HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 4/7/2009 (7) *PLEASE NOTE: Since the Glendale City Council does not take formal action at the
Workshops,Workshop minutes are not approved by the City Council.
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GLEN
Minutes of the
GLENDALE CITY COUNCIL WORKSHOP SESSION
Council Chambers—Workshop Room
5850 West Glendale Avenue
April 07, 2009
1:30 p.m.
PRESENT: Mayor Elaine M. Scruggs, Vice Mayor Manuel D. Martinez, and
Councilmembers Joyce V. Clark, Steven E. Frate, David M. Goulet,
Yvonne J. Knaack, and H. Phillip Lieberman
ALSO PRESENT: Ed Beasley, City Manager; Pam Kavanaugh, Assistant City Manager;
Craig Tindall, City Attorney; and Pamela Hanna, City Clerk
WORKSHOP SESSION
1. FY 2009-10 BUDGET—3RD WORKSHOP
CITY STAFF PRESENTING THIS ITEM: Horatio Skeete, Deputy City Manager for
Administrative Services; Sherry Schurhammer, Management and Budget Director; Alma
Carmicle,Human Resources Director;Ken Reedy, Deputy City Manager
This is a request for City Council to review the material to be presented regarding employee
matters and to provide guidance on the recommended FY 2009-10 operating budget, the
proposed FY 2010-19 Capital Improvement Plan (CIP), and the rate recommendations for the
water, sewer, sanitation, and landfill enterprise funds.
This item incorporates the Council's Strategic Goals while ensuring the city's financial stability
by presenting realistic analyses about the provision of city services and future revenue
expectations.
The Mayor and Council's Strategic Goals continue to serve as the foundation for the
recommended budget even as we manage operations through the economic downturn.
The material concerning employee matters will be presented at the April 7, 2009, workshop. No
materials related to this matter are included in the Budget Workbook.
The second budget workshop occurred on March 31, 2009. The recommended 10-year CIP and
enterprise fund rate recommendations were presented and discussed.
The first budget workshop occurred on March 24, 2009. The recommended operating budget for
FY10 was presented and discussed.
The Budget Workbook containing the City Manager's recommended budget for FY 2009-10 was
delivered to the Mayor and Council on Friday, March 13, 2009. A copy of the FY2009-10 City
Manager's recommended budget is also available on the city's website, glendaleaz.com.
Glendale's budget is an important financial, planning and public communication tool. It gives
residents and businesses a clear and concrete view of the city's direction for public services,
operations and capital facilities and equipment. It also provides the community with a better
understanding of the city's ongoing needs for stable revenue sources to fund public services,
ongoing operations and capital facilities and equipment.
The budget provides Council, residents and businesses with a means to evaluate the city's
financial stability.
All budget workshops are open to the public and are posted publicly per state requirements.
The Budget Workbook provided to Council also is posted publicly as part of the budget
workshop agenda packet.
Staff is requesting guidance on the recommended operating and capital budgets and the rate
recommendations for the water, sewer, sanitation and landfill enterprise funds.
Mayor Scruggs asked for an explanation of the city's sworn police officers 6.5 days of deferred
holiday pay. Ms. Alma Carmicle responded by describing the difference between the current
process and the new process which will mean that police officers will be contributing 6.5 days of
holiday pay to the city's cost savings. She explained that the sworn fire fighters are deferring
their uniform allowance for a year and deferring their deferred compensation to the 457 Plan for
one year.
Councilmember Lieberman asked for clarification on figures shown on tables five and six. He
indicated he was somewhat confused on how they pay for the debt. Mr. Lynch stated this was
the general fund budget and the debt service funds were all handled and budgeted separately. He
clarified the figure Councilmember Lieberman was inquiring about was a grant that was returned
as shown on table five, line 10.
Councilmember Lieberman inquired as to the $4.4 million for the arena and the shortfall. Ms.
Schurhammer explained that the arena was indeed a shortfall, as shown in table five, line 11 as
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was included in the budget balancing for next year. She added they will be showing the details
behind those transfers when they produce the preliminary budget book.
Mayor Scruggs asked if the total $5,038,767 was not only for the arena, but for other transfers as
well. Ms. Schurhammer stated she was correct. Mayor Scruggs asked for Ms. Schurhammer to
clarify it for the public. She added in the future, she would prefer they receive this type of
information in advance. Ms. Schurhammer indicated that $4.9 million was related to the debt
service for the arena and Zanjero. She noted that $100,000 was related to the Civic Center
maintenance reserve.
