HomeMy WebLinkAbout8-21-23 Study Session Agenda PacketSTUDY SESSION AGENDA
CITY COUNCIL
CITY OF WHEAT RIDGE, COLORADO 7500 W. 29th Ave. Wheat Ridge CO August 21, 2023
6:30 pm
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Public Comment on Agenda Items
1. Presentation from Lutheran Foundation
2. Proposition 123 – Affordable Housing Update
3. Telecommunications Occupation Tax
4. Staff Report(s)
5. Elected Officials’ Report(s)
Memorandum
TO: Mayor and City Council
FROM: Patrick Goff, City Manager
DATE: August 13, 2023 (for August 21st study session) SUBJECT: Presentation from the Lutheran Medical Center Foundation
ISSUE: Councilmembers Hoppe and Dozeman requested to add to a future study session a presentation from the Lutheran Medical Center Foundation. Kathie Repola, Executive Director of the Foundation, will be at the August 21 study session to provide such
presentation. PRIOR ACTION: N/A FINANCIAL IMPACT:
N/A BACKGROUND: Lutheran Medical Center Foundation is a Colorado 501c3 public nonprofit that partners
with individuals, businesses, grant makers, physicians and the community to achieve its
mission of building philanthropic support for not-for-profit Lutheran Medical Center and all of its affiliated services, including Lutheran Hospice at the Collier Hospice Center and West Pines Behavioral Health.
The Foundation’s vision is to provide for the changing healthcare needs of the
community by building state-of-the-art facilities, developing innovative care models, and
making sure every patient has access to world-class care. The Foundation turns good healthcare into exceptional healthcare by enabling Lutheran’s staff to exceed the expectations of the people they serve.
History
At the start of the 20th Century, Denver’s population was booming, with residents
spreading out across the plains to develop agriculture, mining, manufacturing and more. As settlement grew, however, so did the need for medical care.
Staff Report – Presentation from Lutheran Medical Center Foundation August 21, 2023 Page 2
In 1905, congregants from St. John’s Lutheran Church in Denver rallied to the cause of opening a tuberculosis sanitarium to care for the city’s residents and visitors. They raised just over $15,000 to purchase 20 acres of land in Wheat Ridge, a few miles west of Denver. The property had two structures: a two-story farmhouse and a five-room
cottage. Patients arrived almost immediately to benefit from the dry, cool air of Colorado’s high plains at the new Evangelical Lutheran Sanitarium.
Over the last 114 years, the Sanitarium has evolved into Lutheran Medical Center. While the hospital still occupies its original 20-acre parcel, and the farmhouse still stands, today’s campus and its affiliated care sites include an acute care hospital, an
accredited hospice and palliative program, behavioral health and addiction services.
Each year, Lutheran’s staff and physicians deliver approximately 2,000 babies, provide inpatient care for 17,000 individuals and emergency services to 70,000 neighbors, and treat 170,000 people with high-quality outpatient service. Lutheran Medical Center, a member of SCL Health (now Intermountain Healthcare), was recognized by
Healthgrades in 2018 as one of America’s Top 50 Best Hospitals, making Lutheran
among the top one percent of more than 4,500 hospitals assessed nationwide.
In 2007, Lutheran Medical Center Foundation incorporated as a 501c3 and assumed full responsibility for all fundraising for Lutheran. At the same time, Community First Foundation, Lutheran’s fundraising entity from 1975 to 2007, broadened its reach as a
community foundation and as of 2013, ended its governance role in SCL Health.
Today, Lutheran Medical Center Foundation generates resources to support care and services at Lutheran Medical Center and is well positioned to assist individuals and corporations with charitable giving to benefit the community.
RECOMMENDATIONS:
This presentation is informational only. ATTACHMENTS: 1. Lutheran Foundation Presentation
The Legacy Continues Campaign
The New Intermountain Health Lutheran Hospital
A Replacement Hospital to Serve the Growing Needs of the Community
ATTACHMENT 1
Presentation Overview
The Legacy Continues Campaign Progress
Campaign Timeline
Naming Opportunities
New Hospital Updates
Double Your Impact
Foundation
Hospital History & Facts
Hospital History & Facts
1905 –Opened as the Lutheran Sanitarium
For over a century, Lutheran has grown and expanded to meet the community’s healthcare needs
1975 –The Lutheran Medical Center Foundation formed to help fundraise for hospital needs
1988 –West Pines opens to support mental and emotional health needs
1996 –Women’s Center opens
1998 –LMC joined St. Joseph Hospital and Exempla Medical Group to become Exempla
Healthcare
2001 –Lutheran Breast Care Center opens
2003 –Heart Center, Intensive Care Unit open; Radiation and Oncology department expand; Level
III ED becomes 2nd busiest in Denver Metro area
2006 –Collier Hospice at Lutheran
Hospital History & Facts
2010 – Exempla Healthcare joined with Sisters of Charity Leavenworth to become SCL Health
2018 – Lutheran purchases land at Clear Creek Crossing to build a new state-of-the-art
replacement hospital
2020 –Receive Magnet Designation for nursing excellence, quality patient care, and
innovations in professional nursing practices.
