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City Council Policy Session

Agenda Meeting Location:

City Council Chambers

200 W. Jefferson St.

Phoenix, Arizona 85003

phoenix.gov2:30 PMTuesday, February 27, 2018

CALL TO ORDER

COUNCIL INFORMATION AND FOLLOW-UP REQUESTS

This item is scheduled to give City Council members an opportunity to publicly

request information or follow up on issues of interest to the community. If the

information is available, staff will immediately provide it to the City Council

member. No decisions will be made or action taken.

CONSENT ACTION

This item is scheduled to allow the City Council to act on the Mayor's

recommendations on the Consent Agenda. There is no Consent Agenda for

this meeting.

CALL FOR AN EXECUTIVE SESSION

A vote may be held to call an Executive Session.

REPORTS AND BUDGET UPDATES BY THE CITY MANAGER

This item is scheduled to allow the City Manager to provide brief informational

reports on topics of interest to the City Council. The City Council may discuss

these reports but no action will be taken.

DISCUSSION AND POSSIBLE ACTION (ITEM 1)

1 Page 52018 Legislative Update

This report provides information regarding the status of current state

legislative issues.

THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.

Responsible Department

This item is submitted by Deputy City Manager Karen Peters and

the Office of Government Relations.

February 27, 2018City Council Policy Session Agenda

INFORMATION AND DISCUSSION (ITEM 2)

2 Page 13Five-Year General Fund Forecast

This report transmits the preliminary status for the General Fund (GF)

fiscal year (FY) 2018-19 budget and a five-year GF forecast through FY

2022-23 (Attachment A). The five-year forecast is being presented to

the Mayor and City Council for the seventh consecutive year and provides

an essential tool in long-term budget discussions and decision making.

The forecast currently shows a balanced budget for FY 2018-19.

THIS ITEM IS FOR INFORMATION ONLY.


This item is submitted by City Manager Ed Zuercher and the Budget and

Research Department.

ORDINANCES, RESOLUTIONS AND FORMAL ACTIONS (ITEM 3)

Roll Call and City Clerk Reads 24-Hour Paragraph and Title

3 City of Phoenix Non-Discrimination and

Anti-Harassment Policy (Ordinance G-6422)

5

At the Dec. 5, 2017, Policy Session, Councilwoman Kate Gallego

requested staff research and create a Sexual Harassment Policy for City

of Phoenix elected officials. On Jan. 10, 2018, City Council approved an

eight-hour rule request from staff to thoroughly research and develop

options for Council review and consideration. This report provides the City

Council with information on Non-Discrimination and Anti-Harassment

Policy Options for elected officials, board members, and volunteers, and

provides a draft ordinance based on recommendations from the

Sustainability, Housing, Efficiency and Neighborhoods Subcommittee on

Feb. 20, 2018.



This item is submitted by Acting Deputy City Manager Toni Maccarone

and the Law Department.

Page 2

http://phoenix.legistar.com/gateway.aspx?m=l&id=/matter.aspx?key=7456

February 27, 2018City Council Policy Session Agenda

ADJOURN

For further information or for reasonable accommodations, please call the Management Intern, City Manager's Office, at 602-262-4449 or Relay 7-1-1 as early as possible to coordinate needed arrangements.

Si necesita traducción en español, por favor llame a la oficina del gerente de la Ciudad de Phoenix, 602-262-4449 tres días antes de la fecha de la junta.

Mayor Greg StantonVice Mayor Laura Pastor

Councilwoman Thelda WilliamsCouncilman Jim Waring

Councilwoman Debra StarkCouncilman Daniel Valenzuela

Councilman Sal DiCiccioCouncilman Michael Nowakowski

Councilwoman Kate Gallego

Members:


City Council Report

Agenda Date: 2/27/2018, Item No. 1

2018 Legislative Update

This report provides information regarding the status of current state legislative issues.


SummaryFeb. 27, 2018, is the 45th day of the Second Regular Session of the 53rd Legislature.The information provided in this report regarding status of legislation is current as ofFeb. 20, 2018. To date 1,280 bills have been introduced and staff continues to reviewthese measures to identify potential impacts.

Responsible DepartmentThis item is submitted by Deputy City Manager Karen Peters and the Office ofGovernment Relations.

Attachment A City Council Information

February 27, 2018

State Update

Feb. 27, 2018, is the 45th day of the Second Regular Session of the 53rd Legislature. The information provided in this report regarding status of legislation is current as of Feb. 20, 2018. To date 1,280 bills have been introduced and staff continues to review these measures to identify potential impacts.

Bills that staff has identified as negatively impacting the City’s core principles:

A. HB 2330: 1% Property Tax Limit; GPLET (Rep. Vince Leach; Tucson)compensates school districts for school district primary property taxes that werenot levied due to the existence of GPLETs, and withholds the equivalent sumfrom the applicable municipality’s state-shared revenue. This would have asignificant financial impact to the City. The bill awaits a hearing in the HouseCommittee of the Whole.

B. HB 2479: TPT; Digital Goods and Services (Rep. Michelle Ugenti-Rita;Scottsdale) adds the business of selling licensing for use of "prewritten computersoftware” regardless of delivery method, and selling "specified digital goods"(books, music, movies, etc.) that are "transferred electronically" (whollydownloaded or saved in some manner by the user) to the retail classification oftransaction privilege taxes. However, gross income, gross receipts or grossproceeds from selling, leasing or licensing "specified digital services" and"specified digital goods" that are remotely accessed by a customer but nottransferred electronically or downloaded to a customer’s electronic device (i.e.“streaming”) are excluded from tax. The bill also creates eight new exemptionsfor transactions that have long been deemed taxable by the state andmunicipalities. City revenues could experience a large loss of revenue over time.A companion bill (SB 1392: TPT; Digital Goods and Services) has also beenintroduced in the Senate. HB 2479 passed in the House Rules Committee onFeb. 19, 2018, by a vote of 6-3 and now awaits a hearing in the HouseCommittee of the Whole.

C. HB 2512: Water Program Amendments (Rep. Rusty Bowers; Mesa) makesvarious changes to statutes relating to water, such as requiring the ArizonaDepartment of Water Resources (ADWR) prepare a desalination action plan,adopt new rules to calculate extinguishment credits in the Pinal ActiveManagement Area (AMA) by Jan. 1, 2019, and establish management plans foreach initial AMA no later than Jan. 1, 2023. Staff believes that the language doesnot contain the needed measures that would protect the Colorado River Basin.HB 2512 passed in the House Rules Committee on Feb, 19, 2018, by a vote of6-3 and now awaits a hearing in the House Committee of the Whole.

D. HB 2514: HURF Distribution; Cities, Towns, Counties (Rep. David Cook; Globe)distributes $18 million from revenues of the Arizona Highway User RevenueFund (HURF) to small counties and municipalities. Of the $18 million, $9 millionmust be distributed to counties with a population of less than 250,000 personsand $9 million must be distributed to municipalities with a population of less than7,500 persons. This bill would reduce HURF monies to the City. HB 2514 passedthe House Rules Committee on Feb. 19, 2018, by a vote of 6-3 and now awaits ahearing in the House Committee of the Whole.

