06.12.13 tax ballot measure memo attch
CITY OF BOULDER
OPEN SPACE BOARD OF TRUSTEES AGENDA ITEM
MEETING DATE: June 12, 2013
AGENDA TITLE
Consideration of a recommendation to City Council for Open Space
and Mountain Parks funding.
PRESENTER/S
Michael D. Patton, Director, Open Space and Mountain Parks
Michael Orosel, Financial Services Manager
EXECUTIVE SUMMARY
On April 23, 2013 during a study session to consider potential 2013 ballot items, City
Council members discussed the prospect of extending the current 0.33 percent sales tax
which is scheduled to sunset at the end of 2018. The discussion came about as a part of a
question regarding OSMP) ability to bond for the
purchase of property identified in the recently-approved Acquisition Plan. OSMP
currently has two sales taxes - 0.33 percent and 0.15 percent that sunset at the end of
2018 and 2019 respectively. These two sunsetting taxes represent 55 percent of OSMP
total annual sales tax revenue.
City Council will take up the issue of potential 2013 ballot measures again on June 18,
2013 and the possibility of extending one of the current Open Space sales taxes will be
discussed. It is also possible that council will consider some alternative to either of the
existing taxes. As a rule, the City Council solicits and values input from the Open Space
Board of Trustees (OSBT). It would be appropriate for the OSBT to consider making a
recommendation to City Council regarding the prospect for an additional sales tax
measure for voter consideration at the November 2013 municipal election.
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STAFF RECOMMENDATION
Staff requests the Open Space Board of Trustees consider making a recommendation to
City Council regarding the possibility of extending either the 0.33 percent or the 0.15
percent sales taxes which are scheduled to sunset in 2018 and 2019 respectively. The
Board could also determine that a different level of funding is appropriate. The purpose of
the additional revenue would be to complete the Vision Plan for land purchase as
described in the council-approved 2013-2019 Acquisition Plan Update.
COMMUNITY SUSTAINABILITY ASSESSMENTS AND IMPACTS
Environmental: Open Space and Mountain Parks is a significant community-
based program that preserves open space land contributing to the environmental
sustainability goal of the City Council.
Economic: The Open Space and Mountain Parks program contributes to
cou
the diverse and vibrant economic system that supports services for residents. The
land system and the quality of life it represents attract visitors and help businesses
to recruit and retain quality employees.
Social: The Open Space land system is accessible to all members of the
aspect of their community.
OTHER IMPACTS
Fiscal: All new funding would come from any potential sales tax.
Staff Time: Only minimal staff time would be required to assist the City Attorney
should a sales tax be placed on the ballot.
PUBLIC COMMENT AND PROCESS
This item is being heard at this public meeting, advertised in the Daily Camera on June 9,
2013.
ANALYSIS
The Open Space and Mountain Parks Department currently has three dedicated sales
taxes that account for more that 92 percent of its total funding:
1.A 0.4 percent sales tax that was approved as a perpetual or permanent tax.
2.A 0.33 percent sales tax that was approved through 2018 after which it will
expire.
3.A 0.15 percent sales tax that was approved through 2019 after which it will
expire.
At the end of 2019 when both the 0.33 percent and 0.15 percent sales taxes have expired,
the OSMP Department will lose 55 percent of its current sales tax funding base. After this
time, only the 0.4 percent sales tax will be available to support ongoing management of
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the 45,000 acres of Open Space and Mountain Parks land. It has been a general
expectation that given the need for ongoing management, after both taxes sunset, the
acquisition of additional land would end or be very limited.
The recently-passed 2013-2019 Update to the Acquisition Plan identifies three levels of
funding strategies for purchasing land. What strategy selected for completion informs the
level of funding required for future acquisitions.
The recently-approved funding strategies include:
1.Fiscally Constrained Plan,
2.Action Plan and
3.Vision Plan.
Fiscally Constrained Plan
The Fiscally Constrained Plan is a simple approach that identifies acquisition targets and
a Capital Improvement Program (CIP) level that can be accomplished based on current
Finance Department revenue projections. It is expected that a total of 1,190 acres could
be purchased prior to the sunsetting of the 0.33 percent and 0.15 percent sales taxes.
