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HomeMy WebLinkAbout2004.0115.TCREM.MinutesTOWN OF FOUNTAIN HILLS MINUTES OF THE REGULAR AND EXECUTIVE SESSION OF THE FOUNTAIN HILLS TOWN COUNCIL January 15, 2004 Mayor Nichols called the meeting to order at 5:35 p.m. AGENDA ITEM #1 — VOTE TO GO INTO EXECUTIVE SESSION: PURSUANT TO A.R.S. 38-431.03.A.3 FOR DISCUSSION OR CONSULTATION FOR LEGAL ADVICE WITH THE ATTORNEY OR ATTORNEYS OF THE PUBLIC BODY (SPECIFICALLY CHAPARRAL WATER.) Councilwoman Stevens MOVED to convene the Executive Session and Councilman Archambault SECONDED the motion, which CARRIED UNANIMOUSLY. Councilwoman Nicola MOVED and Councilwoman Stevens SECONDED a motion to recess the Executive Session at 6:20 p.m., which CARRIED UNANIMOUSLY. AGENDA ITEM #2 — RETURN TO REGULAR SESSION Mayor Nichols reconvened the Regular Session at 6:30 p.m. Following the invocation by Larry Finch, Four Peaks Community Church, roll call was taken. Mayor Nichols noted that Monday, January 19, 2004 is Dr. Martin Luther King Day and requested that everyone observe a moment of silence in honor of Dr. King. ROLL CALL — Present for roll call were the following members of the Fountain Hills Town Council: Councilman Archambault, Mayor Nichols, Councilwoman Stevens, Councilman Kavanagh, Vice Mayor Melendez, Councilwoman Nicola, Councilwoman Ralphe. Town Attorney Andrew McGuire, Town Manager Tim Pickering, Public Works Director Cm Ward, Senior Planner Dana Burkhardt, Director of Parks and Recreation Mark Mayer, Accounting Supervisor Julie etti and Town Clerk Bev Bender were also present. SCHEDULED PUBLIC APPEARANCE/PRESENTATION Don Stapley, Chairman of the Maricopa County Board of Supervisors (District 2) addressed the audience and thanked the Mayor and Council for inviting him to this meeting to provide an update on various issues. He spoke in support of the fact that the Council chose to maintain the County Sheriffs Department as the Town's contracted public safety provider. He reported that the National Association of Counties informed them last year that the County just went from the fourth largest county in this country to the third largest county in the nation. He commented on the significant role the County plays in the criminal justice system, including funding the justice courts in an effort to create more efficient and dignified facilities for the Justices within the 23 courts located throughout the County. Mr. Stapley also discussed funding that the County allocates towards healthcare and said they were the provider of last resort for the indigent population in the County and puts forth great effort to meet escalating demands in this area. He commented on the fact that a task force was formed to look at the healthcare issue and they recommended that it be moved into a special healthcare district with its own governing board, with taxing authority. He said that Proposition 411 was placed on the ballot last November and it passed overwhelmingly with over 70% of the vote. He commented on the positive impacts of the new district and stated the opinion that the "break away" will put the County financially back on a much stronger foundation as far as healthcare. Mr. Stapley noted that there would be an opportunity to elect an independent board, comprised of five members reflecting the districts of the five supervisors. He urged everyone to become familiar with the candidates in District 2 to ensure their ability to cast an informed vote on November 4"'. He added that the members would have the ability to levy up to $40 million annually in property taxes. He clarified that this will not be in addition to what the County has been �nplementing and, in fact, the County will reduce the property tax rate in the primary levy commensurate with whatever ,Wy place on the ballot in an effort to retain level property tax rates. EABBender\Documents\Current Minutes 2004\01-15-04 .doc Page 1 of 21 Mr. Stapley discussed the secondary levy and said that levying a property tax was the only Constitutional thing the Board of Supervisors has to do technically. He explained that the rate is set each year to balance the County's budget and noted that in the ten years he has been on the Board, the rate was reduced three times and remained level the other seven years He stated that he was very proud of that record and commented on the enormously rapid growth in property values the has occurred. He reported that as the third largest county in the nation based on population, not counting undocumented residents, Maricopa County was the largest county of its size with the lowest ratio of general government obligation bonds. He noted that the last bond election was held in 1986 and this June all of those bonds will be paid off and no general obligation debt will remain at the County for anything. He said that this was unprecedented throughout the nation. Mr. Stapley invited everyone for the "mortgage burning celebration" so to speak in June and said the County believed that there was a better way to run government despite the low interest rates and the temptation to incur long-term debt. He stated that the philosophy of the Board of Supervisors was that they can "pay as they go" or go with very short-term debt, tax anticipation notes and bank borrowing, that can be paid off fairly quickly. He added that they would continue in that manner as long as it was possible and practical. He said that because they have the jail tax, which was a 20-year sales tax approved by the voters in 1998, he believed they would be able to "pay as they go" and not incur debt. He commended the County's fiscal management team and other key staff. He emphasized that the residents of Maricopa County lived in one of the best -managed counties in the nation and thanked the Council for the opportunity to present his remarks. Mayor Nichols thanked Supervisor Stapley for his presentation and presented him with a token gift. MAYOR'S REPORT Mayor Nichols read a proclamation proclaiming January 15, 2004 "Fountain Hills National Mentoring Day." He stated that the future course of the State of Arizona and the nation rests on the shoulders of our youth and said that educated, confident and nurtured children will give rise to a strong State and nation. The Mayor noted that one out of four youths live with only one parent, one out of ten are born to teen parents, one out of five live in poverty and 1 out of ten will not graduate high school. He commented that mentoring has been proven to have a positive impact on youths, increasing attendance at school, improving rates of high school graduation and college attendance and decreasing involvement with drugs, alcohol and violent behaviors. The Mayor stated that the celebration of National Mentoring Month and thf establishment of a Fountain Hills National Mentoring Day will emphasize the importance of mentoring and recognize with praise and gratitude the many of the residents already involved in mentoring. Mayor Nichols added that it was his honor to declare January 15, 2004 Fountain Hills National Mentoring Day. CALL TO THE PUBLIC Hugh Henry, 15731 East Sycamore, said it was unbelievable to him that there was one parcel of property in the Town that was worth $2 million in assessed value and it belonged to the City of Scottsdale. He stated that he was leaving this information with the Town Manager this evening with regard to the assessed value of the 66 properties in the community that only add up to $4.3 million in assessed value. He said he found it interesting that the City of Scottsdale has a bigger number in relationship to their smaller involvement in the community, and pay no taxes because they were exempt. He added that they are a part of a signature gathering procedure that they are working on. Mayor Nichols thanked Mr. Henry for his comments CONSENT AGENDA Mayor Nichols read the following consent agenda items AGENDA ITEM #1— CONSIDERATION OF APPROVING THE COUNCIL MEETING MINUTES OF 12/08/03 AND 12/15/03 AND 12/18/03. AGENDA ITEM #2 - CONSIDERATION OF THE LIQUOR LICENSE APPLICATION SUMITTED BY TARGET STORE #1432 LOCATED AT 16825 E. SHEA BOULEVARD. THE APPLICATION IS FOR A CLASS 10 LICENSE. AGENDA ITEM #3 — CONSIDERATION OF THE LIQUOR LICENSE APPLICATION SUBMITTED BY PARKVIEW TAP HOUSE LOCATED AT 16828 E. PARKVIEW. THE APPLICATION IS FOR A CLASS 12 LICENSE. EABBender\Documents\Current Minutes 2004\01-15-04 .doc Page 2 of 21 AGENDA ITEM #4 — CONSIDERATION OF RESOLUTION 2004-01 ABANDONING WHATEVER RIGHT TITLE OR INTEREST THE TOWN HAS IN CERTAIN PUBLIC UTILITY AND DRAINAGE EASEMENTS LOCATED AT THE NORTHERLY AND EASTERLY PROPERTY LINES OF PLAT 506A BLOCK 2 LOT 19 '5330 E. WALNUT LANE) AS RECORDED IN BOOK 159 OF MAPS, PAGE 30. RECORDS OF MARirnpe AGENDA ITEM #5 — CONSIDERATION OF RESOLUTION 2004-02 ABANDONING WHATEVER RIGHT TITLE OR INTEREST THE TOWN HAS IN CERTAIN PUBLIC UTILITY AND DRAINAGE EASEMENTS LOCATED AT THE NORTHERLY PROPERTY LINE OF LOT 11, BLOCK 2 PLAT 505D (16837 N. SOURDOUGH PL.) AS RECORDED IN BOOK 158 OF MAPS, PAGE 41 RECORDS OF MARICOPA COUNTY, ARIZONA. EA03-25 (ZAHARA). AGENDA ITEM #6 — CONSIDERATION OF COUNCIL AUTHORIZATION FOR THE FINAL PAYMENT TO MARICOOPA COUNTY DEPARTMENT OF TRANSPORTATION FOR INTERGOVERNMENTAL AGREEMENTS #C67982422. #C64981222. SHEA BOULEVARD PROJECTS IN THE AMOUNT OF $118 062 AGENDA ITEM #7 — CONSIDERATION OF EXTENDING LETTER PROPOSAL WITH LILLDAN TO PROVIDE PROFESSIONAL PLAN REVIEW SERVICES AS NEEDED FOR MOUNTAIN PLATS. Councilwoman Ralphe MOVED to approve the Consent Agenda as read and Councilman Archambault SECONDED the motion. A roll call vote was taken with the following results: Councilwoman Stevens Aye Vice Mayor Melendez Aye Councilman Kavanagh Aye Councilwoman Nicola Aye Mayor Nichols Aye �uncilwoman Ralphe Aye uncilman Archambault Aye The motion CARRIED UNANIMOUSLY (7 to 0). AGENDA ITEM #8 — CONSIDERATION OF RECOMMENDATIONS FOR RECOVERING COSTS ASSOCIATED WITH FOUNTAIN HILLS' YOUTH SPORT ORGANIZATIONS' USE OF TOWN FACILITIES. Mark Mayer, the Director of Parks and Recreation, addressed the Council relative to this agenda item. He stated that over one year ago, each department was asked to look at their respective budgets to determine the means by which they could reduce the expenditures within the various departments. He said they were also asked to look at ways they could potentially generate additional revenue. Mr. Mayer advised that over this period of time, all of the departments implemented procedures outlined in the Town Manager's Fountain Hills' Budget Reduction Analysis Report, copies of which were included in staff s report. He noted that the report identified a