HomeMy WebLinkAbout2012.1206.TCREM.Minutesz:\council packets\2012\r12-20-12\121206m.docx Page 1 of 7
TOWN OF FOUNTAIN HILLS
MINUTES OF THE EXECUTIVE AND REGULAR SESSION OF THE
FOUNTAIN HILLS TOWN COUNCIL
DECEMBER 6, 2012
EXECUTIVE SESSION AGENDA
CALL TO ORDER
Mayor Kavanagh called the Executive Session to order at 5:30 p.m. in the Town Hall Council Chambers.
AGENDA ITEM #1 – ROLL CALL AND VOTE TO GO INTO EXECUTIVE SESSION: PURSUANT
TO A.R.S. §38-431.03(A)(1), DISCUSSION OR CONSIDERATION OF EMPLOYMENT,
ASSIGNMENT, APPOINTMENT, PROMOTION, DEMOTION, DISMISSAL, SALARIES,
DISCIPLINING OR RESIGNATION OF A PUBLIC OFFICER, APPOINTEE OR EMPLOYEE OF
ANY PUBLIC BODY (SPECIFICALLY, THE REAPPOINTMENT OF THE TOWN'S MUNICIPAL
JUDGE.)
ROLL CALL: Present for roll call were the following members of the Fountain Hills Town Council: Mayor
Kavanagh, Councilmember Yates, Vice Mayor Leger, Councilmember Hansen, Councilmember Brown,
Councilmember Elkie and Councilmember Dickey. Town Manager Ken Buchanan, Town Attorney Andrew
McGuire and Town Clerk Bevelyn Bender were also present.
Councilmember Elkie MOVED to enter into the Executive Session at 5:30 p.m. and Councilmember Brown
SECONDED the motion, which CARRIED UNANIMOUSLY (7-0).
AGENDA ITEM #2 – ADJOURN TO THE REGULAR SESSION
Without objection, the Executive Session adjourned at 6:23 p.m.
REGULAR SESSION AGENDA
* CALL TO ORDER AND PLEDGE OF ALLEGIANCE
Mayor Kavanagh called the meeting to order at 6:32 p.m.
* INVOCATION – Pastor Tom Daly, Trinity Lutheran Church
* ROLL CALL
Present for roll call were the following members of the City Council: Mayor Kavanagh, Vice Mayor Leger,
Councilmember Brown, Councilmember Dickey, Councilmember Elkie, and Councilmember Hansen. Town
Manager Ken Buchanan, Town Attorney Andrew McGuire and Town Clerk Bevelyn Bender were also present.
Councilmember Yates was absent from the meeting.
* MAYOR’S REPORT
Mayor Kavanagh congratulated Councilmember Dickey who has accepted and been appointed to the Domestic
Violence Council of the Maricopa Association of Governments (MAG). She said that they are very happy to
add another Fountain Hills' Council appointee to MAG to represent and speak on behalf of the Town.
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* SCHEDULED PUBLIC APPEARANCES/PRESENTATIONS
(i) PRESENTATION by Mark Lewis, Director of Central Arizona Project.
Town Manager Ken Buchanan addressed the Council and said that Mark Lewis, Director of the Central Arizona
Water Conservation District Board that administers the Central Arizona Project (CAP), is present this evening to
provide a presentation and answer any questions the Council may have regarding the CAP.
Mr. Lewis thanked the Council for the opportunity to address them this evening and provided a brief overvie w
of his extensive background, the composition of the board and their excellent credit status. He noted that they
have lowered property taxes and water rates three times during his 13-year tenure. He said that they supply
renewable water supplies to 80% of the State of Arizona and spend about $100 million annually pumping water
up over the hill using 500 million horsepower so that everyone can enjoy the benefits of living in the desert.
