HomeMy WebLinkAbout1990-102-07/03/1990-1991 ANNUAL BUDGET FINANCIAL POLICIES MANAGEMENT RESOLUTION 90- 102
OF THE COUNCIL OF THE CITY OF FORT COLLINS
ADOPTING THE FINANCIAL AND MANAGEMENT POLICIES
RELATING TO THE 1991 ANNUAL 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 financial plan; and
WHEREAS, the City of Fort Collins is committed to sound financial
planning; and
WHEREAS, these policies establish guidelines for the various decisions
affecting the 1991 Annual Budget and long-range financial plans; and
WHEREAS, the City Council wishes to formally adopt these financial and
management policies in conjunction with the adoption of the budget for the
fiscal year beginning January 1, 1991 and ending December 31, 1991.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT
COLLINS, that the 1991 Financial and Management Policies attached hereto as
Exhibit "A", and incorporated herein by reference be, and the same hereby
are, adopted as the basis for the Resolution adopting the 1991 Annual
Budget for the City of Fort Collins.
Passed and adopted at a regular meeting of the City Council held this
3rd day of July, A.D. 1990.
Kayor
AT EST:
City Clerk
FINANCIAL & MANAGEMENT POLICIES
TABLE OF CONTENTS
PAGE
Overview for Financial & Management Policies. . . . . . . . . . . . . . . . . . 1
Section 1 General
1. 1. Budget Submittal and Presentation. . . . . . . . . . . . . . 2
1. 2 . Budget Process and Philosophy. . . . . . . . . . . . . . . . . . 3
1. 3 . Categorization of City Services. . . . . . . . . . . . . . . . 8
Section 2 Revenue Policies
2 . 1. Revenue Review and Projection. . . . . . . . . . . . . . . . . . 10
2 . 2 . Sales and Use Tax Distribution. . . . . . . . . . . . . . . . . 10
2 . 3 . General Fund Fees and Taxes. . . . . . . . . . . . . . . . . . . . 11
2 . 4 . Private Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3 Financial Administration
3 . 1. Administrative Charges. . . . . . . . . . . . . . . . . . . . . . . . . 12
3 . 2 . Building Maintenance Costs. . . . . . . . . . . . . . . . . . . . . 13
3 . 3 . Lease/Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3 . 4 . Medical Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3 . 5. Payment In Lieu of Taxes (PILOT) . . . . . . . . . . . . . . . 15
3 . 6 . Pension Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3 . 7 . Performance Pay Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3 . 8 . Poudre Fire Authority - Revenue Allocation
Formula. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3 . 9 . Rebate Programs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3 . 10. Car Allowance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4 Governmental and Proprietary Funds
4 . 1. General Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4 . 2 . Enterprise Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4 . 3 . Internal Service Funds. . . . . . . . . . . . . . . . . . . . . . 24
4 . 4 . Special Revenue and Debt Service Funds. . . . . . . . . 24
Section 5 Capital Improvement Funds
5. 1. Citizen Participation. . . . . . . . . . . . . . . . . . . . . . . . . . 27
5. 2 . Capital Improvement Program. . . . . . . . . . . . . . . . . . . . 27
Section 6 Reserve Policies
6. 1. Policy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6. 2 . Types of Reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7 Cash Management & Investment Policy
7 . 1. Policy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7 . 2 . Scope. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7 . 3 . Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7 . 4 . Delegation of Authority. . . . . . . . . . . . . . . . . . . . . . . . 33
7 . 5. Prudence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7 . 6 . Eligible Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7 . 7 . Reporting and Review. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7 . 8 . Ethics and Conflicts of Interest. . . . . . . . . . . . . . . 35
7 . 9 . Policy Revisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8 Debt Policies
8 . 1. Policy Statement. . . . . . . . . . . . . . . . . . . . . . . 37
8 . 2 . Authorization for Municipal Borrowing. . . . . . . . . . 37
8 . 3 . Conditions for Using Debt. . . . . . . . . . . . . . . . . . . . . . 38
8 . 4 . Debt Indicators and Target Levels of Debt. . . . . . 39
8 . 5. Sound Financing of Debt. . . . . . . . . . . . . . . . . . . . . . . . 40
8 . 6. Financing Methods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
OVERVIEW FOR FINANCIAL AND MANAGEMENT POLICIES
THE BUDGET REPRESENTS THE PROCESS BY WHICH FINANCIAL POLICY IS
MADE, IMPLEMENTED AND CONTROLLED. FOR THE CITY OF FORT COLLINS,
DIRECTION FOR THE ANNUAL BUDGET EMANATES FROM MANY DISTINCT
SOURCES. THE CHARTER PROVIDES THE BASIC LEGAL REQUIREMENTS AND TIME
LINES FOR THE PROCESS. COUNCIL GOALS, ORDINANCES AND RESOLUTIONS
PROVIDE ADDITIONAL DIRECTION AND RESPOND TO THE NEEDS OF THE
COMMUNITY. SPECIFIC FINANCIAL POLICIES ARE ALSO FOUND IN CAPITAL
IMPROVEMENT PLANS, IN GRANT APPLICATIONS, AND IN ADMINISTRATIVE
DOCUMENTS.
AS DESCRIBED HEREIN, THE FINANCIAL AND MANAGEMENT POLICIES ARE A
COMPENDIUM OF ALL CITY POLICIES THAT SHAPE THE ANNUAL BUDGET. THEY
ARE INTENDED TO ASSIST THE COUNCIL AND THE CITY MANAGER IN
PREPARING THE ANNUAL BUDGET AND HELP COMMUNICATE TO RESIDENTS AND
CUSTOMERS HOW THE COMMUNITY GOALS ARE BEING ADDRESSED.
1
GENERAL
1. 1. BUDGET SUBMITTAL AND PRESENTATION
(a) On or before the first Monday in September of each year,
the City Manager shall submit to the City Council a
proposed budget for the ensuing budget year with an
explanatory message. The proposed budget shall provide
a complete financial plan for each fund of the City. It
shall also 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 recommendation for
the ensuing year.
The budget estimates are open to the public for
inspection and copy. Within ten days City Council sets
times for public hearings, at which time the public may
comment upon the proposed budget. Before the last day of
October of each year, the Council shall adopt the budget
for the ensuing fiscal year.
(b) The City of Fort Collins is committed to presenting a
sound financial plan for operations and capital
improvements. To this end, the City utilizes conservative
revenue forecasts and:
1 . Prepares separate five-year financial plans for
operations and capital improvements;
2 . Allows staff to manage the operating and capital
budgets, with City Council deciding allocations in
both;
3 . Adopts financial and management policies which
establish guidelines for five-year financial plans;
4 . Establishes target budgets yearly for all funds
based upon adopted policies;
5 . Appropriates the next year' s annual budget in
accordance with the City Charter;
6 . Adjusts the annual budget to reflect changes in the
local economy, changes in priorities, and receipt
of unbudgeted revenues;
7 . Organizes the budget so that revenues are related
to expenditures as much as possible;
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8 . Provides department managers with immediate access
to revenue and expenditure information for
controlling their annual expenditures against
appropriations;
9 . Utilizes a performance measurement system for all
activities in the City;
10 . Evaluates recommendations which have a budget impact
in light of annual appropriations and five-year
financial plans.
1.2 . BUDGET PROCESS AND PHILOSOPHY
(a) Charter Requirements
The City Charter requires a budget to be adopted for the
ensuing fiscal year "before the last day of October of
each year. " A single appropriation ordinance is presented
to Council at the first meeting in October of each year,
containing the appropriations for all City funds for the
ensuing year.
(b) Basis of Accounting
The accounts of the City are organized on the basis of
funds and account groups, each of which is considered a
separate accounting entity. The operations of each fund
are accounted for with a separate set of self-balancing
accounts that comprise its assets, liabilities, fund
equity, revenues, and expenditures or expenses.
In Governmental Funds (General Fund, Special Revenue and
Debt Service Funds, and Capital Projects Funds) , the
modified accrual basis of accounting is used. Revenues
are recognized in the accounting period in which they
become available and measurable. Expenditures are
recognized in the accounting period in which the
liability is incurred.
In Proprietary Funds (Enterprise Funds and Internal
Service Funds) , the accrual basis of accounting is used.
Revenues are recognized in the accounting period in which
they are , earned and become measurable. Expenses are
recognized in the accounting period incurred.
Although classified as Special Revenue Funds for
budgetary purposes, the City' s General Employees '
Retirement and Police Pension Funds are classified as
Trust and Agency Funds for Accounting purposes. The Fire
Pension Fund is shown in Other Governmental with Poudre
Fire Authority. Trust and Agency Funds are used to
account for assets held by the City in a trustee
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capacity, or as an agent for others. Revenues and
Expenditures in these funds are recognized on the basis
consistent with the fund' s accounting measurement
objective. For Pension Funds, the accrual method of
accounting is used.
(c) Adoption Process
The annua}-budget-preeess is based-upon---eha3!tter
re�u3r-emerrts and Eby esrz F4naneial: and
Management--Peri,e ies.--In--M e
year-revenu,( prajeetiens and submit therc-te t4ie-43aafi
a ,a-Reaeaeffiee, whieh eleveleps rget-badgets-fer-
eaeh—department, based—upen—pre-jeeted available
resourees-
Depather-_budged-deveI opment in April,
baeeuponr t et Maniaarzempi�ed lip-Sudgeb
and Research. fudge` are `_•rued `_nbe Budget and
Research zn--May;ale with y -ana4yees-=elating-te
matters -knv-el in iin t-TR
y Nvtt
E e ttne i prig-is tnrneee t
All funds- -stay--tamtt tin .
