No preview available
HomeMy WebLinkAbout2003.0320.TCREM.Packet`m. NOTICE OF REGULAR AND EXECUTIVE SESSION OF THE FOUNTAIN HILLS TOWN COUNCIL Mayor Jon Beydler Councilman Rick Melendez Councilwoman Kathy Nicola Councilwoman Leesa Stevens Councilman John Kavanagh Councilman Mike Archambault Vice Mayor Susan Ralphe WHEN: THURSDAY, MARCH 20, 2003 TIME: 5:00 P.M. EXECUTIVE SESSION (Executive Session will be held in the Building A Teleconference Room) 6:30 P.M. REGULAR SESSION WHERE: TOWN HALL COUNCIL CHAMBERS 16836 EAST PALISADES BOULEVARD, BUILDING B PROCEDURE FOR ADDRESSING THE COUNCIL Anyone wishing to speak before the Council must fill out a speaker's card and submit it to the Town Clerk prior to public discussion of that agenda item. The Clerk will indicate when speaker cards are no longer being accepted. After a motion regarding an agenda item has been made, seconded, and discussed by the Council, the Town Clerk will call the names of those who completed a speaker's card. If there is a Public Hearing, please submit the speaker card to speak to that issue during the Public Hearing. Speakers' names will appear on the overhead screen. At that time, speakers should stand and approach the podium in the order listed. Speakers are asked to state their name prior to commenting and to direct their comments to the Chair and not to other Councilmembers or staff. Speakers' statements should not be repetitive. Individual speakers will have three minutes from the time they are recognized. If representing a specific group or more than three minutes are needed, contact the Town Clerk prior to the beginning of this meeting. Please be respectful when making your comments. If you do not comply with these rules, you will be asked to leave. RULES FOR ADDRESSING THE COUNCIL — ADOPTED 1/18/90 Please adhere to the following rules of order if you wish to speak: 1.) All citizens wishing to speak must fill out speaker cards and be recognized by the Mayor. FAAGENDASUtEGULAR\2003Utegu1ar Session 3-20-03r.doc Page 1 of 3 Last printed 3/20/2003 4:40 PM 2.) The Mayor will not call for public comment on an item until after a motion has been made and seconded and the Council has had adequate opportunity to discuss the item. 3.) Please stand, approach the microphone and state your name and address after being called on to speak. 4.) All comments must be directed to the Mayor. 5.) TIME LIMIT — THREE (3) MINUTES PER PERSON PER ITEM. 6.) Statements should not be repetitive. 7.) Persons or groups wishing to make longer presentations should see" the Town Clerk prior to the meeting. • CALL TO ORDER AND ROLL CALL - Mayor Beydler 1.) VOTE TO GO INTO EXECUTIVE SESSION: (i) PURSUANT TO A.R.S. §38-431.03.A.4, For discussions or consultations with the attorneys of the public body in order to consider its position and instruct its attorneys regarding the public body's position regarding contracts that are the subject of negotiations, in pending or contemplated litigation or in settlement discussions conducted in order to avoid or resolve litigations. (Specifically, the Gibson and Knapp lawsuits); and (ii) PURSUANT TO A.R.S. §38-431.03.A3, For discussion or consultation for legal advice with the attorney or attorneys of the public body (Specifically, the US Department of Justice 2002 COPS grant). 2.) RETURN TO REGULAR SESSION CALL TO ORDER AND ROLL CALL — Mayor Beydler CALL TO ORDER AND PLEDGE TO THE FLAG — Mayor Beydler • INVOCATION — Minister Don Lawrence, Christ's Church Mayor Beydler to read proclamations declaring the month of April: "Child Abuse Prevention Month" and "Life Donor Month". Consent Agenda: All items listed with an asterisk M are considered to be routine, non -controversial matters and will be enacted by one motion and one roll call vote 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, they may request so prior to the motion to accept the consent agenda. The item will be removed from the Consent Agenda and considered in its normal sequence on the agenda. AGENDA ITEM *1.) Consideration of APPROVING THE MEETING MINUTES of March 6, 2003. *2.) Consideration of the SPECIAL EVENT LIQUOR LICENSE submitted by American Legion, Post 58, 16837 E. Parkview Ave. The request is for a fundraiser scheduled for April 12, 2003 from 9:00 a.m. to 11:00 p.m. *3.) CONSIDERATION of approving the Town's letter of request to the United States Department of Justice to return the COPS Grant accepted in November 2002. 4.) UPDATE by the Committee to Save Our Community on their progress in pursuing the formation of a new fire district with possible direction from the Council. 5.) Consideration of RESOLUTION 2003 — 09 adopting an Investment Policy. FAAGENDAS\REGULAR\2003U2egu1ar Session 3-20-03r.doc Page 2 of 3 Last printed 3/20/2003 4:40 PM 6.) Consideration of RESOLUTION 2003 - 10 adopting a Community Facilities District Policy. 7.) Consideration of RESOLUTION 2003 - 05 regarding proposed changes to the Community Center fees. 8.) COUNCIL ASSESSMENT AND REVIEW of the meeting to identify procedural strengths and weaknesses and discuss possible improvements for future meetings. 9.) SUMMARY of Council requests reviewed by the Town Manager. 10.) CALL TO THE PUBLIC 11.) ADJOURNMENT. Pursuant to A.R.S. §38-431-01(G), public comment is permitted (not required) on matters not listed on the agenda but must be within the jurisdiction of the Council. All comment is "subject to reasonable time, space and manner restrictions" and the Council will not discuss or take legal action on matters raised during call to the public unless the matters are properly noticed for discussion and legal action. At the conclusion of the call to the public, individual Council members may respond to criticism, ask staff to review a matter or ask that a matter be put on a future agenda. DATED this 14 day of March, 2003 Bevelyn J. Bender, T(�kn Clerk The Town of Fountain Hills endeavors to make all public meetings accessible to persons with disabilities. Please call 837-2003 (voice) or 1-800-367-8939 (TDD) 48 hours prior to the meeting to request a reasonable accommodation to participate in this 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. FAAGENDAS\REGULAR\2003Utegular Session 3-20-03r.doc Page 3 of 3 Last printed 3/20/2003 4:40 PM Tow-N OF &UNTAINHiLLSPROCLAMATION _ OFFICE OF THE MA YOR WHEREAS, child abuse is a community problem and finding 55S solutions depends on involvement among people throughout the community; and ;\x �N V� WHEREAS, statistics of children who are abused and neglected increase each year; and WHEREAS, effective child abuse prevention programs succeed because of partnerships created among social service agencies, schools, religious organizations, law enforcement agencies, and the business community; and WHEREAS, youth -serving prevention programs offer positive alternatives for young people and encourage youth to develop strong ties to their community; and WHEREAS, all citizens should become more aware of child abuse and its prevention within the community, and become involved in supporting parents to raise their children in a safe, nurturing environment; and NOW, THEREFORE, 1, Jon Beyd/er, Mayor of the Town of Fountain Hills, Arizona, do hereby declare the month of April 2003 as. "Child Abuse Prevention Month" in Fountain Hills, Arizona. Jon BgFydler, Mayj5r, FffuntaV Hills, Arizona Attest: Bevcl yn 1. Bei&r, 6611 CIC7* ;: i� i� 1 � _ ►� _ �r'' i��'� � �"';�� ice'\ ,4 �' � ��'\! y� ice. i�'�; i�'!''� ���'' '� �� '\i' OFFICE OF THE MAYOR WHEREAS, there is no greater gift a human being call give to another hunrmr being than the "Gift of Life" which is what happens when all organ transplant rilloWs another person to become an,active, productive human being; and WHEREAS, the "Gift of Life" call only be given by file citizens of the Town of, Fountain Hills if they are aware of organ and tissue donation; and WHEREAS, the single greatest threat to those suffering from organ disease is death because of the shortage of available organs for transplant, and WHEREAS, the weakest link in the program of organ and tissue douatioll is that people do not discuss their wishes regarding dolation with their faulilies who are called upon to give consent for donation to take place; and WHEREAS, through • the community awareness program of the Donor Network of Arizona, people become aware that transplantation works and that they can make a difference by donating their organs and tissues as a "Gift of Life"; and WHEREAS, the establishment of the mouth of April,. in conjuirctioii with National Donate Life Morith, is deemed essential to create t011711 wide awareness of the need for donation and encouragc family disci 'fssiol►. of the opportunity to give the greatest gift of all, life, by registering their wishes oil the new Arizona Donor Registry, u,wu,.AZDouorRegistr-iy. org NOW, THEREFORE, 1, fall Beydler, Mayor of the Town of Fountain Hills, Arizona, do hereby declare the month of April 2003 as: "DONATE LIFE MONTH" �rATTEST. 2_pcvel�tln Bender, Toum Clerk t,TA TTA TTA TTA WA tTAtTAeTAeTA iMA WA WATT T-TA TTA WATTA Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Submitting Department: Administration Consent:® Regular:❑ Meeting Date: 3/20/03 Contact Person: Bender Requesting Action:❑ Tvae of Document Needing ADDroval (Check all that a ❑ Public Hearing ❑ Resolution ❑ Agreement ❑ Emergency Clause ❑ Special Consideration ❑ Intergovernmental Agreement ❑ Grant Submission ❑ Liquor/Bingo License Application ❑ Special Event Permit ❑ Special/Temp Use Permit ® Other: Minutes Council Prioritv (Check AnDromiate Areas): Report Only:❑ ❑ Ordinance ❑ Special Event Permit ❑ Acceptance ❑ Plat ❑ Education ❑ Public Fitness ❑ Library Services ❑ Public Safety ❑ Community Activities ❑ Economic Development ❑ Public Works ❑ Human Service Needs ❑ Parks & Recreation ❑ Town Elections ❑ Community Development Regular Agenda Wording: *1.) Consideration of APPROVING THE MEETING MINUTES of March 6, 2003. Staff Recommendation: Approve Fiscal Impact: No Purpose of Item and Background Information: Approve the minutes for archival purposes. List All Attachments as Follows: Draft minutes from March 6, 2003. Type(s) of Presentation: none Signatures of Submitting Staff: Department Head /,7 ,C 3 Town Manager / Designee Budget Review (if item not budgeted or exceeds budget amount) Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Meeting Date: 3-20-03 Public Works Consent:® Regular:[—] Requesting Action:® Tvne of Document Needling Approval (Check all that anal ❑ Public Hearing ❑ Resolution ❑ Agreement ❑ Emergency Clause ❑ Special Consideration ❑ Intergovernmental Agreement ❑ Grant Submission ® Liquor/Bingo License Application ❑ Special Event Permit ❑ Special/Temp Use Permit ❑ Other: ❑ Education ❑ Public Fitness ® Public Safety ® Community Activities ❑ Public Works ❑ Human Service Needs ❑ Town Elections ❑ Community Development Tom Ward Report Only:❑ ❑ Ordinance ❑ Special Event Permit ❑ Acceptance ❑ Plat ❑ Library Services ❑ Economic Development ❑ Parks & Recreation R6,"11W�M'bffiV diii i Consideration of the Special Event Liquor License Application submitted by American Legion, Post 58, 16837 E. Parkview Ave. The request is for a fund raiser scheduled forApril 12, 2003 from 9:00 a.m. to 11:00 p.m. Approve Fiscal Impact: No $ .Purpose of Item and Background Information: To obtain Council approval for the special event liquor license. The application meets the security requirements, it complies with statutory and liquor license regulations, and it received a favorable recommendation from the Town Marshal based on his background investigation. At the manager's request in an attempt to reduce paper, full applications will not be reproduced for the packets. The front page will be included for representative purposes and the full application is available for review in the clerk's office. Ward memo; Tate memo; application front page T-yne(s) of Presentat#on: Consent Agenda Signatures of Submitting Staff: D artment Hea 3 Town Manager / Designee Budget Review (if item not budgeted or exceeds budget amount) TOWN OF FOUNTAIN HILLS PUBLIC WORKS DEPARTMENT MEMO TO: Honorable Mayor Beydler and DT: March 12, 2003 Town Council FR: Tom Ward, Direct of Public Works RE: American Legion Special Event CXV Liquor License I;/ The American Legion Post 58 is requesting Council approval of a special event liquor license for a fund raising event scheduled for April 12, 2003. Hours of operation are 9:00 a.m. to 11:00 p.m. The event will be held at the American Legion located at 16837 East Parkview Avenue. Although the special event liquor license is issued by the state, local approval by the Council is required. Public Works and the Town Marshal have reviewed the application. It is consistent with previous applications and includes the following provisions: Security: • Security guards posted at both entrances to restrict alcohol to the event area • Security personnel present at all times to prevent liquor law violations Licensing Compliance: • Bona fide non-profit, charitable organization • Applicant is a member and authorized to act on behalf of the qualifying organization • Within the ten day per year limit (4 days this year including this event) • At least 25% of the proceeds going to the charitable organization making the application • Written agreement to suspend the existing Class 14 license during the event • Does not sell alcohol before 10:00 a.m. on Sunday morning Background Investigation: • Favorable recommendation from the Town Marshal (attached) • No previous infractions to result in denial Based on incident -free past events, statutory compliance, and the fund-raising nature of the event that benefits the community, staff recommends approval. EASpecial Event Liquor License\American Legion Event 4-12-03.doc TOWN OF FOUNTAIN HILLS OFFICE OF TOWN MARSHAL INTER OFFICE MEMO TO: Tom Ward, Director of Public Works DT: March 12, 2003 FR: Todd Tate, Interim Town Marshal wT RE: Special Event Liquor License — American Legion The purpose of this memorandum is to endorse the attached special event liquor license submitted by the American Legion Post of Fountain Hills. It is my understanding that this issue will go before the Council at their meeting on March 20''. The American Legion Post has a valid class 14 (club license) in place at 16837 Parkview Avenue. According to the state liquor department, organizations with a class 14 license are permitted up to 10 days per year in which they are eligible for a special event license allowing public liquor sales. At all other times, the class 14 allows sale to members and guests only. A review of the record indicates that this will be the second request for the calendar year and will only bring their total to 4 of the 10 days they are allowed for special events in 2003. During the 9 am- I I pm time frame, the permit covers only the area specified in the application. According to the liquor department, the facility in effect suspends the class 14 in place at this time and replaces it by the special event permit for those hours specified. The American Legion officials apparently understand that since they have included a written statement foregoing their class 14 license during the special event period. In previous investigations, we have found that the American Legion met all the legal requirements under the Arizona Revised Statutes for a liquor license and temporary permit. This included covert monitoring by state liquor agents to ensure compliance with provision of the special event license. Nothing has been found which would prohibit granting of this permit. In addition, the American Legion will post security guards at the entrance to the front patio and at the rear entrance. Based on this, as well as all of the factors outlined above, I recommend approval by the Council on March 20'h. ARIZONA DEPARTMENT OF LIQUOR LICENSES & CONTROL 800 W Washington 5th Floor 400 W Congress #150 R Phoenix AZ 85007-2934 BAR jttlTucson AZ 85701-1352 (602) 542-5141 N w K (520) 628-6595 APPLICATION FOR SPECIAL EVENT LICENSE Fee = $25.00 per day, for 1-10 day events only A service fee of $25.00 will be charged for all dishonored checks (A R S 44-6852) PLEASE NOTE: THIS DOCUMENT MUST BE FULLY COMPLETED OR IT WII,L BE RETURNED. t DEPT USE ONLY "APPLICATION MUST BE APPROVED BY LOCAL GOVERNMENT LIC# 1. Name of Organization: 14) 672 /Cod � f � n.J (FPS II 2. Non-Profit/I.R.S. Tax Exempt Number: S6- (�Dsx-J& 3. The organization is a: (check one box only) Charitable ❑ Fraternal (must have regular membership and in existence for over 5 years) ❑ Civic ❑ Political Party, Ballot Measure, or Campaign Committee ❑ Religious 4. What is the of this event? purpose 5. Location of the event: 3 _ AILEMow IGOv 8rws;j Address of physical location (Not P.O. Box) City County Zip Kpplicant must be a member of the qualifying organization and authorized by an Officer, Director or Chairperson of the Organization named in Puestion #I. (Signature re uired in section #18 6. Applicant: &(,t)1410 A E^/N61M ao -4 Last First Middle Date of Birth c-- 7. Applicant's Mailing Address: f 7© �igde- bltF L eV Y1-7X)Jj& d7-• Ff 7(e Street City State Zip 8. Phone Numbers: (elep ) S32— 4117-2-- #.ild ) 'r-3 2-,-i/,S r (34ilc)) F-77- JV-72- Site Owner # Applicant's Business # Applicant's Home # 9. Date(s) & Hours of Event: (Remember: you cannot sell alcohol before 10:00 a.m. on Sunday) Date Day of Week Hours from A.M./P.M. To A.M./P.M. Day 1: yI IA-D,? S07-a4A�t 5' q! fi /1 1 / •* AW Day 2: Day 3: Day 4: Day 5: Day 6: Day 7: Day 8: Day 9: Day 10: Lic 0106 1112000 *Disabled iniAduals requiring special accommodations, please call (602) 542-9027. 10. Has the applicant been convicted of a -felony in the past five years, or had a liquor license revoked? ❑ YES A NO (attach explanation if yes) 11. This organization has been issued a special event license forays this year, including this event (not to exceed 10 days per year). 12. Is the organization using the services of a promoter or other person to manage the event? ❑ YES a NO If yes, attach a copy of the -agreement. 13. List all people and organizations who will receive the proceeds. Account for 100 % of the proceeds. THE ORGANIZATION APPLYING MIDST RECEIVE 25% of the gross _revenues of Alcoholic Beverage Sales. t. 11 Name Address P_ ercentage p r�me2�c�t� G�es� Jfo�37C Aar✓i�a FrAt ��! 1 %f?