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Minutes of the work session of July 15, 2002 at 6:00 p.m. at the Council Chambers.

MEMBERS PRESENT:

Mayor Ronald Drake and Council Members Marie Lopez Rogers

Peggy Jones

Stephanie Karlin

Raymond Shuey

Betty Lynch

Albert Carroll, Jr.

ALSO PRESENT

Todd Hileman, City Manager

Mr. Andrew McGuire, City Attorney

LEAGUE OF CITIES AND TOWNS RESOLUTIONS

Mr. Todd Hileman, City Manager, said that the Arizona League of Cities and Towns Resolutions Committee will be meeting on July 26 for its initial meeting to consider all proposed resolutions sponsored by all municipalities. He said that the City’s Intergovernmental Affairs Manager Kristin Greene has compiled a listing of five proposed resolutions that she would like to discuss with Council and receive input on. He indicated that they would be co-sponsors on four of them and one the Council would sponsor alone. He then turned the discussion over to Kristin to explain the five resolutions.

Kristin Greene, Intergovernmental Affairs Manager, reviewed the co-sponsored resolutions and indicated that the first one was originally proposed by the City of Tucson and was co-sponsored by the City of Glendale. She explained that it asks the Legislature to support Arizona’s Military Airports and their missions and to support policies that would keep their missions viable and also asks the Legislature to adhere to the statutes that are already in place that have to do with those bases.

Ms. Greene indicated that the second resolution is sponsored by the City of Phoenix as the prime sponsor and is the ½ cent sales extension. She said that the resolution asks the Legislature for permission to run a ballot to extend the sales tax and not establish how the tax would be divided up. She said that they want to change state statutes to allow the region to put that back on the ballot.

Council Member Karlin stressed that it needs to be made perfectly clear that the ½ cent is for transportation.

Ms. Greene replied that Council Member Karlin was correct and all paperwork will have transportation on it.

Mayor Drake asked if the resolution is something the Council wants to support when it says ”or allow city’s acting through their Council of government the ability to call for an election” and said that he would read that to say either the cities can do that as a whole County wide or let the cities themselves to do this so that Phoenix could go it alone.

Ms. Greene replied that she had asked Phoenix’s government affairs people the same question and they said that it hasn’t been decided whether the sales tax extension will be just in Maricopa County or if the rest of the state will be involved and that is why it mentions the COGS because it could include the Pima Association of Governments or the one in Prescott or Santa Cruz so that is what they are referring to. She said that they would have to keep tabs on what the legislation will look like.

Mayor Drake asked Ms. Greene if she could differentiate in the first paragraph the difference between cities in Maricopa County versus statewide.

Ms. Greene replied that it means to allow cities acting through their COGS to call for an election.

Mayor Drake said that it is not explained in the purpose because if it said that cities acting through their COGS the ability to call for an election statewide it would be more palatable because Phoenix has already thrown that gauntlet out saying if other cities do not want to do it they will do it themselves.

Ms. Greene replied that when the League meets in their pre-conference to discuss the resolutions this issue could be brought up and Council Member Lynch is going to be on the resolution committee this year so the City has the ability to authorize Council Member Lynch to say to Phoenix that the City would prefer before they put their name on as co-sponsor that it be amended to read in the way Council determines or they can decide not to co-sponsor the resolution.

Council Member Lynch said that because there could be other cities outside of MAG who may want to do this in their areas she took it to read that if it was the whole MAG, Phoenix and all the cities that supported it then they would do it as one but it also gave the right to individual cities to do the same thing.

Ms. Greene said that Phoenix has said to the rest of the County if for some reason they did not get the Legislature to agree to put this initiative on the ballot County wide or support the division of moneys the way that they would like to see it with 50% going to their light rail system then they would probably do the sales tax extension alone. She said that this was something that they were holding over the other cities heads to make sure that cities help Phoenix pass the legislation. She said that the Regional Council voted as a group that they would not put into legislation this year any division of the sales tax and whatever went into the working of the final legislation would have to be mutually agreed upon by the regional council so that Phoenix would not be able to hammer out what they want on the initiative.

Mayor Drake asked how it could be done statewide.

Ms. Greene replied that it would be a lot more complicated to do it statewide because there are some places like Sedona with a sales tax so high that they may not be interested in joining. She said that each COG would probably do it individually.

Council Member Jones said that it is something that bears scrutiny all the way through because she fears bait and switch tactics and if it extends beyond Maricopa county then there will be an automatic shift to roads because that is where the need is. She said it probably will not be a 50/50 division and she understands that there are some heavy-duty lobbyists coming on in the Highway Administration so it needs to be watched very clearly.

