HomeMy WebLinkAbout10/13/2020 Study Session Meeting Summary Minutes MARANA AZ
ESTABLISHED 1977
MARANA TOWN COUNCIL
STUDY SESSION
11555 W. Civic Center Drive, Marana, Arizona 85653
Council Chambers, October 13, 2020 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 PM and directed the Clerk to call the
roll. Mayor Honea,Vice Mayor Post, Council Members: Dave Bowen, Patti Comerford
(Excused), Roxanne Ziegler,John Officer (Excused), and Herb Kai.
PLEDGE OF ALLEGIANCE/INVOCATION/MOMENT OF SILENCE: Led by Mayor
Honea.
APPROVAL OF AGENDA:
Council Member Bowen moved and Vice Mayor Post second the motion approving the
agenda as presented. Motion passes, 5-0.
DISCUSSION/DIRECTION/POSSIBLE ACTION
D1 Relating to Budget; presentation, discussion and possible direction regarding
consideration of funding sources for the construction, acquisition, maintenance, and
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financing of critical infrastructure for the continued growth of the Town and safety of
its residents (Yiannis Kalaitzidis)
Finance Director Yiannis Kalaitzidis provided a PowerPoint presentation overview
regarding consideration of funding sources for the construction, acquisition,
maintenance, and financing of critical infrastructure for the continued growth of the
Town and safety of its residents. (A copy of the presentation is on file in the Town Clerk's
Office for review.) Below are highlights of the presentation.
Mr. Kalaitzidis stated staff is not offering a recommendation during the presentation, as
staff is making the examples available in an effort to facilitate conversation on the item.
Major Infrastructure Funding
• Marana continues to grow and is a driving force of new development
o Residential Market Share
o 5-year average, 2015-2019
o Sahuarita, 10%
o South Pinal, 9%
o Oro Valley, 9%
o Tucson, 20%
o Pima County, 28%
o Marana, 24% with 5% of total population of the Tucson Metro Area.
• Growth = Success
o Timing of infrastructure key to development success
■ Build when development is happening
■ Build when circumstances dictate based on agreements
■ Build now to allow for future development
o Unforeseen circumstances require flexibility
• Growth= Obligations
Obligation for Town to provide base infrastructure and amenities to residents
o Policy driven obligations
■ Impact fee projects
■ Development agreement- shared costs
■ Intergovernmental agreements - shared costs
■ Infrastructure maintenance
o Unforeseen circumstances
■ Water Quality Treatment Plants
■ Adonis Road Extension
o Future projects to be discussed soon or unknown to us at this time.
• Historical Funding Sources
o Local resources
■ Dedicated funds (Transportation, HURF)
■ Finance (Bonds, loans)
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• Impact Fees
• General Fund
o RTA, County
o Developer funding
o New revenue source - Sales tax increase
• Local resources
o General Fund
• Estimated available one-time funding at the end of FY2021 - $21
million
o Dedicated recurring funds (Transportation, HURF)
o Impact Fees
o Financing (Bonds, loans)
o RTA
o Developer funding
• Summary of Infrastructure Projects
o Slide on file in the Town Clerk's Office
• Funding for Projects - Pay Go Example
o Slide on file in the Town Clerk's Office
• Funding for Projects - Pay Go & Debt Financing Example
o Slide on file in the Town Clerk's Office
• Next Steps - Requesting Council direction to present a program that considers:
o How to fund existing project needs:
• Use existing funding sources,including some portion of unrestricted
reserves
• Consider a dedicated sales tax
o Consider consequences of each approach:
• Impact of future growth
• Deferment of projects and deterioration of existing infrastructure
• Impact on health and safety and desired services for residents
• Sales Tax Comparison
o Retail Sales Tax Rate by Jurisdiction
• South Tucson 5.0%
• Eloy 3.0%
• Tucson 2.6%
• Oro Valley 2.5%
• Phoenix 2.3%
• Sahuarita 2.0%
• Marana 2.0%
• Casa Grande 2.0%
• Chandler 1.5%
• Current Tax Table
o Slide on file in the Town Clerk's Office
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• By the Numbers - Estimates
o Slide on file in the Town Clerk's Office
• Growth = Obligations: Obligation for Town to provide base infrastructure and
amenities to residents
o Policy driven obligations
• Impact fee projects
• Tangerine Farms Road
• Twin Peaks, Rattlesnake pass
• Marana Main Street
o Development agreements - shared costs
• Twin Peaks, Rattlesnake pass
o Intergovernmental agreements - shared costs
• Tangerine Road to I-10 [RTA funding]
• NWRRDS [Metro Water District, Oro Valley]
• Barnett Drainage Channel
• Unforeseen circumstances
o Water Quality treatment plants
o Adonis Road Extension
• Future projects to be discussed soon or unknown to us at this time.
