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TOWN OF FOUNTAIN HILLS
MINUTES OF THE EXECUTIVE AND SPECIAL BUDGET SESSION OF THE
FOUNTAIN HILLS TOWN COUNCIL
APRIL 19, 2016
SPECIAL BUDGET SESSION
* CALL TO ORDER AND ROLL CALL
Mayor Kavanagh called the meeting to order at 5:31 p.m.
* ROLL CALL - Present for roll call were the following members of the Town Council: Mayor Linda Kavanagh,
Vice Mayor Leger, Councilmember Cecil Yates, Councilmember Dennis Brown, Councilmember Nick DePorter.
Town Manager Grady E. Miller, Town Attorney Andrew McGuire and Town Clerk Bevelyn Bender were also present.
Councilmember Alan Magazine and Councilmember Cassie Hansen arrived at 5:33 p.m.
Mayor Kavanagh announced that the Chairman of the McDowell Mountain Preservation Commission Bill Myers
asked to speak regarding the McDowell Mountain trailhead.
Mr. Myers, a Fountain Hills resident thanked the Council for proposing $1.8M in this year’s budget for the trailhead.
He expressed that the trailhead would be something the Town could be proud of and would also be an asset. Mr.
Myers acknowledged the Town’s limited budget and stated the Town should be able to complete the trailhead with the
funds allocated within one to one and half years. Mayor Kavanagh thanked Mr. Myers for accompanying
Councilmembers to view the location of the future trailhead.
AGENDA ITEM #1 – DISCUSSION WITH POSSIBLE DIRECTION RELATING TO THE PROPOSED
TOWN OF FOUNTAIN HILLS FY2016-17 BUDGET, INCLUDING ALL PROPOSED REVENUES,
EXPENDITURES AND PROGRAMS FOR ALL GOVERNMENTAL FUNDS.
Town Manager Grady Miller stated that one of the most important activities of our operating and municipal
government was the annual budget process. He added that in cities and towns the budget was the expenditures and
budget plan outlining the priorities of the Mayor and Council for the following year. Mr. Miller acknowledged the
involvement of the Town’s staff in the process and explained that this year’s budget was somewhat different than in
previous years because of his approach in several areas. Mr. Miller pointed out that in Council’s budget books they
would see the green sheet containing “Budget Supplements”, which listed departments’ requests and also showed what
was able to be funded. He noted this saved the Finance Department a lot of work as done in past years when they
included budget requests and then after Council’s review Finance would have to eliminate what was not funded. He
stated that this new approach made the process very transparent to Council. Mr. Miller also stated he introduced a
budget category called Non-Departmental or General Government Fund. He explained that a new fund was created for
the purpose of budgeting for Town-wide expenses that did not fit within a particular department. Mr. Miller added that
some of these items were community contracts, memberships such as the Maricopa Association of Government and
the League of Cities and Towns along with some of the debt services.
Mr. Miller presented in his proposal for next year to reestablish the Public Works Department. He explained that
Public Works was merged into the Development Services Department several years ago and after evaluating their work
load, he felt this department needed to be split into two functioning departments. Mr. Miller said he was proposing to
stream-line the “ORG” codes where expenses were charged to and by consolidating the codes he expressed that would
make the Town’s system work more efficiently. Mr. Miller said that if Council noted a difference from previous
budget items, he would be happy to explain them.
Mr. Miller reported that last year Council directed staff to reduce the Community Contracts by 10%, so staff continued
with that direction this year and reduced those contracts again by 10% except for the Extended Hands Food Bank,
which stayed the same since last year their contract was not reduced. Mr. Miller pointed out that Councilmembers had
expressed concerns that the Public Art Fund was not supporting the maintenance and insurance for their art pieces, so
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this year staff calculated the cost of insurance at $12,000 and about $13,000 for the cleaning and maintenance of the
art. Mr. Miller expressed it should be the responsibility of the Public Art Fund to cover those cost and mentioned his
meeting recently with the Art Committee letting them know the direction the Town was going with these cost. Mr.
Miller stated the Committee received his explanation and announced quarterly meetings were planned with the
Committee, which would include Director of Community Services Mark Mayer so that everyone was informed
regarding future art projects.
Mr. Miller began the PowerPoint presentation (available on-line and in the office of the Town Clerk) by reading the
Town’s Mission Statement, Vision Statement and Values Statement. Mr. Miller then turned the session over to
Finance Director Craig Rudolphy to review the Town’s financial forecast.
5-YEAR FINANCIAL FORECAST
Mr. Rudolphy remarked that as in the past the Town was looking for and needed more revenue sources to maintain
their current expenditure limit. He noted that the projects covered a 5-year period for both expenditures and revenues
and explained that each year the Town’s expenditures were exceeding revenues and to balance that out the Town
needed to either reduce expenditures or create new revenues. Mr. Rudolphy explained through several graphs that
showed the true revenues and expenditures without listing overages and as in the past using the General Fund or other
funds services. He also pointed out that some graphs would state “excludes transfers” and those stats would be used
when submitting the tentatively adopted Town Budget to the Audit General’s Office.
GENERAL FUND PROJECTS
Mr. Rudolphy reported the General Fund Projections slide showed a trend analysis projection through 2021, including
transfers. He added that State Shared Revenues were expected to decrease but surprisingly staff recently received the
first projected revenues and the amount the Town would receive was higher than expected approximately $500,000.
He noted that these revenues were not reflected in the budget or the PowerPoint slide. Mr. Rudolphy explained that
the unexpected revenues would be added to the tentative budget as uncommitted revenue in the Contingency Fund and
would give Council the authority to use these funds, if necessary, and, if not used, would be moved to the General
Reserves. Councilmember Yates wanted to clarify that there were no restrictions placed on these funds and Mr.