Request-_—r-i ds abeve target ameants .a��-ubmitted
in `==-th=cZe=nr-o�uppl-emental--Requests-. -These-regide^sts are
reviewed-by-the--city--Manager;and hese--4tavinq the
greatest-me e-the Reeemmended
ate resexrees are available-.-Ea-eh
depart ager--to—]4ast 4ey--its
budget s itta4--artd--Supplemental equests-
3r� z7�tne Budget and Researe`: Gfrrce-prepares
ef sues €er eau�e"zr;eer+tatring--summary
Ad-pa___, analyses
fel - £-�icw—i mcmaZvrm" the ariseussien at
tide- Geune34--vie i sessiens,whieh—prev-ide—staff with
dir'eetie z Qeveleping the Reeamme ded Budget.
The ReeemmendPd Budget is oub�irs ctcd- B-E6urt�ri---sn-late
August-and a, available to t b ' t th
�'j--f[faClc e—pulTrSl.—L'T�LTfG' 3a1RC
time. During September, two addi7tiena�Eeane f
rkses bile input is se, : _: teed -POE t t.._
e-Hearers-.
The
budget €ar-the tzpeeming-year-is-adepted inGeteber
per�harter�equ3rements, and afirral ade t_ed budget_
deeument-is-then
-prtented
4
(c) Budget Preparation
WHILE THE CHARTER ESTABLISHES TIME LIMITS AND THE
ESSENTIAL CONTENT OF THE CITY MANAGER'S PROPOSED BUDGET,
THE BUDGET PREPARATION PROCESS IS NOT PRESCRIBED. THE
PREPARATION PROCESS IS DEVELOPED BY THE CITY MANAGER WITH
INPUT FROM THE CITY COUNCIL. FOR DEVELOPMENT OF THE 1991
BUDGET, THE PREPARATION SCHEDULE HAS BEEN MODIFIED TO
ALLOW FOR INCREASED AND EARLIER PARTICIPATION BY THE
COUNCIL AND THE EXECUTIVE TEAM. THIS MODIFICATION WILL
PROVIDE FOR BETTER COMMUNICATION AND FOCUS ON POLICIES
OR ISSUES THAT WILL HAVE MAJOR INFLUENCE ON THE BUDGET.
FOR THE 1991 BUDGET PREPARATION PROCESS, THE CITY MANAGER
HAS ALSO ESTABLISHED A BUDGET REVIEW COMMITTEE, COMPOSED
OF SENIOR MANAGEMENT REPRESENTATIVES FROM THREE SERVICE
AREAS. THE PURPOSE OF THE COMMITTEE IS TO ENSURE THAT
POLICIES AND ISSUES ARE MORE CONSISTENTLY ADDRESSED .BY
EACH SERVICE AREA. THE COMMITTEE REVIEWS BUDGET ISSUES,
POLICIES AND RECOMMENDATIONS PREPARED BY THE CITY MANAGER
AND THE BUDGET AND RESEARCH OFFICE PRIOR TO PRESENTATION
TO THE EXECUTIVE TEAM. FOLLOWING EXECUTIVE TEAM
DELIBERATION, THE BUDGET ISSUES, POLICIES, AND
RECOMMENDATIONS ARE PRESENTED TO THE COUNCIL.
THE AMOUNT OF AVAILABLE RESOURCES LIMITS BUDGET
APPROPRIATIONS. IN MARCH, DEPARTMENTS DEVELOP FIVE YEAR
REVENUE PROJECTIONS OF THEIR REVENUE SOURCES AND SUBMIT
THEM TO THE BUDGET AND RESEARCH OFFICE. THE BUDGET OFFICE
ALSO COORDINATES COLLECTION OF INFORMATION ABOUT THE
COSTS OF PROVIDING SERVICES FROM THE DEPARTMENTS.
BASED UPON THE REVENUE PROJECTIONS, THE COSTS OF
PROVIDING SERVICES AND DIRECTION PROVIDED BY COUNCIL
ABOUT MAJOR REVENUE SOURCES, THE BUDGET OFFICE STAFF
PREPARES TARGET BUDGETS FOR EACH FUND AND PROGRAM. ALL
OF THIS INFORMATION IS COMPILED INTO THE BUDGET MANUAL
WHICH PROVIDES THE BASIS FOR THE DEVELOPMENT OF EACH
PROGRAM BUDGET. DEPARTMENTS BEGIN DEVELOPING BUDGETS IN
APRIL.
IN MAY, PRIOR TO RECEIPT OF BUDGET PROPOSALS FROM
DEPARTMENTS, TWO COUNCIL WORK SESSIONS ARE HELD. AT THESE
SESSIONS, POLICY ISSUES ARE DISCUSSED AND COUNCIL HAS THE
OPPORTUNITY TO PROVIDE DIRECTION FOR DEVELOPMENT OF
DEPARTMENTAL BUDGETS.
IN LATE MAY, BUDGETS ARE DUE INTO THE BUDGET OFFICE. ALL
FUNDS ARE EXPECTED TO STAY WITHIN THEIR CORRESPONDING
TARGETS. DEPARTMENTS MAY SHIFT RESOURCES BETWEEN
PROGRAMS. REQUESTS FOR FUNDS ABOVE TARGET BUDGETS MUST
5
BE SUBMITTED FOR SUPPLEMENTAL FUNDING. THE SUPPLEMENTAL
REQUESTS ARE REVIEWED AND MAY BE INCLUDED IN THE PROPOSED
BUDGET IF RESOURCES ARE AVAILABLE.
BUDGET ISSUES ARE REVIEWED IN JUNE AND JULY AND THE CITY
MANAGER'S PROPOSED BUDGET IS SUBMITTED TO COUNCIL IN LATE
AUGUST. IT IS MADE AVAILABLE TO THE PUBLIC AT THE SAME
TIME. DURING SEPTEMBER, 'I'WO PUBLIC HEARINGS ON THE BUDGET
ARE HELD AT THE REGULAR COUNCIL MEETINGS. THE CITY
MANAGER SOLICITS ADDITIONAL DISCUSSION AND POLICY
DIRECTION FROM COUNCIL AT THE 'PWO SEPTEMBER WORK
SESSIONS. IF NECESSARY, THE COUNCIL MAY SCHEDULE
ADDITIONAL WORK SESSIONS AND MAY ALSO DIRECT COMMUNITY
BUDGET MEETINGS BE HELD.
THE BUDGET FOR THE ENSUING YEAR IS ADOPTED IN OCTOBER.
FOLLOWING THE PASSAGE OF THE BUDGET ORDINANCE, THE FINAL
ADOPTED BUDGET DOCUMENT IS PRINTED.
(d) Changes to the Adopted Budget
1. Budget Increases
Funds are expected to confine spending to amounts
appropriated during the Budget process. In certain
cases, however, appropriations may be increased
during the budget year in the following
circumstances.
• Carryover Encumbrances - If a department has
open purchase orders at year end, related
appropriations are encumbered and carried over
to the next year to cover the actual expense
when it occurs.
0 Unanticipated Revenue - If a fund receives
revenue during the year from a source that was
not anticipated or projected in the Budget,
such as a grant or a bond issue, such revenue
may be appropriated by Council for expenditure
in the year received.
• Prior Year Reserves - In cases where a fund' s
reserves are greater than required by policies,
Supplemental Requests may be funded, with
Council appropriating amounts from reserves to
fund items which were not included in the
adopted Budget. Council may also appropriate
reserves in case of emergency or unusual
circumstances, if it determines that such
appropriations are in the best interests of the
City.
6
2. Budget Decreases
decreased during the year e level- bel_.. adept_a
C `CC Criatiens 3
weialel
relinquish
L_ _..l d _ _ e L r -If
L _ t - e y. -I
this
et _ L e e_n_s ne essar in
the epinien o f }L�
f
appropriations te a line item ealled "Fresen
Apprepi-iatiens" , and the City Manager if i 11-
3 inferm the l
fund, itprevents them frem beinej spent. Tf the
sAuatien shauld later ehange, the __prep__ _t, __..
err__r________-
_.._1 be _e___.__e. __ ______ __ne ___...- ___ _._r_________.
ANNUAL BUDGETS MAY ALSO BE DECREASED BELOW ADOPTED
APPROPRIATIONS DURING THE YEAR. CHANGES IN SERVICE
DEMAND, ECONOMIC CONDITIONS, AND COUNCIL GOALS AND
DIRECTION MAY CAUSE SUCH BUDGET REDUCTIONS. EACH
SERVICE AREA IS RESPONSIBLE FOR DEVELOPING A PLAN
TO REDUCE APPROPRIATIONS. EACH PLAN MUST BE IN PLACE
AND READY FOR IMPLEMENTATION SHOULD THE NEED ARISE.
IF THE CITY MANAGER DIRECTS BUDGET REDUCTIONS,
COUNCIL WILL BE INFORMED IMMEDIATELY AND THE
APPROPRIATIONS WILL BE SET ASIDE THROUGH
ADMINISTRATIVE ACTION. WHILE THIS ADMINISTRATIVE
ACTION DOES NOT LOWER THE APPROPRIATIONS WITHIN A
FUND, EXPENDITURES ARE PREVENTED. IF THE
CIRCUMSTANCES LEADING TO THE IMPLEMENTATION OF
REDUCTIONS CHANGE, THE APPROPRIATIONS MAY BE MADE
AVAILABLE FOR EXPENDITURE.
(e) Level of Control and Budget Transfers
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 as they deem appropriate.
There are two general types of budget transfers:
1. Within Fund - This is a transfer between line items
and/or departments within a fund, and requires
approval of the fund manager.
2 . Between Funds - This type of transfer requires the
Recommendation of the City Manager and formal action
by the City Council .
7
In order to provide City Council with information and
control over capital improvements taking place within the
City, Council approval is also required to transfer
appropriations between Capital Projects. This is normally
done in cases where a project is completed under budget
and Council wishes to use the unused appropriations to
enlarge the scope of another project.
