[Reproduced here partially out of 50 pages, with attenuation of infographics and appendices that you can access for viewing with link provided]
. . . Just to show you how easily IT IS NOT . . .complicated issues
- there were some issues raised about what Mesa Channel 11 covers or not
- the City's bond programs ... per capita debt for each resident =$3,386
- the City’s Comprehensive Annual Financial Report (CAFR) and Single Audit Reports for Fiscal Year Ended June 30, 2015.
The Audit, Finance & Enterprise Committee of the City of Mesa met in the lower level meeting room of the Council Chambers, 57 East 1st Street, on January 21, 2016, at 0 7:52 .
Please note the approval of these minutes is on the agenda for the entire Mesa City Council tomorrow in a late afternoon study session @ 5:15
| File #: 16-0312 Find it here >> http://mesa.legistar.com/LegislationDetail.aspx?ID=2599281&GUID=04E636C8-3F08-4818-AEDD-992BC7B06DD1 |
Agenda for City Council Meeting 14 March 2016 - please note an important change in putting items on meeting agendas. Any one councilmember can put an item on the agenda. It was previously three.
1.Review items on the agenda for the March 14, 2016 regular Council meeting.
2. Presentations/Action Items:
3. Acknowledge receipt of minutes of various boards and committees.
- 16-0311 Public Safety Committee meeting held on January 21, 2016.3-a
- 16-0312 Audit, Finance and Enterprise Committee meeting held on January 21, 2016.3-b
- 16-0310 Judicial Advisory Board meeting held on February 1, 2016.3-c
- 16-0276 Economic Development Advisory Board meeting held on February 2, 2016
(B)
(C) At the request of any Councilmember, an item on a Council consent agenda will be removed from the consent portion of the agenda and will be separately considered. (3213)
2-a. Hear a presentation and discuss Mesa Channel 11’s budget.
Public Information and Communications Director Steve Wright displayed a PowerPoint presentation relating to the background and services provided by Mesa Channel 11. (See Attachment 1) Mr. Wright provided a brief overview of the history of Government channel programming and stated that Mesa Channel 11 currently has three full-time employees (FTEs) on staff. (See Pages 2 and 3 of Attachment 1)
Mr. Wright explained that the official name for the division is Broadcast and Multimedia Services, due to the fact that it encompasses much more than just Government channel programming. He illustrated the detailed services provided by the division, which are categorized under HDTV, Digital/Social Media, and Audio/Visual. (See Page 4 of Attachment 1)
Mr. Wright displayed a chart of the production process for the program Covering Mesa and emphasized that a 3-minute package takes approximately 6-12 hours to produce. He provided a list of all of the programming produced in 2015. (See Pages 5 through 7 of Attachment 1)
Mr. Wright reported that approximately 30-40 additional requests are received annually for outside programming, such as the following:
Audit, Finance & Enterprise Committee January 21, 2016 Page 2
• Weekend or evening events • Neighborhood specific programming outside of the usual news conferences, groundbreakings and grand openings • Departmental requests for internal use • Departmental requests promoting new and existing services/programs
Mr. Wright advised that current staff lacks the capacity to take on the additional requests and must often rely on hired freelancers. He suggested that a budget solution may be to increase the freelance budget by $50,000 annually or move one part-time benefitted position to a full-time position for a cost of $36,000.
In response to a question from Committeemember Finter related to decentralized PIO’s, Mr. Wright replied that staff meets weekly with marketing staff and PIO’s to coordinate the needs of Channel 11.
Committeemember Finter suggested that the freelance budget assign broader topics to the individual departments’ marketing staff and PIO’s to assist with their professional growth, as well as ease the workload and break down cultural barriers.
Chairman Glover concurred with Committeemember Finter and advised that it may be worthwhile to investigate the possibility of moving all PIO’s under the direction of Mesa Channel 11, in order to determine the feasibility prior to budget discussions. Committeemember Thompson thanked Mr. Wright and asked what it would take to cover all after-hour events attended by Council that are currently being overlooked. Mr. Wright responded that it would need to be part of the budget discussions, since the issues are with staffing levels and Channel 11 resources.
Chairman Glover noted that it was the consensus of the Committee that staff return with an organizational and cost-benefit analysis related to having all PIO’s under Mesa Channel 11, in order to assist with budget discussions.
2-b. Hear a presentation and discuss the City’s bond program and remaining bond authorizations.
Chief Financial Officer Mike Kennington displayed a PowerPoint presentation updating the bond program. (See Attachment 2) He introduced Ryan Wimmer, Deputy Director of the Office of Management and Budget, who was present to answer any questions boardmembers may have.
