Council Regular/Special Meeting

MINUTES OF THE GILBERT TOWN COUNCIL, IN REGULAR MEETING OF WEDNESDAY APRIL 22, 2020 AT 8:00 AM, MUNICIPAL CENTER I, ROOM 300/ VIRTUAL MEETING 50 E CIVIC CENTER DRIVE, GILBERT, ARIZONA COUNCIL PRESENT: Mayor Jenn Daniels, Vice Mayor Scott Anderson, Councilmembers Scott September, Bill Spence, Jared Taylor, and Aimee Yentes COUNCIL ABSENT: None STAFF PRESENT: Town Manager Patrick Banger, Town Clerk Lisa Maxwell, Deputy Clerk Chaveli Herrera, Town Attorney Christopher Payne, Management and Budget Director Kelly Pfost, Water Manager Andrew Jackson, Jeanne Jensen, Public Works Director Jessica Marlow, Tax Compliance Manager Sarah Radbury, Economic Development Director Dan Henderson, and Project Supervisor Jeanne Jensen. AGENDA ITEM CALL TO ORDER Mayor Daniels called the meeting to order 8:05 a.m. ADMINISTRATIVE ITEMS 1. RATES AND FEES - presentation, discussion and possible direction on Utility Rate Changes for Water for financial sustainability. Water Manger Jackson provided background information on the first half of his presentation originally heard at the April 16, 2020 Council Retreat. He discussed the water compliance framework and the Total Trihalomethanes (TTHM) violations from 2017. He detailed the Water Quality Master Plan and its purpose and discussed initiating the North Water Treatment Plant (NWTP) Condition Assessment and the evaluation of all current facilities and equipment. He provided information on the impact of the census and the need to adopt certain compliance required with a growth in population. He discussed Quarter 3 data for regulatory compliance and issues with compliance sites anticipated for 2022. He provided information on water resource challenges and discussed the 18-month assessment conducted with 16 different agencies. He discussed the issues related to the Salt River Project (SRP) allocation due to compliance and facility design limitations and displayed a 7-year differential between SRP water availability and provided estimates. He showed a chart to outline usage and available water as well as water lease information. Project Supervisor Jensen discussed the facility condition and the testing of the treatment facility. She discussed the historic dry out, the timeline and the 2019 Facility Condition Assessment. 1 Councilmember Spence asked about the bands on extreme potential Hydrogen (pH) Adjustments. He also asked about corrosion controls and cathodic protection. Water Manager Jackson discussed acidic ranges of pH adjustments and stated that only bench tests have been done to test cathodic corrosion although the system has never been run that low. Councilmember Spence discussed the effects of chlorine injections and corrosion controls. And Water Manager Jackson discussed looking at ways to enhance the way coagulants are used. Mayor Daniels asked that discussion be moved to the financial component of the item. Water Manager Jackson discussed the division approach efforts made to date. He outlined the alternatives development and detailed the different concerns, issues and parameters to date. He discussed the mitigation strategies and implementation and the risk framework to identify where there are needs and how to address future needs. Project Supervisor Jensen discussed the strategic compliance milestones and discussed the existing plant conditions and full facility reconstruction. She outlined the budget impacts and alternatives comparison. She detailed the financial impact on budget, rates and bonds and long-range forecasts. She detailed each of the cost and repairs and the rates study effort timeline. Water Manager Jackson detailed the recommendations to Council and asked for support to proceed with both the Rate Study and the Basis of Design. Management and Budget Director Pfost provided clarification on the timeline. Vice Mayor Anderson asked about a specific project on Higley Road. Mayor Daniels discussed partnerships and sites and said there was uncertainty on long term strategies. Water Manager Jackson stated that his team would be happy to facilitate a tour of the water plant. Councilmember Spence discussed the possibility of decommissioning existing facilities and the reuse of existing structures. Project Supervisor Jensen explained the cost savings opportunities and options to facilities. She discussed taking a holistic perspective to make sure the right investment was made. Councilmember Yentes discussed the slide that showed hot spots as it related to compliance and stated the South side of Town had discussed growth and the possible issues with that plant. Mayor Daniels stated that the South side of Town was served by different water sources. Water Manager Jackson spoke in agreement and stated the quality of water at the South plant had been consistently better. Councilmember Taylor discussed Nichols Park and asked if current users of the field would be accommodated to another location. He also asked for clarification on the benchmarking data. Town Manager Banger replied and stated that current users of the field would be accommodate and Project Supervisor Jensen provided additional clarification on the benchmarking numbers. Councilmember Taylor discussed staff 2 conducting an analysis of both situations to maximize water availability and Project Supervisor Jensen stated the intention of either project mentioned was to maximize water supplies. Councilmember Taylor discussed debt versus rating and asked about the possibility of using bonds without water rate increases. Town Manager Banger stated that rates were what paid for bonds. Management and Budget Director Pfost stated that there was not a way to fund a project without debt and provided additional details on funding. Project Supervisor Jensen thanked everyone for their time and patience. 