2021 –The Legacy Continues Campaign Kicks off to fundraise for the new hospital
2021 –Designated as a Level II Trauma Center
2021 –Groundbreaking for New Replacement Lutheran Hospital
2022 – SCL Health and Intermountain Healthcare, two of the highest rated non-profit
healthcare systems in the region, merge
Fall 2024 –Anticipated opening of the new Intermountain Health Lutheran Hospital
Hospital History & Facts
Lutheran is the only hospital in Jefferson County that delivers babies and offers an inpatient
hospice program, meaning we care for patients from their first breath to their last, and
everything in between.
Award-winning Women’s Services:
•2020, 2021, 2022 Newsweek America’s Best Maternity Hospitals & Women’s Choice Award
Best Hospitals
•2022-2023 –US News & World Report Best Hospitals for Maternity Care
Certified Comprehensive Stroke Center
•2022 AHA Gold plus, Target Stroke Elite Plus Honor Roll, Target Stroke Advanced
Comprehensive Cancer Center, including a Specialized Breast Center and Lymphedema
Clinic
Heart & Vascular Center
•2019, 2020, 2021, 2022 NCDR Chest Pain MI Registry Platinum Performance Achievement
Award
Lutheran Foundation Impact
Services & Programs Supported
Care Management
•"A Perfect Homecoming" -Program to help at-risk seniors in Jeffco after discharge to ensure
they have access to resources and help
•Outpatient Pharmacy Medication Charity –covers the cost of prescriptions for patients unable
to afford medication
•Clothes, hygiene products, and essentials for patients in need
Cancer Services
•Integrative Health Services
•Equipment
Mom/Baby
Services & Programs Supported
Additional Funded Programs
•Infrastructure improvements to West Pines including ligature risk mitigation
and enhanced security measures
•Neuroscience Symposium
•Education and conferences
•Various Staff Resiliency Programs
•Heart Failure Clinic Care Kits
Trauma Services
•Bereavement Counseling for the community
•Transition to EPIC system
•Education materials for staff and families
•Palliative Care Services
The Lutheran Legacy Continues (thelutheranlegacy.org)
●Photos
●Construction Progression Tour
●Video Highlights
Check out the new hospital website for
updates:
New Hospital Fun
Facts & Figures
Pre-Campaign Planning
Membership
and Public PhasePlanning and Leadership Phase Follow
Through
2018 -2020 July 2021 through December 2023 Jan. 2024-Dec. 2026 Jan. 2026 –Dec. 2026
Pre-Campaign Planning•Set Working Goal•ID and Engage Prospects•Initial Case for Support•Initial Community Outreach•Engage Feasibility Consultant
Leadership Phase (2021 –2023)•Create and Convene Campaign Committee•Conduct Board Campaign•Host Listening Sessions•Conduct Walking Tours•Solicit Largest Gifts•Review and Revise Goal•Plan Campaign Kick-off
Public Phase•Solicit Mid-level Gifts•Solicit Membership Gifts•Solicit Broad-base Gifts•Host House Parties and Events•Donor stewardship
Follow Through•Thank Donors•Show Donors Impact•Final Campaign Report
Plan Campaign•Board Approves Campaign•Rendering Complete•Enlist Campaign Committee•ID More Prospects•Finalize Case for Support•Develop Campaign Plan Timeline•Create Donor Recognition Plan•Develop Communications Plan
Projected Hospital OpeningCampaign Kick-Off•60%+ of Goal Raised•Announce Campaign Goal•Announce Progress to Date•Celebrate Success•Press and Media Campaign
Fluid Campaign TimelineYOUR LOGO HERE
Feasibility StudyJanuary 2021 –July 2021•Assess Readiness•Recommend Plan
Planning and Leadership Phase
Campaign Progress
$3.5 Million Opportunity:●Central Courtyard
$2 Million Opportunity:●Main Lobby
$1 Million Opportunities:●Dining Area●Education Center●Emergency Department●“The Overlook” –2nd Floor Balcony
$500,000 Opportunities:●Chapel●Chapel Reflection Garden●Physician Staff Lounge/Dining Area●Pharmacy●Pathology Lab●Helipad
$300,000 Opportunities:●MRI Suite (2)●Sky Bridge (Parking Garage to Hospital)
Proposed Naming Opportunities
Building a new replacement hospital not only opens a state-of-the-art facility, but also an abundance of fundraising opportunities through naming recognition. The current proposal outlines approximately $33.2 million in naming opportunities throughout the new hospital. The spreadsheet is tentative based on the currently proposed renderings and designed to be updated throughout the building process as needed. Additional areas where the location and size is unknown or that are not included in the formal plan at the moment, may provide additional naming opportunities as the project and campaign progress. The following information is a summary of the draft for review and recommendations.