E. HB 2532: Occupational Regulation; Municipalities; Counties; Prohibition(Rep. Kevin Payne; Peoria) prohibits counties and municipalities from imposingan occupational fee or licensing requirement on a list of professions, includingstreet performers, transient merchants, solicitors, junk or secondhand dealers. Ifa county or municipality imposes an occupational fee or licensing requirement onany of the professions listed that is in effect on the effective date of thislegislation, the fee or requirement does not apply and cannot be enforced.HB 2532 passed in the House Rules Committee on Feb. 19, 2018, by a vote of6-3 and now awaits a hearing in the House Committee of the Whole.

F. HB 2579: Video Service; Certificates of Authority (Rep. Jill Norgaard; Phoenix)places cable licensing and regulation in the Arizona Secretary of State’s Office.Beginning on Jan. 1, 2020, an incumbent cable operator is permitted to eithercontinue to operate within a service area as defined in the local license orterminate the local license by applying for and obtaining a certificate of authorityfrom the state. Staff believes this bill preempts the City’s current ability tonegotiate these types of agreements. HB 2579 passed in the Senate RulesCommittee on Feb. 19, 2018, by a vote of 6-3 and now awaits a hearing in theHouse Committee of the Whole.

G. HB 2604: Consolidated Elections; Voter Turnout (Rep. J.D. Mesnard; Chandler)requires municipalities to comply with statutory consolidated election dates andhold all elections in the next following even-numbered year if, beginning withelections held in 2019, at an election held in an odd-numbered year, other than aspecial election or recall election, the percentage of eligible voters who voted inthat election is less than a specified percentage, calculated by a formula basedon the type of election held. Staff is aware that City Council may potentially acton the issue of consolidating City elections. Staff’s opposition to this bill is basedin the pillar of local control, in defense of the Council’s ability to make its ownchoice on the issue. HB 2604 passed the in the House Rules Committee onFeb. 20, 2018, by a vote of 4-3 and now awaits a hearing in the HouseCommittee of the Whole.

H. HB 2625: Municipal Seals; Restricted Use (Rep. Todd Clodfelter; Tucson)preempts cities and towns from regulating their own official seals, placing intostatute new rules and penalties as to how municipal seals are to be used. Staff

believes this not only violates the City’s ability to govern its own intellectual property, but may impact the relationship Phoenix has with non-profits and service agreements that incorporate the seal in their materials. HB 2625 was held in the House Local and International Affairs Committee.

I. SB 1404: Occupational Regulation; Municipalities; Counties (Rep. Steve Smith;Maricopa) prohibits cities, towns or counties from imposing new licensingrequirements, levying new occupational fees or increasing any existingoccupational fees. Current licensing at the local level becomes preempted if thestate adopts rule on the occupation. The language also impacts trip fees andcommercial use permit fees at the City’s airports. SB1404 awaits a hearing in theSenate Committee of the Whole.

J. SCR 1037: Right to Engage in Occupation (Rep. Steve Smith; Maricopa) placeson the 2018 general election ballot the question of whether to amend the stateConstitution to establish that a person has a fundamental right to engage in anoccupation or profession. No state law or rule can be enacted or enforced thatprohibits or regulates a person from engaging in any occupation or professionunless the state law or rule is clearly necessary to protect the public health orsafety. Staff believes that the language is too broad and could negatively affect anumber of areas, including zoning and municipally-owned airports. SCR 1037passed the Senate Commerce and Public Safety Committee on Feb. 12, 2018,by a vote of 5-3 and now awaits review in the Senate Rules Committee.

K. HB 2333: Home-based Businesses; Local Regulation (Rep. Jeff Weninger;Chandler) limits the ability of counties and municipalities to regulate home-basedbusinesses. The City currently addresses home-based businesses through thezoning ordinance, which allows truly low impact, small businesses to operate inresidential areas in certain circumstances. As written, this bill creates directconflicts with the Phoenix zoning ordinance and allows a far greater andunchecked proliferation of businesses operating on residential properties.HB 2333 was approved in the House Rules Committee on Feb. 19, 2018, andnow awaits action in the House Committee of the Whole.

Bills for which staff is requesting Mayor and Council action:

L. HB 2529: Sober Living Homes; Certification (Rep. Noel Campbell; Prescott)requires that all sober living homes are to be regulated and certified by theArizona Department of Health Services (ADHS). The legislation would allow localgovernments to license sober living homes until ADHS completes its rulemakingprocess. A companion measure, SB 1465: Sober Living Homes; Certification(Sen. Kate Brophy McGee; Phoenix), was introduced in the Senate. This bill wasapproved in the House Rules Committee on Feb. 19, 2018 and is now awaitingaction in the House Committee of the Whole.

ALL BILLS CONTAINED IN THE CURRENT CITY COUNCIL REPORT

C. HB2512 Water Program Amendments (Rep. Rusty Bowers; Mesa)

Oppose Awaits ahearing in the House Committee of the Whole.

D. HB2514 HURF Distribution; Cities, Towns, Counties (Rep. David Cook; Globe)

Oppose Awaits a hearing in the House Committee of the Whole.

E. HB2532 Occupational Regulation; Municipalities; Counties; Prohibition (Rep. Kevin Payne; Peoria)


F. HB2579 Video Service; Certificates of Authority (Rep. Jill Norgaard; Phoenix)


G. HB2604 Consolidated Elections; Voter Turnout (Rep. J.D. Mesnard;Chandler)

Oppose Awaits a hearing in the House Committee of the Whole.

Letter Bill Title City Position Status A. HB2330 1% Property Tax

Limit; GPLET (Rep. Vince Leach; Tucson)

Oppose Awaiting ahearing in the House Committee of the Whole.

B. HB2479 TPT; Digital Goods and Services (Rep. Michelle Ugenti-Rita; Scottsdale)


H. HB2625 Municipal Seals; Restricted Use (Rep. Todd Clodfelter; Tucson)

Oppose Held in the House Local and International Affairs Committee.

I. SB1404 Occupational Regulation; Municipalities; Counties (Rep. Steve Smith; Maricopa)

Oppose Awaits action in the Senate Committee of the Whole.

J. SCR1037 Right to Engage in Occupation (Rep. Steve Smith; Maricopa)

Oppose Awaits review in the Senate Rules Committee.

K. HB2333 Home-based Businesses; Local Regulation (Rep. Jeff Weninger; Chandler)

Oppose Awaits actionin the House Committee of the Whole.

L. HB2529 Sober Living Homes; Certification (Rep. Noel Campbell; Prescott)

Awaiting Council Action

Awaits action in the House Committee of the Whole.

BILLS CONTAINED IN PREVIOUS CITY COUNCIL REPORTS

Letter Bill Title City Position Status M. HB2116 Limitations of

Actions; Dedicated Property (Rep. Anthony Kern; Glendale)


N. HB2320 Development Agreements; Prohibited Agreements (Rep. David

Oppose Passed HouseCommerce Committee (5-4) on Feb. 6,2018 and nowwaits a review

Livingston; Peoria)

in Rules Committee.

