Payson Town Council Regular Meeting - June 24, 2026
Payson Town Council Regular Meeting - June 24, 2026
The Payson (Arizona) Town Council held its regular meeting on Wednesday, June 24, 2026, beginning at approximately 4:00 p.m. in the Town Hall Council Chambers, 303 North Beeline Highway, Payson, Arizona, and adjourning at approximately 7:01 p.m. Mayor Stephen Otto presided, with Vice Mayor Susan 'Suzy' Tubbs and Council Members Charlie Bell, Jim Ferris, Brett Flaherty, Dallin Haws, and Scott Nossek present. Mayor Otto announced that several agenda items would be heard out of order to accommodate presenters: the PSPRS refinancing presentation (G.1) was heard first, followed by the legislative update (D.1), before the Council returned to the regular agenda order. Deputy Town Manager Sheila DeSchaaf, Town Attorney Christina Estes-Werther, Public Safety Director/Fire Chief David Staub, and Town Prosecutor James Pierce were among the staff present.
Consent Calendar
- Approved the meeting minutes from the Special Council Meeting and Regular Council Meeting of June 10, 2026, by unanimous 7-0 vote. Motion by Council Member Jim Ferris, seconded by Council Member Charlie Bell.
Public Comments & Testimony
- Darlene Younker Delage spoke about the property tax levy item (F.1), reading from the staff report that the recommended property tax rate of 0.2855 per $100 of assessed valuation would raise the 2026-27 levy by 5.1% to $757,050. She asked the Council to use clear, non-legalese language in explaining such items because residents may see their tax bills rise even when the rate is unchanged.
- Jeff Robbins spoke in opposition to selling the town-owned Malibu property to an RV park, arguing the land is needed for future municipal growth, is identified in the General Plan as a future growth area, and that there is broad public opposition. He also cited a prior airport-area land sale as an example of short-sighted disposal of town property.
- Tom Dunning, a 21-year Payson resident, also opposed selling the Malibu property, saying the centrally located land could be needed for town purposes later and would be difficult to replace.
Ceremonial; Announcements; Presentations
- Deputy Town Manager Sheila DeSchaaf presented Megan Miller with the Certified Municipal Clerk (CMC) designation from the International Institute of Municipal Clerks and introduced Payson High School junior Izabella Zimmerman, the Town Hall's summer intern through the Gila County Summer Youth Program.
- DeSchaaf reminded the community about the upcoming Fourth of July celebration at Green Valley Park, beginning at noon with a hot dog eating contest, followed by family games and fireworks after dark.
- Tom Dorn of Dorn Policy Group, the Town's lobbyist, gave a legislative update on Arizona's 57th Legislature. He described the Republican majorities (Senate 17-13; House 33-27), noted a $10 million sweep from the highway user revenue fund that he said disproportionately affects rural Arizona, and reported that the State Route 87/260 right-turn-at-McDonald's project was not funded in the budget and is delayed, although ADOT has reportedly placed it in the queue for 2028. He also mentioned PFAS water costs, the lack of an active management area designation for Payson, Colorado River litigation funding, the unfunded Arizona Trail Fund, failed rural housing tax credit legislation, and a proposed statewide restriction on local fees that was avoided.
Public Hearing and Ordinance: Property Tax Levy (Ordinance No. 2026-107)
- Finance Director David Christian presented Ordinance No. 2026-107, which levies the property tax for fiscal year ending June 30, 2027. He explained that the ordinance holds the tax rate constant at 0.2855 per $100 of assessed valuation; the resulting 5.1% increase in the levy to $757,050 is driven by assessed value changes and new construction determined at the county and state level, outside Council control.
- Mayor Otto opened and closed the public hearing with no speakers during the hearing itself.
- Council discussion included support for considering elimination of the Town's property tax in next year's budget. Some members expressed interest in continuing the previous trend of lowering the rate toward zero, while others noted the current increase is modest and the levy is a small share of Town revenue.
- Motion by Council Member Jim Ferris, seconded by Council Member Charlie Bell, to approve Ordinance No. 2026-107. The ordinance passed 6-1, with Council Member Brett Flaherty voting no.
