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HomeMy WebLinkAbout2003.0116.TCREM.Minutes TOWN OF FOUNTAIN HILLS MINUTES OF THE REGULAR AND EXECUTIVE SESSION OF THE FOUNTAIN HILLS TOWN COUNCIL ,ar January 16,2003 Mayor Beydler called the meeting to order at 6:00 p.m. AGENDA ITEM #1 - PURSUANT TO A.R.S. §38-431.03.A.3, VOTE TO GO INTO EXECUTIVE SESSION FOR: DISCUSSION OR CONSULTATION FOR LEGAL ADVICE WITH THE ATTORNEY OR ATTORNEYS OF THE PUBLIC BODY, SPECIFICALLY, REGARDING IMPLEMENTATION OF THE RECOMMENDATIONS FROM THE FIRE AND EMERGENCY SERVICE FUNDING CITIZENS ADVISORY COMMITTEE. Councilman Melendez MOVED to convene the executive session and Councilwoman Nicola SECONDED the motion,which CARRIED unanimously. AGENDA ITEM#2-RETURN TO REGULAR SESSION Mayor Beydler reconvened the regular session at 6:30 p.m. Following the invocation by Pastor David Iverson, roll call was taken. ROLL CALL -Present for roll call were the following members of the Fountain Hills Town Council: Mayor Jon Beydler, Vice Mayor Leesa Stevens, Councilmembers Rick Melendez, Susan Ralphe, Kathleen Nicola, Michael Archambault, and John Kavanagh. Town Attorney Andrew McGuire, Town Manager Tim Pickering, and Director of Administration Town Clerk Cassie B. Hansen were also present. Mayor Beydler read a statement regarding meeting protocol. He declared that the Town of Fountain Hills was not bankrupt but was dealing with problems similar to that of other communities around the nation. He acknowledged that Fountain Hills' problems were severe because percentage wise they were large. After the Council's retreat he felt they had collectively reached a new plateau in their relationship with each other. They realized that the public and the town were far greater than any personal or political agenda, ideology, or personal differences that council members might hold. The council pledged to do their best this evening to fulfill the public's expectations as elected community leaders and representatives. He stated that collectively the Council was committed to ensure that the Town was solvent, that quality services were provided, and that they set an example of respect to the community. AGENDA ITEM #1 - CONSIDERATION OF APPROVING THE MEETING MINUTES OF DECEMBER 19,2002 AND JANUARY 2,2003. AGENDA ITEM #2 - CONSIDERATION OF THE PRELIMINARY AND FINAL PLAT FOR THE 2- UNIT COSTA ALADA CONDOMINIUMS, LOCATED AT 12616 N. MOUNTAINSIDE DRIVE, AKA PLAT 601A,BLOCK 3,LOT 17,CASE NUMBER S2002-51. AGENDA ITEM #3 - CONSIDERATION OF RESOLUTION 2003-01 ABANDONING WHATEVER RIGHT,TITLE, OR INTEREST THE TOWN HAS IN CERTAIN PUBLIC UTILITY AND DRAINAGE EASEMENTS LOCATED AT THE NORTHWESTERLY PROPERTY LINE OF LOT 30, BLOCK 6, PLAT 401B (10248 N. DEMARET DRIVE) AS RECORDED IN BOOK 155 OF MAPS, PAGE 12 RECORDS OF MARICOPA COUNTY, ARIZONA EA2002-24. ELIZABETH AND DAVID VAN VOORHEES. AGENDA ITEM #4 - CONSIDERATION OF APPROVING THE PURCHASE OF ONE MOBILE AND SEVEN PORTABLE RADIOS FROM MOTOROLA IN THE AMOUNT OF $37,062.11. THE RADIOS WILL BE PURCHASED ON STATE CONTRACT AND ARE NEEDED FOR THE MARSHALS DEPARTMENT OFFICERS TO BE DISPATCHED BY THE MARICOPA COUNTY SHERIFFS OFFICE EFFECTIVE FEBRUARY 1,2003. Councilwoman Nicola MOVED to approve the consent agenda as read (Items 1-4) and Councilman Melendez SECONDED the motion. E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session 1-16-03.doc 1 of 18 A roll call vote was taken with the following results: Vice Mayor Stevens Aye Councilman Melendez Aye Nary Councilman Kavanagh Aye Councilwoman Nicola Aye Mayor Beydler Aye Councilwoman Ralphe Aye Councilman Archambault Aye The motion CARRIED unanimously. AGENDA ITEM#5 - CONSIDERATION OF APPOINTING FOUR CITIZENS TO THE COMMUNITY CENTER ADVISORY COMMISSION TO FILL THE VACANCIES CAUSED BY EXPIRING TERMS. Mayor Beydler MOVED to appoint Wally Nichols, Jerry Gorrell, Grace Jakubs, and Leona Johnston to fill the two-year terms and Councilwoman Ralphe SECONDED the motion. The motion CARRIED unanimously. Mayor Beydler recused himself from this discussion (Agenda Item#6) because the Town Attorney advised him that a potential conflict of interest might exist because of his business location. He turned the discussion of this item over to Vice Mayor Stevens. AGENDA ITEM#6 - CONSIDERATION OF A TEMPORARY USE PERMIT TO ALLOW OUTDOOR RETAIL SALES TO OCCUR MORE THAN FOUR TIMES DURING ONE CALENDAR YEAR, LOCATED AT 12645 N. SAGUARO BLVD., AKA LOT 2 OF THE PLAZA FOUNTAINSIDE FINAL PLAT, CASE NUMBER TU2002-04. Senior Planner Dana Burkhardt observed that this item had been continued from the January 2, 2003, Town Council meeting for additional review from staff. He reviewed the site plan, the application, and his staff report, which identified the three primary issues: parking, public safety, and the time limit and schedule. Staff concluded that it was within the Council's ability to establish a timeline and to conditionally approve it as part of this temporary use permit. He noted that staff had not received any letters of opposition to this request and was recommending approval. Councilman Kavanagh MOVED to approve this application with the recommendations as listed except for item #6 that would be removed thereby retaining the limit of four(4). He would then direct the town attorney to draft a new ordinance that would permit this type of use for "Farmer's Market" only. He expressed concern over changing the temporary use permit and opening the town up to a situation where weekly events could be held all over town. He saw this application as a weakening of that protection. This was a unique proposition for an event for which he felt a separate ordinance could deal with so that the integrity of the temporary use permit could be maintained. Vice Mayor Stevens clarified that Councilman Kavanagh was moving to approve this application but removing stipulation #6. Councilman Kavanagh agreed, stating that this would allow for four events per year. This action would allow the application to begin immediately but would concurrently direct the town attorney to bring back a new ordinance that specifically dealt with a farmer's market of this type next week. Councilman Melendez SECONDED the motion. He pointed out that the corner of El Lago Blvd. and Saguaro Blvd. was one of the most difficult ones to cross. He asked for assurances from Public Works Director Tom Ward that speed would be controlled for the safety of the citizens. Director Ward explained that studies had been done addressing the pedestrian crossing and that staff had confronted the developer of Town Center III on their contribution for a possible signal. He assured the Council that this would be a safe intersection. Councilman Archambault asked if this property had 4 temporary or permanent permits. Senior Planner Burkhardt clarified that the provision in the temporary use permit for outdoor retail sales allowed for 4 temporary use permits to be issued for the same use within one calendar year. He noted that none had been issued for this site for this type of application at this point. This would be the first. Councilwoman Nicola asked Mr. McGuire if the Council could approve this application"as is"and then work on the ordinance. She pointed out that an ordinance change would have to come back to the Council for approval but the town attorney would need time to prepare the draft. She thought his work would require a few months and therefore would delay this use for the applicant. Mr. McGuire responded that there were two issues. The E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session 1-16-03.doc 2 of 18 temporary use language, as currently drafted, was read to say that the applicant would need a temporary use permit each time the applicant came up for their use (each use could be from one to seven days). The four (by right for the lack of a better term) that would be granted administratively would still require four different itimw _ permits. The application before the Council would really require 52 conditional use permits or if for two years, 104 permits, which staff felt was ridiculous. If the Council intended to allow this type of use, staff would like to prepare a text amendment that would be a better fit. He acknowledged that this would be a zoning ordinance amendment. Not only would it need to be reviewed by the Council it would also need to go before the Planning and Zoning Commission and would be subject to the 15-day notice requirements. He concluded that this process would take two to three months before it came back before the Council. Councilwoman Ralphe asked if there was such a thing as a usual and customary duration regarding a temporary use permit. She questioned if this applicant's request for a two-year temporary use permit was in the ballpark. Senior Planner Burkhardt stated that the Council could approve a temporary use permit for a period of no longer than two years. The applicant was asking to maximize his application. Councilman Kavanagh asked Mr. McGuire how the motion could be amended to give the applicant the time that it took to put an ordinance change through without disassembling the current temporary use permit. He was hesitant to create a precedent that would essentially eliminate the currently allowed four temporary use permits. He questioned if there was a way to craft this to clearly indicate that this was a special situation and this was only a temporary extension beyond the four for the purposes of getting this "farmers market" ordinance into place. Mr. McGuire said Councilman Kavanagh's motion indicated the intent. Staff wanted the Council's input to see if this was a type of use that the town wanted to encourage. The current language is all that the town currently has to work with, but did not quite fit. Staff wanted the opportunity to provide the council language that would work better. The only drawback was that the current timeframe would limit it to only 4 times. If Councilman Kavanagh wanted the motion to permit this use for a specific amount of time, Mr. McGuire estimated that would take at least three months staff time to prepare the ordinance and have it back in front of the Council, which would then allow the Council the opportunity to