Rudolphy said that was correct.
Mr. Rudolphy noted the amount of local sales tax revenue projected and stated he believed the Town would see a
healthy increase in sales tax revenues this quarter over last year and it appeared to be an upward trend.
HIGHWAY USER REVENUE FUND (HURF)
Mr. Rudolphy pointed out the proposed “HURF” transfers and explained that the State had not release any figures to
date. He added the League of Cities and Towns did not see any surprises to “TOWN”, but acknowledged that changes
could occur at the last minute. He predicted that additional in-lieu funds would be received from Salt River Project’s
activities in various locations since the Town would be accepting in-lieu payment instead of requiring slurry seal
applications in work zones.
FY 16-17 BUDGET ASSUMPTIONS
Mr. Rudolphy these assumptions included additional proposed staffing along with the increase in next year’s contracts
for the Maricopa County Sheriff’s Department at 7% and a 3% increase requested by Rural Metro.
Mr. Rudolphy stated that in this current year 2015-16, there were no General Fund subsidiaries because the Town still
had 2% of the excise tax dedicated to the preserve portion of the bonds going into the FPC Funds. Those bonds were
for the preserve and would be paid off by July 1, 2016. He added that Council had directed after July 2016 the
additional 2% placed in the Pavement Management “HURF” program.
Councilmember Magazine questioned the increase in MCSO and Rural Metro contracts and requested information on
the total increase of 10% overall. Mr. Rudolphy answered that the increase was the result of their pension plans impact
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and added that MCSO had expressed to expect a 10%, but when submitted the contract was for a 7% increase. He
added that since MCSO was a pass-through contract, any expenses incurred were the Town’s obligation to cover.
OUTSTANDING BONDS AT 7/1/17 – DEBIT OVERVIEW
Mr. Rudolphy noted the outstanding bonds at the end of the next fiscal year July 1, 2017 were HURF Bonds, GO
Bonds. and primarily the Saguaro Boulevard Bonds. He explained that the revenue noted on the slide were MPC
Bonds and partly for the preserve and the Community Center. He added that as of July 1 st the $1.4M would be solely
for the Community Center. Mr. Rudolphy pointed out that Eagle Mountain was funded through the residents of that
community.
Councilmember Magazine requested an explanation for the $1.2M principal shown for the Community Center. Mr.
Rudolphy stated that the amount was a combination of bonds and a portion of the series bonds that had been refinanced
previously and included the Library, Museum and Preserve. He continued to explain that the Preserve was purchased
in two pieces with MPC Bonds and the other with GO Bonds.
Mr. Rudolphy mentioned he did not have a slide presentation detailing the proposed levy for Eagle Mountain,
Cottonwoods or the Town. He wanted Council to know that he would be recalculating the levy proposed for the
Cottonwoods. His initial proposal was that Cottonwood’s levy per property owner would be $92.51, but wanted to
inform Council that the levy would change by an additional $2.00 making their levy $94.51. Mr. Rudolphy requested
Council take this information into consideration as they move forward with the budget.
Mr. Miller proposed that when the Revenue Bond was paid off in the next three years totaling $1.2M, could the
approximately $400,000 per year debt payments could go into the General Fund. Mr. Rudolphy stated the funds could
go into the General Fund and also mentioned that the $1.4M refunding on the Revenue Bonds would free up future
sales tax money currently collected and dedicated for the debt services; these funds then could be directed elsewhere.
OPERATIONAL PRIORITIES FY16-17
Mr. Miller stated that the operations priorities had been discussed at great length during the Council Retreat held on
February 11, 2016, and the focus was to stabilize the Town’s finances. Mr. Miller noted those priorities were the
Pavement Management Program, Economic Development Program and its implementation , improving the Fountain
Lake quality, Fire Station No. 2, Facilities Reserve Fund, traffic studies and the State Land and what could be
strategically be done.
Mr. Miller listed the Town’s plan goals as follows:
C3 – Genuinely solicit and consider public and stakeholder feedback as part of the decision-making process.
CR4 – Implement a comprehensive communications plan to encourage informed citizen participation in civic
life.
CR6 – Evaluate customer satisfaction with Town services on a regular basis and implement appropriate
service improvements.
CR7 – Communicate the role of local government and clearly define the trade-offs between service levels and
amenities and the associated costs so residents can make informed choices.
EV1 – Develop a comprehensive economic development strategy for the Town’s future and work with our
partners to forward economic growth and awareness.
EV3 – Promote a mixed use core where residents can live, work, learn and play in an urban village setting, as
depicted in the Downtown Area Specific Plan (Downtown Vision Master Plan).
EV4 – Promote retention, expansion and relocation of quality businesses.
I2 – Lower reliance on State revenues by developing a locally controlled, reliable funding source for
infrastructure maintenance.
I3 – Maintain a current condition assessment of all roadways and sidewalks and prioritize and implement
maintenance efforts to minimize costly reconstruction.
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Mr. Miller addressed the following operational priorities addressed in the budget.
Stabilize Town Finances
Pavement Management Program
Continue to Implement the Town’s Economic Development Plan
Develop methods to improve the Water Quality of Fountain Lake
Plan and Build Fire Station No. 2
Create a Facilities Reserve Fund
Work with the State Land Department on Future Development of State Lands
Conduct Traffic Studies to focus on pedestrian and vehicular safety at key locations,
BUDGET OVERVIEW
Craig Rudolphy stated the proposed budget was $39,794,769 including transfers of approximately $6M. He pointed
out the slide listing the previous fiscal year budgets from FY12 through and including FY17 with transfers included
and pointed out that the Town budget proposed increase was $1.8M from last year.