(f) Lapsing of Appropriations
Per the City Charter, any appropriations which are
unspent at the end of the year lapse into fund balance,
where they cannot be spent unless appropriated by Council
with the following exceptions:
• Capital Projects - Appropriations for Capital
Projects do not lapse until the project is completed
and closed out.
0 Grant Funds - Appropriations funded by federal or
state grants do not lapse until the grant expires,
or the project for which the grant was received is
completed and closed out.
1.3 . CATEGORIZATION OF CITY SERVICES
The City Council has reviewed and categorized all City
services in order to set priorities for allocating
available money. These categories are:
Basic or Core Services - services that are best performed
at the local level and are most closely linked to
protecting the health and safety of citizens. Legally
mandated services or commitments are also included in
this category.
Maintenance of Effort Services - services which the City
has traditionally provided or which reflect a major
capital investment requiring an expenditure of funds to
maintain.
Quality of Life - activities which are provided for more
specialized groups and enhance the desirability of Fort
Collins as a place to live.
8
These categories were applied to City services in the
following manner:
Basic or Core Services Quality of Life
Building Inspection Community Services
Debt Payments Golf
Fire Lincoln Center
Light & Power Museum
Police Open Space
Storm Drainage Recreation
Streets
Water & Wastewater
Maintenance of Effort Services
Cemeteries
Engineering
Facilities
General Administrative Services
Internal Service Activities
Library
Natural Resources
Park Maintenance
Planning
Street Lighting
Transfort
9
REVENUE POLICIES
2. 1. REVENUE REVIEW AND PROJECTION
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:
• fee policies applicable to each fund or activity;
• the related cost of the service provided;
• the impact of inflation in the provisions of
services;
• equity of comparable fees.
The City of Fort Collins maintains a diversified and
stable revenue system to shelter the City from short-
run fluctuations in any one revenue source.
2.2 . SALES AND USE TAX DISTRIBUTION
The City's Sales and Use Tax totals 2 . 75 cents, developed
as follows:
1968 - General City uses 1. 00
1980 - General City uses 1. 00
1982 - General City uses . 25
1989 - Street Capital Maintenance . 25*
1990 - CHOICES 95 Capital Improvement Program . 25*
2 . 75
*Excluding sales of grocery food.
TAX ON ALL SALES & USES-EXCLUDING GROCERY FOOD: .50 cents
Capital Projects Fund
CHOICES 95 Capital Improvement Program 50%
Street Capital Maintenance 50%
TOTAL 100%
Revenue generated by the Sales and Use Tax will be
distributed, based on adopted budgets, in the following
manner:
10
TAX ON ALL SALES & USES: 2.25 cents
(1) Fixed Dollar Amounts
Debt Service Fund
Ft. Collins/Loveland Airport Authority
Sales & Use Tax Reserves
Street Oversizing
(2) General Fund
Actual Sales and Use Tax revenue generated by the 2 . 25
cent tax in excess of the fixed dollar amounts listed
above, will be transferred to the General Fund.
Actual Sales and Use Tax revenue generated by the 0. 25
cent tax for Street Capital projects will be transferred
to, and be retained in, the Capital Projects Fund for
repair and maintenance of existing streets. Timely
effective repair and maintenance helps to avoid costly
reconstruction to streets after deterioration has become
irreversible.
Actual Sales and Use Tax revenue generated by the 0. 25
cent tax for the CHOICES 95 Capital Improvement Program
will be transferred to, and retained in, the Capital
Projects Fund for construction of projects approved
during the CHOICES 95 process. With this pay-as-you-go
program, no debt will be incurred to complete projects.
2 .3. GENERAL FUND FEES AND TAXES
The City of Fort Collins imposes a number of
miscellaneous licenses, fees and taxes, which are
reviewed annually in conjunction with the Revenue Policy,
to determine rates and fee schedules for the ensuing
year.
2.4. PRIVATE CONTRIBUTIONS
The City encourages the solicitation of private
contributions for "Quality of Life Services" . These
services and programs represent an "extra" that the City
has been able to provide to residents. In times of
revenue constraints the City may not be able to provide
the same level of service without additional support.
Therefore, efforts should be made to secure private
contributions in support of these programs and services,
as these contributions are an integral part of their
successful operation.
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FINANCIAL ADMINISTRATION
ADMINISTRATIVE CHARGES
The General Fund —provides se£viees to a!!fangs,
of 3-3 ity iei_..,u ret_zviz-i:,• vn eter-Administrative
eharges he-7fei,�a ut- lT,-r i�a��e alleeatien-is as
€e}}ews
9 59% of the eest is alleeated—,used—art the ratie of
eaeh---furrd-LT—Bridget to—the— tata3 eity—budget
Light _ Power ' s _u-rehas^e_d �ewe�r-a-ad,
9 SV��Q-e f the . est ..l l -gated l9ase�C �`O�]T-Za ratia of the
n� .- yees- in-eaell f nd Ce-the-teta+
This p ey—is applied funds, wi -h—the—e�eeePtiea
orz==eae-€ar`*d5---sciGeneral-Fuiid
3 . 1. ADMINISTRATIVE CHARGES
THE CHARTER STATES THAT EXPENSES FOR DEPARTMENTS
RENDERING SERVICES TO OTHER DEPARTMENTS SHALL BE
EQUITABLY APPORTIONED. FOR ENTERPRISE, INTERNAL, AND
SPECIAL REVENUE FUNDS, DIRECT CHARGES ARE MADE TO THE
FUNDS RECEIVING SERVICES WHEN THEY ARE RENDERED. CERTAIN
DEPARTMENTS WITHIN TILE GENERAL FUND PROVIDE SERVICES TO
ALL FUNDS AND DO NOT HAVE A DIRECT BILLING MECHANISM. FOR
THESE GENERAL FUND DEPARTMENTS, A COST ALLOCATION FORMULA
HAS BEEN DEVELOPED TO APPORTION COSTS TO OTHER FUNDS AND
PROVIDE OFFSETTING REVENUE TO THE GENERAL FUND.
GENERAL FUND DEPARTMENTAL COSTS TO BE ALLOCATED
DEPARTMENTAL COSTS TO BE ALLOCATED ARE BASED ON THE
CURRENT YEAR'S BUDGET AND ON PROJECTED EMPLOYMENT LEVELS.
THE CURRENT YEAR IS THE ONE IMMEDIATELY PRECEDING THE
YEAR BEING BUDGETED. (FOR THE 1991 BUDGET, COSTS TO BE
ALLOCATED ARE FROM THE REVISED 1990 BUDGET. )
THE AMOUNT TO BE ALLOCATED INCLUDES THE REVISED BUDGET
EXPENDITURES FOR ALL DEPARTMENTS AND PROGRAMS WITHIN THE
EXECUTIVE AND LEGISLATIVE SERVICES AREA, THAT IS, CITY
COUNCIL, CITY MANAGER, CITY CLERK, AND CITY ATTORNEY. THE
FULL AMOUNT OF REVISED BUDGETS FOR THE EMPLOYEE
DEVELOPMENT DEPARTMENT IS INCLUDED. THE FINANCE
DEPARTMENT BUDGET IS REDUCED BY THE AMOUNTS REIMBURSED
BY THE UTILITY DEPARTMENTS, AN AMOUNT LINKED TO SPECIAL
IMPROVEMENT DISTRICT ADMINISTRATION, AND REBATE PROGRAM
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ADMINISTRATION. THE INFORMATION & COMMUNICATION SYSTEMS
(ICS) DEPARTMENT REVISED BUDGET IS ADJUSTED FOR AMOUNTS
CORRESPONDING TO SUPPORT FOR THE DEPARTMENTS LISTED
ABOVE.
HOW COSTS ARE ALLOCATED
THE EMPLOYEE DEVELOPMENT COSTS ARE ALLOCATED IN
PROPORTION TO THE TOTAL NUMBER OF BUDGETED FULL TIME
EQUIVALENT POSITIONS WITHIN A FUND.
EXCEPT FOR ICS, ALL OTHER GENERAL FUND ADMINISTRATIVE
COSTS ARE ALLOCATED TO THE FUNDS BASED UPON CORRESPONDING
REVISED BUDGETS FOR THE CURRENT YEAR WITH SOME ADDITIONAL
ADJUSTMENTS. THESE ADJUSTMENTS RECOGNIZE THE LOWER AMOUNT
OF ADMINISTRATIVE SERVICE REQUIRED BY CAPITAL, DEBT
SERVICE, AND PURCHASED POWER PAYMENTS. CAPITAL PROJECT
COSTS ARE REDUCED BY TWO-THIRDS OF THEIR BUDGETED AMOUNT
AND DEBT SERVICE PAYMENTS ARE REDUCED BY THREE-FOURTHS.
PURCHASED POWER IS ALSO DEDUCTED FROM THE LIGHT & POWER
BUDGET.
THE ADMINISTRATIVE COSTS FOR ICS ARE ALLOCATED THROUGH
A TWO-STAGE FORMULA. FIRST, ICS BUDGET IS ALLOCATED BASED
ON ANALYSTS TIME SPENT ON PROJECTS FOR SPECIFIC FUNDS.
THE SECOND STEP IS TO CHARGE ICS SERVICES TO GENERAL
GOVERNMENT, EMPLOYEE DEVELOPMENT AND FINANCE IN THE SAME
METHOD AS THEIR RESPECTIVE ALLOCATIONS DESCRIBED ABOVE.
ALL FUNDS RECEIVE ALLOCATIONS BUT NOT ALL FUNDS 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 AN
INTERNAL SERVICE FUND, OR IF THE FUNDS ROLE IS MERELY TO
FACILITATE PROPER ACCOUNTING PROCEDURES. FOR EXAMPLE, THE
SALES 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
DO NOT CORRESPOND TO THE LEVEL OF SERVICE PROVIDED BY THE
DEPARTMENTS IN THE GENERAL FUND.
