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HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 7/2/2002 * 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 July 2, 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 Pamela Oliveira, City Clerk 1. MULTI-PURPOSE FACILITY CITY STAFF PRESENTING THIS ITEM: Mr. Art Lynch, Finance Director; and Jim Colson, Economic Development Director. The Tourism and Sports Authority (TSA) has contacted the City of Glendale, asking that the City reconsider the its interest in proposing a site for the multi-purpose facility. In November of 2001, the City Council provided direction to staff to analyze the feasibility of a Glendale location for the TSA multi-purpose facility. A City team was in the process of developing a proposal to the TSA; however, due to concerns regarding the site selection process, the Council directed that the City of Glendale remove itself from formal consideration as the home of the TSA multi-purpose facility on February 6, 2002. At this time there are no budget implications associated with re-submitting the City's site proposal; however, future budget impacts would be subject to terms and negotiations with the TSA. The recommendation was to review this item and provide staff with direction. Mr. Colson reviewed the history of the TSA and its original request for proposals from cities interested in becoming the host community for a multi-purpose facility. He stated that the TSA has informed the City of Mesa that they were going to negotiate with other sites. He said the TSA has until September 12, 2002 to finalize agreements with a host community or they will have to seek voter approval for continuation of the authority. 1 Mr. Beasley suggested that the following four parameters be met before discussions with the TSA are re-opened: (1) it must enhance the City's current business investment; (2) it must be a benefit to our community; (3) it must be at no cost to the City; and (4) an exclusivity clause must be included. Councilmember Goulet asked if the City of Glendale could meet the TSA's September 12 deadline, given the fact that the Council will vacate for the month of August. Mr. Colson said he would look at the Council's schedule, but he believed staff could put a proposal together in the timeframe given. He pointed out that staff has a lot of experience on the issue and has a team already in place. Councilmember Goulet asked Mr. Colson if development of the multi-purpose facility would cause any delay in the development of the arena site. He also asked if the Bidwell's supported a West Valley site. Mr. Colson said a critical component of their negotiations would be that the facility have no negative impact on the Coyotes arena or its associated mixed-use development. He said they did not believe there would be any negative impact on the construction schedule. With regard to the Bidwells, Mr. Colson explained that, while they are important to the overall deal, they are not involved in the site selection process. Councilmember Martinez expressed his opinion that the City of Glendale should have at least as much as was offered the City of Mesa. Mr. Colson said they looked at the City of Mesa proposal and felt comfortable that they could build on its framework. He stated that they also had a good understanding of the costs involved because of the work they did on the previous proposal and the Coyotes arena. Councilmember Martinez asked if an exclusivity agreement would be realistic from the TSA's standpoint. Mr. Beasley explained that the exclusivity agreement would ensure that the City of Glendale receives compensation should the TSA take any deal it reaches with the City of Glendale to other communities to obtain counter-offers. He said the agreement should not be a problem for the TSA if it was their intention to deal in good faith. He mentioned the infrastructure investment that was included in the City of Glendale's last proposal and asked if a similar investment was included in the current proposal. Mr. Beasley said they would negotiate reimbursing the City for any costs incurred. He referred to the parameter previously mentioned that states development of the facility must be at no cost to the City. Councilmember Martinez asked if they were still considering setting up a special district. Mr. Lynch stated that they would seek the Council's direction on that issue. Councilmember Martinez said he would support moving forward. Councilmember Lieberman said he spoke with Mr. Ellman and Mr. Ellman expressed his opinion that the stadium would enhance his project. He said Mr. Ellman's only concern was the development of the land surrounding the stadium. He stated that Mr. Bidwell had offered financial aid to other cities, including a loan to the City of Tempe. He said he also supported pursuing the issue. He pointed out the fact that the Bethany Home intersection would have to be done. He noted that federal funds and state money may be available. He stated that he was not necessarily opposed to the City contributing funds towards the project. He pointed out that the stadium would be a tremendous advantage to the City. Vice Mayor Eggleston agreed that the stadium should help with development of the area, benefit the community, and be at no cost to the City. While he agreed some contribution to the project might be necessary, he cautioned against committing any funds until they know more about the direction the project will take. 2 Councilmember Frate stated that he did not have a problem talking with the TSA but, ultimately, the deal has to make good business sense. He said staff should not invest a lot of time in negotiations if they do not feel comfortable with the deal. Councilmember Clark stated that the deal presents both opportunities and dilemmas for her. She said, unfortunately, there are neighborhoods adjacent to the proposed site and, therefore, the impact to those neighborhoods has to be weighed against the economic benefit to the overall community. Before making a decision about going forward, Councilmember Clark said she would need to see some assurance that the developer of the project will be sensitive to the surrounding neighborhoods and take steps to buffer it from the visual, noise and traffic impacts of the stadium. Mayor Scruggs asked staff if they felt comfortable negotiating a deal at this point or if they would like further Council direction with regard to the term "no cost". Mr. Beasley asked the Council to provide a clear indication of what it would and would not consider acceptable. Mayor Scruggs asked if they were requiring that all fees be waived. Mr. Beasley said their position was that the development needs to pay for itself as much as possible. He stated that the City of Mesa proposal waived fees, but that is not necessarily going to be the City of Glendale's position. Mayor