Mr. Rudolphy listed the budget assumption as follows:
Revenue projections determined using trend analyses and flat percentage increases as well as estimates of
building activity; they are best guesses for future revenues.
2% reduction in distribution of State Shared Revenues – the mid-decade census would affect our proportionate
share of distributions (negatively) – impact of Governor Ducey’s Budget on State Shared revenues was
unknown at this time. NOTE: (This item will be adjusted to the recently received information that the Town
would see $500,000 in distributions of State Shared Revenues)
Building permit activity projected to include permits for Adero Canyon, Firerock and Summit at Crestview.
Additional priority staffing levels were considered based on necessity.
A cost of living adjustment of 2.5% would go into effect July 1, 2016 for all full -time and part-time
employees.
No inflation factor for FY17, 2.5% for FY18 and 3.5% for FY19, FY20 and FY21 NOTE: Mr. Rudolphy
believed this may be somewhat conservative.
Annual General Fund payment for the Community Center was required beginning in FY16-17 to pay off this
debt.
Adherence to the State-imposed Expenditure Limitation Law may limit the Town’s ability to budget proposed
capital projects, which we must do. NOTE: Town Council had received a revised reference document to
replace and address the revisions to the Expenditure Limitation calculations do to the change when handling
transfers by excluding transfers twice as described in the original document and therefore correcting the issue.
Maintaining existing levels of service although challenging (no new programs).
Public safety contracts increase 3.0% - 10% through FY21:
o MCSO has a 7.0% increase
o Rural Metro Fire had a 3.0% increase
TPT Construction Sales Tax Revenue included in projections (impact of legislation was unknown at this time).
The projections do not presume development of the former State Trust Land within the next five years.
NOTE: Formerly known as the Ellman Property had been placed back into the State’s Land Trust.
Mr. Rudolphy noted that 10 new positions were requested by department heads with 1.63 employee positions
ultimately budgeted for a total of $149,850. He also reported that an adjustment to employees’ salaries was proposed
at a cost of $75,843. Mr. Miller pointed out that at the Town’s peak employment there were 120 positions and he
expressed that the work load had not changed since staff reductions were made and in fact may have increased for
current employees. He added that coverage was sometimes an issue since there was limited back -up and expressed all
the additional staff requests were worthy, but he had to make a decision upon need versus other Town needs and
wished he could have proposed more positions. Councilmember Magazine asked what the repercussions were and
would the citizens see or feel the affect if the positions were not approved. Mr. Miller answered that for the most part
the citizens would not and do not see the lack in their services except their waiting times for serve may be longer. Mr.
Miller also pointed out that some staff members, such as in Finance, worked on Fridays and week-ends to meet the
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needs in their department and he also mentioned that there were times directors would use outside contractors to cover
services in lieu of employee services. He also pointed out that the costs of contractors used for these services in some
areas are now outpacing savings. Mr. Miller maintained that staff had tried to continue a service level that had always
been maintained. Mayor Kavanagh added that the Town was very fortunate to have highly qualified volunteers but
noted that the Town could not depend on the length of service or the time the y were willing to offer to volunteer and
Mr. Miller agreed. Councilmember Yates asked how many additional staff members Mr. Miller believed the Town
needed. Mr. Miller answered that he could see 10-15 additional employees needed based on his experience.
Mr. Rudolphy explained that the base budget was considered; then department heads were asked to recommend
supplements that had ultimately totaled $1.5M, only 1/3 of those supplements were approved. He pointed out the slide
listing the departmental funding requests proposed at $551,424, which would come from the General Fund and other
funds. Mr. Miller informed the Council that approximately $72,000 of these proposed expenses are one-time, one-
year expenses.
2016-17 BUDGET HIGHLIGHTS
Mr. Rudolphy explained that the Public Safety Budget increased by $453,062 with no increases proposed for utilities
(Salt River Project or Chaparral City Water Company/EPCOR).
Mr. Rudolphy stated that the continued focus was on initiating and/or completing the Capital Improvement Plan
projects as approved by Council and listed as follows:
Ashbrook Wash Project $ 700,000
Drainage - Miscellaneous $ 50,000
Downtown Master Plan $ 400,000
Downtown Lighting Improvements $ 200,000
Fire Station No. 2 Relocation Project $3,800,000
Purchase and Install Chiller $ 300,000
Fountain Lake Water Quality Project $ 205,000
Adero Canyon Trailhead $2,285,000
Fountain Park Access Improvements $ 375,000
Four Peaks Park – Phase I (bus barn demolition) $ 75,000
Unpaved Alley Paving Projects $ 255,000
Fountain Hills Boulevard Shoulder Paving $ 500,000
McDowell Mountain Road Repairs $ 75,000
Contingency $ 92,200
Total $9,312,200
Mr. Rudolphy explained the budget summary of Town funds, Revenues, Expenditures and the Town’s source or use of
reserves. He added that the Town was using reserves of almost $10M and predicted the Town was quickly running out
of reserves. Next slide detailed by category expenditures, a summary of changes in those expenditures, with the
largest increases for internal services, transfers and contingency that totals about $5.5M higher than the prior year. He
continued that the General Fund slide listed the Town’s Operational Budgets broken down by various departments or
divisions within the organization and noted that all showed decreases in their core services except for Public Safety.
