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2026.0224.TCWS.AMENDED.AGENDA.PACKET
NOTICE OF WORK SESSION (BUDGET RETREAT) AMENDED OF THE TOWN COUNCIL Mayor Gerry M. Friedel Vice Mayor Allen Skillicorn Councilmember Hannah Larrabee Councilmember Gayle Earle Councilmember Peggy McMahon Councilmember Brenda J. Kalivianakis Councilmember Rick Watts TIME: WHEN: WHERE: 8:30 AM - WORK SESSION (BUDGET RETREAT) AMENDED TUESDAY, FEBRUARY 24, 2026 FOUNTAIN HILLS COUNCIL CHAMBERS 16705 E. AVENUE OF THE FOUNTAINS, FOUNTAIN HILLS, ARIZONA 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. 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. 1. CALL TO ORDER 2. ROLL CALL 3. WORK SESSION AGENDA a. PRESENTATION: FY2027 Revenue Outlook and Budget Implications b. PRESENTATION: Road Paving — Ongoing Revenues and Future Funding Options c. PRESENTATION: Street repairs related to potholes and small asphalt repairs d. PRESENTATION: Fire Department Overtime Issues & Personnel Request e. PRESENTATION: Fountain Park Lake Liner Replacement Design f. PRESENTATION: River of Time Museum and Exploration Center Lease Agreement g. PRESENTATION: Community Contracts Overview - Update h. PRESENTATION: Leases of Town Owned Properties and Land i. PRESENTATION: Downtown Updates j. DISCUSSION: Wrap-up of priorities 4. ADJOURNMENT Dated this 19 day of February, 2026. Meeting Packet Page 1 of 147 Bevelyn J. Bender, Town Clerk The Town of Fountain Hills endeavors to make all public meetings accessible to persons with disabilities. Please call (480) 816-5100 (voice) or AZRelay 7-1-1 the Thursday prior to the meeting to request reasonable accommodation. Meeting Packet Page 2 of 147 ITEM 3.a. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 2/24/2026 Meeting Type: Town Council Work Session (Budget Retreat) AMENDED Submitting Department: Administration / Finance Prepared by: Paul Soldinger, Chief Financial Officer Staff Contact Information: Phone: 480-816-5160 Email: psoldinger@fountainhillsaz.gov Request to Town Council Regular Meeting (Agenda Language) PRESENTATION: FY2027 Revenue Outlook and Budget Implications Staff Summary (background) Finance staff will provide an overview of FY2027 initial revenue projections, discuss possible legislative impacts, and discuss other budget implications such as the MCSO Law Enforcement costs and recommended annual general adjustment for staff pay. Related Ordinance, Policy or Guiding Principle N/A Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) N/A Suggested Motion N/A FISCAL IMPACT Fiscal Impact: Budget Reference: Funding Source: ATTACHMENTS 1. FY2027 Revenue Outlook and Budget Implications Meeting Packet Page 3 of 147 FY2027 Revenue Outlook & Budget Implications Paul Soldinger, Chief Financial Officer February 24, 2026 Meeting Packet Page 4 of 147 FY2027 Revenues Discussion Meeting Packet Page 5 of 147 FY2027 Budget Milestones •Initial Revenue Projections completed – 1/6/2026 •Departments submitted supplemental requests to Town Manager– throughout January 2026 •Council Retreat – Today (2/24/2026) •Budget Open House – 3/11/2026 •Capital Improvement Plan (CIP) Work Session – 3/24/2026 •Council provides direction on CIP and funding for projects Budget Timeline Meeting Packet Page 6 of 147 FY2027 Budget Milestones •Proposed Budget Work Session – 4/14/2026 •Council discusses proposed budget and provides direction for Tentative budget the following month •Tentative Budget Adoption – 5/5/2026 Regular Meeting (Public Hearing) •Tentative Budget sets the maximum amount the Town may budget for FY2027 •Final Budget Adoption – 6/2/2026 Regular Meeting (Public Hearing) •Council considers adoption of final budget for FY2027 Town operations Budget Timeline Meeting Packet Page 7 of 147 Initial FY27 Revenue Projections Revenue Projections •Transaction Privilege Tax (Local Sales Tax) Revenue Projections by Category •Intentionally conservative to reduce risk •Projected increases of 3.0% across funds (2.1% in General Fund) FY2025 FY2026 FY2027 $ Change from % Change from Actual Projections Projections FY2026 FY2026 TPT Category Construction $ 2,971,838 $ 2,376,414 $ 2,722,303 345,888 14.6% Utilities 1,723,779 1,695,247 1,721,065 25,817 1.5% Retail $10,604,441 10,260,360 10,306,400 46,040 0.4% Restaurants/Bars 1,413,481 1,309,217 1,364,582 55,365 4.2% Real Estate 970,416 681,444 632,545 (48,899) -7.2% Services (Leisure & Tourism)2,466,878 1,691,040 1,801,954 110,914 6.6% Other 40,438 0 0 N/A N/A Total Actual/Forecast Revenues: $20,191,270 $18,013,723 $18,548,849 $ 535,126 3.0% TPT Total Revenues Meeting Packet Page 8 of 147 Local Sales Taxes – Split Revenues •2.9% local sales tax rate applied to almost all categories collected for in-Town purchases, based on past Council approvals to split revenues Revenue Projections - Splits ½ of local construction sales taxes 2.6% 0.2% Econ Dev Fund CIP Fund 0.08% 0.02% Downtown Fund Meeting Packet Page 9 of 147 Initial FY27 Revenue Projections Revenue Projections FY2025 FY2026 FY2027 $ Change from % Change from Actual Projections Projections FY2026 FY2026 TPT Category Construction $ 2,971,838 $ 2,376,414 $ 2,722,303 345,888 14.6% Utilities 1,723,779 1,695,247 1,721,065 25,817 1.5% Retail $10,604,441 10,260,360 10,306,400 46,040 0.4% Restaurants/Bars 1,413,481 1,309,217 1,364,582 55,365 4.2% Real Estate 970,416 681,444 632,545 (48,899) -7.2% Services (Leisure & Tourism)2,466,878 1,691,040 1,801,954 110,914 6.6% Other 40,438 0 0 N/A N/A Total Actual/Forecast Revenues: $20,191,270 $18,013,723 $18,548,849 $ 535,126 3.0% TPT Total Revenues General Fund Streets CIP Econ Dev Downtown $306,824 $36,905 $172,945 $14,762 $3,690 Meeting Packet Page 10 of 147 Local Sales Taxes - Split Revenues Revenue Splits $15,268,851 $1,279,231 $127,923 $511,692 $1,361,152 Local Sales Tax – FY27 Initial Projections* General fund Streets fund Downtown fund Economic development fund Capital projects fund *Based on past Town Council Ordinances General Fund: •FY25 actual: $16.6 million •FY26 projected: $15.0 million •FY27 projected: $15.3 million Streets fund: •FY25 actual: $1.40 million •FY26 projected: $1.24 million •FY27 projected: $1.28 million Econ/Downtown funds (combined): •FY25 actual: $696k •FY26 projected: $621k •FY27 projected: $640k Capital projects fund: •FY25 actual: $1.49 million •FY26 projected: $1.19 million •FY27 projected: $1.36 million Meeting Packet Page 11 of 147 Initial FY27 Revenue Projections – General Fund Revenue Projections FY2025 FY2026 FY2027 $ Change from % Change from Actual Projections Projections FY2026 FY2026 Revenue Source Sales Tax Revenues $ 16,616,599 $ 14,962,027 $ 15,268,851 306,824 2.1% Franchise Tax/Fees 334,101 350,000 325,000 (25,000) -7.1% State Shared Revenues Urban Revenue Sharing (Income Taxes)5,022,719 4,698,139 4,931,976 233,837 5.0% Sales Tax Revenues 3,622,681 3,639,515 3,618,015 (21,500) -0.6% Fire Insurance Premium Taxes 95,892 75,000 330,000 255,000 340.0% Licenses & Permits 952,127 876,787 855,170 (21,617) -2.5% Leases & Rents 368,171 379,914 387,055 7,141 1.9% Charges For Services 278,368 260,000 275,000 15,000 5.8% Fines & Forfeitures (Municipal Court)214,389 210,000 300,000 90,000 42.9% Investment Earnings 616,693 348,507 294,941 (53,566) -15.4% Other 356,642 252,000 215,000 (37,000) -14.7% Total Revenue Source: $ 28,478,382 $ 26,051,889 $ 26,801,008 $ 749,119 2.9% General Fund Revenues Meeting Packet Page 12 of 147 Initial FY27 Revenue Projections – Streets Fund Revenue Projections FY2025 FY2026 FY2027 $ Change from % Change from Projections Projections Projections FY2026 FY2026 Revenue Source Sales Tax Revenues $1,392,501 $ 1,242,326 $ 1,279,231 36,905 3.0% State Shared Revenues HURF 1,889,802 1,890,627 1,928,886 38,259 2.0% Vehicle License Taxes (VLT)1,300,912 1,277,830 1,314,887 37,057 2.9% Investment Earnings 595,071 191,193 121,544 (69,649) -36.4% Other 15,301 131,000 41,000 (90,000) -68.7% Total Revenue Source: $ 5,193,587 $ 4,732,976 $ 4,685,548 $ (47,428)-1.0% Streets Fund Revenues Streets Projected FY26 Ending Fund Balance = $6.1 million Meeting Packet Page 13 of 147 Initial FY27 Revenue Projections – CIP Fund Revenue Projections CIP Projected FY26 Ending Fund Balance = $8.8 million FY2025 FY2026 FY2027 $ Change from % Change from Actual Projections Projections FY2026 FY2026 Revenue Source Sales Tax Revenues $1,485,919 $ 1,188,207 $ 1,361,152 172,945 14.6% Grant Revenues 20,055 2,190,750 978,250 (1,212,500) -55.3% Investment Earnings 498,270 170,000 176,077 6,077 3.6% Other 74,381 0 0 0 N/A Total Revenue Source: $2,078,624 $ 3,548,957 $ 2,515,479 $ (1,033,478) -29.1% Capital Projects Fund Revenues Meeting Packet Page 14 of 147 FY2027 Possible Revenue & Other Budget Impacts Meeting Packet Page 15 of 147 Legislative Bills – Possible Future Impacts •Food for Home Consumption – Local Sales Tax •HCR 2021 – Last Legislative Session – Will be on November 2026 statewide ballot •Would cap Town’s food tax rate at 2.9%, if successful •HB 2839 – introduced this Legislative Session •SNAP eligible food items would no longer be taxable; examples of exemptions: •Fruit •Vegetables •Dairy, etc. Legislative Possible Impacts FY2023 FY2024 FY2025 Food Tax (TPT Code 62):2,081,908$ 2,179,521 2,084,109 Total Local Sales Taxes: 20,586,294$ 20,559,929$ 20,191,270$ Percentage of Total Local Sales Taxes: 10.1% 10.6% 10.3% Total Town Revenues: 40,931,231 40,201,766 38,340,244 Percentage of Total Town Revenues: 5.1% 5.4% 5.4% Actual Revenues Meeting Packet Page 16 of 147 Legislative Bills – Possible Future Impacts •Retail Local Sales Tax – Remote Sellers •HB 2118 – current Legislative session •Current tax guidance requires taxes on remote sales to be paid to municipalities