HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 4/29/2009 *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-D,�T E
MINUTES OF THE
GLENDALE CITY COUNCIL—SPECIAL MEETING
WORKSHOP & EXECUTIVE SESSION
Council Chambers -Workshop Room
5850 West Glendale Avenue
April 29,2009
8:30 a.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;
Nick DiPiazza, Deputy City Attorney; and Pamela Hanna, City Clerk
WORKSHOP SESSION
1. FY 2009-10 BUDGET—4'n WORKSHOP TO WRAP UP PROPOSED OPERATING
BUDGET AND REVIEW OPTIONS FOR THE FY2010-19 CAPITAL PLAN
CITY STAFF PRESENTING THIS ITEM: Horatio Skeete, Deputy City Manager for
Administrative Services; Sherry Schurhammer, Management and Budget Director; and Ken
Reedy, Deputy City Manager for Public Works
This is a request for City Council to review the wrap up information provided regarding the
proposed FYI0 operating budget and to provide guidance about the proposed options for the
FY 2010-19 Capital Improvement Pl an (CIP).
Operating budget wrap up information is provided first in the Background section below.
Information about the proposed options for the FY2010-19 capital plan is provided
immediately following the discussion about the operating budget wrap up. The capital
discussion is composed of the following sub-sections:
o New Municipal Courthouse Capital Budget
o Assumptions Used in Developing the FY09 Capital Budget
o Information About FY11 Assessed Valuation
o Options for Continuing with the New Court Project
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o New Municipal Court Capital Operating Budget
o Other Operating Budget Considerations
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.
This section is divided into two parts: the first part addresses the wrap up items related to the
recommended FY09 operating budget and the second part addresses the proposed options for
the FY2010-19 capital plan.
Operating Budget Discussion
This section provides a summary of our understanding of your directions regarding the
recommended FY09 operating budget presented in the council budget workbook and
discussed at prior budget workshop sessions.
Vacant Positions
When the FY10 budget was developed, savings from vacant positions were included as part of
the balancing. Specifically, Table 6 of the City Manager's budget memo showed the following:
Table 6 — FY10 Strategy to Address GF Revenue Shortfall
' ' Ongoing One-Time
Line 2: Hiring Freeze $2,422,242
Line 3: Retirement Vacancies $2,200,000
The GF hiring freeze savings estimate was based on 33 FTEs. The GF retirement vacancies
savings estimate was based on 24 FTEs. The total number of vacancies included in the two
savings estimates is 57 FTEs.
At the March 24, 2009, budget workshop, a question was asked about the number of frozen
vacancies that currently exist. The figure provided was "77 FTEs" and included the
following:
o 37 vacancies in the GF;
o An additional 6 GF positions that were vacant and incorporated as a permanent
departmental budget reduction and therefore not included in the vacancy savings
figure for FY10; and
o 34 positions paid out of other funds(enterprise funds, designated sales tax funds, and
funds supported by federal or county monies).
Fifty-five(55)FTEs submitted paperwork to participate in the retirement incentive program,
with 43 of them in the GF. There are no sworn positions included in the 55 FTE count.
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The sum of GF positions that are currently vacant or expected to be vacant because of the
retirement program is 37 +43 = 80, with 57 of them counted as savings for FY10.
The savings generated from leaving these positions vacant are needed to balance the budget.
Elimination of these positions will not generate additional funds to reallocate for spending
for other purposes because the savings are needed to help address the expected $14.4M gap
between GF ongoing revenues and GF ongoing expenses.
We recommend retaining the vacant positions by freezing them to maintain flexibility and
provide strategic resources to address changes that are likely to arise during the course of the
fiscal year. As the organization settles down in the coming months we anticipate being in a
better position to make strategic decisions about any positions that could be moved from
"frozen" to eliminate.
Revised Operating Budget Balancing Information
Council requested a restatement of changes that were made to Table 6 in the City Manager's
Memo included in the budget workbook. Below is a revised Table 6 that accounts for the
changes that have occurred since the budget workbook was prepared. The bottom line
change is a positive $42,145 that will be returned to the General Fund.
Table 6 Revised — FY10 Strategy to Address GF Revenue Shortfall
Ongoing One-Time
1' rum-.d ila,i w.n .tt j..,EEl AF43v3{ti' It ''t� �.t t•91v� .�. r f 3.�. iJ a
Line 1: GF Ongoing Operating Budget Shortfall Subtotal ($14,394,134)
Administrative Actions:
Line 2: Hiring Freeze $2,422,242
Line 3: Retirement Vacancies $2,200,000
Lines 4 and 5: Deferral of the scheduled step increase for Police
and deferral of 6.5 days of holiday pay for Police. $2,264,420
Deferral of Fire's uniform allowance and deferred comp for
FY10.
Line 6: Furloughs for FY10 $3,540,283
Line 7: Restructure Leases $1,000,000
Line 7A: Eliminate GF support for July 4 special event ($35,500)
and Copper Canyon High School Program ($33,734) and $9,334 (net)
reallocate $59,900 of these funds to address additional supplies
for the Graffiti Removal Program
Line 7B: Reallocate existing operating budget GF monies from
economic development for the annual OPEC membership and $0 (net)
consulting services for Centerline project
Policy Considerations:
Line 8: Advertising Revenue $1,000,000
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Line 9: One-Time Transfer from Arts Fund $2,000,000
Line 10: Subtotal ($14,384,800) $14,426,945
Revised Net $ 42,145
Capital Budget Discussion
This section provides information about the proposed options for the FY2010-19 capital
plan. This discussion is composed of the following sub-sections:
o New Municipal Courthouse Capital Budget
o Assumptions Used in Developing the FY09 Capital Budget
o Information About FY11 Assessed Valuation
o Options for Continuing with the New Court Project
o New Municipal Court Capital Operating Budget
o Other Operating Budget Considerations
At the third budget workshop on April 7, 2009, Council requested more information
regarding the options considered for the General Obligation (G.O.) bond program. The G.O.
program is the portion of the Capital Improvement Plan (CIP)that is funded by the secondary
property tax.