Mr. Rudolphy explained that the slide listing the General Fund (excludi ng transfers) Operating Budgets charges were
as follows:
Supplemental Budget Requests $ 551,424
Contingency Increase $ 316,345
Rural Metro Increase $ 206,921
MCSO Increase $ 246,141
Other Changes ($ 286,398)
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Changes FY15-16 to FY16-17 $1,034,433
Mr. Rudolphy reported the budget by core services from all funds including transfers were listed as follows:
Public Safety $ 7,638,828
General Government $ 2,929,260
Administration $ 2,818,264
Excise Tax-Downtown/ED/Tourism $ 1,546,775
Public Works $ 827,304
Development Services $ 921,010
Community Services $ 2,172,749
Debt Service $ 2,922,266
Special Revenue Funds $ 5,821,931
Capital $ 12,196,382
Total $ 39,794,769
RESERVE FUNDS (FUND BALANCES)
Mr. Rudolphy stated it was projected that the Reserve Fund balance at the end of next fiscal year would total about
$5.5M and were listed as follows:
General Fund (includes Rainy Day Fund $ 7,458,539
Highway User Revenue Fund $ 1,226,600
Downtown Strategy Fund $ (35,455)
Economic Development/Tourism Funds $ 179,356
Special Revenue Funds $ 631,178
Debt Service Funds $ 420,571
Capital Projects Fund $ 1,676,542
Total $11,557,391
5-YEAR FINANCIAL OVERVIEW
Mr. Rudolphy remarked that the Town oversees 22 different funds as required and noted the next slide indicated the
five-year General Fund Revenue projections and his prediction the Town’s deficient would begin FY2016-17 through
2020-21 and would amount to approximately $5.5M to $6M over the next five-years.
Mr. Rudolphy explained that the operational priority had always been Pavement Management and he showed in a slide
the funding as previously noted. The next slide showed projections excluding transfers and noted that the Town would
balance the budget with transfers. He also pointed out a comparison FY15 -16 General Fund Operating cost percapita
and stated that compared to the cities listed on the slide we were at the low end the funding.
Mr. Rudolphy also presented the General Fund projection graph that showed over one half of the Town’s revenue
would come from taxes with intergovernmental at about a third.
ORGANIZATIONAL CHARTS
Mr. Miller presented an organizational chart, which included the new Public Works Department, and explained that the
new department would handle streets and facilities along with all their activities and would also included the Capital
Improvement Program management and overseeing along with maintaining the Paving Management Program. He
added that the Public Works Department would become more important in the future during the planning of the
Town’s next potential bond election.
FIRE DEPARTMENT
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Mr. Miller stated there were no changes on the Fire Departments organizational chart and that interviews involving the
final three candidates were planned to hopefully replace retiring Fire Chief Roberts. He stated that Rural Metro
performed the candidate recruitment and had provided the Town with three finalists that would be interviewed by
management. Mr. Miller continued to point out that the Fire and Emergency Medical costs totaled $3,708,718 and
proposed the total included a 5.9% increase. He further explained that Rural Metro had a 3% proposed increase but
did not allow for additional equipment needed thus explaining the additional 2.9% added to their budget to cover those
costs. Mr. Miller also noted that the “CARE” program was discontinued last year and replaced with an all volunteer
based “Crisis Response Team”. Mr. Miller pointed out that the next slide showed the $206,948 increase to the Fire
Budget and explained that all fire facility expenses were moved to the Operations Program allowing the Town to show
true facilities expenses and the total fire services costs.
LAW ENFORCEMENT
Mr. Miller continued on to Public Safety noting that the Law Enforcement organizational chart had not changed and
stated that MCSO Captain Letourneau had previously announced MCSO staff would be changing to a 4-10 work week
schedule. Mr. Miller expressed that the Town would have better coverage. Mr. Miller continued that the total amount
requested for Law Enforcement was $3,930,111 up by 6.7%. Mr. Miller said the Town saw a 7% increase in the
MCSO contract of $246,141 and listed the reasons and services provided as follows:
3.8 beats plus a School Resource Officer.
Increase to County benefits that were a major drive to this increase and passed on to the Town.
Services included in the contract with the County are animal control and jail fees.
$15,000 for their MCSO Posse vehicle maintenance on a reimbursement basis.
The next slide described the break-down of Law Enforcement expenses and showed a $7,000 decrease in the animal
control portion of this budget.
MUNICIPAL COURT
Mr. Miller noted that no changes were made to the Municipal Court organizational chart and stated there was an
increase of $42,372. He also informed Council that the Court would be continuing the “Teen Court” program.
Councilmember Magazine noted that the Court requested an increase of $22,500 and wanted to know why the
difference was added. Mr. Rudolphy answered that in the current budget there was an error and the Judges salary was
not included, which had caused the approximately $20,000 increase. Councilmember Magazine asked about the
facility maintenance charges of $13,000 to their budget when other items were rejected. Mr. Miller stated that the
Town had a Court Enhancement Fund, which was to be used exclusively by the Court.
NEW GENERAL GOVERNMENT FUND
Mr. Miller stated that the proposed a new General Government Fund was created as a cost center for Town-wide
expenses and not for a single department and would also include some debt services that ultimately allowed
departments the benefit to place those funds in other areas in their budget. The slide listed the following examples:
Community Service Contracts totaling $120,522
League of Cities and Town dues
Maricopa Association of Governments dues
East Valley Partnership dues
GPEC dues
Sister Cities membership
Contingency of $421,488
Mr. Miller explained that the Contingency Fund had been previously placed in the Town Manager’s budget and since
these Town-wide costs were not attributed to one department, they should be separated out; however, the fund was
managed by the Town Manager and Finance Director. Furthermore any unexpected funds received such as grants
could be placed in this fund in case they were needed or an emergency occurred.
