HomeMy WebLinkAbout2008.0117.TCREM.Minutes TOWN OF FOUNTAIN HILLS
MINUTES OF THE EXECUTIVE AND REGULAR SESSION OF THE
FOUNTAIN HILLS TOWN COUNCIL
January 17,2008
Mayor Nichols called the meeting.
AGENDA ITEM #1 - ROLL CALL AND VOTE TO GO INTO EXECUTIVE SESSION: PURSUANT
TO A.R.S. 38-431.03.A4, FOR 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, THE GOLF RESORT PROPERTIES LITIGATION): AND (ii) PURSUANT TO 38-
431.03(A)(3), FOR DISCUSSION OR CONSULTATION FOR LEGAL ADVICE WITH THE
ATTORNEY OR ATTORNEYS OF THE PUBLIC BODY. (SPECIFICALLY, FOR LEGAL ADVICE
WITH RESPECT TO TAX MATTERS.)
ROLL CALL—Present for roll call were the following members of the Fountain Hills Town Council: Mayor
Nichols, Councilmember Kehe, Councilmember Leger, Councilmember McMahan, Councilmember Schlum,
Councilmember Archambault and Vice Mayor Dickey. Interim Town Manager Kate Zanon, Town Attorney
Andrew McGuire, Town Clerk Bev Bender, Mary Martin (Finance Department), Tom McMahon, Brad
Woodford(outside Counsel) were also present. Keith Hoskins joined the meeting at 5:17 p.m.
Councilmember Archambault MOVED to convene the Executive Session at 5:01 p.m. and Councilmember
McMahan SECONDED the motion, which CARRIED UNANIMOUSLY(7-0).
Councilmember Leger MOVED to recess the Executive Session at 6:24 p.m. and Councilmember Kehe
SECONDED the motion, which CARRIED UNANIMOUSLY(7-0).
AGENDA ITEM#2-RETURN TO REGULAR SESSION
Mayor Nichols reconvened the Regular Session at 6:30 p.m.
• CALL TO ORDER AND PLEDGE OF ALLEGIANCE
• INVOCATION—Ms.Therese Barhart, Church of the Ascension
• ROLL CALL
Present for roll call were the following members of the City Council: Mayor Nichols, Councilmember Kehe,
Councilmember Leger, Councilmember McMahan, Councilmember Schlum, Councilmember Archambault and
Vice Mayor Dickey. Interim Town Manager Kate Zanon, Town Attorney Andrew McGuire and Town Clerk
Bev Bender were also present.
• MAYOR'S REPORT
(i) The Mayor would read a proclamation declaring January 31, 2008 as Pony Express Day.
Mayor Nichols stated that the Pony Express played a particularly important colorful part in the history of the
cio, West dating back between 1860 and 1861. Each year, the Pony Express riders were remembered with a
commemorative ride by the members of the Hashknife Gang, traveling from Holbrook to Scottsdale, with
Fountain Hills being the next to last stop on their trek. The Mayor said that it was his honor to proclaim January
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31, 2008 Pony Express Day in the Town of Fountain Hills and added that all Town residents, visitors and
residents/visitors of surrounding areas were invited to join in the festivities and dress western to commemorate
this part of our history of the West.
SCHEDULED PUBLIC APPEARANCES/PRESENTATIONS
None.
CALL TO THE PUBLIC
Charles Vascillaro addressed the Council and stated that in 1990 the Town Council, looking to start a sales tax,
told the residents of the Town that they were rapidly approaching buildout and needed the tax. That was 18
years ago and they were still not at build out. He said he knew that the Council had already made up their minds
in reference to putting a property tax on a ballot no matter what the citizens thought about that or say this
evening. He added that when a study was ordered by the Town Manager or staff on a potential problem having
to do with finances they would point them in the direction of new taxes and higher taxes. If the study was to
find a way to save money and not consider a Town property tax, they would have found another way. He stated
the opinion that an insufficient amount of study had gone into ways to cut back on costs in an effort to avoid the
implementation of a property tax. He briefly discussed efforts expended by the County and State to reduce costs
and added that build out in Fountain Hills was more than 15 years away. He urged residents not to vote for the
tax and said that it would be raised 2% annually forever. He also thanked Mayor Nichols for all of his hard
work on the Council.
The Mayor thanked Mr. Vascillaro for his comments.
Mayor Nichols announced that later on during the meeting Agenda Items #6, 7, 8, 9 and 10 would be removed
from the agenda and continued to the February 7``'Council meeting.
CONSENT AGENDA
AGENDA ITEM #1 — CONSIDERATION OF APPROVING THE TOWN COUNCIL MEETING
MINUTES FROM JANUARY 3,2008.
Councilmember McMahan MOVED to approve the Consent Agenda as listed and Councilmember Leger
SECONDED the motion, which CARRIED UNANIMOUSLY(7-0).
REGULAR AGENDA
In response to a question from Mayor Nichols, Town Attorney Andrew McGuire advised that Agenda Items #2,
3 and 4 may be discussed together with the concurrence of the Council.
Councilmember Leger MOVED to suspend the rules and discuss all three Agenda Items at once and
Councilmember Schlum SECONDED the motion, which CARRIED UNANIMOUSLY(7-0).
AGENDA ITEM #2—DISCUSSION WITH POSSIBLE DIRECTION TO STAFF RELATING TO THE
TOWN OF FOUNTAIN HILLS'PRIVILEGE LICENSE TAX RATE.
See discussion under Agenda Item#4.
AGENDA ITEM #3 — CONSIDERATION OF RESOLUTION 2008-05, CALLING THE MAY 20, 2008
ELECTION FOR THE PURPOSE OF SUBMITTING TO THE QUALIFIED ELECTORS OF THE
TOWN THE QUESTION OF AUTHORIZING THE TOWN TO LEVY A PRIMARY PROPERTY
TAX.
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See discussion under Agenda Item#4.
LAGENDA ITEM #4 — DISCUSSION WITH POSSIBLE DIRECTION TO STAFF REGARDING THE
STRATEGIC PLANNING ADVISORY COMMISSION'S PROPOSED REVENUE SHORTFALL
SOLUTIONS.
Mary Martin addressed the Council and stated that on January 8th, the public and the Town Council were
presented with a staff report and recommendations based on the Strategic Planning Advisory Commission's
(SPAC'S) report to the Town Council dated December 2007. One of the items the Council requested at that
meeting was that additional sales tax reduction scenarios be prepared for review. She said that this presentation
brought forward those additional scenarios. Ms. Martin advised that the presentation was focused exclusively
on the General Fund revenues and expenditures. The numbers presented represent only that portion of the sales
taxes that went into the General Fund and were used for operating purposes. Some of the assumptions made in
the projections were that the revenue projections did not include projects that had not already been submitted.
Revenue projections assumed no changes to the legislative distribution of shared revenues. The former State
Trust Land property valuations were added to the assessed valuation beginning in the year 2010. Building
permits for the former State Trust Land did not start until the year 2010. 85% of the current sales tax revenues
remained in the Capital Projects Fund but construction permit fees remained in the General Fund. Staff attrition,
particularly attrition related to construction reductions, was included in future years in the expense projections.
Ms. Martin highlighted a PowerPoint presentation and noted that the first slide showed a five year fiscal
projection based on the Town's current financial structure (if they did nothing and follow existing procedures
and laws). Ms. Martin noted that the charts were not cumulative; what they were seeing was the year-by-year
revenues and expenditures. (A copy of the entire presentation made available for review in the office of the
Town Clerk.) She added that the first chart reflects a cumulative deficit of$7.7 million just through Fiscal Year
2012-2013. The next slide reflected an 18 year fiscal projection based on the Town's current financial structure
and:noted that it generated a deficit of somewhere in the neighborhood of$99.1 million. She also referred to a
chart that depicted the Town's General Fund operating costs broken down by operating areas/functions of the
government.
Ms. Martin stated that one of the things mentioned at the last meeting was the issue of the Town's policy with
relation to the budget. Part of the Town's Financial Policy states, "The operating budget would be based on the
principle that current operating expenditures, including debt service, would be funded with current revenues
creating a balanced budget." She stated that a balanced budget was brought forth to the Council every year.
