Thank you.

All right.

Good evening, and welcome to the Eloy City Council work session.

Today is Monday, March thirty.

The time is approximately five PM.

Madam Clerk, may I get a roll call and please remember Sarah?

Of course.

Councilmember Altraska.

Here.

Council Member Curtis.

Thank you.

Vice Mr.

Here.

Councilmember Schneider, excused.

Council Member Garcia is expected in about 15 minutes or so.

Council Member Golender.

Here's here.

I don't see anybody here for public appearances.

So that brings us to item five, discussionizing presentation by Brian Wright Finance Director or revenue projections for the FY 2026-2027 annual budget, seeking guidance on proposed property tax rate, Mr.

Wright.

Okay, good evening, Mr.

Mayor, members of the council and uh four staff members.

Um the first item will be the a little bit of a revenue presentation.

Um a lot of this information uh was it will look familiar to you because it was we talked about it at the uh council retreat about a month and a half ago almost two months ago.

So um I'll go through it and at any time there's questions, please feel free to stop me and we can address those and and stuff like that.

Um so you know, starting off, you know, we're we're gonna just kind of go through um the the agenda tonight with this.

We're gonna look at the the key impacts, talk a little bit about that, the general fund, um, we're gonna go over the property taxes.

Um what has been recommended uh for that.

Uh we're gonna go over the special revenue funds, um, which will be this uh water streets and kind of the airport cemetery, and then over the utility funds, which is water sewing sanitation.

So kind of when we started to look at this uh uh presentation, and this presentation was uh with our finance intern, Abe Mace.

Um he helped prepare this.

So I mean that was one of his first things looking at uh this budget.

So I do want to give him the uh a little shout out because he did help with this and a lot of the the layouts.

So but uh when we're looking at the 26, 27 uh fiscal presentations, you know, some of the key influences are is is with Pennell County.

You know, and when I say Pennell County is because we still have not gotten any word from them or any guidance, any feedback on what's going on with that half cent sales tax, how they're gonna distribute that to the cities and towns when it comes to the road tax.

Um that road tax because of Santan Valley, that you know, what are they going to do?

Are they going to make you know eat that and take and reduce their share or they're gonna split it through uh so that's one of the key influences when we're looking at this budget?

You know, the property tax, um, you know, will council go through and uh go through and uh accept the maximum levy limit that we've been doing.

Um we'll get into that a little later, but that's one of the the key influences, and also state shared revenue.

We've heard that time and time again about San Tan Valley, so you know that's been a key influence on this inflation impact.

You know, yes, the inflation really does drive up our expenses, but as inflation and those indicators hit our what people are buying food at, buying uh local things at the bar and restaurants.

Yes, that's more money to the city, so those influences um are in here, the state economy.

You know, when it comes to job growth, when it comes to wages, you know, that plays a part in our overall um outlook.

And then locally sales tax, where are we?

How does it look?

So some of those are the things that we've looked at as part of this budget.

But when we kind of look at uh the annual impact on inflation, you know the the the graph on the left is just more of an indicator of the last several years of how the CPI when it comes to the Phoenix area, you see it's went from the high as 9.5 and roughly back in December of 2025 is about uh it's about 2.2 percent.

So, you know, we look at that as part of our our our model that we look at.

And then the chart on the right is more looking at how things have changed from a year ago, and these are some of the indicators out there uh by major changes, and you'll see you know, recreations up six percent, you know, non-alcoholic beverages are up about twelve percent.

Um housing is just a little over uh half percent, but gas and gasoline and oil.

We all know what that that is right now because it's all it's about a dollar thirty more than what it was about a month ago, but you know, from a year 3.5 percent.

So I mean, everything is is the indicators are still pointing as a growth from the year prior, except some of the fruit and vegetables on it.

Interesting enough, that's about two percent less.

Um, but when we're looking at it, those are some of the indicators that we're looking at and trying to look at most of our local sales tax when it comes to that, and it's the state in sales tax as well.

But understanding the Arizona economy, um, right now uh there is a slower growth and job growth overall in the state.

Um when we did our research that's uh that that came up, it's still growing, but it's not at a large percent, it's about you know less than one percent.

Um legislative actions.

That for us is a big one.

Um here when we talk about you know potential tax and fee freezes for four years, they still talk about that.

Will it be going through?

Who knows?

But I know the league opposed that.

If they do that, that would actually cap every city and town from incre, you know, if they need to increase sales tax to cover a loss of revenue, you're stuck on that for four years.

Um the other one that uh we're looking at is that's out there.

Brian, I got a quick question on that.

Would that also affect uh any of our rates as far as our water um you know refuse and that that type of um items?

Yeah, Mr.

Mayor, Councilman Varoska, that's a good question.

And talking to our uh bond attorney, it wouldn't because we've already passed a five-year rate study that has already been adopted.

That would be any new tax from that point on.

So at that point, we would be okay because that's something we've been asking because uh within the next month we'll be bringing that utility bond obligation, and that was a question I asked him.

You said no, it would not.

Um, the other one, and there's a little difference between what the governor's looking at and what the legislative looking at is making that no tech or no tax on overtime, no tax on tips, making it the federal and the state kind of parity.

Their proposals are different, but there is going to be one of those methods, and that's an effect our our state income tax on it, our distribution.

Um, some preliminary indications are about a 240,000 dollar hit to the to our um state income tax on it.

But it could go up depending on which model they look.

And the last one, population growth, you know, it's kind of moderate population um due to softer demand and the um with people moving in.

So, you know, that that's kind of like it goes back, you know, the amount of uh snowbirds.

Wasn't as great this year, you know.

Uh the amount of Canadian people that didn't come back this year, it did affect it.

You know, we will probably see that uh uh hit in our state income tax and local, and we have felt it a little bit in our in our local sales tax as well.

You know, but when we look at overall, what is our like a swamp analysis, you know, some of our when our our locals uh revenue base, you know, we do have a stable revenue base.

We do have a very one of the lowest proper primary property tax rates in the county.

You know, we have I-10 corridor, we have Core Civic, which is huge for us.

You know, council's been um awesome, I would say, when it comes to our utility um rates and keeping and moving forward looking at that, you know, and we're prime area for development.

But some of those strengths are also some of our weaknesses that you know when it comes to our local sales tax, yeah, we do still have a 5%.

Our restaurant bar tax is high, but it's not the highest in the state anymore.

You know, that was taken care of a few years ago.

We do have a lack of retail development, you know.

Um it's very hard for us to generate that new tax.

We don't have the bill to say, let's just go out there and do something, you know, and then our population growth has been slow coming.

You know, we're finally back from the COVID census era of getting back to the 19,000 where we were before COVID, but now it's just based upon the what's coming in on housing and and uh because there's really not a growth in the prison population that's gonna push us up.

But overall, um looking kind of like at our diving into and looking at our kind of our general fund highlights, you know, we're looking at next year an estimated revenue budget of about 23.8 million.

Um this is a growth over last year's projection, which was about 21.8 million, and you're like, wow, that's about a two million dollar increase.

