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HomeMy WebLinkAbout2026.0908.TCWS.MINUTES.APPROVEDiDWN OF FOUNTAIN HILLS SEPTEMBER 8, 202fi iOWN COUNCIL WORiC 5E551flN MINUTES T�WN OF FOLINTAIN HILLS MINlJTES ❑F THE WQRK SESSI�N ❑F TH� �DUNTAIN HILLS TnWN C�IJNCI� 5eptemioer 8, 2026 A Work S�ssion of the Fountain Hills Tawn Cauncil was con�ened at 1:OD p.m. Members Pres�nt: Mayar Gerry M. Fried�l: Vic� Mayor Gayle Earle; Councilmember Rick Watts; Coun�ilmember Peggy M�Mahon; Cvuncilmember Brenda J. Kalivianakis; Members Nat Present: Cauncilmember Hannah Larrabee and �auncilmember Allen Skillicorn Staff Present: Town IVlanager Rachael Gaodwin; Tawn Attarney Jennifer J. Wright; Deputy Tawn Clerk Angela Padgett-Es�Oiritu TranscriptiQn Pro�ided �y: e5�ribers, LLC � * � * � Transcriptian is pr�vided in order to facilitate communi�ation accessibi€ity and may not be a totalEy verbatim recvrd of the proceedings. ��**� Page ] of 5D TOWN OF FOUNTAIN HILLS SEPTEMBER 8, 20ifi TOWN CDUNCIL WQRI( 5E5SfON MINUTES MAY�R FRIEaEL: �kay. I'm going to call this wark session to order. Town Cierk, �an we get a roll �all, please? BENdER: Sure. Mayor Fidel. MAYOR FRI EQEL: Present. gEN�ER: Vice Mayvr Earle. EARLE: Present. gENaER: Coun�ilmember Kalivianakis. KALIVIANAKIS: Here. BENDER: Coun�ilmember Watts. WATTS: Present. BENbER: Councilmember Larrabee. BENDER: Councilmember McMahon. MCMAHON: Here. BEN�ER: Councilmember 5lcillicorn. We ha�e a q�orum. MAY�R FRIE�EL: Thank yau. aachael? GaODWIN: Mayor, thank you. Before we begin, I want to briefly frame today's dis�ussion and what we hope to accomplisfi�. The question of how we address �ur lang-term street needs is complicated, and there's not necessarily agreement among the Council ar e�en among ❑ur community a�aut what n�xt steps should be. That's exa�tly why this work session is important. Today, staff will provide the Cauncil with ba�kground and eontext ta help establish a common foundatipn far the discussion. Paul is going t❑ be leading us through, but we'll have ba�id Jano�er as well, sharing so�ne details. It'll include a look at the tawn's history with street funding and previaus band efforts, the cnndition and needs of our roadway system, what we ha�E h�ard from Page 2 of 50 T�WN OF Fal1NTAIN HILLS SEPTEMBER 8, 2026 TOWN COUAfCkI WaRI[ SE551QN MINUTES residents, and some of the considerations and concerns that ha�e been raised as we e�aluate our aptions maving forward. The purpose af today is nat to presume a parti�ular outcome or funding solution. I want t❑ be cl�ar about that. It's to make sure that the Cauncii has the information needed to ha�e an informed policy discussion. At the cpnclusi�n af the presentation and discussian, staff wifl need clear direction far the Cauncil regarding whether and how yau wauld like us to proceed. That direction will heip us determine wi�at additional analysis, funding scenarios, puk�lic engagement or ather work should cvme back to the Council for consideration. Our goal today is to pra�ide the facts, understand the Council's priarities and their �an�erns, and lea�e with enaugh direction ta responsibly ma�e the con�ersatian farward. So with that, I'm going t❑ turn it ❑�er t❑ Paui. He'll take it away. 5�LDINGER: All right. Mayor, Vice Mayor, and Council, thank you far another opportunity. Good afternoon. Like Rachael mentioned, we're �oir�g to have a comprehensive diseussion today. First, we're going to tafk about some historieal infor-mation about raad funding, as well as some towr� sur�ey results. And then I'll turn it o�er t❑ Public Works to talk about current road conditians. 5� the town works with Flash Vote to conduet sur�eys af town residents, and we did conduet a road sur�ey back in March. 452 respondents flut ❑f 849 enrolled at tFre time. And Flash Vote indicates that the margin of error is plus or rninus 5 percent. So wi�at -- they were asked if a raad band would speed up raad repairs, wauld yau support it ar not support it in t�e next ane to tw❑ years? 5o yau can see the results �n the screen. Abaut 68 percent somewhat support or strongly suppart. If yau add those bottom tw❑ up, the 31 percent and the 37 percent. There were those that we�e against it, nine percent strongly against, nine percent samewhat against, and ten percent neutral. And this survey was sent aut t� the full mayor and Council. It's aEso out there for public consumption. Page 3 of 5❑ TOWN OF F�UiVTAIN HILL5 SfPTEM6ER 8, 202fi TDWN CQl1NCIL WOR!{ 5E554aN MIIVUTES 5a for this question, you could chaose all that apply, hut yau'll see that 63 percent said they would want to see a clear explanation ❑f haw road projects would be priaritized. 32 percent afsa said that they would want to see a specifie road repair list, and 19 pet'cent said they thinEc road repairs are the highest priority for the town at the current mament. There's also se�eral other options, sa yau can kind of read it. I'll lea�e it on the screen far j ust a moment. Yes, of course. MCMAHON: Thank you. If -- going through these questians, was there anything like, specifi� as to how, like, people wanted t❑ see exactly how it was going to be spent, not necessarify just on what roads would be repaired, but exactly haw e�ery dime of it was �aing to be spent? Because I know in the past that's been an issue with other bonds and why people said no, because they didn't have c�arity an that. S�LDINGER: Yeah. So Mayor, Councilwaman, these questions we -- we drafted just tQ gi�e peaple ❑ptions. Sa that kind -- that second one, I'd want it ta lae tied to a specifi� road repair list. Was trying to get to that point. Do you want us tfl put tagether a list if we try to go out with a bond initiative? 7here were also aptians far other. You see, ten percent chose other. And a lot of respondents put in �omments. 150 ar so put in specific comments on the t�ings they'd like to see. MCMAHON: flkay. Thank you. And also I probahly missed it, but what was the sampling? I mean, was it }ust in general for sending out to our residents or how did you pick the sampling? SDLDIf�GER: It was all af the peaple signed up for our town-wide surveys. 5o we dan't release the questions ahead of time. We just kind af send it out. Anc{ so we've dane this a f�w tim�s. �his is just one of the sur�eys t}�at we sent out. Sa at the time, there were a6out 809 signed up and �k50 or so respanded. MCMAH�N: So it's the same peaple for every sur�ey you send out? S�L�INGER: Everyone signeci up for the Flash Vate that we cantract with, yeah. Sa Page R nf SD 70WN OF FOLiNTAIN H�LLS SEPTEMBER 8, 2Q26 T�WN COUNCIL W�RIC 5E551�N MINUTES e�ery type af survey we send aut, whoe�er signed up will get the link to that sur�ey and ha�e the opportunity to respond. MCMAH�IV: Dkay. 5o and how often do you ad�ertise this that peopfe can sign up? SOLDINGER: I well, Mike Pelton's not here unfortunately, and Rachael might be able ta chime in, but I know t#�at he does put that vut there. He's d�ne se�eral public pastings about it being availabie far residents. MCMAH�N: lJh-huh. SOLDINGER: I think it's part of his newsletters that he puts ❑ut as well. 5o definitely trying t❑ engage with the residents and trying to get more people signed up. MCMAN�N: ❑kay. Thank you. 50LDINGE#i: Uh-huh. Got it. �kay. WATTS: And just to clarify, I don't know. I'�e probably seen a half a dozen from Pefton where he's announ�ed it, anci I`ve signed up and answer�d the flash as well. So it couid be skewed t�ecause I answered. S�LDINGER: Dkay. Which one did you choose, Councilmember? WATTS: I'm not telling. [LAUGHTER] S�L�IIVGER: ❑kay. H�w muc� to spend? �f you recall, I think it was the last time we met about this tapi�. We tall�ed about just some exampl�s ❑f 11 ❑r 12 -- $22 million t❑ repair s�me pf aur bigger roads in town. 5o we gave a couple ather ❑ptions. We did zero, 5 million, 7.1 mi€lian, 2z million ❑r 3� million. And as yau can see, the results were pretty mixed. But the strongest support was the largest bond, the $30 million hond with 21 percent af resp�ndents chaosir�g that. 5e�a�d pla�e was $11 million, and then there were people, 11 percent af the respondents said that we don't need extra money for road repairs right naw. They wauldr�'t foe interested in a raad bond at any price. UNIaEN71FIEb SPEAKER: (Indiscerni4�le). Page 5 of 50 TOWN �F FdUNTAIN HILL5 5£PTEMBER 8, 2026 TDWN CQIJNCIL WDRE( SE55iQN MINlJTES S�L�INGER: LJh-huh. Also at the bottom, just to paint out, 14 percent responded, nflt sure. Mayhe they weren't familiar with the topic. Eight perGent chose other, which I'm not sure where that would be an the spectrum af these amounts. Again, 150 or so wrote in same comments, same with canstructi�e feedba�k, same with, yau kn�w, positive comments an things that the town has been daing, you knaw. 50 you're gaing ta get that disparate range and comments with any survey. And we do have that within the survey results as well. The main takeaways we want ta tell you, majority d❑ support a i�ond. According ta the results, 68 percent at least somewhat support a band ar strangly supp�rted bond within the sur�ey. The -- far the mast part, the answers were generalfy cansistent a�ross demographics, k�ecause we do ha�e informatian tao. But it was interesting to see that men most strongly supported the bond and the higher dollar amounts as well, in the sur�ey results. EARLE: Can we just -- Yeah. Yau have a questifln? MCMAHON: i have a question. 50LDINGER: 5ure. MCMAH�N: Wha gets to go first? EARLE: ❑kay. How many residents do we have in this town that are af age that could answer such questions? Is it like -- 50LdINGER: I -- yeah -- EARLE: Maybe. Well, t}�is is good. You`re getting feedba�k. And as C�uncilwaman M�Mahon said, it's pretty much t�e same peopfe. But we have hundreds of other Chausands of other peaple that this wi11 affect that didn't get to answer the questian. 5o I'm not a-- it's good to g�t an idea, but I think we talked about that at the league. When we d❑ palling, it's such a small percentage of the actual people that it's gaing to affect. 8ui just keeping that in mind. S�L�INGER: At�salutely. Page 6 0# 5❑ 7QWN OF FaUNTAIN HILLS SEPTEMBER $, ZUZ6 T�WN CQUNCiL WOREC SE5SI�N MIIVUiES GDD�WIN: I think -- I think to your point it's taken -- ideafEy, this is gi�ing you sart of a touch poir�t. it is giving you a-- a sense af that feedba�k. Now, granted, it is while it is statistically �alid in terms of aur population �ersus the input that we have, it's not -- it is ane touch paint, right? It is anly one elernent af the consideratian and the discussion. MCMAH�N: I have the same concerns as I you knaw, because the 24,QQQ residents, et cetera, and we're samp[ing less than 1,�fl�. It seems like I have a big c�ncern with that. However, it's good to have this infarmation because it is representative, but if the Council mo�es toward doing a bond, et-cetera, is there gaing t❑ be -- I'm sure you guys are going to ha�e public community meetings about it, a larger reach for everybady so that we can test the waters and see at that time exa�tfy, you know, what -- what the onslaught is g�ing to �e, you know, t❑ have it or nat have it, et-cetera, correct? GOO�WIN: So -- ga ahead, Mayor. MAYQR FRfEDE�: I was going to say, I think the Council can''t decide. We would decide whether we want to gi�e the �oice ta the residents to decide for this, so they will have their voice. ultimately. GODDWIN: Correct. Yeah. If -- if the Council gi�es direction ta mave farward with this, yes, there wili definitely be public ❑utr�ach. Again, the survey was just one tool t❑ sort of get a temperature check. It's not the end all be all. And yes, it wauld take a heavy lift, from whether it's sacial cornmunications, whether it's in-person meetings, whether -- you know, there's nat a❑ne stop shop for us here. We'll have to do multiple efforts. Yes. MCMAHON: �Indiscernible]. S�L�INGER: All right. KAtIVIANAKlS: Thanit yau, Mr. Mayor. And yeah, just --just -- 1 wasn't gaing to chime in an this, but sir�ce it�5 gDtti�fl SLJCi1 L�15CU551Qt1, I'll just gi�e my two cents. Yau know, I was a political science major in cailege and 1 studied palling for -- extensively and yeah, the five percent margin af error l don't, I don't think y�u can make a five percent margin of error claim based on a flash poll that had 457 people. Page 7 of 50 TflWN DF FOUNTAIN HILLS SEPTEMBER 8, 2026 TDWN C�UNCIL W�RIC 5ES510N MINUTES This is a �ery flawed poll, an�f l car�'t in g�od conscience take anything from it. It's -- it's -- it's not useful infarmation ta me, and I think my colleague said the same thing. And sa as we go farwarci, you knaw, that was just with those �57 people had to say on ❑ne day, and 1'm not sure the relevance of this body going farward and using that as anything other than anecdatal e�idence. 