Loading...
HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 11/5/2002 * PLEASE NOTE: Since the Glendale City Council does not take formal action at the Workshops, Workshop minutes are not approved by the City Council. MINUTES CITY OF GLENDALE CITY COUNCIL WORKSHOP November 5, 2002 1:30 p.m. PRESENT: Mayor Elaine M. Scruggs, Vice Mayor Thomas R. Eggleston, and Councilmembers Joyce V. Clark, Steven E. Frate, David M. Goulet, H. Phillip Lieberman, and Manuel D. Martinez ALSO PRESENT: Ed Beasley, City Manager; Terry Zerkle, Assistant City Manager; Rick Flaaen, City Attorney; and Rosemary Ramirez, Acting City Clerk 1. FIESTA BOWL TRANSITION CITY STAFF PRESENTING THIS ITEM: Mr. Ed Beasley, City Manager OTHER PRESENTER: Mr. John Junker, President and Chief Executive Director of the Fiesta Bowl, Mr. Gary Husk, President of Jamieson and Gutierrez, Mr. Leon Levitt, Fiesta Bowl Chair-Elect and Kevin Hickie, Fiesta Bowl Committee. In anticipation of the opening of the new multi-purpose stadium facility in 2005, representatives of the Fiesta Bowl would like to discuss with the City Council the creation of a Fiesta Bowl Transition Team to identify opportunities to partner with the City of Glendale. The purpose of the Transition Team would be to ensure that the mutual interests of the City and the Fiesta Bowl are identified and dealt with in a pro-active manner prior to the opening of the new stadium. Some of the items the Transition Team will consider include office space requirements, agreements with hotels, site development, practice fields, site parking, facility amenities, community partnerships and events, and citizen participation and involvement. Mr. John Junker, President and Chief Executive Director of the Fiesta Bowl, Mr. Gary Husk, President of Jamieson and Gutierrez, and Mr. Leon Levitt, Fiesta Bowl Chair- Elect will be present to discuss their ideas for a Transition Team and its purpose. The committee would consist of staff from both areas and eventually subcommittees of interest such as citizens and other stakeholders. There has been no previous action taken in consideration of the formation of a Fiesta Bowl Transition Team. 1 Representatives of the Fiesta Bowl contacted City staff regarding their interests in creating a Transition Team. When the Transition Team is formalized, all interested parties would be notified. There are no budget/cost impacts in considering the formation of a Fiesta Bowl Transition Team. Some City staff, currently working on the development of the site, may be assigned to the Transition Team. Provide staff direction regarding the possible formation of a Fiesta Bowl Transition Team Mr. Junker said their intent is to establish Tostitos Fiesta Bowl as a "billion dollar" brand and to be a long-term partner with the City of Glendale. He discussed the history of the Fiesta Bowl, noting it has hosted four national championship games since its inception and will host a fifth title game on January 3, 2002. He pointed out the Fiesta Bowl is the first bowl game in more than 50 years to break into the lineup of New Year's Day bowls. He said they have paid more than $228 million to colleges and universities through team payouts, explaining the money is used to pay for scholarships for athletes in non- revenue generating sports. He said the Fiesta Bowl has been sold out 16 of the past 17 games and is the only BCS bowl to sell out the past seven games. He explained they will work with the City to solicit 2,900 volunteers to promote, market and operate the Fiesta Bowl. He said volunteer leaders are expected to raise money, manage events and represent the Fiesta Bowl 365 days annually in their communities. He stated the Fiesta Bowl has generated an estimated economic impact of more than $918 million in its 31-year history, noting the 1999 national championship game generated an estimated $133 million. He pointed out 837,000 out-of-state visitors have traveled to Arizona for Fiesta Bowl events. Mr. Junker stated the new stadium is vital to their efforts to retain their BCS designation and, given the City of Glendale's commitment to the stadium, they feel confident about their standing in the BCS. He pointed out the Fiesta Bowl is the only BCS bowl game that has hosted every major conference champion and Notre Dame. He explained the BCS is comprised of the Pacific-10 Conference, the Big Ten Conference, the Big East Conference, the Big 12 Conference, the Atlantic Coast Conference and Notre Dame. He stated the BCS will distribute approximately $87 million to universities for the four bowl games. Mr. Junker showed a video demonstrating the value of live telecast and game location, pointing out the city would be mentioned by every media outlet in America. He stated 1,500 national media members attend championship games and 800 to 900 members attend non-championship games. He said they are very interested in the possibility of a block party, but will sit down with city leaders and community groups to learn what the city wants and needs. He suggested the Fiesta