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HomeMy WebLinkAbout03/02/2010 Council Agenda Packet_ ~~~,......t "'~~' ~ ~H~~/ mow/ .~.. a...w.. REGULAR COUNCIL MEETING NOTICE AND AGENDA 11555 W. Civic Center Drive, Marana, Arizona 85653 Council Chambers, March 2, 2010, at or after 7:00 PM Ed Honea, Mayor Herb Kai, Vice Mayor Russell Clanagan, Council Member Patti Comerford, Council Member Carol McGorray, Council Member Jon Post, Council Member Roxanne Ziegler, Council Member ACTION MAY BE TAKEN BY THE COUNCIL ON ANY ITEM LISTED ON THIS AGENDA. Revisions to the agenda can occur up to 24 hours prior to the meeting. Revised agenda items appear in italics. As a courtesy to others please turn off or put in silent mode all pagers and cell Phones. Meeting Times Welcome to this Marana Council meeting. Regular Council meetings are usually held the first and third Tuesday of each month at 7:00 p.m. at the Marana Town Hall, although the date or time may change, or Special Meetings may be called at other times and/or places. Contact Town Hall or watch for posted agendas for other meetings. This agenda may be revised up to 24 hours prior to the meeting. In such a case a new agenda will be posted in place of this agenda. Speaking at Meetings If you are interested in speaking to the Council during Call to the Public, Public Hearings, or other agenda items, you must fill out a speaker card (located in the lobby outside the Council Chambers) and deliver it to the Town Clerk prior to the convening of the meeting. All persons attending the Council meeting, whether speaking to the Council or not, are expected to observe the Council Rules, as well as the rules of politeness, propriety, decorum and good conduct. Any person interfering with the meeting in any way, or acting rudely or loudly will be removed from the meeting and will not be allowed to return. Accessibility To better serve the citizens of Marana and others attending our meetings, the Council Chambers are wheelchair and handicapped accessible. Any person who, by reason of any disability, is in need of special services as a result of their disability, such as assistive listening devices, agenda materials printed in Braille or large print, a signer for the hearing impaired, etc., will be accommodated. Such Regular Council Meeting -March 2, 2010 -Page 1 of 186 special services are available upon prior request to the Town Clerk at least 10 working days prior to the Council meeting. Agendas Copies of the agenda are available the day of the meeting in the lobby outside the Council Chambers or online at wwwmarana.com, by linking to the Town Clerk page under Agendas, Minutes and Ordinances. For questions about the Council meetings, special services or procedures, please contact the Town Clerk, at 382-1999, Monday through Friday from 8:00 a.m. to 5:00 p.m. Posted no later than Monday, March O1, 2010, 7:00 PM, at the Marana Municipal Complex, the Marana Operations Center and at w.w.. w.marana.com under Town Clerk, Agendas, Minutes and Ordinances. REGULAR COUNCIL MEETING CALL TO ORDER AND ROLL CALL PLEDGE OF ALLEGIANCE/INVOCATION/MOMENT OF SILENCE. APPROVAL OF AGENDA CALL TO THE PUBLIC At this time any member of the public is allowed to address the Town Council on any issue not already on tonight's agenda. The speaker may have up to three minutes to speak. Any persons wishing to address the Council must complete a speaker card located outside the Council Chambers and deliver it to the Town Clerk prior to the commencement of the meeting. No electronic capability will be provided by the town beyond existing voice amplication and recording (for DVD, CD Rom, USB drives, etc.) Pursuant to the Arizona Open Meeting Law, at the conclusion of Call to the Public, individual members of the council may respond to criticism made by those who have addressed the Council, may ask staff to review the matter, or may ask that the matter be placed on a future agenda. PROCLAMATIONS MAYOR AND COUNCIL REPORTS: SUMMARY OF CURRENT EVENTS MANAGER'S REPORT: SUMMARY OF CURRENT EVENTS PRESENTATIONS P l: Presentation: Relating to Development; request for direction on a potential annexation of property known as the Emigh-Sanders Annexation (Lisa Shafer) CONSENT AGENDA The Consent Agenda contains items requiring action by the Council which are generally routine items not requiring Council discussion. A single motion will approve all items on the Consent agenda, including any resolutions or ordinances. A Council Member may remove any issue from Regular Council Meeting -March 2, 2010 -Page 2 of 186 the Consent agenda, and that issue will be discussed and voted upon separately, immediately following the Consent agenda. C 1: Resolution No. 2010-20: Relating to Community Development; approving and authorizing full execution of an Intergovernmental Agreement with Pima County for the management and implementation of Community Development Block Grant Program funding for Honea Heights neighborhood design and engineering plans (T VanHook) C 2: Resolution No. 2010-21: Relating to Community Development; approving and authorizing full execution of a contract (R016-10-35) with the Arizona Department of Commerce to receive funds under the American Recovery and Reinvestment Act (ARRA) Arizona State Energy Efficiency Block Grant Program to assist in the development of a comprehensive energy efficiency and conservation strategy (T VanHook) C 3: Minutes of the January 26, 2010 and February 9, 2010 special council meetings and the February 2, 2010 and February 16, 2010 regular council meetings LIQUOR LICENSES BOARDS, COMMISSIONS AND COMMITTEES COUNCIL ACTION A 1: Resolution No. 2010-22: Relating to Economic Development; approving and adopting the Marana Economic Roadmap strategic plan (Josh Wright) A 2: Resolution No. 2010-23: Relating to Administration; approving an Electronic Mail Retention and Storage Administrative Directive for Town of Marana employees and elected and appointed officials (Deb Thalasitis) A 3: Resolution No. 2010-24: Consideration and possible adoption of a resolution of the Mayor and Common Council of the Town of Marana, Arizona, approving the form and authorizing the execution and delivery of a Loan Agreement with the Water Infrastructure Finance Authority of Arizona from its Drinking Water Revolving Fund Program and, if necessary, guaranty or similar agreements to provide insurance policies or surety bonds necessary in connection therewith; delegating the determination of certain matters relating thereto to the Finance Director of the Town; authorizing the taking of all other actions necessary to the consummation of the transactions contemplated by such Loan Agreement and this resolution and declaring an emergency (Erik Montague) ITEMS FOR DISCUSSION/POSSIBLERCTION D 1: Legislative/Intergovernmental Report: Discussion/Direction/Action regarding all pending state and federal legislation and report on recent meetings of other legislative bodies (Steve Huffman) EXECUTIVE SESSIONS E 1: Executive Session pursuant to A.R.S. §38-431.03 (A)(3), Council may ask for discussion or consultation for legal advice with the Town Attorney concerning any matter listed on this agenda. Regular Council Meeting -March 2, 2010 -Page 3 of 186 E 2: Executive Session pursuant to A.R.S. § 38-431.03(A)(3),(4) and (7), discussion or consultation for legal advice with the Town's attorneys and discussion and to consider its position and instruct the Town Manager and staff concerning possible acquisition of certain water infrastructure and accounts and water rights and/or resources E 3: Executive Session pursuant to A.R.S. § 38-431.03(A)(3),(4) and (7), discussion or consultation for legal advice with the Town's attorneys and discussion and to consider its position and instruct the Town Manager and staff concerning (1) the lawsuit entitled Town of Marana v. Pima County/Pima County v. Marana (consolidated), Maricopa County Superior Court No. CV2008-001131, (2) pending legal issues, settlement discussions and contract negotiations relating to the transition of Marana wastewater collection and treatment to the Town of Marana E 4: Executive session pursuant to A.R.S. § 38-431.03(A)(4) for discussion or consultation with the Town's attorneys regarding Chamberlain v. Town of Marana, Pima County Superior Court No. 020094273, and Blomquist v. Town of Marana, United States District Court, District of Arizona, No. CV-09-671-TUC DCB FUTURE AGENDA ITEMS Notwithstanding the mayor's discretion of what items to place on the agenda, if three or more council members request an item to be placed on the agenda, it must be placed upon the agenda for the second regular town council meeting after the date of the request (Marana Town Code, Title 2, Chapter 2-4, Section 2-4-2 B) ADJOURNMENT Regular Council Meeting -March 2, 2010 -Page 4 of 186 ~~~ ~r~. ~~ 11555 W. CIVIC CENTER DRIVE, MARANA, ARIZONA 85653 COUNCIL CHAMBERS, March 2, 2010, 7:00:00 PM To: Mayor and Council Item P 1 From: Lisa Shafer ,Assistant Planning Director Strategic Plan Focus Area: Commerce Subject: Presentation: Relating to Development; request for direction on a potential annexation of property known as the Emigh-Sanders Annexation Discussion: This presentation is intended to provide the Mayor and Town Council with information regarding a proposed annexation of approximately 483 acres known as the Emigh-Sanders Annexation. The proposed annexation area is located south of Twin Peaks Road, west of Sanders Road and north of Emigh Road. This annexation includes approximately 1/2 mile of Twin Peaks Road and one mile of Emigh Road. The proposed area of annexation is contiguous to the Town's corporate limits and is currently within the Town's planning area as defined within the adopted Town of Marana General Plan. The Future Land Use Map within the General Plan designates the subject property as Rural Density Residential (RDR). The RDR designation is characterized by single-family detached homes on very large properties in a density range of 0.1-0.5 residences per acre. Additionally, it allows for neighborhood commercial development. The property is currently zoned by Pima County as RH (Rural Homestead), which is a residential zone with a minimum lot size of 180,000 square feet. In order to establish Town of Marana zoning that equates to existing Pima County zoning without allowing densities greater than those permitted under the current zoning, the proposed annexation area zoning will translate to Town of Marana RD- 180 (Single-family Residential 180,000 square feet minimum lot size). ATTACHMENTS: Name: Description: ~ Emigh_West Annex Area (2j.pdf L©caticnal Exhibit Type: Backup Material Staff Recommendation: This item is presented as informational for direction at the Mayor and Town Council's pleasure. Suggested Motion: No action required. Regular Council Meeting -March 2, 2010 -Page 5 of 186 Area Described As Follows: " South 1/2 of Section 20 Township 12 South, Range 11 East Along with we Northeast 1/4 of Section 20 Township 12 South, Range 11 East, s 1511 E18 Including all adjacents rights of way for Twin Peaks Road to the North and Emigh Road to the South, j Except Northeast 1/4 of the Northeast 1/4 of appoximately .73 acres (parcel 215200700) and adjacent ~. right of way of Twin Peaks Road to the North. o soo i,ooo ,,eoo 2,000 Total acreage of included area approximately 483 acreas. Fee' m m co ~ , t°; __ -- - - - .,~aa.~.:,-~~_ ,, p ~ - TWIN PEAKS'RD _.__.._, ...~__ .. _.... __. _ - -- --- - - No i~, ~ I ~ ~ ~~ a i _ ZO I ~ i m ~ -; #' rn Q ~ i V ii Ill I current Town of Marana Limits I ~i v 12 11 E2Q ~ ~ _ _.__.__ .. OVERTON RD w Z 12S11E21 ,N ,I Aria pt 6;>It~rest ____ -- _.~ i {~ I--------; , __ __ o ___._ . _.._..~.... 12S11E30 ~ - ~ TMOSS~VERBENA~ST - 1E 9 l~Al~ ~, ~/ ~ 11555 W. CIVIC CENTER DRIVE, MARANA, ARIZONA 85653 COUNCIL CHAMBERS, March 2, 2010, 7:00:00 PM To: Mayor and Council Item C 1 From: T VanHook ,Community Development Director Strategic Plan Focus Area: Community Building Subject: Resolution No. 2010-20: Relating to Community Development; approving and authorizing full execution of an Intergovernmental Agreement with Pima County for the management and implementation of Community Development Block Grant Program funding for Honea Heights neighborhood design and engineering plans Discussion: The Town has maintained along-standing partnership with Pima County's Community Development and Neighborhood Conservation Department. For more than 20 years the Town has worked collaboratively with Pima County to providing vital community infrastructure and services to Marana residents using Community Development Block Grant (CDBG) funding. In fiscal years 2007 and 2008 Pima County awarded the Town CDBG funding for the Honea Heights Park and Affordable Housing Land Acquisition programs. The Town has not been able to fully utilize the awards because of unforeseen delays with the Honea Heights III project and changes in land values in the colonial. In October a request was made to Pima County to reprogram the remaining Honea Heights Park ($70,000) and a portion of the Affordable Housing Land Acquisition ($100,000) to support the design and engineering of the Honea Heights III project allowing the project to move forward and helping the Town secure $700,000 in funding awarded by the Federal Home Loan Bank of San Francisco. Pima County agreed to allow the Town to use $170,000 in CDBG funding to promote the development of affordable housing and received permission from the U.S. Department of Housing and Urban Development to reallocate the funding. The IGA will allow the Town to hire, through a competitive section process, professional engineers to move forward with design plans including: paving, grading, water infrastructure, drainage, soils reports, and property surveys. Quarterly reports will be provided to Pima County as a condition of the IGA's. Financial Impact: No matching funding is required for this grant program. ATTACHMENTS: Name: Description: Type: Regular Council Meeting -March 2, 2010 -Page 7 of 186 ^ GDBG_-_H.o..n.ea.ILI Resolution FY 2010.doc GDBG IGA Honea Heights III 2010-2011 Resolution Resolution O Letter- Mayor_Hone_a_to Margaret Kish CDBG 10- GDSG Letter -Mayor Honea to PG 3ackup Material 200°.pdt Staff Recommendation: Staff recommends providing authorization for the Mayor to execute the Intergovernmental Agreement with Pima County for CDBG funding for the Honea Heights Project. Commission Recommendation - if applicable: The Affordable Housing Advisory Commission urged staff to make the request and recommends providing authorization for the Mayor to execute the Intergovernmental Agreement with Pima County for CDBG funding for the Honea Heights Project. Suggested Motion: I move to adopt Resolution No. 2010-20, authorizing the Mayor to execute the Intergovernmental Agreement with Pima County for Community Development Block Grant funding for the Honea Heights Project. Regular Council Meeting -March 2, 2010 -Page 8 of 186 MARANA RESOLUTION N0.2010-20 RELATING TO COMMUNITY DEVELOPMENT; APPROVING AND AUTHORIZING FULL EXECUTION OF AN INTERGOVERNMENTAL AGREEMENT WITH PIMA COUNTY FOR THE MANAGEMENT AND IMPLEMENTATION OF COMMUNITY BLACK GRANT PROGRAM FUNDING FOR HONEA HEIGHTS NEIGHBORHOOD DESIGN AND ENGINEERING PLANS WHEREAS, the Town of Marana recognizes the need to provide safe affordable housing and neighborhood infrastructure for its citizens and has applied for Community Development Block Grant (CDBG) for these purposes; and WHEREAS, Pima County has been awarded funding from the U.S. Department for Housing and Urban Development under the CDBG program for the 2009-2010 fiscal year; and WHEREAS, the Town of Marana was selected as asub-grantee through Pima County's proposal process and has requested that unspent funding be reprogrammed; and WHEREAS, this CDBG award will provide program funding for planning and engineering costs associated with the Honea Heights III project. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF MARANA, ARIZONA, that the Mayor is authorized to fully execute an intergovernmental agreement with Pima County for the use of CDBG funding for Town of Marana's Honea Heights III project. PASSED AND ADOPTED BY THE MAYOR AND COUNCIL OF THE TOWN OF MARANA, ARIZONA, this 2"d day of March 2010. Mayor Ed Honea ATTEST: APPROVED AS TO FORM: Jocelyn C. Bronson, Town Clerk Frank Cassidy, Town Attorney Regular Council Meeting -March 2, 2010 -Page 9 of 186 E4 ~~ E 4:91:5•I ~ x; 68~x , .r NTLY~~3 . ~ Bna,..:.:F.x~livc3lff..~xk.. ~i~~.~., ^r:w...:s.:.,i: ~~ .4~~: R '-~', . October 15, 2009 Ms: Margaret Kish, Director Community Development and Neighborhood Conservation Department Pima. County Kino Service Center 2797 East Ajo Way Tucson;-Arizona $5713- Dear Ms. Kish,: The Town is proud of its long-standing partnership with Pima County's Community. Development'and Neighborhood Conservation Department, For more than 20 years the Town has worked collaboratively with your department to leverage general fund dollars with GO Bond,. HOME, and CDBG funding to provide vital community infrastructure and services to Martina residents. Over the years Martina has evolved. from a sleepy agriculture-based economy into. a, bustling semi-urban destination with dynamic neighborhoods, active recreation areas, and a vibrant commercial sector.. As we have grown Pima County staff have assisted'us in developing and managing programs that honor our rich heritage and are flexible enough to meet changing needs in ou r neighborhoods: Despite the progress we have.: made together over the years, an adequate supply of clean, safe, affordable housing remains one of our community's most pressing needs. Pima County awarded the Town: of Martina Community Development Black. Grant (CDBG) funding for the Honea Heights Park and Affordable Housing t.and Acquisition programs (FY 2007 and 2008) for Honea Heights III, an affordable housing initiative that will provide 40 units of housing to qualified low-income first-#ime homebuyers as part of a comprehensive neighbofiood redevelopment program. The Town has not been able to fully utilize the award because of unfpreseen delays with the project, .but is fully committed to the development of affordable housing.: Toward that end, the. Town has included Honea Heights III in the Strategic Plan adopted by the Council in March' 2009. The Town would like to respectfully request that the remaining Honea Heights. Park ($74,Q00) and a portion of the Affordable. Housing Land.Acquisition ($1110,000} CDBG.funds be reprogrammed to support the design and engineering of the Honea Heights lil project. The $170,000 in CDBG funding will be used to promote the development of affordable housing, helping the Town secure $700,000 in funding awarded by the Federal Home Loan Bank of San Francisco. I would like to personally thank you for taking time to review the Town's request and for your continued commitment to affordable housing, viable neighborhoods, and strong communities. ff you have any questions ar need additional information about our request please feel free to contact me at 520.382.2601 orT. VanHoak, Community Development Director at 520.382.1909 or 520.940.0766 (cellular}. Sincerely E nea May r Regular Council Meeting -March 2, 2010 -Page 10 of 186 11558 w. GN1C CENTER CR1vE, BLDG, A3 c-:,+ t~4ARhNA, Az 85b53-70fi", ~ ;; (520 382-15"° .-~~ FAX:: 382-190] TTY: 382-3449 ~~"''"r~ MAR~I~A. ~~ ~P~R b1 YRI1W 11555 W. CIVIC CENTER DRIVE, MARANA, ARIZONA 85653 COUNCIL CHAMBERS, March 2, 2010, 7:00:00 PM To: Mayor and Council Item C 2 From: T VanHook ,Community Development Director Strategic Plan Focus Area: Community Building Subject: Resolution No. 2010-21: Relating to Community Development; approving and authorizing full execution of a contract (RO16-10-35) with the Arizona Department of Commerce to receive funds under the American Recovery and Reinvestment Act (ARRA) Arizona State Energy Efficiency Block Grant Program to assist in the development of a comprehensive energy efficiency and conservation strategy Discussion: The Arizona Department of Commerce to receive funds Under The American Recovery and Reinvestment Act (ARRA) Arizona State Energy Efficiency Block Grant Program to assist Local governments, towns, cities and counties that are not eligible for direct formula grants from DOE to implement projects focused on increasing energy efficiency, reducing energy use, and reducing fossil fuel emissions and job creation. Arizona jurisdictions with a population over 35,000 according to the 2005 projections qualified for direct allocations. Under the States Arizona Balance of State Energy Block Grant Program (ABS-EECBG) the Town of Marana received a $171,429 allocation of the $6,474,800 received through the U.S. Department of Energy Block Grant funding. ABS-EECBG program focuses on implementing the following two objectives: Objective 1: Provide funding for developing community or building energy efficiency strategies, project monitoring or reporting, or drafting and implementing innovative action that promotes energy efficiency and renewable energy development. Objective 2: Provide funding for increasing energy efficiency or installing on-site renewable energy technologies for existing government-owned buildings, updating traffic signals and street lighting with current energy efficiency technology, or improving other energy-efficiency related systems. Using funding allocated through the Arizona Department of Commerce EECBG Program, Marana will develop a comprehensive Energy Efficiency and Conservation Strategy (Strategy) to serve as the guiding document for initiating energy savings projects and programs and to serve as a resource for its governing body to policy direction. Marana will compile information on municipal energy use, track use trends across the agency, identify saving opportunities, and Regular Council Meeting -March 2, 2010 -Page 11 of 186 establish criteria for setting priorities for the allocation of future funding. The Strategy will also describe public outreach and public education opportunities to meet one of the Community Building goals outlined in Marana's Strategic Plan (passed by Mayor and Council in February 2009). To accomplish this, staff will assemble amulti-disciplinary team for the development of the Strategy. This team will consist of representatives from the each department to work with the Town Engineer, Traffic Engineer, and Environmental Engineer. The team will use existing data, energy audits, and public input to develop a Strategy addressing energy savings across the agency - inclusive of all operational facilities. The team will utilize best practices and lessons learned shared by peer organizations to identify potential projects and programs and set specific goals, objectives, a timetable and measurable outcomes based on established benchmarks and activity expectations. Marana will select pilot project(s) based on level energy savings, implementation period, cost, cost recovery, and the appropriateness of program delivery in concert with public educational opportunities to implement using remaining funding and time. All projects will be completed within the allocated budget and within a timeframe adequate to accommodate delivery of outcomes to the Department of Commerce prior to the 18 month span of the funding period. These projects may include both facility- and street-based initiatives. Cost recovery will be tracked and leveraged in to future projects and programs and reported to DOC. Financial Impact: No matching funds are required under this contract. ATTACHMENTS: Name: ^ EECBG - Marana Resolution 02-2010.doc Description.: EECBG -Resolution 02-2010 Type: Resolution Staff Recommendation: Staff recommends approval for the execution of the contract with the Arizona Department of Commerce under the ABS-EECBG to fund the development of a Energy Efficiency and Conservation Strategy. Suggested Motion: I move to adopt Resolution No. 2010-21, approving and authorizing full execution of the contract with the Arizona Department of Commerce under the ABS-EECBG to fund the development of a Energy Efficiency and Conservation Strategy. Regular Council Meeting -March 2, 2010 -Page 12 of 186 MARANA RESOLUTION N0.2010-21 RELATING TO COMMUNITY DEVELOPMENT; APPROVING AND AUTHORIZING FULL EXECUTION OF A CONTRACT (R016-10-35) WITH THE ARIZONA DEPARTMENT OF COMMERCE TO RECEIVE FUNDS UNDER THE AMERICAN RECOVERY AND REINVESTMENT ACT (ARRA) ARIZONA STATE ENERGY EFFICIENCY BLOCK GRANT PROGRAM TO ASSIST IN THE DEVELOPMENT OF A COMPREHENSIVE ENERGY EFFICIENCY AND CONSERVATION STRATEGY WHEREAS, the Arizona Department of Commerce solicited Request for Information from Arizona jurisdictions meeting the guidelines for the Arizona Balance of State Energy Efficiency and Conservation Block Grant (ABS-EECBG) Program; and WHEREAS, the Town of Marana qualifies for funding under this program as anon-direct entities under the American Recovery and Reinvestment Act Energy Efficiency and Conservation Block Grant program; and WHEREAS, the primary mission of the ABS-EECBG program is to assist, coordinate, and collaborate with local government entities implementing projects focused on increasing energy efficiency, reducing energy use, and reducing fossil fuel emissions; and WHEREAS, the Town of Marana wishes to develop a Comprehensive Energy Efficiency and Conservation Strategy, qualifies to receive a $171,429 funding allocation under the ABS- EECBG program, and completed the required Request for Information. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF MARANA, ARIZONA, that the Council approves the contract and authorizes the Town Manager execute the contract (R016-10-35) with the Arizona Department Commerce. PASSED AND ADOPTED BY THE MAYOR AND COUNCIL OF THE TOWN OF MARANA, ARIZONA, this 2nd day of March, 2010. Mayor Ed Honea ATTEST: APPROVED AS TO FORM: Jocelyn C. Bronson, Town Clerk Frank Cassidy, Town Attorney Regular Council Meeting -March 2, 2010 -Page 13 of 186 MINUTES 11555 W. Civic Center Drive, Marana, Arizona 85653 Council Chambers, January 26, 2010, at or after 6:00 PM Ed Honea, Mayor Herb Kai, Vice Mayor Russell Clanagan, Council Member Patti Comerford, Council Member Carol McGorray, Council Memb"~r Jon Post, Council Member Roxanne Ziegler, Council Member SPECIAL COUNCIL MEETING CALL TO ORDER AND ROLL CALL The meeting was called to order by Mayor Honea at 6:04 p.m. Town Clerk Bronson called roll. All Council Members were present. PLEDGE OF ALLEGIANCE/INVOCATION/MOMENT OF SILENCE Led by Mayor Honea. APPROVAL OF AGENDA Motion to approve moved by Council Member McGorray, second. by Council Member Ziegler. Motion carried unanimously. CALL TO THE PUBLIC No speaker cards were presented. PRESENTATIONS P 1: Presentation: Relating to the MUSD Override Election Presented by Dr. Doug Wilson, Superintendent of Schools for the Marana Unified School District. He noted that'on December 1, 2009, the governing board of MUSD voted for an M & O override election. The Legislature provided a window of opportunity this spring for school districts to increase from a 10% override to a 15% override. In 2007, a $6.2M override was approved. What they have seen since that time is a 2008 budget reduction of $1.SM and in January 2009, the budget was cut another $1.6M per legislative budget cuts. MUSD built their budget this year with a $4.3M reduction.. In October 2009, they received an additional $2.1M reduction in the budget. These amount to budget reductions of $8.6M. The override passed in 2007 added $6.2M to the budget. There were a number of things that when the strategic plan was passed in 2006, were to be implemented with the ovemde. Many got implemented; some were to be phased in. So some of the phased-in did not occur. Regular Council Meeting -March 2, 2010 -Page 14 of 186 Council Member McGorray asked about the election. Dr. Wilson reiterated that the election would be March 9, 2010. Mayor Honea asked what happens if the override doesn't pass. Dr. Wilson recited the process for an override.. You lose a third of the funding and a third each year that the re-authorization doesn't pass until the seventh year when the override is eliminated. Overrides are for seven years. They need to be authorized by the end of year five or you start to lose funding as noted above. Mayor Honea asked if most of the money is funneled to teachers and the classroom? Dr. Wilson responded that a majority of the 2007 override funding went to provide a number of positions. Forty percent of the override helped in terms of salaries for MUSD staff. Every member received an increase. Full-day kindergarten was funded. The same thing would happen with the 2010 override. It would probably save full-day kindergarten as well as help stabilize and help maintain the class sizes. Dr. Wilson went on to discuss Proposition 301 which is different from the override. Council Member Ziegler asked how the override would impact taxpayers. Dr. Wilson responded that this override would replace the 2007 override and there would not be two taxes. The impact to the taxpayers -they have a debt service account -and you cannot comingle funds. MUSD would be using almost $4M out of the debt service account to cover the increase in the'first year of the override -that is the secondary tax rate, so the taxpayers would not see an increase in their secondary tax the first year. Council Member Ziegler then asked if`an override:-would occur every year. Dr. Wilson responded that if this override is successful, it would be four more years before they would go out for re-authorization. Council Member Post thanked'Dr. Wilson for serving on the town's economic roadmap committee. He noted that it became obvious during the meetings how closely the future of the town is linked to the school system. All the people who would be coming to Marana for jobs would be looking to see what kind of school system is in place. In the future we need to figure out how the town and school system can work hand in hand together, because our future solely lies with the school district's. We won't be able to attract the types of businesses we want in our community without a good school system. Dr. Wilson responded that a good school system will attract good business. Mayor Honea noted that the town and the school district have a history of working together, but perhaps there are more ways to work together in the future that can be identified. P 2: Presentation: Relating to Infrastructure;'future bridge aesthetics for Marana interchanges with I-10 Presented by Keith Brann. Most of Marana's interchanges will be pushed to grade separation by the state and others. Marana supports this from a traffic safety standpoint. This brings an opportunity for consistency, that people know they are in Marana and that is pleasing aesthetically. He then continued with the staff goal to foster bridge aesthetics that exhibits a refined style that's~timeless and classic while using subtle elemental features that are cost- effective both initially for construction and for long-term maintenance. He continued the presentation with comparisons to other jurisdictions' aesthetics and the opportunity for Council to approve of the design elements. He showed the aesthetics for the Twin Peaks Interchange involving multiple colors and applications on the fencing. He noted that this interchange artistic design is a little flashier than what will be on future interchanges. Staff went to Phoenix and looked at their interchanges because the Phoenix area has used a monochromatic theme on their bridges. This is generally the theme that he would like to use in Marana. It's a simple bridge design and will be less costly to maintain without detracting from the design aesthetics. Mayor Honea asked how often the abutments would have to be painted. Mr. Brann noted that the bright colors fade faster. A desert, brownish hue will fade less quickly -.red hues will fade faster. If you are willing to take into consideration a certain amount of fading, you could go 10 Regul~~dlVf,1 ~i~#112~0'11' 1~eF1f86t then asked if staff was looking at retrofitting existing bridges to tie them into this pattern. Mr. Brann responded that the town would not be retrofitting bridges, mostly because of the upgrading that will be done over the next 10-20 years. In response to comments from Council Member Ziegler, he also noted that design form liners and applications are not expensive. Mr. Brann concluded that staff was hoping for Council direction to proceed. Mr. Davidson added his comments by stating that the presentation before Council is fairly monumental as it will be a stamp of the community for years to come and will define the community and leave an impression upon visitors and residents. He also noted that this was in line with the town's strategic plan. Staff is asking for the ability to move forward with some of the standard design elements, so that with every new interchange there would be a formula. Council would review each project for specific designs. Motion by Council Member McGorray, second by Council Member Post to proceed as indicated by Mr. Davidson. Motian carried unanimously. ANNOUNCEMENTS/UPDATES PROCLAMATIONS MAYOR AND COUNCIL REPORTS: SUMMARY OF CURRENT EVENTS Council Member McGorray reported on an incident that occurred today wherein a disaster was averted by the quick thinking of a citizen to prevent a vehicle from entering the interstate going the wrong way. MANAGER'S REPORT: SUMMARY OF CURRENT EVENTS Mr. Davidson announced that the budget calendar was placed on the dais tonight. If you have any questions, you can contact him. STAFF REPORTS GENERAL ORDER OF BUSINESS CONSENT AGENDA COUNCIL ACTION BOARDS, COMMISSIONS AND COMMITTEES ITEMS FOR DISCUSSION/POSSIBLE ACTION D l: Resolution No. 2010-10: Presentation: Relating to the General Plan; major amendment process and adoption of the Public Participation Plan Presented by Kevin Kish. He noted that this was the formal kick off of the 2010 General Plan rewrite. This is on the 10-year cycle for updating the General Plan per state statute. There have been some discussions through the planning organizations about trying to get some legislation to extend the 10-year cycle. Staff is going forward in spite of this, It will be done in-house using the Strategic Plan, the Economic Roadmap and the Parks Master Plan and all the new framework documents and guiding documents. "New Focus, New Thinking, New Direction" is the new mantra. Tonight's presentation is the introduction and the rewrite of the General Plan, the intent, the format and organization. He noted that staff is stepping out of the box and taking a different approach from what has been done in the past. Tonight, Council will be asked to adopt the public participation portion and community outreach portion, which is the resolution contained in the Council packets. The introduction/approach is core values, the vision from the Strategic Plan with Marana as the Regul~i~f2~010~i~-id~cncat~~ ~3,geabt~X~rience, where fun and progress meet. Staff is taking this as the axiom of the "New Focus, New Thinking, New Direction". The General Plan intent creates the policy to improve the quality of life, reflect Marana's new approach in creating the town's future, and provides direction for Marana that's different, dynamic and diverse. The Plan will educate the community in regard to linkages and supporting roles between land use, the built environment, social infrastructure, resource conservation and natural systems. A lot of these elements are coming from the Strategic Plan, Roadmap, etc. One of the formats is Marana's "Quality of Life Wheel" -everything is tied together with our future vision. The five elements are land management, natural systems, resources conservation, social infrastructure, and the built environment. Instead of trying to look at the required elements in state statutes, we're trying to look at the reality of what's on the ground, and the preservation of resource management. He continued using the PowerPoint presentation slides. He then presented the public participation plan. This requires Council approval. Staff is looking at voter ratification of the General Plan in the 2011 general election. He recognized and introduced Cynthia Ross, long-range planner from his staff who has been doing a lot of work on this project. He opened the discussion up to questions and comments from Council. Council Member Post asked why a General Plan is put into place when exceptions keep corning back to Council to depart from the Plan. Mr. Kish responded that it's a strategy with the previous General Plan. By doing what's called Master Planning Areas, it allows a minor amendment for that and doesn't take the whole cycle of it. Vice Mayor Kai encouraged staff to get input from landowners and investors and people who have a stake in our community. Council Member Ziegler stated that we need to remember that it's just aplan - a suggestion. When things change, Council needs to be flexible.. The economy and things in our town are changing, and we need to be able to change as well. Motion by Council Member McGorray, second by Council Member Clanagan to adopt the public participation plan and.to proceed with the 2010 General Plan major amendment process. Motion carried unanimously. D 2: Legislative Issues: Discussion/Direction/Action regarding all pending bills before the Legislature No report. EXECUTIVE SESSIONS E L•,Executive Session pursuant to A.R.S. §38-431.03 (A)(3), Council may ask for discussion or consultation for legal advice with the Town Attorney concerning any matter listed on this agenda. FUTURE AGENDA ITEMS ADJOURNMENT Motion to adjourn moved by Council Member Clanagan, second by Council Member McGorray. Motion carried unanimously. The meeting was adjourned at 7:12 p.m. CERTIFICATION I hereby certify that the foregoing are the true and correct minutes of the Marana Town Council meeting held on January 26, 2010. I further certify that a quorum was present. Reguli~I~t~i ~0~04h,7I'Z94~2 ~a~~7 of 186 REGULAR COUNCIL MEETING MINUTES 11555 W. Civic Center Drive, Marana, Arizona 85653 Council Chambers, February 2, 2010, at or after 7:00 PM Ed Honea, Mayor, Present Herb Kai, Vice Mayor, Excused Russell Clanagan, Council Member, Present Patti Comerford, Council Member, Present Carol McGorray, Council Member, Present Jon Post, Council Member, Present Roxanne Ziegler, Council Member,=Present REGULAR COUNCIL MEETING CALL TO ORDER AND ROLL CALL Mayor Honea called the meeting to order at 7:02 p.m. Town Clerk Jocelyn Bronson called roll. All present with Vice Mayor Kai being excused. PLEDGE OF ALLEGIANCE/INVOCATION/MOMENT OF SILENCE Led by Boy Scout Troop # 227. APPROVAL OF AGENDA - Motion to approve moved by Council Member Comerford, second by Council Member McGorray. Motion carried unanimously. CALL TO THE PUBLIC PRESENTATIONS ANNOUNCEMENTS/UPDATES Relating to Town of Marana Parks and Recreation After School Program at Twin Peaks Elementary School Presented by Tom Ellis and members of the Parks and Recreation staff. On January 14, 2010, the Arizona Parks and Recreation Association honored the Twin Peaks After School and Summer Program led by Tammy Haley with her assistants Krista Skillings and Edward Blair, with the Outstanding Program Award for After School Programs throughout the state. PROCLAMATIONS MAYOR AND COUNCIL REPORTS: SUMMARY OF CURRENT EVENTS Council Member McGorray announced that the Dove Mountain Rotary club picked up trash along Tangerine Road on Saturday. She. asked that all citizens be more aware of two words Regulbf~~h{I ~A~'?March 2, 2010 -Page 18 of 186 Council Member Comerford reminded everyone that Wednesday is Tip-A-Cop night at Texas Roadhouse from 4:30 to 9:30 p.m. and encouraged everyone to attend and that donations benefit the Special Olympics. A lot of the Marana police officers participate in this event. Mayor Honea commented that he had called a summit on Friday and invited guests from the Health Center and MUSD, Pima Community College, Northwest Fire District, and the Marana Chamber of Commerce to talk about the financial status of the state and how all parties will be affected in the coming year. The idea was to eliminate redundancies and work together on programs and still provide services to the community. Several ideas were put forth, and he is very proud of the community that works together. Next year is probably going to be the worst financial year on record in Arizona. MANAGER'S REPORT: SUMMARY OF CURRENT EVENTS Deb Thalasitis reported on the Marana Can Do SK that will begin at the Ora Mae Harn Park on Saturday to benefit the Marana Food Bank. STAFF REPORTS GENERAL ORDER OF BUSINESS CONSENT AGENDA Motion to approve moved by Council Member Comerford, second by Council Member McGorray. item C4, Resolution No. 2010-14 was read by Town Clerk Bronson. Due to the emergency clause in that resolution the Consent Agenda requires a roll call vote. Motion carried unanimousl.. C 1: Resolution No. 2010-11: Relating to Development; approving a final plat for Cascada Block XVIII C 2: Resolution No.-2010-12: Relating to Development; approving a release of assurances for Gladden Farms Block 1 and acceptance of public improvements for maintenance C 3: Resolution No_ 2010-13: Relating to Infrastructure; authorizing the Mayor to execute an intergovernmental agreement with Northwest Fire Rescue District for reimbursement for repair of public drainage infrastructure C 4: Resolution No. 2010-14: Relating to Municipal Court; authorizing the Mayor to execute the first amendment to the intergovernmental agreement between the Town of Marana and Pima County for payment for the incarceration of municipal prisoners; and declaring an emergency C 5: Minutes of the January 12, 2010 regular council meeting and January 19, 2010 special council meeting COUNCIL ACTION Jocelyn Bronson addressed Council and noted that Items Al through A4 relate to liquor licenses. Staff reviewed all applications, and she noted that no protests were received by her office. Staff is recommending Council approval of these four items. Motion to approve, items A 1 through A 4, moved by Council Member McGorray, second by Council Member Clanagan. Motion carried unanimously. Regular Council Meeting -March 2, 2010 -Page 19 of 186 A 1: Relating to Liquor Licenses; recommendation to the state liquor board regarding the special event liquor license application submitted by the PGA Tour, Inc. on behalf of The Ritz Carlton Golf Club, Dove Mountain, 6501 W. Boulder Bridge Pass for the Accenture Match Play professional golf tournament A 2: Relating to Liquor Licenses; recommendation to the state liquor board regarding special event liquor license applications submitted by Copper Baseball Club on behalf of Mike Jacobs Sports Park, 6901 N. Casa Grande Highway for fundraisers for youth baseball A 3: Relating to Liquor Licenses; recommendation to the state liquor board regarding a New Series 10 (Beer and Wine Store) liquor license application submitted by Randy Allen Guse on behalf of Walgreens #07209, located at 3800 W. Ina Road A 4: Relating to Liquor Licenses; recommendation to the state liquor board regarding a New Series 10 (Beer and Wine Store) liquor license application submitted by Randy Allen Guse on behalf of Walgreens #05156, located at 7800 N. Cortaro Road A 5: Resolution No. 2010-15: Relating to Real Estate; vacating a portion of the public right- of-way of Linda Vista Boulevard that is being functionally replaced and made unnecessary as a result of the Twin Peaks Traffic Interchange and Camino de Mariana roadway projects Presented by Frank Cassidy. He noted that this is a little piece of roadway that cuts straight east and west. The piece of roadway cuts across the Marana Spectrum parcel and is unneeded. Therefore, the Spectrum agreement calls for abandonment. The way the resolution reads is that the town engineer is authorized to execute the documents including a quit claim deed for that roadway and a reservation of easements for any existing utilities in there, once construction is far enough along to not need the road for construction vehicles. Motion to approve moved by Council Member Post, second by Council Member Clanagan. Motion carried unanimously. BOARDS, COMMISSIONS AND COMMITTEES ITEMS'FOR DISCUSSION/POSSIBLE ACTION D 1: Legislative Issues: Discussion/Dircction/Action regarding all pending bills before the Legislature EXECUTIVE SESSIONS E 1: Executive Session pursuant to A.R.S. §38-431.03 (A)(3); Council may ask for discussion or consultation for legal advice with the Town Attorney concerning any matter listed on this agenda E 2: Executive Session pursuant to A.R.S. § 38-431.03(A)(3),(4) and (7), discussion or consultation for legal advice with the Town's attorneys and discussion and to consider its position and instruct the Town Manager and staff concerning possible acquisition of certain water infrastructure and accounts and water rights and/or resources E 3: Executive Session pursuant to A.R.S. § 38-431.03(A)(3),(4) and (7), discussion or consultation for legal advice with the Town's attorneys and discussion and to consider its position and instruct the Town Manager and staff concerning (1) the lawsuit entitled Town of Re9~ii~nia~ae~r~€:eBti~nae>t~r~f)~ire~~natysv. Marana (consolidated), Maricopa County Superior Court No. CV2008-001131, (2) pending legal issues, settlement discussions and contract negotiations relating to the transition of Marana wastewater collection and treatment to the Town of Marana FUTURE AGENDA ITEMS ADJOURNMENT Motion to adjourn moved by Council Member Clanagan, second by Council Member McGorray. Motion carried unanimously. The meeting was adjourned at 7:16 p.m. CERTIFICATION I hereby certify that the foregoing are the true and correct minutes of the Marana Town Council meeting held on February 2, 2010. I further certify that a quorum was present. Jocelyn C. Bronson, Town Clerk Regular Council Meeting -March 2, 2010 -Page 21 of 186 SPECIAL COUNCIL MEETING MINUTES 11555 W. Civic Center Drive, Marana, Arizona 85653 Council Chambers, February 9, 2010, at or after 6:00 PM Ed Honea, Mayor, Present Herb Kai, Vice Mayor, Present Russell Clanagan, Council Member, Present Patti Comerford, Council Member, Excused Carol McGorray, Council Member, Present Jon Post, Council Member, Present Roxanne Ziegler, Council`Member, Excused SPECIAL COUNCIL MEETING CALL TO ORDER AND ROLL CALL Mayor Honea called the meeting to order at 6:02 p.m. Town Clerk Bronson called roll. Council Members Comerford. and Ziegler were excused. PLEDGE OF ALLEGIANCE/INVOCATION/MOMENT OF :SILENCE. Led by Mayor Honea. APPROVAL OF AGENDA Motion to approve moved by Council Member M_cGorray, second by Council Member Posh Motion carried urzani~nously 5-0. CALL TO THE PUBLIC Ed Stalmaker, President and CEO of the Marana Chamber of Commerce, updated Council on the first Marana. Can-Do SK run and walk held last Saturday at the Ora Mae Harn Park. He noted that nearly 500 people registered for the event. He also indicated that the event was so successful, that it was anticipated to be held for many years in the future. He acknowledged all of the parties who made the event possible, especially Jolene Campbell. PROCLAMATIONS `~ MAYOR AND COUNCIL REPORTS: SUMMARY OF CURRENT EVENTS MANAGER'S REPORT: SUMMARY OF CURRENT EVENTS PRESENTATIONS P 1: Presentation: Relating to the Imagine Greater Tucson update and process Keri Silvyn from Lewis & Roca presented an overview of the work being done by the Imagine Greater Tucson (IGT) regional visioning project. IGT is a collaborative process being formed to guide the development of a publicly supported strategy for a vision to enhance and promote Requi~r~j~ty~go~rc~,~~q~~~~2~~~mic strength and quality of life. She discussed desired outcomes, the participants, where the resources are coming from and the models used. Ms. Silvyn ended her presentation with opportunities to become involved. Gilbert Davidson also noted the Town of Marana's efforts in this regard, and that this isn't just a project of one entity. P 2: Presentation: Relating to Economic Development; discussion and possible action regarding the Marana Economic Roadmap strategic plan. Presented by Josh Wright who noted that the public input process ended with two public forums and is now ready to go before the Planning & Zoning Commission for review and comment before it is brought to Council for final consideration. Over 20 people represented a variety of large and small businesses and organizations. He described the What, the Where and the How questions which cover the three major elements of the plan. The Target Industries being the "What" section of the plan - attracting, maintaining or expanding jobs in Marana. Transportation and Logistics, Tourism and Visitor Experience, and Regional Industry Cluster Support -supporting the southern Arizona business cluster -supply businesses that support local businesses. There are nine economic activity centers -that is what the "Where" question answers. The different activity centers are aligned with the industries. The Focus Areas is the final section -.the "How" -how do we get the industries here or keep them here. Mr: Wrighf then reviewed the elements of this area, including infrastructure that is needed to support the program. He then reviewed with Council the public comments. A number of comments` were received from the general public as well as staff. The (Planning) Commission will review all of the comments next week and then forward their recommendations to Council. The comments ranged identifying additional infrastructure improvements from Ina Road north to including another agency in Pinal County. Thzy have a nonprofit economic development foundation. The Marana Airport had some recommended changes to the actual geographic overlay which would include the BOR park site which was not included in the original design. There are some areas in the geographic overlay zones that are not actually in the town -one of them is the Pinal Air Park. Those areas are now'included in the language. Opening town facilities to school and community colleges was also. a comment. There was discussion about whether the Heritage Center and the downtown were actually tourism centers. That was one of the major focuses of the plan: He presented some of the other areas including the single central business district and asked for questions. Upon motion by Council Member McGorray, second;by Council Member Post, stuff was directed to incorporate comments discussed at tonight's. Council Meeting into the Marana Economic Roadmap draft plan and return with a final draft for consideration by the Mayor and Council at its March 2, 2010 regular meeting. Passed unanimously. P 3: Presentation: Relating to Finance; FY 2010 Revenue Update and FY 2011 Preliminary Revenue Projections. P 4: Presentation: Relating to the Budget; presentation on the FY 2011 Budget Process Framework. Items P3 and P4 were taken together and presented in tandem by Gilbert Davidson and Erik Montague. Mr. Montague began with the current status of this fiscal year, concentrating on the town's general fund. There are three main revenue sources -sales tax, state shared revenues and development related revenues -comprising over 90% of the town's general fund. The largest - 64% is sales tax revenue. He showed numbers collected through December 2009 that do not include transactions in December -those are numbers which we don't have yet. He had Reg~i~aaupatt~u~ly, ~~:~11~latfe~sfor the current year. Collections through December are about $9M or 44%. One could expect that halfway through the year, you'd be at 50% revenue. Certain factors make this number fluctuate, which he discussed. Some of the transient lodging or hotel revenue during the busy season through spring is generally expected to be higher than what it was. There are two main areas of concern with respect to Transaction Privilege Tax - construction or contracting sales .tax and hoteUmotel tax. We continue to see this condition, with respect to commercial development, slide year over year for over 33-35% reduction in taxes collected. We're still 20-30% off projections, which is significant - a little over $1M in contracting sales tax.. With respect to hotel/motel tax, we incorporated within that certain assumptions -but we've had to significantly revise the numbers lower. Depending on the trends, we're in the neighborhood of $2M under overall. State shared revenues are the second largest major revenue source far the town's general fund. State shared sales tax collection are about $957K or 46%, so we're a little under there. Those are collected through the state and then distributed back to jurisdictions. As the state collects less, there is less to distribute. Urban revenue sharing is the shared income tax. We get the amount that is actually what was collected two years prior, so that is a firm number. Auto lieu tax -vehicle registration tax - is dependent upon vehicle registrations, new car sales, etc., but we're close to what could be reasonably expected. We're about a percent offthrough December for total overall in this category or about $80K which is reasonably good: The third largest category is licenses and permits. These incorporated single .family residences and other commercial activity. We are seeing more single family permits than what was anticipated. On the commercial side, we have not seen a significant improvement in conditions for projects being submitted or plans being reviewed. There arc a number of public improvement projects, however. He then presented a slide of overall revenues showing what was budgeted for the current fiscal year and then the current status through December 2009. Total revenues through December are approximately $14M, about 45% of what had been budgeted. Revenues and expenditures are closely tracking through December. By broad category with personnel services, personnel and benefits costs -we`re about $15M spent or about 45% of budget. We had anticipated dipping into reserves of about $LSM. Keep in mind that $1.SM was anticipated for contingency. We've already had to come before you to approve the use of some of that contingency in the amount of $250K associated with the settlement with United Fire. That's part of the variance that you see. Through December, expenditures have exceeded revenues by about $796K, about 53%, slightly ahead of what we would expect. We are hoping to see some good news with the December sales tax in the January numbers. Finance has been working diligently with the Manager's office to make sure we are managing this year's revenues appropriately. For the FY 2011 budget, we've put together a preliminary revenue assessment. We anticipate coming back before Council in March with the final projections. The projections that we'll be discussing this evening will be making some significant assumptions. We'll be using the current structure -the taxing authority. It assumes no major disruption or changes in state shared revenues. With that, Mr. Montague went over a broad summary of the general fund revenues. For the current fiscal year's budget, we had about $30.18M in projected revenues. Based on preliminary projections, we anticipated about $29.4M in revenue collections or a change of about $2.4M or about 8%. Some of the larger changes in those revenue streams have to do with state sales tax and other agency revenues which are really shared revenues. Wi h the sales tax revenues, it does make an assumption that the additional one cent of contracting sales Regu~$~oud~'II~C~~dBga ~pzdYe ~~r~~uad. So in FY 2010 budget, 50% of what we collect in contracting sales tax is incorporated within the general fund. Other Agency Revenue is changing by about 17%, attributable to urban revenue sharing. We anticipate some modest changes in licenses and permits. Charges for services, fines and forfeitures - we anticipate no major changes until we get into investment income and some miscellaneous revenues. Over the last few years we've tapped into our cash reserves for some major projects. There has also been a decrease in the average rate of return for some of our investments over the past few years. Miscellaneous revenues -we're working diligently to mine out all miscellaneous revenues. You'll see the adjustments. We're anticipating that of the $20.6M we budgeted to collect about $18.9M dependent upon the December sales as well as some of the numbers that we'll be getting from some of the lodging businesses, especially over the next several months. Preliminarily, about $19.3M. This assumes maintaining that allocation of that additional one cent in contracting sales tax to the general fund. Preliminary for state shared revenues (other agency) -the major change is attributable to the census. Those numbers will impact our budget. It will be next Fall by the time those numbers will be finalized -for the FY 2011 budget. State shared sales tax of about $237K or 12%. As the `state collects; ess, so will we. Urban revenue sharing is going to be down 25% or about $850K. This is a number that is certain. This is attributable to the declines in income tax and corporate income'tax collections. For auto lieu tax, we don't anticipate any significant change. For permits and fees, this shows the slowdown in the overall economy. For FY 2010 we had budgefed about 75 building permits, and through December we're in the neighborhood of 140. For January, we've issued 38, which is a positive number. We show no significant commercial activity for 2011. We don't anticipate any major projects currently. Council Member McGorray asked about collections from mining. Mr. Montague noted that the negative number is attributable to a refund. There are only two taxpayers in that category. He then turned the presentation back to Mr. Davidson. In response to the current budget deficit for FY 2010, Mr. Davidson stated that staff has been vigilant in taking appropriate actions and monitoring the town's limited resources. The Council approved a budget document last June. Contained within that document were provisions of green, yellow and red -the Level 1, 2 and'3 reduction options. As we have been monitoring the lack of revenues coming in, we have been implementing the Level 1 options. Those include the cell. phones, mobile device reconfigurations -rethinking how we operate from a cell phone operations=centered environment. We're going back to using pagers, land lines and being creative in how we communicate. That is going to save on an annual basis between $24K and $43K. The reason for the difference is dependant on how broad we expand that particular program. For this fiscal year we'll be able to save approximately a quarter of that when it's fully implemented. We are analyzing fleet savings -purchases that had not been made. We broke up the overall fleet purchases into segments to make sure that if the revenues were not there, we still have