Loading...
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