HomeMy WebLinkAboutagenda.council.worksession.20150721
CITY COUNCIL WORK SESSION
July 21, 2015
4:00 PM, City Council Chambers
MEETING AGENDA
I. Cash-in-Lieu of Housing
II. 2015 Budget Update and 2016 Budget Assumptions
III. Internal Controls Update
IV. ERP Project Update
Page 1 of 6
MEMORANDUM
TO: Mayor and Council
THROUGH: Barry Crook, Assistant City Manager
FROM Mike Kosdrosky, APCHA Executive Director
Chris Everson, Affordable Housing Project Manager
DATE: June 17, 2015
MEETING DATE: June 23, 2015
RE: Fee-In-Lieu (FIL) Mitigation Methodology/Models
REQUEST OF COUNCIL: Staff seeks a final decision by Council regarding Fee-in-Lieu (FIL)
methodology/models for affordable housing (AH) mitigation. The goal is not to establish a specific
fee, but to develop a reliable, defensible, predictable, and updatable methodology/mode upon
which a fee can be calculated and the ordinance that established that fee can be amended .
PREVIOUS COUNCIL ACTION: Council generally agreed FIL should eventually be phased out
as an AH mitigation option, but also agreed it should remain an option for the present. Council
directed staff to investigate and advance the following methodologies/models:
Explore and refine Option No. 4 (below) – a new methodology using assessor actual
land value and prevailing construction cost; and
Some combination of Option No. 5 and Option No. 6 (below) – historical cost to
develop plus estimated future development costs.
BACKGROUND: At the March 31, 2015 work session City Council reviewed seven AH mitigation
options:
1) Continue current methodology used in APCHA Guidelines;
2) Market affordability gap method proposed by RRC/Rees Consulting in 2012;
3) Staff-modified market affordability gap method;
4) New gap methodology separating land cost from construction cost;
5) Historical cost to develop method;
6) Estimated future development cost method; and/or
7) Remove FIL as an AH mitigation option altogether.
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Council directed APCHA and City staff to recommend a methodology to calculate fee-in-lieu (FIL)
mitigation rates. Aspen’s fee-in-lieu mitigation option has long been in place as one of several
available to offset the employee housing impacts resulting from development or re-development
of commercial and residential property. Some consider the City’s current FIL rate so low that it
is, for all but fractional mitigation purposes, an unreliable mitigation tool. The concern being that
FIL may not generate enough revenue to offset the cost of providing additional employee
housing.
DISCUSSION: The assigned task was not to establish a specific fee, but to recommend a FIL
methodology/model based on the criteria that it be reliable, predictable, updatable, and
defensible.
Staff has come up with the two FIL methodologies/models per City Council’s request plus an
alternative to Option #4 (above) based on average, not actual, assessor land value.
1. Fee-in-Lieu Model #1A: 2015 Average Assessor Land Value with Future Estimated
Development Cost Based on Recent Construction Cost.
2. Fee-in-Lieu Model #1B: 2015 Actual Assessor Land Value with Future Estimated
Development Cost Based on Recent Construction Cost.
3. Fee-in-Lieu Model #2: Combination of Historical and Future Estimated Development
Cost with Historical Land Cost.
Density projections for each project are based on assumptions we have been using for some
time now, and cost projections follow using escalation assumptions as listed in the tables.
Fee-in-Lieu Model #1A
This proposed methodology estimates future AH project costs based on recent construction
cost experience and an average 2015 land value calculated from Pitkin County assessor data.
This removes any specific land from the subsequent calculations and provides a kind of “land
gap cost” approach to establishing the cost of land in any model to construct affordable
housing.
Average land value was calculated using assessor data with corresponding neighborhood
codes from assessor’s office and by omitting the top and bottom 10% of values. This is done
to address the concerns that very high property values – which we would not target for a
building program – would not be part of the cost calculation. It also removes properties from
the lower end of the cost spectrum and focuses the cost calculation on the “middle” portion
of the available land in the UGB. With a resulting sample size of 1,474 parcels within the
Urban Growth Boundary (UGB), the average land value was calculated to be $8.6 million per
acre. This value is then prorated to the size of each parcel for each project shown. Density
projections for each project are based on assumptions shown and development parameters,
and cost projections follow using escalation assumptions.
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RESULT: This methodology results in an average 21% increase over the existing fee-in-lieu
subsidies per Full-Time Employee (FTE).
AH Existing Model #1A
Category Subsidy/FTE Subsidy/FTE $ Change % Change
Cat 1 $295,077 $351,670 $56,593 19%
Cat 2 $246,881 $290,269 $43,388 18%
Cat 3 $232,946 $258,197 $25,251 11%
Cat 4 $144,393 $199,545 $55,152 38%
Fee-in-Lieu Model #1B
This proposed methodology estimates future AH project costs based on recent construction
cost experience and actual 2015 Pitkin County assessor land values for each parcel in the city
inventory. In this approach, those critics who say our embedded cost includes land we
purchased at the height of the boom period should not be used to calculate costs going
forward. In some cases where actual 2015 Pitkin County assessor land values were not readily
available, values for comparable properties were prorated.