She added the policy further stated, "The Town would not balance the current budget at the expense of meeting
future years' expenditures;for example accruing future years' revenues or rolling over short-term debt to avoid
planned debt retirement." Ms. Martin referred to a chart that depicted sales tax collections for FY 2006-07 and
pointed out that the chart showed all sales tax collections and 85% of the construction sales taxes were dedicated
to the Capital Projects Fund while the rest of the sales tax went into the General Fund.
Ms. Martin said that the scenarios being brought forward this evening all assume a property tax levy of $4.5
million and either:
a. Reduce sales tax to 2.3%
b. Reduce sales tax to 2.1%
c. Reduce sales tax to 2.0%
d. Reduce sales tax to 1.75%
e. Reduce sales tax to 1.6%
f. Reduce sales tax to 1.5%
g. Reduce sales tax to 1.25%
h. Reduce sales tax to 1.0%
i. Eliminate sales tax on food
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Councilmember Leger requested that Ms. Martin clarify what went into the Miscellaneous category. She replied
that business licenses were filed based on business class and the reporting that the Town received from the State
since they were the collecting agency gave them reports in categories based on business class. The ,41)
Miscellaneous class included a number of smaller classes and a few larger classes but the larger classes had too
few members in the class to disclose separately, such as hotels.
Town Attorney Andrew McGuire explained that there was a provision in Title 42 that required entities that
collect sales tax information, such as the Town, not disclose confidential information by any individual taxpayer
or information that would lead to allowing someone to "back" numbers out. When the class was very small,
such as hotels, that class could not be disclosed because of its small size. Ms. Martin added that
communications would be another small class.
Ms. Martin outlined the above listed scenarios(a through i listed above) and their resulting financial impacts (all
assuming a property tax levy of$4.5 million) as follows:
a. Reducing the sales tax to 2.3% would reduce revenue by$18.3 million through FY 2020-2025. The net
effect through 2025 would be a gain of $68.4 million. This scenario would still lead to a deficit of
$30.7 million.
b. Reducing the sales tax to 2.1% would reduce revenue by$30.4 million through FY 2020-2025. The net
effect through 2025 would be a gain of $56.3 million. This scenario would still lead to a deficit of
$42.8 million.
c. Reducing the sales tax to 2.0% would reduce revenue by$36.5 million through FY2020-2025. The net
effect through 2025 would be a gain of$50.2 million. This scenario would still lead to a deficit in the
amount of$48.9 million.
d. Reducing the sales tax to 1.5% would reduce revenue by $51.8 million through FY 2020-2025. The net
effect through 2025 would be a gain of$34.9 million. This scenario would still lead to a deficit in the
amount of$64.2 million.
e. Reducing the sales tax to 1.6% would reduce revenue by$60.8 million through FY 2020-2025. The net
effect through 2025 would be a gain of $25.9 million. This scenario would still leave them with a
deficit in the amount of$73.2 million
f. Reducing the sales tax to 1.5% would reduce revenue by $67.0 million through FY2020-2025. The net
effect through 2025 would be a gain of $19.7 million. This scenario would still leave them with a
deficit in the amount of$79.4 million.
g. Reducing the sales tax to 1.25% would reduce revenue by $82.2 million through FY 2020-2025. The
net effect through 2025 would be a gain of$4.4 million. This scenario would still leave them with a
deficit in the amount of$94.7 million.
h. Reducing the sales tax to 1.0% would reduce revenue by$97.4 million through FY 2020-2025. The net
effect through 2025 would be a loss of $10.7 million. This scenario would result in losses through
every five-year period it would be in effect and the overall loss would be $10.7 million, which would
increase the deficit to $109.8 million.
i. Eliminating the sales tax on food would reduce revenue by $36 million through FY 2020-2025. The
net effect through 2025 would be a gain of $50.7 million. This scenario would leave the deficit at
$48.4 million.
Ms. Martin referred to a chart that depicted the effect of property tax rates and valuations and stated that as the
former State Trust Land became platted and placed on the assessment rolls, the effect that would have on the
actual property tax rate (presuming they began with a property tax rate of$1.00 per $100 of assessed valuation)
was that over the period of time the land was coming on board, there would be a steep drop in the tax rate and
then it leveled out a little bit more and continued to decrease because the levy was only allowed to increase 2%
per year plus new construction. The effect overall over the years would be a distinct reduction in the tax rate.
Ms. Martin advised that in an effort to clarify how the property tax was calculated, staff prepared a very simple
property tax calculation sample that showed if the full cash value of a typical home in Town was $342,750, the
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tax class that that would fall into would be Owner Occupied Residential and the assessed valuation of that was
10% of the limited property value, which would make the assessed value of that property $34,250. Imposing a
$1.00 per$100 of assessed valuation tax would then generate a tax of$342.75 a year.
Ms. Martin indicated her willingness to respond to any questions from the Council.
Councilmember Archambault commented that some confusion existed among the citizens relative to the
difference between a levy and a tax rate. He requested that Ms. Martin expand upon this issue for the public's
benefit.
Ms. Martin explained that basically when they did a levy, what they were basically doing was telling the County
that they needed to collect a certain dollar amount. In this instance the levy would be what that the Town
needed to collect$4.5 million. The County was in charge of assessed valuations and so they took their assessed
valuations and would tell us how much the tax rate would have to be in order to generate that $4.5 million. The
$1.00 per$100 of assessed valuation at this time was staff's best guess on what the assessed valuation would be
when this was imposed. She confirmed that the 2% annual increase was on the levy and not on the tax rate.
Councilmember Leger said that as the assessed valuation of the Town goes up, there was a direct correlation to
the rate and Ms. Martin agreed. She added that that was why they would see that the rate was actually dropping
because as property values and assessments rise, in order to generate the amount of money needed, less and less
of a tax rate was needed.
Councilmember Leger commented that the assessed valuation of the Town would increase significantly when
the annexed property was platted and said it was his understanding that that was not part of the assessed value at
this time. Ms.Martin confirmed Councilmember Leger's statement.
Councilmember Leger advised that he had received many calls from citizens on this issue and many of them,
when attempting to calculate tax rates, began with the market value of their homes. He said that the limited
property value was obviously significantly less (typically 50% to 60%). Ms. Martin stated that the best way for
the public to accomplish this was to pull out their last statement from the County and take a look at the full cash
value, which would track market value versus the limited property value that was restricted in its increases. The
assessment could not increase by more than 10% per year and then there was a formula that "kicked in" if there
was significant change to the property.
Councilmember Leger said that the point he was trying to make was that the tax was calculated from the
assessed value and not the market value and Ms. Martin confirmed that statement.
Ms. Martin stated the opinion that a number of people were forgetting that the assessed value for residential
property was 10% of the limited property value and not the limited property value.
Vice Mayor Dickey noted that the 2% limit on the levy did not have to happen automatically every year. Ms.
Martin explained that the 2% was the maximum levy increase allowed but the levy that the Council chose to
make could be less than that. The Vice Mayor said it would then take an act of the Council to raise the levy
limit.
Town Attorney Andrew McGuire clarified that the 2% applied to the levy limit and not the actual levy. The
levy limit would go up by 2% every year automatically but the Council, before the third Monday in August, had
to levy an annual amount and they could levy less than the limit each and every year that they have. The law
only required that the Council levy something each year for the following year.
Mayor Nichols said that at the beginning of the presentation they had talked about the Town's Financial Policy,
which said that the Town would have a balanced budget with revenues and expenses equal. If the expenses
were more than their revenues as they go through the year, he would like to know what happened.
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Ms. Zanon responded that when staff prepared the budget in the spring of each year they looked at the Council's
goals for each year to see what Council had asked staff to achieve and then they also looked at the Strategic Plan
to review the focus that had been provided by the Town's residents. She added that staff also looked at essential
versus non-essential services and tried to determine whether they were coming in with expenditures higher than
revenues and if so, what types of items could be cut. In the past few years the Town had not been faced with
this difficulty but in 2003 the Town did have to make cuts to the budget and they looked at a reductions in staff,
park related reductions (mowing, over-seeding, etc.), different Public Works expenses such as wash clean up,
frequency of street sweeping, etc., and contract services such as funding of tourism and community
programming across all age groups. Ms. Zanon said that these were the types of things they looked at in the past
and again staff would have to look at what was really essential to the Town and what were the more non-
essential items that could be cut back.
