Town of Fountain Hills · Meeting 219 complete
2026-02-24 · Town Council
Items: 14 / 14
Docs: 26
Docs: 26
Town Council Work Session - Budget Retreat
Synced: 2026-06-27 15:40 AZ
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- Amended Packet ↗ Agenda Packet
- Minutes ↗ Minutes
- SUMMARY OF ACTION ↗ Summary of Action
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Call to Order
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Roll Call
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Work Session Agenda
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PRESENTATION: FY2027 Revenue Outlook and Budget Implications
Finance staff will provide an overview of FY2027 initial revenue projections, discuss possible legislative impacts, and discuss other budget implications such as the MCSO Law Enforcement costs and recommended annual general adjustment for staff pay.
Finance staff will provide an overview of FY2027 initial revenue projections, discuss possible legislative impacts, and discuss other budget implications such as the MCSO Law Enforcement costs and recommended annual general adjustment for staff pay.
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PRESENTATION: Road Paving — Ongoing Revenues and Future Funding Options
Finance and Public Works staff will present current financial information regarding road paving efforts in the Town. This discussion will update the Council on the projected fund balance in the Streets Fund for FY2027, ongoing revenues and challenges continuing to maintain the current levels of spending, and future funding options. Future funding options include issuing bonds:General Obligation bonds, which are generally the lowest cost of borrowing:Voter approval requiredEstablishes a new secondary property tax on residents annually until debt is repaidPledged Revenue bonds:Voter approval not requiredCouncil could pledge/restrict future annual revenues until debt is repaid; orCouncil could raise sales taxes to pay the debt annuallyStaff will provide debt scenarios of $11 million (over 10 years) and $22 million (over 20 years), which are based on recent estimates to complete reconstruction projects for Fountain Hills and/or Palisades Blvd in the Town (about $11 million to reconstruct each of these roads), which are two major arterial roads. The Council could also choose a debt scenario to apply to a selection of roads selected by the BOSS data compiled by Roadway Asset Services. Regardless, if the Town Council determines it would like to consider issuing bonds in the near future, staff recommends that the bond measures are specific.
Finance and Public Works staff will present current financial information regarding road paving efforts in the Town. This discussion will update the Council on the projected fund balance in the Streets Fund for FY2027, ongoing revenues and challenges continuing to maintain the current levels of spending, and future funding options. Future funding options include issuing bonds:General Obligation bonds, which are generally the lowest cost of borrowing:Voter approval requiredEstablishes a new secondary property tax on residents annually until debt is repaidPledged Revenue bonds:Voter approval not requiredCouncil could pledge/restrict future annual revenues until debt is repaid; orCouncil could raise sales taxes to pay the debt annuallyStaff will provide debt scenarios of $11 million (over 10 years) and $22 million (over 20 years), which are based on recent estimates to complete reconstruction projects for Fountain Hills and/or Palisades Blvd in the Town (about $11 million to reconstruct each of these roads), which are two major arterial roads. The Council could also choose a debt scenario to apply to a selection of roads selected by the BOSS data compiled by Roadway Asset Services. Regardless, if the Town Council determines it would like to consider issuing bonds in the near future, staff recommends that the bond measures are specific.