• Funding Needed for Major Infrastructure Projects
o Water Quality Projects
• Water treatment plants - New sales tax, 1/10th or GF ongoing
o Water Conveyance System Redundancy & Reliability Projects
• NWRDDS - GF (10m) or new sales tax
o Storm Drainage Management Projects
• Barnett Channel - New sales tax and FEMA
o Transportation Projects - New & Reconstruct/upgrade
• Tangerine to I-10
• Tangerine Farms Road
• Twin Peaks, Rattlesnake pass
• Marana Main Street
Mayor Honea expressed concern over raising taxes at this time during Covid-19,as there
are families struggling financially. He continued stating the WIFA Loan is the only loan
the town has at this time, and was a surprise to Council. The General Fund can be used
to pay the $1M per year for the Capital Debt Service without a tax increase. The funds for
the Adonis Road Project, was paid by taking funds from other projects that were not
needed at this time. He does not believe that neither of the two projects necessitate a half-
cent sales tax increase.
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He stated, the fact that the Town has to pay$12M-17M to construct Tangerine Road, and
we do not have the funds, $9M needed for the NRRDS Project and we do not have the
funds to complete.
Vice Mayor Post asked why the projects listed are not eligible for Impact Fees. Mr.
Kalaitzidis replied stating the listed projects are eligible for Impact Fees. Vice Mayor
Post asked why,then,is the amount not figured into the calculation. Mr.Kalaitzidis state
the calculation assumes that Impact Fees will be collected at some point in the future to
construct these projects. The slide is not available within this presentation. However, the
Impact Fee plan provides for the amount that will be collected for the construction of a
project. Vice Mayor Post asked whether any of the listed projects are eligible for Impact
Fees. Mr. Kalaitzidis stated yes; NRRDS will be eligible once included in a future Water
Impact Fee Plan. It is not included as of this day,but will be included in the future. Those
Impact Fees would be collected over 10 to 15 year period for water projects. Vice Mayor
Post expressed concern that the presentation does not provide a complete picture of what
direction Council provides to Town staff.
Mr. Mehta stated, for example, the Water Treatment Campus is not eligible for Impact
Fees. The Town would assume those costs when it has identified a solution for the
groundwater. Vice Mayor Post replied stating though he agrees there are few homes that
will tap onto that (ex: KB Homes), though others may tap on in the future. Mr. Mehta
stated the Town incurred those costs very quickly. We received a loan and the hope is
that through the lawsuit and any settlement that accompanies it from 3-M would go
towards it. However at this time, we are not anticipating it, and the Town has to make a
$1M payment each year. Vice Mayor Post asked about the other projects. Mr. Mehta
provided an overview of the projects listed in the presentation, as well as the possible
financing of them. Vice Mayor Post expressed concern over how the projects are
presented stating the residents would have to carry the additional tax burden to complete
those projects. He continued stating he would support an additional tax increase,
provided there is recovery of those funds to be used on future projects as the town grows.
The presentation does not provided sufficient information to Council so that it is able to
provide direction to Town staff.
Council Member Bowen asked whether Vice Mayor Post is concern that the positive
impact of the fees are not represented in the presentation,that only the cost are presented.
Vice Mayor Post replied that is correct. Council Member Bowen stated there would have
to be projections of the impact fees collected over some period to offset some of these
projects. He expressed concern regarding how the town would move forward to fund the
projects, such as using reserve funds to fund them as the projects has to be done. Vice
Mayor Post replied in agreement stating the Town needs to provide to Council a
comprehensive list of all of the projects, funding source and perhaps do an RTA type
program that indicates funds coming in and out into perpetuity. Doing so would provide
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Council with the necessary information to make a decision regarding the funding of
projects.
Council Member Ziegler stated there is no good time to raise taxes. She respectfully
stated Council should not make broad statements to blame Town staff without providing
evidence. She agrees with Vice Mayor Post comments related to the Town needing
additional monies to fund projects, as Council has discussed the matter for a couple of
years through the use of sales tax. Council could have provided much clearer direction
to Town staff during several Study Session Meetings. Vice Mayor Post stated he has
always been a proponent of an RTA style funding mechanism. Council Member Ziegler
stated she is a proponent of raising the sales tax. That although she does not like
increasing taxes,she is in favor of doing what is necessary for the town so that it continues
to grow and maintain a level of service for the community.
Council Member Kai stated he supports the comments of Council Member Ziegler, as
the Town is lagging behind on its tax rate at two (2%) percent. Marana is a growing
community and it has 24% of new construction permits. He appreciates Mayor Honea's
concerns related to Covid-19; however, people are still coming to Marana and taking up
residence in the town. Council Member Ziegler stated Council would need to consider
the number to increase, and collectively make a decision for the community.
