MINUTES
ORO VALLEY TOWN COUNCIL
Study Session
September 22, 2010
ORO VALLEY COUNCIL CHAMBERS
11000 N. LA CANADA DRIVE
 
STUDY SESSION

CALL TO ORDER - At 6:02 p.m.

ROLL CALL

PRESENT:
Satish Hiremath, Mayor
Bill Garner, Vice Mayor
Barry Gillaspie, Councilmember
Joe Hornat, Councilmember
Mary Snider, Councilmember
Steve Solomon, Councilmember
Lou Waters, Councilmember

Mayor Hiremath acknowledged Councilmember Snider’s birthday.

Mayor Hiremath stated that item number three (3) will be discussed first since the presenter is in Town from Phoenix.

3.

Discussion regarding the assessment of options for insurance to augment Risk Retention Pool Coverage


Click here for Item 3

Safety/Risk Manager Bob Easton gave a brief overview of the Town’s current insurance coverage.

-Current coverage is more than adequate
-No need to augment or broaden coverage at this time
-Deductibles have been increased which have saved a fairly significant amount on premium costs

The Town’s current limit for any single claim is $2,000,000 and if that limit would be exceeded, the $10,000,000 excess limit would cover any overage.

The auto policy consists of a $2,500 deductible for at fault claims.  Boiler and machinery (equipment breakdowns) have a $1,000 deductible.  Inland marine (misc. equipment) has a $500 deductible and municipal liability (negligent actions) has a $100,000 deductible.   


Mr. Ed Bantel from Southwest Risk Services explained the Town’s land use lawsuits coverage.
-$2,000,000 limit
-Free consultation regarding land use issues
-No deductible: Town pays 20% of the claim and AMRRP pays 80%.  However, the Town remains responsible for the following:
     -The time and cost of collecting and providing copies of documents
     -The time and cost of staff interviews or depositions
     -The loss of staff productivity while they spend time at a court trial
     -20% of the legal fees, costs and plaintiffs damages

Discussion ensued regarding the claims process and general events that are covered by the Arizona Municipal Risk Retention Pool (AMRRP).

Town Attorney Tobin Rosen stated that unlike a traditional insurance agency, AMRRP works with the town to determine ways to bring certain claims into coverage instead of trying to exclude claims.   

Mr. Ed Bantel said that when calculating premiums, the AMRRP looks at the loss ratio (The amount of money AMRRP pays out to a Town/City as opposed to the amount of money collected by AMRRP from the Town/City).  Those members that have a lower loss ratio have lower premiums and those with higher loss ratios have higher premiums.

1.

Presentation and Status Report Regarding Golder Ranch Fire District (GRFD) Annexations


Click here for Item 1

Assistant to the Town Manager Kevin Burke gave an overview of the Golder Ranch Fire District annexation efforts.
-Town Council approved an Ordinance in 1995 which allowed Golder Ranch Fire District to extend its boundaries by annexing property within the jurisdiction of the Town
-Starting in 2006, Golder Ranch Fire District began a phased annexation process to bring property within the Town boundaries as well as adjacent property in unincorporated Pima County, into the Golder Ranch Fire District boundaries
-First two annexation phases have been successfully completed
-Property owner signatures are being obtained for the third and final annexation phase

Fire Chief Randy Karr and Division Chief John Sullivan gave an overview of the Golder Ranch Fire District and their annexation efforts.

Division Chief John Sullivan stated that Golder Ranch Fire District is a political subdivision of the State and is likened to a County Fire Department.

Golder Ranch Fire District:
     -Governed by Arizona Revised Statutes 48-805
     -Services 215 square miles of Pima and Pinal Counties
     -Provides emergency medical services to over 373 square miles

Division Chief John Sullivan said that the Golder Ranch Fire District focuses on the three P’s: Prepare, Prevent, and Protect.  The Fire District prepares by continually training, offering public education and outreach, emergency operations planning and water resource planning.  The Fire District promotes prevention by utilizing the Fire Code, reviewing plans, performing inspections and conducting investigations.  The Fire District protects by offering medical and ambulance transport services, motor vehicle collision assistance and fire services.    

Division Chief John Sullivan stated that the Golder Ranch Fire District also provides non-emergent services such as desert creature removal, home safety inspections, blood pressure evaluations, and fire extinguisher training.
 
Medical and ambulance services comprise over 70% of the total call volume.  As of September, 2009, Golder Ranch Fire District has resumed full ambulance services in the Town for everything north of Hardy Road.

Division Chief John Sullivan stated that health care costs in the state of Arizona are among the highest in the nation.  These costs include pre-hospital costs and hospital room costs.    

Division Chief John Sullivan discussed the annexation process and stated that the annexation process first started in 2006 when the Golder Ranch Fire District, Rural Metro, and the Town met and discussed standards of services.  A plan was created to ensure that a services delivery model was in place in order to address the standards that were adopted.  Essentially, a standard was required that didn’t have the infrastructure to support it.  Golder Ranch Fire District has since built additional fire stations in order to meet the adopted standards.

Roughly 99.5% of the Town is already served by a fire district.  
Currently, there are 120 parcels in Oro Valley that do not pay taxes for emergency services and have not been transitioned in.  Golder Ranch Fire District would like to annex these parcels.

Division Chief John Sullivan said that the annexation process is similar to the Town’s annexation process in that at least 50% of the property owners would have to support the annexation and sign a petition.

