Notice of Meetings Work-Study Session and Regular Session of the Fountain Hills Town Council

NOTICE OF MEETINGS WORK-STUDY SESSION AND REGULAR SESSION OF THE FOUNTAIN HILLS TOWN COUNCIL

Mayor Linda M. Kavanagh Vice Mayor Dennis Brown Councilmember Alan Magazine Councilmember Nick DePorter Councilmember Art Tolis Councilmember Henry Leger Councilmember Cecil A. Yates

TIME: 4:30 P.M. – WORK-STUDY SESSION SESSION 5:30 P.M. – REGULAR SESSION WHEN: TUESDAY, MARCH 6, 2018 WHERE: FOUNTAIN HILLS COUNCIL CHAMBERS 16705 E. AVENUE OF THE FOUNTAINS, FOUNTAIN HILLS, AZ

Councilmembers of the Town of Fountain Hills will attend either in person or by telephone conference call; a quorum of the Town’s various Commission, Committee or Board members may be in attendance at the Council meeting.

Notice is hereby given that pursuant to A.R.S. § 1-602.A.9, subject to certain specified statutory exceptions, parents have a right to consent before the State or any of its political subdivisions make a video or audio recording of a minor child. Meetings of the Town Council are audio and/or video recorded and, as a result, proceedings in which children are present may be subject to such recording. Parents, in order to exercise their rights may either file written consent with the Town Clerk to such recording, or take personal action to ensure that their child or children are not present when a recording may be made. If a child is present at the time a recording is made, the Town will assume that the rights afforded parents pursuant to A.R.S. § 1-602.A.9 have been waived.

PROCEDURE FOR ADDRESSING THE COUNCIL Anyone wishing to speak before the Council must fill out a speaker’s card and submit it to the Town Clerk prior to Council discussion of that Agenda item. Speaker Cards are located in the Council Chamber Lobby and near the Clerk’s position on the dais.

Speakers will be called in the order in which the speaker cards were received either by the Clerk or the Mayor. At that time, speakers should stand and approach the podium. Speakers are asked to state their name and whether or not they reside in Fountain Hills (do not provide a home address) prior to commenting and to direct their comments to the Presiding Officer and not to individual Councilmembers. Speakers’ statements should not be repetitive. If a speaker chooses not to speak when called, the speaker will be deemed to have waived his or her opportunity to speak on the matter. Speakers may not (i) reserve a portion of their time for a later time or (ii) transfer any portion of their time to another speaker.

If there is a Public Hearing, please submit the speaker card to speak to that issue during the Public Hearing.

Individual speakers will be allowed three contiguous minutes to address the Council. Time limits may be waived by (i) discretion of the Town Manager upon request by the speaker not less than 24 hours prior to a Meeting, (ii) consensus of the Council at Meeting or (iii) the Mayor either prior to or during a Meeting. Please be respectful when making your comments. If you do not comply with these rules, you will be asked to leave.

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WORK-STUDY SESSION

ALL WORK-STUDY ITEMS LISTED ARE FOR DISCUSSION ONLY. NO ACTION CAN OR WILL BE TAKEN. The primary purpose of work session meetings is to provide the Town Council with the opportunity for in- depth discussion and study of specific subjects. Public comment is not provided for on the Agenda and may be made only as approved by consensus of the Council. In appropriate circumstances, a brief presentation may be permitted by a member of the public or another interested party on an Agend a item if invited by the Mayor or the Town Manager to do so. The Presiding Officer may limit or end the time for such presentations.

 CALL TO ORDER AND ROLL CALL – Mayor Linda M. Kavanagh 1. Presentation by Joe Fackel, Executive Vice President and Bear Burnett, Retail Development Director, from Retail Strategies LLC. regarding discovery phase findings and retail recruitment plan. 2. ADJOURNMENT.

REGULAR SESSION AGENDA

 CALL TO ORDER AND PLEDGE OF ALLEGIANCE – Mayor Linda M. Kavanagh

 INVOCATION – Pastor Rod Warembourg, Desert Creek Fellowship

 ROLL CALL – Mayor Linda M. Kavanagh

 MAYOR’S REPORT i) None.

 SCHEDULED PUBLIC APPEARANCES/PRESENTATIONS i) Mayor Kavanagh and/or Council may review RECENT EVENTS attended relating to Economic Development. ii) Update by the McDowell Mountain Preservation Commission regarding RECENT ACTIVITIES.

Call To The Public

Pursuant to A.R.S. §38-431.01(H), public comment is permitted (not required) on matters not listed on the agenda. Any such comment (i) must be within the jurisdiction of the Council and (ii) is subject to reasonable time, place, and manner restrictions. The Council will not discuss or take legal action on matters raised during “Call to the Public” unless the matters are properly noticed for discussion and legal action. At the conclusion of the call to the public, individual Councilmembers may (i) respond to criticism, (ii) ask staff to review a matter or (iii) ask that the matter be placed on a future Council agenda.

Consent Agenda

All items listed on the Consent Agenda are considered to be routine, non-controversial matters and will be enacted by one motion and one roll call vote of the Council. All motions and subsequent approvals of consent items will include all recommended staff stipulations unless otherwise stated. There will be no separate discussion of these items unless a Councilmember or member of the public so requests. If a Councilmember or member of the public wishes to discuss an item on the consent agenda, he/she may request so prior to the motion to accept the Consent Agenda or with notification to the Town Manager or Mayor prior to the date of the meeting for which the item was scheduled. The items will be removed from the Consent Agenda and considered in its normal sequence on the Agenda. z:\council packets\2018\r180306\180306a.docx Last Printed: 2/27/2018 7:30 AM Page 2 of 4

1. CONSIDERATION of approving the TOWN COUNCIL MEETING MINUTES from January 30 and February 6, 2018.

2. CONSIDERATION of RESOLUTION 2018-20, abandonment of the Public Utility and Drainage Easement on Plat 506A, Block 4, Lot 7 (15806 N. Eagles Nest Drive), as recorded in Book 159, Page 30, records of Maricopa County, Arizona. (EA 2018-03)

Regular Agenda 3. CONSIDERATION of appointing three (3) Planning and Zoning Commissioners to each serve a two-year term beginning on March 7, 2018, and ending September 30, 2020.

4. CONSIDERATION of a Cooperative Purchase Agreement contract number C2018-083 with Pro Em Party and Event Rentals for up to $75,000.00 with the option of four (4) one year renewal terms.

5. CONSIDERATION of four (4) BUDGET TRANSFERS from the General Government Contingency: (i) $2,246.25, for holiday lighting of Town Hall; (ii) $600,000.00, for additional contract costs for the Fire Station #2 relocation; (iii) $50,000.00 for the May 15, 2018 Special Election for the primary property tax ballot question; and (iv) $160,000.00, for additional;/unbudgeted Interim Town Attorney Costs; and one (1) BUDGET TRANSFER from Public Works to the Cottonwoods Maintenance District in the amount of $900.00, for an unbudgeted increase in landscaping costs.

6. CONSIDERATION of the second Amendment to Cooperative Purchase Agreement C2017-045, between M. R. Tanner Development and Construction, Inc. and the Town of Fountain Hills, in an amount not to exceed $2,500,000.00, for asphalt replacement and miscellaneous work.

7. CONSIDERATION of Cooperative Purchase Agreement C2018-092, between Roadsafe Traffic Systems, Inc. and the Town of Fountain Hills, in an amount not to exceed $30,000.00 annually, for temporary traffic control devices.

8. DISCUSSION WITH POSSIBLE DIRECTION TO STAFF relating to any item included in the League of Arizona Cities and Towns weekly LEGISLATIVE BULLETIN or relating to any ACTION PROPOSED OR PENDING before the State Legislature.

9. COUNCIL DISCUSSION/DIRECTION to the Town Manager. Item(s) listed below are related only to the propriety of (i) placing such item(s) on a future agenda for action or (ii) directing staff to conduct further research and report back to the Council: i.) None.

10. SUMMARY OF COUNCIL REQUESTS and REPORT ON RECENT ACTIVITIES by the Mayor, Individual Councilmembers, and the Town Manager. i.) None. z:\council packets\2018\r180306\180306a.docx Last Printed: 2/27/2018 7:30 AM Page 3 of 4

11. ADJOURNMENT.

DATED this 27th day of February, 2018.

Bevelyn J. Bender, Town Clerk The Town of Fountain Hills endeavors to make all public meetings accessible to persons with disabilities. Please call 480-816-5100 (voice) or 1-800-367-8939 (TDD) 48 hours prior to the meeting to request a reasonable accommodation to participate in this meeting or to obtain agenda information in large print format. Supporting documentation and staff reports furnished the Council with this agenda are available for review in the Clerk’s office.

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NOTICE OF MEETINGS WORK-STUDY SESSION AND REGULAR SESSION OF THE FOUNTAIN HILLS TOWN COUNCIL

Mayor Linda M. Kavanagh Vice Mayor Dennis Brown Councilmember Alan Magazine Councilmember Nick DePorter Councilmember Art Tolis Councilmember Henry Leger Councilmember Cecil A. Yates

TIME: 4:30 P.M. – WORK-STUDY SESSION SESSION 5:30 P.M. – REGULAR SESSION WHEN: TUESDAY, MARCH 6, 2018 WHERE: FOUNTAIN HILLS COUNCIL CHAMBERS 16705 E. AVENUE OF THE FOUNTAINS, FOUNTAIN HILLS, AZ

If there is a Public Hearing, please submit the speaker card to speak to that issue during the Public Hearing.

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WORK-STUDY SESSION

REGULAR SESSION AGENDA

 CALL TO ORDER AND PLEDGE OF ALLEGIANCE – Mayor Linda M. Kavanagh

 INVOCATION – Pastor Rod Warembourg, Desert Creek Fellowship

 ROLL CALL – Mayor Linda M. Kavanagh

 MAYOR’S REPORT i) None.

Call To The Public

Consent Agenda

1. CONSIDERATION of approving the TOWN COUNCIL MEETING MINUTES from January 30 and February 6, 2018.

Regular Agenda 3. CONSIDERATION of appointing three (3) Planning and Zoning Commissioners to each serve a two-year term beginning on March 7, 2018, and ending September 30, 2020.

4. CONSIDERATION of a Cooperative Purchase Agreement contract number C2018-083 with Pro Em Party and Event Rentals for up to $75,000.00 with the option of four (4) one year renewal terms.

11. ADJOURNMENT.

DATED this 27th day of February, 2018.

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Retail Recruitment Plan Retail Strategies Overview

We are retail real estate professionals. We will tell your story in a way that matters to retailers.

1 Goal 130 4:1 44 20 34 Create Success States Our Team has Licensed Retail Real Communities Served Client to Staff Ratio Located Retailers Team Members for Our Clients Estate

Professionals

Prepared for Fountain Hills_AZ by Retail Strategies 2 Our Partnership

Scott Cooper Economic Development Director

Ashton Antonetti Bear Burnett Joe Fackel Portfolio Director Retail Development Executive Vice Director President

Prepared for Fountain Hills_AZ by Retail Strategies 3 Our Partnership

Executi ve Team

Marketing & Research

Accounti ng

Prepared for Fountain Hills_AZ by Retail Strategies Retail Strategies Process

Market analysis- Data, Data, Data We start where the retailers and landlords start. A retail site will only be chosen if it meets all of a retailers’ key criteria. This criteria is two fold: market criteria and site criteria. Each retailer has its own formula for determining what market characteristics are needed to allow for a profitable store. Which is why this first step is central to formulating an effective retail recruitment strategy. Through our comprehensive market analysis process we have evaluated consumer spending patterns, peer communities, local commercial real estate asset, as well as the demographic and psychographic make-up of your unique consumer trade area. Our partnerships with pioneering data organizations allow us to provide the deepest, most accurate, insight into your community and its consumers to retailers and landlords across the country.

Strategic Planning – The Playbook Every community offers unique assets and challenges to retailers and developers. Taking the market analysis a step further we have sent a experienced retail real estate team to Fountain Hills to view the market first hand as a retail site selector would (Boots on the Ground). Then through connecting with local city leadership and key stakeholders in Fountain Hills’s commercial real estate sector we gain the insight and feedback necessary to access the markets strengths and weaknesses. Many times what the data shows is incomplete. Other critical factors such as co-tenancy, sight lines, access and most notable success of existing retail are taken in to account in creating your strategic retail recruitment plan.