where the goods are delivered (e.g. a Fountain Hills resident ordering a new mattress from an online retailer will result in the Town receiving the taxes, if delivered to a Fountain Hills home) •HB 2118 would change the taxes owed to be based on where the distribution warehouse is located (e.g. that same mattress was delivered to a home in Fountain Hills from a warehouse based in Scottsdale – then, Scottsdale would receive the taxes) Legislative Possible Impacts FY2023 FY2024 FY2025 Remote Sellers (TPT Code 605):1,520,558$ 1,730,864 1,849,537 Total Local Sales Taxes: 20,586,294$ 20,559,929$ 20,191,270$ Percentage of Total Local Sales Taxes: 7.4% 8.4% 9.2% Total Town Revenues: 40,931,231 40,201,766 38,340,244 Percentage of Total Town Revenues: 3.7% 4.3% 4.8% Actual Revenues Meeting Packet Page 17 of 147 Legislative Bills – Possible Future Impacts •Income Tax Conformity •SB 1106 – Vetoed by Governor; other proposals are being discussed at Legislature •Would impact State Shared Income Taxes (Urban Revenue Sharing) beginning in FY2028 (in two fiscal years) •Urban Revenue Sharing is projected to start increasing again in FY2027; any tax conformity measures may reduce those future projected increases Legislative Possible Impacts Projected Projected FY2023 FY2024 FY2025 FY2026 FY2027 Urban Revenue Sharing 4,518,501$ 6,302,824 5,022,719 4,698,139 4,931,976 Total General Fund Revenues: 28,254,987$ 30,774,289$ 28,478,488$ Percentage of GF Revenues: 16.0% 20.5% 17.6% Total Town Revenues: 40,931,231 40,201,766 38,340,244 Percentage of Total Town Revenues: 11.0% 15.7% 13.1% Actual Revenues Meeting Packet Page 18 of 147 MCSO Cost Notification Decreased •FY27 MCSO cost notification noted lower retirement and overtime costs have offset market-based pay adjustments, resulting in another reduction to our contract Budget Reductions – FY2027 FY2027 MCSO Contract $5.69M FY2026 MCSO Contract $5.76M Law Enforcement cost reduction of $68k for FY2027 Meeting Packet Page 19 of 147 Annual General Adjustment (AGA) Policy — FY2027 First Calculation Policy adopted Sept. 9, 2025 (Town Council Work Session) | Presented Feb. 2026 using PMI + ECI data 1) Policy framework (adopted Fall 2025)2) FY2027 calculation (first application) Formula (fixed 50/50 split): AGA = (50% × ECI) + (50% × PMI) ECI = Employment Cost Index (BLS), measured Q4-to-Q4 PMI = Peer Market Index (League of AZ Cities & Towns salary survey, January release) Council retains discretion to override the formula in extraordinary circumstances. Inputs available for FY2027: PMI League survey (Jan 2026)4.26% ECI BLS ECI Q4-to-Q4 3.40% AGA = (0.50 × 4.26%) + (0.50 × 3.40%) = 3.83% (rounded to 3.8%)Recommended FY2027 salary adjustment: 3.8% Note: Implemented as an across-the-board base salary adjustment; rounded to one decimal for payroll/budget administration. Meeting Packet Page 20 of 147 ITEM 3.b. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 2/24/2026 Meeting Type: Town Council Work Session (Budget Retreat) AMENDED Submitting Department: Administration / Finance Prepared by: Paul Soldinger, Chief Financial Officer Staff Contact Information: Phone: 480-816-5160 Email: psoldinger@fountainhillsaz.gov Request to Town Council Regular Meeting (Agenda Language) PRESENTATION: Road Paving — Ongoing Revenues and Future Funding Options Staff Summary (background) Finance and Public Works staff will present current financial information regarding road paving efforts in the Town. This discussion will update the Council on the projected fund balance in the Streets Fund for FY2027, ongoing revenues and challenges continuing to maintain the current levels of spending, and future funding options. Future funding options include issuing bonds: • General Obligation bonds, which are generally the lowest cost of borrowing: o Voter approval required o Establishes a new secondary property tax on residents annually until debt is repaid • Pledged Revenue bonds: o Voter approval not required o Council could pledge/restrict future annual revenues until debt is repaid; or o Council could raise sales taxes to pay the debt annually Staff will provide debt scenarios of $11 million (over 10 years) and $22 million (over 20 years), which are based on recent estimates to complete reconstruction projects for Fountain Hills and/or Palisades Blvd in the Town (about $11 million to reconstruct each of these roads), which are two major arterial roads. The Council could also choose a debt scenario to apply to a selection of roads selected by the BOSS data compiled by Roadway Asset Services. Regardless, if the Town Council determines it would like to consider issuing bonds in the near future, staff recommends that the bond measures are specific. Related Ordinance, Policy or Guiding Principle N/A Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) N/A Suggested Motion Meeting Packet Page 21 of 147 N/A FISCAL IMPACT Fiscal Impact: Budget Reference: Funding Source: ATTACHMENTS 1. FY27 Road Paving Funding Options - 2.24.2026 2. Town of Fountain Hills Bond Election Slides Feb 2026(700722730.1) Meeting Packet Page 22 of 147 FY2027 Road Funding Options Meeting Packet Page 23 of 147 Road Paving Needs & Restrictions •Streets continue to be a topic of discussion •Town is spending about $10 million on road projects this fiscal year: •Palomino reconstruction (capital project) •Richwood reconstruction •Thistle reconstruction •Other roads identified by BOSS data (9/2/2025 Council meeting) •Based on previous discussions, Town roads need about $30-$50 million of additional roadwork (after $10 million this year) •New Town Dashboard shows roadwork completed since 2019 Meeting Packet Page 24 of 147 Road Paving Needs & Restrictions •Streets continue to be a topic of discussion •Town Council has continued making key decisions to put more funding into Streets Fund, including $1.5 million this year •Finance projects that the Streets Fund will have about $6 million at the end of this fiscal year (after completion of about $10 million of road projects) •Expenditure Limitation restricts Town from increasing spending •Town staff has taken steps to allow one-time higher spending in the FY2026 budget •Other options could increase near-term funding and spending, such as debt that goes out longer than one year •Spending debt proceeds and repayment of debt are excludable from the expenditure limitation Meeting Packet Page 25 of 147 Streets Fund – FY25 Actual Activity Streets Fund HURF $1.8M VLT $1.2M TPT (0.2%) $1.4M Investment Earnings + other $0.6M Transfer in $4.0M Total Revenues/Transfers $9.2M Total Expenditures $7.3M •Road Paving $4.9M, and •$0.7M for: •sidewalk repairs •concrete •striping, etc. Other Streets Needs $1.7M (see next slide) Meeting Packet Page 26 of 147 FY25 Actual Streets Fund – “Other Streets Needs” •Streets Fund includes other expenditures: •Salaries & Benefits for Streets staff & other contractual services •About $1.1 million annually •Rights of Way Maintenance •About $500,000 •Street Signs •About $60,000 •Street Vehicle Maintenance •About $13,000 Meeting Packet Page 27 of 147 Streets Fund – FY27 Projected Revenues Streets Fund HURF $1.9M VLT $1.3M TPT (.2%) $1.3M Investment Earnings + other $0.1M Transfers in ?? Total Revenues/Transfers $4.7M Total Expenditures: •$?? For Road Paving •$2.2 million for OtherRoad Paving ??M Other Streets Needs $2.2M Meeting Packet Page 28 of 147 Streets Fund – Ongoing Revenues The Town has been able to budget more than this base amount because we have accumulated savings in our Streets Fund balance Meeting Packet Page 29 of 147 Projected Streets Fund Balance and Situation $9.6M $14.2M General Fund $25.8 Million $7.1 Million Cap Projects Fund $9.1 Million Streets Fund •About $14M of transfers into Streets Fund over past 4 years have helped staff complete more roadwork (including about $10 million this year) •$6 million projected fund balance is about 15-20% of what’s needed to complete all remaining road paving work. •As discussed, the Expenditure Limitation restricts how much the Town can budget/spend each year •Debt does not count toward Expenditure Limitation •Town can increase road spending •But, Town would pay interest on debt Meeting Packet Page 30 of 147 Streets Fund – Expenditure Limitation •Arizona Constitution and statutes require municipalities to spend below the expenditure limitation •The Town’s FY27 preliminary Expenditure Limitation set by the Economic Estimates Commission (EEC) is $38.2M •EEC adjusts Expenditure Limitation every year based on: •Inflation •Changes in population Meeting Packet Page 31 of 147 Streets Fund – Expenditure Limitation •Council has authorized transfers of $12.4M into Streets Fund from General Fund and Capital Projects Fund (FY23 through FY25) •Another $1.5M has been transferred from General Fund in FY26 •Some revenue sources (exclusions) do not count towards expenditure limitation •Total budget can be higher, but must be below limitation after exclusions are considered •Unused excludable revenue can be banked, or carried forward to future years •HURF is an excludable revenue of about $1.8M per year and Investment Earnings are excludable •Staff re-evaluated past 3 years and maximized carryforwards for Streets Fund Meeting Packet Page 32 of 147 Streets Fund – Expenditure Limitation •Excludable Revenue Sources – Carried Forward •Highway User Revenues (Gas taxes) – about $1.8M per year •Investment Earnings Streets Fund FY25 Carryforward About $9.5 million About $5M Streets Fund FY26 Projected Carryforward After FY26 Road Projects Meeting Packet Page 33 of 147 Road Funding Options – What are bonds? •A bond is a type of loan made by an investor to a borrower (or bond