Mayor Scruggs inquired as to the repayment of the money from ADOT for Camelback Ranch.
She asked how many years of payments were involved. Mr. Skeete stated it was a five year
payment of $700,000 with the last three years at $702,858.23. Ms. Schurhammer noted this
information was in their Budget Workbook.
Councilmember Lieberman asked if staff had put away any funding for Super Bowl 2013, should
it come to Glendale. Mr. Beasley stated at this point, they had not set aside any money since the
event was three years out. He added they still needed to see what the funding source would be
with the host committee and any alternative funding sources. Councilmember Lieberman
commented there had been a possibility the state would help with funding; however, does not
believe it was now the case because of the economy.
Ms. Carmicle provided a summary of staff's recommendation pertaining to the Total
Compensation for Employees. She stated their recommendation was that the merit and market
adjustments be deferred. She added there will be no increases to health benefits and life
insurance plans. She explained the furlough program came about from innovative•ideas and
suggestions from employees that would result in cost savings. She indicated this was a voluntary
program sent out to employees in a form of a campaign. She stated the campaign was successful
and realized a savings of $550,000. She explained the Mayor and members of the Council, as
well as members of staff on all levels participated. She stated it was realized that a mandatory
furlough might be need in 2009/10 and staff projected a 13 day furlough program. The 13 days
was part of the formula used to project the savings of $3.5 million. She explained that if it
became apparent that the full 13 days was not needed, the employees would not continue to take
any more days. Over the last week, staff has conducted four focus groups with employees who
have provided staff with a lot of ideas and comments.
Ms. Carmicle commented on the sick and vacation pay for furlough employees. She stated staff
still believes it was not a good business decision to allow employees to accrue vacation and sick
pay when not working. However, the City Manager has allowed staff to temporarily raise the
vacation accrual rate so there will be no impact to vacation and sick pay accrual. She added that
retirement will not affect years of service in terms of computation. In regards to part-time
employees, staff will insure they will not drop below the ASRS eligibility due to the furlough.
Councilmember Clark asked if there was a roll-back provision in the raise accrual for vacation
and sick pay rate once furloughs are no longer needed. Ms. Carmicle stated yes.
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Vice Mayor Martinez asked about provisions pertaining to elected official's retirement. Ms.
Carmicle stated they were not asking elected officials to participate in the mandatory furlough.
Vice Mayor Martinez inquired why they were not asking any of the Councilmembers. Mr.
Tindall interjected stating elected official's pay cannot be reduced during their term; however,
Councilmembers can volunteer to do so. Mayor Scruggs explained the City of Mesa had come
up with a program enabling their elected officials, if they so chose, to write a check back to the
city for the reduction since their pay could not be reduced. She added that she wondered if a
process like that could work here with the furlough and elected official's pay. She said she
would like to see it on the table for consideration. Mr. Tindall said staff could look into it.
Councilmember Lieberman commented that the Arizona State Retirement System (ASRS) for
elected officials had lost millions in the last 2 'A years with no way of making it up in the near
future.
Ms. Carmicle addressed the retirement contribution questions. She explained they did have
increases in the contribution rates for both the city and employees on the ASRS side. She noted
on the Public Safety Retirement System (PSPRS) side, they had a decrease in the contribution
rates for the city only. She added that the PSPRS decisions were through the legislature. Mayor
Scruggs commented that Fire does not pay into the social security system, but police does.
Mayor Scruggs commented that she thought it was great how staff had come up with the
modifications regarding sick and vacation time for furlough employees because everyone was
suffering enough these days. Ms. Carmicle explained this temporary change will affect
everyone, including Police and Fire.
Ms. Carmicle reviewed the health care benefits and stated there had been no premium increases
due to a multiyear agreement with rates negotiated in 2008. She noted the co-pays will also
remain intact for fiscal year 2009/10. She added there were some minor changes in benefits that
had been mailed to employees; however, all were positive for the employees and the health plan.
Ms. Schurhammer presented a slide summarizing budget discussions to date and asked for any
questions.
