City Council - Special Meeting

Good afternoon. Today is February 3rd, 2026 and this is a meeting of the Prescuit City Council. It's a special study session. This meeting is now called to order. Roll call, please. Mayor Rousing, here. Mayor Prom Freeworth, here. Councilwoman Frederickson, here. Councilman Gambboji here, Councilman Garing here, Councilman Grady here, and Councilman Ruby here. All are present. Item 3 A, presentation, discussion, and consideration regarding a follow-up to the January 20th and 21st strategic planning workshop meetings and forecasted meeting schedule for 2026.

Okay. Good afternoon, Mayor and Council. Uh Don Kimble, city manager. happy to be here to to talk with you some more about our strategic plan. As you know, um just a week or two ago, we were together at the Highland Center to talk about our progress so far and some of our our thoughts about the future. This presentation is primarily a summary of that conversation, but then as you have other thoughts or comments you'd like um to to bring up, you're certainly welcome to do so and we can incorporate those before we bring something uh to the council in the next couple of weeks for a uh for a vote on the actual update. And maybe the first place to start is even just with the title. So, as we were looking at the the strategic plan, some of the initiatives, we have the the date, the 2025 to 2029 strategic plan. Um, some of the initiatives in the plan say that they need to be completed by 2031. And so, if we're um if we're using dates, we could call it the 2026 plan. We could call it the 2026 to 2031 plan. um we could call it, you know, prescuit 2030, whatever you wanted to do, but just on the dates we we could incorporate the the latest end date in the plan, which is 2031. Um so again, just just first thought and I see a comment already,

Lois. Yeah, when we were first kicking this off, we were doing it in 2024. So, it was all of 25, 26, 27, 28, 29, 5year strategic plan. So, at this point, you know, we're already into fiscal year 26. So, I definitely agree with changing the dates because this is a moving five-year plan. And therefore, depending on what year we start, whether that be the fiscal year we're in 26, or the fiscal year we're going to 27, 5 years from that, I'd be fine with the dates. Any other comments, Mr. Gambboji?

Having lived in socialist countries, I abhore the term five-year plans. Uh I and I think I brought this up last year, so I don't know that it has to be a five-year plan. And I would just label it the year that we put it together. So this would be the 2026 plan. And if it goes to 2031, I'm okay with that. Uh Mr. Garing, do you have any thoughts on this? I'll leave it to the wiser people in the council to figure this out. Mr. uh Brady Grady here.

Okay. Um, yeah, I like Lois's suggestion that we, you know, just keep moving it forward to the each of the next years, but keep it at a five-year time frame.

Uh, I agree. I think we u need to have kind of a a time, like you said, a time period so it's just not open-ended. I think it gives us more focus. Uh Mary, although there is the emotional uh cringe about the idea of a five-year plan, nonetheless, uh starting the start date with our current year, I think, is appropriate. And I don't agree with just leaving it open-ended. I like having a an end date. and it will roll along as things get changed over the years. But nonetheless, I I don't agree that it should just have a start date and then when this cover what period of time this covers is who knows. I like the five-year idea.

And uh Mr. Ruby, having also lived in socialist countries, I don't like the name of the five-year plan. Um, this is there anything about the strategic plan that has like where it becomes final and retired or is it just an ongoing program?

It's a living document so we can edit and refine and change and and the idea of a rolling plan um certainly works. There may be periods of time when council says, you know what, let's let's reboot. Let's start a new one. Um, usually when you do that, you you'd love to have a a bigger community effort and get a lot of input and and you could do that at any point, but but the idea of adding making some tweaks, taking things off as you finish them and and kind of rolling it along certainly works. Okay. And uh, Lois, since you started the conversation, why don't you end it? Well, thank you. I wasn't done.

Oh, excuse me, Mr. Ruby. I I it's this almost then sounds like an issue of semantics like what do we name it? It could it just be like current strategic plan and we somewhere in the subtitles we know it's like from this year till 5 years out without calling it a five-year plan and that's up to the council. We could include dates, not include dates, whatever the council wants to do. Um Lois, am I are you done? Jay, yes. Okay.

Okay, now I'll go. Um, coming from corporate America, we do fiveyear plans and we do 10-year plans and they mean absolutely nothing other than the time frame that you're allocating resources and capital and other things against. So, we don't have nowhere in the old version or the current version does it say fiveyear plan. It literally spells out the five years we're focused on. So for me, this is about developing breakthrough capabilities that you're not going to be able to get done in a single year overall. And therefore, we gave it that time frame. So I like the timeframe strategic plan.

Great. Okay. I think I'm hearing consensus and we're all warmed up and ready to go here for the rest of it. Yeah.

So thank you very much. So we we've addressed vision and mission in previous years. This year we talked we began our conversation with a talk about the values and most of them stayed the same. Uh I think most of them describe us pretty well. There were a couple u proposals here though. One is to um change the phrase having you know the value or the core belief um from from saying we believe in to defining how we serve. There's action here right? So we serve by um and then listing the values. Um having personal commitment and loyalty um was rephrased to being accountable. A high level of productivity was seen as implied in in excellent results. Um but we added the value of focusing on our community and um solving problems was enhanced with the phrase practicing innovative problem solving. Very good.

Okay, continuing into the plan as we as we talk about public safety. Uh the first item here is just adding some definition when we talk about response times. Uh we wanted to be specific about which response times in the category one or or how do we phrase those? Um currently in the plan in the uh proposed amendments we just define those responses as life safety responses. Uh the the section on or the the initiative related to cellular connectivity uh was moved from public safety to the infrastructure section. Um and result 2.3 um was rephrased to safe traffic flow through enforcement rather than just talking about enforcement for its own sake. And then um the disaster response and recovery item that was in the natural environment section was moved here into the public safety section.

Yeah, that makes sense. Mayor Mary, before we get too far into the weeds, um I want to step back and and at least put myself on the record to the extent that I have a thought. Whether or not it'll rings a bell with anybody else, I don't know. Uh but the under the values idea and I'm looking at an old um version of the strategic plan and I don't see values included so I'm not sure where the red line is redlinining from but nonetheless the last item on the list be nice I don't know that I mentioned it within the retreat when we all got together and talked about this but I am not comfortable with that it seems very um uh and I don't mean this as a pro uh pro pjorative kindergarten uh because what I think is nice is not what other people might think is nice. Uh I can see including a a value for being efficient, effective, competent, uh open, transparent. You know, there are many adjectives I might put on that list, but the be nice uh to my view is rather meaningless and and suggests a smiling face as opposed to being competent in your job, which I think is what most people would want our city government to be.

So, before we get too far into the weeds, I just wanted to include that thought. Yeah. And we did have a conversation about this and um kind of went back and forth and I think um our city manager made the point that uh you know it's on the back of our business cards and that people that apply for jobs they actually are quite engaged when they see be nice and so I think it helps with our recruiting. Mr. Dalen, some comments.

Yeah, I agree. So most of the values to Councilwoman um Frederickson's point most of the values do focus on you know excellence and teamwork and you know efficient effective government operation. Um being nice is something that was thought of as being uh just very prescuit right people who move here one of the first things they say is like wow everybody here is so nice. um wi with the staff that is something that we've actually seen um catch attention in recruitments is people go oh um we've we've seen a lot of places that say be respectful but be nice like I really like that and and that's been something that we've we've heard a lot so we did have the conversation um this is one that that um so all of the values to also answer Councilwoman um Frederickson's point her question. Uh the values that we've been using were developed, I believe, in the early 90s. Um it was a staff-driven process at that time and we've pushed these throughout the organization since that time. Um and staff really they live by these, they're they're judged by these. Um and so um that that was kind of the discussion is this is something we've had for a long time. and it's something that felt really prescuit and it's something that seems to be giving us an advantage uh with our current staff and with uh new folks who are interested in coming here and so the the conversation at the time was to hang on to this one but I know there were different thoughts in the room and there there could still be

I appreciate that and I do remember that discussion mayor when we had our retreat and uh and I didn't expect uh my thoughts to run the table but I just wanted to get them on the record what how I was viewing this. Okay. Thank you. Thank Okay. And any other thoughts on the public safety section,

Lois? Um, I know I sent this to you ahead of time. Um, we had gotten some feedback from the community on what does fiscal year blank mean? Is it going to be done before that date? Is it going to be done during those 12 months? You know, what does that mean? And I had said, you know what, that's a really good point. Should we be aiming for front half, back half or, you know, buy means buy before, you know, or do we write quarters? So, what are you thinking about timing so that we set up expectations aligned all the way around between staff, council, and the public? Yeah, I think any again anything the council wants to do here is is fine. If I could just do whatever I wanted to do. Um, which I can't, but if I could, I would I would use dates and just my analytical brain, I would put a date and a metric and a cost and I' put it in a table and but and that would end up re reformatting the whole whole dang thing. So, in the spirit of an update rather than a rewrite, uh the ability to say um by the beginning of FY28 or by um you know, we could get more specific if council wanted. We could go item by item and try to pin down a more specific time um you know, by mid or by the end of a fiscal year. Um or we could take more of a blanket approach and say um as the mayor prom said by means by. So by means at the beginning of that fiscal year we're going to be at a particular point.

Yeah. However the council would like us to handle that. Um I see that Lars is here in the room. To me um you know we have to think about budgeting. So that's why I think why we should be on uh fiscal years. But is there any way we could describe a fiscal year as, you know, July 1st or end of, you know, June 30th, something like that? Maybe clear it up that way. But I think we need stay on the fiscal year. We could put dates. So instead of by fiscal year 28, we could say by July 1, 2027. Um, that's one way to do it. Yeah.

Even honestly by July 2027. just I'm trying to cut digits out of this thing growing or quarter one fiscal year 27 or but I do like the concept of dates because one of the things you guys are doing is working your way to metrics to go behind this and metrics and scorecards and so the more we're all clear on what the adult goal and deliverable is the more we'll be clear that we're on track to deliver the the results

right and I think maybe if there's any tension in that that topic at all it is We'd always love to have as much time and resources as possible to complete a project so that we know that we're there and and we're ahead of an expectation. Um, and from more of a political perspective, you'd love to see us plowing through and getting stuff done as soon as we can and moving along. So either way, um, we can, again, we can go through and put specific dates on each of these, um, or we can just blanket add a beginning to all of them, whatever the council wants to do. Okay. Any other any other thoughts? I have Patrick here.

Yes, Mayor. Thank you. Um, I think it needs dates. So, I'm I think for the general reader, seeing a date, not a fiscal year, will be much more effective communication. Um, I had a question, Don. So when I'm looking at the plan that we're working from uh result one for public safety does that language through partnerships and investments etc etc all remain yes

okay so the only this just helps me we're getting we're number one's already been completed former number two you're changing that language age um to life safety response times, right? Okay. And then we move to cellular mobile. Okay. Just wanted to understand how it was transitioning from this dock to eventually a new doc.

Yeah. The the intent here is again just to be a little bit of an update. So, we're tweaking um at some point it might be nice to go through it's it's kind of wordy. You could make it real simple and more punchy, but um right now we're just tweaking what we have. So unless I've mentioned an edit, we're leaving it all the same. Thank you,

Mr. uh Kambboji. I support the idea of dates primarily because uh economist Thomas Swell once said that e economics is about dealing with scarcity and this council and our staff have a limited amount of time and I recently wrote an article about chasing shiny objects and we seem in the two years that I've been on council we keep getting new shiny objects just about every month and what I would like to do is be able to point back to the strategic plan and say, "Well, we can't fit that in right now because we're working on completing this by this date."

Thank you, Ted. Mr. Garing,

thank you, Mayor. Just a brief question. Did we not did we decide to not to include Did we decide not to include a response time of 8 and a half minutes or less? So the way that it would read this is this would be in in the amended version strategic priority one number two set currently we'll change the date part by FY29% of life safety response times will be at or below 8 minutes. Okay. Thank you.