Retail Recruitment- Connecting The Dots This is where the real heavy lifting begins as we put the data and underutilized real estate assets to work by connecting them with targeted businesses. Retail recruitment is a complex business and involves multiple parties. Our team has National connections that we will put to work on your behalf. We currently know who to contact, their expansion plans, and their site criteria for over 9000 retailers Timenationwide.nationwide Resources Experience Connections

Prepared for Fountain Hills_AZ by Retail Strategies 5

Your Research Discover: Research

Memberships, Research Partners & Subscriptions & Geographic Information Customized Systems Reports

Prepared for Fountain Hills_AZ by Retail Strategies 7 Discover: Research where does all this information come from? here are the demographic data sources used

Prepared for Fountain Hills_AZ by Retail Strategies 8 Discover: Research

DATA & ANALYTICS Through our partnership you have access to 87 category specific reports containing over 3,000 unique variables. During the initial Discovery Phase Retail Strategies analyzed these variables from 7 different geographies, the results of which have been summarized in the following pages of this report. However, this information is not strictly limited to the retail industry. The research can be adjusted to assist local leadership and city staff with internal and external efforts related to growing and improving all facets of the community. We also realize the goal of our partnership is not only to bring new retail to your community but also to support the existing local business owners. Our data can be run on demand from any site in the market and refined to provide insight into spending patterns, lifestyles, and preferences of the consumers in Fountain Hills. This is a valuable tool when considering weather to grow or expand an existing business, or even in exploring what merchandise mix local shoppers will find the most appealing.

87 3,365 category specific reports unique variables 7 different geographies 23,555 defined per each variable variables to analyze

Prepared for Fountain Hills_AZ by Retail Strategies 9 Discover: High Level

State of Arizona Population 6.9 Million

Phoenix-Mesa-Scottsdale, AZ CBSA Population 4,681,190

Fountain Hills, AZ Population 24,278

Prepared for Fountain Hills_AZ by Retail Strategies 10 Discover: Drive Time & Radius

Prepared for Fountain Hills_AZ by Retail Strategies 11 Discover: Drive Time & Radius

Category 3-Mile Radius 5-Mile Radius 10-Mile Radius 5-Minute Drive Time 10-Minute Drive Time 15-Minute Drive Time

Current Year Estimated Population 25,137 32,049 134,980 12,454 24,863 42,026

Number of Households 11,405 14,063 58,685 6,027 11,312 18,627

Projected Annual Growth (5 YR) 7.60% 7.24% 8.52% 8.11% 7.53% 7.13%

Median HH Income 2017 $73,919 $85,355 $86,290 $65,716 $74,413 $79,616

Current Year Average Age 50.3 49.3 45 50.8 50.3 47.8

Average Home Value $707,691 $793,668 $821,677 $584,601 $716,682 $805,344

Current Year % Bachelor's Degree 42% 45% 49% 40% 43% 47%

Daytime Population 21,849 27,704 156,772 11,731 21,279 41,624

Labor Force 11,805 15,677 67,779 5,882 11,680 21,109

The variables on the chart above are all important variables considered by retail site selectors

Prepared for Fountain Hills_AZ by Retail Strategies * Demographics pulled from city center as identified by internal GIS / Data Source: STI PopStats 12 Discover: Mobile Tracking

Mobile Data Collection

Our mobile tracking study uses data collected from mobile phone users who displayed in a color-coded distribution map that indicates the percent of have agreed within their apps and phone settings to enable location visitors who have travelled to the study area from each square-mile block in information. By drawing a polygon around a retailer, we are able to gather a map grid. Once we draw a polygon around a study area, we then specify a data about the home and work location of customers who have actively used time frame in which to measure customer location patterns. The resulting their mobile device while in the defined area. For this study, we have used data is gathered from shoppers who visited the defined location during the mobile GPS tracking data to examine Fountain Hills’ core consumer trade designated time period. When assessing the results of a mobile study, we area using the Safeway, Target and Tractor Supply Co. stores located in must keep in mind that the number of visitors that are tracked is a very small Fountain Hills, AZ. The chosen retailers are large traffic generators that percentage of the overall population who have visited the study area. These might attract different consumer groups drawn to different categories and data give us accurate insights to the distribution of visitors, but not the levels of retail. The results of this study are overall quantity of visitors. Locations Tracked: Time Period Tracked: Safeway August1, 2016 – Target August 1, 2017 Tractor Supply Co.

Safeway Target Tractor Supply Co. 13733 Fountain Hills Blvd 16825 E Shea Blvd 17130 East Shea Blvd

Prepared for Fountain Hills_AZ by Retail Strategies 13 Discover: Custom Trade Area

Primary Trade Area Each retailer has a specific formula of market criteria they use to determine if they will have a profitable store. Understanding your trade area is extremely important because it sets the parameters for measuring demographic criteria and spending potential sought by retailers and developers. Municipal boundaries, radius rings and drive times are a start to evaluating this information. However, these predefined boundaries are unable to take into account the unique aspects affecting the actual consumer pulling power and local geography of your community. For these reasons a customized trade area is the next step to analyzing a market. A trade area is the geographic area from which a community generates the majority of its customers. A community can have more than one trade area. We define your primary trade area the core base of consumers highly likely to shop and eat in the market at least once a month. Your primary trade area has been created by combining the results from the mobile tracking data with other factors such as: current retail mix in your community, traffic patterns, destination attractions and proximity to competing markets. The time and distance consumers are willing to travel to shop is not “one size fits all”. Therefore retailers will analyze their own trade areas differently taking in to account things like existing Retail Strategies has created the customized trade area shown in the map above and outlined in red which is focused on a consumer who might travel for their primary shopping destination. store locations, competition within their retail category, and convenience.

Prepared for Fountain Hills_AZ by Retail Strategies 14 OurDiscover: Research Custom Trade Area 39,991 2017 Estimated Population Custom Trade Area

42,092 7.8% projected 2022 population projected growth rate 2017-2022

49 50 male average age female average age

Prepared for Fountain Hills_AZ by Retail Strategies Data Source: STI:PopStats 15 OurDiscover: Research Custom Trade Area

CURRENT YEAR ESTIMATED HOUSEHOLDS BY HOUSEHOLD SIZE

8,655

21,613 number of households 3,985 $90,180 median household income 2,149 1,778

611 178 96 23% 50% 12% 10% 4% 1% 1% 1-person 2-person 3-person 4-person 5-person 6-person 7 or more household household household household household household person household

Prepared for Fountain Hills_AZ by Retail Strategies Data Source: STI: PopStats – U.S. Census; U.S. Postal Service16 Discover: Custom Trade Area Our Research DAYTIME POPULATION

38,553 daytime population

3% 29% 9% 6% 33% 2% 18%

Children at home Retired/Disable persons Homemakers Work at Home Employed Unemployed Student Populations

Daytime population is the sum of the following subcategories: retired and disabled people, homemakers and working age people not in the labor force, unemployed people, employed people, persons working at home (both self-employed and employed by a company), children at home (typically preschool), and students (Pre-K to 12th and post-secondary, including college and vocational). Daytime population data provides a more accurate understanding of the distribution of people during the day within the trade area. As well as a better understanding of the type of persons within the trade area. Some people can be classified as falling within more than one subcategory of daytime population. For example, people working at home who are disabled. As a result, some people may be counted twice. This double-counting results in the daytime population being approximately 6% higher.

Prepared for Fountain Hills_AZ by Retail Strategies Data Source: STI: PopStats- U.S. Census Bureau; Bureau of Labor Statistics (BLS); National Center for Education Statistics (NCES)17 OurDiscover: Research Custom Trade Area

CURRENT YEAR ESTIMATED POPULATION AGE 25+ BY EDUCATIONAL ATTAINMENT DOCTORATE DEGREE 595

PROFESSIONAL SCHOOL 1,386 DEGREE

MASTER'S DEGREE 4,369

BACHELOR'S DEGREE 9,651

ASSOCIATE DEGREE 2,590

SOME COLLEGE, NO DEGREE 6,406

HIGH SCHOOL GRADUATE (OR 4,938 GED)

SOME HIGH SCHOOL, NO 790 DIPLOMA

LESS THAN 9TH GRADE 170

Prepared for Fountain Hills_AZ by Retail Strategies Data Source: STI: WorkPlace National Center for Education Statistics (NCES)18 OurDiscover: Research Beyond the demographics

Lifestyle reports allow our retail prospects with the distinct, behavioral market BIG DATA to be purchasing patterns of the segments. Selection of the summed up into a consumers in your market. Esri variables used to identify Tapestry Segmentation is a consumer markets begins with simple narrative on geodemographic segmentation data that includes household the personality of the system that integrates characteristics such as single majority of your consumer traits with residential person or family, income, characteristics to identify relationships (married or households. markets and classify US multigenerational), and tenure; Just because a two people fall neighborhoods. personal traits such as age, sex, within the same group Neighborhoods with the most education, employment, and demographically does not mean similar characteristics are marital status; and housing they are identical consumers. It grouped together, while characteristics like home value or rent, type of housing (single is for this reason that neighborhoods with divergent family, apartment, town house, demographic information alone characteristics are separated. or mobile home), seasonal does not provide a complete Internally homogenous, externally heterogeneous status, and owner costs relative picture of your trade area market segments depict to income. In essence, any potential. We must go beyond consumers' lifestyles and life characteristic that is likely to the demographics to stages. Tapestry Segmentation differentiate consumer spending understand consumer lifestyles combines the "who" of lifestyle and preferences is assessed for and spending behavior based demography with the "where" of use in identifying consumer on personality in order to better local geography to create a markets. align classification model with 67

Prepared for Fountain Hills_AZ by Retail Strategies 19 Discover: Tapestry Segmentation

Tapestry includes 67 distinct market segments and 14 summary groups Tapestry profiles enable the comparison of consumer markets across the country for any area Prepared for Fountain Hills_AZ by Retail Strategies 20 ESRIOurDiscover: Research Tapestry Tapestry Segmentation Segmentation

TAPESTRY HOUSEHOLD SEGMENTATION AREA PROFILE 5 mile Radius – City Center, Fountain Hills, AZ

33.4%

17.7% 17.2%

10.3%

7.2%

Exurbanites Silver & Gold Top Tier 1A Golden Midlife 1E 9A Years 9B Constants 5E

* Remaining percentage is made up of various household groups not represented in top five segmentations. Full tapestry profile report has been provided for further examination.

Prepared for Fountain Hills_AZ by Retail Strategies Source: Esri 21 Discover: Tapestry Segmentation

TAPESTRY HOUSEHOLD SEGMENTATION AREA PROFILE 5 mile Radius – City Center, Fountain Hills, AZ Household Percent of Median Median Lifestyle Traits Segmentation Households Age Income • A larger market of empty nesters, are married couples with no children. • Sociable and hardworking, they still find time to stay physically fit. Exurbanites 33.4% 49.6 $98,000 • Consumers are more interested in quality than cost. They take pride in their homes and foster a sense of personal style.

• Neighborhoods include seasonal or vacation homes, reflected in the high vacancy rate of 35%. Silver & Gold 17.7% 61.8 $63,000 • Primarily retired, but many still active in the labor force. • These consumers have the free time, stamina, and resources to enjoy a good life. • Housing units are owner occupied with the highest home values—and above average use of mortgages. • Annually, earn more that three times the US median household income, Top Tier 17.2% 46.2 $157,000 primarily from wages and salary, but also self employment income and investments. • They regularly cook meals at home, attentive to good nutrition and fresh organic foods. • These neighborhoods are found in large metropolitan areas, outside central cities. Scattered across the US. • Residents are well educated 10.3% 51 $61,000 Golden Years • These consumers are well connected: Internet access is used for everything from shopping to paying bills to monitoring investments and entertainment • Primarily married couples, with a growing share of singles. • Attentive to price, but not at the expense of quality, they prefer to buy 7.2% 45.9 $48,000 Down the Road American and natural products. • Their lifestyle is more country than urban.

Prepared for Fountain Hills_AZ by Retail Strategies Source: Esri 22 Focus Categories Discover: Focus Categories

Utilizing a strategic Retail Strategies uses STI: Market Outlook Our Peer Analysis begins by running a approach to determine to provide accurate and reliable supply- demographic profile based on a specified where your market can demand insight used to identify the drive-time from the major retail node in your consumer demand gaps in your trade area. market. Then comparing certain variables ( support sustainable The data for STI: Market Outlook is derived i.e. residential population, daytime from annual retail sales and expenditures population, median household income, and growth is the key to from the following three major sources of market supply) to the same drive-time focused retail information: U.S. Bureau of Labor geography from the major retail node in Statistics' Consumer Expenditure (CE) other markets within your region of the Demand data is derived from this Retailrecruitment Strategies' approach to retail Survey - country. Taking it a take it a step further we source. recruitment begins by identifying four U.S. Census Bureau's Census of then assess the retail currently located These focus retail categories. Using a process Retail Trade (CRT) reports - within the peer markets with the retail as it annual and monthly reports contribute to that combines: market supply and exists in your market today. The last step of Market Outlook's supply data. demand, peer community comparison, U.S. this phase is to preform a void analysis to industry insight, as well as our own Census Bureau's Economic Census - identify the specific retailers located within Supply data is also derived from this experience and intuition, we are able to those markets that are not currently located source, which provides an even more identify the specific categories of retail within Fountain Hills. detailed view than the CRT reports. Step 3: What We Know where your market is most likely to Industries for the consumer expenditures support growth. However, it is important to Our approach would not be complete without survey are categorized and defined by the keep in mind that our outreach on behalf this last step. This is because if we were to North American Industry Classification of your community will never be strictly base our efforts solely on what the data tells System (NAICS). limited to retailers within the resulting us we would be leaving out the many categories. Our strategic approach to variables influencing retailers actual growth identifying your focus categories can be Step 2: Peer Analysis aspirations. Retailer’s strategies are broken down into the following 3 steps: constantly changing and our team is actively Step 1: Gap Analysis Identification and comparison of similar tracking expansions and closures of retailers Preforming a gap analysis is the first step communities to measure your retail base on a national, regional and local level. By because it provides a direct comparison and identify opportunities from a categorical monitoring the latest as it relates to these between annual retail sales and consumer perspective is the next step in our process. important industry trends we are able to spending on a categorical level. combine what the data tells us with real world insight to focus on expanding concepts Prepared for Fountain Hills_AZ by Retail Strategies looking for markets just like yours. 24 Discover: Total Market Supply

Total Market Supply $360,512,407

This represents the amount captured by businesses located in the defined trade area by block group. The areas with darker green are capturing more consumer dollars.

