CPN Homeowners for a Solid Foundation is a community advocate group that seeks to educate the homeowners of CPN on current issues. We offer an open comfortable forum where each homeowner is given the opportunity to question, understand, and decide for themselves the impacts of issues that will affect our community.
The following list of “myths and facts” was provided by the City of Castle Pines North. Myth: The City is already running a deficit and cannot balance its budget. Fact: By state law, the City cannot run a deficit. The City is currently providing a limited number of services, which do not cost more than the amount of money generated by the City’s revenue stream.
COMMENT This is simply not true. Look at the proposed 2009 budget under legal expenses there is a line item for $125,000 being carried over into 2009 for expenses incurred in 2008. CH2MHill has not been paid one red cent. Ron Clark proclaimed in two public meetings that the City got its first sales tax receipts. For the month of July they collected $46,000 and that was their first substantial income. The bottom line is that the Council has not seen ANY City financials so they have neither idea what their expenses are nor their actual revenues. The bottom line is this no one knows how deep the hole is.
Myth: The City will go bankrupt if it does not secure additional funding. Fact: The City will not go bankrupt. The City will only operate with a balanced budget. COMMENT Suffice it to say the City has no idea if this is a true statement. The Council has never approved any payables or financials. The County has been providing services at no cost to the City. That will end in February 2009. If the City has only realized 46K in sales tax revenue for one month this equals to only about 600K per year which does not even come close to paying for snow removal. If all you want is snow removal and nothing else, the City may have plenty of money as long as we don’t get a winter similar to 2006.
Myth: The incorporation feasibility study was flawed, and the City did not realize that it would not have sufficient funds to operate. Now it is seeking funds from the Metro District to “bail the City out.” Fact: The feasibility study concluded that without levying a property tax the City would not have sufficient funds to provide all services. The study also recognized that: a) there would be opportunities to achieve economic efficiencies by working with the Metro District and the Homeowners Associations to optimize the delivery of services and eliminate unnecessary duplication of resources, and b) the Metro District was collecting more revenues than it needed to meet all of its operations and current and future capital requirements. These facts were provided to the community prior to the incorporation vote. That is why there was a ballot question in the November 2007 election regarding 19 mills of the Metro District’s levy ability being “transferred” to the City. COMMENT The Metro District attempted to point out the fact that the 19 mills was committed to District operations with any excess being directed toward renewable water. In fact the District is using the excess money from the 19 mills to service the debt for the Rueter Hess storage acquisition which is the first step in providing renewable water to the community. The original ballot initiative was flawed in that it made people think this was available. What was not contemplated is that the money they were after was not on the table. When District Board members pointed this out the City and CH2MHILL refused to amend their feasibility study. Given this one must conclude the feasibility study was flawed!
Myth: The City cannot generate enough revenue to properly fund its operations without a tax increase Fact: The City can afford to deliver full services to its citizens if it works with the Metro District and the Homeowners Associations to optimize the delivery of services in the community. The preliminary budget for 2009 with sharing of revenues shows a service level to City residents that are higher than services delivered by Douglas County. This is especially evident in public works with capital projects for streets and roads. COMMENT This is simply rhetoric. No one in this community has ever seen a service plan. During the incorporation discussion the feasibility study only focused on revenues. Service was never discussed. The proposed 2009 budget is silent on service. Has anyone seen a contract for snow removal for the community after February 9, 2009?? If the City can’t produce a contract as simple as snow removal services how can they possible make the statement the City will deliver higher level of service than the County provided.
Myth: If the Metro District reduces its current level of revenue collection, it will not be able to generate sufficient funds to meet its current debt obligations or build up sufficient capital reserves to purchase renewable water rights Fact: The Metro District levies 24 mills specifically for servicing existing debt associated with three bond issues. It cannot use these revenues for any purpose other than to service those bonds. The Metro District is building cash reserves for future capital projects through other mill levy assessments and special charges on the water bills it issues.
COMMENT It was and still is the Metro District’s plan to continue to prepay debt. No decision has been made to reduce its mill levy. If the District lowered its mill levy it would be unable to prepay it variable interest rate debt which would cost the citizens approximately 2.6 million dollars in additional interest costs and remove some of the District’s financing options.
