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HomeMy WebLinkAbout2020.0505.TCRM.Packet            NOTICE OF MEETING REGULAR MEETING FOUNTAIN HILLS TOWN COUNCIL      Mayor Ginny Dickey Vice Mayor Mike Scharnow Councilmember Dennis Brown Councilmember Sherry Leckrone Councilmember Alan Magazine Councilmember David Spelich Councilmember Art Tolis    TIME:5:30 P.M. – REGULAR MEETING WHEN:TUESDAY, MAY 5, 2020 WHERE:FOUNTAIN HILLS COUNCIL CHAMBERS 16705 E. AVENUE OF THE FOUNTAINS, FOUNTAIN HILLS, AZ Councilmembers of the Town of Fountain Hills will attend either in person or by telephone conference call; a quorum of the Town’s various Commission, Committee or Board members may be in attendance at the Council meeting.    PUBLIC NOTICE Due to the COVID-19 pandemic, meetings of the Fountain Hills Town Council will be closed to the public. Previous items that may have been of interest for public comment or were not directly related to the operation of the Town have been removed from the agenda. As always, the meeting will be broadcast live on Cox Channel 11 and streamed from the internet at www.fh.az.gov. We will continue to look to our state leaders and health care professionals for further direction. Thank  you for your compassion and care for the community as we go through this together.         MEETING AGENDA COMMENT ON ANY OF THE FOLLOWING AGENDA ITEMS HERE NOTICE OF OPTION TO RECESS INTO EXECUTIVE SESSION Pursuant to A.R.S. §38-431.02, notice is hereby given to the members of the Town Council, and to the general public, that at this meeting, the Town Council may vote to go into executive session, which will not be open to the public, for legal advice and discussion with the Town's attorneys for legal advice on any item listed on the following agenda, pursuant to A.R.S. §38-431.03(A)(3).             1.CALL TO ORDER AND PLEDGE OF ALLEGIANCE – Mayor Dickey     2.MOMENT OF SILENCE     3.ROLL CALL – Mayor Dickey     4.REPORTS BY MAYOR, COUNCILMEMBERS AND TOWN MANAGER     5.SCHEDULED PUBLIC APPEARANCES/PRESENTATIONS     A.PRESENTATION by Fire Chief David Ott with an Update on COVID-19 Efforts     6.CONSENT AGENDA ITEMS All items listed on the Consent Agenda are considered to be routine, noncontroversial matters and will be enacted by one motion of the Council. All motions and subsequent approvals of consent items will include all recommended staff stipulations unless otherwise stated. There will be no separate discussion of these items unless a councilmember or member of the public so requests. If a councilmember or member of the public wishes to discuss an item on the Consent Agenda, he/she may request so prior to the motion to accept the Consent Agenda or with notification to the Town Manager or Mayor prior to the date of the meeting for which the item was scheduled. The items will be removed from the Consent Agenda and considered in its normal sequence on the agenda.     A.CONSIDERATION OF approving the meeting minutes of the Budget Workshop of April 14, 2020; and the Regular Meeting of April 21, 2020.     B.CONSIDERATION OF Resolution 2020-25, abandonment of the 10' Public Utility and Drainage Easement at the rear and east side of Plat 604A, Block 1, Lot 27 (15014 Palomino Blvd.), as recorded in Book 165, Page 16, records of Maricopa County, Arizona. (EA 2020-02)     C.CONSIDERATION OF adopting Resolution 2020-29 to approve Amendment No. 1 to the Cooperation Agreement between the Town of Fountain Hills and Maricopa County for participation in the Community Development Block Grant (CDBG) Program.     7.REGULAR AGENDA        Town Council Regular Meeting of May 5, 2020 2 of 3     A.CONSIDERATION OF adopting Resolution 2020-22 of the Mayor and Council of the Town of Fountain Hills, Arizona, setting forth the Tentative Budget and establishing the maximum budget amount for the Town of Fountain Hills for the fiscal year beginning July 1, 2020, and ending June 30, 2021.     B.CONSIDERATION OF Resolution 2020-16 adopting the amended and restated Financial Policies of the Town of Fountain Hills     C.CONSIDERATION OF approval for the Civic Center Improvements with Gcon Inc. through the Job Order Master Agreement, Contract No. 2019-006B.     8.COUNCIL DISCUSSION/DIRECTION to the TOWN MANAGER Item(s) listed below are related only to the propriety of (i) placing such item(s) on a future agenda for action, or (ii) directing staff to conduct further research and report back to the Council.     9.ADJOURNMENT         CERTIFICATE OF POSTING OF NOTICE The undersigned hereby certifies that a copy of the foregoing notice was duly posted in accordance with the statement filed by the Town Council with the Town Clerk. Dated this ______ day of ____________________, 2020. _____________________________________________  Elizabeth A. Burke, MMC, Town Clerk   The Town of Fountain Hills endeavors to make all public meetings accessible to persons with disabilities. Please call 480-816-5199 (voice) or 1-800-367-8939 (TDD) 48 hours prior to the meeting to request a reasonable accommodation to participate in the meeting or to obtain agenda information in large print format. Supporting documentation and staff reports furnished the Council with this agenda are available for review in the Clerk's Office.    Town Council Regular Meeting of May 5, 2020 3 of 3   ITEM 6. A. TOWN OF FOUNTAIN HILLS STAFF REPORT    Meeting Date: 05/05/2020 Meeting Type: Town Council Regular Meeting Agenda Type: Consent Submitting Department: Administration Prepared by: Elizabeth A. Burke, Town Clerk Staff Contact Information: Grady E. Miller, Town Manager Request to Town Council Regular Meeting (Agenda Language):  CONSIDERATION OF  approving the meeting minutes of the Budget Workshop of April 14, 2020; and the Regular Meeting of April 21, 2020. Staff Summary (Background) The intent of approving meeting minutes is to ensure an accurate account of the discussion and action that took place at the meeting for archival purposes. Approved minutes are placed on the Town's website and maintained as permanent records in compliance with state law. Related Ordinance, Policy or Guiding Principle N/A Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) Staff recommends approving the minutes of the Budget Workshop of April 14, 2020; and the Regular Meeting of April 21, 2020. SUGGESTED MOTION MOVE to approve the minutes of the Budget Workshop of April 14, 2020; and the Regular Meeting of April 21, 2020. Attachments 2020.0414.TCBW.Minutes  2020.0421.TCRM.Minutes  Form Review Inbox Reviewed By Date Town Clerk (Originator)Elizabeth A. Burke 04/22/2020 02:00 PM Town Manager Grady E. Miller 04/22/2020 02:26 PM Form Started By: Elizabeth A. Burke Started On: 04/22/2020 09:54 AM Final Approval Date: 04/22/2020  MINUTES OF THE BUDGET WORK SESSION OF THE FOUNTAIN HILLS TOWN COUNCIL HELD APRIL 14, 2020 AT 5:00 P.M.                  1.CALL TO ORDER – Mayor Ginny Dickey   2.ROLL CALL – Mayor Dickey Present: Mayor Ginny Dickey (telephonically); Vice Mayor Mike Scharnow (telephonically); Councilmember Sherry Leckrone (telephonically); Councilmember Art Tolis (telephonically); Councilmember Dennis Brown (telephonically); Councilmember Alan Magazine (telephonically); Councilmember David Spelich (telephonically)  Staff Present: Town Manager Grady E. Miller; Town Attorney Aaron D. Arnson (telephonically); Town Clerk Elizabeth A. Burke  3.Presentation of the Fiscal Year 2020-2021 Proposed Budget.      Town Manager Miller explained the logistics of the meeting, stating that the presentation has been divided into sections. At the end of each section the Mayor will call on councilmembers for any questions. He said that one of the most important functions of the Town Council is to adopt a budget. They must adopt the tentative budget in May and the final budget in June. He said that staff will continue to monitor sales tax and shared revenues throughout the year and they will adjust if necessary. Staff will also present a quarterly update to the Council on the budget. Mr. Miller said that they would only initiate a hiring freeze in the worst case scenario. They had originally programmed in a cost of living increase for staff effective in July, but that has been pushed back to January, and if they are not tracking revenue-wise, that will not occur. Mr. Miller said that because of the pandemic he asked staff to go back and see what type of reduction there was during the recession in 2008. He said that it would found that they had a 30% reduction over a two-year period. He said that he thinks they will hear that they will be able to weather this a little better than before. He said that the Town has always been good stewards of taxpayer dollars. They do not always spend the entire amount budgeted and they are conservative with revenue estimates. An example of this is that they knew that Copperwynd would be opening, going from 35 rooms to 160. That bed tax is significant, but they did not program that in. He said that at this time he would turn it over to the Finance Director David Pock. Mr. Pock began a PowerPoint presentation (Exhibit A attached hereto and made a part hereof) which addressed:    YEAR-END REVENUE, EXPENDITURE & FUND BALANCE ESTIMATES ESTIMATED YEAR-END REVENUES - Operating Local Sales Tax Shared Revenues Mr. Pock explained the chart, noting that the left bar was last year's actual amounts, the bar in the middle was the first 8 months of actuals for this year and 4 months projected for the rest of the year, and the right hand bar was what was budgeted at this time last year.    TPT SALES TAX He said that the collection amounts lag about two months; they just received February's numbers last week. The current COVID-19 event started around the beginning of March. Currently, they have collected $9.2 million; the projected $9.5 million for the year and budgeted $9.1 million. He said that the reason for the difference is that they budget conservatively with revenues and they had the $.03 rate increase which was not included in the budget for this current year. STATE SHARED REVENUES Budgeted - $6.2 million Last year - $5.5 million Estimate - $5.9 million He said that those two categories make up 90% of the Town's revenues. He said that to be consistent with what they saw during the recession, they have applied a 30% decreased on the TPT for the last four months of this year. PERMITS/LICENSES TOTAL OPERATING FUND REVENUE OPERATING FUND EXPENDITURES He said that there are two departments not on the chart--the Mayor/Council and the Court. Together those are about $445,000, around $55,000 less than last year. Everything included is forecasted at $16.7 million, leaving them around $900,000 to go toward the fund balance. ADMINISTRATION - They are right on budget at $2 million each PUBLIC WORKS - They budgeted $1.4 million - at $1.2 million DEVELOPMENT SERVICES - Budgeted $1.1 million - at $850,000 COMMUNITY SERVICES - Budgeted $2.8 million budgeted - $2.4 million FIRE & EMS - $4 million - on budget LAW ENFORCEMENT - $4.8 million - on budget Going back to GENERAL GOVERNMENT, Mr. Pock said that this is used to fund items that are town wide expenses and is where the General Fund contingency is held. Last year there was $450,000 included in the budget. They have a lot more this coming year, and they will talk about that later. ESTIMATED YEAR-END EXPENDITURES (Slide 5) Mr. Pock said that he did further research and found in the Wholesale/Retail it is 51% of their revenues, broken down as follows: Construction - $14% Transportation - 11% Restaurant/bar - 8% Insurance/real estate - 8% Services - 8% He said that they have already received 87%of the budgeted TPT for the year so they are in good shape. They need an additional $1.4 million over the last quarter to hit their budget number. For the projections they took off 30% across the top in all categories for the last three months. They do expect to see a spike in April; that was before the stay-at-home order went into effect and people were    Town Council Work Session of April 14, 2020 2 of 9 stocking up. He said that there should be a spike in March activity then there will be a dip. There will be an assumption of a decrease in restaurant/bar activity, since those are limited access. They are projecting the following for the other categories: Construction - $1.6 million Transportation - $1.3 million Retail - $5.9 million $850,000 for each of the last three categories They are holding hope that this current situation will not have extremely dire effects. He did go back and look at the TPT tax filers for last year. Over the entire year there were just over 6,800 tax filers, including individuals, companies, etc. that do business in Fountain Hills. Out of those 6,800 tax filers, the Town receives 50% at least of their collections from 53 of those filers. He said that he cannot go into specifics as to which retailers, but many are still open and still conducting business, so that bodes well for the Town. ESTIMATED YEAR-END FUND BALANCE (Slide 6) RESTRICTED COMMITTED (Slide 7) He said that this includes the Rainy Day Fund, which is set per policy of the Council. Twenty percent of the average annual General Fund Revenues are to be maintained in the Rainy Day Fund. According to last year's calculations, that is $3.2 million. These funds can be used in the case of an emergency; however, per the policy only half of it may be used, so they could use $1.6 million of it this year. That $1.6 million would have to be repaid within five years. Total Committed - $8.1 million    ASSIGNED (TOWN POLICIES) (Slide 8) In the General Fund, 10% of the average is put there to fund equipment purchases, pay down debt, etc. They will be talking more about this during the May 5 Council meeting. This is a portion that he would like to take out and repurpose that amount to go toward UNASSIGNED. Environmental Fund - This fee was not collected for this fiscal year and not included in next year's budget as well. Facilities Replacement Fund - This went down quite a bit this year because they had the purchase of a fire truck a few months ago. This is one of their most expensive pieces of equipment. If the policy he is recommending is adopted, this fund would drop to $2.6 million and the balance would go into UNASSIGNED. UNASSIGNED (Slide 9) These numbers are important because of the legal they have with TPT. This would give them a buffer if something was not quite as obvious. They could continue operations without tapping into the Rainy Day Fund. If the proposed policy is adopted, this amount would increase to $3.6 million for year end, or 22%. The new policy is recommending 20%, so they would still have a slight excess and any excess would get transferred into the Capital Improvements Program (CIP). ESTIMATED YEAR-END FUND BALANCES Summary All Funds - $17 million    Town Council Work Session of April 14, 2020 3 of 9 Summary All Funds - $17 million Councilmember Brown said that he is hearing that they have a reserve of 1.5 to 2.5 months which he finds alarming. He asked Mr. Miller to fill them in on what they would do if they did not have enough income. Mr. Miller said that there are other funds that they could tap if needed. Mr. Miller said that the primary thing they would have to do is cut their expenses. He has worked in organizations that have gone into downturns. If it continues they will have to into th next fiscal year and monitor the situation and make sure they are not dipping into their reserves. He said that they would use their existing resources to manage through it. One thing they do have is a very large contingency that is fully funded, but they do not want to have to tap that. He said that they have been around two to three months in the past; most like to be around six months for operating. Councilmember Brown said that he was around when they went through major cuts, and it was very uncomfortable. Councilmember Brown asked if the art piece for Avenue of the Fountains had already come out of the Public Art Fund. Community Services Director Rachael Goodwin said that the cost of that piece is being paid for by the Public Art Committee, who is fundraising for it. Brief discussion was held on the Environmental Fee. Mr. Miller said that the balance of that fund is being held in abeyance as they wait for the Attorney General's opinion. Staff was asked to provide a listing, from #1 down to #53, of just the amounts of revenue from the TPT, not including the names of the businesses. Mr. Pock said that he could provide that. Councilmember Magazine thanked Mr. Pock for answering his questions prior to the meeting. He said that he is concerned that this is not conservative enough. He is afraid that their sales tax is going to be a lot lower than expected. Councilmember Magazine said that he did not know why they need that much money in the Downtown Strategy Fund. Mr. Miller said that it comes from the excise sales tax; the roundabout is being funded by that fund. Councilmember Magazine said that he was willing to listen to other approaches. Councilmember Leckrone said that she had similar concerns. She understood that they were watching as they go forward. He asked Mr. Pock what he thought and what concerns he had. Mr. Pock said that this has been a great introduction to Fountain Hills and their budgeting process. He said that there is a lot of uncertainty, but he believes they have put together a budget that has a lot of flexibility. It is not that much more overall compared to this year. He said that it was heartening to see the TPT information and that a lot of their revenue is coming from businesses that are still operating in this condition. While they do not want to see this happen at all, it could not have happened at a better time of the year as far as revenue goes as they are going into the slower part of the year.He hoped that when they get the winter visitors back in the fall that they are up and running again, and back to the new normal. Councilmember Spelich said that most of his questions were answered when he met with Mr. Pock. He is taking more of a positive approach. He does not see this going into July. He said that while the majority of the town has been crushed, he has talked with managers of the major stores and their sales are up over 30%. Mr. Pock said that he would welcome a 30% increase; it will be interesting to see what happens.    Town Council Work Session of April 14, 2020 4 of 9 Mayor Dickey, referencing page 6, said that there was $1.3 million restricted for the HURF. She asked if that is in next year's budget, or if it is committed to a project not finished up yet. Mr. Pock said those funds are accumulated in the streets fund. That $1.3 million is after the expected projects and that fund balance would be available for next year's streets projects. Mayor Dickey asked if it was part of the $4.5 million figure. Mr. Pock said that $700,000 of it will be included in next year's budget. Mayor Dickey, referencing page 8, asked if they had made a decision to not spend any of the balance in the Environmental Fund. Mr. Miller said that they have been drawing down from that fund to pay for wash maintenance, and they continue to spend from this fund this year. They suspended the fee for this fiscal year, but any remaining funds will still be available for expending on items related to the Environmental Fund.    Mayor Dickey asked if the $1.2 million in the Facilities Replacement Fund includes the funding for the painting projects they are waiting to do this year. Mr. Pock said that there is painting of the exterior for Town Hall as well as the Community Center scheduled for next year.  Mayor Dickey said that she thought that the six month buffer was included in the Rainy Day Fund; she was not aware that any cities were expected to have six months of unassigned funds for emergencies. Mr. Miller said that most cities do not have a Rainy Day Fund set up the way they do. Mr. Pock said that the 20% figure is GFOA's best practice; to maintain 20% in UNASSIGNED funds. They also have the same type of recommendation to hold in reserve a "rainy day fund" so between the two they would be at 40%, which would give them about five months. Mr. Pock said that his one concern is that the way the Rainy Day Fund is currently set up only allows them to use half of it, so if their UNASSIGNED FUND balance was $0, they would only have access to $1.6 million.Mayor Dickey asked if that was something they should look at changing. Mr. Pock said that they could look at the restrictions. He likes the amount, but not so much the restrictions. FY21 PROJECTIONS Overall Budget Considerations - Mr. Pock said that this current situation is not a structural problem, like the great recession. This was basically a governmental response to a health crisis. It is not something they have encountered before. He thinks it is clear that they cannot stay this way for very long; he is hopeful they get back to some increased activity soon. He said that if they were back to normal by May or June, then they should be starting next year in July on good ground. Mr. Miller said, as he spoke of earlier, they are going into the budget process with all eyes open. Much of what they are doing, cities are doing--making modifications and tracking it for next year. He said that some are going to be hit harder than they will, but they have to react now because they have a lot of overhead costs. Many of the larger communities cannot act as nimbly as Fountain Hills can. Mr. Pock said that one thing he wants to make clear is that Budget Authority is not the same as Fund Balance. The Tentative Budget that will be considered on May 5, 2020, sets the maximum amount. He said that it would be great if they hit maximum revenues, but if they did, they do not have maximum expenditures programmed for next year and that is where the $1.7 million for contingency comes in. He said that they will have quarterly budget updates the second meeting of the month following the end of the quarter, so the first one will be the second meeting in October. Before that, though, he would be happy to send out month-end reports to Council to keep everyone informed.    Slide 14    Town Council Work Session of April 14, 2020 5 of 9  Slide 14 Mr. Pock said that in the past they have consistently underestimated revenues and overestimated expenditures; that is how they are able to add to the fund balance. This next year there were no revenues included for Copperwynd or Keystone. The $1.1 million is related to the $.03 rate increase. He said that they will be discussing user fees in the fall. Those fees would increase revenues slightly, but they were not included in the budget. OPERATING FUND REVENUES (Slide 15) Mr. Pock said that the methodology used is a combination of trend analysis that is used on prior year collections as well as forecasting formulas. They do not use either exclusively. EXPENDITURE CONSIDERATIONS (Slide 16) OPERATING FUND EXPENDITURES (Slide 17) TOWN COUNCIL EXPENDITURES (Slide 18) ADMINISTRATION EXPENDITURES (Slide 19) MUNICIPAL COURT EXPENDITURES GENERAL GOVERNMENT Mr. Pock said that this division pays for expenses like insurance, that is applied town wide.  PUBLIC WORKS EXPENDITURES (Slide 25) DEVELOPMENT SERVICES (Slide 27) This department consists of 9 full time equivalents (FTE's). He said that there is a large decrease in Contractual due to the face that they are no longer contracting out inspection services. If they do have services paid for to expedite services, the contractual inspectors will bill the developer directly and the Town is not involved. COMMUNITY SERVICES (Slide 29) This department consists of 20.5 FTE's and includes a supplement for a full-time groundskeeper as well as a slight increase in community service representative hours at the Community Center. The Maintenance and Repair line item is due to the new restrooms open at Fountain Park, Adero Trail and the Linear Park. These parks areas also affect the supplies line item. Capital Expenditures for this department are the result of two recommended supplements: 1) a UV System for the Splash Park at $35,000; and 2) a truck for the new groundskeeper at $25,000. The Contingency line item is in case they hold an event and there are more revenues than anticipated. This would allow them to spend that within their department. LAW ENFORCEMENT EXPENDITURES This item has a 5.1% increase at just under $4.7 million for patrol services, $68,000 budgeted for jail expenses and $21,000 animal control. The numbers for jail and animal control stay the same for next year; patrol services increased to $4.9 million. FIRE AND EMS EXPENDITURES    Town Council Work Session of April 14, 2020 6 of 9 This Contractual Services has a 3% increase, through their contract. Last year Fire Service was $3.55 million;p next year it is $3.65 million. Councilmember Spelich said that he mentioned during the Council Retreat that he was concerned with the contract with MCSO as far as the overtime they are paying and their staffing. He does not want to go into a lot of detail, but he would request that an executive session be held for further discussion of this item. Mr. Miller said that staff will set up a follow-up meeting. Councilmember Magazine said that there are some line items that it seems they should hold in abeyance, such as the metal detectors. He would prefer they do not spend any of those funds until after the end of the first quarter. Mr. Miller noted that even though these are all included in the budget, he will be working with staff to putting together some reductions within departments, if needed. Councilmember Magazine thanked Mr. Miller and Mr. Pock. Councilmember Brown complimented them on adding Internal Services to the budget process. He said that he would like to see it spread out a little, but the presentation has been excellent. Councilmember Tolis said that he sent a list of questions and Mr. Pock responded quickly and addressed them in a lot of his narrative. Right now with the uncertainty of the economy they need to focus on needs versus wants. He would like to see them sitting tight and not moving forward with extra expenditures until they know what is going to happen. He said that they may need to consider a freeze at the moment and not spend anything right now. He agreed that they needed to evaluate the contracts. Councilmember Scharnow said that in the big picture, they have three different areas where they have extra money, in terms of contingencies. Mr. Pock said that was correct. The $1.7 million in contingency, or any part of the fund balance. He reminded them that it is just the budget authority in case those resources are collected. Mr. Miller said that a good example is if the Town was to receive the Tourism and Sports Authority Grants. This gives them the authority to receive those grant monies and expend them; it is not actual money sitting in the bank. Councilmember Scharnow asked Mr. Pock if he had suggestions for changes. Mr. Pock said that on May 5 he will be bringing forward further discussion of changes to the financial policies to allow the ASSIGNED portion to become UNASSIGNED since they also have the Replacement Funds. He said that he does agree with the Rainy Day Fund and where it is, but he does not think that the restrictions are effective today as when they were first implemented. He said that he did not include any revisions to those restrictions in the current policy revision. He could draft something, but he would like to go forward on May 5 regarding the ASSIGNED balance and bring back other recommendations in the fall. Mayor Dickey asked if it was typical for municipalities to break down Internal Service Funds and charge departments. Mr. Miller said that it is commonly done for such things as copiers and mail rooms. He said that sometimes they even have facilities charges and utilities go back to each department.  