Mayor Honea clarified his earlier statements related to the projects referencing Tangerine
Road and RTA funding, that it was poor planning on the town. Vice Mayor Post replied
stating he disagrees about the poor planning as the town has $21M in the bank. The
planning was well done to be able to set aside that amount in the bank. The Council has
done a good job maintaining the Town of Marana, as it is maintenance people for its
residents. However, the Town is in dire need of additional funds. He would like to
reviewh
t e full list of projects so to provide Council an opportunity to determine the
desired sales tax to leverage bonds.
Mayor Honea inquired of the use of bed and utility tax asking whether it the half-cent is
applied to those. Mr. Kalaitzidis replied stating in the particular model presented, it
would not apply.
Council continued to discuss the merits of the projects and the funding mechanism to
apply in an effort to look at the project list from Town staff. Mr. Kalaitzidis stated Town
staff could provide Council a list of projects along with the projected income cash flows.
Vice Mayor Post stated he would like to see a set of criteria the Town uses to set a priority
for projects that would be eligible for this source of funding.
Council Member Ziegler stated one of the items that came up during the discussion of
the 2040 General Plan was a town recreation center. Marana has over 50,000 residents,
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and the Town really needs to have its own recreation center, as there is a need for one. If
Council increase the sales tax, would the recreation center be included within that list so
that it, too? She commented on the success Town achieved when it issued a temporary
sales tax for the construction of the newly built police building. It is possible to do
something similar for a recreation center.
Mayor Honea issued an apology to Town staff for his earlier comments. He commented
on the use of a sales tax that restrictions are placed on it, and is used for capital projects
no supplementing O&M etc.
Mr. Mehta stated the direction is clear to Town staff. However, the presentation before
the Council does not replace the information the Town presented to Council during the
last fiscal year. That along with the information presented is as much the scenario as
tonight. There was a specific question of how long and the minimum amount the Town
would need to complete the immediate needed projects. It does not take away from the
argument that was presented the previous fiscal year. It would be good to have a long-
term critical infrastructure fund set-up that would not only address the items on the list,
but would have the propensity to grow and handle certain projects in the future.
He continued stating when the Town speaks of being reimbursed through Development
Impact Fees the Development Impact Fee will never bring back the full cost that is paid
out. New development will pay; however, it will not be to the full amount. State law is
such that a city or town can only charge for that portion that will be used in that capacity
in that timeframe.
D2 Relating to Utilities; discussion and direction on water wheeling and recovering
the cost of future water infrastructure or the excess-wheeled water cost (Frank Cassidy)
Town Attorney Frank Cassidy stated he and Water Director Scott Schladweiler worked
on this item together. He provided a historical perspective of the wheeling agreement
and how the Town arrived at this point, and a PowerPoint Presentation. (A copy of the
presentation is on file in the Town Clerk's Office.)
Tucson Water started serving part of this area before the Town of Marana existed. Some
of the areas that are town limits, Tucson Water has been serving those residents and
businesses for decades. The reason why Tucson Water began serving areas outside of its
limits is due to its belief that Tucson Water would be the water provider from mountain
range to mountain range. As a result, they received a CAP accordingly by taking that
position.
As water resources became more expensive, Tucson Water changed its policy and
decided it would not provide services outside of the Tucson city limits. They eventually
met with the Town and stated if the Town wanted Tucson Water to provide services, the
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Town needs to pay the water resource fees. The Town started paying those fees, and have
re-up the in paying through an intergovernmental agreement (IGA) during his tenure.
The Town suggested Tucson Water sell its water system to the Town, as long as it has
water in the pipes. Tucson Water has not decided to sell its system to the Town. As a
result, the Town has been left with something of a patchwork deal of having to respond
to the city's policy of which they will not expand into the town limits, without the Town
of Marana participating.
Mr. Cassidy provided an overview of the IGA's with the City of Tucson explaining the
Town's position that as long as there are properties in the Town of Marana that meets
Tucson's service water policy, you will provide service and give the Town the water
resource at the end of the year. Those properties would be Tucson Water customers. In
August 2020, the Town reached a deal on the Wheeling Agreement. It allows the Town
of Marana to use the Tucson Water pipes to wheel CAP water through the Tucson Water
pipes to make a connection to areas right near Tucson Water has pipes that are far away
from where Marana has pipes but that are in the town limits of Marana. He continued
explaining that due to Marana is having to wheel through Tucson Water entire system,
there are additional cost related to it.
Council Member Bowen asked when the Marana is wheeling water, is it physical wet
water that is being wheeled, or providing Tucson Water credit so that they can provide
its own water to Marana residents and businesses. Mr. Cassidy replied stating Marana
takes its CAP and put an allocation of our CAP into CAV-SARP Tucson Recharge Facility.
With that quantity of water, Tucson through its pipes provide service to Marana's
properties. Council Member Bowen asked whether there is a sufficient way to do that
without having to move Marana's water to Tucson Recharge Facility, given the policy.
