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HomeMy WebLinkAboutPACKET Town Board Study Session 2008-02-08STUDY SESSION TOWN BOARD Friday, February 8,2008 9:00 a.m. Town Board Room 170 MacGregor Ave. AGENDA 1. 2008 Economic Outlook 2. Requests for Funding: a. EP Housing Authority Loan Extension b. SOPA subsidy and site preparation c. EP Urban Renewal Authority Loan d. Elkhorn Lodge Redevelopment Bypass Road 3. Town Projects: a. Barns Complex b. Future Transportation Needs 02/06/2008 WED 18:05 FAX 9705862816 EP Administration @001 *************************** *** FAX MULTI TX REPORT *** *************************** JOB NO. 0001 PGS. 1 TX/RX INCOMPLETE ----- TRANSACTION OK 6672527 5869532 5866336 5861691 6353677 2247899 5771590 ERROR 5869561 STUDY SESSION TOWN BOARD Friday, February 8,2008 9:00 a.m. Town Board Room 170 MacGregor Ave. AGENDA 1. 2008 Economic Outlook 2. Requests for Funding: a. EP Housing Authority Loan Extension b. SOPA subsidy and site preparation r CE) 1 Irhan Danau,al Al,+11.r;+i, 1 -an 1 Vr. 1- kj'di. TOWN OF ESTES PARK MAJOR EXPENDITURE OPTIONS 2008-2013 Date: February 6,2008 To: Honorable Mayor Baudek and Trustees Town Administrator Halburnt Deputy Town Administrator Richardson From: Finance Officer MeFarland Background The Town of Estes Park is presented with several long-term opportunities involving significant expenditures/uses of resources. The current opportunities are as follows (in no order of importance): 1. Requests for Funding: a. EP Housing Authority Loan Extension b. Supporters of the Performing Arts subsidy and site preparation c. EP Urban Renewal Authority Loan d. Elkhorn Lodge Redevelopment Bypass Road 2. Town Projects: a. Bams Complex b. Future Transportation Needs As assets and resources are limited, some prioritization of said opportunities is in order. For some time, staff has utilized a spreadsheet that projects cash flow in the General Fund for 5 years beyond published budgets (attached Exhibit 1). The forecasts are based on existing trend lines, inflation and interest rates, and desired fund balance targets. The byproduct of this analysis is a projected spin-off of funds into the Community Reinvestment Fund (CRF) (attached Exhibit 2). In English, staff projects General Fund balance for the purpose of 1) protecting the ! General Fund and 2) determining a reasonable, safe amount of money that can be committed to capital projects beyond those found in the General Fund. 1 Assumptions 1. General Fund balance ratio is projected at 30% throughout the document. Staff identified this as a target ratio in the pre-budget study session last year. The size of a local government' s fund balance can affect its ability to withstand financial emergencies. Twenty-five to thirty percent, or approximately 3 months operating expenses, is an industry standard GF balance ratio, although some towns choose to have more or less, depending upon the financial situation. Resort towns, which rely heavily on sales tax, tend to lean toward the higher percentage. Each percent of fund balance is equal to approximately $100,000 per year, increasing to $125,000 by 2013. General Fund Balance Ratio is defined as being "GF fund balance / (GF payroll + O&M + capital + GF transfers to other accounts)." 2. Inflation/CPI is projected at 3.5%/year. No allotment has been made for economic recession. "A recession is traditionally defined in macroeconomics as a decline in a country's real Gross Domestic Product (GDP) for two or more successive quarters of a year (equivalently, two consecutive quarters of negative real economic growth)" - Wikipedia). The last two recessions as defined by the National Bureau of Economic research were July 1990 - March 1991, and March 2001 - November 2001. Interestingly, Estes Park sales tax did not decline during either period. Sales tax in 2002 was down 1.2% from Jan-June, and 2.45% from July-December. One could argue that the sales tax decline in 2002 was due more to the July fires than the 2001 recession. Sales tax numbers during those periods were: a. 1990: $3.10 m b. 1991: $3.35 m c. 1992: $3.70 m d. 2000: $5.92 m e. 2001: $6.16 m £ 2002: $6.04 m There are other outside factors that could affect the