Loading...
02.23.21 City Council Study Session packet M ayor Sam Weaver Council M e mbe rs Aaron Brockett Rachel Friend Junie Joseph Mirabai Nagle Adam Swetlik Mark Wallach Bob Yates Mary Young Council Chambers 1777 Broadway Boulder, CO 80302 February 23, 2021 6:00 PM Inte rim City M anage r Chris Meschuk City Attorne y Thomas A. Carr City Cle rk Elesha Johnson ST UDY S E S S ION BOULDE R CIT Y COUNCIL Consideration of options related to the governance and funding of library services, including the formation of a library district 90 min Xcel Energy Partnership Update and Municipalization Wrap-up 60 min Council Discussion on Recruitment F irm Selection for the City A ttorney Recruitment 15 min 2:45 hrs City Council documents, including meeting agendas, study session agendas, meeting action summaries and information packets can be accessed at https://bouldercolorado.gov/city- council/council-documents. (Scroll down to the second brown box and click "I nformation Packet") This meeting can be viewed at www.bouldercolorado.gov/city-council. Meetings are aired live on Municipal Channel 8 and the city's website and are re-cablecast at 6 p.m. Wednesdays and 11 a.m. Fridays in the two weeks following a regular council meeting. Boulder 8 TV (Comcast channels 8 and 880) is now providing closed captioning for all live meetings that are aired on the channels. The closed captioning service operates in the same manner as similar services offered by broadcast channels, allowing viewers to turn the closed captioning on or off with the television remote control. Closed captioning also is available on the live HD stream on Boulder Channel8.com. To activate the captioning service for the live stream, the "C C" button (which is located at the bottom of the video player) will be illuminated and available whenever the channel is providing captioning services. The council chambers is equipped with a T-Coil assisted listening loop and portable assisted listening devices. I ndividuals with hearing or speech loss may contact us using Relay Colorado at 711 or 1- 800-659-3656. Packet Page 1 of 73 Anyone requiring special packet preparation such as Braille, large print, or tape recorded versions may contact the City Clerk's Office at 303-441-4222, 8 a.m. - 5 p.m. Monday through Friday. Please request special packet preparation no later than 48 hours prior to the meeting. I f you need Spanish interpretation or other language-related assistance for this meeting, please call (303) 441-1905 at least three business days prior to the meeting. Si usted necesita interpretacion o cualquier otra ayuda con relacion al idioma para esta junta, por favor comuniquese al (303) 441- 1905 por lo menos 3 negocios dias antes de la junta. Send electronic presentations to email address: CityClerkStaff@bouldercolorado.gov no later than 2 p.m. the day of the meeting. Packet Page 2 of 73 C OVE R SH E E T ME E T I N G D AT E F ebruary 23, 2021 ST U D Y SE SSI ON I T E M C onsideration of options related to the governance and funding of library services, including the formation of a library district P RI MARY STAF F C ON TAC T David Farnan, Director of Library and Arts AT TAC H ME N T S: Description L ibrary District Discussion Addendum: 2019 Boulder P ublic L ibrary F unding Community P oll and Surv ey Report Packet Page 3 of 73 STUDY SESSION MEMORANDUM TO: Mayor and Members of City Council FROM: Chris Meschuk, Interim City Manager David Gehr, Chief Deputy City Attorney Kara Skinner, Assistant Director of Finance David Farnan, Library and Arts Director DATE: February 23, 2021 SUBJECT: Study Session for February 23, 2021 - Consideration of options related to the governance and funding of library services, including the formation of a library district. EXECUTIVE SUMMARY The purpose of this study session item is to provide council with a review of the information that has been presented during several meetings and study sessions since 2018 about options for governance and funding of library services; to determine when council would like to receive public input about forming a library district; and for council to provide direction to staff on the desired path forward. KEY ISSUES IDENTIFIED The key issues for the study session are to inform council about: • Options for governing the library, including the current approach as a municipal library or as an independent library district. • The process and procedures to form a library district. • Strategies to fund library services for each form of governance. • Impacts on the current city budget and delivery of internal services based on the form of governance. Secondary objectives of the study session are: • To provide the opportunity for council members to ask questions about the information presented and to request additional information to be presented in April 2021 during a regular meeting with a public hearing, and • For staff to receive direction from council about how to proceed with library governance and funding discussion and decision. Packet Page 4 of 73 QUESTIONS FOR COUNCIL There are two options for council to consider related to library governance. The form of governance chosen will determine the available funding options. The following questions are intended to provide framework for this discussion. 1. Does council have questions about the options for library governance? 2. Does council have questions about the process and procedures for forming a library district? 3. Does council have questions about the funding options presented for either form of governance? 4. Is there additional information that council directs staff to prepare for the April 2021 public hearing? BACKGROUND Council accepted the 2018 Boulder Public Library (BPL) Master Plan on September 4, 2018. The plan outlines community-driven goals for a ten year period and serves as guide for how the library sustains outputs, meets growing demand, and builds a resilient and sustainable future. It identifies two key development priorities to: • Strategically address ongoing growth in demand and future needs identified for the entire community with specific focus on youth as well as underserved community members and neighborhoods. • Sustain quality service and current service level needs created by past growth in demand with adequate funding and address a backlog of facilities maintenance. The plan indicates that more tax revenue is necessary to meet the community’s vision for its library. A more stable form of funding is necessary to sustain high-quality library services long term. The Library Commission provided a foreword in the master plan that states: “[The Library] Commission has concluded that a library district provides the most equitable, accountable and reliable option for BPL’s long-term financial sustainability” (page 7 of the master plan). Given the commission’s interest in a library district and to understand the cost of providing library services and meeting the master plan goals, council directed staff to hire consultants to perform a balanced and impartial analysis of funding requirements for current library services, the cost of funding each master plan service level and information about the process, structure, and asset allocation related to forming a library district. This information was presented during the November 27, 2018 study session. Packet Page 5 of 73 Since then, the community conversation has continued with an advocacy group, the Library Champions, putting forth a ballot proposal to form a library district for the 2019 election. The ballot proposal was ultimately pulled for 2019, with the understanding that the city would conduct a poll to gauge community support which was completed and presented at the May 7, 2019 regular meeting, and that city staff would commit to recommending sustainable funding as a priority of the council which was discussed at the June 18, 2019 regular meeting. Supporting that priority, the 2019 library operating budget provided ongoing funding for the “maintain service level” of the master plan and the initial 2020 library operating budget provided funding to achieve the “meet community demand” service level. Combined, the 2019 and 2020 budget increases were $700,000 of ongoing funding for the library. Economic impacts of the COVID-19 pandemic required a significant reduction to the 2020 and 2021 city operating budgets, eroding the growth achieved to the library budget in 2019 and 2020. Additionally, construction cost escalation has impacted the capital costs for the North Boulder branch library to meet the city’s net zero energy goals, to complete the outdoor playground, pedestrian plaza, and maker space which exceed the combined total project budget by approximately $2 million and required a reduction in project scope. Approximately $1 million of ongoing, annual operating funds are needed upon completion of the branch library which is anticipated in 2022. Staff presented updated information during the February 11, 2020 study session. The presentation largely focused on the legal processes for forming a library district and the decisions council may need to consider. It also provided financial context in terms of potential impact for property owners and impact to the city’s general fund. The following section provides a summary analysis. ANALYSIS Library District Formation Library Districts may be formed by resolution or ordinance (“Resolution”), or through a petition and election process. Table 1 compares the processes. Packet Page 6 of 73 Table 1. Comparison of Forming a Library District by Resolution or Petition FORMATION STEP RESOLUTION PETITION ESTABLISHMENT & DEFINING SERVICE AREA BOUNDARIES A resolution is considered and adopted by each governmental unit involved (“Establishing Entities”). In this case, the Establishing Entities will be the city of Boulder and Boulder County. The Library District is established when the resolution is adopted by each entity. The resolution must describe the legal service area of the Library District and provide for electors to approve the proposed mill levy. A minimum of 100 eligible electors residing in the proposed Library District service area may submit a petition to the county commissioners to form a district. The petition must include a request for establishment, name of the District, the Establishing Entities and contain a description of the service area boundaries and the proposed mill levy. ELECTION REQUIREMENTS An election is not required to form the Library District. A TABOR election is required to establish the mill levy with debt and spending authorizations. Upon receipt of the petition, the Establishing Entities may adopt a resolution establishing the Library District (see, left column) or they may submit the question of establishment to a vote. The Establishing Entities may require an election to form the Library District and a TABOR election. APPOINTMENT OF A GOVERNING BOARD Upon establishment of the Library District, the Establishing Entities appoint the first board of trustees with 5 to 7 members. Upon establishment of the Library District, the Establishing Entities appoint the first board of trustees with 5 to 7 members. INTER- GOVERNMENTAL AGREEMENT (IGA) The Establishing Entities and Library District enter into a written IGA within 90 days or as otherwise agreed. The IGA describes the terms for the transition of library services to the District including transfers of real estate, employees, administrative, maintenance, procurement, insurance, employee benefits, interim funding, future trustee selection methods, and interim funding. The Establishing Entities and Library District enter into a written IGA within 90 days or as otherwise agreed. The IGA describes the terms for the transition of library services to the District including transfers of real estate, employees, administrative, maintenance, procurement, insurance, employee benefits, interim funding, future trustee selection methods, and interim funding. Packet Page 7 of 73 Financial Information Library Funding The total cost of providing library services includes: • Annual operating budget • Administrative overhead cost often referred to as “Cost Allocation” • Capital project funding The initial 2020 library operating budget was $9.1 million with $7.5 million in funding coming from the city’s General Fund and $1.6 million coming from a 0.333 mill property tax dedicated to the library in the Library Fund. The Library Fund is a combination of the revenue from the 0.333 mill dedicated property tax, grant funds, and funds donated to the library. Economic impacts of the COVID-19 pandemic required a significant reduction to both the 2020 and 2021 city operating budgets. The 2021 library operating budget fell by over 14 percent to $7.8 million with $6.4 million in funding coming from the city’s General Fund and $1.4 million from the Library Fund. In addition to operating expenses, the library also has administrative overhead expenses called Cost Allocation charges (see Table 2) that are not included in the library operating budget. These expenses are not shown in the library operating budget because the services are provided by General Fund supported internal service departments such as Finance, IT, HR, etc. Since the library is predominantly funded out of the General Fund there is no need to break out a separate charge within the same fund. However, these overhead expenses need to be considered to understand the full cost of running a library should it operate as a stand-alone entity. TABLE 2. Cost Allocation Breakdown Total Direct* Indirect Communication $220,627 $161,440 $59,187 Council/Board Support $39,778 - $39,778 Legal $39,099 - $39,099 Finance/Risk $122,822 - $122,822 Human Resources $244,980 - $244,980 Information Technology $695,885 $37,054 $658,831 Insurance $101,254 - $101,254 Building Maintenance/Custodial $1,912,001 $1,075,315 $836,686 Total $3,376,446 $1,273,809 $2,102,637 * Expenses that will likely be eliminated from the General Fund with formation of a Library District. Capital and Unfunded Needs Similar to other general fund departments, library capital funding has been generated on an ad-hoc basis from sources such as bonds (e.g. 2011 capital improvement bonds), capital improvement sales tax (e.g. 2017 Community, Culture, and Safety tax), and Library Fund balance. The library has ongoing, unfunded, maintenance backlog and capital needs that fluctuate in any given year. Depending on pace of Packet Page 8 of 73 funding approved for the maintenance backlog and investment in new capital projects each year, the annual estimated need ranges between $2.3 to $3.3 million. The city is currently conducting a facilities master plan process and the results will provide updated information regarding the library’s maintenance backlog. In addition to capital maintenance, the current North Boulder capital expansion project has been impacted by construction cost escalation resulting in an approximately $2 million reduction of project scope. Net zero energy goals, completion of the outdoor playground, pedestrian plaza, and maker space were all removed from the construction plan. Additionally, $1 million of ongoing, annual operating funds is projected to be needed upon completion of the branch library which is anticipated in 2022. In consideration of current costs as well as funding needs in the immediate future, the total estimated cost to operate the library and maintain (pre-COVID) service levels going forward is provided in Table 3 below. TABLE 3. Library Total Costs Current Operating Budget $7.8 million Operating Deficit Resulting from COVID $1.3 million Administrative Overhead (Cost Allocation) $3.4 million Capital Maintenance (Incl. Deferred Maint.) $2.3 million North Boulder Operating Costs $1.0 million Total $15.8 million Funding the Library Strategies for funding the library according to varying governance structures is informed by how revenues are generated through property tax and/or sales and use tax. A library district would establish funding through taxpayer approved mill levies whereas a municipal library could use a combination of property tax and sales and use tax as is currently the case. For a library district, determining the property tax mill levy that would generate enough revenue to cover the total cost of library services (depending upon the service level desired) is based upon the number of tax payers who own property within the service area boundary. In the original 2018 Library Financial Analysis, two service areas boundaries were considered: • City of Boulder city limits • District boundaries that extended into Boulder County in alignment with the Boulder Valley Comprehensive Plan area. The Library Champions proposed a larger service area boundary that