HomeMy WebLinkAbout2011.0308.TCWSM.Minutesz:\council packets\2011\r4-7-11\110308wsm.docx Page 1 of 21
TOWN OF FOUNTAIN HILLS
MINUTES OF THE WORK STUDY SESSION
OF THE FOUNTAIN HILLS TOWN COUNCIL
March 08, 2011
AGENDA ITEM #1 - CALL TO ORDER AND ROLL CALL
Mayor Schlum called the meeting to order at 5:30 p.m. in the Town Hall Council Chambers.
ROLL CALL:
Present for roll call were the following members of the Fountain Hills Town Council: Mayor Schlum, Vice Mayor
Contino, Councilmember Leger, Councilmember Hansen*, Councilmember Brown, Councilmember Elkie and
Councilmember Dickey. Town Manager Rick Davis, Town Attorney Andrew McGuire and Town Clerk Bev Bender were
also present.
* Councilmember Hansen left the dais at 7:55 p.m.
AGENDA ITEM #2 – UPDATE ON CHANGES TO THE PRELIMINARY TOWN OF FOUNTAIN HILLS FY
11-12 BUDGET.
Deputy Town Manager/Finance Director gave a brief update to the Council as to where they were in the budget process.
(PowerPoint presentation on file in the Town Clerk’s office.) She indicated that staff continued to meet with the
Executive Budget Committee and commented on the few changes that had been made. She discussed that State Shared
Revenues with revised estimates provided from the League, were now anticipated to decrease about 1%. Ms. Ghetti
commented that the budget was back in balance and would review the adjustments that were made. She stated the
Maricopa County Sheriffs’ Law Enforcement contract had been received and although staff had originally bu dgeted a 3%
increase the contract had actually increased 5½%; reduced the merit allow removing the 3% merit for the staff; however
money was left in for funding an incentive program (the innovative awards program) to be determined and based on if an
employee or employees found an innovative idea to save money for the Town that the Town would be able to give them
some type of award for that effort. She stated that $25,000 had been included in the budget for that.
Councilmember Hansen asked if the Law Enforcement contract allowed for a certain percentage of increase. Ms. Ghetti
confirmed that the intergovernmental agreement with Maricopa County called for a full cost recovery contract, so
whatever costs were incurred to provide the 3.8 beats, those costs would be passed along to the Town. She explained the
primary reason for the increase had been the increase in benefits for the deputies (cost of the staffing). She concurred
with Councilmember Hansen that this contract did not include an increase in the level of service.
Councilmember Leger asked if the contract costs had been held even last fiscal year or had they decreased their costs.
Ms. Ghetti reiterated that this was a full cost recovery contract and explained that they (MCSO) did not absorb any costs
nor did they charge the Town any more. Councilmember Leger said he did not recall any increase in their contract last
year but the year before there had been an increase. Ms. Ghetti restated that the cost increase was primarily driven by the
employees so they may have been able to negotiate a better price for health benefits (didn’t increase that much); however,
they had not been able to do that again this year.
Ms. Ghetti reviewed some of the outstanding budget issues as being: Fee Schedule, Community Contracts, and the
Special Transportation Program. She stated that currently staff was in the middle of a fee study, which was part of the
Council’s goals for this fiscal year. She noted that the Special Transportation Program was not funded in the General
Fund and that they were trying to figure how or if the Town can continue that program as the LTAF money was not going
to be resurrected. She noted that they were working on two internal service funds (money set aside to replace vehicles
and equipment, such as fire trucks) and staff had not yet included those in the budget. She explained that the internal
service funds did not affect the General Fund, but were separate funds.
Ms. Ghetti stated that the total for all funds was approximately $34.1M, with the exception of the General Fund. She
noted that the General Fund was balanced and all of the other funds were by nature of themselves balanced, with the
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exception of the Capital Improvement Projects Fund (CIP). She noted that the road bonds had been included because if
the voters approve that, then they had to make sure that they had the money to spend; it had been included in the budget.
She reviewed changes made to the budget, which was done partly to bring the budget into balance due to feedback
received in the Executive Budget Committee or from the Council. Originally include in the proposed budget was a part -
time prosecutor that was going to be an employee; however, the Executive Budget Committee heard a presen tation by the
prosecutor and determined that the need was still there for a fulltime prosecutor and so the budget had gone back to a
contract full-time prosecutor and that had increased the General Fund budget. She stated that the two full -time positions
for Economic Development were both removed from the budget (removed from the General Fund and Economic
Development Fund).
Ms. Ghetti explained how they had been able to balance this budget noting that the League updated the estimates on
anticipated income tax, which meant $71,000 less for Fountain Hills; added $60,000 in interest revenue income with the
objective of going out for bid and putting some of the Town’s money in other investment opportunities according to the
Town’s investment policy.
Mayor Schlum asked if the Town’s state shared revenues had been dropping over the last couple of years. Ms. Ghetti
responded yes, particularly the income tax, which had dropped between 25-30% and was anticipated to drop again next
year by another 11%. She stated that because of the two year lag the year after that it was possible that they would see
another decrease and then it should start to level off. She noted that the state sales tax had started to level off but it had
gone down but not quite as much as the income tax; however, it appeared to be a flat recover. In response to a question by
the Mayor, Ms. Ghetti stated that the Town’s share of the state income tax was going to be less than the sales tax. She
said that per the League of Cities and Towns the census information should be out this week and that would provide
municipalities as to what their proportionate share of the State Shared Revenues (income tax, property tax & HURF)
would be. She explained that depending on how the Town’s population compares to the rest of the state there was a
potential that the Town could lose a proportionate share as we won’t have grown as much as some of the other cities and
that she hoped it was not too much different from staff’s projections.
Mayor Schlum noted that cities and towns were not assured of a specific dollar amount every year and Ms. Ghetti
concurred.
Ms. Ghetti reviewed the expenditures that were revised: (i) the removal of the merit money ($50,000), reduction of the
contingency item from $250,000 by $100,000 due to the increase in the law enforcement contract being higher than
anticipated; (ii) removal of the two proposed Economic Development positions from the General Fund ($32,000) and
Excise Tax Fund ($110,000); (iii) increasing the prosecutor to a full-time contract in the General Fund ($47,000); (iv) and
the increase in the Law Enforcement Contract ($147,000).
Ms. Ghetti stated they were currently on track to have the draft budget to the Council at the end of March. The Executive
Budget Committee continues to meet to finalize things. She commented that the budget was still balanced; however, if
anything significant came up between now and then she indicated that she would inform the Council.
Mayor Schlum requested clarification regarding the legal services for the prosecutor and asked if they were the same as
last year (not an increase of $47,000). Ms. Ghetti agreed that was correct and noted that the proposed budgeted item of
$110,000 had not changed for at least five years. Mayor Schlum pointed out that there was an increase in the cost for law
enforcement and Ms. Ghetti concurred that was correct. Mayor Schlum thanked Ms. Ghetti for keeping the Council
informed and asked when the Council would begin getting into the budget. Ms. Ghetti stated that she expected to deliver
the proposed draft budget at the end of March and that in April and May there would be lots of opportunities for dialogue.
Councilmember Hansen asked about fees noting that Ms. Ghetti had previously indicated that staff was in the process of
reviewing the fee schedule. She asked that staff take a look at the one that involves liquor license renewals, which had
recently been implemented ($750 annual fee). Ms. Ghetti explained that the Town had not had a liquor license fee at all
in the past and this was now something the Town was charging for with different fees depending upon the type of license
they have. Councilmember Hansen stated that the issue was that this was an annual fee as opposed to a one-time new
license fee or a change in the fee. She indicated that she had heard a lot from the community that having that fee every
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year when the Town didn’t really have to do anything for a renewal and that they felt they were paying $750 just as a fee.
She stated the opinion that the Council might want to take a second look at that as they go along in the process.
AGENDA ITEM #3 – DISCUSSION RELATING TO A PROPOSED PAYMENT TO TYLER TECHNOLOGIES
FOR PAST DUE ANNUAL SOFTWARE MAINTENANCE CONTRACT IN THE AMOUNT OF $60,000 FOR
FY09-10.
Ms. Ghetti stated this was brought forward to the Council’s attention as the Town has never had a software maintenance
fee that was over the Town Manager’s authority ($20,000) before. She explained that the $60,000 was f or FY 09/10 and
FY 10/11. She stated that staff had been having an ongoing dialogue with the vendor, not about the software as it was a
good program, but there had been issues with the vendors’ training and implementation that had caused staff difficulties in
moving forward with the program. She indicated that staff had met with the vendor a couple of weeks ago and had
resolved the issue. She commented that the Town had not paid for any maintenance at all and still has not; therefore, this
amount would be for the first maintenance. She reiterated that staff and the vendor had come to an agreement, which was
that the vendor would cut their fee in half for the first year FY 09/10. Therefore, staff was proposing that this approval
would be placed on the next meeting’s consent agenda unless the Council wanted to have additional conversation on it.
She clarified that the amount of $60,000 covered FY 09/10 and all of FY 10/11; Next year the Town would start up again
and pay FY 11/12 and FY 12/13 for the annual software maintenance license agreement.
