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HomeMy WebLinkAboutPackets - Council Packets (1584)Town Council Meeting Regular Session June 2, 2021 1 Council meeting will resume at or after x:xx p.m. 2 3 Town Council Meeting Announcements 4 Upcoming Meetings 5 Five-Year Financial Forecast June 2, 2021 6 OVERVIEW General Fund, Highway Fund, and Community Center Fund Snapshot based upon known current information Serves as planning document for future budgets Forecast is updated annually as part of the budget process Sources: University of Arizona, AZ Department of Revenue, Joint Legislative Budget Committee, AZ Department of Transportation, as well as the knowledge, expertise and professional judgment by Town management and staff 7 GENERAL FUND REVENUE ASSUMPTIONS Assumes continued recovery with no further downturns caused by COVID-19 All revenue sources are at or above pre-pandemic levels by FY 2022/23 Continued improvement in most local tax categories Online sales tax collections to slow as some demand shifts back to traditional brick and mortar State shared revenues see one-time increase in FY 2022/23 Estimated changes in State shared income taxes due to “lag” between collections and distributions Construction sales tax and other development related revenues continue above average trend for next 24 months, with reductions thereafter 250-275 SFR permits per year through FY 24/25, with declines thereafter Approaching buildout in outer years of forecast No permit/tax revenues from specific development assumed No additional federal/state aid related to COVID-19 is assumed 8 GENERAL FUND REVENUES 9 GENERAL FUND EXPENDITURE ASSUMPTIONS Employee merit and Police step increases included in all years of forecast Modest capacity for new FTEs Continued capacity for normal increases in employee-related personnel costs (ERE) Continuation of PSPRS payments at 41.65% O&M assumes current service levels and moderate inflation Transfers to debt service include pension obligation bonds Transfers for CIP projects assumed at 5% of sales tax collections per Town Council financial policies Transfer in FY 22/23 includes second half of American Rescue Plan funding for capital projects Forecast preserves Council’s 25% of fund balance reserve policy 10 GENERAL FUND EXPENDITURES 11 GENERAL FUND FORECAST 12 HIGHWAY FUND REVENUE ASSUMPTIONS Forecast assumes moderate growth in Highway user (gas tax) revenues ADOT estimates with conservative growth figures in outer years Other revenue sources assume modest and incremental growth Transfer in FY 22/23 reflects American Rescue Plan funding for capital 13 HIGHWAY FUND REVENUES 14 HIGHWAY FUND EXPENDITURE ASSUMPTIONS Personnel and O&M figures reflect similar assumptions to General Fund Pavement preservation funding is included at $1.6 – $1.9 million per year Capital outlay reflects ten-year, tentative CIP schedule 15 HIGHWAY FUND EXPENDITURES 16 HIGHWAY FUND FORECAST 17 COMMUNITY CENTER FUND REVENUE ASSUMPTIONS Revenue projections largely reflect those presented to Council earlier in the spring Local sales tax figures follow same growth as General Fund for relevant categories Conservative recovery from impacts of COVID-19 for Town operating revenues Contracted revenues include Pusch 9-hole course 18 COMMUNITY CENTER FUND REVENUES 19 COMMUNITY CENTER FUND EXPENDITURE ASSUMPTIONS Expenditure projections largely reflect those presented to Council earlier in the spring Personnel and O&M figures reflect similar assumptions to General Fund Contracted expenditures include Pusch 9-hole course Capital outlay reflects ten-year, tentative CIP schedule Transfers include estimated debt service for park bonds Ending fund balance in outer years is related to current CIP schedule/timing Specific funding for Community Center improvements has not yet been identified 20 COMMUNITY CENTER FUND EXPENDITURES 21 COMMUNITY CENTER FUND FORECAST 22 Public Hearing: Text Amendment for Proposed Front Yard Setback Reduction Rancho Vistoso Planned Area Development Low Density Residential Zoning Town Council June 2nd, 2021 23 Good evening and thank you for you time Commission. My name is Kyle Packer; I am a planner with the Town of Oro Valley. My presentation tonight is regarding the proposed front yard setback reduction for land zoned Low Density Residential within the Rancho Vistoso Planned Area