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Minutes Regular City Council Meeting City Council of the City of Yuma, Arizona City Council Chambers, Yuma City Hall One City Plaza, Yuma, Arizona June 3, 2026 5:30 p.m. Call to Order Mayor Nicholls called the City Council meeting to order at 5:30 p.m. Invocation/Pledge Chaplain Eugene Johnson of Desert Diamond Church of Christ gave the invocation. Kassandra Granados, Neighborhood Services Specialist, led the City Council in the Pledge of Allegiance. Final Call Mayor Nicholls made a final call for the submission of Speaker Request Forms from members of the audience. Roll Call Councilmembers Present: Martinez, Morris, McClendon, Smith, Morales, Watts, and Mayor Nicholls Councilmembers Absent: None Staffmembers Present: Acting City Administrator, John D. Simonton Neighborhood Services Specialist, Kassandra Granados Deputy City Administrator, Jenn Reichelt Chief Financial Officer, Douglas Allen Various Department Heads or their representative City Attorney, Richard W. Files City Clerk, Janet L. Pierson • Motion Consent Agenda Motion Consent Agenda Item C.3 – 2026-2030 Consolidated Plan, Annual Action Plan, and NRSA Plan – Community Development Block Grant and HOME Investment Partnership Program (Approve the City of Yuma Community Development Block Grant (CDBG) and HOME Investment Partnerships Program (HOME) 2026-2030 Consolidated Plan, Annual Action Plan, and Neighborhood Revitalization Strategy Area (NRSA) Plan, updated Citizen Participation Plan and authorize the City Administrator to execute funding agreements and related documents with the U.S. Department of Housing and Urban Development (HUD).) (Cmty Dev/Nbhd & Econ Dev) Discussion • The Consolidated Annual Performance and Evaluation Report reflects annual results, while fiveyear goals are set using conservative estimates due to yearly funding variations. Exceeding a fiveyear goal early indicates higherthanexpected program performance and does not affect current funding decisions. Annual allocations fluctuate and are considered in planning and reporting. (Smith/Granados) Motion (Smith/McClendon): To approve the Motion Consent Agenda as recommended. Voice vote: approved 7-0. A. Approval of minutes of the following City Council meeting: Regular Council Meeting Minutes May 6, 2026 B. Executive Session Executive Sessions may be held at the next regularly scheduled Special Worksession, Regular Worksession and City Council Meeting for personnel, legal, litigation and real estate matters pursuant to A.R.S. § 38-431.03 Section A (1), (3), (4), and (7). (City Atty) C. Approval of Staff Recommendations • Authorize a construction services contract for the Upgrade Pavement Markings Four Citywide Locations project to the lowest responsive and responsible bidder in the amount of $598,888.40 to HAWK Contracting LLC of Tempe, Arizona. (RFB-25-364) (Eng/Proc) • Ratify and approve change orders added to the original Purchase Order issued to DWD, Yuma, Arizona, in the amount of $95,000.14 for the Valley Aquatic Center Pool Renovations Project. (RFB-26-016) (Facl Mgmt/Proc) • Approve the City of Yuma Community Development Block Grant (CDBG) and HOME Investment Partnerships Program (HOME) 2026-2030 Consolidated Plan, Annual Action Plan, and Neighborhood Revitalization Strategy Area (NRSA) Plan, updated Citizen Participation Plan and authorize the City Administrator to execute funding agreements and related documents with the U.S. Department of Housing and Urban Development (HUD). (Cmty Dev/Nbhd & Eco Dev) • Resolution Consent Agenda Resolution R2026-024 - Development Fee Deferral: Cielo Verde Unit 4, Phase III Subdivision (Authorize deferral of City of Yuma development fees and water and sewer capacity charges for Cielo Verde Unit 4, Phase III Subdivision, and collect a $500.00 administrative fee for the deferral agreement. The effective term of the deferral agreement is three years from date of execution.) (Eng) Resolution R2026-025 - Development Fee Deferral: Cielo Verde Unit 6, Phase II Subdivision (Authorize deferral of City of Yuma development fees and water and sewer capacity charges for Cielo Verde Unit 6, Phase II Subdivision, and collect a $500.00 administrative fee for the deferral agreement. The effective term of the deferral agreement is three years from date of execution.) (Eng) Morales declared a conflict of interest on Resolutions R2026-024 and R2026-025 and left the dais. Motion (Morris/Watts): To adopt Resolutions R2026-024 and R2026-025 as recommended. Pierson displayed the following titles: Resolution R2026-024 A resolution of the City Council of the City of Yuma, Arizona, authorizing and approving a Development Agreement permitting