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Councilmember Hansen requested staff create additional detail for parks to better explain what was requested. Mr.
Miller noted that her request would be addressed before the tentative budget was adopted.
ADMINISTRATION
Mr. Miller confirmed the following core positions were held in the Administration’s Organizational chart as follows:
Town Manager
Legal Services
Town Clerk, Finance
Administrative Services
Information Technology
Economic Development
Volunteer Program
Mr. Miller noted that the department’s budget totaled $2,084,662 with a decrease of 1.9%.
Services preformed included the following:
Finance/Budget, banking, asset tracking, licensing, purchasing, audit, customer services, Channel 11,
websites.
Employee policies/procedures, employee benefits, payroll/compensation, Loss Control/Risk Management,
Employee Relations, Employee Training.
Public records administration, elections, general administration, legislative administration.
Town Council, Strategic Planning Advisory Commission, Municipal Property Corporation.
Volunteer Program coordinates 26 programs; 750 volunteers; 25,000 hours; $450,000 savings.
ECONOMIC DEVELOPMENT
Mr. Miller touch on the Economic Development approach that Council was already familiar with and had been
previously discussed and noted the budget proposed was $317,467. Activities included business attraction, business
retention and expansion and entrepreneurial development. Mr. Miller added that the budget highlights included the
following:
Budget decrease of $3,634
Transfers out to General Government
o JumpStartBiz $ 3,645
o Fountain Hills Community Theatre $28,798
o GPEC Dues $10,265
Increase external marketing activities; trade shows, sales missions and corporate visits
Membership and involvement in International Council for Shopping Centers (ICSC) for retail recruitment that
held a large annual convention in Las Vegas each year and would be attended by staff and added that this
membership was only recently joined, which would be an asset for the Town.
Councilmember Yates spoke in support of the Town’s ICSC membership and explained some of the benefits and
results with staff attending the convention. Mr. Miller added that the Town’s Economic Development Specialist Scott
Cooper would also be working closely with Target Center Management and hopefully with convention contacts and
scheduled appointments already, Mr. Cooper would yield benefits to the Town. Mayor Kavanagh expressed that at the
Economic Development Committee Meeting at MAG they encouraged municipalities to attend this huge conference
because of the contacts that were made and attending would also be an opportunity to show off our Town and what it
offers.
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Councilmember Magazine wondered if this was a change in emphasis due to the fact Council had decided to encourage
non-retail businesses into Town with higher paying salaries with young families with children to help support our
schools. Mr. Miller suggested that this was just one tool the Town could use to encourage businesses. Mr. Cooper
addressed the question and stated this was not a shift in prioritizes but part of the Town’s Economic Development Plan
that had not been addressed recently. He added the membership cost was minimal at $99 and included one conference
each year and regional meetings located in Phoenix and San Diego with expenses totally approximately one to two
thousand dollars and a couple of days time. Mr. Cooper expressed his opinion the ICSC membership was well worth
the time and expense. Councilmember Magazine stated it was not about the money but how Mr. Cooper spent his time
since he was a one-person department and Council’s request to focus on small businesses. Mr. Cooper proposed that
this membership should not take a lot of his time and that encouraging retail business was part of the Economic
Development Plan, and that he felt this membership was very valuable. He added that his shift was not to go away
from finding higher paying jobs and small businesses.
DEVELOPMENT SERVICES DEPARTMENT
Mr. Miller continued and explained that the previous Development Services Department included streets and facilities
but his proposal would split it into two separate departments. Development Services Department would include
Planning and Zoning, Building Safety, Code Enforcement, Engineering, Mapping and Graphics and the new Public
Works would cover streets and facilities. Mr. Miller explained his driver was that if Paul Mood the current Director
left, the Town would have an issue finding someone with all the experience necessary to fill the current position. He
also explained that the current Executive Assistant would be shared between Development Services Department and
Public Works.
Mr. Miller pointed out that the Development Services budget proposal was $921,010. He also stated the highlights of
the department were as follows:
Budget increase of $138,186
Responsible for review of building plans and inspections
Responsible for the “Annual Land Use Analysis Report”
Estimated to perform approximately 2,200 building inspections
Estimated to address 725 Code Enforcement cases
PROPOSED PUBLIC WORKS DEPARTMENT (NEW)
Mr. Miller announced that Paul Mood would be the director with the shared Executive Assistant along with the Civil
Engineer Inspector, the Streets Superintendent who would oversee the Traffic Signal Tech, Fleet Mechanic/Open
Space Specialist along with the Streets Maintenance Tech. Facilities/Environmental Supervisor would still be
Raymond Rees who would oversee the Maintenance Tech and Custodians (full-time and part-time).
Mr. Miller noted that the Public Works proposed budget was $827,304 with an increase of 24.1% and the highlights of
the department were as follows:
Budget decrease of $255,397
Responsible for inspection and maintenance of six ADWR Dams
Solid waste/recycling contract administration
Estimated 70 acres of wash maintenance annually
Maintenance of ten Town-owned buildings
Responsible for overall Capital Improvement Program Administration
Oversee, update, and implement Pavement Management Program
Oversee the street sweeping contract administration
Mr. Miller stated that the different between the FY15-16 and FY16-17 was because of the addition of a director’s
position.
