Loading...
HomeMy WebLinkAboutMinutes - Finance and Bond Committee - 11/26/2007 , MINUTES Town of Oro Valley Finance and Bond Committee Regular Meeting Hopi Conference Room 11,000 N. La Canada Drive Oro Valley, Arizona Monday, November 26, 2007 6:00 p.m. REGULAR MEETING CALL TO ORDER AT 6:00 p.m. ROLL CALL PRESENT: Tony Eichorn, Chair Chuck Kill, Vice-Chair Dan Toth, Member Peter Lamm, Member Bob Harris, Member - arrived at 6:03 p.m. STAFF PRESENT: Stacey Lemos, Finance Director Wendy Gilden, Management and Budget Analyst Mary Rallis, Accounting Supervisor Art Cuaron, Financial Analyst Christina Pickering, Office Specialist ALSO PRESENT: Helen Dankwerth, Vice-Mayor Lyra Done, Parks and Recreation Advisory Board Liaison CALL TO AUDIENCE —There were no speakers. 1. Approval of Minutes from the July 23, 2007 Meeting MOTION: Vice-Chair Kill MOVED to approve the July 23, 2007 minutes. The motion was SECONDED by Member Toth. Motion carried 4-0. 2. Review and Recommendation Regarding Town Council Acceptance of the Town's Financial Audit for the Fiscal Year Ended June 30, 2007 Finance Director Stacey Lemos introduced Corey Arvizu of Heinfeld, Meech & Co., P.C. Mr. Arvizu performed the Town's financial audit and highlighted the following: • The Town received the Government Finance Officers Association Award for Excellence in Financial Reporting. • Financial statements o The Town is in good "financial health." o Consistent with other communities in the state. • Findings: o Areas of improvement 11/26/2007 Minutes, Finance and Bond Committee 2 ■ Procedures over capital assets ■ Cut-off procedures • Accuracy in reporting periods Discussion ensued regarding: • The contract with Heinfeld, Meech & Company. o The contract was awarded as a 5 year proposal. o The contract is renewable annually. • Further defining the cut-off periods for payables and receivables. • The Town's previous auditors concurred with the error that Mr. Arvizu's firm found and accepted responsibility. o The statement with the error has been revised. o The error was not carried forward in subsequent statements. o The error did not affect the Town's bond rating. • The auditors will come throughout the year to perform sample reviews. • Three firms responded to the Request for Proposal (RFP). o The proposals were reviewed by Finance Director Stacey Lemos and Accounting Supervisor Mary Rallis. o Process for choosing new firm was not presented to this Committee before it was brought to Council. MOTION: Member Lamm MOVED that the Town's fiscal year ended June 30, 2007 be forwarded to the Town Council with a favorable recommendation for Council acceptance. Member Harris SECONDED the motion. Motion carried 5-0. 3. Update on Capital Improvement Program (CIP) Process Changes and Committee Appointment to the Capital Improvement Program Technical Advisory Committee (CIPTAC) It was noted that: • The size of the committee would be reduced from 16 members to 10 members. • The Capital Asset Replacement Fund (CARF) would be incorporated into the process. o Items greater than $5,000 would be referred to CARF. o CARF would be used to replace equipment that needs to be replaced annually. o This change would allow the CIP process to focus on other issues rather than spending its budget on replacing equipment. Financial Analyst Art Cuaron highlighted the changes that were made to the program that were approved by the Mayor and Council: • Projects would be ranked on the 0, 3, 5 scale. • Each member would score each project independently. • The highest ranking projects would be funded. • Evaluation criteria have been expanded to include "Avoidance of Future Capital Expenditures." • The system has been automated this year. 11/26/2007 Minutes, Finance and Bond Committee 3 • A Capital Project has been redefined as a project that costs $50,000 or more and would be useful for 5 years or more. Mr. Cuaron reviewed the timeline for the proposed CIP process: • September— October: Board and Commission member appointments to CIPTAC. • November— January: Request forms and instructions in place for central access • February: Meetings scheduled for project presentations • March: Projects scored, tallied and ranked. Draft of comprehensive CIP presented to CIPTAC. CIPTAC recommends CIP for Council adoption. • April: CIP presented to Planning and Zoning Commission • May: Budget Study Session to present CIP to Mayor and Council. • June: Adoption of tentative budget and CIP. • July: Adoption of final budget and CIP. Discussion clarified that: • Mayor Loomis was the Council liaison to CIPTAC. • The General Plan stated that the CIPTAC plan must be presented to the Planning and Zoning Commission as well as Council. Chair Eichorn asked for a volunteer to represent the Finance and Bond Committee at CIPTAC. It was noted that the time