� (Attach additional sheet if necessary) 14. Knowledge of Arizona State Liquor Laws Title 4 is important to prevent liquor law violations. If you have any questions regarding the law or this application, please. contact the Arizona State Department of Liquor Licenses and Control for assistance. NOTE: ALL ALCOHOLIC BEVERAGE SALES MUST BE FOR CONSUMPTION AT THE EVENT SITE ONLY. "NO ALCOHOLIC BEVERAGES SHALL LEAVE SPECIAL EVENT PREMISES." 15. What security and control measures will you take to prevent violations of state liquor laws at this event? (List type and number of security/police personnel and type of fencing or control barriers if applicable) # Police ❑ Fencing # Security personnel ❑ Barriers C_ 16. Is there an existing liquor license at the location where the special event is being held? YES ❑ NO If yes, does the existing business agree to suspend their liquor license during the time period, and in the area in which the special event license will be in use? YES ❑ NO (ATTACH COPY OF AGREEMENT) _&E?ZiCA*) &�610'A) Y�_S_T (40 Name of Business Phone Number 17. Your licensed premises is that area in which you are authorized to sell, dispense, or serve spirituous liquors under the provisions of your license. The following page it to be used to prepare a diagram of your special event licensed premises. Please show dimensions, serving areas, fencing, barricades or other control measures and security positions. eT 'oerr /> l '� - ..i � I \� y 4r�� �� fir' fix!•" ) I S �;' �. . 1 f r" 1✓� �:. I 1 k4'TC H.V � _ ,'\. �, 'r', .i.�I.•"t-I'QD { 1 %^✓ / Tom- -t T�k ii�(� � .l ��. � •, � � �' �� / ` � �°� mot- '- � I., '� •t v `� 1-� ill c , i ��• -7- . 7y Lli, 0 ;i SPECIAL EVENT LICENSED PREMISES DIAGRAM (This diagram must be completed with this application) .—pecial Event Diagram: (Show dimensions, servingareas and label type olen yp closure and security positions) NOTE: Show nearest cross streets, highway, or road if location doesn't have an address. NT THIS SECTION TO BE COMPLETED ONLY BY AN OFFICER DIRECTOR OR CHAIRPERSON OF I ORGANIZATION NAMED IN QUESTION #1 18. I, A-Fi✓NET14 L-- ldowd , declare that I am an Officei/Director/Chairperson appointing the (Print full name) applicant listed in Question 6, to apply on behalf of the foregoing organization for a Special Event Liquor Li e. X - CIU6 (Sig (Title/Position) (Date) (Phone #) OFFICIAL SEAL State of County of _ HARRIET KOSMITIS The foregoing instrument was aclnowl ged befor a this Notary Public. StatejcfAdzona MARICOPA COUrvnr day of My COMM azplres Apr. 22, 2006 Day of Month Month Ym My Commission expires on: 62 —77 ���-'1«< (Date) (Signature of NOTARY PUBLIC) THIS SECTION TO BE COMPLETED ONLY BY THE APPLICANT NAMED IN QUESTION #6 19. I, 'or- ril- E . �"Mf1d , declare that I am the APPLICANT filing this application as (Print full name) as listed in Question 6. I have read the application and the contents and all statements are true, correct and Z- My commission expires on: State of County of The foregoing instrument was acknowledged before me OFFICIAL SEAL .n HARRIET KOSMITIS —_5 day of Q Notary Public . state of Arizona Day of Month Month MARICOPA COUNW MY . ex0raa Apt , 2006 4-7 (Date) (Signature of NOTARY PUBLIC) You must obtain local government approval. City or County MUST recommend event & complete item #20. The local city or county jurisdiction may require additional applications to be completed and additional licensing fees before approval may be granted LOCAL GOVERNING BODY APPROVAL SECTION 20. I, ���V3 der , —Fow n C—lel hereby recommend this special event application on (Government Official) (Title) behalf of Aft LA/ j ,AWS (il- Zt (may, Town or C>4ty) (Sign of OFFI ) (Date) FOR DLLC DEPARTMENT USE ONLY Department Comment Section: (Employee) ❑ APPROVED ❑ DISAPPROVED BY: (Date) (Title) (Date) /VVV,n rt II�vY f� vv.1 - j_[%'��� e..�' J ��.•. `•�Iir%rcaeg�on Post 58 16��� F'ourat�n ills, Arizona 8Sx68� �..J / I t � far , ,' �)'�ti ��� - �"1 �+• ) � '� , � ;: ,qn1 ��'�'jep��n�kc �iquo��,G �,($�,Ir` _ ,•, �, 1 � � '� \/;,� �-;r y � _ 'I <'\ . )�,_./•. � ✓.,��t�,Lf•?� fir\ yr\ '.� I.,�I ` 1,, t 1)! , � , . •(+ � �'.� j;' , r e,i'+, encan'Legion PpstS a ees to, us pond eir I r pe, th ,' LiquL censs, � for, e � •�; '' � ._' --�: ' -� . � �� > � � , ' `"� � ` � �-'i,,l, ..• � -*,. ( �(\rt i, til `•y. I I�t {/ a:"4 �'., ', .'�;\ l {,i i -Q � f 'I (' •' /j.; ... �tY � r � � �� w+t�i'. l�rl III � ,�•\ �, - f � � ` (7 � ' ,' r `r� / \ 1 ... MrjKenBOwmo?. L"Erl . rr - Y 9 L t •f� \ i' Lt r�f" \; ��� •h l "iv,y �_�'- (1 '�� '\, � � -� `..� I✓ •iw r' / rat 1 , tip /• , , �„ \ , ( ��'/j t \ •lr Mti l �, J,• 1J r / r J -.4' ,i„� �� ♦1 c \ .^��� � J I/.,+r 'r `�,� _'l .� "��, t JIl`'1� � , j,� t - l �„ r 1 \ f, , 11111• /Jj• q .� l ,., 1 IIG �(% , _,. // I , t r s.l l• ,' �t . \, `� i'� 1 i`I�y'r` j �• I) * •} y. , i� , `, Ita. Town of Fountain Hills Town Council Agenda Action Form Meeting Type. Regular Meeting Meeting Dates 3/20/03 Submitting Department: Town Manager Contact Persot Consent:® Regina:❑ RequestingActions,® Tvpe of Document NeedinzApproval (Check all that appl ❑ Public Hearing ❑ Resolution ❑ Agreement ❑ Emergency Clause ® Special Consideration ❑ Intergovernmental Agreement ❑ Grant Submission ❑ Liquor/Bingo License Application ❑ Special Event Permit ❑ Special/Temp Use Permit ❑ Other: Council Prioritv (Check Appropriate Areas): ❑ Education ❑ Public Fitness ® Public Safety ❑ Community Activities ❑ Public Works ❑ Human Service Needs ❑ Town Elections ❑ Community Development Tim Pickering Report Only:[:] ❑ Ordinance ❑ Special Event Permit ❑ Acceptance ❑ Plat ❑ Library Services ❑ Economic Development ❑ Parks & Recreation Regular Agenda Wordin; CONSIDERATION of approving the Town's letter of request to the United States Department of Justice to return the COPS Grant accepted in November 2002. Staff Recommendation: Approve Fiscal Impact: Yes $2,841,259 Purpose of Item and Background Information: At the work study session on March I I"', Town Councilmembers requested that this item be agendized to allow for a vote to approve the letter from the Town requesting a withdrawal of the COPS Grant 2002-UMWX0275 from the U. S. Department of Justice. The cost, over the life of the grant, for not sending the letter is approximately $2.8M. oral Signatukes of Submitting Staff. Department He Town Manager / Designee Town Attorney's draft letter of response; spreadsheet - grant cost Budget Review (if item not budgeted or exceeds budget amount) March 5, 2003 VIA FACSIMILE (202-305-4544) AND U.S. MAIL Carly Smith Grant Program Specialist U.S. Department of Justice Office of Community Oriented Policing Services Grants Administration Division 1100 Vermont Avenue, NW Washington, D.C. 20530 VIA FACSIMILE (202-616-8644) AND U.S. MAIL Art Williams Grant Monitoring Specialist U.S. Department of Justice Office of Community Oriented Policing Services Grants Administration Division 1100 Vermont Avenue, NW Washington, D.C. 20530 Re: Town of Fountain Hills, Arizona (the "Town"), Withdrawal from Universal Hiring Program COPS Grant 2002-LMWX0275 (the "Grant") and Information Regarding Reduction -In -Force Analysis (the "Analysis") Dear Ms. Smith and Mr. Williams: This letter is in response to your February 20, 2003 conversation with our Town Attorney, Andrew McGuire, and your follow-up letter to him, dated February 27, 2003, in which you requested further actions and additional information from the Town in order to continue with the Analysis. Pursuant to your request, please consider this letter as (i) a request to withdraw from the Grant and (ii) a response to your request for further information regarding the Town's recent budget reductions. Ms. Smith and Mr. Williams Fountain Hills COPS Grant March 5, 2003 Page 2 Enclosed for your review is the final financial status report for the Grant. As you can see, the Town has not utilized or otherwise drawn upon the funds under the Grant. It is my understanding from your letter to and conversation with Mr. McGuire that you believe the Grant was issued to the Town in error. You indicated that grant funds were only awarded to first-time applicants this year and that the only reason the Town received the Grant was due to the fact that the application was submitted in the name of the Town and not the Fountain Hills Marshals Department, as was the case with all previous grants. Because of this change in submittal information, the Town was considered to be a new agency. The Town is requesting withdrawal at this time in order to comply with your request for same. Also enclosed is a memorandum, dated February 20, 2003, from Julie Ghetti, the Town's Accounting Supervisor, to Mr. McGuire summarizing the Town -wide impact of the positions eliminated due to the recent budget reductions. As you can see from Ms. Ghetti's memorandum, the budget cuts touched virtually every area of the Town staff, including the Marshals Department. While the Marshals Department absorbed the elimination of a total of 9.5 FTE, the bulk of that reduction (7 FTE) was the result of eliminating local dispatching; only 2 FTE (9.8% of the total Town -wide staff reduction) were law -enforcement positions. As you are aware, the Town is in critical need of your determination with respect to the reduction -in -force. Thank you for your time and prompt attention to this matter. Please do not hesitate to contact either me or Mr. McGuire if you have questions or if you require further information. Sincerely, Timothy G. Pickering Town Manager Enclosures cc (w/o enc.): Andrew McGuire Todd Tate 9196.017\smith-wi Iliams3503.ltr.doc THREE YEAR COMPARISON - FY 03 THROUGH FY 05 EXISTING MARSHAL STAFF VERSUS ADDITIONAL GRANT OFFICERS FY 02-03 FY 03-04 FY 04-05 FY 05-06 TOTAL Existing Level of Service: Salaries $460,923 $483,969 $508,168 $533,576 $1,986,636 Benefits $137,172 $171,465 $214,332 $267,915 $790,885 Total $598,095 $655,435 $722,500 $801,491 $2,777,521 Expanded Service Level 17 Officers Plus COPS VI Salaries $876,109 $938,740 1,007,548 1,179,349 $4,001,747 Benefits $309,434 $365,410 425,421 516,768 $1,617,033 Total $1,185,544 $1,304,150 $1,432,968 $1,696,117 $5,618,779 COSTS OF ACTIVATING COPS VI $587,448 $648,716 $710,469 $894,626 $2,841,259 J.A. GhettiCOPS Vl.xls3/14/2003 W U w COD C F z C,7 z O 00 E* 0-I A Cif 7 W V] x 1� m N 0 t r — \'O O, �t O M O r Lf) "D O C � V) 0 rn C1 \D O C, a) M �C r- D, r V) V) N 00 t O r- p 00 M CA N .-. V1 AO 4 OA �O N N C kn V7 �C V7 00 V) V1 I N O) LO N m N N" 7 N N m m M— O— O M M N N N N N M m M �--� �--� M 00 00 G N M 8 �D M 7 kn a\ O M N Oro CN O 000 ON OMO N O f\ D, C,4 rq OD O, -4 "t N M C9 O �O M v) �O �O m w O1 (71 �O 0 m cq M oo D\ oo N oo 0 N N N N p M M Vl Vl It r- 't It ItN p LO 0 0 0 0 0 0 0 0 0 0 0 0 o p 0 0 0 0 0 0 0 0 0 0 0 0 o 0 CD �O N O1 O\ O\ O1 ID m m N 0 0 0 W r co co 0 oo et a, a, C, 00 0 0 0 00 .N. .Ny .Ny _� O r V) M M en M r r r V) cli LO O O O O O O O O O O O O O LO O N �o M M O O "D "t O O 01 �n�DrItI'D�DV')rrn OW') `(L r j i O O O O O O O O O O O O p _O N r O (D�O 0 r 00 V) ON O1 a v> V) Vn r r \O (2, V) V) N CO O of M M M r r IO \D O kn C1 -It r N �O ON r V) 01 p a K1 M m It V) �D M M a ( U 0 0 0 0 0 0 0 0 0 0 0 0 0 C, ON Q1 T (71 C, D\ C� (71 (71 Q, D1 (71 O O O O O O O O O O O O O a N c s a ¢ zz ¢w d d - �i � ,� Z UCaCaV)ciCa Ca Ca Ca0W F-- �L � � � O ,r-� 00 m C 00 \.O 00 V) r O1 V) N CN 00 � r 00 � F e- e- ek e- e- I'D M 00 ON 00 mkn 4 M M M N M— M n� m O 'It O m 00 O r N M N 't } c4 �6 O O\ o0 N O� C D rn O F M O N kn 00 o r N U N N N N M O �VD1 a � Val (3M+ r- C71 0 00 N M 00 M N kr) M G N kn D a O O o 0 0 o O 0o0oVn0 W-�� N � N O 't 00 It 0000 0000 O1 � 0 M N c 4 c N � a O C\ I'�D} O O O C -� It 00 It 00 00 CV 0 0 0 0 O O r- o VNj O� M N r m� O O N N O "t0o cl o0 W') Cl r �O 00 �o a M O O O -r-i r N W) 00 ri O O O O O O O, O\ 01 O, ON Cl O O O O O O T � � V N o W a < N s 7 Z z _ U W P = � F- 2 x d OUO UWCa F--LI m 00 0 �O \o r O, O D V)�OOknO,O 'ct N 0000 C1 a, O ssssss0 V) m en M N m O m � m O�� O O 00 O r N O1 N M 't -4 �d 6 C N N dam' --� M O 0000 rn 00 C, N O N N It M �O C\ M V) W r �wON O 0 N M � O1 M N kn ~ O 0 0 0 0 0 0 0 0 0 � OIt 000 � 0 � o O 10 00 ,It 00 O1 It O ON r- ON r- N O, �O 00 It M Nr d N O, I'D r C1 O1 O M M � h � 00N1 M N Or- 0000 O� O m 0 0 kn kn D O O � 00 O 00 0 r 00 N N N en 0 0 0 0 0 00 o 0 r- r-N � � om0 O O O Om O � V) 00 M 'tt V') r r M O O �O �o --� "t om0 N V) O1 Cl 0 0 0 0 0 O1 O\ O, O1 O\ O1 O O O O O O CM O O N M y X U) IL O U a� C3 3 Ri 70 N U X w Li u 0-4 W m m 00 0 0 0 I'D VI) 00 I, M M O ,O N `n U U oo ,D oo kn O O N N M ,O M In M N kn ,O N N N N N �o O �O M 00 01 W M 0 N +. ,O M 00 00 M O1 t} M M M N M M M N M — 41 � oo�It�cO,oCD in 00 O l� NO O M ,O O M O, C� M .� M ^' D, N N M Vl N � M ,O 01 M o0 ,O v1 O O to m a, O oo N ,O O, O 00 M N v1 r- C\ N kn 0 0 0 0 0 0 0 O ,D 00 �O M O N O 0000 O, It N 0 v) vim') D, r- N O, O --� M N N O O t- 00 N r- �o [� N 01 [� N N CD ON ,0 0N CD O O M 't �c �c 0 D O -e} 00 d' N M Vl [- 00 N M M to M 00000oo 0 kn O M a\ N N M 10 N h ,may 00 0000 O O 00, ,00 ON 'It � N 00 M 00 O, M O O ,O 00 — rn O N v-) O O O O O O O 01 a1 rn a, O\ o, O O O O O O 00 ,O 7 �O N N w 00 [- It kn O [- O O ,O 00 O r- N M ,N., �o 0 O, m N O N kn o0 01 O N l� ,O O o0 01 [— O, O, O 01 N N 00 ,o M N v 00, O w In N � N M N kr r- N ,O (0 N kn O O O O O O O O 0 0000 ,00 "0It 000 � O N O O 00 "t 00 rn \�o O l� N a, r- r- 't 0\ 110 r 01 kn O N 00 Nr 0M •-� �n N l- 00 N t- vi N N 01 M 00 -+ N O O O � 00 N N M 't � 't0 O O ^-d' 00 7 N t� 00 l� 00 N r- kn 0000000 V1 01 M O, 00 M N _0 r. U) 00 00 � � CU 00 7 O O� O N V'1 00 M M �--� 00 M V1 wn O M a1 0 M O O ,O 01 N in N kn [� i d N a O O O O O O 01 0, O1 0, O1 O, O LO O O O O O O N C C) za m U) � o T fa ti � m o >~ N o Cn z LO u ¢ w ¢ o .E wwwdo> c U Q U O h C'7 O O N M X U) a- O U m L 0 co 70 CV U x W Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Submitting Department: Town Manager Consent:❑ Regular:® Meeting Date: 03/20/03 Contact Person: Tim Pickering Requesting Action:❑ Type of Document Needing Approval (Check all that a ❑ Public Hearing ❑ Resolution ❑ Agreement ❑ Emergency Clause ❑ Special Consideration ❑ Intergovernmental Agreement ❑ Grant Submission ❑ Liquor/Bingo License Application ❑ Special Event Permit ❑ Special/Temp Use Permit ® Other: Presentation Couaeift46rit i?Ghec1 Ativronriate Areasl: ❑ Education ❑ Public Fitness ® Public Safety ❑ Community Activities ❑ Public Works ❑ Human Service Needs ❑ Town Elections ❑ Community Development Report Only:® ❑ Ordinance ❑ Special Event Permit ❑ Acceptance ❑ Plat ❑ Library Services ❑ Economic Development ❑ Parks & Recreation Regulti eendaWWoMine: PRESENTATION/UPDATE by the Committee to Save Our Community on their progress in pursuing the formation of a new fire district. Staff Recommendation: Fiscal Impact: No Purpose of Item and Background Information: Members of the Committee to Save Our Community will provide a progress report on their activities toward the formation of a new fire district. List All Attachments as Follows: Memo dated 3/14/03 from the Committee to Save Our Community Type(s) of Presentation: oral Signatures of Submitting Staff: Department Head 9 3 Town Manager / Designee Budget Review (if item not budgeted or exceeds budget amount) TO: Sue Stein FROM: Hugh Henry Committee to Save Our Community DATE: March 14, 2003 Subject: CSOC report to Town Council at March 20, 2003 Meeting Update on meeting with the Maricopa County Supervisor's Board — Meeting of March 19, 2003. Update will include report on the acceptance of Impact Statement and the setting of County's Public Hearing on the Impact Statement of the proposed Fountain Hills Fire District to take place on April 16, 2003. R Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Submitting Department: Administration Consent:❑ Regular:® Meeting Date: 03/20/03 Contact Person: Julie Ghetti Requesting Action:® Type of Document Needing Approval (Check all that a ❑ Public Hearing ® Resolution ❑ Agreement ❑ Emergency Clause ❑ Special Consideration ❑ Intergovernmental Agreement ❑ Grant Submission ❑ Liquor/Bingo License Application ❑ Special Event Permit ❑ Special/Temp Use Permit ❑ Other: Policy Council Priority (Check Aunronriate Areas): Report Only:❑ ❑ Ordinance ❑ Special Event Permit ❑ Acceptance ❑ Plat ❑ Education ❑ Public Fitness ❑ Library Services ❑ Public Safety ❑ Community Activities ® Economic Development ❑ Public Works ❑ Human Service Needs ❑ Parks & Recreation ❑ Town Elections ❑ Community Development Regular Agenda Wording: Consideration of Resolution 2003-09 adopting a Town of Fountain Hills Investment Policy. Staff Recommendation: Approve Fiscal Impact: No Purpose of Item and Background Information: The purpose of the investment policy is to formalize the framework for the Town's daily investment activities to include scope, objectives, authority, standards of prudence, authorized institutions, investment type, collateralization and diversification. According to Moody's Investor Services' Vice President of Public Finance Group, an important factor in the Town's municipal bond rating is the existence of written financial policies that ensure financial stability regardless of changes in personnel or political bodies. List All Attachments as Follows: Memo to Council, Proposed Investment Policy Type(s) of Presentation: verbal Signatures of Submitting Staff: Depa ment Head Town Manager / Designee Budget Review (if item not budgeted or exceeds budget amount) TOWN OF FOUNTAIN HILLS OFFICE OF ACCOUNTING SUPERVISOR INTER OFFICE MEMO TO: Honorable Mayor and Town Council DT: March 14, 2003 THROUGH: Timothy Pickering, Town Manager FR: Julie A. Ghetti, Accounting Supervisor RE: Proposed Investment Policy Administration Since incorporation to pres nt the Town of Fountain Hills has utilized two financial institutions for managing cash. The first institution, the local bank, receives all daily deposits from receipts taken in during the normal course of a business day. The bank that the Town currently uses was the successful bidder during a public bid for banking services. The bank is insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000 per deposit. Excess amounts over $100,000 are guaranteed with bank collateral up to $1,000,000. The second institution, the State Treasurer's Local Government Investment Pool (LGIP), receives all wire transfers from the State Shared Revenues. Investing in the LGIP does not require that the Town solicit a public bid and is allowed under A.R.S. §35-326. The funds are available on 24 hours notice. In December 2000 the trustee for the Town of Fountain Hills Municipal Property Corporation purchased an investment with construction funds that defaulted. This default was cured in September, 2002; however, during the interim the Council requested that all future investments be only in securities backed by the full faith and credit of the Federal government. This investment policy explicitly requires that all custodians of Town assets comply with the mandate; the custodians are required to sign a certificate to that effect. After this policy is adopted by the Council staff will transfer all existing LGIP funds into a new LGIP-GOV pool that invests strictly in issues that carry the full faith and credit of the federal government. The purpose of the investment policy is to formalize the framework for the Town's daily investment activities. A summary of the key objectives are: Scope: Specifies what funds are included within the policy. Objectives: The primary objectives in priority order are 1) safety, 2) liquidity, and 3) return on investments Authority: Management responsibility for investments is delegated to the Town Manager Page 2 Standards of Prudence: The investment official may invest only in the eligible investments unless the person is of discretion and intelligence and seeking a reasonable income and preservation of capital. Authorized Institutions: Any institution other than the LGIP-GOV will need to be established and approved by resolution of the Town Council. Investment Type: Only those investments collateralized or backed by the full faith and credit of the U.S. government. Collateralization: Funds on deposit will be collateralized a minimum of 102%. Diversification: Other than in the LGIP-GOV no more than 25% of the Town's idle cash will be invested in a single security. The attached article from the Government Finance Officers Association (GFOA) entitled "Back to Basics: Making the Case for Investment Policies" highlights policy tips and traps. Staff �4w recommends approval of the attached Investment Policy. Attachs: Proposed Investment Policy, GFOA Article \\earth;J(:,hot d\1AJ1DA'rA\INTEROFF, ICE ENK) CO VCIL(I : M RESOLUTION NO. 2003-09 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, ADOPTING THE TOWN OF FOUNTAIN HILLS INVESTMENT POLICY. WHEREAS, the Mayor and Council of the Town of Fountain Hills (the "Town Council") has determined that it is in the best interests of the citizens of the Town of Fountain Hills (the "Town") to establish written financial policies that ensure financial stability despite changes in Town personnel or political bodies; and WHEREAS, the existence of written financial policies is an important factor in securing and maintaining a favorable municipal bond rating; and WHEREAS, the Town Council desires to establish an investment policy to formalize the framework for the Town's daily investment activities to include scope, objectives, authority, standards of risk and prudence, authorized institutions, investment type, collateralization and diversification. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA as follows: SECTION 1. That the "Town of Fountain Hills Investment Policy" is hereby adopted in the form attached hereto as Exhibit A and incorporated herein by reference. SECTION 2. That the Town Manager is hereby authorized and directed to take all steps necessary to ensure that the Town of Fountain Hills Investment Policy is implemented and applied to all Town investments. PASSED AND ADOPTED BY the Mayor and Council of the Town of Fountain Hills, Arizona, March 20, 2003. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: Tim G. Pickering, Town Manager 9196.001\ A2003-09 - Invest.Policy.m.doc 3-14-03-1 -L C CR4 • ✓ • APPR VED AS TO FORM: Andrew J. McGuire, Town Attorney Lq • TOWN OF FOUNTAIN HILLS INVESTMENT/CASH MANAGEMENT POLICY f 1 T It is the investment policy of the Town of Fountain Hills that idle public funds will be invested in a manner which maintains the safety of principal, maintains liquidity to meet cash flow needs, and conforming to all state and local statutes governing the investment of public funds. Investments will be made with judgement and care that prudent persons would exercise, in the exercise of their own affairs. The purpose of these investment guidelines is to formalize the framework for the Town's daily investment activities to include scope, prudence, objectives, authority, eligible investments, collaterahzation and diversification. 2.0 Scope: This investment policy 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. (hereinafter referred to as "the Town"). These funds are accounted for in the Town of Fountain Hills Annual Financial Report and may include: 2.1 Funds: 2.1.1 General Fund 2.1.2 Special Revenue Funds 2.1.3 Capital Project Funds 2.1.4 Debt Service Funds 2.1.5 Municipal Property Funds 2.1.6 Any new fund/component unit created unless specifically exempted. \\earth\TGheui\WPDATAUNVFST.docRevised 3/13/2003 Except for cash in certain restricted and special 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. 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. 3.1 The standard of prudence to be used by any firm or individual given responsibility as investment official shall be the "prudent person" standard and shall be applied in the context of managing an overall portfolio or account. Investment officers acting in accordance with written procedures and the 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. • LJ 4.0 0hiectiyP, The primary objectives, in priority order, of the Town of Fountain Hills investment activities shall be: 4.1 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 capital in the overall portfolio. To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. 4.2 Liquidity: The Town of Fountain Hills investment portfolio will remain sufficiently liquid to enable the Town of Fountain Hills to meet all operating requirements which might be reasonably anticipated. 4.3 Return on Investments: The Town of Fountain Hills investment portfolio shall be designed with the objective of attaining a rate of return throughout budgetary and economic cycles, commensurate with the Town of Fountain Hills investment risk constraints and the cash flow characteristics of the portfolio. Return shall be subordinated to safety and liquidity. The core of investments are limited to relatively low risk being assumed. Securities shall not be sold prior to maturity with the following exceptions: • A security with declining credit may be sold early to minimize loss of principal. • A security swap would improve the quality, yield or target duration in the portfolio. • Liquidity needs of the portfolio require that the security be sold. Revised 3/13/2003 Authority to manage the Town of Fountain Hills investment program is derived from the ARS §35-323 through 328. Management responsibility for the investment program is hereby delegated to the Town of Fountain Hills Town Manager, or his designee, who shall establish written procedures for the operation of the investment program consistent with this investment policy. Procedures should include reference to: safekeeping, PSA repurchase agreements, wire transfer agreements, banking- service contacts and cohatemVdepository 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 policy and the procedures established by the Town Manager. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Town Manager. The Town of Fountain Hills Town Manager shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. Officers and employees 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 officials shall disclose to the Town Manager any material financial interests in financial institutions that conduct business within this jurisdiction, and they shall further disclose any large personal Page 2 of 9 U financial/investment positions that could be related to the performance of the Town of Fountain Hills, particularly with regard to the time of purchases and sales. VAUNERMWITers 1=1111111811_ The Town Manager will maintain a list of financial institutions authorized to provide investment services. In addition, a list will also be maintained of approved security broker/dealers selected by credit worthiness who are authorized to provide investment services in the State of Arizona. The Town shall qualify institutions 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 A.R.S. §44- 3101, as amended (see excerpt attached as Exhibit A). 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 - a) audited financial statements within six months of the close ofthe fiscal year, b) proof of National Association of Security Dealers certification, trading resolution, c) proof ofAnzona registialion, d) certification of having read the Town of Fountain Hills investment policy and depository contracts. Revised 3/14/2003 By resolution of the Council, an eligible listing of broker/dealers shall be established for the purchase and sale of investment securities and further resolved that all prior resolutions establishing broker/dealers be rescinded. A new list of approved broker/dealers will be established as needed and at least every five years. An annual review of the financial condition and registrations of qualified companies will be conducted by the Town Manager. • err : ra FIRM uM•IN 11 The Town of Fountain Hills is empowered by statute to invest in the following types of investments: The following forms of investment are specified as eligible investments. All investments not listed will be considered prohibited investment purchases. 1. Collateralized or insured certificates of deposit, savings accounts, deposit accounts or money market deposits in amounts that are continuously and fully insured by the Federal Deposit Insurance Corporation ("FDIC's, including the Bank Insurance Fund and the Savings Association Insurance Fund, collateralized at no less than 102 percent. 2. State of Arizona Local Government Investment Pool - GOV. 3. U.S. government obligations, U.S. government agency obligations, and U.S. government instrumentality obligations, which have a liquid market Page 3 of 9 • with a readily determinable market value. 4. Obligations of the Government National Mortgage Association, Federal National Mortgage Association, or Federal Home Loan Mortgage Corporation, or any federal farm credit bank, federal land bank or banks or federal home loan bank notes or bonds. In addition to the limitations on investment types according to Arizona statutes, Town funds will not be invested in reverse repurchase agreement, callable agencies, derivative type investments such as collateralized mortgage obligations, strips, floaters, etc. Certain types of such investments may qualify under state statute but are not deemed appropriate for use by the Town of Fountain Hills. Wlffwal 1 Collateralization will be required on all types of investments: including certificates of deposit, money market or savings accounts, securities, etc. In order to anticipate market changes and provide a level of security for all funds, the collateralization level will be (102%) of market value of principal and accrued interest Acceptable collateral of surplus cash in demand deposit accounts and certificates of deposit are: • direct obligations of the United States Government, its agencies or instrumentalities to the payment of which the full faith and credit of the Government of the United States is pledged, or obligations to the payment of which the full faith and credit of this state is pledged. Revised 3/14/2003 The Federal Deposit Insurance Corporation (FDIC) protects deposits up to $100,000. The Town will seek to collateralize certificates of deposit or any other time deposit in an amount equal to 100% of the investment less the amount ($100,000) insured by the FDIC at levels per recommended practices of the Government Finance Officers Association. Collateral will always be held by an independent third party with whom the Town of Fountain Hills has a current custodial agreement A clearly marked evidence of ownership (safekeeping receipt) must be supplied to the Town of Fountain Hills and retained. Acceptable collateral will be subject to a recognized and readily available market pricing. All security transactions including collateral for repurchase agreements, entered into by the Town of Fountain Hills or it's agents/trustees shall be conducted on a deliveryversus- payment (DVP) basis. Securities shall be held by a custodian designated by the Town Manager and evidenced by safekeeping receipts. 11.0 Diversification: The Town of Fountain Hills will diversify its investments by security type and institution. With the exception of U.S. Treasury securities and authorized pools, no more than 25% of the Town of Fountain Hills' total investment portfolio will be invested in a single security type or with a single financial institution. Investments will be diversified by: Page 4 of 9 • • Limiting investments to avoid over - concentration in securities from a specific issuer or business sector; • Limiting investments in securities with higher credit risks; • Investing in securities with varying maturities; and • Continuously investing a portion of the portfolio in readily available funds such as the Local Government Investment Pool or money market funds to ensure that appropriate liquidity is maintained to meet ongoing obligations. r i U ►/ .. .• a 1/ .. r . To the extent possible, the Town or it's agents/trustees will attempt to match its investments with anticipated cash flow requirements. The weighted average maturity of all investments will not exceed three (9) months. Unless matched to a specific cash requirement, the Town shall not directly invest in securities maturing more than two (2) years from the date of purchase. Reserve or other funds with longer -term investment horizons may be invested in securities exceeding five years, if the maturities of such investments are made to coincide as nearly as practicable with the expected use of funds. WXON R. • NO n ON Inn no 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 Revised 3/14/2003 are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. ••� The Town Manager or designee is charged with the responsibility of including a report on investment activity and returns in the Town of Fountain Hills Comprehensive Annual Financial Report. The report shall summarize investment transactions that occurred during the reporting period, and shall discuss the current portfolio in terms of performance, market sector breakdown, number of trades, interest earnings, and other features. General obligation bond fund proceeds shall be invested pursuant to applicable laws, relevant bond indenture requirements and relevant tenets of this policy. Proceeds from tax-exempt general obligation bonds shall be invested, recorded and reported in the manner set forth by the U.S. Treasury and Internal Revenue Service to preserve the tax- exempt status of the bonds. The Finance Department will maintain systems to ensure that these requirements are met. The Town of Fountain Hills investment policy shall be adopted by resolution of the Town of Fountain Hills legislative authority. The policy shall be reviewed annually by the Town Manager and any modifications made thereto must be approved by the Town Council. Page 5 of 9 17. Cert ifiratinn A copy of this policy will be provided upon request to the senior management of any financial institution who 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. Revised 3/14/2003 Page 6 of 9 E, C 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 (FSA's) 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 (CD): A time deposit with a specific maturity evidenced by a certificate. Large - denomination CD's are typically negotiable. 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 of Fountain Hills. 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 Revised 3/13/2003 G :u counL 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 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&Us small business firms, students, farmers, farm cooperatives, and exporters. FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits, currently up to $100,000 per deposit. 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 (FTILB): 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 United States. Fannie Mae, as the corporation is called, is a private stockholder -owned corporation. The corporation's Page 7 of 9 purchases include a variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages. FNMA's safekeeping. 4. Avoidance of physical delivery securities - Book - securities are also highly liquid and are widely accepted. entry securities are much easier to transfer and FNMA assumes and guarantees that all security holders account for since actual delivery of a document will receive timely payment of principal and interest never takes place. Delivered securities must be properly safeguarded against loss or destruction. FEDERAL OPEN MARKET COMMITTEE (FOMC): The potential for fraud and loss increases with Consists of seven members of the Federal Reserve Board physically delivered securities. and five of the twelve Federal Reserve Bank Presidents. 5. Clear delegation of authority to subordinate staff The President of the New York Federal Reserve Bank is a members - subordinate staff members must have permanent member, while the other Presidents serve on a a clear understanding of their authority and rotating basis. The Committee periodically meets to set responsibilities to avoid improper actions. Clear Federal Reserve guidelines regarding purchases and sales of delegation of authority also preserves the internal Government Securities in the open market as a means of control structure that is contingent on the various influencing the volume of bank credit and money. staff positions and their respective responsibilities. 6. Written confirmation of transactions for FEDERAL RESERVE SYSTEM: The central bank of the investments and wire transfers - due to the United States created by Congress and consisting of a seven potential for error and improprieties arising from member Board of Governors in Washington, D.C., 12 telephone and electronic transactions, all regional banks and about 5,700 commercial banks that are transactions should be supported by written members of the system. communications and approved by the appropriate person. Written communications GOVERNMENT NATIONAL MORTGAGE may be via fax if on letterhead and if the ASSOCIATION (GNMA OR GINNIE MAE): safekeeping institution has a list of authorized Securities influencing the volume of bank credit guaranteed signatures. by GNMA and issued by mortgage bankers, commercial 7. Development of a wire transfer agreement with banks, savings and loan associations, and other institutions. the lead bank and third -party custodian - the ® Security holder is protected by full faith and credit of the U.S. Government Ginnie Mae securities are backed by designated official should ensure that an agreement will be entered into and will address the FHA, VA or FMHM mortgages. The term the following points: controls, security provisions, "passthrougW is often used to describe Ginnie Maes. and responsibilities of each party making and receiving wire transfers. 