STREET FUND (HURF)
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Mr. Miller noted that the budget for the Streets Fund or “TOWN” was $3,534,386 and stated that the highlights were
as follows:
Funds street division operation – 4.0 full time employees (FTEs)
Helps maintain 390 lane miles; 3.5 million square yards of asphalt
Maintaining 68 acres of medians
Zone No. 1 pavement maintenance
Mr. Miller added that Zone No. 1 pavement maintenance would be the focus of next year and added that the budget
increased for the FY15-16 from $2,848,121 to FY16-17 $3,534,386. Mr. Miller also stated that the 2016-17 pavement
maintenance expenditures would cover Zone No. 1, which was the 2nd phase and was scheduled as the next pavement
maintenance project along with mill and overlay on Bainbridge Avenue and La Montana Drive, numerous locations for
pavement replacements and potential slurry seal as the budget allowed.
COMMUNITY SERVICES
Mr. Miller presented the organizational chart and listed the different divisions under the Mark Mayer’s direction. He
stated that the Community Services budget was proposed at $2,170,279, which was a decrease of 4.2%. Mr. Miller
also explained that their activities included the Tourism Program, Parks, Trails, Community Center, Recreation
Programs, Senior Programs and Home Delivered Meals. Mr. Miller pointed out the highlights of the department were
as follows:
Tourism Program
Responsible for 119 acres of parks, the dog park and five ball parks
740 acres of preserve and 16.4 miles of trails and the number was growing
Recreation Programs included are the adult, youth, senior services
Facility rentals of the Community Center
Mr. Miller mentioned that in this year’s budget proposal was an adjustment in the Grounds Keepers title and salaries.
He explained that since those positions were the lowest Town paid positions, management had noticed a high turn-over
of employees. Mr. Miller explained that while the Town was saving money, they were not able to keep the positions
filled. He proposed that these positions be restored in the budget process from Grounds Keeper to Park Operations
Leads and he recommended Council’s approval.
CAPITAL IMPROVEMENT PLAN
The 2016-17 Major Capital Projects were addressed previously in this presentation by Craig Rudolphy, Finance
Director and totaled $9,312,200. Mr. Miller pointed out that the Fire Station was the largest item and was a work in
progress. He continued to explain that the Fountain Hills Boulevard Shoulder Paving Project would help with erosion
issues along the washes on Fountain Hills Boulevard along with some issues on McDowell Mountain Road, which will
begin after completion of truck hauling by contractors in the area. Mr. Miller also pointed out the Fountain Park
Access Improvements involving connectivity from the Avenue to the Park and he added this project was going through
the planning stage at this time. He also mentioned the Fountain Lake Water Quality Project and informed Council a
request for a work-study session would be received sometime in June 2016 to review the consultant’s
recommendations to improve the water quality of Fountain Lake and finally the Adero Canyon Trailhead would
commence next fiscal year.
Mayor Kavanagh expressed that the bus barn demolition was very important to the residents of the Four Pe aks
community and stated how excited they were. Mr. Miller added that along with the removal of the barn other ways
were planned to beautify the site.
FEE SCHEDULED CHANGES
Mr. Miller explained that each year staff reviewed the Town’s fee schedule to make sure what was charged was the
true cost with cost recovery. He wanted to point out some of those fee changes or new fees proposed as follows:
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36 x 36 Zoning Map increased from $10.00 to $30.00 (Supplies and staff time were costly and had not been
adjusted for a long time and hopefully would make people think before they requested this map).
Event date request submittal 59 days or less prior to an event date would be charged $200.00.
Events such as the “Trump” event would now be categorized as a mega event encompassing all the green
space and the amphitheater and charged at $3,500 per day.
Festival Events such as the October Festival or Saint Patrick’s Day would be charged $2,500 per day to
recover staff time along with wear and tear on the park.
Special Events Deposit Fees were recommended and calculated by the total attendance ranging in cost from
$500 for 1,000 and a mega event of 5,000 in attendance charged $5,000.
Special Event Road Closure Administration Fees would be adjusted and charge on the total attendance and
cost would range from $500 - $1,500 to pay for not only areas involving the park but requiring road closures.
NOTE: The Town’s usually contracts an outside vendor with the assistance of Town staff and this fee would
help to recover staff’s time.
Special Event Vendor Compliance Fine penalty for the first time offender would be $250.00 with recurring
offender fined $750.00.
Oversize/Overweight Vehicle/Haul Permit would cost $210.00 and would recover staff time and found
necessary because more dirt hauling had been requested through Town.
Development Agreements proposed to be increased from $2,500 plus $100 per acre or portion thereof to
$5,000 plus $100 per acre or portion thereof to cover the cost of staff time and legal fees involved, which were
not being recovered previously.
Mr. Miller mentioned that Town staff and one of the utilities were in the process of discussing the billings for the
Environmental Fee and added more information would be forthcoming to Council hopefully in June 2016. He also
pointed out that the fee would stay the same next year, with the same billing cycle and billed one-time in December or
January. Councilmember Magazine asked how much of the Environmental Fee had currently been collected. Craig
Rudolphy answered approximately $455,000 representing 86% of the billings.
Mayor Kavanagh asked what a Vendor Compliance Fine entailed. Rachael Goodwin, Recreation Supervisor explained
that this fee was suggested in an attempt to encourage organizers of events to make sure all vendors apply for a
business license. Currently Administration staff had attended and checked each vendor to make sure they were in
compliance and, if not staff, would collect fees and issue a permit to them at that time. She added that eventually staff
would not be able to visit these events and hopefully this fee would make them aware that there was a penalty for not
following the Town’s Code requirements.
Mayor Kavanagh asked how this would be arranged. Ms. Goodwin stated that the goal was to work with vendors in
good faith and get about 90% compliance and noted that new events would be given the chance to work with staff until
they understood the rules and added that any organizer that continued to avoid the process would be charged this
secondary fee. Mayor Kavanagh acknowledged this process would take the burden off the Town’s staff and Ms.
