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2003.1204.TCRM.Packet
NOTICE OF REGULAR SESSION OF THE FOUNTAIN HILLS TOWN COUNCIL Mayor Wally Nichols Vice Mayor Rick Melendez Councilwoman Kathy Nicola Councilwoman Leesa Stevens Councilman John Kavanagh Councilman Mike Archambault Councilwoman Susan Ralphe WHEN: THURSDAY, DECEMBER 4, 2003 TIME: 6:30 P.M. REGULAR SESSION WHERE: FOUNTAIN HILLS COUNCIL CHAMBERS, BUILDING B 16836 E. PALISADES BLVD., FOUNTAIN HILLS, AZ 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 Council discussion of that Agenda item. Speaker Cards are located in the Council Chamber Lobby and near the Clerk's position on the dais. Speakers will be called in the order in which the speaker cards were received either by the Clerk or the Mayor. At that time, speakers should stand and approach the podium. Speakers are asked to state their name prior to commenting and to direct their comments to the Presiding Officer and not to individual Council Members. Speakers' statements should not be repetitive. If a speaker chooses not to speak when called, the speaker will be deemed to have waived his or her opportunity to speak on the matter. Speakers may not (i) reserve a portion of their time for a later time or (ii) transfer any portion of their time to another speaker. If there is a Public Hearing, please submit the speaker card to speak to that issue during the Public Hearing. Individual speakers will be allowed three contiguous minutes to address the Council. Time limits may be waived by (i) discretion of the Town Manager upon request by the speaker not less than 24 hours prior to a Meeting, (ii) consensus of the Council at Meeting or (iii) the Mayor either prior to or during a Meeting. Please be respectful when making your comments. If you do not comply with these rules, you will be asked to leave. • CALL TO ORDER AND PLEDGE OF ALLEGIANCE Mayor Nichols • INVOCATION -Pastor Joel Bjerkestrand, Shepard of the Hills Lutheran Church • ROLL CALL - Mayor Nichols EARegular and Executive Session 12-4-031.doc Page 1 of 2 Last printed 11/25/2003 3:10 PM CALL TO THE PUBLIC Pursuant to A.R.S. §38-431 -01 (G), public comment is permitted (not required) on matters not listed on the agenda. Any such comment (i) must be within the jurisdiction of the Council and (ii) is subject to reasonable time, place and manner restrictions. The Council will not discuss or take legal action on matters raised during "Call to the Public" unless the matters are property noticed for discussion and legal action. At the conclusion of the call to the public, r" individual Council members may (i) respond to criticism, (ii) ask staff to review a matter or (iii) ask that the matter be placed on a future Council agenda. 5 min CONSENT AGENDA 1.) CONSIDERATION of approving the Council MEETING MINUTES of 11/12/03. 5 min REGULAR AGENDA 2.) CONSIDERATION of APPOINTING three citizens to fill vacancies on the Community 5 min Center Advisory Commission. 30 min 3.) CONSIDERATION of the next step in the public Art Master Plan, supported by the Arts Council, to acquire and publicly display sculptures in the downtown area. 15 min 4.) CONSIDERATION of ORDINANCE 03-23 amending the Town of Fountain Hills Tax Code relating to the privilege license tax by increasing the rate of taxation on advertising from zero percent (0%) to two and six tenths percent (2.6%); providing penalties for the violation thereof; providing for severability; designating an effective date and providing for application of tax to certain contracts. 15 min 5.) CONSIDERATION of ORDINANCE 03-24 amending the Town of Fountain Hills Tax Code relating to the privilege license tax; removing the exemption from taxation for residential rental property; providing penalties for the violation thereof; providing for severability; designating an effective date and providing for application of tax to certain contracts. min 6.) CONSIDERATION of ORDINANCE 03-25 amending the Town of Fountain Hills Tax ` W Code relating to the privilege license tax by removing the exemption from taxation for health clubs and spas, providing penalties for the violation thereof; providing for severability; designating an effective date and providing for application of tax to certain contracts. 30 min 7.) DISCUSSION with possible direction to staff to research the Town's authority and options relative to single REFUSE SERVICE within the Town of Fountain Hills. 5 min 8.) COUNCIL ASSESSMENT AND REVIEW of the meeting to identify procedural strengths and weaknesses and discuss possible improvements for future meetings 9.) COUNCIL DISCUSSION/DIRECTION to the Town Manager. 5 min Items listed below are related only to the propriety of (i) placing such items on a future agenda for action or (ii) directing staff to conduct further research and report back to the Council: None requested. 5 min 10.) SUMMARY OF COUNCIL REQUESTS by Town Manager. 8:30 p.m. 11.) ADJOURNMENT �{ DATED this 24th day of November, 2003 Bevelyn J. Bender, Town Clerk The Town of Fountain Hills endeavors to make all public meetings accessible to persons with disabilities. Please call 837-2003 (voice) or 1- R00-367-8939 (TDD) 48 hours prior to the meeting to request a reasonable accommodation to participate in this meeting or to obtain agenda ormation in large print format. Supporting documentation and staff reports furnished the Council with this agenda are available for review in the Clerk's office. EARegular and Executive Session 12-4-031.doc Page 2 of 2 last printed 11/25/2003 3:10 PM Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Submitting Department: Parks & Recreation Consent:❑ Regular:® Meeting Date: 12/4/03 Contact Person: Mark C. Mayer Requesting Action:® Tyne 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: appointment Council Priority (Check Appropriate Areas): ❑ Education ❑ Public Fitness ❑ Public Safety ® Community Activities ❑ Public Works ❑ Human Service Needs ❑ Town Elections ❑ Community Development ❑ Ordinance ❑ Special Event Permit ❑ Acceptance ❑ Plat ❑ Library Services ❑ Economic Development ❑ Parks & Recreation ❑ Finance Regular Agenda Wording: CONSIDERATION of appointing three citizens to fill vacancies on the Community Center Advisory Commission. Staff Recommendation: Approve Fiscal Impact: No 0 Purpose of Item and Background Information: Three positions for the Community Center Advisory Commission expire on December 31S`. Four candidates have applied; including incumbents Peg Tibbetts and Bill Muelhauser; and two other candidates, Joan Aprea and Jackie Miles. Council has interviewed the new applicants previously and have made their recommendations for appointment to Mayor Nichols. Mayor Nichols will announce the names of the three citizens selected for apppointment on Thursday evening. List All Attachments as Follows: None Type(s) of Presentation: none Signatures of Submitting Staff: Depa ment Head ti Town Manager / Designee e:\agenda cover sheet\agenda cover sheet ccac.doc Budget Review (if item not budgeted or exceeds budget amount) Town of Fountain Hills Town Council Agenda Action Form k Regular Meeting Parks and Recreation 0 M.xll ar<'® Meeting Date: December 4, 2003 Requesting Ae 6n'-AZJ ❑ Public Hearing ❑ Resolution ❑ Agreement ❑ Emergency Clause ❑ Special Consideration ❑ Intergovernmental Agreement ❑ Grant Submission ❑ Liquor/Bingo License Application ❑ Special Event Permit ❑ Special/Temp Use Permit ❑ Other: Ca.�rorit� ltecl'Atiuraurtate:s3 ❑ Education ❑ Public Fitness ❑ Public Safety ® Community Activities ❑ Public Works ❑ Human Service Needs ❑ Town Elections ❑ Community Development Mark C. Mayer ❑ Ordinance ❑ Special Event Permit ❑ Acceptance ❑ Plat ❑ Library Services ❑ Economic Development ❑ Parks & Recreation lka lar.,A-` ends orb n Consideration of the next step in the Public Art Master Plan, supported by the Arts Council, to aquire and display publicly sculptures in the downtown area. Sta'Recammendatibni Approve No pujii,jcif lltem c1$ _Qrc The Arts Council is seeking support for the next step in its Public Art Master Plan to collect and publically exhibit forty pieces of sculpture in the downtown area, during the next ten years. The Arts Council is seeking to utilize the Community Center courtyard, Avenue of the Fountains, and Fountain Park for the display to help attact and keep visitors in the downtown area. The proposal seeks the Town's support for four items: 1) Council's acceptance or rejection of the piece under consideration, 2) insure the piece, once accepted, 3) pay the necessary cost of placing the piece on public property, and 4) providing ongoing maintenance to the pieces. Staff, if desired by the Council, could prepare for future consideration a resolution in further support of the request. Art Council representative, Jerry Miles, will be attending the Council meeting to address the Council on this project. List All At tcluuents,as Fofloi� Memo from Jerry Miles regarding this request. 