Council Regular/Special Meeting

MINUTES OF THE GILBERT TOWN COUNCIL, IN SPECIAL MEETING, SPRING FINANCIAL RETREAT, OF THURSDAY, MARCH 3, 2022 AT 8:00 AM, SOUTHEAST REGIONAL LIBRARY, 775 N. GREENFIELD ROAD, GILBERT, ARIZONA COUNCIL PRESENT: Mayor Brigette Peterson, Vice Mayor Aimee Yentes, Councilmembers Scott Anderson, Laurin Hendrix, Yung Koprowski, Scott September, and Kathy Tilque COUNCIL ABSENT: None STAFF PRESENT: Town Manager Patrick Banger, Town Clerk Chaveli Herrera, Town Attorney Christopher Payne, Assistant Town Manager Mary Goodman, Assistant Town Manager Leah Hubbard- Rhineheimer, Parks and Recreation Director Robert Carmona, Public Works Director Jessica Marlow, Assistant Public Works Director Eric Braun, Office of Management and Budget Director Kelly Pfost, Management Services Director Håkon Johanson, Water Resources Manager Lauren Hixson, Fire Chief Jim Jobusch, Chief People Officer Nathan Williams, Wastewater Manager Ken Snow, and Environmental Compliance Manager Hondo Judd AGENDA ITEM CALL TO ORDER Mayor Peterson called the meeting to order at 8:19 a.m. ADMINISTRATIVE ITEMS 1. Long Range Infrastructure Plan (LRIP) Update. 1 Public Works Director Marlow provided information on the importance of the long-range infrastructure plan (LRIP). She outlined the LRIP accomplishments, discussed Enterprise Funds, and detailed the specifics of Enterprise Funds related to Streets, Water, Wastewater, and Environmental Compliance. She outlined the financial strategy, completed projects for Fiscal Year 2021, upcoming and ongoing projects, and provided examples of each fund. Councilmember September asked if the light pole replacement assets were currently meeting what was projected through forecasting. Director Marlow confirmed that they were being replaced at the end of their useful life. Councilmember September asked if they were direct burial types, and Director Marlow confirmed and discussed the different options of direct burial and foundation mounted. Councilmember September asked if the new grading material was metal; Environmental Compliance Manager Hondo Judd confirmed and explained the process in galvanizing. There was additional discussion on useful life, and Mayor Peterson talked about initial costs upfront but a product that lasts longer. Parks and Recreation Director Carmona talked about the General Fund related to Parks, Facilities, Aquatics and Trails. He detailed the different assets and outlined the financial strategy for the General Fund. He provided information on the Facility Condition Index (FCI), Asset Sustainability Target and General Fund Cumulative Repair and Replacement (R&R) needs. He discussed operationalization with facilities and parks and detailed some of the completed projects for FY2021. Councilmember September asked for clarification on what Computerized Maintenance Management Systems (CMMS) was, and Director Carmona clarified it was a work order system and provided an explanation of the process. He talked about moving from a maintenance model to a management model. Vice Mayor Yentes talked about the predictability of some of the replacements seen in Public Works but said replacement needs for Parks and Facilities were contingent on behavior and asked if the Town used comparison studies on use of facilities. There was discussion about behavior over time not being predictable, and Director Carmona discussed the focus of usage levels and provided examples. 2 Director Carmona concluded his presentation outlining upcoming projects related to facilities and parks. Councilmember Yentes asked what was done with existing infrastructure when a playground was replaced and asked about the replacement of sand with wood chips. Director Carmona stated that when a playground was decommissioned, it was taken by the vendor and scrapped when it was determined to be past the safety standard. He stated if there was any life left in it, it would go to auction and if any playgrounds had sand, they were switched to wood chips for Americans with Disabilities Act (ADA)-related concerns and talked about safety and accessibility. 3 2. Utility Rate Increases. Public Works Director Marlow provided information on the review of the Water and Wastewater funds and stated the ask of the Council would be to provide direction on rate implementation and funding options. She provided background information on the rates and outlined the Wastewater and Environmental Compliance (EC) rate timeline and considerations. She provided information on Environmental Compliance and the areas concerning stormwater, air quality, compliance and enforcement and hazardous waste. She discussed the different assets within stormwater and detailed aging infrastructure. She discussed the pressures on the EC Fund and consequences of aging infrastructure, lack of equipment, and deferred maintenance. She provided information on the importance of the Sonoqui Wash Project. Vice Mayor Yentes asked about the impacts to other communities since the Wash covered other communities and discussed impacts of other communities’ maintenance of the Wash to Gilbert’s portion. Environmental Compliance Manager Hondo Judd confirmed their portions were maintained and required through a permit and explained the process. Director Marlow discussed the EC Fund and the different pros and cons with the various evaluations, stating the recommended path from staff would be a 25% increase with an $8 million-dollar bond. Assistant Town Manager Hubbard- Rhineheimer confirmed that it would be a municipal bond, not a General Obligation (GO) bond. Councilmember Tilque talked about the ability to look at everything at once in a perfect world and discussed the public perception of an additional rate increase. She stated that she would prefer evaluations be done at one time in the future and asked for clarification on the ask of the rate study just being a way to understand the need. Director Marlow confirmed and further clarified that the study would dive into more detail and help further refine the need. Councilmember Tilque asked what the impact would be if the Town waited until 2024 to conduct the rate study with other rate study evaluations. Director Marlow stated that no project would move forward. 