Mayor Dickey, going back to Page 17, said that as they go forward she would like to have the message be that they have to approve a maximum amount, but they will not have all of the information by the deadline, so they are approving the authority to spend it, should things improve.    Town Council Work Session of April 14, 2020 7 of 9 Mr. Pock noted that any type of budget transfers would come to Council for approval to use contingency funds. SUPPLEMENTAL REQUESTS (Slide 34) FY21 CAPITAL IMPROVEMENT PROJECTS STORMWATER MANAGEMENT & DRAINAGE STREETS & SIDEWALKS PARKS & RECREATION TRAFFIC SIGNALS FACILITIES REPLACEMENT FUND CONTINGENCY TOTAL - $5.4 Million SUMMARY Mr. Pock said that they will have a $3.7 million fund balance, and adding in $1 million over the course of the year (from sales tax of 50% of construction), and the projects included in this presentation as CIP totally $3+ million, that will leave them a year-end fund balance at 06/30/21 of $1.6 million. Mr. Miller said that he and Mr. Pock have been talking about this and have heard the comments of concern. If the Town Council would support it, they would have a few key projects move forward, such as Panorama Drainage and the La Montana Roundabout, as well as the drainage issues at Golden Eagle Park. The other ones they would sit on and wait and see how things are tracking. They would leave them as they are, but not start on them until they have had their first quarterly meeting with Council.  Councilmember Spelich and Leckrone agreed. Councilmember Leckrone said that she thought the last time they talked that the Palisades median landscaping was going to be removed. Councilmembers agreed and all thanked the staff for a nice presentation. Councilmember Scharnow said that he agreed with everything. He said that at some point he would like to see them look at extending the left-hand turn lane at the Fountain Hills Blvd. and Palisades. Mr. Miller said that Mr. Weldy brought to his attention that based on the concerns raised, they will start doing some traffic counts there and get the initial work done. He said that the Town Engineer has money for very basic studies and they could then bring that back to the Pedestrian and Traffic Safety Subcommittee. Mayor Dickey said that she would hope to keep in the loop moving forward the shoulder paving for Fountain Hills Blvd. and also the fountain lighting that started this year. Mr. Miller said that he would agree. The Council has already committed to going forward and he would add the fountain lighting as the fourth project to move forward with. Mayor Dickey said that when they talk about the capital projects, it does not preclude the regular street maintenance. Mr. Miller said that they do not treat that as capital. The mill and overlays projects are done as part of their contract with MR Tanner. He said that a number of those streets that they do with the streets fund are capitalized. The difference is if they were able to identify what they needed to bond, they would put together a CIP with various services of funding to be paid for with bond proceeds and HURF revenues. REVENUE OPTIONS Mayor Dickey noted that any type of bonding or anything would have to wait until 2022. Any consideration for a primary property tax would have to be in 2022 in May.    Town Council Work Session of April 14, 2020 8 of 9 Mayor Dickey thanked everyone involved in the process.   4.ADJOURNMENT    MOVED BY Councilmember David Spelich (telephonically), SECONDED BY  Vice Mayor Mike Scharnow (telephonically) to adjourn.   Vote: 7 - 0 - Unanimously    The Budget Workshop held by the Fountain Hills Town Council on April 14, 2020, adjourned at        7:15 p.m.     TOWN OF FOUNTAIN HILLS ____________________________ Ginny Dickey, Mayor                ATTEST AND PREPARED BY: ______________________________  Elizabeth A. Burke, Town Clerk    Town Council Work Session of April 14, 2020 9 of 9 TOWN OF FOUNTAIN HILLS MINUTES OF THE REGULAR MEETING OF THE FOUNTAIN HILLS TOWN COUNCIL APRIL 21, 2020                  1.CALL TO ORDER AND PLEDGE OF ALLEGIANCE – Mayor Dickey    Mayor Dickey called the meeting of April 21, 2020, to order at 5:31 p.m. and led the Council and staff members in the Pledge of Allegiance.   2.MOMENT OF SILENCE    Mayor Dickey asked for a Moment of Silence.   3.ROLL CALL – Mayor Dickey Present: Mayor Ginny Dickey; Vice Mayor Mike Scharnow; Councilmember Sherry Leckrone (telephonically); Councilmember Art Tolis (telephonically); Councilmember Dennis Brown (telephonically); Councilmember Alan Magazine (telephonically); Councilmember David Spelich (telephonically) Staff Present: Town Manager Grady E. Miller; Town Attorney Aaron D. Arnson; Town Clerk Elizabeth A. Burke 4.REPORTS BY MAYOR, COUNCILMEMBERS AND TOWN MANAGER    Vice Mayor Scharnow reported that he attended a meeting of Valley Metro online last week. They had a budget review and some things are changing daily for them as well. Numbers reported were: Light Rail-down 57%; Express Rapid Transportation-down 90%; Buses-40% down in ridership; and Paratransit-down 70%. He said that one thing good for them is that they qualify for federal funding and they are looking for relief from the CARES Act. He also reported that the Noon Kiwanis and Town got together last Friday and Saturday and held a blood drive. They had four blood mobiles in the parking lot at Town Hall. He said that they restricted the number of donors to two at each time and only took appointments. They had 124 appointments and collected 106 units of blood. He thanked the Town for helping them out. He said tht the next regular blood drive will be on June 19-20 and they hope to be back in the Community Center. Councilmember Spelich thanked Saddlebrock, as he was told they catered a full Easter dinner to both fire stations and they also had deputies working on Easter to the restaurant for carry out. Mayor Dickey said that she took part in the Fountain Hills Virtual Cabaret and she welcomed their new Executive Director Mike Wallot. She reported that she did an interview with KJAZ about how Fountain Hills was doing during the pandemic. She reported on the Care Card Program which helps to keep seniors connected, and she thanked Ms. Goodwin and her staff and volunteers for those efforts. She said that she was also able to squeeze in information about the 50th Anniversary celebration of the fountain. Mayor Dickey reported that the Arizona Highways TV show is doing a program on "going above and beyond" featuring the Grand Canyon state's cities and towns. She also thanked staff for participating in the #lightAZBlue at Town Hall and encouraged others to join in lighting a blue light for the Governor's initiative to honor healthcare workers. She reported that they continue to participate in the biweekly calls with the Governor's Office and Senator Sinema calls every Thursday. They participated in a Town Hall with Representative Schweikert and leaders from every corner of the state are uniting.   A.PROCLAMATION designating April 21, 2020, as Earth Day       Mayor Dickey reported that Vicky Derksen and Fountain Hills Live did an Earth Day Virtual Event, sharing the golden anniversary this year with the Fountain's 50th. She then read the proclamation declaring Earth Day.   5.CONSENT AGENDA ITEMS All items listed on the Consent Agenda are considered to be routine, noncontroversial matters and will be enacted by one motion of the Council. All motions and subsequent approvals of consent items will include all recommended staff stipulations unless otherwise stated. There will be no separate discussion of these items unless a councilmember or member of the public so requests. If a councilmember or member of the public wishes to discuss an item on the Consent Agenda, he/she may request so prior to the motion to accept the Consent Agenda or with notification to the Town Manager or Mayor prior to the date of the meeting for which the item was scheduled. The items will be removed from the Consent Agenda and considered in its normal sequence on the agenda.    MOVED BY Vice Mayor Mike Scharnow, SECONDED BY Councilmember Dennis Brown (telephonically) to approve the Consent Agenda Items 5-A through 5-E.  Vote: 7 - 0 Passed - Unanimously   A.CONSIDERATION OF approving the meeting minutes of the Regular Meeting of April 7, 2020.     B.CONSIDERATION OF the Amended Plat of Parcel "B" at Firerock, a Condominium, located south of Shea Boulevard on the east side of E. Firerock Country Club Drive.      C.CONSIDERATION OF Approval for the Four Peaks Park Restroom Renovations by JP and Sons Contracting, Inc through the Job Order Master Agreement, Contract No. 2019-006P2.      D.CONSIDERATION OF approving two (2) Special Event Liquor License applications for the River of Time Museum for fundraising dinners to be held in the Fountain Hills Community Center on May 27, 2020 and August 8, 2020.      E.CONSIDERATION OF approving an amendment to PSA 2019-077, changing the terms from a contract of $30,000 per year for 5 years to a contract amount not to exceed $50,000 per year for 3 years for the Home Delivered Meals Program.      6.REGULAR AGENDA   A.CONSIDERATION OF approving the Professional Services Agreement with Black & Veatch, Contract No. 2020-080 and the associated budget transfer.        Regular Meeting of April 21, 2020 Page 2 of 6  Mr. Miller said that the Town Council has had some discussion on this item before, during the Retreat. He then asked Community Services Director Rachael Goodwin to come forward and present the information. Ms. Goodwin gave a PowerPoint presentation on this item which addressed: THE FOUNTAIN, THE LINER AND THE LAKE Ms. Goodwin said they are at a point in time where they need an analysis done of the overall system and its many components. She said that they have over 100 million gallons and 30 acres of water with a closed-loop aeration system. It is an unground system with a liner, and the water is only discharged for irrigation so it is becoming more and more salty. It is also an ecosystem for roots and fish and other animals. She said that they had to bring in specific vendors to address the system and receive proposals. They are told that the liner is good for 20-30 years, and this year is the 20th year. She said that the current condition is unknown, although there are no indications that there is a problem. AN ENGINEERING ASSESSMENT She said that if they are going to decide how to fund, possibly through bonding, they need to know the needs and develop a timeline. She said that this in an investment in the Town's namesake that will help them plan for the future and not have to be reactionary. She said that they are looking to contract with Black & Veatch who was part of the 2000 liner replacement as well, so they are familiar with some of the issues faced before. The total contract is $140,000, which includes an estimated $120,000 for the project and a $20,000 contingency. Mayor Dickey asked for questions at this time. Councilmember Brown asked when the analysis would begin if it was approved. Ms. Goodwin said that due to the current situation of COVID-19, they are hoping to undertake it this summer moving into the fall. Some of it would coincide with other projects such as overseeding of the park, liner testing and irrigation. Councilmember Brown asked if the staff has decided what they would do if they find that the liner is at the last year of its life. Ms. Goodwin said that they have played the "what if" game. This analysis would identify the steps needed and potential options. Mr. Miller said that at that point they will have had some engineers looking at this in a serious fashion. They will have to identify the funding source. He has talked with the Finance Director and there are creative things they could do if it was an emergency, but this will cover far beyond the liner. It will analyze all the different systems out there and provide a pathway. He said that they do believe there is a little more life left in the liner. Councilmember Brown asked if the Sanitary District was going to help. Ms. Goodwin said that they have been involved in the discussion up to now; they will be part of it. They are aware of the project. She spoke with their Manager last week, and she has expressed an interest in being part of the discussions and solution.   Regular Meeting of April 21, 2020 Page 3 of 6  Councilmember Tolis said that he feels they should go with some assumptions that they are dealing with 50-year old equipment and expect it will need to be replaced. He said that he would rather see them putting together a task force, including the Sanitary District. He said that they need to understand what the vision of Fountain Park is. They need to identify what they will pay for and how, rather than throw $120,000 to $140,000 toward the problem. He would like to see more planning and visioning taking place. Mr. Miller said that they are looking for a considerable amount of public involvement as part of the process. In addition to the analysis, they will also be looking at the water irrigation the park. It is highly salty and they need a storage system. They want the engineers to look at variable speed drive system, which they believe will help with the wear and tear and give them more life. He said that the bottom line is that it will be a very comprehensive evaluation, and they will be bringing in the public. They will need the community behind this. At some point, when it comes back to Council, the Council would put together a citizen committee to figure out the logistics in the plan and decide on the sequential order and funding. Councilmember Tolis said that he would like to have some visioning before the consultants come in.He said that they may decide they want to have additional fountains and something more in line of a Bellagio venue. They could have low-ground speakers with nice music, something that the people would enjoy. Vice Mayor Scharnow said that he agrees with some of that, but it seems to him that the study would be the baseline, a place to start in terms of what they can do, and then go into a visioning process. He said that once they get into discussing ideas about making the park more than what it is, tends to get into the controversial area. Right now they need an in-depth study. They would be putting the cart before the horse. He said that they have been down that route. Infrastructure was a term thrown out during the property tax debate. This is a prime example of streets, drainage issues, Panorama, parks, etc. It all costs money; they need a firm grasp on what it is going to cost. Maybe the Sanitary District would help fund once they get some firm numbers since they all serve the same people. Councilmember Brown said that he can see both sides, but he believes that they need to go ahead and find out what the study shows to do everything at this point in time so they can plan for the money they are going to have to assemble. He said that a perfect example would be to shut the fountain off and see how the people felt. The baseline is they have to know what they are dealing with so they can plan for the future.    MOVED BY Vice Mayor Mike Scharnow, SECONDED BY Councilmember Sherry Leckrone (telephonically) to approve the Professional Services Agreement with Black & Veatch, Contract No. 2020-080 and the associated budget transfer.  Vote: 6 - 1 Passed  NAY: Councilmember Art Tolis (telephonically)   7.COUNCIL DISCUSSION/DIRECTION to the TOWN MANAGER Item(s) listed below are related only to the propriety of (i) placing such item(s) on a future agenda for action, or (ii) directing staff to conduct further research and report back to the Council. Regular Meeting of April 21, 2020 Page 4 of 6    Staff was asked about the signs regarding the roads. Mr. Miller said that they are starting to do their pavement management program. Last year Council provided input that they wanted to get as much of the downtown improvements as possible. They started working on street closures this week. He is anticipating that by the end of the week, or early next week, they will have the new streets in place. He said that they will also be bringing forth a contract for the roundabout. He said that they cannot do some of that work until later, so once that is in they will do some finishes so it has a finished look with the next phase next year. Councilmember Tolis asked if it would be possible to have staff share with the Council via e-mail an update on the project happening downtown. He would like to review the design concept for the pedestrian walkway sa he has had a lot of questions coming up in the public forum, and also how it ties in with the Keystone project. Mr. Miller said that they would do that, and in May they will be having their Ten Year Pavement Management Program presentation.   8.ADJOURNMENT    MOVED BY Vice Mayor Mike Scharnow, SECONDED BY Councilmember Sherry Leckrone (telephonically) to adjourn.  Vote: 7 - 0 Passed - Unanimously    The Regular Meeting of the Fountain Hills Town Council held April 21, 2020, adjourned at 6:11 p.m.     TOWN OF FOUNTAIN HILLS ____________________________ Ginny Dickey, Mayor ATTEST AND PREPARED BY: ______________________________ Elizabeth A. Burke, Town Clerk Regular Meeting of April 21, 2020 Page 5 of 6 CERTIFICATION I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Regular Meeting held by the Town Council of Fountain Hills in the Town Hall Council Chambers on the 21st day of April, 2020. I further certify that the meeting was duly called and that a quorum was present. DATED this 5th day of May, 2020. _________________________________ Elizabeth A. Burke, Town Clerk Regular Meeting of April 21, 2020 Page 6 of 6 ITEM 6. B. TOWN OF FOUNTAIN HILLS STAFF REPORT    Meeting Date: 05/05/2020 Meeting Type: Town Council Regular Meeting Agenda Type: Consent Submitting Department: Public Works Prepared by: Randy Harrel, Town Engineer Staff Contact Information: Justin Weldy, Public Works Director Request to Town Council Regular Meeting (Agenda Language):  CONSIDERATION OF  Resolution 2020-25, abandonment of the 10' Public Utility and Drainage Easement at the rear and east side of Plat 604A, Block 1, Lot 27 (15014 Palomino Blvd.), as recorded in Book 165, Page 16, records of Maricopa County, Arizona. (EA 2020-02) Staff Summary (Background) Applicant/Owner:  Genet Elliott-Ide Property Location: 15014 E. Palomino Blvd. The applicant has requested to abandon the pre-incorporation 10' Public Utility and Drainage Easement on the northerly (rear) and easterly sides of Plat 604A, Block 1, Lot 27. The applicant has verbally indicated a desire to enclose his rear yard to keep out javelina and other animals. All the public utilities have approved the abandonment of this easement.  Staff has reviewed the site to determine any on-site drainage issues in addition to the town's general interest in the easement. There is no need for the Town to retain the drainage easements proposed to be abandoned, with the understanding that the owners of Lot 27 are required to pass the developed flows generated by the upstream lots across their property. Related Ordinance, Policy or Guiding Principle N/A Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) Staff recommends adoption of Resolution 2020-25. SUGGESTED MOTION MOVE to adopt Resolution 2020-25. Attachments Vicinity Map  Aerial Photo Map  Exhibit A Map  Res 2020-25  Form Review Inbox Reviewed By Date Town Clerk Elizabeth A. Burke 04/22/2020 02:00 PM Development Services Director John Wesley 04/22/2020 02:16 PM Town Attorney Aaron D. Arnson 04/22/2020 02:25 PM Town Manager Grady E. Miller 04/22/2020 02:42 PM Form Started By: Randy Harrel Started On: 04/16/2020 05:31 PM Final Approval Date: 04/22/2020  BEELINE H W Y SHEA BLVDPALISADES BLVDSAGUARO BLVD SAGUARO BLVDPALISA D E S B L V D PALISAD E S B L V D SA G U A R O B L V DFOUNTAIN HILLS BLVDMcDOWELL MO U N T A I N R D FOUN TA IN H I L L S B LVDSUNRIDGE DREL L A G O B L V D AVENU E O F T H E FOUNT A I N S PANORAMA DRFIREROCK COUNTRYCLUB DREAG L E M O U N T A I N PKW YCRESTVIEW DRPALO M I N O B L V D SIERRA M A D R E GRANDE BLV D G O L D E N E A G L E B L V D E AG L E R I D G E D R E A G L E R I D G E D R VICINITY MAP TOWN OF FOUNTAIN HILLS NORTH SCALE: 1" = 3500'All that i s A r izonaFOUN T A IN HIL L S TOWN OFINC. 1989TOWN HALL DEVELOPMENT SERVICES DEPARTMENT SCOTTSDALE McDOWELL MOUNTAIN PARK FORT McDOWELL YAVAPAI NATIONSALT RIVER PIMA MARICOPA INDIAN COMMUNITY TOWN BOUNDARY SCOTTSDALE 15014 E PALOMINO DR DEVELOPMENT SERVICESAll that is Ari z o na FO U NTAIN HILLST O W N OF INC. 1989AERIAL PHOTO MAPPLAT 604-A, BLOCK 1LOT 2715014 E PALOMINO DRLEGEND:PALOMINO DRABANDON 10'P.U.E. & D.E. EXHIBIT "A"TOWN OF FOUNTAIN HILLSEASEMENT ABANDONMENTLOT 27 RESOLUTION 2020-25 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, ABANDONING WHATEVER RIGHT, TITLE, OR INTEREST IT HAS IN A 10’ PUBLIC UTILITY AND DRAINAGE EASEMENT LOCATED AT THE NORTHERLY (REAR) AND EASTERLY SIDE OF PLAT 604A, BLOCK 1, LOT 27, (15014 EAST PALOMINO BLVD), FOUNTAIN HILLS, ARIZONA, AS RECORDED IN THE OFFICE OF THE COUNTY RECORDER OF MARICOPA COUNTY, ARIZONA, RECORDED IN BOOK 165, PAGE 16 OF MAPS RECITALS: WHEREAS, the Mayor and Council of the Town of Fountain Hills (the “Town Council”), as the governing body of real property located in the Town of Fountain Hills (the “Town”), may require the dedication of public streets, sewer, water, drainage, and other utility easements or rights-of-way within any proposed subdivision; and WHEREAS, the Town Council has the authority to accept or reject offers of dedication of private property by easement, deed, subdivision, plat or other lawful means; and WHEREAS, all present utility companies have received notification of the proposed abandonment. ENACTMENTS: NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, as follows: SECTION 1. That the 10’ public utility and drainage easement located at the northerly (rear) and easterly side of Plat 604A, Block 1, Lot 27, (15014 East Palomino Blvd), Fountain Hills, as recorded the Office of the County Recorder of Maricopa County, Arizona, Book 165 of Maps, Page 16, hereby declared to be abandoned by the Town. Certain lots within this subdivision are subject to lot-to-lot drainage runoff. The property owner is required to pass the developed flows generated by the upstream lots across their property. SECTION 2. That this Resolution is one of abandonment and disclaimer by the Town solely for the purpose of removing any potential cloud on the title to said property and that the Town in no way attempts to affect the rights of any private party to oppose the abandonment or assert any right resulting there from or existing previous to any action by the Town. PASSED AND ADOPTED BY the Mayor and Council of the Town of Fountain Hills, this 5th day of May, 2020. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: Ginny Dickey, Mayor Elizabeth A. Burke, Town Clerk RESOLUTION 2020-25 PAGE 2 REVIEWED BY: APPROVED AS TO FORM: Grady E. Miller, Town Manager Aaron D. Arnson Town Attorney ITEM 6. C. TOWN OF FOUNTAIN HILLS STAFF REPORT    Meeting Date: 05/05/2020 Meeting Type: Town Council Regular Meeting Agenda Type: Consent Submitting Department: Administration Prepared by: Grady E. Miller, Town Manager Staff Contact Information: Grady E. Miller, Town Manager Request to Town Council Regular Meeting (Agenda Language):  CONSIDERATION OF  adopting Resolution 2020-29 to approve Amendment No. 1 to the Cooperation Agreement between the Town of Fountain Hills and Maricopa County for participation in the Community Development Block Grant (CDBG) Program. Staff Summary (Background) In 2017 the Town of Fountain Hills joined the Urban County Community Development Block Grant Program (CDBG).  The program is intended for cities with less than 50,000 in population in Maricopa County that are not eligible to receive CDBG funding directly from the U.S. Department of Housing and Urban Development (HUD).  Maricopa County annually receives $2.5 million or more from HUD for this program.   In order to officially participate in the Urban County CDBG program, the Town of Fountain Hills is required to execute a Cooperation Agreement with Maricopa County every three years. Since the term of the first Agreement will end on June 30, 2020, it is necessary for the Town Council to approve Amendment No. 1 to the Cooperation Agreement with Maricopa County. One of the key benefits of participating in the program is that Maricopa County staff will handle all the paperwork, filing, and reporting requirements that are typically required of cities over 50,000 which directly receive CDBG grant funds from HUD.  Currently, much of the allocation from the CDBG funding is going towards the homelessness issue in the region.  As part of the partnership with Maricopa County, County staff will be responsible for developing and implementing a municipal anti-poverty strategy and housing programs which will not obligate the town. There may also be additional CDBG funding from time to time that may be available to the Fountain Hills through this program to help with other human service needs in our community. Related Ordinance, Policy or Guiding Principle N/A Risk Analysis N/A N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) Staff recommends Council adoption of the resolution.   