City Council News
Council approves use of budget surplus to pay off debt
The City will use about $5.796 million of budget surplus to pay off debt in its development fee funds and bolster its General Fund reserve following City Council approval at a regular meeting on Thursday.
As a practice, the City makes conservative projections when forecasting revenues. Heading into the fiscal year that began July 1, 2020, there was additional uncertainty regarding how COVID-19 could impact local sales tax revenues. When the actual sales tax figures came in, they showed double digit percentage growth that surpassed anything City of Sierra Vista Chief Financial Officer David Felix has seen before in his 26 years with the City. A legislative change to enable local governments to collect sales revenue from online sales contributed only a small portion to the growth.
“This is more than just internet sales … This is the best I have ever seen in the history of the City since I’ve been here,” Felix told the City Council on Thursday. In addition, the City did not need to use any of its Coronavirus Aid, Relief, and Economic Security Act funding in FY 2020 and was able to carry it all forward to cover public safety salaries in FY 2021, the fiscal year that began July 1, 2020.
The City Council approved staff’s recommendation to use the excess revenues over expenditures in the General Fund to pay off debt in its development fee funds including $3.1 million transferred to the parks development fee fund, $775,000 to the police development fee fund, and $1.2 million to the fire and medical development fee fund. The remainder of about $720,000 will be added to the General Fund reserve, bringing the total in reserve to about $6.7 million, which meets the City’s fiscal goal of having two months of operating expenses in reserve.
City Manager Chuck Potucek said this enables the City to change how it uses development fees in the future and use them to proceed more vigorously with the recently adopted Citywide Parks Master Plan. It also helps with debt service and allows the City more flexibility to allocate future funds to needs like projects, street maintenance, and public safety retirement contributions.
“This proposal gives you much more flexibility going forward to accomplish those things, as well as weather any economic storms that may hit us over the next decade,” Potucek told the City Council.
Development fees, also known as impact fees, are one-time fees on new residential and commercial development that cover the costs associated with additional public facilities and services that will be needed for the new construction like public safety, roads, and parks. The City’s current development fees were designed to bring the funds whole over a period of about 10 years.
The transfers approved Thursday, nearly bring the funds whole on their own, but don’t completely pay off the balance because development fees were calculated against the deficit and must be collected until new fees are assessed and adopted. As a result, staff recommends an update to the impact fee study be conducted as part of the development of next fiscal year’s budget.
In other business:
· The City Council approved updates to the City’s Personnel Rules and Regulation after first approving an amendment to the updates so that the Sierra Vista Employee Council will be comprised of one individual from each City department.
· The City Council approved a pre-annexation agreement with Mr. Fix it Properties LLC DBC Properties Plus for its property located at 117 N. 5th Street.
Details on the council meeting items are available in the supporting documents for the Thursday, Oct. 28, City Council meeting. They can be accessed via the “City Council” folder on the City’s document server at docserve.sierravistaaz.gov/.