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 The concept of reasonable assurance recognizes that 1) the cost of a control should not exceed the benefits likely to be derived and 2) the valuation of costs and benefits requires estimates and judgments by management. Internal controls should address the following points: 1. Control of collusion - Collusion is a situation where two or more employees are working in conjunction to defraud their employer. 2. 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. 3. 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 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 Revised 3/13/2003 Page 8 of 9 value of an investment becomes due and payable. MONEY MARKET- The market in which short-term debt instruments (bills, commercial paper, bankers acceptances, etc.) are issued and traded. NATIONAL ASSOCIATION OF SECURITIES DEALERS (NASD): A self -regulatory organization (SRO) of brokers and dealers in the over-the-counter securities business. Its regulatory mandate includes authority over firms that distribute mutual fund shares as well as other securities. 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 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 Securities and Exchange Commission (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. 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. RATE OF RETURN: The yield obtainable on a security Revised 3/13/2003 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, that 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 banks vaults for protection. SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following the initial distribution. 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) + (Dividends paid) + (Capital Gains) — Total Return. TREASURY NOTES: Intermediate U.S.. government debt securities with maturities of one to 10 years and issued in denominations ranging from $1,000 to $1 million or more. 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. YIELD: The current rate of return on an investment security generally expressed as a percentage of the security's current price. Page 9 of 9 rormat Document Page 1 of 3 # Search � ; Printer Fr n Iy Vie !T Forty-sixth Legislature - First Regular Session ��a� ARS TITLE PAGE NEXT DOCUMENT PREVIOUS DOCUMENT 44-3101. Definitions In this chapter, unless the context otherwise requires: 1. "Closed -end company" means any management company other than an open-end company or unit investment trust. 2. "Depository institution" means a bank, savings and loan association or trust company whose business is supervised and regulated by an agency of this state or the United States, or an employee, as defined in title 10, chapter 1, of any such bank, savings and loan association or trust company while acting within the scope of the employee's employment. 3. "Federal covered adviser" means an investment adviser registered under the investment advisers act of 1940. 4. "IARD" means the investment adviser registration depository operated by the national association of securities dealers. 5. "Investment adviser" means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, p 40 .asing or selling securities or who, for compensation and as a part of a regular business, issues or promulgates apjfr ses or reports concerning securities. Investment adviser includes financial planners and other persons who, as an integral component of other financially related services, provide the foregoing investment advisory services to others for compensation and as part of a business or who hold themselves out as providing the foregoing investment advisory services to others for compensation. Investment adviser does not include: (a) An investment adviser representative. (b) A depository institution. (c) A lawyer, law firm, certified public accountant or accounting firm whose performance of the investment advisory services is solely incidental to the practice of the person's profession or who does not do any of the following: (i) Exercise investment discretion with respect to the assets of clients or maintain custody of the assets of clients for the purpose of investing the assets, except if the person is acting in a bona fide fiduciary capacity such as an executor, trustee, personal representative, estate or trust agent, guardian or conservator. (ii) Accept or receive directly or indirectly any commission, fee or other remuneration contingent on the purchase or sale of any specific security by a client of the person. (iii) Give advice on the purchase or sale of specific securities other than advice about specific securities that is based on financial statement analysis or tax considerations that are reasonably related to and in connection with the person's P. ssion. (d) A publisher, employee or columnist of any newspaper, news column, newsletter, news magazine or business or htty://www.azleR.state.az.us/FormatDocument.asp?inDoc=/ars/44/03I01.htm&Title=44&DocTvpe=ARS 3/12/2003 rortnat liocument Page 2 of 3 financial publication or service, whether communicated in hard copy form, by electronic means or otherwise, that does not consist of the rendering of advice on the basis of the specific investment situation of each client. (n insurance company or insurance producer that is licensed or authorized by the department of insurance to transact the business of insurance, including the sale of annuities, whose performance of the investment advisory services is solely incidental to the conduct of business as an insurance company or insurance producer and that receives no special compensation for providing investment advisory services. (f) A real estate salesperson or real estate broker who is licensed or authorized by the state real estate department to transact the business of real estate, whose performance as an investment adviser is solely incidental to the conduct of the individual's business as a broker or salesman and who receives no special compensation for providing investment advisory services. (g) Any officer, director, partner or employee of an entity engaged in selling interest in entities that invest in real property, including partnerships, corporations or sole proprietorships, if such transactions are otherwise subject to the securities laws of the United States or this state. (h) Mortgage brokers or mortgage bankers who are licensed by the state banking department to transact the business of a mortgage broker or mortgage banker, and their employees, whose performance of any investment advisory service is solely incidental to the conduct of the business of a mortgage broker or mortgage banker and who receives no special compensation for providing investment advisory services. 6. "Investment adviser representative" means any partner, officer or director of an investment adviser, any individual who occupies a status or performs functions similar to a partner, officer or director of an investment adviser or any other individual who is employed by or associated with an investment adviser, except clerical or ministerial personnel, Jpll aho does any of the following: (a) Makes any recommendations or otherwise renders advice regarding securities. (b) Manages accounts or portfolios of clients. (c) Determines which recommendation or advice regarding securities should be given to a client if the individual is a member of the investment adviser's investment committee that determines general investment advice to be given to clients or the individual determines general client advice if the investment adviser has no investment committee, except that if an investment adviser has more than five individuals who make recommendations or give advice, only the supervisors of those individuals are investment adviser representatives. (d) Solicits, offers or negotiates for the sale of or sells investment advisory services. (e) Directly supervises employees who perform any of the acts described in this paragraph. 7. "Investment advisers act of 1940" means the act of Congress known as the investment advisers act of 1940 (15 United States Code section 80b). 8. "Investment company" means any company that is registered under the investment company act of 1940. 9. "Investment company act of 1940" means the act of Congress known as the investment company act of 1940 (15 id States Code section 80a). 10. "Licensed investment adviser" means an investment adviser licensed under this chapter. htti)://www.azleR.state.az.us/FormatDocument.asp?inDoc=/ars/44/03I01.htm&Title=44&DocTvi)e=ARS 3/12/2003 rormat i wument Page 3 of 3 11. "Licensed investment adviser representative" means an investment adviser representative licensed under this chapter. NO -Open-end company" means a management company that is offering for sale or has outstanding any redeemable security of which it is the issuer. 13. "Solely incidental to the practice of the person's profession" and "solely incidental to the conduct of the person's business" means that the person does not hold itself out to the public as a provider of investment advisory services, the investment advisory services are rendered in connection with and reasonably related to the professional services or business transactions being provided or consummated and the fee charged for the investment advisory services is based on the same factors used by the person to determine the fees for the person's professional or business services. 14. "Unit investment trust" means an investment company that is organized under a trust indenture, contract of custodianship or agency or similar instrument, that does not have a board of directors and that issues only redeemable securities, each of which represents an undivided interest in a unit of specified securities, but does not include a voting trust. http://www.azleiz.state.az.us/FormatDocument.asp?inDoc=/ars/44/03101.htm&Title=44&DocTvpe=ARS 3/12/2003 • �... .,.»...m�._�..._,. .. �,,. ... .. .x*: vaca.,r,^.--xeaac�ss^r.s-F:cmc:-ss•y..u#�o�rr�:'��.,.a..s�Xr�.s..T"w asrz:s,,:....::'a .:.:.::�._. Local governments sometimes look to investment earnings to compensate for declining revenues. Adhering to established investment policies can help ensure that they don't compromise the safety of public funds in the process. Back to Basics: Making the Case for Investment Policies By Francie Heller, Sally Walton, and Jeremy Willmoth The historically low interest rates caused by the Federal Reserve's aggressive efforts to minimize the effects of the most recent recession have created a serious dilemma for local governments. Already confronted by substantial budget gaps because of declining tax revenues, eroding interest earnings from investments have further exacerbated fiscal woes. Faced with the same problem in the early 1990s, some governments tried to com- pensate for revenue shortfalls by pumping up investment earnings through extended maturities and exotic securities. These misguided efforts resulted in unprecedented losses of taxpayer dollars, prompt- ing some states to pass legislation requiring governments to develop written investment policies. Many governments have since heeded the advice of professional associations to institute such policies. It remains to be seen whether or not all of the attention focused on public investing following the losses of the last decade and the can- onization of investment policies since that time will be enough to prevent a recurrence of those events this time around. What is cer- tain is that investment policies are much more pervasive now than they were before. The prevalence of such policies, however, does not eradicate the temptation to plug budget holes with the purt of investment earnings. As such, this article reviews the impor- tance of investment policies and describes how they can be used to maintain proper perspective now that governments are again chal- lenged by the double whammy of declining tax revenues and erod- ing interest earnings. Developing the Investment Policy The foundation of any successful investment program is a com- prehensive policy that reflects the government's investment philoso- phy and tolerance for risk. For many governments, developing poli- cies and procedures is a time-consuming process that is low on their list of priorities. Confronted by legal or political imperatives to develop an investment policy, governments turn almost instinctive- ly to the policies of other jurisdictions, changing little more than their name. Although sample policies provide useful guidance for the development of an investment policy, governments should do more than simply cut and paste the work of others. An effective pol- icy demands careful consideration of those factors that make each 20 AUGUST 2002 GOVERNME\"T FINANCE REVIEW An investment policy is much more than a simple list of authorized investment instruments. A well - developed investment policy can and should be a valuable tool for managing a government investment program. government unique, including the timing of revenues and expendi- tures, liquidity constraints, and the expertise of the investment staff. An investment policy is much more than a simple list of autho- rized investment instruments. A well -developed investment policy can and should be a valuable tool for managing a government investment program. Such a policy defines the parameters of the investment program and indemnifies investment officers from per- sonal liability so long as they adhere to the tenets of their respective policies. Frequently, state investment statutes provide specific guid- ance on local government investing. Some states go so far as to require by law that their political subdivisions develop and follow written investment policies. Investment guidance at the state level, however, is necessarily general. As such, local governments should tailor their investment policies and programs to their unique con- siderations. Although investment policies should be customized by jurisdic- tion, there are a number of important components or categories that should be included in any investment policy. Sample poli- cies developed by both the Government Finance Officers Association and the Municipal Treasurers Association can serve as useful checklists for the kinds of information governments should consider including in their investment policies (Exhibit 1).' These components include —but are not limited to — scope, objectives, delegation of authority, prudence, collateraliza- tion requirements, authorized investment instruments, interim and annual reporting, and selection criteria for depositories, broker/dealers, and safekeeping institutions. Every investment policy should include a clear and concise state- ment of objectives. Investment objectives, which should be equally well defined for short-term cash as for long-term investments, typi- cally encompass safety, liquidity, and yield. All governments have cash flow needs that must be carefully managed to ensure that there is sufficient cash to meet obligations and that idle cash is efficiently invested. Written investment policies should be available to guide cash managers as they make daily decisions about the allocation of public funds among allowable investment instruments. In the absence of such policies, investment officers expose themselves to the second guessing of both management and elected officials. vestment policies are generally assumed to be intended exclu- for the individual or individuals who have direct responsibili- r a government's investment program. This assumption is rea- sonable in that the purpose of such policies is to guide investment decisions so as to realize stated objectives. However, because invest- ment decisions contribute to a government's overall financial condi- tion, responsibility for the policy that guides these decisions should extend beyond the finance department to the chief executive, gov- erning body, and others who have direct oversight of fiscal affairs. All of these parties should be included in the development and review of the investment policy, which should uniformly apply to local government employees, officials, representatives, and autho- rized agents. Once a government has developed an investment poli- cy, the governing body should officially approve the policy. Securing legislative approval legitimizes the policy as the authoritative guide for the government's investment pro- gram. Upon approval, the investment officer should eval- uate the government's current investment program to ensure that all activities comply with the new policy. Any discrepan- cies should be immediately corrected. This is also an ideal time to formalize procedures for implementing the investment policy. Written procedures outline the process for making investment deci- sions, detail the activities of the investment staff, and specify how 9Istment decisions are to be carried out. Many governments ire a regular review (or audit) of the investment function to ver- that the requirements of the investment policy are being met. Managing Risk and Return Governing body approval of investment policies should not rele- gate these documents to the dust -collector status often reserved for government policies and procedures manuals. To the contrary, investment policies should be referred to again and again as govern- ments manage their investment programs. Written investment poli- cies can help governments manage market risk and return by speci- fying tolerance for risk, defining risk parameters, and minimizing ambiguity. INVESTMENT POLICY CHECKLIST O Scope O Objectives O Delegation of authority O Prudence O Ethics and conflicts of interest O Internal controls for the investment function O Investment committee O Interim and annual reporting O Instruments O Collateral ization O Selection of financial institutions and broker/dealers 0 Maturities and volatility O Diversification O Risks O Safekeeping and custody O Performance evaluation and operations audit In buying and selling securities for their investment portfolios, governments need to be careful so as not to assume more risk than they can tolerate. Investment advisers can help governments establish