SUGGESTED MOTION MOVE to adopt Resolution 2020-29. Attachments Maricopa County Notification Letter  Res. 2020-29  Amendment 1 to IGA  Agreement  Form Review Inbox Reviewed By Date Finance Director David Pock 04/22/2020 12:52 PM Town Attorney Aaron D. Arnson 04/22/2020 12:56 PM Town Manager (Originator)Grady E. Miller 04/22/2020 01:47 PM Town Attorney Aaron D. Arnson 04/22/2020 02:39 PM Town Manager (Originator)Grady E. Miller 04/22/2020 02:42 PM Form Started By: Grady E. Miller Started On: 04/22/2020 11:28 AM Final Approval Date: 04/22/2020  Bruce Liggett, Director of Human Services w 234 N. Central Avenue, Suite 3302 w Phoenix, AZ 85004 Maricopa County Human Services Department Housing and Community Development Division April 6, 2020 Mayor Ginny Dicky Sent U.S Mail and email Town of Fountain Hills 16705 E. Ave. of the Fountains Fountain Hills, AZ 85268 RE: NOTIFICATION OF OPPORTUNITY TO BE INCLUDED IN OR EXCLUDED FROM THE MARICOPA COUNTY COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) PROGRAM Dear Mayor Dicky, The success of the Community Development Block Grant (CDBG) program over the past 45 years has been built on shared housing and community development goals, common expectations, communication and fiscal responsibility. Fountain Hills has the option to elect having its population continue to be included in the Maricopa County CDBG Program. The decision will be effective for the three-year period of FY 2021 through FY 2023. Participation in the Maricopa County CDBG program does not ensure or commit funding for Fountain Hills. All final funding decisions are made by the Maricopa County Board of Supervisors. Fountain Hills currently has a Cooperation Agreement with Maricopa County for your municipality’s population to be included in the County CDBG program. To meet HUD deadlines the County needs to receive the documents listed below indicating your municipality’s decision to be included or excluded from the County CDBG program no later than June 15, 2020. Included in County CDBG: If your municipality chooses to participate in the next three-year Cooperation Agreement for Fiscal Years 2021-22, 2022-23, and 2023-24, the County will need a resolution from your municipality’s governing body authorizing the approval Cooperation Agreement and an amendment to the Agreement which will be forwarded to the Fountain Hills CDBG contact. Excluded from County CDBG: A letter confirming your municipality’s exclusion from the County CDBG program is requested. Please be aware that units of government that are included in the Urban County CDBG program are not eligible to apply for grants under the Small Cities or State CDBG Programs while participating in the Urban County's CDBG Program. Also, by remaining part of the Urban County, included units of government are participants in the Maricopa HOME Consortium Program. This does not preclude units of government from applying for State HOME Funds. Human Services Department w 234 N. Central Avenue, 3rd Floor w Phoenix, AZ 85004 Maricopa County Human Services Department Housing and Community Development Division Please send your response and/or the required document(s) listed above to Rachel Milne, 234 N. Central Ave. 3rd floor, Phoenix, Arizona 85004 or Rachel.Milne@maricopa.gov. If you have any questions regarding the Cooperative Agreement or the Urban County CDBG Program, please contact Assistant Director Rachel Milne at (602) 372-1528. Sincerely, Bruce Liggett Director c: Grady Miller, Town Manager Rachel Milne, Housing and Community Development Assistant Director RESOLUTION NO. 2020-29 A RESOLUTION OF THE MAYOR AND TOWN COUNCIL OF FOUNTAIN HILLS, ARIZONA, APPROVING THE FIRST AMENDMENT TO A COOPERATION AGREEMENT WITH MARICOPA COUNTY, ARIZONA, RELATING TO CONTINUED PARTICIPATION IN THE COMMUNITY DEVELOMENT BLOCK GRANT PROGRAM. RECITALS: WHEREAS, the Town entered into a Cooperation Agreement (the “Agreement”) with Maricopa County, a political subdivision of the State of Arizona (the “County”), for participation in the Community Development Block Grant Program on June 30, 2017; and WHEREAS, the Town and the County desire to continue its participation with Maricopa County for the next period of performance for the federal Fiscal Years 2021-22, 2022-23, and 2023-24. ENACTMENTS: NOW THEREFORE BE IT RESOLVED BY THE MAYOR AND TOWN COUNCIL OF FOUNTAIN HILLS as follows: SECTION 1. The recitals above are hereby incorporated as if fully set forth herein. SECTION 2. The Town, through its Mayor and Council, hereby approves the Amendment to the Agreement (the “First Amendment”) in substantially the form attached hereto as Exhibit A. SECTION 3. The Mayor, the Town Manager, the Town Clerk and the Town Attorney are hereby authorized and directed to cause the execution of the First Amendment and to take all steps necessary to carry out the purpose and intent of this Resolution. PASSED AND ADOPTED by the Mayor and Council of the Fountain Hills, Maricopa County, Arizona, this 5th day of May, 2020. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: ___________________________________ __________________________________ Ginny Dickey, Mayor Elizabeth A. Burke, Town Clerk REVIEWED BY: APPROVED AS TO FORM: ____________________________________ __________________________________ Grady E. Miller, Town Manager Aaron D. Arnson, Town Attorney RESOLUTION NO. 2020-29 PAGE 2 EXHIBIT A TO RESOLUTION NO. 2020-29 [FIRST AMENDMENT TO COOOPERATION AGREEMENT FOR CONTINUED PARTICIPATION IN THE COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) PROGRAM WITH MARICOPA COUNTY] See following pages. CONTRACT NO. C-22-17-065-3-01 Amendment 1 1 AMENDMENT NO. 1 TO THE COOPERATION AGREEMENT BETWEEN MARICOPA COUNTY ADMINISTERED BY ITS HUMAN SERVICES DEPARTMENT AND THE TOWN OF FOUNTAIN HILLS I. Maricopa County (“County”) by and through the Maricopa County Human Services Department and the Town of Fountain Hills (“Town”) entered into a non-financial three (3) year Cooperation Agreement (“Agreement”) on or about August 23, 2017. The effective period of the Agreement was federal fiscal years 2018, 2019, and 2020. The purpose of the Agreement was to establish the Town’s participation in U. S. Department of Housing and Urban Development’s (HUD) Community Development Block Grant (CDBG) Entitlement, HOME Investment Partnerships Program (HOME), Emergency Solutions Grants (ESG), and other HUD-related programs . The County and the Town are collectively referred to as the “Parties.” II. The Parties wish to amend the Agreement as follows: A. Renew the Agreement under the automatic renewal clause in Paragraph 3 for an additional three years , federal fiscal years 2021, 2022, and 2023. B. In accordance with HUD Community Planning and Development Notice CPD-20- 03 issued March 9, 2020: 1. Delete paragraph 5 in its entirety and substitute it with the following: The County and the Municipality will take all actions necessary to assure compliance with the County’s certification under Section 104 (b) of Title I of the Housing and Community Development Act of 1974, as amended, that the grant will be conducted and administered in conformity with Title VI of the Civil Rights Act of 1964 and the Fair Housing Act and will affirmativ ely further fair housing. The Parties also will comply with Section 109 of Title I of the Housing and Community Development Act of 1974, as amended, which incorporates Section 504 of the Rehabilitation Act of 1973 of Title II of the Americans with Disabilities Act , the Age Discrimination Act of 1975, and Section 3 of the Housing and Urban Development Act of 1968, as amended, as well as, the Americans with Disabilities Act of 1990 and all other applicable laws. III. This Amendment may be executed in multiple counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement. This Amendment may be executed by facsimile or electronic (.pdf) signature and a facsimile or electronic (.pdf) signature shall constitute an original for all purposes. CONTRACT NO. C-22-17-065-3-01 Amendment 1 2 IV. The Agreement is amended to incorporate the changes contained in this Amendment No. 1. All other terms and conditions of the Agreement remain the same and in full force and effect. V. This Amendment No. 1 shall be effective on the date of final approval and signature by the Parties. VI. The terms of the Agreement as amended are fully authorized under state and local law and provide the County with the authority to undertake, or assist in undertaking, essentia l community renewal and lower-income housing assistance activities. IN WITNESS, the Parties have approved and signed this Agreement: APPROVED BY: THE TOWN OF FOUNTAIN HILLS APPROVED BY: MARICOPA COUNTY ___________________________________ Mayor Ginny Dickey ____________________________________ Chairman, Board of Supervisors Attested to: Town Clerk Date Attested to: Clerk, Board of Supervisors Date IN ACCORDANCE WITH A.R.S. §§ 9-240 and 11-952, THIS AMENDMENT NO. 1 HAS BEEN REVIEWED BY THE UNDERSIGNED ATTORNEY WHO HAS DETERMINED THIS AMENDMENT NO. 1 IS PROPER IN FORM AND WITHIN THE POWERS AND AUTHORITY GRANTED TO THE TOWN OF FOUNTAIN HILLS UNDER THE LAWS OF THE STATE OF ARIZONA. APPROVED AS TO FORM: Attorney for the Town Date IN ACCORDANCE WITH A.R.S. §§ 11-201, 11-251, AND 11-952, THIS AMENDMENT NO. 1 HAS BEEN REVIEWED BY THE UNDERSIGNED ATTORNEY WHO HAS DETERMINED THIS AMENDMENT NO. 1 IS PROPER IN FORM AND WITHIN THE POWERS AND AUTHORITY GRANTED TO MARICOPA COUNTY UNDER THE LAWS OF THE STATE OF ARIZONA. APPROVED AS TO FORM: Deputy County Attorney Date A COOPERATION AGREEMENT BETWEEN THE COUNTY OF MARICOPA AND PARTICIPATING MUNICIPALITY FOR A COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM THIS AGREEMENT is made and entered into this gj day of QMY^2017 by and between the County of Maricopa,a political subdivision of the State of Arizona, hereinafter called "County",and the Town of Fountain Hills,located in the County of Maricopa,hereinafter called "Municipality". WITNESSETH Whereas two laws have been enacted,Public Law 93-383,the Housing and Community Development Act of 1974,Title I as amended,and Public Law 101-625, HOME Investment Partnership Act at Title II of the Cranston-Gonzales National Affordable Housing Act of 1990,as amended;hereafter called "the Acts";and Whereas the County,as an "Urban County "as that term is used in the Acts,is eligible to receive funds under the Acts,has final responsibility for selecting Community Development Block Grant (CDBG), HOME Investment Partnerships Program (HOME) and Emergency Solutions Grant (ESG)activities,and is authorized to undertake or to assist in the undertaking of essential community development and housing assistance activities which shall be funded from annual CDBG,HOME and ESG grants from federal Fiscal Years 2018,2019,2020 appropriations and from any program income generated from the expenditure of such funds,and Whereas the CDBG,HOME and ESG regulations issued pursuant to the Acts provide that qualified urban Counties must submit a Consolidated Plan and Annual Action Plans hereafter called "Plan"or "Plans",and Consolidated Annual Performance and Evaluation Reports (CAPERs)to the U. S.Department of Housing and Urban Development (HUD) for use of funds and that cities and towns within the metropolitan area not qualifying as metropolitan cities may join the County in said Plans and CAPERs and thereby become a part of a more comprehensive Urban County effort. NOW THEREFORE,the County and Municipality agree as follows: 1.This Agreement shall cover the CDBG Entitlement program,the HOME Investment Partnership (HOME)and Emergency Solutions Grants (ESG) Programs. \\HSD-S-STORAGE\cornmonS\Contracts-Agenda:;\Dept ItemolCommunity DeuelopmenliCDBG Coop Agreements\C-22-17-065-3-OQ Fountain Hills\Fountain Hills Coop Agreement incorp 2001 4 and 201 7 ITEM 7. A. TOWN OF FOUNTAIN HILLS STAFF REPORT    Meeting Date: 05/05/2020 Meeting Type: Town Council Regular Meeting Agenda Type: Regular Agenda Submitting Department: Administration Prepared by: David Pock, Finance Director Staff Contact Information: David Pock, Finance Director Request to Town Council Regular Meeting (Agenda Language):  CONSIDERATION OF adopting Resolution 2020-22 of the Mayor and Council of the Town of Fountain Hills, Arizona, setting forth the Tentative Budget and establishing the maximum budget amount for the Town of Fountain Hills for the fiscal year beginning July 1, 2020, and ending June 30, 2021. Staff Summary (background) The proposed fiscal year 2020-21 budget was presented to the Town Council at the budget workshop on April 14, 2020. The total proposed expenditure for all funds, as revised per Council's direction, is $33.9 million. Resolution 2020-22 establishes $33.9 million as the maximum amount of expenditures for Fiscal Year 20-21. Subsequent to approval of this Resolution, changes to the budget can be made within line items; however, the total amount cannot exceed $33.9M.   Due to the uncertainty relating to the COVID-19 pandemic and its effects on the economy, the proposed budget contains $1.7M in contingency expenditure authority for the General Fund. This contingency provides the Town with flexibility in the case of unforeseen events, such as emergency infrastructure repairs due to a storm. However, contingency can only be used if there are adequate financial resources available. Quarterly budget updates, including revenue collections and expenditures, will be provided to Council during the second meeting of the month following the end of each quarter. Related Ordinance, Policy or Guiding Principle A.R.S. 42-17102 Risk Analysis If not approved, the Town will not be in compliance with State Statute. Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) Adoption of Resolution 2020-22. Adoption of Resolution 2020-22. SUGGESTED MOTION MOVE to adopt Resolution 2020-22. Attachments RES2020.22 Tentative Budget  Exhibit A  PowerPoint  Form Review Inbox Reviewed By Date Finance Director (Originator)David Pock 04/22/2020 01:25 PM Town Attorney Aaron D. Arnson 04/22/2020 01:51 PM Town Manager Form Started By: David Pock Started On: 04/20/2020 01:34 PM RESOLUTION 2020-22 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, SETTING FORTH THE TENTATIVE BUDGET AND ESTABLISHING THE MAXIMUM BUDGET AMOUNT FOR THE TOWN OF FOUNTAIN HILLS FOR THE FISCAL YEAR BEGINNING JULY 1, 2020, AND ENDING JUNE 30, 2021 RECITALS: WHEREAS, pursuant to the provisions of the laws of the State of Arizona, the Mayor and Council of the Town of Fountain Hills (the “Town Council”) are required to adopt a budget for each fiscal y ear ; and WHEREAS, in accordance with ARIZ. REV. STAT. § 42-17102, the Town Manager has prepared, and filed with the Town Council, the Town Manager’s budget estimates for the fiscal year beginning July 1, 2020, and ending June 30, 2021. ENACTMENTS: NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF FOUNTAIN HILLS, as follows: SECTION 1. The recitals above are hereby incorporated as if fully set forth herein. SECTION 2. The statements and schedules attached hereto as Exhibit A and incorporated herein by reference are hereby adopted as the Town’s official tentative budget for the fi scal year beginning July 1, 2020, and ending June 30, 2021, including the establishment of the maximum budget amount for such fiscal year in the amount of $33,901,492. SECTION 3. Upon approval of the Town Council, the Town Manager or designee shall publish in the official Town newspaper once a week for two con secutive weeks (i) the official tentative budget and (ii) a notice, in the form attached as Exhibit B and incorporated herein by reference, of the public hearing of the Town Council to hear taxpayers and make tax levies at designated times and places. The notice shall include the physical addresses of the Fountain Hills Town Hall, the Fountain Hills branch of the Maricopa County Library and the Town website where the tentative budget may be found. SECTION 4. The Town Manager or designee shall, no later than seven business days after the date of this Resolution, (i) make available at the Fountain Hills Town Hall and the Fountain Hills branch of the Maricopa County Library a complete copy of the tentative budget, and (ii) post the tentative budget in a prom inent location on the Town’s website. SECTION 5. The Mayor, the Town Manager, the Town Clerk, and the Town Attorney are hereby authorized and directed to take all steps necessary to carry out the purpose and intent of this Resolution. RESOLUTION NO. 2020-22 PAGE 2 PASSED AND ADO PTED BY the Mayor and Council of the Town of Fountain Hills, Arizona, this 5th day of May, 2020. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: Ginny Dickey , Mayor Elizabeth A. Burke, Town Clerk REVIEWED BY: APPROVED AS TO FORM: Grady E. Miller, Town Manager Aaron D. Arnson, Pierce Coleman PLLC Town Attorney EXHIBIT A TO RESOLUTION 2020-22 [Tentative Budget] See following pages. EXHIBIT B TO RESOLUTION 2020-22 [Notice] See following page. Town of Fountain Hills Notice of Public Hearing Final Budget Adoption and Tax Levy On June 2, 2020, beginning at 5:25 p.m. in the Town Hall Council Chambers, 16705 E. Avenue of the Fountains, Fountain Hills, Arizona 85268, public hearings will be held to allow members of the public to appear and testify or make inquiries regarding Fiscal Year 20 20-21 Budgets for (i) the Town of Fountain Hills, (ii) the Eagle Mountain Community Facilities District Board, and (iii) the Cottonwoods Maintenance District Board, which will include fee increases or new fees . On June 16, 2020, beginning at 5:25 p.m. in the Town Hall Council Chambers, 16705 E. Avenue of the Fountains, Fountain Hills, Arizona 85268, the Eagle Mountain Community Facilities District Board and the Cottonwoods Maintenance District Board will adopt their property tax levies for the Fiscal Y ear beginning July 1, 2020, and ending June 30, 2021. A complete copy of the each of the budgets for the Fiscal Year 20 20-21 may be viewed at: 1. Fountain Hills Town Hall (2nd floor), 16705 E. Avenue of the Fountains, Fountain Hills, Arizona 85268 2. Fountain Hills Maricopa County Branch Library, 12901 LaMontana Drive, Fountain Hills, Arizona 85268 3. The Town of Fountain Hills website at: www.fh.az.gov Anyone wishing to respond may do so in person at the meetings or in writing prior to the date of the June 2, 2020, and June 16, 2020, meetings by delivering the written comments to the Town Clerk’s office, 16705 E. Avenue of the Fountains, Fountain Hills, AZ 85268. 4/19 Arizona Auditor General's Office Official City/Town Budget Forms OFFICIAL BUDGET FORMS Town of Fountain Hills Fiscal Year 2021 4/19 Arizona Auditor General's Office Official City/Town Budget Forms Schedule G—Full-Time Employees and Personnel Compensation Schedule C—Revenues Other Than Property Taxes Schedule D—Other Financing Sources/(Uses) and Interfund Transfers Schedule E—Expenditures/Expenses by Fund Schedule F—Expenditures/Expenses by Department (as applicable) Town of Fountain Hills TABLE OF CONTENTS Fiscal Year 2021 Schedule A—Summary Schedule of Estimated Revenues and Expenditures/Expenses Schedule B—Tax Levy and Tax Rate Information 4/19 Arizona Auditor General's Office SCHEDULE A Official City/Town Budget Forms Fiscal Year General Fund Special Revenue Fund Debt Service Fund Capital Projects Fund Permanent Fund Enterprise Funds Available Internal Service Funds Total All Funds 2020 Adopted/Adjusted Budgeted Expenditures/Expenses* E 1 16,941,430 8,482,065 2,378,862 3,829,194 0 0 931,149 32,562,700 2020 Actual Expenditures/Expenses** E 2 16,941,430 7,132,065 2,378,862 3,829,194 0 0 931,149 31,212,700 2021 Fund Balance/Net Position at July 1*** 3 6,831,347 2,540,602 585,001 4,949,692 0 0 647,075 15,553,717 2021 Primary Property Tax Levy B 4 0 0 0 0 0 0 0 2021 Secondary Property Tax Levy B 5 0 397,401 0 0 0 397,401 2021 Estimated Revenues Other than Property Taxes C 6 19,239,415 5,659,885 2,280 1,634,563 0 0 421,942 26,958,085 2021 Other Financing Sources D 7 0 0 0 0 0 0 0 0 2021 Other Financing (Uses) D 8 0 0 0 0 0 0 0 0 2021 Interfund Transfers In D 9 0 606,240 0 575,000 0 0 50,000 1,231,240 2021 Interfund Transfers (Out) D 10 250,000 751,540 0 229,700 0 0 0 1,231,240 2021 Reduction for Amounts Not Available:11 LESS:Amounts for Future Debt Retirement:0 0 0 0 0 0 0 0 Future Capital Projects 0 0 0 0 0 0 0 0 Maintained Fund Balance for Financial Stability 3,228,246 3,228,246 0 0 2021 Total Financial Resources Available 12 22,592,516 8,055,187 984,682 6,929,555 0 0 1,119,017 39,680,957 2021 Budgeted Expenditures/Expenses E 13 19,239,435 7,849,594 408,600 6,326,874 0 0 76,989 33,901,492 EXPENDITURE LIMITATION COMPARISON 2020 2021 1 Budgeted expenditures/expenses 32,562,700$ 33,901,492$ 2 Add/subtract: estimated net reconciling items (785,163) (478,381) 3 Budgeted expenditures/expenses adjusted for reconciling items 31,777,537 33,423,111 4 Less: estimated exclusions 7,978,989 5,260,667 5 Amount subject to the expenditure limitation 23,798,548$ 28,162,444$ 6 EEC expenditure limitation 29,854,752$ 30,646,564$ * ** ***Amounts on this line represent Fund Balance/Net Position amounts except for amounts not in spendable form (e.g., prepaids and inventories) or legally or contractually required to be maintained intact (e.g., principal of a permanent fund). S c h FUNDS Includes Expenditure/Expense Adjustments Approved in the current year from Schedule E. The city/town does not levy property taxes and does not have special assessment districts for which property taxes are levied. Therefore, Schedule B has been omitted. Town of Fountain Hills Summary Schedule of Estimated Revenues and Expenditures/Expenses Fiscal Year 2021 Includes actual amounts as of the date the proposed budget was prepared, adjusted for estimated activity for the remainder of the fiscal year. 4/19 Arizona Auditor General's Office SCHEDULE B Official City/Town Budget Forms 2020 2021 1. $$ 2. $ 3.Property tax levy amounts A. Primary property taxes $$ B. Secondary property taxes 1,672,659 C.Total property tax levy amounts $1,672,659 $ 4.Property taxes collected* A. Primary property taxes (1) Current year's levy $ (2) Prior years’ levies (3) Total primary property taxes $ B. Secondary property taxes (1) Current year's levy $1,649,821 (2) Prior years’ levies 13,209 (3) Total secondary property taxes $1,663,030 C. Total property taxes collected $1,663,030 5.Property tax rates A. City/Town tax rate (1) Primary property tax rate (2) Secondary property tax rate 0.3382 (3) Total city/town tax rate 0.3382 B. Special assessment district tax rates Secondary property tax rates - As of the date the proposed budget was prepared, the two (2)special assessment districts for which secondary property taxes are levied. For information pertaining to these special assessment districts and their tax rates, please contact the city/town. * city/town was operating Includes actual property taxes collected as of the date the proposed budget was prepared, plus estimated property tax collections for the remainder of the fiscal year. Amount received from primary property taxation in the current year in excess of the sum of that year's maximum allowable primary property tax levy. A.R.S. §42-17102(A)(18) Town of Fountain Hills Tax Levy and Tax Rate Information Fiscal Year 2021 Maximum allowable primary property tax levy. A.R.S. §42-17051(A) 4/19 Arizona Auditor General's Office SCHEDULE C Official City/Town Budget Forms ESTIMATED REVENUES ACTUAL REVENUES* ESTIMATED REVENUES 2020 2020 2021 GENERAL FUND Local taxes Local Sales Tax $9,125,999 $9,125,999 $10,422,156 Franchise Tax 187,231 187,231 211,974 Licenses and permits Business License Fees 141,696 141,696 139,764 Liquor License Fees 2,000 2,000 2,000 Building Permit Fees 240,588 240,588 394,073 Sign Permits 6,100 6,100 6,100 Landscape Permit Fees 16,800 16,800 44,520 Subdivision Fees 52,250 52,250 62,250 Special Event Permits 8,750 8,750 8,750 Engineering Fees 5,900 5,900 5,600 Third Party Revenues 210,000 210,000 Planning & Zoning Fees 16,185 16,185 15,825 Plan Review Fees 185,969 185,969 265,925 Intergovernmental State Sales Tax 2,583,378 2,583,378 2,815,032 Fire Insurance Premium Tax 46,258 46,258 46,721 Vehicle License Tax 336,750 336,750 350,010 Shared Income Tax 3,253,750 3,253,750 3,629,136 Charges for services Parks & Rec User Fees 197,800 197,800 202,700 Encroachment Fees 25,000 25,000 25,000 Variances 4,300 4,300 5,300 Inspection Fees 13,250 13,250 17,000 Leases & Rents 283,584 283,584 278,590 Fines and forfeits Court Fines 179,001 179,001 185,004 Interest on investments Interest on Investments 24,000 24,000 24,000 In-lieu property taxes Contributions Voluntary contributions 37,545 37,545 37,545 Miscellaneous Miscellaneous 40,350 40,350 44,440 Total General Fund $17,224,434 $17,224,434 $19,239,415 * Town of Fountain Hills Revenues Other Than Property Taxes Fiscal Year 2021 Includes actual revenues recognized on the modified accrual or accrual basis as of the date the proposed budget was prepared, plus estimated revenues for the remainder of the fiscal year. SOURCE OF REVENUES 4/19 Arizona Auditor General's Office SCHEDULE C Official City/Town Budget Forms ESTIMATED REVENUES ACTUAL REVENUES* ESTIMATED REVENUES 2020 2020 2021 Town of Fountain Hills Revenues Other Than Property Taxes Fiscal Year 2021 SOURCE OF REVENUES SPECIAL REVENUE FUNDS Highway User Revenue Fund Highway User Tax $1,666,476 $1,666,476 $1,761,600 Vehicle License Tax 785,748 785,748 816,672 Local Sales Tax 819,678 819,678 871,254 In-Lieu Fees 200,000 200,000 200,000 Recycle Proceeds 1,000 1,000 1,000 Interest 24,000 24,000 24,000 Miscellaneous 30,000 30,000 30,000 $3,526,902 $3,526,902 $3,704,526 Downtown Strategy Fund Sales-Excise Tax $81,968 $81,968 $87,120 Interest 1,260 1,260 1,260 $83,228 $83,228 $88,380 Economic Development Fund Sales-Excise Tax $327,871 $327,871 $348,504 Interest 240 240 240 $328,111 $328,111 $348,744 Grants Miscellaneous $1,582,525 $1,582,525 $1,308,800 $1,582,525 $1,582,525 $1,308,800 Public Art In-Lieu Fees $100,000 $100,000 $100,000 Interest 240 240 240 $100,240 $100,240 $100,240 Court Enhancement Fund Court Enhancement/JCEF Revenue $49,000 $49,000 $49,000 Grants 100,000 100,000 Interest 840 840 900 $149,840 $149,840 $49,900 Cottonwoods Maintenance District Cottonwoods Maintenance District $6,643 $6,643 $6,643 Interest 72 72 72 $6,715 $6,715 $6,715 Tourism Fund Grants $90,001 $90,001 $50,000 Interest 180 180 180 $90,181 $90,181 $50,180 Environmental Fund Environmental Fee $491,976 $491,976 $ Interest 2,400 2,400 2,400 $494,376 $494,376 $2,400 Total Special Revenue Funds $6,362,118 $6,362,118 $5,659,885 *Includes actual revenues recognized on the modified accrual or accrual basis as of the date the proposed budget