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HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 2/25/2020 City of Glendale 5850 West Glendale Avenue Glendale, AZ 85301 CZP Glendale ARIZONA Meeting Minutes Tuesday, February 25, 2020 12:30 P.M. Workshop Meeting Council Chambers City Council Mayor Jerry Weiers Vice Mayor Ray Malnar Councilmember Jamie Aldama Councilmember Joyce Clark Councilmember Ian Hugh Councilmember Lauren Tolmachoff Councilmember Bart Turner CALL TO ORDER Mayor Weiers called the meeting to order at 12:31 p.m. ROLL CALL Present: Mayor Jerry Weiers Vice Mayor Ray Malnar Councilmember Jamie Aldama Councilmember Joyce Clark Councilmember Ian Hugh Councilmember Lauren Tolmachoff Councilmember Bart Turner Also Present: Kevin Phelps, City Manager Michael Bailey, City Attorney Julie K. Bower, City Clerk Vicki Rios, Assistant City Manager WORKSHOP SESSION 1. FY 18-19 COMPREHENSIVE ANNUAL FINANCIAL REPORT AND ANNUAL AUDIT UPDATE Presented by: Lisette Camacho, Director, Budget and Finance Rebecca Chitwood, Controller, Budget and Finance Guest Presenter: Dennis J. Osuch, CPA, Principal, CliftonLarsonAllen, LLP Ms. Bower read the item by title. Mr. Osuch provided the results of the external audit with an overview of the following information: • General definition of an audit and result of an audit • How auditors determine what to test •The Audit Process •The Reporting Package— Reports to be delivered and anticipated completion •Comprehensive Annual Financial Report/ Opinion Councilmember Aldama asked if there were categories in the City that were not touched in the audit. Mr. Osuch said all areas were reviewed unless it had an insignificant account balance. He noted basic procedures were still done on small account balances, in order to ensure compliance with Generally Accepted Accounting Principles. Councilmember Clark asked for confirmation that the audit was done to ensure the City was following accepted accounting practices and reporting methods. She asked if the auditors disclaimed assurances as to the content of the reports. Mr. Osuch said the basic financial statements relayed all the financial activity of the City and included notes. The figures were audited and the opinion was that the financial statements were in accordance with Generally Accepted Accounting Principles. The account balances were audited for accuracy by testing transactions, confirming account balances, and reviewing the activity during the year. The disclaimer regarded the Letter of Transmittal. Councilmember Turner asked about the material findings in the report and the timeframe of the City Council Meeting Minutes - February 25, 2020 Page 2 of 9 misclassification. Mr. Osuch said when items were constructed, they did not depreciate. Once construction was completed, the item should be moved to Depreciable Assets so that the City began depreciating the item. Most projects were completed at or near year-end. There was no significant impact because there would not have been much depreciation unless the project was ongoing for a year or more. Councilmember Turner asked for further explanation of the sales tax deficiency. Mr. Osuch said at year end, there was a double booking of the sales tax revenue accrual and a journal entry was recommended in order to reverse the accrual. It was a one-off situation related to year-end. Ms. Camacho said all findings were resolved at the conclusion of the audit. The auditors identified potential issues and made recommendations on how to correct the issues. Staff corrected the errors before the financial statements were published and before an opinion was rendered. Councilmember Tolmachoff asked if the auditors recommended a process to prevent findings from occurring in the future. Mr. Osuch said recommendations were made. He noted a Corrective Action Plan was received from the City, which indicated what would be done to correct the issue. 2. BIENNIAL CERTIFICATION OF LAND USE ASSUMPTIONS, INFRASTRUCTURE IMPROVEMENT PLAN AND DEVELOPMENT IMPACT FEES (DIF) Presented by: Lisette Camacho, Director, Budget and Finance Rebecca Chitwood, Controller, Budget and Finance Guest Presenter: Jill Shaw, Heinfield, Meech & Co., P.C. Ms. Bower read the item by title. Ms. Chitwood provided an explanation of the following: • Background of DIF— SB1525 • Biennial Certification • Council Feedback Ms. Camacho presented the results of the Biennial Certification. Councilmember Clark asked if the Legislature instituted the new reporting system in 2014 or 2016. Ms. Camacho said the reporting requirement for the audit began in 2014. The first reporting period was 2016. Councilmember Clark asked if staff was aware the legislation required a report regarding how a city monitored DIF. Ms. Camacho said staff had a process for monitoring DIF and prepared an Annual Expenditure Report for DIF. The City had an accountant who oversaw DIF, and the oversight for management and the City was essentially done by procuring an audit firm to conduct the DIF external audit for the periods FY2014, FY2015, and FY2016. The audit period for 2016 was missed and had been City Council Meeting Minutes- February 25, 2020 Page 3 of 9 corrected by Heinfield and Meech. Councilmember Clark asked when the legislation was passed, staff was not aware a new auditing report was required. Ms. Camacho said that was correct. Councilmember Clark asked if one deficiency was the amount of DIF collected for a project, where the amount billed was approximately $1,000 less than it should have been. Ms. Camacho said that was correct. The fee that was charged was $3,322 and should have been $4,207.00. Councilmember Clark said the second deficiency issue was the use of the DIF to pay off debt service for Parks and Recreation and to pay for a second set of turnout gear for members of the