Scruggs asked how much the City of Mesa agreed to contribute and what those funds would be used for. Mr. Colson stated that the City of Mesa proposal was vague and offered things the City of Glendale would never consider, such as waiving impact or permit fees. Mr. Lynch explained that the City of Mesa was asked to waive all fees and to fund $1.5 million in construction costs. He said they also had various construction and infrastructure related costs, totaling approximately $38 million. He noted that the cost for the City of Mesa's pedestrian plaza totaled $3.3 million. He clarified for Mayor Scruggs that the City of Mesa agreed to fund a total of $42.8 million, as well as waive all permit and impact fees. He said, however, the City of Mesa would retain certain revenue to offset part of the costs. Councilmember Goulet expressed his opinion that it would be premature to accept a particular level of financial commitment. He said he would be willing to discuss a reimbursable figure that would enable the City to continue its already planned and budgeted projects. He asked Mr. Colson how many other sites might become involved over the next couple months. He also asked if efforts to do away with the TSA were still moving forward and, if so, what effect it would have on the City's negotiations. Mr. Colson said they did not know how many other sites might get involved in the future. He said House Bill 2177 rescinded the TSA, effective September 12, and the stadium funding will disappear at that point. He said they will have to seek voter authorization if they do not have a finalized agreement with a city by September 12. Councilmember Goulet asked if the TSA decided unanimously to look for other sites. Mr. Colson stated that seven of the nine members voted to remove the exclusivity clause. Mayor Scruggs asked Mr. Paladini to further explain House Bill 2177. Mr. Paladini explained that the TSA has to have a deal by September 12 or it will go to the Maricopa County voters to determine if the TSA should continue to exist. He said, if the voters vote to cease the TSA, it becomes the Spring Training and Amateur Sports Authority, funding a list of specific items. He said, at that point, their intent would be to improve Sun Devil Stadium in an effort to retain the Fiesta Bowl and the Cardinals. In response to Councilmember Clark's question, Mr. Colson said the TSA's responsibilities are negotiable at this time. He said they have always tried to have revenue follow expense. Councilmember Clark asked if the property owners for the proposed site would be involved in the negotiations. Mr. Beasley said property owners 3 would not need to be part of the negotiations, except with regard to the sale of the property. Councilmember Clark said, while the City would prefer not to pay any of the costs, such an arrangement may not be realistic. She suggested that staff bring a dollar amount back to the Council. In response to Councilmember Martinez' question, Mr. Colson explained that the City of Glendale had previously submitted a letter of interest, but later decided to withdraw its interest because of the uncertainty of the overall process. He said they had looked at various funding mechanisms, costs, and revenue streams and were confident that a deal could be constructed. He emphasized that their objective has been to operate at minimal cost and to seek recovery of all costs associated with the project. He stated that, while they previously analyzed the expenses involved in the project and identified who would be responsible for those costs, they did not proceed to negotiations. He confirmed for Councilmember Martinez that there would be numerous benefits associated with the co-location of the stadium and arena projects. Councilmember Martinez agreed that some form of buffering would be necessary for neighborhoods in the area. Mayor Scruggs stated that she was not willing to give up any permit fees because the amount of work that would need to be done would deplete City funds. She said she was not willing to give up impact fees with regard to safety, sewer, water, or streets. She expressed her opinion that impact fees for libraries, parks, and so forth could be waived because they do not have a direct relationship to the project. She stated that any money the City spends should be directly related to transportation since that is where the City would benefit most. She said she would not like to own any portion of the project, be involved in its revenue streams, or pay for any of its expenses. She said staff would need to return to the Council with a deal in two weeks to obtain direction before the Council vacates in August. She asked who would win if the City of Glendale makes a deal yrvith the TSA and then the City of Mesa votes in favor of the stadium on September 1 of With regard to the four parameters, Mayor Scruggs stated that transportation enhancements and the activity around the stadium would enhance the City's current investment. She said waiving permit and impact fees would preclude the project from being a benefit to the City. She stated that, in her opinion, there should be no cost to the City, unless the cost will benefit the public as a whole. Vice Mayor Eggleston agreed that the stadium could be a benefit to the City and that the City should only pay the costs of items that would benefit the public or that it would ultimately pay for anyway. He asked about the John F. Long lawsuit. Mr. Flaaen said the John F. Long suit, challenging the existence of the TSA, was currently on appeal. He agreed that the suit could effect whether the TSA is legal to exist in its current capacity. Councilmember Clark asked how the City's costs would be repaid. She pointed out that the City's economic picture does not support added expenditures. She said she would support paying the least amount of money necessary, letting the cost be borne by those who would benefit most from the project. She asked staff to explore the issue further and to talk to the TSA. She said, at this point, she was not willing to make any commitments. Councilmember Martinez said he would be willing to listen should staff return with a deal that has some level of cost to the City. 4 Councilmember Clark stated that she would also be willing to listen. Mayor Scruggs agreed with Councilmember Clark. Councilmember Lieberman pointed out that the City will need to make infrastructure improvements in that area in the future regardless of whether or not the stadium comes to the City of Glendale. He asked if the City waived fees with regard to the arena project. Mr. Beasley responded that it did not. He explained that the arena is a tangible asset owned by the City. Councilmember Lieberman stated that he was not in favor of waiving fees. Mayor Scruggs emphasized the fact that the City is not building the arena for the benefit of some business person. She said the City is building the facility for a multitude of uses and will own it forever. She stated, conversely, that the stadium would not be owned by the City. She noted that the Council would have to vote to waive the fees. Mayor Scruggs directed staff to proceed. 