RESULT: This methodology results in an average 18% decrease from the existing fee-in-lieu
subsidies per FTE.
AH Existing Model #1B
Category Subsidy/FTE Subsidy/FTE $ Change % Change
Cat 1 $295,077 $252,944 -$42,133 -14%
Cat 2 $246,881 $207,997 -$38,884 -16%
Cat 3 $232,946 $175,926 -$57,020 -24%
Cat 4 $144,393 $117,274 -$27,119 -19%
Fee-in-Lieu Model #2
This proposed model uses a combination of historical projects and future estimated projects.
In each case, historical land costs are used. This model represents our best estimates as to
the actual total cost of our developing housing on the parcels we currently own.
RESULT: This methodology results in an average 6% decrease from the existing fee-in-lieu
subsidies per FTE.
AH Existing Model #2
Category Subsidy/FTE Subsidy/FTE $ Change % Change
Cat 1 $295,077 $284,483 -$10,594 - 4%
Cat 2 $246,881 $234,280 -$12,601 - 5%
Cat 3 $232,946 $202,208 -$30,738 -13%
Cat 4 $144,393 $143,556 -$ 837 - 1%
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Conclusions
The criteria to evaluate each methodology/model are:
Is it reliable, predictable, updatable, and defensible?
For context, Reliable means that something is consistently good in quality or performance;
able to be trusted. Predictable means that something is expected, especially on the basis of
previous or known behavior. Updatable means that something can be brought up to date by
adding new information or making corrections. Defensible means that something can be
defended in argument and is justifiable.
The sources of data used to construct each methodology/model include:
the 2015 Pitkin County Assessor,
the Burlingame Phase 2A actual project costs, and
the parcel/property information for each land-banked project site.
Each methodology/model’s future project costs estimates are based on verifiable – and
therefore more reliable, predictable, updatable and justifiable - information using these three
sources.
The more unpredictable variables affecting each methodology/model’s FIL subsidy/FTE
calculation include:
density;
inflation (land and construction costs);
revenue escalation;
Floor Area Ratio (FAR) at each property;
the number of units built; and
the type of category(ies) built.
These variables are often more unpredictable because they are based on assumptions, which
can vary widely depending upon future economic conditions and changing
political/regulatory circumstances and priorities.
Higher densities make the resulting calculations for fees lower. More efficient use of the land
spreads the per FTE costs across high land values with more units – thus creating lower values.
For example, if the densities at 488 Castle Creek and the Lumber yard were reduced by a third,
then the resulting percentage change for each methodology would become +30 percent, -16
percent and +2 percent, respectively.
The impact of density change is less on Model #1B and Model #2 than on Model #1A because
#1B and #2 result in much lower total land cost and thus land becomes less of a percentage of
the overall subsidy. In fact, #1B and #2 both result in roughly the same in total land cost.
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To help illustrate the impact on the models of density decisions – but not to force Council to
make premature decisions about density on any of the properties – we show below the impact
of a 25% reduction in density on the three models.
Fee-in-Lieu Model #1A
Instead of in an average 21% increase over the existing fee-in-lieu subsidies per Full-Time
Employee (FTE), a 25% reduction in density of future projects results in an additional 14%
change on average, for a total average 35% increase.
Fee-in-Lieu Model #1B
Instead of an average 18% decrease from the existing fee-in-lieu subsidies per FTE, a 25%
reduction in density of future projects results in an additional 7% change on average, for a
total average 11% decrease.
Fee-in-Lieu Model #2
Instead of an average 6% decrease from the existing fee-in-lieu subsidies per FTE, a 25%
reduction in density of future projects results in an additional 13% change on average, for a
total average 7% increase.
To help put this in perspective, the 25% density reduction increases land cost per unit from about
$150K to about $200K.
1A 1A 1B 1B 2 2
Sensitivity 100% 75% 100% 75% 100% 75%
Cat1 % Change 19% 31% -14% -8% -4% 7%
Cat2 % Change 18% 29% -16% -10% -5% 6%
Cat3 % Change 11% 23% -24% -18% -13% -2%
Cat4 % Change 38% 58% -19% -9% -1% 18%
AVG % Change 21% 35% -18% -11% -6% 7%
Diff + 14% Diff + 7% Diff + 13%
# Units @100% /acre @75% /acre
802 West Main St 12 57 9 43
517 Park Circle 15 45 12 36
488 Castle Creek 33 40 25 30
Bgame Ph2B 79 376 N/A N/A
Lumber Yrd 150 21 113 16
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The only methodology/model option that results in an increase in the existing FIL subsidy per
employee is Model #1A with an average increase of 21 percent across Categories 1-4. Models
#1B and #2 actually result in decreasing the existing FIL subsidies per employee, with an
average decrease across Categories 1-4 of 18 percent and 6 percent, respectively.
RECOMMENDED ACTION: Based on the fact that the Pitkin County Assessor’s office does
not use average land values in their practice and cautioned against such a practice in this
case, and based on the impacts of changes to the density variable and the resulting very high
cost of land in Model #1, staff recommends Council discard Methodology/Model #1A and
choose between Methodology/Model #1B and #2.
