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HomeMy WebLinkAboutMinutes - Finance and Bond Committee - 4/26/2010 04-26-10 Finance & Bond Committee 1 Town of Oro Valley Finance and Bond Committee Regular Meeting Hopi Conference Room 11000 N. La Canada Drive Oro Valley, Arizona Monday, April 26, 2010 CALL TO ORDER Meeting called to order at 6:14 p.m. ROLL CALL PRESENT: Dan Toth, Member Bob Harris, Member Peter Lamm, Vice-Chair Bill Garner, Councilmember Liaison (via teleconference) Stacey Lemos, Finance Director Wendy Gomez, Management & Budget Analyst Art Cuaron, Finance Analyst ABSENT: Chuck Kill - Chairman Jared Parks, Member GUESTS/OBSERVERS: Mary Snider, Councilmember Lyra Done, PRAB Liaison Lou Waters Joe Hornat Bill Adler Doug McKee CALL TO AUDIENCE No one spoke during Call to Audience. 1. APPROVAL OF MINUTES FROM THE JANUARY 25, 2010 MEETING MOTION: A motion was made by Member Harris and seconded by Member Toth to approve the January 25, 2010 minutes with the following correction: Page 3, Paragraph 4, the word "defuse" should be changed to "diffuse." MOTION carried 3-0. 2. DISCUSSION AND POSSIBLE ACTION - TOWN OF ORO VALLEY FY 2009/10 FINANCIAL UPDATE THROUGH MARCH, 2010 Ms. Wendy Gomez presented the financial update through March 2010. 04-26-10 Finance & Bond Committee 2 Vice Chair Lamm asked if the information in this update was what was presented to Town Council. Ms. Gomez said that it was very close to what was provided to Town Council, however, the information before the board is the most recent information. Member Harris asked if there was any indication of what the State might cut. Ms. Lemos said she didn't have any information on that at this time. Guest/Observer Comment: Mr. Adler said that at last Saturday's Budget Retreat there was no mention of any initiative to promote Economic Development. He is concerned about the lack of interest in Economic Development and feels that there is a need to elevate this subject. He said he feels the Finance and Bond Committee has not advocated for this, and he feels this board needs to convince Town Council that there is a need to stimulate economic growth. MOTION: A motion was made by Member Harris, and seconded by Member Toth to submit the FY 2009/10 Financial Update (through March 2010) to Town Council for approval. MOTION carried 3-0. 3. DISCUSSION AND POSSIBLE ACTION TO RECOMMEND PROPOSED REVISIONS TO TOWN CONTINGENCY RESERVE POLICY Ms. Lemos distributed a chart showing three options for proposed revisions to the Town's Contingency Reserve Policy. She explained that staff's recommendation is to retain 25% of the General Fund in the Contingency Reserve Fund. She added that this recommendation could be subject to interpretation, and she is looking for ways to refine the language and provide better criteria. The Town's current contingency reserve amount is approximately $11 M, or 43% of the General Fund expenditures (recommended at $25.7M for FY 2010/11). Each of the options consist of three categories of contingency reserves funds with different designated uses: • Economic Stabilization Fund -- Used to respond to public emergencies, natural disasters or similar major unanticipated events and to satisfy the public and financial community regarding the fiscal stability of the Town. • Emergency Reserve Fund -- Used to provide for temporary funding of unanticipated revenue shortfalls and/or unexpected expenditures increases. • Excess — Pay-as-you-go, One-time Expenses — Used for "pay-as-you-go" capital outlay, one-time, non-recurring expenditures or to pre-pay existing debt. May not be used to establish or support costs that are recurring in nature. Option 1: Emergency Reserve Fund at 25%, Economic Stabilization Fund at 10%, and Excess above 35%. Option 2: Emergency Reserve Fund at 20%, Economic Stabilization Fund at 10%, and Excess above 30%. - 1 04-26-10 Finance & Bond Committee 3 Option 3: Emergency Reserve Fund at 20%, Economic Stabilization Fund at 5%, and Excess above 25%. Ms. Lemos stated that because we do not know what the future holds, her preference is to keep the Emergency Reserve Fund at a higher percentage, and to look at other revenue sources. Vice Chair Lamm commented that the options revolve around two issues: size of the reserves and conditions under which funds can be utilized. He referred to the progressive super majority option he had previously offered because he wants a trigger or braking system. How do we justify part of economic stability fund? What does minimum mean? If we can't go below it, why have it? If used, how and when do you pay it back? If both funds are depleted, what are the mechanics? Member Harris said the concept of replenishing the fund is good but not practical. He said he does not understand the reasoning on the language "...to satisfy the public financial community..." Ms. Lemos said that this was based on the bond ratings. Vice Chair Lamm asked for a summary of the Town's gross assets. Ms. Lemos replied that the Town's capital asset schedule includes roads, water systems, rights-of-way, buildings and infrastructure. She added that she could return to the committee with additional information. Vice Chair Lamm said the idea of splitting the contingency fund into levels makes sense, but he is more concerned about the trigger and braking mechanism than he is about the levels. Member Harris also said that the levels make sense. Member Harris asked how susceptible the Town was to the State's budgetary decisions and what would happen if the State sweeps more of the Town's funds. Ms. Lemos said that the Town would have to recalculate. Vice Chair Lamm said he would prefer to have the issue on redefining the contingency reserve fund discussed further, if there is not a pressing need for a decision now. Ms. Lemos said that there isn't a pressing need now, and discussion through the following year would be fine. MOTION: A motion was made by Member Harris, and seconded by Member Toth, to have the matter of redefining the contingency reserve fund tabled for further review and analysis by the committee during the coming year. MOTION carried 3-0. Councilmember Snider reported on a conversation she had with the Town Attorney regarding the State's sweep of state shared revenues, where she was told that those revenues are constitutionally protected. Ms. Lemos said that revenues from the State lottery were also designated for distribution to cities and towns, yet those revenues were swept. r . i 04-26-10 Finance & Bond Committee 4 4. COMMITTEE MEMBER/COUNCIL MEMBER LIAISON REPORTS Councilmember Garner thanked Finance and Bond Committee members who attended Saturday's Town Council Budget Retreat. Councilmember Garner did not have anything else to report or discuss, and board members did not ask any questions of him. 5. FUTURE AGENDA ITEMS No future agenda items brought up. 6. ADJOURNMENT MOTION: A motion was made by Member Harris, and seconded by Member Toth, to adjourn. MOTION carried 3-0. Meeting adjourned at 7:24 p.m. r i Prepared by: Arinda Asper Sr. Office Specialist