2. REPORT OF FINDINGS AND RECOMMENDATIONS OF EMPLOYEE COMPENSATION STUDY CITY STAFF PRESENTING THIS ITEM: Ms. La Verne Parker-Diggs, Human Resources Director; and Mr. Ken Wallace, Compensation/Human Resources Information System Manager. OTHER PRESENTER: Dr. Luellen Lucid with the firm of Watson, Wyatt, consultant. The purpose of today's presentation was to introduce the results of the City of Glendale's compensation study authorized by the City Council. This study was authorized in 1999 to address issues of ability to attract and retain employees in a dynamic economy and the need to move towards a market-based pay system that focuses on being competitive in a business environment. The findings and recommendations of Watson Wyatt, the consultant hired by the City to conduct the study, was presented to the Council. In addition, the recommendations of the Mayor's Compensation Task Force related to the Watson Wyatt findings were also presented. The compensation and classification system currently in use at the City of Glendale was implemented in 1985 and focuses not on market competitiveness, but on specific job factors with assigned point totals that are linked to a salary range. The economy of the last few years in the Valley, coupled with a movement nationally to a more knowledge and technology based economy, has made the City's existing compensation system ineffective. Under the current system, some jobs are valued too low and some too high in comparison to similar jobs in the economy. Most organizations review their compensation system every five or so years, but the City's system has not been studied since 1985. 5 Recommendations of the compensation (pay) study include: 1. Developing an organizational pay philosophy; 2. Development of new performance management/appraisal program; and 3. Educate employees on compensation and performance management issues The City Council approved conducting a comprehensive compensation study at its budget retreat held on November 4, 1999. Watson Wyatt was selected as the consultant and began work in November of 2000. If directed by the Council to move forward with the development of a new compensation program, the Human Resources Department will be utilizing employee focus groups to address issues related to the development and creation of a new program. A presentation by the consultant on the findings and recommendations was made to City employees during three open meetings held in May of 2002. Also, the City Manager's Compensation Task Force and the Mayor's Compensation Task Force have received presentations on the consultant's findings and recommendations. Regular updates have been provided to employees on the progress of the study through direct employee communications, including the employee Relay. The Mayor's Compensation Task Force was appointed in June of 2001 and met weekly during July and August of 2001 to review the consultant's work and provided comments and recommendations. Because the study found that current pay levels are competitive, no additional budget funds were requested at this time. Future development of the study recommendations over the next two fiscal years may require additional funding prior to implementation. The recommendation was to accept the consultant report and direct staff to move forward with the development of a new compensation program. Dr. Lucid stated that most modern organizations regularly examine their compensation systems in the context of their business plans and the changing environment. She said an effective review has to include a broad spectrum of input from all levels within the organization. She reviewed a brief history of the compensation study. She stated that the methodology used included the establishment of employee task forces and focus groups. She explained that the study approach included four major steps: (1) to communicate with employees and City management to gather information and to inform employees about the project; (2) to assess market competitiveness of employee compensation and best practices in compensation system design; (3) to make recommendations about compensation system design for the future; and (4) to consider all recommendations in light of adaptability to the City, fiscal responsibility, and affordability. Dr. Lucid stated that the consultant focus groups found that employees consider the City a good place to work, and believe it offers job security and stability. She said employees also felt the City provides generous benefits and generates a family 6 environment. In terms of pay, she said employees believed the City's pay scale to be on par with other cities in the area, but lower than the private sector. She stated that there were differing views about career opportunities within the City and that employees felt the City was understaffed in some areas. Dr. Lucid reported that the Management Group and City Manager's Task Force believed there were significant problems with the current compensation system and that those problems could become substantial if not addressed. She said they felt a new compensation approach that ensures employees are energized, challenged, and fulfilled is needed and that it should provide non-traditional ways to compensate employees. She said they believed multiple pay approaches are needed and that excellence should be rewarded. She said the task force also felt that changes to the compensation system should be phased in over a three-year time frame. Dr. Lucid reported on the findings of their competitive analysis. She explained that the study included 81 benchmark jobs across the City, covering 50% of all employees. She said the study found the City's pay rates were generally competitive with other major Valley cities and with private sector jobs paying below $80,000. She said the City's total pay package for non-public safety jobs is even more competitive when benefits are taken into consideration. She said there was a small decrease in competitiveness of public safety jobs when benefits were taken into consideration. She stated that, while pay is generally competitive, the City's current "point factor" job evaluation system does not accurately predict market pay, resulting in some jobs being evaluated too high and others too low. Dr. Lucid reviewed the study's recommendations. She said, prior to implementing a new pay approach, the City should ensure the following components are in place and fully integrated: (1) the City's goal setting process; (2) performance measures; (3) organizational competencies; and (4) a new performance