[bouldercouncilhotline] Hotline: FW: Hotline: Questions regarding Open Space Taxes and Ballot Measures

[cmosupport at bouldercolorado.gov]

Sender: Lewis, Alisa

From: Patton, Mike

Sent: Tuesday, June 18, 2013 2:01 PM
To: Lewis, Alisa
Cc: Brautigam, Jane; Eichem, Bob; Orosel, Mike
Subject: KC Hotline Questions
 
Answers to the Hotline questions are in Bold text below each question.
Mike:
Thanks for this response.  As I said in my first post, I'm interested in seeing completion of the Vision Plan for Open Space.  The Vision Plan embodies the entire wish list that OSMP has, and I think we are all wondering how much $$ it
 takes to get there. 
 
1.     
My proposal was for a 20 year tax extension of the .15% dedicated solely to open space. When you model it out for 20 years (instead of 10 years like you did), you see that much more revenue goes to OSBT. My proposal also assumed that
 the general fund transfer continues. Could you please provide a model that includes both those assumptions?
                                                  
 
The model was not run beyond 2030 but yes, certainly there would be more funding over a larger course of time.  Bob Eichem will provide a spread sheet he developed for bond stress testing which will also answer this question. By not
 eliminating the GFT you would add roughly an additional one million dollars to each year during the life of your proposed tax.
 
2.You have revised your spreadsheets showing income and expenditures for the Open Space Department. I'll get to questions about all the changes you made. But assuming all those changes are good, it is still clear
 that total acquisitions between 2014 and 2019 under the revised models are $53million, or 60-65% of the Vision Plan for acquisitions. Could you please model how long .15% sales tax should go in order to complete the Vision Plan (which I think would be about
 $31million in 2020 according to your spreadsheets)? Is it 10 years? 15 years? 20 years?
 
The models were not an attempt to demonstrate completion of the Vision Plan.  The models were simply an attempt to show a number of “what if” scenarios to answer some OSBT questions and interests.  I believe Bob Eichem ‘s spread sheets
 will provide answer to the additional models you requested.  
 
3. When Council approved the OSBT Acquisitions Plan, an attachment to the Plan included a spreadsheet called "Fund Financial Action Plan." When I compare that spreadsheet (herein "May Spreadsheet") to the spreadsheets
 provided below, (herein "June Spreadsheet"), there are some significant differences that I'd like to understand better. I'm curious why so much changed in 1 month. Specifically:
 
--- You increased General Operating Expenditures from roughly $10million in 2012 to roughly $13million in 2015. That's about a 30% increase in 3years.  From the May Spreadsheets to the June spreadsheets, there is an increase of over $2million over
 6 years and you decreased sales tax revenues by over $2.5million over 6 years. First, why such a huge increase in Operating Expenses from 2012 to 2015? 

 
The May spreadsheet was prepared prior to OSMP developing its 2014 proposed budget and therefore had no requested increases for 2014.  The June spreadsheets do have the requests totaling $779,384 included for 2014 and are carried over
 to 2015.  In addition, the 2012 General Operating Expenditures represents actual expenditures rather than budget; the expenditures were less than budgeted.
 
 
Also, why such a bid adjustment from last month's spreadsheets to this month's? 
 
The spreadsheet used for the Acquisition Plan was developed to reflect the status of the Open Space Fund under a set of assumptions that are used for budget purposes, e.g., sales and use tax revenue for 2013 through 2019 reflect the
 projections developed by the Budget Office.  The sales and use tax figures for the June Spreadsheets represent a “what if” scenario to reflect the status of the Open Space Fund should there be a period of flat revenue; that should not be construed as a projection
 but a possible scenario and its affect on the Open Space Fund.
 
--You explained below why you decided decreased the sales tax revenue from May's Spreadsheets to the June Spreadsheets. But arewe doing that in all city budgets? I mean, if we are making this change in projection, that should be across
 all city budgets, right?  
 
