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Home My WebLink About2022.1115.TCRM.Packet NOTICE OF MEETING REGULAR MEETING FOUNTAIN HILLS TOWN COUNCIL Mayor Ginny Dickey Vice Mayor Peggy McMahon Councilmember Sharron Grzybowski Councilmember Alan Magazine Councilmember Gerry Friedel Councilmember Mike Scharnow Councilmember David Spelich TIME:5:30 P.M. – REGULAR MEETING WHEN:TUESDAY, NOVEMBER 15, 2022 WHERE: FOUNTAIN HILLS COUNCIL CHAMBERS 16705 E. AVENUE OF THE FOUNTAINS, FOUNTAIN HILLS, AZ Councilmembers of the Town of Fountain Hills will attend either in person or by telephone conference call; a quorum of the Town’s various Commission, Committee or Board members may be in attendance at the Council meeting. Notice is hereby given that pursuant to A.R.S. §1-602.A.9, subject to certain specified statutory exceptions, parents have a right to consent before the State or any of its political subdivisions make a video or audio recording of a minor child. Meetings of the Town Council are audio and/or video recorded and, as a result, proceedings in which children are present may be subject to such recording. Parents, in order to exercise their rights may either file written consent with the Town Clerk to such recording, or take personal action to ensure that their child or children are not present when a recording may be made. If a child is present at the time a recording is made, the Town will assume that the rights afforded parents pursuant to A.R.S. §1-602.A.9 have been waived. REQUEST TO COMMENT The public is welcome to participate in Council meetings. TO SPEAK TO AN AGENDA ITEM, please complete a Request to Comment card, located in the back of the Council Chambers, and hand it to the Town Clerk prior to discussion of that item, if possible. Include the agenda item on which you wish to comment. Speakers will be allowed three contiguous minutes to address the Council. Verbal comments should be directed through the Presiding Officer and not to individual Councilmembers. TO COMMENT ON AN AGENDA ITEM IN WRITING ONLY, please complete a Request to Comment card, indicating it is a written comment, and check the box on whether you are FOR or AGAINST and agenda item, and hand it to the Town Clerk prior to discussion, if possible. TO COMMENT IN WRITING ONLINE: Please feel free to provide your comments by visiting https://www.fountainhillsaz.gov/publiccomment and SUBMIT a Public Comment Card by 3:00 PM on the day of the meeting . These comments will be shared with the Town Council. NOTICE OF OPTION TO RECESS INTO EXECUTIVE SESSION Pursuant to A.R.S. §38-431.02, notice is hereby given to the members of the Town Council, and to the general public, that at this meeting, the Town Council may vote to go into executive session, which will not be open to the public, for legal advice and discussion with the Town's attorneys for legal advice on any item listed on the following agenda, pursuant to A.R.S. §38-431.03(A)(3). 1.CALL TO ORDER AND PLEDGE OF ALLEGIANCE – Mayor Dickey 2.MOMENT OF SILENCE 3.ROLL CALL – Mayor Dickey 4.REPORTS BY MAYOR, COUNCILMEMBERS AND TOWN MANAGER A.RECOGNITION: Stellar Students of the Month for November B.PROCLAMATION November 26, 2022, as Small Business Saturday. 5.SCHEDULED PUBLIC APPEARANCES/PRESENTATIONS A.PRESENTATION: Video on Make a Difference Day B.PRESENTATION: Annual financial audit results by Heinfeld Meech & Co. C.PRESENTATION: Economic Development - First Quarter Report 6.CALL TO THE PUBLIC Pursuant to A.R.S. §38-431.01(H), public comment is permitted (not required) on matters NOT listed on the agenda. Any such comment (i) must be within the jurisdiction of the Council, and (ii) is subject to reasonable time, place, and manner restrictions. The Council will not discuss or take legal action on matters raised during Call to the Public unless the matters are properly noticed for discussion and legal action. At the conclusion of the Call to the Public, individual councilmembers may (i) respond to criticism, (ii) ask staff to review a matter, or (iii) ask that the matter be placed on a future Council agenda. 7.CONSENT AGENDA ITEMS Town Council Regular Meeting of November 15, 2022 2 7.CONSENT AGENDA ITEMS All items listed on the Consent Agenda are considered to be routine, noncontroversial matters and will be enacted by one motion of the Council. All motions and subsequent approvals of consent items will include all recommended staff stipulations unless otherwise stated. There will be no separate discussion of these items unless a councilmember or member of the public so requests. If a councilmember or member of the public wishes to discuss an item on the Consent Agenda, he/she may request so prior to the motion to accept the Consent Agenda or with notification to the Town Manager or Mayor prior to the date of the meeting for which the item was scheduled. The items will be removed from the Consent Agenda and considered in its normal sequence on the agenda. A.CONSIDERATION AND POSSIBLE ACTION: Approval of the minutes of the Regular Meeting of October 18, 2022. B.CONSIDERATION AND POSSIBLE ACTION: Approval of a Special Event Liquor License application for the Fountain Hills Chamber of Commerce for a beer garden in conjunction with Stroll in the Glow on December 3, 2022. 8.REGULAR AGENDA A.CONSIDERATION AND POSSIBLE ACTION: On the Town of Fountain Hills 2023 Legislative Agenda. B.PRESENTATION and PUBLIC HEARING on FY21 and FY22 Development Fee Audit Report. C.CONSIDERATION AND POSSIBLE ACTION: Approval of supplemental funds for the Pumphouse Pilot Art Project. D.HOLD A PUBLIC HEARING, CONSIDERATION AND POSSIBLE ACTION: Adoption of Resolution 2022-43, declaring the Special Use Permit Ordinance a public record, and adoption of Ordinance 22-07 repealing and replacing Zoning Ordinance, Chapter 2, Section 2.02, Special Use Permits. E.CONSIDERATION AND POSSIBLE ACTION: Adoption of Ordinance 22-09 for Short Term Rentals. F.CONSIDERATION AND POSSIBLE ACTION: Approval of a Second Amendment to Professional Services Agreement 2023-021.2 with Top Leaf Tree Services LLC, for Professional tree services. G.CONSIDERATION AND POSSIBLE ACTION: Approval of a First Amendment to Cooperative Purchasing Agreement 2022-074 with Cactus Transport, Inc, for Pavement Maintenance Services. H.CONSIDERATION AND POSSIBLE ACTION: Approval of the American Ramp Contract Town Council Regular Meeting of November 15, 2022 3 H.CONSIDERATION AND POSSIBLE ACTION: Approval of the American Ramp Contract 2023-051 for Skate Park renovation. I.CONSIDERATION AND POSSIBLE ACTION: Approval for a cut and fill waiver to allow hillside cuts in excess of ten feet for the development of a single-family residence at 15341 E. Firerock Country Club Drive. 9.COUNCIL DISCUSSION/DIRECTION to the TOWN MANAGER Item(s) listed below are related only to the propriety of (i) placing such item(s) on a future agenda for action, or (ii) directing staff to conduct further research and report back to the Council. 10.ADJOURNMENT CERTIFICATE OF POSTING OF NOTICE The undersigned hereby certifies that a copy of the foregoing notice was duly posted in accordance with the statement filed by the Town Council with the Town Clerk. Dated this ______ day of ____________________, 2022. _____________________________________________ Linda G. Mendenhall, MMC, Town Clerk The Town of Fountain Hills endeavors to make all public meetings accessible to persons with disabilities. Please call 480-816-5199 (voice) or 1-800-367-8939 (TDD) 48 hours prior to the meeting to request a reasonable accommodation to participate in the meeting or to obtain agenda information in large print format. Supporting documentation and staff reports furnished the Council with this agenda are available for review in the Clerk's Office. Town Council Regular Meeting of November 15, 2022 4 ITEM 4. B. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 11/15/2022 Meeting Type: Town Council Regular Meeting Agenda Type: Reports Submitting Department: Administration Prepared by: Angela Padgett-Espiritu, Executive Assistant to Manager, Mayor/Council Staff Contact Information: Angela Padgett-Espiritu, Executive Assistant to Manager, Mayor/Council Request to Town Council Regular Meeting (Agenda Language): PROCLAMATION November 26, 2022, as Small Business Saturday. Staff Summary (Background) Mayor Dickey will be proclaiming November 26, 2022, as Small Business Saturday. Attachments Signed Proclamation Small Business Saturday November 2022 Form Review Inbox Reviewed By Date Finance Director David Pock 10/19/2022 03:47 AM Town Attorney Aaron D. Arnson 10/19/2022 09:00 AM Town Manager Grady E. Miller 10/19/2022 12:27 PM Form Started By: Angela Padgett-Espiritu Started On: 10/18/2022 04:29 PM Final Approval Date: 10/19/2022 ITEM 5. B. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 11/15/2022 Meeting Type: Town Council Regular Meeting Agenda Type: Public Appearances/Presentations Submitting Department: Administration Prepared by: David Pock, Finance Director Staff Contact Information: David Pock, Finance Director Request to Town Council Regular Meeting (Agenda Language): PRESENTATION: Annual financial audit results by Heinfeld Meech & Co. Staff Summary (Background) In compliance with State statute, an annual financial audit of the Town is completed each year by an independent auditing firm. Heinfeld Meech & Co. completed the annual audit of the Town for the fiscal year ended 6/30/2022. Its audit was conducted in accordance with U.S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Heinfeld Meech & Co. has issued the Town an unmodified opinion for fiscal year 2022. As this is a presentation only, there is no required action from the Town Council. However, the Mayor and Council will have an opportunity to ask questions of the representatives from the auditing firm. Attachments FY22 Annual Comprehensive Financial Report (ACFR) FY22 Single Audit (Federal Grants) FY22 Highway User Revenue Fund (HURF) Letter FY22 Expenditure Limitation Report (ELR) Form Review Inbox Reviewed By Date Finance Director (Originator)David Pock 11/01/2022 03:53 PM Town Attorney Aaron D. Arnson 11/02/2022 10:21 AM Town Manager David Pock 11/03/2022 10:15 AM Finance Director (Originator)David Pock 11/03/2022 11:01 AM Town Attorney David Pock 11/03/2022 11:02 AM Finance Director (Originator)David Pock 11/03/2022 11:03 AM Town Attorney Aaron D. Arnson 11/03/2022 11:04 AM Town Manager Grady E. Miller 11/03/2022 12:01 PM Town Manager Grady E. Miller 11/03/2022 12:11 PM Form Started By: David Pock Started On: 11/01/2022 03:23 PM Final Approval Date: 11/03/2022 TOWN OF FOUNTAIN HILLS, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2022 Issued by: Administration Department Finance Division TOWN OF FOUNTAIN HILLS, ARIZONA TABLE OF CONTENTS INTRODUCTORY SECTION Page Letter of Transmittal 1 List of Elected and Appointed Officials 11 GFOA Certificate of Achievement 12 Organizational Chart 13 FINANCIAL SECTION INDEPENDENT AUDITOR’S REPORT 17 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) 23 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Position 36 Statement of Activities 37 Fund Financial Statements: Balance Sheet – Governmental Funds 40 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position 43 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 44 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds to the Statement of Activities 46 Statement of Net Position – Proprietary Fund 47 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Fund 48 Statement of Cash Flows – Proprietary Fund 49 TOWN OF FOUNTAIN HILLS, ARIZONA TABLE OF CONTENTS FINANCIAL SECTION – continued Page Notes to Financial Statements 50 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: General Fund 72 Highway User Revenue Fund 73 Grants Fund 74 Note to Required Supplementary Information 75 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Governmental Funds: Combining Balance Sheet – All Non-Major Governmental Funds – By Fund Type 78 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – All Non-Major Governmental Funds – By Fund Type 80 Special Revenue Funds: Combining Balance Sheet 84 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 86 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual 88 Debt Service Funds: Combining Balance Sheet 94 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 96 TOWN OF FOUNTAIN HILLS, ARIZONA TABLE OF CONTENTS FINANCIAL SECTION – continued Page Combining Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual 98 Capital Projects Fund: Combining Balance Sheet 101 Combining Statement of Revenues, Expenditures and Changes in 102 Fund Balances Combining Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual 104 STATISTICAL SECTION Financial Trends: Net Position by Component 108 Changes in Net Position 110 Fund Balances – Governmental Funds 112 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 114 Revenue Capacity: Governmental Activities – Tax Revenues by Source 116 Assessed Value and Estimated Actual Value of Taxable Property 117 Principal Property Taxpayers 118 Property Tax Levies and Collections 119 Taxable Sales by Category 120 Direct and Overlapping Sales Tax Rates 122 TOWN OF FOUNTAIN HILLS, ARIZONA TABLE OF CONTENTS STATISTICAL SECTION – continued Page Debt Capacity: Ratios of Outstanding Debt by Type 123 Ratios of General Bonded Debt Outstanding 124 Direct and Overlapping Governmental Activities Debt 125 Legal Debt Margin Information 126 Calculation of Legal Debt Margin 128 Revenue Bond Coverage 129 Demographic and Economic Information: Demographic and Economic Statistics 130 Principal Employers 131 Operating Information: Authorized Full-Time Equivalent Government Employees by Function 132 Operating Indicators by Function 133 Capital Assets Statistics by Function 134 (This page intentionally left blank) INTRODUCTORY SECTION (This page intentionally left blank) www.fh.az.gov November 1, 2022 To the Honorable Mayor, Members of the Town Council, and Citizens of the Town of Fountain Hills: State law requires that all general-purpose local governments publish, within six months of the close of each fiscal year, a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America and audited in accordance with auditing standards generally accepted in the United States by a certified public accounting firm licensed in the State of Arizona. Pursuant to that requirement, we hereby issue the Annual Comprehensive Financial Report (ACFR) of the Town of Fountain Hills (Town) for the fiscal year ended June 30, 2022. This report consists of management’s representations concerning the finances of the Town. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the Town has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the Town of Fountain Hills’s financial statements in conformity with accounting principles generally accepted in the United States of America. Because the cost of internal controls should not outweigh their benefits, the Town’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free of material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The Town’s financial statements have been audited by Heinfeld, Meech & Co., P.C., a certified public accounting firm. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Town for the fiscal year ended June 30, 2022, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditors concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the Town’s financial statements for the fiscal year ended June 30, 2022, are fairly presented in conformity with accounting principles generally accepted in the United States of America. The independent auditor’s report is presented as the first component of the financial section of this report. TOWN OF FOUNTAIN HILLS 16705 E. Avenue of the Fountains, Fountain Hills, AZ 85268 480.816.5100 | Fax: 480.837.3145 Page 1 Accounting principles generally accepted in the Unites States of America require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The Town of Fountain Hills’s MD&A can be found immediately following the report of the independent auditors. PROFILE OF THE GOVERNMENT The Town of Fountain Hills overlooks the Verde River Valley and the east valley of the metro Phoenix area. The Town is a master planned community established in 1970 by McCulloch Properties (now MCO Properties, Inc.). Prior to 1970, the area was a cattle ranch and was part of one of the largest land and cattle holdings in Arizona. The land was purchased by Robert McCulloch in the late 1960s and the community designed by Charles Wood, Jr. (designer of Disneyland in southern California). The centerpiece of Fountain Hills is one of the world's tallest man-made fountains, a focal point that attracts thousands of visitors each year. Located on 13,006 acres of land, Fountain Hills is surrounded by the McDowell Mountains and Scottsdale on the west, the Fort McDowell Yavapai Nation on the east, the Salt River Pima- Maricopa Indian Community on the south, and by the McDowell Mountain Regional Park on the north. The elevation is 1,520 feet at the fountain, 2,460 feet at the Adero Canyon Trailhead, and is approximately 500 feet above Phoenix. Over the past thirty years, Fountain Hills has grown from 10,030 residents to a town of 23,906 in 2021. On June 5, 2006, the Town of Fountain Hills became twenty square miles and about ten percent larger by annexing 1,300 acres of State Trust Land. The process to annex the State Trust Land occurred over a two and one-half year period, and development of the land will occur in the years to come. Annexing this property into the Town ensures that its future development will be of the highest quality under Town standards. The Town offers a wide range of living accommodations, from small condominium complexes to large custom homes. Fountain Hills also offers recreational and cultural programs and services that contribute to a high quality of life for its residents. The community consists of primarily residential property and open space; of the total 20.32 square miles of land, only 2.5% of the total is zoned commercial and/or industrial, 23.3% is preserved as open space and 51.0% is residential. Page 2 The Town’s Mission Statement The Town of Fountain Hills’ purpose is to serve the best interests of the community by:  providing for the safety and well-being of its residents and visitors;  respecting its special, small-town character and quality of life;  providing superior public services;  sustaining the public trust through open and responsive government;  and maintaining the stewardship and preservation of its financial and natural resources. To serve, respect, and provide trust and stewardship. The Town of Fountain Hills is an Arizona municipal corporation, acting as a general law town as prescribed in the Arizona Revised Statutes. The Town was incorporated on December 5, 1989, with the governmental and administrative affairs of the Town operating under the Council- Manager form of government. Legislative authority is vested in a seven member Town Council. The Mayor is a member of the Town Council who is directly elected by voters and chairs the Town Council meetings. The members of the Council are elected at large and serve four year overlapping terms. The Town Council is responsible for the adoption of local ordinances, budget adoption, appointment of residents to citizen advisory committees and hiring the Town Manager. The Town Manager is responsible for implementation of the policies of the Town Council and overall management of the Town through department directors and approximately 65 full-time equivalent (FTE) employees. The Presiding Judge, Town Attorney, and Town Prosecutor are under the direction of the Town Council. The Town provides or administers a full range of services including public safety (law enforcement, fire and emergency medical services); development services (code enforcement, planning and zoning); public works (including construction and maintenance of streets and infrastructure); municipal court; recreational activities; community center; senior services and cultural events. The Town does not maintain utility or other operations that require the establishment of enterprise funds. Fountain Hills Town Hall Page 3 The financial reporting entity (the Town) includes all the funds of the primary government (i.e., the Town of Fountain Hills as legally defined) as well as all of its component units. The component units consist of legally separate entities for which the primary government is financially accountable. Blended component units, although legally separate entities, are, in substance, part of the primary government’s operations and are included as part of the primary government. Accordingly, the Cottonwoods Maintenance District, the Eagle Mountain Community Facilities District and the Fountain Hills Municipal Property Corporation are included in the financial report of the Town. FACTORS AFFECTING FINANCIAL CONDITION The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the Town of Fountain Hills operates. Internal Controls As earlier noted, the management of the Town of Fountain Hills, Arizona, is responsible for establishing and maintaining a system of internal control. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding; 1) Safeguarding of assets against loss from unauthorized use or deposition, and 2) Reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes: 1) The cost of a control should not exceed the benefits likely to be derived, and 2) The valuation of costs and benefits requires estimates and judgments by management. The system of internal control is subject to periodic evaluation by management and is also considered by the independent auditors in connection with the annual audit of the Town’s financial statements. All internal control evaluations occur within the above framework. The Town's internal accounting controls are considered to adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. Budgetary Controls The budget process is a cyclical process and begins each year with the preparation of the base budget by each department head. Each budget is based on expenditures to date and the previous years’ experience. The departments’ base budgets, along with any requests for new positions, programs or services are reviewed by the Town Manager. The Town Manager then meets with department heads to review their base budgets and requests for new services and/or programs. Once management has reviewed the departments’ requests, a tentative budget is presented to the Town Council by the Town Manager. Page 4 The Town Council formally adopts the budget and appropriates funding for the General Fund, Special Revenue Funds, Debt Service Funds, Internal Service Funds, Capital Projects Funds, and Proprietary Fund. Therefore, these funds have appropriated budgets, and budget to actual information is presented. In April/May, the Town Manager submits to the Town Council a proposed budget for the fiscal year commencing the following July 1. The budget includes proposed expenditures and the means of financing them. The Town Council is then required to hold public hearings on the proposed budget and to adopt a final budget by June 30, the close of the Town of Fountain Hills’ fiscal year. Public hearings on the budget are held each year in accordance with legal requirements in order to obtain comments from local taxpayers. The budget is legally enacted through passage of a resolution and is prepared by fund and department. The resolution sets the limit for expenditures during the fiscal year. The Town Manager may authorize transfers within a department; however, all inter-departmental and inter-fund transfers are approved by Town Council. Additional expenditures may be authorized for expenditures directly necessitated by a natural or man-made disaster as prescribed in the State Constitution, Article IX, Section 20. The Town is subject to the State of Arizona’s Expenditure Limitation Law for Towns and Cities. This law does not permit the Town to spend more than budgeted revenues plus the carry-over of unrestricted cash balance from the prior fiscal year. The limitation is applied to the total of the combined funds. All appropriations lapse at year-end. To ensure compliance with the state imposed expenditure limitation, a uniform expenditure report must be filed with the state each year. This report reconciles total Town expenditures from the audited financial statements to total expenditures for reporting in accordance with the state’s uniform expenditure reporting system (ARS Section 41-1279.07). The appropriated budget is prepared by fund and department. Department heads may make transfers of non-personnel appropriations within their department. Transfers of appropriations between departments, however, require Town Council approval. Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. Budget-to-actual comparisons for the General Fund, Streets Fund, and Grants Fund are presented in the Required Supplementary Information and all other funds are presented in Combining and Individual Fund Financial Statements and Schedules. Local Economy The Town of Fountain Hills, Arizona, relies mostly on its Transaction Privilege Tax (Sales Tax) and Voter-Approved Local Revenue (State Shared Revenue) collections to fund nearly 90% of its General Fund (Operating) expenditures. During the past fiscal year, the Town’s revenue collections from these sources exceeded the budgeted expectations. However, the effects of the pandemic on personal income will not have an effect on State Shared Income Tax collections until Fiscal Year 2023 since it lags by two years. In order to address these issues, the Town has proposed a baseline budget requiring any new positions to be deemed mission critical. All vacancies will be evaluated to assess the need for replacement, elimination or modification to the job description. The Town will be closely monitoring its revenue sources and make adjustments accordingly. Page 5 Local sales tax collections remained stable during the past fiscal year, with significant growth in the retail and hospitality-related categories. The following chart is a look at the past five years’ local sales tax activity by category: As shown in the chart, sales tax collections continue to show signs of moderate growth and relative stability across most categories. Retail sales, the largest category of sales tax revenue, experienced a 10% increase over the prior year. Restaurant/Bar and Services revenue exceeded pre-pandemic levels with an increase of 36% and 77%, respectively, compared to FY21. Construction sales tax, a one-time revenue source, is driven entirely by development activity in the community and decreased slightly compared to the prior year. Recent building permit activity indicates that construction sales tax is likely to be relatively stable over the next few fiscal years. The Transportation/Communication/Utility category was the only other one that decreased slightly during the year. Construction activity provides revenue to the Town through local sales tax, the proceeds of which are utilized for general operations and capital expenditures. Without the resources to fund capital projects, the Town must find additional funds to pay for necessary infrastructure projects. For operating costs, the Town is dependent upon Voter-Approved Local Revenue (State Shared Revenue) and local sales tax as a major sources of operating revenue, accounting for 91% of total General Fund revenue collected for fiscal year 2021-22. State-shared revenues are derived as a proportionate share of state sales, income and vehicle license taxes which are distributed based on the Town’s population compared to all other incorporated cities and towns in Arizona (currently 0.44%). State shared income tax revenue is based on personal and corporate earnings from two years ago. Revenue from this category decreased by 12.1% in fiscal year 2021-22. State shared sales tax has increased over the past several years, and this year continued the trend by increasing revenue by 12.9% compared to the prior year. Other local activity has remained fairly consistent during the period. The opportunity to further expand the retail tax base in Fountain Hills is limited by the lack of available commercial land – over 70% of the currently available commercial lots are already developed. Page 6 Development Activity Page 7 Economic Outlook Retail Sales – Not having a property tax, the Town of Fountain Hills relies heavily on transaction privilege taxes (TPT), sometimes called a sales tax. Overall, Town TPT revenues provide over 60% of the General Fund revenues. On November 1, 2019 the Town’s TPT rate went up 0.3% to the current rate of 2.9%. Hospitality-related collections are the most susceptible to changes in economic conditions. Construction TPT is also highly tied to the health of the economy and is equally divided between the General Fund and the Capital Projects Fund. State Shared Revenues – The Town of Fountain Hills receives significant revenue allocations from the State. These Voter-Approved Local Revenues (VALR), or State shared revenues, include allocations of the state-collected income tax, sales tax, fuel tax and motor vehicle-in-lieu taxes. All but the fuel tax and the vehicle license tax are placed in the Town's General Fund, where it is used to sustain a large portion of the Town's day-to-day activities. Ultimately, each of these revenue sources will be negatively affected by inflation, as well as the Federal Reserve’s fight against it. Streets Fund (HURF) – The Town receives a proportionate share of the fuel tax collected in Maricopa County. These revenues are placed in the Streets Fund to be used specifically for street maintenance and related activity. Although the state-shared revenue formula generally allocates revenues based on official census data, in recent years, the state legislature has reduced the formula distribution of state shared revenues to cities. The resulting loss must be replaced by the General Fund, which increases the pressure to maintain operations across the Town. Long-term Financial Planning Fountain Hills’ Financial Policies are balanced on sound financial reserves and conservative revenue growth forecasts for the foreseeable future. However, potential for State legislative impacts to revenue- sharing, reductions in local revenues, and additional demands for essential Town services remain. The Town’s Financial Policies set forth guidelines against which current budgetary performance can be measured and proposals for future programs can be evaluated. The Town’s Financial Policies have helped weather the uncertainty encountered during the pandemic and the years that have followed. This policy continues to require the Town to internally restrict an amount equal to 20% of the average actual General Fund revenues for the preceding five fiscal years as part of its General Fund balance. This amount is estimated to cover approximately 60 days of General Fund expenditures and is considered a “Rainy Day” fund. Additionally, a reserve of 20% of the average actual General Fund revenues for the preceding five fiscal years will be maintained as Unassigned Fund Balance. This additional fund balance reserve will provide increased flexibility in the event of unanticipated decreases in revenue collection. The Council also adopted Financial Policies that include guidelines for the issuance of debt for capital expenditures, community facility districts, financing alternatives, expenditure controls and financial planning. The policy was amended during FY 09-10 to reduce the allocation of the local construction sales tax to the Capital Projects Fund from 85% to 50%, reflecting the transition from one-time building activity to ongoing redevelopment activity. The debt policy was prepared with a preference for “pay- as-you-go” financing for capital spending. However, the policy does allow for bond financing of larger projects so that the cost can be equitably distributed among the Town’s current and future residents. Page 8 In 2020, the Strategic Planning Advisory Commission (SPAC) began the process of gathering public input to update the Strategic Plan’s vision, confirm residents’ values, and create a fresh structure for the Strategic Plan revision. However, the pandemic delayed this effort. Subsequently, Strategic Plan 2022 was built upon the foundation of four Strategic Priorities, eleven Signature Strategies, and twenty- three Supporting Tasks. Based on citizen input, the Strategic Plan is designed to guide our future decisions grounded on these common priorities: 1. Targeted Collaborative Economic Development 2. Promote the Long-Term Financial Sustainability of Town Infrastructure, Environmental, and Social Resources 3. Continue to Improve the Public Health, Well-Being, and Safety of Our Town 4. Maintain Current Infrastructure While Preparing the Town for Emerging Trends that Increase Public Safety and Quality of Life MAJOR INITIATIVES, SERVICE EFFORTS AND ACCOMPLISHMENTS The Town of Fountain Hills’ adopted budget for fiscal year 2021-22 reflected a cautious approach to the continued recovery from the pandemic. Due to the uncertain economic conditions ahead, the Town approached revenue projections cautiously and kept expenditure levels low as well. At the start of the fiscal year, the American Rescue Plan Act (ARPA) provided resources to local governments through the State of Arizona. These resources allowed the Town to save $4.2M in the General Fund that would have otherwise been spent to pay for public safety contracts with Maricopa County Sheriff’s Office and Rural Metro. The same amount will be received in FY23 and will be used for the same purpose. This will result in a total of $8.4M of General Fund savings over the two fiscal years. As Pavement Management has been a priority for many years, Council has decided that the General Fund savings discussed above should be used toward that purpose. As a result, $4M will be transferred to the Streets Fund in FY23 and another $4M in FY24. Although these infusions will not resolve all of the pavement issues in Town, it will provide some relief while other options are researched and implemented. For the Year The following list depicts the continued commitment of the Town of Fountain Hills to make the community a better place to live. Fiscal year 2021-22 goals attained are summarized within this list of accomplishments:  Conducted a survey of Town residents with 98.7% responding that the Town is an Excellent/Good place to live  Provided $170,000 in assistance to local non-profits in the form of one-time grants  Completed a major remodel and technology upgrade of the Community Center  Continued park improvements at Fountain Park, including a complete renovation and expansion of the Splash Pad as well as new playground equipment  Completed storm drain improvements throughout the Town  Secured grant funding from the Arizona Office of Tourism - Proposition 302  Secured grant funding from Salt River Pima-Maricopa Indian Community - Proposition 202 Page 9 AWARDS AND ACKNOWLEDGEMENTS Awards The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Fountain Hills for its Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2021. This was the twenty-sixth consecutive year that the Town has received this prestigious award. In order to be awarded a Certificate of Achievement, the Town published an easily readable and efficiently organized ACFR. This report satisfied both accounting principles generally accepted in the United States of America (GAAP) and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current ACFR continues to meet the Certificate of Achievement program’s requirements, and we will be submitting it to the GFOA to determine its eligibility for the fiscal year ended 2022 Certificate. In addition, the government received the GFOA’s Distinguished Budget Presentation Award for its annual budget for the fiscal year beginning July 1, 2021. In order to qualify for the Distinguished Budget Presentation Award, the government’s budget document was judged to be proficient in several categories, including as a policy document, a financial plan, an operations guide, and a communications device. This is the twentieth consecutive year that the Town has received the award. Acknowledgments The preparation of this Annual Comprehensive Financial Report could not have been accomplished without the efficient and dedicated services of the entire Finance Division team. I also wish to extend my appreciation to the Mayor and members of Town Council for their leadership and support in planning and conducting the financial affairs of the Town in a responsible and progressive manner. Each employee of the Town has my sincere appreciation for the contributions made in the preparation of this report. Respectfully submitted, Grady E. Miller Town Manager Page 10 TOWN OF FOUNTAIN HILLS, ARIZONA LIST OF ELECTED AND APPOINTED OFFICIALS JUNE 30, 2022 ELECTED OFFICIALS Ginny Dickey, Mayor Gerry Friedel, Vice-Mayor Alan Magazine, Councilmember Mike Scharnow, Councilmember David Spelich, Councilmember Sharron Grzybowski, Councilmember Peggy McMahon, Councilmember DEPARTMENT DIRECTORS Grady Miller, Town Manager David Trimble, Deputy Town Manager/Administrative Services Director Rachael Goodwin, Community Services Director Amanda Jacobs, Economic Development Director John Wesley, Development Services Director Justin Weldy, Public Works Director David Pock, Finance Director Elizabeth Burke, Town Clerk Captain Dave Ott, Rural Metro Corporation, Fire Chief Captain Larry Kratzer, Maricopa County Sheriff’s Office, District Commander Robert Melton, Presiding Judge Mark Iacovino, The Law Office of Mark Iacovino, Town Prosecutor Aaron Arnson, Pierce Coleman PLLC, Town Attorney Page 11 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Town of Fountain Hills Arizona For its Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2021 Executive Director/CEO Page 12 Citizens of Fountain HillsCitizens of Fountain Hills Presiding Judge Town of Fountain Hills Organization Fire / EMS AdministrationAdministration Law Enforcement Town Manager Town AttorneyTown Prosecutor Appointed by Council Contracted Mayor and Town CouncilMayor and Town Council Development Services Recreation Community Services Community Center Code Enforcement Building Safety Senior Services Parks Volunteer Program GIS Planning Engineering Streets Facilities Public Works Inspection Finance Finance Town ClerkTown Clerk Administrative Services Administrative Services Economic Development / Tourism Economic Development / Tourism Community Relations Community Relations Page 13 (This page intentionally left blank) Page 14 FINANCIAL SECTION Page 15 (This page intentionally left blank) Page 16 Independent Auditor’s Report Honorable Mayor and Members of the Town Council Town of Fountain Hills, Arizona Report on Audit of Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Town of Fountain Hills, Arizona (Town), as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the Town’s basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Town of Fountain Hills, Arizona, as of June 30, 2022, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Town of Fountain Hills, Arizona, and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Change in Accounting Principle As described in Note 1, the Town implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 87, Leases, for the year ended June 30, 2022, which represents a change in accounting principle. Our opinion is not modified with respect to this matter. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Page 17 In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Town’s ability to continue as a going concern for one year beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Town’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Town’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, and budgetary comparison information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic Page 18 financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town’s basic financial statements. The Combining and Individual Fund Financial Statements and Schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Combining and Individual Fund Financial Statements and Schedules information is fairly stated in all material respects in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the Introductory Section and Statistical Section but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on other work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 1, 2022, on our consideration of Town of Fountain Hills, Arizona’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Town of Fountain Hills, Arizona’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Town of Fountain Hills, Arizona’s internal control over financial reporting and compliance. Heinfeld, Meech & Co., P.C. Scottsdale, Arizona November 1, 2022 Page 19 (This page intentionally left blank) Page 20 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information) Page 21 (This page intentionally left blank) Page 22 TOWN OF FOUNTAIN HILLS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 As management of the Town of Fountain Hills, Arizona (Town), we offer readers of the Town’s financial statements this narrative overview and analysis of the financial activities of the Town for the fiscal year ended June 30, 2022. This discussion and analysis is intended to be an easily readable breakdown of the Town of Fountain Hills’ financial activities based on currently known facts, decisions and conditions. This analysis will focus on current year activities and operations and should be read in combination with the transmittal letter and the financial statements that follow. The management’s discussion and analysis is presented as required supplementary information to supplement the basic financial statements. FINANCIAL HIGHLIGHTS  The Town’s total net position of governmental activities increased $6.4 million to $134.1 million, representing a 5.0 percent increase of the total net position.  General revenues from governmental activities accounted for $25.7 million in revenue, or 73.2 percent of all revenues from governmental activities. Program specific revenues in the form of charges for services and grants and contributions accounted for $9.4 million or 26.8 percent of total governmental activities revenues.  The Town had $28.7 million in expenses related to governmental activities, an increase of 3.3 percent from the prior fiscal year, primarily due to increased general government and public safety expenditures.  Among the major governmental funds, the General Fund had $24.6 million in current fiscal year revenues, which consisted primarily of transaction privilege (sales) tax and intergovernmental revenues. The total expenditures of the General Fund were $13.9 million. The General Fund’s fund balance decreased $1.0 million to $14.5 million at the end of the current fiscal year. OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the Town’s basic financial statements. The Town’s basic financial statements comprise three components: 1) government- wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Page 23 TOWN OF FOUNTAIN HILLS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 OVERVIEW OF FINANCIAL STATEMENTS – continued Government-wide financial statements. The government-wide financial statements provide readers with a broad overview of the Town’s finances, in a manner similar to a private-sector business. These statements are prepared using the accrual basis of accounting. The Statement of Net Position presents information on all of the Town’s assets, liabilities, and deferred inflows/outflows of resources with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Town is improving or deteriorating. The Statement of Activities presents information showing how the Town’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., earned but unused compensated absences). The government-wide financial statements distinguish functions of the Town that are principally supported by taxes and intergovernmental revenues (governmental activities). The governmental activities of the Town include administration, development services, public safety, public works, and culture and recreation. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All Town funds are included in the governmental fund classification, except for one internal service fund that is classified as a proprietary fund. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements use the modified accrual basis of accounting and focus on near-term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the Town’s near-term financing requirements. Internal service fund. This type of fund is classified as a proprietary fund, and it is used to report activity in the Technology Replacement Fund. The fund provides goods and services to other funds and departments on a cost-reimbursement basis. The activity is intended to operate on an essentially “break-even” basis over time. Page 24 TOWN OF FOUNTAIN HILLS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 OVERVIEW OF FINANCIAL STATEMENTS – continued Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the Town’s near-term financing decision. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General, Highway User Revenue (HURF), Grants, and Capital Projects Funds, all of which are considered major funds. Data from other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and schedules. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found immediately following the basic financial statements. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Town’s budget process. The Town adopts an annual budget for all funds. A schedule of revenues, expenditures and changes in fund balances - budget and actual has been provided for the General Fund and major Special Revenue funds as required supplementary information. GOVERNMENT-WIDE FINANCIAL ANALYSIS While this document contains information about the funds used by the Town to provide services to its citizens, the Statement of Net Position and the Statement of Activities serve to provide an answer to the question of how the Town, as a whole, did financially throughout the year. These statements include all assets and liabilities using the accrual basis of accounting, similar to the accounting used by the private sector. The basis for this accounting takes into account all of the current year’s revenues and expenses regardless of when the cash is received or paid. These two statements report the Town’s assets and the changes in those assets. The change in assets is important because it tells the reader whether the financial position of the Town as a whole has improved or diminished. However, in evaluating the overall position of the Town, non- financial information such as changes in the Town’s tax base and the condition of the Town’s capital assets will also need to be evaluated. Page 25 TOWN OF FOUNTAIN HILLS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued Analysis of Net Position. Over time, net position may serve as a useful indicator of a government’s financial position. In the case of the Town, assets related to governmental activities exceeded liabilities by $134.1 million at the end of the fiscal year. The largest portion of the Town’s governmental activities net position reflects its investment in capital assets (e.g., land, infrastructure, buildings and improvements, vehicles, machinery and equipment and construction in progress); less any related outstanding debt used to acquire those assets. The Town uses these capital assets to provide services to its citizens; consequently, these assets are not available for future spending. Although the Town’s investment in its capital assets is reported net of related outstanding debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. As the Town does not currently have any outstanding debt, the reported amount represents the total invested in capital assets. In addition, a portion of the Town’s net position represents resources that are subject to external restrictions on how they may be used. The remaining balance is unrestricted and may be used to meet the Town’s ongoing obligations to its citizens and creditors. The following tables present a summary of the Town’s net position for the fiscal years ended June 30, 2022 and June 30, 2021. Governmental Activities As of June 30, 2022 As of June 30, 2021 Current and other assets $ 37,056,421 $ 25,980,153 Capital assets, net 102,346,737 103,822,185 Total assets 139,403,158 129,802,338 Current and other liabilities 2,873,943 1,861,024 Long-term liabilities 297,878 190,600 Total liabilities 3,171,821 2,051,624 Deferred outflows – leases 2,124,397 Net position Net investment in capital assets 102,346,737 103,822,185 Restricted 5,749,726 2,610,178 Unrestricted 26,010,477 21,318,351 Total net position $ 134,106,940 $ 127,750,714 At the end of the current fiscal year the Town reported positive balances in all three categories of net position for governmental activities. The Town also reported positive balances in all net position categories in the prior fiscal year. Page 26 TOWN OF FOUNTAIN HILLS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued The Town’s financial position is the product of several financial transactions including the net results of activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the depreciation of capital assets. Changes in net position. The Town’s total revenues for the current fiscal year were $35.1 million. The total cost of all programs and services was $28.7 million. The following table presents a summary of the changes in net position for the fiscal years ended June 30, 2022 and June 30, 2021. Governmental Activities Fiscal Year Ended June 30, 2022 Fiscal Year Ended June 30, 2021 Revenues Program revenues: Charges for services $ 2,830,516 $ 1,899,349 Operating grants and contributions 6,381,580 4,733,757 Capital grants and contributions 161,751 135,525 General revenues Property taxes 9,728 402,481 Sales taxes 17,660,758 15,657,292 Franchise taxes 399,007 426,260 State-shared revenue 6,541,023 6,590,986 Vehicle License taxes 1,180,100 1,196,198 Investment earnings (419,006) 49,665 Miscellaneous 280,140 262,953 Total revenues $ 35,025,597 $ 31,354,466 Expenses General government $ 4,333,863 $ 3,793,915 Development services 1,068,260 968,808 Public safety 9,487,150 9,214,615 Public works 9,780,920 10,175,540 Culture and recreation 3,999,178 3,601,870 Interest on long-term debt 0 7,544 Total expenses 28,669,371 27,762,292 Changes in net position 6,356,226 3,592,174 Net position, beginning 127,750,714 124,158,540 Net position, ending $134,106,940 $127,750,714 Page 27 TOWN OF FOUNTAIN HILLS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued The charts below compare the governmental expenses from fiscal years 2021-22 and 2020-21. Page 28 TOWN OF FOUNTAIN HILLS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued The following items are significant current year transactions that have had an impact on the change of net position.  Revenue from property taxes decreased by 98% percent compared to the prior year as the final debt payment was made for the Eagle Mountain Community Facilities District in FY21. The Town does not have any outstanding bonds and did not have a town-wide tax levy for FY22.  Investment income shows a decrease of 944 percent; however, the Town is required to mark all investments to market as of the end of the fiscal year. These investments, mostly government securities, will be held to maturity. Market prices of investments are lower due to rising interest rates prompted by continued inflationary pressures.  Franchise taxes, collected from cable and internet providers, decreased by 6.4% due to changes made to Arizona Revised Statutes.  Overall, expenses increased 3.3 percent primarily due to increased costs in the general government, development services, and community services. The following table presents the cost of the Town’s major functional activities. The table also shows each function’s net cost (total cost less charges for services generated by the activities and intergovernmental aid provided for specific programs). The net cost shows the financial burden that was placed on the Town by each of these functions. Year Ended June 30, 2022 Year Ended June 30, 2021 Total Expenses Net (Expense)/ Revenue Total Expenses Net (Expense)/ Revenue Governmental Activities General government $ 4,333,863 $ (3,617,651) $ 3,793,915 $ (3,435,515) Development services 1,068,260 (120,829) 968,808 (275,647) Public safety 9,487,150 (5,137,429) 9,214,615 (6,155,942) Public works 9,780,920 (7,243,437) 10,175,540 (8,011,077) Culture and recreation 3,999,178 (3,176,178) 3,601,870 (3,107,936) Interest on long-term debt 0 0 7,544 (7,544) Total expenses $ 28,669,371 $ (19,295,524) $ 27,762,292 $ (20,993,661)  The cost of all governmental activities this year was $28.7 million.  Federal, State, and county governments and charges for services subsidized certain governmental programs with revenues of $9.4 million.  The net cost of the Town’s governmental activities was $19.3 million, which was funded primarily by general revenues. General revenues consist of $17.7 million in sales taxes and $7.7 million in State-shared revenues. Page 29 TOWN OF FOUNTAIN HILLS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 FINANCIAL ANALYSIS OF THE TOWN’S FUNDS As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the Town’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of the Town’s net resources available for spending at the end of the fiscal year. The financial performance of the Town as a whole is reflected in its governmental funds. As the Town completed the year, its governmental funds reported an increase of $7.9 million in the combined fund balance from $24.3 million to $32.2 million. The General Fund comprises 44.9 percent of the total fund balance. Approximately $9.5 million, or 65.5 percent, of the General Fund’s fund balance is unassigned. The General Fund is the principal operating fund of the Town. The fund balance decreased by $1.0 million to $14.5 million as of fiscal year end. General Fund revenues increased $2.4 million primarily due to increased local sales tax collections. General Fund expenditures decreased slightly from $14.0 million to $13.9 million. The Highway User Revenue Fund comprises 12.1 percent of total fund balance. The fund balance increased $2.7 million from the prior year and will continue to be used to fund the pavement management program in the next fiscal year. The Capital Projects Fund comprises 31.0 percent of the total fund balance. All of the fund balance is committed or assigned to capital projects. The fund balance increased $5.5 million due to the transfer of General Fund savings from the prior year as required by Town policy. The Grants Fund was utilized during the year to account for the American Rescue Plan Act (ARPA) funding made available by the Department of the Treasury. This federal funding was provided to assist state, county, and local governments after the pandemic. The fund balance remained relatively unchanged since all funds received were used to pay for a portion of the Town’s public safety contracts during the fiscal year. The Technology Replacement Fund is the Town’s sole proprietary fund. Unrestricted net position of this fund at the end of the fiscal year amounted to $118,728. This was an increase of $22,941 that was due to internal charges to other governmental funds. Page 30 TOWN OF FOUNTAIN HILLS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 BUDGETARY HIGHLIGHTS A majority of the budget transfers for the fiscal year moved budget authority between departments within the General Fund; however, the final budget for the General Fund did decrease $3.2 million as a result of budget transfers to the Grants fund to pay public safety costs using ARPA funding. A schedule showing the budget amounts compared to the Town’s actual financial activity for the General Fund is provided in this report as required supplementary information. The significant variances are summarized as follows:  The favorable variance of $1.8 million in overall revenues is primarily due to increased local sales taxes.  The favorable total expenditures variance of $5.8 million is due primarily to lowered expenditures throughout all departments. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets. As of the end of the current fiscal year, the Town had invested $102.3 million in capital assets, including buildings, facilities, vehicles, computers, equipment, infrastructure and artwork. This amount represents a net increase, prior to depreciation, of $3.8 million from the prior fiscal year. The increase was primarily due to the Community Center renovation, improvements to the storm water system, purchase and replacement of vehicles and equipment, and continuation of the sidewalk infill program. Total depreciation expense for the current fiscal year was $5.4 million. The following schedule presents a summary of capital asset balances for the fiscal years ended June 30, 2022 and June 30, 2021. Governmental Activities As of June 30, 2022 As of June 30, 2021 Capital assets – non-depreciable $ 34,894,320 $ 34,155,329 Capital assets – depreciable, net 67,452,417 69,666,856 Total $102,346,737 $103,822,185 The estimated construction commitments amount is $291,779. Additional information on the Town’s capital assets can be found in Note 6. Page 31 TOWN OF FOUNTAIN HILLS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 CAPITAL ASSETS AND DEBT ADMINISTRATION Debt Administration. The Town does not currently have any outstanding debt. Therefore, there were not any town-wide taxes levied in FY22. State statutes currently limit the amount of general obligation debt a Town may issue to a percentage of its total assessed valuation for water, sewer, artificial lighting, parks, open space, recreational facility improvements, public safety, law enforcement, fire and emergency facilities and street and transportation facilities. The current 20 percent debt limitation for the Town is $126 million. State statutes also currently limit the amount of general obligation debt a Town may issue to a percentage of its total assessed valuation for all other purposes. The current 6 percent debt limitation for the Town is $37.8 million. Additional information on the Town’s long-term debt can be found in Note 7 in the notes to the financial statements. CONTACTING THE TOWN’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the Town’s finances and to demonstrate the Town’s accountability for the resources it receives. If you have questions about this report or need additional information, contact the Finance Division, Town of Fountain Hills, 16705 East Avenue of the Fountains, Fountain Hills, Arizona 85268 or visit our website at www.fountainhillsaz.gov. Page 32 BASIC FINANCIAL STATEMENTS Page 33 (This page intentionally left blank) Page 34 GOVERNMENT-WIDE FINANCIAL STATEMENTS Page 35 ASSETS Current assets: Cash and investments Accounts receivable Intergovernmental receivable Taxes receivable Leases receivable Interest receivable Inventory, at cost Prepaid items Total current assets Noncurrent assets: Capital assets not being depreciated Capital assets, net of accumulated depreciation Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Retainage payable Accrued wages and benefits Other liabilities Customer deposits Compensated absences payable Unearned revenues Total current liabilities Noncurrent liabilities: Non-current portion of long-term liabilities Total noncurrent liabilities Total liabilities DEFERRED INFLOWS OF RESOURCES Leases NET POSITION Net investment in capital assets Restricted for: Public works Capital outlay Debt service Unrestricted Total net position Governmental Activities $ 33,773,162 177,100 846,275 25,423 2,152,999 25,900 14,845 40,717 37,056,421 34,894,320 67,452,417 102,346,737 139,403,158 2,037,430 6,429 197,134 1,135 66,608 334,903 230,304 2,873,943 297,878 297,878 3,171,821 2,124,397 102,346,737 3,585,826 1,958,521 205,379 26,010,477 $134,106,940 TOWN OF FOUNTAIN HILLS, ARIZONA STATEMENT OF NET POSITION JUNE 30, 2022 The notes to the basic financial statements are an integral part of this statement. Page 36 Program Revenues Net (Expense) Revenue and Changes in Net Position Functions/Programs Governmental activities: General government Development services Public safety Public works Culture and recreation Total governmental activities Expenses $ 4,333,863 1,068,260 9,487,150 9,780,920 3,999,178 $28,669,371 Charges for Services $ 498,242 947,431 89,140 654,434 641,269 $2,830,516 Operating Grants and Contributions $ 217,970 4,260,581 1,855,049 47,980 $6,381,580 Capital Grants and Contributions $ 28,000 133,751 $161,751 Governmental Activities $ (3,617,651) (120,829) (5,137,429) (7,243,437) (3,176,178) (19,295,524) General revenues: Taxes: Property taxes Sales taxes Franchise taxes State sales & income tax revenue sharing - unrestricted Vehicle license tax revenue sharing - unrestricted Investment earnings Miscellaneous Total general revenues Changes in net position Net position, beginning of year Net position, end of year 9,728 17,660,758 399,007 6,541,023 1,180,100 (419,006) 280,140 25,651,750 6,356,226 127,750,714 $134,106,940 TOWN OF FOUNTAIN HILLS, ARIZONA STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2022 The notes to the basic financial statements are an integral part of this statement. Page 37 (This page intentionally left blank) Page 38 FUND FINANCIAL STATEMENTS Page 39 ASSETS Cash and investments Accounts receivable Intergovernmental receivable Taxes receivable Leases receivable Interest receivable Inventory, at cost Prepaid items Total assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable Retainage payable Accrued wages and benefits Other liabilities Customer deposits Unearned revenues Total liabilities Deferred inflows of resources: Unavailable revenues - property taxes Unavailable revenues - other Leases Total deferred inflows of resources Fund balances: Nonspendable Restricted Committed Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources and fund balances General $ 14,412,273 110,397 587,311 2,152,999 11,901 14,845 36,464 $17,326,190 $ 478,052 177,171 884 66,608 11,654 734,369 6,851 2,124,397 2,131,248 51,309 3,664,240 1,278,191 9,466,833 14,460,573 $17,326,190 Highway User Revenue $ 4,160,922 40,624 238,491 $4,440,037 $ 498,019 15,084 237 513,340 23,401 23,401 3,553,984 349,312 3,903,296 $4,440,037 Grants $ 577,413 $577,413 $ 350,322 218,650 568,972 8,441 8,441 $577,413 TOWN OF FOUNTAIN HILLS, ARIZONA BALANCE SHEET - GOVERNMENTAL FUNDS JUNE 30, 2022 The notes to the basic financial statements are an integral part of this statement. Page 40 Capital Projects $ 10,597,672 23,871 13,419 $10,634,962 $ 634,302 6,429 640,731 4,068,310 5,925,921 9,994,231 $10,634,962 Non-Major Governmental Funds $ 3,906,154 2,208 20,473 25,423 580 4,253 $3,959,091 $ 76,735 4,879 14 81,628 25,258 25,258 4,253 2,138,642 1,442,971 266,339 3,852,205 $3,959,091 Total Governmental Funds $ 33,654,434 177,100 846,275 25,423 2,152,999 25,900 14,845 40,717 $36,937,693 $ 2,037,430 6,429 197,134 1,135 66,608 230,304 2,539,040 25,258 30,252 2,124,397 2,179,907 55,562 5,701,067 9,175,521 7,819,763 9,466,833 32,218,746 $36,937,693 Page 41 (This page intentionally left blank) Page 42 Total governmental fund balances Amounts reported for governmental activities in the Statement of 32,218,746$ Net Position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental capital assets 235,641,934$ Less accumulated depreciation (133,295,197)102,346,737 Some receivables are not available to pay for current period expenditures and, therefore, are reported as deferred inflows of resources in the funds. Property taxes 25,258 Other 30,252 55,510 Long-term liabilities (compensated absences payable) are not due and payable in the current period and, therefore, are not reported in the funds.(632,781) The Internal Service Fund is used by management to charge the cost of technology replacement to the individual funds. The assets and liabilities of the Internal Service Fund are included in the Statement of Net Position.118,728 Net position of governmental activities 134,106,940$ TOWN OF FOUNTAIN HILLS, ARIZONA RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2022 The notes to the basic financial statements are an integral part of this statement. Page 43 Revenues: Property taxes Sales taxes Franchise taxes Licenses and permits Leases and rents Intergovernmental Charges for services Other Fines and forfeitures Investment earnings Total revenues Expenditures: Current - General government Development services Public safety Public works Culture and recreation Capital outlay Debt service - Fiscal charges Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfer in Transfer out Total other financing sources (uses) Changes in fund balances Fund balances, beginning of year Fund balances, end of year General $ 14,943,722 399,007 1,432,438 330,492 6,946,835 167,478 371,515 197,381 (146,307) 24,642,561 3,665,700 1,041,531 4,971,958 1,114,400 3,021,991 129,336 13,944,916 10,697,645 (11,696,102) (11,696,102) (998,457) 15,459,030 $14,460,573 Highway User Revenue $ 1,217,983 3,454 2,681,119 3,679 24,481 6,219 3,936,935 3,207,526 3,207,526 729,409 2,000,000 2,000,000 2,729,409 1,173,887 $3,903,296 Grants $ 4,424,619 1,296 4,425,915 209,324 4,208,150 4,417,474 8,441 8,441 $8,441 TOWN OF FOUNTAIN HILLS, ARIZONA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2022 The notes to the basic financial statements are an integral part of this statement. Page 44 Capital Projects $ 890,062 28,543 (278,547) 640,058 824 762,296 3,686,167 4,449,287 (3,809,229) 9,306,102 9,306,102 5,496,873 4,497,358 $9,994,231 Non-Major Governmental Funds $ 11,482 608,991 606,911 71,751 7,299 26,583 (1,885) 1,331,132 229,409 628,230 144,535 13,196 598 1,015,968 315,164 656,051 (266,051) 390,000 705,164 3,147,041 $3,852,205 Total Governmental Funds $ 11,482 17,660,758 399,007 2,039,349 333,946 14,124,324 171,157 431,838 223,964 (419,224) 34,976,601 4,105,257 1,041,531 9,180,108 5,712,452 3,166,526 3,828,699 598 27,035,171 7,941,430 11,962,153 (11,962,153) 7,941,430 24,277,316 $32,218,746 Page 45 Changes in fund balances - total governmental funds 7,941,430$ Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report the portion of capital outlay for capitalized assets as expenditures. However, in the Statement of Activities, the costs of those assets are allocated over their estimated useful lives as depreciation expense. Expenditures for capitalized assets 3,890,700$ Less current year depreciation (5,356,585) (1,465,885) Some revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes (1,754) Other (12,925) (14,679) Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Loss on disposal of assets (9,563) Compensated absences (118,018) (127,581) The Internal Service Fund is used by management to charge the cost of technology replacement to the individual funds. The changes in net position of the Internal Service Fund is reported with governmental activities in the Statement of Activities.22,941 Changes in net position in governmental activities 6,356,226$ TOWN OF FOUNTAIN HILLS, ARIZONA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2022 The notes to the basic financial statements are an integral part of this statement. Page 46 ASSETS Current assets: Cash and investments Total current assets Total assets NET POSITION Unrestricted Total net position Governmental Activities: Internal Service Funds $118,728 118,728 118,728 118,728 $118,728 TOWN OF FOUNTAIN HILLS, ARIZONA STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2022 The notes to the basic financial statements are an integral part of this statement. Page 47 Operating revenues: Other Charges for services Total operating revenues Operating expenses: Cost of services Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Investment earnings Total nonoperating revenues (expenses) Changes in net position Total net position, beginning of year Total net position, end of year Governmental Activities: Internal Service Funds $ 1,690 65,004 66,694 43,971 43,971 22,723 218 218 22,941 95,787 $118,728 TOWN OF FOUNTAIN HILLS, ARIZONA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2022 The notes to the basic financial statements are an integral part of this statement. Page 48 TOWN OF FOUNTAIN HILLS, ARIZONA STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2022 Governmental Activities: Internal Service Funds Increase/Decrease in Cash and Cash Equivalents Cash flows from operating activities: Cash received from charges for services $ 65,004 Cash received from other sources 1,690 Cash payments to suppliers for goods and services (43,971) Net cash provided by/used for operating activities 22,723 Cash flows from investing activities: Investment income 218 Net cash provided by/used for investing activities 218 Net increase/decrease in cash and cash equivalents 22,941 Cash and cash equivalents, beginning of year 95,787 Cash and cash equivalents, end of year $ 118,728 Reconciliation of Cash and Cash Equivalents to the Statement of Net Position Cash and investments $ 118,728 Less investments not maturing in less than three months 0 Total cash and cash equivalents $ 118,728 The notes to the basic financial statements are an integral part of this statement. Page 49 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Town of Fountain Hills, Arizona (Town) have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. During the year ended June 30, 2022, the Town implemented the provisions of GASB Statement No. 87, Leases. This Statement increases the usefulness of the financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases. The statement establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. The Town’s analysis of contracts and agreements in effect at the beginning of the year resulted in no changes to beginning balances reported in the financial statements due to the implementation of this standard. The more significant of the Town’s accounting policies are described below. A. Reporting Entity The Town’s major operations include development services, culture and recreation, public works, public safety and general administrative services. The Town is a municipal corporation governed by an elected Mayor and Council. The financial reporting entity consists of a primary government and its component units. A component unit is a legally separate entity that must be included in the reporting entity in conformity with generally accepted accounting principles. The Town is a primary government that has a separately elected governing body, is legally separate, and is fiscally independent of other state or local governments. Furthermore, the component units combined with the Town for financial statement presentation purposes and the Town are not included in any other governmental reporting entity. Consequently, the Town’s financial statements include only the funds of those organizational entities for which its elected governing body is financially accountable. Page 50 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Eagle Mountain Community Facilities District and the Cottonwoods Maintenance District. As special purpose districts and separate political subdivisions under the Arizona Constitution, the Districts can levy taxes and issue bonds independently of the Town. Property owners in the designated areas are assessed taxes for the costs of operating the Districts. The Town Council serves as the Board of Directors; however, the Town has no liability for the Districts’ debt, the Districts are responsible for the debt; the debt is therefore not subject to the Town’s debt limit. The Districts cannot be part of another reporting entity. The Districts’ governing bodies are substantially the same as the Town and the Town’s management oversees operations, resulting in the Town having the ability to exercise control. As a result, for financial reporting purposes, transactions of the Districts are combined together and included as if they were part of the Town’s operations. Town of Fountain Hills, Arizona Municipal Property Corporation. The Town of Fountain Hills, Arizona Municipal Property Corporation’s (MPC) Board of Directors consists of three members which are appointed by the Fountain Hills Town Council. The MPC, which is a nonprofit corporation incorporated under the laws of the State of Arizona, was formed for the sole purpose of assisting the Town in obtaining financing for various projects of the Town. The Town has a “moral obligation” for the repayment of the MPC’s bonds. The MPC cannot be part of another reporting entity. The MPC provides services exclusively to the Town. As a result, for financial reporting purposes, transactions of the MPC are combined together and included as if they were part of the Town’s operations. B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) present financial information about the Town as a whole. The reported information includes all of the Town's component units. For the most part, the effect of internal activity has been removed from these statements. Interfund services provided and used, such as interfund transfers, are not eliminated in the process of consolidation. Governmental activities normally are supported by taxes and intergovernmental revenues. The Town does not have any fiduciary or business-type activities. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes, unrestricted state shared revenues, investment income and other items not included among program revenues are reported instead as general revenues. Page 51 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation Government-wide Financial Statements – The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. As a general rule, the effect of internal activity has been eliminated from the government- wide financial statements; however, the effects of interfund services provided and used between functions are reported as expenses and program revenues at amounts approximating their external exchange value. Fund Financial Statements – Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Town considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, and claims and judgments, are recorded only when payment is due. Property taxes, sales taxes, franchise taxes, state shared revenues, licenses and permits, charges for services, and investment earnings associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Grants and similar awards are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. Miscellaneous revenue is not susceptible to accrual because generally they are not measurable until received in cash. Unearned revenues arise when resources are received by the Town before it has legal claim to them, as when grant monies are received prior to meeting all eligibility requirements imposed by the provider. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. The Town reports the following major governmental funds. General Fund – The General Fund is the Town’s primary operating fund. This fund accounts for all financial resources of the Town, except those required to be accounted for in other funds. Page 52 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Highway User Revenue Fund (HURF) – This fund accounts for the Town’s share of motor vehicle fuel tax revenues and sales tax. Grants Fund – This fund accounts for the activities of various restricted grants and contributions received by the Town. Capital Projects Fund – This fund accounts for the capital improvements to various projects and equipment purchases of the Town. Additionally, the Town reports the following fund type: Proprietary Fund – The Proprietary Fund is an Internal Service Fund that accounts for the operation of technology replacement services to other Town departments on a cost reimbursement basis. The Proprietary Fund financial statements are reported using the economic resources measurement focus and accrual basis of accounting and are presented in a single column. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Town’s internal service fund are charges to Town departments for technology replacement. Operating expenses for the internal service fund include the cost of goods and services. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. D. Cash and Investments For purposes of the Statement of Cash Flows, the Town considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents at year end was cash and investments in the State Treasurer’s Local Government Investment Pool. Cash and investments at year end were cash on hand, cash in bank, restricted cash, cash and investments held by the State Treasurer, and investments in the State Treasurer’s Local Government Investment Pool. Cash and investments are pooled, except for investments that are restricted under provisions of bond indentures or other restrictions that are required to be reported in the individual funds. Page 53 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Arizona Revised Statutes authorize the Town to invest public monies in the State Treasurer’s local government investment pools, the County Treasurer’s investment pool, obligations of the U.S. Government and its agencies, obligations of the state and certain local government subdivisions, interest-bearing savings accounts and certificates of deposit, collateralized repurchase agreements, certain obligations of U.S. corporations, and certain other securities. Investments are stated at fair value. Statutes do not include any requirements for credit risk, custodial credit risk, concentration of credit risk, interest rate risk, or foreign currency risk for the Town’s investments. Arizona statute requires a pooled collateral program for public deposits and a Statewide Collateral Pool Administrator (Administrator) in the State Treasurer’s Office. The purpose of the pooled collateral program is to ensure that governmental entities’ public deposits placed in participating depositories are secured with collateral of 102 percent of the public deposits, less any applicable federal depository insurance. An eligible depository may not retain or accept any public deposit unless it has deposited the required collateral with a qualified escrow agent or the Administrator. The Administrator manages the pooled collateral program, including reporting on each depository’s compliance with the program. E. Investment Earnings Investment earnings is composed of interest, dividends, and net changes in the fair value of applicable investments. Investment earnings is a component of revenue in the governmental funds financial statements and is reported in nonoperating revenue in the proprietary fund financial statements. F. Receivables and Payables Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). Interfund balances between governmental funds are eliminated on the statement of net position. Page 54 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES G. Property Tax Calendar Property taxes are levied by the Town and collected by the Maricopa County Treasurer. Property taxes are levied no later than the third Monday in August and are payable in two installments due October 1 of the current year and March 1 of the subsequent year. Taxes become delinquent after the first business day of November and May, respectively. Interest attaches on installments after the delinquency date. Pursuant to A.R.S., a lien against assessed real and personal property attaches on the first day of January preceding assessment and levy; however according to case law, an enforceable legal claim to the asset does not arise. All receivables are shown net of an allowance for uncollectibles. H. Inventory All inventories are valued at average cost using the first-in/first-out (FIFO) method. Inventories consist of expendable supplies held for consumption. Inventories are recorded as expenses when consumed in the government-wide financial statements, and as expenditures when consumed in the governmental funds. I. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. In the government-wide and fund financial statements, prepaids are recognized as expenses/expenditures when goods and/or services are received rather than when purchased. J. Capital Assets Capital assets, which include land and improvements, artwork, buildings and improvements, vehicles, machinery, and equipment, construction in progress, infrastructure assets, and intangible right-to-use assets are reported in the government-wide financial statements. Capital assets are defined by the Town as assets with an initial, individual cost in excess of $10,000 and an estimated useful life in excess of one year. Capital assets are recorded at historical cost, if purchased or constructed. Donated capital assets are recorded at the acquisition value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the assets or materially extend the life of the asset are not capitalized. Page 55 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Capital assets of the Town are depreciated using the straight-line method over the following estimated useful lives: Buildings and building improvements 20 - 50 years Improvements other than buildings 20 years Infrastructure 15 - 50 years Vehicles, machinery and equipment 5 - 20 years K. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position may report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then. The Town did not have any items that qualified for reporting in this category. In addition to liabilities, the statement of financial position may report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. L. Compensated Absences The Town’s employee vacation and sick leave policies generally provide for granting vacation and sick leave with pay. Sick leave and vacation benefits accrue as pay periods are completed at the current rate of pay. All eligible full-time and part-time regularly-scheduled employees can accrue vacation leave. Employees accrue up to a maximum of two times the yearly maximum accrual of vacation through carryover of balances. In the event of termination, employees will be paid for any accrued, but unused, vacation hours. Full-time and part-time regularly-scheduled employees accrue sick leave, up to a maximum of 1040 hours. Part-time non-regularly-scheduled, temporary, or seasonal, and other employees accrue paid sick time for hours worked, not to exceed 40 hours per calendar year. The current and long-term liabilities, including related benefits, for accumulated vacation and sick leave are reported on the government-wide financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee termination, resignations and retirements. Generally, resources from the General Fund are used to pay for compensated absences. Page 56 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES M. Long-term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities on the statement of net position. Bond premiums and discounts are amortized over the life of the bonds using the straight-line method. Deferred amounts on refunding result from the difference between the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. N. Interfund Activity Flows of cash from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers between governmental funds are eliminated in the statement of activities. Interfund transfers in the fund financial statements are reported as other financing sources/uses in governmental funds. O. Net Position Flow Assumption In the government-wide financial statements the Town applies restricted resources first when outlays are incurred for purposes for which either restricted or unrestricted amounts are available. P. Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. Page 57 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Q. Leases As lessor, the Town recognizes lease receivables with an initial, individual value of $50,000 or more. If there is no stated rate in the lease contract (or if the stated rate is not the rate the Town charges the lessee) and the implicit rate cannot be determined, the Town uses its own estimated incremental borrowing rate as the discount rate to measure lease receivables. The Town’s estimated incremental borrowing rate was determined at the time of implementation of GASB 87 and was estimated since the Town does not have outstanding debt. The rate was based on the prevailing federal funds rate during the fiscal year. This rate reflects the low risk of renting these facilities over a long lease period with multiple renewals. NOTE 2 – FUND BALANCE CLASSIFICATIONS Fund balances of the governmental funds are reported separately within classifications based on a hierarchy of the constraints placed on the use of those resources. The classifications are based on the relative strength of the constraints that control how the specific amounts can be spent. The classifications are nonspendable, restricted, committed, assigned, and unassigned fund balance classifications. Nonspendable. The nonspendable fund balance classification includes amounts that cannot be spent because they are not in spendable form, or legally or contractually required to be maintained intact. Restricted. Fund balance is reported as restricted when constraints placed on the use of resources are either externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or is imposed by law through constitutional provisions or enabling legislation. Committed. The committed fund balance classification includes amounts that can be used only for the specific purposes imposed by formal action of the Town Council, the Town’s highest level of decision making authority, by ordinance. Those committed amounts cannot be used for any other purpose unless the Town Council removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. Assigned. Amounts in the assigned fund balance classification are intended to be used by the Town for specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental funds other than the General Fund, assigned fund balance represents the remaining amount that is not restricted or committed. In the General Fund, assigned amounts represent intended uses established by the Town Council or a management official delegated that authority by formal Town Council action. The authority to make assignments has been delegated by the Town Council to the Finance Director. Page 58 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 2 – FUND BALANCE CLASSIFICATIONS Unassigned. Unassigned fund balance is the residual classification for the General Fund and includes all spendable amounts not contained in the other classifications. In other governmental funds, the unassigned classification is used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed, or assigned. The Town applies restricted resources first when outlays are incurred for purposes for which either restricted or unrestricted (committed, assigned, and unassigned) amounts are available. Similarly, within unrestricted fund balance, committed amounts are reduced first followed by assigned, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used. The Town has established a fund balance policy which states that the combined General Fund operating fund balance should be at least 30 percent of the average actual General Fund revenues for the preceding five fiscal years. The Town has established a stabilization fund (Rainy Day fund) in the Town’s fund balance policy. The Rainy Day fund had a balance of $3,595,599, reported as a committed fund balance at June 30, 2022. The Rainy Day fund may only be used for the following: 1) to replace the loss of more than 20 percent of the Town’s local share of state shared revenues, 2) for any event that threatens the health, safety or welfare of the Town’s citizens, 3) for any event that threatens the fiscal stability of the Town, and lastly 4) to address any matter declared as an emergency by the governor of the State of Arizona or the Mayor of the Town. All withdrawals from the Rainy Day fund shall be subject to the following rules: 1) any appropriation shall require the approval by at least 2/3 vote by the Town Council, and 2) the maximum amount of Rainy Day withdrawal in any fiscal year shall not exceed one-half of the total balance in the fund. Replenishment of the Rainy Day fund when spent by the Town should not exceed a period of more than five years, and should be repaid in annual installments of not less than one percent of the previous fiscal year General Fund balance. Repayments shall be appropriated as part of the annual budget adoption. Page 59 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 2 – FUND BALANCE CLASSIFICATIONS The table below provides detail of the major components of the Town’s fund balance classifications at year end. NOTE 3 – CASH AND INVESTMENTS Custodial Credit Risk – Deposits. Custodial credit risk is the risk that in the event of bank failure the Town’s deposits may not be returned to the Town. The Town does not have a deposit policy for custodial credit risk. At year end, the carrying amount of the Town’s deposits was $649,127 and the bank balance was $984,461. At year end, $484,461 of the Town’s deposits were covered by collateral held by the pledging financial institution in the Town’s name. The remaining amount is covered by FDIC. General Fund Highway User Revenue Fund Grants Fund Capital Projects Fund Non-Major Governmental Funds Total Fund Balances: Nonspendable: Inventory $ 14,845 $ $ $ $ $ 14,845 Prepaid items 36,464 4,253 40,717 Restricted: Capital Projects 13,357 13,357 Debt Service 180,121 180,121 Highways and Streets 3,553,984 8,441 3,562,425 Development Fees 1,945,164 1,945,164 Committed: Rainy Day 3,595,599 3,595,599 Public Art 68,641 68,641 Downtown Strategy 518,590 518,590 Economic Development 316,134 316,134 Tourism 205,872 205,872 Capital Projects 4,068,310 4,068,310 Local Court Enhancement 402,375 402,375 Assigned: Capital Projects 5,925,921 5,925,921 Environmental 266,339 266,339 Vehicle Replacement 1,278,191 349,312 1,627,503 Unassigned: 9,466,833 9,466,833 Total fund balances $ 14,460,573 $ 3,903,296 $ 8,441 $ 9,994,231 $ 3,852,205 $ 32,218,746 Page 60 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 3 – CASH AND INVESTMENTS Fair Value Measurements. The Town categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset.  Level 1 inputs are quoted prices in active markets for identical assets  Level 2 inputs are significant other observable inputs  Level 3 inputs are significant unobservable inputs Valuation Techniques. Equity securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Debt securities classified in Level 2 of the fair value hierarchy are valued using matrix pricing techniques. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. The State Treasurer’s pools are external investment pools, the Local Government Investment Pool (Pool 5) and Local Government Investment Pool-Government (Pool 7), with no regulatory oversight. The pools, as an investment company, are not registered with the Securities and Exchange Commission. The activity and performance of the pools are reviewed monthly by the State Board of Investment. The fair value of each participant’s position in the State Treasurer investment pools approximates the value of the participant’s shares in the pool and the participants’ shares are not identified with specific investments. Participants in the pool are not required to categorize the value of shares in accordance with the fair value hierarchy. All investments in which the fair value hierarchy is applicable are measured at fair value on a recurring basis. At year end, cash and investments as of June 30, 2022, are classified in the accompanying financial statements as follows: Carrying amount of investments $33,123,335 Carrying amount of cash deposits 649,127 Cash on hand 700 Total pooled cash and investments $33,773,162 Page 61 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 3 – CASH AND INVESTMENTS At year end, the Town’s investments consisted of the following: Investment Maturities (in Years) Credit Rating Investment Type Category Fair Value Less than 1 1-5 S&P Moody’s U.S. Government and Agency Notes Level 1 $ 7,150,305 $ $ 7,150,305 AA+ Aaa Supra-National Notes Level 1 550,858 68,524 482,334 AAA Aaa Federal Agency Notes Level 1 1,484,861 512,533 972,328 AA+ Aaa Corporate and Foreign Bonds Level 2 2,865,388 49,866 2,815,522 BBB+ to AA- A1, A2, A3, Aa3 Asset Backed Securities Level 2 904,114 904,114 AAA, NR Aaa, NR Certificates of Deposit Level 2 196,541 196,541 A-1, A-1+ P-1 US Bank Money Market Funds Level 1 47,749 n/a n/a $ 827,464 $12,324,603 State Treasurer’s Investment Pool 7 Not applicable 19,923,519 33 days average maturities Total $33,123,335 Interest Rate Risk. Interest rate risk is the risk that changes in interest rates may reduce the market value of Town investments. In accordance with its investment policy, the Town manages its exposure to declines in fair values by the following:  Structuring the investment portfolio so that securities mature concurrent with the anticipated cash requirements for ongoing operations, thereby avoiding, as much as possible, the need to sell securities into an adverse market environment prior to maturity.  Investing funds primarily in shorter-term securities or similar investment pools and limiting the average maturity of the portfolio in accordance with the needs of the Town.  With respect to any firm or individual given responsibility for investments utilizing external research and advice regarding the current interest rate outlook and global economic condition to optimize portfolio duration strategy. Page 62 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 3 – CASH AND INVESTMENTS Credit Risk. Credit risk is the risk of default of debt by an issuer or counterparty to an investment. The Town will limit credit risk by limiting investments in the Town’s portfolio to the asset classes designated as acceptable in ARS §35-323. When possible, analysis of the credit worthiness of all individual debt issuers held in the portfolio should be conducted on an annual basis in an effort to guard against investing in a weak or deteriorating credit situation. Additionally, the Town will pre-qualify financial institutions, brokers/dealers, and investment advisers with which the Town will do business. The State Treasurer’s Local Government Investment Pool 7 was rated AAA by Moody’s at year end. Custodial Credit Risk – Investments. Custodial credit risk is the risk that in the event of depository financial institution failure, the Town’s deposits may not be returned to the Town. The Town’s investment in the State Treasurer’s investment pool represents a proportionate interest in the pool’s portfolio; however the Town’s portion is not identified with specific investments and is not subject to custodial credit risk. Concentration of Credit Risk. Concentration of credit risk is the risk of loss from over concentration of investments. In accordance with its investment policy, the Town diversifies its investment portfolio to minimize the risk of loss resulting from over concentration of assets in a specific maturity, specific issuer, or specific class of securities. With the exception of U.S. Treasury notes and securities and authorized pools, the investment policy establishes a maximum percentage of 30 percent in insured or collateralized certificates of deposit; 20 percent in certificates of deposit registry services; 30 percent in commercial paper; and 30 percent in bonds, debentures, or notes. Investment Type Fair Value Percent of Town Investments U.S. Government and Agency Notes $ 7,150,305 21.6% Supra-National Notes 550,858 1.7% Federal Agency Notes 1,484,861 4.5% Corporate and Foreign Bonds 2,865,388 8.7% Asset Backed Securities 904,114 2.7% Certificates of Deposit 196,541 0.6% US Bank Money Market Funds 47,749 0.1% State Treasurer’s investment pool 7 19,923,519 60.1% $ 33,123,335 Page 63 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 4 – RECEIVABLES Receivable balances, net of allowance for uncollectibles, have been disaggregated by type and presented separately in the financial statements with the exception of intergovernmental receivables. Intergovernmental receivables, net of allowance for uncollectibles, as of year-end for the Town’s individual major funds consisted entirely of receivables due from the State. NOTE 5 – LEASES RECEIVABLE The Town has cell tower land agreements and a fire station ambulance bay usage agreement that fall under the provisions of contracts classified as leases. The related receivables under the lease agreements have been recorded at the present value of their future minimum lease payments as of the implementation date. Lease revenue of $167,062 and related interest revenue of $27,947 are recorded as leases and rents in the General Fund. Future minimum lease payments to be received under the lease agreements at year end are summarized as follows: Year ending June 30: 2023 $ 178,866 2024 187,250 2025 194,146 2026 202,850 2027 129,538 2028-32 617,804 2033-37 292,856 2038-42 251,723 2043-45 97,966 Total $ 2,152,999 Page 64 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 6 – CAPITAL ASSETS A summary of capital asset activity at year end is as follows: Governmental Activities Beginning Balance Increase Decrease Ending Balance Capital assets, not being depreciated: Land $ 29,690,368 $ $ $ 29,690,368 Artwork 2,573,900 35,000 2,608,900 Construction in progress 1,891,061 3,654,675 2,950,684 2,595,052 Total capital assets, not being depreciated 34,155,329 3,689,675 2,950,684 34,894,320 Capital assets, being depreciated: Infrastructure 154,563,278 796,416 155,359,694 Buildings and building improvements 23,116,505 304,784 23,421,289 Improvements other than buildings 15,424,522 1,596,157 43,531 16,977,148 Vehicles, machinery and equipment 4,610,044 454,352 74,913 4,989,483 Total capital assets being depreciated 197,714,349 3,151,709 118,444 200,747,614 Less accumulated depreciation for: Infrastructure (107,205,207)(4,070,189)(111,275,396) Buildings and building improvements (6,969,648) (495,689) (7,465,337) Improvements other than buildings (11,953,133)(442,794)(33,968)(12,361,959) Vehicles, machinery and equipment (1,919,505) (347,913) (74,913) (2,192,505) Total accumulated depreciation (128,047,493)(5,356,585)(108,881)(133,295,197) Total capital assets, being depreciated, net 69,666,856 (2,204,876)9,563 67,452,417 Governmental activities capital assets, net $ 103,822,185 $ 1,484,799 $ 2,960,247 $ 102,346,737 Depreciation expense was charged to functions/programs as follows: Governmental activities: General government $ 206,609 Development services 16,721 Public safety 307,042 Streets and highways 4,025,741 Culture and recreation 800,472 Total depreciation expense $ 5,356,585 Page 65 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 6 – CAPITAL ASSETS Construction Commitments – At June 30, 2022, the Town has the following active construction commitments. The resources for these commitments have been accumulated in the Capital Projects Fund. Governmental Activities Project Spent-to-Date Remaining Commitment Golden Eagle Drainage Improvements $ 273,424 $ 19,571 Storm Drain Improvements - Panarama Drive 167,035 14,370 Fire Alarm Control Panel Upgrades 95,161 6,429 Four Peaks Park Playground Upgrade 1,203,648 61,352 Shea Boulevard Widening - Palisades to Technology 178,851 166,723 Town-wide Guardrail Replacements 26,105 23,334 Total commitments $ 1,944,224 $ 291,779 NOTE 7 – CHANGES IN LONG-TERM LIABILITIES Long-term liability activity for the current fiscal year was as follows: Beginning Balance Additions Reductions Ending Balance Due Within One Year Governmental activities: Compensated absences payable $ 514,763 $ 367,897 $ 249,879 $ 632,781 $ 334,903 Governmental activity long-term Liabilities $ 514,763 $ 367,897 $ 249,879 $ 632,781 $ 334,903 NOTE 8 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS At year end, interfund balances were as follows: Interfund transfers: At year end, interfund transfers were as follows: Transfers out Transfers in General Fund Non-Major Governmental Funds Total HURF Fund $ 2,000,000 $ $ 2,000,000 Capital Projects Fund 9,306,102 9,306,102 Non-Major Governmental Funds 390,000 266,051 656,051 Total $ 11,696,102 $ 266,051 $11,962,153 Page 66 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 8 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS The General Fund transferred $9,196,102 to the Capital Projects Fund for future projects, as required by the Town’s financial policies; $2,000,000 to Highway User Revenue Fund for additional pavement maintenance projects; and $500,000 to Environmental Fund for continued storm drain and wash maintenance. The Economic Development Fund transferred $156,051 to the Tourism Fund to provide funding for operating costs of the tourism program. The Development Fee Fund transferred $110,000 to the Capital Projects Fund for expansion of the Fountain Park splash pad. NOTE 9 – CONTINGENT LIABILITIES Compliance – Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the state government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures/expenses that may be disallowed by the grantor cannot be determined at this time, although the Town expects such amounts, if any, to be immaterial. Lawsuits – The Town is a party to a number of various types of lawsuits, many of which normally occur in governmental operations. The ultimate outcome of the actions is not determinable; however, Town management believes that the outcome of these proceedings, either individually or in the aggregate, will not have a materially adverse effect on the accompanying financial statements. NOTE 10 – RISK MANAGEMENT The Town is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters. The Town’s insurance protection is provided by the Arizona Municipal Risk Retention Pool (Pool). The Pool is made up of various towns and cities within Arizona that operate a common risk management and insurance program. The Pool is structured such that member premiums are based on an actuarial review that will provide adequate reserves to allow the Pool to meet its expected financial obligations. The Pool has the authority to assess its’ members additional premiums should reserves and annual premiums be insufficient to meet the Pool’s obligations. Page 67 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 10 – RISK MANAGEMENT The Town joined the Arizona Municipal Workers’ Compensation Pool (Pool) together with other governments in the state for risks of loss related to workers’ compensation claims. The Pool is a public entity risk pool currently operating as a common risk management and insurance program for towns and cities in the State. The Town is responsible for paying a premium, based on an experience rating formula that allocates pool expenditures and liabilities among members. The Town continues to carry commercial insurance for all other risks of loss, including employee health, dental, and vision insurance. There were no settlements that exceeded insurance coverage in any of the past three years. NOTE 11 – RETIREMENT PLANS Defined Contribution Pension Plan All full-time employees of the Town participate in a defined contribution pension plan administered by the ICMA Retirement Corporation as a 401(a) plan. The contribution rates are 11 percent for both the employee and the Town. The payroll for the Town employees covered by this plan for the year ended June 30, 2022, was $3,994,381 The Town’s total payroll was $4,607,814. A defined contribution pension plan provides benefits in return for services rendered, provides an individual account for each participant, and specifies how contributions to the individual’s account are to be determined, instead of specifying the amount of benefit the individual is to receive. Under a defined contribution pension plan, the benefits a participant will receive depend solely on the amount contributed to the participant’s account and the returns earned on investment of those contributions. All full-time Town employees must participate in the pension plan from the date they are hired. Contributions made by an employee vest immediately and contributions made by the Town vest on a pro rata basis for five years. Town Council has the authority to establish and amend benefit terms and to establish and amend the contribution rates. The assets are held in a trust not controlled by the Town and all investment decisions are made by the employee. The plan does not require reporting under provisions of GASB Statement No. 84, Fiduciary Activities. Page 68 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 11 – RETIREMENT PLANS An employee that leaves the employment of the Town is entitled to his or her contributions and the vested portion of the Town’s contributions, plus interest earned. During the fiscal year, the Town’s required and actual contributions amounted to $439,382. The employees’ contributions totaled $439,382. Employees may also contribute to the ICMA Retirement Corporation 457 plan on a voluntary basis (with the exception of one contract employee that is limited to 11 percent of earnings); there is no employer match for those contributions. During the fiscal year, employees contributed $113,179 to that plan. The Town contributed $9,205 for the contract employee’s 457 account. No pension provision changes occurred during the year that affected the required contributions to be made by the Town or its employees. The ICMA Retirement Corporation held no securities of the Town or other related parties during the fiscal year 2021-22 or as of the close of the fiscal year. Page 69 (This page intentionally left blank) Page 70 REQUIRED SUPPLEMENTARY INFORMATION Page 71 14,943,722 $ 1,116,799 $ 11,361,021 $ 14,541,920 $ 14,460,573 $ (81,347) Variance with Final Budget Positive (Negative) (7,696,102) (81,347) - 200,530 60,246 4,772,807 260,776 5,753,128 7,614,755 - (7,696,102) 141,884 353,226 200,294 20,029 47,903 12,245 4,540,239 301,819 (166,997) 279,160 8,381 (172,947) 1,861,627 (11,696,102) (998,457) 15,459,030 (35,889) 483,188 4,971,958 13,944,916 10,697,645 (11,696,102) 927,378 4,044,580 129,336 3,665,700 1,041,531 3,021,991 2,310,087 408,115 62,684 6,946,835 167,478 371,515 197,381 (146,307) 24,642,561 (4,000,000) (917,110) 15,459,030 Actual 399,007 1,432,438 330,492 3,082,890 (4,000,000) 177,239 3,375,217 8,438,507 1,183,415 5,425,053 5,232,734 19,698,044 334,475 92,355 189,000 26,640 22,780,934 2,510,381 74,929 (4,098,009) 15,459,030 Final 434,896 949,250 282,379 6,645,016 22,878,943 (98,009) (4,000,000) (4,000,000) 106,000 74,929 4,286,584 5,154,300 7,556,495 1,183,415 3,340,217 9,440,884 189,000 26,640 22,780,934 2,430,581 428,144 4,622,841 Fund balances (deficits), end of year Budgeted Amounts Original 434,896 949,250 282,379 6,645,016 335,475 91,355 Other financing sources (uses): Transfer in Transfer out Total other financing sources (uses): Changes in fund balances Fund balances, beginning of year Culture and recreation Total public safety Total expenditures Administration Municipal court Excess (deficiency) of revenues over expenditures Non departmental Expenditures: Capital outlay Mayor and council Current - General government Public safetyFire and emergencyLaw enforcement Total general government Development services Intergovernmental Charges for services Other Fines and forfeitures Investment earnings Total revenues TOWN OF FOUNTAIN HILLS, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL YEAR ENDED JUNE 30, 2022 Revenues:Sales taxesFranchise taxesLicenses and permits Leases and rents 48,113 13,826,923 13,826,923 1,251,932 Public works 1,290,932 1,114,400 176,532 884,814 428,144 1,127,908 4,104,826 See accompanying notes to this schedule. Page 72 Revenues: Sales taxes Leases and rents Intergovernmental Charges for services Other Investment earnings Total revenues Expenditures: Current - Public works Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfer in Total other financing sources (uses) Changes in fund balances Fund balances, beginning of year Fund balances, end of year Budgeted Amounts Original & Final $ 1,145,328 2,494,416 200,000 31,000 24,000 3,894,744 5,846,567 5,846,567 (1,951,823) 2,000,000 2,000,000 48,177 1,173,887 $1,222,064 Actual $ 1,217,983 3,454 2,681,119 3,679 24,481 6,219 3,936,935 3,207,526 3,207,526 729,409 2,000,000 2,000,000 2,729,409 1,173,887 $3,903,296 Variance with Final Budget Positive (Negative) $ 72,655 3,454 186,703 (196,321) (6,519) (17,781) 42,191 2,639,041 2,639,041 2,681,232 2,681,232 $2,681,232 TOWN OF FOUNTAIN HILLS, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL HIGHWAY USER REVENUE YEAR ENDED JUNE 30, 2022 See accompanying notes to this schedule. Page 73 Revenues: Intergovernmental Investment earnings Total revenues Expenditures: Current - General government Public safety Total expenditures Changes in fund balances Fund balances, beginning of year Fund balances (deficits), end of year Budgeted Amounts Original $ 4,196,550 4,196,550 1,049,431 1,006,550 2,055,981 2,140,569 $2,140,569 Final $ 4,173,645 4,173,645 604,095 4,208,150 4,812,245 (638,600) $(638,600) Actual $ 4,424,619 1,296 4,425,915 209,324 4,208,150 4,417,474 8,441 $8,441 Variance with Final Budget Positive (Negative) $ 250,974 1,296 252,270 394,771 394,771 647,041 $647,041 TOWN OF FOUNTAIN HILLS, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GRANTS YEAR ENDED JUNE 30, 2022 See accompanying notes to this schedule. Page 74 TOWN OF FOUNTAIN HILLS, ARIZONA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2022 NOTE 1 – BUDGETARY BASIS OF ACCOUNTING The Town Council follows these procedures in establishing the budgetary data reflected in the financial statements: 1. In accordance with Arizona Revised Statutes, the Town Manager submits a proposed budget for the fiscal year commencing the following July 1 to the Town Council. The operating budget includes proposed expenditures and the means of financing them for the upcoming year. 2. Public hearings are conducted to obtain taxpayer comment. 3. Prior to the third Monday in August, the budget for the Town is legally enacted through passage of a resolution. To ensure compliance with the expenditure limitation, a uniform expenditure report must be filed with the State each year. This report, issued under a separate cover, reconciles total Town expenditures from the audited basic financial statements to total expenditures for reporting in accordance with the State’s uniform expenditure reporting system (A.R.S 41-1279.07). 4. Expenditures may not legally exceed the expenditure limitation described below for all fund types as a whole. For management purposes, the Town adopts a budget by department for the General Fund and in total by fund for other funds. The Town Manager, subject to Town Council approval, may at any time transfer any unencumbered appropriation balance or portion thereof between departments. The adopted budget cannot be amended in any way without Town Council approval. 5. Formal budgetary integration is employed as a management control device during the year for the General, Highway User Revenue, Excise Tax, Special Revenue, Debt Service, and Capital Projects Funds on essentially the same modified accrual basis of accounting used to record actual revenues and expenditures. The Town is subject to the State of Arizona’s Spending Limitation Law for Towns and Cities. This law does not permit the Town to spend more than budgeted revenues plus the carryover unrestricted cash balance from the prior fiscal year. The limitation is applied to the total of the combined funds. The Town complied with this law during the year. Page 75 (This page intentionally left blank) Page 76 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Page 77 ASSETS Cash and investments Accounts receivable Intergovernmental receivable Taxes receivable Interest receivable Prepaid items Total assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable Accrued wages and benefits Other liabilities Total liabilities Deferred inflows of resources: Unavailable revenues - property taxes Fund balances: Nonspendable Restricted Committed Assigned Total fund balances Total liabilities, deferred inflows of resources and fund balances Special Revenue $ 1,780,781 2,208 20,473 165 580 4,253 $1,808,460 $ 76,647 4,879 14 81,540 4,253 13,357 1,442,971 266,339 1,726,920 $1,808,460 Debt Service $ 180,209 25,258 $205,467 $88 88 25,258 180,121 180,121 $205,467 Capital Projects $ 1,945,164 $1,945,164 $ 1,945,164 1,945,164 $1,945,164 TOWN OF FOUNTAIN HILLS, ARIZONA COMBINING BALANCE SHEET - ALL NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE JUNE 30, 2022 Page 78 Total Non-Major Governmental Funds $ 3,906,154 2,208 20,473 25,423 580 4,253 $3,959,091 $ 76,735 4,879 14 81,628 25,258 4,253 2,138,642 1,442,971 266,339 3,852,205 $3,959,091 Page 79 Revenues: Property taxes Sales taxes Licenses and permits Intergovernmental Other Fines and forfeitures Investment earnings Total revenues Expenditures: Current - General government Public works Culture and recreation Capital outlay Debt service - Fiscal charges Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfer in Transfer out Total other financing sources (uses) Changes in fund balances Fund balances, beginning of year Fund balances, end of year Special Revenue $ 6,613 608,991 11,750 71,751 7,260 26,583 (5,049) 727,899 229,409 628,230 144,535 13,196 1,015,370 (287,471) 656,051 (156,051) 500,000 212,529 1,514,391 $1,726,920 Debt Service $ 4,869 39 280 5,188 598 598 4,590 4,590 175,531 $180,121 Capital Projects $ 595,161 2,884 598,045 598,045 (110,000) (110,000) 488,045 1,457,119 $1,945,164 TOWN OF FOUNTAIN HILLS, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE YEAR ENDED JUNE 30, 2022 Page 80 Total Non-Major Governmental Funds $ 11,482 608,991 606,911 71,751 7,299 26,583 (1,885) 1,331,132 229,409 628,230 144,535 13,196 598 1,015,968 315,164 656,051 (266,051) 390,000 705,164 3,147,041 $3,852,205 Page 81 (This page intentionally left blank) Page 82 NON-MAJOR GOVERNMENTAL FUNDS Special Revenue Funds Downtown Strategy Fund – accounts for the portion of Town sales tax committed by the Town Council for the development of the downtown area. Economic Development Fund – accounts for the portion of Town sales tax committed by the Town Council for economic development and tourism. Tourism Fund – accounts for the portion of Town sales tax committed by the Town Council as well as any grants received for all tourism activities. Local Court Enhancement Fund – accounts for a local court surcharge, committed for court enhancement. Environmental Fund – accounts for all funds received from collection of the environmental fee. Cottonwoods Maintenance Fund – accounts for all funds restricted to pay for maintenance of the Cottonwoods Maintenance District. Debt Service Funds General Obligation Debt Service Fund – accounts for the Town’s property tax revenues received to pay the debt service of the Town’s general obligation bonds. Eagle Mountain Debt Service Fund – accounts for the property tax revenues restricted to pay the debt service of the Eagle Mountain Community Facilities District. Municipal Property Corporation Debt Service Fund – accounts for the revenues received to pay the debt service on MPC revenue bonds. Capital Projects Funds Facilities Replacement Fund – accounts for all funds assigned for the maintenance and repair of facilities and equipment. Development Fees Fund – accounts for restricted development fees collected from building permits. Page 83 ASSETS Cash and investments Accounts receivable Intergovernmental receivable Taxes receivable Interest receivable Prepaid items Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued wages and benefits Other liabilities Total liabilities Fund balances: Nonspendable Restricted Committed Assigned Total fund balances Total liabilities and fund balances Downtown Strategy $ 515,678 3,454 580 $519,712 $ 1,122 1,122 518,590 518,590 $519,712 Economic Development $ 312,369 2,208 13,817 1,178 $329,572 $ 7,868 4,392 12,260 1,178 316,134 317,312 $329,572 Tourism $ 210,591 2,766 3,075 $216,432 $ 6,998 487 7,485 3,075 205,872 208,947 $216,432 TOWN OF FOUNTAIN HILLS, ARIZONA COMBINING BALANCE SHEET - NON-MAJOR SPECIAL REVENUE FUNDS JUNE 30, 2022 Page 84 Local Court Enhancement $ 401,939 436 $402,375 $ 402,375 402,375 $402,375 Environmental $ 326,464 $326,464 $ 60,111 14 60,125 266,339 266,339 $326,464 Cottonwoods Maintenance $ 13,740 165 $13,905 $ 548 548 13,357 13,357 $13,905 Totals $ 1,780,781 2,208 20,473 165 580 4,253 $1,808,460 $ 76,647 4,879 14 81,540 4,253 13,357 1,442,971 266,339 1,726,920 $1,808,460 Page 85 Revenues: Property taxes Sales taxes Licenses and permits Intergovernmental Other Fines and forfeitures Investment earnings Total revenues Expenditures: Current - General government Public works Culture and recreation Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfer in Transfer out Total other financing sources (uses) Changes in fund balances Fund balances, beginning of year Fund balances, end of year Downtown Strategy $ 121,798 (6,619) 115,179 46,357 46,357 68,822 68,822 449,768 $518,590 Economic Development $ 487,193 6,044 460 493,697 176,753 176,753 316,944 (156,051) (156,051) 160,893 156,419 $317,312 Tourism $ 71,751 1,216 335 73,302 144,535 144,535 (71,233) 156,051 156,051 84,818 124,129 $208,947 TOWN OF FOUNTAIN HILLS, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NON-MAJOR SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 2022 Page 86 Local Court Enhancement $ 26,583 165 26,748 6,299 13,196 19,495 7,253 7,253 395,122 $402,375 Environmental $ 11,750 590 12,340 611,382 611,382 (599,042) 500,000 500,000 (99,042) 365,381 $266,339 Cottonwoods Maintenance $ 6,613 20 6,633 16,848 16,848 (10,215) (10,215) 23,572 $13,357 Totals $ 6,613 608,991 11,750 71,751 7,260 26,583 (5,049) 727,899 229,409 628,230 144,535 13,196 1,015,370 (287,471) 656,051 (156,051) 500,000 212,529 1,514,391 $1,726,920 Page 87 Total revenues Revenues: Property taxes Sales taxes Licenses and permits Intergovernmental Other Fines and forfeitures Investment earnings Expenditures: Current - General government Public works Culture and recreation Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfer in Transfer out Total other financing sources (uses) Changes in fund balances Fund balances, beginning of year Fund balances, end of year Downtown Strategy Budget $ 114,528 1,260 115,788 270,200 270,200 (154,412) (154,412) 449,768 $295,356 Actual $ 121,798 (6,619) 115,179 46,357 46,357 68,822 68,822 449,768 $518,590 Variance - Positive (Negative) $ 7,270 (7,879) (609) 223,843 223,843 223,234 223,234 $223,234 TOWN OF FOUNTAIN HILLS, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL NON-MAJOR SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 2022 Page 88 Economic Development Budget $ 458,136 240 458,376 244,499 244,499 213,877 (156,051) (156,051) 57,826 156,419 $214,245 Actual $ 487,193 6,044 460 493,697 176,753 176,753 316,944 (156,051) (156,051) 160,893 156,419 $317,312 Variance - Positive (Negative) $ 29,057 6,044 220 35,321 67,746 67,746 103,067 103,067 $103,067 Tourism Budget $ 72,905 180 73,085 233,798 233,798 (160,713) 156,051 156,051 (4,662) 124,129 $119,467 Actual $ 71,751 1,216 335 73,302 144,535 144,535 (71,233) 156,051 156,051 84,818 124,129 $208,947 Variance - Positive (Negative) $ (1,154) 1,216 155 217 89,263 89,263 89,480 89,480 $89,480 (Continued) Page 89 Total revenues Revenues: Property taxes Sales taxes Licenses and permits Intergovernmental Other Fines and forfeitures Investment earnings Expenditures: Current - General government Public works Culture and recreation Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfer in Transfer out Total other financing sources (uses) Changes in fund balances Fund balances, beginning of year Fund balances, end of year Local Court Enhancement Budget $ 49,000 900 49,900 78,800 78,800 (28,900) (28,900) 395,122 $366,222 Actual $ 26,583 165 26,748 6,299 13,196 19,495 7,253 7,253 395,122 $402,375 Variance - Positive (Negative) $ (22,417) (735) (23,152) 72,501 (13,196) 59,305 36,153 36,153 $36,153 TOWN OF FOUNTAIN HILLS, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL NON-MAJOR SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 2022 Page 90 Environmental Budget $ 2,400 2,400 627,082 627,082 (624,682) 500,000 500,000 (124,682) 365,381 $240,699 Actual $ 11,750 590 12,340 611,382 611,382 (599,042) 500,000 500,000 (99,042) 365,381 $266,339 Variance - Positive (Negative) $ 11,750 (1,810) 9,940 15,700 15,700 25,640 25,640 $25,640 Cottonwoods Maintenance Budget $ 6,381 72 6,453 17,131 17,131 (10,678) (10,678) 23,572 $12,894 Actual $ 6,613 20 6,633 16,848 16,848 (10,215) (10,215) 23,572 $13,357 Variance - Positive (Negative) $ 232 (52) 180 283 283 463 463 $463 (Continued) Page 91 Total revenues Revenues: Property taxes Sales taxes Licenses and permits Intergovernmental Other Fines and forfeitures Investment earnings Expenditures: Current - General government Public works Culture and recreation Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfer in Transfer out Total other financing sources (uses) Changes in fund balances Fund balances, beginning of year Fund balances, end of year Totals Budget $ 6,381 572,664 72,905 49,000 5,052 706,002 593,499 644,213 233,798 1,471,510 (765,508) 656,051 (156,051) 500,000 (265,508) 1,514,391 $1,248,883 Actual $ 6,613 608,991 11,750 71,751 7,260 26,583 (5,049) 727,899 229,409 628,230 144,535 13,196 1,015,370 (287,471) 656,051 (156,051) 500,000 212,529 1,514,391 $1,726,920 Variance - Positive (Negative) $ 232 36,327 11,750 (1,154) 7,260 (22,417) (10,101) 21,897 364,090 15,983 89,263 (13,196) 456,140 478,037 478,037 $478,037 TOWN OF FOUNTAIN HILLS, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL NON-MAJOR SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 2022 Page 92 (This page intentionally left blank) Page 93 ASSETS Cash and investments Taxes receivable Total assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable Total liabilities Deferred inflows of resources: Unavailable revenues - property taxes Fund balances: Restricted Total fund balances Total liabilities, deferred inflows of resources and fund balances General Obligation Debt Service $ 150,562 25,258 $175,820 $ 25,258 150,562 150,562 $175,820 Eagle Mountain Debt Service $ 18,612 $18,612 $88 88 18,524 18,524 $18,612 Municipal Property Corporation Debt Service $ 11,035 $11,035 $ 11,035 11,035 $11,035 TOWN OF FOUNTAIN HILLS, ARIZONA COMBINING BALANCE SHEET - NON-MAJOR DEBT SERVICE FUNDS JUNE 30, 2022 Page 94 Totals $ 180,209 25,258 $205,467 $88 88 25,258 180,121 180,121 $205,467 Page 95 Revenues: Property taxes Other Investment earnings Total revenues Expenditures: Debt service - Fiscal charges Total expenditures Changes in fund balances Fund balances, beginning of year Fund balances, end of year General Obligation Debt Service $36 234 270 270 150,292 $150,562 Eagle Mountain Debt Service $ 4,833 39 28 4,900 588 588 4,312 14,212 $18,524 Municipal Property Corporation Debt Service $ 18 18 10 10 8 11,027 $11,035 TOWN OF FOUNTAIN HILLS, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NON-MAJOR DEBT SERVICE FUNDS YEAR ENDED JUNE 30, 2022 Page 96 Totals $ 4,869 39 280 5,188 598 598 4,590 175,531 $180,121 Page 97 Total revenues Revenues: Property taxes Other Investment earnings Expenditures: Debt service - Fiscal charges Total expenditures Changes in fund balances Fund balances, beginning of year Fund balances, end of year General Obligation Debt Service Budget $ 1,200 1,200 350 350 850 150,292 $151,142 Actual $36 234 270 270 150,292 $150,562 Variance - Positive (Negative) $36 (966) (930) 350 350 (580) $(580) TOWN OF FOUNTAIN HILLS, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL NON-MAJOR DEBT SERVICE FUNDS YEAR ENDED JUNE 30, 2022 Page 98 Eagle Mountain Debt Service Budget $ 240 240 1,000 1,000 (760) 14,212 $13,452 Actual $ 4,833 39 28 4,900 588 588 4,312 14,212 $18,524 Variance - Positive (Negative) $ 4,833 39 (212) 4,660 412 412 5,072 $5,072 Municipal Property Corporation Debt Service Budget $ 840 840 1,100 1,100 (260) 11,027 $10,767 Actual $ 18 18 10 10 8 11,027 $11,035 Variance - Positive (Negative) $ (822) (822) 1,090 1,090 268 $268 (Continued) Page 99 Total revenues Revenues: Property taxes Other Investment earnings Expenditures: Debt service - Fiscal charges Total expenditures Changes in fund balances Fund balances, beginning of year Fund balances, end of year Totals Budget $ 2,280 2,280 2,450 2,450 (170) 175,531 $175,361 Actual $ 4,869 39 280 5,188 598 598 4,590 175,531 $180,121 Variance - Positive (Negative) $ 4,869 39 (2,000) 2,908 1,852 1,852 4,760 $4,760 TOWN OF FOUNTAIN HILLS, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL NON-MAJOR DEBT SERVICE FUNDS YEAR ENDED JUNE 30, 2022 Page 100 ASSETS Cash and investments Total assets LIABILITIES AND FUND BALANCES Fund balances: Restricted Total fund balances Total liabilities and fund balances Development Fees $1,945,164 $1,945,164 $1,945,164 1,945,164 $1,945,164 TOWN OF FOUNTAIN HILLS, ARIZONA BALANCE SHEET - NON-MAJOR CAPITAL PROJECTS FUND JUNE 30, 2022 Page 101 Revenues: Licenses and permits Investment earnings Total revenues Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfer out Total other financing sources (uses) Changes in fund balances Fund balances, beginning of year Fund balances, end of year Development Fees $ 595,161 2,884 598,045 598,045 (110,000) (110,000) 488,045 1,457,119 $1,945,164 TOWN OF FOUNTAIN HILLS, ARIZONA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NON-MAJOR CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 2022 Page 102 (This page intentionally left blank) Page 103 Total revenues Revenues: Sales taxes Licenses and permits Intergovernmental Other Investment earnings Expenditures: Current - General government Public works Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfer in Transfer out Total other financing sources (uses) Changes in fund balances Fund balances, beginning of year Fund balances (deficits), end of year Capital Projects Budget $ 1,117,416 472,344 19,200 1,608,960 2,800 304,413 6,273,788 6,581,001 (4,972,041) 555,000 555,000 (4,417,041) 3,305,053 $(1,111,988) Non-GAAP Actual $ 890,062 (143,089) 746,973 824 45,723 3,535,121 3,581,668 (2,834,695) 3,597,952 3,597,952 763,257 3,305,053 $4,068,310 Variance - Positive (Negative) $ (227,354) (472,344) (162,289) (861,987) 1,976 258,690 2,738,667 2,999,333 2,137,346 3,042,952 3,042,952 5,180,298 $5,180,298 TOWN OF FOUNTAIN HILLS, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL ALL CAPITAL PROJECTS FUNDS YEAR ENDED JUNE 30, 2022 Page 104 Facilities Replacement Fund Budget $ 7,200 7,200 872,368 872,368 (865,168) 1,500,000 1,500,000 634,832 1,192,305 $1,827,137 Non-GAAP Actual $ 28,543 (135,458) (106,915) 716,573 151,046 867,619 (974,534) 5,708,150 5,708,150 4,733,616 1,192,305 $5,925,921 Variance - Positive (Negative) $ 28,543 (142,658) (114,115) 155,795 (151,046) 4,749 (109,366) 4,208,150 4,208,150 4,098,784 $4,098,784 Development Fees Budget $ 691,214 7,200 698,414 698,414 (345,000) (345,000) 353,414 1,457,119 $1,810,533 Actual $ 595,161 2,884 598,045 598,045 (110,000) (110,000) 488,045 1,457,119 $1,945,164 Variance - Positive (Negative) $ (96,053) (4,316) (100,369) (100,369) 235,000 235,000 134,631 $134,631 (Continued) Page 105 Total revenues Revenues: Sales taxes Licenses and permits Intergovernmental Other Investment earnings Expenditures: Current - General government Public works Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfer in Transfer out Total other financing sources (uses) Changes in fund balances Fund balances, beginning of year Fund balances (deficits), end of year Totals Budget $ 1,117,416 691,214 472,344 33,600 2,314,574 2,800 1,176,781 6,273,788 7,453,369 (5,138,795) 2,055,000 (345,000) 1,710,000 (3,428,795) 5,954,477 $2,525,682 Non-GAAP Actual $ 890,062 595,161 28,543 (275,663) 1,238,103 824 762,296 3,686,167 4,449,287 (3,211,184) 9,306,102 (110,000) 9,196,102 5,984,918 5,954,477 $11,939,395 Variance - Positive (Negative) $ (227,354) (96,053) (472,344) 28,543 (309,263) (1,076,471) 1,976 414,485 2,587,621 3,004,082 1,927,611 7,251,102 235,000 7,486,102 9,413,713 $9,413,713 TOWN OF FOUNTAIN HILLS, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL ALL CAPITAL PROJECTS FUNDS YEAR ENDED JUNE 30, 2022 Page 106 STATISTICAL SECTION The statistical section presents financial statement trends as well as detailed financial and operational information not available elsewhere in the report. The statistical section is intended to enhance the reader’s understanding of the information presented in the financial statements, notes to the financial statements, and other supplementary information presented in this report. The statistical section is comprised of the five categories of statistical information presented below. Financial Trends These schedules contain information on financial trends to help the reader understand how the Town’s financial position and financial activities have changed over time. Revenue Capacity These schedules contain information to help the reader assess the factors affecting the Town’s ability to generate revenue. Debt Capacity These schedules present information to help the reader evaluate the Town’s current levels of outstanding debt as well as assess the Town’s ability to make debt payments and/or issue additional debt in the future. Demographic and Economic Information These schedules present various demographic and economic indicators to help the reader understand the environment in which the Town’s financial activities take place and to help make comparisons with other cities. Operating Information These schedules contain information about the Town’s operations and various resources to help the reader draw conclusions as to how the Town’s financial information relates to the services provided by the Town. Note: For locally assessed property (i.e., excluding mines, utilities, etc.) Proposition 117, approved by voters in 2012, amended the Arizona Constitution to require that all property taxes after fiscal year 2014-15 be based upon property values limited to five percent in annual growth. The aggregate assessed value of all taxable properties within a taxing jurisdiction (i.e., after applying assessment ratios based on the use of a property), including property values with a growth limit, is currently referred to as net limited assessed value and formerly as primary assessed value. In accordance with Proposition 117, this value is used for all taxing purposes beginning with fiscal year 2015-16. Aggregate assessed value without a growth limit is currently referred to as net full cash assessed value and formerly as secondary assessed value. This value remains the value utilized for determining debt capacity limits. Page 107 2013 2014 2015 2016 Governmental activities: Net investment in capital assets 89,800,560$ 89,713,260$ 95,325,824$ 95,647,990$ Restricted 5,721,744 5,480,867 6,310,810 4,530,239 Unrestricted 20,612,758 19,186,823 15,180,582 17,232,506 Total governmental activities net position 116,135,062$ 114,380,950$ 116,817,216$ 117,410,735$ Source: The source of this information is the Town's financial records. Town of Fountain Hills, Arizona Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year ended June 30 Page 108 2017 2018 2019 2020 2021 2022 94,909,703$ 96,777,854$ 104,781,328$ 104,004,331$ 103,822,185$ 102,346,737$ 4,471,661 4,589,526 3,646,449 2,766,041 2,610,178 5,749,726 17,578,068 16,244,169 15,258,797 17,388,168 21,318,351 26,010,477 116,959,432$ 117,611,549$ 123,686,574$ 124,158,540$ 127,750,714$ 134,106,940$ Fiscal Year ended June 30 Page 109 2013 2014 2015 2016 Expenses Governmental activities: General government 2,909,443$ 2,432,965$ 2,479,365$ 2,516,966$ Development services 1,633,361 1,237,717 2,074,611 2,253,208 Public safety 6,100,131 6,958,056 6,816,152 7,178,890 Public works 5,712,817 6,630,875 4,963,979 6,476,688 Culture and recreation 2,779,294 2,760,690 2,822,954 3,124,523 Interest on long-term debt 567,043 472,999 698,542 241,694 Total governmental activities expenses 19,702,089 20,493,302 19,855,603 21,791,969 Program Revenues Governmental activities: Fines, fees and charges for services: General government 380,926 215,943 337,655 298,737 Development services 377,483 531,193 693,670 1,257,492 Public safety 63,824 74,887 86,641 90,345 Public works 112,521 250,421 236,706 48,688 Culture and recreation 288,745 340,353 339,158 321,189 Operating grants and contributions 1,266,906 1,307,738 1,431,017 1,615,973 Capital grants and contributions 150,535 144,570 2,874,796 381,011 Total governmental activities program revenues 2,640,940 2,865,105 5,999,643 4,013,435 Net (Expenses)/Revenues (17,061,149) (17,628,197) (13,855,960) (17,778,534) General Revenues and Other Changes in Net Assets Governmental activities: Taxes: Property taxes 1,385,147 1,449,646 904,660 2,569,504 Sales taxes 7,957,163 8,459,267 8,983,049 9,395,667 Franchise taxes 334,668 349,414 352,673 360,320 State shared revenues 4,979,183 5,326,332 5,713,235 5,813,678 Investment earnings 69,998 123,311 150,358 219,058 Miscellaneous 300,899 166,115 188,251 13,826 Special item - Donation of capital assets - - - - Total governmental activities 15,027,058 15,874,085 16,292,226 18,372,053 Changes in Net Position Governmental activities (2,034,091)$ (1,754,112)$ 2,436,266$ 593,519$ Source: The source of this information is the Town's financial records. Town of Fountain Hills, Arizona Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year Ended June 30 Page 110 2017 2018 2019 2020 2021 2022 3,142,722$ 3,431,752$ 3,318,477$ 3,470,936$ 3,793,915$ 4,333,863$ 1,364,378 1,460,967 867,725 825,884 968,808 1,068,260 7,563,898 7,567,012 8,142,069 9,003,452 9,214,615 9,487,150 7,904,577 7,380,663 10,263,244 9,961,306 10,175,540 9,780,920 3,375,414 3,311,648 3,767,996 3,490,447 3,601,870 3,999,178 178,749 118,552 57,054 881 7,544 - 23,529,738 23,270,594 26,416,565 26,752,906 27,762,292 28,669,371 837,163 295,716 280,312 533,189 310,411 498,242 1,062,094 1,314,915 1,143,871 608,892 693,161 947,431 155,454 155,973 90,774 100,444 104,726 89,140 216,724 52,465 10,214 131,750 355,619 654,434 393,028 497,914 1,151,500 409,651 435,432 641,269 1,699,931 1,737,958 1,850,676 2,007,841 4,733,757 6,381,580 494,328 304,951 181,939 91,245 135,525 161,751 4,858,722 4,359,892 4,709,286 3,883,012 6,768,631 9,373,847 (18,671,016) (18,910,702) (21,707,279) (22,869,894) (20,993,661) (19,295,524) 2,296,199 2,263,623 2,476,546 2,077,368 402,481 9,728 9,415,151 10,311,577 11,491,123 13,172,390 15,657,292 17,660,758 367,119 421,682 423,947 434,896 426,260 399,007 6,057,278 6,396,667 6,514,470 6,874,771 7,787,184 7,721,123 55,127 158,860 554,549 545,983 49,665 (419,006) 28,839 10,410 202,969 236,452 262,953 280,140 - - 6,118,700 - - - 18,219,713 19,562,819 27,782,304 23,341,860 24,585,835 25,651,750 (451,303)$ 652,117$ 6,075,025$ 471,966$ 3,592,174$ 6,356,226$ Fiscal Year Ended June 30 Page 111 2013 2014 2015 2016 General fund Nonspendable Inventory 10,201$ 14,358$ 6,975$ 9,272$ Prepaid items 32,493 18,348 10,655 4,123 Committed 1,345,200 1,345,200 2,634,923 2,652,357 Assigned 2,191,063 1,647,193 1,872,492 1,701,086 Unassigned 4,117,865 4,972,853 4,369,457 5,853,806 Total general fund 7,696,822$ 7,997,952$ 8,894,502$ 10,220,644$ All other governmental funds Nonspendable Cash with escrow agent 2,301,609$ 1,973,067$ 1,645,000$ -$ Prepaid items 4,706 997 656 5,055 Restricted 3,354,189 3,505,590 10,066,786 4,500,044 Committed 2,175,094 2,089,361 1,079,780 1,366,081 Assigned 9,005,276 7,147,586 5,444,124 5,943,364 Unassigned - - - - Total all other governmental funds 16,840,874$ 14,716,601$ 18,236,346$ 11,814,544$ Source: The source of this information is the Town's financial records. Fiscal Year ended June 30 Town of Fountain Hills, Arizona Fund Balances — Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Page 112 2017 2018 2019 2020 2021 2022 5,872$ 13,490$ 5,168$ 8,982$ 7,117$ 14,845$ 16,868 21,945 17,311 2,418 20,170 36,464 2,714,135 2,893,850 3,027,804 3,249,354 3,387,433 3,664,240 1,743,768 2,101,574 2,380,653 622,641 1,085,667 1,278,191 2,696,999 2,140,434 1,863,722 5,535,499 10,958,643 9,466,833 7,177,642$ 7,171,293$ 7,294,658$ 9,418,894$ 15,459,030$ 14,460,573$ -$ -$ -$ -$ -$ -$ 474 - - - - 4,253 4,432,710 4,571,263 3,579,891 2,708,883 2,541,894 5,701,067 8,576,250 7,248,890 5,868,386 6,068,810 4,430,491 5,511,281 1,784,761 2,340,683 2,592,343 2,402,244 1,845,901 6,541,572 - - - (66,361) - - 14,794,195$ 14,160,836$ 12,040,620$ 11,113,576$ 8,818,286$ 17,758,173$ Fiscal Year ended June 30 Page 113 2013 2014 2015 2016 Revenues Taxes 9,713,445$ 10,271,737$ 10,240,382$ 12,299,285$ Licenses and permits 570,904 891,782 1,043,382 1,372,045 Leases and rents 213,871 252,584 269,753 258,165 Intergovernmental 6,323,047 6,677,518 9,770,048 7,559,436 Charges for services 162,086 161,376 176,541 197,109 Other 300,899 134,114 188,251 147,662 Fines and forfeitures 187,251 170,995 186,456 209,380 Investment earnings 69,998 123,311 150,358 219,058 Total revenues 17,541,501 18,683,417 22,025,171 22,262,140 Expenditures Current: General government 2,699,109 2,194,845 2,275,124 2,324,026 Development services 1,643,757 1,774,983 2,073,990 2,217,814 Public safety 6,022,269 6,890,770 6,675,874 7,034,887 Public works 2,058,990 3,085,559 1,275,779 2,498,714 Culture and recreation 1,791,018 1,921,939 1,962,585 2,240,865 Capital outlay 453,002 1,750,465 8,799,068 6,471,382 Debt service: Principal 2,280,000 2,415,000 1,850,000 4,260,000 Interest 554,860 460,811 454,957 308,106 Other debt service 12,183 12,188 243,585 2,005 Total expenditures 17,515,188 20,506,560 25,610,962 27,357,799 Excess (deficiency) of revenues over (under) expenditures 26,313 (1,823,143) (3,585,791) (5,095,659) Other Financing Sources (Uses) Transfers in 1,279,397 1,838,453 2,519,774 562,044 Transfers out (1,279,397) (1,838,453) (2,519,774) (562,044) Proceeds from sale of capital assets - - - - Issuance of refunding bonds - - 4,180,000 - Issuance of long-term debt - - 7,565,000 - Bond Premium - - 342,086 - Payment to refunded bonds escrow agent - - (4,085,000) - Total other financing sources (uses) - - 8,002,086 - Net change in fund balances 26,313$ (1,823,143)$ 4,416,295$ (5,095,659)$ Expenditures for capitalized assets 467,691$ 2,385,168$ 9,067,254$ 6,394,346$ Debt service as a percentage of noncapital expenditures 16.7% 15.9% 15.4% 21.8% Source: The source of this information is the Town's financial records. Fiscal Year Ended June 30 Town of Fountain Hills, Arizona Statement of Revenues, Expenditures and Changes in Fund Balances Last Ten Fiscal Years (modified accrual basis of accounting) Page 114 2017 2018 2019 2020 2021 2022 12,069,714$ 13,019,341$ 14,342,801$ 15,694,054$ 16,510,939$ 18,071,247$ 1,310,973 2,004,386 2,040,622 835,731 1,293,172 2,039,349 284,090 282,531 280,801 286,391 264,621 333,946 7,917,651 8,266,028 8,401,676 8,920,296 12,713,449 14,124,324 351,476 254,122 181,105 222,947 99,090 171,157 153,438 207,697 347,141 387,225 320,291 431,838 257,727 182,997 130,483 281,704 239,191 223,964 55,127 158,860 554,549 545,983 49,654 (419,224) 22,400,196 24,375,962 26,279,178 27,174,331 31,490,407 34,976,601 2,713,548 3,195,936 3,147,063 3,280,191 6,513,419 4,105,257 1,275,147 1,397,249 858,957 797,513 954,667 1,041,531 7,420,032 7,402,227 6,295,989 8,566,058 8,906,428 9,180,108 3,954,450 3,420,317 7,880,668 6,046,298 6,321,814 5,712,452 2,484,940 2,375,758 2,845,027 2,609,842 2,726,748 3,166,526 1,693,265 4,317,214 4,487,854 2,716,523 4,758,067 3,828,699 2,675,000 2,720,000 2,635,000 2,310,000 400,000 - 244,986 185,164 123,871 67,301 7,044 - 2,180 1,805 1,600 1,998 500 598 22,463,548 25,015,670 28,276,029 26,395,724 30,588,687 27,035,171 (63,352) (639,708) (1,996,851) 778,607 901,720 7,941,430 5,194,138 4,543,728 3,672,532 1,928,978 3,086,628 11,962,153 (5,194,138) (4,543,728) (3,672,532) (1,928,978) (3,136,628) (11,962,153) - - - 418,585 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 418,585 (50,000) - (63,352)$ (639,708)$ (1,996,851)$ 1,197,192$ 851,720$ 7,941,430$ 1,696,612$ 4,293,214$ 4,465,837$ 2,689,270$ 4,758,055$ 3,890,700$ 14.1% 14.0% 11.6% 10.0% 1.8% 0.0% Fiscal Year Ended June 30 Page 115 Fiscal Year Ended June 30 Property Tax Sales Tax Franchise Tax Total 2013 1,421,615$ 7,957,162$ 334,668$ 9,713,445$ 2014 1,463,056 8,459,267 349,414 10,271,737 2015 904,660 8,983,050 352,673 10,240,383 2016 2,543,298 9,391,267 360,320 12,294,885 2017 2,287,444 9,419,551 367,119 12,074,114 2018 2,286,081 10,311,578 421,682 13,019,341 2019 2,427,730 11,491,124 423,947 14,342,801 2020 2,086,769 13,172,389 434,896 15,694,054 2021 427,387 15,657,292 426,260 16,510,939 2022 11,482 17,660,758 399,007 18,071,247 Source: The source of this information is the Town's financial records. Town of Fountain Hills, Arizona Governmental Activities - Tax Revenues by Source Last Ten Fiscal Years (modified accrual basis of accounting) Page 116 Net Assessed Net Total Estimated Taxable Value as a Assessed Direct Actual Percentage of Taxable Tax Taxable Estimated Actual Fiscal Year Value*Rate**Value*Taxable Value 2013 377,816,392 0.2657 3,422,463,416 11.04% 2014 365,963,182 0.2773 3,359,684,579 10.89% 2015 403,330,477 0.1151 3,722,794,676 10.83% 2016 402,223,763 0.5246 3,744,585,506 10.74% 2017 423,688,665 0.4472 3,965,824,715 10.68% 2018 444,639,625 0.4259 4,166,589,970 10.67% 2019 466,895,716 0.4257 4,381,287,279 10.66% 2020 494,576,905 0.3382 4,657,015,387 10.62% 2021 520,103,815 -4,909,183,626 10.59% 2022 546,532,825 -5,436,380,244 10.05% Source: The source of this information is the Arizona Department of Revenue's Abstract of the Assessment Roll and the Town's financial records. ** Per $100 of assessed taxable value; No town-wide taxes levied in FY21 or FY 22. Town of Fountain Hills, Arizona Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years *Note: On November 6, 2012, voters approved Proposition 117, an amendment to the Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and secondary taxes are levied against the net limited assessed value. The net full cash value is used for determining the Town’s bonding capacity and as the ceiling for net limited assessed value. Page 117 Ne t L i m i t e d Pe r c e n t a g e o f N e t F u l l C a s h Pe r c e n t a g e o f As s e s s e d To t a l N e t L i m i t e d A s s e s s e d To t a l N e t F u l l C a s h Ta x p a y e r Va l u e Ra n k As s e s s e d V a l u e Va l u e Ra n k As s e s s e d V a l u e RC S - P a r k P l a c e 1 L L C 4, 1 0 4 , 4 4 3 1 0. 7 5 % EP C O R - C h a p a r r a l C i t y W a t e r C o m p a n y 4, 0 1 4 , 1 5 0 2 0. 7 3 % Hu n t e r R e t a i l L L C 2, 6 6 4 , 4 9 4 3 0. 4 9 % FF I F o u n t a i n V i e w O w n e r L L C 2, 4 8 4 , 8 7 3 4 0. 4 5 % Wh i t e s t o n e F o u n t a i n H i l l s , L L C 1, 9 1 7 , 0 8 5 5 0. 3 5 % St r a t h m o r e C o m p a n y L L C 1, 5 7 9 , 5 9 0 6 0. 2 9 % Fo u n t a i n H i l l s A p a r t m e n t s L L C 1, 4 4 6 , 4 2 9 7 0. 2 6 % Fo u n t a i n H i l l s I n v e s t C o . , L L C 1, 4 3 8 , 8 3 3 8 0. 2 6 % Ta r g e t C o r p o r a t i o n 1, 4 3 5 , 5 9 4 9 0. 2 6 % 1, 3 3 6 , 5 2 7 7 0. 3 5 % Pa l i s a d e s R e s o r t s L L C 1, 3 1 5 , 9 4 8 1 0 0 . 2 4 % Ch a p p a r a l C i t y W a t e r C o m p a n y 3, 3 1 1 , 8 8 0 1 0. 8 8 % In l a n d W e s t e r n F o u n t a i n H i l l s F o u r P e a k s L L C 3, 0 5 3 , 6 6 6 2 0. 8 1 % WS L F o u n t a i n V i e w I n v e s t o r s V , L L C 1, 7 7 4 , 7 9 7 3 0. 4 7 % J & R H o l d i n g s X X L L C 1, 7 7 0 , 8 6 4 4 0. 4 7 % Fi r e r o c k L L C 1, 3 5 8 , 4 6 5 5 0. 3 6 % Qw e s t C o r p o r a t i o n 1, 3 3 9 , 3 7 0 6 0. 3 5 % EN L L C 1, 2 8 6 , 6 6 4 8 0. 3 4 % Sm i t h ' s F o o d & D r u g 1, 2 4 8 , 6 6 8 9 0. 3 3 % Su n T e c h D e v e l o p m e n t L L C 1, 0 5 5 , 8 5 1 1 0 0. 2 8 % To t a l s 22 , 4 0 1 , 4 3 9 $ 3 . 3 3 % 17 , 5 3 6 , 7 5 2 $ 4 . 6 4 % So u r c e : T h e s o u r c e o f t h i s i n f o r m a t i o n i s t h e M a r i c o p a C o u n t y A s s e s s o r ' s O f f i c e . Not e : O n N o v e m b e r 6 , 2 0 1 2 , v o t e r s a pp ro v e d P r o pos i t i o n 1 1 7 , a n a m e n d m e n t t o t h e Ar i z o n a C o n s t i t u t i o n . B e gin n i n g w i t h T a x Y e a r 2 0 1 5 (Fi s c a l Y e a r 2 0 1 5 - 2 0 1 6 ), b o t h pri m a r y a n d se c o n d a r y t a x e s a r e l e v i e d a gai n s t t h e n e t a s s e s s e d l i m i t e d pro per t y v a l u a t i o n . T h e n e t a s s e s s e d f u l l c a s h pro per t y v a l u a t i o n i s u s e d f o r d e t e r m i n i n g t h e T o w n ’ s b o n d i n g c a pac i t y a n d a s t h e c e i l i n g f o r n e t l i m i t e d as s e s s e d pro per t y v a l u a t i o n . To w n o f F o u n t a i n H i l l s , A r i z o n a Pr i n c i p a l P r o p e r t y T a x p a y e r s Ju n e 3 0 , 2 0 2 2 a n d 2 0 1 3 20 2 2 20 1 3 Page 118 Current Percent of Delinquent Ratio of Total Fiscal Total Tax Current Taxes Tax Total Tax Tax Collections Year Tax Levy Collections Collected Collections Collections to Total Tax Levy 2013 1,429,285 1,401,654 98.1% 18,563 1,420,217 99.4% 2014 1,449,884 1,426,612 98.4% 18,215 1,444,827 99.7% 2015 892,104 881,170 98.8%6,903 888,073 99.5% 2016 2,532,115 2,502,995 98.8% 19,146 2,522,141 99.6% 2017 2,278,728 2,241,482 98.4% 29,198 2,270,680 99.6% 2018 2,272,027 2,230,328 98.2% 31,104 2,261,432 99.5% 2019 2,404,250 2,369,262 98.5% 19,914 2,389,176 99.4% 2020 2,092,340 2,044,210 97.7% 37,434 2,081,644 99.5% 2021 397,427 392,363 98.7%5,064 397,427 100.0% 2022 6,381 6,326 99.1%- 6,326 99.1% Source: The source of this information is the Maricopa County Treasurer's Office. Town of Fountain Hills, Arizona Property Tax Levies and Collections Last Ten Fiscal Years Page 119 2013 2014 2015 2016 Sales category: Construction 567,589$ 783,064$ 935,694$ 918,717$ Transportation/utilities 1,402,734 1,375,623 1,405,768 1,327,441 Wholesale/retail 3,598,895 3,653,181 4,214,119 4,815,582 Restaurants/bars 645,258 655,654 682,180 742,540 Real estate, rental & leasing 720,023 782,453 617,348 552,856 Services 310,303 342,079 604,618 779,753 Other 712,360 867,213 523,323 254,378 Total 7,957,162$ 8,459,267$ 8,983,050$ 9,391,267$ Note: Other includes all state and local sales tax audit adjustments. Source: The source of this information is the Town's financial records. Fiscal Year Ended June 30 Town of Fountain Hills, Arizona Taxable Sales by Category Last Ten Fiscal Years (modified accrual basis of accounting) Page 120 2017 2018 2019 2020 2021 2022 730,164$ 1,408,332$ 1,932,716$ 1,910,021$ 1,990,383$ 1,780,123$ 1,288,153 1,309,928 1,290,585 1,405,005 1,529,268 1,501,600 4,982,218 5,235,992 5,464,247 7,031,474 8,956,208 9,834,924 811,985 829,857 893,595 892,210 1,062,172 1,446,971 636,834 745,171 842,233 965,124 993,228 1,103,241 852,675 747,834 1,025,548 916,769 1,125,753 1,992,955 117,523 34,464 42,200 51,786 280 944 9,419,551$ 10,311,578$ 11,491,124$ 13,172,389$ 15,657,292$ 17,660,758$ Fiscal Year Ended June 30 Page 121 Fiscal Year Ended Town Maricopa State Total June 30 Rate County Rate Tax Rate 2013 2.60% 0.70% 5.60% 8.90% 2014 2.60% 0.70% 5.60% 8.90% 2015 2.60% 0.70% 5.60% 8.90% 2016 2.60% 0.70% 5.60% 8.90% 2017 2.60% 0.70% 5.60% 8.90% 2018 2.60% 0.70% 5.60% 8.90% 2019 2.60% 0.70% 5.60% 8.90% 2020* 2.90% 0.70% 5.60% 9.20% 2021 2.90% 0.70% 5.60% 9.20% 2022 2.90% 0.70% 5.60% 9.20% * 0.3% Town rate increase effective 11/1/2019 Source: The source of this information is the Arizona Department of Revenue. Town of Fountain Hills, Arizona Direct and Overlapping Sales Tax Rates Last Ten Fiscal Years Page 122 Co m m u n i t y M u n i c i p a l H i g h w a y Fi s c a l Y e a r G e n e r a l F a c i l i t i e s P r o p e r t y U s e r S p e c i a l T o t a l D e b t En d e d O b l i g a t i o n D i s t r i c t C o r p o r a t i o n R e v e n u e A s s e s s m e n t O u t s t a n d i n g P e r Ju n e 3 0 Bo n d s * Bo n d s * * Bo n d s * Bo n d s Bo n d s De b t Ca p i t a 20 1 3 2, 9 0 0 , 0 0 0 2 , 8 0 0 , 0 0 0 5 , 9 0 5 , 0 0 0 - - 1 1 , 6 0 5 , 0 0 0 49 8 20 1 4 2, 0 0 0 , 0 0 0 2, 4 9 5 , 0 0 0 4, 6 9 5 , 0 0 0 - - 9 , 1 9 0 , 0 0 0 39 0 20 1 5 9, 5 1 7 , 0 8 6 2, 3 0 0 , 0 0 0 3, 5 2 5 , 0 0 0 - - 1 5 , 3 4 2 , 0 8 6 64 2 20 1 6 7, 6 7 8 , 6 6 9 1, 9 3 5 , 0 0 0 1, 4 0 0 , 0 0 0 - - 1 1 , 0 1 3 , 6 6 9 45 0 20 1 7 5, 6 8 0 , 2 5 2 1, 5 6 0 , 0 0 0 1, 0 3 0 , 0 0 0 - - 8 , 2 7 0 , 2 5 2 33 6 20 1 8 3, 6 3 1 , 8 3 5 1, 1 8 0 , 0 0 0 67 0 , 0 0 0 - - 5 , 4 8 1 , 8 3 5 21 9 20 1 9 1, 6 8 3 , 4 1 7 79 5 , 0 0 0 30 0 , 0 0 0 - - 2 , 7 7 8 , 4 1 7 11 0 20 2 0 - 4 0 0 , 0 0 0 - - - 4 0 0 , 0 0 0 17 20 2 1 - - - - - - - 20 2 2 - - - - - - - So u r c e : T h e s o u r c e o f t h i s i n f o r m a t i o n i s t h e T o w n ' s f i na n c i a l r e c o r d s a n d t h e U . S . B u r e a u o f E c o n o m i c A n a l y s i s . * A l l b o n d a m o u n t s p r e s e n t e d i n c l u d e a m o r t i z a t i o n o f o r i g i n a l i s s u a n c e d i s c o u n t s a n d p r e m i u m s . ** A l l b o n d a m o u n t s p r e s e n t e d i n c l u d e a m o r i t i z a t i o n o f o r i g i n a l i s s u a n c e d i s c o u n t s a n d p r e m i u m s . Th e T o w n i s n o t o b l i g a t e d f o r r e p a y m e n t o f t h e E a g l e M ou n t a i n C o m m u n i t y F a c i l i t i e s D i s t r i c t g e n e r a l o b l i g a t i o n b o n d s . Po p u l a t i o n d a t a c a n b e f o u n d i n t h e S c h e d u l e o f D e m o g r a p h i c a n d E c o n o m i c S t a t i s t i c s . Go v e r n m e n t a l A c t i v i t i e s To w n o f F o u n t a i n H i l l s , A r i z o n a Ra t i o s o f O u t s t a n d i ng D e b t b y T y p e La s t T e n F i s c a l Y e a r s Page 123 Fi s c a l Ye a r Ge n e r a l Ob l i g a t i o n Bo n d s * Le s s : A m o u n t s Re s t r i c t e d f o r Pr i n c i p a l Ne t G e n e r a l Ob l i g a t i o n Bo n d s Es t i m a t e d A c t u a l Ta x a b l e V a l u e o f Pr o p e r t y Pe r c e n t a g e o f Es t i m a t e d A c t u a l Ta x a b l e V a l u e o f Pr o p e r t y Ne t G e n e r a l Ob l i g a t i o n Bo n d e d D e b t pe r C a p i t a Ne t G e n e r a l Ob l i g a t i o n B o n d e d De b t p e r N e t L i m i t e d As s e s s e d V a l u a t i o n Mu n i c i p a l Pr o p e r t y Co r p o r a t i o n Bo n d s * Ne t M u n i c i p a l Pr o p e r t y Co r p o r a t i o n D e b t pe r C a p i t a T o t a l Re v e n u e s - A l l So u r c e s 20 1 3 5 , 7 0 0 , 0 0 0 8 2 , 1 8 4 5 , 6 1 7 , 8 1 6 3 , 4 2 2 , 4 6 3 , 4 1 6 0 . 1 6 % 2 4 4 1 . 4 9 % 3 , 5 6 1 , 8 1 4 1 5 4 1 7 , 7 2 3 , 9 9 4 20 1 4 4 , 4 9 5 , 0 0 0 8 7 , 9 4 9 4 , 4 0 7 , 0 5 1 3 , 3 5 9 , 6 8 4 , 5 7 9 0 . 1 3 % 1 8 9 1 . 2 0 % 2 , 7 2 1 , 9 3 3 1 1 7 1 8 , 8 9 1 , 9 6 7 20 1 5 1 1 , 8 1 7 , 0 8 6 4 2 0 , 7 8 2 1 1 , 3 9 6 , 3 0 4 3 , 7 2 2 , 7 9 4 , 6 7 6 0 . 3 1 % 4 8 3 2 . 8 3 % 1 , 7 6 4 , 3 3 8 7 5 2 2 , 1 6 1 , 3 1 6 20 1 6 9 , 6 1 3 , 6 6 9 5 7 6 , 2 8 1 9 , 0 3 7 , 3 8 8 3 , 7 4 4 , 5 8 5 , 5 0 6 0 . 2 4 % 3 7 8 2 . 2 5 % 1 , 0 8 8 , 1 1 7 4 6 2 2 , 2 6 2 , 1 3 9 20 1 7 7 , 2 4 0 , 2 5 2 3 4 3 , 6 9 7 6 , 8 9 6 , 5 5 5 3 , 9 6 5 , 8 2 4 , 7 1 5 0 . 1 7 % 2 8 2 1 . 6 3 % 8 6 0 , 4 3 7 3 5 2 2 , 4 0 0 , 1 9 6 20 1 8 4 , 8 1 1 , 8 3 5 8 3 , 1 8 5 4 , 7 2 8 , 6 5 0 4 , 1 6 6 , 5 8 9 , 9 7 0 0 . 1 1 % 1 9 2 1 . 0 6 % 6 6 4 , 4 8 4 2 7 2 4 , 3 7 5 , 9 6 2 20 1 9 2 , 4 7 8 , 4 1 7 1 4 6 , 1 0 0 2 , 3 3 2 , 3 1 7 4 , 3 8 1 , 2 8 7 , 2 7 9 0 . 0 5 % 9 3 0 . 5 0 % 2 8 7 , 6 9 4 1 2 2 6 , 2 7 9 , 1 7 8 20 2 0 4 0 0 , 0 0 0 1 7 1 , 8 0 7 2 2 8 , 1 9 3 4 , 6 5 7 , 0 1 5 , 3 8 7 0 . 0 0 5 % 9 0 . 0 5 % - - 2 7 , 5 8 6 , 0 1 1 20 2 1 - 1 9 1 , 5 9 4 - 4 , 9 0 9 , 1 8 3 , 6 2 6 - - - - - 3 1 , 3 5 4 , 4 6 6 20 2 2 - 1 9 4 , 3 4 4 - 5 , 4 3 6 , 3 8 0 , 2 4 4 - - - - - 3 5 , 0 2 5 , 5 9 7 So u r c e : T h e s o u r c e o f t h i s i n f o r m a t i o n i s t h e D e p a r t m e n t o f R e v e n u e a n d t h e T o w n ' s f i n a n c i a l r e c o r d s . * A l l b o n d a m o u n t s p r e s e n t e d a r e n e t o f o r i g i n a l i s s u a n c e d i s c o u n t s a n d p r e m i u m s . T h e T o w n i s n o t o b l i g a t e d fo r r e p a y m e n t o f t h e E a g l e M o u n t a i n C o m m u n i t y F a c i l i t i e s D i s t r i c t g e n e r a l o b l i g a t i o n b o n d s . Po p u l a t i o n d a t a c a n b e f o u n d i n t h e S c h e d u l e o f D e m o g r a p h i c a n d E c o n o m i c S t a t i s t i c s . No t e : O n N o v e m b e r 6 , 2 0 1 2 , v o t e r s a pp ro v e d P r o pos i t i o n 1 1 7 , a n a m e n d m e n t t o t h e A r i z o n a C o n s t i t u t i o n . B e gin n i n g w i t h T a x Y e a r 2 0 1 5 (Fi s c a l Ye a r 2 0 1 6 ), b o t h pri m a r y a n d s e c o n d a r y t a x e s a r e l e v i e d a gai n s t t h e n e t l i m i t e d a s s e s s e d v a l u e . T h e n e t f u l l c a s h a s s e s s e d v a l u e i s u s e d f o r de t e r m i n i n g t h e T o w n ’ s b o n d i n g c a pac i t y a n d a s t h e c e i l i n g f o r n e t l i m i t e d a s s e s s e d v a l u e . To w n o f F o u n t a i n H i l l s , A r i z o n a Ra t i o s o f G e n e r a l B o n d e d D e b t O u t s t a n d i n g La s t T e n F i s c a l Y e a r s Page 124 Estimated Estimated Share of Percentage Overlapping Outstanding Debt Applicable Debt Overlapping: Maricopa County -$ 1.12% -$ Maricopa County Community College District 135,585,000 1.12% 1,518,552 Maricopa County Special Healthcare District 600,335,000 1.12% 6,723,752 East Valley Institute of Technology - 2.27% - Fountain Hills Unified School District 5,655,000 96.45% 5,454,248 Total Overlapping Debt 13,696,552 Direct: Town of Fountain Hills, Arizona* General Obligation Bonds - Revenue Bonds - Eagle Mountain Community Facilities District** - Total Direct Debt - Total direct and overlapping debt 13,696,552$ Source: The source of this information is the Town's records, the State and County Abstract of the Assessment Roll, the Arizona Department of Revenue Report of Indebtedness and the applicable governmental unit. * All bond amounts include amortization of original issuance discounts and premiums. ** The Town is not obligated for repayment of the Eagle Mountain Community Facilities District general obligation bonds. Note: The estimated percentage of debt outstanding applicable to the Town is calculated based on the Town's net limited assessed valuation as a percentage of the net limited assessed valuation of the overlapping jurisdiction. Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the Town of Fountain Hills. This schedule further estimates the portion of outstanding debt of those overlapping governments that is borne by residents and businesses of the Town. This process recognizes that, when considering a town's ability to issue and repay long-term debt, the entire debt burden borne by residents should be taken into account. However, this fact does not imply that every taxpayer is a resident, and, therefore, responsible for repaying the debt of each overlapping government. Town of Fountain Hills, Arizona Direct and Overlapping Governmental Activities Debt as of June 30, 2022 Governmental Unit Page 125 2013 2014 2015 2016 6% Debt Limit Debt limit 22,668,984$ 21,957,791$ 24,199,829$ 28,325,296$ Total net debt applicable to limit - - - - Legal debt margin 22,668,984$ 21,957,791$ 24,199,829$ 28,325,296$ Total debt applicable to the limit as a percentage of debt limit - - - - 20% Debt Limit Debt limit 75,563,278$ 73,192,636$ 80,666,095$ 94,417,653$ Total net debt applicable to limit 2,900,000 2,000,000 9,175,000 7,405,000 Legal debt margin 72,663,278$ 71,192,636$ 71,491,095$ 87,012,653$ Total debt applicable to the limit as a percentage of debt limit 4% 3% 11% 8% Source: The source of this information is the Town's financial records. Note: All amounts presented are net of original issuance discounts and premiums. Note: On November 6, 2012, voters approved Proposition 117, an amendment to the Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and secondary taxes are levied against the net limited assessed value. The net full cash assessed value is used for determining the Town’s bonding capacity and as the ceiling for net limited assessed value. Fiscal Year Ended June 30 Town of Fountain Hills, Arizona Legal Debt Margin Information Last Ten Fiscal Years Page 126 2017 2018 2019 2020 2021 2022 30,651,126$ 31,459,192$ 32,400,042$ 33,907,227$ 35,603,580$ 37,800,780$ - - - - - - 30,651,126$ 31,459,192$ 32,400,042$ 33,907,227$ 35,603,580$ 37,800,780$ ------ 102,170,422$ 104,863,974$ 108,000,140$ 113,024,089$ 118,678,601$ 126,002,599$ 5,475,000 3,495,000 1,615,000 - - - 96,695,422$ 101,368,974$ 106,385,140$ 113,024,089$ 118,678,601$ 126,002,599$ 5% 3% 1% - - - Fiscal Year Ended June 30 Page 127 Net full cash assessed valuation 630,012,994 Water, Sewer, Artificial Lighting, Parks, Open Space, Recreational Facility Improvements, Public Safety, Law Enforcement, Fire and Emergency Facilities, Street and Transportation Facilities Debt limit - 20% of net full cash assessed valuation 126,002,599$ Net debt applicable to limit - 20% legal debt margin 126,002,599 All Other General Obligation Bonds Debt limit - 6% of net full cash assessed valuation 37,800,780 Net debt applicable to limit - 6% legal debt margin 37,800,780 Total legal debt margin 163,803,379$ Source: The source of this information is the Maricopa County Assessor's Office and the Town's financial records. Note: On November 6, 2012, voters approved Proposition 117, an amendment to the Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and secondary taxes are levied against the net limited assessed value. The net full cash assessed value is used for determining the Town’s bonding capacity and as the ceiling for net limited assessed value. Town of Fountain Hills, Arizona Calculation of Legal Debt Margin as of June 30, 2022 Page 128 Fiscal Year Ended Pledged June 30 Principal Interest Total Revenues Coverage 2013 1,150,000 285,287 1,435,287 13,397,842 9.3 2014 1,225,000 234,176 1,459,176 14,313,158 9.8 2015 2,545,000 184,500 2,729,500 15,583,484 5.7 2016 480,000 32,740 512,740 16,250,673 31.7 2017 370,000 22,680 392,680 16,815,224 42.8 2018 360,000 16,686 376,686 18,194,833 48.3 2019 370,000 10,854 380,854 19,765,936 51.9 2020 300,000 4,860 304,860 20,862,372 68.4 2021 - - - 24,001,082 100.0 2022 - - - 26,453,550 100.0 Source: The source of this information is the Town's financial records. Town of Fountain Hills Revenue Bond Coverage Last Ten Fiscal Years Municipal Facilities Corporation Revenue Bonds Page 129 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 * Po p u l a t i o n 23 , 0 7 0 2 3 , 3 1 8 2 3 , 5 7 3 2 3 , 8 9 9 2 4 , 4 8 2 2 4 , 5 8 3 2 4 , 9 8 7 2 5 , 2 0 0 2 3 , 8 2 0 2 3 , 9 0 6 Pe r c a p i t a p e r s o n a l i n c o m e 47 , 2 6 0 $ 4 8 , 2 4 4 $ 4 6 , 6 1 9 $ 4 8 , 2 4 0 $ 5 0 , 1 6 2 $ 6 0 , 5 3 1 $ 5 4 , 9 3 6 $ 5 7 , 4 6 8 $ 5 9 , 7 9 1 $ 5 7 , 5 5 0 $ Me d i a n a g e 53 . 