50LDINGER: Yeah. Understaod. Thank you. WATTS: So mayhe the last question. 50LDI�VGER: Yes. WATTS: Maybe nat. I think it's important t❑ understand that regarciless of if the Council mo�es this forward, it's �oing to ga to an electian. ❑r�e -- one cycle, either a special electian or the general election, either or. But the public is gaing t� have the last ward. Ali we're doing is kind of �andensing it to make it palatable for them to look at and understand. 5o today, while it's -- may nat t�e relati�ely important to loak at ihe numk�ers, the direetion when we get there will be decided by the public. SOLbINGER: Yes. Just ❑ne �aveat, councilmember, with a general obligation bond, which we'�e been discussing, that would go ta the �aters. If the Council de�ided to switch directians and go down a pledged revenue obligation bond route, that would not go to the voters. So that's just a distinctio� th�re. WATTS: Right. Sut today we're talking about the general ❑bligation bond. And we're nat talking a�out an alternate, much like Home Rufe ar ar�ything else that we could d❑ that wou4dn't need ta ga before the vaters. But in this parti�ular case, we're talking sofeiy on general �bligatian. S�LpINGER: 5a Councilm�mber, today we're talking more ab�ut the �urrent road conditions and funding needs. But y�s, the general ❑bligation bond option was the primary one discussed at the pre�i�us discussion and still wouid he the leadin� reeommendatian for the Council, yes. All right. Well, that one -- that got a I�t more questions than 1 expected. Thanks, Mike -- thanks, Mike Peltan for not �eing here t�day. Page 8 of 50 TQWN aF F�l1NTAIN H1LLS SEPTEM6ER 8, 2026 T�WN CflUNCIL WORfC SE551�N M1NL1TE5 [LAUGHTER] SDLDINGE�: 5o this is kind flf a refresher. 6ased an our ongoing re�enues for fiseal year '27, we projected about 4.5 million of re�enues. That's a littie bit less than the prior year. We actually brought in close to five million -- or around $5 million last year. And so from a revenue perspecti�e, we bring in Hurf re�enues. That`s aur biggest revenue source at $1.8 millian. Vehicle license taxes at 1.3 millian, lacal sales taxes of 1.3 million, and abaut 1�� t❑ $200,D0D of other re�enues in this fund. 5a as we talked about from the expenditure side when spending, w� ha�e ahaut $2.2 millian in the budget as currently c�nstructed for ather street's needs, whi�h includes things we've talked about, su�h as staffing, landscaping, rights ❑f way, maintenan�e, curb repatrs, ihings Itke that. 5o all the ❑ther kind of things that we need to d❑ as a town that's budgeted there in that bucket, that's how I try ta illustrate it. But based on our ongaing revenues, we anly have about 2.3, $2.4 million a year to spend on raad work. But we've been able to hudget more than that k�ecause we'�e had a�aifable fund balances e�ery year to do that. And a lat af that has to cio with Council decisions to transfer money into the streets fund from general fund, excess reser�es, and t�ings like that. So far fiscal year'27, we did budget $6 million far road repairs. And I belie�e it was the last meeting where the Cvuncil appraved t❑ pr�ceed �n that plan for fiscal year'27. EARLE: ❑oes that six miliion not include the 2.2 that goes to other things? 5�L�1 NG ER: Na -- EARLE: It's a fulf 6.7 miflifln just ta r�ads? 5aLD1NGER: Yes. 5o and one thing to clarify just far the pu4�lic, because if they watch Jeff's presentation, the way him and I explain it a little hit different. Wha't he said was exactfy accurate, rig�t? 6.4 or 6.3 millian on roads. He`s just combining some �f those other little things from that 2.z millian t� go into that six million. So six million is just for road repair. You add anoth�r three tfl 4��,OQO for Page 9 af 5Q TaWIV DF F�UNTAIN HiLLS SEPTEMBER 8, 202b TOWIV COl1NCIL WDR1L 5E55l�N M1NllTES things like striping, �ur� repairs, and �ancrete stuff. Sa �ombined, really, it's more like -- what he says is a�tualfy probably mare accurate than what I'm saying. It's like 6.3 ta 6.4 million on the budget. And so cambined, it's like $8.2 millian in the budget for streets repair neecis for this fis�al year. 5❑ we wanted to ga in the history books and archi��s and give yau an idea of how we used to pay for roads. 5a in the 1970s, prior t❑ incorporation as a town, we had four special road districts here, and they were formed by the County, and �oters authorized up ta $24 million of raad bonds, ar�d $6 million of bonds were actually issued ta construct raads in the town, pre- incorporation. Give me a secand. Sorry. Upon incorporation, the tawn ak�sorbed those districts and toak on those �osts. 5o the town was respansible for the road maintenance ar�ci -- and repairs. And then as a town, we did try ta g❑ aut for a geo bond in 1991, and that was approved. 5❑ we'I! talk about that in a little bit. Z011 we did try again, and t�at was not approved by the �aters, and t�en 2D13 we did have anather successful hond initiati�e, a ge❑ bond for Saguar❑ Boulevard. 5o road districts -- thi� question comes up sometimes about road districts. They're not �ery easy or �iable today. 5o municipal impro�emer�t districts, they're passible far smaller roads like Palomina Boufe�ard, for example, if a majority of the landowners -- lar�downers that li�eci on Palomin❑ Boulevard decided they wanted t❑ �reate a road distri�t and they petitioned -- signed a petitian to form a district, they cQuld. It's a special taxing district wi�ere they would pay the secondary property taxes to pay off the debt. So that is the possibility for same af these projects. But county improvement districts are nat really viable because they're really vnly f�r unincarporated areas of the County. And it's controlled by the 6oard ❑f 5upervisors, and the town would have no c�ntrol aver thase clistricts. anybody ha�e any questions about those? Page 1D of 50 TQWfV DF FQUNTAIN HIlLS SEPTEMBER 8, 2U26 TDWN C�IJNCIL WQRI( 5E55101V MIIVUT�S 5o the special road districts in 1973 -- remember, the vaters authorized up to $24 million, �ut they only issued $6 million. T�at's a goad exampfe of what we taEked about before. If the Cauncil did decide ta mo�e forward and we #�rought a vater authorization to the ballot where we said, hey, we would like authorization to d❑ up ta $22 million of 6onds. Yhat doesn't mean we ha�e to go do $22 million of bonds. We cauld do an $11 million bond issuance or ten million whatever is needed at that time, and then pro�eed and wait until it's needed again. But we �ould use that authorizatian to go out again and do another bond issuance as the need arises. 5o t�at's kind af a gaad example af that. EARLE: When you do that, then does the -- the praperty bill p�rtian that the residents pay, does that fluctuate up and dawn? Then it's not a set rate for sa many years? It's based on when yau take the m�ney? 50l.bINGER: Yeah. Mayor, Councilwoman, it's so when you issu� the debt, let's say it's �11 million every year based on the -- the repayment schedule, let's say it`s a ten year repayment schedule, we would be levying a secandary property tax an the residents to pay off that debt. 5o we -- it's just like yaur mortgage. Yau take aut �]7. millian. Let's say y�u owe $1 millian a year. You le�y a tax on the residents to callect that maney and then you pay it aff e�ery year. If we d�cide to d❑ another bond an top af it, and that bond first bond was not paid aff yet, it would overlap. Sa you'd be ie�ying an amount to pay off both of the hands. And then the -- the -- the secondary property tax le�y wauld go up to pay off the fa�nds. EARLE: But you're saying here, like in '73 to '74, yau ❑nly use six millian ❑f the 24 authorized? 50LbINGER: lJh-huh. Yes. EARLE: 50 -- S�LDINGER� That's what they did, and as the special road districts at the time. EARLE: Dh that's different than -- yeah. S�LbINGER: Yeah. That wasn't the town yet. 5orry, I shauld have spelled that out. 50 Page 11 of 50 TDWN QF FaUNTAIN NILLS SEPTEMBER 8, zQ2fi T4WN C�UNCIL WORIC SE5510N MIfVUTES ��}8Y W85 pl"� I�1CQCj}QI'dtl�fl. Then the tawn became inGorparated in 1989, and then in 1991 we tried for our first road band initiati�e, where the �aters did ap�rove iC. And I'll show you the warding from that -- the bond initiati�e in a littie bit. But they -- they appraved 3.5 mifii�n and we issued $3.5 million of bonds. 2011, we asEced for 29.6 million as a town and the vaters did nat appro�e that. And I'll shaw that example in a little bit as well. And then 2D13, flur third and most recent and -- our last bond initiati�e that went to the �oters, as far as I'm aware, it was appro�ed for $8.2 million ta for t�e reconstructifln ar ir-npro�ement af Saguaro BQulevard. And we actually came in under budget on that ❑ne. We issued ak�out $7.6 million of bonds, and that's the last bond that we did as a town. MCMAH�N: May I -- 50LDINGER: Yes. �f course. MCMAH�N: So when you were billing the -- when the residents were paying on their property tax for the one from 2�13 -- S�LDINGER: Uh-huh. MCMAH�N: -- did they pay less t�ecaus� you didn't use the whole 80D -- ❑r 8.2 millian? Because you ha�e a set rate that yau're billing every -- that's e�erybody's charged. S�LQINGER: Uh-huh. MCMAH�N: Or added t� thetr property tax. Sa what happens when you dot�'t issue t�e full amount? SDLDINGER: So I'll gi�e a little bit of a long winded answer, so fargi�e me. If the Council appro�ed this t❑ go to the �oters, and then the voters chimed in, they said yes ❑r no, if they did say yes, then we would actually ga to the market and wark with aur municipal advisor and fir�d the laest terms for the town. And we'd bring what�ver the -- basically it's like almost a procurement pracess, find the best -- either �t's a dire�t plaGement ar a bidding process to find the best terms for the town. We 4�ring it back ta the Tawn -- Tawn Council. Page 12 of 50 T�WN OF F�LINTAIN HILLS SEPTEMBER 8, 2U26 TflWN COUNCIL WDRIC 5E551�N MINUTES 5a in this case the �oters said yes, $8.2 million to do Saguaro, sa g❑ ahead, d❑ that. We went aut and found the �est terms far a bond, and we br�u�ht it back to the town Council at that $7.G millian. 5a the 7.6 millian is the key point, beeause that's the actual debt t�at we took on. And then we -- actually, you'll see in the bond initiative, I think it was for up to 15 years, but we did for �i�e years at the time because we ! thinit the idea was just to pay it off quickly. That's pretty unusual when it cames to bands, but that's what we did as a town. So we paid it o�f in fi�e years by 2DZ�. WATTS: And th�se ar� taxable bonds. Where they -- or can they be �rafted as tax free fram the 5tate and ❑r the fed? SOLDING�R: So Mayor, Cauncilmember most af these bonds were discussing are typically tax exempt. WATTS: Okay. S�LbINGER: And that's why they can be attracti�e ta -- to band holders. WATiS: Is that state tax exempt or federal and state? SOLdlNGER: Federal I believe in state, t�ut federal, yes. WA7T5: And if you had $22 million and you had certain tran�hes, certain ladders, $5 million for the next faur and a half years ar so what would that do to the effective interest rate over the life of that af that ❑k�f�gation? Would it reduce it or it doesn't increase it? But I think it does reduce it somewF�at. SOLQINGER: Could you clarify your question? WA�TS: Nope. S�LDINGER: I think so. WATTS: I mean, if I ha�e fi�e million this year, fi�e million next year, I'm paying down already. S❑ I`m redu�ing the averall debt. So whife initialiy your presentation assumes that five percent is for the total amount -- SOL�INGER: lJh-huh. WATTS: -- from day ane through the end, but if you anly ha�e certain tranches of Page 13 of 5a TQWN �F FpUNTAl311 HfLLS SEPTEMBER 8, 202fi TaWN Cal1NCIL W�RK 5E55EQN MIiVl1TE5 money that you would ha�e at certain defined periods of time, does that what does that do to th� interest rate? And I beiie�e that it reduces th� effecti�e interest rate ❑ver the duration. 