Supporting documents (3)
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PRESENTATION: Street repairs related to potholes and small asphalt repairs
Staff evaluated the feasibility of performing pothole repairs and small asphalt restoration projects using in-house forces versus contracting the work to a qualified paving contractor. The analysis considered capital equipment costs, staffing requirements, and ongoing operational expenses. In-House Operations – Capital & Staffing RequirementsTo perform pothole and small asphalt repairs internally at an acceptable standard, the Town would need to procure specialized equipment, including:Double Drum Smooth Vibratory Compactor – $63,271.97Cold Planer with Integrated Water Tank (Skid Steer Attachment) – $26,910.04Tack Trailer – $36,256.65Trailer-Mounted Crack Filling Unit – $32,500.00Asphalt Hot Box – $57,204.00Total Estimated Capital Investment: $216,142.66This does not include:Skid steer ownership and replacement costsEquipment maintenance and repairFuelStorageInsuranceDepreciation and lifecycle replacementAdditionally, a typical crew would require:1 Supervisor1 Equipment Operator3–4 LaborersThe Town would incur ongoing salary, benefits, retirement, workers’ compensation, and overtime costs for this staffing level, regardless of daily production needs. Contractor Pricing StructureContractor pricing is equipment- and labor-based with 4-hour minimums and includes supervisory oversight. Representative rates include:Dump Truck – $152/hrSkid Steer – $90/hr3-Ton Roller – $90/hrGrade Tractor – $98/hrPlate Compactor – $25/hrSupervisor – $95/hrEquipment Operator – $72/hrLabor – $42/hrAsphalt Material – $162–$187 per ton (market-adjusted quarterly)Crack Seal – $38 per gallonDump Fees – $250 per loadUnder this model, the Town only pays for services when work is performed. There are no capital expenditures, no long-term staffing obligations, and no equipment maintenance liabilities. Cost Effectiveness ConsiderationsHigh Upfront Capital Cost: The Town would need to invest over $216,000 in specialized equipment before performing the first repair.Utilization Risk: Pothole and minor asphalt repair work is often reactive and seasonal. Equipment may sit idle for extended periods, reducing return on investment.Ongoing Maintenance & Replacement: Pavement equipment requires regular service and eventual replacement, adding long-term financial obligations.Staffing Burden: Maintaining a full asphalt repair crew increases permanent payroll and benefit liabilities.Market Flexibility: Contractor services allow the Town to scale work up or down based on need, weather events, or funding availability.Risk Transfer: Contracting shifts equipment breakdown risk, labor shortages, and material price volatility to the contractor. ConclusionBased on the required capital investment, ongoing maintenance costs, staffing obligations, and limited utilization of specialized equipment, performing pothole and minor asphalt repairs in-house is not cost effective at this time.Utilizing qualified contractors provides operational flexibility, eliminates significant capital expenditures, and allows the Town to pay only for services as needed. This approach represents the most fiscally responsible method for addressing pothole and small asphalt repair needs.
Staff evaluated the feasibility of performing pothole repairs and small asphalt restoration projects using in-house forces versus contracting the work to a qualified paving contractor. The analysis considered capital equipment costs, staffing requirements, and ongoing operational expenses. In-House Operations – Capital & Staffing RequirementsTo perform pothole and small asphalt repairs internally at an acceptable standard, the Town would need to procure specialized equipment, including:Double Drum Smooth Vibratory Compactor – $63,271.97Cold Planer with Integrated Water Tank (Skid Steer Attachment) – $26,910.04Tack Trailer – $36,256.65Trailer-Mounted Crack Filling Unit – $32,500.00Asphalt Hot Box – $57,204.00Total Estimated Capital Investment: $216,142.66This does not include:Skid steer ownership and replacement costsEquipment maintenance and repairFuelStorageInsuranceDepreciation and lifecycle replacementAdditionally, a typical crew would require:1 Supervisor1 Equipment Operator3–4 LaborersThe Town would incur ongoing salary, benefits, retirement, workers’ compensation, and overtime costs for this staffing level, regardless of daily production needs. Contractor Pricing StructureContractor pricing is equipment- and labor-based with 4-hour minimums and includes supervisory oversight. Representative rates include:Dump Truck – $152/hrSkid Steer – $90/hr3-Ton Roller – $90/hrGrade Tractor – $98/hrPlate Compactor – $25/hrSupervisor – $95/hrEquipment Operator – $72/hrLabor – $42/hrAsphalt Material – $162–$187 per ton (market-adjusted quarterly)Crack Seal – $38 per gallonDump Fees – $250 per loadUnder this model, the Town only pays for services when work is performed. There are no capital expenditures, no long-term staffing obligations, and no equipment maintenance liabilities. Cost Effectiveness ConsiderationsHigh Upfront Capital Cost: The Town would need to invest over $216,000 in specialized equipment before performing the first repair.Utilization Risk: Pothole and minor asphalt repair work is often reactive and seasonal. Equipment may sit idle for extended periods, reducing return on investment.Ongoing Maintenance & Replacement: Pavement equipment requires regular service and eventual replacement, adding long-term financial obligations.Staffing Burden: Maintaining a full asphalt repair crew increases permanent payroll and benefit liabilities.Market Flexibility: Contractor services allow the Town to scale work up or down based on need, weather events, or funding availability.Risk Transfer: Contracting shifts equipment breakdown risk, labor shortages, and material price volatility to the contractor. ConclusionBased on the required capital investment, ongoing maintenance costs, staffing obligations, and limited utilization of specialized equipment, performing pothole and minor asphalt repairs in-house is not cost effective at this time.Utilizing qualified contractors provides operational flexibility, eliminates significant capital expenditures, and allows the Town to pay only for services as needed. This approach represents the most fiscally responsible method for addressing pothole and small asphalt repair needs.
