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 8, 2024, 1:00 P.M., IN-PERSON/VIRTUAL MEETING, GILBERT, ARIZONA BOARD MEMBERS PRESENT: President Maggie Valentini Vice President Jeff Wright Secretary-Treasurer Eric Jensen Director Adam Hoffman Director Jeremy Macdonald BOARD MEMBERS ABSENT: None COUNCIL LIAISON PRESENT: None TOWN STAFF PRESENT: Kelly Pfost, Management and Budget Director Matthew Masters, Accountant III Chris Payne, Town Attorney Monica D’Ortenzio, Council Aide Rachel Shaver, Management and Budget Specialist OTHERS PRESENT: None CALL TO ORDER President Maggie Valentini called the meeting to order at 1:00p.m. OATHS OF OFFICE President Maggie Valentini announced the new board member and welcomed him to the board. Management and Budget Director Kelly Pfost directed new board member, Jeremy Macdonald to recite the Oath of Office. 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 member, 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 when the Town needs to issue debt, we ask voters for authorization or do it through an MPC board, which would be the citizen  Public Facilities Municipal Property Corporation February 8, 2024 Page 2 of 5 representation in that case. The Town has done this several times in the past, usually involving growth-related projects, but it can be with any project. The MPC issues the debt, and the Town brings a lease payment to the MPC. The MPC makes the debt payment and when the bonds are completely paid off, the assets that were financed revert to Town ownership. So, it is a collaboration with this board and the Town to do some of the infrastructure that is needed in the Town. Currently, we have the PFMPC which handles public facilities related projects and we have the WRMPC which handles water, wastewater, and utility related projects. Director Jeremy Macdonald asked a question regarding who owns the asset until it is transferred. Director Pfost responded explaining that the PFMPC owns the asset until the time it is transferred. Director Adam Hoffman asked a question regarding whether Parks and Rec is a separate board and would be involved with items that pertain to Parks Capital Investments. Director Pfost responded explaining that it would be in the PFMPC scope as Parks and Rec is not a bond issuing board. They can’t issue any debt, only the PFMPC board could. We could do it for Parks projects, but it would be a collaborative effort where the Town has Park projects that need to be built/done and this board would approve the financing for that. 2. ELECTION – Consider nomination and election of officers for 2024. President Maggie Valentini clarified the election, nominations, and their terms. Jeff Wright nominated Maggie Valentini to continue as President with a second made by Eric Jensen. Eric Jensen volunteered as Vice President with a second made by Maggie Valentini. Jeff Wright volunteered as Secretary-Treasurer with a second made by Maggie Valentini. A MOTION was made by President Maggie Valentini and seconded by Jeff Wright for the acceptance of all above nominations. Motion carried 5 – 0 3. MINUTES – Consider approval of the minutes of the meeting of February 9, 2023. A MOTION was made by President Maggie Valentini and seconded by Vice President Eric Jensen to approve the minutes of the meeting of February 9, 2023 as written. Director Jeremy Macdonald abstained from the vote. Motion carried 4 – 0 – 1 4. ANNUAL REPORT– Consider approval of the annual financial report. Finance and Management Services Accountant III Matthew Masters introduced himself. Director Pfost recognized that Council Aide Monica D’Ortenzio and Town Attorney Chris Payne were also on the call. Mr. Masters explained that he would be reviewing the annual financial report dated June 30, 2023 and the interim report dated December 31, 2023. Mr.  Public Facilities Municipal Property Corporation February 8, 2024 Page 3 of 5 Masters began with the annual financial report, explaining each item line by line on the Statement of Net Position. This is essentially the balance sheet that represents the overall financial health of the remaining bond issuance. With the assets, restricted cash on hand shows none because the transfers in were used to pay off the current bond, principal, interest, and any associated fees. Property, plant, and equipment and the associated accumulated depreciation which represents the bond purchased capital assets that were purchased in previous years. You will notice that there was not any change between fiscal year 2022 and fiscal year 2023 as it has remained fairly consistent. One thing to note is that the July 1, 2022 beginning net position reflects three capital assets that were disposed of in a previous year. They were disposed of