reconsider the application under the new terms kolow of the zoning ordinance. Councilman Kavanagh questioned if the Council were to approve this application, and not only retain stipulation #6 but extend the application until May 315t, would that jeopardize the present restrictions placed on temporary use permits. Mr. McGuire responded that the current text allowed administrative approval up to four. Council action was required when going beyond the four and would be up to the Council's discretion. Councilman Kavanagh asked what would the impact be if the application were to be extended to May 3151. Mr. McGuire restated that the Council would be exercising their discretion to allow this use beyond the four times that could have administratively been granted. He noted that by this motion there was clear direction that the Council wanted better language to work with that would better fit this type of use. Councilman Kavanagh wanted to know if someone came in and applied for a weekly flea market, would the Council still have legal standing to say no and not be accused of unequal application of the town's ordinances. Mr. McGuire said the council would have a difficulty saying no to the exact same use with different users next week that wanted to operate until May. Councilman Kavanagh clarified that the Council could not stop another "farmers market" but another use could be denied. Mr. McGuire responded that without seeing the nature of what a flea market was, he could not give him a legal opinion on that. Councilman Archambault offered Councilman Kavanagh a friendly AMENDMENT: that the Council approve this temporary use permit until such time as staff drafts a "farmers market use permit" to be approved by the Council. Vice Mayor Stevens asked Mr. McGuire if he needed to revise the wording of this amendment. Councilman Kavanagh offered that the amendment could read, "until the Council acted on". Mr. McGuire said staff could take that as an indication to move it as quickly as possible through the process with the condition that this temporary use permit would be active until such time as Council had it on their regular agenda and acted upon it. He asked what happened if the Council at that time said no. Did the "no" terminate the temporary use permit at that point? Councilman Archambault clarified that the temporary use permit would go away but the applicant would have a "farmers market" permit. This would transition into a "farmers market" permit. Mr. McGuire explained that staff would administratively place something on a consent agenda that would transition this permit once the E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session I-16-03.doc 3 of 18 regulation was in place. He clarified that if the Council decided not to have a "farmers market" use amended in the zoning ordinance and rejected the ordinance text change, the consequences would be that the Council terminated this temporary use permit at that time. Councilman Kavanagh SECONDED the amendment. Councilman Melendez asked what the consequences would be for this applicant. Mr. McGuire said it would be approved now and subject only to business license requirement for all participating vendors. The amendment CARRIED unanimously. Councilman Kavanagh expressed that his original concern had been that there would be outside vendors competing with Fountain Hills' businesses. He had since learned that there would be Fountain Hills' merchants participating and the Chamber of Commerce did not voice any objections. Councilman Melendez confirmed that he had talked with the Chamber of Commerce Executive Director Frank Ferrera who had indicated there would be ten local Fountain Hills' vendors participating. The amended motion CARRIED unanimously. Mayor Beydler returned to the dais. AGENDA ITEM#7 - UPDATE ON THE RECENT BUDGET REDUCTIONS INCLUDING: HOW THE STEPS TAKEN SO FAR HAVE IMPACTED TOWN SERVICES; WHAT SOLUTIONS HAVE BEEN IDENTIFIED TO HANDLE ANY SITUATIONS THAT HAD RISEN FROM THE CHANGES; AND A PROJECTION ON HOW MUCH MONEY WOULD BE SAVED IN THE CURRENT FISCAL YEAR, WITH POSSIBLE DIRECTION TO STAFF. Mr. Pickering reviewed steps taken so far: staff reduction (currently 14 positions eliminated), combining of departments, reduction in park expenses, wash clean up stopped, working to reduce the cost of the Shea Blvd. bike lane, and tourism funding reduction. As far as impact, there weren't measurements in place. He pledged to stay on top of the typical measures in place such as response time, crime statistics, community center profitability, and building permit turnaround time. When issues arose, he would make any necessary adjustments. He estimated the savings to date were $1 million and next year the savings would be approximately $1.5 million. Councilwoman Nicola acknowledged that the town was waiting for word from the Justice Department to ensure compliance with all grant requirements. She pointed out that as part of the comprehensive adoption of the budget reduction plan, January 31, 2003, had been set as the deadline for volunteer resignation in order to be eligible for the severance package. Councilwoman Nicola MOVED that the January 31, 2003, deadline be extended and that the town remain status quo on layoffs for sworn officers until the grant information had been received from the Justice Department. She explained to the public that the town had received various grants and needed to ensure that the town was in compliance with grant requirements. Councilwoman Nicola did not want to do forced layoffs but noted that volunteer layoffs could not be stopped. She wanted to wait until the Town received the answer from the Justice Department. She continued her motion to agendize for the first meeting in March further discussion on the final future shape of law enforcement so that during this next fiscal year there would be clear understanding of what would be accomplished. Councilman Archambault SECONDED the motion. Councilwoman Ralphe asked if the deadline extension was across the board for all departments. Councilwoman Nicola replied no, it was limited to sworn officers. Councilman Kavanagh restated the motion for clarification. He suggested that action would not be taken unless it was legal to do so. Councilwoman Nicola agreed. Councilman Archambault asked Mr. McGuire if he knew when he would have an answer from the Justice Department. Mr. McGuire replied it was unlikely the response would arrive in time to meet the January 3lst deadline and might trickle a little behind that date. He noted that the Justice Department was aware that staff was trying to meet that deadline. Councilwoman Ralphe AMENDED the motion to add the criteria of fiscal desirability to the legal desirability. Councilwoman Nicola SECONDED the amendment. Vice Mayor Stevens asked if Councilwoman Ralphe wanted to look at the money issue as to whether or not the town would have to pay money back. Councilwoman Ralphe responded that if the town was required to return funding and pay penalties, the Council might want to take a second look at the situation. E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session 1-16-03.doc 4 of 18 Councilman Archambault questioned if Councilwoman Ralphe's amendment dealt with equipment. Councilwoman Ralphe explained that she understood some of the present grants were for equipment as well as personnel. Councilwoman Nicola acknowledged that Councilwoman Ralphe brought up a point that should be looked into. Councilman Kavanagh asked if there were any equipment grants, as he had never heard of equipment being tied to employee levels. Mr. Pickering replied that he was not aware of any, as the grants being discussed were strictly about the town's requirement by the federal government to maintain personnel. Councilman Kavanagh said it was reasonable not to violate federal law, which the first motion covered. He felt people could misinterpret the vague wording of the amendment and suggested that the Council stick with the original motion. Councilman Melendez asked for clarification on the words "bottom line and fiscal responsibility". Councilwoman Ralphe referred to the Justice Department grant recently applied for that basically called for five more officers. It was this grant she had in mind when she heard Councilwoman Nicola's motion. Councilwoman Ralphe reminded the Council that the town was in the middle of using current grant monies for Marshals Department activities. It was important to look at employee staffing levels and repercussions stemming from being in the middle of grants for other things. She asked Mr. Pickering what the current grants were for. Mr. Pickering responded that all the grants would be reviewed. Councilman Kavanagh expressed concern that the original motion was being mutated. The town attorney had informed the Council that they were not applying for the grant for five new officers but were submitting the paper work so that if the Town decided to apply the town could do so. He asked how the town could be bound by a grant that the town had never put in for. Mr. McGuire clarified that the action of the Council with regard to this grant had been to accept the recent grant that had been applied for. The grant funds were available to be drawn upon at any time. Councilman Kavanagh pointed out that if the town did not draw against the grant then the town did not have to keep people that were never hired. Mr. McGuire agreed that was correct. Councilman Kavanagh noted that if the town were not committing to this grant then it could not encumber the town and was a non-issue. Vice Mayor Stevens stated that there was some miscommunication. She understood Councilwoman Ralphe's amendment to mean she wanted staff to come back with a list of the grants that were currently in place and any that would soon expire so that the Council could review the financial options. Councilwoman Ralphe replied that was correct. Councilman Kavanagh restated that the Council was not going to do anything that was in violation of the Department of Justice (DOJ). If the DOJ stated the town could do it, and there wasn't a price tag, then the Mr. Pickering was directed to continue to stay the course of trimming