Town Council Study Session
November 12, 2008
CALL TO ORDER - 5:30 p.m.


Paul Loomis, Mayor
Al Kunisch, Vice Mayor
Paula Abbott, Council Member
K.C. Carter, Council Member
Bill Garner, Council Member
Barry Gillaspie, Council Member
Salette Latas, Council Member


FY 2008/09 Capital Improvement Plan (CIP) Update through October, 2008

Finance Director Stacey Lemos updated the Town Council on the Capital Improvement Plan (CIP) projects status as follows (dollar amounts shown are estimated project costs): 
General Fund:
~ Employee Security System Enhancement - $268,000 (Completion projected for December 2008)
~ Police Substation Tenant Improvements - $373,000 (Completion projected for March 2009)
~ Digital Information Management System - $53,000 (in process of purchasing equipment).
~ Spillman Mapping Upgrade - $89,000 (Completion projected for February 2009)
~ Content Management System (Rollover) (Completion expected June 2009)
~ Rancho Vistoso Municipal Center (RVMC) (fka Municipal Operations Center) -(Separate Fund - Total project cost $38 million ($6 million currently set aside with $26 million to be bonded, scheduled completion in fiscal year 2010).

Highway Fund
~ Stress Absorbent Membrane Project - $876,000 (Completion May 2009)
~ Fog Seal Project - $245,700 (Completion November 2008)
~ 4000 Gallon Water Truck - $82,758 (Completed)
~ Suffolk Hills Subdivision, Phase II - Rollover, $522,000 (Completion June 2009)
~ Linda Vista Blvd. - Rollover, $110,300 (Completed)
~ Calle Buena Vista - Rollover, $109,900 (Completed)

Discussion followed regarding:
~ Cost of asphalt
~ Budgeted amounts and actual costs (Highway Funds are pool of money used for projects).
~ CIP Technical Advisory Committee process for evaluating and ranking projects.

Storm Water Fund
~ Street Sweeper - $57,400 (Completed)
~ Tractor - $78,100 (Completed)
~ Oro Valley Country Club Drainage (Pima County Flood Control District to pay for project)
~ Lomas de Oro Subdivision (Waiting on response from Federal Emergency Management Agency (FEMA) on scope of project, anticipate project rollover to 2009/10)

Transit Fund
~ New Circulator Expansion Service Vehicles (Regional Transportation Authority (RTA) to purchase and operate services)
~ Park and Ride facility - $675,000 (In design phase, completion February 2009)
~ Coyote Run Replacement Vehicle - $76,100 (Anticipate delivery February 2009)

Town Wide Development Impact Fee Fund
~ La Canada widening - $6,100,000 (Completion January 2009)
~ La Cholla Overlay - $1,000,000 (Completion January 2009)
~ Lambert Lane Widening - $500,000 (Project in design phase)
~ Canyon del Oro (CDO) Shared Use Path - $2,400,000 (Completed)
~ La Cholla/Glover Intersection - $840,000 (Completed)
~ Pedestrian Bridge over CDO Wash - $600,000 Arizona Department of Transportation (ADOT) to complete with SR 77 widening, completion Spring 2009)
~ Shannon Road Project Assessment- $50,000 (Road assessment underway, completion June 2009)

Discussion followed regarding:
~ Street projects: La Canada widening - completion projected for January 2009 weather permitting.
~ Identify funding for Pima Association of Governments (PAG) projects/RTA projects vs. Town projects.

Water Utility Enterprise Fund
~ Pusch View Well Equipping - $1,477,000 (Completion November 2008)
~ D-7 Well Electrical upgrades - $36,400 (Completed)
~ Highlands Main replacement - $1,998,000 (Completion January 2009)
~ El Con Booster Station - $135,000 (Completion November 2008)

Potable Water System Development Impact Fee Fund
~ Lambert Lane Main Relocation (Project on hold)
~ Moore Road F-Zone Main (Dependent on development)

Alternative Water Resources Development Impact Fee Fund
~ Reclaimed Water Project, Phase II - $4,000,000 (Completed)

Discussion followed regarding the Water Utility Fund projects:
~ Programmed through the Water Utility Commission.  Projects do not flow through the CIP project ranking.  
~ Water Utility capital projects are based on the 2006 Master Plan.

Steam Pump Ranch Acquisition Fund
~ Buildings and improvements - $200,000 (Site work and stabilization continue, other improvements are grant contingent).