economy in Estes Park and the most likely scenario would be a fire. 3. The adopted 2008 CRF budget includes financing the barn project in its entirety and the site prep work for the performing arts complex. These expenses were offset by the revenue also included in the CRF for the sale of Lot 4. Our plan in the CRF for the barns was to finance 2.6 million (with a payback of $330,000/yr for 10 years) and pay $900,000 cash through a combination of fund balance and Lot 4 proceeds. We now know that Lot 4 will most likely not be sold 2 in 2008 and these items along with SOPA site prep have all been removed from the attached exhibits for the purpose of showing true cash available in CRF. Availabilitv of resources 1. Community Reinvestment Fund (CRF) Based on the above assumptions, the General Fund can afford to contribute approximately $550,000/year to CRF. Ending fund balance for CRF shows the following cumulative available amounts (rounding): With SOPA subsidy 2008: $1.33 m 2009: $1.88 m 2010: $2.43 m $2.2 m 2011: $2.98 m $2.5 m 2012: $3.53 m $2.9 m 2012: $4.08 m $3.2 m According to the MOU with SOPA, the board committed to contribute $217,000 annually to fund subsidies in the operation. If 100% of construction costs are raised, this commitment should start in 2010 and reduce the amount of available CRF balance, as depicted in the above column. 2. General Fund From the General Fund, $270,000 could be made available in 2008 by purchasing the I new fire truck from the Vehicle Replacement Fund. 3. Catastrophic Loss The only other fund that has significant monies available for borrowing is Catastrophic Loss (approximately $1.Om). All other fund balances are either insignificant, are pledged to specific resources, or are tied up through bond or potential financing covenants and/or restrictions. For the purposes of this discussion, it is assumed that any and all expenditures totaling an aggregate of more than $3.2m between now and 2013 are going to require some sort of financing. 3 Consideration of the GF ratio and the Catastrophic Loss Fund Tabor Regulations require us to maintain a 3% emergency reserve to be used in the event that an unforeseen loss would not be covered by the town's insurance. For 2008, the required 3% reserve equals an estimated $581,316; however the fund balance is $2,386,983. $750,000 is currently on loan to the EPHA, leaving $1,636,983. By considering the tabor requirement of $581,316, we have an additional $1,055,667 in the fund. The Catastrophic Loss fund is to be used to address the loss of infrastructure (buildings, roads) in the case of a calamity, such as a flood, earthquake or fire. No mention of using funds to offset the affects of recessions or plagues (flu) is made. Some consideration may be given to including the Catastrophic Loss fund when calculating the 30% target for the General Fund ratio calculation. The additional $1,055,667 cited above would increase the GF ratio to 38%. 4 1 d. Elkhorn Lodge Redevelopment Bypass Road Developers Bob Koehler and Frank Theis have asked the town to contribute financially to a north-south "bypass" road through their proposed redevelopment of the Elkhorn Lodge property to connect to Elm Road. There is no denying that this road has been envisioned by past town leaders as an alternate road to move traffic through Estes Park and the developers say many past town leaders have promised to financially contribute to the road if it ever became a reality. In the scenario they've presented, the town would be responsible for the cost of the road through the lower 24 acres (the developers estimate at approx. $1,000,000, not including the bridge or traffic signals). The developers would be responsible for the cost of the road through the upper 40-acre parcel. The financial responsibility of connecting Elm Road into the new road lays with the town. Scott Zurn is projecting the Elm Road cost at an additional $1,200,000. Van Horn Engineering is currently projecting cost estimates for the road, but so far, those estimates are different from Mr. Zurn's. The developers are projecting the road will be built over a 3-4 year period. Options: - One lump sum payment to the developers for the road; -Make