issuer) •Bond issuers (e.g., the Town) pay principal and interest to investors •Cities and towns across the country issue tax-exempt municipal bonds to finance capital projects (e.g., governmental facilities, infrastructure, etc.) Meeting Packet Page 34 of 147 Road Funding Options – What are bonds? •Arizona municipal bonds are typically repaid from utility revenues, excise tax revenues, or property taxes (general obligation or “G.O.”) •Generally, the interest income on Arizona municipal bonds is exempt from federal income taxation, and exempt from Arizona income taxation •Borrowing at “tax-exempt” interest rates enables Arizona cities and towns to have lower interest costs •In some instances, issuers may also refinance, redeem or defease the bonds to restructure the payments, achieve savings, or pay off the debt early Meeting Packet Page 35 of 147 Previous Town Attempts for Road Bonds •2011 GO Bond - Failed •For street/transportation-related purposes (broad) •$29.6 million – Failed at Ballot (44% for the bonds) •2013 GO Bond - Passed •For transportation/street upgrades (including rebuilding Saguaro Blvd) – (more specific) •Up to $8.2 million – Passed at ballot (about 67% for the bonds) •GO Bonds issued in FY2015 for $7.6 million and repaid over 5-year period Meeting Packet Page 36 of 147 $11 million could be applied to BOSS data roads or these specific roads Meeting Packet Page 37 of 147 Other Important Considerations •MAG includes Palisades Blvd (between Shea Blvd to Saguaro Blvd) in its future planned Prop 479 Phase IV projects •Between 2041 and 2046, MAG would pay for 70% of the Town’s reconstruction costs, up to $17 million Meeting Packet Page 38 of 147 General Obligation Bonds •Raises additional tax revenues to pay debt through secondary property tax levy •Town, by statute, will levy secondary property taxes to pay debt service on “new money” general obligation bonds (A.R.S. §35-458) •Council approval required to proceed with election •Recommended election would take place in November 2027 – Special Election •Proceeds could be used starting in Fiscal Year 2028-29 (starting around July 2028) •Typically, 15-25 years repayment period (10 or 20 years in our realistic scenarios) •Very strong bondholder security: the borrower is obligated to levy property taxes in an amount sufficient to pay debt service. As a result, G.O. bonds are typically considered more secure than alternative bond types (e.g., revenue bonds), resulting in a lower interest rate for the issuer •Proceeds and debt service payments do not count toward Expenditure Limitation Option #1 Meeting Packet Page 39 of 147 General Obligation Bonds – Election Timeline Option #1 Recommended timeline Meeting Packet Page 40 of 147 General Obligation Bonds •Per Arizona Constitution, the Town may only be indebted up to 26% of its net assessed full cash value •6% category for general municipal purposes •20% category for “water, artificial light, or sewers, when the works for supplying such water, light, or sewers are or shall be owned and controlled by the municipality, and for the acquisition and development by the incorporated city or town of land or interests therein for open space preserves, parks, playgrounds and recreational facilities, public safety, law enforcement, fire and emergency services facilities and streets and transportation facilities” About $62M of borrowing capacity About $206M of borrowing capacity Option #1 Meeting Packet Page 41 of 147 General Obligation Bonds – Realistic Scenarios Option #1 •10-year repayment period •Assumes 5% coupon rate •About $1.47M payment per year •$694k interest in first year •$70k interest in final year •$14.7M of total debt service for $11.2M bond Meeting Packet Page 42 of 147 General Obligation Bonds – Realistic Scenarios Option #1 •20-year repayment period •Assumes 5% coupon rate •About $1.81M payment per year •$1.4M interest in first year •$86k interest in final year •$36.25M of total debt service for $22.3M bond Meeting Packet Page 43 of 147 Meeting Packet Page 44 of 147 Pledged Revenue Obligations – Excise Tax Pledge •Does not increase Town tax revenues •Principal and interest payments are made from existing excise tax revenues that the Town pledged towards repayment of the debt •0.2% of 2.9% TPT = excise tax for Streets Fund •About $1.4M per year •Town Council may send a local sales tax rate increase to voters (must be in even years), but is not required to do so •No voter authorization required. •Can move forward with Council approval. •If accompanied by excise tax increase, November 2026 is next allowable election •Funds can be available to Town within months •Since this financing type does not require voter approval, the financing could be complete as early as July 2027 (FY2027-28) •Typically, 15-25 years repayment period (10 or 20 years in our realistic scenarios) •Proceeds and debt service payments do not count toward Expenditure Limitation Option #2 Meeting Packet Page 45 of 147 Estimated Fees for a Bond Issuance Meeting Packet Page 46 of 147 Council Questions? Meeting Packet Page 47 of 147 Town of Fountain Hills Bond Election Overview FEBRUARY 24, 2026 Jim Stricklin |jstricklin@columbiacapital.com | 602.345.9239 Zach Sakas |sakasz@gtlaw.com | 602.445.8456 Meeting Packet Page 48 of 147 © 2026 Greenberg Traurig, LLP •General Obligation Bonds •Election Required •Must be a November election date, presently in odd or even years •Repaid with property taxes •Town, by statute, will levy property taxes unlimited as to rate or amount sufficient to pay debt service on “new money” general obligation bonds (A.R.S. §35-458) •Per Arizona Constitution, the Town may only be indebted up to 26% of its net assessed full cash value •6% category for general municipal purposes •20% category for “water, artificial light, or sewers, when the works for supplying such water, light, or sewers are or shall be owned and controlled by the municipality, and for the acquisition and development by the incorporated city or town of land or interests therein for open space preserves, parks, playgrounds and recreational facilities, public safety, law enforcement, fire and emergency services facilities and streets and transportation facilities” 2 General Obligation Bonds Meeting Packet Page 49 of 147 © 2026 Greenberg Traurig, LLP •Early activities, prior to calling the election: •To the extent deemed advisable by the municipality, citizen groups or committees will convene to identify projects for potential bond financing •Municipal staff will develop preliminary project budget estimates, and consult with financial advisory firms to ensure sufficient bonding authority is submitted to voters •Of note in recent economic environment is inflation of costs for materials. Projects planned in 2019 as part of bond packages now may face funding shortfalls because of increased costs. •Council, staff or citizen committees may determine priorities for projects as well, or eliminate projects from what will be presented to voters •Staff will work with outside advisors and legal counsel to prepare the resolution calling the election and ballot language that matches projects, amount to be authorized, and other parameters •Clerk will begin preliminary contact with County Elections Department to be prepared if Council adopts the resolution calling the election 3 General Obligation Bond Election Meeting Packet Page 50 of 147 © 2026 Greenberg Traurig, LLP •A.R.S. § 35-452 •Election may be called by governing body (i.e. Town Council). •Election is held on the November election date in any year. •Election passes if a majority of the qualified electors voting at the election vote in favor of the general obligation bonds. •Bond election expenses must be paid from current operating funds of the municipality. •Transaction costs for each bond issuance may be paid from bond proceeds, but election costs must be paid from the current operating funds. 4 General Obligation Bond Election Meeting Packet Page 51 of 147 © 2026 Greenberg Traurig, LLP •A.R.S. § 16-226 •General obligation bond elections called pursuant to A.R.S. § 35-453 are excluded from this statute that requires other elections to be called not later than 180 days before the election date. •However, many County Elections Departments need advance notice of an election and will want the municipality to call the election at least 180 days prior to the election date. •Town Clerk should discuss any such requirements with County Elections Department to ensure the election is called with sufficient time, even if not required by statute. 5 General Obligation Bond Election Meeting Packet Page 52 of 147 © 2026 Greenberg Traurig, LLP •A.R.S. § 35-454 •Informational pamphlet pertaining to the general obligation bond election is required •Certain language must be included in the ballot question, for example “the issuance of these bonds will result in a property tax increase sufficient to pay the annual debt service on the bonds.” •Certain language must be included in any written materials provided by the municipality pertaining to the election, for example “the estimated average tax rate for the proposed bond authorization is $___.” •General obligation bond authority does not expire, giving the municipality flexibility to manage the property tax levy related to general obligation bond debt service. 