the deferral of City of Yuma Development Fees and Water and Sanitary Sewer Capacity charges for Cielo Verde Unit 4 Phase III Subdivision (Three-year deferral, subject to collection of a $500 administrative fee.) (Eng) Resolution R2026-025 A resolution of the City Council of the City of Yuma, Arizona, authorizing and approving a Development Agreement permitting the deferral of City of Yuma Development Fees and Water and Sanitary Sewer Capacity charges for Cielo Verde Unit 6 Phase II Subdivision (Three-year deferral, subject to collection of a $500 administrative fee.) (Eng) Roll call vote: adopted 6-0-1, Morales abstaining due to conflict of interest. Morales returned to the dais. ___________ Motion (Smith/Morales): To adopt the Resolution Consent Agenda as recommended, with the exception of Resolutions R2026-024 and R2026-025 which were adopted through a previous vote. Pierson displayed the following titles: Resolution R2026-020 A resolution of the City Council of the City of Yuma, Arizona, authorizing the City of Yuma to enter into a subrecipient agreement with the Arizona Department of Homeland Security, regarding the Operation Stonegarden Grant Program (To reimburse the City for funds expended for overtime, employee related expenses, and mileage being utilized in support of Operation Stonegarden.) (YPD) Resolution R2026-021 A resolution of the City Council of the City of Yuma, Arizona, authorizing the participation of the Yuma Police Department in the Yuma Regional Mental Health Court through a Memorandum of Understanding (The Yuma Regional Mental Health Court is a problem-solving court program that offers justice-involved individuals with serious mental illness an alternative to traditional prosecution and incarceration.) (YPD) Resolution R2026-022 A resolution of the City Council of the City of Yuma, Arizona, authorizing the execution of an Intergovernmental Agreement between Yuma County, the City of Yuma, and other governmental entities for the Yuma Region Imagery Acquisition Consortium Project providing cost sharing for the purchase of updated aerial imagery (These tools are used by City departments to support planning, public safety, infrastructure management, asset management, development review, and public-facing mapping services.) (IT) Resolution R2026-023 A resolution of the City Council of the City of Yuma, Arizona, authorizing an Intergovernmental Agreement with Yuma County for assistance with coordination and administration of City elections (This agreement will provide the City with voter registration and election services for calendar years 2026-2030.) (Admn/Clk) Roll call vote: adopted 7-0 • Introduction of Ordinances Annual Expenditure Limitation Overview Reichelt and Allen presented the following overview of the State‑mandated Annual Expenditure Limitation (AEL): • What Is the AEL? • The AEL is a State-established spending framework created in 1980 that applies to cities, towns, counties, and community college districts throughout Arizona. • The AEL is based on Fiscal Year (FY) 1980 spending levels and is adjusted annually for population growth and inflation. • Yuma’s 1980 expenditure base of $15.7 million has never been adjusted. • How Does the AEL Formula Work? • The AEL formula begins with the City’s FY 1979-1980 operating expenditure base, which is adjusted annually for population growth and inflation to establish the City’s annual expenditure limitation. • The limitation does not determine how much revenue the City may collect; rather, it establishes how much the City is authorized to spend. • The AEL can be compared to a checking account with an ATM withdrawal limit: funds may be available in the account, but the withdrawal limit restricts how much can be accessed. • Similarly, the City may have available revenues but is limited in how much it may expend under the AEL. • What Is the AEL Not? • The AEL is not a tax increase, new tax, bond authorization, or budget approval, and does not create new taxes or revenue. It is solely a State-established spending limitation approved by voters in 1980. • Why Does It Matter Today? • Since 1980, Arizona’s population has grown from just over 2 million to more than 7 million, while Yuma’s population has more than doubled from approximately 43,000 to more than 100,000 residents. • The City has also expanded geographically, and service demands and responsibilities have increased substantially in areas including transportation infrastructure, water and wastewater, public safety, and technology. • Although the AEL formula is adjusted annually for population growth and inflation, the City’s underlying 1980 expenditure base has remained unchanged despite increased service demands