4 Assistant Town Manager Hubbard-Rhineheimer clarified that the decision originally was to space studies out as to not overwhelm the residents, but stated that adjustments could be made based on the direction of Council. Councilmember Koprowski requested more suggestions on how that could be spaced out so changes were more frequent but with less of an impact than at one time. Assistant Town Manager Hubbard-Rhineheimer discussed additional spacing options. Office of Management and Budget Director Pfost provided clarification that the one being discussed was at the end of five years, but talked about moving them around as needed in the future based on whatever direction was given. Director Marlow discussed the urgency in the item but talked about the opportunity to stagger going forward. Vice Mayor Yentes asked if any part of the infrastructure was maintained by private users. Director Marlow stated there were equal parts that were private but the ones being discussed were solely the Town’s and talked about the importance of educating private users on failures in order to correct deficiencies. Vice Mayor Yentes asked what was done previously related to funding and asked if it was a mix of various funds, to which Director Marlow confirmed. Assistant Town Manager Hubbard-Rhineheimer discussed taking a more comprehensive and professional approach in forecasting needs in comparison to a previous ad hoc approach. Vice Mayor Yentes asked if it would trigger additional needs for funding. Director Marlow stated it was possible as the Town continued to inspect, but stated that some of the resources were already being built on the replacement side and staff would continue to refine the needs. Vice Mayor Yentes asked what the terms would be if they moved forward. Director Pfost discussed not using General Obligation (GO) bonds and discussed the coordination of assessing the need for Wastewater in order to account for the cost of issuance all together. Councilmember Anderson asked if there was a graph available that outlined the total cost. Director Marlow stated there was not one because the request was regarding moving forward with the study, but stated she would be able to show comparisons at a later date. 5 Councilmember Koprowski stated she would not want to see an increase every year and talked about a 2-year cycle with no increase in some of those years. Town Manager Banger clarified the request, and Director Marlow expressed concern at only looking at funds every 4 years and the impact being greater to residents. Councilmember Tilque talked about it being easier for residents to absorb smaller amounts. Town Manager Banger recommended a deeper dive and that staff come back to the Council at a later date in order to weigh the pros and cons of each option and bring a recommendation back. Vice Mayor Yentes expressed concern in the aggregate of more frequent increases, and discussion ensued at looking at comparisons and the taxpayer standpoint. Councilmember Tilque stated she would like to look at actual dollar amounts more than percentages in the future. Mayor Peterson discussed comparisons in providing information that could be better understood by residents. Wastewater Manager Snow provided information on the Wastewater Fund pressures and showed graphs illustrating the flow capacity and reclaimed water supply demand projections. He outlined some of the critical projects that would be delayed without a rate increase. Vice Mayor Yentes asked about the project on Greenfield Road and about impacts to residents. Manager Snow detailed density in surrounding communities and talked about odor reports and the issue that odor must go somewhere and about going above homes. He discussed long term success needs. Councilmember Anderson asked for clarification on the four recharge facilities mentioned and if they were injection wells. Manager Snow provided clarification on the location of the four recharge facilities and discussed beta zone injections and recharge capacity. Director Marlow outlined two options and talked about the pros and cons of each. She discussed the combining of the bonds for a lower issuance and summarized the rate alternatives. She reiterated that the ask was to get direction from Council on a rate implementation and funding options. Councilmember Koprowski asked for clarification on a municipal bond getting paid back over time, to which Director Pfost confirmed. Councilmember Tilque asked for an explanation on the timing of the projects and if they would be moving up in the Capital Improvement Plan (CIP). Director Marlow confirmed 6 they would be and stated that the new rate would not go into effect until this time next year, at which time projects could be started. Councilmember September asked about the typical payback on the bonds; Director Pfost stated those would be 20 years. Councilmember Tilque asked for clarification that the Town would still pay those down as soon as it could. Director Pfost confirmed and provided clarification on the first 10 years and discussed taking advantage of interest rates. Councilmember September asked for clarification