If Fee-in-Lieu is supposed to recover the cost of the government developing mitigation housing on
behalf of those who have a mitigation requirement, and because Methodology/Model #2 best
represents the real cost to the city to develop housing over the next 10-15 years, we recommend
Council adopt Model #2. As staff moves forward with community outreach for potential housing
development on land which the City owns, the density part of th e equation can be further honed.
When that occurs, the calculated values for Fee-in-Lieu under the chosen methodology will be
subject to change by some amount, but will likely remain near the ranges described above.
ALTERNATIVES: Discontinue FIL as an AH mitigation option – thus depending more on the AH
certificate program to provide for fractional and small unit number requirements, and on those
with mitigation requirements actually building more housing themselves .
ATTACHMENTS: FIL Models #1A, #1B, and #2 worksheets
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FEE In Lieu Model #1A: 2015 Average Assessor Land Value with Future Estimated Development Cost Based on Recent Construction Cost 6/5/2015
Projects Burlingame Ph2A 802 West Main 517 Park Circle 488 Castle Creek Bgame2B Lumber Yard AVERAGE EXISTING CHANGE % Change
Actual Projected Future Projected Future Projected Future Projected Future Projected Future
Project Parameters:
Year Occupied:2014.5 2017 2018 2019 2021 2025
Land acres:7.00 0.21 0.33 0.82 7.00 7.20
Land Sq Ft 304920 9000 14458 35895 304920 313632
FAR / Land Sq Ft 28%90%75%65%28%40.5%
FAR:85600 8100 10844 23332 85790 127021
Net Area:86312 8100 10844 23332 84940 127021
FTE:195.75 20.3 27.1 58.3 193.0 317.6
Units:82 12 15 33 79 150
Bedrooms:$172 $12 $15 $33 170 263
Units/acre:11.7 56.0 46.7 40.4 11.3 20.9
FTE/Acre 28.0 98.0 81.7 70.8 27.6 44.1
Avg Category:2.94 TBD TBD TBD TBD TBD
Gross Area:94631 8881 11889 25581 93670 139264
Vertical Const Only / Net Area $342 $368 $379 $390 $414 $466
Total Cost / Net Area $514 $707 $766 $821 $1,258 $1,105
$226,850.76
Cost Historical $Assessor $Future $Total Assessor $Future $Total Assessor $Future $Total Assessor $Future $Total Assessor $Future $Total
Land $485,594 $1,778,288 $1,778,288 $2,856,721 $2,856,721 $7,092,406 $7,092,406 $60,248,405 $60,248,405 $61,969,788 $61,969,788
Soft Costs $6,993,065 $469,466 $469,466 $647,330 $647,330 $1,434,633 $1,434,633 $5,540,898 $5,540,898 $9,325,930 $9,325,930
Construction: Offsite Infrastructure $2,093,538 $140,546 $140,546 $193,793 $193,793 $429,491 $429,491 $1,658,798 $1,658,798 $2,791,936 $2,791,936
Construction: Onsite Infrastructure $3,301,154 $221,617 $221,617 $305,579 $305,579 $677,234 $677,234 $2,615,642 $2,615,642 $4,402,409 $4,402,409
Construction: Buildings/Landscape $29,503,361 $2,981,113 $2,981,113 $4,110,551 $4,110,551 $9,109,932 $9,109,932 $35,184,755 $35,184,755 $59,219,749 $59,219,749
Construction: Other/Mitigation $2,029,323 $136,235 $136,235 $187,849 $187,849 $416,317 $416,317 $1,607,917 $1,607,917 $2,706,299 $2,706,299
Total Development $44,406,036 $1,778,288 $3,948,975 $5,727,264 $2,856,721 $5,445,103 $8,301,824 $7,092,406 $12,067,607 $19,160,013 $60,248,405 $46,608,010 $106,856,415 $61,969,788 $78,446,323 $140,416,111
Average Existing
Subsidy/FTE Revenues Subsidy Subsidy/FTE Revenues Subsidy Subsidy/FTE Revenues Subsidy Subsidy/FTE Revenues Subsidy Subsidy/FTE Revenues Subsidy Subsidy/FTE Subsidy/FTE Subsidy/FTE Change % Change
Category 1 Subsidy per FTE N/A $618,450 $5,108,814 $252,287 $844,480 $7,457,345 $275,090 $1,853,391 $17,306,622 $296,705 $5,889,396 $100,967,018 $523,145 $9,863,580 $130,552,531 $411,121 $351,670 $295,077 $56,593 19%
Category 2 Subsidy per FTE $164,721 $1,320,153 $4,407,111 $217,635 $1,802,639 $6,499,185 $239,745 $3,956,278 $15,203,736 $260,653 $13,101,545 $93,754,870 $485,777 $21,942,509 $118,473,602 $373,084 $290,269 $246,881 $43,388 18%
Category 3 Subsidy per FTE $138,118 $2,009,962 $3,717,301 $183,570 $2,744,559 $5,557,266 $204,999 $6,023,522 $13,136,491 $225,212 $18,990,941 $87,865,474 $455,262 $31,806,088 $108,610,022 $342,022 $258,197 $232,946 $25,251 11%
Category 4 Subsidy per FTE $95,044 $3,330,115 $2,397,149 $118,378 $4,547,198 $3,754,627 $138,502 $9,979,800 $9,180,214 $157,386 $29,446,981 $77,409,433 $401,085 $49,317,898 $91,098,213 $286,876 $199,545 $144,393 $55,152 38%
Assumptions:
Annual Cost Escalation 1.03
Annual Revenue Escalation 1.02
Net Area / FAR 100%
Net Area / FTE 400
2015 AVERAGE Assessor land value calculation:
total parcels.. 8162
parcels with neighborhood code.. 2177
exclude types exempt, mine, housing auth.. 1858
exclude parcels with no land value assigned.. 1842
exclude highest and lowest 10% in value/acre.. 1474
avg = $8,606,915 per acre
$8,606,915.00
This proposed model estimates future projects based on recent construction cost experience and using an average 2015 land value calculated from Pitkin County assessor data. Density projections are based on assumptions
shown. Steps in the calculations are as follows: 1) Establish Land Area; 2) FAR per land area assumption at each property; 3) Net area is a function of FAR; 4) FTEs and Units based upon net area; 5) Land Cost based upon per
acre average 2015 assessor land value; 6) Future development costs based on escalation of recent construction cost experience; 7) Sales revenues at each income level based on assumed escalation shown.
