Okay, welcome everyone to our Mason City Council study session for January 22nd.

All of our council's present, and thank you for that.

Item one as usual, so review the agenda for Monday's uh January 26th council meeting.

Council.

If there's some questions, we have everyone here to help answer that.

Okay, I have one.

Item 5B, the sale of the property on North Phillets.

That was uh I guess the uh adjoining property owner approached the city, and in the past we have probably well in the past we've gone out for auction on the parcels too on a prior parcel.

I know we'll have a presentation on that today.

And I'm just thinking, why would we not have an auction versus uh the sort of the property?

Hi, Lisa Lance.

Yeah, good morning, uh Mayor and give us an overview.

Not that I'm opposed to it.

I I just I like auctions.

Uh here with Lisa uh maybe we want to touch on that here for a minute.

Sure, good morning, uh Mayor and Council.

Um the property is there a slideshow?

Should be one loaded.

There it is.

Thank you.

Good morning.

Uh so 159 North Phyllis.

Um it's a property that we purchased back in 1985.

There was a house on it that was flooding at the time during any rainfall.

So the city purchased the property and then demolished the home.

So we've owned it as a vacant property since that time.

Uh it's just over 15,000 square feet in size, and we uh hired a third party appraiser who appraised it a hundred and sixty-five thousand dollars.

Um, as the mayor mentioned, uh we were approached by the property owner to the south to purchase the property.

So we did reach out to other property owners within the area because it seemed um the best to assemble it with other properties in the area because it's uh not a very large property.

Um, and so we did not receive any feedback from any adjacent property owners other than the one to the south.

Uh Bastion Bastion Investments is interested in redeveloping the site to the south.

It's just over two acres in size.

Um they're hoping to maybe use it as a secondary access into their property.

Um let's see, it just makes more sense, of course, that it's assembled, and then um they're also working with our redevelopment program administrator for the redevelopment of the site.

Um so the advantages of of course are just selling it for the appraised value of 165,000.

Uh, it would be redeveloped.

Uh Bastion Development is definitely looking at uh redeveloping the site soon, and so then the site would no longer be vacant since it has been vacant since 1985.

Um of course we're just looking for the authorization to sell the property.

So I'd be happy to answer any questions.

So, mayor, real quick, I'll just add to that with this presentation.

You know, having purchased that in the mid-80s, um, there is a series of ponding that happens behind the Tempe Canal in this area.

That that property being one of the worst that continued to flood.

Um topography-wise, that that site uh really is kind of the low point of that vape, those vacant properties that you see, and so despite maybe using that for ingress, egress or their development.

Um it likely will have to be used for some level of retention also with their site too.

So well, my thought was you know, again, an auction versus the sale of the property.

Either way is fine with me.

I just want to know a little bit more about I know this is an older uh neighborhood area, larger properties were assembled in that area back in probably the 20s and 30s, and and so some of the parcels are larger.

And so I just thought I'd bring it up to council, see what their council member Haredi if what his thought was he represents the area and if he's okay with uh just the sell of a privately or he wants to go to an auction sometimes at an auction, you might get a higher price starting at the base price of the appraisal.

Um I'll just come in.

Uh you know, I'm okay with this.

Uh it's a kind of interesting property kind of tucked into near the canal.

So in when you look at the area, it's a mix kind of there's duplexes, trap fixes, and some industrial thing apartments and single family homes.

So it's it's a mix of different types of uh buildings there.

So I'm I'm okay on this then.

Um and then just await, you know, what further develops.

I know there's some the vacant land on uh uh north of that, right?

So it's north of the sound is so yeah.

Um so see what what is developed on that end.

So what is the zoning on that property?

What is the anticipated type of use?

Councilmember Duff.

The zoning on the site is RM4.

Uh the property to the south, the Bastion Investments.

They actually have there's uh an entitlement there from 2016 to have um 60 units of senior living on that property.

So I know he was looking to potentially use that as well.

Okay, all right.

So they're looking at building that for senior living residential and that property since it's in a f a flooded plane or a flood area, they would just use it for more access to the property.

They would.

That's what he talked about potentially using it for access or for the retention.

If they wanted to build on it, of course, they'd have to build it up to keep it from flooding in the future.

Maybe they could just use it for green space if they were required to have retention area for that.

Yes.

Okay, thank you.

All right.

Well, I just thought I'd bring it up.

Any more comments from anyone?

If not, uh great.

Move forward, thank you.

I know you'll have a presentation next time around on our study session.

Thank you.

I have a question about one of the item agenda items.

Yes, Ms.

Taylor.

And I think this might be better suited for you.

Um is 5C.

I'm just trying to understand.

Was this maybe this is a bond that I'm just unaware of?

Proposition 4479, 34 million.

So, Mayor, Councilmember Taylor, um, proposition 400 and proposition 479 was the statewide uh, excuse me, is the countywide uh transportation um tax that started back uh Prop 400 was uh a 20-year tax that just sunset um last year and now Pro 479 was approved from by the voters to um for another 20-year extension of that.

So this is what has paid for freeways and transit uh in the region for the last um 20 plus years.

