Loading...
HomeMy WebLinkAboutMinutes - Finance and Bond Committee - 7/23/2007MINUTES TOWN OF ORO VALLEY FINANCE AND BOND COMMITTEE GlUtAlt M"Tt HOPI CONFERENCE ROOM 11'EVELOPMENT SERVICES BUILDING 11,000 N. LA CASADA DRIVE ORO VALLEY, ARIZONA MONDAY, JULY 23,2007 02.4,FTER 6:00 P.M. +.� PRESENT: Tony Eichorn, Chair Chuck Kill, Vice -Chair Bob Harris, Member Peter Lamm, Member Dan Toth, Member STAFF PRESENT: Stacey Lemos, Finance Director Art Cuaron, Finance Analyst Danielle Tanner, Senior Office Specialist ALSO PRESENT: K.C. Carter, Council Member Al Kunisch, Council Member Lyra Done, Parks and Recreation Advisory Board Liaison MOTION: Chuck Kill MOVED to elect Tony Eichorn as Chair of the Finance and Bond Committee. Bob Harris SECONDED the motion. Motion carried, 5-0. MOTION: Bob Harris MOVED to elect Chuck Kill as Vice -Chair of the Finance and Bo Committee. Peter Lamm SECONDED the motion. Motion carried, 5-0. 1 3. APPROVAL OF MINUTES FROM THE APRIL 12,2007 AND APRIL 16,2007 SPECIAL MEETINGS MOTION: Member Harris MOVED to approve the minutes from the April 12, 2007 and April 16, 2007 meetings as amended. Member Toth SECONDED the motion. Motion carried, 5-0. 4. FISCAL YEAR ENDED JUNE 30,2007 BUDGET TO ACTUAL REVIEW OF TOVIN ,VEVENUES AND EXPENDITURES/EXPENSES FWINUTESTINANCE AND BONI)\2007\7-23-07,doc General Fund revenue projections are expected to be $2.4M above budget at fiscal year end. Ms. Lemos_highlighted_the_foilo_wing_main_r_evenue_so_ur_c_es-in the_GeneraLEund • State and County shared revenues were budgeted conservatively due to an uncertainty in population numbers. The final budget numbers are approximately $681K over budget. Collections were slightly offset by under budget status in residential building permits. • Construction sales taxes are above budget by $1.2M due to new commercial construction. • Retail sales tax collections are slightly above budget due to sales tax audits performed on various businesses in the Town. • The new 2% utility sales tax went into effect on April 1st for water, electric and gas. Revenues are expected to generate approximately $1 OOK through year end. • The retail sales and restaurant sales were isolated out to review possible cannibalization on existing businesses. Sales for existing businesses show an average increase of 4% from last year. The Town will continue to look into this issue. • Commercial building permits are targeted close to budget. • The fund balance for the General Fund is expected to be $15.5M at year end verses the original estimate of $14AM. This is the result of revenues coming in over forecasted amounts and the departmental expenditures being maintained under budget. Ms. Lemos discussed the following additional funds: • Bed Tax Fund collections are projected to be on target. • Highway Fund revenues are expected to exceed budget by $150K due to construction sales tax revenues. • Public Transportation Fund revenues are projected to be on target. • The Development Impact Fee Fund is dependent on building permits and is estimated to be under budget by $451 K. Outside funding from State and Federal grants has been received to finish the First Avenue widening project. • Water Utility revenues are estimated to be $863K over budget due to investment income. A 1 % reduction in cannibalization was projected for sales tax revenues. The revenue estimates for 07/08 did not include a cannibalization factor. A 1% reduction in cannibalization will be factored in with 0% going into the future and it should level off after that point. Ms. Lemos reported on the status of the Capital Improvement Program projects for FY 06/07. MOTION: Vice -Chair Kill MOVED to recommend Council acceptance of the financial status report for FY 2006/07. Member Lamm SECONDED the motion. Motion carried, 5-0. The bond issues with money remaining are the 2003 Senior Lien Water Project Revenue Bonds and bonds issued in 2005 for land acquisition and construction of the Municipal Operations Site. The water project bonds are wrapping up this September. Approximately $2.2M remain from the $23.7M issued. It is for an expansion related improvement project in the potable water system. Construction remains for a 500,000 gallon steel reservoir including water main extensions. Potable water improvements for the existing system are complete which cost FA\MINUTESTINANCE AND BOND\2007\7-23-07.doe 2 approximately $7M. The reclaimed water delivery system was completed late 05/06 for $11AM which carried forward slightly into 06/07. - - ------------- - The second series bond was issued in 2005 for approximately $6.2M to purchase land. The land cost approximately $4.7M with $13M remaining, Some of the remaining funds were used for master planning and concept design work for the Municipal Operations Center site. Temporary modular buildings will be located on the site in late August for Water Utility and Public Works employees who are currently located at Calle Concordia. The leased modular building at Calle Concordia will be returned back to the lessor. These bond funds are not paying for the modular building because the offering statement and bond document call for the construction of a permanent Municipal Operations Center. The temporary buildings are being funded from General Fund, Highway Fund, and the Water Fund. Some of these bond funds will be used to bring utilities to the site that would need to be brought in for the permanent building. The sizing of the buildings will be finalized in the fall. MOTION: With re• gard to the quarterly review of proceeds from long-term debt issuances, Vice - Chair Kill MOVED to forward the report to the Town Council with a favorable recommendation for Council acceptance. Member Harris SECONDED the motion. Motion carried, 5-0. Town Council approved the final budget for FY 07/08. The Town is moving towards a program based budget and the departments have identified program areas to look at the types of services provided and the resources that are being allocated to those programs. The Town reviewed the goals and expenditure projections and established service level goals for the budget year. The Town's General Plan, Strategic Plan, and budget will be tied together. These are the five Strategic Plan focus areas for the coming year: • Financial sustainability • Quality of life • Protection of environment and cultural assets • Economic development • Leadership and communication The main revenue sources are: • Local sales tax is made up of utility sales tax, retail, construction, and bed tax. • State shared revenues — There may be a one time 24% increase from State income tax revenues next year due to revenue received from income tax elections two years ago. • Residential and commercial building activity. • A Stormwater Utility fee of $1.90 per unit which has not yet been approved by Council. • Water revenue and impact fee increases in the Water Fund. Ms. Lemos discussed the following goals for next budget year: • Increase to 2.3 officers per 1,000 Town of Oro Valley residents. • Resurface 38 lane miles of Town roadways, • Enhance IT staff by improving the GIS program and adding a Network Administrator. • Increase the public communication program with a Constituent Services Coordinator. FWINUTESTINANCE AND BOND\2007\7-23-07,doc 0 Ensure continual provision of a high quality water supply. 0 Look at Phase 11 of the reclaimed water system. -I,,,-*--- Historic preservationofSteam --Pump-Ranch -and--H-oney--Bee-Village.------------------------- • Conduct roadway capacity improvements. • Maintain existing programs in Parks and Library. • Enhance customer service in the development review process. • Future facility needs at the Municipal Operations Center and Narani a Town Site. • Hire a Procurement Administrator to help with cost savings. Vice -Chair Kill asked how the Town reduced the budget for the departments that used to perform the procurement activities with the addition of a Procurement Administrator. Ms. Lemos explained that it will centralize the process and free up time for staff in other departments and increase efficiency. Departments were asked to keep their 0 & M budgets flat from the 06/07 budget because the Town will now use more competitive bidding and state contracts. Ms. Lemos highlighted some of the main incremental increases programmed into the 07/08 budget in comparison to the 06/07 adopted budget: • There will be a 5% cost of living adjustment for employees and no merit increases. • There are benefit increases of approximately 10% in retirement and medical premiums. • Election costs were included in the budget. • CIP projects are approximately $857K more this year than last year. • There will be new budget programs and staffing this year, $500K will be set aside for the capital asset replacement fund to pay for routine replacement of cars and equipment. Ms. Lemos discussed the 10 approved new personnel positions selected from the 3 4 requested. The Council increased the contingency policy from 20% of adopted expenditures to 25%. Til adopted contingency reserve in the 07/08 budget is closer to 30% of the annual expenditures.1 Ms. Lemos explained the assumptions surrounding the Financial Sustainability Plan. The process will start each year with the current budget year performance and then assumptions