To: Honorable Mayor and Members of Town Council
From: Trish Muller, Finance Director
Title
Ordinance Approving the First Amendment to the 2019 Budget by Making Supplemental Appropriations for 2019 and Authorizing Changes for Year 2019 (Second Reading - Approved on First Reading on April 2, 2019 by a vote of 5-0)
Body
________________________________________________________________________________
Please note that items in red text in this memo and associated attachments reflect revisions from the first reading of this budget amendment ordinance. Only total revenue amounts have been updated to reflect appropriately; no changes to amendment requests occurred since first reading.
Introduction
The charter for the Town of Castle Rock allows for amendments to budget appropriations. Supplemental appropriations require approval by ordinance (Section 9.10) while capital appropriations can be carried forward without approval by ordinance in order to complete ongoing projects (Section 9.15). Capital projects are fully budgeted at the time the contract is signed. Although fully budgeted, actual expenditures vary depending on the timing of work on the project, at times spanning multiple years. Since projects often cross multiple years, capital budget appropriations get carried forward until projects are complete. Each year the Finance Department prepares budget amendments for Town Council review and approval, plus capital carry forward for informational purposes. The number of budget amendments varies by year depending on needs/opportunities that are identified throughout the year. A summary of budget amendments approved by Town Council from 2016 - 2018 is shown below.
Executive Summary
The changes of appropriation in this proposed First Amendment to the 2019 Budget include items to be considered for supplemental appropriation and carryover of unspent capital appropriations from the 2018 Amended Budget. Attachments B and C describe the budget amendment requests in two types of changes:
- Attachment B includes supplemental appropriation items and non-capital encumbered obligations for 2018
- Attachment C includes all encumbered and unencumbered capital project amounts as identified by departments
The table below summarizes changes in appropriations in this First Amendment to the 2019 Budget and the effect on capital and operating expenditure budget increases. Note that total revenue adjustments of $4,671,763 are also included in this budget amendment.
Of the total budget requests, $144,882 is recurring and is incorporated in future financial plans. These recurring costs include $118,698 across Town funds to accommodate for higher than anticipated Property/Casualty insurance premium costs as well as $26,184 in the Castle Rock Water funds for additional seasonal labor. All other items contained within this proposed budget amendment are intended for one-time projects that are not continued every year, therefore are planned as one-time uses of available fund balances. Some items are needed to more precisely appropriate funds as the result of gaining more complete project estimates and the finalization of project scope.
Discussion
Total necessary changes to appropriations referred to in Attachment B net to an increase in total expenditures for 2019 of $14,703,782. Significant supplemental appropriation needs include the following items:
Within the Town Manager’s Office, supplemental appropriation of funds totaling $2,000,000 is needed in the Economic Development Fund for a continuation of the Castle Rock Collaborative Campus project. On December 5, 2017, Town Council approved a development agreement in which the Town will commit funds to assist in the construction of a new collaborative campus project to include Arapahoe Community College, Colorado State University, and Douglas County Schools. These funds were included in the 2018 Budget, however payments will not occur until 2019.
The Town Manager’s Office is also requesting supplemental appropriation of funds from the General Long-term Planning Fund to replace the generator at Fire Station 153. The generator failed in early 2019 and needs to be replaced for a total of $31,355.
The Division of Innovation and Technology request supplemental appropriation of funds to complete the fiber line work at the Plum Creek/Wilcox intersection, that began in 2018 and will continue into 2019 for a total of $20,392.
Supplemental appropriation of $69,221 is included by the Finance Department within the General Fund to continue the development of the new Sales Tax Software and purchase necessary licensing for the new sales tax software that began development in 2018. The Finance Department is also requesting funds to accommodate increased property/casualty insurance premium costs, totaling $118,698 across multiple Town funds.
The Finance Department also requests supplemental appropriation of funds within the General Fund and the Downtown Development Authority TIF (DDA TIF) Fund to accommodate an interfund loan and bank loan payoff. A requested total of $2,125,000 will be loaned from the General Fund to the DDA TIF Fund to pay off a bank loan that helped fund the Festival Park improvement project. Significant interest savings are expected to be realized by utilizing an interfund loan for this debt rather than the bank loan. This loan payoff is pending approval of the DDA board later in April. Additional appropriation in the amount of $813,579 is also requested in the DDA TIF Fund to allow available funding to be utilized for various downtown projects throughout the year.