Development. Purpose: Rancho Vistoso LDR Front Setback Current Standards: 25’ average front setback 20’ minimum front setback Proposed Standards: 20’ minimum front setback 15’ minimum front setback for homes with side entry garages Applicable to all properties utilizing LDR in Rancho Vistoso Setback: The shortest straight-line distance from the property boundary to a building, structure, sign or the like located on the same property or lot. The applicant’s request is to modify front setback standards for Low Density Residential zoning in the Rancho Vistoso Planned Area Development. The requests are to eliminate the 25’ average setback requirement, utilize the existing 20’ setback, and allow 15’ front setbacks for homes with a side entry garage. Side and rear yard setbacks would remain unchanged. This Application started because the applicant wants to modify the front setbacks in one subdivision, however, there is nothing unique in terms of zoning or site design that would allow them to pursue these modifications at this single subdivision. All Low-Density Residential zoning sites and districts need to be treated in a uniform and consistent manner, therefore the proposed changes would apply to all LDR zoned areas. I’d also like to take a 24 Proposed Code Duplicates Intent to Provide Varied Streetscapes Proposed Standards & Existing OVZCR Design Standards Existing Standards 20’ minimum setback Side Entry Garage Only 20’ minimum setback 15’ minimum setback for homes with side entry garage 25’ average setback *NOT TO SCALE *NOT TO SCALE The applicant’s request is to modify front setback standards for Low Density Residential zoning in the Rancho Vistoso Planned Area Development. The requests are to eliminate the 25’ average setback requirement, utilize the existing 20’ setback, and allow 15’ front setbacks for homes with a side entry garage. Side and rear yard setbacks would remain unchanged. This Application started because the applicant wants to modify the front setbacks in one subdivision, however, there is nothing unique in terms of zoning or site design that would allow them to pursue these modifications at this single subdivision. All Low-Density Residential zoning sites and districts need to be treated in a uniform and consistent manner, therefore the proposed changes would apply to all LDR zoned areas. I’d also like to take a 25 Side Entry Garages These aerial photos show homes in the Town of Oro Valley already utilizing front setbacks of 20’ for front entry garage homes, and 15’ for side entry garage homes. The side and rear yard setbacks are smaller than, and not reflective of, the current or proposed side or rear setbacks for this application. In the first photo, you can clearly see the side-entry garage. A side entry garage is exactly that, a garage that is entered from the side, as opposed to the front, of a lot. This side-entry garage home has a front setback of 15’. This is reflected by the orange arrow on the second photo. The blue arrow on the second photo reflects the 20’ setback applicable to homes not utilizing this reduced setback. 26 Overview of Front Setbacks in Rancho Vistoso VLDR – 30’ LDR – Current - 25’ average, 20’ minimum Proposed - 20’ minimum, 15’ for side entry MDR – 20’, 10’-15’ side entry garage in some areas MHDR – 20’ HDR – 20’ I’ll start by discussing the purpose and agenda for tonight’s meeting. Town staff and the applicant are here to give you, the project’s neighbors, an opportunity to share comments and have your questions answered directly regarding the proposed 7 lot single family residential subdivision near Tortolita Mountain Circle and Rocky Highlands Drive, pictured here. First for tonight, I will provide information on the public participation process and give a brief overview of the project. Next, the applicant’s representative Mr. Paul Oland will provide a more detailed overview of the project. After Mr. Oland’s presentation it will be your turn! Please ask any questions you have for the applicant regarding their project and application. I’d like to emphasize that your feedback is critical to shaping the final proposal Town Council considers. As this is our first public meeting, your input here tonight is valuable for both Staff and the applicant. Following your input, I will provide more information about the next steps for this project, then conclude by sharing more about the upcoming opportunities for public participation. 