Under Arizona's two-tiered property tax system, the secondary property tax rate may only be
levied to pay the principal and interest on bonded indebtedness or other lawful long-term
obligations that are issued or incurred for a specific capital purpose.
New Municipal Courthouse Capital Budget
In the FY09 budget book, the new city court facility was planned for the commencement of
construction in FY09 as part of the G.O. program. The total cost was set at approximately
$44.7M (includes $1M in costs incurred in prior FYs).
The purchase contract for the land of the new court facility was done in FY05. The $3.7M
purchase is being paid from the General Government Development Impact Fee fund and is
separate from the $44.7M cost identified in the prior bullet. The last payment is in FY10.
Assumptions Used in Developing the FY09 Capital Budget
At the April 7, 2009 budget workshop, Council asked about the growth assumptions for
assessed valuation (AV) that were made when the FY09-18 CII' was developed. The
following bullets respond to this question.
The General Obligation bond capital program that Council adopted for FY09 was developed
using very conservative growth assumptions for Glendale's secondary assessed valuation
(AV). An 8% decline in secondary AV was assumed for FY10, with only 2%, 3%, 4% and
4% growth assumed for FY11, FY12, FY13 and 14 respectively.
The average annual growth rate in Glendale's secondary assessed valuation was 8.2%
between 1995 and 2005; this average excludes the high growth years of FY08 and FY09 that
reflected the real estate market of 2005 and 2006 respectively.
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o The 8% decline was based on the knowledge that the Maricopa County Assessor's
Office had issued residential valuation notices for FY10 showing a 13% decline in
the median value of single family residential property.
o An 8% decline was assumed for FY10 rather than a 13% drop because recently
completed and recently permitted commercial development would have a positive
impact on future assessed valuation growth in Glendale. As of mid-April 2008,
Glendale had $442M of development permitted for construction.
The FY09 rate recommendation presented to Council was to move 2.5 cents from the
primary to the secondary rate for FY09, resulting in a secondary rate of $1.3768; the total
rate would have remained unchanged at $1.6200. This was recommended because of the
debt service requirements for recently completed projects and planned future projects.
o Projects completed within the past few years that are funded through the secondary
property tax include the Downtown Parking Garage ($18M), Public Safety Training
Facility and Emergency Operations Center ($29.4M), Foothills Recreation and
Aquatic Center ($15.8M), Bethany Home Outfall Channel ($14M), and the Field
Operations Center Expansion ($16.4M).
o Planned future projects included the New Courthouse, Northern Avenue Drain, West
Area Library, Downtown Land Acquisition, Police Digital Communication System,
and Fire Engine and Ladder Replacement.
Council elected to decrease the primary property tax rate by 2,5 cents rather than move that
portion to the secondary rate; the secondary rate remained unchanged at $1.3519; the total
rate declined from $1.6200 to $1.5951.
Council elected to reduce the secondary property tax rate a total of 7.5 cents, from $1.4275 in
FY07 to $1.3519 in FY08; the secondary rate currently remains at $1.3519.
Information About FY11 Assessed Valuation
Based on preliminary information received from the county in the summer of 2008, we
assumed no growth in secondary AV for FY11.
However, during the last week of February 2009, the assessor's office mailed AV notices to
property owners that showed an unprecedented 33% decline in Glendale's residential value.
Those notices reflected the valuations to be used for FYI 1 secondary property tax revenue.
In FY11, Glendale residential valuation is expected to drop 33% based on the notices that
property owners received in late February 2009. We expect this residential drop to translate
into an overall 19% drop in total secondary AV even after accounting for a projected 4%
increase in commercial AV,
Options for Continuation of the New Court Project
Outlined below are three additional options that assume capital construction work continues for
the new court facility.
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Option 1
Summary:
Assumes a 0.0986 cent rate increase is needed to complete the court without cancelling other
capital projects.
Assumptions:
There would be no new funding for government facilities, parks, libraries, open/space and
trails, and cultural/historic projects for FY10 through FY13. This means the projects for
these specific G.O. categories, as summarized in the top half of page 63.1 in the budget
workbook, will not be funded for FY10 through FY13.
This option assumes $7.4M in new funding will be needed for essential police and fire
projects for FY10 through FY13.
This option also assumes $4M in new funding for economic development projects related to
downtown land acquisition and downtown redevelopment.
This option assumes $43M is needed for the new courthouse.
For other current projects already underway, this option assumes the following amounts will
be spent:
o $4.7M for General Government projects
o $16.7M for Flood Control projects and
o $3.2M for Parks projects
Excluded from the Flood Control figure is the Bethany Home Road, 79th to 67th Ave Storm
Drain project scheduled to begin in FY10 because it is not a current project. The Maricopa
County Flood Control District's matching funds for this project will reallocated for other
projects elsewhere in the county.
Outcomes:
After accounting for moving 0.0180 from the primary to the secondary rate, an increase of
0.0986 cents in the property tax rate is needed in FY10 as follows.
o Primary rate changes from $0.2432 to $0.2252.
o Secondary rate changes from $1.3519 to $1.4685.
o Total rate changes from $1.5951 to $1.6937.
Rate increases in FY11 and beyond may be required if AV for FY12, FY13 and/or beyond
declines further.
No new funding will be available for FY10 through FY13 for the following types of G.O.
projects: government facilities, parks, libraries, open/space and trails, cultural/historic and
streets/parking projects. This means that any unanticipated capital needs for these areas will
not be addressed until FY14 at the earliest.
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Cost increases for the planned court, police, fire and economic development projects cannot
be absorbed.
Recommendation:
Option 1 is not recommended because
o It provides no flexibility to address unanticipated capital issues such as cost increases,
major repairs to existing city facilities, and new projects not yet envisioned that might
arise in future years; and
o It creates an additional $1M of new operating expenses for the General Fund at a time
when the city is not able to address the cost because of the recession.
Option 2
Summary:
Assumes no rate increase is needed to complete the court because current projects totaling
$25M are cancelled.