was prepared, plus estimated revenues for the remainder of the fiscal year. 4/19 Arizona Auditor General's Office SCHEDULE C Official City/Town Budget Forms ESTIMATED REVENUES ACTUAL REVENUES* ESTIMATED REVENUES 2020 2020 2021 Town of Fountain Hills Revenues Other Than Property Taxes Fiscal Year 2021 SOURCE OF REVENUES DEBT SERVICE FUNDS General Obligation Debt Service Interest Income 1,200 1,200 1,200 $1,200 $1,200 $1,200 Eagle Mountain CFD Interest Income 240 240 240 $240 $240 $240 Municipal Property Corp Interest Income $840 $840 $840 $840 $840 $840 Total Debt Service Funds $2,280 $2,280 $2,280 CAPITAL PROJECTS FUNDS Capital Projects Fund Sales Tax-Local $640,293 $640,293 $904,152 Grants 90,000 90,000 17,500 Interest 7,224 7,224 19,200 $737,517 $737,517 $940,852 Facilities Replacement Fund Interest Income $7,200 $7,200 $7,200 $7,200 $7,200 $7,200 Development Fee Funds Development Fees $164,025 $164,025 $679,311 Interest Income 7,200 7,200 7,200 $171,225 $171,225 $686,511 Total Capital Projects Funds $915,942 $915,942 $1,634,563 *Includes actual revenues recognized on the modified accrual or accrual basis as of the date the proposed budget was prepared, plus estimated revenues for the remainder of the fiscal year. 4/19 Arizona Auditor General's Office SCHEDULE C Official City/Town Budget Forms ESTIMATED REVENUES ACTUAL REVENUES* ESTIMATED REVENUES 2020 2020 2021 Town of Fountain Hills Revenues Other Than Property Taxes Fiscal Year 2021 SOURCE OF REVENUES PERMANENT FUNDS $$$ Total Permanent Funds $$$ ENTERPRISE FUNDS $$$ Total Enterprise Funds $$$ *Includes actual revenues recognized on the modified accrual or accrual basis as of the date the proposed budget was prepared, plus estimated revenues for the remainder of the fiscal year. 4/19 Arizona Auditor General's Office SCHEDULE C Official City/Town Budget Forms ESTIMATED REVENUES ACTUAL REVENUES* ESTIMATED REVENUES 2020 2020 2021 Town of Fountain Hills Revenues Other Than Property Taxes Fiscal Year 2021 SOURCE OF REVENUES INTERNAL SERVICE FUNDS Internal Service Fund $$$65,000 Vehicle Replacement Charges 300,184 300,184 354,542 Auction/Recycle Proceeds 25,000 25,000 Interest Income 2,400 2,400 2,400 $327,584 $300,184 $421,942 Total Internal Service Funds $327,584 $300,184 $421,942 TOTAL ALL FUNDS $24,832,358 $24,804,958 $26,958,085 *Includes actual revenues recognized on the modified accrual or accrual basis as of the date the proposed budget was prepared, plus estimated revenues for the remainder of the fiscal year. 4/19 Arizona Auditor General's Office SCHEDULE D Official City/Town Budget Forms FUND SOURCES (USES)IN (OUT) GENERAL FUND Internal Service Fund $$$$50,000 Environmental Fund 200,000 Total General Fund $$$$250,000 SPECIAL REVENUE FUNDS Streets Fund $$$200,000 $ Tourism Fund 176,540 Grants Fund 29,700 Environmental Fund 200,000 Economic Development 176,540 Downtown Strategy Fund 575,000 Total Special Revenue Funds $$$606,240 $751,540 DEBT SERVICE FUNDS $$$$ Total Debt Service Funds $$$$ CAPITAL PROJECTS FUNDS Capital Projects Fund $$$575,000 $ Capital Projects Fund 229,700 Total Capital Projects Funds $$$575,000 $229,700 PERMANENT FUNDS $$$$ Total Permanent Funds $$$$ ENTERPRISE FUNDS $$$$ Total Enterprise Funds $$$$ INTERNAL SERVICE FUNDS Internal Service Fund $$$50,000 $ Total Internal Service Funds $$$50,000 $ TOTAL ALL FUNDS $$$1,231,240 $1,231,240 2021 2021 Town of Fountain Hills Other Financing Sources/(Uses) and Interfund Transfers Fiscal Year 2021 OTHER FINANCING INTERFUND TRANSFERS 4/19 Arizona Auditor General's Office SCHEDULE E Official City/Town Budget Forms ADOPTED BUDGETED EXPENDITURES/ EXPENSES EXPENDITURE/ EXPENSE ADJUSTMENTS APPROVED ACTUAL EXPENDITURES/ EXPENSES* BUDGETED EXPENDITURES/ EXPENSES FUND/DEPARTMENT 2020 2020 2020 2021 GENERAL FUND Mayor & Town Council $98,544 $$98,544 $75,026 Municipal Court 397,275 397,275 403,897 Administration 2,050,966 (43,782)2,007,184 2,260,227 General Government 1,073,362 (318,000)755,362 2,255,896 Public Works 1,100,934 1,100,934 1,126,390 Development Services 1,100,291 1,100,291 955,447 Community Services 2,595,839 78,782 2,674,621 2,937,420 Law Enforcement 4,785,920 4,785,920 5,029,469 Fire & Emergency Medical 4,021,299 4,021,299 4,195,663 Total General Fund $17,224,430 $(283,000)$16,941,430 $19,239,435 SPECIAL REVENUE FUNDS Streets Fund $5,194,059 $$5,194,059 $5,118,040 Downtown Strategy Fund 38,400 8,000 46,400 38,400 Economic Development Fund 285,482 285,482 283,246 Tourism Fund 259,103 259,103 229,616 Public Art Fund 139,340 139,340 144,649 Court Enhancement Fund 154,800 154,800 24,800 Special Revenue Fund 1,662,525 312,525 1,338,500 Cottonwoods Maint District 5,101 5,101 5,131 Environmental Fund 735,255 735,255 667,212 Total Special Revenue Funds $8,474,065 $8,000 $7,132,065 $7,849,594 DEBT SERVICE FUNDS General Obligation Bonds $1,663,800 $$1,663,800 $350 Eagle Mountain CFD 409,192 409,192 407,240 Municipal Property Corp 305,870 305,870 1,010 Total Debt Service Funds $2,378,862 $$2,378,862 $408,600 CAPITAL PROJECTS FUNDS Capital Projects $3,200,050 $(240,000)$2,960,050 $5,467,730 Fire/Emergency Dev Fee 9,500 9,500 Park/Rec Dev Fee 40,500 40,500 40,000 Streets Dev Fee Facilities Replacement Fund 819,144 819,144 819,144 Total Capital Projects Funds $4,069,194 $(240,000)$3,829,194 $6,326,874 PERMANENT FUNDS $$$$ Total Permanent Funds $$$$ ENTERPRISE FUNDS $$$$ Total Enterprise Funds $$$$ INTERNAL SERVICE FUNDS Internal Service Fund $$$$25,000 Vehicle Replacement Fund 416,149 515,000 931,149 51,989 Total Internal Service Funds $416,149 $515,000 $931,149 $76,989 TOTAL ALL FUNDS $32,562,700 $$31,212,700 $33,901,492 * Expenditures/Expenses by Fund Fiscal Year 2021 Town of Fountain Hills Includes actual expenditures/expenses recognized on the modified accrual or accrual basis as of the date the proposed budget was prepared, plus estimated expenditures/expenses for the remainder of the fiscal year. 4/19 Arizona Auditor General's Office SCHEDULE F Official City/Town Budget Forms ADOPTED BUDGETED EXPENDITURES/ EXPENSES EXPENDITURE/ EXPENSE ADJUSTMENTS APPROVED ACTUAL EXPENDITURES/ EXPENSES* BUDGETED EXPENDITURES/ EXPENSES 2020 2020 2020 2021 Mayor & Council General Fund $98,544 $$98,544 $75,026 Mayor & Council Total $98,544 $$98,544 $75,026 Administration General Fund $2,050,966 $(43,782)2,007,184 $2,260,227 Downtown Strategy Fund 38,400 8,000 46,400 38,400 Economic Development Fund 285,482 285,482 283,246 Tourism Fund 229,616 Special Revenue Fund 1,662,525 312,525 1,338,500 General Obligation Debt 1,663,800 1,663,800 350 Eagle Mountain CFD 409,192 409,192 407,240 Municipal Property Corp 305,870 305,870 1,010 Cottonwoods Maint District 5,101 5,101 5,131 Capital Projects 155,050 155,050 263,035 Administration Total $6,576,386 $(35,782)$5,190,604 $4,826,755 General Government General Fund $1,060,605 (318,000)742,605 2,255,896 Internal Service Fund 89,164 89,164 25,000 Vehicle Replacement Fund 51,989 General Government Total $1,149,769 $(318,000)$831,769 $2,280,896 Municipal Court General Fund $397,276 397,276 403,897 Court Enhancement Fund 154,800 154,800 24,800 Municipal Court Total $552,076 $$552,076 $428,697 Public Works General Fund $1,100,934 1,100,934 1,126,390 Highway User Revenue Fund 5,194,059 5,194,059 5,118,040 Environmental Fund 735,254 735,254 667,212 Capital Projects 2,660,000 (240,000)2,420,000 4,609,695 Facilities Replacement Fund 819,144 819,144 819,144 Vehicle Replacement 339,742 515,000 854,742 Public Works Total $10,849,133 $275,000 $11,124,133 $12,340,481 Development Services General Fund $1,100,291 1,100,291 955,447 Development Services Total $1,100,291 $$1,100,291 $955,447 Community Services General Fund $2,595,839 78,782 2,674,621 2,937,420 Tourism Fund 259,103 259,103 Public Art Fund 139,340 139,340 144,649 Capital Projects 385,000 385,000 595,000 Park/Rec Development Fee 40,500 40,500 40,000 Community Services Total $3,419,782 $78,782 $3,498,564 $3,717,069 Fire & Emergency Medical General Fund $4,021,299 4,021,299 4,195,663 Fire/Emergency Dev Fee 9,500 9,500 Fire & Emergency Medical Total $4,030,799 $$4,030,799 $4,195,663 Law Enforcement General Fund $4,785,920 4,785,920 5,029,469 Law Enforcement Total $4,785,920 $$4,785,920 $5,029,469 * Town of Fountain Hills Expenditures/Expenses by Department Fiscal Year 2020 DEPARTMENT/FUND Includes actual expenditures/expenses recognized on the modified accrual or accrual basis as of the date the proposed budget was prepared, plus estimated expenditures/expenses for the remainder of the fiscal year. 4/19 Arizona Auditor General's Office SCHEDULE G Official City/Towns Budget Forms Full-Time Equivalent (FTE) Employee Salaries and Hourly Costs Retirement Costs Healthcare Costs Other Benefit Costs Total Estimated Personnel Compensation 2021 2021 2021 2021 2021 2021 59.82 $3,629,481 340,442 374,451 48,464 $4,392,838 Highway User Revenue Fund 6.05 $418,619 46,021 60,022 3,436 $528,098 Economic Development Fund 1.90 200,388 22,042 22,056 6,116 250,602 Tourism Fund 0.90 57,629 6,339 12,021 1,523 77,512 Environmental Fund 0.40 33,755 3,714 2,744 201 40,414 Total Special Revenue Funds 9.25 $710,391 78,116 96,843 11,276 896,626 $$$$$ Total Debt Service Funds $$$$$ $$$$$ Total Capital Projects Funds $$$$$ $$$$$ Total Permanent Funds $$$$$ $$$$$ Total Enterprise Funds $$$$$ $$$$$ Total Internal Service Fund $$$$$ TOTAL ALL FUNDS 69.07 $4,339,872 $418,558 $471,294 $59,740 $5,289,464 DEBT SERVICE FUNDS CAPITAL PROJECTS FUNDS PERMANENT FUNDS ENTERPRISE FUNDS INTERNAL SERVICE FUND SPECIAL REVENUE FUNDS Town of Fountain Hills Full-Time Employees and Personnel Compensation Fiscal Year 2020 FUND GENERAL FUND Fiscal Year 2021 Tentative Budget Grady Miller, Town Manager David Pock, Finance Director May 5, 2020 1 Overall Budget Considerations •Considerations were made due to the COVID-19 pandemic –30% reduction of expected TPT revenues for final quarter of FY20 –Increased amount of Contingency included in FY21 budget –Only high priority Capital Projects will be undertaken in the first quarter of FY21 •Budget Authority is not the same as Fund Balance •Increased visibility of revenues collected in FY21 –Quarterly budget updates to be presented to Council at the second meeting of the month following the end of each quarter –Adjustments to expenditures can be made, if needed •Adoption of Tentative Budget tonight will set the maximum FY21 expenditures at $33,901,492 across all Funds 2 Revenue Assumptions •Transaction Privilege Tax –Revenues were not included for nearly-completed Copperwynd expansion or the Keystone project –Recent increase in TPT rate accounts for nearly all of the expected increase in revenue for FY21 –Existing User Fee Schedule used •State Shared Revenue –Estimates were received in mid-March –Revised estimates are expected later this month for State TPT, VLT, and HURF revenues 3 General Fund Revenues FY20 FY21 % Change Transaction Privilege Tax $9,313,000 $10,634,000 14.2% State Shared Revenues 6,220,000 6,841,000 10.0% Permits & Licenses 1,213,000 1,271,000 4.8% Fines & Fees 377,000 408,000 8.2% Other 101,000 105,000 4.0% Total $17,224,000 $19,259,000 11.8% 4 Expenditure Considerations •Contingency –Included in General Government Department –Provides budget authority if revenues are received –$1.7M included for FY21 •Expenditures excluding Contingency –$17.5M for FY21 vs. $17.0M this year •Internal Service Fund added for technology –Charged to Department/Divisions annually –Charges based on number of FTEs 5 General Fund Expenditures FY20 FY21 % Change Town Council $99,000 $75,000 -24.2% Administration 2,007,000 2,340,000 16.6% Municipal Court 397,000 403,000 1.5% General Government*755,000 2,207,000 192.3% Public Works 1,101,000 1,121,000 1.8% Development Services 1,100,000 946,000 -14.0% Community Services 2,689,000 2,940,000 9.3% Public Safety 8,807,000 9,227,000 4.8% Total $16,955,000 $19,259,000 13.6% * Includes $1.7M Contingency 6 FY21 Supplemental Requests - Green Sheet 7 Total Requests $1,034,000 Not Recommended -688,000 Recommended:346,000 One-time: 255,000 On-going:91,000 Revenue Offsets -24,000 General Fund Contribution $322,000 Personnel 8 108 115 106 77 77 82 87 88 87 80 61 58 57 51 52 52 54 56 56 61 62 40 50 60 70 80 90 100 110 120 FY01 FY06 FY11 FY16 FY21 Number of Full-Time Equivalent Employees Priority Capital Projects 9 Panorama Drive Storm Drain Improvements $1,902,000 Golden Eagle Impoundment Area 500,000 AOTF/La Montana Intersection 300,000 Fountain Lighting 150,000 Total $2,852,000 •Projects identified by Council as high priority •Funded through Capital Projects Fund; not by revenues •Work will continue during the first quarter of FY21 •Remaining capital projects will be evaluated after first quarterly budget update in October Questions? 10 ITEM 7. B. TOWN OF FOUNTAIN HILLS STAFF REPORT    Meeting Date: 05/05/2020 Meeting Type: Town Council Regular Meeting Agenda Type: Regular Agenda Submitting Department: Administration Prepared by: David Pock, Finance Director Staff Contact Information: David Pock, Finance Director Request to Town Council Regular Meeting (Agenda Language):  CONSIDERATION OF  Resolution 2020-16 adopting the amended and restated Financial Policies of the Town of Fountain Hills Staff Summary (background) In May 2003, the Town Council passed Resolution 2003-14 adopting the Town of Fountain Hills' Financial Policies. Although these policies have been updated and revised many times, the original overall goals of Fiscal Conservatism, Maintaining Bond Rating, Stability, and Delivering Quality Services have not changed. With these goals in mind, staff is submitting these proposed revisions to Section III Fund Balance (pp 7-12 of the attached Resolution) for the Council's consideration. Fund Balance is the amount of financial resources available to the Town at a given point in time. Governmental Generally Accepted Accounting Principles (GAAP), established by the Governmental Accounting Standards Board, has provided guidelines on classifying fund balance based on its availability to be used. These classifications, listed from least available to most available, are Nonspendable, Restricted, Committed, Assigned, and Unassigned. In addition to revisions made to clarify policy and increase understandability, staff is proposing the following:  3.2 B (p. 10): Remove requirement that 20% of average actual General Fund revenues for the preceding five fiscal years be held in the General Fund as Assigned. Staff is making this recommendation based on the fact that the requirement was adopted before the Town established Replacement Funds to accomplish the same goal. Now that these funds have been established, the need is no longer there to accumulate these financial resources in two separate areas. 3.2 C (p. 10): Add requirement that 20% of average actual General Fund revenues for the preceding five fiscal years be held in the General Fund as Unassigned. Based on Best Practice recommendations from the Government Finance Officers Association, the Town should maintain a fund balance in the General Fund of "...no less than two months of regular General Fund operating revenues or regular General Fund operating expenditures." Staff recommends the use of operating revenues since this measure is already used to determine the fund balance held in the Stabilization Fund (Rainy Day Fund). If adopted, this requirement will provide approximately two and a half months of General Fund operating revenues, based on actual amounts collected from the preceding five years. 3.6 (p. 12): Add section to formalize the establishment and use of Replacement Funds. Currently, the Town funds established for Facilities Replacement and Vehicle Replacement. A Technology Replacement fund has been proposed for next fiscal year. Related Ordinance, Policy or Guiding Principle 2017 Amended and Restated Financial Policies of the Town of Fountain Hills Governmental Accounting Standards Board Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions Government Finance Officers Best Practices related to Fund Balance Guidelines for the General Fund Risk Analysis If proposed revisions are not adopted, the Town risks not maintaining adequate fund balance to address revenue shortages in the General Fund and possible reduction of the Town's bond rating. Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) Staff recommends the adoption of Resolution 2020-16 SUGGESTED MOTION MOVE to adopt Resolution 2020-16 Attachments Revised Financial Policies  Form Review Inbox Reviewed By Date Finance Director (Originator)David Pock 04/21/2020 04:43 PM Town Attorney Aaron D. Arnson 04/22/2020 09:51 AM Town Manager Grady E. Miller 04/22/2020 12:03 PM Form Started By: David Pock Started On: 04/02/2020 11:27 AM Final Approval Date: 04/22/2020  RESOLUTION 2020-16 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, ADOPTING THE TOWN OF FOUNTAIN HILLS FINANCIAL POLICIES, AMENDED AND RESTATED MAY 5, 2020 RECITALS: WHEREAS, the Mayor and Council of the Town of Fountain Hills (the “Town Council”) approved Resolution No. 2003-14, adopting the Town of Fountain Hills Financial Policies (the “Original Financial Policies”) to establish the framework for fiscal planning and management; and WHEREAS, pursuant to Resolution No. 2003-50, the Original Financial Policies were amended on August 21, 2003 (the “2003 Amended Financial Policies”) to include the Town’s debt policy as reserved under the Original Financial Policies; and WHEREAS, pursuant to Resolution No. 2009-05, the 2003 Amended Financial Policies were amended and restated on June 18, 2009 (the “2009 Amended Financial Policies”) to incorporate Rainy Day Fund procedures and to make other technical corrections; and WHEREAS, pursuant to Resolution No. 2010-16, the 2009 Amended Financial Policies were amended on June 17, 2010 (the “2010 Amended Financial Policies”) to modify the sales tax revenues allocation for the Capital Projects Fund; and WHEREAS, pursuant to Resolution No. 2012-02, the 2010 Amended Financial Policies were amended and restated on June 7, 2012 (the “2012 Amended Financial Policies”) to adopt financial policies consistent with, and to implement, Governmental Accounting Standards Board Statement 54 (“GASB 54”) requirements; and WHEREAS, pursuant to Resolution 2015-08, the 2012 Amended Financial Policies were amended and restated on March 19, 2015 (the “2015 Amended Financial Policies”) to incorporate the Town’s separate cash handling policies and to update certain provisions of the Town’s debt policy; and WHEREAS, pursuant to Resolution 2016-31, the 2015 Amended Financial Policies were amended and restated on November 17, 2016 (the “2016 Amended Financial Policies”) to clarify the time requirement in which to: (i) transfer excess revenues collected over budgeted and unexpended appropriations from the General Fund to the Capital Projects Fund; and (ii) establish the Town Council’s budget adoption as the expression of its intent to commit fund balances for the purpose of GASB 54; and WHEREAS, pursuant to Resolution 2017-09, the 2016 Amended Financial Policies were amended and restated on April 6, 2017 (the “2017 Amended and Restated Financial Policies”) to add a new Chapter 10, Investment/Cash Management Policy, and to make other technical corrections ; and WHEREAS, the Town Council desires to further amend the 2017 Amended and Restated Financial Policies to amend Chapter 3, Fund Balance, and to make other conforming changes. RESOLUTION 2020-16 PAGE 2 ENACTED: NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS as follows: SECTION 1. The recitals above are hereby incorporated as if fully set forth herein. SECTION 2. The document known as Town of Fountain Hills Financial Policies, Amended and Restated May 5, 2020 (the “2020 Amended and Restated Financial Policies”) is hereby adopted in substantially the form and substance attached hereto in Exhibit A and incorporated herein by reference. SECTION 3. The Mayor, the Town Manager, the Town Clerk and the Town Attorney are hereby authorized and directed to take all steps necessary to can-y out the purpose and intent of this Resolution. PASSED AND ADOPTED BY the Mayor and Council of the Town of Fountain Hills, Arizona, this 5th day of May, 2020. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: ___________________________________ __________________________________ Ginny Dickey, Mayor Elizabeth A. Burke, Town Clerk REVIEWED BY: APPROVED AS TO FORM: ___________________________________ __________________________________ Grady E. Miller, Town Manager Aaron D. Arnson, Town Attorney RESOLUTION 2020-16 PAGE 3 EXHIBIT A TO RESOLUTION 2020-16 [2020 Amended and Restated Financial Policies] See following pages. RESOLUTION 2020-16 PAGE 4 TOWN OF FOUNTAIN HILLS FINANCIAL POLICIES Amended and Restated May 5, 2020 RESOLUTION 2020-16 PAGE 5 Table of Contents I. INTRODUCTION................................................................................................................. 1 II. OVERALL GOALS .............................................................................................................. 1 2.1 Fiscal Conservatism.................................................................................................. 1 2.2 Maintaining Bond Rating ........................................................................................... 1 2.3 Stability ...................................................................................................................... 1 2.4 Delivering Quality Services ....................................................................................... 1 III. FUND BALANCE ................................................................................................................ 1 3.1 Fund Balance Classifications.................................................................................... 2 3.2 General Fund ............................................................................................................ 3 3.3 Special Revenue Funds ............................................................................................ 6 3.4 Debt Service Funds .................................................................................................. 6 3.5 Capital Projects Fund................................................................................................ 6 IV. FINANCIAL PLANNING...................................................................................................... 7 4.1 Budget Adoption ........................................................................................................ 7 4.2 Budget Preparation ................................................................................................... 7 4.3 Operating Budget ...................................................................................................... 7 4.4 Revenue Sources ..................................................................................................... 7 4.5 Revenue Estimate..................................................................................................... 8 4.6 Staffing ...................................................................................................................... 8 4.7 Budget Preparation Schedule ................................................................................... 8 4.8 Performance Measurement ...................................................................................... 8 4.9 Efficiency Analysis .................................................................................................... 8 4.10 Department Responsibility. ....................................................................................... 8 4.11 Quarterly Report........................................................................................................ 8 4.12 Deficit ........................................................................................................................ 8 V. EXPENDITURE CONTROL.................................................................................................8 5.1 Budgeted Expenditures ............................................................................................. 8 5.2 Purchasing System and Policies. ............................................................................. 9 5.3 Internal Controls ........................................................................................................ 9 5.4 State Expenditure Limit ..............................................................................................9 5.5 Capitalized Assets .................................................................................................... 9 VI. REVENUES AND COLLECTIONS ..................................................................................... 9 6.1 Balanced Revenue Base .......................................................................................... 9 6.2 Stable Revenue Base ............................................................................................... 9 6.3 Monitoring Collection ................................................................................................ 9 6.4 Intergovernmental Aid ............................................................................................. 10 6.5 Cost Recovery......................................................................................................... 10 6.6 Growth Revenues ................................................................................................... 10 VII. USER FEE COST RECOVERY ....................................................................................... 10 7.1 Establishing Fees .................................................................................................... 10 7.2 Recalculation........................................................................................................... 10 VIII. CASH HANDLING POLICY .............................................................................................. 10 8.1 Individual Responsibilities....................................................................................... 11 8.2 Establishing Cash Handling Sites ........................................................................... 11 RESOLUTION 2020-16 PAGE 6 8.3 Procedures for Cash Collection .............................................................................. 11 8.4 Receipts .................................................................................................................. 12 8.5 Cash Received in Person ....................................................................................... 