number of methods to reduce costs and potentially generate additional revenues, including the elimination of recreation programs; the elimination of staff; and reductions in various other activities. Mr. Mayer said that on the revenue side, staff looked at not only increasing fees associated with the use of the building, but fees for other recreation programs as well. He added that the last item listed had the potential to recover some of the costs associated with providing services for youth associations that utilize Town facilities. He noted that the budget this year contained $4,300 that was identified as revenue, which would come from the recovery of those costs from youth organizations. He stated that in the fall of 2003, staff initiated meetings with the respective groups to inform them of the proposed recommendations with a target date of implementation of January 1, 2004. He added that they met several times over a period of months in an attempt to develop a policy whereby the Town could recover the fees or at least a portion of the fees. He commented on the fact that the recommendations were met with resistance by all of the youth sports ;anizations. Mr. Mayer advised that staff also proposed a means by which they would also solve a number of issues that were occurring regarding field usage, including "no shows;" costs associated with athletic field lighting; field preparation EABBender\Documents\Current Minutes 2004\01-15-04 .doc Page 3 of 21 (games); field preparation (practices); and added that a need was also identified to develop some administrative guidelines, so that procedures would be in place not only for local youth sports organizations but also for individuals and other organizations that utilize the facilities. He reported that staff was successful in addressing a number of these issues..,; through the process in working with the various groups, such as joint monitoring of "no shows," and he thanked them fc their cooperative efforts. He added the opinion that the policies and procedures in place will be of great help and illustrate the various procedures to be used for booking facilities. Mr. Mayer commented that the various youth organizations and the volunteers have made a terrific contribution to the community. He also noted that the Little League donated and installed three scoreboards and a flagpole at Golden Eagle Park and the Soccer Club donated two athletic field paint liners. He referred to the comparison included in the staff report that compared services provided by the Town with other Valley communities and reported that no other community in the Valley provided the level of service provided by the Town of Fountain Hills. He added that in addition to providing over - seeding for the athletic fields, the Town also provides all the basic services associated with lining and dragging the fields, lighting the fields, and setting aside the usage of those fields for the various associations. Mr. Mayer informed the Council that in December staff approached the Parks and Recreation Commission and presented them with three recommendations: (1) the recovery of all costs associated with field preparation for games and athletic field lighting, which would result in approximately $19,110 in new revenue; (2) recover all costs associated with field preparation for games only. This would result in approximately $7,460 in new revenue; and (3) combine the purchasing of materials by the individual organizations for their use and utilize volunteers for field preparation for games, which would result in an annual savings of approximately $4,350 but would not generate any additional revenues. He reported that the Commission did not approve any of the three options listed above and instead chose to add an additional option for the Town Council to consider, that the Town continue to subsidize field preparation and athletic field lighting for all local youth sports organizations and not impose a fee. In response to a question from Councilman Archambault, Mr. Mayer explained that most of the turf areas in Golden Eagle Park are associated with athletic fields. He said that he was not aware of any other community that over -seeded athletic fields and estimated the annual cost of over -seeding all of the Town's parks was in excess of $50,000. He added that Inc could not at this time state exactly what the over -seeding cost was for Golden Eagle Park alone. Councilwoman Stevens referred to Option 3 and asked Mr. Mayer his professional opinion regarding having volunteers help prepare the fields. He responded that the process would be a compromise of sorts and it was envisioned that volunteers would buy the materials associated with field markings and just take care of the field markings, utilizing the sprayers. He added that the Town would remain responsible for dragging the fields and any required hand raking. He said the volunteers would not operate any equipment. He stated that staff was comfortable with this option. Councilman Archambault asked how much money had been spent to date to bring all of the fields up to their current level of quality and Mr. Mayer apologized and said he could not provide that figure off the top of his head. He added that it was difficult to quantify because costs are spread out over a number of line items. In response to a question from Councilman Kavanagh, Mr. Mayer said that he could not state that there was general agreement on Option 3 among the various sports organizations, but it was part of the discussion and had been presented by them to staff as a possible method of reaching the threshold of the $4,300. Mayor Nichols asked if anyone wished to speak on this item and Town Clerk Bev Bender advised that eight speaker cards had been submitted and added that Mike Roland did not wish to speak but wanted the Council to know that he was opposed Agenda Item #8. Ms. Bender read the names of the speakers and Mayor Nichols asked them to come forward at this time and present their remarks. Dick Schmidt, 17319 E. Teal Drive, Chairman of the Parks and Recreation Commission, stated the opinion that the issue was a "touchy one" in view of the small amount of money involved. He noted that the Parks and Recreation Department suffered many cuts as a result of budget problems over the last couple of years. He said the Town was very lucky to have Little League, Pop Warner and the soccer groups with over 500 adult volunteers who work with approximately 1,500 youths of all ages. He stated that the programs would not exist without the volunteers and the members of the Commission felt that the amount of money that would be recovered did not justify the means. He added that the EABBender\Documents\Current Minutes 2004\01-15-04 .doc Page 4 of 21 Commission wanted the programs to expand, not decrease, and need the volunteers to continue working with the youths. He said they needed to identify the funds from somewhere else so that the 500 volunteers and all of the youths would not be affected. aron Intorf, 14015 N. Cameo Drive, President of the Fountain Hills' Little League, said that because of the death of her husband, she was forced to become the dad as well as the mother and became involved in little league, which benefited her greatly. She added that she also lost her daughter a couple of years ago and with the first call she made, little league mobilized to take care of anything that needed to be done. She explained that little league was all about family and helping each other and said her goal was to make sure that all children have the best life experience possible. She said she moved to Fountain Hills because she believed it was the best place to raise her family. She asked the Council not to take this away from them and stated that if they were forced to write a check every year for an undetermined amount of money, they will not be able to survive. She added that the Town could not afford to do half of what the volunteers do for free. She commented on the importance and benefits of sports and noted the significant amount of support the little league receives from the business community. Rob Trilson, 15754 E. Sunflower, past President of the Fountain Hills' Little League, addressed the Council and commented on his vast experience in the organization. He spoke in opposition to the fees and said that the league did not want to be subsidized by the Town but wanted to continue to mobilize their volunteers and create programs for the children in the Town. He said the volunteers can do anything the Town needed to help reduce costs and noted that last year the organization's volunteer umpire saved the league $16,000. He commented on the extensive amount of volunteer hours that go into all of the sports organizations and said there was a monetary value associated with those hours. He emphasized that they already pay a lot through their time and effort because they believed it was important and said they would continue to work with the Town in an effort to assist them in reducing costs. Sandy Goodall, 15648 Ocotillo, the current President of the Fountain Hills' Soccer Club, concurred with the comments presented by the previous speakers. She added that she thought that progress was being made as a result of their meetings and discussions and noted that their biggest concern was to have a mandate imposed on youth organizations. She said �y view that as a burden that the youth of the Town should not have to bear and stated that if the fees were imposed on soccer league alone, they would range anywhere from $11 to $24 per player and many families have more than one child involved in this sport. She advised that in the past they were approached by Parks and Recreation staff who said the Town needed some help in lining the fields and asked if the organization could fund that for two years. She noted that they agreed to work on that and help in any way they could but no one ever came back to them with a dollar figure. She stated the opinion that the various organizations are willing to help with donations of time and some money when possible but are opposed to a mandate. She pointed out that requests for scholarships have increased substantially and said if the organization were not able to offer them, youths would be out on the streets instead of on the fields. Roxanne Boryczki, 16114 E. Glen Eagle Drive, representing the Fountain Hills' Chamber of Commerce, stated that the Chamber's position on the recovery of fees from youth sports was one of opposition based on basic principles, all of the reasons that have already been cited, and the fact that it had come to their attention that