Assumptions:
As with Option 1, this option assumes
o No new funding for government facilities, parks, library, open/space and trails, and
cultural/historic projects for the next four fiscal years, FY10 through FY13. This
means the projects for these specific G.O. categories, as summarized in the top half of
page 63.1 in the budget workbook, will not be funded for FY10 through FY13.
o $7.4M in new funding will be needed for essential police and fire projects for FY10
through FY13.
o $4M in new funding will be needed for economic development projects related to
downtown land acquisition and downtown redevelopment
o $43M will be needed for the new courthouse.
In order to reduce the amount of the property tax rate increase proposed in Option 1, Council
can select current projects to cancel. Every $2.5M in projects equates to a one (1) cent
reduction in the 0.0986 cent rate increase outlined in Option 1. A total of approximately
$25M in projects is needed to eliminate the need for a rate increase for FY10.
Outcomes:
In order to complete the court as scheduled and avoid a rate increase, current CIP projects
totaling $25M must be cancelled.
Listed below are current General Obligation bond projects that total $29.8M. Some of the
flood control projects have funding split between FY09 and FY10, so the FY10 funding
amount is included for these projects. The amount listed for Economic Development projects
would be new funding in FY10 and FY11. Only carryover is assumed for the Parks and
Recreation and Government Facilities projects for FY10. Police and Fire projects are
excluded.
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Excluded from the Flood Control list is the Bethany Home Road, 79th to 67th Ave Storm
Drain project scheduled to begin in FY10 because it is not a current project. Options 1 and 2
already assume this project will not proceed. The Maricopa County Flood Control District's
matching funds for this project will reallocated for other projects elsewhere in the county.
Rate increases in FY11 and beyond may be required if AV for FY12, FY13 and/or beyond
declines further.
No new funding will be available for FY10 through FY13 for the following types of G.O.
projects: government facilities, parks, libraries, open/space and trails, cultural/historic and
streets/parking projects. This means that any unanticipated capital needs for these areas will
not be addressed until FY14 at the earliest.
If there are cost increases for the court, police, fire and economic development projects, it
will not be possible to absorb them.
Flood Control
Bethany Home Outfall Channel: This project encompasses the design and construction of
storm drain improvements in Camelback Road from 59th to 75th avenues. This is the last
phase of the Intergovernmental Agreement (IGA) with the Maricopa County Flood Control
District (MCFCD) and the City of Phoenix by which MCFCD pays 50% of the project's
costs the City of Phoenix pays 25%, and the City of Glendale pays 25%.
o Status: A portion of this project is under construction and a portion of it is in design. •
o FY09 carryover: $2,960,000
o FY10: budget: $3,411,000
Northern Avenue Drain: This project involves the construction of a storm drain on
Northern Avenue between 45th Avenue and 63rd Avenue to address the flooding problems
that frequently occur on Glendale and Northern Avenues. Currently storm water as far north
as Olive Avenue ends up on Glendale Avenue thus causing flooding of structures along
Glendale Avenue. This storm drain project will significantly reduce these flows and
substantially reduce the current flooding problems along Glendale Avenue. In accordance
with the IGA with MCFCD approved by council on April 14, 2009, the City will receive
$7.OM toward the project's cost, If we do not proceed with this project, MCFCD will
reallocate these funds to other projects that are seeking funding.
o Status: Design is completed.
o FY09 carryover: $8,617,000
o FY10: budget: $10,038,000
o $11.6M of the $18.6M represents city funding; the difference is MCFCD funding
Local Drainage Problems: This project encompasses the construction of localized storm
drain improvements to mitigate drainage or flooding problems that follow rain events. Recent
examples are the addition of a storm drain at the end of Cavalier Drive where water ponds at
the end of a cul-de-sac and sits for days before drying up and the construction of a storm
drain in 67th Avenue from Frier Drive to Orangewood Avenue. The MCFCD will pay up to
75% of the cost of these projects through a new program to mitigate local drainage problems.
o Status: This project in design.
o FY09 carryover: $579,000
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o FY10: budget: $0
Collector Drains: Construct storm drain improvements on collector streets to intercept
flows before they reach the arterial streets, which helps mitigate drainage or flooding
problems. These funds are being used to extend storm drains on collector streets north of
Northern Avenue at 47th Avenue. The MCFCD will pay up to 75 percent of the cost of these
projects through a new program to mitigate local drainage problems.
o Status: This project will be constructed as part of the Northern Avenue Drain project.
o FY09 carryover: $559,000
o FY10: budget: $0
Storm Water Master Plan: City wide storm water master plan to determine the adequacy
of existing facilities and to prioritize new facilities. The current master plan is more than 20
years old. This is a city-wide study that includes a regional component as it ties into flows
and systems outside of Glendale. The City entered into an IGA with MCFCD on April 14,
2009 through which MCFCD agreed to pay a total of$500,000 for this study. If we do not
proceed with this project MCFCD will reallocate these funds to other projects that are
seeking funding.
o Status: This project is in the contract development stage.
o FY09 carryover: $57,000
o FY10: budget: $0
Economic Development
Downtown Redevelopment and Land Acquisition: Redevelopment of downtown
infrastructure to encourage private investment and purchase of underperforming downtown
properties that can be assembled and remarketed to businesses and establishments wanting to
locate in the downtown redevelopment area.
o FY10 budget: $2,000,000
o FY11 budget: $2,000,000
Parks and Recreation
Sahuaro Ranch Park Improvements: It includes the renovation and replacement of 20+
year old infrastructure to include ramadas, playgrounds, dog park, soccer and softball fields,
drinking fountains, restrooms, landscaping, fencing, pathways, etc.
o Status: This project is in design.
o FY09 carryover: $2,135,000
Thunderbird Park Improvements: This project's funding will address trail repairs, parking
lot improvements, signage upgrades, trash can and picnic table repair and replacement, etc.
o Status: The contract for work is under development.
o FY09 carryover: $257,000
Park Redevelopment: The "Park Redevelopment" project encompasses a proactive
approach to revitalizing existing parks that have shown signs of deteriorating infrastructure,
amenities, and/or landscape. The purpose of the redevelopment process is to improve or
restore a park's overall functionality for the users while enhancing the park's operating
efficiency. Renovations include replacement or repair of ramadas, turf, irrigation systems,
playground equipment, sport courts, ball fields, security lighting, and landscaping.