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FEE In Lieu Model #1B: 2015 Actual Assessor Land Value with Future Estimated Development Cost Based on Recent Construction Cost 6/5/2015
Projects Burlingame Ph2A 802 West Main 517 Park Circle 488 Castle Creek Bgame2B Lumber Yard AVERAGE EXISTING CHANGE % Change
Actual Projected Future Projected Future Projected Future Projected Future Projected Future
Project Parameters:
Year Occupied:2014.5 2017 2018 2019 2021 2025
Land acres:7.00 0.21 0.33 0.82 7.00 7.20
Land Sq Ft 304920 9000 14458 35895 304920 313632
FAR / Land Sq Ft 28%90%75%65%28%40.5%
FAR:85600 8100 10844 23332 85790 127021
Net Area:86312 8100 10844 23332 84940 127021
FTE:195.75 20.3 27.1 58.3 193.0 317.6
Units:82 12 15 33 79 150
Bedrooms:$172 $12 $15 $33 170 263
Units/acre:11.7 56.0 46.7 40.4 11.3 20.9
FTE/Acre 28.0 98.0 81.7 70.8 27.6 44.1
Avg Category:2.94 TBD TBD TBD TBD TBD
Gross Area:94631 8881 11889 25581 93670 139264
Vertical Const Only / Net Area $342 $368 $379 $390 $414 $466
Total Cost / Net Area $514 $736 $742 $582 $699 $721
$226,850.76
Cost Historical $Assessor $Future $Total Assessor $Future $Total Assessor $Future $Total Assessor $Future $Total Assessor $Future $Total
Land $485,594 $2,016,000 $2,016,000 $2,600,000 $2,600,000 $1,500,000 $1,500,000 $12,742,165 $12,742,165 $13,106,226 $13,106,226
Soft Costs $6,993,065 $469,466 $469,466 $647,330 $647,330 $1,434,633 $1,434,633 $5,540,898 $5,540,898 $9,325,930 $9,325,930
Construction: Offsite Infrastructure $2,093,538 $140,546 $140,546 $193,793 $193,793 $429,491 $429,491 $1,658,798 $1,658,798 $2,791,936 $2,791,936
Construction: Onsite Infrastructure $3,301,154 $221,617 $221,617 $305,579 $305,579 $677,234 $677,234 $2,615,642 $2,615,642 $4,402,409 $4,402,409
Construction: Buildings/Landscape $29,503,361 $2,981,113 $2,981,113 $4,110,551 $4,110,551 $9,109,932 $9,109,932 $35,184,755 $35,184,755 $59,219,749 $59,219,749
Construction: Other/Mitigation $2,029,323 $136,235 $136,235 $187,849 $187,849 $416,317 $416,317 $1,607,917 $1,607,917 $2,706,299 $2,706,299
Total Development $44,406,036 $2,016,000 $3,948,975 $5,964,975 $2,600,000 $5,445,103 $8,045,103 $1,500,000 $12,067,607 $13,567,607 $12,742,165 $46,608,010 $59,350,174 $13,106,226 $78,446,323 $91,552,549
Average Existing
Subsidy/FTE Revenues Subsidy Subsidy/FTE Revenues Subsidy Subsidy/FTE Revenues Subsidy Subsidy/FTE Revenues Subsidy Subsidy/FTE Revenues Subsidy Subsidy/FTE Subsidy/FTE Subsidy/FTE Change % Change
Category 1 Subsidy per FTE N/A $618,450 $5,346,525 $264,026 $844,480 $7,200,624 $265,620 $1,853,391 $11,714,216 $200,829 $5,889,396 $53,460,778 $276,999 $9,863,580 $81,688,970 $257,246 $252,944 $295,077 -$42,133 -14%
Category 2 Subsidy per FTE $164,721 $1,320,153 $4,644,823 $229,374 $1,802,639 $6,242,464 $230,275 $3,956,278 $9,611,329 $164,777 $13,101,545 $46,248,630 $239,630 $21,942,509 $69,610,041 $219,208 $207,997 $246,881 -$38,884 -16%
Category 3 Subsidy per FTE $138,118 $2,009,962 $3,955,013 $195,309 $2,744,559 $5,300,545 $195,529 $6,023,522 $7,544,085 $129,336 $18,990,941 $40,359,233 $209,115 $31,806,088 $59,746,461 $188,147 $175,926 $232,946 -$57,020 -24%
Category 4 Subsidy per FTE $95,044 $3,330,115 $2,634,861 $130,117 $4,547,198 $3,497,906 $129,032 $9,979,800 $3,587,807 $61,509 $29,446,981 $29,903,193 $154,939 $49,317,898 $42,234,651 $133,001 $117,274 $144,393 -$27,119 -19%
Assumptions:
Annual Cost Escalation 1.03
Annual Revenue Escalation 1.02
Net Area / FAR 100%
Net Area / FTE 400
This proposed model estimates future projects based on recent construction cost experience and using actual 2015 Pitkin County assessor land values for each parcel. Density projections are based on assumptions shown.