Division Chief John Sullivan stated that county islands pose problems because there is no dedicated emergency service provider assigned to those areas which can then lead to delayed response times.    

Division Chief John Sullivan stated that if an additional unit/station was created, emergency response times will improve.     

Division Chief John Sullivan said that there is opposition to the proposed annexation of La Cholla Airpark because some citizens are worried that their taxes will increase and they won’t see any increase in services.

Division Chief John Sullivan clarified that the Golder Ranch Fire District is not legally bound to assist with calls from the non-annexed areas but each time they do respond, the taxpayers of Oro Valley pick up the tab.

Golder Ranch Fire District - Proposed La Cholla Annexation status:
-Total of 250 signatures needed to pass the annexation
-Currently, 175 signatures have been collected 

Discussion ensued between Council regarding:
-Water pressure and infrastructure problems located at La Cholla Airpark
-Alternative services to assist La Cholla Airpark
-Costs associated with responding to emergencies in La Cholla Airpark
-Fuel tanks located in La Cholla Airpark
-Signage indicating "No Emergency Coverage" for those areas that choose not to be annexed
-Legal requirements regarding the annexation process

Fire Chief Randy Karr said that the main issue at hand is an equity issue.  If services are rendered, they should be paid for by those that use them.

Fire Chief Randy Karr stated that Golder Ranch Fire District has prepared an extensive campaign to inform the public about the goals of the proposed La Cholla Airpark annexation.  

2.

       Discussion Regarding Water Rates Analysis Report


Click here for Item 2

Water Utility Director Philip Saletta gave a brief overview of the Water Rates Analysis.  Mr. Saletta stated that the Water Utility staff started the water rates analysis in mid June.  The Water Utility Commission and the Finance Subcommittee met several times since the start of the analysis and on September 13th, the Water Utility Commission reviewed and approved the Water Rates Analysis Report.

Water Utility Director Philip Saletta reviewed:
-Customer comments from last year’s Water Rates Analysis
-Cost recovery of fees
-Concern for cash balances
-Uses of Groundwater Preservation Fee
-Concern for economic situation
-No increase in base and commodity rate for FY 10-11 

Water Utility Director Philip Saletta discussed several water utility cost savings which included:
-The reduction of outstanding debt improved the debt service coverage ratio
-Management of water resources related to recovery wells, long term storage credits & extinguishment credits
-Budget reductions in operating costs and capital projects 

Water Utility Director Philip Saletta stated that the Water Utility has three funds that are separate from the general fund.  These consist of the Water Utility, Enterprise, and Impact Fee Funds.  These three funds are combined to calculate the debt service coverage ratio which is one of the main drivers of the water rates.

Water Utility Director Philip Saletta gave an overview of the current Enterprise Fund operating expenses, Water Utility debt, Water Utility annual debt service, and the AWRDIF fund projected revenue for FY 10-11.

Water Utility Director Philip Saletta gave a brief history of the Groundwater Preservation Fee (GPF).
-Established GPF in water rates in 2003
-Currently, GPF is being used to pay for:
     -The debt associated with the acquisition of wastewater effluent for the
      reclaimed water system and the Town’s CAP water
     -Series 2003 bonds to finance construction of Phase I of the Reclaimed Water
      Delivery System
     -2007 WIFA loan to finance construction of Phase 2 of the Reclaimed Water
      Delivery System
     -Studies of alternatives for the future delivery of CAP water
-Future debt on CAP water infrastructure
     -GPF increases are paced with the future delivery of CAP water in 2016

Water Utility Director Philip Saletta provided a history of GPF increases since FY 03-04 and gave an overview of Council water policies which included:
-Water Utility is self supporting with rate based revenues
-No transfer of excess revenues to General Fund
-Water rates and charges reviewed annually
-Debt service coverage ratio of 1.30
-Cash reserves of at least 5% of budget
-Reduced or subsidized rates will be paid by General Fund
-Avoid sudden or large scale shifts in rates
-Rate structure to encourage water conservation
-Rate structure to encourage use of reclaimed water
-Cost of Service approach (AWWA methodology) 

Water Utility Administrator Shirley Seng gave a brief overview of the Enterprise Fund, the Alternative Water Resource Development Impact Fee Fund, and the Potable Water System Development Impact Fee Fund.

Water Utility Administrator Shirley Seng discussed:
-The process for reviewing and recommending new water rates.
-Proposed rate increases for potable water, reclaimed water, and cost recovery charges pertaining to new service establishment fees and meter installation fees
-Financial impact to an average residential customer
 
Discussion ensued between Council regarding:
-Effects of proposed rate increases on golf courses
-Allocation of Groundwater Preservation Fees 
-Timeline for the delivery of CAP water and alternative options
-Sufficient reserves for CAP water construction costs
-Policy regarding cash reserves
-Water meter replacement project
-Process for paying bonds       

4.

     FUTURE AGENDA ITEMS (The Council may bring forth general topics for future meeting agendas. Council may not discuss, deliberate or take any action on the topics presented pursuant to ARS 38-431.02H)


Vice Mayor Garner requested that an item be placed on a future Work Study agenda regarding the various CAP water delivery options as well as the different partners involved in the process.    

Mayor Hiremath clarified that this information will be distributed internally rather than holding a study session.

ADJOURNMENT

MOTION: A motion was made by Councilmember Hornat and seconded by Councilmember Gillaspie to Adjourn at 8:08 p.m. 

MOTION carried, 7-0.