Any other comments? Okay. Thank you.

Okay. So, the next Oh, this was also public safety. So, result three um rephrased a little bit. So this would say by fiscal year 30 or we can put a date to it. The community will experience a sense of personal and economic safety through runway infrastructure improvements at Prescat Regional Airport that support unconstrained operations of wildland firefighting aircraft, commercial airlines, and other airport tenants. Uh the rephrase the the previous phrasing referred to the same thing, but this focuses our effort on the wildfire suppression. um first and then on other economic uh potential projects second um which lines up with the way that we've approach this with our our legislators and the FAA and others. So that's just an alignment issue. Okay. Party two is dynamic economy and we can start off with uh fireworks and celebrations because result one um which was the economic development strategic plan um has been completed and we we've done that that was approved um just over a year ago. I believe that was November December of 24 and we've been working on implementation um over the last year. There's um so that one's been operationalized for result two which would now be result one uh to just more specific again starting to move towards metrics and numbers and things that can really be measured. So again, it sounds like we need to address the date, but this as it reads now is by FY28, the city will attract

300,000 square ft of new commercial development to serve the growing number of residents in the northern part of the community. Right? So we have a we're moving towards a smarter goal, right? The new result two then would be a new addition. Um, and this one would say that by fiscal year 28, we would implement business retention and expansion programs that keep 95% of existing businesses in Prescuit, help at least four significantly expand operations, and promote local successes. Again, so there's your retention piece. The first one being attraction, second, retention. Lois,

uh, just a question on, um, the building blocks to get to help at least four significantly expand operations. Is that just a number out of the sky or do you really think you've got ideas and we'll be able to get it done over two fiscal years? We can't name all four. I wasn't asking, right? Like even if I could tell you, I I couldn't tell you. But the idea is with frequent business visits, going to see all of the businesses in the community and asking what they need and asking how we can help

that there will be at least four times and that the number is pretty arbitrary, but there will be at least four times where somebody says, you know, I could use a little bit more space and we can help them to or I could use a few more staff or I could use um something that will make a dramatic impact for my business and for our local economy and we can work together with them to, you know, put things together, to find the bigger space, to maybe help uh find a program that will fund some staff to whatever it is that they need. Um, but that we're not just visiting the businesses and saying hi and being friendly and listening, which we need to do, but also that we're actually helping them act in ways that improve their business.

Well, and I've been on two of the calls, so I know of at least two businesses. So, I just wanted to make sure there was enough confidence we'll be able to deliver this. So, you've got the specifics. Thank you. Okay, Mr. Brady.

Yes. Um, I think it is important to put a number there. Uh, and I think we could quibble over whether it should be four, six, 10, whatever, but I think it's important to have a number. And then when we establish that metric and see how this more aggressive retention program is operationalized, we'll have a more quote unquote credible number as we move forward. And I think it's very important to do what you've done so far. Very good. Okay. Great.

So moving to number three, which is also new um and in the keeping with the theme here so far. So by fiscal year 28, the city will attract 300 jobs in aviation, aerospace, advanced manufacturing, technology, andor healthcare. The um technology was added as a result of the retreat. The other three are identified in our economic development strategic plan. So we're focused on on that plan as well. Um, and again, the 300 jobs is a number that felt doable, but we don't have a ton of history to know how we're going to do, but but we think we can we can pull that off. Okay. Um, so in the amended, um, let me see. So this should say rephrasing result 5.1. So it was 4.1, now 5.1. Um, to say that by fiscal year 27, um, we will complete the airport master plan that aligns with the city's economic development strategic plan for attracting new high-paying jobs and commerce around the airport. Now, that plan is already in in process. When we get into specific dates, this one might not be July 1. This, but it will be um in the in the current calendar year. And we'll get a better date as we look at that with the airport staff. And then number 5.2, um just changing aviation to aviation aerospace to align with our economic development strategic plan. Okay, moving on to infrastructure.

So, refocusing you know uh result one is talking about uh safe efficient flow of traffic and transportation. Uh the recommendation was to res refocus result 1.1 on an analysis of the causes. Um so by fiscal year 28 there will be a completed root cause analysis of serious traffic injuries and fatalities um that will help us to address causes. Uh removing result 1.2 and that was um let me just confirm this. Um that one was related to traffic congestion and what we discussed at the retreat was that that's removing traffic congestion without adding new roads and and lanes on roads is not the math doesn't math. And when we talk about new roads and new lanes on roads, it's really hard to find where a lot of those would go. You can't make Willow Creek Road any wider. um you can't build another road that goes where Iron Springs Road goes or or some of those kinds of things. And so um we're not really sure how to do how to deal with the capacity issue. What we can deal with is the traffic flow, the the injuries, fatalities, make it safe. Um we can time lights and so if you're driving the speed limit, you can move through multiple lights um between stops. Um things like that. Um but but the capacity issue on its own isn't unless we're doing double decker roads just isn't isn't really possible. And then uh one point

excuse me Lois Don just to answer when we were talking about this way back in 2024 the breakthrough was the traffic signals working that plan and that was going to deliver a reduction in traffic congestion. So you know in that regard I understand where you're coming from. We've done that. It's working. Yeah, but we can't do too much more. That's right. And on the lights. So, we have to kind of re-calibrate that every so often.

And we just did that in the last like couple of months. Um, so if you're driving the speed limit, then you should find yourself flowing through multiple lights. And if you're stopping frequently, then just take a look at the speedometer and and uh make different choices. Uh the last part of this section um related to traffic flow um is refocusing 1.3 on implementation strategies to improve pedestrian safety and access. Again, just adding some specificity to this one that wasn't as clear before. Um, specifically, and I didn't put it on the slide, but it just says by FY28, there will be a plan with implementation strategies for safer pedestrian access to downtown and commercial/ retail services.

Um, Dalen, I have a suggestion. Should we do pedestrian/bicycle on that? Uh, just add pedestrian datic to the uh Yeah, I'll I'll look for nodding heads. I like riding my bike, but Mhm. it's up to the I think that's that's important on the sidewalks or in the streets.

Well, bikes are uh on the on the streets, but we're talking about uh safety and strategies. Should we add bicycles to that? Mayor. Yeah, Mary, just a a thought to the extent that this is um implying anyway an action plan uh implementation strategies for biking within the downtown area. I'm don't ride a bicycle, so maybe I'm just not aware, but I it's hard for me to envision how

uh as Lois uh mentioned, bikes on sidewalks obviously is not a happening thing. and whether or not we can make any changes to the streets to make it safer for bicycles downtown. To the extent of an implementation strategy, I'm not sure that that is an achievable goal in the downtown corridor. Any other comments, Mr. Gambboi?

I used to bike about 5 to 8,000 miles a year. I've bicycled from the Mississippi to the Atlantic Ocean. I know a little bit about cycling. And one of the things that we're lacking here in Prescat is education on how to ride a bicycle in the city. Uh the other day, I was making a right turn. And fortunately, I turned my neck as much as I could and saw a cyclist coming down the the sidewalk right in front of me. We have cycle. You're supposed to cycle with the traffic. People cycle against the traffic. Uh I come down Sierra Peaks just about every day where we have a sidewalk and people are walking on the street. So part of that is not structurally changing Prescuit, but I think there's an element of education because it's it's a safety hazard. you I'm looking for a bicycle coming with traffic and here comes a bicycle against traffic on the sidewalk. That's a very dangerous situation and I think it's because people just don't know.

Yeah, I agree. And uh on uh West Gurley, there's people walking on the south side of West Gurley in in the road in the bicycle lane. So, it's just I think personal choice because there's a sidewalk on the other side of the street. They won't walk on that side. Uh, any other comments? Yes, Patrick.

Yes, I think we should add bicycle. Uh, we do have a council member who rides their bike awful lot in the neighborhoods. I'd be interested in Jay's comments, but yeah, I think bicycle safety is incredibly important. I think it's also a key attractor in our tourism strategy. Uh so just like we value hiking and uh I think we ought to value bike bicycling as well and have an implementation strategy to address that. Mr. Ruby,

yes, I like to bike. Um I think it's something that people in the city have wanted for a long time is that the city to recognize the importance of bicycle accessibility. So I think a lot of people would be happy by this. I think it's worth adding. Yeah. So, um I would I would just point out with the language, the language wouldn't doesn't say that we would figure out a way to make downtown fully accessible to all bikes, but it does it would say that we would come up with a few strategies just to try to make it safer for folks who are trying to ride their bike. Yeah. Okay. All righty. So, let's put that in there. Thank you.

Okay. Good. Okay. So, result two remains the same um other than the update um from Simpo to Yavapai plan. Um on result three um which talks about the long-term water management plan um just adding the word you know it talks about a focus on infrastructure distribution delivery conservation. We just add the word capacity to that. um along with safety which is already there. On result four which talks about workforce housing um the just subtle change in the language um to confirm that that effort is for um so it says the city will facilitate a continuum of housing options for residents and employees so they can live, work and be engaged in the Prescuit community. It's not focused on any specific group that needs housing. It it's as the language is from our discussion at the retreat.

It would just say residents, you know, any resident needs housing.

Should I just speak? I'm sorry. Yeah, it's I met with I think Lois, you were in the meeting with uh Vinnie and Y Plan last week. And we brought up they want to be called Y Plan. It's not a word I think is particularly endearing, but probably if we use their name, we should check in with them to make sure they're being called the way they want to be called. Yeah, it's actually should be Yavapai plan, but they shortened it to Y plan now by intention.

Yeah. Not why, but it's it should be I don't know. Maybe we should check. Is it going to be Yavapai plan? Because people are going to look at Y plan and it doesn't really say much. Y Plan is so simp, you know, not the actual name. It was a central Yavapai Metrop Metropolitan Planning Organization. Their name now is Yavapai Plan and they shorten that to Y Plan. So either one is accurate, whatever they want to go by. Yeah, maybe Yavapai plan because people are going to wonder what the Y stands for. But but that is what Vinnie said he wanted people to do is to wonder about it. Am I not? Am I That's accurate. Correct, Lois. Accurate.

He wants people to wonder about it. Oh, that's very philosophical, I guess. Mayor. Yes, Mary. I just wanted to uh say that I appreciate you changing on result four to include residents and employees only in light of the several people who have gotten up and spoken in front of the council for the need for elders on low income uh to be considered within our approach to affordable housing. It's not just attracting workers to live within our city, but the elders who live among us who may be on restricted or low income need to be in the mix.

Yeah. And you know, interestingly, a lot of them are still working by not by choice, by necessity often. Yeah. Very good. And then sorry, mayor, I'm slow on the uptake. Okay. So, I'm wondering where we left the bicycle safety plan. Did we decide on an an educational program to get people to where they understand how to ride bicycles on the streets?

That could be one of our strategies. Yeah. And the reason I raised that is uh my dad was a bicyclist and he had three bicycles which he claimed to have 25,000 miles on each one. His idea of a great vacation was to get the St. Louis Bicycle Club together and ride from St. Louis Abyspo to Tucson. And I hope he made it there safely. Well, yeah. If you go out Foot Fill Boulevard in St. Louis Abyispo, California, you'll find the do Bob Herring bike wave. Oh, that's interesting.

All right. My My legs are sore just at hearing that that thought, but um but yes, so the way we left that one, by FY28, there will be a plan with implementation strategies for safer pedestrian/bicycle access to downtown and commercial retail services. Uh last point on this slide is is again just closing the circle moving the cellular connectivity goal from public safety to infrastructure which we mentioned earlier. The the next item here is a new result five. Um this one's related to the rodeo by FY28. And again we're working on dates on all of these now. Um, we'll complete a master plan for the rodeo/fairgrounds, at least $15.3 million in repairs or improvements, a plan for future maintenance and investment, and relevant lease updates.