on not being able to pay off a bond in the first 10 years, and Director Pfost discussed the option of using escrow in order to do that. Councilmember Tilque stated that moving forward with the municipal bond would move projects forward faster. There was additional discussion on funding. Vice Mayor Yentes stated her preference in using a higher percentage without the bond and talked about methodology of financing with cash wherever possible. Councilmember Tilque discussed the priority of projects and the degree of impacts and asked about the small piping used at the Greenfield project and corrosion; Manager Snow provided clarification. Mayor Peterson asked if there were any schools near the location, to which Manager Snow confirmed there was a school north of the location. Vice Mayor Yentes asked about more maintenance being on the horizon for the projects. Manager Snow discussed the advantages of doing some of the projects requiring the same technology at the same time and talked about chemical costs being recurring costs. There was discussion on bringing forward two rates. Assistant Public Works Director Braun asked about the CIP prioritization and Manager Snow detailed the process of prioritizing quality of life as it related to pipeline failures and catastrophic failures, noting the importance of continued ongoing wastewater services. Director Marlow stated the projects had been in the CIP but had been pushed out for as long as they could be and discussed the limitation of how they could be funded. Councilmember Tilque recommended that, while the Town looked into the future at other zoning changes, there may be a desire to bring up those changes as it related to potential issues. Town Manager Banger confirmed staff would continue to look at all options and bring the recommendation back to the Council after an analysis. 7 3. Transportation Bond Update and Timeline. Office of Management and Budget Director Pfost provided an overview of the transportation bond. She outlined the payment date change and the different pros and cons related to each. She detailed the planned structure for the 2022 General Obligation (GO) Bonds, provided information on the timeline, and outlined the caveat regarding legal questions/appeals, interest rates, and a potential delayed timeline. Town Attorney Payne provided information on the current litigation and potential issue of accrued interest due to the delay. Councilmember Anderson asked if the interest would be in addition to legal fees, to which Attorney Payne confirmed. Vice Mayor Yentes asked if there was anything the Town could file to the court outlining this. Town Attorney Payne stated that his team were looking at rules and procedures and different options. Mayor Peterson asked about the likelihood of credit rating impacts if the Town tried to move forward with the issuance as-is. Director Pfost discussed the potential of invalidation of the bonds, and Attorney Payne confirmed the risk. There was additional discussion on rate increases throughout the year and Director Pfost detailed concerns in inflation and likelihood of rate increases. Mayor Peterson asked about potential reduction in projects due to the rate increase, and Director Pfost stated the Town would still work to structure within the existing 99 cent rate, but did address potential reduction in capacity and said it was overall not the best use of taxpayer dollars. There was clarification on when the Federal Government met to discuss interest, which was clarified to be every 6 weeks with the exception of August. Councilmember Tilque asked when rates would be locked in. Director Pfost confirmed the timeline to have market discussions, and Finance Director Johanson provided clarification on the process and confirmed the Town did not try to time the market and were more methodical in the approach. Councilmember Tilque said she preferred continuing as planned so the Town was prepared. Mayor Peterson expressed concern in the delay at the court level in hearing of cases and the impacts to timelines and funds. 8 Councilmember Hendrix asked for clarification on the $6 million dollars of interest in Director Pfosts’ presentation, discussed the bond market being more stable, and expressed concern that the calculation did not make sense. Director Pfost discussed built in inflation, stated the Town’s investor team would be in to present later in the day, and welcomed Councilmember Hendrix to speak to them about his concerns. 4. Water Resources Municipal Property Corporation (MPC) Bond Update and Timeline. Office of Management and Budget Director Pfost provided an overview of the item. She discussed the North Water Treatment Plant (NWTP) Facility background and the conditions of the facility. She talked about the project progress and construction cost development. She outlined the Financing Plan and provided rate updates for the Water Utility Rates and Water System Development Fees (SDFs). She detailed the planned bond structure and the next steps in the process. Councilmember Tilque asked for clarification on the rate timeline, and Director Pfost clarified the timeline presented. 