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HomeMy WebLinkAboutPACKET Town Board Study Session 2014-07-08 Tuesday, July 8, 2014 TOWN BOARD 5:00 p.m. – 6:30 p.m. STUDY SESSION Rooms 202/203 * Revised – July 7, 2014 5:00 p.m. Trustee Comments & Questions. 5:05 p.m. Future Study Session Agenda Items. (Board Discussion) 5:15 p.m. RTA Application. (Administrator Lancaster) 5:45 p.m. Break for Dinner Vacation Home Regulations & Enforcement. (Attorney White and Clerk Williamson) 6:00 p.m. Use of Project Contingencies. (Administrator Lancaster) 6:30p.m. Meeting Adjourn. Informal discussion among Trustees concerning agenda items or other Town matters may occur before this meeting at approximately 4:45 p.m. AGENDA                   July 8, 2014 July 22, 2014  Fish Hatchery Property Discussion July 23, 2014 (Special Meeting)  Update on Community Center Feasibility Study August 12, 2014  Commercially Zoned Properties Discussion August 26, 2014  Town Water Ownership / Issues Briefing September 9, 2014  2014 Objectives – Review of Progress October 14, 2014  Seasonal Tour Business - Follow Up Discussion November 11, 2014  Review Citizen’s Survey Results December 9, 2014  2014 Objectives – Review of Progress Items to be Scheduled (Items are not in order of priority)  Logo Discussion  Consideration of Adoption of Dangerous Building Section to Building Code  Museum / Senior Center Master Plan  Review of the Accelerated Development and Design Process Used for Parking Structure  Review Capital Investment Plan and Capital Asset Management Future Town Board Study Session Agenda Items Contact: Jeff Kraft, Director, Business Funding & Incentives Email: jeff.kraft@state.co.us 1625 Broadway, Suite 2700 Denver, CO 80202 Phone: (303) 892-3840 Website: www.AdvanceColorado.com Regional Tourism Act (RTA) Purpose The Regional Tourism Act creates a mechanism for a local government to undertake a regional tourism project to attract out-of-state visitors, to create a regional tourism zone in which the project will be built, and to create a regional tourism authority (or to designate other financing entities) with the power to receive and utilize the increment of revenues derived from the state sales tax collected in the zone, that is above a designated base amount, to be used to finance eligible improvements to the project. The State’s Role The Colorado Office of Economic Development and International Trade (OEDIT) provides administrative support for the Colorado Economic Development Commission (EDC). The EDC has oversight authority for this program. A local community should work with OEDIT to determine application requirements and deadlines to submit completed applications for review by OEDIT. The Business Funding and Incentives Staff will facilitate the application review process, application presentation with structuring recommendations to the EDC, resolution drafting and project monitoring. Requirements • The EDC shall not approve any project that would likely create an annual state sales tax revenue dedication of more than $50 million to all regional tourism projects. • The EDC cannot initially approve more than two projects. Once the EDC approves two initial projects, the EDC may approve two additional projects during the next calendar year. Once the EDC approves two additional projects, the EDC may approve two additional projects during the following calendar year. • The EDC will: Review applications forwarded with OEDIT recommendations and may approve or reject the project based on a demonstration that the following criteria are materially met: o The project is of an extraordinary/unique nature and is reasonably anticipated to contribute significantly to economic development and tourism in the state and communities where the project is located. o The project is reasonably anticipated to result in a substantial increase in out-of-state tourism. o A significant portion of sales tax revenue generated by the project is reasonably anticipated to be attributable to transactions with nonresidents of the zone. o The local government has provided reliable economic data demonstrating that in the absence of state sales tax increment revenue, the project is not reasonably anticipated to be developed within the foreseeable future. Adopt a resolution for approved applications specifying the following: o The local government approved to undertake a regional tourism project. o The area of the regional tourism zone. o Requested by the local government, authorize the creation of an authority to receive and spend state sales tax increment revenue. o The percentage of the state sales tax increment revenue that will be dedicated to the project. o Authorize the collection and use of the state sales tax increment revenue for a designated number of years. o Authorize the utilization of the state sales tax increment revenue by the financing entity pursuant to the RTA and conditions of approval determined by the EDC. o Appoint board members to the approved authority when applicable. Contact: Jeff Kraft, Director, Business Funding & Incentives Email: jeff.kraft@state.co.us 1625 Broadway, Suite 2700 Denver, CO 80202 Phone: (303) 892-3840 Website: www.AdvanceColorado.com o Have the ability to revoke or modify its approval of a project if substantial work on the project does not commence within five years of approval by the EDC. o Other terms and conditions required by the EDC. Process A local government will need to submit a regional tourism project application to OEDIT within the application cycle deadline. OEDIT will review the application for general completeness and to make an initial determination regarding whether the application has met the general criteria for a regional tourism project. An economic review and report on the application will be completed by an independent Third Party Analyst hired by the Office of State Planning and Budgeting. Applications will be forwarded to any county or counties and adjacent municipalities where the project will be implemented for an opportunity to review the application and submit comments to the EDC within 30 days prior to the scheduled EDC meeting. The EDC will make final approval or denial determinations. Contingency Administration Memo 1 To: Honorable Mayor Pinkham Board of Trustees From: Frank Lancaster, Town Administrator Date: June 20, 2014 RE: Discussion of Use of Contingency Funds Allocated to Town Capital Projects Objective: To discuss the use of contingency funds that are included in the budgets for Town capital projects; specifically any limitations on the uses of these funds and any Town Board approvals that are necessary prior to use of any contingency funds previously allocated in the project budget. Present Situation: It is a normal practice to include a specific amount of contingent funding in the budget of capital projects. These funds are included because it is impossible to anticipate all issue that may come to light during a complex construction process. Without an adequate contingency, many projects would have to revise their budgets on an ongoing basis. According to the AACI