7'rrne(s'.o£�entation Verbal �i��iti�res c�f..Sub�nittin� Siff: Department Head Town Manager Budget Review (if item not budgeted or exceeds budget amount) MEMO TO: Mayor and Town Council Town Manager Tim Pickering Civic Association Board of Directors Fountain Hills Arts Council Executive Committee & Board of Directors Fountain Hills Public Art Committee Chamber of Commerce Board of Directors Chamber of Commerce Executive Director Frank Ferrara Sunridge Foundation Board of Directors Fountain Hills Library Association Board of Directors Downtown Development Consensus Committee cc: Greg Bieth at MCO Properties and Alan Cruikshank at the Fountain Hills Times. FROM: Jerry Miles SUBJECT: A ten year program to develop a community sculpture garden in the Fountain Hills downtown area. DATE: August 4, 2003 I. INTRODUCTION Each of the organizations to which this memo is addressed has expressed, in one manner or another, the need to see the Fountain Hills downtown area develop into a viable community center. Multiple objectives can be met through such development, including: (1) generation of a healthy business climate, (2) generation of additional revenue for the Town government, (3) creation of a gathering center for our residents, and (4) establishment of a focal center for visitors to our community. The view has frequently been expressed that, while the "World's Tallest Fountain" is an interesting attraction, a few minutes of watching its waters spew skyward is enough. After that, there is little for a visitor to do in the downtown area unless one of our community fairs or other periodic events is underway. The opening of the River of Time Museum has the potential for creating an additional reason for visiting the downtown area but, by itself, it is not enough. Because of the healthy interest in the arts in our community, many people have expressed the desire to see the development of a major attraction based around visual arts in the downtown area. This memo is intended to address that idea. For the last three years the Fountain Hills Arts Council, working through its Public Arts Committee, has been acquiring various pieces of sculpture for the Town. But, for the most part, this has been done on a day by day basis as funds become available with no long range plan in mind. Nevertheless even on a piecemeal basis, we have had some success in developing a community art collection. Four pieces of sculpture have already been located in the Community Center plaza. These include Precious Cargo which Jackie and I purchased for the Town, A Good Book, purchased by the Fountain Hills Library Association, Embrace, financed by the Sunridge Foundation and the Civic Association and Flower Dancing in the Wind, financed by the Sunridge Foundation and the Estate of Asta Forrest. A fifth piece, The Enduring Family, financed by the Sunridge Foundation and the Civic Association, will arrive in September. In addition, five pieces of smaller sculpture have been placed in the lobby of the library/museum. Bob the Frog and George the Tortoise have been or will be located in Fountain Park near the children's playground. Red Wolf's Song of the Ancients has been installed in the Community Center and Mary Meyer's stained glass windows, Windows of the Mind, have been installed in the library. These join Walkway Through Time by Michael Anderson located on the north side of Shea just east of Saguaro, the six fountains along the Avenue of the Fountains (including Sip and Splash at the intersection of Avenue of the Fountains and Verde River Drive which was financed by the Fountain Hills Rotary Clubs) and a series of several pieces of sculpture privately purchased by the developer of Plaza Fountainside. Taken all together, we have a respectable beginning of a community sculpture collection. This memo proposes an organized effort to substantially expand this collection over the next ten years. 4 II. A CHALLENGE I propose that, by the end of this year, the Fountain Hills Arts Council, acting through the Fountain Hills Public Art Committee, set a goal of acquiring 40 pieces of outdoor art over a ten year period, commencing no later than the beginning of 2004. Some may be life size or larger, others, mounted on outdoor pedestals, may be smaller. In order to maximize the effect of a high quality sculpture park, I would suggest that these pieces be located within an area from the Community Center eastward along the Avenue of the Fountains to Fountain Park. This is not intended to preclude the eventual collection of public art throughout the community. But a concentration of pieces, within easy walking distance of one another, will have a greater visitor impact than pieces that require a car to visit. In addition, I propose that, within the immediate future, the community, acting primarily through the efforts of those organizations to which this memo is addressed, begin to identify 40 sites where these pieces may be located. There will be some concern, I know, that adopting the concept of this program now would get ahead of current studies regarding the future development of the Avenue of the Fountains and contemplated studies regarding the eventual development of the Community Center plaza. But if we are realistic we must acknowledge that any such development is many years in the future. Both projects require extensive studies and reviews and, even when plans for the development of these areas are established, the availability of funding may delay actual development for quite some time. Thus, while it may be premature to try to establish all 40 sites right away, because of the uncertainly as to the future of these two areas, certainly by the end of this year we should be able to identify at least five sites where sculpture could be located in 2004 and by the end of 2004 we should be able to identify several more likely sites. In addition, if we go ahead with the establishment of these sites, it can be done with the understanding that any pieces that have previously been put in place can always be relocated if it becomes necessary to do so. 3 M III. KEY ISSUES TO BE RESOLVED Three obvious questions must be addressed if this project is to go forward. 1. How will the pieces be selected? 2. How will the acquisitions be financed? 3. Who will determine the sites where they will be located? I.How will the pieces be selected? Selection of the pieces should be coordinated through the efforts of the Fountain Hills Arts Council and its Public Art Committee. This does not mean, of course, that the Public Art Committee will simply be told to go out and buy 40 new pieces of sculpture. In many, if not most, cases those providing the funding for the art works will wish to participate in the decision as to which pieces will be purchased. Likewise no suggestion is being made that pieces will be acquired through some type of public hearing process. When the Fountain Hills Arts Council was established several years ago as the official arts organization of the community, the Town Council very wisely decided that the Council itself would not get involved in the selection process, reserving for itself simply the ability to say yes or no to any proposed acquisitions. The Council did, however, establish guidelines regarding membership on the Fountain Hills Arts Council Board of Directors to insure that a variety of viewpoints would be represented on that body. To date, the Council has always accepted the recommendations of the Fountain Hills Arts Council regarding pieces to be acquired. The Fountain Hills Arts Council has already established the policy that any community sculpture collection will be eclectic in nature, reflecting a variety of artistic styles. It has also established some well thought out ideas for the selection process, geared to establishing a collection that will be pleasing and of interest to most of our residents and visitors. 