50LDINGER: 5o Mayor and Coun�ifinember, when you ga tQ -- what I was describing eariier, when yau ga out to kind af like a bidding pracess to get the best terms for the town, yau can laok far particular terms like that, like an early repayment aption that could reduce, but typically jail bonds that we're talking ahout today. Typi�ally, they da have a ten year nancaklable period. And I belie�e you can make additional payments ta that principal with town funcls, but yau kind of ha�e to feel the maricet out and see what the market conditions are to, to loak for those t�rms, if that's what the Council wants t❑ do. WATTS: I understand if it's noncallable, but if it's callafale and we say we might pay them ❑ff earlier, then what does that do t❑ the effective interest rate? And maybe that's a question that, if we mo�e forward, we �an loak at and say, what's the effect of callable bonds versus noncailable? S�LDINGER: Yes, exactly. Councilmember, we can work with ❑ur municipal ad�isor t❑ ereate certain scenarios far same of thase options that yau might be interested in. WA7T5: Thanks. SOLaENG�R: Alf right. Tawn bond Initiati�e one. So as a town, this is the first time we tried to do a road bonci. This initiative, you can see the wording. It is kind of hard to see. I'm sorry. That's haw I kind ❑f had ta do it ta show it an the screen. But it was far $3.5 millian to pro�ide funds for the {�urpase of impro�ement, constructian, reconstruction and maintenance ❑f tawn streets and highways. And you'If see at the bottom that it passed pretty easily. 882 �otes for with 332 �otes against. 5o this ane -- this one was interesting because it was a longer time period. We paid it off 15 ❑r 2Q years far a$3.5 million bond. 5o that was kind af interesting t❑ see that. Town Band Initiati�e 2. Yau may ha�e �eard af this one. We'�e talked abaut it a little bit. VIIe asked the voters to approve or authorize $29.6 miilion of honds far road Page 14 of 5� TDWN QF FOUN7AIN HILLS SEPTEMBER 8, zaZ6 TDWN CQl1NCIL WflRK 5E55101V MINUTES re�onstructian. You'il see that the wording is a little broader to pra�ide funds to design, impro�e, c�nstruct, recanstruct and rehabiiitate the streets, a�en�es, alleys, and highways. Sa at the time, this did not get appro�ed. As you can see, 298� �otes for with 3741 votes against. 5o after that, we came back t❑ thc table. We brought back anather bflnd initiati�e in 2013, asking for authorization ta sell bonds of up to $8.2 millian. And yau'll kind af see in the wording there it's specific to pro�ide funds ta design, impra�e, reconstruct -- reconstruct and rehabilitate Saguaro Boulevard. 5o it was a specific bond for specific purpose ai a lower doliar amount. 5o those are just same key takeaways of that. It easily passed. 7he v�ters appra�ed it 4551 votes for with 2226 vates against at the time. And again, what I thought was interesting is it does authorize us as staff to issue a bond that shall not exceed fifteen years fram the date of their issuan�e. But when we brought farth to the Council was a five-year repayment term rather than the 15-year repayment term. 5o where does that iand us today? ❑ptian ane, we can continue whai we've been doing using our operating budget and finding ways to transfer money int❑ the streets fund to da more road work. 5o we {�ave been doing that already. Continue that, ❑r option two consider issuing a 4�ond, whether it's a pledge re�enue ❑bligatian, where we restrict aur current and future revenues ta pay it off, ❑r a general obligatian hond, which would levy a secondary property tax to pay aff the debt. So with that, I'm going to turn it aver to Publi� Warks unless you i�a�e any questions for me. MAY�R FRIEDEL: I da have a comment. SOLpINGER: 5ure. MAY�R FRIEbEL: 5a if we if we were successful in getting a bond appraved by the �oters -- S�LDINGER: Uh-huh. MAY�R FRIE�EL: -- we -- we still we wauld stifl da our regular other maintenance as Page 15 of 5❑ TQWN OF FOUNTAIfIf HILLS SEPTEMBER 8, 202fi TOWN CDUNCIL WQRIC SESSI�N MINUTES well as we'�e always done. T�is would be in addition ta. So it's ciear for people t❑ understand that we're still going ta do ather road woric with monies from the town. 50LbINGER: Yes. That's accurate. MAYQR FRIEbEL: All right. I just want t❑ make sure that that was clear for peopfe. WATTS: And not only ather road work, but maintenance too. Maintaining the existing �ne has to be a key companent of that as well. SQLDIfVGER: AbsoluteEy. GODQWIN: Paul, before ya►� go, I just ha�e one questian and I don't know that you can answer it. I don't know if it's c{own here ❑r not. But based ❑n the years that these were noted, it looks like they're all on ❑dd years. So it looks like they were all prot�ably done as a special electian, nat part ❑f the standard election �ycle. Is that accurate? 50L�INGER: That's my belief, yeah. I'm not 10� percent sure about the '91 �lection, but if -- I belie�e you're right. �ODDWIN: Okay. SOLDINGER: I don't want to. GQObWIN: Just -- just cheeking just as a-- as a note. 50LDIfVGER: All right. MCMAHDN: Yep. Thank you. I have a question, please. 50LDINGER: Yes. MCMAHON: ❑ption r�umber two. SaL�IlVGER: Yes. MCMAH�N: Pledge revenue obligations. Car� you explain that a little bit better? 50LDINGER: Yes. Actually, this is kind ❑f an interesting time. We're bringing forth a consideration for the Cvuncil next weeEc ta close down the Municipal Property Carporation. pissalve it. I'm kind of going ❑ff �n a tangent, but it's somewhat rele�ant. That was another financing source that we use t❑ issu� bonds ta 6uiid town hall and the cflmmunity center. And what we did at that time is we pfedged our re�enue. 5o we cia have a�istory of pledging re�enues to pay off debt. 5a we pfedge certain Page 1fi of 50 TaWN OF FOUNTAIN HILLS SEPTEMBER 8, 2U2fi TOWN COUNCIL WORK SE5510N MINUTES revenues to pay ❑ff the debt for all the facilities you're seeing around us. And �nGe they were paid ❑ff in araund 2018, then the Council decided to put that tax re�enue into the streets fund. And that's the .2 percent that goes inta the streets fund taday. 6ut yes, a pledge re�enue obiigation. If I went flff on a tangent, sa I might he misremembering your questian, but yes, it's based on aur existing revenues that we're saying, hey, we're n�t g�ing ta use this revenue fo� current raad work. We're going to pay off the ciebt and take o�t a loan through the bond proceeds, and we'll be paying aff fram that re�enue that's caming in. So t�at's always an ❑ption. The reas�n we did not re�ommend that as a primary optian at the last dis�ussion is hecause with such a large amaunt of raad worEc that appears to be needed, restri�ting re�enue might nat be the most preferable option as a town for us. MCMAHON: Thank you far that clarification, be�ause ! thought we had discussed it a fittle bit t�efore, and that's why we were -- one of t�e reasons why we were looking -- going 'this way, yau know -- 50L�INGER: Right. MCMAH�N: -- to cansider the bands. SOLDINGER: Uh-huh. MCMAHON: Thank you. SDL�INGER: lJh-huh. WAT7S: Paul, do yau knaw what the difference is between including the bond an either a special election or on the next general eleetion, what the cost differenee is? S�LbINGER: 5o Mayor, Councilmemb�r, I knaw that the tawn clerk stated at ❑ne af our meetings when dis�ussing this, t�at would be around $50,00� ta hald a special election. I-- I want ta say, is tl�ere an in�remental cost ta add anather question? I'm not sure abaut if it would go to the general ele�tian ❑r not, but I know that the special el�ctian, she stated was around 50,�ao, is what she was estimating. WATTS: And the tax free component of a general obligation bond really gi�es you, if you had a five-per�ent rate on yaur band -- Page 17 nf 5U iOWN OF FOUNTAIN HIlLS SEPTEMeER 8, 2Q26 TOWN COUNCIL WORI( 5E5SIDN MIiVUTES 50LbIIVGER: Uh-huh. WAl"75: -- really becames about a six and a half, almast a se�en-percent effecti�e rate hecause af the tax free component. S�L�II�GER: Uh-nuh. WATTS: Is that fair? SDL�INGER: Yes. WATi�S: Dkay. Thanks. MAY�R FRIEQEL: Dne more question. Qn the -- on the -- an the election. 50LDfNGER: Yes, of �aurse. MAYDR FRIEDEL: if we were to share that election with another ga�ernmental bady like the Sanitary ❑istri�t ar the school district, would we share the �ost as well? Does anybody know? S�L�INGER: Does 6ev? GD�flW11V: I belie�e so. And da yau itn�w ❑ff the top of your head if we share that electian? PAQGETT-ESPIRITIJ: If it gaes to the special el�ction ❑r the general? GDD�WIN: Uh-huh. PADGE�T-ESPIRITIJ: I do know from Bev, if it goEs to a general election, that the cost that we spend -- we pay to the County, is minimal compared ta if we actually hold a separate special electian. But I beiie�e if we da with the sch�ol, I'll ha�e t❑ get hack t❑ you. I think it i$ an off-cast. It wouldn't be as mu�h as if we did it �n ❑ur own. But I'll get clarification and get back to you. MAYQ�i FRIEDEL: And for me, it's just a cast of doing business. That's haw I loak at that. That election Gast. SOLDlNGER: ❑kay. Ali right. WELbY: Mayor and Cauncil, gaod morning, or afternoon. As we'�e had these discussions over t�e years, we're all familiar with haw important pavement ma�+agement is. It takes a lot of planning and a!ot af funding ta maintain arguably one of our m�st valua�fe assets. Page 18 of 5U TOWN OF FDUNTAIN HILLS 5ERTEMBER 8� 2026 7�WN CDUNCIL WORK 5E551�N MINUTES I would argue on behalf of Puk�lic Works, in the last 15 years, thanks t❑ co�peratian fram the ele�ted body and management, that we have made incredible pragress in providing funding and tackling same of the challenges that we face in regartfs ta payment management. The uptick ar down tick ar the minimal amaunt of movement in regards ta the backlog are ❑ne af the things that we ha�e discussed ❑ften. The challenge with a backlog is, as we are ha�ing a discussian five years ago to address this, many streets at in this length af time. 5ame ❑f the ones t1�at were marginal in that time ha�e naw fallen into the backlog. 5a that's when the data gets a little bit confusing. When we were preparing this some time back, on the latter part of preparing what you are about to see, and Mr. Janaver was goir�g tfl share with you, i was a�tuaEiy ahsent. ❑ur aldest granddaughter graduated from Texas or from high s�hoal in Texas, and sa my wife and I were there. Mr. Saldinger, Mr. Janaver, anc! Mr. Pierce -- he was here. There he is. They warked as a team, an incredib{e amount of hours ta bring you this accurate data and inf�rmatian that you're gaing to ha�e. In light ❑f that, Mr. Jann�er is g�ing tQ do the majarity of the presentations and answer the questions. I wi41 �ertainly be here, along with Paul and Mr. Pierce, if you have any questians far us. I would like to thank yau for the opportunity ta spend an afternaon discussing pavement management. It is a long-term planning process that requires funding permanently, nat just once here and there, but it requires funding ongoing. So even the stuff that is brand new right now is going to require maintenan�e in fi�e to se�en years. And a lot of that depends on the weather. 5o it's not a one and done. It is a cantinual pracess that requires funding. Sa again, thank you. Mr. 3ano�er. JAI�QVER: T#�ank you, Mayor, and Council, management. Page 19 nf 5Q TDWIV dF F�1J�IfTAIIV H4LL5 SEPTEM6ER 8, 2U2fi TaWN C�UNCiL WORK SE551�N MINUTES So e�eryone's �ery, very, very happy t❑ be here tfl �ant�nue aur con�ersation on our pa�ement managcment. 5o the con�ersation is gaing to shift now from ❑ur funding histary and the potential financing options to the a�tual condition ot our raadway system, right? 1Nhere we are today and how we got here and what the magnitude af that need looks like. And the purpose af these next slides, again, is not ta identify a final band amount today. That's npt what we're loaking ta do. �ur purpose here is to -- to gi�e Council enough infarmation ta understand the candition of aur network and the scale ❑f the problem, s❑ that you can tel] us -- you can tell staff what you want us to do, and if you want us to continue e�aluating a band. So the town maintains -- the town maintains appraximately 168 cen'Cerline miles of pa�ed raadway. Centerlir�e mile is -- that just means thaf we measure the length of the roadway down its centerline, regardless of whether it's -- has tw❑ lanes, four lanes, six lanes, et cetera. But when you a�count for the a�tual pa�ed width ❑f our raads, we maintain almost 3.5 million square yards ❑f pa�ement. 