Prepared for Fountain Hills_AZ by Retail Strategies 25 Discover: Total Market Demand

Total Market Demand $731,576,222

This represents the amount spent by consumers located in the defined trade area by block group. In the dark green areas the consumer demand is higher.

Prepared for Fountain Hills_AZ by Retail Strategies 26 Discover: Opportunity Gap

Total Market Leakage $371,063,815

This means more people purchase items outside of the defined Fountain Hills trade area than in the Fountain Hills defined trade area for their consumer goods and services. Finding the specific categories where they are leaving the market is the key.

Prepared for Fountain Hills_AZ by Retail Strategies 27 Discover: Opportunity Gap

CUSTOMIZED RETAIL CATEGORY GAP ANALYSIS

General Merchandise Stores $52,530,430

Food and Beverage Stores $42,839,323

Health & Personal Care Stores $20,761,166

Clothing & Clothing Accessories Stores $17,391,233

Foodservice and Drinking Places $12,768,135

Automotive Parts, Accessories, & Tire Stores $8,142,465

Sporting Goods, Hobby, Book, Music Stores $6,873,354

Electronics & Appliance Stores $4,666,209

Furniture and Home Furnishings Stores $3,560,928

Prepared for Fountain Hills_AZ by Retail Strategies Data Source: STI: Market Outlook 28 Discover: Peer Analysis

TRADE AREA COMPARISON REPORT Target 5 Min Drive Time

Employed Median HH Seasonal % City State Residential Pop Market Supply Daytime Pop Income Population

Fountain Hills AZ 25,603 21,288 $74,865 $243,748,718 30.4%

Peer Average 28,207 30,669 $63,206 $395,076,127 24.6%

Green Valley AZ 29,359 30,342 $48,824 $324,413,246 31.6%

Sahuarita AZ 28,187 32,356 $49,832 $355,443,597 24.7%

Felton CA 27,076 29,309 $90,963 $505,371,538 10.0%

Prepared for Fountain Hills_AZ by Retail Strategies 29 Discover: Peer Analysis

PEER ANALYSIS BY RETAIL CATEGORY

6 5

4 4 3 3 3 2 1 1 1 1 0 0 0

Coffee, Juice & Computer & General Grocery & Hardware & Hobbies & Limited Service Quick Service Sports & Smoothie Electronics Merchandise Supermarket Garden Crafts Restaurants Restaurants Recreation Fountain Hills Peer Average

Prepared for Fountain Hills_AZ by Retail Strategies 30 RealOurSummary Estate/Market Research SWOT Summary

STRENGTHS WEAKNESSES • Highly Affluent Clientele •High % of non primary residences • 45% of population with (seasonality) Bachelors Degree or higher •Very few peer markets • Avg HH Income: $103,336 •Functional Obsolescence Retail Product • Ave Disposable: $78,656 •Retail Trade Bifurcation

•Topography

OPPORTUNITIES THREATS • Significant Retail • Consolidation of national retailers with other locations at Leakage Shea & 101 and/or Frank Lloyd • Plot 208 – Repurpose Wright Blvd as leases expire • Park Place... • Over-levered property owners • Anticipated rising interest rates

Prepared for Fountain Hills_AZ by Retail Strategies 31 BootsReal Estate on Analysisthe Ground Boots on the Ground

Purpose Information Collected

To identify and record Address Available Space in Center the primary real estate Property Description Parcel Size (if vacant land) opportunities within the market. Coordinates Existing Tenants (if existing) Listing Agent (if possible) Traffic Count at Property This analysis is performed by Contact Info for Agent or Owner Summary of Recruitment licensed real estate professionals with more than 15 years of Web Address for Agent or Owner Opportunities Specific to experience with development, Property leasing, and redevelopment. Link to Property Info on Agent or Owner’s Website Specific Prospects for Property

Google Earth Link to Aerial Photo Overall Strategy for Property

Google Earth Link to Ground General Comments Photo

Total Size of Center (if existing)

Prepared for Fountain Hills_AZ by Retail Strategies 33 Real EstateCurrent Analysis: Retail Retail Overview Focus Zones

Prepared for Fountain Hills_AZ by Retail Strategies 34 RealCurrent Estate RetailAnalysis: Overview Focus Zones

Zone 1&2: Mostly New Development Opportunities Zone 3&4: New Infill Opportunities / Asset Management)

Prepared for Fountain Hills_AZ by Retail Strategies 35 RealCurrent Estate Analysis:Retail Overview Property Catalog

Shopping Center / Address Property Type Intersection 25+ Retail Real Estate Opportunities Former Walgreens 16749 E Shea Blvd Strip Center Vacant Land 16755 E Shea Blvd Vacant Land Former KFC A&W 16805 E Shea Blvd Freestanding Four Peaks Plaza 16825 E Shea Blvd Power Center Enterprise Strip Center 11829 N Saguaro Blvd Strip Center Dominion Plaza 11731-11803 N Saguaro Blvd Strip Center Vacant Land 11645 N Saguaro Blvd Strip Center Mattress Firm Building 16925 N Saguaro Blvd Strip Center Vacant Land 11616-11638 Desert Vista Vacant Land Vacant Land 9637 N Saguaro Blvd Vacant Land Plaza Fountainside Pad 12605 N Saguaro Blvd Padsite Plaza Fountainside 12627-12641 N Saguaro Blvd Strip Center Redrock Building Center 17100 E Shea Blvd Strip Center Park Place 12800-12898 N Verde River Dr New Development 17225 E Shea Blvd Strip Center Fountain View Place 13014 N Saguaro Blvd Strip Center Vacant Land 16468 E Ave of the Fountains Vacant Land Former Arbys 17224 E Shea Blvd Freestanding Fountain Hills Plaza 13112-13150 N La Montana Dr Grocery Anchored Sears Strip Center 13212 N Saguaro Blvd Strip Center

Fountain View Village 13525 N Fountain Hills Blvd Strip Center Vacant Land 13545 N Fountain Hills Blvd Vacant Land Retail Strategies has cataloged many different retail real estate opportunities Palisades Center 16730 E Palisades Blvd Strip Center within the city limits of Fountain Hills. Each opportunity has been mapped as Palisades Plaza (none well as categorized for quick reference with other key information (i.e. co- 16650 E Palisades Blvd Strip Center shown) tenancy, available space, asking rates, etc.). Building relationships with the Red Rock Plaza 16425 E Palisades Blvd Strip Center land owners, property managers, and commercial brokers will allow this list Safeway Center 13733 Fountain Hills Blvd Grocery Anchored to be constantly updated to ensure the most accurate and relevant Eagle Mtn Village 14845 E Shea Blvd Strip Center information is available for retailers and developers that are looking for opportunities in Fountain Hills.

Prepared for Fountain Hills_AZ by Retail Strategies 36 Retail Prospects Data vs. Real Estate

Time to source and open a retailer in a new market takes approximately 18 to 36 months or more, which is one reason we seek at least a three year contract with our clients. Ultimately, we cannot determine where a retailer will locate. Our goal is to market sites and opportunities they may have never heard of or considered in the past. We’re a matchmaker of opportunity in the industry. If they determine a market is not in their strategic plan currently, our mission will be to supply them with research and marketing materials that will entice them to keep the community in mind as they expand and grow.

~ Tiffany Kilpatrick, Retail Strategies Portfolio Director Formerly with Hibbett Sports, Opened 130 Locations

Prepared for Fountain Hills_AZ by Retail Strategies 38 Discover: Top Categories for Recruitment

Restaurants Automotive

General Apparel & Shoe Merchandise

*** For the purpose of this study Focus Categories identify where the market can support the most significant growth with market conditions as they exist today. However, Retail Strategies recruitment efforts will in no way be solely limited to retailers that fall within the top four categories.

Prepared for Fountain Hills_AZ by Retail Strategies 39 Retail Prospects

Restaurants ~1,200 - 7,000 sq. ft. (per) 20+ Prospects Fast Casual and Fast Food Restaurants account for the majority of the Restaurant sector.

This growth is due to value and convenience. The ability to control the time and quality at a value has changed the way we eat out. In tandem Limited Service Eating Restaurants provide lower-to-moderate price points and there is typically no tip involved. Approximately 40% of all expansion among publically traded retail and restaurant companies will be in this category. You will see a great deal of Retail Strategies efforts reflect this with a heavy focus on this category.

Prepared for Fountain Hills_AZ by Retail Strategies 40 Retail Prospects

Automotive ~2,000 - 20,000 sq. ft. 13+ Prospects Stable sector that typically takes 1-2 acres lots and is proven to sustain regardless of the economy. Automotive is a category that does well in any economy and especially during a downturn. The automotive industry tends to thrive in metropolitan areas due to the heavy dependence on automotive as the primary form of transportation. The longer commutes and dependence on vehicles for families, farms, and professional needs put wear and tear on the vehicle that drive up sales in the automotive category for parts and oil changes. During strong economic times, people replace their vehicles. During a downturn in the economy, people repair their vehicles. Both economies support automotive.

There is a strong expansion plan among the concepts within automotive and they don’t mind locating in very close proximity to each other. They typically will want about 1 acre of land for a BTS, build to suit, opportunity. They

preferPrepared forto Fountain be inHills_AZ high by Retail traffic Strategies areas with convenient access, good visibility and 41 strong signage. Retail Prospects

General Merchandise ~8,000 - 125,000 sq. ft. 6+ Prospects

Variety oriented stores are a great option to revitalize second or third generation space.

The retailers under the General Merchandise category are generally classified as Discount Stores and Specialty Stores. Value and convenience are driving retail trends today. A variety of general merchandise stores are looking for vacant space existing in a shopping center where they can have low rent and revitalize a shopping center. Although value stores do not always top the list in what a community desires, they still generate a healthy amount of sales tax and jobs. In addition, they reduce vacancy creating synergy that sparks additional retail and restaurant expansion.

Prepared for Fountain Hills_AZ by Retail Strategies 42 Retail Prospects

Apparel/Shoe Stores ~1,200 - 25,000 sq. ft. 5+ Prospects

Apparel stores like to cluster and create cross shopping with strong co-tenants.

Apparel is a category that shows evidence of bifurcation. The luxury brands are thriving and the value brands are thriving. The apparel stores that offer an average product at an average price are shrinking. During the recession, consumers learned they can receive a quality product at a discounted price. Post-recession consumer confidence is at a 7 year high. Consumers are saving their disposable income for luxury items and purchasing the rest of the their products at a discount. Apparel is a popular category for online shopping which has been a challenge for brick-and- mortar expansion. Customer service and customization are more important than ever.

Prepared for Fountain Hills_AZ by Retail Strategies 43 ROI – Investing in Retail

Success breeds success. Retail builds on retail. Retail economic impact adds up quickly. Retail attracts the workforce that attracts the primary jobs. Retail influences executives looking to locate their company in your community. Retail enhances quality of life that brings your children home. Retail builds tax base. Retail adds jobs from entry level to managerial. Retail builds communities.

Prepared for Fountain Hills_AZ by Retail Strategies 44 Outreach Retail Recruitment: Outreach

Retail is a dynamic industry that is constantly changing…

Retail decision makers may be in-house corporate real estate staff, local, regional, or national tenant representative brokers, preferred developers, consultants, etc. Retail Strategies maintains a database of nearly 10,000 unique industry contacts that is being constantly updated as these players change. As a result, your retail recruitment team can easily identify the appropriate decision makers and 9,703 present sites in Fountain Hills quickly in order to determine level of interest and begin work to address any potential barriers to market retailers’ contact entry. information & site Retail Strategies’ database not only contains WHO makes the retail development decisions for Fountain Hills but also WHAT each selection criteria retailer requires from a market ( i.e. demographics, psychographics, trade area parameters) and real estate perspective ( i.e. size, co- tenancy, access, visibility). Each individual retailer has their own unique needs that must be met before taking a new store location to their real estate committee. By having this information available we are able to prepare custom site specific packages of information to illustrate that Fountain Hills has the trade area and real estate to support a successful location.