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o Status: Design is completed.
o FY09 carryover: $1,094,000
Park Enhancements: Ongoing park enhancements are vital to the city's efforts to improve
and enhance park functionality and appeal. Typical park enhancements include
improvements such as low-level security lighting, picnic areas, adding or replacing picnic
benches, installation of ADA-compliant playground surfaces, sports courts, shade structures,
landscape, and other amenities and equipment.
o Status: This project encompasses many components for various parks that are in
different stages of design or construction.
o FY09 carryover: $214,000
Facilities Renovations: Funds are used city-wide to provide ongoing renovation to existing
facilities. Facility renovations include planned or unexpected repairs/renovations at existing
buildings such as recreation and community centers, as well as ball field complex sites,
lighting, group picnic ramada pavilions, restrooms, tennis courts, golf courses and
equipment.
o Status: This project encompasses many components for various parks that are in
different stages of design or construction.
o FY09 carryover: $652,000
Government Facilities
Exterior Closure: Contract award expected by June 2009. This project addresses roofing
replacements and upgrades. The current projects are the replacement of the roof at Fire
Station 151 and sealing the skylights at the Main Library.
o Status: Contract award expected by June 2009.
o FY09 carryover: $303,000
City Hall — HVAC System: This project addresses the replacement of the existing heating,
ventilating and air conditioning (HVAC) system at city hall.
o Status: Contract award expected by June 2009.
o FY09 carryover: $517,000
ADA Compliance: An independent study of 37 of the city's oldest facilities determined that
numerous existing restrooms required changes to be in compliance with current ADA
standards. The current planned projects include restroom renovations at eleven city facilities
including the Glendale Airport, Cactus and Ironwood Pools, Paseo Racquet Center, and two
restrooms at Thunderbird Park.
o Status: Contract award expected by June 2009.
o FY09 carryover: $545,000
Interior Finishes (Flooring and Paint): This project addresses the replacement of worn
flooring and wall treatments. Current projects include replacing the carpet on three floors of
City Hall, the basement level of the Council Chambers and Velma Teague Library, as well as
painting interior spaces at the Main Public Safety Building.
o Status: Contract award expected by June 2009.
o FY09 carryover: $491,000
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Electrical Lighting Upgrades: Current projects include lighting upgrades at the Main
Public Safety Building.
o Status: Contract award expected by June 2009.
o FY09 carryover: $127,000
Exterior Closure (Paint): This project addresses the replacement or renovation of exterior
wall treatments for various city facilities. The current project is the repainting of City Hall.
o Status: Contract award expected by June 2009.
o FY09 carryover: $259,000
Parks and Flood Control Projects Not Included in the Preceding List
Western Area Regional Park: This project is in the final stage of construction and will be
completed in June 2009. This project is tied to the Heritage Fund's $700,000 grant. This
project represents the city's match requirement to build ramadas, picnic areas and a
playground area. Failure to complete this project will require repayment of the $700,000
grant. .
AZDES Permit: This permit is a regulatory requirement. In 1999, the city obtained a permit
under the Clean Water Act for the National Pollutant Discharge Elimination System
(NPDES) that requires the monitoring of storm water flows and the preparation of annual
reports. Funding supports the physical collection of storm water discharges following a rain
event, the chemical analysis of the rain water, and the annual reporting requirements.
671" Avenue, Peoria to the ACDC Flood Control Project: This project is in the final stage
of construction and will be completed by the end of FY09.
Recommendation:
Option 2 is not recommended because
o It provides no flexibility to address unanticipated capital issues such as cost increases,
major repairs to existing city facilities, and new projects not yet envisioned that might
arise in future years; and
o It creates an additional $1M of new operating expenses for the General Fund at a time
when the city is not able to address the cost because of the recession.
Option 3
Summary:
Assumes court construction continues but at a slower pace while alternative financing
options are explored; projects totaling $8M must be cancelled if this option is selected.
Assumptions:
To keep the court project moving but at a slower pace, $12M is needed to address court
capital costs.
This option assumes the capital construction work will be completed up to ground level (i.e.,
parking garage basement, on-site storm drainage and water/sewer piping, power and
communication lines, etc). This also means the design and permitting will be completed.
Outcomes:
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To avoid a property tax rate increase while funding $12M for the court, it will be necessary
to reduce $8M of funding for other G.O. capital projects.
The reductions would have to be taken from the list of projects shown in Option 2 with the
addition of the following projects:
o Park Redevelopment: $1.6M in FY10—p. 77 in budget workbook
o Park Enhancements: $250K in FY10—p. 83 in budget workbook
o Parks Facilities Renovations: $252K in FY10—p. 83 in budget workbook
o General Government Projects: $1.4M in FY10, $737K in FY11 and $892K in FY12 —
pp. 111 — 113 in budget workbook
o Bethany Home Road, 79`h to 67th Ave Storm Drain: $615K in FY10 and $3.8M in
FY11 — p. 124 in budget workbook
As part of this option, alternative financing options, including leveraging existing city
facilities, are being fully explored to determine overall financial impacts on the City. This
option would also involve using secondary property tax revenue for funding. Additional
information will be presented once it becomes available.
Recommendation:
Option 3 is recommended because it allows the court project to continue although at a slower
pace and provides time to work through the details of alternative financing options without
decimating the capital plan.
New Municipal Courthouse Operating Budget
The estimated operating, maintenance and service needs of the new courthouse were
discussed at the September 16, 2008, workshop. The estimate for the additional ongoing
costs for the new courthouse was $3.8M for a full fiscal year. This cost included 39
additional FTEs and their related costs as well as utilities to operate the facility and supplies
to clean, and maintain the building.
Since that workshop, staff has refined those estimates for additional operating costs
associated with the new facility.
According to the Municipal Court and City Prosecutor's Office, no additional staff is needed
to continue providing quality services in the new facility.
There will be additional operating costs of approximately $1,036,700 ongoing plus $185,900
of one-time costs associated with the new courthouse facility as discussed below:
o Four (4) new positions related to essential building maintenance and custodial
services are needed — 1 Building Maintenance Worker, 2 Custodians and 1 Day
Porter. While the new courthouse will be similar in size to the existing City Hall it
will not be similarly staffed. Given that a portion of the new court facility will not be
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in use when it opens, fewer custodians and building maintenance staff persons are
needed.