5o to put that into perspecti�e, that's enough pa�ement area to canstruct a two-lane roadway from Fountain Hills t❑ Las Vegas. P�I you'�e heard this term handied about many, many times. PCI stands for Pa�ement Contiition Index, right? And that is simply a standardized �ero t❑ 1�� scale based on the type af se�erity and extent of pa�ement distress that we see in a road. 1Da is essentiaily a p�rfect pavement right, with na ❑bserved distresses. N❑ ❑bser�ed �ra�king. A zera is a completely failed pavement. All you can see is cra�ks. You can actually pick up a piece flf the road. It's just �rumbling in your fingers. Naw, PCI is not simply a measure ❑f how smogth a road feels. A rflad car� actually ride reasonably well, but still have cracking ar ather distresses that actually lawer its PCI. gut far our purposes, the important break point we have is below 40. And yau can see that that line {�ointing ta that 26 ta 4� and zera ta 25. So once roads -- these are the roads that we -- we refer to as aur backlog, right. You'�e -- you've heard that many, many times. By this point, we're generally beyond Page 20 of 50 FOWN flF FOUNTAIN HILLS S�PTEMSER 8, 202670WN CaUNCIL WORIC 5ES51flN MINUTES any kind of cost effecti�e preser�ation, and we're looking at reconstructian ta address those roads. 5a we want ta thinlc of PCI -- I like the analagy af thinking of it as a health score for the pa�ement. 5o th� closer we are to 1Qa -- the cioser we are t❑ 1�4, the -- the healthier the roadway is, correct? And as yau are -- as you get down belaw that 26 to 40 in that in the marginal towards the poor situatifln, that's when we have a situation where we have -- we -- we're, we're past the pvint Qf pre�entive mainter�ance -- pre�entati�e maintenance, and we're into major surgery. Okay. 5o getting back to here. 5o Cauncil has established a �evel ❑f ser�ice pavement candition gaal back in 2018, right? So these are r�ot new standards that we're talking at�aut, and that were created for the purpose of -- af �ur bond discussior� tonight. We don't try to maintain e�ery street at a PCI of 10�, right? Because that wouid not be necessary nor firrar�cially practical. In fact, it would pro6a�ly -- probably bankrupt us. Pavement management is really about maintaining an acceptable condition at the lowest lif� �ycle cast, right? 5a the minimum acceptable condition varies by the roadway function. 5a we hold oitr arterials ta the highest standards, right? Because they �arry the -- the greatest valumes and are they essentially are the baCkf�one of our transportatian network. Then that's fallawed by colle�tars, and then finafly by the lo�al residential streets. The targets that were established in 2018 were roughly 60 to 7� for arterials, 5� to 50 for callectors, and 50 to 55 for lo�al residential streets. Now, the objective is ta inter�ene befare the roads deteriorate belaw those thresholds, heeause ❑nce they reach that poor candition, the available treatment changes from a relati�ely inexpensi�e preser�ation to a much more expensive reconstruction. And again, these -- these PCI values are essentially minimum service le�el targets, okay? 7he gaal is t❑ keep roads above these minimum le�els and treat t�em before they hecome much more expensi�e ta fix. Now, you may remember that approxirnately $65 million figure from the 2022 Page 21 of 5❑ TflWN OF F�UNTAlN HILLS S�PTEMBER 8, 2026 TOWN CQIJNCiI WflRK SE551pN MINUTES pa�ement analysis that we did with the ad hoc Street Committee. It's important ta -- to understand what that $65 million represented. That was essentially a fix everything that was below its target conciition scenaria, akay? So that irrcluded everything from relati�ely inexpensive crack seaiing and siurry seals t❑ mill and o�eriay work all the way through to full depth recvnstru�tion. So that's $�5 million was nat a$65 million backlog. Okay. I just want to make that clear. That was n�t a$65 million backlog. �hat was for everything. And it's not equi�alent t� the hond number that we're discussing today. Backlag roads requiring recanstructian representeci ❑nly a partian af that ❑riginai $b5 million. And the analysis that we're discussing taday is much more focused, primarily on the roads that are either recanstruction -- either requtre reconstructinn now, ar are prajected to require recanstruction in the near future. 50 ❑�er the last few years, the town has generafly follawed a very balanced pa�ement management approach. I'm actuafly �ery, �ery proud ❑f the approach that we'�e taken, and this appraach has been reeommended by our Pa�ement Consultant's model runs. 5o as you knaw, we use this model called the B�5 system, a�d that's essentially what tells us which raads to treat and when, and so fvrth. 5o for roads that ha�e already failed, we recanstruct them, rig�t? It's that simple. But for roads that are still in reasonably good conditi�n, we try to preserve them 6efore they become failures. That's the whale point of pa�ement management. 5o two af the biggest enemies of asphalC pa�ement are water ar�d our en�iranment, right? Particularly the intense sun and the ultravialet UV radiation -- carre�t -- exposure that we ha�e here in Arizana. �nce water gets thraugh those cracks in the pavement and into the underlying pa�ement structure, deterioration accelerates. Over time flxidation, and that UV exposure make the asphalt binder harder and more brittle. And that leads to adclitional cra�kir�g. And that's why it's sa important that treatments like crack sealing and slurry seals take place, because they help ta prate�t the pa�ement while it's still warth protecting, okay? That's a very, very important point. Page 22 of 5Q TOWN flF FOUNTAIN HILLS SEPTEMBER 8, 2026 TQWN CQLJNCIL WpRIC SESSIaiV MINUTES A crack seal is relative4y inexpensi�e, right? VIle seal cracks all the time, and the reason for that is primarily t❑ Eceep water from gettir�g into that underlying pa�ement structure. A slurry seaf is a thin surface treatment, and that seals and protects the pa�ement and slaws down the deterioratian to the deterioration. But it does nat add any meaningful structural strength ta the pavement. A mill and �verlay is a more substantial treatment, where we remove that deteriarated surface and we replace it �n+ith new asphalt, whiie we still retain the underlying pa�ement structure underneath, and that`s still serviceahle. And then when the pavement structure itself has reached the end af its useful life, welf, then that's when we move to a full depth reconstruction. And that's essentially rebuilding the entire roadway pa�ement section. 5a the reasan for this camprehensi�e, balan�ed approach, right, is that a dollar spent at the right time preser�ir�g a gaod raad can pastpone a much larger reconstruction expense. 5a if we -- if we simply followed a worst first strategy and yau knvw -- yau're saying like, well, let's just take eare. Let's just tackle all the backlog. Let's just take care of all that. �f we ciid that worst first strate�y, we cauld spend everything rehuilding the roads, right? 7hat ha�e failed while the rest of the system is deteriorating behind it. 5� that's why we ha�e to kind of ha�e this two-pr�nged approa�h. 5❑ ❑ur primary tool for selecting the rvadway treatme�ts in the pavement management model. The B�5 system that we are using Roadway Asset 5er�ices for. T�ey're the cansuftant that h�lps us run that madel time and time again. The model eva4uates the Gondition, the condition of our entire network, and it helps us to determine how to use the a�ailahle pa�ement funding in the most financially and prudent and effici�nt way. 5❑ in other words, the model is designed to optimiie our in�estment, right? Id�ntifying which raad should b� tr�ated. What treatment should be used so that t}�e treatment pro�ides the greatest value? 5� as a general ruie, the annuai payment program is driven by the recommendatians Page 23 of 5Q TOWIV aF F�UNTAIN HILLS SEP7EMBER 8, ZQ26 TflWN COUNCIL W�RIC SE5510N MINUTES that are �aming out af that madel. 5o each year, staff uplaads a list of the rflads that we have treated that fiscal year t❑ the pavement consultant. We da that at the end of each fis�al year, and they in turn, update the model with the work that was campleted, and then they rerun the modef, right, for the follawing year and subsequent years. And that that telEs us what is caming up next. N�w, there are occasions, however, when we intenti�nally deviate from the model based ❑n other considerations. Far example, Palomino Baulevard, Ridgewoad Dri�e, and �histle Dri�e. Those were advanced last fiscal year, based in part ❑n Cauncil direction and public input, alang with staff`s evaluatian af the conditions in the field and engineering judgment. But again, I want to emphasize that those are really the exceptions. The model remains the primary basis for us de�eloping our -- our pa�ing program, because it allows us ta optimize the limited doliars across our entire roadway network. Anci we alsa cantinue ta maximize that funding that Cauncil pra�ides us by adding additi�r�al preser�atian work whenever contract pricing and remaining budget capa�ity allow us tfl do sa. 5❑ you'll notice that many -- sometimes we have some funding left o�er at the ent� ❑f each fiscal year, and we take that and we advan�e. We kind af ta�kle what's next in the queue ta kind of get a beat on that. So we do whate�er we can. Now, this slide r�presents prabahly the biggest �halienge that the town faces, right, when it cames ta pa�ement management. That is aur need to dfl tw� things at the same iime, right? We need to ane, re�onstruct the roads that ha�e already failed, while two, continuing to preserve the raads that have rrat failed quite yet. 5a aur pa�ement management strategy has done a relati�ely goad job of keeping our a�erall pa�ement networfc in relatively gaod condition, and has protectecf our prior in�estments. 6ut time marches on, right, and r�ads �ontinue to age. At some paint, a marginal road crasses that line where another surface treatment is no longer ecanomically appropriate, and full recanstruction is gaing to �e required. And that's what this graphic Qn the right side ❑f the page is really showing, right? We ha�e about 14 percent of the netwark that is currently in this marginal 4� to 50 Page 24 of 50 TflWN �F FaUNiAIN HILLS SEP�'EMBER 8, ZU2fi TDWN C�UNCIL WflRK 5E5510N MINUTES category. Sa those roads are the pipeline that's -- that's feeding our future backlag if they're not treated in time. And that's why simply eliminating today's backlog daesn't permanently sol�e the probiem, right? �here are always going to be additional pavement that's aging behind it. 5❑ a succ�ssful long term strategy, t�erefore, needs one source ❑f funding that's capable of addressing the re�onstructian backlag, while also preserving enough annual revenue ta maintain our healthier portian of the system. Sa this slide is probably the simplest way to �isualize what we're dealing with. Think ❑f our pa�ement network as a boat that's taking on water. And that baat is �aptained by the �ery cute as a button Justin Weldy. As yau can see, }�e's a-- we love this. We io�e this grap�ic. Anyway. 5o think of flur payment network as a boat that's taking on water. So we're baifing out water every year, right, by reconstructing the baCklag streets, that's what he's bailing aut. But at the same time, water is still coming in right from the bacic of the boat there, because additional aging streets are eontinuing to deteriorate and enter aur backlog, right? S❑ if roads are entering the backlog faster than we're able ta re�onstru�t them, then that tata! ba�klog grows, right? The water is -- is rising in the �oat, right? ❑ur bacEclog is growing, e�en thaugh we're spending millions of dollars an campleting projects e�ery year. Sa the abjectiv� is not simply to bail out faster one year, right? We actually need a sustainable funding approach that's gaing to allaw us both t❑ address and reduce the existing backlog, and a!s❑ reduce the rate at which the additi�nal streets are falling into it, which is the water that's ent�ring the boat. I just -- I�ust want to just stay on this slide for a few more minutes. 