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HomeMy WebLinkAboutPackets - Council Packets (1542) AGENDA ORO VALLEY TOWN COUNCIL BUDGET STUDY SESSION May 26 , 1999 5:30 p.m. ORO VALLEY TOWN COUNCIL CHAMBERS 11,000 N. LA CANADA DRIVE BUDGET STUDY SESSION -AT OR AFTER 5:30 PM CALL TO ORDER ROLL CALL 1. FOLLOW-UP ISSUES FROM MAY 20, 1999 BUDGET REVIEW SESSION 2. GENERAL ADMINISTRATION (10 minutes) (Pages 135 - 150) 3. MUNICIPAL DEBT SERVICE (5 minutes) (Pages 440 - 454) 4. NARANJA ROAD IMPROVEMENT DISTRICT (5 minutes) (Pages 447 - 449) 5. ORACLE ROAD IMPROVEMENT DISTRICT (5 minutes) (Pages 450 -454) 6. TRANSIT (15 minutes) (Pages 378 — 391) 7. BUILDING SAFETY (20 minutes) (Pages 184—203) 8. STAFFING REQUESTS FOR FY 1999/2000 (45 minutes) 9. REVIEW OF BUDGET ISSUES FROM THIS EVENING'S MEETING AT OR AFTER 7:15 P.M. 10. LODGING INDUSTRY INCENTIVE POLICY PROPOSAL AND RECOMMENDATION ADJOURNMENT A copy of the Manager's proposed budget for fiscal year 1999/2000 is available for public inspection in the office of the Town Clerk between the hours of 8:30 a.m. — 5:00 p.m. The Town of Oro Valley complies with the Americans with Disabilities Act (ADA). If any person with a disability needs any type of accommodation, please notify the Town Clerk at 297-2591. POSTED: 5/21/99 4:30 P.M. LH 8 STAFFING - 199912000 BUDGET Staff is currently working on a spreadsheet regarding this agenda item for Wednesday, May 26th which will list all staff positions that relate to the 99100 budget. We hope to deliver this spreadsheet of information early next week prior to next Wednesday's budget session. 10 TOWN OF ORO VALLEY COUNCIL COMMUNICATION MEETING DATE: 05/26/99 TO: HONORABLE MAYOR& COUNCIL FROM: Jeffrey H. Weir, Economic Development Administrator SUBJECT: Lodging Industry Incentive Policy Proposal and Recommendation. SUMMARY: The primary purpose of an incentive policy is to provide the Council and staff with a"powerful tool" that results in achieving desired development. The nature of the business attraction efforts in today's highly competitive environment is the creation and application of incentives/inducements. Given the importance of continued development of resort and lodging facilities for the Oro Valley community a set of guidelines has been prepared. The elements of this proposal address both existing and new lodging operations. The importance of capital investment is a primary consideration as well as overall business performance. The focus on investment precludes projects that are small in scope, but allows for both new and existing lodging operations to request consideration. The incentive associated with investment is a stepped reduction in the sales tax on construction materials returned, or rebated, to the business based on greater amounts of investment qualify for a larger rebate. The second"part" of the proposal provides for an increase in the existing bed tax from 1% to 2%. The incentive associated with performance would recognize a return, or rebate, to the lodging facility operator (both existing and new) of.75% of the additional 1%. This amount is the same amount currently provided to the Metropolitan Tucson Convention and Visitors Bureau(MTCVB) as stipulated in the existing Financial Participation Agreement between MTCVB and the Town of Oro Valley. The remaining .25% of the additional 1% is proposed to be designated for use as for a community project, such as a park or similar amenity. The Lodging Industry Incentive Guidelines as proposed will