Bowl could also partner with the city in the development of youth sports fields and in bringing other public events to Glendale. Mr. Junker assured the Council that it will be proud of its partnership with the Fiesta Bowl. Mayor Scruggs thanked Mr. Junker for addressing issues that have been of concern to the citizens of Glendale and for welcoming the citizens to get involved. Councilmember Goulet asked what the BCS will look for in terms of infrastructure or amenities when the Fiesta Bowl enters discussions about a future contract in 2 2004/2005. Mr. Junker said having a stadium facility in place is the biggest issue, however the BCS will also look for the best hotels, a tremendous amount of meeting space, security for the players and a reward experience. He estimated the length of the contract to be four years, with the possibility of an option for another four years. Councilmember Martinez asked how long the Tostitos contract will be in place. Mr. Junker said they are presently concluding arrangements for a four year agreement. Councilmember Martinez asked if NAU receives any of the scholarship funds. Mr. Junker said NAU, as a 1A institution, would receive funds indirectly. Councilmember Martinez stated he would like to see them attract as many events as possible. Mayor Scruggs asked if another city, such as Houston, could compete with the Fiesta Bowl for a BCS designation. Mr. Junker said several cities will contend for the BCS designation, which is why they feel pressure to have a great championship game this year. He stated the BCS has shown a great deal of respect and loyalty to its BCS cities and he is confident about the Fiesta Bowl's ability to continue as a BCS bowl game. Kevin Hickie said the Fiesta Bowl's past history, along with the new venue, should put them in a tremendous position of strength. Mayor Scruggs asked if having quality hotels near the facility would effect their chances of getting the contract. Mr. Junker said a number of factors work together, but the availability of convenient, high quality hotels will be a key issue. Councilmember Lieberman asked who makes decisions on behalf of the BCS. Mr. Junker explained decisions are made by the six Conference Commissioners and the Director of Athletics at Notre Dame who report to the Chief Executive Officers, Presidents or Chancellors of the 116 Division 1A universities. Councilmember Lieberman invited Mr. Junker to attend the tree lighting ceremony in downtown Glendale to witness the city's ability to attract people to the area. Vice Mayor Eggleston said he was not previously aware of the stadium's importance to the Fiesta Bowl. Councilmember Clark thanked Mr. Junker for recognizing that the city brings something to the table. She asked if Mr. Hickie would chair the transition team. Mr. Junker clarified Mr. Levitt will chair the team and Mr. Hickie will be a member. Councilmember Clark asked who else they envision being members of the transition team. Mr. Junker said various members of their staff would also serve on the team and that citizen participation would be pursued once they have learned more about the arrangements for construction of the stadium. Councilmember Clark asked how the Fiesta Bowl would be involved in developing youth sports. Mr. Junker said they envision working with Glendale to determine what the city needs were and how youth sports in Glendale should work and then they could use their contacts to assist in obtaining sponsorships. Councilmember Clark thanked Mr. Junker for their willingness to commit to Glendale, stating Glendale will do everything in its power to make their experience very favorable. Councilmember Frate thanked Mr. Junker for his informative presentation. The meeting recessed for a short break. 2. CITIZENS BOND ELECTION COMMITTEE REPORT CITY STAFF PRESENTING THIS ITEM: Mr. Tim Ernster, Deputy City Manager; 3 Michael Munroe, Senior Management Assistant The purpose of this workshop item is for Jim Podzius, Chairman of the Citizens Bond Election Committee, to present the recommendations of the 21- member committee to the City Council. The committee is recommending that a bond election be held and that the Council seek voter approval for $500,000,000 in bonding authorization. The need to create a Citizens Bond Election Committee surfaced during spring Council workshop discussions related to the city's 10-year Capital Improvement Plan, particularly as it related to sewer and water projects, and the voter-approved Transportation Plan. Depletion of the city's 1987 bond authorization for water and sewer projects became evident during the review of the capital plan. Staff also noted for Council that part of the Transportation Election Package identified future bonding authorization as a financing mechanism to complete many of the improvement projects outlined in the ballot measure. Council determined that it would be prudent to create a citizens advisory committee to study and review the long-range capital needs of the city in the areas of transportation, sewer and