HomeMy WebLinkAbout2005.0913.TCWSM.Minutes TOWN OF FOUNTAIN HILLS
MINUTES OF THE WORK STUDY SESSION
OF THE
FOUNTAIN HILLS TOWN COUNCIL
SEPTEMBER 13,2005
Vice Mayor Schlum called the meeting to order at 5:09 p.m.
ROLL CALL:
Present for roll call were the following members of the Fountain Hills Town Council: Vice Mayor Schlum,
Councilman Kavanagh, Councilman Kehe, and Councilman McMahan. Town Manager Tim Pickering, Director
of Parks &Recreation Mark Mayer, Town Clerk Bev Bender, and Joel Theis, representing Red Oak Consulting
was also present.
Mayor Nichols and Councilman Archambault were absent and excused from the meeting.
AGENDA ITEM #2 — PRESENTATION AND DISCUSSION REGARDING ESTABLISHING AND
IMPLEMENTING LIQUOR LICENSE FEES.
Mr.Pickering advised that Accounting Supervisor Julie Ghetti was unable to attend the meeting and therefore he
would provide the overview. He noted that for quite some time the Town has been looking at different revenue
enhancements to ensure that the Town's bottom line was secure for the long-term future. He said that they have
looked at many different revenue sources, such as park and recreation fees, everything from reimbursement for
staff time, and one of the items they were asked to look at was liquor licenses. He explained that they were a
very common fee charged for the ability to serve liquor in Town and noted that most municipalities in the
Valley had an annual feel in place, but the Town of Fountain Hills did not, they simply have an initial
application fee that occurs at the time that a business applies for a liquor license. He said that applicants must
receive approval from both the Town and the State. He advised that staff spent a lot of time on the initial
applications but added that more importantly, the philosophy behind liquor license fees was that when liquor
was served there was the likelihood that over time there were more calls for service, particular in the area of law
enforcement. He stated that the Town of Fountain Hills to date had not had that problem but said it certainly
could occur over time should additional/different establishments open within the Town.
Mr. Pickering discussed the research that staff conducted with a lot of different municipalities in the Valley and
noted that a few businesses had purchased liquor licenses from Fountain Hills and transferred those licenses to
other jurisdictions. He said that they wanted to close that "loop hole". Mr. Pickering added that staff had
developed some procedures to go along with this, such as not allowing liquor licenses to be issued to
establishments located within 300 feet of a church or school and reviewing neighborhood statistics as well as
complaints filed against establishments that are pursuing liquor licenses.
Mr. Pickering explained that there were different types of liquor licenses and said that staff was recommending
that they put different annual fees in place, depending upon whether the businesses were in or out of state
producers, whether they served just beer and wine as opposed to selling all types of alcohol, whether the
establishments were convenience stores versus beer and wine stores, private clubs, etc. He noted that staff has
listed recommended fees for the varied types of licenses. He added that staff had also listed in their report a list
of the application fees that the Town had lost as well as the current number of liquor licenses in place. He stated
that staff had also included copies of a survey of some of the other municipalities (Scottsdale, Mesa, Avondale,
Glendale, Peoria and Gilbert) and outlined some of the charges that they had in place. He pointed out that a
proposed enhanced application process had also been submitted for review and consideration. He further stated
that most of the application fees were in the $200 range except for a transfer fee, which was $150. He reported
L. that the lowest priced annual fee was $500, which would be for private clubs,convenience stores,beer and wine
stores and most of the others are $750. The higher fees were for beer and wine bars, liquor stores, and
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hotel/motels and then the bars that serve all types of alcohol are the highest recommendation at $1200
(annually).
Mr. Pickering noted that in some communities other limits were in place; staff was not proposing to limit the
number of liquor licenses as many other municipalities do and said they were not suggesting that a cap be placed
on the number of licenses. He emphasized that staff was simply proposing that an annual fee be charged along
with an application fee. He indicated his willingness to respond to questions regarding this issue.
In response to a question from Councilman Kavanagh, Mr. Pickering confirmed that the Town currently does
not charge any annual liquor license fees and added that the initial application fee was $200. He stated that
Fountain Hills was "behind in the curve" in this area.
