HomeMy WebLinkAbout2005.1213.TCSM.Minutes TOWN OF FOUNTAIN HILLS
MINUTES OF THE SPECIAL SESSION AND PUBLIC HEARING
OF THE
FOUNTAIN HILLS TOWN COUNCIL
DECEMBER 13,2005
Mayor Nichols called the meeting to order at 5:03 p.m.
ROLL CALL — Present for roll call were the following members of the Fountain Hills Town Council:
Councilman Archambault, Mayor Nichols, Councilman Kavanagh, Councilman Kehe and Councilman
McMahan.Town Attorney Andrew McGuire,Town Manager Tim Pickering, and Town Clerk Bev Bender.
Vice Mayor Schlum arrived at 5:15 p.m.
CALL TO THE PUBLIC
None.
AGENDA ITEM #2— CONSIDERATION OF APPROVING LIFEWISE AS THE HEALTH CARRIER
FOR THE TOWN OF FOUNTAIN HILLS EMPLOYEES IN 2005.
Human Resources Administrator Joan McIntosh addressed the Council relative to this agenda item and provided
a brief overview of the proposed health insurance plan. She noted that the Town had contracted with United
Healthcare for employee health insurance coverage during calendar years 2004 and 2005 and said that the
company had quoted a 23% rate increase for 2006. She added that although some increase was anticipated, and
the Town budgeted for a 20% increase, their insurance broker had been optimistic that the Town could
successfully obtain similar coverage for a much smaller premium. She advised that quotes were obtained from
every other major insurance carrier in Arizona in an effort to maintain quality coverage with reasonable
premiums. The various quotes were taken to the Employee Services Committee for comparison and after
extensive discussion, the Committee developed two recommendations for consideration: (1) Remain with
United Healthcare but with a lesser benefit and a 16% increase over 2005 rates; or (2) Switch to a dual option
plan with Lifewise Health Plan, whereby the Preferred Provider Organization (PPO) benefits remained the same
or better than the Town's current plan with a 10.7% increase over 2005 rates and a Health Savings Account
(HSA) was offered.
Ms. McIntosh informed the Council that the members of the Committee took the recommendations back to their
individual departments for discussion and a majority of employees expressed their desire to contract with
Lifewise for 2006. She added that Human Resources also met with Mr. Pickering to review the various options
and to recommend proposing Lifewise Healthcare for approval by the Council at this meeting. She noted that
the Lifewise Plan was a dual option plan. One option was a PPO, which all benefited employees currently had
and the second option was an HSA. She added that during enrollment, employees could choose whichever plan
worked best for them.
Ms. McIntosh stated that the HSA was a fairly new concept in health insurance and was similar to catastrophic
insurance whereby there was a high deductible ($2,500/single and $5,000/family with the current proposal) and
consequently much lower premiums. She explained.that the plan was based on the members taking an active
role in managing their health care costs. The difference between the monthly PPO premium and the monthly
HSA premium was deposited in a health savings account for employees (to a maximum of $2,500 each
annually). The funds could be used for any out-of-pocket health care expenses. The incentive for employees
was that any unused balance at the end of the year rolled over from one year to the next and could be invested.
When an employee left employment with the Town, the funds went with them. She said that the HSA option
was certainly not a plan for everyone, but worked well for people who did not have a great need to utilize
medical services, yet protected them from catastrophic situations.
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Ms. McIntosh briefly reviewed a table that itemized the Town's annual cost, the employees' annual cost and the
total cost for the current United Healthcare Plan, the quoted renewal of United Healthcare and the recommended
Lifewise PPO Plan. She noted that Lifewise was a 10.7% increase over current rates. She added that the past
experience with companies offering a dual option plan such as Lifewise indicated a 75% enrollment in the PPO
and a 25% enrollment in the HSA. Ms. McIntosh said that she would be happy to respond to questions from the
Council regarding this proposal.
Mayor Nichols asked for a motion regarding staff's recommendation.
Councilman Archambault MOVED to approve Lifewise Health Plan as the health insurance carrier for the
Town of Fountain Hills employees in 2006. Councilman McMahan SECONDED the motion.
In response to a question from Councilman Kavanagh, Ms. McIntosh advised that during the annual enrollment
process, employees would be able to switch between the two options. She added that they could also go out of
the network if they chose but said that there would then be more out-of-pocket expenses involved. She said that
all of the physicians in Fountain Hills were providers and added that overall there were approximately 4200
providers in Maricopa County, including chiropractors, etc. and the company had indicated their willingness to
contact any physician the Town suggested who was currently not on the network. She added that they reported
a high success rate in getting the providers to join the network.
