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HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 9/21/2004 * 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 September 21, 2004 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; Pam Kavanaugh, Assistant City Manager; Craig Tindall, Acting City Attorney; and Pamela Hanna, City Clerk 1. CARDINALS/ARIZONA SPORTS AND TOURISM AUTHORITY FINANCING PLAN Mr. Beasley explained Council asked at its last workshop to have certain components of the Cardinal/AZSTA financing plan brought back to Council for further discussion. He said Mr. Tindall, Acting City Attorney, has been working with the Cardinals and AZSTA on these issues. He explained later this week Council would receive revenue and expense report as well as background information on the status of the lease, which will be brought forward to a Council workshop in two to three weeks. He said there have also been new developments with regard to permit fees and Council's questions concerning the dissolution of the CFD. CITY STAFF PRESENTING THIS ITEM: Mr. Craig Tindall, Acting City Attorney. This is a request for the City Council to direct the City Manager to finalize a Memorandum of Agreement with the Cardinals and the Arizona Sports and Tourism Authority to finance stadium-related infrastructure improvements. The goal is to finalize an agreement with the Arizona Cardinals and the Arizona Sports and Tourism Authority (AZSTA) that incorporates the components provided to the City Council at the September 7, 2004 Council Workshop in relation to the Cardinals/AZSTA Alternative Funding proposal in an effort to deliver the best possible sports facility and public infrastructure to the community, the residents of Glendale, and the National Football League (NFL). On July 13, 2004, the City Council approved a resolution authorizing the City Manager to continue negotiations with the Arizona Cardinals and AZSTA concerning utilizing 1 AZSTA bonds instead of a Community Facilities District (CFD). Prior to the AZSTA/Cardinals proposal to finance the infrastructure, the CFD was put in place as the financing mechanism. Since July 13, 2004, staff has been working with the Cardinals and AZSTA to define the conceptual finance structure. Staff also continued to analyze another finance plan, the MPC, as an alternative to the plan provided to the Council in a memorandum on August 12, 2004. On August 12, 2004 the MPC method was provided as another alternative given certain unfavorable aspects of the AZSTA proposal, as originally presented. Since then, staff has continued negotiations with the Cardinals and AZSTA and presented a revised Cardinals/AZSTA finance plan to the Council at the September 7, 2004 City Council Workshop. The City and AZSTA entered into a development agreement in August of 2002 and September of 2002. Each agreement was amended in July of 2003. At the July 1, 2003 City Council Workshop, staff provided an overview of the CFD process. On July 22, 2003, the City Council adopted Resolution No. 3699 to form a CFD. On April 27, 2004, the City Council met as the CFD Board of Directors. On July 13, 2004, the Council adopted a resolution to conceptually approve an alternate AZSTA funding approach. Staff provided two alternatives to the Council at the September 7, 2004 City Council Workshop. Council directed staff to continue negotiations with the Cardinals/AZSTA on their alternative funding approach, include the advantages presented on September 7, 2004, and provide the revised agreement at a future Council workshop. Staff recently met with the Cardinals/AZSTA to review an updated version of the Memorandum of Agreement and is prepared to outline in detail to the Council changes that have recently been made in an attempt to finalize the Memorandum of Agreement. The economic benefits to the community include: • Increased sales tax revenue from future development, • Creation and retention of jobs in Glendale, • A quality commercial development, • Delivery of a state-of-the-art sports facility to the community, • Provision of needed infrastructure improvements, • Provision of a minimum 4,000-5,000 overflow parking spaces for game days, • Allow 4,000-5,000 overflow parking to also be used as youth fields for the community, • Enhanced synergy with adjacent developments, • Extension of 95th Avenue improves traffic flow for the Sports Complex, and • Minimizes neighborhood - impacts east of 91st Avenue 2 The elimination of the CFD will not impact the finances of the City. Excess excise taxes would be received by the City and used for additional services. The options considered were for the City Council to review the Cardinals/AZSTA revised alternative funding approach. The recommendation was for the City Council to direct the City Manager to finalize a Memorandum of Agreement with the Cardinals and the Arizona Sports and Tourism Authority and bring it forward to the Council for formal approval. Mr. Craig Tindall, Acting City Attorney, stated they have reached a form of agreement that is consistent with the direction City