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HomeMy WebLinkAbout09/10/2019 Study Session Meeting MinutesA� MARANA AZ ESTABLISHED 1977 MARANA TOWN COUNCIL STUDY SESSION 11555 W. Civic Center Drive, Marana, Arizona 85653 Council Chambers, September 10, 2019, at or after 6:00 PM Ed Honea, Mayor Jon Post, Vice Mayor David Bowen, Council Member Patti Comerford, Council Member Herb Kai, Council Member John Officer, Council Member Roxanne Ziegler, Council Member SUMMARY MINUTES CALL TO ORDER AND ROLL CALL Mayor Honea called the meeting to order at 6:00 p.m. Town Clerk Cherry Lawson called the roll. All seven council members present constituting a quorum. PLEDGE OF ALLEGIANCE/INVOCATION/MOMENT OF SILENCE: Led by Mayor Honea. APPROVAL OF AGENDA Mayor Honea asked for approval of the agenda. Council Member Ziegler motioned and Vice Mayor Post second the motion to approve the agenda. The motion passed 7-0, unanimously. DISCUS SION/DIRECTION/POSSIBLE ACTION D1 Relating to Finance; presentation, discussion, and possible direction regarding a proposed update to the Town's Investment Policy (Yiannis Kalaitzidis) September 10, 2019 Study Session Meeting Summary Minutes 1 Finance Director Yiannis Kalaitzidis, provided a PowerPoint Presentation overview of the proposed changes to the Town's Investment Policy (PowerPoint Presentation is on file in the Tozun Clerk's Office). He indicated that Luke Snyder and Annette Gastone Investment Advisors with PFM would assist with the presentation. Proposed Policy anges • Investment Policy Update o Modernize language, clarify requirements, and align the policy with A.R.S. and best practices o Last updated February 2000 o Proposed changes enhance the portfolio's diversification and total return o Essential areas covered in proposed policy: ■ Investment philosophy and objectives ■ Investment authority ■ Authorized investments ■ Investment guidelines and compliance ■ Reporting Current Policy • Objectives: Safety, Liquidity & Return • Investments only include: U.S. treasuries & agencies, State LGIP funds • Invests money in all of Town's funds • Town Manager responsible for investment decisions • Investment Policy Recommendations Proposed Policy Objectives: Safety, Liquidity & Return (No Change) Investments include: Match AZ Revised Statues 35-323 Invests money in all of Town's funds, including newly created Self -Insurance Trust funds Finance Director is responsible for program under the direction of the Town Manager Investment Advisor Luke Snyder reviewed the Investment Policy Recommendations stating it is more about updating the policy to be in line with best practices, and that several of the changes being recommended are procedural as provided by GFOA. Most importantly keeping the policy in line with safety liquidity in terms of the objectives. Referring to the PowerPoint slide, the current policy allows for the treasury and federal agencies to allow several additional sectors as Finance Director Yiannis Kalaitzidis had indicated. These sectors we feel will improve the diversification of the portfolio and will likely improve the expected return of the portfolio going forward. The maximum maturity currently is three (3) years on the current policy and they are proposing increasing that limit to five (5) years for the sectors where it is permissible by September 10, 2019 Study Session Meeting Summary Minutes 2 state statute that allows for more flexibility and more diversification in terms of maturities particularly in an environment where rates are likely to move lower. Mr. Snyder explained PowerPoint slide the sector limit in the recommended policy are between 25% and 20 and 50%. If you compare that to state statute on the far left you'll notice that those limits are at 100%. The policy that is being proposed is more restrictive than the state statute and includes additional safeguards and diversification requirements for the town which is in line with what they think is prudent to manage a portfolio like the Town of Marana. In reviewing some of these types of securities it would be allowable that is not currently allowable corporate securities are the primary sector that state statue allows for public entities to invest that they feel will add diversification, and return to the portfolio. There are some risks inherent risks with these securities, including credit risk. In market value risks; however, those risks can be managed. If you combine the corporate securities in the benefit of diversification with the total portfolio it can actually reduce the risk in some ways in the portfolio. They are proposing for the Town's policy that they invest AA or higher. State statute has a set just to pay for the rating but we are proposing to be more conservative with our investments, to limit as much as we can to exposure. In looking at those rating ratings agencies is one component of the analysis, and one thought when investing in corporate securities --it is also important to look beyond the ratings agencies. PFM provides credit analysis where we are looking at these different sectors in the types of securities within