PRESENT:

Chuck Kill - Chairman Peter Lamm, Vice-Chair Bob Harris, Member Dan Toth, Member

ABSENT:

Jared Parks, Member

Also present:
Bill Garner, Councilmember Liaison
Lyra Done, Liaison from Parks and Recreation Advisory Board

MOTION: A motion was made by Member Harris and seconded by Vice-Chair Lamm to approve minutes.

MOTION carried, 4-0.

Ms. Legner referred committee members to the Council communication included in their packets, which outlined the various proposed parks user fees.  Ms. Legner noted that the proposed fee increases consisted primarily of rental fees, including ballfield, ramada, and pool rentals, as well as rentals of the Riverfront Park amphitheater.  Ms. Legner noted that all changes in fees must be approved by Council.

Ms. Legner stated that the last fee increase was in 2003, and that the purpose of the current proposed fee increases was to improve cost recovery.  Ms. Legner noted that the Parks and Recreation Advisory Board understands and supports efforts to improve cost recovery.  Ms. Legner noted that increased cost recovery is a primary goal for Council.  Ms. Legner stated that the fee increases would ensure compliance with the Town’s adopted revenue and fee policy. 

Ms. Legner noted that the proposed fee increases include separate fees for the following:
-residents and non-residents
-non-profit and for-profit organizations
-peak and non-peak usage of park ballfields

Ms. Legner reminded committee members that the Canada Del Oro Riverfront Park was built partially by Pima County bond funds, and for that reason, all usage fees for that facility must be in line with what the County charges. 

Ms. Legner noted that all users have for some time been notified of possible fee increases. 

Ms. Legner walked committee members through each proposed fee increase.      

Ms. Legner noted that current cost recovery for ballfield usage is roughly 11%.  Ms. Legner stated that the additional $20,000 in annual revenues expected from the proposed ballfield fee increases would bring cost recovery to about 24%.  Ms. Legner noted that cost recovery levels are guided by the Town’s adopted revenue and fee policy.     
  
Member Harris asked if staff assumed that demand would stay the same after the fees were increased.  Ms. Legner replied yes.  Member Harris recommended that staff prepare "best case" and "worst case" scenarios for the additional revenue estimates.  Ms. Legner noted that the ballfields are currently rented at maximum capacity and a decrease in demand is not expected.  Ms. Legner stated that the proposed fee increases are in line with those of Pima County and the Amphitheater school district.

Councilmember Garner asked how the Town’s fees at the Riverfront Park compared to the County.  Ms. Legner replied that the fee increases would bring the Town equal to what the County charges.  Councilmember Garner asked how long the Town is obligated to match or charge less than the County.  Ms. Legner replied that the intergovernmental agreement does not provide an end date.  Councilmember Garner noted that this should be revisited by Council and the Finance and Bond committee.  Chair Kill stated that future agreements need to reference a date at which the Town would no longer be required to match or charge less than the County.  Ms. Legner stated she would discuss the issue with the Town’s legal staff.            

Ms. Legner stated the following in regards to pool user fees:
-Current cost recovery for pool admissions is approximately 3%.  A minimum of 10% and a maximum of 35% is desired, per the Town’s adopted revenue and fee policy.  
-Current cost recovery for pool lane rentals is approximately 9%.  A minimum of 35% and a maximum of 65% is desired, per the Town’s adopted revenue and fee policy. 
-Incremental increases for pool admissions and lane rentals are expected each year for the foreseeable future. 

Chair Kill asked if capital expenditures are included when determining cost recovery levels.  Ms. Legner replied yes.  

Ms. Legner stated that the fee increases are expected to generate an additional $88,000 in revenues within the first year of implementation.  Ms. Legner stated that staff would return to the Finance and Bond committee and Council for intermittent increases in the future.  Chair Kill asked what percentage the $88,000 would make up of the department’s total budget.  Ms. Legner replied that the fiscal year 2009/10 budget is approximately $1.9 million.  Ms. Legner stated that the increase would bring the department’s overall cost recovery to about 20%.                 