government. Councilwoman Ralphe expressed that she had not totally understood Councilman Kavanagh's clarification but she had understood Vice Mayor Stevens's questions and summary of her amendment. Councilman Kavanagh asked Vice Mayor Stevens for clarification. Was the amendment proposing that if there weren't any statements from the DOJ that the town's actions were illegal or would have an economic cost to the town then Mr. Pickering would stay the course of trimming government? Mr. Pickering would come back to the Council if further Council action were required. Vice Mayor Stevens agreed that was correct. Councilman Kavanagh said that was fine with him. Councilwoman Ralphe reiterated that her amendment did not only pertain to the most recent grant but all other grants in effect. The amendment CARRIED unanimously. Councilwoman Nicola clarified that the second part to her original motion to discuss at the first meeting in March encompassed the fact that the town did have that grant money available. She proposed that if the grant money was not going to be used that the town notify the federal government so that another municipality could utilize that money. Vice Mayor Stevens asked Councilwoman Nicola if she was expecting a staff report or would it entail just Council's discussion. Councilwoman Nicola stated she would be expecting a staff report and wanted to look at the information provided by the town attorney so the Council could move forward. Bryan Soller,4953 E. Princess Dr., Mesa, AZ(State Fraternal Order of Police(FOP)Vice President) He stated he was representing the marshals who were members of the FOP. He asked that if the Council decided to disband the Marshals Department they hoped that all of the marshals would be treated fairly and with respect. Whatever severance package was given out should be given to all members. E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session 1-16-03.doc 5 of 18 Bill Everson, 3737 E. Hopi,Mesa, AZ(Chairman of the FOP AZ labor Council) He spoke in favor of the motion as it gave the marshal more time to deal with the critical life decisions before them if they lost their jobs in Fountain Hills. He reiterated that they wanted to see all members of the Marshals -Department treated fairly and equitably. Rocky Dziepak, 16316 E. Jacklin He expressed that he was confused since he didn't know that the town was getting rid of the Marshals Department. He had thought this issue was to be discussed at the first meeting in March. He asked for clarity. Councilwoman Nicola responded that no action was being contemplated to eliminate the Marshals Department as an entity. She explained that the second part of her motion was to look at the situation as the Council was going into the next budget year. She emphasized that any decisions would be made with lots of public notice and input. She had understood the statements made by members of the FOP to say that if after a future policy decision were made,they would like their members to receive consideration. Peter Putterman, 16739 E.El Lago Blvd.,#104 He asked that the Council consider the unintended consequences of purchasing radios to have the Fountain Hills Marshals Department (locally controlled agency of record) dispatched by the Maricopa County Sheriffs Office. Once dispatched by the Sheriffs Office all legal entries go into their computers and would, in effect, be handing over the reins of the town department to another outside agency. He reminded the Council that the Maricopa County Sheriffs Office had political leadership that could change at the whim of the Maricopa County voters. He suggested that before reducing the Marshals Department any further that the legal implication be reviewed. He questioned if the town lost the agency of record status, would all of the grants go away because they were for certified officers for the agency of record. He hoped the planning process included looking at these aspects and asked the Council to look at these issues. He noted staff cuts had already been made and the choices were made based upon job functions performed. He reminded the Council that many staff people who have left carried on the day-to-day functionary responsibilities and so far the public has not been informed of any programs going away or how they will be affected. He expressed concern that all this additional work would land on existing staff. He wanted the public to be made aware. He questioned any cost savings by moving the Parks and Recreation Department to the Community Center when $11,000-$26,000 would be spent on making this move when it has yet to be determined what the savings, if any at all, would be from the reduction in staff. He asked the Council to review this expenditure before it was too late. The amended motion CARRIED unanimously. AGENDA ITEM #8 - REPORT ON THREE REVENUE SOURCES CITED IN THE MANAGER'S MEMO DATED DECEMBER 11, 2002 TO PROVIDE THE COUNCIL WITH MORE DETAILS ON THE OPTIONS THAT INCLUDE: THE ELIMINATION OF SALES TAX EXEMPTIONS; THE INCREASE OF PERMIT, LICENSE AND USER FEES; AND THE PLACEMENT OF A UTILITY FRANCHISE FEE ON THE BALLOT. Mr. Pickering reviewed his staff report, which covered the various options available to the Council in order to stabilize the town's financial condition. 1. Eliminate sales tax exemptions 2. Increase permit, license, and user fees 3. Place the utility franchise fee on the ballot • 4. Increase the tax rate on specific industry classes Mr. Pickering noted he had a presentation on the town's overall finances and other options. Councilman Archambault said he would like to discuss with Mr. Pickering a right-of-way host fee that would not be seen on a utility bill. He asked that staff research what other private water companies' rates were as compared to the town's rate. Mr. Pickering said that could be done. Councilman Archambault stated he would like to also discuss refuse license fees with Mr. Pickering and to have staff do further research in this area. Councilwoman Ralphe asked how common it was for Arizona cities to utilize some of these measures. Mr. Pickering explained that all 87 cities and towns were contacted to determine who had these exemptions. He reviewed examples to give the Council an idea of the flavor of those exemptions: 12 cities/towns exempted sales tax on advertising, 32 taxed health spa memberships, and 22 taxed residential rentals. Councilwoman Ralphe E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session 1-16-03.doc 6 of 18 asked how many cities/towns have a refuse fee and an increased sales tax on communications. He stated that he did not have those numbers with him but could provide them to the Council later. i 41„, -Mayor Beydler understood the purpose was to diversify the town's revenue sources so that the town was not so codependent upon major revenue items such as the local sales tax and the state shared revenues. He acknowledged that in government every income item was a tax related item so there was little room to get around the discussion. He wanted the community to understand that the Council was not simply trying to find ways to arbitrarily raise taxes. The Council was trying to spread the pain. Those in the community who felt that they were paying the residential tax had approached him. By paying a potential property tax they felt they were being singled to pay an unfair burden, as they would be assessed twice. Mr. Pickering responded obviously they would if an additional property tax would be charged, as they would have to pay it because they owned the building. The cost of the residential tax, which was only going to raise $75,000 in revenue,typically would be born by that renter who would not be paying that property tax because they were renting. Mayor Beydler asked how many seniors rent in the community and what impact this would have on them. Mr. Pickering explained that he would have to do that research. Councilman Kavanagh reminded everyone that even though the Council had asked to look these options it did not mean that they were biting at the bit to pass all these taxes. The Council was exploring options and there were many things that needed to be looked at. Some of these options were clearly user fees and it seemed reasonable to make someone who was using a particular service pay for that service. Those types of fees were non-controversial. A rental tax was double taxation for the tenant because the property tax was included in their rent. Renters already pay property tax as part of their rent bill. He was concerned that some of the options were attractive at face value but in reality were nothing more than taxes. The difference between these proposed options and property tax was that property tax was tax deductible. He proposed that as the Council tip toed through this field of taxes, they must be recognize that some were attractive but in reality would be the worse thing for people. He acknowledged that it would be difficult to craft something that was the best option for everyone,but the Council did not have a choice since the town's finances were hemorrhaging. Mayor Beydler clarified that this agenda item was a report only and the Council would take no action this evening. Councilman Melendez noted that on his Qwest bill there were eleven separate taxes, his cell phone bill listed three taxes, and on the SRP bill there were three taxes. He commented that none of the suggested options did anything for him. Vice Mayor Stevens noted that the staff report was requesting Council action. She asked Mr. Pickering what he was looking for. Mr. Pickering stated he wanted to proceed with his overall financial report and at the end of the summary he would list all the Council's choices. At that time, he would review his recommendations and the dollar amount he was recommending be targeted. Obviously, the Council could pick and choose from the list that would to done to reach those goals. He noted that there were some agendized items that were calling for action immediately. Vice Mayor Stevens asked if Mr. Pickering was requesting the Council to wait to act until later during this meeting or at a following meeting. Mr. Pickering reiterated that he would make his