Mr. Cassidy replied stating he does not believe that is possible. Town staff tried to get
the City to broaden the pre-existing IGA whereby Marana transfers to Tucson Water
credit at the end of the year for all of the water that is used by new customers in Marana.
However, Tucson Water rejected that offer.
Council Member Kai provided clarification to the water basin and the CAP to Council.
Vice Mayor Post asked whether the Town is able to recover those water credits or fully
assume. Mr.Cassidy replied stating Marana does recover the cost in two ways,1)Marana
knows that it has that water resource obligation, each connection to Tucson Water for
which Marana is obligated to provide water resources, has to pay a Water Resource
Impact Fee. Marana would receive a lump sum amount to find water resources, and 2) a
water rate element that is for water resources.
Mr. Cassidy stated Town staff is seeking direction from Council on the implementation
of two wheeling policies, a Temporary Wheeling Policy, and a Permanent Wheeling
Policy, as provided below:
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"Temporary Wheeling" Policy: For development projects located where MW plans to
extend its water infrastructure
• Allow wheeling only when the developer's cost to extend MW infrastructure
would make the development project not financially feasible
• Even then:
— Use wheeling temporarily -- until a MW main reaches the development
— Require the developer, up front as a condition of service, to advance the
development's fair share cost to extend the Town's water lines
— Until a MW main reaches the development, customers in the development
will pay a higher wheeled water rate
"Permanent Wheeling"Policy:For development projects located where MW DOES NOT
plan to extend its water infrastructure:
• Require the developer to pay MW, up front as a condition of service, a financial
contribution sufficient to cover the higher cost of wheeled water, giving MW the
ability to charge customers in the development the same water rates as customers
not served by wheeling
Mayor Honea opened the meeting to receive comment from the public. The following
individual provided comments.
Ross McCallister, Developer of the Silverbell Gateway Apartments project who has been
working with the Town for over 11/2 years. Relating to its project, any fee at all will result
in additional cost that will be passed on to the residents. That would result in higher
rental rates, and would put pressure on affordability. The increase would result in them
not being competitive as others in a similar market. He expressed concern with a
proposed temporary fee being imposed that may be removed later.
Douglas Kennedy commented stating he had spent two years under development with
Silverbell Gateway Apartments. He expressed concern with the water agreement with
the City of Tucson Water. He complimented Mr. Cassidy and Mr. Schladweiler on their
efforts to bring this forward. He stated he is responsible for this agreement, that if others
can use it that would be fine as well. Tucson charges him an annual rate for the water
allocation. He expressed concern with the proposed plan by the Town.
Mayor Honea closed the meeting to comment on this item.
Mayor Honea and Council Members discussed this item and provided direction to
Town staff.
D3 Relating to Economic Development; update, discussion, and direction regarding
possible establishment of a local small business assistance program to assist businesses
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located within the Town of Marana impacted by the COVID-19 pandemic (Heath
Vescovi-Chiordi)
Assistant to the Town Manager Heath Vescovi-Chiordi provided a brief PowerPoint
Presentation on this item and asked for direction of the Council. (A copy of the
presentation is on file in the Town Clerk's Office for review.)
• Requested research on this item in July 2020
• Staff was directed to look at business assistance examples in our region, as well
as State and Federal programs
• Consider various additional factors as a result of research
• Present findings to Council for discussion and direction
Mayor Honea and Council Members discussed this item and provided direction to
Town staff.
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.
[8:45 PM Minutes:]
Vice Mayor Post, moved and Council Member Bowen second the motion to enter into
an executive session for the purpose provided in Item E2. Motion passes, 5-0.
El Executive Session pursuant to A.R.S. §38-431.03 (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. §38-431.03 (A).
E2 Executive Session pursuant to A.R.S. §38-431.03 (A)(4), for discussion with the
Town's attorneys in order to consider the Town's position and instruct its attorneys
regarding the terms of a proposed development agreement with Meritage Homes
Arizona, Inc. pertaining to public infrastructure funding for the Rancho Marana 154
project.
[9:03 PM Minutes:]
Mr. Cassidy offered language for the Council to consider in its motion.
Vice Mayor Post moved and Council Member Bowen second the motion authorizing
staff to negotiate an amendment to the Rancho Marana 154 development agreement
along the lines discussed in executive session. Motion passes, 5-0.
FUTURE AGENDA ITEMS
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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).
ADJOURNMENT
Mayor Honea asked for a motion to adjourn the meeting.
Vice Mayor Post, moved and Council Member Bowen second the motion to adjourn the
meeting. Motion passes, 5-0. Meeting adjourned at 9:04 PM.
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 October 13, 2020. I further certify
that a .uorum was present.
Cherry L. awson, Town Clerk
MAAA AZ
ESTABLISHED 1977
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