Councilman Kavanagh requested that Mr. Pickering explain the issue of transfers. Mr. Pickering said that for
example if someone wanted to open a grocery store in the Town of Gilbert, where an annual fee of$500 was
charged for the license, instead of purchasing the liquor license in Gilbert, the business owner would purchase it
from the Town and then pay a transfer fee to transfer the license to Gilbert. He noted that the transfer fee was
still less than the difference in cost between the two towns to purchase the license. Mr. Pickering said that he
was not sure whether the business would then pay whatever annual fee was charged in Gilbert to that town or,
because the license was issued in Fountain Hills, would not be subject to an annual fee because there were none
in place at this time. He said that staff would research this issue and report their findings to the Council. He
added that the transfers may be occurring because it was a way to a avoid paying a higher application fee and/or
higher annual fee and it may be because there were "caps" in place in other municipalities and businesses were
trying to find a way around the rules and paying the higher fees.
Councilman Kavanagh questioned whether businesses also transfer licenses from other municipalities to the
Town and Mr. Pickering responded that they have not seen this occur.
Councilman Kehe asked why the transfer fee was set at $200 and Mr. Pickering said that he did not know the
history of that fee but added that the Town's liquor license application fees have been in place since the Town
incorporated and said that they had never charged an annual fee for the licenses. Councilman Kehe clarified that
he wanted to know why staff's report reflected a transfer fee of$150 rather than $200 and Mr. Pickering replied
that that was a good point.
Councilman Kavanagh commented that if someone owned a business in Town and then decided to move to
another community, he would not have a problem with a transfer but stated that he did not like the idea that
people were using the Town as a "transfer service" and added that he would like to see this practice stopped.
Mr. Pickering clarified that the businesses actually open a business in Town but then open additional branches
and buy all of the licenses from the Town rather than the municipalities in which they really intend to conduct
their business.
Councilman Kavanagh noted that staff was recommending that the initial application fee of $200 remain
unchanged and stated that the only change would be the implementation of an annual fee. He expressed the
opinion that the Town should be recouping its liquor license administration costs rather than charging another
secret tax and asked what the administrative costs are. Mr. Pickering replied that the minimum that has been
recommended was $500 and noted that the application process was outlined in the memo provided to the
Council (paperwork, posting, background checks, etc.) and requested justification for charging more for annual
renewals than initial applications when less administrative work was involved. Mr. Pickering pointed out that
everyone was required to pay the initial fee when they apply for the licenses.
Councilman Kavanagh advised that his only concern regarding the list was #6, "Law enforcement, by nature,
had to spend time enforcing liquor license laws and violations. Frequently, additional law enforcement-prone
activity was required around liquor establishments." He asked how many liquor license violations had been
written in the Town and Mr. Pickering responded that staff could conduct research on each of the licenses but j)
emphasized that it was more of a philosophy than a current existing problem. He noted that other jurisdictions
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had seen problems develop and the ordinance, which would be in place for quite some time, would address any
issues that might arise.
Councilman Kavanagh noted that the Town did not charge an additional fee for law enforcement calls to
Name residences and said that he was not sure that it was fair to tell businesses that serve liquor that they need to pay
for additional law enforcement activity because they supposedly would require this service. He added,however,
that if there was a certain amount of Deputy time assigned to alcohol beverage control enforcement, then he
could see calculating and assigning a certain cost but the cost for a police car responding to a disorderly person
call should be picked up by the Town's general taxes.
Mr.Pickering said that those costs would be picked up by the Town's general taxes and added that he was trying
to explain the historic nature of liquor licenses, not necessarily in Fountain Hills, but rather why annual liquor
license fees exist in general in other areas.
Councilman Kavanagh requested that staff segregate out the actual dollar figure associated with#6(the six tasks
that were used to compute the costs). Mr. Pickering advised that the six tasks do not have an actual computation
and explained that philosophically staff put down what potentially could occur—more law enforcement needs at
those establishments.
Councilman Kavanagh commented that that brings them back to the administrative tasks involved in#1 thru#5
and Mr. Pickering concurred and said that the numbers are based on the Town's competition, what other
municipalities charge rather than the paperwork to go from one type of license to another. Councilman
Kavanagh reiterated that the annual fee should reflect the additional monetary costs that processing the annual
renewals would cost the Town. Mr. Pickering noted that staff broke down the numbers the way other
municipalities have broken them down. Councilman Kavanagh said that he would like to start at zero and just
pass on the actual costs.
Councilman McMahan advised that he was philosophically opposed to the entire proposal at this time. He
added that he was opposed to placing any additional financial burden on any Town business at this time. He
said that certainly the situation surrounding the restaurant/lounge area was very precarious and noted that they
have had a number of those establishments go out of business and added that he did not want to give them any
more problems. He pointed out that he ran for office on a campaign of "no new taxes" and said that this also
means no new revenue enhancements.