So Mesa gets a substantial um portion of of that.

That's um going back philosophy-wise for decades that we we needed to see the ROI for our residents out of uh um Prop 400 to make sure that Mesa was getting its fair share from both the freeway and transit uh programs to make sure and and our arterial street programs where we also get funding for that.

So that is where this this funding comes from.

Okay.

Thank you.

Of course.

Any other questions, council Miss Taylor?

Nothing.

I think that was the only one that I had.

Okay.

Well, if not, then we'll move over to item two B.

If uh Lance Salisa, you want to come back and give a presentation and provide direction on selling the 10-acre parcel of city-owned real property located 81 8130 East Redbury.

And I'm curious too, maybe uh how many parcels last night when I was looking over how many parcels like what we have, like on North Phyllis that the city may own that we may want to get back, sell them or get them back out into some type of development opportunities.

Maybe maybe maybe you have that idea, Lisa.

Uh good morning morning, mayor and council members.

Um I would have to look to see.

I know that there are a few properties that we purchased for uh fire stations, things like that.

We'd no longer need need, so we are looking at that.

If there are other uses, maybe other departments that may need to use those before we go to to look at selling them.

Well, I think of the Phyllis property, you know, Lance.

I guess we've owned it for 40 years, 41 years.

Yeah.

That's quite the investment time, so probably now is the best time to sell the parcel.

Exactly.

Okay, go ahead with uh Redberry.

Good morning.

Go ahead.

Yeah, good morning, uh Mayor and Council.

We're here to discuss and and uh receive direction on the sale of the city owned property 8130.

East Redberry.

Uh I'm Lance Webb.

I'm here with uh Lisa Davis, our real estate manager.

Um be discussing a bit of uh this property and then address any questions maybe you have.

Uh we purchased it in 2003 for six hundred and thirty thousand dollars uh for a park site.

It's been determined that we don't need the park site there.

We have other park amenities in the area.

Um we did hire an appraiser, a third party appraiser that praised uh the property um at 1,550,000, and we would like to take it to online auction.

So we're really just looking for direction to take it to auction.

Um we have used easy buy in the past um for Adobe and Wrecker, and as well as uh third the 13-acre groves at Thomas and the 202.

Uh when we used it for Adobe and Wrecker, it did just sell for the appraised value of 435,000.

Uh when we used it for the 13-acre groves, it was appraised at $950,000 and it sold for $1.7 million uh during that online auction.

I do want to point out that um there would be a deposit for any bidders of $77,500.

They would be required to take any classes, training, registration prior to the date of of the um online auction, so they understand how it works.

Um and then the auction is scheduled for 15 minutes, but it would be added any two minutes would be added on if somebody came to the 15 minutes and made a bid, then two minutes would be added on for any other um bidders.

Uh development requirements, of course, currently it's zone RS 35.

Um the city did do kind of a a layout here of what potentially could be uh developed on the property with eight lots.

Um the developer would be required to do uh half street improvements on Redberry and also the private street.

Um, and then if they needed to do any rezoning for any other design, they would need to go through that process through planning.

Uh they could also use septic systems, but that would be through development agreement.

Okay, I I do have a question about that.

Why are we allowing them to do that?

Do we typically not don't we typically not allow is it surrounded?

I can't remember.

Is it surrounded by county?

The septic system.

Right.

Currently, currently there is not sewer available in the area, so we are allowing for that.

Okay, the same thing happened with the 13 acres at the the citrus property that we sold at 202 and Thomas, we allow for septic there as well.

Yeah, mayor and council go forth.

Uh this is something we looked at kind of extensively.

This layout that you see here is is just a concept, right?

To show that it was developable.

One of the the points was we septic would be needed.

It was looked at and actually required um when we looked at this with redundancy for secondary.

If if the one failed, the other would be available.

Uh the expectation is at some point in the future that that would extend uh sewer at some point, but it's nowhere near in that area that makes sense.

And and that's been our philosophy.

If there is sewer nearby and it's obtainable, then we require the hookup.

And because we've had requests from developers sometimes where they're sewers right across the street, yet they've asked to be able to do septic just to save money.

And so we've said no to that.

But in an instance like this where it would be cost prohibitive, uh, they the property wouldn't.

So how how do we define nearby?

Because just to the west is Los Sendas.

You know?

Yeah, yeah.

No, the uh uh council member go forth the the I I think reasonably for this particular site.

Uh Los Sendis, yes, is to the west, and they have sewer service to that.

Uh there is no connection to this area east uh where this property exists.

And that's where it has to go, has to go east.

It would need to go west, but there's no no connection to that.

There's no stub out or anything coming out of the Los Centas area.

Oh or this area.

So you'd have to go into you'd have to go east to five.

Around, yeah.

Yeah, because if you go go west, um you run into residential um lots of Los Cindus that back up to that, and there's no somebody in particular.

There's no existing stuff to the east.

Oh, I wasn't talking about you.

Yeah, okay.

Oh, no, nobody that planned Los Cenders planned for this with the sewer, I guess is what I should say.

Thank you.

If somebody wanted to pay for it though, like I mean, if we got a really great development bid on this piece of land, are we just saying sorry, you can't do that no matter what?