Mayor Drake said that he is not comfortable with the resolution because it does not make sense.

Ms. Greene replied that Phoenix does not need permission to go forward with the tax extension on their own so they would not have to put anything in the resolution that would imply that they could go it on their own. She said that the reason this resolution would be helpful to all cities in Maricopa County is because there will be a difficult fight with the legislature to get permission back once it had been taken away to run this ballot initiative and the legislature is going to want to dictate how the money is going to be spent. She said that the Regional Council has said that they do not want that to happen in the legislature so the language is not going to be in the bill because the Council wants to be the one to dictate how the money will be spent.

Mayor Drake asked if the Legislature is proposing that they know best how to spend the money.

Ms. Greene replied that the bill introduced last year to extend the sales tax had that 50/50 split in it and the legislators wanted to decide what to do with it so it was pulled by Phoenix.

Mayor Drake asked if the Council is comfortable with the wording of the resolution.

Council Member Lynch said that the only reason she was comfortable with it was that they were going after something and not saying how it would spent but if they were saying how it would be spent she was not comfortable at all.

Council Member Jones said that the City of Phoenix could go ahead and schedule an election based upon their charter to extend the ½ cent sales tax for their city and asked if Avondale could do the same thing as a bargaining chip.

Mr. McGuire, City Attorney, replied that it would actually be a new tax to Avondale citizens much like the ½ cent sales tax passed recently. He said that pursuant to the charter an election would be required to extend the ½ cent sales tax.

Mayor Drake said that at least four of the Council do not want to sign on the resolution as it stands.

Ms. Greene said that she would try to get the language clarified and investigate Council Member Jones information related to whether the Phoenix council can extend a County wide tax on its own.

Ms. Greene indicated that the third resolution was submitted by the City of Peoria and Avondale has been asked to sign on as a co-sponsor. She said that it was a resolution that would exempt police officers from jury duty because they are normally excused from jury duty anyway and rarely serve so there is some question as to even having them called for jury duty. She said that there is an issue in cities of not having their officers on duty and there is a fiscal impact of paying overtime when officers are needed to cover their shifts. She said that most people at the League meeting were in favor of it and she did submit it to Chief McKinnon and he thought it was a good idea.

Council Member Lynch said that she thinks it is a good idea but Peoria needs to clarify whom they are talking about because it vacillates between police officers and public safety officers. She said that if they are going to do public safety officers then that includes both fire and police so they need to say Police or Police and Fire and not public safety because they are not consistent in their wording of the resolution and if they do that she is in favor of it.

Ms. Greene replied that she did talk to I.G. in the City of Peoria who did say the intention was police officer and they would work that out.

Councilman Carroll asked what the problem was because they are dismissed any way.

Mayor Drake said that is the reason they should not be sent any way and take the two hours out of their patrol time.

Councilman Carroll asked if that was not their duty as a citizen.

Ms. Greene replied that just because they are exempted does not prevent them from serving if they want to but only means there is no duty to serve.

Councilman Carroll commented that the resolution is for both civil and criminal trials.

Ms. Greene then brought forward the ADOT Highway Litter Removal Resolution, which Phoenix wants some city to sponsor. She explained the problem with the resolution is this year because there is very little chance that any money will be returned to an agency.

Council Member Shuey said that it does not seem appropriate that Avondale should be the primary sponsor for something that Phoenix wants to see especially when it could be used as an unfunded mandate.

Council Member Karlin said that there is a program available where different organizations can sign up to collect litter along the highways which gives them free advertising.

Councilman Carroll suggested that the City might sponsor it to gain some favors from Phoenix later.

Mayor Drake replied that if it is going to cost anything the League does not want the resolution to go forward.

Ms. Greene’s next resolution involved more control by cities as to whether and where liquor licenses are going within city limits. She said that the liquor board has a strong lobby and attempting to take the power out of their hands is futile. She said the resolution changes the Board’s requirement to approve a license after a city has disapproved it to a 2/3 majority for approval even if the City’s disapproval was 51% which does not take any control out of the Board’s hands but just makes sure they all agree that it is a good idea to override a local decision based on local reasons.

Council Member Karlin said that she thinks the Council should sponsor the resolution and asked if there are other cities that would co-sponsor it like Sierra Vista or Prescott where they may have a concern with many liquor stores being in a select area.

Ms. Greene replied that she hopes that at the Resolutions Committee when the Mayor and Council Member Lynch bring this up that other cities will want to sign on and be part of it.

Council Member Karlin said that she thinks this is one that they should fight for.

