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HomeMy WebLinkAbout2006.0119.TCREM.MinutesTOWN OF FOUNTAIN HILLS MINUTES OF THE REGULAR AND EXECUTIVE SESSION OF THE FOUNTAIN HILLS TOWN COUNCIL January 19, 2006 Mayor Nichols called the meeting to order at 5:11 p.m. AGENDA ITEM #1 — VOTE TO GO INTO EXECUTIVE SESSION: PURSUANT TO A.R.S. 38- 431.03.A1, FOR DISCUSSION OR CONSIDERATION OF EMPLOYMENT, ASSIGNMENT, APPOINTMENT PROMOTION DEMOTION DISMISSAL SALARIES DISCIPLINING OR RESIGNATION OF A PUBLIC OFFICER, APPOINTEE OR EMPLOYEE OF ANY BODY, EXCEPT THAT, WITH THE EXCEPTION OF SALARY DISCUSSIONS, AN OFFICER, APPOINTEE OR EMPLOYEE MAY DEMAND THAT THE DISCUSSION OR CONSIDERATION OCCUR AT A PUBLIC MEETING. THE PUBLIC BODY SHALL PROVIDE THE OFFICER APPOINTEE OR EMPLOYEE WITH WRITTEN NOTICE OF THE EXECUTIVE SESSION AS IS APPROPRIATE BUT NOT LESS THAN TWENTY-FOUR HOURS FOR THE OFFICER, APPOINTEE OR EMPLOYEE TO DETERMINE WHETHER THE DISCUSSION OR CONSIDERATION SHOULD OCCUR AT A PUBLIC MEETING. (SPECIFICALLY STRATEGIC PLANNING ADVISORY COMMISSION APPLICANT INTERVIEWS WILL BE CONDUCTED.) PURSUANT TO A.R.S. 38-431- 03AA, DISCUSSION OR CONSULTATION WITH THE ATTORNEYS OF THE PUBLIC BODY IN ORDER TO CONSIDER ITS POSITION AND INSTRUCT ITS ATTORNEYS REGARDING THE PUBLIC BODY'S POSITION REGARDING CONTRACTS THAT ARE THE SUBJECT OF NEGOTIATIONS, IN PENDING OR CONTEMPLATED LITIGATION OR IN SETTLEMENT DISCUSSIONS CONDUCTED IN ORDER TO AVOID OR RESOLVE LITIGATION. (SPECIFICALLY, COX COMMUNICATION.) Councilmember McMahan MOVED to convene the Executive Session and Vice Mayor Schlum SECONDED the motion, which CARRIED UNANIMOUSLY. Mayor Nichols recessed the Executive Session at 6:07 p.m. AGENDA ITEM #2 — RETURN TO REGULAR SESSION Mayor Nichols reconvened the Regular Session at 6:30 p.m. INVOCATION — Pastor Tom Daly, Trinity Lutheran Church. ROLL CALL — Present for roll call were the following members of the Fountain Hills Town Council: Councilmember Archambault, Mayor Nichols, Councilmember Kehe, Councilmember Kavanagh, Vice Mayor Schlum, and Councilmember McMahan. Town Attorney Andrew McGuire, Town Manager Tim Pickering, Assistant Town Manager Ellen Pence, Finance Director Julie Ghetti, Economic Development Specialist Megan Griego, Town Clerk Bev Bender and Rick Giardina, Red Oak Consulting were also present. MAYOR'S REPORT (i) The Mayor read a proclamation declaring February 2, 2006, Pony Express Day. The Mayor proclaimed February 2, 2006, Pony Express Day in the Town of Fountain Hills and invited all Town residents and visitors and residents and visitors of surrounding areas to join in the festivities and dress western to commemorate this part of their history of the West. (ii) The Mayor recognized the outgoing Parks and Recreation Commissioners, the Community Center Advisory Commissioners, and the Public Safety Advisory Commissioners. ZACouncil Packets\2006\R2-2-06\Minutes 01-19-06.docPage 1 of 15 Mayor Nichols, speaking on behalf of himself, the Town Council, staff and the citizens of Fountain Hills presented plaques to the outgoing Parks and Recreation Commissioners, Mike Hoard, Mark Smith and Dick Smith, to outgoing Community Center Advisory Commissioner Peg Tibbetts; and to Dr. Paul Kolwaite, outgoing Public Safety Commissioner, as a token of their appreciation for their years of service. He thanked them for their willingness to serve. CALL TO THE PUBLIC None. CONSENT AGENDA AGENDA ITEM #1 — CONSIDERATION OF APPROVING THE TOWN COUNCIL MEETING MINUTES FROM TANUARY 5, 2006. AGENDA ITEM #2 — CONSIDERATION OF RESOLUTION 2006-07, ABANDONING WHATEVER RIGHT TITLE OR INTEREST THE TOWN HAS IN THE CERTAIN PUBLIC UTILITY AND DRAINAGE EASEMENTS LOCATED AT THE NORTHERLY PRPERTY LINE OF PLAT 505D, BLOCK 2, LOT 51 (15516 E. GRASSLAND DRIVE) AS RECORDED IN BOOK 158 OF MAPS, PAGE 41, RECORDS OF MARICOPA COUNTY, ARIZONA. EA05-24 (TUCKER). AGENDA ITEM #3 — CONSIDER APPROVING A CONTRACT WITH ARDAVIN BUILDERS, INC. IN THE AMOUNT OF $134,000.00 FOR FOUNTAIN PARK PHASE IH IMPROVEMENTS (PICNIC RAMADAS). AGENDA ITEM #4 — CONSIDERATION OF A REVIEW OF THE SPECIAL USE PERMIT, PREVIOUSLY ISSUED FOR AN OUTDOOR EXERCISE AND PLAY AREA FOR "ZUSIA'S DOGGIE DAYCARE AND SALONSPA," LOCATED AT 16650 PALISADES BLVD., SUITE #I10, AKA THE CROSSINGS AT FOUNTAIN HILLS AKA LOT 2 BLOCK 3 PLAT 102. CASE #SU2005- 01. AGENDA ITEM # 5 — CONSIDERATION OF APPROVING AN AMENDED PLAT FOR GOLDEN EAGLE ESTATES LOTS 12 AND 13 TO REPLAT OF LOTS 12 AND 13 GOLDEN EAGLE ESTATES FINAL PLAT. CASE #S2005-24. LICENSE FOR THE AMERICAN LEGION POST #58 SCHEDULED FOR JANUARY 27. AGENDA ITEM #7 — CONSIDERATION OF APPROVING A SPECIAL EVENT LIQUOR LICENSE FOR THE AMERICAN LEGION AUXILIARY UNIT #58 SCHEDULED FOR FEBRUARY 2, 2006 (PONY EXPRESS DAYS). AGENDA ITEM #8 — CONSIDERATION OF APPROVING AN EXPENDITURE THROUGH THE WESTERN STATES CONTRACTING ALLIANCE, IN THE AMOUNT OF $254472.62, TO HEWLETT PACKARD COMPANY FOR LAPTOP COMPUTERS, WORKSTATIONS AND SERVERS. AGENDA ITEM #9 — CONSIDERATION OF APPROVING THE SETTLEMENT OF A FRANCHISE FEE AUDIT IN AMOUNTS DISCUSSED IN EXECUTIVE SESSION AND AUTHORIZING THE TOWN MANAGER TO EXECUTE LETTER. 4 ZACouncil Packets\2006W-2-06Winutes 01-19-06.docPage 2 of 15 Councilmember Archambault MOVED to approve the Consent Agenda as read and Councilmember McMahan SECONDED the motion. A roll call vote was taken with the following results: Councilmember Kehe Aye Vice Mayor Schlum Aye Councilmember Kavanagh Aye Mayor Nichols Aye Councilmember McMahan Aye Councilmember Archambault Aye The motion CARRIED UNANIMOUSLY (6-0). ACTION AGENDA AGENDA ITEM #10 - CONSIDERATION OF APPOINTING SIX CITIZENS TO FILL OPENINGS ON THE NEWLY CREATED SENIOR SERVICES ADVISORY COMMISSION. Mayor Nichols recommended the following appointments to fill openings on the newly created Senior Services Advisory Commission: Walt Dunne, Myrle Erlich, John O'Flynn, Barbara Patterson - Whitehead, Edward Cisak and Dan Coughenour. Mayor Nichols MOVED to approve the above listed citizens to the Senior Services Advisory Commission and Councilmember