Fire Department. Ms. Camacho explained the findings were not regarding an inappropriate use of DIF but were on inadequate documentation. When engaging an audit firm and conducting an external audit, if the documentation did not exist at that time, it was not recreated. There was not enough supporting documentation, however, there was a mechanism to back into the numbers. Councilmember Clark expressed some concerns regarding the documentation. She referred to SB-1525, which required the creation of an advisory committee or a biennial audit of a municipality's impact fee program. She asked why an advisory committee was not considered. Ms. Camacho said the City engaged an external audit firm to catch up on audit requirements. Councilmember Clark asked if the matter would fit under the City's Audit Committee. Ms. Camacho said the Audit Committee would not meet the statutory requirements for an advisory committee. Mr. Phelps said staff would continue to be compliant with audit requirements. He recommended continued monitoring unless there were patterns or issues going forward. Mayor Weiers asked if the following three years had no inadequacies. Ms. Camacho said the latest result was for the period ending June 30, 2017. She said an audit firm had been engaged to audit 2018 and 2019 and she did not expect to have the same findings. Councilmember Clark asked when Council would review a report for the last two years. Ms. Shaw said the last report was completed in June and a report was issued in January. It could be a tighter process but depended on several factors. The timeline for issuance would not be more than a few months. Councilmember Clark asked if data was collected during the field work. Ms. Shaw said data was collected prior to field work. Samples and transactions were selected. Councilmember Clark asked if it took six months to analyze the data. Ms. Shaw said because it was the first year of the audit, the creation of the appendix took the City Council Meeting Minutes - February 25, 2020 Page 4 of 9 majority of time. Mayor Weiers asked if an audit was done every two years. Ms. Camacho said that was correct. Councilmember Clark asked if the audit could be done annually. Mayor Weiers asked if costs were more for a two-year audit versus doing it annually. Ms. Shaw said it could cost more but did not think it was significant. Although the legislation indicated a two-year audit, it would be acceptable to conduct annual audits. She recommended the City Attorney review the ordinance to ensure compliance with the statute. Councilmember Turner wanted to see more attention paid toward the matter over the next few years. He asked if other cities had been unaware of the change in the legislation. Ms. Rios said other cities had been unaware and most were able to correct any issues. Councilmember Clark said it would be to the City's advantage to audit annually and report bi-annually as required by statute. She questioned the expenditure for turnout gear and did not think it was all attributable to growth. Councilmember Tolmachoff did not recall knowing DIF was used for the turnout gear. She asked for clarification whether the documentation was inadequate or missing for both findings. Ms. Shaw explained it was a matter of adequate documentation regarding the percentage of DIF funds for Parks and Recreation and enhanced documentation to support the second set of turnout gear. It was reasonable that DIF was spent on turnout gear, but there was not enhanced documentation attached. Councilmember Tolmachoff asked for the process of documenting the use of DIF. Ms. Camacho said staff consulted auditors, the City attorney, vendors, and others necessary to determine if DIF could be used for a specific purchase. Councilmember Turner recalled a Council policy decision to buy a second set of turnout gear for all firefighters. He questioned whether it was growth-related. A refund of DIF might be necessary. The matter should be looked into further with Council discussion and sampling should be conducted to see if anything else showed up. Councilmember Clark agreed with Councilmember Turner. She was concerned about the use of DIF for turnout gear and would like the expenditure to be justified to Council and requested further research and reporting back to Council. Councilmember Tolmachoff also requested justification of the use of DIF for turnout gear. She recalled Council approved the expense for safety reasons for the firefighters not because of growth. She asked for the justification to be brought back to Council for discussion. Mayor Weiers said the auditor had said it was an appropriate use. Ms. Shaw said that was correct. Equipment was the hardest item to provide support for. Mr. Bailey asked if the DIF fees used were under the new or old legislation. City Council Meeting Minutes - February 25, 2020 Page 5 of 9 Ms. Camacho did not have the information but believed it was the old legislation. Mr. Bailey explained the statutory scheme for old DIF was different than what was in the new statute. Expenditures for various accessories were allowable under the old and were generally grandfathered under the new, but prohibited under the new due to complaints. Councilmember Clark requested further information on the issue of DIF legislation. Fire Chief Garrison said it was a result of the Citygate study. He said the definition of the term "growth" needed to be clarified but did not recall the specific growth discussion. Mr. Bailey explained the term "growth" was not included in the statute. It spoke to necessary public services and defined what a necessary public service was. He agreed there was need for greater discussion and clarification on the DIF program. Councilmember Turner said because there was not adequate documentation, there was no assurance that it was an allowable DIF expenditure. Mr. Phelps stated staff would reconstruct the documentation for the items, ask the auditor to review the documentation, and provide a report to Council. If the expense was not allowable it would be refunded to DIF. Councilmember Clark requested a workshop on the use of DIF. She requested an explanation of what was and what was not allowable under DIF and the definition of growth. 