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HomeMy WebLinkAbout01/12/2016 Study Session MinutesN of :: % +: frv;.fe'y •.F:. .,: toy 9t MARANA 7 STUDY SESSION MINUTES 115 5 5 W. Civic Center Drive, Mar ana, Arizona 8 5 6 5 3 Council Chambers, January 12, 2016, at or after 5:00 PM Ed Honea, Mayor Jon Post, Vice Mayor David Bowen, Council Member Patti Comerford, Council Member Herb Kai, Council Member Carol McG orray, Council Member Roxanne Ziegler, Council Member STUDY SESSION CALL TO ORDER AND ROLL CALL. Mayor Honea called the meeting to order at 5:28 p.m. Town Clerk Bronson called roll. Council Members Kai and McGorray were excused. Council Member Ziegler arrived at 5:33 p.m. There was a quorum present. PLEDGE OF ALLEGIANCEIINVOCATIONIMOMENT OF SILENCE. Led by Mayor Honea, APPROVAL OF AGENDA. Motion to approve the agenda by Council Mminer Bowen, second by Council Member Comerford. Passed 4 -0. CALL TO TIIE PUBLIC. No speaker cards were presented. DISCUS SIONIDIRECTIONIP0SSIBLE ACTION D I Relating to Administration; presentation, discussion and direction regarding the framework for development of the fiscal year 2016 -2017 budget and its role in the implementation of the Strategic Plan, including potential future annexations and the development of a Neighborhood Investment Plan (Gilbert Davidson and Erik Montague) Mr. Davidson began by noting that this is the Council's opportunity to look at the big picture and it also kicks off the budget process. He noted that it's important to keep in the forefront of any decisions the vision of the town's strategic plan. The strategic plan process started in 2008 January 12, 2016 Study Session Minutes with. the vision being "committed to providing exceptional public service, a climate for economic sustainability and a welcoming environment that makes Marana Your Town for life." He discussed the overriding principles beginning with financial sustainability. Even during the recession, Council and staff worked to make sure the budget was structurally balanced. Quality public service, strategic partnerships within the community, specifically the joint meeting with the Marana Unified School District. The Council over the years has always looked at where investments can be made locally to ensure a safe community and provide a good duality of life before using our resources elsewhere. He highlighted What is currently being addressed in the strategic plan. This information was gathered from each of the departments and compiled into the documents in Council packet of information. The strategic plan was merged with the current status on individual initiatives from staff, which are highlighted in red. The document was broken out by department and then each focus area. In most cases we are making great progress. In others, the work has not started or we have not been able to put the appropriate resources into play yet. He then elaborated on some of the things being done in each of the focus areas. We now have a process to follow up with developers to find out where they are in their plan, especially if they have submitted an application, but we have not heard from them for a while. By itself, it is a small part of our overall business plan, but when you put small pieces together, they add up. officers are re- thinking their roles in how they deliver services by going out of their Way to help citizens. We are doing more to reach out and engage the staff on latest best practices. On the heritage side, all of our signature events have incorporated into them some nostalgia or historic component such as the Cotton Festival. The results have been phenomenal. Regarding recreation, he talked about the new Tangerine Park which will be the first town -owned park on the east side of Iw 10. Staff is working on plans to connect parks to the trail system into the Tortolitas. With every development that comes in, we sit down and talk about the recreation piece of it. Most of the projects in the strategic plan have been started. Some projects are long -term and expensive, so we have tried to break those down into smaller pieces to help them get started. 'There have been no modifications coming from the staff side unless they have been presented by Council. Every department is doing a great job at touching every part of the plan. If during the budget process there is something that needs to be modified, staff will bring that back to Council. Even for items that are very expensive, what we are trying to do is take them in smaller chunks and do something rather than nothing. He used the Land Development Code as an example of taking on a big project and updating it in pieces and in two separate fiscal years. His recommendation is to find unique ways to start a program and get it going rather than say it's too big and do nothing. Council Member Bowen who asked a general question about water relative to the Avra Water transfer of their Central Arizona Project water entitlement as noted in the water section of the Strategic Plan merged document. [ether than negotiating with A.vra, is there any technical reason why this shouldn't go through if all parties are in favor of it or is it an ADWR deal? Would a re- negotiation be problematic for us? Mr. Davidson responded that in terms of the acquisition of those water resources for the town, there is a set process that is