Any comments? Got the rodeo included here. Uh, Lois or Jay, are you first? Because sometime I have to remind people I can't after you speak. I can't turn your name off from my screen. You have to do it from your screen. I would love to do it from my screen, but I can't. When I go to the separate screen to look at the issue we're talking about, the request to speak goes away. Yeah, I hope.

Okay, Lois. Um Don, I saw in the um not the not the PowerPoint slide, but in the document you included with it, you had moved the um the cellular mobile devices, but we you left it as saying by fiscal year 20 the community will have the ability to access Sesy contact 911. And I think in the offsite we were talking more about, you know, that people can use their cell phones anywhere in this town, not have dropped calls, not have So if we could remove the 911 and put it at what, you know, the people want, which is I can call anywhere, anytime using my cell phone. Yeah. Okay. Thank you.

Any more speakers? Okay. Thanks. Okay. So also new results seven and 8. Uh result seven would say that by FY29 a complete or we will complete a comprehensive water and sewer utility condition analysis and replacement plan. And result 8 was says by FY30 we would expand the passenger terminal and terminal parking to facilitate safe and efficient movement of airline passenger volumes. two more of just large infrastructure projects.

Can we explain airline passenger volumes? It feels like it could mean a lot of things. Yeah, we can think about those words. So, we're just talking about the number of people who are getting on commercial flights and as we add flights, that's more people. Um, and we don't know by FY30 if we'll snag a fourth flight or not, but but we've got three now. Um, yeah, we we can think of another way of saying, you know, people getting onto commercial flights. Could we change that? Inefficient movement of increasing airline passengers.

Yeah. I because it could read like the volume of the plane. We want to increase like the size of the plane coming in. And I would just say this discussion stem primarily from the fact that planes cannot leave with full passenger loads. So they have to remove passengers during the summer. And I know that was part of your discussion of increasing the length of the runway so that the planes could be full as they left.

Right. Right. Um Okay. So really what we're talking here is with respect to the terminal parking we're talking about airport traffic. Um with the passenger terminal we're talking about you know pedestrian traveler traffic. And so we'll just you know make sure we get the the phrasing on that one right. Um so that clear. Yeah. Maybe ask the airport director to word smith a little bit for us. He knows all the terminology.

Look at that. Okay, strategic priority four um talks about the natural environment. Um at the retreat we talked about adding so to this category. So it is natural environment and community livability. Uh result one remains Lois excuse me you know

it's a hot topic. Yeah, I I'm I'm disappointed to lose preserving and protecting because I think both our natural environment and our community livability, the citizens are asking to preserve and protect and I think that helps us direct versus just the strategic priority is natural environment and community livability. It's like what's the goal from a public point of view. So I don't like losing, preserving, and protecting. I'd be open to other words, but I want to have a descriptor. You know, I think that's a good point. I think we should keep preserving and protecting in there. Um, Patrick, do you have a comment?

I would uh also agree with that. I also wanted to add that um meaningful wildlife corridors was in the original result one and I don't really care where you put it but I'd like to see that language in this particular strategy. Yeah. Do we have anything? Yeah, that's still there. The quarters. I think we should put those in. It's there. Yeah, that's still there. Okay. So, I think I'm hearing um that we'll they'll keep preserving and protecting at the beginning of that title. We'll just add and community livability.

And then result one stays mostly the same including the meaningful the wildlife corridors. Um we're we're adding meaningful to the describe the wildlife corridors and we're adding um land development code updates as a mechanism for the goal. So the full goal would say beginning in FY25 through regional cooperation, partnerships, and updates to the land development code regarding standards for the 25% open space requirement, the community will experience increased trail connectivity, outdoor recreation opportunities, and meaningful wildlife corridors. Thank you. I just couldn't

see that from the notes. So thanks. Okay. Um, result two had to do with disaster preparedness and so we've moved that into public safety. Um, as that ties in with emergency operations and we'd add a new result too. Um, this one would say that by FY28, we will complete and adopt a parks and recreation master plan with a phased implementation strategy that identifies future investment opportunities, timelines, and funding mechanisms for parks, trails, recreation amenities, tree canopy, open space, and other community identified priorities.

Okay, any uh comments? Okay, good. Let's proceed. Also a new result three in this section uh by FY28 we will develop and adopt an open space acquisition framework that establishes clear criteria for evaluating potential acquisitions ensuring decisions reflect community benefit fiscal responsibility and a balanced investment across the parks and recreation system. Lois comment.

Yeah. Um I get fiscal responsibility both in the item you just talked about and now this one funding mechanisms or fiscal responsibility. I do think you know we've had a success with public private partnerships. So I hope that will continue to be part of the solution but my concern is this word a balanced investment across parks and recreation system. that states what the goal is. And until I see the plan, I don't know that I can agree to a balanced investment about between parks and recreation. I think I need to see the plan, the status of the current. We may end up investing more on part of the ledger versus another. So, that's my only concern right now with kind of leading the witness before we see the plan. Any other uh comments on that?

Is your concern with the word balanced or the word investment? Balanced. You'd still be happy with the word investment in there and and an investment across the parks and recck system.

Maybe it's the word a balanced and across. I don't know. I don't know if we're going to invest more in parks or we're going to invest more in in other things. So, I guess the system is called parks and wreck. So, that's fine leaving the word across. Balanced is my big problem right now. Mayor, I would just point out that to to my perspective reading this, I don't see balanced as requiring 5050 or requiring any particular uh weighting of the B investment across the particular elements within the parks and recck system.

Balanced can mean any number of things depending on what the circumstances that confront us at the moment. So I don't see balanced as a problem because I don't see that that ties to any particular outcome. Just the fact that we need to consider the range of what's in front of us and balance appropriately. I'm I this brings into my head the earlier sales tax issue that spoke of roads and open space investment. And when that was voted in, I don't know that I was here at the time, but when it was voted in, my understanding was people thought it was kind of

be a 50/50, and that's not how it turned out. Uh but in this case, a balanced investment since we're all within the scope or the under the umbrella of parks and wreck. Um I don't have a problem with balance because I see that as responding to the circumstances that are in front of us at the time as opposed to open space versus roads which are in two completely different universes. Lois,

yeah, but the whole point of this is about open space acquisition. And so this is mainly aiming towards, you know, trails. And I think the word balanced investment was meant to tell council and leaders, please don't forget about us parks and everything else. And so that's my concern right now is I'm I I wouldn't just say by fiscal year 20 development and open you the whole other thing ensuring decisions reflect community benefit and fiscal responsibility period. Um

it it's almost like it's trying to make sure that result two that the parks and the the previous slide that the parks and rec gets investment as well and future councils you know may or may not be able to do all these things down the road and be balanced. So that's where my concern is is

and balance could mean multiple things. balance could mean, you know, across programmings or categories like you're talking about, it could also mean across geography. Um, it could mean some different things. So, I if you'd like to um add some clarity or definition there or we could remove that, whatever the council wants to do.

Well, the concern had been that, you know, recent councils have spent way too much money acquiring open space. I'm just going to lay it out on the table. We've spent way too much money acquiring open space and so therefore maybe our parks and recreation services and systems aren't where they need to be. And again, decisions are made by leaders that you elect at that time and what they think the priorities need to be. So that doesn't always mean it's going to be balanced.

People leaders, elected leaders are going to make choices and it may not be balanced and it hasn't been balanced. So I just want to leave the the flexibility to who's ever sitting on this dis down the road. Are they going to upgrade several parks that need it badly or are they going to buy this land that's available right now? Not a year from now, not two years from now, right now. And that's hard to say those decisions are going to be balanced down the road.

Yeah. I'd like to weigh in on to me balanced investment is to assure people that we're not going to focus too many resources on acquiring open space at the cost of public safety. You know, building fire stations or other infrastructure, water and sewer infrastructure that it's it's going to be uh balanced. But I don't know. What do you say, Mr. Garing? Uh, thank you, mayor. I actually think that we should just remove the word balanced or if we leave it in there, we put in a very concise definition of what it means.

Right. Well, Dalon, you've got your direction. I've I've heard three different um definitions, which means we need clarity. Right. So, um, we'll work on this some more and we'll bring that back at the voting meeting so you can, um, see see the new language and see if that if that better fits what you're wanting to do there. Maybe ask AI.

Okay. So, then result four and result five are both new. Result four says that by fiscal year 30 we will expand library services for North Prescuit. And result five is that by fiscal year 30 will complete restoration work at Watson Willow and Goldwater Lakes. Any uh comments on those results? Um Lois,

I I do think um we should through the definition of complete restoration work. What is that going to achieve for the public if we could describe what that means? Because otherwise restoration work is very beauties in the eye of the beholder. So just what are we intending and why for what purpose?

Got it. Yeah. So we we have the plan and we'll just pull from that plan uh more on purpose and and direction and goal. Okay. The last uh strategic category number five is good governance and some changes here. Uh result 1.1 as we discussed has been oper operationalized and can be removed. So more fireworks and celebration. This is great. uh we would add a next step to the new result 1.2. Um so the the the full section here, you know, there's an existing section and a new section. The full number two would say to ensure financial transparency and accountability by FY27. The city's budget will be tied to results. To further increase financial transparency and accountability by FY28, the city's budget will be resultsoriented and integrated with long-term forecasting.

Any comments? Lois. Lois. Okay. I'm not sure I understand totally what that means the on FY28 the city's budget the fiscal year 28 new sentence so I read that to mean that by fiscal year 27 we'll be able to have some performance indicators and we can see the budget amounts and the the performance numbers

I love the word performance indicators or performance performance. Yeah, I get now. I'm getting you on the first sentence. So, what's the first second sentence? The second sentence is not just that we have them, but that we're actually doing priority based budgeting. My god, that's so much simpler. Can you please say that? Okay, I get that.

And priority based budgeting also ties in the the long-term forecasting. Okay. So, there would be a new result uh two focus on engagement, right? So, the city will expand public information and community engagement um by hosting a nocost state of the city event at least annually, hosting at least four town halls or community engagement events annually, sponsoring a booth at the farmers market or other public event at least 12 times annually, um and attending at least 12 neighborhood meetings annually. Is that like each one of us has to attend 12 neighborhood meetings or is that cumulative between city council or staff or

it says the city so it's cumulative because we did we did does the event yes last night for the rodeo does that does that count because that was kind of a open house. Yeah, that's that's up to you, right? But how we define it, I you could call that a town hall because because it was because there were a lot of people there and I talked to a lot of people about everything but the rodeo. So, it was kind of like an informal town hall, but they were there and they had things to say.

Yeah. Anytime you're in public, you'll get a lot of questions about whatever. Plus, especially if it's after 9 to5, you know, we're all down there after hours and so I think we should include those uh events that we have,formational events. Yeah. And and so some of these we've already started to make some progress on with the first state of the city. We do we're pretty consistent at the farmers market at least monthly. Um but we could also continue to build with the neighborhood meetings and the and the town halls. Mayor. Yes.

Just a question to the manager. Uh, is there somebody actually on city staff who is has got a little tick mark as we go through the year whether or not we're meeting these goals? Yes. Well, that's a little scary, but thank you. Get going.

Yeah. Time to go meet some people, right? Um, so new result three focus on regional cooperation, relationships, and advocacy. So, um, and I'll just read it here out of the document. By FY28, the city will continue and enhance regional cooperation, relationships, and advocacy by actively participating in regional conversations around water, open space, transportation, wildlife corridors, trail connectivity, economic development, housing, and other topics that are vital to our way of life. and two, tenacious state and federal advocacy for legislation and funding that improves quality of life for Prescuit, our regional partners in rural Arizona.