will be updated, The Finance and Bond Committee will be integral in forecasting the coming year. Member Lamm asked about the Council's outlook on pavement management. Ms. Lemos explained that $1.9M was budgeted this year for roadway resurfacing projects which is slightly higher than 06/07. Council approved the pavement management position to update and maintain the pavement management program. Financial sustainability of the Highway Fund was reviewed which has more restrictions on its revenue sources than the General Fund. The funding is tied closely to construction sales tax revenue which is cyclical. Current service levels are staying consistent. The Town may not be able to expand the roadway surfacing project unless a new revenue source is identified for the Highway Fund. Ms. Lemos reviewed the past 5-years revenues and expenditures per capita: 0 General Fund revenues per capita are increasing steadily and expenditures per capita remain stable until 05/06 and then increase to about $513 per capita. There is an increase in revenues per capita for that same time period due to the increased commercial activity and construction in 05/06. Revenues increased with the construction of Oracle Crossings and expenditures may increase for patrolling those areas, processing permits, etc. FWINUTESTFNANCE AND BOND\2007\7-23-07.doc 4 The Highway Fund had increasing revenues and expenditures per capita in 03/04. The spike beginning in 04105 results from the Town's increased construction sales tax and a --portion being -dedicated -to -the Bighway --- Fund. The - increase- in -revenues -gave _the_ability________ to increase expenditures for additional roadway projects. I Town Council will hold a study session to discuss the Naranja Town Site on July 25 th . There will be a presentation on the election process in case the Council asks for voter approval for full or partial funding of the park, Ms. Lemos stated that the Council has held a study session to find a consultant to assist the Town in a community education campaign. The Council received some funding options but the project can not be done at this point without a dedicated funding source. There are options for covering 0 & M costs. There is funding available if the Town dedicates 2/3 of the bed tax revenues to help offset some of the 0 & M costs. $13M could be paid annually out of bed tax revenues which would pay for most of the 0 & M of the outdoor recreation elements. The indoor elements have higher costs but they also have the opportunity for cost recovery. A primary property tax would help offset the 0 & M costs of the larger facilities. Town Council plans to meet regularly on the Naranja Town Site to discuss progress, If they decide that they would like to prepare for a November 2008 election, it is staff s recommendation that the Council decide how the ballot will be worded early so that there is time to solidify the message and move forward with education and preparing for the election. Vice -Chair Kill recommended a baseline to keep departmental budgets and expenses low. Ms. Lemos stated that the performance based budget measures how well the Town does each year and that is how the Directors and Council receive feedback. Member Lamm suggested that instead of having an arbitrary 5-10% COLA and benefits, to look at real wage increases nationwide or statewide in the private sector and use that as a guide, Ms, Lemos explained that the benefit increases of 10% are primarily from State retirement system employer matching contributions and the Town has to absorb those increases. Health insurance rates have inclined and the Town offset the premium costs by raising employee out of pocket costs. The Town compares itself to other municipalities for specialized government positions. Ms. Lemos discussed the option of looking more closely at projections for benefit increases in the future. The COLA increase is based on the CPI from the U of A Economic Research Institute. Salary and market comparisons are also conducted with surrounding jurisdictions. The Committee plans to meet minimally on a quarterly basis and monthly meeting dates have been reserved and will be held on an as needed basis. FWINUTESTINANCE AND BOND\2007\7-23-07,doc MINUTES, FINANCE AND BOND REGULAR MEETING 6 MOTION: Member Toth MOVED to maintain the existing schedule and time of Finance and Bond Committee meeting dates for FY 2007/08. Vice -Chair Kill SECONDED the motion. MOTION: Member Harris MOVED to ADJOURN the meeting. Being that there were no objections, the meeting adjourned at 8:17 p.m. Danielle Tanner Senior Office Specialist FWINUTESTINANCE AND BOND\2007\7-23-07,doe 6