Well, one of even though with Santan Valley, one of the areas we're looking at is bumping up, and it's a one-time is in our permit and fees and our planning because of um like free free point.

I think it's free point, yeah.

Uh free point.

So we're trying to recognize that one time planning fee permit fee.

So I mean, that is that's about almost about 1.2 million or about 1.2 million in that area alone.

Next year, if we don't have large commercial development, that would drop down.

So that's recognizing the one-time revenue that will be coming in on it.

Quick question.

So 23.8 million last year was 21.

And that's only recognizing the one commercial or the one um industry.

So even if we didn't get that, we would still not be below what we'd had last year.

We'd be pretty close to that that same mark.

We'd we'd be a little above it.

Yes.

All right.

And as we go through, you'll see we can look at some of those categories itself.

Thank you.

Um, the revenue trend, yeah, it shows about six percent uh sustained growth over the past year.

Our population uh since for a lot since over the last three years has grown uh 2,451 people or about 817 per year.

So you know it's showing a little bit of growth on that.

Um new permits are about 148 annually for building permits, um, including about 616 nine uh that were issued you know through December of this year.

So we do still have the the housing side that's coming a lot of infilling ropes and on that.

But state share revenue that's taken a significant hit.

It's down about 37 percent, and we'll get into that a little more as we go on.

But where does most of the money come from?

This graph kind of shows that most of our money now is between two major funds, still city sales tax and uh the internal intergovernmental revenues, those make up about 69% of our revenue.

So the other 31% is made up of all the other categories.

So as you know, that fluctuation with internal or the intergovernmental revenues with state sales tax income tax, you know, that took a big hit because that used to be close to Buton, one of our big largest funds in the general fund as far as revenues concerned.

All right.

Can you kind of give a breakdown?

What is intergovernment revenue?

Where does that revenue come in from?

Yeah, the intergovernmental revenue is your vehicle licensing tax, state income tax, and state sales tax.

Those are those make up your intergovernmental revenues.

Those are what we get from the state based upon our population.

So is that different than state shared revenues?

That that's what that is, yeah.

So this slide here, uh, when we're looking at kind of gives a breakdown of kind of uh what we're looking at budget early by category, the major category.

So you'll see our sales tax, we're looking at the estimated uh uh the budget, and for sales tax has gone up about 1.7% on it.

Property tax, and we'll give them that's going up about 129,000.

We're looking at franchise fees going up about uh not as uh 2%, about 6,000.

But you'll see the license and permits going up 244%, going from 491 to uh one point almost 1.7.

That's because some of the um when it comes to our our like our permit and fees, residential building permits, you know, as valuations go up, and you'll see in our consolidated rate and fee schedule the recommended changes that's being made uh by by Dan, some of these are increasing our our residential permit fees, so we have to account for that.

It's gonna be a little more.

But when if we have a major uh project with a large valuation coming in, that's gonna be a large building permit for commercial.

So that's where that's affected on it.

So, and then you'll see the intergovernmental revenues.

That's going down about almost five percent.

That's reflected of the Santan Valley.

That's the state income tax, state share revenue and VLT on that.

The charges for services, you'll see that about 55% increase.

This is another line that's affected by the that permit.

You know, that'll be the planning fees, the charges that we will go through.

So you'll see these fees go in, but you when we meet and present the budget, you'll see because we farm those out for review to a third party.

You'll see when we meet on the expense side, they will have a large expense line to cover those fees.

So that's it's almost like a wash because with that.

So, you know, we have on the inspections, those will cost a lot, so you're gonna have inspections of outsourcing.

So there will be an expense side of to all that.

If we didn't have it, there wouldn't be the expense side on it as well.

Fines are going up about two percent.

There's not there's um most of that's gonna be the magistrate court.

Um, very not much growth there.

Insurance interest income, kind of recognizing a little more of what the growth model is, but as we do use more of the fund balance, it will be decreasing that interest income on it.

And then miscellaneous going about one percent.

So, you know, overall, most of this increase is generated between three categories, and a lot of it is one-time categories.

Your interest income charges for services and permit fees.

I have a question.

Um, and this goes across as you get further into it, the funds, the different funds, the airport fund, uh, cemetery fund water, and all that.

I mean, you have it up here, it's the miscellaneous category.

It's not big dollars, I know that.

But what makes up that?

What what's accounting for those dollars in that miscellaneous?

Uh in the way I categorize it, in this one, you have um like the fee that comes in, some of the large ones from the core civic transfer.

So when we do when we pay core civic and we do the billing, we get five or twenty-five cents per day for the mandates.

That's about a hundred and thirty thousand annually.

That's in that that number.

Um the IgE with Florence for the the judge into that that one, that's about eighty thousand.

You also have the fire district in there, which is about sixty thousand.

Those are your main three big ones in that, and then our really our miscellaneous one that captures things that don't have categories.

There's about 12 categories that go into that miscellaneous that we just don't um summarize on it.

Yeah, so but the three main ones in the that category are those those three.

So, but overall, the the the general fund, yes, it is increasing.

The one areas I do want to just point out when we're looking at this, as we move through the next 30 to 45 days of the budget process, I will be revisiting the license and permit fees, the charges for service and the interest income, especially make sure that those especially the license and fees and charges for services are looking like what we need it because that's gonna reflect on the expense side.

So those those three ones will probably have a modification once we get to the end.

Um we're still waiting for the intergovernmental revenues, the state share revenue report from the league to come out, you know, with a little better number, but I imagine if we are going to be within 50, 60,000 of that, it's not the really oh, we got another three, four hundred thousand, you know, on it.

But one of the things that we did talk about at the retreat, and it's in here in that 8.7 million is keeping the construction sales tax one time in the general fund for the operating for the year.

However, I'll address some of that when we get into CIP a little more, but um, I just want to make note of that change is in here in our operating revenue on it.

So I'm pretty comfortable with these projections and uh with Abe's help, you know, because we looked at the historic values, look at the inflation with it, but we do need to just pay attention to the license and permits and uh charges for services, just to make sure we're not overstaying those revenue categories at the very end.

But kind of digging in a little bit to the city sales tax side.

Um remember the city of sales taxes really supports three funds: the general fund, the streets fund, and the economic and community fund.

Um when we look at this, when we're looking at city sales tax, we kind of look at numerous things.

We look at policy factors.

We kind of look at the inflation, you know, look at like consumer confidence.

I mean, is that goes back into like the wayfare, you know, is more people buying online.

You can look at that tax category.

Um, you know, national policies, you know, that does play effect because if the price of gas is going up right now, people may not try to spend as much.

They're gonna cut back a little bit because they have to pay more than some other uh operational expenses.

You know, state policies, like I said, the the state keeps coming back with you know cutting and doing things, that affects those.

And then winter visitors.

I mean, we have seen and and talking to people around ropes and that yeah, that you guys had some of the highest number of uh for sales signs that you've had in years out there, and that kind of goes back into play.

If those winter visitors aren't coming back like they used to, that affects your local but the state economy as well.

