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HomeMy WebLinkAboutMinutes - Finance and Bond Committee - 1/28/2008 Town of Oro Valley Finance and Bond Committee Regular Meeting Hopi Conference Room 11000 N. La Canada Drive Oro Valley, Arizona Monday, January 28, 2008 6:00 p.m. REGULAR MEETING CALL TO ORDER AT 6:03 p.m. ROLL CALL PRESENT: Tony Eichorn, Chair Dan Toth, Member Peter Lamm, Member Bob Harris, Member STAFF PRESENT: Stacey Lemos, Finance Director Wendy Gilden, Management and Budget Analyst Susann BeDell, Senior Office Specialist ALSO PRESENT: Lyra Done, Parks and Recreation Advisory Board Liaison ABSENT/EXCUSED: Chuck Kill, Vice-Chair CALL TO AUDIENCE Oro Valley Resident, John Musolf, questioned the funding sources for: • Municipal Operations Center (MOC) • Naranja Town Site • Oro Valley share of the Central Arizona Project • Arroyo Grande Annexation 1. APPROVAL OF MINUTES FROM THE NOVEMBER 26, 2007 MEETING Noted by Member Toth that page two needs to be amended to state that the contract was awarded based on a 5 year proposal and that the contract is renewable annually. MOTION: Chair Tony Eichorn MOVED to approve the November 26, 2007 minutes with noted amendments. The motion was SECONDED by Member Harris. Motion carried 4- 0. 2. REVIEW OF TOWN USE OF PROCEEDS FROM LONG-TERM DEBT ISSUANCES — DISCUSSION AND POSSIBLE ACTION Finance Director Stacey Lemos stated it is a continued agenda item where we are reviewing outstanding debt. Currently have two debt issues outstanding, one in water area and one is our Excise Tax Revenue Obligations. She gave an overview of Water 1/28/2008 Minutes, Finance and Bond Committee 2 Bonds issued in 2003 for approximately $24M for potable and Reclaimed water projects. Five years later the potable water bonds are almost exhausted for projects for which they were ear-marked. $1.1 M is remaining, due to the extension of water mains on hold because growth has not taken place as anticipated. The remainder is on hold and expected to be spent when the project is undertaken in 1 or 2 years. The Reclaimed project bond of$11.4M for Phase One was to extend reclaimed water lines to the golf courses north of Tangerine Road. That project was completed and have begun Phase Two project extending water lines down to the golf courses south of Tangerine Road and over to Painted Sky Elementary for their turf courses. They are piggy-backing onto the La Canada Drive construction project and doing the extension while road is being torn up. Phase Two is being funded by a Water Infrastructure Finance Loan. Excise Tax Revenue 2005 Bonds were issued in the amount of$6.2M for land acquisition and development of the Municipal Operations Center. Have $864K remaining due to master planning of site as well as the cost of bringing utilities in to the temporary modular buildings then will be used for permanent buildings. Will continue to hold over remaining bond amount until TOV is ready to build permanent buildings on site. Discussion ensued regarding the Water project being delayed; Member Harris asked if there is sufficient money to finish the expansion. Ms. Lemos will need to check with the water utility. She believes they are going to augment some of the bond funds with some existing revenues in the water utility. Not knowing how big the project scope was, it is believed they will need to use water utility revenues for the expansion especially if it is going to be put off a couple of years as costs will rise. She will get more information from water utility. Member Lamm asked about Phase Two budget. Ms. Lemos noted that Phase Two is a completely separate budget. Phase Two uses loan funds, not bonds. Applied for a loan through the Water Infrastructure Finance Authority and they are a debt issuance authority unto themselves. It is a State revolving loan fund for municipalities. This process saves the insurance costs for bonds and is a less expensive way of obtaining financing. Loan amount is $6M. Ms. Lemos will bring information to committee regarding that approved loan. MOTION: Member Lamm MOVED that the quarterly review report of proceeds from long-term debt issuances be forwarded to the Town Council with a favorable recommendation for Council acceptance. Member Harris SECONDED the motion. Motion carried 4-0. 3. TOWN OF ORO VALLEY FY 2007/08 MID-YEAR BUDGET REVIEW— DISCUSSION AND POSSIBLE ACTION Ms. Lemos presented the mid-year budget status review through December 31, 2007. 