I think we need to bite the bullet. — John Shada
By William J. Dagendesh
The Manitou Arts, Culture, and Heritage board’s recommendations for the 2023 grant awards dominated the March 14 Manitou Springs City Council work session.
MACH uses a slight increase in sales and use taxes to create a special fund that voters approved in 2019. Two-thirds of the amount is earmarked for facility improvements and operations at the Carnegie Library, the Manitou Art Center, the Manitou Springs Heritage Center, Miramont Castle and the Hiawatha Gardens property.
The remaining 34 percent is for council-approved distribution through awards and grants.
Minch said the city budget includes $488,826 for the MACH sales tax revenue expected this year.
“The way this is expected to be expended is $476,426 on grants, $2,400 on staff administrative support and $1,000 for training we do in October and November. We will be making some photo investments in web application we estimate at about $9,000,” Minch said.
“This is on top of the $10,000 we spent last year. Some of the accomplishments in the 2022 grant round [included] adding two new board members. We made some changes to the MACH logo, we completed the custom website app and I will show you a summary of last year’s projects.
“For 2023 we have our grant awards. We have to take another look at the MACH goals and objectives as the program has dramatically increased. We have to bring it back to council for guidance as I am not sure where that is going to take us. We need to get one additional board member and we have two alternates open.”
Minch summarized 2022, highlighting 35 MACH-funded projects including events, classes, art exhibitions, installations, concerts, festivals and marketplace.
“At the end of each year, applicants submit a project completion report that outlines what happened and that includes the actual participation,” Minch said.
The application window for 2023 closed on Jan. 6. On Jan. 5, MACH had the five Tier 1 presentations and, a week later, the top 12 funding requestors were invited for a question and answer session.
Jan. 26 saw the first competitive application calibration session and a second calibration session on Feb. 9. MACH produced a list of final recommendations for board approval on Feb. 23.
A summary of the 2023 recommendations is $318,979 for Tier 1 properties and $151,923 for competitive grants.
“The reason there is a difference between that and the budget is the dollars for our budget come from that pool. Based on this recommendation, there will not be a mid-year cycle,” Minch said.
At one point, Councilor Julie Wolfe questioned the legality of giving tax monies to religious entities.
“I suggest that be run by our city attorney before we start giving money away to churches, because this is tax money,” Wolfe said.
St. Andrew’s Episcopal Church applied for an exterior security system to protect the historic property from vandalism. Minch said that request is on the recommended to fund list.
Council is expected to approve the MACH board’s recommendations by Tuesday, March 21.
Also, council discussed the storm drainage fees rate case and the storm drainage fund rate study.
In addition to maintenance and improvements to the city’s stormwater infrastructure, the fund covers the cost of ensuring the city’s Environmental Protection Agency mandatory stormwater monitoring program and municipal separate storm sewer systems, known as MS4.
This is designed to prevent stormwater runoff from washing harmful pollutants into local surface waters. The Colorado Department of Public Health and Environment would enforce civil penalties if MS4 requirements are violated.
Finance Director Rebecca Davis said the fund has never had a rate study performed on its revenues and expenses. The last rate increase was $13 to $15 in 2018, per a request from Public Works. Davis said inflation has increased the fund’s expenses in the past few years and revenues have not kept pace.
“Because of this, staff commissioned a rate study analysis from FCS Group to ensure the continued health of the fund,” Davis said.
Boulder-based FCS Group provides solutions to financial, management and economic challenges that public sector clients face.
FCS Group Project Manager Melanie Hobart said potential funding adjustments are needed. FCSG provides solutions to effectively address financial, management and economic challenges faced by public sector clients.
Hobart went over the existing fund balance trajectory, recommendations, annual financial obligations and revenues, updated fund balance trajectory and monthly bill impact, and explained the rate study process.
“A rate study is not just a financial exercise, but a look at operations, the capital program,” Hobart said.
According to Hobart, the utility revenue covers the cost of providing that service.
“Utilities are enterprise funds, they’re supposed to be self-sustaining, which means is you have to have rates or other revenues to cover the full costs of operations and capital going forward,” she explained.
Hobart described two types of costs: operating costs (regular/ongoing) that includes employee salaries and benefits, routine inspections and asset repair/maintenance, whereas capital costs (irregular/periodic) include infrastructure replacement, facility expansions/ upgrades and debt service.
Hobart said the fund is for flood mitigation projects and the city’s mandatory EPA stormwater monitoring program. The storm drainage deptartment is responsible for maintenance and improvement to Manitou’s stormwater infrastructure.
The department oversees all construction and maintenance activities relating to inlet, storm drain pipes, channels, culverts and open conveyances. Stormwater staff is responsible for street sweeping and assists with removing snow and debris, and ensures compliance with the city’s MS-4 permit.
Hobart’s forecast includes a general cost inflation of 5 percent in Fiscal Year 2023, reducing to 4.5 percent in FY24, then down to 3.5 percent in FY25 onward.
“Inflation has been higher the past couple of years, so we are starting a little higher and phasing it down, so for both general and construction cost inflation, we’re starting at 5 percent, but are down to 3.5 percent annual increases by 2025,” Hobart said.
The growth rate forecast showed a conservative growth rate of 0.0 percent per year, given that the city is fully developed.
The monthly utility bill will increase by $2 per month. The fiscal impact will increase the storm drainage fee on July 1, 2023, from $15 to $17 with additional increases in the coming years. This will allow the fund to keep revenues on pace with the operations and capital improvements cost increases.
Mayor John Graham said he could support a $2 increase in July. Mayor Pro Tem Nancy Fortuin said, “I am fine with approving this year’s increase and getting more information to look at the entire program in greater depth later.”
Councilor John Shada added, “I think we need to bite the bullet and raise the rates for this year.”
Councilor Natalie Johnson agreed. “I am comfortable for raising the rates for this year, but would also like to have the bigger picture conversation when we get more information,” Johnson said.
Councilor Judith Chandler said more information will help council provide better information to residents.
“When residents call us and are upset with their bill, it [helps] us give them the information they need so they have a better understanding,” Chandler said.
Council will have a regular meeting at 6 p.m. Tuesday, March 21.