ANNUAL REVIEW
DURING EACH ANNUAL BUDGET PROCESS, THE ADMINISTRATIVE
CHARGE CALCULATION WILL BE REVIEWED. FURTHER REFINEMENTS
IN THE ALLOCATION FORMULAS WILL BE MADE AS NEEDED TO
ASSURE THAT THE EQUITABLE APPORTIONMENT REQUIREMENT OF
THE CHARTER IS MET.
13
3.2 . BUILDING MAINTENANCE COSTS
As part of the 1985 Budget process, Council considered
the City' s policy relating to the maintenance of City
buildings. Such maintenance has been classified into
three categories:
1. General
2 . Renovation
a. Minor
b. Major
3 . Replacement
Priorities associated with the categories have also been
established:
1. Life, Health, and Safety
2 . Repair
3 . Protecting Capital Investment
4 . Quality/Enhancement
3 . 3 . LEASE-PURCHASE
The City of Fort Collins has used lease-purchase
financing for the provision of new and replacement
equipment, vehicles and rolling stock in order to ensure
the timely replacement of equipment and vehicles. This
method may also be used to acquire real property.
Other advantages that lease-purchase financing can offer
over the traditional cash method of financing are:
• Decreasing the impact of inflation on the purchase
of new and replacement equipment.
• Reducing the initial impact of the cost to user
departments by enabling acquisition costs to be
spread over the useful life of the equipment.
• 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-purchasing
City equipment.
14
3.4. 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 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.
3 . 5. PAYMENT IN LIEU OF TAXES (PILOT)
In accordance with the City Charter regarding
municipality rates and finances, the water, wastewater,
and electric utilities "pay into the General Fund in lieu
of taxes on account of the city-owned utilities such
amount as may be established by the Council by
ordinance" .
The PILOT rate, as established by Council is 5% for the
Water and Wastewater Utilities, and 6% for the Light and
Power Utility. This rate is applied to the operating
revenues per year for each utility. The PILOT establishes
a rate approximately one and one-half (1. 5) times the
rate that would be charged if the utilities were
privately owned.
3 . 6. PENSION FUNDS
The City of Fort Collins contributes to three pension
plans, including:
Fire
General Employee Retirement
State Pension - Fire
The Fire and General Employee Retirement Plans are
administered by the City of Fort Collins. The rate of
contribution for the City administered 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.
15
The City Is current pension plans consist of the following
provisions:
• The City will maintain contribution rates at a level
sufficient to meet all current normal costs of each
pension plan;
• Any unfunded liability incurred by individual
pension funds will be amortized over a period not
to exceed twenty years;
0 A thrift plan for City employees is an adjunct to
the general employee retirement plan, to maintain
comparability with benefits provided by other Front
Range communities. Employees participation in this
plan is optional .
0 A money purchase plan is offered to City Police
employees who do not belong to Social Security.
The Budget incorporates the following rate requirements
to continue this policy:
Police
General Employee Money Purchase
Normal Costs Fire Employee Thrift Plan Plan
City Contri. 8% 3 . 553% 3% 8%
Employee Contri. 8% -- 3% 8%
---- ------ ---- ----
TOTAL 16% 3 . 553% 6% 16%
Unfunded Liability Fire
City Contribution $84 , 000
3 .7 . PERFORMANCE PAY PLAN
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. 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 jurisdictions;
16
4 . to provide an incentive and reward for productivity,
and;
5 . to recognize cost savings generated by productive
employees.
Every effort will be made to provide the economic
adjustment necessary for the performance pay plan by
January of each year. If this is not financially
feasible, as much as can be provided (given the priority
demands on available resources) will be given in January.
In the area of compensation, the City initiated, in 1986,
a three-year program to address the issue of comparable
worth, which is concerned with compensation of
individuals based upon their value to the organization.
3 .8. POUDRE FIRE AUTHORITY - REVENUE ALLOCATION FORMULA
(a) In December 1981, the City entered into an agreement with
the Poudre Fire Protection District, creating the Poudre
Fire Authority (PFA) , which provides fire protection
services to the City. The Revenue Allocation Formula
outlines the City' s contribution to the PFA:
Annual Operations and Maintenance Budget
The City will contribute funding for maintenance and
operation costs of the Poudre Fire Authority which shall
be established annually based upon a percentage of Sales
& Use Tax revenues and a portion of the operating mill
levy of the City' s Property Tax. These funds are in
addition to funds contributed by Poudre Valley Fire
Protection District.
;15; .he C_t, _11______ __ _ __ _ ef the Preperty -__ mills
te
the FIFA in 1990with ;,..welt: __ 89
_12the L
l y
Preperty Tax te the PFA.
(b) THE CITY ALLOCATES 67.09% OF THE PROPERTY TAX MILLS TO
THE PFA IN 1991. IN ACCORDANCE WITH RESOLUTION
, THE CITY CURRENTLY CONTRIBUTES 5. 165 MILLS
OF EXISTING PROPERTY TAX TO THE PFA.
An allocation of 0. 303 of one cent of the City's 2 . 25
cent Sales and Use Tax is applicable to all taxable sales
and uses to the PFA. The Revenue Allocation Formula
represents the City' s contribution to the PFA for its
operation and maintenance costs as well as for capital
expenditures.
17
3 .9. REBATE PROGRAMS
The City recognizes that certain segments of its
population, specifically the handicapped and senior
citizens on fixed incomes, may be unable to keep pace
with increasing taxes and utility costs. In an effort to
partially offset the cost of Property Taxes, utility
billings and Sales Taxes on these segments of its
population, the City has established several rebate
programs, as follows:
Property `Pax and Utility Charge Rebate Program
These programs provide financial assistance to
handicapped residents and senior citizens, in the form
of an annual rebate on Property Tax and Utility charges,
who qualify under residency and income guidelines.
Sales Tax Rebate on Food Program
The City recognized the regressiveness of the Sales Tax
on food and specifically excluded the sale of grocery
food when enacting a voter-approved $0. 25 cent Sales and
Use extension for street maintenance on July 1, 1989 and
the extension of the 0 . 25 cent January 1, 1990, for the
CHOICES 95 Capital Improvement Program.
In addition to these measures, the City has a Sales Tax
Rebate on Food Program. This program provides for an
annual rebate to members of qualifying households on the
basis on residency and income guidelines.
3 . 10. CAR ALLOWANCE
The City provides reimbursement to its employees for use
of their personal vehicle on official City business.
Payment is considered a reimbursement for expenses and
not a form of compensation. All payments are based on the
actual mileage traveled by the employee at a mileage
reimbursement rate set by the City Manager.
18
GOVERNMENTAL AND PROPRIETARY FUNDS
4 . 1. GENERAL FUND
The General Fund is the largest and most diverse of the
City' s operating funds. It includes all resources not
legally restricted to a specific use. The major source
of revenue to the General Fund is the Sales & Use Tax,
which accounts for approximately 56% of the fund revenue.
Local Property Tax and the Lodging Tax are also included
in the General Fund as are revenues derived from fees for
services and materials, licenses, permits, and fines.
4.2. ENTERPRISE FUNDS
The City currently has six Enterprise Funds. These
include Cemeteries, Golf, Light & Power, Wastewater,
Storm Drainage, and Water. The Enterprise Fund
classification has been used to account for various
services for which there exists a significant potential
for financing through user charges. Historically,
services were accounted for in an Enterprise Fund only
if they were financed more than 50% by user charges. In
the 1991 Budget, all Enterprise Funds (with the exception
of Cemeteries) will recover 100% of their costs through
the five year projection.
The long term goal of all enterprise accounts is self-
sufficiency. Toward this end, those funds which are not
presently recovering at least 75% of their costs shall
incrementally adjust their rate structures to achieve a
positive income position. Those operations which cannot
achieve a positive income position within a five year
time frame may be accounted for as subsidized operations
and not as Enterprise Funds.
(a) Light & Power Utility
The financial policies of the Light & Power Utility are
administered in accordance with the City Charter. The
budget/five year plan has been prepared in compliance
with the following:
i. Fundamental Purpose
- L
P to nergy systelfts and serviees with sensitivity
life far at,
sty€€ieient eleetrieal energy, reliably and
19
1. MISSION STATEMENT
"FORT COLLINS LIGHT AND POWER IS A COMMUNITY OWNED
ELECTRIC UTILITY. WE WORK WITH OUR CUSTOMERS TO:
0 PROVIDE SAFE, RELIABLE ECONOMICAL SYSTEMS AND
SERVICES;
• MEET THEIR NEEDS AS ECONOMIC, ENVIRONMENTAL AND
TECHNOLOGICAL CHANGES OCCUR;
• CONSERVE RESOURCES; AND
• IMPROVE THE QUALITY OF SYSTEMS AND SERVICES.
2 . Electric Rates
Electric 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:
nta-in
epaii-ar,�Iejng
eider;
• TO MAINTAIN POSITIVE NET INCOME AFTER PAYING
THE FULL COST OF OPERATING AND MAINTAINING THE
ELECTRIC UTILITY IN GOOD REPAIR AND WORKING
ORDER;
• To provide an operating reserve equal to 8% of
budgeted operating expenditures, excluding the
cost of purchased power;
• To provide a future capital improvements
reserve in an amount equal to the average
annual cost (excluding debt financing) of the
approved five-year capital improvement plan,
considering any changes which, from time to
time, may be made in such plan;
• To provide a purchase power reserve equal to
approximately 25% of the annual revenue from
the sale of electrical energy. This reserve
shall be used to partially off-set, defer, or
mitigate the impact of purchase power cost
increases due to factors such as federal power
issues or the competitive marketing of post
1994 surplus Rawhide power. Reserves projected
to exceed the 25% level shall be reported to
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Council during the annual budget process.