Goodwin agreed.
Councilmember Hansen asked about the increase in the Development Fee and Mr. Mood answered that the Town was
one of the cheapest in the valley.
Mr. Miller added that along with the Sanitary District’s Impact Fee the developer takes a big hit and stressed that the
Town was limited under law on the Impact Fees they could collect to pay for growth.
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Avenue of the Fountain Rental Fee previously did not take in consideration that those requesting this rental
sometimes wanted to use a larger portion of the Avenue, so it was decided to split the areas into six sections as
open park space, including the amphitheater, Avenue of the Fountains Plaza, great lawn and other lawns and
would be charged separately. Mayor Kavanagh asked if that included Centennial Circle and Mark Mayer,
Director of Community Services answered that Centennial Circle was considered as open park space.
Ballroom Rental had not been adjusted for seven or eight years at the Community Cen ter and a 10% increase
to all fees was proposed and would reflect the increase cost of living and utilities to help fully recover
operation fees. Mayor Kavanagh asked if there were still separate rental fees for residents because she wanted
to make sure those stayed in place. Mr. Rudolphy answered that there was a separate fee and that those fees
were listed on another sheet in the fee schedule. Mayor Kavanagh also asked if there was an additional charge
to use the kitchen when renting a ballroom. Mike Fenzel, Community Center Events and Operations
Supervisor answered that previously the Town had charged, but had discontinued charging for use of the
kitchen.
PERSONNEL
Mr. Miller stated that personnel requests from Development Services, Public Works, Finance and Community Services
were received resulting in 1.63 new staff positions recommended, which included were a full-time Director of Public
Works and one part-time Accounting Clerk for the Finance Department. He noted the Town employed 43 full -time
and 23 part-time employees for a total of 53.95 FTE employees. Mr. Miller proposed an salary increase of 2.5% for all
employees taking affect on July 1, 2016 at the cost of 75,843 with the total personnel cost of $3,931,043 with an total
increase of 2.9% over last budget year. Mr. Miller added that changing the Town’s insurance provider to the Arizona
Metropolitan Trust saved the Town $100,000 annually in medical, dental, vision, and other employee benefit costs.
Councilmember Magazine wanted to know the methodology used in determining the 2.5% proposed salary increase
and stated he had a problem with the 2.5% because of the additional work load each staff member has taken on and the
limited staff employed, he suggested finding a source to add more to the proposal for an additional ½% or 1% as a
reward and to help retain current staff. Mr. Miller agreed with Councilmember Magazine but added that the ability to
pay was foremost in his thoughts. Vice Mayor Leger stated that he understood the Town had eliminated positions in
the past and how they wanted to bring the staff numbers back up but this ha d not happened. He noted the 10 requests
for additional staff and that only 1.63 FTEs were proposed in the budget. Vice Mayor Leger did not support the merit
system and suggested Council approve a 3% increase instead of the proposed 2 ½%. He suggested using some of the
newly acquired State Revenue money to fund this increase. Councilmember Brown agreed and noted staff’s
production and he would like to see even more of an increase by another ½%. Councilmember DePorter expressed his
support for a 3½% increase for the Town’s employees. Councilmember Yates also agreed and requested a rule to
follow in the coming years when evaluating salary increases by using resources such as the League of Cities and
Towns as a guideline.
Mr. Miller was appreciative for what Council had proposed because he also felt staff was very dedicated to the
organization and agreed with Councilmember Yates that the League would be a great source for information and he
noted the time was right to look at a 3-3 ½% increase in salaries. Mr. Miller declared he would bring back to Council
a proposal for an additional percentage that included salaries and benefits during the tentative budget preparation. He
also noted that a methodology would also be suggested for salary increases going forward. Councilmember DePorter
also pointed out he too did not want to lose good employees because of salary and Mayor Kavanagh agreed. Vice
Mayor Leger stated he wanted the Council to reward staff and not compare increases to other municipalities.
Councilmember Magazine concurred and urged caution with looking at other communities.
FY2016-17 ANNUAL BUDGET
Town Manager Miller’s recommendation as of tonight was to approve the 2016-17 annual budget in the amount of
$39,794,769 including transfers and noted that this annual budget could be adjusted due to the proposal of an
additional salary and benefits adjustment.
Councilmember Yates addressed the Town’s legal services budget and expressed that this budget keeps going up by
20% and noted that this year the amount budgeted was $400,000. He stated that Council had recently discussed how
the Town could cut costs and raise revenue. Councilmember Yates expressed he understood this was a touchy subject
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and wanted it known that this was not about the quality of the Town’s legal services received but the rising costs since
building and growth had been flat in Fountain Hills and he stated the opinion costs were “out of control.”
Councilmember Yates said he understood that the Town did not have a formal contract for legal services and the last
time the Town had an engagement letter for legal services was in 2005. He expressed concern that with a $40M Town
budget and a legal budget expected to reach $400,000; he proposed that the Town could possibly hire a full-time
Attorney on staff with an assistant for about $200,000. Councilmember Yates said he was looking at this from an
organizational stand point. Councilmember Yates requested a work-study session to address this issue and wanted to
compare services received and cost to comparable cities and towns that appear to pay under $200,000 per year for their
legal services and noted this information was received from the League of Cities and Towns. He also requested a
summary of the monies spent and what were the results when the Town ultimately did go to court. He also stressed
that he believed the Town needed to restructure their legal services. Councilmember Yates requested input from the
League of Cities and Towns, litigation summary, scope of work for an Attorney and a legal assistant or secretary,
Councilmember Magazine agreed to the work-study because the issue had been brought up before and discussed. He
stated his opposition for a cheaper attorney that may not have the skills needed and pointed out that the Town was not
only paying for an Attorney but a firm and he also requested information for the work-study on how much work Mr.