5arry. [LAUG HTER] 5o this next slide actually illustrates the baat analogy pretty well. We'�e been successful in maintatning our o�erall condition of -- af our pavemer�t network. But at the same time, the amount ❑f water in the baat, which is our backlag, has actually increased. Page 25 of 50 TQWN aF FOLINTAIN HILLS SEPTEMBER 8, Z026 FQWN COUNCIL W�RK SES51flN MINUTES Sa since 2022, the town has invested approximately $20.8 million in raadway repairs and preser�atian. Sa that investment has helped us maintain a relati�ely strong overall networEc PCI, right? Or actualiy, we've increased it slightly frflm 69 in 2023 ta 69.8 in 202b. 5o we mainly held it -- held it steady. At the same time, the percer�tage of the network in backlog, you can see that number down towards the b�ttvm left there. The percentage of the network in backlog has actualfy in�reased fram 5.44 percent t� 1�.41 percent, about almost a 90 percent increase. S❑ at first, those numbers may seem a bit contradictary, rig�t? But let's remember that PCI is an average across the entire network. So by preser�ing and improving a large parti�n �f Qur streets, we`ve actually been able to maintain that o�erall a�erage, e�en while a growing number of the indi�idual roads ha�e deteriorated inta backlag condition. 5❑ both things cauld be true at the sarne time. O�erall netw�rk can remain relatively healthy, while the number af roads at the bottflm af that condition s�ale continue to degrade and continue to grow, actually. S❑ if we take a�aak at that other number in the middle, there on the left, the percentage of roads in goad ❑r bett�r condition has also declined a bit fram 69 percent ta 63.52 percent between Z�23 and 2QZ6. That's another indication that more of t�e network is mo�ing dawn that deteriaratian cur�e. S� these numhers were actua3ly put together-- I belie�e it was like last May, I believe -- in May. 5a -- but we can kind ❑f for intents and purposes for today's diseussion, we can cansider this still pretty much the same as call it today's numbers. 5❑ this -- aur model t�day identifies 221 roadway segments that are already in backlog. That's that tnp number �n that red line. Ant4 that's requiring reconstruction, right? The estimated reconstruetion cast for those existing backlog s�gments, thase 221 segments, including an inflation -- an inflation assumptiQn, is approximately point $1 millian. But that's anly -- that's ❑nly a snapshot. This is taday's backlag, right? Taking right now. The m�del also identifies another 249 segments t�at are currently approachir�g the Page Zf of 5Q T�WiV DF FOUNTAIN HfLLS SE�TEMBER 8, 2026 TaWN CDUNCIL WORK 5E5510N MtNUTES threshold anci are exp�cted t❑ fa11 inta ba�klog aver approximately the next three to fi�e yea rs. The estimated reconstruGtion �ost for those adclitianal near-term backlag segmenCs is approximately �28.2 million. Sa the planning le�el fi�e year need is essentially ZQ.1 mifii�n plus 28.2 million, or $48.3 million, adjusted for inflation. 5o that $48.3 miflian, right, represents the estimated reconstruction need for raads that are either already in backlog ❑r projecte�{ ta reach backlog �ondition aver the next three ta five years. Now, the $4$.3 million should not �e �iewed as repia�ing our annual pavement program under the funding network, right, that we're -- that's reflected in the presentation. Rig�t. The t�ond praceeds would be directed anfy t�ward eligible �apital improvements, primarily just really the full recanstruction right af roads that ha�e reached backlag candition. The band woufd not eliminate the need for our ongoing streets fund pavement pragram, right? Bonds can only be used far reconstruction. Dur other r�venues would k�e used for pa�ement preservation. 5a we still need that annual funding for crack sealing, slurry, seals, mill and o�erlay work, and other any other preservatian work ❑r treatments that's necessary t❑ keep those good roads from becaming a future backlag. So that is the basic strategy. ❑h, yes. EARL�: I have a question. JAN�VER: Yes. EARLE: The anes that are soon ta, in the next t}�ree to five years, need re�onstruction. Is there any maintenance you can do on it to -- any preventati�e maintenance an those? JAN�VER: Well if -- EARLE: �r that's if nothing's dane t� them? JANQVER: Yes. Mayor and Vice Mayor, if we were to addr'ess those, and we d❑ have other -- other roads that are gaing ta k�e a!s❑ falling int❑ f�acklag behind that. 5o what are what our what our approach here was, was t❑ say, take a five year time frame, look Page z7 of 5U TDWN �f FOUNTAIN HILLS SEPTEMBER 8, 2Q2fi T�WH CpUNCIL W�RK 5E551flN MINl1TE5 at e�eryChing that's g�ing ta 4�e either in hacklog now or going ta be in backl�g at�ci address that with the band pro�eeds, while we use other -- other funds to address the preservation. Because as -- as we're as we're daing this, other -- other roads are going to be falling fr�m preser�atian that -- that -- that we dfln't get a ct�ar�ce to preser�e are going to fall inta this other marginal category, right behind these. 5o at s�me point, we just have to Ecind of pi�k a number like, okay, over five years, where are we going t❑ k�e? Let's address all th�se and get those dane now while we're preser�ing the rest of our healthier roads. 5o I understand where y�u're coming fram -- EARLE: Let me just ask you again. JANOVER: Yeah. EARLE: The ones that are at the three ta fi�e years is -- I mean, we're -- you're basing this an we do not�ing -- nothing pre�entati�e ❑n those. But is it a passibility ❑f thase that are soon to f�e back�ogged, any preventative to keep them from becoming -- not needing to be re�onstructed. That was rny question. JANOVER: Yes. Mayar, Vice Mayar, yes. The short ar+swer to your question is yes, sometFring Gan be done to t�ose, but we had t❑ kind of picic a-- pick a point in which we say, okay, because if we were tfl address t��se and -- and put the -- put the money int❑ thase, then we are taking money away fr-om ather roads that -- that need it as well. �hese are already alm�st -- they're ab�ut to slip into the backlog. And -- and our thaught was, well, if we, if we address those with the hond maney, then we'll -- then we'll -- th� rest flf flt�r -- the rest of our network, the more healthier part of our network will be ak�le ta put tFre mflney revenues into that for -- for pa�er-nent treatment, far -- far -- for maintenance, extending the life af those. Yeah. These -- these are almast at the end of their end of their life. 5a putting another pavement treatment into these, another maintenance treatment inta these, will get us a couple af years more. 5o we're -- our thought was that we'd rather put the -- the -- the right dallars towards Page Z8 of 5U TOWN QF F�llNTAIN HILLS SEPTEMBER S, 2026 iOWN CDUNCIL WORI( 5E551DIV MINUTES the right roadways and the right treatments. 5o again, we were trying to pick a year and trying ta pick a time frame to say this is when these roads are gaing to -- �h, did you want t❑ say something, Paul? 50La1lVGER: 5orry, I'll -- I'm waiting far you t❑ stap. JANDVER: Oh, �kay. I}ust felt someone k�ehind me there. 5o that was essentially what -- we just haci to pick a time frame t❑ say, ❑kay, in three to five years, these are going ta be -- these are gaing to be in -- these are going to be in hacklog. i.et's get those on the queue to take care of them, �ecause we're gair�g t❑ talce �are of them anyway. We`re not going to -- again, we're nat going to take care af them all right now. We �ust don't have the funding to do it all right naw. Sa we're -- we're anticipating with a bond that those wil! be at th� point where we need to take care of them. And if we -- and again, if we dan't put the maintenance money into the other raads to protect the -- I just want to call it healthier roads, then those are going to degrade as well. So we just kind ❑f have t� draw a line in the sand, if you will. WATTS: If -- if -- along the same lines, if you addressed some of these raads that are in that sub-40 category, is there anything you can do? And if -- and if there is something you can do �pased upon the aggressi�eness of the approach, whether it's crack, seal, slurry, mill and a�erlay, how long couid each af those incrernental treatments extend the life ❑f those streets and bring them up to a mare palaCable marginal fair good? And I think forestalling some of this might make some sense by doing something as an intermediate. And if you'r� telling me that everythir�g belaw 40, it's not sal�ageable, there's nothing we can do. That's ane answer. But if there's samething we can da t❑ extend the life of those streets ❑r minimally impro�e it, that's another answer. 1ANOVER: Gaod paint. Mayor, Councilmember Watts, I'll Public Works ❑irectar Weldy discuss the �hipseal with a cape, which we've -- we've done as actually as a pilpt project, sa I'll let hi m discuss that. WATTS: Can we go back to his slide? It's -- it was so -- Page Z9 of SQ TflWN OF FOUIVTAIN HILES SEPTEMBER 8, 2Q2fi TOWIV CflllNCIL W�RK SESSION MINUTES WEL�Y: Having a poster made ❑f it. 5a Mr. Jano�er is doing an excellent job af explaining it. 5o the marginal raads continue to degrade at a percentage based on their life and the weather. We simply don't have enough funding in the f�ucket t❑ use ❑ne ❑f Paui's metaphors ta address all af them. The questian is -- from the Vic� Mayor, can we address some ❑f them in the marginal? Absolutely. Is there something that we can da to extend their life? 5ure. We've been befare this body before and asked for permission t� do an edge mill, a chip seal with a �ape. And we'�e �een suc�essful at that. Some -- c�rtainly sorr�e lessons learned. For the three of them that we'�e done, two different locatians naw, ❑ne ❑f them is faring incredibiy well, a section of Chalma. The other se�tion, not sa well. 5o yes, there are less expensi�e alternatives to bringing them back just above 4Q. And the intent of that alternative was to allow us more time far planning and funding scenarios. WATT5: But each of those treatments has an incrementa! increase in life. 5a if I went from the crack seal up to a slurry seal or cape and a�erlay, then what would I get in return? How many more years af life out of that street if I cauld d❑ it? And each ane has an incremental increase in life expectancy. W�LDY: 5o each -- each one ❑f the segments are slightly different. 5o just to do a vague -- we could probably mo�e that ❑ut twa and a half to two years max before we would ha�e ta address it. And having mo�ed it ❑ut two and a half or three years until we �ould address it, it is now in the area that it's going to need a mill and a�erlay or full depth re�onstruction. 5a we �an mave it ❑ut slightly, but we can't save it. WAiTS: So assuming we did the bond, how much is this gaing t❑ change in a year to two years? Is it going to get progressively warse? Are we going to hold ❑ur own at that 69 -- ar sixty 69.8 percent or how far are we going to slip? WELbY: The int�nt with this discussion ir� regards to directian, is that we would ha�e enough funding t❑ move over the next se�eral years t❑ address the baCklog and use the Page 3U of 50 TflWN �F FflUNYAIN HILLS SEPTEMBER 8, 2UZ5 T�WN COl1NCIL WQRI{ 5�5510N MINUFES funding that is currently allo�ated for maintenance. Sa we would gain su�stantially. The backlog number would go down suhstantially with band funding, provided we still had adequate funding t� continue ta do maintenance to keep us ba�k into the ahave 4Q, 50, 60, or e�en up t❑ 7� PG range fflr some af the other roads. 50 our backlog would -- would cirop suk�stantially. WATTS: So yau're really pushing us t❑ the 2� million plus leve{, and you're going to hold on the soor� to fall into the backlog wit� what we've gflt currently? WEL�Y: V1Ie the intent is not to push t�e Cauncil in regards to funding. Those were just different options that Mr. 5oldinger presented. 5o we don't want t❑ back you into a corner here. We are simply providing accurate data and infarmatian that would allow you to malte a decision t❑ either ma�e forwa�d or stap based on these dif�erent scenarios. WATTS: I didn't mean to phrase it as backing us into a corner. It was more along the lines of, that's the reality that we're loaking at. �fhe reality is that ir� arder ta get the haCklag back up abo�e 40 and get it into a fair condition, I would say at a minimum you need the 20 million pEus. WEL�Y: I woulci not argue with that estimate. MAY�R FRIEDEL: Justin, gi�e me some numb�rs as far as time frame. A full depth reconstruction will last us, what, 2fl ❑r 30 years if we're -- if we're lucky? WEL�Y: Mr. Mayor, and so it's not a �ery camplicated pracess. We li�e in a relatively dry, with the temperature fluctuations going the oppasite directian of mast of that on the planet. We go from the 5�s and 7�s inta the hundreds. But it's the thaw-freeze cycle that really degrades the integrity of asphalt a�erall. 