appropriate risk parameters for their portfolios based on the investment objectives and tolerance for risk specified in their investment policies. The most common types of investment risk are credit risk, liquid- ity risk, and market risk. Credit risk is the risk that some or all of the principal amount of an investment will be lost because of default by the issuer, securities broker or dealer, or financial institu- tion. Liquidity risk is the risk of not being able to sell an investment prior to maturity in order to obtain needed cash. Market risk is the risk that changes in the financial market will reduce the value of an investment. These risks can be mitigated to various degrees by lim- iting investments to high -quality credits, insisting on collateraliza- tion for certain investments, ensuring that there is an active sec- ondary market for investments, and shortening maturities when interest rates are expected to rise.' Governments should explicitly state their tolerance for risk, tak- ing into consideration their overall financial condition, their short - and long-term financial goals, and their unique politi- cal and administrative envi- ronments. An investment pol- icy should specify the govern- ment's risk -to -return ratio and describe how it plans to maintain that ratio. This is usually accomplished through some combination of the risk mitigation strategies identified above. Because governments operate in a politically charged environ- ment in which stewardship for public funds is sacrosanct, financial stability and protection against investment losses are of para- mount importance. In buying and selling securities for their investment portfolios, governments need to be careful so as not to assume more risk than they can tolerate. Broker/dealers and investment advisers can help governments establish appropriate risk parameters for their portfo- lios based on the investment objectives and tolerance for risk speci- fied in their investment policies. Otherwise, public investors can, easily fall into the trap of chasing yield according to prevailing mar- ket conditions. Ideally, investment policies are developed when market conditions are neutral —neither decidedly bullish nor decid- edly bearish. This makes the investment policy a stable guide through the inevitable fluctuations in the market. Investment policies must be able to stand the test of time; that is, their usefulness in guiding investment decision making should not wax and wane with the financial markets. If a policy stifles a gov- ernment's ability to adjust its investment program to changing mar- ket conditions, the policy should be revised accordingly. But an investment policy should not be a work in progress, subject to the whims of broker/dealers, portfolio managers, administrators, and elected officials. Frequently revising investment policies to accom- modate the latest "sure thing" undermines their very purpose, which is to guide investment activities and protect against losses — in any given circumstance. In articulating allowable securities in their investment policies, governments should be as clear and detailed as possible. Ambiguous language opens the door for the "loose" translations that can get governments in trouble. If, for example, statf law limits the use of commercial paper or securities lending and a government decides to engage in such transactions, the policy should be written so as to clearly prohibit illegal investments. If a government decides to invest in a state -sponsored local government mutual fund (investment pool), that fund should be explicitly identified. Otherwise, a portfolio manager might reasonably assume that the policy extends to all municipal mutual funds. The more precise an investment policy's language, the less room for interpretation and mistakes. GOVERNMENT FINANCE REVIEW AUGUST 2002 21 R INVESTMENT POLICY TIPS AND TRAPS Tip Trap Clearly describe which funds are covered by The policy should be clear on which funds are covered by the policy since some funds, such as the policy and which funds are covered by a bond proceeds or pension funds, may have different investment objectives or different invest - separate policy. ment horizons and would be better managed under a separate policy. Include a clear and concise statement of Simply stating investment objectives as safety, liquidity, and yield will not help governments pro - objectives. tect their funds. Statements describing how these objectives will be achieved offer better guid- ance. GFOA's Sample Investment Policy includes explicit statements of objectives. Know your investment statutes and determine Some governments copy the state statute into their investment policies, thus allowing the use of if all of the allowable investment instruments investment instruments that staff may not fully understand or that may be inappropriate for their are appropriate for your investment program. investment program. Many governments may prefer an investment program that is more restric- tive than that allowed by state statute. Use explicit language to describe allowable Vague language leaves room for interpretation. For example, although many derivative invest - investment instruments; include clear defini- ment instruments are guaranteed by the U.S. government, they carry high market risk, which tions of investment types, credit criteria, matu- makes them inappropriate instruments for public funds. However, many policies include all U.S. rity restrictions and other requirements. government securities as allowable investments. Clear, explicit language describing allowable investment instruments leaves little room for interpretation and helps protect governments from imprudent investment decisions. Require governing body approval for new Requiring governing body approval forces investment officials to analyze the security in question security types, securities that are not clearly and explain why it should be included, thereby preventing decisions that have not been fully allowed by the policy, and deviations from the thought out. policy. Include collateral ization requirements in the Governments often require collateral ization for their deposit -type investments (e.g., certificates policy. of deposit and repurchase agreements) but do not include specific guidelines. Investment poli- cies should specify allowable collateral securities, collateral ratios, and third -party safekeeping requirements. Avoid arbitrary percentages when discussing Many investment policies include specific diversification guidelines such as, "The portfolio must diversification requirements; instead, use guide- be invested in 50 percent Treasuries, 30 percent certificates of deposit, 10 percent commercial lines such as "no more than 5 percent of the paper, and 10 percent local government investment pool" Arbitrary percentages can restrict the portfolio can be invested in the securities of a ability of governments to implement effective investment strategies. The purpose of diversifica- single issuer" or "no more than 20 percent of the tion is to reduce risk in the portfolio. This can be accomplished by investing in a variety of maturi- porffolio may be invested beyond one year" ties and avoiding over -concentration in specific business sectors. Require a formal process for selecting finan- The point of this section is to specify what process governments will use to screen firms selling cial institutions and broker/dealers and securities.This section should require a due diligence review of prospective firms, specify mini - describe this process in the policy. mum credit criteria for financial institutions, and limit transactions to only those firms on the approved list. The list should be included as an appendix item. Require competitive quotes from at least three Many governments obtain competitive quotes for their investment transactions but do not specifi- financial institutions and/or broker/dealers. cally require them in the investment policy. By not requiring competitive quotes, this practice could be lost over time. Adding this requirement to the investment policy ensures that the com- petitive quoting process is always used and ensures the best trade execution for investment transactions. Pick relevant benchmarks to gauge invest- Many investment policies specify the 90-day Treasury bill as the benchmark in one section and ment performance. then state that the portfolio must maintain a one-year weighted average maturity in another sec- tion. The benchmark should mirror the weighted average maturity of the portfolio in order to pro- vide a meaningful performance comparison. A list of benchmarks with varying weighted average maturities can be included in the policy to cover times when the portfolio's weighted average maturity changes. Adopt your investment policy as a resolution or Many governments develop investment policies as internal documents and do not require formal an ordinance. governing body approval. By adopting the policy through ordinance or a resolution, the policy becomes an official document. Keep in mind the difference between a policy A policy sets out what you can do. A procedure spells out how you are going to do it. Some poli- and a procedure. cies get bogged down in too much detail and become quickly outdated. Include specifics such as authorized person- Policies that include names rather than titles of personnel and specific names of authorized busi- nel and authorized financial institutions and ness partners can become outdated and require governing body approval to change. Using only broker/dealers in an appendix attached to the titles and referencing appendix items in the policy allows the policy itself to stay current. Appendix policy. items can be easily updated and do not require governing body approval. 22 AUGUST 2002 GOVERNMENT FINANCE REVIEW P�viewing the Investment Policy worth reiterating that investment policies are not meant to be INIK documents; once approved, they should be able to stand on their own with minimal revisions. The realities of the new economy, however, demand that governments review their policies whenever new financial opportunities arise, current investments jeopardize the health of the portfolio, or cash needs change. Even in the absence of such developments, governments should review their investment policies at least once every two years to make sure that their portfolios are in line with their policies and that their policies are meeting their needs. In today's ever -changing marketplace, new securities are con- stantly coming to market. In addition, some states have relaxed statutory requirements to permit certain types of securities that were not allowed in the past. Although the mere availability or per- missibility of new investment instruments does not justify changing an investment policy, governments would be wise to at least consid- er the appropriateness of such offerings within the context of their overall investment programs. If a new security were to meet a gov- ernment's risk and return profile, it would make sense to add it to the list of allowable instruments in the investment policy. Just as governments may need to amend their investment policies to accommodate new investment instruments, they should be pre- pared to make periodic adjustments if their portfolios are underper- forming because of flaws in the policies themselves. Governments should not jeopardize the viability of their portfolios simply to remain true to investment policies that prevent them from achieving minimum yield standards. Before changing their investment poli- cies, however, governments should make sure that flawed policies — not flawed strategies or fluctuating market conditions —are respon- sible for poor portfolio performance. ,dftpvernments also might need to consider revising their invest - policies when their cash flow needs change. For example, a nge c in the timing of property tax collections at the county level could force a local government to issue tax anticipation notes to cover expenditures until the receipt of tax revenues. This kind of change would have a significant impact on investment activities, fundamentally altering the amount of money available for invest- ment and the maturity structure of the portfolio. Investment poli- cies may need to change with evolving cash flow needs so that gov- ernments can continue to efficiently manage idle cash. Conclusion Investment policies are the foundation of sound government investment programs. A well -designed investment policy can enhance portfolio performance, protect against losses, and limit the liability of investment staff. Of course, the extent to which an invest- ment policy facilitates the purposes for which it was designed depends on the importance assigned to it by the organization and the willingness of investment staff to follow its guidance. As government finance officers face increasing pressure to plug budget holes with- out raising taxes or cutting services, the temptation to offset revenue shortfalls with investment earnings can lead investment officials to deviate from their policies. Renewed emphasis on investment poli- cies and procedures by governing bodies and chief executives can help governments avoid the investment problems experienced under similar economic conditions during the 1990s. Ill NOTES Both of these sample investment policies are available online free of charge. GFOAs policy is available at www.gfoa.org/services/specials/invplcy.shtml, while the Municipal Treasurers' Association's can be found at vrww.mtausc.org/certification/model.pdf. M. Corinne Larson, An Elected Official's Guide to Investing (GFOA: Chicago,1996), 7-8. FRANCIE HELLER is president of MBIA-MISC, SALLY WALTO` is vice presi- dent of investments for US Bancorp Piper Jaffray, and JEREMY WILLMOTH is budget administrator for Jackson Count), .Missouri. The authors are all members of the Subcommittee on Investments of GFOA's Committee on Cash Management. i { 30> BOND L0GISTIX.. :�.IGnT :NNC'/ATiON �STL.AAnICN Investment Advisory Services Bond Proceeds Investments Structuring and Bidding Portfolio Management and Reporting Services }` Post -Issuance Compliance Services '4 Arbitrage Rebate Consulting Continuing Municipal Disclosure Consulting DALLAS Toll Free LOS ANGELES 8 6 6-DIAL- B L X NEW YORK (866-342-5259) SAN FRANCISCO I www.bond[ogistix.com GOVERNMENT FINANCE REVIEW AUGUST 2002 23 Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Submitting Department: Admin Consent:❑ Regular:® Meeting Date: 03/20/2003 Contact Person: Julie Ghetti Requesting Action:❑ Type of Document Needing Approval (Check all that a ❑ Public Hearing ® Resolution ❑ Agreement ❑ Emergency Clause ❑ Special Consideration ❑ Intergovernmental Agreement ❑ Grant Submission ❑ Liquor/Bingo License Application ❑ Special Event Permit ❑ Special/Temp Use Permit ❑ Other: Council Priority (Check Appropriate Areas): ❑ Education ❑ Public Fitness ❑ Public Safety ❑ Community Activities ❑ Public Works ❑ Human Service Needs ❑ Town Elections ® Community Development Report Only: El ❑ Ordinance ❑ Special Event Permit ❑ Acceptance ❑ Plat ❑ Library Services ❑ Economic Development ❑ Parks & Recreation Regular Agenda Wording: Consideration of Resolution 2003-10 adopting a policy on Community Facility Districts. Staff Recommendation: Approve Fiscal Impact: No $ Purpose of Item and Background Information: To provide background information to the Council on the history and formation of Community Facility Districts in Arizona. Having a formal CFD policy will guide the staff and Town Council in evaluating the benefits and costs of the CFD, conformance with the Town's General Plan, risks and application procedures. List All Attachments as Follows: Memo to Council, proposed Policy on CFD Formation, General Information on CFD's. Type(s) of Presentation: Verbal Signatures of Submitting Staff: Depar ent ea Town Manager / Designee Budget Review (if item not budgeted or exceeds budget amount) TOWN OF FOUNTAIN HILLS OFFICE OF ACCOUNTING SUPERVISOR INTER OFFICE MEMO TO: Honorable Mayor and Town Council DT: March 13, 2003 THROUGH: Timothy Pickering, Town Manager FR: Julie A. Ghetti, Accounting Su ervisor RE: Community Facilities Districts Administration During the March 6, 2003 meeting e Town Council reviewed a presentation by a developer, MCO Custom Properties, proposing a Community Facilities District (CID) in Adero Canyon. Staff's recommendation was for the Town to adopt a formal policy, application and review process to set forth guidelines and application procedures for the establishment of community facilities districts within the Town The adoption of such policy guidelines by the Town Council will establish a uniform set of criteria for the consideration by the Town for the use of CFD's for the financing of capital improvement projects and recurring project maintenance expenses within defined areas of the Town. Such policy guidelines will also govern the application procedures, implementation methodology and financial responsibilities for any CID project to be considered. At a recent meeting with representatives from Moody's Investors Service the importance of having financial policies in place was related to the effect on the Town bond ratings. Sample policies and procedures were obtained from cities that utilize CID financing - Mesa, Scottsdale, Goodyear, Marana and Peoria. These policies provided the basis for the Fountain Hills Policy Guidelines and Application Procedures for the Establishment of Community Facility Districts attached. The CFD policy has been reviewed by the Town Attorney, Andrew McGuire and outside counsel, Mr. Scott Ruby, of Gust Rosenfeld. Mr. Ruby has represented the Town previously with the Eagle Mountain and Cottonwoods CFD's and specializes in special district financing. Although adoption of the policy is recommended each CFD application shall stand on it's own merits and will not be automatically approved. The attached policy is recommended to insure current and future requests for CID's are analyzed in a consistent and fair manner. This policy will guide the staff and Council with the current Adero Canyon CFD request as well as all future requests. I have attached a report that offers additional insight into the background, benefits and risks associated with the use of CFD financing. Attachments: CFD Policy, Information on CFD's fir. COMMUNITY FACILITY DISTRICTS Background of CFDs Community Facilities Districts (CFD's) were established by the Arizona State Legislature in 1988 to provide