Yeah, I think that's very important that we have that in there because a couple years ago we didn't formally do that. I mean, we never went down to the state legislature and spoke to our legislators in person. and we never went to a hearing and we never had the legislators come down on a regular basis at the end of their sessions and uh have a study session and meet with council. So uh we're definitely formalizing that and uh making some progress especially in the area of getting receiving appropriations now. Any other comments Patrick?

Sorry I'm back on the previous page. So, town halls, um, I think it's a great concept. Um, I'm curious in our definition, is that a town hall around a particular subject matter? Is it a general town hall? Does the mayor call for a town hall? Does city staff create a downtown? Can a council member hold a down a town hall? I need a little clarification then of what we're going to consider. Yeah, you're in charge of the first one, Patrick. And it's due by March. We got to have it by March, the first quarter.

I can choose the topic. you learn anything from that? Yeah, we got to meet our uh I don't know if this is what the council would want, but I would envision something like what the council's policy is on put you all putting agenda items on a meeting agenda. So that would be either the mayor or two members of the council would be able to um you know determine a subject for a town hall and work with Lizette on hosting it. I think Don that would make sense if you agree. Yeah. So the the short answer to your question was yes.

Um all of those are are great ideas. I think there are we could have some sort of a rhythm where we're watching that if we haven't had a big public meeting lately that we're just scheduling an opportunity to talk. Um but we could also focus on specific topics. Um, I find when I talk with public groups, if I will lead off with a topic so they have time to think and then just do Q&A that usually there's a lot of things that come out and and we're really effective at reaching or or providing the information that people actually want um versus me just joining on on what I think is cool, right?

So, I I think there's kind of a a mix there um where we're all just kind of working together on topics. Uh certainly if council members wanted to have uh town halls, we've been trying to work with HOAs and um not made a lot of progress there. One of our HOA manager or HOA management companies has sort of blacklisted us as political and that's we're trying to explain that that's not our intent, right? Um, so we'll keep having that that conversation, but um th those 12 neighborhood meetings I think will be a little bit um tougher at first because it's new.

But um but yes, staff will help coordinate as council wants to get out and just listen or talk about a topic.

Um I I like Sarah's idea of having either the mayor um call for a meeting or having two council members say they want to get together and have a meeting. Um, I I think those are all good ideas. I think uh one of my suggestions since we're entering fire season, I think something on uh uh fire awareness preparation, h home hardening, and uh also have some insurance people come in and because a lot of us have had our insuranceances not renewed and what we can do to by decreasing our risk, uh we can uh work with the insurance companies to uh make sure that they'll still uh insure us. You know, I think those are a lot of topics that people have a lot of questions about.

Yeah. And that could be timely um as we as we get into spring, particularly if it continues to be dry. Oh, Lois, thank you. Um, you know, the the other thing is we we will probably have some things on on uh upcoming ballots and it would be important to host town halls kind of like we did with 478 at the adult center where we could educate people about the the wise and the why nots and the pros and the cons and talk to people and get the issues and stuff. So, I think it I think the town hall is uh could be very topic based. That's what you guys were talking topic based stuff and I do think we're going to have several of them coming up in the next year.

Yeah, especially the general we could include the general plan charter amendments. We all got all kinds of things.

Yep. So we should have no trouble on that part. So that completes the strategic plan portion. Thank you for for all of your comments on that. Um just the last part to talk about and I'll get some help from from it here is just the specific calendar for this year. So we have all these strategies, all these priorities. Now we're a little bit into sequencing. And so we'll get the um the schedule up here and talk just a second or or the time we need I suppose about how any of us are going to read that document. Yeah, exactly.

There we go. Um just so about sequencing, right? So we've already been talking about these special study sessions through the spring so that we can get through a number of issues and keep things moving. But if council would like to change the order, add, remove, any of that kind of stuff, um certainly open to that conversation in any direction. Patrick.

Yes. Thank you, mayor. Um, so I didn't review that in depth, but I like the intent. Um, I did have one specific question related to the general plan. So, I think there's a study session on June 9th, and I don't we'll figure out later what the purpose of that is, but I'm concerned is in order to get it on the ballot in November, isn't there a drop dead date like the last council session of June? I'm just trying to remind myself what

Yeah, it's either late June or early July. Sarah, do you remember? Um, in order for me to get the ballot language to the county on time, it would be the last meeting in June. Um I think at this point as far as the general plan is concerned staff's perspective is that we really need some more clear direction on you know the last meeting it was suggested that all three like the 2015 general plan the March and the June 2025 versions of the general plan um would all be reviewed and up for discussion. you know, that's a lot of review. Um, and the reality of getting that on a November election is pretty slim. Um, but staff is prepared at the first subcommittee meeting to kind of get into some of the specifics of how you all would like to move forward with that. And so that'll give us some better timing idea. Um, but this was the draft that's been put together for a while. And so that was on there at that date. Yeah, kind of a placeholder from the direction we received at the last general plan conversation. Uh we've been targeting the August 2027 election. So, this would be just a a progress update. How how's the committee coming? How are we doing between now and June? Am I to understand? I thought that the that we were going to try to get the general plan on the November 26 election ballot.

November 4th. Yeah. November 4th, 2026. It's November 3rd. 3rd. Oh, darn. I was so close. So close. I'm sorry. I thought I heard you say November 26th and I It's year 2026. November in 2026. November 26. Yeah, it could be a moonshot, but you never know. We might do it. And if we don't, then we can default back to August of 2027. And the big,

excuse me, the big question will be addressed when the committee first meets and they go they have to publish a a schedule and they'll have to discuss that. And one of the big questions is what are we going to do with the current version of the plan because we have notice requirements. So for revamping the plan, we have a much longer notice requirement that makes it impossible to do it this year. If it's just a tweak of the current version, then possibly we can make it. But that's going to be the first discussion at that uh subcommittee meeting. Plus, plus we have to get the consultant hired and get their input, too.

And mayor, just to clarify, Mr. Young, uh, is there some bright line that we can think about for those of us who are on the subcommittee where it falls from little tweaks to revamping? I wish there was a bright line. There's not. So, we make a reasonable determination based on what we're going to do at that point. Um, but no, to answer your question, there's no bright line rule. I was afraid not, but thank you. Mhm. Yeah. Mayor um Jim,

a couple of general questions on the strategic plan process. It seems to me that a lot of the strategic plan that we've been talking about is going to add to staff workload. And it also seems to me that uh a lot of the strategic plan might have an impact on budgets. curious what your thoughts are on that.

I agree with both of those things. So, um the the LD workload and budget. So, if the council approves the plan with the updates or or even with the existing plan, that's just the first direction for staff. As we're looking at our budgets that we're preparing and we look at our our work plans for the year, we prioritize anything that's in the strategic plan. And if for whatever reason we we were in a situation where budgets were particularly tight and we didn't think that we could complete a project, then we'd have to come back with a recommendation to delay that particular thing or um change it somehow so that so that it could work. But to the extent possible, when we're developing our budgets and we're developing our our work plans for the year, we just prioritize those items and and try to get them done. Um and then we we talk about that through the budget process. It's also possible that in a particular budget, council could say, "Hey, we know that this item is in the strategic plan, but in this particular moment, we're, you know, there's there's some other priority, right? Maybe we're we're needing to divert money to, you know, attract public safety employees or whatever it is we're doing." Um, so that's it's it's a living document. We can change it, we can update it, we can all that kind of thing, but we'll prioritize completing this work over other work. um and opportunities.

Yeah. And I'd like to say thanks to the consultants that worked with us. They were catalysts, help us keep focused and uh they were very instrumental in helping us come up with this uh strategic plan. Yeah, it was u Michelle Ferguson with Rafelis um did a fantastic job. I I had a quick question because we mentioned we mentioned the state legislature. Is there a date set when we're going down to the legislature?

Um we just went down last Monday. It's important that we go down as soon as possible at the beginning of the year because that's when they're they start their session and they start working on their budget. So, you have to get your appropriation requests in and then at the end of their session, I believe it's in is it August, September when they're done? They're supposed to be done by the end of April. Yeah. But they're required to be done by the 30th of June at the latest. But August and and September are painfully accurate.

Yes, that's what I I've never seen anything in April with. end. But then that's when we get them on our schedule to have them come here and have a study session and give us a report as to what to expect, what they did, and then we communicate to them what our expectations are, and uh just kind of have a uh So, you just said we went down last Monday cuz I don't remember being down there.

Oh, I'm sorry. Yes, it was uh the mayor, mayor prom and um Dalen, the city manager. Uh the year before we went down and it was felt that uh we had too many people. We needed to be more focused and u so if you um would like to be included next year, we'll certainly uh consider that. Thank you. I would add too that we uh like last year we went down multiple times. Um there's still other opportunities this year when we may go down and particularly if we're watching the you know the legislative updates we get from our consultants and from state 48 and other kind of activity. if there are particular bills that we can go and and um testify in relation to um advocate for or oppose um those are those are really great opportunities uh to get down there and get you know kind of meaningful facetime. So the 26 was our our first time down kind of an introductory hey here's what we're doing this year. Um and then we'll continue to watch and and when it's um strategic, when it makes sense to do so, we'll schedule other visits.

Yeah. Yeah. Let me clarify. We just our plan was to at least get one meeting and get the ball rolling, but there are opportunities for as they come up, our lobbyist lets us know that, hey, there's a hearing coming up. You might want to come testify. So, yes, there is. We're trying to get a two-way conversation going where in the past we had no conversation, Lois. Okay. Um, regarding the calendar, um, there's a couple of things that kind of struck me. One, um, the midyear budget report being at the beginning of March, I seem to recall in the past we were doing them more at February, more midyear. Um, so it just strikes me kind of like that's late. Um, and I'd love to see the data sooner. Um, which then for me brings forward like if I look at the county and other organizations, I think they get budget reports more on a quarterly basis. So that's what I would love to see and strive for. Um, I like the fact with a largely new council, if we were to pull the midyear budget report up, you've got three dates. You've got March 3rd as a part of a budget workshop. You've got March April 21st as part of a budget workshop. And each our special study sessions have been 2 hours. So that's 4 hours. And then and then we have a budget workshop and I don't know what the in uh May 12th and it says full session. So I'm assuming you want the whole two hours there too or are we extending this? And the only reason I'm bringing this up is as a new person trying to learn the budget in 2024, it was two 4hour sessions that you really were able to get deep, wrap your mind around things, hear from all the department directors. And my fear is with a lot of new people

on the council taking things 2 hours with weeks in between, we're going to get lost. We're going to get lost. And so, you know, I would really like to spend more quality time than than this is now six hours compared to what we used to do, which was eight hours. And it used to be in two weeks back to back versus 3 months. So, that's my concern. I'm very concerned with our ability as a council to really understand and do well in this process. And that is one of our biggest responsibilities as a council member is really reviewing and approving the budget because you're going to have to answer to constituents down the road. So that's my fear,

Mr. Garing. Oh, I'm sorry. Uh I'm sorry. I forgot to get my red button down.

Oh, okay. Thank you. Uh, does anyone have any um thoughts about having the budget discussion more frequent and shorter or less frequent and longer? Because I remember we we would do it less frequently and longer. And uh Lars is here. Um do you have any thoughts about this? He's our finance director. Yes, good afternoon. Uh, we structured this a little different. I mean, the midyear got pushed a little bit based on other priorities, but two weeks.

Yep. Two weeks later. The idea with that one is we would give you an overview of what challenges we're facing this budget. Um, so you're kind of made aware of what we're dealing with and then we come back later to give you an update how we solved that or how we balance the budget. Um, but your suggestion to kind of consolidate the work, especially the May 20 or sorry, the April 21st and then the May 12th, get those closer together. That's totally fine with me. Um, but if we do that, it should be in May instead of April uh to get us the time to put the full budget together because when's the the deadline? Um

uh we adopt the tenative budget in the first meeting in June. Okay. Yeah. All right.