5. Water System Development Fees (SDF) Cash Flow. Office of Management and Budget Director Pfost discussed the current water-related debt and planned water-related debt. She detailed the Water SDF cash flow regarding revenue, expenditures and gap. She explained the different scenarios that could cause “holes in the bucket” and contributing factors and provided examples. She provided information on what could be done for instances of holes in the bucket and provided details on options for cash flow to include “wait and see” and “pay as we go” as options. Councilmember Tilque provided an example of fire stations and how those were initially funded, asking if they had been paid back. Director Pfost provided details on that project and discussed the steady process and breaking even by 2030. She stated that the concern with Water is the hole was getting deeper faster than where we would break even at build 9 out. Councilmember Tilque asked if Director Pfosts’ modeling include the large industrial- type projects coming in. Director Pfost explained the modeling. Councilmember Koprowski asked about the risks in using the Water Operating Funds as the Town moved forward. Director Pfost stated those funds were not currently built in and discussed potential for a future rate study if that was the planned source and talked about capacity. Councilmember Koprowski discussed using one-time monies if there was a surplus and asked about the pros and cons of that use. Director Pfost confirmed that SDF were not an Enterprise Fund and stated that they could use one-time money that was not restricted. Councilmember Anderson asked about revenue and if those funds could be used. Director Pfost said they could do that if that was the direction of Council. Councilmember Tilque stated she would like to look at surplus money to offset the need and then look at a rate increase in the future, but she would like to digest the information more. Director Pfost stated they would continue monitoring revenue as it came in and there was time to decide. There was discussion on comparisons and options in using other funds. Councilmember Tilque stated it was important to be mindful that it would be for a one-time need and not a business plan. Director Pfost stated she would work on getting some options together for Council. 6. Water Resiliency and Conservation Opportunities. Water Resources Manager Hixson gave a presentation outline and discussed Gilbert’s four main water sources. She talked about renewable water with the Colorado River Water, Salt and Verde supplies and Reclaimed Water. She discussed groundwater in the Town and how it was used and provided information for Reclaimed Water and Recharge. She provided information on the Salt and Verde Supplies and the important components. She detailed the information on a graph and detailed the allocation and discussed the Colorado River conditions and the tier 1 shortage and the importance of messaging and communication to the public both regionally and locally. She discussed the rapidly changing 10 conditions including concerns in low runoff, unexpected Drought Contingency Plan (DCP) trigger and probability of deeper shortages, the outlined current winter runoff projections. Councilmember September asked about the change in runoff, and Manager Hixson detailed dry soils and excess heat contributing to evaporation and absorption being contributors. She detailed staff’s ongoing preparation for the future and provided details on the current supply resiliency projects. Councilmember September asked if other jurisdictions were participating in the studies or if we were funding those ourselves. Manager Hixson stated it was a regional effort and included most of Gilbert’s neighboring cities as well as other key players involved in the effort. Councilmember September asked if the Bartlett Dam Feasibility Study was to consider the increase of the dam height. Manager Hixson confirmed and talked about increased storage capacity and the contributors. Councilmember September asked if there was a similar study related to Horseshoe Lake, and Manager Hixson detailed the initial appraisal study and the determining factors considering the dredging of Horseshoe Lake and clarified the only study was for the Bartlett Dam. Manager Hixson provided information on how the Town was improving water efficiency to include the changes to the Conservation Code, Proposed Rebates, and efforts with Public Works and within Park operations. Mayor Peterson asked for clarification on how the rebate would work for a residential smart controller. Manager Hixson explained what the process would look like once implemented, and Mayor Peterson asked if there were other rebates being offered. Manager Hixson clarified there were no other water conservation rebates. Councilmember Tilque asked about benefits in using turf, and Manager Hixson stated that there were mixed feelings with the use of turf and stated there were other, more beneficial ways to conserve water. Councilmember Koprowski asked about the turf removal with Public Works and asked if it was the same for Parks. Assistant Public Works Director Braun stated that turf was not allowable in the right-of-way, so it was being removed and Parks were not in a right-of way, so it was different. 11 Manager Hixson outlined the proactive shortage preparations for the Town and provided information on the four stages of the Water Supply Reduction Management Plan. Councilmember Tilque encouraged an increase of communication to share how to continue to reduce water usage. Manager Hixson shared the efforts being made and talked in detail of the current water festival happening. Mayor Peterson provided information on the efforts being made and resources available. Councilmember Anderson emphasized the importance in messaging the shortage. 