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HomeMy WebLinkAboutMinutes - Finance and Bond Committee - 2/12/2007MINUTES TOWN OF 1' 1 VALLEY 1 C t, 1 1 SPECIAL MEETING WATER CONFERENCE ROOM WATER UTILITY BUILDING 11,000 N. LA CA&ADADRIVE ORO VALLEY, ARIZONA MONDAY, FEBRUARY 12,2007 AT OR AFTER 6:00P.M. ROLL CALL PRESENT: Tony Eichorn, Chair Aaron Fisher, Member Peter Lamm, Member STAFF PRESENT: Stacey Lemos, Finance Director Wendy Gilden, Management & Budget Analyst Danielle Tanner, Senior Office Specialist ALSO PRESENT: Helen Dankwerth, Vice Mayor Barry Gillaspie, Council Member Daniel Sharp, Police Chief EXCUSED: Chuck Kill, Vice -Chair 1. APPROVAL OF MINUTES FROM THE JANUARY 29, 2007 REGULAR MEETING MOTION: Member Harris MOVED to approve the minutes from the January 29, 2007 meeting as amended. Member Lamm SECONDED the motion. Motion carried, 4-0. DISCUSSION OF (DEPARTMENT SERVICE LEVELS FOR THE FINANCIAL SUSTAINABILITY PLAN Ms. Lemos discussed the components to the Financial Sustainability Plan (FSP). She explained that the Departmental Forecast includes each department in the General Fund and new program areas or areas for enhancing service levels. Critical funds being reviewed for this plan are the General Fund, Highway Fund, Stormwater Utility Fund, and the Public Transit Fund. Ms. Lemos outlined the following general assumptions: • General staffing growth — EV Model staffing projections will be used for general staffing flow based on existing service levels. Staff has included ratios on current employees per capita in each department which can be compared to the Space Needs Study. • Inflationary growth for O&M and COLAs. • Salary growth through merit increases. GAFinance and BondlMinutes\200712-12-07.doc MINUTES, FINANCE AND BOND REGULAR MEETING 2 • Cost of benefits growth and retirement premiums. • Benefits as a percentage of total salaries. • Population growth projections. • Retail space growth projections. • Starting contributions to Capital Asset Replacement Fund. Ms. Lemos discussed the following Funds: • The Highway Fund has the same general assumptions. The main element of this fund is the cost for roadway maintenance and to conduct the Pavement Preservation Program. • The Stormwater Utility Fund handles Stormwater drainage issues. There is an unfunded mandate from the federal government which requires the Town to meet certain EPA standards and resources in this area need to be dedicated. This function does not have a dedicated revenue source and it is currently being paid out of the General Fund. The Town gets allocations for specific types of capital projects for this fund from the Pima County Flood Control District tax but those are earmarked for specific projects. • The Public Transit Fund operates the Coyote Run transit service. Regional T-r-an,sportation Authority funding -will -be -used to-enhance-and-expanri-thi-s-program-in-tlre -- future. This fund gets a subsidy from the General Fund. Fares are charged for the riders and that revenue also flows into this fund. Ms. Lemos outlined the four large dollar projects that require separate analysis: • Municipal Operations Center - A study was done on cost projections and timing to build it. Annual operating costs for this facility need to be reviewed. The costs to operate the facility will be shared by the General Fund, Highway Fund and Water Fund. • Naranja Town Site - Staff is researching a separate funding scenario and reviewing cost of construction and O&M concurrently. Right now the cost to build and the timing are being prepared and should be completed by the end of the month. Vice Mayor Dankwerth discussed using an experienced professional fundraiser for this project. • Electrical Undergrounding - Public Works will identify the costs, review the proposed lines to be undergrounded and look at the options of a dedicated revenue source. • Southwest Area Annexation Impacts - This is a separate analysis and preliminary numbers have been prepared which will be reviewed during this process. Ms. Lemos discussed the 10-year revenue forecast. Staff plans to look at the existing revenue sources and revenues from new commercial growth. We will also review the estimated impacts from residential and commercial growth and predict build out. We will estimate the impact of our state shared revenues based on population growth after the 2010 Census is complete. Ms. Lemos explained that we will look at the gap after the expenditures and revenues have been forecasted. This will be brought to the group for review and to look at possible new revenue sources to close that gap as well as adjustments to service levels and expenditures. We will also look at possible service level reductions, effect on service levels and the effect on the budget. We may then make a recommendation to present with the Town Manager's proposed budget. Ms. Lemos discussed the budget planning calendar. The Department Heads from the larger departments will attend these meetings to give an overview on how their departments operate in terms of programs and service levels. The EV Model was prepared so that the model has specific tabs dedicated to each major department. She plans to bring each EV Model tab for each GAFinance and 13OndW11Utes\2007\2-12-07.doc 2 MINUTES, FINANCE AND BOND REGULAR MEETING 3 department to review some scenarios and get familiar with how the Model works. This will also help to see what drives the costs in those departments and the effects of changing variables and assumptions. During the end of March, Finance staff will