5o a brand new raad, full depth construction, we eould really t�e looking at 20 to 25 years, pra�ided ther� was adequate funding at the fi�e ta se�en year mark to do crack fill and preservati�e seal. MAY�R FRIEDEL: So -- So -- WELE]Y: 5❑ we've actualfy been able to get up to 3D years aut of some. MAY�R FRIEDEL: OEcay. 5o a mill and averlay, what kind ❑f lifespan? Page 31 of SQ TDWN DF FOLlHTAIN HILLS SEPTEMBER 8, 2026 TOWN COl1NCiL WQRI[ 5E5510N MINiJTES WELbY: A mili and overlay extends the life a�proximately two-thirds of a lifespan. So it wauld be 16 or 17 years. MAYDR FRIEbEL: And how ab�ut cape and chip? WELDY: A maximum fi�e to se�en years, and that's again, just mo�ing samething -- kicking the can down the road, is h�w I've described it. MAYOR FRIEDEL: ❑kay. ThanEc yau. 1NELQY: You're welc�me. MAYDR FRIEDEL: Vice Mayor. EARLE: There, I muted. 5arry. Now I'm learning the mute 6utton. Paul, my questign is s❑ we got Z� million, we get caught up, �ut in t�ree to five years are we going to �e back here asking f�r anather bot�d? That's what it loaks like ta me here if we -- SOLofIVGER: Goad question. 5o Mayar, Vice Mayor, i want ta point -- when ! was nervausly pacing back and forth, I kind af want t❑ say a few things about the data t�ecause -- ynu know, from my perspecti��, a finance perspective. Sa one, one thing that we realky should hedge on is thes� are estimates. We haven't had this PCI data callected in abflut four years. S❑ we're just using predictions at this point, predi�tive rnethodology ta predict what where we are today. It could �hange if we actually did anati�er full measurement, but it's relati�ely accurate. I think anywhere in the plus a ten p�rcent range is prof�a6ly where we are as far as the hacklog numbers that we're presenting today. I just wanted t❑ make that clear. This is just for dis�ussion purposes. As far as bonding goes, the other thing that I wanted ta mentian is what was really interesting is the pa�cment management program for this year. It's all focused an smaller residential roads in the town. And if you loak at the backlog number, what kind of stands out, that �20 million, the $15 million is for our loca! raads. �ur local -- firam my understanding, Justin can touch on this, but a lot af �ur local roads ha�e not been tauched or recanstru�ted in so long, and many of thern are pre incorporated. Sa you can see as a backlog number, most af it is local raads. Page 32 af 50 T�WN DF FaUNTAIN iiILLS SEPTEMBER 8, 2026 T�WM CflUNCII WORI[ SES5IQN MiNUTES And this year we are addressing almost entirely -- or I thi�k entirely lacal roads. 5❑ e�eryt�ing we're doing this year is mitigating ar reducing that number. 5ay we do fi�e ta $6 million this year. That directly reduces that hacklog number. S❑ actualiy aur ba�klog number is starting to laok pretty good. It's right arounci $15 million today. The challenge is that $28 million coming due in the next few years, and most af that is in the next three ta five years, where another $28 millian -- and most af tnat is local roads as well, when I look at the ciata, a similar percentage falls inta that backlog as well. 5o if we were to do a bond, yau knaw what we would do? You know, I dan't want to speak for them, but from a#�udgetary standpoint, try to budget fi�e ta $5 million a year. If -- if we are -- if the Council does still �antinue ta authori2e a miElian or so $2 million of transfers intn the streets fund. That`s how we could get there. That would be a challenge, thaugh. That would be really some navigation. And if we did that, we could really substantially reduce the backlog ❑urs�lves. But then the $oon to be backlog is what we cannot adciress with just our operating budget. That -- sa if that's what the Council want to do, is real{y correct �r fix most af the ba�klog, boncfing is pretty much our �nly �ptian ta do that. If you're -- if the Council ar the residents are happy with the -- the road conditions today and maybe some marginal impro�ements, then we just -- I'ci say �ontinue what we're ti�ing today with our �perating �auciget. Uh-huh. �OODWIN: Paul, can I asEc y�u ❑ne clarifying questi�n? Mayor, if that's okay with yau? What I heard you say was if we -- and this is directly to yaur questian, Vice Mayar. 5a if we went -- if the bond was approved and we ma�e towards that, we wauld work kind of cangruently with aur operating budget to continue ta address -- sa let's just say the k�ond goes tawards those that are under 4D. ihe allo�ated budget each year would go towards preventing anything else to fall into that. 5a we wouEd kind of run a congruent effort so that we're not ba�k here in three to five years, ideally, if that. Page 33 of 50 T�WN OF FOUIVTAIH HiLkS SEPTEMBER 8, 2U26 TQWN C�UNCIL WQRI( SES5IQN MINUTES But we ha�e ta make sure that we have the funds a�ailat�le t❑ da that. That's ❑k�viously highly contingent on aur budgeting pra�ess and our revenues and ❑ther things like that. Is that what I heard you say? S�LDINGER: Yes, that's an excellent way ta summarize it. That's probably a good ❑ption, is to -- if the Council did want to move forward in a k�ond, use that tawards the �urrent k�acklog and then start using the ❑perating hudget to try to address e�erything that`s gaing to start falling into the backlog. That's probably a really goad idea, a gaod way to approa�h it in that conversation. And another point that we'�e ta3ked about in th� past, but just as a-- as a reminder, bond proceeds and spending the b�nd proceeds daes not caunt towards t�e expenditure limitatian in our budget process. 5o we cauld say, hey, we're going ta da $5 millian of raad work from ❑ur existing revenues. And if we did take out a$ZD million band, we could budget anather $2� mi�lion that next year on top of our k�udget t❑ do as much raad wark as possible without any impa�t ta aur expenditure limitatian. MAYDft FRIE�EL: Can we get t�at road work dane, Justin ❑r Ra�id? WELaY: I was bri�ffy a4�sent t❑ discuss an issue with EPCOR. Catch me up real quickly. MAY�R FRIEDEL: 5a if we got a bond, as Paul was saying, far $2d million to get all these suf�standard roads tak�n care of, can we get -- what's the time frame to get that work done? WELOY: Reaiistically, pr�hably five years plus or minus. It's -- it's a lat of raad work. GO�DWIN: �ustin, before you sit down, i had one other t{uestion. Mayor, if that's akay with you? MAYDR FRIEDEL: Ga ahead. GOODWIN: When you m�ntioned --yau were sharing with the Mayorthe different appfications, and preservative applications, and their projected lifespan, what they add to the raad. Meaning if we did a mill and overlay versus a chipseal and a cape, they offer different things. Wanted ta make sure, does it matter when they are applieci, i.e., if the raad is sa far is Page 34 of 50 TQWfV �F FOUN�fAIN HILLS SEPTEMBER 8, 20Z6 TOWN C�UNCIL WORK SE551DN MINUTES so degrad�d ta, let's just say a 3�, and we de�ided to da a chipseal and a Gape, daes that still add five to seven years, ar daes it matt�r when it's applied? WELQY: And that's an excellent questian. So the answer to that question is it just Ecicks the can dawn the road. It just buys us same time. And a �hip seal and a cape is such a type ❑f treatment that it fills a lot af the �oids. But a goad example, if you want to see ane, is half a Chama was pre-in�orporation, the ather was post. ❑n the pre-in�orporation. It laoks wohh�y and yau can see reflective cracking, but it's nat as bad. So that's what it would buy us is time -- GDODWIN: Th�nk you. WELDY: -- but it would not reju�enate. In r�gards to the ❑thers, the proper treatment at the proper time does actually extencf the life to the exp�cted life expe�tancy of that roadway sectian. GDOC7WIN: Thanlc you. I thaught that I wanted to dou6le check that, because I know when we were talking about the earlier question a�out can we can we extend it? Yes, you �an, but I think it matters, you know, your timing. If it's -- if it's too far gone, you know, it's just a band-aid. But doing it an a timely 6asis is what we're trying ta get to. Getting aur roads to that paint where we can then take some of these mare minimal eost measures to extend thase, as opposeci ta always having to reconstruct. 5�LdING�a: And I just want to add ❑ne thing, Mayor. 5o with the fi�e year timeline that Justin mentioned, when you issue a hond, you ha�e t❑ reasonably expect to spend it within a three-year period. So that would be a consicferation. If we �ouldn't do $2� millian of roacfwork, additionally, in the next three y�ars, w�'d probak�ly want ta g� for a smaller laond, or if we went to get the voter authorization, then issue a smaller bond to -- to be realistic with what we can d� in that three-year period. MAYOR FRIEDEL: I-- yeah, I agree with that. And I think it w�uid be a goad test case ta see how -- how it afl worked out. Page 35 of 5U T�WN �f FOUNTAiN HILLS SEPTEMBER 8, 2026 TflWfV COUNCIL WQRIC SfS510N MINllTES Rick. WATTS: 5o I'm not sure if this goes t❑ bavid or to Justin, hut in the aggregate, if we did a 2� -- $20 millian hond and we ciid our $6 million worth of work, we gat $25 millian wort� of angoing wark with three primary streets between Palisades, Fountain gaule�ard, 5aguaro, I dan't believe that you cat� get enough �antractors t❑ be able ta do that work, even in three years. 5a I thinfc it'd have ta be less than the $22 million. I don't know t�rat y�u �an get it all done in five years because of the maintenance aspect and ther� the reconstruction aspect. S❑ can you get it dane? And if so what time periad? And you really ❑ught to have a time period for each of the bond amaunts. WELDY: 5o there are se�eral smaller questians in there ta unpack. The reality is, is there are se�eral cantractors a�ailahle to da ihat type of wark for bicl. Nat all of them are necessarily what we wauld use under �ooperati�e agreement. A gaad example is the Saguaro reconstructian. We got a iarge number of bids from qualified contra�tars for that that were all in the balfpark. So I'm confident that as each segment comes up and we set that out far bid, direct selection is a little bit more challenging, that we would ha�� a series ❑f cantractors, and it's going to take a little bit mare than five years. And then the latter part -- the maintenance would be separate. 5❑ the �ontractars that would be doing the maintenance would typically have either a second crew if they were going t❑ be bidding on something, or they would have subcantractors that would be bidding ❑n it. Sa we wouEd separate the twa. We would not have the same contra�tor ❑r the same crews warking ❑n bor�d work versus maintenance. We would break thase two apart. WATTS: Yeah, but I hear what yau're saying. And it �an be two different entities, but by the same breath, you're ciisrupting traffi�. 5omehow, yau're gaing tfl be disrupting traffic, whet�er it's on some o� the arterial streets, whether it's going to f�e an some of t�e feeders, where�er it's going to be, yau're going to ha�e a lot ❑f, I wauld cali, monkeys in a t�arrel at ❑ne time. And that is going to be a��allenge with the feedbaCk -- the pushback that we get fram Aage 3f of 5❑ 70WN DF FOUNTAIN ii1LlS SEPTEM6ER 8� Z�26 70WN CaUNCIL WORI( 5E551aN MINLJTES even an 5hay, that's going wanderfully, and we still get a fat of heat on that ane. Can you imagine shutting dawn one ❑f the primary streets into town and then more of the side streets as well? WEL�Y: And to yaur pflint -- an� these are all valid. I ha�e li�ed through each of those scenarios. 5o I'�e said this flften, there is no can�enient time for construction because yau cann�t start and stop during seasanal, and it's also anc{ this makes peo�le a little uncomfortabie. Fountain Hi11s is one of the anly municipal governments that pays a con�enience fee. And let me explain that in a litt�e bit of detail. In arder to keep Shay maving in two lanes, we had to pay a little l�it extra, which all of the contractars factored in there, knowing that they would ❑nly be able to tfo a par# of it at ❑ne time instead of just reducing it to one iane. The same applies ta our basic maintenance and treatment. 