13 8.6 Cash Received Through the Mail ........................................................................... 15 8.7 Check Acceptance .................................................................................................. 15 8.8 Credit Card Acceptance.......................................................................................... 17 8.9 Balancing of Cash Receipts.................................................................................... 17 8.10 Cash Over & Short .................................................................................................. 18 8.11 Returned Check Procedures .................................................................................. 19 8.12 Preparation of Deposits (performed by the Finance Division) ............................... 20 8.13 Exceptions to Cash Handling Policy ....................................................................... 20 8.14 Records Retention .................................................................................................. 20 IX. DEBT POLICY .................................................................................................................. 20 9.1 General .................................................................................................................... 21 9.2 Capital Improvement Plan ...................................................................................... 21 9.3 Financing Alternatives ............................................................................................. 24 9.4 Issuance of Obligations ........................................................................................... 25 X. INVESTMENT/CASH MANAGEMENT POLICY .............................................................. 26 10.1 Scope ...................................................................................................................... 26 10.2 Prudence ................................................................................................................. 27 10.3 Objectives ............................................................................................................... 27 10.4 Investment Strategy ................................................................................................ 28 10.5 Responsibility and Control....................................................................................... 29 10.6 Authorized Financial Dealers and Institutions .......................................................... 31 10.7 Portfolio and Investment Asset Parameters............................................................. 32 10.8 Collateralization ....................................................................................................... 34 10.9 Safekeeping and Custody ....................................................................................... 34 10.10 Internal Control ........................................................................................................ 34 10.11 Reporting................................................................................................................. 35 10.12 Investment Policy Adoption ..................................................................................... 35 10.13 Certification ............................................................................................................. 36 RESOLUTION 2020-16 PAGE 7 I. INTRODUCTION The Mayor and Town Council (the “Town Council”) of the Town of Fountain Hills (the “Town”) understands that principles of sound financial management establish the framework for overall fiscal planning and management. The principles set forth guidelines for both current activities and long range planning. Following these principles will enhance the Town’s financial health as well as its image and credibility with its citizens, the public in general, bond rating agencies and investors. The policies will be reviewed periodically to assure the highest stand ards of fiscal management. Policy changes will be needed as the Town continues to grow and becomes more diverse and complex in the services it provides, as well as the organization under which it operates, to provide these services to its citizens. The Tow n Manager and staff have the primary role of reviewing and providing guidance in the financial area to the Town Council. II. OVERALL GOALS The overall financial goals underlying these principles are: 2.1 Fiscal Conservatism . To ensure that the Town is, at all times, in a solid financial condition, defined as: A. Cash solvency – the ability to pay bills. B. Budgetary solvency – the ability to balance the budget. C. Long run solvency – the ability to pay future costs. D. Service level solvency – the ability to provide needed and desired services. E. Adhering to the highest accounting and management practices as well as the financial reporting and budgeting standards established by the Government Finance Officers Association, by the Governmental Accounting Standards Board (GASB) and by other professional organizations. 2.2 Maintaining Bond Rating. To maintain an Aa3 or better bond rating in the financial community to assure the Town taxpayers that the Town government is well managed and financially sound. 2.3 Financial Stability. To have the ability to withstand local and regional economic fluctuations, to adjust to changes in the service requirements of our community, and to respond to changes in Federal and State priorities and funding as they affect the Town’s residents . 2.4 Delivering Quality Services . To deliver quality services in an affordable, efficient and cost - effective basis providing full value for each tax dollar. III. FUND BALANCE “Fund balance” is defined as the cumulative difference between a fund’s assets and its liabilities. The purpose of this policy is to establish a key element of the financial stability of the Town by setting guidelines for fund balance. It is essential that the Town maintain adequa te levels of fund balance to mitigate financial risk that can occur from unforeseen revenue fluctuations, unanticipated expenditures , and similar circumstances. The fund balance also provides cash flow liquidity for the Town’s general operations. Fund bala nce is an important indicator of the Town’s RESOLUTION 2020-16 PAGE 8 financial position, and adequate reserves must be maintained to allow the Town to continue providing services to the community during periods of economic downturns or emergencies, and/or when unanticipated expenditures occur. The level of fund balance is related to the degree of uncertainty and risk that the Town faces. A prudent level of financial resources is necessary to protect against the need to reduce service levels due to temporary revenue shortfalls or unanticipated one-time expenditures. With the Town’s dependency on local sales tax and State shared revenues, there is increased risk of revenue fluctuations due to the overall condition of the economy. Therefore, the level of reserves needs to be sufficient to ensure stability of governmental operations during a slowdown in the economy or legislative changes to the State’s revenue sharing formula. Fund balance is one of the most widely utilized elements of a government’s financial statements. This measure of financial health is used by (1) residents, (2) state, county and local legislators and officials, (3) municipal bond analysts through credit reviews and ratings, (4) taxpayer associations, (5) research organizations and oversight bodies, and (6) reporters. Other factors that influence the level of fund balance are: 1. Credit reviews performed by municipal bond analysts. 2. Improving or preserving the Town’s bond rating. 3. Maintaining a positive trend in historical fund balances. 4. Maintaining a rating equal to or better than surrounding communities. The Governmental Accounting Standards Board (“GASB”) determined that the usefulness and value of fund balance information was significantly reduced by misunderstandings caused by inconsistent treatment and financial reporting practices of governments. As a result, GASB issued a pronouncement, GASB Statement No. 54 (“GASB 54”), which applies to the financial reports of all state and local governments. GASB 54 improved financial reporting by providing fund balance classifications that are more easily understood by the user. 3.1 Fund Balance Classifications . An accounting distinction is made between the various portions of fund balance reported in the Town’s financials . The five classifications are: (A) Non-spendable Fund Balance—Includes amounts either not in spendable form or legally or contractually required to be maintained intact. This amount includes inventory, pre-paid items , and non-current receivables such as long-term loan and notes receivable and property held for resale (unless the proceeds are restricted, committed or assigned). (B) Restricted Fund Balance —Includes amounts that are constrained for a specific purpose through restrictions either (1) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation. (C) Committed Fund Balance —Includes amounts that are committed for specific purposes by formal ac tion of the Town Council. Although amounts designated “committed” are not legally restricted like restricted fund balance, these committed amounts cannot be used for any other purpose unless the Town Council removes RESOLUTION 2020-16 PAGE 9 or changes the limitation by taking the same form of action it employed to impose the limitation. The action to commit fund balances must occur prior to year -end; however, actual amounts can be determined in the subsequent period. (D) Assigned Fund Balance —Includes amounts that are intended by the Town to be used for specific purposes but are neither restricted nor committed. Intent should be expressed by the Town Council itself or a subordinate high -level body or official possessing the authority to assign amounts to be used for specifi c purposes in accordance with policy established by the Town Council. This assignment would include any activity reported in a fund, other than the General Fund, that is not otherwise restricted more narrowly by the above definitions. The Town is not allowed to assign balances that result in a residual deficit in the fund. (E) Unassigned Fund Balance —Includes any remaining amounts after applying categories (A)-(D) above (non-spendable, restricted, committed, or assigned). The General Fund is the only fund that will report a positive unassigned fund balance. 3.2 General Fund. The fund balance of the Town’s General Fund may consist of up to five classifications , as described previously. In order to satisfy the objective of maintaining a bond rating equal to or better than surrounding peer communities, a combined fund balance of at least 30% of the average actual General Fund revenues for the preceding five fiscal years is recommended to be kept in the Committed, Assigned, and Unassigned classifications . A. Committed Fund Balance. The Town will maintain a Committed Fund Balance in the General Fund of 20% of the average actual General Fund revenues for the preceding five fiscal years. The maintenance of this fund balance is a particularly important factor considered by credit rating agencies in their evaluation of the Town’s credit worthiness. (1) Stabilization Fund (Rainy Day Fund). As a component of the General Fund’s Committed Fund Balance, the Town will maintain a Stabilization Fund that shall be designated for use in the event of an unanticipated expenditure or loss of revenue. The balance of the Stabilization Fund at the end of any fiscal year will be equal to a minimum of 20% of the average actual General Fund revenues for the preceding five fiscal years. (2) Stabilization Fund Guidelines . In order to achieve the objectives of this policy, ensure financial stability, and to maintain sufficient operating capital, the following guidelines shall be followed by the Town Council, Town Manager and Town Staff: (a) Inc reases to Fund. At the conclusion of the Town’s annual financial audit, Town Staff shall determine the amount of revenues received by the General Fund in excess of expenditures and interfund transfers made from the General Fund for the year just audited. Transfers shall then be made as set forth herein until the Fund’s balance is equal to at least 20% of the average actual General Fund revenues for the preceding five fiscal years. RESOLUTION 2020-16 PAGE 10 (b) Decreases to Fund. The Stabilization Fund shall be decreased for only one or more of the following purposes and/or under the following circumstances: (i) To replace the loss of more than 25% of the Town’s Transaction Privilege Tax revenue or State shared revenues. (ii) For any event that threatens the health, safety, or welfare of the Town’s citizens. (iii) For any event that threatens the financial stability of the Town. (iv) To address any matter declared as an emergency by the Governor or the Mayor. (c) Authorization of Use. All decreases in the Stabilization Fund shall be subject to the following: (i) Any decrease shall require the approval by at least 2/3 of the entire Town Council. (ii) The total of all decreases during a fiscal year shall not exceed one-half of the beginning fund balance plus any increases during the same fiscal year. (d) Replenishment Rules . Any amount transferred from the Stabilization Fund shall be replenished as follows: (i) All amounts shall be transferred back to the Fund within five years. At least 20% of the total amount originally transferred from the Fund shall be transferred back to the Fund in each of these five years . (ii) Replenishment transfers shall be appropriated as part of the annual budget process . B. Assigned Fund Balance. The Town will maintain an Assigned Fund Balance, in such amounts as deemed necessary by the Town Manager, to systemically accumulate the replacement costs of certain fixed assets. As replacement purchases are made, fund balance will be replenished by charging the owning Department or Division amounts based on the estimated useful life and estimated future replacement value of the fixed asset. Budgeted expenditures of Assigned Fund Balance shall comply with Town policy. C. Unassigned Fund Balance. The Town will maintain an Unassigned Fund Balance in the General Fund in an amount equal to 20% of the average actual General Fund revenues for the preceding five fiscal years. Funds in excess of the balances described in the preceding paragraphs will be Unassigned Fund Balance, unless otherwise assigned in accordance with GASB 54. Any revenues collected in excess of expenditures and interfund transfers made from the General Fund will be used to satisfy fund balance requirements first. Any remaining fund balance will be transferred to the Capital Projects Fund. RESOLUTION 2020-16 PAGE 11 During the annual budget process, the Town Manager will estimate the surplus or deficit for the current year and prepare a projection of the year -end fund balances by classification. Such projection will include an analysis of trends in fund balance levels on an historical and future projection basis. The Finance Director is authorized to assign available fund balance for specific purposes in accordance with GASB 54. It is the Town’s policy that expenditures for which more than one category of fund balance might be used, Restricted Fund Balance used first, Committed Fund Balance used second, Assigned Fund balance used third, and Unassigned Fund Balance used last. 3.3 Special Revenue Funds . A. Streets Fund (HURF). The Streets Fund is used solely for street and highway purposes. The fund is mostly supported by contributions from the State’s Highway User Revenue Fund (HURF); however, the Town Council may also direct portions of other revenue sources to the fund in order to meet the needs of the Town’s Pavement Management Program . All HURF revenue received is included in Restricted Fund Balance. B. Excise Tax Funds . These funds are created by action of the Town Council, either by resolution or during the annual budget process, to track and repor t activities for a specified purpose. The resources in these funds are classified as Committed Fund Balance. 3.4 Debt Service Funds . The Debt Service Fund is established for the payment of principal and interest on bonded indebtedness and is classified as Restricted Fund Balance. Revenues may be derived from a property tax levy, pledged excise taxes, municipal property lease payments and shared revenues. Revenues are received in amounts sufficient to pay the annual debt service payment; therefore, the restricted fund balance will be no less than the annual debt service payment due on July 1 of the new fiscal year and no more than the annual debt service payment due on July 1 plus an amount equal to the average annual delinquency factor based on the prior three years’ delinquency rates. 3.5 Capital Projects Fund. A. Capital Project Fund. A Capital Projects Fund has been established to allow the Town to accumulate monies for: (1) purchase of land or buildings ; (2) improvements to Town-owned properties ; (3) grant matches associated with capital improvements; (4) public safety projects and equipment purchases ; (5) economic development projects ; and (6) such other capital projects as determined by the Town Council. The Capital Projects Fund will be funded by: (A) sales of real and personal property belonging to the Town; (B) General Fund transfer of any excess revenues (from the prior fiscal year) collected over budgeted and unexpended appropriations not needed to meet fund balance requirements or re-appropriation; and (C) interest earnings on the balance of the fund invested per the Town’s investment policy. B. Development Fee Funds . Accounted for separately, but considered part of the Capital Projects Fund, are accumulated development fees collected pursuant to RESOLUTION 2020-16 PAGE 12 ARIZ. REV. STAT. § 9-463.05 that are assessed on new construction for the purpose of funding growth. These funds are restricted to growth-related capital expenditures as designated in the Town’s adopted Infrastructure Improvements Plan. The fund balance will be established each fiscal year during the budget process depending on planned expenditures but cannot exceed accumulated revenues. The Town shall first be entitled to recoup the cost of any capital improvements, infrastructure, marketing or sales -related costs associated with the disposition of property before crediting the Capital Projects Fund (for funds other than development fees). The Town Council may approve the uses of the Capital Projects Fund as a part of its annual budget or by motion and affirmative vote at the time the expenditures are approved. 3.6 Replacement Funds . Replacement Funds are established to accumulate the resources necessary to replace vehicles, facility components, information technology, and other equipment at the end of their useful lives. The Town’s various Departments and Divisions will incur annual internal service charges, based on their shared usage of the underlying asset, its useful life, and the future value of the replacement’s cost. The resources in these funds are classified as Assigned Fund Balance. IV. FINANCIAL PLANNING Financial planning refers to the process of identifying resources and allocating those resources among competing purposes. The primary vehicle for this planning is the preparation, monitoring and analyses of the Town’s budget. It is increasingly important to monitor the performance of the programs competing to receive funding. 4.1 Budget Adoption. The Town Manager shall prepare a proposed annual budget, which shall be submitted to the Town Council and the public for review in accordance with ARIZ. REV. STAT. § 42-17001, et seq. The Town will budget revenues and expenditures on the basis of a fiscal year beginning July 1 and ending the following June 30. The Town Council will adopt the budget no later than June 30. By adopting the budget and the various funds set forth therein, the Town Council expresses its intent to commit fund balances for the purpose of GASB 54 classifications. The Town Manager shall execute the Town Council policies as set forth in the finally adopted budget. 4.2 Budget Preparation. The Town Manager or authorized designee will prepare a budget in accordance with the guidelines established by the Government Finance Officers Association in its Distinguished Budget Award Program. The proposed budget will contain the following: A. Revenue estimates by major category, by major fund. B. Expenditure estimates by department levels and major expenditure category, by fund. C. Estimated fund balance by fund. D. Debt service by issue detailing principal and interest amounts by fund. E. Proposed personnel staffing levels. RESOLUTION 2020-16 PAGE 13 F. A detailed schedule of capital projects, including a capital improvement program. G. Any additional information, data, or analysis requested of management by the Town Council. 4.3 Operating Budget. The operating budget will be based on the principle that current operating expenditures, including debt service, will be funded with current revenues, creating a balanced budget. The Town will not balance the current budget at the expense of meeting future years’ expenditures; for example, accruing future years’ revenues or rolling over short-term debt to avoid planned debt retirement. 4.4 Revenue Sources . Ongoing operating costs should be supported by ongoing, stable revenue sources. This policy protects the Town from fluctuating service levels and avoids crises when one-time revenues are reduced or removed. Revenues from growth or development should be targeted to costs related to development, or i nvested in improvements that will benefit future residents or make future service provision efficient. 4.5 Revenue Estimate. The Town Manager will provide an estimate of the Town’s revenues annually for each fiscal year, as well as estimates of special (grant, excise tax, etc.) revenues and interfund transfers. 4.6 Staffing. The budget will fully appropriate the resources needed for authorized regular staffing. At no time shall the number of regular full-time employees on the payroll exceed the total number of full-time positions authorized by the Town Council. All personnel actions shall be in conformance with applicable Federal and State law and all Town ordinances and policies. 4.7 Budget Preparation Schedule. Annually, the Town Manager shall provide a budget preparation schedule outlining the preparation timelines for the proposed budget. Budget packages for the preparation of the budget, including forms and instructions, shall be distributed to Town Departments in a timely manner for the Department’s completion. Department Directors shall prepare and return their budget proposals to the Administration Department, as required in the budget preparation schedule. 4.8 Performance Measurement. Perform ance measurement indicators will be integrated into the budget process as appropriate. 4.9 Efficiency Analysis . Alternatives for improving the efficiency and effectiveness of the Town’s programs and the productivity of its employees will be considered during the budget process. Duplication of services and inefficiency in service delivery should be eliminated wherever they are identified. 4.10 Department Responsibility. Department Directors are required to monitor revenues and control expenditures to prevent exceeding their total departmental expenditure budgets. Department Directors shall immediately notify the Town Manager of any exceptional circumstances that could cause a departmental expenditure budget to be exceeded. 4.11 Quarterly Report. A quarterly report on the status of the General Fund budget and trends will be prepared within 60 days of the end of each quarter by the Town Manager or authorized designee. RESOLUTION 2020-16 PAGE 14 4.12 Deficit. If a deficit is projected during any fiscal year, the Town will take steps to reduce expenditures, increase revenues or, if a deficit is caused by an emergency, consider using the Rainy Day Fund, to the extent necessary to ensure a balanced budget at the close of the fiscal year. The Town Manager may institute a cessation during the fiscal year on hirings, promotions, transfers and capital equipment purchases. Such action will not be taken arbitrarily or without knowledge and support of the Town Council. V. EXPENDITURE CONTROL The Town Manager shall ensure compliance with the legally adopted budget. In addition, purchases and expenditures must comply with all applicable legal requirements. 5.1 Budgeted Expenditures . Expenditures will be controlled by an annual budget at the departmental level. The Town Council shall adopt appropriations through the budget process. Written procedures will be maintained for administrative approval and processing of certain budget transfers within funds. 5.2 Purchasing System and Policies . The Town will maintain a purchasing system that provides needed materials in a timely manner to avoid interruptions in the delivery of services. All purchases shall be made in accordance with the Town’s purchasing policies, guidelines and procedures and applicable State and Federal laws. The Town will endeavor to obtain supplies, equipment and services as economically as possible. 5.3 Internal Controls . Expenditures will be controlled through appropriate internal controls and procedures in processing invoices for payment. 5.4 State Expenditure Limit. The State of Arizona sets a limit on the expenditures of local jurisdictions. The Town will comply with these expenditure limitations and will submit an audited expenditure limitation report, audited financial statements and audited reconciliation report as defined by the Uniform Expenditure Reporting System (ARIZ. REV. STAT. § 41-1279.07) to the State Auditor General each year. 5.5 Capitalized Assets . All assets of $10,000 or more will be capitalized and recorded in the Town of Fountain Hills Summary of Capital Assets. VI. REVENUES AND COLLECTIONS All government employees are considered stewards of public funds. In order to provide funding for service delivery, the Town must have reliable revenue sources. T hese diverse revenues must be collected equitably, timely and efficiently. 6.1 Balanced Revenue Base. The Town’s goal is a General Fund revenue base that is equally balanced between sales taxes, State shared revenues, property tax, service fees and other revenue sources. 