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TC Packet 02-23-2016 TOWN OF AVON, COLORADO TOWN OF AVON MEETINGS FOR TUESDAY, FEBRUARY 23, 2016 REGULAR MEETING BEGINS AT 7:30 PM AVON TOWN HALL, ONE LAKE STREET _____________________________________________________________________________________ MEETING AGENDAS & PACKETS: HTTP://WWW.AVON.ORG AGENDAS ARE POSTED AT AVON TOWN HALL, RECREATION CENTER, & LIBRARY. Page 1 REGULAR MEETING BEGINS AT 7:30 PM 1. CALL TO ORDER & ROLL CALL 2. APPROVAL OF AGENDA 3. PUBLIC COMMENT – COMMENTS ARE WELCOME ON ITEMS NOT LISTED ON THE FOLLOWING AGENDA 4. ACTION ITEMS 4.1. RESOLUTION NO. 16-03 REFERRING A POLICE STATION BALLOT QUESTION TO A SPECIAL ELECTION (TOWN ATTORNEY ERIC HEIL) 4.2. FIRST READING OF ORDINANCE NO. 16–02, AUTHORIZING THE FINANCING OF CERTAIN PUBLIC IMPROVEMENTS OF THE TOWN, AND IN CONNECTION THEREWITH AUTHORIZING THE LEASING OF CERTAIN TOWN PROPERTY AND THE EXECUTION AND DELIVERY BY THE TOWN OF A SITE LEASE, A LEASE PURCHASE AGREEMENT, A DISCLOSURE CERTIFICATE, A PRELIMINARY OFFICIAL STATEMENT AND OTHER DOCUMENTS AND MATTERS RELATING TO CERTAIN CERTIFICATES OF PARTICIPATION, SERIES 2016; SETTING FORTH CERTAIN PARAMETERS AND RESTRICTIONS WITH RESPECT TO THE FINANCING; AUTHORIZING OFFICIALS OF THE TOWN TO TAKE ALL ACTION NECESSARY TO CARRY OUT THE TRANSACTIONS CONTEMPLATED HERBY; RATIFYING ACTIONS PREVIOUSLY TAKEN; AND PROVIDING OTHER MATTERS RELATED THERETO (TOWN ATTORNEY ERIC HEIL) 4.3. CONSENT AGENDA 4.3.1. RESOLUTION NO. 16-01, RESOLUTION DESIGNATING THE LOCATIONS FOR POSTING THE NOTICES OF PUBLIC MEETINGS (TOWN CLERK DEBBIE HOPPE) 4.3.2. MINUTES FROM FEBRUARY 9, 2016 MEETING (TOWN CLERK DEBBIE HOPPE) 4.3.3. MINUTES FROM FEBRUARY 12, 2016 RETREAT (EXECUTIVE ASSISTANT TO THE TOWN MANAGER PRESTON NEILL) 5. WORK SESSION 5.1. REVIEW OF REPORT ON TOWN OF AVON SALES TAX ON BUILDING MATERIALS (TOWN MANAGER VIRGINIA EGGER, ASSISTANT TOWN MANAGER SCOTT WRIGHT, TOWN ATTORNEY ERIC HEIL) 6. WRITTEN REPORTS 6.1. MONTHLY FINANCIALS (BUDGET ANALYST KELLY HUITT) 6.2. GIFT REPORTING – 2016 WINTERWONDERGRASS VIP FESTIVAL PASSES (EXECUTIVE ASSISTANT TO THE TOWN MANAGER PRESTON NEILL) 7. COMMITTEE MEETING UPDATES: COUNCILORS AND MAYOR 7.1. ECRTA BOARD MEETING – MAYOR PRO TEM JAKE WOLF 8. MAYOR & COUNCIL COMMENTS TOWN OF AVON, COLORADO TOWN OF AVON MEETINGS FOR TUESDAY, FEBRUARY 23, 2016 REGULAR MEETING BEGINS AT 7:30 PM AVON TOWN HALL, ONE LAKE STREET _____________________________________________________________________________________ MEETING AGENDAS & PACKETS: HTTP://WWW.AVON.ORG AGENDAS ARE POSTED AT AVON TOWN HALL, RECREATION CENTER, & LIBRARY. Page 2 9. EXECUTIVE SESSION 9.1. EXECUTIVE SESSION FOR THE PURPOSE OF DETERMINING POSITIONS RELATIVE TO MATTERS THAT MAY BE SUBJECT TO NEGOTIATIONS, DEVELOPING STRATEGY FOR NEGOTIATIONS, AND/OR INSTRUCTING NEGOTIATORS, UNDER C.R.S. §24-6-402(2)(E) AS WELL AS A CONFERENCE WITH THE TOWN ATTORNEY FOR THE PURPOSE OF RECEIVING LEGAL ADVICE UNDER C.R.S. §24-6-402(2)(B) CONCERNING THE UPPER EAGLE RIVER WATER AUTHORITY. 10. ADJOURNMENT Heil Law & Planning, LLC Office: 303.975.6120 3445 S. Clermont St. Fax: 720.836.3337 Denver, CO 80222 E-Mail: eric@heillaw.com e-mail: ericheillaw@yahoo.com H EIL L AW TO: Honorable Mayor Fancher and Town Council members FROM: Eric J. Heil, Town Attorney RE: Referral of Ballot Question re: Certificate Participation Financing for the Police Station, Resolution No. 16-03 and Ordinance No. 16-02 DATE: February 18, 2016 SUMMARY: Resolution 16-03 is presented to Council which would refer a ballot question concerning financing for a police station to a special election on May 3, 2016 (“Ballot Question”). The proposed financing is through “certificates of participation” (“COP”) in a principal amount not to exceed $6.5 million. A companion Ordinance No. 16-02 is also presented which includes the authorization, terms and limitations of the COP financing. The Ballot Question seeks approval of Ordinance No. 16-02. Accompanying this memorandum is are memoranda from Justin Hildreth discussing the cost estimate for the police station and from Scott Wright discussing the financing terms for a bond issuance through COP financing. The referred Ballot Question for the police station financing is coordinated with the efforts of the Eagle River Fire Protection District (“ERFPD”) to refer its own ballot question to its regular special district election May 3, 2016. The ERFPD will seek voter approval for debt authorization and a supporting mill levy. The coordinated effort is the implementation of the Intergovernmental Agreement, dated April 28, 2015 (“IGA”), to construct a “Joint Public Safety Facility” on Lot 1B, Buck Creek Subdivision, on the north side of I-70 (adjacent to the medical office building under construction). Last year the ERFPD was able to sell Lot 1A and acquire Lot 1B which resulted in a reduction of the ERFPD’s outstanding debt on the property by approximately $1.4 million. As part of the IGA to pursue the construction of a Joint Public Safety Facility, the Town of Avon provided temporary financing to assist the ERFPD with the sale of Lot 1A and acquisition of Lot 1B. The IGA contemplates cost sharing to reduce the overall cost of a regional fire station and new police station by sharing the land costs and certain site improvements. The construction of a regional fire station to replace the existing Avon fire station was an identified goal of ERFPD since the Town joined the ERFPD and transferred all of Avon’s fire protection equipment and assets to ERFPD. The Town owns the existing fire station building in Avon and has leased the building to ERFPD at no cost since joining the district. The direct benefits to the Town of the new regional fire station are (1) moving the fire station to a better location for improved response time, (2) constructing a facility that can accommodate the ladder truck and thereby move it up from Cordillera to Avon, (3) constructing a larger regional facility that is planned to serve the community for the next 40-50 years, and (4) vacating the existing fire station owned by the Town so that the Town may reuse this property. The proposed police station is 10,419 sq.ft. and is sized to meet the needs of the Avon Police Department for the next 40-50 years. The size and configuration of the police station are based on upon programming analysis conducted during the initial design process and based upon a review of comparable police stations in peer communities. M EMORANDUM & PLANNING, LLC Avon Town Council Ballot Question re: Police Station Financing February 18, 2016 Page 2 of 4 The most current cost estimate for construction is $4,324,914. A 10% contingency, soft costs, land acquisition, architectural and engineering fees result in a total estimated Project cost of $6,248,112. (See Justin Hildreth’s memorandum for more information.) The costs of bond financing is approximately $150,000, which results in a total expected cost of $6,450,000. The referred Ballot Question and Ordinance No. 16-02 proposes a total principal amount of $6.5 Million based on the current total project cost estimates and the estimated financing costs. A public presentation and open forum for the proposed Joint Public Safety Facility is scheduled for February 23, 2016, in Town Council Chambers, immediately prior to the Avon Town Council meeting, which presentation will include additional detail on the Joint Public Safety Facility project. Additional public outreach meetings are scheduled for March 23, April 11 and April 27. In addition, a Town of Avon community meeting will be held on March 2, where the Facility will be one of the topics expected to be discussed. In order for the Joint Public Safety Facility project to proceed this summer, both the Town of Avon Ballot Question and Eagle River Fire Protection District ballot question must receive voter approval on May 3, 2016. Should one or both of the ballot issues fail, the ERFPD and the Town of Avon will meet to evaluate how to proceed thereafter. PROPOSED MOTIONS: “I move to approve Resolution No. 16-03 REFERRING A POLICE STATION BALLOT QUESTION TO A SPECIAL ELECTION.” “I move to approve Ordinance No. 16-02 AUTHORIZING THE FINANCING OF CERTAIN PUBLIC IMPROVEMENTS OF THE TOWN, AND IN CONNECTION THEREWITH AUTHORIZING THE LEASING OF CERTAIN TOWN PROPERTY AND THE EXECUTION AND DELIVERY BY THE TOWN OF A SITE LEASE, A LEASE PURCHASE AGREEMENT, A DISCLOSURE CERTIFICATE, A PRELIMINARY OFFICIAL STATEMENT AND OTHER DOCUMENTS AND MATTERS RELATING TO CERTAIN CERTIFICATES OF PARTICIPATION, SERIES 2016; SETTING FORTH CERTAIN PARAMETERS AND RESTRICTIONS WITH RESPECT TO THE FINANCING; AUTHORIZING OFFICIALS OF THE TOWN TO TAKE ALL ACTION NECESSARY TO CARRY OUT THE TRANSACTIONS CONTEMPLATED HEREBY; RATIFYING ACTIONS PREVIOUSLY TAKEN; AND PROVIDING OTHER MATTERS RELATED THERETO” REFERRED BALLOT QUESTION: The Avon Town Council is authorized by the Avon Home Rule Charter and by state statute to refer a ballot question to a special election. The Avon Town Council must take action to refer the Ballot Question at least 60 days prior to the election date (March 4 deadline for May 3, 2016 election). The Ballot Question would authorize Ordinance No. 16-02. If approved by the Avon voters, Ordinance No. 16-02 would be effective upon certification of the election results. Ordinance No. 16-02 is not subject to a citizen’s petition for referendum because it is referred to the Avon voters. The proposed Ballot Question is as follows: Police Station Financing Avon Town Council Ballot Question re: Police Station Financing February 18, 2016 Page 3 of 4 Without raising any taxes, shall Ordinance No. 16-02 be approved and shall the Avon Town Council thereby be authorized to use certificate of participation financing, with a principal amount not to exceed $6.5 million, to construct a new police station facility in accordance with the terms of Ordinance No. 16-02? Council has discretion to determine the Ballot Question language. The Ballot Question is not subject to the Tax Payers Bill of Rights (“TABOR”) and therefore is not required to follow the prescribed language for ballot questions set forth in TABOR. The proposed Ballot Question is worded to begin with the phrase “Without raising any taxes,” because the Ballot Question does not propose to raise any existing tax rates in the Town of Avon. The repayment of the COP financing would occur through existing revenues. The remainder of the Ballot Question includes approval of Ordinance No. 16-02 and authorization of COP financing for a new police station facility in a principal amount not to exceed $6.5 Million. CERTIFICATE OF PARTICPATION FINANCING AND TABOR: The ballot question seeks authorization for financing through the use of COP financing. COP financing is not a general obligation of the Town, a “constitutional debt” or a “multi-year fiscal obligation” and therefore is not subject to TABOR. COP financing uses an arrangement whereby the lending institution obtains a leasehold interest on the public property, then leases the public property back to the public entity for the duration of the bond repayment. The obligation of public entity to pay the annual lease payment is “subject to annual budget and appropriation”. In the event that the public entity does not appropriate and pay the annual lease payment, the lending institution has the right to “evict” the public entity, obtain possession of the public property, and re-let the property for the duration of the leasehold to obtain revenues to pay the remaining loan amount. COP financing is a common method of financing used by local governments throughout Colorado. The Town has used COP financing on multiple occasions (e.g. Transit Facility in 2010 and Street Improvements in 2014). The Town has never defaulted on COP financing payments. ORDINANCE NO. 16-02: Ordinance No. 16-02 was prepared by bond counsel for the Town of Avon. The Ordinance specifies that the location of the Police Station will be on Lot 1B, Buck Creek Subdivision, Avon, Colorado (adjacent to the medical office building under construction) IF the Eagle River Fire Protection District ballot question passes and if the Joint Public Safety Facility project proceeds this summer. If this does not occur, then Ordinance No. 16-02 would authorize the construction of a Police Station on other land owned or leased by the Town of Avon within the Town’s boundaries. Ordinance No. 16-02 also states that the use is for a Police Station or other lawful uses. The reference to other lawful uses is to accommodate requirements that lending institutions have to permit any lawful use during the term of the leasehold interest and repayment of the bonds. Under federal law there are many restrictions on the use of public facilities financed with tax exempt bonds. PLEASE NOTE that Ordinance No. 16-02 references a form of Lease Agreement, Site Lease, Trust Indenture and Continuing Disclosure Statement. Due to the volume of pages, these documents are provided on-line on the Town’s website and several hard copies will be provided to the public at the Council meeting. Hard copies will be provided to Council members on request. FAIR CAMPAIGN PRACTICES ACT: The Fair Campaign Practices Act establishes restrictions on Town to advocate for or against a referred ballot measure. Once the Ballot Question is referred to an election, Avon Town Council Ballot Question re: Police Station Financing February 18, 2016 Page 4 of 4 the Town may not spend more than $50 advocating for or against the passage of the ballot issue. The Town may provide a factual statement to the public provided that the factual statement is objective, does not advocate for or against the ballot issue, and includes arguments for and against the ballot issue. The relevant statutory authorization for a factual statement is reprinted as follows: CRS §1-45-117(1)(b) (I) Nothing in this subsection (1) shall be construed as prohibiting an agency, department, board, division, bureau, commission, or council of the state, or any political subdivision thereof from expending public moneys or making contributions to dispense a factual summary, which shall include arguments both for and against the proposal, on any issue of official concern before the electorate in the jurisdiction. Such summary shall not contain a conclusion or opinion in favor of or against any particular issue. As used herein, an issue of official concern shall be limited to issues that will appear on an election ballot in the jurisdiction. Thank you, Eric ATTACHMENTS: Memorandum from Justin Hildreth Memorandum from Scott Wright Resolution No. 16-03 Referring the Ballot Question to a May 3, 2016 Election Ordinance No. 16-02 Authorizing Certificate of Participation Financing for a Police Station Res 16-03 Referring a Police Station Ballot Question to a Special Election Page 1 of 2 RESOLUTION NO. 16-03 REFERRING A POLICE STATION BALLOT QUESTION TO A SPECIAL ELECTION WHEREAS, Section 3.2 of the Avon Home Rule Charter states that the Council may call a special municipal election by resolution; and WHEREAS, the Avon Town Council finds that the construction of an Avon Police Station through the use of certificates of participation will provide the best financing terms and lowest cost for the Avon Community; and WHEREAS, the Avon Town Council finds that the referral of a ballot question to the Avon voters will promote community involvement and input on significant capital expenditures for essential public facilities; and WHEREAS, the Avon Town Council has the right to refer any question on its own motion to a special election; and WHEREAS, the Avon Town Council has the right to determine the title and ballot question; and WHEREAS, Colorado Revised Statute §1-7.5-104 authorizes the governing board of a political subdivision other than a county to determine to conduct an election as a mail ballot election. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF AVON, COLORADO the following: Section 1. Special Election, Title and Ballot Question. A special election is hereby called to be held on Tuesday, May 3, 2016 for consideration of the following ballot question: Police Station Financing Without raising any taxes, shall Ordinance No. 16-02 be approved and shall the Avon Town Council thereby be authorized to use certificate of participation financing, with a principal amount not to exceed $6.5 million, to construct a new police station facility in accordance with the terms of Ordinance No. 16-02? YES____________ NO_____________ Section 2. Mail Ballot Election. Special election on May 3, 2016 shall be conducted as a mail ballot election. Res 16-03 Referring a Police Station Ballot Question to a Special Election Page 2 of 2 Section 3. Town Clerk. The Town Clerk is authorized and directed to take all actions as necessary and appropriate to conduct a mail ballot election on May 3, 2016, in accordance with the law. RESOLUTION INTRODUCED, READ, APPROVED AND ADOPTED ON FEBRUARY 23, 2016. By:____________________________ Attest:___________________________________ Jennie Fancher, Mayor Debbie Hoppe, Town Clerk TOWN COUNCIL REPORT To: Honorable Mayor Jennie Fancher and Avon Town Council From: Justin Hildreth, Town Engineer Virginia C. Egger, Town Manager Meeting Date: February 23, 2016 Agenda Topic: Cost Estimate for Joint Town of Avon Police and Eagle River Fire Protection District Public Safety Facility SUMMARY: The Town has been working on a Joint Public Safety Facility that includes the Town of Avon Police Station and Eagle River Fire Protection District (“ERFPD”) Regional Fire Station to be located at Lot 1B, Buck Creek Subdivision. Last fall, a schematic design for the police station portion of the facility included 19,099 SF building plus 2,173 SF in shared space. The design included 22 underground parking spaces, with a total construction price of $6,675,224, including all fees and contingency. The Council, during its November 10, 2015 meeting, voiced concerns about the size and cost of the project and directed staff to eliminate all the structure parking and reduce the scope of the project. To meet the objectives, other police stations were surveyed in mountain communities and the Breckenridge Police Station was found to be the most comparable having a current staff of 29. The Breckenridge station was constructed in 1996 and is 11,240 square feet. All vehicle parking is outdoors, with patrol cars provided canopy outdoor parking. A review of the Breckenridge space program met or exceeded all the programmatic needs identified for a new Avon Police Department. At Council’s December 8, 2015 meeting, Council approved a Police Station not to exceed 11,300 square feet with surface parking. The total estimated cost was $4,688,656, and was derived using the same $315.00 square foot cost estimate from the larger building. The Council also approved the continuation of the building’s revised schematic design in order to provide the best pricing prior to setting the ballot question to allow the use of Certificates of Participation. Upon receipt of the schematic design package, Evans Chaffee Construction Group (“ECCG”) solicited competitive bids from numerous qualified sub-contractors in each trade and completed pricing of the project on February 15, 2016. Exhibit 1 summarizes the construction cost for the entire Joint Public Safety Facility. Table 1 summarizes the pricing for The Town of Avon Police Station portion of construction costs. Table 1 shows that even though the square footage of the building has been further reduced by 881 square feet, the estimated cost, with surface parking, has increased by $707,000, with competitive pricing. The cost of the facility, with surface parking, however, still remains $1,300,000 less expensive than if developed with structured parking. Chris Evans reports the increase construction pricing is a result of actual competitive pricing versus an estimate based upon limited schematic plans; the high cost of retaining walls for the surface  Page 2 parking designated for the police station; and, the compaction of the police program into a smaller area. Staff has been in early discussion with Chris Evans to identify cost savings. Additional savings will be identified over the next six weeks and prior to the final Guaranteed Maximum Price being contracted. A 10% construction contingency is included in the project budget at this time to cover any cost adjustments as the plans are developed into final construction plans and for unforeseen circumstances encountered during construction such as poor soils or dewatering. Contingency can be released once the foundation and site work are completed since that contains the most risk. TABLE 1 Avon Police Station at Buck Creek Public Safety Facility Total Maximum Square Footage: 10,419 August 1, 2016 Ground Break Facility General Contractor Pricing – Jan 25, 2016 Schematic Design 10,419 SF 12/8/2015 Project Budget SF Schematic Design 11,300 SF Police Building & Parking $4,302,498 $3,669,342 Contingency at 10% $430,250 $355,950 Sub-total: Building & Parking Costs $4,732,748 $4,025,292 Soft Costs Estimate: Utility fees, dewatering, survey, signage, IT, moving, legal, FFE, etc.* $309,224 $309,224 Total Building & Parking Construction Costs $5,041,972 $4,334,516 Architectural & Engineering Fees; & GC Pricing for Redesign $354,140 $354,140 Total Construction Project Costs $5,396,112 $4,688,656 Land Acquisition Cost $852,000 $852,000 Total Estimated Project Costs $6,248,112 $5,540,656 SCHEDULE: Upon approval by Town Council of the ballot language at the February 23, 2016 meeting, the Davis Partnership Group will move forward with design development and preparation of final construction plans. The design development plans, which will be at approximately 2/3 completion of  Page 3 final construction plans, will be done by March 23rd and submitted to ECCG for another round of pricing with the sub-contractors. The design development pricing will be used to develop the Guaranteed Maximum Price (“GMP”) for the project and included in the ECCG Construction Contract. The construction plans will be completed on May 20th, 2016. Assuming the May 3rd election is successful; the contractor will then obtain the building permit and will mobilize around August 1, 2016. Construction can be completed and the building occupied by the end of 2017. Figure 1 – View from Swift Gulch Road  Page 4 Figure 2 – View looking southeast of the apparatus bay Figure 3 – View of public police station entrance on north side of building EXHIBIT A – ECCG Avon Public Safety Facility VE Pricing Recap Gross Cost Fire Police Previous Fire Police Shared GrossFire$3,163,799 $3,163,799 Level 1 9,192 9,224 868 19,284Police$1,940,142 $1,940,142 Level 2 7,985 3,646 11,631Shared$7,974,366 Level 3 6,877 1,464 8,341Fire55%$4,385,901 $4,385,901 Gross 16,069 17,209 5,978 39,256Police45%$3,588,465 $3,588,46550-50 Split $1,727,763Fire50%$863,882 $863,882Police50%$863,882 $863,882 Project Totals: $8,413,582 $6,392,488 $14,806,070Cost per SF (including 50% Shared): $441.47 $316.49 $377.17 Gross Cost Fire Police Current Fire Police Shared GrossFire$4,675,267 $4,675,267 Level 1 8,276 3,601 526 12,403Police$3,011,339 $3,011,339 Level 2 375 6,818 256 7,449Shared$1,465,514 Level 3 6,648 244 6,892Fire55%$806,033 $806,033 Gross 15,299 10,419 1,026 26,744Police45%$659,481 $659,48150-50 Split $1,308,188 Net Change:(770)(6,790)(4,952)(12,512)Fire 50%$654,094 $654,094 % Change:-4.8%-39.5%-82.8%-31.9%Police 50%$654,094 $654,094 Project Totals: $6,135,394 $4,324,914 $10,460,308 Includes $48,000 Irrigation Ditch WorkCost per SF (including 50% Shared): $388.02 $395.62 $391.13 $30,000 Thicker asphalt$314,418 3' Over-Ex per soils rptNet Change:($2,278,188)($2,067,574)($4,345,762)Total:$392,418% Change:-27.1%-32.3%-29.4% Square Footage Avon Public Safety Facility VE Pricing Recap 1 - Base Estimate Per Plans 1 - Base Estimate Per Plans Square Footage Previous Pricing Current Pricing EXHIBIT A TOWN COUNCIL REPORT To: Honorable Mayor Jennie Fancher and Avon Town Council From: Scott Wright, Asst. Town Manager Date: February 23, 2016 Topic: Ordinance No. 16-02 – Authorizing the Financing of Certain Public Improvements SUMMARY: This memorandum addresses the terms of the financing and the timetable regarding the bond issuance. The proposed funding source of Real Estate Transfer Taxes, and other sources of current taxes as may be appropriated, allows the Town to bond for the police station without raising taxes or increasing taxes. BONDING SCENARIOS: The flowing table identifies the differences between including or excluding the architectural and engineering fees, as well as the difference in term between a 15-year and a 20-year term financing. NOTE: “TIC” refers to Total Interest Costs, which includes all costs of the transaction, not just the stated interest rate (or coupon interest). CAPITAL PROJECTS FUND: On September 15, 2014, the final debt service payment was made on the bonds that were used to finance the Avon Recreation Center. The final debt service payment was $465,248. The amounts highlighted in yellow represent annual debt service payments that are within staff’s recommended limit of $450,000 to be paid for from real estate transfer taxes out of the Town Capital Projects Fund. This amount has previously been Projected Cost 2/12/2016 General Contractor Pricing - Super SD Design (Includes Architectural and Engineering Fees) Projected Cost 2/12/2016 General Contractor Pricing - Super SD Design (Excludes Architectural and Engineering Fees) TOTAL COST - BOND PROCEEDS $6,425,000 $6,065,000 DEBT SERVICE DEBT SERVICE TIC DEBT SERVICE TIC 20 YEARS 413,224 2.60%390,104 2.60% COP (average interest rate)2.547%2.548% 15 YEARS 505,297 2.23%477,018 2.23% COP (average interest rate)2.147%2.147% DEBT SERVICE PUBLIC SAFETY FACILITY - AVON POLICE DEPARTMENT UPDATED FEBRUARY 12, 2016 approved in the Town’s 5-year long-range CIP plan. To be clear, Certificates of Participation do not increase any current Town tax or require that a new tax be approved. The appropriation will be planned as an expense of the Capital Projects Fund, which receives its monies from real estate transfer taxes, however, the bonds can be paid from any and all Town revenues. ARCHITECTUAL AND ENGINEERING FEES: It is common in these types of projects to include architectural and engineering fees in the financing in order to reimburse the Town for these out-of-pocket costs. These fees are currently budgeted in the Capital Projects Fund because of the necessity of planning and designing the project prior to the election and issuance of the bonds. Because of the low interest rate environment, staff is recommending that these fees be included in the financing. BOND PARAMETERS AND ELECTION QUESTION: Attached as an Exhibit to this memo is a schedule of Sources and Uses of the proposed Certificates of Participation financing. The bond issuance is subject to a successful election and therefore will not close for several months. The parameters of the financing are included in Section 4 of Ordinance No. 16-02. The parameters allow for a small degree of adjustment in the event that financing conditions change over the next four months. The table below compares the parameters under current financing compared to proposed parameters that are recommended in Ordinance No. 16-02 to allow for changes in financial conditions in the next four months. COP Financing based on Current Rates and Bond Insurance COP Financing Parameters Included in Bond Ordinance Aggregate Principal Amount $6,425,000 $6,500,000 Maximum Annual Repayment Amount $415, 791.50 $450,000 Total Repayment Cost $8,311,464.83 $8,450,000 Maximum Net Effective Interest Rate 2.76% 3.50% TIMETABLE (EXHIBIT B): Attached is a timetable of events for the issuance of the Certificates of Participation. The table shows the process beginning right after a successful election and concluding with a closing and delivery of bond proceeds on July 1, 2016. Exhibits: A – Sources and Uses of Funds B – Draft Timetable for COP Issuance Page 1 SOURCES AND USES OF FUNDS Town of Avon, Colorado Certificates of Participation, Series 2016***************************************************** Police Facility - Scenario 1 - Including architectural and engineering fees*****************************************************Preliminary Rates as of February 18, 2015 (20-years/AAA +50 bps) Dated Date 08/01/2016Delivery Date 08/01/2016 Sources: Bond Proceeds: Par Amount 6,425,000.00 6,425,000.00 Uses: Project Fund Deposits:Project Fund 6,272,769.00 Cost of Issuance:Other Cost of Issuance 70,000.00 Delivery Date Expenses:Underwriter's Discount 51,400.00Bond Insurance 29,090.13 80,490.13 Other Uses of Funds: Additional Proceeds 1,740.87 6,425,000.00 Page 2 BOND PRICING Town of Avon, Colorado Certificates of Participation, Series 2016***************************************************** Police Facility - Scenario 1 - Including architectural and engineering fees*****************************************************Preliminary Rates as of February 18, 2015 (20-years/AAA +50 bps) MaturityBond Component Date Amount Rate Yield Price Serial Bond:12/01/2017 270,000 0.880% 0.880% 100.000 12/01/2018 275,000 1.020% 1.020% 100.00012/01/2019 280,000 1.130% 1.130% 100.000 12/01/2020 280,000 1.230% 1.230% 100.00012/01/2021 285,000 1.330% 1.330% 100.00012/01/2022 290,000 1.510% 1.510% 100.000 12/01/2023 290,000 1.700% 1.700% 100.00012/01/2024 295,000 1.880% 1.880% 100.000 12/01/2025 305,000 2.030% 2.030% 100.00012/01/2026 310,000 2.160% 2.160% 100.000 12/01/2027 315,000 2.280% 2.280% 100.00012/01/2028 325,000 2.370% 2.370% 100.00012/01/2029 330,000 2.470% 2.470% 100.000 12/01/2030 340,000 2.570% 2.570% 100.00012/01/2031 345,000 2.660% 2.660% 100.000 4,535,000 Term Bond:12/01/2032 355,000 3.000% 3.000% 100.000 12/01/2033 365,000 3.000% 3.000% 100.00012/01/2034 380,000 3.000% 3.000% 100.00012/01/2035 390,000 3.000% 3.000% 100.000 12/01/2036 400,000 3.000% 3.000% 100.0001,890,000 6,425,000 Dated Date 08/01/2016Delivery Date 08/01/2016First Coupon 12/01/2016 Par Amount 6,425,000.00 Original Issue Discount Production 6,425,000.00 100.000000%Underwriter's Discount -51,400.00 -0.800000% Purchase Price 6,373,600.00 99.200000%Accrued Interest Net Proceeds 6,373,600.00 Page 3 BOND DEBT SERVICE Town of Avon, Colorado Certificates of Participation, Series 2016***************************************************** Police Facility - Scenario 1 - Including architectural and engineering fees*****************************************************Preliminary Rates as of February 18, 2015 (20-years/AAA +50 bps) PeriodEnding Principal Coupon Interest Debt Service 12/01/2016 46,990.83 46,990.8312/01/2017 270,000 0.880% 140,972.50 410,972.50 12/01/2018 275,000 1.020% 138,596.50 413,596.5012/01/2019 280,000 1.130% 135,791.50 415,791.50 12/01/2020 280,000 1.230% 132,627.50 412,627.5012/01/2021 285,000 1.330% 129,183.50 414,183.5012/01/2022 290,000 1.510% 125,393.00 415,393.00 12/01/2023 290,000 1.700% 121,014.00 411,014.0012/01/2024 295,000 1.880% 116,084.00 411,084.00 12/01/2025 305,000 2.030% 110,538.00 415,538.0012/01/2026 310,000 2.160% 104,346.50 414,346.50 12/01/2027 315,000 2.280% 97,650.50 412,650.5012/01/2028 325,000 2.370% 90,468.50 415,468.5012/01/2029 330,000 2.470% 82,766.00 412,766.00 12/01/2030 340,000 2.570% 74,615.00 414,615.0012/01/2031 345,000 2.660% 65,877.00 410,877.00 12/01/2032 355,000 3.000% 56,700.00 411,700.0012/01/2033 365,000 3.000% 46,050.00 411,050.0012/01/2034 380,000 3.000% 35,100.00 415,100.00 12/01/2035 390,000 3.000% 23,700.00 413,700.0012/01/2036 400,000 3.000% 12,000.00 412,000.00 6,425,000 1,886,464.83 8,311,464.83 Page 4 BOND SUMMARY STATISTICS Town of Avon, Colorado Certificates of Participation, Series 2016***************************************************** Police Facility - Scenario 1 - Including architectural and engineering fees*****************************************************Preliminary Rates as of February 18, 2015 (20-years/AAA +50 bps) Dated Date 08/01/2016Delivery Date 08/01/2016Last Maturity 12/01/2036 Arbitrage Yield 2.563606% True Interest Cost (TIC) 2.599542%Net Interest Cost (NIC) 2.617086% All-In TIC 2.761305%Average Coupon 2.547670% Average Life (years) 11.525Duration of Issue (years) 9.843 Par Amount 6,425,000.00 Bond Proceeds 6,425,000.00Total Interest 1,886,464.83Net Interest 1,937,864.83 Total Debt Service 8,311,464.83Maximum Annual Debt Service 415,791.50 Average Annual Debt Service 408,760.57 Underwriter's Fees (per $1000) Average Takedown Other Fee 8.000000 Total Underwriter's Discount 8.000000 Bid Price 99.200000 Par Average Average PV of 1 bp Bond Component Value Price Coupon Life change Serial Bond 4,535,000.00 100.000 2.147% 8.662 3,465.50Term Bond 1,890,000.00 100.000 3.000% 18.394 2,853.90 6,425,000.00 11.525 6,319.40 All-In ArbitrageTIC TIC Yield Par Value 6,425,000.00 6,425,000.00 6,425,000.00 + Accrued Interest + Premium (Discount) - Underwriter's Discount -51,400.00 -51,400.00 - Cost of Issuance Expense -70,000.00 - Other Amounts -29,090.13 -29,090.13 Target Value 6,373,600.00 6,274,509.87 6,395,909.87 Target Date 08/01/2016 08/01/2016 08/01/2016Yield 2.599542% 2.761305% 2.563606% *Subject to Change EXHIBIT B Draft Timetable for COP Issuance $__________* Town of Avon, Colorado Certificates of Participation, Series 2016 Draft Timetable of Events As of January 19, 2016 May-16 Jun-16 Jul-16 S M T W T F S S M T W T F S S M T W T F S 1 2 3 4 5 6 7 1 2 3 4 1 2 8 9 10 11 12 13 14 5 6 7 8 9 10 11 3 4 5 6 7 8 9 15 16 17 18 19 20 21 12 13 14 15 16 17 18 10 11 12 13 14 15 16 22 23 24 25 26 27 28 19 20 21 22 23 24 25 17 18 19 20 21 22 23 29 30 31 26 27 28 29 30 24 25 26 27 28 29 30 31 DATE EVENT RESPONSIBLE PARTY 5/3/16 Election A 5/4/16 Kick-off/begin drafting legal documents ALL 5/9/16 Send around first draft of legal documents BC 5/11/16 First reading of POS/document review session ALL 5/16/16 Comments on first draft of POS due to BC ALL 5/19/16 Second document review session ALL 5/23/16 Complete Legal and Offering Document Preparation BC 5/25/16 Send Rating Agencies and Insurance Providers Information U 5/31/16 • Rating Calls • Packets Due for Second Reading A/U A 6/8/16 • Receive Ratings • Public Hearing, Second Reading of Ordinances • Received bids back from rating agencies U A 6/15/16 Post POS BC 6/22/16 • Price Certificates of Participation • Continued Public Hearing/Second Reading (if necessary) A 6/27/16 Post Final Official Statement BC 6/30/16 Pre-Closing (30 Days after Final Readying for Referendum) All 7/1/16 Closing and Delivery of Proceeds All A = Town of Avon BC = Bond Counsel (Butler Snow) U = Underwriter (Piper Jaffray) COVER MEMOS ARE FOUND WITH AGENDA ITEM 4.1 ORDINANCE NO. 16-02 FOLLOWS THIS NOTE Ord. 16-02 Police Station COP First Reading: Feb. 23, 2016 Page 1 of 12 TOWN OF AVON, COLORADO ORDINANCE NO. 16-02 AUTHORIZING THE FINANCING OF CERTAIN PUBLIC IMPROVEMENTS OF THE TOWN, AND IN CONNECTION THEREWITH AUTHORIZING THE LEASING OF CERTAIN TOWN PROPERTY AND THE EXECUTION AND DELIVERY BY THE TOWN OF A SITE LEASE, A LEASE PURCHASE AGREEMENT, A DISCLOSURE CERTIFICATE, A PRELIMINARY OFFICIAL STATEMENT AND OTHER DOCUMENTS AND MATTERS RELATING TO CERTAIN CERTIFICATES OF PARTICIPATION, SERIES 2016; SETTING FORTH CERTAIN PARAMETERS AND RESTRICTIONS WITH RESPECT TO THE FINANCING; AUTHORIZING OFFICIALS OF THE TOWN TO TAKE ALL ACTION NECESSARY TO CARRY OUT THE TRANSACTIONS CONTEMPLATED HEREBY; RATIFYING ACTIONS PREVIOUSLY TAKEN; AND PROVIDING OTHER MATTERS RELATED THERETO. WHEREAS, the Town of Avon, Eagle County, Colorado (the “Town”) is a duly organized and existing home rule municipality of the State of Colorado, created and operating pursuant to Article XX of the Constitution of the State of Colorado and the home rule charter of the Town (the “Charter”); and WHEREAS, pursuant to Chapter XIV of the Charter, the Town is authorized to enter into one or more leases or lease-purchase agreements for land, buildings, equipment and other property for governmental or proprietary purposes; and WHEREAS, the Town is authorized by Article XX, Section 6 of the Colorado Constitution, its Charter, and part 8 of Article 15 of title 31, Colorado Revised Statutes (“C.R.S.”), to enter into rental or leasehold agreements in order to provide necessary land, buildings, equipment and