management/appraisal system. She recommended that the City redesign its compensation system to reflect contemporary and competitive practice; shifting to a market pay focus; developing a pay structure with fewer and wider ranges; developing a step plan for a public system program; and introducing a new merit pay approach. She recommended that they phase the compensation system in over a three-year period to allow for plan development, including communication with managers and employees. Mr. Wallace reported on the Mayor's Employee Compensation Task Force findings. He explained that the task force was charged with examining the consultant study methodology, results, and recommendations, as well as reviewing changes being considered in pay, benefits, and other reward programs. He stated that the task force members were in general agreement with the consultant's recommendations, including the three-year phased-in approach to implementation. He said the task force felt that measures of organizational success should be developed and the new performance management program should be in place for at least one year before the City introduces the merit pay program. Councilmember Goulet asked for more information on the step plan with regard to public safety. Dr. Lucid said the first step will be to get the employee task forces in place, who will work with the City in designing the system. She said they do not anticipate a significant financial impact to redesign the structure. Councilmember Clark noted that a merit pay approach had previously failed and she asked what steps were being taken to ensure that it would be successful this time. Ms. Parker-Diggs said the "Pay for Performance" system in place approximately 15 years 7 ago failed because of an economic downturn. She said the merit system would not be implemented without Council approval and without adequate funding. Councilmember Clark asked if the Mayor's Task Force disagreed with any of the consultant's specific recommendations. Mr. Reedy responded that it did not. He stated that their only concern was that some of the smaller issues should not have been included. Mr. Beasley emphasized that employees will be clear on the steps necessary to achieve a certain level and to qualify for an increase. Mayor Scruggs stated that one of the biggest downfalls of the City's previous pay-for- performance plan was that it included public safety. Councilmember Frate pointed out that change is difficult for people. He said employees will have to be shown and be continually reminded of the benefits of the new system. Councilmember Clark said she supported moving forward. Councilmember Lieberman stated that he was pleased to see that the City is where it should be with regard to compensation. He thanked City staff, the consultants, and the committee members for their hard work. Councilmember Martinez noted that the public sector has historically been behind the private sector. He asked about budget cost impacts at the time of implementation. Ms. Parker-Diggs said there would likely be a cost impact over the three-year implementation period. She stated that they would come back to the Council to request any necessary funding at that time. Councilmember Martinez said he supported staff's recommendation. Councilmember Lieberman also voiced his support. Mr. Beasley stated that, upon Council approval, they would move forward with establishing focus groups and task forces to discuss components of the report. He reiterated that all employees will be encouraged to participate in the process. 3. FOOTHILLS RECREATION AND AQUATIC CENTER PROJECT ANALYSIS CITY STAFF PRESENTING THIS ITEM: Ms. Pam Kavanaugh, Deputy City Manager; Ms. Meaghan Ellsworth, Senior Management Assistant; Mr. Warren Smith, Director of Parks and Recreation; and Mr. Richard Cardin, Jr., Parks and Recreation Central District Superintendent. OTHER PRESENTER: Mr. Pat O'Toole, consultant; and Messrs. John Saf ran and Abdul Hameed with Hameed & Associates, consultants. The Parks and Recreation Department was requesting Council approval to proceed with the design phase of the Foothills Recreation and Aquatic Center. The proposed Foothills Recreation and Aquatic Center results from over 10 years of research and planning efforts that included extensive citizen input and voter authorization for funding of this type of project. The 1985 Parks and Recreation Master Plan, the 1993 General Plan Public Facilities & Services Element Document, and the 2002 Parks and Recreation Master Plan all identified the need for increased recreation 8 and aquatic facilities within the City of Glendale. In the fall of 1999, 71% of the voters approved a special bond election proposition allowing for $57,187,800 worth of projects, including the construction of new swimming pools and indoor and outdoor multi-sport recreation centers. In 2001, the Parks and Recreation Department began a comprehensive study that included two distinct analyses. These studies occurred in succession, with a site and facility needs analysis beginning the process and a facility operations business plan concluding the study process. City of Glendale administrative practices support a business planning approach that examines current operational methods and funding mechanisms for proposed capital projects. By adopting a business planning method, staff was able to identify alternative methods of operation as part of their study results. In April of 2001, a needs analysis and site use study was commissioned for the proposed construction of a recreation and aquatic center to be located at the northwest corner of 55th Avenue and Union Hills Drive. The study included gathering public input through surveys, public meetings, and focus groups regarding: • components of the facility; • space and site requirements; • conceptual drawings for cost analysis purposes; and • conceptual use plan. The needs analysis and site use study resulted in the development of a "visual" concept of the center. This study has also allowed the Parks and Recreation Department to identify any challenges that would need to be addressed in the design phases. Some of these challenges include identification of additional parking and the alignment of program areas for operational efficiency. This conceptual study also provided the information needed to conduct a thorough business operation and revenue analysis. Due to the need to develop an operational and maintenance cost estimate specific to this facility, a business plan was developed to identify the staffing, operational, and maintenance needs; and to identify potential revenue-production of the center. Potential revenue production could include, but is not limited to, partnerships, sponsorships, concessions, and non-resident fees. The following analyses were conducted to develop this business plan: • development of an operational philosophy; • market comparison analysis; • center participants demographic analysis; • facility operation management, staffing requirements, programs and capacity, standards and performance measurements, and hours of use; • product pricing analysis; • expenses and revenue projections; and • citizen input on fee payment options. 