does not impinge upon the service area of any other governmental entity (municipal or district library). It includes the City of Boulder, the Boulder Valley Comprehensive Plan Area, and several voting precinct areas in Boulder County. A map of these service areas is Attachment A. In 2018 approximately, 85 percent of BPL’s patron base fell within this larger service area boundary. The actual geographic service area boundaries of a library district are Packet Page 9 of 73 determined by the Establishing Entities, i.e. Boulder City Council and Boulder County Board of County Commissioners, or in the citizen-initiated petition. The final library district boundary must be aligned with voting precinct boundaries for election purposes. Using the city boundary and the Library Champions’ expanded boundary as a base, it is possible to explore various library funding scenarios depending upon the level of service desired. A summary of a few potential scenarios is provided in Attachment B. The scenarios are delineated by different characteristic including: 1) governance structures, e.g. district or municipal; 2) service levels ranging from status quo to expanded service levels, the latter as called for by the Library Champions and included in 2018 Library Master Plan; 3) varying property tax mill levies and the sales and use tax equivalents – sales and use tax is presented for reference; and 4) impacts to property owners within the city and within the expanded boundary in the county. In general, the scenarios include total library costs ranging from $10.1 million up to $20 million requiring mill levies ranging from 0.56 mills up to 4.56 mills with subsequent property tax increases ranging from 0.6 percent up to 5.3 percent as seen in the table below. TABLE 4. Library Funding Scenarios Governance Option Service Level Cost Mills Sales/Use Equivalent Increase to Property Owners City|County Library District Expanded $20M 3.85* n/a 4.4% | 4.2% Municipal Dedicated tax revenues Expanded $20M 4.56* 0.59% 5.3% | ----- Municipal Dedicated tax revenues Status Quo + Unfunded Needs $15.8M 3.53* 0.46% 4.1% | ---- Municipal Un- Dedicated tax revenues Status Quo + Some Unfunded Needs $10.1M 0.56** 0.07%** 0.6% | ---- *0.333 dedicated property tax mills would be eliminated for City of Boulder property owners **Represents incremental funding needed over current levels Additionally, Attachment B provides projected annual dollar increases for both residential and commercial property owners at assumed property values of $850,000. This information was requested by council during the February 11, 2020 study session. Staff reviewed commercial data including business personal property and determined that 41 percent of commercial properties are valued at less than $850,000 and the average value of all commercial properties is $3.1 million. Impacts from the Repeal of the Gallagher Amendment At the November 2020 election, Colorado voters approved Amendment B which repealed the Gallagher Amendment to the Colorado Constitution. With the repeal of the Gallagher Amendment, assessment rates for all property types will remain the same as they are now and projected future decreases in the residential assessment rate are eliminated. With this Packet Page 10 of 73 change, property tax revenue will increase or decrease with a change in valuation alone and not with changes in assessment rates unless changes in assessment rates are approved by the voters. In the near term, approval of this amendment is expected to stabilize property tax revenue. The Colorado Department of Local Affairs, Division of Property Taxation predicts a decline in non-residential property values as a result of the economic impacts of COVID, which would have triggered a decrease in the residential assessment rate and therefore property tax revenue from both non-residential properties (declining values) and residential (declining assessment rate). Impacts to the City Budget If a library district is formed, the city might realize direct savings to the General Fund of approximately $6.4 million per year (at current 2021 budget). There is also the potential for other indirect savings over time and a reduction in future city unfunded capital needs because library facilities assets would no longer require General Fund support. Additionally, the library district and the city may enter into an agreement for the city to provide administrative overhead or Cost Allocation support services to the district valued at $3 to 3.4 million per year. Any revenue the city receives from contracting with the district could offset those costs for the city. However, if a library district is formed, the city budget would not necessarily decrease. Council could decide to retain the funds that would have been allocated to the Library and allocate them to other high priority needs the city or it could decrease taxes. RESPONSES TO QUESTIONS FROM COUNCIL AGENDA COMMITTEE Members of the Council Agenda Committee requested the following information for the memo. 2019 Library Survey In the spring of 2019, The Center for Research and Public Policy was selected via a competitive process in accordance with the city’s procurement policy to conduct a telephone poll and online library survey and report the results. The results were presented to council on May 7, 2019. The survey included the following areas for investigation: • History, use of and relationship with the library; • The library on meeting expectations of users; • Perceptions of the library; • Interest in the process for library funding to meet current and future community needs; • Overall, support or opposition to increased funding of the library; • Support and opposition, at four different levels, to increased taxes for library funding; • Impressions of various approaches to funding of the library; • Reaction to an independent library district; and, • Demographics. The detailed report and phone survey crosstabs are attached to the May 7, 2019 agenda item. At the meeting, council questioned the methodology of the survey and the Packet Page 11 of 73 interpretation of the results. City staff asked Bob Drake, a local Boulder survey expert who has performed and interpreted many surveys for the city in the past for his interpretation of the survey. Mr. Drake’s opinion is Attachment C. The Center for Research and Public Policy’s response to Mr. Drakes opinion is also in Attachment D. Department Funding Comparison Attachment E is a funding comparison of the Library, Police, and Parks and Recreation departments for 2002 through 2020. NEXT STEPS Next steps will be determined from council direction at this meeting. ATTACHMENTS A. Service Area Maps with Library Card Households B. Library Funding Scenarios C. 2019 Poll - Drake Critique of Library Survey D. 2019 Poll – Center for Research and Public Policy (CRPP) response to Drake critique E. Funding Comparison Library, Police, and Parks and Recreation 2002-2020 Packet Page 12 of 73 Cony Cre ek Mi d dleSai nt Vrai nCreekB e a v e r Creek Brainard Lake Lefthand Reservoir LongLake Mitchell Lake NF-112 Caribou Ant el ope Creek CoonTr a ck Cr eek JennyCreek H e s sieRd ShelfRd Eldora GrandIsland Hessie NF-149 BaltimoreTolland Beaver Creek Beaver Creek Ca v e Creek MiddleSaintVrainCreek Beaver Reservoir 72 72SkiRd Gresham PeacefulValley SouthSaint VrainCreek RedRock Lake 72 C o untyRoa d 1 0 0 GoldLakeRd SawmillRd L e ftha nd CanyonDr Ward DelondeCreek Sher woodCreek 72 72 Pennsylvania Gu lch R d NF-298 CountyRoad126N SilverPoint Dr ColdSpri n gDr Su g a rLoaf Rd Sherwood Creek 72 TollandRd Sayre R d NF-149 ShoshoniCampRd NF-512 RidgeRd RidgeRd BigSprin g sDrCounty R o a d128N Magnol i aDr Coun t y Ro a d 1 3 0 EldoradoAve Nederland Rollinsville Phoenix Cardinal 119 GambleGulch Rd Upper Moon Gul c h R d Count yRoad87 J a me sCanyonDr B alarat Rd Jamestown Raymond Balarat Riverside GoldHill Rd Lefthand C a ny on Dr GoldHill Rowena Summerville Gor don Creek 119 MagnoliaDr Four mi le CanyonDr PlattRogers MemorialPark Sugarloaf Sunset SunnysideSwitzerland Park Wallstreet Bl ackG ul ch Rd Lupine Pl Rudi LnCount y Road 6 8 Twin Si s t ersRd Count y Road97PlattRogers MemorialPark Wondervu Pinecliffe Pactolus LincolnHills Beaver Creek 7 SStVrain Dr BLM Buckingham ParkElysianPark L e ftH an dCree k De e r T ra ilRd Sunshi neCanyon Dr ValleyLnPeakv iew R d OldeStageRdBuckingham Park Sunshine Glendale Salina Springdale Four mi leCreek 119 Sugarl oaf RdCrisman Magnolia Orodell GrossReservoir Lakes hor eD r Tunnel19RdFlagstaffRdWalkerRanch Park Eldorado CanyonState Park Crescent Village Crescent Miramonte LillisLn AselOpen SpacePark CoalCreek TwinSpruce Left Han dCr eekN41stStOxfordRdN49thSt NimbusRdN39thSt StVrainRd N55thStProspect Rd N63rdStNe ls o n Rd NFoothillsHwyNFoo th illsH w yAltona 19thStLonghornRd KelsoRd QuinceAve Fairw aysDr47thStMonarchRd Valha l l a DrN49thStEagleTrl N51stStBroadwayStNevaRd JayRd Violet Ave Lee H i llDr N63rdStNiwotRd 28 th StNFoothillsHwy Dia go n a lHwy BoulderOpen Space& MountainParks Boulder Reservoir NaturalArea CootLake 9thSt30thSt30thStArapahoeAve AuroraAve AuroraAve13thSt6thSt23rdStCedarAve NorwoodAve ManhattanDrTabl e MesaDr KalmiaAve HawthornAve DarleyAve Bluebell Ave WalnutSt 9thStBaselineRd BaselineRd IrisAve 55thStCherryvaleRd61stStSouthBoulderRd28thStDen v e r -Boul de rTp k e Diagonal H wySBr oadwayStFoothillsPkwyValmontCity ParkSouth Universityof Colorado-Boulder Boulder Municipal Airport Ara Boulder Junction Valmont Boulder Marshall Lake 128 36 Marshal l RdEl dor a do S pr i ngsD r SFoothillsHwyBoulderOpen Space& MountainParks Eldorado Springs Marshall Rock Cr eek Walnut Creek 93Highway93Plainview MountainViewAve Clover Basin Reservoir N81stStSFordhamStSSunsetStOxfordRd OxfordRd PlateauRd PlateauRd RogersRd NimbusRd DryCreekDrBostonAve St VrainRd N65thSt3rdAve N73rdStNelsonRd PikeRdAir portRdN95thStN75thStSHoverStDi ago na lH w y Lagerman Agricultural Preserve VanceBrand Airport Marnett Dominion PhillipsRd MonarchRd ServiceRdN71stStN83rdStLookoutRdLookoutRd JayRd N95thStNiwotRd Niwot RdN73rdSt N75thStMineral Rd D ia g ona lH w y BoulderCountry Club BoulderOpen Space& MountainParks MonarchPark Niwot Liggett Hillcrest Res ValmontLake Res ParkLakeDrMainStWes tview DrS68thStWSouthBoulderRd N95thStN76thStWBaselineRd WBaselineRdBaselineRd Ba s eli neRd ValmontRd SouthBoulderRd IsabelleRd N75thStN75thStArapahoeRd IndianPeaks GolfCourse Paragon Estates Louisville Coa l Cr eek Rock Creek 128 Eldorado Bl vd WMidwayBl vdS88thStS66thStCount yR oad25DiscDr CoaltonTrl McCaslinBlvdMcCaslinBlvdDillonRd Marshall Rd Northwe s tPkwy CoalCreekGolf Course DutchCreek Park DavidsonMesa OpenSpace Park CommunityPark Superior Great Western Reservoir 128 W112thAve NSimmsStHeritageGolf Course CountyRoad1UnionReservoirRecreationArea DryCre e k CountyRoad2 6 CountyRoad18AlpineStLashleyStGayStAtwoodSt2ndAve SugarMill Rd M is sou riAve BostonAve OxfordRdSBowenSt N119thStSShermanStQuail Rd ProspectRd QuicksilverRdFrancisSt PikeRd E9thAve ECountyLineRdCountyRoad1CountyRoad1MainStN107thStEKenPr at tBlv d EKenPratt Blvd KenPrattBlvd TheFoxHill CountryClub PleasantView Ridge Longmont Panama ReservoirNo1 52 CountyRoad3CountyRoad161/2 CountyRoad31/4BillingsAve MonarchRd N109thStNiwotRd N115thStN115thStNiwot Rd Lookout Rd KenoshaRd ECountyLineRdECountyLineRdN107thStN107thStCanfield Gooding Plumbs Erie 7 AustinAve GreenMillRdVistaPkwy VistaPkwyEEmmaSt EriePkwy Eri e P k w y EriePkwy WSouthBoulderRd ArapahoeRd S120thStN120thStIsabelleRd ECountyLineRdN107thStEBaselineRd NorthwestPkwy WanekaLake Park ErieMunicipal Airport Lafayette W118thPlKohlStAshStW6th Ave IrvingStW10thAve MiramonteBlvd WMidwayBlvd DexterStW1 st Ave AspenStDaphneStCTCBlvdMainStW136thAve LowellBlvdEMidway BlvdAspenStW144thAve S h e ridanPkwy DillonRd DillonRd EmpireRd S120thStW120thAveW120thAveS112thStDen v e r- B o u ld e r Tp keNorthwest Pk wy RuthRoberts Park Carolyn Holmberg Preserve RockyMountain Metropolitan Airport Broomfield 121 36 W117thAve W115thAve EatonStWolffStSheridanBlvdW108thAve LegacyRidge GolfCourse CountyRoad26 CountyRoad31/2CountyRoad18 ECO-119 StVrainState Park Rinn IdahoCreek Jessum CountyRoad12 CountyRoad10CountyRoad5CountyRoad7Wyn dhamHill P k wy HollySt CountyRoad16 WetlandPark Puritan W156thAve CountyRoad4 CountyRoad6 Prebl e Creek Pkwy SheridanPkwyCountyRoad7169thAveCountyRoad5 CountyRoad8 HuronStEriePkwy Northwest Pkwy Colorado NationalGolf Club W estlakeDrW134th AveZuniStFederalBlvdW149thAve OrchardPkwyW128thAve W144thAveHuronSt HuronStHuronStZuniStW136thAve W120thAve Northglenn LivingstonDrAlcottStHuronStW112thAve FederalBlvdTheRanchGolf Course .Patron Locations Within Boulder County 0 1 2 Miles Patrons shown on map: 113,564 Patrons within the city limits of Boulder: 77,694 NOTE: If the patrons file listed a city other than Boulder, those points are grouped together at one location. Boulder City Limits Comp Plan Extend Area Patrons Boulder Valley Comprehensive Plan Areas Area I Area II Area III Area III Annex Area III Planning Reserve Attachment A- Service Area Maps with Library Card Households Packet Page 13 of 73 District Governance | Library Funding Elements Currently Funded?Amount Library District Full Municipal Library Dedicated Funding Full Municipal Library Dedicated Funding Partial Municipal Library Current Funding Partial Current Service Level 2021 Budget Yes $7.8 Million  Current Service Level Gap (due to Covid)No $1.3 Million  Overhead -Cost Allocation Yes $3.4 Million  North Boulder No $1.0 Million  "Expanded Services" per Master Plan No $3.2 Million  Deferred Maintenance No $2.3 Million  "Expanded Service"s per Master Plan No $1.0 Million  Full Costing per Master Plan, Library Champions $20.0 Million $20.0 Million $20.0 Million $15.8 Million $10.1 Million Library Current Costing $15.8 Million Gap Relative to Current Funding n/a $12.2 Million $8 Million $2.3 Million (Incremental Cost Only) Property Tax Boundary City + County City Only City Only City Only Millage (11.981 current city rate)3.85 Mills 4.56 Mills 3.53 Mills 0.56 Mills1 Sales/Use Tax Rate Equivalent (3.86% current rate)n/a 0.59%0.46%0.07%2 City Property Owner Increase per $100k in value|per $850k property value3 $25|$214 $30|$257 $23|$194 $4|$34 % Increase4 4.4%5.3%4.1%0.6% County Property Owner Increase per $100k in value|per $850k property value $28|$234 n/a n/a n/a % Increase4 4.2%n/a n/a n/a Potentially free up $6M+ for other city programs/services Potentially free up $6M+ for other city programs/services Potentially free up $6M+ for other city programs/services Gap will need to be covered by reallocation or tax increase Potentially generate $2M+ in revenue for city for providing admin. overhead Potentially generate $2M+ in revenue for city for providing admin. overhead Potentially generate $2M+ in revenue for city for providing admin. overhead 4 Based on avg. mill levy of 86 mills for city and 92 mills for county 1 Represents increment above 0.33 mills currently dedicated to Library needed to fund $2.3M gap 2 Represents increment above current city 3.86% Sales and Use tax needed to fund $2.3M gap 3 Asssumes current .33 mills dedicated to Library is eliminated in all scenarios except last scenario Boulder Public Library Funding Scenarios OperatingCapitalAdditional Cost to Property Owner Compard to Current Tax Rates Financial Impact to City Municipal Governance Attachment B- Library Funding Scenarios Packet Page 14 of 73 TO: Kady Doelling FROM: Bob Drake DATE: March 5, 2020 SUBJECT: Critique of 2019 Library Survey While I am uncomfortable critiquing the survey and analysis of another market research company, there are so many issues affecting its validity that you should be aware of what some of them as you decide how to move forward exploring options to appropriately fund the Library. ANALYSIS OF SURVEY METHODOLOGY AND ANALYSIS There are five areas of survey design I will address, as well as a final serious flaw in the consultant’s analysis of their data. The first design issue is that for survey results to be truly valid, surveys should avoid identifying up front who the survey is being conducted for or what it's about. For example the surveys I do simply inform respondents that they're being contacted by Drake Research about important issues in your community. To identify for whom the survey is being done and why creates a self-selecting sample, where someone will take or not take the survey based on what the survey is about and who is conducting the survey, as opposed to their willingness to simply take or not take a survey. One can hypothesize that people interested in library issues are more likely to take a survey about the library than are people who are not. Perhaps that may be why results show that an extremely high 92% of City of Boulder households