presentation. If the Council so chose, it could pick one or two from the list that they felt they could support. If that option helped to meet the dollar amount goal that he felt the town needed, so be it. Councilwoman Nicola reflected that the agenda stated there would be a report presented and that there would only be consideration and action on the two resolutions and the ordinance. Mr. McGuire agreed that was correct. That was why he was clarifying with the town clerk that there wasn't an amendment to that provision. Agenda Item#8 did not have action declared. It was for a report. The next three items called for action. Councilman Kavanagh asked if the Council was free to direct staff after agenda item#11 to bring forward more action on these proposed options. Mr. McGuire clarified that there wasn't anything on the agenda that allowed action or direction to staff on the remaining listed items. He noted that it would be clear to staff at that point what further work was necessary on those options which would be brought back to the Council at some point in the future to discuss. Mr. Pickering said that was fine with him. Councilwoman Nicola asked if the Council could clarify anything during the call to the public for a future agenda item. Mr. McGuire requested that council %law members give staff their comments. He noted that he and Mr. Pickering were good at making sure they understood where everyone stood in order to move forward from here so they could come back to the Council in E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session I-I6-03.doc 7 of 18 the future with the requested information. This agenda item did not set out direction to staff on the alternatives, as there was a lot of work to do. - Gene Peters, 14262 Fountain Hills Blvd. He questioned the fund balance as projected by Mr. Pickering at the end of this fiscal year. He was unclear as to how bad the crisis was, how much immediate action was needed, or how much could really wait until the Council sees where the town was on the new fire district. Alan Cruikshank, 14850 E. Grandview Dr. He spoke against the advertising tax. He felt more research was necessary. Bob Sternfels, 16803 E. Palisades (business) He noted that he pays 67% of his income to taxes. He stated he would like to keep some for himself but he would like to keep the money for those that could least afford it. He felt an advertising tax took the money right out of businesses' pocket. It would not effectuate the prolonged recovery to tax advertising and that was why the exemption had been there for so long. Likewise on the tax on residential real estate,those who could least afford it would now have to pay an extra $25,000 to $35,000. That would be the youth and the seniors. He requested that when the council discusses how to raise revenue to consider these statements. Frank Doolittle, 17206 E. Parlin He questioned how the town's financial condition could deteriorate so quickly in a three-month period. He asked for an explanation of where did the money go. He commented that the citizens should have an accounting for that. Mr. Pickering listed those items that had contributed to the town's current financial condition and depletion of the fund balance: the construction of the community center, replacement of the lake liner, and taking on the operations of the fire department. Mr. Pickering made his presentation on the town's current overall financial picture, which included his projections for future expenditures and revenues. It was his opinion that the town was going to be in a better financial position than the worse case budget scenario because of the significant 11109 actions recently taken that included the staffing cuts recently undertaken as well as not filling existing positions. He anticipated that the town would have the recommended fund balance of$2.4 million at the end of this fiscal year (July 2003). He reminded everyone that the town was losing money every month so action would need to be taken by the Council. Mr. Pickering cautioned that there was a lawsuit pending that could have a major affect on what the fund balance was. He projected that next year there would be a$4.9 million deficit. When factoring in the current cuts, he estimated that $3.4 million would still be needed. If the Council fully implemented the budget reduction plan, the funds needed would be approximately $2.4 million. He explained that somewhere in the range of $3.4 and $2.4 million in revenue would be needed at the beginning of this new fiscal year. He expressed that it would take awhile for some of the proposed revenues to come in. Mr. Pickering compared Fountain Hills' rate (1.6%) to the surrounding cities/towns sales tax rates. He reviewed a graph that depicted what the various rate options (0 to 1%)would bring to the town in revenue. Mr. Pickering stated that the Rural Metro representatives had assured him that the town would not have a large increase. They anticipated a 5% increase or less on the current contract of$2.275 million. He displayed a graph that depicted where Fountain Hills stood overall among when compared to surrounding communities with regard to property taxes. He felt that Fountain Hills ranked in the middle or a little lower. He discussed various estimated property tax rates that would be needed in order to pay for fire service and covered the difference between primary and secondary tax rates. Mr. Pickering stated the Council had asked if he agreed with the Fire Funding Committee's recommendations and his answer was yes. He was concerned that there might be voter confusion. If there were a way to solve that problem before the public was asked to vote on this, such as having the impact statement done and so that everyone knew that the Fire District was going to be implemented, that would be a great thing. Mr. Pickering recommended that if the Council could not come to an agreement on the 1% local sales tax increase that had been recommended by the Fire Funding Committee, then the Council could still reach the goal of between $2.4 and $3.4 million through the menu of revenue options as just discussed. He explained that Moody's had notified the town that the bond rating was being reviewed. In the next 90 days, L. Moody's would meet and decide whether or not they will lower the town's bond rating. He advised the Council to take action now on the Fire Funding Committee's recommendation. He summarized his presentation with the visual of a graph that showed the town's projected fund balance and revenue choices. E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session 1-16-03.doc 8 of 18 Vice Mayor Stevens referred to page 6 of his presentation where it showed adopted budget fund balance of $859,000. She asked why he was not projecting the fund balance would be $2.4 million. Mr. Pickering pointed out that the town had approximately $lmillion in savings due to the budget reductions implemented so far. The - town was not doing as badly as had been budgeted. Mayor Beydler asked Mr. Pickering what the town's cash balance was. Mr. Pickering stated that at the end of November 2002, the town had $2.9 million. Mayor Beydler asked if that was the latest data the town had. Mr. Pickering confirmed it was, noting that December numbers would be available fairly soon. Mayor Beydler asked if Mr. Pickering had included in his projection shortfalls anticipated from the reduction in state shared revenues. Mr. Pickering responded that would be approximately $400,000 next year. That reduction had not been included in these projections because staff was not sure if those state shared revenue reductions would be seen this next fiscal year or in 2004. Further research would be needed to determine the exact timing. Mayor Beydler asked if Mr. Pickering was comfortable that the spread of$2.4 - $3.4 million would cover some of these unanticipated events. Mr. Pickering expressed that he would feel more comfortable at the$3.4 million level under those circumstances than at the lower level. Councilman Archambault asked if Mr. Pickering's $2.4 figure included the McDowell Mountain development funds. Mr. Pickering replied no as that was a separate fund and not included in the general fund. He reiterated that he was discussing the town's General Fund. Councilman Archambault concluded that those funds would then be in excess of what the town's expenses were. Mr. Pickering acknowledged that these figures were estimates but he anticipated that at the end of the fiscal year the town would have approximately $2.4 million in the fund balance. He stressed that the town was continuing to lose money every single month. Mayor Beydler recessed the meeting at 8:35 p.m. and reconvened at 8:46 p.m. AGENDA ITEM #9 - CONSIDERATION OF RESOLUTION 2003-02 RELATING TO THE CONSENT BY THE TOWN OF FOUNTAIN HILLS TO FORMATION OF A FIRE DISTRICT WITHIN THE INCORPORATED BOUNDARIES OF THE TOWN; AND DECLARING AN EMERGENCY. Councilman Kavanagh MOVED to approve Resolution 2003-02 subject to the additional requirement that the itisir citizens group seeking information of a new fire district make a presentation to the Town Council at their next regularly scheduled meeting. They will address the groups process for ensuring that the proposed district's organizing board of directors would consist of people representing all of the interested stakeholders. If that presentation were to be made to the Council's satisfaction, then the resolution would proceed. Vice Mayor Stevens SECONDED the motion. Councilman Melendez asked Mr. McGuire to define the term "emergency". Mr. McGuire said it was unfortunate that the State Statute was wide open on the definition of an emergency. Typically an emergency would be whatever the Council determined it to be. In this case, he felt the emergency was pretty clear. The need to fund fire service was imminent, the process for formation of a fire district was laborious at best,and staff had wanted to provide for whatever action the Council took tonight so as not put on hold for another 30 days the efforts of the citizens' group. The citizens' group needed to go forward and put together an impact statement so that they could present it to the Maricopa