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August 16, 2011 Agenda
AGENDA CITY OF DENTON CITY COUNCIL August 16, 2011 After determining that a quorum is present, the City Council of the City of Denton, Texas will convene in a Work Session on Tuesday, August 16, 2011 at 3:00 p.m. in the Council Work Session Room at City Hall, 215 E. McKinney Street, Denton, Texas at which the following items will be considered: WORK SESSION 1. Citizen Comments on Consent Agenda Items This section of the agenda allows citizens to speak on Consent Agenda Items only. Each speaker will be given a total of three (3) minutes to address any items he/she wishes that are listed on the Consent Agenda. A Request to Speak Card should be completed and returned to the City Secretary before Council considers this item. 2. Requests for clarification of agenda items listed on the agenda for August 16, 2011. 3. Receive a report, hold a discussion and give staff direction on the 2011-12 City Manager's Proposed Budget, Capital Improvement Program, and Five-Year Financial Forecast. 4. Receive a report, hold a discussion and give staff direction regarding an Interlocal Agreement between the City of Denton and Denton County Transportation Authority (DCTA) for maintenance and repair of DCTA's fleet of vehicles. 5. Receive a report, hold a discussion, and give staff direction regarding the Solid Waste and Recycling Services overview of the department strategic plan with additional detail the amendment of the facility permit to accommodate expanding services. 6. Receive a report, hold a discussion, and give staff direction on the execution of a contract for Professional Services for Wallace Roberts and Todd to serve as the consultant on the update to the City of Denton Comprehensive Plan. Following the completion of the Work Session, the City Council will convene in a Closed Meeting to consider specific items when these items are listed below under the Closed Meeting section of this agenda. When items for consideration are not listed under the Closed Meeting section of the agenda, the City Council will not conduct a Closed Meeting and will convene at the time listed below for its regular or special called meeting. The City Council reserves the right to adjourn into a Closed Meeting on any item on its Open Meeting agenda consistent with Chapter 551 of the TEXAS GOVERNMENT CODE, as amended, as set forth below. CLOSED MEETING 1. Closed Meeting: A. Deliberations Regarding Certain Public Power Utilities: Competitive Matters - Under Texas Government Code Section 551.086. City of Denton City Council Agenda August 16, 2011 Page 2 1. Receive competitive public power information from staff in the form of a proposed operating budget for Denton Municipal Electric ("DME") for the upcoming fiscal year, including without limitation, revenues, expenses, commodity volumes, and commitments, and the direction of DME; and discuss, deliberate, consider adoption of the budget and other matters, and provide staff with direction regarding such matters. B. Consultation with Attorneys - Under Texas Government Code Section 551.071. 1. Consult with, and provide direction to, City's attorneys on legal rights, restrictions, obligations, and issues associated with the proposed annexation of DH-7, DH-9, and DH-12, where a public discussion of such legal matters would conflict with the duty of the City's attorneys to the City of Denton, Texas under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, and where such matters may become an issue in potential litigation. 2. Consultation, discussion, deliberation, and receipt of information from the City's attorneys regarding potential litigation with Denton County Electric Cooperative, Inc. d/b/a CoServ Electric and CoServ Gas, Ltd. relating to disputes concerning franchise issues, where public discussion of these legal matters would clearly conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. C. Deliberations regarding consultation with the City Attorney - Under Texas Government Code Section 551.071, Deliberations regarding Economic Development Negotiations - Under Texas Government Code Section 551.087. 1. Receive a report and hold a discussion regarding legal issues on matters in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with the provisions of the Texas Open Meetings Act, Chapter 551 of the Texas Government Code. Also hold a discussion regarding granting economic development incentives to a property owner for the purpose of redeveloping a major retail facility in the City of Denton, located at Loop 288 and I-35E. This discussion shall include commercial and financial information the City Council has received from the property owner which the City Council seeks to have the property redeveloped in or near the territory of the city, and with which the City Council is conducting economic development negotiations; including the offer of financial or other incentives. ANY FINAL ACTION, DECISION, OR VOTE ON A MATTER DELIBERATED IN A CLOSED MEETING WILL ONLY BE TAKEN IN AN OPEN MEETING THAT IS HELD IN COMPLIANCE WITH TEXAS GOVERNMENT CODE, CHAPTER 551, EXCEPT TO THE EXTENT SUCH FINAL ACTION, DECISION, OR VOTE IS TAKEN IN THE CLOSED MEETING IN ACCORDANCE WITH THE PROVISIONS OF §551.086 OF THE TEXAS GOVERNMENT CODE (THE `PUBLIC POWER EXCEPTION'). THE CITY COUNCIL RESERVES THE RIGHT TO ADJOURN INTO A CLOSED City of Denton City Council Agenda August 16, 2011 Page 3 MEETING OR EXECUTIVE SESSION AS AUTHORIZED BY TEX. GOVT. CODE, §551.001, ET SEQ. (THE TEXAS OPEN MEETINGS ACT) ON ANY ITEM ON ITS OPEN MEETING AGENDA OR TO RECONVENE IN A CONTINUATION OF THE CLOSED MEETING ON THE CLOSED MEETING ITEMS NOTED ABOVE, IN ACCORDANCE WITH THE TEXAS OPEN MEETINGS ACT, INCLUDING, WITHOUT LIMITATION §551.071-551.086 OF THE TEXAS OPEN MEETINGS ACT. Regular Meeting of the City of Denton City Council at 6:30 p.m. in the Council Chambers at City Hall, 215 E. McKinney Street, Denton, Texas at which the following items will be considered: REGULAR MEETING 1. PLEDGE OF ALLEGIANCE A. U. S. Flag B. Texas Flag "Honor the Texas Flag - I pledge allegiance to thee, Texas, one state under God, one and indivisible." 2. PROCLAMATIONS/PRESENTATIONS A. Proclamations/Awards 1. Presentation of 2011 National City Water Taste Test Competition Award 3. CITIZEN REPORTS A. Review of procedures for addressing the City Council. B. Receive citizen reports from the following: 1. Caleb O'Rear regarding Smoke Free Denton. 4. CONSENT AGENDA Each of these items is recommended by the Staff and approval thereof will be strictly on the basis of the Staff recommendations. Approval of the Consent Agenda authorizes the City Manager or his designee to implement each item in accordance with the Staff recommendations. The City Council has received background information and has had an opportunity to raise questions regarding these items prior to consideration. Listed below are bids, purchase orders, contracts, and other items to be approved under the Consent Agenda (Agenda Items A - N). This listing is provided on the Consent Agenda to allow Council Members to discuss or withdraw an item prior to approval of the Consent Agenda. If no items are pulled, Consent Agenda Items A - N below will be approved with one motion. If items are pulled for separate discussion, they may be considered as the first items following approval of the Consent Agenda. A. Consider approval of a resolution of the City of Denton approving a modification to the stipulation made a part of the settlement agreement between the Alliance of Oncor Cities ("AOC") and Oncor Electric Delivery Company LLC ("Oncor" or "Company") regarding the Company's statement of intent to change electric rates City of Denton City Council Agenda August 16, 2011 Page 4 in all cities exercising original jurisdiction; determining that this resolution was passed in accordance with the requirements of the Texas Open Meeting Act; repealing any prior resolutions inconsistent with this resolution; requiring delivery of this resolution to the Company and Legal Counsel; and declaring an effective date. B. Consider approval of a resolution of the City Council of the City of Denton, Texas, ("City") approving a settlement between Atmos Energy Corp's Mid-Tex Division and Atmos Texas Municipalities ("ATM") resulting in no change in base rates and approving tariffs which reflect costs related to the Steel Pipe Replacement Program; finding the rates set by the attached tariffs to be just and reasonable; requiring delivery of the resolution to the company and legal counsel; determining that the meeting at which this resolution was approved complied with the Open Meetings Act; making other findings and provisions related to the subject; and declaring an effective date. C. Consider approval of a resolution allowing the Black Chamber of Commerce to be the sole participant allowed to sell alcoholic beverages at the Blues Festival on September 17 - 18, 2011, upon certain conditions; authorizing the City Manager or his designee to execute an agreement in conformity with this resolution; and providing for an effective date. The Parks, Recreation and Beautification Board recommends approval (5-0). D. Consider a request for an exception to the Noise Ordinance for the purpose of the 13th Annual Denton Blues Festival, sponsored by the Denton Black Chamber of Commerce. The event will be held in Quakertown Park on Saturday, September 17, 2011, from 1:00 p.m. to 10:30 p.m. and Sunday, September 18, 2011, from 1:00 p.m. to 8:30 p.m. The exception is specifically requested to increase hours of operation for amplified sound on Saturday from 10:00 p.m. until 10:30 p.m. and for amplified sound on Sunday. The amplified sound will not go above the allowable 70 decibels for an outdoor concert. E. Consider approval of a resolution voting for a member to the Board of Managers of the Denco Area 9-1-1 District; and declaring an effective date. F. Consider adoption of an ordinance of the City Council of the City of Denton, Texas, approving a grant application from Ed Canada, owner of 207 N. Elm Street, from the Downtown Incentive Grant Program not to exceed $10,000; and providing for an effective date. The Economic Development Partnership Board recommends approval (6-0). G. Consider adoption of an ordinance of the City Council of the City of Denton, Texas, approving Bylaws for Tax Increment Reinvestment Zone Number 1 (Downtown TIF). The TIF Board recommends approval (7-0). H. Consider adoption of an ordinance of the City Council of the City of Denton, Texas, approving the Project Plan for Tax Increment Reinvestment Zone Number 1 (Downtown TIF). The TIF Board recommends approval (7-0). City of Denton City Council Agenda August 16, 2011 Page 5 L Consider adoption of an ordinance of the City Council of the City of Denton, Texas, approving the Finance and Feasibility Plan for Tax Increment Reinvestment Zone Number 1 (Downtown TIF). The TIF Board recommends approval (7-0). J. Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and CareHere, LLC; approving the expenditure of funds; and providing for an effective date. K. Consider adoption of an ordinance of the City of Denton approving a Lease Agreement between the City of Denton and Columbia Medical Center of Denton Subsidiary, L.P. d/b/a Denton Regional Medical Center for the City of Denton's Health Center in the Denton Regional Medical Center Professional Building; authorizing the expenditure of funds therefor; and providing an effective date. L. Consider adoption of an ordinance of the City of Denton, Texas amending certain provisions of Chapter 17 of the Denton Code of Ordinances, the Denton Property Maintenance Code, including Sections 17-2, 17-35, 17-40, 17-60, 17-153 and 17- 154; providing a severability clause; and providing an effective date. M. Consider adoption of an ordinance establishing an economic development program under Chapter 380 of the Local Government Code for making grants of public money to promote economic development and to stimulate business activity in the City of Denton; approving an agreement with GTM Development, Ltd., regarding the purchase of Golden Triangle Mall and renovation and improvement of an approximate 73.2 acre parcel of land commonly known as Golden Triangle Mall generally located at the northwest corner of I-35 E. West and East Loop 288 in Denton, Texas; authorizing the expenditure of funds therefore; and providing an effective date. N. Consider adoption of an ordinance authorizing the City Manager, or his designee, to execute for and on behalf of the City of Denton, Texas (the "City") an Easement Encroachment Agreement (the "Agreement"), by and between the City and the University of North Texas ("UNT"), regarding the encroachment by UNT upon a Drainage Basin Easement owned by the City, encumbering an approximate 5.297 acre tract of land, more or less, located in the E. Pulchalski Survey, Abstract Number 996 and the A.N.B. Tompkins Survey, Abstract No. 11246, generally located at 1251 South Bonnie Brae Street, City of Denton, Denton County, Texas; providing for termination of ordinance and agreement upon failure of UNT to approve and execute the agreement, and providing an effective date. The Public Utilities Board recommends approval (5-0). 5. ITEMS FOR INDIVIDUAL CONSIDERATION A. Consider adoption of an ordinance adopting a Service Plan for an area of land to be annexed to the City of Denton, Texas, pursuant to an annexation plan, generally identified as DH-7 consisting of approximately 143 acres located on the east and north sides of Teasley Lane, south of Teasley Harbor subdivision and west of Southlake Drive, and more specifically identified and depicted in Exhibit City of Denton City Council Agenda August 16, 2011 Page 6 "A" attached hereto, which area is adjacent to and abuts the existing city limits of the City of Denton, Texas; providing a savings clause; and providing an effective date. B. Consider adoption of an ordinance adopting a Service Plan for an area of land to be annexed to the City of Denton, Texas, pursuant to an annexation plan, generally identified as DH-9 consisting of approximately 298 acres located north of Pockrus Page Road, and north, south and northeast of Edwards Road, and more specifically identified and depicted in Exhibit "A" attached hereto, which area is adjacent to and abuts the existing city limits of the City of Denton, Texas; providing a savings clause; and providing an effective date. C. Consider adoption of an ordinance adopting a Service Plan for an area of land to be annexed to the City of Denton, Texas, pursuant to an annexation plan, generally identified as DH-12 consisting of approximately 1,167 acres located south of east University Drive, east of north Mayhill Road, north and south of Blagg Road, north and south of Mills Road and east and west of south Trinity Road, and more specifically identified and depicted in Exhibit "A" attached hereto, which area is adjacent to and abuts the existing city limits of the City of Denton, Texas; providing a savings clause; and providing an effective date. D. Consider nominations/appointments to the City's boards and commissions. 1. Animal Shelter Advisory Committee 2. Community Development Advisory Committee 3. Health & Building Standards Commission 4. Historic Landmark Commission 5. Public Art Committee 6. Zoning Board of Adjustment E. Consider adoption of an ordinance establishing a resident only parking program in a portion of the Denia Neighborhood to address hazardous conditions caused by adjacent uses and to protect the residents of this neighborhood from harmful conditions and promote the health, safety and welfare of the residents of this neighborhood; and establishing an effective date. 6. PUBLIC HEARINGS A. Hold a public hearing to receive comments from the public regarding proposed redistricting Illustrative Plans concerning proposed new boundaries for City of Denton councilmember districts and provide staff direction regarding such plans. 7. CONCLUDING ITEMS A. Under Section 551.042 of the Texas Open Meetings Act, respond to inquiries from the City Council or the public with specific factual information or recitation of policy, or accept a proposal to place the matter on the agenda for an upcoming meeting AND City of Denton City Council Agenda August 16, 2011 Page 7 Under Section 551.0415 of the Texas Open Meetings Act, provide reports about items of community interest regarding which no action will be taken, to include: expressions of thanks, congratulations, or condolence; information regarding holiday schedules; an honorary or salutary recognition of a public official, public employee, or other citizen; a reminder about an upcoming event organized or sponsored by the governing body; information regarding a social, ceremonial, or community event organized or sponsored by an entity other than the governing body that was attended or is scheduled to be attended by a member of the governing body or an official or employee of the municipality; or an announcement involving an imminent threat to the public health and safety of people in the municipality that has arisen after the posting of the agenda. B. Possible Continuation of Closed Meeting under Sections 551.071-551.086 of the Texas Open Meetings Act. C. Official Action on Closed Meeting Item(s) under Sections 551.071-551.086 of the Texas Open Meetings Act. CERTIFICATE I certify that the above notice of meeting was posted on the bulletin board at the City Hall of the City of Denton, Texas, on the day of 2011 at o'clock (a.m.) (p.m.) CITY SECRETARY NOTE: THE CITY OF DENTON CITY COUNCIL CHAMBERS IS ACCESSIBLE IN ACCORDANCE WITH THE AMERICANS WITH DISABILITIES ACT. THE CITY WILL PROVIDE SIGN LANGUAGE INTERPRETERS FOR THE HEARING IMPAIRED IF REQUESTED AT LEAST 48 HOURS IN ADVANCE OF THE SCHEDULED MEETING. PLEASE CALL THE CITY SECRETARY'S OFFICE AT 349-8309 OR USE TELECOMMUNICATIONS DEVICES FOR THE DEAF (TDD) BY CALLING 1-800-RELAY- TX SO THAT A SIGN LANGUAGE INTERPRETER CAN BE SCHEDULED THROUGH THE CITY SECRETARY'S OFFICE. AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Finance All ACM: Jon Fortune SUBJECT Receive a report, hold a discussion, and give staff direction on the 2011-12 Proposed Budget, Capital Improvement Program, and Five-Year Financial Forecast. BACKGROUND The FY 2011-12 City Manager's Proposed Budget was submitted to the Council on July 29. Staff provided the City Council with a comprehensive overview of the proposed budget at a Budget Work Session on August 4, 2011. In addition, the City Council also discussed the proposed budget on August 9, 2011. The purpose of this agenda item is to provide the City Council with an additional opportunity for questions and dialogue. During the above mentioned meetings, the City Council asked a number of questions and requested a variety of information concerning the budget proposal. In response to the questions, staff has prepared the attached memorandum (Exhibit 1) that summarizes the questions we received and the answers that we have been able to compile. To illustrate the potential financial impact of additional street maintenance funding, a short presentation is also provided to demonstrate the long term effects on the five year financial forecast (Exhibit 2). In addition, as discussed during the August 4, 2011, Budget Workshop, staff is requesting City Council direction on the prioritization of several Council and/or staff issues that have been discussed. An excerpt from the August 4 presentation is also included in Exhibit 2 to assist with the facilitation of this conversation. Below is the schedule we will follow to adopt the budget and tax rate: September 6 Budget Work Session Public Hearing on Proposed Budget September 13 Budget Work Session September 20 City Council Adopts Budget and Tax Rate Agenda Information Sheet August 16, 2011 Page 2 I look forward to discussing the budget materials in detail with you. If you have any questions, or need additional information, please let me know. EXHIBIT 1. Question and Answer Memo 2. PowerPoint Presentation Respectfully Submitted By: Bryan Langley Chief Financial Officer EXHIBIT 1 DENTON Finance Departments 215 E. McKinney s Denton, 71 76201 (440) 3.14-822.1 DFIV1letro (472) 434-2259 Fax (440) 3.14-7206 MEMORANDUM DATE: August 16, 2011 TO: Honorable Mayor and Members of the City Council FROM: Bryan Langley, Chief Financial Officer SUBJECT: City Council Budget Workshop Questions and Responses Information regarding the FY 2011-12 Proposed Budget and Five Year Forecast was presented to the City Council on August 4. Below is a summary of the questions that I have received and the answers that we have been able to compile. For the items that require further research, we will provide additional information at a future City Council meeting. Q1: Provide information on the supplemental package for the neighborhood planning program. A: Planning Department staff requested an additional $80,800 to improve neighborhood planning activities ($55,800) and to fund a city-wide grant program ($25,000). Attached is the Planning Department's supplemental request form and white paper (Attachment 1). Q2: Provide a breakout between new construction and existing appraisal values in the Downtown TI F. A: According to the Denton Central Appraisal District, this information will not be available to the City until the latter part of September. Staff will provide this information to the City Council at that time through an informal staff report. Q3: What has been the history in adopting the effective tax rate? A: The City of Denton has adopted the effective tax rate once in the past five tax years (2010) and exceeded the effective tax rate three times (2007, 2008 & 2009). Tax Year Effective Tax Rate Adopted Tax Rate 2011 $0.70199 $0.68975 2010 $0.68975 $0.68975 2009 $0.71076 $0.66652 2008 $0.66502 $0.66652 2007 $0.58719 $0.66652 1 Q4: Provide a breakdown of the funding and DISD reimbursement for School Resource Officers (SROs). A: On April 25, 2011, the Police Department sent the City Council the attached informal staff report and memorandum of understanding detailing this program (Attachment 2). As shown in the report, fifty percent of the actual cost of one (1) SRO was reimbursed by DISD prior to 2010. This reimbursement was approximately $45,000 for FY 2009-10. Beginning in FY 2010-11, the reimbursement was increased to fifty percent of three (3) SROs (approximately $156,000). For future years, the reimbursement is planned to be increased as well, but no specific timetable has been established. Q5: Provide more detailed information on the cost of implementing components of the bike plan to link the transit center to UNT and TWU. A: The preliminary draft of the Pedestrian and Bicycle Master Plan identifies a number of projects that have been divided into "Immediate On-Street" facilities (1-3 years) and "Short Range On- Street" (3-10 years). The Mobility Committee will review the draft plan on September 13, 2011. The "Immediate On-Street" projects identified in the master plan total 35.3 miles at an average cost of $923,502. This equates to $26,161 per mile of project. Costs do not include Right of Way (ROW), Engineering, Street Repair or Signalization (in most cases). The "Short Range On-Street" projects total 47.7 miles at an average cost of $1,174,313. This equates $24,618 per mile of project. Costs do not include ROW, Engineering, Street Repair or Signalization (in most cases). At roughly $25,000 per mile, the $50,000 budgeted specifically for bicycle expenditures would fund approximately two miles of project expense per year. UNT Sycamore Route While the plan contemplates several bicycle routes that could be utilized from the transit station to UNT, the anticipated cost of the Sycamore route (most direct) is approximately $248,700. The largest single cost in the project estimate is for the signalization of the Carroll Blvd/Sycamore St. intersection (approx. $220,000). Details regarding the UNT route are shown below: • E. Sycamore St from the transit station to S. Elm: 2,257 ft $ 8,551 (low) - $ 21,377 (high) • W. Sycamore St from S. Elm to Welch: 3,238 ft $227,000 (low) - $232,000 (high) • Total project costs for UNT bicycle route: 5,495 ft $235,551 (low) - $253,377 (high) * The plan contemplates an eight foot bike path adjacent to Sycamore Street but is not included in the Appendix A. cost estimate. 2 TWU Route The TWU bicycle route from the transit station to the campus utilizes Railroad Avenue from the transit station to McKinney Street, McKinney Street to Bell Place, Bell Place to Mingo/Bell Street intersection and then Bell Street to E. Sherman Drive. The project cost information for the TWU route does not include all of the segments. The cost for the Railroad Avenue to McKinney St. and McKinney St. to Bell Place segments are not a part of the report and will require some additional engineering and possible signalization to accomplish. The rest of the route is detailed below: • Bell Place: E. McKinney St to Mingo Rd 650 ft. $ 2,461 (low) - $ 6,152 (high) • Bell Ave: Mingo Rd to E. Sherman Dr 5,803 ft. $ 10,780 (low) - $ 25,300 (high) • Project Cost Identified in the Report 6,453 ft. $ 13,241 (low) - $ 31,452 (high) * Signalization requirements for McKinney St. not included. Q6: What are the key industries that remit sales tax to the City of Denton? A: Below is a breakdown of gross sales by industry within the City of Denton as reported by the Texas Comptroller's Office as of December 31, 2010: INDUSTRY GROSS SALES % SHARE Agricultural/Forestry/Fishing/Hunting $399,826 0.01% Mining/Quarrying/Oil and Gas Extraction $166,692,238 4.28% Construction $144,278,979 3.70% Manufacturing $902,523,737 23.16% Wholesale Trade $258,717,784 6.64% Retail Trade $1,643,696,844 42.17% Transportation/Warehousing $17,943,240 0.46% Information $31,168,227 0.80% Finance/Insurance $2,764,722 0.07% Real Estate/Rental/Leasing $20,398,424 0.52% Professional/Scientific/Technical Svc $83,625,980 2.15% Management of Companies/Enterprises $19,450,390 0.50% Admin/Support/Waste Mgmt/Remediation Svc $30,960,137 0.79% Educational Services $22,120,495 0.57% Health Care/Social Assistance $25,320,473 0.65% Arts/Entertainment/Recreation $7,731,673 0.20% Accommodation/Food Services $213,538,583 5.48% Other Services (except Public Administration) $111,632,787 2.86% Other $194,375,066 4.99% TOTAL $3,897,339,605 100.00% 3 Q7: Provide an update on gas well inspection program (i.e., fees, anticipated and projected revenues, and personnel). A: The Planning Department has scheduled a Work Session presentation to the City Council for September 13, 2011. At that time, a detailed overview of the program will be presented to the City Council. Q8: What was the cost of the last comprehensive plan in 1999? A: The Planning Department will provide a detailed overview of the 1999 Comprehensive Plan and costs to the City Council on August 16, 2011. Q9: What is the cost for the STEP increases in Police and Fire? A: For FY 2011-12, the cost of the STEP increases in the Police and Fire departments is estimated to be $107,994. Of this amount, $61,002 is related to the Fire Department, and $46,992 is related to the Police Department. Q10: What are the historical comparisons for pay increases over the last two years for our competitor cities? A: The Human Resources Department has compiled a comparison of compensation adjustments for various cities in the Metroplex. This information includes the FY 2011-12 proposed pay increases as reported on individual city websites and/or in consultation with compensation professionals in those cities along with compensation information for the past two years (Attachment 3). In addition, an article on compensation has been included for your review. Q11: What is the percentage of Certificates of Obligation (CO) that are utility related? A: At the end of FY 2010-11 (September 2011), the total outstanding principal debt (GO, CO & Revenue Bonds) of the City will be $501,720,000. Of this amount, $385,554,350 is related to revenue supported debt issuances for the City's Electric, Water, Wastewater, and Solid Waste activities. Tax supported debt will equal $116,165,650, and of this amount, $71,855,650 is related to General Obligation Bonds, and $44,310,000 is related to Certificates of Obligation. 4 Q12: What percentage of voters approved the 2005 bond program? A: Below is the breakdown of all votes by proposition: Proposition No. 1- The issuance of $4,000,000 of public securities for construction of senior center and public library improvements. 1,415 For (64.03%) 795 Against (35.97%) Proposition No. 2 - The issuance of $27,700,000 of public securities for construction of street, roadway, sidewalk and traffic control improvements. 1,515 For (68.55%) 695 Against (31.45%) Proposition No. 3 - The issuance of $10,700,000 of public securities for park system improvements. 1,187 For (53.98%) 1,012 Against (46.02%) Q13: Please provide a copy of the Materials Management efficiency study. A: In 2010, the City contracted with an external firm to conduct a comprehensive study of the City's warehousing operations. The intent of the study was to review current processes and provide recommendations to improve the efficiency, effectiveness and customer service of the City's warehouse operations. The final report has been attached as requested (Attachment 4). In 2011, staff reviewed all operations for Materials Management (purchasing and warehouse) and proposed a reorganization of purchasing personnel and the elimination of one (1) full time employee (FTE) in purchasing and half (1/2) an FTE in the warehouse. These changes have been included in the FY 2011-12 Proposed Budget. Q14: Which Community Development Block Grant (CDBG) position is being transferred to the General Fund? Are there any other CDBG related positions currently in the General Fund? A: The FY 2011-12 Proposed Budget includes the transfer of the Human Services Coordinator position to the General Fund. Yes, the Community Development Manager position is already in the General Fund. Q15: Is conduit for traffic signals being installed with new streets? Does this save money? A: Yes, as we construct a new street, the traffic division will determine where signals may be installed and provisions for conduit are made. This prevents us from having to cut the street at a later date. 5 Q16: Can we consider a special utility rate for those that use 5,000 gallons or less? What would be the impact? A: We could consider a specialty rate for residential customers. It would require analyzing various rate block structures to determine the best revised structure that would accomplish the goals of the special rate and still recover sufficient revenue from the higher blocks to meet the financial requirements of the water utility. It should be noted that there are other impacts to be considered when designing such a rate. First, the rate will not target only those customers with affordability issues. We currently have over 6,000 water customers in July 2011 who used less than 5,000 gallons. All of these customers would receive the lower rate, regardless of their ability to pay. The second impact is, if the goal of the rate is to assist water customers who have affordability issues; this special rate will only assist the lowest consumer group. Customers, who use more than 5,000 gallons in a month, who have affordability issues, such as families, will in fact pay more to subsidize those on the special rate. We currently use the Plus One program (Prevent Loss of Utility Service) to assist utility customers with affordability issues. Utilities is contributing $85,000 of late fees per year to the Plus One program which is in addition to the approximately $14,000 contributed annually by utility customers. The $85,000 of program funding is allocated approximately as follows: Electric $58,300, Water $8,800, Wastewater $7,800, Solid Waste $8,300 and Drainage $1,800. The existing Plus One program and utility contributions has been the preferred option to assist utility customers who have affordability issues. The program specifically targets customers that need assistance, regardless of their water usage level, and the program does not subsidize customers who can afford to pay. If the Council determines that additional assistance to customers with financial hardships is needed, the contribution to the Plus One program from utility revenues could be increased. Attached is a bill comparison (Attachment 5) between existing FY 2011 utility rates and proposed FY 2012 rates using four actual customers with average monthly water usage of approximately 5,000 gallons or less, also shown is the average monthly bill increase for each utility service, the total dollar bill increase and the total percentage increase. 6 Q17: Please provide an updated street maintenance funding forecast that assumes the transfer of 100% of the growth in franchise fees for each year of the forecast. Also, please show the impact of such a change to the General Fund Five Year Forecast. A: Below is the FY 2011-12 Street Maintenance Funding Forecast that was included in the Proposed Budget: 1 1 1 1 1 Current Budget $2,802,011 $2,802,011 $2,802,011 $2,802,011 $2,802,011 C Fran. Fee Growth 146,609 634,238 1,484,728 2,412,262 2,854,764 *Includes 25% of the growth in franchise fees compared to the FY 2010-11 Budget in FY 2011- 12; 50% of growth in FY 2012-13; 75% of growth in FY 2013-14; and 100% of growth in FY 2014- 15 and subsequent years. Below is the Revised Street Maintenance Funding Forecast with Franchise Fee Growth based on 100% for FY 2012 and subsequent years. Current Budget $2,802,011 $2,802,011 $2,802,011 $2,802,011 $2,802,011 C Fran. Fee Growth 586,436 1,268,476 1,979,637 2,412,262 2,854,764 C Staff has also attached a revised five year forecast for the General Fund which reflects a decrease in revenues based on the revised street maintenance funding forecast (Attachment 6). Approximately $1.5 million in revenues are reduced from the General Fund resulting in a lower effective fund balance. However, the fund balance level is still projected to remain within the reserve target for each of the five years in the forecast with the above mentioned changes. It should also be noted that recurring revenues and expenditures would no longer be in balance for FY 2011-12 and FY 2012-13 as presented in the Proposed Budget. 7 Q18: Explain the impact on the Overall Condition Index (OCI) rating from the proposed street maintenance funding forecast over the five year period. Provide the break point dollar amount that would actually begin to improve the City's OCI rating since $10 million annually is the amount needed to only maintain the current OCI rating. A: Staff has attached the annualized funding scenarios table from the street maintenance report (Attachment 7), which was previously provided to the City Council. As reflected in the table, an annual budget of $10 million ($50 million over 5 years) would maintain the OCI at 63. Based on the proposed street maintenance funding of $38.5 million ($22.5 million from current revenues and $16 million from a proposed $20 million GO Bond Program) over a five year period ($7.7 million annually), the City's OCI rating will decline from 63 to 61. However, this represents a nine (9) point improvement from the "Do Nothing" scenario described in scenario three of the attached table. Attachments 1- Planning Department Supplemental Request & White Paper 2 - Informal Staff Report and Memorandum of Understanding on SRO Program 3 - Comparison of Proposed and Past Compensation Plans for Metroplex Cities 4 - Warehouse Study 5 - Utility Customer Bill Comparison 6 - Revised General Fund Five Year Financial Forecast 7 - Annualized Funding Scenarios Table for Street Maintenance 8 ATTACHMENT 1 2011-12 SUPPLEMENTAL REQUEST COST FORM Division: Planning Department HBU Number: 220001 Program Title: CDNPP Department Ranking: 3 Brief Program Description: Neighborhood Planning Program Strategic Plan Objective 4.3.2 4.3.4 Effective Date of Request 10/1/2011 Annual No. of Positions Position Title Hourly Rate Hrs/FTE OBJECT CODE 6101 Salaries 6110 Overtime Cell Phone Allowance (If Necessary) 6112 Longevity 6142 FICA 6143 TM RS 6156 Life Ins 6150 Health Ins 6158 Long Term Disab. Subtotal INSERT CODE INSERT CODE INSERT CODE INSERT CODE INSERT CODE Subtotal 0 0 INSERT CODE Subtotal - 6308 Postage 3,000 3,500 6305 Reprographics 3,500 3,000 7912 Advertising 6,800 5,500 7850 Professional Services 40,000 40,000 6301 Office Supplies 2,500 21500 7762 Misc Community Service (Grant Program) 25,000 25,000 Subtotal 80,800 79,500 INSERT CODE Subtotal 0 Grant Revenue Enhancement Funding From Other Sources Subtotal 0 0 SUPPLEMENTAL RANKING 3 TOTAL FUNDING REQUESTS 80,800 DIVISION PROGRAM PACKAGE Planning and Development -Planning CITY OF DENTON NEIGHBORHOOD PLANNING PROGRAM (CDNPP) DESCRIPTION The City of Denton's Neighborhood Planning Program (CDNPP) has a three-pronged approach to neighborhood empowerment consisting of neighborhood planning, community building, and professional assistance. Neighborhood Planning is the foundation for sustaining and revitalizing Denton's neighborhoods. This community building program meets the goals set forth in the City of Denton Strategic Plan: Ensure policy and decision-making is based on a proactive approach; Create stability for the community and organization; and Incorporate citizen feedback and communicate desired service level to citizens and employees alike. RELATIONSHIP TO STRATEGIC PLAN JUSTIFICATION The CDNPP offers the best means to develop and implement community-driven neighborhood plans and programming that address physical, social, economic, and civic concerns. The CDNPP objectives are vital for achieving goals described in the Denton Plan as well as re-enforcing the city's Strategic Plan's Key Focus Area (KFA) 4: Safe, Livable, and Family Friendly Community. CDNPP works with and aid in developing neighborhood organizations by assisting associations in being proactive in celebrating its assets and solving its issues. CDNPP program activities supports the Strategic Plan Goal 4:2 Seek clean and healthy neighborhoods in the City of Denton by consistently attaining Objective 4.2.3 - Enhance the quality, livability, and sustainability of the neighborhood in Denton; and Objective 4.2.4 - Support revitalization efforts of existing low-moderate income neighborhoods. After two years of neighborhood meetings, neighborhood educational and involvement activities, the CDNPP is geared to meet the established three (3) partnership initiatives for sustainable change and capacity building. These initiatives will be a collaborative effort between CDNPP and other city departments/divisions. The Demonstrative Initiative provides targeted support for one (1) neighborhood selected through a comprehensive analysis process based on the critical assessment categories. This program year will act in a preparatory function. The selected neighborhood and their selected board will have to be extensively trained on programming, board responsibilities, staffing, and grant management. The Demonstrative Initiative has to work in cooperation with Community Development. SUPPLEMENTAL RANKING 3 TOTAL FUNDING REQUESTS 80,800 The Engagement Initiative seeks to support Denton's neighborhoods in capacity building by identifying and developing neighborhood leaders; connecting neighbors to one another; and developing partnerships with resources to assist in completing assigned duties and priorities. The Community Planning Initiative recognizes neighborhoods are part of a larger community, and seeks to improve the quality of life issues that may not be residential related; nevertheless, impacts the neighborhood's health. This initiative deliberately searches for avenues to enhance the social and economic concerns pertaining to neighborhood revitalization. ACCOMPLISHMENTS The CDNPP 2010-2011 accomplishments include the commencement of the Bonnie Brae-Ector Street Small Area Plan, 2010 Neighborhood Empowerment Summit, Neighborhood University - CDNPP Presents Workshops, Neighborhood Website, updating the Planning Website for resident usage, Neighborhood Committee, the completion of the Neighborhood Tool Kit, Healthy Development Criteria, and stronger push for partnership development by participating as a vendor at variety of events. ISSUES Interdepartmental cooperation: The Bonnie Brae-Ector Street Small Area Plan requires city departments to work in cooperation to conduct an Existing Conditions Assessment and a finding. Most of the departments involved were helpful and met deadlines while others did not and declined to provide an analysis and finding. Neighborhood organizations: Regardless of the number of years in existence, many associations within the city lack a functional organization structure, adequate leadership, vision or programs. Finding the correct balance of respect and programming to produce significant change is essential for these organizations to move forward. Staffing: The CDNPP is the function of one full-time staff person whose long-range, administrative duties are growing each day. For the CDNPP to reach its optimal level, additional staff will be required. CURRENT PRACTICES Neighborhood Planning is imperative to the achievement of KFA 2:2.5, 3 and 4. This grass root form of planning currently produces desired results stated in the Strategic Plan. Indeed neighborhood residents are customers in various aspects of city services. However, to generate healthy neighborhoods and public safety initiatives they are partners as well. FISCAL IMPACT AND POLICY RECOMMENDATIONS It is respectfully requested that $55,800 is allocated to fund the City of Denton Neighborhood Planning Program; and an additional $25,000 be allocated to a city-wide grant program totaling $80,800.00. ATTACHMENT 2 Date: April 25, 2011 Report No. 11-021 INFORMAL STAFF REPORT TO MAYOR AND CITY COUNCIL SUBJECT: School Resource Officer Memorandum of Understanding (MOU) between the City of Denton Police Department (DPD) and the Denton Independent School District (DISD). BACKGROUND: The School Resource Officer (SRO) program -,vas designed to prevent school related crime committed by and against juveniles and young adults. A keystone of the program involves assigning full-time Denton Police Officers to DISD middle and high school campuses. The SRO partnership between the Denton Police Department and the DISD began in 1997 and was funded by a COPS in Schools grant program. The 1997 MOU between the two entities established that one (1) full-time police officer would be assigned to one (1) DISD school. The COPS grant was a three-year federal grant in which DISD reimbursed the City of Denton for the local match portion of the grant. Beginning with the fourth year and each subsequent year thereafter, DISD agreed to reimburse the City at a rate of fifty percent of the actual salary and benefits of one (1) police officer. The program proved to be mutually beneficial to both the Denton Police Department and the Denton Independent School District. As a result, the City- gradually placed more officers on DISD campuses to work as SRO's. These additional officers were assigned without amending the 1997 MOU or adopting additional MOU's. By the beginning of the 2009-2010 school year, a total of seven (7) full-time officers were assigned to the SRO program and placed at the following schools: Denton High School Ryan High School Guyer High School Calhoun Middle School Strickland Middle School McMath Middle School Davis Alternative School Under the existing MOU (from 1997) DISD reimbursed the City of Denton for fifty percent of the actual annual salary and benefits of one (1) of the seven (7) SRO's. This amounted to $45,500 per year in fiscal year 2009-2010. In spring 2010 the Police Department and DISD began discussions regarding moving towards a more equitable cost sharing agreement. DISCUSSION: On December 14, 2010, DPD and DISD adopted the current MOU for the School Resource Officer program. The purpose of this report is to inform the City Council about the terms of this MOU particularly in regards to staffing and compensation. Date: April 25, 2011 Report No. 11-021 Staffing A total of six (6) full-time police officers are now assigned to the SRO program. Prior to the 2010-2011 school year, a Nvorldoad study on SRO activity kvas completed for each of the schools. As a result of the study, the police officer previously placed in the Davis Alternative School was reassigned to supplement the patrol division. SRO's assigned to the middle schools now respond to the Davis Alternative School when needed. Compensation The Police Department and DISD have a mutually agreed upon goal for DISD to reimburse fifty percent of the actual salary and benefits of ever- SRO. The newly adopted MOU represents a step towards achieving that goal. Effective Januaiy 1, 2011, DISD has agreed to reimburse the City of Denton at a rate of fifty percent of the actual annual salary and benefits of the SRO's assigned to the following schools: Denton High School Ryan High School Guyer High School DISD included language in the agreement that states that it will expand the agreement at a future date to include reimbursement to the City of Denton at a rate of fifty percent of the actual annual salary and benefits for SRO's assigned to the following schools as -,yell: Calhoun Middle School McMath Middle School Strickland Middle School CONCLUSION: As a result of the MOU adopted on December 14, 2010, the DISD has agreed to increase their annual reimbursement to the City of Denton from $45,500 to approximately $155,864 per year. Both entities will continue to work towards achieving fifty percent reimbursement for all full- time SRO's. STAFF CONTACT: Lenn Carter Criminal Investigations Bureau Commander Lenn.Carter2CityofDenton.com (940) 349-7996 MEMORANDUM OF UNDERSTANDING (MOW This Memorandum of Understanding (MOU) is being executed by the below listed entities: Denton Independent School District (DISD) City of Denton Police Department (DPD) Nothing in this- MOU should be construed as limiting or impeding the basic spirit of . cooperation which exists between the participating entities listed above. 1. Purpose This MOU establishes and delineates the mission of the School Resource Officer Program, herein referred to the SRO program, as a joint cooperative effort. Additionally, the MOU formalizes relationships between the participating entities in order to foster an efficient and cohesive program that will build a positive relationship between Police Officers and the youth of our community in addition to reducing crime committed by juveniles and young adults. 11. Mission The mission of the SRO program is the reduction and prevention of school related crime committed by juveniles and young adults. To accomplish this mission police officers, herein referred to as SRO, will be assigned to the following schools: Denton High School Ryan High School Guyer High School Calhoun Middle School Strickland Middle School McMath Middle School The-SRC Program accomplishes this mission by creating and maintaining safe, secure, and orderly learning environments for students, teachers and staff. The SRO will establish a trusted communication between students, parents, and teachers. SRO's will serve as a positive role model to instill in students good moral standards, good judgment and discretion, 'respect for other students, and a sincere concern for the school community. SRO's will promote citizen awareness of the law to enable students to become better informed and effective citizens, while empowering students with the knowledge of law enforcement efforts and obligations regarding enforcement as well as consequences for violating the law. SRO's will serve as a confidential counseling source for students and parents and will provide information on available community resources. The following goals are established to accomplish this mission: Ill. SRO Program Goals The following goals are established to accomplish the mission of the SRO Program, A. Promote a safe environment for students, faculty, and staff. B. Reduce criminal offenses committed by juveniles and young adults by detention/arrest. C. Establish rapport with students, faculty, administrative staff,-and parents. IV. OEganizational -Structure A. Composition SRO's are full-time Denton Police Department personnel who are certified peace officers for the State of Texas and meet all requirements as set forth by the Denton Police Department General Orders. B. Supervision The daily operation and administrative control of the SRO" program is the responsibility of the Denton Police Department. Responsibility for the conduct of SRO personnel, both personally and professionally, remains with the Denton Police Department. The Denton Police Department shall retain supervisory personnel to oversee the program. In the performance of their duties, the SRO's shall coordinate with the principal or the principal's designee in the school where they are assigned. V. Procedures A, Concept The officers assigned to the SRO Program are, first and foremost, Law Enforcement Officers. SRO's are responsible for carrying out all duties and responsibilities of a police officer and shall at all times, through -the chain of command, remain under the control of the Denton Police Department. SRO's are enforcement officers in regards to CRIMINAL matters only. SRO's shall not enforce any school or house rule" and are not school disciplinarians and should not assume this role. SRO's will not become involved in administrative matters of the DISD which are not criminal matters. SRO's-are not formal counselors and will. not act as such; however, they are to be used as a resource to assist students, faculty, staff, and all persons involved with the DISD. SRO's may be called upon to teach a variety of subjects to students and staff, Teaching is not only a formal opportunity to educate the campus population, but also another method to build rapport with students and staff. B. SRO Duties and Responsibilities Denton Police Department SRO responsibilities will include, but are not limited to: 1) Enforcing criminal law and protecting the students, staff, and public at large against criminal activity, and taking enforcement action on criminal matters when appropriate; 2) Taking initial reports of crimes committed on campus and, if practical, investigating these crimes according to the case clearance criteria of the Denton Police Department; 3)' Providing information concerning law enforcement topics to students and staff; 4) Providing counseling, on a limited basis, to students and staff; 5) As time allows, presenting information in the classroom on a variety of topics including, but not limited to, narcotics, personal safety, criminal law, leadership and life skills; and 6) Assisting staff with unusual or temporary problems related to school discipline, except that at no time will an SRO be regularly as to monitor lunchrooms, halls, buses, or other areas or activities on the campus. VI. Roles and Responsibilities A. The DISD shall provide the SRO of each campus with the following facilities and materials deemed necessary to the performance of the SRO's duties: 1) An air conditioned and properly lighted, private office, which may be used for general business purposes, located as close as possible to the main entrance of the school; 2) A desk with drawers, chair, and a locking fling cabinet; 3) A computer; 4)' The opportunity to participate in appropriate classroom instruction, as time allows; and 5) The opportunity to address teachers and school administrators concerning the SRO Program goals and objectives. B. Effective Nave the DISD agrees to reimburse the City of Denton at a rate of fifty {50) percent of the actual annual salary and benefits of the SRO's assigned to the following campuses. Denton High School L.q Ryan High School 1~vPvm arV~ . Guyer High School P C. The DISD agrees at a future date to expand this agreement to include reimbursement to the City of Denton at a rate of fifty (50) percent of the actual annual salary and benefits for SRO's assigned to the following campuses: Calhoun Middle School McMath Middle School Strickland Middle School D. The DPD will endeavor to have SRO's available for duty ,at their assigned school each day that school is in session during the regular school year. There is no requirement for DPD to fumish substitute officers on days when the assigned SRO is absent. E. The DPD agrees to invoice the DISD quarterly for all monies owed as a result of this agreement and to submit appropriate payroll documentation with the invoice. Agreed to in cooperation with the Denton Police Department and the Denton Independent School District. Chief Police+ Date City o Denton Superint dent of Schools Date Denton Independent School District ATTACHMENT 3 City of Denton Pay Increase Survey for Non-Civil Service Employees FY 09/10 through Proposed FY 11/12 ~ I' ~4'~'~i~1'j~l 4scYfj}gtrP~~ 1~`g if~~4' -tiyY'{~ ~I~f Iro j~s lii~A -VI 1 I s r o s 'iP~ d B~,r II'~r r r I18 e 1 ~ ~ rI{ f tI~`f( it` cI! Vi lI f ~ ,I. I i ii a r,• f d ~ Addison 1% merit based lump sum 0 0 Arlington 4% lump sum 0 0 Carrollton 1.5% average lump sum $200 lump sum 0 salary reduction and Dallas Restoring 3 mandatory leave days issued 64 hours 5 updaid furlough days mandatory leave Euless 3.25% across-the-board 0 0 Flower Mound 2% merit limited; 5 - 12% pay plan limited; 6.55%-8.83% pay shift plan shift 8 furlough days Fort Worth 3% across-the-board 0 (approximately 3% pay reduction) Frisco 3% merit based lump sum 0-3% lump sum 0-3% merit Garland 0 reinstated 1.15% reduced pay by 1.15% Grand Prairie 3% merit $1,500 lump sum $1,500 lump sum Grapevine 1% market adjustment (pay plan shift 0 1% merit with pass through to employees) Irving 0 3.5% merit less than 1% pay plan shift plus 3.5% merit 1% pay plan shift (no pass through to 1% pay plan shift plus 1% 1% pay plan shift plus 1% Lewisville employees unless they are at the bottom of the pay range) plus 1% merit merit merit Nominal increase based on market and McKinney individual performance; for purposes of 0 0 y budgeting, an average of 2% was included in the budget Mesquite TBD 0 0 - 3% merit Funding equivalent to 2% merit increase and market based pay range North Richland Hills 0 2% merit adjustment is set aside for consideration Plano 2% across-the-board increase 0 0 Projected 0%; however, there are still 2.5 - 5% step increase, Richardson 0 discussions in progress depending on merit 1.4% one-time cost-of- Southlake average 3.9% retroactive to July 1, 2011 0 living adjustment Denton 2% average merit 0 2% merit based lump sum US Salary Budget Increases Continue Gradual Modest Climb Page 1 of 2 Print Go Back ©WorldatWork 1 877/951-9191 Reader Comments (0) Rating (0): Ill.- U.S. Salary Budget Increases Continue Gradual, Modest Climb July 5, 2011 - As an overall sign of the slow recovery, average salary budget increases are growing, according to the 38th annual WorldatWork Salary Budget Survey. A first look at top-level results was released today. Total Salary Budget Increases, by Employee Category Actual 2010 Projected Actual 2011 Projected 2011 2012 Mean Median Mean Median Mean Median Mean Median Nonexempt Hourly Nonunion 2.4% 2.7% 2.9% 3.0% 2.7% 3.0% 2.9% 3.0% Nonexempt Salaried 2.4% 2.7% 2.9% 3.0% 2.8% 3.0% 2.9% 3.0% Exempt Salaried 2.5% 2.7% 2.9% 3.0% 2.8% 3.0% 2.9% 3.0% Officers/Executives 2.5% 2.7% 3.0% 3.0% 2.8% 3.0% 2.9% 3.0% More than 2,200 U.S. compensation and HR professionals responded to the survey, and though the 2011 actual numbers didn't quite make what they projected in last year's survey, the numbers in each employee category inched upward and are projected to continue in that trend next year. Gone may be the days of double-digit percentage increases to salary budgets, but anything is better than nothing. In this year's survey, fewer organizations responded that they weren't budgeting any increase. In a non-recession year, survey analysts expect to see only about 2-3% of respondents answering that they will not budget for salary increases at all. In 2009, a staggering 28-43% of respondents answered that they would give a 0% increase. This year, as another indication of the recovery, most organizations are planning a salary budget increase, with only 7-10% of the respondents citing a freeze. "More organizations are getting back into the salary budget increase game," said Alison Avalos, CCP, research manager for WorldatWork, "after having sat out for one to two years. When companies reported zeros for salary budget increases in 2009, it brought the average down significantly. The recovery means that in order for organizations to stay competitive, they will need to consider at least moderate merit budgets and continue to utilize variable pay and other aspects of compensation and rewards." Avalos added that those companies who previously reported zeros did not report numbers that would "make up" for the past. "Even with a recession in the rear-view mirror, organizations are not planning for extremely high salary increases as they recover," she said. There were very few outlier responses, with most budgeting 3.0% for pay increases in 2011. Other top-level findings from the WorldatWork Salary Budget Survey include: • Total salary budget increases remain consistent across states and metropolitan areas. • Pay for performance continues to be emphasized. With small salary budget increases, professionals report that the bulk of the increase will go to high performers, and very little or no increase will go to low performers. • The usage of variable pay programs remains steady. Watch Newsline throughout July for more news about these and other details in the survey. WorldatWork collected survey data in April 2011. Survey respondents are WorldatWork members employed in the HR, compensation and benefits departments of mostly large U.S. companies. The full report will be available in early August. http://www.worldatwork.org/waw/adimComment?id=53397&from=ww editorial 2711 7/5/2011 ATTACHMENT 4 City of Denton Warehouse Study for RFP #4455 ,R, ; N 1 Celerity Consulting, LLC 75 Cedar Lane Aubrey, TX 76227 Phone: (940) 365-5868 Fax: (940) 365-5868 dbairdcelerity(cbaol.com TABLE OF CONTENTS EXECUTIVE SUMMARY 4 INTRODUCTION 7 1. Background ..................................................................................................7 A. Purpose of the Study .................................................................................................................7 B. Warehouse Overview 7 2. Objectives 8 PROJECT INITIATION AND GOVERNANCE ........................................................9 3. Program Scope Overview 9 4. Program Structure .....................................................................................10 A. Warehouse Cross Functional Team .......................................................................................10 B. Long Term Recommendations ................................................................................................11 DISCOVERY .........................................................................................................11 5. Defining the Dilemma ................................................................................11 6. Process Mapping Workshop .....................................................................13 A. Long Term Recommendations 13 DEPARTMENTAL PROJECT PLANNING AND WAREHOUSE EXECUTION PROCESS .................................................................................................................14 7. Process mapping workshop for Project Planning ..................................14 Process Step 1: Engineering schedules and designs projects ....................................................14 Process Step 2: Develop material lists for projects and send to the Warehouse ........................16 Process Step 3: Warehouse compiles material requirements and enters into JD Edwards .......18 Process Step 4: Material is ordered from the vendor or supplier ................................................19 Process Step 5: Material is received by the Warehouse and placed in inventory .......................21 Process Step 6: Material is ordered and provided to the departments .......................................22 8. Warehouse Improvement Team 24 A.Warehouse Value Proposition and List of Services .................................................................24 B.Warehouse and JD Edwards Inventory Management System .................................................26 C.ABC Analysis and Cycle Counts ..............................................................................................26 D.Miscelaneous Warehouse Achievements ................................................................................27 9. Establish Warehouse Key Performance indicators 28 A. Proposed Dashboard Chart .....................................................................................................28 B. Recommendations ...................................................................................................................32 10. Warehouse markup and review of Operational Cost and Managing Transformers 32 11. JD Edwards System Capabilities 35 12. Bar Coding Technology 37 ADDITIONAL OBSERVATIONS AND RECOMMENDATIONS 38 13. Departments Managing Their Own Inventory 38 Facilities Management .................................................................................................................38 Solid Waste ..................................................................................................................................40 Fire Department ...........................................................................................................................40 2 BENCHMARKING AND OUTSOURCING ............................................................41 14. Warehouse Benchmarking ........................................................................41 15. Warehouse Oursourcing ...........................................................................43 CONCLUSION 44 16. Acknowledgements 44 APPENDICES Appendix 1: Warehouse Workshop Process Map 45 Appendix 2: Warehouse Workshop List of Barriers 48 Appendix 3: Warehouse Customer Satisfaction Survey Results 50 Appendix 4: Warehouse Recommendations Matrix 51 EXECUTIVE SUMMARY At the request of the City Manager and Finance Director, Celerity Consulting, LLC was retained in June 2010 to perform an in depth efficiency study of the City's Warehouse operations. The following remedies were implemented as a result of cooperative effort between Celerity Consulting and the management and staff of City of Denton Finance, Purchasing, Warehouse, Denton Municipal Electric (DME), Water, Waste Water and Technology Services departments: ➢ Identified and reviewed the following processes: • Project Planning Process • Project Prioritization Process • Setting minimum and maximum inventory levels • ABC analysis and Cycle Counts utilizing JD Edwards • Exempt Material (Pick Bins) • Staging Project material • Communication and coordination between departments • Material Requirements Planning (MRP) • Process for tracking Transformers in the DME GIS system ➢ Developed and implemented new process and procedure for the Ordering and Staging of Project Material: • Customized for Denton Municipal Electric (DME) department • Customized for Water and Waste Water Departments • Developed a methodology that can be utilized by other City departments ➢ Developed and expedited the installation of Material Required by Dates (MRBD): • Projects in DME and Water and Waste Water now have a MRBD • Warehouse provides material using the MRBD as a target to provide material for projects and measures Warehouse's ability to meet the date ➢ Implemented roll-out of new process to utility departments ➢ Developed and populated a Warehouse Dashboard Chart with Key Performance Indicators (KPI's) ➢ Determined and published initial Warehouse inventory reports from JD Edwards • Inventory Sale by Department • Inventory Value and Purchasing Rate • Inventory Turns and Cost of Goods Sold (COGS) • Material On Demand fill Rate • Obsolete and Slow Moving Inventory 4 • ABC analysis • Cycle Counts • Line Items Picked by department • Outage by Item • Warehouse Indirect Cost by Line Item ➢ Developed Warehouse Value Proposition and list of services provided to departments ➢ Developed new model for allocating costs to departments for Warehouse Services due to moving Transformers from Warehouse inventory to the DME GIS system effective October 1St, 2010 ➢ Developed and implemented a Customer Satisfaction Survey for the Warehouse for direct feedback from department users ➢ Supported updating DME construction standards to develop common Bills of Material (BOM's) and reduced the number of preliminary material lists to one final list ➢ Completed effort to review and utilize JD Edwards Work Order and MRP modules: • Greater utilization of systems capabilities • Migrate away from Excel and Email and rework due to manual input and transfer of data • Use the system to clean up duplicate data and other inconsistencies • Review transferring of Engineering Construction Standards into JD Edwards as templates for BOM's • Utilize the systems capability to perform Material Requirements Planning (MRP) instead of using Excel spreadsheets ➢ Fact-finding trip to distributors for later consideration of possible outsourcing of the Warehouse The above improvements have been established as a short-term solution for optimal inventory management and improving customer satisfaction. Celerity recommends that the following issues be addressed for a long term, best-fit solution: ➢ DME and Water and Waste Water continue to support and monitor new processes and procedures for the ordering and staging of project material ➢ DME and Water and Waste Water continue to drive construction supervisors and work crews to utilize and implement the new process for ordering material in advance ➢ Institutionalize the monthly reporting of Warehouse Dashboard Chart KPI's and move toward automation of reports from JD Edwards 5 ➢ Continue validation and due diligence for utilizing the JD Edwards Work Order and MRP module and corresponding reports that can: • Reduce rework and mistakes due to multiple manual inputs of data • Utilize reports to better manage projects, order material, improved inventory management, streamline operations, reduce costs and workarounds, and improve productivity • Develop or modify existing processes and procedures to utilize the existing technology ➢ Expand the JD Edwards system and processes and procedures defined to date to include transmission, substation and power generation projects ➢ Roll-out new processes and procedures, system capabilities and reporting, and best practices to remaining departments to utilize JD Edwards reporting ➢ Evaluate implementing Bar Coding Technology once Warehouse key performance indicators are established ➢ Proceed with a Managed Competition Bid for possible outsourcing of the Warehouse 6 INTRODUCTION 1. Background Celerity Consulting, on behalf of the Finance and Purchasing departments, executed a comprehensive Warehouse study from June 14 through October 7t", 2010. This report represents the results of that study, which builds upon the research and work conducted by Finance and Accounting, Purchasing, Warehouse, DME, Water and Waste Water and Technology Services management and staff, as well as input from Celerity Consulting. A. Purpose of the Study In December 2009, The City of Denton (City) published a Request For Proposal (RFP #4455) to solicit proposals to contract with a qualified consulting firm to perform an in depth efficiency analysis and study of the City's Warehouse operation. The purpose of the analysis was to identify the efficiency of support for the following departments: ➢ Denton Municipal Electric ➢ Facilities Department ➢ Fire Department ➢ Solid Waste and Landfill ➢ Water-Waste Water Department ➢ Technology Services B. Warehouse Overview The City of Denton operates a central warehouse consisting of 20,000 square feet of heated space, approximately 18,000 square feet of all weather storage, a 50,000 square foot secure outdoor storage area, and two remote locations. The central Warehouse and ancillary services provide inventory management, courier services, central receiving, UPS/Fed Ex, motor freight outgoing shipping. Current items carried exceed 1600, valued at approximately $8,428,000. The Warehouse supports all City departments with a staff of five employees: one Warehouse Supervisor, three Warehouse Attendants, and one Courier. Warehouse staff is also on call after hours and 24 hours a day on weekends and holidays to support the Electric, Water and Waste Water utilities in case of emergencies. The Warehouse consists of a main Warehouse, a pole yard at the main DME site and the North Lakes sub-station location. The Warehouse purchases material for the departments utilizing their services, receives the material and places into inventory, and provides material to the departments as requested. Material is requested through JD Edwards and then sold to the 7 departments. For Year to Date Fiscal year starting October 1 st, 2009 and running through September 30t", 2010 the Warehouse sold $5,249,997.72 worth of material to the City Departments and the KRUM ISD. The percentage of the value of the sales in descending order and the percentage of items picked for the main purchasers of Warehouse items is as follows: Percentage of Total Sales for FY2009 - 2010 Department % Of Total Sales % Line Items Picked Denton Municipal Electric (DME) 80.2% 53.4% Water and Waste Water 14.9% 31.4% Traffic .88% .75% Parks and Recreation .73% 2.7% Streets .59% 1.36% Warehouse .40% 1.19% Police .38% 1.0% KRUM ISD .30% .03% Facilities Department .27% .75% Parks .18% .58% Landfill and Solid Waste .2% 1.3% The remaining departments represent less than 1 % of the value of sales from the Warehouse. The cost of the Warehouse to operate is approximately $590,000 per year. To cover the cost of operations, the Warehouse charged the departments a 13% markup on the inventory item being purchased. The exception is the DME Pole Yard where 9.5% markup was charged on inventory items. As a professional courtesy, the Warehouse also purchases and provides paper to the KRUM Independent School District. 2. Objectives The City's objectives for this comprehensive review are straight forward that is: ➢ To improve the accuracy, reliability, effectiveness, and efficiency of the Warehouse. ➢ To a level sufficient to satisfy customer expectations. ➢ Within a short timeframe (less than six (6) months to identify and implement including the time already attributed to this study). 8 This includes process improvements from the time a project is designed in a department until the Warehouse provides material to the personnel and crews executing the projects. To the extent possible, these process improvements should complement current departmental efforts to evaluate the JD Edwards Work Order and MRP modules and other system capabilities to improve accessibility of operational data, material requirements planning (MRP), forecasting, and to implement a long term software solution for maintaining optimal material management practices and controls. In accordance with this objective, the implemented and ongoing changes delivered via this study reflect the essence of Warehouse goals to (a) address customer needs and service levels (b) allow the staff to continue to evaluate their processes and develop improvements under changing, dynamic conditions. At a minimum, this study accomplishes this objective by identifying barriers and bottlenecks, communication breakdowns, and inefficient processes and practices. In addition and included within the duration of the study, Celerity Consulting has worked with City staff and stakeholders to start determining solutions and proposed solutions to these barriers and to the extent possible, start implementation. Rework and inefficiencies have been identified throughout the current processes, which when eliminated, will ultimately reduce frustrations and improve communication and coordination between Departmental Managers, departments and internal staff. No revisions or enhancements have been made to the current processes that compromise the quality or safety of the Warehouse processes within the City of Denton. PROJECT INITIATION AND GOVERNANCE 3. Program Scope Overview In early February 2010 the Purchasing Manager, Director of Finance and Celerity Consulting initiated discussions on how Celerity Consulting could assist the Warehouse to achieve its objectives. Thirty-five interviews were conducted with key managers and staff, which indicated that the Warehouse has a significant improvement opportunity. Interviews also confirmed Celerity Consulting could provide a methodology and approach to accelerate results achievement while continuously improving operations and internal communication. As a result of this discussion, City management recognized Celerity Consulting as a partner to help attain its improvement goals. On April 19, an agreement was reached for Celerity Consulting to conduct a study for initiating an efficiency assessment of City of Denton Warehouse. Included in the scope of the program was: ➢ Establishing a reliable interim process for maintaining inventory practices to provide exceptional customer service until a long-term solution can be 9 implemented. (The intent is that the established interim defined process will aid in the long-term JD Edwards software evaluation effort; however, the actual fit of the business processes to the evaluated software is outside the scope and timeline of this project.) ➢ Evaluate the processes and procedures within departments utilizing the Warehouse to evaluate material needs to be provided by the Warehouse and provide said material when required by the departments. ➢ Evaluate the Warehouse processes and procedures to identify opportunities to improve operations, productivity, reduce cost and improve customer satisfaction. ➢ Establishing performance metrics for the above in a timely manner. The Director of Finance was chosen as the executive-in-charge to lead the Efficiency Study of City of Denton Warehouse. 4. Program Structure Managing lasting change in an organization has to start from the top. Leadership is critical to solicit buy-in and continuous improvement in any organization. As a result, the Finance Director and Celerity Consulting decided to form a Warehouse Cross Functional Team (CFT) consisting of City management and stakeholders from the departments involved with the Warehouse to manage and drive continuous improvement. This team would be a sub-set of the City Management Oversight Team consisting of the Assistant City Managers and Managing Directors of Water/Waste Water and DME along with the Finance Director. A. Warehouse Cross Functional Team The CFT was established with key managers and staff who are involved in the process on a daily basis and are therefore most qualified to identify root cause issues and determine and implement immediate solutions. To accelerate improvement, the team met on a weekly basis. CFT Membership Organization Name Title Finance • Bryan Langley Director of Finance Purchasing • Karen Smith Senior Buyer DME • Jeff Morris Operations Manager • Brent Heath Engineering Services Manager • Rowdy Patterson Line Superintendent 10 Water • Mike Barzano Field Service Supervisor for Water Distribution Waste Water • Justin Diviney Manager of Waste Water Collection Technology Services . Bobbie Arashiro Enterprise Architecture Manager • Michael Belew Business Information Analyst Celerity Consulting . David Baird President B. Long Term Recommendations To maintain the momentum already established by this team, Celerity recommends that they continue to meet on a regular basis, at least once per month, until long-term barriers are addressed and solutions and processes are institutionalized. The team could meet less frequently over time, as operations become streamlined and results are being realized. This group should continue to prioritize, establish and monitor ongoing Barrier Removal Teams (BRT's). Barriers and opportunities will continue to be uncovered that should be prioritized and addressed. These teams should be established with managers and staff participation to provide expertise to determine solutions and drive implementation. It is recommended that only a maximum of four BRT's run at any one time. Barrier removal is a focused, concentrated endeavor. Starting too many teams can overload an organization, lead to fragmentation of effort, delay implementation and reduce the quality of the work output. DISCOVERY 5. Defining the Dilemma Thirty-five key City managers and employees were interviewed to determine current workflow challenges, the culture and willingness to change, and identify an initial list of barriers and opportunities for improvement. As a result, a preliminary list of forty four Customer Satisfaction Requests, forty five departmental and Warehouse issues, and eighteen initial Barriers and opportunities for improvement were identified that covered operations within the departments and with the Warehouse. In addition, the current dilemma was identified as: ➢ Warehouse staff was not "Customer Friendly" to departmental personnel retrieving material 11 ➢ Lack of coordination and communication between the Warehouse and departments for projects and operations and maintenance (O&M) material requirements ➢ Lack of trust between Warehouse and Departments ➢ Warehouse not optimally managing the inventory: • Minimum/Maximums not accurate or up to date • Not enough storage space in Warehouse Yard for all material ordered and required by the departments • No separation of material maintained between project and O&M material ➢ Unclear responsibilities between DME staff and Warehouse personnel for managing DME Pole Yard material ➢ 13% and 9.5% markup not justified on material sold to the Departments ➢ No Key Performance Indicators (KPI's) for managing inventory or improving customer satisfaction ➢ Inventory Reports not available from JD Edwards ➢ Not utilizing JD Edwards capabilities: • Work Orders • Material Requirements Planning (MRP) • ABC Analysis • Cycle Counts • Inventory Turns • Obsolete and slow moving inventory • Outage by Item • Warehouse Sales and financial reporting by department ➢ Departments interviewed do not utilize or trust JD Edwards: • Departments depend on Excel and Email to order material and communicate with the Warehouse • Little or no training on the JD Edwards system or its capabilities • Personnel are often self taught to utilize some of the systems screens • Departments cannot reconcile their own Excel financial spreadsheets with the JD Edwards database • Departments are purchasing and implementing their own software systems due to frustration with JD Edwards and the need for a substitute process for managing their operations ➢ Outsourcing the Warehouse should be considered an option 12 ➢ Perceived need for Bar-coding technology to improve Warehouse inventory accuracy and productivity 6. Process Mapping Workshop After the interviews and initial fact-finding were completed, a process mapping workshop was scheduled to define the critical process for defining material needs and ordering and providing material to the end users. The process starts with a developer submitting an approved set of project plans and setting a completion date for their development, and ends with the Warehouse providing material to crews executing the projects. The focus of the workshop was on DME and Water and Waste Water departments since they represent 93% of the total material sold by the Warehouse. The following are the list of critical processes identified during the workshop: ➢ Identified and reviewed the following processes: • Project Planning Process • Project Prioritization Process • Setting minimum and maximum inventory levels • ABC analysis and Cycle Counts utilizing JD Edwards • Exempt Material (Pick Bins) used for truck stock • Staging Project material • Departmental communication and coordination • Material Requirements Planning (MRP) • Process for tracking Transformers in the DME GIS system The workshop objective was to determine the as-is processes, identify barriers and bottlenecks that currently drive inaccuracies, inefficiencies, work a-rounds and rework. Management and staff representing the departments participated in defining the various as-is processes. This was also a discovery exercise for all participants on how work actually flowed through the departments and the Warehouse and also the tasks performed by the various departments' and Warehouse employees. Until the workshop, managers and employees were unsure of other departments' staff roles and responsibilities or that of the Warehouse. An initial list of twenty barriers and opportunities for improvement were identified and prioritized. By the end of the engagement, all barriers had been addressed, short and long-term solutions identified, and implementation started. A. Long Term Recommendations The departments in coordination with the Warehouse have the opportunity to fine tune the "should be" processes as they move toward a long-term solution and after they take the next step to identify and implement a new software solution within JD Edwards. The mapping of these processes will assist management in determining seamless handoffs and defining employee's roles and responsibilities. In addition, the maps should also be used for training purposes when there is employee turnover. 13 DEPARTMENTAL PROJECT PLANNING AND WAREHOUSE EXECUTION PROCESS 7. Process mapping workshop for Project Planning During the workshop it was determined that for this study to be comprehensive it should not only include the review of the Warehouse operations but in addition, the processes and procedures in the major departments that utilize the Warehouses' services. During the process mapping workshop it became apparent that the ability of the Warehouse to supply material started with the engineering function in the departments and ended when the material was provided to the crews. DME represents $7,786,860, or 92% of the total Warehouse inventory valued at $8,480,906. Since they account for the most material purchased by a department, the process mapping workshop focused on the DME work flow. Water and Waste Water are the second largest users of the Warehouse and the process map was later customized to reflect their work flow since it was similar but still different from DME. The difference is DME Engineers determine project material needs while the Construction Superintendents in Water and Waste Water determine their material requirements. However, most of the barriers and opportunities for improvement were similar for both the utility departments. The following are the macro process steps determined during the workshop. Macro Process Steps: 1. Engineering schedules and designs projects 2. Develop material lists for projects and send to Warehouse 3. Warehouse compiles material requirements and enters into JD Edwards 4. Material is ordered from the vendor or supplier 5. Material is received by the Warehouse and placed in inventory 6. Material is ordered and provided to the departments Process Step 1: Engineering schedules and designs projects Description: Engineers are the main point of contact and interaction with developers and coordinate with them to establish project due dates. In addition, engineers design and schedule Capital Improvement Projects (CIP's) and O&M projects. A master schedule is developed on an Excel database to keep track of the project scheduling and also used as a tool to communicate to other functions within the department and the Warehouse the project status during execution. The engineers are the direct contact to the developers and determine project completion dates, project design, and estimated cost to the developer. 14 Barriers and Opportunities for Improvement: Developers often change, delay or even cancel their original completion dates. As a result, engineers may expend time and effort on design work that may be wasted if a developer loses funding, the schedule slips, or the development is delayed, postponed or even canceled. Developers will try and expedite their own projects and drive the departments to accept changes to these dates even if they are short notice and without regard to other scheduled projects. Some developers become irate when they believe that they are not receiving the attention and responsiveness they deserve. As a result they will contact various managers within the departments, City managers and even City Council members in order to expedite their own interests. Engineers are pressured to accept these date changes by the developers even though it has a negative impact on having to reschedule other projects, which leads to having to redeploy resources, work crews and material. This also impacts the ability of the Warehouse to provide material due to shifting schedules, material requirements and changing priorities. Proposed Solutions and Accomplishments- A barrier removal team was established with managers and staff from the departments who work within the process to determine the root causes of these barriers and determine solutions and implement the solutions. Prior to the start of this engagement, DME Engineering had already started an effort to standardize their construction standards. They had developed templates for their designs that used standard material lists and the use of common construction designs. This generated common material needs that were later sent to the Warehouse to start the ordering process for these materials. Reducing the differences in designing projects differently reduced the fluctuation in materials used that had a positive impact on the Warehouses' ability to provide material and reduce the differences in items needed in inventory. There were many discussions on how to set expectations with Developers that continued to expedite their own interests, which had a negative impact on the departments ability to hold to a master schedule. By the end of this engagement, the organization still did not have an agreed upon solution to meet developers demands. Recommendations: Developing a process that is documented and streamlined that moves developers efficiently and effectively through the process and communicates the city's expectations is critical. If a common process is not defined or established, the developer will create their own process and play off departmental staff, management and City management to expedite their interests. Until those expectations are established, communicated and supported, this situation will continue and engineers 15 and departmental managers will continue to believe they have limited control over their operations and will continue to shuffle and reschedule projects. Engineering should continue to fine tune their construction standards and review projects that have been completed in order to determine if there were changes to the design or material requirements. This will allow engineering to improve their standards going forward. An end of project review for lessons learned should be performed for large or complicated projects. The following points should be discussed: ➢ Lessons learned ➢ Update Engineering Design standards ➢ Capture Best Practices ➢ Review Project deliverables: • On time to customer milestones and due dates • Within budget: Project estimate cost Vs. actual cost • Quality of the work performed ➢ Developer feedback Process Step 2: Develop material lists for projects and send to the Warehouse Description: During the process of designing projects, the engineers develop the required bill of materials (BOM's). The list is added to an Excel database and emailed to the Warehouse to start the process of determining material availability. There was a preliminary material list developed and sent after the initial design was completed in order to give the Warehouse a "jump start" on supplying material. A follow up list would be sent to the Warehouse at a later date if the design changed or if the time to start the project changed. A final list may or may not be sent prior to project start. Barriers and Opportunities for Improvement: Multiple material lists were causing the Warehouse to make ongoing adjustments to material requirements that changed with each updated material list. In many cases the material was already ordered or with an updated list, some of this material was no longer required or substituted with a different item. It would be too late to stop the purchase order so the material would be delivered by the vendor and added to inventory. The view of the departments was that it did not matter because the material would be used for another project or application sometime in the future. The departments were driven by project scheduled end dates. They were not establishing the date the material needed to be available from the Warehouse that was prior to the project start date. They were not defining what was later called a "Material Required by Date" (MRBD). This was the target date that was critical for the Warehouse to provide all the required materials in time for the departments to execute the project. 