use the library. Perhaps 92% actually do use the library. Given the methodology, it’s hard to know for sure. A second design issue is that while the survey in questions 11 through 14 ask respondents how they would vote on different proposed levels of tax increases, this appears not to be a survey of registered voters: the survey instrument and the statement of methodology make no reference to any screening of respondents to be registered voters. The only reference to vote behavior is in the second to last question that asks how likely they are to vote on this issue. But even residents who are not registered to vote can opine that they are likely to vote. Attachment C- 2019 Poll - Drake Critique of Library Survey Packet Page 15 of 73 A more significant issue with the survey is the order of the questions. The consultant’s report even goes so far as to say on page 5 that the questionnaire drafters carefully considered the order of the questions: “. . . . placement of questions is carefully accomplished so that order has minimal impact.” I would argue otherwise. Whenever one does surveys on ballot issues, the ballot issue question itself should be one of the first substantive questions asked in the survey. It is important to lead with the ballot question so as to not bias the result of the ballot question by providing information to voters that they may or may not receive by the time they actually vote. Many voters often vote with a little information on issues on the ballot. In the current survey, many statements that clearly could bias the responses to the vote questions are asked prior to the vote questions being asked. See questions 4-7 (which are appropriate questions to ask, but not before the vote questions); the intro to questions 8 & 9 (pointing out the Master Plan urged the City to create a dedicated and sustainable source of funding); and the intro to question 10, which says the Master Plan states that current funding does not meet library needs). Reading these statements to survey respondents ahead of asking them how they would vote on funding could well make them predisposed to say that they will vote in favor of support for the library in the “vote/support” questions—Q10- 14 and Q17. Ordering is also an issue in relation to question 10, which simply asks if without knowing the exact amount of money required, how likely would respondents be to support or oppose increased funding for the library in general. Looks like a pretty innocent question, but it isn’t. Suppose a respondent answers, as 77% do, that he/she would definitely or probably support increased funding for the Library in general. Then in the next question when they ask about the $280 tax increase, some people will likely say, for consistency sake, why yes, I'll vote for that because in the previous question I said I would support increased funding. Another highly significant flaw in survey design is the way this research company, in the wording of questions 11 to 14, keeps asking sequentially lower levels of tax in an attempt to find a level of tax people will support. This methodology is replete with problems. Testing different levels should be done with split samples (where different respondents to the same survey are asked different levels of taxation, with no one respondent getting more than one level) to avoid what is known as the anchoring affect, where people tend to anchor on the first level that they are given. As drafted, the Library Survey first asks every respondent how they would vote on a $280 property tax increase. Then, as a follow-up, those who reject $280 are asked about a $220 tax increase. Those who reject that are presented with two other lower levels--$160 and $90. But the problem is this: After being asked about, and responding negatively toward, an initial $280 level of tax increase, a respondent will, of course, be more likely to support a lower level. The question is, had they been asked the lowest, $90 level, first, would 67% of respondents have said that they would support that level of property tax increase as suggested on page 17 of the report? I strongly suggest that might not be the case. Attachment C- 2019 Poll - Drake Critique of Library Survey Packet Page 16 of 73 Next, maybe I misunderstood the purpose of the poll, but there is no question on the poll that asks if voters would support the creation of a new taxing district at a tax level of X, or Y, or Z. The only question relating to a tax district is question 17, where respondents are asked whether they would support or oppose the creation of a new independent library district funded by a voter-approved property tax. And only 45% say they would—without any mention of a level of tax increase associated with creating a district. This figure does not bode well for voter approval of a District. But on page 18 of their report, the consultants, by removing the “Don’t know/Not sure’s,” claim that 65% of the people now support creating a District. Really? The discussion in the paragraph below suggests otherwise. The final significant flaw is in how the consultants interpret the results of their data. In their analysis of this study, on pages 16 to 18 of the report, the authors inexplicably suggest removing from the data all the “Don't know/Not sure” respondents to questions 11, 12, 13 14 and 17, and re-computes the results to show much higher results for library support. Market researchers who conduct election polling would suggest that for analysis purposes, those who say they “Don't know” or who are “Not sure” whether they would support a particular issue should all be added into the “No/Against” column. To use a court room analogy, if evidence of guilt is not found to be beyond a reasonable doubt, one doesn’t convict—one does not remove the undecided jurors from the jury to reach a verdict. When it comes to ballot issues, if one is not convinced beyond a reasonable doubt to vote in favor of something, then voters will simply vote no, particularly on ballot tax initiatives. So all the “Don’t know/Not sure’s” should be added to those saying they would vote against a level of tax, as opposed to cavalierly removing those folks from the data to bump up perceived support. The consultant’s analysis is truly baffling. There is no better way to illustrate this than to look as the real life polling results Talmey-Drake did for the Denver Post & Channel 4 News to aid their pre-election night reporting on several ballot initiatives appearing on the November, 1998 Ballot—the only year I put together this analysis. As is clearly illustrated below, for the last night’s polling results among “likely voters,” if one takes those who said they were “Undecided,” and add them together with those who said they would vote “No,” the polling results in most instances matched pretty well the actual election result in the last column. Not always exactly, but pretty darn close. We did the election polling for the Denver Post/Channel 4 News from 1982 (I joined Talmey Research in 1987) till 2002 when Paul Talmey semi-retired. And what we learned early on is that on ballot initiatives, an “Undecided/Not Sure” response in pre-election polling is as good as a “No” vote on Election Day. Attachment C- 2019 Poll - Drake Critique of Library Survey Packet Page 17 of 73 Talmey-Drake Election Track Results November 3, 1998 Election Sun Mon Tues Wed Thurs Fri Sat Sun Mon Mon Day 25th 26th 27th 28th 29th 30th 31st 1st 2nd (likelies) Results Sample = [400] [398] [402] [402] [402] [402] [402] [402] [402] 1. Parental notification: For .................................. 63% 59% 61% 60% 61% 57% 56% 55% 57% 56% 55% Against ........................... 33% 37% 35% 35% 35% 38% 39% 40% 39% 40% 45% Undecided ...................... 4% 4% 4% 5% 4% 5% 5% 5% 4% 4% 2. Uniform livestock reg’s: For .................................. -% -% -% 43% -% -% -% 44% 45% 40% 39% Against ........................... -% -% -% 39% -% -% -% 40% 39% 49% 61% Undecided ...................... -% -% -% 18% -% -% -% 16% 16% 11% 3. Hog farm regulation: For .................................. -% -% -% 68% -% -% -% 67% 68% 65% 64% Against ........................... -% -% -% 21% -% -% -% 25% 22% 27% 36% Undecided ...................... -% -% -% 11% -% -% -% 8% 10% 9% 4. San Luis water meters: For .................................. -% -% -% -% 24% 25% 30% 29% 28% 20% 24% Against ........................... -% -% -% -% 59% 60% 54% 55% 55% 62% 76% Undecided ...................... -% -% -% -% 17% 15% 16% 16% 17% 18% 5. Tuition tax credits: For .................................. 43% 44% 45% 45% 45% 44% 45% 43% 41% 45% 40% Against ........................... 48% 48% 47% 46% 46% 49% 47% 50% 52% 52% 60% Undecided ...................... 9% 8% 8% 9% 9% 7% 8% 7% 7% 3% 6. Voluntary term limits: For .................................. -% -% 54% -% -% -% -% 55% 54% 49% 50.4% Against ........................... -% -% 35% -% -% -% -% 33% 34% 43% 49.6% Undecided ...................... -% -% 11% -% -% -% -% 12% 12% 8% 7. State tax surplus: For .................................. 52% 50% 48% 49% 51% 50% 50% 46% 45% 43% 39% Against ........................... 40% 41% 41% 40% 40% 43% 42% 46% 45% 51% 62% Undecided ...................... 8% 9% 11% 11% 9% 7% 8% 8% 10% 6% 8. New Broncos Stadium: 1 For .................................. 52% 53% 55% 59% 58% 57% 56% 60% 61% 57% 57% Against ........................... 42% 44% 40% 35% 36% 39% 39% 36% 36% 41% 43% Undecided ...................... 6% 3% 5% 6% 6% 4% 5% 4% 3% 2%  1998 Talmey-Drake Research & Strategy, Inc., Boulder, Colorado. All Rights Reserved. Methodology: The Talmey-Drake Research/News 4 Election Track for November 2nd was conducted from Saturday, October 31th, to Monday, November 2st. Each night approximately 134 telephone interviews were conducted with registered voters in Colorado, and 402 interviews were conducted in total. The results shown in the table above are for the total from the three nights of interviewing. A random sample of 402 has a margin of error of plus or minus 4.9%. Talmey-Drake interviewed approximately 134 voters each night, the results of which were added to the previous two nights interviewing to create a three-night moving average. 1 The size of Stadium Vote sample is 221 for the November 1st release. Attachment C- 2019 Poll - Drake Critique of Library Survey Packet Page 18 of 73 Attachment D- 2019 Poll - CRPP response to Drake critique Packet Page 19 of 73 Attachment D- 2019 Poll - CRPP response to Drake critique Packet Page 20 of 73 Attachment D- 2019 Poll - CRPP response to Drake critique Packet Page 21 of 73 Attachment D- 2019 Poll - CRPP response to Drake critique Packet Page 22 of 73 Attachment D- 2019 Poll - CRPP response to Drake critique Packet Page 23 of 73 Attachment D- 2019 Poll - CRPP response to Drake critique Packet Page 24 of 73 Funding Comparison Library, Fire, Police, Parks and Rec 2002-2020 % = Annualized Growth Inflation = Denver, Boulder, Greeley CPI, U.S. Bureau of Labor Statistics % = Annualized Growth Inflation = Denver, Boulder, Greeley CPI, U.S. Bureau of Labor Statistics Attachment E. Funding Comparison - Library, PD, Fire, P&R Packet Page 25 of 73 % = Annualized Growth Inflation = Denver, Boulder, Greeley CPI, U.S. Bureau of Labor Statistics % = Annualized Growth Inflation = Denver, Boulder, Greeley CPI, U.S. Bureau of Labor Statistics Attachment E. Funding Comparison - Library, PD, Fire, P&R Packet Page 26 of 73 APRIL 2019 Prepared for: The City of Boulder / Boulder Public Library Prepared by: The Center for Research & Public Policy, Inc. BOULDER PUBLIC LIBRARY COMMUNITY SURVEY RESULTS Photos courtesy of Boulder Public Library 603-309-3919 | info@crpp.com | crpp.com Packet Page 27 of 73 2 BOULDER PUBLIC LIBRARY All of the analyses, findings and recommendations contained within this report are the exclusive property of the City of Boulder and the Boulder Public Library. As required by the Code of Ethics of the National Council on Public Polls and the United States Privacy Act of 1974, The Center for Research and Public Policy maintains the anonymity of respondents to surveys the firm conducts. No information will be released that might, in any way, reveal the identity of the respondent. Moreover, no information regarding these findings will be released without the written consent of an authorized representative of the City of Boulder or the Boulder Public Library. STATEMENT OF CONFIDENTIALITY AND OWNERSHIP Packet Page 28 of 73 3 BOULDER PUBLIC LIBRARY Introduction Methodology Highlights Summary of Findings Appendix Page 4 Page 5 Page 7 History: Use and Relationship Page 10 Meeting Expectations Page 11 Library Perception Statements Page 11 Interest in the Process Page 13 Importance of Funding Page 15 Tax Implications Page 16 Approaches to Funding Page 17 Demographics Page 19 Page 22 Survey Instrument Crosstabulations Packet Page 29 of 73 4 BOULDER PUBLIC LIBRARY The Center for Research & Public Policy (CRPP) is pleased to present the results to two surveys on behalf of the City of Boulder and the Boulder Public Library. The surveys were conducted to collect citizen input regarding the Boulder Public Library and views on meeting future demand for library services. The research study included 500 completed phone surveys among residents of the City of Boulder as well as surrounding areas. A second, identical, survey was completed by 1031 respondents online – also among residents of the City of Boulder and surrounding areas. The phone survey (N=500) was conducted March 15 – 26, 2019. The online version of the survey (N=1031) was conducted between March 15, 2019 through April 5, 2019 The survey included the following areas for investigation:  History, use of and relationship with the Boulder Public Library;  The Boulder Public Library on meeting expectations of users;  Perceptions of the Boulder Public Library;  Interest in the process for funding the Boulder Public Library to meet current and future community needs;  Overall, support or opposition to increased funding of the library;  Support and opposition, at four different levels, to increased taxes for library funding;  Impressions of various approaches to funding of the library; and,  Demographics. Section 2 of this report discusses the Methodology used in the study, while Section 3 includes Highlights derived from an analysis of the quantitative research. Section 4 is a Summary of Findings from the survey. Section 5 is an Appendix to the report containing the crosstabulations and the survey instrument employed. 1 INTRODUCTION Packet Page 30 of 73 5 BOULDER PUBLIC LIBRARY Using a quantitative research design, CRPP completed phone surveys among 500 residents of the City of Boulder and surrounding qualifying areas. An online survey was also completed among 1031 residents of Boulder and surrounding qualifying areas. Survey design input was provided by the CRPP as well as library and city officials. Survey design is a careful, deliberative process to ensure fair, objective and balanced surveys. Staff members, with years of survey design experience, edit out any bias. Further, all scales used by CRPP (either numeric, such as one through ten, or wording such as strongly agree, somewhat agree, somewhat disagree, or strongly disagree) are balanced evenly. Additionally, placement of questions is carefully accomplished so that order has minimal impact. Telephone Survey All telephone interviews were conducted during March 15 – 26, 2019. Residents were contacted by phone between 5:00 p.m. and 9:00 p.m. weekdays and 10:00 a.m. and 4:00 p.m. on the weekend. Respondents qualified for the survey if they were a resident of Boulder or qualifying communities and were 18 years of age or older. All facets of the study were completed and managed by CRPP’s senior staff and researchers. These aspects included: survey design, sample plan design, pretest, computer programming, fielding, coding, editing, verification, validation and logic checks, computer analysis, analysis, and report writing. All population-based surveys conducted by CRPP are approximately proportional to population contributions within states, towns, and known census tract, group blocks and blocks. This distribution ensures truly representative results without significant under-or-over representation of various geographic or demographic groups within a sampling frame. CRPP utilized a “super random digit” sampling procedure, which derives a working telephone sample of both listed and unlisted telephone numbers. This method of sample selection eliminates any bias toward only listed telephone numbers. Additionally, this process allows randomization of numbers, which equalizes the probability of qualified respondents being included in the sampling frame. A “mixed access” sample of both cell and landline phone numbers was utilized. English and Spanish speaking researchers were available. Statistically, a sample of 500 completed surveys has an associated margin for error of +/- 4.5% at a 95% confidence level. Results throughout this report are presented for composite results – all 500 cases. Online Survey CRPP programmed an online version of the survey instrument. Boulder and qualifying Boulder-area residents were encouraged to go to the online link and complete the survey. All online surveys were completed between March 15 and April 5, 2019. The survey was available online in English and Spanish. The link was posted on various websites including the Boulder Public Library site. Outreach to encourage participation included posting the link on the library website, in the Boulder Public Library newsletter “BPL Now”, in social media and on distributed postcard fliers. 