provide the Town Council with an important tool that results in achieving the strategic objective of increasing resort/lodging facilities within the town limits. The resort/lodging facilities generate significant tax revenues for the town without placing high demands on services or infrastructure. The process envisioned gives complete control to the town whereby the lodging facility builder/operator first pays all of the sales taxes and then is reimbursed based on actual performance. This approach guarantees control is in the towns hands and does NOT require any out of pocket expenditure by the town. Currently one major planned project and their respective builders/operators have requested considerations. That project is the Radisson Grand Resort. Two other projects could also be considered, the new Holiday Inn Express and the Sheraton El Conquistador expansion. ATTACHMENTS: a. Memorandum to the Mayor and Council dated April 19,1999 addressing Business Incentive Policy/Guidelines —Lodging Industry. TOWN OF ORO VALLEY COUNCIL COMMUNICATION PAGE 2 OF 2 FISCAL IMPACT: Determined on a project specific basis. RECOMMENDATION: Staff supports the proposed Lodging Industry Incentive Guidelines and requests adoption by the Council. SUGGESTED MOTION: 7 I I/ (L ___, Jeffre H eir, CED Economic Development Administrator (-----) David L. Andrews Finance Director I/ / i Chuck Sweet 4° Town Manager MEMORANDUM TO: HONORABLE MAYOR& COUNCIL FROM: Jeffrey H. Weir, CED, Economic Development Administrator '-'/^ VIA: Chuck Sweet, Town Manager DATE: April 19, 1999 SUBJECT: Business Incentive Policy/Guidelines—Lodging Industry. The current Town of Oro Valley Community Economic Development Strategy (CEDS) was adopted in the fall of 1997 by the Town Council. One of the five stated purposes of the CEDS is to provide guidelines in decision-making to the Town's political and administrative leadership to achieve unity of purpose in the pursuit of economic development goals. There are twenty one (21) action steps identified in the CEDS that relate to the achievement of the Strategic Plan. Action Step number twelve (12)Develop and adopt a Business Incentive Policy, states that the Town may from time to time wish to use some form of incentives to attract or retain desirable businesses. Guidelines and review criteria will be established to assist the Town in deciding when to grant such incentives. The following request proposes the establishment of incentive(s) and guidelines to be applied to both existing and new businesses within the lodging industry. The Town of Oro Valley is and will become more reliant on the generation of Sales Taxes as the primary source of operating revenues. A major focus on increasing new sales taxes is the encouragement of construction of both new resort/lodging facilities and the expansion of existing facilities. Major resorts require large investment sums, even smaller motels require millions of dollars. In today's cautious investment marketplace the opportunity for capital intensive projects is highly scrutinized. The current General Plan and the existing CEDS have identified attracting and expanding resort/lodging facilities as a dual source of potential revenue growth. Lodging facilities provide sales tax revenues for rooms and food beverage if available and bed tax revenues. Given the high desire by the Town of Oro Valley for increased lodging AND the increased difficulty in raising large amounts of investment capital it is proposed that an Incentive