Mr. Kennington informed the Committee that the General Obligation (GO) Bonds have $337 million of outstanding principal with a high investment grade rating. He stated that one of the two metrics that staff looks at in the Debt Program is debt limitation, which is broken down into two buckets as follows:
• Outstanding GO debt for water, wastewater, artificial light, parks and recreational facilities, public safety, and transportation, which may not exceed 20% of the City’s net assessed valuation, and • Outstanding GO debt for general municipal purposes, which may not exceed an additional 6% of the City’s net assessed valuation.
Audit, Finance & Enterprise Committee January 21, 2016 Page 3
Mr. Kennington, in addition, reported that Mesa is currently at 46% of its debt capacity. The second metric, he added, is the debt burden and Mesa’s debt per capita is $3,389. (See Pages 2 through 4 of Attachment 2)
Mr. Kennington proceeded by saying that the Utility Systems Revenue Bonds is debt service that is secured by and repaid from revenues of the utility systems. He reported that the principal outstanding for these bonds is $1,007,455,000 and displayed a graph of the debt expectations after the restructure and issue of authorized bonds.
Mr. Kennington continued his presentation by reviewing the 2015 Bond activity. He reported that Mesa retired the outstanding Highway Project Advancement Notes (HPAN) bond principal of $77.8 million, as well as refunding Highway User Revenue Fund (HURF) bonds for a $1.8 million savings.
Mr. Kennington explained that staff has explored ways to spread out the debt service in anticipation of the spike in 2017/2018 that is a result of the 2004 refunding. He stated that IRS law states that a tax-exempt bond can only be refunded once; therefore, a taxable bond must now be issued at a cost of $1.3 million. He reported that staff has identified $1.7 million in other bonds to cover that cost. He added that approximately $4.6 million in other savings has been identified from normal Utility Revenue Bond refunding, as well as retiring Utility Revenue Bonds early. He provided an estimated timeline for bond refunding activity. (See Page 7 of Attachment 2)
Mr. Kennington indicated that $100 million was estimated in the normal New Money Bond activity in 2016, from both the GO Bond issuance and the Utility Revenue Bond issuance. He provided an estimated timeline for New Money Bonds. (See Page 8 of Attachment 2)
In response to a question from Committeemember Thompson, Mr. Kennington explained that $60 million of the Utility Systems Revenue Bonds is planned but unissued, mostly from the 2014 election.
Mr. Wimmer added that staff would provide a list of the outstanding Capital Improvement Program (CIP) projects, including how many are funded through the various bond authorizations.
In response to a question from Chairman Glover, Mr. Wimmer clarified that GO Bonds are funded through the City’s secondary property tax and are instituted the year following the election, in order to be clear in the minds of the voters. He noted that the property tax revenue may only be used to pay for the GO Bond debt. He explained that the levy, as well as impact fee revenue and court construction fee revenue is first used to pay for the debt on projects that were authorized since 2008. He added that any remaining ‘temporary’ excess is used to cover existing debt from prior authorizations until the debt service for new authorizations catches up to the levy.
Mr. Kennington explained that Mesa sells bonds annually and if there is temporary excess capacity in the secondary levy, then staff is able to pay down the principal in order to save taxpayers interest costs over time.
Audit, Finance & Enterprise Committee January 21, 2016 Page 4
In response to a question from Chairman Glover, Mr. Kennington confirmed that the City paid approximately $5 million of debt last year in order to pay off principal this year thanks to temporary excess capacity.
Committeemember Finter recalled that when he joined the Council, Mesa had the lowest debt compared to other cities in the metro area and now it is half way up the chart. He followed by saying that, although not a bad thing, debt affects the City’s ratings and impacts future Councils. He explained that some debt is good and great things are happening in Mesa, but suggested that all projects go through a filtering process to analyze any future impact before decisions are made. He thanked staff for always making the effort to save money when possible.
Chairman Glover thanked staff for the presentation.
2-c. Hear a presentation, discuss, and provide a recommendation on the City’s Comprehensive Annual Financial Report (CAFR) and Single Audit Reports for Fiscal Year Ended June 30, 2015.
Finance Director Irma Ashworth introduced Sandy Cronstrom with CliftonLarsonAllen, LLP, the City’s external audit firm, who was prepared to address the Committee. Ms. Ashworth displayed a PowerPoint presentation (See Attachment 3) and provided a brief overview of the Fiscal Year 2015 Comprehensive Annual Financial Report (CAFR). She stated that the report provides a detailed presentation of the City’s financial and economic condition that includes an unmodified report, which is a clean audit opinion that meets the Generally Accepted Accounting Principles (GAAP) and complies with the Government Accounting Standards Board (GASB). She summarized the new GASB Statement No. 68 and its implementation, which requires government entities to record their pension liabilities on their financial statements.