County Board of Supervisors. Councilman Archambault clarified that once the Council acted on this issue tonight it would not wait thirty days. Mr. McGuire stated that was correct. Councilman Kavanagh commented that ultimately state law gave the people the authority to establish a new fire district. As far as he was concerned, if 50% of the people + 1 sign a petition saying they want a new fire district then democracy said they would get a new fire district. He did not see how anyone could object to allowing this group to do that. However, he noted that the Council had restrictions due to State Statute, as did the County Board of Supervisors. The County Board of Supervisors had to approve the process after they looked at a financial impact statement that would be submitted by this group. The group could not begin getting petitions signed until the County approves. State Statute also requires that this Council to approve this process. While ultimately the decision was up to the people, both the County Board of Supervisors and the Council have a statutory duty and responsibility to ensure that those who begin the process were doing it reasonably. That was the reason for the financial impact statement, as the costs need to be known. He reminded the public that they would ultimately pay the bill and it was the Council's and the County Board of Supervisiors' responsibility to ensure that this was an honest and realistic financial disclosure statement. He would not have a problem with a realistic financial impact statement. Councilman Kavanagh wanted to make sure it was a truthful one. He questioned and expressed concern as to whether or not this drive could succeed. E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session 1-16-03.doc 9 of 18 He pointed out that approximately 6,500 signatures were needed on the petitions. He felt that getting that many signatures would be hard to accomplish. He said a strong team would be necessary to run this marathon if they expected to finish this drive successfully. He noted there had been concern expressed by the fire union and - current fire fighters that this was the old fire board revisited. He pointed out that other concerns had been heard that other issues were being mixed in that suggest the possibility that there could be political problems and might become an obstacle to this issue. The Council wanted to be sure that when this process started, there would be a united community behind it so that it succeeds. He mentioned that he had heard talk from the Fire Union that they might want to do this, as they did not like the people proposing to do this. He did not want to see division as then people would not sign, there would be confusion, and major problems would result. He stated the reason for the caveat included in his motion was that the Council was hoping that all diverse groups would get together and come back next week and say they are a solid, united, undivided community intent on gathering the required signatures. He knew that the fire union could accomplish that as they recently did it in Scottsdale so he wanted to see them brought on board in this effort. The diversity of different stakeholders would also ensure a very balanced initial fire board. He reminded the public that those names on those organizing documents would become the town's first fire board and those three people would determine the town's fire services. These people needed to be good and reasonable people with full public support so it would be done right. Councilwoman Nicola clarified that there would not be a public vote on this issue. If the citizens' group was successful in gathering the signatures for the petitions, then the fire district would be formed. She did not want any confusion. Councilwoman Ralphe said it was important to know that no matter who delivered fire service, it would be paid for virtually in the same way, property tax. Mayor Beydler thanked Councilman Kavanagh for taking this big step in supporting the formation of a new fire district. He also concurred that the Council wanted a united community moving towards a common goal and not to perpetuate more division or divisiveness, as that would not get this done. Carolyn McClure, 16212 Inca—She asked the Council to approve the resolution. Tammy Rothermel, 14863 Deerskin—agreed with Councilman Kavanagh's comments and explained that there would be three petitions that the public would be asked to sign. She explained the process for the formation of a fire district. Councilman Kavanagh asked Mr. McGuire for clarification that three petitions would be needed. Mr. McGuire stated that the County had not indicated that this was a three-part process. He did not interpret State Statute to say that. He said he would like to have a conversation with the citizens' group to see if they have a different interpretation of the statute because the County had indicated something different. Councilwoman Nicola said that the current petitions being circulated were not the actual petitions to reform the fire district. The committee was currently working to create a database of interested people to facilitate a faster signature collection. She asked that if the public is asked to sign the petition again, ask the petition circulator about any confusion regarding that. Mr. McGuire stated that the petitions could not be circulated until the Board of Supervisors approved the impact statement and authorized the circulation of petitions. The earliest that could happen would be thirty days from now, assuming that the Board of Supervisiors had the impact statement tomorrow. Mayor Beydler asked Bob Travis if he had the answer to that question. Mr. Travis deferred to Tammy Rothermel, as she had been the previous Fire Board's clerk. Ms. Rothermel stated that in doing the research she talked to Jack LaSota, the former attorney general for the State of Arizona, who was experienced in forming fire districts. His law firm assured her that three different petitions would be needed. Mr. McGuire said he would like to talk to Mr. LaSota to discuss the 2001 amendments to this section to see if his opinion was based upon formations prior to this amendment or subsequent to it. He affirmed that he would not be the one to render a legal opinion to this committee, as his client was the Town. If the committee's legal counsel gave them an opinion that they need three separate petitions,then he would not be the one to tell them differently. Councilman Kavanagh said that if the source of the belief that all three petitions were required was based upon the photocopy he had just been given, he made a notation that this form had been revised 12/99. If Mr. McGuire was talking about a 2001 revision,the citizen's group might want to look into that. E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session 1-16-03.doc 10 of 18 Bob Travis, 14218 N. Chinook—He asked that the blue ribbon committee's recommendations be followed and spoke in favor of the district's formation. Ramona Yoder, 15459 E. El Lago Blvd. — She said the voice of the people would be heard in the end if the Council passes this Resolution. Rita Brown, 16738 E. Nicklaus — expressed disappointment that the firemen were working to establish a fire district. The citizen's group had published a notice in the paper requesting all interested parties to come to be a part of this group. Councilman Kavanagh clarified that he did not say the firemen were doing petitions; only that they had expressed interest in doing petitions. Their representative had also told him that they had made overtures but were concerned at the composition of the proposed three people. Mayor Beydler affirmed that the Council encouraged all of the special interest groups and stakeholders to begin communicating and finding common ground to work together in order to ensure that this passes. The Council was trying to bring people together and not continue the past. Hugh Henry, 15731 E. Sycamore (Chairman of the Committee to Save our Community)—He spoke in favor of the fire district's formation and noted that his committee and Mr. LaSota were unaware of any different legislation other than what was given to Councilman Kavanagh. Sasha Weller, 4450 E. Coyote Wash, Cave Creek (representative of the Fountain Hills' Fire Fighters Association) -He stated that the fire fighters union would not compete with the citizens group's efforts. He explained that due to the nature of their employment, they were limited as to how they could participate. Fire fighters would support what was best for this community. They wanted to see the community keep those fire fighters who had served this community regardless of whether it was a city run department,privately run department, or a district run department, because of their experience. Robert Howes, 15745 Mustang—He acknowledged he had served on the blue ribbon Fire Funding Committee and they had looked into the process necessary to form a new fire district. The Committee understood it to be a one step process. He felt the Council should allow the committee to gather signatures to form a fire district, as it was the democratic process. He expressed it was the responsibility of any group that goes forward in this effort to provide accurate information in the gathering of signatures. Mr. McGuire read from the former section of State Statue with regard to the petition issue and then referred to the 2001 amendment, which had added the phase "shah-lam' in front of each of the three criteria. He interpreted that to mean there were two different ways to go. Mr. McGuire reiterated that he would not provide legal counsel to this committee. Mr. McGuire felt it should bear some analysis as to why the amendment was there if it wasn't intended to be an either or process. Robert Barbanica, 16263 E. Hyde Park Pl. (retired fireman) — He expressed concern over the formation of a new fire district. He was afraid that the old fire board would be part of the new fire board. He noted that the old fire board had not allowed the public or fire fighters to come into their meetings to try and tell them things. He wanted to see varied people on this first board so there was broad