In response to questions from Vice Mayor Contino, Ms. Ghetti confirmed that the annual maintenance license agreement
was $50,000 and reiterated that the $60,000 amount was for two years FY 09/10 and FY 10/11. She stated that the vendor
had responded to staff but the issues went back to dissatisfaction with the training and the implementation. There had
been several issues and they had withheld payment of the maintenance noting that there had been a lot of dialogue in
between, which were the only issues. It had not been about the product or their response; it had been about the training
received as it took us down a wrong path and when staff implemented the program, for example, it had crashed the
Town’s whole property master program that contained every address within Fountain Hills and staff had to start all over .
The vendor had acknowledged that the training was not what it should have been by cutting their fee in half.
Vice Mayor Contino commented on the fact that this had been going on for a couple of years and it had not been brought
to the Council’s attention. Ms. Ghetti asked for clarification as to what wasn’t brought forward, that staff was angry or
that there was a dispute with the vendor. Vice Mayor Contino clarified the issue was that we were having problems with
them. Ms. Ghetti apologized and said it wasn’t brought to the Council’s attention as it was something that staff was
moving along with the vendor on and having dialogue. The vendor had wanted to see exactly what the issues were and
staff had to go up the ladder, talk with the local representative and finally talked to a vice president. The vice president
made a visit to the Town Hall and sat down and talked with us; but before that, staff was not going to have anymore
conversations with them until they sent someone and staff could show them what their issues were.
Mayor Schlum asked if the fee had been budgeted in FY 09/10 and this year. Ms. Ghetti confirmed that it had been
budgeted. Mayor Schlum noted that in the analysis provided Ms. Ghetti was looking to continue with this software at this
time. Ms. Ghetti said that was correct and the reason was that it was a good product and was working. She commented
that it had saved the Town a lot of money and helped staff integrate all of the Town’s programs and identify areas that
may have been slipping through the cracks. Ms. Ghetti indicated that the program had identified over $100,000 in things
that they might not have been able to catch before. She further explained that quite a few of the cities and towns within
Arizona are going to the same product, which helped them and had helped them in staff’s negotiations with the vendor as
they could now get together, which provided a bigger voice. She noted that this software was very big in school districts
but not so much in small municipalities; this was a new market for them.
Mayor Schlum commented that additional staff resources were utilized to get this up and going and that staff had talked
with the software provider and negotiated a term that would help the Town recapture some of those lost resources. Ms.
Ghetti concurred with the Mayor’s comment.
Councilmember Leger asked if this was proprietary software (could someone else maintain it). Ms. Ghetti confirmed that
this was proprietary software; if the Town did not pay the fee, there would be no support. Councilmember Leger stated
that helped, as alluded to, if staff was unhappy with someone’s product or service and Ms. Ghetti had stated she was
happy with the product but not the service, and in that it is proprietary software the Town really did not have any options.
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He asked if Ms. Ghetti was comfortable that the issues had been resolved and continuing a relationship with these folks.
Ms. Ghetti responded yes, otherwise she wouldn’t bring it forward. Councilmember Leger commented that it appeared
she had the attention of right people in the organization to respond if going forward there were i ssues. Ms. Ghetti stated
that was correct.
Councilmember Hansen indicated that was kind of her question too (had Ms. Ghetti reached a comfort level now) because
when Ms. Ghetti had said this had been going on for over a year with the implementation she had discovered that they had
had litigation over those same types of issues in Spokane, Washington and Ventura, California. Ms. Ghetti responded that
staff had done the research and had been aware of those lawsuits as well and stated that the Town was not going to just
pay for inferior service and that the product is fine; staff liked the product. She commented that everyday staff learned
something new about it noting that it really was a transition issue. The training was very inferior as far as staff wa s
concerned that she had explained it to the vendor as money wasted and the Town was not willing to pay $50,000 for
service that that the Town was not getting. Ms. Ghetti stated that they had come to a really good agreement and was in a
really good place. She reiterated that the other cities and towns all share information now and the Town was a good
resource for them, and some like Queen Creek, have had it longer than we have and they were a good resource for the
Town. At least we have the ability to share information and they (the vendor) were very responsive. The whole time that
the Town did not pay, the vendor continued to support the program; therefore, she had faith in the company.
Councilmember Elkie asked if the Council had any concerns with this item being on the consent agenda as opposed to the
regular agenda. Mayor Schlum stated that particularly when it was a larger amount it was placed on the regular agenda ;
however, now that we’re reading through the consent agendas there might be a little more discretion, but typically they
would put this on the regular agenda. Councilmember Elkie said it would be his request that this item be placed on the
regular agenda.
Mayor Schlum asked if this was the program that Beata had taught them about what they thought they knew. Ms. Ghetti
responded yes. Mayor Schlum said she was obviously she was a great asset for us to be able to leverage the abilities of
the program. He thanked staff for their efforts and hanging in with the product that now was saving money and helping us
to understand program costs and other things in more detail.
AGENDA ITEM #4 – DISCUSSION REGARDING THE COUNCIL RULES OF PROCEDURE, SECTION 9.4
RELATING TO QUALIFICATIONS FOR APPOINTMENTS.
Town Manager Rick Davis addressed the Council stating that questions and concerns were raised the last time we
addressed the employment of commissioners relative to the current Rules of Procedure, specifically, the amount of or time
of residency of perspective commissioners. This was an issue that staff understood they needed to bring back before the
Council for discussion and consideration. He indicated that staff was open to any changes or modifications the Council
wanted to make, present to listen to their discussion, and take notes.
Mayor Schlum said this item seemed to be more related to the one year (residency) qualification that the Council had been
holding to as applications were reviewed or were giving feedback to residents about their residency before applying for a
board or commissions. He stated that at the last meeting the Council had varied from that process, obviously as there was
the ability to do so with the language, but he indicated that he was not opposed to changing it.
Councilmember Brown said this came about with two junior councilmembers sitting on a committee with a senior
councilperson who had been seated with the old style executive session and who had gone through several interviews
where the applicant didn’t have a full year (residency) and there was a precedent set that sort of over road the qualification
for appointments. He stated that he and Councilmember Elkie had read this and came to the conclusion, not knowing the
precedent that had been set and that what they were doing was a very valid thing to do, which was the basis for where they
were today. He reiterated that he had read this very carefully again and did not see one word in the document that he
would change. He expressed the opinion it was well written and intended, if anything, the Council might consider simply
taking out the ability for the Council to specifically waive this time (residency requirement). He stated he liked having the
ability to say that an applicant had only been in Town for four months but also rea lized that the individual had more
qualifications than anybody else at the table and could be a real asset to conversation. He indicated that he felt it was a
catch 22 because of the precedent that had been set.
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Mayor Schlum asked if anyone wanted to speak to possibly changing anything.
Councilmember Hansen said one of the Council’s goals and objectives was to go through again and review some of the
aspects of the policies and procedures. She said she had gone through and marked a few pages that she w ould like to
bring up in the future as more of a comprehensive discussion and indicated that this change could fall into that as well.
Councilmember Hansen said it was interesting that as she was going through it again there were probably a few provisions
that don’t get used very often and they tend to be forgotten and when they come up it was oops I didn’t realize that was in
there. She expressed the opinion that the overall comprehensive review would a positive thing.
Councilmember Elkie stated it’s always was important to remember to look at the Council’s policies and procedures or
perhaps revise the Town Code to take things out that don’t apply anymore or to refine a few things. He said we should
always be looking at those sorts of things. He echoed Councilmember Brown’s comments as far as the process that we
went through in recommending the Board of Adjustment members. He indicated that they had found a very well qualified
individual and decided to recommend to the Council that they waive the residency requirement in this case. He indicated
that he had not found any discrepancies with this particular section (9.4) but he felt it would be a good exercise to go
through the entire procedure, the Town Code, and to go through policies. He felt that was a good thing to do every couple
two three years.
Mayor Schlum said that was an example of the restrictions placed upon Council related to open meeting law. He stated
that it had been a bit of a surprise that night for him because that had been the assumption of process but obviously they
were not all talking, because you could not do that. He said he appreciated that noting there was benefit of having people
here but he was more pleased when they had a larger number of applicants than positions, which had typically been a
trend over the last couple of years and had been the case that evening. He said that was a good problem to have.
Councilmember Dickey questioned when this was brought up again would that be when the Council looked at more things
beside just this item (a more comprehensive review). She said if they looked at the time (residency requirement), she
requested they try and figure out why it was put there (try to remember why it was put there) and look at other cities and
towns to figure out the value that was there. She did not want to leave it in if it was not useful anymore, because if you
left it in and leave open the idea of using it in this person is more qualified kind of thing, then she was not sure of the
point of having it. If they did have it, she preferred to keep that as something that the Council did not veer from , except
for the nature of the commission or something like that or such as a request for someone from Scottsdale be on that
commission. If they started to yes, except this one had more qualifications one way or the other, she was not sure they
should have it all. She expressed that it might be good to look at the motivation behind having it in the first place and if
they found value in that as they look at the rest of the things in total that Councilmember Hansen wanted to look at.