Fountain Hills' Little League has the opportunity this summer to host the State tournament for little league. She noted that this event would attract a large number of people from all over the State of Arizona and they would spend their dollars at local businesses, which so desperately need the boost. She emphasized that the revenue that would be generated would be substantial and spoke in opposition to charging the teams to play in the Town. Phil Gaziano, Sierra Madre Drive, also spoke in opposition to the fees and said that proceeding in this manner would diminish them all. He noted that Scottsdale charged $3.00 an hour for children to play ball on a field. He said it was time to stop "nickeling and diming" everyone and said they were wasting time to save an insignificant amount of money. Jeff Blandford, 16516 E. Inca Avenue, acknowledged that the Town was experiencing budget difficulties but stated the opinion that there was a difference between youth sports and taxation on businesses and other revenue sources. He requested that the Council look at what was most important and sacred and said he believed there were some things in life � t were sacred and should not be touched. He added that as a business owner he understood budget issues but said that o sports programs are vital to the community and to the Town's youth. He stated that the organizations were well run and they have indicated their willingness to donate time and materials and assured the Council that he would be willing to contribute. He added that he did not feel it was right to tax the youths further than what they are already taxed. He EABBenderr\Documents\Current Minutes 2004\01-15-04 .doc Page 5 of 21 requested that the Council very seriously consider the little impact on the Town budget that the fees would have and the great impact they would have on the Town's youth. Mayor Nichols thanked the speakers for their remarks and asked whether any member of the Council wished to make motion to change the status quo. Councilman Archambault MOVED that Option No. 3 be adopted and Councilwoman Stevens SECONDED the motion. Councilman Archambault said that although this was difficult to state, he was disappointed in the Parks and Recreation Commission in that they "side-stepped" an issue they were charged to handle. He added that he was also disappointed in the leaders of the youth groups who rallied their volunteers against the Town with a "smoke screen." He questioned how many volunteers went home and told their youths "guess what the Council is going to do? They are going to tax youth sports." He said that was terrible and they were not taxing youth sports. He stated that he was proud of the people they have in the Town of Fountain Hills because there are many volunteers and they are the ones who make the Town a Town and should be embraced. He added that sometimes people get rallied for a cause and it turns out to be the wrong cause. He stated that he spent fourteen years as a responsible citizen in charge of youths, from little league to scouts, and one thing that every one of the volunteers he worked with taught the youths was to "expect nothing and appreciate everything". Councilman Archambault said that although in the back of his mind he knew that businesses would come forward and sponsor teams; he was in the background for that one Boy Scout who couldn't afford to go to camp. He added that the Committee knew they could come to him and say, "We need the money to send that boy to camp." He emphasized that that was what championing the human spirit was all about and that was what the volunteers in the Town of Fountain Hills do. Councilman Archambault asked whether they were going to charge adult sports to make up for the youths and noted that the Council voted on December 5, 2002 to take a serious budget cut and for the last year the Council had been saying what the ramifications of that cut would be. He said the Council would be derelict in their charge if they overlooked and gave a special interest favoritism. He added that the oath he swore to was to "faithfully and impartially discharge the duties of the office of Councilperson according to the best of my ability" and stated that that meant he had to represent the;; citizens and every child in the Town who doesn't get to vote. He said that to put this into perspective, when his son played high school sports, they paid the high school for him to participate and when he played in little league they also paid and little league paid to use the school's field. He noted that all they were asking for, when broken down per child, was $4.35 and said this was to cover costs while in Scottsdale they would be paying $19,000. He stated the opinion that it was incumbent upon everyone to instill in our youths to expect nothing and appreciate everything. Councilman Kavanagh said he believed the little league parents and members of the community had every right to be upset when they saw the proposal for fees on little league play. He noted that volunteerism had always been, was now and will continue to be a part of Fountain Hills. He added that he believed it important for the Council not only to create an economic environment but also a psychological environment to ensure continued volunteerism. He said he did not believe that the fees would bankrupt the organizations or make them go away, they would struggle through and find ways to raise the extra money, but said the issue was not money, it was the psychological issue that they send when they begin to tax children. He added that they did not need to charge a small tax that would serve to aggravate the Town's volunteers and instead should facilitate volunteerism. He agreed that the volunteers who give so much should not be "nickeled and dimed" and said he agreed with the Parks and Recreation Commission and opposed the implementation of any fees at this time. He added that they were not talking about a fee on athletic activity, it was a tax, and said that the citizens clearly indicated in the past that they did not want tax increases. He stated that Option No. 3 was not bad but he did not believe it needed to be mandated and to do so would create negativity. He said he believed everyone would get together to raise the money to partially pay for the expenses the good old fashioned Fountain Hills' way, car washes, etc. Councilwoman Ralphe spoke in support of the motion and stated the opinion that it was a "middle of the road" type of solution. She stated that this option does not place the entire burden on the Town and represented a good half way measure. She added the opinion that it provided youths opportunities beyond playing ball; it provided an opportunity to learn about local government and a Council that stands for fiscal responsibility and its effects on everyone. She commented that for every opportunity there was a responsibility and thanked all of the Town's volunteers and sponsors for their time, effort and contributions to the entire community. EABBender\Documents\Current Minutes 2004\01-15-04 .doc Page 6 of 21 Councilwoman Nicola also thanked the various organizations, the Parks and Recreation Commission and staff for their hard work and continuing efforts. She said she would not support the current motion and added that her reasons were already adequately stated by Councilman Kavanagh. She added that she would support remaining status quo. �Mr ice Mayor Melendez stated that in the 1960's, as a result of the effort of then Attorney General John F. Kennedy, a RICO statute was put in place, the purpose of which was to provide expanded authority to law enforcement agencies to fight organized crime. He commented on the success of the program and noted that the funds generated as a result of the arrests and convictions are used to fight crime (additional cars, officers, etc.). He stated that Maricopa County had been very fortunate to have Sheriff Arpaio develop an avenue whereby he could take some of those funds and deliver them for community projects. He added that over Christmas, he and the Mayor met with the Sheriff and asked him to provide some RICO funds to support the youth organizations. He advised that this afternoon he received a call from the Sheriff authorizing him to announce that at the next Council meeting, Sheriff Arpaio would present a check in the amount of $5,000 from the RICO account to support the youth activities. The Vice Mayor said that he would not support the current motion and added that the $5,000 that the Town would receive within the next two months would more than cover the $4,300 savings alluded to this evening. He appealed to his fellow Councilmembers, after having heard what he said about the funds coming into the Town, to withdraw their support for the motion. He added the opinion that everything in life was a matter of a compromise and said he, the Mayor and Mr. Mayer met with the soccer groups and the baseball groups and believe that they too would come forward with assistance. In response to a request for clarification from Councilwoman Stevens, the Vice Mayor explained that the Sheriff was donating the $5,000 to the individual youth groups. Councilwoman Stevens said that although she thought that was great for the youth groups, she questioned how that would help the Town. She added that if the Sheriff was giving the check to the Town in support of the youth groups that would be a different story. Mayor Nichols clarified that the Sheriff will present the check to the Town with the understanding that the Town will 'locate the funds to the youth groups. Mayor Nichols commented that from his perspective, sometimes there are too many laws on the books. He noted that Fountain Hills was fortunate to have groups that were willing to work together with the Town on an event -by -event basis. He spoke in support of a joint effort and working together. Councilman Archambault withdrew his motion. Councilwoman Stevens removed her second to the motion. Councilman Kavanagh MOVED and Councilwoman Nicola SECONDED a motion that no fees be imposed on the Town's youth groups. Councilwoman Stevens said it was wonderful that the Sheriff would assist in this instance but encouraged the various groups to become involved and help staff with materials and labor. She added that their efforts to offset some of the expenses would be greatly appreciated. Vice Mayor Melendez thanked Councilwoman Stevens and Councilman Archambault for the courtesy of accepting the argument. Councilwoman Nicola reminded everyone of the cuts that had taken place in staff and programs and stressed the importance of putting safeguards in place to