Public Facilities Municipal Property Corporation

MINUTES OF THE BOARD OF DIRECTORS OF THE TOWN OF GILBERT, ARIZONA PUBLIC FACILITIES MUNICIPAL PROPERTY CORPORATION, ANNUAL MEETING, TUESDAY, FEBRUARY 4, 2025, 4:00 P.M., IN-PERSON/VIRTUAL MEETING, GILBERT, ARIZONA BOARD MEMBERS PRESENT: Vice President Eric Jensen Secretary-Treasurer Jeff Wright Director Adam Hoffman Director Jeremy Macdonald Director Paula Hatch BOARD MEMBERS ABSENT: None COUNCIL LIAISON PRESENT: Councilmember Chuck Bongiovanni TOWN STAFF PRESENT: Kelly Pfost, Management and Budget Director Anthony St. George, FM Services Accounting Manager Matthew Masters, FM Accounting Supervisor Kole Lyons, Assistant Town Attorney Rachel Shaver, Management and Budget Specialist OTHERS PRESENT: None CALL TO ORDER Vice President Eric Jensen called the meeting to order at 4:04p.m. OATHS OF OFFICE Vice President Eric Jensen announced the new and returning board members and welcomed them to the board. Councilmember Bongiovanni directed new board member, Paula Hatch and returning board member, Jeff Wright 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) Management and Budget Director Kelly Pfost mentioned that all current members are familiar with the PFMPC as Director Paula Hatch has served on the PFMPC in the past. She gave a brief overview, explaining that the PFMPC is a financing arm that helps provide financing or bonds when they are needed within the Town. When that happens, the bonds are approved  Public Facilities Municipal Property Corporation February 4, 2025 Page 2 of 6 both by the PFMPC and the Town and then are able to be issued to help support infrastructure projects. Some of the projects are growth related or System Development Fees, but they can be for any funding source. The PFMPC typically meets once per year, unless there are bonds, which may call for additional meetings. 2. ELECTION – Consider nomination and election of officers for 2025. Vice President Eric Jensen clarified the election, nominations, and their terms. Eric Jensen Volunteered as President. A motion was made by Jeff Wright with a second made by Paula Hatch. Motion carried 5 – 0 Jeremy Macdonald volunteered as Vice President. A motion was made by Eric Jensen with a second made by Jeff Wright. Motion carried 5 – 0 Jeff Wright volunteered to continue as Secretary-Treasurer. A motion was made by Eric Jensen with a second made by Paula Hatch. Motion carried 5 – 0 3. MINUTES – Consider approval of the minutes of the meeting of February 8, 2024. A MOTION was made by Secretary-Treasurer, Jeff Wright and seconded by Director, Adam Hoffman to approve the minutes of the meeting of February 8, 2024 as written. Motion carried 5 – 0 4. ANNUAL REPORT– Consider approval of the annual financial report. Finance and Management Services Accountant III Matthew Masters introduced himself. Mr. Masters explained that he would be reviewing the annual financial report dated June 30, 2024 and the interim report dated December 31, 2024. Mr. Masters began with the annual financial report (dated June 30, 2024) Statement of Net Position. He outlined four highlights from the Statement: 1. Property and equipment remained consistent from Fiscal Year 2023 to 2024. 2. Accumulated depreciation increased due to 2024 depreciation expense. 3. Deferred charge on refunding and unamortized bond premium decreased in accordance with amortization schedules. 4. Bonds payable decreased due to payment of FY2024 bond principal. Secretary-Treasurer Jeff Wright asked about the timing of the bondings and Mr. Masters explained that principal payments occur on July 1 of the Fiscal Year.  Public Facilities Municipal Property Corporation February 4, 2025 Page 3 of 6 Mr. Masters moved on to the Statement of Revenues, Expenses, and Changes in Net Position – 1 Year Comparison, explaining four highlights from the Statement. 1. Revenues associated with lease payments decreased in accordance with decrease in interest and principal payments 2. Refunds and Reimbursements tied to Cash on Hand in investment account off-setting July Principal/Interest payment 3. Depreciation expense increased due to completion of Gilbert Regional Park CIP project (PR0310). 4. Overall Net position increased – projected to continue to increase as debt is repaid He then moved on to Future Debt Payments consisting of the remaining payment interest and principal payments for the Series 2017 funding bond. The bond has approximately three years remaining with total principal payments overall of $17.2 million. He also highlighted Series 2017 Revenue Bonds that also have three years remaining with total projected repayments of $3.8 million. Mr. Masters continued on to the Interim Financial Report dated December 31, 2024 and explained that it represents activity from July 1, 2024 through December 31, 2024. It is primarily the interest payments that were made as of mid-year. He explained three highlights from the Interim Financial Summary. 1. As of December, Interest payments have been made for each bond 2. Interest expense has been offset by funding transfers from the General, Police SDF, Fire SDF and Parks & Recreation SDF funds. 