9 The public survey conducted in the summer of 2001 provided staff with citizen direction for development of the center's revenue plan. Citizens who responded to the public survey requested payment options that used a pass mechanism, as well as the option to pay per program or class. Seventy-four percent the 718 survey respondents opted for monthly pass selections, while 57% opted for yearly passes and 60% requested to pay fees per programs or classes. The center business plan, presented by Leon Younger & Pros, provides balance of program fee options from no cost to complete cost recovery. Based upon the results of the business plan, it is estimated that between 46% to 54% of the cost to operate and maintain the center could be recuperated. The facility needs and site use study was reviewed by the Parks and Recreation Commission on June 3, 2002. The Parks and Recreation Commission approved presenting the study to the City Council. In January of 2002, the City Council approved a professional services agreement with Leon Younger and Pros to produce a business plan and a five-year financial projection for the conceptual recreation and aquatic center. In April of 2001, the City Council approved a professional services agreement with Hameed & Associates to conduct a needs analysis and site use study for the proposed construction of a recreation and aquatic center to be located at the northwest corner of 55th Avenue and Union Hills Drive. In the spring of 1999, four public meetings were conducted to receive comments on potential development of the Foothills Regional Park and the Recreation and Aquatic Center. In April of 2001, two public meetings were held at Midwestern University to present the recreation and aquatic center concept and to gather public input regarding potential uses. In the summer of 2001, 4,300 surveys were provided to the public to gather citizen direction as to the types of uses and facilities that should be planned in the recreation and aquatic center. The estimated project budget includes costs for construction and equipping the facility. Funding for the construction and equipping of recreation and aquatic center is budgeted in the Capital Improvements Program (CIP) for Fiscal Years 2001-02 through 2004-05, totaling $15,046,400. An annual staffing, operating, and maintenance budget of $1,209,800 was projected through the Capital Improvements plan process. 10 A total of 12 additional staff are projected and budgeted for the center, to be added when the center opens to the public. The funding for these positions is budgeted in Fiscal Year 2005. The recommendation was to provide direction to the Parks and Recreation Department to begin the site and facility design phase of this project. Mr. Smith reviewed the capital project history. He stated that the 2002 Parks and Recreation Master Plan identified the need for four recreation centers in the City of Glendale. He stated that they had initially budgeted $5.5 million for the 50,000 square foot Foothills Recreation Center in the second five years of the 1995-2006 CIP, but it was unfunded. He said the center and north area pool were both moved into the first five years in the 1998-2008 CIP. He said the currently adopted budget has $14,770,000, the total required for both projects. He explained that the projects would be funded by the 1999 bond election, where $126 million was approved for parks, open space, and recreational facilities. He noted that the City of Phoenix built the first multi- generational facility in 1998, with the cities of Mesa, Scottsdale, Gilbert, and Tempe building facilities thereafter. He stated that the cities of Peoria, Surprise, and Chandler have centers budgeted in their CIPs and the City of Phoenix has another facility under construction which is expected to open in January of 2003. Ms. Ellsworth discussed the public participation process. She said 102 people attended the two public meetings held in April of 2001 and gave input as to the type of amenities they would like to see in the center. She stated that they also conducted a survey, from which they received 718 responses. She said they held a teen focus group with approximately 30 teens to obtain input as to what they would like to see included in the center. She stated that they had also met with the Parks and Recreation Commission, as well as the Mayor and Council. Ms. Ellsworth reviewed the results of the public participation process. She stated that shade was the most requested amenity. She said they also identified the need for year-round swimming lessons for children, a place for teens to socialize, public eating spaces, and a public gymnasium. Mr. Safran presented his company's concept f9r the recreational center. He stated that the site is located off Union Hills Drive and 55 Avenue, in close proximity to other City amenities. He said they had tried to take advantage of the site's unique characteristics and views and the elongated nature of the site allowed them to extend the parking, making the facility more accessible. He reviewed the location of various amenities and public areas. He stated that the aquatics complex and the multi-purpose building will have their own entries, separate from the main recreation building. In response to Vice Mayor Eggleston's question, Mr. Safran stated that the multi- purpose building will be approximately 8,000 square feet. Councilmember Frate asked if the buildings were attached. Mr. Safran responded that they were. Ms. Kavanaugh noted that they had discussed moving the multi-purpose building and attaching it to the main building, to make the best use of the design. Councilmember Frate asked if the aquatics center was expected to utilize all of the parking spaces located at that end of the facility or if the parking area was placed in that location in an attempt to best utilize the space. Mr. Saf ran explained that the shape of the site and their desire to create a neighborhood friendly environment determined the facility's layout. 