The costs associated with these services, including building utilities like electricity,
water, security system and elevator system maintenance; pigeon control, window
cleaning, and parking lot sweeping; and cleaning and bathroom supplies. One-time
costs are associated with equipment needed to provide the custodial and maintenance
services. These costs are as follows:
• $830,200 ongoing
• $93,900 one-time
o Three (3) new Detention Officer positions related to detention operations on-site are
needed. This staffing level would allow two Detention Officers to operate the on-site
detention space in the new courthouse (custody, care and control of inmates) while a
third Detention Officer attends to transports such as taking inmates to courtrooms or
to the county's jail facility. The costs associated with these services are as follows:
• $206,500 ongoing
• $92,000 one-time
Other Operating Budget Considerations
The City Manager's recommended budget memo shows a $14.4M shortfall between ongoing
revenues and ongoing expenses (i.e., an operating deficit).
The FY10 GF operating budget includes a budget balancing strategy to address the projected
$14.4M shortfall. This strategy is a mix of one-time and ongoing measures and is based on a
phased approach that does not severely diminish the services the city provides to the community.
This $14.4M shortfall is not expected to go away within the next FY. While the operating
deficit might narrow by the start of FY11, it is not expected to be eliminated until the
economy has solidly rebounded from the current recession.
The City Manager's recommended budget also shows that we have an additional $1.1M in
electricity and other utility expenses that will be addressed with one-time funds in FY10.
These expenses are ongoing in nature and will need to be addressed accordingly in FY11.
In addition, the represented employees agreed to defer $2.3M tied to a combination of
deferred step increases and a reduction in paid holidays for Police and deferral of uniform
allowance and deferred compensation for Fire.
In addition, Council has stated its desire to replenish the General Fund fund balance and
contingency reserves.
Other items that are likely to increase in cost by FY11 include employer-paid contribution
rates for the city's retirement plans and health care insurance. We will not know the
magnitude of these potential cost increases until 2010.
The third budget workshop occurred on April 7, 2009. Information regarding employee
matters was presented and decisions were confirmed regarding the recommended operating
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budget and rate recommendations for the water, sewer, sanitation, and landfill enterprise
funds, both of which were presented in earlier budget workshops.
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 information presented.
Mr. Skeete presented a slide that summarized the GF operating budget balancing information
that was presented to council in prior budget workshops and in the council budget workbook.
He said this summary was being presented today in response to council request for a recap at
today's workshop. He explained that the recommended hiring freeze, furloughs, etc.
requires maximum flexibility to ensure quality services continue to be provided to the
Glendale community. He stated at the last budget workshop, staff was asked to look at
possibilities to continue the court project this also would require flexibility. He reiterated that
staff continues to ask Council for flexibility to be able to successfully achieve the goals of
delivering high quality services. He said staff has responded to the council's questions and
concerns while continuing to present a balanced budget.
Mayor Scruggs asked for any comments or questions on the operating budget recap. Vice
Mayor Martinez commented he agreed with the recommendations.
Councilmember Knaack remarked she had been concerned with positions that were being
frozen on a one-time basis rather than on-going. However she wanted to thank staff for
listening to suggestions and providing options on the issue with which she was now
comfortable.
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Councilmember Lieberman asked if represented employees in the Police Department were in
agreement with the adjustments to their memorandum of understanding (MOLT). Mr.
Beasley said the adjustments reflected their recommendations for how they wanted to assist
with balancing the budget.
Councilmember Lieberman asked about the Cops Recovery Hiring Program funding that the
federal government was making available. Chief Conrad said the Cops Recovery Hiring
Program has been opened and Glendale had requested a grant application to allow the hiring
of five police officers. He explained the chances for that funding were slim because of all
the applications being received.
Councilmember Lieberman commented on a job fair for police. Chief Conrad explained that
the Police Department has open hiring and the event was more of an orientation session for
people interested in the job. He added that given the length of the hiring process, he does not
believe they will be bringing anyone on staff before the beginning of the new fiscal year.
Mayor Scruggs asked if the Cops Recovery Hiring Program paid 100% of police salaries for
three years. Chief Conrad said yes but noted that the city must pay for the equipment costs
for all officers hired through the program and must pick up the salary costs beginning in year
four.
Mayor Scruggs asked Mr. Beasley to explain how the two public safety groups came up with
different ways to assist in balancing the budget. She noted there was a glaring difference in
their approach and assistance, Mr. Beasley explained that part of the reason was that one
department was larger and was able to do things differently because of their numbers. He
asked Ms. Schurhammer to explain further. Ms. Schurhammer indicated the police
employees agreed that the best way to help with the budget was through a deferral of the
scheduled step increase and 6.5 days of holiday pay. The fire employees chose to defer their
uniform allowance and the city's contribution to their deferred compensation. She said the
dollar amounts for each represented group were established along the lines of the public
safety sales tax distribution with about two-thirds of the total for police and one-third for fire.
Mayor Scruggs commented on the hiring freeze and the number of positions that were
expected to be vacant versus those counted for the balancing. She remarked that 80 positions
were vacant with only 57 positions counted for the balancing. She asked if the remaining 23
positions would be filled. Mr. Skeete responded that the balanced budget assumes 57 vacant
positions must remain vacant throughout the fiscal year in order to keep the budget balanced.
He said he could not say if the remaining 23 positions will be filled in the future. He said the
remaining 23 positions were not used in balancing the budget but would be held vacant as
long as possible. He said the revenue situation will determine if additional adjustments are
necessary.