water as identified by our professional staff. Council also wanted the committee to analyze financing options related to staging of the capital projects as they are prioritized and to determine whether or not a bond election should be held and the amount of bonding authorization for which voter approval should be sought. The Citizens Bond Election Committee met four times between August 22, 2002 and October 10, 2002. They examined the projects in the Transportation Capital Improvement Plan and Sewer & Water Improvements in the 10-year Capital Improvement Plan. The agendas and summaries of the four meetings are included in the backup material for this workshop item. Over the course of the four meetings, the committee heard presentations from Transportation, Public Works, Engineering, Utilities, Budget and Finance staff representatives. Alternatives for financing the various capital projects were reviewed and discussed thoroughly. The committee requested information about the city's current fee schedule for transportation, sewer and water development fees, the General Plan and buildout population figures, and the bond ratings assigned to the City of Glendale after each sale over the last several decades. The staff also presented, for committee discussion, financing options and the debt financing process. Financing options discussed included General Obligation Bonds, Water and Sewer Revenue Bonds, Transportation Revenue Bonds, Water Infrastructure Financing Authority, Municipal Property Corporation, Certificate of Participation, Community Facilities District and Pay-As-You-Go financing. The committee was determined to identify the best debt financing mechanism(s) for both transportation improvements resulting out of the 2001 election, and water and sewer projects needed as a result of growth in Glendale, an increasingly expensive regulatory climate, and system maintenance and upkeep. The committee discussed the fact that funding for the Transportation Capital Improvement Plan is provided by the half-cent sales tax increase, and that funding for water & sewer projects is provided by the current utility rate structure. The committee considered spreading the capital costs of major projects over time advantageous, 4 especially when there is a dedicated source for repayment. The complete list of projects proposed for bond financing is detailed in the attachments. The total debt financing proposed by staff to the committee is summarized in the following tables: Go Transportation Program Year Amount Project(s) 2005 $60,000,000.00 Capital Improvement Plan 2010 $80,000,000.00 Light Rail Transit 2023 $100,000,000.00 Superstreet Concept Total $240,000,000.00 Sewer & Water Program Year Amount Project(s) 2008 $200,000,000.00 Capital Improvement Plan 2013 $37,000,000.00 Capital Improvement Plan Total $237,000,000.00 The City Council reviewed a list of potential citizens to serve on the Citizen Bond Election Committee during its Executive Session on July 16, 2002. The Mayor and each Councilmember selected three citizens to serve on the committee. The City Council discussed the need for a citizens committee to review financing for the capital improvement plan at the June 18, 2002 City Council Workshop. The City Council reviewed the 10-year Capital Improvement Plan, which identified water & sewer and transportation projects at the Council Workshop on February 19, 2002. Voter approval of a half-cent increase in the city's sales tax in November 2001 to fund transportation improvement projects. Tischler and Associates, Inc. completed a Glendale Development Impact Fees Report in April 2001. Black & Veatch prepared a water & sewer rate analysis in June 2001. Citizens were contacted concerning appointment as members of the Citizen Bond Election Committee. Once the Council authorizes a bond election, information will be publicized through a variety of forums. These forums include: Cable television programming, articles in the "Connection" and on the City's Internet home page, newspaper inserts, and a speakers bureau (members of the Citizen Bond Election Committee). Of the total bond authorization amount, $240,000,000 would be for transportation capital projects through 2023 and $237,000,000 would be for water and sewer capital 5 projects through 2013. The Citizen Bond Election Committee recommended that, if necessary, an additional $23,000,000 could be added at City Council's discretion if any additional capital needs for transportation and/or water and sewer might arise between now and the bond election. If authorized by the voters, all transportation and water and sewer projects would be reviewed by the City Council during the annual budget process for approval and inclusion in the capital improvement program. The recommendation of the Citizens Bond Election Committee is that the City Council authorize a bond election to be held in May 2004 and that the amount of authorization requested for financing future transportation, water and sewer improvement projects be capped at $500,000,000. The