Council provided at their last workshop, although a few issues are still being negotiated. He explained the AZSTA will now issue the debt that the city was previously obligated to issue; therefore, some of the revenue sources have been shifted to pay for the debt service on the bonding issue. He said the city would continue to construct some of the roadway improvements around the stadium. He stated permitting issues are still being discussed, but both parties recognize their respective needs and are working to resolve the issues. With regard to maintaining the turf fields, Mr. Tindall said the authority rightfully pointed out that it is their responsibility to clean up and repair the fields after they have been used for an event. He noted there are no restrictions on the charges the city can impose on the use of the field for non-stadium related events. He said the timing of when the Community Facilities District might be dissolved has been discussed and the parties agree the benefit of the CFD will diminish once the bonds are issued. He stated the indemnification provisions in the earlier agreement have been restructured and reworded in a manner that is now consistent with standard bond related documents. Councilmember Martinez asked if Council is being asked to give direction to proceed with the final agreement. Mr. Tindall responded yes. Councilmember Martinez pointed out some issues has not yet been resolved. Mr. Tindall agreed; stating, however, the proposed agreement is very close to final form. Councilmember Martinez asked if the agreement would be brought back to Council once it has been finalized. Mr. Beasley said most of the issues have been addressed and the agreement is consistent with the direction given by Council at its last meeting. He stated the two remaining issues relate to the amount and timing of the permit fees and dissolution of the CFD. He said staff would like to place the item on the Council's September 28 agenda. Councilmember Martinez noted there is no Exhibit B in his copy of the agreement. Mr. Tindall explained the exhibits are still being prepared. Mayor Scruggs asked Mr. Tindall if he is comfortable with the language of the agreement in regards to the permit fees and CFD resolution. She asked Mr. Tindall to explain the permit fee and CFD issues. She said the agreement requires the city to put in an order for the City Council to approve a resolution calling for the resolution of the City of Glendale CFD No. 1. Mr. Tindall explained the agreement no longer includes a contingent resolution to dissolve the CFD; stating the resolution to dissolve will be put forth when the proper time comes, once the bonds have been sold. Mayor Scruggs pointed out Council's direction at its last workshop was for staff to develop language that would alleviate any concerns the Cardinals or AZSTA might have about the CFD imposing a property tax while still protecting the city's rights. She said the proposed Memorandum of Agreement mandates the city enter into a resolution ordering the CFD Board of Directors to dissolve at a certain time. She asked if that language would be 3 deleted. Mr. Tindall said the language has already been removed. Mayor Scruggs asked where they stand on the permitting fee issue. Mr. Beasley explained the fees would equate to approximately $500,000 more than originally estimated because of changes in project schedules and attempts to meet the construction schedule. He said the amount is no longer an issue, but how and when the fees will be paid are still under discussion. He stated, while the parties agree the project needs to move forward quickly, it is also acknowledged that the city should be made whole in the process. Councilmember Lieberman pointed out the agreement calls for the city to be responsible for any additional costs and expenses associated with permitting for the facility. He asked if staff is confident that the city will not be burdened with any other additional costs or expenses, beyond the $500,000 already mentioned. Mr. Tindall explained $1,195,785 is the amount needed for the standard processes currently underway. He said an additional amount has to be made available for overtime with shift differential. He stated the AZSTA has agreed to make this additional amount available. Councilmember Lieberman stated he is not comfortable voting on the final agreement at the Council's next regular meeting if a lot of changes will have been made. Mr. Tindall stated the substance of the agreement would remain the same. Councilmember Lieberman asked if the language concerning additional costs and expenses associated with overtime, shift labor or other acceleration constituting a cost being borne solely by the city would remain in the agreement. Mr. Beasley responded no, explaining the parties have agreed to pay $500,000 for additional costs should overtime be expended. He said the only remaining issue is when that will be paid, at Certificate of Occupancy or as the work is dispensed. Councilmember Lieberman asked how soon Council could get a copy of the final agreement, stating