the portfolio as another safeguard on Top of those ratings requirements. Risks of Investin in n Corporate Securities • Credit/ Default Risk o Risk that an issuer will be unable to meets its financial obligations • Market Value Risks o Credit spread: risk of financial loss resulting from changes in credit spreads used in the mark -to -market of a fixed income product. o Downgrade: risk that a bond's price will decline due to a downgrade in its credit rating. • Risks can be managed with the appropriate procedures, policies, and limitations in place. Historical Default Rates • Annual Corporate Default Rates by Letter Rating 2006 - 2017 Going Beyond Credit Ratings September 10, 2019 Study Session Meeting Summary Minutes 3 Issuer Analysis • Balance sheet analysis • Earnings: actual and projections • Asset quality and impairments • Corporate governance • Price movement of fixed income and equity securities • Monitor credit default swap levels • Trading volume • Analysts' recommendations Macro Analysis Industry trends Competitive environment Business cycle Regulatory environment Rating agency actions Sovereign credit developments Sector Returns • Historical Sector Annualized Returns from 2015 to 2019 Conclusion • Proposed policy update allows for: o More investment sectors o Enhanced portfolio diversification o Greater level of analysis to manage risk o Potential for greater rate of return o Opportunity to modernize language, clarify requirements, and align the policy with A.R.S. and best practices. Council Member Bowen asked whether the research for the portfolios managed by PFM is performed in house or outsourced. Mr. Snyder replied stating PFM uses a combination by using in house for research as well as hire consultants, and pay for research services like Bloomberg and Credit Analysis. Council Member Bowen asked Mr. Snyder for the length of time that he has been managing funds for municipalities, state agencies and entities. Mr. Snyder stated he had been managing municipal funds since 2010 that he has been with PFM for five years. PFM has been in operation for approximately 40 years. They work with a number of municipalities throughout the state. Council Member Bowen stated in general he is in favor or having other types of securities to... He referenced page 8 in the PowerPoint Presentation asking for clarification between columns A and B, asking whether the line is drawn from the right or left of the column is accurate. Mr. Snyder stated the line provided indicates the state statute requirement. Council Member Ziegler ask why the line was being moved to be more conservative. Mr. Snyder replied stating this is a new sector for the Town to invest in, and believe that it is important to take steps to invest in these sectors so that Finance Director Yiannis Kalaitzidis and his team can become more comfortable with it, as well as to safeguard the portfolio. Council Member Ziegler asked whether there will be a time in the future where the portfolio will be reviewed once again. Mr. Kalaitzidis stated that September 10, 2019 Study Session Meeting Summary Minutes 4 within the policy, there is an item that request a review of the policy itself. This would be a periodic review, as the policy does not specifically state the frequency of the review; it can be reviewed as often as needed. A review would also depend upon the changes within the market as well as what the Town will need for the policy to achieve. Mr. Snyder stated this is something that PFM will recommend a period review of the investment policy, and is something that they would look at within two years at the very least. Mayor Honea commented about the risks of the policy and ask whether the principle and the interest are at risk in these investments, or whether it is just the interest. Mr. Snyder replied stating most of the Town's investments neither of the two are at risk, because they are guaranteed by the government. Mayor Honea stated he was referring to new investments. Mr. Snyder stated both the interest and principle would be at risk with these new investments, depending upon the allocations. Mayor Honea asked whether the amortized investments are spread over a large number of investments in the event one performs poorly and the others does not. Mr. Snyder stated that is exactly how it would work. Corporate securities have performed very well over the last three to five years, and believes that they will continue to perform well. Treasuries, agencies and other types of investment have not performed as well. Mayor Honea stated liquidity is important to the Town as sometimes an emergency event would occur where the Town needs to have access to its funds. He asked whether there is a severe penalty when you have to withdraw cash assets from the fund investment. Mr. Kalaitzidis stated the Town maintains an available cash flow balance that is monitored on a regular basis to ensure availability for the Town's needs. As the Town further moves forward and refines its investments, the Town will continue to monitor that to ensure that it does not happen, or is minimized as much as