annual payments plus interest over 4-6 years, subject to annual appropriation; -Negotiate a partial payment plus tax rebates; fee abatements -Negotiate complete payment through tax rebates; fee abatements 8 OPPORTUNITIES 1 a. EP Housing Authority Loan Extension The $2.6lm EPHA loan is spread across 4 funds. A request has been made to extend the life of the loan to June 2010. Since the EPHA loan was originally budgeted to be repaid in 2008, the general fund portion ($860,000) is still included in total revenues for 2008. Foregoing the repayment will reduce the GF ratio to 22%. The upside is that for the life of the extension, the Town will always draw .25% more in interest income than it would ifthe monies were invested in conventional methods, and the rate is locked at 5.43% until June 2008. This is especially attractive in the current scenario of declining interest rates. The Town will be paid $141,000 in interest over the June 2007 - May 2008 period for this loan. It is impossible to calculate what we would earn for the same period in our money market accounts (as we do not know the rate environment for the future), but the "+.25%" in the EPHA contract ensures at least $6,500 more than we would otherwise be paid. The continuation of the EPHA loan does not have an effect on the CRF, but does expose the Town to be less adaptable/amenable to other opportunities and economic "surprises". Options: 1 -Do not extend the loan repayment, which would require EPHA to obtain a loan to repay the town; -Only require payment of the general fund portion and extend the loan on the other three funds; -Extend the loan across the board at the requested 2 year length; -Or reduce the extension to 1 year and review the situation at that time 5 1 b. Supporters of the Performing Arts Subsidv and Site Preparation The performing arts complex (PAC) is a complicated project that involves an MOU, a fiduciary fund held by the Town, the sale of an asset that is legally entangled, fund raising, escalating construction costs, and Town monies to be contributed for ongoing operation. The CRF has historically paid the $220,000 conference center lease. Said payments stop after the 2008 year. It has been suggested that the Town will begin operational funding of the PAC at a corresponding level. In attached Exhibit 2, please note that this subsidy is accounted for beginning in 2010. We've continued the $550,000 annual transfer from the general fund, but in reality, the SOPA subsidy reduces the amount available to $330,000. The current MOU outlines that SOPA must raise 100% of the construction cost of the theatre and will be responsible for the operations, management and maintenance of the theatre. In exchange, the town will provide the building site, $700,000 in site preparation costs contingent upon the sale of Lot 4, and will provide an annual subsidy of $217,000, based upon annual appropriation ofthe funds. Options: -If 100% of the funds are not raised and/or the sale of Lot 4 has not taken place by 12/31/09, the town may terminate the MOU; -SOPA representatives have also discussed asking the town to issue a bond for construction costs, trusting they will eventually raise all of the money to pay back the debt (this could also be taken to a vote) 6 1 c. EP Urban Renewal Authoritv Loan In order to complete the $1.5m Riverwalk project, it has been projected that EPURA needs to borrow approximately $600,000 from the Town beginning almost immediately. This could be mostly repaid by August, leaving a potential balance due the Town of around $50,000 by the end of the year that EPURA may or may not be able to repay through its property tax allotments received in 2008. There will be no allotments received in 2009, since we recently found out 2007 was the last year of tax increment. The loan could be procured from several sources described above, including GF, CRF, and even Catastrophic Loss. Options: -Abandon the Riverwalk project and identify alternative project(s) whose costs more closely approximate the projected 2008 intake of funds ($900,000); -Short term loan of $600,000 to EPURA as shown below. $500,000 would be repaid by July 2008, with a balance of $41,435 left at the