9 5 3 . 0 5 3 . 7 5 3 . 8 5 3 . 7 5 3 . 5 5 7 . 5 5 8 . 8 5 9 . 4 5 8 . 6 Pu b l i c s c h o o l e n r o l l m e n t 1, 8 8 6 1 , 8 2 0 1 , 6 9 2 1 , 6 1 9 1 , 5 0 6 1 , 4 4 4 1 , 3 8 0 1 , 3 3 8 1 , 3 1 4 1 , 2 6 7 To w n o f F o u n t a i n H i l l s un e m p l o y m e n t r a t e 5. 6 % 6 . 0 % 5 . 4 % 2 . 4 % 1 . 9 % 1 . 6 % 3 . 9 % 8 . 7 % 4 . 9 % 4 . 4 % La n d u s e To t a l a c r e s 13 , 0 0 5 . 7 1 3 , 0 0 5 . 7 1 3 , 0 0 5 . 7 1 3 , 0 0 5 . 7 1 3 , 0 0 5 . 7 1 3 , 0 0 5 . 7 1 3 , 0 0 5 . 7 1 3 , 0 0 5 . 7 1 3 , 0 0 5 . 7 1 3 , 0 0 5 . 7 To t a l s q u a r e m i l e s 20 . 3 2 2 0 . 3 2 2 0 . 3 2 2 0 . 3 2 2 0 . 3 2 2 0 . 3 2 2 0 . 3 2 2 0 . 3 2 2 0 . 3 2 2 0 . 3 2 Va c a n t l o t s 1, 2 0 9 1 , 1 9 6 1 , 1 6 5 1 , 2 4 7 1 , 2 0 9 1 , 1 7 5 1 , 1 7 2 1 , 0 5 2 1 , 1 5 8 1 , 1 5 8 Nu m b e r o f u n i t s Ho u s i n g 12 , 9 7 7 12 , 9 9 1 12 , 9 8 1 13 , 0 0 2 13 , 1 3 0 13 , 1 7 6 13 , 5 5 8 13 , 7 4 9 13 , 8 7 5 13 , 8 7 6 Lo d g i n g 4 4 4 4 4 4 4 4 4 4 Re s t a u r a n t s 56 5 4 4 3 4 6 5 0 5 2 5 4 5 5 5 5 5 7 Sh o p p i n g c e n t e r s 20 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 Sc h o o l s Pu b l i c 3 3 3 3 3 3 3 3 3 3 Pr e s c h o o l 6 7 7 7 7 7 5 5 5 5 Ch a r t e r 1 1 1 1 1 1 1 1 1 - Vo c a t i o n a l - - - - - 1 1 2 2 1 No t e : N / A i n d i c a t e s t h e i n f o r m a t i o n i s n o t a v a i l a b l e * I n f o r m a t i o n o b t a i n e d i s b a s e d o n c a l e n d a r y e a r s ; t h e r e f o r e , t h e l a t e s t i n f o r m a t i o n o b t a i n e d w a fr o m 2 0 2 1 . So u r c e s : T h e s o u r c e s o f t h e " P e r C a p i t a P e r s o n a l I n c o m e " , " M e d i a n A g e " a n d " U n e m p l o y m e n t R a t e " i n f o r m a t i o n ar e S i t e s U S A ( 2 0 0 9 - 2 0 1 7 ) , U . S . C e n s u s B u r e a u a n d A r i z o n a O f f i c e o f E c o n o m i c O p p o r t u n i t y ( b e g i n n i n g i n 2 0 1 8 ) . Th e s o u r c e o f t h e " P o p u l a t i o n " i s t h e U . S . C e n s u s B u r e a u J u l y 1 , 2 0 2 1 e s t i m a t e . T h e s o u r c e o f S c h o o l E n r o l l m e n t i s th e F o u n t a i n H i l l s U n i f i e d S c h o o l D i s t r i c t N o . 9 8 . O t h e r i n f o r m a t i o n i s f r o m t h e T o w n ' s r e c o r d s . La s t T e n C a l e n d a r Y e a r s De m o g r a p h i c a n d E c o n o m i c S t a t i s t i c s To w n o f F o u n t a i n H i l l s , A r i z o n a Ca l e n d a r Y e a r Page 130 Percentage Number of of Total Town Number of Employer Employees Rank Employment Employees Rank Fountain Hills Unified School District No. 98 270 1 5.0% 335 1 Rural Metro Corporation 130 2 2.4% 111 3 Safeway Stores 130 2 2.4%87 7 Fountain View Village 120 4 2.2% 136 2 Fry's Food Stores 90 5 1.7% 105 4 Target Stores 90 5 1.7% 100 5 Firerock Country Club 80 7 1.5% 100 5 Eagle Mountain Golf Club 70 8 1.3%70 9 Fountain Hills Family Practice PC 70 8 1.3% Fountain Hills Medical Center 70 8 1.3% Golf International Inc 60 10 1.1% Quotemedia Inc 60 10 1.1% Sunridge Canyon Golf Course 60 10 1.1% Town of Fountain Hills 60 10 1.1% United States Postal Service 60 10 1.1% Holiday Inn 80 8 Bashas -63 10 Totals 1,420 26.3% 1,187 Total Town employment 5,350 5,486 Source: The source of this information is the Maricopa Association of Governments and Town financials. Note: MAG data includes employers with 5+ employees and is rounded to nearest 10. * Data for 2021 was not available. 2020* Town of Fountain Hills, Arizona Principal Employers Prior Fiscal Year and Nine Years Ago 2012 Page 131 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 Mu n i c i p a l c o u r t 5. 0 0 4 . 0 0 3 . 6 3 3 . 6 3 3 . 6 3 3 . 6 3 3 . 6 3 3 . 6 3 3 . 6 3 3 . 6 3 Ad m i n i s t r a t i o n 11 . 6 8 1 0 . 5 6 1 1 . 3 3 1 1 . 6 3 1 2 . 2 5 1 3 . 4 5 1 3 . 7 0 1 5 . 2 0 1 5 . 0 0 1 6 . 0 0 Pu b l i c w o r k s 9. 8 0 9 . 8 0 1 0 . 8 0 1 2 . 4 3 1 2 . 4 3 1 2 . 0 0 De v e l o p m e n t s e r v i c e s 18 . 7 5 1 6 . 2 5 1 6 . 3 0 1 6 . 3 0 7 . 5 0 8 . 5 0 7 . 5 0 9 . 0 0 9 . 0 0 9 . 0 0 Co m m u n i t y s e r v i c e s 21 . 1 8 2 0 . 1 8 2 1 . 0 6 2 0 . 7 6 2 0 . 7 6 2 0 . 5 6 2 0 . 5 6 2 0 . 5 6 2 2 . 0 1 2 4 . 0 2 To t a l 56 . 6 1 5 0 . 9 9 5 2 . 3 2 5 2 . 3 2 5 3 . 9 4 5 5 . 9 4 5 6 . 1 9 6 0 . 8 2 6 2 . 0 7 6 4 . 6 5 So u r c e : T h e s o u r c e o f t h i s i n f o r m a t i o n i s t h e T o w n ' s f i n a n c i a l r e c o r d s . To w n o f F o u n t a i n H i l l s , A r i z o n a Au t h o r i z e d F u l l - t i m e E q u i v a l e n t G o v e r n m e n t E m p l o y e e s b y F u n c t i o n La s t T e n F i s c a l Y e a r s Fi s c a l Y e a r E n d e d J u n e 3 0 Page 132 Fu n c t i o n / P r o g r a m 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 Mu n i c i p a l C o u r t Ca s e s f i l e d 1, 7 4 0 1 , 6 4 9 1 , 7 3 8 1 , 5 9 3 2 , 0 1 4 1 , 2 7 7 89 1 2 , 2 3 7 1 , 3 2 4 1, 5 8 6 He a r i n g s / T r i a l s h e l d 70 3 1 , 6 6 5 1 , 5 8 5 1 , 5 6 4 1 , 8 4 4 67 6 8 0 1 5 6 8 1 , 4 3 0 1, 3 7 8 Ad m i n i s t r a t i o n FT E s p e r 1 , 0 0 0 r e s i d e n t s 2. 5 2 . 2 2 . 2 2 . 2 2 . 2 2 . 3 2 . 2 2 . 4 2 . 6 2. 7 Re g i s t e r e d v o t e r s - g e n e r a l e l e c t i o n no n e N/A 16 , 2 1 3 no n e 1 6 , 3 8 7 no n e 1 6 , 7 7 5 no n e 1 8 , 4 1 5 no n e Vo t e r t u r n o u t - g e n e r a l e l e c t i o n no n e N/A 38 % n o n e 4 1 % n o n e 5 1 % n o n e 9 1 % n o n e De v e l o p m e n t S e r v i c e s Bu i l d i n g p e r m i t s i s s u e d 45 7 4 4 5 4 4 3 4 1 0 5 0 9 4 6 8 5 7 6 5 4 7 5 7 5 62 0 Bu i l d i n g i n s p e c t i o n s c o n d u c t e d 1, 3 9 5 2 , 1 3 1 2 , 4 4 8 2 , 1 2 9 2 , 7 0 4 3 , 7 0 7 4 , 7 9 5 4 , 0 6 9 3 , 6 5 2 1, 9 1 1 Num b e r o f c o d e v i o l a t i o n c a s e s 74 6 7 1 6 7 5 2 7 1 3 6 6 9 6 5 4 6 5 5 6 9 0 4 9 7 58 6 Num b e r o f z o n i n g c a s e s 10 4 1 6 5 7 2 5 0 4 1 1 1 7 2 1 73 Co m m u n i t y S e r v i c e s Num b e r o f C o m m u n i t y C e n t e r b o o k i n g s / p e r m i t s * 3, 1 9 6 3 , 3 8 3 3 , 4 3 9 3 , 1 2 4 3 , 7 6 4 4 , 3 9 5 3 , 8 5 7 3 , 1 6 9 1 , 6 7 5 1 0 3 3 * Num b e r o f p a r t i c i p a n t s i n r e c r e a t i o n a l p r o g r a m s 1 , 7 8 9 2 , 2 9 1 2 , 2 4 9 2 , 9 1 0 3 , 7 7 3 3 , 7 9 4 3 , 4 8 9 1 , 8 3 0 2 , 8 9 2 4, 1 1 0 Num b e r o f S e n i o r S e r v i c e s m e m b e r s 1, 1 1 8 1 , 1 8 9 1 , 2 7 3 1 , 3 2 6 1 , 3 3 5 1 , 2 2 0 1 , 3 1 3 1 , 2 6 5 1 , 3 6 0 1, 1 7 5 Num b e r o f h o m e d e l i v e r e d m e a l s 6, 9 4 1 4 , 7 9 9 4 , 0 3 5 3 , 4 9 7 3 , 9 2 0 3 , 0 9 3 3 , 5 6 2 5 , 2 1 5 4 , 4 0 2 4, 1 7 8 La w E n f o r c e m e n t ( c o n t r a c t e d ) Ph y s i c a l a r r e s t s 54 5 7 4 3 4 4 5 2 2 0 2 2 0 2 1 4 67 8 6 5 6 49 Tr a f f i c v i o l a t i o n s 1, 2 9 6 1 , 3 7 9 1 , 5 3 9 1 , 2 1 5 1 , 8 0 3 1 , 0 5 3 1 , 2 4 8 2 , 6 1 8 2 , 7 4 5 2, 5 6 8 Fi r e & E m e r g e n c y M e d i c a l ( c o n t r a c t e d ) To t a l i n c i d e n t r e s p o n s e s 3, 1 3 6 2 , 9 5 6 3 , 1 6 6 3 , 1 9 1 3 , 4 2 5 3 , 6 5 9 4 , 0 7 3 3 , 8 9 6 4 , 2 1 5 4 , 2 6 8 Av e r a g e r e s p o n s e t i m e ( i n m i n u t e s ) 3: 5 0 3 : 5 3 3 : 3 7 3 : 5 7 3 : 2 5 3 : 3 3 3 : 3 2 3 : 5 1 4 : 5 0 4 : 3 8 So u r c e : T h e s o u r c e o f t h i s i n f o r m a t i o n i s t h e T o w n ' s f i n a n c i a l r e c o r d s . Not e : N / A i n d i c a t e s t h a t t h e i n f o r m a t i o n i s n o t a v a i l a b l e . Fi s c a l Y e a r E n d e d J u n e 3 0 To w n o f F o u n t a i n H i l l s , A r i z o n a Op e r a t i n g I n d i c a t o r s b y F u n c t i o n La s t T e n F i s c a l y e a r s *T h e C o m m u n i t y C e n t e r w a s c l o s e d f r o m 7 / 1 / 2 2 u n t i l 1 0 / 3 / 2 2 f o r r e n o v a t i o n s . Page 133 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 Pu b l i c s a f e t y Nu m b e r o f f i r e s t a t i o n s 2 2 2 2 2 2 2 2 2 2 Pu b l i c w o r k s St r e e t s ( c e n t e r l i n e m i l e s ) 1 7 8 . 9 1 7 8 . 9 1 7 8 . 9 1 7 8 . 9 1 7 8 . 9 1 8 0 . 0 1 8 0 . 0 1 8 0 . 0 1 8 0 . 0 1 8 0 . 0 St r e e t s ( l a n e m i l e s ) 39 0 3 9 0 3 9 0 3 9 0 . 5 3 9 0 . 5 3 9 1 . 5 3 9 1 . 5 3 9 1 . 5 3 9 1 . 5 3 9 1 . 5 Pe d e s t r i a n l i g h t i n g 34 3 4 8 5 9 1 9 1 9 1 9 1 9 1 9 1 9 5 Tr a f f i c s i g n a l s 13 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 Pa r k s a n d r e c r e a t i o n Ac r e a g e - d e v e l o p e d p a r k s 1 1 6 1 1 6 1 1 9 1 1 9 1 1 9 1 1 9 1 1 9 1 1 9 1 1 9 1 1 9 Pl a y g r o u n d s 7 7 7 7 7 7 9 9 9 9 Ba s e b a l l / s o f t b a l l d i a m o n d s 6 6 6 6 6 6 6 6 6 6 So c c e r / f o o t b a l l f i e l d s 7 7 7 7 7 7 7 7 7 7 Co m m u n i t y c e n t e r s 1 1 1 1 1 1 1 1 1 1 Pr e s e r v e a c r e a g e 74 0 7 4 0 8 0 7 . 2 8 0 7 . 2 8 0 7 . 2 8 0 7 . 2 8 8 9 . 2 9 1 3 . 2 9 1 3 . 2 9 1 3 . 2 Mi l e s o f t r a i l s 10 . 4 3 1 0 . 4 3 1 5 . 8 1 5 . 8 1 8 . 5 1 8 . 5 1 8 . 5 1 8 . 5 1 8 . 5 2 3 . 0 So u r c e : T h e s o u r c e o f t h i s i n f o r m a t i o n i s t h e T o w n ' s f a c i l i t i e s r e c o r d s . No t e : N / A i n d i c a t e s t h e i n f o r m a t i o n i s n o t a v a i l a b l e . To w n o f F o u n t a i n H i l l s , A r i z o n a Ca p i t a l A s s e t s S t a t i s t i c s b y F u n c t i o n La s t T e n F i s c a l Y e a r s Fi s c a l Y e a r E n d e d J u n e 3 0 Fu n c t i o n / P r o g r a m Page 134 Town of Fountain Hills, Arizona Single Audit Report Year Ended June 30, 2022 TOWN OF FOUNTAIN HILLS, ARIZONA SINGLE AUDIT REPORT FOR THE YEAR ENDED JUNE 30, 2022 CONTENTS Page Report on Internal Control Over Financial Reporting and on Compliance and 1 Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Report on Compliance for Each Major Federal Program; Report on Internal Control 3 Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance Schedule of Expenditures of Federal Awards 6 Notes to the Schedule of Expenditures of Federal Awards 7 Schedule of Findings and Questioned Costs 8 Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor’s Report Honorable Mayor and Members of the Town Council Town of Fountain Hills, Arizona We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Town of Fountain Hills, Arizona, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise Town of Fountain Hills, Arizona’s basic financial statements, and have issued our report thereon dated November 1, 2022. Our report included an emphasis of matter paragraph as to comparability because of the implementation of Governmental Accounting Standards Board Statement No. 87, Leases. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Town of Fountain Hills, Arizona’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Town of Fountain Hills, Arizona’s internal control. Accordingly, we do not express an opinion on the effectiveness of Town of Fountain Hills, Arizona’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have not been identified. Page 1 Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether Town of Fountain Hills, Arizona’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Heinfeld, Meech & Co., P.C. Scottsdale, Arizona November 1, 2022 Page 2 Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance Independent Auditor’s Report Honorable Mayor and Members of the Town Council Town of Fountain Hills, Arizona Report on Compliance for Each Major Federal Program Opinion on Each Major Federal Program We have audited Town of Fountain Hills, Arizona’s compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of Town of Fountain Hills, Arizona’s major federal programs for the year ended June 30, 2022. Town of Fountain Hills, Arizona’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. In our opinion, Town of Fountain Hills, Arizona complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2022. Basis for Opinion on Each Major Federal Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report. We are required to be independent of Town of Fountain Hills, Arizona and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of Town of Fountain Hills, Arizona’s compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to Town of Fountain Hills, Arizona’s federal programs. Page 3 Auditor’s Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on Town of Fountain Hills, Arizona’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate it would influence the judgment made by a reasonable user of the report on compliance about Town of Fountain Hills, Arizona’s compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we  Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding Town of Fountain Hills, Arizona’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.  Obtain an understanding of Town of Fountain Hills, Arizona’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of Town of Fountain Hills, Arizona’s internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on Internal Control Over Compliance A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Page 4 A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Town of Fountain Hills, Arizona as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise Town of Fountain Hills, Arizona’s basic financial statements. We issued our report thereon dated November 1, 2022, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Heinfeld, Meech & Co., P.C. Scottsdale, Arizona November 1, 2022 Page 5 Additional Identifying Number Federal Award Name of Funder Assigned By Funder Total Amount Federal CFDA Identification Pass‐Through Pass‐Through Provided to Federal Program Cluster Cluster Federal Awarding Agency/Program Title Number (Optional)Entity Entity Sub‐Recipients Expenditures Total Name Total DEPARTMENT OF TREASURY COVID‐19 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS 21.027 COVID‐19 $4,208,150 $4,208,150 N/A $0 TOTAL DEPARTMENT OF TREASURY $4,208,150 TOTAL EXPENDITURE OF FEDERAL AWARDS $4,208,150 Please Note: Italicized award lines indicate pass‐through funding The accompanying Notes to the Schedule of Expenditures of Federal Awards are an integral part of the schedule. TOWN OF FOUNTAIN HILLS, ARIZONA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Fiscal Period 7/1/2021 ‐ 6/30/2022 Page 6 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Fiscal Period 7/1/2021 ‐ 6/30/2022 Significant Accounting Policies Used in Preparing the SEFA The accompanying Schedule of Expenditures of Federal Awards (Schedule) includes the federal grant activity of Town of Fountain Hills, Arizona under programs of the federal government for the year ended June 30, 2022. The information in the Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Town, it is not intended to and does not present the financial position, changes in net position or cash flows of the Town. Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Any negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Pass‐through entity identifying numbers are presented where available. 10% De Minimis Cost Rate The auditee did not use the de minimis cost rate. Assistance Listing Numbers The program titles and Assistance Listing numbers were obtained from the federal or pass‐through grantor or through sam.gov. If the three‐digit Assistance Listing extension is unknown, there is a U followed by a two‐ digit number in the Assistance Listing extension to identify one or more Federal award lines from that program. The first Federal program with an unknown three‐digit extension is indicated with U01 for all award lines associated with that program, the second is U02, etc. Page 7 TOWN OF FOUNTAIN HILLS, ARIZONA SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2022 Summary of Auditor’s Results: Financial Statements Type of auditor’s report issued: Unmodified Internal control over financial reporting:  Significant deficiency(ies) identified: No  Material weakness(es) identified: No Noncompliance material to financial statements noted: No Federal Awards Internal control over major programs:  Significant deficiency(ies) identified: No  Material weakness(es) identified: No Type of auditor’s report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with §200.516 of Uniform Guidance: No Identification of major programs: Assistance Listing Number Name of Federal Program or Cluster 21.027 Coronavirus State and Local Fiscal Recovery Funds Dollar threshold used to distinguish between Type A and Type B programs: $750,000 Auditee qualified as low-risk auditee: No Findings Related to Financial Statements Reported in Accordance with Government Auditing Standards: No Findings and Questioned Costs Related to Federal Awards: No Summary Schedule of Prior Audit Findings required to be reported: No Page 8 INDEPENDENT ACCOUNTANT’S REPORT Honorable Mayor and Members of the Town Council Town of Fountain Hills, Arizona We have examined the Town of Fountain Hills, Arizona’s (Town) compliance as to whether highway user revenue fund monies received by the Town pursuant to Arizona Revised Statutes Title 28, Chapter 18, Article 2, and any other dedicated state transportation revenues received by the Town, were used solely for authorized transportation purposes during the fiscal year ended June 30, 2022. Management is responsible for the Town’s compliance with those specified requirements. Our responsibility is to express an opinion on the Town’s compliance with the specified requirements based on our examination. Our examination was conducted in accordance with attestation standards established by the AICPA. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the Town complied, in all material respects, with the specified requirements referenced above. An examination involves performing procedures to obtain evidence about whether the Town complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. We are required to be independent and to meet our other ethical responsibilities in accordance with relevant ethical requirements relating to the engagement. Our examination does not provide a legal determination on the Town’s compliance with specified requirements. In our opinion, the Town of Fountain Hills, Arizona complied, in all material respects, with the aforementioned requirements for the fiscal year ended June 30, 2022. Heinfeld, Meech & Co., P.C. Scottsdale, Arizona November 1, 2022 Town of Fountain Hills, Arizona Annual Expenditure Limitation Report Year Ended June 30, 2022 TOWN OF FOUNTAIN HILLS, ARIZONA ANNUAL EXPENDITURE LIMITATION REPORT YEAR ENDED JUNE 30, 2022 CONTENTS PAGE Independent Accountant’s Report 1 Annual Expenditure Limitation Report - Part I 2 Annual Expenditure Limitation Report - Part II 3 Annual Expenditure Limitation Report - Reconciliation 4 Notes to Annual Expenditure Limitation Report 5 INDEPENDENT ACCOUNTANT’S REPORT The Auditor General of the State of Arizona The Honorable Mayor and Town Council of the Town of Fountain Hills, Arizona We have examined the accompanying Annual Expenditure Limitation Report of the Town of Fountain Hills, Arizona for the year ended June 30, 2022, and the related notes to the report. The Town’s management is responsible for presenting this report in accordance with the Uniform Expenditure Reporting System as described in Note 1. Our responsibility is to express an opinion on this report based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether this report is presented in accordance with the Uniform Expenditure Reporting System, in all material respects. An examination involves performing procedures to obtain evidence about the amounts and disclosures in the report. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material misstatement of the report, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. We are required to be independent and meet our other ethical responsibilities in accordance with relevant ethical requirements relating to the engagement. In our opinion, the Annual Expenditure Limitation Report referred to above is presented, in all material respects, in accordance with the Uniform Expenditure Reporting System as described in Note 1. Heinfeld, Meech & Co., P.C. Scottsdale, Arizona October 31, 2022 Page 1 TOWN OF FOUNTAIN HILLS, ARIZONA ANNUAL EXPENDITURE LIMITATION REPORT – PART I YEAR ENDED JUNE 30, 2022 1. Economic Estimates Commission expenditure limitation $ 31,747,291 2. Voter-approved alternative expenditure limitation (approved N/A) 3. Enter applicable amount from line 1 or line 2 31,747,291 4. Amount subject to the expenditure limitation (total amount from Part II, Line C) 21,206,563 5. Amount under the expenditure limitation $ 10,540,728 I hereby certify, to the best of my knowledge and belief, that the information contained in this report is accurate and in accordance with the requirements of the Uniform Expenditure Reporting System. Signature of Chief Fiscal Officer Name and Title: David Pock, Finance Director Telephone Number: 480-816-5162 Date: October 31, 2022 See accompanying notes to report. Page 2 Internal Governmental Enterprise Service Fiduciary Funds Funds Funds Funds Total A. Amounts reported on the Reconciliation, Line D $ 26,969,304 $ - $ 43,971 $ - $ 27,013,275 B. Less exclusions claimed: 1 Bond proceeds - Debt service requirements on bonded indebtedness - Proceeds from other long-term obligations - Debt service requirements on other long-term obligations - 2 Dividends, interest, and gains on the sale or redemption of investment securities - 3 Trustee or custodian - 4 Grants and aid from the federal government 4,208,150 4,208,150 5 Grants, aid, contributions, or gifts from a private agency, organization, or individual, excep amounts received in lieu of taxes 193,194 193,194 6 Amounts received from the State of Arizona 163,245 163,245 7 Quasi-external interfund transactions 43,971 43,971 8 Amounts accumulated for the purchase of land, and the purchase or construction of buildings or improvements - 9 Highway user revenues in excess of those received in fiscal year 1979-80 1,125,640 1,125,640 10 Contracts with other political subdivisions - 11 Refunds, reimbursements, and other recoveries 72,512 72,512 12 Voter-approved exclusions not identified above - 13 Prior years carryforward - 14 Total exclusions claimed 5,762,741 - 43,971 - 5,806,712 C.Amounts subject to expenditure limitatio $ 21,206,563 $- $- $ - $ 21,206,563 TOWN OF FOUNTAIN HILLS, ARIZONA ANNUAL EXPENDITURE LIMITATION REPORT - PART II YEAR ENDED JUNE 30, 2022 Description See accompanying notes to report. Page 3 Internal Governmental Enterprise Service Fiduciary Description Funds Funds Funds Funds Total A. $ 27,035,171 $ - $ 43,971 $ - $ 27,079,142 B. Subtractions: 1.Items not requiring the use of working capital - Depreciation - Loss on disposal of capital assets - Bad debt expense - Other postemployment benefits expense - Claims incurred but not reported - Pension expense - Landfill closure and postclosure care costs - 2.- 598 598 3.Required fees paid to the Arizona Department of Revenue 65,269 65,269 4.Involuntary court judgments - 5.Total subtractions 65,867 - - - 65,867 C. Additions: 1.Principal payments on long-term debt - 2.Acquisition of capital assets - 3.Other postemployment benefits paid in the current year but reported as expenses in previous years - 4.Claims paid in the current year but reported as expenses incurred but not reported in previous years - 5.Pension contributions paid in the current year - 6. - 7.Total additions - - - - - D. Amounts reported on Part II, Line A $ 26,969,304 $- $ 43,971 $ - $ 27,013,275 See accompanying notes to report. TOWN OF FOUNTAIN HILLS, ARIZONA ANNUAL EXPENDITURE LIMITATION REPORT - RECONCILIATION YEAR ENDED JUNE 30, 2022 Total expenditures/expenses/deductions and applicable other financing uses, special items, and extraordinary items reported within the fund financial statements Expenditures of separate legal entities established under Arizona Revised Statutes Landfill closure and postclosure care costs paid in the current year but reported as expenses in previous years Page 4 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO ANNUAL EXPENDITURE LIMITATION REPORT YEAR ENDED JUNE 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Annual Expenditure Limitation Report (AELR) is presented as prescribed by the Uniform Expenditure Reporting System (UERS), as required by Arizona Revised Statutes §41-1279.07. The AELR excludes expenditures, expenses, or deductions of certain revenues specified in the Arizona Constitution, Article IX, §20, from the total expenditures, expenses, or deductions reported in the fund financial statements. In accordance with the UERS, a note to the AELR is presented below for any exclusion claimed on Part II and each subtraction or addition in the Reconciliation that cannot be traced directly to an amount reported in the fund financial statements. All references to financial statement amounts in the following notes refer to the Statement of Revenues, Expenditures, and Changes in Fund Balances for the Governmental Funds. NOTE 2 – The subtraction for expenditures of separate legal entities established under Arizona Revised Statutes in the Governmental Funds consists of expenditures from the Municipal Property Corporation Debt Service Fund and the Eagle Mountain Debt Service Fund. Governmental Municipal Property Corporation Debt Service Fund $ 10 Eagle Mountain Debt Service Fund 588 $ 598 NOTE 3 – The subtraction of $65,269 for required fees paid to Arizona state agencies was paid to the Municipal Firefighter Cancer Reimbursement Fund. NOTE 4 – The exclusions claimed for dividends, interest, and gains on the sale or redemption of investment securities in the Governmental Funds consisted of investment earnings. The current year exclusion utilized is a follows: Governmental Internal Service Carryforward exclusions as of 6/30/21 $ 107,448 $ 11 Investment earnings 12,239 218 Carryforward exclusions as of 6/30/22 $ 119,687 $ 229 Page 5 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO ANNUAL EXPENDITURE LIMITATION REPORT YEAR ENDED JUNE 30, 2022 NOTE 5 – Grants and aid from the federal government are claimed as exclusions in the year the expenditure occurs and any unused amounts are carried forward for future years. The current year grant exclusion utilized is $4,208,150 is related to the Coronavirus State and Local Fiscal Relief Funds grant. NOTE 6 – Grant revenues, contributions and sponsorships from private organizations are claimed as exclusions in the year the expenditure occurs and any unused amounts are carried forward for future years. The current year grant exclusion utilized is a follows: Proposition 202 $ 115,064 Contributions 31,790 Sponsorships 46,340 Current year exclusion utilized $ 193,194 NOTE 7 – State grant revenues are claimed as exclusions in the year the expenditure occurs and any unused amounts are carried forward for future years. The current year state grant exclusion utilized is a follows: Proposition 302 $ 28,985 LTAF II 100,260 Maricopa Association of Governments 34,000 Current year exclusion utilized $ 163,245 NOTE 8 – The exclusion of $43,971 in the Internal Service Fund relates to charges for services paid to the Internal Service Fund for technology replacement. The interfund charges are included in “Charges for Services” in the Internal Service Fund and as a current expenditure in various departments in the Governmental Funds. NOTE 9 – The highway user revenue (HURF) earned in excess of the amounts received in fiscal year 1979-80 is as follows: HURF Fund Intergovernmental Revenue $ 2,681,119 Less: Vehicle License Tax Revenues (826,070) Excludable revenue 1,855,049 Carryforward HURF funds as of 6/30/21 486,129 HURF Fund expenditures 3,207,526 Less: expenditures of Vehicle License Tax (826,070) Less: expenditures of non-excludable revenue (1,255,816) HURF eligible expenditures in current year 1,125,640 Less: current year HURF Funds utilized (1,125,640) Carryforward HURF Funds as of 6/30/22 $ 1,215,538 Page 6 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO ANNUAL EXPENDITURE LIMITATION REPORT YEAR ENDED JUNE 30, 2022 NOTE 10 – Refunds, reimbursements, and other recoveries are claimed as exclusions in the year the expenditure occurs and any unused amounts are carried forward for future years. The current exclusions utilized was $72,512. NOTE 11 – Revenues that are constitutionally excludable that were not spent in the year of receipt may be accumulated and excluded in future years when spent. A summary of the revenue sources and the changes in those balances is shown in the table below: Description Balance June 30, 2021 Increase Decrease Balance June 30, 2022 Dividends, interest, and gains on the sale or redemption of investment securities $ 107,459 $ 12,467 $ $ 119,926 Highway user revenues in excess of those received in fiscal year 1979-80 486,129 729,409 1,215,538 Grants, aid, and contributions 7,145 7,145 Total carryforward $ 593,588 $ 749,021 $ 0 $ 1,342,609 Page 7 ITEM 5. C. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 11/15/2022 Meeting Type: Town Council Regular Meeting Agenda Type: Public Appearances/Presentations Submitting Department: Administration Prepared by: Amanda Jacobs, Economic Development Director Staff Contact Information: Amanda Jacobs, Economic Development Director Request to Town Council Regular Meeting (Agenda Language): PRESENTATION: Economic Development - First Quarter Report Staff Summary (Background) Economic Development Director Amanda Jacobs will be presenting a first quarter (July 1, 2022 - September 30, 2022) economic development update to the Town Council at its meeting on November 15, 2022. The presentation will include updates on business attraction, business retention and expansion, marketing, advertising, tourism, strategic partnerships and grant funding. Attachments Presentation - EcDev 1st Quarter Report Form Review Inbox Reviewed By Date Finance Director David Pock 11/01/2022 03:54 PM Town Attorney Aaron D. Arnson 11/02/2022 10:21 AM Town Manager Grady E. Miller 11/03/2022 12:12 PM Form Started By: Amanda Jacobs Started On: 10/19/2022 12:17 PM Final Approval Date: 11/03/2022 TOWN OF FOUNTAIN HILLS WWW.FOUNTAINHILLSAZ.GOV Economic Development First Quarter Update Presented by: Amanda Jacobs, Economic Development Director WWW.FOUNTAINHILLSAZ.GOV Business Attraction •Atticus Books and Music •Honor Health Primary Care •TDC Financial •Veeta’s Vegan WWW.FOUNTAINHILLSAZ.GOV Business Attraction •Dutch Bros. (Coming Soon) •Manny’s at Park Place (Coming Soon) •Spacefit (Coming Soon) WWW.FOUNTAINHILLSAZ.GOV Business Retention and Expansion •BehaviorAlly •Relocated from BizHub to Ave of the Fountains•840 sq ft to 2,420 sq ft •Increased employees •Business Retention and Expansion •Bludot Open/Business Directory •Downtown WWW.FOUNTAINHILLSAZ.GOV Apartment Occupancy Rate Apartment Occupancy Rate Gunsight 58% Casa Del Lago 83% Four Peaks Vista Condos 65% Havenly at Fountain Hills 76% occupied/92.8% leased Luna at Fountain Hills 93% Park Place at Fountain Hills 94% WWW.FOUNTAINHILLSAZ.GOV Vacant Land Available Category Vacant Acres Vacancy Rate Residential 1,814 14.7% Commercial 58 1.8% Industrial 3 0.02% Lodging 44 0.3% Source: Fountain Hills GIS WWW.FOUNTAINHILLSAZ.GOV Vacancy Rate –Existing Buildings Category Vacancy Rate Commercial 9.0% Office 17.2% Industrial 1.0% Retail 5.4% Source: CoStar WWW.FOUNTAINHILLSAZ.GOV AOT Prop 302 Grants –FY22/23 •Estimate: $67,682 •Rollover: $17,782 •Project Elements •Canadian Magazine Print Ads •Experience Fountain Hills Website •Visitors Guide WWW.FOUNTAINHILLSAZ.GOV AOT VAI Grants •Outdoor Revitalization Grant •Centennial Pavilion (not awarded) •Partnership Grant •Irish Fest (staff denied award) •Marketing Grant •Awarded $230,000 WWW.FOUNTAINHILLSAZ.GOV AOT VAI Grants -Marketing •Billboards •Broadcast & Digital Marketing •Experience Fountain Hills website •Itinerary Pages •Phoenix Magazine •Public Relations WWW.FOUNTAINHILLSAZ.GOV Branding •Community Branding Project •3 Focus Groups •700+ survey responses •Tentative Council Meeting: January 17, 2023 WWW.FOUNTAINHILLSAZ.GOV Partnerships •Arizona Business Advisors •Arizona Office of Tourism •Fountain Hills Chamber of Commerce •Fountain Hills Times •Greater Phoenix Economic Council WWW.FOUNTAINHILLSAZ.GOV Tourism •Hotel Occupancy: 62% •Experience Fountain Hills Website •13,234 unique visits (-17.6%) •Top 5 Cities •Mesa •Scottsdale •Phoenix •Los Angeles •Omaha TOWN OF FOUNTAIN HILLS WWW.FOUNTAINHILLSAZ.GOV Questions? ITEM 7. A. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 11/15/2022 Meeting Type: Town Council Regular Meeting Agenda Type: Consent Submitting Department: Administration Prepared by: Linda Mendenhall, Town Clerk Request to Town Council Regular Meeting (Agenda Language): CONSIDERATION AND POSSIBLE ACTION: Approval of the minutes of the Regular Meeting of October 18, 2022. Staff Summary (Background) The intent of approving meeting minutes is to ensure an accurate account of the discussion and action that took place at the meeting for archival purposes. Approved minutes are placed on the town's website and maintained as permanent records in compliance with state law. Related Ordinance, Policy or Guiding Principle N/A Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) Staff Recommendation(s) Staff recommends approving the minutes of the Regular Meeting of October 18, 2022, as presented. SUGGESTED MOTION MOVE to approve the minutes of the Regular Meeting of October 18, 2022, as presented. Attachments 2022.1018.TCRM.Minutes 2022.1018.TCRM.Verbatim Transcript Form Review Form Started By: Linda Mendenhall Started On: 11/03/2022 08:25 AM Final Approval Date: 11/03/2022 TOWN OF FOUNTAIN HILLS MINUTES OF THE REGULAR MEETING OF THE FOUNTAIN HILLS TOWN COUNCIL October 18, 2022 1. CALL TO ORDER AND PLEDGE OF ALLEGIANCE Mayor Dickey called the Regular Meeting of the Fountain Hills Town Council held on October 18, 2022, to order at 5:30 p.m. and led the Council and audience in the Pledge of Allegiance. 2. MOMENT OF SILENCE A moment of silence was held. 3. ROLL CALL Members Present: Mayor Ginny Dickey: Vice Mayor Gerry Friedel; Councilmember Sharron Grzybowski; Councilmember Peggy McMahon; Councilmember Mike Scharnow Attended Telephonically: Councilmember Alan Magazine Members Absent: Councilmember David Spelich Staff Present: Town Manager Grady E. Miller; Town Attorney Aaron D. Arnson; Town Clerk Linda Mendenhall Audience: Sixty-three members of the public were present. 4. REPORTS BY MAYOR, COUNCIL MEMBERS, AND TOWN MANAGER A. RECOGNITION: Stellar Students of the Month for October. Mayor Dickey recognized the following students who were in attendance for their achievements. Rawlei Cruze-Wood McDowell Mountain Elementary School Xavi Arellano-Casillas McDowell Mountain Elementary School Sara Forsdal Fountain Hills Middle School Harrison Currier Fountain Hills Middle School Hailey Chandler Fountain Hills High School Luke Bloedel Fountain Hills High School B. PROCLAMATION: October 23 – 31, 2022, as Red Ribbon Week. Mayor Dickey issued a proclamation for October 23rd through the 31, 2022 as Red Ribbon Week. Councilmember Mike Scharnow read the proclamation on behalf of Mayor Dickey. Shawn Uphoff, Director of the Fountain Hills Drug Coalition, and Tammy Bell, Fountain Hills Drug Coalition Board of Directors, accepted the proclamation. Jackie Needham, Unit Commander of the East Valley Young Marines, and members of the East Valley Young Marines were recognized. 5. SCHEDULED PUBLIC APPEARANCES/PRESENTATIONS A. Interim Report from the Citizen Streets Committee regarding evaluation of street conditions from 2017 and 2022. Jerry Butler presented to the council, the Citizen Streets Committee’s evaluation of street conditions and answered the council’s questions. 6. CALL TO THE PUBLIC Pursuant to A.R.S. §38-431.01(H), public comment is permitted (not required) on matters NOT listed on the agenda. Any such comment (i) must be within the jurisdiction of the Council, and (ii) is subject to reasonable time, place, and manner restrictions. The Council will not discuss or take legal action on matters raised during Call to the Public unless the matters are properly noticed for discussion and legal action. At the conclusion of the Call to the Public, individual councilmembers may (i) respond to criticism, (ii) ask staff to review a matter, or (iii) ask that the matter be placed on a future Council agenda. The following resident addressed the council under the Call to the Public. Barry Wolborsky, Fountain Hills resident, addressed the council regarding the planned park for Sun Ridge Canyon mentioning that a park is not needed there and that those funds could be used for streets. 7. CONSENT AGENDA ITEMS All items listed on the Consent Agenda are considered to be routine, noncontroversial matters and will be enacted by one motion of the Council. All motions and subsequent approvals of consent items will include all recommended staff stipulations unless otherwise stated. There will be no separate discussion of these items unless a councilmember or member of the public so requests. If a councilmember or member of the public wishes to discuss an item on the Consent Agenda, he/she may request so prior to the motion to accept the Consent Agenda or with notification to the Town Manager or Mayor prior to the date of the meeting for which the item was scheduled. The items will be removed from the Consent Agenda and considered in its normal sequence on the agenda. MOVED BY Councilmember Sharron Grzybowski to approve the Consent Agenda, SECONDED BY Councilmember Mike Scharnow. Vote: 5 – 0 passed – Unanimously Councilmember Grzybowski Aye Councilmember Magazine Record of a Vote was not detected due to technical difficulties Councilmember McMahon Aye Councilmember Scharnow Aye Councilmember Spelich Absent Vice Mayor Friedel Aye Mayor Dickey Aye A. CONSIDERATION AND POSSIBLE ACTION: Approval of the Regular Meeting of the Town Council on September 20, 2022. Approval of the Work Session of the Town Council on September 20, 2022. Approval of the Special Meeting of the Town Council on August 22, 2022. B. PUBLIC HEARING, CONSIDERATION AND POSSIBLE ACTION: Approval of a Liquor License Application for the Hogwash Saloon, located at 16737 East Parkview Avenue Suite B, Fountain Hills, Arizona, for a Series 6 (Bar) license. C. CONSIDERATION AND POSSIBLE ACTION: Approval of budget transfers for the Tourism Fund as a result of grant awards from the Arizona Office of Tourism. D. CONSIDERATIONION AND POSSIBLE ACTION: Approving Professional Services Agreement 2023-33 with Safebuilt to provide building inspection services in the Development Services Department. E. CONSIDERATION AND POSSIBLE ACTION: Resolution 2022-44, abandoning the 20’ Public Utility and Drainage Easement along the north side of 17012 E. Jacklin Drive (Application A22-000010). F. CONSIDERATION AND POSSIBLE ACTION: Approving staff to seek and apply for grants from the Federal Emergency Management Agency (FEMA). . 8. REGULAR AGENDA A. CONSIDERATION AND POSSIBLE ACTION: To approve the recommendations for the appointment of members to the Town's Boards, Commissions, and Committees. MOVED BY Councilmember Sharron Grzybowski to approve the Council Subcommittees recommendation for the appointment of members to the Town’s boards, commissions, and committees as presented, SECONDED BY Councilmember Mike Scharnow. Vote: 5 – 0 Passed – unanimously Councilmember Grzybowski Aye Councilmember Magazine Record of a vote was not detected due to technical difficulties Councilmember McMahon Aye Councilmember Scharnow Aye Councilmember Spelich Absent Vice Mayor Friedel Aye Mayor Dickey Aye B. CONSIDERATION AND POSSIBLE DIRECTION: Possible amendments to Town Code Article 8-6, Vacation Rentals, to incorporate additional regulations as allowed by changes to state statutes. Mayor Dickey opened the item up for public comment. The following residents addressed the council. Jeff Esposito, a Fountain Hills resident, addressed the council and spoke on behalf of the Neighborhood Property Owners Association (NPOA) Board of Directors in support of the proposed short-term rental Ordinance. Enrique Melendez, a Fountain Hills resident, addressed the council in support of the proposed short-term rental ordinance, particularly the portion regarding vacation rentals. Clerks Note: Councilmember Alan Magazine, left the meeting at 6:36 p.m. due to technical difficulties. C. DISCUSSION AND POSSIBLE DIRECTION: Approving in concept the control room building for the Sanitary District ASR Well #1 Building Addition at Fountain Park. Dana Trompke, District Manager, Fountain Hills Sanitary District, presented the addition of a control room building for the Sanitary District ASR Well #1 at Fountain Park and answered the council's questions. MOVED BY Councilmember Peggy McMahon to approve Sanitary District ASR Well #1 Location at Fountain Park and direct the Town Manager to execute all applicable contracts and agreements, SECONDED BY Councilmember Sharron Grzybowski. Vote: 5 – 0 Passed – unanimously Councilmember Grzybowski Aye Councilmember Magazine Absent Councilmember McMahon Aye Councilmember Scharnow Aye Councilmember Spelich Absent Vice Mayor Friedel Aye Mayor Dickey Aye D. CONSIDERATION AND POSSIBLE ACTION: Approval of Contract Amendment 2022-057.1 to Artistic Land Management Landscaping, Inc. MOVED BY Councilmember Mike Scharnow to approve Artistic Land Management Landscaping Inc. contract amendment 2022-057.1, SECONDED BY Councilmember Peggy McMahon. Vote: 5 – 0 Passed – unanimously Councilmember Grzybowski Aye Councilmember Magazine Absent Councilmember McMahon Aye Councilmember Scharnow Aye Councilmember Spelich Absent Vice Mayor Friedel Aye Mayor Dickey Aye E. CONSIDERATION AND POSSIBLE ACTION: approving Cooperative Purchasing Agreement 2023-046 with National Auto Fleet Group. MOVED BY Councilmember Peggy McMahon to approved Cooperative Purchasing Agreement 2023-046, between the Town of Fountain Hills and National Auto Fleet Group, in the amount of $75,280 for the purchase of two vehicles, SECONDED BY Sharron Grzybowski. Vote: 5 – 0 Passed – unanimously Councilmember Grzybowski Aye Councilmember Magazine Absent Councilmember McMahon Aye Councilmember Scharnow Aye Councilmember Spelich Absent Vice Mayor Friedel Aye Mayor Dickey Aye F. CONSIDERATION AND POSSIBLE ACTION: Extension of a Special Use Permit to allow residential uses on a 0.58 acre property in the Community Commercial (C-C) zoning district at 17134 E. Kingstree Blvd., generally located at the northwest corner of Saguaro Blvd. and Kingstree Blvd. MOVED BY Councilmember Sharron Grzybowski, to approve the request for a six-month extension to the Special Use Permit to allow a maximum of 12 dwelling units at 17134 E. Kingstree Blvd., SECONDED BY Councilmember Peggy McMahon. Vote: 5 – 0 Passed – unanimously Councilmember Grzybowski Aye Councilmember Magazine Absent Councilmember McMahon Aye Councilmember Scharnow Aye Councilmember Spelich Absent Vice Mayor Friedel Aye Mayor Dickey Aye G. CONSIDERATION AND POSSIBLE ACTION: approving Professional Services Agreement 2023-047 between the Town and Roadway Asset Services, LLC for Pavement Condition and Evaluation Related Services. MOVED BY Vice Mayor Gerry Friedel to approve Professional Services Agreement 2023-047 between the Town and Roadway Asset Services, LLC for Pavement Condition and Evaluation Related Services in the amount of $59,997, SECONDED BY Councilmember Peggy McMahon. Vote: 5 – 0 Passed – unanimously Councilmember Grzybowski Aye Councilmember Magazine Absent Councilmember McMahon Aye Councilmember Scharnow Aye Councilmember Spelich Absent Vice Mayor Friedel Aye Mayor Dickey Aye H. CONSIDERATION AND POSSIBLE ACTION: Approve a settlement agreement and release and adopt Resolution 2022-45 approving a first amendment to the development agreement between the Town of Fountain Hills and N-Shea Group, LLC and Park Place Properties, LLC. Mayor Dickey opened it up for public comment. The Town Clerk read a written comment provided by Liz Gildersleeve. MOVED BY Vice Mayor Gerry Friedel to approve the Settlement Agreement and Release between the Town of Fountain Hills and N-Shea Group, LLC and Park Place Properties, LLC, and adopt Resolution 2022-45 approving a first amendment to the Development Agreement between the Town of Fountain Hills and N-Shea Group, LLC and Park Place Properties, LLC., SECONDED BY Sharron Grzybowski. Vote: 5 – 0 Passed – unanimously Councilmember Grzybowski Aye Councilmember Magazine Absent Councilmember McMahon Aye Councilmember Scharnow Aye Councilmember Spelich Absent Vice Mayor Friedel Aye Mayor Dickey Aye 9. COUNCIL DISCUSSION/DIRECTION to the TOWN MANAGER Item(s) listed below are related only to the propriety of (i) placing such item(s) on a future agenda for action, or (ii) directing staff to conduct further research and report back to the Council. 10. ADJOURNMENT Having no further business, Mayor Ginny Dickey adjourned the Regular meeting of the Fountain Hills Town Council held on October 18, 2022, at 7:24 p.m. TOWN OF FOUNTAIN HILLS _________________________ Ginny Dickey, Mayor ATTEST AND PREPARED BY: __________________________ Linda G. Mendenhall, Town Clerk CERTIFICATION I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Regular Meeting held by the Town Council of Fountain Hills in the Town Hall Council Chambers on the 18th day of October 2022. I further certify that the meeting was duly called and that a quorum was present. DATED this November 15, 2022. _____________________________ Linda G. Mendenhall, Town Clerk TOWN OF FOUNTAIN HILLS Page 1 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 1 of 43 Post-Production File Town of Fountain Hills October 18, 2022 City Council Meeting Transcription Provided By: eScribers, LLC * * * * * Transcription is provided in order to facilitate communication accessibility and may not be a totally verbatim record of the proceedings. * * * * * TOWN OF FOUNTAIN HILLS Page 2 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 2 of 43 MAYOR DICKEY: I heard the bell so it must be time. I'll call this meeting to order. Please stand for the pledge and remain standing. ALL: I pledge allegiance to the flag of the United States of America and to the republic for which it stands one nation, under God, indivisible with liberty and justice for all. MAYOR DICKEY: Thank you. Please remain standing for a moment of silence. Thank you so much. Roll call, please. MENDENHALL: Thank you, Mayor. Mayor Dickey? MAYOR DICKEY: Here. MENDENHALL: Vice Mayor Friedel? FRIEDEL: Present. MENDENHALL: Councilmember McMahon? MCMAHON: Here. MENDENHALL: Councilmember Scharnow? SCHARNOW: Here MENDENHALL: Councilmember Magazine? Okay. Councilmember Spelich is on an excused absence. Councilmember Grzybowski? GRZYBOWSKI: Present. MAYOR DICKEY: Thank you very much. Our first item are our reports by the Town Manager and Councilmembers. Grady. MILLER: Thank you, Mayor. Mayor and Council, I just have a couple of announcements. First one I wanted to remind the community that this Saturday is a big deal that we've got going on. It's the Make a Difference Day. We've held this event every year for the last several years. For about 40 projects that have been identified to help community come together and help their neighbors with projects that they have around the home. And there's going to be a lot of landscaping efforts and home improvement type of work that's going to be done. And over 200 volunteers actually participate with that. Also, I wanted to let you know and I'm going to make this announcement at the November 1st meeting as well. But the Town will be hosting an open house at the community center on November 9th from 4 p.m. to 7 p.m. to allow comment from residents on the sidewalk gap elimination project, which is on Saguaro -- TOWN OF FOUNTAIN HILLS Page 3 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 3 of 43 which is a sidewalk project on Saguaro Boulevard between Fountain Hills Boulevard and Colony Drive and Palisades between Fountain Hills Boulevard and Saguaro. This is a project that is approximately 94 percent funded by the federal government, and this grant covers the design and construction costs. So we really look forward to seeing the public show up there and give their input before this project commences. That's all I have, Mayor. MAYOR DICKEY: Thank you. Councilmember. MCMAHON: Thank you. Good evening, everybody. I wanted to remind that we have a cares forum this Thursday night at 6:30 at the community center, and everybody is welcome to attend. We are going to have a session on Veterans with the director -- Arizona Director of Veterans Affairs here, and we are going to be speaking in depth about the services that are available to veterans because many of them don't know that they're available, and there are many available. Also, we had a meeting on -- a committee meeting on debenture friendly. The Town is currently in the process of applying to become a debenture friendly town and have additional services available for our citizens. And also, Mayor Dickey and I had a nice time. We were with East Valley Partnership. We were invited to attend a viewing of the new hockey rink at the college and it is going to be where the Coyotes are going to playing for a while. So it was cold, but it was -- it's a really nice facility. FRIEDEL: Just two quick things, Mayor. Thank you. I'm looking forward to being on Grady's work team again for the mad day. So we had a good time last year. We worked hard though, and I have feeling we'll be working even harder this year from what I understand. And then, we had the privilege of attending the Falcon's home football game last week, and they won handily. And it was a great time, there was a pretty good crowd out there too, so. One home game left, so let's make sure we get out there and support them. MAYOR DICKEY: Go ahead. SCHARNOW: Yes. Thank you Madam Mayor. Well, I think all of us had the privilege of attending a truly celebratory event last week at the community center. We were honor the community services department for their huge national first place honor. So that was TOWN OF FOUNTAIN HILLS Page 4 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 4 of 43 a fun event, and I thank everybody for putting that together. And a couple of us from the drug-prevention coalition, we went on a tour of the Fort McDowell Yavapai Nation was organized by the River of Time Museum and Exploration Center, I think it's called now. But it was a really good tour, and Christine Lewis, the other cultural coordinator over there kind of led the tour and saw a lot of sights and learned a lot of the history of Fort McDowell and the Yavapai people, so that was a very good thing. And so I'd encourage -- the museum's going to have several more of those tours, so I would encourage anyone to take that if you can. It's very interesting. GRZYBOWSKI: Okay, I guess I'm next since there's two empty seats between us. I was going to mention the gold medal award that community services held at the community center as well. So I'm glad Counselman Scharnow did. You guys missed a great day. They did a really good job. We're so proud of them. I was also going to mention Make a Difference Day planning meeting and the reminder about Make a Difference Day coming up this Saturday. So instead of doing all that stuff, I want to say I love Stellar Student Day. I love to see this many people, one. And two, I love to see this many young people. And if you guys aren't actually told, you can stay for the whole meeting. You don't have to leave. It is kind of cool, and it does show you the blue hairs can actually make town council seats. Thank you. MAYOR DICKEY: I don't know how to take that blue hair thing. Usually it means a little something different. SCHARNOW: Or no hair. MAYOR DICKEY: Well, true. So I was able to go to my first Arizona Mayor's Education Roundtable discussion. That one was about chronic absenteeism. Other meetings and discussion that will be coming involved economic impact of post-secondary education, regional talent development, and early childhood education and care. The group is made up there of mayors, superintendents, west ed, affilios, collaborative communications, education board Arizona, and others. And they recognize the benefits of cities and schools working together for their shared communities. When one excels, we all succeed. And that's the Fountain Hills way. And Peggy mentioned that we got to go on our East Valley tour of the Novus Innovation Corridor in Tempe and ASU Mullett Theater Arena. It represents a very large investment TOWN OF FOUNTAIN HILLS Page 5 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 5 of 43 and in residential, in hospitality, in restaurants, retails, and offices, and this is very encouraging for the whole region when we see someone have that kind of, I guess you would say, optimism in the future. So a very big investment. Butterfly flutter, they're kind of reveal was this weekend and with all that rain, they had everything inside and it worked out really well down by the fountain and that -- and they were beautiful. I go to a lot of ribbon-cuttings. But I have to say I really like the Tap House one, I don't know why, but that was really fun. And Grady and I resumed with the FAA, and they had met with Fort McDowell Yavapai Nation. We've changed it -- going to be changing some of the flight paths, but it's a least a year away. It shouldn't affect our town. But we'll have a lot of opportunities for public involvement. And then, while we had them, we took advantage of the ability to talk to them about the low -- some of the helicopters and the low-flying early in the morning flights sometimes that our neighbors are hearing and a little upset about. So it was a really good meeting, and I think we got some good resources to tell some folks on where they might get some relief. And last, again, as we approach Veteran's Day, we'll talk more about it at the next meeting, but our Fountain Hills Cares at 6:30, which is all about Veterans. And you know, I heard that we were getting some criticisms about our Fountain Hills Cares events, our programs they've addressed as Peggy mentioned dementia, substance abuse. And I find it hard to understand why sharing this important information with our individuals and our families in our community would be shamed at all. So I really hope that we get a good turnout. I encourage people to come and learn about the resources that are available for our veterans and their families. And again, that's Thursday at 6:30 at the community center. Thank you very much. Any other items? I know -- I think Alan is not on the phone, correct? Okay. If you're there, Alan, let me know so if you have anything. Our next item is our Stellar Student awards for the month. And I will start, as usual with the kids from McDowell Mountain. So what I do is I read the names, I read the little blurbs about you. You come up. Angela will give you the certificate. And then, we'll come down and Bob from the newspaper will take a picture. Our first student is Xavi Arellano-Casillas. Yay. Xavi, you can't tell it by looking at his face, but he's a serious student. A serious and TOWN OF FOUNTAIN HILLS Page 6 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 6 of 43 dedicated student in music class, and he remains focused and participates in every music activity to the fullest. He did an amazing job composing an original piece of music with body percussion for the instruments. The excitement on his face when he was composing this music was priceless. Everyone could see that he was really into the task. He was really proud of these results. Xavi's always respectful of his teacher and his classmates, shows a willingness to practice, practice, practice to learn something new. He's a stellar student, roll model for his peers, and he has every reason to be proud of himself. Xavi. Our next McDowell Mountain Student is Rawlei Cruze-Wood. Rawlei? Yay. Am I saying that right, Rawlei? She is a wonderful student role model for her classmates in music. She always does her best, and she fully engages herself in all learning activities including learning how to play the Ukulele. And in one week she learned how to play You Are My Sunshine. Rawlei is always respectful and kind to her teacher and classmates. She energizes the classroom with her positive attitude and broad smile on her face. Rawlei shows determination and focus in music class, and those attributes help her learn how to play instruments well. She is truly a stellar student. Rawlei. Now we move up to the Fountain Hills Middle School, and our student is Sara Forsdal. Sara, are you here? All right. Being positive, helpful, cooperative and friendly are all the traits of a good student. This is Sara Forsdal. She excels in all subjects and has a true enthusiasm and gift for math. Her hard work and efforts are reflected in her high grades. She's a model student, always follows our school PBIS, positive behavioral interventions and supports expectations. We are very proud of our 5th grade Falcon, Sara. Next is Harrison Currier. Harrison, are you here? Yay, come on up. When we think of Harrison Currier, we think of him as a student that always leads by example. When working in groups on a project, he motivates and inspires his peers to stay on task and produce the team's personal best. As a student leader, Harrison always demonstrates our school's PBIS expectations on being respectful, responsible, safe, and kind. Way to go Harrison. Now we move to the high school. Hailey Chandler? Hailey? Hey. Hailey is very helpful around campus. She's a joy to have in class and never hesitates to assist her peers. She's always on task and is very respectful. Having her be part of this campus brings great value to the school because of the type of leader she is. Hailey's a great role TOWN OF FOUNTAIN HILLS Page 7 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 7 of 43 model. Seeing her influence around campus makes me extremely hopeful of what her future holds. She's a junior who has completed 30-plus hours of community service, two- plus years of varsity sports, and maintains a 3.0 or higher. That is Hailey Chandler. And our last student for this month is Luke Bloedel. Luke, are you here? Oh, there you go. Luke is always humble and is selfless always. Very interactive. Every interaction I've had with him has been nothing but pleasant. You can find him at any school event in the student section leading cheers and showing his school spirit. He says being a Falcon and is proud to be one every day. Seeing his enthusiasm daily and his will to succeed has been a wonderful thing to watch, and I can't wait to see the great things he accomplishes. Luke is a senior who has completed 40-plus hours of community service, leadership role is Stu Go, two plus years of varsity sports while maintaining a GPA of 3.0 or higher. Luke. All right. Thank you, all. See you later. Good job, nice job everyone. Thank you so much. You don't have to leave but you can. Have a good night. That was great. Our next item is a proclamation. It's for Red Ribbon Week. Councilman Mike Scharnow's going to do the honors, and he will present to our -- some people from the coalition. I think Shawn Upholf is here, and I also want to mention that I believe Jackie Kneadham from East Valley Young Marines is in attendance to listen to this important message. So if Shawn would like to come up and accept this, and Mike will read it. SCHARNOW: Yeah. Why don't you come up too, Tammy Bell. I know you weren't expecting it. Tammy Bell's on our board of directors for the drug prevention coalition. So here's the proclamation. So whereas alcohol and drug abuse affect individuals, families, and communities across the nation; and whereas its imperative that visible unified efforts by community members be launched to prevent drug abuse; and whereas Red Ribbon Week offer citizens the opportunity to demonstrate their commitment to drug-free lifestyles; and whereas Red Ribbon Week will be celebrating communities across the nation on October 23rd through the 31st; and whereas businesses, government, law enforcement, media, healthcare providers, religious institutions, schools, and other community-based organizations will demonstrate their commitment to healthy, drug-free lifestyles by wearing red ribbons and participating in drug prevention activities; and TOWN OF FOUNTAIN HILLS Page 8 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 8 of 43 whereas community of Fountain Hills further commits its resources to ensure the success of Red Ribbon Week, and the Fountain Hills Drug Prevention Coalition invites all residents to attend a drug prevention health fair at the Fountain Hills Middle School on next Friday morning, October 28th, between 9 and 11 a.m. So would now therefore be resolved on behalf of Ginny Dickey, Mayor of the Town of Fountain Hills, we do hereby proclaim October 23rd to October 31st as Red Ribbon Week and encourage you to participate in drug prevention education activities not only during Red Ribbon Week but also throughout the year making a visible statement that we are strongly committed to a drug-free lifestyle. So that's a proclamation. Might have to shorten it up next time, I tell you, but anyway. So again, I just want to invite everyone out Friday, next Friday, 9 to 11 at the middle school. We're going to have a lot of activities at this health fair. So we'll -- I don't know are you grabbing a picture now or? MAYOR DICKEY: Maybe the -- maybe Mike, maybe the youngsters can come up too. SCHARNOW: Yeah. Yeah. I want to honor the Young Marines as well. I think they're out of Mesa. And it's always good to see young people involved in activities. And I know they've been big supporters of Red Ribbon throughout the years as well. So welcome everybody. All right. Thanks, guys. MAYOR DICKEY: Thank you so much. Thanks for coming. Our next item is a presentation by our Citizen Street Committee. Grady? MILLER: Yes. Thank you, Mayor -- Mayor and Council. As you're aware the Citizen Street Committee was formed last year for the purpose of developing recommendations relating to this town's long-term streets needs. We're very fortunate to have a very active group here that's been very good about analyzing the situation we have. And so tonight there is an interim report that will be given by Jerry Butler. Jerry Butler, if you can come up to the podium. Jerry is standing in. Originally, Mark Gram who had given you the last presentation was going to do it, but Jerry's actually more than qualified. He's actually done a lot of the analysis that you'll be seeing tonight. Then, I'm going to turn it over to Mr. Butler, who is also a Fountain Hills Sanitary District board member and is here probably also for the other item that's on the agenda as well. Mr. Butler. TOWN OF FOUNTAIN HILLS Page 9 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 9 of 43 BUTLER: Thank you, Grady. Mayor and Council, thank you for allowing us to come and make another presentation. On your agenda it does say that we are going to talk to you about the street conditions from 2017 and 2022. So sit back, relax, we'll start with 2017. Now, only kidding. We boiled it down to something a lot less than that notebook, but the notebook does represent a lot of the things that we have been addressing since we were here five-and-a- half months ago. As far as the background, yes, as Grady says, we were formed a little over a year ago. We have been working diligently to understand the complications, the complexities of our street system, and to come up with the funding recommendations that the community can accept. The -- since our last update, as your agenda said, we had gone through a very detailed comparison of 2017 pavement conditions, along with -- and I need to emphasize the word estimated 2022 conditions because that's all we can do in a five-year gap. The pavement conditions that we have been analyzing, we created a spreadsheet that began with the data that was accumulated in 2017. And that included 1,445 segments of our street system. A street segment is maybe from intersection to intersection or from an intersection to a major alley. But anyway, there's nearly 1,500 segments that we've taken a look at. There's 3.6 million square yards of pavement. Think about that. That's a lot of asphalt. We, in trying to make it easier to understand, we have categorized the streets into letter grades. And when you were in school, A, B, C, D, and F did mean something. In our case, C is not that good. But we had in our spreadsheet an example is just shown in the lower right-hand corner of the exhibit here is -- that spreadsheet goes for 45 more columns to the right. There's 30,000 entries in this spreadsheet. We've tried to take a look at -- each year between now and 2027 to see what a five-year improvement plan might look like. We've adjusted all of our analyses based on the work that the town has already accomplished. So this is not just totally 2017 conditions. We've tried to bring it up to what we believe are 2023 conditions -- or 2022 conditions. To help you understand what our streets do go through, this might get a little busy, but I'm an engineer, and you'll have to bear with me. So what is A, B, C, D, and F as it relates to our streets? If you look at the left side of this chart, you'll see that the condition TOWN OF FOUNTAIN HILLS Page 10 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 10 of 43 index goes from zero to 100. Obviously, 100 is the best you can get in a street. Even after Saguaro was reconstructed and testing followed about a year later, many of the segments were in the high 90s, nothing got to 100. So it's almost impossible to be there. So it's just a level to understand what streets are like. A in this case is from 100 down to an 85 rating. And as you can see, they continue to vary until you get down to F, which is at a rating of 40. As you look at his chart, I'd like to call your attention to the line at 70. If you can see the degradation curve here, and you notice that there are many variations because as in those of us who live in cold climates, no two snowflakes are alike, and no two streets are alike in Fountain Hills. They all vary, they all deteriorate differently. But this chart has six variations created by IMS in 2017. Please call -- look at below 70 how steep the curve gets. It's an indication that once you cross over or through that threshold, streets deteriorated much more quickly than they did when they were new. And if we don't keep up with them, the deterioration accelerates. A is often thought of as being excellent, as you can imagine. B is very good. C is -- well, it's good, okay. D is fair, and F is what we want it -- where we don't want to go there. It's poor to failing conditions. Now, I want to call your attention for just a moment between 70 and 40. To go from a really very good street in B to a F in some cases might take only ten years. So again, if we don't stay up with the maintenance and the repairs, we're in trouble. So as we go forward with some additional slides, please focus on the D and F grades that I'm about ready to show you. In this chart, it represents the arterial street system, which examples are Shay, Saguaro, Palisades. There are two others, but it's the streets that most of us use most of the time. They're streets that are most traveled. Oftentimes they're the four-lane streets in our community. The blue is representative of what conditions were in 2017 by letter grade and also what we have estimated to be in 2022. And as you can see on the first A rating, the streets have gone down a little bit. But again, if you focus on the far right side, D and F, in 2017, those two combined were a little over 14 percent. In 2022, we estimated that they may have increased to a little over 21 percent. And from an engineering point of view, that's about a 50-percent increase. On the next slide, we have identified collectors, which include streets like Peachtree, El TOWN OF FOUNTAIN HILLS Page 11 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 11 of 43 Lago, Golden Eagle. These are streets that connect the arterials together. These streets represent 17 -- about 17 percent of our total street network. And again, when you look at D and F combined in 2017 it was nearly 37 percent. In 2022, we estimate it might be closer to 45 percent, which is only a 22 percent increase, but 15 percent is now in the poor to failing category, the far right chart. Next, we'll move on to the local streets. And again, using the same background of information. In this category, there are 1,175 segments. There are approximately 2.3 million square yards on our local streets. It represents 63 percent of our network. And if you study A for just moment, hey, we're doing okay. It's because a lot of the investments in the last five years have really gone to try to fix up local streets because that's where the biggest complaints come from. Residents always want the street in front of my house fixed first. And the staff's been, I think, really trying to address those. But again, if -- now if you focus to the far right, D and F, it was 67 percent in 2017. And it decreased to 52 percent in 2022, which indicates, hey, we've been making some gains. But they're modest because look at the far right bar chart. It's 29 percent that we're estimating could be in the F category today. So what are we going to do? We, the Committee, strongly recommend the approval of your agenda item 8-G tonight in order to assess the pavement conditions of all streets. They were previously done five years ago and fifteen years ago. Management practices say that we really should be doing this every five to seven years to eliminate some of the guesswork. And I go back to reemphasize no two snowflakes are alike, so we can't say for sure how each street is deteriorating unless we test them more frequently. And this is going to help the committee determine, identify a long-range plan and cost that'll be on everyone's mind on what will be our priorities to mill, and overlay, and reconstruct streets. And coming before you -- or maybe it already has, is the eight million in the American Rescue Plan Act coming from the federal government. I think it's four million each year, for the next two years. We strongly urge you to invest that money in our streets. It will be a tremendous help going forward. So what's next? Well, we intend to return to the council with our findings and final budgetary recommendations in the spring. We also, in the meantime, have to come up with the public outreach program on how we share all of this information in meaningful TOWN OF FOUNTAIN HILLS Page 12 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 12 of 43 ways to the residents of Fountain Hills. My hope is that on this last bullet point, we'll be able to do that before the tests are completed, which will not happen until March. That's as early as it a consultant could get around to looking at our streets. So there's a lot of things that we need to accomplish between now and then, one is the public outreach program. What I would like to leave you with is a fourth to one-third of our streets -- or street yardage, we believe, is in failing condition. Now it varies, I said a fourth to a third. The spreadsheets that were created, initially, we came up with about a third of the streets in D and F. Second analysis, maybe they're a fourth, but it depends on the sliding from D to F is a 41 in D category, a D or by the time we talk about it next year will it be an F? So it just depends on how you position it. We've also concluded that the existing two-and--half million dollar budget that the council spends on streets each year is totally insufficient. It's not enough to catch up with the problem. Personally, I'm optimistic that this committee can come up with a five-year program that can -- will fix all streets in such a condition that five years from now, the two-and-a-half million dollars will be sufficient to continue proper maintenance and sustain our streets for a long, long time. And with that, I will close and try to answer your questions. Thank you. MAYOR DICKEY: Thank you, Jerry, very much. Any questions? Yes, Vice Mayor? FRIEDEL: Can you back a couple slide to your last one that showed the -- that one, the last one? So that 29.4 percent, do you know what that is in yards or miles? BUTLER: Well, in yards, if you -- there's 2.3 million square yards in this local street network. So I guess if you took 30 percent of 2.3 million, you'd have your answer. FRIEDEL: Okay. Thank you. MENDENHALL: Mayor, Councilmember Magazine is on the line. MAYOR DICKEY: Alan, did you have any questions for Jerry or the Committee? Hmm, guess not. Well, so you can't get away from me really. No, I'm very grateful for all the work that you and the committee have done and partnering with our staff, which I know has been helping you along and us too as partners. You know, I was remembering when we first started hearing about this years ago and you made the metaphor about a family having a picnic on a beach and everything was fine, but there was a tidal wave TOWN OF FOUNTAIN HILLS Page 13 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 13 of 43 coming. But you couldn't tell by looking at it. And so I know that this backlog is the tidal wave. And I know that -- and the recognition at the time was we should be looking at some of the roads that weren't in such bad condition because we were trying to stop this backlog, this kind of tipping point, eve-of-destruction sort of feel. But there is a level of frustration, obviously, from our citizens and from us, like, you know, we want stuff now. You know, and -- but I believe that there is a logic to follow. That's why at our retreat, we decided we wanted to have a citizen committee. We wanted to really get to the bottom of the best way to move forward. I'm thankful that the council agreed and wasn't only the eight million, which was from this year and next year, but then we also had had an extra two million the year before. And we all agreed that that should go towards streets. I think we put some aside for facility replacement, but maybe a million or so. But we agreed that that where that that needed to go. I know there's an impression that we'd hadn't been addressing streets, but this is the way to address them. In the meantime, while we were doing this, as you can see we've been taking care of local streets. We obviously did Saguaro, we did finish that project thanks to the folks who voted for that bond. We did all the area around here, and obviously, I think Justin could, you know, stand up and give us a log of all the work that's happened over the last three years or so. But we knew many years ago, two-and-a-half million wasn't enough. We've tried to put more in as we can year after year. And I think we, you know, way back then we said we need another three or four million to add to the two-and-a-half million, not forever though, and you just said that. This is something that can get us on track so that we can get back to two-and-a-half, three million a year that will prevent this. This -- none of this is a surprise as far as overall. But to see it like this in very comprehensible way is really appreciated, and I know I look forward to the next steps, you know, that we have the time on the agenda for tonight. Mike, it looks like you're -- SCHARNOW: Yeah. MAYOR DICKEY: -- going to say something, so, please have at it. SCHARNOW: Well, I was going to let you finish if you had more to -- but, no. And I think to piggy back on that as well. It is good to point out that we have had a pavement TOWN OF FOUNTAIN HILLS Page 14 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 14 of 43 management plan, and so for the last several years, you know, we've picked -- I don't know if it was a number or a grade for, like, the average we wanted on all these different kinds of streets, and that was the goal. And I think it, you know, it's also caused some consternation out there because as you know, Jerry, every street is different, so we had a ranking on all those thousands of stretches of roadway, and so we were doing some maintenance here. You know, and the neighbor over here wasn't getting some. And then, there was more work on the other side of town and people were like what the heck? You know, they were right here. And so, you know, on the surface, it didn't look like it was planned. But there is a plan, and we were following it. And years ago we tried the zone approach, and that wasn't working. And so then we shifted to this, so I just wanted to point that out that, you know, like you said, we're aware of this. We have been working on it. And you know, there's a lot of other needs in town as well. So we have a budget and that's what we've been budgeting. And like you said, we knew, you know, we needed more. And so you know, at some point in time, citizens are probably going to have to step up and pay for some of it. That's the bottom line, one way or another. MAYOR DICKEY: Any other comments or questions? BUTLER: I'd like to go back a slide if I could because -- MAYOR DICKEY: All right. BUTLER: -- I think this is important for the public to understand. If we can keep the streets in the A and B letter grades, we can satisfy -- we can sustain those streets with what we would think of as ordinary normal maintenance. Maintenance that might have to occur every five, six, or seven years. Once you cross below the 70 threshold, we're now into a repair condition. And the other part of this chart that you could look at it costs are minimal at the top. And as you go down the chart, they get very, very expensive. So I think our community's objection was -- would be to try to get all of our streets definitely out of F, hopefully out of D, and up into the A and B categories so that we can afford to maintain in the way that residents probably expect streets to be maintained. And before I leave, I do want to compliment our staff, our street staff. They are doing a phenomenal job with very little resources. And if the public calls them to complain, I'm sorry, but they are doing the best that they can, and they're doing a great job. Thank you. MAYOR DICKEY: Thank you very, very much. All right. Thank you very much for TOWN OF FOUNTAIN HILLS Page 15 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 15 of 43 that presentation. Our next item is call to the public. Are there any speaker cards? MENDENHALL: Yes, Mayor. We have one. It's Barry Wolborsky. Did I say that right Barry? WOLBORSKY: Yes. MENDENHALL: Okay. WOLBORSKY: Perfect. MENDENHALL: Perfect. WOLBORSKY: My mother wouldn't have done better. I'm Barry Wolborsky, and I'm a resident of Fountain Hills. And I'm a board member of the Sun Ridge Canyon Homeowners Association and treasurer of that organization. And I'm here to speak against the park in Sun Ridge Canyon that you're planning. And I've got a wonderful solution for you. Take the money for that park and put it in roads because nobody wants the park. You know, we've had a lot of surveys done by Mr. Miller here. The first one was a survey that we got that asked us what we wanted in the park. The second one was a focus group of about 12 members of a 788-home community that presented all the good things they could do in that park. Is something missing here? Like, do you want the park? Nobody's asked us that. We'd really like somebody to ask us that, Grady. MILLER: I can't really talk about this because it's not on the agenda. But I do want to let you and other Sun Ridge residents know that in November, we're going to be having a public engagement process where the public can participate and give us your full feedback. WOLBORSKY: But is somebody going to do a survey and say do you want -- MILLER: We're not doing -- WOLBORSKY: -- the park or not? MILLER: -- we're not doing surveys. You're going to be welcome to come to the meeting and provide your input and feedback. WOLBORSKY: So once again, it'll be a very small subset of people? MILLER: And Mayor and Council, I'm going to go ahead and advise that we hold any response until after the call to the public per as of the statute. Thanks. No, it's okay. WOLBORSKY: Okay. That's fine. Yeah, I would like to see a survey that really represents the people in our community to see what -- whether they want the park or not. TOWN OF FOUNTAIN HILLS Page 16 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 16 of 43 I forgot to mention that we did have a meeting last summer that Grady attended via Zoom, where we had probably the largest board meeting of homeowners that we've ever had. We had about well over 50 in terms of on Zoom and in person. We usually get about seven or eight at a board meeting. And it was extremely negative about the park. The area that they want to put it in is a very nice, natural area with natural flora and fauna. It's a five-acre lot. They can't do much with it except put in a few shelters and a few walking trails. It adds nothing to the neighborhood. No one has yet informed us what this is supposed to add to our neighborhood. We have two small parks already. We're less -- the furthest house in our community is less than a mile and a half from Golden Eagle Park, which is a wonderful and beautiful park that most of you know. Take this money and put it somewhere where you can use it. That's all I've got. MAYOR DICKEY: Thank you. Do you have any other cards? I'm sorry. MENDENHALL: We don't have any more call to the public. MAYOR DICKEY: All right. Thank you very much. The next item is our consent agenda. Unless anybody would like something removed, can I get a motion? GRZYBOWSKI: Move to approve. SCHARNOW: Second. SCHARNOW: Second. MAYOR DICKEY: All in favor say, Aye. ALL: Aye. MAYOR DICKEY: Thank you. Now we start with our regular agenda, which is recommendations for the appointment of members to the town boards, commissions, and committees. I have received recommendations, and I will offer the following for your approval to serve as noticed. Excuse me. All right. So we start with Community Services Advisory Commission, Sruti Peddi for a term of 11/1/22 to 6/30/23. Yes. Next is our Historical and Cultural Advisory Commission. This is a new commission, so they'll be seven members appointed, and their term will be decided by lot at their first meeting. The members are David Corlett, Susan Obst-D’workis, Debbie Skehen, Dianne Price, Jackie Miles, William Meade, and Sandy Ursini. Our next item is the Board of Adjustments, and we Erik Hansen and Nick Sehman, both for full terms, 11/1/22 to 10/31/25. Okay. Sister Cities Advisory, Nicholas Stumpf for a full term. For McDowell TOWN OF FOUNTAIN HILLS Page 17 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 17 of 43 Mountain Preservation Commission, Steven Nurney for a full term. For SPAC, Strategic Planning, is Jill Keefe for a partial term, 11/1/22 to 4/30/24. And a vacancy to be filled at a future date will be a Sister Cities Advisory Commission appointment for a full term. Before we take a motion, I want to thank the applicants, and the subcommittees on the Council who did the interviews, and our staff. And I want to congratulate and thank those who will be serving on these commissions. Can I get a motion it's on page 222? Somebody's scrolling through there. GRZYBOWSKI: Move to approve the Council subcommittee recommendations for the appointment of members to the town's board, commissions, and committees as presented. MAYOR DICKEY: Thank you. SCHARNOW: Second. MAYOR DICKEY: Thank you. All in favor, please say, Aye. ALL: Aye. MAYOR DICKEY: Thank you very much for those who are willing to serve, and we appreciate it. Okay. Our next item is going to be about our short-term rental ordinance that we've been working on for quite a while. Grady. MILLER: Thank you, Mayor. Mayor and Council, as you know this has been an interesting subject. This past session the legislature passed a law that gave us some minimal ways of regulating short-term rentals. Our own town attorney was part of a work group with the league on a model ordinance that was developed. I'm going to turn it over to John Wesley, our development services director ,who has a brief presentation. The purpose of tonight is really to review. No action's going to be required. But for the Council to review, ask questions. And of course, for the public if they have any questions about this vacation rental ordinance, they can ask questions as well. Then, after we kind of refine this and kind of get direction from you tonight, we'll come back at a later Council meeting for your consideration and possible action. With that I'll turn it over to Mr. Wesley. WESLEY: Mayor and Council, as Mr. Miller said it's a brief presentation that was maybe about half of it there already. The agenda packet has in it draft language that could go into an ordinance based on what has been provided through the model committee. And so this is going to just kind of step through some of the highlights of TOWN OF FOUNTAIN HILLS Page 18 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 18 of 43 that and set the stage then for discussion with the town attorney for more detail. But as Mr. Miller said, in 2016, the State Legislature preempted our ability to control short-term rentals, and so I've been dealing with the impacts of that over the last six years. In this last session, they did pass some legislation that the Governor signed and does not give us some opportunity to implement some local rules and regulations. And so that's what we have for you this evening is first take at that based on both the model ordinance and also some work that was done in Paradise Valley. We looked at an ordinance that they approved that goes beyond some of the things in the state statute that has withstood some legal challenge. So we'll put some of those ideas also in the draft ordinance for your consideration. Just starting with what's included in the model ordinance with each of the sections. Again, this is just what the section title is and what some of the basic info in it, I guess, behind that Section R. So in Section 1, the purpose section defines the purpose -- MAYOR DICKEY: Councilman -- Alan. Alan? Could you mute, please. MAGAZINE: Yeah. I've been trying to talk, but nobody's been hearing me. So I'll just stop. MAYOR DICKEY: Well, now we can hear you. Please feel free to comment when you're ready. Thank you. MAGAZINE: Okay. Thanks. WESLEY: So Section 2 provides definitions for the different terms and issues within the ordinance. Section 3 provides for a permit to be required that they'd have to apply for and receive from the town and penalties with that if they don't obtain the permit. 