7hey know that we're gaing to ha�e t❑ make accammodations to allow people to da certain things on their road or in their neighborhaod, and there's a fee associated with that. If you ga anywhere else in the state, ar the valley, or e�en other states, you will note that Pima fioad is down t❑ ❑ne lane far 2� months, and this is the way it is. And that's -- you have to li�e with it if yflu're in that jurisdi�tion. We are considerably more accommadating here, and we would ha�e to make thvse accommadations. And each ❑ne of them e�st a fittle more. And it takes a littl� more time. I would say that even with the can�enience fee and the time delays ❑r constraints that we ha�e, we'�e stil! been able to manage relati�ely we1E in the 2fl ar sa years that I've been here. gut yes, there are logistical challenges. Absalut�ly. We �ertainly wouldn't want to pick one section of town and disrupt all of it at ane time, k�ecause that also has a �ery negati�e im�act on first responciers resp4nse, trash collection, schp�l bus pickup and drop aff. There's a lot mare impacted than just th� folks that get up and ga to work e�er-y morning. WA7T5: And yau're going to be here for the duration? Rage 37 of 50 7�WN OF FOtJNTAiN HI�LS SEPTEMBER 8, 2�26 TOWN COUNClL WORI( SESSION MINlJTES WELQY: Na, sir. WATT5: ❑kay. [LAUGHTER] jAlVQVER: He's going to be in the polls. Yeah. He's making the same faces he uses in the �ote. So Mayor, Vice Mayar, I'd just like to get back to that -- that -- yaur earlier point, and I think the discussion we've just been having kind af gets -- gets back to that. Ob�iausly we dfln't ha�e the ak�flity to just say, ❑kay, let's -- these 221 ba�klog roads. Okay. They're fixed. Okay. Naw at that paint, if we cauld just do it right away. 5ure we can. We Can do we could da whatever we neec{ ta do to those soan t� be backlog roads and -- and treat those. 6ui honestly, we figured when we dici this ana�ysis, when we started it, we said, okay, it's going to take us time to get through the backlog raads. We can't do them all in one year, ar two years, or th�`ee years. 50 let's -- let's say, akay, three to five years, it's going to take us that much time to get thraugh the backlog that we ha�e right now. And so during that time, while we're fixing the roads we're fixing now, we ha�e other roads that are entering the k�acklog that we're going to -- that we want ta ca�ture and incorporate that into the band praceeds also, s❑ we can address those already and plan forthat. 5o that's really the reason why we had this scenari❑ like this, the three to fi�e-year horizon. It's not like we're saying fike, yau know what, screw them. We don't want to do them right naw. We'll take care ❑f our current -- hut we have to -- we have to think ahaut those k�ecause as we're addressing our backlog naw, those are going t� fall into the backlog. We }ust don't have the time to -- it wauld loe great if we could just like just snap our fingers an�{ it was done, but we know it's gaing to take time ta address them. So anyway, getting ba�k an track. We knaw that there is one important thing finding that we faund from our analysis here. Probably 75.6 per�ent of aur current backfog is actual�y associated with lacal residentiaf streets. Page 38 af SQ TDWN OF F�UNTAIN HILLS SEPTEMBER S, 2U26 T�WN COUNCIL WORI( 5E551DN MINUTES �y com�arison, arterials accounts far approximately six percent, collectors abaut 9.� percent, and alleys about 9.3 per�ent ❑f that current backlog recor�stru�tian cost. Now, hecause most af that backlog is on Io�al streets, CaunGii may want to consider w�ether the pragram shauld simply follow pa�ement canditior�, or do we want to plaee additional emphasis ❑n certain types af roadways? 5a if we simply address backlog based an the pavement condition, a large portion of the reconstructed -- reconstru�tion program that we're going to be working on will naturally accur on the neighborhood streets, because that's where mast of the existing backlog is. Alternatively, Coun�il could direct us to e�aluate prioritization based on roadway classifi�ation ar geagraphic distribution, or some other combinatian af factors. But if Council is tnterested, we can also model aiternati�e funding harizons, such as seven-year or ten-year seenarios, in addition to the fi�e-year estimate that we're showing here. And again, I want to iterate, just like Paul did. These are planning le�el estimates, right? They're not canstructian bids. W� don't have a final proje�t list. But if Council directs us to proceed, we wauld refine the mod�ling costs, right? We w�uld sequen�e thase -- sequence the raadway rec�nstructions before returning with any kind af re�ommendatian. WATTS: Mr. Janover? JANDVER: Yes. MCMAH�N: Why don't we just dis�ussing the addressing for $2�.1 million, t�e backlog far using the bond for that? JANOVER: Yes. MCMAH�N: �kay. S❑ instead ❑f like saying like, payment condition or c�rtain types of -- and certain types ❑f roads. So if Caun�il decides to mo�e farward with this, what I'm hearing, and maybe I'm not hearing it all 10D perc�nt, is that we reafly want t❑ address the backlog, 6ecause that's the problem in the drain that's happening. And it's getting worse and warse and worse. They're getting below 4�, et cet�ra. And s❑ that's w1�at we're because we're a[ways gaing ta be playing catch up no matter Page 39 nf 50 T4WN DF FOUHTAIN HILLS SEPTEMBER $, zD26 T�W�I COUNCIL WORI( 5E5510N MlNlJTES what we do, Even if we had enough money, we're stili going t❑ be playing catch up ❑n the roads are still gaing ta deteriorate. S❑ what we want t❑ do is best use ❑f funds. Best use of funds, it sounds to me like is addressing the backlog because that's the prohlem. And then using the buclget funds ta maintain, you know, ❑ther mare -- you €cnow, higher rated streets, et cetera, carrect? JANOVER: Yes. Mayor, Cauncilmember McMahon. MCMAFt�N: Thank you. JANOVER: That -- that -- that is correGt. That is �orrect. And what I was talking abaut was how we address the backlog. MCMAH�N: Llh-huh. JAN�VER: ❑❑ we want ta address it just 4�y -- do we want to prioritize them by the type of roadway classifi�ation -- MCMAHON: Uh-huh. JANOVER: -- or da we want to take care ❑f everything that's in the north -- northeast ar the northwest first or -- MCMAHON: Right. JAN�VER: It's just-- just different options ❑f how ta approach addressing the backlog. MCMAHON: Right. 8ut Fn the prior page, what did it say? The largest percentage was -- JAN�V�R: Yes. MCMAHON: -- an the general roadways -- JANOVER: Yes, locals. MCMAHDN: -- like the residentiai anes that that really are what our residents are camplaining at�aut, you know, like King 5treet affshoots and things like that. S❑ in looking at t�at parti�ular diagram yau had, yau know, sele�ting that highest percentage area, those streets might he the best use af the bond if this maves forward at all. T�ank yau. JANOVER: Thank yau. EAR�.E: Hi. I'm here. So f�e�ause this is far discussion and I kngw we're not all the way there yet, we have a ways t� go today, but 1 carne on this �ouncil saying ne�er, no way a Page 40 of 50 T�WN O� FDUNTAIN HILLS SEPTEMBER 8, 2Qzfi TOWN C�UNCIL WflRlt 5E551flN MINUTES band for roads untiE I see all these details. And thet� I satd, n�t residential roads be�ause not everybady's on them, just the main arterial and feeder roads. But I see there's a big need in the residential roads. So my -- what I wifl be suggesting is that we do the six percenC ❑f the arterial r�ads, and the 9.2 percent of �allector roads, and what we need to dv ❑n the lacal r�ads as weli with that -- we'll talk about haw we do the bonding down the road. 6ut I like the idea ❑f Paul saying if we can -- if we have t❑ spend it within three years, you know, we talked about which -- what I'd like you to look int❑ is the -- the 11 million at �11 rnifiian bond for ten years. But if there's a way ta da two af them, I dan't know haw you do that, he�ause even the percentage -- when we do a 20-year loan, we're only putting $0.62 an e�ery dollar into the road. The rest goes ta the bank. If we're doing a ten-year loan ❑r bond, $�.77 gaes to t�e road. This is just figures there and the rest goes t❑ the bank, and I'd fike to see mare af it ga to the roads than to the making the �anks rich. Sa if you'r� looking i�to it, Paul, I'd like yau to figure that aut far us, if that's possible. I think yau said, you know, approving the 2� milfion, but it would be laid out, you know, two differ�r�t ways flf haw that works, but. SOL�lNG�R: Yeah. 5o Mayor, Vice Mayor, s❑ we pro�ided -- in the aptions in the sur�ey, we provided those options to the survey resp�ndents. And then we pro�ided some, you know -- you know, estimates ta the Council as well, ❑ne of the options is the $11 millian and over a ten-year repayment period. And if that`s something that we can get a majority dis�ussion an, then we could definitely prepare that. �r if it's multiple scenarios that you're interested in, we can definitely do that. 11 millian o�er a ten miliion or ten-year repayment periad is pretty typical. Y�u could extend it, but to your point, you would be paying more interest o�er the life of t�e repayment. Rage 41 pf 50 TOWN aF FOUNTAIN HILLS SEPTEMBER 8, ZU26 TDWN CDUNCIL WQRI( 5E551QN MINUTES You eould -- we could bring you a fi�e-year repayment period scenario. That`s what we did. The last ❑ne. Yau're -- yau're going ta pay less interest in the five years t�an the ten years, k�ut on the payment, on -- the taxes for the taxpayer will g� up per year because of -- EARLE: W�en you get this second part -- }ust -- but if we can't, if it has to be done within three years and we can't d❑ it within thr�e years, why wauld we take aut a f�ond if we can't? What happens there? That's my questian there, too. SD�QfNG�R: lJh-hul�. EARLE: And the ot�er thing, which I'm I want the general pubiic to knaw when we're talking about determining what gaes on yaur taxes, the �alue of your home -- SOLDINGER: lJh-huh. EARLE: -- is a lat less than what yaur house sells for. 5o a lat of us d❑ fall wit{�in the range of the -- what you were calculating these numhers ❑n is araund 500,��� -- SDLdINGER: Uh-huh. EARLE: -- as the what do yau call it, the limited property valu� or LPV? 50LbINGER: Yes, sa-- EARLE: So for -- ! didn't really laok at that before, and -- 5DLbINGER: Yeah. IVa problem. ! can -- I can state it. 5❑ it's ��ry similar ta wi�at we presented in February, just kind ❑f looking at the average taxpayer or resident that awns a home in Fountain Hiils. It`s pretty ciose. It's an estimate, but it's pretty �lase. In that $11 millian scenaria o�er a ten-year repayment periad. It would be abaut $11a a year af secondary praperty taxes. That's the starCing paint. It could sEightly go down year to year depending on the development in the t�wn and things like that. But'that's an estimate of about haw much it would impact. EARLE: And cammerGial praperties and Eandlart�s, yau know, with apartments and stuff. They're paying property tax too, aren't they? And is it at a different rate fhat wouid be paying towards these bonds, besides just the residents? S�LDINGER: It's based ❑n the limited property value baseti on the assessor's Page 0.2 vf 5U FaWIV OF FOUNTAIN HILiS SEPTEMBER 8, 2�26 TflWN CDl1NCIL WORlL SE5SlON MINUT�S assessment. 5a if there's an assessment �Oy the assessor and there's a limited property value on the �uilding or praperty in tawr�, yes, t�e tax would k�e spread out ❑r levied on us. �AfiLE: So it's not just on us residents, it's on IandownQrs. S�LbINGER: It's an �ommercial, #�uildings as well. �AR LE: Yea h. S�LDINGER: Any -- yeah. Any taxpayers that own buildings in tawn, that's the levy wauld go to us. EARLE: lt is -- but is -- cammercial is helping t❑ pay towards the bond, is what I'm saying? SOLDINGER: Uh-huh. Yes. EARL�: Right, right. Okay. 5o that's only $109 is $�4. I mean, $4.17 a month. Not toa bad. Does anybody hear that out there? That's why I suppart bonds now. Maybe. Yeah, maybe. 50LbINGER: Yeah. WATTS� It's a year. EARLE: I said it's $1�9 a year works ❑ut t❑ $4.�.7 a manth. But you pay most of us. I think I do anyway. I pay mine twice a year. If you have it on your mortgage, it's not gaing to be very much of an increase, so. JAN�VER: Okay. So just to summarize, and just ta be ��ear, we are laoking -- staff is looking for direction tonight flr today. But when -- and where not asking Council ta again select the final bond amount. The first question is simply does Cfluncil want staff to continue e�aluating a potential raadway bond? And if so we'd like same guidance ❑n the time horizon. 