2. LONG-TERM FINANCIAL PLANNING - presentation, discussion and possible direction on System Development Fee (SDF) Fund Balances. Management and Budget Director Pfost explained the System Development Fee (SDF) funds and how they were implemented and utilized. She outlined the current status of the various Town SDF funds. She discussed the possibility of having a bond to cash flow the Roads SDF and the issues with delaying some critical projects without adequate funding. She provided information on the Public Facilities Municipal Property Corporation (PFMPC) bond and the citizen board process in issuing bonds. She discussed the positive outlook on other bonds and stated that the Water related SDF funds that may need to be addressed with the projected population growth and discussed the possibility of a bond through the Water Resources Municipal Property Corporation (WRMPC) bond. She provided additional information on the process. Councilmember Taylor asked how some of the SDF assumptions changed with the COVID- 19 impact. Management and Budget Director Pfost stated that she did not have enough information at the time however she was receiving information from the Development Services Director often on any impacts. She stated that it would probably take six months to see the impact. Town Manager Banger stated he received updates and stated that they have not seen any impacts but will continue to monitor. Vice Mayor Anderson discussed legislation in SDF’s and Mayor Daniels discussed percentage changes and changing mechanisms. There was further discussion on SDF legislation. Councilmember Spence asked if SDF’s must go to the funds listed and Management and Budget Director Pfost stated that SDF funds were highly restrictive. Yung Koprowski asked how the bonds discussed on this item related to the transportation bond. Management and Budget Director Pfost provided clarification on them being other revenue sources which are used first in order to offset costs. Mayor Daniels stated that the Town would try to use more restrictive sources first then supplement. 3. LONG-TERM FINANCIAL PLANNING - presentation, discussion and possible action on Sales Tax Revenue Diversity. Management and Budget Director Pfost discussed the FY2020 Wildly Important Goals (WIG) for the Town to identify optimal revenue diversification and develop a supporting 3 strategy and detailed the importance of the goal. She stated that diversification protected against volatility and provided background information on sales tax comparing Gilbert with surrounding communities. Mayor Daniels discussed residential density and how Gilbert stood in comparison to surrounding communities. Management and Budget Director Pfost detailed 7 different ideas and recommendations on how Gilbert could Diversify. She provided details on Commercial Leases, Commercial Zoning, Accommodation, Heritage District, Northwest Area, Online Sales and Tax Structure. The recommendation for Commercial Lease was to explore options to educate and assist local businesses. Councilmember Spence asked what was meant by “low commercial lease revenue” on a slide presented and asked how other communities were capturing the information. Tax Compliance Manager Radbury discussed how cities and town were non- program cities before and handled revenue in house. She discussed the communication efforts being worked on. Councilmember Spence stated that he was hesitant to emulate another municipality. There was additional discussion on impacts other communities were facing, economic cycles and the need for balance. Councilmember Yentes asked if any analysis had been done regarding compliances with revenues. Tax Compliance Manager Radbury stated they have but were unable to share that information. Management and Budget Director Pfost discussed the rules surrounding taxes and the restrictions on sharing certain information. Tax Compliance Manager shared information on industry standards and the stated that they would look at additional options. Regarding Commercial Zoning, the recommendation was to continue support and preservation of zoning outlined in the General Plan. In looking at Accommodation also known as bed tax there was discussion on sales tax unrestricted versus restricted tax and its purpose. The recommendation was to create signature and destination events to increase volume. Councilmember Taylor asked about additional cost and asked what was being contemplated. Town Manager Banger stated that some models were being put on hold but detailed other ideas such as hosting run events. Councilmember Taylor stated he would need more data before he could support the item. Vice Mayor Anderson discussed the Transportation Advisory Group that could help determine of the events and changes. Management and Budget Director added clarification on offsetting debt service and not supporting private businesses