Prepared for Fountain Hills_AZ by Retail Strategies 46 Retail Recruitment: Conference Representation

Building relationships locally, Who We Connect With regionally, On Your Behalf NATIONALLY on Retail recruitment is a complex behalf of Fountain business and involves multiple parties. To ensure we are creating the best TheHills International Council of environment for deals to happen Our Shopping Centers (ICSC) and Retail team will be contacting those parties Live are the leading global trade necessary to get deals done: associations for the retail industry. Local property owners ICSC and Retail Live help the public and private sectors understand the Brokers industry through educational Developers programs, publications, certification programs, and (most popular) Deal Investors Making Conventions. Each year these Directors of real estate two organizations put on over twenty conferences for real estate Franchisees professionals to connect to discuss Local business owners deals. Fountain Hills will be invited 2017 Conferences to all networking events and will Many other decision makers have access to a table at our booth. Nashville Las Vegas Austin Atlanta Chicago Dallas New Orleans New York City Washington DC Los Angeles Charlotte Orlando

Prepared for Fountain Hills_AZ by Retail Strategies 47 Marketing Guide

Prepared for Fountain Hills_AZ by Retail Strategies 48 Implementing your Strategy Discover Connect Implement Contact developers, retailers, tenant representatives and franchisee groups both regionally and nationally

Make direct and indirect connections through conference representation, in person meetings, phone calls and emails

Coordinate and Focus communicate our efforts with local brokers, property owners and city staff on an on going basis

Follow industry trends as well as changes in your local market to continuously adjust our strategy and improve our efforts to maximize the retail potential in your Prepared for Fountain Hills_AZ by Retail Strategies community

Thank you!

120 18th Street South, Suite 120, Birmingham, AL 35233 205.314.0386 retailstrategies.com Fountain Hills, AZ

Retail Recruitment Plan Retail Strategies Overview

We are retail real estate professionals. We will tell your story in a way that matters to retailers.

1 Goal 130 4:1 44 20 34 Create Success States Our Team has Licensed Retail Real Estate Communities Served Client to Staff Ratio Located Retailers Team Members for Our Clients Professionals

Prepared for Fountain Hills_AZ by Retail Strategies 2 Our Partnership

Scott Cooper Economic Development Director

Ashton Antonetti Bear Burnett Joe Fackel Portfolio Director Retail Development Executive Vice Director President

Prepared for Fountain Hills_AZ by Retail Strategies 3 Our Partnership

Executive Team

Marketing & Research

Accounting

Prepared for Fountain Hills_AZ by Retail Strategies Retail Strategies Process

Prepared for Fountain Hills_AZ by Retail Strategies 5 Your Research Discover: Research

Memberships, Research Partners & Subscriptions & Geographic Information Customized Reports Systems

Prepared for Fountain Hills_AZ by Retail Strategies 7 Discover: Research where does all this information come from? here are the demographic data sources used

Prepared for Fountain Hills_AZ by Retail Strategies 8 Discover: Research

Prepared for Fountain Hills_AZ by Retail Strategies 9 Discover: High Level

State of Arizona Population 6.9 Million

Phoenix-Mesa-Scottsdale, AZ CBSA Population 4,681,190

Fountain Hills, AZ Population 24,278

Prepared for Fountain Hills_AZ by Retail Strategies 10 Discover: Drive Time & Radius

Prepared for Fountain Hills_AZ by Retail Strategies 11 Discover: Drive Time & Radius

Drive-Time & Radius 3-Mile 5-Mile 10-Mile 5-Minute 10-Minute 15-Minute Traditionally when retailers and developers first Category look at a market for the purpose of evaluating Radius Radius Radius Drive Time Drive Time Drive Time demographic information relevant to market Current Year potential they begin with radius rings. This Estimated 25,137 32,049 134,980 12,454 24,863 42,026 approach can work for a quick simple analysis but Population fails to take into account the unique aspects necessary for an accurate and complete Number of 11,405 14,063 58,685 6,027 11,312 18,627 assessment. Households

Projected Annual By assessing demographic make-up based on 7.60% 7.24% 8.52% 8.11% 7.53% 7.13% drive-time geographies we are able to overcome Growth (5 YR) some of the short falls related to the radius ring Median HH Income $73,919 $85,355 $86,290 $65,716 $74,413 $79,616 method. Using distances along actual streets and 2017 highways provides a more narrowly focused way to look at a trade area. This perspective takes in to Current Year 50.3 49.3 45 50.8 50.3 47.8 account natural boundaries (mountains, rivers, Average Age lakes, etc.) as well as man-made factors (bridges, railroad tracks, interstate networks, etc.) that Average Home $707,691 $793,668 $821,677 $584,601 $716,682 $805,344 traditionally affect consumers shopping patterns. Value

Neither the drive-time nor the radius ring methods Current Year % 42% 45% 49% 40% 43% 47% are able to take into account certain factors Bachelor's Degree necessary to fully assess a retail trade area. In the next section you will see how we have taken this process a step further by using real consumer data Daytime Population 21,849 27,704 156,772 11,731 21,279 41,624 to identify where consumers are actually coming from to shop in your market. By combining mobile tracking data with an assessment of other factors Labor Force 11,805 15,677 67,779 5,882 11,680 21,109 unique to your community we are able to define a custom trade area that goes beyond these predefined boundary methods. The variables on the chart above are all important variables considered by retail site selectors

Prepared for Fountain Hills_AZ by Retail Strategies * Demographics pulled from city center as identified by internal GIS / Data Source: STI PopStats 12 Discover: Mobile Tracking

Mobile Data Collection

Our mobile tracking study uses data collected from mobile phone users who displayed in a color-coded distribution map that indicates the percent of visitors have agreed within their apps and phone settings to enable location information. who have travelled to the study area from each square-mile block in a map grid. By drawing a polygon around a retailer, we are able to gather data about the Once we draw a polygon around a study area, we then specify a time frame in home and work location of customers who have actively used their mobile which to measure customer location patterns. The resulting data is gathered device while in the defined area. For this study, we have used mobile GPS from shoppers who visited the defined location during the designated time tracking data to examine Fountain Hills’ core consumer trade area using the period. When assessing the results of a mobile study, we must keep in mind Safeway, Target and Tractor Supply Co. stores located in Fountain Hills, AZ. The that the number of visitors that are tracked is a very small percentage of the chosen retailers are large traffic generators that might attract different overall population who have visited the study area. These data give us accurate consumer groups drawn to different categories and levels of retail. The results insights to the distribution of visitors, but not the overall quantity of visitors. of this study are Locations Tracked: Time Period Safeway Tracked: Target August1, 2016 – Tractor Supply Co. August 1, 2017

Safeway Target Tractor Supply Co. 13733 Fountain Hills Blvd 16825 E Shea Blvd 17130 East Shea Blvd

Prepared for Fountain Hills_AZ by Retail Strategies 13 Discover: Custom Trade Area

Primary Trade Area Each retailer has a specific formula of market criteria they use to determine if they will have a profitable store. Understanding your trade area is extremely important because it sets the parameters for measuring demographic criteria and spending potential sought by retailers and developers. Municipal boundaries, radius rings and drive times are a start to evaluating this information. However, these predefined boundaries are unable to take into account the unique aspects affecting the actual consumer pulling power and local geography of your community. For these reasons a customized trade area is the next step to analyzing a market. A trade area is the geographic area from which a community generates the majority of its customers. A community can have more than one trade area. We define your primary trade area the core base of consumers highly likely to shop and eat in the market at least once a month. Your primary trade area has been created by combining the results from the mobile tracking data with other factors such as: current retail mix in your community, traffic patterns, destination attractions and proximity to competing markets. The time and distance consumers are willing to travel to shop is not “one size fits all”. Therefore retailers will analyze their own trade areas differently taking in to account things like existing store locations, competition within their retail Retail Strategies has created the customized trade area shown in the map above and outlined in red which is category, and convenience. focused on a consumer who might travel for their primary shopping destination.

Prepared for Fountain Hills_AZ by Retail Strategies 14 OurDiscover: Research Custom Trade Area 39,991 2017 Estimated Population Custom Trade Area

42,092 7.8% projected 2022 population projected growth rate 2017-2022

49 50 male average age female average age

Prepared for Fountain Hills_AZ by Retail Strategies Data Source: STI:PopStats 15 OurDiscover: Research Custom Trade Area

CURRENT YEAR ESTIMATED POPULATION BY RACE

4% 3%1% 4% Race

Asian

African American

Latino

White

Other

88%

Prepared for Fountain Hills_AZ by Retail Strategies Data Source: STI: PopStats: U.S. Census; ACS; NCES (public and private records); FFIEC 16 OurDiscover: Research Custom Trade Area

CURRENT YEAR ESTIMATED HOUSEHOLDS BY HOUSEHOLD SIZE

8,655

21,613 number of households 3,985 $90,180 median household income 2,149 1,778

611 178 96 23% 50% 12% 10% 4% 1% 1% 1-person 2-person 3-person 4-person 5-person 6-person 7 or more household household household household household household person household

Prepared for Fountain Hills_AZ by Retail Strategies Data Source: STI: PopStats – U.S. Census; U.S. Postal Service 17 OurDiscover: Research Custom Trade Area

CURRENT YEAR ESTIMATED HOUSING UNITS BY TENTURE

17,452

14,266 $832,658 average housing unit value

Vacant Housing Units Occupied Housing Units Owner-Occupied Renter-Occupied 4,161 3,186

Vacant Housing Occupied Housing Owner-Occupied Renter-Occupied Units Units

Prepared for Fountain Hills_AZ by Retail Strategies Data Source: STI: PopStats - U.S. Census; U.S. Postal Service; FFIEC, Yardi Matrix 18 Discover: Custom Trade Area Our Research DAYTIME POPULATION

38,553 daytime population

3% 29% 9% 6% 33% 2% 18%

Children at home Retired/Disable persons Homemakers Work at Home Employed Unemployed Student Populations

CURRENT YEAR ESTIMATED POPULATION AGE 25+ BY EDUCATIONAL ATTAINMENT

DOCTORATE DEGREE 595

PROFESSIONAL SCHOOL DEGREE 1,386

MASTER'S DEGREE 4,369

BACHELOR'S DEGREE 9,651

ASSOCIATE DEGREE 2,590

SOME COLLEGE, NO DEGREE 6,406

HIGH SCHOOL GRADUATE (OR GED) 4,938

SOME HIGH SCHOOL, NO DIPLOMA 790

LESS THAN 9TH GRADE 170

Prepared for Fountain Hills_AZ by Retail Strategies Data Source: STI: WorkPlace National Center for Education Statistics (NCES) 20 OurDiscover: Research Beyond the demographics

Lifestyle reports allow our retail prospects with the distinct, behavioral market BIG DATA to be purchasing patterns of the segments. Selection of the summed up into a consumers in your market. Esri variables used to identify Tapestry Segmentation is a consumer markets begins with simple narrative on the geodemographic segmentation data that includes household personality of the system that integrates consumer characteristics such as single majority of your traits with residential person or family, income, households. characteristics to identify markets relationships (married or and classify US neighborhoods. multigenerational), and tenure; Just because a two people fall Neighborhoods with the most personal traits such as age, sex, within the same group similar characteristics are education, employment, and demographically does not mean grouped together, while marital status; and housing they are identical consumers. It is neighborhoods with divergent characteristics like home value or rent, type of housing (single for this reason that demographic characteristics are separated. family, apartment, town house, or information alone does not Internally homogenous, externally mobile home), seasonal status, provide a complete picture of your heterogeneous market segments and owner costs relative to trade area potential. We must go depict consumers' lifestyles and income. In essence, any beyond the demographics to life stages. Tapestry Segmentation combines the "who" of lifestyle characteristic that is likely to understand consumer lifestyles demography with the "where" of differentiate consumer spending and spending behavior based on local geography to create a and preferences is assessed for personality in order to better align classification model with 67 use in identifying consumer markets.

Prepared for Fountain Hills_AZ by Retail Strategies 21 Discover: Tapestry Segmentation

Tapestry includes 67 distinct market segments and 14 summary groups Tapestry profiles enable the comparison of consumer markets across the country for any area

Prepared for Fountain Hills_AZ by Retail Strategies 22 ESRIOurDiscover: Research Tapestry Tapestry Segmentation Segmentation

TAPESTRY HOUSEHOLD SEGMENTATION AREA PROFILE 5 mile Radius – City Center, Fountain Hills, AZ

33.4%

17.7% 17.2%

10.3%

7.2%

Exurbanites Silver & Gold Top Tier 1A Golden Years Midlife 1E 9A 9B Constants 5E

* Remaining percentage is made up of various household groups not represented in top five segmentations. Full tapestry profile report has been provided for further examination.

Prepared for Fountain Hills_AZ by Retail Strategies Source: Esri 23 Discover: Tapestry Segmentation

TAPESTRY HOUSEHOLD SEGMENTATION AREA PROFILE 5 mile Radius – City Center, Fountain Hills, AZ Household Percent of Median Median Lifestyle Traits Segmentation Households Age Income

• A larger market of empty nesters, are married couples with no children. • Sociable and hardworking, they still find time to stay physically fit. Exurbanites 33.4% 49.6 $98,000 • Consumers are more interested in quality than cost. They take pride in their homes and foster a sense of personal style.