5hould we model a fi�e-year program as we discuss�d here today? �r wauld you like us t❑ de�eiop a se�en-year, and/or even ten-year alternati�e? And finally, daes Counci] want us to e�aluate different prioritization strateg+es? For example, whether arterials, coliectors, or local streets should receive priority versus addressing the backlog just primarily based on the condition basis or merit basis af Page A3 of 5D TaWN OF FaiJNTAIN HIf.LS SEpTEMBER 8, 2025 70WN COUNCIL WaRK SE551�N MINUTES when it -- when it should be done, when it's next up in the queue. And if Coun�il wants us to mave farward, staff would ta€ce that direction and wilE further de�elop the scenarios and return in eariy 2427 with some refined casts, alternati�es, and recommendations. 5a in essence, what we're seeEcing tanight or taday is just enough pc�licy direction, right, ta -- ta know what alternati�es Cauneil wauld like us to come back with. And with that, that con�ludes the Public Warks portion of t�e presentation. And we'd be happy to answer any questions abaut pa�ement conditigns, the backlog estimates, the treatment strategies, ar potential seenarios. And more importantly, we're interested in Council's th�ughts an whether you wauld like us to continue with this analysis, and if so what type of scenarios and priarities would yau like us ta bring back? 5❑ with that, we have. MCMAH�N: Thank yau. ! have a questian. JANOVER: Captain Weldy is nat here at the moment. I guess he's not here. But we do ha�e Paul, myself, and �eff. Jeff Pierce is in here. S❑ it's just the Paul and ❑ave show. MCMAHON: Thank you. Irr your -- if yau ga ba�k a stide, and you said five years ar whate�er. There's no amount of maney in this. 5a I think part ❑f the -- in loaking at this, and looking at what Paul ga�e us, and looking at like the backlog at 20 million, et cetera, t�en I think that maybe wh�n -- if -- if we direct them ta take a Iflak at -- basically, I think all af this is going to be included if we decide or� a band, et cetera, in order to do the right strategy and stuff, because then you cat�, depending upon the roads or what is chasen, then that wi1G determine the amount of maney as well in the long run. JAN�VER: Yes. Mayor, Councilmember. 5o what will we daing is we're really going to dive down an the -- the a�tual analysis an the real numbers, anci we're gaing ta come back with an actual list of roadways -- MCMA�iDN: Uh-huh. JAfVOVER: -- and we can actualfy come back with projected cost estimates -- MCMAH�N: Right. Page 44 af 50 TQWN OF FaUNTAIfd HfLLS SEPTEM6fR 8. 202fi TaWN CQl1NCIL W�RI( 5E551a�V MI�IUTES JANQVER: -- and actually get some bids on those ta see what we're really up against. MCMAH�N: 5o your -- yaur presentati�n -- Char�k you for your presentation. I t�ink it's been �ery well-written and explained concisely w{�at we're looking at. And yau summed it up �ery weEl. Request far direction. But I kind of think, and maybe I'm wrong, that if we direct them to continue t❑ do this, it's really gaing to ha�e ta take inta all that consideration, sa that an -- a mor� -- a better educated decision can be made later on with more -- not more succinct, but mare directi�e informatian as far as the candition of the roads, et cetera. 5a that's my thin�ing on it. And thank you both, yau knaw, for yaur presentation. I appreeiate it. �OOdWIN: Just to chime in on what Counc'tlmember McMahon just said, there's a littie bit of the information that -- that we wan't be able to provide you. We won't ha�e a condition assessment done again before a decisiar+ has t� he made. We're actually going the other way around and asking to know what your temperature check is on an amaunt. Not us eoming back and saying we need this, because really it's about a toleran�e level fram this Council of what numher can -- does this Council support? And if it's 17. million, if it's 20 million, if it's 4D, whate�er that is, we �an run the scenarios hased on those numbers. But ultimately, it's about what you guys wauid like t❑ see us cpme back with. That's what we're trying -- we're -- we're looking for you guys t❑ put those guardrails and parameters so that we come back with something that's �iable, not something that we come t�ack and the Council gaes, where the heck did this come fram? MCMAHaN: Right. 6ut to m� -- and maybe I'm wrang again, I don't know. I mean, I've heard that we really want ta address the backlog, that thai's really been the probkerri. It's been the big drain about everything and what's in the back of e�erybady's mind all the time. And it's getting worse. And as it gets worse, it gets more expensi�e. 5a yeah, I'm -- I'rr� for looking at the backlog and laoking at moving �orward with that. WATTS: So PauE, where did we get the 11 and the Z2 million? Page 45 of 5Q T�W{V DF FDLIiVFAIN HILLS SEPTEMBER 8, 2�26 TflWN COUfVCII. WORIC 5E5510N MINUTE5 50L�INGER: �h. Sa Mayar, Councilmember, we were pro�iding just examples. It was an easy example, not necessarily us recammendir�g that we should -- WA�TS: So j�st arbitrary numbers? 50LDINGER: Well, not necessarily. We looked at Fauntain Hills Boule�ard and Palisades Boulevard. They're similar in size. We got a quote from ane af aur �urrent cantractars. We had same contingency to that to gi�e you a �onser�ati�e estimate. T�at's where we got the $11 millian for. So the last time we talked at�aut this, we were talking about Palisades and Fountain Nills B�ulevard. The -- the conversation has shifted a little bit t❑ rnore like, hey, shoul�{ we IooEc at the ba�klog? We can always ga back and loak at th�se, but it was kind af interesting seeing the data that -- there are �ertain portions of those raads that are in realEy bad conditian, but there are partians af th�se roads that are in pretty good condition. S❑ y�u know, it`s kind of a hard decisian. It's more af a poli�y cie�isi�n. bo we want ta go dawn that road and -- and make it easier ta just issue a bond and let's reda Palisades 6oulevard ar Fountain Hills Boule�ard, or da we want to address what's currently in the backlog based on the data? Which is mainly our side streets, �ur resident+al raads. WATTS: I think loaking at it, King 5treet is a great example becaus� half of that road is in good shape and half of its falling apart. SOLbINGER: LJh-huh. WATTS: So a goad example, hut ! tf�ink that if I I�oked at it and I said, I took the arterial, �r colleetor, ar the locals in aggregate, that's about $12 million. It's pretty straightforward there. But on the other hand, you're gaing ta have a �antinued degradation of the streets o�er the next year ta two years by the time w� put this all tagether. 50L�INGER: Right. WATTS: So yau're going ta hav� some more that you're g�ing to have to anticipate. And I don't want t� g❑ back to t�e public agair+ ar�d say, we need more money. 5o I'd f�e a supporter af the $2� millian for a ten-year time frame. Just to give you some idea af Page 4S of 5� TOWN OF FQUNTAIfV HILLS SEPT�MS�R 8, 2�2fi TDWN CDUNCIL WORIC 5fS510N MINUTES guidance where I wpuld fall. SnL�INGER: ❑Ecay, Sa 2D rather than 22 as the original exampl�. WATTS: 22 mil�ian. Potato, patato. S�L�INGER: Okay. 6ut you're interested in more af a sharter repayment period, like a ten-year repayment period f�r something like that, 5Q -- WATiS: Yeah, I don't -- I dan't think that the 239 -- or $Z19 based upon the -- the option three, is that painful. SOLDiNGER: llh-huh. WATTS: 5o e�en if it goes to four -- $40D a year, you're talking about less than $5d a montFr. 5❑ I don't go to Starbucks an�e a week. 50LQlNGER: ❑kay. WATTS- ihanks. 50L�INGER: Absolutely. Appreciate the (indiscerni�le]. BENQER: Yes. 5o just ta reiterate, and I wonder if i was clear befare, I would like ta see that we do ihe -- a bond. That's the twenty million that would be taking care ❑f all Che f�ack load -- back -- back laad -- backlog. Sorry. It's a load isn't it? 1t's a backlog. In my calculatinn on that one is what yau estimate it would f�e -- it's the -- it's IiEce $18 a month. if we're thinking of ti�at, that wauld be peopie that are an their mortgages, or it's the -- what was it here -- at the ten years. At the ten years would 6e a#�out 2�0, $Z19 -- 50LQINGER: Uh-huh. EARLE: -- a year. 5� -- and then in the meantime, the monies that we do -- I want us to c�ntinue to pull tagether as mu�h as we can to take care af what we have now. And we might be able ta get some re�onstruction. I don't know. Any capital impra�ement projects or any -- did f make that clear? Am I-- okay. 50L.dINGER: 5o Vice Mayor, 20 million or so -- �ARL�: 6ut t�n years, ten years. 50LbINGER: Ten-year repayment period is what you are mast interested in? EARLE: I want more af the money ta go ta the raads instead af paid in interest. Page 0.7 vf 5U TOWN OF FOUNTAlN HILLS SEPTEMBER 8, z�2fi TOWN COl1NC1L WORK 5�5SION MINUTES 50LOINGER: Dkay. EARLE: We don't want t❑ make the banks richer than they need t� be. We want to make the town richer with the -- with the rrice roads. MAYDR FRIE�EL: My anly concern is can we get the wark done taking $20 million? S�L�INGER: 50 1 think to Justin's point earlier, Mayor, we cauld, if that's the route you want to go, what we would do is ask the voters to authorize us to do 2� or 22 miElion ❑f bonds and probably issue an initial bond ta do three years-worth of raad work, whether that's 10 millian, 11 million, 12 million, and we'll make that decision at that pgint. Then we come back, we go out and do the pracess ta find the best the best option for a bond for the t�wn, and we'd bring it k�ack ta the Council. But first, we need that voter authorization ta -- to -- t❑ da that. MAYOR fRIEDEL: Okay. Goad. So I think yau ha�e some dire�tion, if I'm not mistaken. Or do we? G�O�WIN: Right naw I've heard definitively from the Vi�e Mayor, fram Councilman Watts, and -- that's three. I'd like t❑ hear from the other tw❑ up here if {�ossihie. MAYOR FRIEdEL: Oh, I'm -- I'm all in. GO��WIlV: Okay. MAYOR FRIEDEL: Yeah. KALIVIANAKIS: Yeah, !'m with my c�lleagues on this one. I do prefer the shorter payment, the ten-year so we get more bang for ❑ur 6u�k. I think less of the banks, as my colleague stated. And as far as Palisades and Fountain Hills Boule�ard, you know, we're gaing to get same -- if we have mare patience, we're going to get county money from that in like -- SOL�ING�R: Uh-huh. KALIVIANAKIS: -- ten years or whate�er, 13 years from naw. 5o I think we should put those prajects aff with this bond maney and -- and go �or the -- t�e under 40, the backlog, you know, the people in aur residential neig�barhoocis that have be�n waiting far this for sa long. Page 48 of 50 TDWN QF FQUNTAIN HILLS SEPl'EM6ER 8, 2D26 TOWN COl1NCIL WQRIC 5E551�H MINIl7'E5 And so I wauld like to higher figure so we can just really tackle this for once and for all. And if the voters want it dane, this is their chance to get it done, and done right, and not just half ineasures. 5o yeah, I concur. Okay. MCMAHQN: Ciarification. I'm goad with the 22, k�ecause e�en the million dollar difference, by the time this is done, it's going ta increase. And we'll -- if we -- and -- and it's just probahly just part of it. And if that's what the estimate is, I'm for doing it that way. SQLbIIVGER: Okay. So it sounds like we can pr-epare sarne scenarios specifically with aur municipal advisor. Is there any other scenaria that the Council would like ta see when we bring it back? �r -- it sounds like we're alf pretty set on that 2�, �22 miilion num6er. Okay. Ail rig�t. GO�DWIN: All right. I think that leads us -- unless there's any ot�er fina! questions, I think we are -- we'�e got aur direction. MAYQR FRIEbEL Thank you everybody. 50LDINGER: 7hank yflu. Page 49 of 5❑ rawN aF Foururairu �i��s SEPTEMBER 8, 202fi T�WN C�UNCIL W4R�( SE55iQN MINLJTES Ha�ing na further business, Mayor Friedel adjourned the wprk sessian at 2:37 p.m. APPRQVE�: ` GERRY M. F IEQEL, MAYDR ATTEST: i. �..r�.�� � � BEVEL N J. B D�R, TOWN CLERK a� �pe.�1�- c���ri�icaTioN ���d� I HEREBY CERTIFY THAT T�iE FOREG�ING MINUTES Af�E A TRL1E ANb CdRRECT COPY OF THE MINUT�5 OF THE W�RK SESSION OF THE TOWIV CDUNCI�, FOLINTAIN N1LL5, AR120NA HEL❑ ON SEPTEM6ER 8, 2�26. i FURTHER CER�IFY 1'HA�THE MEETING WA5 ❑ULY CAl.LEb AND HELd AN� THAT A QIJORIJM WAS PRESENT. � BEVE N �. BENDER, �� �oe!s�-t � ,�� �� a� TOWN CLERK Page 50 af 50