3 . Excess Retained Earnings
Priority for the accumulation of reserves and excess
retained earnings shall be as follows: reserves
shall first be accumulated in operating reserve,
second in future capital improvements reserve, third
in the purchase power reserve. After reserves are
funded as specified in 2 . above, any excess retained
earnings shall be added to the purchase power
reserve.
4 . Operating Records
The Light & Power Utility will maintain a standard
system of accounting which shall, at all times,
correctly reflect all financial operations of the
system and keep other such records and data as are
generally used by the electric utility industry.
The accounts of the Light & Power Utility shall be
kept separate and distinct from all other accounts
of the City and shall contain proportionate charges
for all services performed by other departments as
well as proportionate credits for all services
rendered to other departments.
(b) Water & Wastewater Utilities
Formally adopted financial policies are an important
factor in planning the financial operations of the Water
and Wastewater utilities. Policy statements have been
developed and incorporated into the five year financial
plan as follows:
1. Net Income
The net income of the Water and Wastewater Utilities
shall be at least equal to the annual cost of the
following:
• Principal reductions of outstanding bonds;
0 Loan requirements to Federal or State agencies,
and;
• Annual operating reserve increases.
2 . Rate Requirements
Utility rates shall be set at a level to provide for
the net income requirement in each fiscal year.
Levelized rate increases are preferred and, when
possible, should be achieved through levelized
expenditures.
21
3 . Reserves
The following reserves shall be established and
maintained in the applicable utility:
• Operating Reserve - at least equal to 2% 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.
4 . Capital Cost Financing
Annual capital cost shall be identified as one of
three types, and financed as noted:
• Normal replacement of the existing system.
Financed on a Pay-As-You-Go basis from a
reserve for depreciation funded from current
rates.
• System improvements that benefit the existing
and future population. Debt financed over the
life of the improvement and the annual debt
service shall be funded from current rates.
• System expansions that benefit future
populations. Debt financed over the life of the
expansion, and annual debt service shall be
funded from a combination of Plant Investment
Fees and Contributions in Aid of Construction.
Federal and/or State grants may be utilized to fund
portions of, or all, capital costs.
(c) Storm Drainage Fund
The primary purpose of the Storm Drainage Fund is to meet
the public need for effective stormwater management,
including flood control, capital improvements and the
operation and maintenance of drainage facilities.
1. Operation and Maintenance Requirements
Utility rates will be set at a level to provide for
22
the operation and maintenance requirement for each
fiscal year. The rate is based on the category of
land usage and a per square foot per month rate.
2 . Capital Project Needs
A master plan has been developed for each basin to
identify drainage needs, set fees, and determine
capital improvement requirements. In the effort to
balance storm drainage risk and liability, a 20-
year storm drainage capital program has been
developed that relates to the system requirements
of each basin where a positive cost/benefit ratio
exists.
To finance this capital program, a one-time basin
fee is collected with new development and a monthly
capital fee from property owners.
3 . Capital Cost Financing
The financing of capital improvements will be
accomplished through the following:
0 a one-time basin fee that is collected with new
development;
• monthly capital fee collected from property
owners;
• bond issues that will be financed over the life
of the improvement.
The annual debt service will be provided from the
existing monthly capital fees.
4 . Reserves
The following reserves have been established:
a Capital Reserve - equal to the amount of bond
proceeds, monthly capital fees, and one-time
new development fees available at the end of
one fiscal year to be expended in the next
fiscal year;
• Operating Revenue Reserve - equal to 2% of the
projected annual operating revenue;
• Debt Reserve - equal to the amount required by
the individual bond ordinance.
23
4 .3. INTERNAL SERVICE FUNDS
Internal Service Funds are used for the operation of
agencies which provide goods and/or services to other
agencies within the City on a cost-reimbursement basis.
These funds cover expenditures through the imposition of
user charges.
4 .4 . SPECIAL REVENUE AND DEBT SERVICE FUNDS
Special Revenue Funds are used to account for the
proceeds of revenue sources which are restricted by law
or administrative action to expenditures for specified
purposes. Special Revenue Funds include Cultural Services
& Facilities, Recreation, Transit, Transportation, and
the City' s Pension funds.
The Debt Service Fund is used for the payment of
principal and interest on long-term debts. The major
source of revenue in the Debt Service Fund is the Sales
& Use Tax.
(a) Cultural Services & Facilities Fee Policy
The Cultural Services & Facilities Fund shall budget to
recover at least 40% of its total cost in revenue
generated 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. 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 . 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 .
24
Funding collected for any special purpose shall be
earmarked for that purpose and those funds will be
processed through the Fort Collins Foundation.
(b) Recreation Fund Fee Policy
The following fee policy for the Recreation Fund
continues in effect.
1. The Recreation Division shall recover a minimum of
50% of its total costs in revenue generated through
fees and charges.
2 . Categories have been created for the Recreation
Programs in order to evaluate which programs must
cover total or partial expenditures. These
categories are:
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. A transfer from the General Fund will
comprise the difference between actual revenues and
expenditures in these programs as well as programs
requiring "Minimal" support.
3 . Revenue generated from rentals, concessions, and
other miscellaneous sources shall be considered an
equal priority with class registrations when
establishing fees and charges.
4 . The Recreation Division shall provide designated
programs for senior citizens and developmentally
disabled persons at 1/2 the established fee, and to
25
low-income citizens at 1/3 the established fee.
5. The Recreation Division shall charge rental for
rooms, pool time, gym, ball field, and special
equipment, as specified in written policies.
6. 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.
7 . Solicitation of funds through donations, fund
raising events, non-traditional sources, and various
other needs shall be encouraged 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 furtherance of this goal shall
likewise be encouraged.
26
CAPITAL IMPROVEMENT FUNDS
5.1. CITIZEN PARTICIPATION
With Resolution 87-130, Council solicitated citizen
involvement and participation in formulating a Capital
Improvements Program known as Choices 95. By this
Resolution, a citizen committee was created to make
recommendations on the capital improvement needs of the
community and the financing of those improvements. The
recommended Capital Improvement Program was presented
to Council by the Choices 95 citizen committee along with
a pay-as-you-go funding recommendation. The Choices 95
citizen committee was instrumental in the determination
of projects and funding mechanism to be accomplished in
the 1991-1998 Capital Improvement Program.
The residents of Fort Collins on March 7, 1989, approved
the extension of a 0. 25 cent Sales and Use Tax rate
(excluding grocery food) to finance the Choices 95
Capital Improvement Program. This extension is effective
for a seven year period beginning January 1, 1990. In
addition, the residents also approved the extension of
0.25 Sales and Use Tax rate (excluding grocery food) to
finance much needed resurfacing of the City' s streets.
This extension is effective July 1, 1989 and expires
January 1, 1997 .
5.2. CAPITAL IMPROVEMENT PROGRAM
The City's Capital Improvement Program includes the
Capital Projects Fund, the Conservation Trust Fund, and
the Parkland Fund.
(a) Capital Projects Fund
The Capital Projects Fund includes two capital project
classifications:
0 General City Capital Projects
General Capital Projects
- Choices 95 Capital Projects
Street Capital Maintenance
0 Utility Capital Projects
GENERAL CITY CAPITAL PROJECTS:
General Capital Projects include minor street repair,
concrete program, pedestrian access ramps, major building
maintenance and other minor capital projects. General
Capital Projects are financed by transfers from the
appropriate financing fund and can be financed through
27
bond proceeds and/or grant funds deposited directly in
the Capital Projects Fund.
Choices 95 Capital Projects were recommended by the
Choices 95 citizen committee and approved by the voters
of Fort Collins. The proceeds of the 0. 25 cent Sales and
Use Tax is specifically dedicated to finance these
projects.
6 ee earrita} 24a#ntenanee inelades street resurfacing
votersYN
tvrriiu
STREET CAPITAL MAINTENANCE CONSISTS OF THE STREET OVERLAY
AND SEALCOAT PROGRAM. THIS PROGRAM PROVIDES FOR REPAIR
AND MAINTENANCE OF EXISTING STREETS USING CRACKSEALING,
PATCHINGS, SEALCOATS, OVERLAYS OR RECONSTRUCTION. Council
recognized the importance of maintaining existing City
streets, and the voters approved using 0. 25 cent Sales
and Use Tax revenue to finance the projects.
UTILITY CAPITAL PROJECTS:
Includes Wastewater, Storm Drainage, and Water Funds and
are financed by transfers from the respective financing
fund. Sources of funding are bond proceeds and specific
fees and charges. Light & Power Utility Capital Projects
are included in the Light & Power Fund and therefore do
not appear in the Capital Projects Fund.
Conservation Trust Fund
The Conservation Trust Fund provides for the receipt and
expenditure of revenue received from the Colorado State
Lottery. The Lottery revenue finances capital projects
which relate to the acquisition and development of open
space and trails including associated administrative
costs and charges. Consistent with Colorado statutes, the
operation and maintenance of existing open space and
trails may also be financed by these funds.
Parkland Fund
The Parkland Fund provides for the development of
neighborhood parks, as financed by a Parkland Fee. The
Parkland Fee is collected from developers for each new
dwelling unit established within the City limits. The
Parkland Fund includes funds for neighborhood park
capital improvements, with associated operation and
maintenance costs included in the General Fund operating
28
budget.
CAPITAL IMPROVEMENT POLICY
With the exception of the Choices 95 Capital Programs,
the City will continue to operate under its existing
Capital Improvement Policy:
• The City will develop a multi-year plan for capital
improvements and update it annually;
• The City will make all capital improvements in
accordance with the adopted Capital Improvement
Program and the Capital Project Management Control
System;
• The City will identify estimated costs and funding
sources for each capital project requested before
it is submitted to City Council ;
0 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.