cities with a new method of financing, constructing, maintaining and operating public improvements in undeveloped areas of the Town. The cost of the new public infrastructure can be passed on to the landowners in the specific areas being improved without burdening the rest of the community. Infrastructure improvements may include a wide variety of projects such as water and sewer systems, drainage and flood control, streets, trails, open space, lighting, public buildings, school sites, and landscaping. The CID can also pay for the ongoing operations and maintenance expenses of these improvements. Currently there are approximately 25 CFDs in the State. Scottsdale used CFDs to help finance improvements in the McDowell Mountain Ranch and DC Ranch developments. The Town of Fountain Hills has formed a CID for development in the Eagle Mountain Community and improvements in Cottonwoods. CFD Formation Process The potential formation of a new CFD begins with an application from the project developer. Although the developer pays the costs associated with analyzing the potential CFD, the Town must retain control in selecting the parties involved in the formation. These parties typically include a financial advisor, feasibility consultant, engineer, appraiser, bond counsel and underwriter. An independent appraisal and feasibility analysis must be prepared and analyzed. In order to be further considered the CFD must be financially sound and in full compliance with Town policies. CFDs are separate legal entities, similar to establishing an entirely new municipal entity within the boundaries of the Town. The CFD formation process includes several steps including the petition for formation, the general plan for the CFD, Council adoption of intent to form a district, an objection period, an election process and finally the legal formation of the new district. CFDs can only be formed within the boundaries of a Town. Usually the Town Council serves as the Board of Directors for the district. Prior to the issuance of bonds and construction of projects, the District Board must approve a feasibility study on benefits of the CFD and conduct a public hearing on the study. CFD Financing CFDs obtain the capital to construct or purchase improvements by issuing bonds. CFDs are able to issue three types of bonds - general obligation bonds, revenue bonds, and special assessment bonds. General obligation bonds can not exceed 60% of the estimated market value of the property within the district after completion of the improvements. The amount of bonds to be issued is also usually limited by the amount of the additional tax rate that is deemed to be acceptable to future property owners. A Developer Contribution Agreement provides additional protection against default or bankruptcy. Revenue bonds are sometimes used to finance the construction of water and sewer system improvements within the CFD. The bond payments are made from District revenues — typically the water and sewer revenues from the customers that benefit from the improvements within the District. Special assessment bonds are similar to Town improvement district bonds. The assessments are based on specific benefits received by the property owners from the improvements constructed. The bond payments are made from the special assessment revenues collected from the homeowner. This requires semi-annual billings from the District to the property owners, revenue collections and bond principal and interest payments. Delinquent assessments can result in the forced sales of a property. `%W Administrative Requirements CFDs require ongoing administration by Council and staff. A CFD may remain in existence for seven years or longer. As mentioned above, the Town Council usually serves as the Board of Directors for the CFD. The Board will appoint officers for the District including a District Manager, Treasurer and Clerk. Town staff usually provides these administrative services to the Board. The administrative duties of a District are quite similar to those for a Town. The Council must hold periodic board meetings in their capacity as the Board of Directors for the district. The Town Clerk will function for a District in a manner similar to their role for a Town. The Board must formally adopt an annual budget and hold public hearings on the tax levy. The tax rate for the District must be set before August 1 each year. Other duties of the District include the preparation of annual audited financial reports and reports on outstanding debt for review by the State Department of Revenue. Policy Guidance Prior to consideration of a CFD the Council should adopt a formal CFD policy. The policy should address acceptable uses for CFDs, the appropriate size of a development to consider use of a CFD, the types of projects in which CFD financing will be considered and the types and quality of the benefits the Town should expect to gain for undertaking a CFD. Formal procedures should outline the application process, fees required for submittal of the application, the method by which associated costs will be paid, the required documentation and feasibility analyses, parties to be involved, minimum coverage ratios, additional security provisions, requirements for a developer contribution agreement, etc. The policy and procedures should outline when an application for a new CID should be submitted to the Town — e.g. should zoning approval be required prior to application. The policy and procedures should also address whether a development agreement will be required outlining the obligations of the parties. The policy and procedures will outline the type of bond financing potentially available for various uses by CFDs. Benefits of Using CFDs A CID offers potential benefits to the Town, the developer and the homeowner. The primary benefit to the developer is the availability of long term tax exempt financing. Rather than raising its own capital, the developer instead turns to the CFD for funding. The repayment of the CFD debt does not have to be built into the sales price of the home. Instead, the eventual homeowner will repay the debt through additional real estate tax payments or assessments. The primary benefit to the homeowner is a lower up front home price. The homes should be sold at a reduced cost since the developer did not have to pay for certain infrastructure improvements. Of course, the lower initial home price must be offset through the additional real estate taxes or assessments. A Town should expect to benefit from providing CID financing to the developer. Because of the capital saved by the developer, the Town should be provided with additional public amenities in the development. Without the benefit of the CID, these extra public improvements might otherwise not be constructed. An example of additional public improvements is seen in the Scottsdale's DC Ranch development. The significant savings to the developer resulted in an extensive network of public trails throughout the development. Risks of Using CFDs Clearly, there are risks associated with the potential benefits received through a CID. The primary risk is default by the CID on the scheduled debt service payments. Although the Town is not directly liable for these payments, often there is significant political and financial pressure on the Town to cure the default. These repayment risks can be reduced through conservative and careful structuring of the CID at its inception. Proper structuring should include appropriate coverage ratios, acceptable tax rates, and appropriate backup security. A sound feasibility analysis must be carefully considered as part of the application for formation of a new CID. The potential risks associated with CFDs can be reduced by insuring that new CFDs follow a sound financial policy, are carefully ,,%W analyzed and are structured in a financially conservative manner. Conclusion CFDs provide a non-traditional method for financing certain infrastructure improvements. Through their proper use, a Town can acquire additional desired public benefits that might not otherwise have been provided by a developer. The use of a CFD is often limited to major development projects where significant additional public benefits are provided. There are significant risks and ongoing administrative requirements associated with the use of a CFD. These risks can be reduced, but not eliminated, through careful control and financial structuring. Staff is recommending a Town policy for Council review along with detailed procedures to be followed in assessing a developer's application for a CFD. 1leartli\JGhetti\Wi'DATA\CFDmech,ui ism.doc TOWN OF FOUNTAIN HILLS, ARIZONA POLICY GUIDELINES AND APPLICATION PROCEDURES FOR THE ESTABLISHMENT OF COMMUNITY FACILITIES DISTRICTS In order to secure for the Town of Fountain Hills, Arizona (the "Town") the benefits of the Community Facilities Act (the "Act") enacted by the Arizona Legislature in 1988 and to promote the best interests of the Town, the following Policy Guidelines and Application Procedures are adopted by the Town Council. A community facilities district ("CFD") provides a funding mechanism to finance °�4 construction, acquisition, operation and maintenance of public infrastructure that benefits the real property comprising the CID and its ultimate users, and to better enable the Town to provide municipal services benefiting the users of the real property within the CID. The Town Council recognizes the ability of the CFD to allow the construction and/or acquisition of infrastructure that might otherwise not be provided. Considering that the establishment of a CFD is the legal equivalent of the establishment of an entirely new municipal entity within the boundaries of the Town, the Town Council believes that the formation of the CFD should be entered into carefully, to ensure its lasting success. It is for these reasons that the Town Council has established the following Policy Guidelines and Application Procedures. ARTICLE 1. General Policies 1.1. CFD's should be utilized primarily in connection with the financing of infrastructure for development of residential projects, master planned communities or projects involving substantial commercial development. 1.2 Special consideration should be given to CFDs that provide an enhanced level of infrastructure amenities and/or municipal services. Any public infrastructure financed by a CID should be in conformance with the Town's General Plan in order to encourage orderly growth and development. 1.3 All costs incurred by the Town and/or the CFD in connection with the CFD application, formation and administration and operation expenses appurtenant thereto, will be paid by the applicant/landowner (the "Applicant") through a series of monetary deposits as provided herein. These deposits shall be applied to payments for i1e[attlalitih<rtliil `T'T)A"I' l('I t)I'oli�� d=oc services rendered by the Town staff, CID staff and services rendered by outside consultants who may be retained by the Town and/or the CID, including but not limited to bond counsel, financial advisors, engineers, appraisers and attorneys. The Town may use outside consultants as "staff' to review or confirm any analyses prepared in conjunction with an application or financing of the CFD. If the Town or CFD uses outside consultants as "staff', such as attorneys or engineers, those consultants will also be paid their customary rate for services. If authorized by the CFD board of directors, exercising its sole discretion, all or part of such costs may be reimbursed to the Applicant from a CFD tax levy, CID assessments, CFD revenues or CFD bond proceeds, provided such reimbursement is in conformance with federal law, state law and these guidelines. 1.4 The Town will encourage an area to be governed by as few CFDs as possible, and a preference will be given to one master CFD for a single development. This policy is adopted to facilitate ease of administration and to create the largest tax/revenue base possible. The decision to form a CID shall be determined by the Town Council exercising its sole and absolute discretion. 1.5 Unless otherwise agreed to by the Town Council, and pursuant to state statutes, the CID will be governed by a board of directors comprised of the members of the Town Council. The day-to-day administrative responsibilities of the CID will be performed pursuant to a contract by outside personnel or by the Town staff. The Town will determine that adequate safeguards and controls are in place to ensure the soundness of any CID financing program, as well as the adequacy and legality of the legal proceedings and disclosure documents in connection with any financing. At the option of the CFD board of directors and with approval by the Town Council, advisory committees may be utilized. 1.6 Unless otherwise agreed to by the Town, the CID must be self-supporting from the standpoint of financing, operations and maintenance and no Town funds will be used for CFD purposes. Notwithstanding anything contained herein, neither the property, the full faith and credit nor the taxing power of the Town shall be pledged to the payment of any CID obligation or indebtedness. 1.7 After review of the project feasibility report, property appraisals and other required pertinent information, the CFD board of directors will determine, in its sole and absolute discretion, the amount, timing and form of financing to be used by a CFD. 1.8 All public infrastructure constructed or acquired by the CID will utilize statutory public procurement procedures in accordance with applicable laws, rules and regulations, as applicable. 1.9 The CID will not use bond proceeds or other CFD funds to purchase from applicant requesting CFD financing any public rights -of -way or other real property to be used for public infrastructure improvements if such real property would be required to be dedicated and conveyed to the Town by the Applicant upon development of the Applicant's property. 2 1.10 Unless otherwise agreed to by the Town, all costs of administration and operation of the CFD and the operation and maintenance of public infrastructure in the CFD, including replacement reserves if appropriate, shall be the responsibility of the CFD, the Applicant, applicable homeowners associations, or any combination of the foregoing, as may be acceptable to the Town and the CFD board of directors. 1.11 These Policy Guidelines and Application Procedures may be modified from time to time by the Town. Any Applicant will be given the opportunity to propose alternative approaches to those provided herein, with the understanding that concerns of the Town must be adequately addressed before the staff of the Town will recommend approval of a CFD to the Town Council. ARTICLE 2. Content of Application An Application for the formation of a CFD must be completed prior to any determination that a CFD will be formed. The Application shall be submitted to the Town Director of Public Works Office. The Application shall, at a minimum, contain the following information and be organized in the manner described below. Applicant Information 2.1 Applicant Information. A general description of the Applicant, including the corporate and organizational structure of the entity or individual making the Application to form a CFD. This description should also include the names of all officers and/or corporate directors directly related or associated with the proposed development and the proposed CFD. 2.2 Applicant Contact. The name, address, phone number and other relevant information of the primary contact for the Applicant. This information should also list the names (and other relevant information) of any legal representatives, engineers, architects, financial consultants and/or other consultants significantly involved in the Application. 2.3 Experience. A general description of the Applicant's experience with similar types of projects. A description of the applicant's professional experience and evidence demonstrating its financial capacity to undertake the development associated with the public infrastructure and private development. 3 2.4 Financial Ca ability. A description of the proposed equity contribution from the applicant/landowner and a calendar showing the timing and sources of such equity contribution. A description of the applicant's professional experience and evidence demonstrating its financial capacity to undertake the development associated with the public infrastructure and private development (including financial statements if necessary). Proposed CFD and Project Description 2.4 General Description. The Application shall provide a general description of the CFD, its purpose, proposed improvements and/or services to be provided and a statement describing the overall community benefit or enhanced public services to be derived from the CFD. This description should also include a statement of how the proposed CFD meets the existing development objectives of the Town, including the degree to which the CFD is consistent with the goals of the Town's General Plan for promoting orderly development, consistent with growth management policies and zoning requirements and the degree to which the land use plan for the CFD is consistent with the Town's General Plan. 2.5 Location. The Applicant shall provide a description of the proposed CFD's general location within the Town; an area site map illustrating the proposed boundaries and a legal description of the proposed boundaries. This description must include an analysis of the appropriateness of the CFD boundaries. 2.6 Ownership Interests. The Applicant shall provide the identity and address of all persons or entities with any interest in the property, including lienholders and purchasers under pending sales contracts, and the names and addresses of any qualified electors located within the proposed boundaries of the CFD. A current title report and certificate from the Maricopa County Elections Department shall be submitted as evidence of names or persons with any interest in the land and qualified electors, respectively. Proposed Improvements 2.7 Description of Project. The Application shall contain a detailed description of the types of public infrastructure to be financed and/or acquired by the CFD. This description should include a proposed project schedule for commencement and completion of (a) public infrastructure and (b) the private development. 