have looked at the projections of the current revenue sources at least for next fiscal year and will have gathered information on projecting those revenue sources into the future. The Town Manager's budget will be compiled with all of the department requests in April. At that time, the Town Manager has asked to see how far we have gotten on our FSP so that there is consistency between the plan and the budget for the following year. It will all wrap up in the first part of April. Member Harris asked about our personnel compensation compared to other jurisdictions. Ms. Lemos explained that a comprehensive study was done comparing the Town to other comparable jurisdictions. The focus of the current fiscal year adopted budget was to provide for the needed market adjustments. No new personnel were approved in order to bring staffing tip to market conditions. A compensation review is required annually and it is assumed that if the Town keeps up to date with COLAs and merit increases that it will stay steady. Vice Mayor Dankwerth stated that Sandra Abbey, HR Director, recently presented the Compensation study to the Council and only seven positions were lower than 10% and we will adiust for those accordingly_. Mr. Harris explained that the Financial Accounting Standards Board is going to adopt reporting requirements for states and localities on pensions and health insurance coverage. He asked if this could present a funding problem. Ms. Lemos stated that she does not think so because the Governmental Accounting Standards Board (GASB) has already adopted standards on funding post retirement benefits. The Town does not currently have many employees on post retirement benefits so it does not significantly effect on the Town. The current retirement plans that we have for the Police Department and the State Retirement System provide a portion of retirement to retirees to help pay their medical premiums after they retire. If the Town implemented a policy to pay for a portion of retirees benefits, then it would become a liability. Member Lamm suggested that inflation be kept out of the computation as long as possible and that staff work with constant dollars as long as possible because inflation is neither predictable nor within our control. If inflation is incorporated too early, it makes it very difficult to know how the numbers are moving because they will always go up because of inflation and it is not simple to take it out again. Certain revenue sources are in fixed nominal dollars and do not move with inflation and certain expenditures may do the same. In those cases, the level of inflation becomes intrinsic to what happens to the constant dollar spending of that particular account but that is a very small part of the total expenditures over a 10 year period in the Town. Ms. Lemos stated that they are starting to look at an approach to bring back to the Committee. The Town usually uses the U of A Eller College of Business in Economic Research as a source for the annual COLAs. They have historical inflation and CPI calculations for the last 30 years. We were going to look at going back 10-20 years to see what the inflation factor has been assuming that there have been peaks and valleys in that timeframe and do an average of the past and apply it to the future assuming there will be peaks and valleys in the future and then try to level it. Member Lamm indicated that there is nothing wrong with doing that but advised doing it as late in the process as possible after everything else has been analyzed. He stated that it is possible to deduce an implicit market assumption about future inflation by looking at the comparative yields of treasury bonds which are inflation adjusted and not inflation adjusted. The difference between those yields is a market forecast of what inflation will be over the life expectancy of the bond, some of which are 10 years. GAFinance and Bond\Minutes\2007\2-12-07.doc 3 MINUTES, FINANCE AND BOND REGULAR MEETING 4 Ms. Lemos distributed the budget calendars which show target dates. Budget worksheets have been distributed to all of the Department Heads and they are due back March 2na Chief Sharp stated that the Police Department (PD) started out with community policing but has become more reactive. The service we provide is what drives us and how those services are going to be provided is based on the trends and demographics in and surrounding the Town. They look for regional approaches to deal with issues and have task forces to maximize impact. He stated that they are working on technology awareness. Chief Sharp discussed the following issues: • Oro Valley is a target rich environment and the PD has high visibility patrol with 80 volunteers. They will be requesting to increase the volunteer force by 20 which is a nominal cost but it is effective. • Two main areas for auto theft are movie theaters and hospitals. o They invested time upfront on the hospital and it is paying off. o They will review the design of the movie theatre. _ o He is the Vice -Chair of the Arizona Automobile Theft Authority and they will pay for a police officer to go into the Auto Theft Task Force which is a resource. Chief Sharp distributed copies of the Police Officer Staffing Report. The report discusses PD staffing increases to 2.5 Police Offers per 1,000 population. There is no national standard or average so they look at what works best for Oro Valley and what the citizens expect. TPD has 1.9 officers per 1,000 and are trying to get 2.4 but their service is not comparable to Oro