HomeMy WebLinkAboutTB Study Session 2016-08-23
Town of Estes Park, Larimer County, Colorado August 23, 2016
Minutes of a Study Session meeting of the TOWN BOARD of the Town of
Estes Park, Larimer County, Colorado. Meeting held at Town Hall in the
Board Room in said Town of Estes Park on the 23rd day of August, 2016.
Board: Mayor Jirsa, Mayor Pro Tem Koenig, Trustees Holcomb,
Martchink, Nelson, Norris and Walker
Attending: All
Also Attending: Town Administrator Lancaster, Assistant Town Administrator
Machalek, Town Attorney White, Director Hudson and Town
Clerk Williamson
Absent: None
Mayor Jirsa called the meeting to order at 4:30 p.m.
FUND BALANCE POLICY.
Administrator Lancaster stated the Board has adopted a fund balance policy requiring a
minimum General Fund balance of 20%. The industry standard for determining the fund
balance percentage is to use the end of year Comprehensive Annual Financial Report.
Bond rating agencies also use this method to measure the financial health of the
organization. The fund balance policy has been interpreted and calculated by staff as it
relates to the General Fund only, includes one-time capital expenditures in the
denominator, includes all unreserved and unassigned fund balance including Tabor
reserves of 3%, excludes any reserved or assigned future fund balance usage, and is
specific to the audited end of year fund balance as of December 31st of each year. Due
to the seasonality of the Town’s sales tax revenue, the actual unrestricted fund balance
fluctuates considerably throughout the year, hitting a low point in the summer. Other
factors affect the fund balance including the lag time when the Town receives sales tax,
45-60 days, after remittance from local businesses to the State Revenue department;
grant revenues; the exclusion of capital projects and grant funded projects from the
calculation of General Fund unrestricted reserves; cash reserves from the General
Fund, Utilities, Special Revenue Funds, and Internal Services funds are pooled into an
aggregated checking account; and the Town maintains property and liability insurance
to provide coverage for significant losses, such as those experienced during the 2013
flood, eliminating the need for the Town to rely on accumulated fund balances to
respond to the losses and damages of the flood. Higher fund balances would reduce
the operating expenditures, thereby reducing services to the citizens. He suggested the
Board consider reserves for other Town funds and outline the guidelines in the fund
balance policy.
Finance Director Hudson presented graphs outlining financial data for 2011-2016 year
to date for General Fund balance by month, percentage of fund balance to total
expenditures and transfers out, and several charts outlining the funding gap and cuts
needed if the Board moved to a 20% fund balance required throughout the year. He
reiterated the fluctuation of the fund balance occurs due to the seasonality and lag in
sales tax collection by the Town causing the fund balance to rise and dip throughout the
year. He stated the end of the year is the most stable financially for most municipal
entities. The industry standard for fund balance and recommendation of CGFOA is two
months of operating reserves measured at the end of the year. In order to maintain a
20% reserve throughout the year, the Town would have to increase reserves by $3.1
million in 2015 and $1.26 million in 2016. This would require a reduction in services to
Town Board Study Session – August 23, 2016 – Page 2
meet the fund balance requirements. He suggested the Board consider a lower monthly
reserve and a higher annual reserve for the General Fund.
Discussion followed by the Board. Mayor Jirsa stated concern the Town does not have
an adequate safety net to ensure continued services during an emergency and concern
with the inclusion of restricted funds that cannot be used as working capital. He
commented the Town needs to address two different issues related to reserves and
cash flow to ensure the Town covers costs. An appropriate reserve should be
established prior to discussions of the 2017 budget due to the impacts it may have on
available funds for 2017. Trustee Norris would support a monthly minimum to ensure a
reasonable fund balance is maintained in the event of an emergency. Mayor Pro Tem
Koenig suggested the Board consider a tiered approach to increase the fund balance by
either a monthly or annual basis to lessen the impact on making a significant change in
one year. Trustee Nelson would not support a large fund balance and stated he
continues to be comfortable with the current risk associated with the 20% fund balance
determined by the end of year reporting. Trustee Walker would support a month-to-
month fund balance with the exclusion of the Tabor reserves in the calculation.
After further discussion the Board directed staff to recommend a monthly fund balance
and a year end fund balance percentage. Staff would report the monthly fund balance
percentage as part of the monthly dashboard report.
REVENUE ENHANCEMENTS.