Myth: The Metro District needs all of the funds generated by the 24 mills to meet its debt obligations. Fact: The annual revenues generated by the 24 mills exceed the amount of funds needed to meet the annual debt service obligations. The bonds cannot be paid off early without significant financial penalty. The Metro District can reduce its levy to 14.5 mills and still meet its annual debt service obligations with funds left over to build a reasonable reserve. This would allow the City to levy 9.5 mills without the need for a property tax increase.
COMMENT Not true. Taking 9.5 mills from the District would not allow the District to have any left over money to prepay debt. Additionally if the District’s interest rate increased, which it did in late November, the District would not have any reserves in place to pay its debt service obligations. The statement that the District cannot prepay debt is completely false. The District can prepay its 2006 C bonds because they are variable interest bonds. The District has reduced the balance owed from 11,000,000 in May 2006 to $6,700,000 in September 2008. This $4.3 million dollar reduction was made without ANY financial penalty! The District had the foresight to include some variable debt in their refinancing completed in 2006 for the very purpose of being able to prepay debt. This has enabled the District to comply with the mandate that the citizens of this community gave to the District, reduce historical debt and lower our taxes as soon as possible. Myth: The Metro District needs to retain the ability to levy 24 mils in order to be able to have sufficient bonding capacity to secure renewable water rights for the community. It cannot afford to turn over 9.5 mils of this capacity to the City. Fact: The Metro District has stated that it will cost $60 to $80 million to secure renewable water rights. At current bonding rates that would require ____ mils.
COMMENT The cost for renewable water is in the 60 – 80 million dollar range. It is unknown how many mills this may take given the fact that assessed property values may decrease and borrowing costs may increase.
Myth: The City does not understand the seriousness of the community’s situation with respect to the need to secure renewable water rights, nor does it understand the business of the Metro District. Fact: The City fully appreciates that the community needs to secure renewable water rights in a timely manner. The City also fully understands the business of the Metro District. The City’s private-sector partner CH2M HILL OMI has been operating water utilities since 1982 and currently serves more than 200 communities throughout North America. In addition, the City appreciates that renewable water is a necessary – but alone insufficient – condition to assure the future economic viability in terms of home real estate values and a vibrant business sector. The needed economic development work, which was a central reason for incorporation, is something the City can undertake but that the Metro District cannot under its service plan.
COMMENT Question how does serving more people outside the District Boundaries help anyone secure renewable water? It takes approximately 10 years for new residential growth to pay its way. Retail growth is unlikely in the areas the City is looking to annex. Therefore the City will not have any additional money to help solve the renewable water needs of the community. Additionally, the City will not have a credit rating and as such any money borrowed by the City will be at extreme interest costs.
Myth: Only the Metro District has the ability to secure sufficient bonding capacity required to purchase the renewable water rights that the community needs. Fact: The City can in fact secure even more bonding capacity for the purchase of renewable water rights than the Metro District. Cities have a much wider range of revenue sources that can be used to seek funds from bonding. In an uncertain financial market a diversity of revenue sources. The City also can positively influence the future of assessed valuation through economic development and annexation.
COMMENT This is absolutely false!! The City ahs no credit history, unknown income, unknown expenses. No one in this market would loan the City money. When large school districts can not get funding there is no way a small unknown credit such as the City of Castle Pines North will be considered for a loan. The bottom line is one has to show an ability to pay. Currently, and into the foreseeable future, this will be the case. By the time the City has built up the money needed to borrow large sums of money all of the renewable water opportunities, including partnerships, will be gone. If any remain they will have become so expensive that the price will be completely out of reach for this community.
Total 2009 Budgeted Expenditures General Government (rounded) 4,685,000 Capital Expenditures 100,000 Tabor Reserve (rounded) 154,000 Contingency (rounded) 185,000 $5,124,000
CH2 M = 48 % of Expenditures (The statement in the pre-incorporation presentations comes to mind: “Is incorporation financially feasible? Yes. Even the most conservative and expensive option is feasible.”)
(Also these studies showed revenue of $9.8 million.)
Sept 12, 2008 City news release – five year contract signed with CH2M about $1 million annually
* One does not budget to the nearest dollar – could be carryover from 2008 (not necessarily total amount) - Surprisingly the City Treasurer did not catch this.
See City web site for City Budget – Myths and Facts.
----------------------------------------------------------------------- Also a franchise fee is being implemented on many items including electric and gas. My checkbook doesn’t distinguish between a tax and a fee.