16 All of the material lists were loaded into Excel spreadsheets and sent by Email as the main form of communication to the Warehouse to start materials requirements planning and managing material availability for projects. This was a common theme with all of the City departments interviewed. The JD Edwards system used by the City of Denton has the capability to be a useful tool for planning and managing projects and materials management for the Warehouse but is not being utilized. Unfortunately, the use of Excel and Email being used today causes multiple handoffs, manual data input errors and the buying of inventory that is not needed, incorrect or does not have the correct requirements. Proposed Solutions and Accomplishments: In coordination with the Warehouse and the utility departments the barrier removal team was able to determine MRBD's for all projects that would be used by the Warehouse to provide material. This provided the Warehouse with a target date to review current inventory levels and order and receive project material. The Warehouse agreed to meet this date and be measured by their ability to have 100% of the material available. DME agreed to reduce the number of material lists sent to the Warehouse to one final list. They also installed the concept of "latest due date". Engineering will now wait until the latest date possible to inform the Warehouse of the material MRBD. This allows engineering to change the design as required prior to releasing the material list if needed and "freeze" the date the material has to be available to start the project. Water and Waste Water Construction Superintendents have also agreed to follow the same process since they determine materials required for a project. Recommendations: DME has already established a twice-weekly Project Construction Meeting to review projects started, review stages of completion and discuss new projects forecasted. The Warehouse should use this opportunity to bring updates for: ➢ Updated Vendor lead times on delivery of material ➢ Delivery updates of material availability for projects and emergencies ➢ Respond to inquiries regarding inventory levels, damaged or back ordered materials ➢ Updates on project material staged and ready for pick-up ➢ Update on after hours support and scheduling of staff 17 ➢ Any other Warehouse operational issues that may affect projects and need to be communicated to the departments Water and Waste Water do not have project meetings that include the Warehouse like DME. However, they have agreed to inform the Warehouse thirty days prior to project start dates. This would be the equivalent of the MRBD with DME. The Warehouse would also provide the same updates as DME. Process Step 3: Warehouse compiles material requirements and enters into JD Edwards Description: Once the Warehouse receives the material lists from the departments, they start the procedure to review the material requirements, bundle items, check current inventory levels and decide when material has to be ordered and in what quantities. The Warehouse staff uses Excel spreadsheets to capture all material requests. Material lists are sorted by item number and quantities, then combined and compared against the quantities in inventory in the JD Edwards system. Based on project material need dates and vendor lead times, the total quantities are entered into the system as a requisition and Purchasing is notified to order the material. Barriers and Opportunities for Improvement: Determining material quantities and frequency of ordering material is done manually. The staff uses their "best guess" when ordering material. It now takes five days before the Warehouse can inform the departments when their material will be available. Initially it could take the Warehouse two weeks or longer to inform the departments of the material availability for their project. This delayed the departments of informing developers of any changes in the their project start dates, which caused issues and resulted in a frustrated and disgruntled customer. The JD Edwards system has the capability to perform material requirements planning (MRP) but is not being utilized. The Warehouse staff was never trained on the capabilities of the system and therefore manually performs these functions. This resulted in ordering too much or too little material with the possibility of not having the material available when needed by the departments to start their projects. DME provided the Warehouse project material lists but Water and Waste Water departments did not. Water and Waste Water would arrive at the Warehouse with a list of material they needed for a project. The Warehouse would fill the order from existing inventory, which could result in depleting the inventory that should be available for O&M projects. The on hand inventory quantities in the Warehouse along with the required minimums and maximums should be based on the combined historic use of the material for normal O&M and safety stock. Pulling project material 18 from existing stock and depleting the inventory levels often resulted in the material not being available for maintenance projects. Material was then backordered and expedited to try and replenish inventory, which caused scheduling issues of projects and possible additional cost of expediting material from vendors. Proposed Solutions and Accomplishments: The DME department now provides MRBD's and the Water and Waste Water provide a thirty-day notice for their material need dates. This provides the Warehouse with the ability to differentiate between project and maintenance materials. Project material is now ordered separately while maintaining the mandatory inventory levels for maintenance and emergencies. The Warehouse will continue to gather historical data for seasonal fluctuations, normal maintenance usage and project material needs. This will allow for improved material planning, maintaining required inventory levels for maintenance and safety stock, and resetting proper minimum and maximum levels without having to "guess" when and how much material to order or having to inflate inventory levels. The Warehouse identifies the material needed, and informs the departments when available. It will also takes into consideration vendor delivery lead times. If a MRBR cannot be met because the time required to order and receive material is past the required date, then the Warehouse will notify the departments that there is a delay. This will allow the departments to reschedule projects or inform developers that the initial date they expected to start and end their project would have to move to a later date. Recommendations: Utilizing the JD Edwards system for loading project material needs into the Engineering Work Order module, which generates the MRP, could have a substantial impact on the Warehouse's ability to improve material planning and availability. This would alleviate the need for using Excel spreadsheets and Email and therefore reduce errors due to multiple hand offs and the manual inputting of data. Departmental and Warehouse staff would have to be trained on the systems capabilities, available material management reports, and how and where to input data into the system. Process Step 4: Material is ordered from the vendor or supplier Description: Once the Warehouse inputs the material requisitions into the JD Edwards system, Purchasing is notified verbally or by Email to order the material. The Purchasing buyer then generates a Purchase Order that is sent to the vendor or supplier. The buyer then updates the system to include the vendor lead times. Some vendors have blanket orders, which are normally set up with an annual contract. However, 19 when a blanket contract does not exist, ordering some material requires a bidding process that requires a minimum of three bids in order to solicit the best possible price. This can cause additional delays receiving material from the vendor. Purchasing has been able to negotiate with some Vendors to cut cable to length. The actual length of cable for some DME projects is ordered from the vendor, which is then delivered directly to the job site without having to be first processed through the Warehouse. A Warehouse staff member will drive to the job site in order to verify type and quantity of the cable delivered and later updates the JD Edwards system that the material has been received and checked out to the department. Delivering material directly from the vendor to a job site is the best-case scenario. Barriers and Opportunities for Improvement: Departments often complain that the bidding process takes too long. Unfortunately, the bidding process is a requirement that has to be followed according to state law. However, some vendors and suppliers do have negotiated blanket contracts that have resulted in reduced delivery times. Purchasing should continue to pursue establishing blanket contracts with their other vendors and suppliers where possible. Proposed Solutions and Accomplishments: The Warehouse staff now creates a folder for every project requested by the departments. Once material is delivered from the vendor to the Warehouse the staff compares the material received against the material ordered for the project. Once the material is 100% received, the department is then notified that the material is available. The department can then Email the Warehouse when the material should be available for the work crews to pick up. The Warehouse staff will then pull the material and stage the project material in a Warehouse staging area. The material will stay in inventory until it is actually needed by the departments. The departments can also partially pull project material if it is not all needed at one time and the Warehouse will stage the projects by phase. An additional advantage is the departments may reschedule or postpone projects but the inventory will still be available in inventory. Material can be shifted to use for other projects if necessary. Recommendations: The Warehouse and Purchasing should determine if there are other candidates for negotiating blanket contracts when applicable thereby reducing the time and effort needed for the bidding process and the time it takes to order and deliver material. Negotiating with other vendors that can provide cable that is cut to length should also be reviewed and implemented where possible. 20 Process Step 5: Material is received by the Warehouse and placed in inventory Description: With the exception of cut to length cable all other material deliveries are made directly to the Warehouse. An incoming inspection is performed to verify the material ordered is the material received, is the correct quantity and is not damaged. If wrong or damaged material is identified, then the material is returned and the vendor is notified to send a replacement shipment. Once the material has been received it is placed in the Warehouse or the Warehouse yard and the JD Edwards system is updated. For emergencies or for special equipment purchases the departments are notified when material or equipment is available. Barriers and Opportunities for Improvement: If material that is delivered is not what was ordered, it is still accepted if it is an item normally kept in inventory with the idea that it can be used at a later date for another project or application. Sometimes material is delivered to a job site and the Warehouse is not immediately informed to visit the site and verify and receive the material. In addition, work crews may start using the material, which makes it difficult for the Warehouse staff person to verify the quantity of the material delivered and if there was possible damage. The Water and Waste Water departments often complained that when large shipments of pipe were delivered to the Warehouse, the Warehouse staff would immediately contact the department's Construction Supervisors to send a crewmember to retrieve the shipment. The Warehouse was under the assumption that they did not have the space to store the material and expected the departments to take immediate possession. This caused a burden on the departments to pull a worker off a job to retrieve the pipe and then try and find a place to temporally stage the material. Proposed Solutions and Accomplishments: The new process developed for departments to notify the Warehouse of their project MRBD's allows the Warehouse to order material when needed and have more control over managing the quantity of material in the Warehouse or Warehouse yard. Inventory was identified that was scrap or should be removed in order free up space. An evaluation of the Warehouse yard was performed by the Warehouse staff in order to determine the available space and the best way to utilize this space to store and stage inventory. Departments agreed to inform the Warehouse staff immediately when material is shipped directly to and received at the job site. 21 Recommendations: The value of the total Warehouse inventory is approximately $8,480,000 and the value of obsolete and slow moving material is approximately $1,330,000. In coordination with the departments this material needs to be sold or transferred to the departments, scrapped, auctioned or returned to the vendor. This will free up additional cash and space in the Warehouse not currently available. The departments questioned whether the Warehouse has enough storage area, but until the obsolete and slow moving inventory is addressed the need for additional space cannot be established. Process Step 6: Material is ordered and provided to the departments Description: There are several procedures used by departments and customers to retrieve material from the Warehouse. Material requirements can be entered directly into JD Edwards remotely by departmental staff assigned to perform this function. Material can also be requested by Email sent to the Warehouse. Once the request is received, the Warehouse staff enters the list of items and quantities into the system. Departments can also personally visit the Warehouse counter and bring a list of materials needed or personnel can complete a material request form provided by Warehouse staff. For all material requests, the Warehouse staff will first check the inventory levels to make sure there is material available and the location of the material. Once the material is input into the JD Edwards system, a batch is run periodically to generate pick tickets. The pick tickets are printed and the Warehouse Staff proceeds to remove the material from inventory that is then provided to the customer. The system is then updated to a "Ship Confirm" status that moves the material out of inventory and is now sold to the departments. Exempt bins have also been installed and utilized successfully in the Warehouse. Exempt bins contain inventory items that are low cost commonly used items used by the utilities and mostly used for truck stock. The bins are accessible to customers at the Warehouse but the regular Warehouse area and Warehouse yard is not accessible. The exempt material was originally established for emergency and maintenance needs and not for scheduled projects. Customers are allowed to remove exempt bin material at any time during normal Warehouse operating hours. The Warehouse staff monitor the levels of the material being taken from the bins and will re-stock after the material gets to a minimum level. This has been a benefit to the customers and Warehouse staff not having to process every material request for low cost commonly used materials. 22 Barriers and Opportunities for Improvement: The busiest time for the Warehouse to service customer material requests is early in the morning. Crews from the different departments arrive at the Warehouse around the same time, between 7:00 AM and 9:00 AM in order to retrieve material needed for that days' work schedule. This causes a bottleneck at the Warehouse loading dock area and delays getting the material to the customer. This impacts work crews getting to a work site to execute their jobs. Material requests are often made manually from paper forms or hand written lists. This causes data entry errors such as incorrect descriptions or item numbers, incorrect project numbers, or incorrect quantities. Departmental personnel were also disappointed with the "customer experience" of visiting the Warehouse to retrieve material and the lack of attention and responsiveness from the staff. Warehouse staff was also considered unfriendly and uncooperative. The Warehouse staff also had the same opinions of department personnel. Proposed Solutions and Accomplishments: Departments have been trained on the new process to have crew leaders and crews determine their material needs for the following day by the end of their current working day. The material needs can be input into the JD Edwards system by a department employee and the Warehouse staff will then pick the material the same day and have it available for the workers or crews the following day. The next day the departments can retrieve their material without waiting and proceed directly to the job site. This also alleviates the bottleneck caused by employees coming to the Warehouse each morning within the same time period. In order to address the customer experience a survey was developed in order to solicit direct feedback from customers visiting the Warehouse. The survey was not sent by Email to the entire City in order to keep the responses from customers currently visiting the Warehouse and not those individuals that had past experiences. The list of survey questions were rated from Very Satisfied to Very Dissatisfied and are as follows: 1. The length of time it took to receive material 2. The material received was what was requested 3. The material received is in good condition 4. The quality of the service 5. The completeness of the service 6. The Warehouse staff was courteous 7. The overall performance of the Warehouse 23 As a result of this effort to improve customer satisfaction the surveys submitted resulted in an 80% approval rating of the Warehouse. The survey was targeted to be in place for one month in order to retrieve enough responses for an accurate overview of the Warehouses' service levels. Recommendations: Even though departments have agreed that material should be ordered in advance whenever possible, the crew leaders, crews and workers have to migrate to the new process. This requires consistent follow up by management, and when needed a management forcing function to move employees to the new process. The CFT members should meet periodically, initially once a month, to review and discuss the migration to the new process and if there are additional issues that arise that need to be addressed and if employees are making the transition. The exempt bins are working well and customers are satisfied. The material quantities used in the bins should be reviewed and refreshed every six months. This will make sure the correct material is on hand, obsolete material is phased out, new material is added, and the needed quantity on hand and reorder points are adjusted. The Warehouse customer satisfaction survey should be implemented once or twice a year. The Warehouse staff understands that customer satisfaction is a critical component of the service they provide to the City and periodic feedback helps rationalize the ongoing justification to have a Warehouse. 8. Warehouse Improvement Team In order to identify and implement solutions in the Warehouse operations, a Warehouse Improvement team was established. The CFT provided oversight, and the team met weekly and consisted of participants of the entire Warehouse staff, Purchasing and Celerity Consulting. It was critical that the Warehouse be involved in driving improvements in their operations and communicate those improvements to the other City departments. The team should continue to meet and address new issues that arise and respond to departmental issues and priorities that affect the Warehouse. As a result of this effort, the Warehouse has addressed a number of issues and is listed below. A. Warehouse Value Proposition and List of Services During the assessment phase of the program almost every department interviewed requested clarification on the services and value provided by the Warehouse. This was partially fueled by the Warehouse charging departments a 13% markup on material sold to the departments. As a result the team developed and documented a mission statement and list of services provided by the Warehouse. The Warehouse had to agree on the services they would provide to the departments. The list was 24 presented to the CFT for input and discussion. The CFT members were tasked to provide this information to their departments. The following is a summary of these services: 1. Participate in established internal departmental meetings to understand and plan material needs for scheduled, emergency and forecasted projects 2. Pro-actively communicating: a. Vendor lead times on material b. Delivery updates of material for projects and emergencies c. Responds to inquiries regarding inventory levels, damaged or back ordered materials and general Warehouse policies and procedures 3. Monitors Warehouse performance indicators improving customer service, productivity, cost reduction and continuous improvement 4. Solicits customer feedback to improve customer satisfaction 5. Supports problem solving process and procedural challenges with departments 6. Stages material for projects 7. Provides a staging area and easy pick up of material for projects 8. Provides cable cut to length and delivered to a job site 9. Optimizes Warehouse inventory levels: a. Establishes and maintains exempt material b. Establishes and maintains obsolete material c. Establishes and maintains optimal item minimum and maximums 10. Pick and packaging of material 11. Receives and performs quality control of the material delivered 12. Reconciles inventory discrepancies 13. Establishes ABC Inventory ranking and performs Cycle Counts 14. Updates and maintains the inventory in JD Edwards: a. Track items received into and delivered out of stock b. Reconciles inventory levels c. Generates material requisitions d. Update vendor/supplier delivery information 15. Kit and stage to order O&M material 16. Weekday, weekend and holiday after hours on-call service and backup support 17. Materials Planning requirements for: a. Projects b. O&M c. Safety Stock 18. "Hot Shot" service: expediting pick-up of material from a vendor or supplier 19. Courier service and clearing house for: a. Paper b. FedEx c. UPS d. Mailing services and postage e. Storage of miscellaneous equipment f. Personal Computer roll-out g. City Council and Planning and Zoning agenda delivery 25 h. Maintain storage container for weather catastrophe i. Temporary overflow property j. Fire extinguisher exchange service B. Warehouse and JD Edwards Inventory Management System The Warehouse was not utilizing the inventory reporting and management capabilities of the JD Edwards system. The Warehouse staff had never been trained on the capabilities of the system or the reports that could be generated to manage their operations. Most of their effort to use the system was self-taught or through trial and error. This was a common theme with all the departments interviewed. Current industry warehouse inventory management practices were not being used even though the system has the capabilities. As a result of the improvement Team and additional support from Technology Services the Warehouse currently has access to more of the reports and tools available through JD Edwards. Additional system capabilities are being reviewed and additional support from Technology Services is required to access and activate reports and modules. C. ABC Analysis and Cycle Counts Prior to this study, the Warehouse had been Cycle Counting material. However, an ABC analysis had not been established. ABC analysis is a very useful and relatively simple method for classifying and analyzing inventory. The method of analysis is based on a Pareto analysis and is sometimes referred to as the 90-10 rule, the 80- 20 rule, or as Pareto's Law. Pareto's Law has shown that close to 80% of the value of total inventory is represented by 20% of the items. Although many deviations are possible, a rule of thumb is to identify the top 10 to 20% of the items as "A", which represents 80% of the usage. The next 10%, called "B's" usually represent 10% of the usage, and the remaining 70% to 80% of the items, "C's" only 10% of the usage. The ABC Analysis enables the Warehouse staff to dissect the inventory into A, B, C groupings that are normally arrived at based on annual usage. The JD Edwards system was configured to run an ABC report based on the sales volume of each item in inventory. Cycle Counts are then performed according to the ABC groupings: A's are done monthly and should have 100% accuracy, B's are done quarterly and C's are performed annually. The B's and C's should strive for 97% accuracy. A Warehouse cycle count program was established to improve inventory accuracy by providing data to determine root cause of errors and driving continuous improvement. It would also provide a means to verify and correct inventory levels and provide a basis for avoiding the need to perform a periodic total Warehouse inventory count. 26 An inventory cycle count program has three purposes: ➢ Provide a method of sampling the current accuracy, which (if statistically valid) may eliminate the need for a periodic wall to wall inventory ➢ Provide the opportunity to correct inaccurate records ➢ Provide a basis for identifying the root cause of inventory record errors Counting inventory on a regular basis imposes an additional level of operational efficiency. If Warehouse personnel are constantly counting something, then inventory must always be organized, racks filled in, fresh material promptly put away, committed inventory properly tagged, transfers processed and closed out. A regular cycle counting program directly impacts customer service and the face being put forward to customers. In addition, the frequent cycle counting shortens the period of time between physical counts of any given item. As a result, the cause of any discrepancies that turn up during a cycle count will have been recent. This gives the Warehouse staff a much better opportunity to fully diagnose the cause of the discrepancy, close any procedural loopholes and coach any human errors. Inventory write-offs, as a percentage of inventory investment, are much lower with regular cycle counting. A procedure was developed for Cycle Counts and made available to the departments. This lets the departments understand why cycle counts are important and how they should be performed. D. Miscellaneous Warehouse Achievements There were numerous issues addressed by the improvement team to improve operational efficiencies and customer service. The Warehouse staff was actively involved in identifying areas in their own operations that needed improvement and were proactive in determining and implementing solutions. In addition to supporting the roll out of the new process the team also implemented other solutions: ➢ Update and make available a Warehouse catalog of items posted in Excel on the Intranet ➢ Developed a procedure to notify departments that material for a project is available, staged and ready for pick-up ➢ Developed a procedure to notify departments that there have been changes of how material is packed and shipped from the vendor ➢ Determined how to identify the top ten long lead items from the JD Edwards system and inform departments. This information is critical for the department's ability to schedule and plan projects ➢ Reviewed layout of the Warehouse yard to maximize storage availability of material 27 ➢ Reviewed exempt bins for refreshing the parts used, obsolete inventory and readjust quantities on hand and reorder quantities ➢ Determined a procedure to capture project material availability monthly ➢ Developed a plan for resetting the minimums and maximums for DME utility poles and reduce the number on hand The team should continue to address issues and has agreed to continue meeting on a regular basis. This also serves as a format for management from Purchasing and Finance to periodically engage with the Warehouse staff to communicate organizational issues and solicit feedback from the Warehouse staff. In addition the Warehouse Manager can escalate issues that require additional management support. 9. Establish Warehouse Key Performance Indicators The JD Edwards's system reports and available data were not being utilized to track or report Warehouse financial or operational performance, material management or customer satisfaction. Working together with the CFT and Warehouse staff, Key Performance Indicators (KPI's) were identified in order to monitor performance and drive improvement, and later set targets as processes are optimized. Employee performance should be tied to these key indicators in order to align employee behavior to make sure the organization is reaching its financial and operational goals. Choosing the most effective measurements for the Warehouse, the following guidelines were taken into consideration: ➢ Measurements that reflect meaningful benefits to City and departmental managers and Warehouse employees and what Celerity Consulting calls the three R's: • Responsiveness to customer needs • Results Acceleration • Resource effectiveness ➢ Measurements should have clear linkage between: • Short-term performance and strategic objectives • Driver measurements and results: Operational and Financial Measurements • Departmental functions / customers / suppliers / processes • Specific actions required and desired results A. Proposed Dashboard Chart As a first step, Celerity Consulting provided an initial list of proposed indicators. The CFT team and Warehouse staff then provided additional input as to the measures they considered critical. The final list of indices was then arranged into a Dashboard Chart in Excel. The Dashboard consisted of nine different charts that included lagging financial indicators, and leading operational indicators. The initial data to populate the charts was retrieved from the JD Edwards's system and Warehouse 28 personnel collecting project data. The Dashboard Chart was presented and ratified by the CFT with the understanding that the Warehouse would be responsible for future publication and distribution of the Dashboard Chart. In choosing value added measurements the following criteria were used as guidelines: ➢ Improves as the underlying process improves ➢ Worsens as the underlying process worsens ➢ Is viscerally meaningful ➢ Is applied consistently for similar situations ➢ Drives correct behavior ➢ Delivers a justifiable benefit/expense ratio ➢ Benefits customers (the departments) and makes the organization more competitive The Dashboard Chart format is commonly used by industry to help organizations focus on the key indicators that drive and focus managers and employees to meet business goals. The value of laying out the measures in this format is so management can visualize how the measurements interact and affect each other. Management can also monitor if streamlining processes, improving operations, and removing barriers are achieving targets and expected results. The following is the Dashboard Chart developed for the Warehouse: 29 City of Denton Warehouse s (Key Indicators) $10 -Sales Rv Dennrtment _,10 Inventory Value &Purchasing Rate Inventory Turns &COGS $9 FY2008-2009 4.00 8.00 $8 _ i .j 3.50- 7.00 $7 - " 2).00 - 6.00 0$ 'Other x.50 -5.0 s ' $5 $q It- BudgettJ ~2.00 - 4.000 $3 Water c1.50 - 3.0(g -Inv. Purchased - ~ $2 MI DIVE a 2 1'00 Inventory Turns 2.0E $1 - - Inv. Value 0.50 1.00 $0 _ 2; 0 _ 0.00 •_^°COGS 0.00 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D Material Availability on Project Due Dates Total On Demand Fill Rate Obsolete &Slow Moving . Projects 00 0% _ 1,11400 Inventory 100.0% 91, 0% 90.0% $75 14 90.0% v>$1,200 °l0 80.0% 12 85 .0% "$1,000 70.0% 10 800% _ C 60.0% ~s o~ M $800 50.0% 8 g $600 40.0% _ 6 ~o o~ _ C Other 30.0% % Material Available 65.0% Fill Rate s $400 20.0% _ 4 600% _ H - Water 10.0% tTotal Projects _ 2 55 .0% _ $200 _ EDIVE J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D Cycle Count Accuracy and 25000 Line Items Picked by Department Outage by Item & % of Total Adjustments FY2008-2009 - - - - 50.0^r, Items 20000 - 1-10 100.0% 40.0/ 120 128 60 57 - 80.0% 15000 - 30.0% 100 Total Items 70.3% Other 40 S 60.0% 10000 - Item . ~ Total Adjustments - - - - 20.0% o 40.0% Water % Inventory Value 20 Total 38 5000 10.0 zo.o% % L`J % Accuracy E DME o 1.5% _ 0.0% 0 0 3.7/0 0.0% J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D 30 Warehouse Dashboard Chart Definitions Measurements (KPI's) Definitions 1) Sales by Department Year to Date accumulated monthly sales of Warehouse inventory to Departments (From JD Edwards) 2) Inventory Value & Purchasing Budgeted expected value of inventory to be Rate purchased for Departments (linear amount). Year to date value of total inventory in the Warehouse. Year to date accumulated monthly value of inventory purchased (From JD Edwards) 3) Inventory Turns & Cost of Goods Monthly calculated Inventory Turns and Cost of Sold (COGS) Goods Sold. COGS are the direct costs attributable to goods produced and sold by any business. Inventory turns is COGS from stock sales during the last 12 months divided by Average Inventory investment during the past 12 months (From JD Edwards) 4) Material Availability on Project Number of projects with 100% of material Due Dates available during the month, divided by the total number of projects due. Expressed as Project due date is defined as the material required by date (MRBD) and not the project end date. (Manually collected by the Warehouse Manager) 5) On Demand Fill Rate Number of dock orders with 100% of material filled during the month, divided by the total number of dock orders requested. Expressed as (From JD Edwards) 6) Obsolete & Slow Moving Inventory with little or no sales over the last 12 Inventory months. However, an aging analysis will identify material that could be older than 12 months (From JD Edwards) 7) Cycle Count Accuracy and The % of Cycle Counts that was accurate during Adjustments a Cycle Count event. This is measured and tracked separately between the Pole Yard and Warehouse. Also included is the total number of items counted and the % of the value of the inventory being counted, not the value of the total inventory. (Manually collected by the Warehouse Manager) 8) Line Items Picked by Department Total number of line items picked from the * (This indicator may require Warehouse inventory over the last 12 months. some adjustment based on how Each line item may have several items but is "items" are defined such as counted as only one line item. (From JD cable) Edwards) 31 9) Outage by Item & % of Total Total number of items that were out of stock during the month. Also included is the number of the items out of stock divided by the total number of Warehouse items in terms of a (From JD Edwards) B. Recommendations It is suggested that the Warehouse Manager coordinates with his staff, Purchasing and Technology Services to collect the data, update the Excel database, and publish the Dashboard monthly. With the support of Technology Services the chart may be generated automatically without the need for generating the charts manually. After the chart has been published over the next four to six months, targets for each metric should be determined and included in the chart and tracked on a monthly basis. This should be coordinated with the Warehouse Manager, Purchasing Manager and Director of Finance. The Dashboard Chart should also be used as a communication tool for departments and City Management on how the Warehouse is performing. Dashboard chart methodology and KPI's can be established for any department in the City. In general, measurements should be kept to a minimum, automated when possible and be used to monitor achievement towards meeting established targets that support departmental goals and strategy. Targets should be aggressive, attainable and challenge the organization. 10. Warehouse markup and review of Operational Cost and Managing Transformers Description During the initial assessment phase of the study and the interviewing of Warehouse customers and stakeholders, the subject of the Warehouse markup on material purchased through the Warehouse was a common point of contention. The departments wanted a justification for the 13% markup on all goods sold to them. The exception was the DME Pole Yard, which was reduced to a 9.5% markup. Barriers and Opportunities for Improvement This markup had been in place for years and the original justification and calculation for the percentages was lost. The Warehouse had difficulty explaining the reason for the percentage markup and the corresponding services provided to justify the charges. The departments believed materials and consumables could be purchased at a cheaper price and that the Warehouse markup was excessive. A decision had previously been made to transfer all transformers being tracked in the JD Edwards system to the DME GIS system and in order to capitalize these 32 assets. Future, transformers would be ordered through Purchasing but would not be processed through the JD Edwards inventory system. As a result, DME would not incur the 9.5% markup currently being charged for this material. All transformers were being stored at the DME Pole Yard and North Lakes Sub-station. The transformers would continue to be stored in the same locations after October 1 St The value of the markup at time of transfer and revenue to the Warehouse would be $365,837. This would include an additional $3,850,924 needed to "buy" the transformers from inventory and transfer to GIS. The approach was to first separate the actual operating costs of the Warehouse that were inventory related and the cost of the other non-Warehouse related expense items provided by the Warehouse staff to the City. The following are a list of the non- related service expenses, calculated from a previous study by Purchasing that requires two full time equivalent employees: Non Warehouse Related Expense Items 1. Courier Service $77,904 2. Fire Extinguisher Exchange Service $4,940 3. Third Party Mailing Contract Management $5,052 4. UPS Centralized Inbound/Outbound Service $8,195 5. Council and Planning & Zoning Agenda Delivery $3,545 6. Centralized Receiving and Transfers - Non-Inventory items $12,171 7. Miscellaneous and Storage Service $9,229 8. Land Acquisition - Debt Service and Interest Expense $68,792 Total = 189 827 The total Warehouse budget excluding Cost of Goods Sold (COGS) for the fiscal year 2010 - 2011 is $608,864. The total Warehouse sales without transformers for fiscal year 2009 - 2010 were $5,459,849. In addition the Warehouse has a Materials Management fund balance of approximately $1,000,000 that was accumulated over time from the markup charges to the departments. There were two scenarios developed to recalculate and reset the Warehouse markup: 33 Scenario I ~ . 2 "t, t' 'le 'I C Initial Decision to "love `p Transformers Oct. 15t,20 a Cop f 1= Transfer i Tc-ln_>fo1-11)o S frorrl JDE to GI5 to Cjlpit~1I1Z(2 Scenario 2 On Oct IIt Sales of Trar~ ti-irn-i.l-rs VVI, I C t Alilirl~; 7113,850,924 4 113,859,924 . . toWH @ .5% $365,837 NC)11 VV Ii R(-21dte Nlmtkr_l~ Cxlc= r1 It = X11 F'r Total WH Value $8,480,906 Total WH Value after Oct V WJ Transformers = $41629,982 Scenario 1- This takes into consideration the total Warehouse budget including the non-Warehouse related expenses and the yearly Warehouse Sales without transformers. The new markup proposed for this scenario was 11.2%. This markup would be charged to the departments for every transaction from the Warehouse. This is still less than the 13% previously charged on every transaction. Scenario 2- This takes into consideration the total Warehouse budget excluding the non-Warehouse related expenses of $189,828 and the yearly Warehouse Sales without transformers. The new markup proposed for this scenario was 7.7%. This markup would be charged to the departments for every transaction from the Warehouse. This is also less than the 13% previously charged on every transaction. 34 Proposed Solutions and Accomplishments: The two scenarios were presented to the City Manager and Assistant City Managers to make recommendations and solicit buy in and input. The agreed on recommendation was to move forward with Scenario 2 and round up to an 8% markup charge, from the 7.7% calculated, to all the City's departments buying material from the Warehouse. The $189,827 of non-Warehouse related expense would be moved to the Purchasing Departments budget and allocated to the departments through Purchasing. In addition, a preliminary approach to wave the $189,927 by reducing the $1,000,000 Material Management fund balance was also approved. The $365,837 cost to DME would also be waived for the 9.5% markup for transformers. Recommendations The JD Edwards system was changed to incorporate the 8% markup. Departmental response has been positive in accepting the adjusted markup. The method to reduce the Material Management fund balance to offset the non-Warehouse related expense should be defined and communicated to the departments. In addition, the actual cost of the Warehouse has been established and can be used for benchmarking and comparison to an outsourcing supplier. 11. JD Edwards System Capabilities Description The City of Denton uses the JD Edwards software system for their financial and operational needs. During the assessment phase of the study it was determined that departments are not utilizing the capabilities and operational reports that could be provided by the JD Edwards system. Departments rely heavily on Excel spreadsheets and Email to communicate material needs and manage their operations. A common response from the department's employees and managers is that there was not sufficient training of the system and it's capabilities and the system is not user friendly. As a result there has been strong resistance to migrate to the system and take advantage of its capabilities. Barriers and Opportunities for Improvement: The Warehouse was not utilizing the inventory reporting capabilities needed to properly manage and control inventory. The Warehouse Manager and staff were using Excel spreadsheets to try and determine minimum and maximum inventory levels, safety stock and a "best guess" when to reorder material to meet departmental needs. This required multiple handoffs and manual input of inventory requests from the departments to the Warehouse for project and maintenance items. This resulted in data input errors, the wrong material being purchased, errors with cycle counts and keeping too much "just in case" inventory on hand. It was also 35 determined that the City owns the systems modules and reporting capabilities but they were not being requested or fully utilized. Proposed Solutions and Accomplishments: Celerity Consulting identified reports and capabilities available from the system to manage inventory and provide operational and financial reports. By coordinating with Technology Services the system is now capable of providing reports for ABC Analysis, cycle counts, outages, fill rates, and obsolete and slow moving inventory, and inventory value and usage by department. In addition to the process improvement activities it was discovered that the system could also provide Work Order and Material Requirements Planning (MRP) capabilities that could alleviate the need for Excel spreadsheets and Emails to order material. The Work Order module could be used to develop Bills of Material (BOM's) for construction standards. Projects would be opened in a Work Order and the BOM's would then be utilized to develop a material parts list for that particular project. Engineering would have the responsibility to maintain and update the construction standards in the system and modify the Work Order to develop the customized list of material and quantities required for a project. Once the project design is finalized and the material required by date established, the project is released in the system and the MRP is populated with material requirements, quantities and material need by dates. Purchasing would maintain the vendor delivery lead-time provided by suppliers and vendors in the system. This would trigger a system message to the Warehouse Manager to order material and in what quantities thus alleviating the use of Excel spreadsheets and Emails. Once these capabilities were identified, Celerity Consulting facilitated a team of managers and users to review the systems capabilities and make a recommendation on moving forward with the technology. The team decided to pursue utilizing the system but decided to wait until the new process being implemented was institutionalized before incorporating additional technology. Recommendations The departments should continue to implement and monitor the new process and address additional issues that arise that were not originally identified during the process design phase and start of implementation. Celerity Consulting recommends that after four to six months of collecting data and reporting the Warehouse Dashboard chart and institutionalizing the new processes and procedures the team reconvene and develop a strategy on how to transition to the JD Edwards Work Order and MRP modules. In order to make this a successful endeavor it is suggested that a project manager is identified and a project team established. A project plan should be developed that includes milestones and departmental resources required and a budget. If Technology Services and the project team identify the need for additional external software consulting support to update and utilize the modules it is suggested that the City follow the bidding process to find the 36 most suitable vendor to support the effort. It is not recommended that the software vendor take over the project management responsibility but would be a part of the project team. The project manager would keep the project on schedule, on budget, determine new processes and procedures, and escalate issues that could not be resolved by the project team or if a management forcing function is needed during implementation. The skill sets of employees in the Warehouse and departments required to utilize the system should also be evaluated. Targeted training of new processes and procedures and system capabilities for employees should be identified, documented and made available to the staff end users and managers. Employees interfacing with the system should possess the skills and aptitude to be able to utilize the system, interpret reports, communicate internally to their department's staff and managers, address and resolve issues and coordinate with Warehouse personnel. 12. Bar Coding Technology During the course of the study the subject of Bar Coding was often discussed with the perception that this technology would bring improved service levels and better tracking and managing of inventory. It is Celerity Consulting's experience that any organization should cautiously and skeptically evaluate every new or proposed technological tool. If new technology will not improve value added services to customers, improve inventory accuracy, reduce cost and improve employee productivity within a reasonable period of time it should not be purchased. For the investment to be justified the benefits received must exceed the cost to implement the solution. To prepare a Warehouse for bar coding physical inventory, a bar code label, which identifies the item, is printed and affixed to each stocking location. Vendors and suppliers can be required to apply bar code labels to material shipped to the Warehouse or department. This often requires the vendor has a compatible printer and software to produce the labels reflecting the City's item numbers, which are normally different than the item numbers of the vendor. This service is often available but could be expensive. Consideration should be for not only the equipment and software required but also the labor necessary to generate and affix the labels. Vendors normally provide this to high volume, high profitable customers. Labels are assigned to locations because it is not often feasible to attach a label on every part stocked in inventory. During a cycle count, the counter utilizes a hand held bar code reader to scan the label, and then enters the counted quantity using the numeric keypad. After the cycle count is completed the product counts are automatically downloaded into the computer system, which updates the in stock quantities. Advantages of using bar coding versus traditional counting methods: ➢ One person can scan the bar code label, count the parts, and enter the count on the numeric keypad and download into the computer system 37 ➢ Scanning and entering cycle counts usually takes less time than writing down item numbers and counts and then manually entering the count information into the system ➢ Mistakes are not made because the wrong product is written down ➢ Mistakes are not made because the data entry person enters the wrong quantity Additional cost attributed to implementing bar code inventories include: ➢ The cost of printing bar codes labels for all stocked products ➢ The cost and method to utilize weather resistant labels that would be kept outside in the elements and not housed in a protected environment ➢ Placing labels in appropriate bin locations ➢ Buying or renting and maintaining hand held bar code readers ➢ Buying and maintaining the necessary software for the bar code readers to read bin labels and accept count quantities ➢ Cost of an interface to the bar code software and the JD Edwards system Recommendation Institutionalize the streamlined processes and procedures already defined and are already being implemented. After four to six months, perform a study to determine if bar coding technology would improve value added services to customers, improve inventory accuracy, reduce cost and improve employee productivity within a reasonable period of time. Use the Warehouse Dashboard chart KPI's to help determine if these indices would improve with additional bar coding technology. Determine the cost/benefit of implementing bar coding and maintaining the technology. ADDITIONAL OBSERVATIONS AND RECOMMENDATIONS 13. Departments Managing Their Own Inventory Over the past years, some departments decided that they preferred to reduce or remove their material stocked in the Warehouse and manage this inventory themselves. The main argument points for this were the Warehouse could not justify the 9.5 % and 13% markup on their goods, poor customer service, poor responsiveness to customer needs, and wanting more direct control over their material needs. The following is a summary of the departments reviewed during this engagement and the findings and recommendations. A. Facilities Management Facilities have their own off site mini-warehouse that is utilized to provide material for small maintenance jobs to support City Hall and the departments. Material is purchased, received and stored at their warehouse facility for these maintenance jobs. Work orders are generated from their work order system, micromain, and distributed daily to technicians for execution. If the technicians cannot perform the 38 job themselves they outsource to contractors. Material is obtained through a Direct Ship Order (OD) purchase order. The use of the OD purchase order is for emergency use. However, Facilities uses this as a vehicle to purchase normal and emergency material needs. Many of these OD purchase orders are capped at $3000, which is the threshold for having to follow the bid process. The current value of the on hand inventory is estimated to be between $10,000 and $11,000. Material requirements are attached to Work Orders to perform the jobs and technicians retrieve the material from the storage areas. However, the material purchased from vendors and suppliers is not processed through the JD Edwards system as inventory. Even though the Facilities department uses Purchasing to generate the purchase orders and buy the material, the Facilities department is not managing inventory with the same procedures and disciplines as the Warehouse. There are no obsolete or slow moving inventory reports, ABC analysis, Cycle Counts, inventory turns, material usage, fill rates, or tracking outages and the value of the material in storage. Recommendation: Warehouse should provide oversight and help manage the Facilities Warehouse. The Facilities organization should provide a resource from their department assigned to manage and monitor the material from their inventory through the JD Edwards's system and coordinate and communicate with the Warehouse. Inventory can then be tracked through the system and Facilities will have access to all the material management reports provided by the system not being utilized today. Warehouse staff should provide training of this designated resource in materials management policies and procedures currently being used by the Warehouse. In addition, they should be trained on how to use the system by inputting data along with retrieving and interpretation of the reports through JD Edwards. If the department cannot provide this person, then the Warehouse will have to provide this service. The budget for Facilities for fiscal year 2010 - 2011 is approximately $2,793,929. The cost of maintaining the $11,000 Facilities warehouse inventory should be evaluated and compared against the cost of moving and managing the material in the Warehouse. The Warehouse has enough space available to consolidate and add all the material from the Facilities inventory. Centralizing the two Warehouses and running the material through one location should be reviewed for cost savings and the advantages of central materials management and control: ➢ Reduction in the cost and expense of maintaining two facilities ➢ Less resources required by not having to duplicate effort and maintaining two facilities ➢ Common financial and materials management reporting ➢ Common processes and procedures ➢ Centralized Warehouse operations ➢ Utilizing JD Edwards as the common system 39 B. Solid Waste Solid Waste maintains their own inventory of residential and commercial containers and has an on site staging area they call the "Boneyard" located at the solid waste site. Containers are tracked through their in house software system and not through the JD Edwards system. Solid Waste took control of their own inventory in order to avoid the 13% markup charged by the Warehouse, which they considered excessive. In addition, the Warehouse did not have the space required to maintain the inventory of containers and Solid waste wanted direct control and close accessibility of their inventory. All containers have serial numbers provided by the vendors, which is monitored through the Solid Waste software and also used to keep track of containers at residential and commercial customers. Recommendation Solid Waste has acceptable processes, procedures and software to track and manage their containers on and off site. It is the opinion of Celerity Consulting that they are capable of properly maintaining and controlling their inventory. There is no advantage to have the Warehouse maintain the containers. However, Purchasing should review the Solid Waste purchasing activities to make sure they are in compliance with City purchasing requirements and are receiving the best price for their containers. C. Fire Department At one time all the inventory and medical supplies used by the Fire department were ordered and tracked through the Warehouse. This inventory is now being managed and kept at the Fire Department stations and is no longer at the Warehouse. Paramedics are assigned to monitor the medical supplies required for their ambulances at the seven Fire Stations in the City. The Paramedics monitor the expiration date of supplies and drugs at each of the stations. They also order supplies on line through Bound Tree, an Internet website vendor utilized by the Fire Department for ordering and restocking material. Supplies are shipped directly to the stations within two to three days after placing an order. It is the opinion of the Fire Department that they maintain control and the disposal of medical supplies and narcotics rather than the Warehouse having this responsibility. Recommendation The policies and procedures being utilized by the Fire Department provide the required monitoring and control of their medical supplies. Paramedics have the time and training to determine their medical supply needs, change out ambulance truck stock and dispose of expired drugs. Purchasing supplies directly through the Bound 40 Tree vendor provides the department receiving the best possible price for their supplies and a fast delivery time of two to three days directly to the stations. BENCHMARKING AND OUTSOURCING 14. Warehouse Benchmarking Benchmarking is the search for industry best practices that lead to superior performance. A key initiative of the engagement with the Warehouse was to optimize existing processes and procedures with existing resources and with the current technology available. With the exception of incorporating JD Edwards Work Order and MRP capabilities these improvements are being implemented and KPI's have been identified to quantify these improvements. There is a lag time between identifying an issue, finding and implementing a solution, and realizing results. Process improvements can be experienced early on but financial impacts usually take more time to realize. The CFT members and departments should continue to drive the institutionalization of these changes so the departments experience the benefits, which should take affect over the next four to six months. The Dashboard Chart measurements should reflect positive trends as implementation proceeds and the departments and Warehouse continue to migrate employees to the new processes. The Warehouse and departments will then have a foundation that can be used to launch a benchmarking initiative. Utilizing the KPI's and having a common understanding of the new processes and procedures as a starting point, the Warehouse can compare processes and performance measures to other organizations. They can also benchmark to companies that provide outsourced warehousing services. Some of the goals of a benchmarking initiative can be expressed as follows: ➢ Improves organizational quality ➢ Leads to lower cost ➢ Exposes employees to new ideas ➢ Broadens the organization's operating perspective ➢ Enforces a culture open to new ideas ➢ Serves as a catalyst for continuous improvement ➢ Increases employees' satisfaction through involvement, empowerment and a sense of job ownership ➢ Overcomes employees' natural disbelief that they can perform better ➢ Creates an external business view, and raises the organization's level of maximum potential performance 41 There are three primary types of benchmarking that should be addressed when this initiative moves forward: ➢ Process benchmarking ➢ Performance benchmarking (KPI's) ➢ Strategic benchmarking Process Benchmarking: Process benchmarking focuses on already defined work processes and operating systems. This form of benchmarking seeks to identify the most effective operating practices from organizations that perform similar work functions. If an organization improves a core process, it can quickly deliver performance improvements. These performance improvements are reflected through increased productivity and lower costs. During meetings with other organizations, both parties should share their own processes and procedures in order to share experiences, identify best practices and collect new ideas for later consideration and implementation. Celerity Consulting recommends that the "Ordering and Staging of Project Material Process" be reviewed with the benchmarked organization. Performance Benchmarking: Performance benchmarking enables managers to assess their competitive positions through financial and performance measure comparisons. Performance benchmarking should focus on the KPI's already established for the Warehouse and compared to the benchmarked organization. Product pricing from vendors and suppliers along with service comparisons and analysis of operating measures should be reviewed. There are over 1600 items in the Warehouse but not all of these items need to be benchmarked. A sample of Warehouse items should be selected for direct price and vendor service comparison. The sample should focus on "A" items since they represent the most dollar investment. Lead times, service levels, responsiveness, and the value proposition of the vendors and suppliers should also be reviewed. Strategic Benchmarking: In general terms, strategic benchmarking examines how organizations compete. Strategic benchmarking is seldom industry-focused. It often cuts across industries seeking to identify the winning strategies that have enabled high performing companies or organizations to be successful. While it is important for the Warehouse to benchmark against similar types of organizations, it can also be very beneficial to benchmark against private sector companies. In order to be competitive and stay in business, private sector companies have had to learn to streamline their operations, manage costs an drive their bottom line. Determining and incorporating their best practices is an activity that should be considered as a possible element of the benchmarking initiative. 42 15. Warehouse Outsourcing The two common reasons to outsource are to save money and to improve processes. If the City pursues outsourcing it would be to save money by reducing its own costs and pay an outsourced supplier less money in the form of fees than it currently spends on delivering the service itself. The two most common categories in which the City could save money are to transfer Warehouse payroll and the facility to the supplier. Reducing payroll does not necessarily mean laying everyone off. The Warehouse staff may be able to take on other unfilled open positions in the City or be able to be trained for different roles. Another option is to transfer the employees to the outsourced supplier. Purchasing performed an earlier study and it was estimated that to service the non-related Warehouse expense items would require two full time equivalent employees at a cost of$189,827. These services would still have to be performed even if the Warehouse was outsourced. There are currently five full time Warehouse employees. The reduction in payroll could only be realized with a payroll reduction of three employees. In addition, the Warehouse facility is part of the building infrastructure shared with Purchasing and Water and Waste Water departments. Shedding the facility is not an option since it is an integrated part of the infrastructure and is not a stand-alone entity. There would still be cost associated to maintain and manage the Warehouse building and yard. Another reason to outsource is to gain improvement in services. If the City considers outsourcing to improve services or processes it is important that the City understands their position on the service and price expectations from the supplier. It is critical to fully understand what the supplier will deliver and the departments accept what will be delivered. There are key questions that should be answered to decide if the City is ready for outsourcing: ➢ What are the business reasons for outsourcing? ➢ Does the City understand the outsourcing process and do they need help from sourcing advisors or sourcing lawyers? ➢ Does the City understand the impact that outsourcing will have on the departments? ➢ Does the City understand their operations and the costs that those operations drive? ➢ Does the City fully understand the financial detail of the prices the suppliers propose? ➢ Is the City willing to go through layoffs if applicable? ➢ Who will be chosen to lead the effort? ➢ Does the City know who will manage the service after it is outsourced? Over the past several months the Warehouse and departments have defined the processes to streamline and improve their operations and service levels. There is now clear understanding of the roles and responsibilities the departments and Warehouse play and how communication is critical for a seamless process. An outsourcing supplier would have to further improve the process, provide greater service to supply material and have the same level of communication and coordination with the departments and at a lower cost. The KPI's developed for the Warehouse should be used to compare financial and operational indicators to a 43 potential outsourcing supplier. In the next four to six months the City should generate an RFP to solicit quotes from potential suppliers and compare the responses to the processes already implemented, expected service levels and pricing. The proposals need to be compared from each of the prospective suppliers. The following are benefits that should be realized by outsourcing the Warehouse: ➢ Increase in the quality of service already being delivered ➢ Provide the service at a lower price that it currently cost the City. Compare "apples to apples" ➢ Provide additional services not currently provided by the Warehouse such as better vendor pricing based on volume discounts and new product information ➢ Twenty four hour and emergency service ➢ Delivering material directly to a job site like cut to length cable ➢ Consistent service delivery ➢ Improved project planning with predictable vendor lead times It is recommended that the CFT be the team to manage and pursue this initiative. The members involved in this study have the best understanding of the processes and KPI's to generate the RFP and compare the responses. The team would then make a recommendation on whether to outsource the Warehouse. The City has previously outsourced the Fleet Services Warehouse to NAPA auto parts. It is also suggested that the current Superintendent of Fleet Services be a member of the evaluation team since he has already been through this process and has first hand experience in the pros and cons of outsourcing. CONCLUSION 16. Acknowledgements Celerity Consulting is grateful to the management and staff of the City of Denton and especially Finance and Accounting, Purchasing and the Warehouse who provided information, insight and technical advice in the preparation and refinement of this report. We are particularly thankful of Bryan Langley, Karen Smith, and John Lozano who diligently worked with us in understanding the various unique processes and challenges of the City. Their hard work and perseverance to make change were critical to the success of the study and very much appreciated. Sincerely, David Baird President Celerity Consulting, LLC 44 Appendix 1 Warehouse Workshop Process Map City of Denton Warehouse and Project Planning and Execution Process Map Functions Request Pre-Contact COD Developer Project Meeting with Developer Developer No submits plans for development to 4 the City of Denton s Route Plans COD to Applicable Yes City Project Release? - Engineering Departments I Review plans Departments No determine impact 2 on timing, cost S5 7 tart Project 6Discuss the Department Determine and resources Design and Release Yes Pro ect with Engineering Projects Submit comments Assess Needs j Project? Developer on plans -Capital Improvement Size the Project Determine Projects (CIP) completion date -O & M Preliminary design -Emergency Construction Preliminary Check on material availability Superintendent I I Determine completion date Material Specialist I Warehouse Purchasing Vendor/Supplier Crew Foreman 45 City of Denton Warehouse and Project Planning and Execution Process Map Functions COD Developers - 717 L-ID COD Engineering $ 9 10 Department Yes Finalize E-mail Excel Engineering Design Material List Visit and walk the site Engineering 100% for every Project develops a Bill of Material (BOM) and Determine cost of Emails to the 11 Construction Project: Construction Receive -Labor Superintendent, Material List Superintendent Equipment Material Specialist -Material Project and Warehouse but not review Review Supervisor to start Incorporate changes Meeting ordering material Waiting on "Red Folder" from Engineering, Developer, Construction - 12 14 15 Material Superintendent Receive and Request Material E-mail Specialist Review to be Ordered for Warehouse to Input data into Excel Material List Pole Yard in JDE Order Material Special Order Items 13 16 1 Receive and Check JDE for 7 Combine Material Warehouse - Review Quantity on Material List Hand Needs and Generate P.O. Departmental Project Review Warehouse staff review meeting request for material and Finalize material - Engineering check against the quantities and need Purchasing - Construction Superintendent inventory on hand, dates and send to - Material Specialist Also bundle material Purchasing for -Warehouse Supervisor needs for future approval to generate a vendor orders. Purchase Order(P.O.) Discuss and review: - Timing of Projects Vendor/Supplier - rCompletion ofProjects - Start and end dates - Material needs from Warehouse - Future Projects Crew Foreman 46 City of Denton Warehouse and Project Planning and Execution Process Map Functions COD Developer COD Engineering 23 Repeat Department Step 18 Engineering 20 27 Construction Deliver Notify Superintendent I Material to Warehouse to Project Site U pdate J DE tN EDe 28 Material Notify Specialist o Warehouse to Update J DE 22 Deliver 29 Pull Material for Projects, Warehouse Material to Stock Material Maintenance and I Warehouse 30 Emergencies 18 Quality Control of Receive Material into JD Edwards material Purchasing Review and Order Material Check parts to the P.O. Expedite material when required 19 Vendor Vendor/Supplier Bidding Process Receives o. and Ships Verify lead time with Material Check against material vendor ordered -How much How -How fast any 31Crews Pick Crew Foreman up Material at Warehouse 47 Appendix 2 Warehouse Workshop List of Barriers Denton Warehouse Barrier List Red Removal Flag Barrier Description Impact Difficulty 25 Warehouse needs to review and improve good and consistent customer friend) service. 10 2.5 16 The Roles and Responsibilities between the Warehouse and the DIVE Pole Yard need to be defined and 10 3 established Cycle Counts are not understood: material not being counted in alternate locations, can't find locations, some 20 material not labeled, material count is closed out before DIVE can reconcile, need more frequency of Cycle 10 3 Counts, confusion with items on "Future to Commit", and review why 100% Cycle Count at the Pole Yard every 2 months. Warehouse needs to explain how Cycle Counts are established and executed. 14 Departments need to establish a start date and communicate to the Warehouse and Purchasing. Purchasing 10 4 is driven b the start date and not the end date. 21 How is "Future to Commit" utilized in JD Edwards 10 4 11 The rocess for ordering material in advance for future projects is not clear 10 7 6 Due to the difficulty with using the JD Edwards system there is too much manual entry and use of Excel 10 8 spreadsheets for project design 9 Departments do not have access or do not know how to get into JD Edwards to view vendor lead times, 10 8 Min/Max's, item prices, etc. 12 The JD Edwards system is not user friendly. Departments have not been trained and do not understand the 10 8 ca abilities and available reporting. 3 Developers will bypass the project planning and execution process and go directly to the City Management 10 10 and/or the City Council members 13 The Warehouse is manually managing the inventory and not utilizing the JD Edwards system. Warehouse staff 10 10 were never trained in using the system to manage inventor . No automated way to pull a summary of material changed out in a project that changed at the Warehouse as 23 requested by the Departments. This information needs to get back to Engineering to update designs. Can this 9 3 be done with Warehouse material tickets? 17 Purchasing needs to develop a process to communicate and update lead time information in JD Edwards. 8.5 7 .Departments will also have lead time updates from vendors when the are trying to expedite material 24 Why are there arguments between Departments and Warehouse staff if items have been released or not? 8 2.5 5 Getting item pricing for estimating and updating projects is done manually and cannot be pulled directly from 8 3 JD Edwards. Pricing is requested from the Warehouse and may be u to a year old. No real time data. 18 Need to develop a process for Departments to communicate the need for ordering emergency material from 8 5 ,Purchasing. Otherwise Purchasing may start the policy to ask for 3 quotes, which, may delay getting material. 7 Departments are requesting from the Warehouse a list of material lead times from the vendors and the 8 7 Min/Max inventor levels 1 Engineering is requiring that material is ordered before a project is approved. Forecasting future material needs 7 2 is uncertain. 2 Setting expectations with Developers during the project planning phase is inconsistent 7 2 4 5 5 It is \ery difficult to solicit a Developers project completion date The date is floating and not "set in stone" 22 When material is delivered directly , how is the material delivery verified by the work crews and how is JD 4 2 Edwards updated that the material was received? 8 Departments are not clear on how Min/Max levels are established and updated b the Warehouse 3 2 19 The policy and process for managing the relationship and communication with vendors between Purchasing 3 2 and the Departments needs to be established. 15 Can the DIVE Pole Yard have their Access database update the JD Edwards system direct) 2 10 10 Why are Min/Max's based on maintenance and not projects? Warehouse needs to clarify how Min/Max works. 48 Barrier Removal Priority Ranking 25 6, 14, 9, 3,13 16 0320 21 11 12 00 00, 9 23 17 24 5 13 7 7 111,2 m p 6 5 4 c 22 4 3 3, 19 2 15 1 6 1 2 3 4 5 6 7 3 9 16 Removal Difficulty 49 Appendix 3 Warehouse Customer Satisfaction Survey Results Very Somewhat Somewhat Very Total Satisfied Satisfied Satisfied [Dissatisfied Dissatisfied Surveys 1 The length of time it took to receive material 14 8 1 23 2 The material received was what was requested 17 5 1 23 3 The material received is in goad condition 17 5 1 23 4 The quality of service 15 5 1 23 5 The completeness of the service 15 5 1 23 6 The Warehouse staff was courteous 17 5 1 23 7 The overall performance of the Warehouse 15 7 1 23 Sum 112 42 1 5 5 % of Total 59..57% 25.199% iM2% 5.08% 173% Maxium Points to Be Earned 5 2.5 1 -2.5 -5 Customer Satisfaction Weghting (Points Earned E,1'.Q 105 1 0 -30 Customer Satisfaction Index 79 01 50 Appendix 4 Warehouse Recommendations Matrix * The CFT Team should establish the personnel responsible and due dates Item Recommendation Item Responsible Date Status # * Due The CFT should continue to meet on a Tony Puente CFT has agreed to meet regular basis, at least once per month, on a monthly basis going 1. until long-term barriers are addressed and forward. solutions and processes are institutionalized. CFT should continue to prioritize, establish Tony Puente 2. and monitor ongoing Barrier Removal Teams (BRT's). Develop a Development process that is Bryan If a common process is documented and streamlined, and Langley not defined and 3. communicates the city's expectations to explained, the developer developers. The starting point could start will continue to expedite in the Planning department. their own interests. An end of project review for lessons Brent Heath 4 learned should be scheduled and performed for large or complicated projects. The Warehouse should use the twice- John Lozano In the process of being weekly DME Project Construction Meeting implemented. to communicate: availability of material for 5. projects and emergencies, updated vendor lead times, damaged or back ordered materials, and after hours support and scheduling of staff. Water and Waste Water have agreed to Justin Diviney In the process of being 6 inform the Warehouse thirty days prior to implemented. project start dates for project material Mike Barzano requirements. DME and Water and Waste Water Justin Diviney In the process of being 7 continue to support and monitor new implemented. processes and procedures for the ordering Mike Barzano and staging of project material. DME and Water and Waste Water Justin Diviney In the process of being continue to drive construction supervisors implemented. 8. and work crews to utilize and implement Mike Barzano the new process for ordering material in advance 51 Continue validation and due diligence for Tony Puente 9 utilizing the JD Edwards Work Order and MRP module and corresponding reports that can: Determine required departmental and John Lozano Warehouse staff training needs for the JD 10. Edwards systems capabilities, material management reports, and how and where to input data into the system. Utilize reports to better manage projects, John Lozano In the process of being order material, improved inventory implemented. 11. management, streamline operations, reduce costs and workarounds, and improve productivity Develop or modify existing processes and Tony Puente 12. procedures to utilize the existing JD Edwards technology. Expand the JD Edwards's system and Jeff Morris 13. processes and procedures defined to date to include DME transmission, substation and power generation projects. Rollout new processes and procedures, John Lozano In the process of being 14. system capabilities and reporting, and best implemented. practices to remaining departments to utilize JD Edwards reporting. The Warehouse and Purchasing should Karen Smith In the process of being 15. determine if there are other candidates for implemented. negotiating blanket contracts when applicable. Determine the need to negotiate with other Karen Smith In the process of being 16. vendors that can provide cable that is cut implemented. to length. Continue to address with departments Tony Puente The value of this obsolete and slow moving material. This inventory is material needs to be sold or transferred to approximately 17. the departments, scrapped, auctioned or $1,330,000. Departments returned to the vendor. have already stared reviewing their lists of material. Determine if additional Warehouse storage John Lozano In the process of being 18. space is required after disposition of the implemented. obsolete and slow moving inventory. The material quantities used in the exempt John Lozano In the process of being 19. bins should be reviewed and refreshed implemented. every six months. The Warehouse customer satisfaction John Lozano Initial survey was 20. survey should be implemented once or completed. twice a year. 52 The Warehouse Improvement Team John Lozano In the process of being should meet monthly to address new implemented. 21. issues that arise and respond to departmental issues and priorities that affect the Warehouse. The Warehouse should continue to John Lozano evaluate JD Edwards's materials 22. management system capabilities and the required additional support from Technology Services to access and activate reports and modules. The Warehouse Manager should continue John Lozano This activity has been to coordinate with his staff, Purchasing transferred to the 23. and Technology Services to collect KPI Warehouse Manager and data, update the Excel database, and the Dashboard Chart will publish the Dashboard monthly. be published monthly. After the Dashboard chart has been Tony Puente published over the next four to six months, 24. targets for each metric should be determined and included in the chart and tracked on a monthly basis. After four to six months of collecting data Bryan The initial evaluation and reporting the Warehouse Dashboard Langley team agreed to move chart and institutionalizing the new forward to utilize the JD 25. processes and procedures the CFT team Edwards modules but should reconvene and develop a strategy decided to postpone to a on how to transition to the JD Edwards later date. Work Order and MRP modules. In order to implement the Work Order and Bryan MRP modules in JD Edwards, a project Langley manager should be identified and a project 26. team established. A project plan should be developed that includes milestones and departmental resources required and a budget. The skill sets of employees in the Tony Puente In the process of being 27 Warehouse and departments required to implemented. utilize the JD Edwards system should be evaluated. Evaluate implementing Bar Coding John Lozano Technology once Warehouse key 28 performance indicators are established. Determine the cost/benefit of implementing bar coding and maintaining the technology. 53 Warehouse should provide oversight and John Lozano This was discussed with help manage the Facilities Warehouse. Facilities Management The Facilities organization should provide and they were interested 29 a resource from their department assigned in coordinating with the to manage and monitor the material from Warehouse. their inventory through the JD Edwards's system and coordinate and communicate with the Warehouse. Perform a study to combine and centralize John Lozano the Warehouse and Facilities inventory 30. and run the material through one location and for cost savings and the advantages of central materials management and control. Determine how to have Facilities use the John Lozano The Warehouse staff can 31. JD Edwards system to track and manage provide training and inventory. direction on how to use the system. Purchasing should review the Solid Waste Karen Smith purchasing activities to make sure they are 32. in compliance with City purchasing requirements and are receiving the best price for their containers. The CFT should launch a benchmarking Karen Smith initiative. Utilizing the KPI's and having a common understanding of the new 33. processes and procedures as a starting point, the Warehouse can compare processes and performance measures to other organizations. The CFT should launch an outsourcing Tony Puente initiative. The CFT members have the best 34. understanding of the processes and KPI's to generate a Managed Competition Bid and compare the responses. 54 ATTACHMENT 5 RESIDENTIAL BILL COMPARISON CUSTOMER 1 2011 2012 DIFF ELECTRIC 71.30 71.30 0.00 WATER 27.59 30.21 2.62 WW 13.29 14.75 1.46 SW 23.70 24.40 0.70 135.88 140.66 4.78 3.52% CUSTOMER 2 2011 2012 DIFF ELECTRIC 111.79 111.79 0.00 WATER 17.34 18.99 1.65 WW 13.70 15.20 1.51 SW 23.70 24.40 0.70 166.52 170.38 3.85 2.31% CUSTOMER 3 2011 2012 DIFF ELECTRIC 96.10 96.10 0.00 WATER 18.90 20.70 1.80 WW 13.70 15.21 1.51 SW 23.70 24.40 0.70 152.40 156.40 4.00 2.63% CUSTOMER 4 2011 2012 DIFF ELECTRIC 58.25 58.25 0.00 WATER 19.96 21.86 1.90 WW 13.29 14.75 1.46 SW 23.70 24.40 0.70 115.20 119.26 4.06 3.52% Electric bill based on projected FY 2012 rate per KWH ($.0907) ATTACHMENT 6 e5 ens ors ec; r Lti CC) O tD d Cti a) a) pj N O r ~ O O N lL - EF} - 64 - 64 - - - o 0 Cl! C"7 `~6° C"3 67 O LO d (TY tTY C77 O N y N LC) O ~ C O O N lL - EF1 - CF3- - ~ - - - L:7 LCb ~ e°° rm rm ~ O O d 0'Y ai ai y (Ili LC) A O r ~ O O N lL f~ hW Cis d O co co co N Cl) d co CO CO Cl) r y N LC) N O ~ C O O N lL E3 (D rD co M O N d co co co d: N y N LC) O r ~ ® O O N L lL - ~ 64 - EF1 - - - Car t~ ass C) Co co O O a) a) co (b N fC N LC) o E O y N LLI bn 6)- EF} LU U ~ Z O Q L J d C m® co LLU 0 W 2! ui D D' H LU LLd > W cl~ C] > Ili W W W > a- LL U) LL LU ® cld LU ® ~ ' W DL ATTACHMENT 7 100 40 $2M Annual $4M Annual 80 $8.21vl Annual . u $lOM Annual 0 L $lanl Ai,nual 0 $16M Annual z Ui,lin,it?cl 70 -Do Nothing 60 50 0 1 2 3 4 5 Year End Analysis Results [0 = 2010[ Figure 17 -5 Year Annual OCI By examining the differences between the various budgets and OCI results, the benefits of maintaining the system at its current level of service may be compared against letting the system deteriorate and then attempting to rebuild it (essentially the cost of the Do Nothing option in terms of returning the system back to its original OCI). The amount of cost savings for Denton may be estimated at: 1. The Unlimited budget raises the OCI from 63 to a peak of 92 and costs approximately $160M or $5.5M per point increase (63 = starting OCI, 92 = Final OCI, $160M / (92-63) _ $5.5M per OCI point raised). 2. The $10.OM annual budget maintains the OCI at 63 and invests approximately $50M over 5 years. 3. The do nothing drops the OCI from 63 to 52 for an 11 point OCI drop. At $5.5M per point (as developed in item 1. above) this equates to $60M being required to return the system to an OCI of 63. (63-52) x $5.5/pt = $60M 4. The cost to maintain the system on an annual basis therefore $10M dollars less than letting it deteriorate and then attempting to rebuild the network ($60M - $50M = $10M). 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O~ ~ U 1c; p ~O {f} N 00 00 00 O O I~ N co ~ J(z .p N 00 00 Oo b} {f} f,g -bq N O 00 00 M J ° o M ~O 1O 06 M N 00 00 00 } J)r N CN LO O O LO C5 6 06 LL- N o, 0- 00 00 ~9{ ~O 16 0 a cn H o N in H V) V N D o H X > } } LL Q • a U H 16 j, O Q V m m m Off} LL Z FO L1XJ' LL ;i L u N H N X ` w •E ~ V CN V r- D LL cn v N ~ rr ~ O O ~ LL N N N p ~ O V O ' O N t/1 • - _ NO ~ ~ V O N ~ ~ V N s O~~ s 30 s N~ 3 .0 .0 N• CY) } N } Q N O E ~ Q_ Q V o z 0 AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 Questions concerning this acquisition may be directed DEPARTMENT: Transportation Operations to Mike Ellis 349-8424 ACM: Jon Fortune SUBJECT Receive a report, hold a discussion and give staff direction regarding an Interlocal Agreement between the City of Denton and Denton County Transportation Authority (DCTA) for maintenance and repair of DCTA's fleet of vehicles. BACKGROUND The purpose of this agenda item is to discuss the possibility of the City of Denton entering into a contract with DCTA for the provision of bus and vehicle maintenance services. DCTA currently leases property and facilities from the Solid Waste Department. As part of this agreement, DCTA operates and parks their buses at the landfill, and fleet maintenance is provided by a third party contractor at the site as well. While this partnership has worked well, Solid Waste now needs to expand their landfill operations, and as a result, DCTA will be required to relocate their operations in the near future. The DCTA operations can be relocated to another area at the landfill or to an offsite location. As part of these discussions, staff has considered the possibility of combining fleet maintenance operations for both DCTA and the City of Denton. Under such an arrangement, maintenance activities would be performed at the City of Denton's Service Center site located at 901-B Texas Street. Initially, it is contemplated that any such partnership will only be related to the maintenance of DCTA's bus and vehicle fleet. In other words, DCTA will continue to park and operate their buses at the landfill site. In the future, however, it is hoped that improvements can be made to the Service Center location which will allow DCTA to store, operate, and maintain their bus and vehicle fleet all from a single site. The attached PowerPoint presentation provides a general overview of the proposed partnership and ancillary issues that will need to be addressed. Staff is seeking direction from the City Council on the general terms contemplated. Assuming the Council is in agreement with the proposed terms, a contract will be negotiated with DCTA for consideration on the September 6 or September 13 agenda. Agenda Information Sheet August 16, 2011 Page 2 PRIOR ACTION/REVIEW Staff briefed the City Council on the initial concept on April 5, 2011. DCTA staff briefed their Finance Subcommittee on August 2 as part of their budget process. DCTA has placed this item on their August 16, 2011, Finance Subcommittee Agenda for further discussion. DCTA staff has received favorable direction from their Subcommittee regarding the proposed fleet maintenance agreement. FINANCIAL The proposed vehicle maintenance agreement with DCTA will add a third shift to Fleet Services operations and nine employees. The FY 2011-12 City Manager's Budget, as presented to Council on August 4, 2011, included the proposed nine full time employees and a $1,692,344 budget to be funded through the vehicle maintenance agreement with DCTA. An additional amount of $689,000 has been estimated for capital costs to improve City property to include paving a bus parking lot and acquisition of modular buildings. The additional costs are expected to be paid by DCTA, but some costs may be shared with the City of Denton if they also benefit municipal operations. RECOMMENDATION Fleet Services recommends moving forward with finalizing an agreement with DCTA for the provision of fleet maintenance. EXHIBITS 1. DCTA Letter of Interest dated July 27, 2011 2. DCTA - Fleet Services Power Point Respectfully submitted: t Mark Nelson Transportation Director Prepared by: Mike Ellis Fleet Services Superintendent ]i Denton County Transportation Authority EXHIBIT 1 i 1660 S. Stemmons, Suite 250 • Lewisville,TX 75067 972-221-4600 • fax 972-221-4601 a dcta.net July 27, 2011 George Campbell City Manager City of Denton 215 E. McKinney Denton, TX 76201 Dear George, After due consideration of your letter of July 15, 20111 would like to confirm that DCTA continues to be very interested in pursuing a cooperative venture in the area of fleet service maintenance and operations. Yesterday we received some capital estimates regarding this transition which were within range of our expectations but will need further review and analysis by our staff. Our internal plan is to brief the Program Development Committee again on 8/16/11 and Executive Committee on 8/17/11. At that point, we hope that we will have a preliminary agreement completed. After both parties have had ample time to review the drafts presently being formulated by our staffs. This would allow final consideration of the proposed agreement in September by both entities. We appreciate the time and effort your staff has dedicated to this process and look forward to a positive conclusion. 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CZ NO ct ;-4 4-J 4-J 4-j cz 4-J In C) cz O 5 + 1 r , Ifs 4 u, Y t • f 4 f ~f f OW, 'a fn vwd~ 1 I' t a v a ~ ~ y n V 'f t F L 1 V O ~ N O O O O M ~ O N O N ~ ^ L-1 CIN co Ul~ \1.0 cq cq :I- 0 "MM4 gnu t 1 Ct I~ Cz 4-j W n 4-j ct U ~ c ct cz ct 4-j "-4 ct c~ O ~ s=1 w ct r-4 4-J ct C) boo a~ ct s=1 ct 4 4-J cn v~ ct ~ ;--4 ICI 4-J , t v •P, -4 ct O vcl) w ct ct a--+ ct +j Ct 731 ~ W c 4-1 ~ o o j boo 4-J En V ~ct ct O • ct ° gnu, puuuuuu. uuuuuul Ici LO - N bio r--~ 4-1 ct ct C~ j c~ 0 4-j Cj 4-J 4-j ct 4-j O ;-4 ;-.4 ~ O bA O ~ bA O ° N O 4-j 4-j NO a~ a~ a~ +-j v c ct • bZ s--~ bbZ 4-j co s:~ bZ O w o".0 V cam, Q V 4-j , • 4-j ct v v bZ 4-j O Q O O ct • 4-1 N O ~ v rci o O a~ p O CV c~ o 4j +-1 O 4~ b~0 4-1 4-1 4-1 p r+ • 4-j 0 , r-vl 4-1 AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Solid Waste hV- ACM: Howard Martin, 349-8232 SUBJECT Receive a report, hold a discussion, and give staff direction regarding the Solid Waste and Recycling Services overview of the department strategic plan with additional detail on the amendment of the facility permit to accommodate expanding services. BACKGROUND The City Council approved a Strategic Plan on April 5, 2011 defining who we are, where we want to go, and how we plan to get there. It links organizational direction to the City's established vision, mission and values. The Strategic Plan established five Key Focus Areas with goals to be achieved within each Key Focus Area. The City departments are developing their individual strategic plans to achieve the City Council's established goals. Solid Waste and Recycling Services has developed a draft of their department strategic plan and will provide a summary of the plan and provide background on two of the plan's topics, (apartment recycling and facility permit amendments to meet community service needs) that are currently being developed. Facility Permit Amendment The City Council has set goals for the Solid Waste Department that include maintaining a capacity to serve of 50 years and achieving a 40% recycling rate. In order to achieve these long term planning goals, the permitted capacity of our MSW Facility will need to be expanded to ensure adequate processing, treatment and disposal capacity in its integrated solid waste management system. The City of Denton moved its landfill operations from the Mosley Road site in Crossroads, Texas to the current location in 1984. The 1984 site was 32 acres. The EPA implemented improved design and operating riles for municipal solid waste landfills receiving waste after October 9, 1991 that were more protective of the environment. The State of Texas developed its revisions to their Solid Waste Disposal Act to meet the EPA's requirements and all facilities in Texas were required to upgrade their facilities and operating permits to meet those new riles. The City of Denton expanded its facility to include 252 acres, containing 152 acres for landfill disposal, and received its new MSW Facility permit in 1997. The Wastewater Utility and Solid Waste Funds own approximately 900 contiguous acres on the east side of Mayhill Road. The Wastewater Department's wastewater treatment plant, the Beneficial Reuse (Compost) operation and the Solid Waste Department's operations currently utilize a portion of the 900 acre site. The undeveloped acreage will accommodate future facility expansions for both departments. In order to determine whether the undeveloped land on the existing site would be an acceptable location for facility expansion, a geotechnical investigation of portions of the undeveloped areas on the site were conducted in 2008 and a study on the feasibility of a lateral expansion of the landfill was completed in January, 2009. The feasibility study concluded that the undeveloped areas were compatible for landfill use and the study provided three expansion alternatives. The study concluded that a permit amendment for a facility expansion at the existing site can provide greater than 50 years of service capacity. The permitting process is a multi-year process involving design, public input and multiple regulatory agencies involvement on technical and administrative issues. The permit amendment will consolidate the many minor permit modifications issued over the last 14 years, will be based on the latest State of Texas major MSW rile changes of 2006, will accommodate the incorporation of newer industry technologies, and address possible end uses of the closed landfill disposal areas. Respectfully submitted: A. Vance Kemler General Manager Solid Waste & Recycling Services AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Planning and Development ACM: Fred Greene SUBJECT - CAII-0004 (Comprehensive Plan Update) Receive a report, hold a discussion, and given staff direction on the execution of a contract for professional services for Wallace Roberts and Todd to serve as the consultant on the update to the City of Denton Comprehensive Plan. BACKGROUND On April 25, 2011, the City issued a Request for Qualifications (RFQ) No. 4672 seeking qualified professionals with considerable experience in citizen involvement, citizen participation, planning, land use, and sustainability, to develop an update to the City's Comprehensive Plan. On June 21, 2011 the RFQ closed and the City received five proposals from multi-disciplined firms that partnered with other consulting firms in the Dallas-Ft. Worth area. From this number, staff created a short list of consultants to interview, based on staff's assessment of the consultant's submittal and the evaluation criteria outlined in the RFQ. A panel of staff from the City Manager's Office, Water and Wastewater Administration, Planning, Solid Waste, Library, and Utilities Administration interviewed three prospective consultants. Each consultant team was given an opportunity to present their project team, their approach to this project, the scope of work to be performed, and how their previous experience would benefit the City in this process. Each consultant team made a thorough presentation that highlighted their expertise and some intangible, value added features that made the selection more challenging. However, at the conclusion of the interviews, panel members were consistent in their rankings and selection of Wallace, Roberts, and Todd (WRT) as the consultant to prepare the update to the City's Comprehensive Plan. WRT is an interdisciplinary planning and design firm based in Philadelphia. WRT is a leader in community visioning, comprehensive planning, and sustainable development. Their approach acts upon the values and aspirations of each community, engaging citizens and community leaders to take ownership of the challenge of imagining and charting their community's future. This approach is especially well-suited for Denton, which seeks to update the existing comprehensive plan in innovative ways to deal with municipal challenges and consider the integrated nature of municipal decision making. To date, WRT has completed 30 comprehensive plans that have been successfully adopted and implemented nationally and locally by the respective municipality. These plans have been developed utilizing the latest techniques in consensus building, and includes guidelines for fluid responsiveness to upcoming changes - both anticipated and unforeseen. Agenda Information Sheet August 16, 2011 Page 2 National Plans • Cornerstone 2025 Plan for Louisville/Jefferson County, KY, • Forging Our Comprehensive Urban Strategy (FOCUS) Kansas City, MO Comprehensive Plan, • Connections 2025 Comprehensive Plan for Greensboro, NC. Comprehensive plans currently underway: • Imagine Austin, Austin, TX • Albany 2030, Albany, NY Comprehensive plans completed throughout Texas: • City of Celina Comprehensive Plan Update • Town of Flower Mound Comprehensive Plan • City of Georgetown Comprehensive Plan. As well, WRT has incorporated interactive planning initiatives and schemes to guide, reinvigorate, and position cities to stay on the leading edge of the planning profession. WRT's has utilized state-of-the-art techniques to engage all citizens and to develop and test future scenarios for measures of sustainability and quality of life. To develop a comprehensive plan for the City of Denton, WRT has partnered with three additional firms to address specific aspects of the plan: Gresham Smith and Partners is a multi-disciplinary environmental consulting, architecture, engineering and planning firm that has provided services to federal, state and local governments, educational institutions and private industry clientele for the past 43 years. GS&P offers full- service transportation and community planning; economic analysis; energy efficiency and use reduction; water, wastewater, solid waste and stormwater consulting services. The Wolf Group is a strategic communications firm offering advertising, public relations and grassroots services across the country. The Wolf Group is headquartered in Dallas and provides expertise in public relations and outreach, strategic assessment, market research, internet and social media, traditional media, message and strategy development, and media training. Insight Research Corporation is an economic analysis firm. Insight has refined and improved traditional economic analysis protocols to evaluate the detailed economic, employment and investment-grade tax impacts of public and private capital investments, major projects, transportation alternatives and business site locations and expansions. Staff has contacted the consultant team's references and solicited feedback on their performance and experience with the respective consultant. All of the references noted that their expectations were met, the plans the consultant were tasked to completed were prepared on time and on budget, and the consultant's were flexible to changes, met challenges head on, and were responsive to issues raised by the respective cities. Agenda Information Sheet August 16, 2011 Page 3 It is anticipated that the update to the comprehensive plan will be performed in multiple phases over an 18 month to 24 month time schedule. The consultants noted in the initial RFQ, and interviewed by staff will be the consultants performing the tasks for completion of the comprehensive plan update. CONCLUSION Staff requests direction on the execution of a contract for professional services for WRT to serve as the consultant on the update to the city of Denton Comprehensive Plan. RECOMMENDATION Staff recommends that the City Council direct staff to initiate negotiations with WRT to develop contract conditions, deliverables, schedules and contract pricing. Staff will then come back to the Council with the final contract terms and pricing for consideration and approval at a later date. OPTIONS 1. Direct staff to initiate negotiations. 