4, contact, emergency contact and nonemergency contact that we have those -- people's names, contact information establishes some response times think about whether it's an emergency situation or a nonemergency situation, where they have to provide response. Then Section 5 talks about compliance with the law, so this covers a requirement to meet all federal, state, and local laws, as well as the uses that are allowed. We've had that in the current ordinances, I think expands on that just a little bit. But again, lists those uses that you can't do in a short-term rental, and they have to comply with that. Section 6 requires notification to neighbors, and that be done before they start the short- term rental. Advertisement requirements as somebody publicizes, advertises for a short- TOWN OF FOUNTAIN HILLS Page 19 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 19 of 43 term rental, there's a certain language that has to be included in that advertisement that highlights, again, the town's rules and regulations so a person renting would know what those are. Section 8 requires a posting on the property so that -- again, you have that emergency contact information ready and available there at the property. Section 9 requires that minimum insurance standards to be met. Section 10 requires background checks on those renting to make sure that they are not on a sex-offender list. And skip section 11 for just a minute and jump to 12. Section 12 permits inspections, so it allows an opportunity for the town to suspend a permit if somebody's violating the requirements and conditions within the ordinance. Section 13 provides enhanced penalties. So in addition to other penalties in the town code, there's some enhance penalties that can go with violation of the short-term rental. 14 appeals, if somebody believes that we have not applied the rules properly, they can appeal the decision on that. And then 15, judicial relief. And 16 is about severability. Going back to 11, this is a section that is based on the Paradise Valley Ordinance. Everything else was what was in the model code that has been drafted by attorneys and by the league. But in 11, it sets out some of the operating standards that, again, we've used in Paradise Valley. The first one, owner representative must respond to any issues in a timely manner. Two, owner to explain rules prior to occupancy. So it's not just a post-it some place, but the owner would actually explain the rules to somebody's who's going to rent the home. Three, talks about trash and refuse has to be collected and not placed out in public view. And four, the notice requirements be placed -- notice of -- again, regarding the rules placed inside a front door and other doors into the backyards so that, again, people are well aware of the rules that go with renting. Section B covers some health safety rules that requires smoke and carbon monoxide detection and notification system. Two, a fire extinguisher being installed and inspected. Three, fire safety and emergency evacuation map be provided. Four, the air filters get changed every three months. Five, at least one working landline to help provide for emergency contact. Six, the room must be cleaned following CDC rules between rentals. And seven, a requirement for pest control services at least monthly. TOWN OF FOUNTAIN HILLS Page 20 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 20 of 43 So as I stated before, this is a draft put out for Council and public comment and discussion. And then based on what we learn this evening, we will take this, make any refinements and bring it back for actual consideration of the ordinance. MAYOR DICKEY: Thank you so much, John. We'll ask some questions up here, and we'll hear from the public. I wanted to ask, Aaron, when this comes back, do we require a hearing, or this isn't a zoning change is it? ARNSON: Mayor and Council, because this is not a change to our zoning code, this does not require a public hearing. MAYOR DICKEY: Oh. ARNSON: It will be a simple code amendment. MAYOR DICKEY: Okay. Well, we're talking about it now, and when then when we bring it back we'll talk about it. ARNSON: Correct. MAYOR DICKEY: Count -- Vice Mayor. FRIEDEL: A couple of quick questions, John. I didn't see anything addressing parking. And also then another question is what are the requirements for keeping up the outside of the property like landscaping? WESLEY: Mayor, Council -- or Vice Mayor, parking maybe is an issue that could be included. I know it's been a challenge with some short-term rentals in town. We could consider adding that. It wasn't in either model order. So the Pleasant Valley -- or the Paradise Valley ordinance, so we didn't include that at this point. With regard to the landscape maintenance, again, we have codes and ordinances that require maintenance of properties. We haven't seen a need to step that up to single out these properties differently than any other property. We think we're pretty effective of that. But yeah, if the Council thinks that's important, we could look at it. MAGAZINE: Mayor? MAYOR DICKEY: Yes, yes, Councilman, go ahead. We hear you. MAGAZINE: We have one-and-a-half code enforcement officers. I find myself wondering how we're going to enforce even half of these requirements. I just don't see how it can happen unless there's something I don't know. MAYOR DICKEY: Thank you. Anybody want to tackle that? TOWN OF FOUNTAIN HILLS Page 21 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 21 of 43 MILLER: First of all that we have now, thanks to the Council, we were able to add another FTE or full-time equivalent. So now we have two-and-a-half, John? WESLEY: Right. MILLER: And then to the Councilmember's point, a lot of this is administrative. We can do through the process, you know, through when we have the licensing and such that we do with this. However, you are correct. There will be impacts on complaints. And when complaints are received, they're either going to be handled one of two ways. One is if there's an immediate impact, it's going to be MCSO, you know, with loudness or maybe parking in the street, or at least they'll do the police reports on that and that will be part of us on the administrative side trying to deal with them with notice of violation and working through that administratively. But there will be impacts, for sure. And this is something we're going to have to evaluate. Cities that we've seen that have been very effective in other states, like in California, like Palm Springs and also in the Denver area that have been examples to the league that helped developed this, some of the fees that actually have been brought in by those cities have actually paid for additional enforcement staff. So I'm not sure what we're going to be able to really charge, but I do believe that some of this can be offset by just the administration of the permit that was referenced earlier. So there will be impacts, and I think it's a wait and see. And we'll have to anticipate those impacts through our budget process. MAGAZINE: Mayor, and I think the requirements that have been -- can you hear me? MAYOR DICKEY: Yes, we can hear you. MAGAZINE: Yeah. I think the requirements that were shown are all very good. But I don't favor requirements that we know darn well cannot be enforced. For example, how are we going to know whether or not somebody replaced their fire extinguisher after three months? It just isn't going to happen. And so, I think we have to look at this very realistically to see whether or not -- see what can be enforced, what can't be enforced, how many code enforcement officers we're going to have, and so on. MAYOR DICKEY: Thank you. Our attorney, do you want to address it? ARNSON: Yeah. Mayor and Council, I was just going to address that really quick. I think that we should talk about that. I have a couple of subject areas real specific that I'd TOWN OF FOUNTAIN HILLS Page 22 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 22 of 43 like to get Council's input and direction on for when I redraft. That's going to be one of those particularly regarding Section 11 whether we think that's desirable to adopt at all, let alone any individual section. So if it's okay with the parent council, maybe we'll reserve that discussion for a little bit later after the Council is able to address their questions. Does that work? Okay. Thanks. FRIEDEL: So Grady, I was wondering, how many homes are we talking about roughly? Do we have any idea? MILLER: I've seen different numbers. I've seen anything between -- under 1,000. I've seen 350 to about 750 on short-term rentals. And we're supposed to be, like, the fifth highest number of short-term rentals in the state. MAYOR DICKEY: Yeah. I was going to say I -- Sharon, were in you that or Peggy? One of -- yeah, that we saw that presentation at MAG, and I was kind of surprised to see Fountain Hills fifth down as far as having a lot of short-term rentals and not, you know, a lot is a relative term. But for us, it is so percentage wise, we were fifth in the state. We have Sedona, Flagstaff, Paradise Valley, Scottsdale, all of us have been working for years. We put together a video. We've been trying to really get the legislature, which have come around, obviously, with this particular statute. Again, Paradise Valley, they had put something in place that was challenged with that 1487 from a legislator who doesn't live here. And these items in Section 11 survived the 1487. And then, just to reiterate -- and then, I'm sorry. The insurance aspect, that was in the state part? That was in the first -- the State Statute? WESLEY: Yeah. MAYOR DICKEY: Okay. Great. Thank you. Peggy, did you have something? MCMAHON: This is per discussion with Aaron. In Section 11, too, it talks about giving -- information to booking guests. I think that needs to be clarified because the person who books can be different than the guests. So it's really talking about the guests, right? ARNSON: Yes, I believe that's the intent of the language. But we'll look at how we could potentially clean it up. I agree. MAYOR DICKEY: Oh, Mike? SCHARNOW: Yes. So I was wondering, I guess maybe Aaron, a couple of things. And TOWN OF FOUNTAIN HILLS Page 23 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 23 of 43 I know you're going to get back to Section 11, but so does that mean we're going to need access to inside the homes? I mean, I know that was an issue with the sober living and all that kind of stuff, so. ARNSON: That -- well, maybe then this is a good time to raise that discussion. So I -- that is part of the problem in my view there -- in my view there are two issues, one perhaps more practically than the other. With the components of the Paradise Valley ordinance that are whether we can incorporate into Section 11, I guess maybe three. So the first issue -- so the first issue that I see is the practical component of it, as Councilmember Magazine and Councilmember Scharnow eluded to. If there are provisions that we're simply not going to be able to get in there with any regularity to enforce, is it wise or reasonable for us to adopt those? That's a point for discussion. The second point is -- and the second and third point taken together are those Paradise Valley provisions, some of them survive scrutiny because the Council made a record of why they were necessary. So for example -- one really good example is the landline. Apparently I was talking to their town attorney out in Paradise Valley and apparently it's notorious therefore -- and so, a safety requirement was that there needs to be some ability to call 911 if and when an accident happens or an emergency happens on the premises. So for example, I would be advising against -- or I'd be advising that we remove that landline provision as one example because we have it -- unless we're willing to an analysis and make that record, I don't know that we'd be able to garner the same support for adoption of that provision that Paradise Valley did which helped the survive scrutiny under 1487 challenge. MAYOR DICKEY: Aaron, the -- I get what you're saying about the reception part of it, but -- and obviously, we all know that everybody's carrying around phones. But could it possibly have something to do with making sure there is a phone connected to the property not to any one person? ARNSON: It could. The -- I suppose the flip side of it is typically, the phone connected to the property is -- who you'd want to be connected to is the owner. Right? And typically the owner's not there because they're renting it out on a short-term basis. So I mean, I think we get there with the emergency contact information provision, but that's me and kind of my legal recommendation. It's ultimately up to the Council what it TOWN OF FOUNTAIN HILLS Page 24 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 24 of 43 wishes to do. MAYOR DICKEY: Okay. Michael. SCHARNOW: I was wondering too if there was any discussion at any level about, you know, if we have so many of these rentals, I mean, obviously, a lot of them are smaller rentals. You know, it might be a bedroom and a bathroom or a mother-in-law suite or what have you. And you know, we want to crack down on the party houses of course. And that's usually where entire houses, larger homes are being rented out. And I'm just wondering if it's even practical or legal. I mean, can you differentiate square footage in terms of what is being rented out. I mean, it just seems, you know, a lot of these restrictions might be probably not burdensome, but I mean, really a pain to some of the smaller folks that are just renting smaller units, you know, that aren't -- that's not really the issue that were going after. So I don't know if there's a way to differentiate that or if that's a good way to go or not. But I just anticipate some blowback from some folks who just have, like, a lower, you know, bedroom unit down below that couples come in for, you know, spring training for a week or what have you. I was just wondering about that. ARNSON: I'm wondering if the Mayor and Council, in response to Councilmember Scharnow's question, wondering if the definition of short-term rental and vacation rental doesn't get at that, and maybe we just need to tinker with it a little bit to make it clear. It says that short-term rental and vacation rental are interchangeable for purposes of this article and mean any individually or collectively owned single family or one- to four- family house or dwelling unit or any unit or group of units in a condominium or cooperative. So I'm wondering if that is sort of getting at that idea. Maybe to the extent that it doesn't, it could be a subject for Council discussion that we limit it to provisions that are rented out in their entirety. Right? Or not provisions, excuse me, premises that are rented out in their entirety. Of course, the flip side is that means that every exception means that you just get more and more around the edges that are out of compliance and not addressing the problem. So it's ultimately up to -- yeah, it's the -- fair point, up to the Council's discretion. MCMAHON: Are some of these -- sorry. Are some of these, like, the fire extinguisher and the fire and safety emergency evacuation map, a lot of hotels and things have that in TOWN OF FOUNTAIN HILLS Page 25 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 25 of 43 there. So some of these seem to be reflecting requirements that might be, like, in places where people stay over -- accommodations for them for overnight, temporary, et cetera. But also, even though they might be really difficult to enforce, the -- it seems here like they're a guideline, you know, in the sense that you're using these more as a guideline or a just in case or a safety net so to speak to have somebody listed, or should we just take some of them out because they can't really be specifically applied as far as enforcing? ARNSON: I mean that they're -- Mayor and Councilmember McMahon, I think that -- I mean, they're drafted as -- they're drafted to be enforced. That's how they're presented. I'll just say my personal preference as from a legal matter, not from a policy standpoint. As a legal stand -- matter, I prefer to just track the statute as it is. I don't know that it's necessary to go further than the statute, and I think that's the cleanest way to go about it. So if the Council's amenable, I'm fine with removing Section 11. I have no reason to think that we have to have it or have to remove it. I simply think it would be clean if the Council took it out, but that's ultimately up to you. MAYOR DICKEY: Could you put that Section 11 slide -- the slide, I know there were two of them, but just that one might help a little bit too. Vice Mayor? FRIEDEL: Two things, one, I think you leave it in there and you get what you can. But secondly, are these being rented out on an individual basis? Are there realtors in town that work with this? Have we gotten any input from that side? They might have some solutions or some ideas that could help us. I don't know the answer to that. ARNSON: Well, and I don't know if Director Wesley has heard anything specifically. I do know that the primary groups that have been --that were involved in the drafting of the ordinance itself -- or excuse me of the statute itself, was the -- it was industry drafted. Right? They had collaboration with Airbnb, VRBO, and couple of the other big ones I think. So this -- the legislative action was kind of already a compromise with the industry. So I'm not sure if there -- I don't know if there is further comment. But I know that this is what's allowed under the provisions of a sort of pre-negotiated arrangement with the industry. I don't know if that answers your question Vice Mayor. MAYOR DICKEY: Thank you. FRIEDEL: Like, yeah, not really but kind of. MAYOR DICKEY: Why don't we hear from the public if there's anybody here to -- TOWN OF FOUNTAIN HILLS Page 26 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 26 of 43 SCHARNOW: I just have one more. MAYOR DICKEY: Oh, I'm sorry. Go ahead, Mike. SCHARNOW: Just real quick. So whenever the -- this Council or a future council adopts the -- there's no grandfathering then? Everyone has to come in apply or how is that going to work? ARNSON: So that leads to a secondary, Mayor, if I may, that the Council should consider. I think it's relatively quick because there are fees and penalties associate with noncompliance. There wouldn't be any grandfathering. It will be once the ordinance come into effect, compliance begins. But we are suggesting a delayed effective date on this for two reasons. One, under statute we have to notice and publish any fee -- any new fee that we adopt. We need at least 60 days for it to be posted before it takes effect. So it really -- there's no sense in the ordinance going into effect before the fee goes into effect. Right? And the second is -- well, second and third I suppose, is to give staff time to adjust to meet some of those staffing needs that we just identified earlier. And the third is, frankly, to give notice to the public. Right? And to give notice to these property owners that this is something that's going to be going into effect. So I believe Director Palk (ph.) and I discussed and we can toy with this date. But to give us enough time to notice and publish, and for staff to get their ducks in a row to make sure that we have a proper registration in order, I believe we discussed a February 1st, 2023 effective date as that's what we're going to propose -- staff will be proposing to the Council. FRIEDEL: One, one quick. Are those fees capped, or can we do what we want in that area? ARNSON: The fees are capped statutorily, Vice Mayor. MAYOR DICKEY: Linda, do we have speaker cards for this? MENDENHALL: Yes, Mayor, we do. We have two. The first one is Jeff Esposito. He also sent an email with information for you to read. And now he's going to present for us as well. He has a prop. ESPOSITO: Yes, I have a prop. Okay. Madam Mayor and Councilmembers, good evening. My name is Jeff Esposito, I am the president of the Neighborhood Property Owners Association, and I am a Fountain Hills resident. For those of you not familiar with the Neighborhood Property Owners Association, commonly known as the NPOA, TOWN OF FOUNTAIN HILLS Page 27 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 27 of 43 we are an organization set up by homeowners 30 years ago to uphold the neighborhood standards established by McCollough Properties and NCO, the master developers of Fountain Hills. Our governing document is the NPOA Declaration of Reservations. And it was established to enhance the esthetic values of the community and to promote public health, safety, and the general welfare of the community. The Declaration of Reservations is deed restriction that runs with the land and is very much like an HOA. This deed restriction affects almost 4,500 homes in Fountain Hills. The row in the back here, that's all the green here. And for those in the front, all of those green is NPOA jurisdiction. So now, given that background, please know that the NPOA Board of Directors urges the Council to approve the short-term rental ordinance as proposed. And that's the online version that I was reading through that was an amendment -- or an attachment. We believe it to be as strong and restrictive as legally possible. We have dealt with and we continue to deal with short-term rental complaints on a regular basis. They don't have anybody to turn to but us. And in response to our member requests, the NPOA polled it's residential plat delegates, and the results overwhelmingly indicated a desire to regulate short-term rentals as stringently as possible. As a result, the NPOA has established a nuisance complaint resolution to deal with neighborhood disruptions. So in conjunction with our existing nuisance complaint resolution, a strong town code would provide for the approximately 4,500 homes that we share jurisdiction with. One of the strongest neighborhood protection environments in the metro area. So as I mentioned in my letter in the interest of time, I wanted to focus just on the ordinance. But I do want to reiterate, because it kind of came up a little bit before, that enforcement of an ordinance is just as important. You've got to make the investments in that are as well. So we hope you take our recommendations into consideration, and we, the NPOA, are available for further discussions if needed. Thank you. MAYOR DICKEY: Thanks very much. I appreciate that. And believe me, we hear about it too because it's just been a long, hard slog ever since, what was it 2016? Yeah. It's just something that we -- that we really would like to make happen. So -- and this is the first -- there's been some other bills that came through that helped a bit, but this is one TOWN OF FOUNTAIN HILLS Page 28 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 28 of 43 with real teeth. So thank you. ESPOSITO: Yeah, there were some things in that attachment that weren't mentioned here relative to parties, and obnoxious sounds, and that kind of thing, which I think is what we can base that disruption on. MAYOR DICKEY: And that was exactly right because we found ourselves trying to figure out what we could do when it came to noise, or parking, reckless driving -- ESPOSITO: Yeah. MAYOR DICKEY: -- litter. You know, just like everywhere around it. So this will be very helpful. Thanks for your input. ESPOSITO: Thank you for your time. MENDENHALL: Our next speaker is the Honorable Enrique Melendez. MELENDEZ: Good evening, Mayor Dickey, Councilmembers, town manager, and staff. I'm here tonight to present to you an issue that has become prevalent throughout not only our great State of Arizona but throughout all western states. And I'm specifically talking about the VRBO segment of property that, in my opinion, needs to be reviewed and carefully analyzed. I have been a resident of Fountain Hills for 30 years. Served as a councilmember just like you for three years, and now, we have a new element come -- that has come about in the VRBO. We have -- in my own neighborhood, three houses. I'm surrounded by three properties, VRBO. I'm not going to sell, okay. But I think that the Council needs to take a good look at some of the restrictions and some of the policies that cities have put together. I'm referring to Paradise Valley, the City of Anaheim in California. And I believe we need to review and have a provision for these homeowners who have owned their home, and just like the First Amendment, they're able to do whatever they want with their property according to the law and the ordinances that you're behind that Dave has put together. I believe that some of these rentals are getting out of hand in terms of noise. And we have, as Mayor Cortello (ph.) articulated -- well, about three weeks ago. We have ordinances in place, but they need to be enforced. We can't be calling the Sheriff's department all the time. But I believe that if we develop a fine system, a penalty system, if you would, for some of these homeowners that are taking advantage and the lack of respect to their own neighbors. Let me give you an example. There's a house very close TOWN OF FOUNTAIN HILLS Page 29 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 29 of 43 by to me that charges $3,800 a day for the rental. $1,000 for a cleaning deposit, and $75 a day for the upkeep of the spa. My question to you, Council, is what are we -- are we deriving any money from these rentals? And what type of money is scheduled to be spent by the owners to get a permit -- I understand is very low, $50. Am I right, to start a business? And I believe that if someone's charging $3,800 a night, the application fee should be a minimum of $10,000 just to do that. Because in a month, they can develop a lot of income and what are we -- what are we in the town getting/deriving from that? That's one example. Another example that just came about next door to me a couple moved in, bought a home. And then, four months they decided to put it up as a VRBO. However, they were very, very cautious on the way they did it. They said, no children under 12. No dogs. No big parties and so forth. And I think that we have enough meat in some of the ordinances from Paradise Valley, from the City of Anaheim, and other cities that we can't put restrictions, okay, on these property owners because they lack the -- my favorite word that you've heard me say for 30 years, respect. And so I'm appealing to you, Council, and to the town manager, who by the way is the very best one. I worked for five town managers, and you, Mr. Miller, seems to be taking things in accordance to what's best for the community. Excuse my voice. But I want to thank you, Council, but we need to have a definition of what restrictions we can put on these homeowners. They can't go wild. They can't. I travel, and I see mayors from all over the State of Arizona in my diplomatic role. And we're looked upon -- Fountain Hills is a place where you can go and get a VRBO and make a lot of money. So I want to end it by saying please consider developing strict regulations and that conform with the previous mayor, Mayor Cortello has proclaimed in the last meeting. And so I'm asking you for your support. We need to keep Fountain Hills as good as it gets and happy to assist you in any way I can. MAYOR DICKEY: Thank you, Enrique. We really appreciate your coming in. Any questions for Mr. Melendez? Thank you so much. MELENDEZ: Thank you very much. MAYOR DICKEY: Any further comments or questions? Yes, Grady? MILLER: I just had one thing. So the only thing that the town really gets at this point, TOWN OF FOUNTAIN HILLS Page 30 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 30 of 43 besides a lot of headaches, is they do pay the short-term sales tax, which is about 2.9 percent. Right now, long-term rentals that I believe are three months are longer are, like, at 1.6 percent. So it is -- but that's all we're getting. And there's probably a lot more impacts on the community versus what we're actually getting. MAYOR DICKEY: And probably some that we're not getting any. MILLER: Right. MAYOR DICKEY: I hate to say it but all right. So you have what you need. I think we want to go for what's there. Maybe -- what was the one item that you said? MILLER: Landline. MAYOR DICKEY: Yeah. MILLER: Is that what -- MAYOR DICKEY: I mean, that's not -- MILLER: Yeah. MAYOR DICKEY: -- that a big a deal. I mean, I don't mind just leaving everything the way it is and seeing what happens. Grady? MILLER: There was some discussion about parking. And I'm not really sure where the Council's direction was on that if you're wanting as -- we do have a current ordinance now that was really designed to address another kind of set of parking issues. We can -- probably when we come back, we can probably make some suggestions to you on like maybe a limit on the number of cars, and maybe it's, like, the cars are based on what they have to park on their property. And then, a limit to what they can actually have on the street. Would that be something you'd be amenable to? MAYOR DICKEY: I think so. My only caution with that is when someone has a party or you know, I mean, I know that a lot of this has to be evenly enforced. And so it might -- you might have to have something in there that has to do with regularity. MILLER: Right. Okay. Well, that's good input. Thank you. MCMAHON: Also, would that apply to HOA or do they have their own set of rules? ARNSON: Yeah. HOAs would have their own set of rules. Yeah. MCMAHON: That's what I thought. Okay. ARNSON: Yep. But I think at least from my perspective, Mayor and Council, I think we have what we need to bring a revised version back. Thank you. TOWN OF FOUNTAIN HILLS Page 31 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 31 of 43 MAYOR DICKEY: Thanks, John. Our next item is about the Sanitary District well. Grady, you want to introduce that? MILLER: Yes. So we also have an item before you. You probably recall the two restrooms that we had that were installed at the Fountain Park. Thanks to the partnership with the Sanitary District that part of those restrooms are these control rooms that help them monitor the Sanitary District wells. We're going to go ahead and call up Dana Trompke, who is the general manager-executive director of the Sanitary District. And she has a presentation she'll be giving to you for this particular well, which I believe it well number 1? TROMPKE: Yes. MILLER: So with that, I'll turn it over to Ms. Trompke. TROMPKE: Yep. Thank you very much and thank you for the promotion. My actual title is district manager, but executive director sounds nice, so I'll take that for the moment. Thank you very much for letting me come and speak. I would like to present a project that we would like to move forward with. But before I do that, I need to take a step back and explain why and they need for it. So just to remind you, Fountain Hills Sanitary District collects all of the waste water in town and treats it and then disposes of the treated water. In the Town of Fountain Hills, with our population of about 24,000 or more, creates two million gallons of waste water a day. Last year in 2021, we have 710 million gallons of waste water to treat and then somehow use or dispose of. And the figures here show that all of this wastewater comes from every individual home or business that's in town is then connected to the sewer system. And we have a huge network of sewer systems, over 210 miles of gravity sewer pipes that all lead to a waste water treatment plant. Our main plant's located there are Saguaro and Pepperwood. And we do most of our primary, secondary, and tertiary treatment at the waste water treatment plant. At that point, it is technically classified as Class A plus reclaimed water by the State of Arizona but the District goes a step further and sends it to a second treatment facility called our advanced water treatment facility where it undergoes membrane filtration. So 100 percent of the waste water in town is collected, treated and converted to recycled TOWN OF FOUNTAIN HILLS Page 32 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 32 of 43 water. And that is because something -- another unique property of the Town of Fountain Hills in this area is that we have no legal discharge of our water, treated waste water. Most other cities and municipalities treat their water to state standards and then can dispose of it in a wash or river. The town in our District, the Sanitary District does not have that legal discharge because any wash within our service area would go to one of two Native American tribal communities. And the tribal communities have never allowed discharge where waste water would flow across tribal lands. So 100 percent of that recycled water has to be used and dealt with within our boundaries. We do an excellent job of that and have been doing very well since its formation. The recycled water that we generate about 15 percent of it we use internally for some of our own process for the treatment process. 70 percent of it then gets distributed to three different golf courses in town. And then another 15 -- the final 15 percent of it gets distributed and used for irrigation at three town parks, and it does go to fill Fountain Lake. Now, one of the things that you may not realize, though, is that the recycled water supply and demand do not align. The blue line in this chart represents the amount of waste water that comes in every single month. We get a little peak in February or March when all of the festivities, and snow birds, and spring training, and everything. And then, a little dip in the summer when everyone goes on vacation to get out of the heat. But the purple line represents how much reclaimed water is needed for irrigation. You can imagine in July and June when it's 110 degrees, every bit of turf is screaming for water. We have quite an abundance of water in the spring. Rain events such as these last rainy days that we had recently, and then usually we get some winter storms somewhere around February. And the cooler temperatures mean that the turf does not need nearly as much water. And it -- so we have an abundance of water in winter and then, not enough water in the summer. So all of that excess water is stored in underground wells for all the excess water in the winter is stored in the underground wells in the summer. In the year 2000, three wells were constructed in underground vaults around Fountain Lake. You can see them in the first picture, they are buried in great big concrete basins below ground. Half of it is a well, and the well is usually a 12 inch diameter pipe that goes about 700 feet down to the aquafer. And the other half of it is a control facility, and you'll see a picture there on the right. One of the things to note in this picture on the right TOWN OF FOUNTAIN HILLS Page 33 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 33 of 43 is there's a lot of rust and contamination. Those facilities have reached the end of their useful life, and they need to be replaced. You'll also note that one of our operators has his hand on a high voltage power panel and the other hand on a water pipe. So if either one of those items burst or require maintenance, it is a -- it's technically a confined space and electrical codes will no longer allow you build such a facility to have such high voltage electrical items with no room for clearance for safety. In 2019 -- since those facility -- all three of those well vaults really, at this -- deteriorated to such a condition that they had to be replaced. And in 2019, the District replaced two of them with above ground control rooms, and they were cleverly disguised by including public restrooms to them. You'll see the facility in the picture on the right. That actually is a Ramada that matches the architecture of the Ramada in the park. And then, behind it is a building that's divided into thirds. A third of it is a well control room, a third of it is the men's restroom, and a third of it is the women's restroom. From everything that we've heard, these facilities have been wildly successful. They've been very much appreciated. All of the walkers and some of the park events that happen, community events that happen in the park on weekends appreciate that there were two extra restrooms available in that whole 64-acre park. What's important to the Sanitary District is that you note the pictures on the right. Now my crews can safely get in and maintain these facilities. We have the proper amount of clearance that's required by all electrical codes, and it will allow us to better maintain and operate our facilities for a much longer period of time than having to go down kind of down into a buried little vault in the ground. So I mentioned two of the wells were addressed with this one. There's now the third and final well that is located in the park also needs an above-ground control room. The difficulty with this one is that it is in a more prominent area. It's near the area that's called the great lawn. And it is right along a flood channel, the 100-year flood channel that goes through the middle. You'll see the well is on the right, and then the electric service that feeds it is on the left along Saguaro. So we worked and had many, many conversations with town staff, with community services, and parks rec, and Town Manger Miller and tried to evaluate two, three, or four different locations for where TOWN OF FOUNTAIN HILLS Page 34 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 34 of 43 this could best meet our needs and that it wasn't going to provide a distraction or a nuisance in the park and where is it that we could actually add an amenity or add a feature to the park. So the proposal is to put a facility down where the presidential statues now lie -- or stand. You'll see -- sorry, he stands. Some of them are sitting, some are standing. And it would be to tuck them down -- if you kind of look at this aerial, tuck it down as far south as we can, kind of up against the property there. That's the fountain site plaza at the bottom and tuck it down as far as we can. There is a 60-inch drainage pipe that goes through there that we need to -- we can't build on top of. So this would be -- let me get to the architectural renderings. So this is a top view of what the proposal would be. It's going to have a Ramada and a kind of a covered porch area, very much similar to the other facilities. And then, the back half of it instead of needing as much of the building where before it was a third for the well control room and then two-thirds for restrooms, it would just be a smaller footprint and just be the well control room. This is an area of the park where an additional restroom is not desired. But it does go -- right now, currently where the presidential statutes stand. This proposal would pull the sidewalk off and kind of meander it in front of it instead of keeping it along the curb. And that's so our crews can access the building in the back with their vehicle and never have to cross pedestrian traffic. That was one of the goals that we accomplished at the northern bathroom, which we refer to as well 4, is by moving the restroom in front of it, our crews can get to the back, and we don't have to cross with any trucks or traffic. We don't have cross the pedestrian traffic. So the front side of this is again, just another ramada to match the architecture that's already within the park. This would mean that the statutes would be need replaced, but we could put them in a thoughtful, kind of more interactive alignment. There would be an opportunity to put a water fountain underneath. Seems to the be the dog watering bowl is also a big hit every time there's a water fountain. And there was a request that the sidewalk could go through and -- for people who wanted to stop in the shade, and then to also go around because there's quite a bit of power walkers that don't want to kind of hit a traffic jam with those who like to stand and linger around and look at things. Inside the ramada in addition to providing some -- a drinking fountain, shade, a place to TOWN OF FOUNTAIN HILLS Page 35 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 35 of 43 sit down, it might become more of a focal point or a view point where you stop to look at the fountain. I know along Saguaro there's that big sidewalk, and so some people don't quite where to go to take their best picture of the fountain. Inside posters or any sort of other communication can be put up working with parks and community services staff. This is just another shot of it kind of showing the arrangement of how some of the statutes could be laid out. On the southern side of it, one of the comments that we did get on the restroom buildings and the other well buildings is that there is an electrical panel on the outside that's kind of an eyesore. On this one, we'd like to go a step further and perhaps hide it a little better. Maybe take some leaf -- some examples of some of the facilities that are along the avenue of the fountain and mimic some of that architecture to kind of hide the electrical panel a little bit better. And this is just another view from the other -- another vantage. The District will work with the town staff and the Fountain Hills Civic Cultural Association and the Public Arts Committee to relocate the presidential statues. The District will -- this is being proposed as a District project. The District will pay for it, and we would want to get community buy-in for where the statues get placed. Our understanding is that the placement of the statues right now is not ideal or maybe some of it kind of happened a little organic over time, and they weren't necessarily laid out specifically all at once. And so this would give the opportunity to kind of master plan it a little bit better and that the Public Arts Commission could have a say in how to lay those out. So the goal is the project is to benefit both the District and the park users. First and foremost, it provides a needed above-ground control room for that critical piece of our reclaimed water management system. Again, we could not replace the vault with another buried vault in that capacity because you saw the tightness and the unsafe work conditions for operators. It would also allow us to access the facility without crossing pedestrian traffic. It could provide a bit of needed shade and a rest spot along that western walking path. It would provide a drinking fountain and a designated-use spot and a better arrangement of the presidential statues. So with that, if you have any questions, I would be happy. MCMAHON: Thank you for the presentation. I have a couple questions if you don't mind. TOWN OF FOUNTAIN HILLS Page 36 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 36 of 43 TROMPKE: Sure. MCMAHON: What is the cost to the town, or is the Sanitary District paying for all of it? TROMPKE: The Sanitary District would pay for this. MCMAHON: 100 percent? TROMPKE: Yes, on this one. MCMAHON: Okay. What do you think the time frame is on it and if you're moving the well, are you going to be digging it up, right? So are you going to be reseeding any -- redoing the landscape and lawn, et cetera? TROMPKE: Yes. I can't move the well. The well itself is a casing that's been drilled 700 feet down. MCMAHON: Oh, well. I meant the -- TROMPKE: So the big vault -- MCMAHON: Right. TROMPKE: -- that is on top of it will get pulled out and get reduced to something a quarter or a third of the size. MCMAHON: Um-hum. TROMPKE: So there still will be one. And yes, we will regrade and reseed, much like we did at the other two facilities. It just got -- where the well is, it felt that box got smaller and then turf was put it and an irrigation system was put in too. MCMAHON: If this is approved, when do you anticipate starting the project, and how long do you think it's going to take? TROMPKE: As far as construction, I would hope in the less than nine months' time frame as far as construction, I would like to wrap up design by early part of next year, January, February and get it out to a contractor to build. In some of the discussions with town staff, the importance of scheduling this, so I understand that work really needs to happen over the summer. We don't intend to be in construction in the middle of Thanksgiving, and the great fair, and all of the Octoberfest, and all of the big events that occur in that area. So we would be trying to do the construction in the summer months when it would have the least impact. MCMAHON: Also, clarification please on the sidewalk. I know the current sidewalk that goes along the road there, you're going to do away with that one and just make it -- TOWN OF FOUNTAIN HILLS Page 37 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 37 of 43 have it be the circular path? TROMPKE: Yes. MCMAHON: Okay. TROMPKE: Yes. MCMAHON: Thank you. MAYOR DICKEY: Do we have any speaker cards on this item? MENDENHALL: No, Mayor we do not. MAYOR DICKEY: Any other comments or questions anybody? Mike? SCHARNOW: No. I like it. I think it's great. I think it looks good. I think it serves a great purpose for our park, and our pedestrians, and the walkers there, and it helps you guys. So it's another win-win. MAYOR DICKEY: Agree and safety is the issue here and happy to see you may be able to make that step. Any other? No. I need a motion, please. MCMAHON: I'll make it. Move to approve the Sanitary District ASR Well Number 1 location at Fountain Park and direct the town manager to execute all applicable contracts and agreements. GRZYBOWSKI: Second. MAYOR DICKEY: Thank you. All in favor, please say, Aye. ALL: Aye. MAYOR DICKEY: Any opposed? Thanks. Thanks for the info. TROMPKE: Thank you. MAYOR DICKEY: So polite here. Our next item is Artistic Land Management Landscaping. MILLER: Yes. On this particular item, our parks superintendent, Kevin Snipes will be giving the staff report on. With that, Mr. Snipes? SNIPES: Good evening, Mayor, Council. This is a amendment to our existing contract with Artistic Land Management. They do all of or maintenance in our parks and along our streets and washes, and they do a lot of stuff for us. The one thing that we didn't account for when we were doing this contract kind of in a speed fashion, when we let go our old landscape company was if we wanted to add extra -- if we have projects that we needed to get done or if we had storm damage and we needed their help, this will allow TOWN OF FOUNTAIN HILLS Page 38 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 38 of 43 us to have some extra funding available when and if we need them. We have some landscape projects where we're going to add some plants, and using them for that isn't allocated in that maintenance side of the existing contract. So that's why we're asking for an additional $50,000 to add to the contract. MAYOR DICKEY: Anybody have any questions or comments for Kevin? Mike? SCHARNOW: No. I know it's been night and day since we've let go of that other firm and what these guys are doing. I mean, I was just going down Golden Eagle Boulevard earlier today, and it's just -- they're just doing a bang-up job as far as I can see. So with -- I don't know unless there's any other comment, I'll make the motion. MAYOR DICKEY: Just make sure there's no cards. Any speaker cards? No. MENDENHALL: There are no speaker cards. MAYOR DICKEY: Thank you. SCHARNOW: I'll move to approve Artistic Land Management Landscaping Inc. contract amendment 2022-057.1. MCMAHON: Second. MAYOR DICKEY: All in favor, please say, Aye. ALL: Aye. MAYOR DICKEY: Any opposed? Thank you. Thanks, Kevin. SNIPES: Thank you. MAYOR DICKEY: All right. Next, we're onto Auto Fleet. Grady? MILLER: Yes. Justin Weldy, our public works director will be giving the staff report on this particular cooperative purchasing agreement. Mr. Weldy? WELDY: Thank you, sir. Madame Mayor, Councilmembers. This agreement that we're asking for consideration on tonight is part of our ongoing and multi-year vehicle replacement. The exception is one of the vehicles that we are requesting, by default, is actually a deferral from many, many years ago when the street department was about 13 strong and then reduced to four. There were several vehicles in use at that time that were capable of carrying up to six employees. As their life or term of use came to end, we opted not to replace them and instead came back to the Council and asked to use some of that funding to purchase some additional needed equipment. And since that time, we have managed to put money aside for this. And also ask for a budget supplement in last TOWN OF FOUNTAIN HILLS Page 39 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 39 of 43 year. So one of the vehicles is a replacement for the engineering department, and the second one is a new vehicle for the street superintendent. And the latter is the one that we have put some savings aside for and asked for a budge supplement. If there are any questions, I will do my best to answer them. MAYOR DICKEY: Does Council have any questions? No. Do we have any speaker cards? MENDENHALL: No, Mayor, we do not. MAYOR DICKEY: All right. Well, thank you. Well, if there's no discussion, would someone like to make a motion? MCMAHON: I will. Move to approve Cooperative Purchasing Agreement 2023-046 between the Town of Fountain Hills and National Auto Fleet Group in the amount of $75,280 for the purchase of two needed vehicles. GRZYBOWSKI: Second. MAYOR DICKEY: Thank you. All in favor, please say, Aye. ALL: Aye. MAYOR DICKEY: Thanks. Thanks, Justin. WELDY: You're welcome. MAYOR DICKEY: Our next item is something you've seen before. It's about the property on Kingstree. Grady? MILLER: Yes. Our senior planner, Farhad Tavassoli, is going to give a presentation on this request for an extension. TAVASSOLI: Madam Mayor, members of the Council, good evening. I'll keep my presentation brief and allow some more time for discussion or questions. But in summary, this is a special use permit extension request for a residential use within a commercial -- common commercial zoning district. This originally came before you in September of last year. The request was for a half-acre -- pertaining to a half-acre property at the northwest corner of Kingstree and Saguaro Boulevard. The purpose of the special use permit was to allow eight live/work units and four residential units in a commercial lot. Zoning ordinance requires any overnight uses or particularly residential uses within a commercial district requires a special use permit prior to any site claim review and approval. TOWN OF FOUNTAIN HILLS Page 40 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 40 of 43 And really, to summarize -- kind of chronologically why we're before today. The applicant required that they obtain a building permit within six months of approval of the special use permit. The zoning ordinance does allow the applicant to make a request for an extension. Now the original SUP was approved in September, as I mentioned, of last year. Applicant came in with a request for an extension on March 21st. The extension was approved by Council. The applicant has now filed for another -- a second six-month extension request. And in the meanwhile, the applicant has also submitted a site plan to staff for review against the zoning standards and also the engineering standards as well. Staff is recommending approval. Staff believes there is a good faith effort on the applicant's part in moving forward with this project. However, we are still in the -- working on -- with the applicant in the effort to approve a site plan that is compliant and follows all the design review standards of the zoning ordinance. With that, I'll conclude my presentation and allow time for some questions either for myself or the applicant. FRIEDEL: When was that site plan submitted? TAVASSOLI: I believe Madam Mayor, Council, I'm afraid I don't specifically remember, but I believe it was submitted in -- I'll allow the applicant to correct me if I'm wrong, but I think it was submitted after the six-month extension request. MCMAHON: Do you know why he's request -- having to request this time and time again, and will this be his last time do you think? TAVASSOLI: Well, as I mentioned, staff is working with the applicant closely to make sure that does happen -- MCMAHON: Okay. TAVASSOLI: -- within the next six months. MAYOR DICKEY: Any speaker cards on this item? MENDENHALL: Mayor, no, we have no speaker cards. MAYOR DICKEY: Thank you. Any further comments or questions? Can I get a motion, please? GRZYBOWSKI: Move to approve the request for a six-month extension to the special use permit to allow a maximum of 12 dwelling units at 17134 East Kingstree Boulevard. MCMAHON: Second. TOWN OF FOUNTAIN HILLS Page 41 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 41 of 43 MAYOR DICKEY: Thank you. All in favor, please say, Aye. ALL: Aye. MAYOR DICKEY: Thanks very much. TAVASSOLI: Thank you. MAYOR DICKEY: Our next item is related to our presentation that we had earlier, and it is a request to consider a contract for pavement assessment. Grady? MILLER: Yes. I'm just going to have Mr. Weldy, again, give a presentation on this or give a staff report on this particular contract that we're seeking Council consideration and approval. That -- and I'll turn it over to Mr. Weldy. WELDY: Thank you. Madam Mayor, Councilmembers, as you were all well aware, we are working to do the best we can to figure out a long-term pavement-management plan for this community. Part of that plan over the last -- well, almost 15 years has to have an assessment done of our streets and determine the condition of those streets through that assessment. Using those analysis, especially the last one that we had done in 2018, we have been able to utilize the limited funding that we've had to make substantial improvements on the roads that can be saved. As you saw tonight in a presentation from Mr. Butler and his dedicated group of volunteers, there are substantial changes in the local roads, and by far the local roads are one of our largest segments of roads. This new one is a continuation of that. Once the data and information is gathered, the team that is selected from this group will work with town staff and that group of volunteers moving forward on the future to make sure that the funding that we have is placed in the right location at the right time based on recommendation for this -- from this elected body and a team of professionals to accomplish that goal. With that, if you have any questions related to this agreement, I'll do my best to answer them. SCHARNOW: So does the timing of this tie with the work being done by the committee then in their final report or? MILLER: Yes. And that's why it was mentioned this spring because we believe that they'll have everything completed. They're going to -- if you recall, IMS, the firm that we used previously had a specialized -- specially equipped vehicle that drove over all the streets in town and through a laser process were able to identify the condition and gave a letter grading to all of our streets. That's going to happen again. And based on their TOWN OF FOUNTAIN HILLS Page 42 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 42 of 43 findings and conclusions, then that's going to influence the committee in developing what they need to for their report -- and final report to the council. They will also be able to do what-if scenarios based on prioritization of the streets and what we do in what order. So it's very critical to have this contract in place. MAYOR DICKEY: Do we have any speaker cards? MENDENHALL: No, Mayor, we do not. MAYOR DICKEY: Thank you. Do you have any -- yes, Vice Mayor. FRIEDEL: Do you want a motion? MAYOR DICKEY: Oh, sure. FRIEDEL: Move to approve professional services agreement 2023-047 between the town and Roadway Asset Services LLC for pavement condition and evaluation-related services in the amount of $59,997. MCMAHON: Second. MAYOR DICKEY: Thank you. All in favor, please say, Aye. ALL: Aye. MAYOR DICKEY: Any opposed. Thank you, Justin, very much. WELDY: You're welcome. MAYOR DICKEY: All right. We're moving in the right direction there. Our last item is to approve a settlement agreement. I will ask Aaron, would you like to present on this please? ARNSON: Certainly, Mayor. I have -- Mayor and Council, I have no formal presentation tonight. As the Council is aware, over the last several weeks, we have been engaged in negotiations with the plaintiffs in N-Shea vs. Town of Fountain Hills, and that case in superior court to try to reach a resolution of the litigation that was instituted in that case. We've worked together to resolve some of the differences between the parties. The end result of which will be a dismissal of all claims -- a mutually agreed dismissal of all claims and a release. Unless there are questions from the Council, I believe that we've -- I've provided legal advise as well as direction as to the contract and executive session. I'm happy to answer questions otherwise we're -- staff is recommending approval tonight. MAYOR DICKEY: Thank you, Aaron. Are there any questions from Council or TOWN OF FOUNTAIN HILLS Page 43 of 43 OCTOBER 18, 2022 CITY COUNCIL MEETING Page 43 of 43 comments? Do we have speaker cards on this item? MENDENHALL: No -- they're not in person, but they just wanted to ask a question. Liz Gildersleeve wants to know what are the legal fees and legal costs to the Town as a result of this lawsuit? MAYOR DICKEY: Okay. Thank you. Obviously, we're not prepared to respond to that at this point. But we can look that up. So if Council has no comment or any questions about this and there are no further speaker cards, can I get a motion? FRIEDEL: Move to approve the settlement agreement and release between the Town of Fountain Hills and N-Shea Group, LLC and Park Place Properties, LLC and adopt resolution 2022-45 approving a first amendment to the development agreement between the Town of Fountain Hills and N-Shea Group, LLC and Park Place Properties, LLC. GRZYBOWSKI: Second. MAYOR DICKEY: Thank you. All in favor, please say, Aye. ALL: Aye. MAYOR DICKEY: Any opposed. Thank you very much. That passes. Our last item is our discussion/direction to the town manager. Anything for the good of the order of future agendas? No? All right. We are adjourned. ITEM 7. B. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 11/15/2022 Meeting Type: Town Council Regular Meeting Agenda Type: Consent Submitting Department: Community Services Prepared by: Rachael Goodwin, Community Services Director Request to Town Council Regular Meeting (Agenda Language): CONSIDERATION AND POSSIBLE ACTION: Approval of a Special Event Liquor License application for the Fountain Hills Chamber of Commerce for a beer garden in conjunction with Stroll in the Glow on December 3, 2022. Staff Summary (Background) The purpose of this item is to obtain the Council's approval regarding the Special Event Liquor License application submitted by Hannah Toth, representing the Fountain Hills Chamber of Commerce for submission to the Arizona Department of Liquor. The Chamber of Commerce is planning on hosting a Beer Garden for the first time at this event. The Fountain Hills Chamber of Commerce are keenly aware that the final issuance of a liquor license as well as approval to hold the Stroll in the Glow on December 2, 2022, is contingent upon the state, county, and local ordinances and guidelines as it relates to public health and the COVID-19 pandemic. All special event liquor license applicants are required to submit an application and pay a $25 fee for processing. Once the fee is paid and the application is reviewed by Town staff, the application is forwarded to the Town Council for review and consideration. After the application is approved by Town Council, the applicant will bring the signed paperwork to the Arizona Department of Liquor, and be issued a physical license to be displayed for the duration of the event. The special event liquor license application was reviewed by staff for compliance with Town ordinances and staff unanimously recommended approval of the application as submitted. Related Ordinance, Policy or Guiding Principle A.R.S. §4-203.02; 4-244; 4-261 and R19-1-228, R19-1-235, and R19-1-309 Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) Staff recommends approval. SUGGESTED MOTION SUGGESTED MOTION MOVE to to Staff recommends approval. Attachments G:\Special Events\Liquor Apps\2022 Form Review Inbox Reviewed By Date Community Services Director Rachael Goodwin 11/08/2022 02:40 PM Finance Director David Pock 11/08/2022 02:56 PM Town Attorney Aaron D. Arnson 11/08/2022 02:59 PM Town Manager Grady E. Miller 11/09/2022 10:15 AM Form Started By: Linda Ayres Started On: 11/08/2022 01:58 PM Final Approval Date: 11/09/2022 ITEM 8. A. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 11/15/2022 Meeting Type: Town Council Regular Meeting Agenda Type: Regular Agenda Submitting Department: Administration Prepared by: Grady E. Miller, Town Manager Request to Town Council Regular Meeting (Agenda Language): CONSIDERATION AND POSSIBLE ACTION: On the Town of Fountain Hills 2023 Legislative Agenda. Staff Summary (Background) This is the second year of having a legislative agenda that formally identifies key issues and interests of Fountain Hills. The purpose of the legislative agenda is to affect federal and state legislation and regulations as they relate to the interests of the Town of Fountain Hills and its residents. The legislative agenda defines the priorities for the upcoming session and will guide the town's lobbying activities at the Arizona State Legislature. The Town of Fountain Hills has contracted with Jack Lunsford to serve as its Government Affairs Director. Throughout the 2023 legislative session, policy direction will be sought on proposed statutory changes which fall under the adopted Town Council's 2023 Legislative Agenda as well as Council policy statements relating to the Town of Fountain Hills. The legislative agenda focuses on a few key issues to allow the town to have a stronger, more consistent message on the items of greatest priority. The Town's 2023 Legislative Agenda is a flexible document and may change, based on activities at the State Legislature and Council direction. Related Ordinance, Policy or Guiding Principle The 2023 Legislative Agenda provides the policy framework by which the Town of Fountain Hills engages on state and federal legislative issues. Due to concerns about legislative bills impacting the town's finances, the 2023 Legislative Agenda is consistent with Town Council adopted 2022 Strategic Plan, Strategic Priority: Promote the Long-Term Financial Sustainability of Town Infrastructure, Environmental and Social Resources; Signature Strategy 2: Promote the long-term financial health and stability of the Town. Risk Analysis A legislative agenda allows the town to focus on the big picture issues impacting the Town of Fountain Hills. It also ensures that the Town Council's legislative priorities are being pursued and advocated on behalf of the organization. Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) Staff recommends approval of the 2023 Legislative Agenda. SUGGESTED MOTION MOVE to Approve the 2023 Legislative Agenda. Attachments 2023 Proposed Legislative Agenda Form Review Inbox Reviewed By Date Finance Director David Pock 11/03/2022 04:33 PM Town Attorney Aaron D. Arnson 11/03/2022 06:34 PM Town Manager (Originator)Grady E. Miller 11/03/2022 07:05 PM Form Started By: Grady E. Miller Started On: 11/03/2022 03:32 PM Final Approval Date: 11/03/2022 1 2023 State Legislative Agenda Town Council of Fountain Hills Prepared/Presented by Jack W Lunsford The Lunsford Group November 15, 2022 2 THE TOWN’S MISSION To enrich and provide an active quality of life for all residents and visitors through proactive community engagement, resolute stewardship of amenities and open spaces, and the enhancement of the overall health and well-being of our town. THE TOWN’S STRATEGIC PRIORITIES The Fountain Hills Strategic Plan is based on the following key goals or strategic priorities: o Maximizing Economic Development Opportunities in Fountain Hills o Ensuring that Infrastructure in Fountain Hills is Well-Maintained and Safe o Attracting Families and Working Professionals o Ensuring that Fountain Hills Finances are Stable and Sustainable o Focusing on Strengthening the Community and Improving the Town’s Quality of Life THE TOWN’S CORE LEGISLATIVE PRINCIPLES Preserve Local Funding PROTECT State-Shared Revenues – Arizona voters have prohibited municipalities from collecting a local income tax and luxury taxes and, in exchange, have authorized the establishment of an urban revenue-sharing distribution of state income taxes to municipal governments. Historically that percentage had been 15%, however, due to omnibus tax reform changes adopted by the Arizona Legislature the revenue-share percentage was increased to the currently effective rate of18%. Preserve Local Control OPPOSE Preemption of Local Authority – The Town strives to preserve local control so that its citizens can self-govern in their best interest. In every legislative session legislation is proposed that creates unfunded mandates on cities and towns and/or preempts the ability of municipal councils to set policy through ordinances and regulations at the local level which are in the best interest of their citizens and taxpayers. Often times this is a “one-size-fits-all” legislative approach that doesn’t consider the differences in municipalities or the priorities of the residents. Such efforts should be opposed. 3 2023 Legislative Resolutions: League of Arizona Cities and Towns (Endorsed by the Town of Fountain Hills and Incorporated into its Legislative Agenda) ➢ AMEND ARS 42-17105 to remove the statutory requirement to adjourn a regular meeting to gavel into a special meeting for adopting a budget. ➢ AMEND statute to allow municipalities above 2,500 and under 10,000, whose existing general plan was approved by voters, to submit a new general plan for approval at the next regularly scheduled municipal election or special election. ➢ AMEND statute to Permit cities and towns to post public notices and ordinances on either the municipality’s website, in a local newspaper, or both. ➢ AMEND ARS 9-802 to no longer require exhibits to be published if the exhibit’s location is listed within the adopted ordinance and is accessible to the public. ➢ CLARIFY statute to require contact information on political signs not directly affiliated with a campaign committee or candidate. SUPPORT [additional] state appropriations to the Housing Trust Fund. ➢ AMEND statute to provide the Department of Liquor & License Control the authority to grant local governments an extension in time to review and act on liquor license applications. Town of Fountain Hills 2023 State Legislative Agenda 2023 Key Positions ✓ PRESERVE the current minimum urban revenue sharing percentage for cities and towns at 18%. ✓ OPPOSE any legislation that eliminates or reduces the amount of transaction privilege taxes municipalities may levy on food. ✓ OPPOSE any legislation that eliminates or reduces the amount of transaction privilege taxes municipalities may levy on rental property. 4 2023 Key Positions (continued) ✓ SUPPORT legislation that authorizes Maricopa County to call an election for the earliest permissible date to, at a minimum, modify or extend the current ½-cent sales tax to support regional transportation projects in Maricopa County [aka Proposition 400]. ✓ SUPPORT legislation that grants Maricopa County parity with the state’s other fourteen counties and authorizes Maricopa County to call for elections to support regional transportation projects without necessary statutory authorization from the state. ✓ OPPOSE legislation to modify or expand legislative authority to seek SB1487 investigations by legislators pertinent to municipal authorities and to expand any applicable penalties. ✓ SUPPORT legislation addressing the negative impacts short-term rental properties can have on adjacent properties and neighborhoods. LEGISLATIVE POLICY STATEMENTS LOCAL GOVERNMENT • OPPOSE legislation to modify or expand legislative authority to seek SB1487 investigations by legislators pertinent to municipal authority and to expand any penalties. • SUPPORT legislation that further limits SB1487 provisions. • OPPOSE legislation that creates unfunded mandates for municipalities. • SUPPORT legislation on political signs to comply with Reed v. Town of Gilbert U.S. Supreme Court decision. LOCAL GOVERNMENT FINANCE • OPPOSE legislation that reduces or negatively impacts the collection of transaction privilege tax (TPT), State Shared Revenues, or other local revenues. • OPPOSE legislation that may further limit the imposition of construction sales taxes to “materials only” or other methods that do not equitably return those revenues to where the construction activity occurs. 5 NEIGHBORHOODS and QUALITY OF LIFE ISSUES • SUPPORT legislation that provides additional tools and remedies for municipalities to regulate short-term rentals in their communities. • OPPOSE legislation that would limit or curtail the Town’s current zoning authority, particularly in residential areas. • OPPOSE legislation that would prohibit or eliminate the transaction privilege tax on the renting or leasing of real property for residential purposes. • OPPOSE legislation that preempts a city or town from establishing or enforcing its ordinances regulating tobacco, vapor, or alternative nicotine products. • SUPPORT legislation that imposes financial penalties for violating laws relating to restrictions in the use of permissible consumer fireworks, and FURTHER SUPPORT legislation that will prohibit, on all days, the use of permissible consumer fireworks between the hours of 10:00 PM and 8:00 AM. PUBLIC SAFETY • OPPOSE legislation that negatively impacts the Town’s Fire Code or its ability to enforce its Fire Code provisions. • OPPOSE legalizing additional fireworks or other changes that would increase the risk of fires to businesses, neighborhoods, residents and the McDowell Sonoran Preserve. • PRESERVE local control authority that allows cities and towns to regulate the use and discharge of firearms within municipal boundaries. TRANSPORTATION • SUPPORT legislation that authorizes Maricopa County to call an election for the earliest permissible date to, at a minimum, modify or extend the current ½-cent sales tax to support regional transportation projects in Maricopa County [aka Proposition 400]. • SUPPORT legislation that grants Maricopa County parity with the state’s other fourteen counties and authorizes Maricopa County to call for elections to support regional transportation projects without necessary statutory authorization from the state. • SUPPORT the continued viability of HURF funding to cities and towns. ITEM 8. B. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 11/15/2022 Meeting Type: Town Council Regular Meeting Agenda Type: Regular Agenda Submitting Department: Administration Prepared by: David Pock, Finance Director Request to Town Council Regular Meeting (Agenda Language): PRESENTATION and PUBLIC HEARING on FY21 and FY22 Development Fee Audit Report. Staff Summary (Background) ARS 9-463.05 (G.2) requires a biennial audit of development fees and a public hearing on the audit. An audit was conducted by Willdan Financial Services for FY20-21 and FY21-22 and reviewed the land use assumptions, the infrastructure improvement plan as well as the level of service. No audit issues were found and the conclusion was the development impact fee collections and expenditures are consistent with the 10-year plan identified in the reports. Related Ordinance, Policy or Guiding Principle ARS 9-463.05 G2 Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) N/A SUGGESTED MOTION No Council action is required on this item. Attachments Final Report Form Review Inbox Reviewed By Date Finance Director (Originator)David Pock 11/08/2022 01:44 PM Town Attorney Aaron D. Arnson 11/08/2022 01:56 PM Town Attorney Aaron D. Arnson 11/08/2022 01:56 PM Town Manager Grady E. Miller 11/08/2022 02:15 PM Form Started By: David Pock Started On: 11/03/2022 04:34 PM Final Approval Date: 11/08/2022 Town of Fountain Hills | AZ Water, Sewer and Environmental Services Rate Study April 2018 FY 2020-21 and FY 2021-22 Development Impact Fee Audit Table of Contents Section 1 ‐ Introduction ................................................................................................................................ 2 1.1. Introduction ....................................................................................................................................... 2 1.2. Organization of this Report ............................................................................................................... 2 1.3. Audit Approach ................................................................................................................................. 3 1.4. Audit Objectives ................................................................................................................................ 3 1.5. Audit Results ..................................................................................................................................... 4 1.6. Audit Limitations ............................................................................................................................... 4 Section 2 ‐ Parks and Recreation ................................................................................................................. 6 2.1. Fee Development .............................................................................................................................. 6 2.2. Land Use Assumptions ...................................................................................................................... 6 2.3. Infrastructure Improvement Plan ..................................................................................................... 7 2.4. Level of Service .................................................................................................................................. 7 Section 3 ‐ Fire and EMS ............................................................................................................................... 8 3.1. Fee Development .............................................................................................................................. 8 3.2. Land Use Assumptions ...................................................................................................................... 8 3.3. Level of Service .................................................................................................................................. 9 Section 4 ‐ Streets ....................................................................................................................................... 10 4.1. Fee Development ............................................................................................................................ 10 4.2. Land Use Assumptions .................................................................................................................... 10 4.3. Level of Service ................................................................................................................................ 11 Section 5 ‐ Permit Sampling ....................................................................................................................... 12 5.1. Sampling Results ............................................................................................................................. 12 Section 6 ‐ Conclusions ............................................................................................................................... 13 6.1. Land Use Assumptions .................................................................................................................... 13 6.2. Infrastructure Improvement Plan ................................................................................................... 13 6.3. Level of Service ................................................................................................................................ 13 6.4. Final Conclusion ............................................................................................................................... 13 Development Impact Fee Biennial Audit Final Report November 7, 2022 P a g e | 2 Section 1 ‐ Introduction 1.1. Introduction Willdan Financial Services (“Willdan”) was retained by the Town of Fountain Hills, Arizona (“Fountain Hills”) to conduct a Biennial Development Impact Fee Audit (“Audit”) as required under Arizona Revised Statutes (ARS) 9‐463.05. This report details the results of the Audit for the audited period fiscal year (FY) 2020‐21 and FY 2021‐22. 1.2. Organization of this Report This Audit presents a comparison of the development projections (land use assumptions); capital needs (infrastructure improvement plan); and the level of service (LOS) as identified in the January 21, 2020 Land Use Assumptions, Infrastructure Improvement Plan and Development Fee Report (2020 Report) to the development, capital expenditures and level of service experienced by Fountain Hills in FY 2020‐22. The report is organized as follows: • Section 1 ‐ Introduction • Section 2 – Parks and Recreation • Section 3 – Fire and Emergency • Section 4 – Streets • Section 5 – Permit Sampling • Section 6 – Conclusions and Recommendations The appendices to this report are as follows:  Appendix A ‐ ARS§ 9‐463.05 • Appendix B – Parks and Recreation Analysis  Appendix C – Fire and EMS Analysis  Appendix D – Streets Analysis  Appendix E – Permit Sampling Results Development Impact Fee Biennial Audit Final Report November 7, 2022 P a g e | 3 1.3. Audit Approach Willdan staff supporting the Audit meet the definition of “Qualified Professional” as set forth in ARS§ 9‐ 463.05(T)(8). Consistent with the requirements of ARS§ 9‐463.05(G)(2), Willdan audit staff were neither employees or officials of Fountain Hills nor did they prepare the infrastructure improvement plans (IIPs)1. Audit activities consisted solely of document review and discussions with Fountain Hills staff via email and teleconference. Audit activities did not include site visits, first‐hand data collection, or independent verification of data submitted by Fountain Hills. In particular, in support of this audit, Willdan: a) Reviewed IIP forecast and actual expenditures. b) Reviewed LUA forecasted and actual developments. c) Reviewed LOS at two points in time: time of the initial study and the audit timeframe. d) Permit data for purposes of sampling to verify the accuracy of the application of the fees. 1.4. Audit Objectives The primary objectives of the Audit were to: a) Audit Fountain Hills Biennial Development Impact Fees for the periods FY 2020‐21 and FY 2021‐ 22; b) Comply with ARS§ 9‐463.05 by: i. Reviewing the progress of anticipated development as identified in the LUA; ii. Reviewing the progress of the infrastructure improvements plan; iii. Reviewing collections and expenditures of development impact fees for each project in the plan; and iv. Evaluating any inequities in implementing the plan or imposing the development impact fees. 1 Fountain Hills Development Impact Fees report: Land Use Assumptions, Infrastructure Improvements Plan, and Development Fee report was prepared by TischlerBise January 21, 2020. Development Impact Fee Biennial Audit Final Report November 7, 2022 P a g e | 4 1.5. Audit Results Based on Willdan’s scope of services performed as part of this Audit as documented in this Report, the results of this audit follow. a) Fountain Hills Biennial Development Impact Fees for the periods FY 2020‐21 and FY 2021‐22 comply with ARS§ 9‐463.05 as further discussed in sections two through four; b) With respect to ARS§ 9‐463.05 compliance: i. Willdan’s review of the progress of the LUA, identified minor differences between projected and actual development, but anticipates the development over the most recent 10‐year study period will not significantly vary from projections. The audit of the LUA are further discussed in sections two through four; ii. Willdan’s review of collections and expenditures of the development impact fees for each project in the plan, indicate that no ineligible expenditures were made with development impact fee funds during the study period, as further discussed in sections two through four; and iii. Willdan’s evaluation of any inequities in implementing the plan or imposing the development impact fees indicates that the fees were assessed in an appropriate manner based upon the size and type of the development as further discussed in section five. 1.6. Audit Limitations Willdan’s role in this Audit was solely that of third‐party independent auditor. The results presented in this Audit Report are predicated upon information provided by Fountain Hills and representations made by Fountain Hills personnel. Willdan made reasonable efforts given the nature of this audit to assess the reasonableness of such representations. However, Willdan has no means to determine the extent to which material facts concerning information provided have been fully and accurately disclosed, nor is this a forensic audit. All findings in this report are based solely on Willdan’s review of materials furnished by Fountain Hills as identified or publicly available information as cited as well as information obtained by Willdan through emails and meetings with key Fountain Hills staff involved in this audit. Review of additional documentation or disclosure or discovery of material facts could change the findings cited in this Report. Development Impact Fee Biennial Audit Final Report November 7, 2022 P a g e | 5 This report documents the audit for the sole purpose of demonstrating compliance with the requirements of ARS§ 9‐463.05(G)(2); no other use is expressed or implied. Nothing in this report can be considered a legal opinion. Development Impact Fee Biennial Audit Final Report November 7, 2022 P a g e | 6 Section 2 ‐ Parks and Recreation 2.1. Fee Development The 2020 Report calculated investment to serve new development at $2,212,915. The investments equated to the fees as identified in Table 2‐1. Table 2‐1 Parks and Recreation Development Impact Fees Single Family (per Dwelling Unit) Multifamily (per Dwelling Unit) Industrial (per 1,000 sq ft) Commercial (per 1,000 sq ft) Institutional (per 1,000 sq ft) Office (per 1,000 sq ft) $1,916 $1,479 $560 $810 $320 $1,030 2.2. Land Use Assumptions The biennial audit requires an audit of the anticipated growth projections that were adopted in the Fountain Hills land use assumptions (LUA) as compared to the growth by development type that was actually experienced. Table 2‐2 summarizes the projected development in the 2020 Report and the actual development that was experienced by Fountain Hills in FY 2020‐21 and FY 2021‐22. Table 2‐2 Projected versus Actual Development Single Family (Dwelling Units) Multifamily (Dwelling Units) Industrial (1,000 sq ft) Commercial (1,000 sq ft) Institutional (1,000 sq ft) Office (1,000 sq ft) FY 2020‐21 Actual 52 159 0.00 59.18 212.00 0.00 Projected 66 38 1.00 18.00 11.00 6.00 Difference (14) 121 (1.00) 41.18 201.00 (6.00) FY 2021‐22 Actual 129 2 0.00 43.46 0.00 0.00 Projected 66 38 1.00 18.00 11.00 6.00 Difference 63 (36) (1.00) (25.46) (11.00) (6.00) As indicated in Table 2‐2, the actual development for FY 2020‐21 Single family dwelling units fell short of projections while multifamily dwelling units exceeded projections. The opposite holds true for FY 2021‐ 22 where single family units exceeded projections why multifamily development fell short of projections. Commercial and institutional development exceeded projections in FY 2020‐21 while industrial and office developments fell short of projections. For FY 2021‐22 all non‐residential development fell short of projections. As is often the case in the development of financial plans, utility rate studies and impact fee studies, the data that is used for projection purposes are based on the best available data at the time and will be updated over time. The actual development identified in Table 2‐2 represent a “snapshot” in time. Through discussions with Town staff, it was believed that development projections over the new 10‐year study period (identified in the 2020 Report) are still valid and the Town will continue to monitor growth and make adjustments as appropriate. Development Impact Fee Biennial Audit Final Report November 7, 2022 P a g e | 7 2.3. Infrastructure Improvement Plan The 2020 Report identified the parks and recreation IIP of $2,212,915, with projected capital expenditures between FY 2020‐21 and FY 2021‐22 estimated at $414,286 based on anticipated development. Between FY 2020‐21 and FY 2021‐22 Fountain Hills generated $566,204 in parks and recreation development impact fee revenues and $794 in interest income. There was $150,000 in expenditures of parks and recreation development impact fees generated from the fees during the FY 2020‐21 through FY 2021‐22 period. Expenditures included a community services master plan and expenditures on a splash pad. 2.4. Level of Service Level of service projections are intended to ensure that new development is only being asked to pay for facilities or capital needs at the same level as is currently being experienced by existing Fountain Hills development and are not being asked to increase the overall level of service, without a corresponding funding source from existing development to increase their level of service. The 2020 Report identified additional parks and amenities to be acquired based on incremental development during the 10‐year study period. As noted in Section 2.3, $150,000 in expenditures were made on parks or amenities during the 2‐years examined in this audit. During the study period, there will be times of increased level of service and times of a lower level of service compared to the 2020 Report identified level of service, based on when facilities are constructed or acquired in relation to the amount of new development that has occurred. The IIP identified the need for additional park facilities to meet the level of service needs based on the anticipated population growth through the study periods. Since actual expenditures were less than what was anticipated based on projected development, there will be a decrease in the overall level of service. Staff continuously monitors the level of service with the overall objective of achieving the designated level of service at the end of the 10‐year study period identified in the 2020 Report. Development Impact Fee Biennial Audit Final Report November 7, 2022 P a g e | 8 Section 3 ‐ Fire and EMS 3.1. Fee Development The 2020 Report identified growth‐related costs of $159,098 throughout the 10‐year study period. The investments equated to the fees per unit as identified in Table 3‐1. Table 3‐1 Fire and EMS Development Impact Fees Single Family (per Dwelling Unit) Multifamily (per Dwelling Unit) Industrial (per 1,000 sq ft) Commercial (per 1,000 sq ft) Institutional (per 1,000 sq ft) Office (per 1,000 sq ft) $122 $94 $100 $140 $60 $180 3.2. Land Use Assumptions The biennial audit requires an audit of the anticipated growth projections that were adopted in Fountain Hills LUAs as compared to the growth by development type that was actually experienced. Table 3‐2 summarizes the projected development in the 2020 Report and the actual development that was experienced by Fountain Hills in FY 2020‐21 and FY 2021‐22. Table 3‐2 Projected versus Actual Development Single Family (Dwelling Units) Multifamily (Dwelling Units) Industrial (1,000 sq ft) Commercial (1,000 sq ft) Institutional (1,000 sq ft) Office (1,000 sq ft) FY 2020‐21 Actual 52 159 0.00 59.18 212.00 0.00 Projected 66 38 1.00 18.00 11.00 6.00 Difference (14) 121 (1.00) 41.18 201.00 (6.00) FY 2021‐22 Actual 129 2 0.00 43.46 0.00 0.00 Projected 66 38 1.00 18.00 11.00 6.00 Difference 63 (36) (1.00) (25.46) (11.00) (6.00) As indicated in Table 3‐2, the actual development for FY 2020‐21 Single family dwelling units fell short of projections while multifamily dwelling units exceeded projections. The opposite holds true for FY 2021‐ 22 where single family units exceeded projections why multifamily development fell short of projections. Commercial and institutional development exceeded projections in FY 2020‐21 while industrial and office developments fell short of projections. For FY 2021‐22 all non‐residential development fell short of projections. As is often the case in the development of financial plans, utility rate studies and impact fee studies, the data that is used for projection purposes are based on the best available data at the time and will be updated over time. The actual development identified in Table 3‐2 represent a “snapshot” in time. Through discussions with Town staff, it was believed that development projections over the new 10‐year study period (identified in the 2020 Report) are still valid and the Town will continue to monitor growth and make adjustments as appropriate. Development Impact Fee Biennial Audit Final Report November 7, 2022 P a g e | 9 Infrastructure Improvement Plan The 2020 Report identified growth related IIP costs of $31,848 based on anticipated development between FY 2020‐21 and FY 2021‐22. Between FY 2020‐21 and FY 2021‐22 Fountain Hills generated $91,273 in fire and EMS development impact fee revenues and $285 in interest earnings. There were no expenditures of fire and EMS development impact fees generated from the fees during the FY 2021‐21 through FY 2021‐22 period. As discussed previously, the development projections are not anticipated to occur as originally projected. The IIPs were based on the anticipated developments, therefore as development changes so too does the timing of capital expenditures. With new development the 2020 Report would have anticipated matching capital expenditures, and those expenditures did not occur. 3.3. Level of Service Level of service projections are intended to ensure that new development is only being asked to pay for facilities or capital needs at the same level as is currently being experienced by existing Fountain Hills development and are not being asked to increase the overall level of service, without a corresponding funding source from existing development to increase their level of service. The projected capital expenditures were anticipated based on growth. The expenditures were derived using fractional units, for example 0.00017 units of fire apparatus per person. The Town cannot purchase 0.00017 units of fire apparatus based on 1 new resident. It is therefore necessary to take a broader view of capital expenditures and development and match new development and capital expenditures over the entire study period. It is recommended that staff continuously monitor the level of service with the overall objective of achieving the designated level of service at the end of the 10‐year study period identified in the 2020 Report. Development Impact Fee Biennial Audit Final Report November 7, 2022 P a g e | 10 Section 4 ‐ Streets 4.1. Fee Development The streets development impact fee from the 2020 report was based on incremental growth‐related needs of $2,657,140. The investments equated to the fees per unit as identified in Table 4‐1. Table 4‐1 Streets Development Impact Fees Single Family (per Dwelling Unit) Multifamily (per Dwelling Unit) Industrial (per 1,000 sq ft) Commercial (per 1,000 sq ft) Institutional (per 1,000 sq ft) Office (per 1,000 sq ft) $1,935 $964 $630 $2,860 $2,480 $1,240 4.2. Land Use Assumptions The biennial audit requires an audit of the anticipated growth projections that were adopted in Fountain Hills LUA as compared to the growth by development type that was actually experienced and were assessed the streets development impact fee. Table 4‐2 summarizes the projected development in the 2020 Report and the actual development that was experienced by Fountain Hills in FY 2020‐21 and FY 2021‐22. Table 4‐2 Projected versus Actual Development Single Family (Dwelling Units) Multifamily (Dwelling Units) Industrial (1,000 sq ft) Commercial (1,000 sq ft) Institutional (1,000 sq ft) Office (1,000 sq ft) FY 2020‐21 Actual 52 159 0.00 59.18 212.00 0.00 Projected 66 38 1.00 18.00 11.00 6.00 Difference (14) 121 (1.00) 41.18 201.00 (6.00) FY 2021‐22 Actual 129 2 0.00 43.46 0.00 0.00 Projected 66 38 1.00 18.00 11.00 6.00 Difference 63 (36) (1.00) (25.46) (11.00) (6.00) As indicated in Table 4‐2, the actual development for FY 2020‐21 Single family dwelling units fell short of projections while multifamily dwelling units exceeded projections. The opposite holds true for FY 2021‐ 22 where single family units exceeded projections why multifamily development fell short of projections. Commercial and institutional development exceeded projections in FY 2020‐21 while industrial and office developments fell short of projections. For FY 2021‐22 all non‐residential development fell short of projections. As is often the case in the development of financial plans, utility rate studies and impact fee studies, the data that is used for projection purposes are based on the best available data at the time and will be updated over time. The actual development identified in Table 4‐2 represent a “snapshot” in time. Through discussions with Town staff, it was believed that development projections over the new 10‐year study period (identified in the 2020 Report) are still valid and the Town will continue to monitor growth and make adjustments as appropriate. Development Impact Fee Biennial Audit Final Report November 7, 2022 P a g e | 11 Infrastructure Improvement Plan The 2020 Report identified growth‐related IIP costs of $503,584 for FY 2020‐21 and FY 2021‐22 based on projected development. In FY 2020‐21 and FY 2021‐22, Fountain Hills generated $336,141 in streets development impact fee revenues and $100 in interest earnings. There were no expenditures in the audit years. As discussed previously, the development projections are not anticipated to occur as originally projected. The IIP was based on the anticipated, therefore as development changes so too does the timing of capital expenditures. However, with new development the 2020 Report would have anticipated matching capital expenditures, and those expenditures did not occur. 4.3. Level of Service Level of service projections are intended to ensure that new development is only being asked to pay for facilities or capital needs at the same level as is currently being experienced by existing Fountain Hills development and are not being asked to increase the overall level of service, without a corresponding funding source from existing development to increase their level of service. The projected capital expenditures included 2.30 new miles of streets of the widening of Shea Boulevard as well as intersection improvements. Shea Boulevard was not widened using development impact fees as a funding source, nor were development impact fees used to improve intersections. As such, the overall level of service in the Town will decrease (new development occurred but there was not a matching increase in streets expenditures). The intent is to maintain the existing level of service by the end of the study period, recognizing that there will be times of higher and lower levels of service throughout the study period. It is recommended that staff continuously monitor the level of service with the overall objective of achieving the designated level of service at the end of the 10‐year study period identified in the 2020 Report. Development Impact Fee Biennial Audit Final Report November 7, 2022 P a g e | 12 Section 5 ‐ Permit Sampling 5.1. Sampling Results As part of the audit process Willdan took a r sample of residential (39) permits and non‐residential (2) permits that were issued between FY 2020‐21 and FY 2021‐22. The purpose of the sampling was to identify any instances where the fee that was assessed to the development varied from the fee that should have been assessed based on a per dwelling unit or square footage of development basis. Our sampling review did not identify any developments that were assessed incorrect development impact fees. There was a second area in the permit sampling that Willdan reviewed. The second permit review we undertook was specific to Section F of the State Statutes which states: “A municipality’s development fee ordinance shall provide that a new development fee or an increased portion of a modified development fee shall not be assessed against a development for twenty‐four months after the date that the municipality issues final approval for a commercial, industrial or multifamily development or the date that the first building permit is issued for a residential development pursuant to an approved site plan or subdivision plat that would increase the number of service units.” In our review of residential permits we identified some developments that fell within the 24 month period specified in the State Statute. We found incidents in FY 2020‐21 where the development impact fees in the 2020 Report had changed since the prior adopted fees (from the 2014 Report). The developments were correctly assessed the prior adopted fee, per the requirement of the State Statute. Development Impact Fee Biennial Audit Final Report November 7, 2022 P a g e | 13 Section 6 ‐ Conclusions 6.1. Land Use Assumptions Willdan conducted an audit of Fountain Hills’s actual development projections for FY 2020‐21 and FY 2021‐22 and compared the actual new development with the development projections in the 2020 Report. While there were variances between what had been originally projected and what actually occurred, the original projections were based on the best available data at the time of the study. 6.2. Infrastructure Improvement Plan We reviewed the projects that were included in the 2020 Report. As was the case with the LUA, the IIP was developed based on the best available information at the time of the analysis, and the actual expenditures differed from what was projected. While there were differences between the projected IIPs and what actually occurred, it is important to note that in many cases, the IIPs identified the need for capital over the entire study period time horizon and not necessarily in a specific year. As such, the completion of projects should be viewed through a longer (the entire study period horizon) rather than a more focused view on one or two specific years. 6.3. Level of Service The level of service for a given fee area is in flux over time and will change as new projects are incorporated into Fountain Hills existing facilities and networks or as development within Fountain Hills changes. As the Town did experience new development during the audit period but only expanded parks facilities there will be an overall decrease in the level of service during the audit period. We recommend that the Town closely monitor the level of service in the future in adhering to the level of service for the 10‐year study period identified in the 2020 Report and make adjustments to the IIP as appropriate. 6.4. Final Conclusion It is our opinion that Fountain Hills’s development, development impact fee collections and expenditures are consistent with the 10‐year plans identified in the 2020 Report and is consistent with ARS§ 9‐463.05. APPENDIX A ARS §9‐463.05 9-463.05. Development fees; imposition by cities and towns; infrastructure improvements plan; annual report; advisory committee; limitation on actions; definitions A. A municipality may assess development fees to offset costs to the municipality associated with providing necessary public services to a development, including the costs of infrastructure, improvements, real property, engineering and architectural services, financing and professional services required for the preparation or revision of a development fee pursuant to this section, including the relevant portion of the infrastructure improvements plan. B. Development fees assessed by a municipality under this section are subject to the following requirements: 1. Development fees shall result in a beneficial use to the development. 2. The municipality shall calculate the development fee based on the infrastructure improvements plan adopted pursuant to this section. 3. The development fee shall not exceed a proportionate share of the cost of necessary public services, based on service units, needed to provide necessary public services to the development. 4. Costs for necessary public services made necessary by new development shall be based on the same level of service provided to existing development in the service area. 5. Development fees may not be used for any of the following: (a) Construction, acquisition or expansion of public facilities or assets other than necessary public services or facility expansions identified in the infrastructure improvements plan. (b) Repair, operation or maintenance of existing or new necessary public services or facility expansions. (c) Upgrading, updating, expanding, correcting or replacing existing necessary public services to serve existing development in order to meet stricter safety, efficiency, environmental or regulatory standards. (d) Upgrading, updating, expanding, correcting or replacing existing necessary public services to provide a higher level of service to existing development. (e) Administrative, maintenance or operating costs of the municipality. 6. Any development for which a development fee has been paid is entitled to the use and benefit of the services for which the fee was imposed and is entitled to receive immediate service from any existing facility with available capacity to serve the new service units if the available capacity has not been reserved or pledged in connection with the construction or financing of the facility. 7. Development fees may be collected if any of the following occurs: (a) The collection is made to pay for a necessary public service or facility expansion that is identified in the infrastructure improvements plan and the municipality plans to complete construction and to have the service available within the time period established in the infrastructure improvement plan, but in no event longer than the time period provided in subsection H, paragraph 3 of this section. (b) The municipality reserves in the infrastructure improvements plan adopted pursuant to this section or otherwise agrees to reserve capacity to serve future development. (c) The municipality requires or agrees to allow the owner of a development to Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2018-20 - State Statute A-1Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2020-22 - State Statute A-1 construct or finance the necessary public service or facility expansion and any of the following apply: (i) The costs incurred or money advanced are credited against or reimbursed from the development fees otherwise due from a development. (ii) The municipality reimburses the owner for those costs from the development fees paid from all developments that will use those necessary public services or facility expansions. (iii) For those costs incurred the municipality allows the owner to assign the credits or reimbursement rights from the development fees otherwise due from a development to other developments for the same category of necessary public services in the same service area. 8. Projected interest charges and other finance costs may be included in determining the amount of development fees only if the monies are used for the payment of principal and interest on the portion of the bonds, notes or other obligations issued to finance construction of necessary public services or facility expansions identified in the infrastructure improvements plan. 9. Monies received from development fees assessed pursuant to this section shall be placed in a separate fund and accounted for separately and may only be used for the purposes authorized by this section. Monies received from a development fee identified in an infrastructure improvements plan adopted or updated pursuant to subsection D of this section shall be used to provide the same category of necessary public services or facility expansions for which the development fee was assessed and for the benefit of the same service area, as defined in the infrastructure improvements plan, in which the development fee was assessed. Interest earned on monies in the separate fund shall be credited to the fund. 10. The schedule for payment of fees shall be provided by the municipality. Based on the cost identified in the infrastructure improvements plan, the municipality shall provide a credit toward the payment of a development fee for the required or agreed to dedication of public sites, improvements and other necessary public services or facility expansions included in the infrastructure improvements plan and for which a development fee is assessed, to the extent the public sites, improvements and necessary public services or facility expansions are provided by the developer. The developer of residential dwelling units shall be required to pay development fees when construction permits for the dwelling units are issued, or at a later time if specified in a development agreement pursuant to section 9-500.05. If a development agreement provides for fees to be paid at a time later than the issuance of construction permits, the deferred fees shall be paid no later than fifteen days after the issuance of a certificate of occupancy. The development agreement shall provide for the value of any deferred fees to be supported by appropriate security, including a surety bond, letter of credit or cash bond. 11. If a municipality requires as a condition of development approval the construction or improvement of, contributions to or dedication of any facilities that were not included in a previously adopted infrastructure improvements plan, the municipality shall cause the infrastructure improvements plan to be amended to include the facilities and shall provide a credit toward the payment of a development fee for the construction, improvement, contribution or dedication of the facilities to the extent that the facilities will substitute for or otherwise reduce Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2018-20 - State Statute A-2Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2020-22 - State Statute A-2 the need for other similar facilities in the infrastructure improvements plan for which development fees were assessed. 12. The municipality shall forecast the contribution to be made in the future in cash or by taxes, fees, assessments or other sources of revenue derived from the property owner towards the capital costs of the necessary public service covered by the development fee and shall include these contributions in determining the extent of the burden imposed by the development. Beginning August 1, 2014, for purposes of calculating the required offset to development fees pursuant to this subsection, if a municipality imposes a construction contracting or similar excise tax rate in excess of the percentage amount of the transaction privilege tax rate imposed on the majority of other transaction privilege tax classifications, the entire excess portion of the construction contracting or similar excise tax shall be treated as a contribution to the capital costs of necessary public services provided to development for which development fees are assessed, unless the excess portion was already taken into account for such purpose pursuant to this subsection. 13. If development fees are assessed by a municipality, the fees shall be assessed against commercial, residential and industrial development, except that the municipality may distinguish between different categories of residential, commercial and industrial development in assessing the costs to the municipality of providing necessary public services to new development and in determining the amount of the development fee applicable to the category of development. If a municipality agrees to waive any of the development fees assessed on a development, the municipality shall reimburse the appropriate development fee accounts for the amount that was waived. The municipality shall provide notice of any such waiver to the advisory committee established pursuant to subsection G of this section within thirty days. 14. In determining and assessing a development fee applying to land in a community facilities district established under title 48, chapter 4, article 6, the municipality shall take into account all public infrastructure provided by the district and capital costs paid by the district for necessary public services and shall not assess a portion of the development fee based on the infrastructure or costs. C. A municipality shall give at least thirty days' advance notice of intention to assess a development fee and shall release to the public and post on its website or the website of an association of cities and towns if a municipality does not have a website a written report of the land use assumptions and infrastructure improvements plan adopted pursuant to subsection D of this section. The municipality shall conduct a public hearing on the proposed development fee at any time after the expiration of the thirty day notice of intention to assess a development fee and at least thirty days before the scheduled date of adoption of the fee by the governing body. Within sixty days after the date of the public hearing on the proposed development fee, a municipality shall approve or disapprove the imposition of the development fee. A municipality shall not adopt an ordinance, order or resolution approving a development fee as an emergency measure. A development fee assessed pursuant to this section shall not be effective until seventy-five days after its formal adoption by the governing body of the municipality. Nothing in this subsection shall affect any development fee adopted before July 24, 1982. Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2018-20 - State Statute A-3Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2020-22 - State Statute A-3 D. Before the adoption or amendment of a development fee, the governing body of the municipality shall adopt or update the land use assumptions and infrastructure improvements plan for the designated service area. The municipality shall conduct a public hearing on the land use assumptions and infrastructure improvements plan at least thirty days before the adoption or update of the plan. The municipality shall release the plan to the public, post the plan on its website or the website of an association of cities and towns if the municipality does not have a website, including in the posting its land use assumptions, the time period of the projections, a description of the necessary public services included in the infrastructure improvements plan and a map of the service area to which the land use assumptions apply, make available to the public the documents used to prepare the assumptions and plan and provide public notice at least sixty days before the public hearing, subject to the following: 1. The land use assumptions and infrastructure improvements plan shall be approved or disapproved within sixty days after the public hearing on the land use assumptions and infrastructure improvements plan and at least thirty days before the public hearing on the report required by subsection C of this section. A municipality shall not adopt an ordinance, order or resolution approving the land use assumptions or infrastructure improvements plan as an emergency measure. 2. An infrastructure improvements plan shall be developed by qualified professionals using generally accepted engineering and planning practices pursuant to subsection E of this section. 3. A municipality shall update the land use assumptions and infrastructure improvements plan at least every five years. The initial five year period begins on the day the infrastructure improvements plan is adopted. The municipality shall review and evaluate its current land use assumptions and shall cause an update of the infrastructure improvements plan to be prepared pursuant to this section. 4. Within sixty days after completion of the updated land use assumptions and infrastructure improvements plan, the municipality shall schedule and provide notice of a public hearing to discuss and review the update and shall determine whether to amend the assumptions and plan. 5. A municipality shall hold a public hearing to discuss the proposed amendments to the land use assumptions, the infrastructure improvements plan or the development fee. The land use assumptions and the infrastructure improvements plan, including the amount of any proposed changes to the development fee per service unit, shall be made available to the public on or before the date of the first publication of the notice of the hearing on the amendments. 6. The notice and hearing procedures prescribed in paragraph 1 of this subsection apply to a hearing on the amendment of land use assumptions, an infrastructure improvements plan or a development fee. Within sixty days after the date of the public hearing on the amendments, a municipality shall approve or disapprove the amendments to the land use assumptions, infrastructure improvements plan or development fee. A municipality shall not adopt an ordinance, order or resolution approving the amended land use assumptions, infrastructure improvements plan or development fee as an emergency measure. 7. The advisory committee established under subsection G of this section shall file its written comments on any proposed or updated land use assumptions, Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2018-20 - State Statute A-4Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2020-22 - State Statute A-4 infrastructure improvements plan and development fees before the fifth business day before the date of the public hearing on the proposed or updated assumptions, plan and fees. 8. If, at the time an update as prescribed in paragraph 3 of this subsection is required, the municipality determines that no changes to the land use assumptions, infrastructure improvements plan or development fees are needed, the municipality may as an alternative to the updating requirements of this subsection publish notice of its determination on its website and include the following: (a) A statement that the municipality has determined that no change to the land use assumptions, infrastructure improvements plan or development fee is necessary. (b) A description and map of the service area in which an update has been determined to be unnecessary. (c) A statement that by a specified date, which shall be at least sixty days after the date of publication of the first notice, a person may make a written request to the municipality requesting that the land use assumptions, infrastructure improvements plan or development fee be updated. (d) A statement identifying the person or entity to whom the written request for an update should be sent. 9. If, by the date specified pursuant to paragraph 8 of this subsection, a person requests in writing that the land use assumptions, infrastructure improvements plan or development fee be updated, the municipality shall cause, accept or reject an update of the assumptions and plan to be prepared pursuant to this subsection. 10. Notwithstanding the notice and hearing requirements for adoption of an infrastructure improvements plan, a municipality may amend an infrastructure improvements plan adopted pursuant to this section without a public hearing if the amendment addresses only elements of necessary public services in the existing infrastructure improvements plan and the changes to the plan will not, individually or cumulatively with other amendments adopted pursuant to this subsection, increase the level of service in the service area or cause a development fee increase of greater than five per cent when a new or modified development fee is assessed pursuant to this section. The municipality shall provide notice of any such amendment at least thirty days before adoption, shall post the amendment on its website or on the website of an association of cities and towns if the municipality does not have a website and shall provide notice to the advisory committee established pursuant to subsection G of this section that the amendment complies with this subsection. E. For each necessary public service that is the subject of a development fee, the infrastructure improvements plan shall include: 1. A description of the existing necessary public services in the service area and the costs to upgrade, update, improve, expand, correct or replace those necessary public services to meet existing needs and usage and stricter safety, efficiency, environmental or regulatory standards, which shall be prepared by qualified professionals licensed in this state, as applicable. 2. An analysis of the total capacity, the level of current usage and commitments for usage of capacity of the existing necessary public services, which shall be prepared by qualified professionals licensed in this state, as applicable. Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2018-20 - State Statute A-5Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2020-22 - State Statute A-5 3. A description of all or the parts of the necessary public services or facility expansions and their costs necessitated by and attributable to development in the service area based on the approved land use assumptions, including a forecast of the costs of infrastructure, improvements, real property, financing, engineering and architectural services, which shall be prepared by qualified professionals licensed in this state, as applicable. 4. A table establishing the specific level or quantity of use, consumption, generation or discharge of a service unit for each category of necessary public services or facility expansions and an equivalency or conversion table establishing the ratio of a service unit to various types of land uses, including residential, commercial and industrial. 5. The total number of projected service units necessitated by and attributable to new development in the service area based on the approved land use assumptions and calculated pursuant to generally accepted engineering and planning criteria. 6. The projected demand for necessary public services or facility expansions required by new service units for a period not to exceed ten years. 7. A forecast of revenues generated by new service units other than development fees, which shall include estimated state-shared revenue, highway users revenue, federal revenue, ad valorem property taxes, construction contracting or similar excise taxes and the capital recovery portion of utility fees attributable to development based on the approved land use assumptions, and a plan to include these contributions in determining the extent of the burden imposed by the development as required in subsection B, paragraph 12 of this section. F. A municipality's development fee ordinance shall provide that a new development fee or an increased portion of a modified development fee shall not be assessed against a development for twenty-four months after the date that the municipality issues the final approval for a commercial, industrial or multifamily development or the date that the first building permit is issued for a residential development pursuant to an approved site plan or subdivision plat, provided that no subsequent changes are made to the approved site plan or subdivision plat that would increase the number of service units. If the number of service units increases, the new or increased portion of a modified development fee shall be limited to the amount attributable to the additional service units. The twenty-four month period shall not be extended by a renewal or amendment of the site plan or the final subdivision plat that was the subject of the final approval. The municipality shall issue, on request, a written statement of the development fee schedule applicable to the development. If, after the date of the municipality's final approval of a development, the municipality reduces the development fee assessed on development, the reduced fee shall apply to the development. G. A municipality shall do one of the following: 1. Before the adoption of proposed or updated land use assumptions, infrastructure improvements plan and development fees as prescribed in subsection D of this section, the municipality shall appoint an infrastructure improvements advisory committee, subject to the following requirements: (a) The advisory committee shall be composed of at least five members who are appointed by the governing body of the municipality. At least fifty per cent of the members of the advisory committee must be representatives of the real estate, Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2018-20 - State Statute A-6Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2020-22 - State Statute A-6 development or building industries, of which at least one member of the committee must be from the home building industry. Members shall not be employees or officials of the municipality. (b) The advisory committee shall serve in an advisory capacity and shall: (i) Advise the municipality in adopting land use assumptions and in determining whether the assumptions are in conformance with the general plan of the municipality. (ii) Review the infrastructure improvements plan and file written comments. (iii) Monitor and evaluate implementation of the infrastructure improvements plan. (iv) Every year file reports with respect to the progress of the infrastructure improvements plan and the collection and expenditures of development fees and report to the municipality any perceived inequities in implementing the plan or imposing the development fee. (v) Advise the municipality of the need to update or revise the land use assumptions, infrastructure improvements plan and development fee. (c) The municipality shall make available to the advisory committee any professional reports with respect to developing and implementing the infrastructure improvements plan. (d) The municipality shall adopt procedural rules for the advisory committee to follow in carrying out the committee's duties. 2. In lieu of creating an advisory committee pursuant to paragraph 1 of this subsection, provide for a biennial certified audit of the municipality's land use assumptions, infrastructure improvements plan and development fees. An audit pursuant to this paragraph shall be conducted by one or more qualified professionals who are not employees or officials of the municipality and who did not prepare the infrastructure improvements plan. The audit shall review the progress of the infrastructure improvements plan, including the collection and expenditures of development fees for each project in the plan, and evaluate any inequities in implementing the plan or imposing the development fee. The municipality shall post the findings of the audit on the municipality's website or the website of an association of cities and towns if the municipality does not have a website and shall conduct a public hearing on the audit within sixty days of the release of the audit to the public. H. On written request, an owner of real property for which a development fee has been paid after July 31, 2014 is entitled to a refund of a development fee or any part of a development fee if: 1. Pursuant to subsection B, paragraph 6 of this section, existing facilities are available and service is not provided. 2. The municipality has, after collecting the fee to construct a facility when service is not available, failed to complete construction within the time period identified in the infrastructure improvements plan, but in no event later than the time period specified in paragraph 3 of this subsection. 3. For a development fee other than a development fee for water or wastewater facilities, any part of the development fee is not spent as authorized by this section within ten years after the fee has been paid or, for a development fee for water or wastewater facilities, any part of the development fee is not spent as authorized by this section within fifteen years after the fee has been paid. Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2018-20 - State Statute A-7Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2020-22 - State Statute A-7 I. If the development fee was collected for the construction of all or a portion of a specific item of infrastructure, and on completion of the infrastructure the municipality determines that the actual cost of construction was less than the forecasted cost of construction on which the development fee was based and the difference between the actual and estimated cost is greater than ten per cent, the current owner may receive a refund of the portion of the development fee equal to the difference between the development fee paid and the development fee that would have been due if the development fee had been calculated at the actual construction cost. J. A refund shall include any interest earned by the municipality from the date of collection to the date of refund on the amount of the refunded fee. All refunds shall be made to the record owner of the property at the time the refund is paid. If the development fee is paid by a governmental entity, the refund shall be paid to the governmental entity. K. A development fee that was adopted before January 1, 2012 may continue to be assessed only to the extent that it will be used to provide a necessary public service for which development fees can be assessed pursuant to this section and shall be replaced by a development fee imposed under this section on or before August 1, 2014. Any municipality having a development fee that has not been replaced under this section on or before August 1, 2014 shall not collect development fees until the development fee has been replaced with a fee that complies with this section. Any development fee monies collected before January 1, 2012 remaining in a development fee account: 1. Shall be used towards the same category of necessary public services as authorized by this section. 2. If development fees were collected for a purpose not authorized by this section, shall be used for the purpose for which they were collected on or before January 1, 2020, and after which, if not spent, shall be distributed equally among the categories of necessary public services authorized by this section. L. A moratorium shall not be placed on development for the sole purpose of awaiting completion of all or any part of the process necessary to develop, adopt or update development fees. M. In any judicial action interpreting this section, all powers conferred on municipal governments in this section shall be narrowly construed to ensure that development fees are not used to impose on new residents a burden all taxpayers of a municipality should bear equally. N. Each municipality that assesses development fees shall submit an annual report accounting for the collection and use of the fees for each service area. The annual report shall include the following: 1. The amount assessed by the municipality for each type of development fee. 2. The balance of each fund maintained for each type of development fee assessed as of the beginning and end of the fiscal year. 3. The amount of interest or other earnings on the monies in each fund as of the end of the fiscal year. 4. The amount of development fee monies used to repay: (a) Bonds issued by the municipality to pay the cost of a capital improvement project that is the subject of a development fee assessment, including the amount Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2018-20 - State Statute A-8Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2020-22 - State Statute A-8 needed to repay the debt service obligations on each facility for which development fees have been identified as the source of funding and the time frames in which the debt service will be repaid. (b) Monies advanced by the municipality from funds other than the funds established for development fees in order to pay the cost of a capital improvement project that is the subject of a development fee assessment, the total amount advanced by the municipality for each facility, the source of the monies advanced and the terms under which the monies will be repaid to the municipality. 5. The amount of development fee monies spent on each capital improvement project that is the subject of a development fee assessment and the physical location of each capital improvement project. 6. The amount of development fee monies spent for each purpose other than a capital improvement project that is the subject of a development fee assessment. O. Within ninety days following the end of each fiscal year, each municipality shall submit a copy of the annual report to the city clerk and post the report on the municipality's website or the website of an association of cities and towns if the municipality does not have a website. Copies shall be made available to the public on request. The annual report may contain financial information that has not been audited. P. A municipality that fails to file the report and post the report on the municipality's website or the website of an association of cities and towns if the municipality does not have a website as required by this section shall not collect development fees until the report is filed and posted. Q. Any action to collect a development fee shall be commenced within two years after the obligation to pay the fee accrues. R. A municipality may continue to assess a development fee adopted before January 1, 2012 for any facility that was financed before June 1, 2011 if: 1. Development fees were pledged to repay debt service obligations related to the construction of the facility. 2. After August 1, 2014, any development fees collected under this subsection are used solely for the payment of principal and interest on the portion of the bonds, notes or other debt service obligations issued before June 1, 2011 to finance construction of the facility. S. Through August 1, 2014, a development fee adopted before January 1, 2012 may be used to finance construction of a facility and may be pledged to repay debt service obligations if: 1. The facility that is being financed is a facility that is described under subsection T, paragraph 7, subdivisions (a) through (g) of this section. 2. The facility was included in an infrastructure improvements plan adopted before June 1, 2011. 3. The development fees are used for the payment of principal and interest on the portion of the bonds, notes or other debt service obligations issued to finance construction of the necessary public services or facility expansions identified in the infrastructure improvement plan. T. For the purposes of this section: 1. "Dedication" means the actual conveyance date or the date an improvement, facility or real or personal property is placed into service, whichever occurs first. Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2018-20 - State Statute A-9Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2020-22 - State Statute A-9 2. "Development" means: (a) The subdivision of land. (b) The construction, reconstruction, conversion, structural alteration, relocation or enlargement of any structure that adds or increases the number of service units. (c) Any use or extension of the use of land that increases the number of service units. 3. "Facility expansion" means the expansion of the capacity of an existing facility that serves the same function as an otherwise new necessary public service in order that the existing facility may serve new development. Facility expansion does not include the repair, maintenance, modernization or expansion of an existing facility to better serve existing development. 4. "Final approval" means: (a) For a nonresidential or multifamily development, the approval of a site plan or, if no site plan is submitted for the development, the approval of a final subdivision plat. (b) For a single family residential development, the approval of a final subdivision plat. 5. "Infrastructure improvements plan" means a written plan that identifies each necessary public service or facility expansion that is proposed to be the subject of a development fee and otherwise complies with the requirements of this section, and may be the municipality's capital improvements plan. 6. "Land use assumptions" means projections of changes in land uses, densities, intensities and population for a specified service area over a period of at least ten years and pursuant to the general plan of the municipality. 7. "Necessary public service" means any of the following facilities that have a life expectancy of three or more years and that are owned and operated by or on behalf of the municipality: (a) Water facilities, including the supply, transportation, treatment, purification and distribution of water, and any appurtenances for those facilities. (b) Wastewater facilities, including collection, interception, transportation, treatment and disposal of wastewater, and any appurtenances for those facilities. (c) Storm water, drainage and flood control facilities, including any appurtenances for those facilities. (d) Library facilities of up to ten thousand square feet that provide a direct benefit to development, not including equipment, vehicles or appurtenances. (e) Street facilities located in the service area, including arterial or collector streets or roads that have been designated on an officially adopted plan of the municipality, traffic signals and rights-of-way and improvements thereon. (f) Fire and police facilities, including all appurtenances, equipment and vehicles. Fire and police facilities do not include a facility or portion of a facility that is used to replace services that were once provided elsewhere in the municipality, vehicles and equipment used to provide administrative services, helicopters or airplanes or a facility that is used for training firefighters or officers from more than one station or substation. (g) Neighborhood parks and recreational facilities on real property up to thirty acres in area, or parks and recreational facilities larger than thirty acres if the facilities provide a direct benefit to the development. Park and recreational facilities Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2018-20 - State Statute A-10Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2020-22 - State Statute A-10 do not include vehicles, equipment or that portion of any facility that is used for amusement parks, aquariums, aquatic centers, auditoriums, arenas, arts and cultural facilities, bandstand and orchestra facilities, bathhouses, boathouses, clubhouses, community centers greater than three thousand square feet in floor area, environmental education centers, equestrian facilities, golf course facilities, greenhouses, lakes, museums, theme parks, water reclamation or riparian areas, wetlands, zoo facilities or similar recreational facilities, but may include swimming pools. (h) Any facility that was financed and that meets all of the requirements prescribed in subsection R of this section. 8. "Qualified professional" means a professional engineer, surveyor, financial analyst or planner providing services within the scope of the person's license, education or experience. 9. "Service area" means any specified area within the boundaries of a municipality in which development will be served by necessary public services or facility expansions and within which a substantial nexus exists between the necessary public services or facility expansions and the development being served as prescribed in the infrastructure improvements plan. 10. "Service unit" means a standardized measure of consumption, use, generation or discharge attributable to an individual unit of development calculated pursuant to generally accepted engineering or planning standards for a particular category of necessary public services or facility expansions. Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2018-20 - State Statute A-11Town of Fountain Hills, AZ Biennial Development Impact Fee Audit FY 2020-22 - State Statute A-11 APPENDIX B Parks and Recreation Analysis FY 2021‐21 FY 2021‐22 Total Actual Development FY 2021‐21 FY 2021‐22 Total Revenues Single Family (1)52 129 181 Impact Fees $257,342 $308,862 $566,204 Multifamily (1)159 2 161 Interest Income 346 448 794 Industrial (2)0.00 0.00 0.00 Total Revenues 257,688 309,310 566,998 Commercial (2)59.18 43.46 102.64 Institutional (2)212.20 0.00 212.20 Expenditures Office (2)0.00 0.00 0.00 Capital Expenditures 40,000 110,000 150,000 Professional Fees 0 0 0 Projected Development Interest Expense 0 0 0 Single Family (1)66 66 132 Debt Service 0 0 0 Multifamily (1)38 38 76 Total Expenditures 40,000 110,000 150,000 Industrial (2)1.00 1.00 2.000 Commercial (2)18.00 18.00 36.000 IIP Projects Institutional (2)11.00 12.00 23.000 Incremental Expenditures (1)$207,498 $206,788 $414,286 Office (2)6.00 5.00 11.000 Actual Projects (1) Dwelling units Community Services Master Plan 40,000 0 40,000 (2) 1,000 Square feet Splash Pad Renovation 0 110,000 110,000 Total Actual Projects 40,000 110,000 150,000 (1) No specific projects were identified in the IIP, but rather anticipated expenditures based on anticipated development Parks Parks Town of Fountain Hills, Az Development Impact Fee Biennial Audit 2020-22 - Parks and Recreation Anslysis B-1 APPENDIX C Fire & EMS Analysis FY 2020‐21 FY 2021‐22 Total Actual Development FY 2020‐21 FY 2021‐22 Total Revenues Single Family (1)52 129 181 Impact Fees $63,248 $28,025 $91,273 Multifamily (1)159 2 161 Interest Income 133 152 285 Industrial (2)0.00 0.00 0.00 Total Revenues 63,381 28,177 91,558 Commercial (2)59.18 43.46 102.64 Institutional (2)212.20 0.00 212.20 Expenditures Office (2)0.00 0.00 0.00 Capital Expenditures 0 0 0 Professional Fees 0 0 0 (1) Dwelling units Interest Expense 0 0 0 (2) 1,000 Square feet Debt Service 0 0 0 Total Expenditures 00 0 Projected Development IIP Projects Single Family (1)66 66 132 Incremental Expenditures (1)$15,984 $15,864 $31,848 Multifamily (1)38 38 76 Industrial (2)1.00 1.00 2.00 Actual Projects 00 0 Commercial (2)18.00 18.00 36.00 Institutional (2)11.00 12.00 23.00 Office (2)6.00 5.00 11.00 (1) No specific projects were identified in the IIP, but rather anticipated expenditures based on anticipated development (1) Dwelling units (2) 1,000 Square feet Fire and EMS Fire and EMS Town of Fountain Hills, Az Development Impact Fee Biennial Audit FY 2020-22 - Fire & EMS Analysis C-1 APPENDIX D Streets FY 2020‐21 FY 2021‐22 Total Actual Development FY 2020‐21 FY 2021‐22 Total Revenues Single Family (1)52 129 181 Impact Fees $77,867 $258,274 $336,141 Multifamily (1)159 2 161 Interest Income 6 94 100 Industrial (2)0.00 0.00 0.00 Total Revenues 77,873 258,368 336,241 Commercial (2)59.18 43.46 102.64 Institutional (2)212.20 0.00 212.20 Expenditures Office (2)0.00 0.00 0.00 Capital Expenditures 0 0 0 Professional Fees 0 0 0 (1) Dwelling units Interest Expense 0 0 0 (2) 1,000 Square feet Debt Service 0 0 0 Total Expenditures 000 Projected Development IIP Projects Single Family (1)66 66 132 Incremental Expenditures (1)$251,172 $252,412 $503,584 Multifamily (1)38 38 76 Industrial (2)1.00 1.00 2.00 Actual Projects 000 Commercial (2)18.00 18.00 36.00 Institutional (2)11.00 12.00 23.00 (1) Projects were identified in the IIP over the entire study period Office (2)6.00 5.00 11.00 as opposed to in a specific year (1) Dwelling units (2) 1,000 Square feet Streets Streets Town of Fountain Hills, Az Development Impact Fee Biennial Audit FY 2020-22 - Streets D-1 APPENDIX E Permit Sampling Results Sample No. Permit No. Class Fee Category Assessed Fee Adopted Fee Difference Notes FY 2020‐21 1 BP2020‐648 SFR Parks and Recreation $1,916.00 $1,916.00 $0.00 2 BP2021‐23 SFR Parks and Recreation 1,916.00 1,916.00 0.00 3 BP 2020‐572 SFR Parks and Recreation 1,916.00 1,916.00 0.00 4 BP2021‐551 SFR Parks and Recreation 1,916.00 1,916.00 0.00 5 BP2020‐398 SFR Parks and Recreation 1,916.00 1,916.00 0.00 6 BP2020‐563 SFR Parks and Recreation 1,916.00 1,916.00 0.00 7 BP2020‐562 SFR Parks and Recreation 1,916.00 1,916.00 0.00 8 BP2020‐566 SFR Parks and Recreation 1,916.00 1,916.00 0.00 9 BP2020‐496 SFR Parks and Recreation 1,916.00 1,916.00 0.00 10 BP2020‐630 SFR Parks and Recreation 1,916.00 1,916.00 0.00 11 BP2020‐182 SFR Parks and Recreation 1,301.00 1,916.00 (615.00) Old Rate 12 BP2020‐210 SFR Parks and Recreation 1,301.00 1,916.00 (615.00) Old Rate 13 BP2020‐289 SFR Parks and Recreation 1,916.00 1,916.00 0.00 14 BP2020‐452 SFR Parks and Recreation 1,916.00 1,916.00 0.00 15 BP2021‐119 Duplex Parks and Recreation 2,958.00 2,958.00 0.00 2 Units 16 BP2020‐326 MFR Parks and Recreation 42,891.00 42,891.00 0.00 29 Units 17 BP2020‐325 MFR Parks and Recreation 41,412.00 41,412.00 0.00 28 Units 18 BP2021‐119 MFR Parks and Recreation 13,311.00 13,311.00 0.00 9 Units 19 BP2020‐323 MFR Parks and Recreation 67,652.00 76,908.00 (9,256.00) Old Rate 52 Units Single Family/Multifamily Town of Fountain Hills, Az Biennial Impact Fee Audit FY 2020-22 - Permit Sampling E-1 Sample No. Permit No. Class Fee Category Assessed Fee Adopted Fee Difference Notes FY 2020‐21 1 BP2020‐648 SFR Fire and EMS $122.00 $122.00 $0.00 2 BP2021‐23 SFR Fire and EMS 122.00 122.00 0.00 3 BP 2020‐572 SFR Fire and EMS 122.00 122.00 0.00 4 BP2021‐551 SFR Fire and EMS 122.00 122.00 0.00 5 BP2020‐398 SFR Fire and EMS 122.00 122.00 0.00 6 BP2020‐563 SFR Fire and EMS 122.00 122.00 0.00 7 BP2020‐562 SFR Fire and EMS 122.00 122.00 0.00 8 BP2020‐566 SFR Fire and EMS 122.00 122.00 0.00 9 BP2020‐496 SFR Fire and EMS 122.00 122.00 0.00 10 BP2020‐630 SFR Fire and EMS 122.00 122.00 0.00 11 BP2020‐182 SFR Fire and EMS 300.00 122.00 178.00 Old Rate 12 BP2020‐210 SFR Fire and EMS 300.00 122.00 178.00 Old Rate 13 BP2020‐289 SFR Fire and EMS 122.00 122.00 0.00 14 BP2020‐452 SFR Fire and EMS 122.00 122.00 0.00 15 BP2021‐119 Duplex Fire and EMS 188.00 188.00 0.00 2 Units 16 BP2020‐326 MFR Fire and EMS 2,726.00 2,726.00 0.00 29 Units 17 BP2020‐325 MFR Fire and EMS 2,632.00 2,632.00 0.00 28 Units 18 BP2021‐119 MFR Fire and EMS 846.00 846.00 0.00 9 Units 19 BP2020‐323 MFR Fire and EMS 15,600.00 4,888.00 10,712.00 Old Rates 52 Units Single Family/Multifamily Town of Fountain Hills, Az Biennial Impact Fee Audit FY 2020-22 - Permit Sampling E-2 Sample No. Permit No. Class Fee Category Assessed Fee Adopted Fee Difference Notes FY 2020‐21 1 BP2020‐648 SFR Streets $1,935.00 $1,935.00 $0.00 2 BP2021‐23 SFR Streets 1,935.00 1,935.00 0.00 3 BP 2020‐572 SFR Streets 1,935.00 1,935.00 0.00 4 BP2021‐551 SFR Streets 1,935.00 1,935.00 0.00 5 BP2020‐398 SFR Streets 1,935.00 1,935.00 0.00 6 BP2020‐563 SFR Streets 1,935.00 1,935.00 0.00 7 BP2020‐562 SFR Streets 1,935.00 1,935.00 0.00 8 BP2020‐566 SFR Streets 1,935.00 1,935.00 0.00 9 BP2020‐496 SFR Streets 1,935.00 1,935.00 0.00 10 BP2020‐630 SFR Streets 1,935.00 1,935.00 0.00 11 BP2020‐182 SFR Streets 0.00 1,935.00 (1,935.00) Old Rate 12 BP2020‐210 SFR Streets 0.00 1,935.00 (1,935.00) Old Rate 13 BP2020‐289 SFR Streets 1,935.00 1,935.00 0.00 14 BP2020‐452 SFR Streets 1,935.00 1,935.00 0.00 15 BP2021‐119 Duplex Streets 1,928.00 1,928.00 0.00 2 Units 16 BP2020‐326 MFR Streets 27,956.00 27,956.00 0.00 29 Units 17 BP2020‐325 MFR Streets 26,992.00 26,992.00 0.00 28 Units 18 BP2021‐119 MFR Streets 8,676.00 8,676.00 0.00 9 Units 19 BP2020‐323 MFR Streets 0.00 50,128.00 (50,128.00) Old Rates 52 Units Single Family/Multifamily Town of Fountain Hills, Az Biennial Impact Fee Audit FY 2020-22 - Permit Sampling E-3 Sample No. Permit No. Class Fee Category Assessed Fee Adopted Fee Difference Notes FY 2021‐22 1 BP2021‐553 SFR Parks and Recreation $1,916.00 $1,916.00 $0.00 2 BP2021‐373 SFR Parks and Recreation 1,916.00 1,916.00 0.00 3 BP2021‐374 SFR Parks and Recreation 1,916.00 1,916.00 0.00 4 BP2021‐375 SFR Parks and Recreation 1,916.00 1,916.00 0.00 5 BP2021‐470 SFR Parks and Recreation 1,916.00 1,916.00 0.00 6 BP2021‐391 SFR Parks and Recreation 1,916.00 1,916.00 0.00 7 BP2021‐422 SFR Parks and Recreation 1,916.00 1,916.00 0.00 8 BP2021‐238 SFR Parks and Recreation 1,916.00 1,916.00 0.00 9 BP2021‐233 SFR Parks and Recreation 1,916.00 1,916.00 0.00 10 BP2021‐479 SFR Parks and Recreation 1,916.00 1,916.00 0.00 11 BP2021‐203 SFR Parks and Recreation 1,916.00 1,916.00 0.00 12 B22‐000133 SFR Parks and Recreation 1,916.00 1,916.00 0.00 13 B22‐000154 SFR Parks and Recreation 1,916.00 1,916.00 0.00 14 B22‐000228 SFR Parks and Recreation 1,916.00 1,916.00 0.00 15 B22‐000239 SFR Parks and Recreation 1,916.00 1,916.00 0.00 16 B22‐000265 SFR Parks and Recreation 1,916.00 1,916.00 0.00 17 B22‐000298 SFR Parks and Recreation 1,916.00 1,916.00 0.00 18 B22‐000369 SFR Parks and Recreation 1,916.00 1,916.00 0.00 19 B22‐000371 SFR Parks and Recreation 1,916.00 1,916.00 0.00 20 B22‐000392 SFR Parks and Recreation 1,916.00 1,916.00 0.00 Single Family/Multifamily Town of Fountain Hills, Az Biennial Development Impact Fee Audit FY 2020-22 - Permit Sampling E-4 Sample No. Permit No. Class Fee Category Assessed Fee Adopted Fee Difference Notes FY 2021‐22 1 BP2021‐553 SFR Fire and EMS $122.00 $122.00 $0.00 2 BP2021‐373 SFR Fire and EMS 122.00 122.00 0.00 3 BP2021‐374 SFR Fire and EMS 122.00 122.00 0.00 4 BP2021‐375 SFR Fire and EMS 122.00 122.00 0.00 5 BP2021‐470 SFR Fire and EMS 122.00 122.00 0.00 6 BP2021‐391 SFR Fire and EMS 122.00 122.00 0.00 7 BP2021‐422 SFR Fire and EMS 122.00 122.00 0.00 8 BP2021‐238 SFR Fire and EMS 122.00 122.00 0.00 9 BP2021‐233 SFR Fire and EMS 122.00 122.00 0.00 10 BP2021‐479 SFR Fire and EMS 122.00 122.00 0.00 11 BP2021‐203 SFR Fire and EMS 122.00 122.00 0.00 12 B22‐000133 SFR Fire and EMS 122.00 122.00 0.00 13 B22‐000154 SFR Fire and EMS 122.00 122.00 0.00 14 B22‐000228 SFR Fire and EMS 122.00 122.00 0.00 15 B22‐000239 SFR Fire and EMS 122.00 122.00 0.00 16 B22‐000265 SFR Fire and EMS 122.00 122.00 0.00 17 B22‐000298 SFR Fire and EMS 122.00 122.00 0.00 18 B22‐000369 SFR Fire and EMS 122.00 122.00 0.00 19 B22‐000371 SFR Fire and EMS 122.00 122.00 0.00 20 B22‐000392 SFR Fire and EMS 122.00 122.00 0.00 Single Family/Multifamily Town of Fountain Hills, Az Biennial Development Impact Fee Audit FY 2020-22 - Permit Sampling E-5 Sample No. Permit No. Class Fee Category Assessed Fee Adopted Fee Difference Notes FY 2021‐22 1 BP2021‐553 SFR Streets $1,935.00 $1,935.00 $0.00 2 BP2021‐373 SFR Streets 1,935.00 1,935.00 0.00 3 BP2021‐374 SFR Streets 1,935.00 1,935.00 0.00 4 BP2021‐375 SFR Streets 1,935.00 1,935.00 0.00 5 BP2021‐470 SFR Streets 1,935.00 1,935.00 0.00 6 BP2021‐391 SFR Streets 1,935.00 1,935.00 0.00 7 BP2021‐422 SFR Streets 1,935.00 1,935.00 0.00 8 BP2021‐238 SFR Streets 1,935.00 1,935.00 0.00 9 BP2021‐233 SFR Streets 1,935.00 1,935.00 0.00 10 BP2021‐479 SFR Streets 1,935.00 1,935.00 0.00 11 BP2021‐203 SFR Streets 1,935.00 1,935.00 0.00 12 B22‐000133 SFR Streets 1,935.00 1,935.00 0.00 13 B22‐000154 SFR Streets 1,935.00 1,935.00 0.00 14 B22‐000228 SFR Streets 1,935.00 1,935.00 0.00 15 B22‐000239 SFR Streets 1,935.00 1,935.00 0.00 16 B22‐000265 SFR Streets 1,935.00 1,935.00 0.00 17 B22‐000298 SFR Streets 1,935.00 1,935.00 0.00 18 B22‐000369 SFR Streets 1,935.00 1,935.00 0.00 19 B22‐000371 SFR Streets 1,935.00 1,935.00 0.00 20 B22‐000392 SFR Streets 1,935.00 1,935.00 0.00 Single Family/Multifamily Town of Fountain Hills, Az Biennial Development Impact Fee Audit FY 2020-22 - Permit Sampling E-6 Sample No. Permit No. Class Fee Category Square Feet Rate $/sqft Assessed Fee Adopted Fee Difference Notes FY 2020‐21 1 BP2020‐403 Commercial Parks and Recreation 11,334 $0.81 $0.00 $9,180.54 ($9,180.54) Old Rate Sample No. Permit No. Class Fee Category Square Feet Rate $/sqft Assessed Fee Adopted Fee Difference Notes FY 2021‐22 1 NR21‐000021 Commercial Parks and Recreation 47,458 $0.81 $38,440.98 $38,440.98 $0.00 Non‐Residential Non‐Residential Town of Fountain Hills, Az Biennial Development Impact Fee Audit FY 2020-22 - Permit Sampling E-7 Sample No. Permit No. Class Fee Category Square Feet Rate $/sqft Assessed Fee Adopted Fee Difference Notes FY 2020‐21 1 BP2020‐403 Commercial Fire and EMS 11,334 $0.14 $1,586.76 $1,586.76 $0.00 Sample Permit No. Fee Category Square Feet Rate $/sqft Assessed Fee Adopted Fee Difference Notes FY 2021‐22 1 NR21‐000021 Commercial Fire and EMS 47,458 $0.14 $6,644.12 $6,644.12 $0.00 Non‐Residential Non‐Residential Town of Fountain Hills, Az Biennial Development Impact Fee Audit FY 2020-22 E-8 Sample No. Permit No. Class Fee Category Square Feet Rate $/sqft Assessed Fee Adopted Fee Difference Notes FY 2020‐21 1 BP2020‐403 Commercial Streets 11,334 $2.87 $32,415.24 $32,415.24 n/a Sample Permit No. Fee Category Square Feet Rate $/sqft Assessed Fee Adopted Fee Difference Notes FY 2021‐22 1 R21‐000021 Commercial Streets 47,458 $2.87 $136,204.46 $136,204.46 $0.00 Non‐Residential Non‐Residential Town of Fountain Hills, Az Biennial Development Impact Fee Audit FY 2020-22 - Permit Sampling E-9 1555 South Havana, Suite F-305 Aurora, Colorado 80012 800.755.6864 | Fax: 888.326.6864 www.willdan.com 3190 S Vaughn Way, Suite 550, Office 523 Aurora, Colorado 80014 800.755.6864 | Fax: 888.326.6864 www.willdan.com ITEM 8. C. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 11/15/2022 Meeting Type: Town Council Regular Meeting Agenda Type: Regular Agenda Submitting Department: Community Services Prepared by: Rachael Goodwin, Community Services Director Request to Town Council Regular Meeting (Agenda Language): CONSIDERATION AND POSSIBLE ACTION: Approval of supplemental funds for the Pumphouse Pilot Art Project. Staff Summary (Background) In June of 2022 the Fountain Hills Public Art Committee received Town Council approval for an outdoor art installation along the wall adjacent to the Pump House at Fountain Park (formerly known as the mural wall). This installation, to be named the "Pumphouse Pilot Art Project," is an outdoor exhibition with a call for artists to create work around a central theme: “Legends and Lore of the Valley of the Sun.” This project was intended to be a pilot program for a one-year period. During the evaluation period, public support of the project will determine if the public art committee continues with the program. The benefits of this project allow for professional art to be on display, changing every year, offering a fresh, new visual perspective and theme. The Pumphouse Pilot Art Project is an effort to replace the former mural that was removed in 2019. A new mural design was presented and approved by the Town Council in 2020. However, the Covid-19 pandemic stalled its installation. The public art committee has reconsidered the proposed mural and believes a rotating installation would be more efficient, more cost-effective, and create a renewed, sustainable interest in public art. Following Town Council approval, the committee issued a Call to Artists for submissions. An entry fee of $25 per submission was charged and proposals were accepted from early July through early September. Eight accepted art images will be transposed onto 4’ x 8’ Dibond brushed metal panels and be installed along the pump house wall. All mediums were considered with the correct proportioned dimensions. A bracket system proposed for the installation of artwork meets safety standards and is expected to withstand the heat and other impacts of outdoor use. Each panel will be on display for one year to ensure maximum exposure and visibility. Each art panel will have the artist’s name, the title of the piece, a small descriptive paragraph, and a potential sponsor of the panel. The public art committee anticipated more than 100 hundred submissions for this project. Despite efforts to promote the project, only 38 submissions have been received. Due to the low number of submissions, funding for the project has been reduced and the Fountain Hills Cultural and Civic Association does not have sufficient funding to underwrite the costs of this project. In order to move forward with this exhibit, alternative funding must be secured. The public art committee has requested use of the Fountain Hill's Public Art Fund to offset the costs for the project. A total of $12,730 is being requested from the Public Art Fund. The fund balance currently totals $76,676.56. Of note, the Town Council previously directed staff to have the Public Art Fund maintain an average of two years worth of maintenance, repair, and insurance expenditures, which is approximately $80,000. In the event that revenues are generated from the sale of the art panels at the conclusion of the pilot program or from sponsorships, the funds will be deposited back into the Public Art Fund. Cafe Website Call to Artist $700 Promotion on website $200 8 panels @ $750 $6,000 Brackets $3,000 (one-time charge, potential to reuse) Artist Stipend $2,400 Signage $300 Insurance $130 Total Expenses $12,730 Related Ordinance, Policy or Guiding Principle Public Art Policy. Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) Recommended by the Public Art Committee. Staff Recommendation(s) Staff recommends the approval of Public Art Funding for the Pumphouse Pilot Art Project. SUGGESTED MOTION MOVE to approve supplemental funds for Pumphouse Pilot Art Project. Attachments Mural Mock Up Mock Up Details Wall Mounting Extended Call to Artist - Deadline November 6, 2022 Form Review Inbox Reviewed By Date Community Services Director Rachael Goodwin 11/01/2022 04:39 PM Finance Director David Pock 11/02/2022 01:34 PM Town Attorney Aaron D. Arnson 11/02/2022 02:32 PM Town Manager Grady E. Miller 11/03/2022 12:28 PM Form Started By: Patti Lopuszanski Started On: 10/20/2022 02:21 PM Final Approval Date: 11/03/2022 Fountain Park Mural Project,.,.,.,.,.,.,.,.,.,..,.,.,.,.,.,.,.,.,.,.,.,.,.,.,.,.,.,.,..,.,.,.,.,.,.,.,..,.,., PUBLIC ART COMMITTEE RECOMMENDATION "PUMPHOUSE PROJECT" <----- This is an approximate 4'x8' Art Work to scale on the park wall. Art Mural panels to be hung with a universal mounting system that can be utilized every year without the need to drill or mount new hangers Small rectangular detail in image is an information plaque with Artist Name, Title of Work, Contact Information and Price <----- Signage displaying an overview of the Public Art Murals Project. Mounted on east end of wall closest to Veterans Memorial 4' X 8' PANEL PUBLIC ART COMMITTEE RECOMMENDATION "PUMPHOUSE PROJECT" Mounting Detail <----- Art to be mounted by means of temporary reposition-able steel brackets • No need for holes to be drilled in wall • Wind and Theft secure • Easily coordinated and reusable <----- Secured to wall on back side of wall by means of a pinch mechanism (bolt) not accessible to the public Art is first secured to the bracket by hidden bolts not accessible once bracket is hung over the wall Painted to match wall color Title Plaque 4' X 8' PANEL ©© ©© <---- 4'-6'----><----------- 72"-----------> <---BOLTS---> <-12"-> How to install artwork with an ALUMINUM MUSEUM BACK and a “Z-Clip”. 8970 East Bahia Drive | Scottsdale, AZ 85260 480-948-0009 artisancolour.com artisanhd.com 2 4 2 1 3 4” MARK CENTER LINE “Z-CLIP” 4” 2” 2” 2” 1 2 3 4IMPORTANT NOTE! Determine the location of where your art is to be mounted to the wall. Find the center point of your artwork and determine the height from the ﬂoor. It is your responsibility to determine what type of mounting screw/anchors will be appropriate for the type of surface structure you are mounting your artwork to. Now that the “Z-Clip” is securely mounted to the wall - artwork is ready to hang/install. Simply let the top section of the aluminum frame “rest” on the “Z-Clip”. Install complete! Mount the “Z-Clip” to the wall - IMPORTANT: CLIP MUST BE LEVEL! This is the most important part of the installation. Use a pencil or other marking device to mark location of the mounting holes of the “Z-Clip”. Double check to conﬁrm that the “Z-Clip” is LEVEL! Close-up is 1:1 Ratio ITEM 8. D. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 11/15/2022 Meeting Type: Town Council Regular Meeting Agenda Type: Regular Agenda Submitting Department: Development Services Prepared by: John Wesley, Development Services Director Staff Contact Information: John Wesley, Development Services Director Request to Town Council Regular Meeting (Agenda Language): HOLD A PUBLIC HEARING, CONSIDERATION AND POSSIBLE ACTION: Adoption of Resolution 2022-43, declaring the Special Use Permit Ordinance a public record, and adoption of Ordinance 22-07 repealing and replacing Zoning Ordinance, Chapter 2, Section 2.02, Special Use Permits. Staff Summary (Background) Chapter 2 of the Zoning Ordinance provides the procedures for rezoning, special use permits, temporary use permits, site plans, appeals, and variances. Staff has found a need to update and modernize each of these sections, to make them more readable and consistent, and to address some issues found within each of the sections. Because this is a lot of material and because each section can stand alone, staff is processing the changes one section at a time. Staff has looked at and prepared draft language for each section of Chapter 2 that needs to be updated. This has been done to create a consistent structure in each chapter to ease use in the future and ensure consistency in each section. Staff is starting the review with Section 2.02, Special Use Permits, because it is used more frequently than Section 2.01, Amendments or Zoning Changes. The next section to be reviewed will be Section 2.04, Site Plans. Special use permits are set up for each zoning district for uses which may or may not be compatible with the zoning district depending on the setting. Special use permit requests are reviewed by the Planning and Zoning Commission and approved by the Town Council following public input. Conditions can be placed on the approval of a special use permit to address compatibility concerns. Staff believes amendments are needed to this section to: Provide consistency in requirements with other types of applications, Update application requirements and procedures to current practice, Clarify site plan requirements, Clarify that the Permit is reviewed as a Public Hearing, Clarify and improve notice requirements, Add options to what can be required as part of approval of a Special Use Permit, and Provide direction for modification of an approved Special Use Permit. A copy of the existing Section 2.02, a strike through version of the current ordinance, and a clean copy of the revised Section 2.02 are attached for your review. The following is a description of the primary changes. 2.02 A. Purpose. There are no changes to this section 2.02 B. Application (2.02 C in the existing ordinance. Existing 2.02 B moved to 2.02 I). This section has been revised to reflect our change from paper applications to online applications. The revised ordinance contains more detail as to the information to be provided in a project narrative. The existing ordinance allows the Zoning Administrator to require a site plan. The revised ordinance requires the site plan, but then allows for exceptions. Requires submission of a "Good Neighbor Statement", as applicable. This section provides a description of what should be in such a statement, but also leaves some flexibility based on the nature of the application. The revised ordinance adds the requirement for submitting the Citizen Participation Plan required by Section 2.08. States the requirement to submit the names of property owners for notification. Provides for the filing fee. 2.02 C. Review (mostly new). Establishes the need to determine a complete application before processing begins. Establishes that staff will review, comment on, and require revisions until ready for hearing and will then prepare a report with recommendations. Includes general review criteria from current Sec. 2.02 D 1. Gives staff a maximum of three months to review a complete application and place it on a Commission agenda. Establishes that the SUP shall be placed on the next available Council agenda at least 28 days following the Commission action. This addresses Commission discussion following staff recommendation to remove the current 8-day requirement to get on a Town Council agenda. This wording works with current processing timelines, addresses a long Council summer break, but still gives the applicant and public an expectation as to when the request will be on a Council agenda. 2.02 D. Notice (2.02 D 2 in the existing ordinance). Current ordinance requires site posting and mailed notice. Practice has also been to publish notice so that has been added. The revised ordinance includes all three forms of notice. Revised ordinance includes the requirement for a minimum 15-day notice which has been the practice. 2.02 E Hearings (mostly new) Provides an overview of the hearing process. Describes who can appear, what information can be presented, and the ability for the presiding officer to set time limits. Allows for investigations by the decision body Requires a written summary of the testimony and action. 2.02 F. Action (2.02 D & E in the existing ordinance). Mostly the same, just re-organized. A requirement for a maximum 90-day continuance at Planning and Zoning Commission and allows the applicant to request a longer continuance. Allows modification of the "Good Neighbor Statement" submitted with the SUP to address issues that arise during Commission or Council review. Current ordinance requires the SUP to be heard by the Town Council at the next meeting at least 8 days after the Commission recommendation. We often go to the second meeting after the Commission meeting to have minutes done and to meet the processing requirements for Council. This requirement has been omitted from the revised ordinance. 2.02 G. Time Limits (2.02 F in existing ordinance) Gives 6 months to apply for a building permit and one year to obtain a building permit. An applicant can request an extension. Unless a different time limit is set by Council in their approval, if a use requested through a SUP is not begun within 18 months of Council approval, it terminates. 2.02 H. Revocation (2.02 G in existing ordinance). No changes to this section. 2.02 I. General Regulations (2.02 B in the existing ordinance). This was moved to maintain a more consistent format with the other sections. No changes to this section. 2.02 J. Modifications and Amendments (new). This section is new, the current ordinance gives no direction on how to consider modifications or amendments to an approved SUP Defines minor and major modifications. Minor modifications can be approved administratively, major modifications are processed like new applications. Amendments are defined and are processed like new applications. Related Ordinance, Policy or Guiding Principle N/A Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) The Planning and Zoning Commission discussed this text amendment at two meetings. Several modifications were proposed to the initial staff draft ordinance. There was one comment from the public as the first meeting but none at the second meeting. The Planning and Zoning Commission recommends approval of the ordinance as submitted. Staff Recommendation(s) Because of the length of the ordinance, it is necessary to establish the ordinance as a public document through approval of a resolution and the use the ordinance to adopt the document attached to the resolution. Therefore, the Council will be taking action to approve both a resolution and an ordinance. Staff recommends approval of Resolution 2022-43 and Ordinance 22-07. SUGGESTED MOTION MOVE to adopt Resolution 2022-43 and Ordinance 22-07. Attachments Existing Section 2.02 Strike through ordinance Resolution 2022-43, Revised Section 2.02 Ordinance 22-07 Form Review Form Review Inbox Reviewed By Date Development Services Director (Originator)John Wesley 10/20/2022 10:49 AM Finance Director David Pock 10/24/2022 07:10 AM Town Attorney Aaron D. Arnson 10/24/2022 08:01 AM Town Manager Grady E. Miller 10/24/2022 08:46 AM Development Services Director (Originator)John Wesley 10/24/2022 10:09 AM Form Started By: John Wesley Started On: 10/19/2022 09:48 AM Final Approval Date: 10/24/2022 Section 2.02 Special Use Permits A. Purpose: Every zoning district contains certain buildings, structures and uses of land which are normal and complementary to permitted uses in the district, but which, by reason of their typical physical or operational characteristics, influence on the traffic function of adjoining streets, or similar conditions, are often incompatible with adjacent activities and uses. It is the intent of this ordinance to permit special uses in appropriate zoning districts, but only in specific locations within such districts that can be designed and developed in a manner which assures maximum compatibility with adjoining uses. It is the purpose of this section to establish principles and procedures essential to proper guidance and control of such uses. B. General Regulations: 1. Zoning district regulations established elsewhere in this ordinance specify that certain buildings, structures and uses of land may be allowed by the Town Council as conditional uses in a given district subject to the provisions of this section and to requirements set forth in district regulations. The Town Council is empowered to grant and to deny applications for use permits and to impose reasonable conditions upon them. 2. Any building, structure or use existing on the effective date of this ordinance which is reclassified as a special use by this ordinance for the district in which it is located shall be considered as meeting the conditions which would otherwise be imposed upon such use by this ordinance, and its continuance shall not be subject to issuance of a special use permit; provided, however, to the extent that such use fails to conform to the requirements of this ordinance, it shall be considered nonconforming as described in section 4.01, and its continuance shall be governed by all nonconforming use regulations applicable thereto. 3. Every special use permit issued shall be applicable only to the specific use and to the specific property for which it is issued. Upon completion and final inspection by the Zoning Administrator of any authorized structures, signifying that all zoning and site development requirements imposed in connection with the permit have been satisfied, the special use permit shall thereafter be transferable and shall run with the land, whereupon the maintenance of special conditions imposed by the permit, as well as the compliance with other provisions of this ordinance, shall become the responsibility of the property owner. C. Special Use Permit Application: 1. Application for a use permit shall be filed with the Development Services Department on a form prescribed by the Development Services Department. The application shall be forwarded to the Commission by the Planning and Zoning Division, and when required by the Zoning Administrator, shall be accompanied by a detailed site plan prepared in accordance with Section 2.04 showing all information necessary to demonstrate that the proposed use will comply with all special conditions as well as other regulations and requirements of this Zoning Ordinance. An applicant may furnish the Commission with any additional information it may consider relevant to the case. D. Commission Action and Findings: 2.02 Special Use Permits | Fountain Hills Zoning Ordinance Page 1 of 4 The Fountain Hills Zoning Ordinance is current through Ordinance 22-01, passed May 3, 2022. 1. It is the express intent of this ordinance that any use for which a special use permit is required shall be permitted in the particular zoning district; provided, that all special conditions and requirements of this ordinance are met. Therefore, the action of the Commission shall be one of recommending approval or denial to the Town Council based upon its judgment as to whether the specified conditions have been or will be met. The Commission shall consider not only the nature of the use and the special conditions influencing its location in the particular district, but also the proposed location of buildings, parking and other facilities within the site, the amount of traffic likely to be generated and how it will be accommodated, and the influence that such factors are likely to exert on adjoining properties. The Commission may make such suggestions to the Town Council concerning ways a proposed project may be acceptable and compatible to the area. 2. Notice of the nature of the special use permit application and the date of the meeting at which it will be considered shall be posted on the property and shall be mailed to the owners of all real property within three hundred (300) feet of the external boundaries of the property for which application is made. The applicant shall be responsible for providing the names and addresses of these owners. 3. The Commission shall consider the application at the first regular meeting after the proper advertising procedures and period have been completed. The Commission, at this regularly scheduled meeting, shall either (1) make a recommendation to the Town Council, or continue the matter to a specified date (but not longer than sixty (60) days from the date of the original hearing). Within sixty (60) days after the date of the original hearing, the Commission shall render its decision in the form of a written recommendation to the Council. The recommendation shall include the rationale for the recommendation. However, if the Commission is not able to make a recommendation to the Council at the continued meeting and the applicant does not consent to a further continuance, the matter shall be automatically forwarded to the Council with a recommendation for denial. 4. It shall be the responsibility of the applicant to maintain the posting. The notice shall set forth the time and place of the hearing and include a general explanation of the matter to be considered and a general description of the area affected. 5. In order to recommend approval of any use permit, the findings of the Commission must be that the establishment, maintenance, or operation of the use or building applied for will not be detrimental to the public health, safety, peace, comfort, and general welfare of persons residing or working in the neighborhood of such proposed use, nor shall it be detrimental or injurious to property and improvements in the neighborhood or to the general welfare of the Town. 6. The Commission may recommend to the Town Council such conditions in connection with the use permit as it deems appropriate to secure the intent and purposes of this ordinance and may recommend such guarantees and evidence that such conditions are being or will be followed. 7. If the Commission finds that the application and supporting data do not indicate that all applicable conditions and requirements of this ordinance will be met, it may recommend denial of the special use permit. The Commission recommendation shall be mailed to the applicant at the address shown on the application. 2.02 Special Use Permits | Fountain Hills Zoning Ordinance Page 2 of 4 The Fountain Hills Zoning Ordinance is current through Ordinance 22-01, passed May 3, 2022. 8. Upon conclusion of the Commission's hearing, the Commission's recommendation shall be forwarded to the Town Council along with the application materials, staff report, written comments from the public, and minutes of the hearing. E. Council Action and Findings: 1. When the Town Council receives a recommendation from the Planning and Zoning Commission concerning a Special Use Permit application, it shall hear the request at the scheduled date and time specified in accordance to the Arizona Open Meeting Law, but no later than the next regularly scheduled meeting held at least eight (8) days after the Commission recommendation is received. The Council may adopt the Commission's recommendation, approve the Special Use Permit request with the conditions it deems appropriate, or deny the Special Use Permit. 2. The Council's decision shall be final and shall become effective immediately. Notice of the decision shall forthwith be mailed to the applicant at the address shown in the application. F. Time Limits: 1. The Council may establish a time limitation for special use permits. A building permit for the construction of any improvements allowed by any special use permit issued by the Town Council shall be secured within six (6) months from the date of approval. Any lapsing of the building permit prior to completion of the improvements will cause the Special Use Permit to become null and void. Prior to the termination of this time limit, the applicant may make a written request to the Town Council and the Council may reconsider said use permit to determine if the permit should be reissued for an additional time period or be terminated. There shall be no use permit fee for this extension request. 2. No person shall reapply for the same or substantially the same use permit on the same or substantially the same plot, lot, or parcel of land within a period of one (1) year from the date of denial of said use permit. G. Revocation: 1. Special use permits granted in accordance with the provisions of this ordinance may be revoked by the Town Council, if any of the conditions or terms of the permit are violated or if any law or ordinance is violated in connection therewith. The Zoning Administrator shall notify the permittee of a violation of a special use permit, in writing. If the violation is not remedied or the remedy is not substantially begun in the opinion of the Zoning Administrator within ten (10) days after notification, the owner/tenant should be notified that the Town Council will consider revocation of the permit at its next meeting. 2. Any special use permit issued by the Town Council shall be considered null and void if construction does not conform to the originally approved site plan. Any requests for deviations from the originally approved site plan shall be processed as a new use permit. H. Fee: The application for a special use permit shall be accompanied by a filing fee in an amount established by a schedule adopted by resolution of the Council and filed in the office of the Town Clerk. No part of the filing fee shall be refundable. Payment of the filing fee shall be waived when the petitioner is the Town, county, school district, state or federal government. 2.02 Special Use Permits | Fountain Hills Zoning Ordinance Page 3 of 4 The Fountain Hills Zoning Ordinance is current through Ordinance 22-01, passed May 3, 2022. This site does not support Internet Explorer. To view this site, Code Publishing Company recommends using one of the following browsers: Google Chrome, Firefox, or Safari. The Fountain Hills Zoning Ordinance is current through Ordinance 22-01, passed May 3, 2022. Disclaimer: The town clerk’s office has the official version of the Fountain Hills Zoning Ordinance. Users should contact the town clerk’s office for ordinances passed subsequent to the ordinance cited above. Town Website: www.fh.az.gov Code Publishing Company 2.02 Special Use Permits | Fountain Hills Zoning Ordinance Page 4 of 4 The Fountain Hills Zoning Ordinance is current through Ordinance 22-01, passed May 3, 2022. 2.02 Special Use Permits | Fountain Hills Zoning Ordinance Page 1 of 9 The Fountain Hills Zoning Ordinance is current through Ordinance 22-01, passed May 3, 2022. Section 2.02 Special Use Permits A. Purpose: Every zoning district contains certain buildings, structures and uses of land which are normal and complementary to permitted uses in the district, but which, by reason of their typical physical or operational characteristics, influence on the traffic function of adjoining streets, or similar conditions, are often incompatible with adjacent activities and uses. It is the intent of this ordinance to permit special uses in appropriate zoning districts, but only in specific locations within such districts that can be designed and developed in a manner which assures maximum compatibility with adjoining uses. It is the purpose of this section to establish principles and procedures essential to proper guidance and control of such uses. B. General Regulations: 1. Zoning district regulations established elsewhere in this ordinance specify that certain buildings, structures and uses of land may be allowed by the Town Council as conditional uses in a given district subject to the provisions of this section and to requirements set forth in district regulations. The Town Council is empowered to grant and to deny applications for use permits and to impose reasonable conditions upon them. 2. Any building, structure or use existing on the effective date of this ordinance which is reclassified as a special use by this ordinance for the district in which it is located shall be considered as meeting the conditions which would otherwise be imposed upon such use by this ordinance, and its continuance shall not be subject to issuance of a special use permit; provided, however, to the extent that such use fails to conform to the requirements of this ordinance, it shall be considered nonconforming as described in section 4.01, and its continuance shall be governed by all nonconforming use regulations applicable thereto. 3. Every special use permit issued shall be applicable only to the specific use and to the specific property for which it is issued. Upon completion and final inspection by the Zoning Administrator of any authorized structures, signifying that all zoning and site development requirements imposed in connection with the permit have been satisfied, the special use permit shall thereafter be transferable and shall run with the land, whereupon the maintenance of special conditions imposed by the permit, as well as the compliance with other provisions of this ordinance, shall become the responsibility of the property owner. CB. Special Use Permit Application: 1. Complete Application. Applications for a use permits shall be filed electronically on the Town’s websitewith the Development Services Department by an owner of real property within the area proposed for the special use using the process established by the Director for such applications. All such applications shall include the information required in this section. on a form prescribed by the Development Services Department. The application shall be forwarded to the Commission by the Planning and Zoning Division, and when required by the Zoning Administrator, shall be accompanied by a detailed site plan prepared in accordance with Section 2.04 showing all information necessary to 2.02 Special Use Permits | Fountain Hills Zoning Ordinance Page 2 of 9 The Fountain Hills Zoning Ordinance is current through Ordinance 22-01, passed May 3, 2022. demonstrate that the proposed use will comply with all special conditions as well as other regulations and requirements of this Zoning Ordinance. An applicant may furnish the Commission with any additional information it may consider relevant to the case. 2. Project Narrative. A written statement which includes: a. A narrative describing the existing zoning, desired use of the property, and reasons justifying the proposed special use permit. b. A map showing the particular property or properties for which the special use permit is requested and substantially the adjoining properties and the public streets and ways within a radius of three hundred (300) feet of the exterior boundaries thereof. c. A true statement revealing any conditions or restrictions of record (if any) which would affect the permitted uses of the property and the date or dates (if any) of expiration thereof. If the applicant is not the current owner, or has owned the property for less than one year, this statement should also include any real estate disclosures associated with the purchase of the property. d. Such photographs, drawings, and other supporting documents (if any) as the applicant may desire to present. 3. A detailed site plan prepared in accordance with Section 2.04 B. 3 showing all information necessary to demonstrate that the proposed use will comply with all special conditions as well as other regulations and requirements of this Zoning Ordinance. a. For previously developed sites the Development Services Director may allow deviations from the requirements of Section 2.04 B. 3 provided the submitted site plan still provides the information needed by the Commission and Council to consider the impacts of the proposed use. b. The applicant may request to have consideration of a conceptual site plan as part of the consideration of the special use permit. If the Development Services Director approves submission of a conceptual site plan with the special use permit, a final site plan in substantial conformance with the conceptual site plan must be submitted and approved as required by Section 2.04 before submittal of building construction plans. 4. A “Good Neighbor Statement” which provides, as applicable, the following: a. The name and contact information of the property owner. b. The name and contact information for the business. c. A commitment to place emergency contact information on the property in a location that is visible to the public. d. A statement regarding how potentially negative impacts of the proposed use will be mitigated. 2.02 Special Use Permits | Fountain Hills Zoning Ordinance Page 3 of 9 The Fountain Hills Zoning Ordinance is current through Ordinance 22-01, passed May 3, 2022. e. A statement regarding a process for conflict resolution. f. A statement regarding steps that will be taken to integrate into the surrounding neighborhood. 5. Citizen Participation Plan. A copy of the Citizen Participation Plan as required by Section 2.08 6. A list of names and addresses for all property owners within three hundred (300) feet of the exterior boundaries of the property for which an application is made. 7. Filing Fee. Payment of a filing fee in an amount established by a schedule adopted by resolution of the Council and filed in the offices of the Town Clerk. No part of the filing fee shall be returnable. Payment of filing fee shall be waived when the change is initiated by the Council or the Commission or when the applicant is the Town, school district, special purpose district, county, state or federal government. C. Review. 1. Determination of Complete Application. Before initiating review, the Development Services Director, or designee, shall review the submittal to determine if it is complete and meets the requirements of this Section. Applicants will be notified of missing or incomplete application items. Once an application has been determined to be complete the applicant will be notified to pay the application fee. When the fee has been received staff will begin review of the application. 2. Staff review. Staff will conduct review and analysis of the special use permit and will seek additional information and clarification from the applicant as necessary to prepare a report and recommendation to the Planning and Zoning Commission. 3. Review of a special use permit request will include any item specifically required by this Ordinance for a given special use permit plus the following: a. The nature of the use and the special conditions influencing its location in the particular district; b. The proposed location of buildings, parking and other facilities within the site; c. The amount of traffic likely to be generated and how it will be accommodated; and, d. The influence that such factors are likely to exert on adjoining properties. 4. Following notice requirements, the special use permit will be scheduled for public hearings by the Planning and Zoning Commission and Town Council. Unless the applicant requests a delay in writing, staff shall place the request on a Planning Zoning Commission meeting within three months of receiving a complete application. After public hearing, the Planning and Zoning Commission will 2.02 Special Use Permits | Fountain Hills Zoning Ordinance Page 4 of 9 The Fountain Hills Zoning Ordinance is current through Ordinance 22-01, passed May 3, 2022. make a recommendation to the Town Council. The request will be placed on the next available Council agenda at least 28 days after the Planning and Zoning Commission action. D. Notice. Commission Action and Findings: Prior to holding a public hearing, notice of the time and place of the hearing including a general explanation of the matter to be considered and including a general description of the area affected shall be given at least fifteen (15) days before the hearing in the following manner: 1. Notice shall be published at least once in a newspaper of general circulation published or circulated in Fountain Hills. 1. It is the express intent of this ordinance that any use for which a special use permit is required shall be permitted in the particular zoning district; provided, that all special conditions and requirements of this ordinance are met. Therefore, the action of the Commission shall be one of recommending approval or denial to the Town Council based upon its judgment as to whether the specified conditions have been or will be met. The Commission shall consider not only the nature of the use and the special conditions influencing its location in the particular district, but also the proposed location of buildings, parking and other facilities within the site, the amount of traffic likely to be generated and how it will be accommodated, and the influence that such factors are likely to exert on adjoining properties. The Commission may make such suggestions to the Town Council concerning ways a proposed project may be acceptable and compatible to the area. 2. Notice of the nature of the special use permit application and the date of the meeting at which it will be consideredOne or more notices as required by the Development Services Director shall be posted on the property. It shall be the responsibility of the applicant to erect and maintain the posting. 3. Notice and shall be sent by first class mailed real propertyto the owners of all real property within three hundred (300) feet of the external boundaries of the property for which application is made. The applicant shall be responsible for providing the names and addresses of these owners. E. Hearings 1. The Development Services Director shall fix a reasonable time for the hearing of the proposed special use permit and shall give notice in accordance with the Public Notice Requirements Deadline in Section 2.02 D. of this Ordinance. 2. Any person may appear at a public hearing and submit oral or written evidence, either individually or as a representative of a person or an organization. Each person who appears at a public hearing shall be identified, state their name and town, and, if appearing on behalf of a person or organization, state the name and town of the person or organization being represented. The presiding officer may establish time limits for individual testimony and may require that individuals with shared concerns select one or more spokespersons to present testimony on behalf of those individuals. 3. The body conducting the hearing may cause such investigations to be made as it deems necessary and in the public interest on any matter to be heard by it. Such investigation may be made 2.02 Special Use Permits | Fountain Hills Zoning Ordinance Page 5 of 9 The Fountain Hills Zoning Ordinance is current through Ordinance 22-01, passed May 3, 2022. by a committee of one or more members of the body conducting the hearing or by members of its staff or its agents or employees. The facts established by such investigation shall be submitted to the body conducting the hearing either in writing, to be filed with the records of the matter, or in testimony before the body, and may be considered by the body in making its decision. 4. The body conducting the hearing shall cause a written summary of all pertinent testimony heard at such public hearing, together with a record of the names and addresses of all persons testifying, to be prepared and filed with the papers relating to such matter. F. Action. It is the express intent of this ordinance that any use for which a special use permit is required shall be permitted in the particular zoning district; provided, that all special conditions and requirements of this ordinance are met. 1. Planning and Zoning Commission. The Planning and Zoning Commission: a. May recommend approval, approval with conditions, or denial, or may continue a proposed amendment. b. May for any reason, when it deems such action necessary or desirable, continue such hearing to a time and certain place. However, if the Commission is not able to make a recommendation to the Council at the continued meeting and the applicant does not consent to a further continuance, the matter shall be automatically forwarded to the Council with a recommendation for denial. c. Shall, unless waived by the applicant, within ninety (90) days after the date of the original hearing, the Commission shall render its decision in the form of a written recommendation to the Council. d. In order to recommend approval of any use permit, the findings of the Commission must be that the establishment, maintenance, or operation of the use or building applied for will not be detrimental to the public health, safety, peace, comfort, and general welfare of persons residing or working in the neighborhood of such proposed use, nor shall it be detrimental or injurious to property and improvements in the neighborhood or to the general welfare of the Town. e. The Commission may make such recommendations to the Town Council concerning ways a proposed project may be acceptable and compatible to the area which may include: i. Modifications to the “Good Neighbor Statement”. ii. Additional landscaping, setbacks, or other similar measures to mitigate the impact of the proposed use. iii. Adjustments to the location of proposed uses or activities on the site. 2.02 Special Use Permits | Fountain Hills Zoning Ordinance Page 6 of 9 The Fountain Hills Zoning Ordinance is current through Ordinance 22-01, passed May 3, 2022. f. Shall include the rationale for its recommendation. 2. Town Council. a. Town Council may approve, approve with conditions, deny, or continue a proposed amendment. b. The action of the Council shall be final and become effective immediately. 3. The Commission shall consider the application at the first regular meeting after the proper advertising procedures and period have been completed. The Commission, at this regularly scheduled meeting, shall either (1) make a recommendation to the Town Council, or continue the matter to a specified date (but not longer than sixty (60) days from the date of the original hearing). Within sixty (60) days after the date of the original hearing, the Commission shall render its decision in the form of a written recommendation to the Council. The recommendation shall include the rationale for the recommendation. However, if the Commission is not able to make a recommendation to the Council at the continued meeting and the applicant does not consent to a further continuance, the matter shall be automatically forwarded to the Council with a recommendation for denial. 4. It shall be the responsibility of the applicant to maintain the posting. The notice shall set forth the time and place of the hearing and include a general explanation of the matter to be considered and a general description of the area affected. 5. In order to recommend approval of any use permit, the findings of the Commission must be that the establishment, maintenance, or operation of the use or building applied for will not be detrimental to the public health, safety, peace, comfort, and general welfare of persons residing or working in the neighborhood of such proposed use, nor shall it be detrimental or injurious to property and improvements in the neighborhood or to the general welfare of the Town. 6. The Commission may recommend to the Town Council such conditions in connection with the use permit as it deems appropriate to secure the intent and purposes of this ordinance and may recommend such guarantees and evidence that such conditions are being or will be followed. 7. If the Commission finds that the application and supporting data do not indicate that all applicable conditions and requirements of this ordinance will be met, it may recommend denial of the special use permit. The Commission recommendation shall be mailed to the applicant at the address shown on the application. 8. Upon conclusion of the Commission's hearing, the Commission's recommendation shall be forwarded to the Town Council along with the application materials, staff report, written comments from the public, and minutes of the hearing. E. Council Action and Findings: 2.02 Special Use Permits | Fountain Hills Zoning Ordinance Page 7 of 9 The Fountain Hills Zoning Ordinance is current through Ordinance 22-01, passed May 3, 2022. 1. When the Town Council receives a recommendation from the Planning and Zoning Commission concerning a Special Use Permit application, it shall hear the request at the scheduled date and time specified in accordance to the Arizona Open Meeting Law, but no later than the next regularly scheduled meeting held at least eight (8) days after the Commission recommendation is received. The Council may adopt the Commission's recommendation, approve the Special Use Permit request with the conditions it deems appropriate, or deny the Special Use Permit. 2. The Council's decision shall be final and shall become effective immediately. Notice of the decision shall forthwith be mailed to the applicant at the address shown in the application. FG. Time Limits: 1. The Council may establish a time limitation for special use permits. An application for a building permit for the construction of any improvements allowed by any special use permit issued by the Town Council shall be secured submitted within six (6) months from the date of approval and secured within one (1) year. Any lapsing of the building permit prior to completion of the improvements will cause the Special Use Permit to become null and void. 2, Unless otherwise stipulated by Council approval, if the use(s) approved through the special use permit are not established within eighteen (18) months from the date of Council approval, the special use permit shall become null and void. 3. Prior to the termination of this time limitan approved special use permit, the applicant may make a written request to the Town Council and the Council may reconsider said use permit to determine if the permit should be reissued for an additional time period or be terminated. There shall be no use permit fee for this extension request. 24. No person shall reapply for the same or substantially the same use permit on the same or substantially the same plot, lot, or parcel of land within a period of one (1) year from the date of denial of said use permit. GH. Revocation: 1. Special use permits granted in accordance with the provisions of this ordinance may be revoked by the Town Council, if any of the conditions or terms of the permit are violated or if any law or ordinance is violated in connection therewith. The Zoning Administrator shall notify the permittee of a violation of a special use permit, in writing. If the violation is not remedied or the remedy is not substantially begun in the opinion of the Zoning Administrator within ten (10) days after notification, the owner/tenant should be notified that the Town Council will consider revocation of the permit at its next meeting. 2. Any special use permit issued by the Town Council shall be considered null and void if construction does not conform to the originally approved site plan. Any requests for deviations from the originally approved site plan shall be processed as a new use permit. 2.02 Special Use Permits | Fountain Hills Zoning Ordinance Page 8 of 9 The Fountain Hills Zoning Ordinance is current through Ordinance 22-01, passed May 3, 2022. H. Fee: The application for a special use permit shall be accompanied by a filing fee in an amount established by a schedule adopted by resolution of the Council and filed in the office of the Town Clerk. No part of the filing fee shall be refundable. Payment of the filing fee shall be waived when the petitioner is the Town, county, school district, state or federal government. BI. General Regulations: 1. Zoning district regulations established elsewhere in this ordinance specify that certain buildings, structures and uses of land may be allowed by the Town Council as conditional uses in a given district subject to the provisions of this section and to requirements set forth in district regulations. The Town Council is empowered to grant and to deny applications for use permits and to impose reasonable conditions upon them. 2. Any building, structure or use existing on the effective date of this ordinance which is reclassified as a special use by this ordinance for the district in which it is located shall be considered as meeting the conditions which would otherwise be imposed upon such use by this ordinance, and its continuance shall not be subject to issuance of a special use permit; provided, however, to the extent that such use fails to conform to the requirements of this ordinance, it shall be considered nonconforming as described in section 4.01, and its continuance shall be governed by all nonconforming use regulations applicable thereto. 3. Every special use permit issued shall be applicable only to the specific use and to the specific property for which it is issued. Upon completion and final inspection by the Zoning Administrator of any authorized structures, signifying that all zoning and site development requirements imposed in connection with the permit have been satisfied, the special use permit shall thereafter be transferable and shall run with the land, whereupon the maintenance of special conditions imposed by the permit, as well as the compliance with other provisions of this ordinance, shall become the responsibility of the property owner. J. Modifications and Amendments. Following approval of a special use permit modifications and amendment can be considered as follows: 1. Modifications. Modifications are changes to the nature of the site or approved use and can be minor or major as described below. Minor modifications can be considered and approved administratively by the Development Services Director. Major modifications require review and consideration the same as described in this section for new applications. a. A modification is considered minor if it does not materially alter the approved plan or other approval, will not intensify any potentially detrimental effects of the project and is consistent with the original findings and all conditions of approval. b. A modification is considered major if it changes, eliminates or affects a condition of approval (whether adopted by resolution, ordinance or otherwise) such as a change to a 2.02 Special Use Permits | Fountain Hills Zoning Ordinance Page 9 of 9 The Fountain Hills Zoning Ordinance is current through Ordinance 22-01, passed May 3, 2022. discretionary permit, approved plan, or building plan or materially alters a previous approval or plan. Additionally, any modification not determined minor by the Development Services Director is a major modification. 2. Amendments. Amendments are changes to the use(s) approved through the special use permit. Amendments require review and consideration the same as described in this section for new applications. RESOLUTION NO. 2022-43 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, DECLARING AS A PUBLIC RECORD THAT CERTAIN DOCUMENT FILED WITH THE TOWN CLERK AND ENTITLED “SPECIAL USE PERMIT ORDINANCE” BY REFERENCE ENACTMENTS: NOW THEREFORE BE IT RESOLVED BY THE MAYOR AND TOWN COUNCIL OF FOUNTAIN HILLS, ARIZONA, as follows: SECTION 1. That certain document entitled “Special Use Permit Ordinance” of which one paper copy and one electronic copy maintained in compliance with ARS 44-7041 are on file in the office of the Town Clerk and open for public inspection during normal business hours, is hereby declared to be a public record, and said copies are ordered to remain on file with the Town Clerk. PASSED AND ADOPTED by the Mayor and Council of the Fountain Hills, Maricopa County, Arizona, this 15th day of November, 2022. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: ___________________________________ __________________________________ Ginny Dickey, Mayor Linda Mendenhall, Town Clerk REVIEWED BY: APPROVED AS TO FORM: ____________________________________ __________________________________ Grady E. Miller, Town Manager Aaron D. Arnson, Town Attorney RESOLUTION 2022-43 EXHIBIT A Special Use Permit Ordinance 2.02 Special Use Permits A. Purpose. Every zoning district contains certain buildings, structures and uses of land which are normal and complementary to permitted uses in the district, but which, by reason of their typical physical or operational characteristics, influence on the traffic function of adjoining streets, or similar conditions, are often incompatible with adjacent activities and uses. It is the intent of this ordinance to permit special uses in appropriate zoning districts, but only in specific locations within such districts that can be designed and developed in a manner which assures maximum compatibility with adjoining uses. It is the purpose of this section to establish principles and procedures essential to proper guidance and control of such uses. B. Application. 1. Complete Application. Applications for special use permits shall be filed electronically on the Town’s website by an owner of real property within the area proposed for the special use using the process established by the Director for such applications. All such applications shall include the information required in this section. 2. Project Narrative. A written statement which includes: a. A narrative describing the existing zoning, desired use of the property, and reasons justifying the proposed special use permit. b. A map showing the particular property or properties for which the special use permit is requested and substantially the adjoining properties and the public streets and ways within a radius of three hundred (300) feet of the exterior boundaries thereof. c. A true statement revealing any conditions or restrictions of record (if any) which would affect the permitted uses of the property and the date or dates (if any) of expiration thereof. If the applicant is not the current owner, or has owned the property for less than one year, this statement should also include any real estate disclosures associated with the purchase of the property. d. Such photographs, drawings, and other supporting documents (if any) as the applicant may desire to present. 3. A detailed site plan prepared in accordance with Section 2.04 B. 3 showing all information necessary to demonstrate that the proposed use will comply with all special conditions as well as other regulations and requirements of this Zoning Ordinance. a. For previously developed sites the Development Services Director may allow deviations from the requirements of Section 2.04 B. 3 provided the submitted site plan still provides the information needed by the Commission and Council to consider the impacts of the proposed use. b. The applicant may request to have consideration of a conceptual site plan as part of the consideration of the special use permit. If the Development Services Director approves submission of a conceptual site plan with the special use permit, a final site plan in substantial conformance with the conceptual site plan must be submitted and approved as required by Section 2.04 before submittal of building construction plans. RESOLUTION 2022-43 4. A “Good Neighbor Statement” which provides, as applicable, the following: a. The name and contact information of the property owner. b. The name and contact information for the business. c. A commitment to place emergency contact information on the property in a location that is visible to the public. d. A statement regarding how potentially negative impacts of the proposed use will be mitigated. e. A statement regarding a process for conflict resolution. f. A statement regarding steps that will be taken to integrate into the surrounding neighborhood. 5. Citizen Participation Plan. A copy of the Citizen Participation Plan as required by Section 2.08 6. A list of names and addresses for all property owners within three hundred (300) feet of the exterior boundaries of the property for which an application is made. 7. Filing Fee. Payment of a filing fee in an amount established by a schedule adopted by resolution of the Council and filed in the offices of the Town Clerk. No part of the filing fee shall be returnable. Payment of the filing fee shall be waived when the use permit is initiated by the Council or the Commission or when the applicant is the Town, school district, special purpose district, county, state or federal government. C. Review. 1. Determination of Complete Application. Before initiating review, the Development Services Director, or designee, shall review the submittal to determine if it is complete and meets the requirements of this Section. Applicants will be notified of missing or incomplete application items. Once an application has been determined to be complete the applicant will be notified to pay the application fee. When the fee has been received staff will begin review of the application. 2. Staff review. Staff will conduct review and analysis of the special use permit and will seek additional information and clarification from the applicant as necessary to prepare a report and recommendation to the Planning and Zoning Commission. 3. Review of a special use permit request will include any item specifically required by this Ordinance for a given special use permit plus the following: a. The nature of the use and the special conditions influencing its location in the particular district; b. The proposed location of buildings, parking and other facilities within the site; c. The amount of traffic likely to be generated and how it will be accommodated; and, d. The influence that such factors are likely to exert on adjoining properties. 4. Following notice requirements, the special use permit will be scheduled for public hearings by the Planning and Zoning Commission and Town Council. Unless the applicant requests a delay in writing, staff shall place the request on a Planning Zoning Commission meeting within three months of receiving a complete application. After public hearing, the Planning and Zoning Commission will make a recommendation to the Town Council. The request will be placed on the next available Council agenda at least 28 days after the Planning and Zoning Commission action. RESOLUTION 2022-43 D. Notice. Prior to holding a public hearing, notice of the time and place of the hearing including a general explanation of the matter to be considered and including a general description of the area affected shall be given at least fifteen (15) days before the hearing in the following manner: 1. Notice shall be published at least once in a newspaper of general circulation published or circulated in Fountain Hills. 2. One or more notices as required by the Development Services Director shall be posted on the property. It shall be the responsibility of the applicant to erect and maintain the posting. 3. Notice shall be sent by first class mail to each real property owner, as shown on the current records of the County Assessor, within three hundred (300) feet of the external boundaries of the property which for which application is made. E. Hearings 1. The Development Services Director shall fix a reasonable time for the hearing of the proposed special use permit and shall give notice in accordance with the Public Notice Requirements Deadline in Section 2.02 D. of this Ordinance. 2. Any person may appear at a public hearing and submit oral or written evidence, either individually or as a representative of a person or an organization. Each person who appears at a public hearing shall be identified, state their name and town, and, if appearing on behalf of a person or organization, state the name and town of the person or organization being represented. The presiding officer may establish time limits for individual testimony and may require that individuals with shared concerns select one or more spokespersons to present testimony on behalf of those individuals. 3. The body conducting the hearing may cause such investigations to be made as it deems necessary and in the public interest on any matter to be heard by it. Such investigation may be made by a committee of one or more members of the body conducting the hearing or by members of its staff or its agents or employees. The facts established by such investigation shall be submitted to the body conducting the hearing either in writing, to be filed with the records of the matter, or in testimony before the body, and may be considered by the body in making its decision. 4. The body conducting the hearing shall cause a written summary of all pertinent testimony heard at such public hearing, together with a record of the names and addresses of all persons testifying, to be prepared and filed with the papers relating to such matter. F. Action. It is the express intent of this ordinance that any use for which a special use permit is required shall be permitted in the particular zoning district; provided, that all special conditions and requirements of this ordinance are met. 1. Planning and Zoning Commission. The Planning and Zoning Commission: a. May recommend approval, approval with conditions, or denial, or may continue a proposed amendment. b. May for any reason, when it deems such action necessary or desirable, continue such hearing to a time and certain place. However, if the Commission is not able to make a recommendation to the Council at the continued meeting and the applicant does not consent to a further continuance, the matter shall be automatically forwarded to the Council with a recommendation for denial. RESOLUTION 2022-43 c. Shall, unless waived by the applicant, within ninety (90) days after the date of the original hearing, the Commission shall render its decision in the form of a written recommendation to the Council. d. In order to recommend approval of any use permit, the findings of the Commission must be that the establishment, maintenance, or operation of the use or building applied for will not be detrimental to the public health, safety, peace, comfort, and general welfare of persons residing or working in the neighborhood of such proposed use, nor shall it be detrimental or injurious to property and improvements in the neighborhood or to the general welfare of the Town. e. The Commission may make such recommendations to the Town Council concerning ways a proposed project may be acceptable and compatible to the area which may include: i. Modifications to the “Good Neighbor Statement”. ii. Additional landscaping, setbacks, or other similar measures to mitigate the impact of the proposed use. iii. Adjustments to the location of proposed uses or activities on the site. f. Shall include the rationale for its recommendation. 2. Town Council. a. Town Council may approve, approve with conditions, deny, or continue a proposed amendment. b. The action of the Council shall be final and become effective immediately. G. Time Limits. 1. The Council may establish a time limitation for special use permits. An application for a building permit for the construction of any improvements allowed by any special use permit issued by the Town Council shall be submitted within six (6) months from the date of approval and secured within one (1) year. Any lapsing of the building permit prior to completion of the improvements will cause the special use permit to become null and void. 2. Unless otherwise stipulated by Council approval, if the use(s) approved through the special use permit are not established within eighteen (18) months from the date of Council approval, the special use permit shall become null and void. 3. Prior to the termination of an approved special use permit, the applicant may make a written request to the Town Council and the Council may reconsider said use permit to determine if the permit should be reissued for an additional time period or be terminated. There shall be no use permit fee for this extension request. 4. No person shall reapply for the same or substantially the same use permit on the same or substantially the same plot, lot, or parcel of land within a period of one (1) year from the date of denial of said use permit. H. Revocation. 1. Special use permits granted in accordance with the provisions of this ordinance may be revoked by the Town Council, if any of the conditions or terms of the permit are violated or if any law or ordinance is violated in connection therewith. The Zoning Administrator shall notify the permittee of a violation of a special use permit, in writing. If the violation is not remedied or the remedy is not substantially begun in the opinion of the Zoning RESOLUTION 2022-43 Administrator within ten (10) days after notification, the owner/tenant shall be notified that the Town Council will consider revocation of the permit at its next meeting. 2. Any special use permit issued by the Town Council shall be considered null and void if construction does not conform to the originally approved site plan. Any requests for deviations from the originally approved site plan shall be processed as a new use permit. I. General Regulations: 1. Zoning district regulations established elsewhere in this ordinance specify that certain buildings, structures and uses of land may be allowed by the Town Council as special uses in a given district subject to the provisions of this section and to requirements set forth in district regulations. The Town Council is empowered to grant and to deny applications for use permits and to impose reasonable conditions upon them. 2. Any building, structure or use existing on the effective date of this ordinance which is reclassified as a special use by this ordinance for the district in which it is located shall be considered as meeting the conditions which would otherwise be imposed upon such use by this ordinance, and its continuance shall not be subject to issuance of a special use permit; provided, however, to the extent that such use fails to conform to the requirements of this ordinance, it shall be considered nonconforming as described in section 4.01, and its continuance shall be governed by all nonconforming use regulations applicable thereto. 3. Every special use permit issued shall be applicable only to the specific use and to the specific property for which it is issued. Upon completion and final inspection by the Zoning Administrator of any authorized structures, signifying that all zoning and site development requirements imposed in connection with the permit have been satisfied, the special use permit shall thereafter be transferable and shall run with the land, whereupon the maintenance of special conditions imposed by the permit, as well as the compliance with other provisions of this ordinance, shall become the responsibility of the property owner. J. Modifications and Amendments. Following approval of a special use permit modifications and amendment can be considered as follows: 1. Modifications. Modifications are changes to the nature of the site or approved use and can be minor or major as described below. Minor modifications can be considered and approved administratively by the Development Services Director. Major modifications require review and consideration the same as described in this section for new applications. a. A modification is considered minor if it does not materially alter the approved plan or other approval, will not intensify any potentially detrimental effects of the project and is consistent with the original findings and all conditions of approval. b. A modification is considered major if it changes, eliminates or affects a condition of approval (whether adopted by resolution, ordinance or otherwise) such as a change to a discretionary permit, approved plan, or building plan or materially alters a previous approval or plan. Additionally, any modification not determined minor by the Development Services Director is a major modification. RESOLUTION 2022-43 2. Amendments. Amendments are changes to the use(s) approved through the special use permit. Amendments require review and consideration the same as described in this section for new applications. ORDINANCE NO. 22-07 AN ORDINANCE OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, AMENDING THE FOUNTAIN HILLS ZONING ORDINANCE BY REPEALING SECTION 2.02, SPECIAL USE PERMITS, AND REPLACING IT WITH A NEW SECTION 2.02, SPECIAL USE PERMITS, BY ADOPTING THE “SPECIAL USE PERMIT ORDINANCE” BY REFERENCE ENACTMENTS: NOW THEREFORE BE IT ORDAINED BY THE MAYOR AND TOWN COUNCIL OF FOUNTAIN HILLS, ARIZONA, as follows: SECTION 1. That Section 2.02, SPECIAL USE PERMITS, of the Fountain Hills Zoning Ordinance is hereby repealed and a new Section 2.02, SPECIAL USE PERMITS, adopted as a Public Document entitled “Special Use Permit Ordinance” by Resolution 2022-43, is adopted and made a part hereof as if fully set out in this ordinance. PASSED AND ADOPTED by the Mayor and Council of the Fountain Hills, Maricopa County, Arizona, this 15th day of November, 2022. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: ___________________________________ __________________________________ Ginny Dickey, Mayor Linda Mendenhall, Town Clerk REVIEWED BY: APPROVED AS TO FORM: ____________________________________ __________________________________ Grady E. Miller, Town Manager Aaron D. Arnson, Town Attorney ITEM 8. E. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 11/15/2022 Meeting Type: Town Council Regular Meeting Agenda Type: Regular Agenda Submitting Department: Development Services Prepared by: Linda Mendenhall, Town Clerk Staff Contact Information: John Wesley, Development Services Director Request to Town Council Regular Meeting (Agenda Language): CONSIDERATION AND POSSIBLE ACTION: Adoption of Ordinance 22-09 for Short Term Rentals. Staff Summary (background) At the October 18, 2022, regular meeting, staff presented the Town Council with a model ordinance that would establish a registration database and a permitting process for short-term and vacation rentals within the Town of Fountain Hills. Following discussion and direction, staff indicated that they would bring back a final version of the ordinance for adoption in November. That version of the ordinance is presented for consideration, discussion, and possible action. This final proposed version is substantively identical to the previous version, with the following changes based on Council direction and further staff review: Based on recommendations received from Town Prosecutor Mark Iacovino, Town staff expanded the definition of “nonresidential use” in Section 8-6-2 to specifically include unruly gatherings and any uses unrelated to lodging or that are not customarily incidental to lodging, including those set forth in A.R.S. § 9-500.39. This definition was expanded to improve clarity for business owners operating under the new ordinance and to facilitate enforcement functions. 1. Based on discussions with other municipal attorneys, including the Paradise Valley Town Attorney, staff eliminated from Section 8-6-11(B) the proposed requirement that a landline be operational on the premises of a vacation or short-term rental. 2. Staff added to Section 8-6-11(B) language that the Town may inspect properties to ensure compliance with the ordinance or with any provision of Town building, fire, or zoning codes. 