6.2 Stable Revenue Base. The Town will strive for a diversified and stable revenue base to shelter it from economic changes or short-term fluctuations and in any one revenue source by doing the following: RESOLUTION 2020-16 PAGE 15 A. Establishing new charges and fees as needed and as permitted by law at reasonable levels. B. Pursuing legislative change, when necessary, to permit changes or establishment of user charges and fees. C. Aggressively collecting all revenues, late penalties, outstanding taxes owed and related interest as authorized by law. 6.3 Monitoring Collection. The Town Manager or authorized designee will monitor all taxes to ensure they are equitably administered and collections are timely and accurate. Fees and charges should be based on benefits and/or privileges granted by the Town, or based on costs of a particular service. 6.4 Intergovernmental Aid. The Town Manager or authorized designee should pursue intergovernmental aid for those programs and activities that address a recognized need and are consistent with the Town’s long-range objectives. Any decision to pursue intergovernmental aid should include the consideration of the following: A. Present and future funding requirements. B. Cost of administering the funds. C. Costs associated with special conditions or regulations attached to the grant award. 6.5 Cost Recovery. The Town will attempt to recover all allowable costs (both direct and indirect) associated with the administration and implementation of programs funded through intergovernmental aid. In the case of the Fountain Hills Unified School District, the Town may determine to recover less than full cost of services provided. In the case of State and Federally mandated programs, the Town will attempt to obtain full funding for the service from the governmental entity requiring the service be provided. Allo wable costs will be determined based upon a “Cost Allocation Study” prepared periodically. 6.6 Growth Revenues . Local sales tax revenues are derived from several sources with a significant portion from construction related activity. To ensure that the revenue s from growth or development are targeted to costs related to development, or invested in improvements that will benefit future residents or make future service provision efficient, the Town will designate 50% of those one-time revenues to the Capital Projects Fund. Monthly, these revenues will be transferred from the General Fund to the Capital Projects Fund for future appropriation. VII. USER FEE COST RECOVERY User fees and charges are payments for voluntarily-purchased, publicly-provided services that benefit specific individuals. The Town relies on user fees and charges to supplement other revenue sources in order to provide public services. 7.1 Establishing Fees . The Town may establish user fees and charges for certain services provided to users receiving a specific benefit. User fees and charges will be established to recover as much as possible the direct and indirect costs of the program or service, unless the percentage of full cost recovery has been mandated by specific a ction of the Town Council. It is recognized that occasionally competing policy objectives may result in RESOLUTION 2020-16 PAGE 16 reduced user fees and charges that recover a smaller portion of service costs. 7.2 Recalculation. Periodically, the Town will recalculate the full costs of activities supported by user fees to identify the impact of inflation and other attendant costs. VIII. CASH HANDLING POLICY Collecting and controlling cash at the Town are very important functions. The Customer Service Representatives and Permit Technicians are the Town’s cash handling agents. Strong internal controls for cash collection and handling are necessary to prevent mi streatment of Town funds and to safeguard and protect employees from unwarranted charges of mishandling funds. Historical practices shall not constitute justification for deviation from these procedures. The material contained in this Section supersedes any previous policies and procedures regarding the handling of cash followed within the Town and/or within Departments. The Finance Division will conduct periodic reviews of cash handling procedures. Any amendments to the policies require Town Council approval, but the Town Manager may make interpretations and exceptions to the policies contained in this Section as more particularly set forth in Subsection 8.13 below. 8.1 Individual Responsibilities . All cash transactions are to be processed by Town staff (including cash, credit cards, checks, etc.) and not volunteers. Any Department Director or manager with responsibilities for managing Town cash receipts and those employees who are entrusted with the receipt, deposit and reconciliation of c ash for Town-related activities shall be responsible for knowledge of and compliance with this Section VIII. A reference to this Section should be included as part of all departmental policies and procedures. 8.2 Establishing Cash Handling Sites . Ideally, from a control perspective, collecting and controlling cash should be centralized in one location; however, that is not always possible or practical. As a result, the collection of money is, in part, decentralized. The Finance Division must authorize all cash handling sites, including one-time requests for cash for special events. Departments requesting status as a cash handling site (or special events where money is being collected and a cash float is needed) must submit a request to the Finance Division at least 24 hours prior to the special event that includes: A. Reason(s) why cash handling site or cash float is needed. B. A list of the personnel involved with the cash handling site, descriptions of their duties and how segregation of duties will be maintained. C. Whether a change drawer will be needed. D. A description of the reconciliation process, including frequency of reconciliation. E. A description of the process for safeguarding cash until it is deposited. F. A schedule of how often and where cash deposits will be made. 8.3 Procedures for Cash Collection. A. “Cash” is defined as any of the following accepted methods of payment for Town transactions: RESOLUTION 2020-16 PAGE 17 (1) Cash (U.S. coin and currency). (2) Checks (drawn on U.S. banks and made payable to the Town; no third party checks). (3) Credit Cards (MasterCard, Visa, Discover, American Express). (4) Money Orders. B. Cash should be physically protected through the use of vaults, safes, cash registers, etc. Each Department is responsible to make the necessary provisions to properly safeguard the cash receipts in its area and maintain the necessary safe or vault that will ensure the security. Generally, any amount of cash on hand must be maintained in a vault or heavy safe (one which cannot be easily moved by two persons using a hand cart). Cash should not be retained in desk drawers or standard file cabinets without a locking mechanism; petty cash must be secured in a locked file cabinet and keys should be secured separately. C. The cash drawer should be kept shut when not in use and after each transaction. The cash drawer, when open, should not be left unattended when it contains money. The contents of cash drawers should be placed in a safe, vault, or an approved, locked location after each day; all safes are to be kept locked. 8.4 Receipts. A. Procedures must be in place to record the daily beginning and ending receipt numbers of the cash register, and include safeguards to prevent manipulation of register totals, receipt numbers, etc. Automatic numbering of receipts through a computerized system is an acceptable alternative. B. Receipts should be generated from either receipt books or cash register receipt system. C. Cash registers must be programmed to issue receipts, which shall contain all information required by the accounting system to properly credit and track payments. D. Receipt books, if issued for special events, must be issued in sequential order. All books should be accounted for from the time of delivery and returned to the Finance Division. E. Only those receipt books that have been distributed by the Finance Division may be used. F. At a minimum, sequential, pre-numbered receipt forms must contain the follow ing information: (1) Date issued. (2) Cashier and/or Department issuing the receipt. RESOLUTION 2020-16 PAGE 18 (3) Name of payor (not the department name or revenue source). (4) Sufficient information to identify the purpose of the payment. (5) Form of payment (cash, check, credit card, etc.). G. The receipt forms should also: (1) Contain all available identifying numbers and other pertinent, descriptive information including invoice numbers. (2) Be issued in a minimum of two copies, one for the payor and one to accompany the deposit. (3) Never be altered; if any type of change is necessary, all copies of the receipt must be clearly marked “void” and a new receipt issued. (4) Be filed sequentially and retained by the Department (including void receipts). 8.5 Cash Received in Person. A. When a customer produces a mutilated bill (where a portion is missing), the receiver should request that the customer have a bank redeem the bill. No bill will be considered for acceptance if both serial numbers are not present. B. A printed receipt must be issued for each payment received when the customer pays in person. At a remote location (for special events), manual pre -numbered receipts may be used when cash register receipts are not available. C. Departments may not accept pos t-dated checks, IOU’s, or third party checks. D. All cash received must be recorded through the computerized accounting system with computer-generated official Town cash receipts. When a cash handling site with a computerized accounting system has to use tem porary cash receipts, those temporary receipts must be converted over to computerized receipts as soon as possible. If the conversion cannot be accomplished within 48 hours, the cash should be deposited into the Department’s safe and tracked in detail unti l it is recorded on the computerized accounting system. E. The customer must be presented an official Town receipt form with a duplicate record being retained by the receiving Department. All numbered receipts must be accounted for, including the original of voided receipts. F. The cash handling site must maintain a clear separation of duties. An individual should not have responsibility for more than one of the cash handling components: collecting, depositing, disbursement and reconciling. G. The procedures below are to be followed to safeguard the employee and the cash: RESOLUTION 2020-16 PAGE 19 (1) Account for cash as soon as is it received – count the cash in front of customer. (2) Keep cash received in view of the customer until the transaction is complete. (3) If change is required, count all cash and change in front of customer. (4) Reconcile the funds received to the computerized accounting system cash report or to the total of the temporary receipts at the end of the day or at the end of each shift and balance the receipts as set forth in Subsection 8.9. (5) Immediately place all cash in a cash drawer, safe or other secure place until deposited. A secure area for processing and safeguarding funds received should be provided and restricted to authorized personnel. (6) Personal trans actions with Town cash funds are prohibited. Monies may never be borrowed nor loaned from cash funds, nor may personal checks be cashed from receipts. (7) All employees paying for Town services (rentals, movie tickets, animal license, business license, etc.) must be rung up by a different employee under a separate user ID. (8) Deposit all cash intact and not intermingled or substituted with other cash. (9) Pay refunds or expenditures through the appropriate Town bank account on a Town-generated check from the main accounts payable account for the smaller accounts. If the original payment was made using credit/debit card, then whenever possible refunds will be issued through the credit card per credit card regulations. (10) Provide printed receipts generated by the financial system for every transaction involving money. (11) Voided cash receipts must be approved and initialed by a supervisor before the daily deposit is done, noting the reason for voiding the transaction. (12) Deposit daily cash report and cash promptly at the end of each day into the Finance Division safe. (13) Place cash in amounts over $500.00 in the Finance Division safe immediately following the transaction until the end of day close out. (14) Cashiers should enter transactions using their personal logins (switch user) during a single shift. (15) All packaged coin or strapped currency received as payment should be removed from the package or straps and verified. RESOLUTION 2020-16 PAGE 20 H. Cashing checks from Town deposits, borrowing cash for personal use, lapping receipts to cover shortages in cash receipts, withholding checks for deposit in order to float checks, commingling personal and Town funds and modifying cash records are all serious offenses and may result in discipline up to and including immediate discharge from employment. 8.6 Cash Received Through the Mail. A. When mail is opened, if the cash received is not credited directly into the appropriate Town account or issued a receipt thr ough a computerized accounting system, a log of the checks, credit card transactions and or cash should be prepared and submitted to the Finance Division. The log should include the customer’s name, amount received, check number and any other information available that may assist in proper allocation of the funds. The envelope also should be retained as part of the records. B. When mail is opened, checks must be endorsed promptly with a restrictive endorsement stamp. Checks must be stored in a safe or other s ecure place approved by the Finance Division until deposited. C. Unidentified receipts must be deposited to a depository account approved for such purposes. All reasonable attempts should be made to identify the correct account and transfer the funds. 8.7 Check Acceptance. A. The Federal Reserve has established a regulation to standardize check endorsements: (1) Checks must be made payable to the Town of Fountain Hills and endorsed promptly with a restrictive endorsement stamp payable to the Town of Fountain Hills. The endorsement stamps must be distributed by the Finance Division; this stamp protects the check if lost or stolen. (2) All depositor’s endorsements are limited to the top 1.5 inches on the back side of the check, at the trailing edge of the check. This area is where endorsements are normally placed. If you look at the face of the check, the endorsement area is directly behind where “Pay to the Order of” is printed. (3) Any check that has been endorsed may not be returned to the customer. Any marks below the 1.5 inches on the check may obscure the bank routing number, cause delays in returning checks, and forfeit the Town’s right to recovery. The purpose of this regulation is to speed collection and returns. (4) The endorsement must include the following: FOR DEPOSIT ONLY TOWN OF FOUNTAIN HILLS [Account Number] RESOLUTION 2020-16 PAGE 21 (5) Checks should have the customer information pre-printed on the face of the check. Bank issued/generated checks are acceptable. (6) Personal checks from employees for cash may not be cashed at any counter in a Town facility. (7) Checks or credit card transactions will not be cashed or processed for more than the amount of purchase. Departments are not authorized to return currency to the payor in the event that the check exceeds the amount due to the Town. B. Be sure that the name, branch, city and state where the drawer’s bank is located is printed on the check. C. The Town will not accept a check that is: (1) Illegible or not written out clearly; checks should be written out in blue or black ink only. (2) For anything other than the exact amount (no change will be given). (3) A third party check (that is, checks made out to someone other than the Town). (4) Altered or changed. (5) Undated, post-dated or stale dated (older than six months). (6) Not signed. (7) A starter check, i.e. a check without the name, address and check number on the face of the check. (8) Not in U.S. funds. (9) From a foreign bank, even if payable in U.S. funds. (10) Transfer checks. D. If the written amount on a check does not match the numerical amount, the written amount will govern. E. Money orders should be filled out by the customer in the presence of Town staff; the customer must countersign and write Town of Fountain Hills in the payee section. 8.8 Credit Card Acceptance. A. Credit cards accepted are Visa, MasterCard, Discover and American Express. B. When presented with a credit card, the Department cashier shall: RESOLUTION 2020-16 PAGE 22 (1) Verify that the card has not been altered and is not expired. (2) Check customer identification to verify that the name on the card and the account name are the same, unless someone is paying for other family members. (3) Retain the credit card until the transaction is complete. (4) Enter the credit card transaction by swiping the card through the terminal on the keyboard; if the keyboard does not have a terminal, the swipe reader is not functioning or payment is being taken over the telephone, the credit car d number should be entered manually when prompted. (5) If the credit card information is being input from a paper registration form that includes the card number and payor signature, shred or permanently mark over the portion of the form that includes the credit card information as soon as the transaction is complete and the card is accepted. (6) If receiving credit card information over the phone, verify the caller’s name as it appears on the card, verify the amount to be processed, enter the credit card number, expiration date and security code directly; immediately shred any piece of paper where the information can be viewed or taken. 8.9 Balancing of Cash Receipts . A. All funds collected must be balanced daily, by mode of payment, by comparing the total of the cash, checks and credit cards to the computerized accounting reports, to the manual receipts totals, including the totals of the money received by mail. All cash receipts and supporting documentation (daily deposit slip, system receipts, and system reports) should be transferred daily to the accounting system and all discrepancies should be resolved before the end of the day/shift. B. Daily cash counts and reconciliations will be performed on a random basis by the Accountant or other senior Finance Division staff member. These reconciliations should be signed and dated by the reviewer. The total monthly receipts should be balanced with the monthly bank account statements and accounting system monthly reports and all discrepancies should be resolved. C. Currency and coin must be reconciled separately from checks, credit cards and money orders by comparing actual cash received to the cash total from the cash report or to the sum of the cash sales from the manual receipts. D. Over/short amounts must be separately recorded, investigated and resolved to the extent possible as set out in the over/short portion of this Section. E. Because balancing can be a time-consuming task and requires attention to detail, it is recommended that each cashier pre-balance his/her own drawer periodically during the day. NOTE: On the rare occasion that a check needs to be forwarded to another party by the Town of Fountain Hills, the check cannot be endorsed. Any of the following RESOLUTION 2020-16 PAGE 23 positions are authorized to approve this receipt wit hout endorsement: the Town Manager, the Finance Director and the Town Clerk. Approval to accept this instrument in this manner requires approval from one of the Town’s authorized signatories in writing prior to the presentation of the instrument. F. End of day close out process for cash collection points includes the following: (1) Two signatures on the daily cash report before depositing in the Finance Division safe. (2) Total deposit must match the printed report from the software program. (3) Deposits are turned in daily and deposited in the Finance Division safe by the responsible party. 8.10 Cash Over & Short. A. A daily accounting of cash received should be balanced against the total amount on the daily reports run by the Department. Any amount that is over or short shall be reported on the same day to the Department Director and the Accountant. B. The discipline procedures set forth below should be followed if the established dollar limits and frequency of overages and/or shortages are exceeded. The current established dollar limit is five dollars. A log should be established to record any overages and shortages, and the employee’s name and date. Patterns, frequencies and inconsistencies should be noted on the employee’s performance review. Overages or shortages of $50.00 or more are to be reported to the Finance Director. C. Warnings or exceptions involving cash overages or shortages shall be retained in the employee’s permanent file. D. If the shortage is the result of a suspected or documented theft, the shortage must be reported immediately and in writing to the Accountant, the Finance Director and the Town Manager who will submit to law enforcement for investigation, regardless of amount. E. Employees who handle cash are expected to be careful and accurate and to balance their funds each day without overages or shortages. Failure to follow internal controls and checks and balances as approved by the Finance Division is considered to be at least negligence and could be considered misconduct subject to the following disciplinary procedures: (1) Verbal Warning. A verbal warning will be given if an employee has: (i) Two or more over/shorts in any 90-day period (regardless of the amount). (ii) Cumulative over/shorts of $75.00 or more in any 30-day period. RESOLUTION 2020-16 PAGE 24 (2) Written Warning. (i) After an employee has received two verbal warnings, the third warning will be in the form of a written warning. A fourth warning will be subject to disciplinary action as determined by the Department Director. (ii) A written warning will be issued if an employee exceeds a cumulative total of $100.00 or more cash short in any month regardless of the number of verbal warnings. 8.11 Returned Check Procedures . A. Any checks returned by the Town’s depository bank as uncollected shall be sent to the Finance Division. Examples of returned checks include: non-sufficient funds (NSF), account closed, payor’s signature missing, refer to maker and post - dated or stale-dated checks. B. When a check is returned, the Finance Division prepares a negative entry to the revenue journal, debiting the originating account for the amount of the check and at the same time assessing a service fee in the amount set forth in the Town’s adopted fee schedule. It is the responsibility of the Department that was credited with the revenue to notify the check writer and use due diligence to collect the amount of the check and the service fee. The check writer will be prohibited from receiving Town services until the Town is paid the full amount, plus the returned check fee. Restitution should be in the form of currency, money order, cashier’s check or certified check. The Finance Division will maintain an aging report on all non-collectable items; this report will be submitted monthly to the Finance Director. C. When restitution is obtained, the same account should be used that was used on the negative entry and the deposit should be transferred to the Customer Service Representative for inclusion in the daily deposit. D. If after proper due diligence is performed, collection has not been made, the Accountant may be consulted regarding returned items that remain uncollected for further action through the State. 8.12 Preparation of Deposits (performed by the Finance Division). A. The Finance Division shall prepare all deposits. B. All checks must be made payable to Town of Fountain Hills and endorsed. A calculator tape of the checks should be included with the checks bundled together. C. Cash must be recorded on the deposit slip in the appropriate space. D. Only depository-issued deposit slips, including the appropriate account number(s) and sub-code(s) are to be used. E. Someone not involved with collecting the cash, opening the mail or reconciling the deposit must prepare the deposit. RESOLUTION 2020-16 PAGE 25 F. Deposit from the Municipal Court should be secured in locking deposit bags, which are available from the bank. G. Trips to the bank should be at random times during each day. 8.13 Exceptions to Cash Handling Policy. A. Any exception to this Section must be approved in writing by the Department Director and requires the concurrence of the Finance Director. For example, in cases where there is not enough staff available to maintain complete separation of duties, an alternate process to safeguard Town funds must be established and approved by the Finance Director. Requests for exceptions to these procedures must be submitted to the Finance Director in writing. B. Town personnel are prohibited from depositing Town cash into che cking or other bank accounts unless the account has been set up by the Finance Division. 8.14 Records Retention. All cash receipts and related documents must be maintained in accordance with Records Retention Schedules pursuant to ARIZ. REV. STAT. §§ 39 -101 through 39-103 and 41-151.15 through 41-151.19. Accounting reports, deposit slips, credit card receipts, copies of manual cash receipts, etc. should be kept for the period specified by the Records Retention Schedules. IX. DEBT POLICY The purpose of this debt policy is to provide for the preservation and enhancement of the Town’s bond ratings, the maintenance of adequate debt service reserves, compliance with debt instrument covenants and provisions and required disclosures to investors, underwriters and rating agencies. The Town’s overall debt management policy is to ensure that financial resources are adequate in any general economic situation to not preclude the Town’s ability to pay its debt when due. These policies are meant to supplement the legal fr amework of public debt laws provided by the Arizona Constitution, State Statutes, Federal tax laws and the Town’s current bond resolutions and covenants. 