Oh, oh no, I mean we would we would welcome that.

Wouldn't we welcome this?

Okay.

No, yeah, if you know a developer that is willing to uh to that bill, we would love that.

That would be lovely.

I just want to make sure we're not saying absolutely not and that we're giving it.

Of course not.

We would welcome no, yeah.

But we're we're not.

We're just saying in this case that that we've looked at this to say septic systems is uh a viable option for developing.

Probably thinking too futuristically, but you know, I can have dreams.

Somebody wants to commit that that the finances to build that out, great.

So uh moving on to the notification of the cell.

So using easy buy, they'll create uh a web page that we'll also have on our um real estate web page to connect to.

We do have a a list of interested buyers.

Uh we've had we've used the developers advisory forum uh through development services as well and sent to them uh kind of broadcasting to everyone that that we're putting this up for auction.

Uh we also have the policy that we have to put a sign on the site uh as well as send letters to a surrounding property owner so that they're aware of it.

And after those letters, did you receive any?

Did anybody reach out?

Did you hear from any of the community members?

Councilmember Go Forth, those letters have not gone out yet.

Oh, they'll go out once we have the date for the auction.

Okay.

So the sign and the letters and all of those things will go out once we have a date for the auction.

I'm anticipating we'll probably go the end of March, uh meeting all the requirements for notification and also allowing for the website to be up for maybe 30 days for folks to check it out and make sure uh that it's something that they want to bid on.

Lisa, it's fair to say though that this is our agent.

I mean, people who develop in that area are very familiar and hopeful that this site is becoming available.

I was just concerned about the surrounding neighborhood because you know, when we've sold property, the one you mentioned to Thomas.

I I mean some of the neighbors were you know how to describe their their Yeah, they just were surprised and not so happy that this parcel that was supposed to be a park is now has you know 100 homes on it.

So anyway, I just want to make sure everybody is well notified and has some time to um process the difference that's that is coming their way, the change.

So yeah, typically we send letters.

I believe our policy is 500 feet from the property, but we're anticipating to send letters a thousand feet from the property, which is consistent with planning and zoning.

Ms.

Goforth, I know there's uh we know there's a developer interested in the property, and he's emailed my office as well as uh Lisa, so uh he's checking into it as well.

So on on the lot size R 35, what is the smallest lot size might be acceptable in that area if there was a zoning change?

Is there one miss go forth?

I mean, well, it's zoned R 35, right?

That's correct.

And they can come in rezone, and that that would be up to us, Mayor, with this market.

Right.

And I would say no smaller than it is at R 35.

That's why I'm asking the question.

What your preference would be.

For sure.

Yeah.

No smaller than it is right now.

And this was done based on drainage and all the terrain.

Yeah, mayor and council member go forth.

The the there is uh a lot of braided washes to run through this area.

We we did look at the drainage, it considered that um considering the terrain, the area um zoning similar to what what exists in the area too.

So is it surrounded by R 35?

Yes.

Okay.

I have one other question that maybe it was answered, but and I missed it.

You said we originally bought this to turn it into a park.

Why didn't we ever turn it into a park?

Uh I I can touch on that.

Uh council member uh Taylor, the um back when the city purchased this, uh there there was some discussion about per purchasing this this for a park.

Uh that need is not there at this point.

Um at the time the city was was focused on this as a potential site, it's it's not a viable option, and then we're looking to move on from that at this point.

So the community said they don't want it as a park or anything.

I'm just trying to think of the residents around this area and future properties.

I'm kind of thinking into the future.

I I think uh um part of our uh discussion with our parks group, and I don't know if someone is is here that could probably touch on that.

There is a number of other parks that serve the community in the area too, and this site is not needed for parks at at that point.

So thank you.

Yeah.

And that's where we're um mayor and council.

We're we're looking at potentially then uh reinvesting some of these dollars from the sale back into enhancements at those parks.

There's several um that either um are need of enhancements or it's planned enhancements, and so this would be one way that we can help enhance where parks are more viable or where we do have existing parks.

Yeah.

And we've been talking to Councilmember GoForth about that.

Well, I hear this you know, this is another example.

We've owned this parcel for 22, 23 years.

I mean 23 years if you want to tech on 2026.

And that I I go back to you know, evaluation of parcels we really don't need in the city and and then dispose of them and get them back out into the development community, I think is essential.

Um what I didn't see on here was uh where's north south.

Uh is this west of Haas or east of Hawes.

Yeah, uh Mayor, so looking looking on that uh exhibit there yeah, have on your screen, Haas is just to the east.

This is looking to the north.

Um, and then if you look there at the intersection just northeast of that subject parcel, Thomas and and Haas is is just to the northeast right there.

Okay.

Very good.

Thank you.

Mayor, I'll just um add as well.

There um, and I know Councilmember GoFort's very familiar with this, but there's some parcels just to the north of that.

Um, the ghost rider um development that has had a lot of challenges, and we're we're hopeful that through this that um some of those lots can work with the future developer of this parcel to address some of their ingress and egress issues and some of their access issues, and so we're hopeful that there could be some collaboration between uh some of the properties to the north of this and the eventual buyer of this property that to help out those lots as well.