Okay. Mary, just looking at that first um budget oriented meeting on March 3rd and including both a mid-year budget report and the 2027 budget workshop. I know, as Lois might mention, there are several of us on the council now that are fresh faces. Uh, as a 2hour period, I can only imagine that being taken up with the whole 2-hour period to get my head wrapped around where our current budget is sitting and the challenges that uh the city is facing. I don't see that there would be any time left over at that point to begin talking about the next year's budget. So, I don't know if there's going to be enough time for the new people on the council to absorb what is being presented if there is both talk about the current year's budget and looking ahead to next year's budget just as a new new face. That's my thought.

Uh Lois. Yeah. And on that same day, we have another topic. So, in a two-hour meeting, we're going to do three topics. And the other one is important, too, in terms of solid waste funding. So, I I I just don't think this is a plan that's going to get me where I need to be to vote in June. Um there's going to be four other issues of big things going on. The rodeo, you know, uh WOOI code adoption, all these land development code options. You're mentally you're mentally fragmenting us. So if you really want us to get our minds wrapped around these things, please don't take us one hour at a time spread over four months. I just don't think this is a plan for success. And and I've said this multiple times and it just continues to perpetuate itself. So I'm not sure what I have to do to change this plan, what I have to say. So, I'm saying it today in front of everyone in the public that this is not working for me and I know what I'm doing because I've been through two budgets so far.

Yeah. Yeah. I I agree. You know, even even with a longer meeting, you kind of get into a flow and uh instead of stopping in midflow and then having to come back and start all over again. It's kind of like being in school and having frequent Christmas breaks and holidays and the teachers trying to get the kids back in uh back in the groove. But uh so what do you what do you think Mr. Manager? So, generally, um, in in all of the years that I've been here, which is quite a lot, um, the midyear budget report is sort of a brief synopsis of where we are at in our current fiscal year. It is done in a study session either end of February, beginning of March. Um, and in fact, last year it was part of a study session that had um five total items on it that were all kind of brief updates. Um, but it isn't usually done in alignment with kind of a preview for the next fisc year budget. Um, when we were putting together sort of the general outline for the study sessions, it was indicated to me that there was a request from a couple of members of the council to have a number of meetings related to the budget over the course of time so that um by the time we got to the main budget workshop, which we always do in May, um there would be a firm understanding hopefully um of all of the steps in the budget process. So that end of February, beginning of March is typical for the midyear budget because that's kind of a recap um as I said of the current fiscal year that we're in. We can certainly move off that preview on the third um if

you all would like to see it a little bit more consolidated later. Um, and that could be done in alignment with the main budget workshop, which is what we usually do in May. And that's a 2 to 4 hour meeting. Yeah. Some years we've done two days, some years we've only done one. We've mainly done four two days of four hours each, except for last year, the first time we ever did one 4hour meeting. Mhm. And we didn't get it.

We didn't get it. If you're looking for rubber stamping, you can continue on the plan with one day, one 4-hour meeting. It didn't work for us. So, I'm just saying if you want it to work for us, you need four. We've always done half days on Thursdays, four hours or some other day of the week. We didn't we didn't squeeze it into the Tuesday study sessions. And we've dedicated enough time so you could go deep on two or three departments in a row because that really helps you get your mind going on the budget. Yeah. Especially when you're new. So we had one topic and that was the budget. That was it. That was it. The budget. And that's what we did.

And we went all the way through every single department and we went all the way through the the capital plan. We spent a couple of hours on the capital plan as a separate meeting. So I I'm I don't know who thinks this is a wonderful idea of the council, but I'm just telling you the one of the more experienced people here is saying I won't get it again.

So um couple of things here. So first of all, after budget meetings, we always get both feedback, right? So some council members like to spend a lot of time on it, really dig in and spend a large amount of time. Others say it's too much. all at once. I need time in between to process. So that was part of why um we set this up actually so that there are several topics education on topics related to the budget leading up to the budget but then the actual budget meetings are still later in the in the process. Um the thought with the fiscal year 27 workshop in March um was also along the lines of you know when when we get to the budget conversations in May and June the budget's basically done and if there's a significant change that the council wants to make it's a heroic effort to get there. And so we wanted really early in the process to say okay council here's where we think we're going. Here's where we think some of the big issues are going to be. um let's get some input up front and then we can um as we're building the budget, we can take all of that input and stick it together. Um so we can um and then all of this was intended to also partner with one-on-one meetings with each council member um with our finance team um to go through to go through the whole budget. Can I ask that we just do two on twos because the one-on- ones take up a lot of time and a lot of time the one-on ones don't happen before it's on the agenda.

Mhm. So, could we pair up again? Sure. Okay. Thank you.

We can certainly do that. If council would like, um, again, we can take these sort of educational sections and bring them all into a longer budget conversation or we can leave them spread out and look at that April May time frame and schedule a longer period there so that we're doing what I'm trying to get out is both, right? Um, avoiding the too much too fast so that people can process and follow along. Um, but also having the time to make you feel like you've you've had the time you needed to dig in deep and really understand. So, um, I don't know if you have further thoughts on that, but um, in my head, just based on the conversation, I'm thinking, you know, we could take that April meeting and the May meeting and combine them into a longer session. What, you know, maybe it's the the two days. Um and then um and then still do some of the topics ahead of time or if you don't want anything ahead of time in terms of these educational sessions, we can we can try to hit it all in May. It just it could be a lot.

Is that okay? Does that sound good, Lois? I've already said what I have to say. Okay. And then I will show up when you tell me to show up. Okay. Any other comments? Yes. Sounds like a compromise, but Patrick,

I just wanted to add that I I like the idea of the uh midyear report. Um I think that's kind of for some of us will be our first introduction to the budgetary process. I think that's really important. I wouldn't put that in, you know, with with the 4hour study session later on. I think that's going to be really helpful to get some background information. Okay, thank you. I still have my my green button. Oh. Oh, there you are, Mr. Ruby. I'm sorry. You're down there in the lower 40. I kind of forget about you down there. Lower 40.

The lower 40. The bottom lands. Yeah, I I do like actually I'm kind of and both on this. I'd like to hear about the budget when it's scheduled in March. And I think that'll help me to begin to think about it. But I appreciate the idea of an intensive deep dive because I think wrapping my head around what every department needs will be facilitated by a high density moment of really thinking about it. So I sort of back what Lois is saying here. Yeah. And I think having two on twos instead of oneon- ones will be helpful. Okay. continue.

Yeah. So, that's all great. So, we'll make some changes um based on this feedback and um and then I'll also note that there was the comment about the quarterly budget updates and that is absolutely the intent. So, um November 3rd you'll see the the first quarter update um for the next fiscal year and then we'll do a mid-year update for the next fiscal year. And so, you'll we'll start to get into that pattern of fiscal I think that's a good idea. you know, quarterly fiscal updates uh for the council um and for the public so they can follow along where we are.

Okay, before we u move on to item 3B, I think we need to take a few minutes break about five minutes and then we'll come back and talk about funding options for utility projects. Yeah.

All right. Our next item is a presentation and discussion regarding debt funding options for utility projects identified in the 2024 rate study.

Good afternoon, mayor and council. My name is Lars Johnson. I'm the finance director for the city. This study session is about financing our utilities capital plan or financing alternatives. This is a good continuation of the last week's meeting on the wastewater centralization topic. Um, a lot of what we're be talking about today is our wastewater system specifically and how to fund those projects. So today there'll be two parts. I will give a background kind of about the rate study, the rates that were previously adopted, talk about our current debt that we have and what the future plan looks like for our debt, the amount of debt that we'll be needing to acquire. And then we have Kurt Froin. We're fortunate to have Kurt from RBC here to talk more about what our other alternatives are to finance these big projects. So, first uh as a background, the city of Prescuit goes through a full rate study for our utilities every five years. That plan includes a 10-year financial forecast with 10 years of projects identified, but we only adopt five years of rates at a time. The last plan or rate study was done in 2024. The city council at the time adopted the rates in May of that year with the following effective dates. Uh it was July 1st 24 and then January 1st of 26 7 8 and 9. So there's five incremental increases to our rates that were previously adopted. When I was preparing also I noticed some context on impact fees would be helpful that wasn't included on this slide but we at the same time of doing rate studies we do our impact fee studies and the reason is those two go hand inand to fund our capital plan we also need to

evaluate how much development can contribute towards those projects. So each project is evaluated for what percent of that is growthreated versus not. How much of that project is replacement? How much is growth? So that impact fee study also adopted rate increases. They were effective January 1st of 2025 with significant increases around our utilities. Overall the rate the um impact feed for utilities went up 42%. And in wastewater specifically it doubled. So uh for example at the 5/8 meter for wastewater impact fee was about $3,000. Actually I have it right here. 320 it doubled to 6,036 for wastewater. Um I just want to bring this up so that we don't think that rates are the only thing contributed to funding the capital plan in impact fees on new development also contribute and overall I looked at okay how much of the capital plan is funded by impact fees in total and for wastewater approximately onethird is funded from impact fees and in water it's about 20 20% %. So now I'll cover just a few slides on what rates were previously adopted. This is a good reminder to um council and also the public of why the rates had to increase is because of these capital plans that were in place. And so the first two um columns indicate rates that have already happened. So the last rate increase was January 1st of

this year. Uh the first change was 13% for water. Then it was 11% and then after that it drops to 2% a year. So we can see that leveling off. And wastewater 18% increase for the first increment and then 17% dropping to eight seven and four. So, how does this look like from a customer bill standpoint? We have a few examples here on the slide. Uh, just to clarify, these numbers are only the base fee, volume charges, and the aquafer protection fee. It doesn't include solid waste and your applicable taxes. So, this is water wastewater components only on the utility bills. The average usage in the city for residential class is 4,600 gallons of water. And so the 5,000 is kind of rounded up from there, but you you'll notice the increase below for the dollar amounts and then the percent increases for both water and wastewater. So, the most recent one of January 1st, 2026 was about a $14 impact for someone that uses 5,000 gallons a month and waste water at 3,000. And then it goes uh 5% 4.6 and then 4.1. I'll just breeze through these. If you have any questions, let me know. But residential was the first slide and now this is non-residential with a 1in meter and a 2-in meter at two different usage tiers. Now shifting more into utility debt. This slide kind of addresses why we

issue debt for utilities. the when we issue debt, we know it's going to increase the overall cost of the project because we're paying interest over the long period of time. But there's some trade-offs and one particular reason is um these large scale projects have a useful life of 30 to 50 years. So if we were to um set rates to fund those with accumulated balances, our rates would be extremely high. So, this allows us to deliver projects out into the future to serve future customers and having customers pay for that as they're using them through debt service. We know um it's important to evaluate the financial strength of the utilities and that's what the rate study does um especially around um requiring sufficient revenue to cover the debt and operations and maintenance. We also have a debt service coverage ratio that is monitored and we have a covenant with our current debt holders to maintain a certain ratio of revenue versus our debt service. So that's uh also a um important aspect when we're setting setting rates and then considering debt. Now a little bit about what our current debt looks like in utilities. We currently have 13 different loans with the water infrastructure finance authority to this point. That's the the main uh mechanism we've used to fund these large projects. Our total balance as of June 30, which was the last fiscal year that we closed, was 98 million 832,000. The terms of the loans range 20 to 30 years. And in addition to to WIFIA, we also

have one revenue bond outstanding and that's for the Big Chino water ranch purchase. Some of you on council recall that we recently refinanced that. We it was held under the MPC Municipal Municipal Property Corporation that was refinanced to get a lower rate. Uh we issued bonds and paid those off and then we have 5.3 million outstanding on that one. Do you remember what the original cost was to buy that ranch? Unfortunately, I don't have that. Okay. Available, but I can get it to you. I'm thinking 20 million something, but we'll look it up.