committee would also like Council to reconvene the group closer to the election, so that members could assist with educational presentations to the community. In response to Mayor Scruggs' question, Mr. Ernster explained that the committee felt $500 million would allow for cost increases or additional projects that could arise prior to the election in May 2004. Councilmember Lieberman pointed out that, while the need for additional funds could arise before the May 2004 election, the funds would not be spent until after the election. Mr. Podzius agreed. Councilmember Clark said the Committee was originally charged with considering whether the Western Area Wastewater Treatment Plant should be built with a 10 million gallon per day capacity or expanded to 15 million gallons. She asked how the Committee's discussions evolved to cover a range of projects for the next 23 to 25 years. Mr. Ernster said staff identified capital improvements needs for water and sewer over the next 10 to 15 years. Mr. Reedy explained staff looked at all projects that require bond funding, not just the Western Area Water Reclamation facility. He clarified the Committee was not formed solely for the purpose of discussing expansion of the Western Area Water Treatment Plant. Councilmember Clark pointed out $260 million of the $500 million will be spent by 2008. She asked how the city would fund the $500 million program when over half of that amount will be expended within the next six years. Mr. Reedy stated the part of the program that relates to growth would be paid for by impact fees. He noted impact fees would have to be reevaluated to ensure they remain consistent with the Council's goal to make growth pay for itself. He said rate increases will likely be necessary in the future to cover inflation and other cost increases not related to growth. Mr. Art Lynch, Chief Financial Officer, stated structuring bond sales is separate from the bond authorization. He explained the bond structuring is designed to cover capital and growth components, while costs are spread over a reasonable time frame to minimize rate increases. He pointed out they would normally see rate increases as a result of growth itself. 6 Councilmember Clark expressed concern about the city's ability to cover $260 million of the $500 million program by 2008 without tremendous rate increases. Mr. Lynch explained the city has a rapid payback on currently outstanding bonds, thereby creating as much capacity as possible for the new bonds. He pointed out transportation money is already being collected and the financing authorization is being used to smooth out the costs, allowing for project acceleration. Councilmember Clark explained she is concerned about the $200 million in water and sewer bonding needed over the next six years. Mr. Lynch said it is basically a dedicated revenue in that it comes from water and sewer fees and revenue generated to maintain operations and the system. He explained the bonds would be structured to have a longer term to allow for a reasonable repayment. Mr. Lynch confirmed for Councilmember Lieberman that the city is limited in terms of the dollar amount of bonds it can sell. He said, therefore, the city could not sell $500 million in bonds the day after the bond issue passes. In response to Mayor Scrugg's question, Ms. Aguilar explained the rate increase package previously presented to Council covers the city to the year 2005/2006, during which time they will look at additional rate increases necessary to cover the capital plan. She confirmed that the rates have been determined for 2003. Mayor Scruggs asked if the Capital Improvement Program element of the current rate structure has enough capacity to cover the $200 million in bonding. Ms. Aguilar stated the three proposed increases will cover the city until the year 2005/2006. Mr. Ernster confirmed for Mayor Scruggs that all of the transportation bonding debt would be paid by the transportation sales tax. Councilmember Lieberman asked how much of the 87/88 bonds are left. Mr. Lynch stated the 87/88 bonds are almost entirely paid off, explaining only a small amount that had a 15 year maturity remains. Councilmember Lieberman asked if all of the 87/88 bonds would be retired prior to the bond election. Mr. Lynch responded yes. In response to Councilmember Martinez's question, Mr. Lynch explained they are requesting the authorization because it is the most efficient and cost effective financing tool. Mr. Ernster suggested staff do an analysis on the water and sewer portion and provide Council with additional information at a future workshop session. He explained the proposed timing and scheduling of projects is an approximation, stating Mr. Lynch will ultimately schedule the projects in a manner that minimizes the need for rate increases. Mayor Scruggs expressed her opinion that it would not be wise to make a decision on November 5, 2002 concerning an election in May of 2004, given the county's billion dollar bond proposal and the possibility of a regional or statewide transportation tax. Mayor Scruggs acknowledged that rate increases are inevitable, but asked staff to explain how much the capital improvement projects would add to the increases. Mr. Ernster stated they would do that analysis as part of the normal budget process. 