$200,000 Opportunities:●Outdoor Mall●CT Imaging Suite (3)
$150,000 Opportunities:
●Private Mom/Baby Postpartum Rooms (19)
●Milk Preparation Room
$100,000 Opportunities:
●Offering 43 areas at this cost point. Primarily,
procedure rooms within the diagnostic services
and surgery departments, operating rooms, and
areas within Mom/Baby and the NICU.
●Central Utility Plant
$75,000 Opportunities:
●Staff Lounges (All Levels)
●L&D/Recovery Rooms (11)
$50,000 Opportunities:
●Many areas included at this cost point.
Most notably, conference rooms (levels 4
& 5), on-call and triage rooms in
Mom/Baby, and “family” consultation
rooms in common areas.
$30,000 Opportunities: ●Family Lounge Vistas (Level 3 –6)●PM&R Staff Workroom
$25,000 Opportunity: ●Patient Rooms –16 on Level 1; 64 on Level
4; 48 on Levels 5 and 6
$20,000 Opportunity:
●Care Team Stations (4 large ones, many
smaller as well)
$10,000 Opportunity:
●Benches (throughout)
Double Your Impact -Board Match
Supporting Our Community’s Healthcare Future
The Campaign for the New Lutheran Medical Center
●Partner with us in sharing our vision
●Invest in a way that is meaningful to you
●Identify others who would want to be a part of
the New Lutheran
Learn more at TheLutheranLegacy.org
Thank You
Memorandum
TO: Mayor and City Council
THROUGH: Lauren Mikulak, Community Development Director Patrick Goff, City Manager
FROM: Jana Easley, Planning Manager
DATE: August 10, 2023 (For August 21, 2023, Study Session)
SUBJECT: Proposition 123 / Affordable Housing Update
ISSUE: Addressing housing affordability is one of the City’s and State’s most pressing issues. Colorado voters enacted Proposition 123 in 2022 that will make several hundred million dollars available for affordable housing statewide starting in late 2023. For a project to be eligible for these funds
in Wheat Ridge, the City must file a commitment to increase its supply of affordable housing over the next three years to the State of Colorado, Division of Housing. This commitment is due by November 1, 2023.
PRIOR ACTIONS:
City Council adopted the Affordable Housing Strategy and Action Plan (“Strategy”) on January 9, 2023, and subsequently created the Wheat Ridge Housing Fund on June 12, 2023. City Council approved a new position and budget supplemental for a Housing Program Administrator on May 22, 2023.
FINANCIAL IMPACT: Filing a commitment to increase the City’s supply of affordable housing will not have an immediate financial impact on the City; however, it is a necessary step for the City, or any affordable housing developer with a project in the City, to be able to access
Proposition 123 funds over the next three years.
BACKGROUND: Proposition 123 At the general election in 2022, Colorado voters approved Proposition 123, which created a
Statewide Affordable Housing Fund. It is funded by state income tax revenue and overseen by
the Department of Local Affairs (DOLA) and the Governor’s Office of Economic Development and International Trade (OEDIT). The state estimates the fund will generate $300 million annually, with funds becoming available starting in the second half of 2023.
Proposition 123 / Affordable Housing Update August 21, 2023
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The state housing fund will be split between two entities for administration. The Colorado Housing Finance Authority (CHFA) will receive 60% of funds to establish programs related to
equity investments, debt financing, and land banking. The Department of Housing (DOH) will
receive 40% of funds to establish programs related to affordable home ownership, homelessness, and to increase local government capacity for expedited review of affordable housing projects. Affordable Housing Commitment
As a prerequisite to accessing funds, local governments are required to make two commitments:
1) a commitment to expedited review of affordable housing projects and 2) a commitment to increasing the supply of affordable housing by 3% annually. Fast track reviews are not required until 2027, and rulemaking around this topic is still in process. The current focus is on the 3% growth commitment.
In order to access funds, a commitment is due to the state by November 1, 2023. The specific commitment is to increase the supply of affordable housing units (newly built and/or converted) by 3% per year. The City may commit to 3% for one year, 6% for two years, or 9% for three years. Staff is recommending a 9% commitment over three years.
In filing a commitment to the state, the City (and any affordable housing developers within the City) will be eligible to receive the Proposition 123 funds. There would be no financial impact to the City to make a commitment. The City would be eligible for Proposition 123 funds for the duration of the commitment (for three years if we make a three-year 9% commitment).
If the City does not meet its 9% goal by the end of three years, Proposition 123 funds would not be available for a period of one year. After that ineligibility period, the City can file a new commitment and regain access to funds.
Establishing a Baseline
In order to assess growth, a baseline must be established, and measuring the current size of the City’s affordable housing stock is difficult. The baseline includes rental and for-sale units, and housing units are considered affordable if:
• For rental units, they cost less than 30% of the monthly income for a household at or
below 60% of the area median income (AMI).