opportunities to have a large savings. To date -almost $200K will be saved this fiscal year. We've been very aggressive in competitive bid savings -almost $100K, and we'll continue to look at opportunities along those lines. With that, there are a number of things that we're going to continue to make sure we have the best pricing for. One is leases. This has been an item brought up in previous Council sessions. One of the issues is as we get into service levels before we actually lock into a lease, we want to make sure Council has authorized the service level that we'll be at for any particular program. We'll keep you apprised of where we are with that. Office supplies, printing, uniforms, car washes - we hope to save money on those. Regular Council Meeting -March 2, 2010 -Page 25 of 186 The employee benefits process is underway which will again be bid out. We are anticipating only a slight increase in those costs. We're doing a number of things in Technology Services with the network. We anticipate a savings next year of $40K bidding out various item -with some reconfiguration. Another item is SAVE - a statewide cooperative purchasing agreement -partnering with other governmental agencies across Arizona for even greater savings. We've also been holding any vacant positions. We've been utilizing the WRAP program or not filling the position at all. As the numbers come in, we'll take another assessment and see where we are. If there's Council action that will be needed, we'll be bringing that back in March and apprising you of other modifications that have to be made. I believe all of these things will help us have a balanced budget through the end of this fiscal year. He then moved on to the strategic plan focus elements. He identified the three areas of community values as indicators of where we're going to make investment or maintain service levels. One will be having a safe community, two is a clean community, and three is a healthy community. He noted that staff has been out in the community and will continue through February and into March to meet with HOAs, civic groups, commissions of the town and any group willing to listen to budget issues. Through those sessions, staff has been getting feedback and comments and interest on the types of programs that we'll be able to provide and how we'll deal with the budget situation. Two formal Council public hearings have been scheduled in the community. This will be an opportunity for citizens and businesses to listen to what we're doing to manage our budget and the financial resources available. This information will be available on the town's website. As a way to approach this task of making sure we not only have a balanced budget, but a responsible budget and a budget that will meet the long terns needs of our community, staff developed Marana First. Marana First will manage the point-in-time crisis in the economy and still meet the critical needs of our community. s with a household budget, it doesn't make sense to cut everything 20%. What we have to do is kind of the same approach. There are probably some things that have greater value, and we'll have to make those critical choices. Marana First is investing today to make sure we have good results for tomorrow. The first component is revenue enhancement. I do not think that this problem can be solved by raising taxes. That's not necessarily appropriate and is not being recommended, but it is something that. needs to be added to the mix to make sure we maintain critical programs for the time being. The~second will be looking at service level choices. Starting this week, we began meeting with every department, breaking down their budgets into very specific functions and programs and services. That will be delivered to Council. The final thing is how to encourage job creation, business development, expansion within and through the community. That will be very important. The message we give to our community and how we're managing this budget and the decisions the Council makes in terms of how we are trying to encourage future development and growth will lie in that third area. He then presented a slide on FY 2011 Preliminary Revenues showing how the budget functions. This will show how everything works together. Ongoing is expenses we incur year after year obligations of the town -employees, maintenance requirements, etc. At the Revenue line are the same numbers shown earlier. The largest are sales tax and state shared revenue. The next column is Expenditures broken out by the major divisions where we allocate resources. The two largest are public safety and general government (mandated services). Those two numbers should be equal, but Structural must be added in. These are necessary replacements -vehicle replacements, technology replacements and equipment purchased over time. Traditionally, Regu~x~~tie6A~~-f~aat~~edeck~a~i1~'es and we've been able to cover all of the structural items. Vehicle replacements, technology and equipment replacement is not able to be funded out of the revernzes we have now. If we don't manage this appropriately, it becomes a drain on our reserves. We can do some creative things in the structural arena -such as delay purchases of vehicles. That will have some ramifications down the road. You start building up a deferred maintenance vehicle line and replacement, so you have costs you're putting off into the future. In the green area -these are one-time revenues and expenditures. One time revenue is only coming in one time. You wouldn't hire anyone based on this. As an example -contracting sales tax. This is only generated once. Three-quarters of our contracting sales tax has been put back into one-time capital purchases. Only one percent put in the general fund. Licenses and permits -again someone comes in the development services with one thing, and that should be matched up with aone-time expenditure. With respect to Reserves, the beginning balance is $14.SM. We identified contingency money put into this year's budget. If that is all used, then our ending balance would be $13M. My hope is that we again have a slight surplus on the revenue that we are able to manage or contain our expenditures. We want to make sure that we don't tap into the contingency any further. There is a gap between we have between expected revenue and expenditures which is what we're trying to address-over the next few week. Next, we'll start with the revenue options from Marana First. There is a list here that I know the Council is not going to want to move forward on: I wanted to make sure that we listed all the options, and I encourage that we have good discussion and clear direction on the items you do not want to move forward with. I'll highlight one -the property taxes. Rumors out in the community that we've heard from public hearings - is the Council looking at a property tax? I think it's important that the Council address that so that staff can say yes or no. Starting at the top there is the ability to actually increase the sales tax -the 2% today we could look at increasing that. Second is expanding or broadening the sales. tax into other areas such as a tax on food. The third is new taxable items -Erik will talk about the Model City Tax Code approved by the Legislature where you can apply taxes to other types of things. Another is fees for various services, and property tax. Council Member Clanagan noted that one of the things he hasn't heard in Mr. Davidson's presentation is what are we doing to actually shrink the size of government, because that's what we have to address, and it hasn't been spoken of in those terms. And just looking at the structure for the vehicle replacement as an_example -and I'm not talking about first responders - let's look at every other vehicle the town has. How many vehicles does the town actually have in its fleet? Because when you talk about not replacing vehicles, I want to look at cutting vehicles that are currently in the fleet and examining why do we need so many vehicles. We had a discussion once before and I asked the question. Do you have the total number? Mr. Davidson responded that it's well over 300 including police. Council Member Clanagan. Again, if you exclude law enforcement from the discussion, I'm at a loss to understand why we have so many vehicles. Because when you talk about replacing vehicles, we're replacing vehicles that we probably don't need. And if we look at reducing the size of our fleet, I think there's room for savings there. And we need to look at reducing the size of government. In one of the earlier graphs that Erik had, he talked about where we were at in `04 and `O5. How much has the size of government grown from `04 and `OS to where we are now? I think that's the discussion that we have to have. And that's a discussion I want to have before we have any discussion before increasing taxes. Because everybody wants to increase taxes. The state wants to increase taxes. We want to increases taxes. I think we have to be very cautious of going the tax route to try to do this and I think we have an obligation to look at literally shrinking the size of our government. And you mentioned cell phones. I looked at one of the Re9ui~i~aat~rri~tt)~t~e;d~,c~p~cl~ aasubstantial number of administrative support people who work 9 to 5 jobs here in the building with cell phones. I don't understand that - I don't understand why clerical support needs to have a cell phone. Why can't we have a pool cell or a phone that's assigned to an office and when they need a phone they take the phone as opposed to everybody having cell phones. So these are questions that I would like to have answers for. Mr. Davidson responded that the cell phone issue has already been implemented. The vast majority of all cell phones, including his, is all going back to the town and returned to the vendor. Most of our staff will be utilizing their own cell phone or not have a cell phone at all. The reason that there has been a wide distribution of cell phones is the change in our environment -the insatiable need for 24-aces in calling staff and being able to follow up on issues. No matter where a staff member is -even if they're out in the field -there's been this need and desire to make sure that there is contact with them or the ability to communicate with them. We have re-thought many of those elements so there may be a pool phone in some departments. There maybe no phone, and we'll have to go back to the way it was prior to the life before celLphones. That is being implemented and I showed the cost savings that will be incurred for the fiscal year. Talking about the size of government - let me break down into a couple of different things. First, Marana has grown in size not necessarily because we were growing government, but we were growing programs and services and regulations. We were growing in response to the growth of the community. In development services it was a direct response to the need to process plats, submittals, building permits -all of those items. So over a period of years we ramped to accommodate the community's needs. I know that this Council has been very clear about customer service response, so that's why there was an increase. I can tell you from this past year we have definitely begun to shrink. We've not replaced most positions. From FTE, we've dropped 24 out of our budget. The only other way this Council can effect the size of government, you would have to make some very tough decisions of eliminating entire programs or services or changing ordinances that require certain things. So that's the option that the Council has in terms of reducing the size of government. So if we maintain all of the things that we have, that's what's going to drive this discussion on the revenue size and additional cuts if we're going to try-to maintain the existing things that we have. I think the Town of Marana has been very responsive to the changing economic times. We've been aggressive about slowing down on spending. We have re-thought how we've operated and we've come up with some very innovative, creative solutions. So I think we've demonstrated that. But again it's going to be the Council's decision, the Council's direction on whether you want to reduce the actual purpose or size of government. With vehicles, I absolutely agree with you. I think we had this conversation that we want to make sure that we've got a sound fleet, awell-maintained fleet, but a responsible, appropriate sized fleet for the needs and services that we provide or have to respond to. Some of the vehicles we're going to have to have because we have on-call personnel in multiple areas, whether it's our utilities division or something else, we have to respond with the right .equipment, right tools to be able to deal with that. The same goes for our operations and maintenance crews that if there's an accident we have on-call people who have the right vehicles and tools to respond to that. In terms of administrative staff, again all of that is through the implementation of Level 1 as being re-thought and changed entirely. We eliminated stipends for the vast majority of all of our staff. At some point we have to provide a vehicle to be able to get to all the meetings -like PAG. Council Member Clanagan. And I understand -that's why I mentioned that. We have vehicles here to go to those things. I think we need to take a look at just how those vehicles are being used, and one of the things I would like from you in the future is a actual accountability of all of the town's fleet, of how many Regui~rel~is~s~m~rl~a~r~l~nl~~as®d~~e example of the police department, and I understand that; when they have a water main leak. But still, that leaves a lot of room for a lot of other vehicles that I would like to know where they are and how they're being used. Mr. Davidson. Okay. Vice Mayor Kai asked if there is a possibility that we could look into lease programs for some of these vehicles or large equipment purchases. I concur with Council Member Clanagan. If we have equipment that's not being used or we have an access or whatever, we need to do an inventory and either sell it. If we do need something, we need to look into leasing programs and see if that would work for a while. Mr. Davidson responded that we are looking at lease options. We've already received numbers if there are vehicles that are absolutely critical, whether for public safety purposes, that we could possibly lease them. That does have long- term ramifications. If we start -you've got a lease payment that's got to be made over a period of years and. you've got to factor that in. But we are looking at that option if there are critical things that we have to have. Vice Mayor Kai stated that with ;zhe economy improves, we can pay them off early. Mr. Davidson concurred. Council Member Post stated that if you have a 10% shortfall in revenue -cut the budget 10%. We're continually told as Council Members not to micromanage staff, but here you ~~ant us to take this budget and pick it apart and tell you where to cut out 1©%. I'm just telling you -you have a 10% shortfall in revenue, cut it 10% - I don't care hove°you do it. Cut it 10%. I mean obviously you can't cut out 10% of your debt service, but you can address every single one of those things -every single item in those columns by reducing 10%. You could still maintain many of the services by a 10% reduction. T'll fell you how to do it, but do you really want the Council to micromanage every little detail about how we do this? That's how ordinary people are doing their own budgets at home. They're saying that if they're short 10% they've got to cut 10% out of their budgete And they do it. They scrimp and they save and they figure out a way to do it. I think that's one of the issues that people are having with government is that government typically doesn't do that. They go around raising taxes and borrowing and stuff like that. I don't even want to see a presentation on how we can raise taxes. I'll go home. That's not even an option for me. I want to cut the budget until we have expenditures meet revenue. It's very simple. Mr. Davidson addressed Council Member. Post by stating that it would make his job very easy if you gave him the authority to go in and just across the board 10%. That's a no-brainer. But he doubted Council would like the end result. You will get immediate phone calls from a vast majority of different constituent groups. We are already at the bone throughout this entire organization. The past year we have reduced our operating expenses to the bare bone minimum. So there is no fluff left in any department. What will be left are people. So a 10% across the board is going=to equate to multiple layoffs in areas you may not want to have layoffs. So the approach that we're trying to put together here is a thoughtful approach that's centered around the strategic plan that you have worked on over this past year. And it's to make sure that you have all the decision points -the information that goes into those decision points available to you. Whether you want to raise taxes or not, that's your prerogative. My job is to make sure that you have the information; you know what those options are, and if it's not the Council's prerogative to do that, that's fine. It does mean that we will have greater cuts, and if this Council wants to cut deeper into this organization, then we'll have to do that. Mayor Honea stated that he disagreed somewhat because he thinks that everyone pretty much agrees that we're not going to cut public safety, we're not going to cut personnel. That's half of Regula~u~i~ti~®~iin~f-~utl~~s~bo m~ke9a,r11(~~o cut in the budget and you're not going to cut police, which I don't think anybody wants to cut, then you have to cut 20% from everybody else's budget to make it work, and if you cut 20% in some of our budgets -the water department or the parks - it could put us in a pretty serious situation. I think that's why we're trying to identify through the Council -are there programs that we don't want to do right now. And it's not that easy. We're really trying to cut 10% out of 50% of the budget. That makes it a lot more difficult. We're not going to cut police, and that's 50% of our budget. We have to work to balance our budget with the other 50%, and that's what makes it so difficult. Council Member Clanagan stated that like Council Member Post, he has no appetite for taxes or a tax increase. I think we have an obligation to prove that we've done everything we could possibly do before we have a discussion about taxes. Because I just think it sends the wrong message that that's on the table. And you heard the discussion at the police commission meeting earlier this afternoon that people are concerned about tax increase. Because everybody's asking for a tax increase, and nobody thinks anything is going to pass. The voter is not going to approve a tax increase. We have to do our due diligence and do what we have to do. And I'm not saying that the law enforcement community i untouchable. I'm saying that we need to make wise decisions as relates to the police department. But support staff -there are other avenues that perhaps could be looked at. But I think everything should be looked at. I'm not saying that they are not to be touched. Like Jon said, you have an obligation to look at everything and give us your recommendations. Council Member Post. Mr. Mayor, I would. like to go on the record that I do disagree that the police department is untouchable as far as the budget goes. You just can't take something that is 50% of your budget and say, no we're not touching that. I have many, many people that I know -friends -that work in the police department. I know how important the safety of our community is, but you can't just set it on a pedestal and say we're not going to touch it when it is that large a percentage of our budget. Mr. Davidson. No one from the staff, including our-Chief and our police officers have said that the police department is untouchable. T've been very resolute in all of my presentations that while public safety is a high priority, it doesn't mean that we're not going to be creative in how we do that policing and that the police department's not going to have to change the way they've operated over the past number of years at the level of budget that they have. We're not sayin; that. So there will be definite impacts to the police department, but the focus has been how do we make sure we have a safe community, and I think we can do that in a number of creative ways, and that's what we're working through. You will get recommendations based on the types of cuts. But before we move on, if you don't want to discuss taxes, that's your decision. I'm not advocating for taxes, nor is the staff advocating for an increase in taxes. What we want to make sure is that you have all the information to make these decisions, so if we're not going to move do}un this road, then we've got a much greater challenge of cutting into the organization and not coupling it with any increase. Council Member McGorray asked if there is a way that we could identify areas of cutbacks and be educated in that before we proceed with talking about increasing taxes? I really feel we have far too little information on what we could do to really tighten that belt. Let's look at what we can cut back on before we anticipate what we might have to tax, because no matter, the citizens. are going to be paying for it, and everybody is just scared to death with anybody talking additional taxes. Regular Council Meeting -March 2, 2010 -Page 30 of 186 Vice Mayor Kai noted to Mr. Davidson that he would like to say that property taxes increases definitely would not fly in Marana. Our town was incorporated with the promise that we would not implement a property tax in Marana. But I think we might need to look into the franchise utility taxes that City of Tucson collects. We can collect it here in Marana, too, whether it's gas, electric, telephone or whatever. That might be a new taxable item that we're not depending on that other cities and towns collect. Mr. Davidson. We will move forward without talking about taxes. So let's talk about the service level options that will be before you. Hearing your comments, if you want me and the staff to come up with the initial set of targets, we can do that. I would advise that what we've laid out here is a way to try to balance all of the needs. If we're not going to do any sort of revenue enhancement, we're going to have to take the full burden of the $~ - 4M out of services and reduction of expense. So one thing that we had put together was breaking down large departments into their individual components. And I have two examples. I'm going to pick on the City Clerk and we're going to pick on the Parks & Recreation as highlights. Again, these are just examples. In the city clerk's department, you have a number of things that are regulatory-driven. They are mandated by the federal govenment or by the state government. Obviously, elections. The Council can't say we're not going to fund elections and not have them. That has to be done. We can do some creative things in that. You could probably try to renegotiate that -right now our provider is the county. You can maybe make a slight modification, but you're always, always going to have that expense. The Council, Boards and Commissions -again, we've got to staff these and make sure that we've got the resources to provide for each of you. Public records requests - mandated by state/federal law. Liquor licenses - there's a whole state process. And then obviously we've got to retain and manage our records for the long run. So as an example here, there's-not much that we would be able to cut out. We can eliminate any one of those things. The staff that we have that does all of this is the appropriate size. So if there were a reduction;. it's going to critically impact a number of other things that we do. Parks & Recreation is the other highlighted example. We're looking at aquatics and within aquatics you have the pool itself, we have swimming programs, we have swim meets. In this area the Council could say we really like the swimming pool, we don't want to eliminate it; but we want to reduce some of those service level options. So you could reduce the number of hours that the pool is open, or the number of days that the pool is open and that will have a savings. If you were to eliminate it entirely, you're still going to have a costbut obviously you're not going to just drain the pool and let that asset become destroyed. So we'd still have to have water and some level of chemicals that go into that. So this is the way we envision working through the budget and breaking down large departments and their functions into something that; makes sense. The way that we would break it down in terms of recommendations would again be going back to your green, yellow and red levels. Green is the base level. That's what:we're doing today. Yellow would be some set ofcost-savings and we're using again the example of the pool. So here what we're saying is open it for four days a week. The red option would be to close it entirely. So that's the way we envision working through each of these different things. If you want me to just come back with a budget, I don't think you will like the recommendations. I don't know each one of your preferences and the different constituent groups that you're representing, and I think that it would be healthy to have a dialog of the types of services and programs that we provide in this community -what they cost and we're going to manage them for the long run. Cutting out $4M is going to be huge chunks of personnel and programs, so that's going to be a daunting task whether it's myself or all of us Regul~iTVOdi,fii~1l~A~ll~l~lat~h 2, 2010 -Page 31 of 186 Council Member Clanagan suggested to Mr. Davidson that in Continental Ranch there are two pools and swimming lessons and aquatic programs. But the homeowners of Continental Ranch don't assume those costs. They bring in a contractor who provides those swim lessons, the aerobic lessons, the various activities and it costs us nothing. I realize we have an active and a very successful parks and recreation department, but why do we as government need to do that service? There are private people who do that who are professionals in that field. And perhaps that's a way of shrinking government: I'm not saying we should abandon our facilities. We have those facilities - we need to maintain those facilities. They're a resource. They're in investment. But why do we have to provide every level of service, other than opening it and closing it? We can bring in contractors to provide everything else, at no charge to us. Mr. Davidson addressed Council Member Clanagan and Council by stating that is a good example, and we can certainly look across all departmental lines to see how we could restructure government. But that's got to be driven by the Council. Those are major shifts in how we've historically operated. So you have aprogram - and~we're highlighting the pool - that has been a part of the community for a long time and it's operated with the lifeguards and it's been atown-run parks and recreation program. To shift to where we contract out that service, we can certainly explore those things, but I do think it's a Council direction, and the savings on the pool is going to be relatively small. Council Member McGorray stated she is curious about the programs that we offer and the cost involved and if the fees cover the cost. She would have no problem with Parks & Rec if the fees are covering the cost. She would like to see the people -say 60 of any age group -who use the programs pay the cost so that the community at large does not have to subsidize the 60. She asked if that's been looked into that as far as .fees covering costs so we could continue with these programs? Mr. Davidson responded that there are a number~of programs that the Town of Marana provides, especially in the recreation area. These are interest-based classes, special classes -for which the costs are fully recouped. So someone signs up, they pay whatever that amount is and then take, the class or do the activity, and it's a wash. There's large numbers of major programs that it would be impossible to recoup the costs and the pool is a good example. The number of swimmers that we have in north Marana that utilize this pool - if you were to charge the full true cost of labor, chemicals, water, the maintenance -you couldn't swim there on a daily basis. So, those are the items that the Council has provided to the community that have been subsidized so that it provides as much broad access to different age levels and different economic levels for our citizens. Council Member McGorray asked if the pool was heated. Mr. Davidson responded that it was not. Council Member McGorray noted she was looking for ways to make it work, stating that in her community they have a pool which is heated with a very expensive bill. They bought a cover and reduced the hours of use, and there was a considerable savings. With these different things, we need to know the circumstances in order to make a valid. decision. Mr. Davidson noted that another example, one that is part of ongoing discussion, is that some of the after-school and youth programs, and as part of this fiscal year, there was a reduction that was to be made in December. There was a huge outcry from parents, and the staff shuffled money around and it compromised other things to keep that program open until May. That's a Reguiag~,awaoa~-m~fa~rhig~ sab~ad~dsprogram that a lot of people like, but if you were to charge the true cost of that program it would be higher than what the private sector is able to charge in terms of the respective service. So those are the types of things where we've critically analyzed these things and said there are things in the private sector that are managing these things and doing a relatively good job and government shouldn't necessarily be doing thafor duplicating that service, but you all as the elected officials are going to have to bear the brunt of that in letting those constituents know that the service is either going to be ended, or if you want that service provided by the Town of Marana, the true cost is "X" which much, much, much higher than what they're currently paying. Council Member McGorray stated that a lot of the emails coming through said they'd pay willing to pay "X" if you'd just keep the service. Mr. Davidson responded that they'd have to pay the `true" cost which would be a big jump from where they are.. today. Council Member Clanagan noted that he had Mr. Davidson's memo dated February 2 which he appreciated because it talks about the after school prograinm and the preschool program that has been running, and until I saw this memo I never realized.the actual cost and that the uses of this - at least 80 kids enrolled in the various after school and preschool programs, and the users are only paying 11 % of the actual cost -that's enlightening, and I appreciate you giving us, but we're going to have to make tough decisions with that. Ldon't know what we charge for that program, but clearly the users are going to have to pay a much larger percentage than 11%. The town can't absorb the other 89% of that program, and I don't think anybody would expect us to absorb 89%, and that's one of the things government doesn't do as well as the private sector does because the private sector would institute any kind of program in which they were paying for the users to use it. Mayor Honea said that a couple of other things that the town does with the parks &rec programs is not draw boundary lines on the people that they serve. About half the people that use our parks and rec progn-ams, both in south Marana and north Marana, are county residents and not Marana residents. We might look at atwo-tiered thing there. If you're a Marana resident you pay 40% of what the cost of the program is, and if you're a county resident it's 50 to 60%. If we're. getting to the point where we're going to be canceling programs, if we're going to cut them back,'v~re want to provide service to our citizens first and then if we have room we would take someone else. Another thing that's coming up -the state need to make up $1.SB this year, and they rolled $450M to next year, which means you still have the debt, and they borrowed $75~OM which means you still have the debt, and they did pay for shuffling $300M. Next year's Arizona state budget is going to be about $8B with a $SB deficit -over half the budget. The state is doing to come after cities, towns and counties for as much money as they can take legallyfrom us, and I think that this year's a picnic compared to what next year's going to be. You;guys are all right - we may just have to make tough decisions, but it might mean closing the'senior center, eliminating the park programs completely -just shutting those programs down, because if we're going to make those kind of cuts that's the decisions we're. probably going to have to make. There's probably 560 elderly people in our community that go to our senior center. Now even if we doubled the rate or tripled the rate, it still would only pay about 5% or 10% of the costs if you look at the building and the utilities and everything. So to make up -we're looking at probably $2M to start, but if the state starts playing games with us and issuing IOUs -and Gilbert and I were told by an individual who works up there a lot that they could be issuing IOUs by June or July. They don't even have the cash flow; they don't have a rainy day fund. They don't have any money. They're selling all their buildings trying to come up with some one time money. They're probably going to come Regular Council Meeting -March 2, 2010 -Page 33 of 186 after every city and town in the state, and we're all going to be in a tough boat. So if you want to do it strictly by cuts, it's going to be pretty severe. Mr. Davidson stated that he would move on to the final part which was how do we begin to encourage job creation and job expansion within the community? Number one would be that we move forward. with the Marana Economic. Roadmap. Several of you participated with that over the past eight months. It's a great document that I think is going to really define Marana in terms of the types of business, the types of industry that we want to have here, the types of jobs that we want to try to attract. So moving forward with that would be Step 1. Two, we obviously don't have any money to hire new staff so my recommendation would be to reallocate or reassign internal staff to deal with this issue. We've done that to some degree. But if we want to the fullest potential on the roadmap we're going to need to have a couple of sets of hands that are actively working with the business community. It's very labor intensive. I can tell you we've been working with a company over the past couple of months. It hasn't been formalized yet, but it is taking a huge amount of effort to try to work with them and their needs and they. stay here in the Town of Marana. The loss of this company would have been astronomical to our community, so that's a great example where you've got to have people out in the field listening and working with them on a day to day basis. Third, is that we begin to look at business friendly, business-centered incentives to encourage business development and expansion. There's a number of things that we could probably do -whether attracting a new business or retaining one - to be creative on how we incentivize their investment in Marana. There are things throughout the development services process. to modify and enhance and then there's things for existing businesses that we should also explore. And fnally, it's partnerships; how we leverage partnerships -whether it's in the education arena or the existing business arena. We .certainly want to work with Pinal County. with their economic development group, the TREO group, other jurisdictions, and we want to try to leverage the limited resources that we have. I can tell you that I've been meeting with Oro Valley town leadership to talk about how we can work together in north Pima County and share ideas and share resources to try to leverage the limited dollars that we have and make it go even further. That could be the issue centered around the third component. So to coneludc far tor<ight, the Council action requested is for three things: First, the revenue options. I want to make sure that your direction is we are not to move forward at all with any of the revenue components. What we were talking about was not that we'd move forward with implementation with any tax - it was t.o do additional research. So if we're not going to do that, we're going to move on to the service levels. Any additional input on the taxing piece? Second, will be the affirmations, the approach that I've laid out on the service level. I've heard two things. One is some approach taken by staff on a recommendation of where to cut that will have a balanced budget, and the other is kind of going through and talking about all the various programs and services, so I'd like direction on that. Council Member Post. Well, I still like my idea. Council Member McGorray. I would like for us not to do 10% straight across of everybody, but let's look at the areas that we can cut back and still maintain services. Council Member Post. Last year we did that and you did a great job and staff did a great job but this year is the year that we're going to have to make some of those choices that we absolutely did not want to make last year. I think we've been beating around the bush here to tonight, but I think that we will be end up talking about some type of layoffs. I don't think it's our money to borrow from our community just so we don't have to make those kind of tough decisions, so I personally think that is the direction you're Reg~i~d~ t~~~r,~2o~cea)~a~orn~ai. Gilbert, why don't we Look at that additional 10%. Tell us how bad the news is. What are these cuts that we might be facing. That would be good for us to look at and we can make some hard decisions then. Mr. Davidson. So what I'm hearing is you want me to prepare legislative recommendations -basically prepare the budget, and it'll identify the areas, and certainly try to capture the value statements that you had adopted, having a safe, clean, healthy community, but there will be areas, and I want to make sure it's very clear, there will be impacts to personnel, no question about it; there will be reductions in programs and services and as Council Member Post said, those tough decisions are going to result in you guys having to listen and work with the community on how we move forward with that. Mayor Honea. I think what we're looking for is a recommendation if we are $2M short what we think we could be now, and if we were $4M short; so maybe kind of a backup plan. Mr. Davidson stated that he thinks it's going to be higher than $2M. We're further out than just the baseline, too. So we'll take whatever we can envision as the most conservative impact. Mayor Honea. What you're talking about now is if the tate stays constant. We know that revenue sharing is going to be less, but we know what those figures are. If the state gets into the HURT money or into the vehicle tax money which are millions of dollars and takes a big chunk of money, you're not factoring that in right now.:` Mr. Davidson. No. If that were to happen, that's another scenario and we're talking major drastic impacts if we do not have any money coming in from the state or much less an amount than what's anticipated. The final thing is if you want to move forward with the economic development job creation initiatives. We'll have the implementation plan of the roadmap which you're going to have for consideration in the next couple of weeks, reassigning some staff to start working on those things, and then coming back to Council with a number of different policy recommendations of how we could encourage business expansion, business development. Is there'concurrence? Council Member Clanagan. Let me just say, Gilbert, one of the things that I certainly appreciated that wa's done by you and the other employees was the concessions that the employees made to generate-almost a half million dollars in savings. I hope you don't close the door for opportunities for you and your staff to come up with solutions and recommendations that will help us make these decisions. Don't utilize those same resources that you used in the past. We are a part of the solution, We are not saying "you figure it out and bring it back". I'm saying I want to help you out and make it work, but I want to do so at the lower staffing level and a lower resources level than what we've had in the past because we cannot maintain those levels that we've had in the past, and those levels aren't going to help us gear up once we hopefully start to see an uptake in the economy. Still having 300 cars is not going to help us do anything, and they're sitting`around parked. And we're buying new cars. Does that make sense? Mr. Davidson, Absolutely, and that's a great segue to some of the creative things that we've tried to put together to encourage that spirit that we had last year amongst our employees, and I believe that's some of the next items that will be before you. CONSENT AGENDA LIQUOR LICENSES BOARDS, COMMISSIONS AND COMMITTEES COUNCIL ACTION . Mayor Honea stated that Council will be handling the next. three items as one and then go into executive session. A 1: Resolution No. 2010-16: Relating to Personnel; approving and authorizing staff to Reguiatxep~l~aun~~ttd~ ~~~~ti~ ~At5~11d~an (SIP) for fiscal year 2011; and declaring an emergency A 2: Resolution No. 2010-17: Relating to Personnel; authorizing staff to implement a sabbatical program for fiscal year 201 l; and declaring an emergency A 3: Resolution No. 2010-18: Relating to Personnel; approving and adopting amendments to the Worker Recession Assignment Program (WRAP); and declaring an emergency Ms. Machain presented all items. The first two are creative programs implemented last year with some modifications this year. The sabbatical is a new program instituted this year. The WRAP program had some lessons learned from last year which are clarified and outlined in the packet materials. There are two voluntary programs: the SIP and the Sabbatical. Under SIP, there were 11 who took this last year. Two positions were refilled in order to meet critical needs of the town. As a side note, from our records we've identified 67 people eligible for a retirement in one way or another. It's probably unlikely for us to expect that all of those would take a retirement, but six employees are eligible for ASRS or th.e PSPRS; 13 are eligible for retirement under Social Security, and 48 who would be eligiblefor an early retirement. We estimate that we've achieved savings of $400K by those positions being left vacant. The other feature here is that we established two periods in which employees could elect a SiP. One involves a 100% package, the other is half of a package if someone was to elect at a later period of time. The new program is the sabbatical. It's open to full regular and part time classified and unclassified employees for not less than 30 days and no more than 180 days. Employees continue to maintain benefits and seniority, accrue sick leave and vacation, but operational needs must be met. And the WRAP program can fill positions as wells This is open to classified employees only. We can direct a WRAP assignment or employees can compete for a WRAP assignment. What's presented tonight are the changes we made to the policy which are essentially performance evaluations and also be subject to a probationary period. We clarified what happens in a WRAP assignment if there is a reduction>in force in the employee's home position. The employees who take a WRAP on a,voluntary basis are somewhat protected from a layoff at that time. However, if employees are in a directed assignment, they would be subject to the layoff policy as provided in Town Policies, Chapter 8. Council Member Post asked that of the people eligible for the SIP, how many of those are designated essential .positions'? Ms. Machain responded that she'll need to bring that information back at the next meeting. - Due to the lack of a supermajority vote of Council required because of the emergency clauses, Items Al-A3 will come back`to Council for consideration at the February 16, 2010 meeting. Mayor Honea asked for a motion to extend these three items to the next regularly scheduled meeting. Upon motion by Council Member McGorray, second by Council Member Clanagan, passed unanimously. ITEMS FOR DISCUSSION/POSSIBLE ACTION D 1: Legislative Issues: Discussion/Direction/Action regarding all pending bills before the Legislature Steve Huffman gave a brief update on Legislative action. He noted. a couple of things that have happened this week. We are in the sixth special session at the Legislature. They are looking at about a $1.SB hole.. They took about half of that and filled it up just with shift Re9uim~r~ tlek~trdi~ sbab~ s~~s~efl~sl2 and state universities from this fiscal year to the next fiscal year. The other half they filled up by authorizing additional state buildings to be leased out and also by collateralizing revenues from lottery. Where that is important to the town is that they're going to borrow about $450M using revenue from the Arizona Lotteries to pay back that borrowing. That means it basically wipes out LTAP 1 and LTAP 2 which goes into local transportation and transit services. So that will be an immediate and probably permanent impact on the town's revenues. The good news is that of the major revenue sources coming from the state, once you take LTAP 1 and 2 off the table, the rest are pretty much constitutionally tough for the Legislature to get at. If we see any decreases, they are largely going to come from decreases in revenue collection not from actual actions taken by the Legislature to reduce the formulas. If they did try to do that to any of the major funds that we consider state shared revenue, it would require a super majority vote in the Legislature, and the League would almost certainly sue the Legislature. Council Member Post asked the chance of the Legislature trying to give the town an IOU. Mr. Huffman replied that we're really in uncharted territory on almost everything happening in the state right now. I think the revenues that are being collected in the Treasurer's office should be safe. They keep telling us they're safe, but it's just one of those things - we have to keep watching this. We're almost up to a billion dollars in state property leasebacks to cover cash flow. We're not using this for big capital expenses anymore. We all need to be aware of that. On the sales tax collections on our behalf in the state accounts, every representation we've had from the Treasurer's office is that we're safe, but I think it's healthy to be paranoid right now. EXECUTIVE SESSIONS Motion to go into executive session for Item E 2 moved by Council ~Ilember Clanagan, second by Council Member Posh Motion carried unanimously.. Council left the dais at 829 p.m. Council returned to the dai at 8:58 p.m. E 1: Executive Session pursuant to A.R.S. §38-431.03 (A)(3), Council may ask for discussion or consultation for legal advice with the Town Attorney concerning any matter listed on this agenda E 2: Executive session pursuant to A.R.S. § 38-431.03(A)(4) to discuss and consult with the town's attoi7ieys regarding the proposed'Legacy Apartments project and the Town's fees applicable to Section 36 of Dove Mountain FUTURE AGENDA ITEMS ADJOURNMENT. Council Member Post left the meeting after the Executive Session. Upon motion by Council Member Clanagan, second by Council Member McGorray, the meeting was adjourned Passed 4-0. The meeting was adjourned at 8:58 p.m. CERTIFICATION I hereby certify that the foregoing is the Administrative Summary of the Marana Town Council meeting held on February 9, 2010. I further certify that a quorum was present. Regul~l~~tl~OtY~T~p,2 ~7 of 186 ®~ ~~~~' ~~~ ~~~ ,o.. ~ ..,.~. REGULAR COUNCIL MEETING MINUTES 11555 W. Civic Center Drive, Marana, Arizona 85653 Council Chambers, February 16, 2010, at or after 7:00 PM Ed Honea, Mayor Herb Kai, Vice Mayor Russell Clanagan, Council Member Patti Comerford, Council Member Carol McGorray, Council Member Jon Post, Council Member Roxanne Ziegler, Council Member REGULARCOUNCIL MEETING CALL TO ORDER AND ROLL CALL Mayor Honea called the meeting to order at 7:01 p.m. Town Clerk Bronson called roll. All Council Members were present except Council Member McGorray, who was excused. A quorum was present: PLEDGE OF ALLEGIANCE/INVOCATION/MOMENT OF SILENCE Led by Mayor Honea. APPROVAL OF AGENDA Motion to approve. moved by Council 1Viember Comerford, second by Council Member Post. Mahon carried unanin2ously. .CALL TO THE PUBLIC Jolene Campbell reported on the first Marana Can Do SK which was held February 6, 2010 at Ora Mae Ha1n Park. Jolene noted that the event surpassed expectations in the number of registrants and the amount of-food and money donated -all of which was to benefit the Marana Food Bank. Due to the success of this first event, she anticipates that this will become an annual event. Sharyl Cummings addressed Council and stated that although she does not live within the corporate limits of Marana, she feels that she is part of this community, and wanted to let Council know that she voted in favor of the MUSD override. Steve Blomquist also addressed Council with regard to the recent Court decision overturning Marana's motion to dismiss the lawsuit he filed against the town regarding trespassing charges on Saguaro Ranch property. Regular Council Meeting -March 2, 2010 -Page 38 of 186 PROCLAMATIONS MAYOR AND COUNCIL REPORTS: SUMMARY OF CURRENT EVENTS Council Member Ziegler went to the practice round at Match Play yesterday. Mayor Aonea attended today's practice round at Match Play. MANAGER'S REPORT: SUMMARY OF CURRENT EVENTS Deb Thalasitis noted that the new Crossroads District Park will celebrate its official opening this Saturday beginning at 10:00 a.m. and invited everyone to come out and join the day-long events. PRESENTATIONS CONSENT AGENDA LIQUOR LICENSES Ms. Bronson introduced both items, stating that these applications had been reviewed by staff, she had received no protests, and staff was recommending Council approval. Motion to approve moved by Council Membeer Post,-second by Council Member Clanagan, both items were approved unanimously. L 1: Relating to Liquor Licenses; recommendation to the state liquor board regarding a New Series 5 (Government) liquor license application submitted by Evelyne Renee Claire Thorpe on behalf of Mike Jacobs Sports Park, located. at 6901 W. Casa Grande Highway L 2: Relating to Liquor Licenses; recommendation to the state liquor board regarding the special event liquor license applications submitted by the TUSD Amigos de la Danza on behalf of Mike Jacobs Sports Park, 6901 N. Casa Grande Highway for fundraisers for the dance troupe..: - BOARDS, COMMISSIONS AND COMMITTEES COUNCIL, ACTION A l: Resolution No. 2010-16: Relating to Personnel; approving and authorizing staff to implement the Separation lncentive Plan (SIP) for fiscal year 2011; and declaring an emergency A 2: Resolution No. 2010-L7: Relating to Personnel; authorizing staff to implement a sabbatical program for fiscal year 2011; and declaring an emergency A 3: Resolution No. 2010-18: Relating to Personnel; approving and adopting amendments to the Worker Recession Assignment Program (WRAP) Items A 1 through A 3 were presented to Council at the February 9, 2010 meeting. Due to the absence of two Council Members and the emergency clauses requiring a supermajority vote, the items were continued for vote at the February 16, 2010 meeting. Regular Council Meeting -March 2, 2010 -Page 39 of 186 Motion to approve moved by Council Member Clanagan, second by Council Member Ziegler, all items were unanimously approved by way of a roll call vote. A 4: Resolution No. 2010-19: Relating to Development; approving and authorizing the Mayor to execute a Barnett Channel Excavation Development Agreement with Reyher Partnership and Marana 348 Limited Partnership Presented by Frank Cassidy. He noted that this item relates to taking excavated dirt from the Barnett Channel drainage project to be used elsewhere. The applicant will remove the dirt at no cost to the town. Mr. Cassidy did note, however, that. removing this dirt may leave the town without a ready source for fill for future town projects, possibly requiring the town to find another fill source at a higher cost. This cost maybe offset in the short term by not having to pay for the excavation, which Keith Braun estimated would be in the neighborhood of $300K. Council Member Post asked if this dirt had been promised to other parties. Staff responded that any parties who had anticipated using this excavated dirt had been advised that it would be on a first come, first served basis. Council Member Ziegler continued the question and noted her reservations if the dirt had been promised other than through this agreement before' Council. She expressed concern that all other parties should be notified of this agreement. Staff again stated that the early discussions with any interested parties had always been on a first come, first served basis. Council Member Post wanted to reiterate that he's not opposed to Mr. Wexler's group taking the dirt. He just wants to make sure that the town hasn't told a lot of people who are counting on the dirt that it's not available. Council Member Comerford noted that this is an economic development issue, and there are so many variables with the excavation forward. Mr. Davidson noted that this item could back to Council at a later date after staff prepares an analysis of what's already been promised, and the potential volume that remains and other potential users. Mayor Honea asked if the applicant anticipated using the dirt right away. When the town made the first come, first served offer -whoever takes the firsfaaves us time and money down the road. The more people we can.get to come in in a timely manner and takes the dirt now moves us closer to starting and completing our projects. Council Member Ziegler noted that she wasn't' so concerned about the dirt. She's worried about the town. It sounds like a good deal on paper, but if the landowners and people we've talked to in the past who had a plan to use that dirt, we may be setting ourselves up for a lawsuit because we made promises or innuendos we've made or secondly, she is worried about the cost being a moving target. Also, if the town has to eventually go out and buy dirt for a higher cost, there could be a delta that maybe detrimental to the town. Vice Mayor Kai stated that we need that channel, not a channel that goes nowhere. We need to figure out how to get the channel to the west in case of a flood - to make plans to make sure this goes forward. Mr. Davidson stated that there is ongoing staff review and analysis. Motion to approve moved by Council Member Post, second by Council Member Clanagan. Motion passed 5-1 with Council Member Ziegler voting `nay.' ITEMS FOR DISCUSSION/PO5SIBLE ACTION Regular Council Meeting -March 2, 2010 -Page 40 of 186 D 1:.Legislative Issues: Discussion/Direction/Action regarding all pending bills before the Legislature Presented by Steve Huffman. He reported that the Legislature finished its sixth special session. They still not resolve this year's current budget shortfall. There was disagreement as to some debt rollover for K-12 education, university education, so the Legislature has in front of it trying to resolve a shortfall of up to $300M and half a billion dollars for this fiscal year. We're still looking at about a $3.SB shortfall for next fiscal year. One of the things to keep in mind is that the voters of Arizona will be asked on May 18 to vote on a one center sales tax increase. This addition to the sales tax will go exclusively to the state, so there will not be the traditional revenue sharing agreement like we have with the other five cents of the sale tax with cities and counties, so you maybe asked either by the Governor or by folks in the town where you are on the sales tax election. The good news about that is we will know one way or the-.other what the voters are going to decide before the beginning of the next fiscal year. We could either have a really big problem or a kind of big problem. The one cent addition to the sales tax will result in about $1B in additional revenue to the state, so that will still leave us with a pretty sizable gap of about $2.SB. In terms of bill s going through the Legislature right now, next week is important because it's the last week the Legislature has to hear bills in the house of original. Any bills introduced in the Senate will have to be heard by the end of next week. That will be helpful to us because it will help us separate the living from the dead in terms of really bad bills that wren t going forward`or tltat are still alive. We've seen bills putting additional requirements on local governments. We saw bills that were preempting cities and towns from preventing people from carrying firearms in parks - there were a lot of bills like. that dealing with preemptions against local governments. We are actively working with the League and`folks like Mr. Racy who are representing us in the Legislature to try to sift through those,bills and make sure that we're representing the positions that Council has taken with our legislative agenda. We are still waiting to see what the Legislature does to resolve this fiscal year and any plans that come up to deal with next fiscal year. EXECUTIVE SESSIONS Motion to go into executive session on item E 2 by Council Member Post, second by CouncillLfember Clanagan. Motion carried unanimously. Council left the dais at 7.:38 p.m. Council returned to the dais at 8:26 p.m. E 1: Executive Session pursuant to A.R.S. §38-431.03 (A)(3), Council may ask for discussion or consultation for legal advice with the Town Attorney concerning any matter listed on this agenda. E 2: Executive Session pursuant to A.R.S. § 38-431.03(A)(3),(4) and (7), discussion or consultation for legal advice with the Town's attorneys and discussion and to consider its position and instruct the Town Manager and staff concerning possible acquisition of certain water infrastructure and accounts and water rights and/or resources Regular Council Meeting -March 2, 2010 -Page 41 of 186 E 3: Executive Session pursuant to A.R.S. § 38-431.03(A)(3),(4) and (7), discussion or consultation for legal advice with the Town's attorneys and discussion and to consider its position and instruct the Town Manager and staff concerning (1) the lawsuit entitled Town of Marana v. Pima County/Pima County v. Marana (consolidated), Maricopa County Superior Court No. CV2008-001131, (2) pending legal issues, settlement discussions and contract negotiations relating to the transition of Marana wastewater collection and treatment to the Town ofMarana FUTURE AGENDA ITEMS ADJOURNMENT Motion to adjourn moved by Council Member Post, second by Vice Mayor Kai. Motion carried unanimously. The meeting was adjourned at 8:26 p.m. CERTIFICATION I hereby certify that the foregoing are the true and correct minutes of the Marana Town Council meeting held on February 16,,2010. I further certify that a quorum was present. Jocelyn C. Bronson, Town Clerk Regular Council Meeting -March 2, 2010 -Page 42 of 186 ~~~f ~ ~At~~4IV ~.