Because even though they may not buy here, they're buying somewhere else, it affects the local economy.

Um when it comes to housing development, you know, are we still doing a lot of infill?

You know, as ropes and still uh doing uh their their projects.

Um commercial.

This next year, you know, you could have free point, you can have Maverick, you can have the auto zone breaking ground.

There's those are just a few of the commercial projects that could uh affect our local sales tax.

But you know, these areas, you know, are good for you to understand what defines our um sales tax, you know, if it's good in materials, groceries, entertainment, it just gives some information on those.

Um not then really jump into this slide too much.

But kind of when we're looking at the average sales tax collection over the last you know, three to four years from 2023 to 25, we averaged about 10.3 million in local sales tax collection.

The general fund received just under 9.3.4 million.

The streets, one time fund, and again, for um, if you don't remember, we take the construction sales tax, which is four and a half percent, and we take and the council passed a resolution years ago that said one-third of the four percent goes to streets.

So it's really three percent general fund, one-third um one and a half percent streets.

So the streets average for those this time frame is about five hundred and thirteen thousand, and the community economic development fund, which is a two percent food tax, is been collecting about a little over four hundred and three thousand annually.

So when you kind of start diving into the general fund, uh just uh nine point three million, it's broken out into many categories that we have to analyze.

Out of that 9.3 million, six just under seven million goes strictly to general fund operations.

Capital projects fund, which is our construction gets about an average of about a million ropes and ranch, that the incentive agreement, that's about just under it's 875,000.

The express fuel and the food tax, um that that's about 457,000.

And the national gypsum when we had that incentive agreement was about 456,000.

That is sort of agreement.

We haven't really paid this year.

We're not looking at funding it forward, but as part of the the historical looking at it, they're part of this model.

This slide here just kind of gives you more of a graph visual to what we just talked about.

So you'll see we're looking at this next year over the general fund about 6.7 million is as far as the uh what goes into the general fund.

We're looking just over a million for the capital, about 956,000 for ropes and the streets one time about 597,000, and then the food tax, which is the uh community economic development fund tax, that's about uh 451,000.

Express fuel will be about 54,000.

So that's gonna make up our our city sales tax that we're looking at this next year.

And this graph here kind of wraps all that information up to show how fluctuating it is, how volatile it's been, you know, it's like a mountain range.

Um, you know, and it goes all wild on construction sales tax for us.

You'll see it's high, then it we drop down and we collect some more construction.

I wish this was the case if it was retail sales tax, because then you could see that we are growing, you know, through some peaks and valleys, but our retail sales tax is uh relatively flat, it's around two to three percent growth this next year, you know, which is good, it's still growing, but it's not growing at the five to six like it it was the previous year on it.

So when we're looking at state shared revenues, again, um we've talked about it.

Um, you know, Santan Valley, some of these decisions being made.

It seems like the state really is handcuffing our ability to collect those types of tax to help us.

For us, as you see, that's over 30% of our revenue comes from the this revenue source.

Um the general funding tax, you know, during Santan Valley, it's about 387,000.

Um this year's budget or this budget versus last year's budget.

The streets, that's about a $383,000 impact.

That's going to affect some of our uh you know, street projects.

Um we're looking at still the legislative distribution uh issues, you know, with the then trying to, like I mentioned earlier, about trying to meet the flat tax part of you know really incohesive with the the federal law.

Um my understanding there about I think the government wants about a 220 million dollar you know impact on it.

The the legislators want about a 500, so they're not a little bit of a difference.

So I mean it's a big you know, either way would be a just uh less revenue to us when it comes, and then it's not like what that's a one-year, that money's gone, it's gone until that law changes again with it.

So, you know, I know that uh council, especially the mayor's you know, voices concern to the the state on it, but you know the more that they do with our state share revenues, the more we have to look at potential other means to how do we make up that revenue.

So this graph here, or this what I'm gonna just show you is the graph on the left just kind of shows you the breakdown over the years of actual revenue of what we've gotten state income tax.

You'll see we were as collecting back in 2324, we were collecting 4.5 million when it came to state income tax, and we're dropped all the way down to 3.6 and this 3.7.

So I mean that's 800,000 that we've lost in income, and and a lot of that that's due to that flat income tax that the governor signed years ago.

So you can see with the flat income tax that we have revenue is dropped.

Um then VLT or the state sales tax, which is this this next one up here.

You know, that's that's kind of going up because of uh our the sales, the more that it costs the goods, the more we do get a piece of that pie.

This is about the only category that will probably show a positive impact over last year's budget that we had because of the growth because of the cost of everything is going up.

Um vehicle licensing tax, that's the one that took a part of the biggest hit overall as far as a category, and that's because of Santan Valley.

Um, because they don't spread the wealth on that new city to everybody in that category.

The vehicle licensing tax distribution is on a county level, so that distribution reduction came from everybody in the county, not everybody in the state, where with San 10 with income tax and state shared revenue or say income tax, that was a whole state as a whole that people lost money on.

And then highway user revenue, again, we're looking at about $380,000 hit on that.

So that's almost about a 20% reduction.

BLT is about a 30%.

We're looking just in state income tax or state sales tax about 2%, and then really we're saying no change right now until we get better figures from the state on it.

All right, and I have a question that highway um user revenue, is that sales tax or gas tax?

Uh that's a yeah, so the highway we get the a portion of the gas tax.

So it's not what is sold here locally.

That's one of the biggest misconceptions that hey, we have all these truck stops, we should be waking in the money from you know the truck stops.

No, it goes to the pe it goes to the state, it's distributed based upon population.

So, you know, we get a portion of that uh the the gas tax based upon population.

I'm surprised though that it's not drop significantly with like electric vehicles and yeah.

No, I mean they still have that same tax.

I mean, it's not as it's not affecting it like as much as what you're maybe thinking on it.

Well, in the legislature right now, they're looking to do a gas tax holiday that will affect this HERF.

It would be a gas tax holiday for 20 years during the summer months only, but it will be a one billion dollar hit to the HERF funds over 20 years.

So talk to your legislators.

That's just another legislative action that's just hey, you the cities and towns, you figure out how you're gonna do with that, but we're gonna try to.

It's kind of like the legislators said, hey, we're gonna cut the rental tax for long-term rental.

Not not like hotel, but long-term.

They did that last year.

We lost about 175,000 annually on it, but it didn't drop anybody's rent by all that money.

So it was just more of a I'll give you uh this tax cut if you guys support something else and cities and towns, figure it out yourself.

Um that kind of goes into that.

This next section, we're gonna talk about property tax.

I know that's this is a great topic for everyone, but uh like I said, the past several years, council has given the guidance to say, hey, let's keep doing the maximum.

So this current year, the property tax is 0.9769, so just under a dollar.

So with the information we got, the maximum limit that we could do in the 2627 is 0.9848.

So it is going up roughly 0.007, not even a cent.

Yeah, so that would be that would be the increase.

And as we what's very interesting this year, normally when you see rates go up, that's because valuations drop.