Kehe SECONDED the motion, which CARRIED UNANIMOUSLY (6-0). AGENDA ITEM #11 — CONSIDERATION OF AWARDING THE BID FOR BANKING SERVICES TO JP MORGAN CHASE (BANK ONE). Mr. Pickering stated that Finance Director Julie Ghetti would provide an overview of this agenda item. Ms. Ghetti addressed the Council and advised that in November 2005 the Town issued a Request for Proposal (RFP) to the banks in Fountain Hills and advertised on the Town's website for banking services for a three-year period of time. Two banks responded, JP Morgan Chase (Bank One) and Wells Fargo. She noted that both proposals were very attractive. Staff reviewed the bids and prepared an analysis comparing fees that the Town incurred on a regular basis. The bids were reviewed by the Town's investment banking team at the request of staff for additional input. As a result of the analysis, staff's recommendation was that that Town award the bid for banking services to JP Morgan Chase. Ms. Ghetti advised that staff was looking forward to the partnership with JP Morgan Chase and improving the Town's E-banking services and E-customer services for the citizens. In response to a request from Councilmember Kehe, Ms. Ghetti explained that the RFP proposal was quite extensive as far as the services the Town was looking for and said that staff expected to see improved service. She added that the qualifications outlined in the proposal were better than what was currently being received at a lesser price. Vice Mayor Schlum MOVED to approve the Mayor's recommendations and Councilmember McMahan SECONDED the motion, which CARRIED UNANIMOUSLY (6-0). ZACouncil Packets\2006\R2-2-06\Minutes 01-19-06.docPage 3 of 15 AGENDA ITEM #12 — PRESENTATION AND CONSIDERATION OF APPROVING THE DESIGN FOR THE AVENUE OF THE FOUNTAINS ENHANCEMENT PROJECT — PHASE I. Town Manager Tim Pickering advised that the Town's Economic Development Specialist Megan Griego has been working on this project along with the Public Works Department and a team of designers and would provide the Council an overview of Phase I, the sidewalk, lights, shade structures, etc. Ms. Griego addressed the Council and noted that she served as Project Manager for the Avenue of the Fountains Enhancement Project. She noted that Ken Callwell was also present from DLB Group, the consultants who were hired to assist staff in illustrating and developing the design based on the conceptual plan that was approved in 2004. She noted that the design was set around a sense of water and place and said that in 2004, the Town Council approved the concept plan for a sense of water and highlighted a brief slide presentation that showed how the project moved from the conceptual phase to the design phase. Ms. Griego advised that the project would be completed in two phases and said that this evening Phase I would be addressed. Phase I will improve the north and south sides of the Avenue of the Fountains between La Montana and Saguaro and would include staining the sidewalks and sand blasting a design into the concrete; a complete lighting package with street lights with double -sided downers; and two large shade structures at the mid -block location with ample seating under them; accentuating the planters that currently existed by adding more vegetation and uplights to the palms and plenty of benches, trash receptacles and bike racks. She said that the overall concept, in addition to being a water theme, was also to be a pedestrian hub of activity in the downtown, particularly on Avenue of the Fountains. Ms. Griego explained that three different stain colors would be used and discussed the proposed banners, lighting, and electrical outlets located at each palm tree that would expand opportunities for holiday lighting. She discussed the two shade structures that would be located at the north side of the Avenue and noted that they would have a "wavy canopy" in keeping with the water sense theme. She outlined the various pedestrian amenities (benches, trash receptacles, bike racks, water fountains, etc.) and plantings that offer shade but would have canopies that would not detract from the businesses. Ms. Griego commented that Phase II would occur in the future and noted some of the amenities that might be included in that phase. She advised that staff was seeking Council's support to move forward with the construction of Phase I on the Avenue of the Fountain's Enhancement Project. She noted that the funding for Phase I had been already budgeted for in the 2005-2006 Fiscal Year and construction documents had been received. In response to a request from Mr. Pickering, Ms. Griego clarified that the improvements on the south side would only be in front of the Town Hall while on the north side, the improvements would be up and down the Avenue. Ms. Griego added that the different elements in front of the Town Hall would "mirror" the north side of the Avenue. Councilmember Archambault MOVED to approve the design as presented and Councilmember McMahan SECONDED the motion. ZACouncil Packets\2006\R2-2-06\Minutes 01-19-06.docPage 4 of 15 i Councilmember McMahan requested input relative to the proposed timeline and Ms. Griego noted that based on approval of the design this evening, staff would like to start construction in March 2006 and added that the target completion date was June 30, 2007. Councilmember McMahan asked whether electrical conduits would be located under the sidewalk on the north side and Public Works Director Tom Ward stated that one of the positive points associated with this proposal was that they would be able to remove all of the electrical wiring from the palm trees and a conduit system would be provided. He added that they were looking at speakers on the light poles themselves and speakers on the palm trees would no longer be required. He said that the project overall would have a very clean look and the in -ground conduit for electrical was a very positive move. In response to a question from Councilmember Archambault regarding Plat 208, Ms. Griego responded