• Housing units are owner occupied with the highest home values—and above average use of mortgages. • Annually, earn more that three times the US median household income, Top Tier 17.2% 46.2 $157,000 primarily from wages and salary, but also self employment income and investments. • They regularly cook meals at home, attentive to good nutrition and fresh organic foods.

• These neighborhoods are found in large metropolitan areas, outside central cities. Scattered across the US. Golden Years 10.3% 51 $61,000 • Residents are well educated • These consumers are well connected: Internet access is used for everything from shopping to paying bills to monitoring investments and entertainment

• Primarily married couples, with a growing share of singles. Attentive to price, but not at the expense of quality, they prefer to buy Down the Road 7.2% 45.9 $48,000 • American and natural products. • Their lifestyle is more country than urban.

Prepared for Fountain Hills_AZ by Retail Strategies Source: Esri 24 Focus Categories Discover: Focus Categories

Utilizing a strategic Retail Strategies uses STI: Market Outlook to Our Peer Analysis begins by running a approach to determine provide accurate and reliable supply-demand demographic profile based on a specified where your market can insight used to identify the consumer demand drive-time from the major retail node in your gaps in your trade area. The data for STI: market. Then comparing certain variables ( i.e. support sustainable Market Outlook is derived from annual retail residential population, daytime population, sales and expenditures from the following median household income, and market growth is the key to three major sources of information: U.S. supply) to the same drive-time geography focused retail recruitment Bureau of Labor Statistics' Consumer from the major retail node in other markets Expenditure (CE) Survey - Demand data is within your region of the country. Taking it a derived from this source. U.S. Census Retail Strategies' approach to retail take it a step further we then assess the retail Bureau's Census of Retail Trade (CRT) recruitment begins by identifying four focus currently located within the peer markets with reports - These annual and monthly reports retail categories. Using a process that the retail as it exists in your market today. The contribute to Market Outlook's supply data. combines: market supply and demand, peer last step of this phase is to preform a void U.S. Census Bureau's Economic Census - community comparison, industry insight, as analysis to identify the specific retailers located Supply data is also derived from this source, well as our own experience and intuition, we within those markets that are not currently which provides an even more detailed view are able to identify the specific categories of located within Fountain Hills. than the CRT reports. Industries for the retail where your market is most likely to consumer expenditures survey are Step 3: What We Know support growth. However, it is important to categorized and defined by the North keep in mind that our outreach on behalf of Our approach would not be complete without American Industry Classification System your community will never be strictly limited this last step. This is because if we were to (NAICS). to retailers within the resulting categories. base our efforts solely on what the data tells us Our strategic approach to identifying your we would be leaving out the many variables focus categories can be broken down into influencing retailers actual growth aspirations. the following 3 steps: Step 2: Peer Analysis Retailer’s strategies are constantly changing and our team is actively tracking expansions Step 1: Gap Analysis Identification and comparison of similar and closures of retailers on a national, regional Preforming a gap analysis is the first step communities to measure your retail base and and local level. By monitoring the latest as it because it provides a direct comparison identify opportunities from a categorical relates to these important industry trends we between annual retail sales and consumer perspective is the next step in our process. are able to combine what the data tells us with spending on a categorical level. real world insight to focus on expanding concepts looking for markets just like yours. Prepared for Fountain Hills_AZ by Retail Strategies 26 Discover: Total Market Supply

Total Market Supply $360,512,407

This represents the amount captured by businesses located in the defined trade area by block group. The areas with darker green are capturing more consumer dollars.

Prepared for Fountain Hills_AZ by Retail Strategies 27 Discover: Total Market Demand

Total Market Demand $731,576,222

This represents the amount spent by consumers located in the defined trade area by block group. In the dark green areas the consumer demand is higher.

Prepared for Fountain Hills_AZ by Retail Strategies 28 Discover: Opportunity Gap

Total Market Leakage $371,063,815

Prepared for Fountain Hills_AZ by Retail Strategies 29 Discover: Opportunity Gap

CUSTOMIZED RETAIL CATEGORY GAP ANALYSIS

General Merchandise Stores $52,530,430

Food and Beverage Stores $42,839,323

Health & Personal Care Stores $20,761,166

Clothing & Clothing Accessories Stores $17,391,233

Foodservice and Drinking Places $12,768,135

Automotive Parts, Accessories, & Tire Stores $8,142,465

Sporting Goods, Hobby, Book, Music Stores $6,873,354

Electronics & Appliance Stores $4,666,209

Furniture and Home Furnishings Stores $3,560,928

Prepared for Fountain Hills_AZ by Retail Strategies Data Source: STI: Market Outlook 30 Discover: Peer Analysis

TRADE AREA COMPARISON REPORT Target 5 Min Drive Time

Employed Median HH Seasonal % City State Residential Pop Market Supply Daytime Pop Income Population

Fountain Hills AZ 25,603 21,288 $74,865 $243,748,718 30.4%

Peer Average 28,207 30,669 $63,206 $395,076,127 24.6%

Green Valley AZ 29,359 30,342 $48,824 $324,413,246 31.6%

Sahuarita AZ 28,187 32,356 $49,832 $355,443,597 24.7%

Felton CA 27,076 29,309 $90,963 $505,371,538 10.0%

Prepared for Fountain Hills_AZ by Retail Strategies 31 Discover: Peer Analysis

PEER ANALYSIS BY RETAIL CATEGORY

6 5

4 4 3 3 3

1 1 1 1 0 0 0 Coffee, Juice & Computer & General Grocery & Hardware & Hobbies & Limited Service Quick Service Sports & Smoothie Electronics Merchandise Supermarket Garden Crafts Restaurants Restaurants Recreation Fountain Hills Peer Average

Prepared for Fountain Hills_AZ by Retail Strategies 32 RealOurSummary Estate/Market Research SWOT Summary

STRENGTHS WEAKNESSES • Highly Affluent Clientele •High % of non primary residences • 45% of population with (seasonality) Bachelors Degree or higher •Very few peer markets • Avg HH Income: $103,336 •Functional Obsolescence Retail • Ave Disposable: $78,656 Product •Retail Trade Bifurcation •Topography

OPPORTUNITIES THREATS • Significant Retail • Consolidation of national retailers with other locations at Shea & 101 Leakage and/or Frank Lloyd Wright Blvd as • Plot 208 – Repurpose leases expire • Park Place... • Over-levered property owners • Anticipated rising interest rates

Prepared for Fountain Hills_AZ by Retail Strategies 33 BootsReal Estate on Analysisthe Ground Boots on the Ground

Purpose Information Collected

To identify and record Address Available Space in Center the primary real estate Property Description Parcel Size (if vacant land) opportunities within the market. Coordinates Existing Tenants (if existing) Listing Agent (if possible) Traffic Count at Property This analysis is performed by Contact Info for Agent or Owner Summary of Recruitment licensed real estate professionals with more than 15 years of Web Address for Agent or Owner Opportunities Specific to Property experience with development, leasing, and redevelopment. Link to Property Info on Agent or Specific Prospects for Property Owner’s Website Overall Strategy for Property Google Earth Link to Aerial Photo General Comments Google Earth Link to Ground Photo

Total Size of Center (if existing)

Prepared for Fountain Hills_AZ by Retail Strategies 35 Real EstateCurrent Analysis: Retail Retail Overview Focus Zones

Prepared for Fountain Hills_AZ by Retail Strategies 36 RealCurrent Estate RetailAnalysis: Overview Focus Zones

Zone 1&2: Mostly New Development Opportunities Zone 3&4: New Infill Opportunities / Asset Management)

Prepared for Fountain Hills_AZ by Retail Strategies 37 RealCurrent Estate Analysis:Retail Overview Property Catalog

Fountain View Village 13525 N Fountain Hills Blvd Strip Center Vacant Land 13545 N Fountain Hills Blvd Vacant Land Retail Strategies has cataloged many different retail real estate opportunities Palisades Center 16730 E Palisades Blvd Strip Center within the city limits of Fountain Hills. Each opportunity has been mapped as Palisades Plaza (none well as categorized for quick reference with other key information (i.e. co- 16650 E Palisades Blvd Strip Center shown) tenancy, available space, asking rates, etc.). Building relationships with the land Red Rock Plaza 16425 E Palisades Blvd Strip Center owners, property managers, and commercial brokers will allow this list to be Safeway Center 13733 Fountain Hills Blvd Grocery Anchored constantly updated to ensure the most accurate and relevant information is Eagle Mtn Village 14845 E Shea Blvd Strip Center available for retailers and developers that are looking for opportunities in Fountain Hills.

Prepared for Fountain Hills_AZ by Retail Strategies 38 Retail Prospects Data vs. Real Estate

~ Tiffany Kilpatrick, Retail Strategies Portfolio Director Formerly with Hibbett Sports, Opened 130 Locations

Prepared for Fountain Hills_AZ by Retail Strategies 40 Discover: Top Categories for Recruitment

Restaurants Automotive

General Apparel & Shoe Merchandise

Prepared for Fountain Hills_AZ by Retail Strategies 41 Retail Prospects

Representative Brands: Restaurants ~1,200 - 7,000 sq. ft. (per) 20+ Prospects

Fast Casual and Fast Food Restaurants account for the majority of the Restaurant sector.

Prepared for Fountain Hills_AZ by Retail Strategies 42 Retail Prospects

Automotive ~2,000 - 20,000 sq. ft. Representative Brands: 13+ Prospects

Stable sector that typically takes 1-2 acres lots and is proven to sustain regardless of the economy.

Automotive is a category that does well in any economy and especially during a downturn. The automotive industry tends to thrive in the deep south and in less populous areas due to the heavy dependence on automotive as the primary form of transportation. The longer commutes and dependence on vehicles for families, farms, and professional needs put wear and tear on the vehicle that drive up sales in the automotive category for parts and oil changes. The DIY, do it yourself, attitudes in non-major metropolitan communities support the auto parts stores more than the full service auto repair centers. During strong economic times, people replace their vehicles. During a downturn in the economy, people repair their vehicles. Both economies support automotive.

Prepared for Fountain Hills_AZ by Retail Strategies 43 Retail Prospects

General Merchandise ~8,000 - 125,000 sq. ft. Representative Brands: 6+ Prospects

Variety oriented stores are a great option to revitalize second or third generation space.

Prepared for Fountain Hills_AZ by Retail Strategies 44 Retail Prospects

Apparel/Shoe Stores Representative Brands: ~1,200 - 25,000 sq. ft. 5+ Prospects

Apparel stores like to cluster and create cross shopping with strong co-tenants.

Apparel is a category that shows evidence of bifurcation. The luxury brands are thriving and the value brands are thriving. The apparel stores that offer an average product at an average price are shrinking. During the recession, consumers learned they can receive a quality product at a discounted price. Post- recession consumer confidence is at a 7 year high. Consumers are saving their disposable income for luxury items and purchasing the rest of the their products at a discount. Apparel is a popular category for on-line shopping which has been a challenge for brick-and-mortar expansion. Customer service and customization are more important than ever.

Prepared for Fountain Hills_AZ by Retail Strategies 45 ROI – Investing in Retail

Prepared for Fountain Hills_AZ by Retail Strategies 46 Outreach Retail Recruitment: Outreach

Retail is a dynamic industry that is constantly changing…

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120 18th Street South, Suite 120, Birmingham, AL 35233 205.314.0386 retailstrategies.com TOWN OF FOUNTAIN HILLS TOWN COUNCIL AGENDA ACTION FORM

Meeting Date: 3/6/2018 Meeting Type: Regular Session

Agenda Type: Consent Submitting Department: Administration

Staff Contact Information: Bevelyn J. Bender, Town Clerk; 480-816-5115; [email protected] Council Goal: Strategic Values: Civic Responsibility C3 Solicitfeedback in decision-making

REQUEST TO COUNCIL (Agenda Language): CONSIDERATION of approving the TOWN COUNCIL MEETING MINUTES from January 30 and February 6, 2018.

Applicant: NA Applicant Contact Information: Property Location: Related Ordinance, Policy or Guiding Principle: A.R.S. §38-431.01 Staff Summary (background):The intent of approving previous meeting minutes is to ensure an accurate account of the discussion and action that took place at that meeting for archival purposes. Approved minutes are placed on the Town's website in compliance with state law. Risk Analysis (options or alternatives with implications): Fiscal Impact (initial and ongoing costs; budget status): Budget Reference (page number): Funding Source: NA

If Multiple Funds utilized, list here: Budgeted; if No, attach Budget Adjustment Form: NA Recommendation(s) by Board(s) or Commission(s): Staff Recommendation(s): Approve List Attachment(s): None

SUGGESTED MOTION (for council use): Move to approve the consent agenda as listed.

Prepared by: Approved:

Bevelyn Bender, Town Clerk " 2/26/2018

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TOWN OF FOUNTAIN HILLS

TOWN COUNCIL AGENDA ACTION FORM

Meeting Date: 3/6/2018 Meeting Type: Regular Session

Agenda Type: Regular Submitting Department: Community Services

Staff Contact Information: Grace Guetter Marketing & Communications Coordinator [email protected]

REQUEST TO COUNCIL (Agenda Language): CONSIDERATION OF Awarding a Cooperative Purchase Agreement contract number C2018-083 with Pro Em Party and Event Rentals for up to $75,000.00 with the option of four (4) one year renewal terms.