So as we look into this, this is the truth in taxation analysis spreadsheet that we use to determine what's going on.

You'll see that the valuation, that evaluation is actually it's on the snake shot.

It has actually gone up, but we've had such a big jump in our um new construction.

The new construction valuation was about 10 million dollars.

And that is probably when I look at it, would be the gold bond facility.

And so that gave us a capacity of just if you if you look at new growth, nothing else in our property tax area, that the property tax would be 90, 96 cents.

I'm gonna say that will generate us another 96,564.

But if we want to recognize the maximum limit, the two percent growth, because we're only capped on two percent, we can't go above that.

That the maximum we can issue is going up to 0.9848.

That would generate an extra 31,000 dollars for that seven tenths of a cent, right?

So for us to go up, if council looks at it to generate a total of about 129,000 more would be go up to the 9848.

If council knows no, let's just take the new construction.

So property taxes would go from the 9760 9, it would drop just on new construction, recognizing that to 965.

So it went it would drop less than a cent on the on the flip side for an additional the differences right here is $31,280.

So the we're we'll recognize the new construction, and we would generate $96 about $96,565 approximately, but to take the maximum, it would go up to $98.40 from $9769.

So less than a cent.

So that's kind of the you know, when we're looking at this the property tax, is USN these two rates, it would go up just a little bit, valuations are going up.

That's the this is one of those few years where both of them are going up on the same time.

Usually when valuations go up, rates drop.

This this year, valuations going up and the rates going up as well.

This is one of the the odd years that that happens with it, but it's the amount of new construction that is coming online.

So it's kind of like you know, when we look at you know, these next two slides, we've talked about the you know, toll tech in the yield property, it's always about six or seven percent, depending on where you're at.

But uh when we look at it, uh Mr.

Mayor and Council is kind of you know what is the guidance of the council when we uh when we're looking at this, do we go ahead and do the maximum for an additional less than one cent up by that for another 31,000, or say nope, let's just go with the new construction, and the property tax rate will go down by less than one cent.

Is it you know I'll let the council maybe you know talk and ask some questions on that ideas?

It just sounds so small, is it?

Yeah, it isn't that much.

Um I I don't think I think on a what uh three hundred thousand, whatever home.

We're talking probably a rate increase twenty-five, thirty dollars, if that you know annually.

Yeah, right.

Yeah, and a three thousand dollar home, yeah, it would be probably going up less than because you have to think one dollar is about three a three hundred thousand dollar home evaluation for one dollars three hundred dollars a year.

Yeah.

So in this sense, if it's going up less than a cent, you're probably looking less than three dollars.

Yeah, yeah.

Um, I don't see why we don't go to the uh full two percent increase, but that's my own opinion.

And my opinion is it it doesn't seem to make it worth it for $31,000.

Um I think that so explain to me if the rate is low, but new construction um increases, then the value increases as well.

Is that what you said?

The new construction is from new construction being uh assessed by the county and on your tax rolls.

So new construction, gold bond housing that comes on, that's your new construction.

That is recognized in your in that 10 million dollars.

So if someone builds a new house at the lower tax rate, it you're right that the valuation of the house goes up.

No, someone builds a new house, it's the value of the house.

If they value the house on at the county at 150,000, that's the value of a new construction.

That has nothing to do with the tax rate.

So what what um Councilman Glenda, what this is saying is we the the state the the way they look at this is if they're going to give us the 10 million dollars in construction as part of your valuation.

For that, you will have a tax rate of about 96 cents, 96.55, and that will generate the city because of property valuations going up along with new construction, an additional 96,000 a year.

If the state caps our ability to raise property taxes only 2%, so that 2% growth will get generate us another um $31,000 for about another one, not even two sets.

So more on your property tax bill.

So our property tax right now for the city is at 0.9769.

So that is what our property tax, what we're charging on primary property tax right now.

If we adopt the maximum property tax levy limit again, like the city's been doing, that would go to 0.9848 or less than one cent more to the to the taxpayers.

And what would that increase equate to for a house that is just over a hundred thousand dollars?

Not even a dollar.

So it wouldn't it wouldn't even hardly be recognized on you know throughout throughout the year on it.

So I'll just say I think I agree with um council member Vodraska on this.

Um that we stick with the maximum, yes.

So I agree with that.

I agree with sticking with the maximum.

But let's say we didn't take the maximum.

Let's say that was the thought here.

You don't take the maximum.

Well, then you don't have that maximum next year to next year to next year.

So it's not much.

We have it into perpetuity.

So I'm with my council members here.

And so what we'll end up doing is preparing the appropriate paperwork for our public notices in the truth and taxation hearing um as we move forward through the budget process with that.

So explain that what the mayor just said.

So if we don't take it now, then we're not allowed to take it in the future.

Well, no, if you didn't take it now, um Mr.

Mayor, Councilman Glindo.

If we say we're not gonna take the the maximum, we're gonna take just the 965.

Well, next year we're we're losing 31,000 in revenue.

We can't go, we can't go back and collect it.

That means the following year, if you if rates go up and we use, hey, we're we're gonna take the maximum, you might be looking at a three to four percent increase because of it.

It depends on the rates.

You can go collect it, but it's just gonna be it's like a utility, you defer it, you can go back and do it, but it's gonna be a bigger jump to get to that maximum collection limit, and you have to think property taxes are most stable form of revenue that we have.

It's not gonna go down, you know, due to a crash, it's not gonna go down because of people not spending money.

Property taxes considered most stable form of revenue, and it's always been my recommendation to council on the maximum because we're it's a slow increase.

It's not a big jump, and when valuations drop, property taxes will go up.

If there is a downward turn in the economy and housing valuations drop, valuations drop, that means your rates are gonna go up.

So, you know, yes, it is my recommendation to always collect the maximum because we use that for public safety, community programs, services that we use for property tax since that's a one of our revenue sources.

Of our you know, one of our if you look, it's seven percent.

That's the right like the third biggest category we have.

So uh yeah, Sarah said she's good with the max as well.

Okay.

With the max also, I think might be a good time.

It's not gonna hit anybody too hard.

So I'll move forward with the when we move through with the budget process, move forward our our requirement uh posting for the truth in taxation notice and building that in and and uh with the revenue the when we bring the property tax ordinance to council, we'll we'll look at that.

Thank you.

Um getting to special revenue funds, the streets, airport um in the cemetery.

Uh we're looking at overall in the streets fund in each of these categories uh remember uh council, they have their own dedicated revenue sources.

So whatever we but you know fluctuations are, it is pertaining to that fund alone and and stuff and uh in operations.

So when we're looking at the streets fund, this is the one that still has a little bit of a question what's going to come, what's gonna happen with the Pennell County half cent sales tax.

Um part of it for the budget right now.

I've kept it the same as what we did last year.

I didn't show an increase, I didn't show a decrease because I'm not sure what's going on right now.

When we look at the we build the expenditure side of the budget, we'll probably be holding off a few hundred thousand or having a contingency built in place within that fund in case there is a dip in revenue.