• For ownership units:
o The mortgage payment costs less than 30% of the monthly income for a household at or below 100% of the AMI, or
o The unit could be purchased by a household at or below 100% of the AMI.
AMI limits are established annually by the U.S. Department of Housing and Urban Development
(HUD) for varying household sizes. HUD uses one set of AMI limits for most of the Denver metropolitan area, including Jefferson County. For reference, the 2023 family AMI for the Denver metro area is $125,500. For more information, visit HUD’s income limits page.
Proposition 123 / Affordable Housing Update August 21, 2023
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The City’s baseline amount of affordable housing can be estimated using one of three methods: U.S. Census data, HUD’s housing affordability strategies estimate, or DOLA’s web-based
assessment tool. There are pros and cons to each method. DOLA is providing technical
assistance to staff and to communities throughout the state through webinars and one-on-one assistance. Staff will establish the baseline with input and concurrence from DOLA. Action Plan Implementation Updates
The Affordable Housing Strategy established a 5-year workplan, and several actions have
occurred since then. As noted above, the Affordable Housing Fund was established in the beginning of the year, and funds in the amount of $400,000 provided gap financing for the purchase of a 24-unit apartment building by Foothills Regional Housing (FRH). If not purchased by FRH, the project would have been market-rate housing but instead will be preserved for
affordable housing.
Council has also approved parking reductions and parkland fee waivers for affordable housing projects. Staff is actively recruiting for the Housing Program Administrator position. Once a dedicated staff person is hired, additional action items can move forward.
RECOMMENDATION: Staff is recommending that the City file a commitment to the State of Colorado, Division of Housing, to increase the City’s supply of affordable housing by 9% over three years.
The purpose of the August 21 study session is to seek Council consensus on this
recommendation. If there is consensus, a resolution will be brought forth to City Council before the November 1 deadline. ATTACHMENTS:
1. Proposition 123 AMI Reference Sheet
Proposition 123 Overview
Starting 1/1/23, Prop 123 will dedicate income tax revenue equal to 0.1% of Colorado’s
taxable income to create a state affordable housing fund. The Colorado Housing &
Finance Authority (CHFA) and Division of Housing (DOH) will manage the funds, which
are exempt from TABOR. Local governments, nonprofits and developers may apply for
funding in alignment with a community’s affordable housing needs. To receive funds,
local governments must expedite review processes for affordable housing projects and
commit to increasing the affordable housing stock in their community by 3% annually.
TOTAL REVENUE
Approximately $300M Annually
●Funds split between CHFA (60%) and DOH (40%) for programs outlined below
CHFA - AFFORDABLE HOUSING FINANCING FUND ~$180M
Affordable Housing Equity Program (40-70%, $72-$126M)
●Equity investments in low- and middle-income multi-family rental developments
●Includes a tenant equity vehicle - tenants receive a share of the equity growth in
the project to be used for a down-payment on housing or related purposes
Concessionary Debt Program (15-35%, $27M-$63M)
●Debt financing of low- and middle-income multi-family rental developments
●Debt financing for the preservation of existing affordable rental units
●Gap financing (subordinate debt and pre-development loans) for LIHTC projects
●Debt financing for modular and factory-built housing manufacturers
Land Banking Program (15-25%, $27M-$45M)
●Grants/forgivable loans to acquire land for affordable housing development
DOH - AFFORDABLE HOUSING SUPPORT FUND ~$120M
Affordable Home Ownership Program (50%, ~$60M)
●Down-payment assistance to first-time and first-generation homebuyers
●Grants/loans to nonprofits and land trusts to support affordable home ownership
●Grants or loans for resident purchases of mobile home parks
Homelessness Program (45%, ~$54M)
●Serve persons experiencing homelessness or at risk of homelessness
●Rental assistance, housing vouchers, eviction defense
●Grants/loans to develop/preserve permanent supportive housing, especially on a
pay-for-success basis
Local Planning Capacity Development Program (5%, ~$6M)
●Grants to local governments to increase capacity of planning departments
responsible for processing land use, permitting, and zoning applications
LOCAL GOVERNMENT ELIGIBILITY REQUIREMENTS
●Establish a process for expedited review of affordable housing projects
●Commit to increasing affordable housing supply by 3% annually
1ATTACHMENT 1
Proposition 123 Local Government Reference Sheet
Prop 123 permanently increases the amount of funding available to support affordable
housing development. In order to ensure that this new funding is effective at increasing
affordable housing production, the measure requires participating local governments
to expedite review periods for affordable housing projects (a “fast-track” review process)
and to commit to increasing their supply of affordable housing by 3% annually.
Fast-track review processes are not required until 2027 - The measure specifies that
fast-track review processes are not required for funding eligibility until 2027. Local
governments can become eligible for funds in the first funding cycle simply by filing a
commitment with the Department of Local Affairs to increase affordable housing by 3%
annually. Local governments can therefore use the local planning capacity grants
contained in the measure to help streamline permitting and review processes.