input. Councilman Kavanagh clarified the motion's caveat that there be representation of all the interested stake holders as applying to the Fire District's board of directors. He had not been talking about the committee's membership or circulators. Vice Mayor Stevens asked Mr. McGuire what the time frame was. Did Councilman Kavanagh's motion also include that the district's impact statement come back to the Council in two weeks? Councilman Kavanagh noted that there wasn't a time limit on that statement. Mr. McGuire said it was up to the Council as to what level of review they wanted town to put into the district impact statement. The resolution required that it come before the Council prior to it going to the Board of Supervisors. He noted the impact statement should come before the Council very quickly because the Board of Supervisors could not hold their first hearing on it until at least 30 days after receiving that impact statement. It was in the committee's best interests to get that impact statement to E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session 1-16-03.doc 11 of 18 the Council just as soon as possible. He stated he would provide whatever level of review that the Council wanted. - Councilman Kavanagh asked for the impact statement come back to Council for review in two weeks or sooner. He wanted Rural Metro and other parties to have the opportunity to review it so that the Council could have their input. He wanted to make sure it was realistic and accurate. Councilman Archambault asked that the impact statement be fast tracked so that if it becomes available, staff would have had it reviewed by everyone possible before it comes back to the Council. Councilman Kavanagh stated he was only asking for two weeks. Councilman Kavanagh said he envisioned that the committee would make their presentation and give the Council their paperwork at the next meeting. The Council would then agendize it for the next meeting for action. During those two weeks staff and other interested parities would review it so that there would be public comment on it at that meeting. Mr. McGuire interjected this was one of those odd months where there was a large gap between council meetings. He pointed out that this would be a three-week gap. He reminded the Council that at the retreat they had asked that the fourth Thursday of the month be a work session and that was only a week away. He stated that the only thing that he would review the documentation for was to see if all statutory requirements were included. He explained the resolution wording. He had understood what the Council wanted was if after reviewing this if staff or the experts said "time out as this document didn't work", then it would be agendized. Otherwise this process was off and running. Councilman Kavanagh said he was of the understanding that the Council needed to give their recommendation of approval to the County Board of Supervisors. Mr. McGuire said there was actually two parts to that. Discussions early on with the County Attorney's office indicated that they might not consider a resolution prior to reviewing the impact statement to be valid as approving the impact statement. He felt that if the County Board of Supervisors knew that the Town had a chance to review the impact statement with the opportunity through this resolution to react if there was something wrong with it and that the Council had not taken action then they would see that as taking positive action on it. He said he would be willing to communicate that to the County Board of Supervisors without having to go through the extra hoop. The way the resolution was written it would eliminate that extra step. Councilman Kavanagh commented that if Now the Committee provided the impact statement next week what would be the next action. Mr. McGuire explained that staff would follow whatever direction given by the Council for the level of review of the documentation. After receiving the input back from the experts, staff would present something to the Council. If Mr. Pickering was given information that the documentation looked great, then Mr. Pickering would give the Council an affirmative update and the process would move forward. The County would be notified that everyone was on board with it. Councilman Kavanagh asked what would happen if the Council received public input that there were major deficiencies. Mr. McGuire explained that would be where the council reserved the right to agendize this for reconsideration. Councilman Kavanagh said it would not formally go to the Board of Supervisors for a vote until after the Council had one more meeting and said this documentation was OK. Mr. McGuire disagreed that was what he said. Mr. McGuire pointed out that there was a 30-day waiting period in which time the town had the ability to comment. He restated that the hearing could not happen earlier than 30-day or longer than 60-days. Councilman Kavanagh said he wanted to make sure that the Council had the ability to voice their opinion before the County voted on approving the district. Mr. McGuire reminded Councilman Kavanagh that the hearing would be open to the public. The motion CARRIED unanimously. AGENDA ITEM #10 - CONSIDERATION OF ORDINANCE 03-01 RELATING TO THE PRIVILEGE LICENSE TAX; AMENDING THE TOWN CODE BY INCREASING THE RATE OF TAXATION FROM ONE AND SIX-TENTHS PERCENT (1.6%) TO TWO AND SIXTH-TENTHS PERCENT (2.6%) PROVIDING PENALTIES FOR THE VIOLATION THEREOF; PROVIDING FOR SEVERABILITY; DESIGNATING AN EFFECTIVE DATE AND PROVIDING FOR APPLICATION OF TAX TO CERTAIN CONTRACT. Councilwoman Ralphe MOVED to approve Ordinance 03-01 as presented and Councilman Melendez SECONDED the motion. E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session 1-16-03.doc 12 of 18 Councilman Melendez explained that he seconded the motion because he felt everyone was responsible to pay on an equal level rather than dividing the small time tax increases that were previously mentioned. He felt the entire country would be faced with increasing taxes. Vice Mayor Stevens said she had proposed a package to this Council. The package included $2.4 million for a property tax and $2.5 million for a sales tax. She appreciated the Fire Funding Committee's recommendation of a 1% sales tax increase and for a property tax. Vice Mayor Stevens noted that the committee did not have the advantage of the updated financial report as just reviewed by the town manager so they were unable to include the cost cuts already made in their projections. She felt that with the cuts already made, the Council might not need to go quite so high in either direction. Vice Mayor Stevens AMENDED the motion to reduce the sales tax increase to 0.5% and Councilwoman Nicola SECONDED the amendment. Councilwoman Nicola stated that sales tax was something that the council could enact and would generate revenue in a relatively quick fashion. She pointed out that it was something that the Council could revisit later in the year after they had gone through the fire district process and after the Council sees how the voters reacted to the property tax question in May. That was why she supported the 0.5% over the full 1% sales tax increase. She stated she also appreciated the Fire Funding Committee's recommendation. Councilman Kavanagh asked for Mr. Pickering's input, as he understood that the 1% was necessary for the period between now and when the town would have collection of a property tax. Mr. Pickering cautioned the Council that the fund balance was going to dip below the recommended amount. It was his opinion that the fund balance should be between $2.4 or $2.5 million. If the Council passed the 0.05% sales tax increase, they would dip below that suggested amount and he did not recommend that be done. He cautioned them on that action. Vice Mayor Stevens asked Mr. Pickering if he knew how many months the balance would dip below the recommended fund balance. Mr. Pickering said he did not have those exact figures. He estimated that additional revenues would be about $110,000. In looking at his recommendations he noted the town needed revenue between the $2.4 and $3.4 million, which calculated out to approximately $200,000 per month and $280,000 per month. Those were the levels that he would feel comfortable recommending. Without those revenues, he felt Now the shortfall would be approximately $100,000 or more. Councilwoman Ralphe said that it was time to simplify and time to act. She noted that taxes were hard on everyone. She based her motion on the following: the town manager's recommendation (since he was the one who had been crunching the figures and knew them best), the citizen group recommended a 1% increase, and because Moody's delivered a message by placing a watch on the town's credit rating. Mayor Beydler asked Mr. Pickering if the 0.5%, from a management perspective, would be workable in conjunction with some of the other diversified revenue sources. Mr. Pickering reiterated that if the Council got to the$2.4 to$3.4 million levels then the answer would be yes. If the council did not get to those levels then his recommendation stands that the town would need more money from that original source. He acknowledged that he had provided the Council with many options by which to reach those levels. Mr. Pickering noted that sales tax was succinct and staff was fairly sure of the revenues. Combining it with other options was a possibility, but he had not heard a lot of support for those choices. Mayor Beydler asked about a sunset provision. He stated the business community did not create this problem and they were being asked to bail the town out of this problem on the short term while the Council tried to get a new fire district in place and the Council looked at other revenue alternatives. He noted the town's codependence on sales tax and upon state shared revenues was obvious. The town needed to diversify so when there were bumps in the road the town would not get hit so hard. He wanted the business community to understand that this would be a short-term solution with a sunset clause so that they knew there would be relief. Mr. McGuire said there did not appear to be an impediment