4 2 How will the acquisitions be financed? Jackie and I have been involved, in one way or another, in the selection and/or financing of almost all of the pieces acquired by the Town over the last several years. If the community accepts the goal set forth in this memo, then I am prepared, working through the Fountain Hills Arts Council, to coordinate the effort to finance the acquisition of these 40 pieces of sculpture during the next decade. Acquiring these pieces will require the expenditure of somewhere in the neighborhood of $750,000 to $800,00 over this ten year period. I think this can be done primarily with private donations, with a minimum of public funds being involved. Let me also emphasize that the fund raising activities I envision for this project will not have the consequence of drying up or reducing the funds that other Fountain Hills non-profit organizations depend on for their activities. 3 Who will determine the sites where the sculpture will be located? If the recommendation of establishing 40 new sites for sculpture is acceptable, I would propose that as many as 15 of these sites be located in the Community Center plaza and that the remainder be located along the Avenue of the Fountains or elsewhere in the immediate area. Perhaps it would be in order for the Public Art Committee to identify the sites in and around the Community Center plaza and for the Downtown Consensus Committee to suggest locations along the Avenue of the Fountains and within Fountain Park. Let me again emphasize that not all of the sites need to be established before this program goes forward. Nor is 40 a magic number of pieces for the program, although a target of four pieces a year over the next ten years does seem to be a realistic goal. The key factor is the establishment of the concept of creating a major sculpture collection in a relatively concentrated area that would be conducive to a downtown walking tour. I would also point out, however, that the mere fact of locating the sites may have a beneficial effect on fund-raising efforts as one or more individuals, businesses or organizations may feel motivated to promote the development of a particular site. IV. WHERE DO WE GO FROM HERE? If the parties receiving this memo are receptive to this program, then I think that the following steps should be taken. '*ft- 5 1. The Public Art Committee should advise the Fountain Hills Arts Council that it is I.. prepared to undertake the effort to get this project underway. 2. The Fountain Hills Arts Council should then request that the Town Council give its approval and support to the project. 3. Thereafter, I would suggest that the Town Council adopt a resolution approving the project. This resolution should reaffirm the current policy of the Town that it will (1) accept ownership of the pieces offered, subject, of course, to its power to have a final "yes or no" decision regarding any particular piece, (2) insure the pieces which are acquired, (3) pay any necessary costs of locating the pieces of art on the selected site (which may require the pouring of cement pads for individual pieces) and (4) provide any maintenance which may be required. While it is by no means a requirement of going forward, I would suggest that it would be in order for the Town Council to allocate a portion of future hotel bed and sales taxes toward this program. When the hotel bed tax was established some years ago it was with the understanding that a major part of the revenue from this source would be used to promote tourism in the community. One possible scenario would be to allocate a percentage, say 25%, of the amount by which hotel bed and sales taxes in fiscal years 2004-2005 and later exceed those received by the Town in fiscal year 2003-2004. 4. I would urge the Boards of Directors of the Chamber of Commerce and the Civic Association to endorse this program and urge their members to do so as well. Whether these groups will be in a position to make a financial commitment to the project will depend on their own financial ability to do so. I would point out that the Civic Association, primarily, but not exclusively, through the efforts of its major Community Center fund raising program of a few years ago, has already made major contributions to the art acquisition program and still has in excess of $100,000 earmarked for additional acquisitions of art in the Community Center area. These funds will provide a major head start toward the ten year sculpture acquisition program. T 5. The Sunridge Foundation has assisted in the financing of several pieces of our current collection. It is to be hoped that they will continue to do so over the next few years. 6. The Fountain Hills Library Association has already financed one major outdoor piece of work (A Good Book), which is located near the entrance to the library. They were also responsible for the library stained glass windows; they shared the responsibility for acquiring the five pieces of sculpture in the library/museum lobby and they have just acquired a new piece of sculpture called Egghead that will be installed within the library. I would suggest that, over the next ten years, they undertake to finance the acquisition of at least two of the proposed 40 new pieces, with the understanding that the pieces financed by the Fountain Hills Library Association will have a literary bent and will be located in the proximity of the library. V ADDITIONAL SUGGESTIONS There are two or three additional embellishments which might enhance this program. 1. The Fountain Hills Library Association has already installed two park benches near the entrance to the library and museum which were paid for by memorial donations. A number of other benches and other amenities could similarly be fmanced and installed throughout the areas under discussion. 2. The installation of some type of interactive fountain in the downtown area has been the subject of frequent discussion. While I don't propose that this fountain should be part of the project described in this memo, the concept would certainly be consistent with the development of an active and attractive downtown area. 3. Finally, it has frequently been suggested that the Walkway Through Time sculpture located on Shea be relocated to a site where it would be more visible. This would, I believe, demand the consent of those businesses which financed this piece, i.e. Denneys, MCO Properties, Comfort Inn, Bank of America and MCO Realty. They might be prepared to give this consent in exchange for the benefit that enhanced visibility of their gift to the community would bring. 7 V. CONCLUSION As mentioned above, the first step toward implementing this program should be undertaken by the Fountain Hills Arts Council's Public Art Committee. In my view, the acquisition of a major collection of public art is the key, if not the sole, purpose of this committee. Therefore, the response of the Public Art Committee to this memo will be the key to whether or not we can go forward. I hope that their response will be favorable. JLM Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Submitting Department: Admin Consent:❑ Regular:® Meeting Date: 12/04/2003 Contact Person: Julie Ghetti Requesting Action:® Tvne of Document Needing ADUroval (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 ADDronriate 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 ® Finance Regular Agenda Wording: Consideration of Ordinance 03-23 amending the Town of Fountain Hills Tax Code relating to the privilege license tax by increasing the rate of taxation on advertising from zero percent (0%) to two and six tenths percent (2.6%); providing penalties for the violation thereof; providing for severability; designating an effective date and providing for application of tax to certain contracts. Staff Recommendation: Approve Fiscal Impact: Yes $406,350 Purpose of Item and Background Information: Staff is recommending approval of Ordinance 03-23 amending the current tax code Section 8A-405(a) increasing the tax rate from zero to two and six -tenths. If adopted the tax will apply to gross income from the business activity of "local advertising", including advertising revenue received by any newspaper, direct mail flyer, phone books, or other publications distributed within Fountain Hills. The ordinance establishs a rate of 2.6 percent and an effective date of March 1, 2004. The increased revenue was identified during the five year financial forecast/capital improvement work study sessions as a source