Councilmember Knaack asked to comment on the courthouse building. She explained that after
deliberating about it, she cannot see how the city cannot build it. She stated the courthouse was
their ultimate priority, not only because it was needed, but because it has taken on a bigger
picture with the Centerline revitalization project. She recommends moving forward with the
courthouse, even at a minimal level, under the current property tax. She noted she had been
contacted by several developers and property owners and at the moment, their plans have been
stopped and in jeopardy because of the current situation with the courthouse.
Councilmember Goulet agreed with Councilmember Knaack's remarks and said he had
addressed the significance of this issue at the last meeting. He discussed the possibility of losing
future partnerships and jeopardizing relationships with property owners and developers. He
explained he had also heard from property owners and developers on concerns that the
courthouse might be stopped. He noted staff had worked very hard to create a balanced budget;
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however, he still believes they can find a way to keep the much needed courthouse moving
forward for the community and its development.
Councilmember Lieberman also agreed with both Councilmembers on this issue. He explained
that the key element for the redevelopment of the Centerline project was the building of the
courthouse. He discussed how the community was engaged in the cornerstone of this
development, which was the courthouse. He added if there was ever a project that needed to be
continued, even at a somewhat slower rate, they needed to find a way. He noted the city would
disappoint many businesses, property owners, as well as many citizens who had made plans for
the downtown area. He also mentioned he had heard talk about lawsuits and he hopes that was
not the case. He noted he absolutely believes it was of much importance that the City of
Glendale continues developing and working on the construction and the development of the
courthouse. He added there were enough people currently working in the court system to
provide staff for the new court building. He pointed out they were not adding a new facility, but
simply replacing an existing facility with a more modern, efficient one.
Vice Mayor Martinez stated he certainly agrees with what has been said thus far. However, as
was stated and clarified at last week's meeting, staff had indicated that the courthouse could not
be built without raising the secondary property sales tax 21 Y2 cents. He explained Council had
been opposed to increasing rates; therefore, he would also like to find a way to build the
courthouse because of its significance to the Centerline project, as well as the Glendale
community. He noted he believed at last week's meeting, it was explained that staff had looked
at all options and had found no recourse other than raising taxes.
Councilmember Frate stated he does support moving ahead with the courthouse, but does not
support raising taxes to do it. He would like to find another way to possibly tell the public the
city will find a way to continue the project at a slower rate and it was not dead in the water. He
asked staff to possibly find a way and think outside the box. He explained it was exciting to see
the property owners with renewed excitement about the projects that had been planned along
Glendale Avenue. He indicated he would like that excitement to continue.
Councilmember Clark remarked on the discussion today regarding the courthouse. She
explained that people could now identify with her plight in the delay in construction of the west
branch library. She agreed with Vice Mayor Martinez's comments that staff had come back in
the last meeting with having to increase taxes if the courthouse is to be built. However, the
Council did not support that idea. She noted most development and construction financing has
dried up and unless that market moves, they will not be seeing any kind of development along
Glendale Avenue until the economy changes. She indicated it was all tied together in terms of
the economic conditions today. She added that as much as they all would like to see the
courthouse built, unless they raise the secondary property tax rate, she does not see that as a
viable option at the moment.
Mayor Scruggs commented on the huge disappointment she felt after last week's meeting
when they discussed the possibility of delaying construction of the new courthouse. She
remarked on Councilmember Goulet's comment that not building the courthouse would have far
more implications than just a building being delayed. She explained it had caused quite a stir in
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the community. She noted that on the one hand, it was a good predictor that the business
community was excited about the Glendale Corridor and its redevelopment, with the catalyst
being the courthouse. She stated the new information which was not discussed last week, was
the cost of not moving forward with the building. She apologized for not realizing that sooner.
Mayor Scruggs explained the only solution provided was the 21 '1 cent increase, which the
Council could not support. She remarked she had gone back through minutes and staffs
communications pertaining to the increase in assessed valuation and the windfall the city had
received. She noted she had been assured staff was not building a budget on that windfall, but
rather on the same 5% normal increase in assessed valuation the city was used to over the years.
She questioned why they were in so much trouble now, when the assessed valuation had only
dropped off what it had increased in the first place. She explained the bottom line was that they
needed to find the money to go at a slower pace, but not delay the courthouse. She added what
she would like to make clear for staff that they should remove the direction previously given by
Council to stop construction of the project. She asked staff to take the previous direction from
City Council with regard to the courthouse off the books, if the majority of the Council supports •
her proposal. She proposed staff come back with a plan to manage what had been committed to
and keep moving the project forward at a slower rate.