~I~ 11555 W. CIVIC CENTER DRIVE, MARANA, ARIZONA 85653 COUNCII. CHAMBERS, March 2, 2010, 7:00:00 PM To: Mayor and Council Item A 1 From: Josh Wright ,Assistant to the Town Manager Strategic Plan Focus Area: Commerce Strategic Plan Focus Area -Additional Information: The Marana Economic Roadmap is identified as the first action item in the "Commerce" section of the Marana Strategic Plan. Subject: Resolution No. 2010-22: Relating to Economic Development; approving and adopting the Marana Economic Roadmap strategic plan Discussion: The Marana Economic Roadmap is intended to serve as the Town's strategic plan for economic development. The document serves primarily to provide direction to the Town on economic development goals so that resources can be allocated appropriately. The three major elements of the plan are "Target Industries" (industries that Marana should work to attract), "Economic Activity Centers" (geographic areas where those industries should locate), and "Focus Areas" (policies, tools and investments that Marana should implement to create a healthy economy). The Marana Economic Roadmap was crafted over a period of ten months with a stakeholders group representing over twenty local and regional organizations. A public comment period was held from January 5, 2010, through February 5, 2010, including two open houses and an online suggestion box. At its February 9, 2010, study session, the Town Council reviewed the public comments and directed staff to bring back the Marana Economic Roadmap for final consideration at tonight's council meeting. ATTACHMENTS: Name: Description: Type: ^ RE$O ECONOMIC ROADMAP ADOPTION.DOC Resolution Resolution ^ Marana Economic Roadmap_FINAI_.pdf Economic Roadmap Exhibit Staff Recommendation:. Staff recommends adoption of the Marana Economic Roadmap. Regular Council Meeting -March 2, 2010 -Page 43 of 186 Commission Recommendation - if applicable: At its February 16, 2010, regular meeting, the Business & Economic Development Advisory Commission (BEDAC) unanimously approved adoption of the Marana Economic Roadmap and recommended it be forwarded to the Town Council for its final consideration. Suggested Motion: I move to adopt Resolution No. 2010-22, approving and adopting the Marana Economic Roadmap strategic plan. Regular Council Meeting -March 2, 2010 -Page 44 of 186 MARANA RESOLUTION N0.2010-22 RELATING TO ECONOMIC DEVELOPMENT; APPROVING AND ADOPTING THE MARANA ECONOMIC ROADMAP STRATEGIC PLAN WHEREAS a group of regional stakeholders has engaged in a ten-month process of in- depth work to identify priorities for the Town of Marana to attract investment, create jobs, and develop a more sustainable local economy; and WHEREAS the Marana Economic Roadmap specifically identifies target industries that the Town of Marana should work to attract, economic activity centers where those industries should locate, and focus areas that describe policies and procedures the Town of Marana should undertake to achieve its economic development goals; and WHEREAS the Town Council finds that adoption of the Marana Economic Roadmap as set forth in this resolution is in the best interests. of the Town and its residents. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF MARANA, ARIZONA, AS FOLLOWS: SECTION 1. The Marana Economic Roadmap,. attached to and incorporated by this reference in this resolution as Exhibit A, is hereby approved and adopted. SECTION 2. The Town Manager and staff are hereby directed and authorized to undertake all other and further tasks required or beneficial to carry out the terms, obligations, and objectives of the aforementioned Marana Economic Roadmap. PASSED AND ADOPTED BY THE MAYOR AND COUNCIL OF THE TOWN OF MARANA, ARIZONA, this 2nd day of March, 2010. Mayor Ed Honea ATTEST: APPROVED AS TO FORM: Jocelyn C. Bronson, Town Clerk Frank Cassidy, Town Attorney Regular Council Meeting -March 2, 2010 -Page 45 of 186 TABLE OF CONTENTS I. Introduction ...:.........................................................................................................................1 A. The Planning Process ......................................................................................................................4 B. Plan Overview ...........................................................................................................................:.....4 C. Marana's Economic Vision and Economic Development Definition .........................................5 II. Target Industry Opportunities .................................................................................................6 A. Initial Targets ...................................................................................................................................b B. Emerging Opportunities .................................................................................................................7 III. Economic Activity Centers .....................................................................................................9 A. Activity Center Locations .............................................................................................................10 B. Integration of Target Industries and Activity Centers ...........................................................15 IV. Roadmap Focus Areas .............:..........................................................................................17 V. Marana's Economic Roadmap Action Plan ..........................................................................19 Focus Area 1: Business Attraction, Retention and Expansion .....................................................19 Focus Area 2: Resource/Business Support ....................................................................................20 Focus Area 3: Workforce Development .......................................................................................21 Focus Area 4: Tourism and Visitor Experience .............................................................................22 Focus Area 5: Community and Infrastructure Development ...................................................... 22 V. Implementation ....................................................................................................................24 A. Implementation Check List ...........................................................................................................24 B. Implementation Partnerships .......................................................................................................25 C. Roadmap Updates ......................................................................................................................28 Acknowledgements ......................................................................................................................................... 29 Regular Council Meeting -March 2, 2010 -Page 47 of 186 INTRODUCTION The Town of Marano and its leadership are committed to building a sustainable community and high-performing organization. To achieve this objective, a strategic, proactive approach has been implemented to address all facets of the community. In fall 2008, the Town Council and management staff completed a visioning and strategic planning process that resulted in the Marana Strategic Plan. This Plan identifies five Focus Areas where the Town's efforts and resources should be directed. The Strategic Plan recognizes the importance of and provides policy direction for Marana to take steps to build a diverse and thriving local and regional economy that will create career-oriented jobs and community wealth. The creation of this document, the Marana Economic Roadmap (hereinafter referred to as Roadmap), is one of the Initiatives within the Marana Strategic Plan Commerce Center Focus Area. However, the Strategic Plan's other four Focus Areas are directly related to the Roadmap and play an integral role in the success of its implementation Marana Strategic Plan Focus Area: Commerce Center Goal: Build upon the unique combination of assets to attract and maintain career-oriented commerce. The Roadmap was an identified initiative within this Focus Area. The objective is to :: ': ~, ;~ develop Marana as a world-class commerce and business center that creates a ~~ ~~ range of high quality employment opportunities. The Roadmap is intended to COMMERCE provide the strategy to achieve this objective. Marano Strategic Plan Focus Area: Community Building Goal: Create a safe community with a strong sense of place where diverse people are motivated to be involved and feel connected, needed and appreciated. Business and investment are attracted to communities with sound infrastructure and `" reliable, high-quality services coupled with an engaged citizenry. Economic growth is also dependent on health care, a range of housing choices, and the community's COMMUNITY cohesiveness, issues that are all addressed in this Focus Area of the Marano gU1lf71NG Strategic Plan. Marana Strategic Plan Focus Area: Progress & Innovation Goal: Foster an open atmosphere that embraces change, creativity, innovation and calculated risk. Regul~a aka r~~loMom tir~a~ arch ?µafOF1(~; ~~$e 48 of 186 Marano strives for continual quality improvement through creativity and innovation. Today's business climate demands the same from the private sector. Businesses will be looking for communities that align with this atmosphere of progress and PROGRES"; innovation to address rapid change. INNC?VATiCJ^, Marano Strategic Plan Focus Area: Heritage that Ties the Past to the Future Goal: To maintain a sense of community character by linking the past, present and future. The Roadmap recognizes that economic success is dependent on maintaining the uniqueness and quality of life of a community. Marano has a rich and diverse history that, if showcased properly, can position it to become a visitor destination that will attract business growth and development. Marana's heritage will also NERiTAt;E continue to be a point of pride and unifying community force. Marano Strategic Plan Focus Area: Recreation Capital of Arizona Goal: Showcase the unique Sonoran Desert environment by providing diverse recreational opportunities that create economic benefits and accommodate a healthy lifestyle. u;~, High quality recreational opportunities are not only important to bring visitors to ~,h the community but more and more firms are looking for locations where employees can lead an active and healthy lifestyle. Developing Marano as a recreation REC~iEAT{-¢'''r center will provide significant positive economic impacts. A successful economy depends on so many factors within a community, all of the Focus Areas and Goals are addressed in the Roadmap as they relate to strengthening the local and regional economy. Marano is also in the heart of the Sun Corridor; one of 20 megapolitan areas identified across the United States by demographers as areas where the majority of growth will occur in the future. The Sun Corridor is projected to combine to form one of the 10 "megaregions" where the Metropolitan Institute at Virginia Tech University expects that the next 100 million U.S. residents will live. The Sun Corridor Megapolitan region stretches from the Prescott area to the border of Mexico including the I-17, I-10, and I-19 corridors. This offers Marano tremendous opportunities but also many challenges. Marana's Economic Development Basics The importance of building a diverse and vibrant economy in Marano cannot be overstated. Without importing wealth and revenues to the community with the ability to retain them, the Town's aspirations for the future will not be met. This can be explained very simply as creating a "basic" and "non-basic" balanced economy. Basic economic activity is the process of bringing new dollars into the community. This activity can come in a wide range of forms from a tourist staying at a local hotel to a manufactured product Regul~o ana ~con^omic~ itUadmap h ~ar-cht 2, ZO~~e 49 Of 186 made in Marana being sold to a business half-way around the world. In either case, money has come into the community that was not there before which creates jobs and wealth. Non-basic activity is the process of keeping dollars already in the local economy in Marana. The longer that dollar stays in the local economy, the more jobs and businesses it creates and maintains. Since the Town of Marana depends heavily on locally generated sales tax revenues to provide infrastructure, amenities, and services, local basic and non-basic economic activity is critical. Some activities can be both basic and non-basic in nature and occur simultaneously. Arestaurant could be serving a meal to a visitor (basic) right next to a table of local residents (non-basic). In any case, it is necessary for Marana to have a balance of both activities to achieve economic success. How Your Local Economy Works F i.Y1,Ei C4R1C711~i°i!$y £orrGoct to design ~~; _~^ aeF~lcles new,products and seraed 6V provideovtsourced • mechanic ~~a ~i Prs~~:r~.. SerV)CBS .. ~. X ~'-' x P~:'~eCh a~ltC F:lnfr a f~~C2flei In addition to the basic economics, there are numerous quality of life issues impacted by the local economy. Creating jobs close to where Marana's residents live will be even more important in the future. The Sun Corridor is expected to contain over 10 million people by the year 2030 and moving people and goods throughout will be ever more challenging and expensive. Having a full service community will cut down on commute times and costs allowing Marana's residents to spend Regul~arana ~co~nomlclf (~a~ af~Ch ~af0~1(~ ~~~ae 50 Of 186 more time enjoying their families and community -and keeping dollars here. Lower commute distances will also positively impact air quality. Creating career-oriented employment will also allow Marana's residents to stay in the community as their skills grow. Anon-transient population provides a sense of permanence that successful communities strive for. vim. ~i~ /~La.H.KU~ /~'zoz~_3_.~L The Roadmap development process was led by a Technical Advisory Committee (TAC) consisting of representatives from local businesses, utility providers, regional economic development entities, the Town's Business and Economic Development Advisory Commission, Town Council and key town staff. A list of TAC members can be found on the Acknowledgements page. The TAC met six times during the process. The process was facilitated by a technical consultant specializing in community and economic development strategic planning. The consultant was also responsible for drafting all materials and #his document. ~. ~LQ.I~I. ~ e This document has been developed to complement and support the Marana Strategic Plan. Like that plan, the Roadmap contains an Action Plan that contains Focus Areas, Goals, Initiatives and Action Strategies. The Roadmap's Focus Areas are: • Business Attraction, Retention and Expansion • Resource~Business Support • Workforce Development • Tourism and Visitor Experience • Community and Infrastructure Development In addition to the Action Plan, the Roadmap contains two other key components: Target Industries and Activity Centers. Target Industries are defined as potential businesses or industries that might choose to locate in Marana because of its economic or geographic assets. Target industries were identified in order to avoid taking a "shotgun" approach to business development. While Marana will gladly welcome any business that complements the community's vision and values,. there are limited resources available to proactively develop new employment opportunities. Marana's existing and potential assets were carefully examined in order to define its competitive advantage. Only those business segments or target industries where Marana can be most successful will be aggressively pursued through the allocation of resources. Activity Centers are defined areas of current or future concentrated development that offer unique economic development opportunities. Activity Centers were identified in order to focus resources and provide special areas where different types of economic opportunities can be targeted and accommodated. Marana has myriad assets from the high Sonoran Desert setting to RegUl~arana ~con^om~c~~ad'map h ~ar'cF~ ~, ~~$e 51 Of 186 the high intensity I-10 corridor. While very different, both provide a unique platform for economic opportunities. One of the key elements of Marana's economy that is not specifically addressed in this plan is the retail and service sector of the economy. As mentioned earlier, this is an essential sector not only to service the population and visitors but to provide revenues to the Town. Since the location decisions for these types of businesses are typically made by analyzing population and number of households, it was determined that this sector would develop proportionally as the community grows without a proactive attraction approach. It is the Town's responsibility through its planning and zoning processes to ensure that there are plentiful attractive and accessible sites for these .business activities throughout the community. C. 7'lZsz~uu,<iz ~ :~ llc3..«sz. a.itd ~~ ~~~ .. Economic Vision Following are the characteristics of Marana's economy if the community were successful in implementing the Roadmap. These desired future conditions, or economic vision components, were not only used in the development of the Roadmap but will also be used to evaluate success. • Connectivity and accessibility between quality jobs and residential areas • Education that drives the economy and produces a strong labor pool • Multi-generational diverse- Marana provides opportunities for all stages of life • Recognized as a premier destination • The Marana Regional Airport is a focal point of the economy • Marana maintains a strong vision and clear sense of place • The community has an economic identity and reputation for supporting business • The economy is diverse and not dependent on one business sector • Marana has taken full advantage of its transportation assets • There has been a focus on developing community amenities to attract businesses, .investment and visitors Economic Development Definition Economic development in Marana consists of the building of public private sector partnerships to attract and retain a diverse business and employment base, support new local businesses, develop amenities and attractions to create a world class destination and provide a high quality workforce, all of which will move the community toward its vision. R@gUl~arana ~don^omic~adinap Tvlarchl2, 20~~e 52 Of 186 5 II. TARGET INDUSTRY OPPORTUNITIES The Roadmap planning process included a comprehensive SWOT Analysis that identified Marana's internal Strengths and Weaknesses and external Opportunities and Threats. Other economically successful communities in Arizona were also analyzed. Extensive research and analysis of regional assets and potential economic development opportunities was recently completed by Tucson Regional Economic Opportunities (TREO). TREO is a non-profit organization funded by local governments and businesses and is responsible for providing research, marketing, and business recruitment services to grow the regional economy. The results of their research were outlined in the TREO Economic Blueprint, which identifies targeted industries that offer the Tucson area the most potential and match regional assets. Building upon all of this information, Marana identified the following industries to target that best match the community's assets and align with its vision. • Environmental technology (focusing on solar industry) • Bio- and medical sciences • Analytical Instruments (medical devices) • Advanced services (including transportation logistics) • Education (including vocational training) • Tourism (entertainment, retail, etc.) • High-Technology (engineering, electronics, optics, semiconductors, aeronautics, defense, etc.) An additional opportunity identified for Marana is to meet the supplier needs of existing industries. Several large firms within the region must purchase supplies or send work to out of state firms because the products or services they need are not locally available. To capitalize on this business leakage, Marana will target companies that can provide support to existing regional industries. A Regional Industry Cluster Support target was created that Marana can begin to promote immediately. The remaining industries were all considered important and offered potential future opportunities for Marana, but should not be the immediate focus for the community's efforts. pT. ~KL~LQ.L Transportation Logistics Transportation Logistics is defined as businesses that move and store goods for distribution to regional, national, or international markets. TREO has identified 150 firms in the transportation and logistics industry within the Tucson region in its recent Tucson Regional Inland Port Strategic Implementation Plan published in March 2009. These types of businesses look for multiple transportation options, convenient access to markets, and system reliability. Marana has many RegUl~arana ~clon^omic R6adinap ~ar'cF~ 2, ~~$e 53 Of 186 assets such as its rail and highway infrastructure, airport options, and favorable weather to offer this industry in addition to its geographic location close to the Tucson, Phoenix, California and Mexico markets. These types of activities often require large parcels of land in addition to the transportation infrastructure. Key partners in growing this market will be the Arizona Department of Transportation (ADOT), Arizona State Land Department (ABED), Union Pacific Railroad, Pinal Airpark and TREO. Tourism and Visitor Experience In the heart of the Sonoran Desert. with recreational amenities and world class resort facilities, tourism is a natural target for Marana. A successful tourism and visitor experience effort brings new dollars to the community. It also exposes the community to prospective new businesses and business owners. The Town's focus on being "The Recreation Capital of Arizona" and its emphasis on heritage development will position Marana as a diverse visitor destination with many options that will appeal to a wide audience. Today's travelers are looking for more than just good weather -they want to be active and learn. Key partners will include the Marana Chamber of Commerce, Metropolitan Tucson Convention and Visitors Bureau, regional attractions, and the hospitality industry. Regional Industry Cluster Support The aerospace, aviation services and defense industries have a strong presence in the Tucson region and specifically in the Marana area. While at the present time, Marana does not have the foundations in place (e.g., infrastructure, an industrial park, etc.) to justify expending .resources to actively pursue these types of primary employers, there are significant opportunities for support businesses and suppliers to be attracted to Marana. The focus of this target is to reduce the need for local businesses to seek contractors or suppliers for goods or services from out of the region and~or state firms. Attracting these suppliers to Marana will create jobs locally and keep dollars in the area. Key partners will include the Marana Chamber of Commerce and Pima Community College to provide business assistance and training, TREO, and existing local and regional businesses to participate in developing the supply chain. • V~ • • ~ V While Tourism and Visitor Experience, Transportation Logistics and Regional Industry Cluster Support were clearly the best current opportunities, this does not mean other industries will not be pursued or welcomed to Marana. With limited resources. it is critical for the Town of Marana to act strategically and focus its efforts. The development of quality employment opportunities created by businesses that align with community values is the ultimate goal. Regul~af ana ~Ec~oMomic~adinap h Tvtar'ch12~ ZO~~e 54 Of 186 The following business opportunities will require that Marana take steps to position the community to be competitive before justifying expending resources to initiate a proactive business recruitment strategy. Environmental Technology The Environmental Technology industry focuses on businesses that conserve resources, reduce waste, and clean up the environment. Solar industries were determined to have the most potential based on Marana's location and the current focus of state and federal government programs to promote alternative energy sources. It was determined that Marana may not be the best place for generation of solar power due to the- large land area required for solar fields, but equipment manufacturing and testing could. be opportunities. There may also be opportunities to partner with The University of Arizona, TREO, Trico Electric Cooperative and Tucson Electric Power related to current research initiatives. Bio-and Medical Sciences/Analytical Instruments (medical devices, etc.) As the population ages and medical technology advances, this industry is expected to continue to grow. There is already quite a bit of activity in these industries in the Tucson area. There are opportunities to complement this industry where it is already established in Oro Valley. The University of Arizona has also developed facilities and support systems to attract companies that specialize in these .industries. Workforce development is essential to this industry. Businesses within this industry require highly skilled workers that typically are between the ages of 35 and 45 with advanced degrees. These types of workers are attracted by to a community because of quality public schools, availability of medical services, active lifestyle and a fun, interesting downtown. If concepts identified in Marana's community vision and Strategic Plan are achieved, this will result in a community that is desirable for these types of firms. The Town must continue to build the foundations that will at some point position Marana to aggressively pursue business development within this specific industry. Regul~aro~a ~clon^omic~adinnp h ?~tl fOd9 C~ -~~~e 55 Of 186 III. ECONOMIC ACTIVITY CENTERS Due to the unique characteristics within the Marana Planning Area, nine Economic Activity Centers have been identified, each having its own set of opportunities and challenges. This level of comprehensive planning allows the Town to focus its investment and resources on creating a variety of unique places that will attract commerce and economic activities. The intent of the Activity Center concept is to target specific businesses or encourage appropriate types of development to locate in a specific Activity Center. The ultimate outcome is the ability for Marana to create awell-rounded community with appropriate locations to support a variety of economic development opportunities that are compatible with surrounding land uses and have the necessary infrastructure support. Each of the Activity Centers will require more specific area planning to address land uses, zoning and infrastructure development. The Activity Centers will need to be prioritized to allocate resources to implement the specific planning processes. ~~ c~~ The following is a detailed description and location map for each of the nine activity centers identified. 1: Heritage Activity Center The 30 acre Heritage Park serves as the focal point for showcasing the region's rich heritage and history. A trail system connecting various interpretive exhibits along the river will provide an exciting and informative eco- and heritage-tourism experience that will be a destination for visitors. Various additional interpretive sites showcasing the area's heritage will also be distributed throughout the community. In conjunction with the Heritage Park and other amenities celebrating Marana's centuries of agrarian history, local growers' produce will be sold through local Farmers' Markets and events. Techniques should be explored (e.g., signage and design standards) to identify this area as Marana's Heritage Center that attracts visitors to the community but also serves to bring the community together and create a sense of pride for residents and the business community. 2: Dove Mountain Activity Center This Activity Center is intended to be a world- class destination offering tourism and experience opportunities with its resort focus. The area currently includes quality residential development which is expected to continue. Improved access is needed with the expansion of Tangerine Road as an east-west corridor and Camino de Marana as a north-south corridor. Much of the area is currently undeveloped and provides an opportunity to create the type of development consistent with that which has already occurred. The Sonoran Desert experience will be an integral component of the development within the Dove Mountain Activity Center. This Activity Center will continue to develop high quality _, , . - ; i• ,~ ~: s P ., Dove Mountain , ' .., Activity Center Regul~arana lcon~omic~ l2'Oa Nmap h ~arc114, 20~~e 57 Of 186 10 resorts and related hospitality industry commerce that is reflective of the natural setting. The Dove Mountain area is unique in Marana and this development standard should be strongly reflected. Future planning must ensure that there are adequate residential services and a mix of activities that will appeal to visitors (e.g. nighttime activities, unique shopping and entertainment opportunities). Design guidelines should be enforced to ensure that the natural and built environment are integrated and enhance the area's visual appearance. Collaboration with Arizona State Land Department (ASLD), which holds much of the land on the Tangerine Corridor, will be essential. 3: Tangerine Road I-10 Activity Center The configuration of this Activity Center was determined by the Council-approved Single Central Business District. A new I-10 interchange that addresses the railroad crossing issue (at-grade rail crossing adjacent to interchange) is essential for this Activity Center to reach its potential. Plans to build the new interchange are completed and funding for this project should continue to be pursued. This area offers mixed-use opportunities that include residential, commercial and employment area development. Water, sewer and other infrastructure should be planned, programmed and installed in coordination with the interchange reconstruction. .~ ~,~ ~, a ~ ~ ~ ` *` A~= ~., 4: Tangerine Corridor Activity Center This area along Tangerine Road between the Dove Mountain and Tangerine Road and I-10 Activity Centers will serve as a key location for high technology businesses and business park development. The corridor will be sensitively planned with setbacks and clustered development so as not to develop in a linear, strip commercial-type pattern. This area will also serve as a "transition corridor" between the employment center development in the Tangerine Road and I-10 Activity Center and the recreation, resort and tourism amenities in the Dove Mountain Activity Center Regul~arana Eclon^omic~ Kda map h ~af'cli 2, O~~e 58 Ot 186 Development of basic and telecommunication infrastructure will be required along the length of the corridor to ensure that the Town can maximize economic opportunities. 5: Airport Activity Center The Airport Activity Center is anchored by the Marana Airport and its 6,900 foot main runway. It is a tremendous asset for Marana and a major piece of the Transportation Logistics strategy. It offers opportunities for manufacturing and distribution and is poised to become a center for corporate and executive travel. Improvements in basic infrastructure are needed and much of the land around the airport is managed by ASLD. Close collaboration with ASLD will be required to ensure that the Activity Center reaches its potential. Developing move-in-ready buildings at the airport will place Marana at the forefront of attracting quality firms that cannot wait to build their own facilities. ~- `~. ~~ ~ , < _> . ,~ ~~ Airport ' Activity Center ""'~ ~ "~° ~ ~` ~ ~ ~ k t `' ~ This Activity Center also includes a Bureau of Reclamation site that is planned to be developed into a destination amateur sports park which is intended to draw visitors and participants to Marana. 6: Downtown Activity Center Creating a thriving Activity Center as the core of the community is critical for establishing a strong community identity and sustainable economic base. The heart of Marana historically was where regional farmers came together to share information and sell goods. It provided the sense of community within a vast agricultural area. Establishing and capturing this strong sense of place is critical for Marana residents as well as for visitors. The municipal complex and health center are the first major investments in Downtown Marana. Major infrastructure upgrades are needed and improved access from I-10 must be developed. The area has multiple landowners that will play an important role in the implementation of the vision for Downtown } ry: ~1 ,y . Downtown Activity Center °, t ~~ A~ i 3. .: ~Y-, ,~,.~ , t ~ } t r"} ~~° ~. ~ . .. Reguli~ara a ~c~o^nomlc~ad"map h ~ar'ch~ 2, ZO~~e 59 Of 186 12 Marana. Successful downtowns need more than infrastructure, they need people. The Downtown Activity Center will include a strong residential component that will create 247 activity that will help local businesses succeed. It is anticipated that the activities and establishments in this Activity Center will support the Tourism and Visitor Experience target industry. Downtown Marana as currently envisioned is a large Activity Center, identified as part of the Council-approved Single Central Business District. This area can include a variety of development areas tied together with unifying design features and a multimodal transportation network that might include a trolley or other form of transit and pedestrian system. Comprehensive planning and creative techniques will need to be employed to achieve "walk-ability" and a unified design theme. 7: South Marana Activity Center Much of this area was built before being annexed by the Town of Marana and is some of the oldest development in the community. Over time, this Activity Center will need refurbishing to remain competitive with new shopping and activity areas being developed in other parts of the community and region. Appropriate redevelopment will ensure that new and existing buildings are developed or redeveloped according to the Town of Marana's codes and standards. The area east of I-10 continues to enjoy a tremendous amount of traffic and commerce. There is also a successful business park development west of I-10. South Marana and the "Golden Triangle" area include a mix of retail and commercial businesses that has historically served as the business hub of the northern Tucson metropolitan area. In order to ensure continued development and redevelopment, improvements to Ina Road will be required. It will be critical to improve circulation patterns in the area and to beautify the corridor to spur additional private sector investment. Regul~af ana EcoMo el~lr~a~ aP h ?~afOh1(~ -~~~e 60 Of 186 ~ 3 8: Twin Peaks Activity Center A key east-west roadway connection will be completed when the Twin Peaks Interchange project is finished (expected late 2010). This important connection will serve as a catalyst for new development. There has been considerable interest in businesses locating in this general area. This Activity Center already has some industrial activities on the west side of I-10 and offers retail and residential development opportunities on the east side of I-10. Once additional transportation improvements are completed, more parcels will have access and can be developed. There is a need for water and sewer infrastructure on the west side of I-10. 9: Transportation Logistics Zone Activity Center While currently out of the town s corporate limits, this Activity Center's proximity to I-10, Pinal Airpark and planned rail system improvements provides tremendous opportunities for intermodal transportation, logistics and freight activities. The future potential of this Activity Center may hinge upon the Town's decision to annex and its success in annexing all or part of the area. Even if this area does not become part of the Town of Marano, the regional impacts of successful development in this Activity Center could be very positive for Marano. It is important that this area be planned carefully to ensure a compatible land use pattern. Transportation Logistics are typically heavy industrial uses and incompatible land use patterns such as residential neighborhoods or schools might jeopardize the economic development potential of this Activity Center. This type of economic development takes a long time to occur and the area must be protected from incompatible land uses. Regul~ Council Meetir~-~Narnch ?µ 20~1(~; ~~~e 61 of 186 t a arana conomic a ma arc In order to tie together the Target Industry and Activity Center concepts, it is important to identify which of the Activity Centers are currently or could be prepared to be best suited to host the Target Industries. The following matrix provides direction for locating the Target Industries within the various Activity Centers. These recommended locations (indicated in orange) and the needs for the Target Industries should be recognized as the specific area planning for each Activity Center is carried out. Target Industry -Activity Center Matrix Matrix Highlights • The Heritage and Dove Mountain Activity Centers are expected to be Tourism and Visitor Experience focused. • Due to the importance of the Tangerine Road and I-10 interchange and the availability of vacant land, a mix of uses is anticipated. Regul~Q aka I'con~omic Rda map h ~ar~ 2, 20~~e 62 Of 186 15 • The Tangerine Corridor Activity Center is anticipated to be career-based employment focused • In addition to Transportation Logistics, the Airport Activity Center provides opportunities for Regional Industry Support in the aerospace sector. • The Downtown Activity Center offers Tourism and Visitor Experience opportunities and ` there is potential in the Bio- and Medical Sciences industry sector in conjunction with the medical center. • As the retail and service sectors expand in the community, some of the retail stores and shopping centers in South Marana may be available for employment uses providing new employment opportunities. • The Twin Peaks Activity Center offers mixed use employment opportunities in addition to commercial and retail uses serving adjacent residential areas. • The Transportation Logistics Zone Activity Center could provide Regional Industry Cluster support opportunities in addition to transportation related activities. Regul~af ana ~coMe~e~ir~a~ arnch ?~af0~9 (~ ~~$e 63 of 186 ~ 6 IV. ROADMAP FOCUS AREAS To organize the actions and activities that will be required to expand Marana's economy, Focus Areas were identified to provide the framework for the Action Plan. Focus Areas are defined as strategic initiatives that Marana will address to assist in implementing the economic development vision. The five Focus Areas identified are: 1. Business Attraction, Retention and Expansion 2. Resource/Business Support 3. Workforce Development 4. Tourism and Visitor Experience 5. Community and Infrastructure Development Within each of the Focus Areas a goal is identified. The goals describe the ultimate desired outcome for Marana. Focus Area 1: Business Attraction, Retention and Expansion The goal of this Focus Area is to "bring new businesses and jobs to Marana while supporting the existing base of sustainable and thriving firms:' This will take a collaborative local and regional effort utilizing all of Marana's partners. While pursuing new businesses to locate in Marana is an important part of the overall strategy, focus should not be lost on providing assistance and a sound business climate for those firms that have already chosen Marana. It is much easier and economical to help existing firms expand and create jobs than to compete to attract new firms.. Focus Area 2: Resource/Business Support The goal of this Focus Area is to "position Marana as the region's leading, proactive ~~ business partner." Marana wants to be known as the place to be from a regional business perspective. To attain this, the community will need to build a reputation for providing superior services, support, and assistance and be able to partner with businesses to find innovative solutions to complex issues and challenges. Focus Area 3: Workforce Development The goal of this Focus Area is to "work with local and regional partners to maintain a ~\ highly qualified and diversified workforce tailored to the target industries and local business activities." Marana desires to ensure that its residents are qualified to take jobs being created through the Roadmap's implementation. There is also a need to have the workforce evolve and adjust to change and new technologies. Due to advancements in telecommunication, many businesses can locate just about anywhere. Cost, proximity to markets and access to resources used to be the key business location factors. Today, it is the quality of the workforce and the opportunities available to improve it. Regul~arana ~clon^omic~~adinap h 7Ua~ch12 ~~$e 64 of 186 ~ ~ In addition, businesses are looking for locations that provide a comprehensive, sound. education system for families and young people. Focus Area 4: Tourism and Visitor Experience t~*r The goal of this Focus Area is to "be the region's premier leisure, recreation and group ~~ meeting destination." Attracting tourists and visitors to Marana is critical to the local economy. They bring basic dollars to the community without having to provide full time infrastructure and services. A high quality tourism destination also brings business owners, executives, and investors to the community. Showcasing Marana to these decision makers will pay dividends in the business recruitment area. Focus Area 5: Community and Infrastructure Development The goal for this Focus Area is "within the purview of municipal government, provide quality services to support economic development efforts." Basic infrastructure and services are expected by business and without them the community is at a disadvantage. The lifecycle of innovation has become much shorter and firms need to be nimble and able to move quickly. The Town will need to identify a systematic funding program to proactively develop and expand its basic infrastructure and services. Regul~a °0^On~~IoMom ~i~a~ arch ?µa fOh1(~ ~~~e 65 of 186 ~ 8 V. MARANA'S ECONOMIC ROADMAP ACTION PLAN Each Focus Area contains initiatives that are defined as broad tasks that need to be accomplished to assist in the pursuit of the related goal. Action Strategies are then presented with those in orange print being steps that can be undertaken immediately with minimal direct costs to set the foundation for the plan's implementation. y Focus Area 1: Business Attraction, Retention and Expansion Goal: Bring new businesses and jobs to Marana while supporting the existing base of sustainable and thriving firms. Initiative 1.1 Develop and implement basic tools to market the community and provide assistance to existing businesses. Action Strategies 1.1.2 Develop a community brand and marketing plan for business attraction, retention and expansion. 1.1.3 Develop and implement a formal business retention and expansion program. Initiative 1.2 Create a culture that encourages local businesses to be involved in community initiatives and events. Action Strategies 1.2.2 Develop an approach to attract corporate headquarters to Marana. Initiative 1.3 Identify and enhance a variety of places to locate new businesses. Action Strategies 1.3.2 Devise and implement a Town land acquisition strategy to provide key locations that may facilitate appropriate business development projects. 1.3.3 Comprehensively plan the nine identified Activity Centers to accommodate new and expanding businesses. 1.3.4 Perform cost benefit analyses to explore the feasibility of annexing areas within Economic Activity Centers that are not in the town's municipal boundaries. Work with regional partners to implement annexation procedures if deemed appropriate. Regul~arana 1=co~nomic~ KOadinap h ~ar'cf~ 2 20~~e 66 Of 186 ~ 9 Initiative 1.4 Maximize economic opportunities presented by the community's major transportation infrastructure (Interstate, railroad, airport} to attract business and jobs. Action Strategies t Ensure long term viability of the Marana Airport through infrastructure investment, land use planning, zoning decisions and promotion to prospective developers that may tae influenced by airport operations. 1.4.2 !Nark closely with regional partners (e.g., Union Pacific Railroad, Arizona Depart .eat of Transportation, Regional Transportation Authority} to upgrade transportation facilities and improve regional r.r~rtctsryrss. 1.4.4 Develop a Transportation Logistics marketing plan. 1.4.5 Develop an intermodal strategy that integrates the movement of freight (i.e. ground, rail and air). Initiative 1.5 Maximize economic opportunities to attract business suppliers to support regional industries. Action Strategies l Interview existing regional businesses to understand supplier and service needs that are currently being outsourced to other regions. 1.5.2 Develop a Regional Industry Cluster Support recruitment strategy. '~~ Focus Area 2: Resource/Business Support Goal: Position Marana as the region's leading, proactive business partner. Initiative 2.1 Maintain policies, resources and tools that promote economic development. Action Strategies i Maintain equitable and business-friendly tax policies that balance competitiveness with revenue generation. 2.1.2 Maintain a streamlined development review and approval process 2.1.4 Maintain an up-to-date portfolio of business incentives and policies and provide clear guidelines for their use. 2.1.5 Implement a land acquisition strategy (land banking) to provide key locations that could facilitate implementation of desired projects. 2.1.6 Maintain a package of available tools and research best practices to identify new business assistance options. Regul~araua ~Eclon^omic~~a morph eta °t1g; ~~$e 67 of 186 20 2.1.7 Create and maintain a database of state and federal funding sources and programs that assist in meeting businesses' needs (e.g., financing, training, services). 2.1.8 Use all legislative resources available and collaborate with other entities to lobby for the preservation of existing business attraction incentive programs and the development of new ones. 2.1.9 Develop a policy and funding source to assist with employee relocation expenses for companies that bring high-wage jobs to Marana. ~`~ Focus Area 3: Workforce Development Goal: Work with local and regional partners to maintain highly qualified and diversified workforce tailored to the target industries and local business activities. Initiative 3.1 Support local education service providers to expand the capabilities of the workforce. Action Strategies .1 Hald periodic meetings with loeal and regional education service providers to discuss issues and opportunities for Marana to achie 3.1.2 Explore opportunities with Pima Community College, The University of Arizona, and Marana Unified School District to offer classes and training programs at Town of Marana municipal facilities and~or local businesses. 3.1.3 Work closely with Pima Community College, The University of Arizona and Marana Unified School District to develop curriculum and training programs tailored to local needs and businesses. 3.1.4 Work closely with Pima Community College and The University of Arizona to develop curriculum and training programs tailored to local needs and businesses. Initiative 3.2 Increase focus and investment in workforce development. Action Strategies 3.2.1 Maintain a Workforce Development and Job Training Council (identified as Science and Technology Council in the Strategic Plan) that will hold regular meetings with the intent to match major employers with education partners to create workforce solutions. 3.2.2 Develop a Town of Marana dedicated funding source for job training. Initiative 3.3 Attract additional educational and training institutions to Marana. Action Strategies 3.3.1 Develop a marketing strategy for attracting education and training institutions. 3.3.2 Working with area businesses, develop and maintain a current education and training needs assessment and include in the marketing strategy. Regul~ Council Meetir~-~vlarch 7~ 20h1C~ ~o~~e 68 of 186 21 arana conomic a map - arc 3.3.3 Identify potential locations for campuses and training centers and work with private and public sector entities to provide appropriate infrastructure. Ill Focus Area 4: Tourism and Visitor Experience Goal: Be the region's premier leisure, recreation and group meeting destination. Initiative 4.1 Develop Marana's tourism and visitor experience "product." Action Strategies Establish a local `"Tourism Team" to carry out specific to represent Marana in coordinating with regional state tourism promotion entities. 4.1.3 Develop a community "brand" for Marana. 4.1.4 Work with the Chamber of Commerce and local hospitality industry to develop a tourism and visitor experience marketing strategy. 4.1.5 Integrate heritage information and heritage-related activities and events throughout the community. Initiative 4.2 Develop community amenities and facilities that make Marana attractive to visitors while enhancing the resident experience. Action Strategies 4.2.2 Improve bicycle and pedestrian facilities and amenities. 4.2.3 Upgrade the community's parks and recreation facilities. 4.2.4 Create a unique Downtown as an amenity for residents and a destination for visitors to shop and attend entertainment venues that generate revenues for the Town. 4.2.5 Become a destination for trade shows, conferences and other similar major events that will bring visitors to Marana. 4.2.6 Complete the Heritage Tourism Park and associated Santa Cruz River shared use path for use by residents and visitors. 4.2.7 Complete the Tortolita Mountain northeast Marana trail system (extending through both Pima and Pinal counties) to be used as a major tourism and recreation attraction. ~~ Focus Area 5: Community and Infrastructure Development Goal: Within the purview of municipal government, provide quality services to support economic development efforts. Initiative 5.1 Systematically identify, prioritize, and implement infrastructure projects that support economic development goals, seeking public-private partnerships and creative financing arrangements where possible. Regul~af ana Economic ~tOa map h ~arcF~ 2,~~~~e 69 of 186 22 Action Strategies 5.1.2 Maintain a capital improvements plan for each of the nine identified Activity Centers. 5.1.3 Maximize state and federal funding and loan programs for infrastructure development. Initiative 5.2 Build partnerships with regional and state inFrastructure entities. Action Strategies .1 Actively participate in efforts io enhance the regional transportation system. 5.2.3 Improve relationships with other governmental entities to facilitate joint infrastructure development projects. Initiative 5.3 Maintain local control of public utility resources where possible and logical to ensure an efficient development process and support community goals. Action Strategies !.1 Secure an adequate water supply and improve the Marana w 5.3.2 Perform a comprehensive analysis of all utility services provided to determine ways to gain more local control and influence. Initiative 5.4 Develop a strong community foundation that will result in a quality business climate. Action Strategies 5.4.3 Implement a community beautification program. Regul~a ana Eclon^omic~ KOn nmap h ~ar~ 2, P~~g 70 Of 186 23 VI. IMPLEMENTATION Economic development is not a short term effort. Many projects will take years if not decades to complete. Attracting the right kind of jobs and commerce to Marana will take patience, commitment, perseverance and the political will to make investments that may not bear fruit for many years or political terms. Ensuring that the Roadmap is implemented is dependent upon the identification and support of a responsible entity or entities to carry out its directives. Additionally, a dedicated, stable, long- term funding source to carry out the Roadmap's implementation is required. The implementation of the Roadmap can be achieved through numerous different structures and methods; reallocation of current staff, addition of new staff, creating a new department, or the formation of anon-profit corporation are all feasible options. An incremental approach using several of these concepts over time should also be considered. ~ ~LL3L Whatever the ultimate structure, there are several capabilities, functions and actions that will be necessary to successfully implement the Roadmap. These are contained in the Implementation Check List. / Identify a knowledgeable and experienced point of contact for economic leads that will represent the Town and be responsible for compiling and disseminating information and data. Provide resources so that accurate and timely information is available. / Establish a position of authority with decision-making ability to implement economic development action strategies. / Assemble an economic development response team comprised of experts and representatives from staff and primary and secondary implementation partners based on the needs of the project. / Maintain a streamlined development review and approval process. / Develop a process to evaluate Marana's economic development progress and ensure accountability. / Make along-term financial and organizational commitment to economic development. / Designate a "keeper" of the Roadmap to provide oversight and ensure that it is implemented. / Establish networks to effectively collaborate with regional partners. / Offer ongoing education to the public on the importance of economic development. / Ensure trans-departmental involvement through training and information programs. / Define and solidify relationships and expectations with TREO and the Metropolitan Tucson Convention and Visitors Bureau. / .Present the Roadmap to all Primary and Support Implementation Partners and these groups and entities should be communicated with on a regular basis. Regul~af ana ~c~on~orelCil~a~ arrch 7~a fOh1(~ -~~$e 71 of 186 24 / Make reports as necessary to the Town Council and Business and Economic Development Commission regarding progress on implementation of the Roadmap. [~. ~ fah In addition to the Town's efforts, many other entities play key roles in the Roadmap's successful implementation. Some entities and organizations will play a major role (Primary Implementation Partners) while others will play a supportive role (Support Implementation Partners) in implementation. Primary Implementation Partners Roles and Responsibilities Primary Partners will be actively involved in the plan's implementation on a regular basis. They will be counted on to provide information, support, knowledge and expertise. Marana Business and Economic Development Commission • Serve as the keeper of the Roadmap through identifying priorities, ensuring accountability and measuring success. • Assist in promoting Roadmap implementation with the Marana and Southern Arizona business communities. • Lead the periodic Roadmap update process and recommend changes to the Town Council for consideration. • Provide a citizen and local business perspective on the Town's economic development efforts. • Educate and inform the public on the importance of economic development. Marana Chamber of Commerce • Educate and inform the public on the importance of economic development. • Serve as the local small business advocate and liaison. • Serve as the initial point of contact for small businesses considering the community. • Welcome and provide community information to new businesses to Marana. • Serve as a resource- center for small businesses. • Participate in promoting Marana. • Participate in implementing the Tourism and Visitor Experience Focus Area. • Participate in implementing the Business Attraction, Retention and Expansion Focus Area Tucson Regional Economic Opportunities (TREO) • Support the implementation of the Business Attraction, Retention and Expansion Focus Area. • Provide regional marketing and promotion. • Develop and disseminate in-depth employment and industry data. • Provide professional economic development expertise. Regul~arana Econnomic R6admaph ~archt 2, 20~~e 72 Of 186 25 • Assist in recruiting new businesses. • Work to strengthen regional relationships. • Serve as lobbyist for regional economic development efforts. • Host best economic development practices tours. • Support the implementation of enterprise and empowerment zones, workforce development and foreign trade zones. Local and Regional Utility Providers • Support the implementation of the Community and Infrastructure Development Focus Area. • Provide basic infrastructure support and information. • Serve as a collaborative economic development partner. • Share information with perspective businesses. • Provide infrastructure planning expertise. • Serve as a lobbyist for regional economic development efforts. Metropolitan Tucson Convention and Visitors Bureau (MTCVB) • Support the implementation of the Tourism and Visitor Experience Focus Area. • Implement marketing strategies of Marana assets • Recruitment/bookings for conferences and meetings to be held in Marana. • Regional promotion as a visitor destination. • Support the expansion of tourism and visitor experience venues and activities. Education Providers (local schools, vocational and training, community college, university) • Support the implementation of the Workforce Development Focus Area. • Provide quality basic education services. • Develop curriculum and degree programs to meet local economic development needs. • Coordinate with the Town, local businesses and other entities to provide education and training programs. • Participate in mentoring and apprenticeship programs within Marana. • Maintain a high quality K-12 education system to serve the community that is attractive to families and can aid in business recruitment. Support Implementation Partners Roles and Responsibilities Support Partners will provide support for plan implementation. Depending on the project or initiative, their involvement level could change significantly. Pima and Pinal Counties • Provide planning and regulatory functions and basic infrastructure and services. • Provide support to Marana's economic development effort. • Collaborate on mutually supportive community and economic development projects. Regul~arana Ec~onnomlc ltriadmap h ~archl2, ~~ae 73 Of 186 26 Primary Education Providers • Provide quality local primary education. Regional Tourist Attractions • Provide venues to expand the tourism and experience industry. • Participate in joint promotional opportunities. Surrounding Municipal Governments • Support Marana's community and economic development efforts. • Participate in mutually beneficial joint venture opportunities. Tucson International Airport and Pinal Airpark • Coordination to ensure long term viability of air commerce in the region. Arizona State Land Department • Successful coordination and joint planning of State Trust lands within the Marana Planning Area will be necessary to produce win-win projects. Arizona Department of Transportation • Continued improvements to the I-10 corridor. • Improve airport planning and development. • Maximize the state's rail assets. Other State and Federal Agencies • Depending on the issues being addressed, various state and federal agencies will require communication and collaboration activities. Pima Association of Governments (PAG) • Support Marana's community and economic development efforts. Central Arizona Association of Governments (CAAG) • Support Marana's community and economic development efforts. Central Arizona Regional Economic Development Foundation (CAREDF) • Support Marana's economic development efforts. Regul~of ana Edon^om c ft0udinap h 7Narch~ 2, ZO~~e 74 Of 186 27 Financial and Real Estate Sectors • Ensure availability of financing for business activities. • Support business development and Marana's economic development efforts. Institutes and Foundations • Organizations such as Sonoran Institute and other specific issue advocacy groups can be important advocates and supporters of Marana's economic development efforts. c. ~ ~ v In order to remain relevant and effective in a rapidly changing environment, this Roadmap will need to be periodically updated. At the direction of the Town Council, the Marana Business and Economic Development Commission will be responsible for working with Town Staff to update the Roadmap. As appropriate, Marana's Implementation Partners should also be involved or consulted during the update process. The update process should take into consideration the following factors: • Changes to the Marana Strategic Plan and its direction • Updates and changes to other key planning documents • New research • Demographic and/or socio-economic changes • Completed tasks • Challenges and difficulties identified • Regional, statewide, national, and international trends • New opportunities Regul~arana ~clonflomici Rdod"march 7CAarch12 ~~$e 75 Of 186 Zg ACKNOWLEDGEMENTS The Town of Marana would like to recognize and thank the following participants in the development of the Roadmap. ~ o~ivz3,.ofz~ Co~s~it~ Steve Cheslak, Town of Marana Planning Donald Crow, Coca-Cola Enterprises Anthony Cuaron, Town of Marana Utilities Bob Delaney, CB Richard Ellis Charlie Emerson, TRICO Electric Cooperative Tim Healy, CB Richard Ellis Gary Hudman, Town of Marana Technology Services Steve Huffman, Town. of Marana Intergovernmental Affairs George Kennedy, Marana Chamber of Commerce Jana Kooi, Pima Community College-Northwest Campus Kelle Maslyn, Comcast Communications Art McDonald, Tucson Electric Power Company Carol McGorray, Marana Town Council Bill Park, Big Sky Autobody Jon Post, Marana Town Council Walter Richter, Southwest Gas Amber Smith, Marana Business and Economic Development Commission Jennifer Treese, Town of Marana Regional Airport Jonathan Walker, Metropolitan Tucson Convention and Visitors Bureau David Welsh, Tucson Regional Economic Opportunities Dr. Doug Wilson, Marana Unified School District Josh Wright, Town of Marana Manager's Office C~..,,is,,..s ~~..... Partners for Strategic Action, Inc. Curt Dunham AICP Peggy Fiandaca AICP Audra Koester Thomas Chris Garbo RegUl~arana ~clonMomic~adinaph ~ta~a?4 ~~ae 76 of 186 29 1~, •.