2 METHODOLOGY Packet Page 31 of 73 6 BOULDER PUBLIC LIBRARY Overall On several key, core questions held within this survey, CRPP presents two common views of resulting data – one what depicts the questions that include the “unsure” or “don’t know” respondents and another view that includes only those “with and opinion” where “unsure” and “don’t know” respondents are removed from the data. It is not certain or conveyed that those who are unsure about a topic will “fallout” and decide proportionally as those with an opinion have done, but it is the best guide available to estimate final outcomes if there is to be an election, referendum or plebiscite. This is a function of messaging and communication. All things equal and if messaging (on both sides of an issue) remains steady or constant, these results without unsure respondents in the data may approximate the outcome. Naturally and importantly, readers of this report should note that any survey is analogous to a snapshot in time and results are only reflective of the time in which the survey was undertaken. Should concerted public relations or information campaigns be undertaken during or shortly after the fielding of the survey, the results contained herein may be expected to change and should be, therefore, carefully interpreted and extrapolated. Cross tabulations of data were developed and are included with this report. These compare core survey questions by demographic subgroups such as: number of years living in or near Boulder, age, residents with /without children, likeliness to vote in November 2019, ownership of a Boulder business, income, and gender. Each qualified resident who lives in Boulder or qualifying areas surrounding Boulder had an equal chance for participating in the study. Statistical random error, however, can never be eliminated but may be significantly reduced by increasing sample size. Packet Page 32 of 73 7 BOULDER PUBLIC LIBRARY ON HISTORY: USE AND RELATIONSHIPS Overall, about one-half, 49.0%, of all telephone survey respondents reported being very frequent, frequent or moderate Boulder Public Library users. Others considered themselves light or very light users – 17.4% and 24.8%, respectively. Some, 8.0%, noted they or household members were not Boulder Public Library users. Impressively, 34.9% noted they considered themselves “advocates” of the library while 22.5% noted they would consider themselves “loyal users”. Another 38.0% suggested they were “satisfied” users. Together, 95.4% noted they were either advocates, loyal or satisfied. Just 1.7% indicated they were dissatisfied with the Boulder Public Library, and 2.8% were unsure. ON MEETING EXPECTATIONS A large majority, 89.1%, noted that the Boulder Public Library meets their respective expectations either always (44.8%) or most of the time (44.3%). Others suggested the library meets their expectations sometimes (6.6%), seldom (1.3%) or never (1.1%). A few, 2.0%, were unsure. ON LIBRARY PERCEPTIONS There exists significant and positive impressions of the role the Boulder Public Library plays in the community…  The library is important to the vitality of the Boulder and Boulder area – 96.8% agree  The library is an integral part of educating youth in Boulder and the Boulder area – 92.4%  The library contributes to a positive quality of life in Boulder and the Boulder area – 96.4%  The library contributes to lifelong learning – 96.6% ON INTEREST IN THE PROCESS Researchers described, to survey respondents, that the Boulder Public Library Master Plan identified increasing community demand for library programs and expanded services and urged the city of Boulder to create a dedicated and sustainable funding for the library to meet current and future community needs. They were told the city is embarking on a process to look at funding options and were asked how closely they were following the process. Just over one-quarter, 28.0%, noted they were following the process either very closely (6.0%) or somewhat closely (22.0%). Nearly three-quarters, 71.6%, described how closely they were following the process as either “not very closely” (25.6%) or “not at all” (46.0%). Interest was significantly higher after the introduction of the process. Two-thirds (68.0%) noted they were very (20.2%) or somewhat interested (47.8%) in the process. Others, 29.0%, were either somewhat uninterested (13.2%) or not at all interested (15.8%). A few, 3.0%, were unsure. 3 TELEPHONE SURVEY HIGHLIGHTS Packet Page 33 of 73 8 BOULDER PUBLIC LIBRARY ON IMPORTANCE OF FUNDING All survey respondents were presented with the following: “The Boulder Public Library is currently primarily funded by property taxes and sales taxes that are paid in Boulder. The Boulder Public Library Master Plan recognized that the library operates within an annual funding process that does not meet continuing and growing numbers of cardholders and community needs for increasing new programs, services, improved facilities and technology. Researchers asked: “Without knowing the exact amount of money required to meet community demand, how likely are you to support or oppose increased funding of the library in general?” Just over three-quarters, 77.4%, suggested either definitely support (38.6%) or somewhat support (38.8%). Others, 11.2%, suggested they would probably oppose (3.8%) or definitely oppose (7.4%) increased funding. When unsure respondents are removed from the data, the support moves from 77.4% to 87.4%. TAX IMPLICATIONS All respondents were presented with the following: “We have had an opportunity to present the current and future needs of the Boulder Public Library in this survey. To meet needs identified in the Boulder Public Library Master Plan, a property tax increase could be considered for residential and local business property owners. For renters and business tenants, this may mean an increase in rent. Now we are asking you, as a resident of Boulder, Boulder Valley or the adjacent mountain communities, to indicate your support or opposition to investment in the Boulder Public Library. Your household’s share of the cost is put in terms of an average home valued at $850,000.00. Your share of the cost may be more or less depending on the value of your home or business, and likely less if you are a renter.” At $280… Respondents were asked how they would vote if their household tax increase for library funding was $280.00 per year or about $23.33 per month. A total of 45.2% suggested they would definitely (15.0%) or probably support (30.2%) such an increase. Another 38.2% reported they would probably (15.2%) or definitely oppose (23.0%) such an increase. Among those with an opinion (when undecided / unsure respondents are removed from the data), support percent moves to 54.2% with 45.8% opposed. At $220… Respondents who were opposed or unsure at $280 were asked how they would vote if their household tax increase for library funding was $220.00 per year or about $18.33 per month. Another 4.6% move to support resulting in a new total of 49.8% who suggested they would definitely or probably support such an increase. Among those with an opinion (when undecided / unsure respondents are removed from the data), total support percent grows to 58.8% with 41.2% opposed. Packet Page 34 of 73 9 BOULDER PUBLIC LIBRARY At $160… Respondents who were opposed or unsure at $220 were asked how they would vote if their household tax increase for library funding was $160.00 per year or about $13.33 per month. Another 7.4% move to support resulting in a new total of 57.2% who suggested they would definitely or probably support such an increase. Among those with an opinion (when undecided / unsure respondents are removed from the data), total support percent moves to 66.2% with 33.8% opposed. At $90… Respondents who were opposed or unsure at $160 were asked how they would vote if their household tax increase for library funding was $90.00 per year or about $7.50 per month. Another 10.0% move to support resulting in a new total of 67.2% who suggested they would definitely or probably support such an increase. Among those with an opinion (when undecided / unsure respondents are removed from the data), the total support percent moves to 76.2% with 23.8% opposed. APPROACHES TO FUNDING All respondents were asked, if taxes do increase to enhance library funding, if their preference would be a property tax increase, a sales tax increase or some combination. The largest group of respondents, 34.4%, suggested they would prefer some combination while 29.4% suggested they preferred a sales tax increase and 15.4% said they would prefer a property tax increase. Another approach was introduced by researchers. Each respondent was asked if they would prefer a tax increase or a re-allocation of existing City of Bounder funds to the library by reducing funding for other city programs, services or departments. A re-allocation was supported by 40.4% of respondents while 25.6% indicated they preferred a tax increase. Some, 8.6%, offered that they don’t support either a tax increase or a re-allocation. And, just over one-quarter, 25.4%, were unsure. The idea of an Independent Library District was introduced as follows: “To broaden the funding base for the Boulder Public Library, there is an option to establish an Independent Library District. The purpose of a library district is to share expenses among residents of the City of Boulder, Boulder Valley and the adjacent mountain communities.” Support was approximately two-to-one with 45.4% suggesting they strongly (20.8%) or somewhat supported the concept (24.6%). One-quarter, 24.4% suggested they were somewhat opposed (7.2%) or strongly opposed (17.2%). A large percentage, 30.2%, were unsure. When unsure respondents are removed from the data, support increases to 65.0% with opposition at 35.0%. Packet Page 35 of 73 10 BOULDER PUBLIC LIBRARY Readers are reminded that the narrative throughout this report refers to composite aggregate telephone survey data – 500 residents. Text, tables and graphs throughout this report present these composite results. The online survey results (N=1031) are also often displayed within tables and graphs held within this report. HISTORY: USE AND RELATIONSHIPS All respondents were asked to report how frequently they or their family uses the Boulder Public Library. Nearly one-third of all telephone respondents, 31.6%, indicated they use the library very frequently or frequently. The results are presented in the following table. FREQUENCY OF LIBRARY USE PHONE ONLINE Very frequent users 15.0 27.5 Frequent users 16.6 32.9 Moderate users 17.8 21.3 Light users 17.4 10.9 Very light users 24.8 5.9 You and household members are not users 8.0 1.4 Unsure 0.4 0.1 Library users were asked to describe their or their household’s relationship with the Boulder Public Library as advocate(s), loyal user(s), satisfied user(s), or dissatisfied user(s). Over one-third, 34.9%, suggested they were advocates. Results are displayed in the following table. RELATIONSHIP WITH BOULDER PUBLIC LIBRARY PHONE ONLINE Advocate(s) – talking positively about the library in your community 34.9 48.6 Loyal user(s) – likely to remain a long-term user 22.5 37.0 Satisfied user(s) 38.0 11.9 Dissatisfied user(s) 1.7 1.7 Unsure 2.8 0.8 4 SUMMARY OF FINDINGS Packet Page 36 of 73 11 BOULDER PUBLIC LIBRARY MEETING EXPECTATIONS Library users were asked how often the Boulder Public Library meets their expectations. A large majority, 89.1%, indicated the library meets their expectations either always or most of the time. Results are displayed in the following table. FREQUENCY OF MEETING EXPECTATIONS PHONE ONLINE Always 44.8 34.6 Most of the time 44.3 55.6 Total: Always and most of the time 89.1 90.2 Sometimes 6.6 8.2 Seldom 1.3 0.5 Never 1.1 0.2 Unsure 2.0 0.9 LIBRARY PERCEPTIONS All respondents were asked, based on all they know or have heard, how strongly they agreed or disagreed with several statements related to the Boulder Public Library. The following tables hold the results from both the telephone and online surveys. Telephone Survey STATEMENTS STRONGLY AGREE SOMEWHAT AGREE TOTAL: STRONGLY & SOMEWHAT AGREE The library is important to the vitality of Boulder and the Boulder area 89.0 7.8 96.8 The library is an integral part of educating youth in Boulder and the Boulder area 75.4 17.0 92.4 The library contributes to a positive quality of life in Boulder and the Boulder area 84.8 11.6 96.4 The library contributes to lifelong learning 85.8 10.8 96.6 Packet Page 37 of 73 12 BOULDER PUBLIC LIBRARY Online Survey STATEMENTS STRONGLY AGREE SOMEWHAT AGREE TOTAL: STRONGLY & SOMEWHAT AGREE The library is important to the vitality of Boulder and the Boulder area 88.3 9.6 97.9 The library is an integral part of educating youth in Boulder and the Boulder area 73.4 18.7 92.1 The library contributes to a positive quality of life in Boulder and the Boulder area 87.0 10.1 97.1 The library contributes to lifelong learning 84.4 12.4 96.8 Packet Page 38 of 73 13 BOULDER PUBLIC LIBRARY INTEREST IN THE PROCESS All respondents were presented with the following: “A recently adopted Boulder Public Library Master Plan identified increasing community demand for library programs and expanded services and urged the City of Boulder to create a dedicated and sustainable source of funding for library use to meet current and future community needs. The city is embarking on a process to look at funding options. This survey is an important part of that process.” All respondents were asked how closely they are, or have been, following the process to identify Boulder Public Library funding needs and options. Each was asked if they were following the process very closely, somewhat closely, not very closely or not at all. The following graph displays the cumulative totals for those reporting very and somewhat closely as well as not very closely and not at all. 28.0% 71.6% 34.9% 64.4% VERY AND SOMEWHAT CLOSELY NOT VERY CLOSELY OR NOT AT ALL How Closely Following the Library Funding Process? Telephone Online Packet Page 39 of 73 14 BOULDER PUBLIC LIBRARY Researchers also measured interest in the library funding process. All respondents were asked if they were very interested, somewhat interested, somewhat uninterested or not at all interested in this process. The following graph depicts the cumulative totals for very and somewhat interested as well as somewhat uninterested and not at all interested. 