and the addition of revenue sources that did not exist when the limitation was established, including the road, hospitality, and public safety taxes. • Yuma is now one of only a small number of Arizona municipalities that has not adjusted its AEL. • The current City budget is approximately $547 million, compared with an AEL of approximately $175 million. • Most City services, including police, fire, streets, parks, water, and wastewater, are subject to the limitation. • While statutory exclusions have allowed the City to operate above the limitation, changing community needs have increased the need to consider an adjustment. • How Does This Affect Yuma? • Although the City’s budget is approximately $547 million, expenditures subject to the AEL cannot exceed approximately $175 million. • Certain expenditures are excluded from the limitation, including those funded by federal grants and private donations, bond proceeds used for Capital Improvement Plan (CIP) projects, and debt repayment. • Core City operations generally remain subject to the AEL. • Investment earnings are also excluded from the AEL and may be carried forward for future use, providing additional capacity under the expenditure limitation. • City’s Historical Limitation • The purple line illustrates the City’s AEL, which increased from approximately $85 million in 2004 to $156 million in 2022 based on population growth and inflation, as measured by the Gross Domestic Product deflator. • The green line represents expenditures subject to the AEL and shows that the City was at or near the limitation beginning in 2005 and for several years thereafter. • Beginning in 2008, the City issued bonds to fund capital projects, reducing expenditures subject to the AEL. • The Great Recession also reduced revenues and corresponding spending over the following years. Another bond issuance occurred in 2015, while the City was still experiencing effects of the recession. • By 2019, the City’s financial outlook had improved and no additional bond issuance was planned; however, the onset of COVID-19 and subsequent supply chain delays resulted in reduced expenditures. • By 2022, staff identified the AEL as a potential future constraint and advised City Council of the issue, which was subsequently incorporated into the 2024 Strategic Plan. • Long-term projections had generally anticipated continued growth in the AEL; however, a statewide correction related to the 2020 Census reduced the City’s expenditure limitation to approximately $147 million. • This increased the urgency of the issue, as projections showed the City operating at or near the limitation in subsequent years. • The City has continued to operate within the AEL through available exclusions and use of its carryover balance, which is expected to provide sufficient capacity through 2027. • If an adjustment is approved by voters, 2028 would be the first year it takes effect. • The City’s carryover balance remained relatively flat for several years before increasing significantly in 2023 and 2024 due to higher investment earnings associated with rising interest rates. • The carryover is sufficient to support operations but not the CIP; therefore, the City issued bonds in 2025 to fund CIP expenditures. • Statewide Context • Yuma is one of six Arizona municipalities that has not adopted an alternative to the State expenditure limitation. • The comparison chart of Arizona cities with populations of 5,000 or more, excluding Phoenix due to its significantly larger scale, illustrates expenditure limitations relative to population. • Based on FY 2025 data, Yuma’s expenditure limitation of approximately $174 million was comparable to some smaller municipalities but significantly lower than several peer and larger Valley cities. • Yuma is the only city represented on the chart still operating under its original 1980 expenditure base, while other communities had adopted Permanent Base Adjustments or Home Rule. • Some municipalities have approved additional increases since FY 2025. • Options for Adjusting the AEL • Two methods are available to adjust the City’s expenditure limitation. • Under Home Rule, voters authorize the City Council-adopted budget as the expenditure limitation, with voter approval required every four years. • This requires recurring approval and carries the risk that the measure may not be renewed. • A Permanent Base Adjustment, which is commonly used by larger cities, allows voters to approve an adjustment to the City’s underlying 1980 expenditure base. • Unlike Home Rule, the adjustment is made once and does not require recurring voter approval. The City’s budget and oversight processes remain unchanged. • What Is Yuma