2.8 Estimated Costs. The Application shall provide an estimate of the construction and/or acquisition costs of the public infrastructure to be completed by the CFD. This information shall include a detailed list of the estimated cost of each component of the public improvements. 2.9 Development Timetable. A detailed timetable describing the scheduling, timing or phasing of the improvements shall be provided in the Application. This schedule should include a timetable for constructing/acquiring both the public and private 4 components of the overall development. Each phase of the development should be i� shown separately. Additionally, the applicant shall submit a timetable showing the project schedule should a CFD not be granted. Financing Plan 2.10 Description of Financial Plan. The Application shall include a detailed description of the capital financing plan for the public infrastructure and the private development, including both public and private components of the development including both capital and operating/maintenance costs. This description should include the proposed types of tax-exempt/taxable bonds to be issued for the public improvements as well as the financing plan of the Applicant for the private developments and the sources of the proposed financing of debt or equity. 2.11 Sources and Uses of Funds. The Application shall include a detailed sources and uses of funds for the public improvements. This schedule should include the description of components of the public improvements that will be financed by the type of bond to be issued. 2.12 Financial Feasibility. The Application should include a 20-year financial feasibility study for the entire project including both the public infrastructure and the private development. This feasibility study should include: a. A market absorption study for the private development in the CFD prepared by an independent consultant acceptable to the Town. Such study shall include estimates of the revenue to be generated by the development and an estimate of the ability of the market to absorb the development as well as a market absorption calendar for the private development. b. A financing plan for the private development in the CFD. 2.12 Fiscal Impact. The Application shall provide an analysis of how the proposed debt financing, operation and maintenance costs, user charges and other CFD costs will impact the ultimate end users of the property, specifically projected property taxes and property tax rates, special assessments, fees, charges and other costs that would be borne by owners/residents/users in the CFD. The analysis should also address the impact these costs will have on the marketability of the private development. A comparative analysis of such taxes, assessments and fees of similar or adjoining areas and/or CFDs should also be provided. 2.13 Value -to -Lien Ratio Analysis. Based on the estimated value of the property within the development, including the acquisition and/or construction of the public improvements within the CFD, the Application shall include an analysis of the value -to -lien ratios of the proposed public financing. E 2.14 Operation and Maintenance Costs. The Application shall provide a detailed description and a financial pro -forma of the estimated annual operation and maintenance cost of the public infrastructure along with the governmental approvals that will be required for both the public and private improvements to be constructed and operated. The Application must clearly detail the specific entities such as CFD, Homeowners Associations, Applicant, Town, etc that will be responsible for funding the on -going operation and maintenance costs for all CFD improvements. This section should also provide a description of the revenue source of such operations. A description of the proposed equity contribution from the applicant/landowner and a calendar showing the timing and sources of such equity contribution shall also be included. Miscellaneous Information 2.15 Marketing Plan. The Application shall provide a detailed description of the proposed marketing plan to be used by the Applicant to market the property within the CFD. This information may include comparisons of the proposed CID to similar CFDs in the area. 2.16 Disclosure to Prospective Property Owners. The Application shall include information regarding the proposed disclosure forms that will be used to describe to prospective buyers the potential tax, assessment and fee implications of the CFD. Such forms shall have provisions for the signed acknowledgement of receipt of such disclosure forms. The Applicant and any subsequent developer/builder are required to explain in their promotional materials the expected and possible tax, assessment and other financial burdens of the CID to prospective CFD landowners. Upon=@aWi=sago of property in the CFD gw deveh4 P�downer_shall fit —with the Town --a receipt, signed ley -_the -.purchaser that arbrn..i:,lnrine�s_.-th,----puir�s recept__of _the disclosure_ form. Landowners/developers are required to describe in their promotional material the financial and other relative impacts on the development being included in the CID. Copies of the disclosure form must be placed on file with the District Clerk. 2.17 Operating Plan. The Application shall include an operating plan for the CFD, describing the functions of the CID and how the operation and maintenance of the infrastructure and any other services will be provided. 2.18 Development Agreements. The Application shall include (as an Appendix) any Development Agreements entered into between the Town and the Applicant relating to this proposed development. ARTICLE 3. Application Procedures 3.1 Ten copies of the Application for the formation of a CFD shall be submitted to the Town Public Works Director who will coordinate an inter -departmental analysis of the Application. 0 3.2 At the time of submission of the Application, the Applicant shall pay a non-refundable application fee of $20,000 and shall deposit an additional $60,000 as a deposit on account to be applied by the Town in its sQ1"iscretion to the costs incurred in connection with processing and reviewing the application and the formation and administration of the CID. When $25,000 (and each subsequent $25,000 amount hereinafter described) is expended, an accounting will be made to the Applicant for all costs incurred by the Town and an additional $25,000 will be requested and must be paid forthwith. 3.3 After the application fee and deposit are submitted, the Accounting Supervisor shall arrange a pre -review conference with the appropriate Town staff, for the purpose of reviewing the Application for conformity with Town policies. 3.4 If, following the pre -review conference or any other time during the Application process Town staff requests additional information, the Applicant shall provide any and all supplemental information requested prior to proceeding to the next step of the review process. 3.5 The review, analysis and implementation of an Application will be generally conducted in four sequential phases. a. Phase 1 will consist of a preliminary review of the Application to identify missing or incomplete information and to identify and discuss any initial concerns prior to the Town undertaking a more complete review of the Application. b. Phase 2 will consist of a detailed review of the Application as amended. The review will include, but will not be limited to, examining the project feasibility, financing analyses and evaluation of community benefits. This phase may include several iterations of review, comment and re -review. Under the direction of the Accounting Supervisor, a report may be prepared including recommendations related to the CID and an analysis of the impact of the formation of the CID and its effects on the Town. This report may provide a recommended disposition of the Application and any additional requirements that will be placed on the Applicant, developer/landowner, builder and/or the CFD. C. Phase 3, if undertaken, will consist of the planning, development, creation, financing and bond issuance for the CID. d. Phase 4, if necessary, will consist of the continuing administration, oversight and management f the C ����2����� Pam! 3.6 All costs must be paid by the Applicant and received by the Town at least fourteen (14) days prior to the date of the Town Council meeting at which the Application is to be considered. If the Application meets the qualifications provided N herein, the Application, along with any report and recommendations by Town staff, will be forwarded to the Town Council. 3.7 If the Town Council approves an Application for formation of a CFD, the Applicant and the staff of the Town shall coordinate a schedule of events for formation of the CFD. Prior to formation of the CFD the Applicant and the Town shall enter into a development agreement incorporating the requirements of any report, recommendations of the Town staff relating to such CFD, the requirements of these policy guidelines and any other restrictions, provisions and agreements required by the Town. 3.8 If the Town Council approves the formation of a CID and there are existing agreements with the Applicant and/or any other developers/landowners for the provision of infrastructure proposed to be furnished by the CFD, then those agreements will be amended to reflect the agreements and conditions pertaining to the CFD. The amendments will reflect that such infrastructure improvements will be provided (including by acquisition) by either the Applicant, developer/landowner or the CID. ARTICLE 4. CFD Operations and Debt Financing 4.1 Upon formation of a CFD the Applicant shall deposit with the CFD a nonrefundable application fee of $10,000 and an additional $25,000 as a deposit on account for administrative expenses. The administrative expense fee shall be applied by 16� er the CFD to the costs and expenses incurred in connection with the formation, review of any feasibility study, election costs, administration, operation and maintenance of the CFD or its public improvements. These deposits shall be applied to payments for services rendered by the Town staff, CFD staff and services rendered by outside consultants who may be retained by the Town and/or the CFD, including but not limited to bond counsel, financial advisors, engineers, appraisers and attorneys. From time to time, upon depletion of the administrative expense fee, the CFD may request, and the Applicant shall promptly deposit with the CFD, additional $25,000 deposits to be applied to the purposes contemplated in this Section. 4.2 In order to provide for the CFD to be self-supporting for its administrative, operation and maintenance expenses the Town and the CFD, unless otherwise agreed, will require the imposition of a $0.30 per $100 of assessed value ad valorem tax upon the CFD taxable property. Failure to agree to impose any necessary tax for the operation and maintenance of the CFD will relieve the Town and the CFD from undertaking any obligations or operations. 4.3 In connection with any request for debt financing, the Applicant will provide a current appraisal of the fair cash market value of the property within the proposed CFD that is to be taxed or assessed, prepared by a person who is designated as a Member Appraisal Institute ("MAP') and a certified general real estate appraiser (such 8 person hereafter referred to as an "MAI Appraiser"), such appraisal to be in form and substance acceptable to the Town, in its sole discretion. 4.4 The amount of debt of a CID may not have any substantial direct or indirect negative impacts on the debt or financing capabilities of the Town, and the debt imposed on the CID may not impose an unreasonably high financial burden on future CID residents. 4.5 If general obligation bonds are to be issued by the CFD, those general obligation bonds will be secured by an unlimited ad valorem tax on all taxable property located within the CFD. Prior to the issuance of general obligation bonds by the CFD, the applicant shall describe in the project feasibility report, in addition to the statutory requirements, the following information: a. The current direct and overlapping tax and assessment burden on the taxable property that is proposed to be taxed and the full cash value and assessed valuation of the taxable property as shown on the most recent assessment roll. b. The amount and timing of CID general obligation bonds to be issued. C. The expected market absorption of development within the CFD. d. The effect of the CFD bond issuance on CFD property tax rates, calculated over the entire period of time that the proposed General Obligation Bonds are estimated to be outstanding or based on the phasing of the project to be financed, as applicable. e. The CFD board of directors may attempt to limit the total tax rates of the CFD. If the pre -established debt service tax rate is not sufficient to pay the entire debt service in respect of outstanding General Obligation Bonds when due, the Applicant/Developer will be required to contribute an amount annually sufficient to pay the difference between the revenues produced by the pre -established tax rate and the actual CFD debt service coming due in that fiscal year. Security for the Applicant/Developer's payment of this contribution may be in the form of a cash contribution, standby contribution agreement or other acceptable form of security, which shall be bankruptcy proof, as required by the Town and the CFD board of directors. A cash flow schedule illustrating the security amount and the time period required to cover such shortfall will be required to be submitted by the Applicant prior to the issuance of General Obligation Bonds. The security shall remain in full force and effect until such time as the CFD board of directors, exercising their sole discretion, determines the assessed value of real property in the CFD is sufficient to generate ad valorem taxes at the pre -established CFD tax rate sufficient to pay the actual CFD debt service. At that time, the CID board of directors, exercising their sole discretion, will determine whether the Applicant's security will be released in whole or in part. 9 f. Any economic advantage or the estimated savings, if any, to residents in fy� the form of reduced purchase prices, enhanced public services and/amenities, additional community benefits, etc. that are projected to result from CID financing. g. The marketing plan for the issuance of bonds shall be described. The plan should include a statement of whether the bonds will be publicly offered or privately placed. Publicly offered bonds must be rated in one of the four highest investment grade ratings from either Standard & Poor's Corporation, Moody's Investors Services, Inc., or other nationally recognized bond rating services. Pursuant to state statutes, the CID will not issue non -investment grade bonds in a public offering. Privately placed bonds need not be rated. However, purchases of such general obligation bonds must be "qualified buyers" (similar to those acceptable pursuant to the Securities Exchange Commission) and must agree to hold the bonds for their own account and not to resell the bonds except to "qualified buyers" in a private placement. 4.6 Revenue bonds shall be payable from a specified revenue source. An Applicant for revenue bonds must describe in each project feasibility report, along with the statutory requirement, the following: a. The current direct and overlapping tax and assessment burdens on the taxable property within the CFD and the full cash value and assessed valuation of that taxable property as shown on the most recent assessment roll. b. The revenue source from which bonds will be payable. The Town reserves the right to require the applicant to produce such independently prepared financial feasibility studies or reports as it deems necessary to confirm the amount and availability of revenues. C. The expected market absorption of development within the CFD. d. The amount and timing of CFD revenue bonds to be issued. e. The financial impact of the proposed issue(s) on prospective residents. f. Any plan for subsidizing revenues to meet obligations. g. Whether the bonds will be publicly offered or privately placed. Publicly offered revenue bonds must be rated in one of the four -highest investment grade ratings from either Standard & Poor's Corporation, Moody's Investors Service, Inc., or other nationally recognized bond rating services. Pursuant to state statutes, the CFD will not issue non -investment grade bonds in a public offering. Privately placed bonds need not be rated. However, purchasers of such revenue bonds must be "qualified buyers" (similar to those acceptable pursuant to the Securities Exchange Commission) and must agree to hold the bonds for their own account and not to resell the bonds except to "qualified buyers" in a private placement. its] 4.7 Assessment bonds shall be secured by first lien (subject only to the lien for general taxes and prior special assessments) on the property benefited. Applicants for assessment bonds should describe in each project feasibility report, the following: a. The current direct and overlapping tax and assessment burdens on real property to comprise the CFD and the full cash value and assessed valuation of that property as shown on the most recent assessment roll. b. The amount and timing of CFD assessment bonds to be issued. C. The expected market absorption of development within the CFD. d. The estimated assessment amount to be placed on prospective assessed parcels. e. Whether the assessments will be paid upon the sale of lots by the Applicant or will remain on the property after sale. f. Whether the assessment bonds will be publicly offered or privately placed. Publicly offered assessment bonds must be rated in one of the four highest investment grade ratings from either Standard and Poor's Corporation, Moody's Investors Service, Inc., or other nationally recognized bond rating services. Pursuant to state statutes, the CFD will not issue non -investment grade bonds in a public offering. In a public offering, an appraisal of the land to be encumbered, prepared by an MAI Appraiser and in form and substance acceptable to the CID board of directors, in its sole and absolute discretion, shall indicate a minimum land value to debt ratio of 6 to 1 prior to the issuance of debt. Privately placed bonds need not be rated. However the purchasers of such assessment bonds must be "qualified buyers" (similar to those acceptable pursuant to the Securities Exchange Commission) and agree to hold the bonds for their own account and not to resell the bonds except to "qualified buyers" in a private placement. Further, in connection with the sale of unrated privately placed assessment bonds, the CID board of directors must have received an appraisal of the land to be encumbered, prepared by an MAI Appraiser and in form and substance acceptable to the Town, in its sole discretion, indicating a minimum land value to debt ratio of 4 to 1 as of a date prior to the issuance of debt. If a 4 to 1 ratio is not achieved, a scaling down of the proposed debt and phasing of the infrastructure is expected. 