68.0% 29.0% 83.3% 15.2% VERY AND SOMEWHAT INTERESTED SOMEWHAT UNINTERESTED OR NOT AT ALL Interest in the Library Funding Process Telephone Online Packet Page 40 of 73 15 BOULDER PUBLIC LIBRARY IMPORTANCE OF FUNDING All survey respondents were presented with the following: “The Boulder Public Library is currently primarily funded by property taxes and sales taxes that are paid in Boulder. The Boulder Public Library Master Plan recognized that the library operates within an annual funding process that does not meet continuing and growing numbers of cardholders and community needs for increasing new programs, services, improved facilities and technology. Without knowing the exact amount of money required to meet community demand, how likely are you to support or oppose increased funding of the library, in general? Would you say…?” More than three-quarters of all respondents, 77.4%, indicated they would definitely or probably support increased funding of the library, in general. Among those with an opinion (when undecided / unsure respondents are removed from the data), the percentage in support moves to 87.4%. SUPPORT/OPPOSE IN GENERAL PHONE (PERCENT) ONLINE (PERCENT) n=500 Total support or opposition n=1031 Total support or opposition Definitely support 38.6 77.4 60.6 90.5 Probably support 38.8 29.9 Probably oppose 3.8 11.2 3.9 6.1 Definitely oppose 7.4 2.2 Unsure 11.4 3.4 77.4% 11.4% 90.5% 6.1% DEFINITELY & PROBABLY SUPPORT DEFINITELY & PROBABLY OPPOSE Support or Oppose Increased Libary Funding? Telephone Online Packet Page 41 of 73 16 BOULDER PUBLIC LIBRARY TAX IMPLICATIONS All respondents were presented with the following: “We have had an opportunity to present the current and future needs of the Boulder Public Library in this survey. To meet needs identified in the Boulder Public Library Master Plan, a property tax increase could be considered for residential and local business property owners. For renters and business tenants, this may mean an increase in rent. Now we are asking you, as a resident of Boulder, Boulder Valley or the adjacent mountain communities, to indicate your support or opposition to investment in the Boulder Public Library. Your household’s share of the cost is put in terms of an average home valued at $850,000.00. Your share of the cost may be more or less depending on the value of your home or business, and likely less if you are a renter.” Respondents were asked how they would vote if their household tax increase for library funding was $280.00 per year or about $23.33 per month. A total of 45.2% are in support with 38.2% opposed. Results are displayed in the following table. Among those with an opinion (when undecided / unsure respondents are removed from the data), the support percent moves from 45.2% to 54.2%. AVERAGE INCREASE OF $280 / YEAR PHONE (PERCENT) ONLINE (PERCENT) n=500 Total support or opposition n=1031 Total support or opposition Definitely support 15.0 45.2 26.3 61.7 Probably support 30.2 35.4 Probably oppose 15.2 38.2 20.2 30.6 Definitely oppose 23.0 10.4 Unsure 16.6 7.8 Respondents who were opposed or unsure were asked how they would vote if their household tax increase for library funding was $220.00 per year or about $18.33 per month. Support grows by 4.6% to 49.6%. Among those with an opinion (when undecided / unsure respondents are removed from the data), total support percent moves from 54.2% to 58.8%. AVERAGE INCREASE OF $220 / YEAR PHONE (PERCENT) ONLINE (PERCENT) Total support Total support Definitely support +0.6 49.8 0.3 66.7 Probably support +4.0 4.7 Packet Page 42 of 73 17 BOULDER PUBLIC LIBRARY Respondents who were opposed or unsure were asked how they would vote if their household tax increase for library funding was $160.00 per year or about $13.33 per month. Support grows by 7.4% to 57.2%. Among those with an opinion (when undecided / unsure respondents are removed from the data), the total support percent moves from 58.8% to 66.2%. Results are displayed in the following chart. AVERAGE INCREASE OF $160 / YEAR PHONE (PERCENT) ONLINE (PERCENT) Total support Total support Definitely support +0.6 57.2 0.3 76.0 Probably support +6.8 9.0 Respondents who were opposed or unsure were asked how they would vote if their household tax increase for library funding was $90.00 per year or about $7.50 per month. Support grows by 10.0% to 67.2%. Among those with an opinion (when undecided / unsure respondents are removed from the data), the total support percent moves from 66.2% to 76.2%. Results are displayed in the following chart. AVERAGE INCREASE OF $90 / YEAR PHONE (PERCENT) ONLINE (PERCENT) Total support Total support Definitely support +2.8 67.2 0.7 86.5 Probably support +7.2 9.8 APPROACHES TO FUNDING All respondents were presented with various funding approaches or options the City of Boulder may consider related to the Boulder Public Library. Respondents were asked their views on each. Respondents were asked, if taxes do increase, if they would prefer a property tax increase, sales tax increase or some combination. The largest group of respondents, 34.4%, suggested a combination of both a sales and a property tax increase. The following table presents the results as collected. PREFERENCE FOR PROPERTY OR SALES TAX PHONE ONLINE A property tax increase 15.6 23.9 A sales tax increase 29.4 19.5 A combination of property tax and sales tax increase 34.4 32.8 Unsure 20.6 23.9 Packet Page 43 of 73 18 BOULDER PUBLIC LIBRARY Respondents were also asked if they would prefer to see a tax increase or a re-allocation of existing city of Boulder funds to the Library by reducing funding for other city programs, services and departments. The largest group of respondents, 40.4%, noted a preference for a re-allocation of funds. Results are shown in the folllowing table. PREFERENCE FOR TAX INCREASE OR RE-ALLOCATION OF FUNDS PHONE ONLINE A tax increase to support increased library funding 25.6 37.9 A re-allocation of existing City of Boulder funds 40.4 35.9 I don’t support either a tax increase or a re-allocation 8.6 4.5 Unsure 25.4 21.7 The idea of an Independent Library District was introduced as follows: “To broaden the funding base for the Boulder Public Library, there is an option to establish an Independent Library District. The purpose of a library district is to share expenses among residents of the City of Boulder, Boulder Valley and the adjacent mountain communities. Thinking about this library funding option, how strongly would you support or oppose a new Independent Library District that is funded by a voter-approved property tax? Would you…?” Support for an Independent Library District was nearly two-to-one – 45.4% to 24.4%. When undecided respondents were removed from the data, the support percent moves to 65.0%. Results are displayed in the following graph. 45.4% 24.4% 58.9% 14.4% STRONGLY & SOMEWHAT SUPPORT STRONGLY & SOMEWHAT OPPOSE Support or Oppose an Independent Library District? Telephone Online Packet Page 44 of 73 19 BOULDER PUBLIC LIBRARY RESIDENT DEMOGRAPHICS The following are demographics collected among survey respondents from Boulder and the qualifying communities included in both the online and phone surveys. RESIDENT OF… PHONE ONLINE The City of Boulder 74.0 78.1 Gunbarrel 6.2 7.1 Niwot 2.2 2.4 Mountains west of Boulder (Sunshine Canyon, Gold Hill, Sugarloaf, or Jamestown 5.6 2.3 Altona Area (North Foothills) 2.2 0.6 Cherryvale and areas east 2.2 2.4 Unincorporated Boulder County 7.6 7.1 LENGTH OF RESIDENCY PHONE ONLINE 20 years or less 38.0 53.1 Over 20 years 62.0 46.9 EDUCATION PHONE ONLINE Some high school --- --- High school graduate or equivalent 4.6 0.9 Associates degree / trade or vocational certification 0.6 1.3 Some college 6.6 5.4 College graduate 34.6 28.6 Some post graduate 5.0 10.4 Post-graduate or professional degree 46.0 52.7 Prefer not to answer 2.4 0.8 RENT OR OWN PHONE ONLINE Rent 28.4 26.2 Own 69.2 70.3 Prefer not to answer 2.4 3.5 Packet Page 45 of 73 20 BOULDER PUBLIC LIBRARY AGE PHONE ONLINE 18 – 24 11.4 3.8 25 – 34 15.0 12.0 35 – 44 16.8 17.8 45 – 54 13.8 17.5 55 – 64 19.6 17.7 65 or older 12.0 28.8 Prefer not to answer 11.4 2.4 HAVE CHILDREN UNDER 18 LIVING IN HOME PHONE ONLINE Yes 15.6 28.2 No 72.2 69.8 Prefer not to answer 12.2 1.9 CURRENTLY A STUDENT? PHONE ONLINE Yes 7.6 6.0 GENDER PHONE ONLINE Male 42.2 30.8 Female 56.8 64.4 Transgender female --- 0.1 Transgender male --- 0.4 Gender variant / non-conforming --- 1.1 Unsure / Prefer not to answer 0.8 2.7 Other / Not listed 0.2 0.5 Packet Page 46 of 73 21 BOULDER PUBLIC LIBRARY INCOME LEVEL PHONE ONLINE Under $50,000 10.8 17.6 $50,000 to less than $100,000 14.0 24.1 $100,000 to less than $150,000 9.4 17.2 $150,000 to less than $200,000 6.6 9.7 $200,000 to less than $250,000 --- 5.5 $250,000 to less than $300,000 1.8 2.4 $300,000 or more 2.2 3.5 Unsure 2.6 1.2 Prefer not to answer 52.6 18.9 RACE / ETHNICITY PHONE ONLINE White 87.4 84.7 Black or African-American 1.0 0.8 Hispanic or Latino 0.6 3.8 Asian 0.6 4.1 Native Hawaiian or Pacific Islander ---- 0.3 American Indian or Alaska Native 0.2 0.4 Middle Eastern / North African --- 0.7 Other 1.2 1.0 None of these 1.0 0.4 Prefer not to answer 8.4 8.2 LIKELY TO VOTE ON ELECTION DAY – NOVEMBER 2019 PHONE ONLINE Very likely 94.4 92.7 Somewhat likely 3.4 3.1 Somewhat unlikely 0.6 0.5 Not at all likely 0.6 2.2 Unsure 1.0 1.5 OWN A BUSINESS IN OR NEAR BOULDER? PHONE ONLINE Yes 19.4 14.4 Packet Page 47 of 73 22 BOULDER PUBLIC LIBRARY INTERPRETATION OF AGGREGATE RESULTS The computer processed data for this survey are presented in the following frequency distributions. It is important to note that the wordings of the variable labels and value labels in the computer-processed data are largely abbreviated descriptions of the Questionnaire items and available response categories. The frequency distributions include the category or response for the question items. Responses deemed not appropriate for classification have been grouped together under the “Other” code. Each frequency distribution includes the absolute observed occurrence of each response (i.e. the total number of cases in each category). Immediately adjacent to the right of the column of absolute frequencies is the column of relative frequencies. These are the percentages of cases falling in each category response, including those cases designated as missing data. To the right of the relative frequency column is the adjusted frequency distribution column that contains the relative frequencies based on the legitimate (i.e. non- missing) cases. That is, the total base for the adjusted frequency distribution excludes the missing data. For many Questionnaire items, the relative frequencies and the adjusted frequencies will be nearly the same. However, some items that elicit a sizable number of missing data will produce quite substantial percentage differences between the two columns of frequencies. The careful analyst will cautiously consider both distributions. The last column of data within the frequency distribution is the cumulative frequency distribution (Cum Freq.). This column is simply an adjusted frequency distribution of the sum of all previous categories of response and the current category of response. Its primary usefulness is to gauge some ordered or ranked meaning. 5 APPENDIX Packet Page 48 of 73 C OVE R SH E E T ME E T I N G D AT E F ebruary 23, 2021 ST U D Y SE SSI ON I T E M Xcel Energy Partnership Update and Municipalization Wrap-up P RI MARY STAF F C ON TAC T J onathan Koehn, Interim Director of Climate Initiatives AT TAC H ME N T S: Description Memo Packet Page 49 of 73 TO: Mayor and Members of Council FROM: Chris Meschuk, Interim City Manager Tom Carr, City Attorney David Gehr, Chief Deputy City Attorney Cheryl Pattelli, Chief Financial Officer Kathy Haddock, Senior Counsel Jonathan Koehn, Director of Climate Initiatives Yael Gichon, Senior Energy Project Manager Carolyn Elam, Energy Manager Emily Sandoval, Communications Specialist Lex Telischak, Electrical Engineer II Robert Harberg, Project Manager Michael Sweeney, Transportation Engineer Heidi Joyce, Administration DATE: February 23, 2021 SUBJECT: Study Session for February 23, 2021 Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up EXECUTIVE SUMMARY Through its long-standing commitment to local climate action, the Boulder community has adopted aggressive goals to mitigate the role energy plays in global greenhouse gas (GHG) emissions and to strengthen the community’s resilience in the face of climate change. Core to this is achieving 100% renewable electricity supply by 2030 and 100 megawatts of installed local renewable generation. In addition to ongoing policy efforts at the state and local level, as well as investment in local energy efficiency and renewable energy programs, the community sought to take control over its electricity supply through the municipalization effort. Municipalization was the city's effort to bring clean, local, affordable, and reliable electricity to the community by developing a community-owned local electric utility. Exploring the financial feasibility, pursuing necessary legal efforts, and developing the engineering design for a municipal electric utility have been a significant focus of the city for the past 10 years. On Nov. 3, 2020, after many months of negotiations between the City and Xcel Energy, voters approved a new settlement agreement, signaling the community’s desire to pause municipalization efforts and instead focus on partnering with Xcel Energy to advance Boulder’s clean energy and climate goals. Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 1 Packet Page 50 of 73 Since the community vote, city staff have been working to close out the municipalization efforts and to launch the new partnership. The purpose of this memo is to provide council and the community with an update on progress to date including: • Municipalization Project Close-out o Final project expenditures and repayment of General Fund loan o Documentation and records management o Readiness to resume project at a future date, if necessary • Xcel Energy Partnership Launch o Franchise Status and Next Steps o Project Governance o Undergrounding o Energy Partnership Progress While this memo will provide an update on a number of key efforts associated with the Xcel Energy Partnership as mentioned above, several notable accomplishments from the first months of the partnership include: • Began recruitment for Community Advisory Panel • Completed preliminary cost analysis for LED streetlight conversion • Began design work for first distribution undergrounding project • Developed framework and began data collection for long-term undergrounding plan • Integrated partnership work into Climate Mobilization Action Planning • Stood up internal and joint working groups for distribution system planning QUESTIONS FOR COUNCIL 1. Does council have any questions about the goals and structure of the energy partnership or any identified projects or programs? 2. Does council have any questions or preferences around communications and future updates on the energy partnership? 3. Does council have any questions about the municipalization wrap-up or repayment of the general fund? BACKGROUND Using energy—to power homes and businesses, heat buildings and water, and get from place to place—is the single greatest segment of greenhouse gas emissions and is a primary driver of the climate crisis. According to the city’s 2019 greenhouse gas inventory, the overall energy sector comprises nearly all community emissions (98%), a figure that has remained nearly constant since the city began tracking emissions in 2005, even as emissions declined 21% in that time frame. In recognition of this reality, reducing energy emissions—through shifting energy generation from fossil fuels to renewables, electrifying transportation and making buildings more efficient, for example—has long been central to the city’s strategies to mitigate the climate crisis. At a high level, the categories of city’s work in the energy sector are: • High-performance buildings (e.g., energy efficiency and electrification) • Clean mobility (e.g., electrified transportation, transit, VMT reduction) Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 2 Packet Page 51 of 73 • Clean energy sources (e.g., local renewable generation, municipalization, Xcel Energy Partnership) This work is guided by a set of community-created, broad energy goals and specific targets: Energy Goals • Renewable: The community will rapidly decrease its dependence on fossil fuels as an energy source, supporting efficient and electrified buildings and vehicles. • Local: Boulder will host a robust energy economy, with more control over its energy supply, investments, and services, that meets the needs and expectations of its diverse community. • Accessible: Competitively priced energy and technology solutions will serve and help improve the lives of all community members. • Reliable and Secure: The energy supply will be stable, resilient, safe and protected against threats. Energy Targets 1 • 100% renewable electricity by 2030 • 100 MW of local, renewable generation by 2030 • 175 MW of local, renewable generation by 2050 History of Municipalization Guided by these goals and targets, Boulder’s work in recent years has focused significantly on clean energy sources. Electricity generation has consistently comprised more than half of Boulder’s emissions, making it a key target for climate action. Between 2010 and 2020, the city’s primary strategy to change how the community’s energy was generated was to bring local control of electricity to the community through municipalization, the creation of a local, city-run electric utility. Municipalization, or Local Power, was a groundbreaking effort to bring clean, local, affordable and reliable electricity to the community. While the community voted in 2020 to halt municipalization and enter a new franchise agreement with Xcel Energy, the project has provided significant benefit to the Boulder community. Municipalization was, at first and throughout the project, a community-driven effort; the community voted repeatedly in support of the municipalization effort over the past decade. In the 11 years since Boulder allowed its franchise to expire, hundreds of community members have participated in technical working groups, attended events and helped shape the project. This community-centered approach has boosted the community’s energy literacy, setting the stage for successful engagement in the new Xcel Energy partnership. This amplification of energy literacy has also fostered the energy expertise of local elected leaders, helping drive energy source change legislation and conversation across the state. 