ensure that the number of recreation programs not be further reduced. Mayor Nichols commented that he looked at the gift from the Sheriff as giving the Town some breathing time to work with the various groups on a more collaborative basis. He added that he had found them to be very supportive and believed they could work together to accomplish the objectives. �Wouncilman Kavanagh moved the question. The motion CARRIED UNANIMOUSLY (7-0). EABBender\Documents\Current Minutes 2004\01-15-04 .doc Page 7 of 21 AGENDA ITEM #9 — DISCUSSION WITH POSSIBLE DIRECTION TO STAFF REGARDING A REOUEST FOR PROPOSAL FOR CONSULTANT SERVICES TO REVIEW THE TOWN DEVELOPMENT FEES. Mr. Pickering stated that the Town had been in the process of reviewing its long-term financial future and one of the recommendations that came out of the process was to review the current development fees. He added that staff was seeking a motion to move forward on requesting proposals from firms in order to determine costs. Accounting Supervisor Julie Ghetti addressed the Council regarding this agenda item and said that in staff's review of revenue sources for the future and possible restructuring, staff looked at the ordinance for development fees. She noted that a requirement existed that the Town review the fees every five years, with the first one being no later than July 1, 2005. She pointed out that since the fees were imposed, several significant changes had taken place in the way it assumed fire operations and capital infrastructure had also changed. She explained that those factors are considered when reviewing the development fees. She added that preliminary research revealed that most of the other cities conducted reviews and costs ranged anywhere from $60,000 to $100,000 and said that very few consulting firms bid on these particular RFD's. She requested approval from the Council to proceed with an informal bid process and said staff did not intend to put it out for a formal bid only because so few consultants exist. She added that staff contacted the firm that provided the initial development fee study and he gave a rough estimate of $28,000. She said staff was not sure that was going to be the cost because other factors existed that he needed to consider such as whether there was going to be a development fee for fire. She stated that if Council approval were received, staff would proceed with the review process and bring their recommendation back to the Council for their review and consideration. Councilwoman Nicola said at this point in time the Town was living "paycheck to paycheck" and that they will need to review this in a year and a half. She stated that she did not support the expenditure of $28,000 this fiscal year when it can be deferred until after July 0. She cautioned against rushing into an informal bid process with the least expensive provider. She added that she would support a formal bid process during the next fiscal year. Mr. Pickering commented that the monies cannot be used anywhere else and explained that development fees are being used to pay for this and the money was just sitting there. He added that they would not be using operating revenue to fund the project. He said that staff wanted to conduct a Request for Proposals (RFP) rather than a bid process in order to review the quality of the firm instead of just looking at the bottom line. He stated the opinion that $28,000 was "too cheap" and the cost would definitely be higher than that amount. He added that he agreed with Councilwoman Nicola regarding "formality" and said they needed to conduct a very professional selection process and said he didn't support implementing a bid process in this particular instance. Vice Mayor Melendez noted that previous statements he made in opposition to the hiring of a consultant were met with opposition and the Town Attorney advised him that a consultant was necessary in order to review development fees. He commented on the importance of the fees and the urgent need to move forward and get the project underway. Councilwoman Stevens indicated support for moving forward with staff s recommendation. In response to a question from Councilwoman Nicola, Mr. Pickering clarified that the Town was mandated to review the development fees by July 2005 but the process could begin any time before that. Councilman Kavanagh stated that he was not a fan of development fees and that his last vote in support was based on the fact that his vote was needed to approve an alternative with lower fees. He added, however, that the Town was facing the possibility of monumental capital expenses for a third fire house in the event they continued to provide fire service and said the sooner that was put into place the better off the Town would be. He advised that he would support moving forward for this reason. In response to a question from Councilman Archambault, Town Attorney Andrew McGuire stated that development fees must be uniformly applied throughout the Town rather than towards a specific area. He added that the development fee's basis was the capital improvement budget that was approved for various projects in the Town. EABBender\Documents\Current Minutes 2004\01-15-04 .doc Page 8 of 21 Mr. McGuire noted that development fees had dramatically increased throughout the Valley over the last several years and municipalities were fine-tuning their capital budgets to more accurately reflect the projects they planned to do. r. Pickering pointed out that an article published in the Arizona Republic in June 2003 reported that Fountain Hills' 4revelopment fees were the second lowest among twelve Valley communities. He said the lowest community was Tempe and added the opinion that development fees were a wonderful way to pay for future capital expenditures. Mayor Nichols stated that the Town had a five-year capital improvement plan and over the last four or five months it had become apparent that funds would be "short" for capital needs just to maintain the quality of life within Fountain Hills. He said the monies were needed to maintain that quality of life, not necessarily improve it, and voiced support for proceeding with staff s recommendations as soon as possible. There were no citizens present wishing to speak on this issue. Councilwoman Nicola MOVED and Councilwoman Stevens SECONDED a motion to direct staff to proceed with the development of a Request for Proposals to procure the services of a consultant to review the Town's development fee ordinance. The motion CARRIED UNANIMOUSLY (7-0). AGENDA ITEM#10 — CONSIDERATION OF ORDINANCE 04-02 AMENDING THE TOWN OF FOUNTAIN HILLS TAX CODE RELATING TO THE PRIVILEGE LICENSE TAX BY INCREASING THE RATE OF TAXATION ON ADVERTISING FROM ZERO PERCENT (0%) TO TWO AND SIX TENTHS PERCENT (2.6%), PROVIDING PENALTIES FOR THE VIOLATION THEREOF; PROVIDING FOR SEVERABILITY; DESIGNATING AN EFFECTIVE DATE AND PROVIDING FOR APPLICATION OF TAX TO CERTAIN CONTRACTS. Mr. Pickering stated that staff had been studying this issue for quite some time and their first report entitled "The Five Year Financial and Capital Improvement Plan Overview" was dated September 18, 2003. He reported that the plan stated that operating revenues would remain stable and generate sufficient monies to pay for the Town's operating costs. He Anted out that approximately a year and a half ago this was not the case and cuts had to be made. He said at that time a rcision was made to look at the future rather than just one year. Mr. Pickering, assisted by Ms. Ghetti, reviewed a brief power point presentation on this issue and reiterated that in September staff projected capital costs over the next five years. He added that in October they looked at the worst -case scenario ($11 million short in capital) to the best -case scenario ($1 million). He said in November a work-study was held on this issue alone to review all of the revenue generating alternatives because it was apparent that the Town was going to be approximately $8 million short, mainly in streets, in capital in the future over the next five years. He added that this was the reason why staff began to look at enhancements. He commented on the difficulties associated with gaining support for enhancements but stated that in addition to the need to generate funds for major capital projects, the Town had an over reliance on sales tax and revenues obtained from the State. He reported that approximately 75% of the Town's budget came from those two sources, 25% from the State and 50% from sales tax. He cautioned against being too dependent upon sales tax in the event the economy declined. He also noted that the sales tax included a large portion of funds that were generated as a result of construction sales tax, and emphasized that construction would not last forever and planning had to occur. Mr. Pickering stated that Fountain Hills did not have a property tax to rely on for the general operation of the Town and said that this was extremely rare for a Town. He added that although sales taxes go up and down, property taxes keep rising and that provided much needed stabilization. He pointed out that the Town had a very good bond rating but was given a negative outlook because the raters saw the Town's fund balance "dip" a great deal. He emphasized that the financial community that looked at Fountain Hills was concerned about this decrease. He said the balance was beginning to rise and the more steps the Town took to raise the fund, the better. He added that the Town's streets would start to deteriorate if the necessary improvements were not made and stated that this would also affect property values. `r. Pickering informed the Council that staff looked at all of the different revenue sources they could think of to fund the wn capital needs for the future and developed three major recommendations: (1) eliminate exemptions to the local sales tax by certain businesses; (2) recover costs for additional services that were currently being provided, such as EABBender\Documents\Current Minutes 2004\01-15-04 .doc Page 9 of 21 charging for liquor license permits; and (3) increase development fees so that new construction coming into the Town paid for the new capital improvements that will be needed. Mr. Pickering noted that the Town of Fountain Hills was one of the few communities in Arizona that did not charge ai advertising sales tax. He explained that this revenue source was generated by people who wanted to "market" the residents of the Town but were not located in Fountain Hills. He spoke in support of implementing an advertising sales tax and added that 90% of the revenue would come from outside