11 Councilmember Goulet asked if they would be able to provide more parking on the site if the multi-purpose building was moved. He stated that, although the design was remarkable, he was concerned about the additional parking south of Union Hills Drive. He asked if there was adequate parking to accommodate buses and other large vehicles. Ms. Kavanaugh stated that moving the multi-purpose building would allow them to locate more parking on the site. She said they would fence the parking lot across the street, allowing people to cross the street at the light at 55t" Avenue. She stated that a parking area currently planned along Union Hills Drive would afford 100 parking spaces and another area further down the road would allow for 85 parking spaces in the future. Mayor Scruggs said, in the past, she had not supported a public parking area south of Union Hills Drive because it makes residents in the neighborhood uncomfortable and it could be unsafe for people trying to cross Union Hills Drive. She said she could support the parking area, however, if it was reserved for staff, teachers, and City employees and access to the lot was controlled by a gate. Ms. Kavanaugh pointed out that programming and class times will control the flow of people utilizing the center and the amount of parking needed. Councilmember Martinez agreed with Mayor Scruggs concerning the parking area and suggested that they hold a neighborhood meeting for residents in the area. Councilmember Clark asked if the parking area north of Union Hills Drive could be moved further east, making room for a skateboard facility and ramadas. Mr. Smith said they would consider Councilmember Clark's suggestion. He noted, however, that the skateboard amenity is well underway. Ms. Kavanaugh reviewed the project budget. She stated that it includes estimated costs for site improvements, off-site improvements, buildings; furniture, fixtures, and equipment; data, telephone and security systems, professional services, and 1% for the arts funding. She said the budget totals $14,492,700, which falls within the CIP's projected budget of $14,842.700. She assured the Council that they would look for opportunities to reduce the costs and make the best use of the site. Mr. Cardin outlined the process they undertook in developing the business plan. He said the public input process showed that residents were interested in monthly and yearly pass opportunities and to pay for programs on a per-class basis. He defined the market area as residents living within a 12 minute drive time of the facility, from Thunderbird Road north, east to 51st Avenue and west to 83rd Avenue. He stated that they estimated the 2001 population within the market area to total 78,637, with 83% of that population being under the age of 55. He said they looked at the services offered by 18 other recreation providers, particularly those offered by the six providers located within the market area. He said the study's findings supported a public facility that provided various amenities and offered both monthly and yearly passes, as well as daily rates. He emphasized the fact that the goal was to provide everyone with access to the facility. He stated that a scholarship and/or workreation program would be offered. Mr. Cardin stated that they reviewed the conceptual drawings to analyze the operational and programming uses of the space. He said, based on the desire to be as accessible as possible, the facility would be open Mondays through Fridays, from 5:00 a.m. to 10:00 p.m., Saturdays from 6:00 a.m. to 8:00 p.m., and Sundays from 11:00 a.m. to 5:00 p.m. He noted that the facility would be closed for the Christmas and Easter holidays. He discussed the prime time and non-prime time usage schedules for each amenity. 12 Mr. Cardin stated that they had made certain facility assumptions, such as: (1) free general use areas would be open to the public; (2) everyone would have the opportunity to participate; (3) pass holders would benefit by participating in fitness related classes at no extra cost; (4) residents would receive discounted rates ranging between 20% and 50% on all passes and programs; and (5) a discounted non-prime time pass would be offered. He identified Mondays through Fridays from 9:00 a.m. to 4:00 p.m. and weekends as being non-prime times. Councilmember Frate asked if non-residents would be eligible to receive scholarships or to participate in the workreation program. Ms. Kavanaugh said the workreation program was intended primarily for Glendale youth. Mr. Smith explained that staff has developed a system to identify addresses that have a Glendale zip code but actually fall within another city's limits. Councilmember Frate asked if non-residents would be able to utilize the open areas. Mr. Smith said the open areas would be available to everyone. Councilmember Clark pointed that out other cities either do not rent to non-residents or assess a non-resident surcharge. Mr. Smith said the current plan is to offer residents 20% to 50% discounted rates. He noted, however, that they could exclude non- residents if the Council so directed. Councilmember Clark stated that City residents would resent non-residents using the facility, even for an additional fee. She said she would prefer that the facility be restricted to City residents at first. She noted that, after seeing the level of revenue recovery achieved, it could be opened to non-residents if necessary. Councilmember Martinez shared Councilmember Clark's concern that the facility be available to Glendale residents. He said, however, from a revenue standpoint, higher non-resident rates would control the number of non-residents that utilize the facility. He said they could scale back to residents only at a later date if it was found to be a problem. Ms. Kavanaugh said City of Glendale residents could be given preference when registering for classes or programs, with remaining seats sold to non-residents at a higher rate. Councilmember Clark stated that the facility would be very attractive and convenient to many non-residents. She expressed concern that it would be more difficult to restrict membership to residents only at a later date. Mayor Scruggs shared Councilmember Clark's concern about non-resident usage, particularly in terms of the aquatics facility. She said, however, she believed there should be some leeway to allow residents to bring non-resident guests. She expressed her opinion that the meeting rooms should be available for rental to non-residents, as long as residents are given preference. Councilmember Clark asked how guests would be accommodated. She agreed that residents should be allowed to bring non-resident guests. She pointed out that for-profit organizations could rent the multi-purpose facility for commercial purposes. She stated that she believed the facilities should be preserved for City of Glendale residents. Mayor Scruggs noted that the gymnasium could also be overrun with non-residents immediately after school. Vice Mayor Eggleston agreed that the facility should be preserved for residents and their guests. 