Policy/Guideline be developed and approved for the lodging industry. It is the intent of this policy to apply ONLY to motels/hotels/resorts. The proposed Lodging Industry Incentive Policy/Guideline focus separately on two incentives. The first is the Bed Tax and the second is Sales Tax on Construction Materials. The following criteria were used in the development of this incentive approach: 1. The Policy/Guidelines must be fair, performance based and equitable to both existing and new lodging businesses; 2. The Policy/Guidelines should address various facility sizes and potential revenue generation; and 3. The lodging facility(s) requesting consideration must clearly be identified as a benefit to Oro Valley. MEMORANDUM PAGE 2 of 3 TO: HONORABLE MAYOR& COUNCIL SUBJECT: Business Incentive Policy/Guidelines—Lodging Industry. Bed Tax. The current Bed Tax applied to the gross price of each room is 1%. At this time the contract between the Town of Oro Valley and the Metropolitan Tucson Convention and Visitors Bureau(MTCVB) specifies that 75% of the 1% Bed Tax be forwarded to the MTCVB. The remaining 25% of the 1% Bed Tax flows into the town's General Fund and traditionally is used for Economic Development related expenses. The enclosed chart, Arizona Community's Bed Tax Data, and the accompanying three data sheets indicate the amount of Bed Tax, if any, charged by each community. Eighty seven (87) Arizona communities' were reviewed, the source document being the January 1999 Local Government Directory published by the League of Arizona Cities and Towns. Oro Valley's nearest community competitors (within a 70 mile radius) ALL charge at LEAST 2% with Marana at 3% and Tucson at 4%. Number Per Cent Community's Using 0.00 % Bed Tax 25 29% Community's Using Up To 1.00 % Bed Tax 5 6% Community's Using> 1.00% - 2.00 % Bed Tax 27 31% Community's Using> 2.00 % - 3.00 % Bed Tax 22 25% Community's Using> 3.00% -4.00 % Bed Tax 7 8% Community's Using 5.00 % Bed Tax 1 1% 87 100% Incentive Proposed. Increase the Bed Tax from 1%to 2%. Place a"cap" on the MTCVB revenues at no more than $ 450,000 annually, calculated at the current 75% of 1%. Continue the existing 25% of the first 1% as a General fund revenue. Provide up to 75% of the additional 1% as a potential incentive and dedicate the remaining 25% of the additional 1% for funding of a specific community project/facility/ program as determined by the Council. The enclosed Proposed Lodging Industry Incentive Guidelines spreadsheet indicates the distribution of the higher 2% Bed Tax. II. Sales Tax on Construction Materials. Currently the Town of Oro Valley charges a 2% Sales Tax on all construction materials. As previously indicated major resort/lodging facilities are investment intensive given that in many cases average room construction costs can reach from $ 100,000 to $ 167,000. This high per room construction cost is a significant factor in identifying investment capital, the total investment commitment for a resort can easily be from $ 35,000,000 to much larger amounts. Given the importance to Oro Valley in attracting and encouraging expansion of resort/high end lodging facilities any inducement that results in investors looking at this community more favorable should assist in fulfillment of a major economic strategy. MEMORANDUM PAGE 3 of 3 TO: HONORABLE MAYOR& COUNCIL SUBJECT: Business Incentive Policy/Guidelines—Lodging Industry. Incentive Proposed. To encourage high investment intensive resort/high end