Vice Mayor Schlum stated that he was inclined to reflect on the Town Council's goal of being more business
friendly and agreed with the comments made by Councilmen Kavanagh and McMahan. He added that what has
brought the issue to light was staffs desire to "close the loop hole" and figure out how to avoid allowing the
Town to act as a processing mill for licenses. He stated the opinion that the first fair approach would be to at
least recuperate the Town's costs. He said that this should occur before consideration be given to putting the
figures that staff had put together in place for the annual fees. He emphasized that he was definitely sensitive to
all of the businesses that would operate under any of the series of liquor licenses and added that what stands out
right away was the restaurants. He stated that he would like business owners to pay their fair share but not
anything more than that. He asked whether the businesses paid the fee when they transferred licenses in or out
and Mr. Pickering replied that staff would conduct additional research on the transfer issue for future
presentation to the Council.
Councilman Schlum commented that the Council, in keeping with their goals, was looking to be friendly to
businesses and added that he was hesitant to increase the fees to the amounts proposed but would like to stop the
transfers and eliminate staff to having to do all the work just to have the licenses go elsewhere.
Councilman Kehe said that they have to pay attention to the fact that the Town was currently way below the fees
caw charged by other municipalities and did not charge any annual fees. He agreed that they could debate the
amount of the annual fees but noted that they had fiscal problems coming up and he believed they had to be
addressed. He added that when they discussed this issue a year ago, they said that they were going to close the
existing "loop holes" and they have done so to date by increasing the tax on apartment rentals, etc. He stated
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that although he could see where Councilman McMahan was coming from as far as supporting local businesses,
he also believed that they had to pay attention to their revenue sources and ensuring that their fairness policy
stretched across the entire board and not just to one element of the business community.
Councilman Kavanagh said that as far as the transfers, he would like the Town Attorney to look into whether si)
they could make their transfer fee(which could be increased) whatever they decide their regular fee should be or
the fee charged by the municipality they were transferring the license to, whichever was greater, to deter the
business owners' incentive to use Fountain Hills as their licensing source before moving on to other
communities.
Mr. McGuire said that he was not sure he was comfortable with having a fee that was not supposed to be a tax;
one that was flexible in its amount. He added that if they were going to implement a fee that had some bearing
on the administrative burden on the Town for having the transfers, and then they should select a set fee and keep
it at that amount. He stated that using another municipality's number as some sort of flexible deterrent might
take it out of a"fee"category and place it in a"tax"category. He added that if an administrative burden existed,
that could be addressed by a fee, and expressed the opinion that this would be the fair and defensible way to do
it.
Councilman Kavanagh commented that he wanted to try to avoid allowing the Town to become a "magnet"
because surrounding communities were raising their fees for revenue enhancement purposes. He requested that
Mr. McGuire consider the issue and try to come up with some alternative ideas.
Councilman McMahan advised that his position, as stated, was for this year only and said that as the business
climate improved and more and more businesses opened and become more successful and prospered, next year
their position could change. He cautioned against being premature on this issue, particularly in view of the
current economic situation.
Vice Mayor Schlum noted that staff would conduct additional research in response to the various questions
posed by the Council and bring their findings back to the Council for additional consideration. Mr. Pickering
concurred that staff would pursue this matter but asked their indulgence time wise, since the issue was not the
Town's top priority and based on the fact that Ms. Ghetti was currently on sick leave. He said that they should
have the additional information ready to present in approximately one or two months.
Councilman McMahan reminded everyone that the businesses were producing sales tax revenues upon which
Town government functions. Mr.Pickering reported that 50% of the Town's revenue came from sales tax.
Vice Mayor Schlum thanked the Council and staff for their input.
AGENDA ITEM #3 — PRESENTATION AND DISCUSSION REGARDING CHANGES TO THE
CURRENT DEVELOPMENT FEE SCHEDULE.
Mr. Pickering advised that this was another area where staff was attempting to close "loop holes" and said that
the goal was to see where the Town of Fountain Hills stood as far as its current development fee schedule
compared to the surrounding communities. He referred to a copy of a memo that was distributed to the Council
that reflected the Town's various development fees as well as the average for the Valley, which was
approximately $8,600. He explained that development fees were charged when new homes are built so that
existing residents were not paying for the increase in services caused by the new residents (streets, added
police/fire services,parks,etc.). He noted that the theory behind the fees was to"let growth pay for growth".
Mr. Pickering commented that the Council previously approved a contract between the Town and Red Oak
Consulting to complete a Development Fee Study and noted that the study had been completed and the
consultant has provided information relative to their findings. He advised that their consultant would provide 10.000
the Council with a brief overview of what their research had determined and what the results of the study
indicated.