Mr. Lewis highlighted a brief presentation (available on line and in the office of the Town Clerk) and provided
various statistics relative to the CAP's operations and accomplishments. He advised that they are the largest
power user in the State. He discussed the Navajo Generating Station, which is operated by Salt River Project
(SRP), and said that the Environmental Protection Agency (EPA) is asking CAP to p ut up a $1.1 billion
catalytic converter on the smokestacks with the new EPA Environmental Regul ations. He explained that
Fountain Hills is an EPA subcontractor (about 8,900 acre feet of water) and they are looking at a 20% to 30%
price increase if they (CAP) are required to move forward with the catalytic converter project. He added that
another component of the increase is that they have to renew the contract and all the right-of-ways with the
Navajo Nation because the entire structure is on their property. He advised that they are not goin g to run out of
water any time soon (there is a 100-year supply and a water plan that goes out to 2110) and the real challenge is
economics and how they are going to deal with price increases and additional supplies of electricity for
pumping.
Mr. Lewis noted the impacts of a Navajo Generating Station closure both economically and environmentally and
stated that there are no solutions in place for that right now. He said that his organization spends a lot of time
negotiating with the Federal Government and other western states and highlighted various accomplishments. He
indicated his willingness to respond to questions from the Council.
Mayor Kavanagh asked if the EPA does enforce the regulation, does Mr. Lewis have any idea which way CAP
would go to increase customers' charges to cover the costs or are they considering shutting the station down?
Mr. Lewis responded that they don't have an answer to that and they are waiting for the EPA to issue their final
rules on whether the Navajo Generating Station will need a $1.1 billion catalytic converter. He note d that Los
Angeles Water & Power has already announced their official withdrawal from the NGS and they are a 20%
owner of the power plant and they are leaving, which makes it very difficult to spread the costs out (when 20%
are leaving). He added that he will be happy to keep the Council updated.
In response to a question from Councilmember Brown regarding the timeframe for the converter's installation,
Mr. Lewis advised that assuming they are able to negotiate a reasonable upgrade to the power plant and they can
get the rates that they need to cover all of this and borrow needed money, they would be looking at about a 2016
installation date (the permits and entitlements are quite a chore). He noted that there are a lot of uncertainties
associated with this.
Councilmember Dickey stated that this is a very complex issue and acknowledged that there are different
perspectives on this. She advised that she obtained a fact sheet from the Sierra Club that she distributed to the
Council so that they could all get an idea of what some of the environmental issues are that went into this
requirement that may be coming down for the catalytic converter. She added that there is a lot of information
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about this available on line relating to the health effects, even how the Navajo Nation thinks about this. She said
that she knows there are jobs involved and other things like that but there are other aspects to that and their
health and that keeping the plant open has influenced the water toxins and such. She stated this relates to
Fountain Hills and that the CAP has been going out to different cities and towns to talk about rates. She noted
that she has seen an estimate that was put together and it looks like it cou ld be fairly minimal -- ninety cents or
so a month -- and pointed out that cities and towns are paying more for their water and agricultural use of water
was paying less relative to urban use and that maybe that is something that could be reviewed (cost of
agricultural use versus urban use). She stated that the CAWCD is getting 98% of their energy from one source
is a factor in itself that has to be looked at and discussed (i.e. what would be a long-term plan for sun setting a
40-year old plant that has problems both visual and health related). She pointed out that the DEQ has recently
come out with politicians and others who believe that the EPA is overstepping but there are also others on the
other side who don't agree with that and think they are doing a job that is within their purview and because they
are protecting national parks and regional health. She referred to the Clean Air Act and said that the cleanup of
all coal plants has to be completed by 2064 -- and the end date is a zero pollution date so there has to be steps
taken along the way. She emphasized that air pollution is illegal and that the Clean Air Act requires regional
progress towards the ultimate goal of zero pollution.
Councilmember Dickey further advised that they are challenged to find the best way to get them there and said
that obviously in the future there will be more information available. She added that the CAWCD will be
looking at their practices and policies and perhaps at some point after the decision has been made the
information can be supplemented and get a full report back either with a memo at another meeting or something
like that because it is very important but there are a lot of sides to it.