Proposing? • City Council is being asked to consider referring a Permanent Base Adjustment to the voters. • The proposed Permanent Base Adjustment would increase the City’s base by $30 million, resulting in a projected FY 2028 expenditure limitation of approximately $534 million. • This would bring Yuma closer to, though still below, the expenditure limitations of comparable peer cities. • The proposed amount is intended to provide sufficient long-term spending capacity and reduce the likelihood that the City would need to seek another adjustment in the near future. • What Will Voters See? • The ballot language for a Permanent Base Adjustment is largely prescribed by State law, with limited flexibility. • Voters will be asked whether the City of Yuma’s expenditure base should be permanently adjusted by $30 million, with the option to vote “Yes” or “No.” • What Does This Mean Moving Forward? • If approved by voters, the adjusted expenditure base would take effect in FY 2028, with future limitations continuing to adjust for population growth and inflation. • Existing exclusions would remain available; however, the increased spending authority would reduce reliance on those exclusions and provide greater flexibility to fund CIP projects through a combination of pay-as-you-go funding and bond financing. • The adjustment would allow the City to expend revenues already available within the authority provided by State law and local voter approval. • It would not increase or create taxes, generate new revenue, or authorize debt issuance; any local sales tax requiring voter approval would remain subject to a separate vote. • Key Milestones • The proposed timeline includes City Council consideration of the ordinance in June, followed by submission of the required financial analysis to the Arizona Auditor General in July. • Public outreach and education will continue throughout the summer and fall, with arguments for and against the measure collected in August for inclusion in the publicity pamphlet. • Early ballots and publicity pamphlets will be distributed in October, followed by Election Day on November 3. • Available Resources and Information • A dedicated AEL webpage is available through the City’s website and serves as the central location for information related to the AEL and Proposition 436. • Resources include frequently asked questions, fact sheets, presentations, City Council materials, and, as they become available, an informational brochure and publicity pamphlet. • The City’s role is limited to providing factual information and educational materials regarding the measure. City staff do not advocate for or against Proposition 436. Reichelt concluded the presentation by reiterating that the AEL is a State-established spending framework and that the proposed adjustment would not increase taxes, create new taxes or revenue, or affect revenue collection; it would affect spending authority only. She noted that the City’s expenditure base has remained unchanged since 1980 despite changing community needs and that voters will ultimately decide in November whether to approve the proposed adjustment. Discussion • The proposed adjustment would increase the existing expenditure base by $30 million, resulting in a base of approximately $45 million. (Mayor Nicholls/Allen) • The statutory ballot question cannot be modified; however, the introductory language may be revised to provide clarity and ensure consistent terminology. (Mayor Nicholls/Reichelt) • The City’s AEL webpage will reference the term “Permanent Base Adjustment” and use consistent terminology to help voters connect the informational materials with the ballot measure. (Morris/Reichelt) • The AEL webpage and publicity pamphlet will be available in both English and Spanish. (Smith/Reichelt) • If approved, the adjustment would take effect in FY 2028 and provide greater flexibility in prioritizing projects by removing the expenditure limitation as a constraint; project funding would remain dependent on available revenues and City Council priorities. (Smith/Simonton) • The City and Yuma County have been coordinating communications regarding their respective AEL measures. The City may provide a link to the County’s website to help voters distinguish between the two ballot measures. (Morales/Reichelt) • The proposed AEL adjustment would not raise taxes or generate new revenue; it would increase the City’s authority to spend available revenues. (Martinez/Reichelt) • The City is currently able to fund its operational needs; however, as it approaches the expenditure limitation, it may eventually be unable to expend all available revenues if the limitation remains unchanged. (Martinez/Allen) • If