other property for governmental or proprietary purposes; and WHEREAS, for the functions or operation of the Town, it is necessary that the Town finance the construction of buildings and improvements for a police station facility (“Police Station”) and the acquisition of real property if needed, as authorized by law, for police operations and other lawful Town purposes (collectively, the “Project”); and WHEREAS, the Town owns, or will own, in fee title, the Site and the premises, buildings and improvements located thereon (the “Leased Property”), as further described in the Site Lease and the Lease (hereinafter defined); and WHEREAS, the Town Council of the Town (the “Town Council”) has determined, and now hereby determines, that it is in the best interest of the Town and its inhabitants that the Town lease the Leased Property to UMB Bank, n.a., as trustee under the Indenture (the “Trustee”) pursuant to a Site Lease between the Town, as lessor, and the Trustee, as lessee (the “Site Lease”), and lease back the Trustee’s interest in the Leased Property pursuant to the terms of a Ord. 16-02 Police Station COP First Reading: Feb. 23, 2016 Page 2 of 12 Lease Purchase Agreement (the “Lease”) between the Trustee, as lessor, and the Town, as lessee; and WHEREAS, pursuant to the Lease, and subject to the right of the Town to terminate the Lease and other limitations as therein provided, the Town will pay certain Base Rentals and Additional Rentals (as such terms are defined in the Lease) in consideration for the right of the Town to use the Leased Property; and WHEREAS, the Town’s obligation under the Lease to pay Base Rentals and Additional Rentals shall be from year to year only; shall constitute currently budgeted expenditures of the Town; shall not constitute a mandatory charge or requirement in any ensuing budget year; and shall not constitute a general obligation or other indebtedness or multiple fiscal year financial obligation of the Town within the meaning of any constitutional, charter, statutory limitation or requirement concerning the creation of indebtedness or multiple fiscal year financial obligation, nor a mandatory payment obligation of the Town in any ensuing fiscal year beyond any fiscal year during which the Lease shall be in effect; and WHEREAS, the Trustee will enter into an Indenture of Trust (the “Indenture”) pursuant to which there is expected to be executed and delivered certain certificates of participation (the “Certificates”) dated as of their date of delivery that shall evidence proportionate interests in the right to receive certain Revenues (as defined in the Lease), shall be payable solely from the sources therein provided and shall not directly or indirectly obligate the Town to make any payments beyond those appropriated for any fiscal year during which the Lease shall be in effect; and WHEREAS, the net proceeds of the Certificates are expected to be used to finance the Project; and WHEREAS, there has also been presented to this meeting of the Town Council the form of Continuing Disclosure Certificate (the “Continuing Disclosure Certificate”); and WHEREAS, there will be executed and distributed in connection with the sale of the Certificates an Official Statement (the “Official Statement”) in substantially the form of the Preliminary Official Statement (the “Preliminary Official Statement”) relating to the Certificates as approved by the Finance Director of the Town; and WHEREAS, Section 11-57-204 of the Supplemental Public Securities Act, constituting Title 11, Article 57, Part 2, Colorado Revised Statutes, as amended (the “Supplemental Act”), provides that a public entity, including the Town, may elect in an act of issuance to apply all or any of the provisions of the Supplemental Act; and WHEREAS, there has been presented to the Town Council and are on file at the Town offices the following: (i) the proposed form of the Site Lease; (ii) the proposed form of the Lease; and (iii) the proposed form of the Continuing Disclosure Certificate to be provided by the Town (the “Disclosure Certificate”); and Ord. 16-02 Police Station COP First Reading: Feb. 23, 2016 Page 3 of 12 WHEREAS, capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Lease; and WHEREAS, approval of this Ordinance on First Reading is intended only to confirm the Town Council desires to comply with the requirements of the Avon Home Rule Charter by setting a Public Hearing in order to provide the public an opportunity to present testimony and evidence regarding the application, and that approval of this Ordinance on First Reading does not constitute a representation that the Town Council, or any member of the Town Council, supports, approves, rejects, or denies this Ordinance. NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF AVON, COLORADO the following: Section 1. Short Title. This ordinance shall be known and may be cited by the short title “2016 COP Ordinance.” Section 2. Recitals Incorporated. The above and foregoing recitals are incorporated herein by reference and adopted as findings and determinations of the Town Council. Section 3. Location. The location of the Police Station shall be on a portion of Lot 1B, Buck Creek Subdivision, Avon, CO, (“Lot 1B Property”) if (1) the ballot question referred by the Eagle River Fire Protection District for financing of a regional fire station on the Lot 1B Property passes (“ERFPD Ballot Question”) and (2) the Eagle River Fire Protection District proceeds to construct its portion of the “Joint Facility” as described in the Intergovernmental Agreement for a Joint Fire-Police Station Facility between the Town of Avon and the Eagle River Fire Protection District, dated April 28, 2015 (“IGA”). If either the ERFPD Ballot Question does not pass or ERFPD does not proceed to construct its portion of Joint Facility in accordance with the IGA, then the Police Station may be constructed on any land owned or leased by the Town within the municipal boundaries of the Town of Avon. Section 4. Use. The Police Station constructed with the certificate of participation financing authorized by this 2016 COP Ordinance may be used as a Town of Avon police station or any other lawful purpose. Section 5. Ratification and Approval of Prior Actions. All action heretofore taken (not inconsistent with the provisions of this Ordinance) by the Town Council or the officers, agents or employees of the Town Council or the Town relating to the Site Lease, the Lease, the acquisition, construction, installation or improvement of the Project, and the execution and delivery of the Certificates is hereby ratified, approved and confirmed. Section 6. Finding of Best Interests. The Town Council hereby finds and determines, pursuant to the Constitution, the laws of the State of Colorado and the Charter, that the acquisition, construction, and installation of the Project, and the financing of the costs thereof pursuant to the terms set forth in the Site Lease and the Lease are necessary, convenient, and in furtherance of the Town’s purposes and are in the best interests of the inhabitants of the Town and the Town Council hereby authorizes and approves the same. Ord. 16-02 Police Station COP First Reading: Feb. 23, 2016 Page 4 of 12 Section 7. Supplemental Act; Parameters. The Town Council hereby elects to apply all of the provisions of the Supplemental Act to the Site Lease and the Lease and in connection therewith delegates to each of the Mayor, the Town Manager or the Finance Director the authority to make any determination delegable pursuant to §11-57-205(1)(a-i) of the Colorado Revised Statutes, as amended, in relation to the Site Lease and the Lease, and to execute a sale certificate (the “Sale Certificate”) setting forth such determinations, including without limitation, the term of the Site Lease, the rental amount to be paid by the Trustee pursuant to the Site Lease, the term of the Lease, and the rental amount to be paid by the Town pursuant to the Lease, subject to the following parameters and restrictions: (a) the term of the Site Lease shall not extend beyond 40 years; (b) the aggregate principal amount of the Base Rentals payable by the Town pursuant to the Lease shall not exceed $6,500,000; (c) the Lease Term shall not extend beyond 30 years; (d) the maximum annual repayment cost of the Base Rentals under the Lease shall not exceed $450,000, and the total repayment cost shall not exceed $8,450,000; and (e) the maximum net effective interest rate on the interest component of the Base Rentals relating to the 2016 Certificates shall not exceed 3.50%. Pursuant to §11-57-205 of the Supplemental Act, the Town Council hereby delegates to each of the Mayor, the Town Manager or the Finance Director the authority to sign a contract for the purchase of the Certificates or to accept a binding bid for the Certificates and to execute any agreement or agreements in connection therewith. In addition, each of the Mayor, the Town Manager or the Finance Director is hereby authorized to determine if obtaining an insurance policy for all or a portion of the Certificates is in the best interests of the Town, and if so, to select an insurer to issue an insurance policy, execute a commitment relating to the same and execute any related documents or agreements required by such commitment. Each of the Mayor, the Town Manager or the Finance Director is also hereby authorized to determine if obtaining a reserve fund insurance policy for the Certificates is in the best interests of the Town, and if so, to select a surety provider to issue a reserve fund insurance policy and execute any related documents or agreements required by such commitment. The Town Council hereby agrees and acknowledges that the proceeds of the Certificates will be used to finance the costs of the Project and to pay other costs of issuance. Section 8. Approval of Documents. The Site Lease, the Lease, and the Disclosure Certificate, in substantially the forms presented to the Town Council and on file with the Town, are in all respects approved, authorized and confirmed, and the Mayor or Mayor Pro Tem of the Town is hereby authorized and directed for and on behalf of the Town to execute and deliver the Site Lease, the Lease, and the Disclosure Certificate in substantially the forms and with substantially the same contents as presented to the Town Council, provided that such documents may be completed, corrected or revised as deemed necessary by the parties thereto in order to carry out the purposes of this Ordinance. Ord. 16-02 Police Station COP First Reading: Feb. 23, 2016 Page 5 of 12 Section 9. Approval of Official Statement. A Preliminary Official Statement and a final Official Statement, in substantially the form of the Official Statement relating to the 2010 Certificates of Participation, which such updates and revisions as hereafter approved by the Mayor, the Town Manager or the Finance Director, and as hereafter presented to the Town Council and on file with the Town, is in all respects approved and authorized. The Mayor is hereby authorized and directed, for and on behalf of the Town, to execute and deliver the final Official Statement in substantially the form and with substantially the same content as the Preliminary Official Statement, with such changes as may be approved by the Town Manager or the Finance Director. The distribution of the Preliminary Official Statement and the final Official Statement to all interested persons in connection with the sale of the Certificates is hereby ratified, approved and authorized. Section 10. Authorization to Execute Collateral Documents. No provision of this ordinance, the Site Lease, the Lease, the Indenture, or the Certificates, shall be construed as creating or constituting a general obligation or other indebtedness or multiple fiscal year financial obligation of the Town within the meaning of any constitutional, statutory or home rule charter provision, nor a mandatory charge or requirement against the Town in any ensuing fiscal year beyond the then current fiscal year. The Town shall have no obligation to make any payment with respect to the Certificates except in connection with the payment of the Base Rentals (as defined in the Lease) and certain other payments under the Lease, which payments may be terminated by the Town in accordance with the provisions of the Lease. Neither the Lease nor the Certificates shall constitute a mandatory charge or requirement of the Town in any ensuing fiscal year beyond the then current fiscal year or constitute or give rise to a general obligation or other indebtedness or multiple fiscal year financial obligation of the Town within the meaning of any constitutional, statutory or Charter debt limitation and shall not constitute a multiple fiscal year direct or indirect debt or other financial obligation whatsoever. No provision of the Site Lease, the Lease or the Certificates shall be construed or interpreted as creating an unlawful delegation of governmental powers nor as a donation by or a lending of the credit of the Town within the meaning of Sections 1 or 2 of Article XI of the Colorado Constitution. Neither the Lease nor the Certificates shall directly or indirectly obligate the Town to make any payments beyond those budgeted and appropriated for the Town’s then current fiscal year. Section 11. No General Obligation Debt. No provision of this Ordinance, the Site Lease, the Lease, the Indenture, the Certificates, the Preliminary Official Statement, or the final Official Statement shall be construed as creating or constituting a general obligation or other indebtedness or multiple fiscal year financial obligation of the Town within the meaning of any constitutional, statutory or Charter provision, nor a mandatory charge or requirement against the Town in any ensuing fiscal year beyond the then current fiscal year. The Town shall have no obligation to make any payment with respect to the Certificates except in connection with the payment of the Base Rentals (as defined in the Lease) and certain other payments under the Lease, which payments may be terminated by the Town in accordance with the provisions of the Lease. Neither the Lease nor the Certificates shall constitute a mandatory charge or requirement of the Town in any ensuing fiscal year beyond the then current fiscal year or constitute or give rise to a general obligation or other indebtedness or multiple fiscal year financial obligation of the Town within the meaning of any constitutional, statutory or Charter debt limitation and shall not constitute a multiple fiscal year direct or indirect debt or other financial obligation Ord. 16-02 Police Station COP First Reading: Feb. 23, 2016 Page 6 of 12 whatsoever. No provision of the Site Lease, the Lease or the Certificates shall be construed or interpreted as creating an unlawful delegation of governmental powers nor as a donation by or a lending of the credit of the Town within the meaning of Sections 1 or 2 of Article XI of the Colorado Constitution. Neither the Lease nor the Certificates shall directly or indirectly obligate the Town to make any payments beyond those budgeted and appropriated for the Town’s then current fiscal year. Section 12. Reasonableness of Rentals. The Town Council hereby determines and declares that the Base Rentals due under the Lease, in the maximum amounts authorized pursuant to Section 3 hereof, constitute the fair rental value of the Leased Property and do not exceed a reasonable amount so as to place the Town under an economic compulsion to renew the Lease or to exercise its option to purchase the Trustee’s leasehold interest in the Leased Property pursuant to the Lease. The Town Council hereby determines and declares that the period during which the Town has an option to purchase the Trustee’s leasehold interest in the Leased Property (i.e., the entire maximum term of the Lease) does not exceed the useful life of the Leased Property. The Town Council hereby further determines that the amount of rental payments to be received by the Town from the Trustee pursuant to the Site Lease is reasonable consideration for the leasing of the Leased Property to the Trustee for the term of the Site Lease as provided therein. Section 13. No Recourse against Officers and Agents. Pursuant to §11-57-209 of the Supplemental Act, if a member of the Town Council, or any officer or agent of the Town acts in good faith, no civil recourse shall be available against such member, officer, or agent for payment of the principal, interest or prior redemption premiums on the Certificates. Such recourse shall not be available either directly or indirectly through the Town Council or the Town, or otherwise, whether by virtue of any constitution, statute, rule of law, enforcement of penalty, or otherwise. By the acceptance of the Certificates and as a part of the consideration of their sale or purchase, any person purchasing or selling such Certificate specifically waives any such recourse. Section 14. Repealer. All bylaws, orders, resolutions and ordinances, or parts thereof, inconsistent herewith are hereby repealed to the extent only of such inconsistency. This repealer shall not be construed to revise any bylaw, order, resolution or ordinance, or part thereof, heretofore repealed. Section 15. Severability. If any provision of this Ordinance, or the application of such provision to any person or circumstance, is for any reason held to be invalid, such invalidity shall not affect other provisions or applications of this Ordinance which can be given effect without the invalid provision or application, and to this end the provisions of this Ordinance are declared to be severable. The Town Council hereby declares that it would have passed this Ordinance and each provision thereof, even though any one of the provisions might be declared unconstitutional or invalid. As used in this Section, the term “provision” means and includes any part, division, subdivision, section, subsection, sentence, clause or phrase; the term “application” means and includes an application of an ordinance or any part thereof, whether considered or construed alone or