Mr. Lewis agreed that there are a lot of sides to this and ultimately they have a State implementation plan where
they get to the finish line in 2064. He advised that they have made hundreds of thousands of dollars in
commitments based on that State implementation plan and the timeline. He added that essentially the EPA came
along and said the State approved implementation plans that gave them until 2064 but they were now going to
give us two years to get there and that is just totally unfair in the way that the State of Arizona and its
departments (the stakeholders) have been treated in his opinion. He added that that opinion is shared by the
President of the Senate, the Governor and the Speaker of the House. He informed the Council that they have all
testified before the EPA about this -- and it's really about the timeline issue because if they allow enough time to
come up with a plan to get them to the finish line they can then do it in a way that is in the best interests of the
State and is something that the stakeholders can live with. He reported that they have been denied that
opportunity and that is completely unfair -- going from 64 years to 2 years and it totally ignores the 10th
Amendment.
Councilmember Dickey said that in addition to being an energy issue among other things it is also a political
issue.
Mayor Kavanagh thanked Mr. Lewis for his presentation and stated that she enjoyed it when she heard it at the
League of Cities & Towns conference and knew that this would be something worthwhile to discuss.
Mr. Lewis advised that he would like to come out in six months or so and provide the Council with an update
and the Mayor said that that would be great.
(ii) PRESENTATION by the Town's Sales Tax Auditor, Albert Holler, of Albert Holler & Associates, relating
to the Governor's Transaction Privilege Tax (TPT) Simplification Task Force.
Deputy Town Manager Julie Ghetti addressed the Council and stated that back at the end of the last Legislative
Session in May the Governor issued an Executive Order establishing the Transaction Privilege Tax (TPT)
Simplification Task Force. She advised that the Governor noted in her Order that the need for the Task Force
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was premised on three points: (1) That Arizona has one of the most complex TPT (commonly called the Sales
Tax) systems in the country; (2) Taxpayers have expressed very clearly their desire to see reforms and actions
that will modernize and simplify the TPT; and (3) It is in the best interest of the taxpayers and State and local
governments to make the tax both easier to understand, comply with and administer. She reported that the Task
Force has been meeting regularly over the past six months and they have some recommendations. She added
that Al Holler, of Albert Holler & Associates, who represents Fountain Hills as well as many othe r cities and
towns, is present this evening to provide the Council an update on some of the recommendations that will be
going forward to the Legislature.
Mr. Holler addressed the Council and advised that the Task Force came up with ten recommendations, seven of
which are okay and will not affect Fountain Hills. He said that there are three recommendations that he thinks
are really up for discussion (two of them are related) and one of them is that State law should provide for State-
wide administration of all sales tax. He added that with that being said, the Town's ability to audit or do any
work related to sales tax would be removed and would go to the Department of Revenue. He reported that
currently there are 18 cities and towns that have a staff that does their own monitoring of the local businesses,
keeps track of the building permits and new businesses that open and close, etc. He noted that they would lose
their ability to monitor that and stated the opinion that the State agency is not really ready for that (they do not
have the staff). He reported that the Task Force has recommended that it be funded -- they have to fund this if
it happens -- and he doesn't think that there are any assurances that it will be funded or that it will be funded in
the future. He stated that this would affect the Town on the local level and noted that the Town has assessed and
collected almost $200,000 in the last three years, which were the lowest years they have had (in previous years
the amount was double or triple that). He added that the non-compliance would probably rise because the
Department of Revenue certainly cannot provide the type of service that is provided on a local level. He said
that his recommendation is "No."
Mr. Holler informed the Council that the other recommendation is that whenever someone does an audit, and
let's say it goes to the State -- they will have to do an audit for every jurisdiction in the State at one time. He
added that currently the taxpayers have the option of saying, "Okay, go ahead, audit all of my activities for all
my businesses." He said that he does not believe that that particular requirement is taxpayer friendly from the
standpoint that audits will take much longer and the State involvement will make it more complicated (it will not
be efficient and it will not be simpler for the taxpayers to do that). He added that his experience shows that 1
out of 100 taxpayers say "Yes, go ahead and do an audit on everything" but most just say "Why would I want
you auditing everything? or Why would you be here a month instead of a couple of days?"
Mr. Holler said that the other one is the major one that really affects all municipalities and that is shifting the
contracting tax to a material tax. He stated that they grasp the fact that the reporting and the requiremen ts for
the construction industry are complicated and confusing to a lot of people and certainly needs a lot of changes.