possible. Mr. Kalaitzidis stated if that should happen in the future, it would very much depend upon market conditions. At times, the investment may cash in may be better priced than we initially purchase, and thus the Town may not lose money. Council Member Ziegler asked for the value of the Town's portfolio as of this day. Mr. Kalaitzidis stated as of June 30, the value is approximately $78 million in cash and investments. D2 Relating to Development; presentation, discussion, and possible direction regarding the Town's subdivision requirements for private, common on-site recreation areas (Jason Angell) Development Director Jason Angell provided a PowerPoint Presentation overview on Private, Common On-site Recreation Areas (PowerPoint Presentation is on file in the Tozvn September 10, 2019 Study Session Meeting Summary Minutes 5 Clerk's Office.) Based on some recent discussions and development activity that the Town has seen as it is in the process of updating our Land Development Code which triggers a review of all of the Town's Codes related to development. One area that they have received much feedback on is related to parks or private recreational space. From those comments and feedback, there is some interest in pursuing a change to the Town's existing Code requirements. The common number that is often heard is the 185 sq. ft. per single-family dwelling unit. Most recently, Council and Town staff attended a tour of communities in the Phoenix area. Though it was not the primary focus of that tour, part of that trip was to look at the different amenities within those communities, and staff did receive feedback from the Council as part of that. Town staff put that all together as we move forward with the baseline research that has been done thus far. Our current code requirement states, that if a development has a 3 rack 3 residential units per acre or greater, and also has 50 dwelling units they are required to provide the recreational space as part of their subdivision. How that calculation is provided is based in three (3) different areas: apartments and condos are 100 square feet per unit townhomes or patio homes are 140 square feet per unit, and most common one is 185 square feet per single family dwelling unit. It is noted in here, he is not sure whether Council has ever utilized this provision in the past as there is the language within our existing code that allows Council to accept a fee in lieu of. Rather than providing the park amenity within a subdivision you may accept a payment in lieu of that park space. There is also language that speaks to limitations. In essence, the Town will not take unsuitable or unusable property to be counted as park space. In that respect, Staff compiled information and did a comparison as to how we relate to the communities around and near Marana. (The comparison table is available on file in the Tozim Clerk's Office.) The table compared the following cities and towns to Marana: Oro Valley, City of Tucson, Sahuarita, Pima County and then we also went a little further out and a Queen Creek, Buckeye, and City of Maricopa. The first five including ourselves use a flat square footage requirement. Queen Creek Buckeye in Maricopa use a percentage based upon the development area. In a couple of them even break it down into is it active recreation space or is it just open space. Staff look at how Marana relate to land development park standards. Do we have parks standards, yes Marana does. Some of these communities do not have park standards. Standards in Park and Recreation Design Manual is something Marana does not have for private recreational spaces. Parks and Recreation Director Jim Conroy and his staff do have design requirements as they refer to for our public spaces, but not for the private spaces within a subdivision. One area of discussion that the Town has received feedback is to allow parks amenities to be incorporated into drainage areas within. space. Marana have them within its community --Council has allowed for those, and the Code is silent on this. Although on the chart Marana has said no, all the other September 10, 2019 Study Session Meeting Summary Minutes 6 communities that staff has looked at do allow for amenities to be located within a drainage area. San Lucas and Gladden Farms has some as well as other parks have amenities within those drainage areas. When a trail is located adjacent to a park Marana requires a connection adjacent to a subdivision and requires a connection into the overall community trail. If you have trails within your subdivision there is no language that states developers are required to connect out to the public trail. Marana's Code does not have that provision. Many times we do, and there are times the developers have already planned for that as they see it as a benefit. When we do 100 lot subdivision how do we compare to the other communities? When you do the flat number, you can see that almost everyone with the exception of the City of Tucson, is more than double what we would get. For 100 lot subdivision, we would get less than 1/2 acre of property for a