O. SB1119 Municipal Judges; Terms; Retention Election (Sen. John Kavanagh; Fountain Hills)

Oppose Awaiting a hearing in the Senate Judiciary Committee.

P. SB1507 Water Program Amendments (Sen. Gail Griffin; Hereford)

Oppose Awaits a hearing in the Senate Rules Committee.

Q. SB1146 Vehicle Fees; Alternative Fuel VLT (Sen. Bob Worsley; Mesa)

Support Awaits a hearing in the Senate Rules Committee.

R. SB1464 Parks; Historic Preservation; Lottery Fund (Sen. Kate Brophy McGee; Phoenix)


S. HB2586 Antidiscrimination; Employment; Housing; Public Accommodations (Rep. Daniel Hernandez; Tucson)

Support Awaiting a hearing in the House Judiciary and Public Safety Committee.

T. HCR2015 Municipal and County Tax Limitations (Rep. Bob Thorpe; Flagstaff)

Oppose Awaits a hearing in the House Ways and Means Committee.

U. SB1002 Home-Based Businesses; Regulations; Municipalities (Sen. David Farnsworth; Gilbert)

Oppose Awaits a hearing in the Senate Government Committee.

V. HB2023 Prohibited Weapon; Bump-fire Device; Accessory (Rep. Randy Friese; Tucson)

Support Awaits a hearing in the House Judiciary and Public Safety Committee.

W. SB1039 Appropriation; Arizona Water Protection Fund (Sen. Gail Griffin; Hereford)


X. HB2114 Power Authority; Procurement Code; Exemption (Rep. Darin Mitchell; Goodyear)

Support Awaits a hearing in the Senate Government Committee.

Y. SB1295 Animal Cruelty; Domestic Violence; Classification (Sen. John Kavanagh; Fountain Hills)

Support Awaits a hearing action in the Senate Committee of the Whole.


City Council Report


Five-Year General Fund Forecast

This report transmits the preliminary status for the General Fund (GF) fiscal year (FY)2018-19 budget and a five-year GF forecast through FY 2022-23 (Attachment A). Thefive-year forecast is being presented to the Mayor and City Council for the seventhconsecutive year and provides an essential tool in long-term budget discussions anddecision making. The forecast currently shows a balanced budget for FY 2018-19.

THIS ITEM IS FOR INFORMATION ONLY.

SummaryThe February 2017 Five-Year Forecast projected that without any action, the City ofPhoenix would have a GF budget deficit of ($43M) to ($64M) for 2018-19. Withsustained effort, several steps have led to a projected balanced budget for FY 2018-19(this assumes no actions by the State to change revenue from existing projections).These include accumulating one-time savings of $14.4 million in FY 2016-17 andproactive steps in 2017-18 to reduce ongoing costs and to defer and reduce spendingwherever possible.

Over the last few years the City Council has taken necessary actions to protect Cityservices while facing very challenging financial conditions. The City Council has ledimportant fiscal reform measures, including:

· $134 million in innovation and efficiency savings to date since 2010

· Elimination of approximately 2,700 positions since FY 2007-08; resulting in thesmallest government per capita since 1970-71

· Consistently raising the contingency fund to its highest level in our history

· Balancing the deficit in the Public Safety funds without sworn layoffs and theplanned hiring of more than 465 Police Officers and 79 Firefighters between nowand the end of FY 2018-19.

With this strong fiscal planning and early action, the projected funding gap for 2018-19has been eliminated. Over the next few weeks, staff will continue to refine bothrevenue and expenditure estimates until we have a final status in March for the CityManager’s Trial Budget.


FY 2018-19The preliminary expenditure estimates may change as cost estimates are furtherrefined in the coming weeks, however at this time the preliminary FY 2018-19 GFexpenditures are projected to be $1.296 billion. This compares to the adopted GFexpenditure budget of $1.278 billion for FY 2017-18. The increase is due to slightlyincreased costs, primarily resulting from employee concession restorations, andadditional expenditures for capital projects and vehicle replacements.

Total COPERS pension costs are expected to increase next year. However, the GFportion is expected to decrease by about $8 million as compared to the current yearbudget due to a structural change in the budget for the Street TransportationDepartment. Positions for which costs had previously been directly charged to the GFand subsequently transferred to the Arizona Highway User Fund are now being directlycharged to that fund. There is no adverse impact to the Street TransportationDepartment budget as a result of this accounting change. GF COPERS costs areexpected to increase slightly throughout the remainder of the forecast period.However, the increases are projected to be less than what was projected in the 2017Five-Year Forecast due to the continued impact of pension reform and strong planperformance last year.

GF costs for sworn Police and Fire (PSPRS) pension costs are expected to decreaseby about $4 million compared to the current year budget due to strong planperformance and the change from a 20-year to a 25-year amortization period. If a 20-year amortization period were used, the GF public safety pension costs would beprojected to increase about $25 million next year and by a total of approximately $158million for the forecast period. This would have not only impacted our ability to balancenext fiscal year without either additional revenue or difficult cuts to existing programs,but would have increased the likelihood for projected deficits throughout the forecastperiod.

As the five-year forecast shows, pension costs will continue to add significant pressureto the GF budget going forward. However, the pension reform measures for COPERSand PSPRS enacted by the State Legislature, City Council and approved by Phoenixvoters mean these short-term increases are anticipated to slow over time and areexpected to result in significant savings over the next two decades.

There are also other cost increases not within our control including:· State charges for the implementation of Transaction Privilege Tax (TPT) Reform

are expected to increase from approximately $3 million this year to $3.9 million inFY 2018-19.


· The jail per diem rates charged by the Maricopa County Sherriff's Office (MCSO)for the incarceration of Phoenix prisoners will result in an increase ofapproximately $1.5 million in FY 18-19. Next year’s booking rate is $341.57 perinmate, an increase of 4.9 percent, and the housing rate is $100.04 per day, adecrease of 1.6 percent.

Overall, non-pension costs have been stable and manageable.

FY 2019-20 and BeyondThis year's forecast shows considerable improvement over last year's forecast. Thebaseline (midpoint) forecast for each year from FY 19-20 through the end of theforecast period reflects a balanced budget. As we look ahead the areas of concern forthe GF budget are service costs, service levels, capital needs, and revenue. Servicecosts include employee compensation levels, use of technology and other ways to doour existing work more efficiently, and capital needs. Service levels involve the amountof services, hours and the number of facilities we keep open to serve the public.Revenues consider taxes, fees, economic growth, and the impact that the 2020Census may have on the City's relative population share. The current forecastassumes no changes to existing labor contracts. These contracts expire at the end ofFY 2018-19 and contract negotiations will begin in the Fall of 2018. Any changes tothese contracts would impact FY 2019-20 and beyond. Additionally, the currentforecast assumes no changes to existing service levels.

The Phoenix City Charter requires a balanced budget each year. On March 20, abalanced City Manager’s Trial Budget will be presented for Council and Communitydiscussion along with the Preliminary Five-Year Capital Improvement Program (CIP).The budget will present options for debt service payments and one-time capitalrequests. Community Budget Hearings will begin in April.