3. Staff added a delayed effective date of February 1, 2023. This effective date was added to allow staff time to adequately notify and inform the public of the adoption of this ordinance and to allow sufficient time for staff to notice and publish a fee schedule, in accordance with state law. 4. Finally, at the October 18 meeting, the Town Council raised the issue of regulating parking. The Town regulates parking in residential areas under Town Code Section 12-3-9. Rather than adopt a provision of the ordinance that is specific to short-term and vacation rentals, Town staff intends to explore any necessary changes to Section 12-3-9 and improve enforcement of that section as applicable to all residential areas, including rentals. Related Ordinance, Policy or Guiding Principle Article 8-6, Vacation Rentals Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) Staff recommends approval of Ordinance 22-09 as presented. SUGGESTED MOTION MOVE to approve Ordinance 22-09. Attachments Ordinance 22-09 Form Review Inbox Reviewed By Date Development Services Director John Wesley 11/03/2022 04:04 PM Town Attorney Aaron D. Arnson 11/03/2022 06:38 PM Town Manager Grady E. Miller 11/03/2022 07:19 PM Form Started By: Linda Mendenhall Started On: 11/03/2022 03:45 PM Final Approval Date: 11/03/2022 ORDINANCE NO. 22-09 AN ORDINANCE OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, AMENDING THE FOUNTAIN HILLS MUNICIPAL CODE, BY AMENDING ARTICLE 8-6 RELATING TO REGULATING SHORT TERM RENTALS AND VACATION RENTALS; INCORPORATING THE RECITALS BY REFERENCE; ESTABLISHING A PURPOSE; SETTING FORTH DEFINITIONS; REQUIRING A PERMIT TO OPERATE A SHORT TERM RENTAL OR VACATION RENTAL WITHIN FOUNTAIN HILLS’ BOUNDARIES; ESTABLISHING REGULATIONS; ADOPTING NOTIFICATION AND DISCLOSURE REQUIREMENTS; ADOPTING INSURANCE REQUIREMENTS; ADOPTING APPLICATION FEES; ESTABLISHING FINES AND PENALTIES FOR VIOLATIONS; PROVIDING FOR ENFORCEMENT; PROVIDING FOR THE REPEAL OF CONFLICTING ORDINANCES; PROVIDING FOR SEVERABILITY; ESTABLISHING AN EFFECTIVE DATE. WHEREAS local governments may regulate short term rentals and vacation rentals, as limited by Arizona Revised Statutes (“A.R.S.”) § 9-500.39; WHEREAS the Town of Fountain Hills (the “Town”) deems it necessary to adopt certain regulations regarding the use of property as a vacation rental to protect the health, safety, and welfare of the Town residents; WHEREAS a central and significant goal for the Town is to protect the health, safety, and welfare of the Town residents, preserve its housing stock, and maintain the quality and character of residential neighborhoods; WHEREAS the Town will require all vacation rentals to obtain and maintain a valid Town permit, pay permitting fees, provide an emergency point of contact to respond to compliance and emergencies in a timely manner, maintain insurance, provide neighbor notification, and disclose certain information about the vacation rental in each advertisement; WHEREAS the Town will require all short-term rentals to obtain and maintain a valid transaction privilege tax (“TPT”) license number, provide proof of the TPT license to the Town, and require disclosure of the TPT number on each advertisement; WHEREAS the Town retains the right to change its fees after review and approval from the Town Council; WHEREAS the Town deems it necessary to establish penalties and fines that apply to short term rentals and vacation rentals; and NOW THEREFORE, BE IT ORDAINED by the Mayor and Council of the Town of Fountain Hills, Arizona, as follows: Section I. General. The Code of Fountain Hills, Arizona, is hereby amended by amending/adding Article 8-6, Vacation Rentals, to read as follows: ARTICLE 8-6. SHORT-TERM RENTALS AND VACATION RENTALS Sec. 8-6-1 Purpose. Sec. 8-6-2 Definitions. Sec. 8-6-3 Permit Required; Penalties. Sec. 8-6-4 Emergency Point of Contact Requirements; Penalties. Sec. 8-6-5 Compliance with the Law; Prohibited Uses. Sec. 8-6-6 Neighbor Notification Required. Sec. 8-6-7 Advertisement Requirements. Sec. 8-6-8 Posting on the Property Required. Sec. 8-6-9 Insurance Required. Sec. 8-6-10 Background Checks Required. Sec. 8-6-11 Standards and Operating Requirements; Health and Safety. Sec. 8-6-12 Permit Suspensions. Sec. 8-6-13 Enhanced Penalties. Sec. 8-6-14 Appeals. Sec. 8-6-15 Judicial Relief. Sec. 8-6-16 Severability. Sec. 8-6-17 Prior Code Provisions Superseded. Sec. 8-6-18 Effective Date. Sec. 8-6-1 Purpose. This Article is adopted to protect the peace, health, safety, and welfare of the Town’s residents and visitors by enacting reasonable regulations that mitigate the harmful abuses common to the Short- Term Rental of residential property within the Town while preserving property Owners’ rights to rent their property in a manner that does not disturb the peace or harm public health, public safety, or general public welfare. Such harmful abuses deplete law enforcement and public safety resources and can leave other areas of the Town with compromised levels of police protection so as to create a significant threat to the safety of both citizens and police officers alike. The inclusion of a specific regulation or reference to the Town Code in this chapter does not imply the exclusion of any other applicable law. It shall be unlawful to provide, offer or operate a Short-Term Rental or Vacation Rental within the corporate limits of the Town without first obtaining a Permit as provided in this Article and without complying with any and all applicable laws, regulations and this Code. Sec. 8-6-2 Definitions. In this Article, unless the context or definitions in A.R.S. § 9-500.39 indicate otherwise, the following terms or phrases are defined as follows: “Online Lodging Marketplace” has the same meaning prescribed in A.R.S. § 42- 5076. “Short-term rental” and "vacation rental" are interchangeable for purposes of this Article and mean any individually or collectively owned single-family or one-to-four- family house or dwelling unit, or any unit or group of units in a condominium or cooperative, that is also a transient public lodging establishment or owner- occupied residential home offered for transient use. “Vacation rental” does not include: (i) accommodations or property that are classified for property taxation under A.R.S. § 42-12001; or (ii) any unit that is used for any nonresidential use, including a special event that would otherwise require a permit, retail, restaurant, banquet space, or other similar use. “Transaction privilege tax license” is the license issued by the State of Arizona pursuant to A.R.S., Title 42. "Transient" has the same meaning prescribed in A.R.S. § 42-5070. “Advertisement” means any method of soliciting the use of property for vacation rental purposes. “Applicant” means the owner or owner’s designee who applies with the Town for a permit or renewal of a permit. “Days” shall mean calendar days unless stated otherwise. “Designee” and “Agent” are interchangeable for purposes of this Article and mean any person or persons with the charge, care, or control of any property, dwelling unit, or portion thereof. “Designee” includes the “emergency point of contact.” “Emergency point of contact” means the owner or individual designated by the owner to: (i) serve as the local twenty-four (24) hour emergency point of contact for the vacation rental; and (ii) respond to complaints and emergencies relating to the vacation rental in a timely manner as required by this Article. “Neighbor notification” means the written notice provided by the owner to each single-family residential property adjacent to the vacation rental property, directly across from the vacation rental property, and diagonally across the street of the vacation rental property that includes the valid permit number issued by the Town, the physical address of the vacation rental, and the name, address, and twenty- four (24) hour telephone number of the emergency point of contact. “Nonresidential use” means any use that is not permitted in a residential zoning district pursuant to the Town Zoning Ordinance, any use that constitutes an “unruly gathering,” as defined in Section 11-1-7(B) of this Code, and any use other than lodging or uses that are customarily incidental to lodging. In addition to those uses already stated herein, such nonresidential uses include, but are not limited to, weddings; banquets; concerts; retreats; any use for which entrants pay an entry fee; fireworks displays; a one-time or periodic, free or ticketed, cultural, charitable or cause-related occasion conducted for the purpose of attracting revenue, support, awareness and/or entertainment purposes; and social gatherings with more than ten (10) persons in attendance. “Owner” means any person who, alone or with others, has title or interest in a property, dwelling unit, or portion thereof, with or without accompanying actual possession thereof, and includes any person who as agent, executor, administrator, trustee, or guardian has charge, care, or control of any property, dwelling unit, or portion thereof. “Permit” means authorization by the Town to operate a vacation rental in accordance with this Article. “Person” means an individual, public entity, firm, corporation, partnership, limited liability company, trust, association, or any other business entity or juridical person, whether operating on a for-profit or nonprofit basis. “Timely manner” means responding to complaints and emergencies in person, by phone, or by email within the timeframe required by public safety personnel. Sec. 8-6-3 Permit Required; Penalties. (A) Permit required. Prior to use of a property as a vacation rental, the Owner shall obtain an annual vacation rental permit from the Town. Renting, or offering for rent, a vacation rental without complying with the permit requirement in this Section 8-6-3 is prohibited. (B) Permit applications. The owner of a proposed vacation rental shall submit to the Town a permit application on a form furnished by the Town. The permit application shall be signed by the applicant and shall contain the following minimum information, which shall be made publicly available: (1) The physical address of the residential property proposed to be used as a vacation rental. (2) The name, address, and telephone number of the owner for which the vacation rental registration certificate is to be issued. If the property owner is an entity, the legal name of the entity and its statutory agent. (3) The name, address, and telephone number of each designee of the owner, if any. (4) The full name, address, and twenty-four (24) hour telephone number of the individual who will serve as the emergency point of contact. (5) Proof of a valid transaction privilege tax license. (6) Acknowledgment by the owner of an agreement to comply with all applicable laws, regulations, and ordinances, including the requirement that the owner and each designee shall not be a registered sex offender, been convicted of any felony act that resulted in death or serious physical injury, or been convicted of any felony use of a deadly weapon within the past five years. (7) Attestation of compliance with the notification required in this Article. (8) Evidence of liability insurance appropriate to cover the vacation rental in the aggregate of at least $500,000 or evidence that each vacation rental transaction will be provided through a platform that provides equal or greater primary liability insurance coverage for the vacation rental. (9) Evidence the vacation rental is registered with Maricopa County Assessor’s Office in accordance with A.R.S. § 33-1902. (C) Permit fee. Every application, including any renewal application, for a vacation rental permit under this Article shall be accompanied by a non-refundable fee established by resolution. (D) Issuance; reasons for denial. The Town shall issue or deny the permit within seven (7) business days after receipt of a complete application, except that the Town may deny issuance of a permit for any of the following reasons: (1) The applicant failed to provide the information required under subsection B herein; (2) The applicant failed to pay the permit fee required under subsection C herein; (3) The applicant provided false information; (4) The owner or designee of the owner: (i) is a registered sex offender; (ii) has been convicted of any felony act that resulted in death or serious physical injury; or (iii) has been convicted of any felony use of a deadly weapon within five (5) years of submitting the application; or (5) At the time of application, the owner has a suspended permit for the same vacation rental or any of the following applies: (a) one violation at the vacation rental that resulted in or constituted any of the offenses described in Sec. 8-6-12; or (b) three violations of this Article at the vacation rental within a twelve (12) month period, not including an aesthetic, solid waste disposal or vehicle parking violation that is not also a serious threat to public health and safety. (E) Notice of denial; appeal. The Town Manager or designee shall give notice of the denial of an application to the applicant by emailing the notice to applicant at the address listed on the application. The notice of the denial shall inform the applicant of the right to appeal the denial as provided for in Sec. 8-6-13. (F) Maintaining Accurate Information; Violations. All applicants and persons holding permits issued pursuant to this Article shall give written notice to the Town Manager or designee of any change in information submitted in connection with an application for a permit or renewal of a permit. The notice shall be provided to the Town Manager not less than ten (10) days prior to the effective date of the change. A violation of this subsection is a civil offense. (G) Term of Fountain Hills Permit; Renewal application. All permits issued under this Article shall be valid for a period of one (1) year from the date of their issuance or unless suspended or revoked. Except where the Town has received a new application along with the requisite fees, it shall be unlawful for any person to operate a vacation rental after the expiration date recorded upon the face of the vacation rental permit. (H) Operating Without a Permit; Penalties. An owner or operator of a vacation rental that fails to apply for a permit or license within thirty (30) days of the permit application being made available by the Town shall immediately cease operations. In addition to any other penalty pursuant to the Town Code, the Town may impose a civil penalty of up to $1,000 per month against the owner if the owner or owner’s designee fails to apply for permit within 30 days of receiving the written notice of violation from the Town. Representations or advertisements including online listings that reference the property, house or dwelling unit location within the Town is prima facie evidence that a vacation rental is operating in the Town. (I) Non-transferable. No permit shall be transferable either as to location or as to person. (J) Implementation. The Town Manager or designee shall develop the forms and/or database necessary to implement this Section 8-6-3. Sec. 8-6-4 Emergency Point of Contact Requirements; Penalties. (A) Emergency Responses; Violations. When requested by a certified peace officer or Town official, the owner or emergency point of contact whose name appears on the permit application must be on the vacation rental premises, or be available over the phone or text, within 60 minutes of the request. (B) Non-emergency Responses; Violations. The owner or emergency point of contact shall respond to all other complaints relating to the vacation rental in person, over the phone, by e-mail, or by text within four (4) hours of the request. (C) Maintaining Accurate Emergency Information. All applicants and persons holding permits issued pursuant to this Article shall give prior written notice to the Town Manager or designee of any change to the contact information provided to the Town for the emergency point of contact. The notice shall be provided to the Town Manager not less than ten (10) days prior to the effective date of the change. (D) Violations. In addition to any other penalty pursuant to the Town Code, a violation of this Section shall be a civil offense. (E) Penalties. In addition to any other penalty pursuant to the Town Code, an owner shall be subject to civil penalties of up to $1,000 for every thirty (30) days the owner fails to provide notice to the Town as required under this subsection. Before imposing the initial civil penalty, the Town shall provide thirty (30) days’ notice to the owner by emailing a notice of violation to the owner’s email address that was provided to the Town. The notice of the violation shall inform the applicant of the right to appeal the denial as provided for in Sec. 8-6-13. Notwithstanding the date of the notice of violation, the date for calculating the penalties shall be the first day the vacation rental is occupied following the owner’s failure to provide the notice to the Town regarding the change. Sec. 8-6-5 Compliance with the Law; Prohibited Uses. (A) A vacation rental shall comply with the federal, state, and local laws, including laws relating to public health and safety, sanitation, solid waste, hazardous waste, tax privilege licensing, property tax registration, traffic control, pollution control, noise, property maintenance, and nuisance abatement. (B) No person or entity shall operate a vacation rental in violation of this Article or other law. In addition, the use of a vacation rental property for any of the following uses or purposes is strictly prohibited: (1) Any nonresidential use; (2) Holding a special event that requires a permit or license pursuant to a Town ordinance or state law or rule; (3) Operating a retail business, restaurant, event center, banquet hall or similar use; (4) Housing sex offenders; (5) Operating or maintaining a sober living home; (6) Selling liquor, illegal drugs, or pornography; (7) Operating a nude or topless dancing; (8) Obscenity; (9) Adult-oriented business; or (10) Any other use prohibited by A.R.S. § 9-500.39 or Town Code. (C) A vacation rental lacking a valid transaction privilege tax license issued by the State of Arizona shall not be rented or offered for rent. (D) No person or entity may receive payment or accept a fee, directly or indirectly, for facilitating the rental of a vacation rental operating in violation of this Code or other law. (E) In addition to any other penalty pursuant to the Town Code, any person who causes, allows, facilitates, aides, or abets any violation of this Article shall be subject to a civil offense. (F) The failure of any designee to comply with this Article shall not relieve the owner of liability under this Article. Sec. 8-6-6 Neighbor Notification Required. (A) Neighbor notification. Prior to offering a vacation rental for rent for the first time, the owner or designee shall provide neighbor notification to each single-family residential property adjacent to the vacation rental property, directly across from the vacation rental property, and diagonally across the street of the vacation rental property. The neighbor notification shall be provided in writing in the form required by the Town and shall include the following minimum information: (1) The permit number issued by the Town; (2) The physical address of the vacation rental; and (3) The name, physical address, email address, and twenty-four (24) hour telephone number of the emergency point of contact. (B) Additional neighbor notification required. Any change to the information provided under Subsection A shall require additional neighbor notification by the owner or designee not later than five (5) days prior to each change. The additional notification shall be provided in the manner required by Section A. (C) Attestation. At the time of the application, the owner or designee shall provide to the Town an attestation of compliance with the neighbor notification required by this Section 8-6-6. (D) Violations. In addition to any other penalty pursuant to Town Code, a violation of this Section 8-6-6 shall be a civil offense. Sec. 8-6-7 Advertisement Requirements. (A) Required Disclosure. To protect the peace, health, safety, and general welfare of the Town’s residents and visitors, the owner or owner’s designee shall be responsible for displaying the permit number issued by the Town on each advertisement for such vacation rental. (B) In addition to the permit number that must be included in the Short-Term Rental’s listing, the Owner shall complete and prominently display the following statement in the Short-Term Rental’s Online Lodging Marketplace or other listing: The Owner of this property will provide you with pertinent safety information, explain your responsibilities under the Fountain Hills Town Code, and expect you to certify your compliance therewith. You must not use this property for any nonresidential or other prohibited activity or use, as defined in Fountain Hills Town Code Section X-X-X. Any renter who causes, permits, facilitates, aides, or abets such prohibited use of this property shall be subject to a civil infraction carrying a mandatory penalty of a minimum of $500.00, in addition to any other penalties which the Town may impose. The use of this Short-Term Rental to house sex offenders is prohibited by State Law and by the Fountain Town Code. The Owner of this Short-Term Rental is required to perform a background check on you and your guests prior to your stay. (C) Violations. In addition to any other penalty pursuant to the Town Code, a violation of this Section shall be a civil offense. Each advertisement in violation of this Section 8-6-7 shall constitute a separate violation. Sec. 8-6-8 Posting on the Property Required. (A) Posting at the Vacation Rental. The owner of the vacation rental must display the name, phone number, and email address of the owner or designee, and emergency point of contact in a conspicuous place within 15 feet of the primary entrance of the vacation rental. (B) Booking Information. To protect the peace, health, safety, and general welfare of the Town’s residents and visitors, the Owner of a Short-Term Rental shall (1) provide each booking Guest with a statement of applicable Town rules and regulations, or direct each booking Guest thereto, and inform the booking Guest that rental of the unit constitutes an agreement to comply with such rules and regulations and (2) display the Permit number issued by the Town on each advertisement for such Short-Term Rental. (C) Failure to Comply. In addition to any other penalty pursuant to the Town Code, a violation of this Section 8-6-8 shall be a civil offense. Each day a vacation rental does not display the information required by this Section 8-6-8 shall constitute a separate violation. Sec. 8-6-9 Insurance Required. (A) Required insurance. Prior to offering or renting a vacation rental for rent for the first time, liability insurance appropriate to cover the vacation rental in the aggregate of at least $500,000 shall be provided by the owner or the online marketplace platform. (B) Proof of insurance. Proof of the required liability insurance coverage shall be provided to the Town at the time of the application. (C) Violation. In addition to any other penalty pursuant to the Town Code, a violation of this Section 8-6-9 shall be a civil offense. Each day a vacation rental lacks the insurance required by this Section 8-6-9 shall constitute a separate violation. Sec. 8-6-10 Background Checks Required. (A) No sex offender shall be permitted to rent or occupy the vacation rental. Owners who allow a sex offender at the vacation rental shall be found in violation of this Section 8-6-10. (B) Within twenty-four (24) hours of every booking, a sex offender background check on each guest shall be conducted by the owner or by the online lodging marketplace on which the vacation rental is advertised. The owner shall demonstrate compliance with this requirement by retaining a full copy of each background check for a minimum of twelve (12) months after the booking date and providing the copy to the Town upon a request by a police officer. (C) In addition to any other penalty pursuant to the Town Code, any person who violates this Section 8-6-10 shall be subject to a civil offense. (D) The failure of an online lodging marketplace to conduct a background check shall not relieve the owner of liability under this Section 8-6-10. Section 8-6-11 Standards and Operating Requirements; Health and Safety. (A) Standards and Operating Requirements. 1. An Owner or Owner’s Representative shall (a) affirmatively respond to complaints in person, over the phone, or by email, and (b) abate the incident from which the complaint arose in a Timely Manner regardless of when the Owner receives notice of the complaint. If such a response is due within one hour under this Article’s definition of Timely Manner, the response is deemed necessary to protect the peace, health, safety, and welfare of the general public, and the Owner or Owner’s Representative shall so respond in person. If the response is due within 24 hours, the Owner or the Owner’s Representative shall respond either in person, by telephone, or by email. Failure of the Owner or the Owner’s Representative to respond to a complaint as provided herein is a violation of this Article, and the owner shall be deemed responsible for such violation regardless of whether an Owner’s Representative has been designated. 2. Prior to the commencement of the occupancy or during check-in, the Owner shall explain and describe all rules and regulations applicable to the use of the property as a Short-Term Rental including, but not limited to, parking restrictions, restrictions on noise and amplified sound, trash collection schedules, Special Event and Nonresidential Use restrictions, fire evacuation routes, and any other information, as required by this Code, applicable to the Short-Term Rental and the surrounding neighborhood. Prior to or upon the booking Guest’s arrival at the Short- Term Rental, the Owner shall provide the booking Guest with a written copy of the statement of rules and regulations acknowledged by the booking Guest at the time of booking. The Owner shall keep a record of compliance with this section. 3. Trash and refuse shall not be left stored within public view, except in proper collection containers for the purpose of collection in accordance with Town Code. 4. The following notice must be completed in 14-point or larger bold font, on a laminated or otherwise similarly shielded paper, and prominently displayed on the inside of the front door and the primary door to the backyard or in a conspicuous location near each such door. The notice below shall also include information regarding the location of all fire extinguishers and Town of Fountain Hills parking and waste disposal regulations. NOTICE USE OF THIS PROPERTY FOR ANY OF THE FOLLOWING PURPOSES IS PROHIBITED; VIOLATORS MAY BE SUBJECT TO SUBSTANTIAL PENALTIES: 1. Housing sex offenders; 2. Operating or maintaining a sober living home; 3. Selling controlled substances, liquor, or pornography; 4. Obscenity, Nude or topless dancing, and other adult- oriented businesses, performances, parties, or activities in which value is given in exchange for an adult-oriented service; 5. Any uses prohibited under A.R.S. § 9-500.39, or federal, state, or local law; or 6. Any use that disturbs neighboring properties’ peace and enjoyment including, but not limited to, excessive noise, impeding traffic, obstruction of public streets by crowds or vehicles, use or possession of illegal drugs, drinking in public areas, the service of alcohol to minors or consumption of alcohol by minors, fighting, disturbing the peace, and/or littering. USE OF THIS PROPERTY FOR ANY OF THE FOLLOWING PURPOSES IS PROHIBITED; VIOLATORS MAY BE SUBJECT TO SUBSTANTIAL PENALTIES: Use for any nonresidential use, including: 1. For a special event that would otherwise require a permit or license pursuant to Town ordinance or a state law or rule; or 2. Operating a retail business, restaurant, event center, banquet space, or similar use. Your local contact person’s name is and can be reached by phone 24 hours a day, seven days a week, at - - . (B) Health, Safety, and Sanitation. To protect the health, safety, and general welfare of all Short-Term Rental occupants, Short-Term Rentals must meet the minimum standards for habitable structures set forth in this Code and the Zoning Ordinance and the following requirements. The Town may require inspection if it has a reason for concern that the Short-Term Rental may not be compliant with the Town’s fire, building, or zoning requirements or other requirements set forth in this chapter. 1. Smoke and carbon monoxide (CO) detection and notification system. A working smoke alarm and carbon monoxide (CO) alarm system, which may require the installation and maintenance of several detection units, shall be present within the Short-Term Rental and maintained annually as required under NFPA (National Fire Protection Association) 72. The Owner or Owner’s Representative shall keep and make available for inspection upon request by the Fire Marshal a record of all inspections and maintenance activities. 2. Fire extinguisher. A portable, multi-purpose fire extinguisher shall be installed, inspected, and maintained as required under NFPA 10 in any kitchen area and on each floor of a Short-Term Rental and within 20 feet of every outdoor fire feature, fire pit, patio heater, fireplace, or other areas with fire. The extinguisher(s) shall be installed on the wall in an open common area or in an enclosed space with appropriate markings visibly showing the location of the fire extinguisher. 3. Fire Safety and Emergency Evacuation Map. The Owner shall provide and prominently display a map of the Short-Term Rental showing the following information: safe routes of egress in the event of a fire or other emergency; the location of fire detection and suppression equipment; and any additional information relevant to such emergency preparedness measures. Such maps shall include the full property address, emergency information (911), and Owner contact information. 4. Air Filters. As applicable, all HVAC filters in the Short-Term Rental shall be changed every three months or according to the manufacturer’s instructions. The Owner or Owner’s Representative shall keep and make available for inspection upon request by the Town a record of all HVAC filter changes. 5. Parking. The Owner shall establish and post the maximum number of vehicles that can be parked at the rental for a period of 24-hours or more based on an allowance of 1 vehicle for each 750 square feet of livable area in the home. This limitation applies to vehicles parked in the driveway or on the street within 1,000 feet of the property. 6. Cleaning. The Owner shall have the Short-Term Rental cleaned between bookings following CDC guidelines and using household disinfectant products recommended by the United States Environmental Protection Agency. The Owner or Owner’s Representative shall keep and make available for inspection upon request by the Town a record of all cleanings. 7. Pest Control. The Owner shall ensure that the Short-Term Rental receives regular (at least monthly) pest control treatments to keep the interior of all buildings and structures and exterior area of the premises free from infestation of insects, rodents, and other noxious pests where such infestation threatens the health, safety, or welfare of a person or persons. The Owner or Owner’s Representative shall keep and make available for inspection upon request by the Town a record of all pest control treatments. Sec. 8-6-12 Permit Suspensions. (A) Permit suspensions. The Town may initiate an administrative process to suspend a vacation rental permit for a period of up to twelve (12) months for any of the following: (1) Three verified violations of this Article within a twelve (12) month period, not including any such violation based on an aesthetic, solid waste disposal or vehicle parking violation that is not also a serious threat to public health and safety. (2) One verified violation that results in or constitutes any of the following: (a) A felony offense committed at or in the vicinity of a vacation rental by the owner of the vacation rental or by the owner’s designee; (b) A serious physical injury or wrongful death at or related to a vacation rental resulting from the knowing, intentional or reckless conduct of the owner of the vacation rental or the owner’s designee; (c) The owner of the vacation rental or the owner’s designee knowingly or intentionally housing a sex offender, allowing offenses related to adult-oriented businesses, sexual offenses, or prostitution, or operating or maintaining a sober living home; or (d) The owner of the vacation rental or the owner’s designee knowingly or intentionally allowing the use of a vacation rental for a special event that would otherwise require a permit or license pursuant to the Town code or a state law or rule or for a retail, restaurant, banquet space or other similar use. (B) Appeals. A decision to suspend a permit may be appealed by the owner as set forth in Sec. 8-6-14. Sec. 8-6-13 Enhanced Penalties. (A) The remedies in this Article are cumulative and the Town may proceed under one or more such remedies. (B) In addition to any other penalty pursuant to the Town Code, and notwithstanding any other law, the Town may impose a civil penalty of the following amounts against an owner if the owner causes, allows, facilitates, aides, or abets a verified violation of any provision of this Article or fails to perform any act or duty required by this Article, related to the same vacation rental property within the same twelve-month period: (1) Up to $500 or up to an amount equal to one night’s rent for the vacation rental as advertised, whichever is greater, for the first violation. (2) Up to $1,000 or up to an amount equal to two nights’ rent for the vacation rental as advertised, whichever is greater, for the second violation. (3) Up to $3,500 or up to an amount equal to three nights’ rent for the vacation rental as advertised, whichever is greater, for a third and any subsequent violation. If multiple violations arise out of the same response to an incident at a vacation rental, those violations are considered one violation for the purpose of assessing civil penalties. (C) In addition to any other penalty pursuant to the Code, any property that operates as a vacation rental and fails to apply for vacation rental permit in accordance with this Article within thirty (30) days of the application process being made available by the Town, must cease operations immediately. In addition to any fines imposed pursuant to this Section 8-6-12, the Town may impose a civil penalty of up to one thousand dollars ($1,000) per month against the owner if the owner or owner’s designee fails to apply within thirty (30) days of receiving written notice of the failure to comply with this Article. Sec. 8-6-14 Appeals. (A) Any person aggrieved by any decision with respect to the denial of or a refusal to issue a vacation rental permit, the suspension of a vacation rental permit, or a penalty imposed pursuant to this Article may appeal the decision by filing a written notice of appeal with the Town Manager no later than thirty (30) days from the date of the decision letter. The notice of appeal shall be on a form approved by the Town. (B) An appeal under this Section 8-6-13 does not operate as a stay of the permit suspension. (C) This Section 8-6-13 is not applicable to judicial actions brought pursuant to Sec. 8-6- 14 or to penalties including fines imposed by a court. Sec. 8-6-15 Judicial relief. (A) Notwithstanding Sec. 8-6-11, any attempted or completed felony act, arising from the occupancy or use of a vacation rental that results in a death, or actual or attempted serious physical injury, shall be grounds for judicial relief in the form of a suspension of the property's use as a vacation rental for a period that shall not exceed twelve (12) months. (B) The Town attorney may initiate proceedings in the Town court or other court of competent jurisdiction to enforce this Section 8-6-14. Sec. 8-6-16 Severability. In the event any section or provision of this Article shall be declared by a court of competent jurisdiction to be invalid or unconstitutional, such decision shall not affect the validity of this Article as a whole or any part thereof other than the part so declared to be invalid or unconstitutional. Sec. 8-6-17 Prior Code Provisions Superseded. Section 8-6 of the Town Code is superseded and replaced in its entirety by this ordinance. Sec. 8-6-18 Effective Date. This Ordinance shall become effective on February 1, 2023. ITEM 8. F. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 11/15/2022 Meeting Type: Town Council Regular Meeting Agenda Type: Regular Agenda Submitting Department: Public Works Prepared by: Justin Weldy, Public Works Director Staff Contact Information: Justin Weldy, Public Works Director Request to Town Council Regular Meeting (Agenda Language): CONSIDERATION AND POSSIBLE ACTION: Approval of a Second Amendment to Professional Services Agreement 2023-021.2 with Top Leaf Tree Services LLC, for Professional tree services. Staff Summary (Background) The Town of Fountain Hills utilizes a wide range of contractors across all departments to augment Town staff as needed to perform maintenance services. For example, the Public Works Department utilizes contracts to assist in the maintenance of roadway medians and open space areas to ensure that the community receives high quality and timely maintenance services. The Streets Division is responsible for maintaining thirty-eight (38) acres of medians with approximately 330 palm trees and over 10,000 other trees of various species and sizes. One aspect of tree maintenance services that has been difficult to procure at times is professional tree pruning services, which is a standard for all municipal maintenance operations. Top Leaf Tree Services, LLC, one of the major tree service companies operating in Arizona, has agreed to provide tree trimming services in the amount of $50,000 as an amendment to its original contract. This contract amendment will provide much needed support in addressing this community need. Related Ordinance, Policy or Guiding Principle Public Works Mission Statement. Risk Analysis The reason that trees should be pruned is safety. When weak, dead, or dying branches are left on the tree, there is always a heightened risk that they will be broken off unexpectedly and fall into the roadway. This has the potential to cause vehicular and property damage accidents which may result in claims against the town. Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) Staff Recommendation(s) Approval of Professional Services Agreement 2023-021.2 with Top Leaf Tree Services LLC, for Professional tree services. SUGGESTED MOTION MOVE to approve Amendment No. 2 to Professional Services Agreement 2023-021.2 with Top Leaf Tree Services LLC, for Professional tree services in the amount of $50,000. Fiscal Impact Fiscal Impact:$50,000 Budget Reference:N/A Funding Source:Streets Fund If Multiple Funds utilized, list here:N/A Budgeted: if No, attach Budget Adjustment Form:N/A Attachments Professional Services Agreement Open Space Maintenance map Form Review Inbox Reviewed By Date Public Works Director (Originator)Justin Weldy 10/25/2022 02:55 PM Finance Director David Pock 10/26/2022 08:43 AM Town Attorney Aaron D. Arnson 10/26/2022 10:20 AM Town Manager Grady E. Miller 10/27/2022 11:01 AM Form Started By: Justin Weldy Started On: 10/20/2022 05:53 PM Final Approval Date: 10/27/2022 1 Contract No. 2023-021.2 SECOND AMENDMENT TO PROFESSIONAL SERVICES AGREEMENT BETWEEN THE TOWN OF FOUNTAIN HILLS AND TOP LEAF TREE SERVICE, LLC THIS SECOND AMENDMENT TO PROFESSIONAL SERVICES AGREEMENT (this “Second Amendment”) is entered into as of November 15, 2022, between the Town of Fountain Hills, an Arizona municipal corporation (the “Town”) and Top Leaf Tree Service, LLC, a(n) Arizona limited liability company (the “Consultant”). RECITALS A. The Town and the Consultant entered into a Professional Services Agreement (the “Agreement”), dated July 1, 2022, and Amendment No. 1 dated July 5, 2022, for the Consultant to provide Tree Removal, Pruning, and Related Services (the “Services”). All capitalized terms not otherwise defined in this Second Amendment have the same meanings as contained in the Agreement. B. The Town has determined that it is necessary to add funds to the Agreement with the Consultant for Services (Competition Impractical Determination, Section 11.2 of the Town Procurement Polilcy). C. The Town and the Consultant desire to enter this Second Amendment to amend the Agreement to add funds for anticipated services. AGREEMENT NOW, THEREFORE, in consideration of the foregoing introduction and recitals, which are incorporated herein by reference, the following mutual covenants and conditions, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Town and the Consultant hereby agree as follows: 1. Compensation. The Town shall pay Consultant an aggregate amount not to exceed $100,000 (including all renewals) for the Services, resulting in an increase of $50,000. 2. Effect of Amendment. In all other respects, the Agreement is affirmed and ratified and, except as expressly modified herein, all terms and conditions of the Agreement shall remain in full force and effect. 3. Non-Default. By executing this Second Amendment, the Consultant affirmatively asserts that (i) the Town is not currently in default, nor has it been in default at any time prior to 2 this Second Amendment, under any of the terms or conditions of the Agreement and (ii) any and all claims, known and unknown, relating to the Agreement and existing on or before the date of this Second Amendment are forever waived. 4. Israel. Consultant certifies that it is not currently engaged in, and agrees for the duration of this Agreement that it will not engage in a “boycott,” as that term is defined in Ariz. Rev. Stat. § 35-393, of Israel. 5. Conflict of Interest. This Second Amendment and the Agreement may be cancelled by the Town pursuant to Ariz. Rev. Stat. § 38-511. [SIGNATURES ON FOLLOWING PAGES] SHEA BLVD SAGUARO BLVD PALISA D E S B L V D F I R E R O C K C O U N T R Y CL U B D R EA G L E M O U N T A I N PK W Y CR E S T V I E W D R SUN R I D G E D R S A G U A R O B L V D HIL L S B L V D FO U N T A I N McDOWEL L M O U N T A I N R D BEELI N E H W Y PA L I S A D E S B L V D FOU N T A I N H I L L S B L V D VALLEY VISTA SCENIC OVERLOOK WATER FEATURE MUS T A N G D R PA L O M I N O B L V D PALI S A D E S B L V D EL L A G O B L V D FOU N T A I N S AVEN U E O F T H E PI N T O D R GRANDE BLVD G O L D E N E A G L E B L V D HA M P S T E A D D R PA N O R A M A D R SAG U A R O B L V D TOWN OF FOUNTAIN HILLS NORTH All that is A r i z o n a F O U N T AIN HI L L S TOWN OF INC. 1989 SCALE: NTS Map Date: 10-2022 Open Space/Streets Tree Maintenance Areas ITEM 8. G. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 11/15/2022 Meeting Type: Town Council Regular Meeting Agenda Type: Regular Agenda Submitting Department: Public Works Prepared by: Justin Weldy, Public Works Director Staff Contact Information: Justin Weldy, Public Works Director Request to Town Council Regular Meeting (Agenda Language): CONSIDERATION AND POSSIBLE ACTION: Approval of a First Amendment to Cooperative Purchasing Agreement 2022-074 with Cactus Transport, Inc, for Pavement Maintenance Services. Staff Summary (Background) Staff presented a proposal to Council Subcommittee on Pedestrian and Traffic Safety on November 10, 2020. The proposal was a recommendation for the consideration of implementing Traffic Calming measures on El Lago Boulevard, from Palisades Blvd to Fountain Hills Blvd. The proposal considered reducing the width of the travel lanes and the two-way left turn lane, and adding a wider parking lane and bike lane. The subcommittee asked staff to prepare a concept showing the proposed traffic-calming measures and to present the concept at its meeting on February 9, 2021. Staff presented the proposal to the subcommittee and received a unanimous vote to proceed to the full Town Council for its consideration. Traffic-calming is the combination of mainly physical measures that reduce the negative effects of motor vehicle use, alter driver behavior, and improve conditions for non-motorized street users. By design, traffic-calming is a self-enforcing traffic management approach that forces motorists to alter their speed. When effective traffic-calming measures are in place, they improve safety for pedestrians and bicyclists as well as make streets more "livable" for residents and visitors. Enhanced safety is one of the most fundamental benefits of traffic-calming. By decreasing volume and/or reducing speed, the number and severity of accidents is greatly diminished. Traffic-calming also encompasses the use of pavement markings, which allows municipalities to better control motorist behavior by directing drivers how to behave through a variety of signals directly on the pavement. Pavement markings can help reduce traffic speeds and prevent motorists from moving out of designated lanes. The primary objective of traffic-calming is to reduce vehicle speeds. Accomplishing this often requires more than installing a visible speed limit sign. After the tentative approval from the Council Subcommittee on Pedestrian and Traffic Safety, staff began planning for the pavement surface preparation, which includes crack filling and repairing small sections with new asphalt. This will create a more suitable surface for the application of Type II Polymer Slurry Seal. Cactus Asphalt has agreed to provide the Type II Slurry seal for this project in the amount of $154,609.86. Once the slurry seal is applied, staff will be able to implement the new striping configuration to achieve the traffic-calming discussed above. Related Ordinance, Policy or Guiding Principle Public Works Department Mission Statement. Risk Analysis Not approving the contract for slurry sealing will delay the proposed traffic-calming measures Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) Staff recommends the approval of Amendment No. 1 to Cooperative Purchasing Agreement 2022-074.1 SUGGESTED MOTION MOVE to approve Amendment No. 1 to Cooperative Purchasing Agreement 2022-074 with Cactus Transport, Inc, for Pavement Maintenance Services in the amount of $154,609.86 Fiscal Impact Fiscal Impact:$154,609.86 Budget Reference:N/A Funding Source:Streets Fund If Multiple Funds utilized, list here:N/A Budgeted: if No, attach Budget Adjustment Form:N/A Attachments Cooperative Purchasing Agreement Scope and Fee Form Review Inbox Reviewed By Date Public Works Director (Originator)Justin Weldy 11/01/2022 03:44 PM Finance Director David Pock 11/02/2022 01:31 PM Town Attorney Aaron D. Arnson 11/02/2022 02:56 PM Town Manager Grady E. Miller 11/03/2022 07:48 PM Form Started By: Justin Weldy Started On: 10/25/2022 04:03 PM Final Approval Date: 11/03/2022 1 Contract No. 2022-074.1 FIRST AMENDMENT TO COOPERATIVE PURCHASING AGREEMENT BETWEEN THE TOWN OF FOUNTAIN HILLS AND CACTUS TRANSPORT, INC. D/B/A CACTUS ASPHALT THIS FIRST AMENDMENT TO COOPERATIVE PURCHASING AGREEMENT (this “First Amendment”) is entered into as of November 7, 2022, between the Town of Fountain Hills, an Arizona municipal corporation (the “Town”) and Cactus Transport, Inc., d/b/a Cactus Asphalt, a(n) Arizona corporation (the “Contractor”). RECITALS A. After a competitive procurement process (Solicitation ROQ-175923), Pinal County (AZ) (the “County”) entered into Contract 175923ROQ, dated June 27, 2018 (the “County Contract”), for the Contractor to provide JOC Asphalt Maintenance and Repair Service. All of the capitalized terms not otherwise defined in this First Amendment have the same meanings as defined in the Contract. B. The Town and the Contractor entered into a Cooperative Purchasing Agreement dated March 15, 2022, based upon the County Contract (the “Agreement”), for Asphalt Maintenance and Repair Service (the “Materials and Services”). The terms of the Agreement are incorporated herein. C. The Town has determined that additional Materials and Services (the “Additional Materials and Services”) are necessary. D. The Town and the Contractor desire to enter into this First Amendment to (i) increase the compensation authorized by the Agreement (ii) add to the scope to include the Additional Materials and Services. AGREEMENT NOW, THEREFORE, in consideration of the foregoing introduction and recitals, which are incorporated herein by reference, the following mutual covenants and conditions, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Town and the Contractor hereby agree as follows: 1. Compensation. The Town shall pay the Contractor an aggregate amount not to exceed $364,083.58, an increase of $154,609.86 from $209,473.72 2 2. EXHIBIT C. Exhibit C as attached is hereby incorporated into the Agreement by this reference. 3. Effect of Amendment. In all other respects, the Agreement is affirmed and ratified and, except as expressly modified herein, all terms and conditions of the Agreement shall remain in full force and effect. 4. Non-Default. By executing this First Amendment, the Contractor affirmatively asserts that (i) the Town is not currently in default, nor has it been in default at any time prior to this First Amendment, under any of the terms or conditions of the Agreement and (ii) any and all claims, known and unknown, relating to the Agreement and existing on or before the date of this First Amendment are forever waived. 5. Israel. Contractor certifies that it is not currently engaged in, and agrees for the duration of this Agreement that it will not engage in a “boycott,” as that term is defined in Ariz. Rev. Stat. § 35-393, of Israel. 6. Conflict of Interest. This First Amendment and the Agreement may be cancelled by the Town pursuant to Ariz. Rev. Stat. § 38-511. [SIGNATURES ON FOLLOWING PAGES] EXHIBIT C TO COOPERATIVE SERVICES AGREEMENT BETWEEN THE TOWN OF FOUNTAIN HILLS AND CACTUS TRANSPORT, INC. D/B/A CACTUS ASPHALT [Quote or Work Order] See following pages. To:Contact:Town Of Fountain Hills Robert Durham Town Of Fountain Hills - El Lago BoulevardProject Name:Bid Number:CA260922009 Fax:(480) 837-8328Fountain Hills, AZ 85268 Address:16705 E. Avenue Of The Fountains Phone:(480) 816-5150 Project Location:El Lago Boulevard - Fountain Hills Blvd To Palisades Blvd, Fountain Hills, AZ Bid Date:10/26/2022 Price Adjustment - FY2223 2Q Cactus.pdfAttachments: Total PriceUnit PriceUnitItem DescriptionItem #Estimated Quantity $75,604.80$1,326.4057.005-5 TONSLURRY SEAL CQSLM (< 100 TONS)(15% Of 380 Tons Aggregate Based On Measured Surface Area Of37,540 SY): $47,120.00$124.00380.005-28 TONSLURRY SEAL AGGREGATE RES TYPE-II ARTERIAL (Based On Measured Surface Area Of 37,540 SY @20 LBS/SY): $8,037.00$141.0057.005-35 TONTRAFFIC CONTROL SLURRY (Based On Binder Ton): $4,200.00$35.00120.009-4 HRFLAGGING SERVICES PER HOUR (Not Included WithSlurry Seal TC Item Above):5 Flaggers For 2 Days During Slurry-Seal Operations. $11,193.00$1,050.0010.669-8 MILEPAVED SURFACE CLEANING (Two Times ~ 37,540 SY / 7,040 SY/LM = 5.33 Lane-Miles Each): $146,154.80Bid Price Subtotal: $8,455.06Maricopa County, State And Fountain Hills 5.7850%: $154,609.86Total Bid Price: Notes: •Standard Terms and Conditions to follow.•All scheduling contingent upon mutual agreement of Owner and Cactus Asphalt.•Quoted prices valid through September 2022, unless otherwise noted. •Cactus is not responsible for notification, nor removal of vehicles and property from work areas. •In the event that quantities differ from above, billing will reflect agreed upon measured quantities. •EXCLUSIONS (Unless Otherwise Specified): Plans, Engineering, Survey, Staking, As-Builts, Testing, Inspection, Gradework, Landscape Areas, WeedKiller, ABC or Landscape Materials, Vegetation Replacement, Prime Coat, Concrete Structures, Irrigation or Pipe Work, Utility Removal or Relocation, Drywells, Rip/Rap, Structural Backfill, R&R Asphalt Patching, Striping, Signage, Utility Adjustments, Excavation, Subgrade Stabilization, Removal of Debris Generated by Other Trades, Erosion Control, Thickened Pavement Edge, Project Information Sign And Any Special Insurance Requirements. ACCEPTED: The above prices, specifications and conditions are satisfactory and hereby accepted. Buyer: Signature: Date of Acceptance: CONFIRMED: Cactus Asphalt Authorized Signature: Estimator:John Flores (602) 319-3420 jf@cactusasphalt.com Page 1 of 110/26/2022 3:29:03 PM ADOT $ -$384.00 $715.00 $719.00 ∆ $-$331.00 $335.00 $208.53 $211.05 3-1 < 50 T $325.00 $533.53 $536.05 3-2 > 50 T $223.00 $431.53 $434.05 $99.30 $100.50 3-3 < 50 T $589.00 $688.30 $689.50 3-3 > 50 T $549.00 $648.30 $649.50 $198.60 $201.00 3-5 < 50 T $447.00 $645.60 $648.00 3-6 > 50 T $414.00 $612.60 $615.00 $105.92 $107.20 3-7 < 50 T $591.00 $696.92 $698.20 3-8 > 50 T $566.00 $671.92 $673.20 $105.92 $107.20 3-9 < 50 T $609.00 $714.92 $716.20 3-10 > 50 T $583.00 $688.92 $690.20 $105.92 $107.20 3-11 < 50 T $457.00 $562.92 $564.20 3-12 > 50 T $435.00 $540.92 $542.20 $307.83 $311.55 4-1 < 100 T $708.00 $1,015.83 $1,019.55 4-2 > 100 T $691.00 $998.83 $1,002.55 $331.00 $335.00 4-3 < 100 T $724.00 $1,055.00 $1,059.00 4-4 > 100 T $707.00 $1,038.00 $1,042.00 32% CQS-LM 32% Chip Seal Binder AC15-5TR 93% MC-800 TR 100% TR-Fog 32% CQS-TR Asphalt Emulsion Fog Seal SS-1 / CSS-1 63% TRMSS 30% PASS-QB 60% Cactus Item #Quantity % Asphalt As Bid: June 2018 FY '22-'23 July, August, September October, November, December January, February, March April, May, June ADOT $ -$384.00 $715.00 $719.00 ∆ $-$331.00 $335.00 Asphalt Emulsion Fog Seal Cactus Item #Quantity % Asphalt As Bid: June 2018 FY '22-'23 July, August, September October, November, December January, February, March April, May, June $271.42 $274.70 4-5 < 100 T $671.00 $942.42 $945.70 4-6 > 100 T $486.00 $757.42 $760.70 $271.42 $274.70 4-7 < 100 T $671.00 $942.42 $945.70 4-8 > 100 T $486.00 $757.42 $760.70 $271.42 $274.70 4-9 < 100 T $739.00 $1,010.42 $1,013.70 4-10 > 100 T $554.00 $825.42 $828.70 $271.42 $274.70 4-11 < 100 T $761.00 $1,032.42 $1,035.70 4-12 > 100 T $576.00 $847.42 $850.70 $271.42 $274.70 4-13 < 100 T $761.00 $1,032.42 $1,035.70 4-14 > 100 T $576.00 $847.42 $850.70 $198.60 $201.00 4-15 < 100 T $579.00 $777.60 $780.00 4-16 > 100 T $566.00 $764.60 $767.00 $228.39 $231.15 4-17 < 100 T $513.00 $741.39 $744.15 4-18 > 100 T $500.00 $728.39 $731.15 $228.39 $231.15 4-29 < 100 T $718.00 $946.39 $949.15 4-30 > 100 T $702.00 $930.39 $933.15 RAB (Rubberized Asphalt Binder, Field Blend) 82% Polymer Modified Asphalt Rubber (PG 64-16, 16% TR, 3% SBS) 82% Polymer Modified Asphalt Rubber (PG 58-22, 16% TR, 3% SBS) 82% CRS-TR 60% CRS-2P 69% PASS CR 69% 82% Asphalt Rubber (PG 64-16, 18%) 82% Asphalt Rubber (PG 58-22, 18% TR) ADOT $ -$384.00 $715.00 $719.00 ∆ $-$331.00 $335.00 Asphalt Emulsion Fog Seal Cactus Item #Quantity % Asphalt As Bid: June 2018 FY '22-'23 July, August, September October, November, December January, February, March April, May, June $291.28 $294.80 4-20 < 100 T $810.00 $1,101.28 $1,104.80 4-21 > 100 T $626.00 $917.28 $920.80 $215.15 $217.75 5-1 < 100 T $1,155.00 $1,370.15 $1,372.75 5-2 > 100 T $1,050.00 $1,265.15 $1,267.75 $215.15 $217.75 5-3 < 100 T $1,112.00 $1,327.15 $1,329.75 5-4 > 100 T $958.00 $1,173.15 $1,175.75 $211.84 $214.40 5-5 < 100 T $1,112.00 $1,323.84 $1,326.40 5-6 > 100 T $958.00 $1,169.84 $1,172.40 $211.84 $214.40 5-7 < 100 T $1,052.00 $1,263.84 $1,266.40 5-8 > 100 T $1,015.00 $1,226.84 $1,229.40 $211.84 $214.40 5-9 < 100 T $1,155.00 $1,366.84 $1,369.40 5-10 > 100 T $1,049.00 $1,260.84 $1,263.40 $211.84 $214.40 5-11 < 100 T $1,167.00 $1,378.84 $1,381.40 5-12 > 100 T $1,044.00 $1,255.84 $1,258.40 Slurry Seal Binder LMCQSTR 64% 64% 88% Micro Surface Binder LMCQSTR-MS 65% MSE (MAG Spec.) 65% CQSLM 64% CQSPM 64% CQSLM TR Rubberized Asphalt Scrub Seal (Blended Base, 10% TR, 2% SBS) Scrub Seal Binder ADOT $ -$384.00 $715.00 $719.00 ∆ $-$331.00 $335.00 Asphalt Emulsion Fog Seal Cactus Item #Quantity % Asphalt As Bid: June 2018 FY '22-'23 July, August, September October, November, December January, February, March April, May, June $211.84 $214.40 5-13 < 100 T $981.00 $1,192.84 $1,195.40 5-14 > 100 T $843.00 $1,054.84 $1,057.40 $211.84 $214.40 5-15 < 100 T $1,102.00 $1,313.84 $1,316.40 5-16 > 100 T $883.00 $1,094.84 $1,097.40 n/a n/a 5-17 < 100 T NO BID n/a n/a 5-18 > 100 T NO BID n/a n/a $208.53 $211.05 5-19 < 100 T $863.00 $1,071.53 $1,074.05 5-20 > 100 T $790.00 $998.53 $1,001.05 $208.53 $211.05 5-21 < 100 T $982.00 $1,190.53 $1,193.05 5-22 > 100 T $843.00 $1,051.53 $1,054.05 $208.53 $211.05 5-23 < 100 T $1,068.00 $1,276.53 $1,279.05 5-24 > 100 T $941.00 $1,149.53 $1,152.05 $208.53 $211.05 5-25 < 100 T $1,167.00 $1,375.53 $1,378.05 5-26 > 100 T $1,044.00 $1,252.53 $1,255.05 63% CQS TR 63% CQSLM TR 63% CQSLM LMCQS 64% PMCQS (Solid Polymer SBS) 64% PMQS h n/a CQS 63% ITEM 8. H. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 11/15/2022 Meeting Type: Town Council Regular Meeting Agenda Type: Regular Agenda Submitting Department: Community Services Prepared by: Rachael Goodwin, Community Services Director Request to Town Council Regular Meeting (Agenda Language): CONSIDERATION AND POSSIBLE ACTION: Approval of the American Ramp Contract 2023-051 for Skate Park renovation. Staff Summary (Background) The current skate park at Desert Vista Park was installed in 2007. With more than 15 years of use, the skate park has begun to deteriorate. Even though individual safety concerns have been addressed by staff, the overall condition of the skate park has continued to decline, requiring significant rehabilitation. The skate park has long been a popular amenity within the park system. It serves a broad clientele and sees constant use during temperate weather conditions. In November of 2021, through a cooperative partnership with MUSCO lighting, LED lights were added to the skate park allowing evening access for the first time. As a result of evening access, use has increased by 300%. As renewed interest in the skate park has continued, Brilliant Victory Skateboard, a local business, partnered with Community Services to introduce a new Skate School Program and the Fountain Hills Skate Classic Event. Both programs saw sellout crowds and generated significant local suggestions to improve the skate park facilities. As part of the annual Town Council Retreat earlier in the year, a capital improvement project was proposed to rehabilitate and expand the skate park. After receiving Town Council approval last spring, this past summer staff began engaging stakeholders about the skate park redesign. In June 2022 a meeting was held at the Community Center and 25 members of the public/skate park community attended to review the current skate park conditions and share suggestions for improvements. Attendees ranged in age from 8 to 48 years old and all were current Fountain Hills residents. Following this in-person session, a follow-up digital survey was forwarded to all interested users and posted throughout social media. The survey garnered 90 responses with a variety of suggestions and ideas. Based on this feedback, an initial set of renderings was shared in late September. Following staff review and digital follow-up surgery, a final set of renderings has been completed. The response to this project has been very positive. Many of the comments have requested improved features, a more logical and useful layout, and additional features to allow beginner, intermediate and advanced users a full experience. The addition of a pump track, a skate ‘bowl’ and improved ramps are all features that were requested by local users. American Ramp Company has worked to include these features while continuing to stay within the approved budget. Pending Town Council approval, the skate park renovations will begin in January 2023 with the completion date anticipated to be June 30, 2023. Expenditure authority has been allocated within the approved budget and will not exceed $731,640 including all renewals of the contract. Related Ordinance, Policy or Guiding Principle Town of Fountain Hills 2022 Strategic Plan notes that recognized standards should be used for maintenance of the Towns park system. Risk Analysis Safety is a priority for all park amenities. Without significant repair efforts, the skatepark will pose an increasing risk for park users. . Recommendation(s) by Board(s) or Commission(s) The Community Services Advisory Commission (CSAC) voted unanimously to recommend the Skatepark Renovation project at their October 24, 2022 meeting. Staff Recommendation(s) Staff recommends the approval of the American Ramp Contract 2023-051 for the Skatepark Renovation. SUGGESTED MOTION MOVE to approve the American Ramp Contract 2023-051. Fiscal Impact Fiscal Impact:$731,640 Budget Reference:P3051 Funding Source:CIP If Multiple Funds utilized, list here:CP and Park Dev Fee Budgeted: if No, attach Budget Adjustment Form:Yes Attachments American Ramp Contract 2023-051 Exhibit A Exhibit B Skate Park Project American Ramp Scope Letter Skatepark Survey Results Form Review Inbox Reviewed By Date Community Services Director Rachael Goodwin 11/01/2022 04:39 PM Finance Director David Pock 11/02/2022 01:28 PM Town Attorney Aaron D. Arnson 11/02/2022 03:17 PM Town Manager Grady E. Miller 11/03/2022 12:10 PM Form Started By: Patti Lopuszanski Started On: 10/26/2022 10:27 AM Final Approval Date: 11/03/2022 1 Contract No. 2023-051 COOPERATIVE PURCHASING AGREEMENT BETWEEN THE TOWN OF FOUNTAIN HILLS AND AMERICAN RAMP COMPANY THIS COOPERATIVE PURCHASING AGREEMENT (this “Agreement”) is entered into upon execution, between the Town of Fountain Hills, an Arizona municipal corporation (the “Town”), and American Ramp Company, a(n) Missouri corporation (the “Contractor”). RECITALS A. After a competitive procurement process (Solicitation–RFP# 112420), Sourcewell, a State of Minesota local government agency and service corporation (“Sourcewell”) entered into Contract No. 112420, dated December 21, 2020 (the “Sourcewell Contract”), for Skatepark, Bike Park, Pump Track Solutions with Related Equipment, Accessories, and Services. A copy of the Sourcewell Contract is attached hereto as Exhibit A and incorporated herein by reference, to the extent not inconsistent with this Agreement. B. The Town is permitted, pursuant to Section 3-3-27 of the Town Code, to make purchases under the Sourcewell Contract, at its discretion and with the agreement of the awarded Contractor, and the Sourcewell Contract permits its cooperative use by other public entities, including the Town. C. The Town and the Contractor desire to enter into this Agreement for the purpose of (i) acknowledging their cooperative contractual relationship under the Sourcewell Contract and this Agreement, (ii) establishing the terms and conditions by which the Contractor may provide labor, equipment, and materials for Skatepark, Bike Park, Pump Track Solutions with Related Equipment, Accessories, and Services. (the “Materials and Services”) and (iii) setting the maximum aggregate amount to be expended pursuant to this Agreement related to the Materials and Services. AGREEMENT NOW, THEREFORE, in consideration of the foregoing introduction and recitals, which are incorporated herein by reference, the following mutual covenants and conditions, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Town and the Contractor hereby agree as follows: 1. Term of Agreement. This Agreement shall be effective as of the date of execution and shall remain in full force and effect until November 8, 2023 (the “Initial Term”), unless terminated as otherwise provided in this Agreement or the Sourcewell Contract. After the expiration of the Initial Term, this Agreement may be renewed for up to four successive one-year terms (the “Renewal Term”) if: (i) it is deemed in the best interests of the Town, subject to availability and appropriation of funds for renewal in each subsequent year, (ii) the term of the Sourcewell Contract has not expired or has been extended, (iii) at least 30 days prior to the end of the then-current term 2 of this Agreement, the Contractor requests, in writing, to extend this Agreement for an additional one-year term and (iv) the Town approves the additional one-year term in writing (including any price adjustments approved as part of the Sourcewell Contract), as evidenced by the Town Manager’s signature thereon, which approval may be withheld by the Town for any reason. The Contractor’s failure to seek a renewal of this Agreement shall cause this Agreement to terminate at the end of the then-current term of this Agreement; provided, however, that the Town may, at its discretion and with the agreement of the Contractor, elect to waive this requirement and renew this Agreement. The Initial Term and any Renewal Term(s) are collectively referred to herein as the “Term.” Upon renewal, the terms and conditions of this Agreement shall remain in full force and effect. 2. Scope of Work. Contractor shall provide to the Town the Services under the terms and conditions of the Sourcewell Contract and according to the specifications set forth in the Contractor’s Proposal attached hereto as Exhibit B and incorporated herein by reference. 2.1 Inspection; Acceptance. All Materials and Services are subject to final inspection and acceptance by the Town. Materials failing to conform to the requirements of this Agreement and/or the State Contract will be held at Contractor’s risk and may be returned to the Contractor. If so returned, all costs are the responsibility of the Contractor. Upon discovery of non-conforming Materials or Services, the Town may elect to do any or all of the following by written notice to the Contractor: (i) waive the non-conformance; (ii) stop the work immediately; or (iii) bring Materials or Services into compliance and withhold the cost of same from any payments due to the Contractor. 2.2 Cancellation. The Town reserves the right to cancel any work order within a reasonable time after issuance. Should a work order be canceled, the Town agrees to reimburse the Contractor, but only for actual and documentable costs incurred by the Contractor due to and after issuance of the work order. The Town will not reimburse the Contractor for any costs incurred after receipt of the Town notice of cancellation, or for lost profits, shipment of product prior to issuance of a work order or for anything not expressly permitted pursuant to this Agreement. 3. Compensation. The Town shall pay Contractor an amount not to exceed $731,640 (including all renewals) for the Materials and Services at the rates set forth in the Sourcewell Contract and as more particularly set forth in Exhibit B. 4. Payments. The Town shall pay the Contractor monthly (and the Contractor shall invoice monthly), based upon acceptance and delivery of Materials and/or Services performed and completed to date, and upon submission and approval of invoices. Each invoice shall (i) contain a reference to this Agreement and the Sourcewell Contract and (ii) document and itemize all work completed to date. The invoice statement shall include a record of materials delivered, time expended, and work performed in sufficient detail to justify payment. Additionally, invoices submitted without referencing this Agreement and the Sourcewell Contract will be subject to rejection and may be returned. 5. Records and Audit Rights. To ensure that the Contractor and its subcontractors are complying with the warranty under Section 6 below, Contractor’s and its subcontractors’ books, records, correspondence, accounting procedures and practices, and any other supporting evidence 3 relating to this Agreement, including the papers of any Contractor and its subcontractors’ employees who perform any work or services pursuant to this Agreement (all of the foregoing hereinafter referred to as “Records”), shall be open to inspection and subject to audit and/or reproduction during normal working hours by the Town, to the extent necessary to adequately permit evaluation of the Contractor’s and its subcontractors’ compliance with the Arizona employer sanctions laws referenced in Section 6 below. To the extent necessary for the Town to audit Records as set forth in this Section, Contractor and its subcontractors hereby waive any rights to keep such Records confidential. For the purpose of evaluating or verifying such actual or claimed costs or units expended, the Town shall have access to said Records, even if located at its subcontractors’ facilities, from the effective date of this Agreement for the duration of the work and until three years after the date of final payment by the Town to Contractor pursuant to this Agreement. Contractor and its subcontractors shall provide the Town with adequate and appropriate workspace so that the Town can conduct audits in compliance with the provisions of this Section. The Town shall give Contractor or its subcontractors reasonable advance notice of intended audits. Contractor shall require its subcontractors to comply with the provisions of this Section by insertion of the requirements hereof in any subcontract pursuant to this Agreement. 6. E-verify Requirements. To the extent applicable under ARIZ. REV. STAT. § 41- 4401, the Contractor and its subcontractors warrant compliance with all federal immigration laws and regulations that relate to their employees and their compliance with the E-verify requirements under ARIZ. REV. STAT. § 23-214(A). Contractor’s or its subcontractors’ failure to comply with such warranty shall be deemed a material breach of this Agreement and may result in the termination of this Agreement by the Town. 7. Israel. Contractor certifies that it is not currently engaged in and agrees for the duration of this Agreement that it will not engage in a “boycott,” as that term is defined in ARIZ. REV. STAT. § 35-393, of Israel. 8. Conflict of Interest. This Agreement may be canceled by the Town pursuant to ARIZ. REV. STAT. § 38-511. 9. Applicable Law; Venue. This Agreement shall be governed by the laws of the State of Arizona and a suit pertaining to this Agreement may be brought only in courts in Maricopa County, Arizona. 10. Agreement Subject to Appropriation. The Town is obligated only to pay its obligations set forth in this Agreement as may lawfully be made from funds appropriated and budgeted for that purpose during the Town’s then current fiscal year. The Town’s obligations under this Agreement are current expenses subject to the “budget law” and the unfettered legislative discretion of the Town concerning budgeted purposes and appropriation of funds. Should the Town elect not to appropriate and budget funds to pay its Agreement obligations, this Agreement shall be deemed terminated at the end of the then-current fiscal year term for which such funds were appropriated and budgeted for such purpose and the Town shall be relieved of any subsequent obligation under this Agreement. The parties agree that the Town has no obligation or duty of good faith to budget or appropriate the payment of the Town’s obligations set forth in this Agreement in any budget in any fiscal year other than the fiscal year in which this Agreement is executed and delivered. The Town shall be the sole judge and authority in determining the availability of funds for its obligations under this Agreement. The Town shall keep Contractor informed as to the 4 availability of funds for this Agreement. The obligation of the Town to make any payment pursuant to this Agreement is not a general obligation or indebtedness of the Town. Contractor hereby waives any and all rights to bring any claim against the Town from or relating in any way to the Town's termination of this Agreement pursuant to this section. 11. Conflicting Terms. In the event of any inconsistency, conflict or ambiguity among the terms of this Agreement, the Sourcewell Contract, the Proposal, and invoices, the documents shall govern in the order listed herein. Notwithstanding the foregoing, and in conformity with Section 2 above, unauthorized exceptions, conditions, limitations or provisions in conflict with the terms of this Agreement or the Sourcewell Contract (collectively, the “Unauthorized Conditions”), other than the Town’s project-specific requirements, are expressly declared void and shall be of no force and effect. Acceptance by the Town of any work order or invoice containing any such Unauthorized Conditions or failure to demand full compliance with the terms and conditions set forth in this Agreement or under the Sourcewell Contract shall not alter such terms and conditions or relieve Contractor from, nor be construed or deemed a waiver of, its requirements and obligations in the performance of this Agreement. 12. Rights and Privileges. To the extent provided under the Sourcewell Contract, the Town shall be afforded all of the rights and privileges afforded to the Sourcewell and shall be the “Sourcewell” (as defined in the Sourcewell Contract) for the purposes of the portions of the Sourcewell Contract that are incorporated herein by reference. 13. Indemnification; Insurance. In addition to and in no way limiting the provisions set forth in Section 12 above, the Town shall be afforded all of the insurance coverage and indemnifications afforded to the State to the extent provided under the Sourcewell Contract, and such insurance coverage and indemnifications shall inure and apply with equal effect to the Town under this Agreement including, but not limited to, the Contractor’s obligation to provide the indemnification and insurance. In any event, the Contractor shall indemnify, defend and hold harmless the Town and each council member, officer, employee or agent thereof (the Town and any such person being herein called an “Indemnified Party”), for, from and against any and all losses, claims, damages, liabilities, costs and expenses (including, but not limited to, reasonable attorneys’ fees, court costs and the costs of appellate proceedings) to which any such Indemnified Party may become subject, under any theory of liability whatsoever (“Claims”), insofar as such Claims (or actions in respect thereof) relate to, arise out of, or are caused by or based upon the negligent acts, intentional misconduct, errors, mistakes or omissions, in connection with the work or services of the Contractor, its officers, employees, agents, or any tier of subcontractor in the performance of this Agreement. 14. Laws and Regulations. Consultant shall keep fully informed and shall at all times during the performance of its duties under this Agreement ensure that it and any person for whom the Consultant is responsible abides by, and remains in compliance with, all rules, regulations, ordinances, statutes or laws affecting the Services, including, but not limited to, the following: (A) existing and future Town and County ordinances and regulations; (B) existing and future State and Federal laws; and (C) existing and future Occupational Safety and Health Administration standards. 15. Notices and Requests. Any notice or other communication required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered to the party at the address set forth below, (ii) deposited in the U.S. Mail, registered 5 or certified, return receipt requested, to the address set forth below or (iii) given to a recognized and reputable overnight delivery service, to the address set forth below: If to the Town: Town of Fountain Hills 16705 E. Avenue of the Fountains Fountain Hills, Arizona 85268 Attn: Grady E. Miller, Town Manager With copy to: Town of Fountain Hills 16705 East Avenue of the Fountains Fountain Hills, Arizona 85268 Attn: Aaron D. Arnson, Town Attorney If to Contractor: American Ramp Company 601 McKinley Ave. Joplin, Mo. 64801 Attn: Blake Robinson or at such other address, and to the attention of such other person or officer, as any party may designate in writing by notice duly given pursuant to this subsection. Notices shall be deemed received: (i) when delivered to the party, (ii) three business days after being placed in the U.S. Mail, properly addressed, with sufficient postage or (iii) the following business day after being given to a recognized overnight delivery service, with the person giving the notice paying all required charges and instructing the delivery service to deliver on the following business day. If a copy of a notice is also given to a party’s counsel or other recipient, the provisions above governing the date on which a notice is deemed to have been received by a party shall mean and refer to the date on which the party, and not its counsel or other recipient to which a copy of the notice may be sent, is deemed to have received the notice. [SIGNATURES APPEAR ON FOLLOWING PAGES] EXHIBIT A TO COOPERATIVE SERVICES AGREEMENT BETWEEN THE TOWN OF FOUNTAIN HILLS AND AMERICAN RAMP COMPANY [Sourcewell Contract] See following pages. 112420-ARC Rev. 10/2020 1 Solicitation Number: #112420 CONTRACT This Contract is between Sourcewell, 202 12th Street Northeast, P.O. Box 219, Staples, MN 56479 (Sourcewell) and American Ramp Company, Inc., 601 S. McKinley Avenue, Joplin, MO 64801 (Vendor). Sourcewell is a State of Minnesota local government agency and service cooperative created under the laws of the State of Minnesota (Minnesota Statutes Section 123A.21) that offers cooperative procurement solutions to government entities. Participation is open to federal, state/province, and municipal governmental entities, higher education, K-12 education, nonprofit, tribal government, and other public entities located in the United States and Canada. Sourcewell issued a public solicitation for Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services from which Vendor was awarded a contract. Vendor desires to contract with Sourcewell to provide equipment, products, or services to Sourcewell and the entities that access Sourcewell’s cooperative purchasing contracts (Participating Entities). 1. TERM OF CONTRACT A. EFFECTIVE DATE. This Contract is effective upon the date of the final signature below. B. EXPIRATION DATE AND EXTENSION. This Contract expires December 28, 2024, unless it is cancelled sooner pursuant to Article 22. This Contract may be extended up to one additional one-year period upon request of Sourcewell and with written agreement by Vendor. C. SURVIVAL OF TERMS. Articles 11 through 14 survive the expiration or cancellation of this Contract. 2. EQUIPMENT, PRODUCTS, OR SERVICES A. EQUIPMENT, PRODUCTS, OR SERVICES. Vendor will provide the Equipment, Products, or Services as stated in its Proposal submitted under the Solicitation Number listed above. Vendor’s Equipment, Products, or Services Proposal (Proposal) is attached and incorporated into this Contract. 112420-ARC Rev. 10/2020 2 All Equipment and Products provided under this Contract must be new/current model. Vendor may offer close-out or refurbished Equipment or Products if they are clearly indicated in Vendor’s product and pricing list. Unless agreed to by the Participating Entities in advance, Equipment or Products must be delivered as operational to the Participating Entity’s site. This Contract offers an indefinite quantity of sales, and while substantial volume is anticipated, sales and sales volume are not guaranteed. B. WARRANTY. Vendor warrants that all Equipment, Products, and Services furnished are free from liens and encumbrances, and are free from defects in design, materials, and workmanship. In addition, Vendor warrants the Equipment, Products, and Services are suitable for and will perform in accordance with the ordinary use for which they are intended. Vendor’s dealers and distributors must agree to assist the Participating Entity in reaching a resolution in any dispute over warranty terms with the manufacturer. Any manufacturer’s warranty that is effective past the expiration of the Vendor’s warranty will be passed on to the Participating Entity. C. DEALERS, DISTRIBUTORS, AND/OR RESELLERS. Upon Contract execution, Vendor will make available to Sourcewell a means to validate or authenticate Vendor’s authorized dealers, distributors, and/or resellers relative to the Equipment, Products, and Services related to this Contract. This list may be updated from time-to-time and is incorporated into this Contract by reference. It is the Vendor’s responsibility to ensure Sourcewell receives the most current version of this list. 3. PRICING All Equipment, Products, or Services under this Contract will be priced as stated in Vendor’s Proposal. When providing pricing quotes to Participating Entities, all pricing quoted must reflect a Participating Entity’s total cost of acquisition. This means that the quoted cost is for delivered Equipment, Products, and Services that are operational for their intended purpose, and includes all costs to the Participating Entity’s requested delivery location. Regardless of the payment method chosen by the Participating Entity, the total cost associated with any purchase option of the Equipment, Products, or Services must always be disclosed in the pricing quote to the applicable Participating Entity at the time of purchase. A. SHIPPING AND SHIPPING COSTS. All delivered Equipment and Products must be properly packaged. Damaged Equipment and Products may be rejected. If the damage is not readily apparent at the time of delivery, Vendor must permit the Equipment and Products to be returned within a reasonable time at no cost to Sourcewell or its Participating Entities. Participating Entities reserve the right to inspect the Equipment and Products at a reasonable 112420-ARC Rev. 10/2020 3 time after delivery where circumstances or conditions prevent effective inspection of the Equipment and Products at the time of delivery. Vendor must arrange for and pay for the return shipment on Equipment and Products that arrive in a defective or inoperable condition. Sourcewell may declare the Vendor in breach of this Contract if the Vendor intentionally delivers substandard or inferior Equipment or Products. In the event of the delivery of nonconforming Equipment and Products, the Participating Entity will notify the Vendor as soon as possible and the Vendor will replace nonconforming Equipment and Products with conforming Equipment and Products that are acceptable to the Participating Entity. B. SALES TAX. Each Participating Entity is responsible for supplying the Vendor with valid tax- exemption certification(s). When ordering, a Participating Entity must indicate if it is a tax- exempt entity. C. HOT LIST PRICING. At any time during this Contract, Vendor may offer a specific selection of Equipment, Products, or Services at discounts greater than those listed in the Contract. When Vendor determines it will offer Hot List Pricing, it must be submitted electronically to Sourcewell in a line-item format. Equipment, Products, or Services may be added or removed from the Hot List at any time through a Sourcewell Price and Product Change Form as defined in Article 4 below. Hot List program and pricing may also be used to discount and liquidate close-out and discontinued Equipment and Products as long as those close-out and discontinued items are clearly identified as such. Current ordering process and administrative fees apply. Hot List Pricing must be published and made available to all Participating Entities. 4. PRODUCT AND PRICING CHANGE REQUESTS Vendor may request Equipment, Product, or Service changes, additions, or deletions at any time. All requests must be made in writing by submitting a signed Sourcewell Price and Product Change Request Form to the assigned Sourcewell Contract Administrator. This form is available from the assigned Sourcewell Contract Administrator. At a minimum, the request must: x Identify the applicable Sourcewell contract number; x Clearly specify the requested change; x Provide sufficient detail to justify the requested change; x Individually list all Equipment, Products, or Services affected by the requested change, along with the requested change (e.g., addition, deletion, price change); and x Include a complete restatement of pricing documentation in Microsoft Excel with the effective date of the modified pricing, or product addition or deletion. The new pricing 112420-ARC Rev. 10/2020 4 restatement must include all Equipment, Products, and Services offered, even for those items where pricing remains unchanged. A fully executed Sourcewell Price and Product Request Form will become an amendment to this Contract and be incorporated by reference. 5. PARTICIPATION, CONTRACT ACCESS, AND PARTICIPATING ENTITY REQUIREMENTS A. PARTICIPATION. Sourcewell’s cooperative contracts are available and open to public and nonprofit entities across the United States and Canada; such as federal, state/province, municipal, K-12 and higher education, tribal government, and other public entities. The benefits of this Contract should be available to all Participating Entities that can legally access the Equipment, Products, or Services under this Contract. A Participating Entity’s authority to access this Contract is determined through its cooperative purchasing, interlocal, or joint powers laws. Any entity accessing benefits of this Contract will be considered a Service Member of Sourcewell during such time of access. Vendor understands that a Participating Entity’s use of this Contract is at the Participating Entity’s sole convenience and Participating Entities reserve the right to obtain like Equipment, Products, or Services from any other source. Vendor is responsible for familiarizing its sales and service forces with Sourcewell contract use eligibility requirements and documentation and will encourage potential participating entities to join Sourcewell. Sourcewell reserves the right to add and remove Participating Entities to its roster during the term of this Contract. B. PUBLIC FACILITIES. Vendor’s employees may be required to perform work at government- owned facilities, including schools. Vendor’s employees and agents must conduct themselves in a professional manner while on the premises, and in accordance with Participating Entity policies and procedures, and all applicable laws. 6. PARTICIPATING ENTITY USE AND PURCHASING A. ORDERS AND PAYMENT. To access the contracted Equipment, Products, or Services under this Contract, a Participating Entity must clearly indicate to Vendor that it intends to access this Contract; however, order flow and procedure will be developed jointly between Sourcewell and Vendor. Typically, a Participating Entity will issue an order directly to Vendor. If a Participating Entity issues a purchase order, it may use its own forms, but the purchase order should clearly note the applicable Sourcewell contract number. All Participating Entity orders under this Contract must be issued prior to expiration of this Contract; however, Vendor performance, Participating Entity payment, and any applicable warranty periods or other Vendor or Participating Entity obligations may extend beyond the term of this Contract. 