13 Councilmember Clark asked Mr. Cardin if their cost recovery projections included concessionaire revenue. Mr. Cardin stated that they projected $25,000 in concession revenue annually at the recreation center and $70,000 annually at the aquatics center. Councilmember Clark asked when recreational swimming would be offered. Mr. Cardin said it would be offered from Memorial Day to Labor Day. He added, however, that there was some flexibility to expand the season in the future. He suggested that, if they extend the recreational swimming program, they open it to non-residents during non- peak times to help increase revenue. Mayor Scruggs asked if the City would provide lifeguards during adult swimming times. Mr. Cardin responded in the affirmative. Ms. Kavanaugh pointed out that they could offer swimming lessons to small children during the day throughout the year to reduce the number of lessons needed during the summer months. Councilmember Lieberman asked if they anticipated that the facility would eventually be able to pay a larger portion of its operating costs. Mr. Cardin said they expected cost recovery to stay steady once the newness of the facility wears off. He explained that they do a five-year pro-forma because most facilities add new amenities after five years in an attempt to increase public interest. Councilmember Lieberman asked how long it would be before the pool would have to be redone. Mr. Cardin said the pool would last 20 to 25 years; however, the City would not be able to wait that long to add new amenities without suffering a decline in revenue. Councilmember Lieberman asked if the City's maintenance of the pool was included in the figures. Mr. Cardin responded that it was. She said they were careful not to underestimate expenses and were conservative in terms of their revenue projections. He expressed his opinion that the 61% cost recovery projection will ultimately be higher. Councilmember Martinez asked if the plan takes into account the possibility that the City could enter into an agreement with the Deer Valley School District to pay a portion of the operational and maintenance costs. Ms. Kavanaugh replied that it does not. Councilmember Lieberman asked if the $733,395 loss would come out of the Parks and Recreation Department budget or from elsewhere. Mr. Smith stated the net loss would come from the General Fund. He pointed out that $1.2 million was set aside in the General Fund for the recreation/aquatics facility and any revenue generated would reduce the amount of the $1.2 million needed to operate the facility. Councilmember Lieberman clarified that it would not be a net loss. He explained that it will cost the Operating Budget $733,000 per year after all revenues are returned to the General Fund. Councilmember Clark asked if the cost recovery models are based on the premise that they would encourage non-resident usage. Mr. Smith said the models were based on charging non-residents 20% more than residents. He confirmed that excluding non- residents would change the revenue projections. Mayor Scruggs said the Council previously decided to initially restrict the aquatics center to residents and non-resident guests and that they would look at opening the facility to the public after gaining one year's experience. Mr. Cardin explained that the budget was based on a 20% discounted rate for residents. He noted that they could increase the discount to as much as 50%. He explained that the 10-punch passes could be used to allow residents to bring guests to the facility. As a marketing tool, he recommended that they offer residents discounted rates rather than assess a surcharge 14 to non-residents. Councilmember Lieberman pointed out that usage will determine how they deal with non-residents. Mr. Cardin agreed with Councilmember Lieberman. Vice Mayor Eggleston brought the discussion back to the facility's design. He asked if the plan could be phased in or if they would achieve a level of economy by developing the entire facility at once. Mr. Hameed said development could be done in phases; however, it would have to be planned that way. Ms. Kavanaugh pointed out that the ongoing construction necessary for phased development could interfere with parking and interrupt service at the facility. Vice Mayor Eggleston asked to see a phasing plan and information concerning the effect phasing would have on the project's cost. Councilmember Martinez said he would not like to see the project developed in phases. He stated that the business model is sound and they should proceed with the plan as presented. In response to Councilmember Frate's question, Ms. Kavanaugh said they anticipated the architect selection process to take three to four months, with nine to twelve additional months to complete the design. Councilmember Frate said he did not have a problem moving forward with the design. He agreed with Vice Mayor Eggleston that they should look at phasing construction of the facility. Councilmember Clark said a level of expectation was raised when the City approached the residents to solicit their opinions. She noted that the residents were never told the facility would be constructed in phases. She said an economy of scale will not be available if the project is phased in and she believed Vice Mayor Eggleston's suggestion was a thinly veiled attempt to kill off the multi-generational center. Mayor Scruggs said the question was whether the design could be phased to allow the aquatics center to be built should the City be unable to take on the expense of operating the entire facility. She said residents in north Glendale originally wanted a swimming pool and the City now has the opportunity to give them an aquatics center. She said the design is phenomenal, but it comes with very high expenses. She pointed out that the City's income would be decreased by $5 million annually if the food sales tax was repealed. She noted that Vice Mayor Eggleston was attempting to find a way to ensure that the aquatic center could still be built should the City not have adequate funding to build the entire facility. Councilmember Goulet said, given adequate resources, he would not want to construct the facility in phases. He pointed out, however, that the potential loss of income faced by the state due to the Rodeo and Chedeski fires would likely effect all cities. He stated that it would be wise to consider phasing the project to allow the City to continue with the aquatics center. He acknowledged phasing the project would increase its ultimate cost. He stated, however, that it could be a prudent alternative given the City's uncertain economic future. Mayor Scruggs said they could also consider moving forward with the design of the entire facility, but hold off finishing the second floor. She said the City was faced with a number of threats to its financial position, including a special census that could result in a $400,000 to $3 million per year reduction in funding. 