Mayor Nichols stated that what Ms. Zanon was saying was that if the Town's expenses were going to exceed
their revenues, expenses would have to be cut back and hopefully they could do so in the non-essential areas
such as programming for youths, seniors and tourism. Ms. Zanon confirmed that those were the types of areas
that staff would look at first. Mayor Nichols advised that the cutbacks could have an impact on the character of
the Town as they went forward if they did not have enough revenues to pay for expenses.
Councilmember Leger commented that during the presentation staff talked primarily about the General Fund but
said it was his understanding, as they looked at the Capital Fund, that a significant number of other projects
were put on hold and that it had taken the Town four years to recover from that. Ms. Zanon agreed with
Councilmember Leger's comment.
Discussion ensued relative to the fact that with the exception of State shared revenues, HURF funds, etc., a
majority of the money that the Town accumulated for capital improvements to go into the Capital Fund balance
was typically yielded from the General Fund plus construction sales tax; the fact that the Town did have policies
in place that allowed funds to be moved from the General Fund into the Capital Fund but not vice versa and Ms.
Zanon's statement that discussions regarding doing so could take place if the Council so desired; the fact that
not only the General Fund expenditures took an adverse "hit" when revenues were down, even Town
infrastructure was negatively impacted; the fact that the Town also had the option to fund capital projects
through other mechanisms such as bonding but that would be a Council decision; and the fact that one option
would be"pay as you go" and the other would be long term bonding.
Vice Mayor Dickey stated that this conversation was complicated by the fact that they were going through a
downturn in the economy. She commented on the fact that revenues that the Town relied upon may be"swept,"
(HURF,LTAF, etc.). She expressed the opinion that the Town would not see what they were used to seeing and
short term they were facing a problem. She added that for the long term, they were looking at making a
philosophical policy decision, a sound fiscal policy (did they believe that there really should be a "three legged
stool" and that they needed a stable revenue stream in the Town for the long-term). She said that she believed
that the Town could deal with the short-term issues but for the long term, even though everyone was willing to
"tighten their belts," she supported the Mayor's comments relative to the fairness associated with the sound
fiscal policy associated with a property tax. She stated that as they moved forward, that was what was starting
to "gel more" than an acute situation for her. The Town had hired consultants (economic experts) and there
were groups of citizens who were encouraging the Town to do something and she wanted to hear from everyone
else but believed that their advice was sound and fair.
In response to a request from Councilmember Schlum, Ms. Martin explained that eventually the amount of the
tax burden would remain relatively flat but a lot of that was dependent upon on how quickly assessments
increased and how much of a levy the Council authorized. Councilmember Schlum said that generally then the
tax rate might drop and the tax burden might"stay flat"and Ms.Martin concurred.
Councilmember Schlum expressed the opinion that it was important to discuss "how they got to this point." He
commented on the Council's decision to dissolve the Fire District and the removal of a funding mechanism, a
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property tax to fund at least one of the Town's emergency services. The Council was faced with figuring out a
way to pay for that and the 1% increase to 2.6% in the Town's sales tax took place. He also discussed the
current economic downturn, particularly in the real estate/construction area, which was impacting the Town.
Councilmember Schlum stated that the Mayor convinced the Council of the importance of looking into a long-
term revenue plan that led to a 20-year financial plan and that also uncovered additional gaps in long-term
revenues. He noted that the Town's revenue structure was heavily reliant on local and State economies and
State revenues were down this year. In addition, when construction activities slow down as they had this year,
the Town was also directly affected and when they both happen, which was the case this year and for the next
couple of years, the "pinch was painful" and illustrates even more clearly the future revenue dynamics that they
must deal with. He added that the members of the SPAC and the Blue Ribbon Committee had done a wonderful
job helping to illustrate this fact for the citizens and the Town Council.
Town Clerk Bev Bender advised citizens had submitted requests to speak (six for Item#3 and one for#4). Ms.
Bender added that one citizen, Hugh Henry, did not wish to speak but wanted the Council to know that he was
against the implementation of a property tax.
Baron Smith addressed the Council and said that he very much appreciated the life style and services that the
Town of Fountain Hills provided. He added that he was aware of the revenue situation and believed it to be
very real and serious problem. Mr. Smith expressed the opinion that a primary property tax would be the best
way to fairly and equitably spread costs among the people who were going to be depending on those services.
He urged the Council to vote to allow the question of a property tax to be placed on the May 2008 ballot to
allow the citizens the opportunity to decide. He also requested that between now and May the Council
implement an educational effort to clarify issues and address public concerns.
Bob Deppe addressed the Council and questioned whether the Town really needed additional revenue. He
stated the opinion that the need had not been adequately proven and added that this evening's presentation left
out construction sales tax. At the January 8th meeting it was shown that if construction sales tax was left in the
operations budget they would not need extra revenue for eight to ten years. He added that tonight's presentation
also left out other potential revenue sources such as increased development fees and stormwater utility fees. He
said they were still looking at half a budget (no capital budget) and it was difficult to analyze issues without all
of the information. He asked whether the issue was really fairness in the way they collect taxes from residents
and agreed that it was. He added, however, that if they were going to raise property taxes they were going to
have to decrease sales taxes by an equal amount. He added the opinion that the facts were being distorted.
Robert Tripp, 16410 E. Tombstone, addressed the Council and said that about 18 months ago when this began,
there was a presentation made by staff that showed a huge surplus over the next ten years and then the deficit
coming in. Many people asked why not take that surplus and invest it wisely to cover most of the costs but
since that time the money seemed to have disappeared because there was no mention of it in any of the financial
analyses. He questioned why citizens should be paying now when there was extra money to do things for the
future.
Jerry Butler, a member of the SPAC, addressed the Council and stated that he also chaired the Revenue
Solutions Project Team that looked into this issue. He said that one of the things that had not been brought up
by anyone this evening had to do with where this all began and it was only two years ago. The Town created a
Strategic Planning Process and over 1,600 people in the community voiced their opinions, and they talked about
the quality of life issues that make Fountain Hills the wonderful community it is. Out of that process, some
initiatives evolved and they were broken up over the next five years into two components —the first two years
and then the second series over the last three years. In the first two years there were six components of which
the public at that time(2005) demanded that the revenue issues of the community be looked into and be brought
forth to the Council by the end of this past year. The Focus Group that was created was composed of citizens
ikiie and they put notices in the newspaper and on the Town's website, etc. asking for volunteers to step forward and
discuss this with them in detail. They had one person volunteer but now they were hearing from lots of people
who did not support it. They did not support what the citizens analyzed and came up with. He noted that an
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outside Economic Consultant was hired to look at the community and he believed that the Town's operating
expenses were reasonably compared to six other communities with similar circumstances. He said that they
could trim costs but the citizens who served on the Focus Group did not believe it was possible to trim costs by
$4.5 million. He agreed that no one liked taxes but added that he wondered how many people did not like the
quality of life that they currently enjoy in Town. He stated that without sufficient revenues to sustain that
quality of life they had no other options but to reduce it. He advised that he attended a Town Topics meeting the
other evening and the senior citizens spoke up and said that they would not support a property tax and three
attendees stood up said "and we want this, and we want this and we want this." All three requests were for
things that the Town did not currently have. He stressed the importance of doing something now and added the
opinion that the Focus Group went through a very deliberate process and considered all of the options before
presenting them to the Council.
Phil Gaziano addressed the Council and said that he would like to review one of the revenue streams discussed
by the Strategic Planning Commission's revenue solutions. He stated that since he proposed it, he believed he
had a better handle on it than most people. He did not know about fees and Mr. Turner, at the last meeting, said
that there was $3,335 in anticipated fees should this proposal take place and if it were implemented on all of
those lots. He wanted to let them know that the Town, over the course of time, would receive $1,400,034 by
changing one number —from 15% to 20% on the footprint. With 430 lots, the increase in square footage on a
one-acre lot would be 2,000 square feet and if you take $200 a square foot to build, that would be about $150
plus interest over time and the Town would receive approximately $4,400,072 in sales tax. Since that would be
the market value, if you take 74% of that, which was the primary rate as far as full assessment, that would mean
that they would put on the property tax rolls $3,309,000 in value. He stressed that they were not talking about
changing the disturbance areas on the lots, which was approximately one-half acre. Because they were
increasing the footprint they would get fewer two-story homes, which would improve the overall aesthetics of
the Town. Mr. Gaziano added that the Ellman Company put $130 million into Goldfield Ranch and said that
they had not anticipated that in relation to property tax revenue. Even though it did not benefit the Town as far
as dollars were concerned, each individual was going to pay less money. He said that he did not care where his
savings go as far as property taxes.