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PRESENTATION: Fire Department Overtime Issues & Personnel Request
Through its first 2 years as part of the Town, the Fire Department has experienced challenges with overtime. This has become more of a recent issue due to several staff being on leave. Finance will lead this presentation with an overview of the Fire Department's overtime data and the Fire Department will discuss its personnel request for the FY2027 budget.
Through its first 2 years as part of the Town, the Fire Department has experienced challenges with overtime. This has become more of a recent issue due to several staff being on leave. Finance will lead this presentation with an overview of the Fire Department's overtime data and the Fire Department will discuss its personnel request for the FY2027 budget.
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PRESENTATION: Fountain Park Lake Liner Replacement Design
The Fountain Park Lake liner is a critical infrastructure component that maintains water retention for the fountain and irrigation for the park, protects underlying soils, and supports the overall functionality and appearance of the lake The existing liner, when it reaches the end of its useful life, will require proactive planning to prevent potential water loss, structural concerns, and more costly emergency repairs in the future.This project will fund the professional design and engineering services required to prepare construction-ready documents for the replacement of the lake liner. The design phase will include site evaluation, material analysis, phasing recommendations, permitting review, cost estimating, and coordination with fountain operations to minimize service disruption. The consultant will also evaluate opportunities to improve durability, maintenance efficiency, and long-term performance.Completing the design now positions the Town to plan and budget appropriately for construction and schedule the work during an optimal seasonal window to reduce community impact. Advancing this project demonstrates proactive asset management and protects one of the Town’s most recognizable and heavily utilized community amenities.
The Fountain Park Lake liner is a critical infrastructure component that maintains water retention for the fountain and irrigation for the park, protects underlying soils, and supports the overall functionality and appearance of the lake The existing liner, when it reaches the end of its useful life, will require proactive planning to prevent potential water loss, structural concerns, and more costly emergency repairs in the future.This project will fund the professional design and engineering services required to prepare construction-ready documents for the replacement of the lake liner. The design phase will include site evaluation, material analysis, phasing recommendations, permitting review, cost estimating, and coordination with fountain operations to minimize service disruption. The consultant will also evaluate opportunities to improve durability, maintenance efficiency, and long-term performance.Completing the design now positions the Town to plan and budget appropriately for construction and schedule the work during an optimal seasonal window to reduce community impact. Advancing this project demonstrates proactive asset management and protects one of the Town’s most recognizable and heavily utilized community amenities.