end of 2008 -Reduce the scope of the Riverwalk project to save costs -Require payments of any balance with 0&M funds Perhaps the most interesting question to ask involves to what level the Town intends to fund EPURA beyond 2008. The general fund budget (Exhibit 1) assumes continuation of the existing $200,000/year IGA. The logic of continuing to pay $200,000/yr for several years while separation occurs from the new base year to the point where significant funds flow in from property taxes and something can be built, is debatable. EPURA 2008 PROJECTED CAPITAL PROJECT CASH FLOW EPURA BEG PROJECTED CAP END CASH INCOME PROJECT CASH 1/1/2008 $500,000 Jan-08 0 300,000 200,000 Feb-08 16,926 300,000 (83,074) Mar-08 230,052 400,000 (253,022) Apr-08 107,680 400,000 (545,342) May-08 215,612 100,000 (429,731) Jun-08 115,708 (314,022) Jul-08 228,916 (85.107) Aug-08 12,626 (72,481) Sep-08 10,515 (61,966) Oct-08 5,865 (56,102) Nov-08 4,119 (51,983) Dec-08 10,548 Oil,435) $958,565 $1,500,000 ($41,435) 7 2 b. Future Transportation Needs The transportation program (101-5600 in the GF) is approximately $200,000/year. This is expected to double in 2009, which could have a direct effect on the amount of monies available for the CRF. The question here is, "Is continuation of the transportation program important enough to either reduce the transfer to CRF or to cut funding to another department or fund?" One creative option would be to shift some funding in 2008 (purchase $270,000 fire truck from Vehicle Replacement rather than GF, and earmark the savings for future transportation costs). Options: -Reduce hours and/or routes -Eliminate transportation 10 2 a. Barns Complex The barns project is another fairly complex project in that it involves various stages of build-out and funding have been discussed. The 2008 budget calls for using $900,000 of available cash coupled with a $2.6m loan in CRF, the repayment of which would be about $330,000/yr for 10 years. The 2008 budget also projected the sale of Lot 4, from which approximately $600,000 would be used in the total project cost. Without this, the Town is looking at a minimum of al-year delay before starting. The best use of funds from a Net Present Value standpoint would have the Town using all available fund balance in 2010 ($2.3m) and financing the balance ($ 1.2m). The bams project would have a repayment schedule of approximately $220,000/yr for 10 years. This would leave around $110,000 in CRF on an annual basis for other projects. Options: Other financing concepts have included: -Build in phases as cash becomes available (this yields the worst NPV); -Various ratios of cash plus loans; -Taking the project to a vote, thus transferring costs to property tax increments The scenarios shown to the public in the January 31, 2008 meeting at the Museum were as follows. Specific values were omitted, but the point is that the best Net Present Value for the project is to move ahead now, paying as much as possible as a down payment and financing the balance. BARNS FINANCING OPTIONS 2008 2010 2014 NPV Pay cash 2.3m 1.7m 4.025m Finance 3.5rn 4.17lm Con*o 2.3m 1.2m 3.706m 9 Making sense of the options Staff believes that the best way to approach prioritization of the opportunities is to look at what is "real". The Town has made a commitment to SOPA to provide operational support in the amount of $220,000 starting in 2010 (assuming MOU requirements are met on the part of SOPA). We have therefore included this amount in the CRF page and have "blocked off' the funds. While this does not directly affect building projects (CRF funds) the Town will need to determine what to do with the EPHA loan and EUPRA requested loan at the February 12, 2008 Board meeting. This leaves the Town to wrestle with how to prioritize barns, Elkhorn Lodge and transportation. Transportation is part of the General Fund and might be able to be dealt with within the fund. The most readily available funds for the remaining projects are the $330,000 net to CRF each year. 11 \30 .0 00 0 6* /9 0 0 0 0 a= S 4g el \© \P 00 0 t% N \2 00% 00- C C ©© 0 Choo 00 1 € .8 a -1-1 4 2 & - & Mt- f&C N~ u a .2 E r 4 38#3&1.36 U 5 0 W . W 600 5 m $3,182,165 $3,476,917 $3,515,776 $3,585,828 $3,690,568 $3,792,993 Total Revenues 12,161,488 11,652,935 11,995,717 12,352,105 12,680,938 13,007,618 8,701,318 8,509,994 8,807,843 9,116,118 9,435,182 9,765,413 50,000 50,000 50,000 50,000 50,000 50,000 000'069 000'059 000'055 000'055 000'056 000'059 9Lt'LLZ 9E'OLE 965'£9E tgL'Ldz. 6LE'6+Z •8'0*Z 000'003 00 'OOZ 000'001 00'001 000'OOZ 000'OOZ 4!IONiny 6LI'9SI'€ I£~'071'£ Lt,Z'I€I'£ 28'LIT'f £80'POI'£ 8It'59 I'E FO Sa U.1 1401 926'58 SZP'ZOI OPL'POI 190'OL 658'8£ ISL'P6Z .!BaX JOJ AloU Ils.3 13% '8LI 0L6'ELI Ig9'L9I *08't75I 69§'6*I IMU@0 JOIUO ~'006'I 000'006'I 000'006' I 000'006'I 000'006'I 00'5LB'I nuams 101!SIA UOUUOAUOO 616'8LS'£$ 966'26L'ES 895'069'£$ WIN'585'fs 9LL'SIS'£$ LIG'9LP'FS nueigq punJ Buipua Statement ofRevenue, Expenditures, and Fund Balance Projected Exhibit 1 - GENERAL FUND TOWN OF ESTES PARK %09+ DOE'17 E[IVWI.LSE[ - GN,YO + puuosiod)/ aormieq pund 0602 0~63 (goisue#+Solturpuodxo [mo»orn?[eq pund 01/31/08 GENERAL Description 2008 Transfers Out .IMII@j @OU@.I SjUJAH IED Vw /9 8 64 N 00 A. 2 51 1% 8 e ZE 49 -S = C = 4,1, p $ E 1 4 h ~ m 73 1 *3 3 ~ 1 fir ~o ~9 1 1 ~ CA H £ co A E- E- W co U co Co E- O CO ca - 9/ g EZE ; 6 - L O W ·5 $1,044,458 $1,327,333 Sl,877,333 $2,207,333 $2,537,333 $2,867,333 General Fund 650,000 550,000 550,000 550,000 550,000 550,000 700,000 550,000 550,000 550,000 550,000 550,000 PA subsidy - - 220,000 220,000 220,000 220,000 217,125 - 220,000 220,000 220,000 220,000 000'021 000'OZE 000'otz 000'022 SZI'L9Z sasuadxi 000'021 000'015 000'OZE 000'ON - 521'Lit sun,!puadxi imol 000'09£ 000'00£ 000'0££ 000'0££ 000'099 5LN'281 ,MoU qse j FAI £££26I'£$ £££'L98'3$ CE€'LES'ES £9£'LOCES £££'LLWIS CE¢LZE' IS nueleg puni Nuiput Exhibit 2 - COMMUNITY REINVESTMENT FUND Projected 50,000 50,000 - - - Services 50,000 renee Center Lease 217,125 - - - - - 000'00I 000'05 [mId Igiseur OREumip 000'on [Budeo fo - - - 000'OSI ic;!dgo IB,01 uo!,d!.I,gaa NUES/SOURCES OF CASH f fixed assets (Lot 4, Stanley) financing - OF CASH pappou - Buls!Elpury (SOOZ) 1~5 inopirn s Memorandum February 7,2008 To: Mayor Baudek and Town Board of Trustees From: Gerald Swank, Chairman, EPURA; Wil Smith, Director, EPURA A...,£~"~ Re: Short-Term Loan for EPURA Project The EPURA Board of Commissioners takes great pride in the final project of its current life. A primary goal of the Town and the EPURA Board has been to connect the Riverwalk throughout downtown. Very recently, it has become feasible to do this with the cooperation of Sharon Seeley, owner of the Park Theater Mall and the River Shops. Sharon has agreed to allow EPURA to connect the Riverwalk through the Mall and along the area of the River Shops to Moraine Avenue. This will accomplish a continuous Riverwalk throughout downtown Estes Park! In order to accomplish this, the work has to be done in the off-season, a fast track endeavor. to be sure. It has to be finished by May, in order to minimize inconvenience to the merchants and to maximize the advantage of the prime tourist season. EPURA has the financial resources to do this project in the form of property tax increment from 2007 that will come in over the course of 2008. The project cost is estimated at just under $1,500,000. The property tax increment to EPURA is just under $1,500,000. The problem is, due to the necessary fast track of the project, EPURA will be receiving invoices from the contractor and the consultants sooner than the property tax increment will be received. In order to pay the contractor and consultants in a timely manner, EPURA needs to borrow an estimated $600,000 from the Town. Most of this, an estimated $500,000, could be paid back by the end of July, 2008. The remaining $100,000 would be paid back as soon as the property tax increment becomes available or no later than the end of 2008. In the unlikely event of a minor shortfall, any difference would be paid out of EPURA's 2009 funding. The attached table, prepared by Finance Director MeFarland, shows the anticipated tax increment inflow as "projected income" and the anticipated timing of the project expenses. EPURA respectfully requests that these funds be made available, so that the project can be accomplished before the busy season