Unfinished Business: PSPRS Debt Refinancing (G.1 and G.2)
- Lance Holman of Holman Capital presented a direct-lending alternative to bond financing for the Town's Public Safety Personnel Retirement System (PSPRS) debt. He compared bond features (slightly lower interest rates but back-loaded principal, no-call periods, reserve funds, higher fees, and rate uncertainty until sale) with his firm's proposed direct loan: level principal-and-interest payments, no reserve fund, a flat $20,000 documentation fee, a rate locked for 30-45 days, and the ability to prepay on any scheduled payment date at approximately 105% of outstanding principal plus the payment then due. A council member characterized the 20-year direct loan rate as 7.59%; Holman said a 10-year term would be about 60 basis points lower, around 7%. Holman explained the rate is higher than an earlier 5.14% quote because the lender's interest income is not exempt from federal taxation.
- Jack Leeper and Jeremy Newtson of Stifel Public Finance presented a public bond option. Stifel said it has completed roughly 36 pension bond transactions in Arizona totaling several billion dollars. Their estimated structure is an approximately $20.84 million taxable bond issue, with about $19.1 million to prepay PSPRS obligations, $238,000 for the OPEB liability, and a contingency reserve fund of about 5% of deal size held by the Town. The bonds would be fully repaid by 2037 (an approximately 11-year maturity matched to the Town's current PSPRS payment schedule), with an estimated all-in true interest cost of 5.26% based on current market conditions and an expected double-A-minus rating. Estimated total principal and interest is about $27.3 million, producing an estimated net benefit of about $2.6 million (about 12.49% of deal size). Fees are included in the 5.26% all-in cost; Stifel said it is paid only if bonds are sold, and the main cost if the Town backed out would be a rating agency fee of roughly $20,000-$30,000. Without an emergency clause, the authorizing resolution would take effect 30 days after adoption, and one council member noted a possible August 12 date.
- Following questions, Council Member Ferris said direct lending appeared too expensive relative to the bond option and requested actual Stifel term sheets so the Council could compare apples to apples. The transcript also includes an exchange in which a Council member raised community concerns about whether the refinancing should require a public vote under Proposition 401/402 logic; Town Attorney Christina Estes-Werther advised that the Council lacked statutory authority to refer the matter to the ballot, and Mayor Otto criticized the issue as being raised manipulatively during election season. The approved meeting minutes do not record this exchange.
- Motion by Council Member Jim Ferris, seconded by Mayor Stephen Otto, to direct Town staff to prepare refinancing terms with Stifel Public Finance for the approximately $20 million bond issue to pay off the PSPRS debt. The motion carried 7-0.
New Business: Legal Services Review (H.1-H.3)
- Council Member Charlie Bell opened the discussion requested by himself and Council Member Jim Ferris on whether the Town should consider an in-house town attorney instead of contracted legal services. He outlined potential advantages of an in-house attorney - immediate availability, institutional knowledge, predictable salary cost, and accountability - while acknowledging that most effective arrangements are hybrid, using outside firms for specialized or high-risk matters.
- Justin Pierce of Pierce Coleman PLLC, the Town's contracted law firm, presented the firm's qualifications and cost data. He said the firm represents approximately 25 Arizona municipalities and has over 200 years of combined municipal law experience (he said the figure may be approaching 300). He reported that from July 1, 2024 to June 2026, recorded prosecution time of 2,370.5 hours would equate to about $592,500 at a discounted $250/hour rate, while the Town was billed $260,000; and general municipal services time totaling about $628,145 at discounted rates, compared with about $594,550 billed (including indirect costs). Pierce said the firm's flat fee for general legal services has not increased since 2022 despite roughly 10% cumulative inflation. He estimated a competent in-house town attorney would cost over $200,000 in salary plus 40% or more in employee-related expenses, with total compensation, benefits, and overhead likely exceeding $300,000-$400,000 per year, and would still require outside counsel for some matters. He noted the Town's legal budget was over $500,000 in 2019 and would likely cost $600,000-$700,000 today as an in-house operation, whereas payments to Pierce Coleman have been under $500,000 per year.
- Council members expressed differing views. Council Member Ferris questioned whether a contract firm has the same incentive to do extra research or be as accessible as an in-house attorney and said he has not necessarily seen that advantage. Council Member Nossek disagreed, saying he receives almost instant responses and that the in-house assumption is unfounded. Council Member Flaherty praised the firm's responsiveness and cost, noted the Town pays a much higher rate ($675/hour) for a zoning attorney elsewhere, and said having no lawsuits initiated against the Town in the last 12 months is evidence of sound advice. Other members echoed satisfaction with responsiveness and valued the objectivity of outside counsel.
- Under agenda item H.2, the Council discussed review of current legal services provided by Pierce Coleman PLLC and could have voted to hold an executive session under A.R.S. 38-431.03(A)(1) and (3). No action was taken.