1/28/2008 Minutes, Finance and Bond Committee 3 Town of Oro Valley projections look at State projections because a lot of what happens at State level filters down to the Town and impacts Town through revenue sharing. Ms. Lemos analyzed fund by fund based on the attached report. General Fund revenues indicate that the Town will come in approximately $1.IM above our budget at fiscal year end. Driving those revenues and over budget status are our Construction Sales Taxes primarily from commercial construction activity as well as revenue from commercial building permits. Large activity swing on commercial building permits at beginning of year. Quite a few commercial developments are underway and office buildings are currently underway. A one time revenue source was our sales tax audit which helped us exceed budget. Member Harris stated this situation has occurred two years in a row and there may be an underlying problem. Ms. Lemos noted that the audits that occurred that generated revenues showed that the Speculative Builder tax is not required by State or County but is a unique feature of Oro Valley code. Town of Oro Valley can make the Speculative Builder tax better known to developers in the future. Member Harris asked about anticipation of state shared revenues. Ms. Lemos stated that Town of Oro Valley is anticipating declines in state shared revenue. Declines will be due to state sales taxes and HURF gas revenues as they redirect some of those funds to pay for the public safety portion of the State budget. Also anticipating decline in 2009-2010 in the state income tax sharing because it is based on income tax collection from 2 years prior, and last year the legislature affected a 10% reduction in income tax rate for Arizona. County revenue may impact Town of Oro Valley but is as yet unknown. Member Harris asked if Town of Oro Valley gets grant or aid money from the State or County. Ms. Lemos noted that we receive a 50% reimbursement for library costs from the library district tax. RTA funds will not be impacted as far as we know. Bed Tax Fund is projected to meet budget of$1.4M. Highway Fund is projected to be below budget. Development Impact Fee Fund is projected to be $1.5M under budget. Water Utility Fund to exceed budget by $870K primarily due to connection fees for commercial and multi-family developments. Stormwater Utility Fund revenue is anticipated to come in under budget. Capital Improvement Plan (CIP) is making progress. 1/28/2008 Minutes, Finance and Bond Committee 4 Member Lamm noted that the miscellaneous column under the Commercial Building Permits is showing a large difference between budget and actual. Ms. Lemos noted that a few large projects generated a large amount of money that was not anticipated. MOTION: Member Toth MOVED to recommend Council acceptance of the mid-year budget report for FY 2007/08. Member Harris SECONDED the motion. Motion carried 4- 0. 4. REVIEW OF FINANCE AND BOND COMMITTEE SCOPE AND DISCUSS AMENDMENT TO INCLUDE COMMITTEE REVIEW OF FUTURE RECOMMENDATIONS BY FINANCE STAFF FOR AUDIT SERVICES — DISCUSSION AND POSSIBLE ACTION Member Lamm suggested that the discussion be postponed because Vice-Chair Chuck Kill is absent this meeting. Chair Eichorn stated he would like to reschedule the item until the April meeting. Ms. Lemos noted that the attachment to this agenda item shows the scope of authority of the Finance and Bond Committee. Chair Eichorn noted that the Finance and Bond Committee cannot approve Town auditors, Council must approve auditors. MOTION: No legal action was taken on this item. 5. UPDATE TO TOWN OF ORO VALLEY 10-YEAR FINANCIAL SUSTAINABILITY PLAN — DISCUSSION AND POSSIBLE ACTION Finance Director Stacey Lemos stated at the last meeting, the Committee requested to begin the process to update the financial sustainability plan that the Committee put together last year at the request of Council. Attachment A (Town's Budgetary and Fiscal Policy), Section 7 includes the creation of a 10 year financial forecast to measure the financial sustainability of the Town's operations and service levels. Attachment B is the proposed Budget Calendar and Attachment C is the FY 2008/09 Town Budget. Ms. Lemos stated that she would put together what the Committee's recommendation was for last year and bring it to the next meeting. Last year Committee was meeting every two weeks to finish this task. This year it was decided to meet once a month for the next 2 months. The Town Manager's recommended budget will be brought to the Mayor and Council on April 23rd. If the Committee wants to bring back the financial sustainability plan and the budget forecast and present it to Council toward the end of April that is possible. If so, Ms. Lemos can see if the Mayor would be amenable to putting it on the April 30, 2008, agenda. 