Mary Ann Michaels addressed the Council and thanked the Mayor for his last four years of service to the Town.
She stated that on Monday she hand delivered to the Council's mailboxes a memo and correspondence she had
with a gentleman and expressed the opinion that the United States was likely heading towards a recession. She
noted that inflation was generally 4% and as of today it was 5%per annum and the Town's $6 million was being
invested in a municipal pool yielding 4%. This meant that the Town's investment pool was not appreciating and
therefore, buying power was decreasing over time. The buying power of the Town's invested capital was also
decreasing. She said that she was hoping that the Council would at least bring the gentleman she spoke with or
someone like him in and talk with him about exploring this opportunity. She advised that she was not
anticipating that all $6 million would be put into one basket but said that if they pulled out $50,000 and start
with that and if the projections of this company held true, they would have a lot of money in the General
Reserve. She requested that the Council just take some time and talk to this person or someone else and listen to
their presentation.
James Bagg addressed the Council and stated that a lot of confusion about this issue existed within the
community. He expressed the opinion that if a property tax measure was placed on the ballot at this point in
time, it would not be approved by the citizens. He wholeheartedly agreed that the Town needed to implement a
property tax but said there was no reason to place one on the ballot of the May 2008 election. He supported a
comment made at the last meeting to delay placing a property tax on the ballot until 2009. He added the opinion
that the Town was facing too many issues at the current time and there were too many uncertainties. He
commented on the fact that many people were facing increased house payments and people were finding
themselves in difficult financial situations and they were facing a possible recession. He requested that the
Council hold back a year and take that time to educate the citizens of the Town on this important issue.
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Mary Pilarinos addressed the Council and said that she was very unhappy to hear comments by Vice Mayor
Dickey relative to proceeding with the property tax. She stated that she did not support implementing a property
tax but said she was willing to give something up and believed that if that was what it would take a lot of
citizens would be willing to give something up as well rather than face a property tax. She urged the Council to
creatively look at the problem and come up with an alternative solution. She noted that many citizens did not
have "deep pockets" and many had their own personal debts. She added that if they had to have a property tax,
"so be it"and she might vote for it but at this point in time she was not convinced that it was the right way to go.
Mayor Nichols thanked all of the speakers for their comments.
Vice Mayor Dickey said she would like to find out whether there was any opposition to the footprint option.
Mr. Turner advised that he had not personally received any comments from the public indicating opposition to
that option.
Councilmember Leger said that it was his understanding in speaking with Mr. Gaziano that was not going to
take care of the projected shortfall; he was merely suggesting that that was one possible solution. Despite all of
the "conspiracy theories"that roam throughout the Town, they had been looking into this situation for well over
three years. They had their Town Manager and a very competent Finance Director "take a shot at it" and they
came up with some numbers similar to the deficit numbers they were looking at this evening - $99 million. He
said if they cut that in half because they doubt the analysis and make it$50 million, they knew they did not have
any money for capital improvements in future years and questioned where was that money would come from.
This issue was looked at several years ago and the criticism was that the Town Manager and the Finance
Director were biased and incompetent. He emphasized that the Town's Finance Director was a professional and
had acted in an extremely objective manner.
Councilmember Leger advised that they took the input from the citizens and saw that there was some
understandable skepticism there and so they went out at the Town expense and hired a very reputable third party
independent municipal finance person look at the scenario. That information basically confirmed what the
Town's Finance Director had concluded on the general revenue side as well as on the capital side. They did not
stop there; they formed a Blue Ribbon Committee who after in-depth analysis not only came to the same
conclusion as the Finance Director and consultant, they also stated that the Town had a more serious problem;
not five or ten years out, right now. He said that it was very important to understand that they had taken a very,
very good look at this situation and even if this Council decided to move forward with a primary property tax,
they still had a problem. He added that they could take a look at Mr. Gaziano's proposal and several other
peoples' proposals and they could take a look at reinvesting their reserves but he believed they needed to
increase their reserves before they start making risky investments. Councilmember Leger said that he would be
the last person to take what they had now and start looking at hedge funds. He noted that a professor at the
University of Massachusetts also became involved in this process and she said that no one liked taxes but what
she did like was the community and she was interested in the sustainability of the Town's economics, quality of
life and environment. He stated that it was clear to him through all of the independent analyses that the Town
had a problem. He noted that at the current time there was a proposal by the Legislators to cut revenue that the
Town receives from the State (a possible 15% reduction in HURF funds beginning in 2008, etc.). He added that
they were probably not going to begin seeing an upswing in the economy until 2010.
Councilmember Leger expressed the opinion that mistrust started at the Federal level, goes down to the State
level and trickled down to the local level. He said that he too would like to "put this issue to bed" but believed
that it was a decision that must be made by the citizens as part of a ballot initiative in the May 2008 election. He
added that he respected those both for and against the issue and he was not a"tax junky"by any means.
Councilmember Kehe pointed out that the vote this evening was basically to place the item on the ballot next
May so that the citizens could decide which way to proceed. He said that he heard a couple people talk about
the need for more information and education and said that that "is in the plans." He added that whatever
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information could be provided by the Town would be provided and whatever additional information could be
provided by a citizen committee would also be available between now and May 2008 so the decision would be
that of the citizens. He stressed the importance of recognizing that the Town's revenue system was subject to ,44)
the economy and the State Legislature. Right now the Town's estimated receipts for the Fiscal Year in sales
taxes as predicted by the Finance Department showed an estimated 17% drop. The State announced last week
that there was a shortfall of $800 million this Fiscal Year and over $1 billion next Fiscal Year and a recent
article stated that the Legislature was considering dropping State shared revenues. He noted today that the
Governor had proposed taking $211 million from the HURF fund instead of distributing it for street
maintenance for the cities and towns (monies would go towards other purposes). He stated that this Council was
not suggesting that they abandon sales tax or State shared income; what they needed was a supplemental, stable,
predictable, fair and deductible property tax. He added that the citizens' committee did an outstanding job of
characterizing the problem and providing recommendations and he was prepared to support their
recommendations.
Councilmember McMahan concurred with Councilmember Kehe's comment relative to the fact that the citizens
did an outstanding job in putting this together but said that he disagreed with his colleagues that they were in a
fiscal crisis at this time. He stated that he expected an economic upturn to occur after the election and this had
proven to be true in the past. He expressed the opinion that it would be premature to put this on the May 2008
ballot and added that there had not been sufficient discussion or citizen input. He said that if they wanted to put
the issue on a ballot they needed time to distribute complete information, follow up with residents, time for
residents' discussion and feedback, time for many personal presentations, support by way of descriptive
materials and literature and time to create trust and confidence in a new Council. Councilmember McMahan
further stated that some credibility issues existed and said that it took time to earn the citizens' respect and
support. He advised that his idea was a total package with any additional tax and tax reductions packaged
together in a fiscal restructuring package. Decisions that must be made prior to the tailoring of the package
include what percentage of the sales tax they wanted to do; they had options. They should make these decisions
in advance with a lot of citizen input and prepare a program that they could take to the voters next year. In the
meantime, they should work to increase development fees to reflect inflation, implement a more intensive
collection of sales taxes, explore investing some of the Town's funds for income and follow Mr. Gaziano's
suggestion regarding lot coverage on R-143 properties. He said that he believed they should work together to
put together a new fiscal package that could be presented to the voters on May 19, 2009.
