Public Facilities Municipal Property Corporation

MINUTES OF THE BOARD OF DIRECTORS OF THE TOWN OF GILBERT, ARIZONA PUBLIC FACILITIES MUNICIPAL PROPERTY CORPORATION, ANNUAL MEETING, THURSDAY, FEBRUARY 9, 2023, 3:00 P.M., VIRTUAL MEETING, GILBERT, ARIZONA MEMBERS PRESENT: Amber Coleman, President; Jeff Wright, Vice President; Adam Hoffman, Director; Eric Jensen, Director; and Maggie Valentini, Director MEMBERS ABSENT: None COUNCIL LIAISON: Councilmember Chuck Bongiovanni TOWN STAFF PRESENT: Kelly Pfost, Management and Budget Director; Anthony St. George, Finance and Management Services Accounting Supervisor; Rachel Shaver, Management and Budget Specialist OTHERS PRESENT: None CALL TO ORDER President Amber Coleman called the meeting to order at 3:00p.m. OATHS OF OFFICE President Amber Coleman announced the new board members and welcomed them to the board. Councilmember Chuck Bongiovanni gave the Oath of Office to new board members, Adam Hoffman and Eric Jensen. ROLL CALL Management and Budget Specialist Rachel Shaver called roll and declared a quorum was present. COMMUNICATIONS FROM CITIZENS None received. AGENDA ITEMS 1. Welcome and introduction to Municipal Property Corporation (MPC) For the benefit of the new members, Management and Budget Director Kelly Pfost gave a quick overview of the purpose and function of the Public Facilities Municipal Property Corporation (PFMPC). Director Pfost explained that we have the PFMPC and the WRMPC, both of which are run by independent citizens that are appointed by Council. They operate as a mechanism for the Town to be able to issue debt when it is appropriate. The boards help decide when that time is appropriate and for the projects that are needed. When the Town  Public Facilities Municipal Property Corporation February 9, 2023 Page 2 of 5 decides to take on debt, the request can be put on a ballot for citizen approval or brought to one of the Municipal Property Corporations (MPC). When put on the ballot, the debt is typically repaid with property tax money. When brought to an MPC, the debt would typically be repaid with other growth-related revenues, like system development fees for projects that are associated with new growth. The Town can also use sales tax, or the WRMPC will often use utility rates, for water or wastewater, depending on what the project is related to. Simply put, it is a way to finance larger projects that are needed over time. Most of the PFMPC projects have been financed in the past, with two bonds finishing final payments in 2021. The most recent debt was issued in 2017 for a new fire station, which will finish in 2027/2028 with the final payment. Even though there is little debt associated with this area, it is a helpful part of creating infrastructure that the town needs to provide services. 2. ELECTION – Consider nomination and election of officers for 2023. President Amber Coleman explained the election, nominations and their terms. Eric Jensen volunteered as Secretary Treasurer. A MOTION was made by President Amber Coleman and seconded by Vice President Jeff Wright for the above nomination. Motion carried 5 - 0 Jeff Wright volunteered to continue as Vice President. A MOTION was made by President Amber Coleman and seconded by Director Eric Jensen for the above nomination. Motion carried 5 – 0 Maggie Valentini volunteered as President. A MOTION was made by President Amber Coleman and seconded by Vice President Jeff Wright for the above nomination. Motion carried 5 – 0 3. MINUTES – Consider approval of the minutes of the meeting of February 7, 2022. A MOTION was made by Vice President Jeff Wright and seconded by Director Amber Coleman to approve the minutes of the meeting of February 7, 2022 as written. Motion carried 5 – 0 4. REVISION TO THE PUBLIC FACILITIES BYLAWS – Review and consider the updated PFMPC Bylaws for approval before ratification by Town Council. Management and Budget Director Kelly Pfost gave an overview of the revisions needed to the PFMPC Bylaws. Corrections to the address of Town Hall (previously listed as the address for the chamber building) as well as grammar and typographical edits were needed. An update was also made to indicate notice of meetings is given by the Town Manager (or designee) and removes the need for notifying officers of meetings via certified mail or other  Public Facilities Municipal Property Corporation February 9, 2023 Page 3 of 5 avenues. Remaining revisions include updates to Officer duties that reflect current responsibilities, and language added to allow for a director to temporarily fill duties of an officer on a pro tempore basis if the officer is temporarily unavailable. A MOTION was made by Secretary-Treasurer Eric Jensen and seconded by Director Amber Coleman to pass the new bylaws as suggested. Motion carried 5 - 0 5. ANNUAL REPORT– Consider approval of the annual financial report. Finance and Management Services Accounting Supervisor Anthony St. George reviewed the annual financial report dated June 30, 2022 and the interim report dated December 31, 2022. The report dated June 30, 2022 contains financial statements from July 1, 2021 through June 30, 2022, which is referred to as fiscal year 2022. The set of financial statements dated