The Public Works Department requests total supplemental expenditure appropriation of $4,361,597 in the Transportation Fund and $1,957,633 in the Transportation Capital Fund. Significant items in the Transportation Fund include an additional $2,000,000 transfer out to the Transportation Capital Fund intended to aid in funding capital improvement projects, an additional $1,593,667 for the annual Pavement Maintenance Program, $330,000 for the installation of underdrains in the Meadows, and $250,000 for a feasibility study of an interchanged at I-25 and Blackfeather Trail. Requested items within the Transportation Capital Fund include an additional $1,005,147 for the Service Center expansion/renovation and $872,906 for improvements at Highway 86 and Crowfoot Valley Road. As project estimates have been refined, additional funding needs have been identified to accommodate project completion. Transfers In revenue is requested to increase by $112,850 for transfers from other departments to help fund the Fleet bay portion of the Service Center expansion. Additional revenue is also included in the Transportation Capital Fund for grant and contribution revenue related to the Highway 86 and Allen Way and Highway 86 and Crowfoot Valley Road projects. This revenue was anticipated in 2018 and will now be received in 2019.
The Parks and Recreation Department has included supplemental appropriation of funds to including recognition of zip line lease revenue, with offsetting expenditures, for improvements at Philip S. Miller Park as well as GOCO grant revenue related to the East Plum Creek Trail extension that is planned for completion in 2019. Significant items include a transfer out of $177,809 in the General Fund to Parks and Recreation Capital to build a memorial at the Deputy Zack S. Parrish III Memorial Park. Parks and Recreation also requests supplemental appropriation from the Community Center Fund to refinish the hardwood floors at the Recreation Center and complete ongoing work from 2018 for a new boarding system at the Miller Activity Complex (MAC).
Castle Rock Water has requested supplemental appropriation of funds within the Water, Water Resources, Stormwater, and Wastewater Funds, resulting in an overall decrease of $174,432 in expenditure appropriation. The primary reason for the decrease is a request to remove a budgeted interfund loan between the Water Fund and the Wastewater Fund of $5,500,000 after analysis showed that there is no longer a need for the interfund loan. Other requests include $3,098,065 is intended to re-drill Well 217 (Ray Water Treatment Plant) and Well 218 (Aquifer Storage and Recovery). Another $1,642,835 is requested for the ongoing repair and maintenance of wells, which started in 2018 and continues in 2019. The East Plum Creek (EPC) waterline relocation was not previously planned, due to part of the waterline currently being exposed and vulnerable to damage resulting in $450,000 of supplemental appropriation. A request to increase GIS seasonal staff for $26,184 to keep up with mapping demand is also included.
A listing of all requests for supplemental appropriations for the First Amendment to the 2019 Budget, including written justification is included in Attachment B.
In addition to the supplemental appropriations requests, departments will carry forward unspent appropriations, referenced in Attachment C, for capital projects that were planned and funded as previously approved by Town Council. The total amount of capital funding planned to be re-appropriated into the 2019 budget is $73,338,429.
The following chart identifies these requests by fund:
As per section 9.15 of the Town Charter, appropriations for capital expenditures do not lapse and are automatically re-appropriated into the next year’s budget. Therefore, these continuing appropriations are provided for Council’s review. These items are detailed in Attachment C.
Budget Impact
As presented in Attachment D, the Finance Department has ensured that funding is available through either revenues and/or fund balance for one-time expenditures, maintaining adequate reserves within each fund. A summary of the proposed total increase in 2019 expenditure appropriation changes by fund is shown in the following table:
Staff Recommendation
Staff recommends that Town Council approve the Ordinance.
Proposed Motion
“I move to approve on the Ordinance as introduced by title, on second reading.”
Attachments
Attachment A: Ordinance (Second Reading)
Attachment B: Requests for Supplemental Appropriation
Attachment C: Unspent 2018 Capital Project Allocations Carryover for Fiscal Year 2019
Attachment D: Estimated Ending Funds Available for 2019