29
RESERVE POLICIES
6 . 1. POLICY STATEMENT
The accumulation of reserves protects the City from
uncontrollable increases in expenditures or unforeseen
reductions in revenues, or a combination of the two. It
also allows for the prudent financing of capital
construction and replacement projects.
6.2. TYPES OF RESERVES
T-he-Eity-of Fort llins maintains n the fell se ea,
in its
THE CITY OF FORT COLLINS MAINTAINS RESERVES THAT ARE
REQUIRED BY LAW OR CONTRACT AND THAT SERVE A SPECIFIC
PURPOSE. THESE TYPES OF RESERVES ARE CONSIDERED
RESTRICTED AND ARE NOT AVAILABLE FOR OTHER USES. WITHIN
SPECIFIC FUNDS, ADDITIONAL RESERVES MAY BE MAINTAINED
ACCORDING TO ADOPTED POLICIES. ALL EXPENDITURES OF
RESERVES MUST BE APPROVED BY COUNCIL. THIS MAY OCCUR
DURING THE BUDGET PROCESS OR THROUGHOUT THE BUDGET YEAR.
GENERAL FUND
THE GENERAL FUND DESIGNATED RESERVES ARE REPLENISHED FROM
AVAILABLE GENERAL FUND YEAR-END BALANCES. THE BALANCES
ARE DERIVED FROM ALL UNSPENT FUNDS OR REVENUES EXCEEDING
PROJECTIONS. YEAR-END BALANCES MAY ALSO BE USED AS A
FUNDING SOURCE IN THE NEXT BUDGET YEAR.
9 Designated for Revenue Shortfall - this reserve is
held in the General Fund and is designed to be
available for temporary financing of unforeseen
needs of an emergency nature, and to permit orderly
adjustment to revenue losses. The amount of money
to be held in the general contingency reserve will
not be less than 6% of the approved General Fund
budget.
6 General--Fu;t s-&-!mpx:2yeme�s
-this tCl-. erve provides for �T[R'Z'*TGIIanee
needs, major r8neV �s - a-ire to maintain the
ci Gy' fee S i t i e T An a� ameunt is
date rmin ed-- based on the dollar--value—of Gity
b uil ings and improvements.
30
• DESIGNATED FOR BUILDINGS i IMPROVEMENTS - THIS
RESERVE PROVIDES FOR DEFERRED MAINTENANCE NEEDS,
MAJOR RENOVATIONS, AND REPAIRS TO MAINTAIN THE
CITYIS FACILITIES. IT ALSO PROVIDES FOR ADDITIONAL
FACILITY NEEDS. AN AMOUNT I8 DETERMINED BASED ON THE
VALUE OF BUILDINGS AND IMPROVEMENTS AS RECORDED IN
THE COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR)
DIVIDED BY AN AVERAGE ASSET LIFE OF 35 YEARS.
0 General Fund si%nat d C
this reserve Prevides for the timely replasement Of
operating equipment (Vehieles or mashinery) and thee
purehase of additional equipment due to inereased
need- An appropriate reserve amount is fidat$r-iced
based the total dollar al. of Aity equipme�t
• DESIGNATED FOR EQUIPMENT REPLACEMENT - THIS RESERVE
PROVIDES FOR THE TIMELY REPLACEMENT OF OPERATING
EQUIPMENT (VEHICLES, MACHINERY, AND COMPUTER
EQUIPMENT) . AS OPPOSED TO A DEPRECIATION RESERVE,
THIS RESERVE IS INTENDED TO PROVIDE FLEXIBILITY IN
MEETING THE DEMAND FOR NEW EQUIPMENT AND STABILISE
THE COST OF FINANCING IN THOSE YEARS WHERE LARGER
EQUIPMENT PURCHASES OCCUR. THE AMOUNT OF THE RESERVE
IS DETERMINED BY THE VALUE OF LEASED EQUIPMENT
(VEHICLES, MACHINERY, AND COMPUTER EQUIPMENT) PLUS
THE VALUE OF NON-LEASED COMPUTERS DIVIDED BY THE
ESTIMATED ASSET LIFE OF FIVE YEARS. (THE YEAR END
1989 FIXED ASSET REPORT SHOWS LEASED EQUIPMENT AT
$4.9 MILLION AND NON-LEASED COMPUTERS AT $1.5
MILLION. DIVIDING THE TOTAL OF $6.4 MILLION BY A
FIVE YEAR ASSET LIFE RESULTS IN AN ESTIMATED
REQUIRED RESERVE OF $1,280,000. )
OTHER FUNDS
• Operating Reserves - operating reserves are held in
Enterprise, Internal service, and some Special
Revenue Funds. There are two types of Operating
Reserves:
1. An appropriated contingency which provides for
unexpected or unanticipated expenditures during
the year. It is typically budgeted at an amount
equal to 2% of the annual operating budget by
fund, but may be a fixed amount depending upon
available funds.
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
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current expenditures will exceed the total
revenue available. The revenue reserve is
calculated at an amount equal to 2`k of
projected annual operating revenue by fund.
This revenue reserve is not appropriated as
part of the annual budget, but may be utilized
at the end of the fiscal year, if necessary.
• Capital Reserves - 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 appropriated
capital contingency, typically 5% of the amount
annually appropriated for capital construction,
which provides for the conceptual study and
preliminary design of unanticipated capital
improvements.
Debt financed capital improvements are, by
definition, financed by proceeds of bond issues and
do not require capital reserves.
• Debt Reserves - Debt reserves are established to
protect bond holders from payment defaults. Adequate
debt reserves are essential in maintaining good bond
ratings and. the marketability of bonds.
The amount of debt reserves are established by bond
ordinance in association with each bond issuance.
THE CITY COUNCIL MAY ESTABLISH, UPON RECOMMENDATION
OF THE FINANCIAL OFFICER, SUPPLEMENTAL DEBT SERVICE
RESERVES IN ADDITION TO THOSE EXPRESSLY REQUIRED BY
BOND ORDINANCE. SUCH RESERVES SHALL NOT BE DEEMED
TO CONFER ANY RIGHTS UPON BONDHOLDERS OVER AND ABOVE
THOSE SET FORTH IN THE BOND ORDINANCE FOR EACH BOND
ISSUE.
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CASH MANAGEMENT AND INVESTMENT POLICY
(Summarizing Resolution No. 90-44)
7. 1. POLICY STATEMENT
THIS POLICY WAS ADOPTED BY THE COUNCIL OF THE CITY OF
FORT COLLINS AS RESOLUTION 90-44. IT IS INTENDED TO
SUPPLEMENT AND EXPAND UPON ORDINANCE NO. 109, 1988,
"PROVIDING FOR THE INVESTMENT AND DEPOSIT OF PUBLIC FUNDS
AND MONEYS OF THE CITY OF FORT COLLINS. "
7.2 . SCOPE
THIS POLICY SHALL APPLY TO THE INVESTMENT OF ALL GENERAL
AND SPECIAL FUNDS OF THE CITY OF FORT COLLINS
(HEREINAFTER REFERRED TO AS THE "CITY") OVER WHICH IT
EXERCISES FINANCIAL CONTROL, INCLUDING THE CITY OF FORT
COLLINS FIREFIGHTERS PENSION AND GENERAL EMPLOYEES
RETIREMENT FUNDS.
7.3. OBJECTIVES
THE CITY'S PRINCIPAL CASH MANAGEMENT AND INVESTMENT
OBJECTIVES ARE:
• PRESERVATION OF CAPITAL THROUGH THE PROTECTION OF
INVESTMENT PRINCIPAL.
• TO MAXIMIZE THE CASH AVAILABLE FOR INVESTMENT.
• MAINTENANCE OF SUFFICIENT LIQUIDITY TO MEET THE
CITY'S CASH NEEDS.
• DIVERSIFICATION OF INVESTMENTS TO AVOID INCURRING
UNREASONABLE RISK REGARDING A SPECIFIC SECURITY,
MATURITY PERIOD, OR INSTITUTION.
• TO MAXIMIZE THE RATE OF RETURN FOR PREVAILING MARKET
CONDITIONS FOR ELIGIBLE SECURITIES.
• CONFORMANCE WITH ALL FEDERAL, STATE AND OTHER LEGAL
REQUIREMENTS.
7.4. DELEGATION OF AUTHORITY
RESPONSIBILITY FOR THE COLLECTION AND INVESTMENT OF ALL
CITY FUNDS IS ASSIGNED TO THE FINANCIAL OFFICER BY THE
CHARTER, SUBJECT TO DIRECTION OF COUNCIL BY RESOLUTION.
THE FINANCIAL OFFICER MAY APPOINT OTHER MEMBERS OF THE
FINANCE DEPARTMENT TO ASSIST IN THE CASH MANAGEMENT AND
INVESTMENT FUNCTION.
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THE CITY MANAGER SHALL APPOINT AN INVESTMENT COMMITTEE
CONSISTING OF THE FINANCIAL OFFICER AND AT LEAST TWO (2)
OTHER EMPLOYEES OF THE CITY KNOWLEDGEABLE IN THE AREA OF
GOVERNMENTAL INVESTMENTS. THE PURPOSE OF THE COMMITTEE
SHALL BE TO PROVIDE ADVICE TO THE FINANCIAL OFFICER
REGARDING THE OPERATION OF THE CASH MANAGEMENT AND
INVESTMENT PROGRAM. THE COMMITTEE SHALL ALSO REVIEW THE
ACTUAL RATE OF RETURN ON THE PORTFOLIO AS COMPARED TO THE
TARGET RATE OF RETURN.
THE FINANCIAL OFFICER SHALL HAVE THE DISCRETION TO
APPOINT ONE OR MORE INVESTMENT ADVISORS REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION. ALL INVESTMENTS
MADE THROUGH SUCH INVESTMENT ADVISORS SHALL BE WITHIN THE
GUIDELINES OF THIS CASH MANAGEMENT AND INVESTMENT POLICY.