~ l TOOT W YMMR 11555 W. CIVIC CENTER DRIVE, MARANA, ARIZONA 85653 COUNCIL CHAMBERS, March 2, 2010, 7:00:00 PM To: Mayor and Council Item A 2 From: Deb Thalasitis ,Assistant Town Manager Strategic Plan Focus Area: Progress .and Innovation Subject: Resolution No. 2010-23: Relating to Administration; approving an Electronic Mail Retention and Storage Administrative Directive for Town of Marina employees and elected and appointed officials Discussion: At its September 15, 2009 meeting, the Town Council affirmed the Town Manager's process for establishing and issuing Administrative Directives to address key administrative processes within the town. The process included a provision for the Town Council to adopt by resolution certain Administrative Directives that should also apply to elected and appointed officials. The attached "Electronic Mail Retention and Storage" directive is one such directive that has applicability to elected and appointed officials due to potential implications related to Arizona's public records laws and the town's Principle and Ethics-centered Governance policy. The highlights of the administrative directive the Town Council is being asked to adopt this evening includes the following: 1. Provides that the retention of electronic messages is determined by its content. 2. Provides that every department appoint a records coordinator to work with the Town Clerk's office and his/her department head to ensure proper management and disposal of records and compliance with this directive. 3. Provides that e-mail communications that are considered to be non-records and that have a retention period of 120 days or less will be maintained in the town's archival E-mail system. 4. Provides that E-mail messages requiring retention more than 120 days be printed out and kept as paper records or may be maintained in archive folders by those employees given access to archive folders. 5. Provides that department heads, assistanUdeputy department heads, management staff and project management staff will be permitted to maintain archive folders. 6. Provides that those employees not initially given access to archive folders must submit a request if they wish to have access to archive folders. Regular Council Meeting -March 2, 2010 -Page 77 of 186 7. Provides that the town manager must designate an effective date. This date will be determined after employees and elected and appointed officials have been properly trained. In addition, the Administrative Directive provides guidelines in order to comply with public records laws anal Arizona State Archives and Records Management Guidelines. ATTACHMENTS: Name: Description: Type: ^ Reso re. E-mail retention an..d storage AD Resolution Resolution (00019625~.DOC ^ EX A Final version of E- -..._. marl retention Storage AD Exhibit A Electronic Mail Retention and Storage AD .Exhibit (00..0..1.9...62&~ DOC ^ Email_AD Form_fiAable.pdt Storage Request Form Backup Material Staff Recommendation: Staff recommends approval of the resolution adopting the Electronic Mail Retention and Storage Administrative Directive. Suggested Motion: I move to adopt Resolution No. 2010-23, approving an Electronic Mail Retention and Storage. Administrative Directive for Town of Marano employees and elected and appointed officials. Regular Council Meeting -March 2, 2010 -Page 78 of 186 MARANA RESOLUTION N0.2010-23 RELATING TO ADMINISTRATION; APPROVING AN ELECTRONIC MAIL RETENTION AND STORAGE ADMINISTRATIVE DIRECTIVE FOR TOWN OF MARANA EMPLOYEES AND ELECTED AND APPOINTED OFFICIALS WHEREAS the Town Council has established broad guidelines and parameters regarding. the administration of the Town through the Marana Town Code and other ordinances and policies; and WHEREAS Section 3-2-1(G) of the Marana Town Code provides that the Town Manager shall be the chief administrative officer and head of the administrative branch of the Town and shall execute general administrative supervision and control of the affairs of the Town; and WHEREAS on September 15, 2009, the Town Council by Resolution No. 2009-164 approved and authorized the Town Manager to implement an administrative directive system for carrying out certain administrative functions and providing consistency in the performance of administrative tasks, in the use of Town resources and equipment, and in the implementation of the Town Code and other ordinances and policies; and WHEREAS the administrative directive system approved by Resolution No. 2009-164 included the provision that any administrative directive relevant to the Town's elected and appointed officials would be brought before the Council for its consideration and adoption by resolution; and WHEREAS the Town Council finds that the implementation of an Electronic Mail Retention and Storage Administrative Directive for Town of Marana employees and elected and appointed officials is in the best interests of the Town. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF MARANA, ARIZONA, AS FOLLOWS: SECTION 1. The Town of Marana hereby approves the Electronic Mail Retention and Storage Administrative Directive for Town of Marana employees and elected and appointed officials, attached as Exhibit A and incorporated by this reference in this resolution. SECTION 2. The Town's Manager and staff are hereby directed and authorized to undertake all other and further tasks required or beneficial to implement the Electronic Mail Retention and Storage Administrative Directive described in Exhibit A. Regulq~rl~~~i~~y~~~gzagh 2, 2010 -Page 79 of 186 _ ~ _ {00019625.DOC /} PASSED AND ADOPTED BY THE MAYOR AND COUNCIL OF THE TOWN OF MARANA, ARIZONA, this 2nd day of March, 2010. Mayor Ed Honea ATTEST: Jocelyn C. Bronson, Town Clerk APPROVED AS TO FORM: Frank Cassidy, Town Attorney Regular Council Meeting -March 2, 2010 -Page 80 of 186 Marana Resolution 2010-23 - 2 - {00019625.DOC /} ADMINISTRATIVE DIRECTIVE Title: Electronic Mail (E-mail) Retention & Storage Issuing Department: Town Manager/Town Clerk Effective Date: To be designated by Town Manager when training completed Reviewed: Town Manager, Town Clerk, Legal, Human Resources, Technology Services Approved: Town Council by ResolutionNumber 2010-~ Type of Action: New 1.0 PURPOSE Electronic communications have become the preferred means of communicating in today's business world. E-mail and other electronic communication and information management tools are the fastest and most efficient means of communicating and are being used by nearly every employee and official at the Town of Marana. This Administrative. Directive clarifies the Town of Marana's polices governing the use and storage of a-mail communications. 2.0 DEPARTMENTS AFFECTED All Town of Marana departments, employees and appointed and elected officials. 3.0 REFERENCES 3.1 A.R.S. §§ 41-1350, 41-1351, 38-421 and 41-1347 3.2 A.R.S. §§ 39-121 et seq: Public records law 3.3 A.R.S. § 38-431 et seq: Open meeting law 3.4 Town of Marana Personnel Policies and Procedures, Policy 5-4: Use of communications systems and equipment 3.5 Town of Marana Code of Principle and Ethics-centered Governance 3.6 Town of Marana Town-Issued Computer Equipment/Software and Electronic Communication Usage Policies for Council Members 3.7 Email Acceptable Usage Policy #2006-003 and any superseding policy or directive implemented at a later date 4.0 DEFINITIONS 4.1 Backup E-mail records created on a daily basis for the purpose. of disaster recovery. Regular Council Meeting -March 2, 201~I$'1fP~iLLgRgNA RESOLUTION NO. 201 D-23 4.2 Electronic Communications For purposes of this directive, electronic communications refers to electronic mail (e-mail) and electronic calendars 4.3 Non-Records Messages that do not meet the statutory definition of a record as defined in A.R.S. § 41-1350. Destruction of non-record electronic messages does not need to be reported on a Report/Certificate of Records Destruction form 4.4 Records Messages that are considered to be official records as defined in A.R.S. § 41-1350. Official records may require short-term storage, long-term storage, or a combination of both 5.0 POLICIES AND PROCEDURES 5.0 Retention and disposition of public records is determined by the Arizona State Library, Archives and Public Records, Records Management Division, in accordance with Arizona state statutes. A record's retention schedule is -based upon the legal, administrative, historical, fiscal or informational .value of the record, not on the format of the record. "Electronic communication" refers to the format of the record, not its content or value. Thus, electronic communications such as e-mail cannot be assigned blanket retention periods because they are not a type of record or record series. Rather, the value -- and therefore the retention period -- of an electronic message is determined by its content.. It is the responsibility of every town official and employee to retain any electronic communications, depending on the nature and content of the document, as required by the public records retention and disposition schedules. Each town department shall appoint a records coordinator who will work with the Town Clerk's Office and his/her respective department head to assure proper management and disposal of records, including compliance with this directive. Records retention and disposition schedules that apply to town records are available from the Town Clerk's Office. Electronic messages that are considered to be official records (for example, a citizen complaint that is sent via a-mail) must be maintained and destroyed in the same manner as a paper record. Retention and destruction shall be performed according to the corresponding record series on either a department's custom Retention Schedule or the State's General Schedule. 5.1 Short-Term Retention of Record E-mail Messages For records management purposes, the majority of the town's a-mails are short communications that function much like phone calls and are considered to be non-records. For the sake of administrative convenience, records with a retention period of 120 days or less will be maintained in the town's archival a-mail system. These records will be visible in the town's primary a-mail system for the first 60 days of this 120-day period. The records will then be available only in the town's archival a-mail system for the remaining 60 days of the 120-day period. At the end of .120 days, all messages will be permanently deleted. It is the responsibility of each individual employee, appointed or elected official to ensure that any record messages that must be retained beyond 120 days and -are located in the employee's inbox, sent box, or deleted items box are moved to proper storage locations before the end of the 120-day period. 5.2 Long-Term Retention of Record E-mail Messages Regular Council Meeting -March 2, 201~I~fPMARANA RESOLUTIONNO. 2010-23 E-mail messages requiring long-term retention (more than 120 days) may be printed out and kept as paper records or may be maintained in archive folders by those employees given access to archive folders as noted below. Additionally, Technology Services staff will work with individual departments to identify a technology solution when a department requires a shared storage location for a-mail in order to minimize duplication of e-mail storage within departments. Only department heads, assistant/deputy department heads, management staff, and project management staff will be permitted to maintain archive folders. Employees who are not department heads or management- level staff but believe they need longer term storage capability for electronic records should notify their direct supervisor. The employee shall complete a records storage request form which must be signed by the employee's supervisor and department head/general manager. The form will then be forwarded to the Town Clerk's Office and Technology Services for approval. For Development Services staff, the records storage request form will be forwarded to the Development Services Records Manager and Technology Services for approval. Alternatively, staff and elected or appointed officials without permission to create archive folders may simply print out the record to paper, with its contextual information and attachments in place, for filing within the department's existing filing system. 5.3 Public Records Requests E-mail is subject to the public .records law (A.R.S. && 39-121 et seg) and may be subject to public disclosure. Employees should have no expectation of privacy regarding the use of the town's systems and equipment or the transmission, receipt or storage of information in these systems or equipment 5.4 Backup The Town of Marana creates "backup" records of electronic mail on a daily basis. The primary purpose of creating these backups is for disaster recovery in the case of system failure, not for purposes of public records retention. The backups are retained for the limited period of time required by law for backup data. 6.0 RESPONSIBILITIES 6.1 All employees and appointed and elected officials are responsible for understanding the procedures as outlined in this directive and all other applicable town policies and procedures regarding the use of the town's electronic communications. 6.2 All employees and appointed and elected officials are responsible for using the town's electronic communication systems responsibly, in the interest and furtherance of the public's business. 6.3 Technology Services, the Town Clerk's Office and the Legal Department will ensure proper training for new employees and on-going training for existing employees on a regular basis. 7.0 ATTACHMENTS Records Storage Request Form Regular Council Meeting -March 2, 201~~~I~fP#1~MARANA RESOLUTIONNO. 2010-23 Email Records Long Term Storage Request Form The storage of official town a-mail on town servers is established by administrative directive for a maximum of 120 days for employees who are not senior managers, department heads, deputy department heads, or project managers. This form must be filled out and submitted to the employee's department director if any other employee is requesting electronic a-mail storage for longer than 120 days. The form should then be routed through the approval process noted below. A separate Records Storage Form must be submitted for each employee requesting access to archival storage space. Once approved, employees will. be able to view their E-mails in determined archival locations as needed. Employees will keep items in archive storage based on their department's retention schedule, unless specified on this form and approved by the Town Manager. Employee Name: Phone: E-mail Address: Department: Types of E-mails to be stored: Length of Storage: Do you need a shared department storage location? Do you require longer storage /retention than your department's retention schedule calls for? If yes, please provide justification: Employee Signature: Date: Department Head: ^ Approval ^ Disapproval Date: General Manager: ^ Approval ^ Disapproval Date: Town Clerk: ^ Approval ^ Disapproval Date: Technology Svs: ^ Approval ^ Disapproval Date: Town Manager: ^ Approval ^ Disapproval Return completed form to Town Clerk Date: Regular Council. Meeting -March 2, 2010 -Page 84 of 186 '~'~L~ ~~~ ~~ iO~A Oi 41YIY 11555 W. CHIC CENTER DRIVE, MARANA, ARIZONA 85653 COUNC]L CHAMBERS, March 2, 2010, 7:00:00 FM To: Mayor and Council Item A 3 From: Erik Montague ,Finance Director Strategic Plan Focus Area: Commerce, Community Building Subject: Resolution No. 2010-24: Consideration and possible adoption of a resolution of the Mayor and Common Council of the Town of Marana, Arizona, approving the form and authorizing the execution and delivery of a Loan Agreement with the Water Infrastructure Finance Authority of Arizona from its Drinking Water Revolving Fund Program and, if necessary, guaranty or similar agreements to provide insurance policies or surety bonds necessary in connection therewith; delegating the determination of certain matters relating thereto to the Finance Director of the Town; authorizing the taking of all other actions necessary to the consummation of the transactions contemplated by such Loan Agreement and this resolution and declaring an emergency Discussion: The Town has applied to the Water Infrastructure Finance of Arizona (the "Authority") for a loan (the "Loan") from the Authority's Drinking Water Revolving Fund Program (the "Program") to provide funds for the following (collectively the "Project"): (1) a 16-inch ductile iron pipe ("DIP") waterline from 400 feet south of Camino de Mariana along the 14/15 section line to Camino de Mariana and Blue Bonnet Road; approximately 7,7501inear feet (2) a 24-inch DIP waterline to be installed within the construction of the Twin Peaks interchange from the eastern edge of Linda Vista/Twin Peaks to the western edge of the Santa Cruz River at Twin Peaks and traversing the Santa Cruz River,. I 10 and the Union Pacific Railway (approximately 4,300 feet) (3) an eight-inch waterline, 1,327 feet long from Eaglestone Loop south to half a mile north of Cortaro Fames Road to connect the Hartman water system to the Cortaro/Osrhin water system (4) a new well, a waterline and an additional booster station at one of the reservoirs to provide capacity for the area served by the Silverbell Well (5) acquisition of seven wells from the Cortaro Marana Irrigation District (6) payment of the Town's proportionate share of expenses of administering the Program and any Regular Council Meeting -.March 2, 2010 -Page 85 of 186 bonds issued by the Authority with respect thereto The terms and conditions under which the Loan will be made and the obligations of the Town with respect to the Loan will be set forth in a loan agreement to be executed and delivered by the Town and the Authority (the "Loan Agreement"). The Loan and the loan repayments payable by the Town pursuant to the Loan Agreement (the "Loan Repayments") will be secured by a pledge of certain revenues to be received by the Town from the ownership, use or operation of the properties and facilities of the complete waterworks plant and system of the Town (the "Source of Payment"). As of the preparation of these agenda materials, the proposed form of the Loan Agreement was still being negotiated, but its terms will be no less favorable to the Town than the terms of the draft Loan Agreement which is provided as part of the backup materials for this item. We anticipate that the final Loan Agreement will have been placed on file with the Clerk of the Town prior to the time of the meeting at which this Resolution is adopted. Financial Impact: Under the Loan Agreement, the Town will borrow not to exceed $5,250,000 from the Authority. The Loan shall be repaid on or before twenty-one (21) years from the date of the execution and delivery of the Loan Agreement and the Loan shall bear interest at a rate not to exceed five percent (5%) per annum. ATTACHMENTS: Name.: Description: Type: ~ WIF..A .M..arana Resolution.doc WIFA Loan Agreement Resolution Resolution ^ Draft Loan Documents..- #920193-1.O.pdf Draft WIFA Loan Agreement Backup Material Staff Recommendation: Staff recommends adoption of Resolution No. 2010-24. Suggested Motion: I move to adopt Resolution No. 2010-24, approving the proposed WIFA Loan Agreement and authorizing all actions described in the resolution. Regular Council Meeting -March 2, 2010 -Page 86 of 186 RESOLUTION N0. 2010-24 A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE TOWN OF MARANA, ARIZONA, APPROVING THE FORM AND AUTHORIZING THE EXECUTION AND DELIVERY OF A LOAN AGREEMENT WITH THE WATER INFRASTRUCTURE FINANCE AUTHORITY OF ARIZONA FROM ITS DRINKING WATER REVOLVING FUND PROGRAM AND, IF NECESSARY, GUARANTY OR SIMILAR AGREEMENTS TO PROVIDE INSUR- ANCE POLICIES OR SURETY BONDS NECESSARY IN CON- NECTION THEREWITH; DELEGATING THE DETERMINATION OF CERTAIN MATTERS RELATING THERETO TO THE FINANCE DIRECTOR OF THE TOWN; PROVIDING FOR THE TRANSFER OF CERTAIN MONEYS AND MAKING CERTAIN COVENANTS AND AGREEMENTS WITH RESPECT. THERETO; AUTHORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY SUCH LOAN AGREEMENT AND THIS RESOLUTION AND DECLARING AN EMERGENCY WHEREAS, the Mayor and Common Council of the Town of Marana, Arizona (the "Town"), has heretofore applied to the Water Infrastructure Finance of Arizona (the "Authority"), for a loan (the "Loan") from the Authority's Drinking Water Revolving Fund Program (the "Program") to provide funds for (1) a 16-inch ductile iron pipe ("DIP") waterline from 400 feet south of Camino de Manana along the 14/15 section line to Camino de Manana and Blue Bonnet Road; approximately 7,750 linear feet; (2) a 24-inch DIP waterline to be installed within the construction of the Twin Peaks interchange from the eastern edge of Linda Vista/Twin Peaks to the western edge of the Santa Cruz River at Twin Peaks and traversing the Santa Cruz River, I-10 and the Union Pacific Railway (approximately 4,300 feet); (3) an eight-inch waterline, 1,327 feet long from Eaglestone Loop south to half a mile north of Cortaro Fames Road to connect the Hartman water system to the Cortaro/Osrhin water system; (4) a new well, a waterline and an additional booster station at one of the reservoirs to provide capacity for the area served by the Silverbell Well and (5)acquisition of seven wells from the Cortaro Marana Irrigation District as well as payment of the Town's proportionate share of expenses of administering the Program and any bonds issued by the Authority with respect thereto (collectively, the "Project"); and WHEREAS, the terms and conditions under which the Loan will be made and the obligations of the Town with respect to the Loan will be set forth in a loan agreement to be executed and delivered by the Town and the Authority (the "Loan Agreement"); and Regular Council Meeting -March 2, 2010 -Page 87 of 186 WHEREAS, the Mayor and Common Council of the Town have determined that, if required by the Authority, it will be advantageous to provide credit enhancement as well as fund any reserve fund requirement for the Loan by purchasing insurance policies or surety bonds (collectively, ..the "Credit Instrument") pursuant to guaranty or similar agreements to be executed and delivered by the Town and the Issuer (collectively, the "Reserve Fund Agreement"}; and WHEREAS, the Loan and the loan repayments payable by the Town pursuant to the Loan Agreement (the "Loan Repayments") will be secured by a pledge of certain revenues to be received by the Town from the ownership, use or operation of the properties and facilities of the complete waterworks plant and system of the Town (the "Source of Payment"); and WHEREAS, the. Mayor and Common Council of the Town have determined that it will be beneficial to the citizens of the Town to enter into and to perform the Loan. Agreement, whereby the Town will borrow not to exceed $5,250,000 from the Authority; and WHEREAS, the Loan shall be repaid on or before twenty-one (21) years from the date of the execution and delivery of the Loan Agreement and the Loan shall bear interest at a rate not to exceed five percent (5%) per annum; and WHEREAS, the proposed form of the Loan Agreement has been placed on file with the Clerk of the Town and presented at the meeting at which this Resolution was adopted; NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE TOWN OF MARANA, ARIZONA, THAT: Section 1. (A) The form, terms and provisions of the Loan Agreement, in the form of such document (including the exhibits thereto) presented at the meeting at which this Resolution was adopted are hereby approved, with such insertions, omissions and changes, not inconsistent with the Town's application to the Authority or the requirements of the federal government or the Authority or which would result in terms more adverse to the Town, as shall be approved by the Finance Director of the Town, the execution of such document being conclusive evidence of such approval, and the Mayor or, in the absence thereof, the Vice Mayor of the Town and the Clerk of the Town are hereby authorized and directed, for and on behalf of the Town, to execute and attest and deliver, respectively, the Loan Agreement. (B) If required for purposes of the Loan Agreement, the Finance Director of the Town is hereby authorized to take all steps necessary to arrange for the provision of the Credit Instrument and to secure the Credit Instrument with the Source of Repayment, and the Mayor and Common Council of the Town hereby delegate to the Finance Director of the Town the authority to determine the form,. terms and provisions of the Credit Instrument as well as the related Reserve Fund .Agreement. The Mayor or, in the absence thereof, the Regular COUncil Meeting -March 2, 2010 -Page 88 of 186 Vice Mayor of the Town and the Clerk of the Town are hereby authorized and directed, for and on behalf of the Town, to execute and attest and deliver, respectively, the Reserve Fund Agreement if the Credit.. Instrument is required by the Authority. Section 2. For the payment of the principal of and inter- est on the Loan, the Town shall pay the Loan Repayments provided for in the Loan Agreement and the amounts due pursuant to the Reserve Fund Agreement, respectively. The Town shall also pay all other. amounts required to be paid by the Town pursuant to the provisions of the Loan Agreement and, if the Credit Instrument is required by the Authority, the Reserve-Fund Agreement.. Section 3. The obligation of the Town to pay the Loan Repayments provided for in the Loan Agreement and, if the Credit Instrument is required by the Authority, the amounts due pursuant to the Reserve Fund Agreement as well as to make the other payments provided for in the Loan Agreement. is limited to payment from the Source of Repayment, and the obligations of the Town under the Loan Agreement and, if the Credit Instrument is required by the Authority, the Reserve Fund Agreement shall not constitute nor give rise to a general obligation of the Town or any claim against its ad valorem taxing powers, or constitute an indebtedness within the meaning of any statutory or constitutional debt limitation applicable to the Town. Section 4. The appropriate officials and officers of the Town are hereby authorized and directed to take all action necessary or reasonably required to carry out, give effect to and to consummate the transactions contemplated by the Loan Agreement. and, if the Credit Instrument is required by the Authority, the Reserve Fund Agreement, and by this Resolution, including, without limitation, the execution and delivery of any closing and other documents reasonably required to be delivered in connection therewith. Section 5. If any section, paragraph, subdivision, sen- tence, clause or phrase of this Resolution is for any reason held to be illegal or unenforceable, such decision will not affect the validity of the remaining portions. of this Resolution. The Mayor and Common Council of the Town hereby declare that it would have adopted this Resolution and each and every other section, paragraph, subdivi- sion, sentence, clause or phrase hereof and-authorized the execution and delivery of the Loan Agreement pursuant hereto irrespective of the fact that any one or more sections, paragraphs, subdivisions, sentences, clauses or phrases of .this Resolution may be held illegal, invalid or unenforceable. All resolutions or parts thereof, inconsis- tent herewith, are hereby waived to the extent .only of such inconsis- tency. This waiver shall not be construed as reviving any resolution or any part thereof. Section 6. All actions of the officers. and agents of the Town including the Mayor and Common Council of the Town which conform to the purposes and intent of this Resolution and which further the execution and delivery of the Loan Agreement as contemplated by this Regular Council Meeting -March 2, 2010 -Page 89 of 186 Resolution, whether heretofore or hereafter taken, are hereby rati- fied, confirmed and approved. The proper officers and agents of the Town are hereby authorized and directed to do all such acts and things and to execute and deliver all such documents on behalf of the Town as may be necessary to carry out the terms and intent of this Resolution. Section 7. All acts and conditions necessary to be performed by the Town or to have been met precedent to and in the execution and delivery of the Loan Agreement in order to make it a legal, valid and binding obligation of the Town will at the time of delivery of the Loan Agreement have been performed and have been met, in regular and due form as required by law, and no statutory, charter or constitutional limitation of indebtedness or .taxation will have been exceeded in the execution and delivery of the Loan Agreement. Section 8. All formal actions of the Mayor and Common Council of the Town concerning and relating to the passage of this Resolution were taken in an open meeting of the Mayor and Common Council of the Town, and all deliberations of the Mayor and Common Council of the Town and of any committees that resulted in those formal actions were in meetings open to the public, in compliance with all legal requirements. Section 9. The immediate operation of the provisions of this Resolution is necessary for the preservation of the public health and welfare and for the further reason that the execution and.. delivery at the earliest possible date of the Loan Agreement is urgently needed to attempt to secure the lowest possible interest cost to the Town; therefore, an emergency is hereby declared to exist and this Resolu- tion is enacted as an emergency measure and shall be in full force and effect from and after the passage and adoption by the Mayor and Common Council of the Town, as required by law, and this Resolution is hereby exempt from the referendum provisions of the Constitution and laws of the State of Arizona. Section 10. After the execution and delivery of the Loan Agreement and upon receipt of the Loan from the Authority, this Reso- lution shall be and remain irrepealably until the Loan and the Loan Agreement and the interest thereon shall have been fully paid, cancelled and discharged. Regular Council Meeting -March 2, 2010 -Page 90 of 186 PASSED .AND ADOPTED on March 2, 2010:. ...................................... Ed Honea, Mayor, Town of Marana, Arizona ATTEST: ................................. Jocelyn C. Bronson, Clerk, Town of Marana, Arizona APPROVED AS TO FORM: .................................. Frank Cassidy, Town Attorney, Town of Marana, Arizona Regular Council Meeting -March 2, 2010 -Page 91 of 186 CERTIFICATION I hereby certify that the foregoing Resolution No. 2010-24 was duly passed and adopted by the Mayor and Common Council of the Town of Marana, Arizona, at a meeting held on the 2nd day of March, 2010, and the vote was _ ayes and _ nays and that the Mayor and Councilmembers were present thereat. ..... .................................. Jocelyn C. Bronson, Clerk, Town of Marana, Arizona Regular Council Meeting -March 2, 2010 -Page 92 of 186 u Water Infrastructure WIFA Finance Authority of Arizona Arizona's Drinking Water Revolving Fund Town of Mnrann DRAFT Loran Agreement #920193-10 February 19, 2010 Borrower ~'opy Regular Council Meeting -March 2, 2010 -Page 93 of 186 Town of Marana and Water Infrastructure Finance Authority of Arizona Borrower -Table of Contents Document Tab Town of Marana's Borrowing Resolution ......................................................................................1. WIFA Board Resolution .................................................................................................................2. Loan Agreement ..............................................................................................................................3. Loan Agreement Addendum -Wage Rate Requirements for Compliance with P.L. 111-88........4. Exhibit A of Loan Agreement: Financial Terms and Conditions ..................................................5. Exhibit B of Loan Agreement: Technical Terms and Conditions .................................................6. Exhibit C of Loan Agreement: Reporting Requirements ...............................................................7. Exhibit D of Loan Agreement: Source of Repayment and Rate Covenant Provisions ..................8. Exhibit E of Loan Agreement: Debt Service Reserve Provisions ..................................................9. Exhibit F of Loan Agreement: Replacement Reserve Provisions ................................................10. Exhibit G of Loan Agreement: Form of Opinion of Local Borrower ...........................................11. Exhibit H of Loan Agreement: Tax Compliance Certificate of Local Borrower .........................12. IRS Form 8038-G .........................................................................................................................13. Standard Terms and Conditions ....................................................................................................14. WIFA Disbursement Requisitions Procedures Manual and Payment Requisitions (on CD) Regular Council Meeting -March 2, 2010 -Page 94 of 186 Loan Resolution 2010-023-Town of Mauna mater Infrastructure Finance Authority of Arizona WHEREAS, the Water Infrastructure "Finance Authority of Arizona (the "Authority"} has received from Marano, Town of {the "Local Borrower} a request for a loan (the "Loan"}; and WHEREAS, the Authority has determined that the Local Harrower has met the requirements of Arizona Revised Statutes §49-1201 et seq. (the "Act") and the rules promulgated thereunder (the "Rules "); and AREAS, Elie terms and--conditions under which a Loan will be made-and the obligations of the Local Harrower will be set forth in a loan agreement or bond purchase agreement (the "Loan Agreement") to be executed by the Local Harrower and the Authority. NOW, THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE AUTHORITY AS FOLLOWS: The Executive Director of the Authority is hereby authorized and directed to execute a Loan Agreement with the Local Borrower to evidence a Loan in accordance with the Act, the Rules, the Local Borrower's applications to the Authority, and the Project Summary .detailed in Section 2 of this Loan Resolution. The Executive Director and other Authority officials, as appropriate, are authorized and directed to sign any document and take such actions as necessary and appropriate to consummate the transactions contemplated by this Resolution and the Loan Agreement and to ensure that the Local Borrower has completed all requirements of the Authority as detailed in Section 3, Section 4, and Section S of this Loan Resolution. This Resolution shall take effect immediately and shall terminate one year from the date of Board Action. Dated: December 16, 2049 By ; Attest Chairman E~ utive Director Regular Council Meeting -March 2, 2010 -Page 95 of 186 Page 1 of 5 Loan Resolution :2010-023-Town of Marana Water Infrastructure Finance Authority of Arizona DW 012-2010 PL Rank Fundin Cycle 33 DW 2010 Poaulation Served Subsidy Rate 13550 80% This loan will fund multiple projects at various stages of development. They are described as follows: Camino de Manama Waterline The Town of Marana will install a 1b inch ductile iron pipe {DIP) waterline from 400- feet south of Camino de Manama along the 14/15 section line to Camino de Manama and Blue Bonnet Road; approximately 7,7501inear feet. This waterline is a critical piece of infrastnicture identified in the 2004 Water Master Plan. Twin Peaks Waterline This project provides funding fora 24 inch waterline to be installed within the construction of the Twin Peaks interchange from the eastern edge of Linda VistalTwin Peaks to the western edge of the Santa Cruz River at Twin Peaks. This ductile iron pipeline traverses the Santa Cruz River, I -10 and the Union Pacific Railway {approximately 4,300 feet). The most economical way to construct this is as part of the bridge being constructed by the Town of Marana in conjunction with the Regional Transportations Authority {RTA} and Arizona Department of Transportation {ADOT} along the Twin Peaks alignment. This alignment and structure provides an opportunity for the Utilities Department to construct a waterline which traverses each abstraction for the least possible cost and begins the contiguous water system which is needed in order to operate a more efficient system at the lowest cost possible. Hartman to Cortaro Waterline This project provides funding for a waterline to connect the Hartman water system to the Cortaro/Osrhin water system. This includes an 8 inch waterline 1,327 feet long from Eagiestone Loop south to half a mile north of Cortaro Farms Road. This connection will utilize the 2 million gallons of reservoir Regular Council Meeting -March 2, 2010 -Page 96 of 186 Page 2 of 5 L©an Resolution 2Q10-©2~- ~'vwn ©f Marc~na - Water Infrastructure Finance Authority of Arizona capacity within the Hartman system to provide the flow needed in the Cortaro/Oshrin system. It will also utilize the onsite generator as back up-power for unplanned outages.. Silverbell Well and Cortaro Martina irrigation District {CNIID} Silverbell: There are several possible solutions to the capacity challenge which include; drilling and installing a new well, designing and constructing a waterline, or designing and constructing an additional boaster :station at one of the reservoirs. This project provides funding to evaluate the best solution to provide adequate water for-this area. __ _ CMID: The Town wo__uld use the funding to purchase seven wells from CMID and. dissolve _ -- -- - the IGA. June 20, 2007 -Board adopted Resolution No. 2007-021 for $11,100,000 to the Town of Martina for a Clean Water loan to construct a Sanitary Sewer Interceptor System and a system of drainage facilities.. {The Resolution was extended on June 25, 200$ .and subsequently expired on June 24, 2009.) None Financial Assistance Amount: $5,250,000 Primary Repayment Source: Revenues . Secondary Repayment Source: None Loan Term: 20 years Frequency of Repayment: Semi-Annual Loan Structure: Governmental Debt Service Reserve Fund Requirements: Local, Separate Account Repair and Replacement Fund Requirements: Local -Not-Separate Account Requirements Prior to Loan Execution: Regular Council Meeting -March 2, 2010 -Page 97 of 186 Page 3 of 5 - Loan Resolution ZDIO-023- Town of 1V~arana Water Infrastructure Finance Authority of Arizona Require Legal Opinion; Yes Other: No Requirement Requirements Prior to Construction: No Requirement Requirement During Construction: No Requirement Requirements Prior to Final Disbursements: No Requirement Loan Category: Qualified, Not Pledged Policy Exceptions: None Observation Schedule: A Withholding Percentage: 5% Requirements Prior to Loan Execution: Yes 30 day public comment period after WiFA's issuance of the FNSI. Requirements Prior to Construction: Prior Review and Approval of Construction Bids: Yes Require Construction Signs: Yes The Local Borrower shall erect a construction sign displaying information on the Project and the funding sources. The Authority shall provide specifications for such construction signs. Other: No Requirement Requirements During Construction: Prior Review of Changes in Project Scope: Yes The Local Borrower shall submit to the Authority, for review and approval prior to execution, any change to the plans and specifications, construction contracts, Eligible Project Costs, or any other change which will effect the performance standards or purpose of the Project. Other: No Requirement Regular Council Meeting -March 2, 2010 -Page 98 of 186 Page 4 of 5 Loan Resolution 2D1O-023- Town of .l~lar~cna Water Infrastructure Finance Authority of Arizona...... Requirements Prior to Final Disbursements: Require Plan of Operation: No Requirement Require Final Approval: Yes Other: No Requirement Policy Exceptions: None WIFA to generate Press Release: Yes Other: Na Additional Requirements Regular Council Meeting -March 2, 2010 -Page 99 of 186 Page 5 of 5 Loan Agreement Water Infrastructure Finance Authority of Arizona (the "Authority") and Town of Marana (the "Local Borrower") Evidencing a Loan from the Authority to the Local Borrower Dated as of February 19, 2010 Regular Council Meeting -March 2, 2010 -Page 100 of 186 Table of Contents Article 1 Description of the Loan Section L1 Name and Address of Local Borrower ................................................................... 1 Section 1.2 Authorized Officer(s) of Local Borrower ............................................................... 1 Section 1.3 Notices .................................................................................................................... 1 Section 1.4 Loan Information .................................................................................................... 2 Article 2 Description of the Project Section 2.1 Description of Project ............................................................................................. 2 ......................... Section 2.2 Description of System ................................................................... 2 Article 3 Loan to Local Borrower; Amounts Payable Section 3.1 The Loan ................................................................................................................. 2 Section 3.2 Disbursement of Loan Proceeds ............................................................................. 3 Section 3.3 Amounts Payable ................................................................................................... 3 Section 3.4 Tax Covenants ........................................................................................................ 3 Exhibit A Financial Assistance Terms and Conditions; Borrower Payment Instructions; and Loan Repayment Schedule Exhibit B Technical Assistance Terms and Conditions Exhibit C Reporting Requirements Exhibit D Source of Repayment Exhibit E Debt Service Reserve Requirements Exhibit F Replacement Reserve Requirements Exhibit G Form of Opinion of Counsel to Borrower Exhibit H Tax Compliance Certificate of Local Borrower Regular Council Meeting -March 2, 2010 -Page 101 of 186 i Loan Agreement This Loan Agreement (this "Loan Agreement") is made and entered into as of 2/19/2010 by and between the Water Infrastructure Finance Authority of Arizona (the "Authority"), and Town of Marana (the "Local Borrower"),apolitical subdivision of the State of Arizona. This Loan Agreement includes the attached Exhibits and the attached Standard Terms and Conditions. Any capitalized terms used and not defined herein shall have the meanings ascribed to such terms in the Exhibits and the Standard Terms and Conditions. The Authority and the Local Borrower agree as follows: Article 1 Description of the Loan Section 1.1 Name and Address of Local Borrower. Town of Marana Attention: Ms. Dorothy O'Brien, Utilities Director 5100 W. Ina Road Tucson, Arizona 85743 Telephone: 520-3 82-25 32 Fax: 520-382-2590 Section 1.2 Authorized Officer(s) of Local Borrower. Town of Marana Attention: Mr. Erik Montague, Finance Director 11555 W. Civic Center Drive Marana; Arizona 45653 Telephone: (520) 382-1930 Fax: (520) 382-1902 Section 1.3 Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when hand delivered or mailed by registered or certified mail, postage prepaid, to the Local Borrower at the address specified in Section 1.1 and to the Authority at the following address: Executive Director Water Infrastructure Finance Authority of Arizona 1110 West Washington Street, Suite 290 Phoenix, Arizona 85007 Telephone: (602) 364-1310 Fax: (602) 364-1327 Any of the parties may designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent, by notice in writing given to the others. Regular Council Meeting -March 2, 2010 -Page 102 of 186 Section 1.4 Loan Information. The terms of the Loan include the terms set forth in the Exhibits, which are part of this Loan Agreement: Exhibit A Financial Assistance Terms and Conditions; Borrower Payment Instructions; and Loan Repayment Schedule Exhibit B Technical Assistance Terms and Conditions Exhibit C Reporting Requirements Exhibit D Source of Repayment Exhibit E Debt Service Reserve Requirements Exhibit F Replacement Reserve Requirements Exhibit G Form of Opinion of Counsel to Borrower Exhibit H Tax Compliance Certificate of Local Borrower Prior to Loan Closing, the Local Borrower must deliver to the Authority the Opinion of Local Borrower Counsel in the form of Exhibit G and the Tax Compliance Certificate of Local Borrower in the form of Exhibit H, signed and dated the date of Loan Closing. Article 2 Description Of The Project Section 2.1 Description of Project. The Project is described in Project Summary attached to the Loan Resolution of the Authority, and in Exhibit B of this Loan Agreement. Section 2.2 Description of System. The term "System" means and includes all of the properties and facilities of the complete Waterworks plant and system of the Local Borrower, whether lying within or without the boundaries of the Local Borrower, as now existing and as they may hereafter be improved or extended, all improvements, additions and extensions thereto or replacements thereof hereafter constructed or acquired by purchase, contract or otherwise and all contracts, rights, agreements, leases and franchises of every nature owned by the Local Borrower and used or useful or held for use in the operation of said plant and system. or any part or portion thereof. Article 3 Loan to Local Borrower; Amounts Payable Section 3.1 The Loan. The Authority shall loan and disburse to the Local Borrower in accordance with this Article 3 an amount listed in Exhibit A (the "Loan"), and the Local Borrower shall borrow and accept from the Authority, the Loan in the principal amount determined pursuant to this Article 3; provided, however, that (i) the Authority shall be under no obligation to disburse any amount of the Loan if an Event of Default has occurred and is continuing under this Loan Agreement, and (ii) the amount to be disbursed shall be lawfully Regular Council Meeting -March 2, 2010 -Page 103 of 186 2 available for disbursement. The Local Borrower shall use the proceeds of the Loan strictly in accordance with the requirements of this Loan Agreement. Section 3.2 Disbursements of Loan Proceeds. The Authority may disburse funds by check, by electronic means or by means of magnetic tape or other transfer medium. Except as hereinafter provided, disbursements shall be made only when (i) the request for disbursements is in substantially the form provided by the Authority and is accompanied by .the necessary certifications and documentation and (ii) an Authorized Officer of the Authority has determined that such disbursement is proper. An Authorized Officer of the Authority shall approve disbursements directly to the persons or entities entitled to payment or to the Local Borrower in the case of reimbursement for costs of services already paid, and shall provide the Local Borrower with a copy of the approval and the date approved. Disbursements may be made only for Eligible Project Costs. Section 3.3 Amounts Payable. The Local Borrower shall pay to the Authority the amounts shown in Exhibit A on or before the dates shown in Exhibit A, as the same may be adjusted as provided in the Standard Terms and Conditions, to reflect any revisions to the principal repayment schedule of the Loan. Such payments shall be made by electronic funds transfer or by direct debit to the Authority, in each case in accordance with payment instructions in Exhibit A. Section 3.4 Tax Covenants. (a) General. The Local Borrower acknowledges that, in connection with its state revolving fund programs, the Authority issues its bonds ("Authority Bonds") from time to time to finance loans and the Authority also pledges certain loans to secure and to serve as the source of payment for the Authority Bonds. As a result, and under the provisions of federal tax law applicable to the Authority Bonds, it is in the Authority's interest for the Loan to qualify and be an obligation that bears interest that is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations under the Internal Revenue Code. Therefore, the Local Borrower represents and covenants as follows with respect to the Loan and the Authority Bonds. The Local Borrower covenants that it will not take any action, or fail to take any action, if any such action or failure to take such action would adversely affect the exclusion from gross income of the interest on the Loan or the Authority Bonds under Section 103(a) of the Internal Revenue Code or cause the interest on the Loan or the Authority Bonds to become an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations under the Internal Revenue Code, and in the event of such action or omission, it will, promptly upon having such brought to its attention, take such reasonable actions based upon a bond counsel opinion as may rescind or otherwise negate such action or omission. The Local Borrower will not directly or indirectly use or permit the use of any proceeds of the Loan or any other funds of the Local Borrower or take or omit to take any action that would cause the Loan or the Authority Bonds to be or become "arbitrage bonds" within the meaning of Section 148(a) of the Internal Revenue Code or to fail to meet any other applicable requirement of Sections 103, 141, 148, 149 and 150 of the Internal Revenue Code or cause the interest on the Loan or the Authority Bonds to become an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations under the Internal Revenue Code. To that Regular Council Meeting -March 2, 2010 -Page 104 of 186 end, the Local Borrower will comply with all applicable requirements of Sections 103, 14.1, 148, 149 and 150 of the Code to the extent applicable to the_Loan. (b) Modification Based on Bond Counsel Opinion. Notwithstanding any provision of this Section, if the Local Borrower provides to the Authority a bond counsel opinion to the effect that any action required under this Section is no longer required, or to the. effect that some further action is required, to maintain the exclusion from gross income of interest on the Loan or the Authority Bonds pursuant to Section 103(a) of the Internal Revenue Code, the provisions of this Section and the covenants in this Section shall be deemed to be mod~ed to that extent. (c) Bond Counsel Opinion. For purposes of this Section, "bond counsel opinion" means an opinion letter of a firm of attorneys of national reputation experienced in the field of municipal bonds whose opinions are generally accepted by .purchasers of municipal bonds, and who is acceptable to the Authority. IN WITNESS WHEREOF, the Authority and the Local Borrower have caused this Loan Agreement to be executed and delivered as of the date of execution hereof. Water Infrastructure Finance Authority of Arizona Bv: Judy Navarrete, Executive Director Town of Marana Bve Mr. Erik Montague, Finance Director Attest: By: Clerk Regular Council Meeting -March 2, 2010 -Page 105 of 186 4 LOAN AGREEMENT ADDENDUM Wage Rate Requirements for Compliance with P.L. 111-88 Water Infrastructure Finance Authority of Arizona This document (this "Wage Rate Addendum") sets forth additional requirements applicable to state revolving fund Loans made by the Water Infrastructure Finance Authority of Arizona ("WIFA") that are subject to the requirements of federal Public Law 111-88, "Making appropriations for the Department of the Interior, environment, and related agencies for the fiscal year ending September 30, 2010, and for other purposes," enacted October 30, 2009 ("P.L. 111- 88"). The provisions in this Wage Rate Addendum are a part of the Loan Agreement. Capitalized terms not otherwise defined herein shall have the meanings given them in the Loan Agreement. All laborers and mechanics employed by contractors and subcontractors on the Project shall be paid wages at rates not less than those prevailing on projects of a character similar in the locality as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code. With respect to the labor standards specified in this section, the Secretary of Labor shall have the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.) and section 3145 of title 40, United States Code. The Local Borrower shall include this requirement in all bid specifications, construction contracts and purchase orders for the Project. WIFA and the Local Borrower are signing this Loan Agreement Addendum to be effective as part of the Loan Agreement. Water Infrastructure Finance Authority of Arizona By: Judy Navarrete, Executive Director Town of Marana By: Erik Montague, Finance Director Regular Council Meeting -March 2, 2010 -Page 106 of 186 Exhibit A of Loan Agreement Closing Date .............................................,........................................ 02/19/10 First Payment Period ........................................................................... 07/01/10 Financial Assistance Terms and Conditions Original Loan Amount as of the Closing Date .......................................... $ 5,250,000.00 Loan Amount ..................................................... $ 5,250,000.00 Loan Term ................................................................................... 20 Combined Interest & Fee Rate 4.000% Total # of Payment Periods within Loan Term .......................................... 40 Principal Repayments .Period Principal Repayments Begin ...................................................... 4 First Principal Repayment Date .......................................................... . 07/01/11 Final Principal Repayment Date .......................................................... 07/01/29 Combined Interest and Fee Payment Dates First Combined Interest and Fee Payment Date* ....................................... 07/01/10 Final Combined Interest and Fee Payment Date ................................:....... 