Mr. Beasley stated if it was Council's consensus that staff take a look at alternatives to try
keeping the project moving, staff will be happy to do that, as they have been doing on an
ongoing basis throughout the year. He explained it was important for Council to be informed of
the good and bad points regarding moving forward. He noted as far as the CIP pertaining to the
windfall situation, Ms. Schurhammer and Mr. Skeete would be happy to clarify the funds
regarding that period. He asked Mr. Reedy to clarify and provide additional details on the
project and the budget associated with it.
Mayor Scruggs remarked on an e-mail from Mr. Reedy stating staff had no final answers today
and staff was still working through the process. Mr. Reedy agreed with Mayor Scruggs and
stated they did not have a definitive answer today on what it would cost to stop work and loose
as little money as possible. He indicated his concern was whether there was going to be enough
money to pay for this project. He noted that what they were faced with was a $44.7 million
dollar project, of which they had already spent $6.8 million. They needed funding to bring the
project to a close and have money in the future to continue the project. He reiterated that they
were still assessing the cost of delaying, stopping or continuing the project.
Mayor Scruggs stated that so far, $6.8 million had already been spent, which leaves $38 million.
She asked them to find a way to use funds productively to keep the project moving forward. She
explained they did not want to tell the community this project was delayed, but rather that it was
moving forward at a slower pace. She indicated there had to be a middle road between stopping
the project and increasing property rates. Mr. Reedy explained they could certainly look at
alternatives; however, he wanted to make it clear there were risks in continuing, with substantial
cost involved. He noted they might lose more money waiting for next year if it was realized they
could not afford to continue. Mayor Scruggs asked staff to assess the options and come back in a
workshop setting before the budget book goes to print in May.
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Councilmember Knaack agreed with Mayor Scruggs to try and find a level ground somewhere in
the middle to let the public and the business community know the Council has not given up on
this project. She provided an example of townhouses which have not been built and how the
public had been very excited about the project, only to be let down. She did not want that to
happen to the court building.
Councilmember Goulet stated he too would like to see more options on this issue. He believes
this project will help stimulate and generate the momentum in development activity that will
produce revenue. He said that will not happen if they shut it down. He explained if they lose the
momentum, it was very hard to start it up again. He stated he knows Mr. Reedy and staff work
very hard on these issues to come up with viable options. He added he feels the greater harm
would come to the community if this project were to stop which would send the wrong message
to the business community. He indicated there were people counting on this project as the first
step on the three mile project.
Councilmember Lieberman agreed. He stated it would show a lack of faith and face if they were
to stop construction of the courthouse. He indicated the city owed it to the citizens and business
community to keep moving forward.
Vice Mayor Martinez stated he would support the courthouse moving forward if they could find
a way; however, he did not know where the money would come from. He asked Mr. Reedy if
the entire underground infrastructure had been done. Mr. Reedy explained that the basement had
been done, but they were holding off in some areas because of the possibility they might need to
stop. He explained the next construction phase. He noted what they were trying to do was finish
the things that were investments in the future, if the construction were to stop. Vice Mayor
Martinez asked if the building design was complete. Mr. Reedy explained that some phases still
had not been approved; however, they had already paid for that portion. They will go ahead and
get the designs approved so that if they were to stop the project, they would know exactly what
they would be coming back to.
Vice Mayor Martinez asked what would be the next step and how much it would cost. He also
asked how much longer until the construction would be visible by the public. Mr. Reedy replied
that after this initial phase, everything else that goes up and will be visible.
Councilmember Frate commented that he agreed with the discussion to keep the courthouse
moving forward. He supports giving staff time to assess the situation and provide alternatives
for this project. He indicated he looks forward to seeing the material to make a more informed
decision. He explained people understand the economy is bad; however, they were also
unforgiving when it came to their disappointment.
Councilmember Clark commented on Mr. Reedy's remarks. She explained that at this point,
nothing definite was known on how to proceed with the courthouse. She indicated her concerns
pertained to Mr. Reedy's email that they did not have enough money to build the project right
now. In his email he indicated that staff had identified the most logical stopping place, which
was after the underground work was completed. She said he had cited issues of security cost and
maintenance issues if they were to continue and then had to stop. She indicated it was no one's
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desire to stop this project, including staff however, it was a possibility that should be looked at.