Mayor Scruggs stated her main concern pertained to the 57 positions being frozen. She
indicated she had concerns with no constraints being put forth to prevent dipping into the 57
positions. She explained her apprehension stemmed from all the sacrifices being made by
employees and citizens, as well as the quality of life for the community. She remarked she
had- suggested making the one-time savings from the hiring freeze for the 57 positions into
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ongoing savings by eliminating the 57 positions. She said this was either a hiring freeze or
not. Her concern is about doing nothing to prevent filling the vacant positions; she said that
filling the positions would send a message that sacrificing to balance the budget was not
serious since they were able to hire additional personnel at the first opportunity. Mr. Beasley
explained the budget would not be balanced if they were to fill those positions. In addition,
this was not the first time this has been done and it would not make sense to move forward
with this plan only to take it out of balance by continuing to hire. He indicated there were
management controls in place that have allowed them to obtain the savings to date and those
would be the same controls that would be used in this situation. He said he hopes they had
the confidence and trust of the Council that if anything were to change and impact the
budget; they would be back for Council's approval.
Mayor Scruggs commented on her unease and asked if the city were to receive a $1 million
dollar windfall, what the money would be used for. She questioned the city not having some
sort of controls in place so the money could not be used for new staff rather than services for
the community. Mr. Beasley remarked he did not see a windfall happening and any change
would be gradual. However, if it was to happen, it would be prioritized based on what they
wanted and needed to do as a whole. Mayor Scruggs remarked that she appreciated staff
believes Council had so much control over quarterly reports; however, the report is
assembled with little input from Council before it is presented. Furthermore, she believes the
Council would never have the opportunity to have input into whether more staff is being
hired. She reiterated she would have liked to see real commitment to those 57 positions by
means of having set aside an earmark or allocation in the budget that clearly defined this did
not get touched, unless there was a decision from the Council. She noted she understands
she was the only one in the group uncomfortable leaving this open.
Councilmember Clark asked for a clarification. She asked if the 57 positions must remain
vacant this fiscal year to balance the budget. Mr. Skeete responded yes. Councilmember
Clark also clarified that there would be no hiring to fill those 57 positions. Mr. Skeete
agreed. Councilmember Clark inquired about the 23 remaining positions. Mr. Beasley said
the remaining 23 positions would be left available to address strategic needs in the
organizations. He said flexibility was very important in this process. Councilmember Clark
agreed. She remarked her understanding was that the 23 positions may or may not be filled
as the need arises, which allows for flexibility.
Mr. Skeete said the FY 2010 operating budget was balanced with many one-time measures.
He noted that any additional revenue above the budgeted amount must first close the $14.4
million gap. He said it is possible that one-time measures will be needed again for the FY
2011 budget. He said any vacancy savings from the 23 remaining positions would be
considered additional savings. He said they were committed to deliver services to the
community for a long time,
Mayor Scruggs commented that next year will not be any different from this year and there
will possibly be a shortfall. She explained that next year, there will not be a fund to take
from since those funds have already been depleted. She explained her concerns on the frozen
positions and them not being on-going. She stated she was simply looking ahead since the
city will continue to have these deficits. She reiterated that those 57 positions should be
permanently frozen or the city will never get out of this deficit situation.
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Vice Mayor Martinez remarked that Mr. Beasley had stated there was no way the 57
positions would be filled during the next fiscal year. Mr. Beasley agreed. He added if the
economy does not change, they will still have to make additional changes and decisions.
Mayor Scruggs asked to clarify, for the record, that at no time in this discussion pertaining to
the 57 positions, did she imply any reductions in the current employed staff.
Ms. Kavanaugh introduced the next section regarding the courthouse project. She noted that
council has requested staff to move forward some large-scale capital projects in the past
several years such as the Glendale Regional Public Safety Training Facility and Emergency
Operations Center and the downtown parking garage. Consequently, the recommended
capital plans presented to you in prior fiscal year budget workshops have been juggled to
accommodate your direction to move forward these capital projects. The most lasting impact
of moving these projects forward is the annual debt service related to the projects that is paid,
for the most part, with secondary property tax revenue. Ms. Kavanaugh continued by saying
that council also directed staff to provide options for reducing the city's property tax rate in
prior fiscal year budget discussions. Staff provided options per council's request even
though that course of action was not originally recommended to you.
While this approach worked when property values were rising rapidly, it has created some
real challenges now that property values are declining significantly. She noted that staff was
prepared for a decline in property values but could not have anticipated the unprecedented
33% drop that the county recently reported for Glendale's residential assessed valuation.
The result is a significant reduction in secondary property tax revenue to pay the annual debt
service for the General Obligation bond program.
She said staff has recommended options for council's consideration regarding the new
courthouse given the current economic situation and the implications of it for the future.
She asked Mr. Reedy to summarize the recommended options.
Mr. Reedy commented on staff's original recommendation to halt the courthouse project at a
prior budget workshop given the budget crises. The consensus from the Council was for
staff to go back and look for alternatives and find a way to continue the project although at a
slower pace. He explained he met with the project team, design build contractor and
architect to assess a variety of options. He indicated the best scenario that met council's
direction was to complete construction work up to the ground level meaning all underground
work would be completed including the basement for the parking garage and all onsite water,
sewer, storm drain, electric and communication facilities. He said this approach also means
all design and permitting would be completed. With this approach the contractor will be able
to remove the fence but will continue to protect the site from vehicles entering it. He said the
cost of doing all of this work is estimated at $12 million. Mr. Reedy said this approach will
allow them time to come back and see where the economy was headed, and if they can
continue construction without any additional cost. He stated the contractor had provided that
option. He said the contractor is willing to keep the contract open without any additional
cost to the city, which will give the city time to explore additional alternatives on the
financing side.
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Councilmember Frate remarked he found it strange the contractor was willing to do this,
specifically during these economic times; however, it was to his benefit to keep people
working, even if it was not at full speed. He stated this gave both the contractor and the city
some breathing room and added options. Mr. Reedy said there were also the $12 million to
close the project out to consider and the fact that this expenditure would require the deferral
to FY 2014 or later of the capital plan an additional $8 million in projects. Mr. Reedy noted
that all capital projects underway in the current fiscal year will be finished with the exception
of the west branch library project, which would be deferred to at least FY 2014.
Mayor Scruggs stated she appreciated all the hard work Mr. Beasley and the city staff had
done in order to present a balanced budget today. She thanked everyone who was involved
in keeping the courthouse project on track. She indicated she had received appreciative calls
from contractors and citizens. She believed this project affects and means a lot to a great
deal of people, not just the citizens of Glendale. She personally was very thankful and
pleased that staff had found a way to keep it going. Mr. Reedy commented on the stimulus
funding going only to horizontal construction and no opportunity for vertical construction.