07/01/29 * Actual initial Combined Interest and Fee payment calculated only on dollar amount drawn against loan as of initial payment date Debt Service Reserve Fund Requirements Total Reserve Amount ..........:.......................................................... $ 399,727.75 Annual Amount ............................................................................. $ 79,945.55 Reserve Funded by (Date) ................................................................. O1/O1/15 Repair and Replacement Fund Requirement Begin Funding on (Date) .................................................................. 07/01/15 Annual Amount ............................................................................. $ 79,945.55 Semi-Annual Deposit ...................................................................... $ 39,972.78 Annual Payment Years 1 through 5 .................................................................................... $ 399,727.75 Years 6 through ZO ................................................................................... $ 399,727.75 Years 11 through 15 ................................................................................. $ 399,727.75 Years 16 through 20 ................................................................................. $ 399,727.75 Regular Council Meeting -March 2, 2010 -Page 1'PIlIoA1$~n Agreement Exhibit A -- Page 1 Loan Number .................................................................................... 920193-10 Semi-Annual Combined Semi-Annual Annual Total Payment Interest and Combined Interest Principal Annual Year Period Dates Fee Rate and Fee Payment Repayment Payment 1 1 O1/O1/10 4.000% 0.00 1 2 07/01/10 4.000% 77,000.00 0.00 77,000.00 2 3 O1/O1/11 4.000% 105,000.00 2 4 07/01/11 4.000% 105,000.00 189,727.75 399,727.75 3 5 01/01/12 4.000% 101,205.44 3 6 07/01/12 4.000% 101,205.44 197,316.87 399,727.75 4 7 01/01/13 4.000% 97,259.11 4 8 07/01/13 4.000% 97,259.11 205,209.53 399,727.75 5 9 01/01/14 4.000% 93,154.91 5 10 07/01/14 4.000% 93,154.91 213,417.93 399,727.75 6 11 O1/OI/15 4.000% 88,886.56 6 12 07/01/15 4.000% 88,886.56 221,954.63 399,727.75 7 13 01/01/16 4.000% 84,447.47 7 14 07/01/16 4.000% 84,447.47 230,832.81 .399,727.75 8 15 01/01/17 4.000% 79,830.81 8 16 07/01/17. 4.000% 79,830.81 240,066.13 399,727.75 9 17 01/01/18 4.000% 75,029.49 9 18 07/01/18 4.000% 75,029.49 249,668.77 399,727.75 10 19 01/01/19 4.000% 70,036.11 10 20 07/01/19 4.000% 70,036.11 259,655.53 399,727.75 11 21 01/01/20 4.000% 64,843.01 11 22 07/01/20 4.000% 64,843.01 270,041.73 399,727.75 12 23 01/01/21 4.000% 59,442.16 12 24 07/01/21 4.000% 59,442.16 280,843.43 399,727.75 13 25 01/01/22 4.000% 53,825.30 13 26 07/01/22 4.000% 53,825.30 292,077.15 399,727.75 14 27 01/01/23 4.000% 47,983.76 14 28 07/01/23 4.000% 47,983.76 303,760.23 399,727.75 15 29 01/01/24 4.000% 41,908.55 15 30 07/01/24 4.000% 41,908.55 315,910.65 399,727.75 16 31 01/01/25 4.000% 35,590.34 16 32 07/01/25 4.000% 35,590.34 328,547.07 399,727.75 17 33 01/01/26 4.000% 29,019.39 17 34 07/01/26 4.000% 29,019.39 341,688.97 399,727.75 18 35 01/01/27 4.000% 22,185.62 18 36 07/01/27 4.000% 22,185.62 355,356.51 399,727.75 19 37 01/01/28 4.000% 15,078.48 19 38 07/01/28 4.000% 15,078.48 369,570.79 399,727.75 20 39 01/01/29 4.000% 7,687.07 20 40 07/01/29 4.000% 7,687.07 384,353.52 399,727.66 2,421,827.16 5,250,000.00 7,671,827.16 Regular Council Meeting -March 2, 2010 -Page 1~p,~'~r~gn Agreement Exhibit A -- Page 2 Exhibit B Technical Terms and Conditions Section 1 Budget Uses by Budget Item Planning ........................................................................... Design &Engineering .......:.................. _............................... Legal/Debt Authorization ...................................................... Financial Advisor ............................................................... Land/System Acquisition ...................................................... Equipment/Materials ............................................................ Construction/Installation/Improvement ....................................... Inspection & Construction Management ..................................... Project Officer ................................................................... Administration ................................................................ . Staff Training .................................................................... Capitalized Interest .............................................................. Refinance Loan .............................................................. Other .............................................................................. Total Budget ..................................................................... Section 2 Project Description Amount Budgeted $0.00 $125,000.00 $25,000.00 $25,000.00 $1,500,000.00 $0.00 $3,354,000.00 $0.00 $0.00 $0.00 $0.00 $221,000.00 $0.00 $0.00 $5,250,000.00 This loan will fund multiple projects at various stages of development. They .are described as follows: Camino de Manana Waterline The Town of Manana will install a 16 inch ductile iron pipe (DIP) waterline from 400 feet south of Camino de Manana along the 14/15 section line to Camino de Manana and Blue Bonnet Road; approximately 7,750 linear feet. This waterline is a critical piece of infrastructure identified in the 2004 Water Master Plan. Regular Council Meeting -March 2, 2010 -Page 109 of 186 B-1 Twin Peaks Waterline This project provides funding fora 24 inch waterline to be installed within the construction of the Twin Peaks interchange from the eastern edge of Linda Vista/Twin Peaks to the western edge of the Santa Cruz River at Twin Peaks. This ductile iron pipeline traverses the Santa Cruz River, I -10 and the Union Pacific Railway (approximately 4,300 feet). The most economical way to construct this is as part of the bridge being constructed by the Town of Marana in conjunction with the Regional Transportations Authority (RTA) and Arizona Department of Transportation (ADOT) along the Twin Peaks alignment. This alignment and structure provides an opportunity for the Utilities Department to construct a waterline which traverses each obstruction for the least possible cost and begins the contiguous water system which is needed in order to operate a more efficient system at the lowest cost possible. Hartman to Cortaro Waterline This project provides funding for a waterline to connect the Hartman water system to the Cortaro/Osrhin water system, This includes an 8 inch waterline 1,327 feet long from Eaglestone Loop south to half a mile north of Cortaro Farms Road. This connection will utilize the 2 million gallons of reservoir capacity within the Hartman system to provide the flow needed in the Cortaro/Oshrin system. It will also utilize the onsite generator as back up power for unplanned outages. Si_l_verbell Well and Cortaro Marana Irrigation District (CHID) Silverbell: There are several possible solutions to the capacity challenge which include; drilling and installing a new well, designing and constructing a waterline, or designing and constructing an additional booster station at one of the reservoirs. This project provides funding to evaluate the best solution to provide adequate water for this area. CHID: The Town would use the funding to purchase seven wells from CHID and dissolve the IGA. Section 3 Estimated Observation and Disbursement Schedule WIFA Withholding % (released after Final Observation) 5% Observation 1: 50 % Loan Disbursal .............. . ............... $ 2,625,000.00 Final Observation: 95 % Loan Disbursal ....................... . ...... $ 4,987,500.00 WIFA Withholding ............................................................... $ 262,500.00 Regular Council Meeting -March 2, 2010 -Page 110 of 186 B-2 Additional Qbservations - A WIFA representative may perform additional observations based on information provided in the projects status reports included in each Local Borrower disbursement requisition form. Section 4 Requirements Prior To Construction Section 4.1 Construction Bids. The Local Borrower shall submit to the Authority for review and approval prior to execution: (a) engineering contracts related to the Project, (b) bid documents related to the Project, (c) construction contracts related to the Project, and (d) certification of positive effort for disadvantaged business enterprise participation. Section 4.2 User Char;aes. The Local Borrower has established (or, if the System is not yet in operation, the Local Borrower will, at or before the time the System commences operation, establish) a system of user charges which, with other funds lawfully available, will at all times be sufficient to pay the costs of operation and maintenance of the System, including renewals and replacements of the System. The Local Borrower also agrees that such system of user charges will be established and maintained in compliance with any applicable requirements of state and federal law as long as the Local Borrower owes amounts under this Loan Agreement. The Local Borrower at its sole option may pay the costs of operation, maintenance, repair, replacement, extensions and additions to the System from any funds lawfully available to it for such purpose. Section 4.3 Interest in Project Site.. As a condition of the Loan, the Local Borrower will demonstrate to the satisfaction of the Authority that the Local Borrower has or will have a fee simple or such other estate or interest in the site of the Project, including necessary easements and rights-of-way, as the Authority finds sufficient to assure undisturbed use and possession for the purpose of construction and operation of the Project for the estimated life of the Project. Section 4.4 Federal Clean Water Act. The Local Borrower covenants that, to the extent legally applicable, the Project will .meet the requirements of the Federal Clean Water Act in effect on the date of Loan Closing and any amendments thereto that may retroactively apply to the Loan, and the Local Borrower agrees that the Project will comply with applicable provisions of those federal laws and authorities listed in Article 9 of the Standard Terms and Conditions. Section 4S Federal_Safe Drinkin;a Water Act. The Local Borrower covenants that, to the extent legally applicable, the Project will meet the requirements of the Federal Safe Drinking Water Act in effect on the date of Loan Closing and any amendments thereto that may Regular Council Meeting -March 2, 2010 -Page 111 of 186 B-3 retroactively apply to the Loan, and the Local Borrower agrees that the Project will comply with applicable provisions of those federal laws and authorities listed in Article 9 of the Standard Terms and Conditions. Section 4.6 Signs. The Local Borrower shall erect a construction sign displaying information on the Project and the funding sources. The Authority shall provide specifications for such construction signs. Section 5 Requirements During Construction Section 5.1 Changes in Project Scope. The Local Borrower shall submit to the Authority, for review and approval prior to execution, any change to the plans and specifications, construction contracts, Eligible Project Costs, or any other change which will effect the performance standards or purpose of the Project. Section 5.2 Completion of Project and Provision of Moneys Therefor. The Local Borrower covenants and agrees (a) to exercise its best efforts in accordance with prudent utility construction practice to complete the Project and (b) to the extent permitted by law, to provide from its own fiscal resources all moneys, in excess of the total amount of loan proceeds it receives hereunder and under any subsequent loan from the Authority, required to complete the Project. Section 5.3 Inspections; Information. The Local Borrower shall permit the Authority and any party designated by the Authority to examine, visit and inspect, at any and all reasonable times, the property, if any, constituting the Project, and to inspect and make copies of any .accounts, books and records, including (without limitation) its records regarding receipts, disbursements, contracts, investments and any other matters relating thereto and to its financial standing, and shall supply such reports and information as the Authority may reasonably require in connection therewith. Section 5.4 Adjustments for Ineligible Costs. The Local Borrower shall promptly reimburse the Authority for any portion of the Loan which is determined to have been used for costs that are not eligible for funding under the Authority Act, the Federal Clean Water Act, as amended, or the Federal Safe Drinking Water Act, as amended, unless such matter is curable in some other manner by the Local Borrower to the satisfaction of the Authority. Such reimbursement shall be promptly repaid to the Authority upon written request of the Authority. Any such reimbursed principal amount will be applied to reduce the outstanding principal amount of the Loan. Section 5.5 Archaeological Artifacts. In the event that archaeological artifacts or historical resources are discovered during construction excavation of the Project, the Local Borrower shall stop or cause to be stopped construction activities and will notify the State Historic Preservation Office and the Authority of such discovery. Regular Council Meeting -March 2, 2010 -Page 112 of 186 B-4 Section 6 Requirements Prior To Final. Disbursements Section 6.1 Plan of Operation. No requirement. Section 6.2 Final Approval. Prior to the release of the withholding, the Local Borrower will submit to the Authority ja) as-built drawings by a professional engineer that document all changes from the original plans and specifications (b) copies of all testing results performed by or under the supervision of a professional engineer as required by the specifications, and (c) Arizona Department of Environmental Quality (ADEQ) approval of construction or an engineer's Certificate of Completion certifying that all construction was completed in accordance with the plans and specifications or that any changes made are in conformance with the Arizona Revised Statutes, ADEQ and Environmental Protection Agency rules, permits and guidelines and are documented in the as-built drawings. Based on a review of the information submitted, the Authority reserves the right, prior to the release of the withholding, to request modifications to the Project, .the system, or the materials submitted pursuant to this section. Regular Council Meeting -March 2, 2010 -Page 113 of 186 B-5 Exhibit C Reporting Requirements Section 1. Annual Loan Review. The Authority's Annual Loan Review Form and annual financial statements in a .format approved by the Authority, including the report of any annual audit(s) and all audit reports required by governmental auditing standards and any applicable Arizona rules, shall be provided by the Local Borrower to the Authority within one-hundred and eighty (180) days after the end of each fiscal year of the Local Borrower. The Local Borrower shall complete all audits and submit all reports required by the federal Single Audit Act within the time limits under that federal law, currently within the earlier of 30 days after receipt of the auditor's reports or nine months after the end of the audit period, unless a longer period is agreed to in advance by the federal agency that provided the funding or a different period is specified in aprogram-specific audit guide. Section 2. Records and Accounts. The Local Borrower shall keep accurate records and accounts for the System, including the Project (the "System Records"), separate and distinct from its other records and accounts (the "General Records"). To the extent required by law, such System Records shall be maintained in accordance with generally accepted government or other applicable accounting standards and shall be audited annually, if required by law, by an independent accountant, which audit may be part of the annual audit of the General Records of the Local Borrower. Such System Records and General Records shall be made available for inspection by the Authority at any reasonable time. Section 3. Notice of Change In Key Personnel. Promptly after becoming aware thereof, the Local Borrower shall provide notice in writing to the Authority of any change to the information in Section 1 of the Loan Agreement and any other change in key personnel connected to the Project and Loan. Section 4. Notice of Material Adverse Change. The Local Borrower shall promptly notify the Authority of any material adverse change in the activities, prospects or condition (financial or otherwise), of the Local Borrower relating to the System, or in the ability of the Local Borrower to make all Loan Repayments from the Source of Repayment described in this Loan Agreement and otherwise to observe and perform its duties, covenants, obligations and agreements hereunder. Section 5. Disadvantaged Business Enterprise (DBE) Program. The Local Borrower must report DBE participation to the Authority based on guidance from the Authority. Section 6. Notice of Default. Promptly after becoming aware thereof, Local Borrower shall give notice to the Authority of (i) .the occurrence of any Event of Default under the Loan Agreement or (ii) the occurrence of any breach, default, Event of Default, or event which with the giving of notice or lapse of time, or both, could become a material breach, default, or Event of Default (a "Future Breach") under any agreement, indenture, mortgage, or other instrument (other than the Loan Agreement) to which the Local Borrower is a party or by which it or any of its property is bound or affected. Local Borrower shall provide written notice to the Authority if the effect of such breach, default, Event of Default or Future Breach is to accelerate, or to .permit Regular Council Meeting -March 2, 2010 -Page 114 of 186 C_ 1 the .acceleration of, the maturity of any indebtedness under such agreement; indenture, mortgage, or other instrument; provided, however, that the failure of the Local Borrower to give such notice shall not affect the right and .power of the Authority to exercise any and all of the remedies specified herein. Section 7. Notice of Non-Environmental Litigation. Promptly after the commencement or overt threat thereof, Local Borrower shall provide the Authority .with written notice of the commencement of all actions, suits, or proceedings before any court, arbitrator, or governmental department, commission, .board, bureau, agency, or instrumentality affecting Local Borrower which, if adversely determined, could have a .material adverse effect on the condition (financial or otherwise), operations, properties, or business of Local Borrower, or on the ability of Local Borrower to perform its obligations under the Loan Agreement. Section 8. Notice of Environmental Litigation. Without limiting the provisions of Section 7 above, promptly after receipt thereof, Local Borrower shall provide the Authority with written notice of the receipt of all pleadings, orders, complaints, indictments, or other communication alleging a condition that may require Local Borrower to undertake or to contribute to a cleanup or other response under laws relating to environmental protection, or which seek penalties, damages, injunctive relief, or criminal sanctions related to alleged violations of such laws, or which claim personal injury to any person or property damage as a result of environmental factors or conditions or which, if adversely determined, could have a material adverse effect on the condition (financial or otherwise), operations, properties, or business of Local Borrower, or on the ability of Local Borrower to perform its obligations under the Loan Agreement. Section 9. Regulatory and Other Notices. Promptly after receipt or submission thereof, Local Borrower shall provide the Authority with copies of any notices or other communications received from or directed to any governmental authority with respect to any matter or proceeding which could have a material adverse effect on the condition (financial. or otherwise), operations, properties, or business of Local Borrower, or the ability of Local Borrower to perform its obligations under the Loan Agreement, or which reveals a substantial non compliance with any applicable law, regulation or rule. Section 10. Other Information. The Local Borrower shall submit to the Authority other information regarding the condition (financial or otherwise), or operation of the Local Borrower as the Authority may, from time to time, reasonably request. Section 11. Additional Reporting Requirements. The Local Borrower shall refer to the Wage Rate Requirements Loan Agreement Addendum for additional reporting requirements. Regular Council Meeting -March 2, 2010 -Page 115 of 186 C_2 Exhibit D Source of Repayment: System Revenues Section 1 Certain Definitions As used in this Loan Agreement, the following terms shall have the meanings set forth below unless the context clearly requires otherwise: "Additional Parity Obli ations" shall mean any additional obligations having a lien payable from Net Revenues of the System on a parity with the Loan Agreement which may hereafter be issued by the Local Borrower (or any financing conduit acting on behalf of the Local Borrower) in compliance with the terms in Section 3. "Administrative Expenses" shall mean the reasonable cost or value of all services rendered by the Local Borrower and its various departments with respect to the System. "Fund" shall mean the fund or funds into which the Local Borrower shall deposit the Revenues of the System. "Net Revenues" shall mean that portion of the Revenues remaining after deducting sufficient funds for the Operation and Maintenance Expenses of the System. "Operation and Maintenance Expenses" shall mean all costs reasonably incurred in connection with the operation, use and maintenance of the System, including (i) repairs necessary to keep the System in efficient and economical operating condition, (ii) the payments of premiums for insurance hereinafter. required to be carried on the System, (iii) payments of reasonable Administrative Expenses and (iv) generally all expenses of the System except depreciation, interest expense related to the Loan Agreement, any Outstanding Parity Obligations, any Additional Parity Obligations, and interest expenses on any obligations subordinate to such obligations. "Outstanding Parity Obli ations" shall mean obligations issued and outstanding having a lien payable from Net Revenues of the System on a parity with the Loan Agreement. "Revenues" shall mean and include all income, moneys and receipts to be received by the Local Borrower, directly or indirectly, from the ownership, use or operation of the System including any waste material or by-products of the System, and also including investment income. Section 2 Source of Repayment and Rate Covenant Provisions 1. It is understood and agreed that all payments with respect to the Loan shall be made only from the Source of Repayment, which is hereby pledged to the payment of all amounts due under the Loan. The "Source of Repayment" is the Net Revenues of the System as hereinafter provided. The Net Revenues are hereby pledged by the Local Borrower to the payment of all amounts due under the Loan and the repayment of such amounts shall be secured by a lien. on and pledge of the Net Revenues on parity with the pledge and lien granted by the Local Borrower for the payment and security of Outstanding Parity Obligations and Additional Parity Regular Council Meeting -March 2, 201.0 -Page 116 of 186 D-1 Obligations. The amounts due under this Loan Agreement and any Outstanding Parity Obligations and Additional Parity Obligations (exclusive of the Local Borrower's repayment obligations with respect to those reserve fund credit instruments in connection with this Loan and any Additional Parity Obligations which shall be secured on a subordinate basis), shall be equally and ratably secured by said pledge and lien without one having priority over the other: The Local Borrower intends that this pledge shall be a prior and paramount lien on and a first pledge of the Net Revenues, as will be sufficient to make all payments on the Loan, and .the Local Borrower covenants to make the payments under the Loan from the Net Revenues, except. to the extent that it chooses to make such payments from other legally available funds at its sole option. In no event shall the Local Borrower be required to make the payments on the Loan from any revenues, receipts or sources-not derived from the Net Revenues of the System. 2. The Local Borrower covenants and agrees that it will establish and maintain schedules of rates, fees- and charges for all services supplied by the System which, after making reasonable allowance for contingencies and errors in estimates, shall produce Revenues in each fiscal year that are sufficient, (a) to pay the Operation and Maintenance Expenses of the .System, (b) to produce an aggregate amount of Net Revenues equal the sum of (i) one hundred twenty percent (120%) of the aggregate of the debt service or comparable payments payable on the Loan, the Outstanding Parity Obligations, and any Additional Parity Obligations in such fiscal year, and (ii) one hundred percent (100%) of the aggregate of the debtservice on comparable payments, separately payable and secured on a basis subordinate to the Loan by Net Revenues, and (c) to maintain all necessary fund balances required under the resolutions or agreements of the Local Borrower authorizing the Loan, the Outstanding Parity Obligations, and Additional Parity Obligations. Section 3 Additional Parity Obligations The Local Borrower .covenants and agrees that no other obligations of any kind will be issued that are payable from or enjoy a pledge of the Net Revenues having priority over the Loan. It is understood and agreed that Additional Parity Obligations having a lien upon and payable from the Net Revenues may be issued on parity with the Loan, but only as provided herein and only to provide funds to make improvements and expansions to the existing System, to purchase capacity rights in sewage treatment plant facilities owned by other political subdivisions of the State, to purchase capacity rights in water treatment plant facilities owned by other political subdivisions of the State, to acquire land, rights in land or water rights for the System, to provide reasonable reserves for Outstanding Parity Obligations and Additional Parity Obligations, to refund Outstanding Parity Obligations and Additional Parity Obligations or the Loan or to refund other bonds of the Local Borrower, if any, whether revenue bonds, general obligation bonds or other bonds or obligations, issued to provide funds to construct or acquire additions, extensions, improvements, expansions or replacements to the System, subject to the following conditions: (a) The Local Borrower will not, at the time of the issuance of such Additional Parity Obligations, be in default under any Outstanding Parity Obligations, Additional Parity Obligations, the Loan or under any resolution related thereto or providing for the issuance of Additional Parity Obligations or any related credit or reserve fund credit instrument; Regular Council Meeting -March 2, 2010 -Page 117 of 186 D-2 (b) The issuance of Additional Parity Obligations will be duly authorized at an election, if required by law, except as to any bonds or obligations to be issued exclusively for the purpose of refunding any Outstanding Parity Obligations and Additional Parity Obligations or the Loan; (c) The issuance of Additional Parity Obligations will be provided for by a resolution duly adopted by the Local Borrower's governing body and such Additional Parity Obligations will mature and interest will be paid on the same days of the year as Outstanding Parity Obligations and Additional Parity Obligations; and (d) The Reserve Requirement (as defined in Exhibit E), as computed for the amount of Additional Parity Obligations to be issued, shall be available in the Reserve Fund (as defined in Exhibit E) in one of the following ways: (i) Additional Parity Obligation proceeds shall be immediately deposited to the Reserve Fund, or a separate account as may be required, in an amount equal to the increased Reserve Requirement, if any, for the Additional Parity Obligations, or a Reserve Fund surety acceptable to the Authority shall be purchased in such amount; or (ii) Additional Parity Obligations, or any other revenues of the Local Borrower lawfully available to be used for such deposit, may be deposited to the Reserve Fund in equal monthly deposits such that the Reserve Requirement for such Additional Parity Obligations shall be satisfied not more than four years from the date of delivery of such Additional Parity Obligations; or (iii) any combination of (i) and (ii). The Reserve Fund may be divided into separate and discrete subaccounts each pledged to different Additional Parity Obligations provided that each Additional Parity Obligation Reserve Requirement is satisfied in one of the foregoing manners; and (e) the aggregate amount of the Net Revenues of the System for the last full fiscal year immediately preceding the issuance of such Additional Parity Obligation, as shown in a certificate or report of an independent public accountant or firm of such accountants presented to the Authority, has been at least equal to the sum of the following: (i) not less than one hundred twenty percent (120%) of the highest year's debt service or comparable payments on all of the Outstanding Parity Obligations, the Loan, and the Additional Parity Obligations then to be issued, and (ii) not less than one hundred percent (100%) of the aggregate of amounts payable in such fiscal year and secured on a subordinate basis by such Net Revenues and (iii) not less than one hundred percent (100%) of any additional amounts required to maintain or fund necessary fund balances under the resolutions or agreements of the Local Borrower relating to the obligations described in (i). For the purposes of the subparagraph (e), additional amounts may be added to the Net Revenues as shown on the accountant's certificate or report in the following circumstances: (1) If the revenues have been increased as a result of construction of additions or acquisitions to the System made prior to the issuance of such Additional Parity Obligations but during either the fiscal year in which the Additional Parity Obligations are to be issued or in the preceding fiscal year, such increased Revenues may be treated as if such additions to the System were completed on the first day of the fiscal year used for purposes of computation. The Revenues derived from such additions and acquisitions to the System may be converted Regular Council Meeting -March 2, 2010 -Page 118 of 186 D-3 for purposes of computation to estimated Net Revenues which would have been derived therefrom if said additions and acquisitions had actually been completed on the first day of the year used for computation purposes, such estimates to be made by an independent engineer or firm of such engineers having a favorable reputation with respect to such matters. (2) If all or part of the proceeds of the Additional Parity Obligations are to be expended for the acquisition of existing water properties or facilities, there may be added to the Net Revenues of such preceding fiscal year the Net Revenues which would be been derived from the operation of such properties or facilities if such properties or facilities had been acquired and operated by the Local Borrower under the Local Borrower's applicable rate schedule during the entire preceding fiscal year, such Net Revenues to be estimated by an independent engineer or firm of such engineers having a favorable reputation with respect to such matters. (3) If prior to the issuance of the Additional Parity Obligations and subsequent to the first day of such preceding fiscal year, the Local Borrower shall have increased its rates or charges imposed for water services, there may be added to the Net Revenues of such fiscal year the additional Net Revenues which would have been received from the operation of the System during such fiscal year had such increase been in effect throughout such fiscal year, such additional Net Revenues to be estimated by an independent engineer or firm of such engineers having a favorable reputation with respect to such matters. For purposes of calculations under this subparagraph (e), if Additional Parity Obligations are to be issued exclusively for the purpose of refunding or retiring a portion of Outstanding Parity Obligations or this Loan, for the purpose of the calculation required under this subparagraph (e), the percentage requirement on such obligations will be taken into consideration only in any future fiscal year in which any fractional part of such obligations will remain outstanding after the issuance of such Additional Parity Obligations; provided that nothing herein contained shall be construed to limit or restrict the issuance of any Additional Parity Obligations if, before or as a result of the issuance and delivery of such Additional Parity Obligations, any other obligations theretofore issued will not longer be outstanding, or full payment for any such obligations will be provided for by funds from the bond or obligation proceeds. Regular Council Meeting -March 2, 2010 -Page 119 of 186 D-4 Exhibit E Debt Service Reserve Held by Local Borrower -Separate Account The Local Borrower covenants and agrees that it will fund a Reserve Fund (as herinafter defined) in cash in accordance with this Exhibit. "Reserve Requirement" shall mean an amount equal to the highest amount of Loan Repayments to be paid by the Local Borrower in any fiscal year as shown in the Loan Repayment Schedule in Exhibit A, and the Local Borrower's obligations with respect to those reserve fund credit instruments associated with any Additional Parity Obligations, which the Local Borrower and the Authority agree is the initial amount of the Reserve Requirement for the Loan. The amount of the Reserve Requirement, and the amount of the required monthly build up of cash in the Reserve Fund, will be adjusted to reflect any adjustment of the Loan Repayment Schedule in Exhibit A upon and after the delivery of Authority Bonds to finance the Loan or any other adjustment to the Loan Repayment Schedule in Exhibit A. The Local Borrower shall establish and maintain a Reserve Fund Account (as herinafter defined) of the Local Borrower, which account shall be established by the Local Borrower for the purposes described herein and maintained separate and distinct within a separate account administered by the local borrower in accordance with Exhibit A to secure payment to the Authority of Loan Repayments payable under the Loan (the "Reserve Fund Account"). The Local Borrower shall cause to be deposited with the Reserve Fund Account on or before the first Business Day of each month that monthly deposit as set forth in Exhibit A to cause the Reserve Requirement to be fully funded (the "Reserve Fund"). The Local Borrower shall hold the moneys so deposited, all investments made with such moneys and all earnings from investment and reinvestment of such moneys as a separate account to be applied only as perntted by the Loan. For so long as the Loan is outstanding, if, on any date payment is due, the Local Borrower has not paid to the Authority an amount equal to the amount of principal and interest due on the Loan pursuant to Section 3.3 of the Loan Agreement, the Authority will direct the Local Borrower to transfer, and the Local Borrower shall transfer, the amount of the deficiency from the Reserve Fund to the Authority. The Local Borrower shall then deposit in the Reserve Fund from the first Net Revenues available (after provision is made for payment of any amounts which have become due under the Loan) an amount sufficient to cause the amount credited to the Reserve Fund to be at least equal to the amount then required to be on deposit therein. In the event any Additional Parity Obligations which are on a parity with the Loan are outstanding at the time of any such. requested transfer from, or resulting obligation to deposit to, the Reserve Fund, such transfers and deposits shall be made fro rata, according to the respective principal amounts of the Loan and such Additional Parity Obligations, from and to the accounts in the Reserve Fund for the Loan and such Additional Parity Obligations, respectively. Amounts credited to the Reserve Fund Account may be invested by the Local Borrower in investments permitted by law, subject to the requirement that Reserve Fund monies shall be readily available to cover deficiencies in Loan payments as necessary in a timely manner. Investments shall be valued annually as of June 30 at market value. Earnings on investments credited to the Reserve Fund shall be retained therein if and to the extent necessary to cause the amount credited to the Reserve Fund to be at least equal to the amount required to be on deposit therein. Any monies in the Reserve Fund not invested shall be held as a demand deposit bearing Regular Council Meeting -March 2, 2010 -Page 120 of 186 E-1 no interest and shall be secured by direct obligations of the United .States of America in an amount at all times at least equal to the amount of the deposit. The Local Borrower shall keep adequate and accurate records of moneys, investments and investment earnings on amounts credited to the Reserve Fund Account ,and the Authority shall have the right to audit the records of the Local Borrower insofar as they pertain to the Reserve Fund Account. When all amounts payable by the Local Borrower under the Loan have become due, and all such amounts have been paid or the Local Borrower has on deposit in the Reserve Fund Account monies necessary for their payment, any amounts set aside for the Reserve Fund will become available to the Local Borrower for general use. The Local Borrower covenants and agrees that the investment of the Reserve Fund for the Loan Repayments shall at all times after the issuance of Authority Bonds to fund the Loan be restricted to a yield not greater than the yield on the Authoriry's Bonds, which shall be certified at the date of such Bond issuance to the Local Borrower by the Authority based upon certification to the Authority by the underwriters of the Authority's Bonds. The Local Borrower shall maintain adequate records of investment to reflect compliance with this covenant. Regular Council Meeting -March 2, 2010 -Page 121 of 186 E-2, Exhibit F Replacement Reserve Requirements Held By Local Borrower - No Separate Account The Local Borrower shall either spend or maintain a replacement reserve (the "Replacement Reserve") in accordance with Exhibit A. The Replacement Reserve shall be used for one or more of the following purposes: (i) the acquisition of new, or the replacement of obsolete or worn out, machinery, equipment, furniture, fixtures or other personal property for the System provided that the property is depreciable; (ii) the performance of repairs with respect to the System which are of an extraordinary and non-recurring nature provided that the property is depreciable; (iii) the acquisition or construction of additions to or improvements, extensions or enlargements to, or remodeling of, the System provided that the property is depreciable; and/or (iv) to make payments to the Authority on the Loan (collectively, the "Permitted Uses"). For so long as the Loan is outstanding, if on any interest payment date or principal repayment date the Local Borrower has not paid to the Authority an amount equal to the amount of principal and interest due on the Loan pursuant to the Loan Agreement, and the Reserve Fund does not hold sufficient moneys to cover the deficiency, the Local Borrower shall transfer amounts, if any, set aside for the Replacement Reserve to the Authority to cover the deficiency. When all amounts payable by the Local Borrower under the Loan have become due, and all such amounts have been paid, any amounts set aside for the Replacement Reserve will become available to the Local Borrower for general use. Regular Council Meeting -March 2, 2010 -Page 122 of 186 F-1 Exhibit H Form of Tax Compliance Certificate of Local Borrower Water Infrastructure Finance Authority of Arizona $5,250,000.00 Loan to Town of Marana The Water Infrastructure Finance Authority of Arizona (the "Authority") and Town of Marana (the."Local Borrower") are entering into a Loan Agreement (the "Loan Agreement") in the maximum principal amount stated above pursuant to which the Authority will make a loan (the "Loan") to the Local Borrower. In connection with its state revolving fund programs, the Authority issues its bonds ("Authority Bonds") from time to time to finance loans and the Authority also pledges certain loans to secure and to serve as the source of payment for the Authority Bonds. As a result, and under the provisions of federal tax law applicable to the Authority Bonds, it is in the Authority's interest for the Loan to qualify and be aTax-Exempt Obligation that is not an AMT Obligation. Therefore, in order to establish certain facts necessary for the Loan to qualify and be treated as aTax-Exempt Obligation that is not an AMT Obligation, and as required. by the provisions of the Loan Agreement, the Local Borrower by its officer signing this Certificate, certifies, represents, and covenants as follows with respect to the Loan. All statements in this Certificate are of facts or, as to events to occur in the future, reasonable expectations. L DEFINITIONS 1.10. Attachment A. The definitions and cross-references set forth in Attachment A apply to this Certificate and its Attachments. All terms relating to a particular issue, such as Sale Proceeds, relate to the Loan, unless indicated otherwise. (For example, "Sale Proceeds" refers to Sale Proceeds of the Loan, unless indicated otherwise.) 1.20. Special Definitions. Terms used herein, to the extent not defined in Attachment A or below, have the same meaning as defined in the Loan Agreement. In addition, the following definitions apply to this Certificate and its Attachments: "Instructions" means the Rebate Instructions attached hereto as Attachment A-1. "Issue" means the Loan. "Issuer" means the Local Borrower. "Project" means the financing of a portion of the costs of acquisition, construction and improvement of facilities to be financed by the Loan and includes Issuance Costs and interest on the Loan for up to three years from the Issuance Date or, if later, one year after the date the Project is placed in service, all of which are governmental purposes for purposes of the Code. "Reserve Fund" is defined in 3.40(a). Regular Council Meeting -March 2, 2010 -Page 123 of 186 1.30. References. Reference to a Section means a section of the Code. Reference by number only (for example, "2.10") means. that numbered paragraph of this Certificate. Reference to an Attachment means an attachment to this Certificate. II. ISSUE DATA 2.10. Issuer. The Issuer is a Governmental Unit. 2.20. Purpose of Issue. The Issue is being issued to provide funds to pay costs of the Project. 2.30. Dates. The Sale Date of the Issue is the date on which the Loan Agreement is executed and delivered by the Authority and the Local Borrower, and the Issuance Date of the Issue is the first date on which the aggregate draws under the Loan exceed the lesser of $50,000 or 5% of the principal amount of the Loan. 2.40. Issue Price. The Issue Price of the Issue is the principal amount actually advanced by the Authority to the Issuer as the Loan. 2.50. Sale Proceeds, Net Proceeds, and Net Sale Proceeds. The amount of Sale Proceeds equals the Issue Price. The amount of Net Proceeds equals the Issue Price minus the amount of Proceeds (if any) deposited in the Reserve Fund (if any). The amount of Net Sale Proceeds equals the amount of Net Proceeds minus the Minor Portion. 2.60. Disposition of Sale Proceeds. There will be no Pre-Issuance Accrued Interest with respect to the Issue. The Sale Proceeds will be used to pay costs of the Project and, if applicable, to fund the Reserve Fund (if any). 2.70. Higher Yielding_ Investments. Gross Proceeds will not be invested in Higher Yielding Investments except for (A) the Minor Portion to the extent provided in 3.80, (B) those Gross Proceeds identified in 3.10, 3.20, and 3.30, but only during the applicable Temporary Periods there described for those Gross Proceeds, and (C) Gross Proceeds held in the Reserve Fund (if any) to the extent set forth in 3,40(a). 2.80. Single Issue. No other obligations have been or will be sold less than 15 days before or after the Sale Date pursuant to the same plan of financing with the Issue that are expected to be paid from substantially the same source of funds as the Issue, determined without regard to guarantees from a person who is not a Related Party to the Issuer. Accordingly, no obligations other than those of the Issue are a part of a single issue with the Issue. III. ARBITRAGE (NONREBATE) MATTERS 3.10. Use of Net Sale Proceeds and Pre-Issuance Accrued Interest; Temporary Periods. (A) Pre-Issuance Accrued Interest. There will be no Pre-Issuance Accrued Interest with respect to the Issue. (B) Payment of Costs of the Prolect. Regular Council Meeting -March 2, 2010 -Page 124 of 186 2 (1) All of the .Net Sale .Proceeds will be used to pay costs. of the Project. -Such Sale Proceeds may be used to acquire or hold Higher Yielding Investments for a period ending on the third anniversary of the Issuance Date (such period being the Temporary Period for such amount) because the following three tests are reasonably expected to be satisfied: (i} At least 85% of the Net Sale Proceeds will be allocated to expenditures on the Project by the end of the. Temporary Period; (ii) .Within 6 months of the Issuance Date, the Issuer will incur substantial binding obligations to third parties to expend at least 5% of the Net Sale Proceeds on the Project; and (iii) Completion of the Project and allocation of the Net Sale Proceeds to expenditures will proceed with due diligence. Any Sale Proceeds that remain unspent on the third anniversary of the Issuance Date, which is the expiration date of the Temporary Period for such Proceeds, shall not be invested in Higher Yielding Investments with respect to the Issue after that date except as part of the Minor Portion. In complying with the foregoing sentence, the Issuer may take into account "yield reduction payments" (within the meaning of Regulations § 1.148-5(c)) paid to the United States. (2) Any Reimbursement Allocation will qualify as a Reimbursement of Prior Capital Expenditures and will be made by an entry in the financial records of the Issuer kept with respect to the Issue showing that Sale Proceeds of the Issue have been returned to the fund or account of the Issuer from which such amount was originally and temporarily advanced to finance Capital Expenditures paid before this date by not more than (A) 18 months after the later of the date such Capital Expenditures were paid or the date on which the property resulting from such Capital Expenditures and comprising part of the Project was placed in service or (B) three years after the original expenditures were paid. 3.20. Investment Proceeds. Any Investment Proceeds will be used to pay costs of the Project and may be invested in Higher Yielding Investments during the Temporary Period identified in 3.10(B)(1) or, if longer, one year from the date of receipt, such period being the Temporary Period for such Proceeds. 3.30. Payment Fund. Amounts deposited from time to time in the fund of the Issuer from which payments will be made on the Issue, which is a Bona Fide Debt Service Fund, will be used to pay Debt Service on the Issue within 13 months after the amounts are so deposited, such period being the Temporary Period fore such amounts. 3.40. Reserve Funds. (A) Debt Service Reserve Fund. If (and only if) the Loan Agreement requires the funding of a debt service reserve fund ("Reserve Fund") in cash: The amount of Proceeds of the Loan deposited in the Reserve Fund shall not exceed Regular Council Meeting -March 2, 2010 -Page 125 of 186 3 10% of the stated principal amount of the Loan. Amounts in the portion of the Reserve Fund allocable to the Issue may be invested in Higher Yielding Investments with respect to the Issue to the extent that such amounts do not exceed the least of (i) 10% of the principal amount of the Issue; (ii) maximum annual Debt Service; and (iii) 125% of average annual Debt Service. Any amounts in the portion of the Reserve Fund allocable to the Issue in excess of the least of these amounts will not be invested in Higher Yielding Investments with respect to the Issue. In complying with the yield restriction set forth in this Section, the Issuer may take into account "yield reduction payments" (within the meaning of Regulations § 1.148-5(c)) timely paid or to be timely paid to the United States because amounts in the Reserve Fund (other than investment earnings) are not reasonably expected to be used to pay Debt Service other than in connection with reductions in the amount required to be in the Reserve Account. The establishing and funding of the Reserve Fund was reasonably required by the Authority as a condition of making the Loan. (B) Replacement Reserve Fund. If (and only if) the Loan Agreement requires the funding of a replacement reserve fund ("Replacement Reserve Fund") in cash: The Replacement Reserve Fund may be used for one or more of the following purposes: (i) the acquisition of new, or the replacement of obsolete or worn out, machinery, equipment, furniture, fixtures or other personal property for the Issuer's utility system, provided that the property is depreciable; (ii) the performance of repairs with respect to the Issuer's utility system that are of an extraordinary and non-recurring nature, provided that the property is depreciable; (iii) the acquisition or construction of additions to or improvements, extensions or enlargements to, or remodeling of, the Issuer's utility system, provided that the property is depreciable; and/or (iv) to make Debt Service payments to the Authority on the Issue (collectively, the "Permitted Uses"). The Issuer reasonably expects to use amounts in the Replacement Reserve Fund for Permitted Uses other than to make Debt Service payments to the Authority on the Issue, and therefore there is no reasonable assurance of the. availability of those .amounts to make Debt Service payments to the Authority on the Issue if the Issuer encounters financial difficulties 3.50. No Other Replacement Fund or Assured Available Funds. Except as described in 3.30 and, if and to the extent applicable, 3.40(A), ,the Issuer has not established and does not expect to establish or use any sinking fund, debt service fund, redemption fund, reserve or replacement fund, or similar fund, or any other fund to pay Debt Service on the Issue. Except for money referred to in 3.30 and Proceeds of a Refunding Issue, if any, no other money or Investment Property is or will be pledged as collateral or used for. the payment of Debt Service on the Issue (or for the reimbursement of any others who may provide money to pay that Debt Service), or is or will be restricted, dedicated, encumbered, or set aside in any way as to afford the holders of the Issue reasonable assurance of the availability of such money or Investment Property to pay Debt Service on the Issue. 3.60. No Overissuance. The Proceeds of the Issue are not reasonably expected to exceed the amount needed for the governmental purposes of the Issue as set forth in 2.20. Regular Council Meeting -March 2, 2010 -Page 126 of 186 4 3.70. Other Uses of Proceeds Negated. Except as stated otherwise in this Certificate,. none of the Proceeds of the Issue will be used: (A) to pay principal of or interest on, refund, renew, roll over, retire, or replace any other obligations issued by or on behalf of the Issuer or any other Governmental Unit, (B) to replace any Proceeds of another issue that were not expended on the project for which such other issue was issued, (C) to replace any money that was or will be used directly or indirectly to acquire Higher Yielding Investments, (D) to make a loan to any person or other Governmental Unit, (E) to pay any Working Capital Expenditure other than expenditures identified in Regulations § 1.148-6(d)(3)(ii)(A) and (B) i.e., Issuance Costs of the Issue, Qualified Administrative Costs, reasonable charges for a Qualified Guarantee or for a Qualified Hedge, interest on the Issue for a period commencing on the Issuance Date of the Issue and ending on the date that is the later of three years from such Issuance Date or one year after the date on which the project financed or refinanced by the Issue was or will be placed in service, payments of the Rebate Amount, and costs, other than those already described, that do not exceed 5% of the Sale Proceeds and that are directly related to Capital Expenditures financed or deemed financed by the Issue, principal or interest on an issue paid from unexpected excess Sale Proceeds or Investment Proceeds, and principal or interest on an issue paid from investment earnings on a reserve or replacement fund that are deposited in a Bona Fide Debt Service Fund), or (F) to reimburse any expenditures made prior to the Issuance Date except those that qualify as a Reimbursement of Prior Capital Expenditures. No portion of the Issue is being issued solely for the purpose of investing Proceeds in Higher Yielding Investments. 3.80.. Minor Portion. The Minor Portion is equal to the lesser of 5% of the Sale Proceeds of the Issue and $100,000. Such Minor Portion may be invested in Higher Yielding Investments with respect to the Issue. 3.90. No Other Replacement Proceeds. That portion of the Issue that is to be used to finance Capital Expenditures has a weighted average maturity that does not exceed 120% of the weighted average reasonably expected economic life of the property resulting from such Capital Expenditures. IV. REBATE MATTERS 4.10. Issuer Obligation Re~ardin~ Rebate. Consistently with its covenants contained in the Loan Agreement, the Issuer will calculate and make, or cause to be calculated and made, Regular Council Meeting -March 2, 2010 -Page 127 of 186 5 payments of the Rebate Amount in the amounts and at the times and in the manner provided in Section 148(f) with respect to Gross Proceeds to the extent not exempted under Section 148(f)(4) and the Instructions. 4.20. No Avoidance of Rebate Amount. No amounts that are required to be paid to the United States will be used to make any payment to a party other than the United States through a transaction or a series of transactions that reduces. the amount earned on any Investment Property or that results in a smaller profit or a larger loss on any Investment Property than would have resulted in an arm's length transaction in which the Yield on the Issue was not relevant to either party to the transaction. 4.30. Exceptions. (A) Small Issuer Exception. The Issue is exempt under Section 148(f)(4)(D) from the rebate requirement if all of the following requirements are satisfied: (1) The Issuer is a Governmental Unit with general taxing powers within the meaning of Section 148(f)(4)(D), and (2) No part of the Issue is a Private Activity Bond, and (3) All of the Net Proceeds will be used for "local governmental activities" of the Issuer within the meaning of Section 148(f)(4)(D) and none of the Net Proceeds will be used for any Private Business Use, and (4) The aggregate principal amount of all Tax-Exempt Obligations, including the Issue, issued or to be issued by the Issuer, its subordinate entities and entities that issue any such obligations on behalf of the Issuer, or on behalf of which the Issuer issues any such obligations, during the current calendar year does not, and is not reasonably expected to, exceed $5,000,000. The Tax-Exempt Obligations taken into account for this purpose exclude any Private Activity Bonds and any Current Refunding Portion and Current Refunding Issue to the extent that the amount of such Current Refunding Portion or Current Refunding Issue does not exceed the outstanding amount of the obligations refunded by such Current Refunding Portion or Current Refunding Issue. No entity has been or will be formed or availed of to avoid the purposes of Section 148(f)(4)(D)(i)(IV). If, but only if, all of the above requirements are satisfied, check here: [] and sign here: (B) General Exception. Notwithstanding the foregoing, the computations and payments of amounts to the United States referred to in IV need not be made to the extent that the Issuer will not thereby fail to comply with any requirements of Section 148(f) and the Instructions based on an opinion of bond counsel. Regular Council Meeting -March 2, 2010 -Page 128 of 186 4.40. Election. The Issue is a Construction Issue. The Issuer hereby elects to apply the 2-year spending exception to the rebate requirements on the basis of actual facts instead of the Issuer's reasonable expectations. V. OTHER TAX MATTERS 5.10. Not Private Activity Bonds or Pool Bonds. No obligation of the Issue will be a Private Activity Bond or a pooled financing bond (within the meaning of Section 149(f)), based on the following: {A) Not more than 5% of the Proceeds, if any, directly or indirectly, will be used for a Private Business Use and not more than 5%, if any, of the Debt Service on the Issue, directly or indirectly, will be secured by any interest in property used or to be used for a Private Business Use or payments in respect of such property, or will be derived from payments (whether or not to the Issuer) in respect of property, or borrowed money, used or to be used for a Private Business Use. (B) Less than 5% of the Proceeds, if any, will be used to make or finance loans to any Private Person or Governmental Unit other than the Issuer. (C) The lesser of the Proceeds that are being or will be used for any Private Business Use or the Proceeds with respect to which there are payments or (borrowed money) that are being or will be used for any Private Business Use does not exceed $15,000,000 and none of the Proceeds will be used with respect to an "output facility" (other than a facility for the furnishing of water) within the meaning of Section 141(b)(4). (D) The Issuer does not expect to sell or otherwise dispose of the Project or any portion thereof during the term of the Issue except for dispositions of property in the normal. course at the end of such property's useful life to the Issuer. With respect to tangible personal property, if any, that is part of the Project, the Issuer reasonably expects that: (1) Dispositions of such tangible personal property, if any, will be in the ordinary course of an established governmental program; (2) The weighted average maturity of the obligations of the Issue financing such property (treating the obligations of the Issue properly allocable to such personal property as a separate issue for this purpose) will not be greater than 120% of the reasonably expected actual use of such property for governmental purposes; (3) The fair market value of such property on the date of disposition will not be greater than 25% of its cost; (4) The property will no longer be suitable for its governmental purposes on the date of disposition; and Regular Council Meeting -March 2, 2010 -Page 129 of 186 ~ (5) The amounts received from any disposition of such property are required to be, and will be, commingled with substantial tax or .other governmental revenues and will be spent on governmental programs within 6 months from the date of such deposit and commingling. 