Mayor Nichols commented that the PPO for Lifewise was similar to United Healthcare's PPO.
Councilman Kehe asked whether this would include specialists and whether or not permission would be needed
to use specialists. Ms. McIntosh responded that specialists were included and no special permission was needed
to utilize them.
Mayor Nichols commented on the fact that the reaction of the employees contacted by Ms. McIntosh had been
very favorable. He added that the coverage would cost less and was supported by the employees so he viewed ,..4)
this is as a"win-win" situation.
The motion CARRIED UNANIMOUSLY(6-0).
Mayor Nichols thanked staff for their efforts in this regard.
AGENDA ITEM #3 — PUBLIC HEARING TO RECEIVE COMMENT ON THE PROPOSED
DEVELOPMENT FEE SCHEDULE WITH POSSIBLE DIRECTION TO STAFF.
Mayor Nichols declared the public hearing open at 5:10 p.m. to hear comment on the proposed Development
Fee Schedule.
Town Manager Tim Pickering provided background information relative to the proposed Development Fee
Schedule and noted that development fees were those costs that were paid by new businesses and/or residents
coming into the community because of the cost of growth. He said that streets might need to be widened or
there could be a need for more parks added to the system because of additional residents and this was the basis
behind the fees.
Mr. Pickering stated that since the last meeting with the Council regarding this issue, the Town's Strategic Plan
was adopted and this had narrowed the scope of capital improvements. He emphasized that only capital
improvements could be paid for with development fees and staff had taken out and reduced a number of items
that were in the original Development Fee Study. He added that reducing the capital improvement items in turn
reduced the fees that were being proposed. He noted that the proposed fees for Single Family Residential were
approximately $5,220; Multiple Family Residential were $4,818; Commercial were $4,548 and Industrial were
$1,825. He advised that the proposed residential rate would be a little more than the average of nearby cities,
while the commercial rate would still be below average.
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Mayor Nichols outlined the process that would be followed and said that the public hearing was being held this
evening and another public hearing would take place on January 5th(first meeting in January). He noted that the
two public hearings were required by law. Mr. Pickering added that after those were held, Council adoption
could take place and noted that the fees would not go into effect until March. He said that typically, a large
amount of building permits were applied for prior to the effective date and added that anyone who applied for a
permit before March would pay the reduced rate. Mayor Nichols emphasized that no approval would occur this
evening; this was simply the first of two public hearings that must be held.
Mr. Rick Giardina, Vice President of Red Oak Consulting, highlighted the addendum to their September 2005
Final Report on the Development Fee Study prepared for the Town of Fountain Hills (copy on file in the Office
of the Town Clerk). He said that the addendum, as mentioned by Mr. Pickering, was prepared at the Council's
request based on the results of the recently completed City Council Strategic Plan. He added that the Plan
eliminated a number of future capital improvement projects previously reflected in the fees calculations
contained in the September Final Report.
Following Mr. Giardina's presentation, the Mayor asked whether there were any citizens wishing to speak on
this item. Town Clerk Bev Bender advised that there were none.
Councilman Kavanagh questioned why the City of Phoenix was not included in the figures and Mr. Giardina
responded that Phoenix was not discussed or considered because it was such a large metropolitan area.
Mr. Pickering pointed out the Phoenix had different zones for their development fees and said that it would be
difficult to conduct a comparison. He added that capital costs varied in different parts of their community.
Councilman Kavanagh referred to the calculation for the residential fee and asked how many additional homes
the amount was divided among. Mr. Giardina said that the study extended out to 2025 and the costs were being
spread across approximately 4,600 single-family dwellings, not including the State Trust Land. Councilman
Kavanagh asked when they did the calculation for the $6 million for the park that would be put on State Trust
Land, how many additional homes were added to the 4,600 figure. Mr. Giardina replied that at this time they
did not add any numbers associated with that particular development. Councilman Kavanagh stated the opinion
that they should estimate how many homes were going to be in the State Trust Land and have those homes bear
the burden of the park that was going to be located in their part of the Town. Mr. Pickering said that staff did
not have the projection yet but it would not be difficult to obtain. He stated that if the land was annexed, those
residents would bear the burden of the fees and added that staff was currently working on that and would
provide the Council with information in the future.
Councilman Kavanagh asked whether, for the sake of fairness to residents in Town who would begin to pay the
fee in March, staff would obtain those figures before the fee was actually set. Mr. Pickering expressed the
opinion that they would wait until after the land was annexed before determining any adjustments. He said that
if the land did not become part of the Town, there would be no need for the additional park and there would be
fewer homes.
Councilman Kavanagh concurred and stated the opinion that they should pull the$6 million from the study. Mr.