6 General Obligation Bond Election Meeting Packet Page 53 of 147 © 2026 Greenberg Traurig, LLP •Prior to Calling the Election •Citizen education by the municipality is permitted, for example Council presentations describing past successful bond-financed projects or fiscal discipline to repay bonds early. •To the extent a citizen committee was appointed to select projects, disband this committee so it can become an advocacy group. •Approximately 180 Days Prior to Election Date •Council adopts a resolution calling the general obligation bond election, approving the form of ballot language, setting a deadline for pro/con arguments to be submitted, and authorizing municipal staff to take further actions in connection with the election. 7 General Obligation Bond Election Timetable Meeting Packet Page 54 of 147 © 2026 Greenberg Traurig, LLP •After Calling the General Obligation Bond Election •Municipality must be neutral and not advocate for a desired election outcome. Municipal resources may not be used unless information is presented in a neutral, factual manner. For example, no “vote yes on bonds” bumper stickers on municipal police vehicles. •Municipality enters into intergovernmental agreement with County Elections Department •Maricopa County offers a “menu” of services that the municipality can select. Municipality typically must make “menu” selections at least 150 days prior to the election date. •County Elections Department will have a timetable of deadlines and requirements to finalize ballot language, etc., and municipal staff and outside advisors will review draft materials. •Municipal staff work with advisors to prepare the informational pamphlet •Certain language must be included, and some language must be in bold font. 8 General Obligation Bond Election Timetable Meeting Packet Page 55 of 147 © 2026 Greenberg Traurig, LLP •Town clerk coordinates publication of the notice of election, and publication of the call for pro/con arguments. •Sufficient time should be built into informational pamphlet printing schedule to allow for receipt and verification of pro/con arguments (usually deadline in August). •At least 35 days before the election date, the informational pamphlet must be mailed to every household within the political subdivision that contains a registered voter •Town clerk should coordinate early with the printer on timetable – mailings for other elections may go out later, so the printer should be aware that this is a general obligation bond election with the 35-day requirement for the informational pamphlet. •30 days prior to election – voter registration deadline •Early voting period prior to election date •Election Day •Within 20 days after the election, the governing body must canvass the votes cast and certify the result. •Town clerk records a certificate stating the purpose of the election, total number of votes cast and the total number of votes for and against the general obligation bond question. If approved by voters, the certificate states the general obligation bonds are so ordered. •In recent years, certain County Elections Departments have been delayed tabulating election results, and therefore local political subdivisions canvassed elections slightly after the 20-day period. There are statutory exceptions to the 20-day period for these situations. 9 General Obligation Bond Election Timetable Meeting Packet Page 56 of 147 © 2026 Greenberg Traurig, LLP •Pledged Revenue Obligations (Excise Tax) •No voter authorization required •Town may send a local sales tax rate increase to voters, but is not required to do so •November election, only in even years •No statutory authority; this structure is in accordance with Arizona caselaw (the “Civic Center” cases) •Relies on Town’s ability to enter into contracts, including installment purchase agreements and trust agreements •Payments made from revenues or from a special fund not obtained from general taxes •Trend over the past 20 years is to use a corporate trustee instead of a municipal property corporation •Bonds which are not payable from general funds do not constitute a debt of a municipality within constitutional or statutory debt limitation •Transaction document covenants may require Town to increase local sales taxes and fees in order to maintain certain debt service coverage levels •Customary coverage covenant is two times annual debt service 10 Excise Tax Revenue Obligations Meeting Packet Page 57 of 147 © 2026 Greenberg Traurig, LLP •General Obligation Bonds •Call the election and canvass the election (two resolutions) •Resolution(s) approving each issuance of bonds from the voter authorized amount •Pledged Revenue Obligations •Excise Tax - Call an election to raise local sales taxes and canvass the election (two resolutions; optional) •Resolution approving the execution and delivery of a Trust Agreement and Installment Purchase Agreement, and authorizing the pledge of specified revenues •Resolutions approved by Council in connection with a bond issuance will delegate authority to Town staff to carry out the details of the transaction within a permissible set of parameters determined by Council Council Action Summary Meeting Packet Page 58 of 147 ITEM 3.c. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 2/24/2026 Meeting Type: Town Council Work Session (Budget Retreat) AMENDED Submitting Department: Public Works Prepared by: Justin Weldy, Public Works Director Staff Contact Information: Phone: 480-816-5133 Email: jweldy@fountainhillsaz.gov Request to Town Council Regular Meeting (Agenda Language) PRESENTATION: Street repairs related to potholes and small asphalt repairs Staff Summary (background) Staff evaluated the feasibility of performing pothole repairs and small asphalt restoration projects using in-house forces versus contracting the work to a qualified paving contractor. The analysis considered capital equipment costs, staffing requirements, and ongoing operational expenses. In-House Operations – Capital & Staffing Requirements To perform pothole and small asphalt repairs internally at an acceptable standard, the Town would need to procure specialized equipment, including: • Double Drum Smooth Vibratory Compactor – $63,271.97 • Cold Planer with Integrated Water Tank (Skid Steer Attachment) – $26,910.04 • Tack Trailer – $36,256.65 • Trailer-Mounted Crack Filling Unit – $32,500.00 • Asphalt Hot Box – $57,204.00 Total Estimated Capital Investment: $216,142.66 This does not include: • Skid steer ownership and replacement costs • Equipment maintenance and repair • Fuel • Storage • Insurance • Depreciation and lifecycle replacement Additionally, a typical crew would require: • 1 Supervisor • 1 Equipment Operator • 3–4 Laborers The Town would incur ongoing salary, benefits, retirement, workers’ compensation, and overtime costs for this staffing level, regardless of daily production needs. Meeting Packet Page 59 of 147 Contractor Pricing Structure Contractor pricing is equipment- and labor-based with 4-hour minimums and includes supervisory oversight. Representative rates include: • Dump Truck – $152/hr • Skid Steer – $90/hr • 3-Ton Roller – $90/hr • Grade Tractor – $98/hr • Plate Compactor – $25/hr • Supervisor – $95/hr • Equipment Operator – $72/hr • Labor – $42/hr • Asphalt Material – $162–$187 per ton (market-adjusted quarterly) • Crack Seal – $38 per gallon • Dump Fees – $250 per load Under this model, the Town only pays for services when work is performed. There are no capital expenditures, no long-term staffing obligations, and no equipment maintenance liabilities. Cost Effectiveness Considerations 1. High Upfront Capital Cost: The Town would need to invest over $216,000 in specialized equipment before performing the first repair. 2. Utilization Risk: Pothole and minor asphalt repair work is often reactive and seasonal. Equipment may sit idle for extended periods, reducing return on investment. 3. Ongoing Maintenance & Replacement: Pavement equipment requires regular service and eventual replacement, adding long- term financial obligations. 4. Staffing Burden: Maintaining a full asphalt repair crew increases permanent payroll and benefit liabilities. 5. Market Flexibility: Contractor services allow the Town to scale work up or down based on need, weather events, or funding availability. 6. Risk Transfer: Contracting shifts equipment breakdown risk, labor shortages, and material price volatility to the contractor. Conclusion Based on the required capital investment, ongoing maintenance costs, staffing obligations, and limited utilization of specialized equipment, performing pothole and minor asphalt repairs in-house is not cost effective at this time. Utilizing qualified contractors provides operational flexibility, eliminates significant capital expenditures, and allows the Town to pay only for services as needed. This approach represents the most fiscally responsible method for addressing pothole and small asphalt repair needs. Meeting Packet Page 60 of 147 Related Ordinance, Policy or Guiding Principle Town Procurement and Contracting Authority The Town’s purchasing and procurement policies allow the use of outside contractors when doing so is in the best interest of the Town and provides the most cost-effective delivery of services. Contracting for specialized pavement repair work is consistent with these principles. Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) N/A Suggested Motion N/A FISCAL IMPACT Fiscal Impact: Budget Reference: Funding Source: ATTACHMENTS 1. Public Works Pavement maintenance and small asphalt repairs Meeting Packet Page 61 of 147 Presented by Justin T. Weldy, Public Works Director Town Council Retreat February 24, 2026 Town of Fountain Hills Street Repairs Related to Potholes and Small Asphalt Repairs Update Meeting Packet Page 62 of 147 Asphalt Hot Box $57,204.00 Meeting Packet Page 63 of 147 Double Drum Smooth Vibratory Compactor $63,271.97 Meeting Packet Page 64 of 147 Tack Trailer – $36,256.65 Meeting Packet Page 65 of 147 Cold Planer with Integrated Water Tank (Skid Steer Attachment) $26,910.04 Meeting Packet Page 66 of 147 Trailer-Mounted Crack Filling Unit – $32,500.00 Meeting Packet Page 67 of 147 Questions Meeting Packet Page 68 of 147 ITEM 3.d. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 2/24/2026 Meeting Type: Town Council Work Session (Budget Retreat) AMENDED Submitting Department: Fire Department Prepared by: Paul Soldinger, Chief Financial Officer Staff Contact Information: Phone: 480-816-5160 Email: psoldinger@fountainhillsaz.gov Request to Town Council Regular Meeting (Agenda Language) PRESENTATION: Fire Department Overtime Issues & Personnel Request Staff Summary (background) Through its first 2 years as part of the Town, the Fire Department has experienced challenges with overtime. This has become more of a recent issue due to several staff being on leave. Finance will lead this presentation with an overview of the Fire Department's overtime data and the Fire Department will discuss its personnel request for the FY2027 budget. Related Ordinance, Policy or Guiding Principle N/A Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) N/A Suggested Motion N/A FISCAL IMPACT Fiscal Impact: Budget Reference: Funding Source: ATTACHMENTS 1. FY2027 Fire Department Overtime - 2.24.2026 Meeting Packet Page 69 of 147 Fire Department Overtime Meeting Packet Page 70 of 147 Overtime hours by pay period Meeting Packet Page 71 of 147 Average personnel working per shift by pay period Meeting Packet Page 72 of 147 ITEM 3.e. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 2/24/2026 Meeting Type: Town Council Work Session (Budget Retreat) AMENDED Submitting Department: Community Services Prepared by: Kevin Snipes, Community Services Director Staff Contact Information: Phone: 480-816-5178 Email: ksnipes@fountainhillsaz.gov Request to Town Council Regular Meeting (Agenda Language) PRESENTATION: Fountain Park Lake Liner Replacement Design Staff Summary (background) The Fountain Park Lake liner is a critical infrastructure component that maintains water retention for the fountain and irrigation for the park, protects underlying soils, and supports the overall functionality and appearance of the lake The existing liner, when it reaches the end of its useful life, will require proactive planning to prevent potential water loss, structural concerns, and more costly emergency repairs in the future. This project will fund the professional design and engineering services required to prepare construction-ready documents for the replacement of the lake liner. The design phase will include site evaluation, material analysis, phasing recommendations, permitting review, cost estimating, and coordination with fountain operations to minimize service disruption. The consultant will also evaluate opportunities to improve durability, maintenance efficiency, and long-term performance. Completing the design now positions the Town to plan and budget appropriately for construction and schedule the work during an optimal seasonal window to reduce community impact. Advancing this project demonstrates proactive asset management and protects one of the Town’s most recognizable and heavily utilized community amenities. Related Ordinance, Policy or Guiding Principle N/A Risk Analysis Choosing not to move forward with this project increases the risk of needing to do emergency planning and could lead to underfunding the project for when it needs to be completed. Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) N/A Suggested Motion Consensus to move forward FISCAL IMPACT Fiscal Impact: Meeting Packet Page 73 of 147 Budget Reference: Funding Source: ATTACHMENTS 1. Lake liner Meeting Packet Page 74 of 147 Lake Liner Replacement Design Playbook Meeting Packet Page 75 of 147 Fountain Park Lake Liner Design Meeting Packet Page 76 of 147 Better Planning Better Results Meeting Packet Page 77 of 147 Lake Liner Leak Flow Chart Meeting Packet Page 78 of 147 Leak Test Meeting Packet Page 79 of 147 Evaporation Test Results Once evaporation tests have indicated a lake loss greater than 110% of the pan evaporation, then it is recommended that planning begin for the liner replacement. •To Date there has been zero indication of any lake liner outflow •Repeat testing every 5 years Meeting Packet Page 80 of 147 Repair Options Inflatable Cofferdam •Large geotextile tubes unfolded and filled with air and water •This enables one section at a time to be completed •Takes longer and is more difficult to install the liner Meeting Packet Page 81 of 147 Repair Options Aquaphor Recharge The lake water stored by groundwater aquifer recharge and then recovered for later return to the lake. •Pretreatment Filtration •Pretreatment Disinfection •Microfiltration Membranes to remove suspended solids •Dechlorination and UV Disinfection to remove undesirable by-products •Aquifer Storage and Recovery from Well Meeting Packet Page 82 of 147 Repair Options Direct Reuse •Alternative to trying to directly treat the lake water to a high level for aquifer recharge. •Provide a balance between the lower TDS AWTF water and the higher TDS lake water •Acceptable TDS concentrations for turf-grass irrigation is 200 ppm to 500 ppm. •TDS of the Lake reclaimed water has been measured to be over 1,180 ppm. Meeting Packet Page 83 of 147 Aquatic Wildlife Removal •Regulatory Requirements Arizona Administrative Code R12-4 •Arizona Game and Fish Department •Identification of lake species •Transfer to a different lake •Rescue aquatic life by private organizations •Euthanizing and disposal of wildlife Meeting Packet Page 84 of 147 Lake Sludge Disposal Organic and inorganic solids accumulated in the lake must be removed, dewatered, and hauled away for disposal •Air drying out solids not optimal Meeting Packet Page 85 of 147 Mobile Belt Dewatering Dewatering filtrate could be returned to the lake or a temporary storage area Meeting Packet Page 86 of 147 Park Vegetation Maintenance •Cofferdam the pumphouse cove making 200,000 gallons of water available to irrigate Meeting Packet Page 87 of 147 Park Vegetation Maintenance •Dedicated Irrigation Storage of 500,000 gallon reservoir •80 long x 40 wide x 21 depth Meeting Packet Page 88 of 147 Review •Failing to Plan is Planning to Fail •Emergency planning is costly •Proactive planning allows for scheduling replacement vs emergency replacement •Water Evaporation Testing Until 110% is reached •No difference currently, existing liner could last 50+ years, 2050s •Design Plan: •Aquatic Wildlife Removal •Removal of lake water •Sludge Disposal •Park Vegetation Maintenance •Liner Replacement •Refilling Lake Meeting Packet Page 89 of 147 Questions Meeting Packet Page 90 of 147 ITEM 3.f. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 2/24/2026 Meeting Type: Town Council Work Session (Budget Retreat) AMENDED Submitting Department: Administration / Economic Development & Tourism Prepared by: Amanda Jacobs, Economic Development Director Staff Contact Information: Phone: 480-816-5104 Email: ajacobs@fountainhillsaz.gov Request to Town Council Regular Meeting (Agenda Language) PRESENTATION: River of Time Museum and Exploration Center Lease Agreement Staff Summary (background) Background The Town of Fountain Hills and the Fountain Hills Lower Verde River Valley Museum/River of Time Museum and Exploration Center (Museum) entered into a lease agreement on August 16, 2001 (Attachment 1). The agreement expires on August 15, 2026. Key provisions of the agreement include: • Approximately 5,000 square feet of Town-owned space was leased to the Museum at a nominal rate of $1 per year for 25 years (total rent collected: $25). • The Town contributed $210,000 toward exhibits, displays, lighting, and permanent improvements at the inception of the lease. • Throughout the lease term, the Town has paid for building maintenance and utilities, including water, gas, electricity, sewer, trash removal, and base cable television service (excluding telephone and equipment costs). Over the past 25 years, the Town and Museum have maintained a longstanding partnership focused on preserving and interpreting the community’s history. Current Considerations As the lease approaches expiration, the Town must evaluate potential next steps in a manner consistent with state law and the Town’s fiduciary responsibility to ensure the highest and best use of Town-owned assets. In assessing fair market value for comparable commercial space in Downtown Fountain Hills (Civic District), staff reviewed available market data for similar properties in the Avenue District, including galleries, retail spaces, and other commercial uses. According to CoStar, estimated commercial lease rates for comparable properties range from $15 to $17 per square foot annually. Using the lower end of this range: Meeting Packet Page 91 of 147 $15 per square foot × 5,000 square feet = $75,000 annually. This analysis provides a baseline for evaluating future occupancy scenarios. On January 26, Town staff met with the Museum Director and Board President to provide notice that the Town does not intend to renew the lease under its current terms and expressed interest in collaborating on future possibilities for the space. On February 3, staff met again with the Board President, who formally requested a one-year lease extension (Attachment 2). Purpose of Agenda Item The purpose of this agenda item is to review available options and provide direction regarding next steps for the facility following expiration of the current lease. Related Ordinance, Policy or Guiding Principle N/A Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) N/A Suggested