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y Mr. Joel Theis thanked the Council for their patience in awaiting the results of the study and indicated his
intention to highlight a brief PowerPoint presentation that would outline all of the areas that his firm looked at in
order to determine the results outlined in the Council's packets. (For detailed information please refer to the
Le consultant's report on file in the Office of the Town Clerk.)
Mr. Theis advised that they had obtained a copy of the Town's recently approved Capital Improvement Plan and
sat down with staff to identify the growth-related projects, which were a key element in developing the fees. He
stated that his firm was charged with updating existing development fees and looking at two new categories of
fees, the Library and Museum fee and the Fire and Emergency fee. He said that a key element of the process
was to ensure that the fees covered a proportionate share of the capital costs for infrastructure. He noted that his
firm submitted a report last week that explains quite a bit of the detail used in calculating the fees and said that
the results were taken from that report with one exception that he discussed earlier with the Council, the Parks
and Recreation fee, which, since the report was submitted, had increased to $6,492 from$2,469. He explained
that they had looked at a different approach and arrived at a different fee. He reported that they were looking at
a total of $9,238 for a new single-family residential dwelling unit, compared to the current $3,548 fee, which
reflects the capital improvements that would be required to provide the same level of service for new residents
that was being provided to existing residents.
Mr. Theis stated that they also calculated non-residential dwelling fees in two categories, commercial and
industrial for each fee category that those apply to. He added that in the streets category, they broke them out
into two fee categories through the use of traffic generation data that indicates that more trips were generated by
commercial facilities than industrial facilities (the basis for a higher commercial versus industrial fee).
Mr. Theis outlined the various fees included in the report and noted that they reflect that Fountain Hills would
fall in the middle of the spectrum when it came to fees being charged by the various municipalities. He said that
the figures contained in the report represent the highest justifiable fees.
Discussion ensued relative to the various assumptions and methodologies used in preparing the report;
residential and commercial data; the distribution of land use; the fact that although the consultant looked at the
State Trust Land, which at this point is five years in the future and was therefore excluded from the current
study; the fact that the Town was mandated to look at it development fees every five years and staff's opinion
that it would be premature to include it on the assumption that the land would be annexed into the Town; cash
flow and funding needs; debt issuance and repayment; growth related capital improvements and the total dollars
spent on each fee category over a 20-year period; calculations for the Community Center; the fact that the
Town's General Government facilities were calculated using the hybrid fee (average) calculation approach; fee
calculation methods and the fact that current fees were developed on the "buy-in" approach; a "cash flow"
approach utilized by the consultant to ensure that all of the capital projects are paid for by the end of the 20-year
period; the non-growth portion of the CIP; the fact that the Senior Center may be considered an "enhancement
of services" and the proposed methodology relative to fees; the fact that the fees would pay for approximately
half of the total new capital needs staff anticipates for the future and the fact that growth creates the need for
more space.
Mr. Theis stated that at this point he was calling the report a "draft report" and said that a final report would be
considered by the Council on October 6th and at that time a Notice to Adopt Fees would be voted upon. He
advised that this would start the "clock ticking" as to when the fees would be effective and noted the 60-day
waiting period. He added that a public hearing could be scheduled for December 5th to obtain citizen input and
the Council could decide whether to adopt the fees or revise them based on the input received. He clarified that
if the Council decided at the December 5th meeting to just adopt 90% of the fees, that action would not start the
"clock ticking" again; the report had been issued and it could be used as a basis to limit/revise the final fees
assuming they were based on the final report. He advised that if approved by the Council, the fees would go
into effect on March 19, 2006.
In response to a question from Councilman Kavanagh, Mr. Theis said that they had not assumed any type of
rebate. Councilman Kavanagh said that if the Town was to annex the State Trust Land and if they wound up
with a couple of thousand additional residences, he would like to know whether that action would significantly
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lower a lot of the fees. Mr. Theis responded that they would have to look into that particular issue as far as the
fees and commented that some fees would go down because the Town was adding more residents who were
sharing the same facilities but other fees would go up.
Mr. Pickering added that if the amenities went up, for example, a large park was developed that was not ,§101)
calculated in the original Capital Improvement Program, the cost may increase. Councilman Kavanagh noted
that each fee would have to be adopted separately and said that he was concerned because items like the General
Government fee would take a downturn because additional residents would be sharing the cost. Mr. Pickering
agreed and stated if a park were developed,the bottom line would probably go up because of that large expense.