Responsible DepartmentThis item is submitted by City Manager Ed Zuercher and the Budget and ResearchDepartment.

ATTACHMENT A

RESEARCH REPORTBUDGET AND RESEARCH DEPARTMENT

B.R. REPORT NUMBER2018-08

DATE ISSUEDFebruary 22, 2018

TO:

ED ZUERCHERCITY MANAGER

FOR THE BUDGET AND RESEARCH DIRECTOR BY:

JEFF BARTONBUDGET AND RESEARCH DIRECTOR

SUBJECT

FIVE-YEAR FORECAST AND PRELIMINARY GENERAL FUND STATUS FOR FY 2018-19

BACKGROUND

Development and presentation of the five-year forecast is an important step in the City’s budgetprocess. Evaluating projected available resources and identifying potential ongoing budget surpluses or funding gaps will allow City Management and Council to develop strategic plans to ensure the continuation of city operations and optimize services to the community.

The Five-Year Forecast estimates future revenues and expenditures of the General Fund for the current fiscal year through fiscal year 2022-23. The purpose of this forecast is to identify key trends in revenues and expenditures and to provide information about the financial landscape anticipated over the next few years. The information contained in this forecast is based on data available through January 2018.

The General Fund five-year forecast (Attachment A) is provided to the City Council and the community for consideration and provides city policy-makers:

A strategic financial management best practice

A framework for strategic decision-making

The opportunity to make policy changes to maximize city resources and service delivery

A roadmap to continued fiscal health and award-winning budgetary and financial reporting

The forecast is not an official policy or legal budget document and does not enact any budgetary allocations. The forecast is also not intended to set or precisely predict future revenues or expenditures. Rather, the forecast presents current estimates based on several economic and financial assumptions of the future direction and ranges of growth rates for both resources and expenditures. The economic, revenue, and expenditures assumptions are provided in Attachment B.

The forecast is built on several assumptions outlined in Attachment B regarding:

The national, state and local economy

Population and job growth

Revenue growth

Impacts of anticipated increasing pension liabilities

Cost management practices

Future year expenses

All of these factors are subject to change and are detailed further in this report.

Projecting future available resources and expenses over multiple years is complex and involves several assumptions concerning how revenue and expenditures will grow over time. In order to model potential future budgetary scenarios under varying economic conditions, a range is provided for resources and expenditures. The differences between the upper and lower ends of the ranges increase slightly in the later years of the forecast reflecting additional economic uncertainty. The top of each range represents the “optimistic” forecast, while the bottom of the range represents the “pessimistic” forecast. All of the ranges are based upon the assumptions described in this report.

It is important to note, if any of these assumptions as described were to change or modeled differently, the ranges of amounts presented in the forecast would need to be revised. Unexpected economic shocks, recessions, legislative mandates or other risks to the forecast can also adversely affect projections.

Additionally, even slight variances in the revenue and expenditure growth rates in the initial years of the forecast result in substantial changes to the later years due to the compounding effect of the changes. For example, a variance in revenue growth in FY 2018-19 of only 1%, can result in a variance of $11.6M to the ending balance, which would impact the ending fund balances in the subsequent forecast years. Long term forecasts become less reliable the further they are from development because of the many underlying assumptions subject to frequent fluctuations.

Projections are formulated in the first six months of the fiscal year and are based on a current projection of where staff believes resources and expenditures will be for the current fiscal year and the subsequent five years. In order to create the most reliable revenue and expenditure projections, staff relies on several economic sources, months of actual collections and extensive technical reviews before recommending estimates to City management and ultimately the City Council for final consideration.

1 This does not reflect any negative impact to State-Shared Revenue resulting from the FY 2018-19 State budget, nor legislative changes that have recently been proposed or discussed during the current legislative session.

2 Assumes the continuation of City Council’s adopted policy to maximize the primary levy in order to preserve GF services. Any deviation from this policy would require an ongoing reduction to GF programs.

3 Estimates for 2018-19 decreased significantly from 2017-18 due to one-time revenues from insurance proceeds for the Burton Barr Central Library, sales of surplus property, and rental income in 2017-18.

4 Estimates for beginning balance and transfers/recoveries are not derived from annual growth rate projections or broader economic factors.

OTHER INFORMATION

It is important to note that the preliminary FY 2018-19 budget is based on existing state-shared revenue models and statutory obligations. Any changes to state shared revenue formulas or other revenue sources proposed in the Governor’s budget or in legislative bills that would negatively impact the GF budget are not reflected and would need to be solved, if adopted by the State.

Preliminary Status of 2018-19 General Fund Budget

2018-19 Resources- The chart below shows the preliminary resources projection:

GF Resource Category

2018-19Preliminary

Estimate(in millions)

2018-19Preliminary

Projected Annual Growth Rate %

Local Sales & Excise Taxes $465 3.4%

State-Shared Revenue 1 $428 1.8%

Primary Property Tax 2 $161 4.2%

User Fees and Other 3 $128 -7.3%

Beginning Balance 4 $105 N/A

Transfers/Recoveries 4 $9 N/A

Total GF Resources $1,296 -0.3%

Revenue Forecasting Model- In the fall of 2014, Budget and Research consulted with the University of Arizona’s Eller College of Management, Economic and Business Research Center (EBRC) to enhance the City’s sales tax revenue forecasting process. Dr. George Hammond, EBRC Director, and Dr. Alberta Charney, Senior Research Economist, spent several months working with City staff to develop an enhanced econometric sales tax forecasting model for all categories of City sales tax. In the Summer of 2017, staff worked with EBRC to update the tax forecasting model. The EBRC leads the State of Arizona Forecasting Project, which provides in-depth economic forecast analysis and databases on a subscription basis to businesses, organizations, and government via membership. The additional consulting with Drs. Hammond and Charney has provided the City with solid, independent economic and statistical expertise used to develop a statistically valid forecasting model specifically for the City of Phoenix. The projected growth rates in each category of sales tax for the FY 2018-19 estimate and five-year forecast are based on projections developed with the enhanced econometric forecasting model.

2018-19 Expenditures- The preliminary expenditure estimates may change as cost estimates are further refined in the coming weeks. At this time, the preliminary FY 2018-19 General Fund expenditures are projected to be $1.296 billion. This compares to the adopted GF expenditure budget of $1.278 billion for FY 2017-18. The increase is due to slightly increased costs, primarily resulting from employee concession restorations, and additional expenditures for capital projects and vehicle replacements.

Pension Costs - Expected changes in COPERS and PSPRS pension costs are as follows:

COPERS: Total COPERS pension costs are expected to increase next year. However, the GFportion is expected to decrease by about $8 million as compared to the current year budgetdue to a structural change in the budget for the Street Transportation Department. Positions forwhich costs had previously been directly charged to the GF and subsequently transferred tothe Arizona Highway User Fund are now being directly charged to that fund.

GF COPERS pension costs are expected to increase slightly throughout the remainder of theforecast period. However, the increases are projected to be less than what was projected inthe last Five-Year Forecast due to the continued impact of pension reform and strong planperformance over the last year.