1/28/2008 Minutes, Finance and Bond Committee 5 Department Heads can again be invited to talk about service levels in the next few Finance and Bond Committee meetings. Member Harris asked how do you see the format being changed by accounting system —will there be a noticeable change in format of material? Ms. Lemos stated that even moving toward program based budgeting - we still report financial sustainability plan on a department wide level. She recommends keeping it at the department level and does not anticipate the format changing. Member Harris asked if Arroyo Grande Annexation will be addressed in the budget. Ms. Lemos mentioned that including it in the numbers for the budget would be pure speculation at this point. Member Lamm noted that it would cause inconsistent numbers. Chair Eichorn found it useful last year when the department heads spoke directly to the F&B Committee and would like that again this year if possible. Ms. Lemos noted that the departments that would be most helpful to talk to would be Public Works, Parks and Recreation and the Police Department. Members Toth and Lamm both thought it would be helpful if those department heads gave a short presentation in the next couple of meetings. Ms. Lemos will request those heads to come in to speak in the next few months. Member Lamm mentioned that we should not ask the department heads to attend the meetings unless all Members are expected to attend. Ms. Lemos noted that a quorum is required if any recommendations are made. February 25th and March 31st were agreed upon for the next two meetings and combining two department heads at each of those meetings would be feasible. Member Harris noted two things that he would hope the committee could address. First is productivity — second is rationalizing the revenue structure. The Committee should send a recommendation to Council on these two issues. Ms. Lemos noted that the 2% utility tax is going to sunset in January 2009. Member Harris noted that it could be a significant problem. The February 25th meeting will combine speaking with department heads and revenue discussions. Member Lamm stated that he would like to pick up with the road maintenance issue. Ms. Lemos will attempt to get Craig Civalier, along with the new Transit Coordinator. The March 31st meeting will try to include speakers for the Police Department and for Parks and Recreation. Committee will want to know where we are with user fees at that time. MOTION: No legal action was taken on this item. 1/28/2008 Minutes, Finance and Bond Committee 6 6. STATUS REPORT ON THE NARANJA TOWN SITE DEVELOPMENT - DISCUSSION Currently the site is master planned at a cost of $154M. The Mayor and Council want to consider different options for the site and are considering a multiple ballot question option. The ballot issue is an agenda item at the February 6, 2008, Council meeting. MOTION: No legal action was taken on this item. 7. COMMITTEE MEMBER/COUNCIL MEMBER LIAISON REPORTS Parks and Recreation Advisory Board (PRAB) Liaison Lyra Done stated that having more than one scenario on the Town Site is difficult for the consultants and does not think it is a good idea to put to the voters. Lyra Done, asked when an educational program is going to start for the community. Ms. Lemos noted that it cannot start until Council adopts the ballot language and calls for the election. 8. FUTURE AGENDA ITEMS Noted that Agenda Item No. 4 was put over for a future meeting in April, 2008. MOTION: Member Lamm MOVED to recommend that he would like the Committee to add two items to a future agenda, after the rush on budget is over with. Items consist of: • Should there be some formula that limits Council's ability to draw down rainy day reserve faster than a certain rate in bad times. • Whether there should be explicit formulas for spending limits for the Town per year— something like total spending per capita, inflation adjusted. Most things revolve around revenue limitations, not spending limitations. Member Toth SECONDED the motion. Motion carried 4-0. 9. SCHEDULING NEXT FINANCE AND BOND COMMITTEE MEETING Next meeting scheduled for February 25, 2008 at 6:00 p.m. in the Hopi Room. 10. ADJOURNMENT MOTION: Member Harris MOVED to ADJOURN the meeting, SECONDED by Member Lamm. The meeting adjourned at 7:42 p.m. Prepared by: ....K•`•7 ""�4 �9 ~9erg � r. �1 1/28/2008 Minutes, Finance and Bond Committee 7 Susann BeDell Senior Office Specialist