 
As indicated above, the flat years for revenue in the June Spreadsheets are not projections; they are simply “what if” scenarios to demonstrate an extremely modest impact form an economic downturn.  Since we were attempting to look out
 to 2030, given the difficult economic times of the last decade – 2000-2010 - it seemed unlikely that we would see 18 years without at least 2 years without growth in revenue.  At this time the City is not projecting flat years in the city budgets.  OSMP’s
 budget will reflect Budget Office projections which, at this time, are reflected in the May Spreadsheet.
 
--- Why is the line "Acquisition Reserve" which accounted for $8million between 2015-2018 now gone from the June spreadsheet?  
 
The acquisition reserve was $2,000,000.  It represents a reserve and not an expenditure and therefore is not cumulative.  The reserve was utilized to set aside $2,000,000 for use in the real estate acquisition CIP in a future year. 
 After the Acquisition Plan was approved and different “what if” scenarios were being developed, the acquisition reserve was deleted.  This does not represent an expenditure but rather a “freeing up” of those funds for other uses. 

 
Why is the  Beginning Fund Balance between the May Spreadsheet and June Spreadsheet so different? 

 
The main reason for the difference in the beginning fund balance between the two spreadsheets is due to a correction by the Finance Office of an accounting error that occurred in accounting for a real estate transaction between OSMP
 and Parks and Recreation.  That correction caused the Open Space Fund balance to decrease by over $2 million.
 
Ultimately, these and several other changes lead to a decrease of $8million in money available total acquisitions by 2019  between the May spreadsheet and June spreadsheet. They also lead to a decrease of $16million between the Ending Fund
 Balance After Reserve between the May and June Spreadsheets. Can you please explain? 

 
A large portion of the difference is the result of the June model increasing the real estate acquisition CIP by $8,000,000 from $5,400,000 to $13,400,000 in 2019. This modeling change was made to explore the impact of using large portions
 of fund balance for acquisitions as discussed during the May 7th Council meeting.  An additional $2 million of the decrease is accounted for by the accounting correction mentioned above.  Other changes can be accounted for due to differences is
 assumptions between budget assumptions (May Spreadsheet) and “what if” scenarios (June Spreadsheets).

 
4. Since the Joder Property was purchased for just over $5million after the Acquisitions Plan was approved, I assume that the Acquisitions Plan goes down by $5million, from just under $90million at the Vision level to under $85million.
  Is this purchase the reason that the 2013 Beginning Fund Balance from the May Spreadsheet to the June Spreadsheet is different by over $2million? 
 
No.  As indicated above, the $2 million difference in the fund balance is due to correcting an accounting error.
 
5. Why does your model assume that we will receive no grants ever again, given that grants are a regularly source of revenue that we've used in the past.T he model could take the total amount of grants over the last 20 years, and project
 that going forward. Is there some reason why this is not a reasonable assumption? 
 
Grants are not included until there is a commitment from the grantor.
 
6. Where is the Lottery money that OSMP receives accounted for in this budget? The Lottery Fund accounts for State Conservation Trust Fund proceeds that are utilized by both Parks & Rec and by OSMP.
 
As we are using the fund financial, it is limited to Open Space funds only.  In 2013 and 2014, OSMP will be allocated Lottery Funds of $343,000 each year and from 2015 on OSMP will be allocated $355,300 per year unless revenue to the
 Conservation Trust Fund changes.  Expenditures of lottery funds are made from the Lottery Fund and not the Open Space Fund.  These funds are used exclusively for capital projects and have never been used for acquisition purposes.

 
7.  It seems to make sense to me that if you are assuming a downturn in the economy leading to lower sales tax projections, then you should also assume lower land costs. In fact, this rationale (that a weak economy led to very strong opportunities
 to buy land) has led and is leading to some large and important acquisitions.  So, shouldn't the lower sales tax projections lead in turn to a lower number for the acquisition plan? 
 
Although it may seem logical to assume lower land costs when there is a downturn in the economy, OSMP has found no correlation between the state of the economy and the cost of land that would be of interest to OSMP, i.e., large parcels
 of land versus residential property.
 
I don't expect written answer for these, and I know some answers may take a while to produce. To the extent feasible, I'd like to have some discussion on this either at our Tuesday night meeting. 
 
Thanks!
KC