1 Note: these targets will be updated as a part of the Climate Mobilization Action Plan process happening in 2021 Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 3 Packet Page 52 of 73 When the city set out to create its own electric utility, there were few roadmaps to follow; a Colorado community had not attempted municipalization for several decades. Now, thanks to the efforts of the city and community, more is known about the process to municipalize, and the possibility remains open for Boulder or another Colorado community in the future. For additional history of municipalization, see ATTACHMENT A, History of Municipalization. Settlement and Community Vote In Spring 2020, the city began discussions with Xcel Energy around a potential settlement. Through a series of meetings, the parties outlined a settlement timeline and identified key characteristics the city would need to achieve to entertain a potential settlement. Throughout the late spring and into the summer of 2020, the parties negotiated two agreements: the franchise agreement, and a settlement agreement that contains two sub agreements: the energy partnership agreement and interconnection agreement. While all four agreements support the overall partnership framework, they each serve unique purposes. During the summer of 2020, the city hosted a series of town halls, allowing the public to provide input into the negotiations. Staff utilized this input and continued negotiations through the summer. On July 28, 2020, the city and Xcel Energy shared the results of the negotiations with council and the community. After a public hearing, Council finalized the agreements on Aug. 21, 2020 and placed the new franchise agreement on the November ballot for voter consideration. In addition to the franchise decision, council also asked voters to decide if the Utility Occupation Tax, the source of funding for the municipalization efforts, should be repurposed and extended to fund the partnership work with Xcel Energy. On Nov. 3, 2020, the community voted to enter a new franchise with Xcel Energy, with the negotiated settlement, partnership, and interconnection agreements, and additionally to repurpose and extend the Utility Occupation Tax to fund the partnership efforts. With this decision, staff began the process of winding down the municipalization project, which included: • Close-out of all ongoing legal, engineering and management contracts • Remittance of final payments to Xcel Energy and recovery of unspent deposits • Repayment of General Fund • Archival of all records, documents and datasets • Final documentation and outline for next steps in the event the community were to elect to restart the municipalization effort at a later date Launching the Energy Partnership Core to the new relationship between Boulder and Xcel Energy is the energy partnership, an attachment to the settlement agreement between Xcel Energy and the City of Boulder. It lays out the city’s and Xcel Energy’s mutual commitment to achieving the community’s clean energy goals, including its goal of achieving 100% renewable electricity by 2030. The following section provides more details on the launch of the energy partnership. Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 4 Packet Page 53 of 73 ANALYSIS Energy Partnership Overview The overarching goal of the city's energy partnership with Xcel Energy (partnership) is to reduce greenhouse gas emissions associated with gas and electricity consumption, electrify, and boost resilience and equity in Boulder. Specifically, Boulder and Xcel will work together to achieve 100% renewables by 2030 and eliminate electricity-sector emissions. To accomplish this, the city and Xcel will share information and collaboratively innovate projects that Xcel can scale across their system. They will also work with other partners like CU, federal labs and other businesses to develop, test and promote new technologies. Projects in Boulder will not cost customers outside of Boulder without state regulatory approval. The city and Xcel will work together to access potential grant funding to help achieve the goals of the partnership and will work together on regulatory changes that will make meeting the goals of the partnership easier. This section provides an overview of the various elements of the partnership and an update on the status of each. Staff will continue to update Council and the community as work progresses in each area. Overarching Goals and Targets Guiding the Partnership The city’s energy partnership (partnership) with Xcel Energy seeks to make significant progress on Boulder’s clean energy and climate goals. The city and Xcel Energy are working together in a partnership, aimed at helping the city achieve 100% renewable electricity by 2030. The key elements of the partnership include: • Emission reduction targets for Xcel Energy: o 2005 Baseline: 33.9 million tons emitted o 2019 42% reduction: 19.5 million tons emitted (actual) o 2022 52% reduction: 16.6 million tons emitted (target) o 2024 61% reduction: 13.6 million tons emitted (target) o 2027 67% reduction: 11.5 million toms emitted (target) o 2030 80% reduction: 6.9 million tons emitted (requirement) • A 20-year franchise with Xcel Energy, with opportunities to opt out in: o 2023 if Xcel fails to meet the interim emissions target o 2025 if Xcel fails to meet the interim emissions target o 2026 for any reason o 2028 if Xcel fails to meet the interim emissions target o 2031 for any reason o 2036 for any reason • Descriptions of the visions and goals for the City of Boulder and Xcel Energy • Collaborative distribution-level planning for local projects that will: o Support the community’s energy goals and updated emissions reduction targets o Increase access to local renewable energy Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 5 Packet Page 54 of 73 o Improve resilience and reliability o Design solutions that are accessible and equitable • A framework and process for collaboration between the city and Xcel Energy, including: o Guiding principles of the partnership o Information-sharing o Governance o Community engagement • ~$33 million in undergrounding investment by Xcel Energy Full partnership details are available online. Since the November 2020 election, staff, in collaboration with Xcel Energy, have been working to put in place the governance structure to support the partnership, detail a 2021 work plan and initiate priority work in the areas of community engagement, undergrounding and distribution system planning. This section details some key activities that are underway. Franchise Status On Dec. 21, 2020, Xcel Energy filed its application requesting Colorado Public Utilities Commission’s (PUC) approval of the voter-approved franchise agreement. As allowed under the process, three parties filed to intervene in the case – the Office of Consumer Council (OCC), PUC Staff and a Boulder resident. The city also filed to intervene to ensure it was party to any proceedings and able to provide any necessary support to Xcel Energy and the PUC during the litigation process. At the time this memo was finalized, the PUC had not yet issued a notice outlining the next steps in the case. While this litigation could take up to 10 months to resolve, Xcel Energy and the city are proceeding with all efforts outlined in the franchise and partnership agreements and will work collaboratively to support the PUC process. Staff will provide updates to council and the community throughout the process. Distribution Planning The purpose of this work is to develop and implement projects that improve the distribution system in Boulder and allow for the deployment of innovative solutions and pilots that further the city’s energy and equity goals. The city has set up a cross-departmental staff team of subject matter experts to work with Xcel on distribution planning initiatives. The goal is to identify and prioritize distribution related projects for implementation as part of the partnership based on a core set of criteria and identify funding sources. Example projects include resilient infrastructure, local generation, and storage initiatives, microgrid deployment, distribution system improvements, electric vehicle deployments and associated infrastructure, electrification, and hydrogen deployment. Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 6 Packet Page 55 of 73 Undergrounding The Boulder community has long been committed to undergrounding the distribution system to improve reliability and enhance resilience, as well as for aesthetic reasons. Achieving this goal will likely require in excess of half a billion dollars in investment and take decades to accomplish. Making progress towards this goal is a key priority under the new partnership with Xcel Energy. Under the franchise, 1% of the revenues Xcel Energy collects from the community are to be reinvested through community-identified undergrounding projects. Available funds include 1% of the revenues since the expiration of the 1990 franchise, plus annual amounts going forward. This amounts to an estimated $33 million available for investment in the next 20 years, with approximately $16 million of that to be invested in the next 5 years. Recognizing that this is a fraction of what will be required to underground the system, staff have begun developing a comprehensive undergrounding plan that will outline the criteria for project selection and the preliminary investment priorities. The goal of this work is to develop a clear and concise allocation of undergrounding funds and approve criteria associated with their use that allows for the undergrounding of primary circuits, neighborhood circuits, and reserves funding to be leveraged in collaboration with city projects to stretch funds further. These funds will require city match to underground ineligible components of any undergrounding project, such as communications infrastructure and services. Draft criteria for prioritizing undergrounding projects, details on coordination with other city infrastructure projects, proposed cost allocations, and other considerations can be found in ATTACHMENT B, Undergrounding. 100% Renewable Electricity A critical component of the franchise and partnership is the ability of the Boulder community to achieve its goals of 100% renewable electricity and 100 MW of local generation by 2030. The purpose and guiding principles of the partnership are, in part, to: • Identify specific options that address the gap between Xcel Energy’s 80% carbon emissions reduction by 2030 and Boulder’s 2030 goal of 100% renewable electricity • Prioritize reducing greenhouse gas emissions associated with gas and electric consumption, electrification, resilience, and equity • Work together to help Boulder add renewables to achieve its 100% renewables goal by 2030 and to reach zero electricity sector emissions Shortly, Xcel Energy will file their Electric Resource Plan (ERP) with the Public Utilities Commission (PUC). The ERP will outline Xcel Energy’s forecasted generation needs and strategy for meeting those needs. While Xcel Energy has made a clear commitment to reduce its GHG emissions 80% by 2030 compared to 2005 levels, the ERP will be the first public-facing roadmap for how the grid mix is expected to evolve between now and 2030. It will also serve to clarify the gap that the partnership must address to achieve 100% renewable electricity for Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 7 Packet Page 56 of 73 Boulder. The ERP will also inform potential strategies and opportunities the community might undertake as it seeks to close that gap. Based on community feedback to date, staff have proposed the following principles to guide strategies that will be considered: • The pathway will not rely on greenhouse gas emissions accounting methodology alone; in other words, the city would not procure unbundled Renewable Energy Credits (RECs) as a means of claiming a GHG reduction. • The pathway to 100% renewables must result in additional renewables and reduction in fossil generation. • The pathway must scale beyond Boulder. • The pathway must consider the grid impact beyond production (i.e., aligning load with when renewables are producing through a combination of local generation, storage and conservation). • The pathway must be flexible and adapt to new opportunities when they arise. Over the course of 2021, one or more community working groups will be convened to develop and review potential strategies that might be pursued. Opportunities to be discussed include, but are not limited to, expanded distributed generation, community-scale generation, utility-scale projects, emissions reduction strategies (e.g., conservation, sequestration), and storage and load management. The community will also be engaged in establishing interim targets by which progress will be measured, as well as the methodologies that will be used to measure success. Climate Policy A wide range of policies have been adopted at the state and regional levels to reduce greenhouse gas emissions, develop renewable energy resources, support alternatively fueled vehicles, and promote more energy-efficient buildings and appliances, among other things. Although the climate crisis ultimately requires effective national and international response, the actions taken by states and regions play a vital role in developing and testing innovative solutions, delivering near-term emission reductions, and laying the groundwork for broader action. Boulder has played a vital role in advancing important climate policies and will utilize the Xcel partnership and our broader policy collation, CC4CA, to prioritize and advance legislative and regulatory actions. This includes climate policy that will not only make considerable advances in Colorado’s climate-related efforts but enhance Boulder’s ability to achieve our specific climate goals and targets. Streetlights The city’s streetlighting system uses more than 4 million kWh of electricity annually. While the city has installed high-efficiency LED fixtures for all new city streetlights, the legacy system, nearly 4700 fixtures that are owned by Xcel Energy, has yet to be converted. The city and Xcel Energy have launched a project to explore solutions to achieving the community’s vision for a Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 8 Packet Page 57 of 73 streetlighting system that is reliable, delivers the performance and lighting quality needed to provide for the safety and security of the community, that mitigates the community’s GHG emissions and that is cost effective to the city. Multiple pathways are being considered to include: • LED conversion through Xcel Energy’s existing program with and without up-front investment from the city • Developing an alternative program offering and rate design in coordination with Xcel Energy and other communities that could be presented to the PUC • Acquisition of the streetlighting system by the city and subsequent retrofit Xcel Energy has provided the city with a preliminary cost analysis for converting the streetlights under their existing program – the option that requires no up-front cost to the city.2 Based on the analysis, approximately 60% of the city’s lights could be converted to LED; however, despite the reduced energy consumption, the city is not expected to realize annual bill savings due to the structure of the rates associated with streetlights. The study will serve as a baseline for comparison for the other pathways. The next step will be to conduct a full audit of the system and the estimate the cost for potentially acquiring the system and to create an accurate record of the city’s entire streetlight inventory. Governance The Agreement provides for a joint governance structure between the city and Xcel Energy, consisting of three main bodies: • Executive Team - Responsible for oversight of the partnership and for ensuring the successful communication and collaboration necessary to achieve the identified programs, projects, initiatives, and goals. The Executive Team ensures that the partnership activities are in support of Boulder’s goals and directs the remedy of challenges through adjustments to workplan priorities and resource allocations. • Project Oversight Team – Provides the organizational authority to implement programs and projects, to include the assignment of staff and allocation of financial resources. Provides guidance towards the successful implementation of initiatives and reviews and prioritizes new projects and programs. • Advisory Panel – Comprised of appointed community members, the Advisory Panel provides guidance to the city and Xcel Energy to ensure the activities undertaken as part of the partnership support the community’s vision, guiding principles and goals. Both organizations have appointed members to the Executive Team and the Project Oversight Team. The Project Oversight Team members have been meeting regularly to stand up topic specific working groups – Distribution System Planning, Undergrounding, Streetlights – and to 2 Xcel Energy’s current program is only available for cobra-head-style lights. These are the ones typically found along streets and roadways. They do not currently offer a retrofit option for the styles of lights that are commonly found in pedestrian areas. Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 9 Packet Page 58 of 73 identify near-term priorities for consideration by the Advisory Panel. The Executive Team is scheduled to begin meeting regularly starting in April 2021. In addition to staffing the joint governance bodies, the city has also chartered an internal Steering Committee to strengthen cross-departmental collaboration, as well as working groups of subject matter experts in specific topic areas. Advisory Panel The Advisory Panel (Panel) is to serve as the touchpoint to the community to make sure that anticipated effects of projects on various customers within the city are considered and evaluated prior to a decision by the Project Oversight Team. The Panel is not a decision-making body. The Panel is not intended to be composed of experts in electric utility operations or energy technology, but rather a representative customer base for services provided by the electric and gas utility and of residents and businesses impacted by electric and gas utility operations. Its purpose is to assimilate information from various sectors of the community to make recommendations after considering varying viewpoints that inform the final decision on the projects identified by the Project Oversight Team. In January 2020, the application process was opened to community members and business representatives interested in serving on the Panel. The application period will close Feb. 26, 2020. Staff and Xcel Energy conducted extensive outreach to support recruitment. As of Feb. 8, the city had received 62 applications. Representatives from the city and Xcel Energy will begin reviewing applications and conducting phone interviews in early March with a goal of selecting up to 15 panel members by the end of March. The Panel would then convene starting in April and meet quarterly. Given the significant interest in participating in the Panel, as demonstrated by the number of applications already received, staff will be inviting applicants not selected for the Panel to participate in other engagement opportunities. Communications Communication Goals The partnership with Xcel Energy is a new development in the community’s energy future trajectory, and will require consistent, clear and timely communication throughout the partnership. The city’s communication work is guided by several goals. • Develop a successful, collaborative relationship with Xcel Energy: The city will seek to foster open communication channels with Xcel Energy to ensure, when appropriate, consistent messaging and information on the progress of the partnership. • Leverage strategic communication to support a successful partnership: While the ultimate success of the partnership depends significantly on the ability to deliver projects, legislative victories and emissions reductions, strategic communication support can boost community understanding of the partnership’s progress. Sharing facts about project Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 10 Packet Page 59 of 73 successes, learnings and progress can build community understanding of for this new effort. • Provide timely, clear and consistent communication: The Partnership is one of City Council’s stated priorities. The next several months include many opportunities to educate the public about the partnership and its progress. Consistent communications during important events, as well as during lull periods, will support broad community understanding of the partnership. • Make the partnership accessible to the average resident or business: While energy issues impact each of us, few have the technical background to understand the details. The city will seek to make the partnership accessible through using plain language, avoiding jargon and always writing with the audience in mind. • Leverage what we’ve learned in 10 years of municipalization communication: The city’s energy future pathway has changed, but there are significant communication learnings that will inform communication about this new approach. These include prioritizing transparency, avoiding “cheerleading,” providing consistent, clear information and being responsive to community interest and questions. • Ensure that communication regarding the partnership integrates with other climate communication: Communication about the partnership should fit within the city’s broader efforts to communicate about its climate efforts. Communication and Engagement Tactics To achieve these goals, the city will offer a suite of communications and engagement opportunities. • Inform o Twice-monthly Climate and Energy email newsletters will feature content about the partnership o Social media posts to boost community awareness o Media outreach, press releases to both local and, when appropriate, industry and national publications o Quarterly community meetings o Community newsletter articles o Topic-specific webinars • Consult o City of Boulder – Xcel Energy Partnership Community Advisory Panel  Application closed Feb. 26  First board meeting in April o As needed: technical working groups  As needed, the city and Xcel Energy will stand up working groups to address specific issues and questions. These working groups will provide participation opportunities for Boulder’s community of energy experts. o Opportunity to share thoughts directly with City Council, city staff and Xcel Energy via email Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 11 Packet Page 60 of 73 Keeping council informed Council has articulated a significant interest in keeping informed on the partnership. Staff are committed to ensuring council remains apprised of the partnership’s progress and proposes the following approach: • Annual study session on the partnership to provide a high-level overview of partnership activities and progress towards the city’s goals and targets • Information Packets as needed to detail more urgent updates, emerging issues and project milestones • Email updates via Heads Ups and the Climate and Energy Newsletter • Council participation in periodic community meetings • Correspondence with staff as needed Municipalization Wrap-Up Opt-out of the Franchise The settlement agreement effectively suspends the city’s efforts to municipalize. However, the franchise agreement has provisions for the city to opt-out of the franchise in the future. If it is determined that continuing with the partnership is no longer in the best interest of Boulder, council would need to decide whether to recommence the municipalization effort, and in particular the funding mechanism necessary to continue that process. The opt-out provisions included in the settlement agreement are as follows: 1. Non-Performance Based: The city can opt-out of the franchise for any reason on the 5-, 10- or 15-year anniversaries of the franchise. 2. Performance Based: They city may opt-out if Xcel Energy does not perform by: o Failing to meet the benchmarks established for calendar years 2022, 2024, 2027 and 2030. o Failing to meet the 2030 Commitment 3 after notice and a 90-day cure period. City staff will continue to closely engage with the community as the partnership activities progress and will communicate with council and the community if it appears the consideration of exercising an opt-out should be discussed and considered in the future. This will be largely informed by specific conditions described below. Conditions for Recommencement of Municipalization The settlement agreement establishes the base for recommencement of municipalization if the city exercises an opt-out or the franchise expires. The conditions are as follows: 3 The “2030 Commitment” shall mean, collectively, (i) the filing by the Company with the Colorado Public Utilities Commission on or before March 31, 2021, and to thereafter diligently seek approval of, a clean energy plan pursuant to C.R.S. §§ 25-7-105 and 40-2-125.5 to reduce greenhouse gas emissions associated with the generation of electricity sold to the Company’s Colorado electricity customers by 80 percent (from 2005 levels) by 2030 and which seeks to achieve providing its Colorado customers with energy generated from 100 percent (100%) clean energy sources by 2050; and (ii) following, approval thereof by the Colorado Public Utilities Commission, to thereafter diligently and consistently implement such clean energy plan, as approved. Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 12 Packet Page 61 of 73 1. The existing PUC decisions prevail, and no further PUC action is necessary until after the separation of the system. 2. The Case Management Order 4 for discovery in any condemnation case will apply. 3. The list of assets to be acquired in a condemnation is the existing list plus any changes to the system disclosed as part of the data sharing regarding the operation of the distribution system serving Boulder including an annual updated GIS model. 4. The maximum purchase price for the assets acquired from Xcel Energy for the Boulder system is established as $200 million, adjusted by CPI for the distribution system and the NCAR and Gunbarrel substations. 5. Agreement for load interconnection at the six substations serving the Boulder System and the specifics for each substation. 6. Boulder may purchase its streetlights without exercising an opt-out. 7. Agreements for sale of substation assets at NCAR and Gunbarrel and for specific substation service at Boulder Terminal substation that effectively allow Boulder to separate, acquire, and operate the distribution system. Wrap-up efforts Closing out the municipalization project includes the following: 1. Any remaining funds previously appropriated for the municipalization project will be used to pay back the general fund or repurposed for the energy partnership. A final accounting of expenditures is included in this memo. 2. Documentation of municipalization work activities and archiving of pertinent records is underway and will be completed in the first half of 2021. All documentation has been archived and housed in the city’s file system. 3. An internal work product of the history of the legal components of the municipalization project and potential next steps has been generated with links to important documents to provide for ease of reference of material and contact of staff and consultant team members in a potential future opt-out scenario. 4. Xcel Energy will provide the city with updated mapping and data concerning the distribution system so the city can maintain and update its separation plan. 5. Engineering designs have been completed for the distribution separation and substation separation and the city’s debts are paid to Xcel Energy for this work. 6. If the franchise is approved by the PUC, the parties will dismiss the pending condemnation case and the appellate case. Both cases are currently held in abeyance. 4 A Case Management Order (CMO) is a process required in the Colorado Rules of Civil Procedure for each case. This specific CMO refers to the discovery and briefing deadlines for the first phase of the condemnation action. Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 13 Packet Page 62 of 73 FISCAL IMPACT As part of the municipalization wrap-up, historic funding summaries and final expenditures are included in ATTACHMENT C, Municipalization Funding and Expenditures. Repayment to the General Fund Prior to 2018, in addition to Utility Occupation Tax (UOT) funding, council allocated funds from the General Fund to supplement staffing and additional unplanned litigation and transition expenses that were not part of the project’s original feasibility and formation budget. The $1,445,211 cumulative balance (see ATTACHMENT C, Municipalization Funding and Expenditures) drawn from the General Fund will be repaid to the General Fund from the unexpended UOT fund balance of $1,452,757. This fund balance will transfer from the UOT to the General Fund reserves. Repurpose of the UOT Voters passed an extension of the UOT, that was previously allocated for municipalization, in conjunction with the franchise renewal. The UOT will be repurposed to implement activities associated with the energy partnership. This funding is uniquely positioned to carry out the goals of the partnership which are detailed in this memo. While staff has discussed investment philosophies for this budget, a detailed numerical breakdown is not yet developed. Staff’s current thinking includes the following: 1. Actions that allow Boulder to achieve its energy-related goals and targets, specifically 100% renewable electricity by 2030. 2. Funding projects that can be scaled up over time. 3. Including studies aimed at meeting the goals. 4. Focusing on ways to impact the source of our energy and creative ways for the city to invest in the clean energy future. 5. Leveraging undergrounding fees and other Xcel Energy resources that are available to the community. 6. Upgrading street lighting. 7. Investing in distribution system innovations to increase resilience, such as MicroGrids 8. Serving our energy burdened residents through community programs. The partnership is in its infancy. The governance structure is being finalized, the advisory panel forming, and planning for community involvement underway. Staff acknowledges that more specific funding priorities and a detailed budget will evolve as the partnership matures over the coming months. Staff will report to council through its next update. NEXT STEPS As mentioned, staff will continue to update council through information packets, heads up, confidential memos as necessary, and an annual study session on both the litigation of the franchise agreement as important decisions are made by the PUC and the partnership activities as they evolve and develop. The table below highlights select milestones throughout 2021 related to the partnership. Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 14 Packet Page 63 of 73 2021 Key Milestones for the Partnership Timeframe Key Milestones By End of January • Appoint Members to Governance Teams – complete • Begin Advisory Panel Recruitment – complete • Develop Communication Plan – complete • Charter initial Working Groups – complete By End of March • Seat Advisory Panel • Develop Year 1 Community Engagement Plan • Finalize methodology for reviewing undergrounding projects, including reliability metrics • Launch study of electrification as an alternative to gas line replacement/expansion By End of Q2 • Renewable Electricity Community Working Group(s) underway • Phase 1 Undergrounding Plan drafted • Streetlight LED conversion strategy finalized • Community progress reporting, including quarterly meetings fully underway By End of 2021 • Preliminary project priorities identified for addressing 2030 renewable gap and interim targets finalized • 5-Year undergrounding priorities identified and initial project(s) underway ATTACHMENTS ATTACHMENT A: Municipalization History ATTACHMENT B: Undergrounding ATTACHMENT C: Municipalization Funding and Expenditures Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 15 Packet Page 64 of 73 Local Power was a highly complex multi-year effort. This section provides only a high-level history of the project. For more details on Local Power history, please browse City Council archives (search for 'municipalization') and the city's Energy Future litigation records archive. 