So we'll have the a fund a pretty healthy contingency that will probably be from their fund balance in this budget when we move forward because of that unexpected or really not a lot of guidance when it comes to that fund, that one item.

But the interest income is going up on that, and then again, miscellaneous revenue.

Um while that's going up, and you'll see uh council members for OSPA that like 426.

That's also from the the permits.

You can get these right-of-way permits that are coming in from project, solar project, one-time revenue comes on it.

If there's not not many projects, that expense goes down on it.

So we're looking at about five point under five point six million or three point six million.

They do have about a seven million dollar fund balance.

We will be utilizing um about half of that this next year in the 2627.

Even though we're not getting an expense side, it's because we need to use half of it because of the grants that is for the Sun Lynn Gin overpass that improvement.

They gave us about a five million dollar grant.

We probably spend a little about about 150,000 with engineering, but the estimates are about eight million.

So we're gonna have to use about almost three and a half, four million to complete that project.

So that's gonna eat away half the the reserves and the streets fund on it.

So we do have that fund balance for that as we move forward.

Um the next one, airport.

The airport fund, we're looking at about going up about 7.7 percent.

Um a lot of it uh what it right now.

I know uh Christina in public works, she's trying to get the finalize the new airport uh leases.

And once those come before you, hopefully, you know those are will be adjusted.

If we don't get them in time for this budget with any projections, we might be over on it, but on the expense side, our our revenue or our budget will reflect that because we do have a pretty healthy fund balance on that, but the fund balance within the airport fund covers a lot of the one-time projects that we have that are the city's contribution for those uh FFA or state grants for uh airport improvements.

Uh so the leases and fees for airports will be coming hopefully in the next maybe six to nine months time frame, and uh for council's approval, so we can start to have in those new lease rates and fees on the airport hangers out there.

The cemetery fund, besides being a I always say the dead issue out there, but um punt intended on it.

Um the airport and fees charges, you know, roughly just going about 2.6 percent.

Um I know that they uh there's been some in we've had uh talks within staff about um some types of uh uh capital purchases that may need to look at these rates going up.

But you know, airport or the cemetery fund, it's very volatile.

I mean, if you don't have a lot of barrels on it, you know, you're not collecting the plot fees, you're not collecting the liner fees or the the burial fees.

So you'll probably see something within probably the next six to nine months as well of reanalyzing the cemetery fees.

It's been about almost three to four years since those were looked at.

Um those go to the cemetery cemetery board first and for their consideration on it, since they are an independent board.

Um so that that's gonna be the recommendations that those be looked at for some of the the changes that are looking into the cemetery coming up.

But they do have a fund balance of about 411,000, and so you know, if there is any one-time fees, they do have a a healthy uh you know balance to use.

One of the recommendations I know that uh will be looked at with the the cemetery is the perpetual care fund, that's the long-term fund for the cemetery, is maybe increasing that uh contribution for sustaining growth on it, and that would be through the rates as well.

Um last part of this looking at the enterprise funds, you know, water, sewer sanitation.

Um each of these are seeing increases this next year.

Um key impacts for some other rates, the water fund based upon our five-year rate study uh this year, November 1st, another 14% increase will be going in effect.

Sewer fund will have an 11% starting on the uh November 1st, and then starting on July 1st, uh Doug in or waste management is increasing rates for 0.8%, and that's based upon their annual uh adjustment.

That's part of their contract, and you'll also be hearing about that in the consolidated fee schedule as we move forward.

But when we're looking overall, um up here on each of these funds, just kind of a little highlight.

You'll see that you know, you know, water count, yeah.

We've had about 102 new accounts when we're comparing kind of uh some data, the utility accounts have increased by about 102 in water.

Um this is our second rate and rate and fee increase out of the five, you know, some kind of notable things when it comes to our water, we have about 131, almost 132 miles of uh portable water means, about 5.5 miles of water pipe, you know, four wheels and 13 boosters.

So that's just some of the important things because that's important when it comes to our water.

But overall, our water fund is growing about 14.3 percent over the last year.

So to about 4.3 compared to the uh 3.8.

Um, the biggest jump is in our rates and fees on it.

And looking at our in that jumping, you say, well, that's more than 14%.

That's also looking at the water consumption of what we've been using right now, and then looking at the past historical for this last uh six months of usage.

So we feel that those those charges are pretty good.

Um the surprise, we're looking at about 670,000 uh on that.

That's at uh for the cap water, um, and then the miscellaneous uh water revenue uh comes with Council Member Roscoe.

That's at uh for the cap water, um, and then the miscellaneous uh water revenue uh with Councilman Belasco that goes into our meter charges, some of our what uh you know delinquency, you know, hookup fees, all those.

There's about six fees in those.

Uh uh wastewater.

When we're looking at this fund, um this fund is really different.

We last fund you heard that we had about 102 new you know, account growth.

This one only had 32 because a lot of the homes that they build them out in Toltec are in septic.

And that's where a lot of the end field projects are happening.

With the happening rope, none of those happened for us.

But uh we're looking at about 6.7 percent overall, or a little over 2 million dollars um in revenue from wastewater.

Um again, 7%.

Uh this is our second rate increase that'll happen on November 1st.

But our sanitation, yes.

I mean, we only have if you look at this, we only have 1,882 customers when it comes to our sanit or wastewater.

Compared to water, you have 2900.

So we have almost as it says on here, which is kind of a really good statistic, there's about 1,100 people that are on septic, 100 accounts.

So, you know, that's it's quite a bit.

But uh when it comes to the sanitation fund, we're looking at this fund is actually decreasing about 5.6%.

Um as we go through this, uh there's about 4300 sanitation accounts.

Um compared to last year, there's 427.

So you only increase about 44.

But when we're looking at this, our sanitation rates, we're not showing that increase because when we go through and we add the 4%, we're about right on track on that.

We've lost a little bit of some commercial customers, which has affected some of our when we did the forecasting last year with the budget, we had a little bit higher amount.

But when we went to WM, they took over, we lost some of our commercial accounts, and so that that's affected it.

But one of our biggest that we've lost revenue-wise is when it comes to our roll-offs, our roll-offs have what we're getting in from our roll-offs is about half of what it was last year.

So we are seeing a decrease in our roll-off billing.

Those are ones that some of those customers stayed with the other company.

Right.

They stayed with that on that.

When it comes to commercial, they can go to whoever they want as as far as collection.

Um residential, you you go with the city.

So a lot of the commercial and residential uh roll-off customers stayed with the other company.

So we did lose some of that, and that's pretty and it's seen in our um our overall landfill fees.

Um, we're saying we'll go up a little bit, but landfill fees are also um coming a little lower in that right now.

Landfill fees are are slowing down because of uh the Arizona City sanitation is not dumping as much at this time.

They would like to dump more, but we just don't have the personnel to keep up with their load on that, their dumping load.

But overall, the sanitation fund is still maintaining, but we're not really increasing the rates.

The rates are going up above 4% for everybody.

Um, and I'll go over in the consolidated fee schedule, how much of that changes for residential as we look at it.