he will not approve the final document until he has had a chance to review it. Mr. Tindall said staff would do what it can to provide a copy of the final agreement to Council by Thursday. He stated the proposed agreement addresses only specific provisions of the original agreement. Councilmember Lieberman asked that the final agreement make reference to the original contract agreement, noting there is nothing in the agreement that indicates how the city will get paid for their share except in terms of an audience level of over 42,000 and over 40 years. Mayor Scruggs asked if the original agreement ever called for the city to be reimbursed for its costs. Mr. Lynch clarified the city's costs of infrastructure were never to be repaid. He said the original agreement had proceeds generated by the stadium paying off the CFD bonds, but under the new agreement, those funds will be used to repay the bonds being issued by the AZSTA. Councilmember Lieberman asked about the $4.2 million included in the first agreement. Mr. Lynch explained the city was only to be reimbursed if there were direct payments to the Cardinals or to the City from the Cardinals. Mayor Scruggs asked if Councilmember Lieberman is referring to the original agreement or the July 2003 amendment to that agreement. Mr. Lynch stated he is referring to the July 2003 amendment. He explained the contributions of the sums required to be contributed originally assumed the city was selling the bonds. He said the city is no longer selling the bonds so, while the $4.2 million still goes into the project, it is no longer a contribution through the city's bond sale. 4 Councilmember Lieberman asked who controls how the $4.2 million will be used. Mr. Lynch said a number of components of city infrastructure are being built, with some being funded through the city's CIP contribution and others being funded through the AZSTA bonds. He clarified the monies referenced in Section 2.3 will be used to meet the city's infrastructure costs, but will not come to the city directly as city funds. Mayor Scruggs asked for confirmation that the language on Page 3 of the agreement that reads, `Additional costs and expenses associated with such overtime or shift labor or other acceleration shall constitute a cost to be borne solely by the city and not by the Cardinals or the Authority" is going to be deleted. Mr. Beasley stated the language will either be amended or deleted, but it will be made clear that there will be an additional $500,000 for the purpose of overtime and shift differential. Mayor Scruggs asked if the city is responsible for any additional costs that exceed the $500,000. Mr. Beasley responded yes; stating, however, staff has estimated the overtime costs to be $300,000 to $500,000. Councilmember Clark asked if $500,000 could be stated as a cap. Mr. Beasley answered yes, stating he does not believe the Cardinals or AZSTA want to exceed $500,000. Mayor Scruggs pointed out the city put over $2 million into the budget for additional inspectors, engineers, planners and so forth. Mr. Horatio Skeete, Deputy City Manager, said he has reviewed the estimate and believes $500,000 will be sufficient to cover the overtime costs associated with the rest of the project. Councilmember Martinez said, based on the experience to date, have inspectors been able to keep up with the schedule. Mr. Skeete said they are being adequately served with a six day per week schedule; however, they will evaluate the schedule to ensure it is efficient given the number of inspections being conducted. Mayor Scruggs referred to Page 8 Section 3.3, confirming the Council can expect new language that no longer mandates the City Council to pass a resolution requiring the CFD Board to dissolve. Mr. Tindall agreed, stating the language will call for the CFD's dissolution at the appropriate time. Mr. Tindall confirmed for Mayor Scruggs there would be additional language on Page 14 of the document that refers to the $500,000. Councilmember Lieberman referenced Page 12, stating he thought the number of overflow parking spaces was going to be reduced to 4,000. Mr. Tindall noted Section 4.1B states the overflow parking requirement will be reduced to 5,000 spaces if the city provides 1 ,500 spaces in the youth sports fields. Councilmember Lieberman asked if the city or AZSTA would pay to maintain the sports fields. Mr. Tindall said the AZSTA would provide a maximum of $1 million to be used toward the sports fields. Mayor Scruggs pointed out advertising is not permitted on the sports fields, asking if the sponsors of amateur or youth teams will be allowed to display banners. Mr. Tindall said the city and the AZSTA are discussing allowing temporary advertising. Mayor Scruggs asked if there would ever be situations where events will be held concurrently at the sports fields and the stadium. Mr. Tindall responded no. In response to Councilmember Lieberman's question, Mr. Beasley explained garage space that becomes available as the property develops could be used for overflow parking purposes. 