that the property behind the shade structure, just north of it, was owned by Plat 208 and stated that the owners would be responsible for landscaping that property. Mayor Nichols announced that on the rear wall, another view was displayed. Ms. Griego confirmed that on the south side they were only doing in front of the Town Hall and said that they anticipated that the developer or person who owns the other piece of property on the south side would do the sidewalks and copy what has been done. Town Clerk Bev Bender stated that two speakers wished to address the Council regarding this agenda item. Bruce Tominello, 16208 S. Sunridge, said that he thought the design was great and long overdue. He asked what the plan of action was to ensure that existing businesses on the north side of the Avenue of the Fountains would not be negatively affected in terms of people being able to access them during the construction period. John McNeill, 14508 N. Creosote Court, commented that the project appeared to be a good one but he did not believe it could be viewed in the light of just Phase I. He said that the project was originally going to cost $800,000 and has escalated to over a million dollars but was really over a $5 million dollar project when they added the rest of the features outlined. He urged the Council to delay any wasteful expenditure of tax dollars on this project and submit it to the new Strategic Plan Commission to get a recommendation that reflected the desires of the citizens. Mayor Nichols thanked the speakers for their input. In response to a request from Councilmember Kavanagh, Mr. Pickering stated that he would defer to the Project Manager because a very involved plan was in place to keep the businesses updated on access and efforts to mitigate impacts on businesses. Mr. Pickering addressed the issue of finances and noted that they were not spending $5 million; that would be the decision of a future Council. He emphasized that they were only spending what had been budgeted and noted that several public hearings had been held on this issue and tremendous input was obtained in September 2004. He stressed the importance of noting that the reason for the difference in the increase in cost was not because of the project but rather where the project is located. He added that it was located in front of Town Hall and part of the Town Hall project. There was an alternate to do the same design on the north and south side and because the Town Hall was built, they increased the size of the project and it went from $800,000 to $1.1 million; the project has been expanded. ZACouncil Packets\2006\R2-2-06\Minutes 01-19-06.docPage 5 of 15 Ms. Griego discussed business access in the area during the construction period and stated that staff devised a mitigation plan, part of which had already been put into effect. She advised that educational seminars where the owners could learn different marketing tactics were being offered and staff has discussed issues such as temporary signage that would point citizens to the various businesses and identify that the businesses remain open. She noted that similar mitigation plans have been successful in many other cities and towns, such as Phoenix with the light rail project and Glendale with improvements on Grand Avenue. She clarified that the construction dates previously provided were incorrect and advised that construction for Phase I would begin March 2006 and end June 2006, a three-month project. Councilmember Kavanagh asked whether any money for this project would be taken from funds that would ordinarily be used for other purposes. Mr. Pickering responded that the bulk of the funding would come from the downtown fund, a special fund set up whereby 1/101h of a percent of the sales tax was used strictly for downtown amenities. He added that the improvements to the sidewalks in front of Town Hall would be derived from capital improvement funds that were set aside for Town Hall (landscaping, parking shade structures, etc.). He confirmed that all of the money they spent so far and planned to spend comes from the 1/loth percent of sales tax revenue. Councilmember McMahan commented on the fact that several public hearings were held to inform the citizens regarding the project and solicit their input. He added that the project had been discussed throughout the community for several years, was written about in the newspaper many times and the project was one that the public should be very aware of. He stated that the project hopefully would be the "Kierland Commons of Fountain Hills". Mayor Nichols called for the vote. The motion CARRIED UNANIMOUSLY (6-0). AGENDA ITEM #13 — CONSIDERATION OF ORDINANCE 06-06, AMENDING THE TOWN CODE, CHAPTER 7, BUILDING AND BUILDING REGULATIONS, ARTICLE 7-10, RELATING TO COMMERCIAL DEVELOPMENT FEES. Mr. Pickering provided the Council with an overview of this agenda item and stated that Mr. Rick Giardina with Red Oak Consulting, was present to speak to this item. He added that the Council adopted the residential rates and were now concentrating on commercial development fees. He advised that at the last meeting the Council requested that staff provide a comparison of other communities and said that he contacted the Project Manager and asked him to divide the commercial fees in a different manner. He said that previously there was only one commercial fee and he asked the Project Manager to break that down by different types of businesses (restaurants, offices, hotels, etc.) and stated that this information would be presented to the Council this evening. He advised that staff could not recommend some of the resulting figures but said that it was additional information for the Council to consider. He added that the Council was also provided with some background stories/studies that were completed. Mr. Giardina highlighted a brief power point presentation for the benefit of the Council and audience that addressed street fees that could be assessed based on several other categories as opposed