Local fast-track review processes may allow for extended review times - Prop 123
allows local fast-track processes to include extensions to the initial 90-day review period
in a number of circumstances - in the event of revision or resubmission of the
application, for required reviews by outside governments or agencies, for compliance
with state law or court order, or at the request of the developer.
Local governments have flexibility in designing fast-track review processes - The
measure does not specify how local fast-track review processes must be structured, but
rather sets outcome-based timelines and allows local governments to determine how
best to meet those timelines. While some may choose to add staffing or create special
review teams, others may choose to simplify or streamline the permitting process or
allow for self-certification of certain requirements, for example.
3% growth commitments must be made before November 1st - In order to be eligible
for funding in calendar year 2024, local governments must file their 3% affordable
housing growth commitments with DOLA by November 1st, 2023. These commitments
will make local governments eligible for funding through 2026.
The baseline number of affordable homes in a community is determined by local
governments - The baseline number of affordable housing units used to calculate the
3% growth tally is to be determined by the local government with reference to 1 of 3
specified data sources. Local governments may use DOLA calculations of this baseline if
they choose, but the government is responsible for determining the baseline.
Regional coordination is encouraged - Not all local governments are positioned to
boost supply of affordable housing within their geographic boundaries. Prop 123 allows
local governments to partner on affordable housing projects, with units allocated to
each government’s 3% growth targets in proportion to funding provided by each.
2
Proposition 123 AMI Reference Sheet
Proposition 123 is intended to create more affordable housing across the housing
spectrum in a flexible way that enables local governments and affordable housing
developers to substantially improve the affordability of housing in their community.
Different parts of the measure are intentionally targeted towards households at
different income levels in order to serve spectrum from homeless to first time
homeownership; this document serves as a guide to how AMI is treated throughout the
measure to serve this purpose.
There is no cap on AMIs -The single largest program within Prop 123 has no cap on the
income levels that it can serve. The equity financing program at CHFA will receive
approximately ⅓ of all Prop 123 funding ($72-126m per year), and is allowed to finance
homes at all income levels, so long as the project-wide average rent is affordable at 90%
AMI or less. Depending on the composition of the projects seeking funding, homes
affordable at 120% and 150% of AMI will be financed by this program.
AMI flexibility for local governments - If a local government determines that their local
AMI is too low to allow this measure to effectively address their housing needs, they
may petition DOLA to use another AMI that better reflects their local needs - instead
using either the statewide AMI or that of an adjacent jurisdiction.
Mixed-income housing is prioritized - Unlike most other affordable housing programs,
Prop 123 requires CHFA to prioritize mixed-income housing projects and, as discussed
above, uses AMI averaging rather than AMI caps. This will ensure that middle-income
housing is developed with Prop 123 funds.
Primary funding source determines AMI requirements - In situations in which
multiple funding sources are used, only the AMI requirements of the primary funding
source will be binding. The AMI requirements outlined in Prop 123 will not be in effect
when Prop 123 funds are used as a secondary funding source.
Proposition 123 AMI Limits by Program
Agency Program AMI Limit
OEDIT/CHFA Land Banking N/A
OEDIT/CHFA Equity Financing No cap, 90% average
OEDIT/CHFA Concessionary Debt - Development
Financing
N/A
OEDIT/CHFA Concessionary Debt - Gap
Financing/Predevelopment loans
80% AMI
3
Agency Program AMI Limit
OEDIT/CHFA Concessionary Debt - Preservation Financing 60% AMI
OEDIT/CHFA Concessionary Debt - Housing
Manufacturers
No cap, 90% average
DOLA Homeownership - Down Payment Assistance 120% AMI
DOLA Homeownership - Grants and Loans to
Nonprofits
100% AMI
DOLA Homelessness N/A
WHO BENEFITS?
Across Colorado,approximately 2/3 of renter households earn less than 90% AMI, and
approximately 80% of renter households earn less than 120% AMI, according to
Census data. This means that the vast majority of renters in Colorado will be directly
eligible for some form of housing assistance through this measure.
One of the primary goals of Prop 123 is to address the shortage of housing affordable to
teachers and other essential workers. In all 178 school districts across Colorado, the
average teacher salary is less than 120% AMI, meaning that the average teacher in every
single school district in the state will qualify for some form of housing assistance1.
In more than 90% of school districts the average teacher makes less than 90% AMI,
meaning that the average teacher would qualify for affordable rental housing funded
through this measure in nearly every school district.