Councilmember Archambault commented that he was not going to balance on the ideas that any of the other
Councilmembers had talked about; he certainly backed most of those ideas. He added that one of the things he
wanted to point out was that as Councilmembers they took their jobs very seriously and if anyone in the
audience thought that they had not looked at the books, looked at different ways to solve the budget deficit, they
have had "deaf ears" for the last two and a half years. He further stated that they were elected to do a job and
this Council had been doing its job. They were the envy of quite a few cities in the valley and when they went
to the League they asked them how they got such a cohesive Council elected and he would tell them that they all
worked together, giving each other the information, putting together Blue Ribbon Committees like the Strategic
Planning Advisory Commission (SPAC) and when questions were put before them, they went looking for the
answers. He said that this evening he was going to vote to put the property tax on the ballot and added that if it
was voted down he would still sleep at night. He reviewed the downturn in 2003-2004 (he was elected in 2002)
when the Council had to deal with the issue of the Fire District that the Town did not have the funding for. They
were down to $800,000 in the reserve account, a blink of the eye in view of what it costs to run the Town. He
added that he had struggled hard at night when he was first elected and citizens kept saying, "Cut the budget, cut
the budget". He had struggled to find ways not to lay off 23 employees; he struggled with trying to find ways to
save money. He learned what the budget was all about and did what he was elected to do. When the Council
made those decisions, he said the citizens were not going to like what we were going to do and six months later
they had Little Leagues coming to them asking why they had to pay more "to let Johnny play ball," "how come
we had to pay more for Senior services," and "how come we had to charge more for this room rental in the
community center?" He stated that when the money dried up they had to cut services. He said that the park was
brown because the Town did not reseed that year and they did not water the grass, they cut the Fountain back to
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five minutes an hour and people complained. He added that if you have to do what you have to do you do it and
this Council was directed two years ago to find a solution for the revenue shortfall. The Council told the
citizens it was there and they did not hide anything. They went down this odyssey and they were here tonight.
Maybe the citizens did not like what the Council was telling them but they were going to"tell it to you straight."
If the citizens did not like it, that was fine but it was their right to vote it down and he would sleep at night.
Mayor Nichols said that when they started looking at the revenue problems a couple of years ago, they figured it
was going to be a long-term problem. Since that time, the economy had"turned on a dime" and the Town went
from having a surplus budget in the State of over $1 billion to having a deficit. He stated the opinion that the
State did not do a very good job of planning and that was why it was up to the Town of Fountain Hills to do the
planning and that was why he suggested that they do a 20-year plan, a Strategic Plan, and that was what they
were trying to do as a Council,look ahead and plan for the future. The Mayor said that it was an undisputed fact
that they only had a certain amount of property to build on in Town; they would hit build out at a certain point in
time and when that happened they were going to lose a lot of construction tax revenues. He added that they had
to look at how to make up that shortfall--did they want to rely on one source of revenue such as a property tax?
He stated that they were trying to show that they did not want to use one source to make up the shortfall; they
were looking at a restructuring of a revenue package. They want to give direction to staff to take a look at
development fees, the franchise fees on water, the bed tax, lot coverage, etc. He said that they as a Council were
committed to looking at reducing the sales tax in Fountain Hills. He added that before the May election they
planned as a Council to put an ordinance in place that said if the property tax was approved by the voters they
would then change the sales tax, lower it. When the citizens went to the polls in May the citizens would know
that the Council had adopted an ordinance showing what the sales tax would be if the property tax was
approved. He added, however, that if the property tax should fail, the sales tax would remain unchanged. He
said that he did not feel good leaving the Council with the Town in this kind of financial shape because that was
not what he was elected to do; he was elected to look at the future and make sure that the Town was going to be
financially stable in the future. He stated that he did not like property taxes either but he came from
Law "Taxachusetts" where the property taxes were extremely high. He added that they also had to look at the
services they receive in Massachusetts, the educational programs, all the other services and in the end "you get
what you pay for." The Mayor stressed the importance of paying for the quality of life they wanted to have in
the Town.
Mayor Nichols commented on the fact that his business was property management and rentals and so the
implementation of a property tax would significantly impact him but he believed it was the right thing to do;
everyone should pay their fair share and that was not happening now as previously stated. Mayor Nichols
referred to an e-mail he received questioning why the Town was still proceeding with the purchase/installation
of a statue in view of the Town's financial status. Mayor Nichols said that he might make a recommendation to
the Council that they pay the artist for his work, since they had committed to doing that, and place the
installation on hold until the Town had the monies to proceed with that type of project. He stated the opinion
that this type of action would serve as a symbol to show the public that the Council was willing to take action
and that they were concerned about the way monies were spent. He expressed the opinion that the right thing to
do was to place the issue on the ballot for the citizens to decide and said he would vote to support that action.
In response to a request from the Mayor, Town Attorney Andrew McGuire stated that the ballot language that
would be included in Resolution 2008-05 was as follows: "Shall the Mayor and Council of Fountain Hills,
Arizona, be authorized to levy a primary property tax not to exceed$4.5 million. If such amount is approved by
the voters, it would be the base for determining levy limitations for the Town for subsequent Fiscal Years." He
added that there was no ballot language relative to dedicating the use of the funds, but such language could be
legally included in a Resolution.
Mr. McGuire advised that ballot language that specifically limited the use of funds might have the effect of
deceiving the voters into thinking the use of the funds would be limited when that action was not within the
authority of the Council. He said that rather than have that become a question, the language had been pared
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down to just the simple levy limit setting without any kind of notice or intention in the ballot language itself
about the uses for that money.
Mayor Nichols MOVED to approve Resolution 2008-05, including the ballot language as read into the record
by Mr. McGuire (see above) and Councilmember Archambault SECONDED the motion.
Councilmember Leger commented that currently the Town was funded primarily through local sales tax,
revenue from the State and construction revenue, all of which were extremely vulnerable and subject to
economic upturns and downturns. He said he respectfully agreed with Councilmember McMahan's statement
that they would be moving into an upturn in the near future but once again, when you looked at the long term
effects of the ups and downs, which was what all of the analyses had done, they were looking at a$100 million
shortfall, not including capital expenditures. He noted that one of the speakers this evening presented ideas on
taking the Town's reserves and investing them and from her creative suggestion he took away the importance of
diversification. He said that right now 84% of the Town's revenue was vulnerable. He stated that he was
interested in restructuring how they received income. He believed a primary tax to support general operations
was a stable form of revenue. He stressed the importance of diversifying the Town's portfolio. He expressed
the opinion that a ballot initiative would provide an opportunity for the residents to vote on the issue and that
was the way in which they should proceed. He advised that many of his constituents had indicated that they did
not trust government and would support a secondary tax rather than a primary tax because at least that would be
targeted. He said that he would consider supporting the primary property tax under two conditions: (1) That
they were able to put a resolution in place to direct staff to address the intention of this Council to target these
dollars for public safety purposes only and (2) That they put an ordinance in place that would also direct staff to
come back with recommendations to the Council relative to a reduction in sales tax. The Town's sales tax was
currently one of the highest in the Valley and it would be good to take that burden off the residents and the
merchants.
Vice Mayor Dickey reiterated that they could not put sales tax questions on a ballot so in order to allow their v.)
intention to be known, an ordinance or resolution would have to be adopted by the Council (it would contain
their commitment). She stressed the importance of being fair.
Councilmember Schlum said that it was time to look at the Town's long-term revenue problem that had been
identified for a number of years and try to turn it into more of an opportunity. He added the opinion that the
dialogue this evening had been good and he was all for financial stability and sustainability and a stable revenue
source in an amount that would fund a portion of the Town's central fire, police and safety services. Currently,
a majority of the Town's General Fund revenues were paying for fire and police services and were very
sensitive to the economies and if this was approved by the public and went into effect, it would not go up as
much as the costs for fire and police went up every year. There would still be a gap that would have to be
closed by the use of other solutions. He said that he was also focused on need-based spending. He added that
the quality issue was a real one and he agreed that everyone should pay their fair share as well to maintain the
quality of life. He said that the passage of a property tax that would target paying for essential services would
level the playing field for all property owners in the community. He commented that if the voters passed the
property tax, that would represent just part of the solution and agreed with Councilmember Leger's comment
that it needed to be tied to the fairness issue,the Town should not have close to the highest sales tax in the valley
as well. They need to have a"trigger" put into place that would reduce the sales tax to remove the burden from
those citizens who live in the Town.