So that would be just another benefit.

That's not the reason why we're doing it, but that would be a hopeful byproduct of um having this area developed.

Does that include their septic or sewer system too?

I think Ghost Rider usually comes in every few years to discuss that.

Well, that this would address several of the lots.

There's multiple lots in in the area, I believe that this area touches about five of the ten lots in in the ghostwriter property, and so hopeful that we can that between and those would be private agreements between um the eventual buyer and and the properties, but that could be um helpful to solving some of the challenges uh that were created during that development.

Mayor, I have a question.

Or Mr.

Tubes.

Um I think Mr.

Mr.

Butler answered one of my questions.

I believe I was gonna ask what restrictions, if any, would be applied to the proceeds of this sale.

Um the other the other question I have actually a couple others.

So if we're comfortable, and it seems we are with retaining the current zoning so that we don't have a uh issue down the road about the zoning.

Can we make that a condition of the sale so that it's a closed issue that it must remain what is it, R 35?

We'd have to deal with it.

And secondly, down the road when it's built out um and uh someone comes along and decides they would like to connect up to our sewer system.

Can we make sure somebody else pays for it and we don't yeah, so uh great questions, uh mayor and council member Adams.

Uh so probably to address your first one with with the zoning.

I I'm not certain that we've ever done something like that, locking in a zoning um with that, allowing the development process to work that way.

There's probably some leeway on either end for what that could be.

Uh right now it's it's zoned the RS-35.

I don't anticipate that getting any smaller at this point, uh, just given kind of the product that's around and in that area.

Yeah, that's the same.

That's makes sense.

Right.

Councilmember Adams, if I could add it would have to be required to comply with the general plan, the 2050 general plan, as well as the desert upland uh requirements of the area.

So and I will add the desert uplands requires the RS 35 in this area, if I recall, working with our development services.

So mayor and council, I'll just add on on the zoning aspect of it.

Is this it's it's a legislative act, and so we wouldn't in turn to a development agreement that would bind a future council.

A future council could always someone applied for a zoning case.

You can't say to a council five years from now, you can't consider rezoning property.

So that's binding the future council.

That's a sort of a fundamental legal concept.

So we don't bind future councils on legislative acts.

Um and I I haven't talked to Lance about this, but we do see on developments like this where we require them to put in the a dry line on a sewer, and so it's it's there.

So if a line ever gets put into red berry in the future, they they can connect up so that there's so the basically it's it's ready to go.

And if a line shows up in red bear in the future, um that it's great.

So I don't know if we were anticipating that or not on this particular development.

Yeah, so to Jim's point here, Councilmember Adams, typically that would be part of the development agreement uh that we would acquire them to put that line in with a stub out in the case in the future when when that that would become available, we it would be ready to plug.

And that's once the septic system fails.

That's one once the sewer system comes.

Well, okay.

Well, I'm on septic, so I I know how it works, but uh but then the capacity to put in a second septic system in the future if sewer isn't there.

I I'm both hopeful that is on the parcel too.

There's different ways you can mitigate your septic system.

And I know the developers uh in that area probably know that very well.

I have one more question.

Uh Ms.

I see Evans here.

Evan, can you provide a surrounding um map of what the the zoning is?

I know a lot of it is is counting right here, but there is some, you know, Los Andas is obviously city is to the west.

So can you can you provide that to me here before Monday?

Yes, I think you may or counsel go forth.

Happy to provide a map, but you're correct.

Most of the property and in Talance's point, a lot of this is RS 35.

There are um smaller zoning districts in Los Sandes.

And Lisa mentioned the general plan earlier.

So this is in the desert uplands area, and it's really designed for um larger lots with disturbance areas.

You could do smaller lots with common open space, but that would require a lot more property than what is available here.

So to be consistent with the desert upland standards, it would need to develop in a very similar fashion to this.

And you can see on this image that the purple line um is the the disturbed area that you can disturb.

Um so it's really limited.

But yes, we we'd be happy I can get you that map uh this afternoon.

What is the dwelling units per acre for R 35?

Uh, put me on spot.

Um so it would be just over one, I want to say it's like one point one five.

Okay, yeah.

Okay, thank you.

Yeah.

Any other questions?

All right, you got off easy.

Well, uh so you need direction to move forward.

Is that what you're we are looking for direction to move forward with the online auction?

We would come back to council after the auction for the authorization to sell.

I think you have direction.

Okay.

Thank you.

Thank you.

Thank you.

Okay, item two B is a presentation update on the city of Mesa fiscal year 2025 ACFER, also known as the annual comprehensive financial report.

Irma and your team.

Irma.

Well, pardon.

So just Irma.

Irma.

I said just Irma.

Remember that's I'm all you need.

Yeah.

You didn't even bring Mike with you.

Who's behind you though?

Somebody got up behind you.

They're all running out.

That's Lupita Martinez.

She is one of the partners with Clifton Larson Allen.

Oh, okay.

So she's here in case there's any audit-specific questions.

Where is my presentation?

Sorry.

Sorry.