2010: Municipalization Begins The City of Boulder began exploring the creation of a local electric utility, a process called municipalization, in 2010, after voters directed the city to allow its franchise agreement with Xcel Energy to expire. At that time, the Boulder community was seeking ways to shift how its electricity was produced. Xcel Energy's energy mix in 2010 was over 98% coal, which posed significant challenges to achieving the community's greenhouse gas reduction targets. In 2011, voters approved charter amendments and funding to explore the creation of a local electric utility. If created, the utility would serve Boulder customers, much like city-run utilities in Longmont, Fort Collins, Loveland and Estes Park. While other Colorado communities had municipalized in the past, Boulder's effort was the first attempt in several decades. Voter-approved charter amendments included several conditions that must be met before the city could create a local electric utility. •Rates must be equal or less than those offered by Xcel Energy at the time of acquisition. •The utility must have sufficient revenue to cover operating costs and debt, plus carry a reserve of 25% of the debt amount, referred to as “Debt Service Coverage Ratio.” •Reliability must remain comparable to that being offered by Xcel Energy. •There must be a plan to increase renewables. •There must be a plan to decrease greenhouse gas emissions. 2011 to 2014: Analysis Demonstrates Local Power's Feasibility In the project's early years, the city conducted robust feasibility analysis, answering the question Can the city municipalize? The city's analysis demonstrated that could municipalize at reasonable cost and that a local electric utility could dramatically reduce the carbon intensity of the community's electricity generation. The analysis conducted by staff, consultants, and community stakeholder groups and reviewed by an independent third-party reviewer have demonstrated that these requirements can be met given currently available information. The presentation of these analyses and the third-party review led to a Council decision in August 2013 to pursue acquisition of Xcel Energy's electric utility assets. 2015 to 2018: City Seeks State Regulatory Approval In order to create a local electric utility, the city sought to modify the existing electricity system that served Boulder. To do so, the city planned to purchase portions of Xcel Energy's existing infrastructure, through a process called condemnation, and create a separate electric delivery system that would serve only Boulder customers. This separation plan required state approval. ATTACHMENT A: Municipalization History Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 16 Packet Page 65 of 73 The city filed its original separation application at the Colorado Public Utilities Commission (PUC) in 2015. Much of the work between 2015 and 2017 focused on gaining PUC approval. The commission granted conditional approval in fall 2017. In 2017, voters passed an extension and an increase in funding for municipalization efforts as well as a requirement for a final community vote. 2019 to 2020: Local Power Takes Shape After state regulators unconditionally approved the city's separation plan in 2019, the city promised to give voters the final say on whether the city would complete municipalization. In this period, the city's efforts shifted to developing a clear picture of the financial, technical and operational details and providing these key details to the community. Two items comprised the bulk of this work: developing detailed engineering plans for the separation and beginning the process to condemn necessary portions of Xcel Energy's electric infrastructure under the city's eminent domain powers. In fall 2020, the city completed its detailed separation plan. The city's condemnation case was in the appeals process when the 2020 election occurred. The city also updated cost estimates including those for electricity supply, received indicative pricing for power supply, completed transmission to load system impact studies for substation facilities and approved an ordinance that allowed the city to begin the process of acquiring existing Xcel Energy facilities, including condemnation if necessary. 2020: Voters Direct City to Sign New Franchise with Xcel Energy In spring 2020, representatives from the City of Boulder and Xcel Energy began negotiations to settle the city's municipalization effort. While negotiations were ongoing, the city and Xcel Energy hosted a series of town halls to share information and get feedback on the potential settlement. City Council decided to place a new franchise on the ballot and Boulder voters approved the franchise and a partnership-funding measure in November 2020. ATTACHMENT A: Municipalization History Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 17 Packet Page 66 of 73 Coordinating undergrounding with other city infrastructure projects presents the best opportunity to maximize the impact of the underground fund, since many of the costs associated with undergrounding, such as trenching, permitting, and restoration can be shared with or fully borne by the city project and project impacts to the public can be minimized by synchronizing construction. For this reason, staff have reviewed the transportation and water-utility planned capital improvements and developed a list that could be conducive for coordinated undergrounding. Staff is now working with Xcel Energy to prioritize this list using the draft evaluation criteria, outlined in Table 1, and to develop high-level cost estimates to inform the undergrounding plan. The first project that has been identified for potential undergrounding is the North Broadway Reconstruction Project. Xcel Energy is currently developing the undergrounding design and cost estimate for this work. Table 1 – Draft Criteria for Undergrounding Project Evaluation and Prioritization Criteria Description Evaluation Approach Example Scoring Metric Risk Mitigation Mitigate risk for loss of life, property, or resources through hazard elimination Overhead and aboveground assets in or proximate to: •Areas of fire risk •Flood conveyance •Roadways •Tree canopy 10-High potential for loss of life or property 5-Moderate potential for loss of electrical equipment 1-Low risk Reliability Improve system reliability through asset replacement and improvement •Outage mapping •Failure forecasts based on vintage, types of assets •Options to upgrade system as undergrounding takes place # of properties that stand to benefit * Reliability improvement from avoiding specific type of outages Equity Improve reliability and enhance services, for any underserved, underrepresented and frontline communities •Community mapping Equity index Cost Effectiveness Reduce costs for undergrounding and/or other infrastructure projects through synergistic efforts •Project and opportunity identification •Area plans, planned redevelopment ($ saved + Future disruptions avoided + value of other benefits)/cost ATTACHMENT B: Undergrounding Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 18 Packet Page 67 of 73 Criteria Description Evaluation Approach Example Scoring Metric Legal Considerations Identify potential legal risks to underground projects and develop mitigation strategy • Easements • Rights-of-way • Annexation Risk rating Project Scale Determine total cost of project, timeline and number of customers affected. • Number and types of customers impacted, capacity and energy served • Time to complete • Degree to which project planning has already been undertaken TBD Project Impact Degree of disruption and impact to the community to the community • Ability to minimize public impact both near- term and in the future • Ability to integrate with other city projects and priorities Number of people impacted + duration of impact – opportunity to mitigate through synergies with other projects Community Benefits Underground project pairs with other community initiatives to maximize value of investment (e.g. broadband / fiber-to-home, improved viewshed). • Flood and Stormwater Master Plan • OSMP Master Plan • Transportation Master Plan • Community Plans • Ongoing CIP and City Projects # and value of synergistic benefits Undergrounding distribution mainlines will yield the largest benefit in terms of reliability as these collectively serve the largest number of customers and provide backup to other parts of the system. Improving this infrastructure’s reliability will go a long way for improving the customer experience in and around Boulder. Staff are working with Xcel Energy to review historical reliability data to develop a prioritized list of projects. Staff has proposed that 35% of the undergrounding funds be reserved for these types of projects. ATTACHMENT B: Undergrounding Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 19 Packet Page 68 of 73 Staff has proposed that 20% of the underground fund be reserved for projects identified through community engagement for which other sources of funding have been identified. These funding sources could include other city funds, grants or community contributions. It is envisioned that the undergrounding fund would provide up to 30% of cost share for these types of projects. Finally, 10% of the fund would be held in reserve to address any cost overages or for other unanticipated needs. Table 2 provides a summary of the staff’s proposed allocation of the fund. Staff may revise the distribution of funding between project types as more information becomes available on current system reliability, as well as Boulder and Xcel Energy’s planned maintenance work in the coming years. Table 2 - Summary of Proposed Undergrounding Allocations Project Type Percent Allocation Coordinated with City Capital Improvement Projects 35% Mainline Projects 35% Other Projects 20% Reserved for Project Overages 10% Another consideration is that the undergrounding of the electric power system will require the undergrounding of CenturyLink telecommunications facilities as well as customer premise service work. Costs for this type of work may not covered by the Xcel Energy undergrounding fund. Staff will identify potential funding sources for these costs and provide recommendations as part of the budget process. ATTACHMENT B: Undergrounding Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 20 Packet Page 69 of 73 2012-2017 In 2011, Boulder voters approved a Utility Occupation Tax (UOT) to research and fund the creation of a local electric utility. 2017 marked the end of the initial funding of the municipalization efforts. The May 17, 2018 City Council information packet provides a summary of spending and accomplishments achieved in 2012-2017. During 2012-2017, expenditures totaled $13,249,341. $11,804,130 was funded by the Utility Occupation Tax and $1,445,211 was funded from the General Fund. The $1,445,211 balance drawn from the General Fund will be repaid to the General Fund reserves with the closing of the 2020 books. Chart 1 below summarizes the 2012-2017 funding and actual expenditures for the local power/municipalization efforts. *$1,445,211 will be repaid to the GF reserves in 2020 from the unexpended UOT fund balance 2018-2020 In 2017, Boulder voters authorized the City of Boulder to extend and increase the UOT through 2022 to continue funding costs associated with forming a municipal electric utility. The five-year tax increase was to provide funding for essential engineering, litigation and staff work in anticipation of Go/No-Go vote in 2022. The local power/municipalization work and associated funding plan anticipating a Go/No-Go vote in 2022 was suspended when Boulder voters passed two ballot measures in November 2020: 1) to pause the city’s ongoing efforts to create a municipal electric utility and enter a new 20-year franchise with Xcel Energy; and 2) amend and repurpose the UOT. Chart 2 summarizes the funding and actual expenditures of the 2018-2020 local power/municipalization efforts. High-level project milestones and associated costs related to the 2018-2020 phase of the project may be found in Chart 3. Chart 2 Chart 1 ATTACHMENT C: Municipalization Funding and Expenditures Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 21 Packet Page 70 of 73 Category QTR1 QTR2 QTR3 QTR4 QTR1 QTR2 QTR3 QTR4 QTR1 QTR2 QTR3 QTR4 Electric Utility Development Administration $ 3,829,523 City Council Meeting and Public Hearing regarding proposed agreements with Xcel Energy 100%O File Xcel agreements and updated asset list with the Colorado PUC 100%O Update to City Council on Load Interconnection Agreement and Separation Engineering (Information Packet)100%O Boulder files notice regarding proposed process to resolve outstanding issues with the Colorado PUC 100%O Boulder files additional documents with the Colorado PUC as outlined in the notice 100%O PUC Decision and Order 100%O Communications and Engagement $ 256,736 % Communications and Engagement Working Group 100%O Develop 2018-2019 Communications and Engagement Strategic Plan 100%O Separation Engineering - Distribution and Substation Interconnection $ 6,448,259 0% Load Interconnection Application Submitted to Xcel Energy 100%O City Agrees to Load Interconnection Study Scope, Cost and Schedule 100%O Load Interconnection Study Completed 100%O FERC Interconnection Application 100%O FERC Decision and Order 100%O Execute Vendor Support Contracts for Boulder Substation Work 100%O Complete Boulder Substation Separation Design 100%O Negotiate Agreement for Xcel Energy Substation Separation Design 100%O Xcel Energy Completes Substation Separation Design 100%O Complete Work Plan for Xcel Energy Distribution Separation Scope of Work 100%O Negotiate Scope of Work and other Terms of Distribution Separation Design, Cost Estimate, Construction Timeline and Bidding 100%O Xcel Energy Completes Distribution Separation Design, Cost Estimate, Construction Timeline and Bidding Work 100%O Execute Vendor Support Contracts for Boulder Distribution Separation Work 100%O Complete Boulder Distribution System Separation Design, Cost Estimate, and Construction Timeline 100% O Acquisition and Condemnation $ 824,927 Appraisals 100%O Condemnation Ordinance Adopted by City Council 100%O Good Faith Negotiations 100%O File Condemnation Case in District Court - Court Dismissed 100%O Re-file Condemnation Case in District Court # Xcel Energy Motion to Dismiss Re-filed Condemnation Case and Boulder Response # District Court Consideration of Motion to Dismiss Re-filed Condemnation Case # District Court Case Management Order for Re-filed Condemnation Case # Condemnation Trial and Verdict # Integrated Power Supply and Transmission Service $ 21,290 Advertise Request for Indicative Pricing 100%O Receive Vendor Provided Indicative Pricing 100%O Analyze Integrated Power Supply and Transmission Options and Develop Strategy # Integrated Power Supply and Transmission Request for Proposals 100%O Integrated Power Supply and Transmission Proposals Submitted 100%O Negotiate Integrated Power Supply and Transmission Service # Network Integrated Transmission Service Application # Network Integrated Transmission Service Agreement # Transition Planning - Startup and Ongoing O&M $ 395,051 Refine Future Utility Operations Vision/ Plan # Issue Requests for Information, Qualifications and Pricing for Utility Startup and Operations Services # Information, Qualifications and Pricing for Utility Startup and Operations Services Responses # Evaluate and Negotiate Startup and Utility Operations Services # Tracking Worksheet Electric Utility Development 2/11/2021 2020 Goals2019 Goals 2018-20 Expenditures Estimated Progress 2018 Goals O Completed Milestone Δ Anticipated Milestone on Schedule # Anticipated Milestone Delayed Indefinetly Based on Settlement Agreement Chart 3 ATTACHMENT C: Municipalization Funding and Expenditures Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 22 Packet Page 71 of 73 2021-2025 General Fund portion of UOT to be replaced by franchise fee On December 15, 2020, following the election, council adopted amendments to the current Utility Occupation Tax (UOT) to remove the tax associated with the general fund and replace it with the franchise fee and amendments to make the tax code consistent with the voter approved changes to the purpose and the extension of the Utility Occupation Tax. More details can be found in the council memo. ATTACHMENT C: Municipalization Funding and Expenditures Item 2 - Xcel Energy Partnership/Franchise Update and Municipalization Wrap-up Page 23 Packet Page 72 of 73 C OVE R SH E E T ME E T I N G D AT E F ebruary 23, 2021 ST U D Y SE SSI ON I T E M C ouncil Discussion on Recruitment Firm Selection for the City Attorney Recruitment P RI MARY STAF F C ON TAC T Elesha J ohnson, City C lerk B RI E F H I STO RY O F I T E M Added at 2/22/21 C A C meeting AT TAC H ME N T S: Description No Attachments Available Packet Page 73 of 73