of funding for capital projects. List All Attachments as Follows: Interoffice Memo - Revenue Enhancements/Capital Project Funding, Powerpoint handouts Type(s) of Presentation: PowerPoint 1 Signatures of Submitting Staff: ,,. Depa ment H ad �f P � \\earth\jghetti\wpdata\agenda c er sheet.doc 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: November 25, 2003 THROUGH: Timothy Pickering, Town Manager FR: Julie A. Ghetti, Accounting Supervisor RE: Revenue Enhancements/Capital Administration Project Financing During the months of S tember through November staff presented to the Council a five year projection of operating revenues and expenditures, as well as a five year capital improvement plan. The analysis indicates that at the current level of service and resources, and barring any unforeseen significant events, there should be sufficient funds for annual operating costs; however, over the five year period the capital projects are unfunded by approximately $8.M, primarily in street projects. It is important to note that delaying capital improvements for streets and infrastructure will increase annual operating costs over the long term. On November 12, 2003 the Council held a work study session to review alternative sources of revenue for funding capital projects. Several options were discussed and are summarized below: 1. Eliminate exemptions to the local sales tax a) advertising b) residential rentals c) health spa/fitness center membership fees 2. Recover costs for additional services a) business lists, duplicate licenses, notary services b) liquor license permits c) additional field preparation requests 3. Realignment and/or initiation of additional development fees As a first step in implementing capital project revenue enhancements the staff is recommending that the Council approve the elimination of tax exemptions for advertising, residential rentals and health spa/fitness center membership fees as soon as possible. Therefore, three ordinances to amend the Fountain Hills tax code are attached for Council consideration. The attached Ordinance 03-23 revises Section 8A-405(a) Advertising of the Fountain Hills tax code changing the tax rate from zero percent to 2.6 percent. The tax will apply to gross income from business activity of "local advertising" defined as "delivery or disseminating of information directly to the public" by billboards, direct mail, radio, television or newspapers. Gross income includes advertising revenue received by any newspaper, direct mail flyer, phone books, or other publication that is distributed to Fountain Hills businesses or residents. Fountain Hills receives 2.6% of the total advertising revenue sold by publications and allocated to the Town based on what percent of the business total circulation ends up in Fountain Hills. Based on a comparison with some of the 77 other cities and towns that tax advertising 90% of their revenue is derived from businesses located outside of their borders. Estimated annual revenue is $406,350. \\earth\JGhetti\WPDATA\INTEROFFICE MEMO TEMPLATE.doc112520035:01 PM Ordinance 03-24 revises Section 8A-445(h) Rentals eliminating the exemption for residential Co� rentals (65 of 86 incorporated cities tax rentals). The tax applies to persons who are in the business of leasing or renting real property (apartments, houses, condos, etc.) within Fountain Hills but excludes those persons with less than three (3) units within the State. There are approximately 500 apartment/condo units in the Town (Four Peaks Vista, Plaza del Lago, Quail Run and Ridge View Luxury) in addition to those units owned by investors with three or more within the State. Estimated annual revenue is $121,875. Ordinance 03-25 revises Section 8A-410(a)(2) Amusements of the Fountain Hills tax code to include charges for the use of "health spas, fitness centers, dance studios" etc. This tax applies only to the usage or membership fees, not the services provided by the facility. Of the 87 incorporated cities and towns 32 include this option. Estimated annual revenue is $32,500. Staff is recommending approval of ordinance numbers 2003-23 through 25, which will enact the amendments to the Fountain Hills tax code and eliminate the exemptions, providing an additional $560,725 in funding for capital projects with an effective date of March 1, 2004. If passed, the ordinances need to be submitted to the League of Arizona Cities and Towns and the Arizona Department of Revenue sixty days prior to the effective date of the amendment. The League will make the necessary text amendments to the tax code and the Department of Revenue will have sufficient time to notify taxpayers of the impending change and the effective date. As a second step in revenue enhancements staff will be reviewing the current fee schedule for services such as notary, lists of current businesses, special field preparation requests, planning and zoning fees, etc. The proposed fees will be presented for Council consideration at the December 18, 2003 meeting. Currently the Town does not impose a liquor license permit fee although considerable staff time is spent with each application. Staff is recommending that a fee be implemented to recover the cost of preparing the permits; however, legal and staff time will be necessary prior to bringing the proposed fees to the Council. Therefore, it is anticipated that the fee schedule will be presented at the second regular meeting in January, 2004. During the work study session on November 12`h several members of the Council had additional suggestions for revenue enhancements that are worthy of consideration. Staff will be researching each of the suggestions and will be prepared to present them during the first meeting in January, 2004. \\earth\JGhetti\WPDATA\INTEROFFICE MEMO TEMPLATE.doc112520039:06 AM TOWN OF FOUNTAIN HILLS ��yTAIN �l a o. 3 b �2: t9s9 a� that is Implementing Capital Project Funding Phase I CAPITAL RESOURCES VS PROJECTS Unfunded: $81M Surplus Capital Funding: Excise Tax — Mountains Excise Tax — Downtown Open Space PROJECTED CAPITAL RESOURCES AND PROJECTS FISCAL YEARS 20041hmugh 2009 9sau Op. Sp., Dcv FM .............ee........,,,.�_e,.,-...,.. __--,.-.�....... Puts & R. Dev Fus &d. T. -Duxmov.+ &d. T. - M.—i. .....P..w_.ww_........... _....,.m...,w.ww__._.... Goad ('pva11No1 SO.D Sib S2.O $3.0 $LO $5.0 $6.0 $70 $80 $9.0 $10.0 2 RECOMMENDED CAPITAL FUNDING OPTIONS Phase 1: Eliminate exemptions to sales tax Advertising Residential rentals Health spa/fitness center membership fees Phase 2: Recover costs for additional services Business lists, duplicate licenses, notary Liquor license permits Additional field preparation requests Phase 3: Realign development fees PHASE 1 — ELIMINATE TAX CODE EXEMPTIONS Eliminate advertising exemption estimated additional revenue $406,350 annually 77 out of 87 incorporated cities tax advertising majority of revenue will be derived from non -local advertising (90%); i.e. AZ Republic, Tribune, Auto Trader, etc. revenue is captured from direct mail, radio, television, newspaper, phone books, etc. State is also considering eliminating exemption Phase 1 (continued) Eliminate exemption on residential rentals estimated additional revenue $121,875 annually 65 of 87 incorporated cities tax residential rentals would apply to apartment buildings, condominiums, duplexes and homes when owner has more than three units within the State Phase 1 (continued) Eliminate exemption for health spa and fitness center memberships Estimated revenue $32,500 annually 32 of 87 incorporated cities tax memberships Captured from persons who charge for the use of their premises Not a tax on service 3 COMPARISON OF RESOURCES VS PROJECTS BEFORE AND AFTER RECOMMENDED REVENUE ENHANCEMENTS PROJECTED CAPITAL RESOt RCES AND PROJECTS FISCAL YEARS 2004 through 2009 ........... .. .. Part, & R. Der 1�. .... E—T. D, �,cr. T. . �1:11: $00 110 $2 0 S30 $4.0 $50 $60 $ " $90 $90 $10.0 F- I ToA Res urcts 9 Pro acts Unfunded: $8.1M op Space Parks & Rtc Earist Tax - D Wise Th ..N Cenral G., PROJ EC ID CAPITAL RESOURCES AND PROJECTS FISCAL YEARS 20M through 2009 (Including proposed sales tax enhancements $2,8NI) $11.0 $LO $2.0 S3.0 w $$.1 SO sm $8.0 $9.0 $10.6 I TWWReso ©Pm E Unfunded: $5.3M 0 ORDINANCE NO.03-23 AN ORDINANCE OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, AMENDING THE TOWN OF FOUNTAIN TAX CODE RELATING TO THE PRIVILEGE LICENSE TAX BY INCREASING THE RATE OF TAXATION ON ADVERTISING