There being no additional questions or comments, the Mayor called for a vote on the motion. A roll call vote
was taken with the following results:
Councilmember Kehe Aye
Vice Mayor Dickey Aye
Councilmember Schlum Aye
Councilmember McMahan Nay
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Mayor Nichols Aye
�r Councilmember Leger Aye
Councilmember Archambault Aye
The motion CARRIED by majority vote (6-1).
Councilmember Leger said that he would like to provide staff with direction in certain areas relative to the
contingencies he talked about earlier.
Mr. McGuire stated the opinion that it would be appropriate to bring forward a motion or more than one if
necessary.
Councilmember Leger MOVED to direct staff to prepare a resolution for future Council consideration setting
forth the Town Council's intent to dedicate any property tax approved by the voters in May 2008 for public
safety, fire and emergency medical services and Councilmember Dickey SECONDED the motion.
Councilmember McMahan expressed the opinion that the whole issue was premature and said that he would not
support the motion when the vote was called.
Mayor Nichols called for a vote on the motion.
The motion CARRIED by majority vote (6-1) with Councilmember McMahan noting Nay.
Councilmember Leger MOVED to direct staff to prepare an ordinance for Council consideration lowering the
Town's sales tax rate contingent upon the passage of a property tax in May 2008 and Councilmember Schlum
SECONDED the motion, which CARRIED by majority vote(6-1) with Councilmember McMahan voting Nay.
Mayor Nichols MOVED to direct staff to look at the establishment of a franchise fee on water and a stormwater
utility district and Vice Mayor Dickey SECONDED the motion.
Mayor Nichols clarified that the purpose of the motion was to have staff report back to the Council with their
recommendations.
Mayor Nichols said that this action would be independent of the property tax should one be approved by the
voters.
Mayor Nichols explained that the intent of this proposal, as far as the stormwater utility district, was that the
Town had a mandate from the Federal government and the State to provide for the runoff of stormwater, but no
funding was associated with this mandate. He said he wanted to be able to figure out a way to pay for this
mandate and added that the funding currently came out of the General Fund. He added that as far as the
franchise fee on water, the Town had a franchise fee on cable and have held discussions with the Chaparral City
water company and they had talked about a rate hike with the Arizona Corporation Commission (they were
extending their boundaries to cover some other areas). He said there was an opportunity for the Town to collect
some monies that were lying on the table; another small piece to close the revenue gap.
Vice Mayor Dickey stressed the importance of obtaining some information relative to the stormwater utility
because it was difficult to get their arms around how it was based, who was mostly responsible, etc. She said it
was a fairly complicated issue and she would appreciate having additional information from staff on this matter.
The Mayor confirmed that his motion was just too direct staff to prepare an investigative report for the Council's
review on both items.
The motion CARRIED UNANIMOUSLY(7-0).
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Councilmember Archambault MOVED to direct staff to immediately develop and implement a series of actions
designed to produce "trigger points" that staff would implement when economic downturns occur so that they
had a plan in.place when needed. He said that staff would prepare the report and bring it back to the Council for
review and consideration at a future meeting. (He added that in future years they knew that they were going to
have downturns and when they occur he would like to have economic plans in place that future Councils could
rely on.)
Mayor Nichols said that the "trigger points" would bind future Councils and he had a problem with doing that
because this Council could not really bind a future Council.
Mr. McGuire stated that Councils generally could not bind other Councils to their decisions; they would be able
to either accept or reject the "trigger points." He asked whether Councilmember Archambault was talking about
developing a plan to monitor economic indicators so that when certain indicators occur the recommendations
would be brought forth to the Council and Councilmember Archambault said that was exactly the intent of his
motion.
Mayor Nichols said that based on Mr.McGuire's clarification of the motion, he would SECOND the motion.
In response to comments from Councilmember Leger, Ms. Zanon stated that in the report that staff was referring
to staff made several recommendations related to Items #1 and 2. She said if the Council supported staff's
intentions as outlined in the recommendations,the Council could simply direct staff to move forward and look at
those indicators.
Councilmember Archambault advised that he would like staff to go forward and look at policies and put policies
in place as economic indicators arise that say "this was what was going to happen." He added that staff, without
Council direction, would then be able to simply implement the plan.
Mayor Nichols said he did not believe they could do that and Councilmember Archambault WITHDREW his
motion and Mayor Nichols WITHDREW his second to the motion.
Vice Mayor Dickey MOVED that staff work with the Public Information Officer to create a budget document
that was "reader friendly;" a budget brochure that would be available through various public information
avenues.
Mayor Nichols asked whether the Town could expend public money on a ballot initiative.
The Vice Mayor clarified that the purpose of the brochure would be to help citizens better understand the budget
(Item#5) and had nothing to do with the ballot initiative.
Councilmember Leger SECONDED the motion, which CARRIED UNANIMOUSLY (7-0).
Councilmember Kehe expressed concern relative to the number of motions that were being adopted and said that
the only thing the Council really had to do this evening was decide on the property tax issue. He added that he
was not saying that the other issues were not valid; he was just getting the feeling that they were moving farther
than they should move in one night and they should stop at this point. He said that they had enough time to deal
with the other recommendations at future meetings.
Councilmember McMahan concurred with Councilmember Kehe's comments.
Councilmember Leger agreed that they had talked about a lot this evening and noted that the agenda clearly
reflected the fact that staff had asked for direction. He said he too thought they needed to take more time to
discuss the other items but as they read through the recommendations, they were simply asking for direction to
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get started, not to implement them but to bring back information for the Council to review (allowing staff to
proceed with their homework).
Mayor Nichols stated that staff had been given the "green light"to proceed and said he also wanted the public to
knew that they were going to do all of these things that went beyond the primary property tax issue.
Vice Mayor Dickey said she wanted to know more about the R1-43 lots (from 15 to 20%). She wanted to make
sure that before that came before the Council for a decision that she knew what people who were buying lots
thought about it, what people who lived next door to those lots thought about it, what developers thought about
it, etc.
(Councilmember Schlum left the meeting room at 8:30 p.m. and returned at 8:32 p.m.)
AGENDA ITEM#5—UPDATE ON THE TIME LINE FOR RECRUITMENT OF A TOWN MANAGER
AND THE ESTIMATED RECRUITMENT COSTS.
Human Resources Administrator Joan McIntosh addressed the Council relative to this agenda item and provided
an update on the time line for the recruitment of a Town Manager and the estimated recruitment costs. Ms.
McIntosh referred to a slide that depicted a proposed time line prepared by the Recruitment & Selection
Committee. She noted that the first three items had already been completed(information had been posted on the
Town's website requesting input from citizens; a Recruitment Committee had been formally appointed; and the
Committee held their first meeting on December 27, 2007. She advised that on January 11, 2008,the mailing of
the recruitment brochure occurred and all of the ads for the Town Manager position were placed in a variety of
publications.
Ms. McIntosh stated that the deadline for receipt of application packets was February 15, 2008, and she reported
that one week after the ads went out that the Town had already received 16 application packets from a variety of
applicants from different states across the country. She said that she had briefly reviewed them and was
impressed with a number of the responses. She added that she was optimistic that they would receive many
more applications.
Ms. McIntosh reported that the Recruitment Committee would meet to discuss candidates and narrow them
down to 8-10 semi-finalists (February 22, 2008). The Committee would then interact in person or video
interview the top 8-10 semi finalists (February 25 through March 7). Reference checks would be performed on
the top four to five finalists (March 10 through March 14) and the Committee would be provided a summary
report on the final candidates by March 18. There would be a social evening with the candidates/spouses and
Council/spouses on March 27 and the Mayor and Town Council would interview four to five finalists on March
28. Direct Reports interviews for four to five finalists would also take place on March 28. A Public Forum with
the Town Manager candidates would take place on March 29 and an Executive Session would be held on March
31 and the Council would discuss the results of the forum and the interviews and adjourn the Executive Session
to go into a public session to make a decision on which candidate they would like to offer the position to.
Negotiations with the top candidate would then occur between April 1 and April 8 and the goal was to have the
new Town Manager report to work 30 to 60 days later(during the month of June). A welcome reception would
be planned to welcome the selected candidate.
Councilmember Kehe said that he hoped that before the position was offered to any candidate they would have a
team go to that person's current employment community and find out what the community thought about the job
that person had done by interviewing various people. He stated the opinion that this was a vital step in the
process.