7. Ambulance Transportation Report Out. Fire Chief Jobusch provided background on the item and the objective. He outlined Gilbert- specific interests and the important milestones of the service. He discussed the ambulance deployment of six full time ambulances at Gilbert Fire Stations and makeup of each unit, then discussed the cross training of some of the firefighters. He provided data and details on transports by month, response time compliance, and meeting internal goals. Councilmember Tilque asked for an explanation on the data of what a Code 3 referenced. Chief Jobusch stated a Code 3 meant lights and sirens, the provided additional details. Vice Mayor Yentes asked for break down data by the different zones. Chief Jobusch stated he did not have that data but discussed improvements in each zone and being consistent. He discussed Financials by Month and compared revenues and expenditures, noting a spike in the data for January that was related to the cost for Cardiac Monitors. He detailed remaining on track with the projections and meeting the obligations, then discussed the importance of a sustainable Payor Mix model and the financial stability of the community. He discussed billing rate comparisons for the current rates as well as proposed rates. Vice Mayor Yentes asked if other providers charged for mileage. Chief Jobusch confirmed they all charged for mileage and clarified that the Town was charging for mileage but not supplies. In the billing graph presented, Chief Jobusch clarified the other providers were part of the Phoenix Rate Group and the current ability through Arizona Department of Health Services (DHS) to increase rates by 11%, then showed the comparative rates if explored. 12 Councilmember Tilque asked if with the increase would we be given an option to pay back the loan quicker. Chief Jobusch confirmed that would be an option, adding he could provide information on what that would look like, then detailed future considerations. Councilmember Anderson asked if the Town had a payment plan option for those who were uninsured. Chief Jobusch stated he was unsure but believed those bills were treated like similar bills and an invoice was issued. Councilmember Hendrix asked if the Certificate of Necessity (CON) dictated revenue for the Town, and Chief Jobusch clarified that they do not dictate revenue but did set the rates. Discussion ensued on options and impacts to rate increases. Vice Mayor Yentes discussed being mindful of the full impact and approach going forward, and Chief Jobusch talked about reimbursements and working through options to see what the full impact would be. Councilmember Tilque thanked Chief Jobusch and discussed the importance in transparency to the residents and understanding the full financial situation to see where the Town was. 8. Continued Development at Desert Sky and Gilbert Regional Parks. Parks and Recreation Director Carmona provided an overview of his presentation. He detailed the Master Planning process and provided background on the effort and future steps in Park Development. He discussed community outreach during the pandemic, the virtual approach, and the success of the feedback. He confirmed the feedback options were still open for comment and detailed the awards and recognitions of various parks and facilities. He detailed planning resources to include the Parks and Recreation Master Plan, Community Outreach, Sports Field Needs Assessment, and continued guidance of the Parks and Recreation Board, Town Departments, Town Management, and Town Council. Director Carmona discussed Desert Sky Park and detailed the project team. He provided information on Phase 1 and the four multi-use fields, fitness course, and lake. He detailed the various area of needs addressed by the community through their outreach and outlined the draft concept plan regarding the buildout based on need. He shared a rendering of the 13 park at night and discussed Light emitting diode (LED) technology being utilized. He talked about major amenities with future phases to include a championship field, sensory playground, plaza areas, trailhead and parking. He discussed sand-based fields and stated they were an added benefit to the community which allowed for additional wear and tear. Lastly, he shared a fly-through video of Desert Sky Park. Councilmember Anderson asked about the reasoning behind not accommodating overnight parking. Director Carmona stated it was currently against Town Code and discussed additional security concerns. Director Carmona detailed Gilbert Regional Park and discussed the project team. He provided background information on the park and provided a picture of the Master Concept Plan and current layout. He discussed Phase 1, Phase 1A, and Phase 1B of the development and provided information on why there was a need to re-evaluate the Master Plan to include public-private partnership parcels, the rethinking of Phase 1 amenities, re- evaluated capacity requirements and reshaping the basin. He showed a rendering of the preferred Master Plan that outlined the major amenities and showed a video exploring the preferred Master Plan. He detailed the different Gilbert Regional amenities to include ballfield complex, climbing center, trailhead, action sport zone/bike and skate park, community park zone, natural park zone, trail connections, natural space trail loops and art, vistas and “Instagrammable moments”. He detailed the project timeline and the data on usage for both Desert Sky Park and Gilbert Regional Park and discussed taking a look at closing the gaps on the deficits at full build-out and meeting the needs of the community. He reviewed the project timeline and the data on usage for both Desert Sky Park and Gilbert Regional Park and discussed closing the gaps on the deficits at full build-out. Mayor Peterson asked if we were still looking at 2022 for the Surf Park Groundbreaking, to which Director Carmona confirmed. Mayor Peterson spoke in appreciation of the view of the Desert Sky Park to and from her drive to the Public Safety Training Facility. Councilmember Anderson discussed the advocation for active connections, and Director Carmona detailed direct access and said it was on their minds to connect the two areas. 