Pickering said that the money was in there in anticipation of those needs and reiterated that he would be happy
to look at what the impact of the additional densities would be. He said that they should not begin to collect the
monies for the additional homes until everything was properly calculated and Councilman Kavanagh concurred.
Mr. Pickering added that they should know those numbers fairly quickly and that was why they had tried to
work some of it in. He agreed that the extra densities had to be looked at and said staff would pursue that.
Councilman Kavanagh requested that prior to voting on the actual fees that the Council be presented with two
fees, one with and one without. Mr. Pickering and Mayor Nichols concurred with this suggestion. Mr.
Pickering said that perhaps they would adopt one fee if the land is annexed and one fee if it were not.
Councilman Archambault referred to Table 3 and asked why multiple-family residential had less impact than
single-family residential. Mr. Giardina explained that the foundation of the fees was based on trip generations,
which was data compiled by the Institute of Transportation and was based on surveys and trip data. He noted
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that multi-family residential units had less impact on the roadways. Mr. Pickering emphasized that this was
based on each unit and each multi-family unit would pay that amount.
Councilman Kehe commented that infill lots also constituted growth. Mr. Giardina concurred with Councilman j
Kehe's statement that most communities that adopted development fees did not generally have strategic plans
going on concurrently. Councilman Kehe said that the listed community priorities were current and could
change in the future and expressed concern that they might be "shooting themselves in the foot". He noted that
the Town's senior citizen community was going to grow a lot and it was currently at 48% and said they were
going to have problems handling the senior situation. He spoke in support of not precluding options.
Mr. Giardina advised that the Council would need to regularly review the fees and priorities and said that fee
changes could be made based on the consistent updates. He said that they could change them as rapidly as they
wanted as long as they were in accordance with State Statutes, which takes 120 days.
Councilman Kehe stated that the process was time consuming and said that growth would be paid for by current
citizens rather than growth paying for growth because of the delays. He reiterated that the 120-day process must
be followed and added that it should not take 18 months to effect change, it should be completed within a 3-
month period plus the 120 days for adoption. Councilman Kehe questioned whether the inflationary increase in
construction costs should be considered and they should establish a two-year study (one year inflationary and 1
year study).
Councilman Archambault commented on the fact that a Strategic Plan was adopted and said that the Council
was charged with following along with what the citizens of the Town wanted. He said that there was always a
"trade-off' and in this case the Town needed the fees but the citizens did not want the capital improvement
projects so the "trade-off' would be that things compound as they went down the road. The safeguard was that
they got to review the fees every five years so they could adjust them and if the presence of mind at that time
was to include new projects, the citizens would agree to pay for them. He said that citizens had to know that if
they did not want the projects now but did want them down the road, they were going to have to pay more to get „ow)
them.
Councilman Kavanagh said that he would recommend against a 2-year review and said that the Council's policy
had been to not bind future Councils. He added that they could not legally bind a future Council to any action.
He noted that they recently created a commission that would champion the Strategic Plan and said that they
would let the Council know if a review was necessary.
Mr. Pickering noted that development fees were not the only funding source and a lot of the other capital items
residents would be asked to pay for themselves through a sales tax,property tax, or other fee.
Councilman Kehe clarified that he did believe that they should adhere to the Strategic Plan but reiterated that at
this time the residents indicated that they were not willing to pay for certain projects but said that as needs
increased, as they probably would, in order to meet the demands they might have to go back to the community
and said they might need to issue a bond for a particular project. He stated that development fees were not the
only way to raise money but it was a good way and would help the Town deal with future capital,projects that
might appear on the horizon because of growth. He added that he wanted to make sure that they would be in a
position to meet the needs.
Vice Mayor Schlum expressed the opinion that the Council was mandated to review the fees in five years. He
said that it would be a significant assumption to add more CIP dollars in the interim before the next time they
addressed the current five-year plan.
Mayor Nichols thanked everyone for their input and said that the next public hearing will take place on January
5th, 2006.
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AGENDA ITEM#4-ADJOURNMENT
Councilman McMahan MOVED that the Council adjourn and Councilman Archambault SECONDED the
motion, which CARRIED UNANIMOUSLY(6-0). The meeting adjourned at 5:50 p.m.
TOWN OF F ILLS
By
ally chols,Mayor
ATTEST AND
PREPAREDE� BY:
Bevelyn J., eiW r,Town Clerk
CERTIFICATION
I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Special Session and
Public Hearing held by the Town Council of Fountain Hills on the 13th day of December 2005. I further certify
that the meeting was duly called and that a quorum was present.
DATED this 5th day of January 2006.
Bevelyn er, Town Clerk
L
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