2. Direct staff to take another direction. Prepared by: Brian Locldey, AICP Project Manager Respectfully submitted: Mark Cunningham, AICP, CPM Director of Planning and Development sAlegal\our documents\miscellaneous\1 Nk-08929-ais-approval of modified stipulation-07201 1.doc AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Legal CM/DCM/ACM: John Knight, Deputy City Attorney SUBJECT Consider approval of a resolution of the City of Denton approving a modification to the stipulation made a part of the settlement agreement between the Alliance of Oncor Cities ("AOC") and Oncor Electric Delivery Company LLC ("Oncor" or "Company") regarding the Company's statement of intent to change electric rates in all cities exercising original jurisdiction; determining that this Resolution was passed in accordance with the requirements of the Texas Open Meeting Act; repealing any prior resolutions inconsistent with this Resolution; requiring delivery of this Resolution to the Company and Legal Counsel; and declaring an effective date. BACKGROUND On or about January 7, 2011, Oncor Electric Delivery Company LLC ("Oncor" or "Company") filed a Statement of Intent to increase rates by approximately $353 million, which equates to an increase of approximately 12.6% overall and an approximate increase of 15% for Residential customers. The City earlier took action on Oncor's Statement of Intent and suspended Oncor's proposed rate increase to allow its special counsel and rate consultants to review Oncor's application. After extensive review by the City's special counsel and rate consultants and other parties in the rate proceeding pending at the Public Utility Commission of Texas ("DUCT"), the parties reached a Settlement on the increase to be allowed Oncor. The city members of the Alliance of Oncor Cities (AOC) approved the Settlement rates over the period of May, 2011 through June, 2011. Included in the Settlement was a provision whereby Oncor would pay to the cities a total of $21.8 million in retrospective franchise fees Oncor had withheld based on the final order issued by the PUCT in Oncor's prior rate case Docket No. 35717. In Docket No. 35717 the PUCT determined that Oncor was not allowed to recover in rates, the increase in franchise fees agreed to by the cities and Oncor. The City, as part of the AOC coalition of cities, appealed the PUCT's Order to the Travis County District Court. The District Court agreed with AOC's position and issued its judgment reversing the PUCT's decision. The PUCT in turn appealed the District Court's final judgment to the Third Court of Appeals, where the matter is currently pending. But as part of the Settlement, the partied contemplated that the appeal pending at the Third Court of sAlegal\our documents\miscellaneous\11\dkt38929-ais-approval of modified stipulation-07201 1.doc Appeals would be withdrawn. The agreement to withdraw the issue of retrospective franchise fees was premised on the PUCT's decision in an unrelated, but relevant, rate case involving CenterPoint where the PUCT determined that CenterPoint could recover the increased franchise fees in rates. This decision by the PUCT appeared to all the parties in Oncor's pending rate case, Docket No. 38929, that the PUCT had reversed itself with regard to recovery of the increased franchise fees. However, when the parties presented the Settlement to the PUCT, the PUCT clarified its position on recovery of the increased franchise fees and made clear to the parties that the PUCT was not interested in withdrawing the appeal. The Commission considered the Settlement at its June 17 and July 8, 2011 Open Meetings. While the Commission has not yet taken any formal action with respect to the Settlement, the Commission has indicated in fairly certain terms that it will not withdraw its appeal of the franchise fee issues from Docket No. 35717, as is currently contemplated by Paragraph I.D. of the Stipulation and the proposed Order submitted with the Stipulation on May 11, 2011. The Commission has also indicated that it will not support those portions of the Stipulation relating to the payment and recovery of what it has referred to as "retroactive franchise fees," as set forth in Paragraph I.E. of the Stipulation and the proposed Order. The PUCT also indicated that it viewed favorably the remainder of the Settlement and asked the Signatories to the Stipulation to indicate whether they would support the Stipulation if it were modified to remove the provisions regarding "retrospective franchise fees." MODIFICATION OF SETTLEMENT Considering the Commission's comments, and to avoid the time, expense, and uncertainty associated with further litigating Oncor's pending rate case at the PUCT in Docket No. 38929, we believe the better course of action is modify the Stipulation to remove the reference to the retrospective franchise fees. The effect of this is at some time before the end of 2011, the City will need to consider a modification to the tariff sheets it approved when it approved the Settlement of Oncor's application to increase rates. The only tariff affected by removal of the issue of retrospective franchise fee issue is the tariff referred to as the Rider RS tariff. Note that this proposed modification to the Stipulation does not affect Oncor's agreement to pay the cities the retrospective franchise .fees. The only difference as concerns the retrospective franchise fees is that Oncor will not recover those fees from customers. Instead, with regard to the retrospective franchise fees Oncor pays each city, Oncor will either: (1) recover those amounts in the future if the courts ultimately determine that the PUCT was wrong in precluding Oncor from recovering those fees in rates; or (2) if the courts determine that the PUCT was correct in precluding Oncor from recovering the retrospective fees in rates, the cities would refund to Oneor the retrospective fees Oncor paid each city. With regard to any amounts of retrospective franchise fees that are paid to a city, but found to be not recoverable from customers, then the franchise fees then due would be reduced for a three- year period, until the total amount of franchise fees retained by Oncor from that city equals the amount of retrospective franchise fees paid to a city. As an example, if a city receives 2 of 3 - sAlegal\our documents\miscellaneous\11\&08929-ais-approval of modified stipulation-07201 Ldoc $150,000.00 in retrospective franchise fees (as its share of the $21.8 million in total retrospective fees), and the courts ultimately agree with the PUCT that the retrospective fees are not recoverable through rates, then that $150,000.00 would be "refunded" to Oncor over a three-year period through a reduction in the then in place franchise fee for that city. OPTIONS Approve the Resolution or deny the Resolution. RECOMMENDATION The AOC's special counsel and consultants are of the opinion that, even with removal of the issue of payment and recovery of the retrospective franchise fees, the Settlement continues to be a reasonable result and believe that the outcome is well within the range of likely outcomes from a fully litigated proceeding at the PUCT and is one that helps minimize rate case expenses materially, while at the same time resulting in just and reasonable rates. Moreover, given the PUCT's negative view of recovery through rates of the retrospective franchise fees, and the increased rate case expenses that would result from litigation of this issue before the PUCT, continuing to pursue this issue at this juncture before the PUCT augers in favor of a modification to the Stipulation. In short, AOC's special counsel and consultants continue to believe the remainder of the Settlement is a sound result and recommend that the Stipulation be modified to remove the issue of recovery of retrospective franchise fees. The effect of such a modification will not affect the monies the city will receive for the retrospective franchise fee to be paid by Oncor. However, should the PUCT prevail in court with regard to recovery of the retrospective franchise fees, the city would be required to refund those fees to Oncor. Respectfully submitted: k Knight, D uty City Attorney 3 of 3 s:Alegal\our documents\resolutions\11\dkt38929-revised-resolution approving modification to stipulation-07201 Ldoc RESOLUTION NO. A RESOLUTION OF THE CITY OF DENTON APPROVING A MODIFICATION TO THE STIPULATION MADE A PART OF THE SETTLEMENT AGREEMENT BETWEEN THE ALLIANCE OF ONCOR CITIES ("AOC") AND ONCOR ELECTRIC DELIVERY COMPANY LLC ("ONCOR" OR "COMPANY") REGARDING THE COMPANY'S STATEMENT OF INTENT TO CHANGE ELECTRIC RATES IN ALL CITIES EXERCISING ORIGINAL JURISDICITON; DETERMINING THAT THIS RESOLUTION WAS PASSED IN ACCORDANCE WITH THE REQUIREMENTS OF THE TEXAS OPEN MEETING ACT; REPEALING ANY PRIOR RESOLUTIONS INCONSISTENT WITH THIS RESOLUTION; REQUIRING DELIVERY OF THIS RESOLUTION TO THE COMPANY AND LEGAL COUNSEL; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the City of Denton, Texas ("City") has exclusive original jurisdiction as a regulatory authority over Oncor Electric Delivery Company LLC's ("Oncor" or "Company") rates, operations, and services within the City; and WHEREAS, the City is also an electric utility customer and has an interest in Oncor's rates and charges; and WHEREAS, Oncor filed a Statement of Intent with the City on or about January 7, 2011 to increase its annual revenue requirement by approximately $353 million on a system-wide basis, which included an increase in residential base rates of approximately 15%, and in Lighting rates of approximately 26%; and WHEREAS, the City took action on or before February 14, 2011 to suspend Oncor's proposed effective date and to coordinate a response to Oncor's filing with other similarly situated municipalities (such participating cities are referred to herein as Alliance of Oncor Cities ("AOC")); and WHEREAS, AOC continues its interest in minimizing rate-case expenses that would result from a lengthy contested rate case proceeding before the Public Utility Commission of Texas ("PUCT") and through the appellate process; and WHEREAS, AOC authorized its attorneys and experts to formulate and review reasonable settlement positions to resolve the pending rate increase request; and WHEREAS, AOC's attorneys met numerous times with the Company to negotiate a Settlement Agreement resolving the issues raised in the Company's Statement of Intent filing; and WHEREAS, the City has previously approved rates arrived at by way of settlement that produces an increase of approximately $136.7 million; and WHEREAS, intervening events now require a modification to the Stipulation made a part of the Settlement Agreement upon which rates the City previously approved are based; and sAlegal\our documents\resolutions\l l\A08929-revised-resolution approving modification to stipulation-07201 Ldoc WHEREAS, ADC's attorneys and experts recommend that AOC's members approve a modification to the Stipulation made a part of the Settlement Agreement upon which the rates the City previously approved were based; and WHEREAS, the rates previously approved by the City included approval for Oncor to recover from customers certain retrospective franchise fees; and WHEREAS, the Public Utility Commission of Texas ("Commission") in Docket No. 35717 involving Oncor's prior rate application, determined that Oncor could not recover through rates an increase in franchise fees agreed to by Oncor and the City; and WHEREAS, the City as part of the Alliance of Oncor Cities ("AOC") sought judicial review of the Commission's determination that Oncor could not recover in rates the increased franchise fees Oncor agreed to pay the cities; and WHEREAS, the AOC cities sought review of the Commission's decision with regard to recovery of the increased franchise fees and upon judicial review, the Travis County District Court entered its judgment and concluded that the Commission erred in concluding that Oncor could not recover the increased franchise fees from customers, which issue the Commission has appealed to the Third Court of Appeals where the issue is presently pending; and WHEREAS, as part of the Stipulation and Settlement arrived at earlier with regard to Oncor's application to increase rates, the parties to that Stipulation agreed to withdraw from the appeal pending before the Third Court of Appeals, the issue related to recovery through rates of the retrospective franchise fees, as is currently contemplated by Paragraph I.D. of the Stipulation; and WHEREAS, the Commission considered the Stipulation and Settlement at its June 17 and July 8, 2011 Open Meetings and while the Commission has not yet taken any formal action with respect to the Settlement, the Commission has indicated that it will not withdraw its appeal of the franchise fee issue from pending before the Third Court of Appeals, and that the Commission will not support those portions of the Stipulation relating to the payment and recovery of what it has referred to as "retrospective franchise fees," as set forth in Paragraph I.E. of the Stipulation; and WHEREAS, the Commission also indicated that it viewed favorably the remainder of the Stipulation and Settlement and asked the Signatories to the Stipulation to indicate whether they would support the Stipulation if it were modified to remove the provisions regarding "retrospective franchise fees;" and WHEREAS, considering the Commission's comments, and to avoid the time, expense, and uncertainty associated with further litigating Oncor's pending rate case at the Commission in Docket No. 38929, the more expedient course of action is to modify the Stipulation to remove the reference to the retrospective franchise fees; and PAGE 2 of 4 sAlegal\our documents\resolutions\11\dkt38929-revised-resolution approving modification to stipulation-07201 Ldoc WHEREAS, under a modified Stipulation Oncor would nonetheless pay the cities each city's share of the $21.8 million in retrospective franchise fees but would not recover those fees from customers; and WHEREAS, under a modified Stipulation, should the courts ultimately confirm that it is proper for Oncor to recover through rates the retrospective franchise fees, Oncor would be allowed to recover those fees in future rates; and WHEREAS, under a modified Stipulation, should the courts ultimately confirm the Commission's position that Oncor may not recover the retrospective franchise fees, then, with regard to any amounts of retrospective franchise fees that are paid to a city, but found to be not recoverable from customers, then the franchise fees then due the city would be reduced for a three-year period, until the total amount of franchise fees retained by Oncor from that city equals the amount of retrospective franchise fees paid to a city; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. The findings set out in the preamble are in all things approved and incorporated herein as if fully set forth. SECTION 2. The City Council finds that the Stipulation that forms part of the Settlement Agreement previously approved by the City, should be modified such that the issue of recovery of the retrospective franchise fees is removed from the Stipulation and the issue be retained in the appeal pending before the Third Court of Appeals. SECTION 3. Under a modified Stipulation, should the courts ultimately confirm that it is proper for Oncor to recover through rates the retrospective franchise fees, Oncor would be allowed to recover those fees in future rates. SECTION 4. Under a modified Stipulation, should the courts ultimately confirm the Commission's position that Oncor may not recover the retrospective franchise fees, then, with regard to any amounts of retrospective franchise fees that are paid to a city, but found to be not recoverable from customers, then the franchise fees then due the city would be reduced for a three-year period, until the total amount of franchise fees retained by Oncor from that city equals the amount of retrospective franchise fees paid to a city. SECTION 5. To the extent any resolution or ordinance previously adopted by the Council is inconsistent with this Resolution, it is hereby repealed to the extent of any such inconsistency. SECTION 6. The meeting at which this Resolution was approved was in all things conducted in strict compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551. SECTION 7. If any one or more sections or clauses of this Resolution is adjudged to be unconstitutional or invalid, such judgment shall not affect, impair or invalidate the remaining PAGE 3 of 4 sA1ega1\our documents resolutions\1 hAt38929-revised-resolution approving modification to stipulation-07201 1.doc provision of this Resolution and the remaining provisions of the Resolution shall be interpreted as if the offending section or clause never existed. SECTION 8. This Resolution shall become effective from and after its passage. SECTION 9. A copy of this Resolution shall be sent to the Company, care of Don J. Clevenger, Oncor Electric Delivery Company LLC, 1601 Bryan Street, Suite 22-070, Dallas, Texas 75201-3411 and to Mr. Alfred R. Herrera, Herrera & Boyle, PLLC, 816 Congress Ave., Suite 1250, Austin, Texas 78701. PASSED AND APPROVED this the day of , 2011. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY r, ,t 000, BY: PAGE 4 of 4 s:Alegal\our documents\miscellaneous\11\atmos agenda info sheet - settlement agnrt resolution for 2011.doc AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Legal CM/DCM/ACM: John Knight, Deputy City Attorney SUBJECT Consider approval of a resolution of the City Council of the City of Denton, Texas, ("City") approving a settlement between Atmos Energy Corp's Mid-Tex Division ("Atmos") and Atmos Texas Municipalities ("ATM") resulting in no change in base rates and approving tariffs which reflect costs related to the Steel Pipe Replacement Program; finding the rates set by the attached tariffs to be just and reasonable; requiring delivery of the Resolution to the company and legal counsel; determining that the meeting at which this Resolution was approved complied with the Open Meetings Act; making other findings and provisions related to the subject; and declaring an effective date. BACKGROUND For the last four years ATM Cities have worked to resolve rate cases brought by Atmos Energy Corp. ("Atmos") under a regime known as the Rate Review Mechanism ("RRM"). This mechanism has operated since a February 2008 settlement agreement where a number of items that can be very contentious under traditional rate making, like the rate of return on equity and the capital structure of the utility, were stipulated. During last year's RRM negotiations the retroactive true-up provision of RRM was eliminated. This lead to a much smaller base rate increase request by Atmos. Last year Atmos requested an increase of $70 million in base rates and this year the requested increase in base rates, excluding the steel pipe replacement program, was approximately $9 million. NO BASE RATE INCREASE ATM engaged Utilitech, a rate consulting firm located in Lee's Summitt, Missouri. The firm spent several months investigating the merits of Atmos' $9 million increase in base rates. It issued a report which ATM's negotiating team relied upon in trying to resolve contested issues with Atmos. After lengthy negotiations, Atmos agreed to withdraw its request for a base rate increase as part of the overall settlement. STEEL PIPE REPLACEMENT Over the past few years there have been a number of explosions involving steel service lines. The worst of these lines need to be replaced rapidly. Some of the lines have been in the ground since the `50s. Atmos did a risk assessment which attempted to target the lines most likely to have problems. This is the second year of the steel pipe replacement program. As part of the settlement last year it was expected that the residential customer charge would increase this year by 40 cents as a result of steel pipe replacements. In fact, the increase in the residential customer 1 sllegal\our doeuments~rrniscellaneous\l l\atmos agenda info sheet - settlement agent resolution for 201 l.doe charge turned out to be lower than expected. The increase for the residential customer charge turned out to be 35 cents, of which 29 cents of that sum is for the steel pipe replacement program. The additional 6 cents is offset by a reduction in consumption or volumetric charges. The commercial customer charge will increased by $1.22. Even with these increases, the customer charge for Atmos customers in the Mid-Tex region is among the lowest in Texas. WORKING GROUPS As part of the settlement, working groups for Atmos and ATM will begin to meet to work on issues that are difficult to resolve. In particular, under the RRM process there is not enough time to review many of the capital projects for reasonableness and prudence. The working groups should start meeting during the next 30 days. The working groups will also decide if the RRM process should be extended. If by December 15, 2011 no agreement is reached on the appropriate treatment of rate issues identified by the working groups or no agreement has been reached to extend RRM , then, Atmos will file a general rate case with all cities, other than the City of Dallas, no later than January 15, 2012. If an extension in the RRM is agreed to before December 15, 2011, then Atmos will file an RRM no sooner than April 1, 2012. EFFECTIVE DATE OF SETTLEMENT Counsel for ATM recommends that the settlement be adopted. It is the belief of Counsel that a litigated outcome is unlikely to result in a better outcome for ratepayers. The settlement is effective on September 1, 2011. It is important for ATM cities use their best efforts to adopt the resolution implementing the new tariffs by September 1, 2011. FAILURE TO APPROVE SETTLEMENT If a city should choose not to approve the settlement it is likely that the decision will be appealed to the Railroad Commission by Atmos. A litigated appeal of this sort could cost well over $1 million, including the rate case expenses of Atmos and the city. An appeal of this sort will be extremely difficult to pursue if most of the cities located in the Mid-Tex Division have adopted the settlement. SUMMARY OF SETTLEMENT TERMS • RRM 4 o $6.6 million increase for steel service line program (undisputed). o There shall be no increase in base rates. o Rate design changes (R, C, I and T Tariffs attached) $7.50 residential customer charge (inclusive of $0.44 for the steel service line program) ■ $16.75 commercial customer charge (inclusive of $1.22 for the steel service line program) ■ Consumption charge based on residential volumes of 80,048,320 Mef and commercial volumes of 51,011,265 Mcf. o Report quarterly on the progress of the SSL program, indicating the cumulative services replaced by location and costs incurred, along with a narrative discussion of any problems encountered or departures from budgeted activity levels. o Put new tariff into effect on September 1, 2011. 2 s:Alegal\our documents\miseellaneous\11\atmos agenda info sheet - settlement agmt resolution for 2011.doc • Process for Extension of RRM Process o August 15, 2011 ■ Company and Cities agree on list of issues to review ■ Company and Cities establish working groups for issues that include company representatives, city settlement committee representatives and city consultants and attorneys as necessary ■ Company and Cities agree on meeting schedule for special review period o Special Review Period -September 1 -November 15, 2011 ■ Working groups receive and review information related to identified issues and consider company and consultant recommendations o Negotiation Period - November 15, 2011 - December 15, 2011 ■ Negotiate extension to RRM process with appropriate treatment of items from working groups o If no extension to the RRM is reached, the Company will file a Statement of Intent with the cities no sooner than January 15, 2012 a If an extension to the RRM is reached, the Company will file RRM no sooner than April 1, 2012. OPTIONS Approve the Resolution or deny the Resolution. RECOMMENDATION City staff recommends approval of this Resolution. Respectfully submitted: J n{Knight, I uty ity Attorney 3 sAlegal\our documents\resolutions\l 1\resOhltion approving settlement between atm and atmos for 2011.doc RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, ("CITY") APPROVING A SETTLEMENT BETWEEN ATMOS ENERGY CORPS MID-TEX DIVISION ("ATMOS") AND ATMOS TEXAS MUNICIPALITIES ("ATM") RESULTING IN NO CHANGE IN BASE RATES AND APPROVING TARIFFS WHICH REFLECT COSTS RELATED TO THE STEEL PIPE REPLACEMENT PROGRAM; FINDING THE RATES SET BY THE ATTACHED TARIFFS TO BE JUST AND REASONABLE; REQUIRING DELIVERY OF THE RESOLUTION TO THE COMPANY AND LEGAL COUNSEL; DETERMINING THAT THE MEETING AT WHICH THIS RESOLUTION WAS APPROVED COMPLIED WITH THE OPEN MEETINGS ACT; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the City is a regulatory authority under the Gas Utility Regulatory Act ("GURA") and under § 103.001 of GURA has exclusive original jurisdiction over Atmos Energy Corporation - Mid-Tex Division ("Atmos") rates, operations, and services as a gas utility within the municipality; and WHEREAS, the City has participated in prior cases regarding Atmos as part of a coalition of cities known as the Atmos Texas Municipalities ("ATM"), and WHEREAS, on or about April 1, 2010 Atmos filed for an increase in rates, pursuant to the Rate Review Mechanism ("RRM"), of approximately $15.6 million, which represents approximately a $9 million base rate increase and an approximate $6.6 million for the steel pipe replacement program; and WHEREAS, after months of investigation by ATM's rate experts and weeks of negotiations by ATM'S negotiation team, a settlement was arrived at which provides: (1) the steel service line replacement program for this last year be funded through a monthly increase of the residential customer charge of twenty-nine cents and an increase in the commercial customer charge of a dollar and twenty-two cents; (2) there will be no increase in base rates; and (3) Atmos and representatives of ATM will begin meeting in mid-August to begin working on rate- related issues, especially those that are difficult to resolve in the time period called for by the RRM process; and WHEREAS, the Executive Committee of ATM and its lawyers recommend that the Council approve the attached tariffs which are consistent with the understandings between Atmos and the ATM Executive Committee; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. The findings set out in the preamble to this Resolution are hereby in all things approved and adopted. sAlegal\our documents\resolutions\1 I\resolution approving settlement between atm and atmos for 201 I.doc SECTION 2. The rates contained in the attached tariffs are just and reasonable and are hereby approved subject to a prudence review of the steel pipe replacement expenditures in the next general rate proceeding. SECTION 3. A copy of this Resolution shall be sent to Mr. David Park, Vice President for Rates and Regulation, Mid-Tex Division, Atmos Energy Corporation, 5420 LBJ Freeway, Suite 1800, Dallas, Texas 75204, and to Jim Boyle, Counsel for ATM, at Herrera & Boyle, PLLC, 816 Congress Avenue, Suite 1250, Austin, TX 78701. SECTION 4. The meeting at which this Resolution was approved was in all things conducted in strict compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551. SECTION 5. This Resolution shall become effective immediately from and after its passage. PASSED AND APPROVED this the day of 2011. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: Page 2 AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Parks and Recreation f,I ACM: Fred Greene SUBJECT Consider approval of a resolution allowing the Black Chamber of Commerce to be the sole participant allowed to sell alcoholic beverages at the Blues Festival on September 17 - 18, 2011, upon certain conditions; authorizing the City Manager or his designee to execute an agreement in conformity with this resolution; and providing for an effective date. The Parks, Recreation and Beautification Board recommend approving the request with a vote of 5-0. BACKGROUND Since 2007, the Blues Festival has sold alcohol at the event held in Quakertown Park. The Black Chamber of Commerce is requesting to be allowed to sell alcoholic beverages at the 2011 two-day event. Quakertown Park is the only city park where the sale of alcohol is permitted, with City Council's approval. Council has approved the requests to sell alcohol at this event since 2007. RECOMMENDATION Staff recommends approval of the ordinance and agreement as submitted, which is consistent with agreements with other co-sponsored events. PRIOR ACTION/REVIEW (Council, Boards, Commissions) At the August 1, 2011 meeting, the Parks, Recreation and Beautification Board recommended approving the request with a vote of 5-0. FISCAL INFORMATION None. EXHIBITS 1. Letter of Request 2. Parks, Recreation and Beautification Board Minutes of August 1, 2011 3. Proposed Resolution 4. Quakertown Agreement Respectfully submitted: Emerson Vorel Director of Parks and Recreation Prepared by: Janie McLeod Community Events Coordinator r. DENTO BLACK CHAMBER OF COMMERCE Kerry Goree Chairman July 15, 2011 Reggie Hill President Janie McLeod Robin ltyles Secretary Community Events Coordinator Jahn Raines City of Denton 't'reasurer 601 E. Hickory, Suite B Robert tucks Denton, TX 76205 Board Member Roll Johnson Board Member Deal' .lame, Russell Morgan Board Member The Denton Black Chamber of Commerce is requesting the sale of alcohol at our Mary segova 13th Annual Blues Festival, which will be held September 17-18, 2011 in the Board 'Member Quakertown Park. Clyde sherpell Board Member We are also requesting an exception to the Noise {ordinance. The Festival is scheduled to begin at 1:00 p.m. and end at 10:30 p.m. on Saturday, and begin at 1:00 p.m.. and end at 8:30 p.m. on Sunday. Please let me know if you need fitrther information. You can reach nee at 940-367-6679. Sincerely, A meniher of the Temas Association of Robin Myles African American Secretary Chambers of Conitncree vsrtiv.luunc! A member of (lie National Association of African American Chambers of Commerce 4Y 4ti'V\`,11 aiaacc,ra r P.O. Box 51026 - Detitota, Texas 76206 Phone (940) 382-9100 Fax (940) 382-9695 Entail: info deaitoiiblackciiatnUer.org DRAFT Parks, Recreation and Beautification Board Minutes August 1, 2011 Civic Center Communitv Room Members present: Carol Brantley, Vicki Byrd, Alex Lieban, Derrick Murray, Jennifer Wages Members absent: Dave Rowley, Janet Shelton Staff present: Emerson Vorel, Jim Mays, Mary Aukerman, Janie McLeod; Amanda Green, Bob Tickner and Noreen Housewright and Clay Riggs, City of Denton Engineering Department REGULAR MEETING 1. CALL TO ORDER - Murray, Park Board Chairperson called the meeting to order at 6:02 p.m. 2. APPROVAL OF MINUTES OF June 6, 2011 MEETING: Wages made a motion to approve the minutes as written, Brantley seconded and the motion carried with a vote of 5-0. 3. AWARDS AND RECOGNITIONS: 4. Acknowledgement of Departing Park Board Member - Jennifer Wages had elected not to serve another term on the Park Board. Wages was presented with a plaque commemorating her service on the Board from 2007 through 2011. Vorel expressed his thanks for the time and effort she has put in to both the Park Board and the Park Foundation. Murray expressed thanks from the Board for her service. 5. ACTION ITEMS: A. Sale of Alcoholic Beverages at the 13th Annual Blues Festival - McLeod stated that this is the 13th year the event has been held in Quakertown Park and is scheduled for September 17-18. She also said that there have been no incidents reported at the event and the event organizers will obtain the security and insurance as required. MOTION: Brantley made the motion to recommend the Denton Black Chamber of Commerce be allowed to sell alcoholic beverages at the Blues Festival in Quakertown Park on September 17 and 18, 2011. Lieban seconded the motion and it carried with a vote of 5-0. B. Parks and Recreation Fees Ordinance - Athletic Fields Rentals - Vorel stated that the fees are evaluated each year and, if needed, changes are brought before the Board for a vote, then to Council, if approved by the Board. This year, the only thing that changed was the establishment of a Softball Tournament Rate per complex instead of an hourly fee for each field as is currently charged. Kathy Schaeffer, supervisor of this area, arrived to discuss how this change in fee stricture can help Denton attract tournaments. Tournament organizers have told her that the current fee stricture is too costly. Stipulations put on the complex rates will help the City recoup costs to operate the concession stands. When asked if this fee stricture was in line with other cities, Schaffer stated that staff called other cities in the area to inquire of their fees based on the services we wanted to provide so that we would be in line with other cities tournament fees strictures. Schaffer also stated that if the tournament did not meet the minimum requirements, the fees would revert to the hourly rate. MOTION: Wages made the motion to approve the ordinance adopting the revised schedule of fees. Brantley seconded the motion and it carried with a vote of 5-0. C. Unicorn Lake Area Proposed Park - Tickner stated that the Unicorn Lake Estates developer is proposing, through a Developer's Agreement, to give the City 4.93 acres for a park with a lake and walking trail that will connect the trails of Wind River and Unicorn Lake Town Center. He explained that the developer is giving much more than the .74 acres required by Park Land Dedication. The developer will build a concrete walking trail then turn it over to the City. When asked about the cost to maintain the trail/park, Vorel explained that Mays submits a supplemental package during the budget process to assist with maintenance and operation costs for total park acres, which includes new park land acquired. MOTION: Brantley made the motion to recommend acceptance of the land for a neighborhood park at the Unicorn Lake Estates Subdivision. Wages seconded the motion and it carried with a vote of 5-0. D. Select a Committee to Consider Renaming Request - The Denton League of Latin American Citizens (LULAC) submitted a Name Nomination Form request to rename South Lakes Park to the G. Roland Vela South Lakes Park in honor of Dr. Roland Vela, in honor of his many outstanding contributions to the Denton community. A committee of Park Board members was to be appointed to review the request and make a recommendation based on their findings to the entire Board. Vorel explained that signs will be posted at the park to announce the public meeting that will be held at the September Park Board meeting after which the Board will take action on the request at the October Park Board meeting. Lieban asked why LULAC had selected South Lakes Park. Vorel stated that they had originally asked that the South Branch Library be named for Dr. Vela, but, since the library is not a park property it went directly to the City Manager for consideration, who rejected the request. They then submitted a request to rename South Lakes Park which is now being considered. It was restated that parks named after an individual cannot be considered for renaming, such as Milam or Mack Parks. Information on Dr. Vela is in the application, plus he taught at UNT and served on the City Council, Airport Board, and other committees. Additional information may be available through the Denton Record Chronicle. Lieban volunteered to serve on the committee. Murray, who lives in the area, would like to serve. Lieban said that Rowley also lives in the area and volunteered him. McLeod stated that Shelton was involved at the beginning of the park so her name was added to the list. 6. DISCUSSION ITEMS: A. City of Denton Proposed Bicycle Transportation Plan - A Park Board member requested this presentation that was submitted to the Planning and Zoning Commission be submitted to the Board as well. Noreen Housewright and Clay Riggs of the City of Denton Engineering Department gave an informational presentation of the proposed Pedestrian and Bicycle Linkage Component of the Denton Mobility Plan. It was pointed out that signage will be the first step, along with educating the public through Denton ISD, UNT and the Denton Police Department. A focus group was instrumental in helping with the plan. Bicycling groups are excited about the prospect of having designated bike lanes. There are several trails that are now being utilized by cyclists. The plan is moving forward through the various committees and will go to the Mobility Committee in August. Lieban asked what cities were studied. Housewright said that Dallas, Austin, Houston and Portland, OR were used in our study. 7. OTHER BUSINESS: A. Parks Department Projects Status Report Tickner updated the Board on various projects on the list, including: Neighborhood Park Design - Wheeler Ridge Park - This project is expected to finish in September. SP( 'Ernest W. Dallas Jr. Teterans Memorial Park - This project is on target for completion for its dedication on November 11, Veteran's Day. Olvslev Park - This project will start after school is back in session. Community Development Block Grant Projects for Parks - Mack Park - The funds need to be used this year so it is anticipated that a shelter will be purchased and installed by the Park Maintenance. North Lakes Park Softball Complex Playground - this project is still moving through the review process and every avenue is being explored. Lieban said he would like to see us hire an Urban Biologist and to use the City's new Urban Forester to explore the wildlife issues and the mitigation of trees. B. Public Art Committee Meeting Minutes Draft - Vorel pointed out that the mural at the Center for the Visual Arts is going up. Byrd expressed how vivid the colors are. The exhibit of poems and their illustrations will take place from October 24-28, 2011 at the Center for the Visual Arts, after which they will be displayed in various locations throughout the city. 8. FUTURE AGENDA ITEMS: None With no further items on the agenda, Murray asked for a motion to adjourn the meeting. Brantley made the motion to adjourn, Wages seconded and the meeting was adjourned at 7:44 p.m. llcodadldepA nentsUegallour docuntentsVesolutions1111blues €estival alcohol sell.doc RESOLUTION NO. A RESOLUTION ALLOWING THE BLACK CHAMBER OF COMMERCE TO BE THE SOLE PARTICIPANT ALLOWED TO SELL ALCOHOLIC BEVERAGES AT THE BLUES FESTIVAL SEPTEMBER 17-18, 2011, UPON CERTAIN CONDITIONS; AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO EXECUTE AN AGREEMENT IN CONFORMITY WITH THIS RESOLUTION; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the City of Denton ("City") is the owner of the Quakertown Park; and WHEREAS, the consumption of alcoholic beverages is allowed in the Quakertown Park pursuant to City of Denton Code, §22-32 (b); and WHEREAS, the City Council finds that it is in the public interest to select only one vendor of alcoholic beverages at the Blues Festival; and WHEREAS, the Black Chamber of Commerce (called "Chamber") has requested that they be the sole participant allowed to sell alcoholic beverages at this year's Blues Festival September 17-18, 2011; and WHEREAS, the Parks, Recreation, and Beautification Board has recommended that Chamber be the sole participant allowed to sell alcoholic beverages at the Blues Festival; and WHEREAS, the City agrees with the recommendation of the Parks, Recreation, and Beautification Board; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. Chamber shall be the sole participant allowed to sell alcoholic beverages at the Blues Festival September 17-18, 2011 at the Quakertown Park upon the following conditions; 1. They shall be responsible to obtain the temporary license and permit for selling alcoholic beverages approved by appropriate state agency; 2. They shall provide the security necessary for the sale of alcoholic beverages; 3. They shall provide general comprehensive liability insurance from a responsible carrier, with the City as an additional insured, in the amount of $500,000.00; 4. They agree to indemnify the City of Denton against any liability incident to the selling of alcoholic beverages at the Blues Festival. SECTION 2. The City Manager or his designee is authorized to execute an agreement in conformity with this Resolution, which shall be substantially in the form of the agreement attached hereto and made a part hereof by reference. I i 1lcodadldePattmen15t1egaNur ducumentsVesolutionsU Dblues festival alcohol selt.doc SECTION 3, This Resolution shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 1201L MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY s BY; Page 2 of 2 i Vlwdad\depart nentsVegailour documontslcontractstl Ablues festival alcohol contract.doe I QUAKERTOWN PARK AGREEMENT FOR THE BLUES FES'T'IVAL STATE OF TEXAS § COUNTY OF DENTON § This Agreement, made this day of 2011, by and between the City of Denton, a municipal corporation, hereinafter referred to as the "CITY" and the Black Chamber of Commerce, (called "CHAMBER"). WITNESSETH, that in consideration of the covenants and agreements herein contained, the parties hereto do mutually agree as follows: ARTICLE I GENERAL The City grants to CHAMBER the exclusive privilege to distribute/sell alcoholic beverages, subject to the exceptions and conditions hereinafter set forth, for the Blues Festival September 17-18, 2011 to be held at Quakertown Park. This privilege does not extend beyond the date of the Blues Festival for the year 2011. ARTICLE 2 SCOPE OF SERVICES CHAMBER in order to exercise the privilege to distribute/sell alcoholic beverages must perform the following: A. CHAMBER shall be solely responsible for the rental and payment for any booth space necessary for the distribution/sale of alcoholic beverages at the Blues Festival. B. CHAMBER shall be solely responsible to obtain any temporary license and permit necessary for the distribution/sale of alcoholic beverages at the Blues Festival. C. CHAMBER shall be solely responsible for the obtaining and paying for any security necessary for their distribution/sale of alcoholic beverages at the Blues Festival. CHAMBER'S failure to do any of the above and to show proper proof of compliance shall waive their right to exercise the privilege of distributing/selling alcoholic beverages at the Blues Festival. I ARTICLE 3 LOCAL RULES AND REGULATION r CHAMBER agrees to abide by all municipal, county, state and federal laws, ordinances, rules and regulations and specifically, without limitation, the Quakertown Park Rules and Regulations, to obtain all necessary and proper licenses, permits and authorizations, and to comply with the requirements of any duly authorized person acting in connection therewith. CHAMBER shall pay all taxes, if any, of every nature and description arising out of or in any manner connected with the distribution/sale of alcoholic beverages. CHAMBER will exercise reasonable care and due diligence in their distribution/sale of alcoholic beverages at the Blues Festival. ARTICLE 4 INDEMNITY AGREEMENT CHAMBER shall indemnify and save and hold harmless the CITY and its officers, agents, and employees from and against any and all liability, claims, demands, losses, and expenses, including but not limited to, court costs and reasonable attorney fees incurred by the CITY, and including, without limitation, damages for bodily and personal injury, death and property damage, resulting from the negligent acts or omissions of CHAMBER or its officers, shareholders, agents, or employees in the execution, operation, or performance of this Agreement. Nothing in this Agreement shall be construed to create a liability to any person who is not a party to this Agreement, and nothing herein shall waive any of the parties' defenses, both at law or equity, to any claim, cause of action, or litigation filed by anyone not a party to this Agreement, including the defense of governmental immunity, which defenses are hereby expressly reserved. ARTICLE 5 INSURANCE During the performance of the Agreement, CHAMBER shall maintain the following insurance with an insurance company licensed to do business in the State of Texas by the State Insurance Commission or any successor agency that has a rating with Best Rate Carriers of at least an A- or above: A. Comprehensive General Liability Insurance with bodily injury limits of not less than $500,000 for each occurrence and not less than $500,000 in the aggregate, and with property damage limits of not less that $100,000 for each occurrence and not less than $100,000 in the aggregate. B. Liquor/Dram Shop Liability in the amount of $250,000 per occurrence for any event occurring on City-owned property where alcohol will be provided or served. I Blues Festival - Page 2 i C. CHAMBER shall furnish insurance certificates or insurance policies at the CITY'S request to evidence such coverages. The insurance policies shall name the CITY as an additional insured on all such policies, and shall contain a provision that such insurance shall not be canceled or modified without written notice to the CITY and CHAMBER. In such event, CHAMBER shall, prior to the effective date of the change or cancellation, serve substitute policies furnishing the same coverage, ARTICLE 6 NOTICES All notices, communications, and reports required or permitted under this Agreement shall be personally delivered or mailed to the respective parties by depositing same in the United States mail to the address shown below, certified mail, return receipt requested, unless otherwise specified herein, Mailed notices shall be deemed communicated as of three (3) days' mailing: To CHAMBER: To CITY: Black Chamber of Commerce CITY OF DENTOM Derry Goree, Chairman City Manager P.O. Box 51026 215 E. McKinney Denton, TX 76206 Denton, Texas 76201 All notices shall be deemed effective upon receipt by the party to whom such notice is given, or within three (3) days' mailing. ARTICLE 7 ENTIRE AGREEMENT This Agreement, consisting of five (S) pages and (1) exhibits, constitutes the complete and final expression of the agreement of the parties, and is intended as a complete and exclusive statement of the terms of their agreements, and supersedes all prior contemporaneous offers, promises, representations, negotiations, discussions, communications, and agreements which may have been made in connection: with the subject matter hereof. ARTICLE 8 SEVERABILITY If any provision of this Agreement is found or deemed by a court of competent jurisdiction to be invalid or unenforceable, it shall be considered severable from the remainder of this Agreement and shall not cause the remainder to be invalid or unenforceable. In such event, the parties shall reform this Agreement to replace such stricken provision with a valid and enforceable provision which comes as close as possible to expressing the intention of the stricken provision. i Blues Festival Page 3 I ARTICLE 9 DISCRIMINATION PROHIBITED In performing the services required hereunder, CHAMBER shall not discriminate against any person on the basis of race, color, religion, sex, national origin or ancestry, age, or physical handicap. ARTICLE 10 PERSONNEL CHAMBER represents that it has or will secure, at its own expense, all personnel required to perform all the services required under this Agreement. Such personnel shall not be employees or officers of, or have any contractual relations with the CITY. ARTICLE 11 ASSIGNABILITY CHAMBER shall not assign any interest in this Agreement, and shall not transfer any interest in this Agreement (whether by assignment, novation, or otherwise) without the prior written consent of the CITY. ARTICLE 12 MODIFICATION No waiver or modification of this Agreement or of any covenant, condition, or limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith, and no evidence of any waiver or modification shall be offered or received in evidence in any proceeding arising between the parties hereto out of or affecting this Agreement, or the rights or obligations of the panties hereunder, and unless such waiver or modification is in writing and duly executed; and the parties further agree that the provisions of this section will not be waived unless as set forth herein. ARTICLE 13 VIISCELLANEOUS A. The following exhibits are attached to and made a part of this Agreement: Exhibit "A" Resolution No. B. C. Venue of any suit or cause of action under this Agreement shall lie exclusively in Denton County, Texas. This Agreement shall be construed in accordance with the laws of the State of Texas. D. The captions of this Agreement are for informational purposes only, and shall not in any way affect the substantive terms or conditions of this Agreement. Blues Festival Page 4 IN WITNESS HEREOF, the City of Denton, Texas has caused this Agreement to be executed by its duly authorized City Manager, and CHAMBER has executed this Agreement through its duly authorized undersigned officer on this the day of , 2011. CITY OF DENTON, TEXAS GEORGE C. CAMPBELL, CITY MANAGER ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY S BY: SLACK CHAMBER OF COMMERCE BY: KERRY OOREE, C RMAN WITNESS: BY: } Blues Festival Page S ~ i IIIIINIIIIf1AIliA_. _ AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Parks and Recreation ACM: Fred Greene SUBJECT Consider a request for an exception to the Noise Ordinance for the purpose of the 13th Annual Denton Blues Festival, sponsored by the Denton Black Chamber of Commerce. The event will be held in Quakertown Park on Saturday, September 17, 2011, from 1:00 p.m. to 10:30 p.m. and Sunday, September 18, 2011, from 1:00 p.m. to 8:30 p.m. The exception is specifically requested to increase hours of operation for amplified sound on Saturday from 10:00 p.m. until 10:30 p.m. and for amplified sound on Sunday. The amplified sound will not go above the allowable 70 decibels for an outdoor concert. BACKGROUND The Denton Black Chamber of Commerce is hosting the 13th Annual Blues Festival featuring Blues bands, singers, a talent show, food booths, arts and crafts and youth activities. The purpose of the event is to attract visitors from the surrounding area and out of state. The event expects to have 5,000 people in attendance to hear conventional Blues music performed by national and local artists. The event strives to build a sense of community for Denton residents. Amplified sound will be used for both music and public announcements. RECOMMENDATION Staff recommends approving the noise exception request. EXHIBITS 1. Request Letter from the Denton Black Chamber of Commerce Respectfully Submitted: Emerson Vorel Director of Parks and Recreation Prepared By: Janie McLeod Community Events Coordinator r. DENTO BLACK CHAMBER OF COMMERCE Kerry Goree Chairman July 15, 2011 Reggie Hill President Janie McLeod Robin ltyles Secretary Community Events Coordinator Jahn Raines City of Denton 't'reasurer 601 E. Hickory, Suite B Robert tucks Denton, TX 76205 Board Member Roll Johnson Board Member Deal' .lame, Russell Morgan Board Member The Denton Black Chamber of Commerce is requesting the sale of alcohol at our Mary segova 13th Annual Blues Festival, which will be held September 17-18, 2011 in the Board 'Member Quakertown Park. Clyde sherpell Board Member We are also requesting an exception to the Noise {ordinance. The Festival is scheduled to begin at 1:00 p.m. and end at 10:30 p.m. on Saturday, and begin at 1:00 p.m.. and end at 8:30 p.m. on Sunday. Please let me know if you need fitrther information. You can reach nee at 940-367-6679. Sincerely, A meniher of the Temas Association of Robin Myles African American Secretary Chambers of Conitncree vsrtiv.luunc! A member of (lie National Association of African American Chambers of Commerce 4Y 4ti'V\`,11 aiaacc,ra r P.O. Box 51026 - Detitota, Texas 76206 Phone (940) 382-9100 Fax (940) 382-9695 Entail: info deaitoiiblackciiatnUer.org AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Finance ACM: Jon Fortune SUBJECT Consider approval of a resolution voting for a member to the Board of Managers of the Denco Area 9-1-1 District; and declaring an effective date. BACKGROUND The Denco Area 9-1-1 District, created in 1987, is governed by a board of managers. The board is appointed by the county, participating cities and the Denton County Fire Chief s Association. Board members serve staggered two-year terms and are eligible for reappointment. The Emergency Telephone Number Act states: "the board shall manage, control and administer the district. The board may adopt rules for the operation of the district. " On May 9, 2011, Denco Area 9-1-1 sent a memo requesting nominations to serve on the Board of Managers, which was provided to Council on May 27, 2011, as an Informal Staff Report. On June 21, 2011, the City Council voted to nominate Olive Stephens to the Denco Area 9-1-1 Board of Managers. On July 18, 2011, the Denco Area 9-1-1 District sent a list of the nominations they received from participating cities. There were two nominees: Allen Harris and Olive Stephens (Attached). Last year, the City nominated Harlan Jefferson to serve another term on the Board. This year, the term of Olive Stephens of Shady Shores, expires on September 30, 2011. Ms. Stephens has expressed her desire to serve another term if appointed. The City has nominated Ms. Stephens to serve on the Board since 1987. The current Board of Managers is comprised of the following individuals: Board Member Appointed By Term Expires Jack Miller, Chair Denton County Commissioners Court 9/30/2012 Mayor Olive Stephens, Vice Chair Denton County Participating City 9/30/2011 Chief Lonnie Tatum, Secretary Denton County Fire Chiefs Association 9/30/2011 Harlan Jefferson Denton County Participating City 9/30/2012 Bill Lawrence Denton Countv Commissioners Court 9/30/2012 Keith Stephens Largest Telephone Service Provider Rep. Non-voting Agenda Information Sheet August 16, 2011 Page 2 ESTIMATED SCHEDULE OF PROJECT Denco requests each city to vote for one of the nominees and advise them of its selection prior to September 7, 2011. The nominee with the most votes will be the municipalities' representative to the Denco Area 9-1-1 District Board of Managers for the two-year term beginning October 1, 2011. PRIOR ACTION/REVIEW (Council, Boards, Commissions) On June 21, 2011, the City Council approved a resolution to nominate Olive Stephens as a member to the Board of Managers of the Denco Area 9-1-1 District for a two-year term to commence on October 1, 2011. RECOMMENDATION Staff recommends voting for Olive Stephens to serve on the Board of Managers for Denco 9-1-1 as Ms. Stephens was the City's nomination on June 21, 2011. FISCAL INFORMATION This resolution has no fiscal impact. EXHIBITS Memo from Denco Resolution Respectfully submitted: Bryan Langley Chief Financial Officer k L , [T r F)enco Area 9-1 -1 Dist 1075 Princeton Street Lewisville, TX 75067 Mailing: PO BOX 293058 Lewisville, TX 75029-3058 [ . Phone: 972-221-0911 Fax: 972-420-0709 TO: Denco Area 9-1-1 District Participating Jurisdictions FROM: Mark Payne, Executive Director 41 DATE: July 18, 2010 RE: Appointment to the Denco Area 9-1-1 District Board of Managers On May 9, 2011, the Denco Area 9-1-1 District requested participating cities to nominate a representative to the district board of managers. The following nominations were received by the July 15, 2011 deadline: Nominee City/Town Making Nomination Allen Harris The Colony Olive Stephens Denton Double Oak Justin Lewisville Northlake Shady Shores Trophy Club The Denco Area 9-1-1 District requests that each participating city vote for one of the candidates and advise the district of its selection prior to 5 p.m. September 7, 2011. Please send a copy of the resolution or minutes recording council action. Enclosed is a sample resolution you may wish to use and resumes for the candidates. Also enclosed is a copy of the resolution outlining board appointment procedures and a list of current board members. Please mail your response to Denco Area 9-1-1 District, P.O. Box 293058, Lewisville, TX 75029-3058 or fax it to 972-353.6353. You may also email your response to Carla Flowers, Manager Business Operations at cflowers&denco.org Thank you for your assistance in this matter. Enclosures www.denco.org Council Resolution No. A RESOLUTION APPOINTING ONE MEMBER TO THE BOARD OF MANAGERS OF THE DENCO AREA 9-1-1 DISTRICT. WHEREAS, Section 772, Health and Safety Code, provides that two voting members of the Board of Managers of an Emergency Communications District shall be appointed jointly by all cities and towns lying wholly or partly within the District; NOW THEREFORE BE IT RESOLVED BY THE COUNCIL OF THE CITY / TOWN OF ,TEXAS: Section 1 The City / Town of hereby votes for as a member of the Board of Managers for the Denco Area 9-1-1 Emergency Communication District. Section 2 That this resolution shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of .12011. Mayor City / Town of ATTEST: APPROVED AS TO FORM: City / Town Secretary City / Town Attorney ALLEN V. HARMS, cm-o City Councilmember - The City of The Colony 6800 Main Street, The Colon), TX 75056 (972) 625-2580 - tcplacel@thecolonytx.gov http://NvnNnv.allenlialTis.Coro WORK EXPERIENCE Solution Architect HP/EDS, Plano, Texas October 2007 to present Senior Business Analyst / Senior Systems Administrator Electronic Data Systems, Plano, Texas - Jul), 1998 to October 2007 Technical Architect / IS Director Cardiovascular Provider Resources, Dallas, Texas - March 1997 to July 1998 LEADERSHIP City Councilman / Mayor Pro Tem (2008) EXPERIENCE The City of The Colony, Texas - Elected May 2003 to present Director, Executive Board Texas Municipal League, Austin, Texas - October 2010 to present ® Serving on Budget and Audit Committee for TML Executive Board • Served on various Legislative committees for TML Director, Executive Board North Central Texas Council of Governments - 2008/2009, 2009/2010 ® Served on Budget and Audit Committee for NCTCOG Executive Board Member, Regional Emergency Preparedness Planning Council (EPPC) North Central Texas Council of Governments - January 2007 to present ® Vice Chair of NCTCOG EPPC for 2011, and will serve as Chair for 2012 EPPC Liaison, Regional Emergency Preparedness Advisory Council (REPAC) North Central Texas Council of Governments - January 2007 to present President, Region VIII (North Central Texas) Texas Municipal League, Austin, Texas - October 2008 to October 2010 Board of Directors Lewisville Education Foundation, Lewisville, TX - June 2004 to January 2007 AWARDS & Certified Municipal Official (2009, 2010), Award of Excellence (2007, 2009, 2010), ACHIEVEMENTS Certificate of Outstanding Accomplishment (2004, 2009), Certificate of Achievement (2003, 2005, 2006, 2007, 2008) Awarded by Texas Municipal League, Austin, Texas Distinguished Service Award (2006), Exemplary Service Award (2004) Awarded by The Colony (Texas) Chamber of Commerce Graduate of The Colony's Citizens' Police Academy and Citizens' Fire Academy Admiral in the Texas Navy Commissioned by Governor (Senator, Senate Pro Tent) Jane Nelson, April 3rd, 2004 Olive Stephens 101 Lakeshore Road Shady Shores, Texas 76205 April 2011 ® Owned and operated a Ceramic Mold Business: 1965 through 1985 ® Denton County Extension Service: 23 years- Held all offices on county level and served as District Director on the state level. (The name of this organization has been changed to Extension Homemakers Association.) ® Board of Directors American Cancer Society: Served 20 years ® Board of Directors United Way: Served 20 years ® Denton County Historical Commission: Member 16 years ® Lake Cities Chamber of Commerce: Member since 1974 ® Denton county Transportation Plan Project /Lewisville Lake Toll bridge planning committee: Served as Secretary of the board and served on the subcommittee. ® Member of Denton County Mayor's Association: since 1979 ® Served on Committee to Organize the Lake Cities Library - 1975 ® Served on the Committee for 9-1-1 Services -1989 ® Currently Serving on the Denco Area 9-1-1 Board : 1990-present ® Town of Shady Shores Town Council 1963 through 1973 ® Town of Shady Shores, Mayor: Elected 1973- Currently serving 38'h year DNCO AREA 9-1-1 DISTRICT RESOLUTION DEFINING PROCEDURE FOR APPOINTMENT OF PARTICIPATING MUNICIPALITIES' REPRESENTATIVE TO THE DISTRICT BOARD OF MANAGERS. WHEREAS, Chapter 772, Texas Health and Safety Code provides for the Denco Area 9-1-1 District Board of Managers to have "two members appointed jointly by all the participating municipalities located in whole or part of the district."; and WHEREAS, each member serves a term of two years beginning on October 1st of the year member is appointed; and WHEREAS, one member representing participating municipalities is appointed each year. NOW, THEREFORE BE IT RESOLVED BY THE DENCO AREA 9-1-1 DISTRICT BOARD OF MANAGERS: The procedure for participating municipalities to appoint a representative to the Denco Area 9-1-1 District Board of Managers shall be the following: 1. Prior to May 15th of each year, the executive director shall send a written notice to the mayor of each participating municipality advising that nominations are open for one of the municipal representatives to the Denco Area 9-1-1 District Board of Managers until July 15th of that same year. The notice shall advise the mayors that, for a nomination to be considered, written notification of council action must be received at the Denco office prior to 5:00 p.m. on July 15th of that year. No nominations shall be considered after that time, 2. On July 16th of each year, the executive director shall send written notice to the mayor of each participating municipality providing the slate of nominees to be considered for appointment to the Denco Area 9-1-1 District Board of Managers for the term beginning October 1St. The notice shall advise the mayor that the city council shall vote, by resolution from such city, for one of the nominees. Written notice of the council's selection must be received at the district office by 5.00 p.m. on September 15th. No notice will be accepted after that time. 3. The one nominee with the most votes received by the deadline will be the municipality representative appointed for the two-year term beginning October 1s1. 4. If there is a tie between two candidates with the most votes, a runoff election will be held immediately with the candidate receiving the most votes serving the remainder of the term. The incumbent representative shall serve in that positionuntil replaced. APPROVED and ADOPTED on this 4th day of Februa 1999 C airman, B rd of Managers Secretary, Board of 'Managers enco re -1-1 District Board of Managers Y011 Jack Miller, Chairman ® Appointed by Denton County Commissioners Court ® Member since October 2000 ® Term expires September 2012 ® Former mayor and council member of Denton ® Self-employed as a human resource manager Mayor Olive Stephens, Vice Chair ® Appointed by member cities in Denton County ® Member since 1987 ® Term expires September 2011 ® Mayor, Town of Shady Shores Chief Lonnie Tatum, Secretary ® Appointed by Denton County Fire Chief's Association ® Member since May 2004 ® Term expires September 2011 11 Fire Chief, City of Highland Village Harlan Jefferson ® Appointed by member cities in Denton County ® Member since November 1998 ® Term expires September 2012 ® Town Manager, Town of Flower Mound Sill Lawrence ® Appointed by Denton County Commissioners Court ® Member since October 2006 ® Term expires September 2012 ® Former Mayor of Highland Village ® Businessman, Highland Village Keith Stephens ® Non-voting member appointed by largest telephone company (Verizon) ® Member since 2004 ® Serves until replaced by telephone company ® Manager, Region Network Reliability, Verizon All voting members serve two-year terms and are eligible for re-appointment. SAAdmin\Board of Managers\Board of Managers General Information\Denco Board Roster FY201 l.doc SALegal\Our Documents`ResolutionsA l\911 vote for member.doc RESOLUTION NO. A RESOLUTION VOTING FOR A MEMBER TO THE BOARD OF MANAGERS OF THE DENCO AREA 9-1-1 DISTRICT; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the term of office of Olive Stephens, a member of the Board of Managers of the Denco 9-1-1 District, will expire on September 30, 2011; and WHEREAS, Section 772.306 of the Health and Safety Code (V.A.C.S.) provides that two voting members of the Board of Managers of an Emergency Corinnunication District shall be appointed jointly by participating municipalities located in whole or in part in the District; and WHEREAS, the City of Denton, Texas wishes to vote for a member to said Board; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. The City of Denton, Texas hereby votes for Olive Stephens as a member to the Board of Managers of the Emergency Communication District of Denton County for a two-year term to commence October 1, 2011. SECTION 2. This Resolution shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2011. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Economic Development ACM: Jon Fortune SUBJECT Consider adoption of an ordinance of the City Council of the City of Denton, Texas, approving a grant application from Ed Canada, owner of 207 N. Elm Street, from the Downtown Incentive Grant Program not to exceed $10,000; and providing for an effective date. (The Economic Development Partnership Board recommends approval 6-0.) BACKGROUND City Council approved the Downtown Incentive Reimbursement Grant Program on April 3, 2007. The 2010-11 program received $50,000 from the General Fund. To date, $60,000 has been granted by City Council for 2010-11. The Economic Development Partnership Board has recommended an additional $10,000 for this project, which, if approved, leaves the fund at a negative $20,000. In the past, City Council indicated they would consider eligible projects that exceeded the allotted annual $50,000, if additional funds could be identified. There is a balance of $22,935 from unused Downtown Incentive Reimbursement Grants from fiscal year 2009- 2010. If Council deems appropriate, these funds could be used for projects during FY 2010- 2011. Applicant: Ed Canada Frisco, Texas Mr. Canada is the owner of 207 N. Elm Street. The Economic Development Partnership Board and City Council approved a $20,000 grant request in FY 2009-2010, for a previous owner of this building; however, those funds were not used. This building is located next to City Hall West on one of the major entryways to Downtown. It is in poor condition and has been vacant for several years. The Downtown Task Force and the Economic Development Partnership Board both encourage the restoration of this building and believe it is very important to the overall health and appearance of Downtown. This building may be the oldest wooden stricture in the city of Denton. It was built by John Schmidt in the late 1800s. This project involves removing and replacing the exterior stucco, rebuilding the structural framing, repairing termite damage, and repairing and replacing awnings on the front and rear of the building. The owner intends to keep the historical integrity of the building and is using historic photos on which to base his improvements. RECOMMENDATION The Economic Development Partnership Board recommends approval 6-0. ESTIMATED SCHEDULE FOR PROJECT The project should be completed by spring of 2012. PRIOR ACTION/REVIEW On May 12, 20011, the Downtown Task Force reviewed the grant application and recommended a grant in the amount of $10,000 for facade improvements and impact fees. The motion was approved 13-0. On July 13, 2011, the Economic Development Partnership Board reviewed the grant application and recommends a grant in the amount of $10,000. The motion was approved 6-0. FISCAL INFORMATION The total cost of the project is $160,000. A $10,000 grant represents a return on investment of $1116. Please note that the $160,000 budget includes only facade and structural improvements, not finish out work. EXHIBITS Ordinance Agreement Respectfully submitted: Julie Glover Economic Development Program Administrator \\Lodad\departmems\legal\our documents\ordinances\11\207 n. elm ed canada.doc ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, APPROVING A GRANT APPLICATION FROM ED CANADA FROM THE DOWNTOWN INCENTIVE GRANT PROGRAM NOT TO EXCEED $10,000; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, on April 3, 2007, the City Council approved a Downtown Incentive Reimbursement Program by Ordinance No. 2007-072; and WHEREAS, Ed Canada applied for a $10,000 grant; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Council of the City of Denton hereby approves the Agreement attached heretowith from Ed Canada in an amount not to exceed $10,000 from the Downtown Incentive Reimbursement Grant Program. SECTION 2. The City Manager, or his designee, is hereby authorized to execute the Agreement and to carry out the duties and responsibilities of the City, including the expenditure of funds as provided in the Agreement. SECTION 3. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2011. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY Ze" cAdocuments and settings\cagilbre\local settings\temporary internet files\content.outlook\w1h3f3gO\ed canada agreement original.doc DOWNTOWN REIMBURSEMENT GRANT INCENTIVE AGREEMENT This Downtown Reinvestment Grant Incentive Agreement (the "Agreement") is entered into by and between the City of Denton, Texas (the "City"), duly acting herein by and through its Mayor, and Ed Canada, Owner of 207 N. Elm Street (the "Owner"), duly authorized to do busi- ness and in good standing in the State of Texas, duly acting herein by and through its authorized officer. WHEREAS, the City has adopted a resolution which provides that it elects to be eligible to participate in downtown reinvestment grant incentives and has adopted guidelines and criteria governing downtown reinvestment grant incentive agreements known as the Denton Downtown Reinvestment Grant Incentive Program; and WHEREAS, on the 3rd day of April, 2007, the City Council of Denton, Texas (the "City Council") adopted the Denton Downtown Incentive Reimbursement Program (the "Program"), a copy of which is on file in the City of Denton Economic Development Office and which is in- corporated herein by reference; and WHEREAS, the Denton Downtown Incentive Reimbursement Program Policy consti- tutes appropriate "guidelines and criteria" governing downtown reinvestment grant incentive agreements to be entered into by the City; and WHEREAS, Owner will be the owner, as of the Effective Date (as hereinafter defined), which status is a condition precedent, of certain real property, more particularly described in Ex- hibit "A" attached hereto and incorporated herein by reference and made a part of this Agree- ment for all purposes (the "Premises") as of the Effective Date; and WHEREAS, on the 7th day of April, 2011, Owner submitted an application for reinvest- ment with various attachments to the City concerning the contemplated use of the Premises (the "Application"), which is attached hereto and incorporated herein by reference as Exhibit "B"; and WHEREAS, the City Council finds that the contemplated use of the Premises, the Con- templated Improvements (as hereinafter defined) to the Premises as set forth in this Agreement, and the other terms hereof are consistent with encouraging development in accordance with the purposes and are in compliance with the Ordinance and Program and similar guidelines and cri- teria adopted by the City and all applicable law; NOW, THEREFORE, the City and Owner for and in consideration of the premises and the promises contained herein do hereby contract, covenant, and agree as follows: Odocuments and settings\cagilbre\local settings\temporary internet files\content.outlook\w1h3f3g0\ed canada agreement original.doc I. TERMS AND CONDITIONS OF REIMBURSEMENT A. In consideration of and subject to the Owner meeting all the terms and conditions of reimbursement set forth herein, the City hereby grants the following reimbursement: 1. A reimbursement in an amount not to exceed $10,000 attributable to new capital investments, as hereinafter described, being constructed on the Premises. B. A condition of the Reimbursement is that, by August 16, 2012 (subject to force majeure delays not to exceed 180 days), a capital investment in the form of fagade rehabilitation, awnings and signs, as described in Exhibit "B" be constructed on the Premises. For the purposes of this paragraph, the term "force maj eure" shall mean any circumstance or any condition beyond the control of Owner, as set forth in Section XXI "Force Majeure" which makes it im- possible to meet the above-mentioned thresholds. C. The term "capital investment" is defined as the construction, renovation and equipping of fayade improvements, awnings and signs, as described in Exhibit "C" (the "Im- provements on the Premises", the "Contemplated Improvements" or "Improvements") to include costs related to the construction of the Improvements on the Premises. D. A condition of the Reimbursement is that the Contemplated Improvements be constructed and the Premises be used substantially in accordance with the description of the project set forth in Exhibit "B". E. Owner agrees to comply with all the terms and conditions set forth in this Agree- ment. II. CONDITION OF REIMBURSEMENT A. At the time of the award of the Reimbursement, all ad valorem real property taxes with respect to said property owned within the City shall be current. B. Prior to the award of the Reimbursement, Owner shall have constructed the Capi- tal Improvements as specified in Exhibit "B". III. RECORDS AND EVALUATION OF PROJECT A. The Owner shall provide access and authorize inspection of the Premises by City employees and allow sufficient inspection of financial information related to construction of the Improvements to insure that the Improvements are made and the thresholds are met according to the specifications and conditions of this Agreement. Such inspections shall be done in a way that will not interfere with Owner's business operations. Page 2 cAdocuments and settings\cagilbre\local settings\temporary internet files\content.outlookhv1h3f3gO\ed canada agreement original.doc IV. GENERAL PROVISIONS A. The City has determined that it has adopted guidelines and criteria for the Down- town Reimbursement Grant Incentive Program agreements for the City to allow it to enter into this Agreement containing the terms set forth herein. B. The City has determined that procedures followed by the City conform to the re- quirements of the Code and the Policy, and have been and will be undertaken in coordination with Owner's corporate, public employee, and business relations requirements. C. Neither the Premises nor any of the Improvements covered by this Agreement are owned or leased by any member of the City Council, any member of the City Planning and Zon- ing Commission of the City, or any member of the governing body of any taxing units joining in or adopting this Agreement. D. In the event of any conflict between the City zoning ordinances, or other City or- dinances or regulations, and this Agreement, such ordinances or regulations shall control. V. NOTICE All notices called for or required by this Agreement shall be addressed to the following, or such other party or address as either party designated in writing, by certified mail postage pre- pare, by hand delivery or via facsimile: OWNER: CITY: Ed Canada George C. Campbell, City Manager 15298 King Road City of Denton Frisco, TX 75034 215 East McKinney Denton, Texas 76201 Fax No. 940.349.8596 VI. CITY COUNCIL AUTHORIZATION This Agreement was authorized by the City Council by passage of an enabling ordinance at its meeting on the 16th day of August, 2011, authorizing the Mayor to execute this Agreement on behalf of the City, a copy of which is attached hereto and incorporated herein by reference as Exhibit "D". Page 3 cAdocuments and settings\cagilbre\local settings\temporary internet files\content.outlook\w1h3f3gO\ed canada agreement original.doc VII. SEVERABIILTY In the event any section, subsection, paragraph, sentence, phrase or word is held invalid, illegal or unconstitutional, the balance of this Agreement shall stand, shall be enforceable and shall be read as if the parties intended at all times to delete said invalid section, subsection, para- graph, sentence, phrase, or word. In the event that (i) the term of the Reimbursement with re- spect to any property is longer than allowed by law, or (ii) the Reimbursement applies to a broader classification of property than is allowed by law, then the Reimbursement shall be valid with respect to the classification of property abated hereunder, and the portion of the term, that is allowed by law. VIII. OWNER STANDING Owner, as a party to this Agreement, shall be deemed a proper and necessary party in any litigation questioning or challenging the validity of this Agreement or any of the underlying or- dinances, resolutions, or City Council actions authorizing same and Owner shall be entitled to intervene in said litigation. IX. APPLICABLE LAW This Agreement shall be construed under the laws of the State of Texas and is fully per- formable in Denton County, Texas. Venue for any action under this Agreement shall be in Den- ton County, X. ENTIRE AGREEMENT This instrument with the attached exhibits contains the entire agreement between the par- ties with respect to the transaction contemplated in this Agreement. XI. BINDING This Agreement shall be binding on the parties and the respective successors, assigns, heirs, and legal representatives. XII. COUNTERPARTS This Agreement may be executed in counterparts, each of which shall be deemed an orig- inal, but all of which together shall constitute one and the same instrument. Page 4 cAdocuments and settings\cagilbre\local settings\temporary internet files\content.outlook\wlh3f3go\ed canada agreement original (2).doc XIII. SECTION AND OTHER HEADINGS Section or other headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. XIV. NO JOINT VENTURE Nothing contained in this Agreement is intended by the parties to create a partnership or joint venture between the parties, and any implication to the contrary is hereby disavowed. XV. AMENDMENT This Agreement may be modified by the parties hereto to include other provisions which could have originally been included in this Agreement or to delete provisions that were not orig- inally necessary to this Agreement. XVI. FORCE MAJEURE If, because of flood, fire, explosions, civil disturbances, strikes, war, acts of God, or other causes beyond the control of either Party, either Party is not able to perform any or all of its obli- gations under this Agreement, then the respective Party's obligations hereunder shall be sus- pended during such period but for no longer than such period of time when the party is unable to perform. This Agreement is executed to be effective 30 days after the executed date of the day of , 2011, (the "Effective Date") by duly authorized officials of the City and Owner. PASSED AND APPROVED this the day of , 2011. CITY OF DENTON GEORGE C. CAMPBELL, CITY MANAGER Page 5 sAeconomic development\incentives\downtown grant agreements\207 elm\ed canada agreement original.doe ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY ED CANADA, OWNER, 207 N. ELM STREET ATTEST: BY: STATE OF TEXAS § COUNTY OF DENTON § Before me, the undersigned authority, a Notary Public in and for said State of Texas, on this day personally appeared George C. Campbell, City Manager for the City of Denton, known to me to be the person who signed and executed the foregoing instrument, and acknowledged to me that this instrument was executed for the purposes and consideration therein expressed. Given under my hand and seal of office this the day of , 2011. Notary Public in and for the State of Texas My Commission Expires: Page 6 sAcconomic development\incentives\downtown grant agreements\207 elm\ed canada agreement original.doc STATE OF TEXAS § COUNTY OF DENTON § Before me, the undersigned authority, a Notary Public in and for said State of Texas, on this day personally appeared Ed Canada, owner of 207 N. Elm Street, known to me to be the person who signed and executed the foregoing instrument, and acknowledged to me that this instrument was executed for the purposes and consideration therein expressed. Given under my hand and seal of office this the 4f !;(day of d 12011. Notary Public in and for the State of My Commission Expires: t ! Page 7 Exhibit A Legal Description 207 N. Bell 0 T Denton Blk 4 Lot 1(n30') Exhibit B DOWNTOWN INCENTIVE REIMBURSEMENT GRANT PROGRAM APPLICATION Please return completed with necessary attachments and signature to Downtown Development office, 215 E. McKinney no later than 5 p.m. on the Monday prior to the l" Wednesday of each month. If you have any application questions, please contact the Downtown Project Coordinator at 940-349-7731. If you have any building or sign permit/historic preservation questions, please contact the Historic Preservation Officer at 940-349-7732. 4 f~t 6 / / 4 Applicant Name t , l.lf' C_. Dote r d 4 Business Name Aj -Y 7 4 Mailing Address C t r~ t Contact Phone TZ » - ` 6Y60 `-J Email Address ' c a ♦ Building Owner (iJ'di~fereni from applicant) 4 Historical/CurrentBuilding Name 4 Physical Building Address' 4 Type of Work: (check all that apply) Fagade Rehabilitation Fagade Paint-only Awnings _Signage Impact Fee Utility (.Upgrade ♦ Details of Planned Improvements for Downtown Incentive Reimbursement Grant: (attach additional paper iij'necessain ) List Contractor/Project architect Proposals and Total Amounts (please attach original proposals); I. 2. / 4 TOTAL COST O[ PROPOSED PROJECT: t ~i J 4 AMOUNT OF GRANT REQUESTED (50% or TOTAL COST ABOVE): 4 Complete budget detail form attached on page 13 Attach with all required color samples of pai»t, awning/canopy, sign design, etc., as well as photographs of building's exterior facade, roof and foundation. 4'/11 Applicant's Signa ure Date SA1ncentive ProgonAM»wtm" Incentive Grnnl Program Appliention.doe Exhibit C r I I-IOW WILL TI-IIS PROJECT BENEFIT DOWNTOWN DENTON? 207 N Elm is located on the Northern entryway into the Square. This building has been an eyesore for many years-, restoration will include structural integrity as well as cosmetic improvements The total cost of this project is expected to be more than $160,000. BUDGET DETAIL PROJECT EXPENDITURFS CITY FUNDS REQUESTED APPLICANT'S FUNDS TOTAL FACADE REHAB 46,495 46,495 92,990 AWNINGS/SIGNS 3,027 3,028 6,055 IMPACT FEES UTILITY UPGRADES TOTALS 49,522 49,523 99,045 ATTACI I EXACT COLOR SAMPLES, MODEL NUMBERS (WINDOWS, DOORS, ETC.), PHOTOS AND/OR SKETCHES OF WORK TO RE COMPLETED. PLEASE INCLUDE AS MUCH DETAIL AS POSSIBLE. &\Incenlive Program\Downlown Incentive Grant Program Applicaliomdoc i DOWNTOWN INCENTIVE REIMBURSEMENT GRANT AGREEMENT FORM Please return completed with necessary attachments and signature to Downtown Development office, 215 C. McKinney no later than 5 p.m. on the Monday prior to the I" Wednesday of each month. If you have any ;application questions, please contact the Downtown Project Coordinator at 940-349-7731. If you have any building or sign permit/historic preservation questions, please contact the Historic Preservation Officer at 940-349-7732. 1 have met with the Downtown Project Coordinator, and I fully understand the Downtown Incentive Reimbursement Grant Procedures and Details established by the Denton City Council. I intend to use this grant program for the aforementioned renovation projects to forward the efforts of revitalization and historic preservation of Denton's historic downtown, I have not received, nor will I receive insurance monies for this revitalization project. I have read the Downtown Incentive Reimbursement Grant Application Procedures including the Downtown Incentive Reimbursement Grant Details. I understand that if I am awarded a Downtown Incentive Reimbursement Grant by the Denton City Council, any deviation from the approved project may result in the partial or total withdrawal of the Downtown Incentive Reimbursement Grant. If I am awarded a reimbursement grant for fagade, awning or sign work and the fagade, sign or awning is altered for any reason within one (1) year from construction, I may be required to reimburse the City of Denton immediately for the full amount of the Downtown Incentive Reimbursement Grant. r. a v` Business/Organization Name 4 A- Z-f 4 l Applicant's Sigt attire Printed Name Date Building Owner's Signature (if d fforeni from applicant) Printed Name Date - DTTF Signature (obtain signature at DTTF ineeting) Recommendation Date EDPB Signature (obtain signature at EDPB meeting) Recommendation Date SA Incentive ProgrnmlDo%%ntown Incentive Grant Program Applicntion.doc Y.F I, w A-I r y~ A A ~ y I . ~ n c'lay`.: ' 1 z, . ~~n fal Pl~l - i t V~RT I ~ ~ i ~r 't ~f i if-{9 WM k~4:' ! it f ~~I~~'Y7777 k f uu ~ jjj ? A ~ ~ ~ , E,. ~ ~ t~'~,,. aim , ~ ~~,<< ~ ~ r. r q~- r'~ ' ~r ~'F ~ ~ ~ ~ ~ ~p~h ~.ib ~ Po ~rv i w ;q. 7~ t ''.,~a sa - ~a b. j ~ . 'ib _ ~ ~~i ,i 3 w'~. 4 u" i ~ ~ _ ~ r< w _ _ ~ Ja _ ~ v ~ ~k ~ ''-,i' _ ~ ~ i ^~r ~a: „ - - ~ _ i i P t f. , ~ ~ ~u . - i tvF~ + w t 1 (s 'lei. •~l]-1 .,v,, krNa~ i ~p i ~ a a a 1 I q r7 0 - AT„~,~ e aw s;, r 1 a J1+f ~ x~ P , i.. I AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Economic Development ACM: Jon Fortune SUBJECT Consider adoption of an ordinance of the City Council of the City of Denton, Texas, approving Bylaws for Tax Increment Reinvestment Zone Number 1 (Downtown TIF). The TIF Board recommends approval 7-0. BACKGROUND On December 7, 2010, the City Council of Denton, Texas passed ordinance #2010-316, which established Tax Increment Financing Reinvestment Zone Number 1 (Downtown TIF) as authorized by Chapter 311 of the Texas Code; and established a Board of Directors for the Downtown TIF as authorized by Section 311.010 of the Texas Code. The TIF Board has met twice, on March 25, 2011 and on June 29, 2011. The Bylaws were developed in concert with the City of Denton Boards, Commissions and Committees Handbook. The attached Bylaws provide the following: • Power and purpose of the TIF Board; • Record keeping and financial statements; • Powers, number and term of office; • Meeting and quorum regulations; and • Providing an effective date for the adoption of the Bylaws by the Board of Directors and City Council. RECOMMENDATION The TIF Board recommends approval of these Bylaws 6-0. ESTIMATED SCHEDULE FOR PROJECT The TIF Zone is in effect from January 1, 2011 through January 1, 2039, or at an earlier time designated by subsequent ordinance of the City Council in the event that the City determines that the Zone should be terminated due to insufficient private investment, accelerated private investment or other good cause. PRIOR ACTION/REVIEW On March 25, 2011, the TIF Board reviewed the Bylaws and recommended approval 7-0. On June 29, the TIF Board reviewed staff recommendations for changes to the By-laws in concert with the City of Denton Boards, Commissions and Committees Handbook, and recommended approval 6-0. FISCAL INFORMATION The City has determined that the following portions of the tax increment produced by the City of Denton shall be paid into the tax increment fund for the reinvestment zone: Years 1-5 100% Years 6-10 95% Years 11-20 90% Years 21-30 85% Total investment is $24.8 million over the 30 year life of the TIF Zone. EXHIBITS Ordinance Bylaws Respectfully submitted: Julie Glover Economic Development Program Administrator s1legal\our documents\ordinances\11\tif bylaws.doc ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS, APPROVING THE BYLAWS FOR THE TAX INCREMENT REINVESTMENT ZONE NUMBER I (DOWNTOWN TIF); AND DECLARING AN EFFECTIVE DATE. WHEREAS, on the 71' day of December, 2010, the City Council of Denton, Texas, (the "City") established the Tax Increment Finance Zone Number One (Downtown TIF) (the "Zone") as authorized by Chapter 311 of the Texas Code (the "Act"); and WHEREAS, as authorized by section 311.010 of the Act, on June 29, 2011, the Board of Directors of the Zone voted to approve the Bylaws, which are attached hereto as Exhibit "A" and recommended the Bylaws be approved by the City Council; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Council of the City of Denton, Texas, hereby approves said Bylaws for the Downtown TIF, which are attached and made a part by reference herein. SECTION 2. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2011. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY:~ „ j - - - - - - City of Denton Denton Tax Increment Financing Reinvestment Zone No. I BYLAWS ARTICLE I POWERS AND PURPOSE Section 1. Financing Development or Redevelopment in the Zone. In order to implement the purposes for which Tax Increment Financing Reinvestment Zone No. One, City of Denton, Texas (the "Zone") was formed, as set forth in Ordinance No. 2010-316, dated December 7, 2010, creating the Zone, the City of Denton, Texas (the "City") may issue obligations to finance all or part of the cost of implementing the "project plan" for the Zone as defined in the Tax Increment Financing Act of the Tax Code, Chapter 311, Vernon's Texas Codes Annotated (the "Act" Section 2. Books and Records: Approval of Programs and Financial Statements. The Board of Directors shall keep correct and complete books and records of account and shall also keep minutes of its proceedings and the proceedings of committees having any of the authority of the Board of Directors. All books and records of the Zone may be inspected by any director or his agent or attorney for any proper purpose at any reasonable time; and at all times the City Council and the City Auditor will have access to the books and records of the Zone. The City Council must approve all programs and expenditures for the Zone and annually review any financial statements of the Zone. ARTICLE II BOARD OF DIRECTORS Section 1. Powers Number and Term of Office. The property and affairs of the Zone shall be managed and controlled by the City Council based on the recommendations of the Board of Directors of the Zone ("Board of Directors" or "Board"), subject to the restrictions imposed by law, the ordinance creating the Zone, and these Bylaws. It is the intention of the City Council that the Board of Directors shall function only in an advisory or study capacity with respect to the Zone and shall exercise only those powers, advisory in nature, which are either granted to the Board pursuant to the Act or delegated to the Board by the City Council. The Board will a7mp1~with, the policies and procedures as outlined in the City of Denton Handbook for Boards, Commissions. and Coliilcil _Cornainittees. including? but not limited to, .natters rc dipu e+ H sethics conflicts of interest. and the O cn ~ lec tin< 5 Act. BYLAWS Denton Page i - - - - The Board of Directors shall consist of seven (7) directors whom shall be appointed by the City Council of the City. Board membership shall consist of the following: 1. Two members shall be sitting City Council members 2. Two members shall be either property owners of property located within the Tax Increment Reinvestment Zone or residents whose primary residence is located within the Tax Increment Reinvestment Zone 3. Two members shall be either business owners of businesses located within the Tax Increment Reinvestment Zone or a member of the Denton Chamber of Commerce Board of Directors. 4. One member shall be a qualified voter of the City of Denton. The terms of the board members shall be two-year terms. A board member may serve no more than three consecutive terms. At the first meeting of the Board of Directors, the board members will draw lots to establish the staggering of terms with three of the board members serving an initial term of one year. The City Council shall designate a member of the board to serve as chairman of the board of directors, and the board shall elect from its members a vice chairman and other officers as it sees fit. Any director may be removed from office by the City Council for cause deemed by the City Council as sufficient for their removal in the interest of the public, but only after a public hearing before the City Council on charges publicly made, if demanded by such Board member within ten (10) days. In the event of a vacancy caused by the resignation, death, or removal for any reason, of a director, the governing body of the respective taxing unit which made such Board appointment shall be responsible for filling the vacancy. Section 2. Meetings of Directors. The directors shall hold their meetings within a public building in the City as the Board of Directors may from time to time determine. Section 3. Rej4ular and Special Meetings. Regular and Special Meetings of the Board of Directors shall be held at such times and places as shall be designated, from time to time, by the Board of Directors. All meetings of the Board shall be of a public nature unless pertaining to matters of land purchase, security, personnel, or strictly legal matters. Notice of all regular and special meetings of the Board and any committees thereof shall be posted in accordance with the provisions of Chapter 551, Texas Government Code. There shall be at least one Regular Meeting held each year in the month of December. Section 4. Emergency_ Meetings. Emergency Meetings of the Board of Directors shall be held whenever called by the chair, by the secretary, by a majority of the directors then in office or upon advice of or request by the City Council. The secretary shall give notice to each director of each Emergency Meeting. Notice of all Emergency Meetings shall state the purpose, which shall be the only business conducted and shall be subject to the requirements of State Law. Section 5. Quorum. A majority four (4) of the seven (7) directors holding current appointments shall constitute a quorum for the consideration of matters pertaining to the BYLAWS Denton Page 2 purposes of the Zone. The act of a majority of the directors present at a meeting at which a quorum is in attendance shall constitute the act of the Board of Directors, unless the act of a greater number is required by law. Section 6. Conduct of Business. At the meetings of the -Board of Directors, matters pertaining to the purposes of the Zone shall be considered in such order as from time to time the Board of Directors may determine. At all meetings of the Board of Directors, the chair shall preside and in the absence of the chair, the vice chair shall exercise the power of the chair. The secretary of the Board of Directors shall act as secretary of all meetings of the Board of Directors, but in the absence of the secretary, the presiding officer may appoint any person to act as secretary of the meeting. City staff shall provide notice of meetings and prepare meeting agendas. Within five days following each Regular, Special and Emergency meeting, a copy of the minutes of the meeting shall be submitted to the City Secretary of the City. Section 7. Compensation of Directors. Directors as such shall not receive any salary or compensation for their services, except that they shall be reimbursed for their actual reasonable expenses incurred in the performance of their duties hereunder. Section 8. Attendance. Board members shall make every effort to attend all Regular, Special and Emergency meetings of the Board and/or Committees. The City Council may replace a City appointee of the Board for non-attendance at three consecutive meetings. ARTICLE III OFFICERS Section 1. Titles and Term of Office. The officers of the Zone shall consist of a chair, a vice chair, a secretary, and such other officers as the Board of Directors may from time to time elect or appoint; provided however that the City Council shall, on an annual basis, appoint the chair whose term shall end on September 1St of each year. One person may hold more than one office, except that the chair shall not hold the office of secretary. Terms of office for officers, other than the chair, shall not exceed two years. All officers, other than the chair, shall be subject to removal from office, with or without cause, at any time by a vote of a majority of the entire Board of Directors. BYLAWS Denton Page 3 A vacancy in the office of any officer, other than the chair, shall be filled by a vote of a majority of the directors. Section 2. Powers and Duties of the Chair. The chair shall be the chief executive officer of the Board of Directors and, subject to the approval of the City Council, he/she shall be in general charge of the properties and affairs of the Zone and shall preside at all meetings of the Board of Directors. Section 3. Vice Chair. The Vice chair shall be a member of the Board of Directors, shall have such powers and duties as may be assigned to him by the Board of Directors and shall exercise the powers of the chair during that officer's absence or inability to act. Any action taken by the vice chair in the performance of the duties of the chair shall be conclusive evidence of the absence or inability to act of the chair at the time such action was taken. Section 4. Secretary. The secretary shall keep the minutes of all meetings of the Board of Directors in books provided for the purpose, he/she shall have charge of such books, records, documents and instruments as the Board of Directors may direct, all of which shall at all reasonable times be open to inspection, and he/she shall in general perform all duties incident to the office of secretary subject to the control of the City Council and the Board of Directors. The function of Secretary may be performed by City Staff. Section 5. Compensation. Officers as such shall not receive any salary or compensation for their services, except that they shall be reimbursed for their actual reasonable expenses incurred in the performance of their duties hereunder. Section 6. Staff. Staff functions for the Board of Directors may be performed by the City Manager or his designees. ARTICLE IV PROVISIONS REGARDING BYLAWS Section 1. Effective Date. These Bylaws shall become effective only upon the occurrence of the following events: (1) The adoption of these Bylaws by the Board of Directors, and (2) The approval of these Bylaws by the City Council. Section 2. Amendments to Bylaws. These Bylaws may be amended by majority vote of the Board of Directors, provided that the Board of Directors files with the City Council a written application requesting that the City Council approve such amendment to the Bylaws, specifying in such application, the amendment or amendments proposed to be made. If the City Council by appropriate resolution finds and determines that it is advisable that the proposed amendment be BYLAWS Denton Page 4 made, authorizes the same to be made and approves the form of the proposed amendment, the Board of Directors shall proceed to amend the Bylaws. After consultation with the Board of Directors, the Bylaws may also be amended at any time by the City Council by adopting an amendment to the Bylaws by resolution of the City Council and delivering the Bylaws to the secretary of the Board of Directors. Section 3. Interpretation of Bylaws. These Bylaws and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein. If any word, phrase, clause, sentence, paragraph, section or other part of these Bylaws, or the application thereof to any person or circumstance, shall ever be held to be invalid or unconstitutional by any court of competent jurisdiction, the remainder of these Bylaws and the application of such word, phrase, clause, sentence, paragraph, section or other part of these Bylaws to any other person or circumstance shall not be affected thereby. ARTICLE V GENERAL PROVISIONS Section 1. Notice and Waiver of Notice. Unless otherwise required by State Law, whenever any notice whatsoever is required to be given under the provision of these Bylaws, said notice shall be deemed to be sufficient if given by depositing the same in a post office box in a sealed postpaid wrapper addressed to the person entitled thereto at his post office address, as it appears on the books of the Zone, and such notice shall be deemed to have been given on the day of such mailing. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purposes of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened. A waiver of notice in writing signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Section 2. Resignations. Any director or officer may resign at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or, if no time be specified, at the time of its receipt by the City Council. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. Section 3. Approval or Delegation of Power by the City Council. To the extent that these Bylaws refer to any approval by the City, such approval of delegation shall be evidenced by a certified copy of an ordinance, or resolution (if permissible), duly adopted by the City Council. Approved by the TIF Board of Directors on the 29"' day of June; 2011. BYLAWS Denton Page 5 Approved by the Denton City Council on the day of , 2011. BYLAWS Denton Page 6 AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Economic Development ACM: Jon Fortune SUBJECT Consider adoption of an ordinance of the City Council of the City of Denton, Texas, approving the Project Plan for Tax Increment Reinvestment Zone Number 1 (Downtown TIF) The TIF Board recommends approval 7-0. BACKGROUND On December 7t', 2010, the City Council of Denton, Texas passed ordinance #2010-316, which established Tax Increment Financing Reinvestment Zone Number 1 (Downtown TIF) as authorized by Chapter 311 of the Texas Code; and established a Project Plan for the Downtown TIF as authorized by section 311.011 of the Texas Code. City Council reviewed this Project Plan on December 7th, 2010. If approved, the Project Plan will be submitted to the State Comptroller, as outlined in Section 311.016 of the Texas Code. The Project Plan states that: • The Board shall prepare and adopt a Project Plan and submit the plan to the governing body that created the zone; • The Plan must be as consistent as possible with the preliminary plans developed for the zone before the creation of the board; • The Board may adopt amendments to the Project Plan, as approved by an ordinance by the Denton City Council; • The Denton City Council has the final authority on Projects. RECOMMENDATION The TIF Board recommends approval of the Project Plan 7-0. ESTIMATED SCHEDULE FOR PROJECT The TIF Zone is in effect from January 1, 2011 through January 1, 2039, or at an earlier time designated by subsequent ordinance of the City Council in the event that the City determines that the Zone should be terminated due to insufficient private investment, accelerated private investment or other good cause. PRIOR ACTION/REVIEW On December 7t', 2010, City Council reviewed the Project Plan in conjunction with the Finance and Feasibility Plan. On March 25, 2011, the TIF Board reviewed the Project Plan and recommends approval 7-0. FISCAL INFORMATION The City has determined that the following portions of the tax increment produced by the City of Denton shall be paid into the tax increment fund for the reinvestment zone: Years 1-5 100% Years 6-10 95% Years 11-20 90% Years 21-30 85% Total investment is $24.8 million over the 30 year life of the TIF Zone. EXHIBITS Ordinance Project Plan Respectfully submitted: Julie Glover Economic Development Program Administrator sAlegal\our documents\ordinances\t 1\tif project plan.doc ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS, APPROVING THE PROJECT PLAN FOR THE TAX INCREMENT REINVESTMENT ZONE NUMBER I (DOWNTOWN TIF); AND DECLARING AN EFFECTIVE DATE. WHEREAS, on the 7th day of December, 2010, the City Council of Denton, Texas (the "City") established the Tax Increment Finance Zone Number One (Downtown TIF) (the "Zone") as authorized by Chapter 311 of the Texas Code (the "Act"); and WHEREAS, as authorized by section 311.010 of the Act, on March 25, 2011, the Board of Directors of the Zone voted to approve the Project Plan, which is attached hereto as Exhibit "A" and recommended the Project Plan be approved by the City Council; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Council of the City of Denton, Texas, hereby approves said Project Plan for the Downtown TIF, which is attached and made a part by reference herein. SECTION 2. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2011. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: PROJECT PLAN - DENTON TIF NO. 1 PRELIMINARY PROJECT PLAN December 2010 Tax Increment Financing Reinvestment Zone No. 1 Clity of Denton, Texas SCHRADER & CLINE, LLC George R. Schrader Larry D. Cline 4£300 Broadway, Ste A Addison, TX 75001 972-661-1973 schchLaa,swbell.net PROJECT PLAN - DENTON TIF NO. I PRELIMINARY December 2010 The City of Denton, Texas proposes to establish a Tax Increment Financing Reinvestment Zone ("TIF") for the purpose of dedicating the increase in tax revenue generated within the TIF to provide funds for public infrastructure to encourage accelerated development and redevelopment in the downtown area of the City. The TIF consists of approximately 225.73 acres and is more fully described in Project Plan Exhibit A. The City is creating this TIF to encourage accelerated development and redevelopment in this area of the City in an effort to stimulate new higher value, higher density development which would benefit and be incentivized from the proposed public infrastructure improvements. It is expected that the TIF will exist for thirty (30) years or the date when all project costs are paid, whichever comes first. As set forth in Section 311.011 of the Tax Increment Financing Act of the Texas Tax Code Ann., the Project Plan for Tax Increment Financing Reinvestment Zone No. 1, Denton, Texas must and does include the following elements: 1. A map showing existing uses and conditions of real property in the TIF and a map showing proposed improvements to and proposed use of the property. ■ The boundaries of the TIF are shown on the map labeled Project Plan Exhibit: B; ■ Project Plan Exhibit: C shows existing land use within the TIF. Currently, the area is generally developed but contains less than ten percent residential. ■ Project Plan Exhibit: D lists and defines the public improvements being proposed for the TIF; ■ Project Plan Exhibit: E shows anticipated Future Land Use within the TIF. l PROJECT PLAN DENTON TIF NO. I PRELIMINARY 2. Proposed changes of zoning ordinances, the master plan of the municipality, building codes, and other municipal ordinances. ■ Any changes to codes, ordinances, or master plan as a result of the creation of the TIF will be made through the standard process and procedures of the City. 3. A list of estimated non-project costs. ■ Non-project costs within the TIF are those development costs not paid for by the TIF. These costs will include, but are not limited to, $207.5 million, which is comprised of new private development. 4. A statement of a method of relocating persons to be displaced as a result of implementing the plan. ■ Although not anticipated, in the process of developing the TIF, any relocation will be made through the standard process and procedures of the City. 2 PROJECT PLAN - DENTON TIF NO. 1 PRELIMINARY EXHIBIT A Boundary Description Beginning at the southwest corner of the ROW intersection of Carroll Blvd. and Sycamore, the POINT OF BEGINNING; THENCE, north along the west ROW of Carroll Blvd. to the northwest corner of the ROW intersection of Carroll Blvd. and W. Parkway Street; THENCE, east along the north ROW of W. Parkway Street to the northeast corner of the ROW intersection of W. Parkway Street and Locust; THENCE, south along the east ROW of Locust to the north ROW of McKinney; THENCE, east along the north ROW of McKinney to a point directly north of the southeast corner of the ROW intersection of McKinney and N. Bradshaw Street; THENCE, south across McKinney and continuing south along the east ROW of N. Bradshaw Street continuing directly south across E. Hickory Street to the south ROW of E. Hickory Street; THENCE, west along the south ROW of E. Hickory Street to the northeast corner of a tract in the Fred Hill Addition, Block A, Lot 1; THENCE, south and east following the property line of a tract in the Fred Hill Addition, Block A, Lot 1 to the northwest corner of a 1.406 acre tract, A1184A H. Cisco, Tract 14; THENCE, south along the west property line of a 1.406 acre tract, A 1184A H. Cisco, Tract 14 to its intersection with the north property line of a 1.694 acre tract A1184A H. Cisco, Tract 15; THENCE, west and south along the north and west property line of a 1.694 acre tract A 1184A H. Cisco, Tract 15 to the northwest corner of a 0.16 acre tract, A1184A H. Cisco, Tract 20; THENCE, south along the west property line of a 0.16 acre tract, Al 184A H. Cisco, Tract 20 to the north ROW of Sycamore; THENCE, directly south across Sycamore to the south ROW of Sycamore; THENCE, west along the south ROW of Sycamore to the northwest corner of the Oakwood Cemetery; THENCE, south along the west property line of the Oakwood Cemetery to the north ROW of Prairie; THENCE, directly south across Prairie to the south ROW of Prairie; THENCE, west along the south ROW of Prairie to the southwest corner of the ROW intersection of Prairie and Elm; 3 PROJECT PLAN - DENTON TIF NO. I PRELIMINARY Boundary Description THENCE, north along the west ROW of Elm to the south ROW of Sycamore; THENCE, west along the south ROW of Sycamore to the southwest corner of the ROW intersection of Sycamore and Carroll Blvd. and the POINT OF BEGINNING, and containing a total area of approximately 225.73 acres. 4 PROJECT PLAN - DENTON TIF NO. I PRELIMINARY EXHIBIT B TIF Boundary Legend 4+ Q TI F Boundary V L b/ F 1 _ r Centerline Streets N 0 I l_ Property Description r I Acreage w/or w/o Agr use ; "I I.P091, w I Cable Company Duplex ,C MCKI NNEY ~ Exempt _ Ma I OK y"i Gas Company Multifamily &KORY M Phone Company ..j Real and Commercial t` ' ® Single Family L v O SYAMORE . Townhome 7 _J ; Vacant Commercial Lots x H 2 N to W~E P IE S co t F, W April 16 2010 t\4,IPC This map is a graphic representation prepared by the City of Denton and is intended for use only as a reference. Data depicted a j - it 1 0 0 3 q is not guaranteed for accuracy and may be subject to revision at any time without notification. A Registered Surveyor for the State of Texas was not consulted. For Survey level accuracy. supervision and certification of the produced data by a Registered Professional Land Surveyor for the State of Texas would need to be performed 5 PROJECT PLAN - DENTON TIF NO. I PRELIMINARY EXHIBIT C Existing Land Use Legend OTIF Boundary Centerline Streets a r y' Property Description j~ llJ Acreage wlor w/o Agr use Cable Company J c Duplex MCKINNEY Exempt ' OAK t Gas Company N , ! Multifamily - Phone Company x 7 &KORY ON W ~..r ; Real and Commercial C1 •L O Single Family .r ® 0 SJAMORE Townhome J Vacant Commercial Lots aL?' a N ANNER - - Me - - + d S m r 4 W April 16 2010 Miles This map is a graphic representation prepared by the City of Denton and Is Intended for use orgy as a reference. Data depicted 0 005 01 02 03 04 is not guaranteed for accuracy and may be subject to revision at any time Without notification. A Registered Surveyor for the State of Texas was not consulted. For Survey level accuracy, supervision and certification of the produced data by a Registered Professional Land Surveyor for the State of Texas would need to be performed 6 PROJECT PLAN - DENTON TIF NO. I PRELIMINARY EXHIBIT Project Flan PROJECT ESTIMATED COST $M Parking / Transportation 8.0 Complete Streets 7.9 Support for Downtown Projects 4.9 Utility / Drainage Improvements 4.0 TOTAL 24.8 Project Definitions Parkin /g Transportation: Parking includes, but is not limited to, parking garages; surface parking; parking lighting; and parking signage and waytinding. This project category was designed to provide adequate public facilities for transportation and to foster Transit Oriented Development (TOD) that will occur as a result of the planned transit station that will link Denton with passenger rail service to the City of Carrollton, where riders can transfer to the Dallas Area Rapid Transit (DART) system into the Dallas/ Fort Worth metroplex. The goal is to create compact, walkable, pedestrian-centered developments to enhance and act as a catalyst to spur additional development and redevelopment in the district. Complete Streets: are "multi-functional, pedestrian-oriented, aesthetically-pleasing, and safe and inviting for residents and visitors. Redeveloping the existing downtown street network into complete streets will create a pleasing public realm, which in turn supports and encourages a wide variety of new development and investment" according to the Downtown Implementation Plan. Elements of complete streets include the building to building improvements which may encompass: sidewalks, shared travel lanes (e.g. bus and bicycle), parallel and angled parking, pedestrian crosswalks, pedestrian and emergency bulb (American with Disabilities Act (ADA) accessibility), awnings, street improvements, planters, pedestrian street furniture, bike racks and pedestrian lighting. Downtown Projects: may include grants, loans and services for public and private development. Eligible TIF project costs are not limited to public uses and may also include projects that involve: historic preservation, demolition, environmental remediation and economic development grants. Chapter 380 of the Local Government Code grants municipalities in Texas the authority to offer grants and loans of public funds to stimulate economic development. The chapter also includes a provision for the use of City employees, facilities and services. An example of a City service may include additional public safety personnel to serve the increased population created by the transit station and the surrounding transit oriented development. Solid 7 PROJECT PLAN - DENTON TIF NO. I PRELIMINARY EXHIBIT D Project Plan waste and recycling services tailored to serve the downtown area is another example of a public service. Utility Drainage: The downtown TIF district has an aging infrastructure and a number of properties that are situated in the floodplain making proper utility drainage an important component of the project plan. Utility drainage encompasses the physical provisions to accommodate and regulate stormwater runoff to preclude excessive erosion and sedimentation and to control and regulate the rate of flow. Facilities/systems can include natural features and conduits, channels, ditches, swales, pipes, detention devices or other devices designed or intended to carry, direct, detain or otherwise control stormwater," according the Denton Development Code. Projects may include one or more categories that may be leveraged as an incentive for development in the TIF district. An example of such a project, that would include both the parking/transportation and the downtown project categories, is a public private partnership for the construction of a parking garage and mixed use development that includes a public investment for additional parking for the public. 8 PROJECT PLAN - DENTON TIF NO. 1 PRELIMINARY EXHIBIT E Future Land Use Withers St .y.na M-d D.e At Glade 1 t-- xhibit E: Future ;a°' .and Use Y Quakertown Too O Park m Re.,°ent,al Ne,anbo.noo° 51 r..1 Ty... i Pri y f?n wn 51roe11 (3,~wnwwnSlre.u3 i Se<an°gry r.~~ wntaWnSlfb..l-. f~ DownW n51 ep15 Parkway St Downlaw„slrael-a T.rlury Downtown Slr..1,7 Downlawn5lre<1.8 Mixed Use awnl.: S, I I et 110 DownD townre111l~ N m W -O PPf'ant 1p ~l Residential Neighborhood vak it < IV Mixed Use f. 2 fi f, t TO p °v<alf,r~t s~ Area fn ~ D( 1A Transit Mulberry St M Station ~ i ¢1 Mixed Use lp q, Sycamore St.Y 9 AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Economic Development ACM: Jon Fortune SUBJECT Consider adoption of an ordinance of the City Council of the City of Denton, Texas, approving the Finance and Feasibility Plan for Tax Increment Reinvestment Zone Number One (Downtown TIF). The TIF Board recommends approval 7-0. BACKGROUND On December 7, 2010, the City Council of Denton, Texas passed Ordinance #2010-316, which established Tax Increment Financing Reinvestment Zone Number 1 (Downtown TIF) as authorized by Chapter 311 of the Texas Code; and established a Finance and Feasibility Plan for the Downtown TIF as authorized by Section 311.011 of the Texas Code. City Council reviewed this Finance and Feasibility Plan on December 7, 2010. If approved, the Finance and Feasibility Plan will be submitted to the State Comptroller, as outlined in Section 311.016 of the Texas Code. The Finance and Feasibility Plan includes: • Proposed public improvements within the TIF; • Estimated project costs; • An economic feasibility study; • The time frame when related costs or monetary obligations are to be incurred; • Methods of financing and estimated project costs; • The current total appraised value of taxable real property within the TIF; • Tax increment analysis; and • Estimated general value increases within the TIF. ESTIMATED SCHEDULE FOR PROJECT The TIF Zone is in effect from January 1, 2011 through January 1, 2039, or at an earlier time designated by subsequent ordinance of the City Council in the event that the City determines that the Zone should be terminated due to insufficient private investment, accelerated private investment or other good cause. PRIOR ACTION/REVIEW On December 7, 2010, City Council reviewed the Finance and Feasibility Plan in conjunction with the Project Plan. On March 25, 2011, the TIF Board reviewed the Finance and Feasibility Plan and recommended approval 7-0. RECOMMENDATION The TIF Board recommends approval of the Finance and Feasibility Plan 7-0. FISCAL INFORMATION The City has determined that the following portions of the tax increment produced by the City of Denton shall be paid into the tax increment fund for the reinvestment zone: Years 1-5 100% Years 6-10 95% Years 11-20 90% Years 21-30 85% Total investment is $24.8 million over the 30 year life of the TIF Zone. EXHIBITS Ordinance Finance and Feasibility Plan Respectfully submitted ':'e Julie Glover Economic Development Program Administrator sAlegal\our documents\ordinances\f l\tiffinance feasibilty plan ord.doc ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS, APPROVING THE FINANCE AND FEASIBILITY PLANS FOR THE TAX INCREMENT REINVESTMENT ZONE NUMBER 1 (DOWNTOWN TIF); AND DECLARING AN EFFECTIVE DATE. WHEREAS, on the 7th day of December, 2010, the City Council of Denton, Texas, (the "City") established the Tax Increment Finance Zone Number One (Downtown TIF) (the "Zone") as authorized by Chapter 311 of the Texas Code (the "Act"); and WHEREAS, as authorized by section 311.010 of the Act, on March 25, 2011, the Board of Directors of the Zone voted to approve the Finance and Feasibility Plans, which are attached hereto as Exhibit "A" and recommended the Finance and Feasibility Plans be approved by the City Council; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Council of the City of Denton, Texas, hereby approves said Finance and Feasibility Plans for the Downtown TIF, which are attached and made a part by reference herein. SECTION 2. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2011. MARIA A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: FINANCE FLAN - DENTON TIF NO. 1 PRELIMINARY FINANCE PLAN December 2010 Tax Increment Financing Reinvestment Zone No. I City Denton, x SCHRADER & CLINE, LLC Bore R. Schrader Larry D. Cline 4800 Broadway, Ste A Addison, TX 75001 972-661-1973 schclinswbell.net FINANCE PLAN - DENTON TIF NO. I PRELIMINARY December 2010 The Financing Plan provides information on the projected monetary impact that the formation of the Tax Increment Financing Reinvestment Zone (TIF) could have on the property described in Finance Plan Exhibit: A and shown in Finance Plan Exhibit: B. It will also describe how that impact can be utilized to enhance the area and region through leveraging the resources of each entity that participates in the project. Below is a summary of the Financing Plan items required by law. 1. The proposed public improvements in the TIF may include: • Capital costs, including the actual costs of the construction of public works, public improvements, new buildings, structures, and fixtures; and the actual costs of the acquisition of land and the clearing and grading of land; • Financing costs, including all interest paid to holders of evidences of indebtedness or other obligations issued to pay for project costs and any premium paid over the principal amount of the obligations because of the redemption of the obligations before maturity; • Any real property assembly costs; • Professional service costs, including those incurred for architectural, planning, engineering, and legal advise and services; • Any relocation costs; • Organizational costs, including costs of conducting environmental impact studies or other studies, the cost of publicizing the creation of the TIF, and the cost of implementing the project plan for the TIF; • Interest before and during construction and for one year after completion of construction, whether or not capitalized; • The amount of any contributions made by the municipality from general revenue for the implementation of the project plan; • Imputed administrative costs, including reasonable charges for the time spent by employees of the municipality in connection with the implementation of a project plan; • The cost of operating the TIF and project facilities; and • Payments made at the discretion of the governing body of the municipality that the municipality finds necessary or convenient to the creation of the TIF or to the implementation of the project plans for the TIF. 2 FINANCE PLAN DENTON TIF NO. I PRELIMINARY The specific capital improvement projects anticipated to be undertaken in the Denton TIE No. 1, are included in Finance Plan Exhibit: C. 2. Estimated Project Cost of TIF, including administrative expenses. • Project costs are estimated at approximately $24.8 million dollars. Specific cost estimates are included in Finance Plan Exhibit: C. 3. Economic Feasibility Study. • An economic feasibility analysis has been completed and is included as Finance Plan Exhibit: D. 4. The estimated amount of bonded indebtedness to be incurred. • If initial project costs are not advanced by a Developer, the City of Denton may consider issuing bonds when tax increment funds exceed the amount necessary to support debt service. 5. The time when related costs or monetary obligations are to be incurred. • Please refer to Finance Plan Exhibit: C for details regarding the type of improvement costs anticipated. The timing will be monitored by the TIF Board to insure adequate TIF funds are available. 6. A description of the methods of financing all estimated project costs and the expected sources of revenue to finance or pay project costs including the percentage of tax increment to be derived from the property taxes of each taxing unit on real property in the TIF. • Project costs will be financed through loans advanced by developers or by the use of tax increment funds received on a pay-as-you-go basis. No new debt is envisioned at this time, but bonds may be issued at a later date when adequate tax increment has been created to support debt service. The revenue sources will be the real property taxes captured by the TIF, which will account for 100% of revenues used to fund project costs or bond debt service. For the Financial Plan, the City will participate at varied tax rates for thirty (30) years. 7. The current total appraised value of taxable real property in the TIF. • The current appraised base value of the taxable real property in the TIF using the 2010 certified values provided by the Appraisal District is $80.2 million. 8. The estimated appraised value of the improvements in the TIE during each year of its existence. • The estimated appraised value of the improvements in the TIF per year is listed in the following FINANCE PLAN TABLE 1. 3 FINANCE PLAN - DENTON TIE NO. 1 PRELIMINARY TABLE 1 Assessed Real Property Value Including Anticipated New Development ears 1.0- 039 YEAR TOTAL ASSESSED VALUE, $M 2010 80.2 2011 81.6 2012 95.5 2013 100.2 2014 115.1 2015 118.9 2016 137.6 2017 145.5 2018 149.3 2019 162.2 2020 168.7 2021 177.1 2022 191.6 2023 200.2 2024 209.8 2025 223.9 2026 234.1 2027 244.3 2028 259.6 2029 266.9 2030 277.8 2031 283.7 2032 294.6 2033 300.6 2034 311.7 2035 318.3 2036 327.9 2037 334.6 2038 344.4 2039 351.2 4 FINANCE PLAN - DENTON TIE NO. I PRELIMINARY • The estimated annual incremental funds available from future development in the TIF are listed in the following table. TABLE 2 Annual Incremental Funds Provided for TIF No. 1 Years 2010-2040 ASSESSED BASE ANNUAL Year VALUE $M ASSESSED CAPTURED TIF FUND, W VALUE $M VALUE $M 2010 80.2 80.2 2011 81.6 80.2 1.4 2012 95.5 802 15.3 10 2013 100.2 80.2 20.0 106 2014 115.1 80.2 34.9 138 2015 118.9 80,2 38.7 241 2016 137.6 80.2 57.4 254 2017 145.5 802 65.3 376 2018 149.3 80.2 69.1 428 2019 162.2 80.2 82.0 453 2020 168.7 80.2 88.5 537 2021 177.1 80.2 96.9 549 2022 191.6 80.2 111.4 602 2023 200.2 80.2 120.0 692 2024 209.8 80.2 129.6 745 2025 223.9 80.2 143.7 805 2026 234.1 80.2 153.9 892 2027 244.3 80.2 164.1 955 2028 259.6 80.2 179.4 1,019 2029 266.9 80.2 186.7 1,114 2030 277.8 80.2 197.6 1,159 2031 283.7 80,2 2015 1,159 2032 294.6 80.2 214.4 1,193 2033 300.6 80.2 220.4 1,257 2034 311.7 80,2 231.5 1,292 2035 318.3 80.2 2381 1,357 2036 327.9 80.2 247.7 1,396 2037 334.6 80.2 254.4 1,452 2038 344.4 80.2 264.2 1,492 2039 351.2 80,2 271.0 1,549 2040 1,589 TOTAL 351.2 80.2 271.0 24,811 2010 TIF CONTRIBUTION TAX RATE / $100 VALUATION Tax Rate / $100 Valuation YEARS I - 5 YEARS 6 - 10 YEARS I 1 - 20 YEARS 21 - 30 Cit of Denton 0.68975 0.68975 0.6552625 0.6207750 0.5862875 9. The duration of the TIF: • The TIF was created in 2010. It is proposed that the TIF exist for thirty (30) years with termination of the TIF set as 2039 or the date when all project costs are paid and any debt is retired, whichever comes first. 5 FINANCE PLAN DENTON TIE NO. 1 PRELIMINARY EXHIBIT A Boundary Description Beginning at the southwest corner of the ROW intersection of Carroll Blvd. and Sycamore, the POINT OF BEGINNING; THENCE, north along the west ROW of Carroll Blvd. to the northwest corner of the ROW intersection of Carroll Blvd. and W. Parkway Street; THENCE, east along the north ROW of W. Parkway Street to the northeast comer of the ROW intersection of W. Parkway Street and Locust; THENCE, south along the east ROW of Locust to the north ROW of McKinney; THENCE, east along the north ROW of McKinney to a point directly north of the southeast corner of the ROW intersection of McKinney and N. Bradshaw Street; THENCE, south across McKinney and continuing south along the east ROW of N. Bradshaw Street continuing directly south across E. Hickory Street to the south ROW of E. Hickory Street; THENCE, west along the south ROW of E. Hickory Street to the northeast corner of a tract in the Fred Hill Addition, Block A, Lot 1; THENCE, south and east following the property line of a tract in the Fred Hill Addition, Block A, Lot 1 to the northwest corner of a 1.406 acre tract, AI 184A H. Cisco, Tract 14; THENCE, south along the west property line of a 1.406 acre tract, Al 184A H. Cisco, Tract 14 to its intersection with the north property line of a 1.694 acre tract A1184A H. Cisco, Tract 15; THENCE, west and south along the north and west property line of a 1.694 acre tract A1184A H. Cisco, Tract 15 to the northwest corner of a 0.16 acre tract, A1184A H. Cisco, Tract 20; THENCE, south along the west property line of a 0.16 acre tract, AI 184A H. Cisco, Tract 20 to the north ROW of Sycamore; THENCE, directly south across Sycamore to the south ROW of Sycamore; THENCE, west along the south ROW of Sycamore to the northwest corner of the Oakwood Cemetery; THENCE, south along the west property line of the Oakwood Cemetery to the north ROW of Prairie; THENCE, directly south across Prairie to the south ROW of Prairie; THENCE, west along the south ROW of Prairie to the southwest corner of the ROW intersection of Prairie and Elm; 6 FINANCE PLAN - DENTON TIF NO. I PRELIMINARY Boundary Description THENCE, north along the west ROW of Elm to the south ROW of Sycamore; THENCE, west along the south ROW of Sycamore to the southwest corner of the ROW intersection of Sycamore and Carroll Blvd. and the POINT OF BEGINNING, and containing a total area of approximately 225.73 acres. 7 FINANCE PLAN - DENTON TIF NO. I PRELIMINARY EXHIBIT B Property Boundary Map Legend e.r O TIF Boundary Centerline Streets 4-a J'v f Property Description w Ile ~A.. Acreage wlor w/o Agr use Cable Company t3 = MCKINNEY Duplex Exempt ! OK I Gas Company -Am Multifamily r'® KORY Phone Company E J Real and Commercial (1) 0 U) e 1"# Single Family C " Townhome C SYFAMORE - t ! Vacant Commercial Lots = N m !I PRA&IE ',f p wQ~iE W April 16 2010 Miles This map is a graphic representation prepared by the City of Demon and is intended for use only as a reference, Data depicted 0 905 01 0 2 03 0 4 is not guarameed for accuracy and maybe subject to revision at anytime without notification. A Registered Surveyor for the State of Texas was not consulted. For Survey level accuracy, supervision and certification of the produced data by a Registered Professional Land Surveyor for the State of Texas would need to be performed 8 E IBIT C PROJECT ESTIMATED COST, $M Parking / Transportation 8.0 Complete Streets 7.9 Support for Downtown Projects 4.9 Utility/ Drainage Improvements 4.0 TOTAL 24.8 Project Definitions Parking/Transportation: Parking includes, but is not limited to, parking garages; surface parking; parking lighting; and parking signage and wayfinding. This project category was designed to provide adequate public facilities for transportation and to foster Transit Oriented Development (TOD) that will occur as a result of the planned transit station that will link Denton with passenger rail service to the City of Carrollton, where riders can transfer to the Dallas Area Rapid Transit (DART) system into the Dallas/ Fort Worth metroplex. The goal is to create compact, walkable, pedestrian-centered developments to enhance and act as a catalyst to spur additional development and redevelopment in the district. Complete Streets: are "multi-functional, pedestrian-oriented, aesthetically-pleasing, and safe and inviting for residents and visitors. Redeveloping the existing downtown street network into complete streets will create a pleasing public realm, which in turn supports and encourages a wide variety of new development and investment" according to the Downtown Implementation Plan. Elements of complete streets include the building to building improvements which may encompass: sidewalks, shared travel lanes (e.g. bus and bicycle), parallel and angled parking, pedestrian crosswalks, pedestrian and emergency bulb (American with Disabilities Act (ADA) accessibility), awnings, street improvements, planters, pedestrian street furniture, bike racks and pedestrian lighting. Downtown Projects: may include grants, loans and services for public and private development. Eligible TIF project costs are not limited to public uses and may also include projects that involve: historic preservation, demolition, environmental remediation and economic development grants. Chapter 380 of the Local Government Code grants municipalities in Texas the authority to offer grants and loans of public funds to stimulate economic development. The chapter also includes a provision for the use of City employees, facilities and services. An example of a City service may include additional public safety personnel to serve the increased population created by the transit station and the surrounding transit oriented development. Solid FINANCE PLAN - DENTON TIF NO. 1 PRELIMINARY EXHIBIT D Project Plan waste and recycling services tailored to serve the downtown area is another example of a public service. Utility Drainage: The downtown TIF district has an aging infrastructure and a number of properties that are situated in the floodplain making proper utility drainage an important component of the project plan. Utility drainage encompasses the physical provisions to accommodate and regulate stormwater runoff to preclude excessive erosion and sedimentation and to control and regulate the rate of flow. Facilities/systems can include natural features and conduits, channels, ditches, swales, pipes, detention devices or other devices designed or intended to carry, direct, detain or otherwise control stormwater," according the Denton Development Code. Projects may include one or more categories that may be leveraged as an incentive for development in the TIF district. An example of such a project, that would include both the parking/transportation and the downtown project categories, is a public private partnership for the construction of a parking garage and mixed use development that includes a public investment for additional parking for the public. 10 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY FEASIBILITY ANALYSIS (EXHIBIT D OF THE FINANCE PLAN) December 2010 Tax Increment Financing Reinvestment Zone No. I City of Denton, Texas SCHRADER & CLINE, LLC George R. Schrader Larry D. Cline 4800 Broadway, Ste A Addison, TX 75001 972-661-1973 schcliswbell.net FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY INDEX Page Index 1 Forward 2 Section 1: HISTORY 3 Section IL CURRENT CONDITION / SPATE 4 Section III: TAX INCREMENT ANALYSIS 6 Section IV: TABLES 11 TABLE 1 General Value Increase, $M 12 TABLE 2 Catalyst Project Value Increase, $M 13 TABLE 3 Other Development/Redevelopment Value Increase, $M 14 TABLE 4 Cumulative Total Value Increase, $M 15 TABLE 5 City Contribution to TIF, $K 16 'TABLE 6 City BPP Value Increase, $K 17 TABLE 7 Total Income to City, $K 18 Section V: EXHIBITS 19 EXHIBIT] Catalyst Project Overview 20 EXHIBIT 11 Area A 21 EXHIBIT III Area B 22 EXHIBIT IV Area C 23 EXHIBIT V Area D 24 EXHIBIT VI Area E 25 I FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY FORWARD Schrader & Cline, LLC was asked to prepare a Feasibility Analysis using tax increment financing to encourage accelerated development and redevelopment for Tax Increment Financing Reinvestment Zone (TIF) No. 1 in the City of Denton, Texas. The areas of the City within the boundary of the TIF need public infrastructure projects that will provide a stimulus for new development. Section I summarizes the history of Denton. Section II is a brief discussion of the current condition/state. Section III details the tax increment analysis. Section IV contains Tables. Section V contains Exhibits. The following projections of development, redevelopment and tax revenues are subject to change. As underlying conditions in the national and regional economy change, the pace and value of new development and redevelopment projected for the TIF area may shift. Future property tax rates are particularly difficult to predict given their dependence on changes in the tax base, the mix of taxes levied and the various jurisdictions' overall fiscal and budgetary policies. Thus, the projected tax increments are subject to change. The analysis of future tax increment funds is dependent on a series of projections, assumptions, and other inputs. As a result, the report should be reviewed in totality. Neither this report nor its conclusions may be referred to or included in any prospectus or part of any offering made in connection with private syndication of equity, sale of bonds, sale of securities or sale of participation interests to the public without express written approval. 2 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY SECTION I. HISTORY Denton, the county seat of Denton County, is located on IH 35, less than forty miles north of Dallas and Fort Worth. Because of its proximity, Denton has become closely associated with the Dallas - Fort Worth metropolitan area. The City was founded in 1857 in order to become the county seat, because it was located near the center of the County. Although established in 1857, and with a courthouse built on the north side of the square, it was not until 1866 that Denton was incorporated. In its early years, Denton grew slowly, but that changed with completion of the Texas and Pacific Railway and the Missouri, Kansas and Texas Railway through Denton in 1881. With only north and south rail connections, however, the town did not develop as a manufacturing and wholesale center. The next spur to Denton's growth came in 1890 with the opening of North Texas Normal College (now the University of North Texas) and in 1903 with the opening of the Girls Industrial College (now Texas Woman's University). With these developments as catalysts, the City grew from a population of 1,194 in 1880 to 2,558 in 1890 and subsequently, over time, to a population of 26,844 in 1960 and to 48,063 in 1980. Proximity to Dallas and Fort Worth, with good interstate highway connections, played a major role in this growth. Steady and at times rapid growth of enrollment at the two universities was important also. Additionally, after 1974 the City added many new residents as a result of the opening of Dallas - Fort Worth International Airport, which is closer to Denton than to many parts of Dallas and Fort Worth. Many airline employees and executives who traveled for major companies took up residence in Denton. The City of Denton has also benefitted from the continued rapid growth of the metropolitan area and as this growth has moved northward, the City has grown in population from 66,270 in 1990 to 80,537 in 2000 to a currently estimated 122,830, according to the U.S. Census Bureau. 3 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY SECTIONIL CURRENT CONDITION/STATE While Denton has grown to a population in excess of 100,000, the Denton downtown has not shared in the growth. One of the primary reasons for the lack of growth in the downtown area is the condition of the infrastructure. Many of the water and sewer lines serving downtown are 50 years old or older and are undersized to support new and more dense development and redevelopment. Drainage is poor. Many streets have fallen in need of repair or reconstruction, with unsafe sidewalks which do not meet ADA requirements. There also is a lack of parking to serve a higher level of development. The City of Denton has the potential, the need and the desire to undergo a successful revitalization of its downtown. To begin the effort, the City approved a Downtown Masterplan by Fregonese Calthorpe Associates and TIP Strategies in May/June 2003. This was followed by a Downtown Redevelopment Implementation Plan done by Leland Consulting Group and RTKL in 2005. The Leland / RTKL plan suggested five catalyst projects which would Address underserved market niches • Provide direction for targeting and leveraging public investment • Advance market-tested vision over near-term and long-term • Create a physically and economically sustainable plan As one of the potential implementation tools for this plan, Leland/RTKL recommended creation of a Tax Increment Financing (TIF) Reinvestment Zone to fund public improvements which would provide assistance and stimulus for private redevelopment and new development. To further define and guide downtown public infrastructure improvements that would help stimulate private development and be funded by a TIF, the City of Denton asked Jacobs to prepare a Downtown Implementation Plan. This plan, presented to the community and adopted by the Denton City Council in August 2010, focused on parking, complete streets, solid waste, a form base code and the planned transit oriented development. 4 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY Based on the Leland/RTKL recommendation, and following the Downtown Implementation Plan recommendations, the City of Denton is proposing creation of a TIF Reinvestment Zone for the downtown area. The "defined area" of approximately 225.73 acres was developed by city staff along with the Downtown Task Force and the Economic Development Partnership Board. New private development and redevelopment expected to occur as a result of public improvements funded by the TIF will increase downtown property values and tax income as well as bolster business personal property value and its related tax income for all taxing jurisdictions. TIF has been used in many other cities and is a proven method to stimulate private development and redevelopment growth sooner, rather than later, and in many cases will stimulate growth in value which might never occur without public improvements funded by the TIF. 5 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY SECTION III: TAX INCREMENT ANALYSIS This section documents the detailed analysis and inputs used to generate the tax increment revenue estimates. Tax Increment Financing involves: ■ Designating an eligible redevelopment area as a Tax Increment Financing Reinvestment Zone; ■ Soliciting participation of other taxing jurisdictions; ■ Setting the assessment base at the level of the most recent assessment; and ■ Placing tax revenues generated by the increase in assessed value in a tax increment fund for funding public improvements. Thus, future tax increment revenues depend on four elements: ■ The timing and added value of new development; ■ Appreciation of existing land and improvements; ■ The loss of value from any existing improvements demolished to make way for new development; and ■ Future tax rates and the percentage of participation of each taxing jurisdiction. Assessment policies typically set building assessments at 100 percent of fair market value, which are generally comparable to construction costs for new construction. Assessed values are established as of January 1 of the tax year. Thus, development in 2010 goes on the tax rolls for the Tax Year 2011. In this analysis, to be conservative, no increase in value on redevelopment or new development after completion has been included. In addition, after the initial five years, only a portion of the taxes from increases in real property values for the City of Denton are directed to the TIF Fund. Taxes from the remaining portion on real property values and 100% of all taxes from increases in business personal property values will flow to the City. All taxes from increases in real property and business personal property values will flow to the other taxing jurisdictions. Sales tax income generated from both existing retail and new retail will continue to flow to the City of Denton. The total year 2010 taxable value of the property within the TIF boundary is estimated to be $80.2 million. 6 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY For the purposes of this tax increment analysis, the initial tax base for the Tax Increment Fund is assumed to be $80.2 million. Taxes on the amount of base tax value will continue to flow to all taxing jurisdictions during the 30-year life of the TIF. The increase in value as a result of development and redevelopment within the TIF boundary is expected to be created in three different categories: I. the genera) increase in values over time through normal Appraisal District revaluations and overall inflation; 2. the new values created by completion of the catalyst projects identified in the Downtown Redevelopment Implementation Plan; and 3. other general development and redevelopment expected to occur within the TIF boundary. Each of these will be discussed in more detail in the following sections. General Increase General value increases are based on the City of Denton forecast through 2014. The average increase through 2014 is 2.2% per year. To be somewhat conservative, beyond 2014 an average annual increase of 2% per year was used. This annual increase still generated an increase in value within the TIF from $80.2 million to $143.7 million, an increase of $63.5 million (see attached Table 1). Catalyst Projects As mentioned previously, the city of Denton commissioned the team of Leland Consulting Group and RTKL Associates, Inc. to provide a Downtown Redevelopment Implementation Plan. This team evaluated five potential catalyst projects (see Exhibit 1) which would-- • Address underserved market niches in Denton, • Promote density and increase in "rooftops", • Provide direction for targeting and leveraging public investment, • Advance market-tested vision over near- and long-term, and • Create a physically and economically sustainable plan. These catalyst projects would focus on-- 7 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY • Strengthening the core, • Transit, • Infill development, • Connecting the Civic Center to downtown, and • Gateways into downtown. For this analysis, the project values developed by the team for each catalyst project except catalyst project A were used. Project A value was developed based on more recent input from City Staff. Each project is projected to develop over the time periods shown below. The location of each project is shown in Exhibits 11, 111, IV, V, and VI, and a summary is shown below. Area Description Value, $M Development Time Period A Mixed-use Residential/Retail/Transit 55 2012-2028 B Mixed-use Residential/Retail 14 2017-2029 C Residentiallnfill 16 2020-2034 D Mixed-use Office/Residential 27 2022-2038 E Residential Infill 13 2017-2027 The value created over the life of the TIF by these five catalyst projects is shown in attached Table 2. Other Development/Redevelopment New development and redevelopment value increases during the past few years within the downtown area have averaged about $1.7 million per year. With the stimulus provided by the catalyst projects and with the potential aid of TIF funds, this analysis assumed that a higher level of development and redevelopment within the TIF are would occur as shown below. 8 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY Development Annual Value Time Period Increase, $M 2010 2011 3.0 2012-2014 1.5 2015-2019 2.0 2020-2024 2.5 2025-2029 3.0 2030-2034 3.5 2035-2039 4.0 The value created over the life of the TIF by general development/red eve I opment is shown in attached Table 3. The forecast of increased value created within the TIF boundary during the next 30 years from these three categories is shown in Table 4. Income to the TIF Fund based on the values shown in attached Table 4 and the City of Denton tax rate assumptions shown below is detailed in attached Table 5. Jurisdiction Years 2010 Tax Rate % of $/$100 Value Tax Rate City of Denton 1-5 0.6897500 100 6-10 0.6552625 95 11-20 0.6207750 90 21-30 0.5862875 85 Attached Table 5 also shows income which flows to the general fund of the City from the remaining tax rate not applied to the TIF. Business Personal Property tax income will also be generated from increased values within the TIF. Business Personal Property & Inventory (BPP) values for 2009 in the TIF area was 39.1 % of real property values. For this analysis, a conservative forecast of BPP tax income to the City in the TIT District is based on BPP values being 40% of real property values initially, declining 9 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY annually to 30% by 2021 and remaining at 30% thereafter using 100% of the tax rate. This income from BPP is shown in attached Table 6. Attached Table 7 shows a forecast of total income to the City during the 30 year life of the TIF. This income is generated from the non-TIF portion of the real property tax rate and BPP income, both from new values generated within the TIF and also from real property and BPP base values. A summary of income to the TIF and the City General Fund over the 30-year life of the TIF is shown below. Jurisdiction TIF Fund, $K CITY Income, $K City of Denton 24,811 35,615 The public infrastructure projects planned to stimulate the higher values created by the TIF are shown in Project Plan Exhibit D. 10 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY SEC;'TION I V. TABLES I I FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY TABLE 1 CITY OF DENTON TAX INCREMENT FINANCING REINVESTMENT ZONE NO. I GENERAL VALUE INCREASE, $M YEAR VALUE VALUE BASE VALUE INCREASE 2010 80.2 80.2 - 2011 78.6 80.2 (1.6) 2012 81.0 80.2 0.8 2013 84.2 80.2 4.0 2014 87.6 80.2 7.4 2015 89.4 80.2 9.2 2016 91.1 80.2 10.9 2017 93.0 80.2 12.8 2018 94.8 80.2 14.6 2019 96.7 80.2 16.5 2020 98.7 80.2 18.5 2021 100.6 80.2 20.4 2022 102.6 80.2 22.4 2023 104.7 80.2 24.5 2024 106.8 80.2 26.6 2025 108.9 80.2 28.7 2026 111.1 80.2 30.9 2027 113.3 80.2 33.1 2028 115.6 80.2 35.4 2029 117.9 80.2 37.7 2030 120.3 80.2 40.1 2031 122.7 80.2 42.5 2032 125.1 80.2 44.9 2033 127.6 80.2 47.4 2034 130.2 80.2 50.0 2035 132.8 80.2 52.6 2036 135.4 80.2 55.2 2037 138.1 80.2 57.9 2038 140.9 80.2 60.7 2039 143.7 80.2 63.5 TOTAL 143.7 80.2 63.5 *Increases based on City of Denton forecast through 2014. Beyond 2014 assumed average of 2% / year increase. TABLE 2 12 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY CITY OF DENTON TAX INCREMENT FINANCING REINVESTMENT ZONE NO. I CATALYST PROJECT VALUE INCREASE, $M YEAR A B C D E TOTAL CUM.TOTAL 2010 - - - - - - - 2011 - - - - - - - 2012 10.0 - - - - 10.0 10.0 2013 - - - - - - 10.0 2014 10.0 - - - - 10.0 20.0 2015 - - - - - - 20.0 2016 15.0 - - - - 15.0 35.0 2017 - 2.0 - - 2.0 4.0 39.0 2018 - - - - - - 39.0 2019 5.0 2.0 - - 2.0 9.0 48.0 2020 - - 2.0 - - 2.0 50.0 2021 - 2.0 - - 2.0 4.0 54.0 2022 5.0 - 2.0 3.0 - 10.0 64.0 2023 - 2.0 - - 2.0 4.0 68.0 2024 - - 2.0 3.0 - 5.0 73.0 2025 5.0 2.0 - - 2.0 9.0 82.0 2026 - - 2.0 3.0 - 5.0 87.0 2027 - 2.0 - - 3.0 5.0 92.0 2028 5.0 - 2.0 3.0 - 10.0 102.0 2029 - 2.0 - - - 2.0 104.0 2030 - - 2.0 3.0 - 5.0 109.0 2031 - - - - - - 109.0 2032 - - 2.0 3.0 - 5.0 114.0 2033 - - - - - - 114.0 2034 - - 2.0 3.0 - 5.0 119.0 2035 - - - - - - 119.0 2036 - - - 3.0 - 3.0 122.0 2037 - - - - - - 122.0 2038 - - - 3.0 - 3.0 125.0 2039 - - - - - - 125.0 TOTAL 55.0 14.0 16.0 27.0 13.0 125.0 125.0 13 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY TABLE 3 CITY OF DENTON TAX INCREMENT FINANCING REINVESTMENT ZONE NO. I OTHER DEVELOPMENT/REDEVELOPMENT VALUE INCREASE, $M YEAR CUM. VALUE VALUE 2010 - - 2011 3.0 3.0 2012 1.5 4.5 2013 1.5 6.0 2014 1.5 7.5 2015 2.0 9.5 2016 2.0 11.5 2017 2.0 13.5 2018 2.0 15.5 2019 2.0 17.5 2020 2.5 20.0 2021 2.5 22.5 2022 2.5 25.0 2023 2.5 27.5 2024 2.5 30.0 2025 3.0 33.0 2026 3.0 36.0 2027 3.0 39.0 2028 3.0 42.0 2029 3.0 45.0 2030 3.5 48.5 2031 3.5 52.0 2032 3.5 55.5 2033 3.5 59.0 2034 3.5 62.5 2035 4.0 66.5 2036 4.0 70.5 2037 4.0 74.5 2038 4.0 78.5 2039 4.0 82.5 TOTAL 82.5 82.5 14 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY TABLE 4 CITY OF DENTON TAX INCREMENT FINANCING REINVESTMENT ZONE NO. I CUMULATIVE TOTAL VALUE INCREASE, $M YEAR GENERAL CATALYST OTHER TOTAL 2010 - - - - 2011 (1.6) - 3.0 1.4 2012 0.8 10.0 4.5 15.3 2013 4.0 10.0 6.0 20.0 2014 7.4 20.0 7.5 34.9 2015 9.2 20.0 9.5 38.7 2016 10.9 35.0 11.5 57.4 2017 12.8 39.0 13.5 65.3 2018 14.6 39.0 15.5 69.1 2019 16.5 48.0 17.5 82.0 2020 18.5 50.0 20.0 88.5 2021 20.4 54.0 22.5 96.9 2022 22.4 64.0 25.0 111.4 2023 24.5 68.0 27.5 120.0 2024 26.6 73.0 30.0 129.6 2025 28.7 82.0 33.0 143.7 2026 30.9 87.0 36.0 153.9 2027 33.1 92.0 39.0 164.1 2028 35.4 102.0 42.0 179.4 2029 37.7 104.0 45.0 186.7 2030 40.1 109.0 48.5 197.6 2031 42.5 109.0 52.0 203.5 2032 44.9 114.0 55.5 214.4 2033 47.4 114.0 59.0 220.4 2034 50.0 119.0 62.5 231.5 2035 52.6 119.0 66.5 238.1 2036 55.2 122.0 70.5 247.7 2037 57.9 122.0 74.5 254.4 2038 60.7 125.0 78.5 264.2 2039 63.5 125.0 82.5 271.0 TOTAL 63.5 125.0 82.5 271.0 15 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY TABLE 5 CITY OF DENTON TAX INCREMENT FINANCING REINVESTMENT ZONE NO. I CITY YEAR TOTAL REAL PROPERTY VALUE CONTRIBUTION INCOME TO INCREASE, $M TO TIF, $K* CITY, $K 2010 - - - 2011 1.4 - - 2012 15.3 10 - 2013 20.0 106 - 2014 34.9 138 - 2015 38.7 241 - 2016 57.4 254 13 2017 65.3 376 20 2018 69.1 428 23 2019 82.0 453 24 2020 88.5 537 28 2021 96.9 549 61 2022 111.4 602 67 2023 120.0 692 77 2024 129.6 745 83 2025 143.7 805 89 2026 153.9 892 99 2027 164.1 955 106 2028 179.4 1,019 113 2029 186.7 1,114 124 2030 197.6 1,159 129 2031 203.5 1,159 204 2032 214.4 1,193 211 2033 220.4 1,257 222 2034 231.5 1,292 228 2035 238.1 1,357 240 2036 247.7 1,396 246 2037 254.4 1,452 256 2038 264.2 1,492 263 2039 271.0 1,549 273 2040 - 1,589 280 TOTAL 271.0 24,811 3,479 * Based on 2010 tax rate of: Years 1 - 5 $0.6897500 / $100 valuation (100%) Years 6 - 10 $0.6552625 / $100 valuation (95%) Years 11 - 20 $0.6207750 / $100 valuation (90%) Years 21 - 30 $0.5862875 / $100 valuation (85%) 16 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY TABLE 6 CITY OF DENTON TAX INCREMENT FINANCING REINVESTMENT ZONE NO. I CITY YEAR TOTAL REAL INCOME TO PROPERTY VALUE BUSINESS PERSONAL CITY, $K** INCREASE, $M PROPERTY VALUE % INCREASE, $M 2010 - - - - 2011 1.4 40 0.6 - 2012 15.3 39 6.0 4 2013 20.0 38 7.6 41 2014 34.9 37 12.9 52 2015 38.7 36 13.9 89 2016 57.4 35 20.1 96 2017 65.3 34 22.2 139 2018 69.1 33 22.8 153 2019 82.0 32 26.2 157 2020 88.5 31 27.4 181 2021 96.9 30 29.1 189 2022 111.4 30 33.4 201 2023 120.0 30 36.0 230 2024 129.6 30 38.9 248 2025 143.7 30 43.1 268 2026 153.9 30 46.2 297 2027 164.1 30 49.2 319 2028 179.4 30 53.8 339 2029 186.7 30 56.0 371 2030 197.6 30 59.3 386 2031 203.5 30 61.1 409 2032 214.4 30 64.3 421 2033 220.4 30 66.1 444 2034 231.5 30 69.5 456 2035 238.1 30 71.4 479 2036 247.7 30 74.3 492 2037 254.4 30 76.3 512 2038 264.2 30 79.3 526 2039 271.0 30 81.3 547 2040 - - - 561 TOTAL 271.0 30 81.3 8,607 *Estimated Business Personal Property & Inventory value for 2010 is $29.9 million, 39.1% of real property value. To be conservative this percentage was reduced from 40% to 30% over the neat 1 I years. This value was used for the remainder of the TIF life. **Based on tax rate of $0.68975 / $loo valuation applied to business personal property & inventory value increases. 17 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY TABLE 7 CITY OF DENTON TAX INCREMENT FINANCING REINVESTMENT ZONE NO. I CITY YEAR INCOME FROM INCOME TO CITY TOTAL INCOME FROM NEW BUSINESS SUBTOTAL FROM BASE INCOME TO NEW REAL PERSONAL INCOME FROM REAL AND BPP CITY, $K PROPERTY TAX, PROPERTY TAX, NEW VALUES, VALUES, $K* $K $K $K 2010 - - - 759 759 2011 - - - 759 759 2012 - 4 4 759 763 2013 - 41 41 759 800 2014 - 52 52 759 811 2015 - 89 89 759 848 2016 13 96 109 759 868 2017 20 139 159 759 918 2018 23 153 176 759 935 2019 24 157 181 759 940 2020 28 181 209 759 968 2021 61 189 250 759 1,009 2022 67 201 268 759 1,027 2023 77 230 307 759 1,066 2024 83 248 331 759 1,090 2025 89 268 357 759 1,116 2026 99 297 396 759 1,155 2027 106 319 425 759 1,184 2028 113 339 452 759 1,211 2029 124 371 495 759 1,254 2030 129 386 515 759 1,274 2031 204 409 613 759 1,372 2032 211 421 632 759 1,391 2033 222 444 666 759 1,425 2034 228 456 684 759 1,443 2035 240 479 719 759 1,478 2036 246 492 738 759 1,497 2037 256 512 768 759 1,527 2038 263 526 789 759 1,548 2039 273 547 820 759 1,579 2040 280 561 841 759 1,600 TOTAL 3,479 8,607 12,086 23,529 35,615 * Based on 2010 real property value and 2009 business personal property & inventory value. 18 FINANCE PLAN: EXHIBIT D Feasibility Analysis PRELIMINARY SECTION V. EXHIBITS 19 GQ ~ O ~ w v c aci c°' c c~ CY) Qo oL~',~~ (D a) Q a) i lL V V Q. 1- o O Q r* LL „ u k' i 4r olt- AL: rat `"'i....,- ••'b.' i r Yt I ,r a 4 a , ArAl - v ~ r:A. Q HI I ?k A ! 1 ,a " L TA a w U z w N x ' w = Q L :tf C -~-a 3 (o c O C 70 (.5 o 70 0-0 (D E a) ( Z N N = c -C 0 0 (u E--o 0-amo a- w U) a LIU- ,Ahdbl d. ° y W'14 W- rr1f'.Y7~ r f , • w _W CL a - w U z w N W N N N v N L ~ L .c cu ,c o Q (A 3 N m -o ~3. ~c° mznai cn -6-j -c3 O c s- c > W O ca a)o Y ~ O> X M -O E c O ~..J a 5 w.. . l - - y ~.ry Ab AWL- w 1; a, . I'd U z w N x W N 4= C c C (1) ~ O Y > L C O N 'a . X O 0 (1) -0 L C N Q O ch -0 c C: x Aid w r. ,,rra, y a rw . ` U z w [-N GQ x w o N > 3 i - O L.. ~ co U v~ N '3 c x 4 Omc'in -0c °c C op0DWova~ ~o m E (p -09 cl) o_ a. c 0 ' O O S a. p c W N cn C) CL O 1 w C: -0 2- x p N N p p 0 17 11 w w. rw A ~4q 9 L , ~ y' s . Ca.• t 9+e _ v z w N x LXlt C L Q N N Q o 0 v-a o C m ^ V :3 cv a) cn . A~l w F^N+Ij ji A 16j t 1 >40 dd J s. Lr- Qa rf w ~ v z w AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 Questions regarding this acquisition may be directed DEPARTMENT: Risk Management to Scott Payne at 349-7836 All ACM: Jon Fortune SYT- SUBJECT Consider adoption of an Ordinance authorizing the City Manager to execute an agreement between the City of Denton and CareHere, LLC; approving the expenditure of funds; and providing for an effective date. BACKGROUND On June 14, 2011, the City Council received a detailed report and held a discussion regarding the status of the City of Denton's employee Health Center (clinic) and staff's recommended implementation plan. At that time, Council agreed with the plan of action and instructed staff to proceed with the project. The item is being brought back to the Council for approval of the contract with CareHere, LLC, for clinic operation and management. To summarize those discussions, the City prepared Request For Sealed Proposals (RFSP) 44634- Onsite Medical Clinic Operations and Management Services and submitted it to approximately 30 potential respondents, including both Denton hospitals, in December of 2010. The City received 12 responses to the RFSP. A review committee consisting of the Chief Financial Officer, the Director of Human Resources, a representative from the Employee Insurance Committee (EIC), the Risk Manager, the Benefits Administrator, and the City's benefits consultant, evaluated the responses based on the following criteria: • detail and thoroughness of the response (30%) • cost of the services being proposed (35%) • responder's experience in providing similar services, especially for public entities (35%). The review committee selected four companies to make formal presentations and answer additional questions regarding their proposals. From that group of four, the review committee chose two finalists and made site visits to current clinics operated by those companies in the Dallas/Fort Worth area. Agenda Information Sheet August 16, 2011 Page 2 BACKGROUND (CONTINUED) Based on the clinic site visits, the information obtained during the reference check process, and the best value to the City, the review committee recommended that the City enter into a contract with CareHere to manage and operate our clinic. A description of the proposed clinic is included below. Clinic Model CareHere will staff the City's clinic with a full time physician (MD or DO) and a minimum of two Medical Assistants on site. Clinic appointments will be scheduled on-line or through a call center staffed with multi-lingual call takers. Both of these options allow patients to set appointments at their convenience, not just when the clinic is open. This approach also minimizes the number of onsite staff that is needed which in turn helps reduce the overall cost to operate the clinic. CareHere will recruit and credential the physician for our clinic and will provide an opportunity for the City to interview the potential physician in order to help determine the "fit" with our organization. CareHere will also provide for a replacement physician in cases of illness, scheduled vacations or continuing education training. Salaries for the medical staff will be a straight "pass through" from CareHere to the City. Although the hours of operation for the clinic have not been set, the clinic will be open to patients for 40 hours per week. The exact hours of operation will be set after discussions with staff and CareHere, but we would anticipate the hours to be from 7:00 a.m. until 4:00 p.m., with the possibility of different hours one or two days per week to allow for more flexibility. Appointment times would be set to allow for both scheduled appointments as well as "walk-ins." 0inic Services In addition to hiring and managing the on-site medical staff, CareHere will provide all the other services related to the operation and management of the clinic. CareHere will assist us in securing the necessary equipment and supplies (both medical and office) for the clinic as well as the electronic medical records system. They will provide predictive modeling, disease management, case management and Registered Nurse Health Coaches. CareHere will also exchange data with United Healthcare (UHC), the City's self-funded health plan third-party administrator. 0inie Location Denton Regional Medical Center (DRMC) has offered the City a lease for office space in their professional building (adjacent to the hospital) for the clinic. The proposed space has 2,529 usable square feet with five exam rooms and three offices. Agenda Information Sheet August 16, 2011 Page 3 0inic Location ((ontinued) DRMC has offered the space for one dollar ($1) per year and includes an allowance for upgrades/updates to the carpet, paint, and tile. The lease also includes general maintenance and janitorial services for the office space. Patients would also have convenient access to many other specialties within the professional building, in addition to the DRMC Occupational Medicine program and the DRMC Emergency Room, should the need arise. Confidentiality ofEmplovee Medical Records CareHere and the City are strictly bound to the privacy and security standards set forth under the Health Insurance Portability and Accountability Act (HIPAA). The City is prohibited from using medical information when making employment or benefits decisions and will not have access to individual employee medical data. As a covered entity, the City has many responsibilities concerning Protected Health Information (PHI), including but not limited to adopting PHI privacy procedures, providing patients written notice of the City's privacy practices and access to their medical records, and a chance to request alternative methods of communicating information. The City will also establish a process for patients to use in filing complaints and for dealing with complaints. In addition, CareHere has proposed to maintain all patient data in an Electronic Medical Record. Usernames and passwords will be periodically changed, and the sessions between browser and server will be encrypted using a secure socket layer (SSL) certificate. Estimated Clinic Costs All operational costs for the clinic are passed directly through to the City. These costs include staff salaries and benefits, medical supplies, lab tests, and other medical procedures conducted in the clinic. In addition, the City will pay an administrative fee to CareHere for the oversight and management of the clinic which includes the predictive modeling, HRA, case management, disease management, and other related services. The estimated first year operational costs are presented in the table below: Table 1- Estimated Year 1 Clinic Costs Initial Supplies/Equipment Costs Medical Supplies/Equipment $20,000 Recurring Costs Staff Salaries $360,000 Clinic Administrative Fee $319,662 Insurance $3,510 Total Recurring Costs $679,662 ESTIMATED TOTAL YEAR I COSTS $699,662 Agenda Information Sheet August 16, 2011 Page 4 Esthvated Clinic Costs It is important to note that the start-up costs for medical supplies and equipment is an estimate only and the actual costs for these items will be passed through to the City with no markup. Additionally, the staff salaries are also an estimate based on the salary and benefits paid to other CareHere clinic medical staff in the DFW area. Like the supplies and equipment, this is a pass through cost, without markup, so expenses may be higher or lower depending on the medical staff that is recruited for our clinic. The administrative fee is based on $21.50 per employee per month. The administrative fee, staff salaries, insurance, and ongoing medical/office supplies (estimated total recurring costs) will be paid for out of the self-funded health claims budget. Since we will be diverting physician office visits, and other related services, from the self-funded health plan and turning them into fixed costs through the clinic, it is appropriate to fund the clinic operations in this manner. Over time, it is expected that the savings realized from the clinic will more than offset the operational costs. The term of the contract is for three (3) years with the option for two (2) one-year renewals. PRIOR ACTION/REVIEW Information regarding the concept of a Health and Wellness Center was presented to the Council on December 12, 2009. The clinic was also discussed with the City Council during the fiscal year 2010-2011 budget process. A budget of $600,000 was set up for start-up costs, which included estimates for constricting a clinic site, or remodeling an existing stricture, and the initial purchase of office/medical equipment and supplies. This amount is now greatly reduced due to the Denton Regional Medical Center leasing proposal and it is anticipated that it will fall well under $200,000. A more comprehensive report regarding the clinic was presented to Council on June 14, 2011. FISCAL INFORMATION Funds have been budgeted in operating account 850500.7899-Outside Contract Services for the clinic start up costs. Administrative costs and on-going medical supply costs will be paid for out of operating account 850500.6705.0001-Self-Insured Claims/ Health. Respectfully submitted: Scott Payne Risk Manager sAlegal\our documents\ordinances\11\carehere clinic agreement.doc ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND CARE-HERE, LLC; APPROVING THE EXPENDITURE OF FUNDS; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the City has solicited, received, evaluated proposal and selected CareHere, LLC for the purpose of providing professional medical staff, oversight and management of the clinic operations; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Council hereby approves the Clinic Agreement, attached hereto, between the City of Denton and CareHere, LLC. SECTION 2. The City Manager, or his designee, is authorized to execute and make the expenditures as outlined in the attached Agreement and to exercise all rights and duties of the City of Denton under the Agreement. SECTION 3. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 2011. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: City of Denton and CareHere, LLC Clinic Agreement This Clinic Agreement is made and entered into this _ day of 20 , by and between the City of Denton ("City"), and CareHere, LLC, a Tennessee limited liability corporation ("CareHere"). Recitals: A. CareHere contracts with City to arrange for Medical Practitioners to be located at the City's place of business to perform certain medical services for the employees of such City and/or its retirees and/or their dependents. B. The City desires to contract with CareHere for onsite Medical Practitioners in a healthcare clinic and for the provision ofmanagement and non-medical services to assist the City and Medical Practitioners in providing medical services to the City's employees, retirees, and/or dependents. C. CareHere desires to contract with the City for CareHere to arrange for Medical Practitioners to provide certain onsite medical services on behalf of City for the employees or retirees of the City and/or their dependents on the terms and subject to the conditions contained herein. NOW, THEREFORE, for good and valuable consideration, the receipt and the sufficiency of which are hereby acknowledged, the City and CareHere hereby agree as follows: ARTICLE I PROVISION OF MEDICAL PRACTITIONERS 1.01 Provision of Medical Practitioners. CareHere shall arrange for appropriate Medical Practitioner staff to operate the Clinic, as agreed upon between CareHere and the City. For purposes of this document, a Medical Practitioner shall be defined as an individual licensed or certified to treat illness and/or injury and acting within the scope of that license or certification. Examples include, but are not limited to, a Physician, Nurse Practitioner, Physician Assistant, Registered Nurse, Medical Assistant, etc. Medical Practitioner shall be located at the offices provided by the City to provide the Medical Services (as defined herein) to the employees and/or retirees of the City and/or the dependents thereof for a period of not less than forty (40) hours per week unless week contains holidays where hours will be determine by mutual agreement by Client and CareHere. CareHere is not committing to arrange for a particular person as the Medical Practitioners and, at any time and from time to time, CareHere may change the Medical Practitioners upon providing a ten (10) business day notice to the City in writing. City shall have the opportunity to interview all final Medical Practitioner candidates identified by CareHere. City shall also have the right to have CareHere remove a Medical Practitioner upon written notice, which notice shall specify the time by which the Medical Practitioner shall be removed. As used herein, the term "Medical Services" means delivery of those services listed on Exhibit A. The City and CareHere may, at any time and from time to time, amend or supplement Exhibit A by written agreement. 1.02 Standards of Physician Performance. CareHere shall contract with an independent Physician such that the Physician is obligated to perform or deliver the following, supported by two Medical Assistants under the Physician's direction, control, and supervision: (a) The Physician shall determine his or her own means and methods of providing Medical Services in connection with this Agreement. (b) The Physician shall comply with all applicable laws and regulations with respect to the licensing and the regulation of physicians, and shall ensure that the Medical Assistants do the same with respect to any licensing and regulation applicable to them. (c) The Medical Practitioners shall provide the Medical Services in a manner consistent with all applicable laws and regulations and in a professional manner consistent with Medical Services provided in the community. (d) The Physician shall maintain, during the term of this Agreement, appropriate credentials including: (1) A duly issued and active license to practice medicine and prescribe medication in the State of Texas, (2) A good standing with his or her profession and state professional association, (3) The absence of any license restriction, revocation, or suspension, (4) The absence of any involuntary restriction placed on his or her federal DEA registration, and (5) The absence of any conviction of a felony. (e) In the event that the Physician (1) has his or her license to practice medicine or prescribe medication restricted, revoked or suspended, (2) has an involuntary restriction placed on his or her federal DEA registration, (3) is convicted of a felony, or (4) is no longer in good standing with his or her professional or state licensing authority, CareHere shall promptly remove that Physician and replace such Physician with another Physician that meets the requirements of Section 1.02 (d). CareHere shall require any Physician to remove and promptly replace any Medical Practitioner who has his or her professional license or certification restricted, revoked or suspended, is convicted of a felony, or is no longer in good standing with his or her professional or state licensing authority. Page 2 (f) CareHere shall require the Physician to ensure that any Medical Practitioner complies with the requirements of this Section 1.02 with respect to performance, licensing, certification, and good standing, as applicable. CareHere shall require the Physician to notify CareHere immediately in the event the Physician learns of the possibility that any of the events specified in Section 1.02 may occur with respect to the Physician or any Medical Practitioner and CareHere shall immediately notify the City of such notification, so the City can determine whether or not to exercise its right to remove the Physician pursuant to Section 1.01. 1.03 Scheduling of Services. CareHere shall contract with the Physician for the Physician to provide the Medical Services at the Denton Regional Professional Office Building, 3737 S I-35, Suite 3108, Denton, Texas (the "Clinic"). Providing the Client and CareHere has contracted with at least one full-time medical physician at least one week prior, then the Clinic shall open on a date agreed upon by the parties but not later than December 1, 2011, and CareHere shall begin delivering Medical Services on that date. 1.04 Place of Services. The City shall provide the Physician examination room(s) at the Clinic, which examination rooms shall be reasonably satisfactory, in the judgment of the Physician, for the provision of the Medical Services. CareHere shall supply the City with cabinetry, counter space, lockable medication storage, internet connectivity, and telephone and fax connectivity. The City agrees to coordinate, manage, fund and oversee any renovation required to provide the Clinic. The City agrees that the Clinic will be prepared, cleaned, and ready for CareHere to occupy at least two (2) weeks in advance of the targeted clinic opening date. 1.05 Equipment and Supplies. Per Article lI of this Agreement, the City shall reimburse CareHere for the equipment and supplies listed in, but not limited to those specified in, Exhibit B. The Physician shall notify, at any time and from time to time, CareHere of the quantity of such equipment and such supplies which the Physician reasonably requires in connection with the provision of the Medical Services and the date by which such equipment and such supplies are required, and CareHere shall provide such equipment and such supplies by such date and be reimbursed by City. 1.06 Professional Liability Insurance. CareHere shall ensure that the Physician maintains, throughout the term of this Agreement, professional liability insurance covering the acts and omissions of the Physician, in the minimum annual coverage amount of $1,000,000 with an insurance company reasonably satisfactory to CareHere. CareHere will require the Physician to notify CareHere immediately in the event he or she does not have the required coverage and will promptly remove and replace such Physician with another qualified Physician. CareHere shall provide City proof of such professional liability insurance maintained by the Physician. 1.07 Responsibilities of Parties. CareHere is an independent contractor of the City. The Physician shall be solely responsible for his or her actions and /or omissions and the actions and/or the omissions of any agent or any employee used by him or her (including without limitation any Medical Assistants) in connection with providing the Medical Services contemplated by this Agreement. Neither the City nor CareHere shall have any control or involvement in the independent exercise of medical judgment by the Medical Practitioners, and Page 3 neither the City nor CareHere shall incur any liability for the actions or the omissions of the Physician and/or any agent or any employee used by the Medical Practitioners in connection with this Agreement. CAREHERE SHALL INDEMNIFY, DEFEND AND SAVE AND HOLD HARMLESS THE CITY AND ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL LIABILITY, CLAIMS, DEMANDS, DAMAGES, LOSSES AND EXPENSE, INCLUDING BUT NOT LIMITED TO COURT COSTS AND REASONABLE ATTORNEY FEES INCURRED BY THE CITY FOR INJURY, DEATH AND PHYSICAL DAMAGES TO REAL OR TANGIBLE PERSONAL PROPERTY TO THE EXTENT RESULTING FROM THE NEGLIGENT ACTS OR OMISSIONS OF CAREHERE OR ITS OFFICERS, PARTNERS, AGENTS, OR EMPLOYEES IN THE EXECUTION, OPERATION OR PERFORMANCE OF THIS AGREEMENT; EXCEPT THAT THE INDEMNITY PROVIDED FOR IN THIS SECTION WILL NOT APPLY TO ANY LIABILITY RESULTING FROM THE SOLE NEGLIGENCE OF THE CITY, ITS OFFICERS, AGENTS, EMPLOYEES OR SEPARATE CONTRACTORS, OR IN THE EVENT OF JOINT AND CONCURRENT NEGLIGENCE OF BOTH CAREHERE AND CITY, RESPONSIBILITY, IF ANY, SHALL BE APPORTIONED COMPARATIVELY IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. AS A CONDITION TO THE FOREGOING INDEMNITY OBLIGATION, CITY SHALL PROVIDE CAREHERE WITH PROMPT NOTICE OF ANY CLAIM FOR WHICH INDEMNIFICATION SHALL BE SOUGHT HEREUNDER AND SHALL COOPERATE IN ALL REASONABLE RESPECTS WITH CAREHERE IN CONNECTION WITH ANY SUCH CLAIM. HOWEVER, SUCH INDEMNIFICATION BY CAREHERE SHALL NOT BE CONSTRUED TO MEAN CAREHERE IS PROVIDING MALPRACTICE INSURANCE. SAID INDEMNITY OBLIGATION SHALL BE SUPPORTED BY APPROPRIATE LIABILITY INSURANCE WITH MINIMUM LIMITS AS REQUIRED BY THE CITY. 1.08 Other Licensed Medical Practitioners. The City agrees and acknowledges that Physician may from time to time have other Medical Practitioners, as defined in the next sentence, assist the Physician and/or replace the Physician during his or her regularly scheduled time at the City's place of business in the event of an emergency (provided, however, that CareHere will require the Physician to ensure that the services provided by replacement individuals do not exceed the scope of their professional training and licensure). "Medical Practitioners" shall mean a duly licensed nurse, nurse practitioner, medical doctor and licensed physician's assistant. Section 1.07 shall apply in the same manner to the Medical Practitioners as such section applies to the Physician. CareHere shall also ensure, or require the Physician to ensure, that all Medical Practictioners who provide services hereunder have insurance coverage consistent with the requirements of Section 1.06. From time to time the Physician, upon consent of an employee or retiree of the City and/or spouse or dependent of the employee or retiree, may have medical doctors that are interns or residents associated with one of the medical schools in the State of Texas observe and assist the Physician for educational and teaching purposes under the Physician's direct supervision. The same level of professional standards as set forth in Section 1.02 shall apply to Medical Practitioners, other than medical doctor interns and residents, working under the direct supervision of the Physician. Page 4 1.09 Billing. CareHere shall contract with the Physician that the Physician shall not bill or otherwise solicit payment from employees or retirees of the City and/or their dependents, or City, or from the City Benefit Plan for the Medical Services provided by the Physician. 1.10 Medical Records. CareHere shall contract with the Physician for the Physician to maintain medical records in electronic medical records format with respect to all of the patients, all of which medical records shall be maintained in a professional manner consistent with the accepted practice of the community in which the Physician provides the Medical Services in connection with this Agreement. CareHere shall also require the Physician to comply with the Federal and State confidentiality laws relating to health care operations and medical records including, but not limited to, the Health Insurance Portability and Accountability Act (HIPAA). All patient records maintained by the Physician in connection with this Agreement shall be the sole property of the Physician and CareHere. The City understands and agrees that all of the medical records and other protected health information maintained by the Physician will be held by the Physician in strictest confidence, and that the City will not be entitled to have access to the medical records maintained by the Physician, in the absence of an appropriate written authorization from the patient or pursuant to law or court order or in connection with a signed confidentiality agreement as executed between the City and CareHere for purposes of auditing. 1.11 Reports. CareHere shall provide to the City within 30 days following each three (3)-month period of operations, and more frequently as deemed appropriate by CareHere and City, a written report with respect to the provision by the Physician of the Medical Services during the immediately preceding three (3)-month period. The written report shall be in form reasonably satisfactory to the City and CareHere and it is contemplated that the written report will report (a) the number of employees/retirees and dependents treated by the Physician during such immediately preceding quarter, (b) the number of employees for whom work-related treatments were provided, and (c) the number of employees for whom primary care services were provided. 1.12 Noncompliance by the Physician. In the event that the City becomes aware of any failure by the Physician to comply with the obligations of the Physician which are contemplated by this Agreement, the City shall immediately provide written notice to CareHere of such failure, which written notice shall describe the failure in reasonable detail, and CareHere shall use its best efforts to address such failure. In the alternative, CareHere may arrange for the substitution of another person as the Physician. As provided in Section 1.01, City shall have the right to require the immediate removal of the Physician by CareHere. 1.13 General Liability. Without limiting any of the other obligations or liabilities of CareHere, CareHere shall provide and maintain during the performance of the Services under this Agreement, and until the termination of the Agreement, the minimum insurance coverage as indicated hereinafter. 1. During the performance of the services under this Agreement, CareHere shall maintain the following insurance with an insurance company licensed to do business in Page 5 the State of Texas by the Texas Department of Insurance or any successor agency that has a rating with Best Rate Carriers of at least an A- or above: 2. Comprehensive General Liability Insurance with bodily injury and property damage limits of not less than $2,000,000 for each occurrence and not less than $2,000,000 in the aggregate. 