5 Councilmember Clark referred to Page 9 Section 3.6, stating the Council directed staff to ensure the city was not placed in the position of guaranteeing or assuring the AZSTA bonds. Mr. Tindall explained Section 3.6 does not state the city will be securing payment, but that the city will participate in the preliminary official statement that describes the bond and the security. Councilmember Clark asked what is in first position in terms of securing the bonds. Mr. Art Lynch, Chief Financial Officer, clarified Section 3.6 refers to disclosures to the marketplace. He said the guarantee issue is covered under IV on Page 5, which states the completion bonds shall be the pledge of and payment of the AZSTA and the city's pledged stadium excise taxes. Councilmember Clark asked what funding source the AZSTA is relying upon to repay the bonds. Mr. Lynch said they are relying on a mix of funding sources, but the bonds will be Senior Bonds backed by state revenues coming to the AZSTA. Councilmember Clark asked what funding source takes second position for the bonds. Mr. Lynch said the financial structure calls for revenue streams generated by the stadium to be used first, with the city's excise taxes taking the second position. Councilmember Clark reiterated the Council does not want to be responsible for the bonds. She asked if the AZSTA would still have the authority to issue the bonds if the city did not participate. Mr. Lynch said, in his opinion, they could. Councilmember Lieberman noted ADOT is responsible for the DCR approval cost for the 59th Avenue overpass, asking if that means ADOT will be paying for the overpass. Mr. Skeete clarified DCR stands for Design Concept Report. He said the city is responsible for construction of the Maryland overpass and funding has been secured through MAG and ADOT. He stated, however, the city will likely have to front the money to accelerate the overpass because the ADOT funding schedule does not show the project until 2007/2008. Councilmember Lieberman asked if the city will have to front any monies to accelerate the Bethany Home project. Mr. Skeete said the city will have to contribute any interest costs that might be incurred to accelerate the project. Councilmember Lieberman pointed out the Cardinals have agreed to pay for the bridge over the drainage canal, Mr. Skeete said the Cardinals have taken responsibility for constructing the project, but the city is still responsible for financing the project. Councilmember Martinez asked if staff looked at lowering the 42,000 attendance level. Mayor Scruggs responded no, stating the Council did not reach consensus on that issue. Mayor Scruggs referenced Section 3.4, suggesting they modify the new language to read, "...the Authority shall use the city pledged stadium taxes solely for...". Mr. Beasley offered to take her suggestion to the AZSTA. Vice Mayor Eggleston asked if the pledge of the stadium taxes is subject to a time limit. Mr. Tindall explained the pledge is for 30 years, at which time the pledge is renewable. Mayor Scruggs referred to Page 13, noting Availability of Overflow Spaces references attendance levels in excess of 40,000 but Section 4.2D references levels in excess of 30,000. Mr. Tindall said Section 4.2D applies to mega events whereas 4.2B pertains to times when it is anticipated the arena spaces will be needed because of a conflict. Mayor Scruggs asked how they would determine the dates by which they are supposed to have all of the agreements in writing. Mr. Tindall said they anticipate the date to be October 15. 6 Mr. Beasley noted the arena and Ellman companies have sent a letter acknowledging that they are working with the city in regards to the overflow-parking situation. In response to Mayor Scruggs' question, Mr. Tindall explained the party responsible for any construction delays with regard to the 9& Avenue improvements would be responsible for paying the costs associated with those delays. Mayor Scruggs asked if city sales taxes that come from future private commercial development on the parking area land become city pledged stadium taxes. Mr. Tindall confirmed the sales taxes associated with private development would be excluded from the pledged stadium taxes. Mayor Scruggs asked what happens if the AZSTA develops the property. Mr. Lynch clarified the land is owned by B&B Holdings or the Cardinals; therefore, the property would be subject to taxes if developed. Mr. Tindall offered to verify the AZSTA's understanding of this matter. Mayor Scruggs asked for clarification of the language in Section 1.8. Mr. Beasley explained extension of 93`d Avenue to the south is not essential at this time and extending it would result in an unnecessary cost to the city. He said the Cardinals want a 300-foot buffer if the road is ultimately extended. Mr. Tindall offered to clarify the language. Councilmember Martinez asked if the new language added to Section 2.6 is standard. Mr. Tindall explained the provision asks the parties to discuss what costs need to be reimbursed. He pointed out the provision is no longer necessary and may be removed as it is in the interest of both parties for those discussions to occur. Councilmember Frate asked that any new provisions or changes to the final document be highlighted. 