FROM ZERO PERCENT (0%) TO TWO AND SIX TENTHS PERCENT (2.6%); PROVIDING PENALTIES FOR THE VIOLATION THEREOF; PROVIDING FOR SEVERABILITY; DESIGNATING AN EFFECTIVE DATE AND PROVIDING FOR APPLICATION OF TAX TO CERTAIN CONTRACTS. BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, as follows: SECTION 1. That Section 8A-405, Advertising, of the Town of Fountain Hills Tax Code is hereby amended to read as follows: Sec.8A-405. Advertising. (a) The tax rate shall be at an amount equal to zero TWO AND SIX -TENTHS percent (02.6%) of the gross income from the business activity upon every person engaging or continuing in the business of "local advertising" by billboards, direct mail, radio, television, or by any other means. However, commission and fees retained by an advertising agency shall not be includable in gross income from "local advertising". All delivery or disseminating of information directly to the public or any portion thereof for a consideration shall be considered "Local Advertising", except the following: SECTION 2. That any person found guilty of violating any provision of this Ordinance shall be guilty of a class one misdemeanor. SECTION 3. That if any section, subsection, sentence, clause, phrase or portion of this Ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions thereof. SECTION 4. That the provisions of this Ordinance and the increase in tax rate provided herein shall become effective on March 1, 2003. SECTION 5. That the additional tax imposed pursuant to this Ordinance shall not apply to contracts entered into prior to the effective date of this Ordinance. 9196.001\..\03-23 Tax Code Amend.doc 11-25-03-1 [SIGNATURES ON FOLLOWING PAGE] I PASSED AND ADOPTED BY the Mayor and Council of the Town of Fountain Hills, Arizona, December 4, 2003. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: W. J. Nichols, Mayor REVIEWED BY: Tim G. Pickering, Town Manager 9196.001\..\03-23 Tax Code Amend.doc 11-25-03-1 2 Bevelyn J. Bender, Town Clerk APPROVED AS TO FORM: Andrew J. McGuire, Town Attorney Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Submitting Department: Admin Consent:❑ Regular:® Meeting Date: 12/04/2003 Contact Person: Julie Ghetti Requesting Action:® Tvne of Document Needing ADDroval (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: Council Prioritv (Check Annromiate 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 ® Finance Regular Agenda Wording: Consideration of Ordinance 03-24 amending the Town of Fountain Hills Tax Code relating to the privilege license tax by removing the exemption from taxation for residential rental property, providing penalties for the violation thereof; providing for severability; designating an effective date and providing for application of tax to certain contracts. Staff: Recommendation: Approve Fiscal Impact: Yes $121,875 Purpose of Item and Background Information: Staff is recommending approval of Ordinance 03-24 amending the current tax code Section 8A-445(h) and eliminating the exemption on residential rentals. If adopted the tax code will apply to persons who are in the business of leasing or renting more than three (3) residential units within the State of Arizona, establishing a rate of 2.6 percent and an effective date of March 1, 2004. The increased revenue was identified during the five year financial forecast/capital improvement work study sessions as a source of funding for capital projects. List All Attachments as Follows: Interoffice Memo - Revenue Enhancements/Capital Project Funding, Powerpoint handouts Type(s) of Presentation: PowerPoint Signatures of Submitting Staff: JP UW rs, \\earth\jghetti\wpdata\agenda c ver sheet.doc Budget Review (if item not budgeted or exceeds budget amount) ORDINANCE NO.03-24 AN ORDINANCE OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, AMENDING THE TOWN OF FOUNTAIN HILLS TAX CODE RELATING TO THE PRIVILEGE LICENSE TAX; REMOVING THE EXEMPTION FROM TAXATION FOR RESIDENTIAL RENTAL PROPERTY; PROVIDING PENALTIES FOR THE VIOLATION THEREOF; PROVIDING FOR SEVERABILITY; DESIGNATING AN EFFECTIVE DATE AND PROVIDING FOR APPLICATION OF TAX TO CERTAIN CONTRACTS. BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, as follows: SECTION 1. That Section 8A-445, Rental, leasing, and licensing for use of real property, of the Town of Fountain Hills Tax Code is hereby amended to read as follows: Sec. 8A-445. Rental, leasing, and licensing for use of real property. (h) tVED) SECTION 2. That Regulation 8A-200.1, When deposits are includable in gross income, of the Town of Fountain Hills Tax Code is hereby amended to read as follows: Reg. 8A-200.1. When deposits are includable in gross income. (b)(ReseR;ed)NONREFUNDABLE DEPOSITS FOR CLEANING, KEYS, PET FEES, MAINTENANCE, OR FOR ANY OTHER PURPOSE ARE DEEMED GROSS INCOME UPON RECEIPT. SECTION 3. That any person found guilty of violating any provision of this Ordinance shall be guilty of a class one misdemeanor. SECTION 4. That if any section, subsection, sentence, clause, phrase or portion of this Ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions thereof. SECTION 5. That the provisions of this Ordinance and the increase in tax rate provided herein shall become effective on March 1, 2004. SECTION 6. That the additional tax imposed pursuant to this Ordinance shall not apply to contracts entered into prior to the effective date of this Ordinance. / 9196.001\..\03-24 Tax Code Amend.doc 11-25-03-1 1 � ' PASSED AND ADOPTED BY the Mayor and Council of the Town of Fountain Hills, Arizona, December 4, 2003. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: W. J. Nichols, Mayor REVIEWED BY: Tim G. Pickering, Town Manager 9196.001\..\03-24 Tax Code Amend.doc 11-25-03-1 2 Bevelyn J. Bender, Town Clerk APPROVED AS TO FORM: Andrew J. McGuire, Town Attorney IM IN Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Submitting Department: Admin Consent:❑ Regular:® Meeting Date: 12/04/2003 Contact Person: Julie Ghetti Requesting Action:® Tvne_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 ❑ SpeciaVTemp Use Permit ❑ Other: Council Prioritv (Check Anmromiate 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 ® Finance Regular Agenda Wording: Consideration of Ordinance 03-25 amending the Town of Fountain Hills Tax Code relating to the privilege license tax by removing the exemption from taxation for health clubs and spas, providing penalties for the violation thereof; providing for severability; designating an effective date and providing for application of tax to certain contracts. Staff Recommendation: Approve Fiscal Impact: Yes $32,500 Purpose of Item and Background Information: Staff is recommending approval of Ordinance 03-25 amending the current tax code Section 8A-410(a)(2) and eliminating the exemption on fitness center membership fees. If adopted the tax code will apply to business activity of health spas, fitness centers, dance studios, or other persons who charge for the use of premises such as membership fees, establishing a rate of 2.6 percent and an effective date of March 1, 2004. The increased revenue was identified during the five year financial forecast/capital improvement work study sessions as a source of funding for capital projects. List All Attachments as Follows: Interoffice Memo - Revenue Enhancements/Capital Project Funding, Powerpoint handouts Type(s) of Presentation: PowerPoint Signatures of Submitting Staff: et.doc Budget Review (if item not budgeted or exceeds budget amount) ORDINANCE NO.03-25 AN ORDINANCE OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, AMENDING THE TOWN OF FOUNTAIN HILLS TAX CODE RELATING TO THE PRIVILEGE LICENSE TAX; REMOVING THE EXEMPTION FROM TAXATION FOR HEALTH CLUBS AND SPAS; PROVIDING FOR SEVERABILITY; DESIGNATING AN EFFECTIVE DATE AND PROVIDING FOR APPLICATION OF TAX TO CERTAIN CONTRACTS. BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, as follows: SECTION 1. That Section 8A-410, Amusements, exhibitions and similar activities, of the Town of Fountain Hills Tax Code is hereby amended to read as follows: Sec. 8A-410. Amusements, exhibitions, and similar activities. (a) The tax rate shall be at an amount equal to two and six -tenths percent (2.6%) of the gross income from the business activity upon every person engaging or continuing in the following type or nature of businesses: (1) operating or conducting theaters, movies, operas, shows of any type or nature, exhibitions, concerts, carnivals, circuses, amusement parks, menageries, fairs, races, contests, games, billiard or pool parlors, bowling alleys, skating rinks, tennis courts, golf courses, video games, pinball machines, public dances, dance halls, sports events, jukeboxes, batting and driving ranges, animal rides, or any other business charging admission for exhibition, amusement, or entertainment. (2) d) ALTH SPAS, FITNESS CENTERS, DANCE STUDIOS, OR OTHER PERSONS WHO CHARGE FOR THE USE OF PREMISES FOR SPORTS, ATHLETIC, OTHER HEALTH -RELATED ACTIVITIES OR INSTRUCTION, WHETHER ON A PER -EVENT USE, OR FOR LONG-TERM USAGE, SUCH AS MEMBERSHIP FEES. SECTION 2. That any person found guilty of violating any provision of this Ordinance shall be guilty of a class one misdemeanor. SECTION 3. That if any section, subsection, sentence, clause, phrase or portion of this ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions thereof. SECTION 4. That the provisions of this Ordinance and the increase in tax rate provided herein shall become effective on March 1, 2004. 