5.20. Issue Not Federally Guaranteed. The Issue is not Federally Guaranteed. 5.30. Not Hedge Bonds. At least 85% of the Spendable Proceeds will be used to carry out the governmental purposes of the Issue within three years from the Issuance Date. Not more than 50%, if any, of the Proceeds will be invested in Nonpurpose Investments having a substantially guaranteed Yield for four years or more (including but not limited to any investment contract or fixed yield investment having a maturity of four years or more). The reasonable expectations stated above are not based on and do not take into account (A) any expectations or assumptions as to the occurrence of changes in market interest rates or changes of federal tax law or regulations or rulings thereunder or (B) any prepayments of items other than items that are customarily prepaid. 5.40. Hedge Contracts. The Issuer has not entered into, and does not reasonably expect to enter into, any Hedge with respect to the Issue, or any portion thereof. The Issuer acknowledges that entering into a Hedge with respect to the Issue, or any portion thereof, may change the Yield and that Bond Counsel should be contacted prior to entering. into any Hedge with respect to the Issue in order to determine whether payments/receipts pursuant to the Hedge will be taken into account in computing the Yield. 5.50. Internal Revenue Service Information Return. Within the time and on the form prescribed by the Internal Revenue Service under Section 149(e), the Issuer will file with the Internal Revenue Service an Information Return setting forth the required information relating to the Issue. The information reported on that Information Return will be true, correct, and complete to the best of the knowledge and belief of the undersigned. 5.60. Responsibility of Officer. (A) The officer signing this Certificate is one of the officers of the Issuer responsible for issuing the Issue. (B) To the best of the knowledge, information, and belief of the undersigned, all expectations stated in this Certificate are the expectations of the Issuer and are reasonable, all facts stated are true, and there are no other existing facts, estimates, or circumstances that would or could materially change the statements made in this Certificate. The certifications and representations made in this Certificate are intended to be relied upon as certifications described in Regulations § 1.148-2(b). The Issuer acknowledges that any change in the facts or expectations from those set forth in this Certificate may result in different requirements or a change in status of the Issue or interest thereon under the Code, and that bond counsel should be contacted if such changes are to occur or have occurred. Regular Council Meeting -March 2, 2010 -Page 130 of 186 g Town of Marana By: Name: Title: Regular Council Meeting -March 2, 2010 -Page 131 of 186 9 List of Attachments Attachment A -- Definitions for Tax Compliance Certificate Attachment A-1 -- Rebate Instructions Regular Council Meeting -March 2, 2010 -Page 132 of 186 10 Attachment A Definitions for Tax Compliance Certificate of Local Borrower The following terms, as used in Attachment A and in the Tax Compliance Certificate to which it is attached and in the other Attachments to the .Tax Compliance Certificate, have the following meanings unless therein otherwise defined or unless a different meaning is indicated by the context in which the term is used. Capitalized terms used within these definitions that are not defined in Attachment A have the meanings ascribed to them in the Tax Compliance Certificate to which this Attachment A is attached. The word "Issue," in lower case, refers either to the Issue or to another issue of obligations or portion thereof treated as a separate issue for the applicable purposes of Section 148, as the context requires. The word "obligation" or "obligations," in lower case, includes any obligation, whether in the form of bonds, notes, cert~cates, or any other obligation that is a "bond" within the meaning of Section 150(a)(1). All capitalized terms used in this Certificate include either the singular or the plural. All terms used in this Attachment A or in the Tax Compliance Certificate to which this Attachment A is attached, including terms specifically defined, shall be interpreted in a manner consistent with Sections 103 and 141-150 and the applicable Regulations thereunder except as otherwise specked. All references to Section, unless otherwise noted, refer to the Code. "Advance Refunding Issue" means any Refunding Issue that is not a Current Refunding Issue. "Advance Refunding Portion" means that portion of a Multipurpose Issue that constitutes a separate governmental purpose and that would be treated as an Advance Refunding Issue if it had been issued as a separate issue. "AMT Obligation" means aTax-Exempt Obligation the interest on which is an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations under the Internal Revenue Code. "Available Construction Proceeds" means an amount equal to (a) the sum of (i) the Issue Price of an issue, (ii) Investment Proceeds on that Issue Frice, (iii) earnings on any reasonably required reserve or replacement fund allocable to the issue not funded from the Issue Price, and (iv) Investment Proceeds and earnings on (ii) and (iii), (b) reduced by the portions, if any, of the Issue Frice of the issue (i) attributable to Pre-Issuance Accrued Interest and earnings thereon, (ii) allocable to the underwriter's discount, (iii) used to pay other Issuance Costs of the issue, and (iv) deposited in a reasonably required reserve or replacement fund allocable to the issue. "Available Construction Proceeds" does not include Investment Proceeds or earnings on a reasonably required reserve or replacement fund allocable to the issue for any period after the earlier of (a) the close of the 2-year period that begins on the Issuance Date or (b) the date the construction of the project financed by the issue is substantially completed, provided, however, that such Investment Proceeds or earnings shall be excluded from "Available Construction Proceeds" if the Issuer has timely elected such exclusion. If an issue is a Multipurpose Issue that includes a New Money Portion that is a Construction Issue, this definition shall be applied by substituting "New Money Portion" for "issue" each place the latter term appears. If an issue or the New Money Portion of a Multipurpose Issue, as applicable, is Regular Council Meeting -March 2, 2010 -,.Page 133 of 186 A-1 not a Construction Issue, and the Issuer makes .the bifurcation election under Regulations §1.148-7(j)(1) and Section 148(f}(4)(C)(v) to treat the issue or the New Money Portion as two separate issues consisting of the Construction Portion and the Nonconstruction Portion, this definition shall be applied by substituting "Construction Portion" for "issue" each place the latter term appears. "Bona Fide Debt Service Fund" means a fund, including a portion of or an account in that fund (or in the case of a fund established for two or more issues, the portion of that fund properly allocable to an issue), or a combination of such funds, accounts or portions that is used primarily to achieve a proper matching of revenues with Debt Service on an issue within each Bond Year and that is depleted at least once each year except for a reasonable carryover amount not to exceed the greater of the earnings thereon for the immediately preceding Bond Year or one-twelfth of the annual Debt Service on the issue for the immediately preceding Bond Year. "Bond Year" means the annual period relevant to the application of Section 148(f) to an issue, except that the first and last Bond Years may be less than 12 months long. The last day of a Bond Year shall be the close of business on the day preceding the anniversary of the Issuance Date of an issue unless the Issuer selects another date on which to end a Bond Year in the manner permitted by the Code. "Capital Expenditures" means costs of a type that are properly chargeable to a capital account (or would be so chargeable with a proper election or with the application of the definition of Placed in Service) under general federal income tax principles. "Code" means the Internal Revenue Code of 1986, the Regulations (whether temporary or final) under that Code or the statutory predecessor of that Code, and any amendments of, or successor provisions to, the foregoing and any official rulings, announcements, notices, procedures and judicial determinations regarding any of the foregoing, all as and to the extent applicable. Unless otherwise indicated, reference to a Section includes any applicable successor section or provision and such applicable Regulations, rulings, announcements, notices, procedures and determinations pertinent to that Section. "Commingled Fund" means any fund or account of the Issuer that contains both Gross Proceeds of an issue and amounts in excess of $25,000 that are not Gross Proceeds of the issue if the amounts in the fund or account are invested and accounted for collectively, without regard to the source of funds deposited in the fund or account. "Commingled Investment Proceeds" means Investment Proceeds of an issue (other than Investment Proceeds held in a Refunding Escrow) that are deposited in a Commingled Fund with substantial tax or other revenues from governmental operations of the Issuer and that are reasonably expected to be spent for governmental purposes within 6 months from the date of deposit in the Commingled Fund, using any reasonable accounting assumptions. "Conduit Borrower" means the obligor on a purpose investment. Regular Council Meeting -March 2, 2010 -Page 134 of 186 A-2 "Conduit Financing Issue" means an issue the Proceeds of which are reasonably expected to be used to finance one or more Conduit Loans. "Conduit Loan" means a purpose investment acquired bythe Issuer with Proceeds of a Conduit Financing Issue, thereby effecting a loan to the Conduit Borrower. "Construction Expenditures" means Capital Expenditures allocable to the cost of real property (including the construction or making of improvements to real property, but excluding acquisitions of interests in land or other existing real property) or constructed personal property within the meaning of Regulations § 1.148-7(g). "Construction .Issue" means an issue at least 75% of the Available Construction Proceeds of which are to be used for Construction Expenditures with respect to property that is, or upon completion will be, owned by a Governmental Unit or a 501(c)(3) Organization. If an issue is a Multipurpose Issue that includes a New Money Portion, this definition shall be applied by substituting "New Money Portion" for "Construction Issue" each. place the latter term appears. If an election under Section 148(f)(4)(C)(v) and Regulations § L 148-7(j) is made to bifurcate an issue or the New Money Portion of a Multipurpose Issue, this definition shall be applied. by substituting "Construction Portion" for "Construction Issue" each place the latter term appears. "Construction Portion" means that portion of an issue or the New Money Portion of a Multipurpose Issue at least 75% of the Available Construction Proceeds of which are to be used for Construction Expenditures with respect to property that is, or upon completion will be, owned by a Governmental Unit or a 501(c)(3) Organization and that finances 100% of the Construction Expenditures. "Controlled Group" means a group of entities controlled directly or indirectly by the same entity or group of entities within the meaning of Regulations § 1.150-1(e). "Current Refunding Issue" means a Refunding Issue that is issued not more than 90 days before the last expenditure of any Proceeds of the Refunding Issue for the. payment of Debt Service on the Refunded Bonds. "Current Refunding Portion" means that portion of a Multipurpose Issue that constitutes a separate governmental purpose and that would be treated as a Current Refunding Issue if it had been issued as a separate issue. "Debt Service" means principal of and interest and any redemption premium on an issue. "Excess Gross Proceeds" .means all Gross Proceeds of an Advance Refunding Issue that exceed an amount equal to 1% of the Sale Proceeds of such Advance Refunding Issue, other than Gross Proceeds allocable to: (a) payment of Debt Service on the Refunded Bonds; (b) payment of Pre-Issuance .Accrued Interest on the Advance Refunding Issue and interest on the Advance Refunding Issue that accrues for a period up to the completion date of any capital project financed by the Prior Issue, plus one year; (c) a reasonably required reserve or replacement fund for the Regular Council Meeting.- March 2, 2010 -.Page 135 of 186 A-3 Advance Refunding Issue or Investment Proceeds of such fund; (d) payment of Issuance Costs of the Advance Refunding Issue; (e) payment of administrative costs allocable to repaying the Refunded Bonds, carrying and repaying the Advance Refunding Issue, or investments of the Advance Refunding Issue; (f) Transferred Proceeds allocable to expenditures for the governmental purpose of the Prior Issue (treating for this purpose all unspent Proceeds of the Prior Issue properly allocable to the Refunded Bonds as of the Issuance Date of the Advance Refunding Issue as Transferred Proceeds); (g) interest on purpose investments; (h) Replacement Proceeds in a sinking fund for the Advance Refunding Issue; and (i) fees for a Qualified Guarantee for the Advance Refunding Issue or the Prior Issue. If an Issue is a Multipurpose Issue that includes an Advance Refunding Portion, this defmition shall be applied by substituting "Advance Refunding Portion" for "Advance Refunding Issue" each place the latter term appears. "Federally Guaranteed" means that (a) the payment of Debt Service on an issue, or the payment of principal or interest with respect to any loans made from the Proceeds of the issue, is directly or indirectly guaranteed in whole or in part by the United States or by an agency or instrumentality of the United States, within the meaning of Section 149(b) of the Code, or (b) more than 5% of the Proceeds of an issue will be invested directly or indirectly in federally insured deposits or accounts. The preceding .sentence does not apply to (a) Proceeds invested during an initial Temporary Period until such Proceeds are needed to pay costs of the project, (b) investments of a Bona Fide Debt Service Fund, (c) direct purchases from the United States of obligations issued by the United States Treasury, or (d) other investments permitted by Section 149(b) or Regulations "501(c)(3) Organization" means an organization described in Section 501(c)(3) and exempt from tax under Section 501(a). "Fixed Yield Issue" means an issue of obligations the Yield on which is fixed and deterrrunable on the Issuance Date. "Governmental Unit" means a state, territory or possession of the United States, the District of Columbia, or any political subdivision thereof referred to as a "State or local governmental unit" in Regulations §1.103-1(a). "Governmental Unit" does not include the United States or any agency or instrumentality of the United States. "Gross Proceeds" means Proceeds and Replacement Proceeds of an issue. "Hedge" means a contract entered into by the Issuer or the Conduit Borrower primarily to modify the Issuer's or the Conduit Borrower's risk of interest rate changes with respect to an obligation ~., an interest rate swap, an interest rate cap, a futures contract, a forward contract or an option). "Higher Yielding Investments" means any Investment Property that produces a Yield that (a) in the case of Investment Property allocable to Replacement Proceeds of an issue and Investment Property in a Refunding Escrow, is more than one thousandth of one percentage point (.00001) higher than the Yield on the applicable issue, and (b) for all other purposes is more than one-eighth of one percentage point (.00125) higher than the Yield on the issue. Regular Council Meeting -March 2, 2010 -Page 136 of 186 A-4 "Investment Proceeds" means any amounts- actually or constructively received from investing Proceeds. of an issue in Investment Property. "Investment Property" means investment property within the meaning of Sections 148(b)(2) .and 148(b)(3), including any security (within the meaning of .Section 165(g)(2)(A) or (B}), any obligation, any annuity contract and any other investment-type property (including certain residential rental property for family units as described in Section 148(b)(2)(E) in the case of any bond other than a Private Activity Bond). Investment Property includes aTax-Exempt Obligation that is a "specified private activity bond" as defined in Section 57(a)(5)(C), but does not include other Tax-Exempt Obligations. "Issuance Costs" means costs to the extent incurred in connection with, and allocable to, the issuance of an issue, and includes underwriter's compensation withheld from the Issue Price, counsel fees, financial advisory fees, rating agency fees, trustee fees, paying agent fees, bond registrar, certification and authentication fees, accounting fees, printing costs for bonds and offering documents, public approval process costs, engineering and feasibility study costs, guarantee fees other than for a Qualified Guarantee and similar costs, but does not include fees charged by the Issuer. "Issuance Date" means the date of physical delivery of an issue by the Issuer in exchange for the purchase price of the issue. "Issue Price" means in the circumstances applicable to an issue: (1) Public Offering. In the case of obligations actually offered to the general public in a bona fide public offering at the initial offering price for each maturity set forth in the certificate of the underwriter or placement agent attached to the Tax Compliance Certificate of the Issuer, the aggregate of the initial offering price for each maturity (including any Fre-Issuance Accrued Interest and original .issue premium, but excluding any original issue discount), which price is not more than the fair market value thereof as of the Sale Date, and at which initial offering .price not less than 10% of the principal amount of each maturity, as of the Sale Date, was sold or reasonably expected to be sold (other than to bond houses, brokers or other intermediaries). In the case of publicly offered obligations that are not described in the preceding sentence, Issue Price means the aggregate of the initial offering price to the public of each maturity set forth in the certificate of the underwriter or placement agent attached to the Tax Compliance Certificate of the Issuer, which price is not more than the-fair market value thereof as of the Sale Date, and at which initial offering price not less than 10% of the principal amount of each maturity was sold to the public. (2) Private Placement. In the case of obligations sold by private placement, the aggregate of the prices (including any Pre-Issuance Accrued Interest and original issue premium, but excluding any .original issue discount) paid to the Regular Council Meeting -March 2, 2010 -Page 137 of 186 A-5 Issuer by the first purchaser(s) (other than bond houses, brokers or other intermediaries). "Minor Portion" means an amount equal to the lesser of $100,000 or 5% of the Sale Proceeds of an issue. "Multipurpose Issue" means an issue .the bonds of which are allocable to two or more separate governmental purposes within the meaning of Regulations § 1.148-9(h). "Net Proceeds" means the Sale Proceeds of an issue less the portion thereof, if any, deposited in a reasonably required reserve or replacement fund for the issue. "Net Sale Proceeds" means the Sale Proceeds of an issue less the portion thereof, if any, deposited in a reasonably required reserve or replacement fund for the issue and the portion invested as a part of a Minor Portion for the issue. "New Money Issue" means an issue that is not a Refunding Issue. "New Money Portion" means that portion of a Multipurpose Issue other than the Refunding Portion. "Nonpurpose Investments" means any Investment Property that is acquired with Gross Proceeds as an investment and not in carrying out any governmental purpose of an issue. "Nonpurpose Investments" does not include any investment that is not regarded as "investment property" or a "nonpurpose investment" for the particular purposes of Section 148 (such as certain investments in U.S. Treasury obligations in the State and Local Government Series and certain temporary investments), but does include any other investment that is a "nonpurpose investment" within the applicable meaning of Section 148. "Placed in Service" means the date on which, based on all the facts and circumstances, a facility has reached a degree of completion that would permit its operation at substantially its design level and the facility is, in fact, in operation at such level. "Pre-Issuance Accrued Interest" means interest on an obligation that accrued for a period not greater than one year before its Issuance Date and that will be paid within one year after such Issuance Date. "Preliminary Expenditures" means any Capital Expenditures that are "preliminary expenditures" within the meaning of Regulations § 1.150-2(f)(2), i.e., architectural, engineering, surveying, soil testing, reimbursement bond issuance, and similar costs that are incurred prior to commencement of acquisition, construction, or rehabilitation of a project other than land acquisition, site preparation, and similar costs incident to commencement of construction. The aggregate amount of Preliminary Expenditures may not exceed 20% of the aggregate Issue Price of the issue or issues that financed or are reasonably expected to finance the project for which such Preliminary Expenditures are or were incurred. Regular Council Meeting -March 2, 2010 -Page 138 of 186 A-6 "Prior Issue" means an issue of obligations all or a portion of the Debt Service on which is paid or provided for with Proceeds of a Refunding Issue. The Prior Issue may be a Refunding Issue. "Private Activity Bond" means (a) obligations of an issue more than 10% of the Proceeds of which, directly or indirectly, are or are to be used fora Private Business Use and more than 10% of the Debt Service on which, directly or indirectly, is or is to be paid from or secured by payments with respect to property, or secured by property, used for a Private Business Use, or (b) obligations of an issue, the Proceeds of which are or are to be used to make or finance loans to any Private Person that, in the .aggregate, exceed the lesser of 5% of such Proceeds or $5,000,000. In the event of Unrelated or Disproportionate Use, the tests in (a) shall be applied by substituting 5% for 10% each place the latter term is used. "Private Business Use" means use (directly or indirectly) in a trade or business carried on by any Private Person other than use as a member of, and on the same basis as, the general public. .Any activity carried on by a Private Person (other than a natural person) shall be treated as a trade or business. In the case of a Qualified 501(c)(3) Bond, Private Business Use excludes use by a 501(c)(3) Organization that is not an unrelated trade or business activity by such 501(c)(3) Organization within the meaning of Section 513(a). "Private Person" means any natural person or any artificial person, including a corporation, partnership, .trust or other entity, other than a Governmental Unit. "Private Person" includes the United States and any agency or instrumentality of the United States. "Proceeds" means any Sale Proceeds, Investment Proceeds, and Transferred Proceeds of an issue. "Proceeds" does not include Replacement Proceeds. "Qualified Administrative Costs" means reasonable direct administrative costs (other than carrying costs) such as separately stated brokerage or selling commissions, but not legal and accounting fees, recordkeeping, custody and .similar costs. General overhead costs and similar indirect costs of the Issuer such as employee salaries and office expenses and costs associated with computing the Rebate Amount are not Qualified Administrative Costs. "Qualified 501(c)(3) Bonds" .means an issue of obligations that satisfies the requirements of Section 145(a). "Qualified Guarantee" means any guarantee of an obligation that constitutes a "qualified guarantee" within the meaning of Regulations § 1.148-4(f). "Qualified Hedge" means a Hedge that is a "qualified hedge" within the meaning of Regulations § 1.148-4(h)(2). "Rebate Amount" means-the excess of the future value, as of any date, of all receipts on Nonpurpose Investments acquired with Gross Proceeds of an issue over the future value, as of that date, of all payments on those Nonpurpose Investments, computed in accordance with Section 148(f) and Regulations § 1.148-3. Regular Council Meeting -March 2, 2010 -Page 139 of 186 A_~ "Refunded Bonds" means obligations of a Prior Issue the Debt Service on which is or is to be paid from Proceeds of a Refunding Issue. "Refunding Bonds" means obligations of a Refunding Issue. "Refunding Issue" means an issue the Proceeds of which are or are to be used to pay Debt Service on Refunded Bonds and includes Issuance Costs, Pre-Issuance Accrued Interest or permitted capitalized interest, a reasonably required reserve or replacement fund and similar costs of the Refunding Issue. "Refunding Escrow" means one or more funds established as part of a single transaction, or a series of related transactions, containing Proceeds of a Refunding Issue and any other amounts to be used to pay Debt Service on Refunded Bonds of one or more issues. "Refunding Portion" means that portion of a Multipurpose Issue the Proceeds of which are, or are to be, used to pay Debt Service on Refunded Bonds and includes Issuance Costs, Pre-Issuance Accrued Interest or permitted capitalized interest, a reasonably required reserve or replacement fund and similar costs properly allocable to the Refunding Portion. "Regulations" or "Reg: 'means Treasury Regulations. "Reimbursement Allocation" means an allocation of the Proceeds of an issue for the Reimbursement of Prior Capital Expenditures, other than Preliminary Expenditures, that meets each of the following requirements: (a) is evidenced on the books or records of the Issuer maintained with respect to the issue, (b) the allocation entry identifies either actual prior Capital Expenditures, or the fund or account from which the prior Capital Expenditures were paid, and (c) evidences the Issuer's use of Proceeds of the issue to reimburse a Capital Expenditure for a governmental purpose that was originally paid from a source other than the Proceeds of the issue. "Reimbursement of Prior Capital Expenditures" means a Reimbursement Allocation of Proceeds of the Issue to a Capital Expenditure paid prior to the Issuance Date of such Issue, that satisfies the following requirements: (a) the Capital Expenditure was paid after March 1, 1992; (b) prior to, or within 60 days after, payment of the Capital Expenditure (except Preliminary Expenditures), the Issuer adopted an official intent for the Capital Expenditure that satisfies Regulations § 1.150-2(e); and (c) except for Preliminary Expenditures, the Reimbursement Allocation occurs or will occur within 18 months after the later of the date the Capital Expenditure was paid or the date the project resulting from such Capital Expenditure was Placed in Service or abandoned, but in no event more than 3 years after the Capital Expenditure was paid. "Related Parry" means, in reference to a Governmental Unit or 501(c)(3) Organization, any member of the same Controlled Group and, in reference to any person that is not a Governmental Unit or 501(c)(3) Organization, a "related person" as defined in Section 144(a)(3) of the Code. Regular Council Meeting -March 2, 2010 -Page 140 of 186 A_g "Replacement Proceeds" means, with respect to an issue, amounts (including any investment income,. but excluding any Proceeds of any issue) replaced by Proceeds of that issue within the meaning of Section 148(a)(2). "Replacement Proceeds" includes amounts, other than Proceeds,. held in a sinking fund, pledged fund. or reserve or replacement fund for an issue. "Sale Date" means, with respect to an issue, the first date on which there is a binding contract in writing with the Issuer for the sale and purchase of an issue (or of respective obligations of the issue if sold by the Issuer on different dates) on specific terms that are not later modified or adjusted in any material respect. "Sale Proceeds" means that portion of the Issue Price actually or constructively received by the Issuer upon the sale or other disposition of an issue,. including any underwriter's compensation withheld from the Issue Price, but excluding Pre-Issuance Accrued Interest. "Spendable Proceeds" means the Net Sale Proceeds of an issue.. "Tax-Exempt Obligation" means any obligation or issue of obligations (including bonds, notes and lease obligations treated for federal income tax purposes as evidences of indebtedness) the interest on which is excluded from gross income for federal income tax purposes within the meaning of Section 150, and includes any obligation or any investment treated as a "tax-exempt bond" for the applicable purpose of Section 148. Organization. "Tax-Exempt Organization" means a Governmental Unit or a 501(c)(3) "Temporary Period" means the period of time, as set forth in the Tax Compliance Certificate, applicable to particular categories of Proceeds of an issue during which such category of Proceeds may be invested in Higher Yielding Investments without the issue being treated as arbitrage bonds under Section 148. "Transferred Proceeds" means that .portion of the Proceeds of an issue (including any Transferred Proceeds of that issue) that remains unexpended at the time that any portion of the principal of the Refunded Bonds of that issue is discharged with the Proceeds of a Refunding Issue and that thereupon becomes Proceeds of the Refunding Issue as provided in Regulations § 1.148-9(b). "Transferred Proceeds" does not include any Replacement Proceeds. "Unrelated or Disproportionate Use" means Private Business Use that is not related to or is disproportionate to use by a Governmental Unit within the meaning of Section 141(b)(3) and Regulations §1.141-9. "Variable Yield Issue" means any Issue that is not a Fixed Yield Issue. "Working Capital Expenditures" means any costs of a type that do not constitute Capital Expenditures, including current operating expenses. Regular Council Meeting -March 2, 2010 -Page 141 of 186 A-9 "Yield" has the meaning assigned to it for purposes of Section 148 of the Code, and means that discount rate (stated as an annual percentage) that, when used in computing the present worth of all applicable unconditionally payable payments of Debt Service, all payments for a Qualified Guarantee, if any, and all payments and receipts with respect to a Qualified Hedge, if any, paid and to be paid with respect to an obligation (paid and to be paid during and attributable to the Yield Period in the case of a Variable Yield Issue), produces an amount equal to (a) the Issue Price in the case of a Fixed Yield Issue or the present value of the Issue Price at the commencement of the applicable Yield Period in the case of a Variable Yield Issue, or (b) the purchase price for yield purposes in the case of Investment Property, all subject to the applicable methods of computation provided for under Section 148, including variations from the foregoing. The Yield on Investment Property in which Proceeds or Replacement Proceeds of an issue are invested is computed on a basis consistent with the computation of Yield on that issue, including the same compounding interval of not more than one year selected by the Issuer. "Yield Period" means, in the case of the first Yield Period, the period that commences on the Issuance Date and ends at the close of business on the first Computation Date and, in the case of each succeeding Yield Period, the period that begins immediately after the end of the immediately preceding Yield Period and ends at the close of business on the next succeeding Computation Date. The terms "bond", "obligation", "reasonably required reserve or replacement fund", "reserve or replacement fund", "loan", "sinking fund", "purpose investment", "same plan of financing", "other replacement proceeds", and other terms relating to Code provisions used but not defined in this Certificate shall have the meanings given to them for purposes of Sections 103 and 141 to 150 unless the context indicates another meaning. (End of Attachment A) Regular Council Meeting -March 2, 2010 -Page 142 of 186 A_ 10 ATTACHMENT A-1 to Tax Compliance Certificate of Local Borrower INSTRUCTIONS FOR COMPLIANCE WITH REBATE REQUIREMENTS OF SECTION 148(f) OF THE CODE. The Issuer covenanted in the Loan Agreement and Tax Compliance Certificate to comply with the arbitrage rebate requirement of Section 148(f) of the Code. These Instructions provide guidance for that compliance, including the spending exceptions that free the Issue from all or part of the rebate requirements. PART I: GENERAL SECTION 1.01. REBATE GENERALLY. The Rebate Amounts with respect to the Issue must be paid (rebated) to the United States to prevent the bonds of the Issue from being arbitrage bonds, the interest on which is subject to federal income tax. In general, the Rebate Amount is the amount by which the actual. earnings on Nonpurpose Investments purchased (or deemed to have been purchased) with Gross Proceeds of the Issue exceed the amount of earnings that would have been received if those Nonpurpose Investments had a Yield equal to the Yield on the Issue.2 Stated differently, the Rebate Amount for the Issue as of any date is the excess of the Future Value, as of that date, of all Receipts on Nonpurpose Investments over the Future Value, as of that date, of all Payments on Nonpurpose Investments, computed using the Yield on the Issue as the Future Value rate 3 If the Issue is a Fixed Yield Issue, the Yield on the Issue generally is the Yield to maturity, taking into account mandatory redemptions prior to maturity. If the Issue is a Variable Yield Issue, the Yield on the Issue is computed separately for each Yield Period selected by the Issuer. SECTION 1.02. SPECIAL DEFINITIONS. 1' Capitalized terms that are not defined in these Instructions are defined in Attachment A to the Tax Compliance Certificate of the Issuer. 2' Amounts earned on the Bona Fide Debt Service Fund for the Issue are not taken into account in determining the Rebate Amount since none of the obligations of the Issue are Private Activity Bonds, the rates of interest on the Issue do not vary and the average maturity of the Issue is at least 5 years. 3' The scope of these Instructions does not permit a detailed description of the computation of the Rebate Amount with respect to the Issue. If you need assistance in computing the Rebate Amount on the Issue, please contact your bond. counsel. Regular Council Meeting -March 2, 2010 -Page 143 of 186 A-1-1 For purposes of these Instructions, the following terms shall have the following meanings. "Available Construction Proceeds" means an amount equal to (a) the sum of (i) the Issue Price of the issue, (ii) Investment Proceeds on that Issue Price, (iii) earnings on any reasonably required reserve or replacement fund allocated to the issue not. funded from the Issue Price, and (iv) Investment Proceeds and earnings on (ii) and (iii), (b) reduced by the portions, if any, of the Issue Price of the issue (i) attributable to Pre-Issuance Accrued Interest and earnings thereon, (ii) allocated to the Underwriter's discount, (iii) used to pay other Issuance Costs of the issue, and (iv) deposited in a reasonably required reserve or replacement fund allocated to the issue. Available Construction Proceeds do not include Investment Proceeds or earnings on a reasonably required reserve or replacement fund allocated to the issue for any period after the earlier of (a) the close of the 2-year period that begins on the Issuance Date or (b) the date the construction of the Projects financed by the issue is substantially completed. If the issue consists of a New Money Portion and a Refunding Portion and the New Money Portion is a Construction Issue, this def nition shall be applied by substituting "New Money Portion" for "issue" each place the latter term appears. If the issue or the New Money Portion, as applicable, is not a Construction Issue, and the Issuer makes the election under Regulations §1.148-7(j)(1) and Section 148(f)(4)(C)(v) to treat the issue or the New Money Portion as two separate issues consisting of the Construction Portion and the Nonconstruction Portion, this definition shall be applied by substituting "Construction Portion" for "issue" each place the latter term appears. "Bifurcated Issue" means a New Money Issue or the New Money Portion of a Multipurpose Issue that the Issuer, pursuant to Section 148(f)(4)(C)(v) and Regulations § 1.148-7(j), has elected in its Tax Compliance Certificate to bifurcate into a Construction Portion and a Nonconstruction Portion. "Bond Counsel's Opinion" means an opinion or opinions of a nationally recognized bond counsel firm whose opinion is given with respect to the Issue when issued, or its successors or other nationally recognized bond counsel appointed by the Issuer. "Bond Year" means the annual period relevant to the application of Section 148(f) to the issue, except that the first and last Bond Years may be less than 12 months long. The last day of a Bond Year shall be the close of business on the day preceding the anniversary of the Issuance Date of the issue unless the Issuer selects another date on which to end a Bond Year in the manner permitted by the Code. "Computation Date" means each date on which the Rebate Amount for an issue is required to be computed under Regulations § 1.148-3(e). In the case of a Fixed Yield Issue, the first Computation Date shall not be later than 5 years after the Issuance Date of the issue. Subsequent Computation Dates shall be not later than 5 years after the immediately preceding Computation Date for which an installment payment of the Rebate Amount was paid. In the case of a Variable Yield Issue, the first Computation Date shall be the last day of any Bond Year irrevocably selected by the Issuer ending on or before the fifth anniversary of the Issuance Date of such issue and Regular Council Meeting -March 2, 2010 -Page 144 of 186 A-1-2 subsequent Computation Dates shall be the last day of each Bond Year thereafter or each fifth Bond Year thereafter, whichever is irrevocably selected by the Issuer after the first date on which any portion of the Rebate Amount is required to be paid to the United States. The fmal Computation Date is the date an issue is retired. "Construction Expenditures" means Capital Expenditures allocable to the cost of real property (including the construction or making of improvements to real- property, but excluding acquisitions of interests in land or other existing real. property) or constructed personal property within the meaning of Regulations § 1.148-7(g). "Construction Issue" means an issue at least 75 percent of the .Available Construction Proceeds of which are to be used for Construction Expenditures with respect to property which is or is to be owned by a Governmental Unit or a 501(c)(3) Organization. If an election has been made in the Issuer's Tax Compliance Certificate to bifurcate an issue or the New Money Portion, the Construction Portion (i.e., that portion of the issue or the New Money Portion which satisfies the 75 percent test stated in the preceding sentence and which finances 100% of the Construction Expenditures) is treated as the Construction Issue and the balance of the issue or the New Money Portion is treated as the Nonconstruction Portion. "Fixed Yield Issue" means an issue of obligations the Yield on which is fixed and determinable on the Issuance Date. "Future Value" means the value of a Payment or Receipt at the end of a period determined using the economic accrual method as the value of that Payment or Receipt when it is paid or received (or treated as paid or received), plus interest assumed to be earned and compounded over the period at a rate equal to the Yield on the Issue, using the same compounding interval and financial conventions that were used to compute that Yield. "Guaranteed Investment Contract" means any Nonpurpose Investment that has specifically negotiated withdrawal or retirement provisions and a specifically negotiated interest rate and any agreement to supply investments on .two or more future dates ~., a forward supply contract). "Multipurpose Issue" means an issue that consists of a Refunding Portion and aNew Money Portion. "Payment" means payments actually or constructively made to acquire Nonpurpose Investments, as specified in Regulations §1.148-3(d)(1)i) through (v). "Qualified Administrative Costs" means the reasonable, direct administrative costs, other than carrying costs, of purchasing or selling Nonpurpose Investments such as separately stated brokerage or selling commissions. Qualified Administrative Costs do not include legal and accounting fees, recordkeeping, .custody, and similar costs, general overhead costs and similar indirect costs of the Issuer such as employee salaries and office expenses and costs associated with computing the Rebate Amount. In general, Qualified Administrative Costs are not reasonable unless they are comparable to administrative costs that would be charged for the same investment or Regular Council Meeting -March 2, 2010 -Page 145 of 186 A-1-3 a reasonably comparable investment if acquired with a source of funds other than Gross Proceeds of Tax-Exempt Obligations. "Reasonable Retainage" means an amount, not to exceed 5% of the Net Sale Proceeds of the Issue, that is retained for reasonable business purposes relating to the property financed with Proceeds of the Issue. For example, Reasonable Retainage may include a retention to ensure or promote compliance with a construction contract in circumstances in which the retained amount is not yet payable, or in which the Issuer reasonably determines that a dispute exists regarding completion or payment. "Rebate Analyst" means an independent individual, firm or entity experienced in the computation of the Rebate Amount pursuant to Section 148(f) of the Code. "Receipt" means amounts actually or constructively received from Nonpurpose Investments as specified in Regulations §1.148-3(d)(2)(i) through (iii). "Variable Yield Issue" means any issue that is not a Fixed Yield Issue. "Yield Period" means, in the case of the first Yield Period, the period that commences on the Issuance Date and ends at the close of business on the first Computation Date and, in the case of each succeeding Yield Period, the period that begins immediately after the end of the immediately preceding Yield Period and ends at the close of business on the next succeeding Computation Date. PART II: EXCEPTIONS TO REBATE SECTION 2.01. SPENDING EXCEPTIONS. The rebate requirements with respect to the Issue are deemed to have been satisfied if any one of three spending exceptions (the 6-Month, the 18-Month, or the 2-Year Spending Exception, collectively, the "Spending Exceptions") is satisfied. The Spending Exceptions are each independent exceptions. The Issue need not meet the requirements of any other exception in order to use any one of the three exceptions. For example, a Construction Issue may qualify for the 6-Month Spending Exception or the 18-Month Spending Exception even though the Issuer makes one or more elections under the 2-Year Exception with respect to the Issue. The following rules apply for purposes of all of the Spending Exceptions except as otherwise noted. Refundin Ig sues. The only spending exception available for a Refunding Issue4 is the 6-Month Spending Exception. 4' For purposes of these Instructions, references to "Refunding Issue" include the Refunding Portion of a Multipurpose Issue. Regular Council Meeting -March 2, 2010 -Page 146 of 186 A-1-4 Special Transferred Proceeds Rules. In applying the Spending Exceptions to a Refunding Issue,. unspent Proceeds of the Prior Issue that become Transferred Proceeds of the Refunding Issue are ignored. ff the Prior Issue satisfies one of the rebate Spending Exceptions, the Proceeds of the Prior Issue that are excepted from rebate under that exception are not subject to rebate either as Proceeds of the Prior Issue or as Transferred Proceeds of the Refunding Issue. However, if the .Prior Issue does not satisfy any of the Spending Exceptions and is not otherwise exempt from rebate, the Transferred Proceeds from the Prior Issue will be subject to rebate, even if the Refunding Issue satisfies the 6-Month Spending Exception. The Rebate Amount will be calculated on the Transferred Proceeds on the basis of the Yield of the Prior Issue up to each transfer date and on the basis of the Yield of the Refunding Issue after each transfer date. Application of Spending Exceptions to a Multipurpose Issue. If the Issue is a Multipurpose Issue, the Refunding Portion and the New Money Portion are treated for purposes of the rebate Spending Exceptions as separate issues. Thus, the Refunding Portion is eligible to use only the 6-Month Spending Exception. The New Money Portion is eligible to use any of the three Spending Exceptions. Expenditures for Governmental Purposes of the Issue. Each of the spending exceptions requires that expenditures of Gross Proceeds be for the governmental purposes of the Issue.. These purposes include payment of interest (but not principal) on the Issue. SECTION 2.02. 6-MONTH SPENDING EXCEPTION. The Issue will be treated as satisfying the rebate requirements if all of the Gross Proceeds of the Issue are allocated to expenditures for the governmental purposes of the Issue within the 6-month period beginning on the Issuance Date and the Rebate Amount, if any, with respect to earnings on amounts deposited in a reasonably required reserve or replacement fund or a Bona Fide Debt Service Fund if and to the extent that such Fund is subject to rebate (see footnote 3) is timely paid to the United States. If no bond of the Issue is a Private Activity Bond (other than a Qualified 501(c)(3) Bond) or a tax or revenue anticipation bond, the 6-month period is extended for an additional 6 months if the unexpended Gross Proceeds of the Issue at the end of the 6-month period do not exceed the lesser of 5% of the Proceeds of the Issue or $100,000. For purposes of the 6-Month Spending Exception, Gross Proceeds required to be spent within 6 months do not include amounts in a reasonably required reserve or replacement fund for the Issue or in a Bona Fide Debt Service Fund for the Issue. Regular Council Meeting -March 2, 2010 -Page 147 of 186 A-1°5 SECTION 2.03. 18-MONTH SPENDING EXCEPTION. The Issue (or the New Money Portion if the Issue is a Multipurpose Issue) is treated as satisfying the rebate requirement if the conditions set forth in (A), (B) and (C) are. satisfied. (A) All of the Gross Proceeds of the Issue (excluding amounts in a reasonably required reserve or replacement fund for the Issue or in a Bona Fide Debt Service Fund for the Issue) are allocated to expenditures for the governmental purposes of the Issue in accordance with the following schedule, measured from the Issuance Date: (1) at least 15% within 6 months; (2) at least 60% within 12 months; and (3) 100% within 18 months, subject to the Reasonable Retainage exception described below. (B) The Rebate Amount, if any, with respect to earnings on amounts deposited in a reasonably required reserve or replacement fund or in a Bona Fide Debt Service Fund for the Issue, to the extent such Fund is subject to rebate (see footnote 3), is timely paid to the United States. And, (C) The Gross Proceeds of the Issue qualify for the initial 3-year Temporary Period. If the only unspent Gross Proceeds at the end of the 18th month are Reasonable Retainage, the requirement that 100% of the Gross Proceeds be spent by the end of the 18th month is treated as met if the Reasonable Retainage, and all earnings thereon, are spent for the governmental purposes of the Issue within 30 months of the Issuance Date. For purposes of determining whether the spend-down requirements have been met as of the end of each of the first two spending periods, the amount of Investment Proceeds that the Issuer reasonably expects as of the Issuance Date to earn on the Sale Proceeds and Investment Proceeds of the Issue during the 18-month period are included in Gross Proceeds of the Issue. The final spend-down requirement includes actual Investment Proceeds for the entire 18 months. The 18-Month Spending Exception does not apply to the Issue (or the New Money Portion, as applicable) if any portion of the Issue (or New Money Portion) is treated as meeting the rebate requirement under the 2-Year Spending Exception discussed below. This rule prohibits use of the 18-Month Spending Exception for the Nonconstruction Portion of a Bifurcated Issue. The only Spending Exception available for the Nonconstruction Portion of a Bifurcated Issue is the 6-Month Spending Exception. Regular Council Meeting -March 2, 2010 -Page 148 of 186 A-1-6 SECTION 2.04. 2-YEAR SPENDING EXCEPTION FOR CERTAIN CONSTRUCTION ISSUES. (A) In eg neral. A Construction Issue no bond of which is a Private Activity Bond (other than a Qualified 501(c)(3) Bond or a Bond that finances property to be owned by a Governmental Unit or a 501(c)(3) Organization) is treated as satisfying the rebate requirement if the Available Construction Proceeds of the Issue are allocated to expenditures for the governmental purposes of the Issue in accordance withthe following schedule, measured from the Issuance Date: (1) at least 10% within 6 months; (2) at least 45% within 1 year; (3) at least 75% within 18 months; and (4) 100% within 2 years, subject to the Reasonable Retainage .exception described below. Amounts in a Bona Fide Debt Service Fund or a reasonably required reserve or replacement fund for the Issue are not treated as Gross Proceeds for purposes of the expenditure requirements. However, unless the Issuer has elected otherwise in the Tax Compliance Certificate, earnings on amounts in a reasonably required reserve or replacement fund for the Issue. are treated as Available Construction Funds during the 2-year period and therefore .must be allocated to expenditures for the governmental purposes of the Issue. If the Issuer elected in the Tax Compliance Certificate to exclude from Available Construction Proceeds the Investment Proceeds or earnings on a reasonably required reserve or replacement fund for the Issue during the 2-year spend-down period, the Rebate Amount, if any, with respect to such Investment Proceeds or earnings from the Issuance Date must be timely paid to the United States. If the election is not made, the Rebate Amount, if any, with respect to such Investment Proceeds or earnings after the earlier of the date construction is substantially completed or 2 years after the Issuance Date must be timely paid to the United States.. The Rebate Amount, if any, with respect to earnings on amounts in a Bona Fide Debt Service Fund must be timely paid to the extent such Fund is subject to the rebate requirements (see footnote 3). The Issue does not fail to satisfy the spending requirement for the fourth spend-down period i.e., 100% within 2 years of the Issuance Date) if the only unspent Available Construction Proceeds are amounts for Reasonable Retainage if such amounts (together with all earnings on such amounts) are allocated to expenditures within 3 years of the Issuance Date. For purposes of determining whether the spend-down requirements have been met as of the end of each of the first 3 spend-down periods, Available Construction Proceeds include the amount of Investment Proceeds or earnings that the Issuer reasonably expected as of the Issuance Date to earn during the 2-year period. For purposes of satisfying the final spend-down requirement, Regular Council Meeting -March 2, 2010 -Page 149 of 186 A-1-7 Available Construction Proceeds include actual Investment Proceeds or earnings from the Issuance Date through the end of the 2-year period. Available Construction Proceeds do not include Gross Proceeds used to pay Issuance Costs financed by the Issue, but do include earnings on such Proceeds. Thus, an expenditure of Gross Proceeds to pay Issuance Costs does not count toward meeting the spend-down requirements, but expenditures of earnings on such Gross Proceeds to pay Issuance Costs do count. (B) 1'h% penalty in lieu of rebate for Construction Issues. If the Issuer elected in the Tax Compliance Certificate for a Construction Issue, or for the Construction Portion of a Bifurcated Issue, to pay a 1'/z% penalty in lieu of the Rebate Amount on Available Construction Proceeds in the event that the Construction Issue fails to satisfy any of the spend-down requirements, the 11/2% penalty is calculated separately for each spend-down period, including each semi-annual period after the end of the fourth spend-down period until all Available Construction Proceeds have been spent. The penalty is equal to 0.015 times the underexpended Proceeds as of the end of the applicable spend-down period. The fact that no arbitrage is in fact earned during such spend-down period is not relevant. The Rebate Amount with respect to Gross Proceeds other than Available Construction Proceeds (ems., amounts in a reasonably required reserve or replacement fund or in a Bona Fide Debt Service Fund, to the extent subject to rebate (see footnote 3)) must be timely paid. PART III: COMPUTATION AND PAYMENT. SECTION 3.01. COMPUTATION AND PAYMENT OF REBATE AMOUNT. If none of the Spending Exceptions described above is satisfied (and if the 1-1/2% penalty election for a Construction Issue or the Construction Portion of a Bifurcated Issue has not been made), then within 45 days after each Computation Date, the Issuer shall compute, or cause to be computed, the Rebate Amount as of such Computation Date. The first Computation Date is a date selected by the Issuer, but shall be not later than 5 years after the Issuance Date. Each subsequent Computation Date shall end 5 years after the previous Computation Date except that, in a Variable Yield Issue, the Issuer may select annual Yield Periods. The final Computation Date shall be the date the last obligation of the Issue matures or is finally discharged. Within 60 days after each Computation Date (except the final Computation Date), the Issuer shall pay to the United States not less than 90% of the Rebate Amount, if any, computed as of such Computation Date. Within 60 days after the final Computation Date, the Issuer shall pay to the United States 100% of the Rebate Amount, if any, computed as of the final Computation Date. In computing the Rebate Amount, a computation credit of $1,000 may be taken into account on the last day of each Bond Year to the Computation Date during which there are unspent Gross Proceeds that are subject to the rebate requirement, and on the final maturity date. If the operative documents pertaining to the Issue establish a Rebate Fund and require the computation of the Rebate Amount at the end of each Bond Year, the Issuer shall calculate, or cause to be calculated, within 45 days after the end of each Bond Year the Rebate Amount, taking into account the computation credit of $1,000 for each Bond Year. Within 50 days after the end of Regular Council Meeting -March 2, 2010 -Page 150 of 186 A-1-8 each Bond Year, if the Rebate Amount is positive, the Issuer shall deposit in the Rebate Fund such amount as will cause the amount on deposit therein to equal the Rebate Amount, and may withdraw any amount on deposit in the Rebate Fund in excess of the Rebate Amount. Payments of the Rebate Amount to'the Internal Revenue. Service on a Computation Date shall be made first from amounts on deposit in the Rebate Fund and second from other amounts specified in the operative documents. Each payment of the Rebate Amount or portion thereof shall be payable to the Internal Revenue Service and shall be made to the Internal Revenue Service Center, Ogden, UT 84201 by certified mail. Each. payment shall be accompanied by Internal Revenue Service Form 8038-T and any other form or forms required to be submitted with such remittance. SECTION 3.02. BOOKS AND RECORDS. (A) The Issuer or Trustee, as applicable, shall keep proper books of record and accounts containing complete and. correct entries of all transactions relating to the receipt, investment, disbursement, allocation and application of the Gross Proceeds of the Issue. Such records shall specify the account or fund to which each Nonpurpose Investment (or portion. thereof) held by the Issuer or Trustee is to be allocated and shall set forth as to each Nonpurpose Investment (1) its purchase price, (2) identifying information, including par amount, interest rate, and payments dates, (3) the amount received at maturity or its sales price, as the case may be, including accrued interest, (4) the amounts and dates of any payments made with respect thereto, and (5) the dates of acquisition and disposition or maturity. The Issuer, Trustee, or Rebate Analyst, as applicable, shall retain the records of all calculations and payments of the Rebate Amount until six years after the retirement of the last obligation that is a part of the Issue. SECTION 3.03. FAIR MARKET VALUE. No Nonpurpose Investment shall be acquired for an amount in excess of its fair market value. No Nonpurpose Investment shall be sold or otherwise disposed of for an amount less than its fair market value. The fair market value of any Nonpurpose Investment shall be the price at which a willing buyer would purchase the Nonpurpose Investment from a willing seller in anarms-length transaction. Fair market value generally is determined on the date on which a contract. to purchase or sell the Nonpurpose Investment becomes binding i.e., the trade date rather than the settlement date). Except as otherwise provided in this Section, a Nonpurpose Investment that is not of a type traded on an established securities market .