by Terri Wiebold

A recent article in the June/July issue of The Castle Pines Connection titled, “City Council appoints deputy treasurer” has prompted some community inquiry regarding governmental transparency and financial disclosures in regard to the City of Castle Pines North.

While attempting to work directly with city officials and with CH2M HILL in gathering information for the article, The Castle Pines Connection submitted a list of questions in early May to both entities. Following the appointment of Deputy City Treasurer Scott Stewart of CH2M HILL, we began to receive answers. Stewart met personally with a member of the Castle Pines Connection staff and made all financial records available for viewing. Stewart also provided written answers on June 1 (on behalf of City Manager Alan Lanning) to the questions submitted. Many of this financial information has since been added to the City of Castle Pines North website.

Below is the list of questions from The Castle Pines Connection Editor, Terri Wiebold, with answers in italics from Castle Pines North City Manager, Alan Lanning:

From what I’ve been able to ascertain, the city by statute cannot run a deficit. Yet, it owes substantial sums, i.e., CH2M HILL, Attorneys and others. How is this possible?

The Colorado Local Government Budget Law (C.R.S. Sections 31 1 101 115) requires every local government provide for “expenditures in excess of available revenues and beginning fund balances.” Under state law, expenditures of a municipality cannot exceed revenues during the course of a year, except in emergency situations. Castle Pines North (CPN) is adhering to that statute. The City’s current debts are not being paid in their entirety at this time, per mutual negotiations and allowances. For the 2009 budget, we anticipate an amended budget with revised appropriations that shows these debts being paid off with funds available to the City, and thus the City will not pay more than it has funds available.

I am unable to account for these debts in the financials. Shouldn’t they show up somewhere as payables or debt or something? How are they being kept off the books?

The money owed to CH2M HILL and the City’s previous City Attorney are not being “kept off the books”. All obligations of the City are shown as payables in the financial statements, whether they are paid or not. 2008 audited financial statements are being prepared and are due on July 31, 2009.

According to Alan Lanning, CH2MHILL is essentially “floating” the city right now. Can you respond to that?

“Floating” is really not the correct term. CH2M HILL is delaying reimbursement for expenses in order to allow the City to get on its feet financially. CH2M HILL often engages in similar circumstances on city start ups, given the uncertainty of revenues, and understands over the long term that the start up costs will be satisfied.

At a recent city council meeting, one council member said the city was “$1.5 million in debt.” Is this accurate? Please explain.

As of 5/28/09, the City purportedly owes about $805,000 to CH2M HILL and a bit more than $140,000 in legal fees.

When we compare the original pre incorporation budget estimates to the 2009 budget, there are substantial differences. What have you learned since your original estimate that accounts for the differences, i.e., sales tax, city administration, legal fees, etc? What assumptions were made that have not held true?

Legal fees from our former attorney were higher than anticipated as significant start up work was required. The City has learned to carefully budget legal fees with an expected reduction in annual legal fees of at least 50%.

The assumption of obtaining a transfer of property tax millage from the Metro District held not to be true. We have been meeting with the Metro District concerning this issue. The 2009 CPN budget incorporated this situation in reducing anticipated expenditures.

Sales taxes being lower than expected seem to be a product of the recession. However, the City has experienced higher revenue from automobile use taxes, which increase almost makes up for the loss in sales taxes revenues.

What approximate percentage decrease can a city typically expect as a result of economic downturns?

There’s not a typical formula and it’s really based upon whether the City is more heavily reliant upon property taxes or sales taxes to source its general fund. CPN property taxes are tracking fairly accurately, but sales taxes and building activity are down. Automobile use tax revenues are tracking higher than expected. However, there’s really no accurate formula.

What impact could annexation with The Canyons have on the city’s financial situation? What revenues and what expenditures could the city expect from annexation?

We are unable to speculate regarding impacts of the annexation. Property taxes, license fees, sales taxes, building use taxes, and permit fees will be the sources of revenue to the City, which are the same revenue types the City enacts currently on all areas of CPN. As the Canyons project expects to develop in phases over twenty plus years, the City’s expenditures to serve the development are anticipated to be absorbed commensurately with the revenues generated by the development. Expenditures will be determined by Council and incorporated into the budgeting process.