1 ��q 9196.001\..\03-25 Tax Code Amend.doc / 11-25-03-1 1 SECTION 5. That the additional tax imposed pursuant to this Ordinance shall not apply to contracts entered into prior to the effective date of this Ordinance. PASSED AND ADOPTED BY the Mayor and Council of the Town of Fountain Hills, Arizona, December 4, 2003. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: W. J. Nichols, Mayor REVIEWED BY: Tim G. Pickering, Town Manager 9196.001\..\03-25 Tax Code Amend.doc 11-25-03-1 2 Bevelyn J. Bender, Town Clerk APPROVED AS TO FORM: Andrew J. McGuire, Town Attorney Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Submitting Department: Town Manager Consent:❑ Regular:® Meeting Date: 12/4/03 Contact Person: Tim Pickering Requesting Action:® Tvne of Document Needing ADAroval (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 Prioritv (Check Anoronriate 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 ❑ Finance Regular Agenda Wording: DISCUSSION with possible direction to staff to research the Town's authority and options relative to single REFUSE SERVICE within the Town of Fountain Hills. Staff Recommendation: Disapprove Fiscal Impact: Yes Purpose of Item and Background Information Town Manager Pickering has provided information to the Council on the pros and cons of the Town contracting with a single refuse company, including background on the issue, major problems encountered, financial considerations, and possible effects on property owners . List All Attachments as Follows: Memorandum from Town Manager Type(s) of Presentation: oral Signatures of Submitting Staff: Department Head Town Manager / Designee Budget Review (if item not budgeted or exceeds budget amount) \\earth\sstein\agenda cover sheet\agenda cover sheet refuseservice.doc TOWN OF FOUNTAIN HILLS OFFICE OF TOWN MANAGER MEMO TO: Honorable Mayor Nichols and DT: November 20, 2003 Town Council FR: Tim Pickering, Town Manager RE: Research on developing single refuse service At a previous council meeting, staff was asked to provide initial research findings regarding the possibility of the Town of Fountain Hills selecting one refuse hauler to service all residents. Currently the Town does not provide refuse service and is not involved in any manner with this service. Residents now have the freedom to choose any hauler and refuse options available to them. Staff has conducted 130 hours (equaling $5,779) of initial research and is desirous of a council decision to determine if further study is required. Background Currently, there are a total of seven haulers in Fountain Hills; four residential haulers with licenses in town and three commercial haulers. The lowest monthly rate is $14.33 for weekly garbage and recycling. This compares favorably to the average of eleven area municipalities residential refuse charges of $14.95. Currently, Paradise Valley and Apache Junction apply the same philosophy as Fountain Hills and do not regulate their refuse service business. Pros of Single Service Most cities enter into a single refuse franchise for reasons as noted below: • Cost savings for customers due to economy of scale • Eliminating piles of rubbish accumulating in the community; i.e. not everyone purchases service • Better alternative than burning trash or illegally dumping • Esthetics — trash cans only appear once a week on the same day • Less damage to streets compared to multiple trash truck use Of these five problems above that plague some communities, it appears that Fountain Hills experiences only two that could affect our residents; i.e. the esthetics of trashcans being left out and the condition of our streets. Cons of Single Service The primary concern of switching service to a single hauler would be the long-term negative financial impacts on a Town's ledger sheet. Councilmember Archambault and I have had several in-depth and interesting discussions regarding the long-term profitability or loss to the Town by contracting with a single trash hauler. In the first five years of service, a "profit" could be realized if the rate were set higher than is currently available in Fountain Hills ($14.33 - $17.50). However, it is in year five and beyond that is of concern. After the initial five-year period, costs would logically increase as labor, fuel, and tipping fees rise. When the new, increased rate is passed on to residents who do not want to pay the increase, they would then have no choice but to contact the Town Council and insist rates remain the same. Any profit that was once realized, because the rate was initially set high, would disappear. Further, as was the case in many communities, such as Tempe (see the attached news article), a single municipal -controlled refuse service, over time, becomes a financial liability for a community. Every Property Owner Affected Should an enterprise service, such as refuse hauler, begin in Fountain Hills, each citizen would be directly affected weekly. If this occurs, Council should prepare for an onslaught of citizens' opinions about the subject. In other words, the politics in Town would change. Instead of Councilmembers utilizing their time to work on long-term planning issues, a good deal of time would be spent answering citizens' comments about; for instance, why their garbage was not picked up that week, etc. This activity would also require an increased amount of staff time required to assemble bids, monitor the contract, answer calls from and meet with disgruntled customers, communicate with the garbage hauler, visit the missed sites and deal with any accidents involving trash trucks. Additional staff of at least 2 FIFE would be required. Loss of Choice Residents would also lose their ability to choose a hauler. These options cannot be provided with a single hauler. The loss of choice, most likely, would upset constituents. Defining the Problem If we are trying to solve the two problems that possibly plague Fountain Hills; i.e. damaged streets and esthetics issues, there are alternative methods to accomplish this. An annual business license fee of $5,000 per hauler could be instituted. This would recover approximately $35,000 annually or one-third of the $91,000 estimated annual street repairs caused by multiple trash haulers. If esthetics is the issue, an ordinance could be passed limiting placing trashcans to the curb on certain days. However, if we were trying to offer this service under the assumption that it will be a moneymaking effort, this would probably not hold true over time as municipalities are usually not able to withstand charging a higher fee for garbage service to fund other services. Residents pay fees that are the direct cost of the service. We need to establish what problems, if any, the Town wants to solve, i.e. esthetics or street damage. However, if we are attempting to make money from an enterprise operation, experience tells us that over the long run, it is a loss leader. Once a municipality gets into the business of offering trash service, it would be virtually impossible to change back. Pickering/Stein/E:/Pickering/refuseserviceresearch.doc/112003 c THE ARIZONA REPUBLIC C(�ltVlQ\� J 1 s 1'r;�� S ovvl E �1 h lucl� <'n 4res� St' •� }'V1 E� e I o <o rv� � e le S. — ain ch -B4 MONDAY, NOVEMBER 18, 2002 Trash collection cost rises 9.5% By Bob Petrie The Arizona Republic TEMPE — The cost of trash pickup will rise 9.5 percent for homeowners starting Jan.1, the second year in a row