PSPRS: The GF costs for sworn Police and Fire are expected to decrease by about $4 millioncompared to the current year budget due to strong plan performance and the change from a20-year to a 25-year amortization period. While a change to a 30-year amortization wasrequested and approved by the State as allowed by passage of HB 2485 in 2017, the Counciladopted the plan to use a 25-year amortization period.

If a 20-year amortization period were used, the GF public safety pension costs would be projected to increase about $25 million next year and by a total of almost $158 million for the forecast period. This would have not only impacted our ability to balance next fiscal year without either additional revenue or difficult cuts to existing programs, but would have increased the likelihood for projected deficits throughout the forecast horizon.

Contingency – The contingency fund is assumed to increase from $50 million $52 million, remaining on track to grow to recommended levels. The growth in the contingency fund reflects an increase of approximately $2 million per year going forward. FY 2018-19 also reflects a one-time set-aside of $5 million for Policy body cameras and $5.8 million for a Fire SAFER grant match.

Detailed preliminary estimates with multiple year-to-year comparisons are included in the Zero-Based Budget Inventory of Programs document, which was presented to the Council on February 8, 2018and is available online at phoenix.gov/budget. Revenue and expense estimates continue to be developed, and more definitive estimates will be presented along with the City Manager’s Trial Budget in March.

RECOMMENDATION

The General Fund preliminary 2018-19 budget status and Five-Year Forecast are provided for information and discussion.

ATTACHMENTS

Attachment A- Five-Year General Fund Forecast

Attachment B- Forecast Assumption

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ATTACHMENT B

Forecast Assumptions

Economic Sources - Budget and Research staff relies on several different sources for economic data and forecasts to assist with developing revenue and expenditure projections.

The list below includes the primary sources of information:

State Finance Advisory Committee (FAC) which includes several economists and financeprofessionals from the private and public sectors

State Joint Legislative Budget Committee (JLBC) University of Arizona (U of A), Economic Business Research Center Global Insight, IHS Arizona State University (ASU) – WP Carey School of Business, and Western Blue Chip Arizona Department of Administration (ADOA) - Employment and Population Statistics Office JP Morgan Chase Economic Outlook Center Blue Chip Economic Indicators – National Level U.S. Bureau of Labor Statistics U.S. Census Bureau Phoenix Business Journal University of Arizona (U of A) Forecasting Project – A community-sponsored research program

within the Economic and Business Research Center providing project members with economicforecasts for Arizona, the Phoenix-Mesa metro area, and the Tucson metro area. City staffattends the Forecasting Project quarterly meetings and receives quarterly reports anddata/projections used to assist in developing our forecasts. Forecasting Project data relies onGlobal Insight, IHS which is a well-known economics organization that providescomprehensive economic and financial information. The data from this project is incorporatedinto an econometric software program used to forecast sales tax.

Economic Outlook

The overall consensus from these trusted sources is Arizona and the Phoenix Metro area are generating solid economic growth outpacing the nation, however the growth is slower than previous recoveries. They predict the state will continue to grind out solid gains assuming the national economy avoids recession. However, it is worth noting that since 1945, the average length of a U.S. economic expansion has been approximately 5 years and the longest has been 10 years. The current expansion has lasted over 8 years, which makes it the third longest expansion. While there is no natural length of time for sustained periods of economic activity, if historical averages were to hold true, the U.S. economic expansion will end at some point within the forecast range.

At the national level, the National Blue Chip of Economic Indicators forecast GDP growth of 2.7 % in 2018, which indicates the economy will register another year of above-trend growth. A variety of factors account for the optimism in the 2018 economy: better-than-expected monthly reports oneconomic activity, the acceleration in domestic demand as well as export growth, the rebound in residential investment, and Congressional passage of the tax reform package in mid-December last year. However, a sharper-than-expected rise in interest rates could be the biggest threat to continued U.S. economic growth in 2018 (Blue Chip Economic Indicators, Vol. 43, No. 1 January 2018).

Arizona had regained the jobs lost during the Great Recession in 2016, however, job growth lost momentum in 2017, with over-the-year gains gradually decelerating throughout the year. The 2017 third quarter job growth rate for Arizona was 1.5%. It was slightly above the U.S. rate of 1.4%, but well below state job gains in the third quarter of 2016 of 2.8% (Economic Outlook, 2017 4th Quarter

Report). The slower job gains might be offset by the increased hourly wages and recovered housingmarket. The economist at Arizona State University forecasts average hourly wages will increase byabout 4.5% in 2018, and the housing industry will continue to recover with a 15% increase in the number of single-family home permits forecast, although the boom in multifamily construction is projected to start to cooling down (Economic Forecasting Luncheon, November 2017).

The State’s FAC indicated in January 2018 that Arizona ranks 14th in economic momentum, which is the same rank as last year. The rankings for major economic factors are listed below:

AZ Rate AZ Rank

Change in Personal Income (Sept) 3.8% 20

Change in Population (July) 1.7% 6

Change in Employment (Nov) 1.1% 18

Unemployment Rate (Nov) 5.0% 29

Although Arizona still ranks behind half of the U.S. in unemployment rate, there is positive news. The ranking of change in employment has improved from 29 to 18. Furthermore, according to the U of A Economic Business Research Center, “Arizona is well positioned to continue to generate growth at a pace that exceeds the national average” (Economic Outlook, 2017 4th Quarter Report).

Other significant economic assumptions from trusted sources built into this forecast include the following:

Personal income for the Phoenix Metro area is projected to grow an average of 6.4% for theforecast and range from 6.1% to 6.7% (UA/Global lnsight).

Growth in population is expected to continue, but at lower rates than historical growth.Phoenix Metro population is projected to grow 1.8% in 2018 up from 1.7% in 2017 (U of AEconomic Research Center/FAC).

Non-farm employment in metro Phoenix is estimated to grow 2.7% in 2018, flat from 2.7% in2017 (U of A Economic Research Center).

Arizona unemployment is estimated to fall to 4.5% in 2018, compared to 4.9% in 2017 (U of AEconomic Research Center).

The near term outlook for real estate in Greater Phoenix remains bullish. Single familyresidential building is projected to increase by 15% in 2018, which will be the best year forsingle family housing since 2007 (ASU W.P. Carey School of Business- Greater Phoenix BlueChip Forecast).

Inflation is expected to increase during the forecast period with the Consumer Price Index-AllUrban Consumers (CPI-U) rising by 2.0% in FY 2018-19. (UA Economic Research Center). Inthe past 50 years, CPI-U has ranged from negative 0.4% in 2009, to a high of 13.5% in 1980(U.S. Department of Labor Bureau of Labor Statistics).

Resource Assumptions- Revenue growth rates are determined using information from our above mentioned trusted sources, analyzing actual revenue trends and averages, and factoring in any known policy or legislative changes.

Revenue assumptions beyond the broader economic considerations are described below:

No further period of recession with modest revenue growth for the forecast horizon.

Annual revenue growth rates range from 1.6% to 4.4% during the forecast period.

No impact to current revenue tax base, as provided in applicable state statutes and Cityordinances.

No future impact to state shared revenue formulas or legislation or action that could impact cityrevenue sources.