9.1 General. A. The Town will (1) use current revenues to pay for short-term capital projects, repair and maintenance items and (2) reserve long-term debt for capital improvements with useful lives of ten years or more. The Town will not use long- term debt to fund current governmental operations and will manage its cash flow in a fashion that will prevent any borrowing to meet working capital needs. However, exclusive reliance upon “pay-as -you-go” funds for capital improvements requires existing residents to pay for improvements that will benefit new residents who relocate to the area after the expenditure is made. Financing capital projects with debt provides for an “intergenerational equity,” as the actual users of the capital asset pay for its cost over time, rather than one group of users paying in advance for the costs of the asset. Where there is a benefit to all future residents, debt financing should be given consideration. RESOLUTION 2020-16 PAGE 26 B. To increase its reliance on current revenue to finance its capital improvements, and promote a “pay-as -you-go” philosophy, the Town will allocate each year a percentage of current revenues to maintain a minimum 10% of average actual General Fund revenues for the preceding five fiscal years in the assigned fund balance. 9.2 Capital Improvement Plan. A. As part of the budget process each year, the Town Manager or authorized designee will prepare a capital spending plan that provides a detailed summary of specific capital projects for the five fiscal years subsequent to the fiscal year presented. The plan will include the name of the project, project schedule, capital cost by fiscal year and a recommended specific funding source. The five year capital improvement plan will be developed within the constraints of the Town’s ability to finance the plan. B. The Town Manager and Department Directors will develop formal ranking criteria that will be used in the evaluation of all capital projects. The ranking criteria will give greatest weight to those projects that protect the health and safety of its citizens. “Pay-as -you-go” project financing shall be given the highest priority. Capital improvements that must rely upon debt financing shall be accorded a lower priority and projects with a useful life of less than ten years shall not be eligible for inclusion in bond issues except in extraordinary circumstances. C. Lease-purchase financing shall be undertaken only when the project is considered essential to the efficient operation of the Town or to remove expenditures that would exceed the State-imposed expenditure limitation. The Town Manager or authorized designee shall be responsible for ensuring that “pay -as -you-go” expenditures do not cause the State-imposed expenditure limitation to be exceeded in any fiscal year. D. All capital project requests will be accompanied by a description of the sources of funding to cover project costs. Where borrowing is recommended, a dedicated source of funds to cover debt service requirements must be identified. All capital project requests will be required to identify any impact the project may have on future operating costs of the Town. The Town will seek grants to finance capital improvements and will favor those projects that are likely to receive grant money. E. All capital project appropriations and amendments to the capital improvement plan must be approved by the Town Council. F. The capital plan will include all equipment and facilities with a useful life of greater than ten years and a cost greater than $50,000. Debt financing shall not exceed the useful life of the infrastructure improvement or asset. G. The following steps shall be used to prepare the Capital Improvement Program (“CIP”): (1) Establish Capital Improvement policies, including: (a) Time period the CIP will cover. RESOLUTION 2020-16 PAGE 27 (b) Facilities/equipment that will be included in the CIP. (c) How acquisition of multiple items (e.g., computers) will be treated. (d) Identification of projects that are expected to be undertaken, but fall outside the time horizon of the plan. (2) Adopt standards to rank project requests. (a) Projects that address a public health or safety concern are given top priority. (b) Projects mandated by a court of competent jurisdiction or a government with authority over the Town are equal with public health or safety. (c) Major maintenance (preservation of assets). (d) Replacement of obsolete equipment (improving efficiency). (e) Expansion to meet demand caused by growth. (f) Coordination of projects to achieve cost savings. (g) Availability of cash to finance improvements from current revenues. (h) Acquis ition of open space. (3) Perform and maintain a capital inventory and identify useful life. (4) Identify projects. (a) Status review of previously approved projects. (b) Identification of new projects. (c) Assess capital project alternatives. (d) Complete project request forms. (5) Assess funding sources. (a) Available grants. (b) Development fees shall be utilized to fund capital projects before “pay-as -you-go” and bond issuance financing. (c) Developer contributions. (d) Private contributions. RESOLUTION 2020-16 PAGE 28 (e) Issuance of securities. (f) Capital leases. (6) Approve the CIP and Budget. (a) Town Council review. (b) Public hearing. (c) Adoption of the CIP and capital budget. All capital project requests will be accompanied by a description of the sources of funding to cover project costs. Where borrowing is recommended, the source of funds to cover debt service requirements must be identified. All capital project requests will be required to identify any impact the project may have on future operating costs of the Town. Department Directors will submit detailed descriptions of the useful life of capital projects submitted in conjunction with the preparation of the Town’s CIP. The Town Manager shall incorporate an estimate of the useful life of proposed capital improvements in developing an amortization schedule for each bond issue. If a short-lived asset or project (less than ten years) is included in a bond issue then the bond amortization schedule shall be adjusted to refl ect the asset’s rapid depreciation. At no time shall the amortization exceed the life of the asset. 9.3 Financing Alternatives. A. Financing alternatives include, but are not limited to: (1) Grants. (2) Developer Contributions. (3) General Obligation (“GO”) Bond – requires voter approval, supported by an ad valorem (property) tax. (4) Revenue Bonds – repaid with dedicated revenue source (HURF, revenue generated by project). (5) Municipal Property Corporation (“MPC”) Bonds – repaid with a dedicated revenue source. (6) Community Facilities District (“CFD”) or Special District Bonds – supported by an ad valorem property tax, revenues of the district or assessments of the cost of public infrastructure or enhanced municipal services. (7) Capital Leases – repaid within operating budget. (8) Commercial Paper (CP) or Bond Anticipation Notes (BAN) with terms less than two years. RESOLUTION 2020-16 PAGE 29 B. Town debt service costs (GO Bonds, Revenue Bonds, MPC Bonds, Leases) shall not exceed 20% of the Town’s operating revenue in order to control fixed costs and ensure expenditure flexibility. Improvement District, CFD and Special District debt service is not included in this calculation because it is paid by district property owners and is not an obligation of the general citizenry. Separate criteria for CFDs have been established and included within the Town’s CFD policy. C. The Town shall comply with all U.S. Internal Revenue Service arbitrage rebate requirements for bonded indebtedness. D. Where applicable, the Town will structure GO bond issues to create level debt service payments over the life of the issue. The goal will be to strive for a debt repayment schedule to be no more than 15 years; at no time will the debt exceed 25 years. E. Refunding bonds will be measured against a standard of the net present value debt service savings exceeding 3% of the principal amount of the bonds being refunded, or if savings exceed $750,000, or for the purposes of modifying restrictive covenants or to modify the existing debt structure to the benefit of the Town. Refinancings undertaken for other reasons should proceed only when the advantages have been clearly shown in a cost/benefit analysis of the transaction. F. The Town will seek to maintain and, if possible, improve the current bond rating in order to minimize borrowing costs and preserve access to credit. G. An analysis showing how a new issue combined with current debt impacts the Town’s debt capacity and conformance with Town debt policies will accompany every future bond issue proposal. The debt capacity analysis should reflect a positive trend and include: (1) Percent of debt outstanding as a percent of the legal debt limit. (2) Measures of the tax and revenue base. (3) Evaluation of trends relating to expenditures and fund balance. (4) Debt service as a percentage of assessed valuation. (5) Measures of debt burden on the community. (6) Tax-exempt market factors affecting interest costs. (7) Debt ratios. H. MPC and contractual debt, which is non-voter approved, will be utilized only when a dedicated revenue source (e.g., excise taxes) can be identified to pay debt service expenses. The project to be financed will generate net positive revenues (i.e., the additional revenues generated by the project will be greater than the debt service requirements). RESOLUTION 2020-16 PAGE 30 I. The Town’s privilege/excise tax to debt service goal will be a ratio of at least 2.5:1 to ensure the Town’s ability to pay for long-term debt from this elastic revenue source. 9.4 Issuance of Obligations . A. The Town shall select the underwriter and the paying agent/registrar for each debt issuance based on competitive bid. The underwriter must be a firm with an office in the Phoenix area and a record of prior working relationships. B. The request for proposals process will be designed to select the service provid ers that offer the Town the best combination of expertise and price. The Town is not required to select the firm offering the lowest price, but a report must be prepared by the Town Manager providing justification to the Town Council for a recommendation when other than the lowest bidder is chosen. The review of all proposals submitted shall be the responsibility of the Town Manager. C. The Town will sell bonds through public sale, online bidding process or an accelerated bidding process unless the Town Counc il authorizes the bond to be sold by negotiated sale or private placement. D. The Town Manager or designee and Town Attorney will coordinate their activities to ensure that all securities are issued in the most efficient and cost - effective manner and in com pliance with the governing statutes and regulations. The Town Manager and the Town Attorney shall consult and jointly select the bond counsel for a bond issue. E. The Town Manager or authorized designee will seek a rating on all new issues which are being sold in the public market if economically feasible. F. The Town will report all financial information on an annual basis and notices of listed events in a timely manner, not in excess of ten business days after the occurrence of event, to the rating agencies and the Municipal Securities Rulemaking Board (MSRB) Electronic Municipal Market Access (EMMA) system. The annual report will include but not be limited to the Town’s annual Comprehensive Annual Financial Report (CAFR) and other items specified in the Town’s continuing disclosure undertakings. G. Any institution or individual investing monies as an agent for the Town shall do so in a manner consistent and in compliance with the Town’s adopted Investment Policy. H. The Town Manager or authorized designee will provide detailed draw schedules for any project to be funded with borrowed monies. The Town will invest the proceeds or direct a trustee to invest the proceeds of all borrowings in a manner that will ensure the availability of funds as described in the draw schedules. I. The Town acknowledges the responsibilities of the underwriting community and pledges to make all reasonable efforts to assist underwriters in their efforts to comply with Securities and Exchange Commission Rule 15c2 -12 and MSRB Rule G-36. The Town will follow its adopted issuance and post -issuance compliance procedures relating to its tax-exempt financings. RESOLUTION 2020-16 PAGE 31 X. INVESTMENT/CASH MANAGEMENT POLICY It is the intent of this investment/cash management policy (the “Investment Policy”) that idle public funds (i.e., uninvested funds) will be invested in a manner that maintains safety of principal, maintains liquidity to meet cash flow needs, provides competitive investment returns and conforms to all state statutes governing the investment of public funds (the “Investment Portfolio”). The purpose of these investment guidelines is to formalize the framework for the Town’s daily investment activities. 10.1 Scope. This Investment Policy shall be administered in a manner that follows Arizona Revised Statutes Title 35, Chapter 2, Article 2.1, as amended and other investment guidelines mandated by statute and is limited in its application to funds that are not immediately needed and are available for investment, including any and/or all districts, component units, etc., of the Town. These funds are accounted for in the Town’s Comprehensive Annual Financial Report (“CAFR”) and may include: A. The General Fund; B. Highway User Revenue Fund; C. Excise Tax Funds; D. Special Revenue Funds; E. Debt Service Funds; F. Capital Project Funds; G. Development Fees Funds; H. Internal Service Funds; and I. Any new fund/component unit created unless specifically exempted. Except for cash in certain restricted funds, the Town will consolidate cash balances from all funds to maximize investment earnings. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles. 10.2 Prudence. Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. The standard of prudence to be used by any firm or individual given responsibility as Investment Officer shall be the “prudent person” standard and shall be applied in the context of a professional investment official managing an overall portfolio or account in a manner that aims to accomplish the objectives set forth in these policies. Investment Officers acting in accordance with the Town’s written procedures and this Investment Policy and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. 10.3 Objectives . In priority order, the primary objectives of Town investment activities are: A. Safety: Safety of principal is the foremost objective of the investment program. Investments of the Town shall be undertaken in a manner that seeks to ensure the preservation of principal in the overall portfolio. To attain this objective, the Town will diversify its investments by investing funds among a variety of securities offering independent returns and financial institutions. RESOLUTION 2020-16 PAGE 32 B. Liquidity: The Town Investment Portfolio will remain sufficiently liquid to enable the Town to meet all operating requirements that might be reasonably anticipated. Liquidity will be achieved by matching investment maturities with forecasted cash flow funding requirements, by investing in securities with active secondary markets and by diversification of maturities and call dates. Furthermore, since all possible cash demands cannot be anticipated, a portion of the portfolio may also be placed in savings accounts, Certificates of Deposit (“CDs”) or local government investment pools that offer same day liquidity for short-term funds. C. Yield (Return on Investments): The Town Investment Portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints of safety and liquidity needs and the cash flow characteristics of the portfolio. Return shall be subordinated to safety and liquidity. The core of investments is limited to relatively low-risk securities in anticipation of earning a fair return relative to the risk being assumed. Securities shall not be sold prior to maturity, with the following exceptions: (1) A security with declining credit may be sold early to minimize loss of principal; (2) A security swap would improve the quality, yield or target duration in the portfolio; (3) Liquidity needs of the portfolio require that the security be sold; and (4) If market conditions present an opportunity for the Town to benefit from the sale. D. Risk of Loss: All participants in the investment process will seek to act responsibly and prudently as custodians of the public trus t. Investment Officers will avoid any transactions that they reasonably believe might impair public confidence in the Town’s ability to govern effectively. The Town Council recognizes that in a diversified portfolio, occasional measured losses due to market volatility are inevitable, and must be considered within the context of the overall portfolio’s investment return, provided that adequate diversification has been implemented. 10.4 Investment Strategy. The Town intends to pursue a portfolio management philosophy that includes passive management; passive management means that the financial markets will be monitored by Investment Officers and investments will be purchased and sold based on the Town’s parameters for safety and liquidity and based on market conditions. All marketable securities purchased by the Town shall have active secondary markets, unless a specific cash outflow is being matched with an investment that will be held to maturity to meet that obligation. Securities may be purchased as a new issue or in the secondary markets. Securities may be sold as provided in Section 4.3. Securities may be purchased with the intent from the beginning to sell them prior to maturity or with the expectation that the security would likely be called prior to maturity under the analyzed market scenario. The portfolio will be structured to benefit from anticipated market conditions and to achieve a reasonable return. Relative value between asset groups shall be analyzed and pursued as part of the investment program within the restrictions set forth by this Investment Policy. Diversification by market sector and security types, as well as maturity will be used to protect RESOLUTION 2020-16 PAGE 33 the Town from credit and market risk in order to meet liquidity requirements. Market and credit risk shall be minimized by diversification and are defined below: A. Credit Risk: The Town will seek to mitigate credit risk, which is defined as the risk of loss due to failure of the security issuer or backer. Mitigating credit risk is to be accomplished by carefully managing the allocation of funds to non-government or insured sectors. The Finance Director will monitor the credit holdings on a continuous basis to ensure they remain appropriate to hold. B. Interest Rate Risk: The Town will seek to mitigate interest rate risk, which is defined as the risk that the market value of securities held in the portfolio will decline due to increases in market interest rates subsequent to their purchase. This mitigation will be accomplished by: (1) Structuring the Investment Portfolio so that securities mature concurrent with the anticipated cash requirements for ongoing operations, thereby avoiding, as much as possible, the need to sell securities into an adverse market environment prior to maturity; (2) Investing funds primarily in shorter-term securities or similar investment pools and limiting the average maturity of the portfolio in accordance with the needs of the Town; and (3) With respect to any firm or individual given responsibility for investments, utilizing external research and advice regarding the current interest rate outlook and global economic condition to optimize portfolio duration strategy. C. Market Rate Risk: The Town will seek to mitigate market rate risk, which is defined as the risk that the portfolio value will fluctuate due to changes in the general level of interest rates. This mitigation will be accomplished by: (1) Providing adequate liquidity for short-term cash needs; and (2) Making longer-term investments only with funds that are not needed for current cash flow purposes. 10.5 Responsibility and Control. A. Delegation of Authority: Authority to manage the Town investment program is derived from the ARIZ. REV. STAT. §§ 35-323 - 328. Management responsibility for the investment program is hereby delegated to the Finance Director. The Finance Director shall be primarily responsible for ensuring the Investment Portfolio is invested according to this Investment Policy. In carrying out these duties, the Finance Director may delegate certain tasks to others (each an “Investment Officer”) whose skill and experience are appropriate to the delegation. The term “Investment Officer” includes the Finance Director (until a particular task is delegated) and the “Investment Advisor,” as defined below and as described in Section 10.5. A list of Town personnel eligible for delegation as Investment O fficer is attached to this Investment Policy in Appendix A. B. Establishment of Procedures: The Finance Director shall establish written procedures for the operation of the investment program consistent with this RESOLUTION 2020-16 PAGE 34 Investment Policy. Procedures should include reference to: safekeeping, repurchase agreements, wire transfer agreements, banking service contracts and collateral/depository agreements . Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this Investment Policy and the procedures established by the Finance Director. C. Management Responsibilities: No person shall engage in an investment transaction except as provided under the terms of Investment Policy, the procedures established by the Finance Director, or designee, and verbal or written authorization by the Finance Director to withdraw, transfer, deposit and invest the Town’s funds. The Finance Director shall be responsible for all transactions undertaken, and shall establish a system of controls to regulate the activities of Investment Officers. The Finance Director has the authority to manage internally or to delegate the management of the investment program to an investment advisor engaged by the Town (the “Investment Advisor”). The Finance Director is responsible for: (1) Reporting Investment Portfolio performance to Town Manager; (2) Evaluating the performance of the externally-managed portfolio; (3) Monitoring Investment Advisor’s compliance with this Investment Policy; (4) Conveying the investment needs of the Town to the Investment Advisor; and (5) Developing investment strategy with the Investment Advisor. D. Ethics and Conflicts of Interest: All persons involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Employees and Investment Officers shall disclose to the Town Manager any material financial interests in financial institutions that conduct business within the Town, and they shall further disclose any material personal financial/investment positions that could be related to the performance of the Town, particularly with regard to the time of purchases and sales. This Investment Policy expressly incorporates the provisions of ARIZ. REV. STAT. Title 38, Chapter 3, Article 8. E. Disclosure: Investment Officers and employees shall disclose to the Town Manger any material financial interest in financial institutions that conduct business with the Town. Investment Officers and employees shall further disclose any material personal investment positions that could be related to the performance of the Town’s Investment Portfolio. Investment Officers and employees shall subordinate their personal investment transaction to those of this jurisdiction, particularly with regard to the timing of purchases and sales. An Investment Officer who is related within the second degree by affinity or consanguinity to individuals seeking to sell an investment to the Town shall file a statement with the Town Manager and the Finance Director disclosing that relationship. F. Investment Training: Investment Officers shall have a finance, accounting or related degree and knowledge of treasury functions and the State of Arizona laws governing public money management and investments. RESOLUTION 2020-16 PAGE 35 10.6 Authorized Financial Dealers and Institutions . The Finance Director will maintain a list of qualified persons or firms authorized to provide investment services that have been publicly procured. In addition, a list will also be maintained of the State pool of approved security broker/dealers selected by credit worthiness who are authorized to provide investment services. The Town shall qualify persons or firms by applying generally accepted industry standards (i.e., capital requirements, asset quality, earnings, liquidity, management and local community development) using available public agency and private rating services as appropriate. Investment transactions shall only be conducted with financial institutions that are licensed as may be required by law to do business in Arizona. Primary government securities dealers, or broker-dealers engaged in the business of selling government securities shall be registered in compliance with section 15 or 15C of the Securities Exchange Act of 1934 and registered pursuant to ARIZ. REV. STAT. § 44-3151, as amended. It shall be the responsibility of the financial institutions and broker/dealers who desire to become qualified bidders for investment transactions to provide the following: i. Audited financial statements within six months of the close of the fiscal year; ii. Proof of Financial Industry Regulatory Authority (FINRA) certification, and trading resolution; iii. Proof of State registration; and iv. Certification of having read this Investment Policy and the Town’s depository contracts. An eligible listing of broker/dealers shall be established for the purchase and sale of investment securities; a new list of approved broker/dealers will be established as needed. External managers may also use their own lists of internally-approved broker-dealers, but only after any such list has been approved by the Town Manager and Finance Director. A periodic review of the financial condition and registrations of qualified companies will be conducted by the Finance Director and the Town Manager. A. Selection of Depository, Financial Institutions and Broker/Dealers: Depositories shall be selected through the Town’s procurement process, with a typical contract being for two years with an option to extend the contract for three additional one year terms . In selecting depositories, the creditworthiness of institutions shall be considered, and the Finance Director shall conduct a comprehensive review of the prospective depositories’ credit characteristics and financial history. No public deposit shall be made except in an eligible public depository as established by state depository laws. The depository bank bid will not include bids for investment rates on certificates of deposit. Certificate of deposit rates will be evaluated competitively betw een qualified financial institutions in accordance with the manner in which all other types of investment assets are purchased. The Investment Officer may accept bids for certificates of deposit and for all marketable securities either orally, in writing, electronically, or in any combination of these methods. The Investment Officer will strive to receive three price quotes on marketable securities being sold, but may allow one broker/dealer to sell at a predetermined price under certain market conditions. Investments purchased shall be shopped competitively between approved financial institution and broker/dealers. RESOLUTION 2020-16 PAGE 36 B. Insurability: Banks, financial institutions, individuals and firms seeking to establish eligibility for the Town’s certificates of deposit purchase program, shall submit financial statements, evidence of federal insurance and other information as required by the Investment Officers. 