lodging facility construction in Oro Valley the following incentive is proposed. A reduction of the Sales Tax on Construction Materials for lodging and related facility construction be made available for qualifying projects: Sales Tax Oro Valley Investment Amount Rebate Retains % > $ 5,000,000 < $ 10,000,000 0.50% 1.50% > $ 10,000,000 < $ 17,500,000 0.75% 1.25% >$ 17,500,000 <$ 25,000,000 1.00% 1.00% > $ 25,000,000 < 5 32,500,000 1.25% 0.75% > $ 32,500,000 < $ 40,000,000 1.50% 0.50% > $ 40,000,000 < $ 47,500,000 1.75% 0.25% > $ 47,500,000 2.00% 0.00% The enclosed Proposed Lodging Industry Incentive Guidelines spreadsheet indicates the impact of the Sales Tax on Construction Materials Incentive. It is requested that the Council through the Town Manager's office bring forward this topic at the next available Council Study Session. The need for expediency will allow for a timely response to the Radisson Resort development team. The Radisson Resort development team has asked the Town of Oro Valley for consideration of assistance which will facilitate identification and acquisition of investment capital. Cc: David Andrews, Finance Director ATTACHMENTS: 1. Arizona Community's Bed Tax Data chart, 2. Three (3) data sheets supporting the Arizona Community's Bed Tax Data chart data, and 3. Proposed Lodging Industry Incentive Guidelines spreadsheet. II ' CA X o ca CO $. 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Number of Community's Using 0.00 % Bed Tax 25 29% Number of Community's Using Up To 1.00 % Bed Tax 5 6% Number of Community's Using > 1.00% - 2.00 % Bed Tax 27 31% Number of Community's Using > 2.00 % - 3.00 % Bed Tax 22 25% Number of Community's Using > 3.00% - 4.00 % Bed Tax 7 8% Number of Community's Using 5.00 % Bed Tax 1 1% 87 100% II. Nearby Community's (within 70 miles). Benson 2.00 0/0 Casa Grande 2.00 Eloy 2.00 Marana 3.00 Nogales 4.00 Wo Sahuarita 2.00 Wo Sierra Vista 4.00 0/0 South Tucson 2.00 Tucson 4.00 Willcox 4.00 Arizona Community's Comparison of Sales & Bed Tax Rates Sales Tax Bed Tax Bed Tax Town/City Rate Rate Collections 1 Apache]unction 2.00 % 2.00 % N/A 2 Avondale 1.50 % 2.00 % N/A 3 Benson 2.50 % 2.00 % N/A 4 Bisbee 2.00 % 2.50 % $ 36,778 5 Buckeye 2.00 % 0.00 % N/A 6 Bullhead City 2.00 % 3.00 % $ 104,048 7 Camp Verde 1.00 % 3.00 % N/A 8 Carefree 2.00 % 3.00 % N/A 9 Casa Grande 1.80 % 2.00 % $ 128,773 10 Cave Creek 2.00 % 4.00 % N/A 11 Chandler 1.50 % 2.90 % $ 871,000 12 Chino Valley 2.00 % 0.00 % N/A 13 Clarkdale 2.25 % 2.00 % N/A 14 Clifton 2.00 % 0.00 % N/A 15 Colorado City 2.00 % 0.00 % N/A 16 Coolidge 2.00 % 3.00 % N/A 17 Cottonwood 2.20 % 2.00 % $ 56,684 18 Douglas 2.50 a/o 2.00 % $ 31,985 19 Duncan 2.00 % 0.00 % N/A 20 Eagar 3.00 % 3.00 % $ 10,899 21 El Mirage 3.00 % 0.00 % N/A 22 Eloy 2.00 % 2.00 % N/A 23 Flagstaff 1.00 % 2.00 % $ 3,335,957 24 Florence 2.00 % 2.00 % N/A 25 Fountain Hills 1.20 % 3.00 % N/A 26 Fredonia 2.00 % 0.00 % N/A 27 Gila Bend 2.50 % 2.00 % $ 23,875 28 Gilbert 1.00 % 3.00 % N/A 29 Glendale 1.30 % 3.00 % N/A 30 Globe 1.50 % 5.00 % $ 158,804 31 Goodyear 2.00 % 2.00 % N/A 32 Guadalupe 2.00 % 4.00 % N/A 33 Hayden 2.00 % 1.00 % N/A 34 Holbrook 3.0Q% 2.00 % N/A 35 Huachuca City 1.00 % 0.00 % N/A 36 Jerome 3.00 % 0.00 % N/A 37 Kearny 2.00 % 3.00 % N/A 38 Kingman 2.00 % 2.00 % N/A 39 Lake Havasu City 2.00 % 3.00 % $ 416,963 40 Litchfield Park 2.00 % 2.00 % N/A 41 Mammoth 2.00 % 0.00 % N/A 42 Marana 2.00 % 3.00 % N/A 43 Mesa 1.50 % 2.50 % $ 1,432,186 44 Miami 1.50 % 0.00 % N/A Arizona Community's