prescribed by ADWR. There is a component that allows others to weigh in or object to what we're doing, and he believes that is the phase we are in now. So unless someone objects, it should follow the ADWR sequence and be transferred to the town. It does get complicated when someone makes an objection. This January 12, 2016 Study session Minutes happened to the town before. Please let him know if there are other questions or something comes up that you want more information on. He noted that overall, the strategic plan has been a very positive document and is keeping us on track. Each iteration takes us to the next level, and it is all the little things that we do as staff that add to the overall picture. He then turned the presentation over to Erik Montague who gave a general fund update of the budget outlook with a preliminary snapshot of where we think we'll be for December as he is still waiting for the tax journal for December. When he comes back before council in February, the numbers may have changed slightly. We are about or slightly ahead of where we had hoped to be halfway through the fiscal year. While the focus has been on how we did regarding sales tax for the outlet mall, we only have numbers for October, which was great. That data takes a long time to be transmitted to us. Expenditures are lagging except for personnel, and that's a budget mechanism. However, for the year we are about $2M to the good. Next he discussed the preliminary outlook based on the key assumptions of continued growth in the regional economy. Tucson is growing but not as fast as Maricopa County for various reasons. The key revenue sources to support these assumptions come from sales tax, intergovernmental revenues and licenses, permits and fees. We are anticipating 550 new single family residents and a 3.1 percent population growth with an inflation rate of less than 2 percent. Regarding transaction privilege taxes, generally called sales taxes, he is looking for a modest improvement, one thing he is going to be challenged with is how to project the sales tax numbers for the mall. The mall opened at the busiest time of the year, and we will have to figure out how to normalize that data. Year over year there have been modest improvements in retail of 15.6 percent primarily related to the opening of the mall; restaurants of 6 percent; and up 14 percent for contracting sales tax, mostly related to residential development which has been reasonably consistent. Some of the projections were a result of a change in the classification system in the tax journal. In response to a question on how the bed tax is paid, Mr. Montague clarified for Council that if a hotel has a restaurant attached, what the town pays on bed tax comes only from the hotel and not the restaurant. vice Mayor Post asked if the town rebated any of the sales tax back to the outlet mall. Mr. Montague responded that no portion of contracting sales tax is being rebated, but retail sales tax of 45 percent will be rebated starting this year on a quarterly basis. Mr. Montague went on to note that the preliminary numbers exclude the ' / 2 cent sales tax dedicated to the new police facility. For state share revenues, we are anticipating a modest improvement of just fewer than 3 percent. He noted that previously staff had discussed with Council the possibility of a special census in order to get the Enid- decade number to achieve some additional revenues because state shared revenues are shared per capita of population. We came to find that the League was going to advance legislation and continues to do so. We would have the opportunity to change our population estimates each year instead of waiting for each 5 -year period. We would still have the opportunity to do our own special census should we need to. We are not sure how much revenue we will collect as a result of the legislation, but it could be effective for 2016 -17. Based on the numbers that were provided last May, it is somewhere between $ I M and $1.25M additional dollars that the town would receive. To his knowledge there are already about six or seven cities /towns that have already done the special census. We know that based on the January 12, 2016 Study Session Minutes 3 calculations previously when our populations was about 3 5,000, we now know that we are j ust north of 41,000, so that increase will be positive for us. With respect to permits and fees we are at 48 percent of budget year to date. We budgeted for 550 sin gle family residential permits and ar currently at 262. For the new year, we don't know yet what to budget. For the base budget, we carried over the 550. Finance will work closely with development services, building, planning and utilities to determine where growth will occur and the number of units. We anticipate about a 7 percent growth based on valuation increase. He concluded this portion with a general fund preliminary revenue summary showing ongoing and one -time revenues. Next, he talked about the cash reserves, describing how we are holding nicely at $24.6M. The required reserve is about $11 M, and since we are not in the business of holding reserves but using them appropriately, staff will be looking at projects to use those funds. Mr. D noted that with this kind of money in the bank, we can act very quickly if there is a need in the community. When we