Tempe has hiked trash collection. The increase puts Tempe's single-fami- ly residential rate at $13.96 a month, up from $12.75. It ranks Tempe fifth in the Valley in trash rates; Phoenix is highest at $20.20. Last year, Tempe's residential trash fee rose 8.5 percent. Oliver Ncube, deputy public works di- rector, said the cit� has been dipping into reserves to cover increasing trash costs but mUlian kitty dropped to 20,000. Kevin Brown, a central lempe resident, isn't bothered much by the rate increase. "The city is having problems with money. I feel the service is pretty good," Brown said. Commercial rates will rise 5 percent from a minimum of $43.05 to $45.20 a month. Besides higher costs, Ncube said the city would also use the extra money for an alley maintenance program, paving 165 miles over four years. He said the city would be more active in getting residents to clear overgrown bushes and trees hanging from their yards into alleys, which slow and damage trucks picking up uncontained trash. City code requires homeowners to trim bushes from the right of way, but Tempe hasn't been enforcing the law. If someone contacted by the city refuses to cut them, the city will charge $81 per hour to do it. "We're not going out and policing it; we're asking people to work with us and asking them to please trim," Ncube said. TOWN OF FOUNTAIN HILLS OFFICE OF TOWN MANAGER MEMORANDUM TO: Honorable Mayor Nichols and Town DATE: November 12, 2003 Council members _ FR: Tim Pickering, Town Manager' \ RE: Franchising Refuse Service Councilmember Archambault provided the attached information regarding the Town controlling refuse collection services. This issue is scheduled to be preliminarily discussed at the December 4 town council meeting. Councilmember Kavanagh requested that staff obtain the costs that other area residents pay for their service. The average, as seen below, is $14.95 per month. Fountain Hills residents have choices for their service with the lowest priced comparable service at $14.33. Phoenix Metro Area: Residential Monthly Refuse Rates Paradise Valley - contracts out Apache Junction - contracts out Municipality provides: Avondale weekly garbage and recycling Gilbert weekly garbage and recycling Scottsdale weekly garbage and recycling Phoenix weekly garbage and recycling Mesa weekly garbage and recycling Tempe weekly garbage and recycling Surprise weekly garbage and recycling Peoria weekly garbage and recycling Goodyear weekly garbage and recycling Glendale weekly garbage and recycling Chandler weekly garbage and recycling Mo. Fee $ 14.00 $ 14.05 $ 14.36 $ 20.70 $ 18.64 $ 13.96 $ 12.50 $ 12.49 $ 17.30 $ 14.50 $ 11.90 $ 14.95 Avg. $ 14.05 Median $ 15.00 Mode Fountain Hills lowest comparable service $ 14.33 Fountain Hills - Private Companies Mo. Fee & L Disposal $43.00 qtr $ 14.33 wkly garbage & recycling Waste Management $ 14.50 wkly garbage & recycling **AZ Sanitation $ 13.50 2x week trash pickup *AJ Waste/Red Mountain $52.50 qtr $ 17.50 2x week trash pickup *recycling is offered at an extra charge of $11 per month 1**recychng is offered at an extra charge of $8 per month Additional information regarding this issue will be provided in the staff report for the Dec. 4th town %e, council meeting; however, I thought that you would appreciate receiving the attached information ahead of time. As always, please contact me with any questions. Stein/E:/Pickering/memorerefuseservice.dod111303 Refuse Hauler Effects Page I of 4 Chron 075 TOWN OF FOUNTAIN HILLS �`" PUBLIC WORKS DEPARTMENT INTER OFFICE MEMO TO: Tom Ward DT: Revised June 13, 2003 Public Works Director FR: Randy Harrel, P ., .S. i RE: Refuse Hauler Effects Town En ineer Per your request, this memo provides a general overview of the effects of refuse haulers (i.e. garbage trucks) on Fountain Hills: • Street Maintenance/ Repair: Heavy trucks produce by far the most damage to the street pavement of any vehicle. For example, a heavy truck (18,000 LB axle, 40,000 LB total weight) produces 2000 times the pavement damage that a car or light truck produces. (calculated per "Thickness Design — Full -depth Asphalt Pavement Structures for Highways and Streets"). Pavements are designed thicker, and require more maintenance and repairs, because of the effects of even occasional heavy trucks — the most common of which, particularly on local, residential streets, are refuse haulers. The Town currently maintains 163 miles of public streets, and there are 24 miles of privately owned and maintained streets. • Street Sweeping: Trash missing or blowing out of refuse collection trucks during loading is a source of windblown trash. • Air Pollutants: Diesel trucks — including refuse haulers- are known, heavy polluters with respect to air -borne particulates, and — outside of summer dust storm periods - are one of the primary causes of air -borne particulates. (I could do some additional research to illustrate how heavy their pollutant load is, if you wish.) Particulate air pollution is certainly the most visible form of air pollution, and has been linked to asthma, emphysema, and other bronchial illnesses. • Noise Pollution: Diesel trucks are a major source of noise pollution, with a typical noise level of 90 dBA at a distance of 15 m (50 feet) (ref: "Guide on Evaluation and Abatement of Traffic Noise", AASHTO, 1993). • Fly Infestation (trash can inspection required )• Trash containers must be kept "reasonably clean and free from fly larva, intense odors, and an usually high number of flies" (Town Code Section 10-1-6). The Town is required to "inspect annually a minimum of 25% of the single-family residential containers" (Town Code Section 10-1-7, added 8-02-01 at the request of refuse hauler(s), in accordance with Maricopa County requirements for weekly trash pick-up). To my knowledge, the Town still needs to begin this trash can inspection program. • Beautification: This would be difficult to quantity, but certainly trash collection vehicles and processes have a negative- though necessary — effect on the scenic quality of an area. Although the costs of the above effects are difficult to quantify, our best estimate - totaling nearly $91,000 annually - is attached. Cc: Tim Pickering Tony Marchese Chron. File (Betty) AhArfw 6,(; /C�wh k`ivrn19 r' I Refuse Hauler Effects Page 2 of 4 Chron 075 ESTIMATE OF COSTS: Street Maintenance/ Repair& Sweeping: Fountain Hills Totalm Subtotal —Attributable to Street Department Trash Collection Work Category Material Cost: Man-hours: Man-hr Costl2l: Percentage`": Total Cost: Patching $ 3,300 880 $15,840 10% $1,914 Crack Sealing $23,000 2,900 $52,200 1 % $ 752 Pot -hole Repair $ 1,800 560 $10,080 5% $ 594 Sweeping $ 7,100 1,500 $27,000 1% $ 341 Subtotal -Employee $35,200 5,840 $105,120 3.4%+/- $3,601 Contracted Work: Avg. Annual Cost«>: Percentage") Overlay Asphalt $ 44,700 29% $13,000 Reconstruct Asph. $ 89,100 29% $25,800 Rubberized Asph. $ 29,300. 29% $ 8,500 Curb R&R $ 72,600 29% $21,100 Subtotal- Contract $234,700 29% $68,400 Notes: (1) Source for Street Division total material cost and man-hours: Tony Marchese, Street r Supt.. Actual annual averages of FY 99-00, 00-01, and 01-02. (2) Street Division man-hour cost = $18.00/ hour. (Standard billing rate.) (3) Street Division percentages attributable to trash collection were estimated by Street Supt. Tony Marchese. (4) Average Annual Costs for Contracted Work were taken from the individual Work Orders. (5) Pavement Damage Estimate: 29%. See attached estimate. We have assumed for this analysis that trash collection vehicles do not appreciably affect the life cycle of various other pavement maintenance procedures - including emulsion seal, slurry seal, and microsurfacing - since those procedures generally require reapplication due to aging in the hot, dry Arizona climate, rather than due to individual, heavy traffic loads. Fly Infestation Inspections: 7000 SFR residences x 25% inspected annually/ 12 trash cans inspected per hour x $25.00 per hour including overhead & fringes = Subtotal- Inspections $3,646 Air Pollution, Noise Pollution, and Beautification: It would be difficult, if not impossible, to accurately attach a cost to these quality of life items. Assumed to be 20 % of the above quantifiable costs. Subtotal Total Annual Attributable Cost: $15,130 $90,777 Refuse Hauler Effects Page 3 of 4 Chron 075 Estimate of Pavement Damage Percentage: Residences: 9,000 residential units x 10 trips/day x 5 miles average/trip x 7 days/week = 3,150,000 mi/wk Trash Collection: 163 miles roadway x 2 sides x 2 collections/ week x 2000 pavement damage factor = 1,304,000 eq. mi/wk Total: 4,454,000 eq. mi/wk Trash collection percentage: 1,304,000/ 4,454,000 x 100% = 29% Attachments: Street Dept. Costs/Man-hour Summary 99-02 Contract Costs Summary 98-03 Refuse Hauler Effects Page 4 of 4 Chron 075 Notes to Tim Pickering regarding review comments: • TRUCKS CAUSE 5000 X THE DAMAGE OF CARS: I reviewed the referenced Asphalt Design manual. 