Since it is based only on expected revenues, the Fiscally Constrained Plan could be
accomplished without an extension of one of the current sales taxes set to expire in 2018
and 2019, presuming all revenue projections and anticipated expenditures are correct.
Action Plan
The main feature of the Action Plan is the use of the existing fund balance to increase the
Acquisition CIP from $3.4 million to $5.4 million for the duration of the plan. This
increase would produce a total of $35.8 million in acquisition capital. It presumes that
projections for revenues and expenditures are correct.
At an estimated cost of $20,000 per acre, this funding would allow for the purchase of
approximately 1,790 acres over seven years or 255 acres per year. After the 0.33 percent
sales tax sunsets at the end of 2018, additional funds will be allocated from the fund
balance to retain the $5.4 million level for the last year of the Plan. Additionally,
beginning in 2015, $100,000 could be added to the operating budget for ongoing
expenses.
Vision Plan
This most ambitious of the three funding alternatives calls for the long-term purchase of
approximately 8,700 acres of land identified by the Acquisition Plan at a cost of over $90
million. Property targeted by the Vision Plan is the result of years of decision making by
staff, the Board and by City Council. The Vision Plan cannot be accomplished without an
increased funding source beyond the sunset of the 0.33 percent and 0.15 percent sales
taxes in 2018 and 2019.
Alternative Modeling Fund Financials
Staff has developed fund financials modeling three different funding alternatives. In all
cases staff used Finance Department sales tax increase projections as a base. These
projections use a general three percent increase in sales tax revenues over the years. Staff
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changed the model slightly to acknowledge the possibility of periodic downturns in the
national and local economy. As a point of reference, during the last decade (2000 2010)
OSMP sales tax revenue fell 17 percent from 2000 to 2004 and then was essentially flat
during 2008 and 2009. To provide for the prospect of a slight downturn, staff has
included three years of flat sales tax projections or no change in sales tax revenues for
three years in each of the models years 2015, 2016 and 2017.
Staff has modeled three scenarios: first, neither the 0.33 percent nor the 0.15 percent is
continued after sunsetting (Attachment A); second, continuation of the 0.33 percent for
through 2030 (Attachment B) and third, continuation of the 0.15 percent through 2030
(Attachment C).
In each model, the current general fund transfer is eliminated at the end of 2019 and the
fund balance is spent down by 50 percent. In the two models, continuing the 0.15 percent
and 0.33 percent sales tax, the acquisition CIP is maintained at the $3.4 million level. In
the model with neither sales tax extended, the Acquisition CIP is eliminated. While these
are the only tools staff has available for such projections, it is important to keep in mind
the warning from the consultant advising the first Blue Ribbon Commission (BRC): any
projections beyond a few years are almost certainly wrong.
None of the spread sheets include a bonding prospect. However, in a similar review of
OSMP funding, the Finance Director as concluded that by extending either sales tax
bonding would be an acquisition funding option.
Attachment A shows the result of neither the 0.15 percent nor 0.33 percent sales tax
being extended with the other presumptions described above. Under this scenario
beginning in 2020 no further funds are allocated for the acquisition of land, water or
minerals. Even with these modifications, the Open Space fund begins to go negative in
2024 and by 2030 has a deficit of more than $25,000,000.
Attachment B shows the result of the 0.33 percent tax being extended to 2030 but 0.15
percent being discontinued. Under this scenario, a $3.5 million land acquisition CIP can
be maintained; an additional $300,000 can also be allocated for the purchase of water and
mineral rights. By the end of 2030, tjust over
$100 million. The strength of this scenario would allow a considerably more significant
CIP for the pursuit and acquisition of mineral rights or mineral leases.
Attachment C shows the result of the 0.15 percent being extended but the 0.33 percent
being discontinued. Under this scenario, a $3.5 million land acquisition CIP can be
maintained; an additional $300,000 can also be allocated for the purchase of water and
mineral rights. By 2030 there is a Fund Balance After Reserves of just under $8
million.
Presuming all revenue and expenditure projections are met, extension of either the 0.33
percent or the 0.15 percent taxes could allow completion of the Vision Plan described in
the 2013-2019 Acquisition Plan.
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