He added, however that he is not sure that the change to the retail tax would be the solution. He reported that
currently the contracting revenue is based upon approximately 65% of the growth income (if you build a home
and sell it for $200,000, 65% of it becomes taxable). He noted that if it goes to a retail situation the tax would
then be the tax on the materials, which probably would be about 40% of the gross selling price of a home and
right there is a significant difference in the tax base, which would result in a 20% to 25% difference.
Mr. Holler further stated that the Task Force has recommended that they go to a retail tax base but since the
retail tax gets distributed back to the cities and towns and construction tax does not, the Town would get money
from the increase in retail sales, however, there is no plan yet to dictate how the additional funds picked up from
retail would be distributed back to the cities or towns. He said that various studies have been done and the
Department of Revenue recently completely its study and it indicates that the State of Arizona would lose $66
million in revenue. He stated that he believes that the figure is actually higher because the study that the Task
Force and the Department of Revenue have done assumes that there is a 30% non-compliance rate in the
construction industry. He advised that he has been in the business for a long time and the non-compliance rate
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for all municipalities is certainly less than 10%. He pointed out that the State will not monitor the construction
industry the way municipalities do so the 30% might be true for the State but certainly not for the cities and
towns. He reiterated that this will represent a significant revenue loss for the cities and towns and although he
agrees that the process needs to be simplified, Fountain Hills alone for the last three years collected $1.7 million
in construction revenue taxes and to lose that would be significant.
Mr. Holler said that the last thing is that if they were to go to the retail base, the contractors, home builders, etc.
will be buying their materials in other cities and not in Fountain Hills because there is no ma jor supplier in
Town. He stated that they would lose the majority of the $1.7 million because it would go to other cities and
towns. He indicated his willingness to respond to any questions from the Council.
Councilmember Hansen asked what the process is going forward. She noted that they (the Task Force) have
come up with ten suggestions and asked if the municipalities will have the opportunity to provide any input.
Mr. Holler responded yes, and advised that the members had two representatives from t he cities and towns (one
from Gilbert and one from Phoenix) but they were obviously over-ruled. He added that tomorrow the League of
Cities & Towns will be having a phone conference with the Task Force; the Task Force will issue their final
report on December 13th and he doesn't believe there will be any changes. He added that then it will go to the
Legislature and that is where the battle will take place. He said that the League is well versed on this issue and
they will be handling it.
Councilmember Brown thanked Mr. Holler for his presentation and stated that he would like to continue the
conversation about retail sales. He said if someone buys something at Target and pays sales tax, most of the
sales tax stays right here in Town. He added that if lumber and all of the building products are bought in Mesa,
Phoenix and Scottsdale and shipped to Fountain Hills, those cities and towns will keep the tax. He explained
that now the way it is set up is when he buys a permit and starts a project and he depo sits $1,000 in the bank,
6.54% is actually the tax that is paid and kept in Town. He said that he would hate to see that happen to
Fountain Hills because the $1.7 million over the last three years would virtually go down to what is purchased at
Ace Hardware. He agreed that the process is broken and is a mess to keep up with but the auditing syste m in
place is obviously really good. He stated that he would hate to see that change take place because it will really
hurt Fountain Hills.
Mr. Holler noted that there was a study done in previous years and he believes that Phoenix and Tucson would
be the major winners (their tax base would go up).
Mayor Kavanagh thanked Mr. Holler for his presentation and thanked him for serving as a watchdog for the
Town and the taxpayers.
CALL TO THE PUBLIC
None.
CONSENT AGENDA
AGENDA ITEM #1 – CONSIDERATION OF APPROVING THE TOWN COUNCIL MEETING
MINUTES FROM NOVEMBER 13 AND 15, 2012.
AGENDA ITEM #2 – CONSIDERATION OF APPROVING A LIQUOR LICENSE APPLICATION
SUBMITTED BY SUSAN YING TAM, OWNER/AGENT OF CHINA INN ND LLC DBA PACIFIC
MOON CHINESE RESTAURANT, LOCATED AT 16740 PALISADES BOULEVARD #110
FOUNTAIN HILLS, AZ. THIS IS FOR A SERIES 12 LICENSE (RESTAURANT).