27 Overview of Approximate LDR Equivalent Front Setbacks MDR I’ll start by discussing the purpose and agenda for tonight’s meeting. Town staff and the applicant are here to give you, the project’s neighbors, an opportunity to share comments and have your questions answered directly regarding the proposed 7 lot single family residential subdivision near Tortolita Mountain Circle and Rocky Highlands Drive, pictured here. First for tonight, I will provide information on the public participation process and give a brief overview of the project. Next, the applicant’s representative Mr. Paul Oland will provide a more detailed overview of the project. After Mr. Oland’s presentation it will be your turn! Please ask any questions you have for the applicant regarding their project and application. I’d like to emphasize that your feedback is critical to shaping the final proposal Town Council considers. As this is our first public meeting, your input here tonight is valuable for both Staff and the applicant. Following your input, I will provide more information about the next steps for this project, then conclude by sharing more about the upcoming opportunities for public participation. 28 General Plan Conformance Proposed amendment allows more design flexibility options Goal Q A built environment that creatively integrates landscape, architecture, open space and conservation elements to increase the sense of place, community interaction and quality of life. Goal U Conservation of natural and cultural resources through effective land use and transportation planning, design, construction and management Policy LU.1 Promote land use development practices and programs that conserve and minimize impacts to natural and cultural resources The applicant’s request is to modify front setback standards for Low Density Residential zoning in the Rancho Vistoso Planned Area Development. The requests are to eliminate the 25’ average setback requirement, utilize the existing 20’ setback, and allow 15’ front setbacks for homes with a side entry garage. Side and rear yard setbacks would remain unchanged. This Application started because the applicant wants to modify the front setbacks in one subdivision, however, there is nothing unique in terms of zoning or site design that would allow them to pursue these modifications at this single subdivision. All Low-Density Residential zoning sites and districts need to be treated in a uniform and consistent manner, therefore the proposed changes would apply to all LDR zoned areas. I’d also like to take a 29 Public Participation HOA Meetings Rancho Vistoso, Stone Canyon, Estates at High Mesa Primary concerns were about impacts to existing setbacks All have more restrictive, HOA enforced setbacks that will continue to prevail Neighborhood Meeting April on 1st Four residents attended No concerns raised Planning and Zoning Commission Meeting May 4th No concerns raised, PZC recommended approval 30 Summary and Recommendation Applicant property is the only functionally impacted Varied streetscapes maintained Precedent for side-entry garage setbacks within Rancho Vistoso Equivalent to other Planned Area Developments (15’-20’) and OVZCR (25’-30’) Conforms with General Plan by allowing design flexibility PZC recommends approval Rancho Vistoso Neighborhood 10A Setback reduction to allow 20’ for front-entry garage homes, 15’ for side-entry garage homes in areas utilizing Low Density Residential standards The applicant’s request is to modify front setback standards for Low Density Residential zoning in the Rancho Vistoso Planned Area Development. The requests are to eliminate the 25’ average setback requirement, utilize the existing 20’ setback, and allow 15’ front setbacks for homes with a side entry garage. Side and rear yard setbacks would remain unchanged. This Application started because the applicant wants to modify the front setbacks in one subdivision, however, there is nothing unique in terms of zoning or site design that would allow them to pursue these modifications at this single subdivision. All Low-Density Residential zoning sites and districts need to be treated in a uniform and consistent manner, therefore the proposed changes would apply to all LDR zoned areas. I’d also like to take a 31 32 33 34 Oro