single family subdivision. Oro Valley will get almost three (3) times as much as Marana, Sahuarita and Pima County will likely get more than double. In looking at calculating the recreational area of square footage, Marana could just adjust our existing numbers. If you want to stay with that practice when we say rather than the 185 sq. ft. for single family, and decide on 300, the Town could make those adjustments. The Town can also look at a sliding scale based upon densities. Rather than amending the Code by zoning district, Council need to keep in mind that many of the developments that are down here are done by a specific plan; the density is what we typically look at. Council could do a range and of a .5 rack to a two (2) rack that has X requirement, 2.1 to 5 has X and so on. You would do a scale based upon densities, and adjust the requirement throughout. Marana could do the percentage of development area. To do this you would take the gross or net area, and have a certain percentage of the overall development which would have to be dedicated towards open space. Then further define that in terms of a certain percentage having to be active open space. Senior Planner Anita McNamara had researched Durham NC of which does a scoring system, they are not the only community. They do an ala carte approach to its park system; whereas they have different criteria, and different scoring that comes with each amenity. One could develop a certain scoring method that says for so many development units, you have to achieve so many points in recreational space. A park bench is going to get you minimal points. However, a pool, a pool house, a fitness facility, or a community facility is going will provide greater points. Therefore, you may be able to reduce the size of acreage that you have to dedicate towards recreational space, but your amenity could be that much more valuable that you provide in a development. Ms. McNamara reached out to Durham, NC and their staff indicated that was one of the things that push them to an ala carte approach. In Durham they were experiencing developers turning over green grass and adding a park bench and would then classify it as a park. September 10, 2019 Study Session Meeting Summary Minutes 7 Fee In -lieu is a common practice that he has experienced in working with other communities, but it is used throughout the nation. Basically as indicated in Marana's Code, a developer can provide a fee at the Council's approval in lieu of having to create that space. Council can then use those funds to improve the park facilities; however, Marana does have a Park Impact Fee. He stated if this is something Council wished to continue or expand, staff would work with Town Attorney Frank Cassidy to ensure impact fees and the fee in -lieu payment would not be in conflict. Regardless of the path Council wish to travel, it is very important to have a design manual for the community. If Marana develops a manual that defines a pocket park, a neighborhood park, and a regional, it would provide the Town a greater position to start from. Those discussions would not need to be had during a Council Meeting. Rather, those can be conducted at a staff level, or at a Planning Commission level. Next step, Mr. Angell ask whether Council would like to move forward with an update to the park requirements. If Council would like to move forward, is there an approach that you would much rather take, or a preference to updating the Code. He provided several examples, asked whether there is any interest in staff exploring them, including a design manual. Staff will take the additional feedback from Council and move forward with this, also to include additional research, provide additional information, and bring back some basic framework to continue this conversation. Once staff has a sense of being on the right path, we will then go out and engage in public dialogue, and speak with Sahba builders to get their feedback. However, staff would seek direction from Council before moving forward. Mayor Honea stated the current system stinks, because this Council set up those ordinances and resolutions. Marana is grossly inadequate in requirements for improved recreational space --whether it be trails or parks for new growth neighborhoods. Specific plans you can work with because they supersede zoning. In a specific plan you can request to have a big park. When you want your plan approved, it does not have to correspond to the Council. Many of the smaller builders are coming in and staff has determined that they meet the minimum requirement for improved amenities, which is grossly inadequate. From the comparisons that were on the bottom of the scale here open space an improved recreational amenities are two (2) completely different items. One of the things that he and Vice Mayor Post have talked about even on the two (2) rack, he wanted something about clustering of housing. Well you may use half the property leave, and left half of it as open space, but that does not constitute park and recreation amenity requirements. Council Member Comerford stated she is