of the Town. He said the State was also looking into implementing an advertising sales tax. He also discussed revenues generated from rentals and stated that the Town currently taxed all commercial rentals but none of the residential rentals. He noted that a large majority of the cities and towns charge a rental tax on residential rentals. He explained that a stipulation in the definition stated that landlords with three or more units in the State would be subject to this tax and it would not affect the single homeowner or short-term rentals. He said the Town Attorney had advised him that the Town could change that stipulation from three units to one if they chose to do so. He added that the Town would also control the rate and said it was currently 2.6% on commercial rentals but the Council had the ability to choose the rate it wanted for each individual sales tax. He stated that many communities charge a higher communications sales tax and the Town had the flexibility to determine their taxes as well. Mr. Pickering informed the Council that the Town does not currently charge a tax on health spa/fitness center memberships and estimated that taxing this area could provide approximately $32,500 on an annual basis. He noted that anyone who played golf at Sunridge Canyon paid a sales tax, however, anyone who worked out at a health club did not. He emphasized that the figures provided were estimates only prepared by the Town's Sales Tax Auditor, Al Holler, who has significant experience in this area. Mr. Pickering stated that even if the proposed revenue enhancements were implemented, the Town would still have a $5.3 million deficit, compared to the current $8.1 million, and staff was proposing additional steps to decrease the deficit, such as increasing the development fees. He indicated staff s willingness to respond to questions from the Council. Mayor Nichols said that the Council had three separate agenda items, the taxation of advertising; residential rentals; and taxation on health club memberships. He requested that they discuss them one by one said that comments on the public on advertising would be heard first, residential rentals second and membership taxes last. Town Clerk Bev Bender advised that three citizens submitted requests to speak on the first item, advertising. Councilman Archambault noted that if the tax rate dropped down to 1.6% on this particular issue, they were looking at $250,000 in revenue rather than the estimated $406,350 over the long term. Mayor Nichols indicated support for the advertising tax and noted the significant number of communities that already had one in place. He added the opinion that the Town would be out of step if it did not proceed in this manner. Councilman Archambault stated that he checked the rate he paid to the Arizona Republic and it was a flat rate. He noted that 90% of the people who would pay the tax lived outside of the Town and expressed the opinion that Fountain Hills would benefit as a result. Councilwoman Ralphe added that she too supported the advertising tax and commented on the fact that almost all of the other municipalities had one in place. She said that if the Town was able to generate 90% of the revenue from outside of Fountain Hills they certainly should proceed in this manner. In response to a question from the Vice Mayor regarding electronic media, (cable, radio, stations that advertise, etc.) Mr. Pickering responded that he did not know how that was accounted for and would research the matter. Mr. Holler stated that generally the advertising tax went to where the information was disseminated. He said that a radio station would disseminate information from South Mountain and no taxes would be paid by either a radio or television station. Mr. Holler agreed that taxes would be charged for local broadcasting as well as advertising stickers placed on grocery carts or the back of receipts. Mayor Nichols requested that the speakers on this item come forward at this time. EABBenderr\DocumentsTurrent Minutes 2004\01-15-04 .doc Page 10 of 21 Alan Crukshank, 14850 E. Grandview Drive, publisher of The Times, thanked the Council for allowing him the opportunity to address them. He complimented the Council and staff for working together to find ways to ensure that the Town became fiscally sound again. He commented on the proposal to eliminate the sales tax exemption on advertising aid said he previously stated in the paper that most publications would pass the tax onto businesses as an add -on to their dvertising purchases. He added that business owners would then have to decide whether to absorb the cost or pass it on by charging higher prices resulting In the consumer paying a double tax on goods and services once the overall sales tax was applied on the sale. He stated that the advertising tax was a tax on intermediate economic activity, not a final sale to a consumer. He estimated that his business would be responsible for collecting and paying approximately $40,000 in sales tax. He said he had questions regarding compliance and asked whether publications such as the Auto Trader that were either mailed or sold on news racks would be subject to the tax. He noted the number of papers that are carried and delivered in Fountain Hills and said there were questions regarding how much outside publications charged for advertising sold in the Town. He also questioned whether grocery carts, restaurant table tops, golf course benches, coupon packages, organization newsletters, programs and other media would be charged the tax and monitored. He stated that he was prepared to accept the Council's decision to remove the sales tax exemption on advertising but asked that they do so in a fair manner and monitor the collection to ensure that all advertising media were treated equally. In response to a question from Councilman Kavanagh, Mr. Holler stated that staff could monitor the collections. He added that they were aware of the major advertisers and they would personally be advised of the tax. He said that the Department of Revenue would also note on their monthly sales tax return that's mailed out that a change in the law had occurred. Roxanne Burzczki, representing the Chamber of Commerce, said that the Chamber's position in principle was to oppose any tax that burdens the business community; however, they also recognize that they needed to support the community and make their contributions. She stated that in reviewing this issue, they recognized that there was a great deal of revenue source being "left on the table" from companies outside of Fountain Hills. She said that following a lively discussion among the members of the Board, they realized they could absorb the tax on the advertising in Fountain Hills and were willing to support the measure. rtil Gaziano asked why this had not been done before and expressed concern that so much money had been "left on the table" while the Council was looking at "taxing kids." He questioned whether there were any other revenue sources that had not been discovered. He added that as a realtor he could state that their community would spend about as much money in Town as far as sales tax was concerned as anyone else and that was part of what they had to do in order to conduct business here. He said that speaking for himself, the cost would be absorbed. John McNeil addressed the Council and stated support for the tax. He agreed that this probably should have been looked at long before now and the revenue generated over the last couple of years would have put the Town about $800,000 ahead of where it was right now. He commented on the use of sales tax as it pertained to capital projects and spoke in opposition to using sales tax to build a new Town Hall. He stated that if a Town could afford to spend $4 million on a new Town Hall, a financial crisis did not exist but a taxation crisis did. He added that it would be appropriate to pay for a few relatively small, limited term capital projects on an "as you go" basis but said that facilities such as a Town Hall that were not going to be used by the taxpayers should be paid for by a bond issue and not a sales tax. Councilman Kavanagh questioned whether Mr. McNeil retroactively applied that same caveat to 3/10ths of a percent from mountain preservation, which he voted to approve. He asked whether Mr. McNeil was chastising the Council now to catch up for the losses the Town experienced as a result of that noteworthy expense. Mayor Nichols thanked the speakers for their comments and asked whether the Council wanted to make a motion on this item. Councilwoman Ralphe MOVED and Councilwoman Stevens SECONDED a motion to approve Ordinance No. 04-02. :uncilman Kavanagh said that he initially opposed this proposal until he was "educated" by Julie Ghetti as to what a r►eird tax" this was. He said it was amazing that 90% of the tax would be paid by people who spend their advertising dollars outside of Fountain Hills and the Town collected it only because they were advertising appeared in Fountain Hills. He added that anytime a tax can be levied that 90% of the people outside of the Town pay, it was a good tax for the Town. EABBender\Documents\Current Minutes 2004\01-15-04 .doc Page 11 of 21 He noted that the people who run the ads were already collecting the tax, they simply don't pass it onto the Town, they keep it themselves. He also complimented the Chamber of Commerce and The Times, whose members would be impacted harder than the rest of the community as a result of the tax, but who recognized the important need to proceed in this manner for the overall benefit of the Town. Mayor Nichols called for the vote. The motion CARRIED UNANIMOUSLY (7-0). Mayor Nichols declared a brief recess at 8:35 p.m. and the meeting reconvened at 8:45 p.m AGENDA ITEM #11 — CONSIDERATION OF ORDINANCE 04-03 AMENDING THE TOWN OF FOUNTAIN HILLS TAX CODE RELATING TO THE PRIVILEGE LICENSE TAX; REMOVING THE EXEMPTION FROM TAXATION FOR RESIDENTIAL RENTAL PROPERTY; PROVIDING PENALTIES FOR THE VIOLATION THEREOF; PROVIDING FOR SEVERABILITY; DESIGNATING AN EFFECTIVE DATE AND PROVIDING FOR APPLICATION OF TAX TO CERTAIN CONTRACTS. Mayor Nichols noted that the Council already heard Mr. Pickering's presentation on this agenda item and asked if they had any comments or questions. Councilman Archambault asked how the Town would determine whether people have more than three residential units for rent in the State. Mr. Al Holler, Fountain Hills' Sales Tax Consultant, responded that they would have to rely on their honesty and public records were in place at the County to assist them as well. Councilwoman Nicola