- Under agenda item H.3, Town Attorney Christina Estes-Werther presented the Council Decision Request to approve the First Amendment to the Prosecution Services Agreement, increasing the total flat fee to $180,000 per year beginning July 1, 2026. Pierce said the increase was needed because the prosecutor's caseload and time commitment have made the current fee unsustainable. Motion by Council Member Jim Ferris, seconded by Vice Mayor Susan Tubbs, carried 7-0.
Key Outcomes
- Consent agenda (June 10, 2026 minutes) approved 7-0.
- Ordinance No. 2026-107 (property tax levy) approved 6-1, with Council Member Brett Flaherty opposed; the rate is held at 0.2855, and the levy rises 5.1% to $757,050 for FY 2026-27.
- Council directed staff to prepare PSPRS refinancing terms with Stifel Public Finance for an approximately $20 million taxable bond issue, 7-0. Stifel will return with documents for a subsequent authorizing resolution.
- Council took no action on the in-house vs. contracted legal services review (H.1/H.2) and did not go into executive session.
- Council approved the First Amendment to the Prosecution Services Agreement raising the flat fee to $180,000/year effective July 1, 2026, 7-0.
- Several Council members expressed interest in revisiting or potentially eliminating the Town's property tax in the FY 2027-28 budget.
Meeting Transcript
We're going to be using clothes. I love my my favorite story. My friend once told me is that she um miss took a head of garlic for a clove of garlic. And so they just mint that up real nicely. Scheduling commitments in the interest of respecting their their time and ensuring their participation. We will hear those items now, then return to the agenda beginning with call to the public. So we're going to D, the ceremonials, and uh we're going with actually we're going to G. Sheeler, would you introduce them, please? Thank you, Mr. Mayor, Counsel. At a previous meeting, you had presentations, uh, several previous meetings on the public safety personnel retirement system and some financing options. And so we have uh two companies here that I think have been before you before with some information to share. We've asked them to give a recap of the financing that they could provide to the town of Payson for refinancing the our public safety debt. First with us is Lance Holman of Holman Capital, and he's going to uh give you a short presentation. Keep in mind that after the presenters are done later on on tonight's agenda, you do have a discussion item for council discussion and consideration if you'd like to provide staff direction on choosing one option or another option. But if you have questions for the presenter, they're certainly here to answer questions about their proposal for you. Okay. Mr. Mayor, real quick. Uh Sheila, do you have the date that uh Mr. Holman was here previously? I just want to look up the presentation specifically for the April. I know it was an April meeting. Welcome back. Thank you for having me. Waiting on the screen to display, we don't have a signal yet. Oh here we go. Um first uh again, thank you for giving me an opportunity to come back and address the council. It's a privilege. Uh and I just wanted to speak a few minutes to recap some opportunity the opportunity that we would like to present uh to the council regarding your public safety retirement pension system. Oh, you can proceed to the next slide. So I don't I can't use my arrow. All right, the what I've done is do a uh side-by-side comparison between bond financing and direct lending. And on the left in blue, you can see that bonds have a slightly lower rate, uh, but that is not the complete picture. Uh many times in bond financing, you have most of the principal paid in the later years and very little principal paid in the earlier years. And therefore, your interest rate is multiplied times a higher principal balance. On the right side, you have direct lending, and you have a higher interest rate, but it's very similar to the mortgage on your home or your car loans, where you typically have level principal and interest payments uh with each payment, and you have a declining principal balance. So as your interest rate is multiplied each year times the outstanding principal balance, that outstanding principal balance is declining towards zero at the end of the financing. On the left side, you have that bonds have a no-call provision. So if you're gonna finance a bond for 30 years, typically in years one through 10, you are not allowed to pay off the bonds early. That means if interest rates go down in years one through 10, uh, you're not able to refinance it. On the right, you have the right to uh pay off the bonds and pay off the loan on any scheduled payment date in full. Therefore, you have maximum flexibility on your uh balance sheet. In bond financing, you have the potential, the possibility of a reserve fund. So when you have a reserve fund, the the investors are asking you to set aside capital into a separate bucket, and you can't use that bucket. You can use that bucket in later years to pay down the principal, but in the earlier years you cannot. So that those funds are locked up, and you could have used those dollars for other departments within the city. With direct lending, we don't have a reserve fund. The interest rate risk. In a bond financing, it may take you six to nine months to structure a financing, and you don't know what the interest rate is until the day you sell the bonds.
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