the expenditure limitation remains unchanged, operational adjustments may eventually be necessary to maintain expenditures within the limitation. The current mitigation plan relies in part on investment earnings and carry-forward funds, which are available only for a limited period. (Mayor Nicholls/Allen) • If the limitation remains unchanged, the City may need to use bond financing for necessary CIP projects rather than available cash, resulting in additional interest costs. Population and inflation adjustments to the AEL may also lag behind the cost of adding services needed to support community growth. (Mayor Nicholls/Morris/Allen) ___________ Pierson displayed the following titles: Ordinance O2026-015 An ordinance of the City Council of the City of Yuma, Arizona, authorizing the submission to the qualified electors of the City of Yuma a proposition to approve a permanent adjustment to the City’s base expenditure limitation at the November 3, 2026, General Election (Authorize submitting Proposition 436 to Yuma voters to decide on a $30 million permanent adjustment to the City’s expenditure limit.) (Adm/Fin) Ordinance O2026-016 An ordinance of the City Council of the City of Yuma, Arizona, amending Chapter 154 of the Yuma City Code rezoning certain property located in the Residence Manufactured Housing (R-MH-20) District to the Medium Density Residential (R-2) District, and amending the zoning map to conform with the rezoning (Rezone approximately 0.43 acres located at the northwest corner of 27th Street and 20th Avenue.) (Cmty Dev/Cmty Plng) Ordinance O2026-017 An ordinance of the City Council of the City of Yuma, Arizona, amending Chapter 154 of the Yuma City Code, rezoning certain properties located in the Heavy Industrial/Infill Overlay (H-I/IO) District to the Old Town/Infill Overlay (OT/IO) District, and amending the zoning map to conform with the rezoning (The four subject properties are located within the Yuma North End–Old Town South Redevelopment Area and are bounded by Giss Parkway to the north, Madison Avenue to the west, 8th Street to the south, and the Union Pacific Railroad to the east. The properties range in size from 0.62 to 12.29 acres.) (Cmty Dev/Cmty Plng) Ordinance O2026-018 An ordinance of the City Council of the City of Yuma, Arizona, ordering a Special Election to be held in conjunction with the 2026 General Election; designating the purpose, election date, voter registration deadline and providing for publicity pamphlets proposing a change to the City of Yuma Charter, Article IV, Election (Authorize submitting Proposition 437 to Yuma voters to decide whether to reduce signature requirements for nomination petitions.) (Admn) • Budget Discussion No discussion was held. • Appointments, Announcements and Scheduling Appointments Motion (Smith/Watts): To approve the City Administrator’s appointment of Janet L. Pierson as the City Clerk, pursuant to Yuma City Charter, Article VI, Section 3(b); said appointment to be effective as of May 25, 2026. Voice vote: approved 7-0. ____________ Announcements Morales, Smith, Watts, Martinez, and Mayor Nicholls reported on events and meetings they have attended during the last two weeks and upcoming events of note. ____________ Scheduling Watts requested inviting Greg LaVann, President and Chief Executive Officer of Greater Yuma Economic Development Corporation, to discuss data centers coming to the surrounding areas and provide dates and details for upcoming informational sessions on utilities, zoning, water, and environmental impacts. • Summary of Current Events Simonton reported the following events: • June 5 – Teen Night Pool Party at Marcus Pool • June 6 – Water Safety Day at the Valley Aquatic Center • June 13 – Dive-In Movie Nights at Marcus Pool Simonton announced that swimming lesson scholarships remain available for children aged six months to five years, and informed the community that pickleball is offered from 6-8 p.m., Tuesday through Friday, at the Yuma Readiness and Community Center. • Call to the Public Eduardo Prevot, City resident, urged City Council to reconsider zoning for a potential data center, citing strong neighborhood opposition and confusion about data center plans. • Executive Session/Adjournment There being no further business, Mayor Nicholls adjourned the meeting at 6:35 p.m. No Executive Session was held. ________________________ Janet L. Pierson, City Clerk APPROVED: Approved at the City Council Meeting of: ___________________________________ City Clerk: __________________________ Approved at the City Council Meeting of: ___________________________________ City Clerk: __________________________ ________________________ Douglas J. Nicholls, Mayor