15 Vice Mayor Eggleston clarified his position by stating that it never occurred to him not to build the aquatics center. He explained that his reason for asking about phasing the project was to protect the aquatics center should the City be unable to build the entire facility. Councilmember Lieberman said his preference would be to build the entire facility at once because the aquatics center would have to be closed for construction during other phases, resulting in lost revenue. He acknowledged that the City could lose up to $3 million in revenue. He expressed his opinion that the chance of that happening was slim. He suggested that they build the entire facility, but phase in the uses as funding allows. He pointed out the fact that the Arrowhead area is the City's biggest source of personal property tax and sales tax income. Councilmember Martinez said he supported moving forward with the design. He said, based on discussions he had with residents in the area, they would be very disappointed if the Council suddenly decided to phase the project in over time. He expressed his opinion that the multi-generational center was even more important than the aquatics center because there are no senior citizen or youth based services in the area. He stressed the importance of following through with the plans they had conveyed to the public. Mayor Scruggs stated that there was no disagreement about moving forward with the design. She clarified that some Councilmembers were interested in knowing if the design could be done in phases in the event funds were not available to operate the entire facility. She questioned why their request for options would be viewed negatively. She stated that they had three options: (1) build the entire center or nothing at all; (2) start building portions of the center that the City can afford to operate; or (3) build the entire facility, leaving the second floor as a shell. Councilmember Lieberman reiterated that he was in favor of designing the project as a whole. He said the City will know more about it's financial position by the time it has to decide how to proceed with construction of the facility. Councilmember Martinez reminded the Council that they would have to consider all items in the CIP that have an operating expense should there be a revenue shortfall. Mayor Scruggs agreed with Councilmember Martinez. Councilmember Clark stated that she was in favor of doing the entire design and building it all at once. She pointed out that they would not address the facility's operating costs for at least two fiscal years. Mayor Scruggs directed staff to proceed with the design. She stated that a majority of the Council wants it designed in such a way that the Council will have flexibility when making decisions on construction scheduling and provide the choice of building all or a portion of the project at one time, based on the City's economic position. 16 4. REVIEW OF CABLE AND TELECOMMUNICATIONS FEES CITY STAFF PRESENTING THIS ITEM: Mr. Chris Zapata, Deputy City Manager; Mr. Art Lynch, Finance Director; Mr. Robert Drake, Revenue Administrator; and Mr. Michael Bailey, Regulatory and Communications Manager. Telecommunications providers and cable providers utilize City rights-of-way to deliver their products and/or services. Currently, the rates paid by telecommunications providers and cable providers are inconsistent, even though both services are delivered through similarly situated and developed facilities. Preliminary analysis shows that, under the City's current fee structure, the City is not recovering all of the costs associated with rights-of-way usage. It appears that General Fund monies may be subsidizing the users of the City's rights-of-way. Presently, the City of Glendale has a cable provider license fee of 5% of the provider's gross revenues for the use of City rights-of-way. This license fee is in lieu of paying City sales tax. Additionally, cable companies provide other benefits to the City, such as access equipment grants and free cable service. Telecommunications providers are charged only a general sales tax of 1.8%. The most recent increase went into effect in January of 2002. Other Arizona cities have adopted telecommunications sales tax measures. The City of Phoenix has a telecommunications sales tax rate of 4.7% versus a 1.8% general sales tax rate. The City of Chandler has a 2.75% telecommunications sales tax rate versus a 1.5% general sales tax rate. The City of Tucson has a telecommunications tax of 4% versus a 2% general sales tax. An option to consider is increasing the sales tax on telecommunications providers in the amount of 5% of gross revenue. This will decrease the difference in fees and taxes to entities that utilize the same City rights-of-way facilities in the distribution of its product and/or service. No previous action has been taken on this matter. Notification of the public hearing adopting any change will be completed in compliance with Arizona State Statutes. There would be no budgetary cost to the City to implement this rate change. The estimated annual revenue is $3.1 million if the telecommunications sales tax is equalized to the cable fee of 5%. The telecommunications providers will be levied the tax. Telecommunications providers have the ability to pass on the tax to consumers of their services. The recommendation was to review increasing the telecommunications sales tax on telecommunications companies and provide staff direction on conducting further investigation on the direct City costs incurred as a result of right of way usage by the telecommunications companies. 17 Councilmember Goulet asked if they would only look at rates charged around the Valley or in other states as well. He also asked how much time it would take for them to come back with their conclusions. Mr. Lynch stated that they would primarily look within the state, but they may also look at business models used by other states. He said they would return to the Council before the end of the year. Councilmember Goulet stated that he would support staff's recommendation because it would be a good source of additional revenue. The Council unanimously agreed to proceed with staff's recommendation. In response to a question posed by Mayor Scruggs, Mr. Lynch explained that the 5% cable provider fee and telecommunication general sales taxes are passed on to the users. She asked if providers that offer both cable and telecommunications services would be charged 10%. Mr. Lynch said a provider that offers both services would be charged at the cable rate. Mr. Bailey confirmed that the charge would be capped at 5%. Mayor Scruggs asked if any legislation had been introduced concerning this issue. Mr. Bailey responded that it had not. Mayor Scruggs directed staff to review increasing the telecommunications sales tax on telecommunications companies and to conduct further investigation on the direct City costs incurred as a result of right-of-way usage by the telecommunications companies. ADJOURNMENT The meeting was adjourned at 6:00 p.m. 18