7 Councilmember Clark urged staff to prioritize the program to identify projects that are needed immediately. She asked if the $41 million Western Area Water Reclamation line item represents an expansion of 10 or 15 million gallons per day. Mr. Reedy offered to provide that information to Councilmember Clark. Councilmember Clark also asked what they can expect in terms of future rate increases. Councilmember Frate commended Mr. Podzius and the committee for the work they have done. Mayor Scruggs asked about the 91st Avenue Construction project. Mr. Reedy explained part of the project is for additional solids handling capacity at the sub-regional operating plant while the other part is for replenishment of the plant itself. Mayor Scruggs also asked about the $25.3 million Cholla Water Plant Process line item. Mr. Reedy stated they are studying the item in more detail and hope to reduce the amount needed. Mayor Scruggs asked Mr. Ernster when Council will have to make a firm decision if it wants to hold a bond election. Mr. Ernster said Council will have to make a decision by December 2003 to be able to hold the election in May 2004. Vice Mayor Eggleston asked if the $23 million contingency amount would be designated for water, sewer or transportation. Mr. Ernster said the Committee did not specify how the money would be designated, however, he does not believe it would be designated to transportation. He stated they will bring the issue back to Council at a future date. Mr. Beasley pointed out many cities now wish they had a $23 million contingency because of annexation and having to take on other water companies. Mr. Ernster explained the $23 million contingency was established to provide the city with flexibility in dealing with cost increases and the need for additional projects. Mayor Scruggs said, in light of last week's events, she would like to be presented with information as to where private water companies and package plants are in the strip annexation area. She stated she cannot see the city annexing an area and allowing development to occur with a private water company providing water. 3. LEGISLATIVE UPDATE CITY STAFF PRESENTING THIS ITEM: Ms. Amy Rudibaugh Duffy, Intergovernmental Relations Director The state economy is experiencing financial shortfalls, as such the legislature must readjust the state budget through a special session or during the regular legislative session. The Intergovernmental Relations Director will be present to discuss with Council the latest information available regarding any state legislative activities that might have a fiscal impact on the city. This is the first legislative update for the 2003 legislative session. 8 Department heads are notified of proposed legislative activities as they arise that effect their respective areas of City administration and are being asked to provide comments, as appropriate, to the Intergovernmental Relations Office. Intergovernmental Relations will highlight the latest budget information and legislative activities that may have significant financial impact on the City of Glendale. For information, discussion, and possible direction on legislative issues. Ms. Rudibaugh reported the state is approximately $100 million below forecast for three months, with individual income tax cited as the main cause for the revenue shortfall. She noted, according to the Joint Legislative Budget Committee, FY 2002 was Arizona's worst revenue year in over 10 years, with sales, individual income and corporate income tax categories experiencing near historic declines. She reviewed how other cities are being effected by the state revenue shortfall, stating Mesa is facing a $21 million deficit next year, Phoenix has a $40-45 million deficit this year and faces eliminating 200 positions in January, Tempe will eliminate 125 positions and are considering a five percent cut across the board, and Tucson has a $20 million deficit for this year. She stated Glendale will go from a state shared revenue of 15 percent to 14.8 percent for two years, resulting in a $314,000 reduction this year and a $274,000 reduction next year. She pointed out the income tax component of the state shared revenues will be down $3.8 million beginning with FY 2004. Ms. Rudibaugh clarified for Mayor Scruggs that the $3.8 million figure does not include the $274,000 reduction in state shared revenues expected in FY 2004. Councilmember Clark asked if the Legislature is still considering or plans to consider a further reduction in the state shared percentage. Ms. Rudibaugh said, while current plans do not include a cut for the current fiscal year, cuts could be a serious consideration when they discuss the next fiscal year. Councilmember Lieberman asked if the 14.8 percent could be