This next slide is detailing out those 13 loans that I mentioned. The interesting thing I noted was that we have several loans that are just about ready to be paid off. So, um, drinking water means our potable water delivery to customers and clean water is our wastewater system. Um, so you'll notice the intermediate pump station was the most recent uh larger debt that we issued under the water system. that totaled about 59 million that was actually the Chino booster station and the ch the intermediate pump station. And then we reissued a recent one for the zone 41 tank improvements. Um as of June 30th last year, there wasn't anything drawn yet. And then in our wastewater system, we have several. They're just about paid off. And then we had one recent one in 2018 for the sun dog trunk man. Now what does it look like for the future debt? The rate study process includes an evaluation on whether we should be issuing debt to for projects or whether we can cash fund or another term we use in the industry is payo. You pay as you go. The the balance the ten the the balance in the utility enterprise is that we have to look at cash reserves, debt service coverage and then maintain lowest possible rates possible. So those are the tenate the uh delicate balance that we have to look at. But the study then identifies which

projects we intend to issue debt for. And in in the last study, we had $142 million total capital plan in 10 for that 10-year period in the water enterprise and 27 million of that would be debt funded. The wastewater enterprise had 230 million total in the capital plan with 192 million of that funded through debt. So, as we've gone about this um capital plan, we issued the last uh debt for the zone 41 water project and we came to learn that WIFFA no longer is considering uh terms of more than 20 years at a time.

Is that a federal decision or was that our state legislature? I think it's the whiff of board is they're an independent body. they can set policy, but to be honest, I don't know exactly where it comes from. We we just uh with Yeah, whiffle board. Wiffle board. Is it is it state level? It's an independent authority with Yeah. Arizona State.

Okay. But we assumed in the rate study that we'd be able to issue 25-year terms. That allowed us to, you know, to set our rates where they're at. So if we have an issue where we have to issue a shorter period debt, then our debt service goes up and that's going to put rate pressure for us. So we started looking into other options for financing our our wastewater utilities especially. And this is kind of summarizes the proposal. And then after this, we'll have Kurt Frey kind of give more a deep dive into what alternatives there are for us as a city to finance. But essentially, the 27 million for water we would consider still using WIFA for in the 20-year terms are acceptable. The one benefit we have with WIFA is they have something called forgivable principle. So it's in essence it's a grant. Uh they issue the financing and they they'll say a certain port portion of this you don't have to pay back. Um but that's only in the drinking water side. Now that benefit doesn't exist in the wastewater to my knowledge and I look back in our history we've never gotten forgiven principle in wastewater. So um there's less incentive than to to use whiff for wastewater. So our proposal is that we'd pursue revenue bonds, city issued revenue bonds as the option for the longer 25 years or longer term financing. Um to keep rates at previously adopted levels. Um and we're also noticing that you know the estimates we put in the capital plan and public works is here if you'd like to have more clarification, but as these get engineered and designed the costs seem to go higher, not lower. So,

we'll need more flexibility on on our rates to uh have longer term on the debt is what we're looking for. Now, as we go forward, we'll continue to evaluate the best costbenefit approach for both WIFFA or revenue bonds. But, um this is kind of the uh the approach we're looking at. And with that, I'd invite Well, first actually, council, do you have any questions for me before I turn it over to Kurt? Mr. Ruby. Oh, that was leftover. That was over old. Okay. How about Mary Lars? Uh, do we know why WIFFA reduced their the term possible to 20?

I can address it. Curt has an answer. I I actually don't know. Thank you. I'll I'll wait for that then. I guess the um uh the other was when you said that uh under a WIFFA funding project uh there's the potential for forgivable principle. Do we have some sense of whether or not that's actually something that might happen could happen? Has it happened much in the past? If we're thinking about it as as weighing the factors for the funding source, do we have any sense of certainty that some percentage will be forgivable? And maybe our next uh speaker will be able to speak to that.

I think Kurt has some more detail, but I'll tell you from the city side, we have got the benefit of forgivable principle and I had uh some schedules on that, but it it's been significant and worth it. Thank you. and I'm be waiting on the answers. Thanks. Any um any other comments?

So, mayor, if you click your blue button, it'll take you to the current item and then you can see who the speakers are. Says details at the bottom. Maybe zoom out. Then you can zoom back in. All right. Thank you for that update. Okay, Mr. Grady. Yeah, thank you, mayor. Um, so I need a little more help. Um, so is is this conversation then about future debt or is it about the 13 projects that we already have under financing?

Yeah, thank you for the question. This would be for future debt. So anything existing with WIFA, we continue to pay those off over the term that was um given to us in the loan agreement. And then you mentioned earlier impact fees. So as we get into the next element of the conversation, this how does this take into account impact fee revenue?

Yeah. So once the project becomes debt funded the there's a debt service we have to pay principal and interest over the term um whatever portion of the project is um growth related. So let's say it's 30% growth 70% rateayer we allocate the debt service accordingly. So as we get impact fees in that will help pay down the debt that by that same number thank you proportion. Okay. Anything else? Thank you.

And and I do have um the numbers for Mary uh Council Member Frederickson about what forgivable principle we've had um on the loans that we have the drinking water projects. We got a total of 8.5 million forgiven from WIFFA for all those up there on the screen. So we're looking at the essentially 60 million and we got eight. Is that what you said? 8 million forgiven out of 60. Right. That's what's remaining though. So original issuance was higher. Oh okay. Thank you.

Originally we had issued 104 million. If you if you total up the amount authorized um that's 104 million for those drinking water projects. outstanding is at 59 million. Thank you. I I blew right past that, but of uh but of the 8 million that was forgivable out of the And I forget you just gave me the number. It's not totaled up here on the screen. Um 108 million and they forgave eight. Yep. I certainly would pick up 8 million off the sidewalk, but it's not an overwhelming percentage.

Right. Thank you. Thank you. I'll switch it over to Kurt. Okay. Thank you. If it could pull up the next slide deck.

Thanks. Um, Madame Mayor, members of the council, good afternoon. Uh, my name is Kurt Fry. I'm managing director with RBC Capital Markets, and it's nice to see you all again. Um, why don't I start with a whiff of question and then we'll get into the presentation. But my first question is how much time do you all have? Three minutes. Okay, good. The conclusion I'd like to say um is seriously how much time do you want to spend? You give me whatever we need.

Okay, fine. Let me talk about WIFF real quickly. WIFIA is a state agencies that govern how they work. They're also governed by federal law because they get money from the feds to help fund their programs. And then they also set their own policies. um relative to the financing term, they'll go out longer than 20 years if the project is more than 50 million. You don't have any projects that are more than 50 million. So that's that's sort of how they deal with financing term. They like to keep their financing shorter is sort of what their approach is. So they've always done longer than 20 years, but with that caveat, it's got to be a big enough project. Um they do do forgivable principle for uh sewer projects, but they have to be less than $4 million. So you don't have projects that are less than $4 million. So you don't qualify on that front. They're a little bit more liberal uh on drinking water projects um in terms of forgivable principle and that's why the city's been able to take advantage of that over the years.

Okay. Kurt, before we get going, um Yes, ma'am. What what is your background? I mean, do you have were you hired by the city or did you uh um are you the broker for these bonds? How did you fit in?

Let me let me give you the whole story line on that. Um uh couple things. My background uh uh my background originally I worked for the state senate. I was the senior fiscal person for the Arizona State Senate for about eight years back in my formative years. Uh long time ago. Um for the last 37 years, I've been doing what I do now. Uh working as an investment banker, not a broker. And as an investment banker, we provide advice to municipal entities, state government, local government, school districts, public universities, nonprofit hospitals, etc. um on issuing municipal bonds.

And what's the name of your company? Name of the company is RBC Capital Markets. And what does RBC stand for? Royal Bank of Canada. Royal Bank of Canada. Yes, ma'am. Oh. And so our capital markets, Royal Bank of Canada, short marketing pitch here. Royal Bank of Canada is a large global bank. Um it's the bank is headquartered in Toronto. Uh it's the ninth largest bank in North America. Um, our capital markets group is headquartered in New York and I'm part of the capital markets group. So, and the this is probably more than you want to know. So, uh, fascinating.

Sorry. RBC capital markets uh, acquired a firm called Rouser Pierce Rafnes, which was a broker dealer firm that did capital markets work in the state of Arizona. uh it was a uh firm that was formed when glass steel passed in the 30s uh and kicked investment banks out of banks. So at that time uh Valley Bank was the bank in Arizona based in Globe, Arizona. And when GlassSteagall passed in 1931, the gentleman that worked in the bank that did public finance moved into their own firm. And so the firm's been in operation here in Arizona since the 30s. Not me personally, mayor. Okay. Just just for the record. Okay. Does that help? Um and we've been working with the city for gez 20, 30 years. Uh, so, uh, that does that give you all good feel, good background,

except for the Canada part. No, just kidding.

I'm with you. Um, okay. So, let's see. So, we have this deck. So, um, as Lars just went through, the city's embarking on a significant capital infrastructure program for your wastewater system. Uh, where you're talking about issuing a fair amount of debt. Um, and I thought Lars did a nice job of talking about why you issue debt. I mean, certainly the cheapest form of funding is to just pay cash, but the unfortunate thing about paying cash is you got to accumulate quite a bit of it. And to do that, you have to have exceedingly high rates to meet the needs of your wastewater department. So bonding is a way or debt issuance is a way to spread out the cost over a long period of time. Keep your rates lower in the process and this this will come into play when you talk about the duration of the debt you issue whether you go out 20 years or 25 years or even longer. Um what the city staff did uh in conjunction with RBC was take a look at all the different options that the city has for undertaking debt financings for the capital program. And you can see on this slide we looked at at four different approaches really which are the four available to you. One is general obligation bonds. The second one is excise tax revenue obligations. The third is wastewater revenue obligations. And when we when we talk about wastewater revenue obligations, we're talking about either debt issued directly by the city or borrowing through WHIFA. So when you borrow through WIFFA, you you issue wastewater revenue obligations. WIFFA buys them from you and makes a loan of money to you. So important thing to keep in mind as we talk about these. Um, I'll talk about each of these in a little bit of detail just to give you a feel for them and then you all will be able to provide

feedback as to which one you like. We we do have a recommendation based on what we think you like, but that's that's why you guys are the electeds, right? Um, okay. Uh, in looking at the different options, um, you know, there were a number of things that we considered. The first being the affordability of the of the debt program for the city and for its rate payers. And so we look at things like project cost differentials. Some of you may be familiar with this. So whiff is a federally funded program. Being a fally funded program, it's subject to Davis uh vacant wage act requirements, which means that you have to pay federally set wages. that can mean that the project cost is higher as a result of that. So, that's something for you to keep in mind. And and my understanding is that the city's going to bid out some of its upcoming projects to see if you're subject to Davis Bacon if the project fees are higher than if you're not. So, you have some feel for the cost differential. Um, second afford affordability issue we look at is borrowing costs. And we look at both interest rates that you borrow at uh as well as issuance costs. And so uh for example, when you think about whiffer, if whiffer does forgivable principle, that brings down your borrowing cost in a noticeable way. So you want to take a look at what that means. They don't do forgivable principle for the program that you're looking at at this point, but they do subsidize interest rates. And so that helps bring down rates. So we analyze those differentials when we're taking a look at the programs. Um the third affordability issue that we look at is the repayment term. So obviously the longer the borrowing term, the lower the