commitment would entail: • Approximately 1 day's worth of time. • Meetings from February to March. • The meetings would convene on Fridays during the day. • Studying the issues outside of meetings. Member Toth volunteered to be the Finance and Bond liaison with Member Harris as the alternate if necessary. Mr. Cuaron stated that he would return to the Finance and Bond Committee with the cost impact of raising the qualifying amount of Capital projects from $20,000 to $50,000. It was clarified that the funds gained from assets that were auctioned would be returned to the fund that originally paid for the asset. It was noted that the CIPTAC policy had been in process for the past 6 months. Vice-Chair Kill noted that the CIPTAC policy had already been approved by Council before this committee was apprised of it and that the same thing had happened with the audit process. He noted that the committee should have input into these types of decisions before it gets sent to Council. Chair Eichorn noted that it was his understanding that the purpose of the Finance and Bond Committee does not include selection of an auditor. Lyra Done, Parks and Recreation Advisory Board Liaison, noted that in the past the Committee was involved with the audit firm. The audit firm would 11/26/2007 Minutes, Finance and Bond Committee 4 come in and talk to the Committee in the past. She noted that the Committee would recommend their findings to Council in the past. MOTION: Vice-Chair Kill MOVED to appoint Member Toth to the FY 2008/09 Capital Improvement Program Technical Advisory Committee as the Finance and Bond Committee's representative. Member Lamm SECONDED the motion. Motion carried 5-0. 4. Review of Town Use of Proceeds from Long-Term Debt Issuances Finance Director Stacey Lemos stated that the bond proceeds that were outstanding were: • Water Revenue Bond issued in 2003. o Amount left on the bond is $1.3 million. o Funds were used for an above ground reservoir and distribution lines in the Stone Canyon area. o Construction would be completed in December 2007. • Bonds Excise Tax Revenue issued in 2005. o Designated for the Municipal Operations Complex (MOC). o $948K remained on the bond o Estimated cost to build the MOC would be $30 million. o Public Works is anticipated to move into the temporary buildings at this site in December 2007. MOTION: Member Lamm MOVED to forward the report to the Town Council with a favorable recommendation for Council acceptance. Member Toth SECONDED the motion. Motion carried 5-0. 5. Town of Oro Valley FY 2007/08 First Quarter Financial Status Review Finance Director Stacey Lemos stated that the Town had a strong first quarter. She noted that construction revenues were strong which was largely due to the rise in building permits for the Vestar development. She stated that Oracle Crossings has been in business for one year now and sales were also strong. It was clarified that the budget was not based on the projections of Economic Development Agreements (FDA's). Ms. Lemos stated that: • The retail base is growing which provides a greater variety for consumers. • Existing businesses are growing and surpassing last year's figures in retail sales. Vice-Mayor Dankwerth noted that Council had recently voted to discontinue EDA's for retail businesses. She also advised Ms. Lemos to forward the first quarter statistics to Communications Director Mary Davis to disburse to the public. Ms. Lemos noted that projections based on the first quarter were scaled down due to current and local economic trends. 11/26/2007 Minutes, Finance and Bond Committee 5 Management and Budget Analyst Wendy Gilden reviewed the first quarter findings: • General Fund Revenue Collections through the fourth quarter projected that the revenues could be $1.6 million over budget due to: o State shared revenues o The number of residential and commercial building permits was higher than expected. • Vestar was noted as the driving force behind the rise in commercial building permits. • Local sales tax collections were higher than the first quarter of fiscal year 2006/2007. • Projected to meet the budgeted amount • Bed tax fund was projected to meet the budgeted amount of$1.4 million. • Highway fund was anticipated to meet the budgeted amount. o The Highway User Revenue Fund (HURF) collections were currently running $60K higher than budgeted. • Public Transportation Fund will fall below budget by $31 K. o The Regional Transportation Authority has stated that they will not fund the Transit Coordinator position as planned. o The position has been deleted in order to offset the shortfall. • Development Impact Fee Fund was estimated to exceed budget by $170K o The overage was due to an increase in residential building permits. • Oro Valley Water Utility was estimated to exceed budget by $414K. o The overage was due to water sales and water connection fees. • Stormwater Utility Fund was forecasted to be $57K below budget o The shortage was due to the delay in the adoption of the Stormwater Utility Fee. Ms. Gilden stated that overall the revenue is anticipated to be $2.5M over budget. Vice-chair Kill requested a comparison of the total budget for 2007-2008 versus the actuals of 2006-2007. Discussion clarified that this information was brought to the Finance and Bond Committee before presenting it to Council. MOTION: Vice-Chair Kill MOVED to recommend to Council acceptance of the first quarter financial status report. Member Toth SEDONDED the motion. Motion carried 5-0. 