Councilmember Hansen said a good example was now that they have had the smaller committees that interview the
applicants one the things that had been seen was members were re -upping and applying again and they had to go through
the whole process, which included filling out the application that they already had on file. She felt that was a bit much
especially for someone who was applying for the second or third time. She suggested that they could make a modification
stating that if someone was reapplying for a subsequent term that maybe they just do a refresher letter providing an update
of what they were doing now and this was what they had enjoyed doing so they don’t’ have to do all the paperwork that
they are doing initially. She indicated that it would be that type of tweaking and suggested that maybe a way to move this
forward more quickly, because it does get cumbersome, is that if each individual Council person went through and
provided their changes to the Town Manger and then they could use that as a tool going forward to make the process a
little quicker.
Councilmember Elkie expressed the opinion that it was important for the Council to retain some discretion in its
recommendations to the Mayor as far as the committees are concerned, whether it was the one year (residency) or they
made an exception as was recommended in this particular case. He said that clearly as was shown in the last Council
discussion this was not something that had come up in the past and it had always been the status quo to require the one
year even though it was written into the procedures they could make a recommendation and vote to waive that. He stated
that in this particular instance he had felt they had an extremely well qualified person (and not real close) and giving the
Council the discretion to say that this was one of those situations where we should make an exception and he expressed
the opinion that it the rules should not be so rigid (that you must be here one year) noting that the ultimate decision rested
with the full Council. He reiterated that the Council having the flexibility and discretion was very important.
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Councilmember Dickey discussed qualifications stating that there were different opinions. She said there may be those
who think individuals who have lived here for 35 years was more qualified so she did not think it was that cut and dry.
She stated that if the Council did not find value in people living here for a longer time then they should just remove that.
If they did, then they should obviously discuss that further.
Mayor Schlum said for staff’s clarification he understood that the Council would begin reading code, rules, policies and
procedures and would start sharing some thoughts and this item would be brought forward formally at a Work-Study in
the future. He asked the Council if that sounded good.
Councilmember Dickey asked if in the interim if they would be sticking with the commissions as they had talked ab out
maybe looking at that whole thing differently and by doing this exercise and putting energy into that she wanted to know
if they were really saying we’re sticking with what we’re doing.
Mayor Schlum said relating to what was brought up tonight (9.4) there likely would be no changes unless
Councilmembers wanted to bring it forward as part of an agenda item at a future Work-Study, which would cover a lot
more than just section 9.4. He commented there could be changes to that. As stated by Councilmember Elkie, with the
way it was written there was the ability to have someone with less than one year, but it was up to the majority of the
Council to decide if that was the direction to go or not. He hoped that they would not have that happen; however, in
having more applicants than positions he said that could come up. He felt that could happen going forward until the
Council changed the policy. He said he was not sure they would change it, but perhaps they might think there was value
in having someone here for at least six months and maybe that would be something that came up. He said everything was
fair game but that they had to manage it in an effective and efficient way. He concurred with Councilmember Hansen’s
proposal as the way to go.
Councilmember Elkie asked what the procedure would be if they wanted to revisit the entire Council’s procedural rules.
He questioned if it would appropriate to have a committee made up to revisit those rules with staff, such as the Executive
Budget Committee to go through it from the beginning to end to make recommendations for revisions. He suggested that
a combination of perhaps the more seasoned Councilmembers with the Town Manager or Town Clerk to go through and
identify items that don’t apply or come up. He asked what the mechanism would be (the body) to do something like that
so the Council could look from the top down and revisit it as well as the Town Code and other issues at some point in the
future.
Mayor Schlum requested the Town Manager, Town Attorney, and the Town Clerk to share what other communities have
utilized. He said there should be no reluctance of any Councilmember to bring issues forward right away. He asked Mr.
Davis if he was familiar with ways Councils have looked at things or gone through things to update them that might make
sense. He commented that he knew they did things like that when laws changed so they were in compliance.
Mr. Davis stated that recently Administration had completely reviewed the policies within that department and it was
currently in review to ensure that all the changes made are good ones and appropriate for us to make. He noted that he
had been involved in reviewing policy and procedures in almost every community that he had been with and that it was a
common thing to do. As for being done for an elected body, he stated he had never been involved with that process but
assumed that the process used in those other instances (commission and committee) was similar. He stated the opinion
that the mythology as suggested by Councilmember Elkie was a sound one. He said he and Bev would be delighted to
work with any elected officials to review that along with Andrew (Town Attorney) to ensure that those changes are made.
He reiterated that was probably the best process to utilize.
Town Attorney Andrew McGuire said there any number of different processes work. If the committee was going to make
recommendations to the Council as a whole, the rule of thumb has been that it was a subcommittee that would need to be
posted and treated as an official subcommittee. If it is just gathering information back for everyone to consider without
synthesizing and making recommendations then it was more of an Adhoc Committee that did not really need to follow
those same procedures. He continued that since it was likely that the Town Clerk would be there already he did not feel
that would really matter and meetings could be posted and minutes taken. Mr. McGuire stated that this particular set of
rules started in Goodyear about eight or nine years ago and that the foundational document had started in other
communities but had migrated around because someone took the time to make a comprehensive set of Council rules. He
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stated the Town’s version was very tailored the circumstances of the T own but for the most part had been adopted by a
committee process as being described and he felt that that process would work just fine.
Mr. Davis asked if the Council would like him to organize something similar to what was done with the Water Quality
team and assemble a similar group to look at the Council’s Rules of Procedures.
Mayor Schlum asked if there was another area to review, noting that the Town Code had been brought up. He asked
Councilmember Hansen if that would encompass all of the areas she had mentioned.
Councilmember Hansen said she saw this one a little different simply because it has so much to do with the way the
Council operates and the Town Code was much broader. She said she saw this as participation by the full Council and if
there was a smaller committee that would be fine, but she liked the idea of all seven of the Council taking the time to just
go through it. She likened the process to that of the strategic plan when all the ideas that came up got thrown into the
parking lot. She suggested doing a similar exercise with this as there were some other areas earlier in the document that
as Councilmember Elkie had brought up earlier could use a little more flexibility because in her opinion some things were
outlined so minutely that it seemed it might not be as necessary. She reiterated the committee was fine but she hoped that
the entire Council would participate because this directly impacted how the Council operates.
Mr. Davis interjected that the committee would be necessary to get the ball rolling on the discussion and he saw that as
their role. He said he would be happy to solicit Councilmembers interest in serving on the committee. He felt that the
committee would need to frequently come back to the Council and discuss the proposed changes and modifications and
effectuate those through the appropriate process later on. He saw this as a constant communication.
Mayor Schlum reminded the Council that they needed to be efficient with the Town’s recourses and he did not want to try
and fix something that was not necessarily broken. He commented that if it gave them more flexibility and they thought
there would be of benefit in the future or right away then let’s do that. He pointed out that the Council would soon be
getting into the budget and he suggested that this start in July or after beginning with a committee for a month or two and
then bring it back to a Council Work-Study.
Councilmember Hansen reiterated her previous suggestion that Councilmembers individually just go through the
document and put stickies on areas for discussion to take place after the budget was done.
AGENDA ITEM #5 - DISCUSSION REGARDING THE TOWN'S LEGAL SERVICE OPTIONS.
Town Manager Rick Davis addressed the Council and stated that at the last Council meeting he was given direction to
develop a proposal for the Council to consider or at least explore the Town's options with regard to the procurement of
legal services. He noted the budget impact that such services have on the budget and said that because this is the budget
season, he had an opportunity to research this issue as well as how legal services are provided to the Town. He advised
that his objective today is to provide an analysis of recent legal services and present viable options. He stated that when
this first started he thought of four or five different variations that they could discuss but in the end they really only bo il
down to two options: Does the Council want to contract (outsource) legal services or do they want bring in-house a legal
function or division. He said that he would concentrate on those two options (Copy of the presentation on file in the
Town Clerk’s office).
Mr. Davis stated that it is important to discuss some of the fiscal realities regarding how legal services have been
provided, specifically the Town Attorney's services, and not the Prosecutor, Public Defender, etc. He reported that
expenses over the last seven years have hovered right around between $180,000 and $300,000 a year. He noted that this
accounts for outside legal services as well as Town Attorney costs. From 2008-09 to present day, they have been able to
successfully cut about $50,000 a year for Town Attorney costs and added that outside legal counsel expenses thus far this
year are zero, which is a good thing for the Town. Staff anticipates staying level this year, right around $200,000.
Mr. Davis discussed 2008-09 and 2009-10 Town Attorney costs by categories (2008-09: $242,111 for general
representation, contract review, elections, IGA's, Planning/Zoning issues, and all other and 2009-10: $202,233 for general
representation, solid waste, contract review, Planning/Zoning issues, risk management, IGA's, Lakeside, Ni chols/Sons and
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all other). He noted that general representation represents the lion’s share of legal expenses for the Town and called
attention to the decrease in 2009-10 as a result of efforts expended to keep these costs as low as possible.
In response to a question from Councilmember Dickey, Town Attorney Andrew McGuire explained the costs associated
with the Risk Management category (claims, evaluating issues associated with a reduction in force, etc.).