Understanding the City’s Finances
ReplyDeleteThe following list of “myths and facts” was provided by the City of Castle Pines North.
Myth: The City is already running a deficit and cannot balance its budget.
Fact: By state law, the City cannot run a deficit. The City is currently providing a limited number of services, which do not cost more than the amount of money generated by the City’s revenue stream.
COMMENT This is simply not true. Look at the proposed 2009 budget under legal expenses there is a line item for $125,000 being carried over into 2009 for expenses incurred in 2008. CH2MHill has not been paid one red cent. Ron Clark proclaimed in two public meetings that the City got its first sales tax receipts. For the month of July they collected $46,000 and that was their first substantial income. The bottom line is that the Council has not seen ANY City financials so they have neither idea what their expenses are nor their actual revenues. The bottom line is this no one knows how deep the hole is.
Myth: The City will go bankrupt if it does not secure additional funding.
Fact: The City will not go bankrupt. The City will only operate with a balanced budget.
COMMENT Suffice it to say the City has no idea if this is a true statement. The Council has never approved any payables or financials. The County has been providing services at no cost to the City. That will end in February 2009. If the City has only realized 46K in sales tax revenue for one month this equals to only about 600K per year which does not even come close to paying for snow removal. If all you want is snow removal and nothing else, the City may have plenty of money as long as we don’t get a winter similar to 2006.
Myth: The incorporation feasibility study was flawed, and the City did not realize that it would not have sufficient funds to operate. Now it is seeking funds from the Metro District to “bail the City out.”
Fact: The feasibility study concluded that without levying a property tax the City would not have sufficient funds to provide all services. The study also recognized that: a) there would be opportunities to achieve economic efficiencies by working with the Metro District and the Homeowners Associations to optimize the delivery of services and eliminate unnecessary duplication of resources, and b) the Metro District was collecting more revenues than it needed to meet all of its operations and current and future capital requirements. These facts were provided to the community prior to the incorporation vote. That is why there was a ballot question in the November 2007 election regarding 19 mills of the Metro District’s levy ability being “transferred” to the City.
COMMENT The Metro District attempted to point out the fact that the 19 mills was committed to District operations with any excess being directed toward renewable water. In fact the District is using the excess money from the 19 mills to service the debt for the Rueter Hess storage acquisition which is the first step in providing renewable water to the community. The original ballot initiative was flawed in that it made people think this was available. What was not contemplated is that the money they were after was not on the table. When District Board members pointed this out the City and CH2MHILL refused to amend their feasibility study. Given this one must conclude the feasibility study was flawed!
Myth: The City cannot generate enough revenue to properly fund its operations without a tax increase
Fact: The City can afford to deliver full services to its citizens if it works with the Metro District and the Homeowners Associations to optimize the delivery of services in the community. The preliminary budget for 2009 with sharing of revenues shows a service level to City residents that are higher than services delivered by Douglas County. This is especially evident in public works with capital projects for streets and roads.
COMMENT This is simply rhetoric. No one in this community has ever seen a service plan. During the incorporation discussion the feasibility study only focused on revenues. Service was never discussed. The proposed 2009 budget is silent on service. Has anyone seen a contract for snow removal for the community after February 9, 2009?? If the City can’t produce a contract as simple as snow removal services how can they possible make the statement the City will deliver higher level of service than the County provided.
Myth: If the Metro District reduces its current level of revenue collection, it will not be able to generate sufficient funds to meet its current debt obligations or build up sufficient capital reserves to purchase renewable water rights
Fact: The Metro District levies 24 mills specifically for servicing existing debt associated with three bond issues. It cannot use these revenues for any purpose other than to service those bonds. The Metro District is building cash reserves for future capital projects through other mill levy assessments and special charges on the water bills it issues.
COMMENT It was and still is the Metro District’s plan to continue to prepay debt. No decision has been made to reduce its mill levy. If the District lowered its mill levy it would be unable to prepay it variable interest rate debt which would cost the citizens approximately 2.6 million dollars in additional interest costs and remove some of the District’s financing options.
Myth: The Metro District needs all of the funds generated by the 24 mills to meet its debt obligations.