together with another ordinance or ordinances, or part thereof, of the Town. Ord. 16-02 Police Station COP First Reading: Feb. 23, 2016 Page 7 of 12 Section 16. Interpretation. This Ordinance shall be so interpreted and construed as to effectuate its general purpose. Section 17. Charter Controls. Pursuant to Article XX of the State Constitution and the Charter, all State statutes that might otherwise apply in connection with the provisions of this Ordinance are hereby superseded to the extent of any inconsistencies or conflicts between the provisions of this Ordinance and the Sale Certificate authorized hereby and such statutes. Any such inconsistency or conflict is intended by the Town Council and shall be deemed made pursuant to the authority of Article XX of the State Constitution and the Charter. Section 18. Effective Date, Recording, and Authentication. This Ordinance shall be effective only in the event that it is approved by the voters of the Town at a May 3, 2016, special election. This Ordinance shall be numbered and recorded in the official records of the Town kept for that purpose, and shall be authenticated by the signatures of the Mayor and Mayor Pro- Tem and Town Clerk, and published in accordance with law. Section 19. Safety Clause. The Town Council hereby finds, determines and declares that this Ordinance is promulgated under the general police power of the Town, that it is promulgated for the health, safety and welfare of the public, and that this Ordinance is necessary for the preservation of health and safety and for the protection of public convenience and welfare. The Town Council further determines that the Ordinance bears a rational relation to the proper legislative object sought to be obtained. Section 20. Publication. The Town Clerk is ordered to publish this Ordinance in accordance with Chapter 1.16 of the Avon Municipal Code. INTRODUCED AND ADOPTED ON FIRST READING AND REFERRED TO PUBLIC HEARING on February 23, 2016 and setting such public hearing for March 8, 2016 at the Council Chambers of the Avon Municipal Building, located at One Lake Street, Avon, Colorado. BY: ATTEST: ____________________________ ____________________________ Jennie Fancher, Mayor Debbie Hoppe, Town Clerk ADOPTED ON SECOND AND FINAL READING on March 8, 2016. BY: ATTEST: ____________________________ ____________________________ Jennie Fancher, Mayor Debbie Hoppe, Town Clerk APPROVED AS TO FORM: ____________________________ Ord. 16-02 Police Station COP First Reading: Feb. 23, 2016 Page 8 of 12 Eric J. Heil, Town Attorney Ord. 16-02 Police Station COP First Reading: Feb. 23, 2016 Page 1 of 12 STATE OF COLORADO ) ) COUNTY OF EAGLE ) SS. ) TOWN OF AVON ) I, Debbie Hoppe, the Town Clerk of the Town of Avon, Colorado (the “Town”), do hereby certify: I, the duly elected, qualified, and acting Town Clerk of the Town of Avon, Colorado (the “Town”), do hereby certify that: (1) The foregoing pages are a true, correct and complete copy of an ordinance (the “Ordinance”) that was introduced, approved on first reading and ordered published in full in accordance with the Town Charter (the “Charter”) by the Town Council at a regular meeting thereof held on February 23, 2016, and was introduced, approved on second and final reading, and ordered published in full in accordance with the Charter on March 8, 2016, which Ordinance has not been revoked, rescinded or repealed and is in full force and effect on the date hereof. (2) The Ordinance was duly moved and seconded, and the Ordinance was approved on first reading, at the meeting of February 23, 2016, by an affirmative vote of a majority of the membership of the entire Town Council as follows: Councilmember Voting “Yes” Voting “No” Absent Abstaining Jennie Fancher Jake Wolf Megan Burch Matt Gennett Sarah Smith Hymes Scott Prince Buz Reynolds (3) The Ordinance was duly moved and seconded, and the Ordinance was approved on second and final reading, at the meeting of March 8, 2016, by an affirmative vote of a majority of the membership of the entire Town Council as follows: Councilmember Voting “Yes” Voting “No” Absent Abstaining Jennie Fancher Jake Wolf Megan Burch Matt Gennett Sarah Smith Hymes Scott Prince Buz Reynolds Ord. 16-02 Police Station COP First Reading: Feb. 23, 2016 Page 2 of 12 (4) The members of the Town Council were present at such meetings and voted on the passage of such Ordinance as set forth above. (5) The Ordinance was authenticated by the signature of the Mayor, sealed with the Town seal, attested by the Town Clerk, and recorded in the minutes of the Town Council. (6) There are no bylaws, rules or regulations of the Town Council that might prohibit the adoption of the Ordinance. (7) Notices of the meetings of February 23, 2016, and March 8, 2016, in the forms attached hereto as Exhibit A were posted at the Town Hall not less than 24 hours prior to each meeting in accordance with law. (8) On ________, 2016, and ________, 2016, the Ordinance was published by title only in the Vail Daily, a newspaper of general circulation in the Town, in accordance with the Charter and Chapter 1.16 of the Avon Municipal Code. Affidavits of publication are attached hereto as Exhibit B. WITNESS my hand and the seal of the Town affixed on _______________, 2016. [ S E A L ] _______________________________________ Town Clerk A-1 EXHIBIT A (Attach Notices of Meetings of February 23, 2016 and March 8, 2016) B-1 EXHIBIT B (Affidavits of Publication) TOWN COUNCIL REPORT To: Honorable Mayor Jennie Fancher and Avon Town Council From: Debbie Hoppe, Town Clerk Meeting Date: February 23, 2016 Agenda Topic: Resolution No. 16-01 Designating Locations for Posting Notices of Public Meetings C.R.S. Section 24-6-402(2)(c) requires that a municipality’s posting places must be designated at the first regular meeting of the calendar year as part of Colorado’s “Open Meetings Law”. Resolution No. 16-01 is presented to satisfy this requirement whereby it identifies three public locations used for posting notices of Avon’s public meetings in addition to the Town’s website. PROPOSED MOTION “Move to approve Resolution No. 16-01 Designating Locations for Posting Notices of Public Meetings.” TOWN OF AVON, COLORADO RESOLUTION NO. 16-01 RESOLUTION DESIGNATING THE LOCATIONS FOR POSTING THE NOTICES OF PUBLIC MEETINGS Whereas, Local Public Bodies, including the Avon Town Council, are required by Subsection 24-6-402 (2)(c) C.R.S., to designate annually at the Town Council’s first regular meeting of each calendar year, the place at which notice will be posted at least 24 hours prior to each meeting. NOW, THEREFORE BE IT RESOLVED BY THE AVON TOWN COUNCIL AS FOLLOWS: Notice of meetings of the Town Council required pursuant to Section 24-6-401, et seq., C.R.S. shall be posted within the boundaries of the Town at least 24 hours prior to each meeting at the following locations: Avon Town Hall, One Lake Street Avon Recreation Center, 90 Lake Street, Avon Public Library, 200 Benchmark Road Town of Avon website @ www.avon.org ADOPTED THIS 23RD DAY OF FEBRUARY 2016. TOWN COUNCIL TOWN OF AVON, COLORADO _________________________ Jennie Fancher, Mayor Attest: ___________________________________ Debbie Hoppe, Town Clerk TOWN OF AVON, COLORADO AVON MEETING MINUTES FOR TUESDAY, FEBRUARY 9, 2016 AVON TOWN HALL, ONE LAKE STREET Avon Council Meeting 02-09-2016 Minutes Page 1 1. CALL TO ORDER & ROLL CALL Mayor Fancher called the meeting to order at 5:05 p.m. A roll call was taken and Council members present were Jake Wolf, Matt Gennett, Megan Burch, Scott Prince and Sarah Smith Hymes. Buz Reynolds was absent. Also present were Town Manager Virginia Egger, Town Attorney Eric Heil, Assistant Town Manager Scott Wright, Planning Director Matt Pielsticker, Police Chief Bob Ticer, Executive Assistant to the Town Manager Preston Neill and Town Clerk Debbie Hoppe. 2. APPROVAL OF AGENDA Mayor Fancher requested action item 5.1 be reviewed before works session item 4.1. Council agreed to the change. 3. PUBLIC COMMENT No public comments were made. 4. WORK SESSION 4.1. REVIEW OF REPORT ON TOWN OF AVON SALES TAX ON BUILDING MATERIALS (ASSISTANT TOWN MANAGER SCOTT WRIGHT, TOWN MANAGER VIRGINIA EGGER, TOWN ATTORNEY ERIC HEIL) Michael Cacioppo, Angelo Loria and Roger Benedict commented. 5. ACTION ITEMS 5.1. CONSIDERATION OF FOURTH AMENDMENT TO THE INTERGOVERNMENTAL AGREEMENT WITH EAGLE RIVER FIRE PROTECTION DISTRICT TO WAIVE FEES RELATED TO THE CONSTRUCTION OF THE JOINT PUBLIC SAFETY FACILITY (TOWN ENGINEER JUSTIN HILDRETH) Mayor Pro Tem Wolf moved to approve the Fourth Amendment to the Intergovernmental Agreement for a Joint Fire-Police Station Facility between the Town of Avon and the Eagle River Fire Protection District, which waives Building Permit fees and planning review fees, and allocates the payment of the Town of Avon Water Tap Fee to offset the actual water infrastructure costs for the project. Action on the request to waive the Exterior Energy Offset Program fee will be delayed until the results of the geothermal feasibility study is completed. Councilor Burch seconded the motion and it passed unanimously by those present. Councilor Reynolds was absent. 5.2. APPROVAL OF AN INTERGOVERNMENTAL AGREEMENT BETWEEN THE TOWN OF AVON AND EAGLE COUNTY FOR PLAN4HEALTH PROJECT (TOWN ATTORNEY ERIC HEIL) Councilor Gennett moved to approve the Intergovernmental Agreement between the Town of Avon and Eagle County for Plan4Health Project; Mayor Pro Tem Wolf seconded the motion and it passed unanimously by those present. Councilor Reynolds was absent. TOWN OF AVON, COLORADO AVON MEETING MINUTES FOR TUESDAY, FEBRUARY 9, 2016 AVON TOWN HALL, ONE LAKE STREET Avon Council Meeting 02-09-2016 Minutes Page 2 5.3. RESOLUTION NO. 16-O2, A RESOLUTION INITIATING ANNEXATION PROCEEDINGS AND SETTING A PUBLIC HEARING FOR THE ANNEXATION OF UPPER EAGLE RIVER WATER AUTHORITY MOUNTAIN STAR WATER TANK PROPERTY (TOWN ATTORNEY ERIC HEIL) Jason Cowles commented. Councilor Smith Hymes moved to approve Resolution No. 16-02, Initiating Annexation of the Mountain Star Water Tanks Site Property, finding the petition for annexation to be in substantial compliance, and setting a public hearing; Mayor Pro Tem Wolf seconded the motion and it passed unanimously by those present. Councilor Reynolds was absent. 5.4. MINUTES FROM JANUARY 26, 2016 MEETING (TOWN CLERK DEBBIE HOPPE) Councilor Burch moved to approve the minutes from the January 26, 2016 meeting. Councilor Gennett seconded the motion and it passed unanimously by those present. Councilor Reynolds was absent. 6. WRITTEN REPORTS 7. COMMITTEE MEETING UPDATES: COUNCILORS AND MAYOR 8. MAYOR & COUNCIL COMMENTS 9. ADJOURNMENT There being no further business to come before the Council, the regular meeting adjourned at 7: 14 p.m. RESPECTFULLY SUBMITTED: ______________________________________________ Debbie Hoppe, Town Clerk APPROVED: Jennie Fancher ________________________________ Jake Wolf ________________________________ Matt Gennett ________________________________ Megan Burch ________________________________ Albert “Buz” Reynolds ________________________________ Scott Prince ________________________________ Sarah Smith Hymes ________________________________ TOWN OF AVON, COLORADO TOWN COUNCIL RETREAT MEETING MINUTES FOR FRIDAY, FEBRUARY 12, 2016 AVON REGIONAL TRANSPORTATION FACILITY, 500 SWIFT GULCH ROAD Avon Retreat Minutes 2/12/16 Page 1 1. CALL TO ORDER & ROLL CALL Mayor Fancher called the meeting to order at 11:05 a.m. A roll call was taken and Council members present were Megan Burch, Matt Gennett, Jake Wolf, Scott Prince and Sarah Smith Hymes. Buz Reynolds was absent. Also present were Town Manager Virginia Egger, Town Attorney Eric Heil, Assistant Town Manager Scott Wright and Executive Assistant to the Town Manager Preston Neill. 2. WORK SESSION 2.1. TOWN COUNCIL MEETINGS 2.2. SPLIT VOTES 2.3. TOWN COUNCIL MINUTES 2.4. STRATEGIC PLAN 2.5. FESTIVAL SPONSORSHIP POLICY 2.6. NEXT RETREAT MEETING DATE Councilor Reynolds joined the meeting at 12:28 p.m. Councilor Reynolds left the meeting at 2:02 p.m. 3. ADJOURNMENT There being no further business to come before the Council, the retreat adjourned at 4:55 p.m. RESPECTFULLY SUBMITTED: _____________________________________________ Preston Neill, Executive Assistant to the Town Manager APPROVED: Jennie Fancher ________________________________ Jake Wolf ________________________________ Matt Gennett ________________________________ Megan Burch ________________________________ Albert “Buz” Reynolds ________________________________ Scott Prince ________________________________ Sarah Smith Hymes ________________________________ TOWN COUNCIL REPORT To: Honorable Mayor Jennie Fancher and Avon Town Council From: Virginia C. Egger, Town Manager Meeting Date: February 23, 2016 Agenda Topic: Review of Report on Town of Avon Sales Tax on Building Materials (Town Manager Virginia Egger, Assistant Town Manager Scott Wright, Town Attorney Eric Heil) ACTION BEFORE COUNCIL Town Council reviewed the attached Report on the Town of Avon Sales Tax on Building Materials at a February 9, 2016, Work Session. At the conclusion of the Work Session, the Council indicated that no action to exempt or change the tax would be considered based on the Report. The Council did discuss options to dedicate all or a portion of the collected taxes to an affordable/worker housing fund or project; and, developing an ordinance to automatically exempt the building materials sales tax on public facilities. In addition, staff recommendations in the Report were understood to be implemented as soon as possible. In scheduling the February 9th Work Session, Mayor Jennie Fancher was aware that Councilor Buz Reynolds would not be able to attend the meeting. Mayor Fancher agreed to hold the February 9th Work Session, and then another Work Session on the topic, when Councilor Reynolds would be present on February 23rd. Interested members of the public, who had attended the January 12, 2016, Work Session on the topic, were also noticed that a Work Session would be held on February 23rd. Council action is a review of the Report and direction to staff as desired.           THE  TOWN  OF  AVON       SALES  TAX  REPORT     ON   BUILDING  MATERIALS     INCLUDING     COLLECTION  DATA,  LEGAL  REVIEW,  TAX  RELIEF  OPTIONS,     FINANCIAL  INFORMATION  AND     ADMINISTRATION  RECOMMENDATIONS     Prepared  for  the  February  9,  2016     regular  meeting  of  the   Avon  Town  Council       Town  Attorney  Eric  J.  Heil   Assistant  Town  Manager  Scott  Wright   Town  Manager  Virginia  Egger   SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  3  OF  20   peer   communities,   including   the   Town   of   Breckenridge,   and   explores  methods   of   improving  administrative  procedures  to  promote  greater  awareness  and  compliance  with   the   Town’s   sales   tax   regulations.    From   2012   through   2015,   the   Finance   Department   adopted  improved  administrative  procedures  to  notify  contractors,  sub-­‐contractors  and   suppliers  of  the  Town’s  sales  tax  requirements  and  applicability  of  the  Town’s  sales  tax  to   Building  Materials  delivered  into  Avon.    The  Finance  Department  implemented  MUNIRevs   software  in  2014  and  Town  Council  adopted  revisions  to  business  licensing  regulations  by   Ordinance  No.  15-­‐02.    These  two  actions  expanded  the  Town’s  ability  to  identify  businesses   operating  in  Avon  and  the  Town’s  ability  to  notify  such  businesses  of  Town’s  sales  tax   requirements.    The  number  of  business  licenses  issued  to  out-­‐of-­‐town  Retailers  selling   Building  Materials  in  Avon  increased  from  2010  to  2015  due  to  Town’s  improvements   to  its  administrative  procedures  and  notifications  and  due  to  the  overall  increase  in   building  activity  in  Avon.   The  sales  tax  collected  on  Building  Materials  from  out-­‐of-­‐town  Retailers  as  relates  to   overall  construction  activity  for  years  2010-­‐2015  is  summarizes  as  follows:   EXECUTIVE  SUMMARY  TABLE     OUT-­‐OF-­‐TOWN  RETAILERS  OF  BUILDING  MATERIALS   Year  Number  of  Out-­‐of-­‐ Town  Retailers  of   Building  Materials   filing  Sales  Tax   Reports   Sales  Tax  Collected   from  Out-­‐of-­‐Town   Retailers  of   Building  Materials   Total  Building   Activity  by   Valuation   2010  47  $  44,218.85  $13,021,586   2011  51  $  57,873.18  $  9,334,790   2012  52  $  72,747.72  $13,848,500   2013  85  $100,061.95  $36,149,636   2014  105  $318,821.24  $15,235,900   2015  118  $311,607.95  $34,999,261   Building  Activity  by  Valuation  is  based  on  building  permit  information.    The   purchase  of  Building  Materials  at  retail  and  remittance  of  the  associated  sales   tax  for  such  Building  Materials  may  occur  in  the  succeeding  year  or  later   depending  upon  the  timing  and  progress  of  the  building  project.     Council  has  the  legislative  authority  to  enact  a  variety  of  options  to  exempt,  credit  or   rebate  sales  tax  imposed  on  Building  Materials  generally  or  upon  Building  Materials  sold  by   out-­‐of-­‐town  Retailers  and  delivered  into  Avon.    The  financial  impact  of  not  collecting  sales   tax  on  Building  Materials  delivered  into  Avon  is  dependent  upon  the  level  of  construction   activity.    The  projected  reduction  in  sales  tax  revenue  in  future  years  is  estimated  to   average  $300,000  annually  based  upon  the  amount  of  sales  tax  collected  in  2014  and   2015.       The  Town  provides  a  sales  tax  credit  on  “taxable  transactions”  in  The  Village  (at  Avon)   that  corresponds  to  a  public  improvement  fee  imposed  in  the  Village  (at  Avon).    The  public   improvement  fee  on  retail  sales  is  the  most  significant  revenue  source  for  Traer  Creek   Metropolitan  District.    Legislative  action  to  provide  an  exemption  from  sales  tax  for   Building  Materials  delivered  into  the  Village  (at  Avon)  may  reduce  the  future  potential   SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  4  OF  20   revenues  of  Traer  Creek  Metropolitan  District.                       