Mr. Davis further stated that it is important to understand how the Town compares to other communities of similar size
and reported that staff reached out and surveyed six other municipalities -- Payson, Prescott, Oro Valley, Queen Creek,
Maricopa and Apache Junction. He said that they analyzed how those communities utilized legal services and their
associated costs. He reported that Fountain Hills spends only $10.00 per capita in legal services, which is the lowest
amount among the six communities that were surveyed. He stated that Payson pays t he most (a little more than $25.00
per capita and Queen Creek's costs are very similar to the Town's). He noted that the communities that spend the most are
the ones that have in-house counsel and divisions. Mr. Davis confirmed that the numbers provided do not reflect any
outside legal costs). He noted that some of the smaller communities have what he considers to be a significant number of
legal staff and other, much larger communities, have very few -- it all depends on the needs of the community.
Mayor Schlum commented that the demands for legal services will vary from one community to another based on a
number of different factors.
Vice Mayor Contino asked if they had to utilize outside counsel when the Town had an election problem (Mr. McGuire
had extra staff from his firm go down to the Court).
Mr. Davis replied that one of the things that the Town is the beneficiary of is the fact that Mr. McGuire works down the
hall from many individuals who specialize in various legal areas. He stated that he is able to pose questions and obtain
information and the Town was not billed for that extra assistance.
Vice Mayor Contino asked if the case went to Court and Mr. McGuire advised that typically municipalities would have
had to go out and obtain expert help and pay the significant costs associated with that outside counsel (up to $380 per
hour). He stated that Mr. Dave Pennartz with the firm of Gust-Rosenfeld, Mr. McGuire's firm, is an elections expert and
he participated on the Town's behalf at the same fixed hourly rate of $210.00 that the firm charges for everything else.
The Vice Mayor commented that what he is saying is extra fees were charged to go down to court to represent the Town.
He added that Mr. McGuire did not do that, he had one or two other associates do it, and they charged the Town for those
services.
Mr. McGuire concurred with the Vice Mayor's statement and said that when an election challenge occurs, the municipality
needs an elections expert on its side to make sure they are not spending a lot of unnecessary time and money on things
that happen within a very short period of time. He further stated that he is a member of a law firm that employs 65
attorneys and any number of those people are part of the Town's representation.
Mayor Schlum said that the fees vary based on who is working on what, such as a paralegal whose fee would be lower
than an attorney with expertise in a specific area.
Vice Mayor Contino reiterated that his point is that extra monies were spent -- Mr. McGuire's fee as well as the fees of the
additional attorneys who worked on that issue were all charged to the Town.
Mr. McGuire confirmed that his associates did bill the Town for their time spent on this issue (two elections experts from
his firm) at about two-third of their typical hourly rate.
Mr. Davis interjected that the Town has also had other attorneys from the firm visit the Town and attend meetings (for the
minor league issue and others) and stated that from time to time they do and will have other people from the firm join
them. He added that they have not received billings from any outside firm thus far this year and that is what the chart
refers to.
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Mr. McGuire clarified that every partner in his firm, regardless of their billing rate , bills the Town at $210 an hour. The
partner who performed the elections work normally bills $365 per hour and that is what the opposition in the case billed
their lawyer. Because the Town has an arrangement with Gust -Rosenfeld that says all of the partners' fees are capped at
$210 per hour that is the rate the Town is billed no matter who carries out that service.
Mayor Schlum commented that "Town Attorney costs" actually mean "the law firm's costs."
Councilmember Dickey said that if Mr. McGuire had gone to Court, the Town would have been billed the same fees; they
just received the services of experts in that area from his firm. She added that Mr. McGuire did not go with the other
attorneys and charge the Town double.
Mr. McGuire stated that in terms of the liti gation with respect to the Referendum, everything happens within a period of
three to four days and there is no way to get an elections attorney up to speed on all the facts in such a short period of time
and so the account person goes along with them to all the Court appearances and he was present as well in this case. He
added that he was not with them for the pleadings and all of the other things that needed to be drafted. He emphasized
that the turnaround time is immediate in those instances and all the time that Mr. Pennartz spent preparing all of the
documents was time that someone would have had to spend one way or the other and he was not part of any of that. He
said that he was involved in reviewing documents and fact checking to making sure that everything was on task and he
attended the actual hearing with them.
The Vice Mayor said that the Town was charged $210 an hour for Mr. McGuire to attend and $210 an hour for each of the
other two attorneys who were present.
Mr. McGuire advised that there were two people there at the hearing that the Town paid for and there were others who
worked on the file but no one else was at the hearing, just he and Mr. Pennartz.
Vice Mayor Contino stated that that is what he is getting at -- the Town was billed for $210 an hour for Mr. McGuire and
$210 an hour for Mr. Pennartz to be at that hearing. He added that they were charged extra costs even though the charges
were for the services of an attorney within the same firm.
Mr. McGuire clarified that the implication is that having more than one attorney from the firm at the hearing was
somehow overbilling the Town. He noted that sitting at the table across from them were two other attorneys from each of
the groups and one representative for the citizens' group and at the Plaintiff's table services were being provided that
probably came to $800 an hour. He added that the fact that the Town paid $420 for the hour or hour and a half long
hearing, is a tremendous value for the Town.
Vice Mayor Contino advised that he is talking about the costs and he is saying they didn't have outside counsel but
indirectly from the firm there was outside professional counsel provided because that is what happens. He added that they
had to pay extra for those services.
Mayor Schlum noted that the Council will be discussing in-house attorney services versus contracting for legal services
this evening. He stated that if the Town had an in-house attorney, that person would have called upon an expert to
represent the Town at the hearing.
Mr. Davis said that all of those costs are collected and shown on the charts provided to the Council.
Mr. Davis discussed alternatives -- creating an internal legal function or continuing to contract with an outside firm -- and
reported that in-house legal division costs are estimated at $340,000 per year, excluding one-time start-up expenses. He
noted that the Town would still have to budget for outside legal services. He added that the numbers are based on hiring
three staff members (Attorney, Paralegal and Secretary). He outlined the pros associated with having an in-house legal
division, which included singular attention to Town issues, on-site staff/counsel availability and costs not as sensitive to
issues/time. He also provided information relative to the cons -- some loss of legal institutional knowledge/history, higher
costs as a result of an increased rate associated with specialized legal services (a single Town Attorney cannot address all
issues) and a higher annual budget to support an in-house legal division).
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Mr. Davis informed the Council that their options are to create an internal legal function or to continue contracting with an
outside firm. He addressed outsourcing and stated that the pros include maintaining legal costs near th e current level,
having access to firm specialists and support staff and the ability to change the firm or primary attorney. He added that
outsourcing cons include the fact that costs will always be subject to the volatility/complexity of issues and it wo uld be
very difficult to control the annual budget for legal services.
Mr. Davis advised that Ms. Ghetti and other members of the financial staff provided the data for this presentation and
indicated his and staff's willingness to respond to questions from the Council.
Mayor Schlum thanked Mr. Davis for the presentation.
Councilmember Hansen pointed out that staff went through a similar exercise a little over a year ago (a short survey) and
said that she is trying to get a handle on when the Town realize d a reduction in the annual costs for the service compared
to the reduction in services (i.e. staff performed a lot of things to help lower the costs). There seems to be a correlation
regarding the reduced amount for the level of services.
Mr. Davis responded that they saw the evaporation of funding occurring all over the budget and staff tried to look at
anything they could do to lower costs. Close to two years ago staff met with the Town Attorney and asked him what staff
could do to change the way they utilized his services and he provided some helpful suggestions. Staff also provided
suggestions and talked to the Department Heads and the entire staff and found some things that made a significant
difference.
Councilmember Hansen stated that the savings realized resulted in the decision to leave things the way they were and
again they get into the issue of what the level of service is and what they want their level of service to be.
Mr. Davis said noted that they went through a similar process with fire protection (whether it made more sense to do
things in-house or contract out) and they also realized a reduction in costs that made in-house less fiscally feasible.
Mayor Schlum commented that they continue to be challenged as far as the economy (another 1% reduction in next year's
budget) and asked if staff was still looking at ways to mitigate legal costs.
Mr. Davis advised that that specific strategy has not been addressed this year but ongoing discussions continue among
staff and with Mr. McGuire on how best to cut costs. Staff continues to monitor costs associated with legal usage in an
effort to find ways to modify behavior and/or the service level to reduce costs.
Mayor Schlum said that it appears that staying out of lawsuits helps to keep the c osts down and that is something they
should continue to work on.
Mr. Davis pointed out that most of the decrease in costs came from general representation, which is an internal behavioral
change (more work was done up front before forwarding issues on to Mr. McGuire). They also made some changes as far
as Mr. McGuire's participation in meetings and many little things that didn't make a difference as far as the level of
service were implemented and they too helped lower costs.
Mayor Schlum commented on the reductions in costs that have been realized and asked if staff anticipates further
reductions this year (2110-11). He added that he knows some things might come up that require more time but if
everything remains generally the same will the Town realize some additional savings?
Mr. Davis responded that staff is always looking at ways to become more efficient and agreed that it depends on the
climate and what issues may arise that they cannot anticipate beforehand.
Councilmember Elkie stated that going back from 2004 to the present, Town Attorney costs have averaged about
$200,000 a year and they may go up or down depending on what is going on. He said that each year the Town budgets a
certain amount for outside legal counsel ($50,000 last year). If th ey took the $200,000 a year that they are paying for the
Town Attorney now and took the $50,000 out because that is a separate pile of money that they use if they need to and
they have not had to use that really, the amount the Town is really paying for le gal services is just the $200,000 and not
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$250,000. He clarified that they are budgeting about $160,000 a year for the Town Attorney and they are spending about
$200,000 and making up the difference by pulling from that outside attorney fund because they have not had to use an
outside attorney other than those at Gust-Rosenfeld. He said that the $200,000 should be the baseline as far as what they
are looking at for Town Attorney services (and they would still be budgeting for the $50,000 outside legal services).