Valley Water Utility FY 2021-22 Water Rates Presentation June 2, 2021 35 The Oro Valley Water Utility 36 The Water Utility is an Enterprise Fund Funded solely from water sales, fees and charges All revenues are used for operating costs of the Utility Not dependent on the Town’s General Fund Administrative service fees are paid to the General Fund 36 Water Rates Analysis Process, Goals & Assumptions 37 Goals: Meets revenue, cash reserve & debt service coverage requirements Recovers the cost of service Promotes water conservation & maintains the financial health of the Utility Assumptions: Water resource costs, growth, inflation, interest rates & personnel requirements Planned use of cash for existing system improvements Process: Annually, Utility staff prepares a water rate analysis report that is reviewed by the Water Utility Commission The Commission and Utility staff make a recommendation to Council on the proposed water rates 37 Proposed Potable Water Rates Recommendation 38 Potable Water Rates Recommendations: Increases to potable base rates Increases to potable commodity rates (Tiers 1-4) commercial and master-metered multifamily No other changes to potable water rates Why do we need a potable water rate increase: To offset increasing CAP water delivery & wheeling costs Projected CAP Tier 1 shortage – 20% increase in delivery charge Wheeling costs increasing 4% annually over the 5-year projection period Existing system capital projects Cash funding of capital projects over the 5-year projection period 38 Proposed Potable Water Base & Commodity Rates 39 Proposed potable water base rate increase: Water base rates increase by meter size: 87% of customers have 5/8-inch meter and will see a $0.73 per month increase in the base rate Proposed potable water commodity rate increase: Commodity rates: The commodity rate is based on consumption tiers as shown to the right 39 Potable Water Cost Comparisons 40 Monthly water bill comparisons to other water providers: 87% of Oro Valley Water Utility customers have a 5/8-inch meter and consume an average of 7,000 gallons per month These customers will see an increase to their monthly bill of $1.15 or 2.8% increase 40 Proposed Reclaimed Water Rate Recommendation 41 Reclaimed water rate recommendation Increase to reclaimed commodity rate only Why do we need a reclaimed water rate increase Increased reclaimed water delivery costs One time “true-up” rate increase of 17% by Tucson Water to utilize City infrastructure to deliver OV reclaimed water to OV service area 41 Proposed Reclaimed Water Commodity Rate & Cost Comparisons 42 Proposed reclaimed water commodity rate: Golf irrigation (turf) is the primary consumer of reclaimed water Typical 18-hole turf customer consumes 10M gallons of water per month and would see an increase in their monthly bill of $1,000 per month or 3.7% Monthly reclaimed water bill comparisons to other water providers: 42 In Closing 43 Recommendation for approval: The Water Utility Commission and Water Utility staff respectfully recommend approval of water rate increases to the potable base rates, potable commodity rates and reclaimed commodity rate If the proposed rates are approved, they will become effective July 3rd and will be reflected on the water bills beginning in August of the new fiscal year 43 44 Questions? 44 FY 2021/22 Tentative Budget Adoption June 2, 2021 45 FY 2021/22 TENTATIVE BUDGET Tentative Budget brings forward all changes from Manager’s Recommended Budget, including: Revenues and expenditures related to the Westward Look Resort annexation Capacity for Parks & Recreation related bonding Updated and revised CIP budget figures If approved, Tentative Budget establishes the overall expenditure limitation (Home Rule for FY2022) Budget reflects the careful allocation of available resources 46 FY 2021/22 TENTATIVE BUDGET BY FUND FY 21/22 Rec’d Budget: $134,400,759 FY 21/22 Tentative Budget: $161,956,509 47 FY 2021/22 REVENUE SOURCES: $162.0M 48 FY 2021/22 EXPENDITURE SOURCES: $162.0M 49 FY 2021/22 CAPITAL IMPROVEMENT PROGRAM (CIP): $47.2M 50 FY 2021/22 GENERAL FUND OVERVIEW * Excludes budgeted contingency of $5.0M 51 FINAL NOTES AND NEXT STEPS Tentative Budget adoption sets the maximum spending ceiling at $161,956,509 Expenditure authority may only be reallocated or reduced Council has authority to amend budget throughout the fiscal year Publish Tentative Budget for two consecutive weeks Final Budget approval and public hearing set for June 16th regular session 52 Questions? 