Applicant: Applicant Contact Information:

Owner:

Owner Contact Information: Property Location: Related Ordinance, Policy or Guiding Principle: The Town is permitted, pursuant to Section 3-3-27 of the Town Code, to make purchases under the City Contract, at its discretion and with the agreement of the awarded Contractor, and the City Contract permits its cooperative use by other public entities, including the Town. Staff Summary (background): Staff has contracted with Pro Em for many years prior to this CPA for use of their event rentals for the many town organized and co-sponsored events that require event equipment such as light towers, portable restrooms, staging, tenting, etc. Since this company is a company whose services are used each year, staff enters into a long-term Cooperative Purchase Agreement with Pro Em for $75,000.00 a year with the option of four (4) one year terms not to exceed $375,000.00. Risk Analysis (options or alternatives with implications): If this contract is not approved staff will not be able to rent the equipment required to produce successful and safe special events for Town residents and visitors. Fiscal Impact (initial and ongoing costs; budget status): The Community Services Department already has budgets outlined for these expenditures for each of the events that will guide and limit spending as outlined in the contract attached. Budget Reference (page number): 242 Funding Source: NA IfMultiple Funds utilized, list here: Various Budgeted; if No, attach Budget Adjustment Form: Yes Recommendation(s) by Board(s) or Commission(s): Staff Recommendation(s): Recommend approval List Attachment(s): Contract 2018-083

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Contract No. 2018-083

COOPERATIVE PURCHASING AGREEMENT BETWEEN THE TOWN OF FOUNTAIN HILLS AND PRO EM OPERATIONS LLC

THIS COOPERATIVE PURCHASING AGREEMENT (this “Agreement”) is entered into as of February 7, 2018, between the Town of Fountain Hills, an Arizona municipal corporation (the “Town”), and Pro Em Operations LLC, a Delaware corporation (the “Contractor”).

RECITALS

A. After a competitive procurement process, the City of Surprise, Arizona (“City”) entered into Contract # 318000002, effective September 22, 2017, (the “City Contract”), attached as Exhibit 1, with the Contractor for professional event equipment rentals and related services.

B. The Town is permitted, pursuant to Section 3-3-27 of the Town Code, to make purchases under the City Contract, at its discretion and with the agreement of the awarded Contractor, and the City Contract permits its cooperative use by other public entities, including the Town.

C. The Town and the Contractor desire to enter into this Agreement for the purpose of (i) acknowledging their cooperative contractual relationship under the City Contract and this Agreement, (ii) establishing the terms and conditions by which the Contractor may provide the Town with professional event equipment rentals and related services, as more particularly set forth in Section 2 below (the “Goods and Services”) and (iii) setting the maximum aggregate amount to be expended pursuant to this Agreement related to the Goods and Services.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing introduction and recitals, which are incorporated herein by reference, the following mutual covenants and conditions, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Town and the Contractor hereby agree as follows:

1. Term of Agreement. This Agreement shall be effective as of the date first set forth above and shall remain in full force and effect until February 7, 2019. This Agreement may be extended in one year increments for a maximum of four (4) additional terms, upon the mutual agreement of the parties in writing. The Agreement may be terminated prior to its termination date as otherwise provided in this Agreement or the City Contract.

2. Scope of Work. The scope of work for this Agreement is set forth in the City Contract, incorporated by this reference. Changes to the Scope of Work must be agreed upon by the parties in a written change order (“Change Order”). Each Change Order approved and accepted 1 by the parties pursuant to this Agreement shall (i) contain a reference to this Agreement and the City Contract and (ii) be attached hereto as Exhibit 2 and incorporated herein by reference. Change Orders submitted without referencing this Agreement and the City Contract will be subject to rejection.

2.1 Inspection; Acceptance. All Goods and Services are subject to final inspection and acceptance by the Town. Upon discovery of non-conforming Goods and Services, the Town may elect to do any or all of the following by written notice to the Contractor: (i) waive the non-conformance; (ii) stop the work immediately; or (iii) bring Service into compliance and withhold the cost of same from any payments due to the Contractor.

3. Compensation. The Town shall pay Contractor an aggregate amount not to exceed $75,000 per year, and a maximum amount of $375,000 (including all renewals), for the Goods and Services.

4. Payments. The Town shall pay the Contractor monthly, based upon acceptance and delivery of Goods and Services performed and completed to date pursuant to the Scope of Work, and upon submission and approval of invoices. Each invoice shall (i) contain a reference to this Agreement and the City Contract and (ii) document and itemize all work completed to date. Contractor’s invoices for each task shall not exceed the amount set forth in the Proposal and City Contract. The invoice statement shall include a record of materials delivered, time expended and work performed in sufficient detail to justify payment. Additionally, invoices submitted without referencing this Agreement and the City Contract will be subject to rejection and may be returned.

5. Records and Audit Rights. To ensure that the Contractor and its subcontractors are complying with the warranty under Section 6 below, Contractor’s and its subcontractors’ books, records, correspondence, accounting procedures and practices, and any other supporting evidence relating to this Agreement, including the papers of any Contractor and its subcontractors’ employees who perform any work or services pursuant to this Agreement (all of the foregoing hereinafter referred to as “Records”), shall be open to inspection and subject to audit and/or reproduction during normal working hours by the Town, to the extent necessary to adequately permit (i) evaluation and verification of any invoices, payments or claims based on Contractor’s and its subcontractors’ actual costs (including direct and indirect costs and overhead allocations) incurred, or units expended directly in the performance of work under this Agreement and (ii) evaluation of the Contractor’s and its subcontractors’ compliance with the Arizona employer sanctions laws referenced in Section 6 below. To the extent necessary for the Town to audit Records as set forth in this Section, Contractor and its subcontractors hereby waive any rights to keep such Records confidential. For the purpose of evaluating or verifying such actual or claimed costs or units expended, the Town shall have access to said Records, even if located at its subcontractors’ facilities, from the effective date of this Agreement for the duration of the work and until three years after the date of final payment by the Town to Contractor pursuant to this Agreement. Contractor and its subcontractors shall provide the Town with adequate and appropriate workspace so that the Town can conduct audits in compliance with the provisions of this Section. The Town shall give Contractor or its subcontractors reasonable advance notice of intended audits. Contractor shall require its subcontractors to comply with the provisions of this Section by insertion of the requirements hereof in any subcontract pursuant to this Agreement.

2 6. E-verify Requirements. To the extent applicable under ARIZ. REV. STAT. § 41- 4401, the Contractor and its subcontractors warrant compliance with all federal immigration laws and regulations that relate to their employees and their compliance with the E-verify requirements under ARIZ. REV. STAT. § 23-214(A). Contractor’s or its subcontractors’ failure to comply with such warranty shall be deemed a material breach of this Agreement and may result in the termination of this Agreement by the Town.

7. Israel. Contractor certifies that it is not currently engaged in, and agrees for the duration of this Agreement that it will not engage in a “boycott,” as that term is defined in ARIZ. REV. STAT. § 35-393, of Israel.

8. Conflict of Interest. This Agreement may be canceled by the Town pursuant to ARIZ. REV. STAT. § 38-511.

9. Applicable Law; Venue. This Agreement shall be governed by the laws of the State of Arizona and a suit pertaining to this Agreement may be brought only in courts in Maricopa County, Arizona.

10. Agreement Subject to Appropriation. The Town is obligated only to pay its obligations set forth in this Agreement as may lawfully be made from funds appropriated and budgeted for that purpose during the Town’s then current fiscal year. The Town’s obligations under this Agreement are current expenses subject to the “budget law” and the unfettered legislative discretion of the Town concerning budgeted purposes and appropriation of funds. Should the Town elect not to appropriate and budget funds to pay its Agreement obligations, this Agreement shall be deemed terminated at the end of the then-current fiscal year term for which such funds were appropriated and budgeted for such purpose and the Town shall be relieved of any subsequent obligation under this Agreement. The parties agree that the Town has no obligation or duty of good faith to budget or appropriate the payment of the Town’s obligations set forth in this Agreement in any budget in any fiscal year other than the fiscal year in which this Agreement is executed and delivered. The Town shall be the sole judge and authority in determining the availability of funds for its obligations under this Agreement. The Town shall keep Contractor informed as to the availability of funds for this Agreement. The obligation of the Town to make any payment pursuant to this Agreement is not a general obligation or indebtedness of the Town. Contractor hereby waives any and all rights to bring any claim against the Town from or relating in any way to the Town’s termination of this Agreement pursuant to this section.

11. Conflicting Terms. In the event of any inconsistency, conflict or ambiguity among the terms of this Agreement, any Town-approved work orders, the City Contract and invoices, the documents shall govern in the order listed herein. Notwithstanding the foregoing, and in conformity with Section 2 above, unauthorized exceptions, conditions, limitations or provisions in conflict with the terms of this Agreement or the City Contract (collectively, the “Unauthorized Conditions”), other than the Town’s project-specific requirements, are expressly declared void and shall be of no force and effect. Acceptance by the Town of any work order or invoice containing any such Unauthorized Conditions or failure to demand full compliance with the terms and conditions set forth in this Agreement or under the City Contract shall not alter such terms and conditions or relieve Contractor from, nor be construed or deemed a waiver of, its requirements and obligations in the performance of this Agreement. 3 12. Rights and Privileges. To the extent provided under the City Contract, the Town shall be afforded all of the rights and privileges afforded to City and shall be “City” (as defined in the City Contract) for the purposes of the portions of the City Contract that are incorporated herein by reference.

13. Indemnification; Insurance. In addition to and in no way limiting the provisions set forth in Section 12 above, the Town shall be afforded all of the insurance coverage and indemnifications afforded to City to the extent provided under the City Contract, and such insurance coverage and indemnifications shall inure and apply with equal effect to the Town under this Agreement including, but not limited to, the Contractor’s obligation to provide the indemnification and insurance. In any event, the Contractor shall indemnify, defend and hold harmless the Town and each council member, officer, employee or agent thereof (the Town and any such person being herein called an “Indemnified Party”), for, from, and against any and all losses, claims, damages, liabilities, costs and expenses (including, but not limited to, reasonable attorneys’ fees, court costs, and the costs of appellate proceedings) to which any such Indemnified Party may become subject, under any theory of liability whatsoever (“Claims”), insofar as such Claims (or actions in respect thereof) relate to, arise out of, or are caused by or based upon the negligent acts, intentional misconduct, errors, mistakes or omissions, in connection with the work or services of the Contractor, its officers, employees, agents, or any tier of subcontractor in the performance of this Agreement.

14. Notices and Requests. Any notice or other communication required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered to the party at the address set forth below, (ii) deposited in the U.S. Mail, registered or certified, return receipt requested, to the address set forth below or (iii) given to a recognized and reputable overnight delivery service, to the address set forth below:

If to the Town: Town of Fountain Hills 16705 East Avenue of the Fountains Fountain Hills, Arizona 85268 Attn: Grady E. Miller, Town Manager

With copy to: Dickinson Wright PLLC 1850 North Central Avenue Suite 1400 Phoenix, Arizona, 85004 Attn: Fredda Bisman

If to Contractor: Pro Em Operations LLC 1450 East Grant Street Phoenix, Arizona 85034 Attn: Brent Mabb

or at such other address, and to the attention of such other person or officer, as any party may designate in writing by notice duly given pursuant to this subsection. Notices shall be deemed received (i) when delivered to the party, (ii) three business days after being placed in the U.S. Mail, properly addressed, with sufficient postage or (iii) the following business day after being given to 4 a recognized overnight delivery service, with the person giving the notice paying all required charges and instructing the delivery service to deliver on the following business day. If a copy of a notice is also given to a party’s counsel or other recipient, the provisions above governing the date on which a notice is deemed to have been received by a party shall mean and refer to the date on which the party, and not its counsel or other recipient to which a copy of the notice may be sent, is deemed to have received the notice.

[SIGNATURES ON FOLLOWING PAGES]

5 IN WITNESS WHEREOF, the parties hereto have executed and caused to be signed by their duly authorized representatives, this instrument on the date first written above/

“Town”

TOWN OF FOUNTAIN HILLS, an Arizona Municipal Corporation

______Grady E. Miller, Town Manager

ATTEST:

______Bevelyn J. Bender, Town Clerk

(ACKNOWLEDGEMENT)

STATE OF ARIZONA ) ) ss. COUNTY OF MARICOPA )

On ______, 2018, before me personally appeared Grady E. Miller, the Town Manager of the TOWN OF FOUNTAIN HILLS, an Arizona municipal corporation, whose identity was proven to me on the basis of satisfactory evidence to be the person who he claims to be, and acknowledged that he signed the above document, on behalf of the Town of Fountain Hills.

______Notary Public

(Affix notary seal here)

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

6 "Contractor"

OPERATIONS LLC

u^\V

Name: \\\^q\\v yXy^C Its: n^nsl- •V\"€S>.