surprise Marana has been doing this as long as it has. She commented about the message that needs to go out to local builders if you September 10, 2019 Study Session Meeting Summary Minutes 8 want to develop in Marana, you will have to pay for it. It is time that developers pay for what they get in Marana. Parks, utilities, and streets should not be developed at the expense of taxpayers and residents. Developers will be responsible for those costs. Council Member Bowen inquired about the scoring system used in Durham, NC asking how it works whether it is percentage of gross, net or dedicated to buy down cost by the scoring method by the amount of amenities that are installed. Mr. Angell replied stating he does not have that study at hand; however from memory, it is based upon the number of units generates a point. Council Member Bowen stated he is in full support of Mayor Honea comments related to a tiered system or percentage system, although he does have some concerns related to the percentage based system. He is intrigued about the point system, but believes Council needs additional information as he thinks it may be a better system for Marana. He asked what the design manual would consist of: design amenities, shape of the park etc. Mr. Angell stated it would look at the different types of parks, label them by community, defined parks and set up the types of amenities the town would want as a baseline. Many design manuals that are created covers the gamut of parks. He stated Mr. Conroy and his staff have already begun with its Park Master Plan update, that it would be easy to incorporate a design manual and work with him and his staff to develop it. Council Member Officer stated his likes the percentage based system, with some stipulations that the parks are developed first, no matter the size of the community to be developed. When the parks are created first, the builders will have an idea as to the cost for maintaining the park. Parks need to be maintained. When that does not occur, it affects the neighborhoods, and the HOA's does not maintain the parks. Mayor Honea stated the Town needs to separate open space from improved amenity space. He spoke of the many developments that have been created within the Town, but that open space is not a recreational type facility for families and children. Open space for zoning is one thing, improved amenity space is another. Council Member Ziegler stated she agrees with Council's comments about park space in Marana. She complimented Queen Creek and Chandler for its growth, developed park areas and community space. She stated Council needs to take a tour to Queen Creek and the Chandler areas to see the development that is occurring in those communities. She is unsure whether Council needs to change its ideology as to how it views parks and wondered whether it is the size of the Marana community. She is in support of Town staff creating a design manual for parks in the community. There needs to be some form of standardization to our park systems. Mayor Honea stated the problem that he sees is, the Town started mixing open space with parks. Mr. Angell stated for clarification the Town codes have not been updated for some time. Town staff have gone back to view other developments that the Council has September 10, 2019 Study Session Meeting Summary Minutes 9 approved and through specific plans that have been approved for zoning and negotiated for additional park space, Marana does have other communities that have provided for more than the 185 sq. ft. per unit of space. Though it is not much more than that amount. Out of the two or three developments that staff have reviewed out of a dozen, it would place Marana in line with the rest of the areas. Out of the developments that Council has approved, there had been a slight increase of 200 or 210 sq. ft. of open space, but not more than that. Some of the discussions that have taken place recently have placed 185 sq. ft. as the minimum space; Council is negotiating at the bottom while trying to increase upwardly. Town staff believes Marana's baseline should be much higher. He agrees with Mayor Honea that staff needs to do a better job at separating open space versus usable space from the overall park space as it will provide Council with the information it needs to make a decision. Mayor Honea stated as members of Council had indicated, the Town needs some type of manual that the park can use with planning. Having a design manual with not only reduce the amount of work on Council, but equally as well with staff. Council needs some type of guidance on what park systems entails, and it is not a grassy area and a picnic table. Marana parks needs to be clearly defined. Council Member Comerford stated there is one other area of concern whereby a developer who wishes to build a community and establishes several pocket parks. Perhaps there is a way to encourage them to build a larger park with amenities to get more points. If adding larger parks can be incorporated into the design manual based on points, percentage or other standards. Council Member Officer