Teacher Salaries and AMI Levels By County (2-person households)
County
Average Teacher
Salary 90% AMI 120% AMI
Denver $63,938 $72,000 $96,000
Eagle $57,743 $80,550 $107,400
Larimer $63,574 $67,770 $90,360
Pitkin $65,789 $79,560 $106,080
Pueblo $53,664 $51,120 $68,160
Summit $67,310 $75,420 $100,560
1 Keystone Policy Center,https://www.keystone.org/affordingtheamericandream/
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Memorandum
TO: Mayor and City Council THROUGH: Patrick Goff, City Manager FROM: Mark Colvin, Finance Manager Allison Scheck, Deputy City Manager Gerald Dahl, City Attorney DATE: August 21, 2023
SUBJECT: Telecommunications Occupation Tax
ISSUE: The City’s code regarding the taxation of basic local telecommunication services requires revision. The current code is based on the false premise that Lumen (formerly US West, Qwest, and Century Link) is still the primary provider of telephone lines in the City. Based on this premise, competitors
are charged a per line rate computed from Lumen’s number of lines and the flat occupation tax
paid by Lumen per ordinance 1997-1072. Due to the rapid decline of land lines provided by Lumen, the per line charge to other providers has risen substantially. Furthermore, the current code is confusing as to how cellular lines are treated from a taxation perspective.
The types and means of delivery of telecommunication services has evolved significantly since the
City enacted its telecommunication occupation tax code in 1997. The current code does not reflect
the status of the telecommunications industry nor is it consistent with Wheat Ridge’s municipal neighbors. Staff recommends an update to the tax code to ensure equity, simplicity, revenue preservation and ease of administration for both telecommunications providers and City staff.
PRIOR ACTION:
In 1997, Council approved ordinance 1072 substantially amending the Wheat Ridge Code of Laws
concerning the taxation of basic local telecommunication services that had been in force since 1977. That action was driven primarily by the Federal Telecommunications Act of 1996 deregulating basic local telecommunication services to improve competition at the local level. Key code changes from that action included the creation of a single incumbent basic local service
provider, U.S. West, and an occupational tax rate dependent on an annual historical tax value
attributed to U.S. West of $190,575. This ordinance also included the provision of cellular service in the definition of “basic local telecommunications service,” but the text is confusing and contradictory.
Staff Report: Telecommunications Occupation Tax August 21, 2023
Page 2
FINANCIAL IMPACT: The past five years’ revenue derived from telecommunications occupation tax is as follows:
Year Audited Revenue
2022 $876,297
2021 $626,461
2020 $574,382
2019 $498,039
2018 $503,465
DISCUSSION: Since the early 1980s, the telecommunication industry has experienced tremendous technological
innovation. Ranging from the manner in which telecommunication services are provided to the telecommunication equipment used by businesses and consumers, the industry is seemingly in a constant state of flux. Naturally, local governments have experienced challenges in keeping pace with the telecommunications industry as it relates to business occupation taxation. The City of Wheat Ridge last addressed the changes in the telecommunications industry in the late 1990s with
a sweeping amendment of Chapter 22, Article III, “Basic Local Telecommunications Service”. Certain language in the City’s telecommunications tax code language is not aligned with the industry nor the taxation practices of other local governments.
In addressing the mandates of the Federal Telecommunications Act of 1996, the City recognized that U.S. West held a monopoly on basic local telecommunication services in Wheat Ridge.
Naturally, the City desired to create a more competitive marketplace for other basic local telecommunication services. Thus, 1997’s Ordinance 1072, that repealed and reenacted Chapter 22, Article III, sought to foster competition for basic local telecommunication service providers. Part of this effort established U.S. West -- which later became Qwest until becoming CenturyLink and now Lumen – as the sole incumbent basic local telecommunications service provider. While
this designation would appear to memorialize the monopoly that U.S. West once held, it actually served as an important step in the City’s desire to create a fair occupational tax basis for other basic local telecommunication service providers. Another key part of this effort was the codification of $190,575 in telecommunication occupational taxes paid by U.S. West in 1996. This is yet another important benchmark because since 1997, this figure has served as a key piece
of the computation for determining the annual telecommunications occupation tax for all non-incumbent basic local telecommunication service providers. As the incumbent, since 1997, Lumen has never paid an annual amount of telecommunication occupation tax more or less than $190,575.
Staff Report: Telecommunications Occupation Tax August 21, 2023
Page 3
The telecommunication occupation tax applicable to non-incumbents is computed as follows:
Numerator = Incumbent Provider Tax Denominator = Number of Incumbent Provider Lines
The result of the above computation is then divided by 12 for a monthly occupational tax rate. For example, for 2018, the telecommunication occupation rate for a non-incumbent was
computed as follows:
$190,575 4,372 = $3.63
For 2022, the telecommunication occupation rate was computed as: $190,575 1,928
= $8.24 A non-incumbent basic local telecommunication service provider with 150 lines in 2018 paid $6,534 per year in telecommunication occupation taxes. But in 2022, assuming no change in lines, the same provider paid $14,832 in telecommunication occupation taxes, an increase of
127% in 5 years. Meanwhile, the incumbent’s annual occupation tax remained unchanged.