What kind of a timeframe is the city looking at for a revenue sharing agreement with The Canyons? 20, 30, 40 years?

The City and property owner are currently negotiating the terms of an annexation and development agreement. The City has looked at revenue sharing between 20 to 40 years; however, the final terms and conditions of the agreement have not been completed. It is anticipated that City Council will consider the annexation and development agreement at a public meeting in September or October 2009.

When will the city receive the “annexation fee” from The Canyons? I have heard it is in the ballpark of $2.75 million; is that true? If not, what is the amount? Is that an up front, lump sum payment? What will it be used for?

We have received an annexation petition; however, there is no established “annexation fee” or payment of such. As stated above, the City and property owner are currently negotiating the terms of an annexation and development agreement; however, the final terms and conditions of the agreement have not been completed.

Why has the financial information about the city’s current situation not been made more public? The recent publishing budgeted revenues versus budgeted expenditures tells us nothing, really. What about actuals? There is NO actual information available on the city’s website. One city council meeting I attended presented some actuals, but it was only January/February, 2009. Why is this information not made more available to the public?

In general, CPN financial information is available for public inspection and review in accordance with the Colorado Open Records Act. The 2009 budget was presented and discussed in detail with the public 4 separate times in 2008. The budget presentations are still all on the CPN website (via Public Forum archives in the Treasurer page). An audit will be performed this year by our contracted outside auditors. The audited actual financial statements for 2008 will become public information by the statutory July 31, 2009 deadline. Like many municipalities, we are in the process of looking to amend the 2009 budget. Once done, this will also be public information. The three Treasurer reports presented so far at Council meetings this year showed actual, per the Treasurer’s calculations.

When can citizens expect to see the HOA consolidation analysis that the city manager is working on? How much did it cost to do? How much will it potentially save?

This information is proprietary to CH2MHILL and not available to the public.

What is the total amount paid to Stigall & Associates for combined 2008 & 2009? What are their services used for?

Stigall and Associates have been paid a total of $1,060 for

 

 

 

 

 

 

 

 

 

 

2008 and 2009. They performed meeting facilitation services for City Council retreats.

I see four payments in the amounts of $130,000 each for the Base Compensation for CH2M HILL per the repayment schedule. Why the departure from the original timetable of payments? Additionally, I do not see any payments in the amounts of $19,166 for the Start Up Costs. When will repayment of these begin?

The $35,869.52 interim service invoices were paid on 12/11/08. As of the last Council meeting, all 2008 CH2M HILL base invoices ($130,000 per month) have been paid, totaling $650,000. The departure in original timetable was due to cash flow being lower than anticipated. The $200,000 in CH2M HILL start up costs are contractually not due yet from CPN, as they were deferred to a lump sum payment in August of 2009.

Is it true the city has asked CH2MHILL to cut back up to 40%? In what areas will services be cut, if any?

This is a contractual negotiation between the City and CH2M HILL and it is anticipated that an amended contract and scope of work will be presented to City Council at the June 11 Council meeting. This will be a part of the process to amend the 2009 budget. The public will be able to participate in this process, like all other budget processes, once the amended budget is presented to Council.

Will the city file for home rule status anytime soon? If so, what financial impact could that have on the city?

The question of home rule is one for City Council to initially consider and of course, is ultimately decided by the registered electors of the City. The City is currently collecting information on estimated costs of initiating home rule as several communities have recently or are currently in the process of achieving home rule status.

I have had difficulty getting financial information from CH2MHILL; do they have access to all financial information on the city? Who is the best person to contact for financial information at CH2M HILL?

As of 5/28/09, CH2M Hill still does not have the required administrative access to CPN financial information. Please feel free to contact Scott Stewart for financial information questions.

While transparency in government and financial disclosure may still be a work in progress for the City of Castle Pines North, it is progress nonetheless. The Castle Pines Connection offers our thanks to both Treasurer Gilbert for his letter to the editor and to Deputy City Treasurer Scott Steward for sharing the financial records we requested.

Stewart can be reached at 720-234-1957 or via email at Contact by e-mail .