discussed funding the extension of the sewer line, funding road improvements or buying land, we have enough money in the bank to even talk about buying something like that. Mrs Montague said that tied to innovation, one of the things we committed to is providing additional information to the public. To that end, we created a dedicated budget page. I �e credited the communications team for helping to craft the page. This will help the public but also employees fin inf ormation online Notifications through subscriptions will also be provided. Mr. Montague then presented the upcoming key dates for budget preparation including tonight's presentation for the adoption of Council goals and objectives. In January and February, departments will be preparing their base budgets, revenue est and any preliminary carryover requests. The department budgets will be reviewed in March and in April the Manager's recommended operating budget will be presented to Council. In May, Council will be presented with the tentative budget for approval with adoption of the final budget in June. Mr. Montague also reported on the town's self - insurance program, which he said was doing very well. When modeling the estimates for next year's budget, Mayor Honea asked whether stores scheduled to cone to the outlet mall are programmed into the revenue figures. Mr. Montague stated that staff has the square footages, but until we have history, we have no idea what new stores will bring in. Based on analyses done by Pollack & Company, on average for the 366K+ square footage, estimates for taxable sales are $375 per square foot per year. We would make the argument in the absence of ~better information, if they bring on another 5,000 - 10,000 square feet, you can make some generalizations. Depending on tinning, we will have to analyze the numbers again per square feet. Discussions ensued regarding other businesses that are under consider or in process Mr. Davidson noted that in terms of tourism, the hotel is critical as are restaurants. If we don't get those kinds of businesses in line or conning down the pipeline, that will have an effect on the revenues from the mall. Mr. Brann gave a quick update on the status of permits for some of the businesses mentioned. Mr. Davidson noted that the Westside Retail between LA Fitness and Cortaro is ready to go. There being no further questions on budget, Mr. Davidson began the discussion on annexation opportunities. lie highlighted the general annexation opportunities. Historically, there has been January 12, 2016 Study Session Minutes interest in the Rillito, and Portland Cement areas, the Bowtie area at Twin Peaks, Canino de Manana, Linda Vista, Pinal Airpark, Red Rock and White Stallion Guest Ranch. The pros and cons of each of the locations were debated at length. There are great opportunities as well as great challenges with infrastructure and the provision of service relative to the cost benefit. one of the issues with Red Rock is that when we updated our General Plan, the City of Eloy weighed in on our process and we agreed on a joint planning area. The town could annex it, but we would have to work with Bloy and vice versa. We have a great working relationship with Pinal County and they would work with us in this area, but the acquisition of the Pinal Airpark could have negative consequences if we are not careful with how it is planned because of the paddles and extension of runways. Mayor Honea noted that he had asked to have this item on the agenda because he believes Marana's growth in going north along the interstate. The upside in the future is big. Some of the discussion centered on acquiring more area versus taking care of the residents who have already made investments to live within the corporate limits. This discussion segued into the last item which is the neighborhood investment program. Mr. Davidson noted that from a cost standpoint, neighborhood reinvestment is daunting regarding the infrastructure. He is proposing that staff approach the issues from different angles. Rather than not dealing with the big ticket items because of cost, he is suggesting things such as putting in small parrs in older neighborhoods as a first step. It will take unique and creative thinking to put this improvement process in place, but as Marana becomes more successful, every neighborhood should reflect that. He is proposing that as each budget year conies around; we look at where we can make investments to correct any structural deficiencies in the Colonia neighborhoods of Honea Heights, Yoem Pueblo, Marana Vista, Marana Estates, Berry Acres, Adonis, Amole Circle and Price Lane. We can also look for partnerships with landowners, and there are grant opportunities to help with this. We will continue to study the areas and what they have or do not have. There needs to be community conversations first. This will involve both CIP and Council approval. Council Member Comerford stated that this fits well with the conversation on annexations — which we need to take care of our residents who are here. '"Vice Mayor Post said it would be a good idea to figure out how to work this into the budget as a line item each year. For every new development we must insist that there is a maintenance and operations component to be used in that area for road maintenance and other things as long as the CFD