to a single non-residential category and presented additional survey information that Council requested. He noted that they had previously not included the communities of Chandler and Phoenix, and that information was now provided. (Presentation on file in the Office of the Town Clerk.) ZACouncil Packets\2006\R2-2-06Wnutes 01-19-06.docPage 6 of 15 r Mr. Giardina referred to charts displayed in the Council Chambers and stated that up to this point they had only talked about a single commercial category. He noted that the charts depicted five additional categories and added that staff's recommendation was to maintain a commercial category but have separate categories for the office and hotel category. He stated that the recommendation was to maintain a single category for most of the sales tax generating businesses in the community that would fall under the commercial category. The office and hotel tax generally did not generate the magnitude of sales tax realized from other types of tax, retail development for example. Discussion ensued relative to non-residential streets fees and PM Peak Trip Ends (with and without State Trust Land); survey results (including the cities of Phoenix and Chandler); a schedule of proposed commercial and industrial development fees that would apply to specific types of businesses based on trip charges; the fact that lowering some business -type fees and charging street fees by type would dramatically increase other business -type fees. Vice Mayor Schlum MOVED to approve Ordinance 06-06 and Councilmember Archambault SECONDED the motion. Vice Mayor Schlum requested that Mr. Giardina provide the recommended dollar amount that would be applied in an office setting. Mr. Giardina advised that the recommended fee for an office development would be $3.45 with State Trust Land and $3.05 (rounded) without State Trust Land. The Vice Mayor stated that on the restaurants, staff recommended a $10,000 to $12,000 cost and $9,000 to $10,000 on the retail and asked what the cost would be for office. Mr. Giardina replied that office would be approximately $34,000 without State Trust Land and almost $38,000 with State Trust Land. He added that utility impact fees/development fees were included (Sanitation District fee as presently assessed). Councilmember Kavanagh stated the opinion that the charts were misleading and did not reflect the true magnitude of the differences. He added that the charts grossly underestimated the extent of the increases being proposed. He said that this was not a critical point for him because he would vote against the increases but urged everyone to keep in mind that the true impact was more than the graphics depicted. Mr. Giardina noted that in order to make the graphics visual they were not to scale and that was why the numeric values were added. Councilmember Kavanagh replied that data graphically depicted in bar charts should be to scale and if could not be to scale, a table should be used or the lower numbers should be reduced and proposed changes enlarged. Councilmember Kehe referred to Ordinance 06-06 and the commercial/industrial fees and the staff report and asked for clarification. Town Attorney Andrew McGuire explained that the intent in providing the Council with an ordinance was to give them a framework. When the ordinance was produced, prior to the ordinance going out last week, they did not have the available the recommendations now before them. He suggested that if the recommendation from Council was for what appeared in Table 2 (refer to charts) containing the recommended development fees, staff's recommendations for both with and without State Trust Land, that those be the numbers adopted by amendment and then staff would go back and change the ordinance to reflect that. He added that prior to this meeting he was not comfortable putting together an ordinance that did not reflect anything previously discussed. Councilmember Kehe stated that it was his understanding that staff was recommending office, hotel and commercial and for commercial 5.407 (all commercial other than office and hotel); office at 3.449; ZACouncil Packets\2006\R2-2-06\Minutes 01-19-06.docPage 7 of 15 hotel at 1.659 and industrial as a separate category, totaling 1.852. He noted that the motion was to accept a different amount. Mr. McGuire said that the motion was just to open discussion and prior to voting on any motion he was going to clarify what numbers they wanted in the ordinance. Mr. Pickering recommended that they discuss, and the proposal staff suggested, was that for all commercial except for office and hotel, the rate be 5.4 with the State Trust Land and 4.5 without State Trust Land (Table 2). He added that the other rates were not compatible with the other fees. Mr. McGuire confirmed that the ordinance contained both components, with and without State Trust Land. Councilmember Kehe stated that they would wind up with "sort of an average" and in effect they would raise the lower and drop the higher to come up with the average and provide the net result in terms of monies they were looking for in order to at least partially pay for the infrastructure. He asked if they lowered the highs and lowered the lows, whether they would be skewing the whole thing and ending up with less. Mr. Giardina stated that they would end up with less revenue but explained that they did not know the development pattern that would occur and that was one of the reasons they recommended a single class of commercial. He added that they did not know how many restaurants would be added or how many office buildings or when and this why they recommended a single commercial category. Mr. Pickering commented that the fee was exactly the same except for hotel and office, which were dropped because they had less trip generation. He emphasized that this was for discussion purposes and said that they were at an impasse at their last meeting as to what would actually occur, if anything, and so staff attempted to identify different ways to "skin