2. ANNEXATION REQUEST AN-155: JOINT TRAINING FACILITY AND MATERIALS RECOVERY FACILITY CITY STAFF PRESENTING THIS ITEM: Mr. Jon Froke, Planning Director and Ms. Kate Langford, Senior Planner This is a request for the City Council to discuss annexation request AN-155 for 158.9 acres located west of 115th Avenue between Glendale and Northern Avenues. This site is the future location of the Joint Training Facility and existing Materials Recovery Facility (MRF). This request is being presented to the Council in accordance with the procedures outlined in the City's Annexation Policy for undeveloped properties. Glendale 2025, the City's General Plan, includes specific goals addressing the need for growth management. Annexation is a tool that can be used by the City to direct and manage growth. On December 16, 2003, the Council adopted Glendale's first Annexation Policy. 7 The Policy includes a step that incorporates presentation of annexation requests to the Council at a workshop after an analysis of the request has been completed by staff. That is the purpose of this workshop item. The City owns the entire 158.9-acre site. The MRF is located on the north 79.9-acres. The future Public Safety Multi-use Training Facility is to be developed on the southern 79-acres which are vacant. This is the first annexation request located west of 115th Avenue that has been presented to the Council for consideration since the adoption of the Annexation Policy. This is a rather unique situation since both parcels are City-owned properties. The City has owned the MRF site since 1991 and the Training Facility site since 1999. The Glendale General Plan identifies these parcels as Heavy Industrial. The existing Maricopa County zoning for these parcels is R-43 (Rural — 43, one acre minimum lot size.) State law requires that an annexing jurisdiction apply the most comparable city-zoning district to a newly annexed property compared to the existing county zoning. The most comparable Glendale zoning district is A-1 , Agriculture. The annexation analysis of this site indicates that there are no immediate impacts to the City. The MRF facility's operation is an existing City recycling operation that is currently reflected in the City's budget. The Training Facility was identified as a future project in the 1999 general obligation bond package. Costs for master planning the site, design, and construction will be paid for by bond proceeds. Revenue generation potential of the site to cover operation and maintenance will be investigated as part of the master planning process. The next step in the process, if the Council directs staff to proceed with the annexation, is to record the blank annexation petition and schedule the public hearing as required by Statute. The annexation of this 158.9-acre area would require that any future development of this area meet the Glendale General Plan requirements, as well as all other development standards for the City of Glendale. Staff is seeking direction from the Council to continue with the annexation process for this site in accordance with the procedure described in the State Statutes. Councilmember Frate asked what is the distance of frontage along Glendale Avenue. Ms. Langford said the frontage is approximately 1,400 feet wide. Councilmember Frate asked if the city anticipates using the frontage for commercial development. Ms. Langford said a large 35-foot deep depression from old sand and gravel operation takes up the southern 80 acres. She stated mitigation measures would have to be taken to bring the area out of the flood plain. She said she would not venture a guess 8 at future development since the master plan for the joint training facility has not yet been completed. Councilmember Goulet asked if the north side of Glendale Avenue would have the same landscaping requirements that the landfill has for design. Ms. Langford assured Councilmember Goulet their intent is to have landscaping that is comparable to the landfill's landscaping. She pointed out the agreement also calls for improvements along Northern Avenue. Councilmember Lieberman stated he supports the annexation. Vice Mayor Eggleston directed staff to continue with the annexation process. 3. FISCAL YEAR 2003-2004 YEAR END REPORT ON THE GENERAL FUND CITY STAFF PRESENTING THIS ITEM: Ms. Sherry Schurhammer, Budget Director This is a request for the City Council to review the Fiscal Year (FY) 2003-04 year-end report on General Fund (GF) expenditures and revenues. The FY03-04 third quarter report on the General Fund is consistent with the Council's goal of ensuring the City's financial stability through timely reviews of actual expenditures and revenues. In response to requests from the Council, staff committed to providing quarterly reports on the General Fund. The numbers presented in this report represent preliminary results because the annual audit had not been completed at the time of this report. It is possible the results could change once the annual audit is completed. However, staff does not anticipate any substantive changes to occur as a result of the annual audit. The GF's year-end revenue budget and actuals are as follows (in 000s): FY04 Budget FY04 Actuals City Sales Tax $ 44,163 $ 49,766 State Income Tax $ 19,749 $ 19,730 State Sales Tax $ 17,311 $ 18,409 State In-Lieu $ 8,026 $ 8,866 HURF $ 15,155 $ 15,174 Primary Property Tax $ 3,491 $ 3,480 All Other $ 26,818 $ 30,559 TOTAL $134,713 $145,984 As the preceding list shows, FY03-04 year-end GF revenues were $11.3M ($11,272,000) or 8.4% more than was expected. 