Motion N/A - Work Session/Discussion Only FISCAL IMPACT Fiscal Impact: Budget Reference: Funding Source: ATTACHMENTS 1. FH Lower Verde River Valley Museum Historical Society Lease-Management Agreement 8-16-01 (002) 2. Letter from River of Time Board of Directors 2.3.2026 3. River of Time Museum Lease Agreement 2.24.2026 Meeting Packet Page 92 of 147 LEASEIMAi~AGEMENT AGREE:MENT This Lease/Management Agreement is made as of the 16th day of August, 200 I, between ·-the Town of Fountain Hills, a Municipal Corporation (hereinafter referred to as "The Town") and FOUNTAIN HILLS LOWER VERDE RIVER VALLEY MUSEUM & HISTOR1CAL SOCIETY, INC., an Arizona non-profit Corporation (hereinafter referred to as "The Museum Association"). RECITALS A. The Town is the owner of that certain approximately 21,000 square foot building located within the Town of Fountain Hills, State of Arizona. (See Attachment "A") B. Construction of such building has been financed in substantial part by the proceeds of a property tax bond issue passed by the voters of the Town of Fountain Hills, for the purpose of building a public library and museum. C. Approximately 15,000 square feet of such building will be used by the Maricopa County Library District for the operation of a public museum in Fountain Hills. D. Approximately 1,000 square feet of such building has been designated for use as a common lobby and restroom area for the museum and library. E. The remaining area of approximately 5,000 square feet has been designated for use as a museum. Such area may hereinafter be referred to as the "Museum Site". F. In addition to the Museum Site, an additional outdoor area adjacent to the Museum Site has been set aside for a patio and outdoor display area. (See Attachment "B") Such area may hereinafter be referred to as the "Museum Patio". NOW, THEREFORE, the parties hereto agree as follows: 1. LEASE The Town hereby leases to The Museum Association and The Museum Association hereby leases from The Town, the Museum Site and the Museum Patio. Such areas, together with the right Page 1 of 8 Meeting Packet Page 93 of 147 to use the lobby area in common with the library and the right to use adjacent parking and open areas in common with other municipal uses, shall collectively be referred to herein as the "Leased Premises". .. 2. TERM The term of this Lease shall be 25 years, which term shall commence on August 16, 2001, and shall end on August 15, 2026. One year prior to the expiration of the 25 year term, the panies shall meet and during the I 2 months immediately preceding the termination of the Lease shall negotiate and may enter into a renewal for an additional 25 year term provided that at the time of the renewal, neither party is in default of any of the terms and conditions of this Lease as it exists now or as it may be modified in the future. 3. RENT The rent that The Museum Association shall pay to The Town shall be the sum of twenty• five dollars. Said rent shall be due and payable annually in installments of one dollar. The first installment of one dollar shall be paid at the time of the execution of this Lease and one dollar shall be due on the anniversary date for each of the next 24 years. The Museum Association shall have the right to prepay such rent. 4. USE OF THE LEASED PREMISES (A) The Leased Premises shall be used for the maintenance and operation of a museum depicting the history of the Town of Fountain Hills, the Lower Verde River Valley, and other areas within the State of Arizona which, in the judgment of The Museum Association, shall be of general interest to the residents of and visitors to the Town of Fountain Hills. (B) The Museum Association shall not conduct or permit to be conducted any unlawful or hazardous activity upon the Leased Premises. The use of the Leased Premises by The Museum Association is and will continue to be subject to all applicable laws and regulations of the State of Arizona and the Town of Fountain Hills. 5. CONSTRUCTION AND INSTALLATION OF IMPROVEMENTS (A) The Town shall construct and install within the Museum Site certain improvements for the initial operation of the Museum. (8) The Museum Association shall construct and install within the Museum Site such permanent or removable displays and exhibits as it deems appropriate for the museum. In addition, Page 2 of 8 Meeting Packet Page 94 of 147 The Museum Association may install such additional lighting and other improvements as are necessary. (C) The :_own has agreed to provide to The Museum Association the sum ofS2 l 0,000 to pay for a portion of the cost of the displays and exhibits, lighting, or other permanent improvements to be installed by The Museum Association. The Museum Association shall be responsible for any additional costs of such items over and above such amount of $210,000. The funding of such sum shall be made by The Town upon the written request of The Museum Association. 6. REPAIRS AND MAINTENANCE The Town shall be responsible for all janitorial service to the Leased Premises as well as all maintenance and repair of the Leased Premises, except any exhibits of mechanical equipment of The Museum Association, and all mechanical fixtures such as heating, air conditioning, plumbing, and the like. 7. UTILITIES The Town shall be responsible for and pay for all utilities related to the Leased Premises including, but not limited to, water, gas, electricity, sewer, trash removal, and basic cable television. The Museum Association shall be responsible for installing and paying for its own telephone system, and any computer equipment, data lines, internet service, and/or premium cable service that The Museum Association should elect to install. 8. INSURANCE The Museum Association shall obtain and maintain coverage for comprehensive general liability in limits of at least $1,000,000.00 combined single limit covering liability, and property damage, autos owned and non-owned. A certificate shall be provided annually to The Town giving evidence of required coverages. The Museum Association, should it acquire employees, shall obtain Workers Compensation insurance in conformance with Arizona Statutes. Certificate of Coverage shall be provided to The Town. The Museum Association shall be responsible for purchase and maintenance of any insurance covering physical loss to displays, exhibits, and temporary enhancing lighting. Insurance companies used to meet these requirements must be licensed or approved by the State of Arizona. They must have a current A.M. Best Co. rating of at least B+. Page 3 of 8 Meeting Packet Page 95 of 147 In the event of a casualty that destroys or substantially impairs use of the Leased Premises, The Town and The Museum Association shall meet and determine the best course of action to perpetuate the mission and goals of both parties. -. 9. PERMITS AND LICENSES Nothing contained in this Lease shall exempt The Museum Association andior any user of the Leased Premises from the requirement that they obtain any and all required state, county, or town permits or approvals. 10. INCOME AND FEES The Museum Association has the authority, with the approval of The Town, to establish reasonable admission fees to the Museum. The Museum Association shall use any admission fees it receives for the admission to the Museum, and any net income it may receive from the sale of books, maps, or other museum-related items for the maintenance and improvement of museum exhibits, educational programs and other museum-related activities. Museum tours sponsored by the Town of Fountain Hills or by the Fountain Hills Unified School District shall be exempt from such admission fees. 11. \VASTE The Museum Association shall not use nor permit uses within the Leased Premises which could constitute waste on the Leased Premises, a public or private nuisance or any act which is unlawful in any manner. 12. STATUS OF MUSEUM EMPLOYEES The Museum Association understands and agrees that none of the terms and conditions of this Lease contemplate or imply the creation of an employer/employee relationship and that all employees, agents, contractors, subcontractors and volunteers of The Museum Association are independent contractors in terms of their relationship to The Town. 13. ANNUAL REPORT No later than March 31st of each year beginning in 2002, The Museum Association shall prepare and deliver to The Town an annual report on attendance and activity. The Museum Association President and the Town Manager shall meet subsequent to the report delivery and discuss those issues in which The Museum Association and The Town can work together to assist in the continued development of the Museum. Page 4 of 8 Meeting Packet Page 96 of 147 14. DEFAULTS If either The Town or The Museum Association shall be in default in the performance of any of the obligations set forth herein, then the non-defaulting party may send notice to the defaulting party, in writing~ setting forth the condition of default and demanding that the default be cured within 90 days. Should the default not be cured within the 90 day period, then the non-defaulting party may seek any remedy available in equity and/or law including but not limited to termination of this Lease. This default provision shall apply to the entire contract except the provisions regarding payment of insurance premiums and notice of cancellation. In the instance of all insurance required hereunder, the ability to cure shall be limited to 30 days, and if The Town is obligated to pay either a renewal or obtain additional insurance to replace cancelled insurance, the cost therein borne by The Town shall become an immediate obligation of The Museum Association and shall be due and payable in full within 10 days of a receipt by The Museum Association of notice of payment by The Town. 15. RIGHTS UPON TERMINATION The Town and The Museum Association agree and acknowledge that in the even that this Lease terminates at the end of its full term or any extension thereof, then title to all permanent improvements within the museum shall vest in The Town and The Museum Association will have no right to any compensation unless said compensation is specifically agreed to be due to The Museum Association at such termination. If the Agreement should terminate for any reason prior to the end of the full term or any extension thereof, then the parties shall meet and agree upon an amount of compensation, if any·, due to The Museum Association or have its rights hereunder determined by a competent court oflaw. Should the Leased Premises of the contents thereof be partially or totally condemned for public purpose through the exercise of the power of eminent domain by anyone other than The Town, the parties agree that the proceeds of the condemnation shall be divided in an equitable manner to be determined by agreement of the parties. 