It doesn't want to congratulate.

I guess you need more than me.

It's like not.

Okay.

It's at 3 p.m., right?

So I think it's early.

So that's the folder.

There we go.

I don't know what was happening here.

Thank you, Amanda.

Good morning, Mayor and Council.

I'm Irma Ashworth, Finance Director, and I'm here to go through a presentation on the results of our fiscal year 2025 audit.

Um the finance department worked on creating this lovely financial document, and it was audited by Clifton Larson Allen.

And results of the audit were positive.

We have received an unmodified report, which is a clean opinion, which says basically that the financial statements are maturely correct.

We didn't have any findings as a result of the audit.

The financial statements are presented in accordance with generally accepted accounting principles, and we follow all the applicable government accounting standards.

This um slide speaks to the citywide revenues.

The revenues continued strong in fiscal year 25.

For governmental activities, you can see that the revenues were comparable to fiscal year 24, and the business type activities, which is the utility fund and the airport also were very comparable to the prior year.

And in total, um, you can see again that um the fiscal year 25 revenues were strong and were in line with fiscal year 24.

These are some of the um more significant revenues for the governmental activities.

The governmental activities include the general fund, special revenue funds, and all the other um debt service funds and capital project funds.

Um the largest revenue stream is taxes, um, our sales taxes and proper secondary property taxes have been consistent for the last three years.

Um the inner uh unrestricted intergovernmental revenues, which include the state shared sales tax, state shared income tax and vehicle license tax decrease on fiscal year 25 compared to 24.

That was expected as the state um issue the has a state uh flat 2.5 percent um um income tax, so we expected the state income tax to um decrease, and also the state shared revenues are um two-year lag.

The transfers are the transfers from the utility fund to the general fund, and those have increased a little bit over the last couple years, and they are consistent with the resolution that's that um dictates how much um of the utility revenues are transferred to the general fund.

And then program revenues increase a little bit, program revenues are charges and fees, they include license and permits, and um they also include grant funds.

I just wanted for the taxes, and I think you and I just said this.

This it they've pretty much stayed the same, they've been consistent for three years despite the decrease in the rental tax for half a year last year, right?

That is correct.

Um you are correct in January of 25.

Um we no longer were able to collect um sales stocks on rental income.

But retail, which is our largest, um, continued strong, which was able to overcome it.

Had they not cut the rental tax, we would have had an increase as opposed to just being flat.

Thank you.

Irma, can you uh describe the two-year lag for the states the the income tax, just why it affects us the way it does and how that works.

I don't know about the two-year lag.

I just know that exists.

Yeah, we'll let Brian tackle and respect to though he was gonna get away with it.

Morning, Mayor, Council.

So um, council member Taylor, the two-year lag is the collections of the income tax now.

So the state will collect income tax now, but then we will not receive it for another year and a half to two years.

So that's what happens is that they'll collect it now and then calculate everything.

So when we present the forecast, we know what that number is this year and next year.

So we already know what that number is because they've already collected it a year past and two years past.

So it's really the vehicle license tax and the sales tax.

Is that we don't know if we get that right away, but when it comes to the income tax, there's always a two-year lag because they collect everything and then they'll send it out to the uh so they reported taxes.

That that's correct.

That was that was an agreement that was made decades ago uh between the cities and the state about how shared revenue would would function.

And Brian, correct me if I'm wrong.

Part of the reason for the two two-year lag is also to give um Department of Revenue time to reconcile those uh income tax returns because you know there are changes that happen and and refilings that happen, and so um before they distributed the money, they wanted to make sure that they had reconciled uh those those changes.

And of course, that dates back decades, and and maybe that reconciliation could happen faster.

I don't know, but that's just we're everyone's just used to this cadence that now comes from the state.

So thank you.

Thank you so much.

Thank you, Brian.

Okay, Irma.

Any other questions on the slide?

Okay.

Next slide shows a 10-year comparison of our net position.

You can see that it has um increased over the last seven years.

The net position is a result of our total assets, less our total liabilities, and the differential is our net position or what retained earnings in the private industry.

Um you can see that in 2018 the net position did decrease, and that was due to a new accounting standard.

GASB required that um the OPEB, which is other post-employment benefits liabilities that used to be of disclosure only be recorded as a liability on the financial statement.

So when you add a large liability with no corresponding assets, it decreases your net position.

But since then you can see the steady um increase in our net position.

So ERMA shouldn't under sell that either.

Because of council's great direction and fiscal stewardship.

This is the strongest net position in the history of the city.

So in the hundred plus years of this is the strongest net position that the city has been in.

And we've and we've been able to say that the last several years in a row as we've seen that net position uh continue.

So that's something council should be very proud of.

So you're saying that our assets are greater than our liability.

That is correct, Councilmember Taylor.

Thank you.

And you will only been here.

Chris Brady definitely love to highlight that as well.

I uh I must say.

Okay, so the next few slides will go into a little bit more detail on our assets and our liabilities.

So our total assets increase to 6.1 billion dollars.

The largest component of our assets is our capital assets, which is our buildings, our infrastructure, land.

And I do have a slide that kind of breaks that breaks that down a little bit next.