3. If automobiles are used by CareHere staff, then Automobile Liability Insurance with combined single limit bodily injury and property damage of not less than $1,000,000 for each accident. 4. CareHere shall purchase and maintain Workers' Compensation Insurance which, in addition to meeting the minimum statutory requirements for issuance of such insurance, the Employer's Liability limits of a least $100,000 for each accident, $100,000 per each employee, and a $500,000 policy limit for occupational disease. The City need not be named as an "Additional Insured" but the insurer shall agree to waive all rights of subrogation against the City, its officials, agents, employees and volunteers for any work performed for the city by the Named Insured. 5. Professional Liability Insurance with limits of not less than $1,000,000 annual aggregate. 6. CareHere shall furnish insurance certificates or insurance policies at the City's request to evidence such coverages. Except for Workers' Compensation, and professional liability policies, the above insurance policies shall name the City as an Additional Insured on all policies. Such insurance shall not be canceled or the coverage reduced without thirty (30) days prior written notice (ten (10) days if for premium nonpayment) to City. In such event, CareHere shall, prior to the effective date of the change or cancellation, serve substitute policies furnishing the same coverage. 1.14 Provision of Medical Services. Medical Services to be provided by the independent on-site Physician include, but are not limited to, the items listed in Exhibit A. ARTICLE II COMPENSATION 2.01 Initial Set-Up Fee. The City is responsible for the expense of setting up the clinic. Upon execution of this Agreement, the City shall pay to CareHere $20,000 to cover CareHere's purchase of the equipment and the supplies listed on Exhibit B, and any other clinic set-up expenses. If these expenses total less than $20,000, the City will receive a credit; if the expense exceeds $20,000, CareHere will bill the City for the difference, which the City will pay in 30 days. CareHere shall charge the City the actual cost of all equipment and supplies purchased for the Clinic without any markup, processing fee, handling fee, or any other upcharge. All equipment and supplies purchased in this manner shall become the property of the City. Page 6 2.02 Monthly Fee. Monthly invoicing by CareHere will commence upon the opening date agreed upon per Section 1.03 of this Agreement. No later than the 10`h day of each calendar month immediately following the receipt of the CareHere invoice, the City shall pay to CareHere the amount of $21.50 per employee per month for arranging for the Physician and the other services provided under this Agreement during the immediately preceding calendar month. This rate is guaranteed for a period of one year from the date of the Clinic opening. The parties shall agree upon the rates for subsequent years, as limited by law regarding change orders. 2.03 Additional Fees. In advance of the first day of each month, CareHere shall submit an amount equal to the sum of the estimate of that month's medical expenditures and an adjustment from prior months' actual expenditures for all expenses required to operate and maintain the City clinic in order to provide the Medical Services under this Agreement. These expenses may include, but are not limited to, Medical Practitioner fees, reimbursement to Physician for medical malpractice insurance, other required insurance, Medical Practitioner training expenses, approved medical staff travel expenses, medical supplies, office supplies, equipment and other items that may be required by CareHere or the Physician to provide the Medical Services under this Agreement incurred by CareHere to purchase items necessary to provide the Medical Services under this Agreement. The City shall be responsible to pay CareHere such amount invoiced no later than the 15`h day of the calendar month immediately following the receipt of the CareHere invoice. Past due amounts are subject to a finance charge of 1.5% per month. CareHere shall charge the City the actual cost of all equipment and supplies purchased for the Clinic without any markup, processing fee, handling fee, or any other upcharge. All equipment and supplies purchased in this manner shall become the property of the City. ARTICLE III TERM AND TERMINATION 3.01 Term. This Agreement shall be for a term of three years from the opening date of the City clinic to commence delivery of care to patients, subject to earlier termination in accordance with this Agreement. This Agreement may be extended for two additional one-year terms upon the option of the City. 3.02 Effect of Expiration or Termination. The City may terminate the Agreement with CareHere by providing a 60 day notice in writing to CareHere and CareHere may terminate the Agreement by providing a 60 day notice in writing to the City. The expiration or the termination of this Agreement shall not affect the obligation of the City to pay compensation to CareHere or pay for any outstanding invoice for the period prior to such expiration or termination and shall not affect the obligation of CareHere to provide monthly reports for the period prior to the effective date of such expiration or such termination. ARTICLE IV MISCELLANEOUS 4.01 Notice. All notices and other communications permitted or required pursuant to this Agreement shall be in writing, addressed to the party at the address set forth at the end of Page 7 this Agreement or to such other address as the party may designate from time to time in accordance with this Section 4.01. All notices and other communications shall be: (a) mailed by certified or registered mail, return receipt requested, postage pre-paid; (b) personally delivered; or (c) sent by telecopy with a receipt confirmation. Notices mailed pursuant to this Section 4.01 shall be deemed given as of three days after the date of mailing and notices personally delivered or sent by telecopy shall be deemed given at time of receipt. 4.02 Transferability. Except as provided in Section 4.07, City or CareHere may assign or otherwise transfer this Agreement to a third party with written consent from the other party, which consent may not be unreasonably withheld. 4.03 Entire Agreement; Amendment. This Agreement, Request For Sealed Proposal #4634 and all Responses thereto, constitute the entire Agreement between the City and CareHere with respect to the subject matter hereof. This Agreement shall not be amended or waived, in whole or in part, except in writing signed by both the City and CareHere. 4.04 Governing Law. This Agreement shall be governed by, and interpreted in accordance with, the internal laws of the State of Texas and venue shall be in Denton County, Texas. 4.05 Confidentiality. The City and CareHere shall comply with federal and state confidentiality laws relating to health care operations and CareHere shall require that all Medical Practitioners additionally comply with such laws. Nothing herein shall restrict the release of information: (a) provided to government authorities as required by applicable law or applicable regulation or consented to by the patient; (b) furnished to healthcare providers involved in a particular patient's case; (c) which is or becomes public knowledge through no fault of either party; (d) which is otherwise required to be disclosed by applicable law or applicable regulation or pursuant to a court order; or (e) which is deemed necessary for purposes of an audit and subject to a confidentiality agreement executed between the City and CareHere. 4.06 Access to Books and Records and Audits. Both CareHere and the City agree to provide access to their books and records, as they relate to this Agreement, to the other party. The City shall have the right to audit and make copies of the books, records and computations pertaining to this Agreement. CareHere shall retain such books, records, documents and other evidence pertaining to this Agreement during the contract period and five (5) years thereafter, except if an audit is in progress or audit findings are yet unresolved, in which case records shall be kept until all audit tasks are completed and resolved. These books, records, documents and other evidence shall be available within ten (10) business days of written request. Further, CareHere shall also require all subcontractors, material suppliers, and other payees to retain all books, records, documents and other evidence pertaining to this Agreement, and to allow the City similar access to those documents. All books and records will be made available within a 50 mile radius of the City. The cost of the audit will be borne by the City unless the audit reveals an overpayment of 1% or greater. If an overpayment of 1% or greater occurs, the reasonable costs of the audit, including any travel costs, must be borne by CareHere and which must be paid within five (5) business days of receipt of an invoice. Page 8 Failure to comply with the provisions of this Section shall be a material breach of this Agreement and shall constitute, in the City's sole discretion, grounds for termination thereof. Each of the terms "books", "records", "documents" and "other evidence", as used above, shall be construed to include drafts and electronic files, even if such drafts or electronic files are subsequently used to generate or prepare a final printed document. 4.07 Successors. This Agreement is binding upon the parties, their successors and assigns. 4.08 Counterparts. This Agreement may be executed in several counterparts, all of which taken together shall constitute one single agreement between the parties hereto. IN WITNESS WHEREOF, the City and CareHere have executed and delivered this Agreement as of the date first above written. Page 9 CareHere, LLC Date of Signature: Signature: Print Name: Ben Baker Title: Chief Operating Officer Address: 215 Jamestown Park Drive Suite 204 Brentwood, TN 37027 CITY OF DENTON Date of Signature: Signature: Print Name: George C. Campbell Title: City Manager Address: 215 E. McKinney Denton, TX 76201 Page 10 EXHIBIT A "SCOPE OF SERVICES" Medical Services to be provided by the independent on-site Medical Practitioners include those services typically delivered in a primary care physician's office, but are not limited to the following: • Chronic illness evaluation, treatment and management o Diabetes o High Cholesterol o High blood pressure o Etc. • Acute Conditions o Sore throats/ears/headache o Cough, Sinus, Allergies o Strains/sprains/musculoskeletal problems o Acute urinary complaints • Lab testing • Medication dispensements • Occupational Conditions (if applicable) o OJI/Work-related injuries o Minor surgical procedures, such as sutures for laceration treatment • Employment Related Activities (if applicable) o Pre-employment and routine physicals o Pre-employment drug testing • Personal hygiene related problems • Ordinary and routine care of the nature of a visit to the doctor's office • Develop relationships with area medical providers and facilities to ensure efficient specialty and procedure referrals Long Term Prevention Programs Included • Labinsight Health Risk Assessment with comprehensive blood draw analysis (once per year) • Aggregate data analysis from your employee population that allows us to develop the right programs for your Pharmaceutical Program Management • tailored to your specific population • Medical Practitioners "Reach Out" Program to assist the people with the highest health risks • Population Health Management programs targeted for the greatest impact (obesity, diabetes, high blood pressure, etc.) • Disease/Case Management - we proactively assign a "'coach" to help those employees with the greatest need • Self Care Education Tools and Manual online and in print form Page I I • Comprehensive Health Education Training • Physician Health Seminars • Population Promotions • Disease Management • Case Management • CareHere RN Health Coaches • Predictive Modeling Page 12 Program Enablers and Infrastructure Included • 1-800 Customer Support Line (24/7) • 240 Online Scheduling System • Online Medical Management & Tracking System • Clinic Best Practices Sharing • Clinic Inventory Management (supplies, medications, etc.) • Medical Practitioner Recruiting • Medical Practitioner Management • Analysis, Trends, Reporting (to include but not limited to financial, clinic utilization, population health status, wellness, disease management, employee/patient satisfaction, HRA participation, appointment by unique patient, top diagnosis) & Survey Results • HIPAA Compliant Electronic Medical Record (EMR)System • Staff training to include, but not limited to: o Orientation, philosophy, goals, reporting structure o EMR organization, updating and reporting o Initial and on-going ordering of supplies, medications and equipment o Expectations and performance measures • Provide for back-up Medical Practitioners to accommodate for illnesses, vacations or mandatory training • Bilingual professionals to staff the 24/7 nurse and customer support lines • Clinic rollout communication plan • Regular data exchange with the City's health plan third-party administrator Page 13 i EXHIBIT B SAMPLE EXAM ROOM SET UP MEDICAL SUPPLIES AND EQUIPMENT Below is a list that illustrates items that may be required by the Medical Practitioners to deliver Medical Services in accordance with the Agreement. A detailed list customized to the client and clinic will replace this sample Exhibit for the "official" Agreement. Exam table/stool Disinfectant Small refrigerator Waste cans Lockable cabinet Waste can liners Gooseneck light Gloves Dia Set 3.5V Halogen/disposable covers Suture supplies Sundry jars Glucose test supplies Pillow/pillow covers (cloth and Urinalysis supplies disposable) Table paper Stre testing supplies Thermometer/disposable covers Mono testing supplies 4 X 4's Disposable owns Tongue depressors Disposable drapes Cotton balls Thermometer freezer Alcohol 3" Elastic bandage Alcohol dispenser Cold pack Blood pressure cuffs Emesis basins Stethoscope Medications/Injectables (by physician order) Surgical tape Lab supplies Tubes, requisitions, tourniquets) Biohazard bags and Removal Service Wall Posters, Charts Biohazard stickers Small desk and chair (if not provided by City) "Allergic To" stickers Needles Sharps containers Syringes Computer, Fast Internet Connection, "4 in Trash removal, Clean-up, and General I" Printer/Fax/Co ier/Scanner Maintenance Fire Extinguisher Page 14 AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 Questions regarding this report may be directed to DEPARTMENT: Risk Management Scott Payne at 349-7836 All ACM: Jon Fortune SUBJECT Consider adoption of an Ordinance of the City of Denton approving a Lease Agreement between the City of Denton and Columbia Medical Center of Denton Subsidiary, L.P. d/b/a Denton Regional Medical Center for the City of Denton's Health Center in the Denton Regional Medical Center Professional Building; authorizing the expenditure of funds therefore; and providing an effective date. BACKGROUND On June 14, 2011, the City Council received a detailed report and held a discussion regarding the status of the City of Denton's employee Health Center and staff's recommended implementation plan. At that time Council agreed with the plan of action and instructed staff to proceed with the project. The item is being brought back to the Council for approval of the lease agreement with Denton Regional Medical Center (DRMC) for the clinic office space. DRMC has offered the City office space in their professional building (adjacent to the hospital) for the Health Center. The proposed space has 2,529 usable square feet with five exam rooms and three offices. DRMC has offered the space for one dollar ($1) per year and includes an allowance for upgrades/updates to the carpet, paint, and tile. The lease also includes general maintenance and janitorial services for the office space. A budget of $600,000 was initially set up in the Fiscal Year 2010-2011 budget for start-up costs, which included estimates for constricting a clinic site, or remodeling an existing stricture, and the initial purchase of office/medical equipment and supplies. The DRMC lease will greatly reduce the amount needed for remodeling since the lease space was formerly a doctor's office. We anticipate the total set up costs to be well under $200,000. As was discussed on June 14, 2011, staff believes this space would serve the City well as it is located in an existing medical area of Denton that is less than 15 minutes from most City facilities and has ample parking to accommodate our larger vehicles such as dump tricks and solid waste tricks. The fact that the clinic will be located in a professional medical building adds a level of credibility to the operation as well as allowing for easy access and referral to other medical specialties and services should the need arise. Agenda Information Sheet August 16, 2011 Page 2 BACKGROUND (CONTINUED) The DRMC professional building currently has an outpatient imaging center on the first floor that can provide x-ray, sonogram, CT, NMI, and DEXA, and also offers nuclear medicine and other diagnostic imaging services in the hospital itself. There is also an outpatient lab located on the second floor of the building. Patients would have access to outpatient therapies in the office building, including physical therapy, occupational therapy, speech therapy, diabetes education, and cardiac rehabilitation. Solis Women's Health is also located on the second floor of the office building and would be available for patient's mammography needs. Additionally, the City has an existing relationship with DRMC for the initial treatment of most of our occupational injuries. If a patient is seen in the clinic for what turns out to be a work related injury, the proximity of the clinic to the DRMC Occupational Medicine program will allow for a quick and easy referral. Should there be a need for emergency medical services; the DRMC Emergency Room is next door. PRIOR ACTION/REVIEW Information regarding the concept of a Health and Wellness Center was presented to the Council on December 12, 2009. The clinic was also discussed with the City Council during the fiscal year 2010-2011 budget process. Council received a report and held a discussion regarding the Health Center program on June 14, 2011. FISCAL INFORMATION Funds have been budgeted in operating account 850500.7899-Outside Contract Services, for clinic start up costs. Administrative costs and on-going medical supply costs will be paid for out of operating account 850500.6705.0001-Self-Insured Claims/Health. Respectfully submitted: Scott Payne Risk Manager s: materials management prchagenda agenda 2010-2011 august 16, 2011,4634 drmc lease 4m - 4634 Brine lease\2-ord-ifsp 4634 lease.doe ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS APPROVING A LEASE AGREEMENT BETWEEN THE CITY OF DENTON AND COLUMBIA MEDICAL CENTER OF DENTON SUBSIDIARY, L.P. D/B/A DENTON REGIONAL MEDICAL CENTER FOR THE CITY OF DENTON' S HEALTH CENTER IN THE DENTON REGIONAL MEDICAL CENTER PROFESSIONAL BUILDING; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFORE; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON, TEXAS HERBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute a lease agreement between the City and the Columbia Medical Center of Denton Subsidiary, L.P. d/b/a Denton Regional Medical Center for the City of Denton's Health Center in the Denton Regional Medical Center Professional Building in substantially the form of the lease agreement attached hereto and made a part of this ordinance for all purposes (the "Lease Agreement"). SECTION 2. The City Manager, or his designee, is authorized to make the expenditures as set forth in the Lease Agreement. SECTION 3. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 12011. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: Standard First Amendment 5101/2008 FIRST AMENDMENT TO MEDICAL OFFICE BUILDING LEASE THIS FIRST AMENDMENT TO MEDICAL OFFICE BUILDING LEASE (this "Amendment") is made as of 24 (the "'Date of this Amendment"), by and between Columbia Medical Center of Denton SLibsidiajy. L.P. d/b/a Denton Regional Medical Center ("Landlord") and City of Denton ("Tenant"), under the following circumstances: Landlord and Tenant are about to enter into that certain Medical Office Building Lease, dated as of . 20 (the "Lease"), whereby Landlord will lease to Tenant premises consisting of approximately 2,837 rentable square feet and known as Suite No. 317 (the "Premises") on the third 3 floor of the building located at 3537 S. 1-35E Denton. Texas 76210; and In order to induce Tenant to execute the Lease, Landlord and Tenant are executing this Amendment in order to modify certain terns of the Lease. NOW THEREFORE, in consideration of the premises and the agreements and covenants contained herein, Landlord and Tenant agree that the Lease is amended and modified as follows: A. Amendments 1. Section 2.1. The Lease is amended by replacing Section 2.1 with the following: 2.1 Base Rent and Gift-in-Kind. (a) During the Term, Tenant shall pay to Landlord $1.00 per annum as "Annual Base Rent", such sum is hereafter referred to as "Base Rent", together with "Additional Rent" (as hereinafter defined in Section 3). Base Rent shall be payable annually in advance without notice, demand, setoff or deduction and all such installments shall be paid to Landlord or its "Property Manager" (as hereinafter designated) in U.S. Dollars, at the following address: HCA. Inc.. P.O. Box 403374 Atlanta. GA 30384-3374, or at such other address as Landlord may designate. Landlord's "'Property Manager" is Lincoln Harris CSG. The first annual payment of Base Rent shall be due on the Commencement Date and, thereafter, on each anniversary of the Commencement Date. No portion of the Base Rent shall be refunded to Tenant in the event of an early termination of this Lease. (b) Landlord and Tenant acknowledge and agree that the annual fair market rent for the lease of the Premises is $21_75 multiplied by the rentable square footage of the Premises, subject to such annual increases or adjustments as would be required under Schedule B below if such annual market rent were the Annual Base Rent payable under this Lease (such annual fair market rent as increasedladjusted from time to time pursuant to such Schedule is hereinafter referred to as the "Annual Fair Market Rent". Landlord and Tenant acknowledge and agree that subject to the terms and conditions set forth in this Lease, Landlord is donating to Tenant as a gift-in-kind the difference between the Annual Fair Market Rent for the Premises and the annual Base Rent payable by Tenant under this Lease for the use of the Premises for the term of this Lease. 2. Except as othenvise needed for purposes of determining Annual Fair Market Rent pursuant to Section 2.1(b) above, Schedules A and B to the Lease are deleted in their entirety. 3. Section 7.1. The first sentence of Section 7,1 of the Cease is amended by replacing the phrase "Subject to Section 21.5 hereof" with the phrase "Subject to Section 21.5 hereof and the Constitution and Laws of the State of Texas". 4. Section 16.1(b). Section 16.1(b) of the Lease is amended by adding to the end thereof the following:' As used in this Section 16.1(b), the term "Base Rent" shall mean the Annual Fair Market Rent. B. Miscellaneous. 1. Except as amended by this Amendment, the Lease is not otherwise amended, and the Lease is hereby ratified and confirmed and remains in full force and effect, as amended hereby. In the event of a conflict between the terms of this Amendment and the terms of the Lease, the terms of this Amendment shall control. This Amendment may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. Defined terms used in this Amendment not defined herein shall have the meaning set forth in the Lease. 2032785.1 IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the day and year first above written. WITNESS TENANT: As to Tenant: City of Benton (Witness Signature) By: (Signature) {Witness Printed Name} Name: George Campbell Title. Cites Mangier (Witness Signature) Date: (Witness Printed Name) WITNESS LANDLORD: As to Landlord: Columbia Medical Center of Denton Subsidia L.P. d/b/a Denton Regional Medical Center (Witness Signature) By: Columbia North Texas Subsidiary GP. LLC (Witness Printed Name) Its: general artner By: (Witness Signature) (Signature) Name: Caleb O'Rear (Witness Printed Name) Title: Chief Executive Officer Date: APPROVED AS TO FORM: CITY ATTORNEY CITY OF DENTON, TEXAS BY: 2032i85.t 2 'Gross Lease 5!01108 MEDICAL OFFICE BUILDING LEASE THIS LEASE, dated 20_ for reference purposes (the 'Date of this Lease'), is made and entered into by and between Columbia Medical Center of n n Subsidia LP dlbla Denton Regional Medical n r, or its assigns ("Landlord'), and City of Denton (°Tenant'), Landlord, in consideration of the rents to be paid and the covenants and agreements to be performed by Tenant as hereinafter set forth, hereby leases to Tenant and Tenant hereby leases from Landlord, Suite No. 317, consisting of 7x,832 rentable square feet of space (the "Premises), on the rthi d €3f01 floor in the building located at 3537 S. I.35E Denton. Texas, 75210 CSuitding), far the term and upon the conditions and agreements hereinafter set forth ('Lease). The Building is located at or upon the property more particularly described in Exhibit A-1 attached hereto and incorporated herein. The Premises are more particularly shown or described on Exhibit A-2 attached hereto and incorporated herein. This Lease shall constitute a banding agreement between the parties effective as of the date this Lease is executed by Landlord and Tenant. SECTION 1. TERM The commencement date of the tens of this Lease shall be October 1. 2011 (such date, as ii may be adjusted is hereinafter called the "Commencement Date'), and shall continue thereafter for three years, zero 0 months and zero (01 days and shall expire at 11:59 p.m. on September 30. 2014 (the "Expiration Date')(such teim, any extension or renewal thereof and any 'Unauthorized Holdover Term' and any 'One Year Extension Tenn, as such terms are defined in Section 16, are referred to individually and collectively, as the case may be, as the'Ternn). In the event the date of execution of this Lease by Landlord as set forth in Landlord's signature block is after the Commencement Date as set forth above, then the Commencement Date shall mean the date of execution of this Lease by Landlord as set forth in Landlord's signature block Furthermore, in the event the Commencement Date is adjusted pursuant to Section 11, then the Commencement Date shall mean the Commencement Date as determined pursuant to Section 11 hereof. No change to the Commencement Date pursuant to this paragraph or pursuant to Section 11 shall change the Expiration Date unless (a) a different Expiration Date is set forth on a "Commencement Date Certificate" (as defined below), in which event the Expiration Date shall mean the day as set forth on the Commencement Date Certificate, or (b) the initial Term of this Lease as a result of such change in the Commencement Date is less than one (f) year, in which event the Expiration Date shall mean the last day of the first 'Lease Year (as defined below) (in the event of a conflict between clause (a) and clause (b) of this sentence, the Expiration Dale resulting in the longest initial Term shall controt). In the event of any change in the Commencement Date pursuant to the terms of this Section or pursuant to Section 11, Tenant at Landlord's request shall execute and deliver to Landlord a Commencement Date Certificate in the form attached hereto as Exhibit B acknowledging such change in the Commencement Date, and if applicable, the Expiration Date (the "Commencement Date Certificate')- Any change to the Commencement Date and/or Expiration Date pursuant to the tears of this Section or pursuant to Section 11 shall be automatic and refusal or failure by Tenant to sign a Commencement Date Certificate shall not affect such change to the Commencement Date and/or Expiration Date. "Lease Year' shall mean the period beginning on the Commencement Date and ending on the first anniversary of the last day of the calendar month in which the Commencement Date occurs (unless the Commencement Date is the first day of a calendar month, in which event such first Lease Year shall end on the day prior to the first anniversary of the Commencement Date) and each twelve (12) month period thereafter during the Term of this Lease. SECTION 2. RENT 2.1. Base Rent. During the Term, Tenant shaft pay to landlord "Annual Base Reny as determined pursuant to Schedule A or Schedule B below, whichever is applicable, multiplied by the number of rentable square feet of the Premises (such sum is hereafter referred to as "Base Rent), together with any 'Additional Rem' (as hereinafter defined). Base Rent shall be payable in monthly installments in advance without notice, demand, setoff or deduction and,all such installments shall be paid to Landlord or its "Property Manager' (as hereinafter designated) in U.S. Dollars, at the following address: HCA, Inc.. P.O. Box 403374- Atlanta- GA 30384-3374, or at such other address as Landlord may designate. Landlord's 'Property Manager' is Lincoln Harris CSG. Except as otherwise may be provided in Section 11, the first monthly installment for Base Rent shall be due on the Commencement Date and, thereafter, such monthly installments shall be due on the first day of each calendar month. If Tenant's obtigation to pay Base Rent relates to only a part of a month at the beginning or the end of the Term, Tenant shall pay Landlord a proportionate part of the applicable monthly installment for each such partial month, which shall be payable at the same time as the first or last (as applicable) monthly installment is due under this Lease. Schedule A shall apply to this Lease. SCHEDULE A SCHEDULE B Annual Annual Monthly Rent Annual Monthly Rent Lease Base Base Installment Annual Base Base Installment (1) Year Rent Rate Rent Rent Rate Rent (1) (First Year Only) 11011111-913012011 4 N1A1r.s.f. 51.00 NIA 1) The Base Rent set forth in Schedule B is subject to increases as a result of increases in the cost of living during the Term. On the first day of the second Lease Year and on the first day of each Lease Year thereafter during the term of this Lease (each such date an 'Adjustment Date'), Base Rent shall be adjusted to reflect the increase, it any, in the cost of living over the preceding Lease Year. Base Rent due as a result of an increase in the cost of living shall be calculated in accordance with the terms set forth below. The basis for computing the cost of living shall be the unadjusted Consumer Price Index for all Urban Consumers, All Items (1982-84 = 100) published by the Bureau of Labor Statistics of the United States Department of Labor (the 'Index'). The Index for the third calendar month preceding the month in which the Commencement Date occurs shall be the "Base Index Number. The Index for the same calendar month preceding the applicable Adjustment Data shall be the 'Current Index Number. The Base Rent for the Lease Year commencing on each Adjustment Date shall be the product obtained from multiplying the amount of Annual Base Rent set forth in Schedule B (the "Initial Base Rent") by the fraction whose numerator is equal to the Current Index Number and whose denominator is equal to the Base Index Number, provided that in no event will Base Rent for such Lease Year be less than the greater of the initial Base Rent or the adjusted Base Rent for the Lease Year immediatety preceding the Adjustment Date. If on any Adjustment Date, the Current Index Number has not been published, the parties agree that the adjustment to Base Rent contemplated herein will be made after the Current Index Number is published, and that such adjustment will be retroactive to the Adjustment Date. Pending the making of the adjustment. Tenant will continue to pay . the amount of Base Rent in effect for the preceding Lease Year, and at such time as Landlord notifies Tenant of the new adjusted wise Rent amount Tenant shall pay Landlord any short fall between the amount of Base Rent paid subsequent to the Adjustment Date and the new amount of adjusted Base Rent payable hereunder as a result of the adjustment. If the Index is not in existence at the time the determination is to be made, the parties shall use such equivalent price index as is published by a successor government agency in lieu of the Index; or, if no such price index is published, then the parties shall use an equivalent price index as is ubrished a non-governmental agency selected Landlord. 2.2. Taxes on Rent, Tenant shall pay and be liable for all rental, sates and use taxes or other similar taxes, if any, levied or imposed on Base Rent or Additional Rent payments by any city, county, parish, state or other govemmenta$ body having authority, Such payments shall be in addition to all other payments required to be paid to landlord by Tenant under the terms of this Lease. Any such payment shall be paid to Landlord concurrently with the payment of the Base Rent or Additional Rent upon which such tax is based. 1911373.1 Gross Lease 5101108 SECTION 3. ADDITIONAL RENT 3.1. Additional Rent. In addition to the Base Rent as set forth in Section 2 herein, Tenant shall pay Landlord "Additional Rent", which term shall be defined to include the following: (a) any sum owed for separately metered utilities, including, without limitation, electricity, or as a "Surcharge' (as defined in Section 5); and (b) any other sums owed by Tenant pursuant to the terms of this Lease or otherwise arsing in connection with Tenant's occupancy of the Premises. For purposes of (his Lease, Base Rent and Additional Rent shall hereinafter be collectively referred to as'Rent`. 3.2. Security Deoosd. Tenant has deposited with Landlord the sum of $0.00 (the "Security Deposit") as security for the full and faithful performance by Tenant of all of Tenant's obligations hereunder. No interest shall be paid upon the Security Deposit nor shall Landlord be required to maintain the deposit in a segregated account, unless required by applicable law in which event Landlord will comply with such legal requirement. The Security Deposit shall not be construed as prepaid rent. In the event that Tenant shall default in the full and faithful performance of any of the terms hereof, then Landlord may, without notice, either retain the Security Deposit as liquidated damages, or Landlord may retain the same and apply it toward any damages sustained by Landlord, including but not limited to actual damages sustained by the Landlord by reason of the default of Tenant, including any past due Rent. In the event of bankruptcy or other debtor-cieditor proceedings, either voluntarily or involuntarily instituted by or against Tenant, the Security Deposit shalt be deemed to be applied in the following order, to actual damages, obligations and other charges, including any damages sustained by Landlord, other than unpaid Rent, due to Landlord for all periods prior to the filing of such proceedings; to accrued and unpaid Rent prior to the filing of such proceeding; and thereafter to actual damages, obligations, other charges and damages sustained by Landlord and real due the Landlord for all periods subsequent to such filing. In the event of a sale of the Premises or all or any portion of the Building, Landlord shall have the right to transfer the Security Deposit to the buyer, and Landlord shall thereupon be relieved of all obligations to return the Security Deposit to Tenant, and Tenant agrees to look solely to the buyer for the return of the Security Deposit If Tenant fully and faithfully complies with all of the terms hereof, the Security Deposit or any balance thereof shall be retumed to Tenant within thirty (30) days after expiration of this Lease, including any renewal thereof. 3.3. The rentable square footage of the Premises may at Landlord's option, be calculated in accordance with the definition of "rentable area' in the BONA Standard Method for Measuring Floor Area in Office Buildings, ANSUBOMA Z65.1 - 1996 (the 'BONA Standard') or in accordance with any other method adopted by Landlord for the Building so long as such method is used for the calculation of the rentable square footage of all of the rentable area of all space leased or suitable for lease in the Building and so long as the sum of the proportionate share of all such rentable area does not exceed one hundred percent. It requested by Tenant. Landlord shall provide Tenant with a copy of the methodology adopted by Landlord for calculating the rentable square footage of the Building and Premises. The rentable area in the Premises as set forth on Page 1 of this Lease is hereby stipulated to be the rentable area of the Premises for all purposes under this Lease, whether the same should be more or less as a result of minor variations resulting from actual construction and completion of the Premises and for actual occupancy; provided, however, in the event Landlord re-measures the Premises or the Building in accordance with commercially reasonable procedures and if such remeasurement indicates that the rentable area of the Premises is different than above stated, then Landlord may give Tenant written notice of the change and the new number of square feet shall become the rentable area of the Premises for all purposes effective as of the date of such notice. . SECTION 4. USE OF PREMISES 4.1. Prohibitgg Uses. (a) The Premises shall continuously and at all tunes during the Term be used and occupied by Tenant qnly as medical offices for licensed physicians (PhysiCiansl to engage in the private practice of medicine and other related activities incidental thereto, and for no other purpose. Notwithstanding the foregoing, the provision or operation of any of the following services or facilities shall not be permitted in the Premises: (i) a health care fatality that has facilities for overnight accommodations of patients; (i) the provision of any medical or related service to or for any person that is in addition to the examination and diagnosis of patients performed directly by a Physician or by other health care professionals either independently licensed or under the direct supervision of a Physician, or a facility operated for the provision of any such service(s); (iii) outpatient or inpatient surgery services; (iv) outpatient or inpatient birthing services; (v) an oncology treatment facility; (A an emergency center, (vi) physical, inhalation or respiratory therapy services; (viii) a laboratory (including, without limitation, a pathology laboratory or a clinical laboratory); and (ix) diagnostic or therapeutic testing services, including without limitation, all diagnostic imaging services, including without limitation: A. fluoroscopy: e. x-ray; C. plain firm radiography; D, computerized tomography (CT); E. ultrasound; F. radiation therapy; G. mammography and breast diagnostics; H. nuclear medicine testing; 1. magnetic resonance imaging, and J. positive emission tomography. (b) Notwithstanding the foregoing, nothing herein shall prevent Physicians who conduct a medical practice on the Premises from performing outpatient surgeries that do not require general anesthesia, intravenous sedation or the presence of an anesthesiologist or from rendering pathological laboratory or x-ray services for which Tenant has obtained Landlord's consent pursuant to Section 4.1(c); provided that such surgery services, pathological laboratory or x-ray services are the 1911373.1 2 Gross Lease &01108 kind usually and customarily provided in a physician's office, are provided to such Physician's own patients who are not referred to such Physician for the sale purpose of receiving the same and are merely ancillary and incidental to such Physician's primary medical practice and do not constitute the Physician's primary medical practice or specialty or constitute the predominant services rendered by the Physician to the Physician's patients. (c) Prior to providing pathological laboratory or x-ray services, Tenant shall have submitted to Landlord a detailed description of the laboratory or x-ray services Tenant desires to provide or perform and Landlord shall have consented in writing to the provision or performance of such services, which consent may be denied in Landlord's safe and absolute discretion (the provision of such services and procedures shall be strictly limited to those services and procedures to which Landlord has expressly consented in writing and the terms of this paragraph shall be strictly construed to prohibit any expansion or addition to such services or procedures without Landlord's written consent). Tenant shall not dispense any drugs or medicines to persons other than Tenant's own patients. Prior to the installation of any diagnostic, laboratory or radiology equipment for services permitted hereunder, Tenant shall provide Landlord with a list of such equipment; a list of any hazardous substances, wastes or materials, as j hereinafter defined, which will be used or generated in connection with the use of such diagnostic, laboratory or radiology equipment; and Tenant's proposed procedures for the use, storage and disposal of any hazardous substances, wastes or materials, including but not limited to the procedure for silver recovery for any radiology equipment. 4.2. Approved Services. Nahrithstanding anything in this Section 4 to the contrary, Tenant may provide the following ancillary medical rare and services in the Premises to patients of Tenant or of any Physician owner or employee of Tenant practicing in the Premises (the 'Approved Services"): NIA; provided that the provision of Approved Services shall be subject to the following limitations and restrictions: (a) the patients of Tenant or of any Physician owner or employee of Tenant practicing in the Premises to whom Approved Services are provided shall not be referred to Tenant or such Physician for the purpose of obtaining such services or procedures; and (b) the Approved Services are and at all times shall be incidental to and a necessary part of the examination or diagnosis rendered to Tenant's or such Physician's patients (i.e., no provision of services to third parties), and ancillary and incidental to Tenant's or such Physician's primary medical practice and shall not constitute either Tenant's or such Physician's primary medical practice or specialty,'or the predominant services rendered by Tenant to Tenant's patients or by such Physician to such Physician's patients. Without the prior written consent of Landlord, which consent maybe withheld in Landlord's sole discretion. Tenant shall not modify or expand any of the Approved Services. 4.3. Ph ician Qualifications. All Physicians who conduct a medical practice and related activities in the Premises must be and remain appropriately licensed and in good standing with the state licensing board and any applicable federal, state or local certification or licensing agency or office, without restriction, not subject to any sanction, exclusion order, or other disciplinary order with respect to his or her participation in any federal or state healthcare program. Further, each such Physician must be qualified to be a member of the active medical staff of Denton Regional Med'Ical Center (the "Hospital); provided, however, that nothing in this Section 4.3 shall require any Physician who conducts a medical practice in the Premises actually 10 be a member of the Hospital's active medical staff. 4.4. Su ervision and aria ement, Each medical practice conducted upon the Premises shall at all times be conducted under the supervision and authority of a Physician and, except with Landlord's prior written consent, which may be withheld in Landlord's sole and absolute discretion, no such Physician shall (1) allow any other person or entity to purchase, manage or operate its medical practice or (2) conduct the medical practice while serving as an agent or employee of any other person or entity. 4.5. Compliance with Legal Regufrements. Tenant shall comply with all governmental laws, codes, ordinances and regulations applicable to the use of the Premises, and shall promptly comply with all governmental orders and directives for the correction, prevention and abatement of nuisances and other activities in or upon, or connected with the Premises. Tenant shall not use or occupy the Premises in violation of the certificate, of use or occupancy issued for the Premises or the Building (the "Certificate'). Tenant shall act in accordance with and not violate any restrictions or covenants of record affecting the Premises or the Building. Tenant shall immediately discontinue any use of the Premises which is declared by either any governmental authority having jurisdiction or the Landlord to be a violation of any such governmental laws, codes, ordinances or regulations. Certificate, restrictions or covenants. Tenant shall comply with any direction of any governmental authority having jurisdiction which shall, by reason of the nature of Tenant's use or occupancy of the Premises, impose any duty upon Tenant or Landlord with respect to the Premises or with respect to the use or occupancy thereof. To the extent any alterations to the Premises are required by the Americans with Disabilities Act, as amended from time to time (the "AOA") or other applicable laws or regulations, Tenant shall bear the expense of the alterations. To the extent any alterations to areas of the Building outside the Premises or common areas are required by the ADA or other applicable laws or regulations (for "path of travei" requirements or otherwise), Landlord shall bear the expense of the alterations. 44t Hazardous Acts: Waste Nuisance. Tenant shall not do nor permit to be done anything which will invalidate or increase the cost of arty casualty and extended coverage insurance policy covering ft Building, the Premises and/or property located in the Building or the Premises, and shall comply with all rules, orders, regulations and requirements of the appropriate Fire Rating Bureau or any other organization performing a similar function. Tenant shall promptly upon demand reimburse Landlord for any additional premium charged for such policy by reason of Tenant's failure to comply with the provisions of this paragraph. Tenant shall not do nor permit anything to be done in, on or about the Premises which would in any way obstruct or interfere with the rights of other tenants or occupants of the Building, or use or allow the Premises to be used for any immoral, unlawful or objectionable purpose, nor shall Tenant maintain or permit any nuisance or commit or suffer to be committed any waste in, on or about the Premises. SECTION S. BUILDING SERVICES AND MAINTENANCE 5.1. Landlord's Services. Landlord shall provide all of the following utilities and services: (a) Electricity and water for the Premises, as reasonably necessary for the uses permitted under this Lease, except to the extent those utilities are separately metered or submetered to the Premises; (b) If the Building is equipped with a central heating and air-conditioning system that serves the rentable areas of the Building, heat and air-conditioning as required for Tenant's comfortable use and occupancy of the Premises during normal business hours. The term "normal business hours" shall mean the hours of 7:00 a.m. to 7.00 p.m. Monday through Friday and 7.00 a.m. to 2:00 p.m. on Saturday, excluding federal and/or state holidays as elected by Landlord; (a) Unless the Premises are equipped with a water heater, hat water at those points of supply provided for the general use of Tenant and other tenants of the Building; (d) General janitorial and cleaning services for the Premises, five (5) days per week, excluding holidays; (e) General janitorial services in and about the common areas of the Building; (1) Light bulb replacement in the Premises and common areas of the Building: (g) Elevator service during normal business hours, if the Building is equipped with elevator(s); 1911373.1 3 Gross Lease Milos (h) Exterior window cleaning, and snow and ice removal services for the parking areas and walk ways serving the Building, to the extent deemed necessary in Landlord's reasonable judgment; and W Normal maintenance and servicing of lavatory facilities, toilets, sinks and faucets located within the Premises; provided that Landlord shall not be responsible for any repair, maintenance or servicing required on account of misuse of any of the foregoing or the disposal of foreign materials or substances not intended to be disposed in toilets or sinks, all of which shah be the sole responsibility of Tenant. Al such services shall be provided in a manner that is consistent with those services provided in comparable medical office buildings of similar size and age which are located within the local community. 5.2. Utility Services: Damage to Tenant's Property. If Tenant requires or utilizes more water or electric power than is considered reasonable or normal by landlord, Landlord may reasonably determine and require Tenant to pay as Additional Rent, the cast incurred as a result of such additional usage ('Surehargel. Unless otherwise directed by Landlord, Tenant shall pay directly to the utility provider all separately metered utilities required and used by Tenant in the Premises. Landlord reserves the privilege of stopping any or all utifity services to case of accident or breakdown, or for the purpose of making alterations, repairs or improvements. Landlord shall not be liable for the failure to furnish or delay in furnishing any or all of such services when same is caused by or is the result of (a) strikes, labor disputes, labor, fuel or material scarcity, or governmental or other lawful regulations or requirements; (b) the failure of any corporation, firth or person with whom the Landlord may contract for any such service, or for arty service incident thereto, to furnish any such service; (c) the making of any alterations, repairs or improvements as described in the preceding sentence; (d) any other cause other than the gross negligence of the Landlord; and the'tailure to furnish any of such services in such event shall not be deemed or construed as an eviction, or relieve Tenant from the performance of any of the obligations imposed upon Tenant by this Lease, including its obligation to pay Rent. Landlord shall not be responsible for the failure of any equipment or machinery to function properly on account of any such interruption of such services. Tenant shall be solely responsible for and shall promptly pay all charges for telephone, Internet services and ail other communication services. 5.3. Medical and Hazardous Waste, Mold. (a) Tenant, at Tenant's sole cost and expense, shall be responsible for medical, special and infectious waste removal for the Premises and the maintenance and storage thereof pending removal, all in accordance with all applicable taws, regulations and orders. Tenant shall not cause or permit the release or disposal of any hazardous substances, wastes or materials, or any medical, special or infectious wastes, on or about the Premises or the Building. 'Hazardous substances" as such term is used in this Agreement means any hazardous or toxic substance, material or waste, regulated of listed pursuant to any federal, state or local environmental law, including without limitation, the Clean Air Act, the Clean Water Ad, the Toxic Substances Control Act, the Comprehensive Environmental Response Compensation and Liability Act, the Resource Conservation and Recovery Act, the Federal Insecticide, Fungicide, RodenWde Act, the Safe Drinking Water Act and the Occupational Safety and Health Am Tenant shall comply with all rules and policies set by Landlord, and with all federal, state and local laws, regulations and ordinances which govern the use, storage, handling and disposal of hazardous substances, wastes or materials and medical, special or infectious wastes, Tenant shall indemnify, defend and hold Landlord harmless from and against any claims or liability arising out of or connected with Tenant's failure to comply with the terms of this Section 5.3, which terms shall survive the expiration or earlier termination of this Lease. If Landlord decides to provide medical, special and infectious waste removal services for its tenants (which decision may be made in Landlord's sole discretion). Tenant may elect to contract separately with Landlord for such services; provided that Tenant shall pay Landlord a reasonable fee for the provision of sung service, the amount of which shall be determined by Landlord. (b) Tenant shall not permit undue accumulations of garbage, trash, rubbish or other refuse within the Premises and shall keep ail refuse in proper containers until disposal of such refuse. Tenant shall not permit the mixing or disposal of any hazardous substances. wastes or materials or any medical, special or infectious waste with the general office refuse and Landlord shall have no duty or obligation to remove any hazardous substances, wastes or materials or any medical, special or infectious waste from the Premises (except as provided by separate contract as set forth above in Section 5.3(a)). (c) Tenant acknowledges that mold, mildew, fungi and bacteria are naturally occurring organisms. Tenant acknowledges that it has had the opportunity prior to occupying the Premises to test the Premises, at its own expense, for the presence of mold, mildew, fungi and other harmful bacteria (mold, mildew, fungi and harmful bacteria shall be referred to herein as'Organics'). Tenant shall provide landlord with a copy of any such test results. Tenant covenants, warrants and agrees that (i) Tenant shall not take or omit to take arty action with respect to its use of the Premises so as to cause or contribute to the growth of Organics in the Premises or the Building, and (ii) Tenant shall (A) keep the Premises adequately ventilated at all times, (B) repair any condition of the Premises which could cause or contribute to the growth of Organics including, without limitation any condition which causes or permits water to collect or condense within the Premises, tC) maintain indoor humidity within the Premises at a reasonable level (no higher than 60%), (D) regularly inspect all window areas or other areas where water may condense in or leak into the Premises, and (E) if and to the extent the maintenance and repair at the HVAC units serving the Premises are Tenant's responsibility, cause such HVAC units to be inspected and cleaned periodically. Tenant shall immediately notify Landlord in writing of any visible signs of the presence or growth of Organics in the Premises or in the common areas of the Building or of any water leak or excessive water condensation in the Premises or in the common areas of the Building. Furthermore, Tenant shall immediately notify Landlord in writing 0 Tenant has reasonable cause to believe that the growth of Organics has or will occur in the Premises or in any other portion of the Building. Tenant shad use its best efforts to remove immediately from the Premises arty water that (i) leaks into the Premises from inside or outside the Building, (ii) runs into the Premises from arty break or damage to any pipes. appliances or plumbing works, (iii) overflows into the Premises from arty faucet, sink or tub, or (iv) condenses in the Premises. Tenant shall promptly (x) repair any damage to the Premises caused by any such water teak, run overflow or condensation, and (z) return the Premises to the condition in which it existed immediately prior to such water leak, run overflow at condensation. Furthermore, Tenant at its sole cost and expense shall be responsible for remediating and removing all Organics from the Premises. Landlord shall not be responsible for remediafing or removing any Organics from the Premises (unless Landlord at its option e6= to remediate and remove Organics from the Premises) and Landlord shall specifically not be liable for any damage, injury or loss of any kind, to persons or property, including without limitation consequential damages, arising out of the presence of any form of Organics in the Premises or in the Building. If any water leak, run overflow or condensation in the Premises or in any other portion of the Building is caused by the action or negligence of Tenant, then at Landlord's option, if requested by Landlord in writing, Tenant shall reimburse and pay to Landlord the cost of any assessment or report obtained by Landlord with respect to the presence or growth of Organics in the Premises andlor such other portion of the Building. 5.4. Landlord's Repairs. Except as provided in Section 5.5(4), Landlord shaft maintain in good repair the Building, the common areas and facilities of the Building used by Tenant, the mechanical, plumbing and electrical systems of the Premises, the walls, floors, doors, windows and all structural elements of the Premises (excepting painting and repair or replacement of floor or wall coverings). Except as otherwise specifically provided in Section 5, Landlord shall have no duty to maintain, repair, clean or service the Premises. 5.5. ignanrs Repairs, (a) Tenant shall maintain the Premises in good repair and condition and shall make all repairs and replacements and perform all maintenance necessary to keep the Premises in such condition, except to the extent such maintenance, repairs and replacements are to be provided by Land lord pursuant to this Section 5. (b) In addition, Tenant shall promptly repair, in a good and workmanlike manner, any damage to the Premises or other part of the Building caused by any breach of this agreement to maintain the Premises, any misuse of the Premises or any part thereof, or any willful or negligent ad or omission of Tenant, or of any employee, agent or invitee of Tenant. If Tenant fails to do so, Landlord shall have the right to repair any such damage and Tenant shall pay Landlord for the cost of all such repairs, plus interest at the Interest Rate (as defined in Section 21.9). 1911373.1 4 Gross Lease 5101108 SECTION 6. ALTERATIONS Tenant may not make any changes, alterations, improvements of additions to the Premises or attach or affix any articles thereto without Landlord's prior written consent, which consent Landlord shall not unreasonably withhold. All changes, alterations, improvements or additions which may be made upon the Premises by Landlord or Tenant (except unattached trade fixtures and office furniture and equipment owned by Tenant) shall not be removed by Tenant, but shall become and remain the property of Landlord. All changes, alterations, improvements and additions to the Premises shall be done only by Landlord or contractors or mechanics approved by Landlord, and shall be at Tenant's sole expense and at such times and in such manner as Landlord may approve. If Tenant shall make any changes, alterations, improvements or additions to the Premises, Landlord may require Tenant, at the expiration of this Lease. to restore the Premises to substantially the same condition as existed at the commencement of the Term. The interest of Landlord shall not be subject to liens for improvements made by Tenant in and to the Premises. Tenant shall notify every contractor making such improvements of the provisions set forth in the preceding sentence of this paragraph. Any mechanics or materialmen's lien for which Landlord or Tenant has received a notice of intent to file or which has been fried against the Premises ar the Building arising out of work done for, or materials famished to or on behalf of Tenant, its contractors or subcontractors shall be discharged, bonded over or otherwise satisfied by Tenant within ten (10) days following the earlier of the date Tenant receives (a) notice of intent to file a lien or (b) notice that the Lien has been filed. If Tenant fails to discharge, bond over, or otherwise satisfy any such lien, Landlord may do so at Tenant's expense, and the amount expended by Landlord, including reasonable attomeys' fees, shall be paid by Tenant within ten (10) days following Tenant's receipt of a bill from Landlord. SECTION 7. DAMAGE TO PROPERTY - INJURY TO PERSONS; INSURANCE 7.1. Tenant's Indemnity _ Subject to Section 21.S hereof, Tenant sha11 and hereby does indemnify, defend and hold harmless Landlord and its agents from and against any and all claims, demands, actions, losses, damages, orders, judgments, costs and expenses (including, without limitation, reasonable attorneys' fees and costs of litigation) incurred by Landlord and/or its agents as a result of or arising from; (a) the use or occupancy of the Premises by Tenant or any subtenant of Tenant; (b) any willful or negligent ads or omissions of Tenant, arty subtenant of Tenant or Tenant's or such subtenant's agents, employees, contractors or invitees; or (c) any breach or violation by Tenant of the terms of this Lease. 7.2. Landlord's Indemnity, Subject to Section 21.5 hereof, Landlord shall and hereby does indemnify, defend and hold harmless Tenant from and against any and all claims, demands, actions, losses, damages, orders, judgments, casts and expenses (including, without limitation, reasonable attorneys fees and costs of litigation) incurred by Tenant as a result of of arising from: (a) any accident or occurrence occurring within the Building or the common areas and facilities, arising out of the negligence or intentional misconduct of Landlord, or of Landlord's agents, employees or contractors; or (b) any breach or violation by Landlord of the terms of this Lease. 7.3. h5urance. Tenart shall, throughout the Term, at its sole cost and expense, provide and keep in force, with responsible insurance companies reasonably acceptable to Landlord, insurance with respect to this Lease and the Premises in the following amounts for any one accident or occurrence: (a) commercial general liability insurance written on an occurrence basis with limits for property damage claims of not less than $100,000 and limits for personal injury or death not less than $1,000,000 per person and $1,000,000 per occurrence; and (b) casualty insurance insuring Tenant against loss or damage to its equipment and other personal property in the Premises by fire and all other casualties usually covered under an "all risk" policy of casualty insurance. To the extent Landlord also maintains any insurance in any way connected with the Premises, Landlord's insurance shall be excess coverage and Tenant's insurance shall be primary coverage. The policies described herein shall be endorsed to include Landlord and its Property Manager as additional insureds. The policies required herein shall contain an agreement by the insurer that it will not cancer the policy except after not less than ten (10) days' prior written notice to Landlord and that any lass otherwise payable under the policy shall be payable notwithstanding any ad or negligence of Landlord or Tenant that might, absent such agreement, result in a forfeiture of all or a part of the insurance payment. Tenant shall furnish the Landlord with proof of all such insurance at least annually and upon demand of the Landlord. 7.4. Waiver of Liability. Neither Landlord nor its agents shall be liable for any damage to property entrusted to employees of the Building, nor for loss of or damage to any property by theft or otherwise, not for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water or rain which may leak from any part of the Building or from the pipes, appliances or plumbing works therein or from the roof, street or subsurface, or from any other place or resulting from dampness or any other cause whatsoever, unless caused by or due to the negligence of Landlord, its agents, servants or employees. Tenant shall give prompt notice to Landlord in ease of fire or accidents in the Premises or in the Building or of defects therein or in the fixtures or equipment. Tenant hereby acknowledges that Landlord shall not be liable for any interruption to Tenant's business for any cause whatsoever, and that Tenant shall obtain business interruption insurance coverage should Tenant desire to provide coverage for such risk. SECTION S. DAMAGE OR DESTRUCTION A total destruction of the Building in which the Premises are located shall automatically terminate this Lease as ofthe date of such destruction. If the Building is damaged or destroyed by fire or other casualty fcollectivey'Casualty) and if as a result thereof Landlord elects to close and/or demolish the Building or the wing(s) or floor(s) thereof in or upon which the Premises are located, then Landlord shall notify Tenant in writing thereof and this Lease shall terminate (a) as of the date of the Casualty if Tenant has been unable to use or access the Premises as a result of such Casualty, or (b) if Tenant has been able to use and access the Premises after such Casualty, then on the ninetieth (W) day after Landlord delivers such written notice to Tenant. If the Premises are damaged by a Casualty and this Lease is not terminated as provided above, then Landlord shall notify Tenant in writing within sixty (60) days after the date of the Casualty of whether or not Landlord elects to repair the Premises. if Landlord delivers to Tenant written notice that Landlord elects not to repair the Premises (the "No Repair Notice), then either party may terminate this Lease by delivering written notice of termination to the other party not more than fifteen (15) days after Landlord's delivery to Tenant of the ND-Repair Notice. If Landlord delivers to Tenant written notice that Landlord elects to repair the Premises (the 'Repair Notice"), then such Repair Notice shall include Landlord's good faith estimate at the date by which such repairs will be substantially completed (the 'Estimated Completion Date). If the Estimated Completion Date is more than one hundred eighty (180) days after the date of the Casualty, then either party may terminate this Lease by delivering written notice of termination to the other party not more than fifteen (15) days after Landlord's delivery to Tenant of the Repair Notice. If a notice of termination is given pursuant to one of the three preceding sentences, then Ibis Lease shall terminate (a) as of the date ofthe Casualty if Tenant has been unable to use or access the Premises as a result of such Casualty, or (b) if Tenant has been able to use and access the Premises after such Casualty, then on the thirtieth (30th) day after delivery of such termination notice. If the Premises are damaged by a Casualty and this Lease is not terminated, then the damage to the Premises shall be repaired by and at the expense of Landlord, provided Landlord shall not be required to repair or replace any personal property or trade fixtures located in the Premises. Landlord shall use good faith efforts to cause such repairs to be substantially completed by the Estimated Completion Date without the payment of overtime or other premiums; provided, however, Tenant understands Landlord cannot guarantee completion by that date. Tenant acknowledges and agrees that completion of such repairs may be delayed by @ any combination action of workmen (either those employed on the project or in any industry essential to the conduct of the work) such as strikes, embargoes, or lockouts; (k) ads of government; (iii) ads of God; (iv) shortage of materials, energy, fuel, equipment, facilities or labor, or (v) by other causes that are beyond Landlord's control and Tenant agrees that completion of such repairs and the Estimated Completion Date will be extended accordingly. Until the earlier of the termination of this Lease or the completion of repairs, as the case may be, Rent shatl be abated in proportion to the part of the Premises which is unusable by Tenant in the conduct of Tenants business; provided, however, Rent shall not abate 4 the Casualty is due to the negligent ads or omissions of Tenant or Tenant's employees, agents orcontractors. SECTION 9. EMINENT DOMAIN If the Building, the Premises or a material part of either shall be taken by any authorized entity by eminent domain or by negotiated purchase under threat thereof, so that the Premises shall become totally untenantable, this Lease shall terminate as of 1911373.1 5 Gross Lease 5101!08 the earlier of (he date when title or possession thereof is acquired or taken by the condemning authority and all rights of Tenant in this Lease shall immediately cease and terminate. If a part of the Building or a portion of the Premises shall be taken such that the Premises becomes only partially untenantable, Base Rent shall be proportionately, abated. All compensation awarded for any taking (or the proceeds of negotiated sale under threat thereof) whether for the whole or a part of the Building or the Premises, shall be the property of Landlord, whether such proceeds or award is compensation for loss or damage to Landlord's or Tenant's property or their respective interests in the Premises, the Tenant hereby assigns all of its interest in any such award to Landlord. However, nothing contained herein shall be deemed to give Landlord any interest in or require Tenant to assign to Landlord any separate award expressly made to Tenant for. (a) the taking of personal property and fixtures belonging to Tenant; (b) the interruption of or damage to Tenant's business or profession; (c) the cast of relocation expenses incurred by Tenant; and (d) Tenant's unamortized cost of leasehold improvements; provided that the making of any such award to Tenant shall not reduce or diminish Landlord's award relating to such condemnation. Landlord may without any obligation or liability to Tenant stipulate with any condemning authority for a judgment of condemnation without the necessity of a formal suit or judgment of condemnation, and the date of taking under this clause shall then be deemed the date agreed to under the terms of said agreement or stipulation. SECTION 10. ASSIGNMENT AND SUBLETTING Tenant shall not, either voluntarily or by operation of law, directly or indirectly, sell, assign or transfer this Lease, in whale or in part, or sublet the Premises or any part thereof, or permit the Premises or any pad thereof to be occupied by any person, corporation, partnership, or other entity except Tenant or tenant's employees, without the prior written consent of Landlord in each instance. A transfer of stock control in Tenant, if Tenant is a corporation, or the transfer of a greater than forty-nine percent (49%) beneficial ownership interest in Tenant, if Tenant is a partnership, limited liability company or other entity, shall be deemed an act of assignment hereunder. In addition, any such subletting or assignment transaction shall be in all respects in compliance with the applicable provisions of the Medicare Anti Kick-Back Law, 42 USC 1320a-7(b)(1) and (2) and the Stark Seft Referrai Prohibition Act, 42 USC 1395nn at. seq., as the same may be modified, supplemented or replaced from time to time, and all regulations promulgated thereunder from time to time. Any sale, assignment, mortgage, transfer or subletting of this Lease or the Premises which is not in compliance with the provisions of this Section 10 shall be void- The consent by Landlord to any assignment or subletting shall not be construed as relieving Tenant from obtaining the express prior written Consent of Landlord to any further assignment of subletting or as releasing Tenant from any liability or obligation hereunder, whether or not then accrued. Should Landlord permit any assignment or subletting by Tenant and should the moneys received as a result of such assignment or subletting (when compared to the moneys still payable by Tenant to Landlord) be greater than would have been received hereunder had not Landlord permitted such assignment or subletting, then the excess shall be payable by Tenant to Landlord, it being the parties' intention that Landlord, and not Tenant, shall be the party to receive arty profit from any assignment or subletting, In the event of any assignment or subletting approved by Landlord, the assignee or sublessee shall assume all of Tenant's obligations under this Lease and shall be bound to comply with all the terms and provisions of this Lease and Tenant and such assignee or sublessee shall be jointly and severally liable for the performance of Tenant's covenants under this Lease. SECTION 11. ACCEPTANCE OF PREMISES Tenant shall not occupy or use the Premises prior to the Commencement Date as determined pursuant to the fast two sentences of Section 1 of this Lease. It Landlord is unable to deliver possession of the Premises to Tenant by the Commencement Date as determined pursuant to the first two sentences of Section t, then (a) the Commencement Date shall mean the date that the Premises are available for occupancy as set forth in a written notice from Landlord to Tenant, and (b) Tenant shall take possession of the Premises within ten (10) days after receipt of written notice from Landlord that the Premises are available for occupancy. By taking possession of the Premises, Tenant shall be deemed to have accepted the Premises in its `as-is' condition, fit for occupancy, and acknowledged that the Premises are in satisfactory condition and repair. SECTION 12. DEFAULTS 12.1. Events of Default. The occurrence of any of the following shall constitute a material default and breach of this Lease by Tenant (a) The vacating of abandonment of the Premises by Tenant prior to the expiration or earlier termination of this Lease. (b) A failure by Tenant to pay Rent at to make arty other payment required to be made by Tenant hereunder within ten (10) days after same is due and payable. (c) A failure to maintain the insurance required pursuant to Section 7 of this Lease. (d) A violation of the terms of Section 10 of this Lease. (e) A failure to provide any declaration, document or instrument required pursuant to Section 18 of this Lease within the time period set forth in such Section. (f) The failure by Tenant to vacate and surrender the Premises by the date required pursuant to Section 16.1(b) or Section 16.2 hereof or by the date required pursuant to any other termination option or agreement set forth herein or in any amendment of other agreement. (g) A failure by Tenant to observe or perform any other obligation under this Lease to be observed or performed by Tenant, other than payment of any Rent, within thirty (30) days after written notice by Landlord to Tenant specifying wherein Tenant has failed to perform such obligation; provided, however, that if the nature of Tenant's obligation is such that more than thirty (30) days are required for its performance, then Tenant shalt not be deemed to be in default if it shall commence such performance within such thirty (30) day period and thereafter diligently prosecute the same to completion by not later than ninety (90) days after Tenant receives Landlord's written notice. (h) The making by Tenant or any guarantor of this Lease of any general assignment for the benefit of creditors; the filing by or against Tenant or such guarantor of a petition to have Tenant or such guarantor adjudged a bankrupt or the filing of a petition for reorganization or arrangement under any law relating to bankruptcy (unress, in the case of a petition filed against Tenant or such guarantor, the same is dismissed within sbny (60) days); the appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located at the Premises or of Tenants interest in this Lease, where possession is not restored to Tenant within thirty (30) days; or the attachment, execution or other judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure is not discharged within thirty (30) days, (i) The failure by Tenant or any affiliate or subsidiary of Tenant to observe or perform any term, covenant or condition under any other lease or agreement between (i) Tenant and such affiliate or subsidiary of Tenant, and (ii) Landlord or any affiliate or subsidiary of Landlord, and such failure shall have continued beyond any cure period for such failure set forth in such other lease or agreement. 12.2. Landlord's Default. Landlord shall not be deemed to be in default in the performance of any obligation required to be performed by it hereunder unless and untif it has failed to perform such obligation within thirty (30) days after written notice by 1911373.1 6 - Gross Lease S101f08 Tenant to Landlord specifying wherein Landlord has failed to perform such obligation; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for its performance, then Landlord shall not be deemed to be in default if it shall commence such performance within such thirty (30) day period and thereafter diligently prosecute the same to completion. SECTION 13. REMEDIES 13.1. Remedies. In the event an event of default occurs on the part of Tenant as set forth in Section 12, Landlord may exercise one or more of the following described remedies, in addition to all other rights and remedies available at law or in equity, whether or not stated in this Lease., (a) Upon the occurrence of an event of default an Tenants part as set forth in Section 12, Landlord may continue this Lease in full force and effect and shall have the right to tolled Rent when due, and Landlord may re-enter the Premises with or without legal process and relet them, or any part of them, to third parties for Tenant's account and Tenant hereby expressly waives any and all claims for damages by reason of such re-entry, as well as any and all claims for damages by reason of any distress warrants or proceedings by way of sequestration which Landlord may employ to recover said rents. Tenant shall be liable immediately to Landlord for all costs Landlord incurs in retelling the Premises, including, without limitation, brokers' commissions, expenses of remodeling the Premises required by the reletting, reasonable attorneys' fees and costs and like costs. Reletting can be for a period shorter or longer than the remaining Term of this Lease, and in no event shall Landlord be under any obligation to relet the Premises except as otherwise expressly required by law. On the dates such rent is due, Tenant shall pay to Landlord a sum equal to the Rent due under this Lease, less the rent Landlord receives from any retailing. No act by Landlord allowed by this paragraph shall terminate this Lease unless Landlord notifies Tenant in writing that Landlord elects to terminate the Lease. (b) At any time after the occurrence of an event of default by Tenant as described in Section 12, Landlord may terminate this Lease. Upon termination, Landlord shall have the right to collect an amount equal to the sum of the following: all expenses incurred by Landlord in recovering possession of the Premises, including reasonable attorneys' fees and costs; all reasonable costs and charges for the care of the Premises while vacant; all renovation costs incurred in connection with the. preparation of the Premises for a new tenant; all past due Rent which is unpaid. plus interest thereon at the Interest Rate (as defined in Section 21.5); the unamortized portion of any and all tenant improvemerd, finish and/or renovation allowances provided by Landlord in connection with this Lease or any amendment or extension of this Lease (such amortization to be determined on a straight-line basis); and an amount by which the entire Rent for the remainder of the Term exceeds the loss of Rent that Tenant proves could have been reasonably avoided. (e) No termination of this Lease, or taking at recovering possession of the Premises with or without termination of this Lease, shall deprive Landlord of any remedies or actions against Tenant for Rent or for damages due or to became due for the breach of any covenant or condition in this Lease, nor shall the bringing of any such action for Rent; or breach of any covenant or condition, or the resort to any other remedy be herein construed as a waiver of the right to terminate or to obtain possession of the Premises as otherwise provided herein. No receipt of money by Landlord from Tenant after default or termination of this Lease shall: (i) reinstate, continue, or extend the Tenn or affect any notice given to Tenant, (i] operate as a waiver of the right of Landlord to enforce the payment of Rent then due or to became due, or (iii) operate as a waiver of the right of Landlord to terminate the Lease, recover possession of the Premises or exercise any other remedy. (d) In the event of an 'Unauthorized Holdover' (as defined in Section 16.11), then in addition W all other remedies available herein, all taw or in equity, at Landlord's election, Tenant shall pay to Landlord any and all damages, losses, claims, demands, judgments, costs and expenses (including, without limitation, reasonably attorneys' fees and costs of litigation) incurred or suffered by Landlord as a direct or indirect result of or arising from Tenant's failure to timely vacate and surrender the Premises, including without limitation, any lost rent or profit resulting from any delay in Landlord's ability to deliver possession of the Premises to another tenant 13.2. Additional R medies. Should any of these remedies, or any portion thereof, not be permitted by the laws of the state in which the Building is located, then such remedy or portion thereof shall be considered deleted and unenforceable, and the remaining remedies or portions thereof shall be and remain in full force and effect. Landlord may avail itself of these as well as any other remedies or damages allowed by law. All rights, options and remedies of Landlord provided herein or elsewhere by law or in equity shall be deemed cumulative and not exclusive of one another. In the event Landlord employs the services of an attorney to enforce any of its rights under this Lease or to collect any sums due to $ under this Lease or to remedy the breach of any covenant in this Lease on the part of Tenant to be kept or performed, Tenant shall pay to Landlord such reasonable fees and costs as shall be charged by Landlord's attorney for such services. SECTION 14. RULES AND REGULATIONS Tenant shall observe faithfully and comply strictly with the rules and regulations set forth on Addendum "A' attached to this Lease and made a part hereof, and such other rtes and regulations as Landlord may from time to time reasonably adopt for the safety, care and cleanliness of the Building or the preservation of good order therein (the rules and regulations set forth on Addendum 'A' attached hereto, together with any such other rules and regulations shall be referred to herein as the "Rules and Regulations'). Landlord shall not be liable to Tenant for violation of any such Rules and Regulations by any other tenant in the Building, or for the breach of any covenant or condition in any lease by any other tenant in the Building. By the signing of this Lease, Tenant acknowledges that Tenant has read the Rules and Regulations set forth on Addendum W attached hereto and has agreed to comply with the Rules and Regulations. SECTION 15. RIGHT OF ACCESS Upon reasonable notice to Tenant, Landlord and its employees, contractors and agents shall have free access to the Premises during all reasonable hours to inspect the Premises, to make reasonable repairs as required hereunder (provided, however, Landlord shall have no obligation as a result of such examination to make any repairs other than as expressly set forth herein), to remediate and remove Organics from the Premises (provided, however, Landlord shall have no obligation to remediate andlor remove Organics), to maintain and repair any pipes, ducts, conduits and the like in and through the Premises (whether the same service the Premises or other portions of the Building) and to exhibit the Promises to prospective purchasers, lenders or tenants. Furthermore, upon reasonable notice to Tenant. Landlord and its employees, contractors and agents shall have free access to the Premises during all reasonable hours to construct and install any and all supports, improvements, pipes, duds, conduits, wires and mechanical equipment serving other portions of the Building, in, through, under or above the Premises that Landlord deems desirable therefor, without the same constituting an actual or constructive eviction of Tenant; provided, however, Landlord shall use reasonable efforts to minimize the disruption to Tenant's business. Furthermore, Tenant acknowledges that Landlord may from time to time, construct improvements on, in or about other portions of the Building or in the vicinity of the Building and Tenant agrees that any noise resulting from such construction activities shall not constitute an actual or constructive eviction of Tenant or be deemed to violate any covenant of quiet enjoyment set forth in this Lease. If Landlord determines that as a result of any disruption caused by any construction described in this paragraph (excluding construction of renovations or tenant finishes to the Premises for the benefit of Tenant), Tenant is unable to use or occupy any portion of the Premises for the conduct of Tenant's business, then Landlord shall abate Rent for such period as reasonably determined by Landlord in proportion to the part of the Premises which is unusable by Tenant in the conduit of Tenant's business as reasonably determined by Landlord. Landlord and its agents shall have access to the Premises at any time without prior notice in the event of an emergency. 1911373.1 7 Gross Lease 5101/08 SECTION 16. END OF TERM,, HOLDOVER AND LEASE TERM EXTENSIONS 16.1. Surrender of Premises, and Urauthorized Holdover (a) At the termination or expiration of the Tenn of this Lease. Tenant shall surrender the Premises to Landlord in as good condition and repair as at the Commencement Date, reasonable wear and tear and damage by ire and extended coverage perils excepted, and will leave the Premises broom-clean. If not then in default, Tenant shall have the right prior to said termination to remove any etluipmeriL furniture, trade fixtures or other personal property placed in the Premises by Tenant, provided that Tenant promptly repairs any damage to the Premises or the Building caused by such removal. Notwithstanding the foregoing, Tenant shall not have the right to remove any fixtures or equipment constructed or installed in the Premises by Landlord or Landlord's contractor or agents. All of Tenant's personal property not removed by Tenant on or before the termination or expiration of the Terns of this Lease shall be considered abandoned by Tenant and may be appropriated, stored, sold, destroyed or otherwise disposed of by Landlord without fast giving notice thereof to Tenant, without any payment to Tenant and without any obligation to account to Tenant therefor. If any low-voltage cable and/or wiring has been installed by Tenant or by Landlord at Tenant's request in the Premises or elsewhere in the Building (the 'Low-Voltage Wiring') then at Landlord's election, and at Tenant's sole cost and expense, such Low Voltage Wiring shall be removed by Tenant before the expiration or earlier termination of this Lease or removed by Landlord before or after the expiration of earlier termination of this Lease. Tenant shall reimburse landlord upon demand by Landlord for all costs incurred by Landlord in removing or staring any abandoned personal property or Low-Voltage bluing. (b) If Landlord notifies Tenant in writing that Tenant must vacate the Premises by the end of a Lease Term and Tenant holds over and remains in possession of the Premises after such Lease Term expiration date, or if Landlord or Tenant exercises any right or option to terminate this Lease or otherwise agree in writing to terminate this Lease and Tenant holds over and remains in possession of the Premises after the date by which Tenant is required to vacate and surrender the Premises, then such holding over shall operate as an extension of this Lease from month to month (such holdover shall be referred to herein as an `Unauthorized Holdover" and the tern of such Unauthorized Holdover shall be referred to herein as an "Unauthorized Holdover Tern'). Such Unauthorized Holdover Term shall be on all of the same terms and conditions as herein provided (other than the duration of the term) and Tenant shalt pay Landlord monthly Base Rent for the period of its holdover equal to 120% of the amount of the monthly Base Rent installment due and payable hereunder for the last full month of the Temp before such holdover. Such Unauthorized Holdover Term may be terminated by Landlord or Tenant delivering not less than thirty (30) days' prior written notice of termination to the other party. In the event of the delivery of any such notice of termination, this Lease shall terminate upon the later of the following (the "Unauthorized Holdover Termination Date): (i) the date of termination set forth in such notice, (ii) the thirtieth (3(th) day after the delivery of such notice to the non-terminating party, or (iii) such other date as may be agreed upon in writing by Landlord and Tenant. In the event of any such termination of this Lease, Tenant shall vacate and surrender the Premises to Landlord in accordance with the provisions of Section 16.1(a) of this Lease on or before the Unauthorized Holdover Termination Date. Notwithstanding anything-to the contrary set forth herein, (x) no exercise of the foregoing termination option shall extend the term of this Lease and (y) if following the Unauthorized Holdover Termination Date, Tenant has not vacated and surrendered the Premises in accordance with Section 16.1(a) of this Lease, then this Lease shall not terminate, but instead shall continue as a new Unauthorized Holdover and the monthly Base Rent payable for such new Unauthorized Holdover shall increase to 120% of the amount of the monthly Base Rem due and payable hereunder for the immediately preceding Unauthorized Holdover Term. Notwithstanding anything to the contrary set forth herein, the Base Rent payable for any Unauthorized Holdover Term shall not exceed the amount permitted under the 'Stark law` (as defined in Section 21.13(a) hereof) as deternined by Landlord. If any Unauthorized Holdover violates the Stark Law, and as a result of such violation Landlord or any affiliate of Landlord is denied any payment for healthcare or related services under Medicare or any other "Federal Healthcare Program' (as defined in Section 21.13(c) hereof), or n Landlord or any affiliate of Landlord voluntarily or involuntarily refunds arty payment for healthcare or related services under Medicare or any other Federal Healthcare Program, then in any such event. at Landlord's election, Tenant shau reimburse arid pay to Landlord or such affiliate the amount of such denied or refunded payment. 