Council Member Lynch said that in talking with people at the conference last year some of them would sign on to it.

Vice Mayor Rogers questioned if it passes through resolutions is the Council prepared to be the prime lobbyist now or do we need to do it next year.

Ms. Greene replied that she would think that between City staff, the Phoenix Lobbyist, other cities and the League, the City would be prepared to go forward with it if the League decided that it is something they wanted to pursue; she added that we would not be any more prepared a year from now.

DISCUSSION OF METHODS OF ASSURANCE FOR SUBDIVISION IMPROVEMENTS

Mr. Hileman, City Manager, said that Mr. Fitzhugh has been reviewing the City’s policy on methods of assurance for subdivision improvements and he is concerned that the language is somewhat loose in the City’s Ordinance and is providing Council with a couple of options regarding this issue. He said that the first option would require developers to submit a letter of credit on some type of financial assurance in order to proceed with their subdivision which could be pulled down should the infrastructure not be completed. He said the second method of assurance that Mr. Fitzhugh wants Council feedback on would be to withhold C of Os from a developer until all the necessary infrastructure improvements have been constructed to City standards and accepted by City staff.

Mr. Dave Fitzhugh, Development Services Director, said that this is the second time this issue has come before Council and as a result of the prior discussion staff has gone back and done more research in other jurisdictions and have attempted to answer some of the questions that came up during that prior discussion.

He said that the question is the need for a guarantee that the City would not be harmed should a developer default and there was some discomfort that the C of O would not provide full coverage and the City would be exposed to some financial risk to complete the improvements that the developer had started. He said that was in fact true if they do decide to go the C of O way. He said that he strongly believes that this is a tool that could be used with the development community because there is a strong record out in the community of the successful use of this second assurance. He said that the financial assurance does provide the City with 100% financing for any improvements that remain unfinished.

He said that in looking at other city ordinances he felt that Surprise has done the better job of all those cities in putting together clear directions. He said that they have identified specific processes, the what ifs are handled throughout their ordinance and this is the model that he wanted Council to review and consider. He noted that it would become part of the City Code and the subdivision code and they are working on revisions to that.

Council Member Lynch said that she agreed with Mr. Fitzhugh, the City of Surprise ordinance is an excellent format for Avondale to follow.

Mr. Fitzhugh said that the City’s current ordinance does provide a process that is a negotiated process that has to be agreed upon by each individual developer, is not very efficient, and has not been implemented since he has been with the City.

Vice Mayor Rogers asked Mr. Fitzhugh if the C of O would be used as a hold.

Mr. Fitzhugh replied that his proposal would be to have two options, one being financial approved by the attorney and the second would be a C of O hold where they would withhold any occupancy or final electrical permits until the developer has satisfactorily completed all improvements and he has signed off on a letter saying they have done all that they are supposed to do correctly or that they have filed a bond at some stage of completion that is acceptable so they could continue building homes.

Vice Mayor Rogers asked if that would mean that the developer would not have to have a bond in the beginning but could provide one later.

Mr. Fitzhugh replied that was correct.

Council Member Lynch said that what Vice Mayor Rogers said was important because some people have decided that the City is going t o impose the financial assurance up front and it is not depending on the circumstances.

Mr. Fitzhugh explained that if the developer accepted a C of O at first and later they wanted to provide a bond that was acceptable then they would be in a position to issue a C of O.

Councilman Carroll asked why the provisions in the ordinance could not be imposed up front instead of later.

Mr. Fitzhugh replied that the developer has the obligation to build the improvements and what this will do is codify by ordinance how the City will assure that the improvements will be built in a timely fashion either by bond or C of O hold, which is the question before Council. He said that if Council says that they do not want to do a C of O hold then staff would draft an ordinance that specifies the process. He indicated that he does want to clarify the process better and if Council decides that they want both tools available then the draft ordinance will include both.

Council Member Jones said that her understanding is that the C of O hold will be the primary enforcement.

Mr. Fitzhugh replied that they are on an equal basis because the builder can pick A or B and he probably will pick the C of O hold every time.

Council Member Jones asked about there being no obligation to contact the organization financing the developer, which the City has done in the past.

Mr. Fitzhugh replied that there is nothing in the report that discusses that, but the City of Surprise has a section where on the face of a plat on a C of O hold the terminology puts a lien on the property that has to be satisfied before issuing the C of O and he will have to work with the attorney to formulate that language.

Mr. Fitzhugh said that he has had general discussion with the City Attorney about how the lien process might work and it would probably be second tier behind the lending institution. He said that he had a similar discussion with Jerry Levitt of the Homebuilders Association and he relayed back to him his belief that if a project was distressed the lending institution has a vested interest in assuring that the project move forward in some way or other by either bringing someone in to complete the project or find another developer to come in so they could recover their investment.