Steps in the calculations are as follows: 1) Establish Land Area; 2) FAR per land area assumption at each property; 3) Net area is a function of FAR; 4) FTEs and Units based upon net area; 5) Land Cost based upon per acre
average 2015 assessor land value; 6) Future development costs based on escalation of recent construction cost experience; 7) Sales revenues at each income level based on assumed escalation shown.
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FEE In Lieu Model #2: Combination of Historical and Future Estimated Development Cost with Historical Land Cost 6/5/2015
Projects Burlingame Ph2A 802 West Main 517 Park Circle 488 Castle Creek Bgame2B Lumber Yard AVERAGE EXISTING CHANGE % Change
Actual Projected Future Projected Future Projected Future Projected Future Projected Future
Project Parameters:
Year Occupied:2014.5 2017 2018 2019 2021 2025
Land acres:7.00 0.21 0.33 0.82 7.00 7.20
Land Sq Ft 304920 9000 14458 35895 304920 313632
FAR / Land Sq Ft 28%90%75%65%28%40.5%
FAR:85600 8100 10844 23332 85790 127021
Net Area:86312 8100 10844 23332 84940 127021
FTE:195.75 20.3 27.1 58.3 193.0 317.6
Units:82 12 15 33 79 150
Bedrooms:172 12 15 33 170 263
Units/acre:11.7 56.0 46.7 40.4 11.3 20.9
FTE/Acre 28.0 98.0 81.7 70.8 27.6 44.1
Avg Category:2.94 TBD TBD TBD TBD TBD
Gross Area:94631 8881 11889 25581 93670 139264
Vertical Const Only / Net Area $342 $368 $379 $390 $414 $466
Total Cost / Net Area $514 $943 $881 $749 $554 $761
Cost Historical $Historical $Future $Total Historical $Future $Total Historical $Future $Total Historical $Future $Total Historical $Future $Total
Land $485,594 $3,690,000 $3,690,000 $4,105,000 $4,105,000 $5,400,000 $5,400,000 $477,507 $477,507 $18,250,000 $18,250,000
Soft Costs $6,993,065 $469,466 $469,466 $647,330 $647,330 $1,434,633 $1,434,633 $5,540,898 $5,540,898 $9,325,930 $9,325,930
Construction: Offsite Infrastructure $2,093,538 $140,546 $140,546 $193,793 $193,793 $429,491 $429,491 $1,658,798 $1,658,798 $2,791,936 $2,791,936
Construction: Onsite Infrastructure $3,301,154 $221,617 $221,617 $305,579 $305,579 $677,234 $677,234 $2,615,642 $2,615,642 $4,402,409 $4,402,409
Construction: Buildings/Landscape $29,503,361 $2,981,113 $2,981,113 $4,110,551 $4,110,551 $9,109,932 $9,109,932 $35,184,755 $35,184,755 $59,219,749 $59,219,749
Construction: Other/Mitigation $2,029,323 $136,235 $136,235 $187,849 $187,849 $416,317 $416,317 $1,607,917 $1,607,917 $2,706,299 $2,706,299
Total Development $44,406,036 $3,690,000 $3,948,975 $7,638,975 $4,105,000 $5,445,103 $9,550,103 $5,400,000 $12,067,607 $17,467,607 $477,507 $46,608,010 $47,085,516 $18,250,000 $78,446,323 $96,696,323
Average Existing
Subsidy/FTE Revenues Subsidy Subsidy/FTE Revenues Subsidy Subsidy/FTE Revenues Subsidy Subsidy/FTE Revenues Subsidy Subsidy/FTE Revenues Subsidy Subsidy/FTE Subsidy/FTE Subsidy/FTE Change % Change
Category 1 Subsidy per FTE N/A $618,450 $7,020,525 $346,693 $844,480 $8,705,624 $321,137 $1,853,391 $15,614,216 $267,690 $5,889,396 $41,196,120 $213,451 $9,863,580 $86,832,743 $273,444 $284,483 $295,077 -$10,594 -4%
Category 2 Subsidy per FTE $164,721 $1,320,153 $6,318,823 $312,041 $1,802,639 $7,747,464 $285,792 $3,956,278 $13,511,329 $231,639 $13,101,545 $33,983,972 $176,083 $21,942,509 $74,753,814 $235,406 $234,280 $246,881 -$12,601 -5%
Category 3 Subsidy per FTE $138,118 $2,009,962 $5,629,013 $277,976 $2,744,559 $6,805,545 $251,046 $6,023,522 $11,444,085 $196,198 $18,990,941 $28,094,575 $145,568 $31,806,088 $64,890,234 $204,345 $202,208 $232,946 -$30,738 -13%