Councilman Kavanagh questioned whether they should wait to see what happens with the State Trust Land
annexation so that the calculations would not have to be redone. He also asked whether the answer was close
enough to justify waiting or if they are far enough down the road that they will not be redoing the study again in
the next six months because of the State Trust Land. Mr. Pickering expressed the opinion that they were far
enough down the road and added that staff originally thought about that. He added that they were far enough
along to ensure that they would get a much better handle on the situation, especially the number of households,
if they proceed and said they did not know what the number of households would be and he was not comfortable
guessing what the development fees should be with the State Trust Land because there were too many
unknowns. He stated that there would be sufficient time to determine what the actual costs would be and
pointed out that the numbers would also dictate whether items like a new fire station was needed. Mr. Pickering
expressed the opinion that the State Trust Land Development Fee will be higher, not lower, for businesses. Mr.
Pickering estimated that they were still a year or two away from knowing what to do with development fees
should the State Trust Land annexation occur.
Councilmember Kehe commented that if they look at it in the most simple terms, numerous studies had shown
that residential development never pays for itself, so the idea that if they get"X number of homes built as part of
the State Trust Land annexation at some point, they would still not pay for themselves. He added that that cost
was going to have to be spread out and paid by everyone who was here now (unless there were significant
development fees in place). He stated the opinion that in the most fundamental terms, growth should be asked „tif)
to pay for what the result of that growth in terms of capital needs, etc. He noted that at the current time the
Town was not recovering a fraction of the cost ($3400). He said that growth and the costs associated with
growth should be paid by the factors that caused the growth. Mr. Theis stated that the goal was to have them
pay a proportionate share of the growth-related costs.
Councilman Kavanagh pointed out that the Town had another development fee that it did not call a development
fee, the construction sales tax. Mr. Pickering advised that development fees were a short term solution to the
capital and long term they were going to have to maintain it. This was just a portion of the puzzle.
Vice Mayor Schlum commented that additional discussion on this issue would occur prior to any decision-
making taking place.
In response to a question from Councilman Kavanagh relative to parks, Mr. Mayer advised that the Town was
significantly below level as far as the number of parks based on population and anticipated getting farther
behind as the Town moves toward build-out. He noted that they were fairly level with community parks but
were really lacking in neighborhood parks, both acreage wise and location wise. He added that if they included
State Land, they would basically need to double the parks area because they would be deficient in both
community and neighborhood parks.
Additional discussion ensued relative to the methodology used in computing fees in the parks area; the fact that
the standards (not guidelines) are based on minimal standards; the fact that there would be a need for another
major park if the State Trust Land annexation moves forward and at build-out to accommodate some of the
major leagues in Town; the fact that the Parks and Recreation portion of the fees were over 50% of the actual
total fee, this would require additional study possibly at the next meeting; a request from Councilman Kavanagh
that staff provide a breakdown of the one main park and how much the smaller parks costs; the Vice Mayor's
comment that they were not including State Trust Land into the picture and if the land was given to them, they
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would not have the costs associated with acquiring new and or expanding existing park lands; Councilman
Kavanagh's comment that people were fickle in terms of what they want and the fact that a significant amount
of money for the Town's current parks came from Heritage Grants and matching State funds; Mr. Pickering's
comment that when the Council reviews the Development Fees in the future(five years or whatever was decided
upon), donated land may drastically reduce the fees ;the importance of not assuming that the Town was going to
get the land for free; and a request from Councilman Kavanagh that staffs research include data relative to how
much of the funding used for the Town's parks came from Heritage Funds versus from the residents' pockets.
Vice Mayor Schlum thanked Mr. Theis for his presentation and said that the Council had much to consider.
Councilman Kehe commented that at the Council's goal-setting retreat in January, one of the seven top goals
was the expansion of the Town's parks' system to meet the current needs. He added that in the Strategic Plan
process so far, out of all the choices that could have been made after two Town Halls, a Youth Visioning
Institute and interviews with key community leaders, two of the top ten choices were fulfilling the needs of the
parks' system. He said that he would caution the Council against saying that they do not want to go with that
because the people were saying that this was the direction in which they want to head.
Vice Mayor Schlum also thanked Council and staff for their input.
AGENDA ITEM#4—ADJOURNMENT.
Councilman Kavanagh MOVED that the Council adjourn and Councilman McMahan SECONDED the motion,
which CARRIED UNANIMOUSLY. The meeting adjourned at 6:48 p.m.
TOWN OF FOUNTAIN HILLS
Lov By
y hlum,Vice Mayor
ATTEST AND
PREPARED BY:
Bevelyn J. daejtii. )-2;'4
wn Clerk
CERTIFICATION
I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Work Study Session
held by the Town Council of Fountain Hills on the 13th day of September 2005. I further certify that the
meeting was duly called and that a quorum was present.
DATED this 6th day of October 2005.
Bevelyn J. derown Clerk
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