But overall, just kind of sorry, Brian.

I just have a quick question about the the sanitation study, the landfill study.

Is that still going on?

Where are we with that?

Yeah, so uh mayor council member Galindo, the study is still going on.

Um we're about 85% complete right now.

The biggest issue with that is through you know, going through this process over the last year, what we found is that a lot of the data that we had been submitting to the state in regards to our landfill, the uh basically the fill rate has been inaccurate.

And so once we found that information out, a lot of the data we had collected was incorrect based on that assessment.

So now what we have to do is conduct a flyover of the landfill and assess the true fill rate at the landfill, so then we can basically reassess the adjusted rate and fees, and then that impacts all of the other assessments they have of whether we're gonna mothball the facility, whether we're gonna privatize the facility, or if we're going to retain and keep operations of that facility, what the true cost is of getting additional staff equipment and everything to run the landfill, how we need to.

So similar to what Brian had just brought up previously with how we're restricting um Arizona sanitation, city sanitation from dumping additional waste in our landfill.

If we had some additional operators out there and heavy equipment operators to handle that waste coming in, that'd potentially be able to offset this.

But yeah, the study's still going on.

We are currently coordinating with another consultant to conduct that landfill um flyover, and that should be coming to council here probably within May, uh, with that contract approval for that to take place.

Once that's completed, we will be bringing MSW to come and do a work session that will take place at a works uh study session or work session in the near future.

After that study session takes place, then we are going to do another um contract negotiation to do essentially a community outreach process.

Obviously, we know sanitation is heavily uh people are passionate about it.

It's a very hot button issue, and so we want to make sure following the information that we gather, we do a um excessive community outreach campaign, make sure everybody's aware of what's going on, uh what the options are, and then once we receive that community feedback, we'll come back to council with all of the data so that you guys can make a decision based on the feedback, not only from the study, but also hearing from the public outreach.

So, yeah, that's where we're at.

Okay, just to wrap this up, uh you know some of the wrapping this up is you know, the city is stable revenue base is stable.

You know, considering you know some of the constrained financial positions that we're looking at, we are stable when it comes to our our local taxes.

Um our state income taxes finally stabilizing a little bit, our permit and fees, those categories are strong due to some of the uh commercial growth.

Um when it comes to our utility rates, they're they're they're really good position when it comes to that based upon the five-year rate analysis we have and uh with it.

But when we're looking at uh you know, overall, you know, the fiscal strategy that I've looked at is you know, it's created a challenging challenging environment, you know, for budget because we don't know what's gonna happen next, you know, when it comes to some of these, you know, the slower growth at the state level, you know, some of the building permits slowing down residential, you know.

I'm kind of going back to, you know, let's just be a little bit of a conservative fiscal plan to make sure that we're not overstating revenues and then we're coming back going, hey, these didn't come in just because we need we want to hire 10 more people because of we're not growing, but that's the need.

I don't want to have to come back and go, we we're not meeting these mayor, council.

You know, let's be, you know, we're hitting our marks, we're showing the growth in those areas that we need to.

But as far as when it comes to realize what Santan Valley has done for us and what we have to look at, we might have to come back in a future date and say, look, we want to take that next four step forward because we're we're seeing the growth that's gonna be coming in the next six to nine months, you know, down the road.

We may have to look how are we gonna look at that really the only mechanism that we have, and I know it's the worst topic to look at is do we have to in six to nine months down the road, go we need to look at a half a cent sales tax increase to make us pick up where we lost at the state level because that's the only way we will be able to grow as an organization because we don't have that that money coming anymore.

That's just something to look at in the future on it.

But overall with this FY26, 27, you know, the conservative fiscal planning aspect and approach.

Um I think that's the best method on this, but we are meeting the obligations of uh the rate increases for utility funds and and everything, and it's still a very strong stable market out there.

Brian, real quick, um, number one, the city sales tax is increasing modestly by 3.39%.

That's revenue collected, right?

Not a not a rate or anything.

Correct.

Exactly.

I just want to make sure everyone knew that.

Um that's euro beer.

Is that 3.3 or is that yeah?

Okay, thank you.

Any more questions on this before we any more questions before we just kind of touch up on the capital improvement plan consolidated fee schedule, which is item B.

Any questions about it?

Okay.

And let's just go ahead and we'll jump into the uh um, we'll jump in the capital improvement plan.

Um kind of going over the cap improvement plan.

Um starting off this uh the capital improvement plan is a I'm just gonna get to the front page of this.

Is when we're looking at the capital improvement plan for 2627.

We're looking at uh CIP but uh budget about 36.6 million.

But before I get a lot into the the weeds on this, just to kind of recap is um the CIP plan is a very solid plan.

You know, it it really focuses a lot this next year on water and wastewater infrastructure and road improvements.

Some of the major ones we're looking at.

I mean, when it comes to water wastewater, like uh it's been talked about you'll see us um within the next month, the second meeting of April, um, we'll be bringing a resolution for the uh utility obligation bond.

That you utility obligation bond uh will be it'll be not to exceed 21 million, and that will be doing about 10 projects within the water wastewater.

Some of the major ones you'll be looking at part of this plan is the continuation of the sewer line going down Bitagula.

That's that will that will extend that sewer main, upgrading it from an 8 inch to a 24 inch from uh 11 mile corner all the way down to the sunshine.

It'll also be doing two major water line uh extension and loops out on Sun and Gin.

That will that will improve the water out there.

It'll improve it for the growth opportunities in that area.

The sewer lines are gonna open it up for uh residential development or any development coming north on Metagula or east, and then the big one is uh where is we're looking at the completion of that the grant from that we received about three years ago from the state of $5 million for Sun Lin Gin.

So those are between those in that project's about $8 million, and the all these utility obligations about $21.

We're looking at about right there, about almost $29 million out of the 36 is just in those water infrastructure projects.

So out of this $36 million, um there's about 41 projects into that.

Um we took that brought this forth to council at the budget retreat.

One of the guidance that I mentioned that council said was you know, this next year let's take a step back because of some of the revenue constraints and hold off on the general fund transfer, and let's hold off on it um any general CIP projects.

Well, after we did that, we pulled it out and we re-evaluated McKinsey.

I said, you know what, we can do let's let's bring back a few projects.

We brought back uh community project of redoing the interior being recommended the interior uh improvements at the senior center to improve that.

We said um one of the major projects to help staff was out at public works with the shade covering.

And then we we figured you know then also let's put back in two cop cars into you know for the vehicle fleet program.

So there's four projects that we said they called about a half about four hundred thousand dollars.

We can we can do those at this time, but as we move forward through the budget process, if we're able to balance the general fund and still have some of this one-time money that we maybe will introduce a couple other general fund projects back into it.

But right now, we introduced four projects back in because we feel that the capacity was there for that, and plus looking for the community from the community center to helping the staff out with shade structure and some vehicle replacements back into the PD for the fleet, we're recommended from the city manager.

But overall, the 2627 is a very solid plan.

Overall, this the five-year CIP project is there's about 197 projects for about 236 million.