the cat" and provided different options. He noted that staff was certainly open to other options, to address the ones before the Council and/or to return to previous options. Ms. Bender advised that there were four citizens wishing to speak on this item. Bruce Tominello, 16208 Sunridge, urged the Council to think creatively. He recommended consideration be given to commercial businesses that generated future income to the Town be given a break on the development fees, i.e., restaurants and retail shops, but that office building have higher fees as they did not generate the future sales tax income. John McNeill, 14508 N. Creosote Court, addressed the Council and expressed the opinion that the fees the Council was looking at have already been artificially reduced when they removed fees that were associated with the Strategic Plan. He stated that he was not ignoring the mandate of the Strategic Plan but was urging a common sense interpretation. He referenced page 19 of the Plan that he said specified that the Town would ensure that development fees pay for Fountain Hills' infrastructure necessary to serve the Trust lands. Bob Deppe, 16247 N. Boulder Drive, commented that development fees were monies collected formally according to a set schedule set out in a local ordinance — fees were levied against new development projects as a condition of permit approval to support new infrastructure needed to support the proposed development. ZACouncil Packets\2006\R2-2-06\Minutes 01-19-06.docPage 8 of 15 Dennis Brown, 17020 Kiwanis Drive, #109, representing the Contractors' Association, requested that the Council not raise the commercial -based development fees to the level being proposed this evening. He said that before they placed such a heavy burden on the few commercial projects left and they should look at different income avenues. Evelyn Munn, 16222 Boulder, stated that every development caused impacts on traffic, schools, community facilities, air quality, and environment. She said that development must begin to pay its own way in order to maintain a balance in the Town. She added that each home generates an average of ten trips daily and the roads are impacted and each commercial development generates greater impact. She commented that traffic generates verifiable patterns and they need verifiable standards. She said that chaos will result if the problems are not addressed now. She added that every city recognizes this and incorporated traffic impact fees to make up the shortfalls and ensure they do not fall on the residents. Mayor Nichols thanked all of the speakers for their comments. Councilmember Kavanagh thanked Mr. Brown for attending the meeting and correcting false information from the last meeting. He said that some people questioned why he was tenacious in questioning a woman who came before them and said she represented the Licensed Contractors and claimed that they unanimously supported the development fees. He stated that he did not believe that and that was the reason he kept asking questions and now a true representative has come before them and stated the truth — that they do not unanimously support the fees. He expressed appreciation for this clarification. Vice Mayor Schlum asked whether the Sanitary District Fees were reflected in the data and Mr. Giardina said that they were included in the slide and for a residential customer the value was almost $6,000. He added that he did not have the figure for the restaurants and Mr. Pickering advised that the sanitary fee figure was approximately $5,700. Mr. Giardina explained that the $16,200 depicted on the chart included $5,700 of the Sanitation District Fee, it was "backed out" of both figures. The Vice Mayor commented that a significant increase was being recommended and questioned whether it would be wise for the Council to break it down into different uses. He said that he was fairly comfortable with the break out of it but they needed to come up with a number with which a majority of the Council would be comfortable. He added that he would like them to consider a significantly lower number and perhaps a phased in approach. He stated that he would like to identify that number this evening. Mr. McGuire referred the Council to Section 2 of the ordinance, Streets category, (first table showing all of the fees) and said that the only change they would have to the table would be in the streets area, where the office and hotel categories would be added as commercial categories. The office category would add a 1.938 number to that section and the hotel category would add a 0.567 number to the column. He added that on the next page of the ordinance (Page 3), which contains the same table and said that this was the table that would be in place if the State Land were annexed prior to July 1. The same categories were added (office and hotel) and the office number for that scenario would be 2.53 and the hotel number was .74. Mr. Giardina advised that the resulting total for office with State Trust Land would be 3.449; the total for hotel with State Trust Land would be 1.659; the office without State Trust Land would be 3.046 and the hotel without State Trust Land would be 1.675. He added that the current fee for those ZACouncil Packets\2006U22-2-06\Minutes 01-19-06.docPage 9 of 15 categories was .51 (for all commercial). Under the new proposal, all other fees (with and without State Trust Land) would be 5.407 and 4.545 (Page 4 of the packet material). Councilmember Archambault said that over the past two weeks he had the opportunity to look at his commercial development that he did in 1999, a $1 million project and he paid $28,000 in different fees, excluding permits, which equated to 2.8%. He noted that a large chunk of that was the Saguaro/Shea sewer trunk line. He said that the fees did not deter him from building the project because there was a demand; he needed more space. He expressed the opinion that Target would have come to Town no matter what the fees were as long as they were