9 The additional $11.3M collected in FY03-04 is almost entirely attributable to 3 sources of revenue: o City sales tax actuals are 12.7%, or $5.6M ($5,603,000), higher than expected for FY03-04, a remarkable showing for this critical source of on- going GF revenue for the GF; o State sales tax actuals, another on-going GF revenue source, are 6.3%, or $1.1M ($1,098,000), higher than expected for FY03-04; and o The sale of parcels at the Northern Crossing development, a source of one-time revenue for the GF, totaled almost $7.3M ($7,270,000), or almost $4.3M ($4,270,000) more than expected for FY03-04. This growth in City sales tax is remarkable when compared to the expectations that were prevalent at the time the FY03-04 budget was created in the spring of 2003. At that time, the City's economic outlook for FY03-04 was pessimistic. However, the turnaround in City sales tax revenues that was experienced during the 4th quarter of FY02-03 has continued through all 12 months of FY03-04, although growth has moderated somewhat over the fast 6 months of the fiscal year. City sales tax collections attributable to several specific retail developments that opened during FY03-04 came in at just under $4.1M ($4,087,000). This amount is 54%, or $1.4M ($1,433,000), more than expected from the new retail developments. City sales tax collections attributable to the telecommunications rate adjustment came in at almost $3.2M ($3,167,000) for the FY, or 16% more than expected. City sales tax collections attributable to the elimination of the rental housing tax exemption totaled $310,000 for the FY, which is $8,000 more than expected. The FY03-04 year-end budget and actuals for the GF operating and pay-as-you-go (PAYGO) capital expenditures are as follows (in 000s): FY04 Budget FY04 Actuals GF Salaries/Benefits $ 82,689 $ 79,130 GF Non-Personnel $ 32,708 $ 31,241 GF Debt Service $ 2,380 $ 2,484 PAYGO $ 4,799 $ 4,067 TOTAL $122,576 $116,922 Salary savings for the FY03-04 totaled almost $3.6M ($3,559,000), or more than three times than the $1.1M goal that was established when the FY03-04 budget was created during the spring of 2003. 10 Overall, the FY03-04 year-end GF expenditures were almost $5.7M ($5,654,000) less than budget. At the end of FY03-04, the budget-basis GF fund balance is just over $54M ($54,023,000), which is $22.4M ($22,423,000) more than the budget-basis GF fund balance at the start of FY03-04. The FY03-04 3rd quarter report was presented to the City Council on June 1, 2004. The FY03-04 2nd quarter report was presented to the City Council on February 17, 2004. The FY03-04 1s` quarter report was presented to the City Council on November 18, 2003. The FY02-03 year-end report was presented to the City Council on September 16, 2003. The community benefits from periodic reports to the City Council on the General Fund's revenues and expenditures because it is a means to evaluate the City's financial stability. This is a status report on the General Fund for all 12 months of FY03-04. No Council action is required on this report. Ms. Schurhammer stated in summer 2003 Council requested periodic status reports on General Fund revenues and expenditures. She said the first quarterly report was presented in November 2003, the second quarter report followed in February 2004, and the third quarter report was presented in June 2004. She said today's report represents the year-end report, covering the General Fund for the period July 2003 through June 2004. She noted the results are preliminary because they have not yet been audited. Ms. Schurhammer reviewed a comparison of the budget versus actual revenues, noting actuals came in $11.3 million or 8.4% above budget. She said the additional revenue is a result of a boost in both ongoing and one-time revenue sources. On the ongoing side, she explained robust city and state sales tax collections accounted for $6.7 million of the increase, noting city sales taxes alone came in 13% higher than expected. With regard to one-time revenues, Ms. Schurhammer reported the sale of parcels at the Northern Crossing development brought in $4.3 million more than anticipated. She said state income tax, HURF, and primary property tax revenues came in close to expectations, while motor vehicle in-lieu revenues exceeded expectations by $840,000 or 10.5%. She stated that the all other revenue category exceeded budget by $3.7 million or almost 14%. One component of the all other category is revenue from development permits and fees; these sources exceeded budget by 8.7% or almost $449,000. Councilmember Clark asked Ms. Schurhammer for an explanation of "charge-backs." 