Now that is actually up about 41 million from the previous year, but that's also recognizing as we get out later new later on in the years four and five, some of the big projects that we still have, it's just recognizing some of the the values on those.

Britain and public works, 90% of these projects are public works, and they looked at their projects really heavily and updated the values on those.

So staff did a great job of analyzing CIP projects this year, but you know, I kind of just want to leave it at that with uh um council is hit if council's had a chance to review this, you know.

If they if they have any questions with the CIP, um one thing I do want to mention is we've we've talked a lot about many possible grants that we've applied for.

So if we do get a grant that's not recognized in the CIP, then if we do get it, let's just say um we applied for a through uh the community services to uh applied for a grant for a ball field canopy up or play grant equipment, and they get that and they get a 40% grant on it.

We'd be bringing back the council part of the general fund uh our call our general CIP.

It has a fund balance about a little over two million, two point three million, I believe.

Hey, it's an unbudgeted, we are budgeting that fund balance.

We would you come back to council.

We got a grant, we're gonna recognize that as a grants fund, but we're gonna pay the the balance out of the fund balance of this project.

So if we do get a grant that was not on one of our recommended CIP, but it's grant funded and needs the city contribution, we will find those the city's contribution part of that grant in our unbudgeted capital projects line in the this um the general capital projects fund.

So I kind of wanted to let council know that because there are numerous projects that we applied for.

Uh one that's out there that we still don't have and it's not on here is the one systemani.

They give us that million dollars.

We haven't received anything yet.

No, we haven't received the money yet, but when we do, it will be budgeted and spent out of the the grants fund.

That's not on this list because we haven't recognized we haven't received any um any of the the distribution yet on it.

We have applied for again on grants for capital through the one Cisco Mani.

We did um phases two and three of the the roads.

Um they were about three and a half million, four million each phase.

Um and so if we do get awarded those, those will be part of our grant side, and we'll have the budget capacity because I always budget an extra five, six million in case we get a grant, so we would have that capacity for that on it, and then we also on the Kelly Gallego um we applied we did two PD um uh grants that we put in for the PD, the CAD system, which is about 2.2 million, 2.5 million, and a dispatch console upgrade for about 350.

So those are some of the capital projects that we put in for.

Not sure if we'll get it, but uh just wanted to make note that those are some of the CIP projects that aren't on the one year, but they are part of the five-year that's the ghost of the past.

That's all the people in the show bearing here before we put.

So is there any questions with the CIP?

And the only thing that may change on this mayor and council is if we as we go through the next month or two, if there's a rollover project that's funded right now that may not happen, we'll roll by over.

One that I know that will probably be that is the this audio visual upgrade.

That we've talked about because there is one meeting in July that council has said, I think it's the after the only the first meeting in July.

We'll do that because they'll need two to three weeks to do the improvements.

We just couldn't find two to three weeks where there's nobody having a council special counseling anything happened then.

So that will probably be a project that's roll over.

I I just have a question, and maybe this is something we talk about later, but you know the five-year CIP about um looking at projecting maybe that animal control facility on that five-year plan.

Okay.

Like right now, or something in looking at next year when we look at it.

I'd like to add it now.

Okay.

I concur.

Okay, so yeah, no, we we can add that, and it's something similar to like what we're doing with like the community center, right?

That's been on the books for like the last eight years.

You know, you just put it further out and then can shift it up if things change.

But yes, um, we'll we'll get that added.

It will then affect those tools a little bit, but that's not a big deal on it.

And you guys are checking AZ smart fund when it comes to the uh revenue match, right?

The AZ smart fund when it comes to revenue matching.

Oh, for the uh scampa?

Yeah.

Yeah, if on those a lot of those grants we would be utilizing if they're not identified at this moment.

Um my recommendation cookie when it comes to all those is the where the funding would come from would be fund our where the half cent sales tax or the construction sales tax for roads are.

Is that match coming out of there?

Kind of like a sidewalk one that we have right now, it's about 16.

That payment will come out of that fund 16 on it.

So we'll look at those and we'll add those as well because I think there's three that aren't currently on here.

Nice.

Yeah, easy smartphone has a lot to do primarily with anything roads.

Yes.

They put they put matchups for that, and I think there's about 30 million in that pot right now available to cities.

Yeah, and so I'll argue with uh Cookie and Christina.

We'll add those.

It'll be future, won't be affecting the 2627, but it would be like the sidewalk project would be like I think 160,000 match, I think what that is, but we need to get that on the books on it.

So we'll get those updated, and uh those will be in the years two through five on it.

So lastly to kind of go over um that's a great sound out there, isn't it?

Something we don't hear very often here.

It's either that or Paul they're just throwing water outside with the hose.

Um the last one is a consolidating rate and fee schedule.

Um this is done um coming out right now is and uh it went out to all departments to look at their rates that they charge for rates and fees.

Um changes we have, they're highlighted in yellow, and there's a justification with it.

There's only a few.

Oh, there goes the TV.

Maybe that's the God's thing get out of here, Brian.

Um just real quick, we'll just go over this before we lose anything.

Is uh utility positive going up about $25, and that's for water and sewer mostly because of the rates going up 14%.

We always try to collect two months deposit, so when people skip, we don't have we're not losing as much as we used to.

Um but as we go through this, there's no changes community services, there's no changes to the police or administration.

All the yellow highlights you'll see probably for about twelve about six or seven pages are all fee adjustments that Dan went through and looked at all the fees.

He consolidated some of the fees, he put them up to um uh based upon cost of service.

If you have questions about that, I know Dan's probably itching to talk about it, but they're they're really fee-driven or cost-driven basis on those.

Um the couple other ones that I just want to point out.

Uh there's no changes of cemetery right now, uh, nothing to public safety.

But when we get into the uh public works, they have some based upon engineering that there's c cost service increases as well.

Um when we get into sanitation, those rates are going up based upon the 4.8%.

I do want to point out if you look right here.

So right now, residential trash is $30.4 cents.

That's once a week trash once a week uh recycle, it's going up to $31.

So it's going up 96 cents on it.

That's the 4.8%.

So we will be what we'll end up doing is we've already put out a notice to say rates are going to change July 1st because of waste management said their rates are going up.

We will send a letter out to all residential uh trash users, like we did in the past saying, please be aware rates are going up because of this reason.

It's a it's a contract, but be aware July 1st, please change your credit card, your direct deposit, you know, your your automatic payments to this because as you see, about four about two thousand customers are out there in ropes and that they just pay the $31 or $30 and 4 cents and they don't pay attention, so we always have to send that out.

So we will give ample notice, we'll put it in the utility bill, we'll send the some email reminders through our utility system for that.

But I do want to point that out as a fee adjustment on here with it, and it's based upon the contract.

But all of the rates within sanitation are adjusted by that four point four point eight percent.

And then lastly, the other ones when it comes to uh water sewer.

Um this is based upon the you know resolution changes, but the one thing that we did add that are new fees is we added a 10 and 12 inch to some of the the fee, the the charges because there's been talk about you know we we need that because if somebody comes in and we have to build them a 10-inch, we don't have that on there.