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PRESENTATION: River of Time Museum and Exploration Center Lease Agreement
BackgroundThe Town of Fountain Hills and the Fountain Hills Lower Verde River Valley Museum/River of Time Museum and Exploration Center (Museum) entered into a lease agreement on August 16, 2001 (Attachment 1). The agreement expires on August 15, 2026.Key provisions of the agreement include:Approximately 5,000 square feet of Town-owned space was leased to the Museum at a nominal rate of $1 per year for 25 years (total rent collected: $25).The Town contributed $210,000 toward exhibits, displays, lighting, and permanent improvements at the inception of the lease.Throughout the lease term, the Town has paid for building maintenance and utilities, including water, gas, electricity, sewer, trash removal, and base cable television service (excluding telephone and equipment costs).Over the past 25 years, the Town and Museum have maintained a longstanding partnership focused on preserving and interpreting the community’s history.Current ConsiderationsAs the lease approaches expiration, the Town must evaluate potential next steps in a manner consistent with state law and the Town’s fiduciary responsibility to ensure the highest and best use of Town-owned assets.In assessing fair market value for comparable commercial space in Downtown Fountain Hills (Civic District), staff reviewed available market data for similar properties in the Avenue District, including galleries, retail spaces, and other commercial uses.According to CoStar, estimated commercial lease rates for comparable properties range from $15 to $17 per square foot annually. Using the lower end of this range:$15 per square foot × 5,000 square feet = $75,000 annually.This analysis provides a baseline for evaluating future occupancy scenarios.On January 26, Town staff met with the Museum Director and Board President to provide notice that the Town does not intend to renew the lease under its current terms and expressed interest in collaborating on future possibilities for the space.On February 3, staff met again with the Board President, who formally requested a one-year lease extension (Attachment 2).Purpose of Agenda ItemThe purpose of this agenda item is to review available options and provide direction regarding next steps for the facility following expiration of the current lease.
BackgroundThe Town of Fountain Hills and the Fountain Hills Lower Verde River Valley Museum/River of Time Museum and Exploration Center (Museum) entered into a lease agreement on August 16, 2001 (Attachment 1). The agreement expires on August 15, 2026.Key provisions of the agreement include:Approximately 5,000 square feet of Town-owned space was leased to the Museum at a nominal rate of $1 per year for 25 years (total rent collected: $25).The Town contributed $210,000 toward exhibits, displays, lighting, and permanent improvements at the inception of the lease.Throughout the lease term, the Town has paid for building maintenance and utilities, including water, gas, electricity, sewer, trash removal, and base cable television service (excluding telephone and equipment costs).Over the past 25 years, the Town and Museum have maintained a longstanding partnership focused on preserving and interpreting the community’s history.Current ConsiderationsAs the lease approaches expiration, the Town must evaluate potential next steps in a manner consistent with state law and the Town’s fiduciary responsibility to ensure the highest and best use of Town-owned assets.In assessing fair market value for comparable commercial space in Downtown Fountain Hills (Civic District), staff reviewed available market data for similar properties in the Avenue District, including galleries, retail spaces, and other commercial uses.According to CoStar, estimated commercial lease rates for comparable properties range from $15 to $17 per square foot annually. Using the lower end of this range:$15 per square foot × 5,000 square feet = $75,000 annually.This analysis provides a baseline for evaluating future occupancy scenarios.On January 26, Town staff met with the Museum Director and Board President to provide notice that the Town does not intend to renew the lease under its current terms and expressed interest in collaborating on future possibilities for the space.On February 3, staff met again with the Board President, who formally requested a one-year lease extension (Attachment 2).Purpose of Agenda ItemThe purpose of this agenda item is to review available options and provide direction regarding next steps for the facility following expiration of the current lease.
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PRESENTATION: Community Contracts Overview - Update
Town Staff provided an update on Community Contracts in the Town's annual budget during the November 12, 2025 Budget Retreat Work Session. This presentation provides the same information with an update on a renegotiated contract with Central Arizona Shelter Services. Staff is seeking Council direction on how to proceed for the FY2027 budget and in subsequent years.
Town Staff provided an update on Community Contracts in the Town's annual budget during the November 12, 2025 Budget Retreat Work Session. This presentation provides the same information with an update on a renegotiated contract with Central Arizona Shelter Services. Staff is seeking Council direction on how to proceed for the FY2027 budget and in subsequent years.