Valley. Further discussion followed regarding: • The general region is about 52% higher in crime than the average in the rest of the country. Oro Valley is much lower than that because of maintaining vigilance and the committed residents who keep the PD informed. • The goal is the absence of crime and disorder and being proactive. • The OVPD conducts trend analysis and has a GIS program called Crime View and are trying to get another program called Crime View Neighborhood which allows residents to view activity in relative real time in their areas so they can continue in helping the Police. • Member Fisher asked about the wireless ticketing system. Chief Sharp explained that the contact person for the Arizona Court System left and they had to train someone else. They decided to work with the State of Arizona and the Judge granted them funds to buy the readers. Although it is a little slower coming online because they have to work out the issues for the model state wide, it benefits the PD because it brings in money. Chief Sharp explained the different areas discussed in the Staffing Report: • The goal is to get to Priority 1 calls that are the life threatening in 5 minutes 90% of the time. Beats would need to be staffed in order to do it 100% of the time. Oro Valley is approximately 35 square miles and has four beats which is untenable. It is important that the officers have beat integrity and know their beats. • Response times for Priority 2 calls which are emergency type calls but not necessarily life threatening would have a goal of 8 minutes 90% of the time. GAFinance and Bond\Minutes\2007\2-12-07.doe 4 E • It is difficult to compare the OVPD to other agencies regarding officers per thousand. In 1995 the City of Phoenix was labeled the best run city in the US and it they spent a lot of overtime in order to be the best run city because their staffing was low. • Response time standards are driven by demographics, location and citizen expectation. • The OVPD responds to rescue follow ups to look for abuse and neglect patterns. They work with the abuse, neglect, and exploitation of the elderly. Ms. Lemos explained that the spreadsheet showing the police sheets from the EV model was updated with current year budget data and scenarios and included the Magistrate Court costs and the costs for prosecution. Vice Mayor Dankwerth asked how many more officers would be required given our population and mileage if we go to the seven part program. Chief Sharp explained that a seven beat structure would require about 14 more officers but it would increase prevention. They changed the demand of traffic officers by changing the schedule to a platoon system from a squad system. Calls for service are not growing at a huge rate but part of the problem is that before many calls for service were officers discovering issues. Now they are not discovering issues but instead are _ being dispatched and being more reactive. A proactive approach has a direct correlation to prevention. Changing to the seven part program makes each of the beats smaller. One of the major principals to community policing is neighborhood focus. The squad system will be supported by the 2.5 and would include the annexation of the two areas. Chair Eichorn asked about shift differential. Chief Sharp explained that the shift differential is an extra 800 paid per hour to officers working 6pm to Gam. There are fewer officers at night because call volume is diminished. Member Fisher asked if Vestar will be a drain on staffing. Chief Sharp explained that their plan for Vestar is to field a bike squad which encompasses Vestar, Steampump and Rooney Ranch. Member Lamm asked about the status of the ERP system. Ms. Lemos explained that they are currently implementing the ERP system and expect to go live on the financial module July lst The departments will prepare their budgets for 07/08 in a project based format and that will flow into the chart of accounts which is set up in the ERP system to accommodate collecting costs of program areas. It will take 2-3 years or so to verify that the system is working properly. The EV model was not designed in a program based budgeting format. It was designed for service levels in its aggregate so there are only department budget totals. Expenditures in the EV model are population driven and as growth increases, the service level implications increase. Chief Sharp stated that there are different models. Each system provides a solid understanding of the community. Number of officers per 1,000 is used for simplicity. He stated that if the PD obtains 2.5 and applies it to the EV Model, it will be sufficient for at least 10 years. Member Harris asked if there was an opportunity to substitute technology for staffing in the PD. Chief Sharp stated that they have red light cameras and the Deputy Director of DPS has discussed putting speed cameras on interstates and state highways and Oracle Road is a state highway. The PD will have automated license plate readers soon which will be installed on the volunteer cars and they can report the information to a uniformed officer for follow up. GAFinance and Bond\M inu tes\2007\2-1 2-07. doe MINUTES, FINANCE AND BOND REGULAR MEETING 6 Ms. Lemos stated that they have run some scenarios on demonstrating how the EV Model works and updated some information. The projections go out 10 years. She explained that these are preliminary population figures that were plugged into the EV Model last year and they are subject to revision as we define our building activity going forward. The