To: Honorable Mayor and Members of Town Council
From: David L. Corliss, Town Manager
Title
Ordinance Requiring the Town of Castle Rock to Rebate its 2015 Revenue Excess Through Credits on Eligible Account Utility Bills (Second Reading)
Body
________________________________________________________________________________
Executive Summary
Town Council approved the Ordinance, as Amended, on First Reading on August 2, 2016 by a vote of 6-0.
The title was changed to require the action, rather than to authorize it.
This Ordinance will go into effect in the event the Ballot Question that authorizes retention and expenditure of 2015 excess TABOR revenues for public safety and transportation fails at the November 8, 2016 election.
Town Council in 2014 directed staff to manage Town finances to keep revenues within Colorado Taxpayers Bill of Rights (TABOR) limits to the extent possible. Staff has done so since that time; yet, the Town ended 2015 with a TABOR surplus of $714,580.
Because 2015 revenues exceeded TABOR limits, Town Council has until the end of 2016 to either: 1) Refund the surplus, or 2) Ask voters to keep the money to spend on local services.
Town Council discussed these options May 3 and June 21. On the latter date, Council directed staff to send the matter to a public vote. Council will consider tonight under separate agenda items what question for this purpose should be placed on the November 8 General Election ballot.
If voters on November 8 decide the Town should not retain the 2015 excess TABOR revenues, the resolution of the surplus will default to a refund.
The purpose of this item is to adopt on first reading an ordinance establishing a refund methodology for use in the event that the ballot question fails.
Discussion
If a vote requesting the retention of the 2015 excess TABOR revenue fails, the resolution of the surplus would default to a refund. The TABOR standard for refunds is: “Subject to judicial review, districts may use any reasonable method for refunds … including temporary tax credits or rate reductions. Refunds need not be proportional when prior payments are impractical to identify or return.”
Following Council discussion of refund-related alternatives at the May 3 and June 21 Town Council meetings, staff recommends the following: if voters turn down the request for retention, a one-time utility bill credit should be issued to all residential Castle Rock Water customers who are active in the water billing system as of the December 2016 billing date who were also active customers as of December 31, 2015. (Staff does not recommend issuing refund checks, nor does it believe that alternative is feasible to accomplish after the November election and before the end of 2016, as required by TABOR.)
At the end of 2015, there were about 17,300 residential utility billing accounts. Of those, 630 were in the developer or title company’s name, while the property was awaiting transfer to its owner. These accounts would not match the current account information and thus would be excluded from receiving a refund. Additionally, a comparison of 2015 to 2016 account information is likely to find other accounts that were active at the end of 2015 that will not be active in December 2016. This means the number of recipient accounts could end up near 16,500, for a refund of about $43 per residential utility billing account.
It’s important to note that the majority of the Town’s multifamily water accounts have mastered meters, meaning individual units do not have Castle Rock Water accounts. The Town has no way of knowing who currently resides in the individual units, nor whether they were also residents at the end of 2015. Individuals living in those units, estimated to be about 1,500 units, would not receive the refund credit due to impracticality of getting refunds to those living in properties with master metered accounts.
An ordinance to establish this recommended refund methodology is included in Attachment A. Staff recommends that Council adopt this ordinance concurrently with the ballot question ordinance, so that the public has a clear picture of what would transpire with both possible resolutions of the TABOR surplus.
Financial Information
The refund would have these associated costs:
• $714,580, which is the amount of the refund
• $1,000 needed to compare 2015 utility accounts to 2016 utility accounts
• $1,800 to insert into the December water bill a handout explaining the reason for the refund
A budget amendment will be necessary to accommodate for these costs. Staff’s intention is to present that amendment when appropriate.
Staff Recommendation
Staff recommends adoption of the ordinance.
Proposed Motion
“I move to approve on first reading an ordinance requiring the Town of Castle Rock to rebate its 2015 revenue excess through credits on eligible utility accounts.”
Attachments
Attachment A: Ordinance