14 Discussion ensued regarding connectivity. Director Pfost provided information on the cost models and funding sources, then provided details on the cost associated with both parks. She discussed the use of System Development Fees (SDFs) and land sale proceeds and the potential funding source for a Park Bond for the remaining cost. She discussed the bond being the best option based on the timeline presented, then provided information on a timeline if approved. Director Carmona clarified that they were not looking for a decision today, only wanted to present the information. Councilmember Tilque thanked Director Carmona for the information on resident feedback and stated she was surprised by the level of virtual participation. Director Carmona confirmed that some of the assumptions will be refined as they continued to move along the process. 9. Inflation and Economic Outlook. Office of Management and Budget Director Pfost introduced Luke Schneider, Chartered Financial Analyst (CFA)/Managing Director and Annette Gaston, Senior Managing Consultant, of PFM Asset Management. Annette Gaston discussed inflation and provided information on an economic update and information on gross or growth domestic product (GDP) across the last four quarters. She talked about the rebound in the fourth quarter and said it was getting back in line as it was pre-pandemic. She outlined some of the contributors and detractors of the growth and talked about the supply chain balance, adding it was starting to ease. She discussed personal consumption accounts for 2/3 of growth and pent up demand and consumers wanting to spend money. She provided Arizona-specific data and discussed the influx of people being one of the contributing factors to drive growth. She provided details on Consumer Price Index (CPI) and what consumers were paying for goods and services, then provided information on the recession and rebound of inflation. There was discussion of the inflation rates. Luke Schneider stated that we had not seen this type of inflation since the late 1970’s and early 1980’s; he provided information on the highest impacts over 12 months. Annette Gaston stated that more stimulus and money were in the market as a 15 whole and talked about demand exceeding supply. She shared information on where inflation was at the highest and stated that inflation in Arizona was at 8.1%. She stated that Arizona was the number one state for inbound migration and provided information on unemployment rates and smaller labor forces as a whole. Luke Schneider discussed Federal interest rates and their objectives. He provided information on the U.S. Treasury yield curve and talked about inflation expectations over time creating drastic changes. He provided information on the Town’s investment portfolio and discussed risks with the muni curve, then talked about following the Treasury Yield Curve to some extent. He provided information on market expectations reflecting accelerated hikes and the geo-political risk and impacts of those. He discussed some of the uncertainty and provided graphs on a 2-year and 10-year treasury yield and changes in the stock market. He stated that it was a complicated time to think about economics, adding overall growth would moderate over time. He stated there was a higher chance of recession now then in previous years and talked about structural problems in the economy. He discussed the importance of working with the Town and staying the course. Councilmember Hendrix asked in their statement of inflation being beneficial if the intent was nominal earnings, then asked about their thoughts on real earnings. Luke Schneider discussed long term versus short time impacts. Councilmember Hendrix asked for clarification that in the short term we should be aware that we may be losing money today, even if our bank account was getting bigger. Luke Schneider agreed with the statement and provided more information. Councilmember Hendrix asked about the slide related to National Gross Domestic Product (GDP) and asked if it was indexed historically or right before COVID-19, to which Luke clarified the quarters outlined the last 12 months and the other graph being real GDP in Arizona. Councilmember Hendrix asked for clarification in the data related to employment rates accounting for a shortage of labor at lower-level positions. Annette Gaston talked about the mix and looking at the numbers in U3 and U6 and talked about smaller labor pools as a whole. There was discussion on taxes and qualification on jobs, labor force, and skill sets. Councilmember Hendrix asked about higher inflation rates appearing to be in those states with lower tax rates and asked if there were 16 any comments on that. Luke Schneider stated that was part of it, but spoke to more demand in those areas and drive in more discretionary money. Mayor Peterson talked about issuing bonds at this time and asked what that would look like. Luke Schneider stated it would depend on the maturity length, adding there was not a lot of change for long term rates but talked about the difficulty in predicting rates in the 10- 20-year period. There was discussion on an inverted yield curve and quantitative easing, followed by discussion on added interest for bonds if issuance was held off. Luke Schneider detailed potential saving if issuance occurred sooner, rather than later. Councilmember Hendrix restated the question and said that in a previous presentation he felt the calculation did not make sense. He provided information on the breakdown presented. Luke Schneider discussed various factors and stated that it was by no means easy to calculate. There was discussion on prime rates, discount rates, and impacts to the long-term bonds and Federal fund rate impacts to the first part of the yield curve. Luke Schneider talked about taking a long-term strategy, then there was discussion on the timing of new issuances. Town Manager Banger clarified the Town had different advisors that may also assist in that understanding. 