16.2. Automat' a Year Extension Terms. (a) Landlord and Tenant acknowledge and agree that if the parties mutually desire to renew or extend the Term of this Lease- then the preferred method for accomplishing such renewal or extension shall be by the execution of a new lease of the Premises. Nothing set forth herein, however, shall obligate either Landlord or Tenant to execute a new lease. If the parties do not enter into a new lease of the Premises, Tenant remains in possession of the Premises after the expiration of the Tern of this Lease and such continued possession does not constitute an Unauthorized Holdover, then in order to prevent such continued possession from violating the Stark Law, the parties agree that this Lease shall be extended automatically for an additional term of one (1) year (each such one (1) year term, a 'One Year Extension Term'). Except as otherwise expressly provided in Section 16-1(b) above, Tenant's failure to vacate and surrender the Premises in accordance with Section 16.1(a) above upon the expiration of the Term of this Lease shall constitute Tenants incontestable and irrevocable consent and agreement to extend the Term of this Lease by such One Year Extension Terns upon such terms and conditions as provided in this Section 16.2. Such One Year Extension Tern shall be on the same terms and conditions as contained in this Lease, except as provided otherwise in this Section 16.2. Annual Base Rent for each One Year Extension Term (the 'New Base Rentl, shall be determined as set forth below. (1) Landlord shall endeavor to notify Tenant in writing of the New Base Rent payable for the Premises during an One Year Extension Term (a 'New Base Rent Notice') not less than 45 days prior to the commencement of such One Year Extension Tern; provided, however, failure to deliver a New Base Rent Notice to Tenant 45 or more days prior to the commencement of such One Year Extension Tema shall not constitute a breach or violation of the terms of this Lease by Landlord. Annual Base Rent for an One Year Extension Term as set font in a New Base Rent Notice shall be the amount equal to the fair market rental value of the Premises, on an annual basis, as determined by Landlord. Landlord and Tenant agree that delivery of a New Base Rent Notice before or after the exercise of any right or option to terminate this Lease shall not be deemed to void, cancel or otherwise affect the exercise of such right or option to terminate unless Landlord and Tenant agree in writing to cancel the exercise of such right or option to terminate. (2) If landlord delivers the New Base Rent Notice to Tenant 45 or more days prior to the commencement of such One Year Extension Term, then the annual New Base Rent for such One Year Extension Term shall be the annual Base Rent for the Premises as set forth in such New Base Rent Notice. If Landlord fails to deliver the New Base Rent Notice to Tenant 45 or more days prior to the commencement of such One Year Extension Tern or if Landlord does not deliver a New Base Rem Notice, then the annual New Base Rent rate for such One Year Extension Term shall be 115% of the amount of the annual Base Rent rate in effect immediately prior to the commencement of such One Year Extension Term. Beginning on the first day of such One Year Extension Term and thereafter for the remainder of such One Year Extension Term, Tenant shall pay the New Base Rent in equal monthly installments on the first day of each month of such One Year Extension Term. The parties agree that delivery of a New Base Rent Notice to Tenant less than 45 days prior to the commencement of an One Year Extension Tenn shall not effect the calculation or determination of the New Base Rent payable for such One Year Edenton Term. Subject to the rights to terminate this Lease pursuant to this Section 16.2. the determination pursuant to this paragraph of the New Base Rent payable for an One Year Extension Term shall be incontestably binding on Tenant, shall not require the execution of any additional agreements by the parties, and shall be effective regardless of any objection to or rejedion of the One Year Extension Term or the New Base Rem amount by Tenant. (b) Notwithstanding anything to the contrary set forth in this Lease, (1) Landlord may terminate this Lease effective at any time during an One Year Extension Term by delivering written notice of termination to Tenant at any time, and (2) Tenant may terminate this Lease effective at any time during an One Year Extension Term by delivering written notice of termination to Landlord no later than the thirtieth (30th) day after the commencement of such One Year Extension Term. Such notices may be delivered prior to the commencement of any such One Year Extension Term. In the event of the delivery of any such notice of termination, this Lease shall terminate upon the later of the following (the "One Year Extension Termination Date"): (i) the date of termination set forth in such notice, (it) the thirtieth (301h) day after the delivery of such notice to the non-terminating party, or (iii) such other date as may be agreed upon in writing by Landlord and Tenant. In the event of any such termination of this Lease, Tenant shall vacate and surrender the Premises to Landlord in accordance with the provisions of Section 16.1(a) of this Lease on or before the One Year Extension Termination Date. Notwithstanding anything to the contrary set forth herein, (x) no exercise of the foregoing termination option shall extend the term of this Lease and (y) if following the One Year Extension Termination Date, 1911373.1 8 Gross Lease 5101!08 Tenant has not vacated and surrendered the Premises in accordance with Section 15.1(a) of this Lease, then this Lease shall not terminate, but instead shall continue as an Unauthorized Holdover subject to Section 161(b). Upon termination as provided above, both parties shall be released of all obligations and liabilities arising under this Lease following the effective date of termination; provided that the parties shall remain liable for all obligations under this Lease that have accrued prior to such termination or are otherwise intended to survive termination of this lease. SECTION 17. TRANSFER OF LANDLORD'S INTEREST In the event of any transfer or transfers of Landlord's interest in the Premises or in the real property of which the Premises are a part, the transferor shall be automatically relieved of any and all obligations and Habifities on the part of Landlord accruing from and after the date of such transfer. SECTION 18. ESTOPPEL CERTIFICATE, ATTORNMENT, AND NON-DISTURBANCE 18.1. Este el Certificate. Within ten (10) days following receipt of Landlord's written request, Tenant shall deliver, executed in recordable form, a declaration to any person designated by Landlord: (a) ratifying this Lease; (b) stating the commencement and termination dates of the Lease; and (c) certifying (i) that this Lease is in full force and effect and has not been assigned, modified, supplemented or amended (except by such writings as shall be stated); (i) that all conditions under this Lease to be performed by Landlord have been satisfied (stating exceptions, if any); (iii) that no defenses, credits or offsets against the enforcement of this Lease by Landlord exist (or stating those claimed); (fv) the sum of advance Rent, if any, paid by Tenant; (v) the date to which Rent has been paid; (vi) the amount of the Security Deposit, if any, held by Landlord; and (vii) such other information as Landlord reasonably requires. Persons receiving such statements of Tenant shall be entitled to rely upon them. 18.2. Sale of Lartdlord's Interest, In the event of the assignment of this Lease pursuant to any sale or assignment of Landlord's interest in the Premises or the Building, then upon Tenant's receipt of written notice of such sale or assignment, Tenant shall attom to and recognize such purchaser or assignee as Tenant's landlord under this Lease, and shall promptly execute and deliver any instrument that may be necessary to evidence such attomment Upon the effective date of any such sale or assignment, the assigning Landlord shalt be released from all covenants and conditions as Landlord hereunder. Except as may be provided otherwise in Section 1113 or Section 18.4, and without further agreement between the parties, the purchaser or assignee shall be deemed to have assumed all covenants and conditions of Landlord hereunder and this Lease shall continue in full force and effect as a direct lease between such purchaser or assignee, as Landlord, and Tenant, subject to all of the terms, covenants and conditions of this Lease, regardless of whether Tenant executes and delivers the instrument requested by such successor landlord. No consent of Tenant shag be required in the event of any such safe or assignment which is made subject to this Lease, or to any sale or conveyance of the Building or the Premises pursuant to which Landlord leases the Building or Premises back from such purchaser or other transferee, in which case this Lease shall remain in full force and effect as a sublease between Landlord, as sublessor and Tenant, as sublessee. 1B.3. Subordination. This Lease shall be subject to and subordinate and inferior at all times to the lien of any mortgage, to any deed of trust or other method of financing or refinancing now or hereafter existing against all or a part of Landlord's interest in the Premises, the Building or the real properly upon which the Building is located, and to any existing or future lease by which Landlord as tenant leases the Premises, the Building and/or the ground upon which the Building is located (in which latter instance this Lease is a sublease), and fo all renewals, modifications, replacements, consolidations and extensions of any of the foregoing. Tenant shall execute and deliver all documents requested by any mortgagee, deed of trust or security holder or lessor to effect such subordination. If Tenant fails to execute and deliver any such document requested by a mortgagee, deed of trust or security holder or lessor to effect such subordination, Landlord is hereby authorized to execute such documents and take such other reasonable steps as are necessary to effect such subordination on behalf of Tenant as Tenant's duly authorized irrevocable agent and attomey-in-fact, it being agreed that such power is one coupled with an interest. Tenant's failure to execute and deliver such documents or instruments provided for in this Section 18 within fourteen (14) days after the receipt by Tenant of a written request shall constitute a default under this Lease. In the event of any foreclosure, sale in lieu of foreclosure or other safe or transfer of the Premises, the Building or the real property upon which the Building is located pursuant to any such mortgage, deed of trust or other security agreement or in the event of the termination or expiration of the lease, if any, by which Landlord as tenant leases the Premises, the Building and/or the ground upon which the Building is located, the purchaser or the lessor under such lease, as the case may be, at its option, may take over and assume the rights and interests of Landlord under this Lease (but such purchaser or lessor shall have no obligation to do so), and in such event, Tenant shall attom to such purchaser or lessor pursuant to the provisions of this Lease; provided that such purchaser or lessor shall not @ be liable for any previous act or omission of Landlord under this Lease, (ii) be subject to any offset, not expressly provided in this Lease, which theretofore accrued to Tenant against Landlord, or (iii) be bound by any previous prepayment of more than one (1) month's Rent. 18.4. Subordination to Prime Lease. (a) The Building or the Premises are leased to Landlord pursuant to that certain N/A, dated as of N/A (said lease as amended or renewed and any replacement tease effective upon the expiration of said lease shall hereinafter be referred to as the "Prime Lease') between NIA, as lessodlandford (said lessortlandlord, its successors and assigns shall be referred to herein as the `Prime Lessor'), and Landlord, as lesseeftenant Unless renewed or extended, the current term of the Prime Lease will exptre an NIA. Accordingly, this Lease is a sublease and is subject and subordinate to the Prime Lease and to all of the matters to which the Prime Lease is or shall be subordinate. Notwithstanding anything to contrary provided elsewhere in this Lease, if the Prime Lease expires or otherwise terminates prior to the date of expiration of the term at this Lease (including without limitation, any extension of the tent pursuant to Section 16 or pursuant to any amendment to this Lease) and such Prime Lease Is not renewed or extended, then the term of this Lease shall expire and terminate on the date of expiration or termination of the Prime Lease unless Prime Lessor assumes this Lease as provided in Section 18.3 above. Tenant shall indemnify and hold Landlord harmless from and against any and all claims, demands, actions, losses, damages, orders, judgments, costs and expenses (including, without limitation, holdover rent and damages payable under the Prime Lease, reasonable attorneys fees and costs of litigation) incurred by Landlord as a result of or arising from Tenant's failure to vacate and surrender the Premises in accordance with the terms of Section 16.1(a) of this Lease on or before the date of expiration or termination of the Prime Lease. Tenant acknowledges that Landlord shall have no obligation to renew or extend the tern of the Prime Lease or enter into a new lease with Prime Lessor, provided, however, Landlord shall notify Tenant of any renewal or extension of the term of the Prime Lease or of the execution of any new lease with Prime Lessor for ft Building or Premises. (b) Insofar as Prime Lessor is or may be obligated to fumish any services to the Premises, to repair or rebuild the Premises or the Building, to perform any other act whatsoever with respect to the Premises or the Building or to perform any obligation or satisfy any condition of the Prime Lessor under the Prime Lease, Tenant expressly acknowledges and agrees that notwithstanding anything to the contrary provided in this Lease, Landlord does not undertake the performance or observance of such obligations. Furthermore, Tenant expressly acknowledges and agrees that notwithstanding anything to the contrary provided in this tease, if Landlord does not possess the requisite right power or authority under the Prime Lease to provide or perform any service, duty or obligation required by the terms of this Lease, then landlord shall have no obligation under this Lease to provide or perform such service, duty or obligation. Landlord, however, agrees to use commercially reasonable efforts to obtain Prime Lessor's performance of Prime Lessors obligations under the Prime Lease for Tenant's benefit, but without obligating itself to institute legal action or incur any out of pocket expense. If after receipt of written request from Tenant, Landlord fails or refuses to take commercially reasonable actions for the enforcement of Landlord's rights against Prime Lessor with respect to the Premises, Tenant shall have the right to take such action in Tenant's own name. Tenant shall be subrogated to such rights to the extent that the same shall apply to the Premises- 1911373.1 9 'Gross Lease 5101108 (c) This Section 18.4 shall not apply if in Section 18.4(x) above, the name Of the Prime Lessor is not inserted or either 'None' or 'NIA' is inserted for the name of the Prime Lessor. SECTION 19. NOTICES (a) Any notice required or permitted to be given hereunder shall be in writing and may be given by. (i) hand delivery and shall be deemed given, delivered and received on the date of delivery; (ii) registered or certified mail and shall be deemed given, delivered and received on the third day following the data of mailing; or (ii} overnight delivery and shall be deemed given, delivered and received on the following day. (b) All natices to Tenant shall be addressed to Tenant at the Building of which the Premises are a part and to Landlord as follows (or to any other address that Landlord shall designate in writing); Denton Regional Medical Cgnter With a copy to: And to; 3535S.1-35 fa Demon. Texas 76210 HCA Inc. Lincoln Harris CSG Attention: Administration One Park Plaza 3537 S. 1-35 E,. Suite 205 Nashville, TN 37203 OQnlan, Texas 76210 Attention: Vice President, Real Estate Attention: Proaerty Manager (c) In the event a party hereto delivers written notice by a method not authorized pursuant to Section 19(a) above (e.g. fax or email)(a 'Nonconforming Notice), (1) such Nonconforming Notice shall be deemed to be duly given, delivered and received if and only if the recipient of such Nonconforming Notice acknowledges its receipt and acceptance of such Nonconforming Notice in writing by a method authorized in Section 19(a) or by the same method as such Nonconforming Notice was delivered to such recipient, and (it) the dale such Nonconforming Notice shall be deemed to have been given, delivered and received shall be the date of acceptance of such Nonconforming Notice by the recipient thereof set forth in its written acknowledgment of receipt and acceptance. A Nonconforming Notice shall not be deemed given, delivered, received or accepted unless the recipient thereof shall have acknowledged its receipt and acceptance of such Nonconforming Notice in writing as provided above. Neither Landlord nor Tenant shall have any obligation to accept a Nonoonforming Notice. SECTION 20. TERMINATION AS A RESULT OF DEATH OR 01SABILITY I 20.1. Right to Terminate. Provided that Tenant is a solo practitioner or a professional corporation with one shareholder, and provided that Tenant, at the time of such practitioner's or shareholder's death or "Permanent Disability' (as hereinafter defined), is not in default under any term or condition of this Lease, then subject to the terms of this Section, Tenant or the legal representative of his/her estate shall have the right to terminate this Lease by giving Landlord not less than sixty (60) days prior written notice of termination, accompanied by satisfactory documentation of death or Permanent Disability. Within thirty (30) days after Landlord's receipt of such notice of termination, Landlord shall notify Tenant or the legal representative of his/her estate in writing of the amount of the cancellation fee (the "Cancellation Fee°) that shall be required as consideration for the termination of this Lease. The Cancellation Fee shad be the sum of (A) the amount determined by Landlord in its reasonable judgment to be the amount that is commercially reasonable under the circumstances existing at the time of exercise of this option to terminate, plus (B) the unamortized portion of any tenant improvements, finish or renovation allowance provided by Landlord in connection with this Lease remaining as of the effective date of termination (said amortization to be calculated on a straight-line basis over the entire Term). Payment of the Cancellation Fee, if any, shall be a condition precedent to the termination of this Lease under this Section. If such notice of termination shall be duty given, than this Lease shall terminate upon the later of (i) the date of termination set forth in such notice, (ii) the sixtieth (60th) day after the date of delivery of such notice of termination, (iii) the date Tenant or the legal representative of Nsiher estate pays the Cancellation Fee, or (iv) the date Tenant vacates and surrenders the Premises in accordance with Section 15.1(a) of this Lease. Tenant or the legal representative of his/her estate shall vacate and surrender the Premises to Landlord in accordance with the provisions of Section 16.1(a) of this Lease by the later of the date set forth in clause or (ii) above. 'Permanent Disability' shall mean that such practitioner or shareholder is medically determined to be permanently unable to practice medicine as a result of a permanent physical disability. 20.2. Ca tions Partne hi and Limited Liability Companies. If Tenant consists of two or more individual persons or entities and each such entity is wholly Owned by an individual person or if Tenant is a partnership, limited liability company or corporation with two or more partners, members or shareholders who are each individual persons, Landlord agrees to release from liability under this Lease any deceased or Permanently Disabled person or partner (or any entity that is wholly owned by a deceased or Permanently Disabled person), and Landlord agrees 10 release from liability tinder any guaranty of this Lease any deceased or Permanently Disabled member or shareholder who has guaranteed this Lease; provided that (a) the remaining person(s) who constitute Tenant, the remaining partners and the remaining shareholder(s) or member(s) guarantying this Lease, as the case may be, assume all liabilities and obligations from which such person has been released, (b) Tenant is not in default under the terms of this Lease, and (c) no event has occurred which with the giving of notice and/or the passage of time would constitute a default by Tenant under this Lease. Upon the occurrence Of any such death or Permanent Disability, Tenant may give Landlord written notice, which shall include satisfactory evidence of any Permanent Disability, and such release shall be effective upon execution of appropriate release and assumption agreements by the parties. SECTION 21. MISCELLANEOUS PROVISIONS 21.1. Attorne+ys' Fees. In the event that suit is brought by either party against the other for a breach or default under the terms of this Lease, the prevailing party shall be entitled to reasenabte attomeys' fees, which sum shall be fixed by the court 212. Time of Essence. Time is of the essence with respect to the performance of every provision of this Lease. 21.3. Pleadings: Certain Definitions. The Section and paragraph captions contained in this Lease are for convenience only and shall not be considered in the construction or interpretation of any provision hereof. 21.4, Inco oration of P'o Agreements, Amendments. This Lease, the Addenda and the Exhibits attached hereto and incorporated herein contain all of the agreements of the parties hereto with respect to any matter covered or mentioned in this Lease, and no prior agreement or understanding pertaining to arty such matter shall be effective for any purpose. No provision of this Lease may be amended or added to except by an agreement in writing signed by the parties hereto or their respective successors in interest. 21.5. Waivers of Subronation and Claims. Landlord and Tenant hereby mutually waive any and all claims and rights of recovery against one another based upon the negligence of either Landtord or Tenant or their agents or employees for real or personal property loss or damage occurring to the Premises or to the Building or any part thereof or any personal property located therein from perils which are able to be insured against in standard fire and extended coverage, vandalism and malicious mischief and sprinkler leakage insurance contracts (commonly referred to as "Ail Risk"), whether or not such insurance is actually carried. if either party's insurance policies do not permit this waiver of subrogation, then such party wilt obtain such a waiver from its insurer at its sole expense. Furthermore, notwithstanding anything to the contrary set forth herein, Tenant, as a material part of the consideration to Landlord, hereby assumes all risk of damage to property or injury to persons in or on the Premises from any cause other than Landlord's gross negligence or intentional misconduct, and Tenant hereby waives all claims in respect thereof against Landlord. 1911373.1 10 Gross Lease 510110a 21.5. Waiver. No waiver by Landlord or Tenant of any breach or default of any term, agreement, covenant or condition of this Lease shall be deemed to be a waiver of any other term, agreement, covenant of condition hereof or of any subsequent breach by Landlord or Tenant of the some or any other term, agreement, covenant or condition. Landlord's consent to or approval Of any act by Tenant requiring Landlord's consent or approval shall not be deemed to render unnecessary the obtaining of Landlord's consent to or approval of any subsequent act of Tenant, whether or not similar to the ad so consented to or approved. No act or thing done by Landlord or Landlord's agents during the Term of this Lease shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept such a surrender shall be valid unless in writing and signed by Landlord.. The subsequent acceptance of Rent shall not be deemed a waiver of any preceding breach by Tenant of any agreement, covenant or obligation of Tenant or any other term or condition of this Lease. No delay in billing or any failure to bill Tenant for any Rent, nor any inaccurate billing of Rent shall constitute a waiver by Landlord of its right to coiled and to enforce Tenant's obligation to pay the full amount of Rent due and payable under this Lease, as the same may be adjusted or increased from lime to time. 21.7. Accord and Satisfaction. No payment by Tenant or receipt by Landlord Of an amount less than is due hereunder shall be deemed to be other than payment towards or on account of the earliest portion of the amount then due by Tenant, nor shall any endorsement or statement on any check or payment (or in any letter accompanying any check or payment) be deemed an accord and satisfaction (Cr payment in full) and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such amount or pursue any other remedy provided herein. 21.8. Quiet Eniovment. Subject to the terms, covenants, conditions and limitations set forth in this Lease. Tenant shall have quiet enjoyinent and possession of the Premises free from eviction or interference by Landlord so long as Tenant pays as and when due the Rent and other charges provided herein and otherwise fully and punctually performs and complies with all the terms, covenants, conditions and limitations set forth in this Lease. 21.9. Late P~ents. If any monthly installment of Base Rent or any payment of Additional Rent is not received by Landlord within ten (10) days after such installment or payment is due and payable (the `Late Payment Date'), then Tenant shall, upon demand, at Landlord's election, pay Landlord a late charge of five percent (5%) of the amount of such installment or payment. In addition, if any such past due instalknert of Base Rent or payment of Additional Rent is not received by Landlord within the thirty (30) day period following the Late Payment Date or within any subsequent thirty (30) day period, such past due installment or payment shall, upon demand, at Landlord's election. be subject to an additional late charge in the same amount for each such thirty (30) day period until paid. Such late charge is to defray the administrative Costs and inconvenience and other expenses which Landlord will incur on account of such delinquency. If any amount payable to Landlord under this Lease are not paid in full an or before the due date thereof, then Tenant shall, upon demand, at Landlord's election pay interest on the unpaid balance at the lesser of the following rates (the `interest Ratak (a) the prime rate of interest as published by The Wag Street diurnal from time to time, plus four percent (4%) per annum, with each change in such prime rate being effective on the date such change is published, or (b) the highest rate permitted by applicable law. 21.10. 131ndino effect. This Lease shall be binding upon, and inure to the benefit of the parties hereto, their heirs, successors, assigns, executors and administrators. However, nothing in Ihis Section shall be deemed to amend the provisions of Section 10 on assignment and subletting. If Tenant comprises more than one person or entity, then all such persons and entities shall be jointly and severally liable for the full and prompt performance of all obligalions, indemnities and agreements to be performed or observed by Tenant under and pursuant to this Lease, including but not limited to the payment of Rent and any and all other sums required to be paid by Tenant hereunder when due. This Lease may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. 21.11. Charges and Fees. If Tenant requests from Landlord a 'Requested Approval' (as defined below) and Landlord is willing to provide such Requested Approval, then if required by Landlord in its discretion. Tenant shall, at Landlord's option, either (Al pay to Landlord the fee set by Landlord for processing, negotiating and providing such Requested Approval, or (8) reimburse to landlord the fees and costs paid by Landlord to its attorneys for the review, negotiation and preparation andlor modKuation of the Requested Approval and any additional documents or agreements Landlord may require in connection with such Requested Approval. If requested by Tenant, Landlord shall notify Tenant of the amount of the fee, if any, set by Landlord for processing, negotiating and providing such Requested Approval. Tenant shall pay such fee set by Landlord or such attomeys' fees and Costs, as the case may be, within thirty (30) days after the submission to Tenant of an invoice for the same; provided, however, Landlord may in its discretion, require that any fee set by Landlord be paid prior to the granting of such Requested Approval. As used in this Section a "Requested Approval' shall mean (a) any consent, approval or waiver requested by Tenant with respect to (I) any permitted or prohibited use of the Premises, (ii) alterations and improvements to the Premises, (iii) any subletting or assignment, or (iv) any other change in the terms, conditions or provisions of this Lease or any other matter under this Lease, and (b) any estoppel certificate, lien waiver or other certificate or agreement requested by Tenant, with such modifications to such _ consent approval, waiver, certificate of other agreement as are required by Landlord. If Tenant is required pursuant to the terms of this Lease to provide any certificate, statement or other information and Tenant fails to provide such certificate, statement or other information within the time period required under this Lease, then in addition to arty other rights or remedies that Landlord may have under this Lease with respect to such failure, then if required by Landlord in its discretion, Tenant shall pay to Landlord an administrative processing fee in the amount of $100 (subject to adjustment from time to time by Landlord in its reasonable discretion and after delivery of written notice of such adjustment to Tenant) for each notice subsequent to the first notice sent to Tenant requesting such Certificate, statement or other information, which fee shall be paid to landlord within ten (10) days after invoiced to Tenant. If a specific time period is not provided, then the time period for delivering a certificate, statement and other information that is to be provided on request or demand shall be ten (10) days after request or demand. 21.12. Governing Law. This Lease shall be governed by the laws of the state where the Building is located. 21.13. Regulatory Matters. (a) Landlord and Tenant enter into this Lease with the intent of conducting their relationship and implementing the agreements contained herein in full compliance with applicable federal, state and local law, including without limitation, the Medicare/Medicaid Anti-Kickback statute and regulations, as amended (the "Anti-Kickback Law"), and Section 1877 of the Social Security Act, as amended and the regulations promulgated thereunder (the 'Stark Law). Notwithstanding any unanticipated effect of any of the provisions Of this Lease, neither party will intentionally conduct itself under the terms of this Lease in a manner that would constitute a violation of the Anti-Kickback Law or the Stark Law. Without limiting the generality of the foregoing, Landlord and Tenant expressly agree that nothing contained in this Lease shall require either party to refer any patients to the other, or to any affiliate or subsidiary of the other. (b) If arty legislation, regulation or government policy is passed or adopted, the effect of which would cause either party to be in violation of such laws due to the existence of any provision of this Lease, then Landlord and Tenant agree to negotiate in good faith for a period of ninety (90) days to modify the terms of this Lease to comply with applicable law. Should the parties hereto fail to agree upon modified terms to this Lease within this time, either Landlord or Tenant may immediate} terminate this Agreement by giving written notice to the other party. (C) Tenant represents and warrants to Landlord that Tenant (i) is not currently excluded, debarred or otherwise ineligible to participate in Medicare or any federal health care program under section 1128 and 1128A ofthe Social Security Act, as amended or as defined in 42 U.S.C. § 1320a-7b(f), as amended (the "Federal Health Care programs'); (ii) has not been convicted of a criminal offense related to the provision of healthcare items or services but has not yet been excluded, debarred, or otherwise declared ineligible to participate in any Federal Health Care Program; and (ii] is not under investigation or otherwise aware of any circumstances which may result in Tenant being excluded from participation in any Federal Health Care Program. The foregoing representation shall be an ongoing representation and warranty during the Teri of this Lease and Tenant shall immediately notify Landlord of any change in the status of the representation and warranty set forth in this Section. Landlord shall have the right to 1911373.1 11 'Gross Lease 5!01108 immediately terminate this Lease in the event the representation and warranty set forth in this Section is or becomes untrue at any Time. (d) For purposes of this Section of this Lease, "Protected Health Information', or 'PHI', shall have the meaning defined by the Standards for Privacy of Individually identifiable Health Information, 45 C.F.R. Part 160 and Subparts A and E of Part 164 (the "Privacy Standards!, as promulgated by the Department of Health and Human Services ("HHS7 pursuant to the Administrative Simplification provisions of the Health Insurance Portability and Accountability Ad of 1996 ("HIPAA as amended from Lime to time. Tenant agrees to reasonably safeguard PHI from any intentional or unintentional disclosure in vioiation of the Privacy Standards by implementing appropriate administrative, technical and physical safeguards to protect the privacy of PHI. Tenant further agrees to implement appropriate administrative, technical and physical safeguards to unlit incidental disclosures of PHI, including disclosures to Landlord, its subcontractors and agents. The parties agree that neither the Landlord nor its contractors, subcontractors or agents shall need access to, nor shall they use or disclose, any PHI of Tenant. However, in the event PHI is disclosed by Tenant or its agents to Landlord, its contractors, subcontractors or agents, regardless as to whether the disclosure is inadvertent or otherwise, Landlord agrees to take reasonable steps to maintain, and to require its contractors, subcontractors and agents to maintain, the privacy and confidentiality of such PHI, The parties agree that the foregoing does not create, and is not intended to create, a 'Business Associate' relationship between the parties as that term is deftned by the Privacy Standards. (e) If the Stark Law applies to this Lease and there are any other contracts or agreements between Landlord and Tenant (or any 'immediate family member' (as defined by the Stark Law) of Tenant), then Landlord shall include this Lease and such other agreements and contracts on Landlord's centrally maintained and updated master ftt of contracts. Such list of contracts is and shall be available for review by the Secretary of the U.S. Department of Health and Human Services upon request. (f) Tenant represents and warrants to Landlord that (a) neither Tenant nor any person or entity that owns a five percent (541e) or greater equity interest in Tenant nor any of Tenant's officers, directors, members, general or limited partners (Tenant and such owners, officers, directors, members and partners shall be referred to collectively as the "Tenant Owner) is a 'Blocked Party' (as defined below); (b) Tenant is not controlled by, or acting, directly or indirectly, for or on behalf of, any Blocked Party; and (e) Tenant has not instigated, negotiated, facilitated, executed or othervme engaged in this Lease, directly or indirectly, for or on behalf of any Blocked Party. The foregoing representation shall be an ongoing representation and warranty during the Term of this Lease and Tenant shall immediately notify landlord of any change in the status of the representation and warranty set forth in this Section. Landlord shall have the right to immediately terminate this Lease in the event the representation and warranty set forth in this Section is or becomes untrue at any time. As used herein 'Slacked Party' shalt mean any party or nation that (a) is listed on the Specialty Designated Nationals and Blocked Persons List maintained by the Office of Foreign Asset Control, Department of the U.S. Treasury ("OFAC") pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) or other similar requirements contained in the rules and regulations of OFAC (the "Order") or in any enabling legislation or other Executive Orders in respect thereof (the Order and such other rules, regulations, legislation, or orders are collectively called the "Orders") or on any other list of terrorists or terrorist organizations maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Orders (such lists are collectively referred to as the "Lists'), all as amended from time to time; of (b) has been determined by competent authority to be subject to the prohibitions contained in the Orders. 21.14 Lan lord's Relocation Ootion. Subject to the terns and renditions set forth in this subsection, upon not less than ninety (9D) days prior written notice to Tenant. Landlord shall have the right to relocate Tenant to other spare designated by Landlord within the Budding (the "Relocation Space"), provided that: (i) the floor area of such Relocation Space is not materially less than the floor area of the Premises, (it) the tenant finishes in such Relocation Space are comparable to the tenant finishes in the Premises, (iii) the Base Rent for the Relocation Space is not more than the Base Rent for the Premises; (iv) such relocation shall be performed on a weekend so as to minimize any interruption to Tenant's business, and (v) Landlord shall reimburse Tenant for the costs of such relocation, including, without Imitation, moving costs, installation of telecommunication and ',computer lines, and printing costs for new stationary. Reimbursement pursuant to clause (v) above shall be made to Tenant in the form of a rent credit which shall be applied towards the first month's rent due for the Relocation Space and will be based upon invoice(s) presented to Landlord itemizing the costs incurred and the services(s) rendered. Landlord and Tenant shall enter into a new lease for the Relocation Space (the "Relocation Space Lease"). effective as of the "Relocation Date" (as defined below in this subsection). The Relocation Space Lease shall be on Landlord's then current lease forms, shall set forth the base rental rate for the Relocation Space (the 'Relocation Space Base Rent") and shall include such additional terns as Landlord and Tenant mutually agree. The Relocation Space Base Rent shall be an amount equal to the fair market rental value of the Relocation Space, on an annual basis- Such fair market rental value shall he determined by Landlord based on a survey of rental rates being Charged in the market area which encompasses the Building for space comparable to the Relocation Space (taking into account the quality, age, floor level, quality of tenant improvements provided and other relevant factors) and assuming lease terms which allocate responsibility for taxes, insurance and other costs of operating, maintaining and repairing the building, the common areas and the Relocation Space in the same manner as this Lease- The effective date ithe "Relocation Date') of any relocation and of any amendment changing the Premises from the Existing Space to the Relocation Space shall be the date Tenant physically relocates from the Existing Space to the Relocation Space. 21.15. Building Closure or Demolition. Tenant acknowledges and agrees that Landlord shall have the right (but not the obligation) to close or demolish the Building at any time during the term of this Lease. If Landlord decides to close or demolish the Building, then Landlord may terminate this Lease by giving Tenant not less than 180 days' prior written notice of termination. If Landlord delivers such notice of termination, then this Lease shall terminate upon the later of the following (the "Closure Termination Date'): (i) the date of termination set forth in such notice, (ii) the 180th day after the date Tenant receives such notice of termination from Landlord, or (iii) such other date as may be agreed upon in writing by Landlord arid Tenant. In the event of any such termination of this Lease, Tenant shall vacate and surrender the Premises to Landlord on or before the Closure Termination Date. Notwithstanding anything to the contrary set forth herein, (x) no exercise of the foregoing termination option shall extend the term of this Lease and (y) if following the One Year Extension Termination Date, Tenant has not vacated and surrendered the Premises in accordance with Section 16.1(a) of this Lease, then this Lease shall not terminate, but instead shall continue as an Unauthorized Holdover subject to Section 16A(b). The parties agree that in the event of any such termination, they shall not enter into a new agreement for the lease or occupancy of the Premises by Tenant at any time prior to one year after the Commencement Date- Upon termination as provided above, both parties shall be released of all obligations and liabilities arising under the Lease fallowing the effective date of termination; provided that the parties shat! remain liable under the provisions of the preceding sentence and far all obligations under the Lease that have accrued prior to such termination or are otherwise intended to survive termination of this Lease. Upon termination as provided above, both parties shall be released of all obligations and liabilities arising under this Lease following the effective date of termination; provided that the parties shall remain liable for all obligations under this Lease that have accrued prior to such termination or are otherwise intended to survive termination of this Lease. 21,16. Submission of Lease. Submission of this Lease to Tenant does not constitute an offer to lease; this Lease shall become effective only upon execution and delivery thereof by Landlord and Tenant. 21AT No Smoking. Tenant and its employees, representatives, contractors or invitees shall not smoke within the Building, in any common areas (inside or outside), or anywhere on the Hospital campus, or throw cigar or cigarette butts or other substances or litter of any kind in or about the Building, the common areas or the Hospital campus, except in receptacles for that purpose. 21.18. Radon Gas. (Applicable In Florida only) Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from the local county public health unit. 1911373-1 12 Gross Lease 5101108 SECTION 22. ADDENDA The foErowing Addenda and/or Riders are attached to this Lease and made a part hereof: Addendum A, Rules and Regulations, First Amendment (signatures on next page] 1911373.1 13 - Gross Lease 5101108 IN WITNESS WHEREOF, the parties have duly executed this Lease the day and year trait above written. WITNESS As to Tenant TENANT: C' of Denton (Wiitness Signature) By: (Witness Printed Name) (Signature) Name: Geproe CampbelE (Witness Signature) Title: City Manager (Witness Printed Name) Date: (Date must be inserted at time of execution] WITNESS As to Landlord: LANDLORD: Columbia Medical Center of Denton Subsidiary LP dfbfa (Witness Signature) Denton Regional Medical Center By: Columbia North Texas Subsidiarv_ GP. LAC (Witness Printed Name) Its: general partner (Witness Signature) By: (Witness Printed Name) (Signature) Name: Caleb O'ReaY Title: Chief Executive OfFicer Date: [Date must be inserted at time of execution] APPROVED AS TO FORM: CITY ATTORNEY CITY OF DENTON, TEXAS BY, 1911373.1 14 Gross Lease srolroa ADDENDUM "A" TO MEDICAL OFFICE BUILDING LEASE RULES AND REGULATIONS 1. CONDUCT Tenant shall not conduct its practice or business, or advertise such business, profession or activities of Tenant conducted in the Premises in any manner which violates local, state or federal taws or regulations. 2. HALLWAYS AND STAIRWAYS Tenant shall not obstruct or use for storage, or for any purpose other than ingress and egress, the sidewalks, entrance, passages, courts, corridors, vestibules, halls, elevators and stairways of the Building. 3. NUISANCES Tenant shall net make or permit any noise, odor or act that is objectionable to other occupants of the Building to emanate from the Premises and shall not create or maintain a nuisance thereon. 4. MUSICAL INSTRUMENTS, ETC. Tenant shall not install or operate any phonograph, musical instrument, radio receiver or similar device in the Building in such manner as to disturb or annoy other tenants of the Building or the neighborhood. Tenant shall not install any antennae, aerial wires or other equipment outside the Building without the prior written approval of Landlord. 5. LOCKS With the exception of Tenant's pharmaceuticals locker or storage facit€ly, no additional locks or bogs of any kind shall be placed upon any of the doors or windows by Tenant nor shall any changes be made in existing locks or the mechanism thereof. Tenant must upon the termination of its tenancy restore to Landlord all keys fa the Premises and toilet rooms either furnished to or otherwise procured by Tenant, and in the event of loss of any keys so furnished, Tenant shall pay to Landlord the cost thereof. 6. OBSTRUCTING LIGHT, DAMAGE The sash doors, sashes window glass doors, lights and skylights that reflect or admit tight into the halls or other places of the Building shall not be covered or obstructed. The toilets and urinals shall not be used for any purpose other than those for which they were intended and constructed, and no rubbish, newspapers or other substance of any kind shall be thrown into them. Waste and excessive or unusual use of water shall not be allowed. Tenant shall not mark, drive nails, screw or drill into, paint, nor in any way deface the walls, ceilings, partitions, floors, wood, stone or iron work. The expense of any breakage, stoppage or damage resulting from a violation of this rule by Tenant shall be borne by Tenant. Tenant shall be permitted to hang pictures on office walls, but it must be done in a workmanlike manner and in such a way as not to damage or deface such wails. 7. WIRING Electrical wiring of every kind shall be introduced and connected only as directed by Landlord, and no boring nor cutting of wires will be allowed except with the consent of Landlord. The location of the telephone, call boxes, eta, shall be subject to the approval of Landlord. 81 EQUIPMENT, MOVING, FURNITURE, ETC. Landlord shall approve the weight, size and position of all fixtures, equipment and other property brought into the Building, and the times of moving which must be done under the supervision of Landlord. Landlord will not be responsible for any loss of or damage to any such equipment or property from any cause, and all damage done in the Building by moving or maintaining any such property shall be repaired at the expense of Tenant. All equipment shall be installed as required by law, and in accordance with and subject to written approval received on written application of Tenant. 9. REQUIREMENTS OF TENANT The requirements of Tenant will be attended to only upon application at the office of Landlord or its Property Manager. Employees of Landlord or its Property Manager shall not perform any work nor do anything outside their regular duties unless under special instructions from Landlord of its Property Manager. No such employees shall admit any person, Tenant or otherwise, to any other office without instruction from the office of Landlord or its Property Manager. All janitorial services personnel, guards or any outside contractors employed by Tenant shall be subject to the regulations and control of Landlord, but shall not act as an agent or servant of Landlord. 10. MEDICAL AND HAZARDOUS WASTES Tenant shall comply with all policies established from time to time by Landlord regarding the storage and disposal of hazardous substances, wastes and materials, and medical, special or infectious wastes. Tenant shall not dispose or flush down arty drains any corrosive chemicals that might cause any damage to the Building or Premises plumbing. It. ACCESS TO BUILDING Any person entering or leaving the Building may be questioned by Building security regarding hislher business in the Building and may be required to sign in and out. Anyone who falls to provide a satisfactory reason for being in the Building may be excluded. 12. VEHICLES, ANIMALS, REFUSE Tenant shall not allow anything to be placed on the outside window ledges of the Premises or to be thrown out of the windows of the Building- No bicycle or other vehicle, and no animal (other than seeing eye dogs) shall be brought into the offices, halls, corridors, elevators or any other parts of the Building by Tenant or the agents, employees or invitees of Tenant, and Tenant shall not place or permit to be placed any obstruction or refuse in any public part of the Building. 13. EQUIPMENT DEFECTS Tenant shall give landlord prompt notice of any accidents to or defects in the water pipes, gas pipes, electric lights and fixtures, heating apparatus, or any other service equipment. 14. PARKING Unless otherwise specified by Landlord, Tenant and its employees may park automobiles only in spaces designated by Landlord for such purpose and shalt in no event park in spaces reserved for public parking. Tenant agrees that Landlord assumes no responsibility of any kind whatsoever in reference to such automobile parking area or the use thereof by Tenant or its agents or employees. 15. CONSERVATION AND SECURITY Tenant will see that all windows and doors are securely locked, and that all faucets and electric light switches are turned off before leaving the Building. 16. SIGNAGE Tenant shall not place any sign upon the Premises or the Building without Landlord's prior written consent. 1911373.1 Gross Lease 5!61108 ADDENDUM "B" TO MEDICAL OFFICE BUILDING LEASE GUARANTY As a material part of the consideration inducing Landlord to execute this Lease with Tenant, the undersigned, being one or more of the shareholders, members, partners cr owners, as the case may be, of Tenant (who are collective 4y hereinafter referred to as the "Guarantors-), join in the execution of this Lease and jointly and severally, do hereby unconditionally guarantee the fug performance by Tenant of all obligations, indemnities and agreements to be paid, performed or observed by Tenant under and pursuant to this Lease, including but not limited to the payment of Rent and any and air other sums required to be paid by Tenant hereunder when due. The Guarantors further hereby give and grant to Landlord the rights, power and authority, without notice to or approval of any of them and without in any way prejudicing, impairing or affecting any of the Guarantors' liability hereunder, to after, extend or otherwise modify this Lease to the extent which may be agreed upon by Landlord and Tenant; to forbear or delay enforcing the payment of Rent or other sums due under the Lease or enforcing any other obligations of Tenant under the Lease; to release any other person liable for Tenant's obligations under the Lease or any other collateral Landlord may hold for the obligations of Tenant under the Lease; to proceed directly against the Guarantors or any of them on this Guaranty whether or not action is brought against Tenant and whether or not Tenant is joined in any such action, without resort to any security which may be held by Landlord, and without first having exhausted the remedies it may have against Tenant. The Guarantors hereby waive demand and/or notice of any kind induding, but not limited to, notice of default or breach on the part of Tenant of any of the provisions of this Lease or notice of the existence, creation or incurring of any new, different, or additional obligation as aforesaid. This Guaranty is and shall be construed to be an irrevocable, absolute, unlimited and continuing guaranty of payment and performance, and the liability of each Guarantor hereunder and Landlord's right to pursue each Guarantor shall not be affected, delayed, limited. impaired or discharged, in whole or in part, by reason of arty extension or discharge that may be granted to the Tenant, whether in proceedings under the Bankruptcy Cade or any amendments thereof, or under any other state or other federal statutes, or otherwise. Each Guarantor expressly waives the benefits of any extension or discharge granted to Tenant or to arty other Guarantor. This Guaranty shalt survive notwithstanding the expiration or termination of the Lease and this Guaranty shall survive with respect to any sums previously received from Tenant or from any Guarantor that Landlord may be required to repay in any proceeding described in this paragraph. Each Guarantor further agrees to pay Landlord upon demand reasonable attorneys' fees and all costs and other expenses incurred by it in collecting or compromising any obligation hereby guaranteed, or in enforcing this Guaranty against the Guarantors. . The Landlord shall have the right, without affecting any Guarantor's obligations hereunder, and without demand or notice, to collect first from the Tenant, and to exercise its rights of setoff against any asset of the Tenant, and to otherwise pursue and collect from the Tenant any other indebtedness of the Tenant to the Landlord not covered by this Guaranty, and any sums received from the Tenant, whether by voluntary payment, offset, or collection efforts, may be applied by the Landlord as it sees fit, including the application of all such amounts to other debts not guaranteed by the Guarantors, Subrogation rights or any other rights of any kind of any Guarantor against the Tenant, if any, shall not become available until all indebtedness and obligations of the Tenant to the Landlord are paid in full. This Guaranty shall survive the expiration or termination of the Lease to the extent the obligations of the Tenant thereunder likewise survive. GUARANTOR: None R aired (Signature) i• 1911373.1 Gross Lease 5!01!08 EXHIBIT A-1 Location of the Building or Description of the Land upon which the Building is Located TRACTI LEASE PROPERTY DESCRIPTION; Being 1.0474 acres of land and being a part of Lot 1R-R, Block 1, Denton Regional Medical Center Addition, an addition to the City of Denton, Denton County, Texas as shown by the plat recorded in Cabinet 'P', page 37 of the plat records of Denton County, Texas and a tract of land situated in the M.E.P. and P.R.R. Co. Survey, Abstract No. 950, City of Denton, Denton County, Texas according to the deed recorded in Volume 3245, Page 699 of the real property records of Denton County, Texas and more particularly described by metes and bounds as follows: Commencing at 112-inch iron rod found at the southeast corner of Lot 1R-R, Block 1, Denton Regional Medical Center Addition, an addition to the City of Denton, Denton County Texas as shown by the plat recorded in the Cabinet 'P', page 37 of the plat records of Denton County, Texas, being the intersection of the northeast right-of-way line of Interstate Highway No. 35-E (a variable width right-of-way) and with the westerly right-of-way fine of Mayhill Road (a 120 fool wide right-of-way); Thence along the westerly right-of-way line of said Mayhill Road as follows: N 39058'23" E, along the east boundary line of said Lot 1, 99.85 feet to a 112-inch iron rod found at the beginning of a curve to the left; Northeasterly, 522.24 feet along said curve to the left, having a radius of 1,270.00 feet a central angle of 23133'38" and a chord bearing N 28111'34" E, 518.56 feet.to a 112-inch iron rod found at the end of said curve, for the beginning of a curve to the left; Northeasterly, 43.76 feet along said curve to the left, having a radius of 790.00 feet, a central angle of 03010'26" and a chord bearing N 05035'50" E, 43.76 feet to a 112-inch iron rod found at the end of saiq curve; N 56°18TY W, 617.52 feet to the Point of Beginning of the herein described 1.0474 acre tract of land. Thence around the boundary of said 1.0474 acre tract as follows: 5 85°04'30" W, 39.65 feet; S 04°55'04" E, 10.83 feet; S 85°04'21" W, 51 .12 feet; N 04055'34" W, 7.83 feet; . S 85005'04" W, 14.52 feet to the Point of Beginning of a curve to the right; Northwesterly, 23.62 feet along said curve to the right, having a radius of 15.04 feet, a central angle of 89159'24" and a, chord bearing N 49055'13!'W, 21.27 feet to the end of said curve; N 04°55'31" W. 107.09 feet; N 49°55'26" W, 27.86 feet; S 85104'29'W, 107.13 feet to the Point of Beginning of a curve to the right; Northwesterly, 23.57 feet along said curve to the right,' having a radius of 15.00 feet, a central angle of 89059'55" and a chord bearing N 490551 1" W, 21.22 feet to the end of said curve; N 04054'56" W, 14.56 feet; S 85°04'26" W, 7.50 feet; N 04°55'28" W, 40.12 feet; S 85104'14" W, 15.50 feet; N 04°55'21" W, 50.65 feet; N 85°04'35" E, 214,34 feet; S 0405524" E, 52.05 feet; S 49°55'36" E, 26.55 feet; N 85°04'51" E, 52.04 feet; S 04°55'31" E. 188.33 feet to the Point of Beginning, and containing 1.0472 acres (45,616 square feet) of land. 1911373.1 Gross Lease 5101108 EXHIBIT A•2 Floor Plan or Other Speci9 c Description of Premises ❑ ❑ EXAM E DAN 2 EXAM 3 RR l i'x10' I AlO• MAW 5'xlo' Nu1zsE s•x1s' i f EXAivt 4 EXAM 5 wAin NG ~xta' 13'112x' - 1~ BUS;NESS ❑ OrFlCE f I Em s = L RR 11'x4' I 5'X8' :STOR. BREAK ~ 13'x8' OFFICL OFFICE lo'sxl4' ~ OFF7Ct CONF. 11'x10' ` 1~xtz' a b J, 0 a DENTON REMONAL MOB - Srd FLOOR ~R 1819373.1 Gross Lease 5f01ma EXHIBIT B COMMENCEMENT DATE CERTIFICATE The undersigned Landlord and Tenant acknowledge and agree that pursuant to the terms of that certain Medical Office Building Lease, dated as of 20_ (the 'Lease), whereby Landlord teased to Tenant premises consisting of approximately 2 832 square feet and known as Suke No. 317 in the building located at 35a7 S. _I-35E Denton Torras 76210, the 'Commencement Date of said Lease is and shall be 20_, and the Expiration bate of the initial Tenn of said Lease is and shall be _ 20 . In the event of a conflict between the terms of this Certificate and the terms of the Lease, the terms of this Certificate shall control. WITNESS As to Tenant: TENANT: City of Denton (witness Signature) By. (Witness Printed Name) (Signature) Name: George Campbell (witness Signature) Title: City Manager (witness Printed Name) Date: i [Date must be inserted at time of execution] I i WITNESS As to Landlord: LANDLORD' Columbia Medical Center of Denton Subsidiary, LP dibla (Witness Signature) Dento_n_Regional Medical Center Fay: Columbia North Texas Subsidiary GP, LLC (Witness Printed Name) Its: en rag_I„partner (Witness Signature) By: (Signature) (witness Printed Name) Name: CalebO'Rear Title: Chief Executkffl cer Date: [Date must be inserted at time of execution] 1911373.1 AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: City Manager's Office CM/DCM/ACM: George C. Campbell, City Manager SUBJECT Consider adoption of an ordinance of the City of Denton, Texas amending certain provisions of Chapter 17 of the Denton Code of Ordinances, the Denton Property Maintenance Code, including Sections 17-2, 17-35, 17-40, 17-60, 17-153 and 17-154; providing a severability clause; and providing an effective date. BACKGROUND On May 11, 2010 the City Council amended Denton Property Maintenance Code (DPMC). Following previously established procedure, the Code Enforcement Division maintained a list of any enforcement concerns or ordinance errors in anticipation of reconvening with the Citizens and Council Code Committees to discuss said issues. A joint meeting of the Citizens and Council Committees on Property Maintenance Code Issues was held on January 20, 2011 to review five staff recommended revisions to the DPMC. Four of the five ordinance revisions presented were approved unanimously by the membership of the two committees. The fifth recommended revision, outside storage, was sent back to staff with a request to simplify the language and abbreviate the length. The outside storage language was simplified with input from the Citizens Committee. On August 2, 2011 the five recommended revisions to the Denton Property Maintenance Code were presented to the City Council during a Work Session. RECOMMENDATION: Staff recommends adoption of the ordinance amending certain provisions of Chapter 17 of the Denton Code of Ordinances. PRIOR ACTION/REVIEW (Council, Boards, Commissions) • A joint meeting of the Council and Citizens Committees on Property Maintenance Code Issues was held on January 20, 2011. • City Council Work Session -August 2, 2011 EXHIBITS DPMC Revision Ordinance Revised DPMC Changes - Redline Revised DPMC Changes - Clean Respectfully submitted: ~~L C-L~ John Cabrales Jr. Public Information/Intergovernmental Relations Officer Prepared by: r,~ Y • &"'11 Lancine Bentley Code Enforcement Division Manager sllegal\our documents\ordinances\11\property maintenance code amendments august 201 Ldoc ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS AMENDING CERTAIN PROVISIONS OF CHAPTER 17 OF THE DENTON CODE OF ORDINANCES, THE DENTON PROPERTY MAINTENANCE CODE, INCLUDING SECTIONS 17-2, 17-35, 17- 40, 17-60, 17-153 AND 17-154; PROVIDING A SEVERABILITY CLAUSE; AND PROVIDING FOR AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. Chapter 17 of the Code of Ordinances of the City of Denton is hereby amended as follows: (a) In Section 17-2, the definition of "accessory building or structure" is deleted and substituted therefor is the following definition: "Structure, Accessory means any structure on the same lot with, and is incidental and subordinate to, the principal structure. Flatwork, in-ground swimming pools and fences or walls used as fences are excluded." (b) In Section 17-2, the definition of "outdoor storage" is deleted and substituted therefor is the following definition: "Outside Storage means the storage, collection, or safekeeping of any goods, materials, products, appliances, equipment, or containers that are not enclosed by a structure with walls on all four (4) sides and a roof. Outside storage does not include moveable toys such as tricycles or pedal cars." (c) In Section 17-2, the words "an edi "ice of are deleted from the definition of "Structure." (d) In Section 17-35(c), the words "and that a request for a hearing must be made before expiration of the ten day period." are deleted. (e) In Section 17-40(a), the words "Rights of way include the property line to the curb or, if no curb exists, from the property line to the street." are deleted. (f) Section 17-40(k) is deleted. (g) Section 17-60 is deleted and a new 17-60 is substituted, as follows: Sec. 17-60. Outside Storage. 1. In addition to complying with EPA regulations, the International Fire Code, and all other applicable rules and regulations, outside storage shall comply with the following: sAlegal\our documents\ordinances\11\property maintenance code amendments august 201 l.doc a) Shall not be located in any portion of the front yard, and shall be screened from public view at all times. Screening shall be of natural vegetation, masonry, wood, metal, vinyl, PVC, or composite fence materials only, and shall be maintained in a state of good repair at all times. At no time shall a tarp of any kind be used for screening. Play structures such as swing sets, jungle gyms and erected play areas, associated with a residential use, shall be exempt from the screening requirements. b) Properties zoned IC-E or IC-G, and all industrial uses that are legally permitted are exempted from the requirements of paragraph (a) of this Section, provided that no items are stored in any part of a fire lane, required parking space, maneuvering lane, public right-of-way, or visibility triangle. 2. It is an affirmative defense to prosecution that the following items are maintained in good repair, are for residential use, and are not a nuisance to the public: a) Storage, collection, or safekeeping in a carport of- i. Building materials that are temporarily stored in a workmanlike manner as part of, and in conjunction with, an active building permit; ii. Motorized lawn equipment; iii. Storage containers, if stored and maintained in an orderly manner against a permanent wall; or iv. Household and yard tools, and household cleaning implements, if stored and maintained in an orderly manner against a permanent wall, using pegboards, shelves, hooks, storage containers, or tool chests. b) A washer or dryer which is connected and regularly used where the only washer or dryer connection is located under a carport or breezeway. c) Furniture designed for outdoor use. d) Firewood stored and maintained in an orderly manner. e) Smokers, barbeque grills, lawn maintenance equipment, and appliances designed for outdoor use, if in current use. 3. It is an affirmative defense to prosecution that the following items are maintained in good repair and are not a nuisance to the public: a) Play structures such as swing sets, jungle gyms and erected play areas or houses built and maintained as part of a playground located at a church, school, or state- regulated commercial daycare." (h) In the footnote to Section 17-153(x) and in the footnote to Section 154(b), the words "housing unit" are deleted and the word "structures" is substituted. SECTION 2. If any section, subsection, paragraph, sentence, clause, phrase, or word in this ordinance, or application thereof to any person or circumstances is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of Page 2 sAegal\our documents\ordinances\11\property maintenance code amendments august 2011.doc this ordinance, and the City Council of the City of Denton, Texas hereby declares it would have enacted such remaining portions despite any invalidity. SECTION 3. Save and except as amended hereby, all the provisions, sections, subsections, paragraphs, sentences, clauses, and phrases of the Code of Ordinances shall remain in full force and effect. SECTION 4. This ordinance providing for a penalty shall become effective 14 days from the date of its passage, and the City Secretary is hereby directed to cause the caption of this ordinance to be published twice in the Denton Record-Chronicle, the official newspaper of the City of Denton, Texas, within 10 days of the date of its passage. PASSED AND APPROVED this the day of 2011. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: Page 3 Recommended DPMC Changes 17-2 Definitions. n +I,- 4tiettife, of aeeessoF~, b. b b , b . 5 , z"'~,.z ~~~11 pef;Me+ef ~ °16°f1b of V,,_a Str'uctur'e, Accessory: Any str'uctur'e on the same lot with, and is incidental and subordinate to the principal structure. Flatwork, in-ground swimming pools and fences of walls used as fences are excluded. Out .vide storage means the b , , , storage, collection, of safekeeping of any goods, materials, products, appliances, equipment, of containers that are not enclosed by a structure with walls on all four- (4) sides and a roof. Outside storage does not include moveable toys such as tricycles of pedal cars. S'tr2rct2rre means b , any piece of work artificially built up of composed of parts joined together- which requires location on, in, of above the ground of which is attached to something having a location on, in of above the ground. Flatwork of in-ground swimming pools are excluded. 17-35 Procedures for abating nuisance; exception. (c) For such nuisance on public property, the City shall give not less than 10 days' notice, stating the nature of the public nuisance on public property or on a public right-of-way, that the nuisance must be removed and abated within 10 days aff at a request b The notice shall be mailed, by certified mail with a five-day return requested, to the last known registered owner of the junk motor vehicle, any lienholder of record and the owner or occupant of the public premises or to the owner or occupant of the premises adjacent to the public right-of-way on which the public nuisance exists. If the notice is returned undelivered by the United States Post Office, official action to abate the nuisance shall be continued to a date not less than 10 days after the date of the return. (d) A public hearing shall be held before the removal of the vehicle or vehicle part as a public nuisance. The hearing shall be held before the Municipal Court. An order requiring the removal of a vehicle or vehicle part must include a description of the vehicle and the correct identification number and license number of the vehicle if the information is available at the site. Sec. 17-40. Grass or weeds in excess of twelve inches in height declared a nuisance and prohibited. (a) It shall be unlawful for any person owning, claiming, occupying or having supervision or control of any real property, occupied or unoccupied, within the corporate limits of the City to fail to remove any weeds or grass growing in excess of 12 inches in height on said real property, including easements and rights-of-way. Ri'g 4s of Way ~ ejfjde the p fope~4y h ° t It is a violation of this section if the tall grass and weeds are visible from a right-of-way or an adjacent property. It shall be a defense to prosecution that the real property is owned by the State of Texas. Sec. 17-60. Outside storage. 1. In addition to complying with Environmental Protection Agency regulations, the International Fire Code, and all other applicable rules and regulations, outside storage shall comply with the following: (a) Shall be loeated in the side of feaf yaf-I only and shall be opaquely sefeened Shall not be located in any portion of the front yard, and shall be screened from public view at all times. Screening shall be of natural vegetation, masonry, wood, metal, vinyl, PVC, or composite fence materials only, and shall be maintained in a state of good repair at all times. At no time shall a tarp of any kind be used for screening. Play structures such as swing sets, jungle gyms and erected play areas, associated with a residential use, shall be exempt from the screening requirements. b b b Way, of -Asibifity (b) Properties zoned IC-B of IC-G, and all industrial uses that are legally permitted are exempted from the requirements of paragraph (a) of this Section, provided that no items are stored in any part of a fire lane, required parking space, maneuvering lane, public fight-of-way, or visibility triangle. I It is an affirmative defense to prosecution that the following items are maintained in good repair, are for residential use, and are not a nuisance to the public: (a) Storage, collection, of safekeeping in a carport of i. Building materials that are temporarily stored in a workmanlike manner- as part of, and in conjunction with, an active building permit; ii. Motorized lawn equipment; iii. Storage containers, if stored and maintained in an orderly manner- against a permanent wall; of iv. Household and yard tools, and household cleaning implements, if stored and maintained in an orderly manner against a permanent wall, using pegboards, shelves, hooks, storage containers, of tool chests. (b) A washer- of dryer which is connected and regularly used where the only washer of dryer connection is located under- a carport of breezeway. (c) Furniture designed for outdoor use. (d) Firewood stored and maintained in an orderly manner. (e) Smokers, barbeque grills, lawn maintenance equipment, and appliances designed for outdoor use, if in current use. 3. It is an affirmative defense to prosecution that the following items are maintained in good repair- and are not a nuisance to the public: (a) Play structures such as swing sets, jungle gyms and erected play areas of houses built and maintained as part of a playground located at a church, school, of state-regulated commercial daycare. Sec. 17-153. Exterior structure. The exterior of a structure or accessory structure must be maintained in good condition, structurally sound and kept clean and sanitary so as to protect the health, safety and general welfare of the public. (a) Protective treatment. Exterior surfaces, including but not limited to walls, windows, doors, door and window frames, cornices, porches, trim, balconies, decks and fences shall be maintained in good and reasonable condition. Exterior wood surfaces, other than decay-resistant woods, shall be protected from the elements and decay by painting* or other protective covering or treatment. Peeling, flaking, chalking, and chipped paint shall be eliminated and surfaces repainted*. Siding and masonry joints as well as those between the building envelope and the perimeter of windows, doors, and skylights shall be maintained weather resistant and water tight. Metal surfaces subject to rust or corrosion shall be coated to inhibit such rust and corrosion and all surfaces with rust or corrosion shall be stabilized and coated to inhibit future rust and corrosion. Oxidation stains shall be removed from exterior surfaces. Surfaces designed for stabilization by oxidation are exempt from this requirement. * "Pre-1978 housing units structures undergoing paint removal or stabilization where more than 20 square feet of an exterior surface will be disturbed, will require compliance with current "safe work practices" as defined by the Environmental Protection Agency. If the unit is tested prior to paint removal or stabilization and lead is not present, the "safe work practices" requirement will not apply." Sec. 17-154. Interior structure. The owner and manager shall maintain the interior of a structure and equipment in a good, structurally sound, and sanitary condition. Occupants shall maintain that part of the structure which they occupy or control in a clean and sanitary condition. The above conditions include, but are not limited to, the following: (a) The owner and manager shall maintain all structural members structurally sound, and capable of supporting the imposed loads. (b) The owner and manager shall maintain all interior surfaces, including windows, doors, ceilings, and walls, in good, clean, and sanitary condition. Peeling, chipping, flaking, or abraded paint* shall be repaired, removed, or covered. Deteriorated, crumbling, cracked, or loose plaster, decayed wood, and other defective surface conditions shall be corrected. * "Pre-1978 het-;-, t -it, structures undergoing paint removal or stabilization where more than six square feet of an interior surface per room will be disturbed, will require compliance with current "safe work practices" as defined by the Environmental Protection Agency. If the unit is tested prior to paint removal or stabilization and lead is not present, the "safe work practices" requirement will not apply." Recommended DPMC Changes 17-2 Definitions. Structure, Accessory: Anv structure on the same lot with, and is incidental and subordinate to the principal structure. Flatwork, in-around swimming pools and fences or walls used as fences are excluded. Outside Storage means the storage, collection, or safekeeping of any goods, materials, products, appliances, equipment or containers that are not enclosed by a structure with walls on all four (4) sides and a roof. Outside storage does not include moveable tov_ s such as tricv_ cles or pedal cars. Structure means anv kind or any piece of work artificially built up or composed of parts joined together which requires location on, in, or above the around or which is attached to something having a location on, in or above the around. Flatwork or in-around swimming pools are excluded. 17-35 Procedures for abating nuisance; exception. (c) For such nuisance on public property, the City shall give not less than 10 days' notice, stating the nature of the public nuisance on public property or on a public right-of-way, that the nuisance must be removed and abated within 10 days. The notice shall be mailed, by certified mail with a five-dav return requested, to the last known registered owner of the junk motor vehicle, anv lienholder of record and the owner or occupant of the public premises or to the owner or occupant of the premises adjacent to the public right-of-way on which the public nuisance exists. If the notice is returned undelivered by the United States Post Office, official action to abate the nuisance shall be continued to a date not less than 10 days after the date of the return. (d) A public hearing shall be held before the removal of the vehicle or vehicle part as a public nuisance. The hearing shall be held before the Municipal Court. An order requiring the removal of a vehicle or vehicle part must include a description of the vehicle and the correct identification number and license number of the vehicle if the information is available at the site. Sec. 17-40. Grass or weeds in excess of ti elve inches in height declared a nuisance and prohibited. (a) It shall be unlawful for any person owning, claiming, occupying or having supervision or control of any real property, occupied or unoccupied, within the corporate limits of the City to fail to remove anv weeds or glass growing in excess of 12 inches in height on said real property, including easements and rights-of-way. It is a violation of this section if the tall grass and weeds are visible from a right-of-way or an adjacent property. It shall be a defense to prosecution that the real property is owned by the State of Texas. Sec. 17-60. Outside Storage. In addition to complying with EPA regulations, the International Fire Code, and all other applicable rules and regulations, outside storage shall comply with the following: a) Shall not be located in any portion of the front yard, and shall be screened from public view at all times. Screening shall be of natural vegetation, masonry, wood, metal, vinvl. PVC, or composite fence materials only, and shall be maintained in a state of good repair at all times. At no time shall a tarp of any kind be used for screening. Plav structures such as swing sets, jungle gyms and erected play areas, associated with a residential use, shall be exempt from the screening requirements. b) Properties zoned IC-E or IC-G, and all industrial uses that are legally permitted are exempted from the requirements of paragraph (a) of this Section, provided that no items are stored in any part of a fire lane, required parking space, maneuvering lane, public right-of-way, or visibility triangle. 1. It is an affirmative defense to prosecution that the following items are maintained in good repair, are for residential use, and are not a nuisance to the public: a) Storage, collection, or safekeeping in a carport of i. Building materials that are temporarily stored in a workmanlike manner as part of, and in conjunction with, an active building permit, ii. Motorized lawn equipment, in. Storage containers, if stored and maintained in an orderly manner against a permanent wall; or iv. Household and yard tools, and household cleaning implements, if stored and maintained in an orderly manner against a permanent wall, using pegboards, shelves, hooks, storage containers, or tool chests. b) A washer or dryer which is connected and regularly used where the only washer or dryer connection is located under a carport or breezeway. C) Furniture designed for outdoor use. d) Firewood stored and maintained in an orderly manner. e) Smokers, barbeque grills, lawn maintenance equipment, and appliances designed for outdoor use, if in current use. 2. It is an affirmative defense to prosecution that the following items are maintained in good repair and are not a nuisance to the public: a) Plav structures such as swing sets, jungle gyms and erected play areas or houses built and maintained as part of a playground located at a church, school, or state-regulated commercial daycare. Sec. 17-153. Exterior structure. The exterior of a structure or accessory structure must be maintained in good condition, structurally sound and kept clean and sanitary so as to protect the health, safety and general welfare of the public. (a) Protective treatrrrew.. Exterior surfaces, including but not limited to walls, windows, doors, door and window frames, cornices, porches, trim, balconies, decks and fences shall be maintained in good and reasonable condition. Exterior wood surfaces, other than decay-resistant woods, shall be protected from the elements and decay by painting* or other protective covering or treatment. Peeling, flaking, chalking, and chipped paint shall be eliminated and surfaces repainted*. Siding and masonryjoints as well as those between the building envelope and the perimeter of windows, doors, and skylights shall be maintained weather resistant and water tight. Metal surfaces subject to rust or corrosion shall be coated to inhibit such rust and corrosion and all surfaces with rust or corrosion shall be stabilized and coated to inhibit future rust and corrosion. Oxidation stains shall be removed from exterior surfaces. Surfaces designed for stabilization by oxidation are exempt from this requirement. * "Pre-1978 structures undergoing paint removal or stabilization where more than 20 square feet of an exterior surface will be disturbed, will require compliance with current "safe work practices" as defined by the Environmental Protection Agency. If the unit is tested prior to paint removal or stabilization and lead is not present the "safe work practices" requirement will not apply." Sec. 17-154. Interior structure. The owner and manager shall maintain the interior of a structure and equipment in a good, structurally sound, and sanitary condition. Occupants shall maintain that part of the structure which they occupy or control in a clean and sanitary condition. The above conditions include, but are not~limited to, the following: (a) The owner and manager shall maintain all structural members structurally sound, and capable of supporting the imposed loads. (b) The owner and manager shall maintain all interior surfaces, including windows, doors, ceilings, and walls, in good, clean, and sanitary condition. Peeling, chipping, flaking, or abraded paint* shall be repaired, removed, or covered. Deteriorated, crumbling, cracked, or loose plaster, decayed wood, and other defective surface conditions shall be corrected. * "Pre-1978 structures undergoing paint removal or stabilization where more than six square feet of an interior surface per room will be disturbed, will require compliance with current "safe work practices" as defined by the Environmental Protection Agency. If the unit is tested prior to paint removal or stabilization and lead is not present the "safe NN-ork practices" requirement will not apply." AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Economic Development Department A~T ACM: Jon Fortune SUBJECT Consider adoption of an ordinance establishing an economic development program under Chapter 380 of the Local Government Code for making grants of public money to promote economic development and to stimulate business activity in the City of Denton; approving an agreement with GTM Development, Ltd., regarding the purchase of Golden Triangle Mall and renovation and improvement of an approximate 73.2 acre parcel of land commonly known as Golden Triangle Mall generally located at the northwest corner of I-35 E. West and East Loop 288 in Denton, Texas; authorizing the expenditure of funds therefor; and providing an effective date. BACKGROUND The Golden Triangle Mall is currently owned by Chase Bank, who wishes to sell the property. The Herring Group and the Weitzman Group, two Dallas area retail developers, have formed a partnership, GTM Development, Ltd., for the purpose of negotiating a possible joint purchase of the Golden Triangle Mall from Chase Bank. Staff has been working with representatives from GTM Development, Ltd. (GTM) since April 2011 regarding a possible Chapter 380 Economic Development Program Grant Agreement. Under the proposed agreement GTM would: • Purchase Golden Triangle Mall from Chase Bank. • Renovate or cause renovation of existing properties within the boundaries of the proj ect. • Constrict or cause the constriction of new space within the mall proper and/or pad sites. • Invest or cause investment of $45M - $60M. Proposed elements of the contract include: • Required Investment: GTM must invest a minimum of $45M on or before October 1, 2014. Investments made by others within the property boundary may count toward the required investment, with the exception of any monies paid to GTM for the purchase of land and/or strictures. With the exception of the mall roof replacement and deferred maintenance, items for which GTM must pay Chase Bank, all eligible investment must occur after the execution of the agreement. GTM must provide evidence, satisfactory to the City that these investments were made toward improvements to the property. Agenda Information Sheet Golden Triangle Mall August 16, 2011 Page 2 • Edible Costs: GTM must complete $9.5M in renovation or new constriction of the categories listed in Exhibit A (Categories of Eligible Costs) on or before October 1, 2014, and then may exercise the rights to the grant, with consent of the City. If a minimum investment of $45M is not reached on or before October 1, 2014, the agreement will terminate at the amount of grant payments received by the grantee to date. • Grant Payments: GTM will receive 50% of monthly sales tax receipts, less a monthly mall baseline amount established as $95,898. This monthly mall baseline represents the 1.5% sales tax received by the City in calendar year 2010 from contributors located within the mall property, divided by 12 months. Total grant payments could range between $7.12M and $9.5. The total grant amount may not exceed 15.83% of the Required Investment, which has been established at a minimum of $45M - $60M. • Agreement Term: The grant will end after 20 years of monthly grant payments or when 15.83% of the Required Investment has been reached, whichever comes first. The grant may not exceed $9.5M. • Loss of Retailers: If an anchor store as defined in the agreement leaves the Golden Triangle Mall before October 1, 2014 to locate elsewhere within the city of Denton and the vacated space remains void of a sales tax-producing entity for a period of 24 months of becoming vacant, the City and GTM will meet to adjust the monthly mall baseline by utilizing sales tax documents from the State Comptroller's office and GTM When the vacated space is re-occupied by a sales tax-producing entity, the monthly mall baseline will be readjusted using one full year of sales tax information at the Golden Triangle Mall site from the State Comptroller, retailer(s), and GTM The readjusted monthly baseline will not exceed the original $95,898 monthly mall baseline amount. ESTIMATED SCHEDULE OF PROJECT 10/12/2011 GTM closes on the property/starts renovation 10/01/2014 GTM must complete $9.5M in renovation/constriction of eligible costs and invest a minimum of $45M. 10/01/2014 Grant amount established at 15.83% of investment. A minimum investment of $45M is required. Grant amount cannot exceed $9.5M. Monthly grant payments may not exceed 20 years or the maximum grant amount, whichever comes first. Agenda Information Sheet Golden Triangle Mall August 16, 2011 Page 3 PRIOR ACTION/REVIEW City Council discussed elements of the agreement during Closed Sessions on June 21, 2011; July 19, 2011; and August 2, 2011. FISCAL INFORMATION The grant represents a 20-year agreement to share 50% of the increase in sales tax generated by the project. The total amount of grant payments will be established at October 1, 2014 when the Required Investment must be completed. A minimum Required Investment of $45M would result in a $7.12M total incentive. A maximum Required Investment of $60M would result in a $9.5M total incentive. Grant payments would cease at 20 years or $9.5M, whichever comes first. If the minimum Required Investment of $45M is not reached by October 1, 2014, the agreement will terminate and grant payments will cease. EXHIBITS Ordinance Agreement Prepared by: Michelle Cunningham Business Development Officer Economic Development Department Respectfully submitted: Linda Ratliff Director Economic Development Department s: economic development, incentivesincentive agreementsgolden triangle mall grin development ltd 380 agreement.doc ORDINANCE NO. AN ORDINANCE ESTABLISHING AN ECONOMIC DEVELOPMENT PROGRAM UNDER CHAPTER 380 OF THE LOCAL GOVERNMENT CODE FOR MAKING GRANTS OF PUBLIC MONEY TO PROMOTE ECONOMIC DEVELOPMENT AND TO STIMULATE BUSINESS ACTIVITY IN THE CITY OF DENTON; APPROVING AN ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT WITH GTM DEVELOPMENT LTD, REGARDING THE PURCHASE OF GOLDEN TRIANGLE MALL AND RENOVATION AND IMPROVEMENT OF AN APPROXIMATE 73.2 ACRE PARCEL OF LAND COMMONLY KNOWN AS GOLDEN TRIANGLE MALL GENERALLY LOCATED AT THE NORTHWEST CORNER OF I-35 E. WEST AND EAST LOOP 288 IN DENTON, TEXAS; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, GTM Development Ltd. ("GTM") has made a request of the City of Denton to establish an economic development program under Chapter 380 of the Texas Local Government ("Chapter 380") to stimulate the development of commercial property within the City of Denton; and WHEREAS, the City Council by this ordinance is establishing an economic development program under Chapter 380 which will stimulate business activity in the City and promote the public interest (the "Program"); and WHEREAS, to effectuate the Program the City and GTM have negotiated an Economic Development Grant Agreement (the "Agreement"), a copy of which is attached hereto and made a part hereof by reference; and WHEREAS, the City Council finds that the Program and Agreement promote economic development and will stimulate commercial activity within the City of Denton for the benefit of the public; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON, TEXAS HEREBY ORDAINS: SECTION 1. The recitals and findings contained in the preamble of this ordinance are incorporated into the body of this ordinance. SECTION 2. The City Manager, or his designee, is hereby authorized to execute the Agreement on behalf of the City of Denton and to carry out the City's responsibilities and rights under the Agreement, including without limitation the authorization to make the expenditures set forth in the Agreement. SECTION 3. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 12011. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: Page 2 THE STATE OF TEXAS § COUNTY OF DENTON § ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT WITH GTM DEVELOPMENT, LTD This Economic Development Program Grant Agreement ("Agreement") is made and entered into by and between GTM DEVELOPMENT, LTD. ("Grantee"), a Texas limited partnership, and the CITY OF DENTON, TEXAS a Texas municipal corporation, for the purposes and considerations stated below. Grantee and the City are individually referred to as a "PAM" and collectively as the "Parties." Section 1. Authorization. This Agreement is made pursuant to the Economic Development Program provisions of TEXAS LOCAL GOVERNMENT CODE, Chapter 380 (the "Act") to promote local economic development and to stimulate business and commercial activity in the City. Section 2. Definitions. "Anchor Store" for the purposes of this agreement shall be defined as Dillard's, J.C. Penney, Macy's, and Sears. "Eligible Costs" means the cost of any improvements included within the categories identified on Exhibit A. Costs incurred prior to the execution of this Agreement, with the exception of the Mall Roof Replacement, will not be considered Eligible Costs. "Eligible Sales Tax Receipts" means the total amount of sales tax received by the City each month, during the term of this Agreement, as a result of the Total Taxable Sales generated from the businesses located within the Property boundaries, less the Monthly Mall Baseline amount of $95,898. "Grantee" or "GTM" means GTM Development, Ltd., and its successors and assigns as permitted by this Agreement. Page 1 "Incentive" shall mean 15.83% of Required Investment. The anticipated required investment of $60,000,000 will produce an incentive of $9,500,000 but may be less depending on the level of Required Investment. The maximum incentive provided will be $9,500,000. "Initial Phase Completion" means the completion of a minimum $9,500,000 in Eligible Costs within the Property boundaries. The Grantee must provide evidence, satisfactory to the City that these investments were made toward improvements to Eligible Costs. "Monthly Mall Baseline" represents the 1.5% General Sales Tax received by the City in 2010 from contributors located within the Property divided by 12 months and shall be set at $95,898 per month. "Monthly Sales Tax Report" means the monthly report received from the Texas State Comptroller that shows the amount of Total Taxable Sales for a month period. "Pro e " means approximately 73.2 acres encompassing the parcels described in Exhibit B as "Mall Premises." "Program Effective Date" means a date at least sixty (60) days following (i) the date the Grantee provides sufficient evidence of accomplishing Initial Phase Completion in properties and improvements located within the Property boundaries and (ii) a written request from Grantee that Program Grant be initiated. "Program Grant" means 240 consecutive monthly payments made by the City to Grantee beginning on the Program Effective Date. Each monthly payment will be calculated as a percentage of the 1.5% City sales tax collected by the Texas State Comptroller with respect to Total Taxable Sales as reported in the Monthly Sales Tax Report, less the Monthly Mall Baseline, all as described in Section 5.1 of this Agreement. "Required Investment" means an anticipated investment of $60,000,000, but no less than $45,000,000, on or before October 1, 2014, in acquisition, new construction, renovation, and /or expansion of improvements located within the Property boundary, Page 2 including but not limited to Property acquisition costs, deferred maintenance, Property renovations, construction services, architectural and engineering fees, legal fees, leasing and development fees, construction interest, finance fees and interest on Property, tenants allowances, retail or build out expenditures, anchor investments and all other documented costs associated with the redevelopment of the Property. Investments made by others within the Property boundary may count toward the Required Investment, with the exception of any monies paid to the Grantee for the purchase of land and/or strictures. The Grantee must provide evidence, reasonably satisfactory to the City that these investments were made toward improvements to the Property. Investments made prior to the execution of this Agreement, with the exception of the Mall Roof Replacement and Deferred Maintenance, will not be considered as eligible Required Investments. "Total Taxable Sales" means the total amount of all sales from which sales and use tax are collected from businesses located within the Property boundaries. Section 3. Terms of Program Grants. 