Category 4 Subsidy per FTE $95,044 $3,330,115 $4,308,861 $212,783 $4,547,198 $5,002,906 $184,549 $9,979,800 $7,487,807 $128,371 $29,446,981 $17,638,535 $91,391 $49,317,898 $47,378,425 $149,199 $143,556 $144,393 -$837 -1%
Assumptions:
Annual Cost Escalation 1.03
Annual Revenue Escalation 1.02
Net Area / FAR 100%
Net Area / FTE 400
This proposed model uses a combination of historical projects and future estimated projects. In each case, historical land costs are used. Density projections are based on assumptions shown. Steps in the calculations are as
follows: 1) Establish Land Area; 2) FAR per land area assumption at each property; 3) Net area is a function of FAR; 4) FTEs and Units based upon net area; 5) Land Cost based upon historical actual; 6) Future development
costs based on escalation of recent actual experience; 7) Sales revenues at each income level based on assumed escalation shown.
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Response to Fee-In-Lieu (FIL) Mitigation Methodology/Models Page 1
MEMORANDUM
TO: Mayor and City Council
FROM: APCHA Board of Directors
DATE: July 15, 2015
RE: APCHA BOARD OF DIRECTORS RECOMMENDATIONS CONCERNING
PROPOSED FEE-IN-LIEU (FIL) MITIGATION METHODOLOGY/ MODELS
After reviewing the City’s memo dated June 17, 2015, seeking a final decision from City Council
on establishing a methodology to calculate fee-in-lieu (FIL) for mitigation of employee housing, the
APCHA Board of Directors believes that none of the methodologies as presented adequately cover
the actual or real costs associated with building future employee housing.
Therefore, the APCHA Board unanimously recommends to City Council that it either:
1. Eliminate the FIL entirely; or
2. Adopt Methodology Model #1A with a density adjustment of no greater than 75 percent of
the allowable maximum density in determining potential cost for a project; however the
Board believes somewhere between 50 and 75 percent is more realistic.
In our experience, employee housing needs are not adequately met by new commercial and
residential development. For example:
• Mixed projects allow for a developer to mitigate for only one of the required needs –
commercial or free market residential – and at a discount.
• Residential construction does not take into account all types of work associated with the
creation of that home and/or remodel due to a waiver here or there – and again at a discount.
• In most cases, developments that involve an essential public service are waived from
providing mitigation.
When the City discounts mitigation the taxpayers end up paying the difference. It is important to
require realistic FIL exactions. If the FIL charged cannot cover actual costs – mainly construction
and land – we fear the City and County will fall further behind in providing future affordable
housing opportunities for employees.
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Response to Fee-In-Lieu (FIL) Mitigation Methodology/Models Page 2
Unrealistically low FIL exactions will also undercut and threaten the Affordable Housing Credit
Program if those fees are set too artificially low and below the cost for a developer to purchase and
mitigate through affordable housing credits.
We believe a more accurate and realistic methodology must be considered when calculating FIL. If
not, then FIL should be eliminated entirely as an affordable housing mitigation option, and as the
least desirable option available.