McGuire handles personally verse other members of their firm. Mayor Kavanagh agreed the legal services budget
deserved to be addressed along with other aspects and requested current information from the League of Cities and
Towns for comparison. Mayor Kavanagh also agreed a work-study session was needed and requested the session be
scheduled with some consideration for staff having enough time to retrieve the information needed,
Vice Mayor Leger brought up that within the $396,000 legal fee budget, $100,000 went towards the prosecutor and
noted that the work load numbers had increased over the years. He also stated that staff and Council had completed
numerous analyses over the years addressing the Town’s cost for legal services and found the current budget was more
cost effective than most municipalities and if the Town wanted to cut cost they needed to cut down on their demands.
Councilmember Hansen added that in previous years access to legal was limited to the Town Manager and Town
Council was asked to limit their requests. Mr. Miller expressed that Mr. McGuire would often refer individuals back
to get clearance from the Town Manager before addressing an issue and then, if their request was approved, they
would be instructed to complete a “Request for Legal Services” form, which helped contain legal costs. Mr. Miller
also complimented the Town’s legal services from Gust Rosenfield and particularly Town Attorney Andrew McGuire.
Councilmember Hansen stated that there were a variety of attorneys with specialties within their firm to draw from if
needed.
Mr. Miller acknowledged the Council’s request to schedule work-study to discuss the Town’s legal services.
NEXT STEPS
Mr. Miller noted the next steps to the budget as follows:
Approval of two Budget Resolutions:
o 1st Resolution adopts the proposed budget on May 5, 2016
Includes adoption of the fees schedule as proposed
o 2nd Resolution adopts the final budget on June 2, 2016 and clarifies the implementation of adopting the
2016-17 budget
Assists Staff with policy direction as to administering policies and procedures governing
planned budgeted expenditures
Assists the Mayor and Town Council and Citizens with a clear understanding of parameters of
the various departmental and program expenditures for the final adopted budget
Approves the Organizations Charts, FTE Schedule, Job Descriptions and Pay Plans for
FY2016-17
Asphalt Replacement Policy added to the Pavement Management Program
Councilmember Magazine complimented staff on their work on the budget and expressed that the additional
information Council received this evening was extremely helpful. Mr. Miller thanked Finance Director Craig
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Rudolphy along with Accountant Beata Bogdan both Finance Department Staff along with all other staff members who
contributed to this budget process.
Mayor Kavanagh also thanked staff for the budget format as presented that really helped the Town’s residents
understand the process and where their money was going. Mayor Kavanagh also reminded Council that immediately
following this session they would be going into Executive Session in the Fountain Conference Room. The tentative
Wednesday, April 20, 2016, for the continuation of this budget discussion was deemed to be unnecessary.
AGENDA ITEM #2 - ADJOURNMENT
Councilmember Yates MOVED to adjourn the meeting and Councilmember DePorter SECONDED the motion,
which CARRIED UNANIMOUSLY (7-0). The Regular Session adjourned at 7:42 p.m.
EXECUTIVE SESSION
* CALL TO ORDER AND PLEDGE OF ALLEGIANCE
Mayor Kavanagh called the Executive Session to order at 7:53 p.m. in the Fountain Conference Room - 2nd Floor.
AGENDA ITEM #1 - ROLL CALL AND VOTE TO GO INTO EXECUTIVE SESSION: PURSUANT TO : (1)
A.R.S. § 38-431.03(A)(3), DISCUSSION OR CONSULTATION FOR LEGAL ADVICE WITH THE
ATTORNEY OR ATTORNEYS OF THE PUBLIC BODY, AND (2) A.R.S. § 38-431.03(A)(4), DISCUSSION
OR CONSULTATION WITH THE ATTORNEYS OF THE PUBLIC BODY IN ORDER TO CONSI DER 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 LITIGATION (SPECIALLY, PARK PLACE DEVELOPMENT AGREEMENT).
Present for roll call were the following members of the Town Council: Mayor Linda Kavanagh, Vice Mayor Henry
Leger, Councilmember Alan Magazine, Councilmember Cecil Yates, Councilmember Dennis Brown, and
Councilmember Nick DePorter. Town Manager Grady E. Miller, Town Attorney Andrew McGuire, Senior Planner
and Zoning Administrator Robert Rodgers and Town Clerk Bevelyn Bender were also present.
Councilmember DePorter MOVED to go into Executive Session at 7:53 p.m. and Councilmember Yates SECONDED
the motion, which CARRIED UNANIMOUSLY (6-0), by those present.
Councilmember Cassie Hansen entered the meeting at 7:54 p.m.
AGENDA ITEM #2 - ADJOURNMENT.
The Mayor adjourned the Executive Session without objection at 9:29 p.m.
TOWN OF FOUNTAIN HILLS
By ___________________________________
Linda M. Kavanagh, Mayor
ATTEST AND
PREPARED BY:
___________________________
Bevelyn J. Bender, Town Clerk
CERTIFICATION
I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Executive Session, held in
the Fountain Conference Room – 2nd Floor and Regular Session held by the Town Council of Fountain Hills in the
Town Hall Council Chambers on the 19th day of April, 2016. I further certify that the meeting was duly called and that
a quorum was present.
DATED this 5th day of May, 2016. _____________________________
Bevelyn J. Bender, Town Clerk