3.1 This Agreement shall be effective as of the date executed by both Parties. At any time following execution of this Agreement and following Initial Phase Completion of the real improvements (but not later than October 1, 2014), Grantee may designate the first day of any month to be the Program Effective Date by providing written notice to the City at least 60 days prior to the requested Program Effective Date. The City will begin making Program Grant monthly installment payments on the designated Program Effective Date and shall continue to make such monthly installment payments for 240 consecutive months as provided by this Agreement. 3.2 Upon reaching Initial Phase Completion and the Program Effective Date has been established, the Incentive will be capped and is conditioned on the Required Investment, which is anticipated to be $60,000,000 on or before October 1, 2014. If the Required Investment is less than $60,000,000, but not less than $45,000,000, the Incentive will be reduced proportionally and capped as a percentage of Required Investment demonstrated on October 1, 2014. The capped Incentive amount may be less than but not exceed $9,500,000. Page 3 3.3 This Agreement will terminate with respect to the Program Grant upon the earlier to occur of (i) the date Grantee has been paid the full Incentive for the Eligible Costs, or (ii) 240 months after the Program Effective Date regardless of whether Grantee has been paid the full Incentive. Furthermore the Agreement will also terminate for failure to make Required Investment by October 1, 2014. 3.4 If an Anchor Store leaves the mall on or before October 1, 2014 to relocate within the City of Denton and the space does not redevelop with a sales tax-producing entity within 24 months of becoming vacant, the Monthly Mall Baseline shall be adjusted to account for the lost monthly sales tax from that Anchor Store property. The City of Denton and GTM agree to meet to identify the appropriate amount of any Monthly Mall Baseline adjustment by utilizing sales tax documents from GTM and from the State Comptroller's office. The City, following such discussions, shall reasonably determine the amount of any such adjustment. 3.5 If after an Anchor Store leaves the mall resulting in a reduction in the Monthly Mall Baseline as described in Section 3.4, the vacated space is then reoccupied by a sale tax-producing entity, the Monthly Mall Baseline will be increased by an amount proportional to the original adjustment. The increase in the Monthly Mall Baseline will be adjusted in an amount based on the sales tax for the new entity as a percentage of the original Mall Baseline reduction. The adjustment will occur once a full year of sales tax information is available for the new providing entity. The City of Denton and GTM agree to meet to identify the appropriate amount of any Monthly Mall Baseline adjustment by utilizing sales tax documents from GTM, the retailer, and from the State Comptroller's office. An increase in the Monthly Mall Baseline as described in this Section may not exceed the amount of the Monthly Mall Baseline reduction due to the Anchor Store leaving as described in Section 3.4. The City, following such discussions, shall reasonably determine the amount of any such adjustments. Section 4. Installment Payments for Program Grants. For each month during the term of the Program Grant, the City agrees, subject to the conditions contained in this Agreement, to make a Program Grant installment payment to Page 4 Grantee on or before thirty days following the City's receipt from the State Comptroller of the Monthly Sales Tax Report indicating Total Taxable Sales from the businesses located within the Property boundaries. The Program Grant installment payments shall be calculated as provided in Section 5.1 of this Agreement. Program Grant installment payments may be withheld at any time if there are delinquent property taxes on any property owned by Grantee and located in the City, and such installment payments will not be resumed until such delinquency is cured. Notwithstanding anything contained herein to the contrary, if completion of either the Initial Phase Completion and/or Required Investment have not occurred on or before October 1, 2014, the City, in its sole discretion, may cease the Program Grant installment payments and terminate this Agreement. Grantee may in such case retain any Program Grant received prior to October 1, 2014. Section 5. Calculation of Installment Payments. 5.1 Program Grant monthly installment payments during the term of the Program Grant (as set forth in Section 3.1) shall be calculated as 50% of the Eligible Sales Tax Receipts, as established by the most recent State Comptroller's Monthly Sales Tax Report. The City's obligation to make such payments is contingent upon the City's receipt of the Monthly Sales Tax Report; provided, however, if the State Comptroller ceases to issue Monthly Sales Tax Reports, the City and Grantee shall cooperate to arrive at a reasonably equivalent and mutually agreeable alternative method of computing the Program Grant monthly installment payments. 5.2 Any adjustments resulting from overpayment or underpayment of sales tax by a retail business located within the Property boundaries will be reflected in the monthly Program Grant installment payment in which such overpayment or underpayment was reported by the State Comptroller. If for any reason the City is required to remit to the State Comptroller sales tax previously collected on reported sales within the Property boundaries, the next scheduled Program Grant installment payment will be adjusted by the amount of overpayment or underpayment. Should the adjustment result in a negative Program Grant installment payment due, Grantee will remit the balance to the City within 30 days. Page 5 Section 6. Other Grantee Obligations. In consideration of the Program Grant, Grantee agrees as follows: 6.1 In the event of tenant turnover, Grantee shall diligently seek to obtain quality retail tenants that are new to the Denton retail market. However, existing Denton retail businesses shall not be prohibited from leasing retail space at the Property. 6.2 The Property will not be conveyed during the term of this Agreement to any entity whose ownership of the Property would cause the Property to become exempt or partially exempt from ad valorem taxes unless an agreement with the City to ensure a program of payments in lieu of ad valorem taxes has first been agreed upon. Section 7. Audits and Monitoring. 7.1 From time to time prior to and after Initial Phase Completion and reaching the Required Investment level the Grantee will submit statement(s) of Eligible Costs for expenditures. City will review the statement(s) and within 30 days provide Grantee with a letter, signed by the City Manager or his designee, notifying Grantee which items on the statement(s) constitute Eligible Costs or requesting additional detail if needed to make the determination of eligibility. 7.2 During the term of this Agreement, the City reserves the right to conduct audits of the sales and use tax records of businesses located within the Property if, in the sole opinion of the City, such action is determined to be necessary. Grantee agrees upon request to use reasonable efforts to assist the City in obtaining such records from tenant taxpayers. Failure to provide such assistance shall be grounds for default, and City may withhold any Program Grant installment payments until such assistance is provided. During the term of this Agreement, the City will keep, or cause to be kept, copies of the Monthly Tax Reports and proper and current books and accounts in which complete and accurate entries shall be made of the amount of sales taxes received by the City from the State of Texas attributed to retail sales within Property boundaries and such other calculations, allocations and payments required by this Agreement. During the term, the City shall prepare within 180 days after the close of each fiscal year of the City, a complete financial Page 6 statement for such year in reasonable detail covering the above information, and shall furnish a copy of such statement to Grantee. Upon the request of Grantee, and at Grantee's expense, City shall have the annual Program Grant financial statements prepared by an independent certified public accountant. Upon request of Grantee, City shall provide copies of City records related to the Program to investors, lenders, or other parties designated by the Grantee. Section 8. Default. If a parry fails to perform any of its obligations under this Agreement and such failure is not cured within 30 days after written notice, the failure of the non-performing parry to cure within such 30 day period (or to commence to cure if the nature of the failure cannot reasonably be cured within 30 days) shall constitute a default under this Agreement and shall entitle the non-defaulting party to all remedies available at law or in equity (including injunctive relief, specific performance, and suspending or withholding Program Grant payments); PROVIDED, HOWEVER, NOTWITHSTANDING THE FOREGOING, (i) MONETARY DAMAGES SHALL BE LIMITED TO THE AMOUNT NECESSARY TO ENFORCE SPECIFIC PERFORMANCE OF THE FAILED OBLIGATION; (ii) THE CITY CANNOT TERMINATE THIS AGREEMENT UNLESS (1) INITIAL PHASE COMPLETION OF THE REAL IMPROVEMENTS DOES NOT OCCUR ON OR BEFORE OCTOBER 1, 2014 AS PROVIDED BY SECTIONS 3 AND 4 HEREOF, OR (2) COMPLETION OF THE REQUIRED INVESTMENT DOES NOT OCCUR ON OR BEFORE OCTOBER 1, 2014 AS PROVIDED BY SECTIONS 3 AND 4 HEREOF, OR (3) ANY OTHER MATERIAL DEFAULT NOT CURED AS DEFINED IN THIS SECTION. Section 9. Mutual Assistance. The City and the Grantee shall do all things necessary or appropriate to carry out the terms and provisions of this Agreement and to aid and assist each other in carrying out the terms and provisions of this Agreement. Section 10. Indemnity. It is understood and agreed that Grantee in performing its obligations hereunder is acting independently and the City assumes no responsibilities or liabilities in connection therewith to third parties and Grantee agrees to defend, indemnify and hold harmless the Page 7 City from and against any and all claims, suits, and causes of action of any nature whatsoever arising out of Grantee's obligations hereunder. Grantee's indemnification obligations include the payment of reasonable attorney's fees and expenses incurred by the City in connection with such claims, suits, and causes of action. Section 11. Representations and Warranties by the City. The City represents and warrants that: 11.1 The City is a home rule Texas municipal corporation and has the power to enter into and has taken all actions to date required to authorize this Agreement and to carry out its obligations hereunder; 11.2 The City knows of no litigation, proceedings, initiative, referendum, investigation or threat of any of the same contesting the powers of the City or its officials with respect to this Agreement that has not been disclosed in writing to Grantee; 113 The City knows of no law, order, rule or regulation applicable to the City or to the City's governing documents that would be contravened by, or conflict with the execution and delivery of this Agreement; 11.4 This Agreement constitutes a valid and binding obligation of the City, enforceable according to its terms, except to the extent limited by bankruptcy, insolvency and other laws of general application affecting creditors' rights and by equitable principles, whether considered at law or inequity. Subject to the indemnity provided by Section 10 of this Agreement, the City will defend the validity of this Agreement in the event of any litigation arising hereunder that names the City as a parry or which challenges the authority of the City to enter into or perform its obligations hereunder. City recognizes that Grantee intends to commence construction and expend substantial monies in reliance upon the accuracy of the representation and warranty of the City as set forth in this Section 11. Section 12. Representations and Warranties by Grantee. Grantee represents and warrants that: Page 8 12.1 Grantee is a Texas limited partnership duly organized and validly existing under the laws of the State of Texas and is, or will prior to the effective date of this Agreement, be qualified to do business in the State of Texas; has the legal capacity and the authority to enter into and perform its obligations under this Agreement, upon acquisition of all or a portion of the Property; 12.2 The execution and delivery of this Agreement and the performance and observance of its terms, conditions and obligations have been duly and validly authorized by all necessary action on its part to make this Agreement; 123 Grantee knows of no litigation proceeding, initiative, referendum, or investigation or threat of any the same contesting the powers of the City, Grantee or any of its principals or officials with respect to this Agreement that has not been disclosed in writing to the City; and 12.4 Grantee has the necessary legal ability to perform its obligations under this Agreement and has the necessary financial ability, through borrowing or otherwise, to construct improvements on the portions of the Property that Grantee may acquire. This Agreement constitutes a valid and binding obligation of Grantee, enforceable according to its terms, except to the extent limited by bankruptcy, insolvency and other laws of general application affecting creditors' rights and by equitable principles, whether considered at law or in equity. Section 13. Rights of Lenders and Interested Parties. The City is aware that financing for acquisition, development, and/or construction of the improvements required by this Agreement may be provided, in whole or in part, from time to time, by one or more third parties, including, without limitation, lenders, major tenants, equity partners and purchasers or developers of portions of the Property (individually, an "Interested Party" and collectively, "Interested Parties"). In the event Grantee fails to perform any of its obligations under this Agreement, all notices to which Grantee is entitled under Section 8 of this Agreement shall be provided to the Interested Parties at the same time they are provided to Grantee (provided the Interested Parties have previously been identified to the City and provided their notice addresses to the City). If Page 9 any Interested Parry is permitted under the terms of its agreement with Grantee, to cure the event of default and/or to assume Grantee's position with respect to this Agreement, the City agrees to recognize such rights of the Interested Party and to otherwise permit the Interested Parry to cure the event of default and to assume all of the rights and obligations of Grantee under this Agreement. The City shall, at any time upon reasonable request by Grantee, provide to any Interested Party an estoppel certificate or other document evidencing that this Agreement is in full force and effect and that no event of default by Grantee exists hereunder (or, if appropriate, specifying the nature and duration of any existing event of default). Upon request by any Interested Party, the City will enter into a separate assumption or similar agreement with such Interested Parry, consistent with the provisions of this Section 13. Section 14. Compliance. This Agreement shall be conditioned upon and subject to compliance with all applicable federal, state and city laws, ordinances, rules and regulations, including, without limitation, all provisions of the Development Code of the City of Denton. Section 15. Limitation. This Agreement shall never be construed as constituting permission or authority for development or construction pursuant to Chapter 245 of the Texas Local Government Code. Section 16. Entire Agreement; Changes and Amendments. This Agreement constitutes the entire agreement of the Parties with regard to the subject matter hereof. Except as specifically provided otherwise in this Agreement, any alterations or deletions to the terms of this Agreement shall be by written amendment executed by both Parties to this Agreement. Section 17. Successors and Assigns. This Agreement shall be binding on and inure to the benefit of the Parties, their respective successors and assigns. Grantee may assign all or part of its rights and/or obligations in or to or under this Agreement upon written notice to the City of such assignment. The City may execute an amendment to this Agreement evidencing the Page 10 assignment and the City's execution of said amendment to the Agreement shall not be unreasonably withheld or delayed. Notwithstanding anything contained herein to the contrary, Grantee may assign this Agreement without the consent of the City, provided Grantee retains more than 50% of the controlling interest (whether by stock, partnership or otherwise) in that portion of the Property that contains the mall. In addition, without the consent of the City, Grantee may assign this Agreement to any lender ("Lender") providing a loan to Grantee and Lender shall be entitled to succeed to Grantee's rights under this Agreement if Lender obtains title to Grantee's portion of the Property by foreclosure or deed-in-lieu of foreclosure. Lender may assign any rights so acquired to a purchaser of all or a portion of the Property from Lender following any such foreclosure or deed-in-lieu of foreclosure; provided, however, that such assignment by Lender shall be subject to the provisions of this Section. If an assignee agrees in writing to be bound by the terms and conditions of this Agreement and executes an amendment to this Agreement stating same, the assignor shall be released as to the obligations assigned but not as to any obligations or liabilities of the assignor to the City that arose prior to the assignment. Section 18. Notice. Any notice and/or statement required or permitted to be delivered shall be deemed delivered five business days after being deposited in the United States mail, certified with return receipt requested, postage prepaid, addressed to the appropriate party at the following addresses, or at such other addresses provided by the Parties in writing. Any such notice and/or statement shall also be deemed delivered when delivered by a nationally recognized delivery company (e.g., FedEx or UPS) with evidence of delivery signed by anyone at the delivery address. If to Grantee: Gar Herring The MGHerring Property Group, LLC. 5710 LBJ Freeway, Ste. 450 Dallas, Texas 75240 Phone: 972.448.0200 Fax: 972.448.0248 Page 11 With a copy to: Herbert D. Weitzman GTM Development, Ltd. 3102 Maple Avenue, Ste. 350 Dallas, Texas 75201 Phone: 214.954.0600 Fax: 214.953.0866 If to the City: City of Denton Attn: City Manager 215 E. McKinney Denton, Texas 76201 Phone: 940349.8307 Fax: 940349.8596 With a copy to: City of Denton Attn: City Attorney 215 E. McKinney Denton, Texas 76201 Phone: 940349.8333 Fax: 940382.7923 Section 19. Venue. The obligations of the Parties are performable in Denton County, Texas, and if legal action is necessary to enforce this Agreement, exclusive venue shall lie in Denton County, Texas. Section 20. Applicable Laws. This Agreement is made subject to the provisions of the Charter and ordinances of City, as amended, and all applicable state and federal laws. Section 21. Governing Law. This Agreement shall be governed by and construed in accordance with the laws and court decisions of the State of Texas. Page 12 Section 22. Benefit of Agreement. This Agreement is executed solely for the benefit of the Parties and their successors and assigns, and nothing in this Agreement is intended to create any rights in favor of or for the benefit of any third party. Section 23. Legal Construction/Partial Invalidity of Agreement. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision thereof and it is the intention of the Parties to this Agreement that in lieu of each provision that is found to be illegal, invalid or unenforceable, upon written, mutual agreement of both parties and approval of the City Council, a provision be added to this Agreement which is legal, valid and enforceable and is as similar in terms as possible to the provision found to be illegal, invalid or unenforceable. Page 13 EXECUTED and effective as of the day of , 2011, by the City, signing by and through its Mayor, duly authorized to execute same by action of the City Council, and by Grantee, acting through its duly authorized officials. CITY OF DENTON, TEXAS MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY GRANTEE: GTM DEVELOPMENT, LTD., a Texas limited partnership By: CHV Management One, LLC a Texas limited liability company, General Partner By: Herbert D. Weitzman, Manager By: Gar Herring, Manager Page 14 ACKNOWLEDGMENTS STATE OF TEXAS § COUNTY OF DENTON § This instrument was acknowledged before me on the day of 12011, by Mark A. Burroughs, Mayor of the City of Denton, Texas, on behalf of said city. Notary Public, in and for the State of Texas My Commission expires: STATE OF TEXAS § COUNTY OF § This instrument was acknowledged before me on the day of 2011, by Herbert D. Weitzman, the Manager of GTM DEVELOPMENT, LTD, a Texas limited partnership, in its capacity as the General Partner of CHV Management One, LLC, a Texas limited liability company, on behalf of the limited partnership and the limited liability company. Notary Public, in and for the State of Texas My Commission expires: STATE OF TEXAS § COUNTY OF § This instrument was acknowledged before me on the day of 12011, by Gar Herring, the Manager of GTM DEVELOPMENT, LTD, a Texas limited partnership, in its capacity as the General Partner of CHV Management One, LLC, a Texas limited liability company, on behalf of the limited partnership and the limited liability company. Notary Public, in and for the State of Texas My Commission expires: Page 15 EXHIBIT A CATEGORIES OF ELIGIBLE COSTS Categories of Eligible Costs Estimated Costs Mall Roof Replacement (completed) $2,000,000 Parking Lot/Site work $1,650,000 Life/Safety Systems $300,000 Site Signage $400,000 Landscape & Irrigation $300,000 Mall Expansion, Exterior Facade Rework & Entrances $2,200,000 Interior Common Area Upgrades $2,400,000 Open Space Project 300,000 Development Fees $250,000 Anchor Store Infrastructure $6,000,000 • HVAC • Roof Replacement • Parking Lot Resurface • Site work Modifications • Landscape & Irrigation • Exterior Facade Rework & Entrances • Structural Additions excludes interior finish-out TOTAL $15,800,000 The actual cost of any individual Categories of Eligible Improvements may vary from the Estimated Costs shown on this Exhibit A. Grantee has the right to adjust individual line items of Estimated Costs of the individual Categories of Eligible Improvements. Page 16 EXHIBIT B LEGAL DESCRIPTION OF THE PROPERTY BEING ALL OF LOTS 1-6 AND LOTS 8-10, BLOCK 1, OF THE REPLAT OF GOLDEN TRIANGLE ADDITION AS RECORDED IN CABINET B, PAGE 124, OF THE PLAT RECORDS, DENTON COUNTY, TEXAS, ALL OF LOT 11, BLOCK 1, OF THE FINAL PLAT OF GOLDEN TRIANGLE ADDITION, SECOND FILING AS RECORDED IN VOLUME B, PAGE 350, OF THE PLAT RECORDS, DENTON COUNTY, TEXAS, ALL OF LOT 12R AND LOT 13, BLOCK 1, OF THE MINOR PLAT OF GOLDEN TRIANGLE ADDITION, SECOND FILING AS RECORDED IN DOCUMENT NO. 2009-210, OF THE PLAT RECORDS, DENTON COUNTY, TEXAS, AND ALL OF LOT 7R AND LOT 14, BLOCK 1, OF THE AMENDING PLAT OF GOLDEN TRIANGLE ADDITION AS RECORDED IN DOCUMENT NO. 2010-127, OF THE PLAT RECORDS, DENTON COUNTY, TEXAS. Page 17 AGENDA INFORMATION SHEET AGENDA DATE: August 8, 2011 DEPARTMENT: Utilities hV- ACM: Howard Martin, 349-8232 SUBJECT Consider adoption of an ordinance authorizing the City Manager, or his designee, to execute for and on behalf of the City of Denton, Texas (the "City") an Easement Encroachment Agreement (the "Agreement"), by and between the City and the University of North Texas ("UNT"), regarding the encroachment by UNT upon a drainage basin easement owned by the City, encumbering an approximate 5.297 acre tract of land, more or less, located in the E. Pulchalski Survey, Abstract Number 996 and the A.N.B. Tompkins Survey, Abstract No. 11246, generally located at 1251 South Bonnie Brae Street, City of Denton, Denton County, Texas; providing for termination of ordinance and agreement upon failure of UNT to approve and execute the agreement, and providing an effective date. The Public Utility Board recommends approval (5-0). BACKGROUND The City of Denton owns the easement interest rights within a variable width drainage easement, located along the eastern boundary of South Bonnie Brae Street, south of the I-35E highway. The Easement was granted to the City by the University of North Texas ("UNT") and was filed on January 7, 2004 under Clerk's File Instrument Number 2004-2786, Real Property Records, Denton County Texas. The grant of the drainage easement was a Development Code requirement for the constriction of the dorms and athletic facilities at that time. In the Summer of 2011, UNT made a Pre-Application submission, through the Development Review Committee, outlining the installation of 3 wind turbines and their related underground mechanical facilities as an energy savings measure in conjunction with the constriction of the Mean Green Stadium. The proposed locations of the wind turbines are situated within the existing drainage easement on the property. The consultant for UNT was instructed to make an Easement Encroachment Application with the City and that application was facilitated in June of 2011. UNT had petitioned the federal government for funds to constrict the project, and would have made the Easement Encroachment Application prior to June of 2011, had it not been for the delay of approval of those federal funds. UNT would likely have not moved forward on the project had it not been for the federal funding of the project As part of the requirements associated with such funding, the constriction of the turbines must be completed and functioning before the end of the summer of 2011. In order to expedite the constriction process, the City issued a letter ("Letter") in July 2011, stating that the City would not prevent the commencement of constriction activities, prior to the finalization by the parties of the Easement Encroachment Agreement. However, the Letter further provided that such activities would be at the risk of UNT in the event that the City should fail to approve the Easement Encroachment Agreement. UNT is requesting the City approve and finalize the Easement Encroachment Agreement. 1 OPTIONS 1. Recommend approval of granting the Easement Encroachment request 2. Do not recommend approval RECOMMENDATION Staff endorses approval of granting the Easement Encroachment request. ESTIMATED PROJECT SCHEDULE August 2011 PRIOR ACTION/REVIEW Development Review Committee August 8, 2011 - The Public Utility Board recommends approval (5-0). FISCAL INFORMATION Not applicable BID INFORMATION Not applicable Exhibits 1. Ordinance 2. Encroachment Agreement 3. Easement Layout Exhibit 4. Location Map 5. PUB Minutes Respectfully submitted, Jimmy D. Coulter Director of Water/Wastewater Water Administration Prepared by: Doreen E. Blackstone Right-of-Way Agent Real Estate and Capital Support 2 ORDINANCE NO. 2011- AN ORDINANCE AUTHORIZING THE CITY MANAGER, OR HIS DESIGNEE, TO EXECUTE FOR AND ON BEHALF OF THE CITY OF DENTON, TEXAS (THE "CITY") AN EASEMENT ENCROACHMENT AGREEMENT (THE "AGREEMENT"), BY AND BETWEEN THE CITY AND THE UNIVERSITY OF NORTH TEXAS ("UNT"), REGARDING THE ENCROACHMENT BY UNT UPON A DRAINAGE BASIN EASEMENT OWNED BY CITY, ENCUMBERING AN APPROXIMATE 5.297 ACRE TRACT OF LAND, MORE OR LESS, LOCATED IN THE E. PUCHALSKI SURVEY, ABSTRACT NUMBER 996 AND THE A.N.B. TOMPKINS SURVEY, ABSTRACT NO. 1246, GENERALLY LOCATED AT 1251 SOUTH BONNIE BRAE STREET, CITY OF DENTON, DENTON COUNTY, TEXAS; PROVIDING FOR TERMINATION OF ORDINANCE AND AGREEMENT UPON FAILURE OF UNT TO APPROVE AND EXECUTE THE AGREEMENT; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1: The City Manager, or his designee, is hereby authorized to execute an Easement Encroachment Agreement ("Agreement'), by and between the City of Denton, Texas and the University of North Texas, in the form of the Agreement attached to and made a part of this ordinance for all purposes. SECTION 2. In the event the University of North Texas shall not approve and execute the Easement Encroachment Agreement on or before , 2011, this ordinance and the Easement Encroachment Agreement shall be null and void and of no further force and effect. SECTION 3: This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 12011. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: EASEMENT ENCROACHMENT AGREEMENT This Easement Encroachment Agreement ("Agreement") is by and between the City of Denton, Texas, a Texas home rule municipal corporation ("City") and the University of North Texas, a Texas State University ("UNT"), both City and UNT being governmental entities with the power and authority to enter into this Agreement. Whereas, UNT granted and conveyed to the City a Drainage Basin Easement, being filed under Clerk's File Instrument Number 2004-2786, Real Property Records, Denton County, Texas for storm water detention basin (the "Drainage Basin") related purposes; and WHEREAS, UNT has requested permission to use an area within the boundaries of the Drainage Basin, as described and defined below, located in Denton County, Texas for the installation of infrastructure described as: three (3) wind generating turbines and associated towers and other infrastructure and related appurtenances, as depicted on Exhibit "B", attached hereto and made a part hereof (collectively, the Encroaching Facilities"); and WHEREAS, the Encroaching Facilities will be located within those portions of the Drainage Basin more particularly described in Exhibit "A", attached hereto and made a part hereof by reference (the "Encroachment Area"); and WHEREAS, the City Council of the City expressly finds that the granting of consent to encroach within the Drainage Basin and occupy the Encroachment Area to UNT, upon the terms, conditions and provisions set forth below, satisfies the public purpose of the City of Denton, Texas; and WHEREAS, the functions provided herein are functions each party is authorized to perform individually; and WHEREAS, City and UNT have entered into this Agreement to set forth certain responsibilities related to the use of the Drainage Basin and the Encroaching Facilities. NOW, THEREFORE, for the consideration set forth herein and the furtherance of the public purpose of the City of Denton, Texas, the City hereby grants consent to UNT to locate, maintain and repair the Encroaching Facilities within the Encroachment Area, subject to the following terms and conditions: 1. It is understood and agreed that the City does not own the fee simple estate to the Encroachment Area. UNT is responsible to obtain whatever rights and permission, other than the rights granted herein by the City, that are necessary from any others having an interest in the Encroachment Area, including, without limitation, any other parties owning easement interests therein. This Agreement shall extend to and be binding upon UNT and its successors and permitted assigns, and shall not be interpreted or construed as (i) a conveyance of any real property interest of any kind or nature; or (ii) a waiver of any rights held by the City within the Encroachment Area, except as expressly and specifically provided in this Agreement. 2. The Encroaching Facilities shall be constricted in a manner so as not to interfere with any City facilities and shall be constricted in accordance with all Code requirements and the Plans and Specifications (herein so called) to be submitted to City, as provided herein. UNT shall submit the Plans and Specifications for any contemplated Encroaching Facilities to the City prior to constriction activities of any kind within the Encroachment Area. City may review the Plans and Specifications for compliance with the Code. In the event the Plans and Specifications are not in compliance with the Code, UNT shall not conduct any activities related to the Encroaching Facilities until the Plans and Specifications are modified to comply with the Code. Once approved, UNT shall not make any modifications to the Plans and Specifications, without written approval by the City ("Authorized Modifications"), acting by and through the City Engineer. When referring to the Encroaching Facilities within this Agreement, such term shall mean the Encroaching Facilities constricted in accordance with the approved Plans and Specifications, Authorized Modifications, if any, and the Code. 3. UNT shall not allow any lien or claim of any kind to be filed or asserted on or against the property interests owned or claimed by City and shall take whatever actions are necessary to cause the release of such lien or claim in the event such lien or claim is filed or asserted. 4. The Encroaching Facilities are and shall be at all times subordinate to the City's existing easement rights, including without limitation, the use of the Drainage Basin for storm water detention and storage purposes. 5. UNT shall, to the extent permitted by law, defend, indemnify and hold harmless the City, its employees, elected officials, officers and agents, and shall require and cause each contractor, and each subcontractor of each contractor, performing any work within or otherwise occupying the Encroachment Area, to defend, indemnify and hold harmless the City, its employees, elected officials, officers and agents, from and against any and all claims, expenses (including attorneys' fees), damages, losses and judgments arising out of, related to or incident to the presence, constriction, operation and maintenance of the Encroaching Facilities and/or UNT's and/or any other party acting under UNT's authority, occupation or presence on or within the Drainage Basin. Before performing any work within the Encroachment Area, UNT and its agents, contractors and subcontractors shall procure and maintain insurance as specified in Section 6, below, and shall provide to the City such certificate or certificates of insurance complying with the City's insurance requirements, as set forth in Section 6, below, (i) as concerns UNT, on or before the effective date of this Agreement, and (ii) as concerns contractors and subcontractors, prior to any constriction activities related to occupation of the Encroachment Area or the Encroaching Facilities. The covenants contained in this Section 5 shall survive the expiration or termination of this Agreement. 6. UNT shall purchase and maintain, and shall require and cause each contractor and each subcontractor of each contractor performing any working within or otherwise occupying the Encroachment Area, to purchase and maintain the following insurance coverages: A. Commercial General Liability insurance with a limit of not less than $1,000,000 for each occurrence and $2,000,000 in the aggregate for bodily injury, death or destruction of property; Page 2 B. Business Auto Liability insurance (including coverage for Owned, Hired and Non-Owned Autos) with a limit of not less than $500,000.00 for each person and $1,000,000.00 for each single occurrence for bodily injury or death and $500,000.00 for each single occurrence for injury to or destruction of property. The Commercial General Liability insurance and the Business Auto Liability insurance required herein shall name the City as an "Additional Insured", for damages arising from or related to the constriction and maintenance of the Encroaching Facilities and/or occupation of the Encroachment Area (i) as concerns UNT, during the term of this Agreement; and (ii) as concerns contractors and subcontractors, during all times of constriction and/or occupation of the Encroachment Area. 7. UNT shall limit constriction and other operations, including, without limitation, cuts needed in the Encroachment Area, if permitted, required for constriction of the Encroaching Facilities so as to prevent constriction equipment from damaging existing City facilities located within the Encroachment Area and other areas. Without limiting the generality of Section 5 above, UNT shall be responsible for any damage caused, in whole or in part, to any City facilities located within the Encroachment Area and other areas affected in any way by activities conducted pursuant to this Agreement. Further, without limiting the generality of Section 5, above, in the event any City property is damaged or destroyed by UNT related to the rights granted herein, such damage may, at the sole election of City, be repaired or replaced by the City at UNT's expense, and payment by UNT to City is due upon UNT's receipt of an invoice from the City. 8. The City shall not be responsible for any costs of constriction, operation and maintenance or any other matter related to the Encroaching Facilities. It is further agreed that the City shall not be liable or responsible for any damage to the Encroaching Facilities as a result of the City's or public's use of the Drainage Basin, AND UNT, FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY RELEASES THE CITY, ITS OFFICERS, EMPLOYEES, ELECTED OFFICIALS, AND AGENTS, FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES AND LOSSES, OF ANY KIND OR NATURE, INCLUDING WITHOUT LIMITATION, ANY CLAIMS, DAMAGES AND LOSSES ARISING FROM, IN WHOLE OR IN PART, THE NEGLIGENCE, OF ANY KIND, TYPE, OR DEGREE, OF THE CITY, ITS OFFICERS, EMPLOYEES, ELECTED OFFICIALS, AND AGENTS, AS A RESULT OF OR RELATED TO THE CITY'S OR PUBLIC' S USE, OF ANY KIND, OF THE DRAINAGE BASIN AND/OR ACTIVITIES RELATED TO THE PLANNING OR APPROVAL OF THE DRAINAGE BASIN. THE COVENANT AND RELEASE SET FORTH IN THIS SECTION 8 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT. 9. UNT shall not place any stricture or other matter of any kind, other than the Encroaching Facilities, upon Encroachment Area. 10. Grading, if permitted, shall be conducted so as to leave the Encroachment Area in the condition existing prior to any activities conducted pursuant to this Agreement. Spoil dirt and all trash shall be removed from the affected areas. Page 3 11. Constriction equipment and materials shall not be stored on the Encroachment Area or within the Drainage Basin related to the constriction, operation or maintenance of the Encroaching Facilities. Except as otherwise provided in the Plans and Specifications and the Authorized Modifications, if any, this Agreement does not provide authority, or consent of the City, for UNT to occupy any portion of the Drainage Basin other than the Encroachment Area. 12. In the event of default by City or UNT in any of the terms and conditions herein contained and such default continues for a period of forty five (45) days after the non-defaulting party provides notice of such default to the defaulting party, the non-defaulting party may, as its sole and exclusive remedy, either (i) terminate this Agreement; or (ii) seek specific performance of the terms of this Agreement. 13. UNT shall not be permitted to sell, assign, partially assign or transfer its interest in this Agreement, or any of its rights, duties, or obligations hereunder, without the prior written consent of the City. City shall not unreasonably withhold, delay or deny such consent or approval, although the City may condition consent on the express assumption of all obligations of UNT herein by the proposed assignee. No transfer, assignment or other change in rights granted by this Agreement shall be effective until the City shall have consented to such activity. 14. The failure of either party to enforce, or insist upon compliance with, any of the terms, limitations or conditions of this Agreement shall not constitute a general waiver or relinquishment of any such terms, limitations or conditions, but the same shall be and remain at all times in full force and effect. 15. This Agreement shall expire upon the earlier to occur of (i) the abandonment of the Encroaching Facilities; (ii) removal of the Encroaching Facilities from the Encroachment Area; and (iii) termination of this Agreement as otherwise provided herein. Upon expiration or termination of this Agreement, if so directed by the City, UNT shall remove the Encroaching Facilities, or applicable portion thereof, from the Encroachment Area. In the event the City shall not so direct, UNT may remove the Encroaching Facilities from the Encroachment Area. Any occupation of the Drainage Basin in connection with such removal related activities shall be completed on or before thirty (30) days after of the expiration or termination of this Agreement. Insurance, as required in Section 6, above, along with proof thereof satisfactory to the City, shall be maintained by UNT and its contractors during such thirty (30) day period. 16. This Agreement shall be governed by and construed under the laws of the State of Texas and is fully performable in Denton County, Texas. SOLE AND EXCLUSIVE VENUE FOR ANY ACTION ARISING UNDER OR RELATED TO THIS AGREEMENT SHALL EXCLUSIVELY LIE IN COURTS OF COMPETENT JURISDICTION LOCATED IN DENTON COUNTY, TEXAS. 17. Each party paying for the performance of governmental functions or services must make those payments from current revenues available to the paying party. Page 4 18. Neither City nor UNT waive, nor shall City and UNT be deemed by this Agreement to waive, any immunity or defense that would otherwise be available to it respecting any claim(s) made or arising from any act or omission arising under this Agreement. 19. All notices required by, or to which otherwise pertain to this Agreement, shall be sent by U. S. mail, postage prepaid, certified mail, return receipt respected, to the address set forth below, hand- delivered or sent via telephonic facsimile. Notice shall be effective upon the placing in the U.S. mail, as described above, or date of hand delivery or telecopy of the notice, to the addresses and/or telecopy numbers set forth below: City: UNT: City Manager Rich Escalante, Vice Chancellor City of Denton, Texas Administrative Services 215 E. McKinney 801 North Texas Boulevard, Room 319 Denton, Texas 76201 Denton, Texas 76201 Telecopy: (940) 349-8596 Telecopy: (214) 752-8827 20. This Agreement constitutes the entire Agreement between City and UNT regarding the subject matter of this Agreement, and supersedes all prior negotiations, representations, statements, understanding and/or agreements whether written or oral in nature. 21. This Agreement may be amended only by a duly authorized written document executed by a duly authorized official of both the City and UNT. 22. In the event that any provision of this Agreement shall be found by a court of competent jurisdiction to be contrary to law or otherwise invalid, the remaining portions of this Agreement shall remain valid and in full force and effect, to the extent lawfully possible. 23. UNT and the City each hereby represent and warrant to the other party, that the undersigned are the properly authorized officials of the City and UNT, and have the necessary authority to execute this Agreement for and on behalf of their respective governmental entity. Further, UNT and City hereby represent and warrant to the other party that any necessary ordinances or governmental actions establishing such authority have been duly passed and are now in full force and effect. Further, UNT represents and warrants to the City that it has the authority to enter into and perform this Agreement in accordance with terms hereof. 24. It is expressly stipulated by UNT and the City that time is of the essence with respect to this Agreement. Dated to be effective as of the day of 12011. Page 5 CITY OF DENTON, TEXAS BY: GEORGE C. CAMPBELL CITY MANAGER 215 E. McKinney Denton, Texas 76201 ATTEST: JENNIFER WALTERS, City SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: UNT: UNIVERSITY OF NORTH TEXAS BY: Name: Title: ATTEST: BY: Page 6 ACKNOWLEDGMENT THE STATE OF TEXAS § COUNTY OF DENTON § This instrument was acknowledged before me on 12011 by GEORGE C. CAMPBELL, City Manager of the City of Denton, Texas, on behalf of such municipality. Notary Public in and for the State of Texas My Commission Expires: ACKNOWLEDGMENT THE STATE OF TEXAS § COUNTY OF DENTON § This instrument was acknowledged before me on 2011 by , of the University of North Texas, a Texas State University, on behalf of such university. Notary Public in and for the State of My Commission Expires: Page 7 EXHIBIT "A" Pagel of 4 Exhibit "A" Metes and Bounds Description of a 9,584 Square Foot (0.2200 Acre) Tract of Land A. N. B. Tompkins Survey, Abstract Number 1246 E. Puchalsky Survey, Abstract Number 996 City of Denton, Denton County, Texas Being a 9,584 Square Foot (0.2200 Acre) tract of land situated in the A. N. B. Tompkins Survey, Abstract Number 1246, and in the. E. Puchalsky Survey, Abstract Number 996, in the City of Denton, Denton County, Texas, being part of that certain tract of land described in a deed to the State of Texas, for the benefit of North Texas State Teachers College, recorded in Volume 350, Page 271, Deed Records, Denton County, Texas, being part of another certain tract of land described in a deed to the State of Texas, for the benefit of North Texas State Teachers College, recorded in Volume 291, Page 82, Deed Records, Denton County, Texas, and being part of that certain Drainage Basin Easement described in a deed to the City of Denton, Texas, recorded in Instrument Number 2004-2786, Deed Records, Denton County, Texas, being more particularly described as follows: COMMENCING at a 1/2" iron rod found at the intersection of the north line of Willowwood Street (a 50 foot right-of-way) with the east line of Bonnie Brae Street (a variable width right-of-way); THENCE North 00026'43 West, along the east line of said Bonnie Brae Street, a distance of 614.60 feet to a point; THENCE North 00029'52" West, along the east line of said Bonnie Brae Street, a distance of 379.83 feet to a point; THENCE North 00°32'21" West, along the east line of said Bonnie Brae Street, a distance of 206.97 feet to the southwest corner of said Drainage Basin Easement; THENCE North 89°48'55" East, along the south line of said Drainage Basin Easement, a distance of 199.81 feet to a 5/8" iron rod stamped "JQ Eng" set at the POINT OF BEGINNING; THENCE crossing said Drainage Basin Easement, the following thirteen (13) courses: 1.) North 00°41' 11" West, a distance of 93.41 feet to a 5/8" iron rod stamped "JQ Eng" set for comer; 2.) South 89°18'49" West, a distance of 21.93 feet to a 5/8" iron rod stamped "JQ Eng" set for corner; 3.) North 00°41' 11" West, a distance of 20.00 feet to a 5/8" iron rod stamped "JQ Eng" set for comer; 4.) North 89°18'49" East, a distance of 21.93 feet to a 5/8" iron rod stamped "JQ Eng" set for corner; Exhibit "A", Page 1 of 4 EXHIBIT "A Page 2 of 4 5.) North 00°41'11" West, a distance of 370.68 feet to a 5/8" iron rod stamped "JQ Eng" set for comer; 6.) South 89°18'49" West, a distance of 37.41 feet to a 5/8" iron rod stamped "JQ Eng" set for corner; 7.) North 00°41'1 V West, a distance of 20.00 feet to a 5/8" iron rod stamped "JQ Eng" set for corner; 8.) North 89°18'49" East, a distance of 37.41 feet to a 5/8" iron rod stamped "JQ Eng" set for corner; 9.) North 00°41' 11" West, a distance of 289.86 feet to a 5/8" iron rod stamped "JQ Eng" set for corner; 10.) South 89°18'49" West, a distance of 12.88 feet to a 5/8" iron rod stamped "JQ Eng" set for comer; 11.) North 00°41' 11" West, a distance of 20.00 feet to a 5/8" iron rod stamped "JQ Eng" set for corner; 12.) North 89°18'49" East, a distance of 22.88 feet to a 5/8" iron rod stamped "JQ Eng" set for comer; 13.) South 00°41' l 1" East, a distance of 814.04 feet to a 5/8" iron rod stamped "JQ Eng" set for comer in the south line of said Drainage Basin' Easement; THENCE South 89°48'55" West, along the south line of said Drainage Basin Easement, a distance of 10.00 feet to the POINT OF BEGINNING, containing 9;584 Square Feet or 0.2200 of an acre of land. BASIS OF BEARINGS: Bearings are based on the State Plane Coordinate System, N.A.D. 83, Texas North Central Zone 4202. All distances described herein are surface and may be converted to grid by dividing by TxDOT conversion factor of 1.000150630. Company Name: Jaster-Quintanilla Dallas, L.P. By: ~1 hwm~n 21 dvLY201 STel. ' Surveyor' Name: Christopher Maman Q oN Registered Professional Land Surveyor, Texas No. 5532 I.. »A ...i2.. Pv ,Q . SURD Exhibit "A", Page 2 of 4 EXHIBIT "A" Page 3 of 4 SURVEY: A. N. B. TOMPKINS SURVEY, ABSTRACT NO. 1246, AND E. PUCHALSKY SURVEY, ABSTRACT NO. 996 LOCATION: CITY OF DENTON, DENTON COUNTY, TEXAS EASEMENT ACQUISITION: 0.2200 ACRE PLAT OF EXHIBIT "A" - MATCH LINE 10 996 BASIS OF BEARINGS: STATE PLANE (NAD 83). o I E. pUCHALSKy SURVEY' A M A-996 _ SURVEY LINE A-1246 APPROXIMATE LOCATION I 0 I 0 Z/ State of Texas N a I for the benefit of North Texas State Teachers College W Drainage Basin Easement ( Volume 291, Page 82 L'1 Instrument No. 2004-2786 d 0 o Deed Records, Denton County, Texas Deed Records, Denton County, Texas v I Co W I DEED LINE o. Z M N89'18'49"E 21.93' y N00'41'11"W 20.00' M ¢ 9VARIA TRACT O LAND ,~OMpK1Ns S89'18'49"W 21.93'3 0 )0 O z - - N89'48'55"E 199.81_ 10' J O/ POINT OF BEGINNING `DO S89'48'55"W 10.00' N State of Texas for the benefit of North Texas State Teachers College N Volume 350, Page 271 Deed Records, Denton County, Texas 0 0 z IW NOTE: 5/8" CAPPED IRON ROD STAMPED "JQ ENG" SET AT EACH CORNER AND o m POINT OF INTERSECTION OF THE 9,584 SQUARE FOOT TRACT OF LAND. V) = of w NOTE: BEARING AND DISTANCE BETWEEN THE CONTROLLING MONUMENTS ar SHOWN HEREON IS N89'54'56"E, A DISTANCE OF 1267.79'. M 0 3 LO NOTE: ALL BEARINGS ARE BASED ON THE STATE PLANE COORDINATE /N~RSTA Z Li N w 3S Z M N SYSTEM, N.A.D. 83 TEXAS NORTH CENTRAL ZONE 4202. ALL M w °o DISTANCES SHOWN ARE SURFACE AND MAY BE CONVERTED TO GRID Ln Z BY DIVIDING BY TxDOT CONVERSION FACTOR OF 1.000150630. w EXHIBIT "A" m M P.0 w .z 3 i7 B. d ,c`OV Southeast Corner of P.O.C. 8 POINT OF COMMENCING Vol. 350, P9. 271 z Controlling Monument Controlling Monument WILLOWWOOD STREET 1Fd 1/2"IR Fd 1/2"IR / S89'51'10"W 628.59' S89'58'39"W 639,20'i LOCATION MAP OF EASEMENT AND WILLOWWOOD STREET WHOLE PROPERTY BOUNDARY (N.T.S.) (50' RIGH -OF-WAY) 7~Zt~~ol~ OF Thy, al VNis GRAPHIC SCALE 6G113 T14,. 0 100 200 l " JASTER-QUINTANILLA DALLAS, LLP CHRISTOPHER MAMAN CONSULTING ENGINEERS 5532 2105 COMMERCE c SUrrE 100 n DALLAS. TX 75201 t'•~O o~~ 4 214 752-9098 FAX 214 752-3800 ( IN FEET ssto PREPARED BY: D.R.M. 1 inch = 100 ft. d 'sQR`~ CHECKED BY:` C.M. DATE: JULY, 2011 JOB NO.: 4100683.01 PAGE 3 OF 4 PREPARED FROM PUBLIC RECORDS EXHIBIT "A" Pa e 4 of 4 SURVEY: A. N. B. TOMPKINS SURVEY, ABSTRACT NO. 1246, AND E. PUCHALSKY SURVEY, ABSTRACT NO. 996 LOCATION: CITY OF DENTON, DENTON COUNTY, TEXAS EASEMENT ACQUISITION: 0.2200 ACRE' PLAT OF EXHIBIT "A" BASIS OF BEARINGS: STATE PLANE (NAD 83): \ N Drainage Basin Easement VEY A-996 Instrument No. 2004-2786 pUCHALSKY SUR Deed Records, Denton County, Texas E. N89'18'49"E 22.88' r F- La1 N00.41'11"W 20.00'+ W N 589"18'49"W 12.88' W ~ Q 0! m a 10. /NR9 W w rR~ 3S O a M m EXHIBIT "A" N I State of Texas 3 for the benefit of North Texas z o State Teachers College Volume 291, Page 82 °m b m Deed Records, Denton County, Texas .O.B. 0 P.O.C. Z w 9,584 SQUARE FEET WILLOWWOOD STREET VARIABLE WIDTH TRACT OF LAND °o LOCATION MAP OF EASEMENT AND V) WHOLE PROPERTY BOUNDARY (N.T.S.) N8918'49"E 37.41' N00'41'11"W 20.00'- 589'18'49"W 37.41' 3 00 nod I M O °z 10' I _ MATCH LINE NOTE: 5/8" CAPPED IRON ROD STAMPED "JQ ENG" SET AT EACH CORNER AND POINT OF INTERSECTION OF THE 9,584 SQUARE FOOT TRACT OF LAND. NOTE: ALL BEARINGS ARE BASED ON THE STATE PLANE COORDINATE SYSTEM, N.A.D. 83 TEXAS NORTH CENTRAL ZONE 4202. ALL DISTANCES SHOWN ARE SURFACE AND MAY BE CONVERTED TO GRID BY DIVIDING BY TxDOT CONVERSION FACTOR OF 1.000150630. OF 4`SF' Tye, GRAPHIC SCALE . AD$r:tsre$~ STER-QUINTANILLA DALLAS, LLP 0 100 200( CHRISTOPHERMAMAN TA • CONSULTING ENGINEERS ,e 5532 2105 COMMERCE a SUITE 100 DALLAS, TX 75201 e '•'PO 214 752-9098 FAX 214 752-3800 (IN FEET) s~ .+1'ESSto.• 4 PREPARED BY: D.R.M. 1 inch = 100 ft. O gaf~~~' CHECKED BY: C.M. DATE: JULY, 2011 JOB NO.. 4100683.01 PAGE 4 OF 4 PREPARED FROM PUBLIC RECORDS EXHIBIT "B" I Au I i - m I 2 m . yp p N I e: sv _ e I I I ' I mal r s~ m ~I z ~ _ i" - - - i ~ - o I r UNIVERSITY OF NORTH TEXAS EAGLE POINT WIND TURBINES P g ENCROACHMENT AREA NORTH LL re J r . J■. Ali. Existing Drainage Easement - F= ' 411 s _ Encroachment Area t~ I . \ ~r f NTS SITE AREA MAP NORTH DOWN TOWN DENTON SITE I i IF i i I i I I i NTS LOCATION MAP I DRAFT MINUTES 2 PUBLIC UTILITIES BOARD 3 August 8, 2011 4 5 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas is 6 present, the Chair of the Public Utilities Board will thereafter convene into an open meeting on 7 Monday, August 8, 2011 at 9:00 a.m. in the Service Center Training Room, City of Denton 8 Service Center, 901-A Texas Street, Denton, Texas. 9 10 Present: Chair Dick Smith, Vice Chair Bill Cheek Barbara Russell, Randy Robinson 11 and John Baines 12 13 Absent Excused: Phil Gallivan 14 15 Ex Officio Members: George Campbell, City Manager 16 Howard Martin, ACM Utilities 17 18 OPEN MEETING: 19 20 ITEMS FOR INDIVIDUAL CONSIDERATION: 21 22 2) Consider recommending approval of an adoption of an ordinance authorizing the City 23 Manager, or his designee, to execute for and on behalf of the City of Denton, Texas (the 24 "City") an Easement Encroachment Agreement (the "Agreement'), by and between the City 25 and the University of North Texas ("UNT"), regarding the encroachment by UNT upon a 26 drainage basin easement owned by the City, encumbering an approximate 5.297 acre tract of 27 land, more or less, located in the E. Pulchalski Survey, Abstract Number 996 and the A.N.B. 28 Tompkins Survey, Abstract No. 11246, generally located at 1251 South Bonnie Brae Street, 29 City of Denton, Denton County, Texas; providing for termination of ordinance and 30 agreement upon failure of UNT to approve and execute the agreement, and providing an 31 effective date. 32 33 Paul Williamson, Real Estate Manager, made the presentation. Williamson stated that this is a 34 drainage encroachment agreement. In 2003-2004 a storm water detention pond was constricted 35 to capture the developed runoff Williamson showed a location map as well as the site map. 36 These maps showed where the UNT wind turbines are to be located. There are cities that do 37 allow passive use in detention ponds. 38 39 Cheek asked how tall the piers are for the turbines. Williamson responded 125 feet. The 40 turbines are smaller than the ones you would see in West Texas. 41 Russell then asked if they are going to be used for any kind research or is this just alternate 42 energy. Williamson stated that UNT received a grant for these turbines to be installed. 43 44 Martin stated that UNT went through a Fossil Fuel Study looking at the issue of becoming 45 carbon neutral. They are going to be doing things that improve their carbon footprint. 46 Draft Minutes of the Public Utilities Board Meeting August 8, 2011 Page 2 of 2 1 Board Member Baines moved to approve item 2 with a second from Board Member 2 Robinson. The motion was approved by a 5-0 vote. 4 3) Adjourned at 10:06 A.M. AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Planning and Development ACM: Jon Fortune SUBJECT Consider adoption of an ordinance adopting a Service Plan for an area of land to be annexed to the City of Denton, Texas, pursuant to an annexation plan, generally identified as DH-7 consisting of approximately 143 acres located on the east and north sides of Teasley Lane, south of Teasley Harbor subdivision and west of Southlake Drive, and more specifically identified and depicted in Exhibit "A" attached hereto, which area is adjacent to and abuts the existing city limits of the City of Denton, Texas; providing a savings clause; and providing an effective date. BACKGROUND In 2009, via several City Council work sessions, staff recommended the annexation of eighteen (18) areas totaling approximately 9,035 acres of land within the City of Denton's Extra Territorial Jurisdiction (ETJ). Of the 18 areas identified, all but three (3) areas were exempted from the 3-year annexation plan requirement under Section 43.052 of the Texas Local Government Code (Tx. LGC). The fifteen (15) areas that were exempted from the requirement of the 3-year annexation plan were annexed on May 4, 2010, save and except all properties that qualified for Non-Annexation Agreements (NAA) due to them being appraised for ad valorem tax purposes as land for agricultural use, timber land or wildlife management. The remaining three (3) areas that were identified for annexation were placed in a 3-Year Annexation Plan on April 6, 2010, via the adoption of annexation ordinances by the Denton City Council. These areas are identified as DH-7, DH-9, and DH-12. DISCUSSION Service Plan Requirement: Tx LGC § 43.056 sets forth the requirements relative to scheduling for the provision of municipal services germane to annexing property. Per state law, the City must complete a Service Plan for the areas included in the Annexation Plan before the first (1st) day of the 10th month after the month in which the Inventory of Services and Facilities (ISF) is completed. The ISF was completed in November, 24, 2010, which means that the deadline to complete the service plans for DH-7, DH-9, and DH-12 is August 26, 2011. Tx.LGC § 13.056(c) defines "full municipal services" as "services provided by the annexing municipality within its full-purpose boundaries, including water and wastewater services and excluding gas or electrical service." Ne~otiations for Services: Per Tx LGC Section 43.0562, the City and the property owners of an area proposed for annexation are required to negotiate for the provision of services to the area after annexation. As such, the Denton County Commissioner's Court appointed five (5) representatives (identified in the table below) from each area to negotiate with the City. Annexation Area DH-7 Annexation Area DH-9 Annexation Area DH- 12 Oscar Blankemeyer Judith Grimes Wallace Batey Aimee Kimberling Kevin McCormack Jeff Dulin Mark Land Leo Miller Frank James Charlie Parker Lisa Polster Ginger McCormick Kevin Vance Wade Willis Randall Smith The members of the City's negotiation team included Jon Fortune, Assistant City Manager; P.S. Arora, DRC Engineer Administrator, and Chuck Russell, Interim Planning Manager. Also in attendance for the negotiations from the City were Mark Cunningham, Director of Planning and Development; Johnna Matthews, Senior Planner; and Tim Fisher, Assistant Director of Water Utilities. State statute provides several guiding principles for establishing Service Plans. First, the Service Plan may not provide for services in the annexed areas that would reduce the level of fire, police, and emergency medical services within the city. Second, the Service plan must also, provide the area with a level of services comparable to or superior to the level of services available in other parts of the city with land-uses and population densities similar to those reasonably contemplated or projected in the area; however, if the area had a level of service equal to the service provided within the boundaries of the city, the Service Plan must maintain that same level of services. Finally, if the annexed area had a level of services for maintaining infrastructure of the area superior to the level of services provided within the city, the Service Plan must maintain the infrastructure of the annexed area at a level of services that is equal or superior to the level of services previously enjoyed in the annexed area. In order to facilitate completion of the Service Plan, the City hosted several negotiation sessions between the City and the County Representatives for each area. The City initiated the discussion by reviewing the Inventory of Services and providing an initial Service Plan to each of the areas. The initial Service Plan provided by the City represented a level of service that met the guiding principles mentioned above, and represented a fair and equitable approach to the provision of service that was consistent to the initial Service Plans adopted for the 15 areas annexed in May, 2010. The negotiation meetings provided a good opportunity to have an open dialog on service issues associated with annexations. Through the course of meeting, additional services beyond those contemplated in the initial Service Plan were identified by the County Representatives. The City, in an effort to negotiate a mutually acceptable Service Plan, offered additional services and opportunities that exceed normal City policies, ordinances or practices currently applied inside the City limits. While the City was not able to concede to the full extent of the items requested, it is the opinion of the staff that the City negotiated in good faith and provided the County Page - 2 Representatives options for services that exceed what otherwise would be provided under normal conditions. DH-7 Service Plan: The following is a summary of the final negotiated Service Plan for DH-7 that is being proposed for approval. DH-7 meetings were conducted on July 12, July 18, and July 26. Of the five County Representatives, three to four of the members were actively involved at each meeting in the discussion of the Service Plan. Individual meetings were also conducted with members as necessary to review the process, answer questions, and discuss the Service Plan. Following these deliberations and pending City Council approval, the City provided an offer on August 1, 2011 for additional services to the initial Service Plan. These items include the following: 1. The City offered Non-Annexation Agreements to eligible property owners for a term to last seven years. 2. The City offered to allow one property owner to maintain their private solid waste provider contract through July 2016. 3. The City offered to allow one property owner to receive one residential water and wastewater tap and to pay associated fees. The details of these items are provided in the service plan. Upon receiving the City's offer to include these items in the Service Plan, three members of the County Representative team signed the Plan indicating their agreement. The remaining two members did not respond to repeated attempts to gain their signature to either agree or disagree with the proposal. Since a majority of the members did sign in agreement, the attached Service Plan that includes the items listed above is being recommended for approval by the City Council. PRIOR ACTIONS/REVIEWS 4/6/2010 - The Denton City Council adopted an Annexation Ordinance to initiate the annexation of the aforementioned three (3) areas that are not exempted from the 3-year annexation plan requirement under Section 43.052 of the Tx. LGC. 6/30/2010 - In accordance with Tx.LGC 43.052, staff sent Notice of Intent (NOI) to all property owners, public/private entities, and railroad companies within the proposed annexation areas informing them of the City's intent to annex the areas. The NOI was also posted on the City's web site. 11/24/2010 - In accordance with Tx.LGC 43.053.g and Tx.LGC 43.056j, staff completed an Inventory of Services and Facilities (ISF). Subsequent to the completed ISF, staff posted the ISF and an Initial Service Plan for the proposed annexation areas on the City's website. 1/14/2011 - In accordance with Tx.LGC 43.0561.c, staff sent Notices to affected property owners of the 1st Public Hearing. 2/1/2011 - The Denton City Council held the first of two (2) required public hearings. 2/15/2011 - The Denton City Council held the second of two (2) required public hearings. Page - 3 2/17/2011 - The Denton City Council held a third public hearing. The Denton City Council made the decision to hold a third public hearing to give area residents another opportunity to address the City Council due to inclement weather on 2/15/11. This public hearing was not required by law; however, it was done as a courtesy. 7/12/2011 - The City negotiating team met with the County Representative team to establish a Service Plan. 7/18/2011 - The City negotiating team met with the County Representative team to establish a Service Plan. 7/26/2011 - The City negotiating team meet with the County Representative team to establish a Service Plan. EXHIBITS 1. Exhibit 1 - Map of Annexation Area - DH-7 2. Exhibit 2 - Proposed Ordinance to Approve DH-7 Service Plan (Service Plan attached as Exhibit to Ordinance) Prepared by: Mark A. Cunningham, AICP Director, Planning and Development Division Respectfully submitted: dyl Jon Fortune Assistant City Manager Page - 4 EXHIBIT 1 EXHIBIT I Proposed Annexation Area DH-7 DH-7 encompasses approximately 143 acres and is bounded on the north, west and south by current city limits. It is located on the east and north sides of Teasley Lane, south of Teasley Harbor Subdivision and west of Southlake Drive. This area is outlined in yellow on the aerial map below. Jill! DI-17 I J, ~ f z 4 r' ,r EXHIBIT 2 salegallour documentslordinancesll t%dh-7 service plan adoption ordinance.doe ORDINANCE NO. AN ORDINANCE ADOPTING A SERVICE PLAN FOR AN AREA OF LAND TO BE ANNEXED TO THE CITY OF DENTON, TEXAS, PURSUANT TO AN ANNEXATION PLAN, GENERALLY IDENTIFIED AS DH-7 CONSISTING OF APPROXIMATELY 143 ACRES LOCATED ON THE EAST AND NORTH SIDES OF TEASLEY LANE, SOUTH OF TEASLEY HARBOR SUBDIVISION AND WEST OF SOUTHLAKE DRIVE, AND MORE SPECIFICALLY IDENTIFIED AND DEPICTED IN EXHIBIT "A" ATTACHED HERETO, WHICH AREA IS ADJACENT TO AND ABUTS THE EXISTING CITY LIMITS OF THE CITY OF DENTON, TEXAS; PROVIDING A SAVINGS CLAUSE; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, pursuant to Section 43.052, Subchapter C, Texas Local Government Code, a home rule city is authorized to annex certain areas within its annexation plan; and WHEREAS, Section 43.0560), Subchapter C, Texas Local Government Code requires that a preliminary service plan be prepared for the provision of full municipal services to the area proposed to be annexed, be made available for public inspection and be explained to the inhabitants of the area to be annexed at public hearings; and WHEREAS, the City of Denton's preliminary service plan was prepared, made available for public inspection and explained to the inhabitants of the area to be annexed at public hearings; and WHEREAS, Section 43.0562, Subchapter C, Texas Local Government Code requires the City to negotiate the proposed provision of services contained in the preliminary service plan with a committee of five representatives appointed by the Denton County Commissioners Court; and WHEREAS, said negotiations were held between the City and the County-appointed committee; and WHEREAS, said negotiations resulted in minor modifications to the preliminary service plan, which amended service plan is attached hereto as Exhibit "A"; and WHEREAS, the City Council of the City of Denton finds that the amended preliminary service plan is in the best interests of the health, safety and general welfare of the citizens of the City of Denton, Texas and of the citizens of DH-7; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The findings and recitations contained in the preamble of this Ordinance are incorporated herein by reference. SECTION 2. The City Council finds that the amended preliminary service plan attached hereto as Exhibit "A" is complete and adopts it as its official service plan for DH-7 pursuant to Sections 43.056(a) and (k), Subchapter C, Texas Local Government Code. salegahour documentslordinancesll lldh-7 service plan adoption ordinance.docsalegallour documentslordinancesU Ildh-7 service plan adoption ordinance.doc SECTION 3. Should any paragraph, section, sentence, phrase, clause or word of this Ordinance be declared unconstitutional or invalid for any reason, the remainder of this Ordinance shall not be affected thereby. SECTION 4. This Ordinance shall be become effective upon final passage by the City Council. PASSED AND APPROVED this the day of , 2011. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY r` r BY: Page 2 s:llegallour documentslordinancesll lldh-7 service plan adoption ordinance.docsalegaRour documentslordinancesll lldh-7 service plan adoption ordinance.doc EXHIBIT A Page 3 CITY OF DENTON SERVICE PLAN DH-7 1. AREA ANNEXED The area to be annexed encompasses approximately 143 acres and is bounded on the north, west and south by current city limits. It is located on the east and north sides of Teasley Lane, south of Teasley Harbor Subdivision and west of Southlake Drive. The area is an unincorporated pocket located within City of Denton's Extraterritorial Jurisdiction (ETJ), Division 1, and is identified as DH-7. The proposed annexation contains multiple owners. A general description of the area is attached. 11. INTRODUCTION This service plan has been prepared in accordance with the Texas Local Government Code, Sections 43.021; 43.065; and 43.056(b)-(o) (Vernon 2008, as amended). Municipal facilities and services to the annexed areas described above will be provided or made available on behalf of the City of Denton in accordance with the following plan. The City of Denton shall provide the annexed tract the levels of service, infrastructure, and infrastructure maintenance that are comparable to the levels of service, infrastructure, and infrastructure maintenance available in other parts of the City of Denton with similar topography, land use, and population density. III. AD VALOREM (PROPERTY OWNER) TAX SERVICES A. Police Protection Police protection from the City of Denton Police Department shall be provided to the areas annexed at a level consistent with current methods and procedures presently provided to similar areas on the effective date of the ordinance. Some of these services include: 1. Normal patrols and responses; 2. Handling of complaints and incident reports; 3. Special units, such as traffic enforcement, investigations and special weapons; and 4. Coordination with other public safety support agencies. As development commences in these areas, sufficient police protection, including personnel and equipment will be provided to furnish these areas with the level of police services consistent with the characteristics of topography, land utilization and population density of the areas. Upon ultimate development, police protection will be provided at a level consistent with other similarly situated areas within the city limits. B. Fire Protection The Denton Fire Department (DFD) will provide emergency and fire prevention services to the annexation areas. These services include: 1 1. Fire suppression and rescue; 2. Pre-hospital medical services including triage, treatment and transport by Advanced Life Support (ALS) fire engines, trucks and ambulances; 3. Hazardous materials response and mitigation; 4. Emergency prevention and public education efforts; 5. Technical rescue response; and b. Construction Plan Review and required inspections. Fire protection from the City of Denton shall be provided to the areas annexed at a level consistent with current methods and procedures presently provided to similar areas of the City of Denton on the effective date of the ordinance. As development commences in these areas, sufficient fire protection, including personnel and equipment will be provided to furnish these areas with the level of services consistent with the characteristics of topography, land utilization and population density of the areas. It is anticipated that fire stations planned to serve areas currently within the City of Denton will be sufficient to serve areas now being considered for annexation. Upon ultimate development, fire protection will be provided at a level consistent with other similarly situated areas within the city limits. C. Emereency Medical Service The Denton Fire Department (DFD) will provide the following emergency and safety services to the annexation areas. These services include: 1. Emergency medical dispatch and pre-arrival First Aid instructions; 2. Pre-hospital emergency Advanced Life Support (ALS) response; and transport; 3. Medical rescue services, Emergency Medical Services (EMS) from the City of Denton shall be provided to the areas annexed at a level consistent with current methods and procedures presently provided to similar areas of the City of Denton on the effective date of the ordinance. As development commences in these areas, sufficient EMS, including personnel and equipment will be provided to furnish these areas with the level of services consistent with the characteristics of topography, land utilization and population density of the areas. Upon ultimate development, EMS will be provided at a level consistent with other similarly situated areas within the city limits. D. Roads and Streets Emergency street maintenance shall be provided within the annexation areas on the effective date of the applicable ordinance of acceptance. Routine maintenance 2 will be provided within the annexation areas and will be scheduled as part of the City's annual program and in accordance with the current policies and procedures defined by the ordinance and/or as established by the City Council. Any construction or reconstruction will be considered within the annexation areas on a City wide basis and within the context of the City's CIP and/or yearly fiscal budgetary allotments by the City Council. Roadway signage and associated posts will be replaced in priority of importance starting with regulatory signs, then warning signs, then informational signs and in conformance with fiscal allotments by the City Council. If a sign remains, it will be reviewed and placed on the City's inventory listing for routine replacement. All exiting signs will be reviewed for applicability and based upon an engineering study. New signs will be installed when necessary and based upon an engineering study. Routine maintenance of road/street markings will be placed on a priority listing and scheduled within the yearly budgetary allotments by the City Council. E. Parks, Playgrounds, Swimming Pools Residents within the areas annexed may utilize all existing park and recreation facilities, on the effective date of this ordinance. Fees for such usage shall be in accordance with current fees established by ordinance. As development commences in these areas, additional park and recreation facilities shall be constructed based on park policies defined in the Park Master Plan and as specified in the Park Dedication and Development Ordinance. The general planned locations and classifications of parks will ultimately serve residents from the current City limits and residents from areas being considered for annexation. F. Publicly Owned Facilities Any publicly owned facility, building, or service located within the annexed area, and not otherwise owned or maintained by another governmental entity, shall be maintained by the City of Denton on the effective date of the annexation ordinance. G. Other Services Other services that may be provided by the City of Denton, such as municipal and general administration will be made available on the effective date of the annexation. The City of Denton shall provide level of services, infrastructure, and infrastructure maintenance that is comparable to the level of services, infrastructure, and infrastructure maintenance available in other parts of the City of Denton with topography, land use, and population density similar to those reasonably contemplated or projected in the area. IV. ENTERPRISE ACTIVITY (UTILITY CUSTOMER) SERVICES A. Solid Waste Except as provided in Section V.A. 3 Solid Waste and Recycling Collection Services will be provided to the newly annexed property immediately upon the effective date of the annexation at a level consistent with current methods and procedures presently provided to similar areas within the city. Private solid waste collection service providers operating in the affected area immediately prior to annexation and currently providing customers with service may continue to provide their existing service for up to 2 years in accordance with Texas Local Government Code. B. Wastewater Facilities Except as provided in Section V.B. The proposed annexation areas are within the City of Denton Sewer Service Area as defined by Certificate of Convenience and Necessity (CCN) Number 20072 as issued by the Texas Commission on Environmental Quality (TCEQ). As development commences in these areas, sanitary sewer mains will be extended in accordance with the provisions of the City's codes, ordinances and regulations. City participation in the costs of these extensions shall be in accordance with applicable City ordinances and regulations. Capacity shall be provided consistent with the characteristics of topography, land utilization, and population density of the areas. Sanitary sewer mains and lift stations installed or improved to City standards within the annexed areas which are located within dedicated easement, rights-of- way, or any other acceptable location approved by the City Engineer, shall be maintained by the City on the effective date of this ordinance. Operation and maintenance of wastewater facilities in the annexed areas that are within the service area of another water utility will be the responsibility of that utility. Operation and maintenance of private wastewater facilities in the annexed area will be the responsibility of the owner. C. Water Facilities Except as provided in Section V.B. The proposed annexation areas are within the City of Denton Water Service Area as defined by Certificate of Convenience and Necessity (CCN) Number 10195 as issued by the Texas Commission on Environmental Quality (TCEQ). Connections to existing City of Denton water distribution mains for water service will be provided in accordance with existing City ordinances and policies. Upon connection to existing distribution mains, water service will be provided at rates established by city ordinance. As new development occurs within these areas, water distribution mains will be extended in accordance with Denton's Codes, ordinances and utility service policies. City participation in the costs of these extensions shall be in accordance with Denton's codes and ordinances. Water service capacity shall be provided consistent with the characteristics of topography, land use and population density of the area. 4 Operation and maintenance of water facilities in the annexed area that are within the service area of another water utility will be the responsibility of that utility. Existing developments, businesses or homes that are on individual water wells or private water systems will be allowed to continue to remain on these systems until a request for water service is made to the City. These requests for service will be handled in accordance with the applicable utility service line extension and connection policies currently in place at the time the request for service is received. V. ADDITIONAL SERVICES DH- 7 - Pending City Council ratification, the City offers the following additional items: A. Solid Waste Service At Yes Properties' election, it may maintain the services at 9100 Teasley Lane, Denton, Texas, 76210, of its current private solid waste provider for a term not to exceed five years from the date negotiation for services began on July 12, 2011. This will allow Yes, if desired, to maintain its existing solid waste contract through July 12, 2016. If requested, the City will provide solid waste service to Yes properties at any date following the date of annexation. B. Private Water and Wastewater Tap Upon request, the City agrees to provide one water and wastewater tap and to pay the associated impact fees based on one 5/8 inch by 314 inch water meter and a 4-inch wastewater service line for one residential single family home at 5353 Teasley, Denton, Texas, 76210, which currently is owned by Mr. Blankemeyer, for a period not to exceed seven years from the date of the annexation. C. _Non-Annexation Agreements The City is offering Non-Annexation Agreements to eligible property owners in DH-7 for a term of seven years. Eligible property owners are those individuals who currently receive an agricultural property tax exemption on their property. From the effective date of the annexation, currently projected as May, 2013, the seven year Non-Annexation Agreement will extend the time period for non- annexation to 2020. Specific terms and conditions will be provided in individual Non-Annexation Agreements. VI. UNIFORM LEVEL OF SERVICES IS NOT REQUIRED Nothing in this plan shall require the City of Denton to provide a uniform level of full municipal services to each area of the City, including the annexed area, if different characteristics of topography, land use, and population density are considered a sufficient basis for providing different levels of service. VII. TERM This service plan shall be valid for a term of ten (10) years. Renewal of the service plan shall be at the discretion of City Council. 5 VIII. AMENDMENTS The service plan may be amended if the City Council determines at a public hearing that changed conditions or subsequent occurrences make this service plan unworkable or obsolete. The City Council may amend the service plan to conform to the changed conditions or subsequent occurrences pursuant to Texas Local Government Code, Section 43,056. City Representatives Agree Disagree y.~ Jo Fortune Date E buck Russell Date P.S. Arora Date County Representatives Agree Disagree F / { xfY f ~ 1 Oscar Blankemeyer Date Aimee Kin cling ate M rk &ine Date Charlie Parker Date Kevin Vance Date 6 EXHIBIT 1 Proposed Annexation Area DH-7 DH-7 encompasses approximately 143 acres and is bounded on the north, west and south by current city limits. It is located on the east and north sides of Teasley Lane, south of Teasley Harbor Subdivision and west of Southlake Drive. This area is outlined in yellow on the aerial map below, DH 7 I . I s I 11 4 tf rl I 'I h:) h ~ I l • f 1. } III . i.. < , ii- f' r t, 7 AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Planning and Development ACM: Jon Fortune SUBJECT Consider adoption of an ordinance adopting a Service Plan for an area of land to be annexed to the City of Denton, Texas, pursuant to an annexation plan, generally identified as DH-9 consisting of approximately 298 acres located north of Pockrus Page Road, and north, south and northeast of Edwards Road, and more specifically identified and depicted in Exhibit "A" attached hereto, which area is adjacent to and abuts the existing city limits of the City of Denton, Texas; providing a savings clause; and providing an effective date. BACKGROUND In 2009, via several City Council work sessions, staff recommended the annexation of eighteen (18) areas totaling approximately 9,035 acres of land within the City of Denton's Extra Territorial Jurisdiction (ETJ). Of the 18 areas identified, all but three (3) areas were exempted from the 3-year annexation plan requirement under Section 43.052 of the Texas Local Government Code (Tx. LGC). The fifteen (15) areas that were exempted from the requirement of the 3-year annexation plan were annexed on May 4, 2010, save and except all properties that qualified for Non-Annexation Agreements (NAA) due to them being appraised for ad valorem tax purposes as land for agricultural use, timber land or wildlife management. The remaining three (3) areas that were identified for annexation were placed in a 3-Year Annexation Plan on April 6, 2010, via the adoption of annexation ordinances by the Denton City Council. These areas are identified as DH-7, DH-9, and DH-12. DISCUSSION Service Plan Requirement: Tx LGC § 43.056 sets forth the requirements relative to scheduling for the provision of municipal services germane to annexing property. Per state law, the City must complete a Service Plan for the areas included in the Annexation Plan before the first (1st) day of the 10th month after the month in which the Inventory of Services and Facilities (ISF) is completed. The ISF was completed in November, 24, 2010, which means that the deadline to complete the service plans for DH-7, DH-9, and DH-12 is August 26, 2011. Tx.LGC § 13.056(c) defines "full municipal services" as "services provided by the annexing municipality within its full-purpose boundaries, including water and wastewater services and excluding gas or electrical service." Ne~otiations for Services: Per Tx LGC Section 43.0562, the City and the property owners of an area proposed for annexation are required to negotiate for the provision of services to the area after annexation. As such, the Denton County Commissioner's Court appointed five (5) representatives (identified in the table below) from each area to negotiate with the City. Annexation Area DH-7 Annexation Area DH-9 Annexation Area DH- 12 Oscar Blankemeyer Judith Grimes Wallace Batey Aimee Kimberling Kevin McCormack Jeff Dulin Mark Land Leo Miller Frank James Charlie Parker Lisa Polster Ginger McCormick Kevin Vance Wade Willis Randall Smith The members of the City's negotiation team included Jon Fortune, Assistant City Manager; P.S. Arora, DRC Engineer Administrator, and Chuck Russell, Interim Planning Manager. Also in attendance for the negotiations from the City were Mark Cunningham, Director of Planning and Development; Johnna Matthews, Senior Planner; and Tim Fisher, Assistant Director of Water Utilities. State statute provides several guiding principles for establishing Service Plans. First, the Service Plan may not provide for services in the annexed areas that would reduce the level of fire, police, and emergency medical services within the city. Second, the Service plan must also, provide the area with a level of services comparable to or superior to the level of services available in other parts of the city with land-uses and population densities similar to those reasonably contemplated or projected in the area; however, if the area had a level of service equal to the service provided within the boundaries of the city, the Service Plan must maintain that same level of services. Finally, if the annexed area had a level of services for maintaining infrastructure of the area superior to the level of services provided within the city, the Service Plan must maintain the infrastructure of the annexed area at a level of services that is equal or superior to the level of services previously enjoyed in the annexed area. In order to facilitate completion of the Service Plan, the City hosted several negotiation sessions between the City and the County Representatives for each area. The City initiated the discussion by reviewing the Inventory of Services and providing an initial Service Plan to each of the areas. The initial Service Plan provided by the City represented a level of service that met the guiding principles mentioned above, and represented a fair and equitable approach to the provision of service that was consistent to the initial Service Plans adopted for the 15 areas annexed in May, 2010. The negotiation meetings provided a good opportunity to have an open dialog on service issues associated with annexations. Through the course of meeting, additional services beyond those contemplated in the initial Service Plan were identified by the County Representatives. The City, in an effort to negotiate a mutually acceptable Service Plan, offered additional services and opportunities that exceed normal City policies, ordinances or practices currently applied inside the City limits. While the City was not able to concede to the full extent of the items requested, it is the opinion of the City staff that the City negotiated in good faith and provided the County Page - 2 Representatives options for services that exceed what otherwise would be provided under normal conditions. DH-9 Service Plan: The following is a summary of the process to establish the Service Plan for DH-9. The negotiating meetings for DH-9 were conducted on July 6, July 13, July 20, July 27 and August 1. All five of the County Representatives were actively involved at each meeting in the discussion of the Service Plan. Individual meetings were also conducted with members as necessary to review the process, answer questions, and discuss the Service Plan. Following these deliberations and pending City Council approval, the City provided multiple offers for additional services greater than those provided in the initial Service Plan. These items include the following: 1. Non-Annexation Agreements to eligible property owners for a term to last seven years. 2. Constriction a sidewalk along portions of Swisher Road. 3. Installation of temporary traffic calming devices along portion of Swisher Road. 4. Allow private water service taps with conditions for one property owner. 5. Wastewater line extensions along Shiloh and Swisher Roads based on a shared cost approach between property owners and City. 6. Provide water service to Green Tree Estates Sub-division's existing water system with conditions. At the time this agenda material was being finalized, the DH-9 Committee had requested an additional meeting to address some questions about the State annexation law and for additional time to consider their acceptance of the City's offer as described above. As such, the plan attached to this agenda material represents the initial Service Plan that was provided to the DH-9 Committee at the start of the process, and does not include the items offered above. If after meeting with the DH-9 Committee a mutually acceptable agreement can be reached, staff will provide the Council an updated version of the Final Service Plan and ordinance prior to your meeting on August 16. If the meeting with the DH-9 Committee does not result in a mutually acceptable agreement, then staff recommends approval of the Service Plan as attached. PRIOR ACTIONS/REVIEWS 4/6/2010 - The Denton City Council adopted an Annexation Ordinance to initiate the annexation of the aforementioned three (3) areas that are not exempted from the 3-year annexation plan requirement under Section 43.052 of the Tx. LGC. 6/30/2010 - In accordance with Tx.LGC 43.052, staff sent Notice of Intent (NOI) to all property owners, public/private entities, and railroad companies within the proposed annexation areas informing them of the City's intent to annex the areas. The NOI was also posted on the City's web site. 11/24/2010 - In accordance with Tx.LGC 43.053.g and Tx.LGC 43.056j, staff completed an Inventory of Services and Facilities (ISF). Subsequent to the completed ISF, staff posted the ISF and an Initial Service Plan for the proposed annexation areas on the City's website. 1/14/2011 - In accordance with Tx.LGC 43.0561.c, staff sent Notices to affected property owners of the 1st Public Hearing. Page - 3 2/1/2011 - The Denton City Council held the first of two (2) required public hearings. 2/15/2011 - The Denton City Council held the second of two (2) required public hearings. 2/17/2011 - The Denton City Council held a third public hearing. The Denton City Council made the decision to hold a third public hearing to give area residents another opportunity to address the City Council due to inclement weather on 2/15/11. This public hearing was not required by law; however, it was done as a courtesy. 