Ms. Lemos walked committee members through the contents of the item packet, stating the following in regards to the General Fund:
-Year to date General Fund revenues through September were $5.9 or almost $6 million, while year to date General Fund expenditures through September were a little over $6 million.
-Year-end estimated revenues for the General Fund are $27.2 million, while year-end estimated expenditures for the General Fund are $28.9 million.
-Year-end estimated deficit in the General Fund is $1.6 to $1.7 million.  
-The budgeted deficit in the General Fund was $1.6 million.
-Twenty Town employees participated in the voluntary severance plan; seven or eight of those positions have been refilled. 
-Savings of $350,000 are estimated from the voluntary severance plan. 
-Construction sales tax revenues are coming in below budget, and a delay in the Ventana Medical Systems expansion could push estimated tax receipts of $500,000 into next fiscal year.

Vice Chair Lamm asked whether any of the remaining severance plan vacancies would be refilled.  Ms. Lemos replied that the only position left to be filled will be the Planning and Zoning Director, and recruitment for that position has been put on hold.  Ms. Lemos stated that all other positions that were scheduled to be refilled have either already been filled or are in final interview stages. 

Member Harris asked whether reduced expenditures were due to simple "belt-tightening" and maintenance deferral or were instead due to generating greater efficiencies.  Ms. Lemos stated that historical analysis of department expenditures in comparison to budget were utilized in determining year-end expenditure estimates.  Ms. Lemos stated that there may be opportunity as the fiscal year progresses to further reduce year-end expenditure estimates.  

Ms. Lemos noted that the hiring freeze would be kept in place and any future vacancies would be analyzed to determine criticality.  Ms. Lemos noted that the year-end revenue estimates could also change, should the Town see accelerated activity in other commercial construction projects.  

Member Harris noted that, of the $1.6 million estimated General Fund deficit, $400,000 or so reflected ongoing expenditures.  Member Harris stated that the severance plan savings were expected to eliminate the need to dip into the contingency reserves to fund ongoing expenditures.  Ms. Lemos stated that a drop in revenues is the reason behind this, and that staff would continue to monitor actual revenues and expenditures as the fiscal year progresses.

Ms. Lemos moved on to the Highway Fund, noting the following:
-Year to date revenues exceed expenditures.  
-Year-end deficit in the fund is estimated at approximately $280,000.  
-The budgeted deficit in the fund was approximately $200,000.
-A drop in construction sales taxes is the main reason for the deficit.  
-Staff would continue to monitor actual revenues and expenditures as the fiscal year progresses.
-Four full-time Town employees in the Highway Fund had accepted the severance package.

Ms. Lemos then reviewed the Bed Tax Fund, noting the following:
-Hotel industry has been hit hard during this recession.  
-Estimated deficit in the Bed Tax Fund is approximately $204,000.  

Councilmember Garner asked how much additional revenues the Town would see from the expiration of the Hilton bed tax rebate.  Ms. Lemos noted that she believed the historical amount ranged from $180,000 to $200,000, but expected the current fiscal year rebate could be about 25% less.  Ms. Lemos noted that the rebate will end mid-year of fiscal year 2010/11.

Ms. Lemos noted that estimates in the Transit Fund were on target with budget.  

Vice Chair Lamm asked if shutting functions would be necessary, should the economic downturn continue.  Vice Chair Lamm asked if any programs and activities have been considered for discontinuation.  Ms. Lemos replied no, and noted that the five-year forecast in the November 9 study session would include a list of options presented to Council for their consideration in closing the future-year projected deficits.  Ms. Lemos noted that one of those options would be program prioritization and service level evaluation.  Ms. Lemos noted that this option would be paired with the performance measurement data that staff is currently compiling.      

Chair Kill asked who would be initiating discussions of deficit-closing options.  Ms. Lemos replied that cross-departmental teams of Town employees will be assembled for the purpose of gathering cost-saving suggestions.  Ms. Lemos stated that discussions should also be initiated between Council and constituents.    

Chair Kill asked if a decision had been made about when to recruit for the vacant Town Manager position.  Ms. Lemos replied that Council has requested the item be brought before them for discussion in January, and that a hiring decision would likely be put on hold until after Council elections.  Councilmember Garner noted that Council is looking at a national search, and would like staff to provide a listing of search firms to Council in January.  Councilmember Garner noted it would be a six to nine month process. 

Bill Adler, a citizen of Oro Valley, spoke to the committee, stating that not enough importance was being placed on the recruitment of a new Planning and Zoning Director.  Mr. Adler also stated that the Town’s tax rebate agreements would have to be litigated separately, irrespective of the decision made on the Turken v. Gordon tax rebate lawsuit.  Mr. Adler then stated that zoning restrictions on properties should be revisited as a possible economic development tool.  Mr. Adler noted current vacancies in several commercial developments.  Mr. Adler stated that certain zoning prohibitions could possibly be lifted, and that as a result the Town may realize additional construction and retail sales taxes, as well as permit revenues.  Mr. Adler noted that this topic will be discussed at a Council study session scheduled for Wednesday, October 28.                