commented on the Slumlord Act and noted that a State Statute existed that required landlords to register with the State if they own rental property. In response to a question from Councilwoman Stevens relative to taxing all rentals and determining who owned a single or multiple rentals, Mr. Holler stated that sales tax was a "self -reporting tax" and added that research would be conducted to see who had rentals available. He said that most rental properties went through a property manager or real estate agentj and were aware of the tax. He added that anyone who owned one rental property but rented it through a property manager or real estate agent would pay the tax because a real estate company or the property management company is in business. He said the reason for having three or more was that it represented an investment rather than a business. He explained that if they taxed people who owned three or more rentals, they would pick up people who may only have one rental if they went through a real estate agent or property manager. Mayor Nichols clarified that originally he was going to abstain from this item because he owned property rentals in Fountain Hills, but Town Attorney McGuire advised that he did not in fact have a statutory conflict of interest and did not have to abstain from discussing or voting on this issue. Mr. McGuire confirmed the Mayor's statement. Vice Mayor Melendez asked why the Town was not going to tax all rental properties. Mr. McGuire responded that the initial "check the box" system of the model city tax code had a one or three option and the Council can choose to tax everyone. He agreed with Mr. Holler that single rental property owners would most likely go through a real estate agent or property management company and would be taxed. He added that the ordinance could be revised to reduce that number. In response to a request for clarification from Councilman Archambault, Mr. Holler stated that single property owners who had their property listed with a real estate agent or property management company would be considered to be in business and charged a sales tax if a sales tax on that was in effect. Mr. McGuire noted that the option under discussion stated "three or more" rental properties and also stated that if someone had one commercial rental and one residential, that the one residential would be taxable because they would be considered to be in business if they had commercial rentals. Discussion ensued regarding the wording of the cover sheet and the fact that it was incorrect and should read "three or more". EABBender\Documents\Current Minutes 2004\01-15-04 .doc Page 12 of 21 Councilwoman Stevens asked whether the Council could change that number to one or more at this time. Mr. McGuire stated the opinion that changing the number was within the scope of the Council's ability. He added that the Council might want to consider whether this was enough notice to residents regarding an increase in the tax rate or reducing the Kemption and said if they wanted to give more notice on those items, they could move that portion of it off and just ddress the exemption this evening and whether they wanted to remove the exemption on three or more at a later date. Councilwoman Ralphe spoke in support of eliminating the exemption on all rental properties, and asked whether short- term rentals were included. Ms. Ghetti responded that short-term rentals (under 30 days) were already taxed under the Town's bed tax and the proposed tax would be for long-term rentals only, more than 30 days. In response to a question from Councilwoman Nicola relative to whether the tax had to be 2.6% or could be less, Mr. McGuire stated that he was not aware of any discussion regarding a lesser rate although the issue of charging different rates for different categories was brought up. Mr. Holler stated the opinion that the Council could set the rate within every category. Mayor Nichols asked if there were any requests to speak from the public. Ms. Bender advised that Pam Nabor did not wish to speak but wanted to state for the record that she represented 150 people opposed to this item. She added that there were four citizens wishing to speak and the Mayor asked them to present their remarks at this time. Roxanne Boryczki stated that the Chamber previously said they were opposed to the item as written and were looking for additional revenues from this source to level the playing field and ensure that the rentals would be taxed the same as the bed tax and a portion of that could be used for dedicated funding of the Tourism Bureau. She added that in light of some Cinlg sthat had come up today from different sources, they would like to defer this issue for further study. She said it was cear to them whether they were short-term rentals or long-term rentals and at one point it was stated that no tax would be collected on any residential rentals, short or long term. She added that the Board needed additional information prior to taking a stand on the issue. Dina Galassini, 15832 E. Brodiea Drive, a realtor with Realty Executives, stated the opinion that the proposed tax on rental real estate properties was excessive and noted that Scottsdale's tax was approximately 1% less than the proposed 2.6% rate. She said she conducted a multiple listing search for the last six months of active real estate rentals in general and the leased rentals and reported that out of 146 rentals, there were 71 active listings and 75 leased rentals. She requested that they consider lowering the proposed tax rate and said that the tax would most likely be passed on to the tenants. She asked that the Council not penalize landlords and tenants and added that it represented a future move to tax all real estate sales. Fred Pulve, a resident and realtor in Fountain Hills, said that he current served on the local City Government Committee and because of that the top five brokers in Fountain Hills who have offices here asked them on their behalf to make the following statement. He noted that they represent over 200 agents and said that although they would prefer that there be no tax, they recognized the need to raise revenue and for this item to be on the agenda, and asked that it be spread over all owners of residential rentals rather than those who own three or more in the State. Ile added that the tax rate was their biggest concern and noted that Scottsdale charged 1.4% and Mesa charged 1.5%. He stated the opinion that a high rate would discourage people from coming to Fountain Hills and make them uncompetitive. He requested that the Council consider spreading the tax over all owners of residential rentals and, in light of the competition, lower the tax rate. He asked that the Council defer this item to allow further discussion to occur. Donald Weintraub, 9657 E. Celtic Drive, Scottsdale, speaking as the General Manager of the Copperwynd Resort and 'ub, said that the facility contains eight villas that are rented on a nightly basis as well as for longer terms. He added that demand for longer -term rentals existed for these type of units because if people stay for more than 30 days, the occupancy tax was waived. He asked whether this type of unit would be taxed. Mr. Holler nodded in the affirmative in response to his question. EABBender\Documents\Current Minutes 2004\01 - 15-04 .doc Page 13 of 21 Mr. Weintraub commented that the issue now became a competitive one and said that although the hotel industry has been slowly improving, it had its own challenges with competitors right next door. He said that charging a higher tax than surrounding communities would force the consumers to look elsewhere and they would lose business. The Mayor thanked the speakers for their comments. Vice Mayor Melendez MOVED and Councilwoman Stevens SECONDED a motion to approve Ordinance 04-03. Councilwoman Stevens stated that following comments from everyone on the Council, she would like to amend the motion to include all rentals. Mayor Nichols said that the Town had a commitment regarding the current 2.6% tax rate, which would return to the 1.6% rate if a fire district were approved. He asked if they established a rate of 1.6% now on rentals and the fire district was approved, would the sales tax rate then have to be reduced to 0.6%. Mr. McGuire stated that the tax was after the commitment for 1% and said that for the sake of consistency, staff would prefer the same rate of 1.6% and that figure would not have to be reduced if a fire district was formed. In response to a question from Councilman Archambault, Mr. McGuire clarified that staff would bring back the ordinances to change all of the rates that were at 2.6% back to 1.6%. Vice Mayor Melendez stated that he preferred the 2.6% rate and would support Councilwoman Stevens' amendment when she brings it forward. Councilwoman Ralphe said the Town should follow the lead of the majority of incorporated Arizona cities and towns and tax rentals. She added that for the sake of fairness, all of the rentals should be tax. She stated that it should be taxed at the 2.6% rate just like everything else and if it turned out a fire district was formed and the tax was lowered, it would then be comparable to the rate charged in Scottsdale and Mesa. Councilwoman Nicola commented on the current difficulties associated with attracting quality renters to the Town and said she supported the measure for everyone but would prefer a lower rate. Mayor Nichols spoke in support of the tax and stated that many of the owners of the rental properties live outside of Arizona and do not pay for fire protection for their property since that cost was paid out of sales tax. He added that those people are making money in Fountain Hills and should be taxed. He also commented on the importance of following the lead of other municipalities regarding this issue. Councilwoman Stevens said that she was disappointed that the Chamber withdrew their position. She added that she thought they presented a good argument for tourism at the work-study session and she had been prepared to go to 3% to give them a small but dedicated funding source. It was MOVED by Councilwoman Stevens, SECONDED by Vice Mayor Melendez, that the motion be amended to apply to all residential rentals. Councilman Kavanagh commented on the importance of realizing that the tax would be rapidly passed onto the renters themselves and it will be the renters, not the owners, who absorb the extra cost. He stated the opinion that this was not an equitable situation. Councilwoman Nicola agreed with Councilman Kavanagh and said even if the tenant collected the tax, there was no guarantee that the monies would wind up in the general fund because it was still on a voluntary basis. She stated that she would support the amendment and indicated her intention to make a motion to change the rate. Councilman Archambault also concurred with Councilman Kavanagh's remarks and said the Town had a lot of young families who are here for the long-term and who spend their tax dollars here. He said they were trying to capture the out E:\BBender\Documents\Current Minutes 2004\01-15-04 .doc Page 14 of 21 of state investor but the young families would be penalized instead. He stated the opinion that the 2.6% rate was too high and would burden those families. 