7.5. PRUDENCE
THE STANDARD OF PRUDENCE TO BE USED FOR MANAGING THE
CITY'S ASSETS IS THE "PRUDENT INVESTOR" RULE, WHICH
STATES, "INVESTMENTS SHALL BE MADE WITH JUDGMENT AND
CARE, UNDER CIRCUMSTANCES THEN PREVAILING, WHICH PERSONS
OF PRUDENCE, DISCRETION AND INTELLIGENCE EXERCISE IN THE
MANAGEMENT OF THEIR OWN AFFAIRS, NOT FOR SPECULATION, BUT
FOR INVESTMENT CONSIDERING THE PROBABLE SAFETY OF THEIR
CAPITAL AS WELL AS THE PROBABLE INCOME TO BE DERIVED. "
7 . 6. ELIGIBLE INVESTMENTS
ALL INVESTMENTS WILL BE MADE IN ACCORDANCE WITH ORDINANCE
109, 1988 AND THE CASH MANAGEMENT AND INVESTMENT POLICY
ADOPTED BY THE COUNCIL OF THE CITY OF FORT COLLINS BY
RESOLUTION 90-44. THE FOLLOWING IS A SUMMARY OF THE
AUTHORIZED INVESTMENTS:
• ANY SECURITIES NOW OR HEREAFTER DESIGNATED AS LEGAL
INVESTMENT FOR MUNICIPALITIES IN ANY APPLICABLE
STATUTE OF THE STATE OF COLORADO.
0 INTEREST-BEARING ACCOUNTS OR TIME CERTIFICATES OF
DEPOSIT AT STATE OR FEDERALLY-CHARTERED SAVINGS AND
LOAN ASSOCIATIONS OR NATIONAL BANKS IN COLORADO
WHICH ARE DESIGNATED AS DEPOSITORIES FOR PUBLIC
MONEYS.
0 OBLIGATIONS OF THE UNITED STATES GOVERNMENT AND
OBLIGATIONS ISSUED BY AN AGENCY, INSTRUMENTALITY OR
PUBLIC CORPORATION OF THE UNITED STATES.
0 OBLIGATIONS ISSUED BY OR ON BEHALF OF THE CITY.
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• OBLIGATIONS ISSUED BY OR ON BEHALF OF ANY STATE,
POLITICAL SUBDIVISION, AGENCY, INSTRUMENTALITY OR
PUBLIC CORPORATION HAVING AN INVESTMENT GRADE RATING
FROM MOODY'S INVESTORS SERVICE OR STANDARD & POOR'S
CORPORATION.
• PRIME-RATED BANKERS ACCEPTANCES AND PRIME-RATED
COMMERCIAL PAPER.
• GUARANTEED INVESTMENT CONTRACTS OF DOMESTICALLY-
REGULATED INSURANCE COMPANIES HAVING A CLAIMS-
PAYING ABILITY RATING OF "AA" OR BETTER FROM
STANDARD & POOR'S OR A+ FROM BEST RATING SERVICES.
• REPURCHASE AND REVERSE REPURCHASE AGREEMENTS OF ANY
MARKETABLE SECURITY DESCRIBED IN ORDINANCE NO. 109,
1988 WHICH AFFORD THE CITY A PERFECTED SECURITY
INTEREST IN SUCH SECURITY.
• LOCAL GOVERNMENT INVESTMENT POOLS AUTHORIZED BY THE
STATE OF COLORADO.
• SHARES IN ANY MONEY MARKET FUND OR ACCOUNT, UNIT
INVESTMENT TRUST OR OPEN- OR CLOSE-END INVESTMENT
COMPANY, ALL OF THE NET ASSETS OF WHICH ARE INVESTED
IN SECURITIES DESCRIBED IN THIS SECTION, TO THE
EXTENT NOT PROHIBITED BY COLORADO CONSTITUTION OR
STATE STATUTES.
PENSION FUNDS MAY ALSO BE INVESTED IN EQUIPMENT TRUST
CERTIFICATES, REAL PROPERTY AND LOANS SECURED BY FIRST
MORTGAGES OR DEEDS OF TRUST ON REAL PROPERTY, TAX
CERTIFICATES ISSUED ON REAL PROPERTY IN COLORADO, AND
COMMON OR PREFERRED STOCK OR DEBT OBLIGATIONS OF U.S.
CORPORATIONS.
7.7. REPORTING AND REVIEW
AN INVESTMENT REPORT SHALL BE PREPARED ON A QUARTERLY
BASIS AND SUBMITTED TO THE CITY MANAGER. AN ANNUAL
SUMMARY SHALL BE PUBLISHED IN A NEWSPAPAER OF LOCAL
CIRCULATION. THE FINANCIAL OFFICER AND DESIGNATED
INVESTMENT STAFF SHALL MEET AT LEAST QUARTERLY TO REVIEW
THE PORTFOLIO'S ADHERENCE TO APPROPRIATE RISK LEVELS AND
TO COMPARE THE PORTFOLIO'S TOTAL RETURN TO THE
ESTABLISHED INVESTMENT OBJECTIVES AND GOALS.
7.8. ETHICS AND CONFLICTS OF INTEREST
CITY OFFICERS AND EMPLOYEES INVOLVED IN THE INVESTMENT
PROCESS SHALL ADHERE TO THE RULES OF CONDUCT CONCERNING
CONFLICTS OF INTEREST AS STATED IN ART. IV, SECTION 9 (B)
OF THE CHARTER OF THE CITY OF FORT COLLINS, COLORADO.
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7.9. POLICY REVISIONS
THIS CASH MANAGEMENT AND INVESTMENT POLICY WILL BE
REVIEWED PERIODICALLY BY THE CITY MANAGER AND THE
FINANCIAL OFFICER AND MAY BE AMENDED BY CITY COUNCIL AS
CONDITIONS WARRANT.
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DEBT POLICIES
8. 1. POLICY STATEMENT
THE CITY OF FORT COLLINS RECOGNIZES THE PRIMARY PURPOSE
OF CAPITAL FACILITIES IS TO SUPPORT PROVISION OF SERVICES
TO ITS RESIDENTS. USING DEBT FINANCING TO MEET THE
CAPITAL NEEDS OF THE COMMUNITY MUST BE EVALUATED
ACCORDING TO TWO TESTS - EFFICIENCY AND EQUITY. THE TEST
OF EFFICIENCY EQUATES TO THE HIGHEST RATE OF RETURN FOR
A GIVEN INVESTMENT OF RESOURCES. THE TEST OF EQUITY
REQUIRES A DETERMINATION OF WHO SHOULD PAY FOR THE COST
OF CAPITAL IMPROVEMENTS. IN MEETING THE DEMAND FOR
ADDITIONAL CAPITAL FACILITIES, THE CITY WILL STRIVE TO
BALANCE THE LOAD BETWEEN DEBT FINANCING AND "PAY AS YOU
GO" METHODS. THE CITY REALIZES FAILURE TO MEET THE
DEMANDS OF GROWTH MAY INHIBIT ITS CONTINUED ECONOMIC
VIABILITY, BUT ALSO REALIZES TOO MUCH DEBT MAY HAVE
DETRIMENTAL EFFECTS. THROUGH THE RIGOROUS TESTING OF THE
NEED FOR ADDITIONAL DEBT FINANCED FACILITIES AND THE
MEANS BY WHICH THE DEBT WILL BE REPAID, THE CITY WILL
STRIKE AN APPROPRIATE BALANCE BETWEEN SERVICE DEMANDS AND
THE AMOUNT OF DEBT.
8.2. AUTHORIZATION FOR MUNICIPAL BORROWING
THE CHARTER AUTHORIZES THE BORROWING OF MONEY AND THE
ISSUANCE OF THE FOLLOWING SECURITIES TO EVIDENCE
INDEBTEDNESS:
- SHORT-TERM NOTES,
- GENERAL OBLIGATION SECURITIES,
- REVENUE SECURITIES,
- REFUNDING SECURITIES,
- SPECIAL ASSESSMENT SECURITIES,
- TAX INCREMENT SECURITIES, AND
- ANY OTHER SECURITIES NOT IN CONTRAVENTION OF THE
CHARTER.
THE CHARTER ALSO REGULATES WHICH SECURITIES MAY BE ISSUED
ONLY AFTER A VOTE OF THE ELECTORS OF THE CITY AND
APPROVED BY A MAJORITY OF THOSE VOTING ON THE ISSUE.
ELECTION REQUIRED
SECURITIES PAYABLE IN WHOLE OR IN PART FROM AD VALOREM
TAXES OF THE CITY EXCEPT TAX INCREMENT SECURITIES. THE
AGGREGATE SUM OF THESE SECURITIES WHICH HAVE NOT BEEN
REFUNDED OR DEFEASED SHALL NOT EXCEED 10 PERCENT OF THE
ASSESSED VALUATION OF TAXABLE PROPERTY WITHIN THE CITY.
37
ELECTION NOT REQUIRED
- SHORT-TERM NOTES (12 MONTHS OR LESS) ISSUED IN
ANTICIPATION OF THE COLLECTION OF TAXES AND OTHER
REVENUE.
- SECURITIES ISSUED FOR THE ACQUISITION OF WATER
RIGHTS OR CAPITAL IMPROVEMENTS FOR WATER TREATMENT.
- SECURITIES PAYABLE SOLELY FROM REVENUE OTHER THAN
AD VALOREM TAXES OF THE CITY.
- REFUNDING SECURITIES ISSUED TO REFUND AND PAY
OUTSTANDING SECURITIES OTHER THAN THOSE PAYABLE IN
WHOLE OR PART FROM AD VALOREM TAXES.
- SECURITIES FOR ANY SPECIAL OR LOCAL IMPROVEMENT
DISTRICT.