Phoenix’s relative population share, which impacts state shared revenue collections, wasprojected to remain flat throughout the forecast period. The actual share will change annuallybased on Census Bureau Population Estimates and the 2021-22 share will be impacted by the2020 Decennial Census.

No future fee increases or decreases and no new sources of revenue.

Potential increases to revenue resulting from economic development efforts and furtherinnovation and efficiency savings are not included in the forecast.

Ranges provided for revenues: upper and lower ends of ranges increase slightly in later yearsof the forecast reflecting additional economic uncertainty.

Expenditure Assumptions- Assumptions regarding forecasted expenditures are described below:

Annual operating expenditure growth rates, except for pension, are based on the historicalaverages.

The forecast assumes a change from a 20-year to a 25-year amortization period for PSPRSand reflects changes in COPERS costs resulting from a structural change in budgetedpositions for the Street Transportation Department. Additional assumptions about pensioncosts are based on historical actuals and information provided by the COPERS and PSPRSactuaries. The forecast does not attempt to predict future pension liabilities, assets or otherplan assumptions, but rather to account for the currently anticipated costs of pension system.

The impact of pension reform measures approved by voters and the costs for PSPRS resultingfrom the ruling in the Hall vs. Elected Officials Retirement Plan have been included in theforecast based on projections provided by the plan’s actuary.

The forecast does not include the impact of additional potential reform measures for COPERSor PSPRS or the impact of pending litigation.

The forecast includes no additional future funding for program enhancements, unfundedmandates, expiring grants, etc.

Pay-as-you-go capital costs are based on the preliminary estimates in the five-year CapitalImprovement Program.

The forecast includes projected debt service for the mandated Regional Wireless Cooperativeradio replacements and the replacement of the city phone system and associated technologyinfrastructure.

The contingency fund is assumed to increase annually $2 million through the forecast period.

The 2018-19 total compensation costs are based on projections under the current Council-adopted pay plan ordinance and employee contracts.

No other financial impact from changes to labor unit contracts resulting from futurenegotiations is assumed.

In forecast years with a projected baseline deficit or surplus, the next year’s operatingexpenses are assumed to decrease or increase by the baseline deficit/surplus amount prior toapplying the assumed annual growth projection, as the City is required by Charter to balancethe budget each year.

Ranges provided for operating expenditures: upper and lower ends of ranges increase slightlyin later years of the forecast reflecting additional economic uncertainty.

Other Items that Could Impact the Base Budget or the Five-Year Forecast- The costs below are items and needs that do not currently have a funding source or will likely require additional funding and therefore could have an adverse impact on the five-year forecast as it’s currently presented. These costs may need to be ultimately borne, in part or in whole, by the General Fund if no other funding source is identified by the time these costs are imminent.

The forecast reflects increased funding of approximately $7 million per year that will be used toaddress aging City infrastructure, critical equipment, and other technology needs. Examples ofthese projects include replacing fire life safety systems in City facilities and replacing theAccess and Badging Control System. The Access and Badging Control System used byPublic Works to limit access to City facilities will reach end of life in 2018. At that time thebadging system will be completely unsupported by the manufacturer and parts may becomeobsolete. Staff is currently working to identify the scope, cost and timing of these and othercapital projects. Under the direction of the City Manager staff is also working to identify criticalneeds in all City facilities. It is likely that this endeavor will require the work of an external firmthat specializes in facility assessments. It is estimated that these assessments could cost asmuch as $5 million and take as long as three years to complete.

While the forecast shows increased funding for vehicle replacements, the citywide need ismuch greater than the funding that is available. In the Fire Department additional funding isneeded to replace apparatus equipment including pumpers, ambulances and ladders, whichwere originally purchased with voter approved General Obligation Bond funds. Of the 88 firepumper trucks in the fleet, over half will be due for replacement in the next five years. Withlimited funding available, a lease/purchase program was approved by Council to authorize thepurchase of 15 fire pumper trucks at a cost of $1.2 million per year starting in FY 2014-15, andthese costs have been included in the forecast. Additionally, over 1,500 other GF city vehicleswill come due for replacement throughout the forecast period. These include vehicles used byall city departments including police patrol cars. We are currently working with Public Worksand Finance to develop a funding strategy that could address this need.

The Police Department has a fleet of six helicopters. Five of these helicopters are used tosupport daily patrol operations and one is used for mountain rescue. All of these helicoptersare over ten years old and require a significant amount of annual maintenance to keep themoperational and safe according to FAA standards. Given the age, maintenance and number ofhours these helicopters are used annually it is likely that they will need to be replaced in thenear future. The estimated cost of a replacement helicopter is between $4 - $5 million.

The Police Department requires additional funding to implement a body camera program. Afully functional and operational body camera program will require approximately 2,000cameras and between 40 and 50 additional staff in the Police and Law Departments. There isalso a significant cost to maintain and store the video footage. Storage costs are expected toincrease year over year as the amount of required storage increases exponentially. At thistime, the annual cost of a fully operational body camera program is estimated at between $5and $12 million. The 2018-19 preliminary budget reflects $5 million in GF set-aside to assistwith this project.


City Council Report


City of Phoenix Non-Discrimination and Anti-Harassment Policy (Ordinance G-6422)

At the Dec. 5, 2017, Policy Session, Councilwoman Kate Gallego requested staff research and create a Sexual Harassment Policy for City of Phoenix elected officials. On Jan. 10, 2018, City Council approved an eight-hour rule request from staff to thoroughly research and develop options for Council review and consideration. This report provides the City Council with information on Non-Discrimination and Anti-Harassment Policy Options for elected officials, board members, and volunteers, and provides a draft ordinance based on recommendations from the Sustainability, Housing, Efficiency and Neighborhoods Subcommittee on Feb. 20, 2018.


SummaryThe City of Phoenix will not tolerate discrimination of any kind, including harassment, based on the person’s race, color, religion, sex, national origin, ethnicity, age, sexual orientation, marital status, gender, gender identity or expression, or disability. The draft ordinance (Attachment A) responds to City Council’s request to research and prepare a draft anti-harassment policy and includes recommendations from the Sustainability, Housing, Efficiency and Neighborhoods Subcommittee.

Concurrence/Prior Council ActionThis item was recommended for City Council approval by the Sustainability, Housing, Efficiency and Neighborhoods Subcommittee on Feb. 20, 2018, by a vote of 3-0.

Responsible DepartmentThis item is submitted by Acting Deputy City Manager Toni Maccarone and the Law Department.

Draft Prepared by Phoenix Law Department Version 4 Dated 2/22/18

ORDINANCE NO. G-_______

AN ORDINANCE AMENDING PHOENIX CITY CODE CHAPTER 2, ARTICLE II, SECTION 2-52(B) TO ADD COMPLIANCE WITH ALL APPLICABLE LAWS TO THE ETHICS POLICY; AND ESTABLISHING A NON-DISCRIMINATION AND ANTI-HARASSMENT POLICY BY ADDING NEW PHOENIX CITY CODE CHAPTER 2, ARTICLE II, SECTION 2-54; AND REFERRING AN AMENDMENT TO PHOENIX CITY CHARTER CHAPTER XVII (THE RECALL) TO PERMIT REMOVAL OF AN ELECTED OFFICIAL FROM OFFICE FOR A VIOLATION OF THE CITY OF PHOENIX ETHICS, GIFT, CONFLICT OF INTEREST, OR NON-DISCRIMINATION AND ANTI-HARASSMENT POLICIES.