Finally,   uniformity   in   taxation   of   retail   transactions   is   widely   considered   to   be   fair,   efficient,  beneficial  and   preferred,  both   at   the   state   level   and   national   level.    Sales   tax   exemptions  or  tax  relief  which  are  not  uniform  across  Avon  and  other  jurisdictions  can   result  in  a  competitive  disadvantage  for  some  Retailers.   This  Report  is  organized  into  six  sections,  described  as  follows:   I. SALES  TAX  COLLECTIONS  ON  BUILDING  MATERIALS   This  section  includes   basic  terms   and   definitions;  a   chronology   of  the   Town’s   administrative  efforts  to  collect  sales  tax  on  Building  Materials;  a  description  of  the   licensing,   collection   and   reporting   process;  and,   an   overview   of  enforcement   practices.    Also  included  are  examples  of  forms  and  collection  letters  as  attached   exhibits.   II. LEGAL   Town  Attorney  Eric  J.  Heil  addresses  legal  questions  raised  at  the  January  12,  2016,   Council  meeting  regarding  tax  policy  change,  TABOR  issues,  the  2002  Use  Tax  Ballot   question,  Village   at   (Avon)  Annexation   and   Development   Agreement ,   and   legal   considerations  concerning  potential  legislative  options  to  amend  the  Town’s  sales   tax  regulations.   III. SUMMARY  OF  FINANCIAL  INFORMATION   Two  detailed  reports  are  included  in  this  section.    The  first  is  a  summary  of  sales  tax   collections  related  to  Building  Materials  and  the  number  of  return  filers  from  2010-­‐ 2015.    The  second  report  is  a  ten-­‐year  summary  of  building  permit  activity  within   the  Town  of  Avon.    In  addition,  two  credit  ratings  reports,  from  Standard  &  Poor’s   and  Moody’s,  providing  credit  opinions  on  the  Town  of  Avon,  are  included  along   with  a  general  discussion  based  on  their  comments.   IV. LEGISLATIVE  OPTIONS   This   section   identifies   and   discusses   an   array   of   options   the   Town   Council   may   consider  for  a  sales  tax  on  Building  Materials,  considerations  for  potential  outcomes   of  the  option,  and  additional  questions  that  may  be  raised  in  considering  the  action.   V. RECOMMENDATIONS  FOR  SALES  TAX  ADMINISTRATION  IMPROVEMENT   This  section   details  staff’s   recommendations   for  additional   efforts   to   improve   administration  of  the  Town  sales  tax  on  Building  Materials.   VI. EXHIBITS   The  following  Exhibits  referred  to  in  the  above  sections.   1. Exhibit  1  –  Supplier  Verification  Form   2. Exhibit  2  –  Contractor  Letter   3. Exhibit  3  –  1st  Delinquency  Letter   4. Exhibit  4  –  2nd  Delinquency  Letter   5. Exhibit  5  –  Standard  &  Poor’s  Rating  Opinion  Letter     6. Exhibit  6  –  Moody’s  Rating  Opinion  Letter   7. Table  1  –  Sales  Tax  Collections  Related  to  Building  Materials   8. Table  2  –  Commercial  and  Residential  Construction   SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  5  OF  20   SECTION  I   SALES  TAX  COLLECTIONS  ON  BUILDING  MATERIALS     Terms  and  Definitions:   • Person  means  an  individual  or  any  recognized  legal  entity.   • Retailer  means  any  person  selling  tangible  personal  property  at  retail.     • Sales  Taxpayer  means  a  person  buying  taxable  goods  from  a  Retailer.   • Business  License  means  a  license  required  by  the  Town  for  any  person  engaged  in   business  in  the  Town.   • Sales  Tax  License  means  the  license  required  by  the  Town  for  any  person  engaged   in  the  business  of  making  retail  sales  within  the  Town.       Chronology  of  Efforts  to  Enhance  Sales  Tax  Compliance     2010     • Electronic  Business  Licenses  &  Sales  Tax  Records  on  File  -­‐  The  Records  Retention   Act,  established  by  the  Colorado  State  Archives,  which  is  authorized  by  Colorado   State  Statute,  and  adopted  by  the  Town  of  Avon,  directs  the  disposition  schedules  of   public  documents.     a. Sales  Tax  Return  Records:  Required  to  be  retained  for  four  (4)  years  after   filing   of   the   return.     Electronic   records   are   currently   on   file   for   years   beginning  in  2010.      Since  2010,  the  Town  no  longer  accepts  paper  returns.     Paper  returns,  prior  to  2010,  have  been  destroyed  in  compliance  with  the   Records  Retention  Act.         b. Business  Licenses:  Required  to  be  retained  for  two  (2)  years  after  expiration.   Electronic  records  are  currently  on  file  for  years  beginning  in  2014.    Prior  to   March,  2015,  only  contractors  and  subcontractors,  with  a  fixed  location  in   Avon,  were  required  to  have  a  Business  License.     • Town  administration  relies  on  Retailers  and  businesses  to  understand  that  business   licensing,   sales   tax   licensing   and   other   regulations   apply  when   commencing  or   engaging  in  business  in  Avon.     • Town’s  website  includes  informational  links  both  on  the  www.avon.org  homepage   under  the  button  “Online  Payments”,  as  well  as  under  the  Finance  Department’s   page.           • Enforcement  is  practiced  on  a  limited  basis  when  license  holders  fail  to  file  a  return,   returns  appear  inconsistent  when  filed,  or  the  Finance  Department  becomes  aware   of  a  Retailer  who  did  not  have  a  Business  License.       SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  6  OF  20     2012-­‐  2013       • Town   hires   new   Accounting   Assistant  –  Additional  duties   included   sales   tax   administration.     • Town   staff   attends   Colorado   Tax   Audit   Professionals   meetings.       Among   current   topics,  discussions  include  how  to  ensure  the  enforcement  and  collection  of  sales   taxes  on  construction  projects  due  to  the  increase  in  building  activity  coming  out  of   the  great  recession.         • Town  staff  researches  the  Town  of  Breckenridge  process,  which  also  has  a  sales  tax   on  Building  Materials  and  no  use  tax.     • Finance  Director  and  Town  Attorney  agree  that  a  process  similar  to  the  Town  of   Breckenridge  for  identifying  suppliers  and  contractors  on  large  building  projects,   called  a  “Supplier  Verification  Form”  should  be  implemented  in  Avon.     • May,  2013  –  Town  of  Avon  Building  Official  notifies  in  writing  all  Building  Permit   recipients   of  the  Town’s  sales   tax   requirements  at   the   time   of   Building   Permit   issuance.    General  Contractors  are  given  a  general  information  letter  and  form  –  see   Exhibits  1  and  2.     • Town  purchases  MUNIRev  software  for  sales  tax  administration.     • Building  Permits   begin   to   increase   with   better   economy.    Wyndham   project   is   approved  and  is  a  significant  construction  project  with  delivery  of  many  Building   Materials.     Town   staff   contacts   the   contractor,  and   subsequently  all   its   subcontractors   and  suppliers,   to  promote   awareness   of   the   Town’s   sales   tax   requirements  and  applicability  to  delivered  Building  Materials.         2014     • Business   License   administration   is   re-­‐organized,   with   the   Finance   Department   becoming  responsible  for  all  aspects  of  Business  License  administration,  which  was   previously  the  duty  of  the  Town  Clerk’s  office.     • Finance  Department  begins  the  process  of  transferring  the  administration  of  the   licensing  into  new  MUNIRevs  software.    This  change  of  administration  oversight   brought  together  all  information  needed  to  identify,  track  and  monitor  businesses   and  sales  tax  remittance.     • The  website  is  updated  to  list  the  MUNIRevs  telephone  number  prominently  on  the   web  page  and  to  describe  the  processes  for  obtaining  a  Business  License  and  Sales   Tax  License.       SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  7  OF  20   2015       • In   March,   2015,   the   Town   Council   adopted   Ordinance   No.   15-­‐02   which  cross-­‐ referenced  the  sales  tax  definition  of  “doing  business  in  Town”  for  uniformity  and   thus  required   anyone   doing   business   in   Town  to   obtain   a   Business   License.     Previously,  only  businesses  with  physical  locations  in  Town  were  required  to  get  a   Business  License.           • The   revision   to   the   Business   License   regulations   in   early   2015  resulted   in  the   issuance  of  Business  Licenses  to  approximately  347  new  businesses.    Many  of  the   new  Business  Licenses  are  related  to  the  building  industry,  including  both  Retailers   of  Building  Materials,  contractors  and  sub-­‐contractors.    Contractors  with  an  address   outside  of  Avon  who  do  business  in  Avon  must  now  obtain  a  Business  License  in   addition  to  obtaining  a  Contractor’s  License.     • Contractors  are  set  up  in  the  MUNIRevs  with  sales  tax  forms  on  either  a  monthly  or   quarterly   basis  (unless   the   Finance   Department   has   been   informed   by   the   contractor  that  the  respective  business  operations  are  not  subject  to  Avon  sales  tax   (i.e.  service-­‐related  only)).    If  there  are  no  taxable  transactions,  a  business  with  a   Sales  Tax  License  must  still  file  a  sales  tax  return  indicating  zero  amount  due.     • For   2015,   the   Finance   Department   has   collected   a   total   of   $76,675   in   Business   License  fees  for  all  businesses  compared  to  $22,300,  in  2014.     SUMMARY:       The  changes  to  the  Town’s  Business  License  Regulations  in  the  Avon  Municipal  Code   and   changes   to   administrative   procedures   along   with   an   overall   increase   in   economic   activity   and   building  activity  have   resulted  in   an   increase  in   the   number   of   Business   Licenses  and  Sales  Tax  Licenses  held  by  out-­‐of-­‐town  Retailers  of  Building  Materials.    The   number  of  in-­‐town  Retailers  of  Building  Materials  has  remained  comparatively  stable  over   the  last  six  years.    The  legislative  and  administrative  changes  over  the  last  several  years   have   resulted   in   a   greater   number   of   Business   Licenses   and   Sales   Tax   Licenses   for   businesses  “doing  business  in  Avon”  have  thereby  advanced  uniformity  in  the  application   of   the   Town’s   sales   tax.      The   change   in   Business  Licenses   and   Sales   Tax   Licenses   for   Retailers  of  Building  Materials  is  summarized  as  follows:     Year  In-­‐Town   Retailers   Out-­‐of-­‐ Town   Retailers   Sales  Tax  from   In-­‐Town   Retailers   Sales  Tax  from   Out-­‐of-­‐Town   Retailers   Total  Building   Activity  by   Valuation   2010  14  47  $166,154  $  44,219  $13,021,586   2011  14  51  $180,254  $  57,873  $  9,334,790   2012  15  52  $258,565  $  72,748  $13,848,500   2013  18  85  $237,766  $100,062  $36,149,636   2014  16  105  $282,976  $381,821  $15,235,900   2015  21  118  $331,503  $311,608  $34,999,261   SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  8  OF  20     Process  for  Business  Licenses,  Sales  Tax  Notification,  Collection  &  Enforcement       (May,  2013  –  Present)                                           With   the   implementation   of  MUNIRevs,   the   Town’s   online   licensing   and   sales   tax   collection  system,  obtaining  a  Business  License,  Sales  Tax  License,  filing  of  returns,  and   payment  of  taxes  is  all  accomplished  in  one  place.         • Registration   of   a   business  is  accomplished   through   the   process   o f   obtaining   a   Business   License.     A  Sales   Tax   License   must   be   performed   prior   to   opening   the   business   and   making   retail   sales.     Business   License   fees   vary   depending   on   the   location  and  type  of  business.    There  is  no  fee  to  obtain  a  Sales  Tax  License.     • Detailed   information   and   instructions   for   registration   are   found   on   the   Town   of   Avon  website  (www.avon.org)  under  both  the  Business  License  and  Sales  Tax  links   under   the   Home   Page   drop -­‐down   screen   for   Departments.     In   addition,   there   is   specific  information  regarding  the  collection  of  sales  tax  on  materials  delivered  to   job  sites  within  the  Town.    This  information  has  been  available  since  2014.           • There  are  also  informational  links  both  on  the  www.avon.org  homepage  under  the   button  “Online  Payments”  as  well  as  under  the  Finance  Department’s  page  to  the   MUNIRevs  registration  site.    In  addition,  the  MUNIRevs  telephone  number  is  shown   prominently  on  the  web  page  and  throughout  the  process  for  obtaining  the  Business   and  Sales  Tax  Licenses.     • Once  a  Sales  Tax  License  is  issued,  the  Retailer  must  file  a  sales  tax  return,  which   includes   the  payment   of   tax.     This   process   is  performed   online.    The   Retailer   is   required  to  report  the  amount  of  gross  taxable  sales  made  for  the  reporting  period,   the  amount  of  returned  goods,  and  the  amount  of  retail  sales  that  are  exempt  from   taxation.2       • Sales   tax   returns   are   due   by   the   20 th  day   of   the   month   for   the   sales   activities   occurring  in  the  preceding  calendar  month.    The  Finance  Department  does  allow   quarterly  and  annual  filing  of  returns  for  those  businesses  that  do  not  have  minimal   retail  sales  activity.     • It  is  the  duty  of  each  Retailer  who  obtains  a  Sales  Tax  License  to  keep  and  preserve   adequate   records   of   sales   and   such   other   books   and   accounts   necessary   to   determine  the  amount  of  sales  tax.    Such  books  and  records  of  the  Retailer  may  be   examined  at  any  time  by  the  Director  of  Finance  and  must  be  kept  for  a  period  of   three  (3)  years.3     2  AMC  3.08.120(b)  3  AMC  3.08.200   SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  9  OF  20     Enforcement   Enforcement  of  the  Town’s  sales  tax  regulations  generally  follows  these  steps:   1. Written  Notice:    Written  notice  of  a  failure  to  file  is  sent  out  through  the  mail  on   approximately   the   1 st  of   the   month   following   the   due   date   of   the   return.    After   approximately  30  additional  days,  subsequent  mailings  are  sent  out  under  the  Town   Attorney’s  signature  for  failure  to  respond  or  file.    Copies  of  these  collection  letters  are   attached  as  Exhibits  3  and  4.   2. Municipal  Court  Complaint:    If  a  business  does  not  respond  to  the  Town’s  multiple   letter  requests  then  a  municipal  court  citation  is  issued  and/or  a  sales  tax  lien  is  placed   on   a   busine ss.    Often,   the   Sales   Taxpayer   is  instructed   by   the   Court   to   work   out   a   payment   plan   with   the   Finance   Department.     On   only   two   occasions   over   the   past   twenty  years  has  the  Finance  Director  issued  a  distraint  warrant  to  the  County  Sheriff.     A   distraint   warrant   is  an   order   to   seize   and   sell   personal   property   for   payment   of   delinquent   tax  amounts   due.    The   Town   works   cooperatively  with   the   Colorado   Department  of  Revenue  in  matters  involving  collection  of  state  sales  tax  delinquency.     3. Audits:  The   Finance   Direct or   is   responsible   for   examining   returns.     The   Director   performs  an  initial  examination  of  returns  as  taxes  are  remitted  to  determine  if  the   sales  tax  remittance  is  unusual  or  unexpected  considering  the  nature  of  the  business.     The  Director  has  authority  to  order  an  investigation  (i.e.  audit)  of  the  Retailer’s  books.4             Audits   are   sometimes   conducted   as  group  audits   of  large   Retailers  with   other   municipalities.    Audits  may  also  occur  for  a  select  number  of  specific  businesses  within   the  Town.    Businesses  are  selected  based  upon  size  of  the  business  and/or  concerns   identified  by  sales  tax  reports.    The  use  of  audits  is  relatively  rare  in  Avon.    The  Town   has  not  adopted  formal  programmatic  random  audits  for  each  business  category  in  a   manner  similar  to  larger  urban  municipalities.       In  2015,  the  Finance  Department  ordered  audits  of  seven  companies  (none  of  these   audits  involved  any  Retailers  selling  Building  Materials).    Four  of  the  audits  found  that   the  Retailer  was   in   compliance.     The   other   three   audits   resulted   in   additional   tax   assessments  of  $22,549.58.    The  total  cost  of  these  audits  was  $13,919.    The  Town  has   not  conducted  any  recent  audits  of  Building  Materials  suppliers  or  contractors.   An  audit  is  the  only  administrative  procedure  that  authorizes  the  Town  to  obtain   additional  information  on  specific  retail  transactions  beyond  the  general  reporting  of   gross   retail   sales.    Information   obtained   from   audits   is   confidential,   except   that   the   Town  may  publish  statistics  if,  “so  classified  as  to  prevent  the  identification  of  particular   reports  or  returns  or  items  thereof”.5       4  AMC  3.08.170  5  AMC  3.08.200   SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  10  OF  20   SECTION  II     LEGAL     SUMMARY:    This  Section  II  –  Legal  has  been  prepared  by  Eric  J.  Heil,  Avon  Town  Attorney.     