The next um larger chunk is our cash and investments, and then our other assets in the orange that comprises of accounts receivable, lease receivable, but the largest piece is our investment and joint ventures.

The city participates in five different joint ventures.

Three of them we um are our participants in, two of them we are the lead in.

And our investment in all those joint ventures is about 555 million dollars.

So that's the next big chunk in that orange.

Here's a detail of our capital assets.

Um this is the value of our assets at the acquisition or completion of that asset when if we built it, net of accumulated depreciation.

Um it has the comfort of the government activities and the business type activities.

Um I won't hit on all of them, but um I'll just hit on some of the high ones.

Land, we have 451 million dollars worth of land.

Um land is not depreciated, so that is the value of the land at the point in time when the city acquired it.

Um construction in progress, the total for the city is at 584 million dollars.

So as we're working on capital projects, um, um infrastructure, expanding on uh water treatment plant, um, that those costs are accumulated in the construction in progress, and then once the asset is complete and put in service, then it'll move into buildings and improvements or infrastructure.

Our buildings and improvements are 646 million dollars, and then if you go down to the second to the last line, our infrastructure is by far the largest component of our capital assets at 1.8 billion dollars.

So for the government activities, you're just talking about the streets and um for the um utilities, it's you know, pipes and the um the water treatment plants and meters and valves and lots of fun infrastructure stuff.

I'm getting excited.

Yeah, okay.

Okay, our total liabilities were 4.8 billion dollars.

So if you remember a previous slide, our assets were 6.1 billion, liabilities 4.8 billion, so that gives us about a 1.3 billion dollar net position.

Our two largest liabilities are the long-term obligations, which would be our geo bonds and utility bonds and obligations, and then the orange is the pension and OPEB liability.

Again, OPEB is the other post-employment benefits, which is the um retiree medical dental benefits.

And the next two slides will kind of um go into a little bit more detail.

This slide presents the long-term obligations that um comparing fiscal year 25 to fiscal year 24.

Um, the general obligation bonds increased, our general obligation bonds are repaid through secondary property tax.

The highway user revenue bonds decreased.

We only have one of those bonds outstanding, and it will be paid off in 2027.

Um and those are paid through highway user revenue that we get passed on from the state.

There are primarily taxes on gas and and other things like that.

Umtility revenue bonds have decreased as we've switched to issuing utility revenue obligations.

Um as um the market becomes favorable, then we're able to do some refunding, so refinancing of those bonds, um, then the bonds will decrease further and then obligations will continue to increase on that.

And then we have the excise tax obligations as well.

All right, our pension and OPEP unfunded liability.

Um these are the pensions and um that and OPEB that the city has recorded in our financial statements.

ASRS pension is the pension that most non-sworn employees participate in, the liability for that increased.

The PSPR specific to the fire pension um increased slightly, and then um PSPR's police pension and OPEB decreased slightly, and then the city's OPEB plan has also increased.

Um I'd like to remind the council, the mayor and council that um all these unfunded liabilities are actually determined.

Um ASRS hires their actuary, PSPRs hires an actuary, and then the city also hires an actuary for our OPEB plan.

And depending on um assumptions on investment returns, how long someone's gonna work at the city, when they're gonna retire, how long they're gonna live, and what the possible costs are, anticipated costs for health care are for the OPEB plans, all those items play into the actuary's analysis and how they determine what the liability is.

This is the unfunded liability, which means we do have assets, but our liabilities exceed those assets on these plans, and um the city does make this required contributions every year, and with PSPRS, we're actually contributing more than what is required, and I think the current plan would be that um it would be paid off in 2042.

And that is the end of my 2032 42.

Okay.

I know we'd all like 32, but I think it's 42.

Well, we're paying extra on it, and we are and so that might help us pay it down just to add faster.

I think we're ahead of schedule, if I remember right.

Yes.

Great.

Any questions?

Just a quick question.

Is there a reason we didn't have totals on that slide?

And if not, can you add that?

Next slide.

I can add that.

Thank you.

Would you like me to add that and for the presentation for the Monday?

Okay, thank you.

Ms.

Taylor.

Thank you.

Um, I noticed on the long-term obligations versus the total obligations that we have, there's about 2.697 billion dollars of a difference.

Unless I'm missing something in I do I was supposed to add the 1 billion 770 million and the 2,102 million together to get the 4.8.

Sorry.

Oh, the 4.8 is a result of the um obligations and the pension OPEP, but that doesn't have a total and some other accounts payable.

So it's those three components that add up to that.

Between the two of them.

Okay.

Um okay, then my next question is in terms of how we go through this process, and I know this is not budget, I'm very very aware of that.

But when you come to the financial statements, can you explain if if we are using a third-party auditor or how that works, and and can you walk me through just that process to make sure that just we're not just doing this internally with just a singular bias and that we have somebody from the outside working with us?

Yes.

Um, so the preparation of the financial statements starts um at the end of the fiscal year, where our accounts of payable department starts working with the departments and making sure that all the invoices that relate to June are properly recorded in that time frame.

And internally in August, we start working on completing all the required statements and all the required footnotes.