112420-ARC Rev. 10/2020 5 Vendor’s acceptable forms of payment are included in Attachment A. Participating Entities will be solely responsible for payment and Sourcewell will have no liability for any unpaid invoice of any Participating Entity. B. ADDITIONAL TERMS AND CONDITIONS/PARTICIPATING ADDENDUM. Additional terms and conditions to a purchase order, or other required transaction documentation, may be negotiated between a Participating Entity and Vendor, such as job or industry-specific requirements, legal requirements (e.g., affirmative action or immigration status requirements), or specific local policy requirements. Some Participating Entitles may require the use of a Participating Addendum; the terms of which will be worked out directly between the Participating Entity and the Vendor. Any negotiated additional terms and conditions must never be less favorable to the Participating Entity than what is contained in this Contract. C. SPECIALIZED SERVICE REQUIREMENTS. In the event that the Participating Entity requires service or specialized performance requirements (such as e-commerce specifications, specialized delivery requirements, or other specifications and requirements) not addressed in this Contract, the Participating Entity and the Vendor may enter into a separate, standalone agreement, apart from this Contract. Sourcewell, including its agents and employees, will not be made a party to a claim for breach of such agreement. D. TERMINATION OF ORDERS. Participating Entities may terminate an order, in whole or in part, immediately upon notice to Vendor in the event of any of the following events: 1. The Participating Entity fails to receive funding or appropriation from its governing body at levels sufficient to pay for the goods to be purchased; 2. Federal, state, or provincial laws or regulations prohibit the purchase or change the Participating Entity’s requirements; or 3. Vendor commits any material breach of this Contract or the additional terms agreed to between the Vendor and a Participating Entity. E. GOVERNING LAW AND VENUE. The governing law and venue for any action related to a Participating Entity’s order will be determined by the Participating Entity making the purchase. 7. CUSTOMER SERVICE A. PRIMARY ACCOUNT REPRESENTATIVE. Vendor will assign an Account Representative to Sourcewell for this Contract and must provide prompt notice to Sourcewell if that person is changed. The Account Representative will be responsible for: x Maintenance and management of this Contract; x Timely response to all Sourcewell and Participating Entity inquiries; and x Business reviews to Sourcewell and Participating Entities, if applicable. 112420-ARC Rev. 10/2020 6 B. BUSINESS REVIEWS. Vendor must perform a minimum of one business review with Sourcewell per contract year. The business review will cover sales to Participating Entities, pricing and contract terms, administrative fees, supply issues, customer issues, and any other necessary information. 8. REPORT ON CONTRACT SALES ACTIVITY AND ADMINISTRATIVE FEE PAYMENT A. CONTRACT SALES ACTIVITY REPORT. Each calendar quarter, Vendor must provide a contract sales activity report (Report) to the Sourcewell Contract Administrator assigned to this Contract. A Report must be provided regardless of the number or amount of sales during that quarter (i.e., if there are no sales, Vendor must submit a report indicating no sales were made). The Report must contain the following fields: x Customer Name (e.g., City of Staples Highway Department); x Customer Physical Street Address; x Customer City; x Customer State/Province; x Customer Zip Code; x Customer Contact Name; x Customer Contact Email Address; x Customer Contact Telephone Number; x Sourcewell Assigned Entity/Participating Entity Number; x Item Purchased Description; x Item Purchased Price; x Sourcewell Administrative Fee Applied; and x Date Purchase was invoiced/sale was recognized as revenue by Vendor. B. ADMINISTRATIVE FEE. In consideration for the support and services provided by Sourcewell, the Vendor will pay an administrative fee to Sourcewell on all Equipment, Products, and Services provided to Participating Entities. The Administrative Fee must be included in, and not added to, the pricing. Vendor may not charge Participating Entities more than the contracted price to offset the Administrative Fee. The Vendor will submit payment to Sourcewell for the percentage of administrative fee stated in the Proposal multiplied by the total sales of all Equipment, Products, and Services purchased by Participating Entities under this Contract during each calendar quarter. Payments should note the Vendor’s name and Sourcewell-assigned contract number in the memo; and must be mailed to the address above “Attn: Accounts Receivable” or remitted electronically to Sourcewell’s banking institution per Sourcewell’s Finance department instructions. Payments must be received no later than 45 calendar days after the end of each calendar quarter. 112420-ARC Rev. 10/2020 7 Vendor agrees to cooperate with Sourcewell in auditing transactions under this Contract to ensure that the administrative fee is paid on all items purchased under this Contract. In the event the Vendor is delinquent in any undisputed administrative fees, Sourcewell reserves the right to cancel this Contract and reject any proposal submitted by the Vendor in any subsequent solicitation. In the event this Contract is cancelled by either party prior to the Contract’s expiration date, the administrative fee payment will be due no more than 30 days from the cancellation date. 9. AUTHORIZED REPRESENTATIVE Sourcewell's Authorized Representative is its Chief Procurement Officer. Vendor’s Authorized Representative is the person named in the Vendor’s Proposal. If Vendor’s Authorized Representative changes at any time during this Contract, Vendor must promptly notify Sourcewell in writing. 10. AUDIT, ASSIGNMENT, AMENDMENTS, WAIVER, AND CONTRACT COMPLETE A. AUDIT. Pursuant to Minnesota Statutes Section 16C.05, subdivision 5, the books, records, documents, and accounting procedures and practices relevant this Agreement are subject to examination by Sourcewell or the Minnesota State Auditor for a minimum of six years from the end of this Contract. This clause extends to Participating Entities as it relates to business conducted by that Participating Entity under this Contract. B. ASSIGNMENT. Neither the Vendor nor Sourcewell may assign or transfer any rights or obligations under this Contract without the prior consent of the parties and a fully executed assignment agreement. Such consent will not be unreasonably withheld. C. AMENDMENTS. Any amendment to this Contract must be in writing and will not be effective until it has been fully executed by the parties. D. WAIVER. If either party fails to enforce any provision of this Contract, that failure does not waive the provision or the right to enforce it. E. CONTRACT COMPLETE. This Contract contains all negotiations and agreements between Sourcewell and Vendor. No other understanding regarding this Contract, whether written or oral, may be used to bind either party. For any conflict between the attached Proposal and the terms set out in Articles 1-22, the terms of Articles 1-22 will govern. F. RELATIONSHIP OF THE PARTIES. The relationship of the parties is one of independent contractors, each free to exercise judgment and discretion with regard to the conduct of their 112420-ARC Rev. 10/2020 8 respective businesses. This Contract does not create a partnership, joint venture, or any other relationship such as master-servant, or principal-agent. 11. LIABILITY Vendor must indemnify, save, and hold Sourcewell and its Participating Entities, including their agents and employees, harmless from any claims or causes of action, including attorneys’ fees, arising out of the performance of this Contract by the Vendor or its agents or employees; this indemnification includes injury or death to person(s) or property alleged to have been caused by some defect in the Equipment, Products, or Services under this Contract to the extent the Equipment, Product, or Service has been used according to its specifications. 12. GOVERNMENT DATA PRACTICES Vendor and Sourcewell must comply with the Minnesota Government Data Practices Act, Minnesota Statutes Chapter 13, as it applies to all data provided by or provided to Sourcewell under this Contract and as it applies to all data created, collected, received, stored, used, maintained, or disseminated by the Vendor under this Contract. If the Vendor receives a request to release the data referred to in this article, the Vendor must immediately notify Sourcewell and Sourcewell will assist with how the Vendor should respond to the request. 13. INTELLECTUAL PROPERTY, PUBLICITY, MARKETING, AND ENDORSEMENT A. INTELLECTUAL PROPERTY 1. Grant of License. During the term of this Contract: a. Sourcewell grants to Vendor a royalty-free, worldwide, non-exclusive right and license to use theTrademark(s) provided to Vendor by Sourcewell in advertising and promotional materials for the purpose of marketing Sourcewell’s relationship with Vendor. b. Vendor grants to Sourcewell a royalty-free, worldwide, non-exclusive right and license to use Vendor’s Trademarks in advertising and promotional materials for the purpose of marketing Vendor’s relationship with Sourcewell. 2. Limited Right of Sublicense. The right and license granted herein includes a limited right of each party to grant sublicenses to its and their respective distributors, marketing representatives, and agents (collectively “Permitted Sublicensees”) in advertising and promotional materials for the purpose of marketing the Parties’ relationship to Participating Entities. Any sublicense granted will be subject to the terms and conditions of this Article. Each party will be responsible for any breach of this Article by any of their respective sublicensees. 112420-ARC Rev. 10/2020 9 3. Use; Quality Control. a. Sourcewell must not alter Vendor’s Trademarks from the form provided by Vendor and must comply with Vendor’s removal requests as to specific uses of its trademarks or logos. b. Vendor must not alter Sourcewell’s Trademarks from the form provided by Sourcewell and must comply with Sourcewell’s removal requests as to specific uses of its trademarks or logos. c. Each party agrees to use, and to cause its Permitted Sublicensees to use, the other party’s Trademarks only in good faith and in a dignified manner consistent with such party’s use of the Trademarks. Upon written notice to the breaching party, the breaching party has 30 days of the date of the written notice to cure the breach or the license will be terminated. 4. As applicable, Vendor agrees to indemnify and hold harmless Sourcewell and its Participating Entities against any and all suits, claims, judgments, and costs instituted or recovered against Sourcewell or Participating Entities by any person on account of the use of any Equipment or Products by Sourcewell or its Participating Entities supplied by Vendor in violation of applicable patent or copyright laws. 5. Termination. Upon the termination of this Contract for any reason, each party, including Permitted Sublicensees, will have 30 days to remove all Trademarks from signage, websites, and the like bearing the other party’s name or logo (excepting Sourcewell’s pre-printed catalog of vendors which may be used until the next printing). Vendor must return all marketing and promotional materials, including signage, provided by Sourcewell, or dispose of it according to Sourcewell’s written directions. B. PUBLICITY. Any publicity regarding the subject matter of this Contract must not be released without prior written approval from the Authorized Representatives. Publicity includes notices, informational pamphlets, press releases, research, reports, signs, and similar public notices prepared by or for the Vendor individually or jointly with others, or any subcontractors, with respect to the program, publications, or services provided resulting from this Contract. C. MARKETING. Any direct advertising, marketing, or offers with Participating Entities must be approved by Sourcewell. Materials should be sent to the Sourcewell Contract Administrator assigned to this Contract. D. ENDORSEMENT. The Vendor must not claim that Sourcewell endorses its Equipment, Products, or Services. 14. GOVERNING LAW, JURISDICTION, AND VENUE Minnesota law governs this Contract. Venue for all legal proceedings out of this Contract, or its breach, must be in the appropriate state court in Todd County or federal court in Fergus Falls, Minnesota. 112420-ARC Rev. 10/2020 10 15. FORCE MAJEURE Neither party to this Contract will be held responsible for delay or default caused by acts of God or other conditions that are beyond that party’s reasonable control. A party defaulting under this provision must provide the other party prompt written notice of the default. 16. SEVERABILITY If any provision of this Contract is found to be illegal, unenforceable, or void then both Sourcewell and Vendor will be relieved of all obligations arising under such provisions. If the remainder of this Contract is capable of performance, it will not be affected by such declaration or finding and must be fully performed. 17. PERFORMANCE, DEFAULT, AND REMEDIES A. PERFORMANCE. During the term of this Contract, the parties will monitor performance and address unresolved contract issues as follows: 1. Notification. The parties must promptly notify each other of any known dispute and work in good faith to resolve such dispute within a reasonable period of time. If necessary, Sourcewell and the Vendor will jointly develop a short briefing document that describes the issue(s), relevant impact, and positions of both parties. 2. Escalation. If parties are unable to resolve the issue in a timely manner, as specified above, either Sourcewell or Vendor may escalate the resolution of the issue to a higher level of management. The Vendor will have 30 calendar days to cure an outstanding issue. 3. Performance while Dispute is Pending. Notwithstanding the existence of a dispute, the Vendor must continue without delay to carry out all of its responsibilities under the Contract that are not affected by the dispute. If the Vendor fails to continue without delay to perform its responsibilities under the Contract, in the accomplishment of all undisputed work, any additional costs incurred by Sourcewell and/or its Participating Entities as a result of such failure to proceed will be borne by the Vendor. B. DEFAULT AND REMEDIES. Either of the following constitutes cause to declare this Contract, or any Participating Entity order under this Contract, in default: 1. Nonperformance of contractual requirements, or 2. A material breach of any term or condition of this Contract. Written notice of default and a reasonable opportunity to cure must be issued by the party claiming default. Time allowed for cure will not diminish or eliminate any liability for liquidated or other damages. If the default remains after the opportunity for cure, the non-defaulting party may: 112420-ARC Rev. 10/2020 11 x Exercise any remedy provided by law or equity, or x Terminate the Contract or any portion thereof, including any orders issued against the Contract. 18. INSURANCE A. REQUIREMENTS. At its own expense, Vendor must maintain insurance policy(ies) in effect at all times during the performance of this Contract with insurance company(ies) licensed or authorized to do business in the State of Minnesota having an “AM BEST” rating of A- or better, with coverage and limits of insurance not less than the following: 1. Workers’ Compensation and Employer’s Liability. Workers’ Compensation: As required by any applicable law or regulation. Employer's Liability Insurance: must be provided in amounts not less than listed below: Minimum limits: $500,000 each accident for bodily injury by accident $500,000 policy limit for bodily injury by disease $500,000 each employee for bodily injury by disease 2. Commercial General Liability Insurance. Vendor will maintain insurance covering its operations, with coverage on an occurrence basis, and must be subject to terms no less broad than the Insurance Services Office (“ISO”) Commercial General Liability Form CG0001 (2001 or newer edition), or equivalent. At a minimum, coverage must include liability arising from premises, operations, bodily injury and property damage, independent contractors, products-completed operations including construction defect, contractual liability, blanket contractual liability, and personal injury and advertising injury. All required limits, terms and conditions of coverage must be maintained during the term of this Contract. Minimum Limits: $1,000,000 each occurrence Bodily Injury and Property Damage $1,000,000 Personal and Advertising Injury $2,000,000 aggregate for Products-Completed operations $2,000,000 general aggregate 3. Commercial Automobile Liability Insurance. During the term of this Contract, Vendor will maintain insurance covering all owned, hired, and non-owned automobiles in limits of liability not less than indicated below. The coverage must be subject to terms no less broad than ISO Business Auto Coverage Form CA 0001 (2010 edition or newer), or equivalent. Minimum Limits: $1,000,000 each accident, combined single limit 112420-ARC Rev. 10/2020 12 4. Umbrella Insurance. During the term of this Contract, Vendor will maintain umbrella coverage over Workers’ Compensation, Commercial General Liability, and Commercial Automobile. Minimum Limits: $2,000,000 5. Professional/Technical, Errors and Omissions, and/or Miscellaneous Professional Liability. During the term of this Contract, Vendor will maintain coverage for all claims the Vendor may become legally obligated to pay resulting from any actual or alleged negligent act, error, or omission related to Vendor’s professional services required under this Contract. Minimum Limits: $2,000,000 per claim or event $2,000,000 – annual aggregate 6. Network Security and Privacy Liability Insurance. During the term of this Contract, Vendor will maintain coverage for network security and privacy liability. The coverage may be endorsed on another form of liability coverage or written on a standalone policy. The insurance must cover claims which may arise from failure of Vendor’s security resulting in, but not limited to, computer attacks, unauthorized access, disclosure of not public data – including but not limited to, confidential or private information, transmission of a computer virus, or denial of service. Minimum limits: $2,000,000 per occurrence $2,000,000 annual aggregate Failure of Vendor to maintain the required insurance will constitute a material breach entitling Sourcewell to immediately terminate this Contract for default. B. CERTIFICATES OF INSURANCE. Prior to commencing under this Contract, Vendor must furnish to Sourcewell a certificate of insurance, as evidence of the insurance required under this Contract. Prior to expiration of the policy(ies), renewal certificates must be mailed to Sourcewell, 202 12th Street Northeast, P.O. Box 219, Staples, MN 56479 or sent to the Sourcewell Contract Administrator assigned to this Contract. The certificates must be signed by a person authorized by the insurer(s) to bind coverage on their behalf. Failure to request certificates of insurance by Sourcewell, or failure of Vendor to provide certificates of insurance, in no way limits or relieves Vendor of its duties and responsibilities in this Contract. C. ADDITIONAL INSURED ENDORSEMENT AND PRIMARY AND NON-CONTRIBUTORY INSURANCE CLAUSE. Vendor agrees to list Sourcewell and its Participating Entities, including their officers, agents, and employees, as an additional insured under the Vendor’s commercial 112420-ARC Rev. 10/2020 13 general liability insurance policy with respect to liability arising out of activities, “operations,” or “work” performed by or on behalf of Vendor, and products and completed operations of Vendor. The policy provision(s) or endorsement(s) must further provide that coverage is primary and not excess over or contributory with any other valid, applicable, and collectible insurance or self-insurance in force for the additional insureds. D. WAIVER OF SUBROGATION. Vendor waives and must require (by endorsement or otherwise) all its insurers to waive subrogation rights against Sourcewell and other additional insureds for losses paid under the insurance policies required by this Contract or other insurance applicable to the Vendor or its subcontractors. The waiver must apply to all deductibles and/or self-insured retentions applicable to the required or any other insurance maintained by the Vendor or its subcontractors. Where permitted by law, Vendor must require similar written express waivers of subrogation and insurance clauses from each of its subcontractors. E. UMBRELLA/EXCESS LIABILITY/SELF-INSURED RETENTION. The limits required by this Contract can be met by either providing a primary policy or in combination with umbrella/excess liability policy(ies), or self-insured retention. 19. COMPLIANCE A. LAWS AND REGULATIONS. All Equipment, Products, or Services provided under this Contract must comply fully with applicable federal laws and regulations, and with the laws in the states and provinces in which the Equipment, Products, or Services are sold. B. LICENSES. Vendor must maintain a valid and current status on all required federal, state/provincial, and local licenses, bonds, and permits required for the operation of the business that the Vendor conducts with Sourcewell and Participating Entities. 20. BANKRUPTCY, DEBARMENT, OR SUSPENSION CERTIFICATION Vendor certifies and warrants that it is not in bankruptcy or that it has previously disclosed in writing certain information to Sourcewell related to bankruptcy actions. If at any time during this Contract Vendor declares bankruptcy, Vendor must immediately notify Sourcewell in writing. Vendor certifies and warrants that neither it nor its principals are presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from programs operated by the State of Minnesota; the United States federal government or the Canadian government, as applicable; or any Participating Entity. Vendor certifies and warrants that neither it nor its principals have been convicted of a criminal offense related to the subject matter of this Contract. Vendor further warrants that it will provide immediate written notice to Sourcewell if this certification changes at any time. 112420-ARC Rev. 10/2020 14 21. PROVISIONS FOR NON-UNITED STATES FEDERAL ENTITY PROCUREMENTS UNDER UNITED STATES FEDERAL AWARDS OR OTHER AWARDS Participating Entities that use United States federal grant or FEMA funds to purchase goods or services from this Contract may be subject to additional requirements including the procurement standards of the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, 2 C.F.R. § 200. Participating Entities may also require additional requirements based on specific funding specifications. Within this Article, all references to “federal” should be interpreted to mean the United States federal government. The following list only applies when a Participating Entity accesses Vendor’s Equipment, Products, or Services with United States federal funds. A. EQUAL EMPLOYMENT OPPORTUNITY. Except as otherwise provided under 41 C.F.R. § 60, all contracts that meet the definition of “federally assisted construction contract” in 41 C.F.R. § 60- 1.3 must include the equal opportunity clause provided under 41 C.F.R. §60-1.4(b), in accordance with Executive Order 11246, “Equal Employment Opportunity” (30 FR 12319, 12935, 3 C.F.R. §, 1964-1965 Comp., p. 339), as amended by Executive Order 11375, “Amending Executive Order 11246 Relating to Equal Employment Opportunity,” and implementing regulations at 41 C.F.R. § 60, “Office of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of Labor.” The equal opportunity clause is incorporated herein by reference. B. DAVIS-BACON ACT, AS AMENDED (40 U.S.C. § 3141-3148). When required by federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. § 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 C.F.R. § 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. The non-federal entity must place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation. The decision to award a contract or subcontract must be conditioned upon the acceptance of the wage determination. The non-federal entity must report all suspected or reported violations to the federal awarding agency. The contracts must also include a provision for compliance with the Copeland “Anti-Kickback” Act (40 U.S.C. § 3145), as supplemented by Department of Labor regulations (29 C.F.R. § 3, “Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or Grants from the United States”). The Act provides that each contractor or subrecipient must be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he or she is otherwise entitled. The non-federal entity must report 112420-ARC Rev. 10/2020 15 all suspected or reported violations to the federal awarding agency. Vendor must be in compliance with all applicable Davis-Bacon Act provisions. C. CONTRACT WORK HOURS AND SAFETY STANDARDS ACT (40 U.S.C. § 3701-3708). Where applicable, all contracts awarded by the non-federal entity in excess of $100,000 that involve the employment of mechanics or laborers must include a provision for compliance with 40 U.S.C. §§ 3702 and 3704, as supplemented by Department of Labor regulations (29 C.F.R. § 5). Under 40 U.S.C. § 3702 of the Act, each contractor must be required to compute the wages of every mechanic and laborer on the basis of a standard work week of 40 hours. Work in excess of the standard work week is permissible provided that the worker is compensated at a rate of not less than one and a half times the basic rate of pay for all hours worked in excess of 40 hours in the work week. The requirements of 40 U.S.C. § 3704 are applicable to construction work and provide that no laborer or mechanic must be required to work in surroundings or under working conditions which are unsanitary, hazardous or dangerous. These requirements do not apply to the purchases of supplies or materials or articles ordinarily available on the open market, or contracts for transportation or transmission of intelligence. This provision is hereby incorporated by reference into this Contract. Vendor certifies that during the term of an award for all contracts by Sourcewell resulting from this procurement process, Vendor must comply with applicable requirements as referenced above. D. RIGHTS TO INVENTIONS MADE UNDER A CONTRACT OR AGREEMENT. If the federal award meets the definition of “funding agreement” under 37 C.F.R. § 401.2(a) and the recipient or subrecipient wishes to enter into a contract with a small business firm or nonprofit organization regarding the substitution of parties, assignment or performance of experimental, developmental, or research work under that “funding agreement,” the recipient or subrecipient must comply with the requirements of 37 C.F.R. § 401, “Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants, Contracts and Cooperative Agreements,” and any implementing regulations issued by the awarding agency. Vendor certifies that during the term of an award for all contracts by Sourcewell resulting from this procurement process, Vendor must comply with applicable requirements as referenced above. E. CLEAN AIR ACT (42 U.S.C. § 7401-7671Q.) AND THE FEDERAL WATER POLLUTION CONTROL ACT (33 U.S.C. § 1251-1387). Contracts and subgrants of amounts in excess of $150,000 require the non-federal award to agree to comply with all applicable standards, orders or regulations issued pursuant to the Clean Air Act (42 U.S.C. § 7401- 7671q) and the Federal Water Pollution Control Act as amended (33 U.S.C. § 1251- 1387). Violations must be reported to the Federal awarding agency and the Regional Office of the Environmental Protection Agency (EPA). Vendor certifies that during the term of this Contract will comply with applicable requirements as referenced above. F. DEBARMENT AND SUSPENSION (EXECUTIVE ORDERS 12549 AND 12689). A contract award (see 2 C.F.R. § 180.220) must not be made to parties listed on the government wide exclusions in the System for Award Management (SAM), in accordance with the OMB guidelines at 2 C.F.R. 112420-ARC Rev. 10/2020 16 §180 that implement Executive Orders 12549 (3 C.F.R. § 1986 Comp., p. 189) and 12689 (3 C.F.R. § 1989 Comp., p. 235), “Debarment and Suspension.” SAM Exclusions contains the names of parties debarred, suspended, or otherwise excluded by agencies, as well as parties declared ineligible under statutory or regulatory authority other than Executive Order 12549. Vendor certifies that neither it nor its principals are presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from participation by any federal department or agency. G. BYRD ANTI-LOBBYING AMENDMENT, AS AMENDED (31 U.S.C. § 1352). Vendors must file any required certifications. Vendors must not have used federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any federal contract, grant, or any other award covered by 31 U.S.C. § 1352. Vendors must disclose any lobbying with non-federal funds that takes place in connection with obtaining any federal award. Such disclosures are forwarded from tier to tier up to the non-federal award. Vendors must file all certifications and disclosures required by, and otherwise comply with, the Byrd Anti-Lobbying Amendment (31 U.S.C. § 1352). H. RECORD RETENTION REQUIREMENTS. To the extent applicable, Vendor must comply with the record retention requirements detailed in 2 C.F.R. § 200.333. The Vendor further certifies that it will retain all records as required by 2 C.F.R. § 200.333 for a period of 3 years after grantees or subgrantees submit final expenditure reports or quarterly or annual financial reports, as applicable, and all other pending matters are closed. I. ENERGY POLICY AND CONSERVATION ACT COMPLIANCE. To the extent applicable, Vendor must comply with the mandatory standards and policies relating to energy efficiency which are contained in the state energy conservation plan issued in compliance with the Energy Policy and Conservation Act. J. BUY AMERICAN PROVISIONS COMPLIANCE. To the extent applicable, Vendor must comply with all applicable provisions of the Buy American Act. Purchases made in accordance with the Buy American Act must follow the applicable procurement rules calling for free and open competition. K. ACCESS TO RECORDS (2 C.F.R. § 200.336). Vendor agrees that duly authorized representatives of a federal agency must have access to any books, documents, papers and records of Vendor that are directly pertinent to Vendor’s discharge of its obligations under this Contract for the purpose of making audits, examinations, excerpts, and transcriptions. The right also includes timely and reasonable access to Vendor’s personnel for the purpose of interview and discussion relating to such documents. 112420-ARC Rev. 10/2020 17 L. PROCUREMENT OF RECOVERED MATERIALS (2 C.F.R. § 200.322). A non-federal entity that is a state agency or agency of a political subdivision of a state and its contractors must comply with Section 6002 of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act. The requirements of Section 6002 include procuring only items designated in guidelines of the Environmental Protection Agency (EPA) at 40 C.F.R. § 247 that contain the highest percentage of recovered materials practicable, consistent with maintaining a satisfactory level of competition, where the purchase price of the item exceeds $10,000 or the value of the quantity acquired during the preceding fiscal year exceeded $10,000; procuring solid waste management services in a manner that maximizes energy and resource recovery; and establishing an affirmative procurement program for procurement of recovered materials identified in the EPA guidelines. 22. CANCELLATION Sourcewell or Vendor may cancel this Contract at any time, with or without cause, upon 60 days’ written notice to the other party. However, Sourcewell may cancel this Contract immediately upon discovery of a material defect in any certification made in Vendor’s Proposal. Cancellation of this Contract does not relieve either party of financial, product, or service obligations incurred or accrued prior to cancellation. Sourcewell American Ramp Company, Inc. 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VXEVWDQWLDOO\RULQWKHLUHQWLUHW\8QGHU0LQQHVRWD6WDWXWHV6HFWLRQVXEGLYLVLRQDOOSURSRVDOVDUHFRQVLGHUHGQRQSXEOLF GDWDXQWLOWKHHYDOXDWLRQLVFRPSOHWHDQGD&RQWUDFWLVDZDUGHG$WWKDWSRLQWSURSRVDOVEHFRPHSXEOLFGDWD0LQQHVRWD6WDWXWHV 6HFWLRQSHUPLWVRQO\FHUWDLQQDUURZO\GHILQHGGDWDWREHFRQVLGHUHGDWUDGHVHFUHWDQGWKXVQRQSXEOLFGDWDXQGHU 0LQQHVRWD V'DWD3UDFWLFHV$FW 3URSRVHULWVHPSOR\HHVDJHQWVDQGVXEFRQWUDFWRUVDUHQRW D ,QFOXGHGRQWKH³6SHFLDOO\'HVLJQDWHG1DWLRQDOVDQG%ORFNHG3HUVRQV´OLVWPDLQWDLQHGE\WKH2IILFHRI)RUHLJQ$VVHWV&RQWURO RIWKH8QLWHG6WDWHV'HSDUWPHQWRIWKH7UHDVXU\IRXQGDWKWWSVZZZWUHDVXU\JRYRIDFGRZQORDGVVGQOLVWSGI E ,QFOXGHGRQWKHJRYHUQPHQWZLGHH[FOXVLRQVOLVWVLQWKH8QLWHG6WDWHV6\VWHPIRU$ZDUG0DQDJHPHQWIRXQGDW KWWSVZZZVDPJRYSRUWDORU F 3UHVHQWO\GHEDUUHGVXVSHQGHGSURSRVHGIRUGHEDUPHQWGHFODUHGLQHOLJLEOHRUYROXQWDULO\H[FOXGHGIURPSURJUDPVRSHUDWHG Bid Number: RFP 112420 Vendor Name: AMERICAN RAMP COMPANY INC E\WKH6WDWHRI0LQQHVRWDWKH8QLWHG6WDWHVIHGHUDOJRYHUQPHQWRUWKH&DQDGLDQJRYHUQPHQWDVDSSOLFDEOHRUDQ\ 3DUWLFLSDWLQJ(QWLW\9HQGRUFHUWLILHVDQGZDUUDQWVWKDWQHLWKHULWQRULWVSULQFLSDOVKDYHEHHQFRQYLFWHGRIDFULPLQDORIIHQVH UHODWHGWRWKHVXEMHFWPDWWHURIWKLVVROLFLWDWLRQ %\FKHFNLQJWKLVER[,DFNQRZOHGJHWKDW,DPERXQGE\WKHWHUPVRIWKH3URSRVHU¶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id Number: RFP 112420 Vendor Name: AMERICAN RAMP COMPANY INC Rev. 2/2020 Sourcewell RFP #112420 Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services Page 1 RFP #112420 REQUEST FOR PROPOSALS for Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services Proposal Due Date: November 24, 2020, 4:30 p.m., Central Time Sourcewell, a State of Minnesota local government agency and service cooperative, is requesting proposals for Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services to result in a contracting solution for use by its Participating Entities. Sourcewell Participating Entities include thousands of governmental, higher education, K-12 education, nonprofit, tribal government, and other public agencies located in the United States and Canada. A full copy of the Request for Proposals can be found on the Sourcewell Procurement Portal [https://proportal.sourcewell-mn.gov]. Only proposals submitted through the Sourcewell Procurement Portal will be considered. Proposals are due no later than November 24, 2020, at 4:30 p.m. Central Time, and late proposals will not be considered. Solicitation Schedule Public Notice of RFP Published: October 6, 2020 Pre-proposal Conference: October 28, 2020, 10:00 a.m., Central Time Question Submission Deadline: November 17, 2020, 4:30 p.m., Central Time Proposal Due Date: November 24, 2020, 4:30 p.m., Central Time Late responses will not be considered. Opening: November 24, 2020, 6:30 p.m., Central Time ** ** SEE RFP SUB-SECTION V. G. “OPENING” Rev. 2/2020 Sourcewell RFP #112420 Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services Page 2 I. ABOUT SOURCEWELL PARTICIPATING ENTITIES A. SOURCEWELL Sourcewell is a State of Minnesota local government agency and service cooperative created under the laws of the State of Minnesota (Minnesota Statutes Section 123A.21) that facilitates a competitive public solicitation and contract award process for the benefit of its 50,000+ participating entities across the United States and Canada. Sourcewell’s solicitation process complies with State of Minnesota law and policies, conforms to Canadian trade agreements, and results in cooperative contracting solutions from which Sourcewell’s Participating Entities procure equipment, products, and services. Cooperative contracting provides participating entities and vendors increased administrative efficiencies and the power of combined purchasing volume that result in overall cost savings. At times, Sourcewell also partners with other purchasing cooperatives to combine the purchasing volume of their membership into a single solicitation and contract expanding the reach of contracted vendors’ potential pool of end users. Sourcewell uses a website-based platform, the Sourcewell Procurement Portal, through which all proposals to this RFP must be submitted. B. USE OF RESULTING CONTRACTS In the United States, Sourcewell’s contracts are available for use by: • Federal and state government entities; • Cities, towns, and counties/parishes; • Education service cooperatives; • K-12 and higher education entities; • Tribal government entities; • Some nonprofit entities; and • Other public entities. In Canada, Sourcewell’s contracts are available for use by: • Provincial and territorial government departments, ministries, agencies, boards, councils, committees, commissions, and similar agencies; • Regional, local, district, and other forms of municipal government, municipal organizations, school boards, and publicly-funded academic, health, and social service entities referred to as MASH sector (this should be construed to include but not be limited to the Cities of Calgary, Edmonton, Toronto, Calgary, Ottawa, and Winnipeg), as well as any corporation or entity owned or controlled by one or more of the preceding entities; Rev. 2/2020 Sourcewell RFP #112420 Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services Page 3 • Crown corporations, government enterprises, and other entities that are owned or controlled by these entities through ownership interest; • Members of the Rural Municipalities of Alberta (RMA) and their represented Associations, Saskatchewan Association of Rural Municipalities (SARM), Saskatchewan Urban Municipalities Association (SUMA), Association of Manitoba Municipalities (AMM), Local Authority Services (LAS), Municipalities Newfoundland and Labrador (MNL), Nova Scotia Federation of Municipalities (NSFM), and Federation of Prince Edward Island Municipalities (FPEIM). For a listing of current United States and Canadian Participating Entities visit Sourcewell’s website (note: there is a tab for each country’s listing): https://www.sourcewell- mn.gov/sourcewell-for-vendors/agency-locator. Access to contracted equipment, products, or services by Participating Entities is typically through a purchase order issued directly to the applicable vendor. A Participating Entity may request additional terms or conditions related to a purchase. Use of Sourcewell contracts is voluntary and Participating Entities retain the right to obtain similar equipment, products, or services from other sources. To meet Participating Entities’ needs, public notice of this RFP has been broadly published, including notification in the United States to each state-level procurement department for possible re-posting. Proof of publication will be available at the conclusion of the solicitation process. II. EQUIPMENT, PRODUCTS, AND SERVICES A. SOLUTIONS-BASED SOLICITATION This RFP and contract award process is a solutions-based solicitation; meaning that Sourcewell is seeking equipment, products, or services that meet the general requirements of the scope of this RFP and that are commonly desired or are required by law or industry standards. B. REQUESTED EQUIPMENT, PRODUCTS, OR SERVICES It is expected that Proposers will offer a wide array of equipment, products, or services at lower prices and with better value than what they would ordinarily offer to a single government entity, a school district, or a regional cooperative. 1. Sourcewell is seeking proposals for Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services, including, but not to be limited to: Rev. 2/2020 Sourcewell RFP #112420 Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services Page 4 a. Concrete, asphalt, metal, wood, synthetic, composite, or organic materials, equipment, and accessories, intended or designed for bike or skate park or track applications including, but not limited to: i. Pre-cast, poured, cast-in-place, and hybrid solutions; and, ii. Prefabricated, modular, and custom equipment. b. Services related to the solutions described in subsections 1.a. above, including design-build services, site assessment, site preparation, installation, maintenance or repair, and warranty programs. However, this solicitation should NOT be construed to include “service-only” solutions. Proposers may include related services to the extent that these solutions are complementary to the offering of the equipment and products being proposed. A Proposer may elect to offer a materials-only solution, a turn-key solution, or an alternative solution. Generally, a turn-key solution is most desirable to Sourcewell and its Participating Entities, however, it is not mandatory or required. This solicitation does not include those equipment, products, or services covered under categories included in contracts currently maintained by Sourcewell: 1. Athletic Surfacing with Related Materials, Supplies, Installation, and Services (RFP #060518) 2. Athletic and Physical Education Equipment and Supplies with Related Accessories (RFP #071819) Generally, the solutions for Participating Entities are turn-key solutions, providing a combination of equipment, products and services, delivery, and installation to a properly operating status. However, equipment or products only solutions may be appropriate for situations where Participating Entities possess the ability, either in-house or through local third- party contractors, to properly install and bring to operation the equipment or products being proposed. Sourcewell prefers vendors that provide a sole source of responsibility for the products and services provided under a resulting contract. If Proposer requires the use of dealers, resellers, or subcontractors to provide the products or services, the Proposal should address how the products or services will be provided to Participating Entities and describe the network of dealers, resellers, and/or subcontractors that will be available to serve Participating Entities under a resulting contract. Rev. 2/2020 Sourcewell RFP #112420 Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services Page 5 Sourcewell desires the broadest possible selection of equipment, products, and services being proposed over the largest possible geographic area and to the largest possible cross-section of Sourcewell current and future Participating Entities. C. REQUIREMENTS It is expected that Proposers have knowledge of all applicable industry standards, laws, and regulations and possess an ability to market and distribute the equipment, products, or services to Participating Entities. 1. Safety Requirements. All items proposed must comply with current applicable safety or regulatory standards or codes. 2. Deviation from Industry Standard. Deviations from industry standards must be identified with an explanation of how the equipment, products, and services will provide equivalent function, coverage, performance, and/or related services. 3. New Equipment and Products. Proposed equipment and products must be for new, current model; however, Proposer may offer certain close-out equipment or products if it is specifically noted in the Pricing proposal. 4. Delivered and operational. Unless clearly noted in the Proposal, equipment and products must be delivered to the Participating Entity as operational. 5. Warranty. All equipment, products, supplies, and services must be covered by a warranty that is the industry standard or better. D. ANTICIPATED CONTRACT TERM Sourcewell anticipates that the term of any resulting contract(s) will be four (4) years. Up to two one-year extensions may be offered based on the best interests of Sourcewell and its Participating Entities. E. ESTIMATED CONTRACT VALUE AND USAGE Based on past volume of similar contracts, the estimated annual value of all transactions from contracts resulting from this RFP are anticipated to be USD $15 Million; therefore, proposers are expected to propose volume pricing. Sourcewell anticipates considerable activity under the contract(s) awarded from this RFP; however, sales and sales volume from any resulting contract are not guaranteed. F. MARKETING PLAN Proposer’s sales force will be the primary source of communication with Participating Entities. The Proposer’s Marketing Plan should demonstrate Proposer’s ability to deploy a sales force or dealer network to Participating Entities, as well as Proposer’s sales and service capabilities. It is expected that Proposer will promote and market any contract award. Rev. 2/2020 Sourcewell RFP #112420 Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services Page 6 G. ADDITIONAL CONSIDERATIONS 1. Contracts will be awarded to Proposers able to best meet the need of Participating Entities. Proposers should submit their complete line of equipment, products, or services that are applicable to the scope of this RFP. 2. Proposers should include all relevant information in its proposal, since Sourcewell cannot consider information that is not included in the Proposal. Sourcewell reserves the right to verify Proposer’s information and may request clarification from a Proposer, including samples of the proposed equipment or products. 3. Depending upon the responses received in a given category, Sourcewell may need to organize responses into subcategories in order to provide the broadest coverage of the requested equipment, products, or services to Participating Entities. Awards may be based on a subcategory. 4. A Proposer’s documented negative past performance with Sourcewell or its Participating Entities occurring under a previously awarded Sourcewell contract may be considered in the evaluation of a proposal. III. PRICING A. REQUIREMENTS All proposed pricing must be: 1. Either Line-Item Pricing or Percentage Discount from Catalog Pricing, or a combination of these: a. Line-item Pricing is pricing based on each individual product or services. Each line must indicate the Vendor’s published “List Price,” as well as the “Contract Price.” b. Percentage Discount from Catalog or Category is based on a percentage discount from a catalog or list price, defined as a published Manufacturer’s Suggested Retail Price (MSRP) for the products or services. Individualized percentage discounts can be applied to any number of defined product groupings. Proposers will be responsible for providing and maintaining current published MSRP with Sourcewell, and this pricing must be included in its proposal and provided throughout the term of any Contract resulting from this RFP. 2. The Proposer’s ceiling price (Ceiling price means that the proposed pricing will be considered as the highest price for which equipment, products, or services may be billed to a Participating Entity). However, it is permissible for vendors to sell at a price that is lower than the contracted price; 3. Stated in U.S. and Canadian dollars (as applicable); and 4. Clearly understood, complete, and fully describe the total cost of acquisition (e.g., the cost of the proposed equipment, products, and services delivered and operational for its intended purpose in the Participating Entity’s location). Rev. 2/2020 Sourcewell RFP #112420 Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services Page 7 Proposers should clearly identify any costs that are NOT included in the proposed product or service pricing. This may include items such as installation, set up, mandatory training, or initial inspection. Include identification of any parties that impose such costs and their relationship to the Proposer. Additionally, Proposers should clearly describe any unique distribution and/or delivery methods or options offered in the Proposal. B. ADMINISTRATIVE FEES Proposers are expected to pay to Sourcewell an administrative fee in exchange for Sourcewell facilitating the resulting contracts. The administrative fee is normally calculated as a percentage of the total sales to Participating Entities for all contracted equipment, products, or services made during a calendar quarter, and is typically one percent (1%) to two percent (2%). In some categories, a flat fee may be an acceptable alternative. IV. CONTRACT Proposers awarded a contract will be required to execute a contract with Sourcewell (see attached template). Only those modifications the Proposer indicates in its proposal will be available for discussion. Much of the language in the Contract reflects Minnesota legal requirements and cannot be altered. Numerous and/or onerous exceptions that contradict Minnesota law may result in the Proposal being disqualified from further review and evaluation. To request a modification to the Contract terms, conditions, or specifications, a Proposer must complete and submit the Exceptions to Terms, Conditions, or Specifications table, with all requested modifications, through the Sourcewell Procurement Portal at the time of submitting the Proposer’s Proposal. Exceptions must: 1. Clearly identify the affected article and section, and 2. Clearly note what language is requested to be modified. Unclear requests will be automatically denied. Only those exceptions that have been accepted by Sourcewell will be included in the contract document provided to the awarded vendor for signature. If a Proposer receives a contract award resulting from this solicitation it will have up to 30 days to sign and return the contract. After that time, at Sourcewell’s sole discretion, the contract award may be revoked. V. RFP PROCESS A. PRE-PROPOSAL CONFERENCE Rev. 2/2020 Sourcewell RFP #112420 Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services Page 8 Sourcewell will hold an optional, non-mandatory pre-proposal conference via webcast on the date and time noted on page one of this RFP and on the Sourcewell Procurement Portal. The purpose of this conference is to allow potential Proposers to ask questions regarding this RFP and Sourcewell’s competitive contracting process. Information about the webcast will be sent to all entities that have registered for this solicitation opportunity through their Sourcewell Procurement Portal Vendor Account. Pre-proposal conference attendance is optional. B. QUESTIONS REGARDING THIS RFP AND ORAL COMMUNICATION Questions regarding this RFP must be submitted through the Sourcewell Procurement Portal. The deadline for submission of questions is found in the Solicitation Schedule and on the Sourcewell Procurement Portal. Answers to questions will be issued through an addendum to this RFP. Repetitive questions will be summarized into a single answer and identifying information will be removed from the submitted questions. All questions, whether specific to a Proposer or generally related to the RFP, must be submitted using this process. Do not contact individual Sourcewell staff to ask questions or request information as this may disqualify the Proposer from responding to this RFP. Sourcewell will not respond to questions submitted after the deadline. C. ADDENDA Sourcewell may modify this RFP at any time prior to the proposal due date by issuing an addendum. Addenda issued by Sourcewell become a part of the RFP and will be delivered to potential Proposers through the Sourcewell Procurement Portal. Sourcewell accepts no liability in connection with the delivery of any addenda. Before a proposal will be accepted through the Sourcewell Procurement Portal, all addenda, if any, must be acknowledged by the Proposer by checking the box for each addendum. It is the responsibility of the Proposer to check for any addenda that may have been issued up to the solicitation due date and time. If an addendum is issued after a Proposer submitted its proposal, the Sourcewell Procurement Portal will WITHDRAW the submission and change the Proposer’s proposal status to INCOMPLETE. The Proposer can view this status change in the “MY BIDS” section of the Sourcewell Procurement Portal Vendor Account. The Proposer is solely responsible to check the “MY BIDS” section of the Sourcewell Procurement Portal Vendor Account periodically after submitting its Proposal (and up to the Proposal due date). If the Proposer’s Proposal status has changed to INCOMPLETE, the Proposer is solely responsible to: i) make any required adjustments to its proposal; ii) acknowledge the addenda; and iii) ensure the re-submitted proposal is received through the Sourcewell Procurement Portal no later than the Proposal Due Date and time shown in the Solicitation Schedule above. Rev. 2/2020 Sourcewell RFP #112420 Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services Page 9 D. PROPOSAL SUBMISSION Proposer’s complete proposal must be submitted through the Sourcewell Procurement Portal no later than the date and time specified in the Solicitation Schedule. Any other form of proposal submission, whether electronic, paper, or otherwise, will not be considered by Sourcewell. Late proposals will not be considered. It is the Proposer’s sole responsibility to ensure that the proposal is received on time. It is recommended that Proposers allow sufficient time to upload the proposal and to resolve any issues that may arise. The time and date that a Proposal is received by Sourcewell is solely determined by the Sourcewell Procurement Portal web clock. In the event of problems with the Sourcewell Procurement Portal, follow the instructions for technical support posted in the portal. It may take up to twenty-four (24) hours to respond to certain issues. Upon successful submission of a proposal, the Portal will automatically generate a confirmation email to the Proposer. If the Proposer does not receive a confirmation email, contact Sourcewell’s support provider at support@bidsandtenders.ca. To ensure receipt of the latest information and updates via email regarding this solicitation, or if the Proposer has obtained this solicitation document from a third party, the onus is on the Proposer to create a Sourcewell Procurement Portal Vendor Account and register for this solicitation opportunity. Within the Procurement Portal, all proposals must be digitally acknowledged by an authorized representative of the Proposer attesting that the information contained in in the proposal is true and accurate. By submitting a proposal, Proposer warrants that the information provided is true, correct, and reliable for purposes of evaluation for potential contract award. The submission of inaccurate, misleading, or false information is grounds for disqualification from a contract award and may subject the Proposer to remedies available by law. E. GENERAL PROPOSAL REQUIREMENTS Proposals must be: • In substantial compliance with the requirements of this RFP or it will be considered nonresponsive and be rejected. • Complete. A proposal will be rejected if it is conditional or incomplete. • Submitted in English. • Valid and irrevocable for 90 days following the Proposal Due Date. Any and all costs incurred in responding to this RFP will be borne by the Proposer. Rev. 2/2020 Sourcewell RFP #112420 Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services Page 10 F. PROPOSAL WITHDRAWAL Prior to the proposal deadline, a Proposer may withdraw its proposal. G. OPENING The Opening of Proposals will be conducted electronically through the Sourcewell Procurement Portal. A list of all Proposers will be made publicly available in the Sourcewell Procurement Portal after the Proposal Due Date, but no later than the Opening time listed in the Solicitation Schedule. To view the list of Proposers, verify that the Sourcewell Procurement Portal opportunities list search is set to “All” or “Closed.” The solicitation status will automatically change to “Closed” after the Proposal Due Date and Time. VI. EVALUATION AND AWARD A. EVALUATION It is the intent of Sourcewell to award one or more contracts to responsive and responsible Proposer(s) offering the best overall quality, selection of equipment, products, and services, and price that meet the commonly requested specifications of Sourcewell and its Participating Entities. The award(s) will be limited to the number of Proposers that Sourcewell determines is necessary to meet the needs of Participating Entities. Factors to be considered in determining the number of contracts to be awarded in any category may include the following: • The number of and geographic location of: o Proposers necessary to offer a comprehensive selection of equipment, products, or services for Participating Entities’ use. o A Proposer’s sales and service network to assure availability of product supply and coverage to meet Participating Entities’ anticipated needs. • Total evaluation scores. • The attributes of Proposers, and their equipment, products, or services, to assist Participating Entities achieve environmental and social requirements, preferences, and goals. Information submitted as part of a proposal should be as specific as possible when responding to the RFP. Do not assume Sourcewell’s knowledge about a specific vendor or product. B. AWARD(S) Award(s) will be made to the Proposer(s) whose proposal conforms to all conditions and requirements of the RFP, and consistent with the award criteria defined in this RFP. Rev. 2/2020 Sourcewell RFP #112420 Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services Page 11 Sourcewell may request written clarification of a proposal at any time during the evaluation process. Proposal evaluation will be based on the following scoring criteria and the Sourcewell Evaluator Scoring Guide (available in the Sourcewell Procurement Portal): Conformance to RFP Requirements 50 Financial Viability and Marketplace Success 75 Ability to Sell and Deliver Service 100 Marketing Plan 50 Value Added Attributes 75 Warranty 50 Depth and Breadth of Offered Equipment, Products, or Services 200 Pricing 400 TOTAL POINTS 1000 C. PROTESTS OF AWARDS Any protest made under this RFP by a Proposer must be in writing, addressed to Sourcewell’s Executive Director, and delivered to the Sourcewell office located at 202 12th Street NE, P.O. Box 219, Staples, MN 56479. The protest must be received no later than 10 calendar days’ following Sourcewell’s notice of contract award(s) or non-award and must be time stamped by Sourcewell no later than 4:30 p.m., Central Time. A protest must include the following items: • The name, address, and telephone number of the protester; • The original signature of the protester or its representative; • Identification of the solicitation by RFP number; • A precise statement of the relevant facts; • Identification of the issues to be resolved; • Identification of the legal or factual basis; • Any additional supporting documentation; and • Protest bond in the amount of $20,000, except where prohibited by law or treaty. Protests that do not address these elements will not be reviewed. D. RIGHTS RESERVED This RFP does not commit Sourcewell to award any contract and a proposal may be rejected if it is nonresponsive, conditional, incomplete, conflicting, or misleading. Proposals that contain false statements or do not support an attribute or condition stated by the Proposer may be rejected. Rev. 2/2020 Sourcewell RFP #112420 Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services Page 12 Sourcewell reserves the right to: • Modify or cancel this RFP at any time; • Reject any and all proposals received; • Reject proposals that do not comply with the provisions of this RFP; • Select, for contracts or for discussion, a proposal other than that with the lowest cost; • Independently verify any information provided in a Proposal; • Disqualify any Proposer that does not meet the requirements of this RFP, is debarred or suspended by the United States or Canada, State of Minnesota, Participating Entity’s state or province; has an officer, or other key personnel, who have been charged with a serious crime; or is bankrupt, insolvent, or where bankruptcy or insolvency are a reasonable prospect; • Waive or modify any informalities, irregularities, or inconsistencies in the proposals received; • Clarify any part of a proposal and discuss any aspect of the proposal with any Proposer; and negotiate with more than one Proposer; • Award a contract if only one responsive proposal is received if it is in the best interest of Participating Entities; and • Award a contract to one or more Proposers if it is in the best interest of Participating Entities. E. DISPOSITION OF PROPOSALS All materials submitted in response to this RFP will become property of Sourcewell and will become public record in accordance with Minnesota Statutes Section 13.591, after negotiations are complete. Sourcewell considers that negotiations are complete upon execution of a resulting contract. It is the Proposer’s responsibility to clearly identify any data submitted that it considers to be protected. Proposer must also include a justification for the classification citing the applicable Minnesota law. Sourcewell will not consider the prices submitted by the Proposer to be confidential, proprietary, or trade secret materials. Financial information, including financial statements, provided by a Proposer is not considered trade secret under the statutory definition. The Proposer understands that Sourcewell will reject proposals that are marked confidential or nonpublic, either substantially or in their entirety. 10/9/2020 Addendum No. 1 Solicitation Number: RFP 112420 Solicitation Name: Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services Consider the following Question and Answer to be part of the above-titled solicitation documents. The remainder of the documents remain unchanged. Question 1: Does this RFP include roofing? Answer 1: The requested equipment, products, and services are described in RFP Section II. B - Requested Equipment, Products and Services. End of Addendum Acknowledgement of this Addendum to RFP 112420 posted to the Sourcewell Procurement Portal on 10/9/2020, is required at the time of proposal submittal. 10/29/2020 Addendum No. 2 Solicitation Number: RFP 112420 Solicitation Name: Skatepark, Bike Park, and Pump Track Solutions with Related Equipment, Accessories, and Services Consider the following Questions and Answers to be part of the above-titled solicitation documents. The remainder of the documents remain unchanged. Question 1: Can you confirm that EPS geofoam is a product category you are interested in receiving pricing on? Answer 1: In the competitive solicitation process, Sourcewell will not pre-evaluate a proposer’s offerings. Each proposer, in its discretion, will propose the equipment, products, and services that it deems to fall within Sourcewell’s requested equipment, products, and services as described in the RFP. Only those products within the scope of the RFP will be included in any contract awarded by Sourcewell as a result of the solicitation and each Proposal will be evaluated based on the criteria stated in the RFP. Question 2: Please confirm that there is no stated price structures requested. Price structure and units of measurement are open to our own preference. Answer 2: It is left to the discretion of each proposer to determine and propose the pricing approach that aligns with their business methods and satisfies all the requirements of RFP Article III - Pricing. Proposals are evaluated based on the criteria stated in the RFP. Question 3: What is the value of contracts Sourcewell has issued over the last three years in Western Canada? Answer 3: The value of contracts in use in Western Canada is not readily available. Question 4: Are we able to submit pricing for specific geographic regions? Answer 4: Sourcewell is seeking solutions to serve the largest possible cross-section of current and potential Sourcewell Members. Refer to RFP Article VI. – Members and Use of the Resulting Contracts - for details. It is left to the discretion of each proposer to determine and propose the pricing approach that aligns with their business methods and satisfies all the requirements of RFP Article III - Pricing. Individual proposals are evaluated based on the criteria stated in the RFP. Question 5: Is it accurate that contracts will be issued without receiving IFC drawings and based on the numbers submitted to Sourcewell? Answer 5: Yes, proposals will be evaluated based on the criteria stated in the RFP. Sourcewell will communicate award and non-award determinations to all proposers at the conclusion of the evaluation process. Question 6: Sourcewell requests pricing in both CAD and USD, but the exchange rate varies consistently. Can we propose that pricing in CAD governs and USD to be confirmed at the time of final contract? Answer 6: Refer to RFP Section III. A. 3. – Pricing Requirements, for directions applicable to pricing for Proposers intending to sell in the U.S. and Canada. Question 7: How long does Sourcewell intend to use the pricing in the proposal? Material pricing fluctuates periodically. Answer 7: Refer to Sourcewell contract template Section 4 - Product and Pricing Change Requests for guidance on requests for pricing modifications during the term of an awarded contract. End of Addendum Acknowledgement of this Addendum to RFP 112420 posted to the Sourcewell Procurement Portal on 10/29/2020, is required at the time of proposal submittal. American Ramp Company #112420-ARC Pricing for contract #112420-ARC is provided at 7% off factory direct pricing to Sourcewell participating agencies. EXHIBIT B TO COOPERATIVE SERVICES AGREEMENT BETWEEN THE TOWN OF FOUNTAIN HILLS AND AMERICAN RAMP COMPANY [Quote or Work Order] See following pages. 601 McKinley Joplin, MO 64801 Toll-free 877-RAMP-778 Local 417-206-6816 Fax 417-206-6888 sales@americanrampcompany.com PRICING AND SCOPE LETTER DESERT VISTA PARK SKATEPARK – FOUNTAIN HILLS, AZ QUOTE # Q27451 OCTOBER 25, 2022 AMERICAN RAMP COMPANY - PRICING Skatepark - $670,000.00 Tax (9.2%) - $61,640.00 Total - $731,640.00 AMERICAN RAMP COMPANY - SCOPE OF WORK MANUFACTURING, INSTALLATION, AND CONSTRUCTION INCLUDES*: • All labor, supplies, tools, materials, and equipment required to build skatepark and pump track • Demo sections of existing skatepark • Fill Material • Grading of skatepark and pump track • Cutting and shaping grades within skatepark footprint • Installation of Rebar • Install and finish concrete • Expansion joints, saw cuts, and cold joints • Coping, edging, and rails • Pump track forming and asphalt construction • Haul off removed concrete material • Permits • Tax EXCLUDES*: • Construction documents • Engineer stamp/seal • Fencing • Site testing and inspections • Union wages • Utility, mechanical, electrical, plumbing work, relocation, or repairs of any kind not noted in the inclusions. 601 McKinley Joplin, MO 64801 Toll-free 877-RAMP-778 Local 417-206-6816 Fax 417-206-6888 sales@americanrampcompany.com • Professional services provided by Architects, Surveyors, Geo-technical & Electrical Engineers • Toxic or hazardous material handling or removal. • Soil treatment, termite treatment, landscaping, or reseeding. • Irrigation system rework • Dewatering, silt fence, soil stabilization, erosion control. • Removal and/or replanting of any trees or shrubs. • Any work not specifically indicated above. CUSTOMER PROVIDES*: • Unobstructed, safe, and continuous access to work area with heavy equipment. All weather roads for heavy equipment. • All necessary site information including utility locations • Coordinate access to water and electrical power on site Deliverables: • Fully manufactured, installed, and constructed skatepark and pump track *If any additional inclusions are required, we can provide for additional fee DESIGN RENDERINGS 601 McKinley Joplin, MO 64801 Toll-free 877-RAMP-778 Local 417-206-6816 Fax 417-206-6888 sales@americanrampcompany.com 601 McKinley Joplin, MO 64801 Toll-free 877-RAMP-778 Local 417-206-6816 Fax 417-206-6888 sales@americanrampcompany.com 601 McKinley Joplin, MO 64801 Toll-free 877-RAMP-778 Local 417-206-6816 Fax 417-206-6888 sales@americanrampcompany.com PRICING AND SCOPE LETTER DESERT VISTA PARK SKATEPARK – FOUNTAIN HILLS, AZ QUOTE # Q27451 OCTOBER 25, 2022 AMERICAN RAMP COMPANY - PRICING Skatepark - $670,000.00 Tax (9.2%) - $61,640.00 Total - $731,640.00 AMERICAN RAMP COMPANY - SCOPE OF WORK MANUFACTURING, INSTALLATION, AND CONSTRUCTION INCLUDES*: • All labor, supplies, tools, materials, and equipment required to build skatepark and pump track • Demo sections of existing skatepark • Fill Material • Grading of skatepark and pump track • Cutting and shaping grades within skatepark footprint • Installation of Rebar • Install and finish concrete • Expansion joints, saw cuts, and cold joints • Coping, edging, and rails • Pump track forming and asphalt construction • Haul off removed concrete material • Permits • Tax EXCLUDES*: • Construction documents • Engineer stamp/seal • Fencing • Site testing and inspections • Union wages • Utility, mechanical, electrical, plumbing work, relocation, or repairs of any kind not noted in the inclusions. 601 McKinley Joplin, MO 64801 Toll-free 877-RAMP-778 Local 417-206-6816 Fax 417-206-6888 sales@americanrampcompany.com • Professional services provided by Architects, Surveyors, Geo-technical & Electrical Engineers • Toxic or hazardous material handling or removal. • Soil treatment, termite treatment, landscaping, or reseeding. • Irrigation system rework • Dewatering, silt fence, soil stabilization, erosion control. • Removal and/or replanting of any trees or shrubs. • Any work not specifically indicated above. CUSTOMER PROVIDES*: • Unobstructed, safe, and continuous access to work area with heavy equipment. All weather roads for heavy equipment. • All necessary site information including utility locations • Coordinate access to water and electrical power on site Deliverables: • Fully manufactured, installed, and constructed skatepark and pump track *If any additional inclusions are required, we can provide for additional fee DESIGN RENDERINGS 601 McKinley Joplin, MO 64801 Toll-free 877-RAMP-778 Local 417-206-6816 Fax 417-206-6888 sales@americanrampcompany.com 601 McKinley Joplin, MO 64801 Toll-free 877-RAMP-778 Local 417-206-6816 Fax 417-206-6888 sales@americanrampcompany.com ITEM 8. I. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 11/15/2022 Meeting Type: Town Council Regular Meeting Agenda Type: Council Discussion Submitting Department: Development Services Prepared by: John Wesley, Development Services Director Staff Contact Information: John Wesley, Development Services Director Request to Town Council Regular Meeting (Agenda Language): CONSIDERATION AND POSSIBLE ACTION: Approval for a cut and fill waiver to allow hillside cuts in excess of ten feet for the development of a single-family residence at 15341 E. Firerock Country Club Drive. Staff Summary (Background) Anthony Rotta of Golden Heritage Construction represents Alan and Donna Morrison, the owners of a lot at 15341 E. Firerock Country Club Drive. Mr. Rotta is requesting a waiver to allow portions of the lot to have cuts in excess of 10 feet in order to allow the construction of a new residence at 15341 E. Firerock Country Club Drive. The Town of Fountain Hills Subdivision Ordinance, Article 5, Section 5.03.D.: “…the total combined height of any fill or the depth of any cut area as a result of subdivision improvement grading and/or any subsequent grading, including but not limited to grading approved as a part of building permit approval, shall not total more than ten feet, as measured from natural grade, unless otherwise provided in this Article. These limitations on cut and fill apply to all zoning districts.” The greatest amount of fill proposed is 16 feet (6 feet above the maximum allowed). These areas are indicated with the stippled shading along the north side of the development area as depicted on the attached enlarged site plan (Sheet C2 of 2). The lot in question has a long, narrow access out to the street. The first 150 feet of the driveway is relatively flat, but then the property begins to slope down rapidly as the lot opens up for development. The lot has a maximum disturbance area. It is the goal of the Town and the property owner to build the house as far north on the property as possible to limit disturbance further down the hill. The slopes in this area are very steep and thus create a challenge to development without a significant cut. A portion of the area to be cut will be covered by a retaining wall between two buildings. The tallest portion of this retaining wall will be slightly over 18' tall. Given the topography, size of the lots, distance to other properties, and location between the two buildings, the wall will not be very visible except to the people in the driveway/parking area on the lot. Staff has identified three objectives in reviewing cut and fill waiver requests. Those objectives are: 1. To reduce the visual impacts of the proposed development as viewed from the adjacent properties and rights of ways. Given the shape of this lot and the topography in question, to keep from making one big cut, a developer would need to make multiple small cuts and shift the house further down the hill and disturb more of the property. As designed, the area with the significant cut will ultimately not be very visible to people on adjacent properties and should not be visible at all from the right of way. 2. To review the measures applied by the designer to minimize the amount of cut on the lot. The designer has done a good job of designing a home that fits into the topography of the property and keeps the development as far up the hill as possible. The amount of cut could be reduced if the separate second garage and exercise area were removed from the development plans. This building is an important part of the overall development, however, and is placed so that the building itself fills in most of the area of the cut. 3. To consider possible alternatives to the proposed plan that would conform to the ten-foot maximum cut or fill. The two options for reducing the amount of cut are to reduce the size of the home or to move the development further down the hill. With the current design, the area to have a cut in excess of 10' is approximately 3,000 sq. ft. on a 92,818 square foot lot, around 3%. The ordinance allows up to 5% of the lot to have a cut over 10' when under the primary building on the lot. In this case, much of the cut is under an accessory building, so not technically meeting the requirements in the ordinance. The proposed development, with the cuts, has been reviewed and approved by the Firerock Committee of Architecture. Related Ordinance, Policy or Guiding Principle Subdivision Ordinance , Article 5, Section 5.03 "Cut and Fill Standards" Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) Given the approval by the Firerock Committee of Architecture and the limited size and visibility of the cut in excess of 10', staff recommends approval of the cut and fill waiver. SUGGESTED MOTION MOVE to approve cut and fill waiver CFW22-000001. Attachments Vicinity Map Applicant Narrative Illustrations HOA Letter Form Review Inbox Reviewed By Date Development Services Director (Originator)John Wesley 11/09/2022 11:59 AM Finance Director David Pock 11/09/2022 02:05 PM Town Attorney Aaron D. Arnson 11/09/2022 03:13 PM Town Manager Grady E. Miller 11/09/2022 03:34 PM Form Started By: John Wesley Started On: 11/08/2022 04:25 PM Final Approval Date: 11/09/2022 Vicinity CASE: CFW22-000001 SITE / ADDRESS: 15341 E. FIREROCK COUNTRY CLUB DRIVE APN 176-11-213 REQUEST: CUT AND FILL WAIVER All that is Ariz on a FO U N TAIN HIL L S TOWN OF INC. 1989 MCDOWELL MOUNTAIN REGIONAL PARK SALT RIVER PIMA - MARICOPA INDIAN COMMUNITY FO R T M C D O W E L L Y A V A P A I N A T I O N SC O T T S D A L E Site Location Vicinity MapMap ::CaseCase DetailsDetailsCFW22-000001CFW22-000001 FI R E R O C K C O U N T R Y C L U B D R FI R E P A L I S A D E S B L V D FIR E R I D G E T R AZU R E V I S T A T R CA N Y O N Project Name: Morrison Residence Project Address: 15341 E Firerock Country Club Drive Fountain Hills, AZ 85268 Lot #: Fireorck – Lot 4, Parcel Q-3 Description: Construction of a new single family custom home. Project Narrative: This particular Lot has been sitting undeveloped since the original release of Lots over twenty years ago. The Lot is just over two acres and sits above the fifth and sixth greens at Firerock Country Club. The Lot is a flag style design and has a difficult drive approach into the main building envelope area. The new owners are in their late sixties, early seventies and one of the most important components to the home design was livable space on one level with little to no steps. As folks continue to age in these homes, health and safety becomes even more vital for the design. Due to the approach of the lot and steepness overall, the home was designed to be tucked into the high side of the Lot. The biggest advantage this creates is maximum living space on the main level. The Architect did a fantastic job with the overall design, particularly tucking the building into the larger cuts within the site. The design was very well received by the committee of architecture at Firerock. They appreciated the thought behind the design. The split garages help break up the building masses. There was an added connection between the two masses with decorative wood and stone elements to distract from the visual of the cut. The retaining walls will be cladded in stone with beautiful landscaping placed in front to grow as well. Additionally, these walls won’t be able to be seen from the street or drive by traffic. The Architect and Clients have still made every attempt to make investments into the overall aesthetic of the taller walls so they blend in with the home and the landscape. Since the governing HOA (Firerock) has already approved this beautiful design, we are asking that the Town of Fountain Hills also approve and grant the cut/fill waiver. This home will be a tremendous addition to the community and will help complete the development of Firerock as a whole. We appreciate the Town taking the time to review this project and we are hopeful for a positive outcome. Respectfully, Anthony Rotta – President of Golden Heritage Homes, on behalf of Alan and Donna Morrison Approximate Area of Cut in excess of 10’ Topography and Cut Waiver Area Approximate Area of Cut in excess of 10’ Section looking west Natural Grade Sections looking south Artist’s rendering September 30, 2022 ALAN AND DONNA MORRISON 11158 42 Street SE CALGARY, AB T2C 0J9 RE: Parcel Q3 Lot 4 15431 E Firerock Country Club Drive Dear Mr. and Mrs. Morrison, On September 22, 2022, the Committee of Architecture (COA) approved your Preliminary Submittal with the following comments: COA comments: 1. When you submit documents to the Town of Fountain Hills, please submit an electronic copy to the DRC concurrently. A majority of the requirements for final review were included in the preliminary submittal but the Committee wishes to have the consulting architect perform an administrative review to ensure compliance with the Design Guidelines. 2. Materials and colors have provisional approval, depending on the final review of the site material wall. Site material walls are usually reviewed at the framing inspection. Once you have a building permit and are ready to begin construction, please contact Stephanie Fee at the on-site office to schedule a pre-construction meeting. The Construction Compliance Deposit of $20,000 will be due at that time. The COA would like to thank you for your commitment to the community, the professional presentation, and design. The Committee looks forward to the completion of your home. Sincerely, FIREROCK COMMITTEEE OF ARCHITECTURE CC: Golden Heritage Homes