He noted the stimulus package could have helped a lot of different people, instead of the
same ones over and over again. Mr. Beasley remarked that there have been discussions from
the intergovernmental relations staff that there still might be some opportunity for future
stimulus money. He indicated he did not want to totally discount aid from the federal
government since this was a ready project.
Councilmember Lieberman commented that he had read all three options presented very
carefully. He discussed the vacant properties on Glendale Avenue and the urgency he had to
help revitalize the area. He indicated the courthouse would be the saving grace for the area.
He noted the area needed a threshold to generate their faith of redevelopment. He indicated
that the term that comes to mind when driving down Glendale Avenue was "frightening",
because of all the vacant lots.
Councilmember Clark stated that she assumed Mr. Reedy had recommended Option 3 by his
summation. Option 3 is recommended because it allows the court project to continue,
although at a slower pace, and provides time to work through the details of alternative
financing options without decimating the capital plan. She stated that by agreeing to this
option the council was agreeing to cut funds for park redevelopment, park enhancements and
park facilities renovations, government facilities and some flood control projects. She asked
which parks would be affected by this funding reduction. Ms. Santiago-Espino, deputy city
manager for community services, said there are three older parks under design this year that
will go into construction next year based on the current fiscal year's Councilmember Clark
asked how the $250,000 originally planned for park enhancements would have been used had
it not been deferred for the court project. Ms. Santiago-Espino stated it would have gone for
high level security lighting and ADA improvements. Councilmember Clark inquired about
park facility renovations that will now have to be deferred for several years. Ms. Santiago-
Espino said those funds would have been used to renovate existing park buildings.
Councilmember Clark also inquired about the funding to be deferred for general government
projects stating that originally $1.4 million was planned for FY 2010, $737,000 for FY 2011
and $892,000 for FY 2012. Ms. Schurhammer said those funds would have been used to
repair or renovate existing city buildings. .
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Councilmember Clark asked what would be done if any of those buildings required roof
repairs from leaks if no capital funding for renovation would be available until FY 2014 or
later. Mr. Reedy stated it would probably come out of the operating budget. Councilmember
Clark said option 3 means nothing would be done in the next five years for existing city
buildings including interior finishes of flooring, painting, mechanical and lighting. She
noted all these were elements that they were willing to sacrifice in order for the courthouse to
keep moving. She also mentioned the Bethany Home flood control project and how it was
now cut because of the courthouse. She indicated all this reflects on the quality of life for the
citizens of Glendale. Ms. Schurhammer stated that option 3 would allow the city to finish
projects that have funding in FY 2009 although no funding will be available until fiscal year
2014 for general government facilities, flood control, parks, libraries, open space and trails,
cultural historic and streets and parking capital projects. She also noted that limited funding
would be available for economic development and police and fire projects until FY 2014.
Councilmember Clark remarked that Ms. Schurhammer had made her point. She said
continuation of the courthouse project meant the city was willing to cut the things the
citizens directly use and directly benefited from for the next five years. She stated she
believed there was a lot wrong with that picture since the council has always prioritized
quality services for Glendale citizens. However, she said council was willing to defer
everything that the citizens directly benefited from in order for the courthouse to be built in
an economy where they cannot afford to build the courthouse. She noted it has been said that
the courthouse would jump start redevelopment; however, with the current economy, no one
has any funding or financing. She wondered when the reality of the situation would kick in
and have them realize that some things are just not possible right now no matter how much
they want it done. She stated it had been very easy for the council to defer the west branch
library, but not the courthouse because the library was not a priority. She questioned how
they will be able to operate the courthouse with additional operating costs of at least $1
million and where funding will come from. She indicated she was not against the
courthouse, but believes everything has a time and place and this was not the time to
continue a project they could not afford. She suggested resuming the project once the
economy turns around.
Vice Mayor Martinez asked Mr. Reedy how much time option 3 gives the city to find
additional funding. Mr. Reedy responded that the contractor believes he could hold this
project open for six months to a year without any additional cost to the city.
Councilmember Knaack commented she had faith that the economy will turn around and
they should be ready when it happens. She explained she was a big proponent of parks and
Glendale has one of the best park systems in the state. She does not believe the park cuts
will make the parks fall apart. She indicated she still believes the courthouse should stay on
track and thanked staff for a magnificent job on option 3. She stated that next year will be a
new budget year and hopefully they can reinstate some of the things that have been cut back.
Councilmember Lieberman agreed with Councilmember Knaack. He stated the courthouse
was a necessary asset for the city's image and what the Council was trying to accomplish
with the Centerline project. He quoted from the courthouse report that no additional staff
was needed to continue providing quality service in the new facility. He discussed how the
courthouse was the biggest project that has happened in his district and is important to the
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courts functions and the image of a growing Glendale. He noted that money was available
even in these difficult times. He indicated he had also read of all the things to be put on
hold; however, believes it was necessary for the courthouse to move forward.
Councilmember Goulet commented on how the council had continued to ask staff to find
solutions in a difficult economy while building a balanced budget and was thankful for their
flexibility. He agrees with Councilmember Lieberman's comment pertaining to the bonding
approval of$1.2 billion for the Main Street project. He stated it was beyond belief that this
could have happened during this time. He said he has been an advocate for downtown
redevelopment for some time and believes the courthouse was critical to the area. He
wonders what the area would look like in a few years if nothing is done. He explained that
the citizens as well as staff were willing to sacrifice some upgrading and maintenance on
parks to be able to move the courthouse forward. He said he was hearing from the public
that they wanted a vibrant downtown that offered assets to the community, and the
courthouse was a critical component to making it happen. He questioned developers not
wanting to invest at the moment. He noted he had recently spoken with two developers that
were basing their investments on the continued development of the courthouse. He thanked
staff for offering the council options to be able to do this very important project. He believes
that if they do not get this done, the city would suffer for 10 or 15 years, at least. He once
. again thanked staff and stated their work was greatly appreciated. He supports option 3.