Avon  Town  Council  met  on  January  12,  2016  to  review  administration  of  the  Town’s  sales   tax   on   building   projects   in   Avon.     Specifically,   Council   discussed   and   reviewed   the   application  of  the  Town’s  sales  tax  to  Building  Materials  sold  by  out-­‐of-­‐town  Retailers  and   delivered  in  Avon.    Several  additional  legal  questions  were  raised  at  this  meeting  which  are   addressed  in  this  Section.       The  conclusions  in  this  Section  II  -­‐  Legal  are  summarized  as  follows:   • Town  staff  has  an  affirmative  duty  to  administer  and  enforce  sales  tax  as  is   legally  permissible.   • A  change  in  administrative  procedures  to  increase  sales  tax  compliance  does  not   constitute  a  tax  policy  change  requiring  advance  voter  approval  where  Town   voters  have  previously  approved  the  Town’s  authority  to  exceed  revenue  limits   set  forth  by  TABOR.   • The  legal  effect  of  enacting  “tax  exemptions”  versus  “tax  credits”  versus  “tax   rebates”  should  be  understood  because  each  results  in  different  restrictions  on   the  legislative  discretion  of  future  Town  councils.   • The  voter  rejection  of  the  referred  Use  Tax  ballot  question  in  2002  does  not   affect,  restrict  or  diminish  the  Town’s  legal  authority  to  impose  and  collect  the   sales  tax  under  the  Town’s  sales  tax  regulations  and  authority.   • The  enactment  of  any  exemption,  tax  credit  or  tax  rebate  for  Building  Materials   will  likely  have   a   financial   affect   on  the   Village   (at   Avon).     The   degree   of   financial  affect  and  potential  financial  impact  depends  upon  the  scope  of  such   exemption,  credit  or  rebate.   • The  Town  Council  has  broad  discretion  to  enact  exemptions,  credits  and  rebates   on  sales  tax  imposed  on  Building  Materials  provided  that  such  tax  relief  is  (1)   for  a  public  purpose,  (2)  does  not  discriminate  against  a  protected  class  and  (3)   does   not   discriminate   against   interstate   commerce,   thereby   violating   the   dormant  commerce  clause.   • The  Town  is  not  liable  for  refunds  of  any  past  sales  taxes  imposed  and  collected   on   Building   Materials   if   Council   adopts   legislation   to   provide   an   exemption,   credit  or  rebate  of  sales  tax  on  Building  Materials.   Specific  legal  topics  are  discussed  as  follows:     TOWN’S  DUTY  TO  ADMINISTER  AND  ENFORCE  SALES  TAX:    Chapter  3.08  –  Sales  Tax   includes  several  provisions  for  enforcement  and  administration  of  the  Town’s  sales  tax   regulations.    Section   3.08.290  –  Administration  states,   “The   administration   of   all   the   provisions  of  this  Chapter  is  vested  in  the  Director  of  Finance,  who  may,  with  the  approval   SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  11  OF  20   of  the  Town  Manager,  prescribe  forms  and  reasonable  rules  and  regulations  in  conformity   with   this   Chapter   for   the   making   of   returns,   for   the   ascertainment,   assessment   and   collection   of   the   taxes  imposed   hereunder,   and   for   the   proper   administration   and   enforcement  hereof,  a  copy  of  which  forms,  rules  and  regulations  shall  be  made  available  to   the  public.”    The  Avon  Home  Rule  Charter,  Section  8.3  Powers  and  Duties,  states  the   Town  Manager’s  first  power  and  duty  as,  “(a)  be  responsible  for  the  enforcement  of  laws   and  ordinances  of  the  Town.”    The  Town  Staff,  by  and  through  the  Town  Manager,  has  a   general  affirmative  duty  to  administer  and  enforce  the  collection  of  sales  tax.   TAX  POLICY  CHANGE:    The  Taxpayer’s  Bill  of  Rights  (“TABOR”)  was  an  amendment  to  the   Colorado  constitution  adopted  in  1992  that  established  a  variety  of  circumstances  related   to  increases  in  revenue,  taxation  and  debt  that  required  prior  voter  approval.    Article  X,   Section  20(4)(a)  states  that  [D]istricts  must  have  voter  approval  in  advance  for  .  .  .  any  new   tax,  tax  rate  increase,  mill  levy  above  that  for  the  prior  year,  valuation  for  assessment  ratio   increase   for   a   property   class,   or   extension   of   an   expiring   tax,   or  a   tax   policy   change   directly  causing  a  net  tax  revenue  gain  to  any  district.    [emphasis  added].    As  outlined  in   my  memorandum  of  January  8,  2016,  the  imposition  of  the  Town’s  4%  sales  tax  on  Building   Materials  delivered  into  Avon  is  based  on  the  sales  tax  regulations  properly  adopted  by   Avon  and  pre-­‐dating  TABOR.    As  such,  the  imposition  of  the  Town’s  sales  tax  is  not  a  “new   tax”  or  “tax  rate  increase”  as  legally  defined  by  TABOR.       The   Colorado   Supreme   Court   announced   in   2009  Mesa   County   Board   of   County   Commissioners  case  that  a  “tax  policy  change  directly  causing  a  net  tax  revenue  gain  to  any   district”   must   be   considered   in   conjunction   with   Subsection   (7)   of   TABOR   concerning   revenue  limits.6    Where  prior  voter  approval  has  properly  occurred  to  allow  the  District  to   collect  revenues  in  excess  of  TABOR  revenues  limits,  a  subsequent  vote  is  not  required  for   each  tax  policy  change  directly  causing  a  net  tax  revenue  gain.    “We  find  that  a  tax  policy   change   directly   causing   a   net   tax   revenue   gain   only   requires   voter   approval   when   the   revenue  gain  exceeds  the  limits  dictated  by  subsection  (7).”  7       The  Mesa  County  Board  of  County  Commissioners  involved  a  challenge  to  legislation  to   direct   school   district   funds.     In   the   Town   of   Avon,   no   legislative   action   by   Council   has   occurred  with  regard  to  the  imposition  of  sales  tax  to  Building  Materials  delivered  into   Avon.    Rather,  the  imposition  of  the  Town’s  sales  tax  has  resulted  from  changes  in  case  law   and  administrative  efforts  to  increase  compliance  and  uniformity.     TABOR  CONSIDERATIONS:    The  Taxpayer’s  Bill  of  Rights  raises  several  legal  constraints   that   Council   should   understand.     The   Town   may   legally   enact   temporary   “tax   credits,”   which  may  expire  or  may  be  repealed  and  thus  effectively  allow  the  re-­‐imposition  of  the  tax   without  constituting  a  “new  tax”  or  “tax  rate  increase”  that  requires  prior  voter  approval.     Tax  credits  may  be  extended  in  the  Council’s  discretion.       The   Town   Council   may   also   enact   “tax   rebates”   whereby   the   tax   continues   to   be   imposed,  is  collected,  and  then  is  rebated  to  the  party  paying  the  tax.    Tax  rebates  are   permissible   where   Council   has   determined   that   the   primary   reason   for   the   rebate   is   a   6 Mesa  County  Board  of  County  Commissioners  v.  State,  203  P.3d  519  (Colo.2009).   7  Mesa  County  Board  of  County  Commissioners,  at  P.529. SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  12  OF  20   public  purpose.    Tax  rebates  can  be  specific  to  a  community  policy  goal  (e.g.  affordable   housing)  or  specific  to  a  project  that  is  expected  to  provide  public  benefits.    Tax  rebates  are   essentially  an  agreement  to  appropriate  an  expenditure  of  revenues  received  and  therefore   must  be  “subject  to  annual  budget  and  appropriation”  or  must  be  new  “special  project   revenues”  in  order  to  comply  with  TABOR’s  restriction  on  multi-­‐year  fiscal  obligations.       Alternatively,  the  enactment  of  a  “tax  exemption”  by  ordinance  is  permanent  and  such   exemption   cannot   be   repealed  or   reversed  without  voter   approval   in   compliance   with   TABOR.     EFFECT  OF  USE  TAX  REJECTED  BY  VOTERS:    The  Avon  voters  rejected  a  Use  Tax  in  2002.     The  referred  ballot  question  was  in  the  form  required  by  TABOR  and  asked  if  Town’s  taxes   should  be  increased,  “by  the  imposition  of  a  four  percent  (4%)  use  tax  on  the  privilege  of   using  or  consuming  in  the  Town  any  construction  materials.”    As  stated  in  my  January  8,   2016,  memorandum,  sales  tax  and  use  tax  are  legally  distinct.    Each  tax  has  a  separate  legal   authority  that  authorizes  the  imposition  of  such  tax.    The  scope  of  transactions  subject  to   sales  tax  and  the  scope  of  transactions  subject  to  a  use  tax  overlaps  and  courts  have  long   recognized  that  some  transactions  are  subject  to  both  the  sales  tax  and  use  tax  authority   (but  liable  to  pay  both  sales  tax  and  use  tax).    The  2002  Use  Tax  ballot  question  did  not  in   any  manner  affect   the   Town’s   legal   authority   to   impose   a   sales   tax   on   all   transactions   legally  subject  to  the  Town’s  sales  tax,  including  the  imposition  of  the  Town’s  sales  tax  on   retail  transactions  that  occur  within  the  Town  of  Avon.    Specifically,  the  2002  Use  Tax  did   not   ask   whether   the   use   or   consumption   of   construction   materials   in   Avon   should   be   exempt  from  paying  Avon’s  sales  tax.       The  Use  Tax  Ballot  Question  referred  to  the  voters  in  2002  was  worded  as  follows:   “SHALL   THE   TOWN   OF   AVON   TAXES   BE   INCREASED   $1.6   MILLION   ($1,600,000)   ANNUALLY   IN   2003,   AND   BY   WHATEVER   ADDITIONAL   AMOUNTS  ARE  RAISED  ANNUALLY  THEREAFTER,  BY  THE  IMPOSITION  OF  A   FOUR   PERCENT   (4%)   USE   TAX   ON   THE   PRIVILEGE   OF   USING   OR   CONSUMING  IN  THE  TOWN  ANY  CONSTRUCTION  MATERIALS,  SUCH  USE   TAX   REVENUES   TO   BE   APPROPRIATED   AND   SPENT   SOLELY   FOR   TRANSPORTATION  AND  RECREATION  CAPITAL  PROJECTS  AND  SERVICES   AND   INFRASTRUCTURE   RELATED   THEREO   [SIC],   ALL   IN   ACCORDANCE   WITH   ORDINANCE   NO.   02 -­‐18   ADOPTED   BY   THE   TOWN   COUNCIL;   AND   SHALL  THE  REVENUES  COLLECTED  FROM  SUCH  TAX  AND  ANY  EARNINGS   FROM  THE  INVESTMENT  OF  SUCH  REVENUES  BE  COLLECTED  AND  SPENT   AS  A  VOTER  APPROVED  REVENUE  CHANGE  AND  AN  EXCEPTION  TO  THE   LIMITS  WHICH  WOULD  OTHERWISE  APPLY  UNDER  ARTICLE  X,  SECTION  20,   OF  THE  COLORADO  CONSTITUTION  OR  ANY  OTHER  LAW?”   VILLAGE   (AT   AVON):    The   Town   of   Avon   originally   entered   into   an   Annexation   and   Development  Agreement  with  the  Village  (at  Avon)  in  1998  that  included  an  agreement  to   provide  a  “Tax  Credit”  on  Town  sales  tax,  accommodations  tax  and  real  estate  transfer  tax.     The   Annexation   and   Development   Agreement   was   amended   several   times,   then   was   substantially   revised   as   part   of   settlement   of   litigation   in   2014.     The   Consolidated,   SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  13  OF  20   Amended  and  Restated  Annexation  and  Development  Agreement  for  the  Village  (at  Avon)   (“Development  Agreement”)  includes  the  Town’s  agreement  to  provide  a  credit  on  sales   taxes  on  “Taxable  Transactions”.8    This  Tax  Credit  is  codified  in  the  Avon  Municipal  Code  at   Section  3.08.035.   The  Development  Agreement  establishes  a  multi-­‐party  arrangement  whereby  (1)  the   Town  of  Avon  provides  a  Tax  Credit,  (2)  the  non-­‐profit  Public  Improvement  Companies   impose   a   “Public   Improvement   Fee”   or   “PIF”   on   retail   transactions   and   remit   those   revenues  to  the  Traer  Creek  Metropolitan  District,  and  (3)  the  Traer  Creek  Metropolitan   District  then  issues  tax  exempt  municipal  bonds  and  constructs  public  improvements  to   serve  development  in  the  Village  (at  Avon).   The  Development  Agreement  does  restrict  the  Town’s  ability  to  take  any  action  that   would  reduce  the  Tax  Credit  on  Taxable  Transactions,  but  does  not  restrict  the  Town’s   legislative  authority  to  enact  exemptions  to  transactions  that  are  subject  to  the  Town’s   sales  tax.    The  definition  of  “Taxable  Transaction(s)”  means  a  retail  sales  transaction  that  is   subject  to  the  Town’s  sales  tax.    [Emphasis  added].    Therefore,  the  Town  may  amend  its   sales   tax   regulation   by   ordinance   to   enact   new   exemptions,   thereby   defining   certain   transactions  that  are  not  subject  to  the  Town’s  sales  tax,  which  exemptions  would  then   apply  in  the  Village  (at  Avon).    Such  action  by  the  Town  would  not  violate  the  Development   Agreement.    However,  it  is  important  to  recognize  that  any  significant  legislative  change  to   the   Town’s   sales   tax   regulations   should  be   coordinated   with   Traer   Creek   Metropolitan   District  due  to  interrelated  financial  relationship.    Council  is  encouraged  to  understand  and   consider  any  potential  negative  consequences  that  new  sales  tax  exemptions  may  have  on   the  revenue  sources  and  ability  of  Traer  Creek  Metropolitan  District  to  service  outstanding   bonds.   DISCRETION  TO  GRANT  EXEMPTIONS:    The  Town  Council  may  adopt  exemptions  which   are  specific  to  certain  transactions  or  industries  provided  that  (1)  there  is  a  public  benefit   or   purpose   to   such   exemption   and   (2)   the   exemption   does   not   violate   constitutional   considerations.     There   are   many   examples   in   the   statutory   tax   authority   for   granting   exemptions,   or   legislatively   defining   certain   transactions   that   are   not   subject   to   a   tax.     Examples  of  sales  tax  exemptions  include  application  to  public  entities,  purchases  of  food,   purchases   of   food   with   food   stamps,   and   purchases   of   medical   supplies.    The   Town’s   existing   sales   tax   regulations   exempt   “medial   supplies”   “prosthetic   devices”   and   “therapeutic  devices”  from  the  imposition  of  sales  tax.9       With  regard  to  real  estate  transfer  tax,  the  Town  provides  an  exemption  for  the  first   $160,000  when  a  property  is  purchased  for  use  as  a  primary  residence.    The  Town  Council   may  grant  an  exemption  when  it  finds  that  the  exemption  will  promote  a  public  purpose.     Council  is  acting  in  a  legislative  capacity  when  enacting  such  exemptions.         8  Sec.  4.2(a)  of  the  Development  Agreement.   9  AMC  3.08.040   SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  14  OF  20   Substantial   discretion   is   granted   by   courts   to   the   Town   Council   when   acting   in   a   legislative  capacity  to  determine  what  constitutes  a  valid  public  purpose.      However,  such   legislative  discretion  is  not  without  discretion.    Legal  limits  can  be  found  in  the  following   circumstances:   1. the  true  intent  is  to  provide  a  private  benefit  (i.e.  gift)  in  violation  of  the  gift  clause   of  the  Colorado  Constitution;   2. the  exemption  violates  equal  protection  (i.e.  discriminates  based  upon  a  protected   class  –  e.g.  race,  religion,  gender,  age,  etc.);  and,   3. the   legislation   would   discriminate   against   interstate   commerce   and   violate   the   dormant   commerce   clause   (e.g.   granting   an   exemption   for  Retailers   of   Building   Materials  located  in  Eagle  County  or  in  Colorado  but  imposing  the  sales  tax  on  out-­‐ of-­‐state  Retailers  that  deliver  Building  Materials  to  Avon).                             EXEMPTION  FOR  PUBLIC  ENTITIES:    Section  3.08.050  Exempt  Tax  Payers,  subsection   (1)   provides   a   general   exemption   from   sales   tax   for   public   entities,   but   then   states   in   subsection  (3):    “Nothing  herein  contained  shall  be  deemed  to  exempt  from  the  tax  levied   by  this  Chapter  sales  of  building  material  or  supplies  to  be  used  by  a  contractor  for  the   construction   of   an   improvement   for   any   of   the   institutions   or   agencies   enumerated   in   Subsections  (1)  or  (2)  above.”10    The  language  in  subsection  (3)  differs  from  state  statute   which  does  exempt  public  entities  from  paying  state  and  county  sales  tax  and/or  use  tax  on   construction  materials  used  in  public  projects.    Council  may  adopt  language  that  parallels   state  statute.   EXEMPTION  FOR  AFFORDABLE  HOUSING:    Council  may  adopt  an  exemption  of  sales  tax   on   Building   Materials   for   housing   projects.     The   provision   of   adequate   and   affordable   housing   has   long   been   recognized   as   a   legitimate   public   purpose   for   all   levels   of   government.    It  is  well  within  Council’s  discretion  to  adopt  an  exemption  (or  credit  or   rebate)   on   sales   tax   on  Building   Materials  for   affordable   housing   projects.     Specific   considerations  for  any  sales  tax  exemption,  credit  or  rebate  for  affordable  housing  projects   include:   • Defining  projects  eligible  for  exemption.    Such  as  deed  restricted,  public/non-­‐profit   rental  projects,  or  other  housing  projects  intended  to  serve  a  housing  demand.   • Applying  the  exemption  for  all  construction  materials,  whether  purchased  from  in-­‐ town  vendors  and  out-­‐of-­‐town  vendors  who  deliver  materials  to  Avon.   • Adopting  an  exemption  versus  a  “credit”  or  “rebate.”    A  rebate  has  the  advantage   that   it   would   help   a   purchaser   avoid   paying   sales   tax   on  Building   Materials  in   another  municipality  and  a  rebate  could  be  reduced  or  terminated  in  the  future   without  requiring  voter  approval.   