, are unable to keep pace
with increasing taxes and utility costs The City has, therefore, estab-
lished Property Tax and Utility Charge Rebate Programs to provide finan-
cial assistance to those applicants who qualify under established guide-
lines (e g , income, residential , disability certification, etc ) Income
guidelines are adjusted periodically in accordance with State income levels
established for such programs
The City will continue to maintain these programs and will adjust income
guidelines and rebate amounts as necessary
23 CULTURAL SERVICES & FACILITIES FEE POLICY
Background
The Cultural Services and Facilities Fund shall budget to recover a minimum
of 4000 of its total cost in revenue generated through fees and charges
This shall be accomplished through implementing the following 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 The difference between 550.
and 100% will be funded by a transfer from the General Fund
2 The Cultural Services and Facilities Administration and the Museum
and Historic Landmarks budgets provide minimal financial support
and will be funded by a transfer from General Fund
3 A rental fee for Avery House shall be reviewed annually and
charged on rooms not used by Poudre Landmarks
4 Major capital improvements and renovations will be financed
through sources other than Cultural Services and Facilities
Fund
5 Solicitation of funds through donations, fund-raising events, and
non-traditional sources shall be encouraged by the City Staff,
Lincoln Center League, the Cultural Resources Board and the City
Council
Funding collected for any special purpose shall be earmarked for
that purpose, and these funds will be processed through the Fort
Collins Foundation
-20-
ACTION
The 1984 Cultural Services and Facilities Budget and fees have been de-
veloped utilizing this policy
24 PERFORMANCE PAY PLAN
Background
The City' s goal as an employer is to attract and keep quality employees
To help accomplish this goal , the City has established a performance pay
plan based on the upper third pay philosophy The upper third pay philos-
ophy says that after a survey is made of other organizations in the rel-
evant labor market, the pay for Fort Collins' employees will rank in the
upper third of those organizations surveyed
The performance pay philosophy has been maintained for five general reasons
1 To attract quality employees
2 To retain quality employees
3 To operate the City with fewer employees than comparable ,juris-
dictions
4 To provide an incentive and a reward for productivity
5 To recognize cost savings generated by productive employees
The maintenance of the upper third philosophy can be Jeopardized by a slow
economy The City shall implement plans to accomodate the upper third pay
philosophy through sound financing mechanisms
ACTION
Every effort will be made to provide the economic adjustment necessary for
the upper third by January of each year If this is not financially
feasible, as much as can be provided (given the priority demands on avail-
able resources) will be given in January
In April , Council will review the costs of the "upper third" pay plan and
ways to fund it based on savings generated and any increased revenue
growth At that time, Council will implement all or as much of the upper
third as can be soundly financed
25 OPEN SPACE AND TRAILS - ACQUISITION AND DEVELOPMENT
A subcommittee of three Councilmembers has been established to develop a
formal City policy dealing with the acquisition and development of Open
Space and Trails For the purposes of the 1984 Budget, it has been assumed
that this use would be the most appropriate for the utilization of funds
received from the Colorado State Lottery
-21-
26 TAX REFORM PROGRAM
The basic financial philosophy of the City of Fort Collins calls for a
soundly financed and balanced budget, with a goal of improved equity in the
revenue-producing mechanisms available to the City With these fundamental
ideas in mind, a two year Tax Reform Program is recommended
This program will increase the property tax for one year until sub-
stitute revenues are received from new revenue sources, and then will
be cut back, new revenue sources will spread the tax load burden more
equitably, nuisance taxes will be eliminated, new revenues will be
earmarked for specific purposes
The General Fund' s two main revenue sources at present are Property and
Sales Taxes, which account for almost three-quarters of total additions to
the General Fund in the 1984 Budget The Colorado Legislature' s passage of
Constitutional Amendment #1 in 1983 has caused changes in assessed valua-
tions used in property tax computations, and assessed values for the City
are expected to drop off slightly in 1984 requiring an increase in the
City' s mill levy simply to compensate for this drop in revenue base The
1984 Budget provides for an increase from 10 7 to 13 5 mills in Property
Tax The growth of 2 8 mills consists of 1 27 mills to partially compen-
sate for the reassessment ,lust described and to maintain existing service
levels for the Poudre Fire Authority, 1 1 milts to cover operation and
maintenance costs for park improvements funded by the 1981 Parks Bond
Issue, and 0 926 mills to cover increased Parks Debt Service costs In
order to comply with a 13 5 mill levy limitation as directed by Council , a
reduction of 0 496 mills is reflected for general operation and maintenance
costs Other General Fund revenues will need to be applied to compensate
for the mill levy reduction An increase in the City sales tax rate was
considered, but no increase in the rate is included in our projections
In an effort to ease the Ci ty' s increasing reliance on property tax as a
revenue source and to expand and equalize the tax base, a number of actions
are proposed in our two year Tax Reform Program As the reforms are imple-
mented, our plan is to reduce the property tax mill levy below the 1984
level of 1 mil s But we need t e increase in property taxes tor 1964
as a transition to the reforms
Other potential revenue generating mechanisms, and modifications to present
sources which will be examined during our 1984-85 Tax Reform Program are
0 Entertainment Tax - would be levied on the consumers of all
forms of entertainment offered within the City for profit
Proceeds would be specifically earmarked for use before imple-
mentation
0 Hotel /Motel Room Tax - will be examined and potentially
implemented during 1984 This would be a tax on discretionary
expenditures, which could generate revenues in excess of
-22-
r
$100,000 annually, to be paid primarily by visitors to Fort
Collins Proceeds of such a tax would be specifically earmarked
for use before implementation
0 Real Estate Transfer Tax - has been identified as a potential
revenue source for the years 1985 and beyond which would
generate increasing revenues as the home building and sales
activities revitalize in the City
0 Business Occupation Tax - will be considered This would be a
fee levied annually on all businesses in the City based on the
number of employees and would be assessed in conjunction with
the collection of local economic data which would enable better
long range planning activity to be undertaken by the City
0 Elimination of Various Licensing Requirements - with the
identification of potential new revenue generating mechanisms,
it will be possible to eliminate the licensing of certain
business activities, with a reduction in the number of "nui-
sance" licenses and a concentration on simplification of the
licensing process
While this list is not intended to represent all of the potential modifica-
tions which will be examined during the upcoming Tax Reform Program, it is
illustrative of the City' s intention to broaden and diversify its tax base
By determining whom such taxes impact the most, a better mechanism for
eliminating the regressive nature of certain taxes can be developed By
increasing the total revenues generated, without adversely impacting our
citizens, additional funds could be allocated to our City' s growing need
for more expenditures in its Capital Improvement Program
Passed and adopted at a regular meeting of the City Council held this
4th day of October, 1983
ftw� fr7
r yo
ATTEST
City Clerk
-23-