Um we do have a third-party auditor, Clipton Larson Allen.

As I mentioned, Lupita Martinez is here today.

Um, and um we go out to bid for our auditors.

We have two years left on this contract, and then we will go out to bid again um to find the third-party auditors during the time frame that I've been here.

We probably had three different partners that have worked on it.

Um when the auditors come in, and if you have more specific questions, then I'll ask Lupita to come up.

They usually come in in the summertime first, and they work on the internal controls that the city has in place and they work on testing the federal programs that we have, and then they'll come back out in the fall for about two to three weeks.

Well, they take over one of our conference rooms and they go through their audit procedures and selecting um sample sizes, they look at our revenues, they look at expenses, they'd look at our capital assets, look at our liabilities, cash reconciliations.

Every they audit very thoroughly the follow-the government accounting um auditing standards that are issued by the office of the controllers, U.S.

controller's office.

Yes.

Did they find any any material issues or problems with our internal controls or the way that this financial statement was essentially compiled?

They did not have any findings for us.

Um sometimes they'll have a verbal recommendation.

Hey, you might want to consider changing this.

If it leads to a significant deficiency, it is required to be presented and and um communicated to council.

We did not have a significant deficiency this year, and we did not have any material weaknesses.

Significant deficiency, an example of that would be if they proposed a couple of audit adjustments, something that we missed and didn't record appropriately, then they would consider that a significant deficiencies, um saying that we didn't have controls to find that error.

A material weakness could be several significant deficiencies, or the value of that error is significant enough that they consider a material weakness.

And the city of Mesa has not had a material weakness in probably a decade.

Um significant deficiencies, they do happen, and I think it's been three or four years since the last time that there was a significant deficiency, but they are always looking at those items.

Um when they do the federal audit, they're also looking at controls on that, and they also look at compliance items.

Every federal program has very specific compliance items, and if they find something in there that does not meet the compliance requirements, then they also would report that as a finding.

The single audit's not complete yet, but up to this point they have not identified anything that would be a finding.

Okay, and then it's on us to reconcile any of the issues that they would find forward.

And then they double check us again after we correct.

We have to we're required to have a corrective action plan that is presented in their financial statements as part of the packet that gets submitted.

And they for the following year, they will look and see is that corrected or not.

Got it.

Okay.

This is a pretty solid booklet.

Thank you.

Thank you so much.

You're welcome.

Any other questions?

All right.

Thank you, Irma.

Thank you.

All right.

Moving on is item three to acknowledge the receipt of board minutes.

Is there a motion for that?

Thank you, Vice Mayor.

Thank you, Mr.

Reddy.

All in favor say aye.

Motion passes unanimously.

Next we'll move over to Nexus current events and conferences attended.

I know council, we've all been busy this past week.

Who would like to start?

Miss Duff, do you want to lead off?

Sure.

Um, I'll mention our MLK.

Um, well, uh, the East Mesa East Valley um MLK committee put on the parade, and and of course the city of Mesa is a major sponsor.

So we all attended, we're in the fire truck uh with the um mayor as the driver and the I know it was scary, I'm sorry.

Yeah, I lost my certification.

Yeah, and uh Senator Ruben Gallego joined us on the truck, so that was I'm glad that he made that time to come to our uh community and share that.

Um, afterwards, there was the festival, there were speakers, it was on a big number of vendors, I thought larger than past years this year.

It was well attended.

Um, I think the coming together of the community at this point in time um was very powerful, and uh I appreciate uh the NAACP and everybody who worked so hard to put this together and make it meaningful for our community.

Um that was the most significant thing that um I attended, and there was something else, but I'm not coming up with it right now, so thanks.

Well, Miss Dough, you were at uh is it Jerry Fathauer's recognition at the MAC Center, right?

We and I and City Manager City Butler, uh Mr.

Butler and others.

Yeah, Taylor.

Mr.

Staller, Candace, thank you for your leadership on this.

Mr.

Cost was there.

Did you stay for the performance?

Yeah.

Okay.

Chicago Chicago's kind of okay, Symphony, yeah.

Great.

Um, and we had a significant no the final pipe of the central reuse pipeline.

We did that on Thursday.

I don't know if Ms.

Taylor would like to review that since it was in the district and significant for I'm swimming in all the activities that we've had.

Yes, it was amazing.

We got the opportunity to see them lay the last piece of the pipe in the central reuse pipeline down, and that was pretty cool too.

They said they put it 20 feet down into the ground.

Um, for anyone who's watching this, it's a pretty incredible project now that I've learned so much about it, and that this will give us the opportunity to have this exchange with the Gila River Indian community.

And then we're gonna send them our affluent water so that they can use it on their crops, but they are sending us their version, their their portion of CAP, which will save us so much money, and I'm so excited about it.

And uh I know the project has been longstanding.

I live in district two, I've seen it going on for quite a while, but it was pretty awesome to see the last piece dropped in.

And our engineering team is amazing.

These guys work day and night, and I was talking to them about the neighborhood that it's currently being um essentially finished in.

And I said, Are how does that work with our engineering team doing all this this construction in the local neighborhoods?