and stated that bed tax did not go towards marketing. Vice Mayor Anderson discussed additional uses. 4 Management and Budget Director Pfost discussed the Heritage District recommendation to diversify commercial uses. Councilmember Taylor discussed the increase in crime in the area and recommended adding mixes that don’t drive crime. Mayor Daniels discussed creative and mixed space and the related components. She discussed the ratio of commercial uses versus residential in comparison to other municipalities. She stated that restaurants did not drive crime rates, but population did. She said density in people means an increase in crime and the need for officers to be present. She said data was not apples to apples and said she was grateful to the Economic Development Team and business owners who were seeing success. Councilmember Spence talked about the people he has spoken to throughout his campaign and the overwhelming support for the Heritage District to head in that direction. Vice Mayor Anderson said he agreed that there was a need for diversity and he believed the Town would accomplish that with the mix in the Heritage District and the development of the 9.1 acres. Management and Budget Director Pfost discussed the Northwest Area and stated that the recommendation was to explore tools for supporting and revitalizing the area. Councilmember Spence stated the Town should make sure they are aware of where revenue was coming from before it was given away. Mayor Daniels asked for clarification on what was being given away. Councilmember Spence discussed his support of the Economic Development team working all these areas and discussed how the Town could help these areas be prosperous with employment. Management and Budget Director Pfost asked if he meant to be cautious with changing zoning to which Councilmember Spence said yes and to look at those avenues. Vice Mayor Anderson asked for more information on the Urban Land Institute (ULI) Study. Economic Development Director Henderson expanded on the study and said the report was almost final and would be shared with Council and the community. Management and Budget Director Pfost discussed online sales and outlined the Wayfair case and the Economic Nexus that took effect on October 1, 2019 and the related impact. Councilmember September asked if these taxes were restricted and Management and Budget Director Pfost stated that they were unrestricted. Councilmember September asked when we would start to see the impacts of the Nexus and Tax Compliance Manager Radbury provided information on the implementation. Councilmember Spence spoke in response to businesses having to make changes to taxes out of necessity and asked if the Economic Development Department would help capture where the Town was headed and assist businesses who want to transition. 5 Management and Budget Director Pfost stated he was always happy to collaborate however the changes discussed were at the State level rather than local. Mayor Daniels provided additional information on the change. Councilmember Yentes highlighted the importance of this type of revenue and provided more information on compliance issues and concerns. Mayor Daniels stated she was happy for more clarification and discussed the level playing field for brick and mortar stores. Councilmember Spence asked who was responsible for compliance and Management and Budget Director Pfost stated that the Town could do audits, but taxes were remitted to the State. Councilmember Yentes discussed the importance of it being remitted to the State and there was additional discussion. Councilmember Taylor discussed the opportunity to look for ways to save the tax payers money and discussed looking at data to see if an offset was truly accomplished and at what percentage and discussed potential impact to the items discussed earlier. Management and Budget Director Pfost discussed looking at data to decide what information to pull and the recommendation would be to monitor it. Councilmember Taylor discussed food tax Town Manager Banger stated that he had asked Director Pfost to pull the information and stated the food tax was about 10 million and Councilmember Taylor stated it should be something they should look at eliminating. Councilmember Yentes discussed the steady increase within the last 5 years and the importance of tracking all different areas of revenue. Mayor Daniels stated that communities without food tax have substantially higher taxes in other areas. Councilmember Spence asked if online food orders are placed what would the revenue stream be. Tax Compliance Manager Radbury stated it would be reported through the restaurant tax, not online sales. Management and Budget Director Pfost stated that the recommendation going forward was to continue to explore ways to diversify the composition of Gilbert’s sales tax and improve stability. 