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Councilmember Brown MOVED to approve the Consent Agenda as listed and Councilmember Elkie
SECONDED the motion.
A roll call vote was taken as follows:
Councilmember Dickey Aye
Councilmember Elkie Aye
Vice Mayor Leger Aye
Councilmember Hansen Aye
Councilmember Yates Absent
Councilmember Brown Aye
Mayor Kavanagh Aye
The motion CARRIED UNANIMOUSLY by those present (6-0).
REGULAR AGENDA
AGENDA ITEM #3 - CONSIDERATION OF APPOINTING FOUR (4) CITIZENS TO THE PUBLIC
SAFETY ADVISORY COMMISSION, EACH TO SERVE A 2-YEAR TERM BEGINNING JANUARY
1, 2013, AND ENDING DECEMBER 31, 2015.
Mayor Kavanagh MOVED to appoint George Aliory Anthony Finocchio, Frederick Horn and Nancy Ordowski
to serve on the Public Safety Advisory Commission, each to serve a 2 -year term beginning January 1, 2013, and
ending December 31, 2015, and Councilmember Elkie SECONDED the motion.
There were no citizens wishing to speak on this agenda item.
Vice Mayor Leger advised that he would be abstaining from this vote.
The motion CARRIED UNANIMOUSLY by those present and voting (5-0).
Mayor Kavanagh thanked the citizens for their willingness to serve.
AGENDA ITEM #4 - COUNCIL DISCUSSION/DIRECTION TO THE TOWN MANAGER KEN
BUCHANAN.
Items listed below are related only to the propriety of (i) placing such items on a future agenda for acti on or (ii)
directing staff to conduct further research and report back to the Council.
A. None.
Mayor Kavanagh said that she would like to give Councilmember Dickey the opportunity to talk about her first
meeting of the Domestic Violence Council of MAG, which she was recently appointed to.
Councilmember Dickey thanked Mayor Kavanagh for bringing her name forward and noted that the Mayor from
Avondale, Marie Lopez Rogers, is the Chair of MAG and made the appointment. She said that she would like
to be able to talk about some of the great things that are going on but they were going around the room and lost
the quorum so they weren't able to do that but again there is a lot going on and she will be happy to serve in that
capacity, keep the Council in the loop and add some profile to this group. She added that she is a little bit
familiar with this because for a little while when she was at the Department of Justice (DOJ) she worked on
community outreach so it is really interesting and she appreciates that. She noted that Mayor Rogers was
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installed as the President of the National League of Cities and Towns at the League Conference in Boston and
she will be a positive for the cities and towns on a national level.
Mayor Kavanagh thanked Councilmember Dickey for volunteering and said it is really great that the Town has
such wonderful representation on the various MAG Councils (including various staff). She added that it is very
important for the Town to have a voice on MAG as they decide on major transportation issues and now Fountain
Hills also has a clear voice on the Domestic Violence Council.
AGENDA ITEM #5 – SUMMARY OF COUNCIL REQUESTS AND REPORT ON RECENT
ACTIVITIES BY THE TOWN MANAGER KEN BUCHANAN.
None.
AGENDA ITEM #6 - ADJOURNMENT
Councilmember Brown MOVED to adjourn the meeting and Councilmember Elkie SECONDED the motion,
which CARRIED UNANIMOUSLY by those present (6-0). The meeting adjourned at 7:10 p.m.
TOWN OF FOUNTAIN HILLS
By _______________________________
Linda M. Kavanagh, Mayor
ATTEST AND
PREPARED BY:
_________________________
Bevelyn J. Bender, Town Clerk
CERTIFICATION
I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Executive and
Regular Session held by the Town Council of Fountain Hills on the 6th day of December 2012 in the Town Hall
Council Chambers. I further certify that the meeting was duly called and that a quorum was present.
DATED this 20th day of December, 2012.
_____________________________
Bevelyn J. Bender, Town Clerk