Starting in the early part of the 21st century, business and consumer usage of cellular mobile telecommunication services began to outpace landline telecommunication services. In increasing numbers, businesses and consumers switched from landline to cellular mobile telecommunication
services. Having been rewritten in 1997, Chapter 22, Article III did not sufficiently address all
types of telecommunication services. Thus, as landlines of the incumbent decreased remarkably over time and because the code did not adequately address other types of telecommunication delivery services, namely cellular mobile lines, the annual occupational rate began to increase exponentially. As important, it became clear that the even-playing field that the City had sought to
foster 25 years before in 1997 was no longer achievable in the current model.
In analyzing the City’s code and rate, staff studied the code and rate of the City’s neighbors and other similar-sized municipal governments. Following is a list of municipal governments, a summary of their code, their rate and reporting and payment frequency. All these examples pertain to cellular service as well as land lines.
Staff Report: Telecommunications Occupation Tax August 21, 2023
Page 4
Municipality Code Summary Rate Frequency
Arvada Tax levied on the business and occupation of providing basic local exchange service. $.455/line Monthly
Golden
Tax levied on the occupation and business of maintaining a telephone exchange and lines connected therewith in the city and of supplying local exchange telephone service.
$8/line Annual
Westminster
Tax levied on the occupation and business of maintaining a telephone exchange and lines
connected therewith in the city and of supplying
local exchange telephone service.
$.38/line Monthly
Lakewood
Tax levied on the business and occupation of
providing basic local exchange service. Rate adjusted annually based on the change in the U.S. Bureau of Labor Statistics Consumer Price Index for Denver-Boulder.
$4.34/line Monthly
Broomfield
Tax levied on the occupation and business of maintaining a telephone exchange and lines connected therewith in the city and of supplying
local exchange telephone service.
$2.00/line Quarterly
Alternatives
The staff working group, comprised of the finance manager, revenue auditor, deputy city manager, city attorney and outside council and telecommunications expert Ken Fellman, considered alternatives to reduce the current per line charge, ensure equity among providers and preserve the City’s revenue stream. The team considered:
• Do nothing and leave the code as is. This option would result in the continued climb of the
per line charge for providers, which is ultimately passed to customers.
• Implement a sales tax instead of an occupation tax. This option is in stark contrast to our neighbors and might be viewed as a tax policy change resulting in a net revenue gain,
opening us to a TABOR challenge.
• Amend the code replacing the stated incumbent with the current market leader (Xfinity) or top 3, 5 or 10 businesses. This option would likely result in a higher burden on physical phone lines and fail to address the inclusion of cellular lines.
• Amend the code to further clarify cellular service and institute a flat per line fee applicable to all lines and all providers. This option aligns Wheat Ridge with our neighbors, lowers the current per line charge and preserves the revenue stream. It is not a change to tax policy, but rather a cleanup and clarification of the existing code. Recommended Code Amendments Based on extensive research and experience in administering the program, staff recommends the following updates to the current code 1. Change the defined term “basic local telecommunications service” to “basic local exchange service” to utilize common terminology found in state and federal law. Additionally, remove
Staff Report: Telecommunications Occupation Tax August 21, 2023
Page 5
existing ambiguity to more clearly express the intent of the 1997 ordinance that cellular service be deemed “basic local exchange service.” 2. Remove the provision of an incumbent provider who pays $190,575 per year
3. Provide a per line monthly occupation tax for 2024 of $3.55 per line that applies to all basic
local exchange providers. Adjust the per line occupation tax annually, effective January 1, 2025, by the percentage change in the US Bureau of Statistics Consumer Price Index for the Denver-Boulder area.
A draft ordinance is included which amends the code per the recommendations for Council’s
consideration. NEXT STEPS: Staff is requesting consensus from Council to amend the code per the recommendations as outlined
in the draft ordinance attached.
ATTACHMENTS: 1. Draft ordinance
CITY OF WHEAT RIDGE, COLORADO INTRODUCED BY COUNCIL MEMBER __________ COUNCIL BILL NO. ___
ORDINANCE NO. _________ Series 2023 TITLE: AN ORDINANCE AMENDING ARTICLE III OF CHAPTER 22 OF THE WHEAT RIDGE CODE OF LAWS, CONCERNING BASIC LOCAL
TELECOMMUNICATIONS SERVICE
WHEREAS, the City of Wheat Ridge, Colorado (the “City”), is a Colorado home rule municipality, duly organized and existing pursuant to Section 6 of Article XX of the Colorado Constitution; and
WHEREAS, pursuant to its home rule authority and C.R.S. § 31-23-101, the
City, acting through its City Council (the “Council”), is authorized to adopt ordinances
for the protection of the public health, safety, or welfare; and
WHEREAS, in the exercise of this authority the Council has previously adopted Article III of Chapter 22 of the Wheat Ridge Code of Laws concerning basic local telecommunications service; and
WHEREAS, the Council finds and determines that it is necessary to change the
defined term “basic local telecommunications service” to “basic local exchange service” in order to utilize terminology more commonly used to describe this service in both state and federal law, as well as to avoid potential confusion regarding the applicability of certain Federal Communications Commission rules that address “telecommunications
services” as that term is defined in federal law; and
WHEREAS, the Council finds and determines that it is necessary to clarify the definition of “basic local exchange service" and to simplify the manner in which the occupation tax is levied upon such service.