LIABILITY  FOR  REFUND  IF  CODE  AMENDED:    The  question  was  asked  if  the  Town  would   be  liable  for  a  refund  to  those  who  have  paid  the  Town  sales  tax  on  Building  Materials   10  This  language  was  adopted  in  1982  by  Ordinance  No.  82-­‐27   SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  15  OF  20   delivered  in  the  Town  in  the  past  if  the  Town  amended  its  sales  tax  regulations  to  exempt   such  transactions.    As  stated  in  my  prior  memorandum  dated  January  8,  2016,  it  is  my  legal   opinion  that  existing  sales  tax  regulation  was  properly  adopted  and  may  be  legally  applied   to  the  sale  of  Building  Materials  when  those  retail  transactions  occur  in  Avon,  including  the   transfer  of  possession  or  title  of  such  Building  Material  by  delivery  in  Avon.    The  Town  is   not  legally  or  financially  liable  for  past  administration  and  enforcement  of  a  law,  including   a  sales  tax  regulation,  by  virtue  of  amending  or  partially  repealing  such  law  by  legislative   action.   THREE  YEAR  LIMITATION  OF  ACTIONS:    Section  3.08.330  –  Sales  tax  –  collection  –   limitation  of  actions  states  that  the  Town  may  commence  enforcement  actions  for  unpaid   sales  tax  for  up  to  three  years  after  the  date  on  which  the  tax  was  payable;  however,  when  a   Retailer  has  failed  to  file  a  return,  the  sales  tax  may  be  assessed  and  collected  at  any  time.     Section  3.08.340  –  Sales  tax  –  refunds  –  limitation  of  actions  states  that  an  application   for  refund  of  tax  moneys  paid  in  error  or  by  mistake  must  be  made  within  three  years  after   the  date  of  the  purchase.    If  there  was  a  successful  legal  challenge  the  Town’s  collection  of   sales  tax  on  Building  Materials  sold  by  out-­‐of-­‐town  Retailers  and  delivered  into  Town,  the   Town  could  be  liable  for  a  refund  of  all  similar  collections  for  the  preceding  three  year   period.   CHANGES  IN  FEDERAL  AND  STATE  LAW:    Federal  and  state  law  is  expected  to  continue   evolving  with  regard  to  the  imposition  of  sales  tax  on  out-­‐of-­‐jurisdiction  Retailers  who   deliver  goods  into  a  jurisdiction.    The  U.S.  Supreme  Court  Quill  Corp.  strongly  emphasized   that  Congress  has  a  direct  role  in  legislating  on  such  issues.    The  Market  Place  Fairness  Act   was  introduced  in  2010,  which  would  have  required  out-­‐of-­‐state  Retailers  to  collect  and   remit   sales   tax   on   purchases   shipped   to   residents.     The   Marketplace   Fairness   Act   (a   substantially  similar  bill)  was  introduced  in  2013  and  2015.       Although  Congress  has  not  yet  passed  legislation  requiring  on-­‐line  Retailers  to  collect   and   remit   sales   tax,   several   large   internet   retailers   have  already  begun  collecting   and   remitting  sales  tax.    Amazon  recently  announced  that  it  will  collect  Colorado  state  sales  tax   after  an  on-­‐going  legal  challenge  to  Colorado’s  law  to  require  consumers  to  pay  sales  tax   and  to  require  on-­‐line  Retailers  to  report  sales  to  Colorado  consumers  to  the  Colorado   Department  of  Revenue.    The  national  trend  is  clearly  towards  on-­‐line  Retailers  collecting   and  remitting  sales  tax  on  delivered  goods.    Any  change  in  the  national  law  to  legislate  that   sales  tax  may  be  imposed  upon  goods  that  are  delivered  (via  U.S.  mail,  common  carrier  or   any  other  method)  and/or  to  redefine  what  constitutes  “doing  business  in  a  state  or  local   jurisdiction”  will  most  likely  directly  affect  local  sales  tax  regulations.    Council  is  cautioned   to   be   mindful   of   adopting   any   permanent   exemptions   to   Avon’s   sales   tax   which   may   become  inconsistent  with  future  national  law  concerning  out-­‐of-­‐state  Retailers.                           SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  16  OF  20   SECTION  III   SUMMARY  OF  FINANCIAL  INFORMATION     Included   in   this  Section  III  –  Summary   of   Financial   Information  are   two   tables   containing  statistical  information  regarding  building  activity  and  a  discussion  regarding   credit  ratings.       Table  1.    Table  1  is  a  summary  of  sales  taxes  collected  on  Building  Materials  for  the  years   2010  through  2015.    Also  included  is  information  regarding  the  number  of  sales  tax  return   filers,  both  in-­‐town  and  out-­‐of-­‐town,  for  each  Building  Materials  category.    In  addition,   totals   are   provided   for   both   in-­‐town   and   out-­‐of-­‐town  Building   Materials  sales   tax   collections  and  filers.    Finally,  total  sales  tax  collections  for  all  categories  of  sales  taxes  for   both  in-­‐town  and  out-­‐of-­‐town  are  presented.     Table  2.    Table  2  is  a  summary  of  commercial  and  residential  building  activity  including   the  number  of  permits  issued,  total  square  footage  and  value  for  commercial  construction,   and  the  number  of  dwelling  units  and  values  for  residential  construction.     Credit   Ratings.    Even   a   partial   reduction   in   the   Town’s   sales   tax   base   could   have   undesirable  consequences.    The  Town  is  proposing  to  issue  Certificates  of  Participation  for   its  portion  of  the  financing  of  the  joint  Police  /  Fire  Regional  Station  at  Buck  Creek.    In  the   past,  this  type  of  debt  has  been  rated  by  Standard  &  Poor’s  (A+)  and  Moody’s  (Aa3)  (see   attached   Exhibits   5   and   6)   due   primarily   to   the   Town’s   reserves,   consistent   financial   performance,  and  modestly-­‐sized  tax  base  based  on  an  adequate  economy  supported  by   good  financial  management.    A  down-­‐grade  in  these  ratings  would  undoubtedly  increase   the  interest  cost  of  the  Town’s  debt.     According  to  Moody’s  Credit  Opinion  for  the  Town  of  Avon,  page  4  states  that  both  a   “Deterioration  in  the  Town’s  financial  position”  and  “Substantial  decline  in  tax  base  size”   could   move   the   Town’s   ratings   down.    Enacting   any  sales   tax  exemption   which  is   not   common   for   Colorado   municipalities   and   which   is   viewed   as   a   material   change   to   the   Town’s  tax  base  could  adversely  affect  the  Town’s  credit  rating  from  both  Standard  and   Poor’s  and  Moody’s.         SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  17  OF  20     SECTION  IV     LEGISLATIVE  OPTIONS     This  Section   IV  –  Legislative   Options  outlines   and   describes   options   for   Council   consideration  regarding  the  imposition  of  sales  tax  on  Building  Materials.    Some  of  the   options  may  be  combined  or  may  be  varied  by  Council  direction  and  community  input.    For   all  options,  it  is  assumed  that  the  effect  on  the  Town’s  budget  (either  positive  or  negative)   is  a  relevant  consideration  for  Council;  however,  it  difficult  and  somewhat  speculative  for   Town  staff  to  estimate  or  forecast  the  potential  financial  effect  of  each  option.     1. No  Legislative  Action:    Council  has  the  option  of  not  amending  Chapter  3.08  of  the   Avon  Municipal  Code.    Under  this  option,  Town  staff  would  continue  current  efforts   to  inform,  impose,  collect  and  enforce  the  Town’s  sales  tax  on  the  sale  of  Building   Materials  by  Retailers  located  outside  Avon  and  delivered  into  the  Town  of  Avon.     Town  staff  is  continuing  to  improve  and  update  the  administration,  notification  and   guidance  materials  to  facilitate  understanding  and  compliance  of  the  Town’s  sales   tax  requirements.    Direction  from  Council  would  be  appropriate  on  specific  methods   or   actions   that   would   best   accomplish   the   goal   of   improving   uniformity   and   compliance.     2. Enact   An   Exemption   on   Delivered   “Building   Materials”:    Council   may   amend   Chapter  3.08  to  expressly  exempt  the  application  of  sales  tax  on  Building  Materials   that  are  delivered  to  Avon  AND  where  the  Retailer  does  not  have  a  physical  office   presence   in   Avon.     Specific   considerations   on  the   details   of   such   an   exemption   include:   a. Should  the  definition  of  “Building  Materials”  that  qualify  for  exemption  include   only  Building  Materials  that  are  incorporated  into  the  real  estate  (e.g.  concrete,   lumber,   insulation,   drywall,   fasteners,   etc.)?     Should   the   exemption   apply   to   fixtures   (e.g.   appliances,   toilets,   sinks,   faucets,   furnace,   etc.)?     Should   the   exemption   include   the   sales   of   material   and   equipment   from     “retailer-­‐ contractors”?   b. Should  an  exemption  for  delivered  “Building  Materials”  also  apply  to  out-­‐of-­‐town   Retailers  that  actively  advertise  within  the  Town  of  Avon  or  actively  use  sales   persons  within  the  Town  of  Avon?    (Active  advertisement  and  the  use  of  sales   persons  within  the  jurisdiction  are  facts  which  courts  have  considered  relevant   and   material   when   determining   whether   a   business   is   ‘conducting   business’   within  a  jurisdiction  and  therefore  subject  to  that  jurisdictions  taxation).   c. Are  there  any  financial  consequences  to  the  Town’s  credit  rating?   d. Are  there  any  financial  consequences  to  the  Traer  Creek  Metropolitan  District’s   ability   to   service   existing   debt   and   ability   to   issue   new   debt   to   finance   the   construction  of  additional  public  improvements  in  the  Village  (at  Avon).   SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  18  OF  20   e. Are   there   any   impacts  to   existing   and   future   in -­‐town   Retailers   of  Building   Materials  arising  from  such  an  exemption.   f. Will   this   exemption   result   in   the   contractor   paying   sales   tax   to   another   municipality  when  the  Retailer’s  physical  location  is  in  another  municipality?     3. Enact  an  Exemption  on  all  “Building  Materials”:    Council  may  amend  Chapter   3.08   to   exempt   from   sales   tax   all   Building   Materials,   whether   purchased   from   a   Retailer  located  outside  Avon  and  delivered  into  the  Town  of  Avon  or  purchased   from  a  Retailer  located  in  Avon.    Specific  considerations  on  the  details  of  such  an   exemption  include:   a. The  general  considerations  stated  above  concerning  the  definition  of  Building   Materials;  and,   b. A   comprehensive   exemption   would   significantly   impact   Public   Improvement   Company  fee  revenue  sources  from  Home  Depot  and  other  retailer-­‐vendors  in   the   Village   (at   Avon)   which   may   materially   affect   the   existing   Public   Improvement  Fee  revenue  streams  and  the  ability  of  Traer  Creek  Metropolitan   District  to  service  existing  debt  payments.   4. Enact  an  Exemption  on  all  Delivered  Materials:    Council  may  amend  Chapter  3.08   to   exempt   all   tangible   personal   property   from   Town’s   sales   tax   when   sold   by   a   Retailer  located  outside  of  Avon  but  delivered  into  the  Town  of  Avon.      Specific   considerations  on  the  details  of  such  an  exemption  include:   a. Consideration  of  marketing  activities  within  the  Town  by  out-­‐of-­‐town  Retailer;   and,   b. The  competitive  impact  on  existing  in-­‐town  Retailers.   5. Enact   an   Exemption   for   Public   Facilities   and   Projects:    Council   may   amend   Chapter  3.08  to  exempt  the  imposition  of  sales  tax  on  Building  Materials  used  for   public   facilities   and   projects.     Such   exemption   would   simply   repeal   Section   3.08.050(3)  so  that  the  Town’s  sales  tax  regulations  are  consistent  with  the  State’s   sales   tax   regulations.     Such   an   exemption   would   apply   to   both   sales   by   in-­‐town   Retailers  and  sales  by  out-­‐of-­‐town  Retailers  that  deliver  to  Town.   6. Enact   an   Exemption   for   Affordable   Housing   Projects:    Council   may   amend   Chapter   3.08   to   exempt  the   imposition   of   sales   tax   on   Building   Materials   for   affordable   housing   projects.      Specific   considerations   on   the   details   of   such   an   exemption  include:   a. Defining  what  qualifies  as  an  affordable  housing  project  (e.g.  deed  restriction);   and,   SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  19  OF  20   b. Whether   to   apply   the   exemption   to   sales   by   both   out-­‐of-­‐town   and   in-­‐town   Retailers.   7. Enact  a  “Credit”  or  “Rebate”  Rather  Than  Exemption:    Council  may  provide  sales   tax  relief  in  the  form  of  a  credit  or  rebate  rather  than  an  exemption.      A  “credit”  or  a   “rebate”  may  be  repealed  or  re-­‐defined  in  scope  without  the  requirement  of  advance   voter  approval  as  required  by  the  Taxpayer’s  Bill  of  Rights.    A  credit  or  rebate  may   be   more   appropriate   when   granting   tax   relief   for   affordable   housing   projects   because  the  Council  retains  greater  flexibility  to  update  the  definitions  and  scope  of   the  credit  or  rebate  over  time  depending  upon  circumstances.   8. Enact   a   Temporarily   Reduced   Sales   Tax   on   Delivered   Building   Materials:     Council   may   enact   a   temporary   sales   tax   credit   or   rebate   on   delivered   building   materials  which  is  phased  out  over  time.    The  Town’s  existing  4%  sales  tax  was   originally  phased-­‐in  such  that  the  sales  tax  rate  was  1%  for  the  first  year,  2%  the   second  year,  3%  the  third  year,  and  the  full  4%  commencing  on  the  fourth  year.   9. Refer  a  Use  Tax  Ballot  Question  for  Voter  Consideration:    Council  may  refer  a   ballot  question  on  Use  Tax  to  the  next  eligible  TABOR  election  on  November  8,  2016,   which,  if  approved  by  the  Avon  voters,  would  (1)  complement  the  Town’s  sales  tax,   as  widely  recognized  throughout  the  nation,  (2)  would  be  more  comprehensive  in   applying  to  all  goods  used  in  Avon  rather  than  goods  that  are  delivered  in  Avon  or   sold  in  Avon,  and  (3)  would  significantly  simplify  administration,  compliance  and   enforcement.   10. Dedicate  Sales  Tax  on  Building  Materials  to  a  Specific  Purpose:    Council  may   enact  an  ordinance  pledging  the  revenue  from  sales  tax  on  Building  Materials  to  a   specific  purpose  (e.g.  capital  improvement  projects,  affordable  housing).    Council   has  previously  enacted  an  ordinance  pledging  Real  Estate  Transfer  Tax  revenues  to   the  capital  improvement  projects  fund.    An  ordinance  adopting  a  pledge  or  earmark   of   revenues   for   an   identified   purpose   can   be   changed   by   a   future   Council   by   adoption  of  a  new  ordinance.                 SALES  TAX  REPORT  ON  BUILDING  MATERIALS   February  4,  2016 PAGE  20  OF  20   SECTION  V   RECOMMENDATIONS  FOR  SALES  TAX  ADMINISTRATION  IMPROVEMENT     Town  staff  provides  the  following  recommendations  to  improve  sales  tax  administration:     1. Meet  with  New  Licensees.    Newly  licensed  contractors  would  be  required  to  meet   with  Finance  Department  representatives  prior  to  being  issued  a  building  permit  to   ensure  they  have  the  proper  business  license,  determine  whether  or  not  they  are   required  to  have  a  sales  tax  license,  and  provide  necessary  assistance  and  guidance   in  these  processes.     2. Create  and  Publish  Administrative  Guidelines.    Administrative  Guidelines  would   be  used  to  provide  more  information  and/or  guidance  on  specific  sales  tax-­‐related   issues.    They  can  be  more  detailed  than  the  Municipal  Code  and  can  use  real-­‐life   examples.     3. Reach-­‐out  to  Potential  New  Licensees.    Conduct  periodic  informational  campaigns   to   inform   the   public   and   potential   new   businesses   about   the   Town’s   licensing   requirements.     4. Work   with   Community   Development   Department.    Coordinate   with   the   Community  Development  Department  to  identify  ways  to  ensure  compliance  with   the  Town’s  licensing  requirements.     5. Website  Improvements.    Continue  to  review  information  provided  on  the  Town’s   website  and  update  when  appropriate  to  improve  it’s  efficiency,  accessibility  and   functionality  for  users.                             