Capital Asset Replacement Fund
~ Computer and vehicle replacement - $500,000


Long-term Financial Sustainability Discussion for Fiscal Year 2009-10 through Fiscal Year 2018/19

Finance Director Stacey Lemos reviewed the long term (10-year) Financial Sustainability Plan and a a PowerPoint presentation highlighting the following:
~ Cost Saving Potential Opportunities
  - Retail Sales Tax Rebates - $150,000
  - Insurance Premiums - $100,000
  - Vacancy Savings/Hiring Freeze - $150,000 (Economic Development Administrator position, could realize more savings with hiring freeze)
  - Annexation expenses - $200,000
  - Environmentally Sensitive Land Ordinance (ESLO) Consultant Services - $175,000 
  - Rancho Vistoso Municipal Complex (fka Municipal Operations Center (MOC) Debt Services - $833,000
  - Capital Asset Replacement Fund (CARF) Cash Reserve - $500,000
  - Sanofi-aventis rebate - $360,000
TOTAL SAVINGS - 2,468,000

~Economic Vitality Model used to determine long-term forecasting:
- General Fund Assumptions
      1) Revenue:
          - Zero growth in local sales tax for fiscal year 2011 and 2012
          - Fiscal Year 2013 recovery period with 3% growth annually
          - 2% Utility Sales Tax sunsets in April 2009
          - Residential development remains flat with peaks in fiscal years 2011 & 2012
          - Commercial development slows in fiscal year 2010 with slight peaks in fiscal years 2011 & 2014
      2) Expenditures:
          - No new personnel
          - No new program additions or expansions
          - 5% combined cost of living and merit/step increase for staff
          - 10% annual increase in benefit costs
          - Annual funding of Capital Asset Replacement Fund
          - Annual debt service payments for Rancho Vistoso Municipal Complex

Discussion followed regarding:
 - Assumptions - Based on State‚Äôs projections and budget
 - Single family residential permits - Housing market projections
 - Bed tax rebate approximates $390,000 per year (2% of the sales tax generations)
 - Local sales tax projections (rebates categorized under sales tax rebate expenditures)

~ Potential Revenue Sources (General Fund)
   - Revisit past annexations
   - 1/4 cent or 1/2 cent additional local sales tax
   - Implement a local sales tax on current non-taxed categories 
   - Primary Property Tax (subject to voter approval)
   - Library operations
   - Service level/program reductions

Ms. Lemos then reviewed the Highway Fund:
 - Highly volatile and subject to economic fluctuation
 - Assumed construction sales tax revenue of $1.2 million for expansion at Ventana Medical Systems phased in over a 10-year time frame
 - Assumed 25,000 sq. ft. new development added each year
 - Assumed modest population growth
 - Commercial development slows considerably in 2010 with slight peaks in 2011 and 2014

 - No new personnel
 - Annual roadway maintenance capped at $1.2 million per year
 - Overall Condition Index (OCI) continues to decline as roadway projects are kept to a minimum
 - 5% combined cost of living and merit/step increase for staff
 - 10% annual increase in benefit costs
 - Annual debt service payments for Rancho Vistoso Municipal Complex 
 - Due to projected expenditures and revenues, Highway Fund Balance becomes negative in fiscal year 2013
 - Evaluate potential issuance of bonds to help fund road repair and stop further deterioration of roads

Potential Revenue Sources:
 - Redirection of 4% of the 6% bed tax revenues
 - Gas/electric franchise tax
 - Additional increase in local sales tax earmarked specifically for roadway maintenance

Discussion followed regarding:
 - Assumption of $1.2 million per year for roadway maintenance
 -Total Highway Fund expenditures are greater than revenues. Questioned which items to eliminate or minimize to balance the Highway Fund budget. (Likely eliminate the $1.2 million Roadway Maintenance fund to balance the entire budget.  Leads to deterioration of streets.)
 -Try to maintain an Overall Condition Index (OCI) 80 rating of all streets.  (Would need approximately $2 million per year to maintain the streets at this rating.)
 - Example of roadway maintainance to retain OCI 80 rating - La Canada extension - Fog Seal every 3 years, Crack Seal every 5 - 6 years to maintain high standard for 30 years.  
 - Provide a long-term plan to identify the possibility of the Highway Fund "breaking even". Possibilities for sustainability: Add a 1 percent sales tax, a 10% bed tax or raise the percentage of construction sales tax and earmark a higher percentage to Highway Fund.
 - $1.2 million per year currently maintains an OCI rating of 65 -70.  Town does not have $2+ million dollars to bring streets/roads up to an 80 rating. 
 - Must confront issues.  The Town is not using all the taxing options available.  Need to review Franchise fees, reduction of services.  
 - Bed tax funds are important to the Naranja Town Site fund as there are future opportunities for this site.  
 - Roadway Master Plan is in process of being developed.
 - Provide cost benefits for Pavement Management Plan.
 - Roadway maintenance monies currently come from State-shared gasoline sales tax.

Bed Tax Revenue Assumptions:
   - 2% decline in bed tax revenue in fiscal year 2010
   - No growth in revenue in fiscal years 2011 and 2012
   - Fiscal year 2013 begins recovery period with 3% growth annually
   - New hotel facility forecasted in fiscal year 2011 and two new facilities in fiscal year 2013

   - Current sales tax rebate expires in fiscal year 2010
   - 2% of bed tax revenue allocated for marketing efforts

Ms. Lemos stated that staff recommends that the Town involve the Finance and Bond Committee to help analyze options and present recommendations.