'ie Mayor called for a vote on the amendment. A roll call vote was taken with the following results: Mayor Nichols Aye Councilman Kavanagh Nay Councilwoman Stevens Aye Councilman Archambault Nay Councilwoman Ralphe Aye Councilwoman Nicola Aye Vice Mayor Melendez Aye The motion CARRIED by majority vote (5-2). Councilwoman Nicola MOVED to amend the tax rate to 1.6% and Mayor Nichols SECONDED the motion. Councilwoman Ralphe stated the opinion that all citizens should be taxed equally and the rate should be 2.6%. Councilwoman Nicola said that the tax rate currently in place was supposedly a temporary one and based on the taxes that were already being collected. She added that this was a new tax and it does not have to be the same amount or apply to three or more. She also emphasized the importance of remaining competitive. Councilman Kavanagh stated that he would support the amendment to reduce the tax although he opposed the imposition of any tax. ayor Nichols also indicated support for the amendment and said it was not a "given" that all landlords would pass the increase on to the renters and it was easier for them to absorb $10 than $26. In response to a question from the Mayor, Ms. Ghetti advised that commercial rental were taxed at the 2.6% rate. Mr. Pickering noted that staff had estimated the revenue generated at the 2.6% rate to be $120,000 but at the 1.6% rate it would generate approximately $73,000. He reiterated that if the Council approved every one of the enhancements, the Town was still going to be $5.3 million behind. He said that many valid points had been raised but the point was the bottom line. Mayor Nichols stressed the importance of fairness and taxing everyone. Vice Mayor Melendez said the Town had to remain consistent and if commercial rental properties were being taxed at the 2.6% rate, residential rental properties should be taxed the same amount. He added that he would not support the amendment. The Mayor called for the question. A roll call vote was taken with the following results: Councilman Kavanagh Aye Councilwoman Ralphe Nay Vice Mayor Melendez Nay ayor Nichols Aye %wouncilwoman Nicola Aye Councilwoman Stevens Nay Councilman Archambault Aye EABBender\Documents\Current Minutes 2004\01-15-04 .doc Page 15 of 21 The motion CARRIED by majority vote (4-3). The Mayor asked whether anyone wished to speak on the main motion. Councilman Archambault said that if they wanted to talk about across the board rate fairness they should discuss refuse service and noted that it would generate $500,000 a year. Councilman Kavanagh said that his comments on this issue also applied to the tax on health clubs/spas. He stated that he was reluctant to pass any additional taxes and noted that the Council approved $406,000 of the $582,000 tax revenue requested by the Town Manager with the advertising tax. He expressed the opinion that it was not a good time to raise other taxes in Town and agreed that it depressed businesses and made them less competitive. He added that sometimes you had to tax people and if he believed that the Town needed this money for its streets, a new Town Hall, a Senior Center, a skate park, and Desert Vista Park in a few years. He said he didn't mention the trailhead because the development fees already adequately funded that. He emphasized that those items were the "must have items" for the future and he was totally committed to funding them. He said he would not support this tax or the next tax on the agenda because he did not believe they needed those funds at this time. Councilman Kavanagh explained that at a recent retreat, there was talk about creating three new positions, an economic development director, which he did not believe was necessary, a public information officer and a public safety director. He stated that the Town did not need those positions and believed that these funds would be built in to fund those positions. He said that when the need arose, he would vote for taxes and hiring additional staff but did not believe either should happen at this time. Mr. Pickering clarified that none of the projections over the next five years reflect any increase in staffing and reiterated that if all of the enhancements passed, the Town would still be $5 million short. In response to a question from Councilman Kavanagh, Mr. Pickering stated that the only new position was the public information officer, the other two were already funded this year but not filled. Councilman Kavanagh summarized his remarks and said he would defer until the budget was summarized and Council decided what they were going to do. He said that as long as a half million dollars in sales tax monies was coming into the Town and not being spent, he would not vote for any new taxes. Councilwoman Ralphe expressed the opinion that exemptions resulted in inequities and said that it was not the time to divert funds that a previous Council promised the citizens would be put into mountain preservation and other preservation into other pet projects. Councilman Kavanagh responded that his pet projects included streets, the senior center, the town hall, and parks for the Town's children as opposed to creating an unnecessary slush fund of mountain funding. He added that he was not proposing that they not fund the trailhead, they are committed to driving the funding for the fees. He said they should not be putting a slush fund of unneeded money aside when greater needs exist and there was talk about taxing children. Vice Mayor Melendez referred to an article in the Scottsdale Republic that said "City walking fiscal high wire." He stated the opinion that all municipalities were facing deficits and emphasized the importance of looking at the big picture. He said no one liked taxes but they were faced with issues, such as roads, that must be addressed now. The Mayor clarified that the motion was that they remove the exemption from taxation for all residential rental properties, all exemptions for all properties, and tax them at a rate of 1.6%. Mayor Nichols called for the question. A roll call vote was taken with the following results Councilwoman Stevens Aye EABBender\Documents\Current Minutes 2004\01-15-04 .doc Page 16 of 21 Councilwoman Nicola Aye Vice Mayor Melendez Aye Councilwoman Ralphe Aye layor Nichols Aye 'hrouncilman Kavanagh Nay Councilman Archambault Nay The motion CARRIED by majority vote (5-2). AGENDA ITEM #12 — CONSIDERATION OF ORDINANCE 04-4 AMENDING THE TOWN OF FOUNTAIN HILLS TAX CODE RELATING TO THE PRIVILEGE LICENSE TAX BY REMOVING THE EXEMPTION FROM TAXATION FOR HEALTH CLUBS AND SPAS PROVIDING PENALTIES FOR THE VIOLATION THEREOF; PROVIDING FOR SEVERABILITY; DESIGNATING AN EFFECTIVE DATE AND PROVIFING FOR APPLICATION OF TAX TO CERTAIN CONTRACTS. The Mayor stated that Mr. Pickering made a presentation on this item already and asked whether any members of the Council wanted to comment or ask questions regarding the removal of this exemption. None of the Councilmembers indicated that they wished to speak. Ms. Bender advised that three citizens had submitted requests to speak on this item. Roxanne Boryczki, representing the Chamber of Commerce, stated that the Chamber opposed the tax and said that it would result in very little benefit dollar wise and would present a disadvantage for the businesses. She stated that it would also negatively impact senior citizens on fixed incomes who utilize the centers to maintain their mobility. Ross Suozzi, the co-owner of a fitness center in Town, asked how many other cities and towns implemented the tax state- wide and Mr. Pickering responded that 32 out of 88 have one in place. Mr. Suozzi expressed concern regarding the pact of the proposed tax on his businesses' revenue projections and said from a competitive point of view, the tax uld have a detrimental affect on businesses such as his. In response to a question from Mr. Suozzi, Mr. Pickering responded that the Town's auditor prepared the estimated $32,000 in projected revenues. Mr. Suozzi stated that his business represents over 1,000 members and they were unanimously opposed to the tax. Donald Weintraub said that this was a highly competitive issue and said that the health and spa industry, particularly from a resort perspective, is "booming." He added that the Copperwynd Resort has 550 members and over the next couple of years they anticipated that the number would increase to 800. He noted that there was a five -figure membership fee and monthly dues and the added tax would place the club in a very difficult position from a competitive standpoint. He said that the resort recently raised the monthly dues members pay by $10 a month, which they thought was low, and the clients were extremely irate over the increase. He added that the extra tax would result in a loss of customers and revenues. Mayor Nichols thanked the speakers for their comments. Councilwoman Stevens MOVED and Councilwoman Ralphe SECONDED a motion to approve Ordinance 04-04. Councilwoman Nicola stated that she would not support the motion because in her opinion to tax a service that provided health and welfare benefits was not appropriate. She noted that new members would have to pay more than existing ones with contracts and would jeopardize Copperwynd and other businesses in Town. She said she did not see the benefit of the tax. Councilmember Archambault also spoke in opposition to the motion and stated that they would be taxing businesses in Town that were frequented by residents of the Town and not diversifying. He agreed with the importance of allowing businesses to remain competitive. ce Mayor Melendez asked Mr. Suozzi how many of his 1,000 customers were Fountain Hills' residents and he estimated that 99.5% of his customers lived in Town. EABBender\Documents\Current Minutes 2004\01-15-04 .doc Page 17 of 21 In response to a question from Councilwoman Stevens, Mr. Suozzi stated that the fees he charged ranged from $39 to $59 a month. Mr. Suozzi asked whether this would