10. Recruitment and Retention. Assistant Town Manager Goodman provided information on the objective of the discussion. She discussed the new environment and new market and highlighted some of the market factors to include Low Employment, the Great Resignation, Great Promotion, New Expectations, Consumer Price Index (CPI) and Competition. She noted what other peer organizations were doing in response and outlined some of the different approaches that were being explored by those organizations. She detailed the importance in understanding what made sense for Gilbert and she outlined how the issues were affecting the Town to include turnover, vacancies, recruitment challenges, burnout and public operation. She stated the historical average related to turnover was between 6-7% and Gilbert was now seeing trends at about 13%. She showed data for the last 12 months, as well as quarterly, and talked about the challenges in vacancies across the organization with some 17 departments having vacancy rates, then used the Police and Public Works Departments as examples. Councilmember September asked about the vacancy rate for Environmental Services drivers, and Assistant Town Manager Goodman clarified that Town-wide the data could be driven down to departments and to divisions, that some divisions were seeing even higher rates. She stated it was a moving target. She discussed the creation of a cross- departmental team to explore the themes and potential recommendations. She provided information on the interrelated themes of vacancy and recruitment challenges, burnout and struggles with coverage and vacation time utilization and expanding competition. She talked about actively working through strategy and asked if the Town wanted to approach things differently during these unique times. She provided examples of pay-for- performance and potential recommendation to pull forward some CPI as well and changes to recruitment and retention through potential incentives. She detailed other approaches underway in development related to benchmarking, recruitment, and retention. She reiterated there were multi-faceted solutions and not “one size fits all” and talked about the importance of focusing on what made Gilbert great and creating and emphasizing that culture. She stated the next steps would be a presentation back to the Council on March 29, 2022. Councilmember Tilque thanked Assistant Town Manager Goodman for the report and talked about seeing these issues, competition, and private market; she asked if the Town was exploring additional opportunities such as flexible schedules, job sharing, or related. Assistant Town Manager Goodman stated they were looking for additional ways to streamline processes and talked about other ways the Town had considered to be creative, but stated the Town was still seeing eyes wonder and losing great employees to other entities. Councilmember Tilque stated that pay had a lot to do with it and talked about realistically being unable to get to that point at times. Assistant Town Manager Goodman reiterated the importance of taking a large look and stated it was a multi-faceted discussion, then emphasized the importance in having those conversations now as well as into the future. 18 Councilmember Anderson asked if the work-from-home aspect was taken into consideration. Assistant Town Manager Goodman confirmed it was and stated the Town was lucky to be in that spot, and discussed success of that opportunity and the importance of trying to be proactive and stay competitive in that space. Councilmember Koprowski spoke in agreement and stated that was a real strength of Gilbert in embracing those remote changes and talked about that benefit and the great culture, but stated that in itself cannot make up the difference and talked about other positions that did not have the same opportunities to be remote, adding she was supportive in looking at all aspects in order to determine how best to retain those employees. Assistant Town Manager Goodman stated the goal was not to be reactive, but rather proactive, and not to be at the tail end of the solution. She talked about the need to recruit new talent while retaining Gilbert’s best and brightest. Vice Mayor Yentes talked about vacancies and asked about reexamining positions in cases where there was a plan to automate a process. Anecdotally on the recruitment side she spoke of the job postings and the need to reexamine postings in instances where they appeared dull and looking into better ways to recruit. Assistant Town Manager Goodman discussed the current process of reviewing job descriptions by hiring managers in order to ensure the posting was representative of the job; she discussed other tools being utilized such as Predictive Index. She also outlined rolling recruitments and vacancies due to the market, noting examples in the Information Technology (IT) Department. Vice Mayor Yentes stated that individuals may not have considered work in government until they hear about the possibilities and innovation, adding the importance of a job description that tells Gilbert’s story. Assistant Town Manager Goodman spoke in agreement in