International, project contingencies include "Some of the items, conditions, or events for which the state, occurrence, and/or effect is uncertain include, but are not limited to, planning and estimating errors and omissions, minor price fluctuations (other than general escalation), design developments and changes within the scope, and variations in market and environmental conditions. Contingency is generally included in most estimates, and is expected to be expended. A key phrase above is that it is "expected to be expended". In other words, it is an item in an estimate like any other, and should be estimated and included in every estimate and every budget. Because management often thinks contingency money is "fat" that is not needed if a project team does its job well, it is a controversial topic." Contingency funds are commonly associated with change orders approved during the construction process. Change orders are common and may range from minor changes of only a few dollars or possible dollar savings, to major additional expenditures. Under most projects, as long as the project scope remains unchanged and the expenditures remain within the allocated budget (including the contingency funds) the project managers have the authority to approve and fund all change orders. Requiring board approval of all uses of contingencies and change orders would significantly slow projects down due to the fact that they could only be considered twice a month. These delays would also significantly increase the total project costs. Contingency 2 In a more specific discussion, in the Events Center project, an opportunity has presented itself to modify the project and add a second floor meeting space in the silo of the facility. This will provide additional rentable space for clients to use for breakout space and individual meetings, expanding the capacity and market for the facility. Staff believes there will be a positive return on this investment, if the change is done during the construction phase. To add the second floor later after construction is completed would be more expensive and would be disruptive to the operation of the facility. There is adequate funding in the project budget to fund this change. This is an example of a scope change and warrants the discussion and approval of the Town Board. This is beyond the scope of a normal use of contingency funds for completion of the project, however staff believes this is an opportunity that warrants the Board's consideration. Proposal: Discussion only to clarify the definition and use of contingency funds and for staff to obtain Board direction on how the Board would like staff to handle use of contingencys in the future. Advantages: n/a Disadvantages: n/a Action Recommended: n/a - discussion only Budget: n/a Level of Public Interest low Considerations for Effective Change Management of Capital Projects …Based on Industry Best Practices… Ron Norris- 7/6/14 1. Project Approvals: a) Initial approval is given by governing body (i.e., Town Board). b) Approval is to implement specific, planned changes… c) For a specific, not-to-exceed budget… d) To accomplish specific, clearly-defined objectives. 2. Scope of Work: a) A scope is a description of the major changes to be made. b) A scope does not define every detail. A good scope is like headings in an outline. Details are filled in by the project team during design and construction. c) A project’s budget includes the funding needed to fill in all these details and complete design and construction. 3. Contingency Funds: a) Contingency funds are routinely included in the budgets of all capital projects. b) They typically range from 5% to 10% of the estimated capital cost (before adding the contingency). c) They are based on experience: what might be expected to add to costs? Examples: Inflation, weather, unusual design or construction challenges (like the MPEC silo roof.) d) Contingency funds are expected to be spent as part of the authorized budget. e) Completing a project within its authorized budget, including the contingency funds, is the responsibility of the project team (i.e., Staff.) 4. Change Management within the Approved Scope and Budget… when there is no change in project objectives. This is a Staff responsibility. a) Examples:  We need 50 cubic yards more additional fill than we estimated.  Copper wiring is costing 5% more than we estimated.  MPEC silo walls and roof must be raised in order to provide roof integrity. b) These are things we must do in order to accomplish the project’s original objectives. c) Changes are documented by written change orders that explain what change is needed, and what cost is involved. Additional cost is charged against the contingency fund. d) Approvals are by Staff, as delegated by the Town Administrator. A project can have scores or hundreds of change orders. They are used to document how fast we are using up the contingency funds, and help us understand whether the project is being completed within budget. Change Management, p. 2 5. Change Management if the Project Scope is Revised… when there are significant changes to project objectives. This is a Governing Body (Town Board) responsibility. a) Examples:  We decide to add another deck to the parking garage.  We decide to delete the MPEC silo entirely (!)  We decide to keep the silo, but add second-floor meeting space. b) Scope changes are choices made to enhance the project by, for example, reducing energy consumption, or increasing marketability and revenue. c) Changes are documented by detailed, specific written proposals that describe the change, what additional objectives will be accomplished by making this change, and the expected impact on cost and schedule. d) Additional cost is not charged to the project’s contingency fund, but goes against its overall budget. e) Approvals for scope changes should be made by the Board, unless this authority has been delegated by the Board to Staff. f) The Board may delegate this authority up to specific dollar limits, e.g., $10K, $25K, with the understanding that changes above the limit must come to the Board. g) Approval for scope changes should only be granted if the approvers agree that the change justifies the additional investment. Justification can be financial, or non-financial (e.g., safety improvement, ensure regulatory compliance, etc.) 6. Cost Control, Overruns, and Underruns: a) Controlling cost and completing a project within its authorized budget is the responsibility of Staff. b) If scope changes are made and approved, the project’s budget is revised to reflect the cost of the scope change. Staff is then responsible for completing the project within the new budget. c) If a project’s final cost is expected to exceed its (new or revised) budget by more than “x” percent, (where “x” is determined by the Board), the project team must request supplemental authorization from the Board. d) If a project’s final cost is expected to be significantly below its approved budget, the project team brings this information to the Board to decide where else those funds should be reallocated.