4.8 Notwithstanding the restrictions pertaining to public sales and private placements of the bonds set forth in this Article 4, the restrictions may be modified if other financing structures are presented which, in the sole discretion of the CID board of directors, provide other means to address the CFD board of director concerns. 11 ARTICLE 5. Financing Considerations 5.1 The Applicant or developer/landowner shall provide at least $0.25 in infrastructure or community improvements for each $1.00 of debt to be issued by a CFD to finance public infrastructure purposes. If agreed to by the CFD board of directors, in its sole and absolute discretion, prior infrastructure and community improvements constructed or acquired by the Applicant or the developer/landowner and benefiting the property within the CFD may be included in calculating the Applicant's or developer/landowner's compliance with this Section 5. L As described in ARTICLE 2. "Content of Application", the Applicant shall provide a detailed description of how the Applicant will provide the equity contribution of the proposed total costs of the Project. This description should include details of whether the developer is using cash and/or debt and the source of such equity contribution. 5.2 If allowed by law, all bond issues shall include a reasonable debt service reserve fund or acceptable debt service surety in an amount acceptable to the CFD board of directors. The Town and/or CFD board of directors reserves the right to require the applicant to fund a reserve account in such amounts as determined by the Town or CFD board of directors to insure payment. The Town or CFD board of directors will determine whether the reserve shall be funded through bond proceeds, project revenues or directly be the applicant. 5.3 Unless otherwise agreed, it is expected that general obligation bond authorization for a CFD shall expire no later than fifteen (15) years from the date of voter authorization. 5.4 The applicant or developer/landowner (or such other third party acceptable to the Town and CFD) for any CFD bonds, shall indemnify the Town and the CFD and their agents, officers, and employees and shall hold the Town and the CFD and their agents, officers and employees harmless for, from and against any and all liabilities, claims, costs and expenses, including attorneys' fees, incurred in any challenge or proceeding to the formation, operation, administration of the CFD, the offer and sale of CFD bonds, the levying by the CFD of any tax, assessment or charge and the operation and maintenance of public infrastructure financed or owned by the CFD. In addition, if such insurance is not otherwise available from another source, the Applicant shall be responsible for the cost of a Director's and Officers (D&O) insurance policy to cover all actions and activities taken by the Board of Directors and officers of the CFD relating to the CFD formation, financing, administrative actions of other related activities. The Applicant shall be responsible for depositing the amount of any deductible in escrow with the CFD or for providing a plan for providing for such deductible. The amount of the D&O coverage will be determined by the CFD at the time of formation. 12 5.5 Unless otherwise provided to the Town pursuant to other requirements, prior to CFD financing and acquisition by the CFD or Town, the CFD or Town will require an independent environmental report or assessment of any real property which will be dedicated to or otherwise owned, leased or operated by the Town or the CFD and a proposed form or indemnity agreement with respect to all environmental law liability. lkarthUC3I�cUiil�'f'i_?: A\(,'FL)Pvlicy, doc • • 13 M;R 20 ' 0.3 0.3: 12Prl MCOP FH MCO Custom PROPERTIES ZL�, March 20, 2003 Honorable Mayor Jon Beydler Town Council Members Town of Fountain Hills P.O. Box 17958 Fountain Hills, Arizona 85269 Re: Proposed Community Facilities District Policy Dear Mayor and Council: First, we write to express our appreciation for your staff's work in developing the proposed Community Facilities District (CFD) Policy for the Town of Fountain Hills. We are especially grateful for the extra effort to formulate the draft policy in a short time frame. Second, we write to address a few matters that we believe would benefit the policy. General Considerations Language throughout the draft policy suggests that the Town anticipates that CFDs may be organized to finance both the installation of public improvements within a district, and the operation and maintenance of these improvements. However, our Adero Canyon application contemplates that the latter, costs - the ongoing operation and maintenance of the public road to the trailhead -- would be Town costs, as we agreed in our „Mountains" Settlement Agreement. Given the large amount of non -local traffic on this road that would be generated by non-CFD residents using the trailhead, it is reasonable that the 171 future homeowners within Adero Canyon do not bear this additional burden. 2. We request that language be added to the policy that facilitates timely processing of any CFD application, and possibly provides for time frames for completing staff reviews. At the least, we suggest language be added that "Town Staff will review applications in a timely manner." This is consistent with our Settlement Agreement, but also helps keep the focus on evaluating and completing the organization of any CFD . We also think this is a reasonable 16930 E. Palisades Blvd. . Fountain Hills, AZ 85268 • 480-837-9660 Fay: 480-837-1677 • wmvmcop:epe:ties corn. MAR 20 ' ©3 03:13Pr1 MCOP PH -.4 Mayor and Council Page 3 March 20, 2003 applications, but a higher ratio set in stone, in attempting to avoid these, preempts that discussion and possibly the formation of a district. Thank you in advance for your consideration of our points. Please call me if you have any questions, Sincerely, Greg Bielli President cc: Tim Pickering Julie Ghetti IR RESOLUTION NO. 2003-010 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, ADOPTING THE TOWN OF FOUNTAIN HILLS COMMUNITY FACILITIES DISTRICTS POLICY. WHEREAS, the Mayor and Council of the Town of Fountain Hills (the "Town Council") has determined that it is in the best interests of the citizens of the Town of Fountain Hills (the "Town") to establish written policies that ensure a consistent procedure for the Town Council to evaluate a request for formation of a community facilities district ("CFD"). and WHEREAS, the existence of such written policies will guide the Town Council and the Town staff in (i) evaluating the relative costs, benefits and risks of a proposed CFD, (ii) ensuring conformance with existing Town plans and (iii) establishing application procedures. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA as follows: SECTION 1. That the "Town of Fountain Hills Community Facilities District Policy" is hereby adopted in the form attached hereto as Exhibit A and incorporated herein by reference. SECTION 2. That the Town Manager is hereby authorized and directed to take all steps necessary to ensure that the Town of Fountain Hills Community Facilities District Policy is implemented and applied to all requests for formation of a CFD. PASSED AND ADOPTED BY the Mayor and Council of the Town of Fountain Hills, Arizona, March 20, 2003. FOR THE TOWN OF FOUNTAIN HILLS: Jon M. Beydler, Mayor REVIEWED BY: Tim G. Pickering, Town Manager 9196.001\ .\?003-10 - M.Policy.rcsdoc 3-14-03-1 ATTESTED TO: Bevelyn J. Bender, Town Clerk APPROVED AS TO FORM: Andrew J. McGuire, Town Attorney f Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Submitting Department: Parks and Recreation Consent:❑ Regular:® Meeting Date: March 20, 2003 Contact Person: Mark Mayer Requesting Action:❑ Type of Document Needing Approval (Check all that apply): ❑ Public Hearing ❑ Resolution ❑ Agreement ❑ Emergency Clause ❑ Special Consideration ❑ Intergovernmental Agreement ❑ Grant Submission ❑ Liquor/Bingo License Application ❑ Special Event Permit ❑ Special/Temp Use Permit ® Other: Comm. Center Fee Changes Council Priority (Check Appropriate Areas):• ❑ Education ❑ Public Fitness ❑ Public Safety ❑ Community Activities ❑ Public Works ❑ Human Service Needs ❑ Town Elections ❑ Community Development Report Only:❑ ❑ Ordinance ❑ Special Event Permit ❑ Acceptance ❑ Plat ❑ Library Services ❑ Economic Development ® Parks & Recreation Regular Agenda Wording: Consideration of Adopting Resolution 2003 - 05 Proposed Changes to Center Fees Staff Recommendation: Approve Fiscal Impact: Yes $43,040 Purpose of Item and Background Information• Consideration of adopting proposed fees to further reduce the Community Center's reliance on the General Fund for support and to further reduce the facility's annual subsidy. An increase to the fees was proposed along with a number of budget cuts due to the Town's current financial situation. Cuts to the operational budget of the facility have already been made. These latest changes to the fees will generate additonal revenues for the facility. It is anticipated that with the earlier budget cuts and this latest proposed increase to fees, that the anticipated original deficit for the facility of over $300,000 for fiscal 2002 - 2003, will instead be approximately $200,000. The proposed changes to the fees were reviewed at the January 21, 2003, meeting of the Community Center Advisory Commission and have their support. Commission Chair, Wally Nichols, will be attending the Council meeting to speak in support of the proposed fee increase. List All Attachments as Follows: Proposed Fee Changes Memo and Resolution 2003-05 with Appendix 1 Type(s) of Presentation: Written and Verbal Signatures of Submitting Staff: isDepartment He 3 Town Manager / Designee Budget Review (if item not budgeted or exceeds budget amount) C, TOWN OF FOUNTAIN HILLS COMMUNITY CENTER INTER OFFICE MEMO TO: Tim Pickering, Town Manager FR: Mark C. Mayer~ Director Parks and Recreation Dei DT: March 12, 2003 RE: Proposed Rental Rate Revisions Changes to the current fees are being proposed for the following reasons: a) To further reduce the facility's operational deficit b) To continue to reduce the facility's reliance on the Town's General Fund to annually cover the facility's operational shortfall c) Bring the fees more in line with comparable facilities, especially in the area of nonresident/commercial rates d) Based on the experience of operating the facility over the previous eighteen months The following are the proposed rental rate revisions showing the current rates, the proposed rates, and the projected annual financial impact. The new policy will be to charge for all usage unless otherwise directed by Town management. SPACE CURRENT PROPOSED Meeting Rooms: Resident $20/3hrs $25/3hrs; $100/8hrs Commercial $30/hr $33/hr; $200/8hrs Ballroom: Resident $150/8hrs $165/8hrs Commercial $300/8hrs $330/8hrs Ballrooms 3 & 4 Weekends: Resident $300/8hrs $400/8hrs Commercial $600/8hrs $800/8hrs Ballrooms 3 or 4 Weekends: Resident: $150/8hrs $200/8hrs Commercial $300/8hrs $400/8hrs Ballroom Service Club/Multi-user: Resident $50 $60 *Lobby: ANNUAL IMPACT $2,000+ $ 500+ $2,900+ $2,160+ $2,000+ $2,000+ $1,000+ $2,000+ $2,300+ Resident $0/8hrs $300/8hrs $1,500+ Commercial $0/8hrs $600/8hrs $1,600+ *Lobby has been previously included with ballroom rental. Plan to charge if used for functions rather than as a walk-through area. Ballroom and Lobby All Day Rental Resident No rate Commercial No rate $1500 $1,500+ $3000 $1,500+ Outside Area Space Only: Resident 0 Commercial 0 Table rental @$5/each; folding chairs @ $1 each Increase in room rental rates approximately $45/hr (2 hr. min.) $ 300+ $90/hr (2 hr. min.) $ 180+ $23,440+ In addition to the proposed room rental increases, the Center proposes the following changes be made to supplement revenues: ITEM CURRENT PROPOSED ANNUAL IMPACT Bartenders No Charge Charge $15/hr $10,000+ *Liq. Security No Charge Charge $35/hr ($10,000+) not incl. 50/50 Liquor Split For Non -Profits Eliminate $ 7,500+ AudioNisual Minimal Bring to market $ 2,000+ Coffee Service $1.50 $2.50 $100+ *This fee would be payable directly to the individual Marshal staffing an event versus the amount coming from their budget in the future. Increase in service fees approximately $19,600+ Grand Total - Potential impact of increased room and service fees $43,040+ Any changes to fees would be reflected in updated material distributed or made available to the public as quickly as possible. The implementation of the changes would take immediate effect for any new contracts written and would be written in as existing contracts were rewritten. 40 Staff also compared these revised rates with several other facilities in the valley including the Mesa Centennial Center, the Glendale Civic Center and the Phoenix Civic Plaza based on a square footage cost as follows: Mesa Glendale Phoenix *Fountain Hills Centennial Center Civic Center Civic Plaza Community Center Ballrooms .18 sq. ft. .16 sq. ft. .14 sq. ft. .18 sq. ft. NR/Comm. .09 sq. ft. Resident Mtg. Rooms.27 sq. ft. .19 sq. ft. .15 sq. ft. .21 sq. ft. NR/Comm. A I sq. ft. Resident * Fountain Hills is the only community that charges a differential fee between nonresident/commercial and resident. CONCLUSION The net effect of the recent latest round of budget cuts and the proposed fee increase will be to lower the anticipated operational deficit this year from the original budgeted amount of over $300,000, to an estimated amount of around $200,000. It is anticipated that this deficit will be further reduced during the 2003 — 2004 fiscal year by additional budget reductions and a full year of increased revenue, under the proposed fee increases, to an estimated amount of under $200,000. Lastly, under Resolution 2003-05, fees would be reviewed on an annual basis with adjustments made to reflect cost increases and market adjustments. RESOLUTION 2003-05 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, APPROVING REVISIONS TO THE COMMUNITY CENTER FEE SCHEDULE. WHEREAS, the Mayor and Council of the Town of Fountain Hills (the "Town Council") has determined that it is in the best interest of the citizens of the Town of Fountain Hills (the "Town") to revise the Community Center fee schedule; and WHEREAS, the Town Council desires to make the Community Center more self- sustaining by reducing the Community Center's reliance on the general fund to cover the annual operational shortfall; and WHEREAS, the current fee schedule does not reflect market rates of comparable facilities in the greater Phoenix metropolitan area; and WHEREAS, the Town Council desires to continue making adjustments to the Community Center's rates to reflect trends in market rates and to cover operational costs. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA as follows: SECTION 1. That the "Appendix 1 — Fees of the Operations and Procedures Manual for the Community Center" is hereby adopted in the form attached hereto as Exhibit A and incorporated herein by reference. SECTION 2. That the fees will be reviewed on an annually in preparation for the annual budget for the facility, and any associated adjustments will be made during the budget process. PASSED AND ADOPTED BY the Mayor and Common Council of the Town of Fountain Hills, Arizona, March 20, 2003. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: Z X, Bdle Mayor . Bevelyn J. Bender, Town Clerk q-Wl�rD BY: APPRO D AS TO FO — � c 1 G. Pickering, Town Mjnage Andre . McGuire, Town Attorney 9196.00h .. \2003-05 — CommunityCncres.doc 3-20-03-1 APPENDIX I - COMMUNITY CENTER FEE SCHEDULE Im Rental fees include set-up, tables, chairs, podium, one wired microphone, staging, removal and normal clean up. Rooms requiring extraordinary cleaning will be billed at the rate of $25/hour. Room Conference Room Kids Room Classroom 1 or 2 Classrooms 1 & 2 Seminar 1 or 2 Art Room 1 or 2 One Ballroom " Two Ballrooms " Three Ballrooms *' Grand Ballroom " Ballroom 3 or 4 Weekend " Ballrooms 3 & 4 Weekend " Grand Ballroom Weekend " Grand Ballroom & Lobby All The Courtvord Resident / Non -Profit Up to 3 Up to 8 Per Hour Hours' Hours Thereafter $25 $100 725 $25 $100 ' $25 $25 $100 $25 $35 $160 $35 $25 $100 $25 $25 $100 S9S _Non_ Resident / Commercial Per Hour Up to 8 Per Hour hour min. Hours Thereafter S33 $200 4S3' J�3 $200 $33 $33 $200 $33 $41 $260 S41 $33 S200 $33 a $165 a $330 $25 S50 n/a n/a n/a n/a $330 $660 $990 $1,320 $50 $100 a $495 $75 $150 a $660 $100 $200 a $200 $30. n/a S400 S60 :1 $400 $700 $60 $105 n/a n/a I S800 $i400 $120 $210 7:00 am to 12:00 am Day $1,500 Up to 2 Over 4 Hours 2-4 Hours Hours $90 $135 1 S .R 7:00 am to 12:00 am $3,000 _ Up to 2 2-4 Over 4 _ Hours Hours Hours $180 $270 1 $400 ' For normal business hours or when building is occupied for other events, otherwise per hour rate. 'SThe 8 hours ballroom rental includes'set up time, event time and clean u time. '-must be coordinated with and a p quired time for set up ; additional charge to the Licensee, however there may be a fee dependingl try the schedule, o schedule these times at no Resident/Non-Profit Non/Resident/Commercial Kitchen Usaae Fee: S25/ballroom S50/ballroom There will be a $25 minimum fee if kitchen is not cleaned and trash removed. Groups Meetina 5 or More Times per Year: $60/ballroom per meeting Concessions: All services and sales belong to the Center unless otherwise negotiated. NOTE: Non-profit groups may request rental rate adjustments for extenuating special circumstances by applying in writing to the Director and Commission no less than two weeks prior to the requested date. For Community Service Groups, Town Memorials, Town sponsored events or no -fee community service events (examples: the Blood Drive, Town Hall Meetings, Parks and Recreation sponsored activities) rental charges will be waived subject to approval of the Director or designee for reasonable requests. (8/2�01 Council Meeting, Amended, 8/2/01, By Council Motion) 3/13/2003 11:25 AM