Mayor Loomis recessed the meeting at 7:10 p.m.  The meeting resumed at 7:15 p.m.


Discussion of Administrative Procedures & Policies for Town Board & Commission Member Appointments

Town Clerk Kathryn Cuvelier reviewed options for the following:
 - Timing of Council Member appointments to the Boards and Commissions
 - Term lengths and limits 

Management Assistant Tory Schlievert reviewed the following:
  - Council liaison assignments to Boards/Commissions
  - Eligibility requirements
  - Council liaison assignments to outside agencies
  - Process Change
      - Appointment process as it relates to Council election
      - Ratification of appointments by Council
      - Board/Commission Rules and Procedures would be amended to reflect any changes as approved by Council.

Discussion followed regarding:
~ Board/Commission members resignations - Council Member who originally appointed that member would reappoint citizen with ratification by entire Council.
~ Continue the application process to determine eligibility and to advertise for volunteers.
~ Continue Citizen Planning Institute (CPI) class requirement. 

General thoughts from Council:
~ Timing of Council Member Appointments:
  - August gives new Council members the opportunity to look at applications and to come up with their recommendation; July would be more concurrent with fiscal year. (Mayor Loomis)
  - June may be best as appointments made in June would coincide with the seating of the new Council. (Council Member Abbott)
  - Supported August appointments (Council Member Gillaspie)
~ Obtain input from current Board/Commission members on proposed changes. (Vice Mayor Kunisch)
~  Term length and limits:
   - Two year terms with no limits (consensus).

~ Council Liaisons to Board and Commissions:
   - Liaison positions would go away (consensus).

~ Additional Citizen Appointments
   - Important to have a representative from Countryside and large turf users on Water Utility Commission (WUC).  Change number of members on WUC to 9. Interviews would be conducted by the WUC chair and staff liaison and final appointments by Council.  (Mayor Loomis)
   - Keep all Board/Commission membership at 7 with exception of Municipal Property Corporation (MPC).  (Council Member Latas)
   - Should maintain Countryside and large turf users representatives.  Agree with Mayor Loomis.  (Council Member Gillaspie) (Suggestion by staff: the Water Utility Director and the WUC Chair make recommendations for these two representatives). 
   - Oro Valley Citizen Corp Council (OVCCC) - Appointments have been by the Mayor in the past. Established to coordinate volunteers for help with protection of community.  OVCCC currently includes representatives from Volunteers in Police Service, Neighborhood Watch, Medical Reserve Corp, Community Emergency Response Team and Terrorist Information, Prevention Systems, Amphitheater School District representative and Explorer Newspaper representative.  Questioned whether to retain appointments by the Mayor and not ratified by Council or appointments by Mayor and ratified by Council. (Mayor Loomis)
   - Maintain current appointment process.  (Vice Mayor Kunisch)
   - Seems to be lack of enthusiasm on OVCCC.  Need more citizen involvement.  Council appointments of volunteers would help jump start the group. There has been discussion by the OVCCC to move away from being sponsored by the Town.  (Council Member Garner)
   - OVCCC includes 5 core positions, 3 staff positions: the Mayor, Town Manager, and the Chief of Police.
   - Possibly include the 5 core positions along with 7 volunteers appointed by the Council. (Council Member Latas)
   - Single appointees to the Pima County Bond Advisory Subcommittee, RTA, Northern Pima County Chamber of Commerce, Tucson/Pima County Bicycle Advisory Committee and the Environmental Planning Advisory Committee would continue to be made by the Council.

~ Requirements for Board and Commission Eligibility:
   - Continue Citizen Planning Institute (CPI) requirement and 8 hours a year of training for members.  (consensus)

~ Council Member Liaison position to outside agencies:
   - Continue on an annual basis with appointments in July. (consensus)

Further discussion followed regarding:
  - Solicit input from current Board and Commission members regarding proposed changes.
  - Maintain an objective process and clarify that there is not the appearance of "cronyism". 
   - Work toward Boards/Commissons that work together.
   - Town Manager can send out letter to current Board/Commission members informing them of proposed changes.
   - First meeting in January, have an action item to initiate changes necessary to implement the Board and Commission changes as discussed.
   - Impact to citizens that have given so much of their time to the Town.
   - The removal of appointee by appointing Council Member.
   - Board/Commission Code of Ethics
   - Current Town Code provides that a majority of Council is needed to remove the Board/Commission members. 
    - Multiple positions by one person - current Ordinance provides that a volunteer can only serve on one Board or Commission. 
    - If new plan is adopted, the current Board/Commission members would be encouraged to submit an application.


MOTION: A motion was made by Council Member Carter and seconded by Council Member Garner to adjourn at 8:45 p.m.

MOTION carried, 7-0.