10.7 Portfolio and Investment Asset Parameters. A. Pricing: Market price for investments acquired for the Town’s Investment Portfolio shall be priced using independent pricing sources and market value shall be monitored at least annually. B. Eligible Investments: The Town’s eligible investments are governed by ARIZ. REV. STAT. § 35-323 et seq. Furthermore, those investments not identified in ARIZ. REV. STAT. § 35-323 et seq. are considered to be ineligible. For the eligible investments, the following limitations apply: (1) Investments in insured or collateralized CDs in eligible depositories shall not exceed 30% of the portfolio. (2) Investments in Certificate of Deposit Account Registry Services shall not exceed 20% of the portfolio. (3) Bonds, notes or other evidences of indebtedness of the State or any of its counties, incorporated cities or towns, school districts or special taxing districts, including registered warrants that bear interest pursuant to ARIZ. REV. STAT. § 11-635, shall not exceed 10% of the portfolio. (4) Bonds, notes or evidences of indebtedness of any county, municipal district, municipal utility or special taxing district of any state that are payable from revenues, earnings or a special tax specifically pledged for the payment of the principal and interest on the obligations, and for the payment of which a lawful sinking fund or reserve fund has been established and is being maintained shall not exceed 10% of the portfolio. (5) Bonds, notes or evidences of indebtedness issued by any county improvement district or municipal improvement distri ct of any state to finance local improvements authorized by law, if the principal and interest of the obligations are payable from assessments on real property within the improvement district shall not exceed 10% of the portfolio. (6) Commercial paper of prime quality shall not exceed 30% of the portfolio. (7) Bonds, debentures, notes or other evidences of indebtedness shall not exceed 30% of the portfolio. (8) Negotiable or brokered certificates of deposit issued by a nationally or state chartered bank or savings and loan association shall not exceed 30% of the portfolio. Bond proceeds shall be invested by the Finance Director (or the Investment Officer, if such duties have been delegated) pursuant to applicable laws, relevant bond indenture requirements and relevant tenets of this Investment Policy. RESOLUTION 2020-16 PAGE 37 Proceeds from tax-exempt bonds shall be invested, recorded and reported in the manner set forth by the United States (“U.S.”) Treasury and Internal Revenue Service to preserve the tax-exempt status of the bonds. The Town’s Finance Department will maintain systems to ensure that these requirements are met. Funds set aside to defease Town debt in conjunction with an escrow agreement will be invested in accordance with State law and appropriate bond documents and as the trustee bank holding such funds deems necessary. C. Prohibited Investments: Regardless of sector, no more than 5% of the portfolio may be invested in any one issuer (excluding obligations issued or guaranteed by the U.S. or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations or instrumentalities). In addition to the limitations on investment types according to ARIZ. REV. STAT. § 35-323 et seq., Town funds will not be invested in any of the following: (1) reverse repurchase agreement (2) callable agencies (3) derivative type investments such as collateralized mortgage obligations, strips, floaters, etc. (4) futures, contractual swaps, options (5) inverse floaters (6) interest only securities (7) forward contracts (8) interest bearing securities that have a possibility of not accruing current income (9) closed end management type companies (10) securities whose yield/market value is based on currency, commodity or non-interest indices (11) bearer-form securities D. Downgraded Credit Ratings: If the credit rating of a security is subsequently downgraded below the minimum rating level specified in this Investment Policy, the Finance Director shall evaluate the downgrade on a case-by-case basis in order to determine if the security should be held or sold. The Finance Director will apply the general objectives of safety, liquidity, yield and legality to make the decision. 10.8 Collateralization. Where allowed by State law, full collateralization is required on all demand deposit accounts, including checking accounts and non-negotiable certificates of deposit. The State requires all depositories holding public funds participate in the State managed pooled collateral program. The State will monitor collateral for public funds to ensure the proper level of collateral is maintained by participant depositories. The Finance Director will check to ensure that any depository it utilizes is a State collateral pool participant. In the event that the Town enters into a repurchase agreement, it shall require collateralization at 102% and accept only the following insurance and securities as collateral: A. FDIC insurance coverage. B. Obligations of the U.S., its agencies and instrumentalities, including agency and instrumentality issued mortgage backed collateral if directly guaranteed by the U.S. C. Other obligations, the principal of and interest on which are unconditionally guaranteed or insured by the State, the U.S. or its agencies and instrumentalities. RESOLUTION 2020-16 PAGE 38 D. Obligations of states, agencies thereof, counties, cities, and other political subdivisions of any state having been rated as to investment quality by a NRSRO and having received a rating of no less than “A” or its equivalent. 10.9 Safekeeping and Custody. All security transactions including collateral for repurchase agreements, entered into by the Town or its agents/trustees shall be conducted on a delivery- versus -payment (“DVP”) basis. That is, funds shall not be wired or paid until verification has been made that the safekeeping bank received the correct security. The safekeeping, or custody, bank is responsible for matching instructions from the Town’s Investment Officers on an investment settlement, with what is wired from the broker/dealer, prior to releasing the Town’s designated funds for a given purchase. The security shall be held in the name of the Town, or held on behalf of the Town, in a bank nominee name. A third party custodian designated by the Finance Director and evidenced by safekeeping receipts will hold securities. The safekeeping bank’s records shall assure the notation of the Town’s ownership of, or explicit claim on, the securities. The original copy of all safekeeping receipts shall be delivered to the Town. Securities shall be held by a custodian designated by the Town Manager and evidenced by safekeeping receipts. 10.10 Internal Control. The Town Manager shall establish an annual process of independent review as part of the external audit. This review will provide internal control by assuring compliance with policies and procedures. The Investment Officer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the Town are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived and the valuation of costs and benefits requires estimates and judgments by management. Internal controls should address the following points: A. Control of collusion: Collusion is a situation where two or more employees are working in conjunction to defraud their employer. B. Separation of transaction authority from accounting and record keeping: By separating the person who authorizes or performs the transaction from the people who record or otherwise account for the transaction, a separation of duties is achieved. C. Custodial safekeeping: Securities purchased from any bank or dealer including appropriate collateral (as defined by state law) shall be placed with an independent third party of custodial safekeeping. D. Avoidance of physical delivery securities: Book-entry securities are much easier to transfer and account for since actual delivery of a document never takes place. Delivered securities must be properly safeguarded against loss or destruction. The potential for fraud and loss increases with physically delivered securities. E. Clear delegation of authority to staff members: Staff members must have a clear understanding of their authority and responsibilities to avoid improper actions. Clear delegation of authority also preserves the internal control structure that is contingent on the various staff positions and their respective responsibilities. F. Written confirmation of transactions for investments and wire transfers: Due to the potential for error and improprieties arising from telephone and electronic RESOLUTION 2020-16 PAGE 39 transactions, all transactions s hould be supported by written communications and approved by the appropriate person. Written communications may be via facsimile if on letterhead and if the safekeeping institution has a list of authorized signatures. G. Development of a wire transfer agreement with the lead bank and third-party custodian: The Finance Director should ensure that an agreement will be entered into and will address the following points: controls, security provisions, and responsibilities of each party making and receiving wire transfers. 10.11 Reporting. The Town Manager, or designee, is charged with the responsibility of providing quarterly reports on investment activity and returns. The report shall summarize investment transactions that occurred during the reporting period, and shall include, at a minimum: A. Asset listing showing par value, cost and market value of each security, type of investment, issuer and interest rate; B. Average maturity of the portfolio; C. Maturity distribution of the portfolio; D. Average portfolio credit quality; E. Distribution by type of investment. 10.12 Investment Policy Adoption. This Investment Policy shall be adopted by resolution of the Town Council. The Investment Policy shall be reviewed at least once every five years by the Finance Director and Town Manager and any modifications made hereto must be approved by the Town Council. 10.13 Certification. A copy of this Investment Policy will be provided upon request to the senior management of any financial institution that is approved to transact business with the Town in order that it is appraised of the policies of the Town. The certification must be signed and executed by a senior member of the financial institution before any business is conducted. RESOLUTION 2020-16 PAGE 40 GLOSSARY AGENCY: A debt security issued by a federal or federally sponsored agency. Federal agencies are backed by the full faith and credit of the U.S. Government. Federally sponsored agencies (FSAs) are backed by each particular agency with a market perception that there is an implicit government guarantee. An example of federal agency is the Government National Mortgage Association (GNMA). An example of a FSA is the Federal National Mortgage Association (FNMA). ASKED: The price at which securities are offered. BANKERS’ ACCEPTANCE (BA): A draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer. BASIS POINT: A unit of measurement used in the valuation of fixed-income securities equal to 1/100 of 1 percent of yield (e.g., “1/4” of 1 percent is equal to 25 basis points). BID: The price offered by a buyer of securities. (When you are selling securities, you ask for a bid.) See Offer. BROKER: A broker brings buyers and sellers together for commission. CERTIFICATE OF DEPOSIT (CDs): A time deposit with a specific maturity evidenced by a certificate. Large- denomination CDs are typically negotiable. CERTIFICATE OF DEPOSIT ACCOUNT REGISTRY SERVICES (CDARS): A network of financial institutions offering CDs that diversify large deposits between banks at FDIC limits. COLLATERAL: Securities, evidence of deposit or other property which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual report for the Town. It includes five combined statements for each individual fund and account group prepared in conformity with GAAP. It also includes supporting schedules necessary to demonstrate compliance with finance-related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section. COUPON: (a) The annual rate of interest that a bond’s issuer promises to pay the bondholder on the bond’s face value. (b) A certificate attached to a bond evidencing interest due on a payment date. DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. DEBENTURE: A bond secured only by the general credit of the issuer. DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities. DISCOUNT: The difference between the cost price of a security and its maturity when quoted at lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount. RESOLUTION 2020-16 PAGE 41 DISCOUNT SECURITIES: Non-interest bearing money market instruments that are issued a discount and redeemed at maturity for full face value (e.g., U.S. Treasury Bills). DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns. FEDERAL CREDIT AGENCIES: Agencies of the Federal Government set up to supply credit to various classes of institutions and individuals, e.g., S&L’s small business firms, students, farmers, farm cooperatives, and exporters. FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits, currently up to $250,000 per deposit. FEDERAL FARM CREDIT BUREAU (FFCB): Debt securities issued by banks of the Farm Credit System, a leading provider of loans, leases and services to rural communities and U.S. agriculture. FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve through open-market operations. FEDERAL HOME LOAN BANKS (FHLB): The institutions that regulate and lend to savings and loan associations. The Federal Home Loan Banks play a role analogous to that played by the Federal Reserve Banks vis-a-vis member commercial banks. FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA): FNMA, like GNMA was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal corporation working under the auspices of the Department of Housing and Urban Development (HUD). It is the largest single provider of residential mortgage funds in the U.S. Fannie Mae, as the corporation is called, is a private stockholder-owned corporation. The corporation’s purchases include a variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages. FNMA’s securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest. FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member, while the other Presidents serve on a rotating basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market as a means of influencing the volume of bank credit and money. FEDERAL RESERVE SYSTEM: The central bank of the U.S. created by Congress and consisting of a seven-member Board of Governors in Washington, D.C., 12 regional banks and about 5,700 commercial banks that are members of the system. FINANCIAL REGULATORY INDUSTRY AUTHORITY: A regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange’s regulation committee. The Financial Industry Regulatory Authority is responsible for governing business between brokers, dealers and the investing public. By consolidating these two regulators, FINRA aims to RESOLUTION 2020-16 PAGE 42 eliminate regulatory overlap and cost inefficiencies. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA OR GINNIE MAE): Securities influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations, and other institutions. Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae securities are backed by the FHA, VA or FMHM mortgages. The term “pass-throughs” is often used to describe Ginnie Maes. GOVERNMENT SPONSORED ENTERPRISE AGENCIES (GSE): U.S. Government Agencies, Government Sponsored Enterprises (GSEs), Corporations or Instrumentalities of the US Government – Federal Instrumentality Securities include, but are not limited to, Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage Corporation (FHLMC), Federal Home Loan Banks (FHLB), and the Federal Farm Credit Bureau (FFCB). INTERNAL CONTROLS: An internal control structure designed to ensure that the assets of the entity are protected from loss, theft, or misuse. The internal control structure is designed to provide reasonable assurance that these objectives are met. INVESTMENT ADVISOR: An independent person or group of people that makes investment recommendations or conducts securities analysis for a fee. LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes. LOCAL GOVERNMENT INVESTMENT POOL (LGIP): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment. MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold. MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase/reverse repurchase agreements that establishes each party’s rights in the transactions. A master agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller- borrower. MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. MONEY MARKET: The market in which short-term debt instruments (i.e., bills, commercial paper, bankers’ acceptances, etc.) are issued and traded. OFFER: The price asked by a seller of securities. (When you are buying securities, you ask for an offer.) See Asked and Bid. OPEN MARKET OPERATIONS: Purchases and sales of government and certain other securities in the open market by the New York Federal Reserve Bank as directed by the FOMC in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and credit; sales have the opposite effect. RESOLUTION 2020-16 PAGE 43 Open market operations are the Federal Reserve’s most important and most flexible monetary policy tool. PORTFOLIO: Collection of securities held by an investor. PRIMARY DEALER: A group of government securities dealers who submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include SEC-registered securities broker-dealer, banks and a few unregulated firms. PRUDENT PERSON RULE: An investment standard. In some states, the law requires that a fiduciary, such as a trustee, may invest money only in a list of securities selected by the custody state - the so-called legal list. In other states, the trustee may invest in a security if it is one which would be bought by a prudent person of discretion and intelligence who is seeking a reasonable income and preservation of capital (see ARIZ. REV. STAT. §§ 14-10902 and 14- 10906). QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the payment of any sales or compensation use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits. RAINY DAY FUND: Designed to set revenue aside during times of above-trend economic growth and to utilize this revenue during times of below-trend growth. A Rainy Day Fund can be used to balance the budget which is the intended purpose. RATE OF RETURN: The yield obtainable on a security based on it purchase price or its current market price. This may be the amortized yield to maturity on a bond the current income return. REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security “buyer” in effect lends the “seller” money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. Dealers use RP extensively to finance their positions. Exception: When the Fed is said to be doing RP, it is lending money, which is, increasing bank reserves. SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank’s vaults for protection. SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following the initial distribution. SECURITIES & EXCHANGE COMMISSION (SEC): Agency created by Congress to protest investors in securities transactions by administering securities legislation. SIFMA: Securities Industry and Financial Markets Association. TOTAL RETURN: The sum of all investment income plus changes in the capital value of the portfolio. For mutual funds, return on an investment is composed of share price appreciation plus any realized dividends or capital gains. This is calculated by taking the following components during a certain time period: (Price Appreciation) + RESOLUTION 2020-16 PAGE 44 (Dividends paid) + (Capital Gains) = Total Return. U.S. TREASURY BILLS: A non-interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months, or one year. U.S. TREASURY BONDS: Long-term U.S. government debt securities with maturities of ten years or longer and issued in minimum denominations of $1,000. Currently, the longest outstanding maturity for such securities is 30 years. U.S. TREASURY NOTES: Intermediate U.S. government debt securities with maturities of 1 to 10 years and issued in denominations ranging from $1,000 to $1 million or more. U.S. TREASURY OBLIGATION: Direct obligations of the U.S. Treasury whose payment is guaranteed by the U.S. YIELD: The current rate of return on an investment security generally expressed as a percentage of the security’s current price. 2909518.2 RESOLUTION 2020-16 PAGE 45 Appendix A Authorized Investment Officers PFM Asset Management LLC Attn: Paulina Woo 1820 East Ray Road Chandler, Arizona 85225 Town Manager Town Accountant (limited in ministerial acts only) Town Clerk (limited in ministerial acts only) ITEM 7. C. TOWN OF FOUNTAIN HILLS STAFF REPORT    Meeting Date: 05/05/2020 Meeting Type: Town Council Regular Meeting Agenda Type: Regular Agenda Submitting Department: Public Works Prepared by: Justin Weldy, Public Works Director Staff Contact Information: Justin Weldy, Public Works Director Request to Town Council Regular Meeting (Agenda Language):  CONSIDERATION OF  approval for the Civic Center Improvements with Gcon Inc. through the Job Order Master Agreement, Contract No. 2019-006B. Staff Summary (Background) At the March 19, 2019 Town Council meeting, the Council approved several Job Order Master Agreements specifically for construction. Each of these agreements were approved with an amount of $125,000 allowed annually. The Town Council approved the job order contracts with the understanding that any project over $50,000 would be brought back to Council for approval using one or more of the job order contracts.   The Library and Civic Center were opened in 2001. Since that time the concrete plaza has seen displacement causing tripping hazards.  These trip hazards have been ground down to acceptable limits but the concrete continues to shift.  The irrigation for the small turf areas surrounding the concrete plazas also run onto the concrete.  Maintenance of these areas is a challenge and it is recommended to replace the concrete with pavers to minimize trip hazards and reduce future maintenance cost.   The current proposed project is for Removal and replacement of approximately 12,600 square feet of concrete between the Library and Community Center, and replacement with pavers. The project is listed in the Town Council approved FY 2019-20 Capital Improvement Program budget.   Proposals were obtained from three approved vendors within the Job Order Agreements. The project estimate is $94,069, with an owner’s allowance of $10,000, for a total of $104,069, with funding available from the existing CIP project budget for $150,000.00. The contract has been renewed and the vendor is current with its insurance and business license requirements. Related Ordinance, Policy or Guiding Principle NA Risk Analysis Not moving forward with this improvement would likely increase the risk of trip hazards, and the future Not moving forward with this improvement would likely increase the risk of trip hazards, and the future cost to make improvement will most certainly be higher, as well. Recommendation(s) by Board(s) or Commission(s) NA Staff Recommendation(s) Staff recommends approval of the contract as presented. SUGGESTED MOTION MOVE to approve Civic Center Improvements with Gcon Inc. through the Job Order Master Agreement, Contract No. 2019-006B in the amount of $104,069. Fiscal Impact Fiscal Impact:$104,069 Budget Reference:362 Funding Source:CIP If Multiple Funds utilized, list here: Budgeted: if No, attach Budget Adjustment Form: Attachments Contract  Contract renewal letter  Proposal  Form Review Inbox Reviewed By Date Public Works Director (Originator)Justin Weldy 04/22/2020 12:46 PM Finance Director David Pock 04/22/2020 12:50 PM Town Attorney Aaron D. Arnson 04/22/2020 12:57 PM Town Manager Grady E. Miller 04/22/2020 01:45 PM Form Started By: Justin Weldy Started On: 04/22/2020 12:05 PM Final Approval Date: 04/22/2020  Project TOWN OF FOUNTAIN HILLS - CENTENNIAL CIRCLE Square Footage Location 12901 N. LAMONTANA DR.12,600 Architect MONTGOMERY Duration (Days) Bid Date 4.20.2020 28 Revision Date - CSI GMP -$ 992$ 235$ 5,644$ 5,625$ SUBTOTAL BOND GENERAL LIABILITY BUILDER'S RISK OVERHEAD TAXES TOTAL $ / SF PAVERS GENERAL CONDITIONS DESCRIPTION DEMOLITION / REMOVALS 17,667$ 01-0001 02-4000 20,435$ 43,470$ 32-9000 $94,069 $81,572 $7.47 TOWN OF FOUNTAIN HILLS - CENTENNIAL CIRCLE Inclusions • Demo existing 12,600 SF 4" thick concrete sidewalk. • Saw cut from other concrete staying in place. • Furnish and install 12,600 SF of Belgard 6CM Red holland pavers to match existing. • Includes 1" of sand, pavers to be compacted after placement. • Reinforced soldier course on all unrestrained edges. • Includes locating of existing utilities. • Includes plywood protection over existing pavers. • Includes full fencing of site for pedestrian control. Exclusions • Excludes landscape & irrigation modification. • Excludes electrical work. Qualifications • Proposal is based on the project being completed during regular work hours. • Paver lead times are 2-3 weeks. • New pavers might not match existing exactly. • Pricing is valid for 30 days from date of proposal. Scope of Work