Fact: The annual revenues generated by the 24 mills exceed the amount of funds needed to meet the annual debt service obligations. The bonds cannot be paid off early without significant financial penalty. The Metro District can reduce its levy to 14.5 mills and still meet its annual debt service obligations with funds left over to build a reasonable reserve. This would allow the City to levy 9.5 mills without the need for a property tax increase.
COMMENT Not true. Taking 9.5 mills from the District would not allow the District to have any left over money to prepay debt. Additionally if the District’s interest rate increased, which it did in late November, the District would not have any reserves in place to pay its debt service obligations.
The statement that the District cannot prepay debt is completely false. The District can prepay its 2006 C bonds because they are variable interest bonds. The District has reduced the balance owed from 11,000,000 in May 2006 to $6,700,000 in September 2008. This $4.3 million dollar reduction was made without ANY financial penalty! The District had the foresight to include some variable debt in their refinancing completed in 2006 for the very purpose of being able to prepay debt. This has enabled the District to comply with the mandate that the citizens of this community gave to the District, reduce historical debt and lower our taxes as soon as possible.
Myth: The Metro District needs to retain the ability to levy 24 mils in order to be able to have sufficient bonding capacity to secure renewable water rights for the community. It cannot afford to turn over 9.5 mils of this capacity to the City.
Fact: The Metro District has stated that it will cost $60 to $80 million to secure renewable water rights. At current bonding rates that would require ____ mils.
COMMENT The cost for renewable water is in the 60 – 80 million dollar range. It is unknown how many mills this may take given the fact that assessed property values may decrease and borrowing costs may increase.
Myth: The City does not understand the seriousness of the community’s situation with respect to the need to secure renewable water rights, nor does it understand the business of the Metro District.
Fact: The City fully appreciates that the community needs to secure renewable water rights in a timely manner. The City also fully understands the business of the Metro District. The City’s private-sector partner CH2M HILL OMI has been operating water utilities since 1982 and currently serves more than 200 communities throughout North America. In addition, the City appreciates that renewable water is a necessary – but alone insufficient – condition to assure the future economic viability in terms of home real estate values and a vibrant business sector. The needed economic development work, which was a central reason for incorporation, is something the City can undertake but that the Metro District cannot under its service plan.
COMMENT Question how does serving more people outside the District Boundaries help anyone secure renewable water? It takes approximately 10 years for new residential growth to pay its way. Retail growth is unlikely in the areas the City is looking to annex. Therefore the City will not have any additional money to help solve the renewable water needs of the community. Additionally, the City will not have a credit rating and as such any money borrowed by the City will be at extreme interest costs.
Myth: Only the Metro District has the ability to secure sufficient bonding capacity required to purchase the renewable water rights that the community needs.
Fact: The City can in fact secure even more bonding capacity for the purchase of renewable water rights than the Metro District. Cities have a much wider range of revenue sources that can be used to seek funds from bonding. In an uncertain financial market a diversity of revenue sources. The City also can positively influence the future of assessed valuation through economic development and annexation.
COMMENT This is absolutely false!! The City ahs no credit history, unknown income, unknown expenses. No one in this market would loan the City money. When large school districts can not get funding there is no way a small unknown credit such as the City of Castle Pines North will be considered for a loan. The bottom line is one has to show an ability to pay. Currently, and into the foreseeable future, this will be the case. By the time the City has built up the money needed to borrow large sums of money all of the renewable water opportunities, including partnerships, will be gone. If any remain they will have become so expensive that the price will be completely out of reach for this community.
Total CH2M Hill OMI $2,468,764
ReplyDeleteTotal 2009 Budgeted Expenditures
General Government (rounded) 4,685,000
Capital Expenditures 100,000
Tabor Reserve (rounded) 154,000
Contingency (rounded) 185,000
$5,124,000
CH2 M = 48 % of Expenditures
(The statement in the pre-incorporation presentations comes to mind: “Is incorporation financially feasible? Yes. Even the most conservative and expensive option is feasible.”)
(Also these studies showed revenue of $9.8 million.)
Sept 12, 2008 City news release – five year contract signed with CH2M about $1 million annually
* One does not budget to the nearest dollar – could be carryover from 2008 (not necessarily total amount) - Surprisingly the City Treasurer did not catch this.
See City web site for City Budget – Myths and Facts.
-----------------------------------------------------------------------
Also a franchise fee is being implemented on many items including electric and gas. My checkbook doesn’t distinguish between a tax and a fee.