exists. Mr. Davidson ended his presentation with a brief discussion on things we have talked about in the past that are critical for Marana's long -term future. The town has different types of debt — debt the town has issued for facilities like the municipal complex, road infrastructure such as the Twin Pears interchange, and external debt for CFD's and improvement districts. He is referring to anything the town has issued or backed by the town's sales tax. Having a management plan of buying down debt without bonding puts us in a much better cash position for the longterm. It is an up -front expense but frees up dollars in the long term. Another element to watch is the public safety retirement system which is a financial liability of a little over $7M. It is about Go percent funded, and that needs to get to a fully funded status as quickly as possible. A lengthy discussion ensued on the benefits of funding up as quickly as possible. Referencing the airport and wastewater enterprise funds, the airport is totally supported by the general fund even though it's listed as an enterprise entity. We need to get it fully funded. January 12, 2016 Study Session Minutes Regarding wastewater, the plan is to move toward operating revenues to treat flows and keep then going. The growth in Marana has been somewhat of a challenge because we have to start looking at some type of expansion. Staff is exploring as many options as possible of what that could look like. we have to pay close attention to the costs for this because the numbers have gotten bigger in terms of what it will cost to build a new plant. we are accumulating a cash reserve from impact fees for wastewater. we need to keep doing a health check on the important initiatives such as where we are and what are the assumptions that we may need to tweak to stay on top of these initiatives long term. Next year is the town's 40`" anniversary. There are some things that we could roll out in terns of celebrations to mark that event. one thing is revamping the town's seal and logo. Currently, it doesn't read correctly. This could be a good opportunity to freshen up the seal and logo for our publications. The final issue is the flame Rule Option or Alternative Expenditure Election. This would normally have been presented to the voters in 2017, but we are looking at going one year earlier due to the legislation for a consolidated election schedule. In the past we have done well with this measure, but now we have concerns due to being part of a bigger and more complex ballot. There could be 9 different ballots. Our issues are now on a partisan ballot. Historically, council members have been elected in the Primary and home Rule has always been done in the general. If we put this issue on the Primary ballot, Democrats and Republicans will automatically receive a ballot, but Independents have to choose a ballot in the Primary. They automatically get a ballot for the general. So that will be a complication for this item as almost a third of our registered voters are registered Independents. The major party ballots will look like partisan ballots instead of non - partisan which is what Marana is. So we have the option of a Primary ballot or a general ballot or a special election which we will have to pay for at a cost of $130- $140K. we need to put out a lot of educational materials about how this ballot will look and work. Vice Mayor Post noted that we have been fortunate to have this pass in the past, but maybe we should get some advice as to when to take this to the voters because of all the complications. Mr. Davidson and Mr. Montague weighed in on the problems with the Home Rule option is that the language often looks like a tax increase because of the way we are mandated to present it. Council elections are also at the same time. Ms. Bronson noted that there is now information on the town's website for the upcoming election. Mr. Davidson said that staff would reach out to the League and other jurisdictions to see how they are proceeding. It is critical to get this measure passed because the consequences of it not passing could be devastating. If it doesn't pass, we keep collecting the money but we can't spend it, so based on last year's numbers, our expenditure authority would severely limit our ability to conduct business as we are doing now. It would be two years before we could have another special election to get the Home Rule Option passed. There were no further items to discuss. January 12, 2016 Study Session Minutes EXECUTIVE SESSIONS Pursuant to A.R.S. § 38-431.03, thc'l-'own Council ma vote to g o into executive session, which will not be open to the public, to discuss certain matters. El Executive Session pursuant to A.R.S. §38-431.03 (A)(3), Council ma ask for discussion or consultation for le advice with the Town Attorne concernin an matter listed on this a FUTURE AGENDA ITEMS AWOURNMENT. Upon motion b Council Member Zie second b Vice Ma Post, the meetin was adjourned at 8:04 p.m. Passed 5-0. L SFM At IffN I[WAW I IL I hereb certif that the fore are the true and correct minutes of the stud session/presentation of the Marana Town Council meetin held on Januar 12, 2016. 1 further certif that a q uorum was present. Wr46 P 41e �� 4c e�l � A r o in s o n , Town Clerk v - ) t ; 4 - "Oil /6 l 44 e A 7 Januar 12, 2016 Stud Session Minutes 7