- TAX INCREMENT SECURITIES PAYABLE FROM AD VALOREM TAX
REVENUE DERIVED FROM INCREASED VALUATION FOR
ASSESSMENT OF TAXABLE PROPERTY WITHIN A PLAN OF
DEVELOPMENT OR OTHER SIMILAR AREA AS DEFINED BY
APPLICABLE STATE STATUTES.
SECURITIES ISSUED FOR THE ACQUISITION OF EQUIPMENT
OR FACILITIES PURSUANT TO A LEASE-PURCHASE CONTRACT.
8. 3 . CONDITIONS FOR USING DEBT
DEBT FINANCING OF CAPITAL IMPROVEMENTS AND EQUIPMENT WILL
BE DONE ONLY WHEN THE FOLLOWING CONDITIONS EXIST:
- WHEN NON-CONTINUOUS PROJECTS (THOSE NOT REQUIRING
CONTINUOUS ANNUAL APPROPRIATIONS) ARE DESIRED;
- WHEN IT CAN BE DETERMINED THAT FUTURE USERS WILL
RECEIVE A BENEFIT FROM THE IMPROVEMENT;
- WHEN IT IS NECESSARY TO PROVIDE BASIC SERVICES TO
RESIDENTS AND TAXPAYERS (FOR EXAMPLE, PURCHASE OF
WATER RIGHTS) ;
- WHEN THE RIGHTS OF BOND BUYERS AND SUBSEQUENT
INVESTORS ARE PROTECTED THROUGH FULL DISCLOSURE; AND
WHEN TOTAL DEBT, INCLUDING THAT ISSUED BY
OVERLAPPING GOVERNMENTAL ENTITIES, DOES NOT
CONSTITUTE AN UNREASONABLE BURDEN TO THE RESIDENTS
AND TAXPAYERS.
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8.4. DEBT INDICATORS AND TARGET LEVELS OF DEBT
WHILE NO ABSOLUTE MEASURES OF DEBT BURDEN EXIST, THE CITY
RECOGNIZES THAT MUNICIPAL BOND RATING AGENCIES AND
FINANCIAL ANALYSTS HAVE ESTABLISHED KEY DEBT INDICATORS
BY WHICH THEY EVALUATE THE CREDIT STRENGTH OF ISSUERS.
SINCE DEBT ISSUED BY ENTITIES SHARING THE SAME GEOGRAPHIC
AREA, FOR EXAMPLE, POUDRE R-1 SCHOOL DISTRICT, CANNOT BE
CONTROLLED BY THE CITY, THE INDICATOR THAT WILL BE USED
WILL BE CALCULATED USING ONLY DIRECT DEBT ISSUED BY THE
CITY FOR ITS UTILITIES AS THE RATES COLLECTED FOR
SERVICES ARE THE SOURCE OF REPAYMENT. THE CITY COUNCIL
HAS CHOSEN TO USE DIRECT DEBT SERVICE AS A PERCENT OF
GENERAL FUND AND DEBT SERVICE EXPENDITURES TO MONITOR ITS
DEBT.
THIS INDICATOR MEASURES HOW THE CITY'S DEBT BURDEN
COMPARES TO FINANCIAL OPERATIONS. AS DEBT SERVICE
REQUIREMENTS INCREASE, THE FLEXIBILITY TO MAKE DECISIONS
REGARDING OTHER EXPENDITURES IS REDUCED. EXCESSIVE DEBT
MAY BE INDICATED IF THE PERCENTAGE IS MAINTAINED AT VERY
HIGH LEVELS. A DEBT SERVICE TO OPERATING BUDGET EXPENSES
RATIO OF 10 TO 15 PERCENT IS CONSIDERED FAIR; OVER 15
PERCENT IS GENERALLY CONSIDERED POOR.
THE TARGET INDICATOR IS:
DIRECT DEBT SERVICE AS A PERCENT OF OPERATING
EXPENSE: 10 TO 12 PERCENT FOR THE 1991-1995 PERIOD.
RECENT CREDIT ANALYSES OF CITY ISSUES HAVE NOTED THE DEBT
BURDEN OF THE CITY IS ABOVE AVERAGE AND HAVE QUESTIONED
THE ABILITY TO MEET FUTURE DEBT SERVICE DEMANDS. BY
ESTABLISHING A TARGET INDICATOR DEFINED ABOVE AND
MANAGING DEBT ACCORDINGLY, THE CITY INTENDS TO REDUCE ITS
DEBT BURDEN OVER THE NEXT FIVE YEARS.
SINCE THE CITY'S SUSTAINED GROWTH CAUSES DEMAND FOR
CAPITAL IMPROVEMENTS AND RESULTING DEBT FINANCING, THE
CITY TARGET IS ESTABLISHED AT A LEVEL ABOVE THE MEDIAN
FOR CITIES OF COMPARABLE SIZE. THE CITY TARGET IS ALSO
ADJUSTED BECAUSE CERTAIN PORTIONS OF ITS DEBT BURDEN ARE
SELF-SUPPORTING. SPECIFICALLY, ANHEUSER-BUSCH HAS PLEDGED
TO COVER A LARGE SHARE OF THE SALES TAX REVENUE DEBT.
PROPERTY TAXES FROM THE DOWNTOWN DEVELOPMENT AUTHORITY
DISTRICT ARE PLEDGED TO COVER ITS DEBT SERVICE. FINALLY,
SPECIAL IMPROVEMENT DISTRICT DEBT WAS ISSUED ON THE
PREMISE THAT IT WOULD BE SELF-SUPPORTING. THEREFORE, THE
INDICATOR WILL BE TRACKED USING THREE DIFFERENT DEBT
LOADINGS. THE FIRST IS A FULL LOADING OF DIRECT DEBT,
SIMILAR TO THE CALCULATION METHOD USED BY MOODY'S
INVESTOR SERVICE. THE SECOND SUBTRACTS OUT FROM THE
MOODY'S CALCULATION THE FULL ANHEUSER-BUSCH DEBT PORTION,
FIFTY PERCENT OF SPECIAL IMPROVEMENT DISTRICTS DEBT, AND
39
TWENTY PERCENT OF THE DOWNTOWN DEVELOPMENT AUTHORITY
DEBT. THE FINAL LOADING DEDUCTS ALL ANHEUSER-BUSCH,
SPECIAL IMPROVEMENT DISTRICTS, AND DOWNTOWN DEVELOPMENT
AUTHORITY DEBT.
DIRECT DEBT SERVICE AS A PERCENT OF OPERATING EXPENSE:
10 TO 12 PERCENT FOR THE 1991-1995 PERIOD.
Annual Direct Debt Service As A
Percent of Total Expenditures
30 Total Direct Debt
(Moody's Calculation)
25
Direct Debt
20 Less Some
Self-Supporting
15 - - - - - - - - - - - - - - - - - - - - - - - - - - -
Target Zone
10 - - - - - -
5
Direct Debt
Less All Self-Supportl
0
1980 1982 1984 1986 1988 1990 1992 199
Year - - - projected - - -
8 . 5. SOUND FINANCING OF DEBT
WHEN THE CITY UTILIZES DEBT FINANCING, IT WILL ENSURE
THAT THE DEBT IS SOUNDLY FINANCED BY:
- CONSERVATIVELY PROJECTING THE REVENUE SOURCES THAT
WILL BE USED TO PAY THE DEBT;
40
FINANCING THE IMPROVEMENT OVER A PERIOD NOT GREATER
THAN THE USEFUL LIFE OF THE IMPROVEMENTS;
DETERMINING THAT THE BENEFITS OF THE IMPROVEMENT
EXCEED THE COSTS INCLUDING INTEREST COSTS; AND
MAINTAINING A DEBT SERVICE COVERAGE RATIO WHICH
ENSURES THAT COMBINED DEBT SERVICE REQUIREMENTS WILL
NOT EXCEED REVENUES PLEDGED FOR THE PAYMENT OF DEBT.
EVALUATING PROPOSED DEBT AGAINST THE TARGET DEBT
INDICATORS.
8. 6. FINANCING METHODS
THE CITY MAINTAINS THE FOLIAWING POLICIES IN RELATION TO
METHODS OF FINANCING USED TO ISSUE DEBT:
TOTAL GENERAL OBLIGATION (PAYABLE FROM PROPERTY TAX
LEVIES) DEBT WILL NOT EXCEED 10% OF ASSESSED
VALUATION PER THE CITY CHARTER;
WHERE POSSIBLE, THE CITY WILL USE REVENUE OR OTHER
SELF-SUPPORTING BONDS INSTEAD OF GENERAL OBLIGATION
BONDS;
WHEN APPROPRIATE, THE CITY WILL ISSUE NON-OBLIGATION
DEBT, FOR EXAMPLE, INDUSTRIAL DEVELOPMENT REVENUE
BONDS, TO PROMOTE COMMUNITY STABILITY AND ECONOMIC
GROWTH;
STAFF WILL MAINTAIN OPEN COMMUNICATIONS WITH BOND
RATING AGENCIES ABOUT ITS FINANCIAL CONDITION AND
WHENEVER POSSIBLE, ISSUE RATED SECURITIES; AND
STAFF WILL EXCHANGE INFORMATION WITH LARIMER COUNTY,
POUDRE R-1 SCHOOL DISTRICT, THE POUDRE VALLEY
HOSPITAL DISTRICT AND OTHER ENTITIES WHOSE DEBT
WOULD CONTRIBUTE TO THE OVERLAPPING DEBT INDICATORS
FOR THE PURPOSE OF MONITORING SUCH DEBT BURDENS.
ANNUAL BUDGETS INCLUDE APPROPRIATIONS FOR DEBT SERVICE
PAYMENTS AND RESERVE REQUIREMENTS FOR ALL OUTSTANDING
DEBT AND FOR DEBT ANTICIPATED TO BE ISSUED WITHIN THE
ENSUING BUDGET YEAR.
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