5000 x would be reasonable for a freeway or very heavily traveled arterial roadway; 1000 x would be reasonable for a lightly traveled street. I revised the multiplier to 2000 x (which is also about the amount for a collector roadway), as a weighted average. • USE MAINTENANCE AVERAGES FOR LAST 5 YEARS: Contract maintenance work was revised to the actual average of the last 5 years. The average of the last 5 years ($234,000/year) is somewhat less than the Capital Improvement Plan amount previously used ($300,000). Street Dept. work was revised to the average of the last 3 years (that's all Tony had readily available on his computer), which was a little higher than last year's amount. • MORE THAN 7000 RESIDENCES? Ken V. verified that the Town has 7,000 SFR residences (and so that figure was kept in the Fly Infestation Inspections calculation.) The residents' mileage was adjusted to 9000 residences in the pavement damage calculation to include condos and apartment units (per Ken V.). TOWN OF FOUNTAIN HILLS OFFICE OF ACCOUNTING SUPERVISOR INTER OFFICE MEMO TO: Timothy G. Pickering, Town Manager DT: December 4, 2003 FROM: Julie Ghetti, Acc?unting RE: Municipal Refuse Service Staff recently did a comparison of surrounding cities and towns that provide municipal refuse service to the residents based on the monthly rates which revealed that the rate Fountain Hills residents are paying is comparable. If the Town wishes to consider administering the refuse service through a contract with a single provider the following is provided as additional information: I. For all of the cities that provide sanitation services the residents pay with their water and/or sewer bill; the incentive for the customer to pay is to maintain their water or sewer service. 2. The cities that provided financial reports and showed an operating loss in refuse was Tempe, Peoria, Gilbert, Phoenix, Chandler and Surprise. The cities that showed a profit are Mesa and Scottsdale. These are set up as enterprise funds (business like activities) and an administrative fee is transferred from the enterprise fund to the general fund. Avondale and Goodyear break even. The City of Surprise has increased their rates each year for the past three years and is considering eliminating municipal refuse and outsourcing the service. The City of Peoria raised their rates two years ago and will consider raising them again in FY2004-05. 3. If the Town becomes the trash hauling services provider (through contract or department) the Town becomes responsible for picking up the trash on a regular basis, regardless if the customer has paid or not (public health issue). Without a water and/or sewer billing system there is no way that the Town can force collection on non-paying customers (except through lawsuit). 4. The Town of Paradise Valley experimented with restricting their community to one trash hauler but dropped the proposal after the citizens complained about having their ability to choose their own provider eliminated. 5. According to Cathy Connelly at the League of Arizona Cities and Towns "refuse" is not a function that can be franchised; however, the Town can require trash haulers to pay a higher annual business license fee (maximum $5,000). I would be happy to do further research if you need any more information. (fp� LU rMIA, 6�A, L,;t� Refuse Service • 1 year ago we were asked to diversify our revenue source. This would be a great way of generating revenue? . This proposed revenue source allows the Town to 'earn" its income by providing a service for its "dollars". All this requires is a little effort. Refuse Service . We can add to the quality of life for our residents by helping to free -up current general funds that are being used to supplement our road repairs. These freed up funds can be used for Youth Sports, Community Services such as senior field trips or cooperative efforts with our school system, revival of the Parks and Recreation programs, and other quality of life issues that make this town desirable. 1 Refuse Service . Article 10 of the Town Code requires us to inspect at least 1/4 of the containers used in our town. To date, I have yet to find such records and I am told this have never been done. . Maricopa County Environmental Services Department requires that 2 pickups occur each week. We are not assuring our residents that this is happening. This is also stated in Title 10 Chapter 1-5 of the Town Code. Refuse Service . Title 49 # 741 & 746 of the Arizona Revised Statutes gives us authority to control refuse service for our town. In fact, as a town, we are required to provide for the health, safety, and welfare of our citizens. Providing for our citizens these prescribed life issues is why we incorporated. N Refuse Service . This service could add stability to the constant price wars being waged. We are subsidizing these price wars with our streets. When we add the increased license fee what do we think will happen to the fees? What happens when the little haulers who are keeping the fees down leave because they can't afford the license increase? We will be left with possibly 2 haulers and only $10,000 to mitigate the damage being enacted to our streets. Refuse Service . My proposal would diminish road damage and control noise and pollution (air, noise, and liquid). At forces exacted 2000 times that of a car, we are currently subjecting our roads to horrendous forces each day and causing premature wear. 3 Refuse Service . Prices would be more realistic and stabilized over a 5-year period with adjustments tied to inflation. A false sense of affordability would be avoided. If several haulers were to pull out of town, a cry by residents to provide relief from the skyrocketing cost of refuse would be demanded. State Statutes and Town Codes would become the weapon of choice. Refuse Service . Recycling would actually happen. Fear that refuse companies don't take recycling goods to the proper sites would be calmed by proof of receipts from those places. . In the news article about Tempe's rate hike, a comment is made that they will be paving 165miles of alleys in 4 years. At what cost per mile? This is a profit!!! M Refuse Service • City of Scottsdale Financial statement shows $16,226,231 in revenue from refuse service. $13,069,471 will be used to pay landfill fees, employee cost and bond payments. That leaves $3,156,760 of which $1,993,595 will transfer out and $1,163,165 that will be retained as a reserve. This is a profit of $3,156,760. FY 2003104 Adopted Budget Fund Summaries Solid Waste Fund - Enterprise Actual Adopted Estlrrate Adopted 2001102 20021'03 2002m3 2003104 Source of FurMs: Beginning Fund Bala—WReserve Operating Reserve 1,852,436 2,139.799 2,872,820 3,155, B54 Urn- rved - - - 1.340,158 Total Beginning Fund Balance/Resen i 1,852,436 2,139,799 2,872,820 4,496,012 RevenuesRefuse Cdlec0on Charges 15,T96, 170 16,115,445 16,115.d45 1007r,531 Interest Earnings 55,199 44.013 44,013 48.700 Subtotal 15,851,369 14159,458 1Q759,459 16,226,231 Total Revenues 15,851,369 16,159.458 16,159,458 16,226,231 Use of Funds: Departments Financial Services 514,776 565,264 565,264 586.491 Munkipal Services 11.080,368 11.946.975 11.717.474 12,137,487 Subtotal 11,595, 144 JZSJ ,239 12,282, 738 12,723,978 Debt Servid MPC Bm1ds-Transfer Station 343,221 341.993 341,993 345.493 Subtotal -3,221 341,993 341,993 345,493 Total Operating Budget 11,938.365 12.854,232 12,624,73 13,089,4T7 Tran,ters-out s 156�7(p Indue,g Cult Al tin, 1.643,484 1.646.768 1,546.768 1.958.092 er Genal Fund 77.200 - - - Fleet Maras nerd Fund 331 000 - 229,500 - CUP Fund 823, 812 18,400 18,400 10,500 In -Lieu Property Tax 17,124 16,867 16,867 17,003 Total Transters-0rd 2.892,620 1,682,035 1,911,535 1,993,595 Ending Fund BalanWReserve Operating Reserve 2,872,820 3213.558 3.155.854 3,267,36E Unreserved - 549,433 1,340,158 2,391.609 Total Ending Fund BalanWReserw 92,BT2,820 $3,762'"1 $4,496.012 $5,659,177 5