7/12/11 - The City negotiating team meet with the County Representative team to establish a Service Plan. July 6, 13, 20, 27 and August 1, 2011 - The City negotiating team met with the County Representative team to establish a service plan. EXHIBITS 1. Exhibit 1 - Map of Annexation Area - DH-9 2. Exhibit 2 - Proposed Ordinance to Approve DH-9 Service Plan (Service Plan attached as Exhibit to Ordinance) Prepared by: Mark A. Cunningham, AICP Director, Planning and Development Division Respectfully submitted: dY't Jon Fortune Assistant City Manager Page - 4 EXHIBIT 1 EXHIBIT 1 Proposed Annexation Area DH-9 DH-9 encompasses approximately 298 acres of land and is bounded by current city limits on all sides; north, south, east and west. DH-9 is located north of Pockrus Page Road, north, south and northeast of Edwards Road. This area is outlined in yellow on the aerial map below. D H 9 I I r ~t i EXHIBIT 2 s:llegallour documentslordinances1111dh-9 service plan adoption ordinance.doc ORDINANCE NO. AN ORDINANCE ADOPTING A SERVICE PLAN FOR AN AREA OF LAND TO BE ANNEXED TO THE CITY OF DENTON, TEXAS, PURSUANT TO AN ANNEXATION PLAN, GENERALLY IDENTIFIED AS DH-9 CONSISTING OF APPROXIMATELY 298 ACRES LOCATED NORTH OF POCKRUS PAGE ROAD, AND NORTH, SOUTH AND NORTHEAST OF EDWARDS ROAD, AND MORE SPECIFICALLY IDENTIFIED AND DEPICTED IN EXHIBIT "A" ATTACHED HERETO, WHICH AREA IS ADJACENT TO AND ABUTS THE EXISTING CITY LIMITS OF THE CITY OF DENTON, TEXAS; PROVIDING A SAVINGS CLAUSE; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, pursuant to Section 43.052, Subchapter C, Texas Local Government Code, a home rule city is authorized to annex certain areas within its annexation plan; and WHEREAS, Section 43.0560), Subchapter C, Texas Local Government Code requires that a preliminary service plan be prepared for the provision of full municipal services to the area proposed to be annexed, be made available for public inspection and be explained to the inhabitants of the area to be annexed at public hearings; and WHEREAS, the City of Denton's preliminary service plan was prepared, made available for public inspection and explained to the inhabitants of the area to be annexed at public hearings; and WHEREAS, Section 43.0562, Subchapter C, Texas Local Government Code requires the City to negotiate the proposed provision of services contained in the preliminary service plan with a committee of five representatives appointed by the Denton County Commissioners Court; and WHEREAS, said negotiations were held between the City and the County-appointed committee; and WHEREAS, said negotiations did not result in any modifications to the preliminary service plan attached hereto as Exhibit "A"; and WHEREAS, the City Council of the City of Denton finds that the preliminary service plan is in the best interests of the health, safety and general welfare of the citizens of the City of Denton, Texas and of the citizens of DH-9; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The findings and recitations contained in the preamble of this Ordinance are incorporated herein by reference. SECTION 2. The City Council finds that the preliminary service plan attached hereto as Exhibit "A" is complete and adopts it as its official service plan for DH-9 pursuant to Sections 43.056(a) and (k), Subchapter C, Texas Local Government Code. salegallour documentslordinancesll lldh-9 service plan adoption ordinance.doc0legallour documentslordinancesll I ldh-9 service plan adoption ordinance.doc SECTION 3. Should any paragraph, section, sentence, phrase, clause or word of this Ordinance be declared unconstitutional or invalid for any reason, the remainder of this Ordinance shall not be affected thereby. SECTION 4. This Ordinance shall be become effective upon final passage by the City Council. PASSED AND APPROVED this the day of 2011. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: i Page 2 s:llegahour documentslordinanccsll lldh-9 service plan adoption ordinance.docsNegallour documentslordinancesll Ildh-9 service plan adoption ordinance.doc EXHIBIT A Page 3 CITY OF DENTON SERVICE PLAN DH-9 Original Offer L AREA ANNEXED The area to be annexed encompasses approximately 298 acres of land and is bounded by current city limits on all sides; north, south, east and west. It is located north of Pockris Page Road, north, south and northeast of Edwards Road. The area is an unincorporated pocket located within City of Denton's Extraterritorial Jurisdiction (ETJ), Division 1, and is identified as DH-9. The proposed annexation contains multiple owners. A general description of the area is attached. II. INTRODUCTION This service plan has been prepared in accordance with the Texas Local Government Code, Sections 43.021; 43.065; and 43.056(b)-(o) (Vernon 2008, as amended). Municipal facilities and services to the annexed areas described above will be provided or made available on behalf of the City of Denton in accordance with the following plan. The City of Denton shall provide the annexed tract the levels of service, infrastructure, and infrastructure maintenance that are comparable to the levels of service, infrastructure, and infrastructure maintenance available in other parts of the City of Denton with similar topography, land use, and population density. III. AD VALOREM (PROPERTY OWNER) TAX SERVICES A. Police Protection Police protection from the City of Denton Police Department shall be provided to the areas annexed at a level consistent with current methods and procedures presently provided to similar areas on the effective date of the ordinance. Some of these services include: 1. Normal patrols and responses; 2. Handling of complaints and incident reports; 3. Special units, such as traffic enforcement, investigations and special weapons; and 4. Coordination with other public safety support agencies. As development commences in these areas, sufficient police protection, including personnel and equipment will be provided to furnish these areas with the level of police services consistent with the characteristics of topography, land utilization and population density of the areas. Upon ultimate development, police protection will be provided at a level consistent with other similarly situated areas within the city limits. 1 B. Fire Protection The Denton Fire Department (DFD) will provide emergency and fire prevention services to the annexation areas. These services include: 1. Fire suppression and rescue; 2. Pre-hospital medical services including triage, treatment and transport by Advanced Life Support (ALS) fire engines, tricks and ambulances; 3. Hazardous materials response and mitigation; 4. Emergency prevention and public education efforts; 5. Technical rescue response; and 6. Constriction Plan Review and required inspections. Fire protection from the City of Denton shall be provided to the areas annexed at a level consistent with current methods and procedures presently provided to similar areas of the City of Denton on the effective date of the ordinance. As development commences in these areas, sufficient fire protection, including personnel and equipment will be provided to furnish these areas with the level of services consistent with the characteristics of topography, land utilization and population density of the areas. It is anticipated that fire stations planned to serve areas currently within the City of Denton will be sufficient to serve areas now being considered for annexation. Upon ultimate development, fire protection will be provided at a level consistent with other similarly situated areas within the city limits. C. Emmency Medical Service The Denton Fire Department (DFD) will provide the following emergency and safety services to the annexation areas. These services include: 1. Emergency medical dispatch and pre-arrival First Aid instructions; 2. Pre-hospital emergency Advanced Life Support (ALS) response; and transport; 3. Medical rescue services. Emergency Medical Services (EMS) from the City of Denton shall be provided to the areas annexed at a level consistent with current methods and procedures presently provided to similar areas of the City of Denton on the effective date of the ordinance. As development commences in these areas, sufficient EMS, including personnel and equipment will be provided to furnish these areas with the level of services consistent with the characteristics of topography, land utilization and population density of the areas. 2 Upon ultimate development, EMS will be provided at a level consistent with other similarly situated areas within the city limits. D. Roads and Streets Emergency street maintenance shall be provided within the annexation areas on the effective date of the applicable ordinance of acceptance. Routine maintenance will be provided within the annexation areas and will be scheduled as part of the City's annual program and in accordance with the current policies and procedures defined by the ordinance and/or as established by the City Council. Any constriction or reconstruction will be considered within the annexation areas on a City wide basis and within the context of the City's CIP and/or yearly fiscal budgetary allotments by the City Council. Roadway signage and associated posts will be replaced in priority of importance starting with regulatory signs, then warning signs, then informational signs and in conformance with fiscal allotments by the City Council. If a sign remains, it will be reviewed and placed on the City's inventory listing for routine replacement. All exiting signs will be reviewed for applicability and based upon an engineering study. New signs will be installed when necessary and based upon an engineering study. Routine maintenance of road/street markings will be placed on a priority listing and scheduled within the yearly budgetary allotments by the City Council. E. Parks, Playgrounds, Swimming Pools Residents within the areas annexed may utilize all existing park and recreation facilities, on the effective date of this ordinance. Fees for such usage shall be in accordance with current fees established by ordinance. As development commences in these areas, additional park and recreation facilities shall be constricted based on park policies defined in the Park Master Plan and as specified in the Park Dedication and Development Ordinance. The general planned locations and classifications of parks will ultimately serve residents from the current City limits and residents from areas being considered for annexation. F. Publicly Owned Facilities Any publicly owned facility, building, or service located within the annexed area, and not otherwise owned or maintained by another governmental entity, shall be maintained by the City of Denton on the effective date of the annexation ordinance. G. Other Services Other services that may be provided by the City of Denton, such as municipal and general administration will be made available on the effective date of the annexation. The City of Denton shall provide level of services, infrastructure, and infrastructure maintenance that is comparable to the level of services, infrastructure, and infrastructure maintenance available in other parts of the City of Denton with topography, land use, and population density similar to those reasonably contemplated or projected in the area. IV. ENTERPRISE ACTIVITY (UTILITY CUSTOMER) SERVICES A. Solid Waste Solid Waste and Recycling Collection Services will be provided to the newly annexed property immediately upon the effective date of the annexation at a level consistent with current methods and procedures presently provided to similar areas within the city. Private solid waste collection service providers operating in the affected area immediately prior to annexation and currently providing customers with service may continue to provide their existing service for up to 2 years in accordance with Texas Local Government Code. B. Wastewater Facilities The proposed annexation areas are within the City of Denton Sewer Service Area as defined by Certificate of Convenience and Necessity (CCN) Number 20072 as issued by the Texas Commission on Environmental Quality (TCEQ). As development commences in these areas, sanitary sewer mains will be extended in accordance with the provisions of the City's codes, ordinances and regulations. City participation in the costs of these extensions shall be in accordance with applicable City ordinances and regulations. Capacity shall be provided consistent with the characteristics of topography, land utilization, and population density of the areas. Sanitary sewer mains and lift stations installed or improved to City standards within the annexed areas which are located within dedicated easement, rights-of- way, or any other acceptable location approved by the City Engineer, shall be maintained by the City on the effective date of this ordinance. Operation and maintenance of wastewater facilities in the annexed areas that are within the service area of another water utility will be the responsibility of that utility. Operation and maintenance of private wastewater facilities in the annexed area will be the responsibility of the owner. C. Water Facilities The proposed annexation areas are within the City of Denton Water Service Area as defined by Certificate of Convenience and Necessity (CCN) Number 10195 as issued by the Texas Commission on Environmental Quality (TCEQ). Connections to existing City of Denton water distribution mains for water service will be provided in accordance with existing City ordinances and policies. Upon 4 connection to existing distribution mains, water service will be provided at rates established by city ordinance. As new development occurs within these areas, water distribution mains will be extended in accordance with Denton's Codes, ordinances and utility service policies. City participation in the costs of these extensions shall be in accordance with Denton's codes and ordinances. Water service capacity shall be provided consistent with the characteristics of topography, land use and population density of the area. Operation and maintenance of water facilities in the annexed area that are within the service area of another water utility will be the responsibility of that utility. Existing developments, businesses or homes that are on individual water wells or private water systems will be allowed to continue to remain on these systems until a request for water service is made to the City. These requests for service will be handled in accordance with the applicable utility service line extension and connection policies currently in place at the time the request for service is received. V. UNIFORM LEVEL OF SERVICES IS NOT REQUIRED Nothing in this plan shall require the City of Denton to provide a uniform level of full municipal services to each area of the City, including the annexed area, if different characteristics of topography, land use, and population density are considered a sufficient basis for providing different levels of service. VI. TERM This service plan shall be valid for a term of ten (10) years. Renewal of the service plan shall be at the discretion of City Council. VII. AMENDMENTS The service plan may be amended if the City Council determines at a public hearing that changed conditions or subsequent occurrences make this service plan unworkable or obsolete. The City Council may amend the service plan to conform to the changed conditions or subsequent occurrences pursuant to Texas Local Government Code, Section 43.056. 5 EXHIBIT 1 Proposed Annexation Area DH-9 DH-9 encompasses approximately 298 acres of land and is bounded by current city limits on all sides; north, south, east and west. DH-9 is located north of Pockrus Page Road, north, south and northeast of Edwards Road. This area is outlined in yellow on the aerial map below. DH9 Ab w l i _ i r : COY _ _ t ~ r S J k f , - - I k rt i 6 AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Planning and Development ACM: Jon Fortune SUBJECT Consider adoption of an ordinance adopting a Service Plan for an area of land to be annexed to the City of Denton, Texas, pursuant to an annexation plan, generally identified as DH-12 consisting of approximately 1,167 acres located south of east University Drive, east of north Mayhill Road, north and south of Blagg Road, north and south of Mills Road and east and west of south Trinity Road, and more specifically identified and depicted in Exhibit "A" attached hereto, which area is adjacent to and abuts the existing city limits of the City of Denton, Texas; providing a savings clause; and providing an effective date. BACKGROUND In 2009, via several City Council work sessions, staff recommended the annexation of eighteen (18) areas totaling approximately 9,035 acres of land within the City of Denton's Extra Territorial Jurisdiction (ETJ). Of the 18 areas identified, all but three (3) areas were exempted from the 3-year annexation plan requirement under Section 43.052 of the Texas Local Government Code (Tx. LGC). The fifteen (15) areas that were exempted from the requirement of the 3-year annexation plan were annexed on May 4, 2010, save and except all properties that qualified for Non-Annexation Agreements (NAA) due to them being appraised for ad valorem tax purposes as land for agricultural use, timber land or wildlife management. The remaining three (3) areas that were identified for annexation were placed in a 3-Year Annexation Plan on April 6, 2010, via the adoption of annexation ordinances by the Denton City Council. These areas are identified as DH-7, DH-9, and DH-12. DISCUSSION Service Plan Requirement: Tx LGC § 43.056 sets forth the requirements relative to scheduling for the provision of municipal services germane to annexing property. Per state law, the City must complete a Service Plan for the areas included in the Annexation Plan before the first (1st) day of the 10th month after the month in which the Inventory of Services and Facilities (ISF) is completed. The ISF was completed in November, 24, 2010, which means that the deadline to complete the service plans for DH-7, DH-9, and DH-12 is August 26, 2011. Tx.LGC § 13.056(c) defines "full municipal services" as "services provided by the annexing municipality within its full-purpose boundaries, including water and wastewater services and excluding gas or electrical service." Ne~otiations for Services: Per Tx LGC Section 43.0562, the City and the property owners of an area proposed for annexation are required to negotiate for the provision of services to the area after annexation. As such, the Denton County Commissioner's Court appointed five (5) representatives (identified in the table below) from each area to negotiate with the City. Annexation Area DH-7 Annexation Area DH-9 Annexation Area DH- 12 Oscar Blankemeyer Judith Grimes Wallace Batey Aimee Kimberling Kevin McCormack Jeff Dulin Mark Land Leo Miller Frank James Charlie Parker Lisa Polster Ginger McCormick Kevin Vance Wade Willis Randall Smith The members of the City's negotiation team included Jon Fortune, Assistant City Manager; P.S. Arora, DRC Engineer Administrator, and Chuck Russell, Interim Planning Manager. Also in attendance for the negotiations from the City were Mark Cunningham, Director of Planning and Development; Johnna Matthews, Senior Planner; and Tim Fisher, Assistant Director of Water Utilities. State statute provides several guiding principles for establishing Service Plans. First, the Service Plan may not provide for services in the annexed areas that would reduce the level of fire, police, and emergency medical services within the city. Second, the Service plan must also, provide the area with a level of services comparable to or superior to the level of services available in other parts of the city with land-uses and population densities similar to those reasonably contemplated or projected in the area; however, if the area had a level of service equal to the service provided within the boundaries of the city, the Service Plan must maintain that same level of services. Finally, if the annexed area had a level of services for maintaining infrastructure of the area superior to the level of services provided within the city, the Service Plan must maintain the infrastructure of the annexed area at a level of services that is equal or superior to the level of services previously enjoyed in the annexed area. In order to facilitate completion of the Service Plan, the City hosted several negotiation sessions between the City and the County Representatives for each area. The City initiated the discussion by reviewing the Inventory of Services and providing an initial Service Plan to each of the areas. The initial Service Plan provided by the City represented a level of service that met the guiding principles mentioned above, and represented a fair and equitable approach to the provision of service that was consistent to the initial Service Plans adopted for the 15 areas annexed in May, 2010. The negotiation meetings provided a good opportunity to have an open dialog on service issues associated with annexations. Through the course of meeting, additional services beyond those contemplated in the initial Service Plan were identified by the County Representatives. The City, in an effort to negotiate a mutually acceptable Service Plan, offered additional services and opportunities that exceed normal City policies, ordinances or practices currently applied inside the City limits. While the City was not able to concede to the full extent of the items requested, it is the opinion of the staff that the City negotiated in good faith and provided the County Page - 2 Representatives options for services that exceed what otherwise would be provided under normal conditions. DH-12 Service Plan: The following is a summary of the Service Plan negotiations for DH-12. DH-12 meetings were conducted on July 7, July 21, July 28, and August 8. All five of the County Representatives were actively involved at each meeting in the discussion of the Service Plan. Following these deliberations and pending City Council approval, the City provided multiple offers for additional services greater than those provided in the initial Service Plan. These items include the following: 1. Non-Annexation Agreements to eligible property owners for a term to last seven years. 2. Water lines along Mills and Cunningham roads based on a shared cost approach using a 60% pro-rata methodology to recover 50% of the cost. 3. Water line along Blagg Road from Gessling to Lakeview based on a shared cost approach using a 60% pro-rata methodology to recover 50% of the cost. 4. Waiving of zoning application fees for a period of one year from date of annexation. Upon receiving the City's offer to include these items in the Service Plan, the members of the DH-12 County Representative team did not accept these terms of the City's offer and did not agree to the Service Plan offered by the City (Exhibit 2). Since the majority of the members did not agree to the City's offer, the Service Plan that included these provisions is not being recommended for approval. However, staff does recommend that the Council approve the initial Service Plan that was provided to the County Representatives at the start of this process. This plan does not include the items listed above and is attached for Council's consideration. (Attached to Ordinance in Exhibit 3). PRIOR ACTIONS/REVIEWS 4/6/2010 - The Denton City Council adopted an Annexation Ordinance to initiate the annexation of the aforementioned three (3) areas that are not exempted from the 3-year annexation plan requirement under Section 43.052 of the Tx. LGC. 6/30/2010 - In accordance with Tx LGC 43.052, staff sent Notice of Intent (NOI) to all property owners, public/private entities, and railroad companies within the proposed annexation areas informing them of the City's intent to annex the areas. The NOI was also posted on the City's web site. 11/24/2010 - In accordance with Tx LGC 43.053.g and Tx LGC 43.056j, staff completed an Inventory of Services and Facilities (ISF). Subsequent to the completed ISF, staff posted the ISF and an Initial Service Plan for the proposed annexation areas on the City's website. 1/14/2011 - In accordance with Tx LGC 43.0561.c, staff sent Notices to affected property owners of the 1st Public Hearing. 2/1/2011 - The Denton City Council held the first of two (2) required public hearings. Page - 3 2/15/2011 - The Denton City Council held the second of two (2) required public hearings. 2/17/2011 - The Denton City Council held a third public hearing. The Denton City Council made the decision to hold a third public hearing to give area residents another opportunity to address the City Council due to inclement weather on 2/15/11. This public hearing was not required by law; however, it was done as a courtesy. 7/7/2011 - The City negotiating team met with the County Representative team to establish a Service Plan. 7/21/2011 - The City negotiating team met with the County Representative team to establish a Service Plan. 7/28/2011 - The City negotiating team met with the County Representative team to establish a Service Plan. 8/8/2011 - The City negotiating team met with the County Representative team to establish a Service Plan. EXHIBITS 1. Exhibit 1 -Map of Annexation Area -DH-12 2. Exhibit 2 -Proposed Final Service Plan - DH-12 (Not Recommended) 3. Exhibit 3 - Proposed Ordinance to Approve DH-12 Service Plan (Service Plan attached to Ordinance as Exhibit A) Prepared by: Mark A. Cunningham, AICP Director, Planning and Development Division Respectfully submitted: dY't Jon Fortune Assistant City Manager Page - 4 EXHIBIT 1 EXHIBIT 1 Proposed Annexation Area DH-12 DH-12 encompasses approximately 1,167 acres of land and is bounded by current city limits on all sides; north, south, east and west. DH-12 is located south of E. University Drive, east of N. Mayhill Road, north and south of Blagg Road, north and south of Mills Road, and east and west of S. Trinity Road. This area is outlined in yellow on the aerial map below. r { € DH12 - .E tai f r, I P =i f i i ;_i ' , 1 I I I r1 ; r # r , i r l a f~ v EXHIBIT 2 Final Offer 10 August 2011 CITY OF DENTON SERVICE PLAN DH-12 1. AREA ANNEXED The area to be annexed encompasses approximately 1,154 acres of land and is bounded by current city limits oil all sides; north, south, cast and west. It is located south of E. University Drive, east of N. Mayhill Goad, north and south of 13lagg Road, north and south of Mills Road, and cast and west of S. Trinity Road. The area is an unincorporated packet located within City of Denton's Extraterritorial Jurisdiction (ETJ), Division 1, and is identified as Dl-l-12. The proposed annexation contains multiple owners. A general description of the area is attached. II. INTRODUCTION This service plan has been prepared in accordance with the Texas Local Government Code, Sections 43.0121; 43.065; and 43.056(b)-(o) (Vernon 2408, as amended). Municipal facilities and services to the annexed areas described above will be provided or made available on helaalf of ttae City of Denton in accordance with the following plan. The City of Denton shall provide the annexed tract the levels of service, infrastructure, and infrastructure maintenance that are comparable to the levels of service, infrastructure, and infrastructure maintenance available in other parts of the City of Denton with similar topography, land use, and population density. IIL AD VALOREM PROPERTY OW1NER TAX SERVICES A. Police Protection Police protection from the City of Denton Police Department shall be provided to the areas annexed at a level consistent with current methods and procedures presently provided to similar areas on the effective date of the ordinance. Son-le of these services include: 1. Normal patrols and responses; 2. Handling of complaints and incident reports; 3. Special units, such as traffic enforcement, investigations and special weapons; and 4. Coordination with other public safety support agencies. As development commences in these areas, sufficient police protection, including personnel and equipment will be provided to furnish these areas with the level of police services consistent with the characteristics of topography, land utilization and population density of the areas. Upon ultimate development, police protection will be provided at a level consistent with other similarly situated areas within the city limits. 1 Final Offer 10 August 2011 B. Fire Protection The Denton Fire Department (DFD) will provide emergency and fire prevention services to the annexation areas. These services include: I . Fire suppression and rescue; 2. Pre-hospital medical services including triage, treatment and transport by Advanced Life Support (ALS) fire engines, trucks and ambulances; 3. Hazardous materials response and mitigation; 4. Emergency prevention and public education efforts; 5. Technical rescue response; and 6. Construction Plan Review and required inspections. Fire protection from the City of Denton shall be provided to the areas annexed at a level consistent with current methods and procedures presently provided to similar areas of the City of Denton on the effective date of the ordinance. As development commences in these areas, sufficient fire protection, including personnel and equipment will be provided to furnish these areas with the level of services consistent with the characteristics of topography, land utilization and population density of the areas. It is anticipated that fire stations planned to serve areas currently within the City of Denton will be sufficient to serve areas now being considered for annexation. Upon ultimate development, fire protection will be provided at a level consistent with other similarly situated areas within the city limits. C. Emer eney Medical Service The Denton Fire Department (DFD) will provide the following emergency and safety services to the annexation areas. These services include: 1. Emergency medical dispatch and pre-arrival First Aid instructions; 2. Pre-hospital emergency Advanced Life Support (ALS) response; and transport; 3. Medical rescue services. Emergency Medical Services (EMS) from the City of Denton shall be provided to the areas annexed at a level consistent with current methods and procedures presently provided to similar areas of the City of Denton on the effective date of the ordinance. As development commences in these areas, sufficient EMS, including personnel and equipment will be provided to furnish these areas with the level of services consistent with the characteristics of topography, land utilization and population density of the areas. 2 Final Offer 10 August 2011 Upon ultimate development, EMS will be provided at a level consistent with other similarly situated areas within the city limits. D. Roads and Streets Emergency street maintenance shall be provided within the annexation areas on the effective date of the applicable ordinance of acceptance. Routine maintenance will be provided within the annexation areas and will be scheduled as part of the City's annual program and in accordance with the current policies and procedures defined by the, ordinance and/or as established by the City Council. Any construction or reconstruction will be considered within the annexation areas on a City wide basis and within the context of the City's C1P and/or yearly fiscal budgetary allotments by the City Council. Roadway signage and associated posts will be replaced in priority of importance starting with regulatory signs, then warning signs, then informational signs and in conformance with fiscal allotments by the City Council. If a sign remains, it will be reviewed and placed on the City's inventory listing for routine replacement. All exiting signs will be reviewed for applicability and based upon an engineering study. New signs will be installed when necessary and based upon an engineering study. Routine maintenance of road/street markings will be placed on a priority listing and scheduled within the yearly budgetary allotments by the City Council. E. Parks, Playgrounds, Swimming", Pools Residents within the areas annexed may utilize all existing park and recreation facilities, on the effective date of this ordinance. Fees for such usage shall be in accordance with current fees established by ordinance. As development commences in these areas, additional park and recreation facilities shall be constructed based on park policies defined in the Park Master Plan and as specified in the Park Dedication and Development Ordinance. The general planned locations and classifications of parks will ultimately serve residents from the current City limits and residents from areas being considered for annexation. F. Publicly Owned Facilities Any publicly owned facility, building, or service located within the annexed area, and not otherwise owned or maintained by another governmental entity, shall be maintained by the City of Denton on the effective date of the annexation ordinance. 3 Final offer 10 August 2011 G. Other Services tit ~i I~ ' ire r V.A 1 I VJ). Other services that may be provided by the City of Denton, such as municipal and general administration will be made available on the effective elate of the annexation. The City of Denton shall provide level of services, infrastructure, and infi'astrucaire maintenance that is comparable to the level of services, infrastructure, and infrastructure maintenance available in other parts of the City of Denton with topography, land use, and population density similar to those reasonably contemplated or projected in the area. IV. ENTERPRISE ACTIVITY (UTILITY CUSTOMER) SERVICES A. Solid Waste Solid Waste and Recycling Collection Services will be provided to the newly annexed property immediately upon the effective date of the annexation at a level consistent with current methods and procedures presently provided to similar areas within the city. Private solid waste collection service providers operating ill the affected area immediately prior- to annexation and currently providing customers with service may continue to provide their existing service for up to 2 years in accordance with Texas Local Government Code. B. Wastewater Facilities The proposed annexation areas are within the City of Denton Sewer Service Area as define(] by Certificate of Convenience and Necessity (CCN) Number 20072 as issued by the Texas Commission on Environmental Quality (TCEQ). As development commences in these areas, sanitary sewer mains will be extended in accordance with the provisions of the City's codes, ordinances and regulations. City participation in the costs of these extensions shall be in accordance with applicable City ordinances and regulations. Capacity shall be provided consistent with the characteristics of topography, lane] utilization, and population density of the areas. Sanitary sewer mains and lift stations installed or improved to City standards kvithin the annexed areas which are located within dedicated easement, rights-of- way, or any other acceptable location approved by the City Engineer, shall be maintained by the City oil the effective date of this ordinance. Operation and maintenance of wastewater facilities in the annexed areas that are within the service area of another water utility will be the responsibility of that utility. Operation and maintenance of private wastewater facilities in the annexed area will be the responsibility of the owner. C. Water Facilities Except as provided in Section V.13 and V.C. 4 Final Offer 10 August 2011 The proposed annexation areas are within the City of Denton Water Service Area as defined by Certificate of Convenience and Necessity (CCN) Number 10195 as issued by the Texas Commission on Environmental Quality (TCEQ). Connections to existing City of Denton water distribution mains for water service will be provided in accordance with existing City ordinances and policies. Upon connection to existing distribution mains, water service will be provided at rates established by city ordinance. As new development occurs within these areas, water distribution mains will be extended in accordance with Denton's Codes, ordinances and utility service policies. City participation in the costs of these extensions shall be in accordance with Denton's codes and ordinances. Water service capacity shall be provided consistent with the characteristics of topography, land use and population density of the area. Operation and maintenance of water facilities in the annexed area that are within the service area of another water utility will be the responsibility of that utility. Existing developments, businesses or homes that are on individual water wells or private water systems will be allowed to continue to remain on these systems until a request for water service is made to the City. These requests for service will be handled in accordance with the applicable utility service line extension and connection policies currently in place at the time the request for service is received. V. ADDITIONAL SERVICES A. Non -Annexation Agreements - The City has agreed to offer Non- Annexation Agreements to eligible property owners in DH-12 for a term to last seven years. Eligible property owners are those individuals who currently receive an agricultural property tax exemption on their property. From the effective elate of the annexation, currently projected as May, 2013, the seven year Non-Annexation Agreement will extend the time period for non- annexation to 2020, City will receive non-annoxalioll from el D~I Io May 31, 2012, B. Water service Mills Road Properties from 1\/IaIhill to TrinitV inclrulin Cu,inier ha in -The City offers to design and construct public water access lines including all taps from the water line ul) to the private property line based on specific provisions. The total project will include survey, design, construction, staking, installing of taps and testing and inspection during construction. The city will extend water service to interested residents based on the following provisions: 5 Final offer 10 August 2011 1. Each homeowner that wishes to connect to the city's public water supply system is willing to pay for a pro rata charge of sixty (60%) percent of the per-foot cost of such water line based on the frontage of each lot. 2. The City agrees to extend the water line as indicated provided, before the start of the project, there is sufficient participation by property owners to cover at least 50% of the project cost through pro rata fees prior to construction of the project. 3. Homeowners are responsible for paying meter set fees and water impact fees required for all new connections to the City's water system prior to construction of the project. 4. Homeowners connecting to the City's public water system shall physically and permanently remove from the private water well service to any structure, residential or otherwise, that is served by City water service. The homeowner will allow the City to conduct a customer service inspection for each home connect to the City's water system as required by State law. 5. Homeowners connecting to the City's public water system shall be responsible for their private service line and re- plumbing of their house/property to connect to the city water meter to be located within the street right of way. 6. Any easements needed from private property to construct the public water system must be donated by the property owner to the City at no cost to the city. 7. City will establish a Pro-Rata Agreement to recoup the cost of the water line in the future from the lots that initially do not tie to the City water line. A property that does not initially connect to the City's public water supply system but later requests a connection, will be assessed a pro rata charge of sixty (60%) percent of the per-foot cost of such water line based on the frontage for their lot , i; !_ed 1 . 8. The City agrees to pursue alternate funding options to the benefit of the property owners that may be available through the Community Development Flock Grant program prior to commencement of the project. 9. Ciiy will extend this offer for extension of the water line for a period of -years from the date of execution of annexation. 6 Final Offer 10 August 2011 C. 'W'ater service Rln~g Road from Gesslirr to Lakeview -Tile City offers to design and construct public water access lines including all taps from the water line up to the private property line based on specific provisions. The total project will include survey, design, construction, staking, installing of taps and testing and inspection during construction. The city will extend water service to interested residents leased on the following provisions: I . Each homeowner that wishes to connect to the city's public water supply system is willing to pay for a pro rata charge of sixty (60%) percent of the per-boot cost of such water line based on the frontage of each lot. 2. The City agrees to extend the water line as indicated provided, before the start of the project, there is sufficient participation by property owners to cover at least 50% of the project cost through pro rata fees prior to construction of the project. 3. Homeowners are responsible for paying meter set fees and water impact fees required for all new connections to the city's wager system prior to construction of the project. 4. Homeowners connecting to the City's public water system shall physically and permanently remove from the private water well service to any structure, residential or otherwise, that is served by City water service. The homeowner will allow the City to conduct a customer service inspection for each home connect to the City's water system as required by State law. 5. Homeowners connecting to the City's public water system shall be responsible for their private service line and re- plumbing of their house/property to connect to the city water meter to be located within the street right of way. 6. Any easements needed from primate property to construct the public water system must be donated by the property owner to the City at no cost to the City. 7. City will establish a Pro-Rata Agreement to recoup the cost of the water. line in the future from the lots that initially do not tie to the City water line. A property that does not initially connect to the City's public water supply system but later requests a connection, will be assessed a pro rata charge of sixty (60%) percent of the per-foot cost of such water line based on the frontage for their lot_ f i-~ 7 Final Offer 1 0 August 2011 8. The City agrees to pursue alternate funding options to the benefit of the property owners that may be available through the Community Development Block Grant program prior to commencement of the project. 9. City will extend this offer for extension of the water line for a period of + year from the date of execution of annexation. D. Zoning - The City cannot establish zoning as a component of the annexation.. However, if a DH-12 property owner desires to request a zoning change within one-year of the (late of annexation, the City will waive zoning application fees. With the assistance and cooperation of the property owner, the City will provide an analysis and recommendation to forward to the Planning and Zoning Commission and City Council. Staff cannot guarantee that a specific zoning request will be recommended or granted as a component of the service plan. L. SupplenieWal Inforniat on - The City is in receipt of supplemental information from the Denton County Representatives related to the current condition of certain County Roads as of July 28, 2011. This information reflects more recent maintenance data as it relates to Blagg, Gessling, Mills, Cunningham, Trinity, and Grissom. It is the desire of the County Representatives to ensure that the City has this information since it will be more current than the adopted Inventory of Services which was approved on November 24, 2010. VI,. UNIFORM LEVEL OF SERVICES IS NOT REQ IRED Nothing in this plan shall require the City of Denton to provide a uniform level Of full municipal services to cacti area of the City, including the annexed area, if different characteristics of topography, land use, and population density are considered a sufficient basis for providing different levels of service. VII. TERM This service plan shall be valid for a term of ten (10) years. Renewal of the service plan shall be at the discretion of City Council. VIII. AMENDMENTS The service plan may be amended if the City Council determines at a public hearing that changed conditions or subsequent occurrences make this service plan unworkable or obsolete. The City Council may amend the service plan to conform to the changed conditions or subsequent occurrences pursuant to Texas Local Government Code, Section 43.056. 8 Final Offer 10 August 2€111 City Representatives Agree Disagree ~ 1! t Yn Fortun ate Chuck Russell Date P.S. Arora Date County Representatives Agree Disagree Wallace Batey Date Jeff u n Date 4"Ij Frank James Date a)w 11 /,-b Gi e ecormick - Date al dal Srnith Date 9 Final Offer 10 August 2031 EXHIBIT 1 Proposed Annexation Area Dtl-12 DH-12 encompasses approximately 1,151 acres of land and is bounded by current city limits on all sides; north, south, east and west. DH-12 is located south of E. University Drive, east of N. Mayhill Road, north and south of Rlagg Road, north and south of Mills Read, and east and west of S. Trinity Road. This area is outlined in yellow on the aerial map below. L) 11,112 I f I . 1 r 4 f t I I 1 _I 1 r f I I 1. I i Ii a 1 I I I 1 i I i 7 r li 1 Y I 'L. Ali ' Y 10 EXHIBIT 3 sAlegallour documentslordinances1111dh-12 service plan adoption ordinance.doc ORDINANCE NO. AN ORDINANCE ADOPTING A SERVICE PLAN FOR AN AREA OF LAND TO BE ANNEXED TO THE CITY OF DENTON, TEXAS, PURSUANT TO AN ANNEXATION PLAN, GENERALLY IDENTIFIED AS DH-12 CONSISTING OF APPROXIMATELY 1,167 ACRES LOCATED SOUTH OF EAST UNIVERSITY DRIVE, EAST OF NORTH MAYHILL ROAD, NORTH AND SOUTH OF BLAGG ROAD, NORTH AND SOUTH OF MILLS ROAD AND EAST AND WEST OF SOUTH TRINITY ROAD, AND MORE SPECIFICALLY IDENTIFIED AND DEPICTED IN EXHIBIT "A" ATTACHED HERETO, WHICH AREA IS ADJACENT TO AND ABUTS THE EXISTING CITY LIMITS OF THE CITY OF DENTON, TEXAS; PROVIDING A SAVINGS CLAUSE; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, pursuant to Section 43.052, Subchapter C, Texas Local Government Code, a home rule city is authorized to annex certain areas within its annexation plan; and WHEREAS, Section 43.0560), Subchapter C, Texas Local Government Code requires that a preliminary service plan be prepared for the provision of full municipal services to the area proposed to be annexed, be made available for public inspection and be explained to the inhabitants of the area to be annexed at public hearings; and WHEREAS, the City of Denton's preliminary service plan was prepared, made available for public inspection and explained to the inhabitants of the area to be annexed at public hearings; and WHEREAS, Section 43.0562, Subchapter C, Texas Local Government Code requires the City to negotiate the proposed provision of services contained in the preliminary service plan with a committee of five representatives appointed by the Denton County Commissioners Court; and i WHEREAS, said negotiations were held between the City and the County-appointed committee; and WHEREAS, said negotiations did not result in any modifications to the preliminary service plan attached hereto as Exhibit "A"; and WHEREAS, the City Council of the City of Denton finds that the preliminary service plan is in the best interests of the health, safety and general welfare of the citizens of the City of Denton, Texas and of the citizens of DH-12; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The findings and recitations contained in the preamble of this Ordinance are incorporated herein by reference. SECTION 2. The City Council finds that the preliminary service plan attached hereto as Exhibit "A" is complete and adopts it as its official service plan for DH-12 pursuant to Sections 43.056(a) and (k), Subchapter C, Texas Local Government Code. s:llegallour documentslordinancesll lldh-12 service plan adoption ordinance,docs:UegaRour documentslordinancesll Ildh-12 service plan adoption ordinance.doc SECTION 3. Should any paragraph, section, sentence, phrase, clause or word of this Ordinance be declared unconstitutional or invalid for any reason, the remainder of this Ordinance shall not be affected thereby. SECTION 4. This Ordinance shall be become effective upon final passage by the City Council. PASSED AND APPROVED this the day of , 2011. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: Page 2 salegallour documentslordinancesll lldh-12 service plan adoption ordinance.docsalegahour documentslordinancesll Ildh-12 service plan adoption ordinance.doc EXHIBIT A Page 3 CITY OF DENTON SERVICE PLAN DH-12 Original Offer L AREA ANNEXED The area to be annexed encompasses approximately 1,154 acres of land and is bounded by current city limits on all sides; north, south, east and west. It is located south of E. University Drive, east of N. Mayhill Road, north and south of Blagg Road, north and south of Mills Road, and east and west of S. Trinity Road. The area is an unincorporated pocket located within City of Denton's Extraterritorial Jurisdiction (ETJ), Division 1, and is identified as DH-12. The proposed annexation contains multiple owners. A general description of the area is attached. II. INTRODUCTION This service plan has been prepared in accordance with the Texas Local Government Code, Sections 43.021; 43.065; and 43.056(b)-(o) (Vernon 2008, as amended). Municipal facilities and services to the annexed areas described above will be provided or made available on behalf of the City of Denton in accordance with the following plan. The City of Denton shall provide the annexed tract the levels of service, infrastructure, and infrastructure maintenance that are comparable to the levels of service, infrastructure, and infrastructure maintenance available in other parts of the City of Denton with similar topography, land use, and population density. III. AD VALOREM (PROPERTY OWNER) TAX SERVICES A. Police Protection Police protection from the City of Denton Police Department shall be provided to the areas annexed at a level consistent with current methods and procedures presently provided to similar areas on the effective date of the ordinance. Some of these services include: 1. Normal patrols and responses; 2. Handling of complaints and incident reports; 3. Special units, such as traffic enforcement, investigations and special weapons; and 4. Coordination with other public safety support agencies. As development commences in these areas, sufficient police protection, including personnel and equipment will be provided to furnish these areas with the level of police services consistent with the characteristics of topography, land utilization and population density of the areas. Upon ultimate development, police protection will be provided at a level consistent with other similarly situated areas within the city limits. 1 B. Fire Protection The Denton Fire Department (DFD) will provide emergency and fire prevention services to the annexation areas. These services include: 1. Fire suppression and rescue; 2. Pre-hospital medical services including triage, treatment and transport by Advanced Life Support (ALS) fire engines, tricks and ambulances; 3. Hazardous materials response and mitigation; 4. Emergency prevention and public education efforts; 5. Technical rescue response; and 6. Constriction Plan Review and required inspections. Fire protection from the City of Denton shall be provided to the areas annexed at a level consistent with current methods and procedures presently provided to similar areas of the City of Denton on the effective date of the ordinance. As development commences in these areas, sufficient fire protection, including personnel and equipment will be provided to furnish these areas with the level of services consistent with the characteristics of topography, land utilization and population density of the areas. It is anticipated that fire stations planned to serve areas currently within the City of Denton will be sufficient to serve areas now being considered for annexation. Upon ultimate development, fire protection will be provided at a level consistent with other similarly situated areas within the city limits. C. Emmency Medical Service The Denton Fire Department (DFD) will provide the following emergency and safety services to the annexation areas. These services include: 1. Emergency medical dispatch and pre-arrival First Aid instructions; 2. Pre-hospital emergency Advanced Life Support (ALS) response; and transport; 3. Medical rescue services. Emergency Medical Services (EMS) from the City of Denton shall be provided to the areas annexed at a level consistent with current methods and procedures presently provided to similar areas of the City of Denton on the effective date of the ordinance. As development commences in these areas, sufficient EMS, including personnel and equipment will be provided to furnish these areas with the level of services consistent with the characteristics of topography, land utilization and population density of the areas. 2 Upon ultimate development, EMS will be provided at a level consistent with other similarly situated areas within the city limits. D. Roads and Streets Emergency street maintenance shall be provided within the annexation areas on the effective date of the applicable ordinance of acceptance. Routine maintenance will be provided within the annexation areas and will be scheduled as part of the City's annual program and in accordance with the current policies and procedures defined by the ordinance and/or as established by the City Council. Any constriction or reconstruction will be considered within the annexation areas on a City wide basis and within the context of the City's CIP and/or yearly fiscal budgetary allotments by the City Council. Roadway signage and associated posts will be replaced in priority of importance starting with regulatory signs, then warning signs, then informational signs and in conformance with fiscal allotments by the City Council. If a sign remains, it will be reviewed and placed on the City's inventory listing for routine replacement. All exiting signs will be reviewed for applicability and based upon an engineering study. New signs will be installed when necessary and based upon an engineering study. Routine maintenance of road/street markings will be placed on a priority listing and scheduled within the yearly budgetary allotments by the City Council. E. Parks, Playgrounds, Swimming Pools Residents within the areas annexed may utilize all existing park and recreation facilities, on the effective date of this ordinance. Fees for such usage shall be in accordance with current fees established by ordinance. As development commences in these areas, additional park and recreation facilities shall be constricted based on park policies defined in the Park Master Plan and as specified in the Park Dedication and Development Ordinance. The general planned locations and classifications of parks will ultimately serve residents from the current City limits and residents from areas being considered for annexation. F. Publicly Owned Facilities Any publicly owned facility, building, or service located within the annexed area, and not otherwise owned or maintained by another governmental entity, shall be maintained by the City of Denton on the effective date of the annexation ordinance. G. Other Services Other services that may be provided by the City of Denton, such as municipal and general administration will be made available on the effective date of the annexation. The City of Denton shall provide level of services, infrastructure, and infrastructure maintenance that is comparable to the level of services, infrastructure, and infrastructure maintenance available in other parts of the City of Denton with topography, land use, and population density similar to those reasonably contemplated or projected in the area. IV. ENTERPRISE ACTIVITY (UTILITY CUSTOMER) SERVICES A. Solid Waste Solid Waste and Recycling Collection Services will be provided to the newly annexed property immediately upon the effective date of the annexation at a level consistent with current methods and procedures presently provided to similar areas within the city. Private solid waste collection service providers operating in the affected area immediately prior to annexation and currently providing customers with service may continue to provide their existing service for up to 2 years in accordance with Texas Local Government Code. B. Wastewater Facilities The proposed annexation areas are within the City of Denton Sewer Service Area as defined by Certificate of Convenience and Necessity (CCN) Number 20072 as issued by the Texas Commission on Environmental Quality (TCEQ). As development commences in these areas, sanitary sewer mains will be extended in accordance with the provisions of the City's codes, ordinances and regulations. City participation in the costs of these extensions shall be in accordance with applicable City ordinances and regulations. Capacity shall be provided consistent with the characteristics of topography, land utilization, and population density of the areas. Sanitary sewer mains and lift stations installed or improved to City standards within the annexed areas which are located within dedicated easement, rights-of- way, or any other acceptable location approved by the City Engineer, shall be maintained by the City on the effective date of this ordinance. Operation and maintenance of wastewater facilities in the annexed areas that are within the service area of another water utility will be the responsibility of that utility. Operation and maintenance of private wastewater facilities in the annexed area will be the responsibility of the owner. 4 C. Water Facilities The proposed annexation areas are within the City of Denton Water Service Area as defined by Certificate of Convenience and Necessity (CCN) Number 10195 as issued by the Texas Commission on Environmental Quality (TCEQ). Connections to existing City of Denton water distribution mains for water service will be provided in accordance with existing City ordinances and policies. Upon connection to existing distribution mains, water service will be provided at rates established by city ordinance. As new development occurs within these areas, water distribution mains will be extended in accordance with Denton's Codes, ordinances and utility service policies. City participation in the costs of these extensions shall be in accordance with Denton's codes and ordinances. Water service capacity shall be provided consistent with the characteristics of topography, land use and population density of the area. Operation and maintenance of water facilities in the annexed area that are within the service area of another water utility will be the responsibility of that utility. Existing developments, businesses or homes that are on individual water wells or private water systems will be allowed to continue to remain on these systems until a request for water service is made to the City. These requests for service will be handled in accordance with the applicable utility service line extension and connection policies currently in place at the time the request for service is received. V. UNIFORM LEVEL OF SERVICES IS NOT REQUIRED Nothing in this plan shall require the City of Denton to provide a uniform level of full municipal services to each area of the City, including the annexed area, if different characteristics of topography, land use, and population density are considered a sufficient basis for providing different levels of service. VI. TERM This service plan shall be valid for a term of ten (10) years. Renewal of the service plan shall be at the discretion of City Council. VII. AMENDMENTS The service plan may be amended if the City Council determines at a public hearing that changed conditions or subsequent occurrences make this service plan unworkable or obsolete. The City Council may amend the service plan to conform to the changed conditions or subsequent occurrences pursuant to Texas Local Government Code, Section 43.056. 5 EXHIBIT 1 Proposed Annexation Area DH-12 DH-12 encompasses approximately 1,154 acres of land and is bounded by current city limits on all sides; north, south, east and west. DH-12 is located south of E. University Drive, east of N. Mayhill Road, north and south of Blagg Road, north and south of Mills Road, and east and west of S. Trinity Road. This area is outlined in yellow on the aerial map below. 3 DH12 I I I: 1 F I I ,j I .t - i T I I i.. r tj: I t ~ ~ f I I I i y t I a I I u 6 AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: City Manager's Office CM: George Campbell, City Manager SUBJECT Consider nominations/appointments to the City's Boards and Commissions. BACKGROUND Below is the list of outstanding Boards and Commissions nominations and the Council Member responsible for the nomination: Animal Shelter Advisory Committee - During the confirmation process, it was found that Kari Jo Zika lives outside the city limits and thus cannot serve. This is a nomination for Mayor Burroughs. Community Development Advisory Committee - Council Member King Health & Building Standards Commission - During the confirmation process, it was found that Dana Binnion lives outside the city limits and thus cannot serve. This is a nomination for Council Member King. There is also an Alternate position which is a nomination for any council member. Historic Landmark Commission - Mayor Pro Tem Kamp Public Art Committee - Justin Rouhier has moved outside of the city limits. This is a nomination for Mayor Burroughs. Zoning Board of Adjustment - Alex Payne has moved outside of the city limits. This is a nomination for Council Member Gregory. Nominations could be made and voted on at this meeting should the Council desire. Approval would be contingent on completion of the confirmation process. If you require any further information, please let me know. Respectfully submitted: Jennifer Walters City Secretary AGENDA INFORMATION SHEET AGENDA DATE: August 16, 2011 DEPARTMENT: Police ACM: Fred Greene SUBJECT Consider adoption of an ordinance establishing a resident only parking program in a portion of the Denia neighborhood to address hazardous conditions caused by adjacent uses and to protect the residents of this neighborhood from harmful conditions and promote the health, safety and welfare of the residents of this neighborhood; and establishing an effective date. BACKGROUND The University of North Texas (UNT) will open a new football stadium south and east of the intersection of I-35E and Bonnie Brae. The first scheduled event for the stadium will be the inaugural UNT home football game on September 10, 2011. The stadium plan includes a limited amount of parking on site, while the majority of the stadium parking is intended for the lots around Fouts Field and other on-campus parking venues. Representatives from UNT developed traffic plans for entry and exit of vehicles, including the use of manned traffic control points on surrounding streets. The Denia Area Community Group (DACG) includes streets that border the new stadium location. The DACG has voiced strong concerns related to traffic and parking issues associated with the new UNT football stadium. Specifically, they are concerned about traffic being directed into and through neighborhood streets, creating access issues for neighborhood residents. Further, they are concerned that attendees at stadium events will utilize neighborhood streets as a free parking alternative due to the proximity to the stadium. In addition to the substantial inconvenience to residents, the DACG believes this will serve to reduce property values in the neighborhood. Several Council members along with City staff met with representatives from the University of North Texas and DACG on several occasions as stadium constriction and traffic plans were being developed. Based on these meetings, staff developed a parking plan intended to reduce the identified impact of stadium events on the neighborhood. Parking Plays Staff proposes an ordinance establishing a "Resident Only" parking program for on-street parking for a portion of the Denia area neighborhood. The area affected would be bounded by I-35 southbound service road on the North, continuing to McCormick to Agenda Information Sheet August 2, 2011 Page 2 form the boundary on the East, then continuing South to Willowwood, then West on Willowwood to Highland Park Road and South on Highland Park Road, then East on Willowcrest Loop and around to Highland Park Road again, then South on Highland Park Road, which changes directions and nuns West to Bonnie Brae, then continuing North to the I-35 service road such that Bonnie Brae is the West boundary. Residents that reside in the affected area would have the option to purchase resident parking permits issued by the City of Denton. The permit will be in the form of a placard to be hung on the inside rear view mirror facing the vehicle window. Guest and temporary permits would also be available for purchase. The permit is valid beginning September 1 and ending on August 31 of the following year. All permits will be available at the Denia Recreation Center. Prior to the start of stadium events, the City will conspicuously post signs indicating the locations and times for which parking is by permit only and indicating that unauthorized vehicles may be towed at the expense of the owner or operator in accordance with Section 684.053 of the Texas Transportation Code. The resident parking only zones becomes effective upon the posting of signs in the zone. The Police Department will provide personnel to patrol the affected neighborhood before, during and after the event. Permit Costs The cost of the annual permit is $5.00 per vehicle. One permanent guest pass shall be issued for each vehicle permit purchased, up to a limit of three (3) guest passes per residence. Temporary passes to accommodate large gatherings would also be available for purchase at a cost of $2.00. Temporary passes shall be valid for a single day only and will be provided on an individual basis. Program Evalltation Staff intends to evaluate the parking plan after the first four UNT home football games of the 2011 season. Any necessary changes will be brought back to the City Council for consideration. OPTIONS 1. Council can direct staff to bring the ordinance forward for approval as written. 2. Council can direct staff to make additional changes to the ordinance. 3. Council can reject the ordinance. RECOMMENDATION Staff recommends that Council approve the ordinance as written. PRIOR ACTION/REVIEW 08/02/11 - Council Work Session Agenda Information Sheet August 2, 2011 Page 3 FISCAL IMPACT Implementation of the parking plan will incur some financial expenditure. Staff estimates that proper signage for the affected neighborhood streets will require the purchase of thirty-four (34) signs and stands at a total cost of approximately $4,300.00. In addition, staff estimates a cost of $900.00 to design and purchase the parking permits. While proceeds for the sale of the permits may off-set that cost, staff does not have an accurate estimate of the number of resident and temporary permits that will actually be sold. Finally, staff estimates the use of up to four (4) police officers and one (1) supervisor to monitor and patrol the neighborhood as well as manage the signs and barricade for each event, at an estimated cost of $1,536.00 per event. EXHIBITS Ordinance Parking Map Respectfully submitted, Paul W. Abbott Chief of Police Prepared by: Scott Fletcher, Captain s:AIegal\our documents\ordinances\1I\denia resident only parking.doc ORDINANCE NO. AN ORDINANCE ESTABLISHING A RESIDENT ONLY PARKING PROGRAM IN A PORTION OF THE DENIA NEIGHBORHOOD TO ADDRESS HAZARDOUS CONDITIONS CAUSED BY ADJACENT USES AND TO PROTECT THE RESIDENTS OF THIS NEIGHBORHOOD FROM HARMFUL CONDITIONS AND PROMOTE THE HEALTH, SAFETY AND WELFARE OF THE RESIDENTS OF THIS NEIGHBORHOOD; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the City Council deems that it is in the public interest to establish a "Resident Parking Only Program" for residential streets in a portion of the Denia Neighborhood within the City of Denton, Texas in light of hazardous traffic conditions to residents and children, caused by the use of residential streets for parking by persons using adjacent educational, stadium, commercial, and industrial facilities, by those who do not reside in the neighborhood; and WHEREAS, the City Council desires to protect the residents of this neighborhood from polluted air, excessive noise, trash and refuse and from unreasonable burdens in gaining access to their residences; and WHEREAS, the City Council further desires to preserve the character of the Denia residential districts; and WHEREAS, the City Council deems this program in the public interest to promote efficiency in maintenance of the streets in a clean and safe condition in this neighborhood; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. Creation of "Resident Parking Only Program." There is hereby created a "Resident Parking Only Program" in a portion of that neighborhood known as the "Denia Neighborhood and bounded by the I-35 southbound service road on the North, continuing to McCormick to form the boundary on the East, then continuing South to Willowwood, then West on Willowwood to Highland Park Road and South on Highland Park Road, then East on Willowcrest Loop and around to Highland Park Road again, then South on Highland Park Road, which changes directions and runs West to Bonnie Brae, then continuing North to the I-35 service road such that Bonnie Brae is the West boundary, and as further illustrated by the map attached hereto as "Exhibit A" and incorporated as though set forth herein. The Chief of Police shall be charged with monitoring the effectiveness of this program and may request review by the Council of the City of Denton, as necessary. SECTION 2. Definitions. (1) City manager means the city manager or his designee. sAlegal\our documents\ordinances\11\denia resident only parking.doc (2) Resident parking only zone means any designated on-street parking spaces within a residential area where only resident motor vehicles displaying a valid permit may park. (3) Permit means a resident parking only permit issued by the city manager under this article. The permit will be in the form of a placard clearly displayed in the vehicle window. (4) Guest pass means a temporary parking pass issued by the city manager under this article. The pass will be valid for a period of one year. The pass will be in a form designed to hang from a vehicle's rear view mirror. (5) Temporary pass means a temporary parking pass issued by the city manager under this article. The pass will be valid for a period of one day and will be in a form designed to hang from a vehicle's rear view mirror. (6) Block shall mean that portion of one side of a street situated between two (2) cross streets. An alley shall not be considered as establishing the boundary of a block for purposes of this article. (7) Vehicle shall mean a vehicle as defined by the Texas Transportation Code "Rules of the Road." SECTION 3. Designation of resident parking only zones. (a) The city manager may, in consultation with the Denia neighborhood, designate resident parking only zones in the Denia Neighborhood as the city manager determines necessary to provide for the parking needs of the residents of that neighborhood based upon the following criteria: (1) The street(s) proposed for the program shall consist of low density residential uses. The city manager will determine the days and time of the restricted parking based upon traffic and parking patterns generated by adjoining uses and will include input from the residents of the Denia neighborhood. (2) Traffic control requirements as determined by the Police and Traffic Engineering departments shall be considered. (b) Marked service, delivery, city and state vehicles while parked for the purpose of providing service, delivery or conducting official business in the resident parking only zone are exempt from application of this article. (c) The City shall conspicuously post signs indicating the locations and times for which parking is by permit only and indicating that unauthorized vehicles may be towed at the expense of the owner or operator in accordance with section 684.053 of the [Texas] Transportation Code. A resident parking only zone becomes effective upon the posting of signs in the zone. Page 2 sAlegal\our documents\ordinances\11\denia resident only parking.doc (d) The costs for the establishment of a resident parking only zone are five dollars ($5.00) annual fee for each resident parking only permit, per vehicle. SECTION 4. Resident parking only permit. (a) The City Manager shall, upon designation of resident only parking streets and payment of the permit fee, issue resident parking only permits to any person who resides in the resident parking zone sufficient for that person's vehicles, including any vehicles owned by other family members residing at the same address. (b) The application for a permit must contain the name, home address, and driver's license number of the resident or property owner applying for the permit(s) and the number of permits needed. (c) To prove residency within the residential parking only zone and to verify the contents of the application, the applicant shall present at the time of application: (1) A valid Texas driver's license showing the applicant's current home address; or (2) A valid Texas motor vehicle registration for the motor vehicle to be parked in the resident parking only zone, showing the applicant's current home address; or (3) A residential utility bill showing the applicant's current home address. (d) When a vehicle other than a service, delivery, city or state vehicle making a delivery or conducting official business is parked in a resident parking only zone, the permit must be conspicuously displayed by suspending from the inside rearview mirror. On motorcycles and trailers, such permit may be placed at a convenient location at or near the vehicle's license plate. (e) A permit authorizes the holder to park a vehicle at any time in a resident parking only zone, unless such parking is prohibited or restricted by regulations other than those established under this article. (f) A permit is not transferable or assignable. (g) A permit is valid for one year beginning September 1 and ending August 31 of the following year. Permits may be renewed by applying in accordance with provisions of this article. (h) A lost, stolen or destroyed permit may be replaced for a two dollar ($2.00) fee. The permit holder must sign an affidavit stating that the permit was lost or stolen or provide physical verification that the permit has been destroyed. If a vehicle is sold, the permit holder may remove the permit and use it in lieu of the aforementioned signed affidavit. Page 3 sllegal\our documents\ordinances\1 I\denia resident only parking.doc (i) One permanent guest pass shall be issued for each vehicle permit purchased, up to a limit of three (3) guest passes per residence. 0) Temporary passes are available to accommodate large gatherings within the residential parking only zone. Temporary passes shall be valid for one day only and will be provided on an individual basis. A fee of two dollars ($2.00) per pass shall be charged to recover administrative costs. The total number of temporary passes shall not exceed five (5) passes in one (1) day. In no case shall the number of temporary passes issued exceed the available curb space within one block of the location of the large gathering. (k) Issuance of a resident parking only permit does not limit either the city or the state's ability to perform emergency repairs, maintenance, construction or reconstruction of the roadway, and performing emergency repairs, maintenance, construction or reconstruction of the roadway does not create a cause of action against either the city or the state. SECTION 5. Removal of residential parking permit zone. A residential parking permit zone may be removed by either of the following methods: (a) The City Manager may, in consultation with the Denia neighborhood, determine to remove the resident permit parking zone. (b) A petition may be filed in the traffic engineering department signed by the residents who own or occupy sixty (60) percent of the linear footage of the numerical street block requesting the removal of the "Resident Parking Only" signage. Such a petition shall not be considered within two (2) years of implementation of the zone. (c) If the resident-only parking is located on a state maintained roadway, the state may, at its sole discretion upon a finding that traffic conditions have so changed that the existence of the roadway facility under the "Resident Parking Only" program is impeding maintenance, damaging the highway facility, impairing safety or that the roadway facility is not being properly operated, or if for any other reason it is the state's judgment that such use is not in the public interest, approval for the "Resident Parking Only" program on state maintained roadways may be: (1) modified, if corrective measures acceptable to both parties can be applied to eliminate the objectionable uses of the roadway facility, or (2) terminated and use of the area for "Resident Parking Only" discontinued. SECTION 6. Offenses; towing. (a) A person commits an offense if he: (1) Parks a motor vehicle in a resident parking only zone without displaying a valid permit, guest pass or temporary pass on the vehicle as required by this article; or Page 4 sAlegahour documents\ordinances\l I\denia resident only parking.doc (2) Falsely represents himself as being eligible for a resident parking only permit, submits false documents, or otherwise makes a false statement of a material fact on an application for a permit. (b) Further, the city, acting through its police department, may tow or cause to be towed any unauthorized vehicles parked in designated residential parking only zones during the hours of enforcement of such zone as permitted by Chapter 684 of the Texas Transportation Code. SECTION 7. Penalty. If found guilty of an offense under this Chapter, the punishment may be a fine not to exceed five hundred dollars ($500.00). SECTION 8. Effective date. This ordinance providing for a penalty shall become effective 14 days from the date of its passage, and the City Secretary is hereby directed to cause the caption of this ordinance to be published twice in the Denton Record-Chronicle, the official newspaper of the City of Denton, Texas, within 10 days of the date of its passage. PASSED AND APPROVED this the day of 2011. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: Page 5 - - - - N_ _ a m a d 2 4 w w prc y 1-35W Ramp ~ A 8 MAPLE -MAPLE MAPLE MAPLE MAPLE `t' . yy I3 3SF ani y L,35W RnmP rc SwRa p. t' Om y m I3 w r t35 I.-.. SfSF a a ¢ a 2 m F 3SF k 3UICERO G u I3S SF a FSER`ICF t. Sv'3y. PAWATE EPGLf- EAGLE 2 EAGLE EAGLE EAGLE EAGLE - EAGLE EAGLE EAGLE Rp {3tf I3SESER ~OqE, > x y y hfF RO ylff9 ~ % umi ~ a W s w s x a ~ Q pLRPOR NE WILEN.RE WILSNIRE [re N35E RnmU a 35 ERyr .SS ....1 fANNiN -fANNIN ---GANNIN y: .,f FR FSEq ARz R~ o•..i. ~ 1>p:I ~v klCfgp NRiE E ti 4~ ~ a sW Ly °L MARGfE Ix MARGIE '~jy15~d Rhc R $ f V v f.pp /Ise t 0 m a 3 y 91.. SESER ~mL W v SCi~'%1 i h(x, y ~ a -COLLINS LE ~ ryt3SP Rp l3SE } ~ g a z S R fRL{ np I. C'`R ~ UN[E NJJU 3S pI. - -VNDERWOBD k - zz L IUf NN J. rF ~ f .35E Y ESfp 5{m ~ Ppd It F `iOf k ~j o-A¢ u ~ f3 w SF a ? 6 +5 . 'F1111111, x INFO R ~ o O a 2 4. GA FriJ 6u[ENLEC ~3r 3SF / -....GREENLEE `-...GREENLEE z ` ~ I P 3SFS ~ IkYT FR`IC f r~sE RO w x " SER / f G > m S ~ MIC.l rigl I 3`EF ~ 'a S ~ N114PO(. h\41L1 !l/ ~/ef /3Sf I~i11~~ Rp 0 o V ~ y Y ~ r 16- M i Q a• TREMONi ~ irJ ri+lv LiN~~~EV LINDSE'i iilyOCEv v v t~ c ZE C d Ewe ' \ o r.aLr x d J HWOt~r. .'aN\vYV'.U r.nvttrvr~U L w i ~ \ WiLIOWWt~t~1~ WII OWN OC~o W11.L~ WVJneU VVII Its\v u\vY~D WRLOV \o~r. \VILLO\V NOi~] PRNATF \ v \ I 2 VIILLO`Nt NLSi V F v r a 'n ~ fn uH [L IAI!F CI vnUHEI. lA'.~REI. ~.n U~.LL W ty _ s Willowood Herbi„Wn vnRN Highland-fark Rd. n1,1A,—> 'A- PArt-,n ~ 11- 1--1 ....SOLAR Legend S11ea. N P.-I. Area Map te: The I formation provided on this map represents the current data in the Denton GIS system. It is not an Official map of the City nton Not to Scale F ° N and is not to the accuracy standards of a survey map. This map may contain errors and omissions. The Agenda Information Sheet provided by the Legal Department contains confidential information and has been provided to the Council under separate cover. s:\legal\our documents\resolutions\l 1\redist 2011 city of denton resolution adopting criteria (00512706) (2) 041111.doex Exhibit 1 RESOLUTION NO. 11%20 11-012 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS ADOPTING CRITERIA FOR USE IN THE REDISTRICTING 2011 PROCESS; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council has certain responsibilities for redistricting under federal and state law, including but not limited to, Amendments 14 and 15 to the United States Constitution, U.S.C.A. (West 2006) and the Voting Rights Act, 42 U.S.C.A. § 1973, et seq. (West 2010); and Tex. Gov't Code Ann. 2058.001 and 2058.002 (Vernon 2008); and WHEREAS, the City Council has certain responsibilities for redistricting under the City Charter; and WHEREAS, on review of the 2010 Census data, it appears that a population imbalance exists requiring redistricting of the City Councilmember Districts; and WHEREAS, it is the intent of the City to comply with the Voting Rights Act and with all other relevant law, including Shaw v. Reno jurisprudence; and WHEREAS, a set of established redistricting criteria will serve as a framework to guide the City in the consideration of redistricting plans; and WHEREAS, established criteria will provide the City a means by which to evaluate and measure proposed plans; and WHEREAS, redistricting criteria will assist the City in its efforts to comply with all applicable federal and state laws; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. The City of Denton, Texas, in its adoption of a redistricting plan for City Councilmember Districts, will adhere to the following criteria: 1. Where possible, easily identifiable geographic boundaries should be followed. 2. Communities of interest should be maintained in a single district, where possible, and attempts should be made to avoid splitting neighborhoods. 3. To the extent possible, districts should be composed of whole voting precincts. Where this is not possible or practicable, districts should be drawn in a way that permits the creation of practical voting precincts and that ensures that adequate facilities for polling places exist in each voting precinct. 4. Although it is recognized that existing districts will have to be altered to reflect new population distribution, any redistricting plan should, to the extent possible, be based on existing districts. 5. Districts must be configured so that they are relatively equal in total population according to the 2010 federal census. In no event should the total deviation between the largest and the smallest district exceed ten percent. sAlegahour doeumentslresolutionsll llredist 2011 city of denton resolution adopting criteria (00512706) (2) 04111 Ldocx 6. The districts should be compact and composed of contiguous territory. Compactness may contain a functional, as well as a geographical dimension. 7. Consideration may be given to the preservation of incumbent-constituency relations by recognition of the residence of incumbents and their history in representing certain areas. 8. The plan should be narrowly tailored to avoid retrogression in the position of racial minorities and language minorities as defined in the Voting Rights Act with respect to their effective exercise of the electoral franchise. 9. The plan should not fragment a geographically compact minority community or pack minority voters in the presence of polarized voting so as to create liability under section 2 of the Voting Rights Act, 42 U.S.C.A. § 1973. SECTION 2. The City Council will review all plans in light of these criteria and will evaluate how well each plan conforms to the criteria. SECTION 3. Any plan submitted to the City Council by a citizen for its consideration should be a complete plan-i. e., it should show the full number of City Councilmember Districts and should redistrict the entire District. The City Council may decline to consider any plan that is not a complete plan. SECTION 4. All plans submitted by citizens, as well as plans submitted by staff, consultants, and members of the City Council should conform to these criteria. SECTION 5. This Resolution shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2011. MARK : B't7RR0U , MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: AP OVED A TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: Page 2 i sAlegahour documentsVesolutions\l I\redist 2011 city of denton resolution adontine euidelines (00512707) (2) 041111.doex Exhibit 2 RESOLUTION No. 82011-011 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS ESTABLISHING GUIDELINES FOR PERSONS SUBMITTING COMMENTS AND SPECIFIC REDISTRICTING PROPOSALS; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council has certain responsibilities for redistricting under federal and state law including, but not limited to, Amendments 14 and 15 to the United States Constitution, U.S.C.A. (West 2006) and the Voting Rights Act, 42 U.S.C.A. § 1973, et seq. (West 2003); and Tex. Gov't Code Ann. 2058.001 and 2058.002 (Vernon 2008); and WHEREAS, the City Council has certain responsibilities for redistricting under the City Charter; and WHEREAS, it is necessary to provide for the orderly consideration and evaluation of redistricting plans which may come before the City Council; and WHEREAS, these guidelines relate to persons who have specific redistricting plans they wish the City Council to consider; and WHEREAS, the City Council welcomes any comments relevant to the redistricting process; NOW, THEREFORE, I THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. In order to make sure that any plan that might be submitted is of maximum assistance to the City Council in its decision making process, the City Council hereby sets the following guidelines: 1. Proposed plans must be submitted in writing and be legible. If a plan is submitted orally, there is significant opportunity for misunderstanding, and it is possible that errors may be made in analyzing it. The City Council wants to be sure that all proposals are fully and accurately considered. 2. Any plan must show the total population and voting age population for Blacks, Hispanics, Asians, and Anglo/other for each proposed City Council district based on 2010 Census Data. If a plan is submitted without a population breakdown, the City Council may not have sufficient information to give it full consideration. 3. Plans should redistrict the entire City of Denton. The City Council will be considering the effect of any plan on the entire City. Also, the City Council is subject to the Voting Rights Act, which protects various racial and language minorities. Thus, as a matter of federal law, the City Council will be required to consider the effect of any proposal on multiple racial and ethnic groups. If a plan does not redistrict the entire city, it may be impossible for the City Council to assess its impact on one or more protected minority groups. i s:\legal\our documents\resolutions\11\redist 2011 city of denton resolution adopting guidelines (00512707) (2) 04111 l.docx i i 4. Plans should conform to the criteria the City Council will be using in drawing the Councilmember Districts. 5. Comments must be submitted in writing and be legible, even if the person also makes the comments orally at a public hearing. b. Persons providing comments and those submitting proposed plans must identify themselves by full name, home address, provide a phone number and, if available, an email address. The City Council may wish to follow up on such comments or obtain additional information about submitted plans. 7. All comments and proposed plans must be submitted to the City Council by the close of the public hearing. SECTION 2. This Resolution shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of '2011. i MARK A. S, 4 MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: EGAL FORM: O L AP VElA'f ANITA BURGESS, CITY ATTORNEY BY: ) Page 2 Exhibit 3 h ' L--I µ L v 0 ~w f 5 -v 17 f ~ 1 L I i I ur ~tl DISTRICTS R.m~~ ne .Mg. Exhibit 4 ti J N (U J L ~ N fO O N ~ „ o -0 L m i' r. C, N p C U LLL F7 .m~ Pt Y...- ury i Of o n 31%9. r, f ;f . ~ k ° 1 r-- A ~ O rn ~ d 4 a s ~ - 9' n V t0 frv tiP s ~ 7 ~ ~ i _ p E 6 i z' S rt„y --oc+rnm-' ..t.. nvl , ..,N ~ %A' ~ ~ Pelm n151 • l.. 7 MflO° l9 l 1 P PI I rJ a 1 - - N ' d S.n nM1 i 5 < fld M,.. G K1, n sv,a{y !*`w ~ ~ ,.re F c4 t <M C N tl PI'N !;'.1 ~ 1fi 'Ini n,.lN 1:.I M•,HN 1,..1 !1N l] ~ J f q ~ ~ r.T. flvv M y ,X S oM 5 ~ Ifi ~mH ~t o K tF IS (.N, N t r, alma.., r 20 .t,., 1`' otrS°Ttl IS mpnH c-i y N .-.0 L i.,tiry M~ r. WAO (2 15 wueaf _ 5 M1S Rm'M 19M1 ' „ J u'I Rulvenl. t !Z W:i ' IS Pvlh ,7 ~ r f~ G A m - W' A % Fl N w ~ 6i !lr r ~ 9 Cwltnn e 4 f. f r+, . r ,y v uYaf ~`f ,ems n _f. ..M.nur c ~ ^'T Y 3 t r ' v, il! F lS ~IaM W rgw~' ~d 3 d _q 5 +O VuH 13. Prwd Is 11- 11 Li n n ben' `3 r +~'F' nN smonv.«w aaJ .>+n m IL o. w ~ dd LL 16 A.-1 ~ 3 }'OnV Fmy ? 'C]v1:WMwM C ,L' q ~ T ~ 'J v 3 IS rrc Ar(a IS ue.t.li `5, pry IS h rw.o'J"+W b IS M,wvro3'.,W h v Q ~C~pp (p r7 1. ,.IreW 1 .N 3 Cn ~ 'L A. IS ~t,llp;l ,.Mv4 C Q V N N 15 ttl u.n..},.ft,.aa..a i T py S tlf }wV5 _ nnV F V L Q Hl 411>I'11uJl ~ c M O ~ = U +Ct m."rer'x+Y.:l IS r.lenl,v'~' ~ mnV V onY ~ C. mnV j b q U - Q O W OI ,SA»i[n'r.H ,mprW ii O! c 6 h C~ Cl) 3 IC 1'+3 C: 3nrtuRny flnl vnyN ~ ~i C U C p W ~ U C ~ ~ I mr ~ n ~ u_ verla.y, ~ ' C ~ U In O) ~ U "mn s .ny _ ~ E a ~ P+v ~ ~ v U r Q v am,..wl.l w • + .o r U c t a co IS APYrel4 11 P,V -e ~ ~ ~ ,QC O VI ~ ~ O IS a«.,H «nnvny N _.r_...__. - ~ ~-_..J • u ` ~ e C z W o0 -7-J- m o a, E 00 City of Denton Illustrative Draft Plan C Summary 2010 Census Total and Voting Age Population Hispanic % Non-Hispanic Non-Hispanic Non-Hispanic Non-Hispanic District Persons Deviation of Total Anglo /o Black /o Asian /o Other /o Population of Total of Total of Total of Total Population Population Population Population 1 27,448 -3-51% 30.57% 46.28% 17.08% 3.04% 3.03% 2 27,144 -4.57% 20.74% 67.08% 7.65% 1.84% 2.69% 3 29,561 3.92% 15.85% 66.36% 8.07% 7.07% 2.67% 4 29,627 4.16% 18.41% 67.39% 7.55% 3.92% 2.75% Totals 113,7801 1 21.23% 61.96% 10.01% 4.03% 2.79% Ideal Size =113,780 / 4 = 28,445 per district. Total Maximum Deviation = 4.16% - (4.57%) = 8.73% Some percentages may be subject to rounding error. Hispanic % Non-Hispanic Non-Hispanic Non-Hispanic Non-Hispanic District Total VAP• of Total VAP Anglo % Black % Asian % Other % of Total VAP of Total VAP of Total VAP of Total VAP 1 21,584 25.61% 50.96% 17.39% 3.43% 2.60% 2 20,802 17.20% 71.60% 7.18% 1.88% 2.12% 3 26,268 14.07% 68.05% 8.36% 7.03% 2.48% 4 21,813 15.79% 71.04% 7.08% 3.97% 2.12% Totals 90,467 17.96% 65.51% 9.94% 4.25% 2.34% "Voting Age Population Some percentages may be subject to rounding error. 6/22/2011 oeo ~ ~ ~ ~ e e ;e ~e ;e ae oe O i li W o A . a $ M M X ~ y x ~ g Q M W ~p r' r N ~ o ` 3 n o 2R o o a a n ~i n N 00 @ o 0 o c ~ 0 0 0 0 ~ X p~ NN MM x~ N N f N a C7 r N N V ~~SQQ] S N 0 0 0 ~ Q~ > ~ O O O ~ c d d o a d d d d Q N N C M M N Go q V m q V `y .~a ~ .qag> a o rn p v m o m N ~ ~ ai ~ r ci ~ M r M X X` a ° p > ~ Q q CL e _ c y~y~ aE X aE gp ae aaae Pape a~ o Q. ` M<" t j M tD c'1 N U Q a~ i 8 G C O O O 3~ G O C G O ~ ~ X< g x 's rn c m v v) a .O d m m r N b u> r chi o 7 d q Q YQ- c < ~ a m N de N~ N ° a a m 3e m sE < M 4~ N $,v oN o ~b> ° ~i ~ N X p Xm Q v r ~n p (n C prp fo tu~~ ~o IL 3 U1 Y ~ O cl N M ; ~ e N ~ 01 V. 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I L V 0 ~ V C 3 3 _ o V µe o Z' £ pj E a`) \,SCJ in `.35 Svc ~ ~ ~ p + ~ j V 1 ~ y E i c ~~{k" i °Aa o m Msf i n Q- c n V y 2 ~I o cn t F ` 95 d v MSfy U C U N ~p 'Oe' °ng J D Z ! ~.~5 1-35 M MSe., M aci -o E -k City of Denton Illustrative Plan 1 Revised Summary 2010 Census Total and Voting Age Population Hispanic % Non-Hispanic Non-Hispanic Non-Hispanic Non-Hispanic District Persons Deviation of Total Anglo % Black % Asian % Other % Population of Total of Total of Total of Total Population Population Population Population 1 27,448 -3.51% 30.57% 46.28% 17.08% 3.04% 3.03% 2 27,144 -4.57% 20.74% 67.08% 7.65% 1.84% 2.69% 3 29,443 3.51% 16.82% 65.90% 7.64% 7.03% 2.63% 4 29,745 4.57% 17.43% 67.84% 7.97% 3.97% 2.80% Totals 113,780 21.23% 61.96% 10.01% 4.03% 2.79% Ideal Size = 113,780 14 = 28,445 per district. Total Maximum Deviation = 4.57% - (-4.57%) = 9.14% Some percentages may be subject to rounding error. Hispanic /o o Non-Hispanic Non-Hispanic Non-Hispanic Non-Hispanic 0 0 0 0 District Total VAP* of Total VAP Anglo /o Black /o Asian /o Other /o of Total VAP of Total VAP of Total VAP of Total VAP 1 21,584 25.61% 50.96% 17.39% 3.43% 2.60% 2 20,802 17.20% 71.60% 7.18% 1.88% 2.12% 3 26,021 14.80% 67.83% 7.92% 7.02% 2.44% 4 22,060 14.92% 71.27% 7.62% 4.02% 2.17% Totals 90,467 17.96% 65.51% 9.94% 4.25% 2.34% *Voting Age Population Some percentages may be subject to rounding error. 8/11/2011 _ oo0 0 0 o 0 o 0 0 m O rn° m m c) o 'q N N O F LL fC! 0 Q `o 0 0. N `o 0 0 0 r a r 0 °v rn co r O^ N O d v N v ch O d co co o N ~ 0 0 0 o 0 0 0 0 0 0 O L G ON O ~ ~ ~ O Q ~ p ~ ~ ~ 0 r O O O O F> O O O O `0 0 a ~ `o r ~ = a O ~ N M V ~ Q M ~ N ~ G d > L O t O 0 0 0 0 0 _ a o 0 0 0 0 3 m O m v o 0 0 o G ° m a u, ° 0 m a x a x _ V O N ON v M ? 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