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City of Aspen
2016 Proposed Budget Assumptions
July 16, 2015
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Summary of Contents
•City Sales Tax
•Lodging Tax
•Property Tax
•Real Estate Transfer Tax
•Use Tax Collections
•Budget Assumptions
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City Sales Tax
•Recipients of Collections (Total Tax = 2.4%)
–Parks & Open Space (1.50%)
–Transportation (0.15%)
–Kids First/Housing Development (0.45%)
–School District (0.30%)
•Sunset provisions exist for:
–Par k s & Open Space 0.50% Ta x (12/2025)
–School District 0.30% Sales Tax (12/2016)
$6,000,000
$7,000,000
$8,000,000
$9,000,000
$10,000,000
$11,000,000
$12,000,000
$13,000,000
$14,000,000
$15,000,000
Retail Sales Tax Collections
City Collections Inflation Adjusted
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City Sales Tax
2013
Taxable Sales
2014
Taxable Sales
% Chg from
2013 2015 Budget 2015 Forecast
% Chg from
2014 2016 Forecast
% Chg from
2015
Accommodations 154,203,962 174,238,702 13%172,870,000 188,178,000 8.0%196,650,000 4.5%
Restaurants 100,675,103 111,665,603 11%110,790,000 117,249,000 5.0%121,940,000 4.0%
Sporting Goods*41,226,893 46,171,246 12%45,880,000 47,556,000 3.0%49,450,000 4.0%
Clothing*48,997,465 54,910,508 12%54,020,000 57,107,000 4.0%59,390,000 4.0%
Food & Drug 49,658,484 51,966,063 5%51,640,000 51,966,000 0.0%53,250,000 2.5%
Liquor & Marijuana 10,677,724 13,424,410 26%12,320,000 16,781,000 25.0%17,470,000 4.1%
General & Misc.41,117,784 42,536,051 3%41,880,000 43,121,000 1.4%44,750,000 3.8%
Luxury Goods*25,092,274 28,058,214 12%28,890,000 29,742,000 6.0%30,940,000 4.0%
Utilities 40,667,708 41,260,445 1%42,290,000 41,879,000 1.5%43,135,000 3.0%
Construction 41,078,207 42,002,794 2%47,110,000 44,523,000 6.0%46,749,000 5.0%
Automobile 15,712,733 18,716,363 19%18,800,000 20,401,000 9.0%21,230,000 4.1%
Total Taxable Sales 569,108,336 624,950,398 10%626,490,000 658,503,000 5.4%684,954,000 4.0%
Net Revenues 11,795,568 13,089,782 11%13,003,000 13,792,600 5.4%14,346,600 4.0%
•2014 taxable sales increased 9.8% over 2013
•Through May 2015, sales are up 8.5% over 2014
•Projecting roughly 5.5% growth for 2015
•Benchmark approximate historical average growth of 4% for 2016
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City Lodging Tax
•Recipients include ACRA (1.5%) and Transportation (0.5%)
•Trending upward on occupancy and ADR –2014 achieved new highs
•2015 and 2016 projected increases of 7.5% & 4.5% respectively
2007 2008 2009 2010 2011 2012 2013 2014
Avg. ADR $295 $319 $293 $287 $277 $295 $314 $333
Avg. REVPAR $164 $189 $149 $151 $155 $168 $182 $197
Avg. Occupancy 50%52%45%47%50%51%51%53%
40%
42%
44%
46%
48%
50%
52%
54%
$0
$50
$100
$150
$200
$250
$300
$350
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000 L o d g i n g Ta x Collections
(Transportation Share Shown)
Lodging Tax Transportation Inflation Adjusted
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Property Taxes
•First glimpse of 2015 estimate will be available in August (from County)
•2015 is a reassessment year and impacts from the decline in real estate values will be dropping off from the lookback period
•Maximum annual increase to property tax revenue under TABOR is combination of inflation + new construction growth
•2015 Allocation: General Fund (35%), Asset Management (65%)
•The City does not apply the full mill levy: 2014 credit was 0.273 mills
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Real Estate Transfer Tax (1.0% Housing)
–2014: Annual collections last year were highest since 2007
–2015: Revised projection is roughly 25% above original budget estimate
–Jan-Jun revenues 56% above average revenue collections since the real estate collapse
–Assuming Jul-Dec roughly 8% below average collections post collapse
–2016: 5% increase projected off of revised 2015 estimate
Year 2008 2009 2010 2011 2012 2013 2014 7 Yr. Avg.2015 Proj.2016 Proj.
Jan-Jun $3,043,295 $2,900,680 $2,440,206 $3,001,060 $2,461,700 $2,060,642 $4,031,574 $2,848,451 $4,664,973 $3,879,000
Jul-Dec $2,688,007 $2,980,698 $3,930,105 $2,232,269 $4,131,214 $3,610,955 $4,356,399 $3,418,521 $3,135,027 $4,311,000
Annual $5,731,302 $5,881,378 $6,370,311 $5,233,329 $6,592,914 $5,671,597 $8,387,972 $6,266,972 $7,800,000 $8,190,000
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Use Tax (2.1%)
•Realizing revenue lags use tax deposits typically by three to four years
•Timing of project completion and issuance of CO are deciding drivers
•2015 projection adjusted upward based on 2014 and 2015 deposits
•2016 projected realized revenue increase is 7.5%
$42,187
$974,325
$1,186,299
$944,954
$525,938
$911,617 $920,126
$1,112,000 $1,195,000
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
2008 2009 2010 2011 2012 2013 2014 2015 Proj.2016 Proj.
Realized Revenue
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Budget Assumptions
•Base Budgeting vs. Alternatives
–What defines a supplemental request?
•Operating Expenses
–2% allowance for materials, goods, and service
•Personnel Expenses
–Up to 4% merit increases (based on performance review); no change from prior yr.