affect outstanding agreements and membership dues. Mr. McGuire stated that it would depend upon how their contracts were written. Mayor Nichols said that he too would not support the motion and said he believed the businesses in Town should an must remain competitive. Councilman Kavanagh advised that he would not support the motion for the reasons he stated under the last agenda item. Councilwoman Stevens indicated support for the motion and stated the opinion that the Town needed every penny it could get. She expressed surprise that membership fees ranged in the five figures and questioned why anyone who paid that amount to be a member couldn't afford the sales tax. She noted that the date on this was April 0 and said if some members were willing to support this and move the date back to help those who already under contract, she would be willing to support an amendment. Councilwoman Ralphe said that she would support the motion and reiterated that if there were exemptions that meant that some people were not paying their fair share. She emphasized the importance of fairness and agreed that anyone who could pay five figures to join a club could pay $26 a month. Mayor Nichols called for the question. A roll call vote was taken with the following results: Councilwoman Stevens Aye Councilwoman Nicola Nay Vice Mayor Melendez Nay Councilwoman Ralphe Aye Mayor Nichols Nay Councilman Kavanagh Nay '4 Councilman Archambault Nay The motion FAILED for lack of a majority vote (2-5). The Mayor declared a brief recess at 9:53 p.m. and the meeting reconvened at 10:00 p.m AGENDA ITEM #13 — CONSIDERATION OF THE FINAL PLAT FOR "ADERO CANYON — PARCEL 2," A 60.46-ACRE, 24-LOT SINGLE FAMLY SUBDIVISION (AKA EAGLES RIDGE NORTH, PARCEL 2) CASE #S2002-35. Mayor Nichols stated that the Council was about to discuss and consider the final plats for Adero Canyon's Parcel 2, Parcel 3, Parcel 4, Parcel 9 and Parcel 1. He said that in the interest of time, he asked if there was any way they could "package" them as one item. Mr. McGuire responded that the staff report already packaged them as one giant item. He said that Parcels 2, 3, 4 and 9 would be considered together and Parcel 1 was separated out. He added that the Council could suspend the rules and treat the first four parcels as a consent item. He said that first they would have to make sure that any changes to the stipulations were included for each parcel. The Council concurred with this recommendation. Senior Planner Dana Burkhardt addressed the Council relative to agenda items 13 through 16 (parcels 2, 3, 4 and 9) at Adero Canyon. He noted that parcel 2 contained approximately 24 single-family lots and a bridge is located at the entrance at Hummingbird Lane. He added that parcel 3, north of parcel 2, has approximately 24 lots on a double -headed cul-de-sac and the entrance off of Eagle Ridge Drive also has one of the bridge locations agreed to in the settlement agreement. He said that parcel 4 is the northern most parcel in Adero Canyon and contained approximately 22 lots. He noted that all of the plats conform to the preliminary plat and settlement agreement. He stated that parcel 9 is located at EABBender\Documents\Current Minutes 2004\01-15-04 .doc Page 18 of 21 the entrance and north of parcel 1 on the north side of Eagle Ridge Drive contained approximately 8 lots total. He said that staff recommended approval of the plats and Mr. McGuire would review two revised stipulations. Lr. McGuire stated that with respect to Parcels 2, 3 4 and 9, Stipulation No. 1 is amended to read as follows: "prior to oLoo'nstruction, provide approved water service plans" rather than the language currently listed. He added that in Parcel 2 and 4, a new stipulation, No. 9, was added that reads: "The Town of Fountain Hills' approval of this plat is conditioned upon the Town receiving written notification from the Arizona Department of Water Resources (AWR) expressly stating one of the following: (1) AWR has approved the modification of the Chaparral City Water Company's (CCWC) designation of an assured water supply that demonstrates the water supply is sufficient to meet CCWC's current and committed demands as well as this plat or (2) that AWR has determined that the deficiencies in CCWC's designation, as indicated in AWR's letter of October 29, 2003 have been cured to the satisfaction of AWS and the CCWC demonstrated a sufficient water supply to meet the demands associated with this plat. Mr. McGuire said that the new stipulation would appear on all five of the plats. In response to a question from Councilwoman Ralph, Mr. Burkhardt said that the Council had heard about 2 of the 7 bridges associated with two parcels (2 and 3) and noted that two more bridge locations are planned for Adero Canyon and three were planned for Eagle's Nest. He said that they were consistent with the agreement. Councilman Archambault MOVED and Vice Mayor Melendez SECONDED a motion to approve Agenda Items 13 through 16 covering Parcels 2, 3, 4 and 9. The motion CARRIED UNANIMOUSLY (7-0). AGENDA ITEM#14 — CONSIDERATION OF THE FINAL PLAT FOR "ADERO CANYON — PARCEL 3 AND A PORTION OF ADERO CANYON — PARCEL 2." A 57.70-ACRE, 24-LOT SINGLE FAMILY SUBDIVISION (AKA EAGLES RIDGE NORTH, PARCEL 3); CASE #S2002-20. See Agenda Item 13 for discussion and vote. - CONSIDERATION OF THE FINAL PLAT FOR "AnF,RO C ANYCIN — PARf F.l. Aff 39.56-ACRE, 22-LOT SINGLE FAMILY SUBDIVISION (AKA EAGLES RIDGE NORTH PARCEL 4)• CASE #S2002-15. See Agenda Item 13 for discussion and vote. AGENDA ITEM #16 — CONSIDERTION OF THE FINAL PLAT FOR "ADERO CANYON — PARCEL 9,)9 A 25.40-ACRE, 22-LOT SINGLE FAMILY SUBDIVIDION (AKA EAGLES RIDGE NORTH, PARCEL 9); CASE #S2002-36. See Agenda Item 13 for discussion and vote. AGENDA ITEM #17 — CONSIDERATION OF THE FINAL PLAT FOR "ADERO CANYON — PARCEL 1 A 23.941-ACRE, 9-LOT SINGLE FAMLY SUBDIVISION (AKA EAGLES RIDGE NORTH, PARCEL 1); CASE #S2002-10. Councilman Kavanagh MOVED and Vice Mayor Melendez SECONDED a motion to approve Parcel 1. Mr. McGuire noted that the stipulation amendments to number 1 and number 9 were the same as the other two and staff would make sure that they appear on the final plat. The motion CARRIED UNANIMOUSLY (7-0). Mayor Nichols stated that a misunderstanding occurred regarding the Call to the Public and a Mr. Lloyd wished to speak at this time. The Council concurred that Mr. Lloyd should be allowed to present his remarks. :nald Lloyd, E. Banebridge Avenue, addressed the Council and stated that acts of vandalism had taken place at his me. He said that Councilman Kavanagh and a member of the Sheriffs Department came out and he and his wife felt better but were concerned that such acts were taking place. He distributed pictures to the Council depicting the acts of EA\BBender\Documents\Current Minutes 2004\01 - 15-04 .doc Page 19 of 21 violence that occurred. He thanked everyone for showing that they truly cared. He said he decided to come before the Council when he read an article about KKK signs being erected in Town. Mayor Nichols thanked Mr. Lloyd for his input and said that the Town of Fountain Hills had zero tolerance for vandalism of any time. He said he and his family had the Council and Sheriff Department's full support. Councilman Kavanagh urged the viewers to report any vandalism to the Sheriff's Department as quickly as possible and noted that they can remain anonymous. Councilwoman Nicola expressed her concern that these acts occurred over three weeks ago and she just learned about it. She requested that information be forthcoming relative to whether the number of vandalism and/or hate crimes was increasing. She stressed the importance of being informed and taking swift action. Councilman Archambault personally apologized for what occurred and said in his 32 years in Town he had never seen that type of behavior. He added that this was not the way Fountain Hills was and it would be stopped. Mayor Nichols thanked Mr. Lloyd for coming forward and presenting his remarks. AGENDA ITEM #18 - COUNCIL ASSESSMENT AND REVIEW OF THE MEETING TO IDENTIFY PROCEDURAL STRENGTHS AND WEAKNESSES AND DISCUSS POSSIBLE IMPROVEMENTS FOR FUTURE MEETINGS. There were no comments at this time. AGENDA ITEM #19 — COUNCIL DISCUSSION/DIRECTION TO THE TOWN MANAGER. ITEMS LISTED BELOW ARE RELATED ONLY TO THE PROPRIETY OF 0) PLACING SUCH ITEMS ON A FUTURE AGENDA FOR ACTION OR 0i) OR DIRECTING STAFF TO CONDUCT FURTHER RESEARCH AND REPORT BACK TO THE COUNCIL: A. REQUESTED BY COUNCILMAN KAVANGH — PLACING THE ITEM OF ELIMINATING THE No TURN ON RED SIGNAL AT THE INTERSECTION OF PALISDES AND SHEA BOULEVARDS ON A FUTURE AGENDA FOR ACTION. Councilman Kavanagh said he would like staff to reevaluate two traffic regulations in Town, the no turn on a red signal at Palisades and Shea and come back with a report and possible recommendations. B. REQUESTED BY COUNCILMAN KAVANAGH — PLACING THE ITEM OF INCREASING THE SPEED LIMIT ON SAGUARO BLVD. FROM 35 MPH TO 40 MPH ON A FUTURE AGENDA FOR DISUSSION Councilman Kavanagh said he would like an evaluation of the speed limit conducted on Saguaro Boulevard with the possibility of raising it from 35 to 45 mph and receive staff s recommendations on this issue. Mr. McGuire advised that either three members of the Council or the Mayor had the ability to place the items on a future agenda. There were sufficient members willing to place Item A on a future agenda. Councilwoman Nicola noted that the Town no longer had a Traffic Engineer on staff and asked whether staff would provide the recommendations or a consultant. Mr. Pickering responded that the Town Engineer had already looked at this situation and his recommendation will be provided to the Council. The Mayor said that Item B would be placed on a future agenda if Councilman Kavanagh were not satisfied with what staff presents. AGENDA ITEM #20 — SUMMARY OF COUNCIL REQUESTS BY TOWN MANAGER The Town Manager briefly reviewed the Council's summary of request. EABBender\Documents\Current Minutes 2004\01-15-04 .doc Page 20 of 21 AGENDA ITEM #21— ADJOURNMENT Councilwoman Stevens MOVED that the Council adjourn and Councilwoman Ralphe SECONDED the motion, which CARRIED UNANIMOUSLY. The meeting adjourned at 10:20 p.m. TO I2 ATTEST AND PEPARED BY: Bevelyn J. nder, own Clerk CERTIFICATION I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Regular Session held by the Town Council of Fountain Hills on the 15th day of January 2004. 1 further certify that the meeting was duly called and that a quorum was present. DATED this 5`h day of February, 2004. Bevelyn J. Benar, Tdwn Clerk EABBender\Documents\Current Minutes 2004\01-15-04 .doc Page 21 of 21