She reiterated they had to stop and assess a good place to create a hiatus on this project, until
they have the money to move forward.
Mayor Scruggs indicated that the majority of City Council supported removing the previous
direction given to staff to stop this project. She asked staff to look for ways to continue the
project through the next year when they could revisit the revenue side. Staff will come back to
the City Council with several options and we will determine whether to stop the project as well
as consider what can be done to continue it and keep their commitment to the public. She
commented on the bonds being used for other projects and asked Ms. Schurhammer and staff to
go back and figure out how to utilize the money wisely and move forward.
Mr. Reedy stated they will go back and do some more calculations. He noted their intent was
not to stop this project if there was any way to continue. However, staff wanted to make sure
City Council understood the implications and what the financial costs might be if they were to
continue and then had to stop. Mayor Scruggs remarked that things might change in the future
and added it was unfair to say that the 21 '/ cent property increase was only for the courthouse.
Mr. Reedy explained they would need to raise the property rate 16% to continue the courthouse
if the assessed valuation does not go down any more.
Mayor Scruggs summarized the discussion thus far. She stated the budget process for 2009/10
was not complete at this point and the CIP was still a work in progress because they were
waiting for more information on the courthouse. She asked staff for a balance sheet with all the
changes done so far and Council will reconvene at some point in the future, after there has been
enough time to examine all options. Mr. Beasley agreed.
Mr. Skeete asked to respond to Mayor Scruggs' comments that the CIP might have been built
with the windfall a couple of years ago and that might be the reason they were now in difficulty.
He explained that the CIP was not built based on the windfall regarding property values. He
noted that the fund balance in the CIP debt service fund has grown because projects in the CIP
were not planned based on a windfall. He explained the problem that arises when the city must
pay the debt service on almost $200M worth of capital projects built since FY 2001 (excluding
water, sewer and GO! transportation projects) and the revenue to pay that debt service will
decline almost 20%. He also noted that the city's property tax rates declined over the past few
years with a 7.5 cent drop in the city's secondary rate. He stated he wanted to make clear that
staff had not relied on the windfall in property values to build the budget and the proof was that
they had doubled the CIP debt service fund balance. He added that this year they were building
a budget based on a decline, and the reality of today and projecting out into the future based on
today's numbers.
Mayor Scruggs remarked that assessed valuations had gone up 53% and now dropped 33%,
which seemed like the 20% increase would still be there in assessed valuations. Mr. Skeete
explained those numbers did not compare across the board when they were only looking at a
snapshot. He explained there were a lot of variables that went into those calculations including
the city's secondary property tax rate, which had been decreased over the past few years. He
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added there were many considerations that went into the formula and it was not as easy as
subtracting those figures.
Vice Mayor Martinez asked if the courthouse could be built with development impact fees. Ms.
Schurhammer stated they were already using development impact fees to pay for the land. Vice
Mayor Martinez asked what the contingency fund balance was now. Ms. Schurhammer stated
that the GF fund balance was around $18 million. Vice Mayor Martinez remarked he had read
somewhere that it could be reduced to up to $4.6 million. He noted he was just thinking of
options to keep the courthouse going. Mr. Skeete stated he could certainly look at that; however,
there might be some serious implications to other commitments tied to that fund balance. He
commented he would defer to Mr. Lynch and his expertise and creativity. He added Mr. Lynch
had been very cautions and successful in guiding the city.
Vice Mayor Martinez suggested possibly selling city assets. Mr. Beasley remarked they
understood Council's direction and staff will be looking at several options; however, he did not
want to confuse the public with recommending options that staff still has not analyzed. Vice
Mayor Martinez commented on a 2002 list that was made when they were discussing the food
tax. He noted he assumes the list has been looked at by staff and if not, for them to consider it.
Mayor Scruggs questioned why the courthouse building was not ever considered to be put into
the municipal property corporation. She remarked how the city has always found innovative
ways to pay for projects otherwise not thought of before. She reiterated the courthouse was the
top priority of the City Council right now, not only for the building's sake, but what the building
signifies to the city's economic redevelopment.
Mr. Beasley stated he will schedule the workshop and inform Council of the time.
Mayor Scruggs asked if everyone was in agreement that the courthouse project should not be
stopped. The majority of City Council agreed with Mayor Scruggs.
ADJOURNMENT
The meeting was adjourned at 3:20 p.m.
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