Mayor Scruggs agreed with Councilmember Goulet. She stated the courthouse was not only
for criminals and judges, but for the City of Glendale. She explained there was a section of
Glendale that was not as healthy as the rest of the city and everyone is hurt when that
happens. She remarked that this project meets a real need to provide an adequate facility for
Glendale's city court system, as well as a symbol of economic development. She said once
the Glendale Corridor changes from what it is today, which is a negative image for investors,
to a vibrant area, it will generate wealth for every other part of the city. She explained how
certain parts of the city had been revitalized and new revenue was found to serve the citizens
of Glendale. She noted this can also be done for the Centerline project. She stated this part
of town was affecting neighborhood pride, which brings down property values because of
unclean properties. She indicated that this project represents a lot more than a place for
judges to hear cases and administer justice. She stated she believes this would be
remembered in Glendale's history as one of the most important pieces of work initiated of
any City Council. She said that to take 25% of the City of Glendale's land mass and give
that area new hope was extremely important.
Mayor Scruggs commented on the park funding reduction situation. She asked Ms.
Santiago-Espino for a computation of the amount the city has spent for parks over the past
five years. She remarked she did not think citizens believe the city was not providing
adequate recreational facilities. She explained all the work and effort the city has put into
Glendale parks and recreation centers over the years. She added that they have provided
quality of life projects and this courthouse project would just add to it. Mayor Scruggs asked
Mr. Reedy when the courthouse was projected to open based on the option presented today.
Mr. Reedy replied it was originally going to open in mid-2010 but the slowdown will push
back the opening by a year or so.
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Vice Mayor Martinez commented on his first home near Glendale Avenue when it was a
prosperous area. He stated it was distressing to see all the vacancies that now occupy the
area. He noted the city has invested a lot of time and money in the Centerline project to
dismiss it now. He stated that one of the council's goals and priorities had been the
courthouse for all the reasons that have been stated. He indicated that hard choices had to be
made some time and this was one of them. He added that they could not have everything and
therefore had to set priorities and the council has set the courthouse as a priority. He
explained the conditions the judges and staff had to tolerate with the inadequate facilities
they have to work under. He stated the courthouse was something that was a long time
coming that needs to be done and he supports continuing the project.
Councilmember Frate said the council had to make decisions for the greater good that meant
possibly setting some projects back. He remarked he does not foresee them moving all these
projects back five years because he believes the economy will eventually bounce back. He
discussed how investors were interested in Glendale, Arizona because of what the city has
done in the past several years. He commented how the Centerline project was on the front
page of Glendale's section in the newspaper. The article confirmed the work that had been
done with students from ASU and the Centerline project. He explained that Glendale was
one of the few cities revitalizing its downtown area. He understands no one wants to put off
park projects however; those projects were proactive and not reactive. He stated this
development was not in his area but he was willing to delay some projects to help another
part of the city that was in need. He added he and his constituents were very excited with the
Centerline project and what it means to the city as a whole. He supports option 3.
Mayor Scruggs asked staff to recap the financial situation on this issue.
Ms. Schurhammer recapped option 3 by stating that option 3 would allow the city to finish
projects that have funding in FY 2009 although no funding will be available until fiscal year
2014 for general government facilities, flood control, parks, libraries, open space and trails,
cultural historic and streets and parking capital projects. She also noted that limited funding
would be available for economic development and police and fire projects until FY 2014.
Mayor Scruggs clarified that the current projects stated did have funding this year and would
be completed. Ms. Schurhammer confirmed that FY 2009 projects had funding and will be
completed. She explained that the new funding to be provided between fiscal year 2010 and
2013, was the $4 million for economic development and $7.5 million for police and fire
proj ects.
Mayor Scruggs asked Mr. Reedy to clarify the discussion on the $8 million and $12 million
needed for the court project, Mr. Reedy explained that $8 million in other project deferrals
was necessary for the project close out at the $12 million dollar level.
Mayor Scruggs asked for clarification on the $8 million in deferrals needed to complete the
courthouse projects as proposed in option 3. Mr. Reedy explained that the work to date to
complete the site was $12 million dollars. However, $8 million was needed to close out the
project, which would have to be acquired by deferring projects. Mayor Scruggs remarked
that they would be deferring projects whether they move forward with the courthouse or not.
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Ms. Schurhammer replied that she was correct. She noted that the original assumption was
that only $4 or $5 million was needed to stop the courthouse; however, since that time, staff
has learned that deferral of $8 million dollars worth of projects is needed as listed under
option 3.
Mayor Scruggs stated that what she was trying to communicate to the public was that
stopping this project also comes with its own set of consequences and deferred projects. Mr.
Beasley stated she was correct. He noted that option 3 buys time for staff to take a look at
another financial solution, keep the contractors on site and save the cost that will be incurred
by closing down the project. Mayor Scruggs stated it would be a poor decision on their part
to close down the project and incur costs without having anything to show in return.
Mr. Beasley asked Ms. Schurhammer for the next step in the process.
Ms. Schurhammer stated that the next steps were similar to those followed in the past. She
said a preliminary budget will be presented at the June 9, 2009, evening meeting with council
receiving the preliminary budget book about a week in advance of the June 9 meeting. She
said the June 23, 2009 evening meeting will address the final budget public hearing and
adoption as well as the public hearing for the property tax levy. Mayor Scruggs asked if the
property tax rate would remain the same, Ms. Schurhammer stated the rate will remain
unchanged at $1.59.
Vice Mayor Martinez thanked Mr. Beasley and staff for the great work done on this budget.
He believes this has been one of the most difficult budgets they had worked on since he has
been on the Council, He also thanked police and fire for their deferrals to help balance the
budget, as well as all the employees who sacrificed and helped with the budget process rather
than see layoffs.
Councilmember Lieberman also thanked staff for providing the Council with the three
options, as well as the detailed information provided for each item.
Mayor Scruggs stated she appreciated all of staffs work and thanked them for directing them
through what started off as a very unpleasant task. She expressed her gratitude for guiding
the Council through it smoothly and efficiently.
Mr. Beasley stated that the city attorney was unavailable; therefore, there will be no
Executive Session after this meeting.
ADJOURNMENT
The meeting was adjourned at 1020 a.m.
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