Mr. Davis advised that the $50,000 would be compared most closely to the line item they budget for now -- specialized
legal services. He said that they certainly don't anticipate that they are going to spend that for their internal legal need s
when they set up the budget -- they hoped and anticipated that the number they budgeted would be stuck to this year. He
added that unforeseen issues arose and some of that money will need to be spent. He noted that history shows annual
expenditures in the neighborhood of $200,000 for just Town Attorney expenses and it is difficult to know whether that
will remain at that level in the future.
Mayor Schlum pointed out that an in-house attorney would have to reach out at times to obtain the expert services of
outside attorneys depending upon the situations that arise. He said that the expenses could rise above the $50,000 the
Town budgets for outside services because the current City Attorney utilizes the services of others at his firm and the
Town receives those services at a discounted rate.
Mr. McGuire emphasized that outside legal counsel has been virtually non-existent since he joined Gust-Rosenfeld. He
said that during his tenure with the City he also worked for a smaller firm that did not have the r esources that Gust-
Rosenfeld has and so included in there is the cost for the Town to go out and get the resources that didn't exist when he
was with the smaller firm. He added that since joining Gust -Rosenfeld, services have been internalized as much as
possible at the lower rate. He said that there aren't many disciplines for which they would have to go out to outside
counsel. The only one he could think of was if there was a conflict of interest where there was no ability, under the firm's
own ethical rules, to represent the Town. He noted that there is no other firm that provides a municipal service that Gust -
Rosenfeld does not have.
Discussion ensued relative to the fact that the pie chart for 2009-10 does not include the $50,000 and whether it would be
clearer if the $50,000 was shown for comparison sake; The Mayor's comment that it wouldn't because the money wasn't
used in 09-10 and his point that an in-house attorney would be more likely to use that money; the fact that the numbers
shown relate directly to the firm's billing; that in 09-10 there were outside legal services used that are not reflected on the
pie graphs; difficulties associated with comparing apples to apples when they are dealing with estimates of what the costs
would be; the fact that the Town's labor council is not part of the Gust-Rosenfeld firm; the fact that the chart, for 09-10,
represents everything but 08-09 does not; Councilmember Dickey's comment that outside legal services will most likely
remain the same whether they utilize an in-house attorney or outside firm depending upon the events that occur and the
fact that the Town would receive those services at a lower rate through Mr. McGuire, based on the fact that he is part of
that firm and the Mayor's concurrence with that statement; and the challenge associated with determining outside legal
costs if they were to have a single in-house attorney.
Councilmember Elkie stated that the Town pays whenever someone from the firm does any work for it and they don't
have Mr. McGuire 100% of the time. They are paying on an as needed or project basis compared to someone who may be
there full time. He discussed return on investment and said this point should be taken into consideration. He added that
they do not have someone working full time on Town business and stressed the importance of comparing not only
numbers but also the level of service being provided from whoever is handling the Town Attorney's duties. He noted that
some of the services such as issuing an RFP or reviewing contracts would be done in-house with an in-house attorney in
place and they wouldn't have the fluctuating costs. He said that if they were to take out the $50,000, because it is a bit
speculative, that brings the cost down to $290,000.
Councilmember Elkie asked Mr. Davis if through his discussions with Deputy Town Manager/Finance Director Julie
Ghetti there was ever any talk about taking out the Secretarial position listed in the materials provided.
Mr. Davis advised that there was such discussion and added that there are variations that they could pursue with regard to
staffing. He stated that they could begin with a couple of individuals and then determine what the workload requires and
pursue other options, either by reallocating work internally or by hiring somebody.
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Councilmember Elkie commented that looking at current staff would certainly be a possibility and noted that a new
Secretarial position, in the amount of $40,000 would also have a benefit cost of approximately $15,000 and Mr. Davis
concurred. Councilmember Elkie said that if the $55,000 total amount was subtracted from the $290,000, that would
bring the amount down to $235,000 a year (compared to the $200,000 on average a year that the Town is paying) and
again Mr. Davis concurred.
Vice Mayor Contino noted that the telephone calls are all lumped into one category and asked if there was any way staff
could break down those calls and provide the Council with a monthly listing of how much time was spent on the
telephone for legal advice. He expressed the opinion that they are lumping two or three things in together and he would
like to know how much time is actually spent on the phone outside that they are getting charged for as well.
Mr. Davis advised that staff would be happy to provide whatever level of detail the Council desires.
The Vice Mayor stated that he would like to see more detailed billings relative to all the charges so the Council knows
exactly where the money is going.
Ms. Ghetti addressed the Council and said that she would be happy to provide the Council copies of the invoices because
they are very detailed. She said that if staff tried to take out the individual pieces it would be very time consuming but
they could do it. She added that staff will be happy to do whatever the Council wishes.
Vice Mayor Contino stated he wants details relative to how many minutes or hours were spent on the various issues and
Mr. Davis stated that a copy of what the Town receives from the firm would provide that information. Mr. Davis said that
in addition to the Vice Mayor, anyone who would like that information should simply request it from Ms. Ghetti.
Councilmember Dickey asked what the "one time start up expense" would be and Mr. Davis replied that he could tell the
Council what that relates to but he could not provide an exact dollar figure at this time; it needs more work. He said the
figure would include office accommodations, space modifications, IT purchases and initial publications, etc.
Councilmember Dickey asked if there would be any costs associated with finding an in-house attorney and Mr. Davis
responded yes, staff would suggest a broad based recruitment to fill such a position.
Vice Mayor Contino asked whether the Town has a law library containing law books and Mr. Mc Guire advised that they
have one set of the Arizona Revised Statutes and noted that in terms of a law library, that constitutes a small fraction of
what is paid for legal resources. He noted that the on-line resources are more readily available and heavily used and most
of the resources they typically have in a law library are now on line (subscription charges are fairly significant,
approximately). He said if you look at other law libraries the costs are approximately a maximum of $15,000 to $20,000 a
year. He added that it all depends on the expertise the in-house Town Attorney has and what books that person will keep
on the shelf.
Mr. Davis noted that there would still be expenses for physical space and IT equipment, etc.
Discussion ensued relative to the legal resources available in the Town versus those available through a large firm such as
Gust-Rosenfeld; the fact that it would be more costly to have an in-house attorney; the fact that utilizing, for example, an
in-house attorney for reviewing Council Procedures would probably be less expensive in the long run; Town
shortcomings in such areas as a Town liaison (a lobbyist and voice down at the Legislature), someone to serve on the
Maricopa Association of Governments (MAG) Committee to review the Town Code and provide recommendations,
policy review and contract standardization, intergovernmental committees, employee training, etc.; Councilmember
Elkie's statement that in speaking with staff there are a number of projects that they would like to under take (policy
review, etc.) but the costs are such that in using a contract attorney expenses will increase and everyone is very mindful of
that; Councilmember Elkie's opinion that having an in-house attorney would help staff function more quickly and there
would be less of a turnaround time; and his opinion that having an in -house attorney who only has the Town's issues on
his/her plate has some real value.
Councilmember Elkie stated the opinion that the additional costs they may be talking about for an in-house attorney
would be greatly realized by the amount of work and services the Town would obtain from someone spending 40 hours a
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week on the Town's business -- overall a cost savings. He added that having someone in-house provides a number of
benefits and at some point Fountain Hills has to step up and move in the direction that other cities and towns have and
bring someone in-house.
Mr. McGuire said he believes Councilmember Elkie raised a very good point about the importance of having a legislative
liaison. He noted that Avondale pays for all of the legislative work that the Town gets unless it reaches the point where it
begins to be excessive and then the firm splits some of that time back. He stated that he has spent a tremendous amount of
time at the Legislature on behalf of the city of Avondale that the Town of Fountain Hills has benefitted from that at no
cost. He added that contract standardization is an excellent point as well and one of the reasons why they are able to
shave $40,000 out of the budget was the staff's dedication to accepting that they don't have to reinvent the wheel all the
time. He said that the contracts that his firm has worked on for other communities can be easily adapted and have been
now so the Town can use the benefit of a larger entity picking up the tab for all the heavy labor, getting through the
contract design and modification, to get to that point. He stated that they have done a lot of that off of the back of
Avondale. He further advised that the return on investment point is an excellent point as well. He noted that they did the
analysis eight years ago when Avondale was in the same position -- getting to the point where they thought they were
large enough to hire an in-house counsel (it made sense to them). He reported that what they found out in comparing in-
house services to hiring outside counsel was that on the time spent, they were only getting billed for legal services -- not
administrative services.
Mr. McGuire expressed the opinion that he operates pretty efficiently and 85% of his time is legal work and 15% is
administrative but some others are not as efficient. He said those are the things that the Town benefits from that they don't
have to pay for. He stated that it would be constructive to look at other municipalities similar to Fountain Hills. He stated
that Paradise Valley is a good example of a municipality that is really trying to trim its costs and has an excellent Town
Attorney who possesses a number of areas of expertise. He noted that he still has an outside services budget that he
utilizes and he comes to Gust-Rosenfeld and others to obtain assistance for things he just doesn't have the time to do. He
expressed the opinion that that is the other side of the in-house comparison -- access also means access that may not be as
efficient.