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PRESENTATION: Leases of Town Owned Properties and Land
The Town's Public Works Department (Facilities) manages Town-owned facilities and land. The Town has several existing lease agreements with local organizations, most with lower-levels of revenue to the Town. Many also require the Town to pay for certain expenditures, such as repairs and maintenance and utilities. Finance also collects revenues from these existing leases. This presentation will discuss the existing leases and seek direction from the Council on moving forward.
The Town's Public Works Department (Facilities) manages Town-owned facilities and land. The Town has several existing lease agreements with local organizations, most with lower-levels of revenue to the Town. Many also require the Town to pay for certain expenditures, such as repairs and maintenance and utilities. Finance also collects revenues from these existing leases. This presentation will discuss the existing leases and seek direction from the Council on moving forward.
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PRESENTATION: Downtown Updates
Downtown Streetscape 5-Year PlanBackground:During the FY25/26 budget process, Council directed staff to proceed with development of a 5-Year Downtown Streetscape Plan. Prior to budget adoption, discussion occurred regarding removing the Avenue District from the improvement plan. Staff requested the Avenue remain included to allow for additional dialogue with The Avenue Merchant Association and further Council consideration. A site visit between staff and Council was conducted in the fall of 2025 to discuss the long-term vision for the Avenue.Council Input Requested:• Does Council wish to retain the Avenue District as part of the 5-Year Plan?Request to Increase Size of Banners along the Avenue Background:During the America 250 presentation, Councilmember Kaliviankis inquired about increasing the size of street banners along the Avenue. Staff requested the item be discussed at the February 24 Retreat to allow for broader Council input.Council Input Requested:• Does Council support increasing the size of street banners during the implementation of the Downtown Streetscapes Project?Entryway / Monument SignsBackground:Entryway/monument signage was included in the FY25/26 proposed budget but removed at Council’s direction pending completion of the Townwide Wayfinding Signs Project. Staff anticipates bringing forward funding in the FY26/27 budget and seeks preliminary Council feedback.Council Input Requested:• Does Council support including entryway/monument signage in the FY26/27 budget?Update on Plat 208Background:At the November 18 Council meeting, staff presented potential uses for two properties within Plat 208. Staff will provide Council with an update on Plat 208 and introduce an alternative, Town-owned property for consideration.Council Input Requested:• Does Council wish staff to explore alternative opportunities for public restrooms and placemaking?
Downtown Streetscape 5-Year PlanBackground:During the FY25/26 budget process, Council directed staff to proceed with development of a 5-Year Downtown Streetscape Plan. Prior to budget adoption, discussion occurred regarding removing the Avenue District from the improvement plan. Staff requested the Avenue remain included to allow for additional dialogue with The Avenue Merchant Association and further Council consideration. A site visit between staff and Council was conducted in the fall of 2025 to discuss the long-term vision for the Avenue.Council Input Requested:• Does Council wish to retain the Avenue District as part of the 5-Year Plan?Request to Increase Size of Banners along the Avenue Background:During the America 250 presentation, Councilmember Kaliviankis inquired about increasing the size of street banners along the Avenue. Staff requested the item be discussed at the February 24 Retreat to allow for broader Council input.Council Input Requested:• Does Council support increasing the size of street banners during the implementation of the Downtown Streetscapes Project?Entryway / Monument SignsBackground:Entryway/monument signage was included in the FY25/26 proposed budget but removed at Council’s direction pending completion of the Townwide Wayfinding Signs Project. Staff anticipates bringing forward funding in the FY26/27 budget and seeks preliminary Council feedback.Council Input Requested:• Does Council support including entryway/monument signage in the FY26/27 budget?Update on Plat 208Background:At the November 18 Council meeting, staff presented potential uses for two properties within Plat 208. Staff will provide Council with an update on Plat 208 and introduce an alternative, Town-owned property for consideration.Council Input Requested:• Does Council wish staff to explore alternative opportunities for public restrooms and placemaking?
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Adjournment
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