(ACKNOWLEDGEMENT)

STATE OF ARIZONA ) ss. COUNTY OF MARICOPA ) On 2_||4 2018, before me personally appeared ^'C-fofiQ Qcxmcf, the \l\ce:. fica^OTch of Pfe^ €Sim , an Arizona limited liability corporation, whose identity was proven to me on the basis ofsatisfactory evidence to be the person who he claims to be, and acknowledged that he signed the above document, on behalf ofPro Em Operations LLC.

LETICIA ALICEA Notary Public, State of Arizona Maricopa County Notary Public My Commission Expires October 04, 2021

(Affix notary seal here) EXHIBIT 1 TO COOPERATIVE PURCHASING AGREEMENT BETWEEN THE TOWN OF FOUNTAIN HILLS AND PRO EM OPERATIONS LLC

[CITY CONTRACT]

See following pages.

EXHIBIT 2 TO COOPERATIVE PURCHASING AGREEMENT BETWEEN THE TOWN OF FOUNTAIN HILLS AND PRO EM OPERATIONS LLC

[CHANGE ORDERS]

See following pages.

TOWN OF FOUNTAIN HILLS

TOWN COUNCIL AGENDA ACTION FORM

Meeting Date: 3/6/2018 Meeting Type: Regular Session

Agenda Type: Regular Submitting Department: Administration

Staff Contact Information: Craig Rudolphy, Finance Director, 480-816-5162; [email protected]

REQUEST TO COUNCIL (Agenda Language): CONSIDERATION OF (1) four BUDGET TRANSFERS from the General Government Contingency: 1) $2,246.25 for holiday lighting of Town Hall; 2) $600,000.00 for additional contract costs for the Fire Station #2 relocation; 3) $50,000.00 for the May 15, 2018, special election for the primary property tax ballot question; and 4) $160,000.00 for additional/unbudgeted Interim Town Attorney costs; and (2) one BUDGET TRANSFER from Public Works to the Cottonwoods Maintenance District in the amount of $900.00 for an unbudgeted increase in landscaping costs.

Applicant: Applicant Contact Information:

Owner:

Owner Contact Information: Property Location: Related Ordinance, Policy or Guiding Principle: Staff Summary (background): 1) The Town incurred additional costs to install/remove holiday lighting on the Town Hall building. 2)The contract for the relocation of Fire Station #2 came in approximately $600,000 over the budgeted costs. Council approved the contract cost and this budget transfer is needed to fully fund the project. 3) The Town did not anticipate holding a special election for a primary property tax during the last budget cycle. This transfer will allow for a special election for the primary propoerty tax ballot question. 4) After the dismissal of the prior Town Attorney, an Interim Town Attorney was hired. This transfer will allow for the increased costs of the Interim Town Attorney. 5) After the budget was prepared last year for the Cottonwoods Maintenance District, the Town was informed of an increase in the landscaping costs for the District. This transfer will allow the increased costs to be paid. Risk Analysis (options or alternatives with implications): Without these transfers, the various programs will have a budget shortfall and not able to complete the work that is required. Fiscal Impact (initial and ongoing costs; budget status): $813,146.25 Budget Reference (page number): Funding Source: General Fund

If Multiple Funds utilized, list here: Budgeted; if No, attach Budget Adjustment Form: No

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TOWN OF FOUNTAIN HILLS

TOWN COUNCIL AGENDA ACTION FORM

Meeting Date: 3/6/2018 Meeting Type: Regular Session

Agenda Type: Regular Submitting Department: Public Works

Staff Contact Information: Justin T. Weldy, [email protected], 480-816-5133

REQUEST TO COUNCIL (Agenda Language): CONSIDERATION OF the second Amendment to Cooperative Purchase Agreement C2017-045, between M. R. Tanner Development and Construction, Inc. and the Town of Fountain Hills, in an amount not to exceed $2,500,000.00, for asphalt replacement and miscellaneous work

Applicant: NA Applicant Contact Information: NA

Owner: NA

Owner Contact Information: NA Property Location: Zone 1 Pavement Management Area Related Ordinance, Policy or Guiding Principle: NA Staff Summary (background): Note, this amendment is to amend a contract approved by Council on October 3, 2017, However, the underlying Chandler contract expired on January 22, 2018, and there was not sufficient time to complete a paving project of this size in that time frame. The total cost for fiscal year 2017-2018, will not be increased as result of this amendment.

In 2013 Town Council passed Resolution 2013-02 approving the Pavement Management Program. The Zone 1 Pavement Management Area is currently scheduled for pavement maintenance. Due to the age and conditions of the roads in Zone 1 staff has determined that certain collector and residential streets will require the top layer of asphalt to be replaced. Due to budget limitations, additional mill and overlay in Zone 1 is anticipated to be completed in FY2017-18 and slurry seal in FY18-19. Risk Analysis (options or alternatives with implications): The proposed mill and overlay is required to prevent more costly repairs in the future. Fiscal Impact (initial and ongoing costs; budget status): 2,500,000.00 Budget Reference (page number): 285 Funding Source: Highway User Revenue Fund If Multiple Funds utilized, list here: NA Budgeted; if No, attach Budget Adjustment Form: NA Recommendation(s) by Board(s) or Commission(s): NA Staff Recommendation(s): Staff recommends approval of the Second Amendment to Cooperative Purchasing Agreement C2017-045.

Page 1 of 2

TOWN OF FOUNTAIN HILLS

TOWN COUNCIL AGENDA ACTION FORM

Meeting Date: 3/6/2018 Meeting Type: Regular Session

Agenda Type: Regular Submitting Department: Public Works

Staff Contact Information: Justin T. Weldy, Public Works Director, [email protected] 480-816-5133

REQUEST TO COUNCIL (Agenda Language): CONSIDERATION OF Cooperative Purchase Agreement C2018-092, between Roadsafe Traffic Systems, Inc. and the Town ofFountain Hills, in an amount not to exceed $30,000.00 annually.

Applicant: NA Applicant Contact Information: NA

Owner: NA

Owner Contact Information: NA Property Location: NA Related Ordinance, Policy or Guiding Principle: NA Staff Summary (background): The Town's primary use of temporary traffic control devices (barricades) is to have available the equipment and resources necessary to control traffic in the event of a prolonged traffic signal outage, Town construction projects, and Town sponsored special events. This Contract will provide the services necessary to assist staff with implementing these safety measures. Risk Analysis (options or alternatives with implications): NA Fiscal Impact (initial and ongoing costs; budget status): $30,000.00 -- 60,000.00 Budget Reference (page number): 285 - 242 Funding Source: Multiple Funds ifMultiple Funds utilized, listhere: HURF, Community Services (Special Events) Budgeted; if No, attach Budget Adjustment Form: NA Recommendation(s) by Board(s) or Commission(s): NA Staff Recommendation(s): Staff recommends approval of the Cooperative Purchase Agreement as presented. List Attachment(s): Cooperative Purchase Agreement, 2018-092, Underlying Maricopa County Department of Transportation contract.

SUGGESTED MOTION (for Council use): Move to approve Cooperative Purchase Agreement C2018-092, with Roadsafe Traffic Systems Inc, in the amount of $30,000.00 annually

Page 1 of 2

Issue No. 7 – February 23rd, 2018

Legislative Overview Today is the 27th day of the legislative session and the conclusion of “crossover week,” where bills successfully voted out of their chamber of origin are then referred to committees in the opposite chamber. To date, 284 of the 705 bills, resolutions, and memorials, filed in the House have been sent to the Senate. Some bills are still in the pipeline, according to Speaker Mesnard, but the vast majorities have been sent. In the coming weeks, we will be monitoring budget discussion in the legislature as debate begins on appropriations. We will be monitoring these discussions for any potential impact on cities & towns, and we will continue to monitor existing bills as they are assigned to new committees. Statewide Cable Licensing This week League staff participated in a stakeholder meeting on HB 2579; video service; certificates of authority, sponsored by Rep. Jill Norgaard (R-Phoenix). This was the first opportunity to discuss in depth the concerns regarding the legislation with both the sponsor and the industry. The bill passed the House the same day as the stakeholder meeting with a vote of 37-18.

The League presented a document that outlines the inconsistencies of the legislation and highlights the issues, including that it removes protections for residential and business subscribers such as maintaining a level or quality of video services provided by the cable operator; requiring that a cable operator give a 30-day prior notice to customers of any changes in rates, programming, services or channel positions; and requiring buildout of the network so that all residents and businesses will have access to video services.

In addition, the bill contains provisions that would effectively remove local authority over rights-of-way. It will shift the costs of some street repair, restoration and undergrounding of facilities to the taxpayers who have already made investments to maintain public streets and roads within their communities and should not have to bear the costs associated with repairing and maintaining the integrity of the street system that was diminished as a result of the cable operator’s street cuts. The bill also does not protect residents because there is no ability for local or state government to effectively enforce the Cable Act provisions regulating cable operators.

We remain deeply concerned about having the time to adequately review and address these issues, among many others, within the constraints of this legislative session and do not understand the proponents’ need to make this policy change without the opportunity to grasp the potential consequences.

We look forward to seeing the industry’s response to our concerns and have also committed to working on this issue in the interim if we are unable to reach an agreement this session. Retirement; Assumed Rate of Return

Last week the Senate Finance Committee heard SB 1262; retirement; assumed rate of return sponsored by Representative Warren Petersen (R-Gilbert). This bill would force all plans under PSPRS administration – PSPRS, CORP, and EORP – to adjust their assumed rate of return from the current 7.4% to approximately 4.7%.

Senator Petersen believes future market returns will fall well below 7.4% and lowering the assumed rate of return would ensure the plan is meeting its expectations and paying down the unfunded liabilities. However, most economists and actuaries believe a diversified portfolio like that of PSPRS currently, has a reasonable expectation to meet future return assumptions.

If this bill is enacted, the decrease in the assumed rate of return would result in an approximately 27% increase in contribution rates, translating to $587 million per year across the three plans. Of the $587 million in increased contributions, $292 million will be absorbed by cities.

The League spoke in opposition to SB 1262, indicating the historical returns of PSPRS as well as the future projected returns identified by actuaries and economists does not support a reduction in the assumed rate of return. Despite the League’s opposition the bill passed through the Senate Finance Committee 4-2.

Occupational Licensing continued…

HB 2532 occupational regulation; municipalities; counties; prohibition, sponsored by Rep. Kevin Payne (R-Peoria), passed out of the House by a vote of 34-22. The bill, which creates a list of occupations that cities/towns cannot license, was amended to delete most occupations, but left in 4 occupations: window washer, florist, interior designer, and photographer. The bill now goes to the Senate.

SB 1404 occupational regulation; municipalities; counties, sponsored by Sen. Steve Smith (R-Maricopa), also moved this week through the Rules Committee and Caucus and is now awaiting placement on the COW calendar. This bill would preempt cities and towns from adopting any new occupational licenses or fees.

Local occupational licensing has been an effective and efficient tool for managing local public safety and consumer protection issues. It has not created barriers to business but has helped keep regulation limited and responsive to local needs. In fact, no one has testified that local licensing has been cause for concern for any business interests in Arizona.

Neither bill solves an existing problem and both are unnecessary. The League will continue to oppose both bills as they move through the process, and we ask you to request that your legislators vote no. Post-Traumatic Stress Disorders; Presumption

On Friday, February 16 a stakeholder meeting was held to discuss concerns and alternative options for HB 2501; PTSD; workers’ compensation; presumption sponsored by Representative Paul Boyer (R-Phoenix). The League offered a proposal that continues to be reviewed by the participants. This week HB 2501 was voted out of the House 57-2-1.

The passed language in HB2501: 1) extends the time to file a workers’ compensation claim by tolling the deadline to one year after the last counseling session, 2) creates a presumption of PTSD for the public safety employee unless the employer can prove through a preponderance of evidence the employee’s job did not create the PTSD, 3) prohibits the employer from requesting an Independent Medical Exam (IME), 4) increases the number of visits from a minimum of 12 to a total of 48 visits (an additional 36), 5) and requires the employer to pay 100% of the employee’s salary during the period of visits if the counselor says the employee is unfit for duty. The League had calculated cost for the PTSD program at approximately $86M per year for all employers under PSPRS and CORP. After a fiscal note was requested by a House member the Joint Legislative Budget Committee (JLBC) released their projections indicating the cost to the state would range between $1.8-17.5 million per year with the cost to local governments ranging between $9.7-90 million per year, based on the number of public safety employees who utilize the program.

We continue to participate in discussions and negotiations on HB2501 as the bill continues through the process in the Senate. Real Estate Signs; Cities; Counties This week the House of Representatives considered HB 2500; real estate signs; cities; counties sponsored by Representative Travis Grantham (R-Gilbert). The language in HB 2500 requires counties and cities to allow real estate signs in the right of way. The League has voiced opposition to the bill. Since the US Supreme Court decision in Reed vs. the Town of Gilbert, cities and towns are prohibited from adopting any content-related ordinances with respect to temporary signs. In other words, we are now required to treat all temporary signs the same.