Ms. McIntosh stated that they did not provide for that step but believed it to be a good suggestion and one that
the Committee could discuss pursuing.
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Councilmember Kehe requested that that step be incorporated into the actual time line and Ms. McIntosh said
she would do so.
In response to a question from Councilmember Leger, Ms. McIntosh briefly explained the type of due diligence
that was conducted as far as candidates (professional references,background checks and driving record,etc.).
Councilmember Kehe stated that he believed that the candidates' existing staff and Councilmembers be asked
for input as well as members of the community. He stressed the importance of taking any precautions that could
be taken and Ms. McIntosh concurred.
Town Clerk Bev Bender advised that one citizen wished to address the Council relative to this agenda item.
Bruce Florence addressed the Council and said that Council and staff had a lot more to do before anything else
was done this evening. He said they were here to talk about the time line and they had done that but now they
should stop because they were being premature. He referred to a December 3`d letter to the Council in which he
pointed out that according to the Town Code it took three members to put one item on the agenda and expressed
the opinion that that was unconstitutional. He said he hoped that the Council and staff addressed that item
before any announcement was made about an opening. He requested that they review that letter and also
outlined a number of points he made in a December 8th letter to the Council (job description should be reviewed,
all relevant Town policies and codes should be reviewed and revised as needed, etc). He said that he did not
trust what was done during the prior administration. He urged the Council to put this issue on hold until some of
the items he had brought up in his letters could be addressed.
Mayor Nichols thanked Mr.Florence for his comments.
Mayor Nichols asked that the Council suspend the rules to allow Agenda Items#6, 7, 8 & 9 to be discussed at
one time.
Councilmember Archambault MOVED to suspend the rules to allow Agenda Items #6, 7, 8 &9 to be discussed
at one time and Councilmember Schlum SECONDED the motion, which CARRIED UNANIMOUSLY(7-0).
Mayor Nichols MOVED to continue Agenda Items #6, 7 8 & 9 to the February 7, 2008 meeting and
Councilmember McMahan SECONDED the motion, which CARRIED UNANIMOUSLY (7-0).
AGENDA ITEM#6— CONSIDERATION OF A SITE PLAN FOR"MOBILE WEST,LLC,"LOCATED
AT 11803 SAGUARO BOULEVARD TO ALLOW THE SALE OF GOLF CARTS AND RELATED
ITEMS ON PROPERTY LOCATED IN THE C-3 ZONING DISTRICT. CASE #PD2007-01.
(CONTINUED TO THE FEBRUARY 7, 2008 COUNCIL MEETING.)
AGENDA ITEM #7 — PUBLIC HEARING OF ORDINANCE 08-01, A TEXT AMENDMENT TO
CHAPTER 18, TOWN CENTER COMMERCIAL ZONING DISTRICT, OF THE ZONING
ORDINANCE. IF ADOPTED, THE AMENDMENT WOULD ALLOW FOR GREATER BUILDING
HEIGHTS, REDUCED SETBACKS, SHARED PARKING AND MULTI-FAMILY RESIDENTIAL
USES IN THE"TCCD"ZONING DISTRICT. CASE#Z2007-05.
(CONTINUED TO THE FEBRUARY 7, 2008 COUNCIL MEETING.)
AGENDA ITEM #8 — CONSIDERATION OR ORDINANCE 08-01, A TEXT AMENDMENT TO
CHAPTER 18, TOWN CENTER COMMERCIAL ZONING DISTRICT, OF THE ORDINANCE. IF
ADOPTED, THE AMENDMENT WOULD ALLOW FOR GREATER BUILDING HEIGHTS,
REDUCED SETBACKS, SHARED PARKING AND MULTI-FAMILY RESIDENTIAL USES IN THE
"TCCD" ZONING DISTRICT. CASE#Z2007-05.
(CONTINUED TO THE FEBRUARY 7, 2008 COUNCIL MEETING.)
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AGENDA ITEM #9 — PUBLIC HEARING OF ORDINANCE #08-02, TO AMEND A PORTION OF
THE OFFICIAL ZONING MAP OF APPROXIMATELY 18.44 ACRES IN SIZE FROM
INTERMEDIATE COMMERCIAL ZONING DISTRICT (C-2) TO TOWN CENTER COMMERCIAL
DISTRICT(TCCD)IN THE DOWNTOWN AREA. CASE#Z2007-04.
(CONTINUED TO THE FEBRUARY 7, 2008 MEETING.)
AGENDA ITEM #10 — CONSIDERATION OF ORDINANCE #08-02, TO AMEND A PORTION OF
THE OFFICIAL ZONING MAP OF APPROXIMATELY 18.44 ACRES IN SIZE FROM
INTERMEDIATE COMMERCIAL ZONING DISTRICT (C-2) TO TOWN CENTER COMMERCIAL
DISTRICT_ (TCCD) IN THE DOWNTOWN AREA. CASE #2007-04. CONTINUED TO THE
FEBRUARY 7, 2008 MEETING.)
Councilmember Archambault MOVED to continue Ordinance #08-02 to the February 7, 2008 meeting and
Councilmember McMahan SECONDED the motion, which CARRIED UNANIMOUSLY(7-0).
AGENDA ITEM #11 — PROGRESS REPORT ON THE ESTABLISHED ITEMS OF COUNCIL
BUSINESS:
A. DEVELOPMENT FEES ADJUSTMENT
Ms. Zanon advised that the contract for development fees adjustment was being reviewed by Red Oak
Consulting and staff was expecting that to be signed shortly. Staff had attached a time frame for the analysis to
be done and highlighted the time frame (report ready to file for the Notice of Intent by February 7, 2008; Public
hearing on April 17; adopt fees June 5, 2008 with fees becoming effective 75 days after adoption).
B. DOWNTOWN DEVELOPMENT AGREEMENT/C-2 ZONING TO TCCD
Ms. Zanon reported that on January 10th the Planning and Zoning Commission heard the rezoning of property as
well as changing of language in the Town Center Commercial Zoning District and would be sending forth a
positive recommendation to the Council. Staff continued to hold weekly meetings with the development team.
Councilmember Kehe noted that a former Chair of the Planning and Zoning Commission had sent two letters to
the members of the Council that posed questions about full lot coverage, building height and parking in the
proposed Ordinance change. He said that the person had raised some legitimate concerns, made some good
points, and based on his background and service to the Town, they should not ignore what he was saying. He
added that he would like to see some kind of a report prepared that addresses those issues.
Mayor Nichols stated the opinion that he had an opportunity to present his comments at the Planning and Zoning
Commission's meeting (as a member of the public). The Mayor added that the person could also attend the
February 7th public hearing and provide input.
Councilmember Kehe asked if there was anything staff should be doing in the interim and Ms. Zanon stated that
she did not believe that staff had received a copy of the second letter. Councilmember Kehe advised that the
second letter talked about unsigned minutes being distributed and that was not really an issue associated with the
ordinance but the comments made in the first letter were directly associated with the ordinance.
Ms. Zanon advised that when staff handled zoning ordinance amendments, they did a presentation highlighting
changes to the amendment and describing the rationale behind the changes. She said that many of these items
might already be included in what staff was planning to present on the 7t.
Mayor Nichols stated the opinion that Mr. Downes understood the procedure and the public hearing process and
said he would have an opportunity at the February 7th meeting to express his feelings. He added that he did not
see the need to have staff prepare a separate report.
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Councilmember Kehe clarified that he was only asking whether staff should be prepared to respond to the points
raised by Mr. Downes at the February 7th meeting.
Ms. Zanon advised that she would forward a copy of the letter particularly to the Planning Department staff to
ensure that the items Mr. Downes had brought up had been or would be addressed.
C. ENVIRONMENTAL POLICY
Ms. Zanon reminded the Council that there would be a Work Study on this issue on February 12th. She also
noted that the Town held its first electronic recycling event on January 5th and it was a successful first effort.
D. GENERAL ACCESS TO THE MOUNTAIN PRESERVE
Ms. Zanon said that to date she was not aware of MCO having signed the agreement.
Mayor Nichols advised that he had received a letter from Jeremy Hall that indicated they had not changed their
position; they were not going to give up on the liability or anything else. The Mayor said that as far as he was
concerned they should not spend any more Town resources on this item.