Administrator Lancaster stated as a tourist community the Town continues to be
supported largely by sales tax revenue. The municipality has one of the lowest property
tax mil levies in Colorado. He presented the following areas for consideration by the
Board to enhance revenues, including annexation of commercial properties within the
Estes valley, formation of special purpose districts such as DDA, DBA, or URA, fees for
storm water utility, admission fees, or development fees, allowing marijuana
dispensaries, use tax, paid parking and/or move to Home Rule to begin collecting sales
tax locally and increase sales tax collection enforcement. The Town currently has an
agreement with Larimer County to consider annexation of commercial development or a
residential development of five or more units. Other communities have policies in place
that require annexation if a developer wants to obtain governmental utilities or services.
The Town could develop a similar policy. Paid parking can change driver behavior,
encourage the use of outlying parking lots, and be changed seasonally.
Director Hudson provided the Board with an estimated sales tax revenue generated
from the sales of marijuana locally with a low of $111,337, a high of 4490,785 and an
average of $236,498. He stated the Town could include an additional tax on
recreational sales of up to 10% as approved by the voters. The average additional tax
in Colorado has been 3.5%. The Town would become eligible for 15% from the State if
the Town allowed marijuana sales.
Board discussion has been summarized: Trustee Nelson stated paid parking rarely
breaks even with the cost of equipment and enforcement. Mayor Jirsa requested staff
investigate the potential of an IGA with the State for local sales tax enforcement. The
Board requested an executive summary on Home Rule, including the pros and cons.
Trustee Nelson stated the additional revenues from marijuana sales has offset the
additional cost of law enforcement. Trustee Norris stated concern with the eroded
image Estes Park would have as a family friendly destination if marijuana sales are
allowed. Mayor Pro Tem Koenig questioned the Town’s responsibility to the guest
visiting the Town and the federal lands surrounding the Town that prohibit marijuana as
it continues to be a felony at the federal level. Trustee Martchink stated the increase in
revenue from marijuana sales could help fund child care services. Staff suggested the
Town visit a community such as Breckenridge to better understand the impacts the sale
of marijuana has had on the community before moving forward with further action. The
Board requested staff address any possible revenue items prior to the 2017 budget
discussions.
Town Board Study Session – August 23, 2016 – Page 3
TRUSTEE & ADMINISTRATOR COMMENTS & QUESTIONS.
Trustee Norris read a prepared statement as it relates to Policy Governance sections
1.5.4.A and 2.1.8.8 which states it is the responsibility of the Town Board as a whole to
identify and prioritize projects for the Town staff, and decisions concerning a substantial
policy determination and/or a controversial nature shall be the responsibility of the full
Board. He commented the Board began investigating the desirability of moving two
different Town services to other organizations in the past three months, including the
transferring of Senior Services operations to the Estes Valley Recreation and Park
District with the full involvement of the Board, and more recently the investigation of
transferring the Estes Park Police Dispatch services to the Larimer County Sheriff’s
Office at the Mayor’s request. He stated concern that the transferring of dispatch
services has not been discussed by the full Board or agreed by the Board to move
forward with investigating the option. He requested the Board follow their Policy
Governance guidelines and discuss the matter with the entire Board and receive public
input on the issue before any additional action is taken. Town Board members Nelson,
Holcomb and Martchink agreed the item should be brought forward for discussion by
the Board prior to further investigation. Mayor Jirsa commented the Board has nothing
to discuss at this point in time and Administrator Lancaster was asked only to inquiry as
to the possibility of outsourcing dispatch. Trustee Walker agreed there was no policy
breach because staff has only requested information and no action has been taken.
Trustee Martchink stated the Town of Breckenridge’s Community Development
department has invited the Town to visit their community to better understand how they
have addressed child care and housing in their community.
Administrator Lancaster stated Director Hudson has suggested the Town consider a
lease purchase agreement to fund the additional floors for the parking structure at the
Visitor Center. The $435,000 obligated to the Street Improvement Plan (STIP) annually
could be used to fund the 15-year lease payments. Building the full parking garage
could save approximately $1 million and increase the potential contractors interested in
the project. The Board consensus was to move forward with investigating the option.
FUTURE STUDY SESSION AGENDA ITEMS.
None.
There being no further business, Mayor Jirsa adjourned the meeting at 6:45 p.m.
Jackie Williamson, Town Clerk