Temporary signage is a topic that generates many complaints from our residents. If cities and towns are statutorily required to give special treatment to one industry, then temporary signage from all industries would have to be allowed – leading to a huge increase of signage in the right of way. Therefore, we are very wary of any legislation that will lead to the proliferation of signs.

The bill was voted out of House Third Read 39-20 on Wednesday and is headed to the Senate. Please contact your Senators to let them know about the concerns you have with this bill.

Legislative Bill Monitoring

Due to changes on the legislature’s website this year, you will need to take an extra step to see the details of each bill. To see the bills we are tracking, go to the League’s Legislative Bill Monitoring (LBM) page. To see our position and a brief summary, click on the bill number. In the new page, click on the bill number to be redirected to the legislative web site where you can enter the bill number to see all its current status, versions and vote count.

Issue No. 8 – March 2nd, 2018 Legislative Overview

Today marks the 54th day of session and this week staff at the League have been engaged in a number of stakeholder meetings and meeting with legislators on bills impacting city and town government.

Action in the legislature continued this week at a moderate pace, with most of the activity occurring in standing committees. Floor and committee activity will increase in the coming weeks as the legislature works to take action on bills before deadlines pass. While budget discussions have continued, the introduction of a budget package has yet to occur.

Digital Goods and Services

SB 1392 and HB 2479, TPT; digital goods and services, sponsored by Sen. David Farnsworth (R-Mesa) and Rep. Michelle Ugenti-Rita (R-Scottsdale) respectively, are the companion bills that emerged from the interim committee on Digital Goods and Services.

The intent is to draw a line between “pre-written software” and “specified digital goods” (books, music, movies, etc.) that are “transferred electronically” meaning wholly downloaded or saved in some manner by the user and thus are considered taxable, versus the same items that are “remotely accessed” over the Internet (“in the cloud”) without downloading a complete copy and thus are defined as exempt “specified digital services.” To accomplish this, the bill creates at least eight new exemptions for transactions that have been held taxable for decades.

On Wednesday of this week, despite our best efforts, HB 2479 was approved in the House Committee of the Whole and passed on Third Read by a vote of 39-19. However, when the companion bill SB 1392 was scheduled for floor action in the Senate Committee of the Whole, it was retained on the calendar. This was due to the many phone calls and messages from cities and towns to their legislators as well as the completion of a fiscal note by the Joint Legislative Budget Committee. That fiscal note confirmed our misgivings about the bill including the new exemptions we identified and cost to state and local governments.

The current analysis by League staff on the fiscal impact to cities and towns shows an estimated loss of approximately $48 million in the first year, and increasing losses each year thereafter as more and more products are delivered digitally. Since the early 1990s, sales of digital goods have been considered taxable under the Retail classification because software files consist of data that is measurable in kilobytes, megabytes, gigabytes, etc.

The U.S. Supreme Court has accepted a case from South Dakota that could potentially overturn the Quill decision from 1992. This would change the requirements establishing “nexus” and taxing authority, particularly with regard to out-of-State sellers such as those on the Internet. It is widely believed the court accepted the case in order to modernize the Quill decision and broaden the taxability of retail products sold online.

It is imperative that we keep up our efforts to educate legislators about the true negative impacts of this dramatic policy change. COX Statewide Cable License

The stakeholder process for HB2579 video service; certificates of authority, continues with Cox Communications but with no agreement as of yet. It is sponsored by Rep. Jill Norgaard (R-Phoenix). The bill as introduced would allow incumbent and competitive video and Internet providers, such as Cox, Comcast and CenturyLink, to obtain a more corporate-friendly statewide license agreement from the Secretary of State and completely abandon their existing agreements with cities and towns that were negotiated in good faith to protect rights-of-way, consumers and taxpayers. The bill has a double committee assignment in the Senate and we hope this allows more time for a thorough vetting of the bill to ensure it works for consumers who use these services and for taxpayers who do not.

Cable licensing at the local level has been the standard for the entire existence of cable TV, for more than 50 years. Yet, in a few weeks, Cox is trying to completely undo that system, one that has worked well for consumers. Cox has claimed that local license agreements impede competition and consumer choice. We believe competition is good and our existing license agreements encourage competitor providers to deploy their technology and services into our communities to benefit our residents. There are no existing federal, state or municipal laws that prevent competition; if a competitor wants to enter into the market today, all they have to do is ask. No legislation or government entity can force competition to occur. This decision is entirely up to the industry to decide whether or not it is worthwhile to invest in our communities to compete in the cable TV or Internet market. The cable industry is seeing more competition from satellite and video streaming services. The experience in other states that have adopted statewide franchise/license laws similar to HB2579 is very significant and it is clear that it did not live up to expectations. The proponents of these measures claimed that more competition, lower prices, and increased customer satisfaction would be achieved by deregulating the video market, much like what HB2579 seeks to do. However, it is abundantly clear that these expectations were not achieved. In fact, customer satisfaction is at all-time lows, prices increased substantially soon after legislation was adopted and customer complaints have increased considerably. We believe HB2579 will have the same outcome in Arizona due to the fact that there is no delegation of oversight of these companies to ensure they are following FCC customer service standards. In addition, the bill will not protect taxpayers because there are provisions that would shift some costs of street repair, restoration and undergrounding of cable facilities to the city. As a result, all taxpayers would pay to repair street damage caused by cable companies, even those that do not subscribe to their services.

Please contact your Senators to explain the damaging impacts of this legislation and request a more thorough stakeholder process be conducted to ensure this bill will not negatively impact consumers and taxpayers. Zoning; Private Schools This week HB 2461 zoning regulations; private schools, sponsored by Rep. Vince Leach (R-Tucson), passed out of the Senate Education Committee on a 4-3 vote. This bill would prohibit counties and municipalities from adopting land use regulations or imposing conditions for building or use permits on private schools that are not enforced or imposed on charter schools.

Traditional public schools do not go through a city zoning process. However, they are typically included as part of larger developments and do go through a public process at the school board level. This local governing body is positioned to hear concerns from adjacent neighborhoods and can work to mitigate any negative impacts (for example, lights from sports fields, traffic from buses and parents dropping off students, etc.) the school could create.

Several years ago, the statutes were modified to give charter schools this same treatment. Unfortunately, since these schools no longer go through a zoning process, there is no opportunity for neighbors to weigh in with their concerns or have a process to resolve conflicts with other land uses. Consequently, some problems have occurred.

HB 2461 would extend this same statutory exemption from the zoning process to private schools. While there has been an ongoing debate in Arizona over educational opportunities provided by traditional public schools, charter public schools and private schools, that is not our concern with this bill. Rather, it is the impact on neighborhoods because residents will no longer have a place to register their concerns prior to the development of a private school or have any recourse to address conditions that are created that are not compatible with the adjacent land uses.

Please contact your legislators to let them know that you are believe that neighborhoods should have the chance to be heard when it comes to what is being built next to them and to ask them to vote no on this bill when it comes to the Senate floor unless these concerns are addressed. Vehicle Fees; Alternative Fuel VLT/HURF Distribution; Cities, Towns, Counties

This session, in the House and Senate, the Legislature has considered companion bills addressing the continuous sweeps of HURF to fund the Department of Public Safety (DPS). HB2166 and SB1146; vehicle fees; alternative fuel VLT, sponsored by Representative Noel Campbell (R-Prescott) and Senator Bob Worsley (R-Mesa) respectively attempt to address HURF sweeps and adequately fund DPS.

The amended provisions of these companion bills require the annual collection of a highway safety fee with the vehicle registration application. The highway safety fee funds will be deposited into the Arizona Highway Patrol Fund and the fee must be sufficient to fund 110% of DPS highway patrol budget for each fiscal year.

Additionally, the bills require the Director of the Arizona Department of Transportation (ADOT) to set a percentage by which they’ll charge a vehicle license tax (VLT) to owners of alternative fuel vehicles beginning January 1, 2020. Finally, the bill continues to exempt a VLT for alternative vehicles with a gross weight of greater than 10,000 pounds (tractor trailers, etc.).

On February 20, 2018 HB2166 was approved in the House 35-24-1 and was transferred to the Senate where it has not been assigned. SB1146 was approved in Committee of the Whole on February 22, 2018 with identical amendments to those adopted in the House; however, this bill has not appeared for a full vote in the Senate.

The League signed in support of these bills as we see it as an effort to address sweeps from HURF that have been taking place since 1982.

On a similar topic, HB2514; HURF distributions; cities, owns, counties is sponsored by Representative David Cook (R-Florence, Coolidge, Globe, Casa Grande) and passed the House 36-20-4.

The amended language in HB2514 changes the distribution of HURF funds by directing an initial $18M to rural counties and cities before calculating the additional funds based on the traditional formula. As mentioned in the February 16, 2018 bulletin, the League signed in and spoke in opposition to HB2514 indicating we do not believe it is useful to pit rural cities versus urban cities and rural counties versus urban counties. Rather, we believe the root cause of the HURF funding problem is that the available pool of money is too small since the gas tax has not been raised since 1991. The current gas tax of 18₵, adjusted for inflation, is 33₵ in today’s dollars.

Additionally, the League identified that while the purchasing power of the pool of HURF funds continues to decline, the state has swept HURF funds every year since 1982 to fund the portions of the budget because DPS does not have a dedicated funding source. Since 2001 the state has swept $1.1B from HURF resulting in degrading roads and fewer road projects.

We believe our time is better suited addressing the lack of overall funds in HURF and finding DPS a dedicated funding source, and HB2166 and SB1146 address one of those two issues. We encourage you to reach out to your legislators to ensure the Senate adopts the House version of the bill and vote on HB2166. ASRS; Nonparticipating employers

This past week the Senate considered SB1054; ASRS; nonparticipating employers sponsored by Senator Karen Fann (R-Prescott). This bill attempts to close a previously uncontemplated loophole whereby employers who were removed from the Arizona State Retirement System (ASRS) through legislative action but remained a public employer would not have to pay their portion of their accrued pension liabilities.

In 2012, after the conversion of State Compensation Fund, Arizona – a public entity – to CopperPoint – a private entity – Senator Steve Yarbrough (R-Chandler) sponsored SB1194 requiring an entity that converted from public to private pay their portion of the accrued unfunded liabilities. In recent years certain public employers have discussed pursuing future legislation to remove them from the ASRS so that they can operate “more like a business.”

In light of these discussions, the ASRS approached the legislature seeking protection in statute whereby if a public employer were to be removed from the pension system the ASRS would be able to charge that employer, on an annual basis, their portion of that year’s unfunded liability. The League signed in and spoke in support of SB1054 because the language ensures that the millions of dollars in accrued liabilities from an extracted employer are not transferred to the contribution rates of remaining employees and employers (cities, towns, counties, school districts, State, etc.) in the retirement system.

This bill was heard in Senate Finance on February 11, 2018 and passed with a 6-1 vote. On February 28, 2018 the full chamber voted on the bill passing it 29-1. Sober Living Homes SB 1465 and HB 2529 sober living homes; certification, sponsored by Sen. Kate Brophy- McGee (R-Phoenix) and Rep. Noel Campbell (R-Prescott), respectively, would establish a state-wide licensing system for sober living homes.

While discussions are still ongoing, the basic principle of both bills is that all sober living homes would be required to be licensed going forward. The standards for licensure would be developed by the Arizona Department of Health Services (DHS), with input from the public and other stakeholders, but would largely mirror national standards in place in other states. Furthermore, DHS would have the authority to shut down or take legal action against sober homes that did not comply.

Last year at the Annual Conference the League’s full membership adopted a resolution to advance legislation to protect neighborhoods and sober living home residents from poorly-run, unregulated sober homes. Recognizing that the opioid epidemic has created an unprecedented demand for substance abuse recovery housing and that this environment has unfortunately been used by some to exploit those in recovery, the League along with several of our cities, DHS, the Arizona Recovery Housing Association, and other stakeholders have been working with Senator Brophy-McGee and Rep. Campbell on a statewide legislative solution.

In terms of process, both bills have steadily advanced and are awaiting further action while the final terms of the legislation are decided. The timeline will depend on how quickly discussions are wrapped up but we expect movement in the coming weeks.

On a related note, SB 1451 patient referral inducements; prohibited compensation, sponsored by Sen. Nancy Barto (R-Phoenix) passed out of the Senate this week. This bill would prohibit the “brokering” of substance abuse patients amongst sober homes and other substance abuse treatment providers. Patient brokering, like unregulated sober living homes, has been a nationwide problem and the League supports addressing both issues proactively at the state level.

The League will continue to work with legislators and other stakeholders to develop the best policies for dealing with these issues and will provide updates as these particular bills move through the process. If you have specific questions or comments related to these bills or the issue in general please contact Legislative Associate Alex Vidal ([email protected]). Legislative Bill Monitoring

Our Legislative Bill Monitoring system has been upgraded! The issue with linking directly to a specific bill’s information page on the Arizona Legislature website has been resolved. We have also implemented a self-updating list through Arizona Capitol Reports, providing you with the most up-to-date information possible!

Click here to browse through our Legislative Bill Monitoring page!