(within the meaning of Section 1273 of the Code) is rebuttably presumed to be acquired or disposed of for a price that is not equal to its fair market value. (A) Obli ag tions purchased directly from the Treasury. The fair market value of a United States Treasury obligation that is purchased directly from the United States Treasury is its purchase price. Regular Council Meeting -March 2, 2010 -Page 151 of 186 A-1-9 (B) Safe harbor for Guaranteed Investment Contracts. The purchase price of a Guaranteed Investment Contract shall be treated as its fair market value on the purchase date if all the following conditions are met: (1) .The Issuer or broker makes a bona fide solicitation for a specified Guaranteed Investment Contract and receives at least three bona fide bids from reasonably competitive providers (of Guaranteed Investment Contracts) that have no material financial interest in the Issue. (2) The Issuer purchases the highest-yielding Guaranteed Investment Contract for which a qualifying bid is made- (determined net of broker's fees); (3) The Yield on the Guaranteed Investment Contract (determined net of broker's fees) is not less than the Yield then available from the provider on reasonably comparable Guaranteed Investment Contracts, if any, offered to other persons from a source of funds other than Gross Proceeds of Tax-Exempt Obligations; (4) The determination of the terms of the Guaranteed Investment Contract takes into account as a significant factor the Issuer's reasonably expected drawdown schedule for the amounts to be invested, exclusive of amounts deposited in a Bona Fide Debt Service Fund and a reasonably required reserve or replacement fund; (5) The terms of the Guaranteed Investment Contract, including collateral security requirements, are reasonable; and (6) The obligor on the Guaranteed Investment Contract certifies the administrative costs that it is paying (or expects to pay) to third parties in connection with the Guaranteed Investment Contract. (C) Safe harbor for certificates of deposit. The purchase price of a certificate of deposit shall be treated as its fair market value on the purchase date if all of the following requirements are met: (1) The certificate of deposit has a fixed interest rate, a fixed payment schedule, and a substantial penalty for early withdrawal; and (2) The Yield on the certificate of deposit is not less than (a) the Yield on reasonably comparable direct obligations of the United States, or (b) the highest Yield that is published or posted by the provider to be currently available from the provider on reasonably comparable certificates of deposit offered to the public. Certificates evidencing the foregoing requirements should be obtained before purchasing any Guaranteed Investment Contract or certificate of deposit. Regular Council Meeting -March 2, 2010 -Page 152 of 186 A-1-1 O SECTION 3.04. CONSTRUCTIVE SALE/PURCHASE. {A) Nonpurpose Investments that are held by the Issuer or Trustee as of any Computation Date (or Bond Year if the computations are required to be done annually) shall be treated for purposes of computing the Rebate Amount as of such date as having been sold for their fair market value as of such date. Investment Property which becomes allocated to Gross Proceeds of the Issue on a date after such Investment Property has actually been purchased shall be treated for purposes of the rebate requirements as having been purchased by the Issuer on such date of allocation at its fair market value on such date. (B) For purposes of constructive or deemed sales or purchases of Investment Property (other than Investment Property in the Escrow Fund or that is otherwise not invested for a Temporary Period or is not part of a reasonably required reserve or replacement fund for the Issue) must be valued at its fair market value on the date of constructive or deemed sale or purchase (C) Except as set forth in (B), fixed rate Investment Property that is (1) issued with not more than 2% of original issue discount or original issue premium, (2) issued with original issue premium that is attributable exclusively to reasonable underwriters' compensation or (3) acquired with not more than 2% of market discount or market premium, may be treated as having a fair market value equal to its outstanding stated principal amount, plus accrued interest. Fixed rate Investment Property also may be treated as having a fair market value equal to its present value. SECTION 3.05. ADMINISTRATIVE COSTS. (A) Administrative costs shall not be taken into account in determining the payments for or receipts from a Nonpurpose Investment unless such administrative costs are Qualified Administrative Costs. Thus, administrative costs or expenses paid, directly or indirectly, to purchase, carry, sell, or retire Nonpurpose Investments generally do not increase the Payments for, or reduce the Receipts from, Nonpurpose Investments. (B) Qualified Administrative Costs are taken into account in determining the Payments and Receipts on Nonpurpose Investments and thus increase the Payments for, or decrease the Receipts from, Nonpurpose Investments. In the case of a Guaranteed Investment Contract, a broker's commission or similar fee paid on behalf of either the Issuer or the provider is an administrative cost that is not a Qualified Administrative Cost to the extent that .the present value (computed using the taxable discount rate used by the parties to compute the commission or, if not readily ascertainable, a reasonable taxable discount rate) of the commission, as of the date the contract is purchased, exceeds the present value of annual payments equal to 0.05 percent of the weighted average amount reasonably. expected to be invested each year during the term of such contract. Regular Council Meeting -March 2, 2010 -Page 153 of 186 A-1-11 PART IV: COMPLIANCE AND AMENDMENT SECTION 4.01. COMPLIANCE. The Issuer, Trustee or Rebate Analyst, as applicable, shall take all necessary steps to comply with the requirements of these Instructions in order to ensure that interest on the Issue is excluded from gross income for federal income tax purposes under Section 103(a) of the Code. However, compliance shall not be required in the event and to the extent stated therein the Issuer and the Trustee receive a Bond Counsel's Opinion that either (A) compliance with such requirement is not required to maintain the exclusion from gross income for federal income tax purposes of interest on the Issue, or (B) compliance with some other requirement in lieu of such requirement will comply with Section 148(f) of the Code, in which case compliance with the other requirement specified in the Bond Counsel's Opinion shall constitute compliance with such requirement. SECTION 4.02. LIABILITY. If for any reason any requirement of these Instructions is not complied with, the Issuer and the Trustee, if applicable, shall take all necessary and desirable steps to correct such noncompliance within a reasonable period of time after such noncompliance is discovered or should have been discovered with the exercise of reasonable diligence. The Trustee shall have no duty or responsibility to independently verify any of the Issuer's, or the Rebate Analyst's, calculations with respect to the payments of the Rebate Amount due and owing to the United States. Under no circumstances .whatsoever shall the Trustee be liable to the Issuer, any bondholder or any other person for any inclusion of the interest on the Issue in gross income for federal income tax purposes, or any claims, demands, damages, liabilities, losses, costs or expenses resulting therefrom or in any way. connected therewith, so long as the Trustee acts only in accordance with these Instructions and the operative documents pertaining to the Issue. (End of Attachment A-1) Regular Council Meeting -March 2, 2010 -Page 154 of 186 A-1-12 Form SOJS'G (Rev. November 2000) Department of the Treasury Internal Revenue Service Report Information Return for Tax-Exempt Governmental Obligations - Under Internal Revenue Code section 149(e} OMB No. 1545-0720 - See separate Instructions. Caution: If the issue price is under $100,000, use Form 8038-GC. Amended Return, check here - 1 Issuer's name 2 Issuer's employer identification number Town of Marana TBD 3 Number and street (or P.O. box if mail is not delivered to street address) Room/suite 4 Report number 11555 W. Civic Center Drive N/A 5 City, town, or post office, state, and ZIP code 6 Date of issue Marana, AZ 85653 TBD 7 Name of issue 8 CUSIP number 2010 DW Revolving Fund Loan N/A 9 Name and title of officer or legal representative whom the IRS may call for more information 10 Telephone number of officer or legal representative Erik Montague, Finance Director ( 520 ) 382-1930 T e of Issue (cneck a ncanle box(es) ana enter the Issue price) see Instructions ana attacn scneawe 11 ^ Education 11 12 ^ Health and hospital 12 13 ^ Transportation 13 14 ^ Public safety 14 15 . ^ Environment (ncluding sewage bonds) 15 16 . ^ Housing 16 17 ^ Utilities 17 18 Describe - DW Revolving Fund loan ~ Other 18 $5,250,000 19 20 . If obligations are TANS or RANs, check box - ^ If obligations are BANs, check box - ^ If obligations are in the form of a lease or installment sale, check box - ^ Descri tion of Obli ations. Corn lete for the entire issue for which this form is bein filed. (a) Final maturity date (b) Issue price (c) Stated redemption price at maturity (d) Weighted average maturity (e) Yeld 21 07/01!2030 $5,250,000 $5,250,000 TBD years TBD Uses of Proceeds of Bond Issue (includin underwriters' discount 22 Proceeds used for accrued interest 22 23 Issue price of entire issue (enter amount from line 21 column (b)) 23 $5,250,000 24 , . . Proceeds used for bond issuance costs (including underwriters' discount) 24 25 Proceeds used for credit enhancement 25 26 . Proceeds allocated to reasonably required reserve or replacement fund 26 27 Proceeds used to currently refund prior issues 27 28 Proceeds used to advance refund prior issues 28 29 Total (add lines 24 through 28) . 29 30 Nonrefundin roceeds of the issue subtract line 29 from line 23 and enter amount here . 30 $5,250,000 Descri tion of Refunded Bonds (Com lete this art onl for refundin bonds. 31 32 33 34 Enter the remaining weighted average maturity of the bonds to be currently refunded , - N/A years Enter the remaining weighted average maturity of the bonds to be advance refunded - N/A years Enter the last date on which the refunded bonds will be called . - N/A Enter the dates the refunded bonds were issued - N/A Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) 35 N/A 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (see instructions) 36a. N/A b Enter the final maturity date of the guaranteed investment contract - N/A 37 Pooled financings: a Proceeds of this issue that are to be used to make loens to other governmental units 37a b If this issue is a loan made from the proceeds of another tax-exempt issue, check box - ^ and enter the name of the issuer - and the date of the issue - 38 If the issuer has designated the issue under section 265(b)(3)(B)()(III) (small issuer exception), .check box - ^ 39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box - ^ 40 If the issuer has identified a hedge, check box - ^ Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Sign Here TBD Regular o~tcii~i3~tlF~of~@~ii3lis2a~Rd~e813~~t~~86 Date Erik Montague, Finance Director Type or print name and title For Paperwork Reduction Act Notice, see page 2 of the Instructions. Cat. No. 637735 Form 8038-G (Rev. 11-2000) LOAN AGREEMENT STANDARD TERMS AND CONDITIONS Water Infrastructure Finance Authority of Arizona Regul~~~ti~g -March 2, 2010 -Page 156 of 186 TABLE OF CONTENTS Page Article 1 Covenants of the Local Borrower with Respect to the System and the Project Section 1.1 Operation and Maintenance of System.: .................................................................. 1 Section 1.2 Additions and Modifications .................................................................................... 1 Section 1.3 Disposition of Project and System ........................................................................... 1 Article 2 Additional Covenants of the Local Borrower Section 2.1 Unconditional Obligations ......:................................................................................ 2 Section 2.2 Performance Under Loan Agreement .....................................................:................ 2 Section 2.3 Disclaimer of Warranties and Indemnification ........................................................ 2 Section 2.4 Loan Repayments; Prepayments; Adjustments; Late Charges ................................ 2 Section 2.5 Source of Repayment of Local Borrower's Obligations and Pledge ....................... 3 Section 2.6 Insurance .............................:.................................................................................... 3 Section 2.7 No Liens .............................................:..................................................................... 3 Section 2.8 Disadvantaged Business Enterprise Program ......................................................... 3 Article 3 Representations of Local Borrower Section 3.1 Organization and Authority ............................................:....................................:.. 4 Section 3.2 -Full Disclosure ....................:................................................................................... 4 Section 3.3 Pending Litigation .........................._..................................,.....................,............... 4 Section 3.4 Compliance with Existing Laws and Agreements .................................................. 5 Section 3.5 No Defaults ............................................................................................................. 5 Section 3.6 Governmental Consent ........................................................:................................... 5 Section 3.7 Compliance with Law ............................................................................................. 5 Article 4 Assignment Section 4.1 Assignment and Transfer by Authority ................................................................... 6 Section 4.2 Assignment by Local Borrower ....:.......................................:................................. 6 Article 5 Defaults and Remedies Section 5.1 Events of Default .................................................................................................... 6 Section 5.2 Notice of Default ..................................................................................................... 7 Section 5.3 Remedies on Default ............................................................................................... 7 Section 5.4 Attorney's Fees and Other Expenses ...................................................................... 7 Section 5.5 Application of Moneys ........................................................................................... 7 Section 5.6 No Remedy Exclusive; Waiver; Notice .................................................................. 7 Section 5.7 Retention of Authority's Rights .............................................................................. 8 Section 5.8 Default by the Authority ........................................................:................................ 8 Regul~~e~~~~~~ti~g -March 2, 2010 -Page 157 of 186 i Article 6 Provisions Applicable to Loans Financed by Authority Bonds Section 6.1 General .................................................................................................................... 8 Section 6.2 Tax Covenants ........................................................................................................ 9 Section 6.3 Third Party Beneficiaries ........................................................................................ 9 Section 6.4 Additional Documents Relating to Authority Bonds .............................................. 8 Section 6.5 Disclosure Regarding Authority Bonds .................................................................. 9 Section 6.6 Assignment and Transfer by Authority to Trustee ............................................... 10 Section 6.7 Conditions to Assignment by Local Borrower ..................................................... 10 Section 6.8 Sale or Other Disposition of Project or System .................................................... 11 Section 6.9 Deficiencies Under Bond Documents Caused by Failure to Make Loan Repayment ............................................................................................................ 11 Section 6.10 Indemnification ..................................................................................................... 11 Section 6.11 Compliance with Master Trust Indenture ............................................................. 11 Section 6.12 Provisions Relating to Default .............................................................................. 11 Section 6.13 Tax Compliance Certificate .................................................................................. 11 Article 7 Miscellaneous Section 7.1 Binding Effect ....................................................................................................... 12 Section 7.2 Severability ........................................................................................................... 12 Section 7.3 Amendments, Supplements and Modifications .................................................... 12 Section 7.4 Execution in Counterparts ..................................................................................... 12 Section 7.5 ............................ Applicable Law ......................................................................... 12 Section 7.6 Captions ................................................................................................................ 12 Section 7.7 Further Assurances ...................................................:............................................ 12 Section 7.8 Arbitration ............................................................................................................. 12 Section 7.9 Notice Regarding A.R.S. § 38-511 ....................................................................... 12 Section 7.10 E-Verify Compliance A.R.S. § 23-214 ................................................................. 12 Article 8 Definitions Section 8.1 Definitions ................... Section 8.2 Rules of Interpretation Article 9 List of Federal Laws and Authorities 133 166 Regul~~e~ti~g -March 2, 2010 -Page 158 of 186 11 This document sets forth Standard Terms and Conditions applicable to the Loan made by the WATER INFRASTRUCTURE FINANCE AUTHORITY OF ARIZONA (the "Authority") to the Local Borrower. These Standard Terms and Conditions are a part of the Loan Agreement to which this document is attached. Certain terms used herein are defined in Article 8. Article 1 Covenants of the Local Borrower Relating to the System and the Project. Section 1.1 Operation and Maintenance of System. The Local Borrower covenants and agrees that it shall, in accordance with prudent utility practice, (a) at all times operate the properties of the System and any business in connection therewith in an efficient manner, (b) maintain the System in good repair, working order and operating condition, and (c) from time to time make all necessary and proper repairs, renewals, replacements, additions, betterments and improvements with respect to the System so that at all times the operations carved on in connection therewith shall be properly and advantageously conducted from revenues of the System or, if the Local Borrower so elects, from any other source of funds lawfully available. Section 1.2 Additions and Modifications. The Local Borrower may make any additions, renewals, replacements, modifications or improvements to the System which it deems desirable and which do not materially reduce the operational integrity of any part of the System. All such renewals, replacements, additions, modifications and improvements shall become a part of the System. Section 1.3 Disposition of Proiect and System. (a) The Local Borrower shall not sell, lease, abandon or otherwise dispose of all or substantially all or any substantial portion of the Project or the System except upon compliance with the provisions of this Section; provided, however that the requirements of this Section shall not apply to transactions which are capital leases within the meaning of generally accepted accounting principles to finance expansion or improvement of the System and under which the Local Borrower maintains a purchaser's interest or other beneficial ownership, use, possession and control of the System so long as no default exists. (b) The Local Borrower may sell, lease, abandon or otherwise dispose of all or substantially all or any substantial portion of the Project or the System if the Local Borrower shall give at least ninety (90) days' prior written notice to the Authority of the proposed transaction, and the Authority gives its written consent which shall not be unreasonably withheld. The Local Borrower understands that the Authority, in determining whether or not to give its consent, must determine that the proposed transaction will not adversely affect the Authority's ability to meet its duties, covenants, obligations and agreements or conditions of any grant received by the Authority or the State from the United States of America, which is related to the Capital Grant Facility or any capitalization grants received by the Authority or the State under the Federal Water Pollution Control Act, as amended, and the Federal Safe Drinking Water Act, as amended. (c) Notwithstanding the provisions of subsection (b) above, the Local Borrower may sell, lease or otherwise dispose of, any of the property comprising part of the System without prior notice to or the consent of the Authority, other than the Project, in either of the following circumstances: (i) If the Local Borrower determines that such property is not necessary, useful or profitable to the operation of the System; or (ii) if the value of such property sold, leased or otherwise disposed of in any one year is equal to not more than 5% of the value of the. fixed assets of the System. Section 1.4 Cost of Proiect. The Local Borrower certifies that the estimated Eligible Project Costs as listed in Section 1 of Exhibit B is areasonable and accurate estimation of the Eligible Project Costs and, upon the direction of the Authority the Local Borrower will supply the Authority with a certificate from its engineer stating that such estimated Eligible Project Costs is a reasonable and accurate estimation. Regul~~~t~~~~~ti~g -March 2, 2010 -Page 159 of 186 Article 2 Additional Covenants of the Local Borrower Section 2.1 Unconditional Obligations. The obligation of the Local Borrower to make the Loan Repayments and the obligation to perform and observe the other duties, covenants, obligations and agreements on its part described herein are payable solely from the Source of Repayment described in this Loan Agreement and shall be absolute and unconditional and shall not be abated, rebated, set-off, reduced, abrogated, terminated, waived, diminished, postponed or otherwise modified in any manner or to any extent whatsoever, while any payments hereunder remain unpaid, regardless of any contingency, act of God, event or cause whatsoever, including (without limitation) any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, the taking by eminent domain or destruction of or damage to the Project or the System, commercial frustration of the purpose, any change in the laws of the United States of America or of the State or any political subdivision of either or in the rules or regulations of any governmental authority, any failure of the Authority to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with the Project or this Loan Agreement, or any rights of set-off, recoupment, abatement or counterclaim that the Local Borrower might otherwise have against the Authority or any other party or parties; provided, however, that payments under this Loan Agreement shall not constitute a waiver of any such rights. The Local Borrower shall not be obligated to make any payments required to be made by any other local bon owers under separate loan agreements or local borrower bonds. Notwithstanding any other provision of this Section 2.1, or this Loan Agreement, neither the Authority, nor any assignee of the Authority shall have the right or ability to compel the repayment of this Loan Agreement from any source other than the Source of Repayment. Section 2.2 Performance Under Loan Agreement. The Local Borrower covenants and agrees (a) to maintain the System in good repair and operating condition; (b) to cooperate with the Authority to the extent it may lawfully do so, in the observance and performance of the respective duties, covenants, obligations and agreements of such Local Borrower and the Authority under this Loan Agreement; and (c) to comply with the covenants set forth in this Loan Agreement. Section 2.3 Disclaimer of Warranties. The Local Borrower acknowledges and agrees that (i) the Authority makes no warranty or representation, either express or implied as to the value, design, condition, merchantability or fitness for particular purpose or fitness for any use of the System or the Project or any portions thereof or any other warranty or representation with respect thereto; (ii) in no event shall the Authority or its respective agents be liable or responsible for any direct, incidental, indirect, special or consequential damages in connection with or arising out of this Loan Agreement or the Project or the existence, furnishing, functioning or use of the System or the Project; and (iii) are not intended to and shall not be construed as a waiver of any defense or limitation on damages provided for under and pursuant to the laws of the United States or of the State. Section 2.4 Loan Repayments: Preuavments: Adiustments; Late Charges. (a) The Local Borrower may prepay the Loan Repayments in whole or in part at any time without premium upon receipt of the prior written approval of the Authority and only in conformance with such terms and conditions as the Authority, in its sole discretion, may require. The Authority's consent to a prepayment will not be unreasonably withheld. If the Local Borrower makes prepayments of Loan Repayments, the Authority shall adjust principal amounts within the Loan Repayment Schedule contained in Exhibit A pro rata in accordance with guidance from the Local Borrower, provided that the Local Borrower shall not receive credit for prepayments of principal without consent of the Authority. Upon such adjustment, the Authority shall compute the adjusted combined interest and fee amounts to reflect the adjusted principal amounts and shall enter the results in the Loan Repayment Schedule with notice to Local Borrower. (b) Each payment made as a Loan Repayment as described in subsection (a) shall be applied first to the combined interest and fee payment then due and payable on the Loan and then to the principal amount of the Loan. (c) In addition to the other payments required by this Section, the Local Borrower shall pay a late charge for any payment that is received by the Authority later than the tenth (10) day following its due date, in an amount equal to six percent (6%) per annum on such late payment from its due date to the date it is actually paid; provided, however, Regul~~~~~ti~g -March 2, 2010 -Page 160 of 186 2 that the combined interest and fee rate payable on the Loan including such late charge shall not be in excess of the maximum rate permitted by law or any proceedings or resolution authorizing the execution of this Loan Agreement. (d) Upon the final disbursement, if the Loan is less than'the estimated Eligible Project Costs, the amount of each Principal Installment due as set forth in the Loan Repayment Schedule contained in Exhibit A shall be adjusted pro rata. Upon such adjustment, the Authority shall compute the adjusted combined interest and fee amounts to reflect the adjusted principal amounts and shall enter the results in the Loan Repayment Schedule with notice to Local Borrower. Section 2.5 Source of Repayment of Local Borrower's Obligations and Pledge. The Local Borrower irrevocably pledges the Source of Repayment described in this Loan Agreement for the punctual payment of all amounts due under the Loan Agreement. The Authority and the Local Borrower agree that the amounts payable by the Local Borrower under this Loan Agreement are payable solely from the Source of Repayment described in this Loan Agreement and are not payable from any other source whatsoever, unless the Local Borrower chooses to pay, and pays, any amount due hereunder from any other source lawfully available to it. Section 2.6 Insurance. The Local Borrower shall maintain or cause to be maintained in force, insurance policies with responsible insurers or self-insurance programs or through membership in a risk retention pool, including, but not limited to, the Arizona Municipal Risk Retention Pool (in accordance with the Local Borrower's customary practices) providing against risk of direct physical loss, damage or destruction of the Project and the System, at least to the extent that similar insurance is usually carried by utilities constructing, operating and maintaining system facilities of the nature of the System, including liability coverage, all to the extent available at reasonable cost. Section 2.7 No Liens. Except for (i) the debt service on any future bonds, notes or other evidence of indebtedness of the Local Borrower issued or contractual obligations incurred in accordance with this Loan Agreement payable from the funds pledged to the payment of this Loan Agreement which are on parity with the lien and charge on the funds so pledged to pay this Loan Agreement and (ii) as provided in Exhibit D of this Loan Agreement, the debt service on currently outstanding bonds, notes or evidences of indebtedness or contractual obligations of the Local Borrower, if any, payable from the Source of Repayment described in Exhibit D of this Loan Agreement which the Local Borrower has disclosed to the Authority in writing, the funds so pledged as described in this Loan Agreement after the payment of all costs of operating and maintaining the System, are and will be free and clear of any pledge, lien, charge or encumbrance thereon or with respect thereto which are prior to, or of equal rank with, the obligation of the Local Borrower to pay this Loan Agreement, and all corporate or other action on the part of the Local Borrower to that end has been and will be duly and validly taken. Section 2.8 Disadvantaged Business Enterprises. The Local Borrower must (i) Make a good faith effort to award a fair share of work to DBE's who are small business enterprises (SBE's), minority business enterprises (MBE's), and women business enterprise (WBE's). (ii) Require sub-recipients, including prime contractors and subcontractors, to make a good faith effort to award a fair share of work to DBE's. (iii) Require prime contractors to pay subcontractors for satisfactory performance no more than thirty (30) days from the prime contractor's receipt of payment from the Local Borrower.. (iv) Require prime contractors to notify the Local Borrower in writing prior to any termination of a DBE subcontractor for convenience by the prime contractor. (v) Report DBE participation to the Authority. Regul~&~~~gti~g -March 2, 2010 -Page 161 of 186 Article 3 Representations of Local Borrower The Local Borrower represents for the benefit of the Authority that the representations contained in this Loan Agreement are true at the time of execution and delivery of this Loan Agreement and, other than with respect to events outside of Local Borrower's control, will be true in all material respects at all times during the term of this Loan Agreement. Section 3.1 Organization and Authority. (a) The Local Borrower is a Political Subdivision or Indian Tribe as defined in the Authority Act. (b) The Local Borrower has full legal right and authority and has, or will obtain as and when required, all necessary licenses and permits required to acquire, own, operate and maintain the Project and the System, to carry on its activities relating thereto, to execute and deliver this Loan Agreement, to undertake and complete the Project, to pledge the Source of Repayment, and to carry out and consummate all transactions contemplated by this Loan Agreement. The Project is a project which the Local Borrower may undertake pursuant to State law and for which the Local Borrower is authorized by law to borrow money. (c) The proceedings of the Local Borrower's governing body approving this Loan Agreement and authorizing its execution, issuance and delivery on behalf of the Local Borrower, and authorizing the Local Borrower to undertake and complete the Project have been duly and lawfully adopted in accordance with the laws of the State. (d) This Loan Agreement has been duly authorized, executed and delivered by an Authorized Officer of the Local Borrower; and, assuming that the Authority has all the requisite power and authority to authorize, execute and deliver, and has duly authorized, executed and delivered this Loan Agreement, this Loan Agreement constitutes a legal and valid obligation of the Local Borrower enforceable in accordance with its terms, and the information contained under "Description of the Loan" in this Loan Agreement is true and accurate in all material respects. Section 3.2 Full Disclosure. (a) To the best of the Local Borrower's knowledge, there is no fact that the Local Borrower has not disclosed to the Authority in writing that materially adversely affects the properties, activities, prospects or condition (fmancial or otherwise) of the Local Borrower or the System, or the ability of the Local Borrower to make all Loan Repayments due hereunder and otherwise observe and perform its duties, covenants, obligations and agreements under this Loan Agreement. (b) The information relating to the Local Borrower (including without limitation the financial and statistical data contained therein) submitted to the Authority by the Local Borrower in connection with the Authority's approval of the Loan was at the time of the Authority's approval of the Loan and at all times subsequent thereto up to and including the Loan Closing, will be (if necessary by amendment provided by the Local Borrower) true and correct and will not contain an untrue statement of material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading in any adverse respect. To the extent permitted by law, and notwithstanding any other provision of this Loan Agreement, the Local Borrower will indemnify, save and hold harmless the Authority, and each of the Authority's agents, for, from and against any and all claims, damages, liability and court awards including costs, expenses and reasonable attorneys' fees incurred as a result of any omission or misstatement of material fact in the information submitted to the Authority by the Local Borrower in connection with the Authority's approval. of the Loan, as it may have been supplemented and amended by the Local Borrower. Section 3.3 Pending Litigation. There are no proceedings pending, or to the knowledge of the Local Borrower, threatened, against or affecting the Local Borrower, in any court or before any governmental authority or arbitration board or tribunal that, if adversely determined, would materially adversely affect the properties, activities, prospects or condition (financial or otherwise) of the Local Borrower or the System, or the ability of the Local Borrower to make all Loan Repayments and otherwise observe and perform its duties, covenants, obligations and agreements Regul~~e~~it~g -March 2, 2010 -Page 162 of 186 4 under this Loan Agreement that have not been disclosed in writing to the Authority in the Local- Borrower's application for the Loan or otherwise. Section 3.4 Compliance with Existing Laws and Agreements. The authorization, execution and delivery of this Loan Agreement by the Local Borrower, the observance and performance by the Local Borrower of its duties, covenants, obligations and agreements hereunder and the consummation of the transactions provided for in this Loan Agreement, the compliance by the Local Borrower with the provisions of this Loan Agreement and the undertaking and completion of the Project will not result in any breach of any of the terms, conditions or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Local Borrower pursuant to any existing ordinance or resolution, trust agreement, indenture, mortgage, deed of trust, loan agreement or other instrument (other than the lien and charge of this Loan Agreement and any ordinance or resolution or indenture which authorized outstanding obligations of the Local Borrower which are on a parity with this Loan Agreement as to a lien on, or a source. and security for, payment thereon from the source of payment that is pledged to the Loan Repayments) to which the Local Borrower is a party or by which the Local Borrower, the System or any of its property or assets may be bound, nor will such action result in any violation of the provisions of the charter or other document pursuant to which the Local Borrower was established or any laws, ordinances, resolutions, governmental rules, regulations or court orders to which the Local Borrower, the System or its properties or operations are subject. Section 3.5 No Defaults. No event has occurred and no condition exists that, upon authorization, execution and delivery of this Loan Agreement or receipt of the amount of the Loan, would constitute an Event of Default hereunder. The Local Borrower is not in violation of, and has not received notice of any claimed violation of, any term of any agreement or other instrument to which it is a party or by which it maybe bound, which violation would materially adversely affect the properties, activities, prospects or condition (financial or otherwise) of the Local Borrower or the ability of the Local Borrower to make all Loan Repayments or otherwise observe and perform its duties, covenants, obligations and agreements under this Loan Agreement. Section 3.6 Governmental Consent. The Local Borrower has or will have obtained prior to the date of the Loan Closing all permits and approvals required to date by any governmental body or officer (and reasonably expects to receive all permits required in the future by any governmental agency) for the making, observance and performance by the Local Borrower of its duties, obligations and agreements under this Loan Agreement or for the undertaking or completion of the Project and the financing thereof, and the Local Borrower has complied with all applicable provisions of law requiring any notification, declaration, filing or registration with any governmental body or officer in connection with the making, observance and performance by the Local Borrower of its duties, covenants, obligations and agreements under this Loan Agreement or with the undertaking or completion of the Project and the financing thereof; and the Local Borrower has complied with all applicable provisions of law requiring any notification, declaration, filing or registration with any governmental body or officer in connection with the making, observance and performance by the Local Borrower of its duties, covenants, obligations and agreements under this Loan Agreement or with the undertaking or completion of the Project and the financing thereof. No consent, approval or authorization of, or filing, registration or qualification with, any governmental body or officer, other than those already obtained or reasonably expected to be obtained, is required on the part of the Local Borrower as a condition to the authorization, execution and delivery of this Loan Agreement, the undertaking or completion of the Projector the consummation of any transaction herein contemplated. Section 3.7 Compliance with Law. The Local Borrower: (a) is in compliance with all laws, ordinances, governmental rules and regulations to which it is subject and the failure to comply with which would materially adversely affect the ability of the Local Borrower to conduct its activities or undertake or complete the. Project or the condition (financial or otherwise) of the Local Borrower or the System; and (b) has obtained, or will obtain as and when required, all licenses, permits, franchises or other governmental authorizations necessary for the ownership of its property or for the conduct of its activities which, if not obtained, would materially adversely affect the ability of the Local Borrower to undertake or complete the Project or the condition (financial or otherwise) of the Local Bon ower or the System. Regul~~e~~ib~~ti~g -March 2, 2010 -Page 163 of 186 Article 4 Assignment Section 4.1 Assisnment and Transfer by Authority. The Local Borrower hereby approves and consents to any assignment or transfer of this Loan Agreement that the Authority deems to be necessary in connection with the Clean Water Revolving Fund and Drinking Water Revolving Fund programs of the Authority. Section 4.2 Assignment by Local Borrower. This Loan Agreement may not be assigned by the Local Borrower for any reason, unless the following conditions shall be satisfied: (i) the assignee shall be a governmental unit within the meaning of Section 141(c) of the Code or another entity acceptable to the Authority and the assignee shall have expressly assumed in writing the full and faithful observance and performance of the Local Borrower's duties, covenants, .agreements and obligations hereunder; (ii) immediately after such assignment, the assignee shall not be in default in the performance or observance of any duties, covenants, obligations or agreements of the Local Borrower hereunder; and (iii) the Authority shall receive an opinion of counsel to the effect that such assignment will not violate the provisions of any agreement entered into by the Authority with, or condition of any grant received by the Authority from the United States of America relating to the Capital Grant Facility or any capitalization grants received by the Authority or the State under the Federal Water Pollution Control Act and the Federal Safe Drinking Water Act. No assignment shall relieve the Local Borrower from primary liability for any of its obligations under this Loan Agreement and in the event of such assignment, the Local Borrower shall continue to remain primarily liable for the performance and observance of its obligations to be performed and observed under this Loan Agreement. Article 5 Defaults and Remedies Section 5.1 Events of Default. If any of the following events occurs, it is hereby defined as and declared to be and to constitute an "Event of Default": (a) failure by the Local Borrower to pay, or cause to be paid, when due any Loan Repayment; (b) failure by the Local Borrower to make, or cause to be made, any required payments of principal, redemption premium, if any, and interest on any bonds, notes or other obligations of the Local Borrower for borrowed money. (other than the Loan), after giving effect to the applicable grace period, the payments of which are secured by the Source of Repayment described in this Loan Agreement; (c) failure by the Local Borrower to perform any duty, covenant, obligation or agreement on its part to be observed or performed under this Loan Agreement, other than as referred to in paragraphs (a) and (b) of this Section, which failure shall continue for a period of thirty (30) days after written notice, specifying such failure and requesting that it be remedied, is given to the Local Borrower by the Authority, unless the Authority agrees in writing to an extension of such time prior to its expiration, provided, however, that if the failure stated in such notice is correctable but cannot be corrected within the applicable period the Authority may not unreasonably withhold its consent to an extension of such time if corrective action is instituted by the Local Borrower and diligently pursued until the Event of Default is corrected; (d) the institution of any proceeding, with the acquiescence of the Local Borrower, for the purpose of effecting a composition between the Local Borrower and its creditors or for the purpose of adjusting the claims of such creditors, pursuant to any federal or state statute now or hereafter enacted, if the claims of such creditors are payable from the Source of Repayment described in this Loan Agreement; (e) a determination by the Authority that any material representation made by or on behalf of the Local Borrower contained in this Loan Agreement, or in any instrument furnished in compliance with or with reference to this Loan Agreement, is false or misleading in any material respect; and (f) the filing of a petition by or against the Local Borrower under any federal or state bankruptcy or insolvency law or other similar law in effect on the date of this Loan Agreement or thereafter enacted, unless in the case of any such Regul~~~~i~t~g -March 2, 2010 -Page 164 of 186 6 petition filed against the Local Borrower such petition shall be dismissed within thirty (30) days after such filing and such dismissal shall be final and not subject to appeal; or the Local Borrower becoming insolvent or bankrupt or making an assignment .for the benefit of its creditors; or the appointment of a custodian (including, without limitation, a receiver, liquidator or trustee of the Local Borrower or any of its property including the System) by court order, or possession of the Local Borrower or its property or assets is taken if such order remains in effect or such possession continues for more than thirty (30) days. Section 5.2 Notice of Default. The Local Borrower shall give the Authority prompt telephone notice of the occurrence of any Event of Default referred to in Section 5.1 paragraph (c) hereof, and of the occurrence of any other. event or condition that constitutes an Event of Default, at such time as any senior administrative or financial officer of the Local Borrower becomes aware of the existence thereof. Any telephone notice pursuant to this Section shall be confirmed in writing by the end of the next Business Day. Section 5.3 Remedies on DefaWt. (a) Whenever an Event of Default referred to in Section 5.1 hereof shall have occurred and be continuing, the Authority shall have the right to take any action permitted or required pursuant to this Loan Agreement and to take whatever other action at law or in equity as may appear necessary or desirable to collect the amounts then due and thereafter to become due on their scheduled payment dates or to enforce the performance and observance of any duty, covenant, obligation or agreement of the Local Borrower hereunder, including, without limitation, .appointment of a receiver of the System. (b) Nothing in this Loan Agreement shall be construed to affect the Attorney General taking action to enforce this Loan Agreement in accordance with the Authority Act. Section 5.4 Attornev's Fees and Other Exuenses. In the event of a default hereunder by the Local Borrower, the Local Borrower shall on demand and to the extent not prohibited by applicable law pay to the Authority the reasonable fees and expenses of attorneys and other reasonable expenses (including without limitation the reasonably allocated costs of in-house counsel and legal staff) incurred by the Authority in the collection of Loan Repayments or any other sum due hereunder or in the enforcement of performance or observance of any other duties, covenants, obligations. or agreements of the Local Borrower to the extent permitted by law. Section 5.5 Aunlication of Monevs. The parties acknowledge that: (a) all amounts coming due hereunder as Loan Repayments shall be treated as principal and combined interest and fees with respect to the. Loan which amounts are secured by a pledge of the Source of Repayment in accordance with Exhibit D of this Loan Agreement; and (b) amounts coming due under Section 5.4 hereof shall be secured by the Source of Repayment on a basis subordinate to the Loan Repayments, but on a parity with comparable expenses relating to such Outstanding Parity Obligations and Additional Parity Obligations. However, any moneys collected by the Authority pursuant to Section 5.3 in the exercise of remedies with respect to amounts due or to become due hereunder shall be applied: (a) first, to pay any attorney's fees or other fees and expenses owed by the Local Borrower pursuant to Section 5.4 hereof, (b) second, to pay delinquent combined interest fees and late charges on the Loan; (c) third, to pay combined interest and fees then due and payable on the Loan; (d) fourth, to pay delinquent principal on the Loan in order of scheduled maturity; (e) fifth, to pay principal then due and payable on the Loan; and (fj sixth, to pay any other amounts due and payable pursuant to this Loan Agreement. Section 5.6 No Remedv Exclusive; Waiver; Notice. No remedy conferred upon or reserved to the Authority hereunder is intended to be exclusive, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission to exercise any right, remedy or power accruing upon any Event of Default shall impair any such right, remedy or power or shall be construed to be a waiver thereof, but any such right, remedy or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any .remedy reserved to it as described in this Article, it shall not be necessary to give any notice, other than such notice as may be required in this Article. Regul~~~~ib~t~g -March 2, 2010 -Page 165 of 186 ~ Section 5.7 Retention of Authority's Rishts. Notwithstanding any assignment or transfer of this Agreement pursuant to the provisions hereof, or anything else to the contrary contained herein, the Authority shall have the right upon the occurrence of an Event of Default to take any action, including (without limitation) bringing an action against the Local Borrower at law or in equity, as the Authority may, in its discretion, deem necessary to enforce the obligations of the Local Borrower to the Authority. Section 5.8 Default by the Authority. In the event of any default by the Authority in any duty, covenant, agreement or obligation described in this Agreement, the Local Borrower's remedy for such default shall be limited to injunction, special action, action for specific performance or any other available equitable remedy designed to enforce the performance or observance of any duty, covenant, obligation or agreement of the Authority described herein as may be necessary or appropriate. The Authority shall on demand pay to the Local Borrower the reasonable fees and expenses of attorneys and other reasonable expenses in the enforcement of such performance or observance. Article 6 Provisions Applicable to Loans Financed by or Pledged to Secure Authority Bonds Section 6.1 General. The Local Borrower acknowledges that the Authority is entering into this Loan Agreement and agreeing to make the Loan at this time for the benefit of the Local Borrower, and that the Authority may finance the Loan, along with other loans to other local bon-owers, through the issuance of Authority Bonds and may pledge the Loan to secure Authority Bonds. If and for so long as the Authority's source of funds to make disbursements on, or to carry, the Loan represented by this Loan Agreement is, or becomes, the proceeds of Authority Bonds, or this Loan Agreement is assigned by the Authority as security for payment of amounts due or to become due on Authority Bonds, the Local Borrower agrees to cooperate with the Authority with respect to the issuance of Authority Bonds by furnishing and certifying information concerning the Local Borrower, the Project, the System and the Source of Repayment, and by agreeing to reasonable modifications and additions to this Loan Agreement necessary or convenient for the Authority Bond transaction. Without limiting the generality of the foregoing, the Local Borrower agrees that if the Authority at any time determines, in its discretion, that it is necessary in connection with the issuance of Authority Bonds or the maintenance of the Authority's bond program, then the provisions set forth in this Article shall be in effect. Section 6.2 Tax Covenants. (a) General. The Local Borrower acknowledges that, in connection with its state revolving fund programs, the Authority issues its Authority Bonds from time to time to fmance loans and the Authority also pledges certain loans to secure and to serve as the source of payment for the Authority Bonds. As a result, and under the provisions of federal tax law applicable to the Authority Bonds, it is in the Authority's interest for the Loan to qualify and be aTax-Exempt Obligation that is not an AMT Obligation. Therefore, the Local Borrower represents and covenants as follows with respect to the Loan and the Authority Bonds. The Local Borrower covenants that it will not take any action, or fail to take any action, if any such action or failure to take such action would adversely affect the exclusion from gross income of the interest on the Loan or the Authority Bonds under Section 103(a) of the Internal Revenue Code or cause the interest on the Loan or the Authority Bonds to become an AMT Obligation, and in the event of such action or omission, it will, promptly upon having such brought to its attention, take such reasonable actions based upon a bond counsel opinion as may rescind or otherwise negate such action or omission. The Local Borrower will not directly or indirectly use or permit the use of any proceeds of the Loan or any other funds of the Local Borrower or take or omit to take any action that would cause the Loan or the Authority Bonds to be or become "arbitrage bonds" within the meaning of Section 148(a) of the Internal Revenue Code or to fail to meet any other applicable requirement of Sections 103, 141, 148, 149 and 150 of the Internal Revenue Code or cause the interest on the Loan or the Authority Bonds to become an item of tax preference for purposes of the alternative m;nimum tax imposed on individuals and corporations under the Internal Revenue Code. To that end, the Local Borrower will comply with all applicable requirements of Sections 103, 141, 148, 149 and 150 of the Code to the extent applicable to the Loan. (b) Modification Based on Bond Counsel inion. Notwithstanding any provision of this Section, if the Local Borrower provides to the Authority a bond counsel opinion to the effect that any action required under this Section is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of Regul~&~~~ib~gti~g -March 2, 2010 -Page 166 of 186 interest on the Loan or the Authority Bonds pursuant to Section 103(x) of the Internal Revenue Code, the provisions of this Section and the covenants in this Section shall be deemed to be modified to that extent. (c) Bond Counsel Opinion. For purposes of this Article, "bond counsel opinion" means an opinion letter of a firm of attorneys of national reputation experienced in the field of municipal bonds whose opinions are generally accepted by purchasers of municipal bonds, and who is acceptable to the Authority. Section 6.3 Third Party Beneficiaries. The Trustee, the owners from time to time of the Authority Bonds, any Credit Enhancer from time to time of the Authority Bonds and any underwriter of the Authority Bonds are each expressly acknowledged to be third party beneficiaries of this Loan Agreement and each representation, agreement, duty, obligation and provision of this Loan Agreement. Section 6.4 Additional Documents Relatin¢ to Authority Bonds. The Local Borrower will furnish to the Authority and certify to such information and execute and deliver and cause to be executed and delivered such documents as the Authority, the underwriter or other parties to any Authority Bond transaction may reasonably require, including, without limitation: (a) a certificate of an Authorized Officer of the Local Borrower to the effect that the information contained in the Final Official Statement (defined in Section 6.5, paragraph (a)) for the Authority Bonds concerning the Local Borrower is correct in all material respects and is an accurate summary of the information which it purports to summarize, and that nothing has come to the Authorized Officer's attention that would lead the Authorized Officer to believe that the information in the Final Official Statement relating to the Local Borrower contains an .untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and (b) subject to the continuing disclosure requirements of Securities and Exchange Commission Rule 15c2-12 (the "Disclosure Rule"), a continuing disclosure undertaking of the Local Borrower meeting the requirements of the Disclosure Rule , and a statement of the Local Borrower as to whether it has failed to provide any information and notices required by the provisions of previous continuing disclosure undertakings, if any, of the Local Borrower under the Disclosure Rule, and if it has not, describing the circumstances and status of such failure; and (c) an appropriate certificate executed by Authorized Officer of the Local Borrower concerning the reasonable expectations of the Local Borrower as to the use of the proceeds of the Loan and such other matters as may be required on the part of the Local Borrower in order to ensure that the Authority Bonds are and will remain Tax- Exempt Obligations that are not AMT Obligations, and the Local Borrower covenants to comply with the provisions of such certificate; and (d) such other certificates, documents and information, and supplemental opinions of Local Borrower's counsel, as the Authority, the underwriters of the Authority Bonds or other parties to the Authority Bonds transaction may reasonably require and as are necessary to confirm the continued truth and accuracy of information supplied by or on behalf of the Local Borrower. Section 6.5 Disclosure Resardins Authority Bonds. (a) The information, if any, relating to the Local Borrower (including without limitation the financial and statistical data contained therein) which has been furnished by the Local Borrower to be included in, and which is included in, a Preliminary Official Statement of the Authority (the "Preliminary Official Statement"), or a final