So we needed to do that and add it, and that's just following the same step as with the other ones when it comes to fees and charges on it.

But that's both involving wastewater for the 10 and 12 inch.

If it's meter charges or um looking at uh capacity charges as well on it.

So those are the major changes within this.

This report it will be loaded up to the uh the website uh finance page for the posting with the public hearing.

It'll sit there for you know 60 days, March 20, the the day after the last second meeting in May will bring this resolution to council for adoption of the rate and fee schedule because it has to be uh 30 days prior to the implementation on that.

So that's kind of a rate and fee schedule on that.

Is there any questions with the rate and fee schedule that we have?

So I looked at it, but it's reasonable, right?

I mean, it's not like someone who has been building here all of a sudden come July 1, they look and go, oh my god, this is like outrageous.

You know what I mean?

I I just I know we don't like to they'll tear us apart.

I just want to make sure that we're being reasonable.

We're that they and it looks reasonable to me, but I'm not a builder, and that's my biggest concern.

I just want to make sure that they're reasonable increases and not it's not shocking to the census for people who have done business with us before, and we hope we'll continue to do business with this.

There's a couple of ways I break down the fees.

Um in some ways they're going up and some ways they're going down.

The by striking a lot of the items that you'll see in there, we went to a flat rate.

If you remember a couple years ago to you guys that were here before, do we really sit there and count every socket?

Unfortunately, sometimes we do, and sometimes it's just cheaper to build, you know, by the time you get up to a certain point, we're just charging the hourly rate.

So on some things we're going down, and some things we don't know.

When it comes to the value-based, you see the biggest change in those if I can find it quickly.

Are we off your 500,000 hour fee chain, 500 valuation?

Um, I don't have it here.

If I can find it quickly, I will.

Essentially, Dan, what you're trying to do too is it it targets more of the large scale construction.

Yeah, it really does charge in McKenzie's right.

Where we were significantly under other communities was our our high value projects over our 10 million dollar project.

We were over 5 million actually, we were significantly lower.

So, and that's where I see a little you start seeing a little bit more year bumps are your high value projects.

So I'm sorry, I don't have the let me switch classes here.

So you'll see uh the first up to about 500,000.

There really isn't any change with the exception of a 15 cent increase per thousand dollars.

So it's fairly minimal.

We're still fairly comparable with the other communities.

We may be more on the permits, but we're less on our impact fees.

So it's fairly comparable.

Our big change, like I said, is going to a flat rate for our my or minimum building fees instead of just yeah, every little item.

Um our hourly fees, you know, based on our department, uh we're about 140 per hour for to run my department.

And if you break out the employees, it's just about seven, it's like sixty-eight something just to run my department.

Now we run on a theory of 75% cost recovery, and that's because we'll never accumulate all this money for our department.

The reality is you only we're 100% cost recovery if we get another solar project, another gold bond, and uh you know, that's the only way we'll be 100% cost recovery.

So we're trying to keep in that range of 75% total cost recovery.

But will we complain?

Yes.

No, I get you.

I think you're dead on because they're gonna they're gonna raise it to me.

Because the one thing that it's changed every year that's adopted in your fee schedule is the values.

As construction values go up, the fees go up.

As construction values went up, like after 2,000, after COVID, all the construction values went way up.

Now they started coming back down.

Now they've even out for about a year.

They went up a little bit here and there.

This year they went up a little bit more.

So they kind of they they bounce.

Um I do see in the next few years that those values are gonna start creeping back up again considerable because of everything that's going on.

Um so the idea is to try and just keep the changes minimal, but yet still keeping some recovery because inspection costs have gone up significantly over the past year.

So yeah, I just because we have a lot of infill homes.

We don't we haven't seen the huge influx of community, you know.

I want to make sure that we're still we're competitive, but that we're not especially hitting the small guy really hard because we still need those infill homes.

Yes, yeah, I I agree with you 100%, and that's why I focus most of them on the balance and most of them on the higher end.

So thank you.

So to answer your question, is it reasonable?

Yes.

Yes, it is.

So it's back to Dan.

So um so Dan, um what well things uh associated with the Vice Mayor's question is that we're not seeing the sticker shock that they're seeing in Gilbert and Chandler and all these other communities that kind of sat on their weights and then all of a sudden decide no, we can't do this.

We gotta increase our rates, and they're they're doing it all at one time, and it they're experiencing the sticker shock of well now.

Significantly.

Yeah.

And you don't have that gradual gradual increase.

But my question was for like not necessarily new construction, but maybe like remodeling construction, because I have seen and I'm very happy to see a lot of old uh buildings and old constructions in Eloy that are that are getting uh remodeled and reconstructed and stuff.

So like if they go from a one-size line to a higher size line, this affects them as well.

Light line.

Like a sewer line.

Oh, okay.

Um those are based on value.

That's a flat four percent.

So if the value goes up, the cost goes up.

If the value goes down, the costs go down.

Yeah.

So just for my interest, does the value go up after construction, or does the value go up as construction progresses on an old building?

Um this is actually not just commercial buildings, but residential, you'll see a reduction in fees because we're going to an hourly rate for a lot of our fees instead of the value-based.

And that's for those, that's for money fees.

Now cookies fees, they're based on if it's gonna cost $30,000 to put it on the sewer line, it's gonna be four percent of that.

And really what they do is they pick the lowest contractors.

Sometimes they do, sometimes they don't.

You know, it just depends on when that comes into.

But a really good thing that you mentioned is um we're gonna see the biggest decreases are non-habitable areas or patients and non-habitable areas, garages and stuff like that.

That's where you're gonna see the biggest decrease in fees because they used to be all based on value, which was for a patio was $84 a square foot.

It didn't cost $84 a square foot to build a patio.

You know, so it may be it may be eighteen hundred dollars now, say for $200 square foot patio.

Well, it's gonna be probably about 240.

I have to look exactly.

So we're gonna see those fees are gonna come down.

So the the modifications and all that are gonna go are gonna come down.

We were actually years ago losing, we were not even getting close to breaking even.

So we eliminated that line and we brought it up to value to be comfortable, but the values jumped so much on that we were like this is ridiculous.

So we brought it.

So I'm bringing it down just to a flat hourly just to be more economical to everybody, and we're recovering our cost.

So Mr.

Mayor, um as counsel, that uh concludes item B of the agenda.

And so at this time, um just like a wrap-up, I'll we'll really wrap up and uh look at the revenues and retirement as we move on in the budget process, but uh we'll move forward with the property tax at the maximum levy.

We'll update the CIP with some of the projects that uh council mentioned uh from the animal control to some of the the rude stuff to recognize that and then we'll keep posting this and then bring the resolution in May for the consolidated fuse schedule.

Thank you, Brian.

Thank you, and thank you your staff as well.

You guys did a great job of making this definitely digestible for us without a doubt.

Any questions from council before we go?

Steph, anything comments, questions?

All right, favorite part.

I don't need a motion on this.

No