16. TERMINATION OF THE MUSEUM ASSOCIATION In the event that the Museum Association shall cease to exist as an Arizona non-profit corporation, then, unless prior to such termination The Town shall have agreed upon the designation of a successor entity to the Museum Association, this Lease shall terminate and, subject to any third party rights, title to all museum exhibits and displays shall vest in the Town of Fountain Hills. Page 5 of 8 Meeting Packet Page 97 of 147 17. NON-WAIVER BY THE TO\VN The failure of The Town to insist upon strict performance of the terms, conditions and covenants of this Lease shall not constitute or be construed as a waiver or relinquishment of the .. Town's rights to thereafter enforce any such tenns, conditions or covenants and that the same shall continue in full force and effect. 18. ASSIGNMENT This Lease is not assignable by either party in whole or in part without the express written consent of the other party. 19. LIMIT A TIO NS ON TOWN POWERS The Museum Association understands, agrees and acknowledges that the term of this Lease is for 25 years, but that The Town does not and cannot enter into an agreement that is constituted as debt for any period exceeding the current fiscal year of The Town. Any requirement by The Town that funds would be expended or obligations incurred in the narure of a debt must be approved in the annual operating budget of The Town as adopted by the Town Council according to law, and any action by The Museum Association in any court of competent jurisdiction to require specific perfonnance to pay any sums shall be barred by this Lease unless the sum was specifically authorized in the annual municipal operating budget. 20. NOTICES Whenever this Lease requires that notice be given to a party to the Agreement, such notice shall be in writing and shall be made by personal delivery to the other party or sent by U.S. mail, postage prepaid, addressed as follows: To The Town: To The Museum Association: TOWN OF FOUNTAIN HILLS P.O. Box 17958 Fountain Hills, Arizona 85269 Attention: Town Clerk FOUNTAIN HILLS & LOWER VERDE RIVER VALLEY MUSEUM & HISTORICAL SOCIETY INC P.O. Box 17445 Fountain Hills, Arizona 85269 Attention: President Page 6 of 8 Meeting Packet Page 98 of 147 Either party may change its address for notices by advising the other party, in the manner set forth above. 20. LA\VS •. This agreement is subject to the law of the State of Arizona and specifically the provisions of A.R.S. § 38-511. IN WITNESS WHEREOF, the parties have executed this Lease11v1anagement Agreement as of the l 61h day of August, 200 I. ATTEST: CASSIE HANSEN, Town Clerk TO\VN OF FOUNTAIN HILLS, A Municipal Corporation FOUNTAIN HILLS & LO\VER VERDE RIVER VALLEY .MUSEUM AND HISTORICAL SOCIETY An Arizona Non-Profit Corporation By:_i_ll_.,._t~_· ---- ALAN CRUIKSHANK, President Page 7 of 8 Meeting Packet Page 99 of 147 ST A TE OF ARIZONA ) ) ss. COUNTY OF MARICOPA ) SUBSCRIBED AND SWORN TO before me by Alan Cruikshank, known to be the President of the FOUNTAIN HILLS & LOWER VERDE RIVER VALLEY MUSEUM & HISTORICAL SOCIETY. Notary Public Page 8 of 8 Meeting Packet Page 100 of 147 'I.OT w. "I.J1111s· AT , • • a· ,._ ... , I I I 0----- ©-- I 'I Iii HDA Architects & Plaaaersl I ...._, • ,.._c;_,--~-.u-Sllm >' • n:z.:_,._ ,a_,._ ~g IIUSEU.. fLOOII PUii . I ) I ( I I .1,------------ 1 I I I I I I I ' •·-e· --.,... I '; Meeting Packet Page 101 of 147 :'1.01 ,..,. ,_,..ITS. Al 1• • 10· .,. ........ , r. 'o I I I <l,-- 1 I -r-~---... -... I ~ .\ }f ; +---------------A. 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Y, . /,' / " 32'-•• ~ NEW TOWN CENTER COMPLEX II I n,1111 OI' l'D/llf'IAIN KlU.9 ~ ,-J IIOfflf 1..dlOln'ANA l!Vn • ro!JNrA111 HILi.i .UW.HA -Meeting Packet Page 102 of 147 Meeting Packet Page 103 of 147 River of Time Museum Lease Agreement Meeting Packet Page 104 of 147 Background •25-Year Lease between Town and Museum Association; expires August 15, 2026 •Approximately 5,000 sq ft •Rent $1 annually; Total $25 •Town provided $210,000 •Cost of displays and exhibits •Lighting •Other permanent improvements •Town pays for maintenance, utilities and janitorial services Meeting Packet Page 105 of 147 Museum Memberships •2025 –117 members •2024 –163 members •2023 –242 members *Note: Membership data provided by the Museum •70-75% live in Fountain Hills •20% live in Rio Verde •5% live in Valley or Nationwide Meeting Packet Page 106 of 147 Net IncomeTotal Revenue •January –December 2022 •$168,014 •January –December 2023 •$123,058 •January –December 2024 •$178,524 •January –October 2025 (closed in the summer) •$75,741 •January –December 2022 •($50,388) Loss •January –December 2023 •($42,893) Loss •January –December 2024 •$8,952 •January –October 2025 (closed in the summer) •($40,297) Loss Profit and Loss Statement *Note: Numbers provided by Museum. Meeting Packet Page 107 of 147 Town Requirements •Any consideration of renewal requires an evaluation of compliance with state law •Highest and best use of a Town-owned facility. Meeting Packet Page 108 of 147 Gift Clause •Arizona’s Gift Clause exists to protect taxpayers. It ensures public dollars are used for a clear public purpose and that the Town receives fair value in return. •Two common questions: •Is there a clear public purpose; and •Is the Town receiving fair market value? Meeting Packet Page 109 of 147 Option 1 –Renew •Renew •Museum is requesting one year •Fair Market Value ($75,000) •Museum is requesting “short-term funding plan” •Museum is conducting a community fund drive •Define Terms Meeting Packet Page 110 of 147 Option 2 –Evaluate Future Options •Town building used for Town purposes •Relocate Economic Development and Tourism Department •Retain components of museum •Potential service agreement •Welcome Center and Gift Shop •Training and Workforce Hub •Event Programming •Patio •Adjacent to Centennial Pavilion •Storage Meeting Packet Page 111 of 147 Meeting Packet Page 112 of 147 Meeting Packet Page 113 of 147 Option 1 •Draft new agreement •Council approval before summer recess Option 2 •Notification to museum •In person meeting –January 26 and February 3 •Formal Letter –February 9 •Transition Letter •Museum needs 3 months for deaccession •Evaluate budget implications Next Steps Meeting Packet Page 114 of 147 Staff Recommendation and Council Direction •Option 2 to ensure compliance with state law and position the facility to better align with evolving community priorities and long-term strategic objectives. Meeting Packet Page 115 of 147 Discussion. Questions? Meeting Packet Page 116 of 147 ITEM 3.g. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 2/24/2026 Meeting Type: Town Council Work Session (Budget Retreat) AMENDED Submitting Department: Administration / Finance Prepared by: Paul Soldinger, Chief Financial Officer Staff Contact Information: Phone: 480-816-5160 Email: psoldinger@fountainhillsaz.gov Request to Town Council Regular Meeting (Agenda Language) PRESENTATION: Community Contracts Overview - Update Staff Summary (background) Town Staff provided an update on Community Contracts in the Town's annual budget during the November 12, 2025 Budget Retreat Work Session. This presentation provides the same information with an update on a renegotiated contract with Central Arizona Shelter Services. Staff is seeking Council direction on how to proceed for the FY2027 budget and in subsequent years. Related Ordinance, Policy or Guiding Principle N/A Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) N/A Suggested Motion N/A FISCAL IMPACT Fiscal Impact: Budget Reference: Funding Source: ATTACHMENTS 1. FY2027 Community Contracts Overview - 2.24.2026 Meeting Packet Page 117 of 147 Community Contracts -Updated Paul Soldinger, Chief Financial Officer February 24, 2026 Meeting Packet Page 118 of 147 Community Contracts Overview Meeting Packet Page 119 of 147 Community Contracts •Community contracts have previously been discussed with prior Councils to allocate General Fund revenues to support local community programs: •$120,700 Budgeted in General Government Department (central Town costs, such as insurance) in General Fund •$73,700 of this budget has been allocated to community organizations (see next slide) •Town staff renegotiated unsheltered reserve bed contract with CASS since last Budget Retreat: •Prior Contract - $15,000 including3 reserve beds for Town •Renegotiated Terms - $5,000 including 1 reserve bed for Town; $55 per day for any unsheltered resident stays over 30 days (Town will limit maximum contract amount) FY2027 Budget Considerations Meeting Packet Page 120 of 147 Community Contracts FY2027 Budget Considerations CASS contract renegotiated to $5,000 annually – 1 reserved bed and $55 per day more than 30 days for the year Town staff are seeking Council feedback on these budgeted amounts moving forward Hotel vouchers when needed for victims of domestic violence The Town paid $40,000 per year to A New Leaf for sheltering services in fiscal years 2022 and 2023 Community Contract FY2024 FY2024 FY2025 FY2025 FY2026 FY2026 Organizations (if applicable) Budget Actual Budget Actual Budget Actual (to date) Budgeted Expenditures Community Organizations Emergency Vouchers - Domestic Violence Various hotels - as needed 12,000 264 12,000 0 12,000 0 MAG Contribution - Homelessness Central Arizona Shelter Services (CASS)50,000 0 50,000 30,000 50,000 15,000 Boys & Girls Club Boys & Girls Club 24,500 24,480 24,500 24,500 24,500 24,500 Extended Hands Food Bank Extended Hands Food Bank 24,200 24,200 24,200 24,200 24,200 24,200 Sister Cities Sister Cities 10,000 10,000 10,000 10,000 10,000 10,000 Totals: $120,700 $58,944 $120,700 $88,700 $120,700 $73,700 General Government - General Fund Meeting Packet Page 121 of 147 ITEM 3.h. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 2/24/2026 Meeting Type: Town Council Work Session (Budget Retreat) AMENDED Submitting Department: Administration / Finance Prepared by: Paul Soldinger, Chief Financial Officer Staff Contact Information: Phone: 480-816-5160 Email: psoldinger@fountainhillsaz.gov Request to Town Council Regular Meeting (Agenda Language) PRESENTATION: Leases of Town Owned Properties and Land Staff Summary (background) The Town's Public Works Department (Facilities) manages Town-owned facilities and land. The Town has several existing lease agreements with local organizations, most with lower- levels of revenue to the Town. Many also require the Town to pay for certain expenditures, such as repairs and maintenance and utilities. Finance also collects revenues from these existing leases. This presentation will discuss the existing leases and seek direction from the Council on moving forward. Related Ordinance, Policy or Guiding Principle N/A Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) N/A Suggested Motion N/A FISCAL IMPACT Fiscal Impact: Budget Reference: Funding Source: ATTACHMENTS 1. Town-Owned Leases 2.24.2026 Meeting Packet Page 122 of 147 Town-Owned Property Leases Meeting Packet Page 123 of 147 American Medical Response (AMR) •Fire Station #2—Ambulance Bay, sleeping quarters and shared facilities •Annual rent •Current: $33,420 •Increases: 3% annually •Term •Current through: December 31, 2028 •AMR options to renew through: December 31, 2032 •AMR paid operating and maintenance expenses: •None Meeting Packet Page 124 of 147 Fountain Hills Elks Lodge •Golden Eagle Park—Concession Building •Annual rent •Current: $1,350 •Increases: None •Term •Current through: November 30, 2026 •Automatic renewals through: November 30, 2030 •Elks paid operating and maintenance expenses: •None Meeting Packet Page 125 of 147 Maricopa County •Fire Station #1—Air Quality Monitor Site •Annual rent •Current: $400 •Increases: None •Term •Current through: January 31, 2028 •County options to renew through: January 31, 2038 •County paid operating and maintenance expenses: •Utilities Meeting Packet Page 126 of 147 International Dark Sky Discovery Center (IDSDC) •Land—12845 N La Montana •Annual rent •Current: $10 plus $9,835 for parking lot maintenance •Increases: Inflation annually on parking lot maintenance amount •Term •Current through: February 20, 2074 •Town and IDSDC may agree to renew through: February 20, 2124 •IDSDC paid operating and maintenance expenses: •All expenses, including utilities Meeting Packet Page 127 of 147 Fountain Hills Cultural and Civic Association (FHCCA) •Land-Community Garden •Annual rent •Current: $1 •Increases: None •Term •Current through: June 30, 2026 •Town and FHCCA may agree to annual renewals •FHCCA paid operating and maintenance expenses: •Water and trash Meeting Packet Page 128 of 147 Sunset Kiwanis •Land and Building-16957 E Kiwanis Dr •Annual rent •Current: $1 •Increases: None •Term •Current through: April 6, 2029 •Town and Sunset Kiwanis may agree to renew •Sunset Kiwanis paid operating and maintenance expenses: •All expenses, including utilities, except maintenance of the exterior of the main building, the roof, the parking lot, and the HVAC system Meeting Packet Page 129 of 147 Fountain Hills Lower Verde River Valley Museum & Historical Society •Library Building—River of Time Museum •Annual rent •Current: $1 •Increases: None •Term •Current through: August 15, 2026 •Museum paid operating and maintenance expenses: •None Meeting Packet Page 130 of 147 Maricopa County Library District •Library Building—Library •Annual rent •None •Term •Current through: August 17, 2026 •Town and Library District may agree to 5-year renewals •Library District paid operating and maintenance expenses: •None Meeting Packet Page 131 of 147 Friends of the Library •Library Building—Lobby and Lobby Office •Annual rent •None •Term •None •Friends of the Library paid operating and maintenance expenses: •None Meeting Packet Page 132 of 147 ITEM 3.i. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 2/24/2026 Meeting Type: Town Council Work Session (Budget Retreat) AMENDED Submitting Department: Administration / Economic Development & Tourism Prepared by: Amanda Jacobs, Economic Development Director Staff Contact Information: Phone: 480-816-5104 Email: ajacobs@fountainhillsaz.gov Request to Town Council Regular Meeting (Agenda Language) PRESENTATION: Downtown Updates Staff Summary (background) Downtown Streetscape 5-Year Plan Background: During the FY25/26 budget process, Council directed staff to proceed with development of a 5-Year Downtown Streetscape Plan. Prior to budget adoption, discussion occurred regarding removing the Avenue District from the improvement plan. Staff requested the Avenue remain included to allow for additional dialogue with The Avenue Merchant Association and further Council consideration. A site visit between staff and Council was conducted in the fall of 2025 to discuss the long-term vision for the Avenue. Council Input Requested: • Does Council wish to retain the Avenue District as part of the 5-Year Plan? Request to Increase Size of Banners along the Avenue Background: During the America 250 presentation, Councilmember Kaliviankis inquired about increasing the size of street banners along the Avenue. Staff requested the item be discussed at the February 24 Retreat to allow for broader Council input. Council Input Requested: • Does Council support increasing the size of street banners during the implementation of the Downtown Streetscapes Project? Entryway / Monument Signs Background: Entryway/monument signage was included in the FY25/26 proposed budget but removed at Council’s direction pending completion of the Townwide Wayfinding Signs Project. Staff anticipates bringing forward funding in the FY26/27 budget and seeks preliminary Council feedback. Council Input Requested: • Does Council support including entryway/monument signage in the FY26/27 budget? Meeting Packet Page 133 of 147 Update on Plat 208 Background: At the November 18 Council meeting, staff presented potential uses for two properties within Plat 208. Staff will provide Council with an update on Plat 208 and introduce an alternative, Town-owned property for consideration. Council Input Requested: • Does Council wish staff to explore alternative opportunities for public restrooms and placemaking? Related Ordinance, Policy or Guiding Principle 2023-2026 Community Economic Development Strategy, Downtown Strategy Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) Suggested Motion N/A - Works Session - discussion only FISCAL IMPACT Fiscal Impact: Budget Reference: Funding Source: ATTACHMENTS 1. Downtown Streetscapes 2.24.2026 Meeting Packet Page 134 of 147 Downtown Streetscapes Meeting Packet Page 135 of 147 Proposed Downtown Improvements 5 YR –Capital Fund Capital Projects FY26 FY27 FY28 FY29 FY30 Streetscape Scope Design of Verde River and Parkview Const. of Verde river Const. of Parkview PLUS Design of East ½ of Ave Const. of East ½ of Ave PLUS Design of West ½ of Ave Construction of West ½ of Ave Meeting Packet Page 136 of 147 Increase Size of Street Banners Meeting Packet Page 137 of 147 FY2027 -$160,000 FY2028 -$200,000 FY2029 -$200,000 FY2030 -$100,000 Total:$660,000 Downtown Entryway/Monument Signs Meeting Packet Page 138 of 147 Meeting Packet Page 139 of 147 Downtown Entryway/Monument Signage Meeting Packet Page 140 of 147 Update Plat 208 Meeting Packet Page 141 of 147 East Lot Plat 208 Meeting Packet Page 142 of 147 West Lot Plat 208 Meeting Packet Page 143 of 147 Plat 208 and Town -Owned Land Meeting Packet Page 144 of 147 Avenue of the Fountains –Site Location Map Meeting Packet Page 145 of 147 Questions? Meeting Packet Page 146 of 147 ITEM 3.j. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 2/24/2026 Meeting Type: Town Council Work Session (Budget Retreat) AMENDED Submitting Department: Administration / Town Clerk Prepared by: Staff Contact Information: Phone: Email: Request to Town Council Regular Meeting (Agenda Language) DISCUSSION: Wrap-up of priorities Staff Summary (background) Related Ordinance, Policy or Guiding Principle Risk Analysis Recommendation(s) by Board(s) or Commission(s) Staff Recommendation(s) Suggested Motion FISCAL IMPACT Fiscal Impact: Budget Reference: Funding Source: ATTACHMENTS None Meeting Packet Page 147 of 147