base is the current year 06/07. There is an employment population factor that measures the influx of people on a daily basis which provides daytime population figures. The officers from the Utility Tax approval which would be effective April 1st are included which makes 98 commissioned officers. The Model shows the status quo going out 10 years with maintaining current service levels. The existing PD budget of $12.1M divided by the number of commissioned officers is the cost per officer. The total projected cost per adopted budget remains status quo. Member Lamm asked if the projected number of officers is based on maintaining the officer per 1,000 ratio. The daytime population is growing faster than the nighttime population so if you are maintaining a static number of officers per 1,000 it means that during this period we have a declining number of officers per 1,000 for daytime population. Ms. Lemos stated that the EV Model was prepared to benchmark the Town into the future and compare us to other jurisdictions. The basis of this number was done with residential population and it focused on the incorporated resident population to calculate that number. The daytime population represents people who live outside the Town boundaries but work in the Town or who come into the Town on a daily basis. Member Lamm pointed out that we have a steadily increasing workload on the PD. Ms. Lemos stated that staff modeled out the base year going forward to show what the base year level of service would be and it may actually depict an eroding service level. Ms. Lemos stated that they wanted to demonstrate how the EV Model works at different service levels and to show the cost differential and the budget between 2.5 officers per 1,000 and other ratios to present the range of service levels and to show what the impact would be on the budget at each service level. The projected 2.5 officers per. 1,000 would result in adding about 13 new officers to maintain the service level, related cost, incremental cost per year and to maintain that with increasing population. The Model accounts for a 2.5% inflation factor. Ms. Lemos stated that additional police officers drive the Magistrate Court and Prosecution. Chief Sharp stated that one of the officers was 85% paid for by state. Certain positions would not have much effect on Prosecution. Annexation and an increase in motorcycle officers would have a huge impact on Prosecution. The EV Model will balance it out over time. Ms. Lemos explained that the EV Model was designed to have the basis of residential growth as the driver in staffing. There is also an element which includes square footages of new commercial space and it increases the employment level. Ms. Lemos explained that there are two arms to the EV model and we are looking at the financial arm of the model but we need to go back and update the land use side. Member Lamm suggested we keep the 2.5 and define it as the mean of the daytime ratio. Daytime defined as residents plus employees. It is a crude approximation but will produce a gradually rising number of incremental officers as the ratio of daytime to nighttime population grows and as the daytime to the nighttime increases, the ratio will adjust accordingly. Member Harris discussed a separate analysis for the commercial development along Oracle and Pinal County like we have for the Foothills Mall. Ms. Lemos stated that it would be a detailed project and we would need assistance with that effort. For our purposes with the limited time to GAFinance and Bond\Minutes\2007�2-12-07.doc 6 prepare the FSP, she recommended to keep with the structure of the EV Model. She indicated that when we update the commercial element of the Model we could apply those ratios and some factors and see how those numbers change, Vice Mayor Dankwerth asked about the effect of annexation to the north. Ms. Lemos stated th it is a blank slate and it would take years to plan that area and try to assign specific dollar impacts to it at this point. Staff would not be comfortable assigning revenues and expenditure to the area because there is so much unknown and nothing to base it on. Chief Sharp stated th there would be a staffing impact on the PD but they do have 4-wheel vehicles and the ability t go into the desert and mountains, The Pl) also has regional agreements with Pima County and relationship with the Sheriff at Pinal County so if that were to occur, staffing levels at 2.5 per 1,000 would take care of it assuming we continue to have an active volunteer group. I Ms. Lemos stated there is a lot of updating to do to the Model. Staff will be working diligently and bring the progress to each meeting. Member Harris asked if the 2.5 includes the assumption of the development of the Naranj a Town Site. Chief Sharp stated that it does and the PD wants to be heavily involved in that design, I Council Member Gillaspie asked that the Committee keep in mind as they review this information that one of the purposes of the EV Model was to give us something that is relatively reliable to discuss as a community and communicate the real estimated costs. Member Harris recommended hiring a consultant to advise the Town on presenting this end product to the public. Vice Mayor Dankwerth stated that that maybe the job of the Community Relations person we hope to hire. U�110'131� MOTION: Member Lamm MOVED to ADJOURN the meeting at 7:56 p.m. Member Harris SECONDED the motion. Motion carried, 4-0. Danielle Tanner Senior Office Specialist GAFinance and Bond\Minutes\2007\2-12-07,doc 7