EXHIBIT 1 EXHIBIT 2 EXHIBIT 3 EXHIBIT 4 EXHIBIT 5 EXHIBIT 5 EXHIBIT 5 EXHIBIT 5 EXHIBIT 6 EXHIBIT 6 EXHIBIT 6 EXHIBIT 6 TABLE 1 SALES TAX COLLECTIONS RELATED TO BUILDING MATERIALS 2010 - 2015 # of # of # of # of # of # of Building Materials NAICS Category Amount Filers Amount Filers Amount Filers Amount Filers Amount Filers Amount Filers Other Foundation, Structure, and Building Exterior Contractors 2,273.07$ 3 2,294.76$ 4 8,398.86$ 4 9,979.07$ 4 3,379.96$ 4 32,451.13$ 8 Other Building Equipment Contractors 14,209.32 15 10,237.09 16 21,712.16 21 19,251.09 33 22,227.27 33 45,839.52 31 Other Building Finishing Contractors 1,818.96 1 2,166.79 1 2,769.98 2 3,348.02 5 46,031.75 7 37,766.96 10 All Other Specialty Trade Contractors 6,340.97 19 10,234.98 17 9,769.90 15 8,709.09 22 92,789.42 33 123,600.94 49 Lumber Merchant Wholesalers 10,393.80 1 21,542.15 2 17,054.55 2 18,983.05 4 30,510.01 4 17,517.59 4 Plumbing & Heating Equip & Supplies Merchant Wholesalers 96,715.12 4 111,142.41 3 122,178.23 3 132,259.19 5 175,269.12 6 174,362.76 5 Floor Covering Stores - 2 - 0 - 0 - 2 49,140.77 9 73,515.17 10 Window Treatment Stores - 1 - 1 - 1 1,483.69 3 1,074.50 3 - 2 Household Appliance Stores - 1 2,064.67 3 57,691.60 3 28,660.05 4 15,958.72 4 18,895.68 4 Home Centers - 2 - 2 - 2 - 2 63,902.97 3 78,357.71 4 Paint and Wallpaper Stores - 0 - 0 - 0 - 2 - 1 - 1 Other Building Material Dealers 78,621.58 12 78,444.13 16 91,737.20 14 115,155.11 17 101,512.48 14 40,803.39 11 Total Sales Tax on Building Materials 210,372.82$ 61 238,126.98$ 65 331,312.48$ 67 337,828.36$ 103 601,796.97$ 121 643,110.85$ 139 In Town vs. Out-of-Town Building Materials In-Town 166,153.97$ 14 180,253.80$ 14 258,564.76$ 15 237,766.41$ 18 282,975.73$ 16 331,502.90$ 21 Out-of-Town 44,218.85 47 57,873.18 51 72,747.72 52 100,061.95 85 318,821.24 105 311,607.95 118 Total 210,372.82$ 61 238,126.98$ 65 331,312.48$ 67 337,828.36$ 103 601,796.97$ 121 643,110.85$ 139 In Town vs. Out-of-Town - All Categories In-Town 4,897,186.29$ 90.59%4,838,603.47$ 88.87%5,003,178.47$ 89.58%5,698,370.34$ 89.58%6,091,583.92$ 86.19%6,533,511.26$ 86.56% Out-of-Town 508,767.08 9.41%606,209.76 11.13%582,045.10 10.42%662,697.53 10.42%976,175.54 13.81%1,014,359.53 13.44% Total 5,405,953.37$ 100.00%5,444,813.23$ 100.00%5,585,223.57$ 100.00%6,361,067.87$ 100.00%7,067,759.46$ 100.00%7,547,870.79$ 100.00% Notes: (1) In those instances where there is less than 3 filers in a category, the sales tax amounts have been added to the category titled "Other Building Material Dealers" in order to maintain confidentiality. 201520102011201220132014 TABLE 2 COMMERCIAL AND RESIDENTIAL CONSTRUCTION LAST TEN FISCAL YEARS Total Total Building Permits Square No. of Construction Year Issued Footage Value Units Value Value 2006 146 26,639 114,860,200$ 12 13,980,955$ 128,841,155$ 2007 166 19,242 25,248,538 93 10,970,648 36,219,186 2008 145 11,416 2,525,749 15 11,165,780 13,691,529 2009 91 - 725,000 3 8,683,371 9,408,371 2010 112 16,517 3,215,036 7 9,806,550 13,021,586 2011 125 2,210 922,600 9 8,412,190 9,334,790 2012 126 54,250 11,400,000 8 2,448,500 13,848,500 2013 159 217,293 27,121,876 12 9,027,760 36,149,636 2014 156 - 1,500,000 10 13,735,900 15,235,900 2015 163 179,149 16,207,000 25 18,792,261 34,999,261 Source: Town of Avon Community Development Department Commercial Construction Residential Construction FISCAL YEAR 2015 FINANCIAL REPORT February 23, 2016 ______________________________________________________________________________________ 1. Fiscal Year 2015 Financial Report Cover Memo 2. Sales and Accommodations Tax Reports - December 2015 3. Real Estate Transfer Tax Report and Monthly Detail – January 2016 4. General Fund Year-To-Date Expenditures - January 2016 5. Fleet Maintenance Fund Year-To Date Expenditures - January 2016 6. Transit Fund Year-To Date Expenditures - January 2016 TOWN COUNCIL REPORT To: Honorable Mayor Jennie Fancher and Avon Town Council From: Kelly Huitt, Budget Analyst Date: February 17, 2016 Re: Fiscal Year 2015/2016 Financial Report – December / January Revenues: SALES TAX • Sales tax revenue for the month of December is down $62,104 or -5.09% compared to December 2014, and down -10.06% compared to the budget. This decrease includes $52,454 from new businesses, and after adjusting for new business growth, -9.38% is the loss in revenue from existing business for the month. Final 2015 year-to-date sales tax totals $480,337 more than 2014, and is $89,374 over the revised budget. New businesses make up a whopping 80.63% of this total growth. • December sales tax collections are up for Accommodations at 16.54%, Restaurants/Bars at 8.34%, Grocery and Health stores are up 8.06%, and Home/Garden increased 5.10% compared to December 2014. However, a few categories had major declines: Miscellaneous Retail decreased -22.34%, Other businesses are down -22.63%, and Service Related entities declined -73.03%. The decrease in existing business growth from Miscellaneous Retail can be partially attributed to two entities being re-categorized. The large decrease in the Service Related category is due to wide variances in returns from interior design and architecture businesses which were unusually high in December 2014. The Other business category is down from the reclassification of a few businesses combined with some large construction related returns in December 2014. 2014/2015 Growth Growth Variance Existing Business New Business Home/Garden 3,567.17 -5.90%11.00% Grocery, Specialty, Health 25,094.02 5.63%2.43% Liquor Stores 554.19 1.23%0.00% Sporting Goods Retail/Rental 3,358.03 1.99%0.00% Miscellaneous Retail (10,823.37)-22.90%0.56% Accommodations 28,649.17 13.18%3.37% Restaurants/Bars 10,214.02 3.90%4.44% Other (37,281.63)-36.04%13.41% Service Related (85,435.13)-76.09%3.05% Total ($62,103.53)-9.38%4.30% Category Sales Tax Monthly Totals - December 2015 ACCOMMODATIONS TAX • Accommodations tax revenue for December is up $29,476, or 17.45% compared to December 2014, and up 8.36% compared to the monthly budget. Final year-to-date accommodations tax totals $137,035 more than 2014, and is $53,513 over the revised budget. • December 2015 accommodations tax collections are up for all lodging types compared to December 2014: Hotels are up 10.83%, Vacation Rentals increased 17.08%, and Timeshare units improved by 39.89%. REAL ESTATE TRANSFER TAX • 2016 real estate transfer tax collections for January equal $64,422, which is a $15,782 increase over January 2015. Expenditures: • General Fund expenditures through January 2016 total 11.44% of the total 2016 budget. These expenditures include the Town’s annual insurance premium, $40,000 for the Winter Wondergrass event, $25,000 toward the writer’s conference, and $87,110 encumbered for community grants. • Fleet expenditures for January are at 10.13% of the total budget. These costs include blanket encumbrances for stock parts and ongoing expenditures such as regularly purchased shop supplies and monthly copier charges. • Transit funds are 22.29% expended compared to the 2016 budget. These expenditures include a $135,000 encumbrance for the 2015 people mover bus purchase, as well as $176,000 for the Town’s half of the 2016 gondola operations. Category New Business Growth Total Growth Home/Garden 58,323.12 (25,843.52)32,479.60 Grocery, Specialty, Health 27,128.25 112,572.85 139,701.10 Liquor Stores 216.56 15,840.65 16,057.21 Sporting Goods Retail/Rental 16,462.14 50,703.56 67,165.70 Miscellaneous Retail 19,198.07 (28,623.73)(9,425.66) Accommodations 19,868.38 108,400.30 128,268.68 Restaurants/Bars 13,218.63 63,354.37 76,573.00 Other 202,392.03 (122,212.32)80,179.71 Service Related 30,505.52 (81,167.41)(50,661.89) Total $387,312.70 $93,024.75 $480,337.45 Sales Tax Annual Totals - 2015 TOWN OF AVON SALES TAX 2015 Actual vs. Budget Budget YTD Collections Budget % of change 2010 2011 2012 2013 2014 2015 2015 Variance from 2014 January 515,009.18$ 511,040.76$ 519,784.89$ 677,943.78$ 638,863.27$ 674,203$ 765,195.68$ 90,992.75$ 19.77% February 504,752.59 532,903.25 533,546.48 636,702.27 673,722.03 710,990 788,999.06 78,009.10 17.11% March 620,937.20 665,532.70 643,910.29 720,267.31 793,301.96 837,185 875,499.53 38,314.90 10.36% April 309,937.09 305,269.73 304,220.84 307,407.13 381,839.56 402,962 403,560.42 598.84 5.69% May 242,830.16 236,424.93 270,082.79 309,938.72 340,332.28 359,158 353,840.11 (5,318.15) 3.97% June 377,920.42 406,828.27 430,588.57 490,329.18 538,517.31 568,306 570,424.51 2,118.32 5.93% July 421,975.98 452,873.44 472,215.40 537,479.66 570,959.86 602,543 601,516.82 (1,026.53) 5.35% August 361,702.25 419,977.29 455,439.86 504,332.25 547,085.80 577,349 572,647.57 (4,701.09) 4.67% September 359,139.22 391,546.49 424,793.75 475,362.88 546,016.59 576,220 595,235.68 19,015.38 9.01% October 288,859.84 299,193.35 341,711.43 356,925.96 417,921.46 441,039 423,701.53 (17,337.87) 1.38% November 284,528.70 301,407.41 336,060.63 362,460.94 397,935.36 419,948 438,315.55 18,367.81 10.15% December 818,360.74 921,815.61 852,868.64 981,917.79 1,221,263.98 1,288,820 1,159,160.45 (129,659.55) -5.09% Total 5,105,953.37$ 5,444,813.23$ 5,585,223.57$ 6,361,067.87$ 7,067,759.46$ 7,458,723$ 7,548,096.91$ 89,373.91$ 6.80% Actual Collections $0 $100,000 $200,000 $300,000 $400,000 $500,000 2011 2012 2013 2014 2015 Year Sales Tax Collections for December TOWN OF AVON SALES TAX 2015 Actual vs. Budget $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 2011 2012 2013 2014 2015 YTD Sales Tax Comparison January - December $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 $1,000,000 $1,100,000 $1,200,000 $1,300,000 Sales Tax Monthly Comparison 2013-2015 2013 2014 2015 TOWN OF AVON ACCOMMODATIONS TAX 2015 Actual vs. Budget Actual Collections Budget YTD Collections Budget % change 2010 2011 2012 2013 2014 2015 2015 Variance 2014 January 87,938.84$ 85,233.73$ 90,118.88$ 108,508.43$ 129,851.78$ 140,746$ 164,361.04$ 23,615.12$ 26.58% February 99,336.34 114,035.90 106,016.32 137,503.61 150,317.06 162,928 175,056.31 12,128.14 16.46% March 105,518.15 122,145.16 115,043.42 153,208.80 168,597.39 182,742 183,650.29 908.13 8.93% April 26,496.88 26,214.58 20,786.24 26,494.49 31,626.02 34,279 34,825.13 545.79 10.12% May 12,425.51 15,152.82 16,664.44 24,527.17 21,961.97 23,805 28,002.56 4,198.05 27.50% June 32,857.68 49,999.66 56,012.17 66,578.91 54,232.23 58,782 53,397.46 (5,384.68) -1.54% July 51,170.82 62,928.07 66,726.73 73,008.92 81,083.01 87,886 86,301.22 (1,584.39) 6.44% August 42,188.56 52,037.55 58,358.93 67,688.07 71,044.33 77,005 75,107.71 (1,897.01) 5.72% September 30,090.34 35,521.81 42,245.24 44,661.37 50,840.16 55,105 60,417.74 5,312.26 18.84% October 20,614.06 21,801.56 25,879.51 27,154.53 34,977.59 37,912 38,706.72 794.62 10.66% November 20,582.47 24,971.33 22,786.42 28,171.04 32,064.02 34,754 34,328.47 (425.62) 7.06% December 98,561.90 135,984.00 112,759.02 131,361.43 168,944.85 183,119 198,421.26 15,302.49 17.45% Total 627,781.55$ 746,026.17$ 733,397.32$ 888,866.77$ 995,540.41$ 1,079,063$ 1,132,575.91$ 53,512.91$ 13.76% - 25,000.00 50,000.00 75,000.00 100,000.00 125,000.00 150,000.00 175,000.00 200,000.00 2011 2012 2013 2014 2015 Accommodations Tax Collections for December Town of Avon Real Estate Transfer Tax 2016 Actual vs. Budget Budget YTD Collections $ change % of change 2011 2012 2013 2014 2015 2016 2016 2015 2015 January 57,540.00$ 50,204.00$ 22,535.00$ 85,126.74$ 48,640.40$ 50,539$ 64,422.00$ 15,781.60$ 32.45% February 230,705.50 41,750.07 55,872.69 562,219.70 85,479.08 186,812 March 187,099.47 84,760.49 125,927.64 50,375.06 168,744.22 118,076 April 249,482.30 219,195.80 144,437.80 197,656.36 125,266.30 179,158 May 187,668.62 270,170.12 121,784.12 183,745.60 237,971.08 191,657 June 49,606.58 169,040.47 90,309.74 220,009.15 294,434.84 157,600 July 46,707.37 71,057.40 386,434.78 141,051.52 396,838.68 199,457 August 106,785.21 232,505.93 97,579.70 154,032.32 152,380.93 142,265 September 140,876.56 96,389.34 157,010.67 267,886.92 291,223.61 182,479 October 64,005.33 176,889.62 169,839.80 178,044.24 172,855.22 145,777 November 98,057.44 150,549.86 112,491.82 122,582.66 169,328.38 124,987 December 198,448.03 145,134.57 83,382.60 1,598,062.92 175,552.42 421,193 Total 1,616,982.41$ 1,707,647.67$ 1,567,606.36$ 3,760,793.19$ 2,318,715.16$ 2,100,000$ 64,422.00$ 15,781.60$ 32.45% Budget 2,100,000.00 Variance, Favorable (Unfavorable)(2,035,578.00)$ Actual Collections $- $20,000.00 $40,000.00 $60,000.00 $80,000.00 $100,000.00 2012 2013 2014 2015 2016 YTD Real Estate Transfer Tax Collections Dept./Div.2016 Encumbrances Year To Date Available Number Description Budget Outstanding Expenditures Balance YTD/Budget General Government: 111 Mayor and Town Council 210,907$ 8,874$ 27,324$ 174,709$ 17.16% 112 Boards and Commissions 15,300 - 1,018 14,282 6.65% 113 Town Attorney 130,000 - - 130,000 0.00% 115 Town Clerk 135,636 17,465 13,578 104,593 22.89% 121 Municipal Court 124,210 - 7,185 117,025 5.78% 131 Town Manager 366,967 1,158 27,690 338,119 7.86% 133 Community Relations 149,897 10,372 6,178 133,347 11.04% Total General Government 1,132,917 37,869 82,973 1,012,075 10.67% Human Resources Department: 132 Human Resources 411,819 11,924 23,721 376,174 8.66% Finance & IT Department: 141 Finance 812,834 16,325 51,892 744,617 8.39% 143 Information Systems 384,846 22,735 14,374 347,737 9.64% 149 Nondepartmental 398,813 46,114 148,231 204,468 48.73% Total Finance & IT 1,596,493 85,174 214,497 1,296,822 18.77% Total General Gov't Departments 3,141,229 134,967 321,191 2,685,071 14.52% Community Development: 212 Planning 317,767 23,618 7,687 286,462 9.85% 213 Building Inspection 146,758 3,750 8,380 134,628 8.27% 214 Economic Development 40,600 5,113 - 35,487 12.59% 215 Town Produced Events 314,364 - 8,807 305,557 2.80% 216 Signature Event Seed Funding 125,000 31,500 65,000 28,500 77.20% 217 Community Grants 230,150 87,110 - 143,040 37.85% Total Community Development 1,174,639 151,091 89,874 933,674 20.51% Police Department: 311 Administration 658,376 27,506 37,488 593,382 9.87% 312 Patrol 2,331,166 35,174 118,881 2,177,111 6.61% 313 Investigations 263,742 - 15,052 248,690 5.71% Total Police 3,253,284 62,680 171,421 3,019,183 7.20% Public Works: 412 Engineering 273,664 2,626 14,497 256,541 6.26% 413 Roads and Bridges 1,612,864 90,988 64,150 1,457,726 9.62% 415 Parks 1,093,645 26,035 41,772 1,025,838 6.20% 418 Buildings & Facilities 1,109,892 164,209 34,769 910,914 17.93% Total Public Works 4,090,065 283,858 155,188 3,651,019 10.73% Recreation Department: 514 Administration 238,222 15,206 26,295 196,721 17.42% 515 Adult Programs 58,827 590 2,758 55,479 5.69% 516 Aquatics 427,447 10,764 21,966 394,717 7.66% 518 Fitness 132,740 - 3,316 129,424 2.50% 519 Guest Services 292,090 7,500 15,363 269,227 7.83% 521 Youth Programs 132,412 927 5,294 126,191 4.70% Total Recreation 1,281,738 34,987 74,992 1,171,759 8.58% TOTAL OPERATING EXPENDITURES 12,940,955$ 667,583$ 812,666$ 11,460,706 11.44% Department Expenditure Summaries General Fund January 2016 Expenditures to Date Dept./Div.2016 Encumbrances Year To Date Available Number Description Budget Outstanding Expenditures Balance YTD/Budget EXPENDITURES Public Works: 434 Fleet Maintenance 1,785,969$ 70,924$ 109,956$ 1,605,089$ 10.13% Total Operating Expenditures 1,785,969 70,924 109,956 1,605,089 10.13% TOTAL EXPENDITURES 1,785,969$ 70,924$ 109,956$ 1,605,089$ 10.13% Expenditure Summary Fleet Maintenance Enterprise Fund January 2016 Expenditures to Date Dept./Div.2016 Encumbrances Year To Date Available Number Description Budget Outstanding Expenditures Balance YTD/Budget EXPENDITURES 431 Transit Administration 239,797$ 11,584$ 22,413$ 205,800$ 14.18% 432 Transit Operations 1,549,213 140,450 245,624 1,163,139 24.92% 435 Wash Bay 159,486 10,954 3,310 145,222 8.94% Total Operating Expenditures 1,948,496 162,988 271,347 1,514,161 22.29% TOTAL EXPENDITURES 1,948,496$ 162,988$ 271,347$ 1,514,161$ 22.29% Expenditure Summary Transit Enterprise Fund January 2016 Expenditures to Date TOWN COUNCIL REPORT To: Honorable Mayor Jennie Fancher and Town Council From: Preston Neill, Executive Assistant to the Town Manager Date: February 23, 2016 Agenda Topic: Town Code Requirement for Gift Reporting and Disclosure Report The Town Code of Ethics requires disclosure of any gifts received which exceed $50 in value. “Gifts” includes any present, or offer of future, individual gift, favor, loan, service or thing of value in excess of $50.00 and such gift is offered due to such person’s status as a Town Officer then such Officer shall report such gift and the estimated value to the Town Clerk. The Avon Municipal Code requires the Town Clerk to disclose through a report any gifts offered to any Town Officer per Section 2.30.170 of the Town Code of Ethics. Please find attached the Town Clerk Gift Reporting Disclosure Report for February 2016, which lists the following: 1) Fourteen (14) 3-day VIP passes to the WinterWonderGrass Music & Brew Festival from February 19th through February 21st 2) Two (2) single-days VIP passes to the WinterWonderGrass Music & Brew Festival on February 19th 3) One (1) general admission pass to the WinterWonderGrass Music & Brew Festival on February 19th 4) Six (6) 3-day general admission passes to the WinterWonderGrass Music & Brew Festival from February 19th through February 21st Town Council is not required to take any action; however, any Town Council member may request Council consideration of a report gift to determine whether such gift constitutes a conflict of interest. Town of Avon Town Clerk Disclosure Report In accordance with §7, Article XXIX of the Colorado Constitution and Section 2.30.170, Chapter 2.30 Avon Town Code of Ethics of the Avon Municipal Code, and any other applicable Avon Home Rule Charter provision, ordinance or resolution adopted by the Town of Avon, I, Debbie Hoppe, Town Clerk for Town of Avon, submit the following list of such gifts reported to be received by officers of the Town of Avon: 1. 2016 WinterWonderGrass Music & Brew Festival VIP Passes – The Town Council received fourteen (14) 3-day VIP passes to WinterWonderGrass from February 19th through February 21st. Each member of the Council received two (2) passes, one provided for the purpose of reviewing the event for production and for any future funding request, and the second provided as a gift for a guest. Each pass is valued at $299.00. 2. 2016 WinterWonderGrass Music & Brew Festival VIP Passes – Mayor Jennie Fancher received two (2) single-day VIP passes to WinterWonderGrass on February 19th, valued at $286.00. 3. 2016 WinterWonderGrass Music and Brew Festival General Admission Pass – Festival and Special Events Director received one (1) single-day General Admission pass to WinterWonderGrass on February 19th, valued at $74.00. 4. 2016 WinterWonderGrass Music & Brew Festival Three-Day Passes – A Town employee drawing was held for six (6) 3-day general admission passes to WinterWonderGrass from February 19th through February 21st. Three (3) Town employees were awarded passes as they were given away in pairs. Each pass is valued at $149.00. Submitted to the Avon Town Council on February 23, 2016. _________________________________ Debbie Hoppe, Town Clerk