4. PUBLIC WORKS - presentation, discussion and possible direction on Environmental Services - Recycling Costs. Public Works Director Marlow briefly discussed the talking points for her item. She provided information on resident feedback regarding recycling programs and highlighted the Instagram story created by the Digital Government Department and the feedback received. Mayor Daniels mentioned that although many residents were in favor of keeping the program she also wanted to confirm that some residents were not in favor. Public Works Director Marlow outlined Gilbert’s impacts and challenges, the recycling market and sale of commodities. She discussed disposal cost trends and recycle budget 6 impacts to the Town and different measures taken. She provided information on multiple cost saving measures and fleet maintenance and preventative maintenance. She detailed the rate history and outline the 5-year plan and the needs for long term solutions and opportunities. She outlined the next steps and asked for Councils support in conducting a Fee Study in FY2021 on Residential Solid Waste rates. There were no questions asked. 5. PUBLIC SAFETY - presentation, discussion and possible direction on Public Safety Personnel Retirement System (PSPRS) Unfunded Liability update. Management and Budget Director Pfost provided background information on the Public Safety Personnel Retirement System. She discussed the Towns unfunded liability and the accuracies needed to pay benefits. She discussed a gap in assets and liabilities and the work done to close the gap. She discussed the recommendation to Council to begin to pare back funding and detailed the recommended strategies and changes. Mayor Daniels asked for clarification on the one-time funding strategy, stating that it was not being paid one time but using different funding sources. She also asked if 90 percent was considered fully funded. Management and Budget Director Pfost stated that was correct. She discussed not supporting ongoing operations with one-time money and the need to update formal policies. Ms. Pfost discussed the policy on being 90 percent full funded and said historically it had been poorly managed. 6. FINANCIAL PLANNING - presentation, discussion and possible direction on Early Debt Payoff. Management and Budget Director Pfost discussed the General Fund and detailed the benefit in paying off Town debt early by setting money aside. Mayor Daniels added clarification that the dollars were unrestricted and could be utilized elsewhere if needed. Ms. Pfost spoke in agreement and stated the money could be moved is something more pressing came up. Councilmember Spence discussed applying Transactional Privilege Tax (TPT) funds to this purpose. Mayor Daniels cautioned against the implication of the Town having extra money. She discussed the many projects that need to be taken into account and prioritizing those intentions. Yung Koprowski stated that other communities were looking at their budgets and reducing costs due to COVID-19, she asked if Gilbert was going through the same reduction efforts and if these funds would be used to offset those costs. 7 Mayor Daniels elaborated on the upcoming budget conversations that Council will have with the Budget Department and discussed the need for additional data to understand the impact. Management and Budget Director Pfost stated that Gilbert was fiscally conservative. Councilmember Taylor spoke in support of paying off debt early but also discussed the importance of avoiding debt. He discussed the approach of selling the University Building. Town Manager Banger stated that staff was still working on the sale of the building and stated that plans would change if it were to happen. 7. LONG-TERM FINANCIAL PLANNING - presentation, discussion and possible direction on Long-Term Financial Model including financial trends. Management and Budget Director Post presented an excel spreadsheet in outlining General Fund Revenues and Expenditures. She discussed the formula options and asked Council for any questions. Councilmember Taylor asked about the model for salary growth for sworn personnel. Mayor Daniels discussed formulas for sworn personnel regarding years of service and rank. Town Manager Banger further elaborated on the step and grade increases for sworn personnel and the pay for performance model for non-sworn. 8. WRAP-UP - Review of the Retreat and Action Items. Management and Budget Director Pfost asked if there were any final questions. Councilmember Taylor stated that he received additional information from staff regarding the Public Safety Advocacy Center and he asked that all members of Council receive the information. Councilmember September expressed how impressed he was with the lines of service from all staff and stated that he wished more people could see these efforts. He thanked staff for all their hard work. Mayor Daniels stated she was grateful for these opportunities because they helped Council make better decisions. Town Manager Banger thanked staff for their hard work and for always pushing forward and asking the right questions. He stated that the Town was always being proactive once data is received and he thanked Council for all their questions. Mayor Daniels adjourned the meeting at 11:34 a.m. 8  ATTEST: ___________________________ ___________________________________ Jenn Daniels, Mayor Chaveli Herrera, CMC, Deputy Town Clerk CERTIFICATION I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the regular meeting of the Town Council of the Town of Gilbert held on the 22nd day of April, 2020. I further certify that the meeting was duly called and held and that a quorum was present. Dated this ____ day of ____________________ 2020. ___________________________________ Chaveli Herrera, CMC, Deputy Town Clerk 9