reasonable and justified because of the demand that existed in Town. He said that he was aware of the various struggles that the Town had faced and stressed the importance of being fair. He emphasized the importance of taking the burden off of existing residents/businesses and allowing growth to pay for growth. Councilmember Kavanagh stated that there were many ways in which businesses contributed to the Town economically. He added that some of the businesses would not ever come to Town and many of them would but perhaps they would be delayed several years. He made the point that if they hadn't been deterred and instead had moved to Town, they would have paid two and a half times the property tax and generated sales tax revenue. He said that the businesses did have other ways to contribute if the Town can get them there quickly. He added that all of the states that had aggressive economic and population growth were all low tax states that welcomed business and industry and the ones suffering were the ones that drove businesses out; they were the high tax states as a general rule. He expressed the opinion that an argument could be made that the Town could get more money by not raising the fees and attracting businesses to the Town earlier and said that this was the side he took on the issue. Councilmember Archambault clarified that sales tax revenue was generated and used to pay for the operation of the Town and impact fees paid for infrastructures that come into play as the pressure was applied as a result of growth. He stated that it was the residents and the winter visitors that generated the sales tax, not the businesses. He commented on the property tax that he paid and noted that he did not have to pay for fire protection. Councilmember Kavanagh commented that if the businesses did not locate in Town, other communities would get the sales tax. He agreed that the amount of property tax paid to the Town was miniscule but if all of the commercial businesses in Town disappeared tomorrow, the property tax would dramatically increase (as well as the school tax) and said if they got rid of businesses, everyone would wind up paying for those increased taxes. He added that the more businesses that come to Town, the lower the school taxes become and more money goes into their pockets. He stressed the importance of also looking at the hidden benefits. Councilmember Kehe read into the record material that was provided as an appendix to this agenda item (from the Brookings Institute) dated June 2003 (on file in the Clerk's office) and stated that this paper showed that impact fees were a practical and valuable tool for financing local infrastructure needs and could directly fund infrastructure improvements and indirectly promote economic development at the same time. He said that improved infrastructure created jobs which created money. He added that the Milkin Institute, a public supported "think tank" in Santa Monica, stated "there is little evidence that impact fees significantly influence an entity's decision of whether to locate. A funding plan that omits impact fees because of the concern that they will deter growth may backfire and result in the infrastructure and associated services being compromised in quality." He also read the conclusion from a paper co-authored by the Town's consultant (December 2003), which stated, "In summary, with careful planning impact fees can provide the funding source to maintain service levels in a growing community. As such, they can represent an affordable one-time entrance fee into a highly ZACouncil Packets\2006W-2-06Mnutes 01-19-06.docPage 10 of 15 i desirable place in which to live and conduct business. They can also be encouraging to certain types of entities in terms of providing a funding source for infrastructure. In this way, instead of being viewed as a deterrent to growth, impact fees may actually support growth." Mayor Nichols noted that the Town adopted the concept of development fees several years ago because they felt the fees were the right thing to do to pay for future growth. He said that development fees were put into place with the assistance of experts in that area. He stated the opinion that it was only fair that commercial development pay its own way. He added that the fee current in place had no basis, it was an artificial fee, and stressed the importance of basing the fees on facts. He believed they should support the recommendations provided by the consultants that were based on facts. He noted that the residents of the Town paid their way and the same should be true for commercial and industrial development. Councilmember Archambault stated that if they did not collect enough fees, staff would be instructed to start looking at the infrastructure in an attempt to "stretch the use of the streets or fire stations". He spoke in support of being proactive and not caught short in the future. He emphasized that the money had to come from somewhere and if they did not get it from the development fees, whether on the residential or commercial side, they would wind up getting it from the citizens who were already here. Councilmember Kavanagh said that there was no shortage of "think tanks" and studies on both sides of this issue. Councilmember McMahan stated that he reviewed all of the materials regarding the impact fees and agreed with almost all of it but said he wanted to consider the special commercial construction situation that existed in Town. He added that although impact fees would be greatly beneficial to the entire community, in his opinion they were still too high in the commercial construction area and therefore he would not support the ordinance. Vice Mayor Schlum pointed out that some of the speakers this evening, including representatives of the building community and the Chamber of Commerce, were not opposed to paying a fair amount. They asked that the Council not go with the suggested number but indicated their willingness to pay their fair share. He agreed with Mayor Nichol's