3. NORTHERN107 AN-206 ANNEXATION SOUTHWEST CORNER OF 107TH AVENUE AND NORTHERN AVENUE Presented by: George Gehlert, Senior Planning Project Manager Ms. Bower read the item by title. Mr. Gehlert presented an overview of the annexation request for a 10-acre site at the southwest corner of 107th Avenue and Northern Avenue. Councilmember Clark asked if there was fiscal impact information beyond the first year. Jessi Pederson, Economic Development Assistant Director, said staff did not have information beyond the first year. Councilmember Clark said under current County zoning, the property had a shopping center use. She was not in support of the applicant's conceptual use of multi-family and fast-food establishments. Mayor Weiers asked if it would be net-neutral because the residential and commercial canceled each other out. Ms. Pederson said there would be a positive impact. The annexation was being discussed and the uses would come back to Council at a later date. Mayor Weiers asked if the City provided water and sewer. Mr. Gehlert said that was correct. City Council Meeting Minutes - February 25, 2020 Page 6 of 9 Mayor Weiers had no objection to the annexation. He asked if the applicant had requested the annexation. Mr. Gehlert said it was at the applicant's request. Councilmember Tolmachoff asked the number of multi-family units being proposed and if it was single-story. Mr. Gehlert said it was approximately 120 multi-family, two-story stacked flats, with a maximum structure height of thirty feet. Councilmember Tolmachoff asked if the residences to the west and south were within the Glendale Metropolitan Planning Area (MPA). Councilmember Clark said that was correct. Councilmember Tolmachoff asked where the nearest police response was for the area. Mr. Gehlert did not have the information. Councilmember Tolmachoff was not excited about the proposal. Councilmember Turner said if the parcel was left with the County, the County would determine the use and the City would be excluded from the sales tax revenue. He supported the annexation and the resulting sales tax revenue. Mr. Phelps said once the property was annexed, staff would work with the developer. The City could push the development to the best use and density possible. Councilmember Clark said if it was solely a commercial use, she could support the annexation. Mayor Weiers said it would be a good location for a gas station. He supported the project. Councilmember Tolmachoff asked about the development of Northern Parkway. Trevor Ebersole, Transportation Director, said the parcel would be on the frontage of Northern Parkway. Councilmember Tolmachoff asked if Northern would still be a parkway at 107th Avenue. Mr. Ebersole said it was likely that Northern Parkway would be a six-lane arterial at 107th Avenue. Councilmember Tolmachoff said the parcel was well-suited for commercial, not residential. The parcel was zoned commercial in the County. She asked if the developer would be required to go before the County to change to multi-family. Mr. Gehlert said that was correct. The current zoning was for a shopping center. Councilmember Tolmachoff agreed with Councilmember Clark about commercial zoning only. The City needed to be a good neighbor to the residents in Country Meadows. Vice Mayor Malnar believed Country Meadows would prefer residential zoning rather than City Council Meeting Minutes - February 25, 2020 Page 7 of 9 commercial. The zoning case would still have to come before Council and it would have the ability to recommend something different than what was proposed. He did not have a problem moving forward with the pre-annexation process. Councilmember Turner said there were two existing billboards on the site, which the developer agreed to remove which was a positive. He said it would be better for the parcel to come into the City's control rather than the County's. Mayor Weiers said there was consensus to move forward. 4. NORTHERN PLACES AN-210 ANNEXATION SOUTH SIDE OF NORTHERN AVENUE, EAST OF LOOP 101 FREEWAY Presented by: George Gehlert, Senior Planning Project Manager Ms. Bower read the item by title. Mr. Gehlert presented an overview of the annexation request for a 3.55-acre site at Northern Avenue, east of the Loop 101. Councilmember Clark was in support of the proposed annexation. Councilmember Tolmachoff asked if the property adjacent to the parcel was located in the county. Mr. Gehlert said the adjacent parcel was located in the county. There was Council consensus to proceed. CITY MANAGER'S REPORT Mr. Phelps reported on a discussion held with the Arizona Sports and Tourism Authority (AZSTA) and other stakeholders regarding a new high school basketball event to be held at the State Farm Stadium. The event would be held from June 18 through 21, 2020 and the projected attendance was over 15,000. CITY ATTORNEY'S REPORT No report COUNCIL ITEMS OF SPECIAL INTEREST None EXECUTIVE SESSION None ADJOURNMENT Mayor Weiers adjourned the meeting at 2:14 p.m. City Council Meeting Minutes - February 25, 2020 Page 8 of 9 I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the meeting of the Glendale City Council of Glendale, Arizona, held on the 25th day of February, 2020. I further certify that the meeting was duly called and held and that a quorum was present. Dated this 5th day of March, 2020. ' J . Bower, MMC, City Clerk City Council Meeting Minutes- February 25, 2020 Page 9 of 9