11 Ms. Schurhammer explained charge-backs represent revenue from the Enterprise Funds to the General Fund for services provided by General Fund departments. The services provided include billing customers, payroll, legal, financial, and recruitment and hiring work. These are services that the enterprise fund operations would have to pay a private company to provide if they were not provided by other City departments. Councilmember Clark asked if the higher than anticipated city sales tax figures reflect the transportation sales tax of 1/2 cent. Ms. Schurhammer responded no, explaining the half-cent sales tax for transportation is segregated into a separate fund. Vice Mayor Eggleston asked if the $7.2 million related to the sale of Northern Crossing parcels would go toward paying off the city's obligation for purchasing the property. Mr. Lynch said revenue from some of the pads and parcels will go toward paying the amount the city borrowed to start the project. He emphasized the project is running ahead of schedule and the city is very close to having enough money to reimburse itself for the land costs. In response to Mayor Scruggs' question, Mr. Lynch stated Council's direction through the last budget process was to use the proceeds from the sale of parcels at the Northern Crossing development to make the scheduled debt service payments on the loan obtained for the purchase of the parcel and other related costs. Mr. Lynch further clarified his statement by stating that revenues from the sale of parcels are being used to make the scheduled debt service payments, but are not being used to pay off the debt early. He said, however, as revenues accumulate, Council could direct staff to pay down or pay off the principal. Councilmember Martinez asked if the city would make a profit on the remaining pads. Mr. Lynch said he is optimistic the city will make a profit, stating the sale of the pads and the sales tax generated from those uses should put the city well ahead of what it paid for the land. Councilmember Martinez asked Ms. Schurhammer if the sales taxes for Northern Crossings are included in her sales tax figures. Ms. Schurhammer explained the sales tax revenue from Northern Crossings is reflected in the FY03-04 year-end numbers. Councilmember Lieberman noted the city has invested almost $16 million in the project. Mr. Lynch clarified the money that comes to the city is from the sale of the property, not construction. He confirmed the money for Wal-Mart's holdback has been netted out of the $7.2 million. Mayor Scruggs pointed out the Council set out not necessarily to make a profit, but to revitalize the area. Councilmember Frate noted Northern Crossings was one of the largest redevelopment projects in the state. Ms. Schurhammer continued her presentation, reviewing a year-to-year comparison of city sales tax receipts, stating FY03-04 receipts increased almost $6.3 million over FY02-03 actuals. She attributed part of the increase to the improved economy, as well as to new retail development, the telecom rate adjustment and the elimination of the rental housing tax exemption. Councilmember Lieberman pointed out the city saw an increase in sale tax revenue, despite the loss of auto dealerships along Glendale Avenue. 12 Ms. Schurhammer said state shared revenue was approximately $1.9 million higher than expected in FY03-04. However, FY03-04 state-shared revenue actuals were actually less when compared to FY02-03 receipts. She explained the decline from FY02-03 was the result of lower income tax receipts, noting the city expected and planned for the decline. She stated a comparison of budgeted versus actual expenditures shows an expenditure savings of over $5.6 million. She explained staff achieved the city's salary savings goal of $1.1 million by the end of the first quarter, allowing for $3.6 million in salary savings by the end of the year. Ms. Schurhammer concluded her presentation, stating the General Fund fund balance, on a budget basis, grew by more than $20 million during FY 2003/04, having a beginning balance of $31.6 million and an ending fund balance of $54 million. Councilmember Clark asked if the $54 million is unappropriated. Ms. Schurhammer explained the General Fund contingency appropriation for FY 2004/05 of just under $16.5 million is included in the $54 million. Vice Mayor Eggleston said Ms. Schurhammer's report testifies to the fact the city is a very lean but strong organization. Mayor Scruggs said the city has experienced very exciting times during the past three years. She thanked everyone involved in the management of the city's finances and employees who made sacrifices along the way. She said for the city to be in its present financial situation after one of the worst financial times in recent memory is nothing short of remarkable. ADJOURNMENT The meeting was adjourned at 3:40 p.m. 13