–5% i n c re a s e t o health insurance premiums for employer (and employee)
–Raise cafeteria plan benefit from $620 to $700
–Continuation of employee recognition, goals and outcomes awards structure
–Adjusted pay ranges by 2% and added new pay range to reflect market conditions –overall labor budget projected to increase roughly 1.5% for 2016
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Memorandum
To: City Council
From: Don Taylor, Director of Finance
CC: Steve Barwick, City Manager
Date: July 17, 2015
Re: Internal Control Audit Recommendations Update.
When the city Council received and reviewed the recommendations of the internal control audit they
asked that we report back from time to time as to the progress in implementing the recommendations.
Here is a status report.`
GOLF
For Golf inventory, COGS year to date looks reasonable at 68% of sales. While the Margin may be a
little low by retail standards, golf pro shops have difficulty in marking up at high rates due to category
killers in some of the product lines, for example golf clubs.
For inventory control, the Golf Pro makes purchases and checks inventory into the system, and makes
inventory adjustments in the system as necessary. He leaves comments in the system. Finance
reviews an inventory adjustment report directly from the system (PSK) monthly. Finance audits
inventory additions to invoices and reviews any adjustments for reasonableness. There have been no
issues so far. Inventory shrinkage has averaged between 2-3% over the last several years.
POS SYSTEM RECONCILIATION
For Clerk’s system, Full Court, the court Clerk establish a username for the accounting manager and
had training from Full Court support on system orientation. Next we need to set up a process for
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reconciling that system to Eden. In addition to the Full Court reconciliation, we will create monthly
revenue reconciliations for the other POS systems such as, Recreation, Parking, Wheeler Ticketing
and Bar, Golf, Municipay. There is already a reconciliation in place for Yardi and Innoprise. The bank is
reconciled to Eden, but these POS system reconciliations will catch if a transaction was entered and
receipted in a subsidiary system, but never made it to the bank or Eden.
RECONCILIATION FORMAT
This recommendation was made to improve evidence that a reconciliation control occurred. We will roll
out a standard reconciliation cover sheet this month. The new Enterprise Resource Planning (ERP)
System that is currently in contract negotiations will have bank account reconciliations built into that
system.
SYSTEM ACCESS REVIEW
This has not been started and will likely be complete by end of the year.
SAFEGUARDING OF CASH
We installed a new Finance safe that includes unique digital codes per employee and unlimited number
of combinations, and a drop safe. The safe remains locked throughout the day with pending batches in
the safe or dropped in upon receipt. Three separate auto locking cash drawers were installed at the
Finance Window.
PARKING REVENUE LOSS RECOVERY
The City filed a claim with our insurance carrier. Coverage was denied as expected.
RECREATION LEAGUE FEES
Recreation is matching league payments to the General Ledger to insure payment is received by all
teams.
DIVERT PARKING CREDIT CARD PROCEEDS
This is mitigated through the bank procedures, and we will make it a policy to have two signatures to
set up a new account.
Other internal audit recommendations:
• PARKING REVENUE CONTROLS (Need to check that Parking has been doing the log sheets
and reviewing the gate manual open log)
• DOCUMENTED POLICIES AND PROCEDURES (need resources)
• GOLF COURSE WALK ON PREVENTION (Golf? Accept risk?)
• RECREATION FACILITY FREE USAGE (accepted risk)
In the last few months we also worked with Wheeler on bar cash over/short logs and review
procedures. We worked with Community Development to derive a permit fee calculation template in
Excel to verify Eden calculations. We are working with Special Events to improve procedures for selling
and recording UPCC VIP tickets.
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Enterprise Resource
Why ERP?
Continuity of Processes and Information
Best Practice Configuration
Accessible Information Accessible Information
Mobile Applications
Electronic Workflow
Electronic Documents
Integrated Applications
esource Planning
Why ERP?
rocesses and Information
Best Practice Configuration
Accessible Information Accessible Information
Mobile Applications
Electronic Workflow
Electronic Documents
Integrated Applications
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Software a
What is SaaS?
Licensed software model
Delivered via Web Delivered via Web
Outsource hardware & software maintenance
Reduced Internal IT Support Costs
as aService
What is SaaS?
Licensed software model
Delivered via Web Delivered via Web
Outsource hardware & software maintenance
Reduced Internal IT Support Costs
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Strategy
GFOA Consulting
Internal R
Scope Control
Leverage Best Practices Leverage Best Practices
Simple User Interface & Mobility
Change Management
Training
Strategy
GFOA Consulting
Resources
Scope Control
Leverage Best Practices Leverage Best Practices
ser Interface & Mobility
Change Management
Training
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Progress
•GFOA Needs Analysis
•Advisory Board & Functional Requirements
•RFP Process •RFP Process
7 proposals received
•2 Proposals Elevated and Demonstrated
SAP & Oracle Cloud
Progress
Advisory Board & Functional Requirements
received
2 Proposals Elevated and Demonstrated
SAP & Oracle Cloud
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Next Steps
•Develop Scope of Work
•Contract Negotiation
•Council Action: Contract Approval Aug •Council Action: Contract Approval Aug
•Project Start 4 th Quarter 2015
Next Steps
Council Action: Contract Approval Aug -Sep Council Action: Contract Approval Aug -Sep
Quarter 2015
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