Official Statement (the "Final Official Statement") of the Authority concerning any Authority Bonds, as of the respective dates of each such document and at all times subsequent thereto up to and including the Bond Closing, will be (if necessary by amendment provided by the Local Borrower) true and correct and will not contain an untrue statement of material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. To the extent permitted by law, and notwithstanding any other provision of this Loan Agreement, the Local Borrower will indemnify, save and hold harmless the Authority and each other local borrower, if any, included in the Final Official Statement, and each of such parties' respective agents, for, from and against any and all claims, damages, liability and court awards including costs, expenses and Regul~~~~gti~g -March 2, 2010 -Page 167 of .186 9 attorneys fees incurred as a result of any omission or misstatement of a material fact in the Local Borrower's information in the Final Official Statement, as it may have been supplemented or amended by the Local Borrower. (b) The Local Borrower agrees that from the date of the Final Official Statement and for a period until not later than 25 days after the date of the Bond Closing if and so long as the offering of the Authority Bonds continues (i) the Local Borrower will furnish such information with respect to itself as the Authority (for itself or at the request of the underwriters of the Authority Bonds) may from time to time reasonably request and (ii) if any event shall occur as a result of which it is necessary, in the opinion of Bond Counsel to the Authority, or counsel for the underwriters of the Authority Bonds, to amend or supplement the information in the Final Official Statement relating to the Local Borrower in order to make such information not misleading in light of the circumstances then existing, the Local Borrower will forthwith prepare, and furnish to the Authority and the underwriters such information relating to the Local Borrower as may be necessary to permit the preparation of an amendment of or supplement to the Final Official Statement (in form and substance satisfactory to the Bond Counsel to the Authority and counsel for the underwriters) which will amend or supplement the Final Official Statement so that it will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances then existing, not misleading. (c) The Local Borrower agrees that if prior to the 25th day following the end of the underwriting period of the Authority Bonds, as defined for purposes of the Disclosure Rule, any event shall occur which causes the representations contained in Section 6.4, paragraph (a) to be false in any material respect, the Local Borrower shall promptly notify the Authority of such development, and if in the opinion of the Authority and the underwriters of the Authority Bonds such development requires the preparation of a supplement or an amendment to the Preliminary Official Statement or the Final Official Statement, the Local Borrower agrees to cooperate with the Authority and the underwriters for the Authority Bonds in preparing any such supplement or amendment in a form acceptable to such parties and to pay all reasonable expenses incurred by such parties in connection with the preparation thereof. Section 6.6 Assignment and Transfer by Authority to Trustee. (a) The Local Borrower expressly acknowledges that, other than the right of the Authority to be indemnified by the Local Borrower, all right, title and interest of the Authority in, to and under this Loan Agreement will be assigned to the Trustee as security for the Authority Bonds, as applicable, as provided in the Authority's Master Trust Indenture, and that if any Event of Default shall occur the Trustee, pursuant to the Authority's Master Trust Indenture, shall be entitled to act hereunder in the place and stead of the Authority. The Local Borrower hereby acknowledges the requirements of the Authority's Master Trust Indenture applicable to the Authority Bonds and consents to such assignment and appointment. The Authority shall retain the right to compel or otherwise enforce observance and performance by the Local Borrower of its duties, covenants, obligations and to be indemnified. by the Local Borrower; provided, however, .that in no event shall the Authority or the Trustee have the right to accelerate the payments under this Loan Agreement. (b) The Local Borrower hereby approves and consents to any assignment or transfer of this Loan Agreement that the Authority deems to be necessary in connection with any refunding of the Authority Bonds or otherwise in connection with the Clean Water Revolving Fund and Drinking Water Revolving Fund programs of the Authority. Section 6.7 Conditions to Assignment by Local Borrower. Notwithstanding Section 4.2, this Loan Agreement may not be assigned by the Local Borrower for any reason, unless the following conditions shall be satisfied: (i) the Authority, the Trustee and the Credit Enhancer, if any, of the Authority Bonds shall have approved said assignment in writing; (ii) the assignee shall be a governmental unit within the meaning of Section 141(c) of the Internal Revenue Code or another entity acceptable to the Authority and the assignee shall have expressly assumed in writing the full and faithful observance and performance of the Local Borrower's duties, covenants, agreements and obligations hereunder; (iii) immediately after such assignment, the assignee shall not be in default in the performance or observance of any duties, covenants, obligations or agreements of the Local Bon ower hereunder; (iv) the Authority and the Trustee shall have received an opinion of bond counsel to the effect that such assignment will not adversely affect the exclusion of interest on the Authority Bonds from gross income for purposes of Federal income taxation under Section 103(a) of the Code or make the Authority Bonds or the Loan AMT Obligations; and (v) the Authority and the Trustee shall receive an opinion of counsel to the effect that such assignment will not violate the provisions of the Master Trust Indenture or any agreement entered into by the Authority with, or Regul~~~t~~t~g -March 2, 2010 -Page 168 of 186 10 condition of any grant received by the Authority from, the United States of America relating to the Capital Grant Facility or any capitalization grants received by the Authority or the State under the Federal Water Pollution Control Act and the Federal Safe Drinking Water Act. No assignment shall relieve the Local Borrower from .primary liability for any of its obligations under this Loan Agreement and in the event of such assignment, the Local Borrower shall continue to remain primarily liable for the performance and observance of its obligations to be performed and observed under this Loan Agreement. Section 6.8 Sale or Other Disposition of Project or System. The Local Borrower agrees that it will not sell, lease, abandon or otherwise dispose of all or substantially all or any substantial portion of the Project or the System unless (i) the transferee assumes the Local Borrower's obligations under this Loan Agreement in accordance with Section 6.6, (ii) the. Authority shall by appropriate action determine, in its sole discretion, that such sale, lease, abandonment or other disposition will not adversely affect the Authority's ability to meet its duties, covenants, obligations and agreements under the Bond Documents, and will not adversely affect the eligibility of interest on Authority Bonds then outstanding or which could be issued in the future for exclusion from gross income for purposes of federal income taxation or cause such Authority Bonds to be AMT Obligations, and (iii) the Credit Enhancer, if any, of the Authority Bonds shall have given its prior written consent to such disposition. Section 6.9 Deficiencies Under Bond Documents Caused by Failure to Make Loan Repayment. The Local Borrower acknowledges that payment of the Authority Bonds by the Authority, including payment from moneys drawn by the Trustee from the Bond Reserves or the CWRF Financial Assistance Account and DWRF Financial Assistance Accounts established under the Bond Documents, does not constitute payment of the amounts due under this Loan Agreement. If at any time the amounts on deposit in the Bond Reserves or the CWRF Financial Assistance Account and DWRF Financial Assistance Accounts shall be less than the amounts required by the Bond Documents as the result of any transfer of moneys from the Bond Reserves or the CWRF Financial Assistance Account and DWRF Financial Assistance Accounts which in turn is the result of a failure by the Local Borrower to make any Loan Repayments required hereunder, the Local Borrower agrees to (i) replenish such moneys so transferred, and (ii) replenish any deficiency arising from losses incurred in making such transfer as the result of the liquidation by the Authority of investment securities acquired as an investment of moneys in the Bond Reserves or the CWRF Financial Assistance Account and DWRF Financial Assistance Accounts, by making payments to the Authority in equal monthly installments for the lesser of six (6) months or the remaining term of the Loan at a combined interest and fee rate to be determined by the Authority necessary to make up any loss caused by such deficiency, provided that the combined interest and fee rate payable on the Loan including such make-up combined interest and fees shall not exceed the maximum rate permitted by the Authorizing Proceedings which authorized this Loan Agreement. Section 6.10 Indemnification. To the extent permitted by law, the Local Borrower shall indemnify, save and hold harmless the Authority against any and all claims, damages, liability and court awards including costs, expenses and attorney fees to the extent incurred as a result of any gross negligence or willful misconduct by the Local Borrower, or its employees, agents or subcontractors pursuant to the terms of this Loan Agreement. Section 6.11 Compliance with Master Trust Indenture. The Local Borrower covenants and agrees to take such action as it may lawfully take and as the Authority shall reasonably request. so as to enable the Authority to observe and comply with, all duties, covenants, obligations and agreements contained in the Master Trust Indenture insofar as such duties, covenants, obligations and agreements relate to the obligations of the Local Borrower under this Loan Agreement. Section 6.12 Provisions Relatin¢ to Default. (a) Any notice or information which the Local Borrower is to give to the Authority pursuant to the provisions of Article 5 shall also be given by the Local Borrower to the Trustee and to any Credit Enhancer at the same time. (b) Notwithstanding the provisions of Section 5.3, paragraph (a) and Section 5.7, so long as a Credit Enhancer is not in default of its obligations with respect to its payment guarantee of the Authority Bonds and such guarantee is in effect, the Credit Enhancer shall have the right to direct the exercise of remedies provided for herein and the Trustee and the Authority shall not pursue any remedy except with the prior written consent of the Credit Enhancer. Regul~~~~gt~g -March 2, 2010 -Page 169 of 186 l l (c) In the event of a default hereunder by the Local Borrower, the Local Borrower shall also pay the expenses of the Trustee and of any Credit Enhancer in the same manner as provided in Section 5.4 with respect to the expenses of the Authority. Section 6.13 Tax Compliance Certificate. If the Authority Bonds are issued and sold on the basis that they are Tax-Exempt Obligations, an Authorized Officer of the Local Borrower shall deliver an appropriate certificate concerning the reasonable expectations of the Local Borrower as to the use of the proceeds of the Loan and such other matters as may be required on the part of the Local Borrower in order to ensure that the Authority Bonds are and will remain Tax-Exempt Obligations that are not AMT Obligations, and the Local Borrower covenants to comply with the provisions of such certificate. Article 7 Miscellaneous Section 7.1 Binding Effect. This Loan Agreement shall inure to the benefit of and shall be binding upon the Authority and the Local Borrower and their respective successors and assigns. Section 7.2 Severability. In the event any provision of this Loan Agreement shall be held illegal, invalid or unenforceable by any Court of competent jurisdiction, such holding shall not invalidate, render unenforceable or otherwise affect any other provision hereof. Section 7.3 Amendments, Supplements and Modifications. This Loan Agreement may not be amended, supplemented or modified without the prior written consent of the Authority and the Local Borrower. Section 7.4 Execution in Counterparts. This Loan Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.5 Applicable Law. This Loan Agreement shall be governed by and construed in accordance with the laws of the State of Arizona, including the Authority Act. Section 7.6 Captions. The captions or headings in this Loan Agreement are for convenience only and shall not in anyway define, limit or describe the scope or intent of any provisions or sections of this Loan Agreement. Section 7.7 Further Assurances. The Local Borrower shall, at the request of the Authority, authorize, execute, acknowledge and deliver such further resolutions, conveyances, transfers, assurances, financing statements and other instruments as may be necessary or desirable for better assuring, conveying, granting, assigning and confu~ming the rights and agreements granted or intended to be granted by this Loan Agreement. Section 7.8 Arbitration. The parties hereto agree to use arbitration to the extent required by Section 12-1518 of the Arizona Revised Statutes. Section 7.9 Notice Regarding A.R.S. $ 38-511. To the extent applicable by provision of law, the parties acknowledge that this Loan Agreement is subject to cancellation pursuant to A.R.S. § 38-511, the provisions of which are hereby incorporated herein. Section 7.10 E-Verify Compliance A.R.S. ~ 23-214. The Local Borrower warrants to the Authority that it is registered with and is participating in the employment verification pilot program as jointly administered by the United States department of homeland security and the social security administration or any of its successor programs (the "E-Verify Program") and that the proof submitted to the Authority of that registration and participation is true and correct. The Local Borrower agrees that it will remain registered with and will participate in the E-Verify Program until the Loan is fully paid. If the Authority determines that the Local Borrower is not so registered and participating, the Authority will notify the Local Borrower by certified mail of the determination of noncompliance and the Local Borrower's right to appeal the determination. On a final determination of noncompliance, the Local Borrower shall repay all monies received as an economic development incentive (within Regul~~~t~~ti~g -March 2, 2010 -Page 170 of 186 12 the meaning of Arizona Revised Statutes Section 23-214) to the Authority within thirty days of the final determination. Article 8 Definitions Section 8.1 Definitions. The following terms as used in this Loan Agreement shall, unless the context clearly requires otherwise, have the following meaning: "AMT Obligation" means aTax-Exempt Obligation the interest on which is an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations under the Internal Revenue Code. `Annual Loan Review Form" means the loan compliance questionnaire circulated by the Authority to all borrowers as part of the Authority's annual loan portfolio review. `Authority" means. the Water Infrastructure Finance Authority of Arizona, a body corporate and politic of the State of Arizona duly created and validly existing under and by virtue of the Authority Act. `Authority AcP' means Title 49, Chapter 8 (Section 44-1201 et ~.) of the Arizona Revised Statutes ("A.R.S."). `Authority Bonds" means any bonds of the Authority issued to finance the State's revolving fund established pursuant to the Water Pollution Control Act, as amended, and the Safe Drinking Water Act, as amended. `Authorized Officer" means, (i) with respect to the Local Borrower, the person whose name is set forth in this Loan Agreement or such other person or persons authorized by the Local Borrower to act as an authorized officer of the Local Borrower to perform any act or execute any document relating to the Loan or this Loan Agreement whose name is famished in writing to the Authority and the Trustee; and (ii) with respect to the Authority, the Chairman, Vice Chairman, Executive Director, or any other person or persons designated by the Board to act on behalf of the Authority with respect to this Loan Agreement; the designation of such person or persons shall be evidenced by a written certificate containing a specimen signature of such person or persons and signed on behalf of the Authority by its Chairman or Vice Chairman. "Bond Closing" means the date of initial delivery of and payment for the Authority Bonds. "Bond Documents" means and includes the Master Trust Indenture, any supplemental indenture and any comparable or related document pursuant to which the Authority Bonds are issued, and all further amendments and supplements thereto adopted in accordance with the provisions thereof. "Bond Reserves" means reserves established by the Bond Documents for the Authority Bonds to secure timely payment of amounts due on the Authority Bonds even if one or more local borrowers do not make timely payments on their loans. "Business Day" means any day other than a Saturday, Sunday or legal holiday or a day on which banking institutions, in the city in which the designated office of the Authority (being Phoenix, Arizona) is located, are closed. "Capital Grant Facility" means the contractual arrangement established with the Authority by the United States of America Environmental Protection Agency to make capitalization grant payments pursuant to Title VI of the Federal Water Pollution Control Act, as amended (33 U.S.C. § 125 et sec .) and the Federal Safe Drinking Water Act, as amended (particularly 42 U.S.C. § 300j-12 et sec .). "Clean Water Act" means the Federal Water Pollution Control Act amendments of 1972 (P.L. 92-500; 86 Stat. 816), as amended by the Water Quality Act of 1987 (P.L. 100-4; 101 Stat. 7). Regul~&e~~egt~g -March 2, 2010 -Page 171 of 186 13 "Clean Water Revolving Fund' means the fund established by A.R.S. § 49-1221. "Code" means the Internal Revenue Code of 1986, the Regulations (whether temporary or fmal) under that Code or the statutory predecessor of that Code, and any amendments of, or successor provisions to, the foregoing and any official rulings, announcements, notices, .procedures and judicial determinations regarding any of the foregoing, all as and to the extent applicable. Unless otherwise indicated, reference to a Section includes any applicable successor section or provision and such applicable Regulations, rulings, announcements, notices, procedures and determinations pertinent to that Section. "Combined Interest and Fee Rate" means periodic interest and fee payments made by the Borrower, see Exhibit A to this Loan Agreement. "Construction Period" means the period from the date of the Loan Closing until the date of the final disbursement of proceeds of the Loan pursuant to this Loan Agreement, but in no event later than the third anniversary of the Loan Closing. "Cost" means those costs that are eligible to be funded from draws under the Capital Grant Facility and are reasonable, necessary and allocable to the Project and are permitted by generally accepted government auditing standards to be costs of the Project. "Credit Enhancer" means the entity so designated in the Bond Documents, if any, or any successor thereto, that from time to time has issued and outstanding a municipal bond insurance policy or similar payment guarantee relating to the Authority Bonds. "CWRF Financial Assistance Account" means the account so designated in the Master Trust Indenture to which loans funded by the Clean Water Revolving Fund shall be credited. "Debt Management Fee" means the fee component of the combined. interest and fee payments made by the Borrower, see Exhibit A to this Loan Agreement. "Department" means the Department of Environmental Quality of the State of Arizona. "Drinking Water Facility" has the meaning given that term in the Authority Act, currently: a community water system or anon-profit noncommunity water system as defined in the Federal Safe Drinking Water Act (P.L. 93-523; 88 Stat. 16601; P.L. 95-190; 91 Stat. 1393; P.L. 104-182; 110 Stat. 1613) that is located in the State. The term does not include water systems owned by federal agencies. "Drinking Water Revolving Fund' means the fund established by A.R.S. § 49-1241. "DWRF Financial Assistance Account" means the account so designated in the Master Trust Indenture to which loans funded by the Drinking Water Revolving Fund shall be credited. "Eligible Project Costs" means, whether incurred before or after the date of this Loan Agreement, such portion of the Costs as is disbursed by the Authority for the benefit of the Local Borrower. The Local Borrower and the Authority acknowledge that the actual Eligible Project Costs for the Froject have not been determined as of the effective date of this Loan Agreement.. The final Eligible Project Costs shall be established after all disbursements have been made. "Event of Default" means any occurrence or event specified in Section 5.1 hereof. "Indian Tribe" has the meaning given that term by the Authority Act, currently: any Indian tribe, band, group or community that is recognized by the United States Secretary of the Interior and that exercises governmental authority within the limits of any Indian reservation under the Jurisdiction of the United States government notwithstanding the issuance of any patent and including rights-of-way running through the reservation. Regul~~e~~~t~g -March 2, 2010 -Page 172 of 186 14 "Loan" means (a) during the Construction Period, the commitment to lend to the Local Borrower the Estimated Eligible Project Costs set forth in this Loan Agreement (as it may be amended or revised from time to time), and (b) thereafter, the amount of money equal to the Eligible Project Costs which is actually loaned to the Local Borrower pursuant to this Loan Agreement. "Loan AgreemenP' or `Agreement" means this Loan Agreement, including the Exhibits and these Standard Terms and Conditions. attached to this Loan Agreement, as it may be supplemented, modified or amended from time to time in accordance with the terms hereof. "Loan Closing" means the date of execution and delivery of this Loan Agreement. "Loan Repayment Date" means the payment dates commencing and ending on the dates set forth in this Loan. Agreement. "Loan Repayments" means the payments payable by the Local Borrower pursuant to this Loan Agreement. "Local Borrower" means the Political Subdivision or Indian Tribe that is a party to and is described in the first paragraph of this Loan Agreement. "Master Trust Indenture" means and includes the Master Trust Indenture dated as of August 1, 1999, as supplemented, and any comparable or related document, pursuant to which the Authority issues Authority Bonds. "Political Subdivision" has the meaning given that term by the Authority Act, currently: a county, city, town or special taxing district authorized by law to construct wastewater treatment facilities. "Project" is the project described in Section 2.1 of the Loan Agreement, all or a portion of the Cost of which is financed from the proceeds of the Loan. `Repayment Period" means the period over which the principal amount of the Loan will be repaid which period begins and ends on the dates set forth in this Loan Agreement. "Repayment Principal Amount" means the amount the Authority agrees to loan to the Local Borrower pursuant to this Loan Agreement or such lesser amount of actual Eligible Project Costs as represents the aggregate amount of the Loan actually made pursuant to this Loan Agreement. "Reserve Fund Surety" means a surety bond, insurance policy, letter of credit or similar arrangement representing the irrevocable obligation of the issuer thereof to pay to or at the direction of the Local Borrower an amount up to the Reserve Requirement as set forth in Exhibit A. "Safe Drinking Water Act" means the Federal Safe Drinking Water Aet (P.L. 93-523; 88 Stat. 1660; P.L. 96-190; 91 Stat .1393; P.L. 104-182; 110 Stat. 1613), as amended in 1996. "Source of Repayment" means the "source of repayment" set forth in this Loan Agreement as defined in Exhibit D. "State" means the State of Arizona. "System" means the "System" as defined in Section 2.2 of the_Loan Agreement. "Tax-Exempt Obligation" means any obligation or issue of obligations (including bonds, notes and lease obligations treated for federal income tax purposes as evidences of indebtedness) the interest on which is excluded from gross income for federal income tax purposes within the meaning of Section 150 of the Code, and includes any obligation or any investment treated as a "tax-exempt bond" for the applicable purpose of Section 148 of the Code "Trustee" means the Trustee appointed by the Authority pursuant to the Bond Documents and its successor or successors and any other corporation which may at any time be substituted in its place as Trustee pursuant to the Bond Documents. Regul~~~~&~ti~g -March 2, 2010 -Page 173 of 186 15 Terms not otherwise defined herein shall have the meanings ascribed to them in Exhibit D to the Loan Agreement. Section 8.2 Rules of Interpretation. For all purposes of this Loan Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) Words of one gender include the corresponding words of other genders; words of neuter include both genders; and words in the singular include words in the plural and vice versa. (b) Words indicating persons, parties, or entities (and the like) include firms, associations, partnerships (including limited partnerships), limited liability companies (and the like), corporations, trusts and other legal entities, including public and governmental bodies, as well as natural persons. (c) References to a statute refer to the statute, as amended, and any successor statute, and to all regulations promulgated under or implementing the statute or successor statute, as in effect at the relevant time. (d) References to a governmental or quasi-governmental entity or representatives thereof also refer to an entity that succeeds to the functions of the governmental or quasi-governmental entity and representatives thereof. (e) Headings preceding sections of text and any table of contents are solely for convenience of reference and are not part of this Loan Agreement and are not to affect its meaning, interpretation or effect. (f) Actions permitted under this Loan Agreement may be taken at any time and from time to time in the actor's sole discretion. (g) The word "including" means "including, but not limited to" and the word "include" means "include, among others." (h) The terms "hereby," "hereof," "herein," and "hereunder" (and the like) refer to this Loan Agreement. (i) Indications of time of day mean local time in Phoenix, Arizona. (j) This Loan Agreement shall be governed by and construed in accordance with the applicable law of the State of Arizona, except for its conflict of law rules and except as preempted by federal. Article 9 List of Federal Laws and Authorities By Section 5.4 and Section 5.5 of Exhibit B to the Loan Agreement, the Local Borrower agrees that the Project will comply with applicable provisions of the following federal laws and authorities: Environmental 1. Archaeological and Historical Preservation Act of 1974, PL 93291. 2. Clean Air Act, 42 U.S.C. 7506(c). 3. Clean Water Act, Titles lI,1V, and V, Pub. L. 92-500, as amended. 4. Coastal Bamer Resources Act, Pub. L. 97-348. 5. Coastal Zone Management Act, Pub. L. 92-583, as amended. 6. Endangered Species Act 16 U.S.C. 1531, et seq. 7. Executive Order 11593, Protection and Enhancement of the Cultural Environment. Regul~~e~t~ib~gti~g -March 2, 2010 -Page 174 of 186 16 8. Executive Order 11988, Floodplain Management. 9. Executive Order 11990, Protection of Wetlands. 10. Farmland Protection Policy Act, 7 U.S.C. 4201. et seq. 11. Fish and Wildlife Coordination Act, PL 85-624, as amended. 12. Magnunson-Stevens Fishery Conservation and Management Act, Pub L. 94-265 13. National Historic Preservation Act of 1966, PL 89-665, as amended. 14. Safe Drinking Water Act, section 1424(e), PL 92-523, as amended. 15. Wild and Scenic Rivers Act, PL 90-542, as amended. 16. Environmental Justice, Executive Order 12898. Economic: 1. Demonstration Cities and Metropolitan Development Act of 1966, PL 89-754, as amended. 2. Section 306 of the Clean Air Act and Section 508 of the Clean Water Act, including Executive Order 11738, Administration of the Clean Air Act and the Federal Water Pollution Control Act with Respect to Federal Contracts, Grants, or Loans. Social Le isl,~: 1. Age Discrimination Act, PL 94-135. 2. Civil Rights Act of 1964, PL 88-352, Title VI. 3. Executive Order H 246, Equal Employment Opportunity. 4. Participation by Disadvantaged Business Enterprises in Procurement Under Environmental Protection Agency (EPA) Financial Assistance Agreements . 5. Rehabilitation Act of 1973, PL 93, 112 (including Executive Order 11914 and 11250). 6. Section 13 of PL 92-500; Prohibition against sex discrimination under the Federal Water Pollution Control Act. 7. Section 129 of the Small Business Administration Reauthorization and Amendment Act of 1988, Pub. L. 100-590. 8. The Drug Free Workplace Act Of 1988, Pub. L. 100-690. Miscellaneous Authority: 1. Anti-Lobbying Provision (40 CFR Part 30) and New Restrictions on Lobbying,. Section 319 of Pub. L. 101-121 2. Executive Order 12549 -Debarment and Suspension. 3. Uniform Relocation and Real Property Acquisition Policies Act of 1970, PL 91-646. *~:*** Regul~&e~ti~g -March 2, 2010 -Page 175 of 186 1 ~ ~~~ fi.~ ~ ! r,,... a ....W 11555 W. CIVIC CENTER DRIVE, MARANA, ARIZONA 85653 COUNCII. CHAMBERS, March 2, 2010, 7:00:00 PM To: Mayor and Council Item D 1 From: Steve Huffman ,Intergovernmental Affairs Administrator 5trategie Plan Focus Area: Not Applicable Subject: Legislative/Intergovernmental Report: Discussion/Direction/Action regarding all pending state and federal legislation and report on recent meetings of other legislative bodies Discussion: This item i s scheduled for each regular council. meeting in order to provide an opportunity for discussion of any legislative or regional intergovernmental item that might arise. Periodically, an oral report may be given to supplement the Legislative Bulletins. ATTACHMENTS: Name: Description: Type: D 2010_Legislatye Bulletn_# 6.pdf Legislative Bulletin # 6 Backup Material ^ 2010.Legislatve Bulletn_# 7.pdt Legislative Bulletin # 7 Backup Material Staff Recommendation: Upon the request of Council, staff will be pleased to provide recommendations on specific legislative/intergovernmental issues. Suggested Motion: Mayor and Council's pleasure. Regular Council Meeting -March 2, 2010 -Page 176 of 186 Page 1 of 5 Arizona ~,~~.- Towns Legisiative Bu I l~ti n ISSUE 6 -FEBRUARY 12, 2010 HB 2512 Municipal Taxes; Auditors and Collectors House Bill 2512 municipal taxes; auditors and collectors sponsored by Representative Rick (t+~rphy (R-Glendale), has passed out of the House Ways and Means Committee despite opposition by the League. The bill prohibits cities and towns from using private, third-party entities from performing certain tax administration, auditing and collection functions. Because of severe cutbacks in city budgets and at the Department of Revenue, the League will continue to oppose this bill because cities may want the option of private tax administration. The League appreciates the support of Representatives Steve Farley (aTucson) and Tom Chabin (QFlagstaff) for voting against the bill in committee. HB 2631 State Capitol Restoration Recapture District The League supported HB 2631 in Government Committee this week, which is sponsored by Representative wid Gowan (R -Sierra Vista}. HB 2361 establishes a State Capitol Centennial Restoration Trust Fund, in which counties and municipalities may participate. This bill creates an economic development toot for local governments, which is a step in the right policy direction. Under provisions of the bill, local governments, starting in October 2010, may create an Economic Recapture District to address a public necessity and determine a baseline transaction privilege tax (TPT}. Revenues generated within the district will be divided among three priorities: 1 } revenues 50% above the baseline will be retained by the state, 2) half of the remaining revenues will be issued to the Economic Recapture District, and 3} the other half will be issued to the State Capitol Centennial Restoration Trust Fund. The State Capitol Centennial Restoration Trust Fund wi[l be used strictly for the restoration of the Arizona State Capitol complex and wilt be overseen by the State Capitol and Economic Recapture Oversight Commission (SCEROC}. Economic Recapture Districts will terminate in June 2017. The League will continue to track this bill through the legislative process. Session Update Bill °drop" deadline has officially passed for bath the Senate and the House, however the committee hearing deadline for the Legislature was extended a week to February 2b, 2010. Most committees convened this week with a variety of bills being heard that affect cities and towns. Few floor votes have taken place yet on bills that impact municipalities. As of this publication 1,230 bills have been Regular Council Meeting -March 2, 2010 -Page 177 of 186 Page: 2 of 5 introduced, along with 128 memorials and resolutions. Also, The Maricopa County Board of Supervisors recently chose .replacements for Republican Senators Jim Waring (R-Phoenix) and Pamela Gorman (R-Anthem). Former Sen.. Waring will be .replaced by Ed Bunch and former Sen. Gorman will be replaced by David Braswell The .Board of Supervisors has been considering candidates to fill the seat vacated by Flypresentative Sam Crump (R-Anthem), but have not officially selected a replacement. Sen. Waring, Sen. Garman and Representative Crump have. all vacated their seats in order to run ftrr the Congressional District 3 seat currently held by Congressman John Shadegg, who is retiring from the US House of Representatives. Sixth Special Session: Sine Die Last week the Governor issued a Call for the Sixth Special Session to occur concurrently with the 49th Second Regular Session. The session was intended to pass a sales tax referral to the May ballot, bond against future lottery proceeds and enact additional spending .cuts for the current fiscal year. Following the Call, the Senate took bi-partisan action on the entire budget bill package, which included: • SB 1001 statewide special election • SB 1002 budget reconciliation, appropriations, education • SB 1003 revenue bonds, lease-purchase finance • SB 1004 state lottery, authorization • SB 1005 standard deduction, nonresidents, prorate • SCR 1001 temporary sales tax, repeal The House has opted to take incremental steps on this budget package. Last-week, the Hause approved SB 1001 and SCR 1001, ensuring a May election regarding the temporary sates tax increase. On Monday, the House approved SB 1.004 and SB 1005; on Tuesday, the Hause approved SB 1003; and on Wednesday, the House amended and approved SB 1002. The amendment linked language from HB 2250, the Arizona Jobs Recovery Act sponsored by Speaker FGrk Adams (R-Mesa), to SB 1002 regarding state budget reductions and education rollovers. Qn Thursday, SB 1002 was transmitted back to the Senate, however they did not vote on the amended version of the hilt. Instead both chambers adjourned Sine Die. The rumor at the Capitol is another budget proposal will come before the Legislature within the next two weeks. The League has reviewed .all of the budget proposals for their impact on cities and towns, and found the primary bill of interest is 56 1004, which contains changes to the lottery. The securitization, essentially borrowing against future lottery proceeds, will be directed at the state general fund portion for debt repayment, at least for the next-two years. The lottery banding is to produce $450 million for the current fiscal year. Other lottery distributions are left intact, provided there are funds available after the. debt service has been paid. This currently retains the structure for accounts such as LTAF I and II and Heritage Fund, but only after other obligations have been meta SB1004 also creates a "new" lottery to replace the one currently authorized by voters in 1992. The existing lottery ends in 2012, but the new lottery created in the bill continues until 2036, an additional 25 years. Because SB1004 was passed by a supermajority, the lottery question does not have to go back to the people far a public vote. The new tottery continues the existing beneficiary matrix, but only after sufficient proceeds have been received to pay far the debt service.: Regular Council Meeting -March 2, 2010 -Page 178 cif 188 Page 3 of 5 Eminent Domain (SB 1362 and SB 1365) This week the League opposed twa eminent domain bills in the Senate Judiciary Committee, which are sponsored by Senator Chuck Gray (R-Mesa}. An expert attorney testified on behalf of the League, courtesy of our members. Despite his points on each bill, they both passed of Committee and may advance though the legislative process. ~ 1362 eminent domain, attorney fees, interest outlines conditions in which the court may award reasonable casts and attorney fees, with interest, to the defendant in eminent domain cases. Qur attorney stated that this bill was unnecessary, as the vast majority of condemnation cases settle out of court. Furthermore, the courts already have the authority to allocate costs as they see fit. This bill is framed to incentivize property owners to sue government entities accordingly. ~ 1365 eminent domain, disclosure, violation expands the timeline in which a government entity must notify a property owner the property is subject to condemnation from 20 days to 120 days. Our attorney stated the timeline reference was Eargely about the mere implementation of the statute, not about legislative Intent, and questioned what benefit either party would obtain from the delay. Additional concerns were also expressed about the assessment of special benefits and severance damages, as the benefit from the improvement on the property can no longer be deducted from the amount compensated. HB 2407 municipal sales tax; utilities Representative Frank Antenori (R-Tucson) is the sponsor of HB 2407, which exempts unincorporated residents who are customers of municipal utility services, from municipal excise tax. More importantly, this bill prohibits a municipality from increasing any municipal excise tax unless the nominal rate increase applies equally across all classes of taxpayers subject to the tax, regardless of whether a city or town has adopted the Model City Tax Code. Lastly, this bill requires any increases in municipal excise tax rates paid by a public service corporation to be approved by the Arizona Corporation Commission. HB 2407, even as it will be amended on the House floor, will effectively prohibit city and town councils from raising their sates tax rates on specific classifications. Instead, state taw will mandate that any rate hikes would .have to apply to every sales tax class the city adopts in the Model City Tax Code. For example, if your council decides to raise the rate on the hotel/motel classification (i.e. a "tourist tax"), it would have to raise the rates on every business subject to tax under the Model City Tax Code. This restriction would apply even if the city strikes with the industry to raise the tax for a specific benefit for that industry. This is an affront to our ability to set our own local tax policies. Please contact your Representatives and encourage them to vote NQ on HB2407. THE WEEI~~Y~TLIGHT Representative Cecil Ash (R -Mesa) Born in the city he now represents, Mr. Ash grew up on a cattle ranch in southeastern Arizona. After attending a semester at BYU and a semester at U of A, he served a 27-month mission for his church in France, from 1968 to 1970. Regular Council Meeting -March 2, 2010 -Page 179 of 186 .Page 4 of 5 After his mission, he returned to college and received a Bachelor of Science-degree in Psychology, cum laude from Brigham Young University in 1973. He earned a Juris Doctor degree from ASU in December of 1976. He was engaged in private practice in Mesa for two years, before accepting a position as a legaC advisor to the Director of the Arizona Department of Public Safety in November 1978. In 1983, he returned to private practice in Mesa with .an emphasis in real estate. He held an Arizona real estate broker's license from 1980 to 1993.. In 1985, he purchased the first Arizona franchise for Help-U-Sell Real Estate and operated' as its broker for the next four years. He was part of a family partnership that purchased and developed Viewpoint RV ft Golf Resort, a 334-acre, 2,000-space RV resort in east Mesa. Following the sate of his Help-U-Sell franchise, he accepted a position with the Maricopa County Public Defender`s office from 1990 to 1995, where he engaged in criminal defense work, handling everything from DUIs to first degree murder cases. In 1995, following the death of a brother, Mr. Ash took over management of the family RV and golf resort business, which continued until the resort was sold in 20Q4. With the sale of the family business, he began devoting more time to political issues. He has been a precinct committeeman for the Republican Party since approximately 1994. His wife, Linda, was a delegate and he was an alternate to the Republican National Convention in New York City in 2004. The Ashes had been affiliated with United Families International (UFI) for several years. This is a charity that endeavors to preserve family values in society. In the fall of 2004, UFI requested the Ashes to represent the organization for six months at the United Nations, monitoring language in UN documents and at UN conferences. The Ashes have been married for 35 years and have five children. With four bays, all of whom became Eagle Scouts, he has been involved in the Bay Scouts from. 1.981 until 2001. He served on the Parent Advisory Council of Franklin Junior High School, was a charter member of the Mesa Sunrise Rotary Club and in 1994, a member ofthe Rotary Club's International Exchange Group, and spent six weeks in the Burgundy province of France. His legislative assignments include Vice Chair of the House Judiciary Committee, and membership on the Banking and Insurance; and Public Employees, Retirement and Entitlement Reform Committees. What is your tong range vision for Arizona? The most important objective for the Arizona Legislature is to promote economic policies which rejuvenate existing businesses and invite new baseline businesses and companies to the state. White we desperately need to improve our educational system, .fund state parks and the graduate medical student program, as welE as many other important programs and services, funding for alt activities of state government is dependent upon: a .successful economy which generates the necessary revenue. Ultimately, Arizona needs a diversified economy that provides a stable revenue base far an improved standard of living for us all. Whaf are your short term goals for this session? 1) Ta help to salve the budget crisis as soon as possible; 2) To encourage bi-partisan solutions; 3) To modify the criminal sentencing code where appropriate to reduce the injustices presently in the system and to reduce the cast of incarceration; and 4) To improve our educational system. Regular Council Meeting -March 2, 2010 -Page 180 of 186 Page 5 of 5 If you could guarantee one piece of legislation would passe what would it be? A bill that balances the budget. However, another one of my objectives is to eliminate same of the injustices 1 see in the criminal justice system. I have several bills that wilt address these issues. How can the state government and local governments be better partners? In most any relationship, the most important factor is good communication. I'm optimistic enough to believe that we're alt trying to do what's best for our state. We are all part of a local government as welE as a state government. We may not agree on everything, but we have to understand the needs and motivations of the other side. 1°m confident that once that understanding is reached, we wilt be able to work together to solve our problems. What's the best book you've read recently?Why would you recommend it? I recently read, "Who Reallly Cares: America's Charity Divide, Wha Gives, Who doesn't and Why it Matters," by Arthur C. Brooks. The book is an accumulation of data by Prof. Brooks (of Syracuse University's Maxwell School of Citizenship and Public Affairs}. His research controverts conventional wisdom about conservative selfishness and greed, and liberal generosity. According to the data, religious conservatives from all economic strata are far more likely to give to charity than liberals or secular conservatives.. He concludes that, "Charity is important to our personal prosperity, happiness, health and ability to express ourselves humanely. Furthermore, the policies, politics, and cultural forces that compromise the willingness and ability of people to give charitably induce a personal flaw into citizens that impoverishes them, stunts their opportunities, and has negative repercussions for our communities, our politics, and our nations." These are important concepts for policy makers and lawmakers to be aware of as they consider legislation involving entitlements and other government programs. Thank you for your time. Thank you for the opportunity. Legislative Bulletin is published by the !_eague of Arizona Cities and Towns. Forward your comments or suggestions to leagueCazleague.org. Regular Council Meeting -March 2, 2010 -Page 181 of 186 Page 1 of 5 ISSUE 7 -FEBRUARY 19, 2010 Le~,islati~;~e Bull~ti~ State Shared Revenue There is a rumor around the Capitol that Senator Russell Pearce (RrMesa) will be sponsoring a striker regarding changes to State Shared :Revenue. The League is bracing for action next week, which is the last week of Committee Hearings in the chamber of origin. The League wilt notify its members immediately with updates about this matter. Thank you for staying poised for mare information. Session Update The deadline for committee. hearings for bills in their chamber of origin in both the House and Senate is February 2b, 2010. With most committees meeting this week and the deadline in sight, agendas are quickly being filled. Many bills were heard that have a potential impact an cities and towns. In addition, much more activity was seen on the floor, which- also included bills that will affect cities and towns. Those bills are described in more detail in the following articles. The final tally for bills introduced is 1232 with 153 memorials and resolutions.. Amanda Reeve, a Phoenix resident who is a paralegal with Bryan Cave, LLP and a political activist, was named as the replacement far Representative Sam A~ump (R•Anthem) who resigned late last month in order to run far the U.S. Hawse seat in Arizona's 3rd Congressional District to replace the retiring Rep. John Shadegg. New Tax Notification Obstacles A strike-everything amendment adopted by the House Government Committee this week proposes to put new, conflicting obstacles on cities and counties that alter taxes or fees. House Bill 2257, which is sponsored by Representative Frank Antenori (R-TUC9on}, was amended by Representative David Gowan (F~Sierra Vista} to require cities and counties to put any proposed changes to their tax codes or fees on their websites at least 90 .days before the council takes action. Additionally, cities. and counties must issue a press release to their "normal distribution channels" 90 days before the council can take up any tax or fee changes. While the t_eague isn't apposed to proper notice ar using websites to inform the public, the bill may conflict with existing notice requirements and cause confusion withthe complex calendar governing development impact fees. We hope to take these issues up with Reps. Gowan and Antenori in an effort to promote good government. Impact Fees (Again ) Regular Councif Meeting -March 2, 2010 -Page 182 of 186 Page 2 of House Bill 2249 - municipal development fees; refunds and House Bill 2259 -development fees; proportional share -were pulled from the House Committee of the Whole (COW} Calendar on Thursday after League personnel attended a meeting moderated by the sponsor, Representative Andy Bigt,~ (R-C~1lbert) with representatives of the homebuilders. Representative Biggs has scheduled another stakeholder meeting for next week but has made no commitments regarding the bills after that. White we certainly appreciate Representative Biggs' efforts to address our concerns on these bills, we note that cities. and towns are already in a two-year impact fee rate freeze and are just. beginning to implement the changes that went into effect late last year. We question the wisdom of making even mare changes to the impact fee statutes at this time, especially since the homebuilders' proposal in these two bills are confusing and contradictory. We will update you on the outcome of next week's discussion. .Attack on Eminent Domain Senator Chuck Cray (R -Mesa} is the sponsor of several Senate bills related to eminent domain. Here are the bills and their short titles: . SB1362 -eminent domain; attorney fees; interest • 561363 -eminent domain; governing body; vote • SB1364 -slum clearance . SB1365 -eminent domain; disclosure; violation • SB136b -eminent domain; relocation assistance The last two Senate Judiciary Committees heard SB1362, SB1363 and 561365. 561366 is scheduled for next Monday. Alt of these bills unfairly tilt the balance on eminent domain to the property owners' favor. In 2006, Proposition 207 passed and put significant changes into place an this issue already. In fact many of these bills simply replicate Proposition 207 and in testimony it has been pointed out by League. sponsored experts that these bills are realty unnecessary and redundant to current statute and the State Constitution. Unfortunately the committee members have listened to a few anecdotes and have based their votes on emotional testimony. We will keep you apprised of the future of these bills. Water Charles Under existing statute, municipalities are authorized to provide water and wastewater service, and manage service accounts via an enterprise fund. Municipalities may either contract with the property owner or with the property occupant to coordinate payment for services rendered. House Bill 2450, sponsored by Representative Frank Antenori (R-Tucson), stipulates that municipalities may only require payment from the individual it contracted with for services and may refuse service on delinquent accounts only to the person on the account. In short, this means that a community must provide water services to properties, regardless of its status as a rental property, foreclosure property and so forth. The League is seeking feedback on this matter, to further explore the potential negative consequences it may have on cities and towns. Please contact Stephanie Prybyl with any comments. (sprybylC~azleague. org}. Regular Council Meeting -March 2, 2010 -Page 183 of 186 Page 3 of 5 Temporary Sales Tax Election During the Sixth Special session, the Legislature passed and the Governor enacted Senate Biit 1001,. authorizing a special election regarding a temporary sales tax increase to help reduce the state budget deficit. The election wilt be held on May 18, 2010. Arguments regarding this matter for publication in the Publicity Pamphlet must be submitted to the Secretary of State by Thursday, February 25, 2010. The fee for ballot measure arguments is $1©0 or $75 if the text is submitted electronically. Far information on how to submit a ballot measure argument, click here. Several communities have inquired what will happen if the sales tax does not pass. The mast direct result would be the state's deficit increasing by approximately $943 million far the current fiscal year, and an estimated $968 million in FY 2011-12 and $1 billion in FY 2012-13. The Legislature would then devise the budget for the next fiscal year taking into account the reduced level of revenue. The League is anticipating that if the sales tax does not pass, and the deficit grows, attacks on Urban Revenue Sharing will become more appealing to some legislators. Since the League cannot predict the outcome of the special election, nor what steps will be taken after May 18, 2010, we cannot estimate Revenue Sharing impacts at this time. We understand that communities are typically finalizing their own budget plan in late May/early June and empathize with the uncertainty this situation casts upon planning efforts. The League wilt keep members apprised of any budgetary actions that occur and is happy to respond to any questions or concerns in the meantime. Election Recount Thresholds Currently, state law requires an automatic recount in city elections if 10 or fewer votes separate the candidates: House X11 2342 would require a recount if the margin between candidates is less than or equal to one quarter of one percent of the number of votes cast for both candidates. The. bill is sponsored by Representative Frank Antenari (R -Tucson). The effect of this bill-would be to potentially Increase the number of automatic recounts the City Clerk ar county elections department would have to perform in larger cities. On the other hand, for smaller municipalities the bill would have the opposite effect- there could be fewer recounts. We have heard no reason for the change. The League testified in House Judiciary on Thursday about the effects of this bill, and the committee decided to hold it and see if any compromise could be made by next week. Legislative Day If your city or town would like to meet with your legislators in a comfortable, small group setting, please contact Stephanie Prybyl at the League (sprybylCazleague.org} .about scheduling a Legislative Day. This is a great opportunity to discuss issues unique to your community with your delegation over lunch. The League will .host the meeting and provide lunch -and is also available to assist in contacting your legislators, providing session updates and other information to make your meeting more productive. Regular Council Meeting -March 2, 2010 -Page 184 of 186 Page 4 of 5 THE VlIEFKLY997TLlGHT Senator Debbie McCune Levis (D - P'~oenix) Senator Debbie McCune Davis was born in P,raddack, Pennsylvania; however economic opportunity moved the family to Arizona in 1963. She attended R. E. Simpson in the Alhambra Elementary School District and Orangewood Elementary School in the Washington Elementary School District. During her years at Washington High School she was involved in a variety of activities at both school and church. She became involved in student council during her junior and senior year, graduating in 19b9. She began her higher education at Glendale Community College and graduated from Arizona State University in 1475 with a degree in Sociology. During this time she married and started a family. In 1978,. Debbie was elected to the House of Representatives at the age of 27. She served as Minority Whip from 1982-1994. Today, working as Program Director of the Arizona Partnership far Immunization Debbie is on the ground floor of creating a statewide registry for tracking immunizations of children. She returned to the House of Representatives in 2002 and was elected to the Senate in 2006. Debbie's key legislative priorities include Education, Health Care, Neighborhood Issues and Consumer Issues. She works closely with neighborhood groups to keep neighborhoods resilient and safe. Ensuring schools and universities have the ability to provide an educational opportunity for all Arizonans is also important to Debbie. Debbie and her husband, Glenn Davis, have a blended family of five children and three grandchildren. They continue to .live in centrallwest Phoenix. What is your long range vision for Arizona?What are your short term goals for this session? Arizona is a great place to live and work and I want to keep it that way. It's been a great place to get an education as a stepping stone to future opportunity. We need to maintain our efforts to protect Arizona's assets economically and environmentally, so families can continue to enjoy a healthy and productive lifestyle. My immediate goal is to protect the Arizona we know and love and keep our state on a competitive track. If you could guarantee one piece of legislation would pass; whaf would it be? This session I am more interested in making certain that particular legislation does not became law. I am working vigilantly to make sure that the voters' actions on Proposition 200, Nov. 2008 defeating the payday loan act, are respected. The community coalition that apposed the proposition is actively opposing HB 2161. How can the sate government and Local governments be better partners? I believe that the government closest to the people is most responsive to the needs of citizens. The state should be responsible for the overarching structure. The decision-making process is much more. efficient at the local level. I enjoy the diversity of Arizona and would prefer that local governments prosper. by addressing issues. locally. Regular Council Meeting -March 2, 2010 -Page 185 of 186 Page 5 of 5 What's the best book you've read recently?Why would you recommend it? I recently had occasion to review the .Arizona Constitution and enjoyed putting myself in the shoes of those who created the original document. 1 found wisdom, caution and .optimism in this. living document that set the foundation for the state we live in today. Needless to say, I think my colleagues should read it! Thank you for your time. Thank you. Legislative Bulletin is published by the I_ea~ue of Arizona Cities and Towns. .Forward your comments or sug;estions to leagueC~azteague.org. Regular Council Meeting -March 2, 2010 -Page 186 of 186 r. ~. ~IARANA /~~ S7E'ATEME~TT 4F AGENDA CfJNFLICT 1, .end _ %~~ , dectare a canllict ©n Agenda Item _.~____L ,entitled; ,~~C S~AI.~~.~~,~~~JG1~ /~/~e X For the following reason{s): L ~~~' - ~'~~~erS ~~ ~ x ~~ ~~~ Signature L D Date