suggestion that the Council arrive at a fair figure that would support the quality community they lived in. He added that he too was not comfortable with the high numbers as presented and indicated his intention to suggest some different figures. He added that the Town Attorney helped walk them through how this could be done, based on the numbers presented and said he was comfortable with the different break outs for office, commercial and hotel. He expressed the opinion that they "go for the new numbers" that seem fair and emphasized that they were one-time charges and not on -going and would ensure the future quality of the Town. He added that they needed to keep in mind that they did not want to keep businesses that would benefit the Town in the long run, as far as sales taxes and other things, out of the Town. He also stressed the importance of being competitive with the Town's surrounding communities. He indicated his intention to amend his motion. Mr. McGuire suggested that the Vice Mayor present an amendment at this time so that the main motion would remain on the table. Councilmember Kavanagh recommended that they go to a total number and direct staff to maintain the proportions. ZACouncil Packets\2006\R2-2-06\Minutes 01-19-06.docPage 11 of 15 Vice Mayor Schlum MOVED to amend the motion to state that office development fee be 2.2 with State Trust Land; without State Trust Land 2.0; commercial with State Trust Land at 3.0 and without State Trust Land 2.5; hotel with and without State Trust Land 1.5; industrial 1.85 with State Trust Land and 1.82 without State Trust Land. Councilmember McMahan SECONDED the motion. Councilmember Kehe said that he could support the breakdown in categories (office, hotel, all of the commercial and industrial) but said that the staff's recommendations already contained a compromise and emphasized that every dollar they reduced went on the backs of the citizens. He expressed the opinion that the reductions were drastic, particularly all other commercial that was reduced by 25%, and said he would not support this but would support staff's recommendations in total. Vice Mayor Schlum commented that he believed there were benefits to remaining competitive and having increased revenue so that all of the difference would not fall upon the citizens who already lived in Town. He said that he wanted to be fair and the fees from the consultant were maximum supportable fees and therefore he presented the compromise. Mayor Nichols asked for the rationale behind the numbers recommended by the Vice Mayor. Vice Mayor Schlum responded that he looked at what the other towns were assessing and wanted to remain competitive. He added that he also looked at where the increases were, for example general government, and said there was a significant increase there but not extremely dramatic compared to some of the other increases. He agreed that the arguments for street charges were most compelling. Councilmember Kehe expressed the opinion that the thinking that businesses would locate in Town because of its impact fees might not be correct. He noted that infrastructure, which was required as a result of growth, was a catalyst for economic development. He said he was concerned that the recommendations were being based on "good faith" rather than factual material. He reiterated that growth would place demands on infrastructure and if the Council did not figure out a way to pay for that growth through development fees, the burden would be placed on the citizens. Vice Mayor Schlum commented that his recommendation was based on a philosophical approach to taxation or fees. He stated the importance of remaining competitive and noted that the fees would be subject to review. Councilmember Archambault said that the Council was elected by the citizens of the Town who they represent and added that they did not represent big business. He expressed concern that they could be shifting the burden, as pointed out by Councilmember Kehe, to the citizens. He asked whether the Council would be open to considering a three-year escalating fee that would achieve a "fair point" so that future Councils would not have to deal with something that the previous Councils had forced them to deal with. Vice Mayor Schlum stated that the businesses that exist today in Fountain Hills represent a fabric of the Town and added that he believed this was an opportunity to get the outsiders' money and save money for the existing community. He reiterated the opinion that the proposed amounts were fair. Councilmember McMahan said that he could not think of any reason why the fees could not be reviewed in two years because the commercial construction picture would surely change during that period of time. He stated that he did not want to hinder construction and those people who had struggled so hard; he wanted to give them every break possible. ZACouncil Packets\2006W-2-06Winutes 01-19-06.doePage 12 of 15 Councilmember Kavanagh commented that he would support the amendment and expressed the opinion that it represented a fair compromise. Councilmember Kehe referred to previous comments regarding the construction industry and noted the significant projects that would be coming on line. He added that the Town has 500 infill lots and the possibility of annexing the State Trust Land. He stated the opinion that the building industry was more than on the verge of success; they would be doing very well. He referred to a memo that stated the average new home being built in Town was 5,116 square feet in size and at a conservative estimate of $200 a square foot, they were talking about $1,200,000 homes. He added that he seriously doubted that anyone would be discouraged from building in Fountain Hills because of an additional several thousand dollars in impact fees. Councilmember McMahan clarified that he was referring to the commercial construction sector. Mayor Nichols applauded the Vice Mayor on his recommendations and said that they could use the numbers, which were a lot better