6. Update on Development Review Fees and Parks User Fees Review Ms. Lemos stated that the Town of Oro Valley's Development Review Fees were significantly less than the Towns of Marana, Sahuarita, Tucson and Pima County. She noted that the goal for development review fees was for cost recovery. She advised that the Town cannot make a profit on these fees; however an adjustment to the fees would be necessary in order to attain a better cost recovery percentage. She informed the committee that the budget for development review was $300K; whereas the cost recovery has been $100K for the past three years. 11/26/2007 Minutes, Finance and Bond Committee 6 Ms. Lemos noted that the Council had directed Staff to continue to: • Review the fees. • Audit the number of hours Staff spends on reviewing plans. • Contact other jurisdictions to compare how fees were determined. • Return to Council in early spring. Ms. Lemos stated that the Parks and Recreation department's user fees were also being studied. Operational audits were discussed. It was noted that: • Public Works was in the midst of an audit. • An auditing firm was recently awarded the bid to audit the Legal department. • The Parks and Recreation department would be audited. The Request for Qualifications notice would be issued soon. Vice-chair Kill stated that he wanted to review a recent study conducted by the Finance department. The study reported on the total revenue versus the total expenses per person in the Town over the past five years. He noted that he wanted the report forwarded to Council for review as it would be a helpful tool to determine whether the Town spends too much or too little per capita. 7. Committee Member/Council Member Liaison Reports Parks and Recreation Advisory Board (PRAB) Liaison Lyra Done stated that PRAB would have a study session on November 27 at 6:00 p.m. in the Hopi room. Ms. Done invited the Finance and Bond committee to attend the meeting. She noted that she was PRAB's liaison to report to PRAB the issues discussed at Finance and Bond committee meetings. She stressed the importance of the two committees working together and suggested that the Finance and Bond committee have a liaison for the Parks and Recreation Advisory Board. Vice Mayor Dankwerth concurred. Vice-Mayor Dankwerth addressed concerns regarding the Town's stance to no longer share sales taxes with businesses. She stated that concerns largely surrounded the bio- tech industry such as Sanofi Aventis. She noted that the Town would help Sanofi Aventis to a degree. The company would receive approximately $345K out the cost to Sanofi Aventis of$60M. It was clarified that the law that prohibited communities from utilizing EDA's was in effect in Maricopa County and not Pima County. Discussion followed regarding the upcoming January 28, 2008 meeting. Member Harris wanted an update of the Financial Sustainability Plan on the upcoming agenda. Ms. Lemos noted that a review of the mid-year budget status would be presented to Council at the end of January. 11/26/2007 Minutes, Finance and Bond Committee 7 Vice-Mayor Dankwerth stated that the Bed Tax agreement with the Hilton expires in 2010 and may come forward for reconsideration. She noted that the Town did not have Bed Tax agreements with other hotels. Discussion clarified that a conceptual presentation regarding annexation to the north would be presented to Council on December 19, 2007. Vice-chair Kill stated that he would like to receive the minutes for the Finance and Bond committee meetings sooner than right before the next meeting. It was clarified that Ms. Lemos created the agenda for the Finance and Bond Committee. Chair Eichorn noted that in order to have an item added to the agenda, the item should be submitted to Chair Eichorn or Ms. Lemos thirty days prior to the meeting. Vice-Mayor Dankwerth stated that a second member must also want the item on the agenda in order to have the item added. Adjournment MOTION: Vice-Chair Kill MOVED to ADJOURN the meeting, SECONDED by Member Harris. The meeting adjourned at 8:02 p.m. Prepared by: Christina Pickering Office Specialist