in 2020 yet were not reflected in last year’s financials. Liabilities include two separate bonds payable, with the current portion is bond payments that will be made within the next year, meaning the $5.7m is expected to be made within fiscal year 2024. The long-term portion is the remaining balance on the bonds which will go down gradually as payments are made. The unamortized bond premium is the premium that was issued alongside these bonds that gets unamortized gradually down over the life of the bonds. Net position represents any liability that has been factored out of the assets that are remaining in the fund. Mr. Masters moved on to the Statement of Revenues and Expenses which represents the revenue and expense activity. Revenues show lease payments from the various departments tied to these bonds. Investment income, which is bank interest associated with this fund, then the change in fair market value which fluctuates year to year depending on market activity. Expenses show interest expense on the bond, but do not show principal expense since the bonds are presented on a full accrual basis which represents all of the activity that took place within the year and includes the principal payment. Then we have depreciation which is the overall reduction in value of the assets based on their useful life, which is accumulated each year as an offset against the value of the assets. Overall, we saw a net change in our net position of $5.1m, which is reflective of the reduction in the overall bonds liability that came with paying off the bonds during the year. Secretary-Treasurer Jeff Wright asked about assets that were transferred/retired that were caught this time and who identified that error. Mr. Masters explained that Finance found the error and did a review of the assets to ensure that the values were properly being recorded in the set of financials. Secretary Treasurer Wright asked if there were any needed changes in the internal controls of financial reporting. Mr. Masters responded that Finance has implemented tracking of the various values to make sure that any additions be reviewed. Director Adam Hoffman asked for clarification regarding footnote C on the Statement of Net Position as he was aware of the Fire Station, but not the other listed projects. Director Pfost explained that the additional projects were associated with the 2009 PFMPC bonds that were refunded in 2017. The PFMPC refinanced, refunded those bonds, then did the new money in 2017. Director Pfost also explained that the debt payments finish in 2027. Director Hoffman asked if it was a 10-year or 15-year term on the debt. Director Pfost answered that it is typically 20 years, however at the time of refinancing, it was able to be shortened to finish in 2027 instead of 2028. Mr. Masters continued on to the Interim Financial Report dated December 31, 2023. Mr. Masters explained that this set of financials will give an idea of where things stood at the end of Quarter 2 of this year. The main activity involves revenue and expenses as the according  Public Facilities Municipal Property Corporation February 8, 2024 Page 4 of 5 funds have been transferred in to pay for the necessary expenditures. Also shown is a breakdown of the principal and interest payments that will be due on July 1, 2024. The packet also includes excerpts from the debt book which will give a year-by-year breakdown of the debt payments moving forward. Secretary-Treasurer Jeff Wright asked if we anticipate any new refinancing or debt issuances in the next 12 months. Director Pfost explained that we do not anticipate any refinancing as there is only a couple of years left on the 2017 debt. We also do not anticipate any new debt in the next 12 months. She went on to explain that Council is discussing capital needs for the future and the PFMPC is one of the options for future capital debt, but we do not anticipate that it will be this fiscal year. A MOTION was made by President Maggie Valentini and seconded by Vice President Eric Jensen 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. None received. From the COUNCIL LIAISON on current events. None received. From the STAFF on current events. None received. ADJOURN President Maggie Valentini adjourned the meeting at 1:20pm. ATTEST: _____________________________ ________________________________ Maggie Valentini, President Jeff Wright, Secretary-Treasurer  Public Facilities Municipal Property Corporation February 8, 2024 Page 5 of 5 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 8, 2024. I further certify that the meeting was duly called and held and that a quorum was present. Dated this ________ day of ________, ______. ________________________________ Jeff Wright, Secretary-Treasurer