Councilmember Kehe noted that Maxxam, Inc. was the parent company and the president owned 80% of the
stock. He said he firmly believed that the president of Maxxam, Inc., Charles Hurwitz, alone could "give the up
or down." Councilmember Kehe suggested that before they say there was nothing more they could do that a
contact be made by the Mayor with the principle stockholder.
Mayor Nichols indicated his intention to contact Mr. Hurwitz.
Councilmember Leger advised that he too received a letter from Mr. Hall and in reading through it he found it
disturbing that the tone of the letter was that the Town was not cooperating. He stated the opinion that it was
important for the public to know why the Town would not enter into a shared agreement relative to insurance
and paying for security. He requested that Mr. McGuire outline those facts and issues for the benefit of the
public and Mr. McGuire concurred. He said that the agreement that was presented by staff in December
represented the Town's best offer.
E. PREPARING A SOUND TOWN FINANCIAL FUTURE
Ms. Zanon noted that this issue had already been discussed.
F. STATE TRUST LAND/ELLMAN DEVELOPMENT AGREEMENT
Ms. Zanon reported that staff did a preliminary review of the submittals from January 2nd and they should be
getting those back on Tuesday. In the preliminary review there was an initial assessment of the traffic study and
staff had requested additional information. Once that information had been received, staff would proceed with
giving the Council their assessment of the traffic study. Two open houses were still planned to be scheduled for
late February. The draft Development Agreement was reviewed by staff and the Town Attorney and it had been
sent back so staff was continuing to work on that.
G. TOWN HALL WATER FEATURE AT AVENUE OF THE FOUNTAINS AND LA MONTANA
DRIVE
Ms. Zanon advised that they were still in the six to eight week period of site preparation.
In response to a question from the Mayor, Ms. Zanon stated that it was her understanding that the Town had
made a commitment to purchase the water feature (statue). Staff had talked with outside agencies regarding the
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installation of the statue but to date no commitments had been made. Mr. Ward confirmed that no installation
Lime commitments had occurred.
Mayor Nichols said that he believed the estimated cost for installation was approximately $30,000 and noted
that, as previously mentioned, some citizens were asking why the Council was proceeding with work such as
this when the Town was facing tough financial times. He asked whether the Council wanted to delay the
installation of the water feature to show the public that they were in fact fiscally responsible.
Councilmember McMahan stated that he had heard the same comments.
Councilmember Kehe commented that they were talking about $30,000 and noted that that was part of the
funding for the Town Hall and dated back to 2003-04. He explained that what held that up was making the
decision regarding what type of art work the Council wanted to put there. He said that everybody recognized
that that particular intersection was a key focal point in the community and so they decided to have a feature that
would be appropriate for that important location. In April 2006, some of the members of the Council were
asked by the former Town Manager to look into the situation and come up with a recommendation and they
talked to several members of the Arts Committee and reached a consensus that the feature should reflect the
heritage of the community. He noted that Fountain Hills was once ranch land and their recommendation was
handed down to the Town Manager and the issue remained dormant for whatever reason. This past summer the
Mayor and Jerry Miles took a trip and found a piece that they thought met the criteria. They brought it back and
ran it by the members of the Council who had been involved and the successor to the Arts Council and everyone
agreed that it"hit the mark." He said that before they acted precipitously on this,they should consider all of that
and what it would do for the community. He added that some expenditures relate to a quality of life and so
before they tell the artist to put it in storage some place, they should think very carefully about the whole
picture. He added the opinion that they had already made an impression by making the recommendations a
multiple set of recommendations to address the Town's financial problems, many of which involve sacrifice.
He said he would like to proceed with the installation of the feature.
In response to a question from Councilmember Leger relative to reducing the costs associated with installation,
Mr. Ward advised staff had been talking to Qwest about the lowering of the utility box behind the sidewalk (3
feet high and would sit in front of the piece of art). He explained that to put the box down in a vault to allow a
clear view of the statue would be an expense but staff had not received a figure as yet. He added that lowering
utilities was very expensive and suggested that perhaps they get some "hard dollars" on this since at this point in
time they only had "soft dollars." He said they need to know what it was going to take and they also had to find
out about the infrastructure needed to run the lines.
Councilmember Leger asked whether any other possible locations were considered for the feature that might
have lower infrastructure costs. Councilmember Kehe responded that the feature was designed for that
particular location.
Councilmember Leger said that there were people for and against the expenditures and stated the opinion that if
they delayed installation they would receive more criticism for spending $70,000 on a statue and then putting it
in storage. He added that delaying it would be an attempt to garner support for a property tax by demonstrating
that this Council had been fiscally irresponsible and he said he would simply suggest that people look at the
budget for the last four years and see that the budget had fallen well short of expenditures and budgets had been
well managed. He indicated support for proceeding with the installation.
Councilmember McMahan said he would not oppose placing the installation on hold but he did want to see it be
put in place some day. He added that the timing was terrible and delaying it might avoid a"flash point."
Vice Mayor Dickey asked whether it would cost more to put it up later if they delay now and Mr. Ward noted
that construction costs always increased over time.
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Mayor Nichols said that he was sure that once it was installed people would look at it and say it was fantastic
and a good thing to do and the Council had been fiscally responsible over the last four years. He stated the
opinion that they should continue with the project.
Councilmember McMahan commented on the fact that monies for this were budgeted years ago as part of the
Town Hall project and it was not a recent expenditure.
H. TRAFFIC CONTROL AT AVENUE OF THE FOUNTAINS AND SAGUARO
Ms. Zanon advised that progress continued at this intersection and staff had begun looking at curbs and asphalt
for the purpose of meeting ADA standards. They had also started to locate electrical lines and sprinklers that
may have to be relocated as a result of putting in the U-turn. Staff was going down to Tucson to look at the
Hawk signal before the end of January (January 29`h).
In response to a question from Councilmember Leger, Mr. Ward advised that $45,000 was placed in the budget
for signal design but there were no monies for installation.
Councilmember Kehe commented on a citizen's recent concern regarding a U-turn and staff's immediate and
professional response. He thanked staff for their efforts in assisting the citizen.
AGENDA ITEM #12 — DISCUSSION WITH POSSIBLE DIRECTION TO STAFF REGARDING THE
GOLF RESORT PROPERTIES LLC LITIGATION.
Councilmember Schlum MOVED to proceed as recommended by the Litigation Counsel during this evening's
Executive Session and Councilmember McMahan SECONDED the motion, which CARRIED
UNANIMOUSLY(7-0).
AGENDA ITEM#13—QUARTERLY REPORT BY THE INTERIM TOWN MANAGER OF COUNCIL
GOALS.
Ms. Zanon advised that Council set eight goals for Fiscal Year 2007-08 and they had a report before them that
shows three of the goals had been met (all related to the Strategic Plan for year 2 as well as revenue shortfall).
The remaining five goals were on track.
AGENDA ITEM#15—SUMMARY OF COUNCIL REQUESTS BY TOWN MANAGER
Ms. Zanon stated that she received a request to prepare an investigative report on establishing a stormwater
utility as well as a franchise fee on water. Council also asked staff to investigate the other items related to
Agenda Item#4 (some of the SPAC's proposed revenue shortfall solutions) and report back to the Council with
their findings.
Councilmember McMahan complimented Ms. Zanon on the quality of her reports and the Council concurred.
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)
directing staff to conduct further research and report back to the Council.
A. NONE
AGENDA ITEM#16-ADJOURNMENT
Councilmember Leger MOVED to adjourn the meeting and Councilmember Archambault SECONDED the `44111111)
motion, which CARRIED UNANIMOUSLY(7-0). The meeting adjourned at 9:20 p.m.
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TOWN OF FOUNTAIN HILLS
By °ilk' 4. -1-'itd\talkAA/L4211
Wally ichols,Mayor
ATTEST AND
PREPARED BY:
Bevelyn J e er,Town Clerk
CERTIFICATION
I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Executive and
Regular Session held by the Town Council of Fountain Hills on the 17th day of January 2008. I further certify
that the meeting was duly called and that a quorum was present.
DATED this 761 day of February 2008.
Bevelyn J. d ,Town Clerk
L
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