Mr. McGuire advised that the steps that were taken to decrease costs have worked and gotten them to the point where they
are at. He added that hopefully they will see additional cost savings. He said that Mr. Mood coming on board from
another community that utilizes outside services understands that and is very receptive to that and so they are moving
more efficiently.
Councilmember Leger asked what the salary of Paradise Valley's in-house Attorney is and Mr. McGuire reported that the
legal services budget, which covers the Attorney, the paralegal and a secretary was $286,000 this year.
Councilmember Leger said that those costs appear low to him for an experienced, knowledgeable Attorney. He stated that
they keep talking about the level of service and said there are two sides to that -- level of service and quality of service.
He expressed the opinion that a "one man band" is going to lack a lot of expertise and he would think they would have to
tap outside more often. He asked Mr. McGuire if he charges the Town when he pops down the hall at Gust -Rosenfeld and
asks another attorney for some expert advice on a particular issue. Mr. McGuire replied that what the members of the
firm have learned over the years in working with municipalities is that the one thing that drives in-house Attorneys who
they work for and who review the bills more crazy than anything else is when he gets billed for two lawyers sitting in a
room talking about something. He stated that he hears this at municipal Attorney meetings all the time and said to the
extent absolutely possible his firm does not do that. He added that the firm does not charge the Town for helping Mr.
McGuire learn his craft.
Councilmember Leger stated his belief that the in-house legal costs are unrealistically low and if the Town brought in a
quality generalist they would have to pay that person more than what they are seeing here and they will have more
occasion to consult with outside counsel and that typically department costs grow and that is why the Town has been so
successful at contracting out services because it allows them to be more dynamic and flexible in terms of decreasing hours
or a service from an outside agency versus reducing an in-house Attorney's hours. Councilmember Leger said that the
costs will increase over time with an in-house Attorney versus a contractual Attorney and asked what is the problem they
are trying to fix or is this just a budget discussion.
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Mayor Schlum commented that there are other elements to the discussion but they have spent most of the time talking
about costs.
Councilmember Leger stated that this discussion was driven by an agenda item and he respects the three Councilmembers
who wanted to place the item on an agenda (to call for the termination of the contract with a firm) but he thinks they are
just "dancing around this" and he would like to know when they are going to get to the heart of the issue and that the
Council has had discussions several times about in-house service versus outside contracting and they have come to the
conclusion that it is more cost effective to contract services. He said he knows there are different levels of discussion bu t
he would like to know whether they will get to that particular discussion.
Mayor Schlum agreed that they have talked about the costs before and now they are looking at new data. He added that
everyone agreed that it is less costly to have a contract attorney and the numbers provided this evening support that as
well. He noted that there are other elements to that and they have touched on some of them -- service and how does the
Town procure legal services -- and those are certainly items they can talk about tonight. He stated that in relation to
service levels and what the Council wants from an Attorney or a law firm, he thinks it better to discuss with who they
have as their legal firm and the individual Councilmembers speaking to primarily Mr. McGuire on how the Town wants to
be served, communicated with, etc. He added that quantifying that is another thing they could discuss but as far as how
the Council wants to be served by the Town Attorney, that service area, is a two-way street and they have to talk to the
Town Attorney regarding that and each person might have different ideas. He noted that they also want to be conscious of
the costs.
Councilmember Hansen said that quality of service relates to the discussion at the last meeting and she thinks that based
on the way this item is agendized tonight, they have gone along with the way it was agendized. She stated that if they
want to have additional discussion of what brought about the last Council meeting she would like some direction on
whether they are dealing with performance or expectations and that might come to the point of an Executive Session since
the Attorney is appointed by the Council.
Mayor Schlum said perhaps he would discuss this further with her to determine exactly how that process should go.
Councilmember Dickey stated that one of the things they could look at is contracts and evaluations, things like that, what
are the Town's needs and why are they doing this? She said that obviously they are not doing this to save money because
that won't happen so what isn't being met if someone thinks something isn't being met? She added that if someone wanted
to talk about that (one of the three appointed officials in Town) she is open to doing so. She advised that she thinks they
are talking about the budget and so this is something to discuss but if they are talking about saving money that will not
happen. She agreed that they should be more open about what they are trying to do but she doesn't know how that can be
discussed except in an Executive Session if that is what the Council wants. She added that she is not opposed to talking
about whatever the rest of the Council wants to talk about.
Councilmember Leger commented that they do have the numbers and they are in the budget season and it appears that the
numbers regarding in-house counsel are low. He stated that they have a service in place and although it is not an
insignificant amount of money they are paying for that service it does seem to be lower than what they would be paying.
Comparison show that whether in-house or outside, the Town's costs are still lower so he doesn't know how much
discussion it will take to come to that conclusion but it is his understanding that this whole thing was brought to a Work
Study Session because of what was agendized and comments that were made in Council meetings specifically stating that
people felt that based on an occurrence with the Attorney General's Office that the Town should terminate its relationship
with the firm that Mr. McGuire works for. That seems to be the issue or the problem that they need to solve but he finds
that they are on a side track and dancing around and he doesn't feel that they are getting to the cause. He said if there ar e
members who rightfully so put a very serious agenda item out there asking to terminate a law firm, that is a very different
issue and he won't guess at motivation but he doesn't believe it has to do with the discussion they are having now in terms
of saving dollars. He stated that it is simply what he perceived as a dissatisfaction with the level of service that was
provided that was exasperated by the most recent incident with the Attorney General's Office. He added that he was
simply trying to obtain some clarification in terms of where they are at and what their objective is today in this Session.
Councilmember Hansen said she believes the item was agendized the way the Mayor made the motion -- to continue this
to a Work Study to look at legal services in a more comprehensive manner. She noted that based on the way it was
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agendized and direction given to staff, staff heard that the Council wanted to know what the options were and that is
exactly how they responded. She stated that within the parameters of this agenda item they need to correctly decide how
they go forward with the process.
Mayor Schlum said his expectations according to the way the item was agendized was that discussion would be pretty
wide open so he hopes they can work within that. They are talking about costs, service levels and the way they procure
the services and if there are things that should be considered outside of this meeting then that should occur but he doesn't
know what they are. He added that he wants them to cover whatever they need to and it seems that the item is open for a
lot of discussion.
Councilmember Elkie said this is pretty clear and he commended Councilmember Leger for "pointing at the elephant in
the middle of the room" and saying "let's start talking about this." He commented that the Council placed staff in a
precarious position but they certainly understood why the Council asked for this Work Study Session and placed staff in a
tenuous position to present information relative to whether or not Council should terminate the services of its current
Town Attorney. This obviously came out because of dissatisfaction with the handling of the recent Attorney General
Office's complaint that was made in the subsequent investigation and the resulting penalty that was placed upon the
Council. Before going into that, one of the things that they haven't discussed is the option of whether this contract should
go out to bid again or, another option that Mr. McGuire aptly stated earlier, the Town contracts with the firm of Gust -
Rosenfeld. There may be a number of attorneys that work within that firm that could serve in the Town Attorney capacity
in which Mr. McGuire currently serves. Those are two other options that have not been discussed tonight but they are on
the table so to speak.
Councilmember Elkie further stated that as discussed previously, there is diss atisfaction regarding the way the Attorney
General's complaint was handled, specifically the lack of communication from Gust-Rosenfeld to the Town regarding the
Attorney's early investigation of this matter (an earlier discussion that took place last year). There was no communication
to inform the Council that something may be coming down the pike. The explanation, as provided by Mr. McGuire, was
that he was awaiting a more formal inquiry to share with the Council and therefore did not communicate with th em
information about the initial contact from the Attorney General's office. He said that his feeling is that had they been
communicated with back in December, understanding that the OMLET Division conducts their own investigations and
gives out whatever findings they arrive at, there may have been some steps that they could have taken along the way to
provide some information. He added that he is certain that after the 20 -minute conversation with the Attorney General's
Office was completed that Mr. McGuire would have had a fairly good idea as to what the breadth of the investigation was
going to encompass, especially considering the fact that Ms. Bender provided the E -Session minutes for that particular
meeting to the Assistant Attorney General.
Councilmember Elkie stated that at a minimum the Council should have been made aware of the inquiry and it was a big
surprise to everyone to obtain the findings and the penalty and certainly an embarrassment. The lack of communication,
in his opinion, warrants a vote of no confidence in the way that this was handled and they should be looking at options --
whether it be in-house (and they have discussed that and he agrees with his fellow Councilmembers that this option would
be more costly) or other options but they shouldn't just let this pass, take the penalty and the slap on the wrist, without
some type of ramification. He said it really bothers him to be serving on the Council and being penalized and he takes
that very seriously. He added that perhaps his comments will open up a new line of discussion.
Councilmember Hansen commented that she is extremely uncomfortable with the direction this is going in by the way it
was agendized. If a member of the public had looked on line and viewed the agenda and the packet material, the material
was basically dollars and functions and did not indicate that the Attorney General's complaint was going to be discussed at
all and by saying that this agenda item is covered by that umbrella, makes her very uncomfortable. She s aid she was not
prepared to go in that direction unless they are more specific so the public will know what is going to be discussed here.