Council Member Jones said that it is assumed that the City will complete the project but the lender should also be involved in the process.

Mr. Fitzhugh replied that it is slanted toward the City because it is the one that the residents call.

Council Member Lynch said that the only thing she would add, having been on the lending side, is that the lender is not in the business to take real estate and if there is a major financial difficulty throughout the City the lender is going to foreclose and let someone else take over so that they get their money out of it. She said the lender should not be counted on to pick up the project and the City may be stuck doing it.

Mr. Hileman indicated there appears to be general agreement that an alternative form like a C of O hold is a risk the City is willing to take, but should continue to develop a policy that has fairly tight rules which will be discussed when the text is available.

Jerry Levitt of the Homebuilders Association said he strongly urges the Council to accept the C of O hold as a formal City Ordinance. He noted that the C of O hold is a policy that is used valley wide and there has never been an incident where the builder has defaulted and if it were to happen the City would not be at risk because the lending institution has a vested interest in seeing the infrastructure completed so they will complete the sell of the project to another builder that would finish it and the City would not be in a position to complete the infrastructure.

Mr. Levitt said he had a concern about the position of the report that indicates that the City will not issue building permits for the final 10% of the total lots until all improvements for the subdivision have been completed. He indicated that it would be a major problem for Homebuilders. He said at that point they could bond or letter of credit that amount but preventing them from getting building permits would be more punishing that what is necessary and asked that be either changed or removed.

Mayor Drake asked Mr. Levitt if no builder has defaulted.

Mr. Levitt replied that the Department of Real Estate was not able to determine if any builder was not able to finish the infrastructure so there is no track record of having a problem.

Mr. Hileman asked Mr. Levitt to check back with the Department of Real Estate and see if it includes the times a builder has defaulted and bond was used to complete the project.

Mr. Levitt replied that he had asked that question twice and was told very clearly that zero was the case.

Mayor Drake asked Mr. Fitzhugh if what he wanted was the opportunity to enforce a bond or C of O hold.

Mr. Fitzhugh replied that he was asking to have both options in the ordinance.

Mayor Drake said that Mr. Fitzhugh is not asking Council to force one or the other on the builders.

Mr. Fitzhugh replied that was correct.

Mayor Drake asked at whose discretion would either be applied.

Mr. Fitzhugh replied that he would bring back what Surprise has done which comes forward with the final plat to Council and Council could approve it with the appropriate assurances.

Mayor Drake asked if the bond would apply only to new unknown builders and the C of O hold to known builders.

Mr. Fitzhugh replied that other cities do not distinguish between builders because there has to be a level playing field where all builders are treated equally but if a builder is in default on one project and has others ongoing then the C of O holds on the other project could be removed and a bond be required on all.

Mayor Drake said that he would like to see both options included.

Councilman Carroll said that this seems to create a gray area so either do it or don’t do it.

Mr. Fitzhugh replied that he does not see a gray area because the builder still has to do the same level of work and there is some risk by not having a bond or other financial assurance in hand should something go wrong but at least this clarifies it more that it does currently.

Mr. Hileman said that the in between process they have not talked about is the escrow account that is a controlled escrow where the amount of the improvement is put on deposit and drawn down as the bills become due which is the middle ground one that he and Mr. Fitzhugh have worked with on a couple of projects but have not made a policy on for lack of direction from Council which they may want to consider. He said that it is the middle of the two where bonds are more expensive but it does require more staff management, because there has to be a sign off on each portion of the project at monthly draws. He indicated that it is safer than a C of O hold but puts more strain on Mr. Fitzhugh’s staff to have someone to administer that program. He said that Council had discussed that in the first meeting and if they had any ideas on that he would like to hear them.

Council Member Lynch said that an escrow becomes difficult to administer and that is why she did not bring it up and did not see it in Surprise’s ordinance.

Mayor Drake indicated that the Councils’ direction was to include either a C of O hold or bond in the draft ordinance and escrow was not a consideration.

ADJOURNMENT

There being no further business to come before the council, Council Member Karlin moved to adjourn. Council Member Lynch seconded the motion. Motion carried unanimously.

Meeting adjourned at 7:10 pm.

________________________

Mayor Drake

_____________________________

Linda M. Farris, CMC

City Clerk

CERTIFICATION

I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the work session of the city council of the City of Avondale held on the 15th day of July 2002. I further certify that the meeting was duly called and held and that a quorum was present.