____________

BE IT ORDAINED BY THE COUNCIL OF THE CITY OF PHOENIX as follows:

SECTION 1. Phoenix City Code Chapter 2, Article II, Section 2-52(B) is

amended to read as follows:

B. Ethics policy. It is the policy of the City of Phoenix to uphold, promote anddemand the highest standards of ethics from all of its elected officials,employees, board members, and volunteers. Accordingly, all City electedofficials, employees, board members, and volunteers must maintain theutmost standards of personal integrity, truthfulness, honesty and fairnessin carrying out their public duties, avoid any improprieties in their roles aspublic servants, COMPLY WITH ALL APPLICABLE LAWS, and never usetheir City position or power for improper personal gain.

SECTION 2. Phoenix City Code Chapter 2, Article II, Section 2-54 is added to

read as follows:

SEC. 2-54. CITY OF PHOENIX NON-DISCRIMINATION AND ANTI-HARASSMENT POLICY.

A. DEFINITIONS. THE FOLLOWING DEFINITIONS APPLY TO THISSECTION. THE PLURAL OF THE WORD OR PHRASE INCLUDES THESINGULAR, AND THE SINGULAR INCLUDES THE PLURAL.

1. BOARD MEMBER MEANS A MEMBER OF A CITY OF PHOENIXBOARD, COMMITTEE, COMMISSION, OR TASK FORCE.

2. ELECTED OFFICIAL MEANS A PERSON ELECTED ORAPPOINTED AS MAYOR OR AS COUNCIL MEMBER OF THECITY OF PHOENIX.

3. TERM OF OFFICE FOR AN ELECTED OFFICIAL MEANS THEPERIOD THAT RUNS FROM THE DATE AN ELECTED OFFICIALIS DEEMED A QUALIFIED CANDIDATE FOR A CITY OFPHOENIX OFFICE AND CONTINUES UNINTERRUPTEDTHROUGH THE DATE THE ELECTED OFFICIAL VACATES THEOFFICE. TERM OF OFFICE FOR A BOARD MEMBER MEANSTHE PERIOD THAT RUNS FROM THE DATE OF THE BOARDMEMBER’S INITIAL OATH OF OFFICE AND CONTINUESUNINTERRUPTED THROUGH THE DATE THE BOARD MEMBERVACATES THE OFFICE. TERM OF OFFICE FOR A VOLUNTEERMEANS THE PERIOD THAT RUNS FROM THE FIRST DATE AVOLUNTEER PROVIDES SERVICES TO THE CITY OF PHOENIXAND CONTINUES UNINTERRUPTED THROUGH THE LASTDATE THE VOLUNTEER PROVIDES SERVICES TO THE CITYOF PHOENIX.

4. VOLUNTEER MEANS A PERSON, OTHER THAN A BOARDMEMBER, WHO PROVIDES SERVICES TO THE CITY OFPHOENIX WITHOUT ANY EXPRESS OR IMPLIED PROMISE OFCOMPENSATION, AND SERVES AS A HEARING OFFICER,INTERN, EXTERN, CONTRACTOR, VENDOR, OR OTHERWISESERVES IN THE ADMINISTRATIVE OFFICES OF AN ELECTEDOFFICIAL, THE CITY MANAGER, OR A CITY OF PHOENIXDEPARTMENT OR FUNCTION HEAD. A BLOCK WATCHCAPTAIN IS NOT A VOLUNTEER FOR PURPOSES OF THISPOLICY.

B. NON-DISCRIMINATION AND ANTI-HARASSMENT POLICY. WHENACTING IN THE COURSE AND SCOPE OF THEIR DUTIES DURINGTHEIR TERM OF OFFICE, CITY OF PHOENIX ELECTED OFFICIALS,BOARD MEMBERS, AND VOLUNTEERS MUST NOT BY WORDS ORCONDUCT HARASS OR DISCRIMINATE AGAINST ANY PERSONBASED ON THE PERSON’S RACE, COLOR, RELIGION, SEX,NATIONAL ORIGIN, ETHNICITY, AGE, SEXUAL ORIENTATION,MARITAL STATUS, GENDER, GENDER IDENTITY OR EXPRESSION,OR DISABILITY. IN ADDITION, CITY OF PHOENIX ELECTEDOFFICIALS, BOARD MEMBERS, AND VOLUNTEERS MUST NOTRETALIATE AGAINST ANY PERSON WHO MAKES A COMPLAINT OFDISCRIMINATION OR PARTICIPATES IN THE INVESTIGATION OF ACOMPLAINT.

C. FILING OF A COMPLAINT. ANY PERSON WHO IS AGGRIEVED BY AVIOLATION OF THE NON-DISCRIMINATION AND ANTI-HARASSMENTPOLICY BY AN ELECTED OFFICIAL, BOARD MEMBER, ORVOLUNTEER MAY FILE WITH THE CITY CLERK A WRITTENCOMPLAINT ALLEGING SPECIFIC VIOLATIONS OF THE POLICY THATOCCURRED DURING THE TERM OF OFFICE OF THE ELECTEDOFFICIAL, BOARD MEMBER, OR VOLUNTEER. UPON RECEIPT OF ACOMPLAINT, THE CITY CLERK WILL ASSIGN A MATTER NUMBER TOTHE COMPLAINT. FOR THE PERIOD THAT BEGINS WITH THEASSIGNMENT OF THE MATTER NUMBER BY THE CITY CLERKTHROUGH FINAL ACTION BY COUNCIL IN OPEN SESSION, THECOMPLAINT WILL BE REFERENCED SOLELY BY MATTER NUMBER,AND THE COMPLAINT, INVESTIGATION AND ANY PROCEEDINGSRELATED TO ITS EVALUATION MUST REMAIN CONFIDENTIAL.

D. CONSIDERATION OF A COMPLAINT. WITHIN FIVE DAYS OFRECEIVING A COMPLAINT, THE CITY CLERK WILL FORWARD THECOMPLAINT TO THE CITY ATTORNEY. IF THE COMPLAINTCONTAINS ALLEGATIONS AGAINST AN ELECTED OFFICIAL ORBOARD MEMBER, THE COMPLAINT WILL BE PLACED ON THECOUNCIL’S NEXT AVAILABLE EXECUTIVE SESSION AGENDA. IF THECOMPLAINT CONTAINS ALLEGATIONS AGAINST A VOLUNTEER, THECITY MANAGER WILL TAKE ALL FURTHER ACTION RELATED TO THECOMPLAINT.

E. ELECTED OFFICIAL PARTICIPATION. IF A COMPLAINT IS FILED BYOR MAKES ALLEGATIONS AGAINST AN ELECTED OFFICIAL, THEELECTED OFFICIAL MUST NOT PARTICIPATE IN ANY COUNCILDISCUSSION OR VOTE RELATED TO THE COMPLAINT, PROVIDED,HOWEVER, THAT AN ELECTED OFFICIAL WHO FILES OR IS NAMEDIN A COMPLAINT MAY DEFEND AND RESPOND TO ALLEGATIONS IN

THE COMPLAINT AND FULLY PARTICIPATE IN ANY INVESTIGATION OF THE COMPLAINT.