to the Council putting a sunset clause on a sales tax increase. If the Council determined a specific time that this increase would end, that could be done. This would allow the Council to discuss if there was a retraction, where would it go. Vice Mayor Stevens said 0.5% would bring in approximately $1.3 million and if the Council also enacted the $2.4 million in property tax, the total ,; revenue would be at $3.7 or $3.8 million, which was actually over the town manager's recommendation. Mr. Pickering said her analysis was correct but his request was that the money would be needed at the beginning of this fiscal year and that was where his crunch came in. He explained what concerned him was that he would not E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session 1-16-03.doc 13 of 18 know while putting this next budget together whether or not the town was on sound financial footing. Vice Mayor Stevens commented that if the Council approved the proposed property tax and the measure did not pass, she did not know where the town's financial footings would be. She did not want to ask the citizens to pay more money than necessary although she could appreciate what Mr. Pickering was saying. Mayor Beydler reiterated that the town manager was saying that the Council needed to decide what revenues they wanted to reach the goal of between $2.4 to $3.4 million for short term 2003 revenues. Mr. Pickering said that was correct. Councilman Kavanagh reminded everyone that this was a temporary tax and would go away the moment that a property tax was enacted whether by the May election or by the formation of a new fire district. This was not a perpetual tax. He proposed that if the Council wanted to look at the $2.4 million figure and then dip into the • enhancements previously proposed that could be done. He reminded the Council that the utility franchise fee would have to be passed by the voters, which could only be passed in the May election so that would not help the town temporarily. He felt in that list of enhancements there would be others that would rub people the wrong way so realistically the Town would only be able to extract $370,000 from the list of enhancements. Therefore, in order to get to the $2.4 million Councilman Kavanagh AMENDED the amendment to change the sales tax rate increase to 0.75%. That amount combined with the $370,000 would reach the magic $2.4 million. The amendment DIED due to the lack of a second. Phil Gaziano, Sierra Madre Dr. —supportive of the 1% sales tax increase. Lowell Janson, 17324 E. Zaharia — He stated that no matter what increase was implemented he supported the addition of a sunset clause. Councilman Archambault asked for clarification as to what the rate would be for advertising. Mr. Pickering affirmed that it would be 2.1% in that analysis. The amendment FAILED on a vote of 5 to 2. Vice Mayor Stevens and Mayor Beydler cast the aye votes. Councilman Kavanagh AMENDED the motion so that the sales tax increase would terminate upon the first day of collection of a property tax and Councilwoman Nicola SECONDED the amendment. Councilman Melendez asked if that was appropriate. Mr. McGuire responded that he did not see any impediment to the Council placing a restriction on the time frame and that was a definite trigger. That was something that won't happen one way or the other without the need for the increase to stay in place or a replacement set of funds. He stated it was within the council's purview to address it then or now. Councilwoman Ralphe asked Mr. Pickering if the inclusion of a sunset clause was adequate from a financial standpoint. Mr. Pickering responded with his only reservation. He would have liked to have taken it through the full fiscal year simply because of budgeting purposes and assuming that this money would be there. Councilman Kavanagh clarified the amendment. The sales tax would not end when the voters approved the property tax but when the first collection occurred. He did not think there would be any disruption of cash. Mr. Pickering said his only concern was if the fire district were to be formed and they started to collect their taxes but they needed three or four months to actually take over the operation. If the sales tax was dropped, the town would still have to cover the expenses of that transition. Councilman Kavanagh asked Mr. McGuire for his opinion. Mr. McGuire said the prior impediment had been the budget laws. He felt that what Mr. Pickering was anticipating was having a budgeted item in the next fiscal year even if there was a successful formation of a fire district, that would cause some funding needs to be carried through just for transition from the town's side. He did not know if the newly formed fire district would have funds from day one. Mr. McGuire said he was comfortable that the County would provide funding on day one. If those funds were included in the budget, then the town would legally be able to spend it. Councilman Kavanagh pointed out that he was not talking about what the town could legally spend; the Council was concerned about stopping the taking. Mr. Pickering confirmed that he did not have a huge heartburn with that scenario. He wanted everyone to realize there might be some ' ,, lean months if the town continued to provide fire service and the revenue had gone away. Mr. Pickering answered Councilwoman Ralphe's question by saying he did not have a strong objection to that deadline. E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session 1-16-03.doc 14 of 18 Councilman Archambault pointed out that if the sales tax goes away when property tax revenue comes in, the town would not be out anything. Mr. Pickering said his minor concern was only if the property tax was collected by the district and not by the town with the town still providing the fire service. Councilman Archambault did -not think the fire district would not be able to collect property taxes until 2004. Mr. Pickering said he would then not have any concerns. Councilman Archambault noted that if the fire district were formed in time to get a property tax on the rolls for 2003 then the town would not need to do it. Mr. Pickering said that scenario gave him more comfort. The amendment CARRIED unanimously. Councilwoman Nicola said the Council had determined earlier that they would not act on any of the presented alternative sources of revenue. One was a tax on advertising and the other was a tax on health-spas-fitness centers. However, she found them listed in the ordinance that the Council was about to adopt. Mr. McGuire explained that he had indicated the agenda before the Council would not have allowed them to act on any of those items that were not included in subsequent items. Obviously those items were included in this ordinance because it addressed all the model sales tax code. Councilwoman Nicola noted that there had been citizens present earlier who only saw the first half of the meeting who left. She was concerned that they might think they have time to talk to the application of the sales tax model to advertising and other memberships because of the discussions earlier. Councilwoman Nicola AMENDED the motion to reduce Section 8A-405 to zero and remove Section 8A-410(2) and Councilman Kavanagh SECONDED the amendment. Councilman Archambault asked if that could be clarified by saying that the current tax levied be increased by whatever amount and not go those other places. He was concerned that people had left who maybe wanted to talk about those items. Councilman Kavanagh asked if Councilwoman Nicola's motion was to remove any additions and anything that would inactivate the statute. Mr. McGuire asked for clarification of "inactivate the statute". Councilman Kavanagh said he had extracted the additional: tax advertising and heath membership that would be discussed in the future. Mr. McGuire said that was correct. Councilwoman Nicola said she was changing the amount, not adding new sections. Councilman Kavanagh reiterated that the Council was raising the rate on the existing categories but not adding any new Now categories. Mr. McGuire said that was correct. Councilman Archambault stated that the council was taking out the wrinkles, which would then cause them to be taxed. He had tried to clarify everything by saying whatever the town was taxing now it would be on those items that the rate would increase. Mr. McGuire confirmed that he would ensure that all changes were made before the ordinance was signed. The amendment CARRIED unanimously. Paul Garrahan, 13604 N. Bonita—He understood that the 1% sales tax was needed to stop the hemorrhaging. He did not know what the fire district tax would impose. He said those two taxes would ultimately have a profound impact on the citizens' vote for property taxes. He asked if the residents would know what the fire district's proposed tax would be,before voting on the property tax. The amended motion CARRIED unanimously. AGENDA ITEM #11 - CONSIDERATION OF RESOLUTION 2003-03 SUBMITTING TO THE QUALIFIED ELECTORS OF THE TOWN THE QUESTION OF AUTHORIZING THE TOWN TO LEVY PRIMARY PROPERTY TAXES; AND DECLARING AN EMERGENCY. THE EMERGENCY CLAUSE IS NECESSARY TO MAKE THE RESOLUTION EFFECTIVE IMMEDIATELY AND MEET THE STATUTORY DEADLINES FOR THE ELECTION PROCESS. Vice Mayor Stevens MOVED to approve Resolution 2003-03 and Councilwoman Ralphe SECONDED the motion. Councilman Kavanagh thought that the Council was looking at $2.4 million. Councilman Kavanagh AMENDED the motion to change the amount to $2.4 million and Councilwoman Nicola SECONDED the ,,, amendment. E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session 1-16-03.doc 15 of 18 Vice Mayor Stevens said she would have preferred to have the sales tax a bit lower but she felt that the $2.4 million would be enough. Any shortage that the town had, the town would have to look at additional revenue sources besides these two areas. She stated that the Council needed to formulate a plan to look at where the town's revenue base was. Councilwoman Ralphe was concerned with the lower number as there were some unknowns in the town's future, such as would there be enough signatures to form the fire district. If