Comparison of Sales & Bed Tax Rates Sales Tax Bed Tax Bed Tax Town/City Rate Rate Collections 45 Nogales 1.25 % 4.00 % $ 151,558 46 Oro Valley 2.00 % 1.00 % $ 164,827 47 Page 2.00 % 2.00 % N/A 48 Paradise Valley 1.20 % 3.00 % N/A 49 Parker 2.00 % 3.00 % N/A 50 Patagonia 3.00 % 3.00 % N/A 51 Payson 2.00 % 0.00 % 1. $ 67,829 52 Peoria 1.50 % 3.50 % $ 92,520 53 Phoenix 1.30 % 3.00 % $ 18,888,000 54 Pima 1.00 % 0.00 % N/A 55 Pinetop-Lakeside 2.50 % 0.00 % N/A 56 Prescott 2.00 % 2.00 % $ 208,329 57 Prescott Valley 2.00 % 2.00 % N/A 58 Quartzsite 2.00 % 0.00 % N/A 59 Queen Creek 1.00 % 1.00 % N/A 60 Safford 2.00 % 3.00 % $ 86,754 61 Sahuarita 1.00 % 2.00 % N/A 62 St. Johns 2.00 % 0.00 % N/A 63 San Luis 2.50 % 0.00 % N/A 64 Scottsdale 1.40 % 3.00 % $ 6,877,314 65 Sedona 3.00 % 3.00 % N/A 66 Show Low 2.00 % 0.00 % N/A 67 Sierra Vista 1.50 % 4.00 % $ 284,480 68 Snowflake 2.00 % 0.00 % N/A 69 Somerton 2.50 % 0.00 % N/A 70 South Tucson 2.50 % 2.00 % $ 7,437 71 Springerville 3.00 % 1.00 % $ 8,354 72 Superior 2.00 % 0.00 % N/A 73 Surprise 2.00 % 1.00 % N/A 74 Taylor 2.00 % 0.00 % N/A 75 Tempe 1.70 % 2.00 % $ 1,524,679 76 Thatcher 2.00 % 3.00 % N/A 77 Tolleson 2.00 % 2.00 % N/A 78 Tombstone 2.50 % 3.00 % N/A 79 Tucson 2.00 % 4.00 % + $ 6,409,172 80 Wellton 2.50 % 0.00 % N/A 81 Wickenburg 1.00 % 0.00 % N/A 82 Willcox 2.00 % 4.00 % $ 130,523 83 Williams 3.00 % 1.25 % $ 278,556 84 Winkelman 2.50 % 0.00 % N/A 85 Winslow 3.00 % 2.00 % $ 71,790 86 Youngtown 2.00 % 2.00 % N/A 87 Yuma 1.70 % 2.00 % $ 2,190,493 MN t'o O 00'1 M .w� O M O 01 To NN 01 O LA 00 F C t CO N O '-i 00 O C N O LA tt N = O O tD LA N i• � LI. 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U ,� ry .0 ,uf fLp 11 oO Liill�ilk ilk ilk O ii aJ O N 'C , — ij 'Q O = N -I o E AAAA a oC oG vii I Q c4 ttl n 0 oC o�C (1) 0 0 a) au tri a aE O x M a LL) )-.+ ''+ ,"+ p<(.4, Town of Oro Valley Staffing Analysis FY 1999-2000 Town Budget Department! Estimated Salary & Division Position Modification Benefits @ 25% Finance/Economic Econ. & Financial New Hire; Part-time $26,000 Development Analyst (5) Legal Paralegal New Hire 37,500 General Information New Hire 59,795 Administration Systems Admin. Planning & Zoning Plan Review/Field New Hire 37,500 EIT Building Safety Plans Examiner New Hire 50,000 Building Safety Permit Tech New Hire 25,000 Building Safety Building Inspector New Hire 37,500 Building Safety Plans Exam/Bldg. New Hire (Contract) 55,000 Insp. Parks & Recreation Maintenance New Hire 28,750 Laborer I (2) Parks & Recreation Parks Maint. Lead New Hire 20,625 Person Parks & Recreation Recreation/ New Hire 35,000 Volunteer Coordinator Police Assistant Chief New Hire; .75 FTE 61,160 Police Patrol Sergeant New Hire 56,250 Police Patrol Officers (4) Grant Contingent 168,000 New Hires Public Works Laborer New Hire 22,500 Water Utility Utility Service New Hire 41,250 Worker IV Water Utility Utility Service New Hire 90,000 Worker II (3) Water Utility Customer Service Reclassify 1,500 Rep. Clerk/Receptionist Water Utility Civil Engineering New Hire 45,000 Technician Town Clerk P/T Clerk New Hire (.5) 11,875 Receptionist Human Resources PIT Clerk New Hire (.5) 11,875 Receptionist Finance Secretary to Admin. Reclassification 5,577 Assistant Human Resources Human Resource Salary Adjustment TBD Director Human Resources Human Resource Salary Adjustment 7,045 Specialist Library Librarian New Hire 50,000 . Public Works Transportation New Hire 62,500 Planner Public Works Bicycle Program New Hire 41,875 Coordinator