and this milestone of accomplishment can be realized. EPURA 2008 PROJECTED CAPITAL PROJECT CASH FLOW EPURA BEG PROJECTED CAP END CASH INCOME PROJECT CASH 1/1/2008 $500,000 Jan-08 0 300,000 200,000 Feb-08 16,926 300,000 (83,074) Mar-08 230,052 400,000 (253,022) Apr-08 107,680 400,000 (545,342) May-08 215,612 100,000 (429,731) Jun-08 115,708 (314,022) Jul-08 228,916 (85,107) Aug-08 12,626 (72,481) Sep-08 10,515 (61,966) Oct-08 5,865 (56,102) Nov-08 4,119 (51,983) Dec-08 10,548 (41,435) $958,565 $1,500,000 ($dll,435) The Fairgrounds at Stanley park Proposed Stall Barns Public input session Young Families Survey 1. Given the information on the master plan, do you feel that the new stall barns should be used year round or only in the summer? 29 Yes 0 No 2. What other activities or functions would you like to see the barns be capable of doing? Year around family use, Something for all ages, racquet ball, Ice rink (10) Kids play room (5) Young kids area (12) Recreation (2) Tennis ( 4) pony rides Walking track. 3. Given the Choices for paying for the barns, and the pricing differences, which ofthe following would you rather the town board consider in the building a $3 million dollar barn? a. Build all 60,000 square feet at this time and finance the whole project (23) b. Phase lhe project over a period of time and finance a portion of it. (3) c. Pay as you go. (3) Comments: More winter activities for children and families indoors (11) Indoor playhouse/playground Snack stand Love the idea Love to see something for our children indoors in winter (3) We end up driving to the valley for children' s activities, then shop. (4) Warm swimming pool with castle Feel isolated in winter would love a facility like this. .. The Fairgrounds at Stanley Park Proposed Stall Barns Public Input Open House SURVEY 1. Given the information on the master plan, do you feel lhat the new stall barns should be used year around or only in the summer? 17out of 18 people said yes. 1 did not answer 2. What other activities or functions would you like to see the barns be capable of doing? • Indoor activities - 1 • Ice skating/ice activities - 11 • Horses -1 • Tennis - 2 • Family Activities - 1 • Weights - 1 • Volleyball - 1 • Handball - 1 • Ping Pong - 1 • Walking track - 2 • Dog Shows - 4 • Basketball - 1 • Misc. Sports - 3 • Railroad Show - 1 • Business Conferences - 1 • High Altitude Training - 1 • As Much as Possible - 3 • Home Show - 1 • Other Shows - 2 3. Given the choices for paying for the barns, and the pricing differences, which ofthe following would you rather the town board consider in building a $3 million dollar barn? a. Build all 60,000 square feet at this time and finance the whole project. (11) -Pay what you can and finance the rest. (6) b. Phase the project over a period of time and finance a portion of it. c. Pay as we go. Other options: Comments: • Would love to help with the project • Think in terms of generating revenues and opportunities for local residents during the winter months • Lets jettison from 1950 into the 21 century as fast as we can for our community • These investments are critical to make now: The longer we wait the further behind our town falls. Please spend the money and get this going now. • Best idea in a long time. • Definitely keep tennis in the design • Expandable end walls for future enlargement • Remember that in the winter you have to get people downtown, difficult yes but must be done • Unlimited use needed for indoor facilities • Year round possible • Keep use for residents and not rented out every weekend - balance should be planned • New horse barns are quite close to Sr Center and museum, what about enough parking? • Shuttles - yes (2) • October Fest - look at the success of Scottish Fest! • How does this affect the Perf. Arts Center? That project needs money too. . • Need public trans to the valley • Need to know cost of building as well as revenue and operating expenses. • Free to residents • Stipulation on building - energy efficient - providing own power through wind and solar • CV13 should be open for visitors, it was closed on New Years Day • Where will we get employees • Include environmental education in the building