NOW THEREFORE BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF WHEAT RIDGE, COLORADO:
Section 1. Section 22–121 of the Code is amended by repealing and reenacting the following definitions to read in their entirety as shown: Basic local exchange service means a service that provides (a) a local dial tone;
(b) local usage necessary to place or receive a call within an exchange area; and (c)
access to emergency, operator, and interexchange telecommunications services. Basic local exchange service is also intended to be analogous to "telephone exchange service" as that term is defined in federal law, namely, service within a telephone exchange, or within a connected system of telephone exchanges within the same
exchange area operated to furnish to subscribers intercommunicating service of the character ordinarily furnished by a single exchange, and which is covered by the
ATTACHMENT 1
exchange service charge, or comparable service provided through a system of switches, transmission equipment or other facilities (or combination thereof) by which a subscriber can originate and terminate a telecommunications service. The provision of
cellular or mobile radio telephone service to any resident, business or other entity shall
be deemed basic local exchange service for the purpose of determining the applicability of this business and occupation tax.
Line shall mean a separate telephone number, or its functional equivalent such
as a unique locator, having a service address located within the City of Wheat Ridge, except that, to the extent basic local telecommunications service is provided through trunks, a line shall mean network access register or its functional equivalent.
Basic local exchange service provider shall be any company or entity who enters
into the business of providing basic local telecommunications service in the City. Section 2. Section 22–123 of the Code concerning amount and payment of tax is hereby repealed and reenacted to read in its entirety as follows:
The amount of the tax levied and payment of the tax shall be as follows:
(1) each basic local exchange service provider who provides basic local exchange service within the city shall pay a per line tax as described below: The City Council finds and determines;
a. after reasonable inquiry and calculation, there presently are a total of 20,000 individual lines of exchange service being provided by all basic local exchange service providers in the city.
b. the total revenue derived from the telephone occupation tax under Article III of chapter 22 for calendar year 2022 was $850,000. This total
revenue figure shall be used to determine the annual per line basic local exchange service charge under subsection 1(c) below.
c. based upon these figures, the per-line tax which is imposed and shall be paid by each basic local exchange service provider as of January 1, 2024 is: $3.55 per month. This per line tax amount shall be annually
adjusted by the Wheat Ridge City Treasurer as set forth in subsection (3) below.
d. the per line rate established hereby will result in no significant change in revenue derived from the occupation tax on basic local exchange service as compared to prior years, it being the intention of the Council
that this revenue amount remain essentially constant.
(2) Each year the prior year's monthly rate shall be adjusted by the percentage change in the U.S. Bureau of Labor Statistics Consumer Price Index for Denver-Boulder, all items, all urban consumers, or its successor index based upon the August report of the prior year. The new rate shall be
effective on the following January 1. Effective January 1, 2025, the tax rate
shall be the 2024 monthly line charge adjusted by the percentage change in the U.S. Bureau of Labor Statistics Consumer Price Index for Denver-Boulder, all items, all urban consumers, or its successor index. This
adjustment shall be based upon the August 2024 report of such index.
(3) The Wheat Ridge City Treasurer is hereby authorized and directed to perform the necessary calculations to determine the per-line tax annually, based upon the then-current calculation by the City of the number of basic local exchange
service lines in the City as of the date of calculation. The Treasurer is
directed to perform this calculation so as to achieve a per-line charge which will result in no significant increase or decrease in the overall annual revenue to be collected by the City from this tax.
Section 3. Effective Date. This Ordinance shall take effect upon adoption and
signature by the Mayor and City Clerk, as permitted by Section 5.11 of the Charter.
INTRODUCED, READ, AND ADOPTED on first reading by a vote of __ to __ on this ___ day of ___________ 2023, ordered published in full in a newspaper of general circulation in the City of Wheat Ridge, and Public Hearing and consideration on final passage set for _____________, 2023 at 7:00 p.m. in the Council Chambers, 7500
West 29th Avenue, Wheat Ridge, Colorado.
READ, ADOPTED AND ORDERED PUBLISHED on second and final reading by a vote of ___ to ___, this _____ day of ___________ 2023.
SIGNED by the Mayor on this _____ day of __________ 2023.
_________________________
Bud Starker, Mayor
ATTEST: _________________________
Stephen Kirkpatrick, City Clerk
Approved as to Form
_________________________ Gerald E. Dahl, City Attorney First Publication:
Second Publication: Wheat Ridge Transcript Effective Date: Published: Wheat Ridge Transcript and www.ci.wheatridge.co.us