lower your annual cost is going to be. It's going to be a greater overall cost, but if you're looking to control rates, it's kind of like your mortgage payments. you know, uh, ideally you want to pay back your mortgage in as short a period of time as possible, but ideally you can't sometimes get there because you need a lower mortgage rate. So instead of paying it back in 15 years, you pay it back in 30. Um, we also look at the impact of the WIFA program requirements and the limitations that puts on the debt. Uh, this first one's a big one. The repayment term of the debt as Lars mentioned is generally restricted to 20 years with WIFA. Your rate study was based on 25 years uh borrowing term and the rates that you adopted are based on 25 year financing term. So if you say well I want to do WIFA and you have to do a 20-year financing term, you're sort of buying into having to have higher rates. Okay. um cost of the project. I mentioned Davis Bacon wages. There's also a a federal law uh the American iron and steel requirements that also results in higher project costs. Basically, um when we look at WFO, we also think about staff time and effort. They're a state agency. There are a lot of reporting requirements associated with that. Uh that wouldn't be a driving factor, but it is a factor. It's particularly a factor after I listen to your discussion about strategic plan and then budgeting cuz Lars is going to be really busy meeting with you all on the budget it sounds like. So, uh staff time on on WIFFA is something to think about. Um another important thing with WIFA is WIFA doesn't let you refinance the debt that they incur. So, um you know, again, just like with your mortgage, if

interest rates go lower, what do you do? you refinance your mortgage. The same thing is true with bonds. When when uh the city goes out and issues bonds, if there's an opportunity to lower your interest cost by refinancing that debt, then we go ahead and do that. WIFIA doesn't let you refinance the debt. It's a single loan rate that stays in place for the duration of the loan. Uh and then the last thing with whiff uh that also is relevant to the city is whiffer restricts your borrowing to being on a project basis. So it takes a singular project and says we'll loan you money for that project. What the city's financing plan is and what the rate study shows is is that you're doing multiple projects at the same time spread over multiple years. Um, and so you're really borrowing on a cash flow basis as opposed to a project basis. So when we restricts you to borrowing on project basis, it doesn't it doesn't fit your finance plan very well. Questions on any of that? Okay. Um, okay. Let's talk about each of these types of alternatives. So the first is general obligation bonds. Um, general obligation bonds is your lowest cost of borrowing that that you can do. It's your best credit, so you get the lowest interest rate when you do it. Um, but general obligation bonds require voter approval. Um, general obligation bonds are secured by property taxes. They don't have to be payable from property taxes. You could you could go out and issue general obligation bonds secured by property taxes and pay the principal and interest with net uh waste water or revenue. So revenues in the enterprise system um and and many cities do that uh

and any financing repayment term is allowable. So you can go out 20 years, 25 years, 30 years etc. The biggest downside of the geo bonds, I think, from the city's perspective is uh is it's secured by property taxes. And my sense is the council doesn't want to do a property tax back bond. So, but we looked at it. Um the second option up here is excise tax revenue obligations. Excise tax revenue obligations. The city's done quite a few of these for uh various projects of the city over time. Um they don't require voter approval. They're secured by city excise taxes, which is basically your local city sales tax plus uh state shared revenues. So, state uh income taxes and sales taxes uh that the city receives. Um they can be payable from excise taxes or from from wastewater revenues. Um the biggest downside to using excise tax revenue obligations is you use that debt for other city projects. And so, uh, it's sort of like you want to save your capacity of excise tax bonds in case you need to do park improvements or or city administrative facilities or other projects like that. Uh, and then also on excise tax obligations, uh, any financing or repayment term is allowable. So, you can go out 20 years, 25, 30 years. Okay. Then turning to uh wastewater revenue obligations. Uh these don't require go to approval as well. Uh they are secured by and payable from net revenues to the wastewater system. Uh so these are these are revenue obligations, enterprise fund obligations. And uh if you're issuing

them directly by the city, any financing term is allowable. So you can go out 25 years as as is reflected in the rate study or longer. And then and then lastly our uh wastewater revenue obligations via the whiff alone. And we we sort of talked about that uh they don't require voter approval. Um they're secured by and payable from net revenues to the wastewater system but the financing term is limited to no more than 20 years. uh and there's no ability to refinance the debt and loans are made on a project basis. And so that's the four alternatives that we looked at. Any questions on the alternatives?

Yes, Lois.

So, well, I've never owned property in California. I have a lot of neighbors here who have been like Lois, if you ever approve a GEO bond, you're out, you know. And so my understanding is because they're secured by property taxes, it has affected people um in communities that have secured them that way that it's affected them in multiple different ways as they go to refinance their mortgages or, you know, they're very concerned that we would ever think about geo bonds. Um, so my question is because I didn't know about that and I've been educated by uh osmosis of the public opinion. Um, what are the downsides of the way the revenue obligations or the city direct revenue bonds, whatever we're talking about here? What is the downside? What what's the street saying or the people saying about it doing it this way?

Um, because on paper, at least looking at your two slides, looks like that's the option. and I know that's what you're recommending, but I want to know what's the downside. What's the public going to say to me when we ever get to decide that we're going to vote this way?

Uh, thank you. It's a good question. Um, the downside, the only downside, I guess I would say, is, you know, in a perfect world, if you didn't have to issue debt or if you didn't have to pay back debt, that would be great. But that's not real world. you know to do that one one of two things happens to do that you either delay your projects till you've accumulated enough money or you raise your rates or or take money from the general fund to have enough money to do the projects. So you're talking about $230 million of projects take a long time to have $230 million. And so you hire consultants to do a raid study. What they do is they come in and they say, "Here are your capital projects." They work with your department to say, "Here's when those projects are needed, either for maintenance, upkeep, improvement, or enhancement to to, you know, uh, deal with growth." And they say, "Here's how you pencil that out with rate increases that are responsible and that don't raise rates too much." And so to me, the larger downside is not doing it. it's it's not going forward and doing it. In other words, if you borrow for a shorter period or you delay your projects, those are greater downsides than going forward. That that's what I would say an answer to that. I mean, you have a need for improvements to your wastewater system and your water system for that matter. Um, you have to figure out a way to pay for those. And so, this is the most responsible way to pay for it. There's really no downside to to issuing debt in this way. And the geo bonds, the geo bond approach is not a bad approach.

It just depends on how you feel about property taxes, A, and B, how you feel about going to an election. California, for a whole lot of reasons, is a different bird. their property tax system in California is is a more challenging property tax system because of Prop 13. It created a bunch of problems. Um, in Arizona, we had the benefit of uh putting in a property tax system after Prop 13 occurred. I was actually working at the legislature at the time and we came up with a property tax system that avoided a lot of the downfalls associated with Prop 13. So geo bonds here work pretty well. That's not to say you do them. Like I I don't think the council wants to go to the voters and say, "Hey, we want a property tax for wastewater improvements." Okay. Um the next couple of pages, uh I will just go through I I'll just mention I won't go through them uh because there's a lot of detail here. Um, but it gives you a sense of the depth of the analysis that the city staff and RBC went through. So, we looked at whiffle loans versus city issued revenue bonds because the city's done a bunch of whiff loans and said, "Well, if we did a 20-year financing, where do they measure out? And if we do a 25-y year financing, how do they work?" And we just kind of did pros and cons. Um, and that's what you see on these couple of few pages. This particular page talks about timing uh and interest rates associated with the two approaches which I've talked about a little bit. Um this next slide talks about project costs. We talked about federal

contracting requirements under WIFA that you don't have uh if you do city issued bonds. Um the bottom portion of the chart talks about flexibility in terms of timing and how you can borrow on a uh cash flow basis as opposed to a project basis. Uh if you issue city issued revenue bonds and this last slide just talks about the repayment terms. Um, in both cases, if you go to do this, whether whether you're doing uh water revenue obligations or wastewater revenue obligations via WHIFF alone or you're issuing debt directly, the council has to approve a resolution authorizing it. Okay. Then just in concluding, um here are the conclusions. Um so uh first thing I I guess I would note is the issuance of wastewater revenue bonds by cities. Uh is a commonly used financing approach. Uh cities throughout Arizona, cities across the country use wastewater revenue bonds all the time to issue debt. It's it's very common approach. uh it's a project finance approach meaning that the the revenues associated with the infrastructure that you're doing pay for the infrastructure. Um the issuance of this debt is really similar to excise tax revenue bonds that the city's issued in the past. It's also similar to the uh water revenue bonds that you issued. Uh just requires council adoption of an authorizing solution. Um the financing period from start to finish is about a 3 to four month financing period. And uh in looking to put it together, if you decide to go forward with this, what we do is we look at the projects that you need to fund over about an 18 to 24month period, combine them into one bond

issue. You borrow for that, you spend that down with the goal being to have uh as few separate bond financings as possible because that minimizes your issuance costs, but to not borrow until you need the money because there's no sense in borrowing the money and paying interest on it until you're going to spend it. Um second concluding thing that we'd note is uh when the city asked us to analyze this, they asked us to take a look at the rate study and make sure that the financial plan was feasible and viable and issuing 25-year debt was was feasible and viable. Both of which we confirmed is in fact the case. Numbers look fine. Uh we think it's very doable for the city to do this plan. Uh and then lastly, um we'd note that a financing term of 25 years or longer really requires the city to issue wastewater revenue bonds directly as opposed to going through WIFFA for all the reasons that I mentioned. WIFFA doesn't do 25 years. So that sort of stops you in your track pretty quickly on that. Um, and the other thing that I guess I would note is we did look at cost differential between doing a whiffle loan and the city issuing revenue bonds. And we really determined that the uh the difference in cost was not that significant even if it was a 20-year term. Now, part of that comes down to what's the cost differential in project costs because you're subject to Davis uh vacant wage requirements uh if you do OFA project. And so that's yet to be determined, but we were sort of surprised the cost differential wasn't that great. Part of the reason for that is most bonds that that uh municipal entities issue that have a term of 20

years or longer get refinanced at least one time. With us loan doesn't get refinanced. So when you refinance it, let's say 10 years into your bond issue, you refinance it. You're refinancing it for a 10year period, the remaining 10 years. And so that brings down your borrowing cost quite a bit. So, we we we just thought that was interesting that the differential between the two wasn't that great. Um, that completes my comments. Mayor, I'd be happy to answer any questions. Uh yeah, I'd like to um start off with um just letting the public know that um we're growing and we need to have our infrastructure keep up with our growth. And uh recently we went to the public and uh they very generously taxed themselves 0.95% because we were 30 years behind in our police and fire public safety infrastructure. Now we're moving on to our water infrastructure and how are we going to pay for that? And um you know we currently have a h 100red million approximately 100 million in a whiff debt and now we're talking about taking on another approximately 200 million in bonding debt. Total of 300 million. These are big numbers. And uh one thing we need to address, I think legal could probably help us out with this is we have a charter amendment that caps how much we can spend on projects about uh 16 million I believe

with um inflation. And is any of this going to trigger because it has to come to a vote of the public. Does any of this going to trigger the need for that?

We don't believe it triggers it. Although we are going through the process as we talked about last time of doing breaking out the different projects as part of centralization and we'll bring that back to council. What I'll say is that the analysis of how that Prop 401 it's the financing mechanism is sort of irrelevant to that analysis and so as I mentioned we don't think there's an issue but we're going getting those numbers together to be able to bring to council and we'll discuss that but it doesn't impact the type of financing used. And then another uh question I have is our neighbor Prescuit Valley to the east. They use a lot of districts, you know, they have a road districts, they have fire districts, they have uh water districts, and um we really don't have that. And I was just wondering, is there a way to maybe combine some of this financing with the formation of a water and um sewer reimbursement uh district uh in the maybe the northern part of our uh city where we're having all this uh all this growth to kind of spread it out. I think that's a great question, mayor. And I I'll just say that

well, not reimbursement, but improvement districts. Yeah, I'll say that that's part of our development impact fee study is that we evaluate the impact growth will have on this infrastructure need um the fees into the system to help pay off this debt. Um I think that addresses that concern. So, so we could be forming some districts if we needed to. The I can jump in there a little bit too. So, um, districts are another way of raising taxes basically.