Mayor Schlum advised that he respects Councilmember Hansen's opinion in that area.
Councilmember Hansen added especially since they have an Open Meeting Law violation. She said that in last April or
May if she had stood up and said she was uncomfortable with what was going on, which she probably should have done,
maybe that wouldn't have happened but it probably would have anyway.
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Mayor Schlum stated so that they don't get to this spot again, and they talked about it and he tried to make it so that they
could move forward and could have whatever conversation they needed to have, it sounds like the items that memb ers
want to talk about are not items they want to talk about at a public meeting (but rather in an Executive Session). He asked
if he was correct.
Councilmember Hansen said she believes they get into performance issues and it would certainly be Mr. McGuire's call to
say whether or not they should be discussed in public or in an Executive Session, just as they would with the Town
Manager's evaluation.
Mayor Schlum stated that he knows things change but if they were to bring this forward at another public meeting, and he
knows Councilmember Hansen is not the legal expert, but he is not sure how they would word the agenda differently in
order to be able to talk about other items that might need to be talked about in public.
Councilmember Elkie suggested that Mr. McGuire respond to that question.
Mr. McGuire noted that the topic was intended to be as broad as humanly possible and staff was not sure how else to put it
other than discussion of legal services. He added that as Councilmember Elkie correctly p ointed out the staff was not in
any position to provide packet materials related to performance; the Council strictly performs that function. He said that
the comments by Councilmember Elkie at the last meeting when they moved to continue this was, "we ar e going to talk
about this at that meeting," including what was agendized that night so he thinks there was a pretty clear understanding
from everyone going forward with the motion that night that they were going to continue the discussion from the previou s
meeting to tonight and again, they tried to be as broad as they could on that agenda item and he honestly doesn't know
what else they could have done.
Councilmember Leger stated that being somewhat confused about what their objective was he went back to the public
record and looked at the last agenda item, number 22, directing the Town Manager to prepare the appropriate notification
documentation terminating representation of the law firm, etc. etc. and the update to that public record says table to
Council Work Study Session (as noted in the action minutes by the Town Clerk).
Councilmember Hansen asked whether the minutes state tabled or continue to and Councilmember Leger said he believes
it said tabled. Councilmember Hansen advised that should it have said tabled, they would have had to vote at this meeting
to take it off the table, which they cannot do at a Work Study Session.
Mayor Schlum confirmed that the motion was to continue and said his question, so that they can be effective, is what do
they want to talk about in public and as far as what they want to talk about in Executive Session, they don't want to get the
Town in trouble or anyone working for the Town by talking about things in public that should not be talked about in
public. He noted that personnel items can be one of those items. He said he needs Council's help to ensure that they are
being effective and efficient with their time. He added that if they are not being served the way they want to be or are
having challenges they want to talk about they need to talk to that person they are having challenges with or want to be
served differently by.
Councilmember Elkie said that he agrees and communication in any format is extremely important. He asked if they are
going to continue this discussion tonight or, out of respect for Mr. McGuire, is this something that should be discussed in
an Executive Session.
The Mayor stated that he respects Councilmember Hansen's comments and it sounds like some members are not
comfortable talking about certain things this evening because of the language used on the agenda and again he respects
that. He added that if there is a way to bring something forward in a public meeting that needs to be brought forward, the
members should either talk to him or the Town Manager and they can make it happen because they want to be effective as
a Town Council.
Councilmember Dickey advised that she thought they would be talking about it because when they finished up that last
meeting they said okay, we are bringing it forward, and she wanted to know what they were allowed to say out loud
because she wanted to talk about the original complaint. She said that she knows that the members really want this to go
forward and she is happy to say she made the complaint and happy to say when and why and all those things if that is
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really where they want to go but her desire for that complaint in May, which she told the Councilmembers about and she
didn't tell Vice Mayor Contino, which she now regrets, but she had grave concerns about that. What she thought was an
Executive Session and they all thought was an Executive Session she still thinks was an Executive Session so even though
the opinion of the Attorney General was that the presentation maybe should not have happened or maybe Mr. McGuire
should have done it, or maybe she (the Assistant Attorney General) should have known they wound up having it in a
public meeting within a week or whatever it was. At the time, since this had been building up and was not the first time in
the history of Executive Sessions that she has been a part of (and not always the same group of people) that Executive
Session has been breached. She said that members have talked to her about the embarrassment and it blowing up in her
face but she said no, she called for an investigation because she had very strong reasons, including actual people who said
that something from that Executive Session was said in public. She noted that they were going through some contentious
times with employees and she had had other conversations one-on-one that put her in fear of some of the consequences
that would have occurred to their Town, which is utmost in her thoughts, not an individual employee or anything like that.
Councilmember Dickey indicated that she felt that was jeopardizing their ability to even negotiate and the settlement to
her was they had to do it because of a breach -- not one that she is making up but if the Attorney General's Office did not
want to investigate it ... She asked if they thought they weren't going to talk about that and said she is reading in the paper
that she is the person that did it and she is happy to tell them she is and why she did.
Councilmember Elkie expressed concerns regarding the direction this is going; concerns about divulging some
information that could potentially open the Town up to lawsuits.
Mr. McGuire advised that there are two points related to that and the first is they had an Executive Session and there was
a discussion of the Town wide reduction in force and the Council's role in that and approving an organizational chart as it
were at the next meeting. After that meeting there were also discussions that were not Council wide; they were individual
between him and Councilmembers to discuss the spinoff of what was the basis of the complaint and those are privileged
communications that they should not be talking about here because as a group they can wa ive privilege, which he would
not recommend they do because there are a lot of things that will come o ut, but as individuals they cannot so the
discussions related to the reduction in force that have Risk Management components to them are probably an area they
want to stay away from, not because they will breach an Executive Session because they never talked about those things --
subsequent events caused that discussion -- but it was privileged communication that they will want to keep that way.
Mayor Schlum stated that related to what Councilmember Dickey is sharing here and the agenda item is relevant because
they are talking about legal services and this was obviously a topic that came up as perhaps a reason to terminate the
relationship.
Councilmember Dickey said that she would wrap it up. She questioned the idea that the complaint led to a finding th at
has led to some Councilmembers wanting to sever the relationship and stated that months and months ago they had been
wanting to sever the relationship, before this happened. She added that she wants everyone to talk about it and to be real.
She stated that for this event the remedy is fine with her.
Mayor Schlum urged Councilmember Dickey and anyone else to talk through him since they may get into sensitive areas.
He urged the Councilmembers to raise their hands if they want to provide input or concerns.
Councilmember Dickey stated the opinion that this event is not spurring the desire to sever the relationship because it is
not a secret that this has been talked about way before this happened.
Councilmember Brown commented that that doesn't feel t hey should even be discussing firing the Town's legal firm for
what his considers a misstep and said it is not a misstep that has offended him in any way and he thinks the misstep came
from the Attorney General's Office by not doing a full investigation but he would not want to reopen that -- he wants it to
go away. He added that as he said last week, this Town has got bigger alligators to capture and put away and from being
an employer for many years he would say let's have a conversation but get away from firing the Town Attorney change
the world in that respect. He stated that he could not do that and there is not an action that has been created to generate a
firing of the Town Attorney.
Councilmember Elkie said for him, and he can't speak for the othe r two Councilmembers who voted to not accept the
Attorney General's recommendation, he believes that if a complaint was filed and there was a grave concern about a
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violation of some sort, in the interest of full disclosure, full investigation, he believes a full investigation would have been
warranted. He stated that if anyone up on the dais does anything wrong, himself included, and there is an allegation, there
should be a full investigation and if that particular Councilmember or a staff member is found to have done something
inappropriate then they should suffer the consequences as a result of their actions. He added that for a complaint to be
filed, and they are not talking about something relatively minor, they are talking about something that could potentially
have somebody charged criminally or removed from office, and if someone is willing to file a complaint they should also
be willing to allow for that investigation to take place and not stop it in the interest of putting it aside and take the
consequence and moving on.
Mayor Schlum interjected and stated that he doesn't know if that falls within what they are talking about and said they
should be talking about legal services and he is addressing Council behavior.
Councilmember Elkie replied that he was also responding to other comments that were made and the Mayor stated the
opinion that they are beginning to go down the wrong road.
Councilmember Elkie further commented that if there is a complaint that is filed with the Attorney General's Offi ce and
the Assistant calls to inform the Town Attorney that an investigation is going to take place, then the very next phone call
should be to the Town Manager, to the Mayor or an e-mail should be sent to the entire Council informing them of that
situation. He advised that that is the issue he has as far as legal services and it is a separate issue as far as the ultimate
investigation. He said that what he hasn't heard from Mr. McGuire is any recognition or acknowledgment that perhaps in
retrospect he should have communicated that information back in December when he received the call from the Assistant
Attorney General. He has only heard that Mr. McGuire was waiting for a more formal complaint or inquiry to be filed
and he feels that there should have been communication at that moment because this is a serious issue.
