Potential sales tax increase, project funding on Council’s agenda at March 22 meeting

 

Members of the Globe City Council: Mayor Al Gameros, Vice Mayor Mike Stapleton (District 4), and Council members Freddy Rios (District 1), Mike Pastor (District 2), Jesse Leetham (District 3), Mariano Gonzalez (District 5), and Fernando Shipley (District 6). All members were in attendance at this meeting.

Community Pool rehab progressing, opening still set for July 4

City Engineer Jerry Barnes, standing in for Linda Oddonetto, gave a progress update on the Community Pool rehab project. Council viewed pictures of what the community center will look like when it’s finished. The style is sleek and modernistic, in white with aqua highlights.

Construction is moving along slowly, Barnes said. Currently, workers are patching cracks in the pool and prepping the infrastructure, such as trenching and piping for electrical. The zero-entry has been dugout.

Barnes said the City is still aiming to open the pool by July 4 – but “It’s going to be tough.” He said if the opening is delayed past the Fourth of July, it will be because materials weren’t available in time, not due to any problem with the contractors. He said everyone has been working hard to get the pool open by the Fourth.

The City is funding the project through ARPA funds totaling $210,000 plus generous contributions from funding partners, including a Community Investment Grant at $250,000, Gila County at $100,000, United Fund at $200,000, Arizona Complete Health at $50,000, Capstone at $100,000, BHP at $250,000, and Cobre Valley Regional Medical Center at $1.9 million – as well as many other organizations and individuals.

Improvements will continue after the pool opening, depending on availability of funds. Barnes said Phase 2 calls for a 2,500-square-foot event room, which for now will be a covered area. The concession stand is also part of Phase 2. The City will probably put up a temporary structure for concessions until the permanent structure can be built, Barnes said.

Update on financing for new fire station and sewer extension

Globe is planning to expand its municipal sewer system in the northeast part of town, as well as build a new fire station to replace the current 100+-year-old station. City Engineer Jerry Barnes presented an update on financing options for these two projects.

Sewer expansion financing

The City is preparing a preliminary engineering report for the sewer expansion as part of its applications for funding. The City is looking at funding through USDA and through Arizona’s Water Infrastructure Finance Authority (WIFA).

Jeff Kellner, a consultant for the City, explained the process of preparing the preliminary engineering report. He said two main alternatives for the expansion are being considered: 

• Build a lift station and force main that would pump sewage from the fairgrounds area back to the existing system for treatment at the current facility, or
• Construct a satellite wastewater facility in the fairgrounds area. 

Both options have pros and cons, Kellner said. The preliminary engineering report will specify exactly where the components would be located, as well as their sizes and capacities.

Barnes said the preliminary engineering report will go far beyond the sewer assessment that was done previously. It will include a cost estimate, which USDA requires in order to consider the City’s application. The report will take into account not just current sewer demand but also maximum possible development in the area.

For the application, the City will also be preparing a cost analysis of the City’s sewer rates. Barnes said the preparation of that analysis can be paid for through a technical assistance grant. At the same time, the City will obtain a cost analysis of capacity.

Barnes said the City is running into a situation where developers are building outside city limits but wanting to tie into the City’s sewer system – but the citizens are paying for the system and have ownership of it. In this situation, most cities charge the developer a capacity fee so the developer will be paying for part of the plant, Barnes said. The cost analysis of capacity will allow the City to charge capacity fees in a professional manner. Barnes said the city is currently at a little less than 50% capacity, thanks to repairs reducing stormwater seepage into the system.

“With the capacity study and a number, we can talk to [developers] about annexation and what money they would save.” City Engineer Jerry Barnes

The City is looking at funding the sewer expansion partly through a USDA loan grant. Barnes said under the terms, the loan will come first, meaning the City will have to spend the loan portion first. Payments will start as soon as the money is borrowed, and the interest rate is currently 1.5%. City staff is already in talks with USDA as the application is being prepared.

The City is also looking at a bridge grant loan from WIFA to pay for the design and preliminaries. Barnes said as the construction gets underway, USDA will pay off the bridge loan.

Barnes said grants are usually for about 75% of costs, so if the City erects a pump station costing $6 million, for example, the grant would cover $4.5 million and the City would have to cover $1.5 million. The City is looking for partners for the match portion.

City Manager Paul Jepson said staff has been looking at all possible funding sources for the project, and this is the best option available. Barnes pointed out that the USDA loan grant would allow the City to develop infrastructure in advance of needs since the City has to pay only a portion upfront.

Jepson said the City has a laundry list of other sewer projects that it will be submitting for federal money.

Fire station design and financing

Fire Chief Gary Robinson presented the site and main design features of the new fire station. A site at Third and Ash has been selected and purchased because it will provide direct access to Highway 60. It also has the advantage of having a stoplight close by that will help with traffic control. The site gives access from more than one point, which will help reduce backing.