telling Gilbert’s story and looking at different opportunities for advancement and growth. There was additional discussion on trends across other agencies that happened to the industry as a whole, shared issues, and concerns. Mayor discussed Commercial Driver’s Licenses (CDLs) and other requirements, losing employees to other similar agencies, as well as smaller applicant pools due to changes and challenges in the labor force. She provided Waste Management as an example and 19 discussed the importance of doing things for Gilbert employees that made them feel valued and also mentioned incentives. Assistant Town Manager Goodman applauded the team for having the dialogue across departments and said employees wanted to come and feel invested. Mayor Peterson talked about understanding the different factors and the need to look at other solutions to make it feel special to be a part of Team Gilbert. 11. Financial Policies Overview. Office of Management and Budget Director Pfost provided information on the purpose of Financial Policies. She outlined when and how policies could change and explained where the policies could be found. She briefly outlined the 23 policies and stated that those policies in full were available at the end of the presentation packet. Councilmember Tilque thanked Director Pfost for sharing the information and asked about one-time use of revenue and stated that since the Council was looking into that now, there was importance to understand that it was not ongoing. Director Pfost confirmed that one- time money should only be used to fill a gap and never for an on-going need. Mayor Peterson recommended that the Policy Statements should be included in the training for onboarding new Councilmembers. Councilmember Tilque appreciated the information and talked about it being a good business practice. Director Pfost stated Gilbert was always looking at opportunities to improve and welcomed feedback. Councilmember Anderson asked if a refund to a taxpayer constituted as a one-time revenue. Town Manager Banger discussed the Town not having a primary tax and the complexity of it, then asked Town Attorney Payne about the gift clause. Attorney Payne discussed the sales tax base and complexity in determining a percentage back. Councilmember Anderson stated that Gilbert should have some way to refund money if it were collecting more than was needed. Mayor Peterson talked about those funds going back into the community and benefiting the residents in other ways, then spoke to the issues in determining where the funds came from and how to return them. 20 Vice Mayor Yentes discussed looking at trends, adjusting as needed, and looking at options to alleviate burdens of taxpayers wherever possible. She discussed lowering rates or categories in all areas that Gilbert taxed. Councilmember Tilque stated that idea was different than giving a refund, to which Vice Mayor Yentes confirmed. Mayor Peterson stated the Town had reduced rates and taken opportunities when they had the opportunity to do so, and Councilmember Tilque recommended evaluating those opportunities on a regular basis. 12. Staffing Model Update. Office of Management and Budget Director Pfost provided background information on how the staffing model originally began with a consultant and then was taken on in-house from 2015-2017, at which time it was implemented. She discussed the model features and explained how it worked, noting the yearly updates included data surrounding inputs, weights, adopted full time employees (FTEs), pay plans, manual adjustments and population. She outlined the three key projections used consisting of Ratio and Anticipated Growth, Position Weights, and Manual Adjustments, then provided details and examples of each. Lastly, she discussed how the staffing model was used to assist in long term planning, comparing staffing model with new requests, projecting staffing needs in the future and decision-making. Councilmember Tilque asked if the positions that were shown in the model still had to be justified. Director Pfost confirmed that departments would still need to provide a business case. Town Manager Patrick Banger confirmed that the staffing model was a tool used to forecast future needs. 13. Long Term Financial Plan Update Office of Management and Budget Director Pfost discussed the long-term financial model and broad ranging and how revenues and expenditures can be impacted over time. She stated that the model was updated every year and explained the different data points on 21 the graph and how the information was used. She provided different examples to show how the graph worked in different scenarios. Town Manager Banger stated the model was an excellent tool for long term projections and credited Director Pfost for its creation. 22 RECESS SPECIAL MEETING AND RECONVENE IN EXECUTIVE SESSION Mayor Peterson recessed the special meeting at 4:30 p.m. Pursuant to A.R.S. §§ 38-431.03(A)(3),(4), legal advice from the Town Attorney and discussion and consultation regarding a potential water purchase agreement. ADJOURN EXECUTIVE SESSION AND RECONVENCE SPECIAL MEETING ADJOURN Mayor Peterson adjourned meeting at 4:48 p.m. ATTEST: ___________________________ ___________________________________ Brigette Peterson, Mayor Chaveli Herrera, MMC, Town Clerk CERTIFICATION I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the special meeting of the Town Council of the Town of Gilbert held on the 3rd day of March, 2022. I further certify that the meeting was duly called and held and that a quorum was present. Dated this ____ day of ____________________. 23 ___________________________________ Chaveli Herrera, MMC, Town Clerk 24