reminisced back to when the Town began to work on its General Plan ten years ago and he was on the Parks and Recreation Commission. Back then, they brought in different park plans that other communities were already using. One of the challenges then was to determine whether Marana was to use a high standard, or approve what the Town had at that time. As we look towards design manual, the Town needs to set its standards high. Council Member Ziegler stated staff should not reinvent a new manual, but rather borrow an existing communities and build from there. She asked whether the Town is receiving complaints from the residents related to our parks. Mr. Angell stated the Town is not necessarily receiving complaints from residents, but that staff does receive comments from time -to -time comparing one park to another community park. Mayor Honea, he believes part of the problem that Marana is experiencing is that we are transitioning from a rural to urban community. With a rural Marana community, it was okay to have open spaces for hiking and movement. However with an urban - based community, residents want more density which requires the Town to look for more park space. September 10, 2019 Study Session Meeting Summary Minutes 10 Vice Mayor Post stated he thinks there are two distinctly different areas of town, Twin Peaks and north Marana. When it comes to north Marana there have been great park amenities done in drainage areas. He referenced the Gladden Farms communities stating the Town needs to divide the two areas where one area of town is permitted to use drainage areas correctly with amenities, as it should count. The Twin Peaks area becomes more difficult asking whether the Town should count park space as density in that area. A simple footbridge would get you to more space where a park could be built, that a road should not be built due to the cost of the bridge, however, one could access it with a footbridge. He asked whether that would count against density. Mr. Angell stated it would as those are private spaces. Typically when you perform density calculations, you would remove the dedicated portion of the development, or the unusable portion of the development. Then perform the density calculation. He stated the Town could look at removing that. Vice Mayor Post stated the Town should look at that as it could increase the potential density of park space in the Twin Peaks area. Vice Mayor Post stated now is the perfect time for the Town to look at what it would accept as a Town park. Once we accept a town park, the Town is then married to the maintenance of it forever. Marana needs to ensure that its standards are maintained at the highest level before we accept a park system. Council Member Kai commented on the Twin Peaks area stating the cost of land is at a premium, and developers want to place more homes in that area. That is where the Council needs additional guidance, and a design manual would likely provide that to Council. Council Member Ziegler asked whether Town staff will develop a design manual in house, as that would be the preferred method over subcontracting it out. Mr. Angell stated staff would develop it in-house, and thanked Council for its candid feedback as it would help in directing the staff towards the development of a design manual. The Town will look at other communities and consult with the Town Manager as it develops the manual and come back to Council with additional details before the creation of a draft document. Council Member Bowen asked whether Mr. Angell had a set timeline for bringing the item back to Council for its review. Mr. Angell stated he did not, but will work to bring a draft back to Council very soon. EXECUTIVE SESSIONS Pursuant to A.R.S. § 38-431.03, the Town Council may vote to go into executive session, which will not be open to the public, to discuss certain matters. September 10, 2019 Study Session Meeting Summary Minutes 11 E1 Executive Session pursuant to A.R.S. X38-431.03 (A), Council may ask for discussion or consideration, or consultation with designated Town representatives, or consultation for legal advice with the Town Attorney, concerning any matter listed on this agenda for any of the reasons listed in A.R.S. X38-431.03 (A). FUTURE AGENDA ITEMS Notwithstanding the mayor's discretion regarding the items to be placed on the agenda, if three or more Council members request that an item be placed on the agenda, it must be placed on the agenda for the second regular Town Council meeting after the date of the request, pursuant to Marana Town Code Section 2-4-2(B). porn ADJOURNMENT Council Member Bowen motioned to adjourn the meeting, with a second provided by Council Member Officer. The motion passed 7-0, unanimously. The meeting adjourned at 7:10 p.m. CERTIFICATION: I hereby certify that the foregoing are the true and correct minutes for the Study Session Meeting of the Marana Town Council meeting held on September 10, 2019. I further certify that a quorum was present. Cherry L. La4on, Town Clerk MARANA AZ ESTABLISHED 1977 September 10, 2019 Study Session Meeting Summary Minutes 12