So, in California with Prop 13, for example, there's this there's this limit on on what you can tax. And so, the way to get around that is you create another entity and then that entity can tax that, too. Um, and so then you see a lot of cities that have fire districts, road districts, recreation districts, water districts. It's another way of getting around the problems created by something like a Prop 13 um in um in Prescat Valley. And I'm not intimately familiar with all of their districts, but it it just it creates different revenue streams for each one. Each one's in kind of a neat um portfolio, and it's it's another way to deal with the services. And then those services in Prescat Valley are mostly outsourced.

Yeah. Because they don't they don't have like they outsource their fire um department to CAFMA.

Right. So CAFMA charges the residents um a particular amount for just that service. We the the model in Prescuit has been mostly sales tax based um general fund and you know some specific funds related to utilities and and roads and those things. the the impact fee that Lars mentioned is the way that we address the new development um with the exception of sometimes you do see like a community facilities district in a new development um that's helping the developer and the city to meet the obligation to create the infrastructure. So sometimes that's possible if needed with the develop particular development. But in general, if you don't have a district in an existing area and you're trying to add the district, usually it's because you don't have the revenue to support that area and so you're trying to create another revenue stream.

Thank you. Uh Mr. Ruby,

is it possible to use both of these at the same time? like can could you do a whiff alone and a general obligation bond for the same project? The reason I asked that is because it seems like these projects are going to be 50 years, 30 to 50 years, and spreading the cost out evenly over the people using it seems to be important, but maybe there's a way to leverage part of the WIFFA loan to help the overall cost. Um, the short answer is yes, you could use different funding sources. You probably wouldn't do it on a project by project basis. Um, and and you could do that, but you wouldn't want to splinter it up into too many separate debt issuances. Certainly between WIFFA and city issued debt. Yeah, you could do that uh to your heart's content, but but whiff only borrows on a or lends on a project basis. So they want a discrete project that you're looking at and they won't go out 25 years. So if you're looking to borrow for 25 years, you wouldn't end up doing whiff. The other thing I guess I'd say is, you know, and it relates to a question the mayor asked, all these projects aren't happening all at once. So you're not doing $230 million day one. They're spread out over quite a few years, right? Five, six, seven years. Um and so so you'll have a bond issue, you know, year 1 and one year three or four and they'll get spread out in that fashion. The other thing relative to the mayor's comment on project size, you'll remember I said none of the projects of the city

are more than 50 million. Right? So it's $230 million of projects, but it's a bunch of projects, not just one big one. I have a I have a question. I I looked on the I just went online and the revenue bonds are on the retail market paying about four 4%. Um what are we going to be paying in interest? Uh the lowest possible rate we can get. Um right now if you went out and did a 25-y year revenue bond for the city, you'd probably have a double A rated bond. They'd be in the low 4% range.

Mhm. um depends what happens you know between now and when you issue debt. So again you're going to issue debt you know year 1 year 3 year five etc. It'll depend on what interest rates are like at that time. Generally speaking I think you'll be sub 4%. 4% and whiffle loans are about two below 4%. Yeah low four.

Uh whiffle loans would be uh whiffal loans this way you think about them. Whiffle loan loans are uh set based on what interest rates are at any given time and they're a percentage of the interest rate you would otherwise get. Typically about 80 to 85% of the interest rate that the city would borrow at. Does that help? So if so if interest rates are 4% then multiply 4% times 80% you'd be at 320. Okay. Thank you. Just give you a feel. Uh let's see. We have Patrick next.

Yeah. Just one quick response to the comment.

But if you went with you're going to have a lower uh term. So that's probably makes up and maybe even exceeds the the cost of the of the debt itself. Just another thought. However, I have a question. So what projects are we talking about? Don't expect the answer today. What projects are we talking about through 2034? If we can get that information at some point because I know here we're just talking about how we're going to what form of debt issuance. Uh I'd like to know a little more background at some future point about that. Um and then secondly um we know the legislaturator is can uh looking at tax and financing and will that have an impact on our assessment of how much we'll be going out with this kind of mechanism as opposed to a tiff for a particular district.

Uh it's a great question. Um, I don't know whether the legislature will pass the tiff legislation or not. It's not existed in Arizona law thus far. Um, it wouldn't really apply here. So, a a tiff is a tax increment financing approach. Um, basically the concept is you take a uh think of a uh downtown area, let's say. um you're going to put in a bunch of developments. And so you look at what the tax receipts are from that downtown district today and you say, I'm going to take any increase in those taxes and use that to pay the debt that I'm going to issue to improve the downtown area. So that's why it's called a tax increment district. Um that wouldn't really apply here. I thought the city manager said it well. What Prescat has done and what you're doing here is you're really looking to put in wastewater improvements that benefit the entire city. Maybe some areas more than others, but you're looking to centralize uh your wastewater system into a single plant as I understand it. You're looking to put in development associated with growth and you're looking to charge rateayers for the cost of operating that system to either deliver water or wastewater services and pay for capital infrastructure needs that have a 30 to 50 year life. You're going to spread the cost of that over not just today's taxpayers, but future taxpayers by borrowing for 25 years and repaying that debt over 25 years. So the people today pay a proportionate amount, but the people in year 2, 3, 4, all the way out 25 years pay their share. So you have generational equity associated with a

long lived capital asset. Does that help? Yes. So on the tax increment financing piece, I know we actually did several when I used to work for the city of Columbus. Um and so I I hear your point and I it was more for street improvements that were being undertaken. Uh you're right, not systemwide. So thanks for that explanation. Uh uh Lois,

thank you. I do know when we were looking at the rates of couple years ago following the refella study, when was that two years ago? Two years ago in 24 and I asked, you know, given the huge bumps in year 1 and year two, which you just showed on the charts earlier, and then at least water went down to 2% but wastewater kept gradually down. And I asked, "Can we delay some of this or postpone it a year or two or or or to try and smooth this thing out?" And the answer from staff at that time was no. That you had kicked cans on these projects as long as you possibly could. And so one of the things that we talked about earlier today with the strategic plan was in strategic priority um number three about infrastructure. We talked about um and I guess we'll get the results it looks like here by FIS before fiscal year 29 to complete a comprehensive water and sewer utility condition analysis and replacement plan. Um where we would be able to see the the age the condition um the material of all of these sewer and water pipes all over the city um because you don't necessarily want to invest in things you can't see. But then when it breaks or explodes or backs up, then you're going to pay inordinate amount of money to fix things. And we have seen some of those breaking around town over the last couple of months. So, so I do think it would be really good before we take a vote on the question before us at some future meeting, it would be good to see more details about these projects that are being included in here. And not only like I know you all know when you name a project and you name it a certain way. I was looking at some of the names on the current list that means a lot to you but to the English people out here English

speakaking like could you let us know is this a main that runs through the middle of downtown? Is this a main? Because I think what we need to help all of the residents see is that we're investing all over this community, not just in the growth corridor. and we've got a lot of old stuff downtown and in other areas that everyone needs to help and that's why we do it via rate payment. So it I think it would be helpful to council to see these projects in more detail and more importantly what is what are we replacing and what's the condition of that because that helped me before be able to justify to why we were taking these rate increases and I think we need that again for this decision that we'll be taking. Thank you. Okay. Any um any other comments? Uh Lars,

I just wanted to say that those are excellent points and and part of the budget process in five-year capital planning will be uh showing how these projects are funded. So that detail will be available in the budget process. And then also on the last rate study, of course, there's the appendixes with all the detail with how we got to the totals. Um, and also the the next council action we're anticipating on this would be when we bid out the next big project, we'll be asking for bid alternates, one with federal with uh WIFFO requirements, one without. So we can see the cost differential. We can calculate then the cost benefit of the financing alternatives we have. And then when that contract comes to council, we'll also be adopting a resolution for the financing for that that project.

So, we're expecting April, May. Yeah. I have a question for Kurt. Um, can you disclose your percentage or your commission that you get for selling these bonds? Is it Sure. Do we pay? Does the city pay or does the uh Yeah, I'm sorry. Purchaser of the bonds.

I'm sorry about that, may be, but yes, the city does pay. Um, we, you know, we have, uh, fees. I hadn't even thought about it, tell you the truth. Um, generally speaking, our fees for doing bond financing are somewhere in the $5 per $1,000 of bonds um that are issued. So, I' I'd have to do the math for you on it. It comes out to um, is it a percentage? It's not percentage. It's not a percent. It's less but it would be less than 1/2 of 1%. Okay. Under 1.5% then. Yeah. Of 200 million.

Yes. Over the 200 million would be over, you know, whatever that is, 7 n years or something like that. I won't be here for all of that, mayor. No, no offense. I'd love to be will.

I'd love to be, but I won't be. But but uh you know overall issuance costs when you do a bond financing um if you do a bond financing where the city issues the debt directly your issuance cost that's for the legal council for reading agencies for printing and offering perspectives for our fees uh for all the various things involved typically run somewhere between 1 and a4 and 1 and 12% of the power amount of the bonds that are issued. We do we pay that upfront or is that you pay part of the financing? You pay it out the proceeds of the financing.

Okay. Okay. And if you do a loan with WIFFA, the costs are less than that, but you still you still pay the bond council firm. You don't do an offering perspectus. Um so you have less costs. And again, when we analyze the two approaches, that's also something that we look at. What happens if we default? Like say some catastrophic thing happens. Oh my word. Mayor, please. We um I've heard of communities defaulting. Okay. So, yeah,

I'm knocking on wood. I've never worked on a buying financing that defaulted and I can't in my wildest imagination think that the city of Prescott would default on its debt. Um, you know, in all seriousness, I mean, the analysis that we go through before you issue the debt is designed so that you don't you'll have a lot of coverage between the revenues that you bring in the door versus the debt service. And so, the likelihood of that happening is really remote. There's not been a single wastewater revenue bond. Uh I think this is true in the history of the state of Arizona that's ever defaulted. It's like doesn't happen. Part part of the reason is wastewater is an essential utility. Like it's water and wastewater people pay their bills.

You have to so defaults are really rare in that space. Okay. Thank you Mary. And just to clarify in my own mind uh the chart where you're comparing WIFA versus cityisssued revenue bonds uh under project project costs you indicate financing costs of approximately 1 to one and a half% of the bond amount. This is what we're speaking of in your your firm's percentage half a percentage point is included within this one to one and a half%. That is correct. Thank you. Any other comments? Uh, Mr. Garing.

Thank you, Mayor. Just a quick question on a WHIFFA a whiff of finance project. Does the WHIFFA loan have to be paid off in full at the end of the 20 years or can you have a large bal balance at the end of a 20-year period to refinance? We we get the amortization schedule based on the term provided and we make those payments. So at end of the term there's there's no principal remaining. It's it's paid off. Okay. Thank you. Typically level debt service.

I have a question for Mr. Garing. Uh when you were in California and uh working as a civil engineer, how did your communities pay for their uh water infrastructure? Well, the best example I can give you is the city of Grover Beach, where I was city engineer. There was considerable concern throughout the community of 14,000, less than a third the size of Prescat, about the condition of city streets. And so we went into a very massive publication public education program. And the people of Grover Beach voted for a $47 million bond issue to fix their streets financed out of their property taxes and the majority was over 2/3.

We uh we did a similar thing for our street. not similar, but we had an an issue. And we have a 1% sales tax that the public generously uh tax themselves for, and then we have to renew it every certain amount of years, go to the ballot, and hopefully have them uh renew it for infrastructure like our roads. Okay. Any uh any more comments, any public input? We don't have any comment cards. Okay. Well, just in case they forgot, I was going to ask anyway. All righty. This meeting is adjourned. Thank you.

Thank you. Thank you.