Robinson said the FD gets about 80% of its calls from a corridor roughly from Autozone to the courthouse.

The proposed building will cover the existing property from edge to edge, and the fact that the property isn’t very large means they will have to build “up.” Parking will be somewhat limited, but the location will have plenty of apron space for trucks coming in off the highway.

The floor plan will have modern features, including living and office spaces that will be separated from the apparatus spaces by an airlock. This will reduce the amount of exhaust and contaminants that personnel will be exposed to – a problem in the current building.

“If you’re talking about public safety and you’re talking about the people who put themselves in danger, you want a safe facility for them.” Engineering Director Jerry Barnes

The apparatus bay in the new building will allow for maintenance to be done within the facility, rather than out in the street as is being done now. It will also have a drainage system, which the current facility does not.

Firefighters’ gear will be separated from vehicle exhaust and will be stored in a negative pressure space allowing contaminants to be vented out. Also, all firefighters will have two sets of gear so used gear can be sent out for decontamination without concerns about downtime due to missing gear.

There will be separate living spaces for each personnel, which Robinson says has become standard for fire services across the board.

“To expand the city, we need services that can get out and keep people protected, not only our residents but our fire staff as well.” Councilman Jesse Leetham

Barnes said the new building will be financed with a loan at 2.5% interest, probably through USDA. A preliminary architectural report will be needed. The cost of the station is estimated to come in around roughly $5.6 million. 

The USDA loan can be used for equipment, such as a ladder truck, as well as for the building construction, Barnes said. This loan is unusual, he said, in that if there are cost overruns, such as due to the increasing price of steel, the City could go back and ask for any additional amount needed. Alternatively, the City could also initially ask for more money than it expects to need and only use what’s actually needed.

Barnes said despite some people’s suggestions, it is not possible to expand the current fire station, neither horizontally nor vertically. The building will house the Police Department after the FD moves out.

Community pool entry fees to be discussed at public hearing May 24

Council discussed the entry fees to be charged for access to the community pool after it opens in July. To come up with a proposed fee schedule, Walt Braddon, Globe’s professional services consultant on the pool, looked at the fees being charged at Cobre Valley Recreation Center’s pool as well as the user fees and charges in Superior, Florence, and Apache Junction. Braddon said those fees all come in very close to one another, and the proposed fees for Globe’s pool will be similar to those.

The proposed fee schedule is $1 for entry for youth and seniors and $2 per adult. There would also be rates for monthly, annual, and family passes, and fees for renting the entire facility either with or without pool use. Groups such as the Pirhanas will use the pool under an intergovernmental agreement.

Residents and non-residents will pay the same fees.

Paul Jepson explained that the City doesn’t expect to be able to “pay the bills” with entrance fees, but those funds will be invested back into the community center for improvements.

A notice of intent for the fee schedule will be posted on the City’s website for 60 days, and a public hearing will be held on May 24.

Opening hours for the pool haven’t been determined yet and will depend on staffing, Jepson said.

City sales tax could increase by up to 1%

City staff is proposing an amendment to Globe’s tax code that would increase City sales tax by up to 1%. This increase would exclude retail food sales for home consumption.

Paul Jepson explained that, despite the funds for major projects that seem to be pouring in, the City has experienced constant shortages of operational funds – money to pay for day-to-day operations. Jepson said the problem has come about because Globe’s day-to-day costs have increased over the years, while people’s expectations for services have also grown. This includes services such as the fire department and police department, the costs of responding to social challenges such as the opioid crisis, the increased costs of complying with federal and state regulations, and rising costs for employee health care and retirement programs.

“It’s not that things are more expensive, it’s that the scope of what it takes to deliver quality municipal services is more comprehensive and more expanded.” City Manager Paul Jepson

Jepson said the problem is also arising because people who don’t live in Globe are using City services and facilities. Jepson said Globe’s population is 7,249 based on the 2020 census, but its service population – the population the City actually serves – is about 30,000. These are tourists, employees of local firms who live elsewhere, and people from the region who come here to shop. Globe has to provide services to all these people, but they don’t provide any additional property tax or any state-based funding, Jepson said. The only way they contribute is through sales tax.

Jepson said an “appropriate and proportional sales tax levy so visitors and travelers pay their fair share” would allow the City to continue to provide services to all.

“If there is an additional burden, that person who creates the burden should help pay the cost.” City Manager Paul Jepson

Jepson said visitors and travelers pay 73% of the sales tax the City receives. “For every dollar we collect from a resident of the city, we collect between three and four from visitors,” Jepson said. “That is the way they help the city, that is the way they repay us for the services we provide.”

He said residents will see their sales tax payments go up somewhat, but they can reassure themselves knowing that visitors will be paying three or four times as much, which will benefit everyone within the City.