3. Next significant activity will be the 7/1/2025 Principal and Interest payments Secretary-Treasurer Jeff Wright asked if there is a reason that we don’t accrue or recognize the revenue evenly over the year. Mr. Masters clarified that he was referring to the six month revenues and explained that the six month revenue record just represents the December interest payments that have been made. Transfers were made from the funds to fund those interest payments where as of end of last year, the $7 million is representative of both interest payments as well as the principal payment. Mr. Wright clarified that we don’t accrue, but that it is on a cash basis. Mr. Masters explained that it is done on an accrual basis when the payment is occurred. Management and Budget Director Kelly Pfost also explained that we don’t make payments from the general fund in even increments each month, only at those two times during the year. Ms. Pfost also explained that we do not even in out or amortize it, those are when the actual transactions happen in the GL. Mr. Wright thanked them for the explanations. Vice President Jeremy Macdonald mentioned that he saw others with agenda packets that included the financial report and wondered if those were distributed ahead of time. Director Paula Hatch answered that they were included in one of the emails prior to the meeting. Management and Budget Specialist Rachel Shaver explained that the agenda and agenda packet had been shared on the Thursday prior to the meeting. A MOTION was made by Vice President, Jeremy Macdonald and seconded by Director, Paula Hatch to approve the annual financial report as written. Motion carried 5 – 0  Public Facilities Municipal Property Corporation February 4, 2025 Page 4 of 6 5. FUTURE BONDS NEEDS DISCUSSION – Status Report Management and Budget Director, Kelly Pfost shared a presentation with information on potential and upcoming items for the PFMPC board. She explained that there are only three years remaining on all of the existing bonds that the board has approved with principal and interest payments this fiscal year (FY26) and then Fiscal Year 2027 will represent the last payments on those bonds. These represent both the refunding of bonds that were issued in 2009 purchasing land and the repayments sources are Police SDF, Fire SDF, Parks, SDF, and the General Fund. There was also money that was issued in 2017 that built Fire Station 9 which was repaid by Fire SDF. All of these bonds will finish in 2027. In previous meetings, there have been questions of what happens after all of the current bonds are finished, so there are upcoming plans and potential for additional bonds that will likely come to the PFMPC. They will need to be approved by Council before coming to the PFMPC, so there are still several steps that need to happen. The Town looked recently at Police, Fire, and Park infrastructure that is needed and there is not a funding mechanism for those infrastructure projects coming up. After taking a look at all of the options and in an effort to make it as fair as possible across the Town, the Council approved to change the Sales Tax to 2.0%, The Use Tax to 2.0%, and the Bed Tax to 5.0%. These changes went into effect on January 1, 2025 with the intent to use that for the Town needs and infrastructure projects. There are 23 specific projects that are outlined, with detailed information found online by Googling Gilbert Sales Tax. These projects have a combined amount of over $700 million, with the Sales Tax bringing in about $55 million a year. If you do the math, you can image how long it would take to cash fund all of these projects making it unlikely that would work. We will do our best to cash fund as much as possible and will then, with Council approval, bring them before the PFMPC board for approval to issue new PFMPC bonds that would use Sales Tax money to help repay construction and other higher dollar items. Along with those Quality of Life/Sales Tax Projects, some of them are partially funded with Sales Tax and some with growth related System Development Fees (SDF), like new Parks or the Police Substation Expansion. It is likely at that time that there will be both of those refunding with the bonds that are requested. We are also keeping an eye on the Roads SDFs as there will be a lot of projects happening there that may be in advance of what cash flow is coming in in that area. We should be ok in FY26, but may have potential needs in FY27. We also wanted to make the board aware of one other project that is on the horizon, which is a Solid Waste Transfer Station. The landfill is running out of capacity and the solid waste team is working with Mesa on a study to look at different options to identify what is feasible/possible. This would probably take place in the FY27/FY28 timeframe, but if a viable option is found, our portion would likely need to be bonded as well. The repayment on that would be the Solid Waste rates (residential and commercial) that are using the transfer station. Ms. Pfost explained that these are just a few things on the horizon and are not fully fleshed out yet, but will definitely require the assistance of the PFMPC as the current debt finishes and we have additional needs in the Town.  Public Facilities Municipal Property Corporation February 4, 2025 Page 5 of 6 FUTURE AGENDA ITEMS/MEETINGS No future agenda items identified. COMMUNICATIONS From the PRESIDENT on current events. None received. From the BOARDMEMBERS on current events. Secretary-Treasurer Jeff Wright asked who they would contact if they had questions prior to the next meeting in FY26. Management and Budget Director Kelly Pfost explained that they could reach out to her or to Management and Budget Specialist Rachel Shaver, but can not include the whole board to avoid violating Open Meeting Laws. From the COUNCIL LIAISON on current events. None received. From the STAFF on current events. None received. ADJOURN President Eric Jensen adjourned the meeting at 4:26pm. ATTEST: _____________________________ ________________________________ Eric Jensen, President Jeff Wright, 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 4, 2025. I further certify that the meeting was duly called and held and that a quorum was present. Public Facilities Municipal Property Corporation February 4, 2025 Page 6 of 6 Dated this ________ day of ________, ______. ________________________________ Jeff Wright, Secretary-Treasurer