And he said, Oh, they're amazing.

They just call us, hey, we need to back a uh travel trailer out, or we have a you know, we have a vacation we're taking, and the whole family's coming in.

He said, We'll move all of the construction equipment out of the way.

We'll like temporarily put the road back together so that the neighborhood can get in and out because it's been the holidays, people have been so busy.

And I thought that's very accommodating.

Like yes, it's excellent customer service.

And he said the neighbors have just been so delighted to see kind of everything come together and be finished, but also they get to see the construction happen and talk to the engineers.

So thank you everyone for coming.

Thank you so much for being a part of it, and thank you for the whole entire staff that put this deal together with with the Heela River Indian community because it's gonna benefit us and them.

Yeah, and last night I went to the park rangers meeting, which was great.

Were you there?

I think I saw you there, yeah.

Yeah, yes, I saw Council uh member summers there, and so we uh we got the opportunity to encourage the park rangers that we were excited to see them be more um active in our districts.

I was actually talking to one of them about how I want to do the archery and fishing.

They have they have archery.

I didn't know that.

This is awesome.

Nighttime Scorpion Hunts yes I know yes I asked if we can take hairspray and light them on fire than they said I'm not allowed to do that.

Turn it but yeah that was a nice um presentation of what they're looking to do in the community and how to get more active within our various districts um that was my 10 minutes we also and I I don't need to talk about it but if somebody else would like to we had uh the Mesa Police Department promotions and awards yesterday recognizing so many of our um people a lot of promotions a lot of awards very proud of the work we do and the like um chief butler um mentioned these are our future leaders these are the people who are really outstanding and our our future so very proud of one yes besides that that was great we have two new assistant chiefs so that's a big that's a big change um I went to the Mesa Historic Homes tour didn't I make it to that this weekend no it was great saw the Ponderosa house in Golden Hills yeah so that was fantastic um that was a great event very interesting so okay I know the central Mesa reuse pipeline does start uh I texted uh Lance Webb about there's a lot of construction on the north side of the 202 freeway and I what's this construction here and so it was Lance can say it better than I can but they're putting in a pump to pump water the affluent underneath the 202 freeway to the holding tank on the South side and then from there pumps it up over the hill and through district uh one Mr Adams district as well and as well as district uh is it five between you and and next door to L show yeah but this is on North Val Vista that's uh yeah it's all D1 until further till Greenfield I think but yeah that that was a great pipeline thing I tried to uh get in the excavator but they didn't let me so it's probably a good thing I saw you drive apart thank you I think we've covered most everything I think Mr.

Summers you have a lot to add if there's about your dirt and ribbon cuttings in D6 a lot of dirt and a lot of dirt and ribbon cuttings and going on uh yeah there's gonna be even more KTR actually this Friday KTR will be uh Cannon Beach will be cutting their ribbon so if anybody wants to come out they're gonna make a whole weekend of it but starts with a ribbon cutting somewhere around six o'clock I think on Friday watch for post in case I got that wrong and uh DSV is expanding DSV as a critical uh logistics component of our semiconductor industry here in the Valley uh and they just broke ground on uh a new regional headquarters that'll be just south of uh Arizona Athletic grounds uh in the Pecos Industrial area so we're looking forward to that as well and there's more to come we're not done yet and that's not a small build I mean it was 9500 square foot facility that cheaped out in the last 5000 just making a million yeah that's what I challenged them and I I hope you build it big enough and there's office space connected to that because it is uh uh regional headquarters and I think that's really the important component of this is that they're gonna have some jobs uh you know good paying jobs related to the office work and the management of that organization here in the in the region what ribbon cutting were we at recently um was it comico over by hospital superstition springs area yeah cities growing anything else I'll I'll just add I was at the MCC with uh President Danielle and his uh staff uh kick off and and we had a QA and talked about or the important uh collaboration between Mesa Community College and the city of Mesa and you know they're celebrating their 60th anniversary last year so 60 years as uh Mesa community college it's nice to be with them with that Mr.

Butler can you share schedule a future meetings first of all mayor council thanks for being um at so many of these events it's uh it means a lot to staff when you're able to come and you know help celebrate some of these accomplishments like the Central Mesa reuse pipeline where we can um we can make our residents very happy by concluding that project but it's gonna be uh critical for our future water uh portfolio so um we appreciate council's support on on all of that so uh today following we'll we'll have an e-session here in a moment but following that e-session the audit and finance committee will meet uh our next study session will be Monday the 26th at 515 p.m followed by a council meeting that evening and just a reminder that we will not have study session next Thursday morning that has been canceled so you get to sleep in a little bit so thank you council all right thank you Mr.

followed by a council meeting that evening.

And just a reminder that we will not have study session next Thursday morning that has been canceled.

So you get to sleep in a little bit.

So uh thank you, Council.

All right, thank you.

Mr.

Butler, audio six is to convene an an e-session, it's a session uh regarding the possible acquisition and negotiation for a parcel of land.

Is there a motion to go in e-session?

Thank you, Miss Taylor.

Ms.

Duff, all in favor say aye.

All right, we'll see you next door.

No, I'm not sure.