not, the town would still be providing the fire service. In looking over some of the past fire district's budgets she found that there was a year when the budget was $3.5 million. If that was true in the past for a fire district, then she was worried if the town went to$2.4 million. Mayor Beydler asked Mr. Pickering to explain his rationale for his $3 million number. Mr. Pickering said that number came from the Fire Funding Committee. He noted that their concern had mirrored Councilwoman Ralphe's. They felt that over time the town would need more money than the town currently had or had budgeted. They also looked at increases next year for fire service. The cost for fire service would be about 5% more next year than what it was this year and that amount is almost$2.5 million. If a 10% increase were assumed then the amount needed would be $2.6 million. He said he would be remiss if he did not advise the Council that the $2.4 million number was low. Because of discussions with the contractor, he knew the costs would come in more than that. Mayor Beydler noted that by law the maximum the property tax could be increased was 2% per year. Mr. Pickering stated that was correct. Mayor Beydler asked if Mr. Pickering if he was concerned that inflation or an increased contract price could exceed that 2% per year. Could the Council unwittingly set the town up for a budget deficit in this particular category from the beginning? Mr. Pickering agreed and said that was a good observation. Vice Mayor Stevens said it was not her intent to create another financial problem for the town a year from now. If the town manager thought that the $2.5 or $2.6 million was what was needed, maybe the Council should reconsider that number. She asked if Mr. Pickering thought $2.5 million would do it. Mr. Pickering expressed that he would be more comfortable with the $2.6 million number. He reminded the Council that the Fire Funding Committee felt it prudent not to set the amount too low in the beginning, as operating costs would only increase. He stated that personnel costs could rise more than 2% each year. kkiw Vice Mayor Stevens explained her rationale for the $2.4 million, as being what the Rural Metro contract cost today and that was what the town would need. Vice Mayor Stevens AMENDED the amendment to change the amount to $2.6 million and Councilwoman Nicola SECONDED the amendment. Mr. McGuire clarified that whatever amount the Council selected as the base, was not the amount that would be levied. The amount of levy would be set by the County. Once the base was set, it could only have incremental increases each year and those were set by State Statute. The Council was not obligated in anyway to levy to the maximum each year. Vice Mayor Stevens said she understood that but part of the criticism that the Council had received from the community was a lack of trust. She did not want to have a budget where the sky was the limit and the public knew that the Council could use it. Vice Mayor Stevens wanted to be able to justify the amount to the public as the amount needed. Councilman Archambault expressed that the council was not looking at other revenue sources. The Council was concentrating only on sales tax and property tax. He felt the $2.4 million number would encourage this Council and town staff to look for other revenue sources to diversify the town's income, which was what Mr. Pickering indicated needed to be done. He said he would not support rising past the $2.4 million. Mr. Pickering pointed out that the property tax was the best way to diversify the tax base. It was a better revenue source than any of the other examples, exemptions, or sales taxes. Councilman Archambault noted that was not the only way. Mr. Pickering agreed. Mayor Beydler commented that the property tax was meant to fund things to primarily protect your property, like fire. Councilwoman Nicola responded to Councilman Archambault that the Council was only talking about how to fund fire services. She noted that other sources of revenue would need to be looked at to fund the general budget for all town services. Councilman Kavanagh added that the cost of fire service was not currently $2.4 million nor would it be $2.5 or $2.6 million as that was the cost of the Rural Metro contract. There would be additional fire expenses such as maintaining the buildings. By going to$2.6 million the Council was funding the entire cost of fire service that included the Rural Metro contract and other related expenses. A roll call vote was taken on the amendment with the following results: Councilman Kavanagh Aye Councilwoman Ralphe Nay E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session 1-16-03.doc 16 of 18 Councilman Melendez Aye Mayor Beydler Aye Councilwoman Nicola Aye Vice Mayor Stevens Aye Councilman Archambault Nay The amendment CARRIED on a vote of 5 to 2. Councilman Kavanagh AMENDED the motion so that the collection of the property tax shall terminate on the first day that funds were available to the town from a new fire district if that became a reality and Councilwoman Nicola SECONDED the amendment. Councilman Archambault asked Councilman Kavanagh if once the fire district funding capabilities came into play, would the Town's funding stop. Councilman Kavanagh said that was correct. Councilman Archambault felt there would be some overlapping of property taxes. Councilman Archambault asked how that could be rectified. Mr. McGuire said that it came back to the question of when funding would become available to the new district. He was of the opinion that a new district had money available from day one and the county would allow them to draw upon warrants and operate day one of their fiscal year. Year 2003 was a little iffy, but if the Council were talking about the fiscal year,July 2004,funds would be available to them so the two budgets would not have to overlap. Mayor Beydler questioned if the voters approved the primary property tax, the amendment went into play, and the Town did not levy, would that mean that the property tax would go away or what would happen to it. Mr. McGuire stated this was that gray area. There was nothing in the Constitution, State Statutes, case law, or in the minds of every other attorney in the state that he could talk to in these two days that had any prohibition to an actual sunset clause on the tax. He concluded that at the point the secondary property tax was levied by the fire district,the Council's ability to levy a tax was terminated. The Council would not be able to submit the property tax levy to the County that next year. Councilman Archambault asked if this would have the affect of guaranteeing the voters that they would not be taxed twice. Mr. McGuire said that was correct. The amendment CARRIED unanimously. Vice Mayor Stevens commented that there were those who did not believe that the proposed property tax would actually pay for fire service. She pointed out that if a majority of the Council enacted some type of property tax, it would then go to the voters for their approval. If the voters approved the property tax, she pledged that this money would be used to pay for fire services for as long as she was in office. Mayor Beydler noted that the Council could say that but the money would go into the General Fund to be budgeted. Mr. McGuire agreed that was true. Councilman Kavanagh said Vice Mayor Stevens's point was well taken and she was 100% correct. Were the Council to allocate more money than what it would cost the town for fire service, then the money could be diverted elsewhere. If the Council were only taxing people for what the fire expense was, then the only way to divert funds would be to basically cancel the fire protection. He did not think that would be an issue. Cindy Bonomolo, 15809 E. Cholla Dr. —She felt it was a minority of the people who had indicated their distrust of her and the Council. She said she trusted the Council and supported a tax increase. Phil Gaziano, Sierra Madre Dr. —He asked the Council to stop talking about spending the money in other areas. The town needed to move on. Bob Travis, 14218 N. Chinook Place—He expressed concern that the Council might be taxing enough. The amended motion CARRIED%kow AGENDA ITEM #12 - COUNCIL ASSESSMENT AND REVIEW OF THE MEETING TO IDENTIFY PROCEDURAL STRENGTHS AND WEAKNESSES AND DISCUSS POSSIBLE IMPROVEMENTS FOR FUTURE MEETINGS. E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session 1-16-03.doc 17 of 18 Mayor Beydler felt the Council had performed admirably. Vice Mayor Stevens said clarifying the speaker card procedure was helpful. Councilman Kavanagh thought things went well, much was accomplished, and attitudes were good with less animosity. Councilman Archambault stated that the dialogue between staff and the Council " went well. He was pleased with the way the meeting and hoped future meetings would run as well. Mayor Beydler said the "R" word, respect, was big time tonight. Staff was smiling and giving good input. He felt the Council would get what they gave out. AGENDA ITEM#13- CALL TO THE PUBLIC. John Turner, 17135 Calaveras — spoke to the law enforcement issue. He recommended that the Marshals Department be allowed to patrol like the Sheriffs Department and not be restricted by the Kavanagh plan. He wanted both departments to be able to prove their professionalism. AGENDA ITEM#14-ADJOURNMENT. Councilman Archambault MOVED that the Council adjourn and Councilman Kavanagh SECONDED the motion, which CARRIED unanimously. The meeting adjourned at 10:40 p.m. TOWN OF FOUNTAIN HILLS By: / Jo eydler,Mayo ATTEST: \-- Cassie B. Hansen, G y Director of Administration/Town Clerk /%' PREPARED BY: / `-`-/--- .i Bev Bender,Executive Assistant CERTIFICATION I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Regular and Executive Session held by the Town Council of Fountain Hills on the 16th day of January 2003. I further certify that the meeting was duly called and that a quorum was present. DATED this 6th day of February2003. .f• ik A.24. ta-A. Cassie B. Hansen, " Director of Administration/Town Clerk E:\BBender\Documents\Current Minutes 2003\Notice of Regular and Executive Session 1-16-03.doc 18 of 18