Mr. McGuire advised that he believes, and he would have to go back and listen to the tapes, but he believes he very
clearly stated at the Council meeting when they were discussing the Attorney General's opinion that had he known
looking back that that would be the only communication from the Attorney General's Office he certainly would have
transmitted it out. He said he doesn't believe that is an accurate statement (the one made by Council member Elkie) and
believes at that meeting he confirmed exactly that -- that if he were not expecting a written communication that he would
then transmit out to the Council and thought that the telephone call was it, he would have notified them. He added that
looking back, knowing that that could be the case, absolutely and he has no problem at all saying that.
Councilmember Dickey said that she was the person who put the complaint in and she had not heard one thing since May
so she thought that it was not progressing and they just didn't think it was worth progressing and she still hasn't. She
added that when the letter came she called and their process is after the Council does the training that is when they would
say that the whole thing got wrapped up and then she would be provided a report. She stated that that is their process and
she was perplexed and wanted to know why she wasn't told about the letter at all. She said that of course she was the
person who did it, it wasn't a public thing. She advised that she is confused about why they can't talk about it because that
is exactly what they said they were going to do and at that time she said that was good because they could finally talk
about all of this.
Councilmember Hansen said the motion to continue was to continue that agenda item and this agenda item does not look
like the agenda item that was continued. She announced that she was going to leave the dais (left at 7:55 p.m.).
Councilmember Leger indicated that he wanted to respectfully respond to a comment that Councilmember Elkie made and
said he believes it is an appropriate comment because it is within the context of what he considered cause for termination,
which was this whole event that took place. He advised that he too would have l iked to have seen this go in the direction
Councilmember Elkie wanted it to go in but he thought differently when he stepped back (in talking about the decision
made by the Assistant Attorney General not to investigate).
Councilmember Leger asked how they need to agendize this for a Work Study Session or other meeting to allow open
discussion. He stated that he thinks it would be healthy for this Council to have an open discussion and healthy for the
community. He noted that he is not hiding anything; he wasn't hiding anything then and he is not hiding anything now.
He added that he appreciates Councilmember Elkie's earlier observation about the white elephant in the room. He said
that he doesn't know how they could do that -- he thought they were doing it and he is looking at the agenda item and to
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him tabled to the next Work Study is an assumption that that is what they are doing. He asked if they could be in
violation -- the public meeting law now versus the Open Meeting Law.
Mr. McGuire responded that it was staff's intention to have this agenda item consume all of the discussions, both
performance based, budgetary, etc. and the fact that the staff only addressed the budget side was because that is all they
could address. Staff didn't have anything to put in the packet on performance based evaluation -- that is up to the Council.
He said that if they want to agendize it again he is fine with that and advised that he does not want to have an Executive
Session discussion about it. He believes that this discussion should take place in public because the public should hear the
discussion and there shouldn't be any kind of discussion behind closed doors about the performance of the law firm. He
explained that the reason they (Town Attorney/Gust-Rosenfeld) doesn't have a severance clause like the Town Manager
does is because if there is ever a time when four members of the Council decide they are not comfortable with the legal
advice being given then they need to part ways. He emphasized that it is not in the Town's best interest to have legal
advice that the Council is not following or legal advice that the Council is not getting. He added that either one of those is
unacceptable and that is why they have always kept it as an at-will position and it only takes four Councilmembers to
sever the relationship. He reiterated that any future discussion on this issue needs to take place in a public meeting.
In response to a query from the Mayor, Mr. McGuire clarified that the issues he is referring to are pe rformance, budget,
in-house counsel, outside counsel -- anything the Council wants.
Councilmember Leger also suggested that within that agendized item there also be a discussion of the Assistant Attorney
General's letter because it is all so intertwined. He pointed out that that obviously came up here this evening so he
believes that item should be in there as well so then they don't get in the same situation that they are in now in part -- not
being able to discuss certain things because they were not agendized. He added that he does have some concerns about
Councilmember Hansen leaving the dais in her experience about what they have discussed here as well.
Councilmember Leger advised that he has a quick question that pertains to Councilmember Hansen le aving the dais as
well. He stated that they have been discussing the Town's legal service options and asked if the Council is doing anything
inappropriate by having this discussion. He said it seems as though the perimeters are pretty wide there. He add ed that he
doesn't want to leave this meeting thinking that they violated something going down this road. He noted that they are
problem solving and he thinks as Councilmember Elkie said that they need to somehow agendize this so they can have a
full discussion. He added, however, that he thinks that is within the context of this agenda item because it was the
Attorney General's investigation that was the cause as stated for the previous agenda item to terminate. He said that to
him that seems well within the perimeter of the discussion.
Mayor Schlum said it does to him too and he respects Councilmember Hansen's feelings -- if she feels she wasn't prepared
to speak about what she wanted to speak on based on the agenda item she read. He told all of the C ouncilmembers to
please approach him or approach staff and let them know if they don't think this covers what they want to talk about in
advance so they can have a full discussion. He added that things might come up that would put them where they are
tonight, that could happen as well. He advised that he has asked Council clearly what they wanted to talk about and he
has heard some things brought up tonight and staff has captured those. He stated that if there are other things that need to
be covered in a future public or potential Executive Session he or staff need to know about them so they can make sure
they are covering them.
Councilmember Elkie commented that the only other two items that he would suggest are what would need to be done in
order to issue an RFP for legal services if they decide not to continue with the firm of Gust -Rosenfeld and what the
procedures are within the contract if they wanted to have another attorney from that firm represent the Town.
Mr. McGuire advised stated that they could address both of those items within the context of tonight's meeting. He noted
that they are already under contract by an engagement letter with Gust-Rosenfeld -- they employ the firm. He said that he
has been the Town Attorney and the point person for the Town but other attorneys could certainly serve in this role and
many on staff have served as city or town attorneys in other communities. He stated that Dave Pennartz from his firm has
served as Scottsdale's City Attorney and worked in Glendale's City Attorney's office and the firm definitely has other
attorneys would could represent them if that is the Council's desire. He said he would be happy to provide names,
resumes and anything else they would like.
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Mr. McGuire also discussed a possible RFP process and stated that they can always do that as well. He noted that it
becomes somewhat of a "what if question" because if their intention is they are happy with the current services is it really
fair to invite other people in to participate in an RFP process but as he said before and will continue to say, the firm is
perfectly comfortable standing on the merits of their work. They have a resume and body of work that they are proud of
and they are happy to continue with and they provide it at a lower cost than most people could and they provide a level of
expertise that is just not available from any other firm. He added that other firms that practice in their area certainly ha ve
components that they do but he is more than happy to have that process play out as well -- he is just making sure they
know where they are in the process.
Councilmember Leger asked where they go from here and the Mayor stated that he has asked Councilmembers to come
forward and let him or the Town Manager know what they wis h to have on an agenda. He added that in the interim they
could get comfortable talking with the Town Attorney and asking questions that might help them be more efficient. He
said that he will get with Mr. McGuire but the items that he heard discussed th is evening Mr. McGuire would not be
comfortable discussing in an Executive Session. He said if there are other items regarding this he welcomes bringing that
forward as well.
Vice Mayor Contino said he heard a lot of discussion this evening that wasn't on the agenda and added that he is very
disappointed with the Town Attorney not bringing the Council back on track and putting them where they should be. He
stated that the discussion they had and the things that happened outside of what was on the agenda really upsets him and
this is another reason why they are looking at everything -- because they are not following what is in front of them.
Councilmember Leger asked if they were not following what is in front of them and pointed out that the agenda item is
broad enough and the genesis of it, the previous agenda item, was very specific. He asked whether they need to have the
same language that they had on the original agenda item in order to proceed. He added that Councilmember Hansen had
suggested that.
Mr. McGuire advised that staff's attempt at this agenda item was to make it as wide open as humanly possible and they
left it at legal services generally to talk about everything. They were perfectly comfortable that the agenda item
encompassed performance based and budget based items. They talked about trying to be more specific about the item
when it was continued and he recommended that they try to make this as wide open as possible because it was clear that
there was a lot of discussion that was going to be performance based and he wanted to make sure that happened. He
added that to assert that the agenda item was somehow designed to truncate that discussion is just not the intent -- the
intent was to make it as wide open as possible. He said that the intent of the motion was clear and the intent of what was
said during the discussion of the motion was clear and that was what they are here for.
Mayor Schlum commented that they are going from a Town Council meeting to Work Study so that in itself is a different
animal because that particular item he believes was for Council action. He added that it did morph a little as it came to the
Work Study Session but he thinks it broadened -- it certainly broadened into more than just terminating the law firm. It
included that and a whole lot of other things but they are certainly within the context of a Work Study, which could then
be taken eventually back to a Council meeting for action. He said he believes the agenda item is quite broad as it was
intended to be.
AGENDA ITEM #6 - ADJOURNMENT
Councilmember Elkie MOVED to adjourn the meeting and Councilmember Brown SECONDED the motion, which
CARRIED UNANIMOUSLY by those present (6-0). The meeting adjourned at 8:10 p.m.
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TOWN OF FOUNTAIN HILLS
By __________________________
Jay T. Schlum, 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 Work Study Session in the
Town Hall Council Chambers held by the Town Council of Fountain Hills on the 8th day of March 2011. I further certify
that the meeting was duly called and that a quorum was present.
DATED this 7th day of April 2011.
_____________________________
Bevelyn J. Bender, Town Clerk