Food purchased for home consumption is not being included in this tax increase because about 65% of that food is purchased by residents.

Jepson said the average increase to each Globe household would be less than $130 per year, or about $5 per month per resident.

“We’ve thought of this and our future, and how we’re going to sustain all the things that are happening in our community, and this is the way to do it, to balance it out so everybody contributes to the resources, to our community.” Mayor Al Gameros

Jepson pointed out there has been no increase in property taxes in the past six years, and he advised Council not to consider hiking property taxes for at least another five years.

He said businesses would benefit from the higher sales tax through enhanced municipal services, including reduced crime and increased fire protection, better roads and infrastructure, and increased marketing efforts such as First Friday and the New Times advertising program.

Jepson said compared to other cities and towns, Globe is currently in the lower third in terms of sales tax rates, and if the increase is approved, Globe would move into the upper third. Bisbee’s sales tax rate is 3.5%, Superior’s is 4.00%, and Payson’s is 2.88%. 

Globe’s current sales tax rate is 2.3%. If Council approves the full penny tax increase, it will bump up to 3.3%.

The revenues from the sales tax increase would help the City replace the fire station, continue to invest in parks and recreation, provide quality services to both visitors and residents, and position the City to “take advantage of the opportunities we know are just around the corner,” according to Jepson.

“I think we’re making a lot of really good moves that are going to put us in a position to grow.” Councilman Fernando Shipley

Mayor Gameros pointed out that Council has always had a vision of growth and increased activity for the City, going back to when water infrastructure was upgraded under the direction of Mayor Wheeler. In 2016, Council made economic development a priority and took the lead in seeking growth for the city, including improving housing and quality of life.

Mayor Gameros said other cities have been able to take advantage of population growth for operational funds, but Globe can’t do that. Yet, he said, we have 28,000 to 30,000 vehicles passing through Globe every day, utilizing municipal resources, but the residents have to foot the bill for that. He said an increased sales tax is the way to balance it out and get a return from the people who use resources when they visit our community.

Other council members concurred. Mariano Gonzalez commented, “The other option is to do nothing.…Then we will have nothing three to five years from now.”

Jesse Leetham said, “This is a no-brainer.…In order to keep growing as a city, we have to keep growing internally and to keep growing internally, we have to make money to keep that going.”

“We need to think bigger and bolder about our city, and we’re going to see the returns in the future if we continue to do that.” Mayor Al Gameros

City staff will post a notice of intent for 60 days, and staff will also meet with residents and groups to discuss the move. The tax increase will come back to Council at its May 24 meeting for a public hearing and a vote on final approval.

The effective date of the tax increase, if approved, would be August 1.

Fee for credit card use for building and zoning permits proposed

Council also discussed a proposed fee to be assessed when people use a credit card to pay for building and zoning permits. The fee would cover the City’s costs of credit card processing.

Jeannie Sgroi, Globe’s Finance Director, said in the past, the City has not allowed people to pay by credit card, but in the interest of being business-friendly, the City wants to allow people to use them.

There would be no administrative fee. The City would only be passing the cost of credit card processing on to the user. There would be a cap of 3.25% on the amount of the fee.

A public hearing on this fee will be held on May 24.

Motions approved

Council also approved motions for the following:

• Accounts payable in the amount of $548,102.14
• Approval of an extension of premises at the American Legion, 645 S. Broad Street, for the 2022 Car and Motorcycle Show and Swap Meet to be held on March 19.
• Approval to advertise a Request for Statements of Qualifications for on-call water/wastewater utility contracting. Jerry Barnes explained that the City will be using an on-call contractor for amounts up to $300,000, but each contract will come back to Council for approval. The contractor will be working on the common line, water repair, sewer repair, and other projects that the City doesn’t have the manpower to complete the projects itself.
• A resolution to write off uncollectible water debt, as described at Council’s March 8 meeting.
• Adoption of a pension funding policy for Globe’s Public Safety Personnel Retirement System. Finance Director Jeannie Sgroi explained that the new policy has to do with publishing information about PSPRS funding policies on the City’s website, as required by the state.
• Purchase from Empire-Cat of a backhoe in the amount of $104,924.54 and a thumb attachment in the amount of $11,950.96. Public Works Director John Angulo explained that the City has already budgeted and approved this purchase. The thumb was needed for post-fire flooding creek mitigation. Angulo said people would recognize it from the video of when a horse trailer was pulled out of floodwaters near the hospital.
• A contract with BMS CAT Stratton Restoration for mitigation and restoration of fire damage at the Globe Fire Department Building, in the amount of $48,007.64. Chief Robinson said there had been a fire in the fire station, which the crew extinguished fairly rapidly. BMS CAT Stratton came in immediately to do necessary mitigation and cleanup and also is currently performing restoration work. Most of the contract amount will be paid by the fire department’s insurance, Robinson said.

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