than where they are today. He added that the numbers might not be perfect, but they would generate a lot more money for infrastructure. He noted that they would be reviewed in two years and adjustments could be made at that time. He indicated support for the amendment. Mayor Nichols called for the vote on the amendment. Councilmember Kehe said he hoped they were not giving up their authority to further debate the issue. He expressed the opinion that a compromise had not really been achieved and questioned whether there was a willingness on the part of the Council to continue to work on this issue and come up with a figure somewhere between staff's recommendation and the amendment. Mr. McGuire suggested that the Council vote on the amendment and said that if they did not achieve a majority vote another amendment could be made. Councilmember Kehe appealed to the remaining three members of the Council to vote down the amendment with the intent that there would be an opportunity to do some "horse trading" before the night was over, rather than settle. Councilmember Kavanagh expressed the opinion that a compromise had been reached. He added that the Council has studied this issue for a long time. Mayor Nichols called for a vote on the amendment. The motion CARRIED by majority vote (5-1) with Councilmember Kehe voting Nay. Councilmember Archambault stated that he would like to propose another amendment that they review development fees in two years. Mr. McGuire responded that the Council could determine that a 2-year time frame for review was the preference of the Council but noted that the next Council could reject that idea and stick to the 5-year review time frame. He added that in order for a future Council to reject the 2-year proposal, a revision to the ordinance would have to be made. He said that they could add another section that mandated a review in two years and it would have to be repealed if a future Council disagreed. ZACouncil Packets\2006W-2-06Winutes 01-19-06.docPage 13 of 15 Councilmember Archambault MOVED to amend the main motion to add a section calling for the review of all the development fees in two years and Councilmember McMahan SECONDED the motion. Councilmember Kavanagh commented that a new Council might decide to amend that two days after they take office and emphasized the importance of respecting new Councils and trusting them to guide themselves. Vice Mayor Schlum stated the opinion the Town Manager and Finance Director would bring to the Council's attention the fact that it was time to review the fees. He said he did not believe it was appropriate to include the review time frame in the ordinance. Councilmember Archambault explained that he was attempting to reach a compromise with all of the Councilmembers and said he hoped the Council would also address Councilmember Kehe's concerns regarding the fact that the fees might be a little too low. He stated that two years down the road the Council would be able to review minutes reflecting their logic and reason. Councilmember Kavanagh said he would be more comfortable if the amendment were changed to state that it was the sense of this Council that the fees and the need for them and levels should be carefully watched at all times but dictating a two-year time frame appeared to be too specific. Mr. Pickering commented that it was helpful to mandate the review because it had taken them over a year to get to this point and if they did not know ahead of time that this was going to occur, it might not have gotten done. He said that it costs a lot of money and staff time and therefore it would be nice to know when the Council would like the issue reviewed. Mayor Nichols stated that he supported a 2-year review time and added that changes in situations might warrant revisions. He said that he supported the amendment despite the fact that he was not happy with the numbers, but he believed it to be a good compromise and a good start. Vice Mayor Schlum also expressed support and added that this was an issue that certainly should be looked at. He said that based on the fact that staff sees value in doing so, he would agree to the 2-year review time frame. Mayor Nichols called for a vote on the amendment to review all of the fees in two years. The motion CARRIED UNANIMOUSLY (6-0). Councilmember Kavanagh MOVED to create a new commercial category called "Movie Theater" and that they designate the development fee for this category zero. Councilmember McMahan SECONDED the motion. Councilmember Kavanagh explained that having a movie theater had been a dream of the community for a long time. He said that they had had three false starts and economically the projects kept "teetering". He added that anything the Council can do to encourage the development of a movie theater in Town would be a positive step and appreciated by the residents. The motion CARRIED BY MAJORITY VOTE (5-1) with Councilmember Archambault voting Nay. Mayor Nichols called for a vote on the main motion with the three amendments. ZACouncil Packets\2006\R2-2-06\Minutes 01-19-06.docPage 14 of 15 The motion CARRIED BY MAJORITY VOTE (5-1) with Councilmember Kehe voting Nay. AGENDA ITEM #14 COUNCIL DISCUSSION/DIRECTION TO THE TOWN MANAGER. ITEMS LISTED BELOW ARE RELATED ONLY TO THE PROPRIETY OF (i) PLACING SUCH ITEMS ON A FUTURE AGENDA FOR ACTION OR (ii) OR DIRECTING STAFF TO CONDUCT FURTHER RESEARCH AND REPORT BACK TO THE COUNCIL: nswisimm AGENDA ITEM #21— SUMMARY OF COUNCIL REQUESTS BY TOWN MANAGER. None. AGENDA ITEM #12 — ADJOURNMENT Councilmember McMahan MOVED that the Council adjourn and Vice Mayor Schlum SECONDED the motion, which CARRIED UNANIMOUSLY. The meeting adjourned at 8:40 p.m. TOWN OF FOU AIN HILLS By Wally is ols, Mayor ATTEST AND PEPARED BY: I dzl 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 191h day of January 2006. I further certify that the meeting was duly called and that a quorum was present. DATED this 2nd day of February, 2006. ZACouncil Packets\2006\R2-2-06\Minutes 01-19-06.docPage 15 of 15