Ms. Ashworth reported that the City’s total assets were approximately $3.8 billion, with the largest portion being capital assets (buildings, building improvements and infrastructure). She noted that the second largest portion is Cash & Investments, used for ongoing projects. She reviewed the cash balances and highlighted that the cash amount of $121 million seems high, however that includes $78 million received to pay-off Highway Project Advancement Notes (HPAN) in August 2015. (See Page 5 of Attachment 3) Ms. Ashworth provided an overview of the total liabilities of approximately $3 billion and highlighted that the amount for pension liabilities was now recorded. She displayed a chart illustrating the Citywide Long-Term Debt and noted that the amount listed for HPAN notes was paid in August 2015. (See Pages 6 and 7 of Attachment 3)
Ms. Ashworth illustrated a graph of the Revenue by Source made up of only governmental activities. (See Page 8 of Attachment 3) She commented that the majority of the large revenue funds include taxes, unrestricted inter-governmental, and transfer funds.
In response to a question from Chairman Glover, Office of Management and Budget Director Candace Cannistraro explained that she could provide all of the information regarding debt service by issuance date after the meeting, as she did not have that information with her at this time.
Audit, Finance & Enterprise Committee January 21, 2016 Page 5
Ms. Ashworth continued with her presentation and displayed a chart of Functional Expenses that illustrates how the expenses are divided for the government activities funds. She indicated that approximately half of the expenditures are Public Safety expenses with General Governmental in second place.
Committeemember Finter commented that the CAFR is a great process and the outside auditor provides a good check and balance.
Chairman Glover thanked staff for the presentation.
It was moved by Committeemember Finter, seconded by Committeemember Thompson, to recommend that the City’s Comprehensive Annual Financial Report (CAFR) and Single Audit Reports for Fiscal Year Ended June 30, 2015, be forwarded on to the full Council for consideration. Carried unanimously.
2-d. Hear a presentation, discuss, and provide a recommendation on multi-year Solid Waste Service Agreement Discounts for Business and Commercial Establishments.
Environmental Management and Sustainability Department Director Scott Bouchie displayed a PowerPoint presentation (See Attachment 4) as it relates to providing discounts for multi-year solid waste service agreements.
Mr. Bouchie indicated that new legislation allows apartment complexes of five or more units to be open to commercial competition. He added that the Mesa ordinance was updated to meet such compliance, which led to discussions on how the City can remain competitive within the commercial market. He reported that the Solid Waste Management division currently serves 2500 commercial accounts that provide approximately $5 million in revenue. He added that the change in state law allows for an additional 250 accounts, or $1.5 million in revenue for apartment complexes.
Mr. Bouchie requested direction from the Committee relative to offering business customers a 2% cumulative discount each year for signing a multi-year service agreement. He clarified that a one-year agreement would offer a 2% discount, a two-year agreement would offer a 4% discount, up to a three-year agreement offering a 6% discount. He emphasized that service agreements would offer incentives to the customers while offering stability to the City, allowing staff the ability to project future revenues and expenditures.
. In response to a question from Committeemember Thompson, Mr. Bouchie explained that staff programs commercial accounts with a 10% profit margin in order to reach the target range after the potential 6% discount. He added that if an account were lost, approximately 25% of its associated profit would be lost. Committeemember Finter supported the recommendation and stated that the customer wins in the end.
Chairman Glover voiced his support for the discounted service agreements as it should keep Mesa competitive with the private market.
Audit, Finance & Enterprise Committee January 21, 2016 Page 6
It was moved by Committeemember Thompson, seconded by Committeemember Finter, to recommend that the multi-year Solid Waste Service Agreement Discounts for Business and Commercial Establishments be forwarded on to the full Council for consideration.
Carried unanimously.
2-e. Hear a presentation, discuss, and provide a recommendation on a proposed amendment to the Mesa City Code, Section 1-5-7 regarding reducing the number of Councilmembers required to place an item on an agenda.
Glover displayed a PowerPoint presentation (See Attachment 5) regarding the proposed amendment to the Mesa City Code Section 1-5-7. He explained that he initiated this amendment in an effort to be more in line with the original intent of the City Charter, which offers every Councilmember an equal vote with the Mayor.
Committeemember Finter stated that Phoenix allows Councilmembers to add items to the agenda and he feels that it is more advantageous to the district system. He voiced his support for the amendment.
It was moved by Committeemember Thompson, seconded by Committeemember Finter, to recommend that the proposed amendment to the Mesa City Code, Section 1-5-7 regarding reducing the number of Councilmembers required to place an item on an agenda be forwarded on to the full Council for consideration.
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