MOTION: A motion was made by Member Harris and seconded by Member Toth to forward the fiscal year 2009/10 first quarter financial status review to Council for approval. 

MOTION carried, 4-0.

Ms. Lemos stated that the contracted performance measurement consultant began meeting with department heads in early October.  Ms. Lemos stated that the purpose is to formulate meaningful performance measures that could be utilized during next fiscal year’s budget process, but also to gauge progress towards meeting the goals outlined in the Town’s strategic plan.

Ms. Lemos stated that, based on feedback from department heads, the consultant has prepared the first draft of sample performance measures, and the measures are currently being reviewed by staff.  Ms. Lemos stated that a goal of November 30 has been set for project completion, with a final draft report to be provided to Ms. Lemos for her review by December 15.  

Ms. Lemos stated that the performance measures will gauge program output, workload, efficiency, outcome and effectiveness.

Ms. Lemos noted that the performance measures and final report will be reviewed and discussed by Council at a study session scheduled for January 13.  Ms. Lemos stated that, upon Council approval, the measures will be incorporated in the budget templates for fiscal year 2010/11.  Ms. Lemos stated that a more complete set of the performance measures will be available in December.  

Chair Kill asked at what stage of the process Finance and Bond committee members would be involved in the details.  Ms. Lemos asked committee members if they would like this issue to be a standing agenda item at the next meeting.  Member Harris replied yes, and noted that the measures need to be transparent and understandable to the average person.  Member Harris noted that the City of Peoria and the Town of Queen Creek have good performance measures and that it would be worthwhile to include as an appendix to the final report a review of those measures, particularly for the Town’s major departments, such as Police or Water.  

Ms. Lemos stated that the ICMA Center for Performance Measurement program allows for benchmarking by leveling and standardizing the data among member jurisdictions.  Ms. Lemos also noted the importance of having additional measures unique to the Town, which are provided in response to Council and citizen request.  Ms. Lemos asked committee members if they would be interested in speaking with the consultant at their next meeting.  Chair Kill replied yes.  

Councilmember Garner stated that it would be helpful to see what percentage each department makes up of the Town’s total budget, and compare those percentages to other jurisdictions.  Councilmember Garner then stated that a review of these percentages in conjunction with the ICMA performance measures would allow Council and staff to benchmark a program’s or department’s efficient use of available resources.

Ms. Lemos stated that, if available, the performance measurement consultant would attend the committee’s next meeting.  Ms. Lemos stated that she would provide committee members with draft templates of the performance measures at the committee’s next meeting.                                              

MOTION: A motion was made by Member Toth and seconded by Member Harris to schedule a Finance and Bond Committee meeting for November 30. 

MOTION carried, 4-0.

Ms. Lemos stated that the Town's auditors would be in attendance at the November 30 meeting to present the fiscal year 2008/09 audit.  Ms. Lemos stated she would also provide the latest five-year financial forecast to committee members at the November 30 meeting.     

Councilmember Garner noted that recruitment of a Planning and Zoning Director is on hold primarily because Council may reconsider a previous proposal to consolidate the Planning and Zoning, Development Review, and Building Safety departments.   Councilmember Garner noted that elimination of the Planning and Zoning Director position had been proposed as part of the consolidation.  

Vice Chair Lamm stated that he would like to discuss and have the committee make a possible motion to recommend to Council a complete review of the Town’s contingency reserve policy.  Vice Chair Lamm stated he was particularly interested in eliminating a distinction between an economic emergency and a physical emergency.  Vice Chair Lamm stated he would instead prefer an emphasis on the amount of contingency reserves being utilized.  Vice Chair Lamm stated he would prefer a policy in which large amounts could be utilized only by progressive supermajority.  

Ms. Lemos asked committee members if they would be interested in having staff research other jurisdictions’ contingency reserve policies.  Vice Chair Lamm replied yes. 

Member Harris asked if this item would be scheduled for the November 30 meeting.  Ms. Lemos replied yes.    

MOTION: A motion was made by Vice-Chair Lamm and seconded by Member Harris to adjourn.

MOTION carried, 4-0.

Meeting adjourned at 7:37 p.m.