reduced further. Ms. Rudibaugh explained the 14.8 percent was a two year agreement and will return to 15 percent after two years assuming no other legislative changes are made by then. Ms. Rudibaugh stated the Governor's Budget Office projects that for this fiscal year it will be down $443 million. She said the Governor sent a letter on August 27, 2002 to all agency department heads, asking them to reduce their budgets by 10 percent. She stated the Governor also sent a letter dated October 23, 2002 to both the President and the Speaker about her budget, including $119 million in agency cuts and revenue options for a total reduction of$409 million. She explained the Governor's plan calls for $120 million in agency cuts and would result in 43 immediate layoffs and the freezing of 683 currently vacant positions, in addition to the 762 positions eliminated in FY 2001. She reviewed other options being discussed, including a two percent tax off on ACCESS, a tax premium, Proposition 303, delaying renovation of the forensic facilities at the Arizona State Hospital, funds transfers, revenue bond issuances and funds from the Ladewig settlement. She stated the business community sent a letter dated October 28, 2002 to the President and Speaker urging the legislature to convene a special session after the November election to address the 2003 deficit. Mayor Scruggs pointed out Diane McCarthy signed the letter on behalf of WestMarc and that it was not brought forward to WestMarc for a vote. Ms. Rudibaugh stated most members of the Senate seem to agree on the Ladewig settlement, delaying the forensic facility and using $50 million from Proposition 303 should it pass. She said they could also have votes for the premium tax and bonding, 9 but want more information on agency cuts. She said the House, however, believes the funds sweeps should not be done because they would not effect the structural deficit. She said they favor agency cuts which could be carried over to the next year. Mayor Scruggs asked if the state has the right to assess a premium tax on the federal government. Ms. Rudibaugh said the issue came up during the last legislative session, but failed on the floor. She indicated the state would not have the authority to assess a premium tax on the federal government. Councilmember Goulet asked Ms. Rudibaugh how many seats she anticipates will change in the Legislature. Ms. Rudibaugh stated there will be 32 new members in the House and only five to seven members will remain in the Senate. Councilmember Lieberman pointed out a special session would have little meaning since those attending would not be in office after January 6. Mayor Scruggs asked if they are relying on Proposition 303 to pay for the programs created by Proposition 204 passed two years ago. Ms. Rudibaugh responded yes. She explained Proposition 204 was originally supposed to have 60,000 people on the program over a several year growth period, but has already exceeded 120,000 people. Councilmember Martinez said he thought the money gained through Proposition 303 has to be used for specific purposes. Ms. Rudibaugh said Proposition 303 is expected to generate $150 million and it is believed $50 million could be used to help pay for Proposition 204 programs because of their relationship to Proposition 303. Councilmember Clark pointed out less money would be realized by Proposition 303 if a no-smoking ordinance were passed. Vice Mayor Eggleston pointed out Arizona is not the only state facing a revenue shortfall. Ms. Rudibaugh agreed, noting the Governor's Budget Office stated 42 to 45 other states are in a similar situation. Vice Mayor Eggleston asked if anyone has offered any solutions. Ms. Rudibaugh said the logic has been that the economy will pickup. She stated there has been some talk of tax reform efforts next session, but it is too soon to tell at this point. Councilmember Lieberman pointed out the city's state shared revenue was previously reduced from 15.6 percent to 15 percent. Ms. Rudibaugh agreed. Mayor Scruggs noted the Fiscal Tax Policy Reform Committee held its first meeting October 29 to discuss the state's financial condition. She said Elliott Pollack indicated the state will not see a recovery like it has in years past because home sales and car sales have not slowed. She stated the business community is expected to aggressively push for a reduction in the corporate valuation percentage because of its negative impact on attracting business to Arizona. She stressed the impact a reduction would have on the community, especially school districts. Councilmember Clark noted a proposition on the ballot called for freezing property tax rates for senior citizens, which would result in stagnant property tax valuations in the out years. Ms. Rudibaugh asked the Council to communicate to the Legislators the importance of state shared revenue in times of budget crisis and to ask for their support. She submitted a written copy of her report for the record. 10 ADJOURNMENT The meeting was adjourned at 4:35 p.m. 11