53 PSPRS Obligation Bonds 54 Process Followed and Timeline January 2021 - engaged independent consultant CBIZ to calculate forecasting scenarios and run analyses on various options. March 9 and 16 - held Budget & Finance Commission (BFC) meetings to review work of consultant. April 7 – Presented unanimous BFC funding recommendation to Council, along with presentations from PSPRS and consultant. 55 Historical and Projected Performance – Employer Contribution Rates Years 2022 through 2037 are projected, based upon 7.3% return 56 Historical and Projected Performance – Employer Contributions Years 2022 through 2037 are projected, based upon 7.3% return 57 Historical and Projected Performance – Employer Contribution Rates Years 2022 through 2037 are projected, based upon 5.3% return 58 Historical and Projected Performance – Employer Contributions Years 2022 through 2037 are projected, based upon 5.3% return 59 Public Policy Objectives Replace the Town’s unfunded liabilities with: $10.0 Million from General Fund reserves $17.6 Million from debt obligations with an estimated borrowing cost in the range of 2.5-2.75% (based on current market conditions) Mitigate inherent pensions risks by: Continuing to budget for pension-related contributions equal to 41.62% of Tier 1 & 2 payroll, consistent with the contribution rate of the 2019 Police Plan Actuarial Valuation 60 Police Plan: Potential Outcome of Policy Objectives According to the PSPRS Modeler and assuming that (i) the Town continues to contribute 41.62% of Tier 1 & 2 payroll until there are no Tier 1 & 2 employees on payroll, (ii) pension plan assumptions (other than the investment return assumption) are met and no actuarial assumption changes take place, and (iii) PSPRS earns 5.3% annually, the fund would remain at least 100% funded for the next 16 years. Using the first two assumptions above, but assuming the fund actually earns its 7.3% assumed annual return through 2058, the PSPRS Modeler indicates that the funded status could increase to 135% by 2036, and to 230% by 2052. PSPRS Modeler: 5.3% Annual Return PSPRS Modeler: 7.3% Annual Return 61 Reduce Pension Legacy Liability Market conditions as of May 11, 2021. Spreads based on comparable recent transactions. Financing results subject to market conditions and successful underwriting. All NPV values are discounted to July 6, 2021 (assumed transaction closing date) at a discount rate of 2.42%, the arbitrage yield. UAL and amortization computed by Stifel using assumptions from the 2020 Actuarial Report, annual UAL payment data provided by PSPRS as of 6/30/2020, and other Stifel calculations and assumptions. Expected savings are based on PSPRS achieving the assumed 7.3% rate of return. Please refer to Stifel’s risk disclaimer for additional information. The red line illustrating UAL payments illustrates the Town’s projected UAL payments per the most recent PSPRS Modeler adjusted upward by $500,000, consistent with the Town’s recent policy. Annual, surplus contributions would decrease future required UAL payments if the fund achieves its actuarial assumptions, but this graph does not reflect this reduction. 62 Risks Market Risk – All pension plans are subject to changes in market conditions and year-over-year investment return performance. The assumed rate of return should ideally approximate a plan’s long-term historical average. As long as plan investment returns remain above the debt issuance rate, an issuer of pension obligation bonds will be in a better position financially. Actuarial Risk – Any retirement system’s independent actuaries calculate projections for plan assets and liabilities, and these projections are premised on a variety of assumptions such as investment returns, payroll increases, COLA adjustments, mortality rates, early retirements, and benefit payments. Annual employer contributions are calculated based on these assumptions. Pension obligations address the unfunded liability at a given point in time by swapping the assumed rate of return with a market-based borrowing rate that is locked in at the time of issuance. Any new liability created by new actuarial assumptions will have to be amortized separately. 63 Questions 64