F. INITIAL EVALUATION BY THE COUNCIL. COUNCIL MEMBERS WHODID NOT FILE AND ARE NOT NAMED IN THE COMPLAINT AGAINSTAN ELECTED OFFICIAL OR BOARD MEMBER WILL INITIALLYEVALUATE THE COMPLAINT IN EXECUTIVE SESSION TO PROVIDEDIRECTION ON WHETHER THE ALLEGATIONS IN THE COMPLAINT:

1. ARE FACIALLY SUFFICIENT IN WHOLE OR IN PART TOWARRANT INVESTIGATION; OR

2. ARE FACIALLY INSUFFICIENT TO WARRANT INVESTIGATIONAND ARE THEREFORE SUBJECT TO DISMISSAL. THECOUNCIL’S DISMISSAL OF THE COMPLAINT IS NOT SUBJECTTO REVIEW; OR

3. MAY INVOLVE A CRIME, IN WHICH CASE THE PARTICIPATINGCOUNCIL MEMBERS MAY REFER THE COMPLAINT TO THEPROPER AUTHORITY FOR INVESTIGATION ANDPROSECUTION. IF THE COUNCIL REFERS THE COMPLAINTTO ANOTHER AUTHORITY FOR CRIMINAL INVESTIGATION ORPROSECUTION, THE COUNCIL MUST STAY ALL ACTIONRELATED TO THE COMPLAINT UNTIL THE CRIMINALINVESTIGATION AND ANY RELATED PROCEEDINGS ARERESOLVED.

IF THE PARTICIPATING COUNCIL MEMBERS FAIL TO PROVIDE DIRECTION RELATING TO SUBSECTIONS (F)(1) THROUGH (3) OF THIS SECTION, THE COMPLAINT IS DEEMED DISMISSED.

G. INVESTIGATION OF A COMPLAINT. UPON A DETERMINATION THATA COMPLAINT AGAINST AN ELECTED OFFICIAL OR BOARDMEMBER WARRANTS INVESTIGATION, THE PARTICIPATINGCOUNCIL MEMBERS MAY REFER THE COMPLAINT FORINVESTIGATION BY A QUALIFIED LAW FIRM. THE IDENTITIES OFTHE COMPLAINANT AND THE ELECTED OFFICIAL, BOARD MEMBER,OR VOLUNTEER NAMED IN THE COMPLAINT MUST REMAINCONFIDENTIAL UNTIL FINAL ACTION ON THE MERITS OF THECOMPLAINT BY THE PARTICIPATING COUNCIL MEMBERS (FOR ANELECTED OFFICIAL OR BOARD MEMBER) OR CITY MANAGER (FORA VOLUNTEER).

H. INVESTIGATION REPORT. AFTER THE INVESTIGATION OF ACOMPLAINT CONCLUDES, THE INVESTIGATOR WILL PREPARE AWRITTEN REPORT WITH FINDINGS OF FACT AND CONCLUSIONSOF LAW RELATING TO THE COMPLAINT. A REPORT RELATING TO ACOMPLAINT AGAINST AN ELECTED OFFICIAL OR BOARD MEMBERWILL BE PROVIDED TO THE PARTICIPATING COUNCIL MEMBERSFOR SUCH ACTION AS THE PARTICIPATING COUNCIL MEMBERSDEEM APPROPRIATE. THE REPORT WILL BE AVAILABLE FORPUBLIC INSPECTION UNDER THE ARIZONA PUBLIC RECORDS ACTAFTER FINAL COUNCIL ACTION IN OPEN SESSION.

I. CONSIDERATION OF AN INVESTIGATION REPORT. THEINVESTIGATION REPORT RELATING TO A COMPLAINT AGAINST ANELECTED OFFICIAL OR BOARD MEMBER WILL BE PLACED ON THEAGENDA OF THE NEXT AVAILABLE MEETING OF THE FULLCOUNCIL AND MAY BE HEARD IN EXECUTIVE SESSION ASPROVIDED BY LAW. BY THE AFFIRMATIVE VOTE OF THREE-FOURTHS OF THE PARTICIPATING COUNCIL MEMBERS, THECOUNCIL MAY CONCLUDE THAT AN ELECTED OFFICIAL HASVIOLATED THE POLICY AND IMPOSE THE ACTIONS OR CIVILSANCTIONS PERMITTED BY THIS SECTION OR DISMISS THECOMPLAINT. IF LESS THAN THREE-FOURTHS OF PARTICIPATINGCOUNCIL MEMBERS VOTE TO IMPOSE ACTIONS OR CIVILSANCTIONS OR TO DISMISS THE COMPLAINT, THE COMPLAINT ISDEEMED DISMISSED.

J. SANCTIONS. BY THE AFFIRMATIVE VOTE OF THREE-FOURTHS OFTHE PARTICIPATING COUNCIL MEMBERS, THE COUNCIL MAYIMPOSE ANY OF THE FOLLOWING ACTIONS OR CIVIL SANCTIONSFOR A VIOLATION OF THE NON-DISCRIMINATION AND ANTI-HARASSMENT POLICY BY AN ELECTED OFFICIAL: CENSURE; AMAXIMUM CIVIL SANCTION IN THE AMOUNT OF $2,500.00 FOREACH VIOLATION; OR, IF APPROVED BY QUALIFIED CITY OFPHOENIX ELECTORS, REMOVAL FROM OFFICE. BY A MAJORITYVOTE, THE COUNCIL MAY IMPOSE ANY OF THE FOLLOWINGACTIONS OR CIVIL SANCTIONS FOR VIOLATION OF THE NON-DISCRIMINATION AND ANTI-HARASSMENT POLICY BY A BOARDMEMBER: CENSURE, A MAXIMUM CIVIL SANCTION IN THE AMOUNTOF $2,500.00 FOR EACH VIOLATION, OR REMOVAL. PHOENIX CITYCODE SECTION 1-5 DOES NOT APPLY TO AN ACTION UNDER THISSUBSECTION.

K. REMOVAL OF BOARD MEMBER. COMPLIANCE WITH THIS SECTIONIS NOT REQUIRED FOR THE COUNCIL TO ACT UNDER PHOENIXCITY CODE SECTION 2-51.

SECTION 3. An amendment to Phoenix City Charter Chapter XVII (The Recall)

to permit the removal of a council member from office by an affirmative vote of three-

fourths of council members for the council member’s violation of the City of Phoenix

ethics, gift, conflict of interest, or non-discrimination and anti-harassment policies shall

be submitted to the qualified City of Phoenix electors for their approval or rejection at

the next citywide election held according to law.

PASSED by the Council of the City of Phoenix this ___ day of

___________________, 2018.

____________________________________ M A Y O R

ATTEST:

City Clerk

APPROVED AS TO FORM:

Acting City Attorney

REVIEWED BY:

City Manager

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