December 31, 2022 is an interim set of statements that covers July 1, 2022 through December 31, 2022. Fiscal year 2022 financials are presented to the Public Facilities Corporation and are specific to this MPC. The balance sheet is a point in time snapshot of the corporation as of June 30, 2022. The balance sheet includes assets, liabilities, and net position (what is left over after the liabilities have been satisfied). This corporation issues debt, constructs buildings, and pays off the debt through lease payments from the Town and net position is a good indicator of how the corporation is doing financially. Two separate columns are provided on the balance sheet, June 30, 2021 and June 30, 2022. Highlights and differences between the two include a large decrease in cash compared to the prior year, which is solely due to timing. As debt payments become due, lease payments are made from the Town and may accumulate (based on timing), but they ultimately pay down the debt. Property, plant and equipment includes construction costs capitalized and shows a large decrease from the prior year due to the bond issuances that were paid off. The MPC issues debt and constructs the facilities, but when the debt is paid off, the value of the assets is transferred to the Town. There was no sale of assets, this is just showing the transfer. The deferred charge on refunding is an accounting transaction that is used when debt is refunded (refinanced). If the MPC refinances debt, there is a deferred charge on the refunding that is amortized over the life of the debt until the debt is paid off. In the liabilities section, it shows how much the MPC still owes on the debt that was issued and each year the amounts go down as the debt is paid off. Note – This MPC is not separately audited by an independent CPA but is part of the Town’s financial statements that are. The Town received an unmodified opinion which means that the audit passed for fiscal year 2022. Vice President Jeff Wright asked how often the lease payments are made and if they are made monthly. Mr. St. George explained that the payments are made semi-annually, with interest owed every six months and principal due once a year. Finance and Management Services Accounting Supervisor Anthony St. George moved to Page 3, which is synonymous with an income statement for the indicated time period. This shows payments from the Town to the corporation to pay off the debt that is owed. Under expenses, interest expense is expensed annually and is not a reduction of long-term liabilities. This clearly shows how much interest that the MPC is paying on the debt that is owed. There is a small amount of administrative expenses, which are annual charges for a trustee involved  Public Facilities Municipal Property Corporation February 9, 2023 Page 4 of 5 with the debt issuance. Finally, the transfer out of residual assets shows the value of the assets that is going to outlive the bonds that were issued to pay for them. Mr. St. George explained that pages 4 and 5 are simply more detailed versions of pages 2 and 3 but are broken out by issuance. The first column shows the 2017 issuance that is still active and being paid down, and the other two columns show the 2011 and 2014 issuances that were paid off during the fiscal year. Mr. St. George moved on to the interim report. This report shows that the cash balance is built up in preparation to pay the debt that comes due in January 2023 – cash comes into the corporation and then goes back out to pay the debt when it is due. Interest is due every 6 months with remaining principal owed with the last payment, which is due on July 1, 2027. A MOTION was made by Vice President Jeff Wright and seconded by Director Adam Hoffman to approve the annual financial report as written. Motion carried 5 - 0 FUTURE AGENDA ITEMS/MEETINGS No future agenda items identified. COMMUNICATIONS From the PRESIDENT on current events. None received. From the BOARDMEMBERS on current events. Vice President Jeff Wright thanked Director Amber Coleman for her service as President the previous two years. From the COUNCIL LIAISON on current events. None received. From the STAFF on current events. Management and Budget Director Kelly Pfost thanked the board members for their time and willingness to volunteer with the MPC Board. She stated that we are not planning to issue any additional PFMPC debts this year and will plan to meet again in January 2024. ADJOURN A MOTION was made by President Maggie Valentini and seconded by Secretary-Treasurer Eric Jensen to adjourn the meeting. Motion carried 5 - 0 Meeting adjourned at 3:27 p.m.  Public Facilities Municipal Property Corporation February 9, 2023 Page 5 of 5 ATTEST: _____________________________ ________________________________ Maggie Valentini, President Eric Jensen, Secretary-Treasurer CERTIFICATION I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Annual Meeting of the Town of Gilbert, Arizona Public Facilities Municipal Property Corporation held on February 9, 2023. I further certify that the meeting was duly called and held and that a quorum was present. Dated this ________ day of ________, ______. ________________________________ Eric Jensen, Secretary-Treasurer